Slide 1: Interim Results 2023
INTERIM RESULTS 2023 Interim Results Presentation 25 July 2023 Reach plc - Interim Results 2023 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Reach plc (the Forward-looking statements speak only as of the date of such “Company”) and its subsidiaries or associated companies or its statements reflecting the knowledge and information available or their affiliates (the “Group”) in connection w
Slide 3: Contents
CONTENTS 01 Strategic Update Jim Mullen, CEO 02 Financial Update Darren Fisher, CFO 03 Summary Jim Mullen, CEO Reach plc - Interim Results 2023 3
Slide 4: Strategic Update
INTERIMS 2023 STRATEGIC UPDATE JIM MULLEN CEO Reach plc - Interim Results 2023 4
Slide 5: Customer Value Strategy supporting more sustainable business
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Customer Value Strategy supporting more sustainable business 2023 in line with expectations • The difficult macro environment continues • Material impact on sector from decline in referral traffic • Content & data focus supports growing customer engagement •
Slide 6: Reduction in referral traffic impacts page views
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Reduction in referral traffic impacts page views Facebook deprioritisation of news drives decline Average monthly page views (bn) • Reduction in traffic across sector • Page views down 16% YOY 1.7bn 1.7bn 1.6bn • Facebook page views 1.3bn 1.4bn down 45% • H1
Slide 7: Our scale digital audience
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Our scale digital audience Growing registrations & activity supports depth of data 37m digital audience 6th largest c.75% of UK total digital asset Registered 13.2m +15% customers 1. Alphabet 6. Reach 2. Meta 7. Apple 28 day actives 5.4m +14% 3. Amazon 8. eB
Slide 8: Focus on secure audience & sustainable revenue
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Focus on secure audience & sustainable revenue Data supports greater engagement & higher quality revenue Audience Revenue Diversification Diversification Better experience, deeper engagement More revenue supported by data Building direct relationships Reduci
Slide 9: Reaching new customers & building secure audience
AUDIENCE DIVERSIFICATION STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Reaching new customers & building secure audience Better experience, greater engagement, more data Direct relationships New audiences Experience & engagement Recommendation tools Read by both users Personalised Similar users article
Slide 10: Revenue diversification
i f i ca t i re to g d i ve rs s ex posu G row i n Strategic delivery Financial update Editorial Summ r e Strategy du c e driving diversification of revenue u e REVENUE DIVERSIFICATION STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY e n ev Strategy Moredriving directly sold i g p revenue n diversification
Slide 11: AI in early stages of development
Strategic delivery Financial update Editorial Summary Strategic delivery Financial update STRATEGICStrategic UPDATE delivery FINANCIAL UPDATEupdate SUMMARY Financial Editorial Summary AI in early stages of development AI AI AI in early in inearly early stages of stages stages development of of devel
Slide 12: Resilient demand for printed products
nt demand for printed products managing volume decline; maximising revenu STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Strategic delivery Financial update Editorial Summary Resilient demand for printed products Resilient demand for printed products Actively managing volume decline; maximising revenue A
Slide 13: Print – scale business enabling digital investment
tinuous cost improvement supports cashflows STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Print – scale business enabling digital investment Continuous cost improvement supports cashflows • Ongoing performance • Broader sourcing of newsprint & Optimised distribut more flexible supply 10s of billions • N
Slide 14: Financial Update
INTERIMS 2023 FINANCIAL UPDATE DARREN FISHER CFO Reach plc - Interim Results 2023 14
Slide 15: H123 Summary
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY H123 Summary Adjusted Results H123 £m H122 £m Var £m Var % Revenue 279.4 297.4 (18.0) (6.1%) • Challenging digital market; Operating costs (244.6) (251.6) 7.0 (2.8%) print revenue robust Operating profit 36.1 47.2 (11.1) (23.5%) Operating margin 12.9% 15.9%
Slide 16: Revenue lower
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Revenue lower Print resilient, circulation growing, digital under pressure +2.4% -18.3% -5.3% -16.1% -£18m OR -13.3% -6.1% Q1: +2.6% Q1: (21.1%) Q2: +2.2% Q2: (15.7%) £297m Q1: (13.4%) Q2: (18.7%) £279m Total print down 2.7% or £6.1m H122 Circulation Print A
Slide 17: Revenue decline reflected in lower H1 profit
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Revenue decline reflected in lower H1 profit Efficiencies support investment and offset inflation; FY efficiencies H2 weighted -£18m +£22m -£2m -£11m Print OR -24% Digital -£8m -£5m £47m £36m Net cost saving of £7m or 3% H122 Revenue Inflation Investment Eff
Slide 18: Print circulation - resilient and predictable
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Print circulation - resilient and predictable Volume as expected; cover prices support revenue growth 5% 2.0% 1.8% 2.6% 2.2% 0% • Revenue increased -5% over past 4 quarters -10% • Gradual decline in volume since 2019 -15% • Circulation revenue -20% over 70%
Slide 19: Digital revenue impacted by page views & yield
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Digital revenue impacted by page views & yield Revenue decline all from ‘audience variable’ revenues Monthly page views (bn) Open market yield (rebased) 1.8 33% 40% 160 140 30% 1.6 1.7 1.7 120 20% 100 1.6 80 1.4 4% 10% 60 1.4 0% 40 Ave.109 Ave.96 Ave.132 Ave
Slide 20: Strategic revenues continue to outperform
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Strategic revenues continue to outperform Facebook & open market drives decline Data-driven revenue broadly flat for period -1% -24% £72m • Data driven revenue broadly flat £61m • Decline in ‘other’ from lower open Data driven £25m market demand & loss of di
Slide 21: Operating Costs
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Operating Costs Lower impact of inflation; cost savings H2 weighted +£6m £252m • Operating costs 3% lower +£4m -£3m Newsprint 39 +14% • Newsprint lower due to volumes +4% £245m -3% • Average newsprint price higher Newsprint 33 Labour 119 year on year, but re
Slide 22: Newsprint pricing
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Newsprint pricing Inflation much reduced; expect lower cost during H2 100% Newsprint pricing (% YOY) 80% • Price during period > H122 60% • Now seeing sequential decline • Expect significantly lower pricing in 40% H2 - lower level of hedging 20% • Reduction
Slide 23: Adjusted cash flow
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Adjusted cash flow Lower operating cashflow reflects lower revenue Cash balance at start of year £25m Movement in the year (£29m) £1m £12m Net debt at balance sheet data (£4m) £7m £126m £2m £ million £1m £6m £46m £19m £4m £23m £65m £14m (£22m) £(23m) £(25m)
Slide 24: Capital allocation
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Capital allocation Cash & balance sheet support creation of more sustainable business Investment in long term revenue & margin growth Resilient print profits, sustainable cash Returns to shareholders generation & strong balance sheet Pension funding Reach pl
Slide 25: 2023 full year outlook
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY 2023 full year outlook Profit in line with market expectations Print Digital Costs Cash No change expected in rate of Macro uncertainty continuing H2 weighted savings Improved working circulation volumes capital position Not forecasting for recovery 5-6% red
Slide 26: Summary
INTERIMS 2023 SUMMARY JIM MULLEN CEO Reach plc - Interim Results 2023 26
Slide 27: Enlighten, Empower, Entertain
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Award winning journalism Telling the stories of our communities ENLIGHTEN EMPOWER Reach plc - Interim Results 2023 ENTERTAIN 27
Slide 28: Looking forward
STRATEGIC UPDATE FINANCIAL UPDATE SUMMARY Looking forward Strengthening platform for long term growth • A more efficient, data driven, digitally focused business • Diversified digital revenue makes business more sustainable • Resilience of print drives predictable cashflows • Strong track record on
Slide 29: Q&A
Q&A Interim Results Presentation 25 July 2023 Reach plc - Interim Results 2023 29