March 30, 2017 Last Updated 8:08 am

Johnston Press reports total revenue down 6% in 2016, takes £120.4m impairment charge

‘While we can expect to see continued pressure on traditional print revenue streams, we have seen digital return to growth in Q1 2017, with better margin products, and will see growth from our investment in the i from both the newspaper and website.’

Edinburgh, Scotland – March 30, 2017 — Johnston Press plc, one of the UK’s foremost news publishers, announces its results for the 52 week period ended 31st December 2016.

Financial Highlights1

  • Adjusted1 revenue (including the i from April) down 6.0% for the period, down 5% Q3 and with trends improving, revenues up 1% in Q4
  • Cost savings of £26m (excluding acquisitions) for the period
  • Adjusted1 EBITDA margins continue to exceed 20%
  • Statutory loss before tax of £300m includes non-cash impairment of £223.9m in H1 and £120.4m in H2.

Operational Highlights

  • Record audience growth, with increase of overall audience:
    • Improving print volume trends across the regionals
    • Average on-network monthly Unique Users up 15.4% from 19.5m in 2015 to 22.5m in 2016, following mid-year re-launch of entire web portfolio of 173 sites.
    • Off-network (predominantly Facebook) unique users up 60% year-on-year to 2m.
    • Average on-network monthly page views up 4.6% to 91.1m in 2016
  • Further success of i newspaper:
    • Acquisition of the i newspaper in April 2016 for £24m
    • i newspaper sales volumes up 5% (ABC excluding bulks) year-on-year
    • Q4 circulation revenues up 20% year-on-year
    • Launch of inews.co.uk, reaching average 1.4m unique users per month in Q4 2016
  • More efficient sales operation:
    • Focus on restructuring sales teams
      • restructured teams creating retention, transaction and acquisition teams
      • sales and distribution staff reduced by 200 over the year
      • adopted modern approach to sell creative, native and targeted digital and print advertising solutions
      • moved 21,000 small, infrequent customers into Media Sales Centre
    • New commercial platform to support Local Display, Features and Entertainment
    • Built our partnerships and programmatic model on 1XL platform
  • Manage obligations
    • Raised £21.25m of cash through disposals of the Isle of Man titles in August (£4.25m) and East Anglia/Midlands titles in Jan ’17 (£17m)
    • Revolving Credit Facility cancelled January 2017, removing maintenance covenants
    • Strategic review commenced of options for £220m bond refinancing in June 2019

Market context
The Group operates in a sector that is experiencing substantial revenue volatility and structural change.

  • National print display advertising contracted by 12.5% in 2016 (WARC / AA1)
  • National digital display advertising up 2.1% in 2016 (WARC / AA)
  • Total circulation volumes across national quality newspaper sector declined by 9% in 2016 (ABC2)
  • Clear impact of Brexit on advertising in June 2016 and  Q3 2016, especially SMEs, Jobs, & Property sectors
  • Weakness of sterling has increased the cost of imported paper and ink
  • Signs of improving economic confidence (among SMEs) in Q4 2016 and Q1 2017

Asset impairment
Following an impairment at the half year of the carrying value of acquired publishing titles, the downturn in quarter 3 and continued revenue pressures, have resulted in a further impairment of £120.4m in H2.

Ashley Highfield, Chief Executive Officer, commented,
“Despite an industry wide backdrop of significant downward pressure on revenues, the actions we have taken to pilot the business through this rapidly-changing market and create the conditions from which to create growth are starting to bear fruit:  circulation figures of key titles are improving, the i has bucked the trend of declining national newspaper sales and our progressive editorial and sales models are starting to transform our regional businesses.

While we can expect to see continued pressure on traditional print revenue streams, we have seen digital return to growth in Q1 2017, with better margin products, and will see growth from our investment in the i from both the newspaper and website. Further, we will start to see the benefits of our restructured sales teams and product roll out.

Amid ever growing concerns from advertisers, both big and small, about the placement of their brand alongside unacceptable content, and increasing uncertainty around fake news, we believe our strategic focus on providing readers and advertisers alike with news platforms that serve as a trusted source of truth and insight, put together by teams of professional reporters who know their communities, is becoming an ever more important USP. By combining digital innovation with real news value, we will continue to see further growth in monetisable audiences.

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