SMG yesterday posted a pre-tax profit of £4.2m in the first half of 2008 and said it has reduced its massive debt mountain by more than 90%.
SMG yesterday posted a pre-tax profit of £4.2m in the first half of 2008 and said it has reduced its massive debt mountain by more than 90%.
The Glasgow-based group, which reported 14% year-on-year growth in regional TV ad revenue for the first six months of 2008, said that it remains on track to hit full-year targets "despite difficult market conditions".
"We are bang on target," said Rob Woodward, SMG's chief executive. "We are a very different company now," he said, referring to previous management that made acquisitions at the top of the market and rolled up huge debts, In its interim results, SMG focused on the performance of its television business STV, which also includes production and digital operations. STV's revenue remained flat year-on-year at £56m, with operating profit up by 26% at £4.9m.
SMG plans to rebrand its whole business as stv after more than a decade when it expanded into radio, newspaper publishing, outdoor and cinema advertising. Most of these businesses have now been sold or are in the process of being offloaded.
Within STV, operating profits in the broadcasting operation grew 49% year-on-year to £5.2m, with national airtime revenue flat and regional airtime ad revenue up 14% for the period. SMG's share price rose by a half penny to 9p in London dealing.
"Clearly the economic environment is significantly more challenging in 2008 but we are on track to outperform the market for the full year, especially in the regional advertising market," said Woodward.
He predicted the company will continue to outperform in 2009.
SMG forecast that in the third quarter of 2008 it expects regional TV advertising revenues to be up 16% year-on-year - flat in October and with "growth expected" for November and December.
However, in terms of national TV ad revenues, the forecast for the third quarter is for a 15% year-on-year drop and a "low double-digit decline" in October.
The group is planning to set up an online advertising service next year that it hopes will be a money spinner.
In the continuing television business, the first half of 2008 saw revenue remain flat at £56m with operating profit up by 26% at £4.9m. Overall, the group's pre-tax profit rose to £4.2m from £1m in the previous year, reflecting cost-cutting measures implemented in the business.
The company also reduced net debt to £15.1m from £189.4m a year ago.
SMG group revenue fell to £75.6m in the first half of 2008, compared with £88.9m in the same period last year. Operating profit fell from £6.9m to £5.4m.
Pearl & Dean saw a year-on-year revenue drop of £1m to £8.3m in the first six months of the year and a small increase in operating losses to £500,000.
The company said that this was due to the seasonal nature of the business and a "weak first four months of films".
SMG forecast Pearl & Dean's ad revenue in the third quarter to be down 10% year- on-year, with a "low single-digit decline" for October.
Virgin Radio, which was sold to Times of India subsidiary TIML for £53.2m in June, saw revenue drop by almost £1m to £11.3m and a fall in operating profit from £2.5m in the first half of 2007 to £1m in the first half of 2008.
