The Edinburgh-headquartered company's results, which cover the 26 week period ended 2 July 2016, showed that its contract printing income rose by £400,000 to £6.6m (from £6.2m in the first half of 2015).
The business also showed improved underlying revenue decline to 4.7% in Q2 (14.5% in Q1), which it attributed to its recent acquisition of the i newspaper and a slight improvement in underlying run rate.
However, the group posted a statutory pre-tax loss of £183.7m, down from a profit of £2.2m in the first half of 2015, which it said is primarily a result of a non-cash impairment of £183.6m reflecting a change of assumptions on the publishing titles and print assets.
The firm’s total revenue for the first half was £114.2m, which reflects a decline of 5.1% for the period, down from £128.9m in the first half of 2015. Net debt reduced to £137.7m, from £146.1m at 2 January 2016.
The company said strong circulation performance from the acquisition of the i newspaper and improving volume trends across regionals helped to partially offset challenging advertising trading conditions.
The group acquired the i on 10 April for £24m. It said the average daily circulation of the newspaper grew from 270,182 in the month prior to the acquisition to 294,223 in June, an increase of 8.9% with a further increase expected in July.
Johnston grew its digital audience by 22.4% to an average monthly audience of 24.4m the first half of 2016. Print audience decline rates improved from Q1, with weeklies now down 10.9% year-on-year (as at 2 July) - a 1.3% improvement on the year-to-date run rate. Circulation revenue increased by £900,000 (2.3%) to £38.4m following the i acquisition.
Print advertising revenue excluding classifieds declined 4.4% in the period (7.7% excluding the i). For the half year, the decline was 10.3% year-on-year to £32m, reflecting a 15.6% fall in Q1. Digital publishing advertising excluding classified increased by 1.6% to £9.3m.
The board said that, while it is encouraged by the improved Q2 performance in several parts of the business, overall performance for the period was marginally below its expectations.
It added that, in light of the additional market uncertainty following the EU Referendum, the business is now focused on revenue and cost measures to maintain margins and minimise the impact of a difficult trading environment.
The group's shares fell by 16% to 11.55p in morning trading.
The company’s four strategic priorities are to grow its overall audience by strengthening digital growth and reducing print decline, make a success of the acquisition of the i, transform the editorial and sales operations to be more efficient, and strengthen the balance sheet through disposals and pension deficit reduction.
Johnston Press chief executive Ashley Highfield said: “The market continues to be challenging and uncertainty surrounding the outcome of the Brexit negotiations has caused further softness in some segments of the advertising market, in June and July.
“Nevertheless, we are focused on our strategy of increasing overall audiences, maximising opportunities for the i, maintaining tight cost control and rebalancing our portfolio.
“In that respect, we are nearing completion of the disposal of our Isle of Man newspaper group for £4.25m and are well advanced in negotiations for further divestments.”
He added: “The divestment plans, alongside the strategic implementation of key initiatives such as [sales training drive] Salesforce of the Future, will put Johnston Press on a stronger footing for the future, focusing on key geographies, audiences segments and higher yielding advertisers, and will enable us to continue to reduce debt levels and cut financing costs further and prepare the business for refinancing due by 2019.”
The group’s turnover for the 53 weeks to 2 January 2016 was £245.1m.
