British music and media company Chrysalis Group plc today (Nov. 14) said it was upbeat on its prospects despite registering a severe decline in annual pretax profit.
Ongoing pressures on advertising revenue and weaker-than-expected sales at its recorded music division contributed to a 72% shortfall in full-year operating profit to £2.7 million ($4.7 million), down from £9.5 million ($16.5 million) in the corresponding period last year.
Group revenue during the Aug. 31 period was £133.6 million ($233 million) vs £136.7 million ($238 million) last time. The sales figure excluded its discontinuing Chrysalis Mobile and Chrysalis Books divisions. The former was shuttered during the year; Chrysalis’ loss-making books publishing arm was spun-off recently in a management buyout.
In a statement issued this morning to the London Stock Exchange, the company said total revenue at its core Chrysalis Radio unit fell by 7% to £62.9 million ($109 million) after being struck by a slump in radio advertising market, particularly in the second half. Radio earnings before interest, taxes and amortization was £7.5 million ($13 million), against £14 million ($14 million) last time. Chrysalis Radio’s assets include the AC Heart and dance Galaxy stations.
The Chrysalis Music division — which comprises music publishing and U.K. wholesale distribution, plus the Echo record label — achieved EBITA of £3.5 million ($6.1 million) vs £4.6 million ($8 million) last time; Echo was subsequently restructured. Revenues at the division rose 4.1% to £73.5 million ($128 million).
“2005 was a difficult year for the Chrysalis Group, reflecting advertising conditions in the U.K. and continuing problems with our books division,” group CEO Richard Huntingford said in a statement.
On an upbeat note, Huntingford said the company had achieved a “good start” to its current financial year, with its radio division generating a 4% rise in revenue during the September to October period. At the same time, David Gray’s U.K. chart topping album “Life in Slow Motion” had underpinned a “strong start” for Chrysalis Music, which represents the singer-songwriter for publishing. “Motion” is certified platinum (300,000 units) in Britain, according to the Official U.K. Charts Co.
Huntingford says he is confident that “the current financial year will be a successful year for the group” which, going forward, will focus on its radio, music publishing and distribution activities.