Shares in 250-year-old firm fell 14% on £340m impairment charge & declining ad sales
Companies: Johnston Press
Struggling British newspaper group Johnston Press recorded a statutory pre-tax loss of £323m in its FY16 final results on Wednesday after declining ad sales and a £120m writedown in the value of some of its titles hit the 250-year-old firm.
On an underlying basis, revenues fell 6% YoY to £221.5m as total ad revenues fell 15% and print ad revenue fell 9%, leading to a 14.5% decline in operating profit. However, on a statutory basis, the firm reported losses of £323m after recording an impairment charge of £344m on its print assets.
Brexit appears to have had a considerable impact on the Group, with weakened sterling raising the cost of ink and paper, and uncertainty hitting ad sales even further.
On a more positive note, the publisher said it had record audience growth, with average monthly unique users across its network increasing 15% to nearly 22.5m. This followed the mid-year re-launch of its entire web portfolio of more than 170 sites.
The i newspaper also performed well after its £24m acquisition in April. It saw sales increase 5% and circulation revenues increase 20% Yoy. As a result of the i's success and overall action required to boost performance, the company said it had focused on restructuring (and reducing) sales teams.
CEO Ashley Highfield said that the Board had taken actions to pilot the business through the "rapidly-changing" market to create conditions to generate growth, despite the industry-wide backdrop of downward pressure on revenues.
Mr. Highfield added that the firm will start to see the benefits of its restructured sales teams and product roll out soon, and that circulation figures of key titles were improving, with the recently acquired i newspaper bucking the trend of declining ad sales:
"...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."
Shares in Johnston Press fell 14% as the market opened on Wednesday, and are down 50% in the past 12 months.