SMG chief executive Rob Woodward insisted the company's recovery plan is "bang on track" yesterday, despite a slump in profits and another write-down in the value of plum asset Virgin Radio.

SMG chief executive Rob Woodward insisted the company's recovery plan is "bang on track" yesterday, despite a slump in profits and another write-down in the value of plum asset Virgin Radio.

Unveiling half-year pre-tax profits of just £1m, down from £8m in the same period in 2006, he declared that the Scottish media group has received "significant interest" in Virgin from a number of potential buyers, while insisting flotation remains an option alongside a trade sale.

SMG is understood to have struggled to meet its £80m target price for Virgin Radio amid the turmoil in financial markets. Potential suitors believed to have put in indicative offers include private equity firm Vitruvian Partners and Global Radio, which is chaired by former ITV chief executive Charles Allen.

This appeared to be borne out yesterday as SMG cut the book value of Virgin for the second time this year, to £85m, following a change in accounting methodology. SMG has imposed a goodwill writedown of £26.6m after reclassifying the business as a discontinued activity.

Former Chrysalis chief executive Richard Huntingford will take over as executive chairman of Virgin Radio on Monday, following the recent departure of Virgin chief executive Paul Jackson. Huntingford was appointed Virgin Radio's non-executive chairman last month after 20 years at Chrysalis.

Woodward insisted a potential float of Virgin remains an option, but this has been delayed amid volatility in the credit market. There was more bad news yesterday as analysts at Numis revalued the business at just £60m. On a brighter note, the station has recruited David Lloyd, formerly managing director of Chrysalis stations Galaxy and LBC, as programme director.

Woodward said he did not comment on valuations, but maintained that the fundamentals of the Virgin business are sound, stating that it is performing ahead of budget in the second half and continues to outperform other listed radio groups.

Under Woodward SMG has set up a three-year turnaround plan that will focus on cutting net debt to boost investment in STV, partly by stripping out non-core assets. Outdoor advertising business Primesight has been offloaded for £62m and Woodward said he has received "renewed interest" in cinema advertising business Pearl & Dean.

Within Pearl & Dean, the board has concluded that a contract with Vue cinemas is "onerous" and has made a £11.4m provision to cover future losses over a three-year period.

SMG's earnings before interest, tax, depreciation and amortisation fell from £15m in the first half last year to £10m this time on flat turnover of £89m. Net debt climbed to £189.4m at June 30 from £157.3m six months earlier, which the company blamed partly on debt renegotiation costs and exceptional restructuring expenses. SMG's debt mountain will be reduced through the Primesight sale.

SMG said its TV business underperformed in the first half and fresh action was taken to address this. A further £2.5m in cost cuts was identified, with £1.5m of that saving to be achieved through job cuts.

The group yesterday appointed David Connolly, the former vice chairman of ad agency Starcom and Ofcom contract rights renewal adjudicator, as commercial director of its television business.

Woodward commented: "We were put in by SMG shareholders earlier this year to implement a turnaround and we are bang on track. We have delivered to plan over the last three months, disposing of Primesight, improving Virgin Radio's outlook and beginning the turnaround of STV, our core business."

The group said it is on track to meet second-half forecasts but did not recommend an interim dividend.

SMG shares closed down 2.25p at 33.5p.