Archant has reported £2.2m losses for the 2012 financial year and is facing a possible £13m bill from the taxman, shareholders were told today.
Turnover in the year to 31 December 2012 was down 2.7 per cent to £131.4m and operating profits fell 39.5 per cent to £6.3m, according to preliminary figures published by the privately-owned company this morning.
Operating costs rose 0.4 per cent to £125.1m as a result of increased costs of printing contracts, “investment in business development” and an increase in sales staff.
In a statement issued this morning the publisher said: “Following a recent tax case involving another company, provision has been made in the 2012 accounts for a possible payment to HMRC in respect of corporation tax and interest of up to £13m dating back almost 10 years.
“There is likely to be further litigation before the position becomes clear. If the company is ultimately required to meet these liabilities, it will do so within its existing banking arrangements.”
The news comes four months after a tax tribunal ruled over a plan by regional press group Iliffe News and Media to conceal bumper profits at its local newspaper subsidiary companies in the years 2003-2005.
Internal memos revealed the scheme was partly driven by a desire to reduce journalists’ wage demands by concealing from them the extent of the profits made by the titles they worked for.
Iliffe is now facing the prospect of a claim from the Government over tax deductions claimed on payments totalling £51.4m.
Archant said that despite “pressures on trading results” the business remained cash generative with cash flow from operating activities of £7.6m, compared with £13.1m in 2011.
Net debt at the end of the year was reduced from £17.4m in 2011 to £15.7m, while revenue from online activities increased to £6.4m and was up 15 per cent in the second half of 2012.
The underlying post-tax loss – after one-off costs and the impact of an impairment charge of £4.8m relating to the write down of the carrying value of acquired newspaper titles – stood at a loss of £2.2m, compare with a £1.5m loss in 2011.
Chairman Richard Jewson said: “Archant has had a challenging year, but has remained profitable and cash generative, whilst making real progress in strengthening its traditional products and in generating increased revenues from digital media.
“These show through in a satisfactory start to the current year.”
Archant’s television venture Mustard went live online earlier this year.