Australian Provincial Newspapers (APN), which is 43 per cent controlled by Independent Newspapers and the O'Reilly family, may face tax claims of up to Aus$30 million (almost £15 million) from the Australian tax authorities. The possible claim "relates to matters which were the subject of detailed accounting and tax advice at the time", according to APN.
The Australian company said it "believes the ATO (Australian Taxation Office) claim will not be sustained". However, APN will "if necessary, defend its position vigorously, having regard to further legal and tax advice received".
A spokesman for APN told The Irish Times last night that the possible claim arose from a general tax audit by the Australian tax authorities.
The claims are linked to the group's subsidiaries for the years 1991 to 1994, according to APN's interim results, released yesterday. APN said the possible assessments only came to the company's notice recently. The possible assessment of up to Aus$30 million is higher than the Aus$27.96 million operating profit generated in the first six months of 1997. This was 5.8 per cent up on the first half of the previous year.
Sales grew by 9.2 per cent from Aus$144.9 million to Aus$158.3 million. Operating profit margins fell from 18.3 per cent to 17.4 per cent. After a lower interest charge, pre-tax profit grew at the faster pace of 16.8 per cent from Aus$18.18 million to Aus$21.24 million. Reflecting real growth, earnings per share rose from 5.5 cents to 6.2 cents. The interim dividend is being raised by 6 per cent to 3.7 cents per share.
Reviewing the results APN chairman, Mr Liam Healy, who is also chief executive of Independent Newspapers, said the Australian company "performed well despite difficult trading conditions".
Earnings before interest and tax in APN's core regional newspaper division rose by 10 per cent in the first half of this year despite "flat advertising revenues", Mr Healy said.
This was achieved through tight control of costs, the benefits of its capital investment and lower newsprint prices. The specialist publishing division had a "slightly higher" loss. However, there has been a "substantial restructuring" and a turnaround has been achieved. The full year is expected to show a significant improvement.
