2019 Annual Report
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Reach plc Annual ReportAnnual 2019 Our Reach Annual Report 2019 In this report Highlights1 Strategic Report 1 Revenue (£m) Digital revenue (£m) Introduction 1 £702.5m -3.0% £107.0m +17.2% Chairman’s statement 2 713.0 723.9 702.5 107.0 Our business and the value we create 4 623.2 91.3 Our brands and influence 6 529.7 An evolving business focused on 10 68.7 being fit for the future 58.4 Opportunities and challenges facing 12 our industry 30.4 Chief Executive’s review 16 Business review 20 KPIs 23 Financial review 26 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Engaging with our stakeholders 30 Managing our resources and 32 Adjusted operating Adjusted earnings relationships 1 per share – basic (p)1 Section 172 statement 42 profit (£m) +5.4% 41.1p +4.8% Risks and uncertainties 43 £153.4m Statutory: 2019: £131.7m Statutory: 2019: 31.8p (2018: loss £107.6m) (2018: loss 41.0p) Governance 48 153.4 41.1 145.6 38.1 39.2 Chairman’s governance introduction 49 137.5 36.1 33.9 Board of directors 50 124.7 109.6 Corporate governance report 52 Nomination Committee report 56 Audit & Risk Committee report 57 Remuneration report 62 Directors’ report 83 Financial Statements 87 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Independent auditor’s report 88 Consolidated income statement 96 Dividend per Net (debt)/cash (£m) Consolidated statement of 96 share (p) £20.4m +£61.2m comprehensive income +6.7% 6.55 Consolidated cash flow statement 97 6.55p 6.14 20.4 5.80 Consolidated statement of changes 97 5.45 in equity 5.15 Consolidated balance sheet 98 (9.0) Notes to the consolidated financial 99 (28.6) statements (40.8) Parent company balance sheet 131 Parent company statement of 131 changes in equity Notes to the parent company financial 132 (88.7) statements 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 1 Our financial statements disclose financial measures which are required under IFRS. We also report additional financial measures that we believe enhance the relevance and usefulness Other 136 of the financial statements. These are important for understanding underlying business Subsidiary and associated 136 performance. Statutory figures are shown for comparative purposes where they differ from adjusted figures. See notes 3 and 36 to the consolidated financial statements. undertakings Shareholder information 139 Group five year summary IBC For further information or to read the Annual Report online, go to https://www.reachplc.com Disclaimer This Annual Report is sent to shareholders who have elected to receive a hard copy and is available on our website www.reachplc.com for those shareholders who have elected to receive a copy electronically. In this document, references to ‘the Group’, ‘the Company’, ‘we’ or ‘our’ are to Reach plc and its subsidiaries. A reference to a year expressed as 2019 is to the 52 weeks ended 29 December 2019 and a reference to a year expressed as 2018 is to the 52 weeks ended 30 December 2018. References to ‘the year’ and ‘the current year’ are to 2019 and references to ‘last year’ and ‘the prior year’ are to 2018. The Annual Report contains forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and future assumptions because they relate to events and/or depend on circumstances that may or may not occur in the future and could cause actual results and outcomes to differ materially from those expressed in or implied by the forward-looking statements. No assurance can be given that the forward-looking statements will be realised. Statements about the directors’ expectations, beliefs, hopes, plans, intentions and strategies are inherently subject to change and they are based on expectations and assumptions as to future events, circumstances and other factors which are in some cases outside the Company’s control. The Annual Report has been prepared on the basis of the knowledge and information available to directors at the date of its preparation and the Company does not undertake any obligation to update or revise the information during the financial year ahead. It is believed that the expectations set out in these forward-looking statements are reasonable, but they may be affected by a wide range of variables which could cause actual results or trends to differ materially. The forward-looking statements should be read in the context of the principal risk factors set out in the Strategic Report. Strategic Report Governance Financial Statements Introduction News matters. Views matter. Words matter. We should know. We use them every day to inform, entertain and touch our readers. Millions of them, up and down the country. Readers with diverse interests, opinions and opposing political beliefs and voices. Reach plc is the largest commercial national and regional news publisher in the UK. We create engaging, differentiated content which is distributed through newspapers, magazines and digital platforms – playing a central role in our audiences daily lives. Our brands have a long heritage of being trusted sources of timely news and information – delivered in any way our audiences want to receive it. It is this trust and scale that sees us as prominent champions, campaigners and changemakers in the UK today. Yes words matter. Our name, for example. We didn’t just pluck it out of a hat. It’s who we are. It’s what we do. We are Reach. Digital champions see more on pages 24 and 25 National changemakers see more on pages 8 and 9 Local campaigners see more on pages 14 and 15 Reach plc Annual Report 2019 1 Strategic Report Chairman’s statement Reach delivered a robust financial performance during the past year in line with our expectations.” Nicholas Prettejohn Chairman Introduction Against a backdrop of political and economic uncertainty, I am pleased to report that 2019 was a year of solid financial performance for Reach with improved trends in revenue, higher earnings and strong cash flow generation. The delivery against operating targets, such as the growth of our online audience, was excellent. We welcomed Jim Mullen as our new Chief Executive as well as other new members of the Board. Towards the end of the year, we started work to redefine the strategic shape of Reach for the coming years. 2 Reach plc Annual Report 2019 Strategic Report Governance Financial Statements Highlights Board changes At the start of March 2019, Simon Fuller joined the Board as Chief Financial Officer and Company Secretary, taking over from Vijay Vaghela who stepped down from the Board at the same time. A chartered accountant with significant listed company 6.7% increase in dividend experience, Simon was previously the Chief Financial Officer at McColl’s Retail Group plc. Vijay spent some 24 years with the Company and, on behalf of the Board and staff of Reach, I thank him for his long and loyal service. Simon Fox stepped down from the Board in mid-August, leaving Growth in Reach after seven years as Chief Executive. During his tenure, he oversaw a number of strategic acquisitions, including the purchase of Local World and the acquisition of the UK publishing assets of Northern & Shell, thereby helping to position Reach as our online the largest commercial national and regional news publisher in the UK. Simon left Reach in a strong position and well placed for the next stage of its development. On behalf of the Board and our audience shareholders, I would like to take this opportunity to thank Simon for all his hard work and wish him well for the future. After a comprehensive search, we were delighted to appoint Jim Mullen to the Board in August 2019 as Chief Executive. Jim brings Strong with him a rich and relevant experience, particularly in the area of digital transformation, gained from his time at Ladbrokes Coral, William Hill and News International. I am confident he will prove Board to be an outstanding leader for Reach. Financial performance Governance The Group saw revenue reduce by 3% to £703m and adjusted Ensuring that the Company demonstrates and adheres to the operating profit increase by 5% to £153m, resulting in operating principles of good corporate governance is one of my main margin increasing. Statutory operating profit of £132m was up responsibilities as Chairman and this year signalled an important from a loss of £108m in the prior year. Strong cash generation development in this area, being the first year the Company was resulted in the £41m net debt at 30 December 2018 moving to required to report under the 2018 version of the UK Corporate a net cash position of £20m at the financial year end. This was Governance Code. You will see in this year’s Strategic Report we underpinned by a strong operational performance including have included more information about how we engage with our growth in our online audience. A more comprehensive analysis of key stakeholders and how they influence our decisions, as well business performance is provided by Jim Mullen and Simon Fuller as more information on the vital work we have done on engaging in their statements later in this report. with our colleagues whilst also promoting diversity and inclusion. We have also made a number of changes in this report to help Dividends better describe our governance measures including greater risk The Board understands the importance of the dividend to disclosure and revised key performance measures. shareholders. Following the interim dividend payment of 2.50p Strong corporate governance delivery starts at Board level and, per share, I am pleased to confirm that the Board proposes in my opinion, having breadth of experience, skills and diversity to increase the final dividend by 7.4% to 4.05p per share.