Heavy losses have been reported in the latest set of accounts of Associated Newspapers Ireland, which publishes the tabloid Ireland on Sunday newspaper.
Despite an intensive marketing campaign and major circulation gains, the paper has posted pre-tax losses of €13 million in the accounts covering the period from the end of September 2002 to the end of September 2003.
This compared to pre-tax losses of €14.6 million in its last set of accounts which covered the period from September 5th, 2001 to September 29th, 2002.
The latest accounts show that at the end of September 2003 Associated Newspapers Ireland had retained losses of €27.6 million, compared to €14.6 million in the previous period. The statements are prepared on a going-concern basis because of support from its British parent, Associated Newspapers Ltd.
The paper, which has provided stiff competition for titles owned by Independent News & Media (IN&M), reported a turnover in the latest accounts of €10 million, up from €3.5 million in the previous period.
The accounts show that the cost of sales were €12 million and administrative expenses were €11 million. The heavy costs left the company with an operating loss of €13 million.
The company now employs 65 staff, up from 48 in the previous period and its payroll costs have risen from €2.7 million to €4.6 million. Total directors emoluments, distributed among four individuals, amounted to €236,891, up from €219,865.
Associated Newspapers Ireland is ultimately owned by Daily Mail and General Trust plc based in London.
This company publishes the Daily Mail and Mail on Sunday among a range of titles. The ultimate owner of Daily Mail and General Trust plc is Viscount Rothermere, estimated to be the 23rd richest man in Britain.
Ireland on Sunday was purchased by Associated in 2001 for €11.9 million from Scottish Radio Holdings. Since then the paper's circulation has grown enormously and in the last Audit Bureau of Circulation (ABC) figures in December 2003 it stood at 160,493.
These circulation gains were driven by the editor-in-chief of the paper, Mr Martin Clarke, who championed the use of free CDs as a promotional tactic. While this helped boost circulation on certain weeks, advertisers were sceptical about its long-term benefits.
Mr Clarke has since left the paper to take on a senior role at the Mail on Sunday.
His replacement is Mr Ted Verity, a former editor at the Mail on Sunday, who has spend time working in Dublin over recent years. Several journalists have also left the paper in the last two years.
Mr Clarke was also responsible for aggressive campaigns against Associated's main rival in Ireland, IN&M, including its executive chairman Sir Anthony O'Reilly.
Mr Clarke accused IN&M of inflating its sales figures with so-called "bulk sales" (reduced price sales). As part of this campaign last year, Ireland on Sunday published advertisements in the national press mocking Sir Anthony and his various newspapers.
Despite this intense rivalry and the strong circulation growth, Associated Newspapers Ireland has found it difficult to make Ireland on Sunday profitable.
However, its senior executives have constantly emphasised that it hopes the paper can become commercially successful in the long term.
