The UK’s largest newspaper and magazine delivery business Newsteam Group has swung to a £1.1m pre-tax profit in the year to 30 December 2023, up from a loss of £1.43m in 2022.
Post-tax profit was greater, coming in just short of £2m, because the company was able to recognise a “deferred tax asset in relation to its unrelieved prior year trading losses”.
Newsteam’s directors said in its Companies House accounts on Tuesday that the business saw a loss in the first quarter of 2023 but profit in each of the following three quarters.
Company chairman Neil Jagger told Press Gazette in an email that the first three months of 2024 had shown “virtually the same pre-tax profit as for the whole of 2023”.
Newsteam Group attributes profit to software improvements and paper route acquisitions
The business, which launched in 2014 and had some 42,000 customers in 2020, said it saw total turnover of £58.7m in 2023, up 15% on its 2022 turnover of £51.1m. Costs of sales increased 7.5% year-on-year to £50.2m and administrative expenses 28% to £7.44m, ultimately producing a gross profit margin of 14.53% — up from 8.56% in 2022.
The company generated net cash of £1.54m in 2023, ending the year with cash in bank and at hand of £860,842. In 2022 it instead lost £492,525, ending the year with £169,194. The average monthly number of employees in 2023 was 262, up from 245 the year before.
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Newsteam Group attributed its success in part to “substantial software improvements” made in 2023, which it said had allowed it to maximise the number of drops it could make per delivery round and forced down costs per drop.
It also says it has been acquiring newspaper rounds from newsagents looking to exit the delivery business, and that it now has “the largest news media distribution networks in the country”, purportedly reaching 80% of the UK. The directors added in the report that since 2022 the business has been seeking to diversify the range of products it delivers.
At the end of 2023 Newsteam Group acquired its home news delivery software provider, Paperround HND Service, which had until then been financed by Newsteam’s backer, Michael Kinton.
The company says its outlook “is very positive”.
The company has £2.1m in debts due this year and a further £1.4m coming due in subsequent years. The directors expect to meet the liabilities with “accelerated loan repayments of £1.25m whilst retaining a bank balance of £1.1m”.
Looking ahead at “the structure for print media” the company acknowledged that “the market has been in decline for some time and we believe this trend will continue.
“The customer base is increasingly mature. The digital channel is distributing an increased proportion of news media. Publishers have protected their profitability by pricing actions well above inflation.”
They added: “In recent years there has been a very significant reduction in the number of newsagents as volumes have declined and margins have been squeezed.
“This represents an opportunity for NTG to acquire home delivery rounds of newsagents looking to exit the category.”
Its main risk, it said, is “the entrance of a new company who wants to own a direct to customer daily delivery service”, which the directors wrote in the report they find “extremely unlikely considering the specific operational challenges for a new entrant to the market”.
In late 2020 Newsteam reported a Covid-induced home delivery boom had boosted its number of direct customers by 72% to 42,000.
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