Johnston Press ‘on target’ for profit growth

The group, which owns The Scotsman, Scotland on Sunday and Edinburgh Evening News, will also see the full benefits of a £37.6 million cut in operating costs.

Highfield pledged more investment in the group’s websites and in providing journalists with new equipment.

“Good progress has been made in the process of transforming the group,” he said in the group accounts. “The changes made provide a strong platform for us to build on in 2013 as we invest in refreshing our print portfolio, and simultaneously move our operation to be real-time, digitally led, social, mobile and ever more local.”

New sources of revenue included e-commerce channels such as the voucher website DealMonster and the WOW24/7 entertainment what’s-on site.

But he admitted that the trading environment remained “challenging”. Pre-tax profits for the year to the end of December fell from £28.4m to £12.6m on turnover down from £373.8m to £328.7m. But the long-term decline in operating profit has slowed to 4.7 per cent against 20 per cent annual falls in the period 2006 to 2010.

Total advertising was 12.7 per cent lower, falling from £231.3m to £201.9m and print advertising by 14.8 per cent from £212.9m to £181.3m.

But digital advertising revenue grew by 12 per cent from £18.4m to £20.6m and digital display advertising was up 38.6 per cent and will continue to grow this year, said Highfield.

Overall audience across print and digital grew by 5 per cent, with the average daily digital audience, a key measure of future health, growing by 29.3 per cent. As part of the transformation of the group, tablet apps were launched for 18 titles on iPad, Amazon Kindle Fire and Google Play Android.

Five newspaper titles changed from daily to weekly, three free titles became paid-for and a further 47 newspapers (including ten free titles) were redesigned with the support of industry leading designers. A number of print centres were closed.

Reducing debt continued to be a priority for the board and it fell from £351.7m to £319.4m. Speaking to The Scotsman, he said the aim was to see it fall to “no more than three times earnings before interest, tax and depreciation [ebitda]” which is expected to climb to £80m, giving a “target” debt of £240m.

This, he said, could allow the company to invest more and eventually return to paying a dividend. “We are on target to do that [to hit £240m], and getting down to £200m should be easily attainable,” he said.

“Our share price would be a lot higher and we could then raise equity. We would have much more strategic flexibility. Getting the debt down would liberate the company.”

On whether he thought there would be more consolidation among media companies, he said: “Yes, I do. It would be good for the industry. We are not competing with each other, our competition is Google, Amazon and eBay.”

Johnston Press had been involved in “conversations”, but there were no live talks with potential partners. “I keep my ears to the ground but there is nothing meaningful,” he said.