Johnson Press writes off half the value of its newspaper properties
Due to the acquisition of the i from The Independent, debt has grown to £209M, while ad revenues across the chain continue to fall, down another 15 percent in the second quarter
The UK newspaper company Johnson Press took the dramatic step today of announcing that it is taking a non-cash impairment of £183.6 million impairment charge (£216.9 million gross, net of £40.3 million in deferred tax), lowering by nearly half the value of the company. The action sent the company’s stock down over 18 percent in trading today in London.
In reaction, the company said they are looking at possible divestments.
“The market continues to be challenging and uncertainty surrounding the outcome of the Brexit negotiations has caused further softness in some segments of the advertising market, in June and July,” said Ashley Highfield, Chief Executive at Johnson Press plc.
“Nevertheless, we are focused on our strategy of increasing overall audiences, maximising opportunities for the i, maintaining tight cost control and rebalancing our portfolio. In that respect, we are nearing completion of the disposal of our Isle of Man newspaper group for £4.25 million and are well advanced in negotiations for further divestments.”
Johnson Press publishes The Scotsman, the Yorkshire Post, the Falkirk Herald, and other regional papers, and recently acquired i, the national paper launched by The Independent in October of 2010.
The dramatic announcement came inside the latest earnings report released today. Total revenue fell 9.7 percent in the second quarter, with ad revenue falling 15 percent.
Net debt grew to £209.4 million due to the acquisition of the i in April for £22.0 million. This is obviously an issue with investors as The Telegraph reported that analyst at Numis said “Our key issue with Johnston Press remains debt This material debt pile, relative to cashflows, in combination with the declining and uncertain trading environment, places a significant question mark on the equity value in the business.”