JOHNSTON Press, the publishing group that owns The Scotsman, made a £429.3 million pre-tax loss last year.
Unveiling its results for 2008, the company warned that 2009 would be "challenging" and admitted there was a risk of breaching its banking covenants.
Johnston, which made a £124.7m profit in 2007, disclosed it took a £417.5m non-cash impairment
charge against "publishing titles and goodwill" as advertising revenues fell sharply in the economic downturn. Underlying operating profits came in at £128.4m – down nearly 28 per cent. The company will not be paying a dividend as it seeks to cut its debt.
In a statement to the stock exchange, Johnston said: "The speed and severity of the collapse in advertising revenues has been beyond the collective experience of the entire industry and even the longest serving of those who work in it."
The results showed that Johnston's jobs advertising revenues fell 19.5 per cent to £82m in 2008, but by 40 per cent in the final quarter to end-December. Property revenues slid 32.4 per cent to £54.3m, and by nearly 55 per cent in Q4. Motors revenues was 21.2 per cent lower at £31.9m, and down 29.5 per cent in Q4.
Display advertising revenues fell 9.3 per cent over the year, and 16 per cent in the final quarter. Digital revenues were up 31.1 per cent to £19.8m from £15.1m in 2007.
The group's headcount reduced in the year by 1,130 to 6,408 and John Fry, Johnston's new chief executive, said there would be more job losses to come.
Debts were cut by £214.9m to £476.8m, mainly through a £200m-plus equity fund raising from investors last year. That included the sale of a 20 per cent stake to Ananda Krishnan's Malaysian investment firm Usaha Tegas.
Johnston said it was confident it could sell its newspaper business in the Republic of Ireland or renegotiate the company's debt arrangements with its banks.
But it added that as these were "not within our gift" it had to "indicate the existence of material uncertainty which may cast significant doubt on the group's … ability to continue as a going concern".
Asked about the company's debts, Fry said: "When you go into an economic downturn you would like to have as much financial flexibility as you can."
Johnston is the latest newspaper group to suffer from the major downturn in advertising.
Last month Trinity Mirror scrapped its dividend after a pre-tax loss of £73.5m. Daily Mail & General Trust is expected to reveal a downturn in its regional paper performance when it reports later this year.
Archant, where Fry was formerly chief executive, posted a 31 per cent fall in newspaper and printing profits to £16.2m earlier this week.
Johnston Press's shares closed down 27 per cent at 5.62p.
