Losses mount at Johnston Press

SHARES IN Johnston Press fell back yesterday as pre-tax losses at the publishing group spiralled to £286.8 million.

Stocks fell back more than 6% during the day despite the company — which publishes The Scotsman along with a portfolio of regional titles in Tayside, Fife and elsewhere across Scotland — saying it was more optimistic about its prospects than “at any time in recent years”.

Underlying operating profits — which strip out exceptional items and £0.9m of expected revenues from a cancelled News International print contract — increased by 2.5% from £53m to £54.3m in the year to December 28, while revenues dropped 5.5% to £291.9m.

However, on a statutory basis groupwide revenues fell 15.6% from £358.7m to £302.8m during the year and losses increased by £280m from £6.8m in 2012.

The huge disparity between the yearend outcomes was due to a series of writedowns on assets — including a £202.4m impairment on its publishing titles and a further £68.4m writedown on the value of its printing press plant — and £33m of costs associated with the group’s ongoing restructuring plan.

Edinburgh-based Johnston has axed nearly 1,600 staff over the past two years, with its workforce falling by another 13% last year to 4,188.

The group also remains more than £300m in debt and said it was still exploring refinancing options after being given breathing space by its lenders at the end of last year.

“The last several years have been impacted by the longest, and at times the deepest, recession in memory,” group chairman Ian Russell said in an update to the market yesterday.

“However, the economic outlook in the markets in which we operate is more positive.

“This, coupled with the changes and innovations that we have made at Johnston Press, give the board greater confidence in our future than at any time in recent years.”

Despite the losses, the group said it had seen signs of a reversal in advertising declines.

Digital revenues leapt 19.4% ahead last year after a 25.3% surge in the final six months, while underlying print advertising dropped 9.5% to £157.1m.

However, the improvement in digital business was not enough to prevent overall advertising revenues dropping, down 6.4% on an underlying basis to £181.7m.

Chief executive Ashley Highf ield said the group was seeing improvements in underlying revenue declines, which narrowed to 5.3% in the final quarter.

He said: “Our digital growth remains strong, with significantly increasing audiences coming to our websites in 2013 and into 2014.

“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.”

Since the year end, total advertising revenues have fallen 6% in the first two months of 2014, although Johnston said underlying earnings growth had continued with an 8% increase to the end of February.

Shares closed down 1.50p at 22.50p.