REG - Reach PLC - Trading Update

ReachAnnouncement

23/11/2021 07:00

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RNS Number : 1917T  Reach PLC  23 November 2021

 

Reach plc

Digital growth and strengthening print help support further investment

23 November 2021

Reach plc is issuing a trading update covering 28 June 2021 to 21 November
2021 ('the period').

Jim Mullen, Reach plc Chief Executive

"Strategic delivery is transforming our prospects for growth and we're
progressing towards our goal of doubling digital revenue over the medium term.
Registration numbers are strong, and advertisers are responding to our
expanded portfolio of data-led products. Together with our efficient operating
model, this is enabling us to invest further in digital content as we build a
modern and inclusive media business."

●    Revenue currently trading ahead of full year expectations, enabling
digital investment

●    Customer registrations now over 8m, up from 6.7m at end of July

●    Newly extended and enlarged RCF and strong cash conversion increases
financial flexibility

Continued strong growth in digital revenue and further print resilience

We have seen a more normalised pattern of year-on-year trading during H2,
following the relatively soft H1 comparatives as we annualised the first COVID
lockdown. Revenue has continued to grow and was up 1.2% overall in the period,
with digital up 17.2% and print declines moderating further to 3.5%.

A strong digital revenue performance in the period was driven by yield
expansion, supported by strategic delivery and a recovery in digital
advertising versus 2020.   On a two-year basis, digital revenue growth
remains encouraging, up by 39.0% for the year-to-date, with average page views
growing by 30%.

The full year outlook for print has strengthened, driven predominantly by
circulation which is on an improved two-year trajectory compared to H1. This
reflects a combination of market recovery, strategic investment in
availability, marketing, promotions and product enhancement.

Delivery of strategy on track with investment programme accelerating

Customer registrations are now over 8m (6.7m at end of July), with growth
supported by the recent addition of Google 'one tap' functionality, a more
frictionless route to sign-up, which enables deeper customer understanding. As
we approach our target of 10m registered users, we're focusing on the next
phase of the Customer Value Strategy, driving retention, engagement frequency
and dwell time to grow ARPU. Our 'PLUS' products have now been used to support
over 150 campaigns and we're exploring routes to deeper and broader
integration with advertisers via programmatic exchanges, curated marketplaces
and other digital buying platforms.

Revenue mix and cost savings from last year's transformation programme are
supporting a stronger profit margin and increased strategic investment,
particularly in expanding the breadth and depth of our digital content. So far
this year we have hired c.400 additional digital editorial roles in both
national and local titles and completed the rollout of the local Live network
into every county of England and Wales.

While transformation in 2020 enabled a more efficient and adaptable operating
model, we remain vigilant regarding wider consumer confidence and inflationary
pressure in the post-pandemic environment. We have begun to see an increase in
the cost of print production, particularly for energy and newsprint. With the
longer-term effect on the cost base still emerging, we are closely monitoring
developments and will continue to prioritise efficiencies to mitigate the
impact.

We have yet to reach agreement with regard to the triennial review of our
pension commitments but we continue to engage in discussions and remain
committed to working towards our objective of achieving funding of all schemes
as agreed in our 2016 triennial review.

New credit facility underpins strength of balance sheet and cash flow

We recently concluded an increase in our revolving credit facility with an
expanded syndicate of relationship banks. The increase in available facilities
from £65m to £120m, for a term of at least four years, demonstrates growing
confidence in our covenant and provides further flexibility to invest in the
strategy.

Notes

Latest company compiled view of market expectations shows consensus group
revenue of £604.1m and adjusted operating profit of £145.8m for 2021.

Revenue movements stated on like-for-like basis excluding ISL (Independent
Star Limited) and impact of regional portfolio changes. Period relates to 28
June to 21 November 2021 with November being a latest estimate of revenues.

 

                                YOY Breakdown                   2yr* Breakdown
                                Period  H1       Year to date  Period    H1      Year to date

                                %          %     %             %         %       %
 Digital Revenue                17.2%   42.7%    29.2%         36.4%    41.4%    39.0%
 Print Revenue                  (3.5%)  (5.2)%   (4.5%)        (21.4%)  (23.9%)  (22.8%)
 -     circulation revenue      (3.7%)  (5.1)%   (4.5%)        (15.6%)  (16.0%)  (15.8%)
 -     advertising revenue      (2.8%)  (4.3)%   (3.6%)        (29.2%)  (33.7%)  (31.7%)
 Group Revenue                  1.2%    2.6%     2.0%          (11.9%)  (14.9%)  (13.6%)

*Period 2yr movement is a combined two-year like-for-like comparison versus
the same period in 2019

Preliminary results for the 12 months to 26 December 2021 will be published on
1 March 2022.

 

Enquiries

Reach

Jim Mullen, Chief Executive
Officer
 

Simon Fuller, Chief Financial Officer

Ciaran O'Brien, Communications
Director
        communications@reachplc.com

Matt Sharff, Investor Relations
Director
        +44 (0)7341 470 722

 

Tulchan
Communications
          reachplc@tulchangroup.com

Giles Kernick
 
   +44 (0)207 353 4200

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