Analysis: Media group focuses on internet business, writes Arthur Beesley, Senior Business Correspondent.

Independent News & Media used its annual results yesterday to disclose that it had taken a 20 per cent stake in British online gaming company, Cashcade, for a sum of less than €10 million.

With record profits in line with analysts' forecasts and Sir Anthony O'Reilly's confident predictions of more juicy growth to come, Independent's investment in the owner of the getminted.com gaming portal was symbolic of the emphasis on its internet operations in its 2005 results.

There wasn't a mention of a region in its diverse portfolio without a follow-on reference to the repositioning or mergers of "portal sites" for classified advertising.

In a global market dominated by talk of advertisers following newspaper readers in their migration to online media, this is no surprise.

Yet as the 2005 results show, Independent continues to do quite well in its traditional newspaper market.

Circulation and advertising are not the only factors here. A €100 million print contract in Belfast with News International begins next year.

With the acquisition of a strategic stake in India's Dainik Jagran, the group has bought into the world's "fastest growing newspaper market". In addition to rising literacy, it sees big potential there from the rising tide of consumerism.

This factor that is also at play in South Africa, where Independent introduced a new "red-top" Daily Voice last year and expanded its Zulu-language paper, Isolezwe.

Nearer home, chief operating officer Gavin O'Reilly dismissively brushed aside the threat to the Irish Independent from the Irish Daily Mail and said there had been no drop in circulation since its rival entered the scene.

Still, the shift in the editorial tone of the Irish Independent suggests it is determined to meet the challenge head-on.

He was similarly confident about the Evening Herald, stating that the Herald AM freesheet and Metro (part-owned by The Irish Times) had merely expanded the market. Despite circulation drops in recent years at the Sunday Tribune, the group remains "very happy" with its 29 per cent stake in that paper.

Exceptional items in the results included a €62.7 million profit on the sale of its iTouch stake and a €11.4 million gain on the sale of the Sunday World print site in Terenure.

A €27.2 million restructuring charge reflected changes in the Sunday World and British magazine unit, while €16.4 million in "launch" expenditure was attributed to Herald AM, the London Independent, the compact Belfast Telegraph and Daily Life.