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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