UK post-production giant VTR plc has suffered a significant drop in its year on year operating profits.
The group - which includes Soho post facilities VTR, Blue and The Machine Room - saw figures fall by£2.2m to£1m for the year ending August 31st 2003 but saw pre-tax profits rise from a loss of£1.3m to a profit of£0.5m. All in all the group's operating margin fell from 15% to 4.5%.
Managing director John Banks, in a statement to the shareholders, blamed the media recession for the slump. "This has been a year when, in spite of very strong performances from some of the subsidiaries, elements of the Group were finally affected by the recession in the media industry in general and advertising in particular," he said. "Group turnover increased compared to last year, principally due to the additional contribution from our new profit centres, but the additional costs of operating these and the reduced margins achieved in our traditional areas combined adversely to affect profitability."
Group turnover increased to£23,990,743 from£22,343,326. New "profit centres" - Knightsbridge based facility K POST and D-Cinema - helped to keep these turnover figures up but that merely points to a slight stagnation in the underlying business areas of VTR, Blue and The Machine Room, with VTR in particular having a tough time.
"VTR Ltd had a very disappointing year largely due to the well-publicised recession in the economy and subsequent slowdown in the advertising market," said Banks, who, significantly also suggested that "price competition" within the sector had an affect on profits.
The 2002 losses were due to the write of an ?exceptional item' worth£4m.
VTR Group, which also includes animation company The Hive and IT specialists Clipstream, employs more nearly 300 people across all of it's UK businesses.