Chrysalis made to modify accounts

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The Independent Online
THE FINANCIAL Reporting Review Panel has forced Chrysalis, the media group, to modify its accounts after criticising the company's accounting treatment of its investments in associated companies.

The panel said that the treatment of Chrysalis's investment in Metro Radio was not in accordance with standard accounting practice.

The company's directors have undertaken to make appropriate adjustments, including reclassification of the revaluation reserve, and to provide a full explanation in the company's 1993 accounts.

The panel said Chrysalis had revalued its investment in Metro Radio, contrary to Statement of Standard Accounting Practice 1, by an amount equal to goodwill previously written off.

The point is that goodwill of an associate must be treated similarly to goodwill of subsidiaries in consolidated accounts. Goodwill that has been previously written off cannot be written back.

Chrysalis itself said it still maintained that the aggregate value of the investment shown was justified. However, the company recognised that the total should have been attained by attributing fair values to the intangible assets of Metro Radio, its radio licences, when Chrysalis acquired its interest.

The adjustment to the accounts which the directors have implemented will have no effect on the reported total net assets of the group, the panel said.

In the light of these undertakings, the panel said it has decided to take no further action in respect of the accounts for the year ended 31 August 1992.

Chrysalis is best known for making Gazzetta Italiana, an Italian football programme for Channel Four. Chrysalis completed the sale of its record company to EMI last year.

In September 1993 Pony Canyon, the music division of the Japanese media group Fujisankei, agreed to buy a quarter of Chrysalis's new record subsidiary, the Echo label.