Johnston revenues down as strategic review continues

Rhys Handley
Wednesday, August 29, 2018

Johnston Press had “no significant update” for investors on its efforts to tackle £220m in bond-related debt, as it reported a 10% decline in revenue for the half-year.

The publisher’s H1 2018 results were released today (29 August), with a total statutory revenue of £93m and operating profit of £7.4m – up 50.1% on H1 2017 – although the firm highlighted its adjusted operating profit, which stood at £16.6m.

Adjusted results for Johnston were calculated with the exclusion of a number of factors, including market-to-market movement of bonds, restructuring costs and strategic review costs. Net debt was reported at £140.2m.

Highlights for the publisher included the continued strong performance of the i newspaper, acquired in 2015, which posted a 61% increase in adjusted EBITDA to £6m and was key in mitigating against the broader decline in revenue.

Contract printing also remained relatively steady, with revenues at £6.6m, a decline of 3.2%. This was attributed to a reduction in print volumes – including the decision by Guardian Media Group to reduce the format of The Guardian and Observer – although £500,000 in new contracts offset the impact.

In a conference call to investors and press this morning, chief executive David King, who was appointed following Ashley Highfield’s departure in May, said that no update was yet available on the ongoing discussions over how to refinance £220m worth of debt in high-yield bonds, which is repayable on 1 June next year.

“We currently have no significant update,” he said. “However, we will report back as soon as we can say anything of substance. Our strategic review will continue, and we will update you as soon as we can.

“Clearly, we have been struggling to make the investment that we want – I have probably said that trading conditions are tough too many times, but we expect that to continue. We will continue to fight and mitigate where we can, but I do not predict any material change.

“Now we are trying to find solutions to the changes we have seen, as the way news feed algorithms have changed mean our online traffic has slowed. Though Facebook and Google are part of the challenge in that respect, they can be part of the solution and we will work more closely with them to find that.”

Total statutory advertising revenue for the group fell by 17.8% to £43.2m, with the most significant drop (15.4%) being in print advertising, excluding classifieds, though digital advertising revenue also experienced a marginal fall.

Its share prices stood at 4.18p at the time of writing, following an unexpected spike to 9.1p in late July and an all-time slump in June.

The publisher will continue its strategic review, having faced legal action from its lead shareholder Christen Ager-Hanssen last month if it were to opt for a pre-pack. Johnston urged Ager-Hanssen to present any solutions he might have for the review.

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