Earnings and profits impacted by advertising downturn in the UK
Strong underlying performance relative to media sector
Scottish and Grampian TV licences renewed at significantly increased cost
Market share increases in TV, newspapers, cinema and outdoor
Increased stake in SRH (29.5%)
Dividend reduced in line with impact on earnings
Timing of upturn uncertain
Margins protected by early cost reductions
Key Financials
Total Turnover * £139.7m (2000: £152.7m)
EBITDA * £36.5m (2000: £40.0m)
Total operating profit * £32.0m (2000: £36.4m)
Profit before tax * £20.0m (2000: £30.0m)
Earnings per share * 4.7 pence (2000: 7.8 pence)
Dividend per share 1.5 pence (2000: 2.3 pence)
* Excluding exceptional items, online losses and goodwill amortisation
These results reflect the severe advertising downturn in the UK. £6m of the fall in pre-tax profit was the result of the decline in ITV advertising; £2m was the impact of the increased cost of the ITV licences; and £2m reflected the carrying cost of the SRH investment. In light of current trading conditions and the previously indicated policy of increasing dividend cover, the interim dividend is reduced to 1.5 pence.
Andrew Flanagan, Chief Executive of SMG, said:
This is the toughest advertising market of recent times, and visibility is poor enough to make predictions unwise at present. However, we are managing our businesses tightly, and we have put cost reduction measures in place early.
Audience delivery across all media has been resilient and our cross-media strategy leaves us better placed than most to ride out the current downturn. I am confident that when conditions improve, thanks to our presence across a number of media sectors, we will be well able to take advantage of any upturn.
