Johnston Press still burdened by debt
Scotsman group continuing to grapple with print decline
The London-based group said it traded well in the first quarter and while the second quarter was impacted by a slowdown in general trading, it said July showed some improvement.
Its digital audience grew by more than 20% in the first half of the year to an average monthly audience of 19.9m against 16.7m for the same period in 2014 showing the rapid switch in reader habits.
Digital revenues also grew, up 17.5% to £16.5m and now representing 20.5% of total advertising against 16.6% last year.
But the group continues to depend for almost 80% of its advertising revenue on a declining print business. Total income came in at £128.9m, down 4.6% on the previous half year, a slightly slower decline than in 2014 (4.3%).
The group made cost savings of £7.6m (gross) which offset revenue declines, and funded digital investment of £2.6m, contributing to underlying operating profit – a measure of ongoing trading performance – of £27m, down £1.2m, which produced a margin of 20.9%.
Underlying profit before tax increased 114.3% from £8.3m to £17.8m, reflecting reduced interest payments following refinancing of the group.
The company has further reduced its debt from £194.2m in 2014 to £183.3m, but this continues to weigh on its investment plans as interest payments soak up cash generated.
It said the business enters the second half “from a lower base than planned” and added: “We believe in our strategy and are confident that our transformation projects will position the group well for the future.”
Ashley Highfield, chief executive, said: “Trading conditions in the first half of 2015 have undoubtedly been challenging, with May and June being particularly difficult – a time when there was also a high degree of uncertainty in the wider market.
“However, we believe, local publishing, with SMEs representing 80% of our advertising revenue, is not as volatile as national publishing. We have seen some improvement in reducing the decline in advertising revenues in July compared to July 2014. We will continue to drive for further improvement in revenues, albeit off a lower base, and will also continue to target further cost savings.
“Our strategy remains constant and is showing real traction. Digital now accounts for over 20% of advertising revenues, up from 13% two years ago. Digital display saw growth of 30% in the period.”