Operating profit at regional press giant Johnston Press fell 8.7 per cent year on year to £30.4m for the first six months of 2012 while pre-tax profits almost halved to just over £8m.
But interim results released this morning show a £30m pay-off from News International earlier this year helped slash the publisher’s debt burden.
Johnston accepted the payment earlier this in return for terminating a long-term print contract between the pair.
The one-off payment, received in early July, reduced Johnston’s net debt to £332.1m, according to results covering the 26 weeks to 30 June. Last year the figure stood at £361.7m.
If the non-recurring NI payment is excluded from the results, operating profit during the period was actually down 8.7 per cent to £30.4m and pre-tax profit was almost halved – falling 48.6 per cent to £8.06m.
Operating profit including non-recurring items (including the print deal) was up 16 per cent from £32.6m to £37.8m, while group revenue before non-recurring items fell 8.2 per cent year on year form £191.8m to £176.1m.
Johnston said that taking into account the £30m payment from NI there was a net non-recurring gain of £7.4m in the half year – the extra revenue was offset by a £13.3m write-down following the closure of print facilities in Peterborough and £10.8m in restructuring costs (including redundancy costs).
Other key figures from today’s report include:
- Costs were cut by £12.8m for the period, or 8.1 per cent year on year, with the company confident of achieving full-year cost savings target of £25m.
- Print advertising was down 12. 5 per cent from £113.5m to £97.4m
- Newspaper sales revenue down 3.1 per cent from £48.2m to £46.7m
- Digital revenue up 8.4 per cent to £10.3m.
Commenting on the results, chief executive Ashley Highfield: “The first half has been a period of tremendous activity and we have made significant progress. Johnston Press is going through a strategic transformation.
‘As we continue to develop our digital portfolio, refresh our print offering, reduce costs, and use our substantial operating cash flow to bring down our debt, we are increasingly confident about the success of the strategy and the benefits that it will deliver.”
In the first six months of the year the paper has relaunced 23 of its titles. The remainder of its 250-strong portfolio are scheduled for relaunch before the end of the year.
As part of its cost reduction plan Johnston has also converted five of its daily newspapers into weeklies.
Highfield has said he plans for Johnson Press to have annual turnover of £400m by 2020 with 50 per cent or revenue coming from digital.
This means he needs to achieve a 10-fold increase increase in digital revenue over the next eight years and reverse overall revenue decline.