Johnston Press: Connecting Local Communities. Johnston Press Plc Annual Report and Accounts 2005
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Johnston Press plc Annual Report and Accounts 2005 Johnston Press: Connecting local communities. Johnston Press plc Annual Report and Accounts 2005 Johnston Press Johnston Press plc 53 Manor Place Edinburgh EH3 7EG Tel: 0131 - 225 3361 Fax: 0131 - 225 4580 e-mail: [email protected] Web Site: http://www.johnstonpress.co.uk Registration number 15382 Our aim is to serve our local communities Advisors by publishing quality newspapers, related print publications and websites that attract users, providing an effective platform Solicitors Principal Bankers for advertisers to reach their target audience. MacRoberts The Royal Bank of Scotland plc 152 Bath Street 36 St Andrew Square Glasgow Edinburgh G2 4TB EH2 2YB Ashurst Lloyds TSB Scotland plc Broadwalk House Henry Duncan House 5 Appold Street 120 George Street London Edinburgh EC2A 2HA EH2 4LH Auditors Barclays Bank plc Deloitte & Touche LLP Luton Corporate Banking Centre Chartered Accountants 1 Capability Green and Registered Auditors Luton Saltire Court LU1 3US 20 Castle Terrace Edinburgh National Australia Bank EH1 2DB 88 Wood Street London Investment Bankers EC2V 7QQ Citigroup Citigroup Centre Registrars 33 Canada Square Computershare Investor Services PLC Canary Wharf PO Box 82 London The Pavilions E14 5LB Bridgewater Road Bristol Stockbrokers BS99 7NH Deutsche Bank AG London Winchester House 1 Great Winchester Street London EC2N 2DB Contents 02 Highlights 33 Corporate Governance 57 Group Balance Sheet 04 Digital publishing 37 Corporate Social Responsibility 58 Group Cash Flow Statement 06 Acquisitive growth 43 Directors’ Remuneration Report 59 Notes to the Consolidated 08 Investing to improve efficiency 50 Directors’ Report Financial Statements 10 Chairman’s Statement 53 Independent Auditors’ Report 96 Company Statement of 12 Chief Executive Officer’s Review 54 Group Income Statement Directors’ Responsibilities 20 Financial Review 55 Group Statement of 97 Company Balance Sheet 24 Management Board Recognised Income and 98 Notes to the Company 26 Board of Directors Expense Financial Statements 28 Group’s Newspaper Titles 56 Group Reconciliation of 106 Group Five Year Summary 31 Websites by Division Shareholders’ Equity 107 Notice of Meeting The cover of this report and pp1-32 have been printed on Revive Special Silk which contains 30% post consumer waste, text pp33-108 are printed on Revive Uncoated which contains 100% post consumer waste, both products are ISO 14004 accredited. Designed and produced by corporateprm, Edinburgh and London. www.corporateprm.co.uk JohnstonJohnston Press Pressplc Annual plc Annual Report Report and Accounts and Accounts 2005 2005 01 Highlights 2005 was another year of progress in a difficult market Turnover £m Operating Profit before non-recurring items £m* £520.2 m £180.3m up 1% 05 520.2 05 180.3 04 519.3 04 178.4 03 491.8 03 163.6 02 428.4 02 131.6 01 300.6 01 91.1 Underlying EPS p* Dividends p 38.62p up 2% 8.4 p up 17% 05 38.62 05 8.4 04 37.77 04 7.2 03 32.36 03 6.0 02 26.75 02 5.4 01 23.65 01 4.9 Operating Profit Margin before non-recurring items %* Digital Revenues £m up to 34.7% £8.3 m up 32% 05 34.7 05 8.3 04 34.4 04 6.3 03 33.3 03 5.4 02 30.7 02 4.4 01 30.3 01 2.6 * See page 54 for definitions 02 Johnston Press plc Annual Report and Accounts 2005 Left to right. - Award winning Hemel Today website - Campaigning journalism - Wakefield Express, Yorkshire Weekly Newspaper of the Year Left to right. - Computer to plate technology - Students Today one of the Group’s national websites - Dinnington print facility due to be completed third quarter 2006 Financial Highlights Operational Highlights > Operating Profit before non-recurring > Expanded into Northern Ireland items up 1% and the Republic of Ireland > Pre Tax Profit up 1% > Record launch of new publications and supplements > Underlying Earnings Per Share up 2% > Digital revenues up 32% > Dividend Per Share up 17% > Excellent cost control > Acquisitions earnings enhancing > Continued investment for efficiency > New bank facilities negotiated with reduced margins > Significant increases in unique users and page impressions Johnston Press plc Annual Report and Accounts 2005 03 04 Johnston Press plc Annual Report and Accounts 2005 Digital publishing The Group increasingly connects with its communities through its internet presence. With over 250 websites in the markets where we publish, supplemented by group wide classified platforms, readers and advertisers are offered additional ways to access news, information and target audiences. On a like-for-like basis in 2005, the unique users of our websites increased by 41% and page impressions increased by 49%. During the year CV match, online auctions and a local business directory were launched as new services. Revenues from internet advertising and services increased by 32% to £8.3 million. Currently 45 million monthly page impressions 5million unique users per month Johnston Press plc Annual Report and Accounts 2005 05 Acquisitive growth Although part of the same overall strategy, there were three distinctive elements behind the acquisitions made in the year. a) Market Entry – The acquisition of Score Press took the Group into the Republic of Ireland and Northern Ireland for the first time. The strong economy in the Republic of Ireland in particular makes this a faster growing market than the UK and the relatively fragmented ownership structure provides potential for further consolidation. b) Consolidation – The acquisition of Local Press and the Leinster Leader Group consolidated our position in these new markets and has provided the critical mass to enable the integration of these separate operations into two new divisions which in turn will improve efficiency. The acquisition of The Scotsman Publications Ltd significantly increases our presence in the Scottish market and has enabled the Scotland division to be reorganised around a substantial daily centre. c) Add ons – Although much smaller in scale, the acquisitions of the Thorne Gazette, Ashwell Associates and Best Asian Media were all in areas or contiguous to areas where we already have a publishing presence. Significant margin improvement can be obtained in these businesses by leveraging off the infrastructure we already have in place. 58 new titles up from 243 in 2004 to a total of 301 06 Johnston Press plc Annual Report and Accounts 2005 Existing JP areas Acquisitions in 2005 Leinster Leader Ltd Score Press Ltd and Local Press Ltd The Scotsman Publications Ltd Regional Printing Centres 1 Falkirk 2 Sunderland 3 Hartlepool 4 Leeds 5 Isle of Man 6 Preston (external) 7 Halifax 8 Scarborough 9 Wakefield 10 Sheffield 1 11 Northampton 12 Peterborough 13 Portsmouth 14 Derry 15 Belfast 16 Portadown 14 17 Limerick 18 Kilkenny 15 2 16 3 5 4 8 6 7 Best Asian 9 Media Ltd Thorne Gazette 17 18 10 Ashwell Associates Ltd 12 11 13 Johnston Press plc Annual Report and Accounts 2005 07 08 Johnston Press plc Annual Report and Accounts 2005 Investing to improve efficiency The ongoing process of investing to improve our business continued throughout 2005. The significant investments in the print division allowed us to close the old press at Halifax and the closure of the presses at Wakefield and Sheffield have been announced and will coincide with the start up of the new press at Dinnington. An announcement has also been made to close the old press at Scarborough. The investment in standard operating systems and optimisation of process flows has resulted in further consolidation of production and backroom operations which will deliver improved product and an enhanced level of service to our readers and advertisers. Expanded and upgraded systems will allow all of the acquired businesses to be absorbed into the Johnston Accounting Centre over 2006 with little additional resource requirements. We are also investing in bringing more graduates and potential managers of the future into the Group. These individuals are working in functions across the breadth of the business and helping to identify areas for potential improvement as our business continues to develop and evolve. £64 million spent on new property, plant and equipment in 2005 Johnston Press plc Annual Report and Accounts 2005 09 Chairman’s Statement Serving local communities through the provision of news, information and entertainment has been at the heart of the Johnston Press culture for more than 150 years. In 2005 Johnston Press was able to Dividend achieve a robust profit performance The Board proposes a final dividend of despite the significant downturn in 5.6p per share, making a total of 8.4p recruitment advertising experienced per share for the year. This compares by the industry as a whole. to 7.2p per share in 2004, an increase The growth in profit before tax of 17%. reflects tight cost controls and increased business efficiencies as Growth in local media well as the development of new During the year we were successful in revenue streams including those making a number of acquisitions of from web-based products aimed at companies which specialise in local local markets. In the face of difficult publishing. The principal acquisitions trading conditions the staff of were Score Press Ltd, Leinster Leader Johnston Press have shown Ltd, Local Press Ltd and finally The themselves to be flexible and highly Scotsman Publications Ltd, which did effective. On behalf of shareholders, not complete until 4 January 2006 and I would like to congratulate them all therefore has not been consolidated on the results they have achieved. into the 2005 results. The process of integrating these businesses into the Results existing Johnston Press management Overall revenues for the year were structure is going well. This means we £520.2 million. This was up only have acquired more than 50 new print 0.2% on 2004 reflecting the significant titles in Scotland, Northern Ireland and Roger Parry downturn in recruitment advertising.