Johnston Press writes down print, media assets as revamp starts to bear fruit
Wednesday, August 28, 2013
The major overhaul at Johnston Press has resulted in the group's first increase in like-for-like operating profits in seven years.
Johnston’s results were complicated by the impact of the wholesale restructuring at the regional media group, which has relaunched 227 titles and switched five daily newspapers to weekly frequency, alongside a big push into digital and mobile channels.
Like-for-like sales in the six months to the end of June fell 9.8% to £144.3m, but like-for-like operating profit increased by 4.3% to £28.6m.
However, Johnston also filed a massive £194.5m non-cash impairment charge against the value of its titles and wrote down the value of its print assets by £57.9m, resulting in a bottom line loss of £248.7m.
Advertising revenues fell by 13.6%, although chief executive Ashley Highfield described the advertising market as "increasingly stable" and said the rate of decline had "narrowed to 6.3% during June and July 2013". Circulation revenues for its revamped portfolio also showed "early signs of improvement", and the overall rate of circulation decline has reduced to just 0.7%.
Digital revenues jumped 13.3%, and Johnston has grown its web and mobile reach to 11.8m unique users a month. The firm does not disclose digital's contribution to operating profit.
Costs were reduced by £24.3m, ahead of plan, and the group has managed to get its pension deficit down to under £100m.
Separately, it received a £10m exceptional gain due to News International’s cancellation of its contract printing arrangement with Johnston, after NI took previously outsourced print back in-house following the closure of the News of the World.
This went towards reducing net debt, which was down £55.3m to £306.4m. Johnston has received a total of £40m in compensation for the cancellation of the NI deal.
The absence of the NI work reduced turnover by £7.1m and operating profits by £3m.
Johnston’s contract printing sales for external clients were £6.1m during the period, out of total contract print revenues of £27m. It has secured a new £600,000 contract with an unnamed customer as part of its push to replace the lost NI volume, "but at lower margins" than it enjoyed with NI.
A spokeswoman told PrintWeek that Johnston was "monitoring" News International's recently-announced hybrid print project, but had no plans at present to make a similar move itself.
The group’s share price rose by 0.5p to 16.5p in early trading (52-week high 19p, low 5.2p).