Stock in Sanctuary Group has taken a massive hit after the independent British music firm today (June 17) issued a profit warning. The company's share price fell 30% to 30p in morning trading on the L
Stock in Sanctuary Group has taken a massive hit after the independent British music firm today (June 17) issued a profit warning. The company's share price fell 30% to 30p in morning trading on the London Stock Exchange after Sanctuary told investors to expect a significant shortfall in interim earnings.
The company forecast a 40% year-on-year shortfall in earnings before interest tax depreciation and amortisation. It says the situation has arisen as a result of its bullish expansion activities and the slippage of unspecified record releases.
In recent months, Sanctuary has acquired Elton John's London-based management firm Twenty-First Artists for £16 million ($30.1 million) and integrated various businesses into its 360-degree model.
As a result of these circumstances, the group says it is re-assessing its full-year expectations. In its statement to the Stock exchange, Sanctuary said: "It is now clear that the [above] factors and...more challenging trading conditions in the second half will have a negative impact on the group's full-year figures.
The fall has some similarities to the drop in EMI Group Plc share values in February, which came immediately after the company warned that delays in the release of Coldplay's "X&Y" and Gorillaz's "Demon Days" would contribute to a fall in full-year earnings.
Concurrently, Sanctuary says it is undertaking an operational review focusing on ways to improve cash generation and profitability, and reduce debt.
The company confirmed June 3 that it had entered discussions with third parties on a buyout. Analysts tell Billboard.biz that cash generation remains a key sticking-point for any potential bids for the company. With regards to any such offers, Sanctuary said today that it has "nothing further to add at this stage," and further announcements would be made when relevant.
The group's financial results for the six months to March 31 2005 will be unveiled on June 28.