Johnston Press plc today publishes its Interim Management Statement which has been drawn up for the 18 weeks to 4 May 2013, this being the last practicable date, as required by the UK Listing Authority's Disclosure and Transparency Rules.
Highlights for the period:
- First increase in operating profit for almost 7 years - despite challenging economic environment
- Total revenues down 11.4% on a like-for-like basis - revenue declines slowing month-on-month
- Costs on track to reduce by over £20m in 2013
- 183 titles now successfully relaunched
New website rollout commenced for every title
- Continued digital audience and revenue growth in the period
- Focus on debt reduction maintained with £10m cash receipt from the negotiated cancellation of print contract with News International
The restructuring of the business that took place in 2012 is reflected in the reduced cost base, and theGroup's operating profit for the period to the end of April was ahead of the same period in the prior year. The reduction in costs includes current year savings as well as the full year effect of the savings made last year. Reducing the Group's net debt remains a key priority and this was assisted by the £10m received from the negotiated cancellation of the remaining print contract with News International. We expect net debt to continue to reduce significantly over the course of 2013 with capital expenditure and working capital remaining tightly controlled.
Market conditions at the beginning of 2013 were broadly in line with those seen at the end of 2012, but each of the first 3 months of the year showed a slowing in the year-on-year rate of revenue decline. While April's results did not reflect this improving trend (partly due to the timing of Easter), initial trading in May suggests that the trend in the slowing of revenue declines has now resumed and we would expect this to continue into the second half of the year.
On a like-for-like basis*, total revenues for the 18 week period were down 11.4 % year on year, with total advertising revenues down 15.1%. The unadjusted declines were 15.5% and 15.2% respectively. Display advertising was down12.7 % in the 18 week period compared to last year, principally as a result of poor weather at the start of the year and relatively strong comparatives at the beginning of 2012.Classified advertising declined by 16.8% in the period primarily due to the economic environment, with the employment and motors categories being the most affected.
Digital audience growth has continued, with monthly website visitors for April showing a 16.4% year-on-year increase to 11.6m. There was further development of the Group's websites in the period with the start of a programme to roll out new versions of all our local websites this summer. With the exception of digital employment and business directory there was strong growth in digital revenues with a growth rate excluding these categories of 32.2%. Digital employment revenues were depressed by the decline in print employment revenues in the period, and we are in the process of making significant changes to business directory including a change of partner. Including the impact of these categories digital growth was 8.1% in the period.
The successful re-launch of allof the Group's titles has now almost been completed with the final re-launches scheduled to be completed in June. The Group's circulation revenue declined byjust 0.8% year-on-year on a like-for-like basis (with an unadjusted decline of 6.0%) during the period. This was an improvement on the 2012 performance, and taking into account the impact of the poor weather at the beginning of the year and the benefit of the relaunches going forward, we continue to expect year-on-year circulation revenuegrowth over the full year. For the titles relaunched in 2013, the average post-relaunch revenue uplift has been around 6% year-on-year.
Provided that the trading environment does not deteriorate further,with the circulation revenue increases from the relaunchedtitles, an increased growth rate of the digital business, and cost savings already achieved or identified, we expect the results for 2013 to be in line with current market expectations.
Commenting on the Interim Management Statement, Johnston Press' CEO Ashley Highfield said:
"For the first time in almost 7 years we are in a position to report a year-on-year increase in operating profit for the period. While the economic environment continued to be challenging, the implementation of our strategy progressed further with the successful completion of the relaunch of the vast majority of our titles, together with the further development of our digital business and the rollout of new hardware and software to all sales staff and journalists. With our reduced cost base and our continued focus on debt reduction, we remain on track to deliver a strong performance in 2013."
For further information please contact:
Ashley Highfield, Chief Executive Officer or Grant Murray, Chief Financial Officer
0207 466 5000 (today) or 0131 225 3361 (thereafter)
Richard Oldworth/ Sophie McNulty/ Louise Hadcocks
0207 466 5000
A number of changes have taken place in the business since the corresponding period last year including the conversion of five titles from daily to weekly, the title relaunches, and changes to the contract printing operations as a result of the revised arrangements with News International. The overall results compared to the same period last year are therefore given on both a like-for-like and unadjusted basis where appropriate.
The Interim Management Statement may contain forward looking statements, which have been made by the Directors in good faith based on the information available to them at the time of their approval of the Statement, and should be treated with caution due to inherent uncertainties, which are beyond Johnston Press' ability to control or estimate precisely and include both economic and business risk factors, underlying such forward looking information.