Johnston Press confident on strategy following 'solid' first half


Johnston Press chief executive Ashley Highfield said he was confident in the firm's ability to return to top line revenue growth and reverse the decline in operating profit following the publication of "solid" first-half results this morning.

Highfield, who has almost halved the £357m net debt he inherited in November 2011, said there was now "a real momentum gathering pace within the group", which reported increases in both underlying operating profit and underlying operating profit margins.

Highfield said: "Johnston Press has delivered a solid first half performance. The results reflect our on-going progress against our strategic priorities as well as an improving economic climate, and demonstrate our continuing relevance to the communities we serve across print and digital.

"We are growing strongly in a number of categories, and reducing the decline in the rest, whilst continuing to bring down our cost base. As a result we are growing operating profits and margins."

Underlying revenues (excluding the group's ROI business and the cancellation of the News International contract) fell 4.3% to £135.8m in the six months to 28 June 2014, which represented a narrowing of the 5.3% decline in the first half of 2013.

Underlying operating profit rose 3.6% to £28.3m, while underlying operating profit margins grew to 20.9% from 19.3% in H1 2013; underlying pre-tax profit leapt 188.5% to £6.1m. Net debt fell from £306.4m to £181.6m following its recent refinancing.

As a result, annual interest payments have fallen more than £36m to around £20m and debt maturity has been extended by five years, providing "a level of improved stability from which to develop the business".

Underlying contract printing revenues for the period were £1.1m higher than the prior year, at £6.3m, mainly driven by new contract wins. However, printed newspaper sales declined 4% on an underlying basis to £39.7m.

The group highlighted the "supply and volatility of pricing of newsprint" among the principal risks and uncertainties for the business, adding that it was "the largest single expense incurred by the business" after staff costs at some 10% of the cost base.

Underlying print advertising revenue fell 8.7% to £70.8m, although this was partially counteracted by a 23.4% increase in underlying digital ad revenues to £14.1m, leaving total underlying advertising revenues down 4.6% at £84.9m.

Operating costs fell £7.1m or 6.2% to £107.5m on an underlying basis.

Another key metric for the group, total audience figures, grew 14.3% year-on-year to 25.6m monthly users in June across print and digital platforms. Johnston Press said that it was experiencing total audience growth in 136 of the 151 markets in which it operates.

Highfield said: "We are seeing continued growth in our total audience and in digital revenues and we believe this sale allows us to better capitalise on the opportunities in these markets.

"The economy is continuing to improve and the ripple-out effect from London and the South East is beginning to show in the numbers in Scotland, Yorkshire and Northern Ireland. We have also seen a growth in a number of national advertising sectors such as Telecom, Finance, Travel and Grocery.

"With digital audiences regularly hitting 16m (up 39.4% year on year), July hitting 18m and digital revenues now representing 16.5% of total advertising revenues up from 12.7% during H1 of 2013 we are fast becoming a genuinely multi-media company."

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