Johnston Press’s Interim Management Status:
Johnston Press is a leading UK based local media group, connecting SMEs with local consumers through the provision of news, sport and other information, in print, online and via mobile and social networks.
Highlights for the Quarter:
Having successfully refinanced in the first half of the year, the business continues to grow its audience and move closer to returning to top line growth, with more advertising categories now showing net growth in the period.
We enjoyed a further narrowing of the decline in total revenues year on year from continuing operations, down 3.1% in the third quarter compared with 4.3% in the first half of the year.
Further highlights include:
* Momentum in digital audience growth underpinning the strength of our multimedia platform, with total print and digital audience now averaging over 27m users per month including mobile audience nearly doubling (96% growth) to 6.5m average monthly unique users. Total digital audience up 40% year on year in September.
* Advertising revenues down 3.4% in the third quarter, compared to 4.6% in the first half of the year, whilst advertising volumes remain strong with year on year growth in the quarter.
* Encouraging year on year aggregate revenue growth in both the employment and motors category.
* Digital revenues delivering strong growth of 19.5% in the quarter.
* New products starting to deliver growth – In the third quarter Digital Kitbag took 879 orders which more than doubled the orders taken in the previous quarter. The first Sky AdSmart sales were also booked in the period with a strong pipeline developing.
* Circulation revenues in the quarter declining in line with trend at 4.7%.
* Continuing to focus on cost savings, reinvesting part of those savings in its Digital business.
* Trading during October 2014 is in line with monthly trends.
Operational Performance
The Group remains focused on returning the business to overall growth and has a clear strategy to achieve this aim, which encompasses driving audience growth, investing in new digital products, accelerating digital revenues and continuing to pay down debt.
During the third quarter, Johnston Press has made further progress towards this goal, building on the first half performance. The decline in revenues from continuing operations has narrowed further, down 3.1% year on year compared with 4.3% at the half year. The digital revenue growth reflects a strong contribution from key categories including property (up 51% year on year), motors (up 79% year on year) and employment (up 11% year on year).
Johnston Press’ investments in its offering and new product launches are supporting digital growth.
* Digital Kitbag, which provides digital marketing services to SMEs, has seen increasing uptake in the period. During the third quarter we launched an online Digital Kitbag portal for SMEs, with thousands of visitors and hundreds of businesses downloading our SME digital marketing guides.
* During the third quarter we launched ‘TheEducationList.co.uk’, a new product in our Employment category in the education sector, building on the success of the TheSmartList and the AccountancyList. We also rolled out a video screening product for interviews across all sectors.
* We completed the Relaunch of 10 football apps in the quarter.
* WoW24/7, the online entertainment listings and going out portal, has had over 2.5m visits to the site in 2014 peaking in August when over 400,000 unique visitors came to the site, fuelled by the Edinburgh Festivals. Into 2015 we will be looking to build on the success of this year, as we seek to target key urban areas outside of London offering a valuable audience for local and national advertisers.
The Group’s total audience is now averaging over 27m unique users per month, with the growth in its digital audience remaining strong, up 40% year on year in September and accounting for 65% of the month’s audience. Mobile audiences are averaging 6.5m a month for the year, representing a near doubling of year on year audience. Our Scottish Independence website had over 4.5m users, more than voted in the referendum.
Outlook
Signs of economic growth are present in most of the Group’s geographic markets and whilst some challenges remain, the Group is focused on taking the right actions to deliver its strategy and return the business to overall top line growth. The continuing strong growth of Johnston Press’ digital platform positions the business for further improvements in 2015.
In addition, the business will implement further efficiency and restructuring initiatives in the final quarter.
As a result of the progress in the year to date and our plans for the final quarter, the Board expects trading results for 2014 to be in line with current market expectations.
Share Capital Reorganisation
On 24 October, Johnston Press announced plans for a Share Capital Reorganisation which will see a consolidation of every 50 existing Johnston Press ordinary shares into one new ordinary share. This activity will see a significant reduction in the number of Johnston Press shares in issue. The proposal is subject to shareholders approval at a general meeting to be held on 12 November 2014.
Note
All information is reported on continuing operations following the sale of its Republic of Ireland titles in April 2014, which contributed revenues of £13.5m and operating profit of £1.1m in 2013.
