Virgin loses £44m on the high street

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The retailing arm of Sir Richard Branson's Virgin empire has recorded a £44m loss in its most recent financial statement, newly lodged at Companies' House.

Other recent documents from the Virgin empire also reveal it has paid a senior executive nearly £1.2m. That is believed to have been Sir Richard.

VOP Holdings, the parent company for Virgin Megastores as well as other high street outlets, made a £44m pre-tax loss in the year to 31 January 2001, after a £126m loss the year before.

Its accounts, filed at the end of November, show it has £176m of debts and a £97m hole in its balance sheet and is being kept afloat only through support from its ultimate parent company, Sir Richard's Virgin Group Investments, registered in the British Virgin Isles.

VOP found itself in a parlous financial situation despite a debt restructuring when Sir Richard poured £116m in cash into the group in two separate deals. These generated a £75m exceptional profit for the company.

VOP hit trouble when it took control of the Our Price chain, a joint venture with WH Smith. The losses at Our Price became a strain to Sir Richard, and he sold the chain in October for just £2 to the Australian group Brazin.

The VOP finance director, Steve Peckham, said the company was now "hitting its numbers" and hoped it would be able to make a profit this year. But its losses are indicative of the massive cash drain afflicting the Virgin empire.

The group's mobile phone business, Virgin Mobile, lost £106m in the year to the end of last December, the most recent figures available, and the saving and unit trust business, Virgin Direct, lost £13.2m in the same period. Both companies are joint ventures, with Virgin only owning half the shares.

In addition, V2, Sir Richard's music business with such artists as Moby and the Stereophonics, is also believed to be haemorrhaging losses. Last week V2's managing director, Jeremy Pearce, resigned and Sir Richard is believed to be taking a more hands-on approach to turn the business around.

V2's most recent accounts, for the year to June 2000, show losses of £41m in that period, having dropped £48m the year before. Its balance sheet shows a deficit on shareholder funds of £107m.

Though Virgin Atlantic, now 50 per cent owned by Singapore Airlines, is profitable, its trading since 11 September has deteriorated by the reluctance of many people to fly on holiday or business.

Virgin Rail, half-owned by Stagecoach, is being affected by the problems at Railtrack, though recent half-year figures show profits rising. The Virgin empire has a complex web of holding companies, operating subsidiaries and dormant businesses. More than 200 entities are registered at Companies' House, and many of these companies have poor reporting records, because they filed their accounts late.

One of the key companies operating in the empire is Virgin Management, which runs Sir Richard's head office in Holland Park, west London.

It has only just filed accounts for the year to 31 January 2000, a breach of Companies' House rules, which show a loss of £4.24m, down from the £27.5m loss it made the previous year.

The group has a deficit on shareholder funds of £40.4m but analysts wonder that it was still able to pay one unnamed director that near-£1.2m

Its directors during the period included Sir Richard, and Richard Bowker, who has just become head of the Strategic Rail Authority.

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