Drop in Archant profits revealed

FALLING advertising revenues and 'difficult trading conditions' prompted a 27pc drop in operating profits last year at Archant, the media group behind The Journal, the Eastern Daily Press and Evening News.

FALLING advertising revenues and 'difficult trading conditions' prompted a 27pc drop in operating profits last year at Archant, the media group behind The Journal, the Eastern Daily Press and Evening News.

The group - which publishes four daily newspapers, 60 weeklies and about 80 magazines around the country - revealed that operating profits fell from �30.5m in 2007 to �22.2m last year. Total revenue fell from �193.8m to �175.1m.

Chairman Richard Jewson said trading conditions had 'deteriorated through the last few months'- adding that it was 'difficult to foresee the shape and scale of our industry in the years ahead.'

Publication of the group's annual results followed last week's announcement by Archant Norfolk that it would seek 54 redundancies in its 179-strong editorial department.

The group's results reveal that operating costs were cut by 6.4pc last year and the number of employees fell by 9.9pc.

But the financial statements also show an 'impairment charge' of �33m to reflect the change in value of some 'acquired newspaper and magazine assets', which are 'no longer supported by their underlying profitability' in the weakening economy.

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The charge is an accounting measure rather than a cash transaction, but gave the group a pre-tax loss of �25.2m for the year.

Full-year revenues from recruitment and property advertising fell by 14pc and 31pc respectively.

There was a 31.8pc decrease in profits of the ongoing newspaper and printing businesses to �16.2m and magazines and contract publishing saw profits, including acquisitions, down 17.9pc at �5.8m.

But revenues from online activities increased by 51.1pc to �3.8m driven by the development of jobs24.co.uk and online display advertising.

Archant will pay total dividend for the year of 26.4p per share - a fall of 34pc on the dividend paid in 2007.

Mr Jewson said: 'We expect the difficult trading conditions, which have deteriorated through the last few months, to continue for 2009 and beyond. It is impossible to know the timing and extent of any recovery and difficult to foresee the shape and scale of our industry in the years ahead.'

Pete Kelley, National of Union of Journalists committee member at Archant Norfolk, said 'Despite the tougher trading conditions, Archant is still a very profitable company, as these figures show. We are as interested as anyone else in seeing the company well positioned for the future. We are interested in the quality and success of well-run community newspapers. At a time when other media companies are typically cutting 10pc to 15pc of jobs - which is bad enough - these figures only confirm how ludicrous it is for the company to threaten to cut 54 editorial roles - close to one in three.

'We would add that this company is fortunate in having many shareholders with a genuine commitment to good newspapers. At this point, they should be sharing the pain. Trinity Mirror has frozen final dividends, and said they will not return until conditions improve. Reduction by a third is a start… but these dividends are still a drain the company can ill afford at this point.'

Archant's annual meeting takes place on April 30 at the Assembly House in Norwich.

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