Radio groups remain upbeat: leading ILR stations predict better times ahead for the commercial sector.(Radio)

GCap says it is drawing a line under an "awful" first trading year, as it joins its two main rivals in predicting better times ahead for the commercial radio sector.

Amid what has been an extremely difficult advertising sector, the three main players GCap, Chrysalis and Emap, all accompanied the announcement of financial results last week with optimism that the market is beginning to look more encouraging for all concerned.

GCap posted preliminary results for the 12 months to March 31 2006, with turnover down by more than 30m [pounds sterling] and pre-tax profit almost halving to 22.2m [pounds sterling]. More worryingly, statutory results including 42.8m [pounds sterling] of amortisation and 27.8m [pounds sterling] of restructuring costs relating to the Capital and GWR merger left the group with a yearly loss of 47.9m [pounds sterling].

GCap Media operations director Steve Orchard is making no excuses, but is looking to the future. "We're drawing a line, which represents the end of an awful year for GCap," he says. "We merged two companies against the backdrop of an enormous downturn in the radio advertising market.

"When you're doing a reshuffle on this scale, it's inevitable you'll lose focus on listeners and on advertisers, but now it's time to move on. We've got the management structure sorted and our brands are so much stronger than anyone else in commercial radio."

However, despite Orchard's optimism, he admits the period since March 31 has not been great, with a World Cup-related boost to the advertising market failing to be as good as had been expected. Performance is also being dragged down by Capital Radio, as group revenues for April and May are down 4% on last year, but only down by 1% excluding the flagship London station.

Orchard says the situation at Capital is due to an ongoing decline in audience over the past five years, coupled with the decision to cut back on daytime advertising slots. However, he adds, "We think our listeners like this policy and the investment in the station will be rewarded in the 07/08 financial year."