Profits of pounds 290.2m cap `excellent' year for United

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The Independent Online
United News & Media capped a hectic year in which it merged with Lord Hollick's MAI by announcing better-than-expected underlying profits despite disappointing figures from newspapers, magazines and MAI's original money-broking business. Lord Hollick, the Labour peer who has in effect sidelined United's chairman, Lord Stevens, since the two companies' marriage last February, described the combined group's first year as "excellent".

Profits of pounds 290.2m were comfortably ahead of expectations, driven by strong performances from United's television interests, where it owns the Anglia and Meridian franchises and holds significant stakes in HTV and Yorkshire-Tyne Tees, and business services, its exhibitions to market research arm.

A 15 per cent rise in earnings per share to 40p (34.8p) helped the shares, up 30p to 770.5p, close at a record high since the merger. Forecasts of profits for the current year were pushed higher yesterday to a range between pounds 310m and pounds 335m.

Lord Hollick played down suggestions from the rivals it outbid last year for exhibitions group Blenheim that it had overpaid for the company. He said he was "delighted" by the pounds 589m acquisition, which he said had a good portfolio of exhibitions and better-than-expected management. United won control of Blenheim by fighting off interest from Reed and Emap.

Reported pre-tax profits were dented by more than pounds 200m of exceptional charges that included pounds 62.4m to cover restructuring following the merger of United with MAI. The charge also took in pounds 32m of reorganisation costs at the struggling Express newspaper titles, where the Sunday and daily titles were merged into a seven-day operation, pounds 18.1m of integration costs at Blenheim and a pounds 62.5m charge to cover the pre-launch costs of Channel 5, the new terrestrial channel which launches at the end of this month.

The effect of the exceptional charges was offset by a pounds 149.6m profit on the disposal of businesses worth more than pounds 300m, including legal publisher Tolley, sold to Reed, and the South Wales Argus group of local newspapers.

United owns 29 per cent of Channel 5, giving it the largest single holding in the station. The provision in its accounts implies a total pre-launch cost for the channel of more than pounds 200m.

Despite the high costs of launching the channel, analysts remained positive about the station's prospects. One has put a present value of pounds 330m on Channel 5, about a tenth of United's pounds 3.6bn market value, and expects it to make annual profits of pounds 185m by the end of its 10-year renewable licence period.

In national newspapers, which includes the Star as well as the Express, Lord Hollick said he was confident the group's relative decline compared with arch mid-market rival the Daily Mail had stabilised. He said a "good chunk" of an estimated pounds 15m saving from a printing restructuring would be reinvested in promoting the Express.

According to Lord Hollick, United remains an "interested observer" in the unfolding stand-off between Granada's chairman, Gerry Robinson, and his opposite number at Yorkshire-Tyne Tees, Ward Thomas, regarding the price at which the widely expected takeover of Yorkshire by Granada should take place.