Johnston Press, one of the leading media groups in the UK and publisher of the St Helens Reporter, announces its results for the 53 weeks ended January 3, 2015.
2014 was a 53 week trading period and the underlying results have been adjusted to exclude the impact of the extra week.
Unless otherwise stated, or where the context otherwise requires, financial information in this announcement is provided on an underlying basis.
Profit before tax: Underlying profit before tax increased 235.1% to £29.9m from £8.9m
Operating profit: Increased for the second consecutive year to £55.5m – up 2.8%
Revenue: Total underlying revenues of £265.9m reflect a decline of 4.4% for the period
Digital revenues: Up 20.0% for the period, from £24.0m to £28.8m representing 17.4% of advertising revenues (2013: 13.8%)
Digital audience grew by 35.8% to an average of 16.7m in 2014 (2013: 12.3m)
Cost reduction: Operating costs reduced by £13.8m net of investment in digital
Operating margin: Up to 20.9%, from 19.4%
Continued debt reduction: Net debt down to £184.6m at period end (2013: £302.0m), reflecting refinancing
Digital revenue growth:
Digital revenues were up 20.0% underlying in the full year growing from £24.0m to £28.8m with property, motors and local display joining employment in showing strong year on year growth. New products and national platforms for local businesses for example SkyAdsmart and 1XL were launched and DigitalKitbag was rolled out.
Returning to top line growth:
Total underlying revenue of £265.9m declined 4.4% for the period, reducing the rate of decline from 5.2% in 2013 and 7.4% in 2012.
Total advertising revenues of £165.7m declined 4.7%, print advertising declined 8.7% to £136.9m while digital revenues were up 20%. The employment category led the way with revenue growth of 3.4%, becoming the first to reach the overall digital tipping point.
Newspaper sales revenue was down 4.8% from £81.8m to £77.9m.
Average total monthly audience for the year was 27.3m, up from 24.5m in 2013, representing an increase of 11.4%. Digital audiences grew by 35.8% from an average in 2013 of 12.3m to an average of 16.7m per month in 2014. 40.7% of our digital users are now reached via mobile devices (2013: 31.7%).
Strong cost discipline
Underlying operating costs were reduced by £13.8m (6.2%) to £210.4m, net of digital investment, while financing costs (excluding exceptional items) of £21.5m in H1 were reduced to £9.7m in H2.
The results include a net charge before tax of £53.8m in respect of exceptional items. Exceptional operating costs of £44.7m relate to further write-downs of publishing titles and other assets, along with business restructuring. Exceptional finance costs of £9.0m were associated with the refinancing and include an interest accrual release offset by the write off of term debt issue costs and debt refinancing fees.
Net debt and financing costs
Successful refinancing of existing debt facilities completed in June 2014 through a £140m placing and rights issue and raising £220.5m in a £225m 8.625% bond issue due 2019.
Net debt post refinancing was reduced to £184.6m (2013: £302.0m) after initial discount and marking to market.
Net cash inflow from operating activities was £7.8m, after annual pension contributions of £6.3m and exceptional pension contributions of £8.2m and redundancy costs of £9.9m. Excluding exceptional items, the Group generated operating cashflows of £30.7m, while the disposal of the Republic of Ireland business in April 2014 to Iconic Newspapers Limited generated £7.1m.
Total finance costs reduced from £45.8m in 2013 to £34.6m.
Consistent with the strategy to use surplus cashflow to reduce the overall leverage of the Company over time, the Company has allocated £5.0m of its cash to buy-back bonds in the open market over the coming months.
Further to the refinancing carried out in 2014, the Company has lodged a petition with the Court of Session seeking approval for the reduction of the Company’s share premium account by £275.0m to eliminate the accumulated deficit on the profit and loss account and create distributable reserves going forward.
The provisions of the bond restrict the Company’s ability to pay dividends until certain conditions, including that net leverage is below 2.25x EBITDA, are met. Although the Board wishes to resume dividend payments as soon as is appropriate, no ordinary dividend is proposed for the period
Commenting on the annual results and outlook, the Chief Executive, Ashley Highfield, said: “Following the refinancing we are seeing the business transform into a modern multimedia organisation.
“The strong growth in our digital audiences and accelerated growth of digital revenues, aided by the roll-out of Digital Kitbag and the launch of Sky Adsmart and 1XL are changing the shape of the Company.
“We are excited about the future for the business and confident of delivering on our strategic objectives of growing an engaged audience base and returning our business to top line growth.”