Newspaper publisher Johnston Press has announced a three-year deal with its lenders to finance its £351m debt until September 2015.
The publication of the group’s annual results was postponed from 3 April until today pending finalisation of discussions with the banks.
However the lending facility has now been agreed and was announced alongside today’s results, which saw the group post a statutory loss of nearly £144m due to a write-down in the value of its assets.
The group’s underlying net operating profit in 2011 was £28.4m, down just over £2m or 7pc from the previous year.
Chief executive Ashley Highfield said: “We are very pleased to announce the completion of our refinancing which provides the Group with lending facilities to take it through to September 2015.
“This is due in no small measure to our efforts over the last three years to significantly reduce our net debt by over £125m, restructure our cost base, taking out over £90m of costs, and introduce strong revenue initiatives for the future.”
The deal will commit JP to repaying at least £70m a year in debt over the next three years.
Today’s figures showed that while the company had reduced its net debt from £387.m to £351.7m, its also spent £38.5m on debt interest payments.
Commenting on the future outlook Ashley said that newspapers would remain the company’s primary revenue stream “for many years to come.”
“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,” he said.
Since Ashley’s arrival as CEO in November, the group has embarked on a major editorial shake-up which has seen the departure of some its most senior editors.
It has also announced that five of its daily titles will move to weekly publication next month as part of a relaunch of nearly all 170 of its paid-for newspaper titles.
In his chief executive’s statement, Ashley said it was clear the group must undertake “further radical change in its operations to be appropriately structured for the future.”
He said the relaunch programme would aim to be self-financing, with the prospect of cover-price increases for many of the new-look titles.
Ashley also confirmed plans for a series of new digital products based around niche areas of specific interest – dubbed the ‘Mumsnet’ vision by some commentators.
He said: “We have built a huge repository of valuable content from all our newspapers, held in a single database, all indexed with excellent metadata. The opportunity is therefore there to aggregate and publish this content around specific interest areas, creating new websites, and we will be launching the first of these in 2012.”
In his statement Ashley revealed that the number of staff employed by JP had fallen during the year by 668 to stand at 5,245 – a reduction in headcount of 11.3pc.
He said further efficiency measures were now under way, saying: “We aim to keep local editorial and local sales staff in the heart of the community, but increasingly centralise everything else.”
The company has recently announced plans to move its entire contact centre operation across England to Sheffield as well as closing a number of smaller newspaper offices over the past year.
But Ashley said the group’s internal reorganisation was not simply about costs, but about developing what he called a “simpler organisation more appropriate for its future needs.”
The statutory loss of £143.8m posted by the group today is due to a series of write-downs on so-called ‘non recurring items.’
These include the closure of the group’s printing presses in Leeds and the Isle of Man, which together resulted in a depreciation charge of £5.2m, and redundancy payments due to restructuring of £4.3m.
Overall revenues in 2011 fell from £398.1m in 2010 to £378.8m last year – a drop of just over 6pc.
However although print advertising revenues declined by 9.7pc over the course of the year, the group said revenues from newspaper sales, digital advertising and contract printing were all either unchanged or growing.
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It seems Mr Highfield has invested in a magic wand – and hence his optimism to ‘introduce strong revenue initiatives for the future’. One wonders why he hasn’t introduced them already unless they simply add up to wishful thinking.
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How did JP manage to rack up £387m of debt?
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You’ve not really been paying attention have you, Cherrywonder?
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Former chief exec tried to buy the whole of Ireland and Scotland or something, Cherry.
It was a big expansion plan that went very badly wrong.
JP bought too many titles for far too much money at just the wrong time.
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They racked up the debt through an expansion programme. They made £400m or so in profits over a period, and spent even more than that buying up other papers. Unfortunately it wasn’t the profits which they invested. Those were paid out in dividends and bonuses to shareholders and directors. Instead they borrowed the cash to expand. When the crash came in 2007-8 they were jiggered. The company had been worth over £1b with shares at £4.70. Shares fell to 7p and company value to £50m. They still owe £350m or so, so the debt is seven times more than JP is worth. The chief exec who oversaw all this, Tim Bowdler, left with a nice package worth £1,088,000 of which £516,000 was a performance-related bonus. Unbelievable. Ano who pays for this fiasco? The poor sods getting made redundant as the vicious circle cuts and falling circulations continues.
Peter Lazenby
NUJ FoC
Yorkshire Evening Post (Johnston Press).
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Megalomania, Cherrywonder, megalomania. Buying a host of newspapers across Ireland just before the bubble burst, instead of consolidating its assets and building a better future for its papers, its staff and readers. My press portfolio is bigger than yours, nah-nah. Now look where they are; and those responsible are sunning themselves with fat pay-offs while the rest of us worry for our jobs.
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Can I book Pete lazenby to speak on my behalf when they try to make meredundant?
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It seems to me the same people who are laying into JP for ‘not investing in newspapers’ are laying into them for, erm, investing in newspapers.
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Looking into your rear view mirror is all well and good – difficult to tell what the future holds. Splurging 60% of your operating profit on finance charges is far from ideal….the blended interest rate of 9.9% when compared against a 0.5% base rate gives you an idea of the risk the money lenders believe they are taking….
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paper boy; not just investing in paper. Investing in the WRONG and heavily over-priced papers. They are a millstone around the neck of dozens of excellent and profitable papers that have now been stripped to the bone staff-wise and fighting for survival. Anyone working on them is paying the price for the greed and stupidity of the past. Or maybe you have a cushy little number somewhere?
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Most instructive, ta.
The old leveraged expansion caper, eh?
I believe several UK publishing companies made the same catastrophic error, which pretty much explains why we’re all up sh*t creek now as they struggle to pay crazy amounts interest on insane amounts of debt.
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It almost makes you cry doesn’t it? It was such a short time ago that JP was absolutely loaded. Every employee I know said at the time we bought those Irish titles that it was a massive mistake. It was blindingly obvious they were overpriced and we could see even then that circulations were starting to decline, despite the booming economy. It was clear to all that the future was not going to be in the printed word.
It’s such a simple concept – make hay while the sun shines then put some away for a rainy day. Well JP, it’s absolutely chucking it down now, isn’t it?
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“We aim to keep local editorial and local sales staff in the heart of the community, but increasingly centralise everything else.”
Then why are LOCAL editorial and LOCAL sales staff being paid off after years of loyalty to the company in various offices around the country and new roles advertised on internet websites (not JP Websites by the way) for sales staff etc both online and in print for the Sheffield areas? More staff who have no experience in advertising and newspapers. also, why not use the JP websites to advertise the new posts if they are so successful? There will be nothing LOCAL about JP before long.
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My mistake, you HAVE advertised “some of the jobs” on your website since I last checked.
By the way I like the part which states “Permanent” next to Job Type?.
Why join us?
Cultures & values
“Our aim is to attract, retain and engage the best people in a high performance and supportive culture that drives business success”.
You forgot to mention that when “the best people” work their socks off, do their job, meet their set targets and establish your brand, they will be made REDUNDANT. A new call centre will be opened and their job will be advertised and relocated to another part of the country. Should this not be on the job description in small print.
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JP borrowed Billions to buy up titles all over the country and all they seem to have done is made Thousands redundant.
They blame the fall in sales on the digital age, but in reality if they hadn’t bought up these titles they would have been performing more or less as they were. Stopping daily papers printed on the day with the latest news was a huge mistake, cancelling local editions caused a huge drop in revenue, cuts in staff levels so that thes titles are produced on a shoestring and increasing the cost have all led to a drop in revenue.
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Well spoken Mr. Lazenby. After spending over 30 years in the local newspaper industry myself, 25 of which were very happy years until JP knocked down the door. What followed was the decimation of staff, the continued attempt to minimise good journalism aligned with an atmosphere of bullying and intimidation! Seems nothing has changed since my departure! I sympathise with all staff who are faced with continued uncertainty! There is nothing ‘Local’ about Johnston Press.
Dearne Valley Reader says it all!
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