Johnston Press PLC Regulatory News (JPR)

14 May 2008 07:16



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY JOHNSTON PRESS PLC TODAY IN CONNECTION WITH THE PROPOSED SUBSCRIPTION AND RIGHTS ISSUE. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE COMPANY'S REGISTERED OFFICE

Johnston Press plc

14 May 2008

INTERIM MANAGEMENT STATEMENT

Johnston Press plc publishes its first Interim Management Statement, which has been drawn up for the 17 weeks to 26 April 2008 being the latest practicable date, as required by the UK Listing Authority's Disclosure and Transparency Rules, and announces a subscription of shares by Usaha Tegas and a rights issue (fully underwritten save for those rights over which the Company has received irrevocable undertakings to take up) which together will raise equity funding of £212m to strengthen its balance sheet. 

This will position the Group more strongly to weather the current cyclical pressures whilst progressing with investments in its digital and related activities as the Company continues its evolution to becoming a multiߛchannel community media company.

Total advertising revenues for the 17 weeks to 26 April 2008 were 5.7% down on the same period in the prior year. At the 2007 Annual Results announcement on 5 March 2008, the Group disclosed total advertising revenues for the first 8 weeks of the year had declined yearߛonߛyear on a likeߛforߛlike and constant currency basis by 4.2%. This performance has deteriorated, particularly due to falls in property, employment and motors advertising to the extent that for the 17 weeks to 26 April the overall decline, on the same basis, in advertising revenues was 7.1%. Over the 17 weeks there were declines in property of 12.1%, motors of 16.4% and employment of 5.3% on a likeߛforߛlike and constant currency basis.

Within the advertising decline of 7.1% for the 17 weeks, print advertising was down by 9.1% whilst digital advertising continued the success of 2007 and grew by 56.8%.

The deterioration in advertising trends will potentially further impact the half yearly impairment reviews of the valuation of intangible assets in those publishing divisions that have the least headroom, with those most at risk being the divisions including recent acquisitions. Based on forecasts at 31 March 2008 the combined impairment of goodwill and publishing titles was £55 million. This was recorded as a non-recurring charge at that date and is expected to negatively affect the profit for the six months ended June 30, 2008.

Newspaper sales revenue after the 17 weeks to 26 April is essentially flat yearߛonߛyear with cover price increases offsetting circulation declines which were at similar levels to recent years. Contract printing revenue after the 17 weeks to 26 April is 6.8% ahead of last year due to the benefit of the News International contract at Portsmouth which did not start until the second half of 2007. Other revenues are broadly flat yearߛonߛyear.

Net debt at 26 April 2008 was £700million. This was impacted by a further adverse translation adjustment of the Euro denominated debt of £10.0million plus an IAS 39 non-cash adjustment of £3.8 million.

Given the recent reduction in consumer confidence, and deteriorating economic forecasts, the Board believes that the prudent action is to raise equity capital in order to reduce debt.

Before reaching this decision, the Board considered a range of alternatives. These options were examined closely in conjunction with the Group's advisors and were deemed not to be appropriate or sufficient in the current circumstances. Taking into account these factors, in particular the desire to reduce any potential financial stress whilst allowing the Group to develop the business, the Board concluded that the Group should raise £212m in new equity by way of the subscription and Rights Issue to provide the appropriate balance between equity and debt for the Group.

Given the more challenging environment, the Group is working hard on managing its cost base and providing there is no further deterioration in the advertising environment, expects to deliver a satisfactory result for 2008 in very difficult circumstances.   

Contact:

Deutsche Bank is acting exclusively for Johnston Press and for no-one else in relation to the Rights Issue and the Subscription, and will not be responsible to any other person for providing the protections afforded to clients of Deutsche Bank nor for providing advice in connection with the Rights Issue or the Subscription.

A Prospectus relating to the Rights Issue and the Subscription and including the EGM notice is expected to be published today and posted to Shareholders. The Provisional Allotment Letters are expected to be dispatched on 31 May 2008. The Prospectus will give further details of the New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights to be offered pursuant to the Rights Issue, the business of the Company and the industry in which the Company operates.

A copy of the Prospectus when published will be available from the registered office of Johnston Press plc at 53 Manor Place, Edinburgh EH3 7EG. The Prospectus will also be available for inspection during normal business hours on any weekday (Saturday, Sundays and public holidays excepted) at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA up to and including 23 June 2008.

This document is not a Prospectus but an advertisement and investors should not subscribe for any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of the information contained in the Prospectus.

This document is issued by Johnston Press and approved solely for the purposes of Section 21(2)(b) of the Financial Services and Markets Act 2000 by Deutsche Bank AG, London Branch. Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervising Authority) and regulated by the Financial Services Authority for the conduct of UK business.

This announcement is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the "US Securities Act") or an exemption therefrom. The Company has not registered and does not intend to register any securities under the US Securities Act, and does not intend to offer the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted.

This announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy New Ordinary Shares or to take up entitlements to Nil Paid Rights in any jurisdiction in which such offer or solicitation is unlawful. Neither this announcement, nor the Prospectus, nor the Provisional Allotment Letter will be distributed in or into the Australia, Canada, Japan or the Republic of South Africa. The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been and will not be registered under the relevant laws of any state, province or territory of Australia, Canada or Japan and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within Australia, Canada or Japan except pursuant to an applicable exemption. 

The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been or will not be registered under the relevant laws of any state, province or territory of Australia, Canada or Japan and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within Australia, Canada or Japan except pursuant to an applicable exemption.

Neither the content of Johnston Press's website nor any website accessible by hyperlinks on Johnston Press's website is incorporated in, or forms part of, this announcement. 

This announcement and/or the Prospectus and/or the Provisional Allotment Letters and/or the transfer of Nil Paid Rights, Fully Paid Rights and/or New Ordinary Shares should not be distributed into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. 

No representation or warranty, express or implied, is made by Deutsche Bank as to the accuracy, completeness or verification of the information set forth in this document, and nothing contained in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. Deutsche Bank does not assume any responsibility for its accuracy, completeness or verification and accordingly disclaim, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this document or any such statement.

The contents of this document should not be construed as legal, business or tax advice. Each prospective investor should consult his, her or its own legal adviser, financial adviser or tax adviser for advice. None of Johnston Press, Deutsche Bank, or any of their respective representatives is making any representation to any offeree or purchaser of the New Ordinary Shares regarding the legality of an investment in the New Ordinary Shares by such offeree or purchaser or acquirer under the laws applicable to such offeree or purchaser or acquirer.

This announcement includes statements that are, or may be deemed to be, ''forward-looking statements''. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms ''believes'', ''plans'', ''intends'', ''may'', ''will'', ''would'', ''could'' or ''should'' or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' intentions, beliefs or current expectations concerning, amongst other things, Johnston Press's results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which Johnston Press operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation: conditions in the markets; the market position of Johnston Press; earnings, financial position, cash flows, return on capital and operating margins of Johnston Press; anticipated investments and capital expenditures of Johnston Press; changing business or other market conditions; and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the Listing Rules, Prospectus Rules or other applicable legislation or regulation, neither Johnston Press or Deutsche Bank undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Undue reliance should not be placed on forward-looking statements, which speak only as of the date of this announcement.