Turnover at regional publisher Midland News Association fell by almost a third in 2020 because of the Covid-19 crisis.
The MNA, whose biggest paper the Express and Star lost its position as England’s largest paid-for regional daily newspaper last year, has reported turnover of £17.8m for the 53 weeks to 2 January 2021.
This was down 31% from £26m in 2019 – itself a 10% drop on the year before.
Phil Inman, chief executive of MNA parent company Claverley Group, said in a financial statement accompanying the 2020 accounts that the hit to turnover was because of advertising and circulation revenues being put “under increasing pressure, exacerbated by the coronavirus outbreak”.
The MNA suspended publication of the majority of its weekly and monthly titles at the start of the first pandemic lockdown but, it said, “agreed to continue” printing its daily Express & Star and Shropshire Star and paid-for weekly titles mindful of its “commitment to provide readers with trusted and up to date news”.
Some of the free weeklies were reinstated after the first wave of the pandemic but suspended again when lockdown restrictions returned in the winter, such as the free Chronicle Week which distributed an average of 208,683 copies in 2019 but fewer than 120,000 between July and October according to ABC.
Before tax, the MNA grew from a loss of £2m in 2019 to profit of £44,000. The profit figure before exceptional items, pension payments, depreciation and amortisation, grew from £2m in 2019 to £2.1m a year later.
Operating profit before exceptional items, depreciation, amortisation and impairment was 6% up from £1.8m to £1.9m.
Inman said: “In spite of the challenges faced the directors remained committed to developing the print and digital portfolios in 2020 wherever possible.
“Following consultations with staff members, trading partners and local communities, the directors approved plans to expand the geographical footprint of one of the free weekly newspapers, invest in the development of new page-turning and paid-for applications for mobile devices, and to enhance and expand the website creation product offering.”
The MNA claimed £1.4m through the Government job retention scheme in 2020. (In the first three months of 2021 it claimed somewhere between £300,003 and £750,000 according to banded figures released by HMRC.)
The company said almost 170 members of staff volunteered to take furlough leave in just two days at the start of the pandemic “with many citing their actions as a contribution to the longevity of the company”. In total it furloughed more than 230 employees in the first few months of lockdown.
When lockdown measures were later reimposed and titles suspended again, 80 people were placed on full or flexible furlough.
In the meantime, last summer 102 members of staff were made redundant, mostly in advertising.
This resulted in severance costs of £1.7m compared to £478,000 in 2019 and £866,000 in 2018.
Inman said in the report: “These difficult decisions have been made to ensure the business remains sustainable and thus enabling the business to continue to employ hundreds of employees.”
The average number of monthly employees fell from 390 in 2019 to 324. Those in sales and administration were down from 281 to 227 while production and distribution staff were down from 109 to 97.
Total compensation to so-called key management personnel, including the company directors, was £666,000 – down from £745,000 the year before.
The company prepared a three-year business plan in November which it said was based on “prudent assumptions” given the economic uncertainty caused by the Covid-19 pandemic but still showed it returning to EBITDA profitability in 2021 before recovering to pre-Covid levels in 2022.
Its trading is currently “substantially ahead” of the business plan, exceeding forecasted EBITDA by £0.8m in the final quarter of 2020 and by £1.7m in the first quarter of 2021.
“The cash position remained positive throughout the plan, despite substantial investment built in for future acquisitions,” it also said.
The company has ringfenced £4m in cash for the remainder of 2021 to “provide a level of contingency for any worst-case scenarios” which includes each of its subsidiaries suffering a 10% decline in annual budgeted turnover.
It had £12m consolidated cash in the bank at the end of last year and its liquidity was described in the accounts as “currently very healthy”.
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