Johnston Press write-down prompts £144m pre-tax loss

Regional newspaper publisher Johnston Press reported a pre-tax loss of £143.8m for the 2011 financial year today as it wrote down the value of its publishing assets.

On an underlying basis, operating profit fell 10.3 per cent to £64.6m on turnover down 6.1 per cent to £373.8m.

Johnston Press spent £38.5m on debt interest payments over the year with debt at the end of the year standing at £351.7m. Interest costs over the year were said to be 9.9 per cent, with £35m paid back.

Johnston announced today that it has secured a new lending facility with its creditors amounting to £393m for the next three years. The group has committed repay a further £70m over the next three years. The refinancing deal has cost Johnston £11.5m in fees.

Advertising revenues fell 9 year on year but slowed from 10.1 per cent in the first half to 7.7 per cent in the second half. Digital advertising revenues grew by just 0.7 per cent to £18.4m – recovering from 0.5 per cent decline in the first six months to growth of 8.6 per cent in the second.

Newspaper sales 'remained resilient'with revenues down 1.1 per cent year on year.

Commenting on the company's outlook, chief executive Ashley Highfield, who took charge of the company in January, said: 'Although the prospects for the economy remain downbeat in the short term, I believe we can return Johnston Press to being a growth business through the twin track approach of re-launching and revitalising our papers while simultaneously growing our websites, and taking full advantage of the opportunities created by technology and the changing media demands of our users to deliver innovative propositions."

Like-for-like operating costs - excluding the impact of 'significant'newsprint price increases - fell by £24.5m and the number of staff fell to 5,245 in 2011, a reduction of 11.3 per cent on 2010.

Highfield added: 'We aim to put digital at the heart of Johnston Press. Newspapers will remain our primary revenue stream for many years to come, but the web and apps, accessed from PCs, tablets and smartphones, are becoming as important, if not more so, as an access method for an increasing percentage of our audience."

He continued: 'We have embarked on an ambitious plan to re-launch all our titles as far more integrated digital and print hybrid offerings, refreshed and revitalised in print, with new web, mobile and iPad offerings," he continued.

'In some cases the internet will become the hourly and daily pulse of a community and we will move to printing the physical paper just once a week - with overall audience uplift and a considerable increase in profitability for those titles.

'In all communities that we serve we aim to have a web audience at least as big as our newspaper circulation and to use print to actively cross-promote the web and vice versa, thus remaining relevant in a digital age, while not alienating our heartland audience."

Highfield also promised further 'radical change'in the future.

Elsewhere in today's report, the company said the decline in revenues in 2011 was 'almost entirely due to print advertising revenues", with other categories remaining 'relatively stable in spite of the economic conditions within its markets".

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