SMG’s delayed financial results for 2001 show the group’s operating profits falling by 12 per cent on last year to £14.3m.

The announcement was delayed while negotiations took place to restructure the company’s debts.

Talks have proved successful in securing the group’s borrowing requirements until June 2003. It owes almost £200m of bank loans and overdrafts and £140m in other loans.

Turnover for the year was £280.8m (from £300.5m), primarily reflecting the effects of the advertising downturn.

The group has wide media interests, including newspapers The Herald, the Sunday Herald and the Evening Times – all circulating in Scotland.

Chairman Don Cruickshank said: “2001 was undoubtedly the most challenging of years for SMG, as a combination of external factors impacted both revenues and costs.

“However, the underlying performance of our businesses was strong and each remains profitable with good margins, despite the severity of the global advertising downturn and the harsh terms for the renewal of our television licences.

“We responded to the emergence of these challenges swiftly with early cost reduction measures, including a six per cent reduction in the Group’s headcount, resulting in annual savings of over £5m.

“As a result, SMG remains fundamentally strong, built around high margin, well-branded businesses with sound prospects.”

The publishing division was affected by general caution over the economic outlook and saw revenues fall in 2001 by two per cent to £77.4m (from £78.8m).

Investment in further product development and cost increases outside the company’s direct control, mainly in newsprint, resulted in the fall in operating profits.

Circulation revenues increased slightly in 2001, as a result of implementing price increases at both The Herald and Sunday Herald. The Evening Times recorded one of the best circulation performances of any evening newspaper in the UK.

Other developments include the construction of the new printing facilities, with the phased transfer of printing already under way. It expected to close the existing operation by the end of 2002.

SMG owns Virgin Radio, Scottish TV, Pearl & Dean, the Grampian ITV franchise and Ginger Media, and employs some 1,700 staff, around 800 of those in newspapers and magazines.

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