In its full year results, released today, the company described 2008 as a "particularly challenging one for the regional press" as it unveiled a revenue drop of 12.4% to £531.9m.
In a statement, the company said: "Although the directors remain confident of either the disposal of the Republic of Ireland businesses or a successful renegotiation of the group's debt facilities, they have concluded that the combination of these circumstances...indicate the existence of a material uncertainty which may cast significant doubt on the group's and company's ability to continue as a going concern."
Johnston Press is suffering from an endemic decline in local newspaper advertising revenues that former Daily Express editor Richard Addis said this week printed local newspapers would "never recover from". It has recently revealed that it was attempting to sell its Irish titles.
Chairman Roger Parry said that the severity of the advertising slump in the second half of 2008 "turned out to be far worse than we anticipated".
Total advertising revenues across the company were down 35.9% year-on-year, however, the company has partly offset this decline with a 15.7% cost reduction programme. Over the year, headcount across the group has been cut by 1,130 full time employees to 6,408.
Chief executive John Fry, who was appointed as chief executive of the group in January, said: "Advertising markets remain depressed…however, we are benefiting from the full effects of the 2008 cost reduction programme with more initiatives in place which will drive further efficiencies."
Its print division has borne the brunt of the cost reduction programme with the closure of its Northampton site and the cessation of the Leeds day shift, bringing in a £9m a year saving.
The company said that work on its new press hall in Carn, Northern Ireland had now been completed and the site now prints all group titles for the region and The Guardian and The Observer.
The pre-tax £429.3m loss, which compares to a pre-tax profit of £124.7m profit last year, was driven by £528.1m of one-off charges and payments for the year, relating to the impairment of goodwill and the value of its publishing titles.
Included in the write-off was a £7m charge for the "accelerated depreciation on the press at Northampton", which was based at the site that closed earlier this year.
It added that the biggest challenges in the current climate came from the decline of newspaper sales, which posed a growing risk to advertising revenues and the rising cost of newsprint.
Fry said that in the coming year, the company would focus on reducing debt levels and ensuring a successful refinancing of the group's banking facilities, which come up for renewal next year.
He said that he remained confident that the company "will remain an invaluable source of news, information and entertainment in local markets, which will enable us to be the business partner of choice for local advertisers as we have been for many years".
Also see:
Johnston Press predicts multi-million pound profits for Irish arm
New Johnston Press exec hits out at BBC and council-funded papers
