Johnston Press in £300m loss amid writedowns

Johnston Press CEO Ashley Highfield

Shares of Johnston Press — owner of The Scotsman, the i newspaper and the Yorkshire Post — fell another 10% after it reported a statutory loss before tax of £300 million for the year to December 31 amid a writedown of publishing titles and print assets.

Johnston Press has lost roughly 90% of its stock market value since 2014 — and now has a market capilisation of only £21 million.

Excluding impairment charges “and other adjusting items” Johnston Press — which owns more than 200 local newspapers — reported an adjusted operating profit of £42.1 million.

The group said it has interest costs of £20 million and pension contributions of £10.3 million and that “further downward pressure on revenues could reduce operating cashflow below the level required to service interest and pension commitments.”

Cash at bank was £16.1 million.

Johnston Press CEO Ashley Highfield said statutory total revenues were down 8% to £222.7 million and total statutory advertising revenue — combined print and digital — declined 17.7% to £122.6 million.

Highfield said statutory print advertising was down 18.6% to £95.7 million.

However, statutory newspaper sales revenue grew 11% to £79.9 million, helped by the i from the date of acquisition, while adjusted digital revenues (excluding classified) improved 1.1%.

“Net debt, excluding bond mark-to-market, was £203.9 million, compared to £179.4 million at the end of 2015, largely reflecting the cost of acquiring the i,” said Highfield.

The CEO said Johnston and its advisors were “currently exploring the strategic options available to the group in relation to its £220 million 8.625% senior secured notes which become due on 1 June 2019.”

Johnston Press said the acquisition of the i newspaper last April had been “transformational” for the business, significantly strengthening the Johnston Press portfolio.

It said the i increased its newspaper sales volumes by 5% year-on-year with Q4 circulation revenues up 20% compared to the equivalent quarter in 2015.

In its first nine months, the i’s new website went from zero to achieving an average of 1.4 million unique users a month during the fourth quarter and surpassing 1.9 million unique users in November.

Highfield added: “Despite an industry wide backdrop of significant downward pressure on revenues … circulation figures of key titles are improving, the i has bucked the trend of declining national newspaper sales and our progressive editorial and sales models are starting to transform our regional businesses.

“While we can expect to see continued pressure on traditional print revenue streams, we have seen digital return to growth in Q1 2017, with better margin products, and will see growth from our investment in the i from both the newspaper and website.

“Further, we will start to see the benefits of our restructured sales teams and product roll out.

“Amid ever growing concerns from advertisers, both big and small, about the placement of their brand alongside unacceptable content, and increasing uncertainty around fake news, we believe our strategic focus on providing readers and advertisers alike with news platforms that serve as a trusted source of truth and insight, put together by teams of professional reporters who know their communities, is becoming an ever more important USP.

“By combining digital innovation with real news value, we will continue to see further growth in monetisable audiences.”