Earlier financial accounts to be restated.

Sanctuary Group plc today (April 28) admitted it would restate previous financial accounts but said that expectations for its underlying business remained on track.

Underlying current trading remains "in line with the expectations for the current financial year," the independent music firm said in a statement issued ahead of its annual general meeting in London.

After a rocky financial period, the company completed an equity fundraising on March 20. The financial lifeline reduced the company's indebtedness to roughly £32 million ($58 million), compared with about £163 million ($296 million) previously, Sanctuary confirmed today.

The company also gave a snapshot on performance for its core divisions. "Both the recorded product and merchandising divisions continue to perform well and the directors remain confident that the group's more robust financial position has restored the ability of these divisions to attract new acts," the company added. The artist management division, however, was behind expectations.

Stock in Sanctuary Group was down 7.89% to 52.5 pence at the close of trading.

The company also said it was making progress on the disposal of its studios, publishing and "certain other businesses," but would continue to incur operating costs on them until completion.

The board warned that total non-recurring expenses could amount to between £10 million ($18.22) and £15 million ($27 million) in the current financial year.

"We are still tidying up the business," a spokesman said. The ongoing restructuring of the business is expected to continue through the course of this financial year.

Sanctuary also that operating profit in its interim results to 31 March 2005 was overstated by £3.6 million ($6.55 million) resulting in an operating loss for the period of £1.9 million ($3.46 million) compared to the operating profit of £1.7 million ($3.09 million) as previously stated.

Shareholders today approved all nine resolutions put forward at the AGM, including the appointments of new auditors KPMG and non-executive chairman Bob Ayling.

Interim results for the six months ended March 31, 2006 will be unveiled in July.