Chairman's Statement
Scottish Media Group PLC
5 May 2000
Scottish Media Group plc
Company No. 42391
The following statement was made by Don Cruickshank, Chairman of Scottish
Media Group plc, at the Company's Annual General Meeting held at Cowcaddens,
Glasgow at 12 noon on Friday 5 May 2000.
There's no doubt that 1999 was a significant year for SMG. Yet again we
delivered record profits, reaching £50 million for the first time and we have
reflected this in our proposal to raise the dividend for the year by 10% to
26.5 pence. However, more significantly we have reinforced SMG's pre-eminent
position in Scotland while transforming the group into a major UK media
company.
The continued development and building of our market leading position in
Scotland was strengthened by launching new products such as the Sunday Herald
and our digital television channel, S2. In addition, we made our first
substantial move out of Scotland with the acquisition of Primesight, an
outside advertising contractor, followed by Pearl & Dean, the well known
cinema advertising business. Both these businesses offer good growth potential
but more importantly they operate nationally and have significantly enhanced
the profile of the group within the UK advertising industry.
Of course, these moves laid the foundation for the largest acquisition in the
group's history with the purchase, in March, of Ginger Media Group - taking us
into the fast-growing radio sector for the first time, through Virgin Radio,
and establishing our position as a leading UK media company. In addition to
the excellent prospects for the radio business, Ginger Media Group's
television production arm has added firepower to Scottish Television
Enterprises, making SMG the sixth largest programme producer in the UK. The
integration of these successful businesses into the group is well under way
and they are already contributing strongly to the group's performance in 2000.
The nature of the media sector is such that, despite the significant progress
we have made over the last twelve months, we must continue to grow and
accelerate the development of the group in our existing markets as well as
embracing the opportunities created by new technology. Management has
well-founded and ambitious plans to capitalise on SMG's strong position with
the implementation of the group's internet plans moving rapidly. We will
launch the first of our new s1 range of information and classified advertising
sites later this year and we expect the full suite of services to be in place
within the next 12-18 months.
Meanwhile, the prospects for the UK economy in general, and the advertising
market in particular, look good. Our performance in the first quarter of 2000
has been encouraging and management continues to set exacting targets for each
part of the group. Television advertising revenues across the ITV Network
have been particularly strong, driven by the growth in dot.com advertising
activity which is concentrated in the south east of the UK. Scotland has not
fully shared in this growth, but airtime sales have still been ahead of our
expectations. The reorganisation of STE is beginning to deliver, with a
number of further commissions in drama, children's and factual already
secured. With the addition of Ginger Television to the group, we look forward
to an enhanced performance from this high profile part of our business.
Newspaper advertising sales are growing steadily in line with the market and,
with the Sunday Herald now firmly established, we anticipate strengthening our
position in the competitive Scottish newspaper market place. The outdoor
sector is showing signs of renewed growth, with a strong second quarter in
prospect after a difficult 1999 and Primesight continues to invest in building
its estate. The cinema business continues to show good growth in attendances
and advertising and while not benefiting from the Star Wars phenomenon of last
year, Pearl and Dean will perform well in 2000. Although only part of the
group since March, Virgin Radio's growth is more than justifying our
confidence, with revenue growth of 25%.
As part of the transformation and growth of SMG, we wish to restructure the
group to reflect its increasingly national profile and to streamline its
divisional structure. We also intend to confirm the name of the group as SMG
plc. You will be asked to vote on these plans at the Extraordinary General
Meeting which follows this AGM.
In concluding, I believe we have made a promising start to the year and, with
the healthy outlook for the economy, the group's prospects for the remainder
of the year are good. I am confident that SMG will continue its track record
of providing excellent returns to its shareholders in 2000 and maintain our
record of rapidly developing the group, growing it into one of the foremost
media companies in Britain.
N.B. The EGM approve the restructuring as proposed and the results of the
poll cast at the Shareholders' Court Meeting and the CULS Holders' Court
Meeting will be announced as soon as possible.
Enquiries:
Callum Spreng, Director of Corporate Affairs 0141-300-3605
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