Stock in Sanctuary Group sank 30% to 63.4p after the ailing British independent music firm reported on Thursday (Nov. 23) "disappointing" results for its recorded product division and admitted that it
Stock in Sanctuary Group sank 30% to 63.4p after the ailing British independent music firm reported on Thursday (Nov. 23) "disappointing" results for its recorded product division and admitted that it was looking to sell parts of its business, including the Rough Trade label.
In a trading update issued to the London Stock Exchange, Sanctuary said it was considering a disposal of its stake in Rough Trade Records, claiming the label was likely to record an unexpected loss before tax of roughly £2.8 million ($5.3 million) for the year to Sept. 30, all of which will be absorbed by Sanctuary.
Sanctuary currently owns a 49% stake in Geoff Travis' Rough Trade, which is the label home to the Strokes, Pulp frontman Jarvis Cocker, Sufjan Stevens and Arcade Fire, among others. Talks on a sale have been held with "a number of interested parties," Sanctuary said.
Moreover, the company says it has received various approaches on a number of its businesses. "Once Sanctuary has announced its results for 2006," Sanctuary said, "it expects to be in a position to consider these strategic proposals."
The London-based group gave warning that it may have to book provisions of £15 million ($28 million) to £18 million ($34 million), which may lead to a restatement of the 2005 results or be reported in the 2006 results.
On a positive note, Sanctuary said it expects "an improved performance" for the year to Sept. 30, 2007, with "all of its major divisions making a positive net contribution in the period."
Chief executive Frank Presland remained upbeat on the company's future, but said it was disappointing that Sanctuary's recovery was being "obscured by further historic accounting issues".
In the statement, he added, "We are seeing the first signs of success from our efforts to put the business on a proper footing and I am confident that we will continue to make progress in the current financial year."
After a string of profit warnings over the past two years, Sanctuary launched a £110 million ($205 million) rescue deal earlier in 2006. Former British Airways CEO Bob Ayling was hired to the role as non-executive chairman in April, pledging to ensure proper standards of corporate governance, financial transparency and strive for appropriate levels of performance.
The following month, group founder and CEO Andy Taylor was dismissed after an investigation into the company's 2005 financial statement found accounting mistakes had been made. He was replaced at the helm with Presland, CEO of Twenty-First Artist Management. Taylor's fellow Sanctuary co-founder Rod Smallwood split earlier this month.