Write-offs hit Thames: Provisions against property and US investment will wipe out profits for 1992

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The Independent Online
THAMES TV, the former broadcaster that lost its franchise on 1 January, yesterday shocked the stock market with write-offs on London property and a US investment that will wipe out its 1992 profits.

The shares, requoted after Tuesday's suspension, plunged 66p to 155p before recovering to close at 188p, down 33p.

They rose again on takeover hopes after it was confirmed that Pearson is in talks to buy Thorn-EMI's 59 per cent stake.

Thames said it expected to make pounds 45m in pre-tax profits and would take the net pounds 35m- pounds 42m of provisions as an extraordinary item. New accounting rules will shortly outlaw this practice.

Thorn, by contrast, said it would take the hit above the line in its consolidated results.

The provisions are against the decline in value of its long leaseholds on buildings in London and its investment in Reeves Entertainment, a US production company and film library. Thames paid about pounds 65m for Reeves in 1989.

The main property write-downs are on the Euston Road studios and at 149 Tottenham Court Road. Since losing its franchise and failing in its bid for the Channel Five licence, it needs much less space.

Thames said that as a result of the write-downs it would make a bottom-line loss for 1992 and that it would therefore not have sufficient reserves to pay a final dividend.

It also admitted that it had made 'a technical breach' of the Companies Act in paying out an interim dividend last year without filing the necessary interim balance sheet to show it had sufficient distributable reserves to do so.

Derek Hunt, finance director, said: 'It was a cock-up. The advice we're getting is that . . . nobody could have been disadvantaged by what we've done. I'm not proud of it as finance director, but it's a small matter.'

Companies House said yesterday such a breach was minor and not a criminal offence.

Thorn said the Pearson talks were at a preliminary stage and the Thames results would lead to a cut of about pounds 10m in its shareholders' funds for the year to 31 March.

(Photograph omitted)