Chrysalis Sees Stronger Radio Revenues, Outlook Remains Uncertain

Pre-tax profit swung into the black, at £0.6 million, up from a loss of £5.6 million for the same period last year. Group turnover was up 21% at £113.7 million and EBITDA before the costs of new media was up 31% to £8.2 million. Core operating profits, again pre-new media, rose 17% to £5.0 million.

Radio revenues strengthen Chrysalis’ radio revenue rose by 24% in March and April, following a positive start to 2002 (see Chrysalis Radio Revenues Turn Positive). This revenue rise was underpinned by double-digit audience growth, according to the results. Nevertheless, the company says that the short-term revenue outlook is still uncertain.

Chrysalis Radio operates seven major market stations under two brands, Heart and Galaxy, and is the fourth largest commercial radio group in the UK.

“Market conditions, particularly in the advertising businesses, during the six-month period between September and February, were some of the most challenging our industry has faced in the last decade,” said chief executive Richard Huntingford.

New media Chrysalis sold or closed down all its new media activities at the end of the 2001 financial year (see New Media Write-Offs Cost Chrysalis ), with the exception of Rivals Europe which was subsequently merged with the Internet Division of 365 Corporation (see Chrysalis And 365 Merge Sports Website Businesses), its nearest competitor, in late December 2001.

The group’s sole remaining new media investment is its 40% stake in the new merged company, Rivals Digital Media. The division’s loss before interest and tax of £2.4 million (down from £9.1 million in 2001) therefore reflects 100% of Rivals Europe for a major part of the period, together with the exceptional costs of £0.7 million.

However, the carrying value of all the new media investments, including Rivals, was written down to zero as at the end of the last financial year so there is now no future financial exposure to new media beyond the Group’s 40% investment in Rivals Digital Media.

Outlook The company says that it “would be premature to herald a return to growth for UK advertising revenue as a whole”, although the radio division’s strong revenue growth in March and April of 24% leads Chrysalis chairman Chris Wright to be confident in its organic growth.

Wright does not expected the UK radio advertising industry as a whole to return to positive growth during this year and budgets at Chrysalis reflect this outlook.

At 9.45am today Chrysalis Group shares were up 1½p at 279.