National World issues trading update

Highlights as reported by National World:

• 7% digital growth in challenging economic conditions
• Overall revenue decline mitigated by digital growth and acquisitions
• Continued pivoting towards more diverse and sustainable revenue streams
• Maintaining profit expectations for the full year
• Maiden dividend proposed, payable 5 July to shareholders on the register on 2 June

National World’s chairman, David Montgomery, said: “We have continued to reposition the business towards our new, digital-only operating model – meaning full automation of all content resourcing and production processes across all platforms, including print. We already lead the local publishing sector in video exploitation and are in the process of relaunching the majority of our brands deploying the new model.

“Our five recent acquisitions focus on original content serving key communities, by sector and locality, and expected to add further acquisitions in the coming months.

“These acquisitions, combined with the accelerated implementation of the new operating model, we expect to compensate for the recent downturn in advertising sales impacting the sector.”

Trading

Against a difficult background for advertising, total Revenue for the period has declined by just 5% year-on-year, benefiting from both continuing growth in digital and recent acquisitions. In April and May revenue is down 1% year-on-year following an 8% decline in the first quarter.

Digital revenue is expected to grow by 7% year-on-year for the period. Video revenues have more than doubled compared to the same period last year, driven by a 15% increase in video views.

Overall audience for the period increased by 20% year-on-year with page views reaching a peak of 167 million in the January football transfer month. Audience increased by 9% year-on-year, excluding the benefit of the Scoopdragon and Newschain acquisitions. Although continuing to grow, digital revenue momentum has been impacted by lower yields reflecting the sector-wide cooling of advertising demand.

Print revenue decline of 13% in the first quarter has been reduced to a 3% decline in April and May, again helped by acquisitions, including the addition of the Rotherham Advertiser, which is now the Group’s highest circulation weekly newspaper.

Acquisitions

For the five acquisitions completed in the period, the Group paid a total consideration of £3.0 million, (£1.9 million consideration net of cash acquired) funded from its existing cash resources. Revenue of £2.0 million and EBITDA contribution of £0.4 million are expected in the first half, with the bulk of this flowing from 1 May. For the full year, revenues of approximately £7.0 million are expected with an EBITDA contribution of more than £1.0 million.

Management is continuing to look at further potential value-creating acquisitions that align with the Group’s strategy as it repositions the business towards the new operating model, underpinned by greater productivity in specialist and original content.

The acquisition of Insider Media, with its regional B2B audience, indicates the route to sustainable revenues and growth as this business focuses on expert coverage of its sectors through daily online reporting, digital newsletters, events and, soon, exclusive video content.

Management has accelerated plans to integrate the recent acquisitions and to adopt the new operating model. We are confident these actions will deliver the required operating cost savings from June onwards, rather than rely solely on the more optimistic forecasts of an advertising pick-up.

Financial position

The Group maintains a strong financial position with a cash balance of at least £21.0 million at the end of May, offset by £1.0 million of outstanding loan note debt. Since the year-end, National World has made the final deferred instalment of £2.5 million in respect of the purchase of JPIMedia Group acquired in 2021.

The Board has recommended the payment of a maiden dividend on 5 July to shareholders on the register at 2 June in recognition of the Company’s significant progress over the last two years, during which time it has generated Adjusted EBITDA of £19.8 million on the assets acquired at the start of 2021 for £10.2 million.

Outlook

The Company remains confident that investment and development of its digital business, together with the adoption of our new operating model and careful cost management, will continue to support profits and cash flow despite challenging economic conditions. Performance for the year is forecast to be in line with the Company’s expectations.