The principal activity of the Group is the dissemination of news, information and advertising matter by way of print and other media. The Directors consider the principal activities of the Group to be one class of business.

The Group results for the period are set out in the Group profit and loss account on page 18. A review of the Group's performance and future prospects is contained in the Chairman's statement on pages 4 and 5 and the Chief executive's review of operations on pages 7 to 11. The company has paid a preference dividend of 4.0p per share amounting to £4,000. In view of the need to conserve resources for long term capital expenditure, the Directors do not recommend payment of any dividend on the ordinary shares.

2. Directors' responsibilities

Company law requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period.

The directors confirm that suitable accounting policies have been used and applied consistently. They also confirm that reasonable and prudent judgements and estimates have been made in preparing the financial statements for the year ended 1st April 2001 and that applicable accounting standards have been followed.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

3. Going concern

After reviewing the Group's cash balances and projected cash flows the Directors believe that the Group has adequate resources to continue operations for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts.

4. Employee involvement

There is regular contact between management and employees' representatives so as to ensure that employees are provided with information on matters of concern to them as employees and are aware of the financial and economic factors affecting the performance of the Group and so that their views can be taken into account in making decisions which are likely to affect their interests.

5. Employment of disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and abilities of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability.

6. Tangible fixed assets

The market value of freehold and leasehold property is estimated by the Directors to be approximately £6.0 million greater than its balance sheet value of £11.0 million.

The movements in tangible fixed assets during the period are set out in the table on page 29.

7. Creditor payment policy

The Group has implemented systems to ensure the prompt recognition of all identifiable liabilities to creditors and payments are made to these creditors in line with the CBI's Prompt Payers Code. The creditor days figure for the company for the year was 26 days (2000 29 days).

8. Donations

Charitable donations amounted to £157,100 (2000 £106,600). There were no contributions to political organisations during the period.

9. Ownership

All the ordinary shares of Guardian Media Group plc are owned by the Scott Trust.

10. Directors

The Directors at 1st April 2001 are listed on page 5.

Caroline Marland, who was a Director on 3rd April 2000, resigned on her retirement from the business on 31st December 2000. Carolyn McCall was appointed as a Director on 28th October 2000.

According to the Register kept under section 325 of the Companies Act 1985, no Director had any interest in the shares of the Company or its subsidiaries.

11. Directors emoluments

Salary/fees
Salaries and fees have been set by the Remuneration Committee having regard to market conditions. The Company has paid Trader Media Group Limited £25,000 for the services of J R Harris as a Non-executive Director of the Company. J R Harris's emoluments as an executive director of Trader Media Group Limited are disclosed in their accounts.

Performance related bonus
The bonus arrangements of executive directors have been determined by the Remuneration Committee.

a) The bonus arrangements for R W Phillis and N Castro are based on a formula related to profit before tax above a minimum threshold.

b) The bonus arrangements for C McCall and I S Ashcroft are based on annual pre-determined divisional and group financial performance targets. The whole bonus is treated as earned in the year it is awarded but payment of one third is deferred for two years and is normally conditional on the director continuing as an employee. Similar bonus arrangements apply to other senior executives in the operating divisions.

c) A C Rusbridger has no contractual entitlement to a bonus payment.

Pensions
Retirement benefits are accruing to the executive directors under money purchase schemes. J R Harris and I S Ashcroft are also members of a top-up scheme providing defined benefits. This scheme is non-contributory as regards the members and in the opinion of the actuary no contributions are required to be made by the company as the scheme is fully funded to meet its liabilities as they fall due.

Benefits in kind
These relate to the provision of motor car and healthcare benefits.

12. Auditors

The auditors, PricewaterhouseCoopers, have indicated their willingness to continue in office, and a resolution concerning their reappointment will be proposed at the Annual General Meeting.

By Order of the Board

Phil Boardman
Secretary
24th July 2001