Johnston Press Posts Upbeat Financial Report Despite Drop in Operating Profit

The publishers of The Scotsman last year registered a 44 per cent drop in its operating profit compared to the year before.

Says Johnston Press – in its preliminary financial results, released this morning and covering the 53 weeks up to the second of January – its operating profit in 2009 was £71.8 million, as against a £128.4 million profit the year before.

The figures are reflected in a year-on-year fall in revenue, from £531.9 million in 2008 to £420 million last year.

But like the financial review of counterparts, Trinity Mirror, published last week, the prospects regarding advertising revenue were upbeat.

However, factoring in ‘non-recurring items’ – ie unusual items such as the sale or purchase of assets, and Johnston, until relatively recently, had been acquiring various newspaper titles, plus it recently closed its Edinburgh printing works – the figures reveal an operating loss of £399.7 million in 2008 turning into an operating loss of £90.6 million last year.

The pre-tax figures were profits of £98.8 million and £43.3 million in 2008 and 2009 – before the inclusion of non-recurring items – and losses of £429.3 million and £113.8 million in 2008 and 2009.

In a statement, the company says: “Despite tough conditions, the period since Q2 [April, May, June] 2009 has seen a measure of month-on-month stability returning to markets in which we operate.”

It continued: “Like-for-like advertising fell by 26.5 per cent on 2008. The rate of decline reduced throughout the period with the first quarter down 33.9 per cent and the final quarter down 11.2 per cent.”

Newspaper sales revenue was down 1.8 per cent , described as “above [the] industry average”.

Net debt was down by £55.3 million to £422.1 million at the start of January.

Said John Fry, chief executive: “The year ended with the group in a much stronger position than it began: advertising is more stable; circulation trends have improved; digital revenues are growing; our cost base has reduced significantly and we have renegotiated finance facilities for three years.

“We are therefore well positioned to take advantage of any upturn as it occurs. Since the successful refinancing of our debt announced at the end of August [last year] we have been trading in line with the expectations we had at the time. That being the case we have no immediate plans to raise capital.”

The company confirmed that the Johnston family involvement in the company board of directors is to come to an end at the end of April when – at the annual general meeting – Freddie Johnston retires as a director, after over 50 years on the board. Also stepping down are Peter Cawdron and Martina King.

The results continue: “Stabilising and developing sales of our daily and weekly newspapers continues to be a strategic objective. This has been greatly enhanced by additional focus on consumer research with the Group now having over 6000 active online reader panellists. These consumer panellists provide feedback on newspaper content and offer a valuable insight into the views of our readers.

“We have also invested in specific research projects to support our daily newspapers in Edinburgh and Leeds and instigated new procedures to evaluate the quality of our newspapers including an initiative to canvass the opinion of peer groups, consumers and staff.

“As a result of these initiatives sales performance has improved, with daily newspapers improving from a first half decline of -7.8 per cent to -6.3 per cent in the second half and weekly newspapers from -7.2 per cent in the first half to -4.6 per cent in the second. Encouragingly, over one third of the Group’s weekly titles reported sales declines of less than three per cent in the second half of the year. The recently published ABC [Audit Bureau of Circulation] figures for July to December 2009 show that we have the best performing titles, in terms of circulation, compared with our main competitors.

“Daily newspapers continue to benefit from overnight printing and early delivery to outlets, particularly our titles in Northampton, Kettering and Peterborough. The Peterborough Evening Telegraph reported an increase in sales of 0.6 per cent year-on-year for July to December 2009, one of only two regional daily newspapers in the country to do so. The proportion of daily newspaper copies on subscription or home delivery has also increased from 11.8 per cent in 2008 to 13.1 per cent in 2009.

“Our digital audiences continue to be independently audited by the industry body ABCe. Results for January to June 2009 indicated that our online audience had increased by 11.9 per cent against the immediately preceding period and that our online audience is the largest of all the regional media companies. Second half performance shows an increase of 11.6 per cent.”