Reach (LSE:RCH) — Full Year Results

0:00 Good afternoon, and welcome to the REACH PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated in right corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Jim Mullen. Good afternoon to you, sir. Thank you very much. Good afternoon, everyone. Thank you for joining us on this presentation today. It's really important for us that we speak to as many investors or prospective investors as possible, And then we don't take your interest for granted, so we do very much appreciate it.

0:48 And I just wanna give you an overview of what has been

0:53 quite a a an impressive 2024 for our business. The teams have came together and performed really well. And part of the the reason for a strong '24 was the fact that REACH PLC made their costs and restructuring decisions pretty early. In fact, we made it back in h two twenty twenty three. That's an important point to make is that we have a history of basically acting quickly. I think we were the first if not one of the if not one of the first, I think we were the first to structure our business so as we could be ready for 2024. And when you restructure it early, you allow the business some oxygen to actually breathe and not have the overhead of significant change hanging over them. And that's basically one of the reasons why we delivered such a strong 2024.

1:44 Strong in a sense that, digital come back to growth, up 2%, for the full year, and a particularly strong q four where we had the benefits of strong audience traffic as well as our our our ecommerce and our affiliate businesses and great content coming together. I mean, q four for us in 2024 is an exceptional quarter. And so that's we're really, proud of that. And some of you might say, you're maybe new to your business, well, 2% doesn't seem that impressive. I said, well, if you do a read across the some in the consumer media industry, think you might find that it is. Some are in decline. We've actually delivered growth. So really, really strong digital year for us coming back to growth. Overall overall in print, it's a it's a product that we love.

2:34 We sell 670,000,650,000 copies a day at roughly one fifty, one seventy. Now just for a moment, just think about that. That's every single day we manufacture and produce a product which has a steady 600 to 650,000 sales. Now that's declining at 17%, but it is still extremely attractive, the advertising. So advertising is only down 14% against 17% on volume, and circulation which is a cover price is only down 3%. Now everyone talks about manage decline as a negative thing. Manage decline is not a negative thing when you have scale and we do. So print circulation at three is maintaining that loyalty because it's a habitual product that our customers have been buying for twenty, thirty years.

3:27 So it's part of the lifestyle, it's part of the daily habits. So we're really, really delighted that that significant revenue stream has been well managed. Overall, it's given us an operating profit of 102,000,000, and that's up 7,000,000 like for like with an excellent cash conversion, which Darren Fisher, our CFO, will take you through. But again, just thinking about our business, We're the six biggest digital asset in The UK just after the BBC, which is the fifth, and then it's the four American platforms. We're the six biggest digital asset in in The UK. And not only that, on over 500,000,000 of revenues, we make over 100,000,000 of profit. And that's the way to look at it. Excellent operating margin, excellent management of cost, delivering profit every year, which is a very strong healthy business.

4:15 What's driving that growth? Well, about six years ago, we come up with a customer value strategy. What that basically means, we don't have funded model, which means we don't have subscriptions because we deal in a segment of The UK consumer market, 38,000,000 of them, who basically don't have the the the money at the end of the month to actually pay $6.99 or $9.99 for content. And philosophically and and from a purpose perspective, we don't think that news should be paid for. It's not a luxury. It should be free. If you want to know what's going on in these communities, if you really want to know what's going on in Southport during the tragedy there and and the rights that then came after, if you want to know how your government is operating during a pandemic, if you want to know how your council is dealing with essentially moss and houses which are causing young people to have really damaging health issues, then why should you need to pay for that? So and so we feel really, really strongly about that.

5:10 And we've managed to find a model that works which is ad funded. Certain segments of advertisers think our papers are really strong to get to their audiences. But also, we have this deal with the readers which basically says, if you give us permission to contact you through your device, whether it's your phone, your laptop, or your iPad, then we will give you content when you want it, exactly what you like. And as long as we can say, well, we can track when you came on and how long you spent on the article, we will then basically send even more content. And what we've got is we've got 14,000,000 people who have signed up. 9,000,000 because the trusted brands, the trusted Liverpool Echo, the trusted Daily Mirror, trusted Bristol Post, and the Daily Records have basically said, yeah, I don't mind you sending me content to my phone because I know it's a brand that I trust and you won't take advantage of it. 9,000,000 of them have done so. So we don't charge 9,000,000 subscription fee unlike it's not a Netflix approach, it's not an economist, it's not a times. But what we basically say is we'll probably put some ad blocks in those content segments and because of that, we charge the advertisers.

6:18 So think about that for a moment. 9,000,000 people have essentially subscribed to our services on a daily basis. You just don't pay it for a monthly fee. We get the money at other sites, which is from the advertisers. And because we get that sign ups, it essentially means that we can actually get better rates with our advertisers. We go to advertisers, and that's simply how it works. Either you advertise on our sites, which is essentially you don't know who you'll get, but it's widespread, which we do. And we make we make we do well from that. Or we basically see, we go and advertise it, look, we know exactly how many people say a million and a million and half people are thinking about their kids going back to school in the next three or four weeks. And they'll be looking at school uniforms, and they'll be looking at pencil cases, and look at all the stuff that the retailers sell and we will go to those retailers and basically say, out of the 9,000,000 and a half, we may have a million people who are thinking about getting new school shoes and new school uniforms for your kids. Would you like to get to them because you don't have to spend on a nationwide campaign?

7:20 We've got them here. That's simply how it works. But what happens is, normally, in our, say, an open market where the the market sets the price, those advertisers might pay, I don't know, 20p for that advert and then the click through. But we will say, well, because we're not wasting your advertising spend, we're gonna charge you nine times that. Alright? So that 20p is nine times that and that's how it works. That is simply how our model works. And how does that work? It basically means our data driven revenue, that sort of revenues increased by 7% and that now makes up 45% of our overall digital revenues. So we're not relying on, Google for that part of it. We have that direct relationship And that's up from 43 to 45 from last year. Now it also basically means that our our direct advertising with the market sets the price because we've got such scale, that's up as well. That's up 22%.

8:15 So despite some of the stuff that you're hearing with regard to strain on The UK consumer economy, that's absolutely true. But you have to remember who our social demographic is. Our social demographic are usually the CDE, that sort of bottom end of the economic sphere. Now the thing about that demographic is they still need to they still need to actually buy stuff, but they're looking for value. So we find that things like the food retailers are very, attracted to that market for offers you'll see at Tesco owned brand, Clubcard, all the products, etcetera. So that's why we're seeing that up left in the open market because we're really, really strong in that area. So even though our page use of the client from 2023, but it's still up there around the high $3,040,000,000 a day, we're actually increasing the value of a page.

9:06 So yields went up and that yield is essentially how much money do you make from advertising on a page and that's went up 19%, which is great. So that's why that's why we've got a strong digital business going back to growth. Now overall, we're obviously managing the claim of about 75% of our revenue from new newspapers. So overall, we still need to maintain a good operating margin. REACH have been, since I had been here as chief executive for six years and actually before that, well known for managing our costs. Right? And one of the things that we do we do two things, but one of the things that we do well is we see things early and we're good at it. And then investors will see it is we surely can't keep doing that. Well, here's the trick.

9:54 We can't to an extent because actually because the revenue is 70 odd percent is in newspapers and as newspapers declined by 17%, that means you have less ink. And what's ink? It's a chemical. It's a fusion of other minerals and it needs to be heated up to a very high temperature to produce it. So our energy cost drop. Newspapers, newsprint are printed on paper. We use less paper, which is expensive and has to go on a ship, which means less energy cost to do that. And then the electricity that goes with it. And then how do you print it? We usually print it without even in plates. It's quite an expensive product. But as it declines 17%, that cost gradually comes down. So you can see how the model works where we decrease our cost base as the volume of the product that we make. And then if we do need if we get into, I mean, god forbid, another escalation award in Europe, which we got hit with, or energy crisis, which we got hit with, which is in or inflation, post the pandemic, which we get hit with, then we have a track record of finding those costs and we can do that. So our print is expertly managed and despite 6% like for like revenue decline.

11:02 So that's the overall story of our business. I'm gonna hand you over to Darren who's gonna take you through some of the financials and then he'll come back to me just to give you a bit more of the strategy. Darren?

11:16 Thanks, Jim. Can you move this slide on, Joe?

11:21 So I think the the high level summary is we had a a a good performance in 2024. You'll see that we had we had a a revenue decline of just around 4%, and that's really a a managed decline of our business. Tim has just talked about, yeah, how we manage our our print business. Overall, though, our digital revenue returned to growth. So two point 22% improvement in our digital revenue, and that's excuse me. Sorry. Print which still remains the main driver, I'll talk about in a moment, but it declined 6%. That is the circulation revenues offsetting the circulation decline of 17%. From a cost point of view, Jim's already mentioned that we manage our costs very effectively.

12:12 So we've had a saving of 6.5% in our cost base this year. That's been driven really by the cost program we had in 2023, where we had to respond to the deprioritization of news in that year, and also the unwinding of inflation on our on our newsprint costs. Overall, we had a strong margin, an operating margin of 19% that was up from 17%. So we've generated over 100,000,000 in in overall profit. On the next slide.

12:53 So you can see there, digital revenue, 2% return to growth. Circulation, well, it's down 66% overall. As I said before, this is effectively because we've been able to manage the decline, which is 17% through our cover price increases. Print advertising, 15%. That's a good performance against against circulation volume decline of 17%. And overall, we had a 6% decrease in our overall revenues.

13:27 On the next slide. So on the uses of cash, we generate a 126,000,000 of operating cash flow. As you know, a significant portion of that goes into our paying out obligations to our pension scheme holders, which is 60,000,000.

13:43 We paid dividends last year of 23,000,000 as we did in the prior year. Historical legal issues, we had a provision at the end of twenty twenty three of 18,000,000, which where we settled after we'd settled the the claims of 9,000,000 this year. We've got another 9,000,000 to pay in 2025. We expect that to be paid over the course of twenty twenty twenty five and 2026. Restructuring charge of 17,000,000, much of that was related to the program we completed in 2023, where some of that just ran over into into January. And then CapEx of 12,000,000 is pretty much in line with where we'd normally expect our CapEx to be. And then other is made up of a number of things, things like lease payments, vacant property costs, and net interest.

14:34 And that leaves us with a net debt number of 14,000,000, flattered by the fact we had 15,000,000 of property sales proceeds, which won't recur in 2025. Certainly not materially, we may have 1 or 2,000,000 of cash coming in from the remaining properties that we have. Next slide. Thank you, Darren. So that's that's just a quick overview of the numbers. There'll be there'll be there'll be opportunities for you to ask some questions, but I just wanted to take you through some of the key points of the presentation. Now one of the things when you're dealing with consumer businesses, I think, is a an investor that we have seen. You have to really believe the management, you know, because there's certain there's so many things going on in the macro environment and external fact world that you have to basically have a a confidence level in the management that they can basically say that that that what they're gonna do that done.

15:30 So this slide is essentially just a a sort of but we're not crowing about it. But last year, we said, well, this is what we're gonna do at the beginning of 2024. I just wanna get through to demonstrate that we've done so and also tell you why it's important. So we need to demonstrate the strategy is working. The strategy has been in place now for five and a half years and there's always a question about, well, is it still relevant? Yeah. Well, we think it is. So what we've seen in the strategy is that there's something called RPM. RPM is revenue per page. So it's revenue per thousand pages that we present. Now that's important. If you take a page on a website or on an app, there could be anything between four or six ad blocks there. Some of them you won't see, but when they're presented and if you read this top of the article to the bottom, if you look at piece of video, we will charge advertisers for the time that you spend that that ad was presented and that's called RPM.

16:24 That's up 19%. Right? That's really, really important. And the reason why it's up 19% is because of the effectiveness of our advertising. Going back to that point I said, we've got 9,000,000 users who we know that you like sports or we know that you like automobiles or you like breaking news and we get that content in front of you at the time you want to see it and we charge higher rates for it. That's a 19 RPM growth that's coming through. It also means that because we're actually earning more revenue that we can increase our operating margin. As I said, with our good cost management, our operating margin is set in 19%. This is a really underlying, you know, come on to the historical legal obligations. This is a really healthy business. The other thing about digital is what is the level of quality of the digital earnings? It's really important question. And I'll tell you why it's important.

17:17 If you go in and do a search on Google now or one of your search engines, you will find the AI will sometimes create an answer for you and that could be a blocker of going on to a individual independent piece of content. Now the way around that was to build relationships with customers which we have done. So here at REACH, we actually don't mind that because we think that gives us a competitive advantage, which basically means, okay, we'll put in and I'm searching for something and it's came up with AI and I might go on to a piece of independent content, the BBC or the Daily Mail or REACH or whatever. But actually, we've got 9,000,000 people who don't actually even go there. They get sent to every day. And because we know when they access the content, how long they stay on our page, we can actually send content that's relevant to them. So actually, having those blockers in the open market is an advantage to us because we don't have subscriptions, but we still relatively have access to those people. So that's really, important, which is why that 45% of our overall digital revenue comes from a one to one relationship with a reader or a customer.

18:28 Now we built that strategy around the ad market losing cookies. That was that was the start of it back in six years. What's actually materialized is cookies weren't weren't actually the blocker to content. It was AI. Now we use AI internally. So we quite welcome this this this issue, which is for a lot of publishers because it gives us a slight competitive advantage. We've got momentum in the digital business again. I think this is really strong again. You might look at the numbers. It was only point it's only up two percent, Jim. Why really? Is is that that good? Well, quite a lot of digital businesses out there which are really healthy and a negative growth and we're delivering too. And it comes back to that point about data. And in q four was an absolutely outstanding quarter for us. So we then built that into our plans for this year, made sure it was fairly prudent so we don't disappoint coming into the the full year 2025.

19:21 So we've had a really good start. Come trading has been good. Just to let you know that, we've let that know with other investors, other perspective. That's been good. So we're in a healthy place at the moment. Spoke about cost. Don't wanna dwell too too much on it, but as our print declines over a period of time, our cost decline as well. And also, we're quite a big business. We've got bits of property. We've proven that we can do it. And you should read between the lines where the chief executive is speaking to you about the confidence that he and the CFO have in cost. Hopefully, I'm I'm radiating some confidence that we can manage cost. I don't think there's I don't think there's been an issue there for REACH and there would be one going forward. And then also because of that good profit number, because of the significant cash generation that we make, then we declared final dividend again.

20:13 So again, you should be on that mind that's you may look at, obviously, we've got a paper business and that might put a negative tone on the business. Do not do that. Look beyond that. Look at the cash that it generates. Look how that cash pays for the obligations, how that cash is invested in digital. And then the final point, and this is really, important. One of my primary jobs when the board hired me six years ago was to solve two problems. One was pensions. And then with Darren's support, we are now on the final runway to fill pension fully funding by 2020. What does that mean? Well, look, we pay 6 we make a 100,000,000 of profit, 60,000,000 of that goes in pensions. Right. And and it's deserved. It was it was obviously everyone some of might know the history of of REACH, but that ends and that cash becomes available for investment. So we have managed the business well up to that point. We're getting so close. We're only thirty months away now from this 2028 date. And it might not even mean that we have to wait until that point. We might actually say, look, the business is that well run. You can maybe actually invest early because, know, we can get the returns.

21:21 The main point is we are materially closer to that date when our obligations go away. Joe, next slide please. This slide is really important. So I made a statement about why is data led important because some people don't understand it. So this slide looks at if you look at that dark turquoise line at the bottom, that's basically the money that we get from open market. Now what the open market is, you search in for Man United and it comes up or Man United Arsenal, we put it in, comes up with a report for last night's game. You go and look at the ad on one of our sites, whether it's the Manchester Evening News or the Daily Mirror, and there'll be ads that will be put up there just because you found us. Now REACH are price takers in that situation.

22:13 We don't put the price for those ads. It depends upon the demand. There's a whole algorithmic structure behind it, which is dictating demand and price and center price and we might get, I don't know, 14p of that. Now what's happening over that time is because it's becoming more competitive for audience, you're seeing audience decline. That's where you're that white dotted line at the bottom decline. But you're also seeing the RPMs, you know, the the revenue per thousand decline over time as well. I mean, it's still a lot of money because it's significant, but it's in a declining platform. You then add into that things like AI, which is putting AI results. You might put it in and you just see, oh, it's a draw between Man United and Arsenal. Here were the scores and we'll give you a view and that may be enough for you if you're on the hoof. So that then takes audience away again. So the strategy was, well, if I get to know these people, before they even put the search and I'll send it to the phone, either WhatsApp or send it in newsletters or when you go into the site, you'll see your content right away without doing a search. That's the light turquoise light turquoise light above it.

23:17 Right? And that's shown you how since we started the strategy back in 2019. With that dip in COVID, what happened then was manufacturers and advertisers thought the world was gonna end and no advertising gets spent. Pretty soon after people were baking banana bread at home, they realized they had to sell bananas and flour and milk. It all came back again and you've had this spike. Now the interesting thing about this slide, if you notice the top thick full line of fit that says FB referral. Now what happened then was Facebook decided to deprioritize news and basically stop sending traffic to news providers in The UK and it dipped by about 30%. Because we had direct relationships with our customers, we could still send them news directly and actually our revenue increased.

24:09 And it proves the point of if we had subscribers, then we wouldn't have to worry about that, but we don't we don't have subscribers because it's all ad funded. So despite a decline in Facebook referrals, we still manage to increase our revenue, which is essentially why we've seen this RPM, this growth in revenue per thousand from 2020 to 2024 going up 65%. So this slide just really proves the numbers behind the strategy and that it's working. Thanks, Joe.

24:45 Some of you might not know our business and we often forget internally that we sometimes go, why are showing this slide again? I mean, everyone knows, Some people don't actually about the scale. If you're the marketing director of a major UK brand or the marketing director of a regional brand that's looking maybe to own its area or expand, then you want to be get the most effective use of your spend. So if you're a major UK brand, you come to us and we will get you access to the 80% of The United Kingdom. Right? Simple as that. And our reach is really, really important to us because actually you can come to us via an agency of directs and basically go, I need to get to the whole of The UK, can you sell this stock or you're in Manchester and you might be wanting to just do in Manchester or Glasgow or Plymouth. We can do that for you. That's one of the benefits that we have. Maintaining the scale of our business is really important.

25:43 So we win business that way. We win business quite often that way. But what we then do is just what I've spoke to you previously. We then go, yeah. Well, I do want to spend the money but I don't want it I don't want to spend a lot. I mean, I know that I'm gonna access 38,000,000 people, Jim, Darren, but I know only half a million of them are gonna buy my product. So why do I want to spend it on 37,500,000 people? I we we don't worry about it. We can do the segmentation for you. So we bring the scale and we bring the deep dive insight, which is one of the reasons why we retain clients with Tesco, which will come on to an event. We keep retaining them because not only are the national clients, but they don't want to spend millions. Now you might think that that's a bit odd to say, well, don't you want them to spend millions? No. We don't. We want them to come back and say that advertising was really effective.

26:30 We want them to come back and say that advertising was really effective. So rather than doing one campaign for a million pounds and never coming back, do $20,500,000. Right? Do do $25,500,000. Right? And then over time, you build up more and more loyalty. So we've done that. We've also launched The United States because we've got to the stage where actually we've saturated The UK. So about eighteen months to two years ago, we launched The United States by the Mirror US, is left of center, the Express, which is right of center, and then dealing with Irish diaspora and giving them content which is relevant today with Irish star. We now have an audience in United States of 30,000,000 uniques, which is only 7,000,000 behind the Washington Post and we've done that within an eighteen months to two year period.

27:18 We've got 50 to 60 journalists based in New York and California and we've got a similar amount here based in in Canadian Wharf and some home working which allows us to do a twenty four seven news cycle. So that has been really, really successful for us and that project is now profitable from a project basis within North America. Sure. Next slide, please. So engagement is really important. There isn't much point in recording a unique user if that user only comes once a year, say, to feed about the Grand National or to read about England and the semis of the Euros or just to look at general election results. So you can have these big numbers and it's for some of your seasons, media investors will know this is that you have to look beyond if any if any media owner basically says, well, I've got 38,000,000 unique users, you go, that sounds really impressive.

28:18 You need to look beyond that and you need to look at engagement. And how many times did they come back?

28:23 It's not the email you might sound sound a lot, but if they only come once, you're only showing them that Tesco advertisement once, you want them to come back every single day. That's why engagement is important. So our paid views per visit, which is essentially when I come on to your network, how many of your pages that you'll look at is not just for the election results, essentially, when you look at other stuff. And what we do is we because we know you well, we can go, look, I know you came on to look at the the election result, I know you're interested in this content here or this entertainment content and we present that to you. That has proven to work for us because our engagement of pages per visit are up 8% year on year. That's underlying was supported by our sign ups. Now people don't sign up to content unless it's relevant. So I like a niche I like niche sport.

29:13 It's called Scottish football. Right? And I read it every morning. And basically, the the REACH system behind it picked up. There was this chap in London who was picking up Scottish football 350 miles away, but that was fine. So what happened is every time I went on, whether it was to read about the breaking news or the economy, strangely, if I didn't know it would have been strange, the Scottish football story started to come up. And then I started packing which which club I liked in Scotland and then I was go then that started to appear. And over a period, didn't take long, maybe twelve weeks, I started getting content I liked. And it got to the stage because the content was high quality because that's what we do. We're a journalist organization. We've got 1,700 journalists. We're the second biggest employer of journalists in The United Kingdom after the BBC because it's high quality. I eventually signed up and that happened for 9,000,000 people.

30:08 So year in year, we're signed up another 26%. It's grown 26 which is fantastic. Now I know some of you are have sent in some questions about the UX and the quality of the experience. We hear you. We're an ad funded business. We've got obligations on historical legal issues which would now resolve. We've got obligations and pensions which are going fully funded. We need to pay that. And so what we do is we put more ads on our page and it was impacting the user experience. So part of our capital allocation last year was essentially to a new digital publishing platform on which has increased which has decreased the latency and the experience for all of our sites. And by the end of this year, all of our sites by the express will be fully on the new platform.

30:55 We ran NPS reviews of it for January to make sure the user experience was going back more positive than it was, and that was presented to the board. And then in q one twenty twenty six, the express will be fully on the platform as well. The reason why that's delayed is because when we bought that platform at we bought that type of ad of the sport platform behind it. So the majority of the digital state will be created in 2025. And as you can see, they're they're already reporting that they are

31:21 three times more quicker with a increase with a decrease latency for for page loading. So here's some case studies. I think this is a real important slide. The first one is our Tesco case study which is essentially we've got about four 45,000,000 postcodes and postcodes are hugely valuable pieces of data. Now, Tesco, you've probably seen them run a revised club card campaign, but Tesco are actually we need to be more competitive because they're actually getting attacked from all sides by discount retailers. So with our data, we looked at the areas where they may or may not be under our over indexing competitiveness.

32:07 And we use that through a post code analysis which allowed them to therefore spend their advertising more wisely. Now you deal with a company like Tesco, they're far more advanced data wise than us, then you need to make sure that advertising is effectiveness. And what we've actually been done, we use one segment, which is over 35 females, to see whether or not we could increase the spend with Tesco. And the click through rates increased by three times industry average just on one campaign. And the result of this has meant that we have renewed the Tesco contract with them. So for the last four or five years, we have renewed and rewon the business. And we're under threat as well because there are other publishers who are trying to take that business from us. But that's three times in this the average is managed to allow us to win that business.

32:55 Allwin are essentially the national lottery operator. Now one of the things that we just have to let you know, people just think, oh, you're a newspaper publisher of a digital business. We are not really social platform experts. But in the last eighteen months, we've got a 100,000,000 followers, you know. They might not have a loyalty to our brand, but we write some brilliant content. We've invested studios in all of our major hubs and we're now creating this social following, which basically for all when when they're trying to get to a younger market, deliver 5,000,000 views for them. So they're one of our key clients. And then the final one is just to to show you an idea of the EFL on Sky was launching. And if you if you know the data of the EFL, it's actually huge. It's a it's a really big thing. But it's a regional product, you know. So you can't just go for a whole campaign because it's too generic.

33:49 So we actually went with regional clubs and we're just using the idea here about there's one here about Huddersfield where we actually got readers and consumers who either have subscribed to us or read our our our our our content in Yorkshire and basically made it made it aware for those customers pre launch and that reached 4,000,000 users for EFL regional football. So that's that's three of our good successful how we use data in 2024. And all that came through to our digital growth rates that I just spoke to you about previously. Cool. We have a purpose in our business and that basically trumps everything that we do. So just for I know you're investors here and and you're here to make a return and that's really, really important. And hopefully, I've demonstrated that we will deliver a return for you with a back digital back to growth, managing our huge print revenue line, declaring a dividend again.

34:52 So I think I think I've spent a lot of time on that, but I really want him to just let you know what you're you're investing in. We represent communities that no one else does. So if you take the Salford Lads Club, sort of iconic youth club center, which essentially is part of Salford and part of Manchester, well, the MEN was gonna make sure that that didn't I didn't that didn't fall over and it did.

35:18 If you look at the assisted dying law which was discussed in parliament, that came from the Express. That came from a team of journalists in Express who thought this was important, who'd been personally affected by this. So we wrote about it and it basically basically had a converse made sure there's a conversation in parliament about it. Liverpool Echo were the first on patch in Southport. You know, the residents of Southport from whatever background were concerned that these outsiders coming in and it was our journalists that were on patch reporting it. Got to the point where it was getting picked up by North American and European news agencies, but it was actually our journalists. A fair few of them got assaulted, but making sure that the truth of the matter was was getting out there and and again, just reminding everyone why this happened and it it was not to be used for any political aims. It was it was it was because of a tragedy and and just remind everyone what this was about. It is not about politics.

36:21 It was just about families who have been who have undergone a tragedy and it was the Echo that did that and they've been doing it for a while. And again, on the Echo as well, why this is really, really important to us and why our strategy has to be a real strategy that is sustainable. The echo has been the main voice for the families of the Hillsborough victims to the point where it's now got Hillsborough law has been passed by the prime minister. That's through thirty six years of campaigning. That's what we pay for. Now we might put ads at the site for shopping offers, you might put Christmas ads or Black Friday ads and we make money and we invest in it. But actually, thirty six years that title stood stood firm with those families and we got the house of brother. This is what we do. So we are a sustainable long term business.

37:12 And then on our new studio, we've got the the the Eurothrash and the Division Bell, which is a podcast and webcast services. And then the Daily Record, which is my newspaper I was brought up with about the continuing, obviously, stories about people who've been affected in Scotland and in West Central Scotland. So we are delivering brilliant content. That is our purpose and we've got this great opportunity that attracts people's attention and engagement. And what we've found is people respond. They don't mind getting an ad for an offer or for advertising if the content is good enough and we continue to do that. So the message from here is we still employ the second volume volume of journalists in The United Kingdom. We are committed to do that. We have an important role to play in democracy.

38:01 But also, if we don't do that, we can't make any money and we've managed to get it to work together. So thanks for listening to that. That was an important purpose for our business. Cool. Here's our investment case. Very simple, but I thought we'd put it out there. We'd love our great content. The content's got content's not good enough, people ignore you. When they come, we get them to stay. We get them to stay through our customer value strategy, which essentially means it's growing over 6%. And that's continued. That's been growing for a while. We develop our audiences. We do things like ecommerce and affiliates. We sell beauty boxes. We sell gardening equipment. We do articles on gardening because it's coming into March. And at the bottom of that, because we've got such scale, sell a product.

38:48 Nothing wrong with that. Content and commerce coming together, which is good. And don't do not underestimate our print business, you know. And there might be some of you who are reading this or listening here who don't buy newspapers, but a lot of people do. And just to give you some of the facts behind it, we've looked at the actuarial tables because the biggest issue that we have in this business is mortality. And on average, there's twenty to twenty five years of life left for those people who are buying six over 600,000 newspapers a day at £1.50 or £1.70. There are not many digital businesses out there who can rely on that income stream to grow their business. Do not underestimate it. People say managing the client is turned off, I don't. If it's if it's of scale, it's of real value to And we're highly profitable. This management team knows how we manage the business. We are obsessed with margins.

39:40 We are obsessed with our operating margins and we're obsessed by costs. And one of the good things about it, as our high volume print business declines, so does the volume cost go down as well to produce to to support that. But there's always places where we can go and we've proven that before. We're not asking you to trust this, just have a custody glance over the last six years of what we've done in cost. You'll see that we we are a proven management team in doing that. We have resolved our long term uncertainties. So I've been six years in the business. It's taken us five years to get to this point. Historical legal issues, which is phone hacking, has now been resolved. Next year over the last year, we will make a payment we've accrued for, that's fine. And we're on the path to fully funded with the pensions, which is essentially the Rupert Maxwell store pension money decades ago.

40:34 We're now getting to it's now within months. And now is the time that I would say would be a great time to look at our business because that obligation goes. And then we've got a clear capital allocation framework which you can ask down a bit questions on that if if if you wish. So quite a hopefully quite a simple and compelling investment case. So just to summary summarize customer value strategy is working. We get to know readers and we can send get them content which makes them stay on-site and we sell them more advertising. It's as simple as that. Our audience is growing and we're diversifying our revenue. We never used to do this. We always seemed a bit of a an easy one for us. If you get 32,000,000 people coming on-site and they're reading stuff about products, whether it's car insurance or whether it's gardening equipment or Taylor Swift tickets, then why don't you become part of that process?

41:26 Just to let you know that we're getting better at it because you only make small margins in these things, maybe one or 2%. When you look at it, as I said, we're obsessed by margins. You might find we're given half a point away as a transaction fee to an ecommerce platform. Someone come up with an idea, why don't we build their own ecommerce platform, which we did. It's called Yimbley and we saved ourselves half a point. That's how we're looking at our business. Our digital business is growing. You may see, oh, Jim, it's only 2%. Have a read across some of our competitors. Quite a few of them are negative growth. We are growing it too. When the tailwind comes to the economy, that will be multiplied. If it gets tougher, you know, the customer value strategy is to be as competitive as we can in that in that area. Print revenues remain reliable. Please do not underestimate the huge amount of cash it gives us and how we can invest it. A lot of people switch off. I've left investors meeting going, didn't manage to get across just to look at the numbers. It's huge. And that goes to digital investments. That's good.

42:27 We shouldn't have to be tested on cost and efficiencies. Right? We are just drilling at it. Dan and I lead it. I've been here for six. Dan's been here for two. We've delivered every year since. But an interesting thing to look at, even before CEO and CFO were here, we were doing it. It's not just us, there are a whole team behind us in how you manage this business and the cost and they've stayed there here. And and then our financial obligations are beginning to unwind. If you couple that with over 500,000,000 of revenue, with over 100,000,000 of profit, a pretty healthy business, you know, which will only get better in 2020. Thank you. Right. I'll I'll jump on to some questions that have come through. I'll start start with some financial ones just to give you a bit of a break there, Jim. Capital allocation.

43:18 Given current levels of valuation, would it make more sense to undertake buyback? And whilst I appreciate this is a board decision, if it if the answer is no, does this indicate that they feel the future share price is also risky? Yeah. So the the the first thing to say is, you know, we, we've been a a dividend paying company for some time. And from a capital allocation point of view, that's the way we have thought about it. It's interesting that, you know, this has come up, from time to time. It's been, you know, certainly been talked about as we've been on on the roadshow. As as it is today, you know, our our our model really is supporting a dividend for our shareholders. Yeah. We'll continue to to have these discussions at our at our board on a half yearly basis around whether we would want to, look at that going forward. But right now, as you know, we've just declared a dividend.

44:15 That's where that's where we feel the right thing to do to do is for the company. Great. And can you tell me where do you think peak level of debts will get to? Yeah. So key drivers of cash. Yeah. So the key drivers of cash look. We have a really clear picture of of our cash going forward now that we've got our, you pension contribution schedules agreed with our with our trustees. We have, HLI resolved. As I said before, we only have 9,000,000 left to pay, which will be paid at over 25, '20 6. We, you know, we have routinely paid a dividend. You know, clearly, is decision for the board each half year, but we know what that looks like, you know, should we continue to do so.

45:05 And, you know, we have a clear picture of the cash we're generating, you know, in terms of our cash conversion, a 105% this year, typically probably high nineties. So going forward, we can sort of predict those forward really, really easily. We'll continue to go into our RCF over the next few years as we continue to pay those obligations down. Once that comes off in 2028, then we'll start to see that cash coming back in. The cash flow will increase significantly, and that will give us, you know, the opportunities to be considering, the way that we want to, again, look at our capital allocation model, how much we want to invest in the business, you know, how much we want to pay down in debt, and whether we we think about the current model we have for for rewarding shareholders as well. In terms of where that will get to, I'd expect the outflows over the next few years to be 20,000,000 to $25,000,000 a year, adverse. We'll further go into net debt before that starts to come back.

46:06 Thanks, Darren. Can you provide more information on new revenue streams like affiliates and ecommerce? I think on that, I'll move to slide 30. Yeah. Yeah. So affiliates affiliates has actually performed really well over the last few years. We've put a significant amount of effort into it. It grew 50% in 2024. I mean, these aren't, you know, these aren't the biggest revenue streams, but they're important revenue streams to to us in terms of supporting our over overall digital revenue. So they're they're certainly making a strong contribution to our overall digital revenue. We also have, obviously, the the the Okay Beauty Box. Again, that's performed really well last year. We had a really good q four.

46:58 As, as we went into Black Friday, we increased quite materially, in fact, significantly the number of, advent calendar boxes that we we had available to sell this year compared last year compared to the the prior year. They all sold out in advance of Christmas, which is hopefully what you'd expect to do for an advent calendar. And we've introduced a a new marketplace called Yimbley. So that is in its sort of early days, but, we're seeing that grow, getting more partners signed up, and we're starting to see that also contribute to the overall digital revenue. So it's a very important series of revenue streams, and and and the growth of those has been a contributor to the growth we saw this year last year, I should say. Thanks. Thanks, Darren. Jim, probably one for you.

47:44 How do you use AI at REACH? And is is some of your output AI generated? I'll move to the next slide. Yeah. I mean, we use AI in two ways. One is generative AI for editorial. I just need to add that nothing is published without the sign off of an editor human editor. And we don't use it to write the content. We use it to support the production of the content. To give you an example, it may be used for picture sourcing. Pictures help people engage with the content, stay on-site for longer, and we can search the library very, very quickly now. We use it for distribution. So if you read the star, the mirror, or the express, you might find the byline, I. The name of the journalist, will be the same person.

48:31 But each of those publications have a style, so there'll be a list of vocabulary which is appropriate to each of the publications. If you read those three titles, you quite quickly within a couple of reads readings, you'll you'll find out what what what what title you're reading. So it does that. And then distribution across our network, we have a 120 brands and we can use AI to distribute across the network if we are seeing audience are interested in a particular topic. So if it was, for instance, the Oscars and people were coming in to read it on the mirror and we found that that audience was safe from Glasgow, then new content that came out for that audience might be automatically put onto the dealer record to see the response. So AI is used that way generatively, but always signed off by a senior journalist or editor.

49:19 And we also use we're quite we're quite advanced in AI, which is non generative, which is essentially using algorithms to help us with our business. We have a tool called Mantis, which does essentially four things. One is it does brand safety, so it ensures advertisers are not advertising next to content that they might feel that weary about or which is discussed topics which are might be might be might be about war or crime or whatever else. And it also does content targeting. So we sell the the facility to access to to put content onto advertisers to other publishers. It'll also generate content for you if you wish and do picture selection. So that service is is also there and then also provides back end statistics.

50:11 Now we developed that internally and we are now confident that it's working that we've went out and have commercial legal contracts for other publishers. So I think recently we signed up LiveBible. We use immediate media and team over an ad conference in Australia and signed up nine in in Australia. So that's now a separate unit where we're applying and commercializing AI. And it's a 7 I mean, it's a it's a 7 figure income including ours. REACH are also a client over this product. But and we put around the management team with an MD structure around as well. So we think we're fairly despite what you Dan and I don't look like Californian sort of software gurus, but we actually are we we we nudge and do very, very well in the eye within our business because behind us, we we we have all these tech folk.

51:04 Thanks, Jim. Can you tell me, can you continue to grow the 9,000,000 embedded customer base? And how can you increase the revenue profit contribution per individual cost? Very good question, actually. Yes. I think we can. Obviously, we started off at a low base, so you find the percentage growth rates will naturally decline. And I get this question from investors quite a Where can you get to? I think there's there's probably a wee bit more we can go. Not much. I mean, if you look at some of the the subscription for the other publishers, I mean, there's probably 5 or 6,000,000 for a paid for. The likes of Netflix and stuff is maybe $1,114,000,000. So you get to certain limits and we're getting to approach that. But the key thing is about the profitability.

51:51 It's not actually about the acquisition. You need to manage churn. People fall away, then you go, why did you fall away and bring them back in. But it's also about engagement, you know. So someone signed up for, I don't know, say, Tottenham Hotspur newsletter, which we do. And you might find that they're they're less frequent, maybe because the team's not doing so well or sorry, Joe, and they sort of stopped reading the content as much. But the more they're on-site, you pick up more things because we put links in the sites and see where they go to and then we track where where they've spent time. So you might find someone who might have taught them Hotspur fan and actually were spending time on, say, a beauty box product And then you start to get a subscription for that. And that's a real life example of an IR director where you actually can connect you can connect different content types of individual. So how do you increase profit? You do more of that with the data and insight. They may end up they may have started as a football fan, but they may have an entirely different piece of content that they're interested in, and you sign them up to that, and that's about engagement.

52:55 Thanks, Jim. And we understand that the print is an important revenue stream. When in your view does the other revenues in digital outpace the decline in print? I'm not I said this when we were growing before the Ukraine war, which is a which is a kickoff for a number of things, which is essentially cost inflation, input cost inflation, and then consumer inflation happened post the pandemic. And it's it's not appropriate now to see when is that inflection point just because there's too many things going on in the environment. I think you need to look at single digit growth for digital over a period of time. And when we get to 2028, that significant cash generation from print helps us to fund and accelerate our digital growth. So it wouldn't be appropriate for me to give. I wouldn't do anyway any guidance on the point where it overtakes. I think you just you need to look at digital growing funded by a strong revenue cash generating business.

53:59 Thanks, Jim. I'm conscious that we're coming up to time, so I'll answer any of the other questions directly after the event. Perfect. Jim, Darren, Jay, thanks very much for answering those questions from investors. Of course, the company can review the questions submitted today and they will publish our responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to the company, Jim, could I just ask you for a few closing comments? Yeah. Well, three things. One is that the feedback is important to us because we we work together on these things. If if there are if there are things that you don't have answers to, all those areas that you want more questions, or just how we present the information because you want we want you to become part of our company, then please do give us that feedback. We would appreciate it. It's really important to us. Second thing is underlying some of the narrative around our business. You just look at the number. We are healthy, you know, and we're getting rid of these historical obligations.

54:58 And we have an old business, traditional business, which is funding a new one. And that that new one is the sixth biggest digital asset in The UK, you know. And I think there's just a a narrative reset. So I would ask you to think about that. And then thirdly, look, thanks for the time on the call. We do not take for granted your interest in our company, which is why we're always available. And if there's any questions, then Joe's available to take them and we will get back to you. Thank you. Thank you once again for updating investors today. Could I please ask investors not to close the session? As you know, redirected to provide your feedback and what the management team can better understand your views and expectations. This will then take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of management team of REACH PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.