Delivering the Highest Audience Reach Into Local Areas
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Johnston Press plc Annual Report and Accounts 2009 Delivering the highest audience reach into local areas. Johnston Press plc 108 Holyrood Road Edinburgh EH8 8AS Tel: 0131 - 225 3361 Fax: 0131 - 225 4580 email: [email protected] Web Site: http://www.johnstonpress.co.uk Johnston Press plc Registration number 15382 Annual Report and Accounts 2009 ADVISERS Johnston Press plc is one of the top 3 largest local Solicitors Principal Bankers newspaper publishers in the UK and a major force on MacRoberts Barclays Bank plc 152 Bath Street 2nd Floor, Quay 2 the Internet. Glasgow Fountainbridge G2 4TB Edinburgh EH3 9QG Our aim is to serve local communities across a variety of Ashurst Broadwalk House Lloyds TSB Scotland plc channels, providing access to local information. We have 5 Appold Street Henry Duncan House London 120 George Street unique local content created by teams of local experts EC2A 2HA Edinburgh who believe that “Content is King”. Our coverage of local EH2 4LH Auditors stories and events is unrivalled across all media. Deloitte LLP National Australia Bank Chartered Accountants The Plaza and Statutory Auditors 50 Lothian Road Saltire Court Edinburgh 20 Castle Terrace EH3 9BY Edinburgh EH1 2DB The Royal Bank of Scotland plc 36 St Andrew Square Investment Bankers Edinburgh Citigroup EH2 2YB Citigroup Centre 33 Canada Square Registrars Canary Wharf Computershare Investor Services PLC London PO Box 82 E14 5LB The Pavilions Bridgewater Road Stockbrokers Bristol Deutsche Bank AG London BS99 7NH Winchester House 1 Great Winchester Street London EC2N 2DB 11.4 297 18.3 million million readers local websites total audience Print titles Extending audience reach to 61.0 We provide a wide variety of Daily - 18 million page impressions per month, complementary publications to Weekly - 156 up 16.0% on 2008o layer the market, give consumer choice and increase advertising Weekly free - 97 6.9 million unique users per month, reach: Printing from up 15.0% on 2008o • Lifestyle magazines 8 regional print centres • Community newsletters • Commuter newspapers • Niche publications • Local events and exhibitions This report has been printed on Edixion which is FSC certified and both mill and printer achieved ISO 14001 certification. Designed and produced by corporateprm, Edinburgh and London. www.corporateprm.co.uk * see pages 10 and 45 o These web statistics are based on Webtrends 8. The prior period numbers and percentage increases have been restated on this basis. Key Financials Operational Summary • Total revenue of £428.0 million down 19.5% on • Refinancing completed - 3 year agreement signed last year to September 2012 • Total print advertising revenues (excluding week • Year-on-year advertising revenue performance 53 in 2009*) down 27.4% on last year improved as the year progressed • Circulation revenues of £99.7 million (excluding • Continuing strong cost management with total week 53), down only 1.8% on last year costs (before non-recurring and IAS 21/39 items) • Operating profit (before non-recurring and IAS down £49.3 million on last year (excluding week 53 21/39 items) of £71.8 million representing an in 2009) operating margin of 16.8% • Successful roll-out of new editorial content • £126.0 million net impairment charge against management system (CMS) in two divisions intangibles, no additional impairment in the second • Upgraded jobs website through partnership with DMGT half of the year • Closure of presses in Scotland and ROI with printing • Reduction in net debt of £55.3 million to £422.1 being transferred to more efficient presses with million excluding term debt issue costs (see note 22) increased colour availability • Net cash inflow from operating activities of £89.2 million • No dividend proposed Revenue (£’m) Digital Revenues (£’m) Operating Profit* (£’m) before non-recurring and IAS 21/39 items 5 year comparison 5 year comparison 5 year comparison 600 18 240 500 15 19.8 200 17.7 607.5 400 602.2 12 160 15.1 531.9 300 520.2 9 120 186.8 178.1 180.2 428.0 200 6 11.3 80 8.3 100 3 40 128.4 0 0 0 71.8 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Costs* (£’m) Operating Profit Margin*(%) Underlying EPS (p) before non-recurring and IAS 21/39 items before non-recurring and IAS 21/39 items note 14 5 year comparison 5 year comparison 5 year comparison 450 36 30 375 30 25 300 24 34.6 20 28.44 429.4 415.4 31.0 26.93 403.5 29.3 225 18 15 25.08 356.2 339.9 24.1 150 12 10 75 6 16.8 5 13.41 0 0 0 5.53 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS 01 Introduction 14 Corporate Social Responsibility 45 Group Income Statement 02 Chairman’s Statement 23 Divisional Managing Directors 46 Group Statement of Comprehensive Income 24 Board of Directors and 47 Group Reconciliation of Shareholders’ Equity BUSINESS REVIEW Group Management Board 48 Group Statement of Financial Position 04 Strategic Overview 26 Corporate Governance 49 Group Statement of Cash Flows 06 Operational Review 31 Directors’ Remuneration Report 50 Notes to the Consolidated Financial Statements 09 Performance Review 40 Directors’ Report 82 Company Balance Sheet 43 Directors’ Responsibility 83 Notes to the Company Financial Statements Statement 90 Group Five Year Summary 44 Independent Auditors’ Report 91 Notice of Meeting ibc Advisers Johnston Press plc Annual Report and Accounts 2009 01 OVERVIEW Chairman’s Statement 2009 was a difficult year for regional media and Johnston Press has been adapting its business to better meet the challenges of the current market and the changes faced by the industry. The recessions in the United Kingdom and Republic underway. Users of our digital services continued to of Ireland have had a dramatic effect on advertising grow markedly during 2009 and the challenge for us revenues. Although conditions remain tough, now is to enhance the revenues from this increasing I am pleased to say that the past year has seen audience reach. a measure of stability returning to the markets in which we operate. Our business continues to deliver Financial Performance market leading operating margins and operations Total revenues during 2009 were £428.0 million, remain cash generative. The year was also marked a reduction of £103.9 million on 2008. This by the completion of a successful refinancing of our reflects the continued decline in advertising debt facilities in August, providing a stable platform revenues, particularly in the early part of the year. Ian Russell for our future development. Advertising revenues (print and digital) were down Chairman by £96.4 million or 26.0% year-on-year. The most Strategy badly affected areas were the classified pillars Your Board believes that our ability to provide of employment and property, however the latter local news, through a variety of media, to the saw year-on-year growth in both November and communities in which we operate remains December. Motors, which has been our most unrivalled. The decline of printed media in general challenging vertical for a number of years, also saw has been well documented, particularly as the year-on-year growth in December. number of online news providers continues to increase and there are further developments in the The decline in revenues throughout the year is methods of accessing them. Although it remains reflected in the operating profit before non-recurring an integral part of our business we are seeking to and IAS 21/39 items of £71.8 million, 44.1% down complement our in-print offering with additional on the previous year. This figure includes the impact projects and in particular, focussed commercial of the 53rd week in 2009 (see page 10) which development of revenue opportunities within digital contributed £2.1 million. This profit level represents media. an operating margin of 16.8%. Largely this has been achieved by further substantial cost savings We are also increasingly looking to develop being made across the Group as we continue to collaborative ventures with partners, particularly adapt to the changing trading environment and in the digital field, and a number of projects are restructure ourselves for the future. 02 Johnston Press plc Annual Report and Accounts 2009 The pre-tax loss for the year was £113.8 million, with a The Board is also extremely grateful to Peter and pre-tax profit of £43.3 million relating to trading before Martina for their services as Directors, again over a non-recurring and IAS 21/39 items. The non-recurring number of years. Freddie, Peter and Martina leave items related primarily to the impairment of publishing with our very best wishes for the future. titles, the write-off of the remaining value in the presses that have been closed and a one-off adjustment for During 2009 we welcomed Mark Pain and Camilla the cost of share warrants issued in the year. The Rhodes to our Board as Non-Executive Directors. balance represents the costs associated with the Mark was previously Group Finance Director of reduction in headcount during the year. Abbey National Group plc before taking on the same role at Barratt Developments Limited. He Net debt (excluding term debt issue costs) at 31 is a Non-Executive Director of Punch Taverns plc December 2009 was £422.1 million, down from and Northern Rock plc. Camilla enjoyed a very £477.3 million at the beginning of the year. In our successful career at News International where she Interim Results announcement in August 2009 we was Managing Director of Times Newspapers and reported that an agreement had been reached with News Group Newspapers and brings invaluable Your Board our lenders to refinance the Group’s debt facility.