31st May 2000

Remarks by Dr. Anthony J.F. O’Reilly at Company’s AGM

Perhaps the most extraordinary media event of the last 18 months has been the marriage of Time-Warner with America Online, a clear indication that as technology becomes more universal and understood, content, utility, market access and entertainment will be the reason why people choose one form of delivery over another and stay brand loyal to it.

The change in the name of the company from Independent Newspapers to Independent News & Media last year indicated our belief that broadly based media companies have a really bright future as long as they remain important to the markets they serve.

We have invested heavily in all aspects of media in the past 18 months. Since year-end we have been successful in our bid for the Belfast Telegraph, an excellent metropolitian franchise which is not only earnings enhancing but also has very good growth prospects.

On the new media front, iTouch went international with operations being started in the UK, Ireland, New Zealand and Australia - in addition to our established operations in South Africa. Unison launched its "internet on TV" concept in Ireland which is proving very successful.

When you add MBA Direct in the UK, to shopping malls such as "DigitalMall" in South Africa, to Peakhour (business-to-business) and Soprano for advanced WAP technology in Australia, and m-commerce in New Zealand, it is clear that our executives are working feverishly to ensure maximum value for our shareholders (and themselves) in a dynamic and fast expanding market place.

From all of this you will detect that I feel greatly enthused by my appointment as Executive Chairman of the Group, and even more enthused that the durable and unsinkable Liam Healy is happy to continue as Deputy Chairman. Each year at our AGM, I record my admiration for Liam's contribution to the Group, but I do so again without apology and I think all of us, as shareholders, should do likewise.

As you may be aware, the International Advisory Board, was augmented this year by the arrival of John Meagher, former CEO and Deputy Chairman of Independent and the Rt. Hon. Kenneth Clarke QC former Chancellor of the Exchequer in the UK.

The Board, chaired by Ben Bradlee had a superb meeting in February in South Africa, incorporating discussions with the new President, Thabo Mbeki, and a once in a lifetime luncheon with the utterly unique Nelson Mandela, who spoke so movingly at the Independent lecture in Trinity earlier this year.

I am delighted to announce that all of our main companies and markets did extremely well in the past year and promise to do even better this year. New Zealand got off to a great start in 2000 with double digit advertising growth at the New Zealand Herald. Circulation in the Herald is showing a year on year lift due to improved content and changes in distribution methods.

Elsewhere in New Zealand, the merger of the Hastings and Napier papers into "Hawkes Bay Today" proved a tremendous success. To date, we have achieved all the objectives that we had set ourselves in terms of both advertising and circulation.

In Australia, our bet on outdoor has proved to be a real success with profits up by 51%. We now have 70% of the total market, and a very buoyant outdoor demand with the Olympics coming in September.

Radio, Regional newspapers and pay-television operations, are all performing extremely well, and we are expecting a very good year from Australia. It should be noted that APN has had seven consecutive years of solid growth and has, for the past five years, been the top performing Australian media stock in EPS terms.

In South Africa, it was a tough year with the economy static and interest rates as high as 25%. However, our 14 newspapers performed well in a difficult climate and in particular our Johannesburg titles achieved very strong circulation gains.

South Africa has also been the incubator for a great deal of our mobile phone technology, and our acquisition of over 70% of iTouch plc and its internal expansion into a worldwide series of companies in New Zealand, Australia, South Africa, the UK and Ireland, hold great promise for the corporation and its shareholders.

In recognition of the progress achieved, we have appointed Ivan Fallon, Executive Chairman of iTouch plc. Now headquartered in London, he is assisted by two extraordinary and talented executives in Avi Azulai and Wayne Pitout, who have been the dynamic forces behind the development of iTouch over the past four years. They will operate as Joint Managing Directors.

We are also encouraged by the projected growth of the South African Economy. With interest rates down to a more reasonable level, the economy is set for recovery, and growth of over 3% is predicted for the year.

In the UK, it is now two years since we purchased full control of The Independent. Over the past two years we have, as predicted, turned around the performance of our flagship titles, with circulations during the year reaching 231,000 for the daily and 263,000 for the Sunday. Advertising is very strong with first quarter 2000 revenues ahead by 20% compared to the same period last year.

And proof positive of the major turnaround of the Independent, particularly in the 25-45 age group, is Simon Kelner's receipt of the Editor of the Year for the second successive year, with additional accolades for David McKittrick, Robert Fisk and Deborah Orr.

Independent Digital UK, with the acquisition of MBA Direct and the informed leadership of Richard Withey is now in the top 20 content sites in the UK with eight million page accesses per month.

In other developments, our regional newspapers did well during the year, and our successful magazines were augmented in early 2000 by the acquisition of Dominion in the specialty education area.

When added to our expanding UCAS relationship, this publication now makes the Independent the number one newspaper company in the education courses market in the United Kingdom.

All in all it has been a very successful year for the UK, and recently made even more so with our successful bid for The Belfast Telegraph from Trinity Mirror (subject to Competition Commission approval) which will be earnings enhancing in the first year.

Brendan Hopkins has led his team magnificently in all its diverse manifestations, and the move to new premises in August / September will pull together all our activities in the United Kingdom under one roof for the first time.

I am happy to report that in Ireland, which remains a primary focus for many of you here, your company continued to benefit from strong economic growth.

The response to Unison, the on-line content portal for up to 40 regional newspapers has been very favourable in both the regional and national papers and represents a very clear example of the power of the regional press to sell products in their areas.

We are extremely pleased with the progress of Unison, and will continue to invest heavily in this uniquely consumer-friendly internet application.

Irish Multichannel, our Unison joint venture partner, in which we hold a 50% stake, had a very positive year, successfully competing for broadband and narrowband licences which will enable roll out of telephony and internet services in our existing franchise area - encompassing some 600,000 homes - and in new areas, including Dublin.

Irish Multichannel is now firmly positioned as the second largest cable company in the country. Subscribers under management increased to approximately quarter of a million since year end, through a combination of organic growth and consolidation into our company of the 3rd and 4th largest players - CMI and Suir Nore.

I congratulate Bart Bonsall and his team on a job well done and I look forward to the roll out of broadband services over the coming months and receipt by Irish Multichannel of its broadband and narrowband licences on June 10th.

The Irish market remains one of the most competitive in the world with 16 Sunday papers and 11 daily papers on offer. Many of these papers are produced on a marginal cost basis and from companies with considerable international resources. Below cost selling is a major issue, not just for Independent Newspapers - but for all Irish newspapers, and the NNI has expressed its concern in a most vocal way.

Independent's titles continue to lead in the booming market, with a 50% audited market share with 7 in 10 reading one of our market-leading newspaper titles.

Our provincials will this year yield almost IR