GCap Media’s total revenues for June were up 6% year on year, ahead of the company’s expectations, and were up 2% year on year for the three months to 30 June, according to its first Interim Management Statement.
The company said it has seen an encouraging trend in radio advertising revenue since its preliminary statements in May, when it announced like for like total revenues were down 2% in April and up 1% in May (see
GCap Media Reports Revenue Decline).
Total revenue for July is expected to be 16% higher than in July 2006, with radio advertising up 14% compared to last year, when advertising was depressed during the World Cup.
The Group currently expects the growth in total revenue in the second quarter of the financial year to be ahead of that in the first quarter. Comparisons are on a like for like basis, allowing for the sale of the two Century stations in October 2006.
Reduction of costs continues to be a top priority for GCap’s senior management team. “We remain on track to achieve the £5.5 million of additional cost savings we announced in May,” said the statement. “These savings will take the total savings achieved since the merger of GWR and Capital Radio to £35 million per annum, some 20% of the cost base of the Group at the time of the merger.”
Chief executive, Ralph Bernard, said: “We are continually improving the business and finding new ways to unlock its full potential.
“We have already achieved cost savings far greater than envisaged at the time of the merger and are confident that we can deliver substantial margin improvements in the future.”
The Group also said it has “put in place plans to achieve further significant savings over the next two years.” Assuming that radio advertising continues to improve, these cost reductions, in conjunction with initiatives to grow revenue, will enable GCap to target an operating profit margin of between 12% – 14% by March 2009.
The websites of the Group’s major brands will also provide a tool for developing audience and revenue streams, independent of radio advertising budgets, according to the statement.
“We have seen increased traffic in the quarter to June, with 1.4 million average monthly unique users, up 13% on last year,” according to GCap. Like for like online revenues for the quarter increased by 38% year on year, with the company saying this trend is encouraging and will be enhanced further by net investment in their websites of £2.1 million this year.
Bernard added: “Our brand portfolio has been streamlined, audiences are being built at all our major stations and we are investing where we can see attractive returns. Encouragingly, we are beginning to see signs of improvement in advertising revenues, despite an uncertain outlook for consumer confidence.”
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