SMG show profitable interims for half-year

SMG's half-year interim results have shown that all the group's businesses have remained profitable, despite the continuation of the advertising downturn during the first half of 2003.
The six months to 30 June 2003 was a period of transition for SMG. The group now has a secure financial footing with the successful completion of the £216m disposal of the publishing business. This reduced debt by 40% to £246m and enabled SMG to refinance on much improved terms. In addition, a positive outcome of the litigation proceedings initiated by Chris Evans was achieved.
Andrew Flanagan, Chief Executive of SMG, said: "Overall, we anticipate a satisfactory performance for SMG in the second half of 2003, outperforming the first half. As the UK advertising markets recover, SMG will be well placed to generate faster growth."
The continuation of the advertising downturn, which began three years ago, has hit national advertising particularly hard. Turnover for continuing operations reduced to £86.0m (2002: £91.9m) for the first six months of the year with EBITDA for Continuing Operations at £19.0m before exceptionals and goodwill amortisation (2002: £24.7m). Reduced airtime sales and increased marketing spend at Virgin Radio contributed to a reduction in operating profit on continuing operations before exceptionals and goodwill amortisation to £11.3m (2002: £16.3m), despite £1m of cost savings achieved across the group.
The impact of the publishing disposal and the lower interest costs from refinancing the debt position mean that SMG posted a pre-tax profit, before exceptionals and goodwill amortisation, of £5.5m (2002: £10.5m). After taking these items into account, SMG's pre-tax profits grew to £5.9m (2002: £0.9m).
SMG’s operating margins remained robust at 18% reflecting the strength of the brands and management’s focus on costs. The group is now entirely focused on national advertising markets, which they claim have better growth prospects in the long-term as well as good short-term recovery prospects.
SMG has made significant progress in laying the groundwork for organic growth and development through continued investment and innovation, harnessing digital technologies across each of its businesses and exploiting opportunities for interactivity wherever these are available.
This was supplemented by the launch earlier this month of SMG Access, an initiative designed to further capitalise on the Group’s multi-platform structure and capture increased market share.
(KmcA)