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Thursday, 18 April, 2002, 10:15 GMT 11:15 UK
Profits tumble at SMG
SMG logo
SMG announced job cuts last year
A fall in profits has been reported by SMG, the media company which owns Virgin Radio and Scotland's two main ITV stations.

The Glasgow-based firm said it had made a pre-tax profit of 36m, down from 59m in the previous year.

SMG, which described 2001 as one of the toughest years on record, has been hit by a drop in advertising spending since the 11 September terrorist attacks.

It saw its turnover fall and when a number of exceptional costs are taken into account, the company actually posted a loss for the year.

The preliminary results reveal;

  • Group turnover for the year to 31 December slid from 300.5m to 280.8m

  • Operating profits before one-off costs fell from 68.1m to 51.3m

  • It cut its workforce by 6% to 1,700 and wrote off investments, meaning bottom-line pre-tax losses came in at 64.2m.

Chief executive Andrew Flanagan said: "There's no disguising that this has been a pretty tough year for all media companies."

However, he added: "After one of the toughest years on record, the group remains fundamentally strong with high-margin, well-branded businesses.

"We acted quickly and effectively to alleviate the impact of the advertising downturn on profit and margins and we're well placed for the upturn in advertising revenues when it comes."

Andrew Flanagan
Andrew Flanagan: "A tough year"
The release of the group's results was delayed by a month as it sought to conclude negotiations to restructure its debts.

As at 31 December, SMG's debts were 394m, but, on Thursday, it said it had successfully renegotiated its borrowing facilities until June 2003.

That means shareholders will receive a total dividend of 3p per share, down on last year's 6.8p payout.

SMG chairman Don Cruickshank said advertising had yet to show any major signs of recovery.

But he added: "Encouragingly, the market is becoming more predictable and buying activity is reverting to more traditional patterns."

SMG runs the Scottish and Grampian ITV franchises and owns Virgin Radio after striking a deal with Chris Evans in 2000.

Its newspaper interests include the Glasgow-based Herald, Sunday Herald and Evening Times. The group also has a cinema and billboard advertising arm.

Mr Flanagan refused to comment on recent speculation that SMG had received approaches for parts of the group, although he conceded: "There are a lot of bottom-feeders out there who will try and get it on the cheap."

SMG said Scottish and Grampian TV had renewed their ITV licenses until 2011, although a "harsh" increase in the cost had hit profits.

See also:

14 Dec 01 | TV and Radio
Evans sues for lost Virgin shares
24 Oct 01 | Scotland
Media group confirms redundancies
11 Sep 01 | Business
Media giant confirms ITV's woes
13 Jan 00 | Business
Evans sells up
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