The NEC Group is targeting an upsurge in trade over the next 12 months as the music business fights back from a worldwide slump in major artists touring.
Bosses of the Solihull-based group, which supports almost 29,000 jobs, said they are confident of an upturn in fortunes in the live music sector following a lacklustre year.
The group, which also owns catering business Amadeus and national ticketing agency The Ticket Factory, saw its annual deficit widen to £20.2 million from £7.7 million last year after interest on historic loans was taken into account.
But NEC bosses said the financial performance – which delivered an operating profit of £16.9 million in the year to March 31 2012 – was marginally ahead of expectations.
Star acts which performed during the period included Rhianna, Status Quo and Neil Diamond but NEC Chief Operating Officer John Hornby forecast a bright future for the group, including the LG Arena, currently the seventh most popular live music venue in the world according to a recent US-based survey.
He said: “The real decline year on year was in the Arena and Tickets Factory business and that was on the back of the music market which was really depressed in the whole of the Western World in 2011.
“But we are very positive about the long-term prospects for the music market. Live music goes in cycles and sometimes you get blips. Consumer confidence across a lot of the Western World was fragile in 2011 and promoters were cautious. 2012 will be a much better year than 2011 for the music market.”
Mr Hornby said forthcoming concerts by the likes of George Michael, Lionel Ritchie and Justin Bieber were likely to bolster the NEC Group’s financial fortunes. “We are now seeing a much stronger flow across all genres, particularly music.”
The group’s exhibition business, based at The NEC in Solihull, individually delivered a profit of £27.5 million, but the figure was £10.1 million (27 per cent) down on the previous year.
Mr Hornby said the vast majority of the decline in operating profits from £29.4 million in the year to March 31 2011 to £16.9 million was due to the exhibition fall-off. “The NEC Group has been hit by the regular cycle of trade exhibitions. We will see better headline numbers this year.”
The exhibition business traded ahead of budget expectations but the Arenas and Ticket Factory business delivered an operating profit of £3.7 million, down £1.5 million (29 per cent) on the previous year, reflecting the depressed state of the touring music market in the UK during 2011 and early 2012.
Mr Hornby told the Post that the NEC aimed to clear an outstanding debt to Birmingham City Council for loans taken out over a 25-year period in the late 1980s to help fund construction of the NIA and ICC. The NEC paid out £29.8 million according to the latest accounts, with just over £24 million of that sum related to the city council debt.
“The plan is that because the city council holds all of that, we do a bit of tidying up in the next 12 months and cancel that debt. The debt on that is held by the city council – it’s a circular transaction, credited as income to the city council.
“If you take the city council and the NEC as a whole, there is a net nil cost there.”
In an NEC Group statement, Mr Hornby added: “Overall, we delivered a financial result that was marginally ahead of our budget expectations. We are pleased with that result, given the extent of the macro-economic headwinds we and our customers faced during the year.
“The exhibition business delivered a strong result, taking into account the regular exhibition pattern which meant that a number of large trade shows were not scheduled to take place in the year.”
Chief executive Paul Thandi said: “I am pleased that the efforts of everyone across our businesses resulted in us achieving a financial result for the 2011/12 year that was ahead of our budget expectations.”