RNS Number:0521P
Johnston Press PLC
27 August 2003
For Immediate Release 27 August 2003
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Johnston Press plc, one of the U.K.'s leading regional newspaper publishers,
announces interim results for the six months ended 30 June 2003.
KEY FINANCIALS
2003 2002 Change
#'m #'m
Turnover 248.5 193.6 +28%
Operating profit before operating
exceptional items 84.1 62.1 +35%
Profit before tax 66.7 44.3 +51%
Headline earnings per share 16.82p 14.26p +18%
Interim dividend 2.0p 1.8p +11%
HIGHLIGHTS
* Like-for-like advertising revenue growth of 3%
* Increase in operating margins, pre operating exceptionals
- Overall from 32.1% to 33.8%
- Former RIM companies from 26.8% to 32.6%
- Johnston Press (excluding RIM) from 33.4% to 34.5%
* RIM integration ahead of expectations
* Free cash flow up 49%
* Over #40m to be invested in new Sheffield print centre between 2004 and
2006
OUTLOOK
Chief Executive, Tim Bowdler, said:
"We have made a satisfactory start to the second half. Costs remain under close
control and we continue to enjoy the benefits of the integration of the RIM
businesses. Although we see no early prospect of a significant improvement in
overall market conditions, we anticipate continued modest advertising revenue
growth and remain confident that the outcome for the year will reflect good
progress."
For further information please contact:
Tim Bowdler, Chief Executive or
Stuart Paterson, Finance Director: 020 7466 5000 (today) or
0131 225 3361 (thereafter)
Richard Oldworth/Suzanne Brocks
Buchanan Communications: 020 7466 5000
CHIEF EXECUTIVE'S HALF YEAR STATEMENT
Johnston Press has continued to perform well through the six months to 30 June
2003. During the period, advertising revenues continued to grow modestly, costs
remained well controlled and the benefits from the integration of Regional
Independent Media (RIM) exceeded expectations.
Operating profit before operating exceptionals increased by 35% to #84.1 million
and excluding RIM, which was acquired on 12 April 2002, grew by 7%. As the
acquisition resulted in higher borrowings throughout the period, the interest
charge increased by 27% to #16.7 million leaving profit before tax at #66.7
million, up 51%.
Headline earnings per share rose from 14.26p to 16.82p, an increase of 18%. The
interim ordinary dividend payable on 7 November 2003 will be 2p per share, an
increase of 11%.
TRADING REVIEW
For the period under review, advertising revenue for the enlarged group
increased on a like-for-like basis by 3.0%. Yields were ahead in every category,
in part reflecting the continued benefits of our recent investment in increased
colour printing capability. Market conditions continued to vary across the
country, particularly in the case of job advertising, with conditions in the
north generally remaining better than those further south.
Advertising volumes on a like-for-like basis were up by 1.6%, primarily due to
growth of 11.9% in property advertising, the lowest yielding category. Despite
this change in the advertising mix, average yield across all categories
increased by 1.4%. The growth in property volumes reflected a general slowdown
in the rate of house price increases, which in turn, fuelled the need for
vendors to advertise more frequently.
All classified categories grew revenue on a like-for-like basis over the six
months although, apart from property advertising, the increases were modest.
Display advertising declined by 1.7%, with business at the local level being
flat and national agency business falling back, a reflection of macro-economic
uncertainty exacerbated by the Iraqi conflict. In contrast, consumer confidence,
under-pinned by low interest rates and continued low unemployment, generally
remained positive in our various local markets and provided the foundation for
the modest overall growth in advertising revenues across the Group.
The operating profit margin in the period, pre-operating exceptionals, increased
from 32.1% to 33.8% with every publishing division improving its performance.
Within that overall picture, the operating margins of the Johnston Press Group
prior to the RIM acquisition increased from 33.4% to 34.5% and for the RIM
companies from 26.8% to 32.6%. Performance in the northern half of England was
particularly strong against the previous year.
The Printing Division has also had a better period as the newly installed and
upgraded presses began to perform to expectations. In overall terms,
like-for-like operating profit increased by 14% from #1.7 million to #2.0
million, reflecting the additional volumes now being processed through the
division as well as the improved operational performance.
The detailed review of the RIM printing facilities, which led to the closure of
the Harrogate press, has also resulted in a decision to invest at the two
remaining print centres. At Leeds, we are installing a new print tower to
increase colour availability and we have also introduced computer-to-plate
technology. At Sheffield, we have decided to build a new press centre on a
greenfield site to support the local publishing operations at an anticipated
cost in excess of #40 million. Expenditure on this project will be phased over
the period 2004 to 2006 by which time it is expected to be fully on line,
resulting in the closure of the existing press.
Weekly circulations have increased again by 1.1%, now into their seventh
successive year of growth. Whilst circulations of our daily titles fell by 3.3%,
this was in part due to further reductions in bulk sales, especially for some of
the RIM titles. We remain confident that progress is being made in addressing
the declining evening sale and early indications suggest some improvement in the
second half. Circulation revenues from our daily titles were 0.6% ahead on a
like-for-like basis reflecting our concentration on the full price trade sale.
We now have 145 local websites which extend and complement our local newspaper
publishing activities. The RIM electronic media activities have been fully
integrated into the Johnston Press model and in the half year we saw a positive
financial contribution of #1.1 million from the Group's activities in this area.
Considerable advances have been made in further developing the content and
functionality of our sites and page impressions continue to grow, up 43% on last
year, on a like-for-like basis.
During the period, considerable progress has been made with the continuing
integration of RIM. Initiatives to rationalise various support functions at the
local and regional level are well advanced and are expected to deliver ongoing
cost savings. Against a stated target saving of #9 million in 2003, we are
already confident of achieving in excess of #10 million. We continue to be
delighted with the performance of RIM and with the overall quality and potential
of the business.
BORROWINGS
The Group continues to generate strong cash flow and this has facilitated a
reduction in net debt as at 30 June 2003 to #463 million, some #94 million lower
than at this time last year. The seasonal nature of the business resulted in an
increased working capital requirement at the half year of #9.3 million,
predominantly due to trade debtors, which traditionally reverses at the
year-end.
On 7 January 2003, the Group re-financed #133 million of its bank debt with a
private placement of #60 million and US $115 million Senior Notes with a 10 year
term. The #100 million 364 day facility within the bank debt was repaid and
cancelled, together with an additional voluntary repayment of #33 million.
In view of the funding position of our two defined benefit pension schemes, the
Group has committed to pay an additional #12.6 million one-off contribution. It
will be paid in the second half and will have no material impact on the profit
and loss account. This ensures that the MFR of both funds will be in excess of
90%.
BOARD
During the period, we strengthened the Board with the appointment of two new
non-executive directors. With considerable experience in consumer-facing
organisations, both are already making a very valuable contribution.
Martina King, aged 42, is Managing Director, Country Operations Europe, at
Yahoo! UK Ltd, having joined in 1999 as Managing Director, UK & Ireland. Her
wealth of media sector experience also includes seven years at Capital Radio,
the last three of which were as Managing Director, preceded by 10 years at The
Guardian in a variety of advertisement display sales roles culminating in
Display Sales Manager between 1991 and 1993.
Simon Waugh, aged 45, is Deputy Managing Director of British Gas having joined
Centrica plc as Group Director of Marketing in 1997, a role which he still
retains. Operationally he is responsible for all key customer-facing divisions
covering sales, marketing, customer service and call centres. Simon was
previously Managing Director of SAGA Services Ltd after four years with Lloyds
Abbey Life Group, initially as Commercial Director and latterly as Deputy
Managing Director of Lloyds Bank Insurance Services. His early career was spent
at American Express where he became UK Sales and Marketing Director.
OUTLOOK
We have made a satisfactory start to the second half. Costs remain under close
control and we continue to enjoy the benefits of the integration of the RIM
businesses. Although we see no early prospect of a significant improvement in
overall market conditions, we anticipate continued modest advertising revenue
growth and remain confident that the outcome for the year will reflect good
progress.
T J Bowdler
27 August 2003
GROUP PROFIT AND LOSS ACCOUNT
26 Weeks to 30 June 2003 26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
Notes #'000 #'000 #'000
Turnover 2 248,456 193,564 428,394
Operating profit before operating exceptionals 84,069 62,131 131,217
Operating exceptionals 4 (882) (1,125) (1,747)
Operating profit 3 83,187 61,006 129,470
Share of associates' operating profit 231 204 401
Exceptional items 4 - (3,732) (4,438)
Profit on ordinary activities before
interest and taxation 83,418 57,478 125,433
Net interest 5 (16,719) (13,206) (32,708)
Profit on ordinary activities before taxation 66,699 44,272 92,725
Taxation on profit on ordinary activities 6 (19,834) (13,006) (26,861)
Profit for the financial period 46,865 31,266 65,864
Dividends 7 (5,740) (5,177) (15,464)
Retained profit for period 41,125 26,089 50,400
Earnings per Share 11
Headline 16.82p 14.26p 26.75p
Headline diluted 16.72p 14.17p 26.61p
Basic 16.51p 12.49p 24.65p
Basic diluted 16.42p 12.41p 24.52p
GROUP BALANCE SHEET
At 30 June 2003 At 30.6.03 At 30.6.02 At 31.12.02
Notes #'000 #'000 #'000
Fixed Assets
Intangible 927,557 932,567 927,557
Tangible 153,812 163,782 154,084
Investments 4,908 5,050 5,195
1,086,277 1,101,399 1,086,836
Current Assets
Stocks 2,219 2,885 2,703
Debtors: due within one year 74,202 72,771 54,645
due after more than one year 6,704 6,556 7,062
Cash at bank and in hand 9 7,176 11,859 10,735
90,301 94,071 75,145
Creditors: amounts falling due within one year (134,454) (138,413) (121,973)
Net current liabilities (44,153) (44,342) (46,828)
Total assets less current liabilities 1,042,124 1,057,057 1,040,008
Creditors: amounts falling due after more
than one year (426,983) (518,116) (472,559)
Provisions for liabilities and charges (12,070) (3,277) (5,952)
Net assets 603,071 535,664 561,497
Capital and Reserves
Called-up share capital 8 29,463 29,363 29,445
Reserves 573,608 506,301 532,052
Shareholders' funds 10 603,071 535,664 561,497
The Interim Report was approved by the Board of Directors on 27 August 2003.
GROUP CASH FLOW STATEMENT
26 Weeks to 30 June 2003 26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Operating profit 83,187 61,006 129,470
Exceptional items (536) (3,456) (4,976)
Depreciation 8,397 7,725 16,718
Development grant amortisation - - (14)
Amount written off employee share option trust 147 - 111
(Profit)/loss on sale of fixed assets (7) 111 81
(Increase)/decrease in working capital (9,306) 900 10,361
Decrease in unfunded pension provision - - (294)
Net cash inflow from operating activities 81,882 66,286 151,457
Income from fixed asset investments 811 1,016 1,158
Net interest paid (15,955) (11,933) (27,627)
Preference dividends paid (76) (76) (152)
Term debt issue costs - (6,845) (6,845)
Returns on investment and servicing of finance (15,220) (17,838) (33,466)
Taxation (7,732) (8,108) (17,713)
Purchase of tangible fixed assets (9,211) (8,329) (15,741)
Sale of tangible fixed assets 51 1,137 2,165
Sale of investment - 2 1
Purchase of investments (238) - (643)
Capital expenditure and financial investment (9,398) (7,190) (14,218)
Purchase of businesses and subsidiary undertakings - (573,537) (573,330)
Sale of businesses and subsidiary undertakings 608 225 5,604
Acquisitions and disposals 608 (573,312) (567,726)
Equity dividends paid (10,195) (6,559) (11,654)
Net cash inflow/(outflow) before financing 39,945 (546,721) (493,320)
Issue of ordinary share capital 449 221,665 223,145
(Repayment of)/additional loan capital - net (note (52,147) 325,370 274,480
9)
Finance leases (11) (31) (43)
Financing (51,709) 547,004 497,582
(Decrease)/increase in net cash (11,764) 283 4,262
NOTES
26 Weeks to 30 June 2003
1. Basis of Preparation
The Interim Reports for the six months ended 30 June 2003 and 30 June 2002 are
unaudited, but have been prepared on the basis of accounting policies expected
to be adopted in the annual accounts for the year ending 31 December 2003. These
are consistent with those set out in the audited accounts for the year ended 31
December 2002. The results for the year ended 31 December 2002 are an abridged
version of the Company's full accounts, which carried an unqualified auditors'
report and which have been filed with the Registrar of Companies.
The Group continues to apply the provisions of FRS10 in respect of the valuation
of intangible fixed assets. In the assessment of the value of our publishing
titles, shown as intangible assets, it has been decided that these should not be
depreciated since they have an indefinite life, and impairment tests, in
accordance with FRS11, support this treatment.
2. Turnover
26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Turnover represents:
Newspapers and contract printing
Continuing operations 248,456 192,717 426,815
Discontinued operations - 847 1,579
Total turnover 248,456 193,564 428,394
3. Operating Profit
26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Operating profit represents:
Newspapers and contract printing
Continuing operations 83,187 60,927 129,236
Discontinued operations - 79 234
Total operating profit 83,187 61,006 129,470
4. Exceptional Items
26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Fundamental reorganisation
following acquisition of new titles - 3,732 4,438
#882,000 of operating exceptional items relating to other redundancy and
restructuring costs are included within operating profit (26 weeks to 30 June
2002 - #1,125,000).
5. Net Interest
26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Net interest paid 16,354 11,750 30,901
Exceptional cost of writing off term debt issue
costs
of previous bank facility - 1,456 1,456
Provision for impairment of investment in Mirago 365 - 351
16,719 13,206 32,708
6. Taxation
The taxation charge for the six months to 30 June 2003 has been provided on the
basis of the estimated effective tax rate for the year to 31 December 2003. The
charge for the six months to 30 June 2003 includes a tax credit of #374,000 (26
weeks to 30 June 2002 - #1,893,000) in respect of the exceptional items in notes
4 and 5.
7. Dividends
26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Preference 76 76 152
Ordinary 5,664 5,101 15,312
5,740 5,177 15,464
The interim ordinary dividend of 2p per share (2002 - 1.8p) is payable on 7
November 2003 to shareholders on the register at close of business on 17 October
2003.
8. Share Capital
At At At
30.6.03 30.6.02 31.12.02
000's 000's 000's
Ordinary shares of 10p each 283,574 282,575 283,389
13.75% Cumulative Preference shares of #1 each 756 756 756
13.75% "A" Preference shares of #1 each 350 350 350
The increase from 31 December 2002 in the number of Ordinary shares arose from
the exercise of 184,578 share options under the Group's Sharesave and Executive
Share Option Schemes.
9. Analysis of Net Debt
Other
31 December non-cash 30 June
2002 Cash flow changes 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 10,735 (3,559) - 7,176
Overdrafts (3,212) (8,205) - (11,417)
Increase/(decrease) in net cash 7,523 (11,764) - (4,241)
Bank loans (472,630) 184,296 - (288,334)
Senior notes - (132,785) - (132,785)
Loan stock (43,473) 636 - (42,837)
Finance leases (90) 11 - (79)
Term debt issue costs 5,828 - (675) 5,153
Net debt (502,842) 40,394 (675) (463,123)
Interest Cover
(excluding exceptional items) 4.3 times 5.2 times
Of the #7,176,000 cash at bank and in hand, #1,645,000 is held on deposit to
guarantee the 1999/2006 Loan Stock interest for one year.
10. Reconciliation of Movements in Shareholders' Funds
26 weeks to 26 weeks to 52 weeks to
30.6.03 30.6.02 31.12.02
#'000 #'000 #'000
Profit for the financial period 46,865 31,266 65,864
Dividends (5,740) (5,177) (15,464)
Other recognised gains and losses (net) - (99) (57)
Share issues (net) 449 221,665 223,145
Net increase in shareholders' funds 41,574 247,655 273,488
Opening shareholders' funds 561,497 288,009 288,009
Closing shareholders' funds 603,071 535,664 561,497
11. Earnings per Share
The calculation of earnings per share is based on the following profits and
weighted average number of shares:
Headline Basic/Diluted
June 2003 June 2002 June 2003 June 2002
#'000 #'000 #'000 #'000
Profit for the financial period 46,865 31,266 46,865 31,266
Exceptional items (note 4 and 5) 1,247 6,313 - -
Tax effect of exceptional items (374) (1,893) - -
Preference dividend (76) (76) (76) (76)
47,662 35,610 46,789 31,190
June 2003 June 2002
No. of shares No. of shares
Weighted average number of shares
For headline/basic earnings per share 283,423,426 249,768,704
Exercise of share options 1,597,148 1,472,856
For diluted earnings per share 285,020,574 251,241,560
Headline figures are presented to show the effect of excluding exceptional items
from earnings per share.
12. The Interim Statement is being sent to shareholders. Further copies will be
available from the Company's registered office at 53 Manor Place, Edinburgh EH3
7EG.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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