TIDMJPR
RNS Number : 3558O
Johnston Press PLC
06 August 2014
For immediate release 6 August 2014
JOHNSTON PRESS PLC
RESULTS FOR THE 26 WEEK PERIOD ENDED 28 JUNE 2014
Continuing Strategic Progress Supports Robust Performance
Johnston Press plc, one of the leading multi-platform community
media groups in the British Isles, announces its results for the 26
week period ended 28 June 2014.
Key Financials
Continuing Operations
- Underlying results(1) Statutory results
----------------------------- --------------------
Half Half Half
year year year Half year
2014 2013 Underlying 2014 2013
GBP'm GBP'm change GBP'm GBP'm
Revenue 135.8 141.9 (4.3%) 135.8 153.4
---------------- ------- ------- ----------- ------- -----------
Operating
profit/(loss) 28.3 27.3 3.6% 24.9 (228.8)
------- ------- ----------- ------- -----------
Profit/(loss)
before tax 6.1 2.1 188.5% (6.3) (254.0)
---------------- ------- ------- ----------- ------- -----------
Net Debt - - - 181.6 306.4(2)
---------------- ------- ------- ----------- ------- -----------
(1) Underlying results exclude exceptional
items (Note 4) and include adjustments made
to reflect the impact of IAS19R (Note 15),
share based payments (Note 17) and disposed
titles as well as the impact of the termination
of the News International printing contracts
in 2013.
(2) Net debt for 28 Dec 2013 was GBP302.0
million.
The first half of 2014 has seen continued progress on the
implementation of the strategy set out at the start of 2012: to
grow our overall audience through re-launching our print titles and
investing in new digital products across all platforms, to stem the
decline in top line revenue and return to top line growth, to
accelerate the growth of digital revenues, and thus to reverse the
decline in operating profit enabling us to continue paying down
debt. We are pleased to say that solid progress has been made on
all of these key objectives.
Strategic progress:
Growing profitability
-- Underlying operating profit was GBP28.3m for the first half
of 2014, year on year growth of 3.6%.
-- Underlying operating profit margins grew to 20.9%, up from 19.3% at H1 2013.
Building overall audiences
-- Total audiences in June have grown to 25.6m monthly users
across our print and digital platforms, representing 14.3% year on
year growth.
-- Digital audiences have grown to 15.9m unique users a month,
representing the addition of 4.2m unique users year on year, an
annual growth rate of 39.4%.
-- Digital audiences in July reached approximately 18m unique users, a growth of almost 44%.
-- In June 2014 mobile visitors to our news sites reached 6.7m
users, growing 88% year on year representing 46% of all digital
traffic.
-- In 136 of the 151 markets in which we operate we are experiencing overall audience growth.
Digital revenue growth:
-- Digital advertising grew 23.4% to GBP14.1m.
-- Digital local display advertising continues to grow strongly,
and at the half year point was up by 30% year on year.
-- The key advertising categories of Employment (+15%), Property
(+72%) and Motors (+132%) all continue to grow strongly in
digital.
-- Our digital marketing service offering (Digital Kitbag) is
expanding. A total of 691 new orders were booked in the first half
of the year with the monthly run rate increasing from 86 orders in
April of this year to 214 orders in June. The average revenue per
advertiser is also growing.
Returning to top line growth
-- Total underlying revenue declines are narrowing; H1 2014
recorded a year on year underlying decline of 4.3% (compared to a
decline of 5.3% during H1 2013).
-- Total Advertising revenue for July 2014 was just 2.1% down
year on year. This is on the back of a 4.6% year on year underlying
decline in total advertising revenue in the first half of 2014, and
an 8.1% year on year decline in the first half of 2013.
-- The Sheffield 'Media Sales Centre' revenues are growing, up
5% year on year, across print and digital, with new outbound
revenue streams delivering to plan.
-- The Employment category is now in overall growth, up 4.1%.
-- Underlying newspaper sales revenue decline rate is stable at 4.0%.
-- Continuing focus on customer retention and winning new
customers supported by better sales tools, templates and processes
has seen total sales volumes in print advertising up fractionally
year on year in 2014.
-- Whilst National Advertising continues to show year on year
declines overall, there are encouraging numbers in the growth
sectors of Finance (+64%), Telco (+33%), Travel (+19%), and Grocery
(+9%) sectors.
Maintaining cost leadership
-- Underlying Operating costs were reduced by GBP7.1m year on
year, a 6.2% saving year on year.
-- Our reader-contributed-content project, which was made
possible by our investment in better processes and technology, has
added a social and community dimension to our news products which
is familiar to audiences from new media platforms like Facebook.
This enabled us to increase overall audience trends, improve our
relevance, reduce our costs, and enable our skilled journalists to
focus on specialist quality content that adds distinctive value to
our products.
Summary and Outlook
Commenting on the results Ashley Highfield, Chief Executive,
said:
-- Johnston Press has delivered a solid first half performance.
The results reflect our on-going progress against our strategic
priorities as well as an improving economic climate, and
demonstrate our continuing relevance to the communities we serve
across print and digital. We are growing strongly in a number of
categories, and reducing the decline in the rest, whilst continuing
to bring down our cost base. As a result we are growing operating
profits and margins.
-- During the first half of 2014 we successfully delivered our
capital refinancing plan where we raised GBP225m through a bond
issue and GBP140m through a placing and rights issue, allowing us
to pay down our historic debt. We now have a third less debt with a
markedly lower interest rate resulting in our annual interest
payments reducing from over GBP36m to around GBP20m. This puts
Johnston Press on a much more stable footing and allows us now to
focus on returning to top line growth and a prosperous future.
-- Also in the first half of 2014 we sold our Republic of
Ireland business, comprising 12 titles. The sale of our assets in
the Republic of Ireland means we can focus our resources entirely
on driving our business in the United Kingdom and Isle of Man, with
particular emphasis on our digital initiatives. We are seeing
continued growth in our total audience and in digital revenues and
we believe this sale allows us to better capitalise on the
opportunities in these markets.
-- The economy is continuing to improve and the ripple-out
effect from London and the South East is beginning to show in the
numbers in Scotland, Yorkshire and Northern Ireland. We have also
seen a growth in a number of national advertising sectors such as
Telecom, Finance, Travel and Grocery.
-- There is a real momentum gathering pace within the Group,
with innovation and creativity at the heart of new launches during
H1, including our latest digital jobs offering Smartlist for
Engineers, our ground breaking partnership with Sky, a re-launched
WOW24/7 national what's-on entertainment website, the coming out of
Beta of Digital KitBag, the Scotsman Scottish Referendum website,
the relaunch in print and online of The Yorkshire Post, and brand
new football apps for our major premier league and championship
titles.
-- With digital audiences regularly hitting 16m (up 39.4% year
on year), July hitting 18m and digital revenues now representing
16.5% of total advertising revenues up from 12.7% during H1 of 2013
we are fast becoming a genuinely multi-media company
-- In view of this operational progress, we are confident in
continuing to deliver on our stated strategy.
For further information please contact:
Johnston Press
Ashley Highfield, Chief Executive Officer 020 7466 5000 (today)
or
David King, Chief Financial Officer 0207 612 2611
(thereafter)
Buchanan 0207 7466 5000
Richard Oldworth / Sophie McNulty / Clare Akhurst
The Half Year Report for the period ended 28 June 2014 is
available at www.johnstonpress.co.uk/investors
Forward looking statements
The report contains forward looking statements. Although the
Group believes that the expectation reflected in these forward
looking statements are reasonable, it can give no assurances that
the expectations will prove to be correct. Due to the inherent
uncertainties, including both economic and business risk factors
underlying such forward looking information, actual results may
differ materially from those expressed or implied by these forward
looking statements. The Group undertakes no obligation to update
any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Results for the six months ended 28 June 2014
A summary of the key financial results is set out in the table
below:
Comparison of Statutory to Adjusted
and Underlying Performance
26 weeks ended 28
June 2014 Statutory Adjusted(1) Underlying(2)
GBPm GBPm GBPm
----------------------------- --------------------------- ------------------------- -----------------------
Total continuing revenues 135.8 135.8 135.8
----------------------------- --------------------------- ------------------------- -----------------------
Operating costs(3) (108.2) (105.3) (104.8)
----------------------------- --------------------------- ------------------------- -----------------------
EBITDA 27.6 30.5 31.0
Depreciation & amortisation (2.7) (2.7) (2.7)
----------------------------- --------------------------- ------------------------- -----------------------
Operating profit 24.9 27.8 28.3
Net finance costs (31.2) (22.2) (22.2)
Share of results of
associates - - -
----------------------------- --------------------------- ------------------------- -----------------------
(Loss)/profit before
tax (6.3) 5.7 6.1
26 weeks ended 29
June 2013 Statutory Adjusted(1) Underlying(2)
GBPm GBPm GBPm
----------------------------- --------------------------- ------------------------- -----------------------
Total continuing revenues 153.4 143.4 141.9
----------------------------- --------------------------- ------------------------- -----------------------
Operating costs(3) (377.5) (110.6) (109.7)
----------------------------- --------------------------- ------------------------- -----------------------
EBITDA (224.0) 32.8 32.1
Depreciation & amortisation (4.8) (4.8) (4.8)
----------------------------- --------------------------- ------------------------- -----------------------
Operating (loss)/profit (228.8) 28.0 27.3
Net finance costs (25.2) (25.2) (25.2)
Share of results of
associates - - -
----------------------------- --------------------------- ------------------------- -----------------------
(Loss)/profit before
tax (254.0) 2.8 2.1
(1) Adjusted results exclude exceptional items
(set out in Note 4 to the financial statements).
(2) Underlying results exclude exceptional
items (Note 4) and includes adjustments, totalling
GBP0.5m to 28 June 2014 (29 June 2013: (GBP0.7m)),
made to reflect the impact of IAS19R (Note
15), share based payments (Note 17) and adjustments
made to 2013 comparatives for disposed titles
as well as the impact of the termination of
the News International printing contracts
in 2013.
(3) Operating costs include cost of sales and
are stated before depreciation and amortisation.
EBITDA is earnings before interest,
tax, depreciation and amortisation.
Basis of presentation
In preparing commentary on performance, the financial impact of
a number of significant accounting and operational items affecting
the results have been adjusted for in arriving at the underlying
results discussed in this review.
In the first half of 2014 the Group disposed of its Republic of
Ireland business, which comprised of 12 titles. This business has
been reported as discontinuing operations at 28 June 2014, and
comparatives have been restated accordingly.
Revenue
Total statutory reported revenue in the first half of 2014
declined 11.5% to GBP135.8m. Underlying revenues declined 4.3% to
GBP135.8m. In 2013 Contract Printing included GBP10m revenue from
the termination of the remaining contract with News International
which was an exceptional, non-recurring item.
Performance Review for Continuing Operations
Statutory Adjusted(1) Underlying(2)
------------------------------------------- ------------------------------------------ ------------------------------------------
2014 2013 change(3) change(3) 2014 2013 change(3) change(3) 2014 2013 change(3) change(3)
GBP'm GBP'm GBP'm % GBP'm GBP'm GBP'm % GBP'm GBP'm GBP'm %
--------------- -------- --------- ---------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
Advertising
revenue
Print
advertising 70.8 78.1 (7.2) (9.2%) 70.8 78.1 (7.2) (9.2%) 70.8 77.6 (6.7) (8.7%)
Digital
advertising 14.1 11.4 2.7 23.4% 14.1 11.4 2.7 23.4% 14.1 11.4 2.7 23.4%
---------------
Total
advertising
revenue 84.9 89.5 (4.5) (5.1%) 84.9 89.5 (4.5) (5.1%) 84.9 89.0 (4.1) (4.6%)
--------------- -------- --------- ---------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
Non
advertising
revenue
Newspaper
sales 39.7 41.6 (1.9) (4.4%) 39.7 41.6 (1.8) (4.4%) 39.7 41.4 (1.7) (4.0%)
Contract
printing 6.3 16.0 (9.7) (60.7%) 6.3 6.1 0.2 4.3% 6.3 5.2 1.1 22.5%
Other 4.9 6.4 (1.5) (23.7%) 4.9 6.4 (1.5) (23.7%) 4.9 6.4 (1.5) (23.6%)
Total
other
revenues 50.9 64.0 (13.1) (20.5%) 50.9 54.0 (3.1) (5.7%) 50.9 52.9 (2.0) (3.8%)
-------- --------- ---------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
Total
continuing
revenues 135.8 153.4 (17.6) (11.5%) 135.8 143.4 (7.6) (5.3%) 135.8 141.9 (6.1) (4.3%)
--------------- -------- --------- ---------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
Operating
costs (110.9) (382.3) (271.4) 71.0% (108.0) (115.4) (7.4) 6.4% (107.5) (114.6) (7.1) 6.2%
Operating
profit/(loss) 24.9 (228.8) 253.7 (110.9%) 27.8 28.0 (0.2) (0.7%) 28.3 27.3 1.0 3.6%
Operating
profit
/(loss)
margin 18.3% (149.1%) 20.5% 19.5% 20.9% 19.3%
--------------- -------- --------- ---------- ---------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
(1) Adjusted results exclude Exceptional items (set out
in Note 4 to the financial statements).
(2) Underlying results excludes exceptional items (Note
4) and includes adjustments made to reflect the impact
of IAS19R (Note 15), share based payments (Note 17) and
disposed titles as well as the impact of the termination
of the News International printing contracts in 2013.
(3) % and variance change has
been calculated based on unrounded
numbers.
Operating costs include cost of sales,
depreciation, amortisation and operating
exceptional items.
Contract print revenues earned in the 3 months
since disposal of the Irish business to Mediaforce
on 1 April 2014 was GBP0.3m.
Print and Digital Advertising Revenue
Print and Digital
Advertising
Statutory Continuing
Revenue Analysis
26 week period Print Digital
------------------------------------------ ------------------------------------------ ------------------------------------------
2014 2013 2014 2013 2014 2013
------------ ------------ ------------
GBPm GBPm % change(1) GBPm GBPm % change(1) GBPm GBPm % change(1)
------------- ------------- ------------- ------------ ------------- ------------- ------------ ------------- ------------- ------------
Property 12.2 13.4 (9.5%) 11.5 13.0 (11.9%) 0.7 0.4 71.9%
Employment 10.8 10.4 4.1% 6.4 6.6 (2.2%) 4.4 3.8 15.1%
Motors 7.3 7.4 (1.5%) 6.5 7.1 (7.7%) 0.8 0.3 131.6%
Other 20.6 21.9 (5.9%) 17.1 18.7 (8.4%) 3.5 3.2 8.7%
Display 34.0 36.4 (6.3%) 29.3 32.7 (10.3%) 4.7 3.7 29.8%
Total 84.9 89.5 (5.1%) 70.8 78.1 (9.2%) 14.1 11.4 23.4%
------------- ------------- ------------- ------------ ------------- ------------- ------------ ------------- ------------- ------------
(1)% and variance change has been calculated based on unrounded
numbers.
Within total advertising revenue, print advertising performance
has seen an improving trend, the half year ended 5.1% down, and
July improved further just 2.1% down year on year.
Digital revenues grew by 23.4% (from GBP11.4m to GBP14.1m) in
the period, with all categories of digital revenue performing
strongly compared to the prior year. Within this, local online
display, digital property and digital motor revenues grew by 31.0%,
71.9% and 131.6% respectively. Our Motors and Entertainments
categories are both approaching the digital tipping points, where
digital revenue growth is close to compensating for print revenue
decline.
Newspaper sales
Underlying newspaper sales revenues were down 4% in the first
half of the year; on a statutory basis the decline was 4.4%, in
line with plan, reflecting a conservative cover price strategy.
Circulation volumes are improving their year on year performance
and trending towards our target of single digit decline across the
portfolio by year end.
Contract printing
Underlying Contract print revenues in the first half of the year
were GBP1.1m higher than 2013, mainly driven by new business
contracts won.
Other revenues
Reported other revenues were down GBP1.5m period on period.
Sundry sales revenue declined GBP1.0m year on year. Leaflet revenue
declined 25.7% year on year, with volumes continuing to decline in
2014 affected primarily by the closure of a number of free titles
in the second half of 2012. This revenue shortfall has largely been
offset by a corresponding saving in leaflet distribution costs.
Gross margin and operating profit
The Group achieved a statutory operating profit, from continuing
operations, of GBP24.9m in the first half (June 2013 loss
GBP228.8m).
The Group continues to balance the need for investment in
digital and journalism and cost savings. Within operating profit,
underlying operating expenses continue to be actively managed and
have reduced by GBP7.1m compared with the same period in 2013. The
reduction in costs includes current year savings (through lower
headcount, office rationalisation and an assortment of other
initiatives) as well as the full year effect of the savings made
last year. We are confident that we will achieve further cost
savings in the year.
The tight management of costs has allowed us to improve the
Group's underlying operating margin for the first half to 20.9%
compared with 19.3% in the first half of 2013.
Exceptional Items
Exceptional operating items totalling GBP2.9m have been
recognised in the first half of 2014 (29 June 2013 GBP256.8m). This
comprises GBP2.3m of restructuring costs, GBP1.0m of pension plan
expenses and GBP0.4m of aborted disposal costs partially offset by
GBP0.9m gains on property and print asset disposals. A significant
net exceptional loss of GBP256.9m was recognised in the first half
of 2013, of which GBP255.9m related to impairment. Refer to Note 4
for further details. GBP10m of exceptional revenue was recognised
in 2013 from the termination of the remaining contract with News
International.
Of the GBP2.9m charge to exceptional items in the period ended
28 June 2014 (29 June 2013 GBP256.8m), GBP1.9m were cash items (29
June 2013 GBP0.9m).
Exceptional financing items totalling GBP9.0m have been
recognised in the period. Further breakdown of these items is
provided in Note 4.
Dividend
No interim dividend has been proposed or paid to any shareholder
in the current period. There were no ordinary dividends proposed
but not paid or included in the accounting records in either of the
comparative periods shown.
Financial position
At the period end, the Group had net assets of GBP216.8m, an
increase of GBP119.7m on the position at 28 December 2013. This
increase is a direct consequence of the recent refinancing
transactions which are discussed later in the Interim Management
Report.
Other income statement items
Finance costs
Finance costs Jun-14 Jun-13 change
GBPm GBPm GBPm
----------------------- ------- ------- -------
Interest on bond (2.3) - (2.3)
Interest on bank
overdrafts and loans (11.6) (12.4) 0.8
Payment-in-kind
interest (5.3) (5.7) 0.4
Amortisation of
term debt issue
costs (2.3) (2.0) (0.3)
----------------------- ------- ------- -------
Total operating
finance costs (21.5) (20.1) (1.4)
----------------------- ------- ------- -------
Total exceptional
finance costs (9.0) 0.0 (9.0)
----------------------- ------- ------- -------
Total finance costs (30.5) (20.1) (10.4)
----------------------- ------- ------- -------
Operational finance costs have increased by GBP1.4m compared to
prior year, due to the interest accruing on the 8.625% Senior
secured notes 2019 offered as part of the recent refinancing, for
the period from 16 May 2014. Refer to Note 14 for further
details.
Exceptional finance costs totalling GBP9.0m includes the GBP9.2m
interest accrual release, and term debt issue costs written off in
the period of GBP7.1m, following the refinancing. Other refinancing
fees of GBP11.1m charged to exceptionals in the period relate to
legal and professional fees associated with refinancing that were
attributable to the equity and bond issue, the new revolving credit
facility, the repayment of lending banks and noteholders and the
new pension framework agreement.
Taxation (Refer to Note 7 in the condensed financial
statements)
Corporation tax for the interim period is credited at 58.3% (29
June 2013: credited at 24.3%, 28 December 2013: credited at 25.8%),
including deferred tax.
The tax on actuarial (losses)/gains on defined benefit pension
schemes taken to the consolidated statement of comprehensive income
is a credit of GBP2.4m comprising a deferred tax credit of GBP2.4m
(29 June 2013: deferred tax charge GBP5.6m; 28 December 2013:
deferred tax charge GBP9.3m).
Pensions (Refer to Note 15 in the condensed financial
statements)
The Group's defined benefit pension plan deficit (as assessed
under IAS19R) increased by GBP8.6m to GBP86.9m. The increase in the
deficit was due to a reduction in the discount rate derived from
long term corporate bonds yields.
Following the renegotiations of contributions to the deficit,
the minimum amount of contributions committed to be paid to the
scheme during 2014 is GBP6.3m; this contribution level has
increased from prior year contributions of GBP5.7m.
Cash Flow/Net Debt
Following the recent refinancing, our interest charges on our
gross debt are 8.625% (2013: 11.7% weighted average interest rate).
The Group's net debt position has improved significantly compared
to previous periods with net debt of GBP181.6m at 28 June 2014 (29
June 2013 GBP306.4m, 28 December 2013 GBP302.0m). The refinancing
resulted in cash inflows of GBP360.5m, from the combined debt and
equity raise, offset by repayment of historic debt and interest of
GBP332.9m and financing fees paid of GBP15.6m in the period.
Cash held at 28 June 2014 was GBP39.5m, an increase of GBP12.9m
compared to 29 June 2013, and GBP10.4m compared to 28 December
2013. Included in the cash balance at 28 June 2014 was GBP7m due to
advisors and the Johnston Press defined benefit pension Trust,
received as part of the refinancing, but not yet paid at the
balance sheet date. The Group continues to maintain a tight control
of working capital and capital expenditure with GBP3.7m having been
spent on asset purchases (29 June 2013 GBP4.2m, full year 28
December 2013 GBP4.3m) offset by GBP6.3m received from
non-essential asset sales (29 June 2013 GBP2.6m, full year 28
December 2013 GBP3.7m), and GBP6.5m received from the disposal of
the Republic of Ireland publishing titles and assets.
Net cash outflow from continuing operations in the 26 weeks
ended 28 June 2014 decreased 106.05% to GBP2.5m (2013 June :
GBP41.3m inflow ; 2013 December : GBP54.1m inflow) which compares
with EBITDA of GBP30.5m ( 2013 June: GBP32.8m; 2013 December :
GBP62.6m). The operating cash flow was GBP29.6m lower than EBITDA
principally as a result of redundancy payments made over the period
and a modest working capital outflow.
Cash interest paid in the first half was GBP16.5m (29 June 2013
GBP18.2m, 28 December 2013 GBP24.8m), a decrease of 9.3% on the
same period in 2013.
Financing
The Company announced on 23 June 2014 that it had successfully
completed its Capital Refinancing Plan (announced on 9 May 2014).
Gross proceeds of GBP140.0m were received by the Company in
connection with the Placing and the Rights Issue, and further to
the announcement made by the Company on 14 May 2014, gross proceeds
of GBP220.5m were received from the offering of GBP225.0m 8.625%
senior secured notes due 2019. The notes were issued at a discount
of GBP4.5m.
All amounts previously outstanding were repaid and or cancelled
in full, as at 23 June 2014 the Company paid in total GBP332.9m
including the residual balance of Payment In Kind (PIK) interest
and Make-Whole, and the interest accrued to 23 June 2014 amounting
to GBP5m.
In addition, under the Capital Refinancing Plan the Company
entered into a 4 year and 6 months (expiring 23 December 2018)
GBP25m New Revolving Credit Facility which is currently
undrawn.
Professional and legal fees associated with the refinancing have
been incurred, totalling GBP21.1m. The fees related to GBP9.2m of
equity related costs (Refer Note 16b - Share premium), GBP7.9m of
bond issuance costs written off and GBP4.0m relating to legal and
professional fees attributable to the equity and bond issue, the
new revolving credit facility, the repayment of lending banks and
noteholders and the new pension framework agreement (Refer to Note
4 - Exceptional items and 6c) Finance costs).
Events after balance sheet date
On 23(rd) July 2014, the Group received dividends from the Press
Association totalling GBP2.1m.
Related party transactions
Related party transactions are disclosed in Note 19 to the
condensed set of financial statements.
There have been no material changes in the related party
transactions described in the last annual report.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which
have been identified by the business that could have a material
impact on the Group's long-term performance.
The following significant market risks are important to the
overall performance of the Group, and the Group has no control over
these risk factors. The Directors consider the most significant
market risks to include changes in gross domestic product and
unemployment rates, levels of property transactions, new car sales
and consumer confidence, public sector spending and the impact of
the Scottish Independence referendum.
The Group has reviewed the list of principal risks and
uncertainties reported in the 2013 Annual Report and updated this
following the recent refinancing and sale of Euro based Irish
titles. The Group has removed Interest rate risk and foreign
exchange rate risk from its highlighted risks. This reflects the
sales of the Euro based Irish titles, and the repayment of the Euro
and USD denominated loan notes.
An explanation of the principal risks and uncertainties which
could have a material impact on the Group's performance and how the
Group seeks to mitigate the risks is described below.
Description of risk Mitigation
Further Reductions in Print Advertising
Print advertising revenues The Group continues to develop its on-line
could decline at a faster advertising offering through partnerships,
rate due to further migration mobile apps and new verticals such as The
of customer spending Smartlist and WOW247. It also continues
to on-line media and to invest in its sales expertise to ensure
a lack of consumer confidence both a more proactive and effective approach
in some of the markets and that the sales offering is fully understood
in which we operate. by sales staff and customers. In addition
the recent launch of Digital Kitbag will
offer customers a full print and digital
marketing service solution.
Covenant Compliance
The Group has put in The Bond has no maintenance covenants. The
place new debt facilities: Group carefully monitors its obligations
a GBP225m Bond, and a to Bond holders. The RCF has a single Net
GBP25m Revolving Credit Debt / EBITDA covenant. The facility is
Facility (RCF). undrawn at period end.
Newsprint Price and Supply Risk
Following a period of The Group carefully manages its consumption
relative stability, paper of newsprint through waste management, recycling,
prices rose in 2013 and pagination and distribution of free titles.
more recently have fallen. The Group also has some of the most efficient
There is a risk to the printing presses in the industry. Contracts
business in terms of are put in place with key suppliers to ensure
both supply and volatility security of supply and optimum pricing.
of pricing of newsprint
which, after staff costs,
is the largest single
expense incurred by the
business, some 10% of
the cost base.
Failure to Monetise Increased Readership of our
News
Websites
This is an industry issue. Our digital strategy focuses on building
On-line advertising rates digital audiences and revenues through new
are lower and it is difficult platforms and enhancing the content available
to charge for accessing to readers and advertisers. The Group has
news on-line because launched a number of paid-for news applications
free alternatives exist. and continues to innovate its digital products.
Pension Deficit Funding
The Group Defined Benefit The Group has renegotiated its contribution
pension scheme is currently to the Defined Benefit pension deficit.
in deficit leaving the The next review date is December 2015.
Group responsible for
potential shortfalls.
Business Opportunities Constrained by Debt
Gross debt is currently The Group seeks to comply with all the requirements
GBP225m; the Group is of its funding arrangements in the most
operating above its optimal cash-effective manner and carefully prioritises
level of gearing. Further any funds available for investment to those
reduction in gearing areas which can provide the greatest long-term
is a key priority. However, return.
this focus could lead
to missed revenue opportunities
if insufficient funds
are left available for
investment.
Restructuring Risk
The Group continues to The Group has developed a planned phased
implement restructuring approach to implementing changes, including
programmes. consultation and communication.
Adequacy of Human Resources
Like most organisations The Group has put in place succession planning
there is an element of across the organisation and this is reviewed
dependency on certain at least annually by the Executive Directors
key individuals in the and by the main Board.
Group.
Lifestyle and Technology Changes Affect Newspaper
Circulations
Newspaper circulations The Group continues to promote loyalty schemes
continue to decline due to encourage increased frequency of newspaper
to increased availability purchase and is seeking to increase subscription
of news through alternative rates. In response to changing reader habits
media channels and changing we have introduced news websites tailored
reader habits. to mobile devices, increased the frequency
of updates and promoted news and mobile
services.
Slowdown in Rate of Digital Growth
The Group experienced The Group continues to invest in improving
strong growth in its its understanding of its audience and in
digital income streams, growing its overall audience, as well as
in H2 2013 and H1 2014. developing new products (eg: Digital Kitbag)
The rate of growth could to enable customers to reach their targeted
slow down if customers audience and enable the Group to continue
seek alternative routes to participate in growth in digital advertising
to audiences served. spend.
Liquidity and Going Concern
Following the placing and rights issue, the Group now has gross
debt of GBP225m. Cash on balance sheet of 28 June 2014 was
GBP39.5m, and the Group has access to a GBP25m revolving credit
facility (RCF) which is undrawn. The bond (Senior Secured notes)
has a five year maturity due 2019, and the Group's RCF matures on
23 December 2018.
The Group's policy is to ensure it has committed funding in
place sufficient to meet foreseeable peak borrowing
requirements.
Based on its review, and after considering reasonably possible
downside sensitivities, the Board is of the opinion that the Group
has adequate financial resources to meet operational needs for the
foreseeable future, and have concluded that it is appropriate to
prepare the financial statements on a going concern basis.
Outlook
The Group has made further progress during the first half in
implementing its strategy for growth, continuing to invest in
technology to build its digital platform whilst maintaining a tight
control on costs. Having reported its first underlying operating
profit increase in seven years in 2013, the Group has now delivered
further operating profit growth of 3.6% on an underlying basis in
the half year to 28 June 2014.
On 23 June 2014 the Group completed its refinancing, raising
GBP220.5m from its first bond issuance. This provides the Group
with funding for 5 years, and offers a level of improved stability
from which to develop the business. The Group's net debt fell from
GBP302m at 28 December 2013, to GBP181.6m at 28 June 2014.
There are signs of economic growth in a number of the Group's
geographic markets, and in some categories including motors and
employment. The economic momentum has not yet reached all areas of
the country in which the Group operates. Total Advertising revenue
decline rates for the half year were 4.6%. July 2014 has seen a
further improvement to a decline rate of just 2.1% compared to July
2013.
We remain focused on adapting our business to the changing
environment in which we operate and reaching the point where
digital growth will offset any further decline in print so that we
can return to overall top line growth.
In view of this operational progress, we are confident in
continuing to deliver on our stated strategy.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
Chief Executive Officer Chief Financial Officer
Ashley Highfield David King
6 August 2014 6 August 2014
Independent review report to Johnston Press plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 28 June 2014 which comprises the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity, the consolidated
balance sheet, the consolidated cash flow statement and related
notes 1 to 20. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks months ended
28 June 2014 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
6 August 2014
Johnston Press plc
Consolidated income statement for the 26 week period ended 28
June 2014
Restated(1,2) Restated(1,2)
26 weeks to 28 26 weeks to 52 weeks to
June 2014 29 June 2013 28 December
2013
Before Exceptional Total Before Exceptional Total Before Exceptional Total
exceptional items(3) exceptional items exceptional items
items items items
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Revenue 3(a) 135,811 - 135,811 143,438 10,000 153,438 279,978 10,000 289,978
Cost of sales (76,884) - (76,884) (84,214) - (84,214) (164,134) - (164,134)
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Gross profit 58,927 - 58,927 59,224 10,000 69,224 115,844 10,000 125,844
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Operating expenses (31,090) (2,919) (34,009) (31,189) (10,963) (42,152) (62,025) (44,380) (106,405)
Impairment - - - - (255,901) (255,901) - (270,793) (270,793)
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Total operating
expenses (31,090) (2,919) (34,009) (31,189) (266,864) (298,053) (62,025) (315,173) (377,198)
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Operating profit
/ (loss) 27,837 (2,919) 24,918 28,035 (256,864) (228,829) 53,819 (305,173) (251,354)
Financing
Investment
income 5 50 - 50 383 - 383 393 - 393
Net finance
expense on
pension
liabilities/assets(1) 6(a) (1,750) - (1,750) (2,691) - (2,691) (5,446) - (5,446)
Change in fair
value of borrowings 6(b) (563) - (563) - - - - - -
Change in fair
value of hedges 6(b) (1,353) - (1,353) 2,822 - 2,822 (1,691) - (1,691)
Retranslation
of USD debt 6(b) 2,398 - 2,398 (5,116) - (5,116) 1,749 - 1,749
Retranslation
of Euro debt 6(b) 531 - 531 (538) - (538) (235) - (235)
Finance costs 6(c) (21,483) (9,046) (30,529) (20,059) - (20,059) (39,808) (724) (40,532)
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Total financing
costs (22,170) (9,046) (31,216) (25,199) - (25,199) (45,038) (724) (45,762)
Share of results
of associates - - - 2 - 2 2 - 2
(Loss)/profit
before tax 5,667 (11,965) (6,298) 2,838 (256,864) (254,026) 8,783 (305,897) (297,114)
Tax 7 1,190 2,485 3,675 3,027 58,591 61,618 3,923 72,638 76,561
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
(Loss)/profit
from continuing
operations 6,857 (9,480) (2,623) 5,865 (198,273) (192,408) 12,706 (233,259) (220,553)
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Net profit/(loss)
from discontinued
operations(2) 8 366 - 366 580 (279) 301 1,113 (999) 114
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
Consolidated
(loss)/profit
for the period 7,223 (9,480) (2,257) 6,445 (198,552) (192,107) 13,819 (234,258) (220,439)
----------------------- ------ ------------ ------------ --------- ------------ ------------ ---------- ------------ ------------ ----------
(1) The adoption of IAS19R has affected the measurement and
presentation of pension related gains and losses. Refer to the
Accounting policies section for further details.
(2) Comparative income statement information has been restated
to show the Republic of Ireland business as a discontinued
operation due to its disposal on 1 April 2014.
(3) Items which are deemed to be non-recurring by virtue of
their nature or size. Refer to note 4 for further details.
Restated1 Restated1
52 weeks to
26 weeks to 26 weeks to 28 December
28 June 2014 29 June 2013 2013
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
items items Total items items Total items items Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------ ------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
From
continuing
and
discontinued
operations 9
-------------- ------ ------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Earnings per
share (p)
Basic 0.29 (0.38) (0.09) 0.68 (21.06) (20.38) 1.42 (24.28) (22.86)
Diluted 0.29 (0.38) (0.09) 0.68 (21.06) (20.38) 1.42 (24.28) (22.86)
-------------- ------ ------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
From
continuing
operations 9
-------------- ------ ------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
Earnings per
share (p)
Basic 0.28 (0.38) (0.11) 0.61 (21.03) (20.42) 1.30 (24.17) (22.87)
Diluted 0.28 (0.38) (0.11) 0.61 (21.03) (20.42) 1.30 (24.17) (22.87)
-------------- ------ ------------ ------------ -------- ------------ ------------ -------- ------------ ------------ --------
(1) Comparatives restated to show additional bonus issues and
rights issue of 5,293,860,091 (refer note 16a) following the
Group's announcement of the Capital Refinancing Plan.
Johnston Press plc
Consolidated statement of comprehensive income for the 26 week
period ended 28 June 2014
Revaluation Translation Retained
Notes reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ------------ ------------ ---------- ---------
Loss for the period - - (2,257) (2,257)
Items that will
not be reclassified
subsequently to
profit or loss :
Actuarial loss on
defined benefit
pension schemes
(net of tax) (2) 15 - - (9,718) (9,718)
- - (11,975) (11,975)
---------------------------- -------- ------------ ------------ ---------- ---------
Items that may be
reclassified subsequently
to profit or loss
:
Revaluation adjustment (2) - 2 -
Exchange differences
on translation of
foreign operations - 16 - 16
Deferred tax on
exchange differences - (7) - (7)
(2) 9 2 9
---------------------------- -------- ------------ ------------ ---------- ---------
Total comprehensive
(loss)/income for
the period (2) 9 (11,973) (11,966)
---------------------------- -------- ------------ ------------ ---------- ---------
Consolidated statement of comprehensive income for the 26 week
period ended 29 June 2013
Restated(1) Restated(1)
Revaluation Translation Retained
reserve reserve earnings Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------ ------------ ------------ ------------ ------------
Loss for the period - - (192,107) (192,107)
Items that will
not be reclassified
subsequently to
profit or loss :
Actuarial gain on
defined benefit
pension schemes
(net of tax)(1,2) 15 - - 18,766 18,766
---------------------------- ------ ------------ ------------ ------------ ------------
- - 18,766 18,766
---------------------------- ------ ------------ ------------ ------------ ------------
Items that may be
reclassified subsequently
to profit or loss
:
Revaluation adjustment (6) - 6 -
Exchange differences
on translation of
foreign operations - 944 - 944
Deferred tax on
exchange differences - (226) - (226)
(6) 718 6 718
---------------------------- ------ ------------ ------------ ------------ ------------
Total comprehensive
(loss)/income for
the period (6) 718 (173,335) (172,623)
---------------------------- ------ ------------ ------------ ------------ ------------
(1) The adoption of IAS19R has affected the measurement and
presentation of pension related gains and losses. Refer to the
Accounting policies section for further details.
(2) Actuarial loss of GBP12,147,000 (June 2013: gain of
GBP24,372,000) net of deferred tax credit of GBP2,429,000 (June
2013: deferred tax charge of GBP5,606,000)
Johnston Press plc
Consolidated statement of changes in equity for the 26 week
period ended 28 June 2014
Share-based
payments
Share Share reserve Revaluation Own Translation Retained
capital premium reserve shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- --------- ------------ -------------- -------- -------------- ----------- ---------
Opening
balances 69,541 502,829 13,576 1,737 (5,312) 9,579 (494,867) 97,083
Total
comprehensive
loss for the
period - - - (2) - 9 (11,973) (11,966)
--------------- ---------- --------- ------------ -------------- -------- -------------- ----------- ---------
Recognised
directly
in equity :
Dividends - - - - - - - -
(Note
10)
Provision for
share-based
payments
(Note
17) - - 131 - - - - 131
Share capital
issued
(Note 16a) 46,630 - - - - - - 46,630
Share premium
arising
(Note 16b) - 84,869 - - - - - 84,869
Options
exercised - - - 8 - - 8
Release on
exercise
of share
warrants - - (601) - - - 601 -
--------------- ---------- --------- ------------ -------------- -------- -------------- ----------- ---------
Net change
directly
in equity 46,630 84,869 (470) - 8 - 601 131,638
--------------- ---------- --------- ------------ -------------- -------- -------------- ----------- ---------
Total
movements 46,630 84,869 (470) (2) 8 9 (11,372) 119,672
--------------- ---------- --------- ------------ -------------- -------- -------------- ----------- ---------
Equity at end
of
the period 116,171 587,698 13,106 1,735 (5,304) 9,588 (506,239) 216,755
--------------- ---------- --------- ------------ -------------- -------- -------------- ----------- ---------
Consolidated statement of changes in equity for the 26 week
period ended 29 June 2013
Share-based
payments
Share Share reserve Revaluation Own Translation Retained
capital premium reserve shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- --------- ------------ ------------- -------- -------------- ----------- ----------
Opening
balances 65,081 502,818 18,959 1,783 (5,589) 9,267 (318,402) 273,917
Total
comprehensive
loss for the
period - - - (6) - 718 (173,335) (172,623)
--------------- ---------- --------- ------------ ------------- -------- -------------- ----------- ----------
Recognised
directly
in equity :
Dividends
(Note
10) - - - - - - (76) (76)
Provision for
share-based
payments
(Note
17) - - 347 - - - - 347
Own shares
purchased - - - - (120) - - (120)
Share warrants
exercised 2,796 11 - - - - - 2,807
Release on
exercise
of share
warrants - - (3,466) - - - 3,466 -
--------------- ---------- --------- ------------ ------------- -------- -------------- ----------- ----------
Net change
directly
in equity 2,796 11 (3,119) - (120) - 3,390 2,958
--------------- ---------- --------- ------------ ------------- -------- -------------- ----------- ----------
Total
movements 2,796 11 (3,119) (6) (120) 718 (169,945) (169,665)
--------------- ---------- --------- ------------ ------------- -------- -------------- ----------- ----------
Equity at end
of
the period 67,877 502,829 15,840 1,777 (5,709) 9,985 (488,347) 104,252
--------------- ---------- --------- ------------ ------------- -------- -------------- ----------- ----------
Johnston Press plc
Consolidated balance sheet as at 28 June 2014
28 June 29 June 28 December
2014 2013 2013
Notes GBP'000 GBP'000 GBP'000
----------------------------- ------ ---------- ---------- ------------
Non-current assets
Intangible assets 11 537,436 548,806 541,360
Property, plant and
equipment 12a 52,777 57,291 54,181
Available for sale
investments 970 970 970
Interests in associates 22 22 22
Trade and other receivables 4 5 6
Derivative financial
instruments 13 - 4,991 -
----------------------------- ------ ---------- ---------- ------------
591,209 612,085 596,539
----------------------------- ------ ---------- ---------- ------------
Current assets
Assets classified
as held for sale 12b 2,389 13,520 6,625
Inventories 2,080 2,347 2,545
Trade and other receivables 44,885 40,787 36,718
Cash and cash equivalents 39,452 26,595 29,075
Derivative financial
instruments 13 15 630 1,108
----------------------------- ------ ---------- ---------- ------------
88,821 83,879 76,071
----------------------------- ------ ---------- ---------- ------------
Total assets 680,030 695,964 672,610
----------------------------- ------ ---------- ---------- ------------
Current liabilities
Trade and other payables 61,108 53,931 74,013
Current tax liabilities 1,687 947 752
Retirement benefit
obligation 15 6,300 5,700 5,700
Borrowings 14 - - 8,553
Short-term provisions 1,604 1,366 1,796
----------------------------- ------ ---------- ---------- ------------
70,699 61,944 90,814
----------------------------- ------ ---------- ---------- ------------
Non-current liabilities
Borrowings 14 221,063 328,200 314,863
Retirement benefit
obligation 15 80,638 93,724 72,634
Deferred tax liabilities 86,690 103,991 92,776
Trade and other payables 133 139 136
Long-term provisions 4,052 3,714 4,304
----------------------------- ------ ---------- ---------- ------------
392,576 529,768 484,713
----------------------------- ------ ---------- ---------- ------------
Total liabilities 463,275 591,712 575,527
----------------------------- ------ ---------- ---------- ------------
Net assets 216,755 104,252 97,083
----------------------------- ------ ---------- ---------- ------------
Equity
Share capital 16a 116,171 67,877 69,541
Share premium account 16b 587,698 502,829 502,829
Share-based payment
reserve 17 13,106 15,840 13,576
Revaluation reserve 1,735 1,777 1,737
Own shares (5,304) (5,709) (5,312)
Translation reserve 9,588 9,985 9,579
Retained earnings (506,239) (488,347) (494,867)
Total equity 216,755 104,252 97,083
----------------------------- ------ ---------- ---------- ------------
Johnston Press plc
Consolidated cash flow statement for the 26 week period ended 28
June 2014
26 weeks 26 weeks 52 weeks
to to to
28 June 29 June 2013 28 December
2014 2013
Notes GBP'000 GBP'000 GBP'000
------------------------------- -------- ---------- ------------- ------------
Cash flows from operating
activities
Cash (used in)/generated
from operations 18 (2,465) 41,336 54,145
Income tax received/(paid) 918 (2,800) (2,800)
Cash generated from
discontinued operations 678 87 392
Net cash (outflow)/inflow
from operating activities (869) 38,623 51,737
------------------------------- -------- ---------- ------------- ------------
Investing activities
Interest received 19 6 16
Dividends received 31 377 377
Proceeds on disposal
of publishing titles - - 1,965
Proceeds on disposal
of property, plant
and equipment 6,251 2,631 3,697
Expenditure on digital
intangible assets (1,748) - (3,033)
Purchases of property,
plant and equipment (2,015) (4,196) (4,320)
Disposal proceeds
and investing activities
of discontinued operations 6,473 1 1
Net cash provided
by/(used in) investing
activities 9,011 (1,181) (1,297)
------------------------------- -------- ---------- ------------- ------------
Financing activities
Issuance of bonds 220,500 - -
Issue of shares 16a,16b 140,680 2,807 4,471
Dividends paid - (76) (152)
Interest paid (16,546) (18,246) (24,803)
Repayment of bank
borrowings (204,738) (22,199) (26,586)
Repayment of loan
notes (121,798) (5,802) (6,473)
Refinancing fees (15,611) - (514)
Purchase of foreign (260) - -
currency options
Cash movement relating
to own shares held 8 (120) (97)
Net cash provided
by/(used in) financing
activities 2,235 (43,636) (54,154)
------------------------------- -------- ---------- ------------- ------------
Net increase/(decrease)
in cash and cash equivalents 10,377 (6,194) (3,714)
Cash and cash equivalents
at beginning of period 29,075 32,789 32,789
Cash and cash equivalents
at end of period 39,452 26,595 29,075
------------------------------- -------- ---------- ------------- ------------
Johnston Press plc
Notes to the condensed set of financial statements
1. General Information
The condensed financial information for the 26 weeks to 28 June
2014 does not constitute statutory accounts for the purposes of
Section 434 of the Companies Act 2006 and has not been audited. No
statutory accounts for the period have been delivered to the
Registrar of Companies. This interim financial report constitutes a
dissemination announcement in accordance with Rule 6.3 of the
Disclosure and Transparency Rules of the United Kingdom Listing
Authority.
The condensed financial information in respect of the 52 weeks
ended 28 December 2013 has been produced using extracts from the
statutory accounts for this period. Consequently, this does not
constitute the statutory information (as defined in section 434 of
the Companies Act 2006) for the 52 weeks ended 28 December 2013,
which was audited. The statutory accounts for this period have been
filed with the Registrar of Companies. The auditor's report was
unqualified and did not contain a statement under Sections 498 (2)
or 498 (3) of the Companies Act 2006. Whilst the report was
unqualified, there was however an emphasis of matter in relation to
going concern.
The next annual financial statements of the Group for the 53
weeks to 3 January 2015 will be prepared in accordance with
International Financial Reporting Standards as adopted by the EU
("IFRS"). The condensed set of financial statements included in
this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34 'Interim Financial
Reporting'. The financial information in this Interim Report has
been prepared in accordance with the recognition and measurement
criteria of IFRS and the disclosure requirements of the Listing
Rules and Disclosure and Transparency Rules. The auditor has
reviewed the financial information in this Interim Report and their
report is set out on page 13.
The Interim Report was approved by the Directors on 5 August
2014 and is being made available to shareholders on the same date
on the Company's website at www.johnstonpress.co.uk.
2. Accounting Policies
Basis of Preparation
The interim financial information has been prepared on the
historical cost basis, except for the revaluation of certain
properties, pension balances and financial instruments. Historical
cost is generally based on the fair value of the consideration
given in exchange for the assets.
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis of
accounting in preparing the unaudited condensed consolidated
interim financial statements.
On 23 June 2014 the Company announced that it had successfully
completed its Capital Refinancing Plan (announced on 9 May 2014).
Gross proceeds of GBP140.0 million were received by the Company in
connection with the Placing and Rights Issue, and further to the
announcement made by the Company on 14 May 2014, gross proceeds of
GBP220.5 million were received from the offering of GBP225.0
million 8.625% senior secured notes due 2019 at a discount of
GBP4.5 million. Previous borrowings outstanding were repaid and
cancelled as at 23 June 2014 resulting in the payment of GBP332.9
million (refer to note 14). In addition, the Company entered into a
4 year and 6 month GBP25 million Super Senior Revolving Facility
Agreement ("RCF") which is currently undrawn. Under the RCF, the
Group has one financial covenant, measured quarterly, requiring the
achievement of a specified ratio of consolidated leverage to
consolidated EBITDA for the last 12 months.
As part of the refinancing process, the Board has undertaken a
recent and thorough review of its forecasts and associated risks.
These forecasts extend for a period of 12 months from the date of
approval of these unaudited condensed consolidated interim
financial statements and demonstrate the availability of adequate
financial resource and demonstrate compliance with financial
covenants over the period. Based on its review and after
considering reasonably possible downside sensitivities, the
Directors are satisfied that it is reasonable to adopt the going
concern basis of accounting.
Basis of Accounting
Adoption of new or amended standards and interpretations in the
current period
In the current financial period, the Group has adopted the
following new standards, amendments to standards and
interpretations which are effective for periods commencing from 1
January 2013 onwards. With the exception of the impact of IAS 19
(revised 2011) which is explained below, their adoption has not had
any significant impact on the amounts reported in these interim
financial statements but may impact the accounting for future
transactions and arrangements. Further details of the impact of
adoption will be included in the 53 weeks to 3 January 2015
financial statements.
IAS 19 (revised 2011) - Employee benefits ('IAS 19R') is
effective for annual periods beginning on or after 1 January 2013.
The key changes are that the deferral of actuarial gains and losses
is no longer permitted and the deficit should be recognised in full
on the balance sheet (subject to any restrictions in IFRIC 14) and
the finance cost, which was the difference between the interest on
liabilities and expected return on assets has been replaced by a
net interest cost. In most cases the finance cost will increase as
the expected return on assets will effectively be based on the
discount rate (i.e. the returns available on AA-rated corporate
bonds) with no allowance made for any outperformance expected from
the Plan's actual asset holding. More disclosure will be required
about the risks posed by the Plan.
The amendments to IAS 19R have impacted the presentation of
pensions related gains and losses in the income statement and
statement of comprehensive income. For the restated periods ended
29 June 2013 and 28 December 2013, the lower expected return on
assets reduced the level of pension income that was recognised in
the income statement leading to a higher net expense of GBP5.0
million and GBP10.2 million before tax respectively. The amounts
recognised in other comprehensive income reduced by GBP5.0 million
and GBP10.2 million respectively. There was no change in the
statement of financial position or cash flow statement as a result
of implementing IAS 19R.
IFRS 13 - Fair Value Measurement: applies whenever another IFRS
requires or permits fair value measurements, or disclosures about
fair value measurements, with some limited exceptions. The IFRS
applies to measurements such as fair value less costs to sell that
are clearly based upon fair value, as well as to disclosures about
such items. IFRS 13 provides a consistent framework with a single
definition of fair value as 'the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date'.
IFRS 13 disclosures as required are reflected in the notes to these
financial statements.
Amendments to IFRS 10, IFRS 12 and IAS 27 - Investment Entities
(endorsed 20 November 2013)
IAS 36 (amendments) - Recoverable Amount Disclosures for
Non-Financial Assets (endorsed 19 December 2013)
IAS 39 - Novation of Derivatives and Continuation of Hedge
Accounting (endorsed 19 December 2013)
Critical judgements in applying the Group's accounting
policies
In the process of applying the Group's accounting policies,
management has made the following judgements that have the most
significant effect on the amounts recognised in the financial
statements (apart from those involving estimations, which are dealt
with below).
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
Exceptional items
Exceptional items include significant transactions such as the
costs associated with restructuring of businesses along with
material items including for example revenue received on the
termination of significant print contracts, significant pension
related costs, the disposal or exit of a significant property
directly linked to restructuring and impairment of intangible and
tangible assets together with the associated tax impact. The
Company considers such items are material to the Income Statement
and their separate disclosure is necessary for an appropriate
understanding of the Group's financial performance. These items
have been presented as a separate column in the Group Income
Statement.
Valuation of publishing titles on acquisition
The Group's policies require that a fair value at the date of
acquisition be attributed to the publishing titles owned by each
acquired entity. The Group's management uses its judgement to
determine the fair value attributable to each acquired publishing
title taking into account the consideration paid, the earnings
history and potential of the title, any recent similar
transactions, industry statistics such as average earnings
multiples and any other relevant factors.
The publishing titles are considered to have indefinite economic
lives due to the historic longevity of the brands and the ability
to evolve the brands in the changing media environment.
Assets held for sale
Where a property or a significant item of equipment (such as a
print press or property no longer required as part of Group
operations) is marketed for sale, management is highly committed to
the sale and the asset is available for immediate sale, the Group
classifies that asset as held for sale. If the asset is expected to
be sold within twelve months, the asset is classed as a current
asset. The value of the asset is held at the lower of the net book
value or the expected realisable sale value.
The Directors have estimated the sale values based on the
current price that the asset is being marketed at and advice from
independent property agents. The actual sale proceeds may differ
from the estimate.
Provisions for onerous leases and dilapidations
Where the Group exits a rented property, an estimate of the
anticipated total future cost payable under the terms of the
operating lease, including rentals, rates and other related
expenses, is charged to the Income Statement at the point where the
unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under it.
Where there is a break clause in the contract, rentals are provided
for up to that point. In addition, an estimate is made of the
likelihood of sub-letting the premises and any rentals that would
be receivable from a sub tenant. Where receipt of sub-lease rentals
is considered reasonable, these amounts are deducted from the
rentals payable by the Group under the lease and provision charged
for the net amount.
Under the terms of a number of property leases, the Group is
required to return the property to its original condition at the
lease expiry date. The Group has estimated the expected costs of
these dilapidations and charged these costs to the Income
Statement. No discounting has been applied to the provision as the
effect of the discounting is not considered material.
Valuation of share-based payments
The Group estimates the expected value of equity-settled
share-based payments and this is charged through the Income
Statement over the vesting periods of the relevant awards. The cost
is estimated using a Black-Scholes valuation model. The
Black-Scholes calculations are based on a number of assumptions
that are set out in Note 30 of the 28 December 2013 financial
statements, and are amended to take account of estimated levels of
share vesting and exercise.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the period end date that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial period,
are discussed below.
Impairment of publishing titles and print presses
Determining whether publishing titles are impaired requires an
estimation of the value in use of the cash generating units (CGUs)
to which these assets are allocated. Key areas of judgement in the
value in use calculation include the identification of appropriate
CGUs, estimation of future cash flows expected to arise from each
CGU, the long-term growth rates and a suitable discount rate to
apply to cash flows in order to calculate present value. The Group
has identified its CGUs based on the seven geographic regions in
which it operates. This is considered to be the lowest level at
which cash inflows generated are largely independent of the cash
inflows from other groups of assets and has been consistently
applied in the current and prior periods. At the interim period an
assessment has been made of whether any potential triggering event
has arisen which would require an interim review of the carrying
value - no such event has arisen and no impairment loss has been
recognised in 2014 (June 2013: GBP194.5m, December 2013:
GBP202.4m). The carrying value of publishing titles at 28 June 2014
was GBP533.1 million (June 2013: GBP548.8m; December 2013:
GBP538.5m). Details of the impairment reviews that the Group
performs are provided in Note 11.
Determining whether print presses are impaired requires an
estimation of the value in use of each print site. The value in use
calculation requires the Group to estimate the future cash flows
expected to arise from the print sites and a suitable discount rate
in order to calculate present value.
Valuation of pension liabilities
The Group records in its Statement of Financial Position a
liability equivalent to the deficit on the Group's defined benefit
pension schemes. This liability is determined with advice from the
Group's actuarial advisers each year and can fluctuate based on a
number of factors, some of which are outside the control of
management. The main factors that can impact the valuation
include:
the discount rate used to discount future liabilities back to
the present date, determined from the yield on corporate bonds;
the actual returns on investments experienced as compared to the
expected rates used in the previous valuation;
the actual rates of salary and pension increase as compared to
the expected rates used in the previous valuation;
the forecast inflation rate experienced as compared to the
expected rates used in the previous valuation; and
mortality assumptions.
Details of the assumptions used to determine the liability at 28
June 2014 are set out in Note 15.
3. Business Segments
Information reported to the Group's Chief Executive for the
purposes of resource allocation and assessment of segment
performance is focused on the two operating segments of Publishing
(in print and online) and Contract Printing. These are the only two
operating segments of the Group.
a) Segment Revenues and Results
Publishing Contract Eliminations Group
printing
26 weeks period ended GBP'000 GBP'000 GBP'000 GBP'000
28 June 2014
-------------------------------- -------------- ---------- ------------- ---------
Revenue
Print advertising 70,853 - - 70,853
Digital advertising 14,068 - - 14,068
Newspaper sales 39,720 - - 39,720
Contract printing - 6,314 - 6,314
Other 4,099 757 - 4,856
-------------------------------- -------------- ---------- ------------- ---------
Total external sales 128,740 7,071 - 135,811
Inter-segment sales(1) - 19,089 (19,089) -
Exceptional items - - - -
Total revenue 128,740 26,160 (19,089) 135,811
-------------------------------- -------------- ---------- ------------- ---------
Operating profit/(loss)
Segment result before
exceptional items 26,140 1,697 - 27,837
Exceptional items (2,765) (154) - (2,919)
Net segment result 23,375 1,543 - 24,918
-------------------------------- -------------- ---------- ------------- ---------
Investment income 50
Net finance expense
on pension liabilities/assets (1,750)
Net IAS 21/39 adjustments(2) 1,013
Net finance costs (30,529)
Share of result of -
associates
-------------------------------- -------------- ---------- ------------- ---------
Loss before tax (6,298)
Tax 3,675
-------------------------------- -------------- ---------- ------------- ---------
Loss after tax for
the period - continuing
operations (2,623)
-------------------------------- -------------- ---------- ------------- ---------
Profit after tax for
the period - discontinued
operations 366
-------------------------------- -------------- ---------- ------------- ---------
Consolidated loss
after tax for the
period (2,257)
-------------------------------- -------------- ---------- ------------- ---------
(1) Inter segment sales are charged at prevailing market
prices.
(2) Relates to changes in fair value of hedges, retranslation of
USD and retranslation of Euro denominated debt.
Contract
Publishing printing Eliminations Group
26 weeks period ended GBP'000 GBP'000
28 June 2013 GBP'000 GBP'000
-------------------------------- -------------- ---------- --------------- ----------
Revenue
Print advertising 78,053 - - 78,053
Digital advertising 11,404 - - 11,404
Newspaper sales 41,560 - - 41,560
Contract printing - 6,056 - 6,056
Other 5,530 835 - 6,365
-------------------------------- -------------- ---------- --------------- ----------
Total external sales 136,547 6,891 - 143,438
Inter-segment sales(1) - 20,204 (20,204) -
Exceptional items - 10,000 - 10,000
Total revenue 136,547 37,095 (20,204) 153,438
-------------------------------- -------------- ---------- --------------- ----------
Operating (loss)/profit
Segment result before
exceptional items 26,338 1,697 - 28,035
Exceptional items (207,165) (49,699) - (256,864)
Net segment result (180,827) (48,002) - (228,829)
-------------------------------- -------------- ---------- --------------- ----------
Investment income 383
Net finance expense
on pension liabilities/assets (2,691)
Net IAS 21/39 adjustments(2) (2,832)
Net finance costs (20,059)
Share of result of
associates 2
-------------------------------- -------------- ---------- --------------- ----------
Loss before tax (254,026)
Tax 61,618
-------------------------------- -------------- ---------- --------------- ----------
Loss after tax for
the period - continuing
operations (192,408)
-------------------------------- -------------- ---------- --------------- ----------
Profit after tax for
the period - discontinued
operations 301
-------------------------------- -------------- ---------- --------------- ----------
Consolidated loss
after tax for the
period (192,107)
-------------------------------- -------------- ---------- --------------- ----------
(1) Inter segment sales are charged at prevailing market
prices.
(2) Relates to changes in fair value of hedges, retranslation of
USD and retranslation of Euro denominated debt.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in the Group's annual
consolidated financial statements for the 52 weeks to 28 December
2013. Segment result represents the profit earned by each segment
without allocation of the share of results of associates,
investment income, finance costs (including in relation to pension
assets and liabilities) and income tax expense. This is the measure
reported to the Group's Chief Executive for the purposes of
resource allocation and assessment of segment performance.
The Group, in common with the rest of the publishing industry,
is subject to the main holiday periods of Easter, summer and
Christmas. Since these fall across both half years, the Group's
financial results are not usually subject to significant seasonal
variations.
b) Segment Assets
28 June 29 June 28 December
2014 2013 2013
Notes GBP'000 GBP'000 GBP'000
---------------------- ---------- -------- -------- ------------
Assets
Publishing 646,466 650,610 638,679
Contract printing 33,549 38,763 32,823
---------------------------------- -------- -------- ------------
Total segment assets 680,015 689,373 671,502
---------------------------------- -------- -------- ------------
Unallocated assets 15 6,591 1,108
Consolidated total
assets 680,030 695,964 672,610
---------------------------------- -------- -------- ------------
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's Chief Executive
monitors the tangible, intangible and financial assets attributable
to each segment. All assets are allocated to reportable segments
with the exception of available-for-sale investments and derivative
financial instruments.
c) Other Segment Information
26 weeks to 26 weeks to 52 weeks to 28
28 June 2014 29 June 2013 December 2013
Contract Contract Contract
Publishing printing Group Publishing printing Group Publishing printing Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------- --------- -------- ----------- --------- -------- ----------- --------- --------
Additions to
property,
plant
and
equipment 1,987 28 2,015 4,130 - 4,130 4,320 - 4,320
Depreciation
and
amortisation
expense 1,883 819 2,702 2,119 2,714 4,833 4,108 3,644 7,752
Impairment of
property,
plant
and
equipment - - - - 57,907 57,907 1,443 62,252 63,695
Net
impairment
of
intangibles - - - 194,472 - 194,472 202,427 - 202,427
-------------- ----------- --------- -------- ----------- --------- -------- ----------- --------- --------
4. Exceptional Items
Exceptional items included with the Group Income Statement
are:
Restated(1) Restated(1)
26 weeks 26 weeks 52 weeks
to to to
28 June 29 June 28 December
2014 2013 2013
Notes GBP'000 GBP'000 GBP'000
------------------------- --------- --------- ------------ -------------
Revenue
Termination of print
contract - 10,000 10,000
Total revenue -
exceptional items - 10,000 10,000
------------------------- --------- --------- ------------ -------------
Operating expenses
Pensions
Plan expenses(2) 15 (1,060) (3,139) (6,347)
Pension protection
fund contribution - (3,063) (4,408)
Section 75 pension
debt - - (1,268)
Restructuring costs (2,315) (4,923) (32,061)
Gain on disposal 860 166 199
Other (404) (4) (495)
Total exceptional
operating expenses (2,919) (10,963) (44,380)
------------------------- --------- --------- ------------ -------------
Impairment of :
Intangible assets - (194,472) (202,427)
Property, plant
and equipment - (57,907) (63,695)
Assets held for
sale - (3,522) (4,671)
------------------------- --------- --------- ------------ -------------
Total exceptional
impairment - (255,901) (270,793)
------------------------- --------- --------- ------------ -------------
Total exceptional
finance costs 6c (9,046) - (724)
------------------------- --------- --------- ------------ -------------
Net exceptional
items (11,965) (256,864) (305,897)
Taxation on exceptional
items 2,485 58,591 72,638
------------------------- --------- --------- ------------ -------------
Total exceptional
items after tax (9,480) (198,273) (233,259)
------------------------- --------- --------- ------------ -------------
(1) Comparative income statement information has been restated
to show the Republic of Ireland business as a discontinued
operation due to its disposal on 1 April 2014.
(2) The adoption of IAS19R has affected the measurement and
presentation of pension related gains and losses. Refer to the
Accounting policies section for further details.
Revenue
In 2013, the Group recognised revenue of GBP10.0 million (June
2014: GBPnil, June 2013: GBP10m, December 2013: GBP10m) from the
termination of a long term printing contract with News
International following its closure of News of the World in 2012.
There is no exceptional revenue to be reported for the period ended
28 June 2014.
Operating expenses - pensions
Exceptional charges were recorded in prior periods to reflect
additional pension levy and Section 75 obligations agreed by the
Company and trustee (refer note 15).
Plan expenses in 2014 comprise GBP380,000 additional
administration expenses incurred in connection with refinancing
(2013: GBPnil) and pension levy expenses of GBP680,000 (June 2013:
GBP3,139,000; December 2013: GBP6,347,000).
Operating expenses - restructuring costs
Restructuring costs relate to reorganisations designed to reduce
costs largely carried out in 2013 but further continued in 2014
(June 2014: GBP1.0m; June 2013: GBP4.4m; December 2013: GBP24.4m).
Other restructuring costs include early lease termination costs
(June 2014: GBPnil; June 2013: GBPnil; December 2013: GBP3.0m),
empty property costs (June 2014: GBPnil; June 2013: GBP0.7m;
December 2013: GBP1.4m), dilapidations (June 2014: GBPnil; June
2013: GBPnil; December 2013: GBP1.4m ), and other associated legal
and consulting fees and dual-running office costs (June 2014:
GBP1.3m; June 2013: GBPnil; December 2013: GBP2.8m ).
Operating expenses - gain on disposal
In line with Group policy, disposal gains of GBP0.8 million were
recognised in Exceptional Items during the period relating to two
significant property disposals, which were held as Assets
Classified as Held for Sale at 28 December 2013. Print press
equipment was sold in the period with gains on disposal of GBP0.1
million (June 2013: GBP0.2m; December 2013: GBP0.2m).
A net gain of GBP0.4 million from several property disposals
were included in operating profit during the period; this is in
line with Group policy.
Operating expenses - other
The Group incurred other operating expenses of GBP0.4 million
(June 2013 GBPnil; December 2013 GBP0.5m ) relating to legal and
consulting fees for aborted or other disposals.
Impairment of intangible assets, property, plant and equipment
and assets held for sale
In the period ended 28 June 2014, there was no impairment of
intangible assets (June 2014: GBPnil, June 2013: GBP194.4m;
December 2013: GBP202.4m, ). There was no write-downs in the value
of presses or property assets in the period (June 2014: GBPnil,
June 2013: GBP57.9m; December 2013: GBP63.7m ), or write-downs in
assets held for sale (June 2014: GBPnil, June 2013: GBP3.5m;
December 2013: GBP4.6m ).
Finance costs
Exceptional finance costs totalling GBP9.0 million (June 2013:
GBPnil; December 2013: GBPnil) includes the GBP9.2 million interest
accrual release, and term debt issue costs written off in the
period of GBP7.1 million, following the refinancing. Other
refinancing fees of GBP11.1 million (June 2013: GBPnil; December
2013: GBP0.7m) charged to exceptionals in the period relate to
legal and professional fees associated with refinancing that were
attributable to the equity and bond issue, the new revolving credit
facility, the repayment of lending banks and noteholders and the
new pension framework agreement. Refer to note 6c for further
details.
Tax-effect of exceptional items
The Group has disclosed a GBP2.5 million tax credit (June 2013:
GBP58.6m; December 2013: GBP72.6m) in relation to the total
exceptional items of GBP12.0 million (June 2013: GBP256.9m;
December 2013: GBP305.9m)
5. Investment Income
Restated(1) Restated(1)
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
----------------------- -------- ------------ ------------
Income from available
for sale investments - 381 378
Income from other 31 - -
investments
Interest receivable 19 2 15
----------------------- -------- ------------ ------------
50 383 393
----------------------- -------- ------------ ------------
(1) Comparative income statement information has been restated
to show the Republic of Ireland business as a discontinued
operation due to its disposal on 1 April 2014.
6. Finance Costs
a) Net Finance Expense on Pension Liabilities/Assets
Restated(1) Restated(1)
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
-------------------------------- --------- ------------ ------------
Interest on assets 9,590 8,401 16,781
Interest on liabilities (11,340) (11,092) (22,227)
-------------------------------- --------- ------------ ------------
Net finance expense
on pension liabilities/assets (1,750) (2,691) (5,446)
-------------------------------- --------- ------------ ------------
(1) The adoption of IAS19R has affected the measurement and
presentation of pension related gains and losses. Refer to the
Accounting policies section for further details.
IAS19R replaces the finance cost on the defined benefit
obligation and the expected return on plan assets with a net
finance charge, based on the defined benefit liability and the
discount rate, measured at the start of the period (29 December
2012). Accordingly, a discount rate of 4.65% has been applied on
both interest on assets and liabilities (June 2013: 4.50%; December
2013: 4.50%).
b) IAS 21/39 items
All movements in the fair value of derivative financial
instruments are recorded in the Income Statement. In the current
period, this movement was a net charge of GBP1.4 million (June
2013: GBP2.8m net gain; December 2013: GBP1.7m net charge). The
retranslation of foreign denominated debt resulted in a net gain of
GBP2.9 million (June 2013: GBP5.7m net charge; December 2013: net
gain GBP1.5m). This is a result of GBP appreciating against the US
Dollar and the Euro currencies, 3.4% and 4.4% respectively, to 28
June 2014. The retranslation of the Euro denominated publishing
titles held at fair value is shown in the Statement of
Comprehensive Income.
In addition, the fair value movement on the 8.625% Senior
Secured Bonds 2019 resulted in a loss of approximately GBP0.6
million. Refer to note 14.
c) Finance Costs
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- ------------
Interest on bond (2,286) - -
Interest on bank
overdrafts and loans (11,561) (12,352) (23,504)
Payment-in-kind
interest (5,345) (5,735) (12,148)
Amortisation of
term debt issue
costs (2,291) (1,972) (4,156)
Total operational
finance costs (21,483) (20,059) (39,808)
----------------------------- --------- --------- ------------
Interest accrual 9,181 - -
release
Term debt issue (7,145) - -
costs
----------------------------- --------- --------- ------------
Gain on debt extinguishment 2,036 - -
----------------------------- --------- --------- ------------
Refinancing fees (11,082) - (724)
Total exceptional
finance costs (9,046) - (724)
----------------------------- --------- --------- ------------
Total finance costs (30,529) (20,059) (40,532)
----------------------------- --------- --------- ------------
The interest accrual release of GBP9.2 million includes a
release of the PIK accrual of GBP25.7 million less GBP6.4 million
PIK payment and GBP10.1 million Make-Whole interest paid due to
early debt repayment. The term debt issue costs write off of GBP7.1
million represents the remaining term debt issue costs after
amortisation at the date of repayment.
The GBP11.1 million refinancing fees relates to legal and
professional fees associated with the recent refinancing that were
attributable to the equity and bond issue, the new revolving credit
facility, the repayment of lending banks and noteholders and the
new pension framework agreement. These have been recorded in the
Income Statement.
7. Tax
The tax credit comprises:
28 June Restated(1,2) Restated(1,2)
2014
29 June 28 December
2013 2013
GBP'000 GBP'000 GBP'000
-------------------------- ------ ---------- -------------- --------------
Corporation tax - 819 617
Deferred tax (3,675) (62,437) (77,178)
---------------------------------- ---------- -------------- --------------
Total tax credit (3,675) (61,618) (76,561)
---------------------------------- ---------- -------------- --------------
Profit /(loss) before
tax (6,298) (254,026) (297,114)
---------------------------------- ---------- -------------- --------------
Tax at 21.5% (June
2013 : 23.25% ;
Dec 2013: 23.25%) (1,354) (59,061) (69,079)
Tax effect of items
that are not deductible
or not taxable in
determining taxable
profit (2,239) 555 7,133
Tax effect of share - - -
of results of associate
Tax effect of investment
income (7) (88) (88)
Effect of other
tax rates (75) (1,092) 2,838
Unrecognised deferred
tax assets - - 2,508
Other items - - -
Effect of reduction
in deferred tax
rate - - (19,214)
Adjustment in respect
of prior years - (1,932) (659)
---------------------------------- ---------- -------------- --------------
Total tax credit (3,675) (61,618) (76,561)
---------------------------------- ---------- -------------- --------------
(1) The adoption of IAS19R has affected the measurement and
presentation of pension related gains and losses. Refer to the
Accounting policies section for further details.
(2)Comparative income statement information has been restated to
show the Republic of Ireland business as a discontinued operation
due to its disposal on 1 April 2014.
The basic rate tax applied for the 2014 period of 21.5% (2013
period of 23.25%) was a blended rate due to the tax rate of 23% in
effect for the first quarter of 2014, changing to 21% from 1 April
2014 under the 2013 Finance Bill. (2013: 24% in effect for first
quarter and 23% from 1 April 2013).
Corporation tax for the interim period is credited at 58.3%
(June 2013: credited at 24.3%, December 2013: credited at 25.8%),
including deferred tax.
8. Discontinued operations
On 1 April 2014 the Group completed the disposal of the Republic
of Ireland titles to Iconic Newspapers, part of Mediaforce Limited,
for a cash consideration of GBP7.1 million. The assets were written
down by GBP8.0 million at 28 December 2013 in anticipation of the
disposal and therefore no profit or loss has been recorded in the
current period for the disposal.
In accordance with IFRS 5 'Non-Current Assets Held for Sale and
Discontinued Operations', the results and cash flows of this
'disposal group' are reported separately from the performance of
continuing operations at each reporting date and comparatives have
been restated.
The net profit from discontinued operations for the period ended
28 June 2014 was GBP0.3m. As part of the disposal, a transitional
services agreement (TSA) was agreed between the Group and
Mediaforce. The TSA includes services such as pre-press, human
resources, payroll, collections and information technology for
varying periods of time. Since the disposal, the Group has
recognised income of GBP0.2m under the TSA. This income has been
included in the net profit / (loss) from discontinued operations
for the period.
Profit on disposal of operations
28 June 2014
GBP'000
------------------------------- -------------
Publishing titles 5,406
Property, plant and equipment 267
------------------------------- -------------
Net assets disposed 5,673
Add : Disposal costs 1,369
------------------------------- -------------
Carrying value of disposed
operations 7,042
------------------------------- -------------
Consideration satisfied by
cash 7,042
Gain on disposal of Republic -
of Ireland titles
------------------------------- -------------
Disposal proceeds and investing activities of discontinued
operations
28
June
2014
GBP'000
---------------------------- --------
Cash consideration (above) 7,042
Transaction costs paid (569)
Net cash consideration 6,473
---------------------------- --------
9. Earnings Per Share
The calculation of earnings per share is based on the following
profits/(losses) and weighted average number of shares:
Continuing and discontinued operations
Restated(1) Restated(1)
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
------------------------- -------- ------------ ------------
Earnings
Loss for the period (2,257) (192,107) (220,439)
Preference dividend(2) - (76) (152)
------------------------- -------- ------------ ------------
Earnings for the
purposes of basic
and diluted earnings
per share (2,257) (192,183) (220,591)
Exceptional items
(after tax) 9,480 198,552 234,258
------------------------- -------- ------------ ------------
Earnings for the
purposes of underlying
earnings per share 7,223 6,369 13,667
------------------------- -------- ------------ ------------
000's 000's 000's
------------------------- ---------- -------- --------
Number of shares
Weighted average
number of ordinary
shares for the purpose
of basic earnings
per share(3) 2,464,161 942,837 964,917
Effect of dilutive
potential ordinary
shares :
warrants and employee - - -
share options
deferred bonus shares - - -
------------------------- ---------- -------- --------
Number of shares
for the purposes
of diluted earnings
per share 2,464,161 942,837 964,917
------------------------- ---------- -------- --------
Pence Pence Pence
-------------------- ------- -------- --------
Earnings per share
(p)
Basic (0.09) (20.38) (22.86)
Underlying(4) 0.29 0.68 1.42
Diluted(5) (0.09) (20.38) (22.86)
-------------------- ------- -------- --------
(1) Comparative earnings restated for the adoption of IAS19R and
comparative number of shares restated to show additional bonus
issues and rights issue of 5,293,860,091 (refer note 16a) following
the Group's announcement of the Capital Refinancing Plan.
(2) In line with IAS 33, the preference dividend and the number
of preference shares are excluded from the calculation of earnings
per share.
(3) The weighted average number of ordinary shares are shown
excluding treasury shares.
(4) Underlying figures are presented to show the effect of
excluding exceptional items from earnings per share.
(5) Diluted earnings per share are presented when a company
could be called upon to issue shares that would decrease net profit
or increase loss per share.
Continuing operations
Restated(1) Restated(1)
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
------------------------- -------- ------------ ------------
Earnings
Loss for the period (2,623) (192,408) (220,553)
Preference dividend(2) - (76) (152)
------------------------- -------- ------------ ------------
Earnings for the
purposes of basic
and diluted earnings
per share (2,623) (192,484) (220,705)
Exceptional items
(after tax) 9,480 198,273 233,259
------------------------- -------- ------------ ------------
Earnings for the
purposes of underlying
earnings per share 6,857 5,789 12,554
------------------------- -------- ------------ ------------
000's 000's 000's
------------------------- ---------- -------- --------
Number of shares
Weighted average
number of ordinary
shares for the purpose
of basic earnings
per share(3) 2,464,161 942,837 964,917
Effect of dilutive
potential ordinary
shares :
warrants and employee - - -
share options
deferred bonus shares - - -
------------------------- ---------- -------- --------
Number of shares
for the purposes
of diluted earnings
per share 2,464,161 942,837 964,917
------------------------- ---------- -------- --------
Pence Pence Pence
-------------------- ------- -------- --------
Earnings per share
(p)
Basic (0.11) (20.42) (22.87)
Underlying(4) 0.28 0.61 1.30
Diluted(5) (0.11) (20.42) (22.87)
-------------------- ------- -------- --------
(1) Comparative earnings restated for the adoption of IAS19R and
comparative number of shares restated to show additional bonus
issues and rights issue of 5,293,860,091 (refer note 16a) following
the Group's announcement of the Capital Refinancing Plan.
(2) In line with IAS 33, the preference dividend and the number
of preference shares are excluded from the calculation of earnings
per share.
(3) The weighted average number of ordinary shares are shown
excluding treasury shares.
(4) Underlying figures are presented to show the effect of
excluding exceptional items from earnings per share.
(5) Diluted earnings per share are presented when a company
could be called upon to issue shares that would decrease net profit
or increase loss per share.
10. Dividends
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
---------------------- --------- -------- ------------
Amounts recognised
as distributions
in the period
Preference dividends
paid - 76 152
---------------------- --------- -------- ------------
Pence Pence Pence
------------------- ------- ------ ------
Dividend paid per
share
Preference - 6.875 13.75
------------------- ------- ------ ------
No interim dividend has been proposed or paid to any shareholder
in the current period. There were no ordinary dividends proposed
but not paid or included in the accounting records in either of the
comparative periods shown. Refer to Note 16a for additional
explanations of resolutions made on dividends on preference
shares.
11. Intangible Assets
Publishing Digital Total
titles intangible
assets
Notes GBP'000 GBP'000 GBP'000
-------------------------- ------ ----------- ------------ ----------
Cost
Opening balance 1,302,277 3,033 1,305,310
Additions - 1,747 1,747
Disposals 8 (153,154) - (153,154)
Closing balance 1,149,123 4,780 1,153,903
-------------------------- ------ ----------- ------------ ----------
Accumulated impairment
losses and amortisation
Opening balance 763,741 209 763,950
Amortisation for
the period - 265 265
Disposals 8 (147,748) - (147,748)
Impairment losses - - -
for the period
-------------------------- ------ ----------- ------------ ----------
Closing balance 615,993 474 616,467
-------------------------- ------ ----------- ------------ ----------
Carrying amount
Opening balance 538,536 2,824 541,360
Closing balance 533,130 4,306 537,436
-------------------------- ------ ----------- ------------ ----------
28
June
2014
GBP'000
----------------------- --------
Scotland 52,127
North 217,231
Northwest 61,512
Midlands 120,082
South 46,291
Northern Ireland 35,887
Total carrying amount
of publishing titles 533,130
----------------------- --------
The Group tests the carrying value of publishing titles held
within the publishing operating segment for impairment annually or
more frequently if there are indications that they might be
impaired. No indicators of impairment have been identified at 28
June 2014 hence no impairment test has been performed as at 28 June
2014. As a result, no impairment charge has been recognised in the
period (28 June 2013 GBP194.4m, 28 December 2013 GBP202.4m).
Digital intangible assets
Digital intangible assets primarily relate to the new design of
the Group's 196 local websites and the development of the Customer
Relationship Management (CRM) capability. The websites form the
core platform for the Group's digital revenue activities whereas
the CRM capability will enable the Group to accelerate the growth
of its subscriber base. These assets are being amortised over a
period of five years. Amortisation for the year has been charged
through cost of sales.
12a. Property, Plant & Equipment
Freehold Leasehold Plant Motor Total
land buildings and Vehicles GBP'000
and GBP'000 machinery GBP'000
buildings GBP'000
GBP'000
---------------------------- ----------- ----------- ----------- ---------- ---------
Cost
At 28 December 2013 63,782 6,247 124,185 4,841 199,055
Additions - 505 1,510 - 2,015
Disposals (611) (13) (3,296) (975) (4,895)
Transferred to/from assets
held for sale during the
period (1,337) 551 (313) - (1,099)
Reclassification (531) 535 (4) - -
Exchange differences (26) - (98) (7) (131)
At 28 June 2014 61,277 7,825 121,984 3,859 194,945
---------------------------- ----------- ----------- ----------- ---------- ---------
Depreciation
At 28 December 2013 35,859 3,836 100,361 4,818 144,874
Disposals (379) (8) (3,061) (973) (4,421)
Charge for the period 303 108 2,010 16 2,437
Transferred to/from assets
held for sale during the
period (939) 640 (307) - (606)
Reclassification 1,176 290 (1,466) - -
Exchange differences (11) 1 (97) (9) (116)
---------------------------- ----------- ----------- ----------- ---------- ---------
At 28 June 2014 36,009 4,867 97,440 3,852 142,168
---------------------------- ----------- ----------- ----------- ---------- ---------
Carrying amount
At 28 December 2013 27,923 2,411 23,824 23 54,181
---------------------------- ----------- ----------- ----------- ---------- ---------
At 28 June 2014 25,268 2,958 24,544 7 52,777
---------------------------- ----------- ----------- ----------- ---------- ---------
12b. Assets classified as held for sale
The Company held GBP2.4m assets held for sale at fair value as
shown below, the assets held for sale are classified as Level 3
accordingly to IFRS 13. The Directors have estimated the sale
values based on the current price that the asset is being marketed
at and advice from independent property agents.
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
--------------------- -------- -------- ------------
Freehold land and
buildings 2,079 12,791 6,340
Leasehold buildings 125 - 36
Plant and machinery 185 729 249
Carrying amount 2,389 13,520 6,625
--------------------- -------- -------- ------------
13. Derivative Financial Instruments
The Company held only foreign exchange options at 28 June 2014
measured at fair value as shown below. These financial instruments
are classified as Level 2 according to IFRS 13 and are valued with
reference to prevailing quoted forward exchange rates of the US
Dollar to the British Pound at the balance sheet date.
28 June 29 June 28 December
2014 2013 2013
28 June 2014 Notes GBP'000 GBP'000 GBP'000
-------------------- ---------- -------- -------- ------------
Current asset
Interest rate caps - - 4
Foreign exchange
options 15 630 1,104
15 630 1,108
------------------------------- -------- -------- ------------
Non current asset
Interest rate caps - 76 -
Foreign exchange - 4,915 -
options
- 4,991 -
-------------------- ---------- -------- -------- ------------
Total 15 5,621 1,108
-------------------------------- -------- -------- ------------
14. Borrowings
The Company announced on 23 June 2014 that it had successfully
completed its Capital Refinancing Plan (announced on 9 May 2014).
Gross proceeds of GBP140.0 million were received by the Company in
connection with the Placing and the Rights Issue, and further to
the announcement made by the Company on 14 May 2014, gross proceeds
of GBP220.5 million from the offering of GBP225.0 million 8.625%
senior secured notes due 2019. The notes were issued at a discount
of GBP4.5 million.
All amounts previously outstanding were repaid and cancelled in
full; as at 23 June 2014 the Company paid in total GBP332.9 million
of which the total Payment In Kind (PIK) interest and Make-Whole
amounted to GBP16.5 million and the interest accrued up to 23 June
2014 amounted to GBP5 million.
In addition, under the Capital Refinancing Plan the Company
entered into a 4 year and 6 months (expiring 23 December 2018)
GBP25 million New Revolving Credit Facility (RCF) which is
currently undrawn. The Company incurred a GBP0.9 million
arrangement fee associated with the RCF, which the Company will
amortise over the term.
The borrowings at 28 June 2014 are recorded at quoted market
fair value and classified as Level 1 according to IFRS 13. As the
borrowings are shown at fair value the associated issue costs
against the 8.625% Senior secured notes 2019 have been charged to
the Income Statement (refer to note 6b). The borrowings at previous
period ends were recorded at amortised cost.
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
-------------------------- -------- --------- ------------
Bank loans - 205,682 200,851
Private placement
loan notes - 118,086 110,994
Payment-in-kind interest
accrual - 14,770 20,372
8.625% Senior secured 221,063 - -
notes 2019(1)
221,063 338,538 332,217
Term debt issue costs - (10,338) (8,801)
Total borrowings 221,063 328,200 323,416
-------------------------- -------- --------- ------------
The borrowings are disclosed in the financial statements as:
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
------------------------ -------- -------- ------------
Current borrowings - - 8,553
Non-current borrowings 221,063 328,200 314,863
Total borrowings 221,063 328,200 323,416
------------------------ -------- -------- ------------
The Group's net debt is:
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- ------------
Gross borrowings as
above 221,063 328,200 323,416
Cash and cash equivalents (39,436) (26,595) (29,075)
Impact of foreign
currency hedge instruments (15) (5,545) (1,104)
----------------------------- --------- --------- ------------
Net debt including
foreign currency hedge
instruments 181,612 296,060 293,237
Term debt issue costs - 10,338 8,801
Net debt excluding
term debt issue costs 181,612 306,398 302,038
----------------------------- --------- --------- ------------
(1) 8.625% Senior
secured notes 2019
breakdown
Principal Amount 225,000
Bond discount (4,500)
Fair value loss 563
Total 221,063
--------------------- --------
15. Retirement Benefit Obligation
For the purposes of these financial statements, the Group has
applied the requirements of the standard IAS 19 Employee Benefits
(Revised 2011) for the period ended 28 June 2014, which introduces
changes to the recognition, measurement, presentation and
disclosure of post-employment benefits. The standard impacts the
measurement of various components in the defined benefit pension
obligation and associated disclosures, but not the Group's total
obligation. The standard replaces the finance cost on the defined
benefit obligation and the expected return on plan assets with a
net finance charge or income, based on the defined benefit
liability or asset and the discount rate, measured at the start of
the period. This has increased the finance charge in the Condensed
Consolidation Income Statement with an equal and offsetting
movement in actuarial gains and losses in the Condensed
Consolidated Statement of Comprehensive Income. Refer to the change
in accounting treatment section below for further details.
Characteristics of the Group's pension related liabilities
The Johnston Press Retirement Savings Plan
The Johnston Press Retirement Savings Plan is a defined
contribution Master Trust arrangement for current employees,
operated by Zurich. Contributions by the Group are a percentage of
basic salary. Employer contributions range from 1 per cent of basic
salary, for employees statutorily enrolled, through to 12 per cent
of basic salary for Senior Executives. Employees who were active
members of the Money Purchase section of the Johnston Press Pension
Plan on 31 August 2013 transferred from the Johnston Press Pension
Plan to the Johnston Press Retirement Savings Plan from 1 September
2013.
The Johnston Press Pension Plan
The Johnston Press Pension Plan is a defined benefit pension
plan closed to new members and closed to future accrual. There was
formerly a defined contribution section of the Johnston Press
Pension Plan which was closed in August 2013 and members' benefits
were transferred to the Johnston Press Retirement Savings Plan. The
assets of the schemes are held separately from those of the Group.
The contributions are determined by a qualified actuary on the
basis of a triennial valuation using the projected unit method.
Based on the outcome of the triennial valuation at 31 December
2010, the fixed annual contribution amount of GBP5.7 million became
payable from 1 June 2012 under the schedule of contributions agreed
between the Company and the Plan Trustees. However, pursuant to the
Pension Framework Agreement (described further below) entered into
on the implementation of the Capital Refinancing Plan, these
contributions increased . As described further below the increase
in contributions is backdated to 1 January 2014. Under the rules of
the Johnston Press Pension Plan, additional contributions may be
payable on the disposal of Group companies.
In August 2009, the Johnston Press Pension Plan was granted
security over GBP170 million of the Group's assets, on
substantially the same terms as the creditors of the then Existing
Lending Facilities and Private Placement Notes. These security
interests remained in place following the amendment and restatement
of the Override Agreement on 24 April 2012.
The current IFRS and actuarial valuation of the Johnston Press
Pension Plan excludes the impact of the Capital Refinancing Plan. A
new valuation of the Johnston Press Pension Plan as at 31 December
2012 was commissioned by the Trustee and takes account of the
Capital Refinancing Plan. The deadline for finalising the valuation
was extended by agreement with the Plan Trustees and was signed
after the balance sheet date.
In conjunction with the Capital Refinancing Plan, the Plan
Trustees and the Company entered into a Pension Framework
Agreement, agreeing, inter alia to the following :
On implementation of the Capital Refinancing Plan in June 2014,
the secured guarantee provided in favour of the Plan Trustees by
the Company and certain of its subsidiaries in relation to any
default on a payment obligation under the Johnston Press Pension
Plan has been removed. In return for the removal of this security
and the aforementioned guarantee, an unsecured cross-guarantee has
been provided on implementation of the Capital Refinancing Plan by
the Company and certain of its subsidiaries in favour of the Plan
Trustees in relation to any default on a payment obligation under
the Johnston Press Pension Plan. Each claim made under the
unsecured cross-guarantee is capped at an amount equal to the
aggregate S75 debt of the Johnston Press Pension Plan at the date
any claim made by the Plan Trustees falls due.
The deficit as at the 31 December 2012 valuation date will be
sought to be addressed over an 11 year period by entry into a
recovery plan providing for contributions starting at GBP6.3
million in 2014, GBP6.5 million in 2015 and GBP10.0 million in 2016
increasing by three per cent per annum with a final payment of
GBP12.7 million in 2024.
Settlement of unpaid PPF levies and Section 75 debts.
The Johnston Press Pension Plan will be entitled to receive 25
per cent of net proceeds from business or asset disposals up to and
including 31 August 2015 exceeding GBP1 million in a single
transaction or GBP2.5 million over the course of a financial year,
subject to certain permitted disposals, conditions in relation to
financial leverage and other exceptions set out in the Framework
Agreement.
The Company will also pay additional contributions to the
Johnston Press Pension Plan in the event that the 2014/2015 PPF
levy or the 2015/2016 PPF levy is less than GBP3.2 million, equal
to the amount the levy falls below GBP3.2 million, up to a maximum
of GBP2.5 million.
Additional contributions will also be payable to the Johnston
Press Pension Plan in the event that the Group satisfies certain
conditions in relation to financial leverage.
The Company will pay 25% of net proceeds from the sale of its
Republic of Ireland titles to the pension plan in September
2014.
This funding agreement needs to be reflected in the valuation
documentation of the Johnston Press Pension Plan, which must be
submitted to the Pensions Regulator who may exercise certain powers
if it is not compliant with the relevant legislation. If the
Johnston Press Pension Plan's funding position deteriorates after
successful implementation of the Capital Refinancing Plan then the
contributions may have to be revisited and additional contributions
to the Johnston Press Pension Plan may be required. Contributions
would ordinarily only be revisited in the context of the triennial
valuation of the Johnston Press Pension Plan, although the Plan
Trustees have power to call a valuation earlier if they resolve to
do so.
Irish Pension Schemes
In addition, the Group maintains liability for two defined
benefit schemes providing benefits for a small number of former
employees in Limerick and Leinster. Both schemes have been closed
to future accrual since 2010 and are either already being wound up
(in the case of Leinster) or will be wound up in the short term
future (in the case of Limerick).
Change in accounting treatment - adoption of IAS 19R
Changes in accounting treatment have been reflected in the
Condensed Consolidated Financial Statements retrospectively and the
impact on the Condensed Consolidated Income Statement and Condensed
Consolidated Statement of Other Comprehensive Income for the period
ending 29 June 2013 and 28 December 2013 is as follows :
Impact on income statement
Notes 29 June 28 December
2013 2013
---------------------------- ------ ----------- ------------
As reported - consolidated
loss for the period (188,245) (211,966)
IAS 19R - Increase in
net finance charges (1,877) (3,870)
IAS 19R - Plan expenses 4 (3,139) (6,347)
Income statement - net
increase (5,016)(1) (10,217)(1)
---------------------------- ------ ----------- ------------
Deferred tax 1,154 1,744
---------------------------- ------ ----------- ------------
As restated - consolidated
loss for the period (192,107) (220,439)
---------------------------- ------ ----------- ------------
(1) As a result of the adoption of IAS 19R, the Group records a
higher net expense within the income statement of GBP5.0 million
and GBP10.2 million at June 2013 and December 2013
respectively. Equally, other comprehensive income reduces by
GBP5.0 million and GBP10.2 million at June 2013 and December 2013
respectively.
Other comprehensive income - (loss)/gain on pension
29 June 28 December
2013 2013
---------------------------------------- --------- ------------
As reported - Actuarial (loss)/gain
recognised net of tax 14,904 30,156(1)
As reported - Difference between
actual and expected return (17,547) (30,338)
IAS 19R - Gains/losses on plan
assets in excess of interest 22,563 39,055
---------------------------------------- --------- ------------
Other comprehensive income
- net decrease 5,016(2) 8,717(2,3)
As restated - Actuarial (loss)/gain
recognised 19,920 38,873
Deferred tax on pension remeasurements (1,154) (1,744)
---------------------------------------- --------- ------------
As restated - Actuarial (loss)/gain
recognised net of tax 18,766 37,129
---------------------------------------- --------- ------------
(1) Actuarial (loss)/gain recognised net of tax of GBP29,025,000
plus additional deferred tax asset arising from changes in tax rate
of GBP1,131,000.
(2) As a result of the adoption of IAS 19R, the Group records a
higher net expense within the income statement of GBP5.0 million
and GBP10.2 million at June 2013 and December 2013 respectively.
Equally, other comprehensive income reduces by GBP5.0 million and
GBP10.2 million at June 2013 and December 2013 respectively.
(3) During the period October to December 2013, the Group
contributed GBP1.5 million into the pension fund for pension
protection fund levy. This increased other comprehensive income by
GBP1.5 million and decreased cash at bank by GBP1.5 million.
Amounts arising from pensions related liabilities in the Group's
financial statements
The following tables identify the amounts in the Group's
financial statements arising from its pension related
liabilities.
Income statement - pensions and other pension related
liabilities costs
Note 28 June 29 June 28 December
2014 2013 2013
----------------------- ----- -------- -------- ------------
Employment costs:
Defined contribution
scheme (2,250) (2,555) (4,550)
Defined benefit
scheme
Plan expenses(1) (1,409) (3,139) (6,347)
Net finance cost
on Johnston Press
Pension Plan 6(a) (1,750) (2,691) (5,446)
----------------------- ----- -------- -------- ------------
Total defined benefit
scheme (3,159) (5,830) (11,793)
----------------------- ----- -------- -------- ------------
Total pension costs (5,409) (8,385) (16,343)
----------------------- ----- -------- -------- ------------
(1) Relates to administrative expenses incurred in managing the
pension fund amounting to GBP729,000 (GBP349,000 recognised within
operating items before exceptional items and
GBP380,000 recognised within operating exceptional items).
Additionally includes GBP680,000 pension protection fund levy.
Other comprehensive income - (loss)/gain on pension
28 June 29 June 28 December
2014 2013 2013
----------------------------- --------- -------- ------------
Gains/(losses) on
plan assets in excess
of interest 1,208 22,563 39,055
Experience gains and
losses arising on
the benefit obligation (1,481) - (6,116)
Changes in assumptions
underlying the present
value of the benefit
obligation (11,874) 1,809 13,473
Actuarial (loss)/gain
recognised in the
statement of comprehensive
income (12,147) 24,372 46,412
Deferred tax 2,429 (5,606) (9,283)
----------------------------- --------- -------- ------------
Actuarial (loss)/gain
recognised in the
statement of comprehensive
income net of tax (9,718) 18,766 37,129
----------------------------- --------- -------- ------------
Statement of financial position - net defined benefit pension
(deficit)/surplus and other pension related liabilities
28 June 29 June 28 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
---------------------------- ---------- ---------- ------------
Amounts included in
the Group Statement
of Financial Position
:
Fair value of scheme
assets 425,718 403,152 420,306
Present value of defined
benefit obligations (512,656) (502,576) (498,640)
Total liability recognised (86,938) (99,424) (78,334)
Amount included in
current liabilities 6,300 5,700 5,700
Amount included in
non-current liabilities (80,638) (93,724) (72,634)
---------------------------- ---------- ---------- ------------
Analysis of amounts recognised of the net defined benefit
pension (deficit)/surplus
28 June 29 June 28 December
2014 2013 2013
Notes GBP'000 GBP'000 GBP'000
--------------------------------- ------ --------- ---------- ------------
Net defined benefit pension
(deficit)/surplus at beginning
of period (78,334) (121,319) (121,319)
--------------------------------- ------ --------- ---------- ------------
Defined benefit obligation
at beginning of period 498,640 504,111 504,111
Income statement :
Current service cost - - -
Past service cost - - -
Interest cost 11,340 11,092 22,227
Other comprehensive income
:
Experience (gains) and
losses 1,481 - 6,116
Remeasurements of defined
benefit obligation :
arising from changes in
demographic assumptions - - (25,849)
arising from changes in
financial assumptions 11,874 (1,809) 12,376
Cash flows :
Age related rebates - 511 511
Benefits paid (by fund
and Group) (10,679) (11,329) (20,852)
--------------------------------- ------ --------- ---------- ------------
Defined benefit obligation
at end of the period 512,656 502,576 498,640
Fair value of plan assets
at beginning of period 420,306 382,792 382,792
Income statement :
Interest income on plan
assets 9,590 8,401 16,781
Pension Protection Fund
payments (680) (3,139) (6,347)
Administration costs (729) - -
Other comprehensive income
:
Return on plan assets less
gain 1,208 22,563 39,055
Cash flows :
Company contributions - 503 - -
receivable
Company contributions 18 6,199 3,353 8,366
Age related rebates - 511 511
Benefits paid (by fund
and Group) (10,679) (11,329) (20,852)
--------------------------------- ------ --------- ---------- ------------
Fair value of plan assets
at end of period 425,718 403,152 420,306
Net defined benefit pension
(deficit)/surplus at end
of period (86,938) (99,424) (78,334)
--------------------------------- ------ --------- ---------- ------------
Analysis of fair value of plan assets
28 June 2014 29 June 28 December
2013 2013
GBP'000 GBP'000 GBP'000
--------------------- ------------- -------- ------------
Equities 63,593 262,260 268,394
Bonds 101,804 51,563 67,507
Diversified Growth
Funds 147,198 15,410 -
Others(1) 113,123 73,919 84,405
--------------------- ------------- -------- ------------
Total fair value of
plan assets 425,718 403,152 420,306
--------------------- ------------- -------- ------------
(1) Other mainly includes LDI, protected Rights Funds, index
linked gilts.
Following extensive discussions with the pension trustees,
Pension Regulator and the Company, it has been agreed that the mix
of investments should be split 50% growth allocation and 50%
protection allocation.
Analysis of financial assumptions
Valuation at Valuation Valuation
at at
28 June 2014 29 June 28 December
2013 2013
-------------------------- ------------- ----------- ------------
Discount rate 4.35% 4.80% 4.65%
Future pension increases
Deferred revaluations
(CPI) 2.05% 2.25% 2.40%
Pensions in payment
(RPI) 3.25% 3.25% 3.40%
Life expectancy
Male 22.2 years 23.1 years 22.1 years
Female 24.2 years 23.1 years 24.1 years
-------------------------- ------------- ----------- ------------
Other pension related obligations
The Company has agreed to pay the expenses of the Johnston Press
Pension Plan and the Pension Protection Fund ('PPF') levy as they
fall due.
As a result of the exceptional charges recorded in 2013 less
payments of GBP1.5 million paid into the pension fund, the Group
holds an accrual of GBP3 million, which it believes will be
sufficient to cover the pension levy charges for the period
2014/2015. Following the reduction in gearing the Group expects a
reduction in pension levy costs from 2015/2016, subject to future
changes in the ratings applied by the Pension Protection Fund.
The Johnston Press Pension Plan (the "Plan") is subject to a
potential increase in its liabilities in the event that historic
benefit equalisation has not validly taken effect for a specific
group of members. The Group's lawyers have advised that an
application to court should be made for a declaration that normal
retirement dates for these members were validly equalised as
intended, and currently anticipate a successful outcome in relation
to that application. On 23 June 2014, they advised that in making
the application, the cost of equalisation to be used in the
application would be in the range of GBP8 million to GBP18 million
based on two different equalisation calculation methods. The
expectation is that any hearing in relation to this matter would
take place in late 2014 or early 2015. No provision has been made
in the Group's assessed pension deficit or financial statements.
Based on advice to the trustees of the Plan, the Company
anticipates the maximum obligation in relation to this matter (in
the event that the court application is not successful) to be in
the region of GBP8 million.
16a. Share Capital
The Company announced on 23 June 2014 that it had successfully
completed its Capital Refinancing Plan (announced on 9 May 2014).
Total gross proceeds of GBP140.0 million were received by the
Company, approximately GBP2.3m through a Placing of 13,676,149 new
placing shares at 17.0 pence and GBP137.7m through the issue of
4,589,637,232 new ordinary shares at 3.0 pence per rights issue
share. The allotment of shares were granted at the general meeting
of the Company held on 27 May 2014 in order to implement the
Capital Refinancing Plan and following completion of the Placing
and Rights Issue, the number of Ordinary Shares in issue is
5,293,860,091.
As at 28 June 2014 the share capital amounted to GBP116.2m and
the Group has 5,293,860,091 ordinary shares at 1p each at par. The
below table illustrates the analysis of share capital as a result
of capital re-organisation.
Ordinary Shares GBP'000
----------------------------------------------------------------- ------------------ --------
Opening Balance 28 Dec 2013(1) 684,352,165 68,435
Cash generated under the Group company share option scheme(1,2) 1,108,705 111
Cash generated through exercise of share warrants(1,2) 4,833,738 483
Placing shares(3) 13,676,149 137
Rights issue(3) 4,589,889,334 45,899
Movement 4,609,507,926 46,630
----------------------------------------------------------------- ------------------ --------
Closing Balance 28 June 2014 5,293,860,091 115,065
----------------------------------------------------------------- ------------------ --------
Preference Shares GBP'000
----------------------------------------------------------------- ------------------ --------
Opening Balance 28 Dec 2013 & Closing Balance 28 June 2014 1,105,600 1,106
----------------------------------------------------------------- ------------------ --------
Total Share Capital 116,171
----------------------------------------------------------------- ------------------ --------
(1) In total generated 690,294,608 shares at GBP69,029,461.
Capital reorganisation occurred whereby ordinary shares of 10p
nominal value were subdivided into one ordinary share of 1p and one
deferred share of 9p.
(2) Share option and share warrant exercises generated a net
cash inflow of GBP658,000 (refer cash flow statement). Issue of
share capital generated GBP594,000 and issue of share premium
generated GBP64,000 (refer note 16b)
(3) The Group's Capital Refinancing Plan raised gross proceeds
of GBP2,325,000 through a placing of 13,676,149 new placing shares
at a placing price of 17p and GBP137,697,000 through the issue of
4,589,889,334 new ordinary shares (6.52 for 1 rights issue) at 3p
per rights issue. This in total generated a capital injection of
GBP140,022,000 (refer cash flow statement). Placing shares of
GBP2,325,000 were generated via issue of share capital GBP137,000
and share premium GBP2,188,000 (refer note 16b). Rights issue of
GBP137,697,000 were generated via issue of share capital
GBP45,899,000 and share premium GBP91,798,000 (refer note 16b).
28 June 2014 28 Dec 2013
GBP'000 GBP'000
---------------------------------------------------------- ------------- ------------
Issued
684,352,165 ordinary shares of 10p each - 68,435
5,293,860,091 ordinary shares of 1p each 52,939 -
690,294,608 deferred shares of 9p each 62,126 -
756,000 13.75% Cumulative Preference Shares of GBP1 each 756 756
349,600 13.75% 'A' Preference Shares of GBP1 each 350 350
Total Issued share capital 116,171 69,541
---------------------------------------------------------- ------------- ------------
The Company has only one class of ordinary shares which has no
right to fixed income. All the preference shares carry the right,
subject to the discretion of the Company to distribute profits, to
a fixed dividend of 13.75% and rank in priority to the ordinary
shares. Given the discretionary nature of the dividend right, the
preference shares are considered to be equity under IAS 32.
As published in our 2013 Annual Report the Directors were
advised that certain distributions made on the 13.75% Cumulative
Preference Shares and 13.75% 'A' Preference Shares in financial
years ending 28 December 2013, 29 December 2012 and 31 December
2011 and in the period ended June 2012 have been made without fully
complying with the relevant requirements of the Companies Act
2006.
At the recent Company's Annual General Meeting on 27 June 2014,
and at reconvened meetings of the holders of 13.75% Cumulative
Preference Shares and 13.75% "A" Cumulative Preference Shares held
on 16 July 2014, a special resolution was approved to ratify the
dividend payments and as a result the Company and Directors have
been released of any obligation associated with the breach of the
Companies Act 2006 in respect of these dividends.
Share warrants
During the period, 4,833,738 ordinary shares of 10p each were
issued following the exercise of share warrants, generating
GBP483,374 of cash for the Company. Each of the placing and rights
issue and the Capital Reorganisation constituted an "Adjustment
Event", as a result of which the number of Warrants were adjusted
pursuant to adjustment provisions. 39,359,979 warrants were
outstanding prior to the announcement of the rights issue. In
accordance with the terms of the Warrants, the Adjustment Event
resulted in 30,359,979 Warrants being issued to warrant holders
each giving the holder the right to subscribe for 7.6689949
ordinary shares at an exercise price of GBP0.03949 per share, all
of which were outstanding at the balance sheet date.
16b. Share Premium
28 June 2014
GBP'000
------------------------------------------- -------------
Opening Balance 28 December 2013 502,829
Share premium generated under the Group
savings related share option scheme(1) 64
Placing shares(2) 2,188
Rights issue(2) 91,798
Capitalised costs associated with raising
new capital (9,181)
------------------------------------------- -------------
Total movement 84,869
------------------------------------------- -------------
Closing Balance 28 June 2014 587,698
------------------------------------------- -------------
(1) Share option and share warrant exercises generated a net
cash inflow of GBP658,000 (refer cash flow statement). Issue of
share capital generated GBP594,000 (refer note 16a) and issue of
share premium generated GBP64,000.
(2) The Group's Capital Refinancing Plan raised gross proceeds
of GBP2,325,000 through a placing of 13,676,149 new placing shares
at a placing price of 17p and GBP137,697,000 through the issue of
4,589,889,334 new ordinary shares (6.52 for 1 rights issue) at 3p
per rights issue. This in total generated a capital injection of
GBP140,022,000 (refer cash flow statement). Placing shares of
GBP2,325,000 were generated via issue of share capital GBP137,000
(refer note 16a) and share premium GBP2,188,000. Rights issue of
GBP137,697,000 were generated via issue of share capital
GBP45,899,000 (refer note 16a) and share premium GBP91,798,000.
As detailed in note 16a, the Company completed its Capital
Refinancing Plan on 23 June 2014. The costs associated with raising
new equity amounted to GBP9.2 million and have been recognised
against share premium.
At the Company's Annual General Meeting on 27 June 2014, a
special resolution was approved to initiate a process to reduce the
Company's share premium account by GBP275 million to eliminate the
accumulated deficit of approximately GBP133.1 million on the
Company's profit and loss account and create distributable reserves
for the Company going forward.
17. Share-Based Payments
The Group issues share-based benefits to employees. These
share-based payments have been measured at their fair value at the
date of grant and the fair value of expected shares is being
expensed to the Income Statement on a straight-line basis over the
vesting period. Fair value has been measured using the Black
Scholes model and adjusted to reflect the most likely share vesting
and exercise pattern. The impact on the accounting periods has
been:
28 June 2014 29 June 2013 28 December
2013
GBP'000 GBP'000 GBP'000
----------------------- ------------- ------------- ------------
Included in operating
expenses 131 347 512(1)
----------------------- ------------- ------------- ------------
(1) GBP507,000 continuing operations and GBP5,000 discontinued
operations.
The cumulative provision for share-based payments of
GBP13,106,000 (30 June 2013: GBP15,840,000; 29 December 2013:
GBP13,576,000) is shown as a reserve in the Group Statement of
Financial Position.
18. Notes to the Cash Flow Statement
28 June 29 June 2013 28 December
2014 2013
Notes GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- ------------- ------------
Operating profit/(loss) 24,918 (228,829) (251,354)
Adjustments for exceptional
items:
Impairment of publishing
titles - 194,472 202,427
Write down of print
presses - 57,907 63,695
Write down in carrying
value of assets held
for sale - 3,522 4,671
Exceptional pension
protection fund contribution 1,060 6,202 12,023
Exceptional legal
and other professional
fees (1,169) - 1,169
Exceptional redundancy
costs (14,003) - 17,820
Adjustments for non
cash items:
Amortisation of intangible
assets 265 - 209
Depreciation charges 2,430 4,806 7,497
Charge for share based
payments 17 131 347 507
Pensions administrative 349 - -
expenses
Profit on disposal
of property, plant
and equipment (1,589) (660) (1,266)
Currency differences 16 (85) (148)
Operating items before
working capital changes:
Net pension funding
contributions 15 (6,199) (3,353) (8,366)
Movement in long term
provisions (381) (451) 499
------------------------------- --------- --------- ------------- ------------
Cash generated from
operations before
workings capital changes 5,828 33,878 49,383
Working capital changes
:
Decrease in inventories 465 503 305
(Increase)/decrease
in receivables (8,248) 1,034 4,753
Increase/(decrease)
in payables (510) 5,921 (296)
Cash (used in)/generated
from operations (2,465) 41,336 54,145
------------------------------- --------- --------- ------------- ------------
19. Related Party Transactions
There have been no related party transactions that have occurred
during the first six months of the financial year that have
materially affected the financial position or performance of the
Group during that period and there have been no changes in the
related party transactions described in the 2013 Annual Report and
Accounts that could do so.
20. Contingent liability
On 1 April 2014, the Group entered into a sale agreement with
Iconic Newspaper Limited for the sale of the trade and assets of
the Group's regional newspapers in the Republic of Ireland,
including its Donegal titles, for GBP7.1 million.
As a condition to the sale, Johnston Press plc agreed to provide
a guarantee in respect of the performance of certain obligations of
the entities within the Group making the disposal of the trade and
assets up to a maximum aggregate limit of GBP3 million.
That guarantee will be effective for up to 36 months following
completion of the sale.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGGRZKVGDZZ
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