Trading Statement

21 Sep 2005 07:03

Sanctuary Group PLC21 September 2005 21st September 2005 The Sanctuary Group plc PRE-CLOSE TRADING UPDATE Trading update In its announcement on 23rd August 2005 when the Board of The Sanctuary Groupplc ("Sanctuary", the "Group" or the "Company") announced new bankingarrangements, an update on the offer period and a trading update, it stated thatit would update the market as soon as appropriate after reviewing expectationsfor the key trading months of August and September. The Group is now in aposition to provide commentary to the market on its expectations for the fullyear. Due to a number of operational and trading problems, to which the market hasalready been alerted in the Company's Interim Results (announced on 28th June)and in its announcement on 23rd August, and latterly due to continuingconstraints placed on management by the corporate discussions announced to themarket on 3rd June, it is likely that the Group will generate a loss at EBITDAlevel before exceptional items such as restructuring costs and provisions. Thisis below the lowest end of current market expectations. The Group has suffered from recent negative commentary as a result of poortrading in 2005 and this has had an adverse impact in particular in the Recordsdivision. The Board continues to enjoy the support of its bankers. Action to date At the Interim Results on 28th June 2005 the Board indicated that it hadtargeted an initial £7m to £8m of annual cost savings to be implemented by theyear-end. This is on target to be achieved. In addition, the Board stated that it would be looking at disposals of a numberof non-core businesses. The Company has completed the sale of its BookPublishing division to Music Sales. Discussions continue on a number of other businesses and the Board will updatethe market as and when these discussions reach a conclusion. Review of business To restore the Group to profitability and growth, the Board is finalising afundamental review of the business. This review addresses, inter alia, worldwidecost structures, the performance of revenue generating assets, premises andaccounting policies. Without compromising our high level of service and commitment to our artists andcustomers, the Company intends to make further additional and substantialannualised costs savings that will be implemented by the financial year-end. TheCompany will make formal presentations to shareholders, analysts and othermarket commentators as soon as practicable thereafter. Update on offer period There is at present no further update to the position set out in ourannouncement on 23rd August. Executive Chairman, Andy Taylor, commented: "I am well aware that Sanctuary has disappointed the market significantly thisyear and, with hindsight, it is clear we grew too fast. I am totally focused on repairing the short-term damage to what is fundamentallya robust business. We will be restructuring our business and supporting ourartists throughout. The Board and I are determined to steer a company that hasan extremely strong roster of artists back to a profitable trading position andback to sustainable long term growth." Ends For further information, please contact: Andy Taylor, Executive Chairman 0207 602 6351Mike Miller, Finance Director 0207 602 6351 Philip RangerDirector, Corporate & Investor Relations The Sanctuary Group plc 07768 534641/ 020 7300 1323 Paul Downes Merlin 07900 244888/ 020 7653 6620 Eddy LevitenHead of Corporate Communications The Sanctuary Group 020 7300 6542 This information is provided by RNS The company news service from the London Stock Exchange