Regional publisher Johnston Press recorded a pre-tax loss of £300m in 2016 after a huge write-down in the value of its newspaper titles.
The past year has seen the group raise £21m from the sale of its weekly papers in the East of England and the Isle of Man alongside a move into national publishing with the purchase of the i.
But continued difficult trading conditions, which the company blamed partly on the Brexit vote, have forced it to write-down the value of its regional titles and other print assets by a total of £344m, according to its annual results published this morning.
A general meeting of the company is now set to be called within the next 28 days to discuss possible next steps.
The report accompanying today’s results also warned that digital revenue growth and cost-cutting may not be enough to overcome the decline in print advertising.
And it admitted there was “some uncertainty” around JP’s ability to repay or refinance the £220m of loans that become due in the summer of 2019.
Today’s results showed overall revenues at the group down 6pc from £235.7m in 2015 to £221.5m last year, although JP also pointed to an improving trend with a 5pc revenue drop in the period July to September was followed by 1pc growth in the final three months of the year.
Adjusted profits – not taking into account the asset write-downs – fell from £30.3m to £22.6m, but circulation revenues, boosted by the i aquisition, rose by 11pc.
The report states: “The Group’s trading performance in 2016 reflected a period of difficult trading in the summer, prompted by Brexit-related uncertainty.”
And it warns: “In line with the industry, the Group has seen increased volatility and accelerated decline rates in print advertising and newspaper sales. If the rates of decline experienced in 2016 continue into 2017 and beyond, then anticipated digital revenue growth and cost reduction initiatives may not be sufficient to mitigate the effect of the lost revenues, impacting the Group’s ability to return to growth.”
On the asset write-downs – which exclude the i – it states: “In light of the difficult trading conditions that continued in 2016, and the resulting decline in adjusted operating profit, the Group has written down the carrying value of certain assets by £344m.
“The impairment charge on publishing titles and print assets reflects the current trading performance, and reduced long term growth rates.
“The write-down reduces the assets carrying value of publishing titles to £120 million (excluding the i) and print assets to £20 million. As a consequence of the impairment of publishing titles, the Company has net assets which are less than half of its called-up share capital.
“Pursuant to section 656 of the Companies Act 2006, the directors will call a general meeting of the company within 28 days to consider whether any, and if so what, steps should be taken to deal with the situation. As part of its strategic review the Company is working with its advisers to address the issues which result from this.”
On the loan repayment issue, the report says: “The Directors anticipate that the Group will remain in a position to meet its obligations in respect of the bonds, including with regard to the payment of interest, in the period to their maturity.
“However, in light of the challenges faced by the industry as a whole, the current trading experience of the Group, and the likely financial position of the Group at the time the bonds are due for repayment in June 2019 there is uncertainty surrounding the Group’s ability to refinance the bonds at par in the debt markets on commercially acceptable terms.
“Failure to repay, refinance, satisfy or otherwise retire the bonds at their maturity would give rise to a default under the indenture governing the bonds dated 16 May 2014 and could have a material impact on the Group’s operations and its ability to continue as a going concern.
“As a result, the Directors, along with the Group’s advisors, are currently exploring the strategic options available to the Group in the event that a refinancing of the bonds in the debt markets prior to June 2019 is not possible.”
Commenting on the results, JP chief executive Ashley Highfield said: “Despite an industry wide backdrop of significant downward pressure on revenues, the actions we have taken to pilot the business through this rapidly-changing market and create the conditions from which to create growth are starting to bear fruit.
“Circulation figures of key titles are improving, the i has bucked the trend of declining national newspaper sales and our progressive editorial and sales models are starting to transform our regional businesses.
“While we can expect to see continued pressure on traditional print revenue streams, we have seen digital return to growth in Q1 2017, with better margin products, and will see growth from our investment in the i from both the newspaper and website. Further, we will start to see the benefits of our restructured sales teams and product roll out.
“Amid ever growing concerns from advertisers, both big and small, about the placement of their brand alongside unacceptable content, and increasing uncertainty around fake news, we believe our strategic focus on providing readers and advertisers alike with news platforms that serve as a trusted source of truth and insight, put together by teams of professional reporters who know their communities, is becoming an ever more important USP. By combining digital innovation with real news value, we will continue to see further growth in monetisable audiences.”
Laura Davison, national organiser for the National Union of Journalists commented: “Journalists at Johnston Press remain unconvinced by the company’s strategy. It’s them who are continuing to bear the brunt of the cost-cutting programme which has resulted in £100 million taken out since 2012.
“That translates into the lost jobs of colleagues, increased work for those who have stayed and most recently an unwelcome pay freeze. Meanwhile as staff costs are falling, the company has maintained unrealistic profit margins and its payments under long-term share ‘incentive’ plans at the top are rising.”
Sign up for our free daily email bulletin
Follow HTFP on Twitter
Got a story? Email the Editor at
Well what did they expect. Their one size fits all attitude to local weeklies, cutting staff to un-acceptable levels, closing town centre offices. getting rid of staff photographers and asking readers to send in their own phone pics is the road to nowhere! Yet they blame brexit, the weather, the lunar eclipse, the Gulf Stream and that wee boy down the street! Take responsibility for a change. Ask the guys at the coalface who have been in newdpapers for decades. THEY know how to run newspapers. Digital is a dismal failure. It wasnt broken…WHY did JP bosses try to fix it?
Report this comment
Sadly, their performance isn’t in-line with the rest of the market. Digital is woeful, much worse than other publishers. The ‘excluding classifieds’ trick is hiding a digital performance that is in decline. That’s decline!
The i performance is brilliant, but it has taken the ‘eye’ off the ball of the rest of the business.
Report this comment
Oh my god. Is that a surrender to the inevitable then? Sounds like one.
Report this comment
Nice one, Ash…
Report this comment
Mr Highfield seems to be SuperTeflonMan with these kind of results.
Reminds me of a frightening conversation I had with a senior JP manager years ago when he said the company did not mind newspaper sales declining because it reduced print costs. They have achieved that magnificently. This was at a time when digital was the promised land (it is now an expensive sideline, being outstripped for income by even an ailing print performance).
Report this comment
Shocking but not altogether surprising figures from JP anyone with any level of business acumen could see this kind of huge loss coming, judtvtrack their actions and semingmy panic measures in recent months,however the extent and magnitude of the loss is the most shocking fact.
With news rooms cut to the bone, workloads increasing and with all editorial staff at breaking point, the tom must be right to review the entire commercial operation and cut out levels of manager and under performing sales people to prevent future losses and reduce cuts, onevthings for sure there’s only so many cuts a department can take before the whole section collapses and already that poisition has been psssed. Only time wil tell
Report this comment
The share price yesterday meant the company value was around £23m
Still less than the £24m paid for the i.
I don’t remember reading how they paid for the paper either. Yes it’s doing well, but it’s the only JP paper where staff haven’t been cut (yet).
I regularly flick through JP papers and they are terrible, a shadow of their former selves, but cost too much. I’ll be interested to see what happens to the share price now.
Report this comment
Remind me again why, on that fateful day 10 or 15 years ago, local newspaper groups unilaterally decided to start bunging all their material on their websites for free? They may as well have swigged a jar of strychnine. Pure suicide. Too late to pull the plug on them? Maybe not; it’s worth a try. If people want their news, let them pay for it again.
Report this comment
Ha! I knew Brexit would come into it somewhere.
It’s just a case of managed decline being managed badly, across the whole industry.
I just tried to read a story on a TM website and a popup for O2 crashed my computer.
Report this comment
Accelerating decline takes rare talent so big bonuses to the top tier!
Report this comment
First thing this morning I read AH comments and everything was looking positive. Then reports drove into the detail and the crisis which could lead to the demise of the company became evident. Just goes to show the difference between PR statements and journalism. Also, whatever happened to selling sub-core newspapers? Those that have been sold weren’t the worst performing. It seems that potential revenue stream has failed. I predict JP will now look to move them online only to cut costs further.
Report this comment
The Scotsman website is seeing these terrible figures as “Johnston Press flags improvement amid tough market.” Emperor’s new clothes, and all that.
Back in October 2014 Ashers was saying that the worst of the decline of regional newspapers was over. Absolutely ridiculous.
Report this comment
The print editions’ circulations have tumbled because of the dire content (ie Newsroom if the Future). The websites have also perished on the Rock of poor content, given away free. Higher circulation will mean higher advertising. Will that simple message EVER penetrate the skulls of the suits mis-managing this once healthy company?
Report this comment
No journalists out there then
Only a little digging into JP’s own detailed statement reveals the £4+million of LTIP ( Long Term Incentive Plan) cash bonus payments to persons unspecified.
Report this comment
The hastily arranged crisis board meeting will be interesting.
Watch this space for further developments
Report this comment
Time for JP to throw in the towel and admit it’s not got a future rather than hang on until the bailiffs move in to take away Ashley’s chair. It’s all largely of their own making. JP refused to be the innovators a decade or more ago when they needed a great online presence. Now what we’ve ended up with is rubbish newspapers that fewer and fewer people can be bothered to read because there’s little worth reading in them and awful websites which aren’t updated often enough and when they are they contain stories that aren’t worth reading. For instance my local paper’s website sports pages haven’t been updated in more than a week. In addition adverts appear in odd positions that interrupt the reader viewing the story – you have to use an ad block extension to prevent this. The adverts are hardly innovative either – you can do so much more on the web than in print.
It sounds serious that JP is calling a general meeting within the next 28 days to decide what to do next. I don’t recall it doing that before after announcing dire figures. I don’t think they would even be able to sell the company with those kind of losses and debt.
Report this comment
Members of the public and aspiring advertisers regularly phone our once-superb newspaper and can’t get through. It used to thrive in the town centre, but is now miles away from its former base. The paper is a flimsy shadow of its former self, with circulation down by more than half and the cover price disgracefully high. What a complete and utter shambles!r
Report this comment
This company is doomed unless there is a change at the top. Advertisers are deserting in their droves and simply do not get response from JP products any more.
Report this comment
“…ever growing concerns from advertisers….about the placement of their brand alongside unacceptable content”
One interesting point amid the sick of the huge loss and a classic case all local publishers have of left hands and right hands, when things are thrown together and the priority is pushing it out quick and cheap, any thoughts about relevant placement goes out the window.
Independent publishers value advertisers so will make sure ads are situated next to relevant content, it’s a customer first strategy in action. A recent example where I am was of a fitness ad feat with 2 ads on it, one for a bakery and cake shop, the other advertising sofas and footstoools, I kid you not!
When you stop caring about the end user the end users go elsewhere, which brings us back to this staggering £300,000,000 loss
Report this comment
Clearly no financially literate journalists either.
Read the financial statements, focus on the net cash position.
Don’t get hysterical about a loss including write downs.
Once the net cash can’t cover the interest on the debt then you will really have to worry. The big issue with JP is declining revenues un- matched by cost savings and the small matter of finding £200m by June 19.
If the company managed prudently then net debt might get down to less than £100m by then. If so it has a chance of re-financing to meet its bond obligation in June 19, if not then ” Houston we have a problem”.
One thing Trinity have done extraordinarily well is manage down their debt through cost focus. Whinging journos at TM should actually be applauding Vjay Vaghela every time he enters the building. Those still there would be long gone without his stewardship of the cash.
Report this comment
Innovation went out the window when JP took over – if it was not in the budget (that was ‘agreed’ up to 15 months in advance) then it didn’t happen, it couldn’t because the local MD’s dare not invest (spend) beyond the budget.
Gone was the ‘cottage industry’ style of management where local managers were quick to react and made it a great, fun place to work.
I will always remember a comment from my MD after he had endured 2 years of JP – “I might as well be the manager of the local Tesco, I don’t make any decisions any more, I just pass things down from Edinburgh and pass back what they requested”.
And, the time that a talented and skilled young member of staff asked for a modest pay rise to keep him with us as he had been head hunted – that decision went all the way up the ladder to Edinburgh as the lower managers/MD’s were not allowed to agree a pay increase outside of the budget!
Report this comment
The Sheffield Star are about to be shipped out-of-town somewhere too. Prepare to lose a few staff, but also lose even more readers of a certain vintage.
Report this comment
I blame Brexit and that woman on the number 43 bus.
You cannot possibly blame those in charge.
Report this comment
The main problem with JP is that they put more and more work on not just the editorial staff but also on the sales staff too, the morale is low and mid level management have no clue what the marketplace is like they just look at facts and figures, also they tend to roll out new plans without finishing planning for them like sales force if the future for example where samples staff are targeted on businesses that aren’t even running anymore I’ve been working 14 hour days just to keep up with how they want the territory’s run which probably means I’m on less than minimum wage, in all my time working there anything that Ashley has launched has been a rush job to save his own skin meaning that we have unhappy salespeople who have no chance of hitting target because no losses have been taken into account.
Report this comment
I love all the anti-digital and ‘giving it away for free’ comments. It reminds me of this https://www.youtube.com/watch?v=AjNE2N0SDzs
It has nothing to do with any of it! Did the radio kill local newspapers? No. Did TV kill local newspapers? No. Will the internet kill newspapers? No, but the current business model of regional publishers will.
Small, independent publishers either in print, online or a mixture of both can still work if they’re happy to accept modest profits. It’s just a shame that the shiny-suit-heavy likes of TM and JP will bleed everything dry before selling off the bare bones.
Report this comment
Oliver. You are so right. Digital isn’t killing JP papers. Shoddy editing , and some shallow work from hard-pressed and inexperienced reporters is the reason. But I don’t blame the staff. The ones I meet seem at their wits end from web, social media and print work.
Report this comment