Music to the ears as SECC profits rise

19 Dec 2009

by Ian McConnell, Evening Times

The Scottish Exhibition and Conference Centre in Glasgow has turned in a resilient performance in the face of the deep UK recession, achieving a rise in both turnover and trading profits in its last financial year as concert business remained brisk.

Ian Grant, chairman of SECC owner SEC Limited, described the 10% rise in turnover to £18.1m in the year to March 31 as a "fantastic result in the circumstances". He declared the year had "witnessed unprecedented turbulent times across all sectors of our economy".

Chief executive John Sharkey hammered home the point that SEC Ltd, which is about 91% owned by Glasgow City Council with the remaining 9% held by banks and investment companies, had achieved a 47% rise in trading operating profit to £618,676 "during times unparalleled in my lifetime".

Pre-tax profits tumbled from £1.1m to £627,812. Sharkey noted this was the result of a fall in investment income arising from plummeting global stock markets and an increase in costs relating to the £110m "QD2" project, which will have a 13,500-capacity "Arena" as its centrepiece.

He signalled pre-tax profits could, in the current financial year to March 2010, be of a similar order to the £627,812 achieved in the 12 months to March this year.

Grant, meanwhile, emphasised that the Arena construction project, due for completion in 2012, "continues unabated" in spite of the economic woes having been particularly evident in the commercial property sector.

He said this was "testament to our lack of complacency".

Sharkey estimated that the Arena project would, by the time it was completed, leave SEC Ltd with debt of between £15m and £20m on its balance sheet.

And he emphasised his view that, in coming years, the financial performance of SEC Ltd must be judged not against the numbers of the prior financial periods but against the targets set. He noted that the Arena would, the minute it was opened, put a lot of fixed cost on to the profit and loss account in terms of interest payments on debt, the need to pay rates, and in terms of the depreciation charge on the building.

Sharkey also noted SEC Ltd would lose car parking revenue with the Arena project.

He cautioned: "Our financial performance is going to drop before it climbs."

Sharkey noted SEC Ltd, which he emphasised was run as an arm's length business in spite of Glasgow City Council's 91% stake, did not have "any debt at all" on its books at the moment.

However, he voiced his belief that the debt being taken on for the Arena project would be "manageable".

Commenting on trading, Sharkey said: "The music market continues to be a pretty strong place to be in the current climate. It is never wavering at all."

He also cited strength in SEC Ltd's box-office ticket booking business.Outlandish singer Lady Gaga is among the acts due to play at the SECC, with a concert scheduled for March next year. The X Factor Live, a touring spin-off from the popular television talent contest, comes to the SECC in March. Singer Rihanna is also due at the SECC next year.

Highlighting the continuing buoyancy of the concert business, Sharkey said: "The amount of stuff we have got on next year - whether it is your X Factor or Rihanna or your Lady Gaga and everything else - it is still really busy."

Asked if he agreed with the portrayal in some quarters of teenagers as the ultimate recession-proof consumers, in the context of concerts at the SECC, Sharkey noted that the likes of Rihanna, Lady Gaga and X Factor did attract teenagers dependent on their parents' credit cards.

However, he also pointed to a general increase in the popularity of live entertainment, not just on the music front but also in terms of an explosion of comedians playing to large audiences and with the likes of Britain's Got Talent and Dancing on Ice.

Looking forward to the opening of the Arena in this context, Sharkey said: "We should be open to be able to capitalise on what should still be a fairly strong live entertainment market."

He also highlighted the Arena's significance as a venue for the 2014 Commonwealth Games in Glasgow.

The new Arena will host all the gymnastic competitions at the Games. The Armadillo will host to weightlifting, with judo and wrestling in the SECC's Hall 3 and netball in Hall 4.

Sharkey, meanwhile, expressed his satisfaction that SEC Ltd had not been forced into any big lay-off programme during the deep recession, noting its core staff of about 150 was relatively intact and that the number of contractors working for the Clydeside conference and exhibition centre had also been largely maintained. He said the avoidance of significant redundancies was "one of the things that has been good about this year".

He added: "Quite a lot of companies, for obvious reasons, have had to go through staff cuts and fairly heavy redundancy programmes.

"That is one of the things we have managed to get through the year largely avoiding, partly because we have got an Arena coming through the door.

"Our business activity base has held up reasonably well through the current year as well."

Reproduced with the permission of the Herald and Times Group.

  • The SECC's Clyde Auditorium