Johnston Press : Financial Results 2015

Adjusted profit before tax of £31.5m up 22.6%; Net debt down by £14.8m

Johnston Press plc ('the Group'), one of the leading local media groups in the UK, announces its results for the 52 weeks ended 2 January 2016.

We are pleased to confirm that the Group achieved Adjusted EBITDA for the period of £57.3m, in line with expectations. The Group traded well in the first quarter, while the second quarter was impacted by a sector-wide slowdown which continued through the second half and into 2016. Cost savings substantially mitigated revenue declines; and the benefit of reduced financing costs (down 34.1%) resulted in improved profit before tax and earnings per share. We continued to invest in our digital products and platforms. We reduced our pension obligations by £63m to a closing IAS19 deficit of £27m.

We are also pleased to confirm that the proposed acquisition of the i was approved at a general shareholder meeting held on 21 March 2016 achieving 99.85% of votes cast in favour. We look forward to completion on 10 April 2016 and the opportunities it brings to accelerate the transformation of the Group.

Key highlights:

Growing digital audiences
Digital audience grew by 40.7% year on year to 22.6m Unique Users in December 2015 (2014: 16.1m). Total monthly audience across print and online grew 19.8% to 31.9m in December 2015.

Growing digital revenues
Total digital revenues grew 12.4% to £30.6m for the period, representing 20.6% of advertising revenues (2014 FY: 16.9%) with revenue from the key strategic category of digital display advertising up 26.7%.

Continued cost reduction
Total operating costs were reduced by £13.6m (6.7%) after investment in digital of £6.0m. (2014 cost reduction: £13.8m)

Increased profit before tax
Adjusted profit before tax increased 22.6% to £31.5m (2014: £25.7m)

Increased EPS (fully diluted)
EPS increased by 30.1% to 21.2p

Continued debt reduction
Cash generated of £14.8m reduced net debt to £179.4m (2014: £194.2m)

Financing Costs
Interest cost reduced to £19.1m (2014: £29m)

Pensions
Pension deficit under IAS19 has reduced by £63m (70%) to £27m.

Acquisition of the i (to complete 10 April 2016)
Gained shareholder approval yesterday. The acquisition will be earnings enhancing.

Financial Highlights:

£ million	Continuing Operations - Adjusted			Continuing Operations - Statutory
	2015	2014	Change	2015	2014	Change
	52 weeks	53 weeks	%	52 weeks	53 weeks	%
Revenue	242.3	260.0	(6.8)	245.1	268.8	(8.8)
Operating profit	50.6	54.7	(7.5)	1.0	10.7	(90.7)
Profit/(loss) before tax	31.5	25.7	22.6	2.9	(23.9)	112.1
Net Debt	179.4	194.2	(7.6)	146.1	184.6	(20.9)
EPS - fully diluted	21.2p	16.3p	30.1	10.5p	(0.44)p	n/a

Audience and revenues

Our digital audience grew by 40.7% to 22.6m in December 2015 (2014 16.1m) while our total audience (across print and digital) in the same month was 31.9m, up 19.8% year on year. The fourth quarter saw us launch redesigned websites for the Scotsman, Yorkshire Post, Sheffield Star and Portsmouth News, with significant audience uplift, with the rollout of the new design to other large brands happening during 2016.

Total revenues of £242.3m declined 6.8% for the period. Digital advertising was up 12.4% to £30.6m for the period, representing 20.6% of the total advertising revenues (2014 FY: 16.9%). Print publishing revenues (advertising and circulation) were down 9.7% to £193.9m including print advertising down 11.9%.

National display revenues (print and digital) were up 11.8% year on year driven by a 99% increase in revenue from 1XL, our digital advertising exchange partnership.

Digital display revenue, including 1XL was up 26.7% to £12.4m.

Operating profit, profit before tax and earnings per share

Operating profit was £50.6m (after a £6.0m investment in digital), a decrease of 7.5% (£4.1m) on the prior period. Operating costs of £191.7m were reduced by £19.6 million (net £13.6m or 6.7%) (2014 net reduction £13.8m). The operating margin remains strong at 20.9%. Profit before tax increased by 22.6% to £31.5m, benefiting in part from reduced finance charges of £9.9m. EPS (fully diluted) increased 30.1% to 21.2p.

Net debt

Net debt excluding mark-to-market and after £5m bond buy back, reduced by £14.8m to £179.4m (2014: £194.2m). Net debt has reduced from c. £300m at the start of 2013. The post refinancing debt structure has allowed us to significantly reduce the interest we pay, having reduced both the interest rate and the absolute amount of debt. Total adjusted financing costs reduced from £29.0m in 2014 to £19.1m in 2015 (down 34.1%). Net cash from operations before bond buy back was £14.8m.

Pensions

The IAS19 Pensions Deficit of £27m has reduced by £63m (70%) from the prior period end including £53m reflecting changes in demographic assumptions resulting from its pension study and the benefit of changes in the Scheme Rules entitling the Group to participate in any surplus when the scheme closes.

Ashley Highfield, Chief Executive, commented:

'The challenging trading conditions experienced in the second half of 2015 have continued into Q1 2016. We have reduced costs to maintain profitability, reset our portfolio and refocused on priority markets with attractive audiences that offer the best opportunity for growth. Success in driving our national display advertising business in 2015 and the rollout of our local display advertising Sales Force initiative gives me confidence for the future despite the fact that the market remains difficult.

'The acquisition of the i newspaper is also incredibly exciting for us. It gives us scale, with a combined JP plus i daily print circulation of over 600,000 papers making us the UK's 4th largest news publisher, and thus numerous revenue and cost synergy opportunities. Further, not only will the i contribute positively to earnings but it will allow us to accelerate growth in digital, and help stabilise our circulation revenues. In conjunction with the planned asset disposals this will enable us to continue to reduce debt levels and cut financing costs further.'

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
Zoë Pocock
020 3772 2561

Investor presentation and audio/webcast: A presentation for analysts and live audio/webcast will be held at 9.00am on Tuesday 22 March 2016 at Bell Pottinger, Holborn Gate, 330 High Holborn, London, WC1V 7QD.

Webcast link: https://secure.emincote.com/client/johnston_press/johnston003/

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: [phone] (no pin needed)

The announcement for the period ended 2 January 2016 will be available at www.johnstonpress.co.uk/investors.

Statutory and adjusted basis

In the Management Report, performance is stated on an adjusted basis to provide a more meaningful comparison of the Group's performance taking account of the closure of businesses, week 53 in 2014 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.