Loan burden hits ailing Express

ALMOST two-thirds of the profits declared by Richard Desmond's Express Newspapers were eaten up by interest payments on a loan, new accounts reveal.

Just a week ago, accounts for the newspaper group showed that despite tumbling sales of the Daily Express and Sunday Express, the company made pre-tax profits of £12.6m in 2001. Express Newspapers' own operations showed a surplus of only £3.29m. Most of the group's income came from joint ventures, which include West Ferry Printers, owned jointly with the Telegraph Group.

But now a set of accounts from a further company within Desmond's publishing empire shows that the Express's immediate parent clocked up losses of £7.7m - virtually all of it accounted for by interest on a £100m loan.

The £7.7m cost of the loan represents just over 60% of the £12.6m profits reported by the Express group. Desmond bought Express Newspapers for £125m from United Business Media, headed by Labour peer Lord Hollick, in November 2000.

The latest figures are for Northern & Shell Media Holdings, a company set up immediately before the Express takeover. The company owns all the shares in the Express group. It is is owned by Northern & Shell Network, which in turn is owned by Desmond's master company, RCD1. It is only when accounts for RCD1 - due by the end of October - are filed that a fuller picture of Desmond's finances will emerge.

His businesses include OK! magazine, The Fantasy Channel and magazines including Asian Babes and Big Ones. The N&S Media Holdings accounts indicate that the company was set up simply to take on a £100m loan and act as a vehicle for ownership of the Express.

The £7.7m loss represents interest on the loan. The money was loaned to N&S Media Holdings by N&S Network. But the ultimate provider of the £97.5m that Desmond borrowed to help finance the takeover of the Express group in 2000 was Germany's Commerzbank.