Trading Update
July 7, 2020 RNS Number : 1850S Reach PLC 07 July 2020
7 July 2020 Reach plc announces transforma on to accelerate customer value strategy Reach plc, the UK's leading commercial na onal and regional news publisher, today provides a trading update and announces plans to transform the business to enable an accelerated delivery of its customer value strategy. Commen ng on the announcement, Jim Mullen, Chief Execu ve Officer, Reach plc, said: "Structural change in the media sector has accelerated during the pandemic and this has resulted in increased adop on of our digital products. However, due to reduced adver sing demand, we have not seen commensurate increases in digital revenue. To meet these challenges and to accelerate our customer value strategy, we have completed plans to transform the business and are ready to begin the process of implementa on. Regre ably, these plans involve a reduc on in our workforce and we will ensure all impacted colleagues are treated with fairness and respect throughout the forthcoming consulta on process. The plans will provide a stable pla orm for us to accelerate our strategy, based on stronger and deeper customer rela onships, increasing our appeal to adver sers. This will ensure the sustainability and profitability of the Reach business, enabling it to deliver to stakeholders over the long-term. Award-winning journalism and content will always be at the core of our purpose. Through the transforma on, Reach will realise the full poten al of its business model, enabling our news brands to con nue to shape the daily conversa ons of millions of people for years to come."
Key points: · Q2 Group revenue declined by 27.5% impacted by reduc ons in circula on and adver sing compared with the prior year. Slightly improved trends in June saw Group revenue fall by 23.9% · Customer registra ons have now passed the 2.5m mark for first me - exceeding our previous target for the end of 2020 · The Group's customer value strategy will be accelerated with the customer registra on target increased to 10m by 2022 (previously 7m) · The planned changes announced today will deliver £35 million in annualised savings at an es mated one-off cost of £20 million
Q2 and year-to-date trading and liquidity update1
Reach con nues to a ract a leading audience share with over 41 million2 unique visitors during May and con nues to grow its customer registra ons - now over 2.5 million3.
Q2 Group revenue to 28 June was down 27.5% compared with the corresponding period last year. Print revenue declined by 29.5% and digital revenue was down by 14.8%. Circula on remains significantly below pre-COVID-19 levels with local adver sing con nuing to be challenging. Year to date Group revenue to 28 June was down 17.5%, benefi ng from the good start to the year before COVID-19 began impac ng the business in mid-March. In June, we have con nued to see modest but encouraging improvements in circula on and na onal digital revenue as the Government's lockdown restric ons have eased. Group revenue declined by 23.9% in June compared with 30.5% in April. In June Digital saw a decline of 4.9%, compared to the 22.5% fall seen in April when the impact of COVID-19 was at its worst. Print revenue in June was down 26.7% year on year compared with the 31.8% decline seen in April.
Reach con nues to maintain a strong balance sheet with access to sufficient liquidity.
Transforma on of the Reach business and accelera on of our customer value strategy In February, Reach unveiled its customer value strategy centred on building an intelligent, relevant and trusted content business for the long-term through capturing customer insight and data. The increased headwinds to circula on and adver sing mean the strategy is now even more relevant.
The plans announced today will reshape the Reach business into a streamlined, efficient organisa on with more focussed editorial, adver sing (solu ons and local commercial) and central opera ons. Editorial will move to a more centralised structure bringing together na onal and regional teams across print and digital to significantly increase efficiency and remove duplica on while maintaining the strong editorial iden ty of our news brands. In local commercial as well as in finance, Reach will move to fewer loca ons and a simpler management structure, with costs geared to current market condi ons.
In total the company plans a reduc on in headcount of around 550 people (or 12% of its workforce). Reach will shortly begin a 45-day consulta on regarding these plans.
These changes will provide the business with a strong pla orm to accelerate the delivery of its customer value strategy and significantly increased customer registra on targets. Reach has already surpassed its full year 2020 target in achieving over 2.5 million customer registra ons. It is now increasing its 2022 target to 10 million by 2022 up from the 7 million announced in February. Through stronger and deeper personalised customer rela onships the business will make its content more relevant and adver sing more targeted, increasing the value of its audience.
Alongside the reshaping and refocusing of the business, Reach will invest in crea ng an improved digital customer experience across all newsbrands and products, with support from an expanded data and insights team. A new self-serve digital pla orm will also be launched to appeal to SME digital adver sers and there will be further investment in the InYourArea hyperlocal pla orm which has already surpassed 800,000 ac ve registered users. The transforma on will ensure the company's leading na onal and regional tles will con nue to deliver quality news and content across print and digital channels for the long-term.
Delivering for all stakeholder groups The accelerated strategy and new structure will enable Reach to end the previously announced temporary pay cuts for all colleagues except for the CEO, CFO and other Board members, whose pay will con nue to be subject to a 20% reduc on. All annual bonus schemes rela ng to 2020 remain suspended. The company will also resume its monthly contribu ons towards historic pension deficits following the deferral announced in April. The Reach Board recognises the importance of a dividend to our shareholders and will keep future dividends under review, restar ng payments when it is appropriate to do so. Interim results update Reach has previously confirmed its full interim results will be announced on Monday 28 September. Further detail on the plans announced today will be provided at that me. Notes 1 Revenue trends - Revenue on an actual and like for like basis are the same for 2020 2 Source: Comscore UK mul -pla orm May 2020, 3Source: Reach data
Reach Jim Mullen, Chief Execu ve Officer Simon Fuller, Chief Financial Officer communica [email protected] Ciaran O'Brien, Communica ons Director
Tulchan 020 7353 4200 David Allchurch/Giles Kernick [email protected]
LEI: 213800GNI5XF3XOATR61 Classification: 3.1 Additional regulated information required to be disclosed under the laws of a Member State
Forward-looking statements You are not to construe the content of this announcement as investment, legal or tax advice and you should make your own evalua on of the Company and the market. If you are in any doubt about the contents of this announcement or the ac on you should take, you should consult a person authorised under the Financial Services and Markets Act 2000 (as amended) (or if you are a person outside the UK, otherwise duly qualified in your jurisdic on). This announcement has been prepared in rela on to the trading update for the six months from 30 December 2019 to 28 June 2020. The financial informa