TIDMJPR
RNS Number : 1998G
Johnston Press PLC
04 August 2016
JOHNSTON PRESS PLC
INTERIM RESULTS FOR THE 26 WEEK PERIODED 2 JULY 2016
Strong circulation performance from the acquisition of the i
newspaper, and improving volume trends across regionals, helps
partially offset challenging advertising trading conditions.
Johnston Press plc ("the Group"), one of the leading local media
groups in the UK, announces its unaudited interim results for the
26 week period ended 2 July 2016. The Group and sector has
continued to experience challenging advertising trading conditions
during the period, although the second quarter prior to the
referendum over membership of the European Union showed signs of
improvement.
The Group achieved adjusted EBITDA for the period of GBP25.5m,
with cost savings substantially mitigating revenue declines.
Whilst the Board is encouraged by the improved Q2 performance in
several parts of the business, overall performance for the 26 week
period ended 2 July 2016 was marginally below the Board's
expectations. In light of the added market uncertainty following
the referendum vote, the Company is now focused on revenue and cost
measures to maintain margins and minimise the impact of a difficult
trading environment.
Headlines(1) :
Strategic:
The company's four strategic priorities are: grow overall
audience (strong digital growth and reducing print decline), make a
success of the acquisition of the i newspaper, transform the
editorial and sales operations to be more efficient, and strengthen
the balance sheet through disposals and pension deficit
reduction.
-- Audience Growth: Digital audience grew by 22.4% to an average
monthly audience of 24.4m in H1 16 (H1 15: 19.9m). Print audience
decline rates improved from Q1, with Weeklies now down 10.9% year
on year (as at July 2) a 1.3% improvement on the ytd run rate, with
regional dailies improving their run rate 0.5% to -13.6% (as at 2
July) with key titles i up 10.5% (2 July) year on year, The
Yorkshire Post down 9.8% and The Scotsman down 10.9%. Circulation
revenue increased GBP0.9m (2.3%) to GBP38.4m following the
acquisition of the i newspaper during the period.
-- Acquisition of the i newspaper: Acquired on 10 April for
GBP24.0m, the average daily circulation of the i grew from 270,182
in the month prior to acquisition to 294,223 in June (ABC audited),
an increase of 8.9% with a further increase expected in July. We
have grown market share in the quality daily segment from 18.0% to
20%. inews.co.uk launched on 14 April achieved 1.65m weekly page
views in the week commencing 26 June and is regularly achieving
over 1m page views per week.
-- Continued transformation: H1 was focused on the bedding in of
the Newsroom of the Future programme and the launch of 19 new fully
responsive websites and mobile apps for our priority titles, with
encouraging audience results across print and digital. Fundamental
changes to our advertising business (the Salesforce of the Future
programme) has seen the cessation of some low margin commercial
digital product offerings and other low margin accounts moved from
the field into the Media Sales Centre (which has shown 0.4% revenue
growth year on year in Q2), the broader revenue benefits of which
should be seen in H2.
-- Disposals: The sale of our titles on the Isle of Man for
GBP4.25m, which we announced on 4 July 2016, and which is the first
in our programme of disposals, is nearing completion, with further
announcements expected soon (see 'Strategic progress' and
'Disposals' below).
Financial:
-- Revenue: Improved underlying revenue decline to 4.7% in Q2
(14.5% Q1), benefiting from the i acquisition and slight
improvement in underlying run rate. Total adjusted revenues of
GBP113.9m (H1 15: GBP126.1m) reflect a decline of 9.7% for the
period. Digital publishing advertising excluding classified
increased 1.6% to GBP9.3m.
-- Operating profit: Adjusted operating profit of GBP22.0m
declined by GBP4.0m as cost savings of GBP8.6m substantially
mitigated revenue declines.
-- Profit before tax: Adjusted profit before tax of GBP12.3m;
Statutory loss of GBP183.7m is substantially as a result of a
non-cash impairment of GBP183.6m (GBP216.9m gross, net of some
GBP40.3m deferred tax) reflecting a change of assumptions on the
publishing titles and print assets.
-- Debt: Net debt reduced to GBP137.7m (from GBP146.1m at 2
January 2016) and includes a mark to market gain on the fair value
of the bond of GBP38.4m. Excluding mark-to-market movements, our
net debt has increased from GBP179.4m at 2 January 2016 to
GBP209.4m at 2 July 2016 following the acquisition of the i
newspaper.
-- Pensions: The IAS19 pensions deficit reduced to GBP23.2m with
increased liabilities more than offset by improved asset
valuations.
Financial Summary
GBP million Continuing Operations - Adjusted(1) Continuing Operations
- Statutory
2016 2015 Change 2016 2015 Change
26 weeks 26 weeks % 26 weeks 26 weeks %
Revenue 113.9 126.1 (9.7) 114.2 128.9 (11.4)
(207.7)
EBITDA 25.5 29.2 (12.5) (2) 25.4 n/a
Operating profit/(loss) 22.0 26.0 (15.5) (211.4) 22.2 n/a
Profit/(loss) (183.7)
before tax 12.3 16.8 (27.0) (2) 2.2 n/a
Impairment net n/a n/a n/a (183.6) - n/a
of tax (2)
Net Debt 209.4(3) 183.3(3) 14.2 137.7 183.1 (24.8)
Earnings per share 9.34p 12.82p(4) (27.1) (140.56)p 1.36p(5) n/a
(1) The results are presented on a continuing adjusted basis which
excludes the following items: mark-to-market gain on the Group's bond,
restructuring costs, impairment of intangible assets, items related
to the defined benefit pension plan, non-cash share based payment
costs, trading and write downs relating to the closure of titles and
digital operations, one off legal costs and disposal gains.
(2) The Statutory results for H1 '16 include an impairment charge
of GBP216.9m on publishing titles and GBP6.9m on presses (including
property). The deferred tax benefit on the impairment of titles amounts
to GBP40.3m.
(3) Adjusted net debt and financing costs are stated excluding fair
value mark to market valuation adjustments on the bonds.
(4) Adjusted EPS presented above has been calculated using the closing
weighted average number of ordinary shares (105.3) million) at 2 July
2016. This excludes shares held by the company's employee benefit
trust of 0.6 million (0.6 million 4 July 2015).
(5) The Statutory figures presented represent both basic and diluted
earnings per share for H1.
Strategic progress
The Group continues to seek to transform the business in line
with the four strategic priorities: grow overall audience (strong
digital growth and reducing print decline), make a success of the
acquisition of the i newspaper, transform the editorial and sales
operations to be more efficient, and strengthen the balance sheet
through disposals and pension deficit reduction.
1. Grow overall audiences:
Having completed the implementation of Newsroom of the Future,
which has improved circulation rates in our primary titles, helped
grow traffic to our websites (up 22.4%) and increased social media
traffic (up 60% yoy), we have now gone live with the Salesforce of
the Future transformation programme which, after an initial period
of disruption, aims to increase customer count, forward order book
and average order value and improve digital sell through whilst
either stopping or reducing the cost to serve of low margin
activity. These strategic initiatives, along with the acquisition
of the i newspaper in April and the proposed disposals, are part of
the Group's plan to rebalance the portfolio in favour of growing
audiences, advertisers and geographies, with more stable revenues
and greater opportunities for growth, in order to further
deleverage the business.
Our digital audience grew by 22.4% to an average monthly
audience, excluding the inews.co.uk website, of 24.4m in H1 16 (H1
15: 19.9m) and to 24.8m unique users in June 2016 including
inews.co.uk (June '15: 19.8m). Our total audience (across print and
digital) in the same month was 32.7m, up 8.0% year on year.
2. Acquisition of the i
We completed the acquisition of the i newspaper on 10 April
2016. Daily print sales reached 318,189 on 1 July while the audited
figures show circulation of 309,990 on Saturday 25 June, a growth
of 24% versus the corresponding issue last year, whilst the month
as whole was up 7.2% year on year. July audited figures ('ABCs')
are expected to show a continued positive trend.
inews.co.uk launched on 14 April, reached 50,000 unique users on
average per day in June and achieved 3.4m page views over the
month. It continues to see steady growth in audiences, with more
than 600,000 unique browsers in its first month, growing to 1.2
million in June and reaching 1.65 million in the last week of
June.
3. Transform the Editorial and Sales Operations
Revenue trends - grow digital and rebalance portfolio
Q2 evidenced improved underlying revenue decline rates to 4.7%
in Q2 (14.5% Q1), benefiting from the i acquisition and slight
improvement in underlying run rate. Total adjusted revenues of
GBP113.9m (H1 15: GBP126.1m) reflect a decline of 9.7% for the
period. Digital publishing advertising excluding classified
increased 1.6% to GBP9.3m with continued growth in 1XL and Google
AdWords sales and a better performance in Q2 (+3.3%) than Q1.
Advertising revenues fell by 17.9% in Q1 but improved marginally
with a 15.0% decline in Q2 despite the impact of the run up to, and
uncertainty following the result of the EU referendum in June.
Relative weakness in digital growth reflects the discontinuation of
low margin digital business and the short term disruption resulting
from a move to growing profitable digital revenues out of the Media
Sales Centre, for example with a new Mobile only digital tele-sales
team.
Print advertising revenues excluding classifieds declined 4.4%
in Q2 (7.7% excluding the i). For the half year, the decline was
10.3% year on year, (reflecting a 15.6% fall in Q1). Classified
advertising including employment, properties, motors and other
advertising fell by 28.2%. Total digital advertising now represents
21.2% of total advertising.
In line with the plan to increase the proportion of revenue from
circulation, the acquisition of the i newspaper, has resulted in an
increase in circulation revenue of GBP0.9m (2.3%) to GBP38.4m with
its performance offsetting declines in pre-existing titles.
The printing business continues to perform well with revenues
for the period up 6.3%.
Operating costs
Adjusted operating costs of GBP88.3m (excluding depreciation and
amortisation) were reduced by GBP8.6m, including the i newspaper's
operating costs, reflecting the need to balance tight cost control
with investment in the business.
Profitability
Adjusted profit before tax of GBP12.3m declined by GBP4.5m with
cost savings substantially mitigating revenue declines. The
statutory loss includes an asset impairment charge of GBP183.6m net
of deferred tax (gross GBP223.9m) on publishing titles and print
assets reflecting the current trading performance, reduced long
term growth rates, increased discount rate and the requirement to
allocate all head office costs to the cash generating units.
4. Strengthen the balance sheet
Disposals
Having announced the intention to sell selected assets including
the GBP4.25m disposal of the Isle of Man operations, the Group is
actively exploring opportunities for the disposal of further
assets. Further announcements will be made in due course.
Debt
Net debt of GBP137.7m includes a mark to market valuation gain
of GBP38.4m for the period.
Net debt (excluding mark to market) was GBP209.4m having
acquired the i in April for initial cash consideration of GBP22.0m.
Cash flow from operations for the period before payments for LTIPs
and i acquisition costs was GBP8.6m. Net cash at the period end was
GBP10.6m.
Pensions
The IAS19 pensions deficit has reduced slightly to GBP23.2m at
period end with increased liabilities arising from a reduced
discount rate being more than offset by both improved asset
valuations particularly on the State Street Liability Driven
Investment Portfolio hedged fund and contributions paid.
Other matters
Board changes
On 26 April 2016 we announced Mark Pain's intention to step down
as a Non-Executive Director. He will leave the Board on 31 August
2016. From 1 September 2016 Camilla Rhodes will become Senior
Independent Director and Mike Butterworth will become Chairman of
the Audit Committee.
Outlook
The Group is making strong strategic progress in what continues
to be a challenging advertising trading environment. It is too
early to assess the impact of the vote to leave the European Union
on revenues, with local display advertising outside London showing
resilience in some markets and weakness in others. The classified
advertising markets (increasingly a less significant part of the
portfolio), especially jobs and property, is looking challenged.
Offsetting this is strong circulation performance from the i, and
improved run rates from the rest of the portfolio, especially
within the priority titles focused on more ABC1 audiences.
Overall audience growth is encouraging and our new 'We Are
Digital' initiative to drive greater social and mobile traffic is
the first step to greater monetisation in these areas. The i has,
under our ownership increased circulation significantly and
advertising revenue run rates are improving (following an initial
dip during the transition). Sharing of content and ideas between
the i and the rest of the JP portfolio is increasing.
The implementation of Salesforce of the Future is our priority
for H2. Having transferred low yielding accounts to a more
efficient cost-to-serve telesales model, being handled out of our
Media Sales Centre, our field sales staff have now been
comprehensively trained in new products, equipped with new hardware
and software, allocated new territories, supported with new
marketing collateral and incentivised to grow higher-yielding
customer accounts.
In addition to this top-line Salesforce of the Future drive to
improve revenue performance and the We Are Digital drive to
increase monetisable traffic, we will continue to keep a tight
control on costs through H2.
Ashley Highfield, Chief Executive, commented:
"The acquisition of the i newspaper in April was
transformational for Johnston Press. Since the acquisition we have
increased circulation considerably, using the extensive JP
distribution network, and continued to grow market share. Perhaps
more significantly, owning the i newspaper is enabling us to
present the whole JP portfolio, and the 1XL digital advertising
network, to media buying agencies and clients afresh. Further, we
have started to see significant content sharing between the i and
the rest of the portfolio.
The market continues to be challenging and uncertainty
surrounding the outcome of the Brexit negotiations has caused
further softness in some segments of the advertising market, in
June and July.
Nevertheless, we are focused on our strategy of increasing
overall audiences, maximising opportunities for the i, maintaining
tight cost control and rebalancing our portfolio. In that respect,
we are nearing completion of the disposal of our Isle of Man
newspaper group for GBP4.25 million and are well advanced in
negotiations for further divestments.
The divestment plans, alongside the strategic implementation of
key initiatives such as Salesforce of the Future, will put Johnston
Press on a stronger footing for the future, focusing on key
geographies, audiences segments and higher yielding advertisers,
and will enable us to continue to reduce debt levels and cut
financing costs further and prepare the business for refinancing
due by 2019."
For further information please contact:
Johnston Press
Ashley Highfield, Chief Executive
Officer 020 7612 2601
David King, Chief Financial Officer 020 7612 2602
Bell Pottinger
Dan de Belder 020 3772 2561
----------------
Investor presentation and audio/webcast: A presentation for
analysts and live audio/webcast will be held at 9.00am on Thursday
4 August 2016 at Bell Pottinger, Holborn Gate, 330 High Holborn,
London, WC1V 7QD.
Webcast link:
https://secure.emincote.com/client/johnston_press/johnston005
A replay will be available after 2.00pm on the Group website
www.johnstonpress.co.uk
Please see the conference call dial in details below:
Number: +44 20 3059 8125 (no password required)
The announcement for the 26 week period ended 2 July 2016 will
be available at www.johnstonpress.co.uk/investors.
Statutory and adjusted basis
In the Interim Management Report, performance is stated on a
continuing adjusted basis to provide a more meaningful comparison
of the Group's performance taking account of the closure of
businesses and other non-trading items. The adjusted results aim to
demonstrate the performance of the Group without the volatility
created by non-recurring items, restructuring charges in respect of
cost reduction measures and accounting items such as the impairment
of intangible assets, pension finance and administrative expenses,
the impact of fair value changes on the value of the bond and the
impact of tax legislation changes. A reconciliation between the
statutory and the adjusted results is provided under Non-GAAP
measures within this financial information.
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 assurance that
the expectations will prove to have been 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.
Market abuse regulation
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Interim management report for the 26 week period ended 2 July
2016
Introduction
This Financial Review provides commentary on the Group's
adjusted performance for the 26 week period ended 2 July 2016
(2015: 26 weeks). Unless otherwise stated, all figures and growth
rates presented are adjusted. A reconciliation of statutory to
adjusted figures is detailed in Non-GAAP measures.
Results for the 26 week period ended 2 July 2016
Adjusted
2016 2015
26 weeks 26 weeks change Change(5)
GBPm GBPm GBPm %
------------------------------------------- --------- --------- ------ ---------
Newspaper sales 38.4 37.5 0.9 2.3%
Contract printing 6.6 6.2 0.4 6.3%
Print advertising excluding classified(1) 32.0 35.7 (3.7) (10.3%)
Digital advertising excluding classified 9.3 9.1 0.2 1.6%
------------------------------------------- --------- --------- ------ ---------
41.3 44.8 (3.5) (7.9%)
Classified and other advertising(2) 23.9 33.4 (9.5) (28.2%)
------------------------------------------- --------- --------- ------ ---------
Total Advertising revenue 65.2 78.2 (13.0) (16.6%)
Leaflet, syndication and other revenue 3.7 4.2 (0.5) (11.9%)
Total revenues 113.9 126.1 (12.2) (9.7%)
------------------------------------------- --------- --------- ------ ---------
Operating costs3 (88.3) (96.9) (8.6) (8.9%)
------------------------------------------- --------- --------- ------ ---------
EBITDA4 25.5 29.2 (3.7) (12.5%)
------------------------------------------- --------- --------- ------ ---------
Depreciation and amortisation (3.6) (3.2) 0.4 12.6%
------------------------------------------- --------- --------- ------ ---------
Operating profit(6) 22.0 26.0 (4.0) (15.5%)
------------------------------------------- --------- --------- ------ ---------
Operating profit margin 19.3% 20.6%
------------------------------------------- --------- --------- ------ ---------
(1) Includes local and national display, transactional revenues,
DKB and Enterprise revenues
(2) Includes the former classified advertising categories of
employment, property, motors, features, entertainment and other
classified.
(3) Operating costs include cost of sales and are stated before
depreciation and amortisation.
(4) EBITDA is earnings before interest, tax, depreciation and
amortisation. Figure is based on unrounded numbers.
(5) The % change variance has been calculated based on unrounded
numbers.
(6) Operating profit figures are based on unrounded numbers.
Revenue
Total adjusted revenues of GBP113.9 million (4 July 2015:
GBP126.1 million) reflect a decline of 9.7% for the period with a
14.5% decline in Q1 and, benefiting from the i acquisition and a
slightly reduced underlying decline, 4.7% in Q2. Excluding the i,
Q2 revenues were down 13.5% (Q1 down 14.4%).
The table below provides a break-down of advertising by category
including performance by quarter:
Advertising category performance 2016 2015
26 weeks 26 weeks Change
H1 change Q1 change Q2 change
GBPm GBPm GBPm % % %
---------------------------------- ---------- ---------- ------- ---------- ---------- ----------
Display - local & national 25.0 28.2 (3.2) (11.3%) (15.8%) (5.9%)
Transaction revenues(1) 14.4 15.1 (0.7) (4.6%) (9.9%) 0.4%
DKB & Enterprise(2) 1.9 1.5 0.4 22.8% 23.8% 21.8%
---------------------------------- ---------- ---------- ------- ---------- ---------- ----------
Print and digital publishing
advertising 41.3 44.8 (3.5) (7.9%) (12.5%) (2.8%)
Classified and other advertising 23.9 33.4 (9.4) (28.2%) (25.4%) (31.2%)
---------------------------------- ---------- ---------- ------- ---------- ---------- ----------
Total Advertising revenue(3) 65.2 78.2 (13.0) (16.6%) (18.0%) (15.0%)
---------------------------------- ---------- ---------- ------- ---------- ---------- ----------
Print publishing advertising 32.0 35.7 (3.7) (10.3%) (15.5%) (4.4%)
Digital publishing advertising 9.3 9.1 0.2 1.6% (0.2%) 3.3%
---------------------------------- ---------- ---------- ------- ---------- ---------- ----------
Print and digital publishing
advertising 41.3 44.8 (3.5) (7.9%) (12.5%) (2.8%)
---------------------------------- ---------- ---------- ------- ---------- ---------- ----------
(1) Includes Public Notices, Births, Marriages & Deaths
& i Announce.
(2) Enterprise includes partnership revenues, readers holidays
and other B2B services.
(3) Advertising revenue figures are based on unrounded
numbers.
Advertising revenues fell by 16.6%, following a 18.0% decline in
Q1 and 15.0% in Q2. Digital publishing advertising (excluding
classified) grew 1.6% to GBP9.3 million with continued strong
growth in 1XL and Google AdWords sales. Print revenues excluding
classifieds declined 10.3% year on year, 15.6% in Q1 and 4.4% in
Q2. Classified advertising including employment, properties, motors
and other fell by 28.4%. Total digital advertising now represents
21.2% of total advertising.
Newspaper sales
Newspaper sales revenues have improved by 2.3% year-on-year,
after including revenues generated from the recently acquired i
newspaper title.
Contract printing
Contract print revenues were GBP6.6 million in the first half of
the year, a slightly improved performance on the prior year. The
Group has benefited from the additional revenues generated from the
four-title print contract with Express Newspapers, which the Group
commenced printing in July 2015.
Leaflets, syndication and other revenues
Leaflets, syndication and other revenues (which include events,
reader offers and waste sales) declined GBP0.5 million period on
period, which can be attributed a reduction in a number of events
and other non-core activities.
Gross margin and operating profit
The Group achieved operating profit of GBP22.0 million in the
first half (4 July 2015: GBP26.0 million), a reduction of 15.5% on
the prior period. The trading conditions have remained difficult,
with cost mitigations going some way to reduce the overall
operating profit decline.
The Group continues to balance the need for investment in
digital and journalism with cost savings. Operating costs
(excluding depreciation and amortisation) but including the
additional costs of the i, were reduced to GBP88.3 million, a
GBP8.6 million year-on-year reduction. The depreciation charge rose
to GBP3.7 million, increasing by GBP0.7 million year-on-year.
Savings were made across all parts of the business including
production, editorial, sales and overheads.
The tight management of costs has allowed us to maintain a
robust underlying operating margin for the first half at 19.3% (4
July 2015: 20.6%).
Taxation
Corporation tax for the interim period is credited at 19.7% (4
July 2015: charged at 21.5%, 2 January 2016: credited at 295.2%),
including deferred tax. In the prior periods, the effective tax
rate is higher than the nominal rate, due to the timing of deferred
tax movements (Note 6).
The tax credit of GBP35.7 million in the period includes GBP39.1
million of deferred tax credit arising on the impairment of the
Group's publishing titles in the period, of GBP216.9 million,
calculated at an 18% tax rate (Note 9).
Earnings per share and dividends
A reconciliation of statutory to adjusted earnings per share is
detailed within adjusting items.
The provisions of the Group's bond restrict the Company's
ability to pay dividends on the Company's ordinary shares until
certain conditions, including that net leverage is below 2.25x
EBITDA, are met. Although the Board wishes to resume dividend
payments as soon as is appropriate, no ordinary dividend is
declared for the period.
Preference share dividends of GBP0.1 million were approved on 18
May 2016 and paid on 30 June 2016 based on the directors
consideration of distributable reserves available at the time.
Following continued difficult trading conditions and Brexit
impacting discount rates, a further review of the valuation of
intangibles has been undertaken resulting in a significant
impairment and the extinguishment of distributable reserves. As a
result, unless distributable reserves are created, preference share
dividends will not be payable at the year end.
Reconciliation of statutory and adjusted results
Adjusted operating profit of GBP22.0 million (4 July 2015:
GBP26.0 million, 2 January 2016: GBP49.0 million) has been
calculated after adjusting for revenue and cost of sales for closed
titles and digital brands. Adjustments made to operating costs
include restructuring, impairment and other non-trading related
costs. The prior year interim included an adjustment to remove
Letterbox direct delivery operation which was outsourced during
2015, this adjustment is no longer required.
Statutory to adjusted reconciliation of operating (loss)/profit 2016 2015
26 weeks 26 weeks
GBPm GBPm
----------------------------------------------------------------- ---------- ----------
Statutory operating (loss)/profit (211.4) 22.2
Closed titles, Digital brands, Motors and other revenue
adjustments (0.1) (0.5)
Pensions 0.7 1.0
Restructuring costs 5.2 2.4
Impairment of publishing titles, print presses and assets 223.8 -
held for sale
i acquisition costs 1.7 -
Other 2.1 0.9
----------------------------------------------------------------- ---------- ----------
Adjusted operating profit 22.0 26.0
----------------------------------------------------------------- ---------- ----------
For the purpose of reconciling to the Group's previous revenue
reporting, the table presents the historic revenue
presentation.
2016 2015
26 weeks 26 weeks change
H1
change
GBPm GBPm GBPm %
--------------------------- ---------- ---------- ------- --------
Advertising revenue
Print 51.4 63.0 (11.6) (18.4%)
Digital 13.8 15.2 (1.4) (9.2%)
--------------------------- ---------- ---------- ------- --------
Total advertising revenue 65.2 78.2 (13.0) (16.6%)
--------------------------- ---------- ---------- ------- --------
Non advertising revenue
Newspaper sales 38.4 37.5 0.9 2.3%
Contract printing 6.6 6.2 0.4 6.3%
Other 3.7 4.2 (0.5) (11.9%)
--------------------------- ---------- ---------- ------- --------
Total other revenue 48.7 47.9 0.8 1.7%
--------------------------- ---------- ---------- ------- --------
Total continuing revenue 113.9 126.1 (12.2) (9.7%)
--------------------------- ---------- ---------- ------- --------
Finance income and costs
Net finance costs were GBP9.7 million in the period, an increase
of GBP0.5 million year-on-year. The prior year net finance costs,
included the benefit of a GBP0.7m dividend income from the Press
Association, which has not been repeated in the current period.
Cash finance costs excluding investment income and exceptionals
have reduced by GBP0.2 million year-on-year following the Group's
bond buy-back (Note 5).
Net financing costs(1) 2016 2015
26 weeks 26 weeks Change
GBPm GBPm GBPm
--------------------------------------- ---------- ---------- -------
Interest on bond (9.5) (9.7) 0.2
Interest on bank overdrafts and loans (0.2) (0.2) -
Amortisation of term debt issue costs (0.1) (0.1) -
Investment income 0.1 0.8 (0.7)
--------------------------------------- ---------- ---------- -------
Total net operating finance costs (9.7) (9.2) (0.5)
--------------------------------------- ---------- ---------- -------
(1) Finance costs exclude the bond mark to market, pension
finance costs and exceptional finance charges.
In the period, an adjustment to the value of the bond resulted
in a fair value gain to the income statement of GBP38.4 million
compared to a GBP9.3 million fair value loss in the comparative
period (Note 5b).
Reconciliation of statutory net debt to net debt excluding
mark-to-market
2016 2015 2015
26 weeks 26 weeks 52 weeks
GBPm GBPm GBPm (2)
---------------------------------- --------- --------- ----------
Outstanding principal amount 220.0 225.0 225.0
---------------------------------- --------- --------- ----------
Bond repurchase - - (5.0)
Cash and cash equivalents (10.6) (41.7) (40.6)
---------------------------------- --------- --------- ----------
Net debt excluding mark-to-market 209.4 183.3 179.4
---------------------------------- --------- --------- ----------
Mark-to-market on Bond(1) (67.3) 4.3 (29.0)
Bond discount (net) (4.4) (4.5) (4.4)
---------------------------------- --------- --------- ----------
Statutory net debt 137.7 183.1 146.1
---------------------------------- --------- --------- ----------
(1) Mark-to-market on bond represents movement in valuation from
inception. The fair value gain for the period from 2 January 2016
to 2 July 2016 amounted to GBP38.4m (26 weeks 2015: GBP9.3 million
loss, 52 weeks 2015: GBP23.9 million gain).
(2) Statutory net debt is calculated on unrounded numbers.
Cash flow/Net debt
The Group's net debt was GBP209.4 million on 2 July 2016
reflecting the acquisition of the i on 10 April 2016, and excludes
mark-to-market on the bond and bond discounts totalling GBP71.7
million. In the period, a GBP38.4 million fair value movement gain
has been recognised. The net debt after mark-to-market adjustments
was GBP137.7 million. Refer table above for a reconciliation
between Statutory net debt and net debt excluding mark-to-market
(Note 12).
Cash generated from operations of GBP3.2 million is after
payment of a GBP3.9 million LTIP payment to senior managers,
(excluding executive Directors), the cash for which was raised in
2014, GBP1.5 million of i acquisition costs and pension
contributions of GBP4.7 million.
Cash held at 2 July 2016 was GBP10.6 million, with the reduction
from the year end largely due to the acquisition of the i and
weaker cash flow from the underlying trading performance. The Group
continues to maintain tight control of working capital and capital
expenditure with GBP3.2 million having been spent on asset
purchases (4 July 2015: GBP4.3 million, 2 January 2016: GBP7.8
million) offset by GBP1.8 million received from non-essential asset
sales (4 July 2015: GBP0.7 million, 2 January 2016: GBP2.3 million)
(Note 16).
Cash interest paid in the first half was GBP9.7 million (4 July
2015: GBP9.9 million, 2 January 2016: GBP19.7 million).
In addition to the agreement for the disposal of the Group's
assets in the Isle of Man announced on 4 July 2016, the group is
actively exploring opportunities for the disposal of further
assets, with the aim of reducing net debt. We will consider
opportunities to repurchase bonds as they arise where financially
attractive to do so.
Net asset position
At the period end, the Group had net assets of GBP112 million, a
decrease of GBP147 million on the prior year due to a significant
impairment charge at the interim period offset in part by movements
in the market value of the bond (GBP38.4 million).
Liquidity and going concern
At the period end, the Group had gross debt of GBP220 million,
cash on balance sheet of GBP10.6 million, and the Group has access
to a GBP25 million revolving credit facility (RCF) which was
undrawn at the half-year, and remains undrawn. The Group's bond
(Senior Secured notes) has a five year maturity due 1 June 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.
With this in mind, following the acquisition of the i and in
anticipation of future assets disposals, the Group will seek to
review the Revolving Credit Facility (Super Senior facility) with
its lenders, to ensure it continues to meet the needs of the
business.
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.
Asset impairment
The carrying value of assets is reviewed for impairment at least
annually or more frequently if there are indications that they
might be impaired. In light of the difficult trading conditions
that have continued into the first half of 2016, and the resulting
fall in adjusted operating profit of GBP4.1 million, the Group has
determined that it is prudent to write-down the carrying value of
certain assets by c.GBP224 million. The impairment charge on
publishing titles and print assets reflects the current trading
performance, reduced long term growth rates, increased discount
rate and the requirement to allocate central costs to all cash
generating units. The write-down reduces the asset carrying value
of publishing units to GBP259 million (excluding the i) and print
assets to GBP20 million. Refer to Note 9 and 11 in the financial
statements.
Pensions
The Group's defined benefit pension plan deficit has decreased
by GBP3.8 million, from the year-end, to GBP23.2 million reflecting
contributions in the period of GBP4.7 million. As a result of
movements in the discount rate, which worsened post the vote to
leave the European Union (Brexit vote), the discount rate has been
reduced from 3.75% to 2.85%, increasing liabilities by GBP57.7
million. However, gains on asset valuations of GBP61.5 million on
the liability driven investment portfolio (LDI) hedged fund were
recognised, offsetting the movement in liabilities.
No changes were made to the demographic assumptions which were
revised at the 2 January 2016 year-end following its pension study
and changes in the Scheme Rules entitling the Group to participate
in any surplus when the scheme closes. The Group has committed to
annual contributions of GBP10 million in 2016.
The Pension Framework Agreement and the required level of
contributions are subject to review as part of the 31 December 2015
triennial valuation which is currently underway (Note 13).
Acquisition and disposals
On 11 April 2016 the Group completed the acquisition of the
business and certain assets of the i newspaper from Independent
Print Limited. i is a UK national daily newspaper providing concise
quality editorial content, and was named National Newspaper of the
Year in 2015 at the industry's News Awards. The total purchase
consideration is GBP24 million, of which GBP22 million was settled
in cash on completion and a further GBP2 million will be settled in
cash on 20 April 2017.
On 4 July 2016 the Group announced it had entered into an
agreement for the sale of its titles on the Isle of Man to Tindle
Newspapers Ltd, the UK based publisher, for GBP4.25 million in
cash, following a competitive tender process. The disposal
comprises the Isle of Man Examiner, Isle of Man Courier, Manx
Independent and www.iomtoday.co.im. The disposal will be effected
by the sale of the Company's subsidiary Isle of Man Newspapers
Limited.
Events after balance sheet date
Refer to Note 19 for details of significant post balance sheet
events.
Related party transactions
Related party transactions are disclosed in Note 18.
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 include changes in gross domestic product and
unemployment rates, levels of property transactions, new car sales
and consumer confidence, and public sector spending.
The directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the 52 week period ended 2 January 2016. However, the
Brexit vote has introduced a further level of uncertainty. This
affects risks over which it has no control, and those which it
seeks to manage and mitigate. A detailed explanation of the risks
summarised below, and information about how the Group seeks to
mitigate the risks can be found on pages 21 to 22 of the annual
report are available at
http://www.johnstonpress.co.uk/investors/reports-results-presentations.
Further reductions in print advertising
Print advertising revenues could decline at a faster rate due to
further migration of customer spending to online media and a lack
of consumer confidence in some of the markets in which we operate.
Consumer and advertiser confidence may be affected by the Brexit
vote.
Newsprint price and supply risk
Although paper prices have fallen over the course of the past 12
months future price rises represent a risk to the Group in terms of
both supply and pricing of newsprint which, after staff costs, is
the largest single expense incurred by the business. Sterling has
seen a marked reduction in value relative to the Euro and other
currencies in recent weeks and paper prices will rise as a result
of these currency movements.
Failure to monetise increased readership of our content on
websites and mobile devices
This is an industry issue. On-line advertising rates are lower
and it is difficult to charge for accessing news on-line because
free alternatives exist.
Pension deficit funding
The Group Defined Benefit pension scheme is currently in deficit
leaving the Group responsible for potential shortfalls, in
particular driven by sustained low interest rates. Reductions in
interest rates following the Brexit vote will cause pension
liabilities to rise.
Business opportunities constrained by debt
The Group continues to operate with greater than optimal levels
of gearing, hence continued reduction of debt over time remains a
priority. However, this focus could lead to missed revenue
opportunities if insufficient funds are left available for
investment.
Business change
The Group is implementing its new sales model which may cause
disruption during the transition, and a reduction in short term
revenues.
Adequacy of Human Resources
Like most organisations there is an element of dependency on
certain key individuals in the Group.
Lifestyle and technology changes affect newspaper
circulations
Newspaper circulations continue to decline due to increased
availability of news through alternative media channels and
changing reader habits.
Slowdown in rate of digital growth and reduction in advertising
rates for mobile
The Group experienced strong growth in its digital income
streams in recent years. The rate of growth could slow down if
customers seek alternative routes to audiences served. The industry
as a whole has seen a shift towards accessing digital content
through mobile devices which generally attract lower advertising
rates than the rates achieved for desktop devices.
Responsibility statement
The directors 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,
Ashley Highfield David King
Chief Executive Officer Chief Financial Officer
4 August 2016 4 August 2016
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial information differs from
legislation in other jurisdictions.
Address of Registered office
Johnston Press plc,
Orchard Brae House
30 Queensferry Road
Edinburgh
EH4 2HS
Group income statement for the 26 week period ended 2 July
2016
52 weeks
26 weeks 26 weeks ended
ended ended 2 January
2 July 2016 4 July 2015 2016
Notes GBP'000 GBP'000 GBP'000
-------------------------------------------------- ----- ------------ ------------ ----------
Continuing operations
Revenue 3 114,193 128,871 245,089
Cost of sales (71,743) (70,827) (140,612)
-------------------------------------------------- ----- ------------ ------------ ----------
Gross profit 42,450 58,044 104,477
-------------------------------------------------- ----- ------------ ------------ ----------
Operating expenses (29,993) (35,802) (68,216)
Impairment and write downs (223,870) - (35,234)
-------------------------------------------------- ----- ------------ ------------ ----------
Total operating expenses (253,863) (35,802) (103,450)
-------------------------------------------------- ----- ------------ ------------ ----------
Operating (loss)/profit 3 (211,413) 22,242 1,027
-------------------------------------------------- ----- ------------ ------------ ----------
Financing
Investment income 4 60 762 854
Net finance expense on pension liabilities/assets 5a (457) (1,504) (2,933)
Change in fair value of borrowings 5b 38,366 (9,333) 23,918
Finance costs 5c (10,271) (9,987) (19,973)
-------------------------------------------------- ----- ------------ ------------ ----------
Total net financing income/(costs) 27,698 (20,062) 1,866
-------------------------------------------------- ----- ------------ ------------ ----------
(Loss)/profit before tax (183,715) 2,180 2,893
Tax credit/(charge) 6 35,743 (674) 8,538
-------------------------------------------------- ----- ------------ ------------ ----------
(Loss)/profit from continuing operations (147,972) 1,506 11,431
-------------------------------------------------- ----- ------------ ------------ ----------
Net loss from discontinued operations(1) - (2) -
-------------------------------------------------- ----- ------------ ------------ ----------
Consolidated (loss)/profit for the period (147,972) 1,504 11,431
-------------------------------------------------- ----- ------------ ------------ ----------
(1) Republic of Ireland business is reported as a discontinued
operation due to its disposal on 1 April 2014.
The accompanying notes are an integral part of these financial
statements. The comparative period is for the 26 week period ended
4 July 2015.
52 weeks
26 weeks 26 weeks ended
ended ended 2 January
2 July 2016 4 July 2015 2016
Notes GBP'000 GBP'000 GBP'000
---------------------------------- ----- ------------ ------------ ----------
From continuing and discontinued
operations
Earnings per share (p)
Earnings (GBPm) 7 (148,048) 1,430 11,279
Weighted average number of shares
(m) 7 105,326 105,273 105,281
---------------------------------- ----- ------------ ------------ ----------
Basic (140.56) 1.36 10.71
---------------------------------- ----- ------------ ------------ ----------
Diluted (140.56) 1.36 10.71
---------------------------------- ----- ------------ ------------ ----------
From continuing operations
Earnings per share (p)
Earnings (GBPm) 7 (148,048) 1,428 11,279
Weighted average number of shares
(m) 7 105,326 105,273 105,281
---------------------------------- ----- ------------ ------------ ----------
Basic (140.56) 1.36 10.71
---------------------------------- ----- ------------ ------------ ----------
Diluted (140.56) 1.36 10.71
---------------------------------- ----- ------------ ------------ ----------
Consolidated statement of comprehensive income for the 26 week
period ended 2 July 2016
Revaluation Translation Retained
Notes reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- ------------ ------------ ---------- ----------
Loss for the period - - (147,972) (147,972)
Items that will not be reclassified
subsequently to profit or loss
:
Actuarial gain on defined benefit
pension schemes (net of tax) 13 - - (375) (375)
- - (148,347) (148,347)
-------------------------------------- -------- ------------ ------------ ---------- ----------
Items that may be reclassified
subsequently to profit or loss
:
Revaluation adjustment (2) - (33) (35)
Exchange differences on translation
of foreign operations(1) - (46) - (46)
Deferred tax on exchange differences - - - -
(2) (46) (33) (81)
-------------------------------------- -------- ------------ ------------ ---------- ----------
Total comprehensive loss for
the period (2) (46) (148,380) (148,428)
-------------------------------------- -------- ------------ ------------ ---------- ----------
(1) Movements in the translation reserve relate to the
translation of interests in dormant Irish subsidiaries.
Consolidated statement of comprehensive income for the 26 week
period ended 4 July 2015
Revaluation Translation Retained
reserve reserve earnings Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ------------ ------------ ---------- --------
Profit for the period - - 1,504 1,504
Items that will not be reclassified
subsequently to profit or loss
:
Actuarial loss on defined benefit
pension schemes (net of tax) 13 - - 995 995
-------------------------------------- ------ ------------ ------------ ---------- --------
- - 2,499 2,499
-------------------------------------- ------ ------------ ------------ ---------- --------
Items that may be reclassified
subsequently to profit or loss
:
Revaluation adjustment - - - -
Exchange differences on translation
of foreign operations(1) - (283) - (283)
Deferred tax on exchange differences - - - -
- (283) - (283)
-------------------------------------- ------ ------------ ------------ ---------- --------
Total comprehensive (loss)/profit
for the period - (283) 2,499 2,216
-------------------------------------- ------ ------------ ------------ ---------- --------
(1) Movements in the translation reserve relate to the
translation of interests in dormant Irish subsidiaries.
Consolidated statement of comprehensive income for the 52 week
period ended 2 January 2016
Revaluation Translation Retained
reserve reserve earnings Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ------------ ------------ ---------- ---------
Profit for the year - - 11,431 11,431
Items that will not be reclassified
subsequently to profit or loss
:
Actuarial gain on defined benefit
pension schemes (net of tax) 13 - - 57,648 57,648
-------------------------------------- ------ ------------ ------------ ---------- ---------
- - 69,079 69,079
-------------------------------------- ------ ------------ ------------ ---------- ---------
Items that may be reclassified
subsequently to profit or loss
:
Revaluation adjustment (2) - - (2)
Exchange differences on translation
of foreign operations(1) - (245) - (245)
Deferred tax on exchange differences - - (10,956) (10,956)
(2) (245) (10,956) (11,203)
-------------------------------------- ------ ------------ ------------ ---------- ---------
Total comprehensive (loss)/profit
for the year (2) (245) 58,123 57,876
-------------------------------------- ------ ------------ ------------ ---------- ---------
(1) Movements in the translation reserve relate to the
translation of interests in dormant Irish subsidiaries.
Consolidated statement of changes in equity for the 26 week
period ended 2 July 2016
Share-based
Share Share payments Revaluation Own Translation Retained
capital premium reserve reserve shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- --------- ------------ ------------- ---------- ------------- ---------- ----------
Opening
balances 116,171 312,702 6,963 1,731 (3,582) 9,320 (184,290) 259,015
Total
comprehensive
loss for the
period - - - (2) - (46) (148,380) (148,428)
--------------- ---------- --------- ------------ ------------- ---------- ------------- ---------- ----------
Recognised
directly
in equity :
Dividends
(Note
8) - - - - - - (76) (76)
Provision for
share-based
payments
(Note
15) - - 1,029 - - - - 1,029
Options
exercised - - (14) - 14 - - -
Release of SBP
reserve for
expired share
schemes(1) - - (554) - - - 554 -
Release of own
shares(2) - - - - 251 - (251) -
--------------- ---------- --------- ------------ ------------- ---------- ------------- ---------- ----------
Net change
directly
in equity - - 461 - 265 - 227 953
--------------- ---------- --------- ------------ ------------- ---------- ------------- ---------- ----------
Total
movements - - 461 (2) 265 (46) (148,153) (147,475)
--------------- ---------- --------- ------------ ------------- ---------- ------------- ---------- ----------
Equity at end
of the period 116,171 312,702 7,424 1,729 (3,317) 9,274 (332,443) 111,540
--------------- ---------- --------- ------------ ------------- ---------- ------------- ---------- ----------
(1) On lapse of schemes balances are released to distributable
reserves.
(2) Revaluation of own shares reserve to reflect the weighted
average price of shares purchased.
Consolidated statement of changes in equity for the 26 week
period ended 4 July 2015
Share-based
Share Share payments Revaluation Own Translation Retained
capital premium reserve reserve shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- ---------- ------------ ------------ -------- ------------ ---------- --------
Opening balances 116,171 587,702 13,780 1,733 (5,206) 9,565 (523,764) 199,981
Total comprehensive
(loss)/profit
for the period - - - - - (283) 2,499 2,216
--------------------- --------- ---------- ------------ ------------ -------- ------------ ---------- --------
Recognised directly
in equity :
Dividends (Note
8) - - - - - - (76) (76)
Share capital
reduction(1) - (275,000) - - - - 275,000 -
Provision for
share-based
payments
(Note 15) - - 802 - - - - 802
Options exercised - - (339) - 348 - - 9
Purchase of own
shares - - - - (895) - - (895)
Net change directly
in equity - (275,000) 463 - (547) - 274,924 (160)
--------------------- --------- ---------- ------------ ------------ -------- ------------ ---------- --------
Total movements - (275,000) 463 - (547) (283) 277,423 2,056
--------------------- --------- ---------- ------------ ------------ -------- ------------ ---------- --------
Equity at end
of the period 116,171 312,702 14,243 1,733 (5,753) 9,282 (246,341) 202,037
--------------------- --------- ---------- ------------ ------------ -------- ------------ ---------- --------
(1) During 2015 the Group reduced its share premium by
GBP275,000,000 increasing distributable reserves.
Consolidated statement of changes in equity for the 52 week
period ended 2 January 2016
Share-based
Share Share payments Revaluation Own Translation Retained
capital premium reserve reserve shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- ---------- ------------ -------------- -------- -------------- ----------- --------
Opening
balances 116,171 587,702 13,780 1,733 (5,206) 9,565 (523,764) 199,981
Total
comprehensive
(loss)/profit
for the year - - - (2) - (245) 58,123 57,876
--------------- ---------- ---------- ------------ -------------- -------- -------------- ----------- --------
Recognised
directly
in equity :
Dividends
(Note
10) - - - - - - (152) (152)
Provision for
share-based
payments
(Note 17) - - 2,188 - - - - 2,188
Share capital
reduction(1) - (275,000) - - - - 275,000 -
Performance
share
plan
exercised - - (321) - 321 - - -
Company share
option plan
exercised - - - - 17 - - 17
Deferred bonus
plan
exercised - - (18) - 18 - - -
Purchase own
shares - - - - (895) - - (895)
Release of SBP
reserve for
expired
share
schemes(2) - - (8,666) - - - 8,666 -
Release of own
shares(3) - - - - 2,163 - (2,163) -
--------------- ---------- ---------- ------------ -------------- -------- -------------- ----------- --------
Net change
directly
in equity - (275,000) (6,817) - 1,624 - 281,351 1,158
--------------- ---------- ---------- ------------ -------------- -------- -------------- ----------- --------
Total
movements - (275,000) (6,817) (2) 1,624 (245) 339,474 59,034
--------------- ---------- ---------- ------------ -------------- -------- -------------- ----------- --------
Equity at end
of the year 116,171 312,702 6,963 1,731 (3,582) 9,320 (184,290) 259,015
--------------- ---------- ---------- ------------ -------------- -------- -------------- ----------- --------
(1) During 2015 the Group reduced its share premium by
GBP275,000 increasing distributable reserves.
(2) On lapse of schemes balances are released to distributable
reserves.
(3) Revaluation of own shares reserve to reflect the weighted
average price of shares purchased.
Consolidated balance sheet
52 weeks to
26 weeks to 26 weeks to 2 January
2 July 2016 4 July 2015 2016
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ------ ------------- ------------- ------------
Non-current assets
Goodwill - 85 -
Intangible assets 9 286,072 515,258 479,047
Property, plant and equipment 11a 42,789 53,457 52,713
Available for sale investments 970 970 970
Interests in associates - 22 -
Trade and other receivables 2 1 2
329,833 569,793 532,732
-------------------------------- ------ ------------- ------------- ------------
Current assets
Assets classified as held
for sale 11b 1,811 937 82
Inventories 2,110 2,173 2,383
Trade and other receivables 34,356 37,748 31,628
Current tax asset 1,178 - 247
Cash and cash equivalents 10,593 41,687 40,564
50,048 82,545 74,904
-------------------------------- ------ ------------- ------------- ------------
Total assets 379,881 652,338 607,636
-------------------------------- ------ ------------- ------------- ------------
Current liabilities
Trade and other payables 39,222 45,672 44,549
Current tax liabilities - 1,397 -
Retirement benefit obligation 13 10,166 6,489 10,016
Short-term provisions 1,849 1,703 1,835
-------------------------------- ------ ------------- ------------- ------------
51,237 55,261 56,400
-------------------------------- ------ ------------- ------------- ------------
Non-current liabilities
Borrowings 12 148,254 224,771 186,619
Retirement benefit obligation 13 13,001 80,574 16,946
Deferred tax liabilities 49,296 81,969 84,196
Trade and other payables 3,345 3,873 819
Long-term provisions 3,208 3,853 3,641
-------------------------------- ------ ------------- ------------- ------------
217,104 395,040 292,221
-------------------------------- ------ ------------- ------------- ------------
Total liabilities 268,341 450,301 348,621
-------------------------------- ------ ------------- ------------- ------------
Net assets 111,540 202,037 259,015
-------------------------------- ------ ------------- ------------- ------------
Equity
Share capital 14 116,171 116,171 116,171
Share premium account 312,702 312,702 312,702
Share-based payment reserve 15 7,424 14,243 6,963
Revaluation reserve 1,729 1,733 1,731
Own shares (3,317) (5,753) (3,582)
Translation reserve 9,274 9,282 9,320
Retained earnings (332,443) (246,341) (184,290)
Total equity 111,540 202,037 259,015
-------------------------------- ------ ------------- ------------- ------------
Consolidated cash flow statement
26 weeks 26 weeks 52 weeks
to to to
2 January
2 July 2016 4 July 2015 2016
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ------ ------------ ------------ ----------
Cash flows from operating
activities
Cash generated from operations 16 3,189 24,983 41,025
Income tax - (816)
Cash used in discontinued - (212) -
operations
Net cash inflow from operating
activities 3,189 24,771 40,209
------------------------------------ ------ ------------ ------------ ----------
Investing activities
Interest received 60 59 148
Dividends received - 703 706
Proceeds on disposal of intangible 90 - -
fixed assets
Proceeds on disposal of property,
plant and equipment 720 117 200
Proceeds on disposal of assets
held for sale 1,007 628 2,139
Acquisition of publishing
titles (22,000) (60) (67)
Expenditure on digital intangible
assets (353) (1,096) (1,705)
Expenditure on property, plant
and equipment (2,882) (3,246) (6,084)
Sale of investment in associates - - 10
Disposal proceeds and investing
activities of discontinued
operations (37) - (46)
Net cash used in investing
activities (23,395) (2,895) (4,699)
------------------------------------ ------ ------------ ------------ ----------
Financing activities
Dividends paid(1) (76) (228) (304)
Interest paid (9,689) (9,890) (19,658)
Repayment of bond - - (4,900)
Purchase of own shares - (888) (895)
Financing fees - - (25)
Settlement of share schemes - - 19
Net cash used in financing
activities (9,765) (11,006) (25,763)
------------------------------------ ------ ------------ ------------ ----------
Net (decrease)/increase in
cash and cash equivalents (29,971) 10,870 9,747
Cash and cash equivalents
at beginning of period 40,564 30,817 30,817
Cash and cash equivalents
at end of period 10,593 41,687 40,564
------------------------------------ ------ ------------ ------------ ----------
(1) In 2015 the Group settled preference dividends relating to
2014 and 2015. 2014 dividends were accrued at the end of 2014.
Notes to the condensed set of financial statements for the 26
week period ended 2 July 2016
1. General information
The condensed financial information for the 26 weeks to 2 July
2016 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 (Interim
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 2 January 2016 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 2 January 2016,
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.
The next annual financial statements of the Group for the 52
weeks to 31 December 2016 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 Interim 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
after the notes to the consolidated financial statements
The Interim Report was approved by the Directors on 4 August
2016 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 including
borrowings. 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 Interim
Report. Accordingly, the unaudited condensed consolidated interim
financial statements have been prepared on a going concern basis
(discussed further in the Financial Review) and under the
historical cost basis except for the revaluation of certain
properties and financial instruments, share-based payments and
defined benefit pension obligations that are measured at revalued
amounts or fair value at the end of each reporting period.
Basis of accounting
The financial statements have been prepared on the basis of the
significant accounting policies set out in the financial statements
for the 52 week period ended 2 January 2016 with the exception of
the adoption of new or amended standards and interpretations in the
current year as follows:
New and amended IFRS's endorsed and adopted for the 26 week
period ended 2 July 2016
Impact on financial
Accounting standard Requirements statements
---------------------------- ---------------------------------------------------------- ----------------------------
Annual improvements to IFRSs 2012-2014 cycle
---------------------------------------------------------------------------------------- ----------------------------
IFRS 5, 'Non-current Clarifies treatment when Minor - revisions taken
assets held for sale an asset (or disposal group) into consideration when
and discontinued operations' is reclassified from 'held applying standards - refer
regarding methods for sale' to 'held for distribution', to held for sale note.
of disposal or vice versa, such that
this does not constitute
a change to a plan of sale
or distribution, and does
not have to be accounted
for as such.
---------------------------- ---------------------------------------------------------- ----------------------------
IFRS 7, 'Financial Amendments relate to Servicing None - no asset
instruments: Disclosures' contracts - if an entity de-recognitions
transfers a financial asset have taken place in the
to a third party under conditions period.
that allow the de-recognition
of an asset, IFRS 7 requires
disclosure of all types of
continuing involvement in
the transferred assets. Additional
disclosures are not required
for interim periods.
---------------------------- ---------------------------------------------------------- ----------------------------
IAS 19, 'Employee Clarifies that when determining None - pension obligations
benefits' the discount rate for obligations, relate to UK obligations
the currency that liabilities where an active market
are denominated in is important exists.
and considers the availability
of corporate bond rates such
that where there is no active
market government bonds should
be used.
---------------------------- ---------------------------------------------------------- ----------------------------
IAS 34, 'Interim financial The amendment clarifies what Minor - cross references
reporting' is meant by the reference between various parts
in the standard to 'information of the document is clear
disclosed elsewhere in the and specific.
interim financial report'.
It further amends IAS34 to
require a cross-reference
from the interim financial
statements to the location
of that information.
---------------------------- ---------------------------------------------------------- ----------------------------
Narrow scope amendments
---------------------------- ---------------------------------------------------------- ----------------------------
Amendments to IFRS None - no structural
10 'Consolidated financial * Exception from preparing consolidated financial complexity
statements' and IAS28 statements is available to intermediate parent giving rise to consideration
'Investments in associates' entities which are subsidiaries of investment of these technical changes.
on Investment entities: entities where the investment entity parent measures
Applying the consolidation its subsidiaries at fair value.
exemption*
* Subsidiaries which act as an extension of an
investment entity should be consolidated.
* Equity accounting for investments in associates and
joint ventures - policy choice.
---------------------------- ---------------------------------------------------------- ----------------------------
Amendment to IFRS This amendment provides specific None - not applicable.
11 'Joint arrangements' guidance on accounting for
on accounting for the acquisition of an interest
acquisition of interest in a joint operation that
in joint operations is a business.
---------------------------- ---------------------------------------------------------- ----------------------------
Amendments to IAS Prohibits revenue-based depreciation None - refer Note 9 -
16 'Property, plant methods and generally presumes Intangible Assets and
and equipment' and that such methods are an Note 11a - Property, Plant
IAS 38 'Intangible inappropriate basis for amortising and Equipment.
assets' on clarification intangible assets.
of acceptable methods
of depreciation and
amortisation
---------------------------- ---------------------------------------------------------- ----------------------------
Amendments to IAS Allows entities to use the None - not applicable.
27 'Separate financial equity method to account
statements' on equity for investment in subsidiaries,
method in separate joint ventures and associates
financial statements in their separate financial
statements.
---------------------------- ---------------------------------------------------------- ----------------------------
Amendments to IAS Amendments clarify guidance Minor - requirements
1 'Presentation of on materiality and aggregation, considered
financial statements' presentation of sub-totals, in relation to the financial
- Disclosure Initiative the structure of financial information overall.
statements and disclosure
of policies. Encourages companies
to apply professional judgement
in determining what information
to disclose in their financial
statements and how it may
improve clarity or disclosure
more generally.
---------------------------- ---------------------------------------------------------- ----------------------------
* Not yet EU endorsed.
There are numerous standards which have a mandatory application
date of on or after 1 January 2017 and are not yet EU endorsed. The
details of these changes will be further assessed during the course
of the year and disclosed in the annual financial statements. The
most significant changes include amendments to IAS 12 'Income
taxes', 'Recognition of deferred tax assets for unrealised losses'
and amendments to IAS 7 'Cashflow statements' Disclosure
initiative.
More significant changes are proposed for application in 2018
covering IFRS 9 'Financial Instruments and IFRS 15 'Revenue from
contracts with customers' and in 2019, IFRS 16 'Leases. The impacts
of the changes in these standards have not yet been assessed. The
changes are not yet EU endorsed.
Critical accounting judgements and key sources of estimation
uncertainty
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.
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.
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 28 of the 2 January 2016 financial
statements, and are amended to take account of estimated levels of
share vesting and exercise.
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 of exit
as an onerous lease. 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.
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 year,
are discussed below.
Impairment of publishing titles, print presses and other
intangible assets
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. A GBP216.9 million
impairment loss has been recognised for the period ended 2 July
2016 (2 January 2016: GBP35.2 million) in relation to publishing
titles. The carrying value of publishing titles at 2 July 2016 was
GBP283.5 million (2 January 2016: GBP476.4 million).
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 (Note 11a).
An impairment charge of GBP5.4 million has been recognised for
the period ended 2 July 2016 (2 January 2016: nil).
A GBP1.5 million write-down on assets held for sale was charged
in the period (2 January 2016: nil) (Note 11b).
Details of the impairment reviews that the Group performs in
relation to other intangible assets are provided in Note 9. No
additional charge is considered necessary for the interim period (2
January 2016: GBP1.6 million accelerated depreciation/amortisation
charge was taken in relation to digital intangible assets).
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. The pension 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 each year 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 based on standard base table adjusted
to reflect specific conclusions and conditions based on a study of
the actual scheme members.
Details of the assumptions used to determine the liability at 2
July 2016 are set out in Note 13.
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
Contract
Publishing printing Eliminations Group
26 week period ended 2 July 2016 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ---------- ------------- ----------
Revenue
Print advertising 51,398 - - 51,398
Digital advertising 14,177 - - 14,177
Newspaper sales 38,375 - - 38,375
Contract printing - 6,643 - 6,643
Other 3,125 475 - 3,600
--------------------------------------------------- ----------- ---------- ------------- ----------
Total external sales 107,075 7,118 - 114,193
Inter-segment sales(1) - 12,511 (12,511) -
Total revenue 107,075 19,629 (12,511) 114,193
--------------------------------------------------- ----------- ---------- ------------- ----------
Operating loss
Net segment result (207,501) (3,912) - (211,413)
--------------------------------------------------- ----------- ---------- ------------- ----------
Investment income 60
Net finance expense on pension liabilities/assets (457)
Change in fair value of borrowings(2) 38,366
Net finance costs (10,271)
Loss before tax (183,715)
Tax 35,743
--------------------------------------------------- ----------- ---------- ------------- ----------
Consolidated loss after tax for the
period (147,972)
--------------------------------------------------- ----------- ---------- ------------- ----------
(1) Inter segment sales are charged at prevailing market
prices.
(2) Relates to changes in fair value of hedges.
Contract
Publishing printing Eliminations Group
26 week period ended 4 July 2015 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ---------- ------------- --------
Revenue
Print advertising 64,112 - - 64,112
Digital advertising 16,527 - - 16,527
Newspaper sales 37,557 - - 37,557
Contract printing - 6,247 - 6,247
Other 3,564 864 - 4,428
--------------------------------------------------- ----------- ---------- ------------- ----------
Total external sales 121,760 7,111 - 128,871
Inter-segment sales(1) - 16,008 (16,008) -
Total revenue 121,760 23,119 (16,008) 128,871
--------------------------------------------------- ----------- ---------- ------------- ----------
Operating profit
Net segment result 21,212 1,030 - 22,242
--------------------------------------------------- ----------- ---------- ------------- ----------
Investment income 762
Net finance expense on pension liabilities/assets (1,504)
Change in fair value of borrowings(2) (9,333)
Net finance costs (9,987)
Profit before tax 2,180
Tax (674)
--------------------------------------------------- ----------- ---------- ------------- ----------
Profit after tax for the period -
continuing operations 1,506
--------------------------------------------------- ----------- ---------- ------------- ----------
Loss after tax for the period - discontinued
operations (2)
--------------------------------------------------- ----------- ---------- ------------- ----------
Consolidated profit after tax for
the period 1,504
--------------------------------------------------- ----------- ---------- ------------- ----------
(1) Inter segment sales are charged at prevailing market
prices.
(2) Relates to changes in fair value of hedges.
Contract
Publishing printing Eliminations Group
52 week period ended 2 January
2016 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ---------- ------------- ---------
Revenue
Print advertising 119,607 - - 119,607
Digital advertising 31,719 - - 31,719
Newspaper sales 72,461 - - 72,461
Contract printing - 12,627 - 12,627
Other 7,568 1,107 - 8,675
--------------------------------------- ----------- ---------- ------------- ---------
Total external sales 231,355 13,734 - 245,089
Inter-segment sales(1) - 30,182 (30,182) -
Total revenue 231,355 43,916 (30,182) 245,089
--------------------------------------- ----------- ---------- ------------- ---------
Operating (loss)/profit
Segment result (1,829) 2,856 - 1,027
--------------------------------------- ----------- ---------- ------------- ---------
Investment income 854
Net finance expense on pension
liabilities/assets (2,933)
Change in fair value of borrowings(2) 23,918
Net finance costs (19,973)
Profit before tax 2,893
Tax 8,538
--------------------------------------- ----------- ---------- ------------- ---------
Consolidated profit after tax
for the period 11,431
--------------------------------------- ----------- ---------- ------------- ---------
(1) Inter segment sales are charged at prevailing market
prices.
(2) Relates to changes in fair value of hedges.
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 2 January
2016. Segment result represents the profit earned by each segment,
investment income, finance costs (including in relation to pension
assets and liabilities) and income tax expense. Publishing and
printing business are reported to the Group's Chief Executive for
the purposes of resource allocation and assessment of
performance.
The Group, in common with the rest of the publishing industry,
is subject to the main holiday periods of Easter, summer and
Christmas as well as school and bank holidays. Since these fall
across both half years, the Group's financial results are not
usually subject to significant seasonal variations from year to
year.
b) Segment assets
2 July 4 July 2 January
2016 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- ----------
Assets
Publishing 349,867 620,123 574,975
Contract printing 30,013 32,215 32,661
---------------------------- -------- -------- ----------
Total segment assets 379,880 652,338 607,636
---------------------------- -------- -------- ----------
Consolidated total assets 379,880 652,338 607,636
---------------------------- -------- -------- ----------
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
and unless specifically part of contract printing are allocated to
publishing with the exception of available-for-sale investments and
derivative financial instruments.
c) Other segment information
26 weeks to 2 July 26 weeks to 4 July 52 weeks to 2 January
2016 2015 2016
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 2,798 84 2,882 2,698 548 3,246 5,837 247 6,084
Depreciation
expense(1) 2,909 810 3,719 1,758 1,242 3,000 6,403 1,965 8,368
Impairment
of property,
plant and
equipment
and assets
held for
sale 1,537 5,391 6,928 - - - - - -
Impairment
of
intangibles 216,942 - 216,942 - - - 35,234 - 35,234
-------------- ----------- --------- -------- ----------- ---------- -------- ----------- ---------- --------
(1)Includes amortisation of digital intangible assets (Note 9),
depreciation charge on property plant and equipment (Note 11a) and
depreciation charge on assets classified as held for sale (Note
11b).
4. Investment income
2 July 4 July 2 January
2016 2015 2016
GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- ----------
Income from available
for sale investments(1) - 703 706
Interest receivable 60 59 148
--------------------------- -------- -------- ----------
60 762 854
-------------------------- -------- -------- ----------
(1 Dividends received from Press Association recognised as
available for sale investments. Dividend received on sale of a
division.)
5. Finance costs
a) Net finance expense on pension (liabilities)/assets
2 July 2016 2 January
4 July 2015 2016
Note GBP'000s GBP'000 GBP'000
-------------------------------- ----------- ------------ ------------ -----------
Interest on assets 8,733 8,389 16,771
Interest on liabilities (9,190) (9,893) (19,704)
-------------------------------- ----------- ------------ ------------ -----------
Net finance expense on pension
liabilities/assets 13 (457) (1,504) (2,933)
-------------------------------- ----------- ------------ ------------ -----------
b) Fair value adjustment
In the period the fair value movement on the 8.625% Senior
Secured Bond due 2019 results in a gain of GBP38.4 million in the
period (4 July 2015 GBP9.3 million loss; 2 January 2016 GBP23.9
million gain) (Note 12).
c) Finance costs
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
----------------------------- ------------ ------------ ----------
Interest on bond (9,488) (9,703) (19,296)
Interest on bank overdrafts
and loans (199) (187) (374)
Amortisation of term debt
issue costs (97) (97) (194)
Financing fees - - (109)
Total operational finance
costs (9,784) (9,987) (19,973)
Exceptional refinancing (487) - -
fees(1)
----------------------------- ------------ ------------ ----------
Total finance costs (10,271) (9,987) (19,973)
------------------------------ ------------ ------------ ----------
(1 Exceptional refinancing fees charged in the period relate to
VAT on 2014 refinancing fees.)
6. Tax
The tax (credit)/charge comprises:
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ ----------
Current tax
Corporation tax (credit)/charge (867) 75 200
Adjustment in respect
of prior periods (64) 253 (626)
------------------------------------- ------------ ------------ ----------
Total current tax (credit)/charge (931) 328 (426)
------------------------------------- ------------ ------------ ----------
Deferred tax
Total deferred tax (credit)/charge (34,812) 346 (8,112)
------------------------------------- ------------ ------------ ----------
Total tax (credit)/charge
for the period (35,743) 674 (8,538)
------------------------------------- ------------ ------------ ----------
Reconciliation of tax % % %
(credit)/charge
Standard rate of corporation
tax (20.0) 20.3 20.3
Tax effect of items that
are not deductible or
not taxable in determining
taxable profit 0.3 0.4 (10.7)
Unrecognised deferred
tax assets - - (0.1)
Prior period adjustment - 2.3 (21.6)
Prior period adjustment
in respect of bond accounting - - 38.2
Adjustment for change
in rate 0.1 - (316.9)
Effect of other tax rates (0.1) (1.5) (4.2)
Tax (credit)/charge rate (19.7) 21.5 (295.2)
------------------------------------- ------------ ------------ ----------
Corporation tax for the interim period is credited at 19.7% (4
July 2015: charged at 21.5%, 3 January 2015: credited at 295.2%),
including deferred tax, this represents the best estimate of the
average annual effective tax rate expected for the full year,
applied to the pre-tax income of the six month period.
The basic rate tax applied for the 2016 period is 20.0% (2015:
20.25%). The prior year rate of 20.25% was a blended rate due to
the tax rate of 21% in effect for the first quarter of 2015,
changing to 20% from 1 April 2015 under the 2013 Finance Act.
Legislation was introduced in the UK Budget 2016 to reduce the
main rate of corporation tax by a further 1% to 17% from 1 April
2020. The impact of the deferred tax re-measurement should be
recorded when the legislation is substantively enacted for IFRS
purposes. We expect the Finance Bill to be substantively enacted in
September 2016. As this is after the Interim balance sheet date,
adjustment is not required for the purposes of the estimated annual
effective tax rate.
The tax credit in the period includes GBP39.1 million of
deferred tax credit arising on the impairment of GBP216.9 million
on the Groups publishing titles in the period, calculated at an 18%
tax rate (Note 9).
7. 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
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ----------
Earnings
(Loss)/profit for the period (147,972) 1,506 11,431
Preference dividend(1) (76) (76) (152)
----------------------------------- ------------ ------------ ----------
(Loss)/earnings for the purposes
of diluted earnings per share (148,048) 1,430 11,279
----------------------------------- ------------ ------------ ----------
000's 000's 000's
------------------------------------- -------- -------- --------
Number of shares
Weighted average number of ordinary
shares for the purpose of basic
(loss)/earnings per share(2) 105,326 105,273 105,281
-------------------------------------- -------- -------- --------
Pence Pence Pence
------------------------------- --------- ------ ------
(Loss)/Earnings per share (p)
Basic (140.56) 1.36 10.71
Diluted(3) (140.56) 1.36 10.71
-------------------------------- --------- ------ ------
Continuing operations
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ ------------ ----------
Earnings
(Loss)/profit for the period (147,972) 1,504 11,431
Preference dividend(1) (76) (76) (152)
--------------------------------------- ------------ ------------ ----------
Earnings for the purposes of diluted
earnings per share (148,048) 1,428 11,279
--------------------------------------- ------------ ------------ ----------
000's 000's 000's
------------------------------------- --------- -------- --------
Number of shares
Weighted average number of ordinary
shares for the purpose of basic
earnings per share and diluted
earnings per share(2) 105,326 105,273 105,281
-------------------------------------- --------- -------- --------
Pence Pence Pence
------------------------------------- --------- -------- --------
(Loss)/earnings per share (p)
Basic (140.56) 1.36 10.71
Diluted(3) (140.56) 1.36 10.71
-------------------------------------- --------- -------- --------
(1) In line with IAS 33, the preference dividend and the number
of preference shares are excluded from the calculation of earnings
per share.
(2) The weighted average number of ordinary shares are shown
excluding share held by the Employee Benefit Trust.
(3) 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.
Based on the current share price awards under the Company's
share schemes and warrants representing a total of 20,122,000
shares which are currently outstanding will not vest or crystalise
and no dilution from these warrants or awards is reflected.
8. Dividends
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ ----------
Amounts recognised as distributions
in the period
Preference dividends paid 76 76 152
------------------------------------- ------------ ------------ ----------
Pence Pence Pence
------------------------- ------ ------ ------
Dividend paid per share
Preference 6.88 6.88 13.75
-------------------------- ------ ------ ------
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 14 for additional explanations of
resolutions made in respect of dividends on preference shares.
9. Intangible assets
Publishing Digital intangible
titles assets Total
s GBP'000 GBP'000 GBP'000
------------------------------------------------ ------- ----------- ------------------- ----------
Cost
At 2 January 2016 1,149,190 4,718 1,152,908
Additions 10 24,000 353 24,353
Disposals - (216) (216)
At 2 July 2016 1,173,190 4,855 1,178,045
------------------------------------------------ ------- ----------- ------------------- ----------
Accumulated impairment losses and amortisation
At 2 January 2016 672,795 2,066 637,861
Amortisation for the period - 386 386
Disposals - (216) (216)
Impairment losses for the period 216,942 - 216,942
------------------------------------------------ ------- ----------- ------------------- ----------
At 2 July 2016 889,737 2,236 891,973
------------------------------------------------ ------- ----------- ------------------- ----------
Carrying amount
At 2 January 2016 476,395 2,762 479,047
At 2 July 2016 283,453 2,619 286,072
------------------------------------------------ ------- ----------- ------------------- ----------
The carrying amounts of the publishing titles by cash generating
unit (CGU) is as follows:
2 July
2 January 2016 Impairments Additions 2016
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------------- ------------ ---------- --------
Scotland 52,127 (4,982) - 47,145
North 194,958 (99,418) - 95,540
Northwest 46,300 (31,532) - 14,768
Midlands 109,109 (54,783) - 54,326
South 38,442 (13,767) - 24,675
Northern Ireland 35,459 (12,460) - 22,999
The i - - 24,000 24,000
-------------------------- --------------- ------------ ---------- --------
Total carrying amount of
publishing titles 476,395 (216,942) 24,000 283,453
-------------------------- --------------- ------------ ---------- --------
Acquisition of publishing title
The addition in the period, relates to the i publishing title
which the Group acquired on 11 April 2016. Johnston Press plc
completed the acquisition of the business and certain assets of i
from Independent Print Limited. i is a UK national daily newspaper
providing concise quality editorial content, and was named National
Newspaper of the Year in 2015 at the industry's News Awards. The
total purchase consideration is GBP24 million, of which GBP22
million was settled in cash on completion and a further GBP2
million will be settled in cash on 20 April 2017 (Note 10).
Impairment assessment
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. The publishing titles are grouped by CGUs, being the
lowest levels for which there are separately identifiable cash
flows independent of the cash inflows from other groups of
assets.
The recoverable amounts of the CGUs are determined from value in
use calculations. The key assumptions for the value in use
calculations are:
-- expected changes in underlying revenues and direct costs during the period;
-- growth rates; and
-- the discount rate.
The Group prepares discounted cash flow forecasts using:
-- the Board approved budget for 2016, updated for 2016
forecast, and the projections for 2017 and 2018 which reflects
management's current experience and future expectations of the
markets the CGUs operate in. Changes in underlying revenue and
direct costs are based on past practices and expectations of future
changes in the market. These include changes in demand for print
and digital, circulation, cover prices, advertising rates as well
as movement in newsprint and production costs and inflation;
-- capital expenditure cash flows to reflect the cycle of capital investment required;
-- net cash inflows for future years are extrapolated beyond
2018 based on the Board's view of the estimated annual long-term
growth rate of nil, except for the i which has a long-term growth
rate of 2.5%; and
-- management estimate discount rates using post-tax rates that
reflect current market assessments of the time value of money and
the risks specific to the CGUs. The post-tax discount rate applied
to the future cash flows for the period ended 2 July 2016 was 11.0%
(2015: 10.0%). The pre-tax discount rate equates to 13.7% (2015:
12.1%). The post-tax discount rate reflects management's view of
the current risk profile of the underlying assets being valued with
regard to the current economic environment and the risks that the
regional media industry is facing. The present value of the cash
flows is then compared to the carrying value of the asset to
determine if there is any impairment loss.
The total impairment charge recognised for the period ended 2
July 2016 was GBP216.9 million (2 January 2016: GBP35.2
million).
The impairment charge in the period relates to all CGU's except
the i.
9. Intangible assets (continued)
The Group has conducted sensitivity analysis on the impairment
test of each CGUs carrying value. A decrease in the long-term
growth rate of 0.5%, beyond 2018, would result in a further Group
impairment of GBP13.8 million and an increase in the discount rate
of 0.5% would result in an additional impairment of GBP15.5
million.
Growth rate Discount rate
sensitivity sensitivity
GBP'000 GBP'000
----------------------------------------------------- ------------ -------------
Scotland (1,763) (2,068)
North (3,589) (4,210)
Northwest (4,447) (4,525)
Midlands (1,971) (2,313)
South (1,102) (1,293)
Northern Ireland (919) (1,076)
The i - -
----------------------------------------------------- ------------ -------------
Total potential impairment from sensitivity analysis (13,791) (15,484)
----------------------------------------------------- ------------ -------------
Digital intangible assets
Digital intangible assets primarily relate to the Group's 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
two to five years. Amortisation for the year has been charged
through cost of sales.
10. Acquisition of subsidiary
On 10 April 2016 Johnston Publications Limited (a subsidiary of
Johnston Press plc set up for that purpose) acquired the principal
assets of the i, part of the Independent Group.
The i is a highly regarded newspaper with a clear market
position and loyal readership. By joining with Johnston Press the
combined circulation will be equal to 9% of national daily
circulation, making us the fourth largest player in the national
newspaper market.
With our considerable digital experience, the combination of
Johnston Press and the i will also allow us to grow digital
audiences and revenues through the creation of inews.co.uk.
The acquisition will offer:
-- increased scale,
-- growing revenues,
-- accelerated digital transformation.
The key financial benefits:
-- Earnings enhancing,
-- Strong cash generation
-- Cost saving and revenue synergies.
10a. Consideration
Total consideration for the principal assets acquired was GBP24
million, GBP22 million payable on completion on 10 April 2016 and
GBP2 million payable on 20 April 2017, there are no conditions
around the deferred payment. The purchase consideration was almost
entirely attributed to the business intellectual property rights
(GBP23,999,994).
10b. Acquisition related costs
Approximately GBP1.7 million costs relating to the acquisition
have been recognised within the Johnston Press plc. These include
legal and advisory fees.
10c. Additional identifiable assets acquired and liabilities
assumed
A number of additional assets and liabilities were acquired at
acquisition. As per the acquisition agreement the balance sheet
acquired was neutral with the balance being cash settled by the
seller.
As at 10 April 2016
GBP000's
------------------------------------------------- -------------------
Deferred revenue - subscriptions and advertising 586
Inventories - paper (184)
Retail agreements (149)
Employee costs 3
Transitional cost recharges (133)
Cash settlement 123
------------------------------------------------- -------------------
10d. Measurement of fair values
On acquisition the full amount of the consideration has been
recognised as an intangible addition to Publishing titles. As noted
above the net of the additional balance sheet assets and
liabilities acquired were nil. As above the net on balance sheet
assets acquired were nil. The payment of the consideration related
to the acquisition of the title.
Under IFRS 3 - Business combinations assets should be measured
at fair value at the date of acquisition and separated into their
constituent parts where material. On review of the business
acquired it was concluded that other than the publishing titles
there were no other material, separable intangible assets.
11a. Property, plant & equipment
Freehold
land
and Leasehold Plant and Motor
buildings buildings machinery Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
------------------------------------ ---------- ---------- ---------- --------- --------
At 2 January 2016 60,587 6,526 126,001 889 194,003
Additions 9 376 2,497 - 2,882
Disposals - (489) (3,011) (350) (3,850)
Transferred to assets held for
sale during the period (8,207) - (175) - (8,382)
Exchange differences - 153 - - 153
At 2 July 2016 52,389 6,566 125,312 539 184,806
------------------------------------ ---------- ---------- ---------- --------- --------
Depreciation
At 2 January 2016 39,048 2,341 99,012 889 141,290
Disposals - (489) (3,011) (350) (3,850)
Charge for the period 233 185 2,730 - 3,148
Accelerated depreciation charge - 72 87 - 159
Impairment of tangible fixed assets 2,438 - 2,953 - 5,391
Transferred to assets held for
sale during the period (4,077) - (167) - (4,244)
Exchange differences - 123 - - 123
------------------------------------ ---------- ---------- ---------- --------- --------
At 2 July 2016 37,642 2,232 101,604 539 142,017
------------------------------------ ---------- ---------- ---------- --------- --------
Carrying amount
At 2 January 2016 21,539 4,185 26,989 - 52,713
------------------------------------ ---------- ---------- ---------- --------- --------
At 2 July 2016 14,747 4,334 23,708 - 42,789
------------------------------------ ---------- ---------- ---------- --------- --------
During the period, the Group carried out a review of the
recoverable amount of its print manufacturing plant and related
equipment. These assets are used in the Group's print segment. The
review led to the recognition of an impairment loss of GBP5.4
million which has been recognised in the Income Statement.
11b. Assets classified as held for sale
Freehold
land and Plant and
buildings Machinery Total
GBP'000 GBP'000 GBP'000
Cost
------------------------------------- ---------- ---------- --------
At 2 January 2016 171 37 208
Disposals (3,109) (192) (3,301)
Transferred from property, plant
and equipment 8,207 175 8,382
At 2 July 2016 5,269 20 5,289
-------------------------------------- ---------- ---------- --------
Depreciation
At 2 January 2016 105 21 126
Disposals (2,287) (168) (2,455)
Charge for the period 26 - 26
Exceptional write down in the period 1,537 - 1,537
Transferred from property, plant
and equipment 4,077 167 4,244
At 2 July 2016 3,458 20 3,478
-------------------------------------- ---------- ---------- --------
Carrying amount
At 2 January 2016 66 16 82
-------------------------------------- ---------- ---------- --------
At 2 July 2016 1,811 - 1,811
-------------------------------------- ---------- ---------- --------
Assets classified as held for sale consists of land and
buildings in the UK and Republic of Ireland that are no longer in
use by the Group and print presses that have ceased production. All
the assets are being marketed for sale and are expected to be sold
within the next year.
Non-current assets are transferred to assets held for sale when
it is expected that their carrying amount will be recovered
principally through disposal and a sale is considered likely. They
are held at the lower of carrying amount and fair value less cost
of sales.
A write down of GBP1.5 million has been charged in the period to
recognise a property held for sale at its expected realisable sale
value.
12. Borrowings
The borrowings at 2 July 2016 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
relating to the 8.625% Senior secured notes 2019 have been charged
to the Income Statement (Note 2).
The breakdown of the 8.625% Senior secured notes 2019 is as
follows:
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ----------
Principal amount(1) 220,000 225,000 220,000
Bond discount (4,400) (4,500) (4,400)
Fair value (gain)/loss(2) (67,346) 4,271 (28,981)
Total borrowings 148,254 224,771 186,619
--------------------------- ------------ ------------ ----------
(1) The Principal amount remaining is stated after GBP5 million
bond buy back in August 2015
(2) The fair value gain for the period from 2 January 2016 to 2
July 2016 amounted to GBP38.4 million (26 weeks 2015: GBP9.3
million loss, 52 weeks 2015: GBP23.9 million gain).
The borrowings are disclosed in the financial statements as:
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
------------------------ ------------ ------------ ----------
Current borrowings - - -
Non-current borrowings 148,254 224,771 186,619
Total borrowings 148,254 224,771 186,619
------------------------ ------------ ------------ ----------
The Group's net debt is:
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ----------
Gross borrowings as above 148,254 224,771 186,619
Cash and cash equivalents (10,593) (41,687) (40,564)
Net debt 137,661 183,084 146,055
--------------------------- ------------ ------------ ----------
The Group's GBP25 million Revolving Credit Facility (RCF) is
currently undrawn (2015: undrawn).
13. Retirement benefit obligation
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% of basic salary,
for employees statutorily enrolled, through to 12% 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 and
are set out in a Schedule of Contributions and Recovery Plan dated
29 July 2014.
A valuation of the Johnston Press Pension Plan as at 31 December
2012 was commissioned by the Trustees and takes account of the
Capital Refinancing Plan. A new triennial valuation as at 31
December 2015 is due to be carried out in 2016 with the results
available by March 2017.
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 Group and certain of its subsidiaries in relation to any
default on a payment obligation under the Johnston Press Pension
Plan was removed. In return for the removal of this security and
the aforementioned guarantee, an unsecured cross-guarantee was
provided on implementation of the Capital Refinancing Plan by the
Group 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 s.75 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 by 31 December 2024 through 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 3%
per annum thereafter with a final payment of GBP12.7 million in
2024.
-- Settlement of unpaid PPF levies and s.75 debts.
-- The Johnston Press Pension Plan was entitled to receive 25%
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 Group also agreed to pay additional contributions to the
Johnston Press Pension Plan in the event that the 2014/2015 PPF
levy or the 2015/2016 PPF levy was 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.
As part of the 31 December 2012 triennial valuation, this
Pension Framework Agreement was reflected in the valuation
documentation of the Johnston Press Pension Plan, and subsequently
it was submitted to the Pensions Regulator. The Agreement and the
required level of contributions are subject to review as part of
the 31 December 2015 triennial valuation which is currently
underway.
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
2 January
2 July 2016 4 July 2015 2016
Note GBP'000 GBP'000 GBP'000
--------------------------------- ----- ----------------------- ------------ ----------
Employment costs:
Defined contribution scheme (2,039) (2,188) (3,880)
Defined benefit scheme
Plan expenses(1) (409) (162) (632)
Pension protection fund(2) (261) (859) (1,221)
Net finance cost on Johnston
Press Pension Plan 5(a) (457) (1,504) (2,933)
--------------------------------- ----- ----------------------- ------------ ----------
Total defined benefit scheme (1,127) (2,525) (4,786)
--------------------------------- ----- ----------------------- ------------ ----------
Total pension costs (3,166) (4,713) (8,666)
--------------------------------- ----- ----------------------- ------------ ----------
(1) Relates to administrative expenses incurred in managing the
pension fund.
(2) Relates to the payment of GBP332,000 (estimate) to the
Pension Protection Fund for the period April 2016 to March 2017
(April 2015 to March 2016: GBP722,000).
Other comprehensive income - (loss)/gain on pension
2 July 2016 4 July 2015 2 January
GBP'000 GBP'000 2016 GBP'000
------------------------------------------------ ------------ ------------ --------------
Increase/(decrease) in plan assets
in excess of interest 59,444 (3,897) (7,610)
Changes in assumptions (increasing)/decreasing
the underlying present value of the
benefit obligation (59,907) 9,041 61,660
(Increased)/decreased defined benefit
obligation under IFRIC 14 - (3,900) 2,971
Actuarial (loss)/gain recognised in
the statement of comprehensive income (463) 1,244 57,021
Deferred tax 88 (249) 10,842
------------------------------------------------ ------------ ------------ --------------
Actuarial (loss)/gain recognised in
the statement of comprehensive income
net of tax (375) 995 67,863
------------------------------------------------ ------------ ------------ --------------
During 2015 the Group commissioned a review of the IAS19
assumptions used in determining the closing liability of the
Johnston Press Pension Plan specifically focusing on demographic
assumptions. A medically underwritten study was carried out by KPMG
to identify the current health of a statistical sample group of
existing Plan members, assessed via telephone interviews targeted
towards members with the most significant liabilities in the Plan.
The output was interpreted by underwriters and then analysed
alongside the results from a postcode analysis performed in the
prior year. This was translated into mortality assumptions for use
in calculating the IAS19 scheme liabilities. The methodology used
was compliant with the applicable Technical Actuarial Standards in
force published by the Financial Reporting Council.
The study of current mortality gives an age rating of +3.0 years
to the standard SAPS tables used for the IAS19 disclosure
(previously this assumption had been set in line with 104% of
Self-Administered Pension Scheme (SAPS) tables). The futures
improvement model has been updated to reflect the most recent
Continuous Mortality Investigation (CMI) 2015 projections and the
allowance for long term rates of improvement of 1.25% p.a. for
males and 1.0% p.a. for females remains unchanged. This is
equivalent to a life expectancy at 65 of 19.7 years (4 July 2015:
22.0 years) for males and 21.3 years (4 July 2015: 23.9 years) for
females. The reduction in assumed life expectancy is equivalent to
a reduction in liabilities of GBP51.0 million.
The Rules of the Plan were revised such that the Company has an
unconditional right to any surplus on the eventual wind up of the
Plan. As such the additional IFRIC 14 liability has been
reversed.
Statement of financial position - net defined benefit pension
deficit and other pension related liabilities
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------------------------- ------------ ------------ ----------
Amounts included in the Group Statement
of financial position:
Fair value of scheme assets 534,918 477,602 473,413
Present value of defined benefit obligations (558,085) (557,794) (500,375)
Additional defined benefit obligation - (6,871) -
under IFRIC 14
Total liability recognised (23,167) (87,063) (26,962)
Amount included in current liabilities 10,166 6,489 10,016
Amount included in non-current liabilities (13,001) (80,574) (16,946)
---------------------------------------------- ------------ ------------ ----------
Analysis of amounts recognised of the net defined benefit
pension deficit
2 January
2 July 2016 4 July 2015 2016
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ------ ------------ ------------ ----------
Net defined benefit pension deficit
at beginning of period (26,962) (90,001) (90,001)
---------------------------------------- ------ ------------ ------------ ----------
Defined benefit obligation at
beginning of period (500,375) (567,509) (567,509)
Income statement :
Interest cost 5a (9,190) (9,893) (19,704)
Other comprehensive income :
arising from changes in demographic
assumptions - - 53,204
arising from changes in financial
assumptions (59,907) 9,041 8,456
Cash flows :
Benefits paid (by fund and Group) 11,387 10,567 25,178
---------------------------------------- ------ ------------ ------------ ----------
Defined benefit obligation at
end of the period (558,085) (557,794) (500,375)
Fair value of plan assets at beginning
of period 473,413 480,479 480,479
Income statement :
Interest income on plan assets 5a 8,733 8,389 16,771
Other comprehensive income :
Return on plan assets less gain 59,444 (3,897) (7,610)
Cash flows :
Company contributions 16 4,715 3,198 8,951
Benefits paid (by fund and Group) (11,387) (10,567) (25,178)
---------------------------------------- ------ ------------ ------------ ----------
Fair value of plan assets at end
of period 534,918 477,602 473,413
Additional defined benefit obligation - (6,871) -
under IFRIC 14
---------------------------------------- ------ ------------ ------------ ----------
Net defined benefit pension deficit
at end of period (23,167) (87,063) (26,962)
---------------------------------------- ------ ------------ ------------ ----------
Analysis of fair value of plan assets
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ ----------
Equities 78,158 81,827 76,162
Multi-asset credit 109,762 110,189 110,464
Diversified Growth Funds 165,168 169,246 167,124
Liability Driven Investments 180,276 112,548 115,625
Other(1) 1,554 3,792 4,038
--------------------------------- ------------ ------------ ----------
Total fair value of plan assets 534,918 477,602 473,413
--------------------------------- ------------ ------------ ----------
(1) Other mainly includes cash and Protected Rights Funds.
Analysis of financial assumptions
Valuation Valuation
Valuation at at at
2 January
2 July 2016 4 July 2015 2016
-------------------------------------- ------------- ------------ -----------
Discount rate 2.85% 3.85% 3.75%
Future pension increases
Deferred revaluations (where linked
to inflation (CPI)) 1.75% 2.20% 2.00%
Pensions in payment (where linked
to inflation (RPI)) 2.75% 3.20% 2.95%
Life expectancy
Male currently aged 65 19.7 years 22.0 years 19.7 years
Female currently aged 65 21.3 years 23.9 years 21.3 years
-------------------------------------- ------------- ------------ -----------
Sensitivity analysis of significant assumptions
The following tables present a sensitivity analysis for each
significant actuarial assumption showing how the defined benefit
obligation would have been affected, by changes in the relevant
actuarial assumptions that were reasonably possible at the
reporting date:
Changes in defined benefit
obligation
GBP'000
----------------------------------------------------------- --------------------------
Discount rate
+0.10% discount rate 549,403
Inflation rate
+0.10% inflation rate 563,765
Mortality
+10.0% to base table mortality rates 538,516
Pension increase exchange
Allowance for 25% take up for sections where automatically
offered 558,552
----------------------------------------------------------- --------------------------
The sensitivity analysis is based on a change in one assumption
while holding all other assumptions constant, therefore
interdependencies between assumptions are excluded. The methodology
applied is consistent to that used to determine the recognised
pension liability.
Other pension related obligations
The Group has agreed to pay the expenses of the Johnston Press
Pension Plan and the Pension Protection Fund ('PPF') levy as they
fall due.
The Group entered into flexible apportionment arrangements in
March 2014 and again in March 2015 with the agreement of the Plan
Trustees, which resulted in a decrease in the 2014/15 and 2015/2016
PPF levy charges. The Group expects to see the full benefit of
reduced levy charges in 2016/2017, when the increased pension
contributions commence. The Company was required to pay a levy in
relation to 2014/15 amounting to GBP2.7 million and 2015/16 of
GBP0.7 million. The reduction in both of these levies from the
2013/14 level of GBP3.2 million resulted in payments of GBP0.5
million and GBP2.5 million being made to the Plan in September 2014
and September 2015 respectively, in accordance with the Pension
Framework Agreement. Current expectations for the 2016/17 PPF levy
is that it will be lower again than the 2015/16 PPF levy which will
benefit the Group in full given the top-up payments to the Plan in
relation to the PPF levy have now ceased.
The Plan was subject to a potential increase in its liabilities
in the event that historic benefit equalisation had not taken
effect for a specific group of members (the "Affected Members") at
the intended date. The Company made an application to the High
Court (the "Court") for a declaration that normal retirement dates
for the Affected Members were validly equalised as intended with
the interests of Affected Members being represented by a
representative beneficiary (the "Representative Beneficiary"). In
May 2016 the Company reached agreement with the Representative
Beneficiary and the trustees of the Plan as to the applicable
relevant normal retirement dates for the Affected Members ("the
Agreement"). The Court approved the Agreement, which is recorded in
a binding Court Order. As a consequence, the Company and the
trustees have agreed to recognise additional liabilities in the
Plan of c.GBP5.3 million in respect of benefits under the Plan
accruing to the Affected Members.
News Media Association pension scheme
The Group is a member of the News Media Association (NMA)
(formerly the Newspaper Society), which was an unincorporated body
representing the interests of local newspaper publishers. During
2014 the Newspaper Society incorporated itself as a company limited
by guarantee and entered into a merger with the Newspaper
Publishers' Association (a body representing the interests of
publishers of national newspapers). As part of the merger, existing
members entered into a deed of covenant in respect of the deficit
to the Newspaper Society's defined benefit pension scheme. The
members agreed to make contributions over a period of 25 years or
until such time as the deficit has been addressed. Applying a
discount rate of 12%, the Group's best estimate of this at present
value is GBP783k. News Media Association Pension Scheme liabilities
have been included within provisions.
Other pension related liabilities
The closing provision relating to unfunded pensions for senior
employees was GBP0.8 million (4 July 2015: GBP1.4 million). The
unfunded pension provision is assessed by a qualified actuary at
each period end.
The company incurs post-retirement medical benefit pension
related liabilities in relation to pension plan members who are
former Portsmouth and Sunderland employees of GBP0.1 million (4
July 2015: GBP0.2 million). The post-retirement medical benefits
represent management's best estimate of the liability
concerned.
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 are in the process
of being wound up and no further employer funding contributions are
payable.
On 6 January 2015, the Trustees of the Limerick Leader Plan
accepted the offer of additional funding to the Plan in
consideration for the Trustees agreeing to proceed to wind up the
Plan. The total amount of this additional funding was EUR320,000.
At the end of the period there was GBPnil liability (4 July 2015:
GBPnil).
Other pension related liabilities have been included within
provisions.
14. Share capital
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ----------
Issued
Ordinary shares
105,877,777 ordinary shares of 1p each
(2 Jul 2016, 4 July 2015 and
2 January 2016) 1,059 1,059 1,059
---------------------------------------- ------------ ------------ ----------
Total ordinary shares 1,059 1,059 1,059
---------------------------------------- ------------ ------------ ----------
Deferred shares
690,294,608 deferred shares of 9p each 62,126 62,126 62,126
Second class deferred shares
5,293,888,850 deferred shares of 0.98p
each 51,880 51,880 51,880
---------------------------------------- ------------ ------------ ----------
Total deferred shares and second class
deferred shares 114,006 114,006 114,006
---------------------------------------- ------------ ------------ ----------
Preference shares
756,000 13.75% cumulative preference
shares of GBP1 each 756 756 756
349,600 13.75% 'A' preference shares
of GBP1 each 350 350 350
---------------------------------------- ------------ ------------ ----------
Total preference shares 1,106 1,106 1,106
---------------------------------------- ------------ ------------ ----------
Total issued share capital 116,171 116,171 116,171
---------------------------------------- ------------ ------------ ----------
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 as to its ability 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.
Share warrants
During the period there were no share warrants exercised (2015:
nil). At the balance sheet date 30,359,979 warrants were
outstanding, each giving the holder the right to subscribe for
0.1533799 ordinary shares at an exercise price of GBP1.9745 per
share.
15. 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:
2 January
2 July 2016 4 July 2015 2016
GBP'000 GBP'000 GBP'000
PSP, SAYE, CSOP, Deferred
Bonus, RSP(1) 509 339 596
Value Creation Plan 520 463 993
---------------------------- ------------ ------------ ----------
Included in operating
expenses 1,029 802 1,589
---------------------------- ------------ ------------ ----------
(1) PSP - Performance Share Plan, SAYE - Save As You Earn, CSOP
- Company Share Option Plan, RSP - Restricted Share Plan.
The cumulative provision for share-based payments of
GBP7,424,000 (4 July 2015: GBP14,243,000; 2 January 2016:
GBP6,963,000) is shown as a reserve in the Group Statement of
Financial Position.
16. Notes to the Cash flow statement
2 July 2 January
2016 4 July 2015 2016
Notes GBP'000 GBP'000 GBP'000
------------------------------------------- ------ ---------- ------------ ----------
Operating (loss)/profit (211,413) 22,242 1,027
Adjustments for non-cash
items:
Impairment of publishing
titles 9 216,942 - 35,234
Write down of print presses 11a 5,391 - -
Write down in carrying value
of assets held for sale 11b 1,537 - -
------------------------------------------- ------ ---------- ------------ ----------
12,457 22,242 36,261
Adjustments for non-cash
items:
Amortisation of intangible
assets 386 162 1,815
Depreciation charges 3,333 3,000 6,553
Charge for share based payments 15 1,029 802 2,188
Disposal of interest in
associates - - 12
Profit on disposal of intangible (65) - -
fixed assets
Profit on disposal of property,
plant and equipment (182) (263) (968)
Currency differences (111) (288) (249)
------------------------------------------- ------ ---------- ------------ ----------
16,847 25,655 45,612
Operating items before working
capital changes:
Net pension funding contributions 13 (4,714) (3,341) (8,928)
Unfunded pensions - (557) -
Movement in long term provisions (419) - (29)
------------------------------------------- ------ ---------- ------------ ----------
Cash generated from operations
before working capital changes 11,714 21,757 36,655
Working capital changes
:
Decrease in inventories 273 370 160
(Increase)/decrease in receivables (3,525) (143) 2,905
Increase/(decrease) in payables/including
redundancy accruals(1) and
LTIP settlement (5,273) 2,999 1,305
------------------------------------------- ------ ---------- ------------ ----------
Cash generated from operations 3,189 24,983 41,025
------------------------------------------- ------ ---------- ------------ ----------
(1) Refer to adjusting items as per reconciliation of Statutory
to Adjusted numbers.
Cash generated from operations of GBP3.2 million is after
payment of a GBP3.9 million LTIP payment to senior managers
relating to 2015, (excluding executive Directors), the cash for
which was raised in 2014, costs paid in relation to the i
acquisition of GBP1.5 million and GBP4.7 million of pension deficit
contributions. Cash generated excluding these items is GBP13.3
million.
17. Contingent liability
Johnston Press Pension Plan
The Plan was subject to a potential increase in its liabilities
in the event that historic benefit equalisation had not taken
effect for a specific group of members (the "Affected Members") at
the intended date. The Company made an application to the High
Court (the "Court") for a declaration that normal retirement dates
for the Affected Members were validly equalised as intended with
the interests of Affected Members being represented by a
representative beneficiary (the "Representative Beneficiary"). In
May 2016 the Company reached agreement with the Representative
Beneficiary and the trustees of the Plan as to the applicable
relevant normal retirement dates for the Affected Members ("the
Agreement"). The Court approved the Agreement, which is recorded in
a binding Court Order. As a consequence, the Company and the
trustees have agreed to recognise additional liabilities in the
Plan of c.GBP5.3 million in respect of benefits under the Plan
accruing to the Affected Members.
Iconic Newspapers Limited
On 1 April 2014, the Group entered into a sale agreement with
Iconic Newspapers 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 of the sale, Johnston Press plc agreed to provide
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 (ending 1
September 2016) following the completion of the sale.
18. Related party transactions
There have been no related party transactions that have occurred
during the first 26 weeks 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 2015 Annual Report and
Accounts that could do so.
19. Post balance sheet events
On 4 July 2016 the Group announced it has entered into an
agreement for the sale of its titles on the Isle of Man to Tindle
Newspapers Ltd, the UK based publisher, for GBP4.25 million in
cash, following a competitive tender process. The disposal
comprises the Isle of Man Examiner, Isle of Man Courier, Manx
Independent and www.iomtoday.co.im. The disposal will be effected
by the sale of the Company's subsidiary Isle of Man Newspapers
Limited.
Other than the proposed disposal of the Isle of Man activities,
and changes to tax legislation not yet enacted as mentioned in Note
6 there were no significant post balance sheet events requiring
disclosure in the accounts.
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 week period ended 2 July 2016 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
changes in equity, the condensed consolidated balance sheet, the
condensed consolidated cash flow statement and related Notes 1 to
19. 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 week period ended 2
July 2016 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
4 August 2016
Consolidated income statements - reconciliation of statutory and
adjusted
26 weeks ended 2 July 26 weeks ended 4 52 weeks ended 2
2016 July 2015 January 2016
Adjusting Adjusting Adjusting
Statutory items Adjusted Statutory items Adjusted Statutory items Adjusted
Notes GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Advertising revenue
Print advertising A 51,398 3 51,401 64,110 (1,106) 63,004 119,607 (1,553) 118,054
Digital advertising A 14,177 (334) 13,843 16,527 (1,292) 15,235 31,719 (2,275) 29,444
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Total advertising
revenue 65,575 (331) 65,244 80,637 (2,398) 78,239 151,326 (3,828) 147,498
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Non advertising
revenue
Newspaper sales A 38,375 - 38,375 37,559 (50) 37,509 72,461 (78) 72,383
Contract printing A 6,643 - 6,643 6,247 - 6,247 12,627 - 12,627
Leaflet, sundry and
other A 3,600 (1) 3,599 4,428 (326) 4,102 8,675 (643) 8,032
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Total other revenue 48,618 (1) 48,617 48,234 (376) 47,858 93,763 (721) 93,042
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Total continuing
revenues 114,193 (332) 113,861 128,871 (2,774) 126,097 245,089 (4,549) 240,540
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Cost of sales B (68,024) 243 (67,781) (67,665) 1,852 (65,813) (132,243) 3,009 (129,234)
Operating costs (253,863) - (253,863) (35,802) - (35,802) (103,450) - (103,450)
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Restructuring and
redundancy costs C 5,172 2,390 9,362
Impairment D 223,870 - 35,234
Other E 4,287 2,313 3,267
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Total adjustments 233,329 233,329 4,703 4,703 47,863 47,863
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Total operating costs (253,863) 233,329 (20,534) (35,802) 4,703 (31,099) (103,450) 47,863 (55,587)
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Total costs (321,887) 233,572 (88,315) (103,467) 6,555 (96,912) (235,693) 50,872 (184,821)
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
EBITDA (207,694) 233,240 25,546 25,404 3,781 29,185 9,396 46,323 55,719
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Depreciation and
amortisation F (3,719) 159 (3,560) (3,162) - (3,162) (8,369) 1,668 (6,701)
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Operating (loss)/profit (211,413) 233,399 21,986 22,242 3,781 26,023 1,027 47,991 49,018
Investment income 60 - 60 762 - 762 854 - 854
Net finance expense
on pension
assets/liabilities G (457) 457 - (1,504) 1,504 - (2,933) 2,933 -
Fair value
gain/(loss)
on borrowings H 38,366 (38,366) - (9,333) 9,333 - 23,918 (23,918) -
Other - - - - - - - - -
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Finance cost I (10,271) 487 (9,784) (9,987) - (9,987) (19,973) 84 (19,889)
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Finance costs 27,698 (37,422) (9,724) (20,062) 10,837 (9,225) 1,866 (20,901) (19,035)
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Profit/(Loss) before
tax (183,715) 195,977 12,262 2,180 14,618 16,798 2,893 27,090 29,983
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Tax credit/(expense) 35,743 (38,095) (2,352) (674) (2,552) (3,226) 8,538 (14,959) (6,421)
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
(Loss)/profit from
continuing operations (147,972) 157,882 9,910 1,506 12,066 13,572 11,431 12,131 23,562
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Net loss from discontinued
operations - - - (2) - (2) - - -
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Consolidated profit/(loss)
for the period (147,972) 157,882 9,910 1,504 12,066 13,570 11,431 12,131 23,562
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
26 weeks ended 2 July 26 weeks ended 4 52 weeks ended 2
Earnings per share 2016 July 2015 January 2016
Adjusting Adjusting Adjusting
Statutory items Adjusted Statutory items Adjusted Statutory items Adjusted
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------- ------ --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Earnings
(Loss)/profit for
the period (147,972) 157,882 9,910 1,504 12,066 13,570 11,431 12,131 23,562
Preference dividend (76) - (76) (76) - (76) (152) - (152)
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Earnings for the
purposes of diluted
earnings per share (148,048) 157,882 9,834 1,428 12,066 13,494 11,279 12,131 23,410
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Number of shares
Weighted average
number of ordinary
shares for the purpose
of basic earnings
per share(1) 105,326 105,326 105,326 105,273 105,273 105,273 105,281 105,281 107,281
Total possible share
outstanding(2) 121,517 121,517 121,517 119,757 119,757 119,757 117,473 117,473 117,473
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
Earnings per share
(p)
Basic (140.56) 149.90 9.34 1.36 11.46 12.82 10.71 11.52 22.24
Fully diluted (121.83) 129.93 8.09 1.19 10.08 11.27 9.6 10.33 19.93
--------------------------- --------- --------- --------- --------- --------- --------- ---------- --------- ---------
(1) The weighted average number of ordinary shares are shown
excluding shares held by the Employee Benefit Trust.
(2) This is the total number of shares outstanding including all
of those underwater that could have a dilutive effect if they
vest.
A Revenue
Revenue adjustment split for 26 weeks ending 2 July 2016
Closed Digital Launch
titles brands Motors fees TSA(1) Total
Statutory GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s adjusting Adjusted
GBP'000s A1 A2 A3 A4 A5 GBP'000s GBP'000s
-------------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Advertising revenue
Print advertising 51,398 3 - - - - 3 51,401
Digital advertising 14,177 (1) (14) (319) - - (334) 13,843
--------------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total advertising
revenue 65,575 2 (14) (319) - - (331) 65,244
--------------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Non advertising revenue
Newspaper sales 38,375 - - - - - - 38,375
Contract printing 6,643 - - - - - - 6,643
Other 3,600 (1) - - - - (1) 3,599
--------------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total other revenue 48,648 (1) - - - - (1) 48,617
--------------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total continuing revenues 114,193 1 (14) (319) - - (332) 113,861
--------------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
(1) TSA - Transitional Services Agreement
Revenue adjustment split for 26 weeks ending 4 July 2015
Closed Digital Launch
titles brands Motors fees TSA(1) Total
Statutory GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s adjusting Adjusted
GBP'000s A1 A2 A3 A4 A5 GBP'000s GBP'000s
-------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Advertising revenue
Print advertising 64,110 (1,106) - - - - (1,106) 63,004
Digital advertising 16,527 (10) (400) (652) (230) - (1,292) 15,235
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total advertising
revenue 80,637 (1,116) (400) (652) (230) - (2,398) 78,239
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Non advertising
revenue
Newspaper sales 37,559 (50) - - - - (50) 37,509
Contract printing 6,247 - - - - - - 6,247
Other 4,428 (53) - - - (273) (326) 4,102
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total other revenue 48,234 (104) - - - (273) (376) 47,858
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total continuing
revenues 128,871 (1,220) (400) (652) (230) (273) (2,774) 126,097
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
(1) TSA - Transitional Services Agreement
Revenue adjustment split for 52 weeks ending 2 January 2016
Closed Digital Launch
titles brands Motors fees TSA(1) Total
Statutory GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s adjusting Adjusted
GBP'000s A1 A2 A3 A4 A5 GBP'000s GBP'000s
-------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Advertising revenue
Print advertising 119,607 (1,553) - - - - (1,553) 118,054
Digital advertising 37,719 (16) (761) (1,268) (230) - (2,275) 29,444
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total advertising
revenue 151,326 (1,569) (761) (1,268) (230) - (3,828) 147,498
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Non advertising
revenue
Newspaper sales 72,461 (78) - - - - (78) 72,383
Contract printing 12,627 - - - - - - 12,627
Other 8,675 (117) - - - (526) (643) 8,032
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total other revenue 93,763 (195) - - - (526) (721) 93,042
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
Total continuing
revenues 245,089 (1,764) (761) (1,268) (230) (526) (4,549) 240,540
--------------------- --------- --------- --------- --------- --------- --------- ---------- ---------
(1) TSA - Transitional Services Agreement
Adjusted operating profit of GBP22.0 million (4 July 2015:
GBP26.0 million, 2 January 2016: GBP49.0 million) has been
calculated after adjusting for revenue and cost of sales for closed
titles and digital brands. Adjustments made to operating costs
include restructuring, impairment and other non-trading related
costs. Adjustments made at the comparative reporting periods will
not be the same as they reflect the decisions made in the business
at the reporting date and provide a comparable position, this may
involve additional adjustments based on events after the
comparative reporting date or removal of adjustments to provide a
comparable position between the 2015 and 2016 figures.
A1 Closed titles
As part of the review of the Group's portfolio, 17 small titles
were closed or merged in the second half of 2015. Total revenue of
GBP0.0 million (4 July 2015: GBP1.2 million) in respect of these
has been adjusted.
A2 Digital brands
Revenue of GBP0.0 million (4 July 2015: GBP0.4 million) for two
digital brands (DealMonster and Business Directory) has been
adjusted to reflect the closure of these businesses in the second
half of 2015.
A3 Motors
Revenue of GBP0.3 million (4 July 2015: GBP0.7 million)
reflecting the wind down of motors.co.uk has been adjusted for. The
contract with motors.co.uk for online motor sales expired at the
end of March 2016 and has not currently been renewed or replaced.
The full Motor internet revenue has been removed to provide a like
for like position. Any remaining click revenue is immaterial and
has been excluded.
A4 Launch fees
In June 2015 GBP0.2 million initial fees were received on the
execution of digital contracts - this was categorised as one off
revenue and has been adjusted for in the prior period to bring the
revenue down to the average monthly revenue for the remainder of
the year.
A5 Transitional Services Agreement (TSA)
In the comparative period GBP0.3 million of TSA fees were
adjusted, this related to a TSA with Iconic Newspapers Limited
following the disposal of the Group's Irish business and covered a
12 month period from April 2014.
B Cost of sales
Cost of sales associated with closed titles of GBP0.0 million (4
July 2015: GBP0.9 million), Digital Brands GBP0.0 million (4 July
2015: GBP0.4 million) and contract termination with motors.co.uk
GBP0.3 million (4 July 2015: GBP0.5 million) have been adjusted
for.
C Restructuring costs
Over the past few years there have been significant changes to
the structure of the business. In the current period this includes
redundancy costs of GBP3.5 million (4 July 2015: GBP1.0 million).
Other restructuring costs include early lease termination costs,
empty property costs, dilapidations and other associated legal and
consulting fees.
D Impairment
Impairment of intangible publishing titles of GBP216.9 million
(Note 9), print presses GBP5.4 million (Note 11a) and assets held
for sale GBP1.5 million (Note 11b) have been recognised.
E Other
Other adjusted costs include Pension Protection Fund Levy costs
of GBP0.3 million (4 July 2015: GBP0.9 million). During 2015 a cash
payment for the Pension Protection Fund Levy of GBP0.7 million was
required. The pension levy was charged at the capped rate,
reflecting historic high gearing. The charge has fallen and is
expected to reduce as reduced gearing and flexible apportionment
arrangements are reflected in the levy assessment.
Grants were made to senior management under long-term incentive
plans to a value totalling GBP1.0 million as at the date of grant
(4 July 2015: GBP0.8 million).
In 2016 GBP1.7 million of costs were adjusted relating to
acquisition costs of i.
Other adjusted costs include pension administration for closed
defined benefit pension scheme, one-off legal costs and disposal
gains.
F Depreciation
Accelerated depreciation of GBP0.2 million relating to fixed
assets disposed of in the period (Note 11a).
G Net finance expense on pension assets/liabilities
Net pension interest expense of GBP0.5 million (4 July 2015:
GBP1.5 million) required under IAS 19 has been adjusted for (Note
13).
H Fair value gain on borrowings
Fair value adjustments on the value of the Group's bonds of
GBP38.4 million (4 July 2015: GBP9.3 million) required under IAS 39
have been adjusted for (Note 5b).
I Finance cost
An adjustment of GBP0.5 million relates to VAT on 2014
refinancing fees (Note 5c).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSSESDFMSEIA
(END) Dow Jones Newswires
August 04, 2016 02:01 ET (06:01 GMT)
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