These are exciting times for Saudi Research and Marketing Group (SRMG), one of the leading media groups in the Kingdom and the Middle East.
Buoyed by a record SR181 million net profit for fiscal year 2005, and a highly successful initial public offering (IPO) earlier this year, SRMG has embarked on a strategic restructuring plan which is set to take the Middle East publishing sector by storm. The IPO saw the flotation of some 24 million SRMG shares at SR46 per share with a total value of SR1.1 billion. It was oversubscribed by 132 percent.
The acquisition by the state-owned General Organization for Social Insurance (GOSI) and the Saudi Pensions Fund of a 5.62 percent stake each in SRMG respectively no doubt strengthened investor confidence, and would undoubtedly help any future foray by the group into the financial and capital markets.
The SRMG strategy was outlined at the group’s first board meeting following the IPO in April. The new board of directors read like a Saudi corporate “Who’s Who” and include: Prince Faisal Bin Salman (chairman), Muhammad Ali Hafiz, Suleiman Saad Al-Humaid, Muhammad ibn Abdullah Al-Kharashi, Abdullah Salim Bahamdan, Muhammad Hussein Al-Amoudi, Abdullah Saleh Kamel, Muhammad Omar Al-Eisai, Abdul Rahman ibn Ibrahim Al-Ruwaitie, Dr. Azzam ibn Muhammad Al-Dakhil and Suleiman Ibrahim Al-Hodaithy (members).
The strategy entails divesting from or selling loss-making ventures and restructuring the flagship entities of the group with an emphasis on improving quality and performance.
SRMG’s restructuring has seen the group last year relocate some of its London-based publications to Dubai, notably its three women’s magazines — Hia, Al-Jamila and Sayidaty. Its English-language flagship, Arab News, based in Jeddah, also launched a UAE edition in Dubai earlier this year. In all, SRMG publishes 15 newspapers and magazines, with a total readership of seven million people around the world.
SRMG is also forging ties with foreign media groups. In June 2006, a delegation led by SRMG Chairman Prince Faisal Bin Salman visited Italy where they met with leading Italian media organizations and discussed cooperation and joint investment projects in publishing, distribution, advertising, printing, specialized publications and training.
SRMG has already signed an agreement with RCS, one of the largest media groups in Italy, to publish its prestigious La Gazzetta dello Sport, the first and oldest sports daily in the world. The group has also established Moutamarat company in a joint venture with Dubai Holding. The new company plans to publish a series of specialized publications, the first — the India-Arab CEO Guide next month. There is also pressure from board members for the group to expand to other countries in the Middle East notably Iran and Turkey and to move into broadcasting and Internet online publishing.
Apart from media and publishing, SRMG is also consolidating its printing business. In April this year, it acquired Hala Printing Company and, more recently, SRMG’s board of directors approved the sale of 30 percent of its wholly-owned affiliate, Al-Madina Printing & Publishing Company, in an IPO targeted for early 2007. Samba Financial Group has been appointed to advise on the part flotation, which is subject to final regulatory and stock exchange approval from the Capital Market Authority.
“We’ll use the returns from the IPO to expand the group’s activities, either through entering into new investment projects or by further strengthening the group,” explained Chairman Prince Faisal Bin Salman while making the IPO announcement.
Al-Madina is one of the largest printing companies in the Middle East, with state-of-the-art presses in Riyadh, Jeddah and Dammam. Apart from printing SRMG and other media publications, it also prints corporate brochures and, more importantly, school textbooks under a contract with the Ministry of Education.
The growth and buoyancy of SRMG was further highlighted by the company’s first-quarter 2006 net profits which increased by 120 percent to SR61.1 million from SR27.8 million for the same period in 2005.
The company also reported a 15 percent growth in sales in the same period in 2006. Last year, SRMG posted a record net profit of SR181.4 million — up by 285 percent, the largest in the company’s history. Revenues increased from SR949 million in 2004 to SR1.06 billion in 2005. SRMG is capitalized at SR800 million and at end-2005 had total assets of SR1.4 billion. The company employs over 1,080 people in total.
Shares are listed on the Tadawul stock exchange and on Nov. 18 its share price was SR71.50 — well above the SR46 per share set at the IPO. Its current market capitalization is estimated at SR5.38 billion. The ascendancy of SRMG on the Saudi corporate ladder is reflected in its 49th ranking in the Top 100 list.
Another encouraging sign is that revenues from advertising topped SR850 million in 2005, which according to Dr. Azzam Al-Dakhil, executive vice president of SRMG and managing director of Saudi Research & Publishing Company (SRPC), accounted for a staggering 32 percent of the total advertising revenues of the print media in the Arab world. The group is projecting an upward trend for profit and performance over the next few years.
According to Chairman Prince Faisal Bin Salman, the main strategy for the print media side of the business is technological upgrading and development and adding value through innovative new products and services in line with changes in lifestyles, all of which would contribute to enhancing the performance of the group and adding value to shareholders.