Glasgow-based Scottish Media Group (SMG) has released an upbeat trading statement for the year ending 31 December 2004, revealing a 9% increase in profit before tax like for like, to £17.5 million, compared with £16 million in 2003.
Total operating profit rose by a massive 62% year on year, up to £17.7 million in 2004 from £10.9 million in 2003 (see
SMG’s Profits Tumble 28% As Advertising Decline Bites). This increase was aided by the strong performance of Scottish TV and Grampian TV, both outperforming the commercial television market as a whole in 2004.
Scottish TV and Grampian TV enjoyed an 8% growth in advertising revenues, resulting in an increase in SMG’s share of ITV’s Net Advertising Revenues (NAR) to 6.5%, compared to 6.2% in 2003. SMG attributes this success to the return of traditional advertisers and a continued strong growth in the Scottish advertising market.
The Group’s Virgin Radio reported pre-tax profits of £17.5 million for 2004, up from last year’s £16 million earnings, however, turnover for Virgin was down from £23.2 million to £20.1 million. SMG recently turned down an informal £100 million takeover bid for the station from private equity group 3i (see SMG Rejects 3i Offer For Virgin).
SMG remain optimistic about Virgin, citing excellent growth potential within the digital market, with sister stations Virgin Classic Rock and Virgin Radio Groove generating more than one million listening hours between them.
Elsewhere, like for like group turnover rose by 7% to £201.2 million for 2004, compared to £188.2 million in 2003, however, total turnover for the year dropped by 4% to £201.2 million from £209.2 million in 2003. SMG showed a 66% reduction in debt for 2004.
Commenting on the results, Andrew Flanagan, chief executive of SMG, said: “The recovery in advertising markets, a strengthened balance sheet and a return to revenue growth made 2004 an important year for SMG.”
He continued: “With the advertising market recovery now established, our strong media brands can capitalise on their healthy market positions to accelerate growth. We’ve already seen encouraging revenue trends in 2005 so far and the excellent business development opportunities we’ve identified are set to further boost SMG’s growth.”
SMG is optimistic about its prospects for the rest of 2005. First quarter trading has been positive across all businesses, with television revenues rising by 8% in 2005 and Virgin Radio also expected to show an uplift of 8% for the quarter.
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