Asia spoils Branson's Mega fun

THE chunk of Sir Richard Branson's international entertainment empire that includes Virgin Megastores and Virgin cinemas stayed in the red last year. Its accounts show that in the year to last January, Virgin Entertainment Asia (VEA) ran up a £4.4m deficit, after a £6.5m loss the previous year.

Operating losses at Virgin Entertainment Europe increased to £1.3m from £1.18m previously. Pre-tax losses were £3.3m, after a £21.9m deficit the previous year.

Virgin director Will Whitehorn said: 'These accounts are so out of date.' No wonder - Virgin is renowned for filing its accounts late.

Results were more encouraging elsewhere. Virgin Entertainment Group chief executive Simon Wright said the 169 Virgin Megastores in the UK and Ireland made £7m operating profits last year, compared to breakeven previously. 'It's going great guns,' he said.

Wright said strong sales of DVDs such as Spiderman and the Minority Report were driving income, but admitted 'the music market is a bit sluggish'.

Virgin Entertainment Asia includes 22 Megastores in a joint venture with Japanese retailer Marui. It 'continues to face a difficult market,' Virgin said.

When the accounts were filed, the business included five cinema complexes which were 'extremely successful'. This is Virgin-speak for a £969,000 profit. The shops lost £1.2m.

VEA's cash burn was £5.6m, on top of £14m previously. It borrowed £3.2m net from banks and £1.1m from elsewhere in the Virgin group. VEA has £39m net debt. Interest bills rose £2m to £3.99m.

Wright said Virgin plans to float 10% of the Japanese cinema side, valuing its stake at up to £45m. Venture capitalists antfactory Japan own 37% of the cinema business.