Chairman’s Report 30th September 1992
1991/92 was a difficult year of the local radio throughout the United Kingdom: the recession deepened and advertising revenues were increasingly more difficult to gain in an ever competitive market. Against this background, DevonAir’s revenue declined by £95,000 (8.8%) to £988,000.
Despite the falling revenues, the wisdom of the amalgamation of the DevonAir and Plymouth Sound radio stations became apparent with a reduction in operating costs of in excess of £260,000: from 67 percent of gross revenue to 47 percent. The result was a fall in trading loss before interest and exceptional items, from £141,000 in 1990/91 to £27,000 in the current year. At the recession not deepened and the revenues not been eroded, the company would have seen a return to profitability during the year: this is now expected to take place in the year to September 1993.
The profit and loss account reveals a payment of some £48,000 largely in respect of compensation for loss of office to Mr DF Smith and includes legal costs of approximately £11,000. With this exceptional costs and the net finance charges, a pre-tax loss of some £78,000 is recorded as compared with £215,000 in the previous year. Through consortium and group relief arrangements the company has recovered some £75,000 of cash flow by surrendering its tax losses to Capital Radio PLC and GWR Group PLC.
I believe that the amalgamation of the two radio stations has already revealed benefits in this, the company’s first full year of combined training with Plymouth Sound. We are currently offering a much enhanced service to the people of the franchise area and are confident that the licence retention submissions in 1993 will be supported by a level of programme service which is unparalleled in the company’s history.
I must report, with great concern, that the company is facing a fundamental change in the cost of transmitting its broadcast signal. This company, along with other small radio stations, was launched with the support of cross subsidies on the cost of transmission: these were especially important with DevonAir Radio given the topography of the broadcast area which dictates the need for five transmitters. Such subsidies are now being removed with resultant sevenfold increase in costs from some £19,000 per annum to £126,000.
I should like to record my thanks to the staff for their dedication and professionalism in this, a year of change, which has been made doubly difficult by the deepening recession. However, already 1992/93 is revealing more tangible evidence of significant improvements in all aspects of the company’s operations.
K.E. Holmes