Slide 1: 2020 Interim Results
2020 Interim Results 28 September 2020 Reach
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Reach plc (the “Company”) and its subsidiaries or associated companies or its or their affiliates (the “Group”) in connection with the publication of the Company's interim results for the 26 weeks ended 28 June 2020. Certain statements in this presen
Slide 3: Highlights
Highlights Jim Mullen, CEO Financial update Simon Fuller, CFO Strategic delivery Jim Mullen, CEO Driving customer engagement Lloyd Embley, Group Editor-in-Chief Summary Jim Mullen, CEO Reach
Slide 4: Highlights
Highlights Jim Mullen Chief Executive
Slide 5: COVID-19 update
COVID-19 update Strong and early action to protect the business Agenda setting coverage Record digital engagement More agile and efficient business, focused on delivery Reach
Slide 6: Key operating highlights
Key operating highlights Circulation sales improving Digital revenue growth Gradual return of advertisers to market Major reorganisation of editorial, advertising and central operations delivered in 12 weeks Creation of Reach ‘Newswire’ Annualised cost savings of at least £35 million Ahead of expect
Slide 7: Key strategic highlights
Key strategic highlights Increased consumption Scale + engagement / gag has delivered more 3.5m registrations Registered users are ee Increased target - more loyal 10m by 2022 _ so = _ Reach ID rollout in Q4 Increased frequency Ongoing and recency LTT a. momentum On track to announce value impact at
Slide 8: Financial update
Financial update Simon Fuller CFO
Slide 9: Group's performance ahead of expectations
Group’s performance ahead of expectations Group adjusted results piss Andy ver ven £m £m £m Revenue 352.6 290.8 (61.8) (17.5%) Costs (282.3) (236.2) 46.1 16.3% Associates 1.0 0.3 (0.7) (70.0%) Operating profit” 71.3 54.9 (16.4) (23.0%) Operating margin 20.2% 18.9% -1.3%pt EBITDA” 82.3 68.4 (13.9) (1
Slide 10: Group revenue impacted but recovering
Group revenue impacted but recovering LFL -17.5% £353m £291m 2 T T T Q1 20 220 9320 1) Accelerated decline in LFL revenue from second half of March due to COVID-19 impacts. other BB print BB Digital 1) Steady recovery since April, with Q3 LFL at -15.0% closing the % gap to start of the year. ©} Digi
Slide 11: Digital revenue stabilised, trend improving
Digital revenue stabilised, trend improving 413.7% +12.9% LFL -1.0% £49m £48m 1 T T T Qt 20 220 320 © Decline in LFL Digital in Q2 due to yield impacts and reduced advertising demand. ) Q3 moved back to growth both by individual month and overall. © National digital performance in August hit an all
Slide 12: Strengthening digital performance metrics
Strengthening digital performance metrics Page view and audience momentum demonstrate relevance of digital business and customer engagement accelerated by the crisis. Reach Note: (1) Google Analytics (2) ComScore UK multiplatform
Slide 13: Investment in customer value strategy prioritised
Investment in customer value strategy prioritised InYourArea Reach ID developments investments, mM and product setting up innovation registrations li d e.g new database. annua ise widgets and . Q4 launch est nt improved Reach ID Invi me interface Reach
Slide 14: Print revenue improvements since April
Print revenue improvements since April LFL -20.1% / Other 1B Printing 1B Advertising Ii Circulation £241m I Circulation) Advertising I I T Qt 20 0220 93 20 © Resilient circulation revenue has improved every month since April 2020. © Initiatives such as Deliver to my Home and investment in product av
Slide 15: Operating margin protected by decisive action
Operating margin protected by decisive action © Other IB Depreciation 1B Newsprint Bi Labour H119 H120 — Faull Year = = Half Year 19.3% 20.0% 201% 21.8% 18.4% 196% 18.8% 20.2% 18.9% ! I I l I 2016 2017 2018 2019 2020 Operating margin of 18.9% helped by management actions announced on 6 April. §@ Tra
Slide 16: Transforming the Reach operating model
Transforming the Reach operating model Total £ savings © Transformation plan announced in July supporting acceleration of Customer Value Strategy. © Restructuring is now materially complete, reshaping the business into a streamlined, efficient organisation with more focussed editorial, advertising a
Slide 17: Strong operating cash flow demonstrates resilience
Strong operating cash flow demonstrates resilience Operating cash flow of foun Deferred consideration 68 (1) presse 8) a = as 1% Ht) aay Star oe 6) e co M4 (19) a Reach
Slide 18: Profit conversion to operating cash flow maintained
Profit conversion to operating cash flow maintained ™@ Business remains consistently cash conversion®. 9 © This provides the Group with sufficient [Rac sbeit cash to fund the transformation. "Dividends i other © Investment in the Customer Value Strategy has continued throughout pandemic. i Net cash
Slide 19: Net cash increased, pension deficit reduced
Net cash increased, pension deficit reduced 42 7 243 a Dec 19 Jun 20 © Improvement of £21.5m from year end driven by cash conservation measures. £25m on the £65m facility drawn (now repaid). Despite cost of transformation and historical property development, year end net cash up year on year. Dec 19
Slide 20: Business remains well-positioned
Business remains well-positioned At least £35m annualised savings £4m annualised investment BB Labour 1D) Other © Transformation materially © Strong cash performance delivered. maintained. ®™ Improved margin expected ®™ Supports investments and going forward. capital allocation plan. —— Reach
Slide 21: Strategic delivery
21 Strategic delivery Jim Mullen Chief Executive
Slide 22: The pillars of our customer value strategy
The pillars of our customer value strategy Revenue Transformation diversification harnessing and growth talent and teams Increased A single view of customer the customer engagement < A unified view --| sae A ccustomer- ~ & of the customer Pi aa centric culture x across Reach 7 3 underpinned Improved
Slide 23: Strong momentum on engagement
Strong momentum on engagement +39% Total minutes App users 6ex spent on Reach \ 1 YoY S> sites YoY +32% menvonepe| SA 4 Nel multi-platform YoY ee Reach
Slide 24: Single view of the registered customer
Single view of the registered customer 3.5 million registrations BB Target registrations © Actual registrations 4,000,000 3,000,000 2,000,000 1,000,000 Jan IB Newsletters) InYourArea |) Commenting [J Other Reach
Slide 25: Revenue diversification and growth
(€) Revenue diversification and growth Hl Non Registered Engagement @ Registered v L WY Loyalty +30% bom Revenue PVs/User Session/User PVs/Session — — Reach xs 25
Slide 26: Transformation - harnessing talent and teams
©) Transformation — harnessing talent and teams ™ New executive team. ™ More focused commercial structure. ® New insight and innovation teams. ® Increased focus on D&I, wellbeing. Reach
Slide 27: Product and innovation
Product and innovation with MemoryLane Discover the
Slide 28: Getting better at what we are good at
Getting better at what we are good at circulation recovery. HE Digital fevr M™© Group revenue ® Continuing focus © Print on efficiency. 419.7% ® Strong operating margin and cash generation. Reach
Slide 29: Driving customer engagement
Driving customer engagement Lloyd Embley Group Editor-in-Chief
Slide 30: Editorial driving customer engagement
Editorial driving customer engagement Mirror, st ‘VIRUS ORGAN DONOR PLEA.
Slide 31: Summary
31 Summary Jim Mullen Chief Executive
Slide 32: No matter the
No matter the her get “ iat to get \ vorsivered... ik Q4/ Q1 Strategic priorities uk aot Continued Establishment of progress against single customer Progress Further site registered view and evidence commercial launches customers target of increased partnerships and product of 10m by 2022 revenue /
Slide 33: Summary
Summary Performing Reach is profitable ‘he ae locos wee clretee ely materially ahead | and cash generative pp celveringa: Cage ie of 2020 market with a strong strategy and have towards our strategic expectations Halafcelincet continued to and revenue goals invest in Q4/Q1
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Slide 35: Thank you
Thank you Questions Reach
Slide 36: Appendices
Appendices 36
Slide 37: Group income statement
Group income statement H1 20 H1 19 H1 20 H1 19 Statutory Statutory Adjusted(1) Adjusted(1) £m £m £m £m Revenue 290.8 352.6 290.8 352.6 Operating profit 28.9 63.7 54.9 71.3 Adjusted operating profit 54.9 71.3 54.9 71.3 Operating adjusted items (26.0) (7.6) - - Profit before taxation 25.2 58.2 53.5 69
Slide 38: Group balance sheet
Group balance sheet H1 20 2019 £m £m Intangible assets 852.0 852.0 Property, plant and equipment 216.4 224.9 Right-of-use assets 42.6 - Investment in associates 21.9 21.9 Retirement benefit assets 74.6 31.2 Deferred tax assets 55.0 55.9 Non-current assets 1,262.5 1,185.9 Cash and cash equivalents 66
Slide 39: Group revenue trends 2020
Group revenue trends 2020 H1 20 Q1 Q2 Jan/Feb Mar/Apr May/Jun Jun YTD Print (10.7%) (29.5%) (8.8%) (21.8%) (28.4%) (20.1%) Circulation (4.7%) (18.2%) (3.1%) (13.4%) (16.9%) (11.5%) Advertising (18.9%) (45.7%) (17.5%) (32.6%) (44.6%) (31.9%) Printing (26.3%) (53.4%) (24.0%) (41.9%) (51.5%) (40.1%) Ot
Slide 40: Group revenue trends 2019
Group revenue trends 2019 H1 19 Q1 Q2 Jan/Feb Mar/Apr May/Jun Jun YTD Print 7.7% (9.3%) 20.7% (7.5%) (10.3%) (1.5%) Circulation 18.9% (5.3%) 33.4% (1.7%) (5.4%) 5.4% Advertising (14.1%) (22.3%) (3.4%) (22.6%) (24.6%) (18.2%) Printing 16.0% 9.3% 23.1% 7.3% 9.9% 12.6% Other 19.0% (2.1%) 33.6% 4.4% (7.
Slide 41: Reconciliation of statutory to adjusted results
Reconciliation of statutory to adjusted results Operating Pension adjusted finance Statutory items charge Tax Adjusted results (a) (b) (c) results £m £m £m £m £m H1 20 Revenue 290.8 - - - 290.8 Operating profit 28.9 26.0 - - 54.9 Profit before tax 25.2 26.0 2.3 - 53.5 Loss/(profit) after tax (2.4) 2
Slide 42: Operating adjusted items
Operating adjusted items H1 20 H1 19 £m £m Pension administrative expenses (2.0) (1.1) Restructuring charges in respect of cost reduction measures (3.0) (6.1) Provision for historical legal issues (5.0) - Provision for historical property development (15.5) - Operating adjusted items included in adm
Slide 43: Adjusted cash flow
Adjusted cash flow H1 20 H1 19 Var £m £m £m Adjusted operating profit 54.9 71.3 (16.4) Depreciation 13.5 11.0 2.5 Adjusted EBITDA 68.4 82.3 (13.9) Net interest paid (0.6) (1.5) 0.9 Income tax paid (8.3) (3.8) (4.5) Restructuring payments (3.9) (7.7) 3.8 Net capital expenditure (1.5) (1.6) 0.1 Repaym
Slide 44: IFRS16 impact on balance sheet
IFRS16 impact on balance sheet 2019 (audited) IFRS 16 adjustment 2019 (unaudited) £m £m £m Intangible assets 852.0 - 852.0 Property, plant and equipment 224.9 - 224.9 Right-of-use assets - 45.6 45.6 Investment in associates 21.9 - 21.9 Retirement benefit assets 31.2 - 31.2 Deferred tax assets 55.9 -
Slide 45: Financing
Financing H1 20 2019 Change £m £m £m Revolving credit facility (25.0) - (25.0) Cash balances 66.9 20.4 46.5 Net cash 41.9 20.4 21.5 Financial covenants Minimum Maximum Minimum Interest Cover Net Debt to EBITDA Cash Flow* Bank facilities Throughout term of facilities 5.0x 1.75x £25m * Cash flow befor
Slide 46: Pensions
Pensions H1 20 2019 Change £m £m £m Fair value of scheme assets 2,541.3 2,400.8 140.5 Present value of scheme liabilities (2,766.7) (2,663.9) (102.8) Impact of IFRIC 14 (36.2) (32.8) (3.4) Net scheme deficit (261.6) (295.9) 34.3 Net scheme deficit after deferred tax (209.9) (242.9) 33.0 Pension sche
Slide 47: Reduced discount rate has been a key driver of deficit increase since 2011
Reduced discount rate has been a key driver of deficit increase since 2011 4.90% 800 5% 4.50% 4.40% 700 4% 3.70% 3.65% 600 3.20% 3.20% 3.15% 500 2.96% 3.35% 3% 3.05% 3.05% 2.65% 2.76% 3.05% 2.50% 400 2.80% 2.82% 1.94% 2% 300 1.66% 200 1% 100 230.1 297.7 252.2 301.2 305.2 466.0 377.6 348.6 295.9 261.
Slide 48: Provisions and Associates
Provisions Share-based Historical legal payments Property Restructuring issues Other Total £m £m £m £m £m £m At 29 December 2019 (0.7) (5.7) (1.4) (21.1) (7.1) (36.0) IFRS16 Adjustment - 0.4 - - - 0.4 Released/(charged) to income statement 0.2 - (3.0) (5.0) (15.9) (23.7) Utilisation of provision 0.1
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