Reach Plc · LSE:RCH
Reach — H1 2021 Earnings Presentation
41 slides from Reach's earnings presentation, Jul 13, 2021
Slide 1: Interim Results 2021
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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: Jim Mullen, CEO
Reach Jim Mullen CEO
Slide 4: Introduction, Financial Update, Strategic Delivery
1 Introduction Jim Mullen, CEO 2 Financial Update Simon Fuller, CFO 3 Strategic Delivery Jim Mullen, CEO 4 Editorial - Investing in Journalism Lloyd Embley, Group Editor-in-Chief 5 Summary Jim Mullen, CEO 6 Q&A 4
Slide 5: Transforming our prospects
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Transforming our prospects With a clear pathway to profitable growth • We now employ more journalists than in 2019 • Core purpose of ‘champions, campaigners & changemakers’ even more vital in digital era • Reach audienc
Slide 6: UK's largest commercial publisher of news & sport media
Introduction Financial Strategic Investing In Summary Update Delivery Journalism UK’s largest commercial publisher of news & sport media Unmatched scale, reach and influence Scale Influence • 9 national newspapers 8m • 110+ regional newspapers newspapers sold p.w 856k stories published • 50,000 reta
Slide 7: Key highlights
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Key highlights Digital momentum, print resilience, investing to grow 6.7m registered Digital almost a quarter of our business customers Digital Print 42% Digital 58% 10m Revenue +6% +43% 6.7m Print Digital now 23% 2.5m
Slide 8: Interims 2021 Financial Update
Interims 2021 Financial Update Simon Fuller CFO 8
Slide 9: Significant financial progress, ahead of expectations
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Significant financial progress, ahead of expectations • Revenue growth follows strong digital performance & annualisation Group adjusted results H120 £m H121 £m Var £m Var % COVID-19 lockdown Revenue 290.8 302.3 11.5 4.
Slide 10: Operating profit bridge
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Operating profit bridge Property rationalisation impacts statutory profit +25.5% 27 • Majority of charges relate £23.7m to final element of business transformation £13.0m £68.9m £3.6m (1.0%) • Property rationalisation a
Slide 11: Organic group revenue growth
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Organic group revenue growth Strong growth in Q2 driven by digital Group Revenue (£m) Group Revenue YOY • Revenue growth £302m materially £291m LFL +2.6% 16.8% supported by 48 69 annualisation of COVID-19 impact Q2 YOY
Slide 12: Digital revenue acceleration
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Digital revenue acceleration Strategic delivery & sector shift supporting growth Digital revenue £m UK monthly unique visitors* (m) Worldwide PVs per month (m) 2yr +41% 2yr +8% 2yr +24% 69 1,680 41.5 42.1 1,581 39.1 1,2
Slide 13: Evolution of digital revenue
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Evolution of digital revenue Strategic delivery & sector shift supporting growth H1 21 42.7% Digital Revenue Growth (%) 65.0% • Q2 revenue growth acceleration with comparative period down 14.8% 39.8% 41.4% H2 20 20.3% •
Slide 14: Print advertising and digital revenue
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Print advertising and digital revenue Sector shift toward digital reflected in advertising mix Total Print advertising vs digital Total £225m £245m* 86% 81% 74% 67% 59% 48% 42% • Digital now c.60% of advertising + digit
Slide 15: Print revenue robust
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Print revenue robust Mix progression & circulation trend support longer term resilience Print Revenue (m) £241m -15.2% LFL -5.2% +7.3% £232m Mix 12 (19) 12 +10 12 5% • Circulation & ad growth in Q2 10 4% 53 +20.8% • Con
Slide 16: Operating margin progress
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Operating margin progress Sustained strengthening of margin Adjusted operating costs (£m) Adjusted operating profit margin (%) £236m £235m Half Year Full Year 22.3% 22.8% 21.8% 90 85 20.0% 20.1% 20.2% 19.6% 18.8% 18.9%
Slide 17: Investing to grow the business
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Investing to grow the business Digital shift & transformation provide foundation for organic investment • Expansion of Live network • Support registrations & Engagement • Deepen coverage to • Enhances customer insight d
Slide 18: Strong adjusted operating cash flow
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Strong adjusted operating cash flow Increase in net cash position to £55m 30 83 79 (4) (9) (13) (10) 42 55 (3) (4) Operating £ million cash flow £83m 29 (37) 13 (16) id ds al ed r as g CF DA g he ts en on g es leg re as
Slide 19: Pension deficit reduced
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Pension deficit reduced Significant reduction in IAS19 deficit; triennial valuation ongoing • Reduction in pension deficit under IAS19 - now at £155m (FY20: £314m) • Largely driven by 49bps increase in discount rate fro
Slide 20: Full year outlook
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Full year outlook Business well-placed to progress • Trading ahead of full year expectations on revenue and profit • Expect underlying momentum will continue • Tougher YOY comparatives, especially Q4 digital • Increase
Slide 21: Strategic Delivery
Strategic Delivery Jim Mullen CEO 21
Slide 22: A reminder of our strategy
Introduction Financial Strategic Investing In Summary Update Delivery Journalism A reminder of our strategy A Single View Of Harnessing Talent The Customer & Teams A unified view of the A customer-centric culture Increased Customer Revenue Diversification underpinned by data customer across Reach En
Slide 23: How we will double digital revenue
Introduction Financial Strategic Investing In Summary Update Delivery Journalism How we will double digital revenue Customer value creation Registrations Engagement Content Product Development Increasing content helps us understand with more personalised enabling more consumption our customers & rel
Slide 24: Registrations advancing
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Registrations advancing Confidently progressing towards 10m target 6.7m Newsletters IYA 5.0m Other • 6.7m customers registered • >30% growth since end of 2020 2.5m • Registered customers consuming >3x more content 0.8m
Slide 25: Engagement growing
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Engagement growing Engagement and loyalty continuing to grow Audience and loyalty measures • Page views particularly high during early part +8% +50% of pandemic +30% • Two-year growth rates +1% more indicative Unique Lo
Slide 26: Content broadening
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Content broadening Expanding breadth & depth of newsletter content Newsletters PVs (pm) Top 10 newsletters New engagement Mirror 1m 2m 3m opportunities Express Royals MEN Echo LFC Daily Briefings: Content 47 Echo severa
Slide 27: Reach Plus Portfolio delivering for advertisers
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Reach Plus Portfolio delivering for advertisers + Significant improvement in ad effectiveness Uplift in click through rate Betting & Travel Leisure Gaming * Education Retail & +46% Fashion * +36% +14% +20% +23% * Uplift
Slide 28: Product development - Plus Portfolio
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Product development - Plus Portfolio + Starting to serve ads to more targeted audience Audience+ • Growing customer data enabling increasingly targeted approach Customer+ • Already worked on c.50 new campaigns based on
Slide 29: Reach Plus Portfolio worked example
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Reach Plus Portfolio worked example + Case Study: Property Identify behaviours, refine audience, target ad Define data set Refine Cohort Property Audience Unique users who have registered for newsletters on these topics
Slide 30: Partnership with OnTheMarket
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Partnership with Case Study: Property Building on large property cohort & geo capability • Significant commercial partnership – engagement across full Plus+ portfolio As the biggest multi-channel • Aim to enhance OTM di
Slide 31: Evolution in data-sharing
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Evolution in data-sharing Pro-active strategy means we’re well prepared • Reach ID allowing us to build pool of 1st party data • Enables understanding of customers’ behaviour across our products • Mantis will enable dev
Slide 32: ESG progress
Introduction Financial Strategic Investing In Summary Update Delivery Journalism ESG progress Developing our impact & influence Environment Governance • Signed up to ‘Ad net zero’ Social • Working to codify corporate • Committed to 75% GHG • Pride of Britain Awards sustainability approach reduction
Slide 33: Investing in our people
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Investing in our people D&I and wellbeing at centre of cultural shift D&I targets Materially incorporated into extended access remuneration to physical & targets for 2021 Wellbeing & mental health onwards support is a m
Slide 34: Investing in Journalism
Investing in Journalism Lloyd Embley Group Editor-in-Chief 34
Slide 35: Investing in journalism
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Investing in journalism Growing reach and depth of content Audience Page views 42m 1.6bn • Role of publishers has never been more vital +8%* +24% * • Expect c.10% bigger editorial team by year-end • More stories on more
Slide 36: Editorial position aligned to our audience
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Editorial position aligned to our audience One story, one publisher, many audiences 36
Slide 37: Regional News expansion
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Regional News expansion Portfolio facilitates unmatched scale and coverage Iconic brands, Live across all of England & Wales trusted by readers Northern North North East Ireland Scotland East West 83% 51% 75% 80% 33% Ea
Slide 38: Summary
Reach Summary Jim Mullen CEO
Slide 39: Our priorities to drive growth
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Our priorities to drive growth Extending our reach, enhancing our data, growing our capabilities More Audience Loyalty Page views Data More Sites Journalists More Stories Content Data Insight Cohorts Personalised 39
Slide 40: Continuing to deliver our plan
Introduction Financial Strategic Investing In Summary Update Delivery Journalism Continuing to deliver our plan On path to long-term sustainable growth Audience growing and more engaged Investment in content and data will accelerate growth Sector shift and efficient operating model has transformed p
Slide 41: Thank you
Reach icon Thank you . « Questions.