Sanctuary's Financial Troubles Continue
According to the Financial Times in London, shares in Sanctuary fell another 18 per cent after the UK artist management and music publisher issued its third profit warning since June.Sanctuary, which manages artists including Iron Maiden, Axl Rose and Slipknot, said in a trading update that full-year losses would be below the lowest end of market expectations. The music company has suffered from its rapid expansion, particularly in the US, followed by delays to album releases from some artists that are believed to be mostly in its urban record business, run by Matthew Knowles, Beyonce’s father.
Andy Taylor, chairman, said on Wednesday: “I am well aware that Sanctuary has disappointed the market significantly this year and, with hindsight, it is clear we grew too fast…The Board and I are determined to steer a company that has an extremely strong roster of artists back to a profitable trading position and back to sustainable long term growth.”
In June the shares lost almost a third of its value after the group warned that profits would be below expectations for the first half. Then in August, shares fell 40 per cent after Warner Music was understood to have pulled out from talks on a possible takeover of the group and Sanctuary said it expected a further deterioration in results.
Sanctuary on Wednesday gave no further update on any more offers for the company, though the group said in August it remained in discussions with other parties.
Earnings before interest, tax, depreciation and amortisation (ebitda) - and before exceptional items including restructuring costs and provisions - would generate a loss, the group said.
However, Sanctuary said it was on target to achieve £7m to £8m of annual cost saving to be implemented by the year-end and intended to make additional cost savings. Additionally, it continued to be in discussions over the disposal of a number of non-core businesses.
Shares fell from 10p to 8.25p in early morning in London. They are down from a 44p high this year.
Source: Bravewords.com
Related articles:
Financial Crisis at Sanctuary
8 Comments
I don't know if the title of this thread properly describes its contents.
It should be more like Sanctuary continue to work through financial problems, rather than More financial trouble
The fact that share prices fell is typical when buy out proceedings fail and are ended.
Also it sounds prommissing that, "Sanctuary said it was on target to achieve £7m to £8m of annual cost saving to be implemented by the year-end and intended to make additional cost savings. Additionally, it continued to be in discussions over the disposal of a number of non-core businesses."
A 2m to 3m loss accompanied by a 7m to 8m cost reduction could transtale to a 4m to 6m profit, as long as the cuts don't effect the income potential.
I don't know much about economics but a share going from 44p to 8.25p is pretty darn BAD!!!!!!!!!
And how the hell are they gonna save 7-8m a year??? Why didn't they save that much up to now???
I hope they don't go bankrupt...
[right][snapback]119004[/snapback][/right]
It's only bad if you plan on selling some
It could be a good time to buy some shares.
This is just a regular thing stocks go through. If I were an investor in Sanctuary, I wouldn't sell right now....I'd BUY.
Assume you bought 100 shares at 44p/share The total value of your portfolio = 4400p (however that converts into a higher denomination...damn Brits)
Prices then plummeted to 22p/share, meaning your stock has lost half its value, and is now worth only 2200p. If you sell right now, you lose 2200p on your initial investment.
If you buy 100 more shares, though, something neat happens.
Your total investment on 200 shares would then be 4400p + 2200P = 6600p. By averaing out the initial price you paid for the first 100 and the current price for the second 100, you really paid 33p/share (6600/200)
So to make your total investment back, the stock only needs to rise to 33p, instead of all the way up to 44p.
Mind you, this whole strategy won't work if the company has no chance of recovering. However, I've been told a new Maiden album is due out in 12 months or so, which means Sanctuary's market value is going to skyrocket.
(Disclaimer: follow IronDuke's Financial Advice at your own risk.)
Sigh... some people call it gambling, others call it business...
So, who's going to be bold (foolhardy) enough to follow IronDuke's advice and make himself a rich man?
[right][snapback]119041[/snapback][/right]
It's called "speculating." Buying a stock not for the dividends it will pay for performance, but instead for the potential resale value. People wouldn't need to do this is publically traded companies were regulated better; any company on the NYSE, TSX, London Market, etc. isn't legally required to pay dividends if they turn a profit. The majority shareholder(s) (who in 99.9% of cases are company execs) just vote to "reinvest" that quarter's profits into the company, and the other shareholders (the little guy investing for his retirement) doesn't see a dime ever, unless they sell the stock for more than they paid for it.