Highlights

Headlines:

Strategic:

The company’s four strategic priorities are:  grow overall audience (strong digital growth and reducing print decline), make a success of the acquisition of the i newspaper, transform the editorial and sales operations to be more efficient, and strengthen the balance sheet through disposals and pension deficit reduction.

  • Audience Growth: Digital audience grew by 22.4% to an average monthly audience of 24.4m in H1 16 (H1 15: 19.9m). Print audience decline rates improved from Q1, with Weeklies now down 10.9% year on year (as at July 2) a 1.3% improvement on the ytd run rate, with regional dailies improving their run rate 0.5% to -13.6% (as at 2 July) with key titles i up 10.5% (2 July) year on year, The Yorkshire Post down 9.8% and The Scotsman down 10.9%. Circulation revenue increased £0.9m (2.3%) to £38.4m following the acquisition of the i newspaper during the period.
  • Acquisition of the i newspaper: Acquired on 10 April for £24.0m, the average daily circulation of the i grew from 270,182 in the month prior to acquisition to 294,223 in June (ABC audited), an increase of 8.9% with a further increase expected in July. We have grown market share in the quality daily segment from 18.0% to 20%. inews.co.uk launched on 14 April achieved 1.65m weekly page views in the week commencing 26 June and is regularly achieving over 1m page views per week.
  • Continued transformation: H1 was focused on the bedding in of the Newsroom of the Future programme and the launch of 19 new fully responsive websites and mobile apps for our priority titles, with encouraging audience results across print and digital. Fundamental changes to our advertising business (the Salesforce of the Future programme) has seen the cessation of some low margin commercial digital product offerings and other low margin accounts moved from the field into the Media Sales Centre (which has shown 0.4% revenue growth year on year in Q2), the broader revenue benefits of which should be seen in H2.
  • Disposals: The sale of our titles on the Isle of Man for £4.25m, which we announced on 4 July 2016, and which is the first in our programme of disposals, is nearing completion, with further announcements expected soon (see ‘Strategic progress’ and ‘Disposals’ below).

Financial:

  • Revenue: Improved underlying revenue decline to 4.7% in Q2 (14.5% Q1), benefiting from the i acquisition and slight improvement in underlying run rate. Total adjusted revenues of £113.9m (H1 15: £126.1m) reflect a decline of 9.7% for the period. Digital publishing advertising excluding classified increased 1.6% to £9.3m.
  • Operating profit: Adjusted operating profit of £22.0m declined by £4.0m as cost savings of £8.6m substantially mitigated revenue declines.
  • Profit before tax: Adjusted profit before tax of £12.3m; Statutory loss of £183.7m is substantially as a result of a non-cash impairment of £183.6m (£216.9m gross, net of some £40.3m deferred tax) reflecting a change of assumptions on the publishing titles and print assets.
  • Debt: Net debt reduced to £137.7m (from £146.1m at 2 January 2016) and includes a mark to market gain on the fair value of the bond of £38.4m. Excluding mark-to-market movements, our 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.
  • Pensions: The IAS19 pensions deficit reduced to £23.2m with increased liabilities more than offset by improved asset valuations.