johnston press plc...johnston press plc 2 overview of 26 weeks to 2 july 2011 • operating profit...

Johnston Press plc

Presentation Title

Johnston Press plc

June 2011

Half year results

presentation

Johnston Press plc 2

Overview of 26 weeks to 2 July 2011

• Operating profit (before non-recurring and IAS 21/39 items) of

£33.3m down 17.6% year-on-year

• Operating margin of 17.4%

• Year-on-year total advertising revenue declines of 10.0%

• Digital revenue has shown an improving trend and moved into

positive growth from May

• New online business directory and customer review offering,

Find it, launched March 2011

• Two new digital partnerships with Zoopla (property) and

Nimble Commerce (vouchers)

• Total costs reduced by £8.3m despite £4.2m newsprint price

increase in the period


Johnston Press plc

Financial Review


Key Financials

• Total revenue of £191.8m (-7.5% on last year)

• Total advertising revenue down 10.0% on last year

• Newspaper sales revenue of £48.2m (only -1.8% on last year)

• Total costs (before non-recurring and IAS 21/39 items) down

by £8.3m despite significant newsprint price increase in the

period

• Operating profit (before non-recurring and IAS 21/39 items) of

£33.3m; operating margin of 17.4%

• Net debt reduced by £16.0m, with a further reduction in

facilities of £20.0m

• Net cash inflow from operating activities of £33.4m


Income Statement

-1.9Pension scheme past service gain

(17.1)2.221.84Underlying earnings per share (p)

(25.5)25.519.0Profit after tax

(0.6)5.2Tax

(47.1)26.113.8Profit before tax

3.3(1.2)IAS 21/39 adjustments

17.0(21.2)(17.6)Net interest cost

6.3-Pension scheme curtailment gain

7.1(2.8)(2.6)Restructuring costs

(17.6)40.533.3Operating profit

6.1(9.9)(9.3)Depreciation

(15.5)50.442.6EBITDA

(7.5)207.3191.8Turnover

Change

%

2010

£’m

2011

£’m

26 weeks to 2 July 2011


Operating Profit

40.5 (12.8)

(2.7)

8.0

(4.2) 3.4

1.1

33.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2010 Operating

Profit

Print Advertising Other Revenue Newsprint price

increase

Production Cost

Savings

Editorial Savings Other Cost

Savings

2011 Operating

Profit

£'m

Total cost savings £12.5m


Total Revenues


(17.6)40.533.3Operating profit

5.0(166.8)(158.5)Operating costs

(7.5)207.3191.8Total revenue

(12.9)10.18.8Other revenue

-14.014.0Contract printing

(5.0)10.09.5Digital

(1.8)49.148.2Newspapers sales

(10.3)124.1111.3Print advertising

Change

%

2010

£’m

2011

£’m


Print Advertising Revenue by Category


(10.3)124.1111.3Total print advertising

(9.9)29.226.3Other classified

(8.3)12.011.0Motors

(7.5)18.617.2Property

(34.7)16.210.6Employment

(3.8)48.146.2Display

Change

%

2010

£’m

2011

£’m


Total Advertising Revenue by Quarter


(8.9)60.555.1(11.8)63.656.2Total print advertising

(1.5)4.84.8(9.7)5.24.7Digital advertising

Q2Q1

(11.6)

(10.3)

(5.0)

(6.3)

(35.0)

(8.3)

Change

%

59.9

12.8

5.3

8.8

5.0

23.2

2011

£’m

65.3

14.2

6.0

9.6

7.6

23.1

2010

£’m

(8.3)68.860.9Total advertising

(10.1)15.013.5Other classified

(11.5)6.05.7Motors

(8.7)9.08.4Property

(34.4)8.65.6Employment

0.925.023.0Display

Change

%

2010

£’m

2011

£’m


Newspaper Sales Performance

• Year-on-year revenue decline only 1.8%

– cover price increases predominantly offset the effect of

circulation declines

• Circulation declines in H1 2011:

– Dailies -7.8%

– Weeklies -6.8%

• JP benefits from having a high proportion of weekly

titles in its portfolio


Net Debt & Cash Flow

1.20.2Net capital expenditure

(401.1)(370.7)Closing net debt (excluding issue costs)

0.2(4.1)Translation/PIK accrual

(422.1)(386.7)Opening net debt

2.5(0.6)(Decrease) / Increase in net cash

(18.3)(20.7)Repayment of debt and overdrafts

20.820.1Net cash flow before debt repayments

(0.1)(0.1)Dividends paid

(5.4)(0.9)Tax paid

(16.1)(13.3)Return on investments and servicing of debt

41.234.2Net cash flow from operating activities

(9.8)(1.9)Other movements

(2.9)(5.8)Net movement in working capital

9.99.3Depreciation

44.032.6Operating profit (after non-recurring items)

3 July 2010

£’m

2 July 2011

£’m


Use of Operating Cash Generated

0.0

10.0

20.0

30.0

40.0

50.0

H1 2010 H1 2011

£'m

Net capex

Income tax paid

Interest paid

Repayment of

borrowings


Net Debt History

386.7

370.7

422.1

401.1

483.9 477.3

424.0

300

350

400

450

500

Jun

2008

Dec

2008

Jun

2009

Dec

2009

Jun

2010

Dec

2010

Jun

2011

£'m

Net Debt


Bank Covenants

2.1Covenant >

3.1Interest cover (times)

5.1Covenant <

4.5Net debt / EBITDA

370.7(£’m)Net debt

436.4(£’m)Net assets

02.07.11As at


Refinancing

• Current facilities due to expire September 2012

– Business continues to be strongly cash generative

– All covenants met at June 2011 and forecast to be met

throughout period of the facilities

– All scheduled reductions of facilities have been made early

• Commenced process of refinancing

– Initial discussions with banks have started

– To complete first quarter 2012


Johnston Press plc

Operations & Strategy


Operations and Strategy

• Vision

• Print

• Cost management

• Digital strategy and progress

– Find it

– Deal Monster

– Zoopla

• Board changes


JP’s Vision

Utilise local news and information to create and sustain strong local brands

which can be delivered and monetised through multiple channels

JP’s strong brands and content can operate

in print, other media or potentially even

beyond media

JP’s core competence is a

strong local news and

information coverage

JP’s content and brands

are well respected in

their local communities


Print Strategy

• Continued focus on improving

newspapers:

– Reader feedback (100,000 readers

in 2011)

– Peer review (100 titles)

• Portfolio adjusted to mitigate

increase in newsprint cost

– Closure of free newspaper titles

– Distribution of others reduced

• Quality of content is key for both

print and digital products


Cost Savings by Cost Type

8.3

0.6

7.7

3.1

6.7

(2.1)

Cost

Saving

£’m

5.6

-

5.6

0.5

0.9

4.2

Inflation

£’m

13.9166.8158.5Total Costs

0.69.99.3Depreciation

13.3156.9149.2

3.653.950.8Other

7.685.578.8Labour

2.117.519.6Newsprint

Underlying

Cost

Saving

£’m

2010

£’m

2011

£’m


Newsprint and Cost Savings

• Newsprint savings from closure of marginal titles, waste

management, control of number of pages and reduced

distribution of certain frees

• Efficiencies in transport and logistics following the

implementation of new Group Services Division

• Further centralisation of prepress function

• Centralisation of credit control

• Continued streamlining of management structure

2011 cost savings include:


Cost Management

• Group continuously strives to

improve cost base

• Savings have been achieved by:

– Reducing discretionary spend

– Centralisation of functions

excluding local journalism and

field sales

– Application of new technology to

improve/automate processes

• Opportunity for further

improvements is focussed on

centralisation/technology

Employment - FTE's

3,000

4,000

5,000

6,000

7,000

8,000

Dec-

07

Jun-

08

Dec-

08

Jun-

09

Dec-

09

Jun-

10

Dec-

10

Jun-

11


Digital Strategy

Our digital strategy has two key elements: profitable extension of print;

leveraging our assets to build new digital businesses

1

2

Our digital strategy entails leveraging our content, brands and customers to create market

leading digital positions in local markets

Digital extensions of print

assets

For example:

• Jobstoday.co.uk

• iAnnounce.co.uk

• Scotsman.com

• Peterboroughtoday.co.uk

Digital businesses leveraging

assets

• Digital directory – Find it

− Sales force and brand

• Launch of Deal Monster in

conjunction with Nimble

Commerce

− Brand, data and audience

• Improve property platform with

Zoopla partnership

Leveraged Digital Strategy

1 2


1. Use the increasing strength of our jobs platform to target new recruitment

revenues

2. Launch online business directory (Find it)

3. Evaluate the opportunity for a new digital business in online discount

vouchers

4. Accelerate online display revenue through contextual advertising and a

new trading approach

5. Deliver design, functionality and content enhancements to our local news

websites

Leveraged Digital Strategy

Our Digital Strategy for 2011

Key Areas of Focus

New online sales team operational in June 2011

Successful launch March 2011

Deal Monster to launch in the Autumn

Online display up 10.0% in H1

Websites unique users up 8.5% year-on-year


Digital Performance

• Total digital revenues declined 5.0% in H1 due to pressure on employment revenues but have returned to growth since May

• Excluding employment, revenues grew by 1.8%

• Online display (local & national) has continued to grow, up 10.0%

• Find it has increased business directory revenues by 59.9% year-on-year in the second quarter

• Unique users up 8.5% year-on-year, page impressions up 5.2% year-on-year

Digital revenues H1 year-on-year

0.0

2.0

4.0

6.0

8.0

10.0

12.0

H1 2010 H1 2011

£'m

Employment Business Directory iAnnounce

Online Display Other


• Partnership with the

largest customer review site in

Europe

• Leveraging off our local brand

strength, e.g.

www.portsmouthnews.co.uk/findit

• Launched 1 March 2011

• Strong traffic growth providing

excellent response for local

advertisers

• July revenue growth 96% year-

on-year

Launch of New Online Directory (Find it)


Online Vouchers – Deal Monster

• Good fit with regional publishing

businesses – successful

launches have been seen in

other countries

• Partnering with Nimble

Commerce on the technology

platform

• Nimble has previous experience

with many US publishers

• New business unit created that

will leverage local advertiser

relationships, customer

database and access to local

media

• Launch expected in Autumn


New Property Offering with Zoopla

• JP currently uses in-house developed software to

power Property Today

• Zoopla will provide new technology platform and

database to power enhanced local JP property site


Digital Strategy

2009DMGT- New jobs platform providing local market leadership

2011Zoopla- Property website upgrade contract signed

2011Nimble- Vouchers launch planned for Autumn

2011Qype- Upgraded digital directory launched

2010EMC- Upgraded new websites

2010Polopoly- New content management system

LivePartner

• Upgrade of Digital Portfolio:

• Now have an excellent portfolio of digital products enabling focus to

move to sales/marketing


Vision

By the end of 2011 we will be much closer to our vision of the local e-hub

• We want our websites to be the

go to source for:

- Local news / sport

- Local classified

- Local offers and services

- Local comment and forums

Illustration of Local E-hub

Local

Classifieds

Local

News/Sport

Local Offers

and services

Local Comment &

Forums

Local Flagship

Site


Board Changes

Ashley Highfield appointed as

Chief Executive Officer

start date 1 November 2011

Currently Vice President of Microsoft, responsible for the UK Consumer and

Online business

Former Director of New Media and Technology at the BBC, responsible for the

launch of the BBC’s iPlayer and Editor-in-Chief of BBC Online


Summary

• Operating profit of £33.3m

• Operating margin of 17.4%

• Year-on-year advertising revenue declines improved in the second quarter

• Debt down by £16.0 million to £370.7 million, facility reduced by a further £20.0 million

• Find it business directory launched

• Two new digital partnerships with Nimble Commerce and Zoopla

• £8.3m of total cost savings

• Refinancing process commenced

• New CEO, Ashley Highfield, starts 1 November

johnston press plc...johnston press plc 2 overview of 26 weeks to 2 july 2011 • operating profit...

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