Johnston Press revenue down but trading 'in line with expectations'

By Richard Stuart-Turner, Tuesday 17 April 2018

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Johnston Press has recorded a revenue drop of 9.5% in its full-year results and warned it would need to cut costs against a “difficult backdrop” but said its adjusted EBITDA was “in line with expectations”.

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Highfield: "Addressing the group’s capital structure remains a key priority"

The results, announced today (17 April) for the 52-week period ended 30 December 2017, showed that the news publisher achieved sales of £201.6m from continuing operations, down from the £222.7m it recorded in 2016. The group said £9.9m of this drop resulted from the sale of Midlands and East Anglia titles to Iliffe Media in January 2017.

The business recorded total advertising revenue – including print and digital – of £100.2m, down 18.3% year-on-year from £122.6m in 2016. Excluding classifieds, this included a print advertising decline of 20% – from £61.3m in 2016 to £49m – and an 8.1% increase in digital advertising, from £18.6m in 2016 to £20.1m.

Circulation revenue fell by 1% year-on-year to £79.1m but contract printing revenue grew by 4.2% to £13.3m. The group said the latter was driven by a strong record of client retention and competitive wins for its Sheffield and Portsmouth print plants.

The group’s pre-tax loss narrowed to £95m, from £300.7m in 2016. Adjusted EBITDA was £40.1m, down 8.7% on the 2016 figure of £43.9m, though the group said this was in line with its expectations. Its adjusted EBITDA margin dropped from 20.8% in 2016 to 19.9%.

The i newspaper, which was acquired by Johnston Press in April 2016, delivered a “significant profit improvement”, the group said, with adjusted EBITDA of £9.3m in its first full year. This was more than double the adjusted EBITDA over the comparable 38-week period in 2016, from £3.3m to £7.6m.

In its results statement, the group said the trading environment “remains challenging”, notwithstanding early signs of some improvement in the national print advertising market.

“Comparatives do get harder, and we expect to see continued pressure on revenues, and the requirement for cost savings. Against this difficult backdrop we are focused on maintaining our strong margins, driving additional growth from i and realising further operational and financial synergies. During 2018 we will continue to selectively invest in the business, with a focus on digital, journalists, and content generation.”

The group said it has traded in line with the board’s expectations in the first quarter of 2018, with adjusted EBITDA higher for the period than the prior year, while revenue for the i grew by 21% year-on-year in Q1.

The publisher is currently in the midst of a strategic review, launched last March, to find a solution to the repayment of £220m in high-yield bonds, which mature in June 2019.

It said discussions with stakeholders and their advisors – including with a bondholder committee – remain in progress and that any [financing] proposal will be subject to negotiation and consent of stakeholders.

It added “there can be no certainty that a formal proposal will be forthcoming”, and if no consensual agreement is reached, then alternative refinancing or restructuring options will be explored.

“Whilst operationally the business is performing well in challenging markets, addressing the group’s capital structure remains a key priority,” said Johnston Press chief executive Ashley Highfield.

“The strategic review of financing options is ongoing and discussions with our various stakeholders are progressing.”

He added that while “the debate is ongoing”, the group will only update on the situation when it has “something concrete” to share.

Johnston Press’ share price was down slightly by 0.06p in early trading to 8.8p.

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