JOHNSTON Press plc and its subsidiaries (‘the group’), (LSE: JPR), announces its results for the 26-week period ended 30 June 2018.
Operational highlights
A strong performance from the i newspaper, which saw a 61 per cent increase in adjusted EBITDA on H1 2017 to £6.0m, has helped to mitigate a broader decline in revenues.
The group has posted a statutory operating profit of £7.4m compared to £4.9m in the same period last year while delivering an adjusted EBITDA of £19m at a margin of 20.4 per cent.
Consistent with pressures seen across the industry, adjusted advertising revenues from continuing operations have fallen by 15 per cent with revenue from classified advertising showing a decline of 28.5 per cent compared to the same period last year.
Digital audiences grew to a record 27.3m average unique users per month. However, the effects of algorithm and news feed changes by Google and Facebook contributed to total digital advertising revenues declining by 7.4 per cent (down 4.3 per cent excluding classifieds) on H1 2017 to £12.2m.
Adjusted newspaper sales circulation revenues have proven resilient, falling by 1.7 per cent on H1 2017 to £38.9m, with price rises broadly off-setting the impact of circulation declines.
The group’s adjusted net debt position, which excludes mark-to-market gains on our bonds, is £203.2m – with interest payments consuming £9.5m of cash in the period.
Financial highlights
Statutory results for the group:
* Total revenue was £93.0m (H1 2017: £103.3m) down ten per cent
* Operating profit was £7.4m (H1 2017: £4.9m) up 50.1 per cent
* Profit before tax was £6.2m (H1 2017: loss before tax of £10.2m) includes a non-cash impairment of £3.5m (H1 2017: £4.5m) and mark-to-market gain on the bond of £8.8m (H1 2017: loss of £4.4m)
Adjusted results for the group:
* Total adjusted revenue was £93.0m (H1 2017: £101.3m) down 8.2 per cent, (down 4.1 per cent excluding classifieds)
* Adjusted operating profit was £16.6m (H1 2017: £16.2m) up 2.4 per cent
* Adjusted group EBITDA was £19.0m (H1 2017: £19.7m) down 3.7 per cent
* Adjusted EBITDA margin of 20.4 per cent (H1 2017: 19.5 per cent)
* Adjusted net debt was £203.2m at 30 June 2018 (as at 30 December 2017: £195.9m)
Strategic review
The strategic review is ongoing, and we will provide an update as soon as possible.
Commenting on the results, chief executive officer, David King said:
“There are two sets of issues affecting Johnston Press. The first is the group’s historical debts, including its pension obligations, which continue to weigh on our balance sheet. The second is the tough market conditions affecting the performance of our newspapers and websites. However, our resilient performance allowed us to generate an operating profit of £7.4m in the period, up from £4.9m in H1 2017.
“The strong performance of the i demonstrates that it is possible to grow a newspaper brand, despite the prevailing headwinds. The i grew its circulation revenues by 17 per cent and its advertising revenues by 20 per cent compared to H1 2017. The digital audience for inews.com grew to 4.2m in June, up from 1.3m in December last year.
“The market backdrop for regional/local newspapers is extremely difficult, as evidenced by the 15 per cent drop in our adjusted advertising revenues from H1 2017. We have continued to make progress growing digital audiences to a record 27.3m average unique users per month.
“However, the continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes, has contributed to total digital revenue decline, while balance sheet constraints has restricted the group’s ability to invest, and counter these effects. We will engage with the Cairncross Review into the future of high quality journalism with a view to helping address the challenges faced by local news organisations in monetising its content.
“As part of the strategic review, the group continues to explore its options for the refinancing or restructuring of the group’s debt but, as yet, no decisions have been made nor agreements reached. We will provide an update as soon as possible.”
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