O’Reilly to surrender chair at Indo group

INDEPENDENT News & Media has bowed to investor pressure and separated the roles of chairman and chief executive.

The move will see Tony O'Reilly become chief executive and hand over the role of chairman to the former Fianna Fáil TD Brian Hillery.

Mr Hillery, who represented the Dún Laoghaire/Rathdown constituency and was also a senator, is currently chairman of the exploration firm Providence Resources, in which Mr O'Reilly is the largest shareholder.

It is understood that Mr O'Reilly will remain in the top job for about five years.

The appointment of Mr Hillery will cause some surprise in the markets. There had been some speculation that Mr O'Reilly would have remained as chairman and that the chief executive post would go to his son Gavin, who is chief operating officer of the media group.

Last year, Independent came under pressure from the Irish Association of Investment Managers to separate the roles, as is common in most European companies.

Speaking at yesterday's annual general meeting Mr O'Reilly, who owns 27% of Independent's shares, hit out at the latest changes in corporate governance practices. He said new rules, which urged non-executive directors to step down after nine years on a company board were "nonsense". He said it took many years for directors to develop a knowledge of a company and the new regulations would result in a loss of talented individuals.

Gavin O'Reilly said the decision by his father to remain on as chief executive was a good move for the company.

"It is an extremely positive vote of confidence that the largest individual shareholder is prepared to give his considerable talent and time and effort to drive this company forward. Globally the issue of the dual role was not so much of an issue. But we made a commitment to split the roles. We want to be a leading light in terms of corporate governance. I think the market will be satisfied with that."

Gavin O'Reilly said trading got off to a good start this year with advertising ahead in all main markets.

Independent said like-for-like group advertising revenues have been buoyant in the first six months of this year, and up over 6% in constant currency terms circulation revenue running 7% ahead.

The company is seeking to improve its operating profit from 17% to 20% in the next couple of years, which will add €45 million to €50m annually.

Independent said it continues to focus on its operating cost base with a restructuring of its workforce ahead of plan. Last December, it announced plans to cut 5% of its worldwide staff, including 205 voluntary redundancies in Ireland. It said it was "firmly on track" to deliver annual savings of €18.9m by the end of 2005.

Gavin O'Reilly said the company was winning the battle in the Sunday newspaper market. He said he was "staggered" by how much some British publishers were pumping into their Irish operations but said Independent would be able to see them off.

"Whilst it would appear that our circulation and readership would bear out the fact that in the last skirmish we have certainly come out ahead, I don't think we can naturally assume that they have gone away. But certainly the pace of competitor activity has begun to wane," Gavin O'Reilly added.