The shares had been under pressure in the wake of the EU referendum amid concern over likely pressure on ad revenues.
But even if it is prompting a modest relief rally there seems little to get excited about in the release. Group revenue is down 8% on a like-for-like basis in the first half with the 9% decline in the first quarter and 7% decline in the second quarter at least suggesting the backdrop was improving before Brexit intervened.
Publishing revenue also fell 8% with 14% growth on the digital side failing to outweigh a 10% decline in print.
The company’s response to Brexit looks to be more cost cutting. It says it will ‘necessary mitigating actions to support profits given the increased uncertainty’. The risk is that by stripping costs out the company undermines the quality of its key brands.
If a publisher is not producing quality content then it will struggle to hang on to readers and ultimately advertisers whether this content is being accessed online or through a physical product.
Prospective investors need to decide how much of this has been priced in.
Liberum remains a fan with a ‘buy’ recommendation and 275p price target. Ahead of the morning open it wrote: ‘The share price has fallen by 28% following the vote to leave the EU, shares look very cheap at c.2.5x FY'16E P/E.’