SMG plc Interim Results 2006 CHAIRMAN S STATEMENT

SMG plc Interim Results 2006 CHAIRMAN S STATEMENT Overview The first half of 2006 held mixed fortunes for SMG. Revenue performance varied across the Group while profits were lifted as a result of operational performance, cost savings and a positive movement in pension interest charges. We continue to make excellent progress in developing our strategically important online presence aimed at creating new revenue streams. During the six months the preparatory work on stv.tv, Peopleschampion.com and upgrading the virginradio.co.uk website was completed and all have now been launched. These initiatives will become increasingly important as we move forward. Underlying Group Turnover was marginally down at 88.6m (2005: 90.7m) as sales revenues in broadcast television were lower, partially offset by growth in radio and outdoor. However, reduced costs in the areas of licence fees, staff and pension interest charges saw underlying Pre-Tax Profits rise by 38% to 8.0m (2005: 5.8m). Underlying results exclude the impact of the former UGC Cinemas contract, which generated 4.2m in turnover and 0.9m of operating profit in 2005. Earnings per share (on the same underlying basis) grew by 43% to 2.0p (2005: 1.4p). Since the half year, SMG s Chief Executive, Andrew Flanagan, has left the Group by mutual agreement. The Board is making good progress with regard to appointing a successor and is considering both external and internal candidates with the help of independent executive search consultants. An announcement will be made once this process is complete. In the meantime Donald Emslie has taken over as Acting Chief Executive. Following our statement on 29 th August regarding the approach from UTV plc, the Board of SMG has now confirmed in writing to the Board of UTV that, while it rejects UTV s proposal for a merger of the two businesses under which SMG shareholders would receive only a 52% interest in the merged entity, it would be willing to hold discussions with the Board of UTV on the basis of a proposal which has regard to the relative market values of SMG and UTV, SMG s prospects and the value of SMG s portfolio of assets. No formal response has, as yet, been received from UTV. This statement is made without UTV s consent and there can be no certainty that an offer will be made nor as to the terms on which any offer might be made. We have made significant progress in taking our strong media brands into the online space, which is allowing us to transact directly with our consumers. Each of our consumer-facing brands now has a compelling online presence, boosted by significant, but low cost, promotion and we are confident that this initiative will prove to be an important profit driver for SMG in the coming years. In line with our future strategy, which is firmly based on strong television, radio and online brands, exciting content and close connection with our audiences, we have today announced the decision to dispose of the Group s cinema and outdoor advertising businesses Pearl & Dean and Primesight. Although excellent businesses in themselves, they are no longer core to the Group. As far as advertising is concerned, markets have been mixed in the first six months of 2006 and the hoped-for boost in television airtime revenues from the World Cup failed to materialise. This weakness has continued across the summer months, exacerbated by concerns over inflation, fuel prices and high levels of consumer borrowing. 3

The Group s net pension deficit reduced to 32.4m a 12% reduction from the 2005 year end and a significant improvement on the prior year (December 2005: 36.7m; June 2005: 68.8m). The research that we have initiated among Scottish companies to establish a clearer understanding of mortality rates among occupational pension scheme members in Scotland will be concluded in the coming months and will form the basis for the future funding of the Group s schemes. The Group s steady performance, both financially and strategically, allied to the uncertain climate in advertising markets for the remainder of the year, has prompted the Board to adopt a cautious outlook and maintain the interim dividend at 1.2 pence per share (2005: 1.2 pence). Outlook For the remainder of 2006, we expect our broadcast television business to perform in line with ITV1 as a whole, given that it too is subject to the effects that the Contract Rights Renewal (CRR) process has on ITV1 in an already depressed TV market. In radio, we expect to continue to outperform the market as Virgin Radio s schedule and music proposition build momentum. Cinema, on the other hand, continues to be affected by the broadcast market overall and we anticipate another tough year for Pearl & Dean. In outdoor, Primesight should continue to outperform a growing market. Advertising markets remain extremely difficult and there are no indications at this stage of conditions improving markedly before the end of 2006. Whilst we continue to make good progress in creating opportunities for generating revenues from non-traditional sources, these are unlikely to make any significant profit contribution before 2007 and, in common with other media companies, the Board views the outlook for the remainder of the current year as challenging. Chris Masters Chairman 13 September 2006 4

CHIEF EXECUTIVE S REVIEW Divisional Performance Television revenues, in common with ITV1 as a whole, fell by 7% to 57.9m in the first six months of 2006 (2005: 62.2m), impacted by the negative effects of CRR, a weak television market and the phasing of commissions in SMG Productions. This was partially offset by growth in SMG Solutions, our facilities business. Our share of ITV1 s net advertising revenues (NAR) remained stable at 6.6%. Although reduced regional programme costs, staff costs and licence fees helped to partly offset the revenue fall, the operational gearing of this business resulted in overall television profits falling by 4% to 9.0m (2005: 9.4m). In radio, industry out-performance saw Virgin Radio s revenues grow by 5% to 11.1m (2005: 10.6m). However, we invested in marketing to support the launch of the Christian O Connell Breakfast Show and this, combined with increased costs for our new digital services, resulted in radio profits reducing to 2.0m (2005: 2.5m). The breakfast show, which launched in late January, has performed well and is in line with our expectations for a new show in this important slot. In cinema, although the loss of the UGC contract impacted total revenues, underlying revenues grew by 5% to 8.5m (2005: 8.1m). This, coupled with reduced costs as a result of lower headcount, resulted in a flat underlying profit performance with a loss of 0.3m (2005: 0.3m loss). In our outdoor advertising business we made good progress in converting the increased revenue, brought about by our investment in panel growth in recent years, into profit. Revenues grew by 13% to 11.1m (2005: 9.8m) and, with margins growing to 14.4% (2005: 12.2%), this converted into profit growth of 33% to 1.6m (2005: 1.2m). Connecting With Our Audiences Our audiences are vitally important to the success of our business. We continue to make strenuous efforts to grow these where possible, and enhance the affinity that we enjoy with our viewers and listeners. Across the Group each year, our consumer brands reach approximately 16 million people. In television, 80% of the Scottish viewing public tunes into stv for an average of 11 hours a week. We continue to be the most popular peak-time broadcaster in Scotland with a peak-time share of 29% compared to our nearest rival, BBC1, at 22%, and more than three times the level of our nearest commercial rival C4 (9%). While the ongoing encroachment of multi-channel television will cause audience erosion until digital switchover in 2010, our target is to retain a 29% share of commercial impacts at digital switchover. Virgin Radio reaches on average 2.3 million listeners a week, including 8% of all 20-44-year-old men in the UK a key target group for advertisers. Audiences have shown a steady upward trend in recent times and, following a slight fall in Q2 of 2006, we anticipate continued growth across the remainder of 2006. Additionally, in July, Virgin Radio became available on Freeview, a move which is set to boost the 28% of listeners already enjoying our output via digital platforms. This compares with an industry average of under 13%, further demonstrating the strength of Virgin Radio in the digital arena. 5

Content Content drives audiences and we continue to focus closely on this aspect of our business. In television, the ITV1 network schedule remains popular with the Scottish audience and so far this year we have augmented ITV1 s network output with: Revamped regional news programmes, Scotland Today and North Tonight, which are broadcast each weekday evening in the South and North regions of the stv transmission area respectively. Scotland Today and North Tonight together outperform the BBC s national news at 6 in terms of audience figures. Refreshed Scotsport, the world s longest-running sports programme. More popular, yet targeted, local programming such as Jet Set (a look at RAF pilot training at Lossiemouth) and The Woman Who Ate Scotland (a culinary trip around the transmission area). Content is also key to SMG Productions and the seven episodes of Taggart and four episodes of Rebus produced across 2006 will begin airing this autumn. Additionally, we have produced a second series of Jack Osbourne Adrenaline Junkie for ITV2 who have just commissioned a further 10 part series in the same vein. In radio, The Christian O Connell Breakfast Show, launched in late January, has performed in line with our expectations for a new show in this important slot. With some of the country s most talented music programmers onboard, Virgin Radio s proposition, The music we all love, is proving popular with listeners attracted to a play list that features 15 of the artists responsible for the top 20 selling albums in the first six months of 2006. Capitalising on Content As a content producer we have access to a large back catalogue of recent and historical material and, with the proliferation of content-hungry channels, we have had considerable success in selling content to other broadcasters. In 2006 alone, ITV1 and ITV 3 will run 11 repeats of Taggart and we have sold 46 episodes of the detective series to UK Gold. Later this year we plan to launch ScotlandonTV.tv, the first IPTV service for Scotland, further capitalising on the value and heritage of our television archive which has been built and protected over the last 50 years. Online Activities Digital technology and the increasing range of new distribution platforms offer significant advantages to SMG in that they allow our broadcast businesses to operate without the constraints of the regulated environment. Drawing on the strength of our brands to capitalise on the close relationships we have with our audiences will allow us to transact directly with them, thus providing new revenue streams while at the same time creating the opportunity to target new audiences. Significant progress in our online development was achieved in the first half of 2006: 6

An extensive new stv.tv website was developed during the first half of the year and launched in July, following the successful rebranding of Scottish TV and Grampian TV to the single stv brand in May. This suite of websites now provides Scottish consumers with news, sport, weather, listings, competitions, dating and gaming services, many of which provide direct revenues to SMG, while also offering an attractive new online promotional opportunity for advertisers. These sites are each supported through on-air promotion on stv. We plan to add genealogy, motoring and betting to this portfolio before the end of the year. We are targeting to reach 500,000 unique users and 4.0m page impressions per month on stv.tv by the end of 2007. The acquisition of the price comparison site, peopleschampion.com, was negotiated during the first half of the year and the site launched earlier this month. Peopleschampion.com will be promoted across stv initially then quickly rolled out across all our media and will generate revenues via click-throughs, sales commissions and banner advertising. We anticipate the business quickly reaching profitability since it is targeting to achieve 200,000 unique users and 1.3m page impressions per month by the end of 2007. Virginradio.co.uk has been refreshed and was relaunched earlier this month. The site has generated significant traffic for many years and we plan to capitalise on its popularity through online advertising. It already achieves over 14 million page impressions per month and attracts 405,000 unique UK users and is targeted to achieve 30 million page impressions and 1 million unique users per month by the end of 2007. Virginradio.co.uk also attracts significant email traffic from its 500,000 registered users, half of whom receive emails from Virgin Radio once a week, creating a valuable and up to date database. Pearlanddean.com was launched in February, giving this business its first direct interaction with cinema-goers in its 50+ year history. The site now offers news, reviews, listings for every cinema in the UK and Republic of Ireland, dvd hire, movie memorabilia, film related ringtones and movie ticket sales for all the UK s principal cinema chains. Regulation Whilst recognising our commitments as a public service broadcaster, regulation still has a major influence on the performance of both stv and Virgin Radio. Some 30% of ITV1 s schedule remains as PSB and while it accounts for 20% of the commissioning budget it only returns 11% of the ratings. Over time as we migrate to digital this will be reviewed and we are continuing to work with our regulator, Ofcom, to reduce the burden of regulation as and where appropriate. We believe that we may have the opportunity to access the reduced licence terms for Virgin Radio already announced by Ofcom earlier than May 2008. This could amount to initial annualised savings of around 2m per annum. Furthermore, there are ongoing discussions taking place with regulators in the following key areas: ITV1 children s schedule Contract Rights Renewal Network Arrangements Product placement Regional programming Transmission Production in the nations and regions 7

Additionally, we expect that the proposed increase in external programming commissions by the BBC as part of the WOCC, which we expect to be included in their Charter renewal process, will benefit both our programme production and facilities businesses as the demand for programming from the Nations will increase. Summary SMG has made good progress in the first half of 2006 on many fronts. We have grown pre-tax profits, despite unpredictable advertising markets, made headway in lightening the impact of regulatory costs and taken significant steps in creating new businesses and sustainable revenue streams, most notably in the online environment. We have a clear strategy going forward and, while trading in the remainder of the year appears challenging, the management and staff are committed to building on the progress achieved in the first six months and continuing to drive the business forward. Donald Emslie Acting Chief Executive 13 September 2006 8

Consolidated income statement for the six months ended 30 June 2006 CONTINUING OPERATIONS 6 months 6 months 31 December Note Revenue 2 88.6 94.9 210.0 Net operating expenses before reorganisation costs (76.3) (81.2) (178.8) Reorganisation costs 4 - - (3.5) Net operating expenses (76.3) (81.2) (182.3) Operating profit 2 12.3 13.7 27.7 Gain on disposal of investment 4 - - 2.3 Profit before financing 12.3 13.7 30.0 Interest income 0.1 0.3 0.6 Finance costs 5 (4.4) (7.3) (11.8) Profit before tax 8.0 6.7 18.8 Tax 6 (1.7) (1.5) (4.4) Profit attributable to equity holders 6.3 5.2 14.4 Earnings per ordinary share - basic 8 2.0p 1.7p 4.6p - diluted 8 2.0p 1.7p 4.6p Underlying (excludes exceptional items and former UGC contract contribution) Note Revenue 88.6 90.7 200.7 Operating profit 12.3 12.8 30.7 Profit before tax 14 8.0 5.8 19.5 Earnings per share - basic 2.0p 1.4p 4.8p Consolidated statement of recognised income and expense for the six months ended 30 June 2006 6 months 6 months 31 December Profit for the period 6.3 5.2 14.4 Actuarial gain recognised in the pension schemes 6.1-45.0 Deferred tax charge to equity (1.8) - (14.8) Application of IAS 32 and IAS 39 - - (0.5) Recognition of equity component of CULS - - 2.5 Net profit recognised directly in equity 4.3-32.2 Total recognised income for the period 10.6 5.2 46.6 9

Consolidated balance sheet at 30 June 2006 30 June 30 June 31 December Note ASSETS Non-current assets Goodwill 222.1 222.1 222.1 Property, plant and equipment 37.7 32.3 36.0 Deferred tax asset 14.1 32.3 16.7 273.9 286.7 274.8 Current assets Inventories 42.1 28.5 33.8 Trade and other receivables 65.8 69.0 56.2 Cash and cash equivalents 7.7 13.2 28.0 Short term bank deposit 2.5 5.0 5.0 118.1 115.7 123.0 Total assets 392.0 402.4 397.8 EQUITY Capital and reserves attributable to the Company s equity holders Share capital 10 7.9 7.8 7.8 Share premium 10 59.5 58.8 59.0 Merger reserve 173.4 173.4 173.4 Equity reserve 2.5 2.5 2.5 Other reserve 5.3 5.2 5.3 Hedging reserve 11 - (0.8) (0.5) Retained earnings 11 (120.2) (162.0) (125.1) Total equity 128.4 84.9 122.4 LIABILITIES Non-current liabilities Financial liabilities - Borrowings 139.2 139.0 149.1 - Convertible unsecured loan stock 22.4 22.1 22.2 - Derivative financial liability 9-0.8 0.5 - Other non-current liabilities 0.8 0.9 0.8 Retirement benefit obligation 13 46.0 99.0 53.0 208.4 261.8 225.6 Current Liabilities Trade and other payables 42.2 41.8 36.5 Current tax liabilities 6.6 9.2 10.0 Provisions 1.0-3.3 Dividends payable 5.4 4.7-55.2 55.7 49.8 Total liabilities 263.6 317.5 275.4 Total equity and liabilities 392.0 402.4 397.8 10

Consolidated cash flow statement for the six months ended 30 June 2006 6 months 6 months 31 December Note OPERATING ACTIVITIES Cash generated by operations 12 1.5 4.0 26.7 Income taxes paid (4.4) - - Interest paid (5.2) (3.4) (9.0) Pension deficit funding - (2.8) (2.8) Net cash (used)/ generated by operating activities (8.1) (2.2) 14.9 INVESTING ACTIVITIES Interest received 0.1-0.3 Disposal of investment - - 2.7 Purchase of property, plant and equipment (4.9) (4.4) (11.2) Net cash used by investing activities (4.8) (4.4) (8.2) FINANCING ACTIVITIES Dividends paid - (3.1) (11.6) Net borrowings (repaid)/ drawn (9.9) - 10.1 Release of cash on deposit 2.5 2.5 2.5 Net repayment of loan notes/stock - (0.1) (0.2) Net cash (used in)/ generated by financing activities (7.4) (0.7) 0.8 Movement in cash and bank overdrafts (20.3) (7.3) 7.5 Net cash and bank overdrafts at beginning of period 28.0 20.5 20.5 Net cash and bank overdrafts at end of period 7.7 13.2 28.0 Reconciliation of movement in net debt 6 months 6 months 31 December Opening net debt (139.1) (134.8) (134.8) Movement in cash and bank overdrafts in the period (20.3) (7.3) 7.5 Net cash outflow/ (inflow) from decrease/ (increase) in debt financing 9.9 - (10.1) IFRS (increase)/ decrease in CULS liability (0.2) 0.7 0.6 Movement in loan note liabilities - 0.1 0.2 Net movement in Escrow cash (2.5) (2.5) (2.5) Closing net debt (152.2) (143.8) (139.1) 11

Notes to the interim statement for the six months ended 30 June 2006 1. Basis of preparation This financial information comprises the consolidated balance sheets as of 30 June 2006 and 30 June 2005 and related consolidated interim statements of income and cash flows for the six months then ended (hereinafter referred to as 'financial information'). This financial information has been prepared in accordance with the Listing Rules of the Financial Services Authority. In preparing this financial information management has used the principal accounting policies as set out in the group s annual financial statements for the year ended 31 December 2005. The group has chosen not to fully adopt IAS 34, 'Interim financial statements', in preparing its 2006 interim statements and, therefore, this interim financial information is not in compliance with IFRS. The information for the year ended 31 December 2005 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on the financial statements was unqualified and did not include a statement under section 237(2) or (3) of the Companies Act 1985. 2. Business segments For management purposes the Group is currently organised into four operating divisions Television, Radio, Cinema and Outdoor. These divisions are the basis on which the Group reports its primary segment information. Principal activities are as follows: Television the production and broadcasting of television programmes and associated enterprises. Radio the operation of commercial radio in the UK. Cinema the provision of advertising space within cinema complexes. Outdoor the provision of advertising solutions across various outdoor media. Segment information about these businesses is presented below. Six months ended 30 June 2006 Television Radio Cinema Outdoor Group m m REVENUE External sales 57.9 11.1 8.5 11.1 88.6 PROFIT Segment result 9.0 2.0 (0.3) 1.6 12.3 Financing (4.3) Profit before tax 8.0 Tax (1.7) Profit after tax 6.3 12

2. Business segments (cont d) Six months ended 30 June 2005 Television Radio Cinema Outdoor Group m m REVENUE Underlying external sales 62.2 10.6 8.1 9.8 90.7 Former UGC contract - - 4.2-4.2 External sales 62.2 10.6 12.3 9.8 94.9 PROFIT Underlying segment result 9.4 2.5 (0.3) 1.2 12.8 Former UGC contract - - 0.9-0.9 Segment result 9.4 2.5 0.6 1.2 13.7 Financing (7.0) Profit before tax 6.7 Tax (1.5) Profit after tax 5.2 3. Operations in the interim period In line with the UK advertising market as a whole, the autumn season provides the Group with the highest level of business and largest element of annual revenue, and as a result the full year results are expected to be more heavily weighted towards the second half of 2006. 4. Exceptional items i) Reorganisation costs In December 2005, the Group announced plans to reorganise the Television business in light of reduced Public Service Broadcasting licence requirements and the impact of new technology which will arise from the move of STV to new premises in Pacific Quay, Glasgow. In the same month, the Group committed to a reorganisation of the structure of the Out of Home division, resulting in the creation of separate Outdoor and Cinema divisions. Both decisions culminated in a reduction in headcount within the organisation, resulting in the creation of a provision for exceptional costs of 3.5m. ii) Gain on disposal of investment On 20 October 2005, the Group announced the sale of its 19.9% stake in Heart of Midlothian plc ( Hearts ) to Heart of Midlothian 2005 Limited, a company wholly owned by UAB Ukio Banko Investicine Grupe ( UBIG ) at a consideration of 0.9m, or 35 pence per share. The Group also entered into an agreement for the disposal of its entire holding of convertible loan stock in Hearts to UBIG for a consideration of 1.8m plus accrued interest. The disposal resulted in a net gain of 2.3m to the Group after disposal costs of 0.4m. 5. Finance costs 6 months 6 months Full year Interest expense: Bank borrowings 4.5 4.8 9.3 CULS and loan note interest 0.9 1.0 1.7 5.4 5.8 11.0 Pension finance (credit)/ cost (1.0) 1.5 0.8 Finance costs 4.4 7.3 11.8 13

6. Tax 6 months 6 months Full year The charge for tax is as follows: Tax on profit on ordinary activities excluding exceptional items at 21% (2005: 23%) 1.7 1.5 4.2 Tax charge on exceptional items - - 0.2 1.7 1.5 4.4 The charge is lower than the standard rate of 30% due to adjustments for prior year over provisions and certain tax planning initiatives. 7. Dividends 6 months 6 months Full year Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31 December 2004 of 1.5p - 4.7 4.7 Interim dividend for the year ended 31 December 2005 of 1.2p - - 3.8 Final dividend for the year ended 31 December 2005 of 1.7p 5.4 - - 5.4 4.7 8.5 The proposed interim dividend of 1.2p per share to be paid on 19 January 2007 was approved by the Board on 8 September 2006 and has not been included as a liability as at 30 June 2006. It is proposed to pay the interim dividend to shareholders on the register at 8 December 2006. 8. Earnings per share 6 months 2006 6 months 2005 Full year 2005 EPS including exceptional items: Basic EPS Attributable profit for the financial period (including exceptional items and former UGC contract) 6.3 5.2 14.4 Weighted average number of shares in issue 314.8m 314.3m 314.5m EPS 2.0p 1.7p 4.6p Underlying EPS: Basic EPS Attributable profit for the financial period (including exceptional items and former UGC contract) 6.3 5.2 14.4 Impact of exceptional items and former UGC contract - (0.7) 0.6 Attributable profit for the financial period 6.3 4.5 15.0 Weighted average number of shares in issue 314.8m 314.3m 314.5m Underlying EPS 2.0p 1.4p 4.8p There is no difference between basic and diluted EPS as there is no material impact from dilutive share options. 14

9. Derivative financial liability The derivative financial liability at 30 June 2006 is nil ( 0.8m at 30 June 2005; 0.5m at 31 December 2005) and has arisen as a result of an interest rate swap. The Group uses interest rate swaps to manage its exposure to interest rate movements on its bank borrowings. The notional principal amount of the outstanding interest rate swap contract at 30 June 2006 was 60.0m. At 30 June 2006 the fixed interest rates are 4.94% (fixed until 2007) and floating rates are 4.75% (3 month LIBOR). Any net gain or loss deferred in equity will reverse during the next three years, being the life of the swap. 10. Share capital During the six months to 30 June 2006, the Group has issued new ordinary shares of 2.5p each relating to the exercise of share option awards, which has resulted in a 0.1m increase in share capital and a 0.5m increase in share premium. 11. Statement of changes in reserves Hedging Retained reserve earnings m m At 1 January 2006 (0.5) (125.1) Net profit - 6.3 Dividends - (5.4) Allotment of own shares - (0.3) Actuarial gain - 6.1 Deferred tax - (1.8) Movement in hedging reserve 0.5 - At 30 June 2006 - (120.2) There have been no movements in the merger reserve, equity reserve and other reserve during the six months ended 30 June 2006. 12. Notes to cash flow statement 6 months 6 months Full year Operating profit (before reorganisation costs) 12.3 13.7 31.2 Depreciation and other non-cash items 3.7 3.4 6.6 Operating cash flows before movements in working capital 16.0 17.1 37.8 Increase in inventories (8.3) (3.0) (8.3) (Increase)/ decrease in trade and other receivables (10.6) (8.5) 1.7 Increase/ (decrease) in trade and other payables 6.9 (1.3) (4.0) 4.0 4.3 27.2 Reorganisation costs (2.5) (0.3) (0.5) Cash generated by operations 1.5 4.0 26.7 15

13. Retirement benefit schemes The fair value of the assets in the schemes, the present value of the liabilities in the schemes and the expected rate of return at each balance sheet date was: At 30 June At 30 June At 31 December 2006 2005 2005 Equities 8.0% 140.0 7.6% 137.0 8.0% 146.2 Bonds 4.1-4.9% 111.0 4.1-4.9% 93.9 4.1-4.9% 109.6 Fair value of schemes assets 251.0 230.9 255.8 Present value of defined benefit obligations (297.0) (329.9) (308.8) Deficit in the schemes (46.0) (99.0) (53.0) A related offsetting deferred tax asset of 13.6m is shown under non-current assets. Therefore the net pension scheme deficit amounts to 32.4m at 30 June 2006 ( 68.8m at 30 June 2005; 36.7m at 31 December 2005). 14. Calculation of underlying profit before tax 6 months 6 months Full year Profit before tax 8.0 6.7 18.8 Adjusted for: Former UGC contract contribution - (0.9) (0.5) Reorganisation provision - - 3.5 Gain on disposal of investments - - (2.3) Underlying profit before tax 8.0 5.8 19.5 15. Mailing A copy of this statement is being sent to all shareholders on 4 October 2006 and will be available for inspection by members of the public at the Company's registered office at Pacific Quay, Glasgow, G51 1PQ. 16

Independent auditors review report to SMG plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2006 which comprises the consolidated income statement, consolidated statement of total gains and losses, consolidated balance sheet, consolidated cash flow statement and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out in Note 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2006. PricewaterhouseCoopers LLP Chartered Accountants Glasgow 13 September 2006 17

Notes: (a) The maintenance and integrity of the SMG plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. 18