Interim results September 2021 - National World PLC
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Interim results
September 2021
1
Highlights Acquisition of JPI and its transition to a national media business Financial transformation with £4.6 million adjusted EBITDA (-£0.1 million, 2020) Savings of £5 million annualised on target Multiple launches and expansion to a full UK wide footprint Successful start of journey to create new publishing growth model
The first six months
● Creation of a national media business from limited regional base
● De-centralised and devolved responsibility to individual brands
● Launch of nine new World Sites and relaunches from existing infrastructure and annualised
investment of £2 million from August 2021
● Trialling a new subscription platform, Axate, for premium content
● Increased investment in digital product and engineering
● £5 million annualised cost savings will be delivered by end of 2021
● Adjusted EBITDA £4.6 million
● Increase in productivity – “localise and energise” achieved
● Provides platform for organic growth and through acquisitions
3
A new online national newspaper
.com
4National World market expanded to full UK footprint
5Strategy
● National multi-platform content and sales business
● Original content based on consumer needs
● Monetisable premium content
● Commercial content based on client needs
● Long term relationship with both consumers and clients
● E-commerce targeting specific segments
● "Digitise and monetise” underway
6Implementation
● National footprint established with Nationalworld.com
● Eight launches of World websites so operational in all UK metropolitan hubs
● Further organic growth through launches and portfolio development
● Acquisition of premium content businesses adding digital capabilities
7Radical change in operating model
● Phase Two – Introduction of new operating model
● Focus on talent and premium content
● Consumer-led content
● Acceleration of registration programme and online subscriptions
● Automation of sales and editorial production
● Targeting larger long-term customer partnerships with full service offering
8The rich heritage
9Realisation of heritage brands value
Historic titles held back by inefficient model
Focus on reputation and specialist knowledge
● Premium content that attracts payment
● E-commerce targeted at audience segments
Focus on comprehensive service to users and businesses across all platforms
● Print, online, video, broadcast and events
All brands nurtured as economic drivers of their communities
10Financials
Adjusted results* Statutory results
H1 2021 H1 2020 H1 2021 H1 2020
£m £m £m £m
Revenue 42.1 - 42.1 -
Operating (loss)/profit 4.2 (0.1) (0.1) (0.1)
(Loss)/earnings per share (pence) 2.4p (0.2)p (0.8)p (0.2)p
EBITDA 4.6 (0.1) 1.3 (0.1)
Net cash 18.1 4.4 18.1 4.4
*Adjusted results are before non-recurring items, amortisation of intangible assets and implementation of IFRS 16.
● Robust first half performance with adjusted operating profit of £4.2 million
• Improving revenue trends in Q2
• Benefit of restructuring and tight management of cost base
• All staff returned from furlough on 1 April 2021, Q1 benefit of £0.5 million furlough credit.
● Adjusted EBITDA margin of 10.9%
● Strong cash position after paying £8.8 million for acquisition, capital raise and share issue costs.JPI Acquisition
● JPI Group acquired for £10.2 million on 2 January 2021
• £5.2 million consideration paid on completion and balance to be paid
in two equal instalments of £2.5 million in March 2022 and March
2023
• £1.7 million paid in March 2021 for excess working capital left in the
business (including cash of £0.5 million) at completion
• £2.1 million acquisition costs, including capital raise and share issue, of
which £1.9 million paid in the period.
● £20.0 million convertible loan notes issued to fund acquisition converted to
equity on 7 May 2021 and £1.0 million interest only loan notes repayable in
December 2023Revenue
Actual 2021 Proforma 2020 Change Change
£m £m £m %
Print Publishing Revenue** 35.6 39.1 (3.5) (9)%
Advertising 16.5 17.9 (1.4) (8)%
Circulation 17.9 19.7 (1.8) (9)%
Other 1.2 1.5 (0.3) (19)%
Digital Publishing Revenue*** 5.8 4.8 1.0 21%
Advertising 3.5 3.3 0.2 5%
Subscriptions 0.7 0.3 0.4 195%
Other 1.6 1.2 0.4 36%
Other revenue 0.7 0.8 (0.1) (3)%
Total Revenue 42.1 44.7 (2.6) (6)%
**Print revenue includes all print driven revenue and all print led packaged revenue with digital and government Covid-19 advertising spend (print and digital)
***Digital revenue includes all digital driven revenue and digital led packaged revenue with print
13Digital Advertising Revenue ● In Q2 digital advertising grew by 35%
compared to a decline in Q1 of 16% as
reader behaviour reflected Covid
restrictions being imposed then lifted.
● Overall digital advertising revenue grew
by 5% in H1 with growth of 18% in July
and August.
● Launch of Nationalworld.com and eight
metropolitan news websites to give UK
wide footprint.
● Rationalised and re-clustered multiple
news sites to form more commercially
homogeneous markets.
14Pageviews ● Pageviews, the main driver of
programmatic revenue, averaged 111
million per month in H1 growing to
118.8 million in August.
● Target online audience of at least 200
million average monthly page views
by end of 2022.
● The Scotsman grew page views to an
all time record of 19.5 million in
August.
15Digital subscription revenue
● Growing digital subscribers is a main
focus of our strategy to lessen the
reliance on print circulation revenue.
● Revenue grew by 195% in the period
for 13 daily newspaper websites with
21 weekly paper websites recently
offering subscription as well.
16Print advertising revenue ● Trends have improved across the year as we
start to emerge from the pandemic and realise
the benefits of a new localised advertising
structure instigated at the end of H1.
● Weekly and monthly run rates for advertising
have improved from April onwards as business
confidence improves and lockdown conditions
are eased.
● Significant improvement in Q2 compared to Q1
resulting in an overall decline of 8% for H1.
● Improving trend in summer as overall print
advertising revenue stabilised.
17Circulation revenue
● Significant product developments initiatives
resulted in an improving performance in Q2
as circulation revenue improved to -2% YOY.
Overall circulation revenues were down -9%
in H1.
● Portfolio reorganisation included re-
launches in Brighton, conversion of free to
paid newspaper in Milton Keynes, and
conversion of daily to weekly in Wigan.
● Volume decline partially mitigated by cover
price increases across the portfolio.
18Costs
2021 2020 Change
£m £m £m
Labour 22.2 - 22.2
Newsprint and production costs 6.1 - 6.1
Depreciation and amortisation 1.4 - 1.4
Other 8.4 0.1 8.3
Total operating cost before non-recurring costs 38.1 0.1 38.0
Non-recurring costs 4.1 - 4.1
Total operating costs 42.2 0.1 42.1
19Cash flow ● Strong cash generation
● Majority of acquisition related costs
(£8.8 million) and £1.5 million of
restructuring costs paid in H1
● Tight management of working capital
● Minimal capex spend in H1
● Strong balance sheetKey performance indicators
● Grow digital audience (page views) with a target of c200 million average monthly
page views by the end of 2022
● Increase digital revenue and achieve stability in Group revenue
● Optimise the long-term viability of print brands alongside maximising revenue and
profit
● EBITDA margin of at least 10%
21Outlook
• July and August 2021 revenue on a proforma basis is broadly in line with 2020 and
management’s expectations.
• Volatility in the trading environment following the lifting of government-imposed
restrictions due to the COVID 19 pandemic
• Board anticipates trading for the year to be in line with market expectations despite a
significant increase in newsprint prices in the second half of the year mitigated by
further cost savings.
22Summary National World acquisition of JPI has expanded its reach to a UK wide footprint Continuous launches extract greater productivity from a reduced cost base Scope for target acquisitions to expand content base and increase digital capabilities Successful start of journey to create new agile publishing model for growth.
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