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Johnston Press turns the page

Johnston Press's digital gains are starting to offset perennial declines in print
March 27, 2015

Tepid UK trading and incessant print declines sent underlying sales down 4 per cent at Johnston Press (JPR). However, in what has become a familiar pattern for publishers, digital growth and cost-cutting boosted the regional paper owner's operating profits by 3 per cent to £55.5m.

IC TIP: Buy at 160p

The figures in our table partly reflect Johnston's rights issue and 50-to-one share consolidation last year. That raised about £361m, helping slash net debt by 39 per cent to £185m. Layoffs also meant its underlying operating costs fell by 6 per cent, but that was offset by £45m in one-off restructuring costs and write-downs.

Print weakness pushed total advertising sales down 5 per cent to £166m. But Johnston's investments in its property, motoring and recruitment websites fuelled a 36 per cent increase in its monthly digital audience to an average of 16.7m, sending digital revenues up a fifth to nearly £29m. Moreover, a new tie-up with Sky will allow Johnston's advertisers to use the pay-TV giant's household data to target campaigns more effectively.

Johnston's advertising sales were down 4.1 per cent in the first eight weeks of this year. More positively, its printing operation recently won a five-year contract with Express Newspapers, publisher of the Daily Star.

Broker Numis expects pre-tax profit of £36.1m, giving EPS of 27.1p (from £29.9m and 22.3p in 2014).

JOHNSTON PRESS (JPR)
ORD PRICE:160pMARKET VALUE:£157m
TOUCH:158-161p12-MONTH HIGH:382pLOW: 145p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:189p*NET DEBT:92%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2010**336144.7nil
2011**316-122-12.0nil
2012**303-60.8nil
2013 (restated)290-291-90.8nil
2014†269-24-0.4nil
% change-7---

*Includes intangible assets of £514m, or 486p a share

**Figures adjusted for rights issue and 50-to-one share consolidation

†53-week period to 03 Jan 2015