Publisher stung by debtors

JOHN SHEPHERD

Sterling Publishing yesterday joined the list of companies that have fallen foul of non-paying customers in former Soviet bloc countries.

Roger Harrison, chairman, said Sterling had made an extra pounds 3.4m of provisions relating to debtors in previous years. Sales to eastern Europe were now conditional "on receipt of full repayment from the advertiser".

He added: "Problems arose from the rapid growth in sales to countries in eastern Europe by reference book companies Sterling Publications and Cornhill Publications."

Victor Lewis was removed as managing director of Sterling Publications after a vote of no-confidence by directors. Negotiations on compensation for loss of office are continuing amid unconfirmed reports that he could pocket pounds 750,000.

News of Sterling's trading problems comes less than two weeks after Harrington Kilbride, a rival publisher, revealed more than pounds 2.1m of provisions and related charges for uncollected debts in eastern Europe.

Sterling, best known for publishing Debrett's Peerage, also announced it operated a loss in the year to 31 March. The pounds 2.75m operating loss on sales of pounds 67.8m, almost half of which were in eastern Europe, was not only compounded by the bad debt charge but by a pounds 4.48m provision against intangible assets.

The overall result before tax was a loss of pounds 8.44m, compared with a profit of pounds 7.04m in 1993/94. Despite the losses and boardroom coups this year, investors reacted positively to action being taken. Shares rose 8p to 31p, but are still well shy of the 200p mark of a year ago.