AKQA, which was founded in 1995 by Ajaz Ahmed, attributed much of the loss to the cost of its merger with the US advertising agency Citron Haligman Bedecarre, now renamed AKQA Inc.
However, according to a report by the newsletter Marketing Services Financial Intelligence, AKQA was already struggling and suffered a pre-tax loss of £301,000 before the costs of the merger.
Over the past few years, the agency has been unwilling to share its financials with the press and has been slow to register its 2001 figures with the Registrar of Companies. In fact, the Registrar of Companies threatened AKQA with legal action over the delay.
David Elgin, AKQA's financial director, said: "In 2001, as a result of our merger and expansion in the US and Singapore, AKQA took an exceptional one-off charge related to administrative expenditure, which resulted in the company's first loss in eight years.
"Due to the merger in 2001, we needed to complete the filing of our US acccounts before we filed in the UK.
"The outlook for 2004 is strong and we will file our 2003 accounts in the New Year. All of AKQA's offices made a good profit for the year to date 2003, which is stronger that 2002 and shows a good ongoing trend."
In 2002, the company reported a post-tax profit of £206,000, a major drop from the profit of £2 million reported in 2000.