REG - Reach PLC - Annual Results for year ended 31 December 2024
04/03/2025 07:00
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RNS Number : 1815Z Reach PLC 04 March 2025
Reach plc ("The Company") Full Year Results - year ended 31 December 2024
4 March
2025
Reach teams delivering to plan, digital return to growth
Financial performance ahead of market expectations
Jim Mullen Chief Executive
"Our good performance in 2024 saw our digital business move back to growth,
driven by our Customer Value Strategy and diversification into areas like
affiliates and ecommerce. Our use of data allowed us to drive greater value
from our digital content, increase engagement and deliver better performance
for our advertisers. We continue to demonstrate expert management of our print
business, maximising revenue and reader value, while maintaining our focus on
costs across the business.
"The media landscape has continued to evolve, and the year saw us adapt our
own proposition with the introduction of the Content Hub and increased video
capability. Our audiences have responded positively, demonstrating support
for our offer and for the value of free-to-access, advertising-funded
journalism that informs, is reliable and gives them a voice. We are well
placed for 2025."
Improved profitability driven by our Customer Value Strategy and cost actions
Financial Summary((1))
12 months to 31 Dec 2024 Adjusted results((2)) Statutory results
2024 2023 Change Change LFL((1)) 2024 2023 Change
Revenue £m 538.6 568.6 (5.3)% (4.2)% 538.6 568.6 (5.3)%
Operating profit £m 102.3 96.5 6.0% 6.9% 74.2 46.1 61.0%
Operating profit margin % 19.0% 17.0% 2.0% 13.8% 8.1 % 5.7%
Earnings per share Pence 25.3 21.8 16.1% 17.0 6.8 150.0%
Net (debt)/cash((3)) £m (14.2) (10.1) (14.2) (10.1)
Dividend per share((4)) Pence 7.34 7.34 7.34 7.34
FY2024 Highlights
· Revenue declined 5.3% to £538.6m, as Print revenue of £406.7m, (FY23:
£438.8m) was down 7.3%, 6.0% like-for-like, but importantly outperformed the
volume trends, while digital revenue returned to growth £130.0m (FY23:
£127.4m) up 2.1%
· Strong trading of digital advertising with yields growing 19%
· The Customer Value Strategy drove a 6.8% increase in data-driven digital
revenues. These are more sustainable and valuable, continuing to outperform
the market and now represent 45% of total digital revenues (FY23: 43%)
· The Group continued its strong record in managing operating costs to deliver a
6.5% like-for-like reduction to £439.1m (FY23: £475.0m)
· Adjusted operating profit increased by 6.0% ahead of market expectations, at
an improved margin of 19.0% (FY23: 17.0%)
· Highly cash generative with adjusted operating cash flow of £107.3m (FY23:
£91.9m)((5)), cash conversion of 105% (FY23: 95%) and closing net debt of
£14.2m
· Total dividend maintained at 7.34p
Q4 Highlights
· Strong digital performance, with revenue up 8.6% like-for-like
· Page view growth of 6%, and increased audience engagement through the use of
data
· Like-for-like Print circulation performance was in line with trends for the
year, demonstrating its resilience as a revenue stream
· Print advertising revenue performed well, given the unusually high level of
activity by food retailers in the comparable quarter last year
· Strong growth in direct advertising and from the success of our more seasonal
activities such as the OK! Beauty Box advent calendar and affiliates
Strong Q4 Trading
2024 periods Q1 YOY Q2 YOY Q3 YOY Q4 YOY Q4 LFL((1)) YOY % FY YOY FY LFL((1)) YOY %
% % % % %
Digital Revenue (8.5) 6.7 2.5 7.7 8.6 2.1 2.3
Print Revenue (6.0) (6.2) (3.9) (12.6) (7.9) (7.3) (6.0)
- circulation revenue (3.4) (3.7) (1.9) (8.8) (3.0) (4.5) (3.0)
- advertising revenue (10.7) (12.3) (9.1) (23.6) (20.3) (14.6) (13.5)
Group Revenue (6.7) (3.6) (2.5) (8.1) (4.1) (5.3) (4.2)
Costs (7.6) (6.5)
FY25 Outlook - On track to deliver market expectations
We remain focused on delivering our Customer Value Strategy, optimising our
print assets, controlling our costs and managing our cash to continue building
a more sustainable business for the future. We remain alive to the uncertain
macro environment and dynamic media backdrop. Despite this we continue to
expect digital growth, along with a reduction on adjusted operating costs of
4-5%.
Trading performance across the first two months of 2025 has been encouraging,
supported by growing audience numbers. The Group is confident of delivering in
line with current market expectations for the full year.((6))
Notes:
((1)) The results have been prepared for the year ended 31 December 2024 and the
comparative period has been prepared for the 53 week period ended 31 December
2023. The revenue and costs have been adjusted to show the numbers on a like
for like basis (LFL). The additional week in 2023 contributed £6.2m of
revenue and £0.8m of operating profit.
((2)) Set out in note 20 is the reconciliation between the statutory and adjusted
results. The current period is for the year ended 31 December 2024 ('2024')
and the comparative period is for the 53 weeks ended 31 December 2023
('2023').
((3)) Net debt balance comprises cash and cash equivalents of £20.8m (inclusive of
£2.4m restricted cash) (note 16) less bank borrowings of £35.0m (note 16)
but excludes lease obligations.
((4)) Full year dividend of 7.34 pence per share comprised of interim dividend of
2.88 pence per share and proposed final dividend of 4.46 pence per share.
((5)) An adjusted cash flow is presented in note 21 which reconciles the adjusted
operating profit to the net change in cash and cash equivalents. Note 22
provides a reconciliation between the statutory and adjusted cash flows.
((6)) Market expectations compiled by the company are an average of analyst
published forecasts - consensus adjusted operating profit for FY25 is £99.3m.
Jim Mullen, Chief Executive Officer and Darren Fisher, Chief Financial Officer
will be hosting a webcast at 9:00am (UK) on 4 March 2025. It will be followed
by a live question and answer session. The presentation slides will be
available on www.reachplc.com
(file:///C%3A/Users/lauraharris/Downloads/www.reachplc.com) from 7.00am (UK).
You can join the webcast to watch the presentation or listen to the Q&A
via the following weblink, which you can copy and paste into your browse
https://brrmedia.news/RCH_FY24 (https://brrmedia.news/RCH_FY24)
Enquiries
Reach plc
Jim Mullen, Chief Executive Officer communications@reachplc.com
Darren Fisher, Chief Financial Officer +44 (0)7557 557 447
Lija Kresowaty, Head of External Communications
Jo Britten, Investor Relations Director
Teneo reachplc@teneo.com
Giles Kernick +44 20 7427 5412
About Reach
We're Reach plc, the UK's and Ireland's largest commercial news publisher.
We're home to more than 120 trusted brands, from national titles like the
Mirror, Express, Daily Record and Daily Star, to local brands like MyLondon,
BelfastLive and the Manchester Evening News, to our US titles. Every month, 44
million people come to us, via print and online, for trusted news,
entertainment and sport.
LEI: 213800GNI5XF3XOATR61
Classification: 3.1 Additional regulated information required to be disclosed
under the laws of the United Kingdom
Forward looking statements
This announcement has been prepared in relation to the financial results for
the year ended 31 December 2024. Certain information contained in this
announcement may constitute 'forward-looking statements', which can be
identified by the use of terms such as 'may', 'will', 'would', 'could',
'should', 'expect', 'seek, 'anticipate', 'project', 'estimate', 'intend',
'continue', 'target', 'plan', 'goal', 'aim', 'achieve' or 'believe' (or the
negatives thereof) or words of similar meaning. Forward-looking statements can
be made in writing but also may be made verbally by members of management of
the Company (including, without limitation, during management presentations to
financial analysts) in connection with this announcement. These
forward-looking statements include all matters that are not historical facts
and include statements regarding the Company's intentions, beliefs or current
expectations concerning, among other things, the Company's results of
operations, financial condition, changes in global or regional trade
conditions, changes in tax rates, liquidity, prospects, growth and strategies.
By their nature, forward-looking statements involve risks, assumptions and
uncertainties that could cause actual events or results or actual performance
or other financial condition or performance measures of the Company to differ
materially from those reflected or contemplated in such forward-looking
statements. No representation or warranty is made as to the achievement or
reasonableness of and no reliance should be placed on such forward-looking
statements. The forward-looking statements reflect knowledge and information
available at the date of this announcement and the Company does not undertake
any obligation to update or revise any forward-looking statement, whether as a
result of new information or to reflect any change in circumstances or in the
Company's expectations or otherwise.
Chief Executive's review
Return to Digital Growth
2024 was a robust year for Reach, with our teams continuing to deliver on our
plans, and driving a return to growth both in digital revenue and in page
views in Q4. While we have seen a challenging macro environment and the
ongoing dominance of the tech platforms, our strategy, and the plans we put in
place for the year, have continued to create value and further our transition
to a more resilient digital business.
We have continued to expertly manage print, and our early but necessary
actions on costs meant we exceeded our cost-saving target of 5-6% and
delivered a strong operating margin of 19% (FY23: 17%).
Throughout all of this, we continued to serve our audiences free-to-access
news, which has proven more important than ever in a year of historic
elections across the world, social unrest caused by disinformation, and
ongoing questions about the power of the platforms. Millions of people in this
country are not in a position to pay for news and making ad-funded news
sustainable will ensure that it remains accessible to all. Thank you to all
our teams for delivering a robust year and passionately serving our audiences.
CVS driving sustainable growth
Our performance has once again been driven by our Customer Value Strategy
(CVS), which gives us a better understanding of our audiences and drives
better value, both for us and our advertising partners.
Over the year, we saw 19% growth in yield, meaning we have been able to make
each page view more valuable due to our richer data, expertise in trading
digital assets and understanding of our audiences. Data-driven page views are
now worth nine times more than a programmatic page view, making us less
vulnerable to fluctuations in the open market. Overall, this more valuable
data-driven revenue now makes up 45% of our overall digital revenue (FY23:
43%).
Our data strategy has also paved the way for significant progress in
diversifying our revenue, particularly non-advertising revenue including
ecommerce and affiliates. We had a strong Black Friday period, bolstering an
already encouraging performance in affiliates, with an overall year-on-year
growth of 51%.
Ecommerce also grew strongly with a 39% year-on-year increase in revenue. The
OK! Beauty Box continues to sell well and its popular advent calendars sold
out before December. This early Customer Value Strategy initiative now has
more than 15,000 monthly subscribers and has grown revenue 42% year on year.
In the summer we moved further into this space, launching our own ecommerce
platform, Yimbly, which is progressing according to plan and which we will
scale further in 2025.
To further the diversification of our revenues, we spent 2024 expanding our
proprietary ad tech platform Mantis as a B2B proposition and revenue stream in
its own right. We now have a dedicated and experienced team in place, which
has made good progress in adding revenue and signing partnerships with other
publishing groups including LadBible Group, Immediate Media, National World
and Netmums in the UK, as well as Nine in Australia.
Our US expansion project has also progressed, with our audience continuing to
grow steadily every month. Across all of our titles we now reach 11% of the US
online population.
Crucially, while page views for the year were down 14%, the trend improved
significantly through the year, ending Q4 with a very encouraging 6%
year-on-year increase. Our data-driven approach has supported this return to
page view growth, with our AI-supported content recommender tool serving each
customer more content they might enjoy. Our editorial distribution teams are
highly skilled and take a forensic approach to using data to understand our
audiences across different channels, which has increased the discoverability
of our content with key referrers such as Google Discover.
Behind all of this good work is the awareness that we must improve the
customer experience on our websites so that our audiences can better enjoy our
great content, and I am happy to say we have made good strides here. In 2024,
we trialled a new website platform on the Liverpool Echo, which improved page
loading speeds, removed the page shifting issue and increased page views per
visit. We have since launched this platform on the Manchester Evening News,
Daily Record, BirminghamLive, and the Daily Star, with page loading speed
tripling on those sites and page views per visit up 2%. The teams also
recently introduced the new platform on the Mirror site and we will continue
to roll out across our other sites through 2025.
Print expertly managed
Our well-managed and reliable print business continues to underpin our digital
growth. With the support of carefully considered cover price increases, our
circulation revenue has declined more slowly at 3% like-for-like than the
industry-wide volume decline in newspaper sales. Our print advertising
continues to be a valuable and effective channel for our advertising partners,
especially with retailers such as Tesco and Boots, with this revenue stream
declining 13.5% on a like-for-like basis, outperforming the 17% decline in
volumes.
Our print business performed particularly well during big events this year,
including the Euros and Taylor Swift Eras tour. The teams took this
opportunity to maximise print sales with popular souvenir specials, maximising
valuable advertising opportunities. We also continue to provide our print
customers with value for money, balancing carefully managed cover price
increases with enhanced content and partner offers, for example a recurring
offering from the National Trust which remains very popular.
We continue to manage our costs effectively, and have been able to reduce our
overall newsprint cost by almost 30%. While much of this is due to the fall in
volumes, we have also been able to provide further stability by negotiating
longer-term contracts for our materials.
Impactful journalism
At Reach we are proud of the work we do and once again there are many examples
of excellent and impactful journalism from our teams, and I will pull out just
a few highlights here. As I have mentioned, our titles delivered brilliant
journalism in a year of elections, from the UK to the US, to the selection of
another new Scottish First Minister. I particularly enjoyed 5000 voices, a
joint project across our titles which gathered vox pops around the country,
demonstrating our unique strength in having thousands of journalists on the
ground who are truly plugged into their communities. I was similarly moved
watching the aftermath of the Southport riots unfold, as our teams at the
Liverpool Echo, and then our other national and local titles, provided
reliable, trustworthy news at a time when the country needed it most,
sometimes at their own personal risk.
Our journalists uncovered agenda-setting exclusives, for example the
WalesOnline Vaughan Gething investigations. They also drove campaigns that
made a difference to their communities, from the Manchester Evening News
raising funds to save the Salford Lads Club, to the Mirror's Dentists for All
campaign, to the Express making assisted dying part of the national
conversation, leading to a historic vote in November.
The editorial teams also continued to focus on engaging audiences across a
range of channels, prioritising video growth and increasing engagement from
secure audiences, in other words the audience we can communicate with
directly. We now have 9m sign-ups from people receiving content directly on
their devices via WhatsApp, newsletters and push notifications. While not a
like-for-like comparison, it's worth looking at this achievement through the
lens of UK subscriptions to Netflix which sit at 17m (Q32024). Along similar
lines, these are people whom we can reach directly with our content.
Our Studio has made progress in working with our titles and commercial
partners to provide high-quality multi- platform content. Through this work,
we have increased our total social video views by 12% year on year, and grown
revenues from direct social video buys. This work has also allowed us to
secure additional sponsored content, for example the Won In A Million podcast,
made in partnership with the National Lottery. In 2025, we will be
strengthening our Studio capability with five new Studio facilities, in our
London, Glasgow, Manchester, Birmingham and Liverpool hubs.
In an ever-shifting online media environment, it is crucial that our teams are
built to be agile and use every tool at their disposal to move with their
audiences. We have made great strides on this front, with the creation of the
Content Hub in the summer. This allows us to deploy more resources to breaking
or trending stories, reduce duplication across some niche topics such as TV,
and create subject experts, or writers who have built up higher visibility
with search engines. It's early days, but in a short time this new structure
has more than doubled the average page views of its team members, while
supporting existing core brand teams. One standout example of how this
structure can benefit us is SurreyLive - a site which over the year has grown
its audience by 321% with the support of Content Hub content, and during that
time has built a strong audience in health and wellness.
We will continue to explore the opportunities of using some resource more
flexibly in this way and have already been able to expand this team, with an
additional 60 editorial roles created in the autumn.
Through the year, we have continued to refine our proprietary AI tool, Guten,
which is particularly useful in breaking down data and tailoring original
content for different audiences. For example, the teams have found the tool
very useful for quickly repurposing a generic weather bulletin to be more
relevant to regional audiences at our various sites. With the editorial and
product teams working in partnership, the tool has evolved to provide custom
functionality including a more automated article upload and image selection
process. As always, our journalists continue to decide how and when this tool
is used, and must review any piece of content before it is published. Over
2024, Guten supported over 1.8bn page views, and we are further broadening its
use across other functions in the business, again in a carefully controlled
manner.
Ensuring we remain relevant
Our work to reach more people and to future-proof our brands can only be
achieved through getting a diverse workforce, bringing new views and
experiences. Our diversity and inclusion work has played an important part in
making this happen, bringing more young people, from a variety of backgrounds,
into our newsrooms. We made progress here in 2024 by first relaunching our
summer internship scheme and then partnering with The King's Trust on the 'Get
Into Journalism' programme which has now led to eight apprentices joining the
business on training contracts.
It was more vital than ever this year that we protected our journalists not
only through traditional security measures but also through dedicated Online
Safety support, an issue which particularly came to the fore this summer
during the country-wide unrest. While it is an unfortunate reality that we
need to take such measures, our society depends on journalists being able to
do their jobs safely and I am proud that Reach leads in this area.
We also made further progress in our work as an environmentally sustainable
business in 2024, making our near-term science-based target submission, which
takes us one important step closer on our path to net zero.
We remain vocal on wider industry affairs, fighting for the changes that will
allow for the healthy media sector we all need. We continue to call for
Government to fund reliable local news through its own advertising spend, and
to reconsider the considerable spend that funds tech platforms and by
extension, disinformation.
Delivering our strategy
The continued delivery of our strategy is a significant achievement given the
challenges our teams face, and this is down to their strong operational
expertise and efforts. The difficult cost actions we finished implementing
early in the year allowed us to adopt new organisational structures to better
reflect the digital environment. Our teams have continued to transform and
deliver these plans, balancing quality output with efficiency, and their
success creates more confidence as an organisation to face the challenges,
known and unknown, ahead.
We have delivered a strong financial performance with an operating margin of
nearly 20% and that importantly means we can meet our significant obligations,
whether that's to our former employees and pensioners or to our shareholders.
Digital is undeniably the future, and the delivery of our plans to place
digital at the centre of our newsrooms, and to structure our resources with
the introduction of the Content Hub and new Studio facilities, is not just
driving results for today but setting ourselves up to deliver in the years
ahead.
Looking ahead
While many challenges remain and the media world will continue to change in
the coming years, we are well set up for the fast-moving and competitive
digital landscape we operate in. In 2025, while we remain mindful of market
uncertainty and challenging industry dynamics, we will continue to evolve,
building on successes such as the Content Hub and Studio, and making further
progress rolling out the new website platform across remaining sites. We
continue to manage the risk posed by dominant tech platforms, by securing our
audiences and creating more direct channels to bring them to our content.
Jim Mullen
Chief Executive Officer
4 March 2025
Financial Review
This year, we have made good progress against our strategic objectives and
delivered a financial performance ahead of market expectations. Our expert
teams have ensured we remain focused on driving forward our Customer Value
Strategy while controlling costs and managing our cash position.
Our Customer Value Strategy and the strong trading of our digital assets have
increased the portion of data-driven revenues. These revenues are higher
yielding and grew 6.8% year-on-year. This revenue growth was supported by the
continued diversification of our revenue streams into areas such as affiliates
and ecommerce. Over the course of 2024 we have seen two material headwinds
ease, which has benefited our more volume-dependent revenues. Firstly, open
market prices for our programmatic advertising have stabilised after a long
period of decline. Secondly, through the use of data, in the final quarter of
2024 we started to grow our audience and page views, following the referrers'
well-publicised deprioritisation of news.
As a result, positive trading momentum returned to our digital business,
driving growth of £2.6m or 2.1% to £130.0m (2023: £127.4m). Revenue per
thousand pages (RPM) across our digital estate increased by 19%. The
business's Black Friday trading period benefited from seasonally skewed
activities such as the OK! Beauty Box advent calendar and affiliates.
Operational expertise
In print, we have a highly skilled team with decades of operational expertise
which allows us to optimise our business to deliver revenue of £406.7m (2023:
£438.8m). The teams achieve this through data, supporting our titles with
market-leading promotional deals, additional pagination and standalone
supplements, as well as maintaining high levels of availability. The team
carefully manages the value exchange between our readership and the increasing
cover prices, which is needed to offset the steady 17% year-on-year decline in
volumes. Together, this means circulation, which represents 55% of our
revenues, declined 4.5% to £298.5m (2023: £312.5m), and print advertising
declined by £11.2m or 14.6%, which is well ahead of the volume decline. The
print advertising performance demonstrates how valuable this advertising
format remains to many of our partners.
Strong track record of cost and cash management
We have a strong track record of cost management and driving responsible
efficiencies. This is an important dynamic, as cost savings are required to
bridge the current gap between the decline in print and the growth in digital,
to position the business for the long term. At the end of 2023, we made the
decision to restructure our business so that we could deliver our cost-saving
target to reduce total adjusted operating costs by 5-6%. The cost reduction
programme meant that headcount reduced by 13% year-on-year. This large-scale
programme enabled changes in how we allocated and operated our editorial
resource. A significant step has been the creation of the Content Hub, a
brand-agnostic central pool of digital content specialists to improve overall
levels of productivity and support journalists in enhancing their offering to
our readership.
Newsprint costs have also been expertly managed. On a like- for- like basis
these costs declined 28%, well in excess of our Group's 17% volume decline,
helped by a further unwinding of inflationary pressures. The teams have been
prudent in extending contracts to create more stability in our cost base in
2025. In 2024, we delivered operational cost savings of 6.5% on a
like-for-like basis and an improved operating margin of 19% (2023: 17%).
We continued to manage our cash efficiently with cash conversion strong at
105%, supported by net adjusted working capital inflows. This, along with the
three property disposals (net proceeds from property disposals: £14.6m) meant
we closed the year with net debt of £14.2m (2023: £10.1m). The £4.4m
working capital includes material timing differences which we expect to
reverse during the first half of 2025. Pension scheme contributions during the
year were £59.2m (excluding £3.3m paid into escrow and restricted bank
accounts), historical legal issue claim settlements totalled £9.1m and we
incurred £16.5m of cash restructuring payments. Together these non-operating
cash outflows amount to £84.8m.
During the year we continued to invest to fund the development of our US
operations, as well as our ecommerce platform Yimbly and our proprietary ad
tech platform, Mantis. We have also been investing in our new platform which
improves the audience experience and this will be rolled out across the
majority of our sites during 2025.
Longer-term considerations underpinned by robust balance sheet
Our high levels of cash generation are used to meet our financial obligations
and provide returns to our shareholders. During 2025, along with our usual
pension scheme contributions, we will also need to fund a one-off payment of
c.£5m to the West Ferry Printers Pension Scheme to correct a historical
procedural issue relating to Barber Window equalisation which we inherited on
the 2018 acquisition of Express Newspapers. It is important to highlight that
this is separate to the triennial pension valuations and funding arrangements,
which remain unchanged. These provide a clear view of our future pension
commitments which will materially step down from the current rate of £59.2m
in 2024 to around £15m in 2028. In terms of our historical legal issues the
estimated cost of resolving these is unchanged, with a remaining provision of
£9.1m at the end of 2024. This is expected to be fully utilised during 2025
and into 2026.
The Group has a robust balance sheet with a closing net debt of £14.2m
(inclusive of £2.4m restricted cash) with £35.0m drawn down on our revolving
credit facility. During the year we completed the refinancing of our banking
facilities, increasing the Group's revolving credit facility to £145.0m and
extending the term until December 2028 (with a one-year extension option until
December 2029).
2025 outlook
Print represents three quarters of Group revenues and underpins both the
profitability and cash generation of the Group. Our operational experts will
continue to manage the decline in volumes to ensure we deliver a robust
circulation and print advertising performance. This enables the Group to meet
its financial commitments and continue our digital transformation.
The changes to national insurance contributions increases our labour costs by
approximately 2% on an annualised basis. The broader impact of these policy
changes on the macro environment including consumer sentiment and
discretionary spend such as advertising is less clear.
During the year, we expect to reduce total adjusted operating costs by 4-5%.
These savings will be driven by improved organisational efficiency, lower
newsprint volumes and lower general input costs.
Summary income statement
The results have been prepared for the year ended 31 December 2024. The
comparative period has been prepared for the 53-week period ended 31 December
2023. The additional week in 2023 contributed £6.2m of revenue and £0.8m of
operating profit, and the table illustrating the LFL (like-for-like)
performance is shown on page 13.
Adjusted Adjusted YOY Statutory Statutory YOY
2024 2023 change 2024 2023 change
£m £m % £m £m %
Revenue 538.6 568.6 (5.3) 538.6 568.6 (5.3)
Costs (439.1) (475.0) (7.6) (465.9) (523.9) (11.1)
Associates 2.8 2.9 (3.4) 1.5 1.4 4.6
Operating profit 102.3 96.5 6.0 74.2 46.1 61.0
Finance costs (5.1) (3.5) 45.6 (11.4) (9.4) 21.4
Profit before tax 97.2 93.0 4.5 62.8 36.7 71.2
Tax charge (17.5) (24.6) (28.9) (9.2) (15.2) (39.5)
Profit after tax 79.7 68.4 16.5 53.6 21.5 149.8
Earnings per share - basic (p) 25.3 21.8 16.1 17.0 6.8 150.0
Group revenue declined by £30.0m or 5.3% to £538.6m, with print decline of
7.3% and digital growth of 2.1%.
Adjusted costs decreased by £35.9m or 7.6% to £439.1m, more than offsetting
the decline in revenue. The decline in costs was driven by the reduction in
circulation volumes, and the continued unwinding of some of 2022 newsprint
cost inflation alongside the cost reduction programmes. Statutory costs were
lower by £58.0m or 11.1%, due to lower operating costs and lower operating
adjusted items, £26.8m in 2024 versus £48.9m in 2023.
Adjusted operating profit increased by £5.8m or 6.0% to £102.3m, driven by
the cost savings. The adjusted operating margin of 19.0% in 2024 compares to
17.0% for 2023. Statutory operating profit increased by £28.1m or 61.0%,
primarily due to the decrease in operating adjusted items disclosed in the
adjusted operating items table on page 11.
Adjusted earnings per share increased by 3.5p or 16.1% to 25.3p. Statutory
earnings per share increased by 10.2p to 17.0p, principally due to the
increase in operating profit.
Revenue
2024 2023 YOY change %
£m £m
Digital 130.0 127.4 2.1
Print 406.7 438.8 (7.3)
Circulation 298.5 312.5 (4.5)
Advertising 65.4 76.6 (14.6)
Printing 17.3 20.2 (14.5)
Other 25.5 29.5 (13.1)
Other 1.9 2.4 (23.9)
Total revenue 538.6 568.6 (5.3)
Revenue declined overall by £30.0m or 5.3%.
Digital revenue increased by 2.1% to £130.0m (2023: 15.0% decrease). Revenue
has returned to growth as our strategically driven or 'data-led' revenues,
which are more resilient and higher yielding, continued to perform robustly.
We have also seen a better performance across the rest of our digital business
where revenues are more volume sensitive. After periods of decline, open
market prices for mass-scale advertising have stabilised. Similarly, following
the deprioritisation of news by the dominant tech firms, referral traffic has
also stabilised. While page views declined 14% over 2024, momentum improved
over the period and was in growth over quarter four. Our strategy has allowed
us to trade our digital assets more effectively and provide our advertisers
with more valuable data. Data-driven revenues were £59.1m, an increase of
6.8%, and now represent 45% of digital revenue (2023: 43%).
Print revenue decreased by £32.1m or 7.3% (2023: £438.8m). Circulation
revenue declined 4.5%, 3.0% on a LFL basis (2023: £312.5m), with an average
15% increase in cover prices offsetting the ongoing decline in circulation
volumes.
Print advertising revenue declined by £11.2m or 14.6% (2023: decreased
11.9%). On a like-for-like basis this represents a 13.5% decline, which is a
solid performance as these trends outperformed the 17% decline in print
volumes. During the year, the strongest performing sectors for print
advertising included retail, entertainment and the Government.
Print revenue also includes external or third-party printing revenues and
other print-related revenues, which decreased by £6.8m or 13.7% (2023:
decreased 8.0%). These revenues are largely contracted on a cost-plus basis,
and reflect the external market demand for print.
Costs
2024 2023 YOY 2024 2023 YOY
Adjusted Adjusted change Statutory Statutory change
£m £m % £m £m %
Labour (216.0) (223.0) (3.2) (216.0) (223.0) (3.2)
Newsprint (42.2) (59.5) (29.1) (42.2) (59.5) (29.1)
Depreciation and amortisation (19.6) (21.6) (9.4) (19.6) (21.6) (9.4)
Production and sales-related costs (62.0) (68.0) (8.9) (62.0) (68.0) (8.9)
Other (99.3) (102.9) (3.4) (126.1) (151.8) (16.9)
Total costs (439.1) (475.0) (7.6) (465.9) (523.9) (11.1)
Adjusted costs of £439.1m (2023: £475.0m) decreased by £35.9m or 7.6%. On a
like-for-like basis, adjusted costs declined by 6.5%. Labour costs decreased
3.2% as we implemented our 2023 restructuring and efficiency programme in
early 2024, with headcount falling by 13% over the year. Newsprint costs
reduced from lower volumes and the continued unwinding of newsprint cost
inflation.
Statutory costs were lower by £58.0m or 11.1%, due to lower operating costs
and operating adjusted items which were £22.1m lower (£26.8m in 2024
compared to £48.9m in 2023).
Operating adjusted items included in statutory costs above related to the
following:
Statutory Statutory
2024 2023
£m £m
Provision for historical legal issues - 20.2
Restructuring charges in respect of cost reduction measures (8.0) (26.9)
Pension administrative expenses and past service costs (9.7) (5.5)
Property-related items 1.1 (8.0)
Other items (10.2) (9.3)
Impairment of sublease - (19.4)
Operating adjusted items in statutory costs (26.8) (48.9)
The Group estimates for historical legal issues are unchanged, however the
timetable for payment of these costs is likely to extend into 2026. As a
result, there is no change in the provision for historical legal issues
relating to the cost associated with dealing with and resolving civil claims
in relation to historical phone hacking and unlawful information gathering
(2023: £20.2m decrease).
Restructuring charges of £8.0m (2023: £26.9m) principally relate to in-year
cost management actions taken in the period.
Pension costs of £9.7m (2023: £5.5m) comprise external pension
administrative expenses alongside the additional one-off past service cost
within the West Ferry Printers Pensions Scheme which we expect to be paid
during 2025.
Property-related items comprise the profit on sale of assets (£5.5m) less
vacant freehold property-related costs (£1.5m), onerous lease and related
costs (£2.8m) and impairment of vacant freehold property (£0.1m). In 2023,
property-related items related to the impairment of vacant freehold property
(£4.3m), vacant freehold property-related costs (£1.4m) and onerous lease
and related costs (£2.6m) less the profit on sale of assets (£0.3m).
Other adjusted items comprise adviser costs in relation to the defined benefit
pension schemes (£6.1m); the Group's legal fees in respect of historical
legal issues (£1.0m); internal pension administrative expenses (£0.5m);
corporate simplification costs (£0.5m); and other restructuring-related
project costs (£2.1m). In 2023, other adjusted items comprised the Group's
legal fees in respect of historical legal issues (£5.3m); adviser costs in
relation to the defined benefit pension schemes (£2.5m); internal pension
administrative expenses (£0.6m); corporate simplification costs (£0.5m); and
other restructuring-related project costs (£0.7m) less a reduction in
National Insurance costs relating to share awards (£0.3m).
The impairment of a sublease during 2023 represented the £10.8m impairment of
a finance lease receivable along with the subsequent recognition of onerous
costs of £8.6m of the vacant site following the sub-lessee entering
administration during the prior year.
Adjusted operating profit bridge
Adjusted
£m
FY23 97
Revenue mix (30)
Inflation & volume 13
Efficiencies 35
Investment (11)
Other (2)
FY24 102
Adjusted operating profit of £102.3m was an increase of £5.8m or 6.0%,
reflecting the decline in revenue of £30.0m or 5.3%, mitigated by a £35.9m
or 7.6% decrease in adjusted operating costs. This meant that the adjusted
operating margin increased by 2.0 percentage points from 17.0% in 2023 to
19.0% in 2024.
The net cost saving of £35.9m was driven mainly from efficiencies. A majority
of these related to labour costs which were lower following the cost reduction
programmes, with the balance coming from other operational costs, primarily
newsprint. Investments were made into our US operations, our ecommerce market
place Yimbly, our proprietary ad tech platform Mantis, and the new website
platform for our digital publications.
Reconciliation of statutory to adjusted results
Operating Pension
Statutory adjusted Adjusted interest finance Adjusted
results items £m charge results
£m £m £m £m
Revenue 538.6 - - - 538.6
Operating profit 74.2 28.1 - - 102.3
Profit before tax 62.8 28.1 2.9 3.4 97.2
Profit after tax 53.6 21.4 2.2 2.5 79.7
Basic earnings per share (p) 17.0 6.8 0.7 0.8 25.3
The Group excludes adjusted operating items and the pension finance charge
from the adjusted results. Adjusted items relate to costs or income 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.
Items are adjusted on the basis that they distort the underlying performance
of the business where they relate to material items that can recur (including
impairment, restructuring, tax rate changes and profit or loss on the sale of
freehold buildings) or relate to historical liabilities (including historical
legal and contractual issues, and defined benefit pension schemes which are
all closed to future accrual).
Other items may be included in adjusted items if they are not expected to
recur in future years, such as property rationalisation and items such as
transaction and restructuring costs incurred on acquisitions or the profit or
loss on the sale of subsidiaries or associates.
Management excludes these from the results that it uses to manage the business
and on which bonuses are based to reflect the underlying performance of the
business and believes that the adjusted results, presented alongside the
statutory results, provide users with additional useful information. Further
details on the items excluded from the adjusted results are set out in note
20.
Like-for-like comparison
vs 53 week LFL vs 52 week
FY 2024 FY 2024
YOY YOY
% %
Digital 2.1 2.3
Print (7.3) (6.0)
Circulation (4.5) (3.0)
Advertising (14.6) (13.5)
Group revenue (5.3) (4.2)
Adjusted operating costs YOY decline % (7.6) (6.5)
The 2024 results have been prepared on a calendar basis, for the 12-month
period ended 31 December 2024. The comparative period, the 2023 results, has
been prepared for the 53 weeks ended 31 December 2023. The revenue and costs
have been adjusted to show the numbers on a 52-week like-for-like basis. The
additional week added £6.2m to revenue and £0.8m to operating profit.
Balance sheet and cash flows
Historical legal issues provision
The historical legal issues provision relates to the cost associated with
dealing with and resolving civil claims in relation to historical phone
hacking and unlawful information gathering. Payments of £9.1m have been made
during the year. At the year end, a provision of £9.1m remains outstanding
and this represents the current best estimate of the amount required to
resolve this historical matter. Further details relating to the nature of the
liability, the calculation basis and the expected timing of payments are set
out in note 18.
Decrease in accounting pension deficit
The IAS 19 pension deficit (net of deferred tax) in respect of the Group's
defined benefit pension schemes decreased by £43.1m from £77.1m at 2023 to
£34.0m at the year end. The decrease in the deficit is primarily driven by
the Group contributions. The favourable effect of the increase in discount
rate and change in demographic assumptions during the year were fully
mitigated by adverse investment returns.
Group contributions in respect of the defined benefit schemes in 2024 were
£59.2m (2023: £60.0m). Contributions in 2025 are expected to be £55.7m
under the current schedule of contributions. This excludes the c.£5m one-off
payment to West Ferry Printers Pension Scheme. Also, an additional £5.5m is
to be transferred to secure bank and escrow accounts during the year for two
of the schemes which is recognised in our Consolidated Balance Sheet, and
which may be transferred to the corresponding Schemes at a later date,
depending on their funding status.
Profit to cash measure
This ratio is a measure of our effectiveness at working capital management. It
is calculated as our adjusted operating cash flow as a proportion of adjusted
operating profit.
2024 2023
£m £m
Adjusted operating profit 102.3 96.5
Depreciation and amortisation 19.6 21.6
Adjusted EBITDA 121.9 118.1
Working capital movements 4.4 (3.9)
Other 2.9 1.3
Associates (2.8) (2.9)
Adjusted cash generated from operations 126.4 112.6
Lease payments (7.3) (5.3)
Capital expenditure (11.8) (15.4)
Adjusted operating cash flow 107.3 91.9
Profit to cash ratio 105% 95%
During the year, adjusted operating profit was £102.3m (2023: £96.5m) and
the adjusted operating cash inflow was £107.3m (2023: £91.9m) with a profit
to cash ratio of 105% reflecting efficient ongoing cash management. Adjusted
working capital improved year on year, predominantly from timing differences
on receipts and payments.
Uses for cash
The table below shows how the Group is using the cash generated from
operations to meet its financial obligations. Adjusted cash generated from
operations is adjusted operating cash flow excluding the impact of net lease
payments and capital expenditure.
2024 2023
£m £m
Adjusted cash generated from operations 126.4 112.6
Pension payments to schemes (59.2) (60.0)
Pension payments into escrow (1.9) -
Historical legal issues (9.1) (4.6)
Restructuring (16.5) (18.8)
Capital expenditure (11.8) (15.4)
Proceeds from disposal of property 14.6 -
Final payment on acquisition - (7.0)
Other (23.4) (19.2)
Cash flow before returns to shareholders 19.1 (12.4)
Dividends paid (23.2) (23.1)
Cash flow after returns to shareholders (4.1) (35.5)
Net debt (14.2) (10.1)
Material uses for cash include pension contributions totalling £59.2m (2023:
£60.0m) and restructuring payments of £16.5m (2023: £18.8m) which mainly
relate to the 2023 cost reduction programmes. Other comprises professional
fees in respect of historical legal issues and adviser costs in relation to
the defined benefit pension schemes of £4.2m (2023: £7.8m), net lease
payments of £7.3m (2023: £5.3m), interest paid on borrowings and refinancing
fees of £3.9m (2023: £3.1m) and other movements which account for the
balance of cash flows.
The Group paid a dividend in the period of £23.2m (2023: £23.1m).
Cash balances
Net debt at the year end is £14.2m, inclusive of £2.4m restricted cash, from
£10.1m at the end of 2023. The Group has £35.0m drawn down on its revolving
credit facility, with the overall total cash position of £20.8m at the year
end. The Group has refinanced its banking facilities and has a revolving
credit facility of £145.0m in place to December 2028 with an option to extend
to 2029.
Cash generated from operations on a statutory basis was £89.5m (2023:
£76.4m). The Group presents an adjusted cash flow which reconciles the
adjusted operating profit to the net change in cash and cash equivalents,
which is set out in note 21. A reconciliation between the statutory and the
adjusted cash flow is set out in note 22. The adjusted operating cash flow was
£107.3m (2023: £91.9m).
Dividends
On 2 May 2024, the final dividend proposed for 2023 of 4.46 pence per share
was approved by shareholders at the Annual General Meeting and was paid on 31
May 2024.
An interim dividend for 2024 of 2.88 pence per share was paid on 20 September
2024 (2023: 2.88 pence per share).
The Board proposes a final dividend of 4.46 pence per share for 2024 (2023:
4.46 pence). The final dividend, which is subject to approval by shareholders
at the Annual General Meeting on 1 May 2025, will be paid on 30 May 2025 to
shareholders on the register at 2 May 2025. The Board has considered all
investment requirements and its funding commitments to the defined benefit
pension schemes.
Current trading and outlook
We remain focused on delivering our Customer Value Strategy, optimising our
print assets, controlling our costs and managing our cash to continue building
a more sustainable business for the future. We remain alive to the uncertain
macro environment and dynamic media backdrop. Despite this we continue to
expect digital growth, along with a reduction on adjusted operating costs of
4-5%.
Our financial commitments for the year ahead are similar to 2024
notwithstanding an additional £5m payment to the West Ferry Printers Pension
Scheme, with the remaining pensions contributions, expectations for historical
legal issues and capital expenditure unchanged.
Trading performance across the first two months of 2025 has been encouraging,
supported by growing audience numbers. The Group is confident of delivering in
line with current market expectations for the full year.
Darren Fisher
Chief Financial Officer
4 March 2025
Consolidated income statement
for the year ended 31 December 2024 (53 weeks ended 31 December 2023)
Adjusted items Adjusted items
Adjusted 2024 2024 Statutory Adjusted 2023 Statutory
£m £m 2024 2023 £m 2023
notes £m £m £m
Revenue 4 538.6 - 538.6 568.6 - 568.6
Cost of sales (303.4) - (303.4) (344.7) - (344.7)
Gross profit 235.2 - 235.2 223.9 - 223.9
Distribution costs (36.8) - (36.8) (36.9) - (36.9)
Administrative expenses 5 (98.9) (26.8) (125.7) (93.4) (48.9) (142.3)
Share of results of associates 2.8 (1.3) 1.5 2.9 (1.5) 1.4
Operating profit 102.3 (28.1) 74.2 96.5 (50.4) 46.1
Interest income 6 0.2 - 0.2 1.0 - 1.0
Finance costs 7 (5.3) (2.9) (8.2) (4.5) - (4.5)
Pension finance charge 15 - (3.4) (3.4) - (5.9) (5.9)
Profit before tax 97.2 (34.4) 62.8 93.0 (56.3) 36.7
Tax charge 8 (17.5) 8.3 (9.2) (24.6) 9.4 (15.2)
Profit for the period attributable to equity holders of the parent 68.4 (46.9) 21.5
79.7 (26.1) 53.6
Earnings per share notes 2024 2024 2023 2023
Pence Pence Pence Pence
Earnings per share - basic 10 25.3 17.0 21.8 6.8
Earnings per share - diluted 10 24.9 16.7 21.6 6.8
The above results were derived from continuing operations. Set out in note 20
is the reconciliation between the statutory and adjusted results.
Consolidated statement of comprehensive income
for the year ended 31 December 2024 (53 weeks ended 31st December 2023)
2024 2023
notes £m £m
Profit for the period 53.6 21.5
Items that will not be reclassified to profit and loss:
Actuarial gain/(loss) on defined benefit pension schemes 15 11.4 (0.5)
Tax on actuarial gain/(loss) on defined benefit pension schemes 8 (2.8) 0.1
Share of items recognised by associates after tax - 0.4
Other comprehensive income for the period 8.6 -
Total comprehensive income for the period 62.2 21.5
Consolidated statement of changes in equity
for the year ended 31 December 2024 (53 weeks ended 31 December 2023)
(Accumulated loss) / retained earnings and other reserves
Share premium Capital £m
Share account Merger redemption
capital £m reserve reserve Total
£m £m £m £m
At 26 December 2022 32.2 605.4 17.4 4.4 (21.9) 637.5
Profit for the period - - - - 21.5 21.5
Other comprehensive income for the period - - - - - -
Total comprehensive income for the period - - - - 21.5 21.5
Credit to equity for equity-settled share-based payments - - - - 1.3 1.3
Dividends paid (note 9) - - - - (23.1) (23.1)
Capital reduction (note 19) 605.4
- (605.4) - - -
At 31 December 2023 32.2 - 17.4 4.4 583.2 637.2
Profit for the period - - - - 53.6 53.6
Other comprehensive income for the period - - - - 8.6 8.6
Total comprehensive income for the period - - - - 62.2 62.2
Purchase of own shares (note 19) - - - - (0.6) (0.6)
Credit to equity for equity-settled share-based payments - - - - 2.5 2.5
Tax credit for equity settled share-based payments - - - - 0.5 0.5
Dividends paid (note 9) - - - - (23.2) (23.2)
At 31 December 2024 32.2 - 17.4 4.4 624.6 678.6
Consolidated cash flow statement
for the year ended 31 December 2024 (53 weeks ended 31 December 2023)
2024 2023
notes £m £m
Cash flows from operating activities
Cash generated from operations 11 89.5 76.4
Pension deficit funding payments 15 (59.2) (60.0)
Pension payments into escrow 15 (1.9) -
Income tax paid (2.4) (0.5)
Net cash inflow from operating activities 26.0 15.9
Investing activities
Interest received 6 0.2 0.6
Dividends received from associated undertakings 1.9 1.9
Proceeds on disposal of property, plant and equipment 14.6 0.9
Purchases of property, plant and equipment (1.3) (3.5)
Expenditure on capitalised internally generated development 12 (10.5) (12.8)
Interest received on leases - 0.4
Finance lease receipts - 0.2
Deferred consideration payment - (7.0)
Net cash generated from/(used in) investing activities 4.9 (19.3)
Financing activities
Interest and charges paid on borrowings (3.9) (3.1)
Dividends paid 9 (23.2) (23.1)
Interest paid on leases 16 (1.3) (1.2)
Repayment of obligation under leases 16 (6.0) (4.7)
Purchase of own shares 19 (0.6) -
Drawdown of borrowings 16 5.0 15.0
Net cash used in financing activities (30.0) (17.1)
Net increase/(decrease) in cash and cash equivalents 0.9 (20.5)
Cash and cash equivalents at the beginning of the period 16 19.9 40.4
Cash and cash equivalents at the end of the period 16 20.8 19.9
Consolidated balance sheet
at 31 December 2024 (at 31 December 2023)
notes 2024 2023
£m £m
Non-current assets
Goodwill 12 35.9 35.9
Other intangible assets 12 843.3 840.8
Property, plant and equipment 13 104.2 113.6
Right-of-use assets 14 9.9 13.0
Investment in associates 14.1 14.5
Retirement benefit assets 15 72.4 66.0
1,079.8 1,083.8
Current assets
Inventories 10.2 11.4
Trade and other receivables 87.6 85.1
Current tax receivable 8 6.6 8.1
Cash and cash equivalents 16 20.8 19.9
Other financial assets 15 1.9 -
127.1 124.5
Assets classified as held for sale 17 2.6 11.0
129.7 135.5
Total assets 1,209.5 1,219.3
Non-current liabilities
Trade and other payables - (1.1)
Lease liabilities 16 (23.0) (28.5)
Retirement benefit obligations 15 (117.7) (168.8)
Provisions 18 (21.5) (26.6)
Deferred tax liabilities (210.3) (200.1)
(372.5) (425.1)
Current liabilities
Trade and other payables (105.3) (96.2)
Borrowings 16 (35.0) (30.0)
Lease liabilities 16 (4.3) (4.7)
Provisions 18 (13.8) (26.1)
(158.4) (157.0)
Total liabilities (530.9) (582.1)
Net assets 678.6 637.2
Equity
Share capital 19 32.2 32.2
Merger reserve 19 17.4 17.4
Capital redemption reserve 19 4.4 4.4
Retained earnings and other reserves 19 624.6 583.2
Total equity attributable to equity holders of the parent 678.6 637.2
Notes to the consolidated financial statements
for the year ended 31 December 2024 (53 weeks ended 31 December 2023)
1. General information
The financial information, which comprises the Consolidated income statement,
the Consolidated statement of comprehensive income, the Consolidated cash flow
statement, the Consolidated statement of changes in equity and the
Consolidated balance sheet and related notes ('Consolidated Financial
Information') in the Preliminary Audited Results announcement is derived from
but does not represent the full statutory accounts of Reach plc. The statutory
accounts for the 53 weeks ended 31 December 2023 have been filed with the
Registrar of Companies and those for the year ended 31 December 2024 will be
filed following the Annual General Meeting on 1 May 2025. The auditors'
reports on the statutory accounts for the 53 weeks ended 31 December 2023 and
for the year ended 31 December 2024 were unqualified, do not include reference
to any matters to which the auditors drew attention by way of emphasis of
matter without qualifying the reports and do not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006.
Whilst the Consolidated Financial Information included in this Preliminary
Audited Results Announcement has been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting
Standards (IFRS), this announcement does not itself contain sufficient
information to comply with IFRS. This Preliminary Audited Results Announcement
constitutes a dissemination announcement in accordance with Section 6.3 of the
Disclosure and Transparency Rules (DTR). The Annual Report for the year ended
31 December 2024 will be available on the Company's website at
www.reachplc.com (file:///C%3A/Users/lauraharris/Downloads/www.reachplc.com)
and at the Company's registered office at One Canada Square, Canary Wharf,
London E14 5AP before the end of March 2025 and will be sent to shareholders
who have elected to receive a hard copy with the documents for the Annual
General Meeting to be held on 1 May 2025.
The Consolidated Financial Information has been prepared for the year ended 31
December 2024 and the comparative period has been prepared for the 53 weeks
ended 31 December 2023. Throughout this report, the Consolidated Financial
Information for the year ended 31 December 2024 is referred to and headed 2024
and for the 53 weeks ended 31 December 2023 is referred to and headed 2023.
The presentational currency of the Group is Sterling. The Company presents the
results on a statutory and adjusted basis and revenue trends on a statutory
and like-for-like basis as described in note 2.
2. Accounting policies
Basis of preparation
The Consolidated Financial Information has been prepared in accordance with
UK-adopted international accounting standards ('IFRS') and the applicable
legal requirements of the Companies Act 2006. These standards are subject to
ongoing amendment by the International Accounting Standards Board and are
therefore subject to change. As a result, the Consolidated Financial
Information contained herein will need to be updated for any subsequent
amendment to IFRS or any new standards that are issued. The Consolidated
Financial Information has been prepared under the historical cost convention.
The accounting policies used in the preparation of the Consolidated Financial
Information for the year ended 31 December 2024 and for the 53 weeks ended 31
December 2023 have been consistently applied to all the periods presented.
These Consolidated Financial Statements have been prepared on a going concern
basis.
Going concern basis
The directors have made appropriate enquiries and consider that the Company
and the Group have adequate resources to continue in operational existence for
the foreseeable future, which comprises the period of at least 12 months from
the date of approval of the financial statements.
In accordance with LR 9.8.6(3) of the Listing Rules, and in determining
whether the Group's annual consolidated financial statements can be prepared
on a going concern basis, the directors considered all factors likely to
affect its future development, performance and its financial position,
including cash flows, liquidity position and borrowing facilities, and the
risks and uncertainties relating to its business activities.
The key factors considered by the directors were as follows:
• The performance of the business in 2024 and the progress being made in the
implementation of the Group's Customer Value Strategy and the implications of
the current economic environment including inflationary pressures. The Group
undertakes regular forecasts and projections of trading, identifying areas of
focus for management to improve the delivery of the Customer Value Strategy
and mitigate the impact of any deterioration in the economic outlook;
• The impact of the competitive environment within which the Group's businesses
operate;
• The impact on our business of key suppliers (in particular newsprint) being
unable to meet their obligations to the Group;
• The impact on our business of key customers being unable to meet their
obligations for services provided by the Group;
• The deficit funding contributions to the defined benefit pension schemes and
payments in respect of historical legal issues; and
• The available cash reserves and committed finance facilities available to the
Group. On 12 December 2024, the Group agreed a £145.0m facility, which
expires on 12 December 2028. The Group has drawn down £35.0m on the facility
at the reporting date.
Having considered all the factors impacting the Group's businesses, including
downside sensitivities (relating to trading and cash flow), the directors are
satisfied that the Company and the Group will be able to operate within the
terms and conditions of the Group's financing facilities for the foreseeable
future.
The directors have reasonable expectations that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable
future, which comprises the period of at least 12 months from the date of
approval of the financial statements. Accordingly, they continue to adopt the
going concern basis in preparing the Group's annual consolidated financial
statements.
Changes in accounting policy
The same accounting policies, presentation and methods of computation are
followed in the Consolidated Financial Information as applied in the Group's
latest annual consolidated financial statements for the year ended 31 December
2024.
Alternative performance measures
The Company presents the results on a statutory and adjusted basis and revenue
trends on a statutory and like-for-like basis. The Company believes that the
adjusted basis and like-for-like trends 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, it is 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. An adjusted cash flow is presented in note 21
which reconciles the adjusted operating profit to the net change in cash and
cash equivalents. Set out in note 22 is the reconciliation between the
statutory and adjusted cash flow. Note 23 shows the reconciliation between the
statutory and like-for-like revenue.
Adjusting items
Adjusting items relate to costs or income 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. All
operating adjusting items are recognised within administrative expenses.
Details of adjusting items are set out in note 20 with additional information
in notes 5 and 15.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year,
are discussed below:
Historical legal issues (note 18)
The historical legal issues provision relates to the cost associated with
resolving civil claims in relation to historical phone hacking and unlawful
information gathering. The provision consists of known claims and the
associated costs. The key uncertainties in relation to this matter relate to
how each claim progresses, the amount of any settlement and the associated
legal costs. Our assumptions have been based on historical trends, our
experience and the expected evolution of claims and costs.
In December 2023, a judgment was handed down in respect of four test claims
and as a result all claims issued after 31 October 2020 are now likely to be
dismissed as time barred, other than where individuals can demonstrate
specific exceptional circumstances. This significantly reduced the amounts
that are expected to be paid out. On 17 May 2024, the Claimants' Application
for Permission to Appeal that decision was refused. This means that the
Judge's ruling on limitation stands and no further appeal against it is
possible. This provides us with further certainty in respect of the level of
our provisioning. There have been no changes to the provision other than
settlements made during the period. The majority of the provision is expected
to be utilised within the next two years.
Our view on the range of outcomes at the reporting date for the provision,
applying more and less favourable outcomes to all aspects of the provision is
£4m to £16m (2023: £12m to £22m). Despite making a best estimate, the
timing of utilisation and ongoing legal matters related to the provided-for
claims could mean that the final outcome is outside of the range of outcomes.
Retirement benefits (note 15)
Actuarial assumptions adopted and external factors can significantly impact
the surplus or deficit of defined benefit pension schemes. Valuations for
funding and accounting purposes are based on assumptions about future economic
and demographic variables. These result in risk of a volatile valuation
deficit and the risk that the ultimate cost of paying benefits is higher than
the current assessed liability value. Advice is sourced from independent and
qualified actuaries in selecting suitable assumptions at each reporting date.
Impairment review (note 12)
There is uncertainty in the value-in-use calculation. The most significant
area of uncertainty relates to expected future cash flows for the
cash-generating unit. Determining whether the carrying values of assets in a
cash-generating unit are impaired requires an estimation of the value-in-use
of the cash-generating unit to which these have been allocated. The
value-in-use calculation requires the Group to estimate the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate
in order to calculate present value. Projections are based on both internal
and external market information and reflect past experience. The discount rate
reflects the weighted average cost of capital of the Group.
Property provisions (note 18)
Provisions are measured at the best estimate of the expenditure required to
settle the obligation based on the assessment of the related facts and
circumstances at each reporting date. There is uncertainty in relation to the
size and period over which the provision will be utilised and this is
dependent on our ability to sublease the vacant properties. We have assumed no
subletting but if this were to change, there could be a material impact on the
provision.
Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, described above,
management has made the following judgements that have the most significant
effect on the amounts recognised in the financial statements:
Indefinite life assumption in respect of publishing rights and titles (note
12)
There is judgement required in continuing to adopt an indefinite life
assumption in respect of publishing rights and titles. The directors consider
publishing rights and titles (with a carrying amount of £818.7m) have
indefinite economic lives due to the longevity of the brands and the ability
to evolve them in an ever-changing media landscape. The brands are central to
the delivery of the Customer Value Strategy which is delivering digital
revenue growth. At each reporting date management review the suitability of
this assumption.
Identification of cash-generating units (note 12)
There is judgement required in determining the cash-generating unit relating
to our Publishing brands. At each reporting date management review the
interdependency of revenues across our portfolio of Publishing brands to
determine the appropriate cash-generating unit. The Group operates its
Publishing brands such that a majority of the revenues are interdependent and
revenue would be materially lower if brands operated in isolation. As such,
management do not consider that an impairment review at an individual brand
level is appropriate or practical. As the Group continues to centralise
revenue generating functions and has moved to a matrix operating structure
over the past few years, all of the individual brands in Publishing have
increased revenue interdependency and are assessed for impairment as a single
Publishing cash-generating unit.
Historical legal issues (note 18)
Following the judgment handed down on 15 December 2023, all claims issued
after 31 October 2020 are now likely to be considered time barred and
subsequently dismissed, other than where individuals can demonstrate there
were exceptional circumstances why they could not have been aware of their
putative claims.
Subsequently, the test claimants' application for permission to appeal was
refused by the trial judge on 9 February 2024, with claimants having a further
short period to apply for permission to appeal to the Court of Appeal. On 17
May 2024, the Application for Permission to Appeal was refused by the Court of
Appeal. This means that the Judge's ruling on limitation stands and no further
appeal against the test claims being time barred is possible. As such no
contingent liability has been disclosed in the accounts.
3. Segments
The performance of the Group is presented as a single reporting segment as
this is the basis of internal reports regularly reviewed by the Board and
chief operating decision maker (executive directors) to allocate resources and
to assess performance. The Group's operations are primarily located in the UK
and the Group is not subject to significant seasonality during the year.
4. Revenue
2024 2023
£m £m
Print 406.7 438.8
Circulation 298.5 312.5
Advertising 65.4 76.6
Printing 17.3 20.2
Other 25.5 29.5
Digital 130.0 127.4
Other 1.9 2.4
Total revenue 538.6 568.6
The Group's operations are located primarily in the UK.
5. Operating adjusted items
2024 2023
£m £m
Provision for historical legal issues (note 18) - 20.2
Restructuring charges in respect of cost reduction measures (note 18) (8.0) (26.9)
Pension administrative expenses and past service costs (note 15) (9.7) (5.5)
Property-related items (note 20) 1.1 (8.0)
Other items (note 20) (10.2) (9.3)
Impairment of sublease - (19.4)
Operating adjusted items included in administrative expenses (26.8) (48.9)
Operating adjusted items included in share of results of associates (1.3) (1.5)
Total operating adjusted items (28.1) (50.4)
Operating adjusted items relate to costs or income 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. Set out in
note 20 is the reconciliation between the statutory and adjusted results which
includes descriptions of the items included in adjusted items.
The Group estimates for historical legal issues are unchanged, however the
timetable for payment of these costs is likely to extend into 2026. As a
result, there is no change in the provision for historical legal issues
relating to the cost associated with dealing with and resolving civil claims
in relation to historical phone hacking and unlawful information gathering
(2023: £20.2m decrease) (note 18).
Restructuring charges of £8.0m (2023 £26.9m) principally relate to in-year
cost management actions taken in the period.
Pension costs of £9.7m (2023: £5.5m) comprise external pension
administrative expenses of £4.7m (2023: £5.5m) alongside the additional
one-off past service cost of £5.0m relating to a Barber Window equalisation
adjustment identified by the Trustees of the West Ferry Printers Pension
Scheme (the 'WF Scheme') during the year.
Property-related items comprise the profit on sale of assets (£5.5m) less
vacant freehold property-related costs (£1.5m), onerous lease and related
costs (£2.8m) and impairment of vacant freehold property (£0.1m). In 2023,
property-related items related to the impairment of vacant freehold property
(£4.3m), vacant freehold property-related costs (£1.4m) and onerous lease
and related costs (£2.6m) less the profit on sale of assets (£0.3m).
Other adjusted items comprise adviser costs in relation to the defined benefit
pension schemes (£6.1m), the Group's legal fees in respect of historical
legal issues (£1.0m), internal pension administrative expenses (£0.5m),
corporate simplification costs (£0.5m), and other restructuring-related
project costs (£2.1m). In 2023, other adjusted items comprised the Group's
legal fees in respect of historical legal issues (£5.3m), adviser costs in
relation to the defined benefit pension schemes (£2.5m), internal pension
administrative expenses (£0.6m), corporate simplification costs (£0.5m), and
other restructuring-related project costs (£0.7m) less a reduction in
National Insurance costs relating to share awards (£0.3m).
The impairment of a sublease during 2023 represented the £10.8m impairment of
a finance lease receivable along with the subsequent recognition of onerous
costs of £8.6m of the vacant site following the sub-lessee entering
administration during the prior year.
6. Interest income
2024 2023
£m £m
Interest income on bank deposits 0.2 0.6
Interest on finance lease receivable - 0.4
Interest income 0.2 1.0
7. Finance costs
2024 2023
£m £m
Interest and charges on borrowings (4.0) (3.3)
Interest on lease liabilities (1.3) (1.2)
Adjusted finance costs (5.3) (4.5)
Other interest costs (note 8) (2.9) -
Finance costs (8.2) (4.5)
8. Tax charge
2024 2023
£m £m
Corporation tax charge for the period (2.1) (5.5)
Prior period adjustment 0.6 (1.1)
Current tax charge (1.5) (6.6)
Deferred tax charge for the period (10.8) (8.1)
Prior period adjustment 3.1 (1.0)
Deferred tax rate change - 0.5
Deferred tax charge (7.7) (8.6)
Tax charge (9.2) (15.2)
Reconciliation of tax charge 2024 2023
£m £m
Profit before tax 62.8 36.7
Standard rate of corporation tax of 25.0% (2023: 23.5%) (15.7) (8.6)
Variance in overseas tax rates 1.2 0.9
Impact of change in tax rates - 0.5
Tax effect of permanent items that are not included in determining taxable 1.8 (5.8)
profit
Deferred tax not recognised (9.0) (0.4)
Prior period adjustment 3.7 (2.1)
Capital loss on disposal of property 8.4 -
Tax effect of share of results of associates 0.4 0.3
Tax charge (9.2) (15.2)
The standard rate of corporation tax for the period is 25.0% (2023: 23.5%).
The current tax receivable of £6.6m (2023: £8.1m) primarily comprises
residual overpayments held with HMRC following the agreement of the
deductibility of certain costs. In 2023 the current tax receivable of £8.1m
was net of the uncertain tax provision of £23.4m held in respect of this
matter. £2.9m of related interest (note 7) has been recognised in the period
upon agreement of this position, reducing the current tax receivable.
The tax on actuarial gains (2023: losses) on defined benefit pension schemes
taken to the consolidated statement of comprehensive income is a deferred tax
debit of £2.8m (2023: credit of £0.1m).
The amount taken to the consolidated income statement as a result of pension
contributions was £11.6m (2023: £11.4m).
9. Dividends
2024 2023
Pence Pence
per share per share
Amounts recognised as distributions to equity holders in the period
Dividends paid per share - prior year final dividend 4.46 4.46
Dividends paid per share - interim dividend 2.88 2.88
Total dividends paid per share 7.34 7.34
Dividend proposed per share but not paid nor included in the accounting 4.46 4.46
records
The Board proposes a final dividend for 2024 of 4.46 pence per share. An
interim dividend for 2024 of 2.88 pence per share was paid on 20 September
2024 bringing the total dividend in respect of 2024 to 7.34 pence per share.
The 2024 final dividend payment is expected to amount to £14.1m.
On 2 May 2024, the final dividend proposed for 2023 of 4.46 pence per share
was approved by shareholders at the Annual General Meeting and was paid on 31
May 2024.
Total dividends paid in 2024 were £23.2m (2023 final dividend payment of
£14.1m and 2024 interim dividend payment of £9.1m).
10. Earnings per share
Basic earnings 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 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.
2024 2023
Thousand Thousand
Weighted average number of ordinary shares for basic earnings per share 315,352 314,206
Effect of potential dilutive ordinary shares in respect of share awards 4,582 2,893
Weighted average number of ordinary shares for diluted earnings per share 319,934 317,099
The weighted average number of potentially dilutive ordinary shares not
currently dilutive was 7,625,633 (2023: 6,328,039).
Statutory earnings per share 2024 2023
Pence Pence
Earnings per share - basic 17.0 6.8
Earnings per share - diluted 16.7 6.8
Adjusted earnings per share 2024 2023
Pence Pence
Earnings per share - basic 25.3 21.8
Earnings per share - diluted 24.9 21.6
Set out in note 20 is the reconciliation between the statutory and adjusted
results.
11. Cash flows from operating activities
2024 2023
£m £m
Operating profit 74.2 46.1
Depreciation of property, plant and equipment 9.4 13.9
Depreciation of right-of-use assets 2.8 2.8
Amortisation of other intangible assets 7.4 4.9
Impairment of property, plant and equipment 0.4 4.7
Impairment of finance lease receivable - 10.8
Impairment of right-of-use assets 0.9 1.3
Impairment of other intangible assets 0.6 -
Profit on disposal of property, plant and equipment (5.5) (0.3)
Profit on early termination of leases (0.3) -
Share of results of associates (1.5) (1.4)
Share-based payments charge 2.5 1.3
Pension administrative expenses and past service costs 9.7 5.5
Operating cash flows before movements in working capital 100.6 89.6
Decrease in inventories 1.2 1.5
(Increase)/decrease in receivables (2.6) 9.5
Decrease in payables and provisions (9.7) (24.2)
Cash flows from operating activities 89.5 76.4
12. Goodwill and other intangible assets
The carrying value of goodwill and other intangible assets is:
Goodwill Publishing Internally generated assets Intangible
£m rights and titles £m assets
£m £m
Opening carrying value 35.9 818.7 22.1 876.7
Additions - - 10.5 10.5
Amortisation - - (7.4) (7.4)
Impairment - - (0.6) (0.6)
Closing carrying value 35.9 818.7 24.6 879.2
During the year, the Group capitalised internally generated assets relating to
software and website development costs of £10.5m (2023: £12.8m). These
assets are amortised using the straight-line method over their estimated
useful lives (3-5 years).
Publishing rights and titles are not amortised. There is judgement required in
continuing to adopt an indefinite life assumption in respect of publishing
rights and titles. The directors consider publishing rights and titles (with a
carrying amount of £818.7m) have indefinite economic lives due to the
longevity of the brands and the ability to evolve them in an ever-changing
media landscape. The brands are central to the delivery of the Customer Value
Strategy which is delivering digital revenue growth. This, combined with our
inbuilt and relentless focus on maximising efficiency, gives confidence that
the delivery of sustainable growth in revenue, profit and cash flow is
achievable in the future.
There is judgement required in determining the cash-generating units. At each
reporting date management review the interdependency of revenues across our
Publishing brands to determine the appropriate cash-generating unit. The Group
operates its Publishing brands such that a majority of the revenues are
interdependent and revenue would be materially lower if brands operated in
isolation. As such, management do not consider that an impairment review at an
individual brand level is appropriate or practical. As the Group continues to
centralise revenue generating functions and has moved to a matrix operating
structure over the past few years all of the individual brands in Publishing
have increased revenue interdependency and are assessed for impairment as a
single Publishing cash-generating unit.
The Group tests the carrying value of assets at the cash-generating unit level
for impairment annually or more frequently if there are indicators that assets
might be impaired. The review is undertaken by assessing whether the carrying
value of assets is supported by their value-in-use which is calculated as the
net present value of future cash flows derived from those assets, using cash
flow projections. If an impairment charge is required this is allocated first
to reduce the carrying amount of any goodwill allocated to the cash-generating
unit and then to the other assets of the cash-generating unit but subject to
not reducing any asset below its recoverable amount.
The impairment review in respect of the Publishing cash-generating unit
concluded that no impairment charge was required.
For the impairment review, cash flows have been prepared based on the approved
Budget for 2025 and projections for a further four years. The prior year was
based on a 10 year model. The reduction in the assessment period reflects the
decline in print volumes and revenues together with the growing relevance of
our digital business. The shorter assessment period requires fewer judgemental
assumptions and involves less uncertainty. The forecasts for 2026 to 2029 are
internal projections. The underlying assumptions assume a continued decline in
print revenues, growth in digital revenues and the associated change in the
cost base as a result of the changing revenue mix, together with ongoing
efficiency initiatives. These projections are used to develop the key
assumption of EBITDA levels across the five-year period. The long-term growth
rate applied beyond the forecast period has been assessed at -0.1% (2023:
0.9%). This is based on the Board's view of being able to maintain EBITDA
broadly at current levels over the forecast period. This growth rate is lower
than the prior year due to being applied at the end of 5 years, instead of 10,
whereby circulation revenue remains a higher overall proportion of total
revenue upon which future declines need to be considered. We continue to
believe that there are significant longer-term benefits of the scale of our
national and local digital audiences and there are opportunities to grow
revenue and profit in the longer term.
The discount rate reflects the weighted average cost of capital of the Group.
The current post-tax and equivalent pre-tax discount rate used is 10.3% (2023:
10.2%) and 15.2% (2023: 13.6%) respectively.
In respect of the values assigned by management to each of the above
assumptions used to develop the key assumption of EBITDA growth, revenue is
based on past performance and current trends, alongside management's planned
pricing strategies and circulation volume trends experienced across the
industry. Operating costs are based on management's forecasts for the current
structure of the business, adjusting for inflationary increases, the
transition of the cost base arising from the shift from print to digital and
ongoing efficiencies. The long-term growth rate used to extrapolate cash flows
beyond the forecast period is based on future anticipated growth
opportunities, including consideration of industry forecasts. The discount
rate reflects specific risks relating to the industry in which the Group
operates.
The impairment review is highly sensitive to reasonably possible changes in
key assumptions used in the value-in-use calculations. In addition, the macro
environment remains uncertain. The headroom in the impairment review is £50m
(2023: £53m). EBITDA in the five-year projections is forecast to remain
broadly consistent over the period, with a CAGR of -0.4% (2023: CAGR of 0.2%).
A decrease in EBITDA is a reasonably possible change, driven by changes such
as print revenue declining at a faster rate than projected, digital revenue
growth being lower than projected or the associated change in the cost base
being different than projected. Such a change would lead to an impairment if
EBITDA in the five-year projections were to decline at a CAGR of 2.0% (2023:
10-year projections declining at 0.6%). Alternatively, an increase in the
discount rate by 0.7 percentage points (2023: 0.6 percentage points) would
lead to the removal of the headroom.
13. Property, plant and equipment
Freehold land and buildings Plant and equipment Asset under construction Total
£m £m £m £m
Cost
At 31 December 2023 155.6 343.2 1.5 500.3
Additions - 0.5 0.6 1.1
Reclassification - 1.8 (1.8) -
Transfer to assets classified as held for sale (10.3) - - (10.3)
At 31 December 2024 145.3 345.5 0.3 491.1
Accumulated depreciation and impairment
At 31 December 2023 (75.6) (311.1) - (386.7)
Charge for the period (2.2) (7.2) - (9.4)
Impairment (0.1) (0.3) - (0.4)
Transfer to assets classified as held for sale 9.6 - - 9.6
At 31 December 2024 (68.3) (318.6) - (386.9)
Carrying amount
At 31 December 2023 80.0 32.1 1.5 113.6
At 31 December 2024 77.0 26.9 0.3 104.2
Impairment of vacant freehold property of £0.1m (2023: £4.3m) (note 5) was
as a result of the carrying value of certain Group properties being in excess
of their market value at the reporting date. Plant and equipment was impaired
by £0.3m in the current period as no longer in use. Plant and equipment was
impaired by £0.4m in 2023 due to site closures and was included within
onerous lease and related costs of £2.6m (note 5).
14. Right-of-use assets
Properties Vehicles Total
£m £m £m
Cost
At 31 December 2023 28.1 3.6 31.7
Additions - 0.7 0.7
Other movements (0.2) - (0.2)
Derecognition at end of lease term (1.8) (1.0) (2.8)
At 31 December 2024 26.1 3.3 29.4
Accumulated depreciation and impairment
At 31 December 2023 (17.1) (1.6) (18.7)
Charge for the period (1.9) (0.9) (2.8)
Impairment (0.9) - (0.9)
Other movements 0.1 - 0.1
Derecognition at end of lease term 1.8 1.0 2.8
At 31 December 2024 (18.0) (1.5) (19.5)
Carrying amount
At 31 December 2023 11.0 2.0 13.0
At 31 December 2024 8.1 1.8 9.9
Impairment of property right-of-use assets of £0.9m (2023: £1.3m) has been
recognised within onerous lease and related costs (note 5). Other movements
include the impact of changes in lease term and rent reviews.
15. Retirement benefit schemes
Defined contribution pension schemes
The Group operates defined contribution pension schemes for qualifying
employees, where the assets of the schemes are held separately from those of
the Group in funds under the control of Trustees.
The current service cost charged to the consolidated income statement for the
year of £15.8m (2023: £17.3m) represents contributions paid by the Group at
rates specified in the scheme rules. All amounts that were due have been paid
over to the schemes at all reporting dates.
Defined benefit pension schemes
Background
The defined benefit pension schemes operated by the Group are all closed to
future accrual. The Group has six defined benefit pension schemes:
• the MGN Pension Scheme (the 'MGN Scheme'), the Trinity Retirement Benefit
Scheme (the 'Trinity Scheme'), the Midland Independent Newspapers Pension
Scheme (the 'MIN Scheme'), the Express Newspapers 1988 Pension Fund (the 'EN88
Scheme'), the Express Newspapers Senior Management Pension Fund (the 'ENSM
Scheme') and the WF Scheme.
Characteristics
The defined benefit pension schemes provide pensions to members, which are
based on their final pensionable salary, normally from age 65 (although some
schemes have some pensions normally payable from an earlier age) plus
surviving spouses or dependants' benefits following a member's death. Benefits
increase both before and after retirement either in line with statutory
minimum requirements or in accordance with the scheme rules if greater. Such
increases are either at fixed rates or in line with retail or consumer prices
but subject to upper and lower limits. All of the schemes are independent of
the Group with assets held independently of the Group. They are governed by
Trustees who administer benefits in accordance with the scheme rules and
appropriate UK legislation. The schemes, with the exception of the ENSM
Scheme, each have a professional or experienced independent Trustee as their
Chairman with generally half of the remaining Trustees nominated by the
members and half by the Group.
Maturity profile and cash flow
Across all of the schemes, the uninsured liabilities related 65% to current
pensioners and their spouses or dependants and 35% to deferred pensioners. The
average term from the period end to payment of the remaining uninsured
benefits is expected to be around 11 years. Uninsured pension payments by the
schemes in 2024, excluding lump sums and transfer value payments, were £77m
and these payments by the schemes are projected to rise to an annual peak in
2034 of £89m and reduce thereafter.
Funding arrangements
The funding of the Group's schemes is subject to UK pension legislation as
well as the guidance and codes of practice issued by the Pensions Regulator.
Funding targets are agreed between each Trustee board and the Group and are
reviewed and revised usually every three years. The funding targets must
include a margin for prudence above the expected cost of paying the benefits
and so are different from the liability value for IAS 19 purposes. The funding
deficits revealed by these triennial valuations are removed over time in
accordance with an agreed recovery plan and schedule of contributions for each
scheme (where applicable). The latest valuation date for the schemes was 31
December 2022. The ENSM Scheme commenced winding up in February 2024.
The funding valuation of the MGN Scheme at 31 December 2022 was agreed on 9
October 2023. This showed a deficit of £219.0m. The Group paid contributions
of £46.0m to the MGN Scheme in 2024 and the agreed schedule of contributions
includes payments of £46.0m per annum (pa) from 2025 until January 2028.
During the year, the Trustees of the MGN Scheme purchased a bulk annuity
policy insuring 18% of the total liabilities of the scheme.
The funding valuation of the Trinity Scheme at 31 December 2022 was agreed on
28 March 2024. This showed a deficit of £5.8m. The Group paid contributions
of £3.5m to this scheme in 2024, and agreed a schedule of contributions of
payments of £5.2m pa to 31 March 2024 and £4.5m pa from 1 April 2024 to 31
December 2027, or if earlier, until the Scheme has reached 100% funding on the
technical provisions basis. 100% funding on this basis was confirmed during
July 2024 and contributions from August 2024, totalling £1.9m during the
period, have subsequently been diverted into an escrow account.
The funding valuation of the MIN Scheme at 31 December 2022 was agreed on 28
March 2024. This showed a deficit of £53.3m. The Group paid contributions of
£9.7m to this scheme in 2024 and the agreed schedule of contributions
features payments of £9.7m in 2025, £10.6m pa in 2026 and 2027 and £11.4m
in 2028.
The funding valuation of the EN88 Scheme at 31 December 2022 was agreed on 27
March 2024. This showed a surplus of £2.0m. Deficit contributions payable to
the Scheme were instead paid into a separate bank account held by the Group
for the period from September 2023 to March 2024. The 2022 valuation does not
provide for any deficit recovery contributions but instead payments are made
to the separate bank account of £1.0m pa until 31 December 2027 or if earlier
when the Scheme has attained full funding on a long term basis (or a specified
trustee release condition occurs, namely that (i) the value of the Scheme
assets is sufficient for the Trustee to enter into a full buy-in, or (ii) an
insolvency event occurs). In 2024, £1.5m of payments were made into the bank
account. In certain events the EN88 Scheme Trustee has the right to have the
bank account balance released to it; its purpose is to avoid future trapped
surplus in the EN88 Scheme.
During 2022, the Trustees of the ENSM Scheme purchased a bulk annuity at no
cost to the Group. The Trustee of the ENSM Scheme subsequently converted this
to a buy-out policy on 28 February 2024, converting all pension liabilities
previously covered by the buy in into individual annuity policies between the
insurer and former scheme members, with the value of the insured liability and
assets removed from the balance sheet. The residual cash held by the ENSM
Scheme is currently held as a surplus until all the costs of the transaction
are known. No further funding is expected.
The funding valuation of the WF Scheme at 31 December 2022 was agreed on 27
March 2024. This showed neither surplus nor deficit. The company ceased
deficit funding payments to the WF Scheme in 2021 which together with a one
off payment enabled the Trustees to purchase a bulk annuity for all known
pension liabilities. During 2024, as part of the due diligence to prepare the
WF Scheme for buy-out, the Trustee identified a required Barber Window
equalisation adjustment dating back to 1990. The impact of the required
adjustment has been recognised in the consolidated income statement as a past
service cost. The additional anticipated £5.0m of funding will be paid during
2025 to cover the additional liability. Following this no further funding is
expected.
Group contributions in respect of the defined benefit pension schemes in the
year were £59.2m (2023: £60.0m).
At the reporting date, the funding deficit in the schemes is expected to be
removed by 2028 through a combination of the contributions and asset returns.
Contributions (which include funding for pension administrative expenses) are
payable monthly. Contributions per the current schedule of contributions are
£61.3m (including £1.0m for the EN88 scheme to a separate bank account and
£4.5m for the Trinity Scheme to the Escrow account) in 2025, £62.1m pa in
2026 and 2027, and £15.3m in 2028.
The future deficit funding commitments are linked to the three-yearly
actuarial valuations. Although the funding commitments do not generally impact
the IAS 19 position, IFRIC 14 guides companies to consider for IAS 19
disclosures whether any surplus can be recognised as a balance sheet asset and
whether any future funding commitments in excess of the IAS 19 liability
should be provisioned for. Based on its interpretation of the rules for each
of the defined benefit pension schemes, the Group considers that it has an
unconditional right to any potential surplus on the ultimate wind-up after all
benefits to members have been paid in respect of all of the schemes except the
WF Scheme. Under IFRIC 14 it is therefore appropriate to recognise any IAS 19
surpluses which may emerge in future and not to recognise any potential
additional liabilities in respect of future funding commitments of all of the
schemes except for the WF Scheme.
The calculation of Guaranteed Minimum Pension ('GMP') is set out in
legislation and members of pension schemes that were contracted out of the
State Earnings-Related Pension Scheme ('SERPS') between 6 April 1978 and 5
April 1997 will have built up an entitlement to a GMP.
GMPs were intended to broadly replicate the SERPS pension benefits but due to
their design they give rise to inequalities between men and women, in
particular, the GMP for a male comes into payment at age 65 whereas for a
female it comes into payment at the age of 60 and GMPs typically receive
different levels of increase to non-GMP benefits. On 26 October 2018, the High
Court handed down its judgment in the Lloyds Trustees vs Lloyds Bank plc and
Others case relating to the equalisation of member benefits for the gender
effects of GMP equalisation. This judgment creates a precedent for other UK
defined benefit schemes with GMPs. The judgment confirmed that GMP
equalisation was required for the period 17 May 1990 to 5 April 1997 and
provided some clarification on legally acceptable methods for achieving
equalisation. An allowance for GMP equalisation was first included within
liabilities at 30 December 2018 and was recognised as a charge for past
service costs in the income statement. In 2020 further clarification was
issued relating to GMP equalisation in respect of transfers out of schemes and
a further allowance for GMP equalisation was included within liabilities at 27
December 2020 and was recognised as a charge for past service costs in the
income statement. The estimate is subject to change as more detailed member
calculations are undertaken, as guidance is issued and/or as a result of
future legal judgments. Past service costs in 2022 related to a Barber Window
equalisation adjustment identified by the Trustees of the MGN Scheme. The
impact relates to the equalisation of retirement ages to 65, which was
previously implemented from 17 May 1990, rather than the date of the Deed of
Amendment of the Rules which was 4 April 1991.
Risks
Valuations for funding and accounting purposes are based on assumptions about
future economic and demographic variables. This results in the risk of a
volatile valuation deficit and the risk that the ultimate cost of paying
benefits is higher than the current assessed liability value.
The main sources of risk are:
• investment risk: a reduction in asset returns (or assumed future asset
returns);
• inflation risk: an increase in benefit increases (or assumed future
increases); and
• longevity risk: an increase in average life spans (or assumed life
expectancy).
These risks are managed by:
• investing in insured annuity policies: the income from these policies exactly
matches the benefit payments for the members covered, removing all of the
above risks. At the reporting date the insured annuity policies covered 23% of
total liabilities;
• investing a proportion of assets in other classes such as Government and
corporate bonds and in liability-driven investments: changes in the values of
the assets aim to broadly match changes in the values of the uninsured
liabilities, reducing the investment risk, however some risk remains as the
durations of the bonds are typically shorter than those of the liabilities and
so the values may still move differently. At the reporting date non-equity
assets amounted to 97% of assets excluding the insured annuity policies;
• investing a proportion of assets in equities: with the aim of achieving
outperformance and so reducing the deficits over the long term. At the
reporting date this amounted to 3% of assets excluding the insured annuity
policies; and
• the gradual sale of equities over time to purchase additional annuity policies
or liability-matching investments: to further reduce risk as the schemes,
which are closed to future accrual, mature.
Pension scheme accounting deficits are snapshots at moments in time and are
not used by either the Group or Trustees to frame funding policy. The Group
and Trustees seek to be aligned in focusing on the long-term sustainability of
the funding policy which aims to balance the interests of the Group's
shareholders and members of the schemes. The Group and Trustees also seek to
be aligned in reducing pensions risk over the long term and at a pace which is
affordable to the Group.
The EN88 Scheme, the ENSM Scheme and the Trinity Scheme have an accounting
surplus at the reporting date, before allowing for the IFRIC 14 asset ceiling.
The WF Scheme was in deficit on the accounting basis at the 2024 year end due
to the Barber Window equalisation adjustment identified in the year. Across
the MGN Scheme and the MIN Scheme, the invested assets are expected to be
sufficient for the schemes to pay the uninsured benefits due up to 2044, based
on the reporting date assumptions. The remaining uninsured benefit payments,
payable from 2045, are due to be funded by a combination of asset
outperformance and the deficit contributions currently scheduled to be paid up
to 31 January 2028 for the MGN Scheme and 31 December 2028 for the MIN Scheme.
For the MGN Scheme and MIN Scheme, actuarial projections at the year-end
reporting date show removal of the accounting deficit by the end of 2026 for
the MGN Scheme and 2027 for the MIN Scheme due to scheduled contributions and
asset returns at the current target rate. From this point, the assets are
projected to be sufficient to fully fund the liabilities on the accounting
basis. The Group is not exposed to any unusual, entity-specific or
scheme-specific risks. Other than the impact of the Barber Window adjustment
relating to the WF scheme and the MGN Scheme purchase of a bulk annuity, there
were no plan amendments, settlements or curtailments in 2024 or 2023 which
resulted in a pension cost.
In June 2023, the UK High Court (Virgin Media v NTL Pension Trustees II
Limited) ruled that certain historical amendments for contracted-out defined
benefit schemes were invalid if they were not accompanied by the correct
actuarial confirmation. In July 2024 the Court of Appeal upheld the High
Court's judgment.
The Group has taken legal advice and conducted investigations into the changes
made to the Schemes across this period. We have not identified any issues and
at this time do not consider there to be a financial impact from this ruling.
The Group will continue to monitor the impact of future developments.
Results
For the purposes of the Group's consolidated financial statements, valuations
have been performed in accordance with the requirements of IAS 19 with scheme
liabilities calculated using a consistent projected unit valuation method and
compared to the estimated value of the scheme assets at 31 December 2024.
Based on actuarial advice, the assumptions used in calculating the scheme
liabilities are:
2024 2023
Financial assumptions (nominal % pa)
Discount rate 5.49 4.62
Retail price inflation rate 3.20 3.08
Consumer price inflation rate 1.0% pa lower than RPI to 2030 and equal to RPI thereafter 1.0% pa lower than RPI to 2030 and equal to RPI thereafter
Rate of pension increases in deferment 2.88 2.71
Rate of pension increases in payment 3.40 3.34
Mortality assumptions - future life expectancies from age 65 (years)
Male currently aged 65 21.2 21.4
Female currently aged 65 23.3 23.7
Male currently aged 55 21.0 21.0
Female currently aged 55 24.2 24.2
The defined benefit pension liabilities are valued using actuarial assumptions
about future benefit increases and scheme member demographics, and the
resulting projected benefits are discounted to the reporting date at
appropriate corporate bond yields. For 2023 and 2024, the financial
assumptions have been derived as a yield curve with different rates per year,
with the figures in the table above representing a weighted average of these
rates across all of the schemes. This is considered to be a more robust and
accurate approach to setting assumptions as it allows for each scheme's
individual circumstances, rather than considering the schemes in aggregate as
has been done in the past.
The discount rate should be chosen to be equal to the yield available on
'high-quality' corporate bonds of appropriate term and currency. For 2023 and
2024, the discount rate has been set as the full corporate bond yield curve.
The inflation assumptions are based on market expectations over the period of
the liabilities. For 2023 and 2024, the inflation assumptions have been set
using the full inflation curve. The RPI assumption is set based on the
break-even RPI inflation curve with a margin deducted. This margin, called an
inflation risk premium, reflects the fact that the RPI market-implied
inflation curve can be affected by market distortions and as a result it is
thought to overstate the underlying market expectations for future RPI
inflation. Allowing for the extent of RPI linkage on the schemes' benefits pre
and post 2030, the average inflation risk premium has been set at 0.2% per
annum to 2030 and 0.4% per annum thereafter. The CPI assumption is set based
on a margin deducted from the RPI assumption, due to lack of market data on
CPI expectations. Following the UK Statistics Authority's announcement of the
intention to align RPI with CPIH from 2030 the assumed gap between RPI and CPI
inflation is 1.0% per annum up to 2030 and 0.0% per annum beyond 2030,
consistent with 2023.
The estimated impacts on the IAS 19 liabilities and on the IAS 19 deficit at
the reporting date, due to a reasonably possible change in key assumptions
over the next year, are set out in the table below:
Effect on Effect on
liabilities deficit
£m
£m
Discount rate +/- 1.0% pa -150/+175 -115/+140
Retail price inflation rate +/- 0.5% pa +19/-19 +12/-12
Consumer price inflation rate +/- 0.5% pa +19/-17 +17/-15
Life expectancy at age 65 +/- 1 year +70/-70 +50/-50
The RPI sensitivity impacts the rate of increases in deferment for some of the
pensions in the EN88 Scheme and some of the pensions in payment for all
schemes except the MGN Scheme. The CPI sensitivity impacts the rate of
increases in deferment for some of the pensions in most schemes and the rate
of increases in payment for some of the pensions in payment for all schemes.
The effect on the deficit is usually lower than the effect on the liabilities
due to the matching impact on the value of the insurance contracts held in
respect of some of the liabilities. Each assumption variation represents a
reasonably possible change in the assumption over the next year but might not
represent the actual effect because assumption changes are unlikely to happen
in isolation.
The estimated impact of the assumption variations makes no allowance for
changes in the values of invested assets that would arise if market conditions
were to change in order to give rise to the assumption variation. If allowance
were made, the estimated impact would likely be lower as the values of
invested assets would normally change in the same directions as the liability
values.
The amounts included in the consolidated income statement, consolidated
statement of comprehensive income and consolidated balance sheet arising from
the Group's obligations in respect of its defined benefit pension schemes are
as follows in the table below.
Past service costs of £5.0m relate to a Barber Window equalisation adjustment
identified by the Trustees of the WF Scheme during the year.
Consolidated income statement 2024 2023
£m £m
Pension administrative expenses (4.7) (5.5)
Past service costs (5.0) -
Pension finance charge (3.4) (5.9)
Defined benefit cost recognised in income statement (13.1) (11.4)
Consolidated statement of comprehensive income 2024 2023
£m £m
Actuarial gain due to liability experience 6.5 14.1
Actuarial gain/(loss) due to liability assumption changes 173.3 (6.9)
Total liability actuarial gain 179.8 7.2
Returns on scheme assets less than discount rate (168.6) (8.7)
Impact of IFRIC 14 0.2 1.0
Total gain/(loss) recognised in statement of comprehensive income 11.4 (0.5)
Consolidated balance sheet 2024 2023
£m £m
Present value of uninsured scheme liabilities (1,240.5) (1,557.7)
Present value of insured scheme liabilities (375.8) (277.9)
Total present value of scheme liabilities (1,616.3) (1,835.6)
Invested and cash assets at fair value 1,195.2 1,455.1
Value of liability-matching insurance contracts 375.8 277.9
Total fair value of scheme assets 1,571.0 1,733.0
Funded deficit (45.3) (102.6)
Impact of IFRIC 14 - (0.2)
Net scheme deficit (45.3) (102.8)
Non-current assets - retirement benefit assets 72.4 66.0
Non-current liabilities - retirement benefit obligations (117.7) (168.8)
Net scheme deficit (45.3) (102.8)
Net scheme deficit included in consolidated balance sheet (45.3) (102.8)
Deferred tax included in consolidated balance sheet 11.3 25.7
Net scheme deficit after deferred tax (34.0) (77.1)
Movement in net scheme deficit 2024 2023
£m £m
Opening net scheme deficit (102.8) (150.9)
Contributions 59.2 60.0
Consolidated income statement (13.1) (11.4)
Consolidated statement of comprehensive income 11.4 (0.5)
Closing net scheme deficit (45.3) (102.8)
Changes in the present value of scheme liabilities 2024 2023
£m £m
Opening present value of scheme liabilities (1,835.6) (1,860.0)
Past service costs (5.0) -
Interest cost (81.6) (88.5)
Actuarial gain - experience 6.5 14.1
Actuarial gain - change to demographic assumptions 23.9 35.7
Actuarial gain/(loss) - change to financial assumptions 149.4 (42.6)
Benefits paid 109.4 105.7
Bulk transfer due to buy-out 16.7 -
Closing present value of scheme liabilities (1,616.3) (1,835.6)
Impact of IFRIC 14 2024 2023
£m £m
Opening impact of IFRIC 14 (0.2) (1.2)
Decrease in impact of IFRIC 14 0.2 1.0
Closing impact of IFRIC 14 - (0.2)
Changes in the fair value of scheme assets 2024 2023
£m £m
Opening fair value of scheme assets 1,733.0 1,710.3
Interest income 78.2 82.6
Actual return on assets less than discount rate (168.6) (8.7)
Contributions by employer 59.2 60.0
Benefits paid (109.4) (105.7)
Administrative expenses (4.7) (5.5)
Bulk transfer due to buy-out (16.7) -
Closing fair value of scheme assets 1,571.0 1,733.0
Fair value of scheme assets 2024 2023
£m £m
UK equities 3.3 2.2
Other overseas equities 34.0 32.5
Property 27.2 28.3
Corporate bonds 250.0 279.0
Fixed interest gilts 1.5 1.1
Liability-driven investment 779.9 1,029.2
Cash and other 99.3 82.8
Invested and cash assets at fair value 1,195.2 1,455.1
Value of insurance contracts 375.8 277.9
Fair value of scheme assets 1,571.0 1,733.0
The assets of the schemes are primarily held in pooled investment vehicles
which are unquoted. The pooled investment vehicles hold both quoted and
unquoted investments. Scheme assets include neither direct investments in the
Company's ordinary shares nor any property assets occupied nor other assets
used by the Group.
When setting the investment strategy, the Trustees of the defined benefit
pension schemes consider a wide range of asset classes for investment, taking
account the expected returns and key individual risks associated with those
asset classes as well as how these risks can be mitigated where appropriate.
The assets of the individual schemes are held across matching and growth
portfolios. Details regarding each scheme's approach to the allocation of the
assets between these portfolios can be found on our website under pension
scheme disclosure notices, www.reachplc.com/pension-scheme-disclosure-notices
(file:///C%3A/Users/lauraharris/Downloads/www.reachplc.com/pension-scheme-disclosure-notices)
, included in the Statement of Investment Principles (SIP).
The purpose of the assets in the matching portfolios is to generate cash flows
to match the expected cash outflows arising from the pension obligations. The
asset classes in the matching portfolios include, but are not limited to,
asset-backed securities, short-duration buy and maintain credit, synthetic
credit, bonds, gilts, swaps, liability-driven investment (LDI) and cash
funds.
The purpose of the assets in the growth portfolios is to generate consistent,
absolute returns while managing downside risks and reducing the chance of
large losses in stress situations. The asset classes in the growth portfolios
include, but are not limited to, equities, bonds, diversified growth,
multi-asset credit, emerging markets, inflation swaps, property,
infrastructure and private credit funds.
The MGN Scheme, the Trinity Scheme and the MIN Scheme also hold bulk annuity
contracts to match the benefits payable to a portion of the scheme's
pensioners.
16. Net debt
The net debt for the Group is as follows:
1 January 2024 Cash IFRS 16 lease liabilities movement
£m flow
£m
New leases 31 December 2024
Loan Interest £m Other movements £m
drawdown £m £m
£m
Liabilities from financing activities
Borrowings (30.0) - (5.0) - - - (35.0)
Lease liabilities (33.2) 7.3 - (1.3) (0.7) 0.6 (27.3)
(63.2) 7.3 (5.0) (1.3) (0.7) 0.6 (62.3)
Current assets
Cash and cash equivalents 19.9 (4.1) 5.0 - - - 20.8
Net cash less lease liabilities (43.3) (41.5)
Net debt (10.1) (4.1) - - - - (14.2)
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of one week or less. The carrying amount of
these assets approximates their fair value. The cash and cash equivalents
disclosed above and in the statement of cash flows include £2.4m (2023:
£0.9m) of restricted cash relating to potential pension contributions to the
EN88 Scheme if the funding is deemed required (note 15). This is not available
for general use within the Group. In addition, whilst not classified as cash
and cash equivalents, this is also true for £1.9m held in escrow in relation
to the Trinity Scheme (note 15), which is recognised within Other financial
assets on the Consolidated Balance Sheet.
Following a refinancing during December 2024, the Group has a revolving credit
facility of £145.0m which expires on 12 December 2028, including an option to
extend by up to one year. The Group had drawings of £35.0m, at the reporting
date. The facility is subject to two covenants: Interest Cover and Net Debt to
EBITDA, both of which were met at the reporting date.
17. Assets classified as held for sale
2024 2023
£m £m
Opening balance 11.0 -
Classified as held for sale in the year (note 13) 0.7 11.0
Disposals (9.1) -
Closing balance 2.6 11.0
At 31 December 2024, two properties were recognised as assets classified as
held for sale with a total carrying value of £2.6m. As part of measuring the
properties at the lower of their carrying amount and fair value less costs to
sell, a £0.1m impairment loss has been recognised within impairment of vacant
freehold property costs (note 5). The fair value was determined by the sale
price or the value of offers received on the property.
18. Provisions
Share-based payments Historical
£m Property Restructuring legal issues Other Total
£m £m £m £m £m
At 1 January 2024 (0.5) (19.1) (12.7) (18.2) (2.2) (52.7)
Charged to income statement (0.3) (1.6) (8.1) - (0.9) (10.9)
Released to income statement - 0.3 0.1 - - 0.4
Utilisation of provision 0.1 2.0 16.5 9.1 0.2 27.9
At 31 December 2024 (0.7) (18.4) (4.2) (9.1) (2.9) (35.3)
The provisions have been analysed between current and non-current as follows:
2024 2023
£m £m
Current (13.8) (26.1)
Non-current (21.5) (26.6)
(35.3) (52.7)
The share-based payments provision relates to National Insurance obligations
attached to the future crystallisation of awards. This provision will be
utilised over the next three years.
The property provision relates to property-related onerous contracts and
onerous committed costs related to vacant properties. The provision will be
utilised over the remaining term of the leases or expected period of vacancy.
The restructuring provision relates to restructuring charges incurred in the
delivery of cost reduction measures. The net charge of £8.0m principally
relates to in-year cost management actions taken in the period (note 5). The
restructuring provision is expected to be utilised within the next year.
The historical legal issues provision relates to the cost associated with
resolving civil claims in relation to historical phone hacking and unlawful
information gathering. The provision consists of known claims and costs. The
key uncertainties in relation to this matter relate to how each claim
progresses, the amount of any settlement and the associated legal costs. Our
assumptions have been based on historical trends, our experience and the
expected evolution of claims and costs. The known and common costs provision
is calculated using the most likely outcome method.
At the period end, a provision of £9.1m remains outstanding and this
represents the current best estimate of the amount required to resolve this
historical matter. The majority of the provision is expected to be utilised
within the next two years (2023: two years).
Our view on the range of outcomes at the reporting date for the provision,
applying more and less favourable outcomes to all aspects of the provision, is
£4m to £16m (2023: £12m to £22m). Despite making a best estimate, the
timing of utilisation and ongoing legal matters related to provided for claims
could mean that the final outcome is outside of the range of outcomes.
The other provision balance of £2.9m at the period end relates to libel and
other matters, the majority of which is expected to be utilised over the next
year.
19 Share capital and reserves
The share capital comprises 322,085,269 (2023: 322,085,269) allotted, called
up and fully paid ordinary shares of 10p each.
The share premium account reflected the premium on issued ordinary shares. On
18 December 2023, a capital reduction of £605.4m became effective. The
balance on the share premium account of £605.4m was cancelled, creating
distributable reserves of the same amount within retained earnings. The merger
reserve comprises the premium on the shares allotted in relation to the
acquisition of Express & Star. The capital redemption reserve represents
the nominal value of the shares purchased and subsequently cancelled under
share buy-back programmes.
The Company holds 3,927,313 shares as Treasury shares (2023: 4,110,884
shares). In 2024, 183,266 shares were withdrawn from Treasury to satisfy the
vesting of awards granted under the Reach Long Term Incentive Plan and buy-out
awards granted in 2023.
Cumulative goodwill written off to accumulated loss and other reserves in
respect of continuing businesses acquired prior to 1998 is £25.9m (2023:
£25.9m). On transition to IFRS, the revalued amounts of freehold properties
were deemed to be the cost of the asset and the revaluation reserve has been
transferred to accumulated loss and other reserves.
Shares purchased by the Trinity Mirror Employees' Benefit Trust are included
in retained earnings and other reserves at £2.6m (2023: £3.8m). During the
year, the Trust purchased 590,205 shares (2023: no shares) for a cash
consideration of £0.6m (2023: nil). The Trust received a payment of £0.6m
from the Company to purchase these shares. During the year, 1,716,112 shares
were released relating to grants made in prior years (2023: 1,229,928).
During the year, awards relating to 2,112,984 shares were granted to executive
directors on a discretionary basis under the Long Term Incentive Plan (2023:
1,623,678). The exercise price of each award is £1 for each block of awards
granted. The awards vest after three years, subject to the continued
employment of the participant and satisfaction of certain performance
conditions and are required to be held for a further two years. During 2023,
awards relating to 394,666 shares were granted to an executive director under
the Long Term Incentive Plan representing a buy-out of awards that were
forfeited on joining the Group. The awards vest in line with the original
vesting dates of the forfeited awards, subject to the continued employment up
to the relevant vesting dates. 61,164 of these shares had a vesting date in
2024 (2023: 95,760 shares).
During the year, awards relating to 3,948,180 shares were granted to senior
managers on a discretionary basis under the Long Term Incentive Plan (2023:
3,085,852). The exercise price of each award is £1 for each block of awards
granted. The awards vest after three years, subject to the continued
employment of the participant and satisfaction of certain performance
conditions.
In 2024, awards relating to 2,400,238 shares were granted to employees on a
discretionary basis under the Save As You Earn Plan. The exercise price of
each award is 89.0 pence. The awards vest after three years, subject to the
continued employment of the participant. The estimated fair value of the
options was £671,587.
During the year, no awards relating to shares were granted to executive
directors under the Restricted Share Plan (2023: no shares).
20. Reconciliation of statutory to adjusted results
Year ended 31 December 2024
Operating Pension
adjusted finance Adjusted interest
Statutory items charge (c) Adjusted
results (a) (b) £m results
£m £m £m £m
Revenue 538.6 - - - 538.6
Operating profit 74.2 28.1 - - 102.3
Profit before tax 62.8 28.1 3.4 2.9 97.2
Profit after tax 53.6 21.4 2.5 2.2 79.7
Basic earnings per share (p) 17.0 6.8 0.8 0.7 25.3
53 weeks ended 31 December 2023
Operating Pension
adjusted finance
Statutory items charge Adjusted
results (a) (b) results
£m £m £m £m
Revenue 568.6 - - 568.6
Operating profit 46.1 50.4 - 96.5
Profit before tax 36.7 50.4 5.9 93.0
Profit after tax 21.5 42.4 4.5 68.4
Basic earnings per share (p) 6.8 13.6 1.4 21.8
(a) Operating adjusted items relate to the items charged or credited to
operating profit as set out in note 5.
(b) Pension finance charge relates to the defined benefit pension schemes
as set out in note 15.
(c) Adjusted interest relates to other interest costs as set out in note
8.
Set out in note 2 is the rationale for the alternative performance measures
adopted by the Group. The reconciliations in this note highlight the impact on
the respective components of the income statement.
Items are adjusted on the basis that they distort the underlying performance
of the business where they relate to material items that can recur (including
impairment, restructuring, tax rate changes and profit or loss on the sale of
freehold buildings) or relate to historical liabilities (including historical
legal and contractual issues, defined benefit pension schemes which are all
closed to future accrual). Other items may be included in adjusted items if
they are not expected to recur in future years, such as property
rationalisation and items such as transaction and restructuring costs incurred
on acquisitions or the profit or loss on the sale of subsidiaries or
associates.
Impairments to non-current assets arise following impairment reviews or where
a decision is made to close or retire printing assets. These non-cash items
are included in adjusted items on the basis that they are material and vary
considerably each year, distorting the underlying performance of the business.
The opening deferred tax position is recalculated in the period in which a
change in the standard rate of corporation tax has been enacted or
substantively enacted by parliament. The impacts of the change in rates are
included in adjusted items on the basis that when they occur they are
material, distorting the underlying performance of the business.
Provision for historical legal issues relates to the cost associated with
dealing with and resolving civil claims for historical phone hacking and
unlawful information gathering. This is included in adjusted items as the
amounts are material, it relates to historical matters and movements in the
provision can vary year to year.
The Group's defined benefit pension schemes are all closed to new members and
to future accrual and are therefore not related to the current business. The
pension administration expenses and the pension finance charge are included in
adjusted items as the amounts are significant and they relate to the
historical pension commitment.
Also included in adjusted items in 2024 are vacant freehold property-related
costs (£1.5m), onerous lease and related costs (£2.8m), impairment of vacant
freehold property (£0.1m), the Group's legal fees in respect of historical
legal issues (£1.0m), adviser costs in relation to the defined benefit
pension schemes (£6.1m), internal pension administrative expenses (£0.5m),
corporate simplification costs (£0.5m), and other restructuring-related
project costs (£2.1m) less the profit on sale of assets (£5.5m). These are
included in adjusted items as they relate to historical liabilities or are
one-off items not expected to recur.
Also included in adjusted items in 2023 were the impairment of finance lease
receivable of £10.8m and recognition of onerous costs of £8.6m of a vacant
print site where the sub-lessee entered into administration during 2023. Other
adjusted items comprised impairment of vacant freehold property (£4.3m),
vacant freehold property-related costs (£1.4m), onerous lease and related
costs (£2.6m), the Group's legal fees in respect of historical legal issues
(£5.3m), adviser costs in relation to the defined benefit pension schemes
(£2.5m), internal pension administrative expenses (£0.6m), corporate
simplification costs (£0.5m), and other restructuring-related project costs
(£0.7m) less a reduction in National Insurance costs relating to share awards
(£0.3m) and the profit on sale of impaired assets (£0.3m). These were
included in adjusted items as they related to historical liabilities or are
one-off items not expected to recur.
21. Adjusted cash flow
2024 2023
£m £m
Adjusted operating profit 102.3 96.5
Depreciation and amortisation 19.6 21.6
Adjusted EBITDA 121.9 118.1
Working capital movements 4.4 (3.9)
Net capital expenditure (11.8) (15.4)
Net interest paid on leases (1.3) (0.8)
Finance lease receipts - 0.2
Repayment of obligation under leases (6.0) (4.7)
Other 2.9 1.3
Associates (2.8) (2.9)
Adjusted operating cash flow 107.3 91.9
Interest and charges payments and receipts (3.7) (2.5)
Income tax paid (2.4) (0.5)
Restructuring payments (16.5) (18.8)
Historical legal issues payments (9.1) (4.6)
Dividends paid (23.2) (23.1)
Purchase of own shares (0.6) -
Pension funding payments (59.2) (60.0)
Pension payments into escrow (1.9) -
Dividends received from associated undertakings 1.9 1.9
Legal fee payments in respect of historical legal issues (0.8) (5.3)
Adviser cost payments in relation to defined benefit schemes (3.4) (2.5)
Proceeds from disposal of property 14.6 -
Other adjusted items payments (7.1) (5.0)
Net cash flow before acquisitions (4.1) (28.5)
Bank facility drawdown 5.0 15.0
Acquisition-related cash flows - (7.0)
Net increase/(decrease) in cash and cash equivalents 0.9 (20.5)
22. Reconciliation of statutory to adjusted cash flow
Year ended 31 December 2024 Statutory (a) (b) Adjusted
2024 £m £m 2024
£m £m
Cash flows from operating activities
Cash generated from operations 89.5 (19.1) 36.9 107.3 Adjusted operating cash flow
Pension deficit funding payments (59.2) - - (59.2) Pension funding payments
Pension payments into escrow (1.9) - - (1.9) Pension payments into escrow
- - (16.5) (16.5) Restructuring payments
- - (9.1) (9.1) Historical legal issues payments
- - (0.8) (0.8) Legal fee payments in respect of historical legal issues
- - (3.4) (3.4) Adviser cost payments in relation to defined benefit schemes
- - (7.1) (7.1) Other adjusted items payments
Income tax paid (2.4) - - (2.4) Income tax paid
Net cash inflow from operating activities 26.0
Investing activities
Interest received 0.2 - - 0.2 Interest and charges payments and receipts
Dividends received from associated undertakings 1.9 - - 1.9 Dividends received from associated undertakings
Proceeds on disposal of property, plant and equipment 14.6 - - 14.6 Proceeds from disposal of property
Purchases of property, plant and equipment (1.3) 1.3 - - Net capital expenditure
Expenditure on capitalised internally generated development (10.5) 10.5 - - Net capital expenditure
Net cash generated from investing activities 4.9
Financing activities
Interest and charges paid on borrowings (3.9) - - (3.9) Interest and charges payments and receipts
Dividends paid (23.2) - - (23.2) Dividends paid
Interest paid on leases (1.3) 1.3 - - Net interest paid on leases
Repayment of obligations under leases (6.0) 6.0 - - Repayment of obligation under leases
Purchase of own shares (0.6) - - (0.6) Purchase of own shares
Drawdown of borrowings 5.0 - - 5.0 Bank facility drawdown
Net cash used in financing activities (30.0)
Net increase in cash and cash equivalents 0.9 - - 0.9
(a) Items included in the statutory cash flow on separate lines which for
the adjusted cash flow are included in adjusted operating cash flow.
(b) Payments in respect of adjusted items are shown separately in the
adjusted cash flow.
53 weeks ended 31 December 2023 Statutory (a) (b) Adjusted
2023 £m £m 2023
£m £m
Cash flows from operating activities
Cash generated from operations 76.4 (20.7) 36.2 91.9 Adjusted operating cash flow
Pension deficit funding payments (60.0) - - (60.0) Pension funding payments
- - (18.8) (18.8) Restructuring payments
- - (4.6) (4.6) Historical legal issues payments
- - (5.3) Legal fee payments in respect of historical legal issues
(5.3)
- - (2.5) Adviser cost payments in relation to defined benefit schemes
(2.5)
- - (5.0) (5.0) Other adjusted items payments
Income tax paid (0.5) - - (0.5) Income tax paid
Net cash inflow from operating activities 15.9
Investing activities
Interest received - 0.6 Net interest and charges payments and receipts
0.6 -
Dividends received from associated undertakings - 1.9 Dividends received from associated undertakings
1.9 -
Proceeds on disposal of property, plant and equipment 0.9 (0.9) - - Net capital expenditure
Purchases of property, plant and equipment (3.5) 3.5 - - Net capital expenditure
Expenditure on capitalised internally generated development (12.8) 12.8 - - Net capital expenditure
Interest received on leases 0.4 (0.4) - - Net interest paid on leases
Finance lease receipts 0.2 (0.2) - - Finance lease receipts
Deferred consideration payment (7.0) - - (7.0) Acquisition-related cash flow
Net cash used in investing activities (19.3)
Financing activities
Interest and charges paid on borrowings - - (3.1) Net interest and charges payments and receipts
(3.1)
Dividends paid (23.1) - - (23.1) Dividends paid
Interest paid on leases (1.2) 1.2 - - Net interest paid on leases
Repayment of obligations under leases (4.7) 4.7 - - Repayment of obligation under leases
Drawdown of borrowings 15.0 - - 15.0 Bank facility drawdown
Net cash used in financing activities (17.1)
Net decrease in cash and cash equivalents (20.5) - - (20.5)
(a) Items included in the statutory cash flow on separate lines which for
the adjusted cash flow are included in adjusted operating cash flow.
(b) Payments in respect of adjusted items are shown separately in the
adjusted cash flow.
23. Reconciliation of statutory to like-for-like revenue
Statutory and like-for-like
2024 Statutory Like-for-like 2023
2024 v 2023 £m 2023 (a) £m
£m £m
Print 406.7 438.8 (5.9) 432.9
Circulation 298.5 312.5 (4.7) 307.8
Advertising 65.4 76.6 (1.0) 75.6
Printing 17.3 20.2 (0.2) 20.0
Other 25.5 29.5 - 29.5
Digital 130.0 127.4 (0.3) 127.1
Other 1.9 2.4 - 2.4
Total revenue 538.6 568.6 (6.2) 562.4
(a) Exclusion of week 53
Principal Risks and Uncertainties
Monitoring and managing our principal risks is key to how the Board assesses
the overall risk landscape and makes strategic decisions.
This year, most of our risks remained stable with some, mainly those relating
to funding and our people, softening slightly. We have not noted any risks
that have significantly increased during 2024. While the macro environment has
remained fairly challenging, the fall in inflation and resultant drop in
interest rates towards the end of the year were both welcome. The refinancing
of our revolving credit facility to 2028 has resulted in an improvement in the
risk relating to funding capability. Though we have not identified any new
risks to include in our principal risks and uncertainties this year, we have
split the risk relating to falling circulation and/or page views into two
separate risks. Although these risks are related and have similar impacts,
they have different causes, mitigations and owners.
Our principal risks and progress against them are set out below.
Risk and description How we mitigate the risk Change in year
Strategic
Macroeconomic environment • bi-annual Board review of strategy and financial targets; Change in year: Stable
• annual budgets set and approved by the Board; Inflation decreased significantly during 2024 and interest rates reduced in
August and November. Though the general election created some initial
Risk owner: Executive Committee • regular re-forecast throughout the year; optimism, the autumn budget was widely perceived to be negative for business.
Economic growth has been slow throughout 2024 and the uncertain macro
Appetite: Flexible • macroeconomic factors, inflation and interest rates are monitored by the environment is expected to continue in 2025.
Executive Committee each month and Board at each
meeting;
Deterioration in macroeconomic conditions, including high interest rates and
inflation could result in: • weekly Executive Committee trading meeting to review results and other
factors affecting performance; and
• reduced customer and advertiser spending in both digital and print
advertising; • costs under constant review.
• lower revenue, cash flow and profits;
• rising salary, printing and other costs from inflationary pressures; and
• increased debt interest costs.
Drop in digital page views • bi-annual Board review of strategy and financial targets; Change in year: Stable
• Customer Value Strategy aims to increase page views per session and Page views have remained broadly stable over 2024, though increased in the
revenue per page; final quarter of the year. We have focused on a number of activities to help
Risk owner: Chief Digital Publisher/Chief Product Officer
support or grow page views, including:
• annual budgets set, regular re-forecast throughout the year;
Appetite: Flexible
• Content Hub, to evolve and engage with our audiences;
• weekly Executive Committee trading meeting to review results and factors
affecting performance; • Reach Studio, to create video content that builds audience volume and
engagement;
Digital page views fall significantly for an extended period. This could be • re-platforming our digital assets to improve user experience; and
caused by changes in major platforms' support and referrals to our content,
• increased capacity within the distribution teams focusing on improving
changes to search and disruption from AI, competition in the market, lower • Reach Studios set up to produce video content. visibility of our content; and
demand for our brands or issues with user experience.
• continued to grow US operations.
Could result in:
• lower digital advertising revenue; and
• direct impact on operating profits if costs cannot be reduced.
Inability to recruit and retain talent • we continually monitor and review: Change in year: Improving
• turnover levels; We have seen this risk improve slightly over the course of the year due to
availability of editorial talent as other publishers restructured. In other
Risk owner: Group Human Resources Director • pay and benefits; areas of the business, the risk has remained stable.
Appetite: Flexible • employee proposition;
• succession plans in place for key senior roles;
The inability to recruit and retain talent with appropriate skills, knowledge • digital capabilities of our workforce;
and experience would compromise our ability to deliver our strategy. This may
be caused by: • the recruitment channels and opportunities to expand our talent pool
(e.g. outside London); and
• lack of understanding of people/skills required by the business;
• diversity and inclusion;
• employment market trends e.g. wages;
• regular reporting to the Board on key people metrics and trends.
• reward insufficient to retain and attract the best;
• reliance on key individuals;
• lack of employee movement or progression; and
• capacity for change/volume of change.
Operational
Acceleration of print circulation decline • weekly Executive Committee trading meeting to review results and other Change in year: Stable
factors affecting performance;
Circulation decline has continued at a stable pace and in line with our
• bi-annual Board strategy days; expectations throughout 2024. The Executive Committee and Board review
Risk owner: Executive Committee
regularly, to monitor trends and consider cover price updates and other
• annual budget set, approved by Board. Regular re-forecast throughout the actions.
Appetite: Flexible year;
• long-term planning for manufacturing and distribution decline; and
An acceleration of the decline in demand for printed newspapers at the • cover price increases used to offset fall in circulation revenue.
national and local level due to industry-wide changing consumer habits. This
could result in:
• lower circulation revenue;
• reduced advertiser spending on print advertising;
• print site costs per copy increase due to fixed costs
• distribution through wholesalers becoming
less economic at lower volumes; and
• revenue falls at a higher rate than costs, impacting profits.
Cyber attack • business-critical systems well established and supported by disaster Change in year: Stable
recovery plans;
Given our continued strategic focus on customer data as a source of revenue,
• regular assessment of vulnerability and ability to re-establish operations the potential gross risk of a cyber security breach is increasing all the
Risk owner: Chief Financial Officer/Chief Information Officer in the event of a failure; time. In response we continued to deliver cyber security improvements and
focused on the preparedness and management of cyber incidents, including cyber
Appetite: Cautious • cyber incident training and table-top exercises to rehearse incident training and table-top exercises. We have continued to harden our
re-establishing operations in the event of a failure; cloud environments and performed regular penetration tests to identify
vulnerabilities. As a result, the net risk has remained stable.
• hardened cloud environments to contain the damage from a potential cyber
An internal or external cyber threat or attack, or a breach within one of our attack; and
suppliers, could lead to:
• regular penetration tests.
• direct impact on our ability to produce and publish content either
digitally or in print;
• resultant immediate impact on income and profits;
• reputational damage and loss of market share;
• management time required to manage back to BAU; and
• other core systems inaccessible.
Supply chain disruption • monitor and manage all key third-party print and information systems and Change in year: Stable
technology providers;
The risk has remained broadly stable in the year, though we closely monitored
• business continuity/disaster recovery plans in place with our key the impact of disruption to trade routes in the Middle East on our
Risk owner: Chief Operating Officer/Chief Financial Officer/Chief Product partners; print-related suppliers and increased stock holdings as a result. The Audit
Officer
& Risk Committee undertook a deep-dive into this risk in the summer,
• clear governance arrangements covering risk management, change control, including reviewing the key processes and controls in place to monitor and
Appetite: Cautious security and service delivery; manage this risk.
Our print and digital products rely on a small number of key suppliers and • use of multiple suppliers where possible;
could be adversely affected by changes to supplier dynamics. A major failure,
breach or prolonged performance issues at a key supplier could result in: • stock holdings at levels that would provide time to switch to alternative
suppliers; and
• business interruption or disruption;
• robust on-boarding of suppliers.
• damage to reputation;
• loss of revenue;
• increased costs; and
• reduced service and product quality.
Health and safety incident • group-wide health and safety policies and management system; Change in year: Stable
• health and safety committees across the business monitor compliance; Overall, health and safety risk has remained stable with incidents remaining
consistently low. However, within editorial, the gross risk has increased as a
Risk owner: Chief Operating Officer • health and safety manager and occupational health provider at every site; result of reporting from war zones in Ukraine and the Middle East, and civil
unrest in the UK. Our established procedures to protect colleagues working in
Appetite: Minimalist • risk assessments in key areas of the business covering work in hostile and high-risk environments, including online, have once again helped to ensure
high-risk environments; that the net risk remained stable.
• health and wellbeing support, including for mental health, to all our
Reach operates manufacturing sites and sends journalists to high-risk colleagues;
locations. This results in the inherent risk of injury or death to colleagues,
freelance journalists, contractors or other visitors to our sites. Online • Online Safety Editor monitors threats and abuse towards our journalists;
abuse of journalists, including harassment, threats and attempts to undermine and
their credibility can create a challenging and sometimes hostile environment
for them to perform their duties effectively. • ISO 45001 certification confirms the operation of controls at
manufacturing locations.
Published content and/or editorial practices • governance structures provide clear accountability for compliance with all Change in year: Stable
laws and regulations;
While occasional complaints and corrections are unavoidable given the number
• policies and procedures in place to meet all relevant requirements, of titles and volume of content published, the number of incidents in 2024 has
Risk owner: Group General Counsel/Chief Digital Publisher refreshed in 2024; been consistent with prior years and is deemed acceptable.
Appetite: Cautious • monitor upcoming legislative changes and emerging trends; and
• all editorial employees are trained on how to create content that complies
with relevant legislation.
We publish significant volumes of content every day across our national and
local titles. Breaches of regulations or editorial guidelines, editorial
errors, or issues with the tone of our content could damage our reputation,
cause us to lose readership, or put us at risk of legal or regulatory
proceedings.
Lack of funding capability • committed loan facilities to December 2028; Change in year: Improving
• regular forecasting and monitoring of cash flow, including daily updates The risk has improved in 2024 with the extension of our committed loan
to cash flow forecasts; facilities and falling interest rates in the second half of the year. The
Risk owner: Chief Financial Officer
Company completed refinancing of its banking facilities in late 2024. The
• weekly cash flow and debt meetings; facility comprises a £145m Revolving Credit Facility ("RCF"), with a
Appetite: Cautious
four-year maturity to December 2028 including an option to extend by up to one
• monthly Treasury Committee meetings chaired by the CFO; year. We also continued to make significant payments to our pension schemes
and to settle liabilities for historical legal issues.
• regular reporting to the Board;
Lack of funding or available cash to meet business needs. This may be caused
by a lack of working capital, unexpected increases in interest costs or • regular discussions with pension scheme trustees to review ways of
increased liabilities, in particular due to defined benefit pension schemes or de-risking our pension liabilities; and
settlement of historical legal issues.
• regular reviews, updates and provisioning for historical legal
liabilities.
Regulatory
Data protection failure • governance structures to direct and oversee our data protection strategy; Change in year: Stable
• data protection policies, processes and controls; The risk has remained stable during the year though the regulatory landscape
continues to increase in complexity, increasing the gross risk of regulatory
Risk owner: Group General Counsel/Data Protection Officer • Data Protection Officer and team; breach. We continued to focus on embedding data, enhancing and embedding
controls and processes, and responding to evolving requirements in the US.
Appetite: Minimalist • champions across the business; While our collection and use of personal data continues to increase, breaches
and incidents have more than halved since 2022.
• 'data protection by design and default' approach to collecting and using
personal data;
A contravention of data protection regulations applicable to Reach, such as
the UK or EU General Data Protection Regulations (GDPR), Privacy and • a comprehensive data protection and privacy plan; and
Electronic Communications Regulations 2003 (PECR), various state and federal
legislation in the US and Canada (e.g. the updated California Consumer Privacy • active 'horizon scanning' to ensure legislative changes and guidance are
Act CCPA Amended), could lead to monetary penalties, reputational damage and a anticipated and planned for.
loss of customer trust.
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