REG - Reach PLC - Trading Update

ReachAnnouncement

10/10/2023 07:00

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RNS Number : 4821P  Reach PLC  10 October 2023

 
 
            10 October 2023

Reach plc ("The Company") Q3 Trading update for the 3-month period to 24
September 2023

Full year profit expectations unchanged

                                Q3 YOY %  9 Months YOY %
 Digital revenue                (13.7)    (15.2)
 Print revenue                  (5.8)     (3.8)
 -     Circulation revenue      (3.3)     0.4
 -     Advertising revenue      (8.9)     (15.7)
 Group revenue                  (7.8)     (6.6)

 

The factors affecting Q3 digital revenue are unchanged from those outlined in
our half year results. These include depressed open market yields and the
well-publicised declining digital referral volumes, in particular from
Facebook's de-prioritisation of news. As a result over the nine-month period,
year-on-year page views declined 21%. Data driven revenue,(1) which is higher
value and more targeted, continues to be robust and now makes up a larger part
of digital revenues at 42%. (FY 2019 - 24%)

 

In print, circulation revenue has grown marginally over the first 9 months of
the year. This remains a resilient and predictable revenue stream as we
actively mitigate the expected volume decline. Last September 2022 saw modest
advertising activity following the Queen's death, excluding this one-off
factor the quarter would trend in line with the 9-month movement. Brands
continue to value advertising to our substantial customer base.

 

Capital reduction

The Company announces that it will in due course be posting a circular to
shareholders (including notice of general meeting) in connection with a
proposed capital reduction of £605.4m. This is conditional upon the approval
of the Company's shareholders and by the High Court of Justice in England and
Wales. The Capital Reduction will not involve any return of capital or payment
to shareholders but will create additional distributable reserves.(2)

 

MGN Pension scheme resolution

We are pleased to report that we have now concluded the 2019 triennial
valuation for the MGN scheme, and at the same time concluded its 2022
triennial valuation.  The funding valuation of the MGN scheme at 31 December
2022 showed a deficit of £219.0m. This deficit is expected to be removed via
a schedule of contributions that includes annual payments of £46.0m pa from
January 2023 until January 2028. The previous schedule of contributions for
the MGN scheme included payments of £40.9m pa from 2023 to 2027(3).
Discussions are ongoing with the Group's other schemes in relation to the 2022
triennial valuations and are expected to be concluded satisfactorily by the 31
March 2024 due date.

 

Outlook

We remain confident of meeting profit expectations for the full year.(4) We do
not anticipate the market backdrop to change materially in the near term and
as a result we remain focused on the areas within our control; improving
customer engagement, diversifying revenues and driving efficiencies. Our plans
to reduce full year operating costs by 5-6% remain on track. We expect a High
Court judgement on time limitation relating to historical legal issues in the
next few months.

 

 

 

Jim Mullen Chief Executive

 

"This quarter we see continued evidence that our data driven strategy is
working, supported by our resilient print business. Through this challenging
period we have remained focused on the controllables. We are delivering our
Customer Value Strategy and have made progress diversifying our audience. We
continue to review our cost base so that we can accelerate our digital
transformation."

Notes

 (1)  Includes revenue from advertising activity which utilises data generated via
      registrations, audience behavioural or Mantis contextual. It also includes
      other strategically driven revenues, less dependent on audience volumes such
      as affiliates, partnerships and ecommerce.
 (2)  This change will result in £605.4m cancellation of the Company's share
      premium account and the creation of distributable  reserves of the same
      amount.
 (3)  Previous MGN schedule of contributions disclosed in the Half year report - 25
      July 2023.
 (4)  Market expectations compiled by the Company are an average of analyst
      published forecasts - consensus adjusted operating profit for FY23 £95.0m.

 

 Enquiries

 

 Reach                                                communications@reachplc.com
 Jim Mullen, Chief Executive Officer
 Darren Fisher, Chief Financial Officer

 Lorraine Clover, Group Company Secretary
 Lija Kresowaty, Head of External Communications
 Jo Britten, Investor Relations Director              +44 (0)7557 557447

 Teneo                                                reachplc@teneo.com
 David Allchurch/Giles Kernick                        +44 (0)207 353 4200

 

About Reach

We're Reach plc, the UK's and Ireland's largest commercial news publisher.
We're home to more than 130 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 recently launched U.S.
titles. Every month, 48 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

The information in the section of the announcement headed "MGN Pension scheme
resolution" in relation

to the conclusion of the 2019 and 2022 triennial valuations for the MGN scheme
is inside

information disclosed under article 7 of the Market Abuse Regulation.

 

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