A strong performance from the i newspaper has helped bolster interim results at Johnston Press, which is battling to reinvent itself in the face of huge decline in classified advertising.
In the six months to 1 July sales on continuing operations slipped by 3.1% to £102.9m while operating profits fell by 16.8% to £16.2m.
The firm posted a statutory loss of £10.2m for the period. In the prior year the loss was a huge £184m after Johnston Press made a massive writedown in the value of its assets.
However, Johnston Press pointed to underlying revenue growth of 4.6%, excluding the effects of a slump in classified advertising that saw sales in that part of the business collapse by 36% to £17.4m.
Chief executive Ashley Highfield said the group was focused on “creating a business for the future” in the face of the continued significant structural decline in classifieds.
The publisher of local and national titles including the Yorkshire Post and the Scotsman acquired the i in April 2016 in a £24m deal, and in January this year completed the sale of 13 local newspapers to Iliffe Media for £17m in cash.
Digital advertising revenues jumped by 14.8% to £10m, while overall ad revenues were flat, in contrast to the heavy decline experienced in the prior year. Print advertising revenues fell by 4.9% to £25.2m, on an adjusted basis excluding the titles that were sold off.
The i newspaper put in “a fantastic performance”, Highfield said, making a £14.5m contribution to revenues, with sales up 28.6% on the prior-year, post-acquisition period. It posted a 42% jump in EBITDA to £3.7m (pro-forma 2016 EBITDA: £2.6m).
Contract printing revenues grew 3.2% to £6.8m. The group has print centres in Sheffield, Portsmouth and Portadown, and the print operation has won new business from the Metro and Daily Mail. The i is currently printed by Trinity Mirror, under a pre-existing contract that expires at the end of the year.
"We are in talks with Trinity re our print requirements after this date and we would hope to make an announcement on this shortly," said David Crow, managing director of print and logistics.
Johnston Press also provided an update about the major strategic review it embarked upon in March, to find a solution to the looming repayment of £220m in high-yield bonds, which mature in June 2019.
In its statement, the group said: “After a period of initial consultations with the largest shareholders and bondholders we are currently focused on discussions with the pension trustees. The board is pleased by the continued support of the major stakeholders during the review process.”
Various possible solutions have been mooted, with the Telegraph reporting last month that hedge funds could try to engineer a mega-merger involving Trinity Mirror or Newsquest.
The group has cut its pension scheme deficit by £14.6m, to £53.1m, since the end of last year.
Johnston Press share price rose in early trading but then fell by 0.49p, or 4.43%, to 10.51p on the news. The group’s market capitalisation is just £11.5m.