Johnston Press loses fifth of market value after warning on profits

JOHNSTON Press has lost a fifth of its market value after warning that profits will be dented by a poor revenue performance around the time of the General Election.

The Edinburgh-based publisher, in a trading update ahead of interim results next month, said total revenue in the 26 weeks to July 4 was expected to fall by five per cent, worse than last year’s 4.3 per cent decline. First-half profits were likely to be marginally below 2014, while full-year profits were also likely to be “slightly below market expectations”.

The shares were marked down almost 20 per cent to 114p, equivalent to a price of 2.28p before this year’s one for 50 consolidation. That followed the rights issue at 3p a share, equivalent to 150p, well below the stock’s previous all-time low of 4.2p in June 2011 and its pre-rights issue price last year of 25p.

Ashley Highfield, chief executive, said: “Trading conditions in the first half of 2015 have undoubtedly been challenging, especially in the period around the General Election - a time when there was also a high degree of uncertainty in the wider market. While we expect this will have an impact on profit both at the half year and the full year, there are positive indicators coming through with digital growth and continued strong cash flow.”

Johnston said that in the second quarter, around the time of the election, a number of national and local advertisers had chosen to reduce or delay their spend in both print and online.

Total advertising revenue was down five per cent against last year’s 4.6 per cent. Circulation revenue was also expected to fall by some 5.5 per cent during the period, though circulation volumes were showing a small improvement in the rate of decline.

Management had taken action to mitigate much of the revenue reduction in the period, limiting the impact on profits.

The company said it expected to meet its digital revenue growth targets for the year, it continued to deliver strong cash flows, and it had reduced net debt, in line with expectations.

Chairman Ian Russell told the annual meeting last month that Mr Highfield’s £1.65m package last year was due largely to a one-off reward linked to a doubling of the share price during his tenure, though there was a 12 per cent vote against remuneration approval. Mr Russell said executives would now benefit from the group’s incentive plan when shares topped 230p.