REG - National World PLC - Half-year Report
31/07/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230731:nRSe6992Ha&default-theme=true
RNS Number : 6992H National World PLC 31 July 2023
National World plc
("National World", the "Company" or the "Group")
Half-yearly Financial Report
Results for the 26 weeks ended 1 July 2023
· Continued investment in acquisitions and launches signals return
to revenue growth
· 9% growth in digital revenues as business pivots to new operating
model
· 21% year-on-year increase in page views; 49% increase in video
views
· First Half 2023 Adjusted EBITDA of £3.1 million in line with
expectations
· Half year strong cash balance of £22.1 million
· 0.5p per share maiden dividend paid on 5 July, commencing a
progressive policy
· Full year expectation unchanged with projected revenue increase
on 2022
Adjusted results*^ Statutory results
H1 2023 H1 2022 H1 2023 H1 2022
£m £m £m £m
Revenue 41.6 43.5 41.6 43.5
EBITDA 3.1 5.9 2.1 4.9
Operating profit 2.9 5.7 1.4 4.1
Profit before tax 3.2 5.6 1.7 3.9
Earnings per share (pence) 0.9p 1.7p 0.5p 1.2p
* Adjusted results are before non-recurring items, amortisation of
intangible assets and impact of IFRS 16. Note 20 provides a reconciliation
between Statutory and Adjusted results.
^ Unaudited
Commenting on the results, Chairman, David Montgomery, said
"The company has successfully commenced the journey to revenue growth in the
first half. Measures to deliver a sustainable multi-platform business
continued apace despite the downturn in the advertising market. Five
acquisitions in the period and improvements in newly launched online brands
are replacing lost revenue from heritage assets and we now expect overall
revenues for 2023 to exceed last year. Strong growth, particularly in video
revenue, as well as the accelerated implementation of an innovative operating
model will contribute to the delivery of full year profits in line with
expectations."
Total revenue down 4%, digital revenue up 9%, cash balance of £22.1 million
· Revenue improvement seen in the second quarter despite
challenging trading environment and against tough comparators. Total Revenue
was down 4% to £41.6 million, with a flat year-on-year performance in quarter
two, following an 8% decline in quarter one.
· Robust digital revenue growth, up 9% year-on-year to £8.9
million. The Group has delivered average monthly page views of 141 million in
the first half, a 21% year-on-year improvement. Video advertising continues to
be an area of growth, with revenues up 67% and total video views of 275
million in the first half, a 49% year-on-year improvement.
· Adjusted EBITDA of £3.1 million, down 47% and adjusted operating
profit is £2.9 million, contributing factors being the downturn in
advertising and investment in new brands. In the first half, the Group
accelerated plans to implement the new operating model, which will deliver
£1.1 million of savings in the second half with c.£2.5 million of annualised
cost savings and restructuring costs of £0.9 million. However, the new model
primarily focuses on sustaining our news brands in local markets by increasing
reach and customer engagement. Investment in technology and platforms is well
advanced and the first relaunches of fully automated and integrated print,
online and video brands is expected this quarter.
· Acquisitions. For the five acquisitions completed in the period,
the Group paid a total consideration of £3.0 million, (£1.9
million consideration net of cash acquired) funded from its existing cash
resources. Revenue of £2.0 million and EBITDA contribution of £0.3
million are reported in the first half, with the bulk of this flowing from 1
May. For the full year, revenues of approximately £7.0 million are expected
with an EBITDA contribution of c.£1.0 million.
· Investment. The Group has relaunched some of its key brands in
both print and digital products in the first half including The Scotsman app
relaunch and four of our daily print titles between April and June. Two more
relaunches have been delivered in July and a final two will be complete in
September. We continue to invest in automation technology and video with 250
of our journalists retrained in all aspects of TV journalism and operating new
equipment. Our first Freeview TV channel Shots! (Channel 276) was launched on
19 July.
· Strong balance sheet with significant financial flexibility,
closing cash balance of £22.1 million at 1 July 2023, with outstanding debt
of £1.0 million. On 31 March 2023, National World made the final deferred
instalment of £2.5 million in respect of the purchase of JPIMedia Group
acquired in 2021.
· Dividend. On 24 May 2023, shareholders approved the payment of a
0.5 pence per share maiden dividend payable on 5 July. The dividend recognises
the Company's significant progress over the last two years, during which time
it has generated Adjusted EBITDA of £19.8 million on the assets acquired at
the start of 2021 for £10.2 million.
Outlook
The Company's primary focus is to build a sustainable and monetisable content
business, embracing its news provision tradition but with a wider agenda
across all platforms. This pivoting of the business has continued unabated
despite the economic headwinds in the first half. In July revenues have
increased by 2% year on year and the Company is poised to benefit in the
second half from at least three of its key elements - the acquired businesses,
new launches and relaunches of heritage brands and video and TV expansion.
Therefore the Board confirms its view that the business will perform in line
with expectation for the full year.
Enquiries
National World plc
David Montgomery
c/o Montfort Communications
Dowgate Capital Limited - Financial Advisers and Brokers +44 (0)20 3903 7715
David Poutney
James Serjeant
Montfort Communications
Nick Miles +44 (0)77 3970 1634
Olly Scott +44 (0)78 1234 5205
Forward looking statements
This announcement may include 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", "estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will", or "should" or, in each case, their negative or
other variations or comparable terminology. These forward-looking statements
include matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements regarding the
Directors' current intentions, beliefs or expectations concerning, among other
things, the Company's results of operations, financial condition, liquidity,
prospects, growth, strategies and the Company's markets. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances. Actual results and developments could differ
materially from those expressed or implied by the forward-looking statements.
Forward-looking statements may and often do differ materially from actual
results. Any forward-looking statements in this announcement are based on
certain factors and assumptions, including the Directors' current view with
respect to future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the Company's
operations, results of operations, growth strategy and liquidity. Whilst the
Directors consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Save as required by
applicable law or regulation, the Company undertakes no obligation to release
publicly the results of any revisions to any forward-looking statements in
this announcement that may occur due to any change in the Directors'
expectations or to reflect events or circumstances after the date of this
announcement.
Chairman's Statement
The Group delivered a robust performance in line with expectation for the
period. The investment to support new launches and organic development was
maintained despite an advertising downturn and a decline in revenue. The
reliance on heritage print assets has begun to reduce as the business pivots
towards a more diverse and dependable model through both acquisitions and
continued growth in specific digital activities. Currently trends are more
encouraging and the company is now well positioned to benefit from its
investment in developing areas like video, subscriptions, apps and its new
brands.
Overall revenue was £41.6 million, a decline of 4%. Following an 8% decline
in the first quarter against strong comparators, revenue was flat in the
second quarter and has begun the third quarter a little ahead of last year.
The thrust of group strategy is to grow sustainable revenues through a wider
content and commercial agenda operating across all platforms.
Three components are constantly at play - acquisitions, consolidation and
innovation. A mixture of the first two is expected to increase revenues
overall for the full year. The net effect of launches and acquisitions this
year means a projected stabilisation of revenue for the first time in many
years.
The innovation involves a change to the operating model that is focused on
automation including the immediate exploitation of artificial intelligence in
production across both print and digital platforms.
Significant investment in sustaining newly launched online brands and
deploying staff resources to manage the implementation of the new model
contributed to the reduction in operating profit in the period.
The Group delivered an adjusted EBITDA of £3.1 million and adjusted operating
profit of £2.9 million. Contributing factors included the general advertising
downturn, and the support for the new brands that give National World a full
UK footprint which are expected to turn profitable in late 2024.
The Group delivered a statutory operating profit of £1.4 million. Statutory
earnings per share were 0.5 pence per share (2022: 1.2 pence per share) for
the period. Adjusted earnings per share for the period were 0.9 pence per
share (2022: 1.7 pence per share).
Since acquiring JPIMedia in January 2021, overall staff numbers have come down
from approximately 1,500 to 1,100 and productivity has increased as this
reduced number now service around twenty new brands and five newly acquired
businesses.
Both the investments in launches and acquisitions have had limited effect on
the group's cash which is £22.1 million at the end of the period, which is
after the £2.5 million final deferred payment, made in March, for JPIMedia
Group.
The five acquisitions bring in around £7 million of additional revenue and
are expected to contribute £1 million of EBITDA this year.
The company has introduced multiple measures to create a long-term sustainable
business across all platforms to stem long term revenue decline that has been
previously addressed solely by cost cutting.
The content agenda has been widened, something best demonstrated by both the
acquisition of Business Insider (Insider Media Limited) and the specialist
content focus of our premium heritage assets, the Yorkshire Post, Scotsman and
Belfast Newsletter.
Monetisable expert content is critical to the development of the group and our
talent base is being reformed and re-skilled to deliver this approach in
video, podcasts, events and now mainstream television.
Three hundred, almost half our journalists, have been trained in all aspects
of video, including presenting and editing, and the company has invested in
equipping them with the latest kit.
This and other measures to accelerate the new operating model have been the
focus of management while also coping with inflationary cost challenges and a
depressed advertising market impacting yields.
Key initiatives, both in acquisition and innovation, so far this year include:
● The rapid increase in video production, including training and
equipping 250 journalists, with a resultant 49% rise in video views and 12%
rise in engagement minutes. The year-on-year revenue has doubled;
● The launch of Freeview Channel 276, fully programmed and automated
with mainly original, home produced content;
● The acquisition of four weekly newspapers, including the Rotherham
Advertiser, and Business Insider magazine, online and events company with a
combined total revenue of £7.0 million and expected £1.0 million of EBITDA
in 2023;
● The development of Nationalworld.com, our national online newspaper,
and the wider City World portfolio in every major UK city including London,
that together should reach profitability in the second half of 2024;
● Overall increase in audience of 21% in the period and online revenue
growth of 9%;
● The development of automation in print publishing that will be
rolled out for the weekly titles during the remainder of the year with purely
local content, thereby increasing value to the consumer and advertiser;
● The consolidation of a daily press unit to centrally relaunch eight
titles in a modern format;
● The launch of The Scotsman subscriber app with an upgrade in quality
comparable to The Times and The Daily Telegraph. New apps will be launched for
the Yorkshire Post and the News Letter, also for paying subscribers, and
Nationalworld.com will offer a free app as it develops its middle market wider
audience; and
● The resumption in growth of paid digital subscriptions on our
premium brands, with subscriber numbers up by 5% since December 2022 and the
resumption of growth in registrations across our network, up 2% year on year.
All these initiatives help to pivot the company towards a premium content
business, based on expert journalism and targeting key topics. A number of
potential further acquisitions have also been identified.
Despite unfavourable economic conditions and an advertising downturn, National
World's transition has gained momentum and it is poised to benefit across
print, digital and video platforms in a recovery.
This, and recent trends towards a modest improvement, gives confidence that
the company can meet its expectations for the full year.
David Montgomery
Executive Chairman
31 July 2023
Financial review
Income statement
The statutory and adjusted results have been prepared for the 26 weeks ended 1
July 2023 (2023) and the comparative period is for the 26 weeks ended 2 July
2022 (2022).
Note 20 sets out the reconciliation between the statutory and adjusted
results.
Adjusted results Statutory results
2023 2022 2023 2022
£m £m £m £m
Revenue 41.6 43.5 41.6 43.5
Operating Costs (38.5) (37.6) (38.3) (37.3)
Depreciation and Amortisation (0.2) (0.2) (0.7) (0.8)
Operating profit pre non-recurring items 2.9 5.7 2.6 5.4
Non-recurring items:
Restructuring costs - - (1.0) (1.3)
Transaction costs - - (0.2) -
Operating profit 2.9 5.7 1.4 4.1
Net finance income/(expense) 0.3 (0.1) 0.3 (0.2)
Profit before tax 3.2 5.6 1.7 3.9
Tax (charge)/credit (0.8) (1.1) (0.4) (0.8)
Profit after tax 2.4 4.5 1.3 3.1
Earnings per share - basic (pence) 0.9p 1.7p 0.5p 1.2p
Earnings per share - diluted (pence) 0.9p 1.6p 0.5p 1.1p
EBITDA 3.1 5.9 2.1 4.9
Operating profit margin % 7% 13% 3% 9%
EBITDA margin % 7% 14% 5% 11%
The Group delivered a solid performance considering the challenging market
conditions in the period with revenue decreasing 4% to £41.6 million (2022:
£43.5 million), and adjusted operating profit decreasing to £2.9 million
(2022: £5.7 million). Adjusted EBITDA in the period was £3.1 million (2022:
£5.9 million) with the EBITDA margin reducing by seven percentage points to
7% (2022: 14%).
Adjusted finance income was £0.3 million (2022: £0.1 million cost).
Statutory financing income was £0.3 million (2022: £0.2 million cost)
including IFRS16 lease finance costs.
Adjusted profit before tax decreased by £2.4 million to £3.2 million (2022:
£5.6 million), while Statutory profit before tax was £1.7 million, as a
result of lower operating profit in the period. Non-recurring costs decreased
by £0.1 million to £1.2 million (2022: £1.3 million).
Statutory profit per share for the period was 0.5 pence per share (2022: 1.2
pence per share). Adjusted earnings per share for the period was 0.9 pence per
share (2022: 1.7 pence per share).
Revenue
The table below provides a summary of revenue for the 26 weeks ended 1 July
2023 with the comparative for the 26 weeks ended 2 July 2022.
2023 2022 Change Change
£m £m £m %
Print Publishing Revenue 31.7 34.6 (2.9) (8)%
Advertising 14.6 16.7 (2.1) (13)%
Circulation 14.9 16.5 (1.6) (10)%
Other 2.2 1.4 0.8 57%
Digital Publishing Revenue 8.9 8.2 0.7 9%
Advertising 5.6 5.0 0.6 12%
Subscriptions 0.8 0.8 - 0%
Other 2.5 2.4 0.1 4%
Other revenue 1.0 0.7 0.3 43%
Total Revenue 41.6 43.5 (1.9) (4)%
The revenue environment has remained challenging with a significant slowdown
in the UK economy impacting consumer confidence, driven by rising inflation
and interest rates. Revenue decline of 4% year-on-year reflects an 8% fall in
the first quarter and flat growth in the second quarter with revenue earned
through acquisitions mitigating against further declines.
Print revenue
Print revenue comprises all revenue driven by the local newspaper titles,
including all digital revenue packaged with print.
Advertising revenue decreased by 13% period-on-period with a fall of 16% in
the first quarter and a decline of 9% in the second quarter. The weakening of
the UK economy has impacted all National, Local and MSC categories.
Circulation revenue fell by 10% during the period with a decline of 11% in the
first quarter and a decline of 7% in the second quarter. Average monthly
circulation volumes in the period were 1.5 million for the daily newspapers
and 0.8 million for the weekly newspapers representing an annual decline of
18% and 12% respectively. The second quarter circulation volumes for daily
newspapers fell compared to the first quarter by 5% and weekly newspapers
increased by 2%. The impact of falling volumes was partially mitigated by
cover price increases in the first quarter, in addition to titles acquired in
the period which contributed £0.2 million revenue in the first half.
The Group continues to have a strong print subscriber base with print
subscription revenue of £1.5 million in the period, a decline of 4%
year-on-year which is lower than the overall circulation revenue decline of
10%.
Other print revenue, which includes syndication, leaflets, events ticket sales
and other sundry revenues grew by 57% bolstered by the acquisition of Insider
Media Ltd.
Digital revenue
Digital revenue comprises all revenue sold programmatically, digital-led
direct sales, subscriptions, syndication and revenue generated from the Google
and Meta initiatives.
Digital revenue increased by 9% in the period, delivering a strong first
quarter with a growth of 11% and slowed in the second quarter to 4%. The
macroeconomic uncertainty has resulted in softer advertising yields, and there
is continued volatility in audience numbers during the period. Video
advertising continues to increase with 67% growth year-on-year.
Digital Advertising revenue increased by 12%, with a strong first quarter
performance recording growth of 14% slowing to 9% in the second quarter as we
saw some softening of yields. Advertising revenue is predominantly driven by
audience and the Group had average monthly Pages Views (PVs) 141 million,
representing year-on-year growth of 21%.
Digital Subscription revenue remained flat year-on-year despite an 11%
reduction in subscribers. Premium brand subscribers to the Scotsman, the
Yorkshire Post, and the Newsletter increased by 5% since the year-end, with
total subscribers for our websites and apps decreasing by 3% to 19k since the
year-end driven by price rises in H2 2022 and moving from a subscriber to
audience (page views) led focus across a number of titles.
Other digital revenue grew by 4% and includes contracts for both Meta and
Google content.
Other revenue
Other revenue increased by 43% reflecting grants from the BBC for local
democracy reporters and from Meta for the funding of 60 journalists (2022: 45
journalists).
Operating Costs
Operating costs comprise:
Adjusted results Statutory results
2023 2022 2023 2022
£m £m £m £m
Labour 21.3 21.1 21.3 21.1
Newsprint and production costs 6.4 6.4 6.4 6.4
Depreciation and amortisation 0.2 0.2 0.7 0.8
Other 10.8 10.1 10.6 9.8
Total operating cost before non-recurring costs 38.7 37.8 39.0 38.1
Non-recurring costs - - 1.2 1.3
Total operating costs 38.7 37.8 40.2 39.4
Statutory operating costs increased by £0.8 million to £40.2 million (2022:
£39.4 million) and increased by £0.9 million on an adjusted basis to £38.7
million (2022: £37.8 million). Adjusted costs are before non-recurring costs,
amortisation of intangible assets of £0.5 million, and impact of IFRS16.
Labour
The Group employed an average of 1,110 employees during the period (2022:
1,179).
Newsprint and Production costs
Newsprint and production costs remained flat during the period. Reductions in
newsprint volumes (-18%) were primarily due to decreased circulation and
reduced pagination offset by increasing pricing in newsprint (+16%) and
printing (+7%). A reduction in newsprint costs has been confirmed for the
third quarter, with the benefit expected to continue into the second half.
Depreciation and amortisation
Adjusted depreciation and amortisation, which excludes amortisation of
intangible assets and depreciation on Right of Use assets, has remained at
£0.2 million (2022: £0.2 million) as capital expenditure continues to be
tightly managed. Excluding acquisitions, capital expenditure of £0.7 million
in the period related to IT equipment and digital development projects. We
expect capital expenditure of c.£1.5 million for the full year. Statutory
depreciation and amortisation fell by £0.1 million to £0.7 million (2022:
£0.8 million) due to lower Right of Use assets depreciation charges across
both property and motor vehicles.
Other
Other costs comprise property, IT, digital product and engineering,
administration and other operating costs. Adjusted other costs increased by
£0.7 million to £10.8 million reflecting costs associated with acquired
businesses, digital and IT investment, other inflationary increases as a
result of the current economic climate offset by lower IFRS16 lease costs as a
result of the 2022 property rationalisation.
Adjusted other costs of £10.8 million are £0.2 million higher than Statutory
other costs as they are before IFRS16 impact (2022: £0.3 million of IFRS16
lease costs).
Non-recurring cost
Total non-recurring costs of £1.2 million (2022: £1.3 million) were expensed
in the period, which includes:
· £1.0 million Restructuring costs (2022: £1.3 million) for the
delivery of cost reduction measures, which will generate in-year savings of
£1.1 million and annualised savings of £2.5 million. For the full year,
total restructuring costs of c.£2.0 million are expected, delivering combined
annualised costs savings of c.£4 million.
· £0.2 million on transaction costs, including £0.1 million to
acquire Insider Media Limited and its subsidiaries, and £0.1 million on other
speculative transactions.
Finance income and charges
Financing (income) and charges on a statutory and adjusted basis are:
Adjusted results Statutory results
2023 2022 2023 2022
£m £m £m £m
Interest income (0.4) - (0.4) -
Interest on unsecured loan notes 0.1 0.1 0.1 0.1
Interest on lease liabilities - - - 0.1
Total financing (income)/charge (0.3) 0.1 (0.3) 0.2
Net adjusted financing costs include £0.4 million interest income earned from
cash held on deposit with Barclays Bank, attracting interest at the BOE base
rate less 5 basis points (2022: £nil), and interest expense of £0.1 million
on the interest only unsecured loan notes (2022: £0.1 million).
The £1.0 million interest only unsecured loan notes will continue to accrue
interest at 15% per annum. Interest is payable in June and December each year
until maturity and repayment on 31 December 2023.
Statutory finance expense includes £nil interest charge on IFRS16 lease
liabilities (2022: £0.1 million).
Profit before tax
Statutory profit before tax of £1.7 million (2022: £3.9 million) is after
£1.2 million (2022: £1.3 million) non-recurring costs.
Adjusted profit before tax of £3.2 million (2022: £5.6 million) is before
non-recurring items, the impact of IFRS16 and amortisation of intangible
assets. The decline in profit before tax reflects the challenging trading
conditions and inflationary pressures, with 4% revenue shortfall, and
operating costs 2% higher than the comparative.
Statutory tax charge and effective tax rate
The statutory tax rate for the period is a blended rate of 23.5%. A statutory
tax charge of £0.4 million is recognised in the period (25.9% effective tax
rate). No tax payments have been made in the period and no payments will be
made for the remainder of 2023, as the Group utilises brought forward tax
losses against taxable profits.
The adjusted profit before tax is £3.2 million, and the adjusted tax rate is
24.0% with an adjusted tax charge in the period of £0.8 million (2022: £1.1
million). The adjusted tax charge provides a more meaningful and comparable
financial result.
Earnings per share
Statutory earnings per share for the period were 0.5 pence per share (2022:
1.2 pence per share).
Adjusted earnings per share for the period were 0.9 pence per share (2022: 1.7
pence per share).
Balance sheet
1 Jul 2023 31 Dec 2022
£m £m
Non-current assets 20.3 16.9
Current assets 35.2 38.4
Total assets 55.5 55.3
Current liabilities (20.9) (20.5)
Non-current liabilities (0.6) (0.8)
Total liabilities (21.5) (21.3)
Net assets 34.0 34.0
Net assets of £34.0 million is consistent with the net assets reported at the
year-end with the £1.3m statutory profit after tax for the period, offset by
the dividend declared in the period of £1.4 million relating to the prior
year performance and the £0.1m long term incentive share based payment
charge.
Non-current assets
Goodwill has increased by £2.7 million to £7.9 million due to the
acquisition of Insider Media Limited in April 2023 (£2.6 million) and
deferred tax liability recognised on acquired publishing titles (£0.1
million). Intangible assets have increased by £0.6 million to £5.7 million
due to the acquisition of the Rotherham publishing titles, and capitalisation
of digital development projects.
The net deferred tax asset decreased by £0.2 million to £4.0 million, with
tax losses utilised against taxable profits in the period offset by the
acquisition of Insider Media Limited deferred tax assets. Gross brought
forward losses of £17.8 million (31 December 2022: £18.8 million) are
recognised as a deferred tax asset at the period-end, calculated using a
blended corporate tax rate of 25%. £2.2 million of tax losses remain
unrecognised (31 December 2022: £2.2 million).
Current assets
Cash and cash equivalents of £22.1 million decreased by £4.9 million in the
period. There were a number of significant one-off cash outflows in the
period, including the final deferred consideration payment of £2.5 million
for the 2021 acquisition of JPIMedia Publishing Limited (renamed National
World Publishing Limited), £1.9 million net cash consideration for the five
acquisitions completed in the first half and £1.3 million payment of 2022
restructuring costs accrued at year-end.
Current liabilities
Trade and other payables of £18.8 million (2022: £15.9 million) increased by
£2.9 million in the period driven by £1.4 million dividend payable due to
shareholders on 5 July 2023, £1.0 million increase in payables relating to
Cloud and production costs and increase in deferred revenue due to acquiring
Insider Media Limited.
Deferred Consideration has reduced to nil as the final payment of £2.5
million was paid on 31 March 2023 to JPIMedia Limited.
Current provisions fell by £0.1 million to £0.5 million as £0.1 million was
utilised in the period for onerous IT contracts.
Non-current liabilities
Right of Use lease liabilities have reduced by £0.1 million to £0.2 million
as the majority of property leases expiring are replaced by serviced office
space on short term contracts.
Non-current provisions decreased by £0.1 million to £0.4 million due to
£0.2 million dilapidation provisions becoming due in the next 12 months,
offset by Insider Media Limited £0.1 million of dilapidations provision
acquired relating to occupied offices.
Key Performance Indicators
To monitor progress against the Group's strategy the Board set four Key
Performance Indicators ("KPIs"), for 2023, and performance against these for
the first half is set out below:
● Digital audience. Grow digital audience (page views) with a target
of c.200 million average monthly page views by the end of 2023.
21% year-on-year improvement in average monthly page views reported in the
first half, with the Group achieving average monthly page views of 141
million, compared to 117 million in the prior period.
● Revenue trends. Improve revenue trends with KPIs that monitor a
transition from dependency on print sales to an increasing percentage of Group
revenue from digital beyond the 15% achieved in 2022.
Strong growth in digital revenue of 9% and other revenue growth of 43% was
offset by an 8% decline in print revenue. The growth in digital revenue was
achieved despite lower yields, with growth seen in audience and video revenue.
Digital revenue represented 21% of Group revenue, representing an improvement
on the 2% on the first half of 2022.
● EBITDA margin of at least 10%. Adjusted EBITDA margin of 7%, is
below the target and 2022 comparative of 14%. The Group expects to report a
c10% EBITDA margin in the full year results.
● Strong cash generation to provide financial flexibility and
headroom for investment. The Group's cash balance reduced by £4.9 million
from £27.0 million to £22.1 million after paying the final £2.5 million
deferred consideration on the acquisition of JPI Media Publishing Limited
(renamed National World Publishing Limited) and £1.9 million on acquisitions.
Net of the £1.0 million outstanding loan note due in December, and the £1.4
million dividend payable on 5 July to shareholders net cash of £19.7 million
provides significantly financial flexibility and headroom for investment.
Cash flow
Adjusted Statutory
H1 2023 H1 2022 H1 2023 H1 2022
£m £m £m £m
Operating profit for the period 2.9 5.7 1.4 4.1
Depreciation and amortisation charges 0.2 0.2 0.7 0.8
Restructuring costs paid (1.4) (0.9) - -
Long term incentive plan expense 0.1 - 0.1 -
Changes in provisions - - (0.3) (0.6)
Changes in working capital (1.8) 0.5 (1.6) 2.0
Net cash inflow from operating activities 0.0 5.5 0.3 6.3
Net cash outflow from investing activities (4.8) (2.7) (4.8) (2.7)
Financing activities
Interest paid (0.1) (0.1) (0.1) (0.1)
Principal repayment of leases - - (0.3) (0.8)
Net cash generated from financing activities (0.1) (0.1) (0.4) (0.9)
Net decrease in cash and cash equivalents (4.9) 2.7 (4.9) 2.7
Cash and cash equivalents at the beginning of the period 27.0 23.0 27.0 23.0
Cash and cash equivalents at the end of the period 22.1 25.7 22.1 25.7
Cash inflow from operating activities of £0.3m is after £1.4 million of
restructuring costs paid of which £1.3 million were expensed to the 2022
Income Statement.
The conversion of adjusted operating profit of £2.9 million into cash is 39%
(£1.1 million comprising cash inflow from operating activities before
restructuring cost paid, and after purchases of tangible assets).
At the period-end the Group maintains a substantial cash balance and retains
financial flexibility. As at 1 July 2023, the Company held £22.1 million
(2022: £25.7 million) of cash. The Group had some notable cash outflows in
the first half, with cash decreasing by £4.9 million since the year-end
including the final deferred consideration payment of £2.5 million for the
2021 acquisition of JPIMedia Publishing Limited (renamed National World
Publishing Limited), £1.9 million net cash consideration for the five
acquisitions completed in the first half, capital expenditure (£0.7 million),
loan note interest (£0.1 million) and capital payments on IFRS16 leases
(£0.3 million) and supplier payments made in advance to access discounts.
Capital Expenditure
Capital expenditure during the period includes £0.5 million of digital
development project costs and £0.2 million expenditure on IT equipment,
predominantly laptops and video equipment. For 2023, capital expenditure is
expected to be c.£1.5 million including digital development costs and certain
systems and remaining IT equipment requiring replacement as it approaches the
end of its useful life. Beyond 2023, capital expenditure is expected to be
limited to c.£1.0 million per annum.
Dividends
Shareholders approved the Group's maiden dividend at the 24 May 2023 AGM of
0.5 pence per share. This was paid on 5 July 2023 to shareholders on the
register at 2 June 2023, and is held as a liability at the period-end. The
maiden dividend reflects the Board's confidence in the ongoing strong cash
generation of the business, the future prospects of the Group and its strong
balance sheet. The Board continues to adopt a progressive dividend policy.
The Board is committed to provide strong returns to shareholders through a
combination of share price growth and income. To ensure the Group maintains
financial flexibility and an appropriate level of financial headroom for
investment and working capital, dividend payments will be aligned to the free
cash generation of the business. The free cash generation for the purposes of
assessing the dividend will be the net cash flow generated by the Group before
the repayment of debt, dividend payments and other capital returns to
shareholders.
Outlook
The company's primary focus is to build a sustainable and monetisable content
business, embracing its news provision tradition but with a wider agenda
across all platforms. This pivoting of the business has continued unabated
despite the economic headwinds in the first half. In July revenues have
increased by 2% year on year and the company is poised to benefit in the
second half from at least three of its key elements - the acquired businesses,
new launches and relaunches of heritage brands and video and TV expansion.
Therefore the Board confirms its view that the business will perform in line
with expectation for the full year.
Other items
Principal risks and uncertainties
The Group's principal risks and uncertainties, which could impact the Group,
are identified on pages 29 to 31 of National World plc's Annual Report for the
period ended 31 December 2022 which is available on the Company's website.
These risks are as follows: strategy, cyber security and data migration,
infrastructure and operations, and data protection.
The Directors have reviewed these principal risks and uncertainties, and do
not consider that the principal risk and uncertainties have changed since the
publication of the annual report for the period ended 31 December 2022.
However, the Board notes that the increased economic uncertainty and
inflationary pressures are being considered to ensure the Group can meet its
strategic objectives.
Going concern statement
The Directors assessed the Group's prospects, both as a going concern and its
long-term viability, at the time of the approval of National World plc's
Annual Report for the period ended 31 December 2022 and again when approving
National World plc's Half-yearly Financial Report for the 26 week period ended
1 July 2023. Further information is set out in the 2022 Annual Report of
National World plc.
The Directors consider it appropriate to adopt the going concern basis of
accounting in the preparation of the Group's interim consolidated financial
accounts. The assessment was based on review of the remaining term of the
three year projections for the business which are considered by the Board when
approving the budget, and reforecast, for 2023. Management believe that a
longer term assessment is not appropriate given the ongoing structural
challenges facing print media and changing landscape for digital. Key
considerations in the assessment were:
· The ongoing impact of the macroeconomic conditions on revenue;
· Management's ongoing mitigating actions in place to manage costs
and cash flow;
· Capital expenditure requirements, including ongoing maintenance
capital expenditure requirements; and
· Investment in digital resource and development.
Sensitivity analysis was applied to the projections to determine the potential
effects should the principal risks and uncertainties occur, individually or in
combination. The Board also assessed the likely effectiveness of any proposed
mitigating actions.
Whilst the Group strategy is to grow through acquisition and organic
development, no acquisitions have been assumed in the projections as there is
no certainty that acquisition/s will be concluded. Prior to proceeding with
any acquisition, the three year projections will be updated to ensure there is
no adverse impact on the Group prospects or going concern resulting from an
acquisition.
Having considered the factors impacting the Group's businesses, including
downside sensitivities, the £22.1 million cash held as at 1 July 2023, the
Directors are satisfied that the Group will be able to operate with sufficient
financial flexibility and headroom for the 12 months from the date of signing
the interim report.
Viability statement
The Directors have a reasonable expectation that the Company and the Group
will be able to continue in operation and meet its liabilities as they fall
due over the period of their assessment. The Directors assessed the prospects
of the Group over a three year period which reflects actual trading for the
first six months of 2023 and projections for the remainder of 2023, 2024 and
2025 in line with the planning cycle adopted by the Group. A three year period
is adopted as it enables the Directors to consider the impact of declining
print revenues, investment to drive growth in digital and ongoing
restructuring costs required to support profits and cash flow. The assessment
considers the Group's current financial position and the principal risks and
uncertainties facing the Group including those that would threaten the
business model, future performance, solvency or liquidity.
Sensitivity analysis is applied to the projections to determine the potential
effects should the principal risks and uncertainties occur, individually or in
combination. The Board also assessed the likely effectiveness of any proposed
mitigating actions.
Whilst the Group strategy is to grow through acquisition and organic
development, aside from the acquisition completed in the first half of 2023,
no other acquisitions have been assumed in the projections as there is no
certainty that acquisitions will be concluded. Prior to proceeding with any
material acquisition, the three year projections will be updated to ensure
there is no adverse impact on the Group prospects or going concern resulting
from an acquisition.
It is understood that such future assessments are subject to a level of
uncertainty that increases with time and, therefore, future outcomes cannot be
guaranteed or predicted with certainty. Also, this assessment was made
recognising the principal risks and uncertainties that could have an impact on
the future performance of the Group and the financial risks described in the
notes to the Group's annual consolidated financial statements.
Board changes
David Lindsay was appointed to the Board, as a Non-Executive Director, on 14
September 2022.
John Rowe was appointed to the Board, as an Executive Director, on 24 February
2023.
Statement of Directors' responsibilities
The Directors are responsible for preparing the half-yearly financial report
in accordance with applicable laws and regulations.
The Directors confirm to the best of their knowledge:
a) The interim consolidated financial statements have been prepared in
accordance with International Accounting Standard 34 'Interim Financial
Reporting', as adopted by the United Kingdom; and
b) The Management Report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face.
On behalf of the Board
David Montgomery
Executive Chairman
31 July 2023
Condensed consolidated income statement
for the 26 weeks ended 1 July 2023 (26 weeks ended 2 July 2022 and the 52
weeks ended 31 December 2022)
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
Notes £m £m £m
Continuing operations
Revenue 5 41.6 43.5 84.1
Cost of sales (31.5) (32.0) (63.5)
Gross profit 10.1 11.5 20.6
Operating expenses before non-recurring items (7.5) (6.1) (11.7)
Non-recurring items: 6
Restructuring and redundancy costs (1.0) (1.3) (3.3)
Transaction costs (0.2) - (0.3)
ROUA impairment - - (0.1)
Total operating expenses (8.7) (7.4) (15.4)
Operating profit 1.4 4.1 5.2
Financing
Finance costs 7 (0.1) (0.2) (0.3)
Interest income 8 0.4 - 0.2
Net finance income/(expense) 0.3 (0.2) (0.1)
Profit before tax 1.7 3.9 5.1
Tax credit/(charge) 9 (0.4) (0.8) 0.1
Profit after tax from continuing operations 1.3 3.1 5.2
Earnings per share 10
Earnings per share - basic 0.5p 1.2p 2.0p
Earnings per share - diluted 0.5p 1.1p 1.9p
Note 10 sets out the calculation of adjusted earnings per share and Note 20
presents a reconciliation between the statutory and adjusted results.
Condensed consolidated statement of comprehensive income
for the 26 weeks ended 1 July 2023 (26 weeks ended 2 July 2022 and the 52
weeks ended 31 December 2022)
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
£m £m £m
Profit for the period 1.3 3.1 5.2
Total other comprehensive profit for the period - - -
Total comprehensive profit for the period 1.3 3.1 5.2
Condensed consolidated statement of financial position
At 1 July 2023
As at As at As at
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
Notes £m £m £m
Non-current assets
Goodwill 7.9 5.2 5.2
Intangible assets 11 5.7 5.0 5.1
Tangible assets 12 1.0 0.8 0.9
Investments 1.1 - 1.1
Right of use assets 13 0.6 0.8 0.4
Deferred tax 4.0 3.3 4.2
20.3 15.1 16.9
Current assets
Inventory 0.1 - 0.1
Trade and other receivables 13.0 13.1 11.3
Cash and cash equivalents 22.1 25.7 27.0
35.2 38.8 38.4
Total assets 55.5 53.9 55.3
Current liabilities
Trade and other payables (18.8) (15.8) (15.9)
Borrowings 14 (1.0) - (1.0)
Lease liabilities 13 (0.6) (0.8) (0.5)
Deferred consideration - (2.5) (2.5)
Provisions 15 (0.5) (0.9) (0.6)
(20.9) (20.0) (20.5)
Non-current liabilities
Borrowings 14 - (1.0) -
Lease liabilities 13 (0.2) (0.4) (0.3)
Provisions 15 (0.4) (0.6) (0.5)
(0.6) (2.0) (0.8)
Total liabilities (21.5) (22.0) (21.3)
Net assets 34.0 31.9 34.0
Equity
Share capital 17 0.3 0.3 0.3
Share premium 17 27.4 24.6 24.6
Retained earnings and other reserves 17 6.3 7.0 9.1
Total equity 34.0 31.9 34.0
Condensed consolidated statement of changes in equity
for the 26 weeks ended 1 July 2023 (26 weeks ended 2 July 2022 and the 52
weeks ended 31 December 2022)
Share capital Share premium Retained earnings and Other reserves Total equity
Notes £m £m £m £m
Equity as at 31 December 2022 (audited) 0.3 24.6 9.1 34.0
Issue of new ordinary shares 17 - 2.8 (2.8) -
Long-term incentive share based payments charge 18 - - 0.1 0.1
Dividend payable to shareholders on 5 July 2023 - - (1.4) (1.4)
Profit for the period - - 1.3 1.3
Total comprehensive profit / (loss) for the period - 2.8 (2.8) -
Equity as at 1 July 2023 (unaudited) 0.3 27.4 6.3 34.0
Equity as at 1 January 2022 (audited) 0.3 24.6 3.9 28.8
Profit for the period - - 3.1 3.1
Total comprehensive profit for the period - - 3.1 3.1
Equity as at 2 July 2022 (unaudited) 0.3 24.6 7.0 31.9
Equity as at 1 January 2022 (audited) 0.3 24.6 3.9 28.8
Profit for the period - - 5.2 5.2
Total comprehensive profit for the period - - 5.2 5.2
Equity as at 31 December 2022 (audited) 0.3 24.6 9.1 34.0
Condensed consolidated cash flow statement
for the 26 weeks ended 1 July 2023 (26 weeks ended 2 July 2022 and the 52
weeks ended 31 December 2022)
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
Notes £m £m £m
Cash flow from operating activities 16 0.3 6.3 9.5
Net cash inflow from operating activities 0.3 6.3 9.5
Investing activities
Deferred consideration 19 (2.5) (2.5) (2.5)
Acquisition of subsidiaries 19 (1.4) - (0.1)
Investment in The News Movement - - (1.1)
Interest earned 8 0.4 - 0.2
Intangible assets purchases and acquisition 11 (1.0) - (0.2)
Tangible assets purchases and acquisition 12 (0.3) (0.2) (0.4)
Net cash outflow from investing activities (4.8) (2.7) (4.1)
Financing activities
Interest paid 7 (0.1) (0.1) (0.2)
Capital repayments of lease payments 13 (0.3) (0.7) (1.1)
Interest element of lease rental payments 7 - (0.1) (0.1)
Net cash generated from financing activities (0.4) (0.9) (1.4)
Net (decrease)/increase in cash and cash equivalents (4.9) 2.7 4.0
Cash and cash equivalents at the beginning of the period 27.0 23.0 23.0
Cash and cash equivalents at the end of the period 22.1 25.7 27.0
Notes to the consolidated financial statements
1. General information
National World plc (the "Company" or "National World") is a public company
listed on the London Stock Exchange in England and Wales. The Company is
domiciled in England and its registered office is No 1 Leeds 4th Floor, 26
Whitehall Road, Leeds, England, United Kingdom, LS12 1BE.
The principal activity of the Company is to operate in the news publishing
sector.
The condensed consolidated Interim Financial Statements of the Company and its
subsidiaries for the 26-week period ended 1 July 2023 comprise the Company and
its subsidiaries (together referred to as the 'Group').
These Interim Financial Statements do not comprise statutory accounts within
the meaning of Section 434 of the Companies Act 2006. Statutory accounts for
the 52 weeks ended 31 December 2022 were approved by the Board of Directors on
16 March 2023 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under Section 498 of the
Companies Act 2006.
The auditors, Crowe U.K. LLP, have carried out a review of the Interim
Financial Statements and their report is set out at the end of this document.
The financial information for the 52 weeks ended 31 December 2022 is extracted
from National World plc's financial statements for that year. These Interim
Financial Statements have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with International
Accounting Standard, as adopted by the United Kingdom.
The half-yearly financial report was approved by the Directors on 31 July
2023. This announcement is available at the Company's registered office at No
1 Leeds 4th Floor, 26 Whitehall Road, Leeds, England, United Kingdom, LS12 1BE
and on the Company's website at www.nationalworldplc.com.
2. Basis of preparation
These Interim Financial Statements have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct Authority and with
International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the United Kingdom. The consolidated Interim Financial Statements
were authorised for issue by the Board of Directors on 31 July 2023.
These Interim Financial Statements are presented in British pounds, which is
the functional currency of all entities in the Group. All financial
information has been rounded to the nearest million except when otherwise
indicated.
These Interim Financial Statements have been prepared under the historical
cost basis.
Going concern
These consolidated financial statements have been prepared on a going concern
basis as set out in the Financial Review in this half-yearly financial report.
Changes in accounting policies and disclosures
The standards that became applicable in the period did not materially impact
the Group's accounting policies and did not require retrospective adjustments.
3. Significant accounting policies
The accounting policies adopted are consistent with those of National World
plc for the previous year. National World plc's annual report is available at
www.nationalworldplc.com.
Taxes on income in the interim periods are accrued using tax rates that would
be applicable to expected total annual profit or loss.
New and revised IFRS Standards in issue but not yet effective
None of the standards which have been issued by the UK Endorsement Board but
are not yet effective are expected to have a material impact on the Group.
Basis of consolidation
The Group Interim Financial Statements consolidate the Interim Financial
Statements of National World plc and all its subsidiary undertakings owned
during the 26 week period ended 1 July 2023.
Subsidiaries are included in the Group's Interim Financial Statements using
the acquisition method of accounting. The results of subsidiaries acquired or
disposed of during the period are consolidated from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Purchase
consideration is allocated to the assets and liabilities on the basis of their
fair value at the date of acquisition. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Where necessary, adjustments are made to the Interim Financial Statements of
subsidiaries to bring the accounting policies used into line with those used
by the Group.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method.
The cost of the acquisition is measured at the aggregate of the fair values at
the date of exchange of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the
acquiree. Acquisition related costs are recognised in the Income Statement as
incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3, including publishing
titles, are recognised at their fair value at the acquisition date.
Alternative performance measures
The Company presents the results on a statutory and adjusted basis. The
Company believes that the adjusted basis will provide investors with useful
supplemental information about the financial performance of the Group, enable
comparison of financial results between periods where certain items may vary
independent of business performance, and allow for greater transparency with
respect to key performance indicators used by management in operating the
Group and making decisions. Although management believes the adjusted basis is
important in evaluating the Group, they are not intended to be considered in
isolation or as a substitute for, or as superior to, financial information on
a statutory basis. The alternative performance measures are not recognised
measures under IFRS and do not have standardised meanings prescribed by IFRS
and may be different to those used by other companies, limiting the usefulness
for comparison purposes. Note 20 sets out the reconciliation between the
statutory and adjusted results.
Adjusting items
Adjusting items relate to costs or incomes that derive from events or
transactions that fall within the normal activities of the Group, but are
excluded from the Group's adjusted profit measures, individually or, if of a
similar type in aggregate, due to their size and/or nature in order to better
reflect management's view of the performance of the Group. The adjusted profit
measures are not recognised profit measures under IFRS and may not be directly
comparable with adjusted profit measures used by other companies. Details of
adjusting items are set out in Note 20.
4. Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group's accounting policies
The preparation of financial statements requires management to exercise
judgement in applying the Group's accounting policies. It also requires the
use of certain critical accounting estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Actual amounts
may differ from these estimates. The Directors have identified the following
critical accounting judgements or estimates relating to the financial
information of the Group.
Key sources of estimation uncertainty
Valuation judgements
Acquisitions
On 7 February 2023 the Group acquired Bann Media Limited and on 28 April 2023
the Company acquired Insider Media Limited and its subsidiary. Both
acquisitions have been treated as a business combination under IFRS 3, refer
to Note 19.
Impairment of publishing titles
The Group is required to test whether intangible and tangible assets have
suffered any impairment based on the recoverable amount of its CGUs, when
there are indicators for impairment. Determining whether the regional business
is impaired requires an estimation of the value in use of the CGU to which
these assets are allocated. Key sources of estimation uncertainty in the value
in use calculation include the estimation of future cash flows of the CGU
affected by expected changes in underlying revenues and direct costs as well
as corporate and central cost allocations through the forecast period, the
long-term growth rates and a suitable discount rate to apply to the
aforementioned cash flows in order to calculate the net present value.
5. Revenue
The analysis of the Group's contracted revenue for the period from continuing
operations is as follows:
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
£m £m £m
Print revenue 31.7 34.6 66.3
Digital revenue 8.9 8.2 16.3
Other(1) 1.0 0.7 1.5
Total revenue 41.6 43.5 84.1
(1) Includes Local Democracy Reporting Service funding from the BBC and Meta
to support news coverage of top-tier local authorities and other public
service organisations.
6. Non-recurring costs
Profit for the period is after the following items that are unusual because of
their nature, size or incidence:
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec22
(unaudited) (unaudited) (audited)
£m £m £m
Non-recurring costs
Restructuring a 1.0 1.3 3.3
Transaction costs b 0.2 - 0.3
Property rationalisation c - - 0.1
Total non-recurring costs 1.2 1.3 3.7
a) Restructuring costs
Restructuring costs of £1.0 million have been expensed in the period and
relate predominantly to severance (H1 2022: £1.3 million, FY2022: £3.3
million).
b) Transaction costs
In the period, £0.1 million professional advisory fees were incurred in
relation to the successful acquisition of Insider Media Limited and its
subsidiary Newsco Insider Limited. A further £0.1 million was incurred in the
period in relation to other speculative transactions. In the prior year, £0.3
million of professional advisory fees were incurred in relation to the aborted
acquisition of Reach plc.
c) Property rationalisation
The prior year charge relates to the right of use asset impairment of the
Preston office which was exited as the business continued to adopt a flexible
working policy.
7. Finance costs
26 weeks ended 1 Jul 23 26 weeks ended 52 weeks ended
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
£'m £m £m
Interest on interest only unsecured loan notes 0.1 0.1 0.2
Interest on lease liabilities - 0.1 0.1
Total finance costs 0.1 0.2 0.3
Interest is being accrued at 15% on £1.0 million of interest only unsecured
loan notes, which are repayable on 31 December 2023.
8. Interest Income
26 weeks ended 1 Jul 23 26 weeks ended 52 weeks ended
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
£'m £m £m
Interest Income 0.4 - 0.2
Total Interest Income 0.4 - 0.2
9. Tax
Income tax credit/(charge) is recognised based on management's estimate of the
weighted average effective annual income tax rate expected for the full
financial year. The estimated average tax rate used for 2023 is 23.5%, a
blended rate due to change in corporation tax rate on 1 April 2023 increasing
from 19% to 25%.
The change to the standard rate of corporation tax rate to 25%, substantively
enacted by parliament in May 2021, has been accounted for in the calculation
of the deferred tax.
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
£m £m £m
Profit before tax 1.7 3.9 5.1
Tax at the UK corporation tax rate of 23.5% (2022: 19%) (0.4) (0.7) (1.0)
Effects of:
Expenses not allowable - (0.1) -
Deferred tax asset recognised for tax losses - - 0.9
Effect of increase in deferred tax rate to 25% - - 0.2
Adjustment relating to acquired balance - - -
Total tax credit / (charge) for the period (0.4) (0.8) 0.1
Effective tax rate 26% 21% 2%
At the period-end the Group has total tax losses carried forward of £20.0
million of which £17.8 million are recognised as a deferred tax asset at the
period-end (31 December 2022: £18.8 million, 2 July 2022: £15.8 million),
calculated using a blended corporate tax rate of 25% (31 December 2022: 25%, 2
July 2022: 24%). The Group expects the losses will be utilised over the next
three years.
The remaining tax losses of £2.2 million have not been recognised as a
deferred tax asset due to uncertainty over the timing of future profits and
gains. (31 December 2022: £2.2 million, 2 July 2022: £22.3 million).
The deferred tax balance has decreased by £0.2 million to £4.0 million at
the period end. The movement reflects £0.3 million of deferred tax assets
acquired on the Insider Media business combination (Note 19) offset by £0.1
million deferred tax liability arising on acquired publishing title assets,
and £0.4 million of tax losses utilised in the period against taxable
profits.
10. Earnings per share
Basic earnings per share is calculated by dividing earnings for the period
attributable to equity holders of the parent by the weighted average number of
ordinary shares during the period and diluted earnings per share is calculated
by adjusting the weighted average number of ordinary shares in issue on the
assumption of conversion of all potentially dilutive ordinary shares.
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited)(1) (unaudited) (audited)
m m m
Weighted average number of ordinary shares for basic earnings per share 262 259 259
Effect of dilutive ordinary shares in respect of unexercised / potential share 4 16 16
awards under the value creation plan
Weighted average number of ordinary shares for diluted earnings per share 266 275 275
Pence Pence Pence
Statutory earnings per share
Earnings per share - basic 0.5 1.2 2.0
Earnings per share - diluted 0.5 1.1 1.9
Adjusted earnings per share
Earnings per share - basic 0.9 1.7 2.9
Earnings per share - diluted 0.9 1.6 2.7
(1)12.7m new ordinary shares were issued on 3 May 2023 to satisfy the value
creation plan award, of which 4.3m share options remain unexercised at the
period end (Note 17).
11. Intangible Assets
Publishing titles - Regional Digital intangible assets Total Intangible assets
Note
£m £m £m
Cost
At 31 December 2022 (audited) 5.3 0.8 6.1
Acquisitions / Acquisitions of subsidiaries 19 0.5 - 0.5
Additions - 0.5 0.5
At 1 July 2023 5.8 1.3 7.1
Accumulated impairment losses and depreciation
At 31 December 2022 (audited) (0.8) (0.2) (1.0)
Charge for the period (0.2) (0.2) (0.4)
At 1 July 2023 (1.0) (0.4) (1.4)
Carrying amount
At 31 December 2022 (audited) 4.5 0.6 5.1
At 1 July 2023 4.8 0.9 5.7
Acquisitions in the period, totalling £0.5m include:
· Newry Reporter (acquired January 2023);
· Banbridge Chronicle (acquired February 2023) (Note 19);
· the Rotherham Advertiser, Dearne Valley Weekend and The Chase
titles (acquired on 28 April 2023).
These acquisitions will complement and expand the reach of the Group in
Northern Ireland and Yorkshire, respectively.
Digital intangible asset additions include the capitalisation of external
development costs which form part of the core platform for the Group's
Editorial and Sales functions.
12. Tangible assets
Tangible assets
Note
£m
Cost
At 31 December 2022 (audited) 1.7
Acquisitions of subsidiary 19 0.1
Additions 0.2
Disposals (0.1)
At 1 July 2023 1.9
Accumulated depreciation
At 31 December 2022 (audited) (0.8)
Charge for the period (0.2)
Disposals 0.1
At 1 July 2023 (0.9)
Carrying amount
At 31 December 2022 (audited) 0.9
At 1 July 2023 1.0
The tangible assets are depreciated over their useful lives. The additions in
the period relate to IT hardware including video equipment purchased for the
Group's Editorial function.
13. Leases
The Group leases office buildings and motor vehicles for use in its business
operations. Leases of offices generally have terms of between two and 10
years, with longer period leases having a break clause after year five. Motor
vehicles generally have a term of four years and are principally utilised by
the sales, editorial and IT departments. With the exception of short term
leases and leases of low value underlying assets, each lease is reflected on
the Statement of Financial Position as a right of use asset and a
corresponding lease liability. Rights of use assets are depreciated over the
term of associated lease.
Right of use assets
Note Property Motor Vehicles Total
£m £m £m
Carrying amount at 31 December 2022 (audited) 0.2 0.2 0.4
Acquisition of subsidiaries 19 0.2 0.1 0.3
Depreciation charge for the period (0.1) - (0.1)
Carrying amount at 1 July 2023 (unaudited) 0.3 0.3 0.6
Right of use liabilities
The carrying amounts of lease liabilities and the movements during the period
are set out below:
Note Property Motor Vehicles Total
£m £m £m
Carrying amount at 31 December 2022 (audited) 0.7 0.1 0.8
Acquisition of subsidiaries 19 0.2 0.1 0.3
Lease payments (0.3) - (0.3)
Carrying amount at 1 July 2023 (unaudited) 0.6 0.2 0.8
The carrying amounts of lease liabilities at the period end is set out below:
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
£m £m £m
Current liabilities (0.6) (0.8) (0.5)
Non-current liabilities (0.2) (0.4) (0.3)
Total (0.8) (1.2) (0.8)
14. Borrowings
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
Notes £m £m £m
Balance at the beginning of the period 1.0 1.0 1.0
Net book amount at the end of the period 1.0 1.0 1.0
Borrowings at 1 July 2023 comprises £1.0 million 15% interest only unsecured
loan notes, repayable on 31 December 2023.
15. Provisions
Onerous IT contracts Property rationalisation Dilapidations Total
£m £m £m £m
At 31 December 2022 (audited) 0.1 0.4 0.6 1.1
Utilised in the period (0.1) (0.2) - (0.3)
Acquisition of subsidiaries (Note 19) - - 0.1 0.1
At 1 July 2023 (unaudited) - 0.2 0.7 0.9
Current provision - 0.2 0.3 0.5
Non-current provision - - 0.4 0.4
Total provision at 1 July 2023 - 0.2 0.7 0.9
Onerous IT contracts
The Onerous IT contracts provision was fully utilised in the period. The
£0.7m provision that was charged in 2021 in relation to the remaining
obligations over the unexpired term of remaining contract obligations on IT
Infrastructure which overlaps with the transition to Cloud computing.
Property rationalisation
The Property rationalisation provision was first charged in 2021 when certain
office locations were vacated as the Group continued to adopt a flexible
working policy.
Leasehold property dilapidations provision
The acquisition of Insider Media Limited included £0.1m of leasehold property
dilapidation provisions in relation to various occupied offices.
The provision for leasehold dilapidations relates to the contractual
obligations to reinstate leasehold properties to their original state at the
lease expiry date. The Group has assessed the entire portfolio and made
provisions depending on the state of the property and the duration of the
lease and likely rectification requirements.
16. Notes to the Cash Flow Statement
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
Notes £m £m £m
Operating profit 1.4 4.1 5.2
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets 11 0.4 0.3 0.5
ROUA and tangible assets depreciation expense 12,13 0.3 0.5 1.0
Long term incentive plan expense 18 0.1 - -
ROUA impairment - - 0.1
Operating cash flow before working capital changes 2.2 4.9 6.8
Net (decrease)/increase in provisions 15 (0.3) (0.6) (1.0)
1.9 4.3 5.8
Changes in working capital:
(Increase)/decrease in receivables (1.1) (0.2) 1.6
Increase/(decrease) in payables (0.5) 2.2 2.1
Cash generated from operations 0.3 6.3 9.5
17. Share capital and reserves
26 weeks 26 weeks 52 weeks ended
31 Dec 22
ended ended
1 Jul
2 Jul 22
(unaudited) (unaudited) (audited)
£m £m £m
Share capital 0.3 0.3 0.3
Share premium 27.4 24.6 24.6
Retained earnings and other reserves 6.3 7.0 9.1
34.0 31.9 34.0
On 3 May 2023, a block listing for 12,663,363 new Ordinary Shares was
completed to satisfy the allotment of shares pursuant to the Company's 2019
Value Creation Plan ("VCP"). The new Ordinary shares issued rank pari passu
with the Company's existing issued ordinary shares.
At 1 July 2023, 8,231,186 of new Ordinary share options have been exercised,
and are included in the share capital at the period end. The remaining
4,432,177 of the new Ordinary share options have not been exercised however
are entitled to dividend equivalents payable on 5 July 2023, in accordance
with the rules of the VCP.
All 267,663,987 shares in issue rank equally for voting purposes, on any
dividend declared and distributions made on winding up of the Company (2022:
259,432,801).
Value creation plan ("VCP")
The VCP was put in place on Admission in September 2019. The overall effect of
the VCP is that the three founding Executive directors together were able to
earn Ordinary Shares equivalent in value to 10% of any equity value created
above an 8% compound annual growth rate based on the measurement of absolute
total shareholder return generated over the VCP performance period commencing
on listing (September 2019) and ending on the date of publication of the
Company's results for the financial year ending 31 December 2022.
On 17 April 2023, 12,663,363 awards in the form of nominal cost options over
new ordinary shares vested pursuant to the terms of the 2019 VCP. The VCP
award was calculated using the average share price of 22.12p determined over
the 20 day testing period ending on 17 April 2023.
The Group recognised a £2.8 million increase in share premium in the period
ended 1 July 2023 in relation to the VCP, and a corresponding decrease in
reserves of £2.8 million in the same period.
The founding directors vested shares and values on the 17 April 2023, which
they were entitled to, were as follows:
Shares options Value
£
D Montgomery 4,432,177 980,242
V Vaghela 4,432,177 980,242
M Hollinshead 3,799,009 840,208
Total 12,663,363 2,800,692
At 1 July 2023, 8,231,186 of new Ordinary share options have been exercised.
The remaining 4,432,177 of new Ordinary share options remain unexercised
however were entitled to dividend equivalents payable on 5 July 2023, in
accordance with the rules of the VCP.
18. Share Based Payments
Long term incentive plan 2022 & 2023
On 12 December 2022, the Company granted 1,848,718 Long Term Incentive Shares
("LTIP 2022") option awards to two Executive Directors. The awards vest after
three years if certain performance criteria are met during that period and are
subject to the continued employment of each participant. Full details of the
LTIP 2022 scheme can be found in the Remuneration Report included within the
2022 Annual Report. The Group recognised a charge of £40k in the period ended
1 July 2023 in relation to LTIP 2022 (2022: £nil).
On 30 March 2023, the Company made 3,050,672 share option awards in the form
of nominal cost options under the Long Term Incentive Plan ("LTIP 2023") to
the two founding Executive Directors and certain senior managers. John Rowe
has a separate long term conditional bonus arrangement, payable in cash, that
mirrors the LTIP 2023 scheme, for the equivalent of 389,527 share awards. The
LTIP 2023 Performance Share options vest on 30 March 2026 and is conditional
on meeting performance conditions measured over a three-year period and is
subject to continued employment of each participant. Performance conditions
include compound annual growth in adjusted earnings per share ("EPS"), and
compound annual growth in total shareholder return ("TSR") as approved by the
Remuneration Committee.
The Group recognised a charge of £0.1m in the period ended 1 July 2023 in
relation to LTIP 2023 (including the conditional bonus arrangement).
19. Business Combinations
In 2023, the Group has acquired 100% of the issued share capital of the
following Companies:
Country of Fair value of net assets at Acquisition Nature of business Acquiring entity
incorporation acquisition date Date
and operation £m
Northern Ireland 0.0 7 February 2023 Newspaper publishers National World Publishing Limited
Bann Media Limited (a)
Insider Media Limited and Newsco Insider Limited (b) England (0.1) 28 April 2023 B2B Media
National World plc
Each acquisition meets the definition of a business combination and has been
accounted for using the acquisition accounting method in accordance with the
Group's accounting policies.
(a) Bann Media Limited was acquired on 7 February 2023, and owns and operates
Banbridge Chronicle newspaper title and website. The fair value of acquired
net assets (intangible assets - publishing title, Note 11), totalling £40k,
is the same as the acquisition price paid.
(b) Insider Media Limited and its subsidiary Newsco Insider Limited were
acquired on the 28 April 2023. All the assets and liabilities of the company
were acquired. Insider is the UK's leading regional B2B media company that has
built up, over 33 years, a loyal following of its business-orientated
magazines and events, daily business newsletters and business information.
Cash consideration of £2.5 million was paid on completion, with £1.1m cash
acquired on acquisition, before advisory and legal fees of £0.1 million
incurred relating to the Insider Media Limited acquisition.
The acquisitions represent a growth opportunity for National World, with
synergies realised across the combined Group with opportunities for audience
expansion.
The provisional fair value of the assets and liabilities recognised as a
result of the acquisitions are as follows:
Notes Insider Media Limited & subsidiary Bann Media Limited
Total
acquisitions
£m £m £m
Working capital (0.4) - (0.4)
Tangible assets 12 0.1 - 0.1
Right of use assets 13 0.3 - 0.3
Right of use liabilities 13 (0.3) - (0.3)
Dilapidation provision 15 (0.1) - (0.1)
Deferred tax asset 9 0.3 - 0.3
Fair value of assets and liabilities acquired - provisional (0.1) 0.0 (0.1)
Goodwill 2.6 0.0 2.6
Total initial consideration 2.5 0.0 2.5
Total cash consideration of £2.5 million was paid for the Insider Media
Limited and Bann Media Limited acquisitions, with no deferred or conditional
consideration applicable.
For the period of ownership during the six month period ended 1 July 2023,
Insider Media and the Banbridge Chronicle contributed Revenue of £1.6 million
and Adjusted EBITDA of £0.3 million.
Other acquisitions completed in H1 2023
The Group completed three asset purchase acquisitions in H1 2023 which do not
meet the criteria of business combinations. The Group acquired Newry Reporter,
Farm Week and Rotherham Advertiser titles for combined cash consideration of
£0.4m (Note 11), with the assets disclosed as acquired intangible asset -
publishing titles in the period.
Total cash consideration paid for all five acquisitions completed in H1 2023
(share and asset purchases) totalled £3.0 million, excluding £1.1 million
cash acquired from the Insider Media acquisition. Total legal and advisory
costs incurred in respect of all acquisitions completed in H1 was £0.1
million (Note 6). For the period of ownership during the six month period
ended 1 July 2023, the revenue included in the Income Statement for all
acquisitions was £2.0 million Revenue and Adjusted EBITDA of £0.3 million.
JPIMedia Group acquisition - Deferred consideration
The £2.5m million deferred consideration was paid to the former owners
JPIMedia Limited on 31 March 2023, representing the second and final tranche
due and there are no further amounts payable relating to the JPIMedia Group
acquisition.
20. Alternative performance measures
To provide clarity of the underlying trading performance of the Group, the
operating results are presented on an adjusted basis. Adjusted results are
before non-recurring restructuring and organisational charges, IFRS16
adoption, transaction costs, amortisation of intangible assets and impairment
charges. The Directors believe that it is appropriate to additionally present
the alternative performance measures used by management in running the
business, and that it will present a more meaningful and comparable financial
result. The adjusted results provide supplementary analysis of the
'underlying' trading of the Group.
Operating profit as determined under IFRS reconciles to adjusted operating
profit:
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
(unaudited) (unaudited) (audited)
Notes £m £m £m
Operating profit as determined under IFRS 1.4 4.1 5.2
Adjustments:
Lease costs (0.2) (0.3) (0.7)
Depreciation on right of use assets 13 0.1 0.3 0.6
Amortisation of intangible assets 11 0.4 0.3 0.5
Restructuring costs 6 1.0 1.3 3.3
ROUA Impairment 6 - - 0.1
Transaction costs 6 0.2 - 0.3
Adjusted operating profit 2.9 5.7 9.3
Reconciliation of EBITDA to adjusted EBITDA:
26 weeks ended 26 weeks ended 52 weeks ended
1 Jul 23
2 Jul 22
31 Dec 22
Notes (unaudited) (unaudited) (audited)
£m £m £m
Operating profit as determined under IFRS 1.4 4.1 5.2
Depreciation and amortisation 11,12,13 0.7 0.8 1.5
ROUA Impairment - - 0.1
EBITDA 2.1 4.9 6.8
Adjusted operating profit 2.9 5.7 9.3
Depreciation 12 0.2 0.2 0.4
Adjusted EBITDA 3.1 5.9 9.7
21. Post balance sheet events
On 5 July 2023, the 0.5 pence per share maiden dividend was paid to
shareholders. The dividend recognises the Company's significant progress over
the last two years, during which time it has generated Adjusted EBITDA
of £19.8 million on the assets acquired at the start of 2021 for £10.2
million.
INDEPENDENT AUDITOR'S REVIEW REPORT TO NATIONAL WORLD PLC
On the interim financial information for the six months ended 1 July 2023
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the 26 weeks period ended 1
July 2023 which comprises the Condensed Consolidated Income Statement and the
Statement of Comprehensive income, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Changes in Equity,
the Condensed Consolidated Cash flow Statement of National World plc and the
related notes 1 to 20.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the 26 weeks period ended 1 July 2023 is not prepared in
all material aspects, in accordance with UK-adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagement 2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity". A review of interim financial information
consists of making enquiries, primarily or persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half yearly report has
been prepared in accordance with UK-adopted International Accounting Standard
34 "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance ISRE
2410 (UK), however future events or conditions may cause the Group to cease to
continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with UK-adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our conclusion
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued by the
Financial Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Leo Malkin
Statutory Auditor
Crowe U.K. LLP
London
EC4M 7JW
31 July 2023
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FIFLEDEILVIVRecent news on National World
See all newsREG - National World PLC - Directorate Change
AnnouncementREG - National World PLC - Director/PDMR Shareholding
AnnouncementREG - National World PLC - Sale of the entire business and assets of PCS Ltd
AnnouncementREG - National World PLC - Results for the year ended 30 December 2023
AnnouncementREG - National World PLC - Director/PDMR Shareholding
Announcement