GCap Media announce new strategy

The headlines: Capital Radio set for a make-over, Beat 106 and The Storm to be re-branded as Xfm, Capital Gold and Capital Life to combine and nine analogue stations to be sold.

The stations facing the axe are former Marcher Group stations in the Northwest and North Wales: MFM, Buzz 97.1, Coast FM and Champion FM. Stations in the Southwest which do not fit with the key geographic regions are Gemini FM, Plymouth Sound, Orchard FM, Lantern FM and South Hams Radio.

The re-launch of Capital FM will take place on January 12th 2006 when the station will switch to a new advertising policy, under which the amount of ad minutes will be halved, and there will never be more than two commercials in a row. A new music position, on-air branding and schedule will also take place.

The Xfm national network is set to get bigger ? GCap are rebranding Beat 106 in Scotland and The Storm (digital) as Xfm, plus launching Xfm Manchester after a licence win earlier this year. Plans have been announced to combine Capital Gold analogue stations with the national digital station Life, and rebrand both as one national station.

Development will take place of national digital stations Planet Rock and Core, and nine analogue stations in the South West, North West and North Wales will be sold.

Financially, the group revenue is down 11 per cent, group operating profit down 27 per cent. Here are the full details:

Underlying Pro Forma Financial Results

? Group revenue down 11% at ?111.6m (2004: ?125.3m)
? Group operating profit down 27% at ?14.7m (2004:?20.1m)
? Group profit before taxation of ?12.4m (2004:?17.3m)
? Net debt of ?68.5m with interest cover of 9x
? Underlying earnings per share of 4.5p (2004: 6.6p)

Statutory Results

? Group revenue up 75% at ?102.1m (March 2005: ?58.5m) following merger
? Loss before tax ?10.1m (March 2005: profit ?6.5m) after amortisation of ?19.5m (March 2005: Nil) and merger restructuring costs of ?3.5m

(March 2005: Nil)
? Basic loss per share of 3.5p (March 2005: earnings per share 4.9p)
? Net cash inflow from operating activities up 27% at ?4.2m (March 2005: ?3.3m)
? Interim dividend of 3.1p per share (2004: 6p per share).

Outlook

? Strategic review complete
? Bold plans to rebuild Capital FM audience numbers
? Investment strategy
? Divestment plan
? Proposed special dividends from disposal of assets

Talking about the results, GCap Media Chief Executive, Ralph Bernard commented: “These results are extremely disappointing and I believe in no way reflect the full potential of the portfolio of assets owned by the Group. We are taking firm management action to improve them. We have completed a root and branch review of our businesses and we have developed a clear plan of action which will revitalise GCap, particularly Capital Radio, and return it to growth. We have the spread of assets and depth of management to be the winner in the commercial market.”