SMG Reports Record Pre-Tax Profits, Looks To Future Opportunities
Scottish Media Group (SMG) reported record pre-tax profits in its preliminary full year results today. Its performance during 2000 was in line with analyst expectations, with an 18% increase in profit before tax, which reached £59m.
SMG chairman, Don Cruickshank, described the year to 31 December as “a period of significant development for the group.” and went on to announce turnover up 24% year on year to £300.5m and operating profit up 34% to £74.3m.
Interest costs increased year on year from £15.3m to £5.3m, mainly due to an acquisition programme which included the takeover of Ginger Media Group (see Ginger Acquisition Strengthens SMG’s Presence
SMG noted that unlike the many ITV companies, its TV airtime sales did not benefit from the dotcom boom of early 2000. “The dotcom companies, banks and telecoms sector continued to focus their marketing effort on southern England,” the company reported. Once the bubble burst in summer, Scottish and Grampian Television managed to outperform the network for the second half of the year and finished the year with a NAR of 5.88%, although this was down on the previous year’s 6.12%.
The Ginger acquisition also meant the takeover of Virgin radio, which appears to be paying off as an investment, as turnover for SMG’s radio interests grew to £33.6m, up 22% year on year. Virgin Radio’s margins helped transform this into £15m in operating profit, up 58% on a like for like basis, despite a disappointing performance in recent RAJAR figures (see Capital Still On Top As AM Declines Across London).
In terms of SMG’s other interests, publishing turnover increased 4% year on year to £78.8m and was translated into a 7% increase in operating profits to £16m, thanks in part to cost control measures. Advertising sales in SMG newspapers grew by 8%, including a 27% increase for the relatively new Sunday Herald. A price war with rival newspapers saw SMG holding the cover prices on its titles, but the Sunday Herald still lost 6% of circulation, while the Evening Times dropped 5%. The out of home division, including cinema and outdoor advertising interests, saw a 9% increase in turnover to £28.7m. However, excluding the airports advertising business, which was sold during the last year, this represents an increase of 40% over 1999. Operating profit grew 8% to £4.3m.
Looking to the future, Cruickshank said the company was “confident that we are well positioned to take advantage of any opportunities that we identify in the fast-changing world of communications.” Many speculate that the building up of a 20.8% stake in Scottish Radio Holdings (see SMG Increases Stake In Scottish Radio Holdings) during 2000, and further share buying this year (see SMG Continues To Build Scottish Radio Interest) at a total cost of £125m, is indicative of where SMG has identified its next “opportunity”. Indeed, on releasing these results the company stated, “We believe that there will be further consolidation and cooperation within the UK radio sector and that, by taking this step, we are well-positioned.”
Scottish Media Group: 0141 300 3000
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