June 17 (Bloomberg) -- Shares of Sanctuary Group Plc, the music company that said earlier this month it was in talks with potential buyers, plunged as much as 30 percent after the company said fiscal first-half earnings were lower than a year earlier.

The shares fell as much as 12.75 pence, the biggest decline in more than 10 years, to 30.25 pence and traded for 30.5 pence at 9:49 a.m. in London. Earnings before interest, tax, depreciation and amortization in the first half ended March 31 fell 40 percent from a year earlier because of fewer record releases, Sanctuary said in a statement today, citing preliminary figures.

Sanctuary has bought companies including Associated International Management, which represents Martin Kemp and Nadia Sawalha, Elton John's Twenty-First Artists Ltd. and World Online Merchandising, which sells products for Elton John and Simon & Garfunkel. This pursuit of international growth led to extra costs in the first half, the London-based company said today.

``The company has also been very acquisitive over the past couple of years, and these acquisitions are probably not living up to expectations,'' said Paul Richards, a Numis Securities analyst who rates the stock ``hold.'' Sanctuary was also hit by ``a slippage in record releases like EMI was earlier this year.''

Shares of EMI Group Plc fell the most in three years in February when the company said delays to Coldplay's ``X&Y'' and Gorillaz's ``Demon Days'' albums would cut its earnings for the year ended March 31. Coldplay's ``X&Y'' was released this month and topped the U.S. and U.K. album charts.

`Substantially Less'

Sanctuary said today it has ``nothing to add at this stage'' on potential offers. It said on June 3 it was talking to possible buyers about a sale or a ``further business opportunity.''

Earnings for the full year are expected to be ``substantially less'' than last year, Sanctuary said. The second half should be ``stronger'' than the first half as in previous years, though the drop in first-half profit and ``more challenging trading conditions'' will cause the full-year decline, the company said.

Numis Securities plans to almost halve its full-year earnings estimates for Sanctuary, Richards said.

Sanctuary's Ebitda for the first half of fiscal 2004 was 10.6 million pounds and net income was 2.9 million pounds. The company earns more in the second-half of the year because more records are released and artists tour during the northern summer.

Sanctuary, which also manages Iron Maiden and Beyonce, will report first-half results on June 28.

To contact the reporter on this story: Peter Gotting in London at pgotting@bloomberg.net.

Last Updated: June 17, 2005 04:56 EDT