Companies: CHS   

Chrysalis put in a creditable performance in the six months to February, moving back into the black with profits of £0.6m (£5.6m loss). The music, radio, books and TV group increased sales to £110.2m (£91.0m). Operating profits hit £3.3m (£4.7m loss). The group's radio interests, which encompass the seven Galaxy and Heart radio stations, chipped in profits of £3.2m on flat sales of £22.7m. Both its music publishing arm and TV production outfit also posted gains. In terms of improvement, its books arm was perhaps the best division. Here, Chrysalis hoisted sales from £7.5m to £14.4m and pre-tax profits from £1m to £1.3m. Chairman Chris Wright says Chrysalis is well placed to take advantage of the Government's decision to no longer restrict the ownership of media companies in the UK. Despite Wright's bullishness, there are still many reasons to be wary of Chrysalis. The first is its valuation. It is forecast to make profits of £4.4m this year and produce earnings of 2.37p. For 2003, it is expected to make £11.7m and earnings of 5.01p. This means it is trading at over 117 times expected 2002 earnings, and almost 56 times 2003 earnings. There is also a questionmark over net assets and borrowings. During the period under review, net assets fell from £30.3m to £12.8m. Net borrowings increased from £29.6m to £31.2m. Meanwhile, interest payments hit £2.5m (£1.2m). This payment, a £2.4m loss on its new media division and the £0.8m it spent on its digital radio interests are the main reasons why the pre-tax line does not look as strong as it could. At £466.5m, Chrysalis looks fully valued.

Chrysalis Group	LSE	£41.8m	62.25p	2.75p
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