More than 600 jobs were lost at Johnston Press last year as the company posted its first rise in profits for seven years, annual results have revealed today.
The regional publisher introduced an enhanced voluntary redundancy scheme for staff last autumn in a bid to help pay down its £320m debt.
Today’s results show that the scheme contributed to a reduction in overall headcount of 609 over the course of 2013, not including staff who left in the early months of this year.
The results also show underlying profits at the group rose 2.5pc over the year to stand at £54.3m, and that net debt fell by £17.3m to stand at £302m.
Total advertising revenues were down 6.4pc during the year at 181.7m, but while print advertising revenues fell 9.5pc, digital advertising revenues rose 19.4pc to stand at 24.6m.
Revenue from newspaper sales was down 2.1pc from 89.6m in 2012 to 87.7m.
Bosses have hailed the increase in underlying profit – the such rise for seven years – as an indication that the company is returning to financial health.
However taking into account restructuring costs of £33m, the cancellation of a £10m print contract with News International, and a write-down of assets of £202.4m, the group posted a statutory operating loss of £245.6m.
Today’s results provide the first indication of the scale of headcount reduction arising from the voluntary redundancy scheme.
The company has previously declined to give out any figures on how many staff took up the enhanced redundancy package.
The financial report says: “As our work to reshape Johnston Press continued through 2013, all aspects of the business were reviewed. As a consequence, we offered a voluntary redundancy programme to all our employees during the autumn which contributed to a reduction in average headcount of 609 over the period.
“This has allowed staff to accept enhanced terms to leave the Group and with a number of them doing so during the early part of 2014. Careful planning has been undertaken to ensure the efficiency of future operations and to maintain quality.”
The added redundancy costs associated with the scheme contributed to overall restructuring costs of £33m – up from £24.4m in 2012.
According to the financial report, the company has now lost almost 1,600 staff over the course of the past two years.
The results also reveal that newspaper cover price rises had a bigger impact on circulation than had been anticipated.
“Whilst overall circulation revenue declines were as anticipated in one or two very challenged economic markets, increasing cover prices during the recession created a greater circulation decline than expected,” the report says.
Commenting on the results, chief executive Ashley Highfield, said: “We are delighted to see a return to underlying operating profit growth for the first time in seven years, with underlying operating profits in 2013 increasing by 2.5pc on 2012.
“Along with slowing declines in print advertising revenues, and a stable circulation revenue decline rate, these are clear indications of good progress during the year in the implementation of our strategy for growth.
“During the year we completed the re-launch of our websites and our print titles, and took the first steps to re-invent community newspapers with significantly higher levels of user generated content.
“With the benefits of our actions coming through, coupled with strong digital growth and a slowing print decline, the Group is well positioned to make further progress in 2014.”
In his chief executive’s report, Ashley hailed the completion of the programme of newspaper relaunches into “more modern standardised templates” during 2013 and raised the prospect of more user-generated content.
“One of the direct results of the relaunch programme is that we now have a platform to provide greater efficiencies in our content gathering operation from our journalists, freelance contributors and readers,” he said.
“Using web-based editorial software the Group is now allowing trusted contributors the ability to author content directly.
“If these trials are successful they will provide a blueprint for the Group to restructure the editorial content gathering operations and greatly increase the volume of locally supplied material.”
Today’s report also makes clear that JP will not sign up to the government’s proposed new system of press regulation underpinned by Royal Charter.
It says: “Lord Justice Leveson made it clear in his enquiry into press standards that the local press was not guilty of any wrongdoing and should not be penalised by any new regulatory system.
“However, we felt that the Royal Charter proposals would not provide smaller titles with adequate protection from vexatious or speculative complaints and the costs associated with processing such claims.
“As a result, and in line with the significant majority of the industry, we have joined the process of establishing the Independent Press Standards Organisation.”