Market tunes in to Capital Radio

CAPITAL Radio pleased the market with a 30 per cent increase in earnings during the year to September and news that advertising revenue in the final quarter was well ahead of the previous year.

The shares closed 14p higher at 223p as investors also warmed to a 10 per cent rise in the full-year dividend.

Richard Eyre, managing director, said: 'It has been an important year for Capital, with these figures representing the first fruits of the new management team.'

Capital's franchise to broadcast two stations, on FM and AM, comes up for renewal next summer. With a 17.3 per cent share of the London radio market on FM, five points better than Radio 4, the nearest rival, and 8.5 per cent on AM, it is thought to be a near racing certainty that Capital will stay on air.

Birmingham-based Midlands Radio, acquired in April for pounds 18m, contributed pounds 1.1m to operating profits of pounds 9.9m. After a nearly tripled contribution from associates (including a stake in Metro Radio in Newcastle) and lower interest receivable, pre-tax profits emerged at pounds 11.7m. That compared with pounds 11.0m in the year to September 1992, which benefited from a one-off pounds 2.2m boost from the disposal of the Duke of York's theatre. The underlying growth in profits from pounds 8.8m was 33 per cent, on sales 26 per cent higher at pounds 40.6m (pounds 32.3m).

Earnings per share were 11.3p, compared with 10.9p (or 8.7p excluding the theatre sale). A final dividend of 4p (3.5p) made a full year total of 5.75p (5.25p).

Mr Eyre said that there had been unprecedented co-operation between radio stations during the year to promote radio as an advertising medium. A survey predicted a 3.4 per cent share of the display advertising market by 1997 compared with 2.8 per cent now.

Following the Midlands acquisition cash balances at the year end were pounds 7.5m (pounds 19.5m).