Half-year Report

RNS Number : 3490U

National World PLC

01 August 2022

 

National World plc

(National World" the "Company" or the "Group")

Half-yearly Financial Report

For the six months ended 2 July 2022

Financial Highlights

	Adjusted results*			Statutory results**
	H1 2022	H1 2021		H1 2022	H1 2021
	£m	£m		£m	£m
Revenue	43.5	42.1		43.5	42.1
Operating profit/(loss)	5.7	4.2		4.1	(0.1)
Profit/(loss) before tax	5.6	3.5		3.9	(0.9)
EBITDA	5.9	4.6		4.9	1.3
Earnings/(loss) per share (pence)	1.7p	2.4p		1.2p	(0.8)p

*  Adjusted results are before non-recurring items, amortisation of intangible assets and impact of IFRS 16. Note 16 provides a reconciliation between Statutory and Adjusted results.

** Unaudited

Commenting on the results, Chairman, David Montgomery, said

"We have had a strong first half for 2022 despite the uncertain economic environment. Investment in digital content and development has been increased to transform the business for growth whilst driving efficiencies to manage the challenges presented by the economy. The transformation is underpinned by re-skilling of the workforce to reduce dependency on news by widening the agenda with original content that can be monetised. Automation will also increase efficiency as we transition the business. The creation of this new model, and the recent expansion into a UK wide market, means that management can target specific acquisitions, several of which are being actively pursued."

Operating profit up 36%, Digital revenue up 41%, cash balance of £25.7 million

· Strong performance despite challenging trading environment with revenue up 3% to £43.5 million, adjusted operating profit up 36% to £5.7 million and adjusted EBITDA up 28% to £5.9 million.

· Robust digital revenue growth , up 41% year-on-year to £8.2 million. There has been volatility in audience numbers because of public sentiment in the face of economic and news events affecting all media, but the revenue impact has been mitigated by stronger yields and increased video advertising, (the latter more than doubling year-on-year).

· Continued growth from National and City World websites. Nationalworld.com continues to deliver strong growth with average monthly page views of 15.6 million in H1 2022, one year after its launch. The seven City World sites are delivering average monthly page views of 4.7 million with new launches to follow.

· Investment . We continue to invest, with a further £1.2 million (£2.4 million annualised in 2023) planned for the second half of 2022. This is in digital content, development and launches that we anticipate will deliver further growth in 2023.

· Incremental cost savings of £0.3 million were delivered in the period and we are on track to deliver £1.2 million of further savings in the second half with c£3.0 million of annualised cost savings by the end of the year with restructuring costs of c£2.5 million.

· Strong balance sheet with significant financial flexibility, closing cash balance of £25.7 million at 2 July 2022, with outstanding debt of £1.0 million and deferred consideration of £2.5 million.

· Outlook

The trading environment remains difficult with the prospect of a further slowdown in the UK economy. Despite these macro-economic challenges, increased investment in the development of our portfolio of digital sites and commercial opportunities and the tight management of the cost base will support future profits and cash flow. At this stage, the Board expects the business will perform in line with its expectations. As the Group successfully implements its strategy, the Board anticipates being able to initiate dividends at the time of announcing the 2022 full year results with a progressive dividend policy.

Enquiries

National World plc c/o Montfort Communications David Montgomery Vijay Vaghela
Montfort Communications - Financial PR & IR Nick Miles Olly Scott	[phone] [phone]

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.

Chaiman's Statement

The Group delivered a strong performance in the period with revenue growing by 3% from £42.1 million to £43.5 million despite the challenged trading environment with the slowdown in the UK economy apparent in the second quarter.

Management of the cost base and focus on growth elements of the business ensured that the Group delivered an adjusted operating profit of £5.7 million and an operating margin of 13%. Adjusted operating costs of £37.6 million, before depreciation, are broadly in line with the prior period. New cost saving initiatives in 2022 have already benefited H1 by £0.3 million and are expected to benefit the second half of 2022 by £1.2 million with an annualised benefit of £3.0 million in 2023. Restructuring costs of c.£2.5 million are expected in 2022 to deliver cost savings, of which £1.3 million were incurred in the first half.

Adjusted EBITDA increased by 28% year-on-year to £5.9 million (2021: £4.6 million) with an EBITDA margin of 14%. The strong EBITDA, with minimal capital expenditure and tight management of working capital, ensured the Group delivered an operating cash flow of £6.3 million (2021: £3.1 million) before the payment of non-recurring costs of £0.9 million (2021: £4.1 million).

Adjusted financing costs were £0.1 million (2021: £0.7 million) and adjusted profit before tax increased by 60% year-on-year to £5.6 million. Statutory financing costs were £0.2 million (2021: £0.8 million) including IFRS16 lease finance costs.

Statutory profit before tax of £3.9 million, represents a £4.8 million improvement on the £0.9 million loss before tax reported in the prior period, due to the strong growth year-on-year in revenue and profits and materially lower non-recurring costs which fell from £4.1 million to £1.3 million.

Statutory earnings per share were 1.2 pence per share (2021: 0.8 pence loss per share) for the period. Adjusted earnings per share for the period was 1.7 pence per share (2021: 2.4 pence per share), with the decline driven by the annualised impact of the shares issued in 2021 offsetting the strong performance in the period.

The Company's objective remains:

" To create a premium and diversified content and sales business through implementation of a modern operating model across multiple brands and platforms. This will be executed by driving organic growth of both new and existing portfolio brands and by making acquisitions, all of which will continually enhance our digital capability and expand our content inventory".

National World is a young company with its first set of assets acquired just 19 months ago and has made significant progress in expanding into a national media business.

The pace of transformation will accelerate in the next half year powered by a leadership structure to emphasise the potential of online premium content based on a customer first culture.

This rapid transition is being overseen by a Digital Steering Group (DSG) chaired by a non-executive director, John Rowe, who has a strong record as an online entrepreneur and in retail.

The main pillars of the DSG are to focus on the lifetime value of the customer, providing premium content across a wider agenda of information, entertainment and specialist subjects that can be monetised effectively. To achieve this our workforce is being re-skilled and the transition to a fully automated and digitised production process will finally release a significant number of staff from industrial processes. The online initiatives include long overdue self-serve platforms for both contributors and advertisers.

The first decisive move to separate online as a distinct and standalone business has taken place with the City World division. This started with seven new launches into London, Birmingham, Bristol, Liverpool, Newcastle and Manchester. To this is added Leeds, Edinburgh and Sheffield, creating a pure online division (together with nationalworld.com). The three heritage newspaper brands related to the latter three cities will now be relaunched to ensure they remain relevant and attractive to readers.

The result will be that the 'World' division becomes the fastest growing in the largest markets with an emphasis on video, sport and city life - all content areas that have enjoyed recent growth. The positioning of the World division targets the middle market metropolitan consumer, providing reliable content as distinct from the celebrity based red top market.

Key initiatives in 2022 have included:

● Expansion of City World sites. The launch of nationalworld.com and seven City World sites (Manchester, Glasgow, Birmingham, London, Newcastle, Bristol and Liverpool) in 2021 increased the Group's nationwide footprint. The centrally operated sites are being enhanced by the integration of the Edinburgh News, Sheffield Star and Leeds Evening Post websites with the seven City World sites. All content generating staff will be managed through the City World sites. The combined 10 City World sites will provide full coverage of the key cities in England and Scotland with all operations purely focused on digital. Nationalworld.com and the seven City World sites achieved 20.3 million average monthly page views in the first half and strong growth is expected in the second half. The 10 City world sites achieved 38.2 million average monthly page views in the first half (compared to 24.3 million in the prior period).

● Increased investment in digital content resource. 30 editorial roles being recruited enable the Group to provide quality unique local content for all our digital sites and grow revenue. There will be an enhanced focus on developing newsletters, premium content, sports (in particular football) and increased consumer content for the city sites.

● Increased investment in tech and development. We continue to improve SEO performance, UX (User Experience) and develop and launch new products and services.

● Ongoing portfolio management. In the first half of 2022, with the substantial increases in newsprint prices and more challenging trading environment we have closed three newspaper titles and changed the Hartlepool Mail to a weekly publication.

● Roll out of common editorial systems. This simplifies workflows, separating content generation and print production. Trials are underway with potential suppliers to further automate and digitise print production, this first phase of which will be implemented in Q3 2022.

● Capitalise on opportunities to launch new products and services by leveraging the strong base of editorial and commercial expertise;

● Evaluate acquisitions, investments and strategic partnerships to expand the content agenda in order to build scale, accelerate digitisation and product enhancement and to drive customer engagement; and

● Management of the cost base. Inflationary cost pressures and increased investment have been substantially offset through ongoing management of the cost base.

National World has had a strong first half in a difficult trading environment. We have increased investment to deliver growth and achieve efficiencies to manage the challenges facing the business. We are investing a further £1.2 million (£2.4 million annualised in 2023) in the second half of 2022 and anticipate this investment will deliver further growth in digital audience and revenue in 2023.

Whilst we continue to pursue acquisition opportunities, particularly in premium and original content genres, to build scale and increase revenue, the Board remains mindful of the challenges posed by the volatile trading environment.

David Montgomery

Executive Chairman

1 August 2022

Financial review

Income statement

The statutory and adjusted results have been prepared for the 26 weeks ended 2 July 2022 (2022) and the comparative period is for the 26 weeks ended 3 July 2021 (2021).

Note 16 sets out the reconciliation between the statutory and adjusted results.

	Adjusted results			Statutory results
	2022	2021		2022	2021
	£m	£m		£m	£m
Revenue	43.5	42.1		43.5	42.1
Operating Costs	(37.6)	(37.5)		(37.3)	(36.7)
Depreciation and Amortisation	(0.2)	(0.4)		(0.8)	(1.4)
Operating profit pre non-recurring items	5.7	4.2		5.4	4.0
Non-recurring items:
Restructuring	-	-		(1.3)	(3.3)
Acquisition, loan note issue and share re-listing	-	-		-	(0.8)
Operating (loss)/profit	5.7	4.2		4.1	(0.1)
Net finance expense	(0.1)	(0.7)		(0.2)	(0.8)
Profit/(loss) before tax	5.6	3.5		3.9	(0.9)
Tax charge	(1.1)	(0.7)		(0.8)	-
Profit/(loss) after tax	4.5	2.8		3.1	(0.9)
Earnings/(loss) per share - basic (pence)	1.7p	2.4p		1.2p	(0.8)p
Earnings/(loss) per share - diluted (pence)	1.6p	2.2p		1.1p	(0.8)p
EBITDA	5.9	4.6		4.9	1.3
Operating profit margin %	13%	10%		9%	0%
EBITDA margin %	14%	11%		11%	3%

The Group delivered a strong performance in the period with revenue increasing 3% to £43.5 million (2021: £42.1 million) and adjusted operating profit increasing by 36% to £5.7 million (2021: £4.2 million). Strong management of the cost base, despite significant inflationary cost pressures, ensured operating margin improved by three percentage points to 13% (2021: 10%). Adjusted EBITDA in the period grew by 28% to £5.9 million (2021: £4.6 million) with the EBITDA margin increasing by three percentage points to 14% (2021: 11%).

Adjusted financing costs were £0.1 million (2021: £0.7 million) and adjusted profit before tax increased by £2.1 million to £5.6 million (2021: £3.5 million). Statutory financing costs were £0.2 million (2021: £0.8 million) including IFRS16 lease finance costs. The finance costs in 2021 included £0.6 million of interest on the £20 million convertible secured loan notes prior to their conversion to equity in May 2021.

Statutory profit before tax was £3.9 million, an increase of £4.8 million from the 2021 loss before tax of £0.9 million with improved operating profit and lower non-recurring costs in the period which fell by £2.8 million to £1.3 million (2021: £4.1 million).

Statutory earnings per share for the period are 1.2 pence per share, a material improvement on the loss of 0.8 pence per share in 2021. Adjusted earnings per share for the period was 1.7 pence per share (2021: 2.4 pence per share). The fall in adjusted earnings per share reflects the full year impact of the shares issued in 2021 to fund the acquisition of JPI Media Group, working capital and headroom for investment.

Revenue

The table below provides a summary of revenue for the 26 weeks ended 2 July 2022 with the comparative for the 26 weeks ended 3 July 2021.

	2022	2021	Change	Change
	£m	£m	£m	%
Print Publishing Revenue	34.6	35.6	(1.0)	(3%)
Advertising	16.7	16.5	0.2	1%
Circulation	16.5	17.9	(1.4)	(8%)
Other	1.4	1.2	0.2	17%
Digital Publishing Revenue	8.2	5.8	2.4	41%
Advertising	5.0	3.5	1.5	43%
Subscriptions	0.8	0.7	0.1	14%
Other	2.4	1.6	0.8	50%
Other revenue	0.7	0.7	-	-
Total Revenue	43.5	42.1	1.4	3%

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 growth of 3% year-on-year reflects 5% growth in the first quarter and 1% growth in the second quarter. Whilst the first quarter comparatives were impacted by the COVID-19 pandemic and related lockdown restrictions they benefited from £0.7 million of COVID 19 Government spend, with an additional £0.2 million in the second quarter comparative. The Group delivered growth in the second quarter of 2022 despite the stronger comparative and a slowdown in the UK economy.

Print revenue

Print revenue comprises all revenue driven by the local newspaper titles, including all digital revenue packaged with print and COVID-19 related government spend.

Advertising revenue increased by 1% year-on-year with growth of 4% in the first quarter being partially offset with the second quarter being broadly in line with the second quarter of 2021. The weakening of the UK economy in the second half has impacted both National and Local categories.

Circulation revenue fell by 8% during the period with a decline of 5% in the first quarter and a decline of 11% in the second quarter. The weaker second quarter performance reflects the impact of the slowdown in the UK economy in 2022 and marginally stronger comparatives as COVID 19 restrictions had been lifted in the second quarter of 2021. Average monthly circulation volumes in the period were 1.9 million for the daily newspapers and 0.9 million for the weekly newspapers representing an annual decline of 17% and 14% respectively. The impact of falling volumes was partially mitigated by cover price increases for the majority of the Group's newspapers from January 2022.

The Group continues to have a strong print subscriber base with print subscription revenue of £1.5 million in the period, a decline of 2% year-on-year which is lower than the overall circulation revenue decline of 8%.

Other revenue, which includes syndication, leaflets, events ticket sales and other sundry revenues grew by 16%.

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 41% in the period, with continued strong growth of 39% in the second quarter. The Ukraine war and macroeconomic uncertainty has created volatility in audience numbers during the period, but the revenue has been mitigated by stronger yields and increased video advertising, the latter more than doubling year-on-year.

Advertising revenue increased by 43% year-on-year, with the first quarter performance impacted by weaker comparatives due to national lockdown restrictions in the first quarter of 2021. Advertising revenue is predominantly driven by audience and the Group had average monthly Unique Users (UUs) and Pages Views (PVs) of 45 million and 117 million respectively representing year-on-year growth of 25% and 5% respectively.

The audience performance reflects growth from our national site, nationalworld.com, which has continued to deliver strong audience growth to offset the volatility in audience driven by external factors, including algorithm changes implemented by Google in the second quarter. The Group had average monthly PVs of 121 million in the first quarter compared to 114 million in the second quarter, with nationalworld.com averaging 15.6 million PVs across the first half, after reaching an audience of 20.4 million in April 2022 one year after its launch. Average monthly Unique Visitors (based on Comscore) were 17.7 million in the first half, an increase of 13% year-on-year.

Subscription revenue growth of 14% is driven by the annualisation impact of the growth in subscribers in 2021 and an increase in subscription prices during the period partially offset by an increase in churn which results in subscribers falling in the second quarter. Total subscribers for our websites and Apps decreased from 20k at the end of 2021 to 19k at the end of the period.

Other digital revenue grew by 50% and is driven by increased revenue from a re-negotiated Google content contract and the annualisation of the contracts for both Meta and Google content contracts which both commenced during February 2021.

Other revenue

Other revenue is in line with 2021 and reflects grants from the BBC for local democracy reporters and from Meta for the funding of 45 journalists (H1 2021: 47 journalists).

Operating Costs

Operating costs comprise:

	Adjusted results		Statutory results
	2022	20211	2022	20211
	£m	£m	£m	£m
Labour	21.1	21.7	21.1	21.7
Newsprint and production costs	6.4	6.1	6.4	6.1
Depreciation and amortisation	0.2	0.4	0.8	1.4
Other	10.1	9.7	9.8	8.9
Total operating cost before non-recurring costs	37.8	37.9	38.1	38.1
Non-recurring costs	-	-	1.3	4.1
Total operating costs	37.8	37.9	39.4	42.2

¹ COVID job retention scheme funding of £484,000 is reported net within Labour costs. The prior year Interim reported Furlough net within Other costs.

Statutory operating costs fell by £2.8 million to £39.4 million (2021: £42.2 million) and fell by £0.1 million on an adjusted basis to £37.8 million (2021: £37.9 million). Adjusted costs are before non-recurring costs, amortisation of intangible assets of £0.3 million, and impact of IFRS16.

Labour

The Group employed an average of 1,179 employees during the period (2021: 1,262). The prior period labour costs are net of a furlough credit of £0.5 million, received in the first quarter of 2021 prior to staff being recalled from furlough on 1 April 2021.

Newsprint and Production costs

Newsprint and production costs increased during the period, reflecting a significant increase in newsprint prices and an increase in printing costs. The increased costs have been substantially offset by a reduction in newsprint volumes that were driven by a reduction in circulation and reduced pagination.

Depreciation and amortisation

Adjusted depreciation and amortisation, which excludes amortisation of intangible assets and depreciation on Right of Use assets, has fallen by £0.2 million to £0.2 million (2021: £0.4 million) as capital expenditure is tightly managed and assets relating to leasehold properties have been fully depreciated or written off as the Group moves to serviced offices as property leases expire or office space is vacated. Capital expenditure of £0.2 million in the period related to IT equipment and we expect capital expenditure of c.£1.5 million for the full year. Statutory depreciation and amortisation has fallen by £0.6 million to £0.8 million (2021: £1.4 million). The key driver of the fall is driven by £0.4 million reduction in Right of Use assets depreciation as the Group vacated its leased offices in Edinburgh and materially downsized the use of the Leeds office.

Other

Other costs comprise property, IT, digital product and engineering, administration and other operating costs. Adjusted other costs increased by £0.4 million to £10.1 million reflecting digital investment, the impact of lockdown easing including the resumption of events, and costs associated with revenue improvement offset by lower IFRS16 lease costs as a result of the 2021 property rationalisation, and continued management of all costs, including IT contract savings. Adjusted other costs of £10.1 million are £0.3 million higher than Statutory other costs as they are before IFRS16 impact (2021: Adjusted costs of £9.7 million include £0.8 million of IFRS16 lease costs).

Non-recurring cost

During the period non-recurring costs of £1.3 million (2021: £4.1 million) relate to restructuring costs for the delivery of cost reduction measures, predominantly severance (2021: £3.3 million restructuring costs). Restructuring costs of c, £2.5 million are expected for the full year with annualised costs savings of £3.0 million by 2023 with £1.5 million operating cost savings being delivered in 2022.

In 2021, in addition to the restructuring costs, £0.8 million costs were incurred in relation to the acquisition of JPI Media Publishing Limited and its subsidiaries and the capital raise.

Financing charges

Financing charges on a statutory and adjusted basis are:

	Adjusted results		Statutory results
	2022	2021	2022	2021
	£m	£m	£m	£m
Interest expense from leasing arrangements	-	-	-	0.1
Interest on unsecured loan notes	0.1	0.1	0.1	0.1
Interest on convertible secured loan notes	-	0.6	0.1	0.6
Total financing cost	0.1	0.7	0.2	0.8

Total financing costs include interest on unsecured loan notes of £75,000 (2021: £56,000), and interest charges on IFRS 16 lease liabilities of £67,000 (2021: £118,000). The lower interest charge on IFRS16 lease liabilities reflects the reduction in Right of Use lease liabilities by £0.7 million to £1.2 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 in December 2023.

In 2021, interest of £0.6 million was accrued on the £20.0 million convertible secured loan notes until the conversion to equity on 7 May 2021.

Profit before tax

Statutory profit before tax of £3.9 million (2021: £0.9 million loss), is after £1.3 million (2021: £4.1 million) non-recurring costs.

Adjusted profit before tax of £5.6 million (2021: £3.5 million) is before non-recurring items, the impact of IFRS 16 and amortisation of intangible assets.

The improvement  in profit before tax reflects the strong growth in operating profit both pre and post non-recurring items.

Statutory tax credit and effective tax rate

The statutory tax rate for the period is 19%. A statutory tax charge of £0.8 million is recognised in the period (21% effective tax rate). No tax payments have been made in the period and no payments will be made for the remainder of 2022, as the Group utilises brought forward tax losses.

The adjusted profit before tax is £5.6 million, and the adjusted tax rate is 19% with a tax charge in the period of £1.1 million (2021: £0.7 million). The adjusted tax charge provides a more meaningful and comparable financial result.

Earnings per share

Statutory earnings per share for the period were 1.2 pence per share (2021: loss of 0.8 pence per share).

Adjusted earnings per share for the period were 1.7 pence per share (2021: earnings of 2.4 pence per share). The fall in statutory earnings per share reflects the annualised impact of the shares issued on 7 May 2021 on conversion of the £20 million loan convertible loan notes.

Balance sheet

		2 July 2022	1 January 2022
		£m	£m
Non-current assets		15.1	16.5
Current assets		38.8	36.0
Total assets		53.9	52.5
Current liabilities		(20.0)	(18.7)
Non-current liabilities		(2.0)	(5.0)
Total liabilities		(22.0)	(23.7)
Net assets		31.9	28.8

Net assets increased by £3.1 million from £28.8 million to £31.9 million reflecting the statutory profit after tax for the period.

Non- current assets

The net deferred tax asset reduced by £0.8 million to £3.3 million, as brought forward tax losses were utilised in the period. Gross brought forward losses of £15.8 million (1 January 2022: £19.7 million) are recognised as a deferred tax asset at the period-end, calculated using a blended corporate tax rate of 24%. £6.5 million of tax losses remain unrecognised (1 January 2022: £6.5 million).

Current assets

Cash and cash equivalents of £25.7 million increased by £2.7 million in the period. Strong operating cash flow in the period, £6.3 million of cash generated from operating activities offset by £3.6 million utilised for deferred consideration (£2.5 million) for the 2021 acquisition of the JPI Media Publishing Limited (renamed National World Publishing Limited), capital expenditure (£0.2 million), interest (£0.1 million) and capital payments on IFRS16 leases (£0.8 million).

Current liabilities

Trade and other payables of £15.8 million (2021: £13.7 million) increased by £2.1 million in the period predominantly driven by restructuring accruals increasing by £0.4 million, production accruals increasing by £0.6 million  and £0.1  million increase in Cloud migration accruals.

Right of Use lease liabilities have reduced by £0.4 million to £0.8 million as payments were made on leases.

Current provisions fell by £0.4 million to £0.9 million as payments in the period of 0.7 million were partially offset by £0.2 million transfer from long term to current provisions and a £0.1 million charge in the period for dilapidations on a vacated property.

Non current liabilities

On 31 March 2022 the first tranche of £2.5 million deferred consideration payment was made to JPIMedia Limited relating to the acquisition of JPI Media Publishing Limited. The remaining £2.5 million deferred consideration payable previously classified as a non-current liability at 1 January 2022 is now classified in current liabilities.

Right of Use lease liabilities have reduced by £0.3 million to £0.4 million as the majority property leases expiring are replaced by serviced office space on short term contracts.

Non-current provisions fell by £0.2 million to £0.6 million as liabilities moved to current provisions and there were no charges in the period.

Key Performance Indicators

To monitor progress against our strategy the Board set four Key Performance Indicators ("KPIs"), for 2022, and performance against these for the first half is set out below:

● Digital audience. Grow digital audience (page views) with a target of c200m average monthly page views by the end of 2022.

In the first half and Group achieved average monthly page views of 117 million, compared to 111 million in the prior period. After a strong start to the year with monthly page views peaking at 131 million in January 2022, we have experienced increased volatility in audience as a result of the war in Ukraine and algorithm changes by Google in the second quarter. These key factors have adversely impacted our audience and therefore the target to achieve c200 average monthly page views will now be deferred to 2023.

● Revenue trends. Improve revenue trends with KPIs that monitor a transition from dependency on print sales to increasing percentage of Group revenue from digital from the 15% achieved in 2021.

Revenue trends have improved in the first half of 2022 with growth of 3% compared to a decline of 2% in 2021. Strong growth in digital revenue of 41% was partially offset by a 3% decline in print revenue. The growth in digital revenue was achieved despite the challenges in driving audience with strong growth in yields and video revenue. The marginal decline in print revenue was despite the loss of significant Government supported COVID 19 spend in the first half of 2021. Digital revenue represented 19% of Group revenue, representing an improvement on the 15% in 2021 and 14% in the first half of 2021.

● EBITDA margin of at least 10%. Adjusted EBITDA margin of 14%, is well above our target of at least 10% and represents an improvement of three percentage points on the 11% margin 2021.

● Strong cash generation to provide financial flexibility and headroom for investment. The Group's cash balance increased by £2.7 million from £23.0 million to £25.7 million supported by net operating cash flows of £6.3 million and after paying of £2.5 million deferred consideration on the acquisition of JPI Media Publishing Limited (renamed National World Publishing Limited). Net of the £1.0 million outstanding loan note due in December 2023 and the £2.5 million deferred consideration on the acquisition of JPI Media Publishing Limited, net cash of £22.2 million provides significantly financial flexibility and headroom for investment.

Cash flow

	H1 2022	H1 2021
	£m	£m
Operating Profit/(loss) for the period	4.1	(0.1)
Depreciation and amortisation charges	0.8	1.4
Acquisition, loan note issue and share re-listing costs	-	0.8
Changes in working capital	1.4	1.0
Net cash inflow from operating activities	6.3	3.1
Net cash outflow from investing activities	(2.7)	(7.0)
Financing activities
Interest paid	(0.1)	(0.1)
Principal repayment of leases	(0.8)	(0.8)
Issue of convertible secured loan notes	-	11.6
Issue of interest only unsecured loan notes	-	1.0
Capital raise and share issue costs	-	(1.4)
Net cash generated from financing activities	(0.9)	10.3
Net increase in cash and cash equivalents	2.7	6.4
Cash and cash equivalents at the beginning of the period	23.0	12.7
Cash and cash equivalents at the end of the period	25.7	19.1

Robust operating cash generation, the benefit of restructuring and low capital expenditure ensured the Group maintains a substantial cash balance and retains financial flexibility. As at 2 July 2022, the Company held £25.7 million (2021: £19.1 million) of cash.

During the period £2.5 million of deferred consideration was paid out in relation to the JPI Media Publishing Limited acquisition (renamed National World Publishing Limited).

Capital Expenditure

Capital expenditure includes expenditure on IT equipment, predominately laptops, of £0.2 million during the period. For 2022, capital expenditure is expected to be c.£1.5 million as the IT Infrastructure is migrated to the Google Cloud Platform and certain systems and remaining IT equipment is replaced as it approaches the end of its useful life. Beyond 2022, capital expenditure is expected to be limited to c.£1.5 million per annum.

Dividends

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.

As the Group successfully implements its strategy, the Board anticipates being able to initiate dividends at the time of announcing the 2022 full results with a progressive dividend policy.

Outlook

Revenue in July fell by 6% with continued growth in digital partially offsetting a more challenging performance for print.

The trading environment remains difficult with the prospect of a further slowdown in the UK economy. Despite these macro-economic challenges, increased investment in the development of our portfolio of digital sites and commercial opportunities and the tight management of the cost base will support future profits and cash flow. At this stage, the Board expects the business will perform in line with its expectations.

Other items

Principal risks and uncertainties

The Group's principal risks and uncertainties, which could impact the Group, are identified on pages 22 to 24 of National World plc's Annual Report for the period ended 1 January 2022 which is available on the Company's website. These risks are as follows: strategy, cyber security and data migration, infrastructure and operations, data protection and COVID-19.

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 1 January 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 1 January 2022 and again when approving National World plc's Half-yearly Financial Report for the 26 week period ended 2 July 2022. Further information is set out in the 2021 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 three year projections for the business which are considered by the Board when approving the budget, and reforecast, for 2022. 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 impact of a slowdown in the UK economy with significant inflationary cost pressures;

· The impact of COVID-19 on revenue;

· Management's ongoing mitigating actions in place to manage costs and cash flow;

· Capital expenditure requirements, including the impact of the rationalisation of office space, migration of IT infrastructure to the Google Cloud Platform and 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.

The review concluded that the Group maintained significant financial flexibility with cash of £25.7 million as at 2 July 2022 and the Directors are satisfied that the Group will be able to operate with sufficient financial flexibility and headroom for the foreseeable future.

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 2022 and projections for the remainder of 2022, 2023 and 2024 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, no acquisitions have been assumed in the projections as there is no certainty that acquisitions 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.

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

Vijay Vaghela gave notice of his resignation and will continue to support the business and work through his notice period until 30 June 2023.

Steve Barber gave notice to step down as a Non-Executive and stepped down from the Board on 22 July 2022.

The Board has commenced the process of finding a replacement for both roles. In considering candidates to fill the Board vacancies, the Board has regard to the benefits of, and the need to encourage, diversity (including gender) within the Board's membership and this is a specific consideration of the recruitment process.

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

1 August 2022

Condensed consolidated income statement

for the 26 weeks ended 2 July 2022 (26 weeks ended 3 July 2021 and the 52 weeks ended 1 January 2022)

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
	Notes	£m	£m	£m
Continuing operations
Revenue	5	43.5	42.1	86.0
Cost of sales		(32.0)	(31.3)	(64.1)
Gross profit		11.5	10.8	21.9
Operating expenses before exceptional items		(6.1)	(6.8)	(12.9)
Non-recurring costs:	6
Restructuring		(1.3)	(3.3)	(3.6)
Onerous IT contracts		-	-	(0.7)
ROUA impairment		-	-	(0.9)
Property rationalisation		-	-	(0.9)
Acquisition, loan note issue and share re-listing		-	(0.8)	(0.8)
Total operating expenses		(7.4)	(10.9)	(19.8)
Operating profit / (loss)		4.1	(0.1)	2.1
Financing
Finance costs	7	(0.2)	(0.8)	(0.9)
Net finance expense		(0.2)	(0.8)	(0.9)
Profit / (Loss) before tax		3.9	(0.9)	1.2
Tax (charge) / credit	8	(0.8)	-	4.1
Profit / (Loss) after tax from continuing operations		3.1	(0.9)	5.3
Earnings / (Loss) per share	9
Earnings / (Loss) per share - basic		1.2p	(0.8)p	2.8p
Earnings / (Loss) per share - diluted		1.1p	(0.8)p	2.6p

Note 9 sets out the calculation of adjusted earnings per share and Note 16 presents a reconciliation between the statutory and adjusted results.

Condensed statement of comprehensive income

for the 26 weeks ended 2 July 2022 (26 weeks ended 3 July 2021 and the 52 weeks ended 1 January 2022)

		26 weeks ended 2 July 2022		26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)		(unaudited)	(audited)
		£m		£m	£m
Profit / (Loss) for the period		3.1		(0.9)	5.3
Total other comprehensive profit/(loss) for the period			-	-	-
Total comprehensive profit/(loss) for the period		3.1		(0.9)	5.3

Condensed statement of financial position

At 2 July 2022

		As at 2 July 2022	As at 3 July 2021	As at 1 January 2022
		(unaudited)	(unaudited)	(audited)
	Notes	£m	£m	£m
Non-current assets
Goodwill		5.2	5.2	5.2
Intangible assets		5.0	5.5	5.3
Tangible assets	10	0.8	1.1	0.8
Right of use assets	11	0.8	2.6	1.1
Deferred tax		3.3	-	4.1
Trade and other receivables		-	0.5	-
		15.1	14.9	16.5
Current assets
Inventory		-	0.1	0.1
Trade and other receivables		13.1	11.8	12.9
Cash and cash equivalents		25.7	19.1	23.0
		38.8	31.0	36.0
Total assets		53.9	45.9	52.5
Current liabilities
Trade and other payables		(15.8)	(14.1)	(13.7)
Lease liabilities	11	(0.8)	(1.4)	(1.2)
Deferred consideration		(2.5)	(2.5)	(2.5)
Provisions	13	(0.9)	-	(1.3)
		(20.0)	(18.0)	(18.7)
Non-current liabilities
Borrowings	12	(1.0)	(1.0)	(1.0)
Lease liabilities	11	(0.4)	(1.3)	(0.7)
Deferred consideration		-	(2.5)	(2.5)
Provisions	13	(0.6)	(0.5)	(0.8)
		(2.0)	(5.3)	(5.0)
Total liabilities		(22.0)	(23.3)	(23.7)
Net assets		31.9	22.6	28.8
Equity
Share capital	15	0.3	0.3	0.3
Share premium	15	24.6	24.6	24.6
Retained earnings / (accumulated losses)	15	7.0	(2.3)	3.9
Total equity		31.9	22.6	28.8

Condensed consolidated statement of changes in equity

for the 26 weeks ended 2 July 2022 (26 weeks ended 3 July 2021 and the 52 weeks ended 1 January 2022)

		Share capital	Share premium	Retained earnings/ (Accumulated losses)	Total equity
	Notes	£m	£m	£m	£m
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 31 December 2020 (audited)		0.1	4.7	(1.4)	3.4
Issue of shares on 7 May 2021		0.2	20.4	-	20.6
Costs directly attributable to issuing new shares		-	(0.5)	-	(0.5)
Loss for the period		-	-	(0.9)	(0.9)
Total comprehensive loss for the period		-	-	(0.9)	(0.9)
Equity as at 3 July 2021 (unaudited)		0.3	24.6	(2.3)	22.6
Equity as at 31 December 2020 (audited)		0.1	4.7	(1.4)	3.4
Issue of shares 7 May 2021		0.2	20.4	-	20.6
Costs directly attributable to issuing new shares		-	(0.5)	-	(0.5)
Profit for the period		-	-	5.3	5.3
Total comprehensive profit for the period		-	-	5.3	5.3
Equity as at 1 January 2022 (audited)		0.3	24.6	3.9	28.8

Condensed consolidated cash flow statement

for the 26 weeks ended 2 July 2022 (26 weeks ended 3 July 2021 and the 52 weeks ended 1 January 2022)

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
	Notes	£m	£m	£m
Cash flow from operating activities	14	6.3	3.1	8.2
Net cash inflow from operating activities		6.3	3.1	8.2
Investing activities
Acquisition of subsidiaries	14	-	(2.2)	(2.2)
Deferred consideration		(2.5)	-	-
Cash acquired in subsidiaries		-	0.5	0.5
Repayment of outstanding inter-company balance payable to JPIMedia Ltd		-	(4.7)	(4.7)
Subsidiary acquisition costs		-	(0.5)	(0.5)
Purchases of tangible assets		(0.2)	(0.1)	(0.2)
Net cash outflow from investing activities		(2.7)	(7.0)	(7.1)
Financing activities
Interest paid	7	(0.1)	(0.1)	(0.1)
Capital repayments of lease payments	11	(0.7)	(0.8)	(1.6)
Interest element of lease rental payments		(0.1)	-	(0.2)
Proceeds from issue of convertible secured loan notes	15	-	11.6	11.6
Proceeds from issue of interest only unsecured loan notes	15	-	1.0	1.0
Debt, prospectus and share issue costs		-	(1.4)	(1.5)
Net cash generated from financing activities		(0.9)	10.3	9.2
Net increase in cash and cash equivalents		2.7	6.4	10.3
Cash and cash equivalents at the beginning of the period	23.0		12.7	12.7
Cash and cash equivalents at the end of the period	25.7		19.1	23.0

Notes to the consolidated financial statements

1. General information

National World plc ('the Company') is a public limited company listed on the London Stock Exchange in England and Wales. The Company is domiciled in England and its registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT, United Kingdom. The principal activities of the Group are to provide news and information services in the United Kingdom through a portfolio of multimedia publications and websites.

The condensed consolidated Interim Financial Statements of the Company and its subsidiaries for the 26-week period ended 2 July 2022 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 1 January 2022 were approved by the Board of Directors on 17 March 2022 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 1 January 2022 is extracted from National World plc's financial statements for that year.

The half-yearly financial report was approved by the Directors on 1 August 2022. This announcement is available at the Company's registered office at 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT 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 1 August 2022.

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's annual report is available at 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 period ended 2 July 2022.

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 16 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 16.

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

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 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		£m	£m	£m
Print revenue		34.6	35.6	71.9
Digital revenue		8.2	5.8	12.7
Other1		0.7	0.7	1.4
Total revenue		43.5	42.1	86.0

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 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		£m	£m	£m
Non-recurring costs
Restructuring	a	1.3	3.3	3.6
Acquisition, loan note issue and share re-listing	b	-	0.8	0.8
Property rationalisation	c	-	-	1.8
Onerous contracts	d	-	-	0.7
Total non-recurring costs		1.3	4.1	6.9

a)  Restructuring costs

Restructuring costs of £1.3 million have been incurred in the period for the delivery of the targeted cost savings and relate predominantly to severance (H1 2021: £3.3 million, FY2021: £3.6 million).

b)  Acquisition, loan note issue and share re-listing costs

The £0.8 million cost in the prior period relates to:

· the acquisition of JPI Group which was completed on 2 January 2021;

· the issue of loan notes; and

· the re-admission to Listing on 7 May 2021.

c)  Property rationalisation

A number of office locations were vacated in 2021 as the business has adopted a flexible working policy. In the prior year period, the ROU assets (£0.9 million) at these locations were written off in full together with a provision for onerous occupation costs related to this vacant space (£0.9 million) until the end of the lease term (Note 13).

d)  Onerous contracts

A provision of £0.7million was created in the prior period for the remaining cost obligations over the unexpired contract term of an existing contract associated with moving technology infrastructure to the Cloud (Note 13).

7.  Finance costs

	26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
	(unaudited)	(unaudited)	(audited)
	£'m	£m	£m
Interest on convertible secured loan notes	-	0.6	0.6
Interest on interest only unsecured loan notes	0.1	0.1	0.1
Interest on lease liabilities	0.1	0.1	0.2
Total finance costs	0.2	0.8	0.9

Interest is being accrued at 15% on £1.0 million of interest only unsecured loan notes (Note 12).

8.  Tax

Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. The average annual tax rate used for the 26 weeks to 2 July 2022 is 19%, the same as for the 26 weeks ended 3 July 2021 and 52 weeks ended 1 January 2022.

The corporation tax rate will increase to 25% for the year beginning 1 April 2023. The change to the standard rate of corporation tax rate to 25%, was substantively enacted by parliament in May 2021, and has been accounted for in the calculation of the deferred tax.

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		£m	£m	£m
Profit / (Loss) before tax		3.9	(0.9)	1.2
Tax at the UK corporation tax rate of 19%		0.7	(0.2)	0.2
Effects of:
Expenses not allowable		0.1	0.2	0.1
Deferred tax asset recognised for tax losses		-	-	(4.4)
Effect of increase in deferred tax rate to 25%		-	-	0.1
Adjustment relating to acquired balance		-	-	(0.1)
Total tax charge / (credit) for the period		0.8	-	(4.1)
Effective tax rate		21%	0%	355%

Gross brought forward losses of £15.8 million are recognised as a deferred tax asset at the period-end (1 January 2022: £19.7 million, 3 July 2021: £2.8 million), calculated using a blended corporate tax rate of 24% (1 January 2022: 23%, 3 July 2021: 23%), as the Group expects the losses will be utilised over the next three years.

The Group has tax losses carried forward of £22.3 million (2021: £26.1 million), of which £15.8 million are recognised as deferred tax assets at the period end. The remaining tax losses of £6.5 million have not been recognised as a deferred tax asset due to uncertainty over the timing of future profits and gains.

9.  Earnings/(Loss) per share

Basic earnings/(loss) per share is calculated by dividing profit for the period attributable to equity holders of the parent by the weighted average number of ordinary shares during the period and diluted earnings/(loss) 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  2 July 2022	26 weeks ended  3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		'm	'm	'm
Weighted average number of ordinary shares for basic earnings per share		259	118	189
Effect of dilutive ordinary shares in respect of potential share awards under the value creation plan1		16	12	16
Weighted average number of ordinary shares for diluted earnings per share		275	130	205
		Pence	Pence	Pence
Statutory earnings / (loss) per share
Earnings / (Loss) per share - basic		1.2	(0.8)	2.8
Earnings / (Loss) per share - diluted1		1.1	(0.8)	2.6
Adjusted earnings / (loss) per share
Earnings per share - basic		1.7	2.4	3.7
Earnings per share - diluted		1.6	2.2	3.4

¹ The effect of the potential dilutive shares on the statutory earnings/(loss) per share would have been anti-dilutive and therefore were not included in the calculation of diluted statutory loss per share.

10.  Tangible assets

					Tangible assets
					£m
Cost
At 1 January 2022 (audited)					1.3
Additions					0.2
Disposals					(0.1)
At 2 July 2022					1.4
Accumulated impairment losses and depreciation
At 1 January 2022 (audited)					(0.5)
Charge for the period					(0.2)
Disposals					0.1
At 2 July 2022					(0.6)
Carrying amount
At 1 January 2022 (audited)					0.8
At 2 July 2022					0.8

11.  Leases

The Group leases office buildings and motor vehicles for use in its business operations. Leases of offices generally have terms between 2 and 10 years, with longer period leases having a break clause after year 5. Motor vehicles generally have a term of 4 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 balance sheet 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

		Property			Motor Vehicles	Total
		£m			£m	£m
Cost
At 1 January 2022 (audited)		2.6			0.8	3.4
At 2 July 2022		2.6			0.8	3.4
Accumulated impairment losses and depreciation
At 1 January 2022 (audited)		(2.0)			(0.3)	(2.3)
Charge for the period		(0.1)			(0.2)	(0.3)
At 2 July 2022		(2.1)			(0.5)	(2.6)
Carrying amount
At 1 January 2022 (audited)		0.6			0.5	1.1
At 2 July 2022		0.5			0.3	0.8

Right of use liabilities

The carrying amounts of lease liabilities and the movements during the period are set out below:

		Property	Motor Vehicles	Total
		£m	£m	£m
Carrying amount at 1 January 2022 (audited)		1.5	0.4	1.9
New leases		-	-	-
Interest charge		0.1	-	0.1
Lease payments		(0.7)	(0.1)	(0.8)
Carrying amount at 2 July 2022 (unaudited)		0.9	0.3	1.2

The carrying amounts of lease liabilities at the period end is set out below:

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		£m	£m	£m
Current liabilities		(0.8)	(1.4)	(1.2)
Non-current liabilities		(0.4)	(1.3)	(0.7)
Total		(1.2)	(2.7)	(1.9)

12.  Borrowings

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
	Notes	£m	£m	£m
Balance at the beginning of the period		1.0	8.4	8.4
Issue secured convertible loan notes		-	11.6	11.6
Issue of unsecured interest only loan notes		-	1.0	1.0
Accrued interest capitalised		-	0.6	0.6
Conversion of loan notes to equity	15	-	(20.6)	(20.6)
Net book amount at the end of the period		1.0	1.0	1.0

Borrowings at 2 July 2022 comprises £1.0 million 15% interest only unsecured loan notes, repayable on 31 December 2023.

13.  Provisions

		Onerous IT contracts	Property rationalisation	Dilapidations	Total
		£m	£m	£m	£m
At 1 January 2022 (audited)		0.7	0.9	0.5	2.1
Utilised in the period		(0.3)	(0.4)	-	(0.7)
Charge/(credited) in the period		-	(0.1)	0.2	0.1
At 2 July 2022 (unaudited)		0.4	0.4	0.7	1.5
Current provision		0.2	0.2	0.5	0.9
Non-current provision		0.2	0.2	0.2	0.6
Total provision at 2 July 2022		0.4	0.4	0.7	1.5

Onerous IT contracts

A provision of £0.7 million was created in the prior period for the remaining obligations over the unexpired term of remaining contract obligations on IT Infrastructure which overlaps with the transition to Cloud computing.

Property rationalisation

A number of office locations were vacated in 2021 as the business adopted a flexible working policy. In the prior period, the ROU assets (£0.9 million) for vacated office space were written off in full together with a provision for onerous occupation costs (£0.9 million) related to this vacant space until the end of the lease term. In the period, £0.1 million of the provision has been transferred to the dilapidations provision, and £0.4 million utilised.

Leasehold property dilapidations provision

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. The provision has increased by £0.2 million in the period, with £0.1 million property rationalisation provision transfer and £0.1 million expensed to Operating costs. £0.5 million of the provision has been classified as current at the period-end as these leases expire in 2022.

14.  Notes to the Cash Flow Statement

				26 weeks ended 2 July 2022		26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
				(unaudited)		(unaudited)	(audited)
	Notes		£m		£m		£m
Operating profit / (loss)				4.1		(0.1)	2.1
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets				0.3		0.3	0.5
ROUA and tangible assets depreciation expense				0.5		1.1	2.2
ROUA impairment				-		-	0.9
Acquisition, loan note issue and share re-listing costs				-		0.8	0.8
Operating cash flow before working capital changes				4.9		2.1	6.5
Net (decrease)/increase in provisions	13			(0.6)		-	1.6
				4.3		2.1	8.1
Changes in working capital:
(Increase)/decrease in receivables				(0.2)		1.0	0.2
Increase/(decrease) in payables				2.2		-	(0.1)
Cash generated from operations				6.3		3.1	8.2

15.  Share capital and reserves

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		£m	£m	£m
Share capital		0.3	0.3	0.3
Share premium		24.6	24.6	24.6
Retained earnings / (accumulated losses)		7.0	(2.3)	3.9
		31.9	22.6	28.8

The 10% convertible secured loan notes were converted into 205,432,801 ordinary shares with a nominal value of 0.1 pence each on 7 May 2021. All 259,432,801 shares in issue rank equally for voting purposes, on any dividend declared and distributions made on winding up of the Company.

The 205.4 million ordinary shares were issued on 7 May 2021 at a price of £0.11 per share (including the 10% conversion premium on the £20.0 million secured convertible loan notes) giving rise to a share premium of £20.4 million. £0.5 million of costs incurred were directly attributed to the new share issue and have been deducted from share premium in the current period.

16.  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 loss as determined under IFRS reconciles to adjusted operating profit/(loss):

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
	Notes	£m	£m	£m
Operating profit / (loss) as determined under IFRS		4.1	(0.1)	2.1
Adjustments:
Lease costs		(0.3)	(0.8)	(1.6)
Depreciation on right of use assets	11	0.3	0.7	1.4
Amortisation of intangible assets	14	0.3	0.3	0.5
Restructuring costs	6	1.3	3.3	3.6
Onerous IT contracts	6	-	-	0.7
ROUA Impairment	11	-	-	0.9
Property Rationalisation	6	-	-	0.9
Acquisition, loan note issue and share re-listing costs	6	-	0.8	0.8
Adjusted operating profit		5.7	4.2	9.3

Reconciliation of EBITDA to adjusted EBITDA:

		26 weeks ended 2 July 2022	26 weeks ended 3 July 2021	52 weeks ended 1 January 2022
		(unaudited)	(unaudited)	(audited)
		£m	£m	£m
Operating profit / (loss) as determined under IFRS		4.1	(0.1)	2.1
Depreciation and amortisation		0.8	1.4	2.7
ROUA Impairment		-	-	0.9
EBITDA		4.9	1.3	5.7
Adjusted operating profit		5.7	4.2	9.3
Depreciation		0.2	0.4	0.8
Adjusted EBITDA		5.9	4.6	10.1

INDEPENDENT AUDITOR'S REVIEW REPORT TO NATIONAL WORLD PLC

On the interim financial information for the six months ended 2 July 2022

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the 6 months ended 2 July 2022 which comprises the condensed consolidated Statement of Financial Position of National World plc as of 2 July 2022 and the related condensed consolidated Income Statement, the condensed consolidated Statement of comprehensive income, the condensed consolidated Statement of Changes in Equity, the condensed consolidated Cash flow Statement for the six months then ended and the related notes 1 to 16.

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 six months ended 2 July 2022 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 inquiries, 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 Groups 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 and Ireland) 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.

Crowe U.K. LLP

Statutory Auditor

London

1 August 2022

 

END

 

 

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