Johnston Press reveals Express contract alongside 2014 accounts
Wednesday, March 25, 2015
Johnston Press has won a “multi-million pound” five-year contract to print Express Newspapers’ four major print titles at its Dinnington site in Sheffield.
The regional newspaper publisher will print the Daily Express, Daily Star, Sunday Express and Daily Star Sunday from July, when production of the four titles for the north of England will move from Express Group’s Broughton plant in Sheffield.
Johnston Press announced the contract alongside its annual results this morning (25 March), igniting speculation over the future of the Broughton print plant, which was previously expected to benefit from Express Group owner Richard Desmond’s £100m investment in new presses.
Meanwhile, Trinity Mirror recently confirmed that it was “in the early stages of evaluating certain of Northern & Shell’s assets” in response to media speculation linking it with a bid for the Daily Express.
This followed reports in The Times and Private Eye, the latter of which claimed Desmond was "thought to be close to agreeing a deal to sell off all four national titles".
Ashley Highfield, chief executive of Johnston Press, said he was not surprised that the Express Newspapers contract had gone out to tender and that Johnston Press had won it in a “fair fight”.
“We had a very good year for contract printing in 2014 with [underlying] contract print revenues up 22.3% and this contract will help move those numbers up even further,” said Highfield.
Highfield confirmed that the Express contract “pretty much fills up the spare print capacity we had from exiting the News International contract” the early cancellation of which, in 2012, resulted in a £30m settlement for Johnston Press. “We did very well by exiting [the NI contract],” he added.
Elsewhere, Johnston Press’s 2014 accounts showed the publisher is continuing to move towards its goal of returning to top line ad revenue growth, which Highfield reiterated should be achieved within 2015.
“We hope that by the end of the year, growth in digital ad revenue will outweigh the decline in print,” he said. “It’s not going to be a walk in the park and it will require a lot of hard execution, but it’s encouraging to see employment has already tipped, with revenue growth of 3.4% last year.
“Motors was within £100,000 of tipping last year as well, with digital growth of 88% balancing print decline of 5.8%.”
In total, digital advertising revenues were up 20.7%, from £24.1m to £29.1m, while print advertising revenues declined 8.2%, from £150.4m to £138.1m.
Underlying newspaper sales revenue fell 4.8% from £81.8m to £77.9m after volume declines of circa 11.5% were partially offset by cover price rises. Highfield said the publisher had factored in price rises of up to 7% again for the current year.
Turnover for the 53 weeks to 3 January 2015 was £268.8m, down 4% on the £280m turnover achieved in the 52 week period to 28 December 2013 (excluding the final £10m instalment of the NI settlement last year).
Operating profit for the year was £10.7m (2013 loss: £245.7m), while the pre-tax loss narrowed to £23.9m (2013: £291.4m), largely thanks to the significant reduction in exceptional costs year-on-year.
Meanwhile, net debt was further reduced from £302m to £184.6m and total finance costs were reduced from £45.8m to £34.6m, following a successful refinance in June 2014.