Trading conditions 'challenging'
Scotsman owner to sell more titles amid 27% profits fall
The local paper owner of The Scotsman, Yorkshire Post and Falkirk Herald, reported a 27% fall in half-year pre-tax profits from £16.8 million to £12.3m.
Taking account of impairments on the publishing titles and print assets it fell to a bottom line loss of £183.7m against a £2.2m profit last time.
Shares in the group fell to an all-time low, down more than 18% or 2.5p at 11.6p.
The London-based group admitted that overall performance for the 26 week period ended 2 July 2016 was “marginally below the board’s expectations”.
It reported strong growth in circulation for the ‘i’ newspaper which it acquired in April, and this partially offset “challenging advertising trading conditions”.
But after launching its Newsroom of the Future initiative circulation for The Scotsman fell by a further 10.9% and the Yorkshire Post was down 9.8%.
During the period it sold newspapers in the Isle of Man and said it is “actively exploring opportunities for the disposal of further assets.” It said further announcements will be made in due course.
EBITDA for the period fell 12.5% from £29.2m to £25.5m, with cost savings “substantially mitigating” revenue declines.
“Whilst the board is encouraged by the improved Q2 performance in several parts of the business, overall performance for the 26 week period ended 2 July 2016 was marginally below the board’s expectations,” it said.
It hinted at more cost cutting to improve the trading position.
“In light of the added market uncertainty following the [EU] referendum vote, the company is now focused on revenue and cost measures to maintain margins and minimise the impact of a difficult trading environment,” it said.
The digital audience grew by 22.4% to an average monthly audience of 24.4m in H1 16 (H1 15: 19.9m).
Print circulations for the dailies were down 13.6% year on year with the ‘i’ up 10.5% but The Scotsman down 10.9% and The Yorkshire Post 9.8%. Sales of the weeklies were down 10.9%.
Circulation revenue increased £0.9m (2.3%) to £38.4m following the acquisition of the i newspaper during the period.
The company said that after acquiring the ‘i’ newspaper in April for £24m it had grown market share in the quality daily segment from 18% to 20%.
Its ‘i’ website launched on 14 April and achieved 1.65m weekly page views in the week commencing 26 June. It is regularly achieving over 1m page views per week, it said.
The sale of group titles on the Isle of Man for £4.25m, announced on 4 July, was described in the statement as “the first in our programme of disposals”. It said further announcements were expected soon.
Group revenue of £113.9m was down 9.7% from £126.1m. Digital publishing advertising, excluding classified, increased 1.6% to £9.3m.
Net debt has increased from £179.4m at 2 January 2016 to £209.4m at 2 July 2016 following the acquisition of the i newspaper.
Ashley Highfield, chief executive, said: “The acquisition of the i newspaper in April was transformational for Johnston Press. Since the acquisition we have increased circulation considerably, using the extensive JP distribution network, and continued to grow market share.
“Perhaps more significantly, owning the i newspaper is enabling us to present the whole JP portfolio, and the 1XL digital advertising network, to media buying agencies and clients afresh. Further, we have started to see significant content sharing between the i and the rest of the portfolio.
“The market continues to be challenging and uncertainty surrounding the outcome of the Brexit negotiations has caused further softness in some segments of the advertising market, in June and July.
“Nevertheless, we are focused on our strategy of increasing overall audiences, maximising opportunities for the i, maintaining tight cost control and rebalancing our portfolio. In that respect, we are nearing completion of the disposal of our Isle of Man newspaper group for £4.25 million and are well advanced in negotiations for further divestments.
“The divestment plans, alongside the strategic implementation of key initiatives such as Salesforce of the Future, will put Johnston Press on a stronger footing for the future, focusing on key geographies, audiences segments and higher yielding advertisers, and will enable us to continue to reduce debt levels and cut financing costs further and prepare the business for refinancing due by 2019.”