The publisher of titles including the Scotsman, Yorkshire Post and the national i has reported a Â£300m pre-tax loss due to a tough advertising market and writing down the value of its 200-plus local newspapers.
Johnston Press, which has seen its largest shareholder, Crystal Amber, seek to oust its chief executive and finance chief, reported a Â£344m non-cash writedown on the value of all its local and regional titles excluding the i.
The i, which the publisher acquired from Evgeny Lebedev for Â£24m last April, has proved to be a star performer, making Â£3.3m in profits in the eight months to the end of last year.
The company said the non-cash writedown related to a string of acquisitions in the early part of this century, such as the Scotsman newspaper group, which was acquired for Â£160m in 2005. The writedown reduces the value of Johnston Pressâs publishing titles to Â£120m, excluding the i, and other print assets to Â£20m.
The cut-price national title, which increased paid-for sales by 5% despite a 10p price rise last year, has seen accelerating profit growth and is forecast to make potentially almost Â£8m profit this year.
When the company bought it from Lebedev, who owns the London Evening Standard and runs the Independent website, it was estimated to be making Â£5.2m in full-year profit.
âThe i has bucked the trend of declining national newspaper sales,â said the Johnston Press chief executive, Ashley Highfield. âWe will see growth from our investment in the i from both the newspaper and website [this year].â
The i made Â£18.5m in revenues in the eight months Johnston Press owned it last year, and would have made Â£25.6m if it had owned it for all of 2016.
However, aside from the performance of the i it was a tough year for Johnston, one of the UKâs biggest local and regional newspaper publishers.
Total revenues dropped 8% to Â£222.7m last year. Within this, total ad revenues fell 15.4%, with print ads dropping 17.1% and digital advertising falling 8.5%.
The company reported adjusted profits down 12.4% from Â£56m to Â£49m. Its share price fell nearly by 10% to just under 20p in early trading on Wednesday.
Johnston Press blamed factors including jittery advertisers pulling budgets following the Brexit vote last June.
âAdvertising revenues were dealt a blow following the referendum vote in June,â said Highfield. âWhilst we did see improving growth momentum towards the end of the year, it was not enough to return local display advertising to growth in 2016. In particular, the employment and property markets were under significant pressure.â
The company said trading had picked up since last summer with total revenues up 1% in the fourth quarter; digital advertising rose 2% in the first quarter this year, or 10% stripping out classified ad income.
âWe are seeing improving trends at out biggest [local] titles, such as the Yorkshire Post, Scotsman and Northern Ireland News Letter,â said Highfield. âWe are getting back into growth.â
Highfield added that he hoped the issues faced by Google and YouTube over the placement of ads around inappropriate content, and ad measurement failings at Facebook, might help other digital publishers to pull in more revenue as a result.
âAmid 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 ever more important,â said Highfield, who is chairman of the News Media Association, the trade body for newspapers that has hit out against Google and Facebook.
The company said it made Â£26m in cost savings last year, which included axing 200 sales and distribution staff, and has made Â£100m in savings since 2012.
The companyâs net debt increased from Â£179m to Â£203.9m last year. The drop in profits means that the companyâs ratio of net debt is more than four times profits, a key metric watched by the City.
Highfield said there had been a number of âconstructiveâ meetings with Crystal Amber, which controls 22% of Johnston Press, and that he and finance chief Dave King continued to have the backing of the board.