SPMG was forced to write down the value of Sport Newspapers, which it bought for £50 million in December 2007, by around one third due, according to reports.
“The directors consider these write-downs to be an appropriate reflection of the current trading position of Sport Newspapers’ business and the unprecedented circumstances in which businesses have been operating in 2008,” the company said.
“By taking this decisive action, in relation to the carrying value of group intangible assets, the directors consider that the group’s balance sheet reflects a sustainable level of intangible assets,” it added.
In a trading update today, SPMG also said the business had operated through to October “broadly in line with management expectations”.
The group insists that its underlying financial performance is solid, despite the results – SPMG recorded an underlying pre-tax profit of £6 million on revenues of £29.4 million.
The sport publisher claim the write-downs had “a distorting effect” on the financial statements.
SPMG’s results show that most of the group’s revenue comes from copy sales of its newspaper, while its mobile and internet activities continue to generate a significant proportion of revenue.
However, the group was forced to admit that the weekday sales of the Daily Sport have fallen by around 30% since the time of acquisition to 75,000 copies.
SPMG said: “A newspaper is a product that is ‘baked fresh’ each day and, although there have been setbacks on the way, the board is encouraged that the recipe we now have is beginning to gain acceptance and credibility in the market.”
“The newspaper has a very particular niche and we are confident that we can develop the product and grow the circulation with the team that are now in place,” the company added.
SPMG also confirmed that it was in the company’s interests to move its financial year-end from July 31 to December 31.
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