Sport Media Group – owner of the Sunday and Daily Sport – returned to profit in the six months to the end of June, the company reported today.
After being bailed out by its former owner David Sullivan in April last year, interim results released this morning reveal that the publisher made an underlying pre-tax profit of £330,000 over the period.
The return to profit comes after the company made underlying pre-tax loss of £374,000 in the first half of last year.
However, SMG said the Royal Bank of Scotland had agreed to defer its monthly loan repayment of £50,000 for a period of six months to provide its necessary working capital.
SMG was also able to post and underlying operating profit of £838,000 in the six months to the end of June, comparing favourably with an underlying operating loss of £612,000 in the first half of last year. However, this came from revenue which fell to £9.6m in the six months to June.
‘Management’s focus on stabilising the core businesses saw the disposal of two loss-making subsidiaries, one during the period reported and one post-period end,’said Martin Robinson, chairman of the group.
This resulted in each of the group’s trading entities returning to profit and becoming cash generative, Robinson said, however despite generating £574,000 in cash during the first six months of the year the company had been forced to defer its bank payments as a result of “working capital pressure” stemming from debt servicing and loan repayments.
‘To date, the second half of the year has continued to see a solid performance from the newspapers, with some circulation gains although there is continued pressure on advertising revenues,’he added.
‘The digital division is optimistic that recent initiatives will produce improvements in its core trading subsidiary over the remainder of the year. Securing a consistent source of exclusive content remains a priority for the group, and as such, planning for the development of our own studio facilities continues, within the context of our financing facilities.
‘Achieving and maintaining these performance improvements are critical to ensure that the repayment holiday provided by our bankers is sufficient to manage our working capital requirements and enable the group to resume reducing its significant debt position.”
The company suffered a number of setbacks last year, withdrawing its titles from Audit Bureau of Circulations measurement in March as sales plummeted.
Sullivan then stepped in with Gold Group making a £1.7m loan to SMG and taking a ten per cent stake in the business after it breached its banking covenants.
Sullivan had previously sold the newspaper to SMG in September 2007 for around £40m.