Nunn brings down curtain at the National as a report shows financial success of his musicals

Martine McCutcheon's starring role as Eliza Dolittle in My Fair Lady helped to keep the National Theatre out of debt.

Though McCutcheon missed many performances through illness, the production sold out on the publicity and the box office receipts helped to fill the National's coffers, as did the success of another vintage musical, South Pacific, also directed by Sir Trevor Nunn, the artistic director.

The theatre's annual report, to be released today, shows the two musicals were largely responsible for keeping Britain's flagship theatre out of the red, and helped to turn a £626,000 accumulated deficit last year into a £99,000 surplus this year.

"In a difficult economic climate, it is pleasing to report that the National Theatre has returned to the position of a small operating surplus," it says. "The box office success from programming two musicals, My Fair Lady and South Pacific, within one financial year contributed much to this achievement. Such an opportunity is rarely available to the Theatre and is unlikely to be possible in the near future."

It adds: "This was an excellent result benefiting particularly from performances of My Fair Lady both on the South Bank and in the West End."

The NT does, though, sound a warning that it needs to draw a new generation of theatregoers. "We are ... mindful that the necessary level of ticket pricing continues to restrict the accessibility of the National and makes it difficult to attract a new generation of attenders," it says.

With this in mind, the theatre mounted a special season with lower prices, but this, says the report, "will see lower box office revenues and, as a consequence, some reduction in ancillary income".

Sir Trevor Nunn writes in the annual report that the National "must never depart from its responsibility to celebrate the great language theatre of the past, flowing from and through Shakespeare, and to create vivid and demanding language theatre for the future".

He then, unusually, selects two actors, Simon Russell Beale and Alex Jennings for praise. "For several years, I have believed that two young actors have proved in their work that the tradition of great acting, in the footsteps of our founding genius, Sir Laurence Olivier, is alive and well, and it has been my determination to present them in that light at the National. I am aware that the selective naming of names in a report such as this can be invidious, but since my theme is continuity then needs must."

Sir Trevor also pays tribute to the actor Michael Bryant, who died this year. Bryant "provided the backbone and carried the torch of the National for a quarter of a century. Greatness comes in many different forms. Wise, authoritative, idiosyncratic, mischievous and of flawless artistic judgement, Michael was a great teacher by being a great example."

* The National's new artistic director, Nicholas Hytner, who takes over from Sir Trevor in April, is to stage a version of Philip Pullman's award winning fantasy trilogy His Dark Materials. Mr Hytner will direct the stage version himself.

The opening production of Mr Hytner's regime, as earlier revealed in The Independent, will be Henry V, with Adrian Lester as the first black actor to play Shakespeare's monarch for a national company.