Reach plc

Good morning, everyone, and welcome to those of you in the room and also online. Welcome to REACH's half year results for 2025. It's good to see a number of familiar faces in the room, but for those who don't know me, my name's Piers North, and I'm privileged to be here today as the REACH Chief Executive. Today, I want to cover three things. One, how I see the business and its trajectory. Two, sharing with you our strategic priorities for the upcoming future. And then I'll move on to updating on our performance from the half years before handing over to Darren to talk through the detailed financials. Before I do that, just a couple of dry housekeeping points. It's just a reminder to turn your phones onto airplay mode or silent, please. And secondly, our standard disclaimer, which you'll be glad I won't read out, but I will trust that you're familiar with and that has been noted. So moving on, these results will be my first as Chief Executive, so I do want to just briefly introduce myself, and I promise, obviously, I won't do this every time. I've been with the business for 10 years now, and I spent the last five years in the role of Chief Revenue Officer before taking on the role of Chief Executive in March. What excited me about Reach when I joined those 10 or so years ago, our scale, our incredible legacy brands, plus the potential to unlock future revenue opportunities, is still what excites me today. Now, as I said, I was Chief Revenue Officer here for five years, which means I know the commercial business, especially the digital, and especially the wider industry, very well indeed. It also means I've been lucky enough to establish some fantastic relationships across the leadership team at Reach and the wider business. We have brilliant people at our business, and as I said, I'm privileged to lead them and the business as we move forward into our next chapter. Now, you don't spend 10 years somewhere without forming some views on our strengths, and yes, obviously, some of the challenges we face, but I did just want to talk a minute and celebrate the huge advantages we have. We have that market-leading scale. We have editorial impact at kind of that national level, but also the local level as well, the relevance. and increasingly, obviously, international. We offer our partners huge standout scale with over 100 trusted brands reaching 70% of the UK population. And indeed, once you take out the tech platforms and the BBC, we are leading the way in terms of publisher and content creation by audience reach. And obviously, these stats don't even account for those people that we reach off platform, on social channels, and the like. We also have a growing audience in the US. We currently reach about 10% of that audience there, which is obviously a sizeable population indeed. I talked about social. We also boast social followings of over 100 million across platforms such as TikTok and YouTube. And also not forgetting the 9 million signups we have, those people that we could reach directly either through email, newsletters, or WhatsApp. But putting scale aside, this combined with the local relevance is hugely important to our advertising partners who increasingly want to connect, to be authentic and to differentiate and to connect with certain communities across the UK. This is a real USP of ours in what is a crowded and competitive media market. As many of you will know, the Customer Value Strategy laid foundations in this area, allowing us to grow our audience data pool. This data has informed not only our advertising, but our revenue diversification, affiliates, e-commerce, and our B2B expansion of Mantis, our in-house ad tech platform. Together, these initiatives mean that data-driven revenues now represent about 43% of our total digital business. Our print revenues continues to fund our digital transition. Today that does mean that 75% of our business comes from print, which is reliable, albeit a declining revenue stream. So what does this mean for us financially? We consistently deliver an operating profit margin in the high teens, and last year that meant £102 million of profit. This is standout in our industry right now and something I think is largely underappreciated, as so far clearly these returns are used to meet our legacy obligations. I appreciate the importance of shareholder returns as well, which we have a strong track record of delivering. But what you'll hear from me today is how we intend to accelerate our transition into digital. I would just like to set the scene first a little bit and look back at our business over the last few years. I think sometimes when you want to look to where you want to go to, you have to look to where you have come from. I'm also a bit of a history geek, as many of my colleagues know. So please indulge me, and I won't take too long. But I like to think of our digital evolution in sort of three five-year phases. Firstly, those kind of early transition years post the iPhone and the iPad, you know, saw us around 40 million pounds of revenue in 2012. This was era of rapidly evolving digital consumption, changing patterns from consumers with the new mobile and smartphone technologies. And it was a time when product took the lead with plenty of experimentation and entrepreneurship. Then it was the programmatic era which saw editorial come to the fore, audience volume at significant growth, page views driving our performance as a business. Programmatic is an industry taking hold and growing at sometimes over 60% a year. And this was an exciting period for us as a business and I think one where we led the line. And then more recently, and crucially before some of the referral changes, was our focus on the yield and the RPM focus, the price of our pages, where commercial-driven initiatives started to come to the fore. Here, we took our revenues from a growing 65% over this four-year period and improving our monetization. This period was challenged. We clearly had big macro shocks, COVID in the Ukraine and the like, but also we had the changes in the referral landscape. But we made big technological leaps in that time, and we set ourselves up for the opportunities to follow. So we move into our next phase. We take all the positives for this period, from that entrepreneurship of the early days, the audience volume, and the commercial initiatives, and look and recognize that growth is important across both our direct and indirect areas of our business. and that our content needs to be sustainable in a view of changing media consumptions. Now of course there are days where I could wish that I could flip a switch at Google or Meta or indeed even know that there is a switch to flip, but that pace of change is something that we have shown ourselves to be adept at navigating and also the excitement of opportunities that come from it. So what are our three priorities to drive growth? Firstly, my leadership and I have looked at three main areas to focus on. We have made undoubtedly a lot of progress in recent years under the customer value strategy, but now is the time to build on those foundations. What I'm proposing is we take and innovate in three particular areas. The first is connecting with audiences, the second is accelerating tech and AI, and third is diversifying revenues. If we cut through what all of that means, they all support that sustained digital growth. And as I take you through these three areas, I'll touch on some of the relevant market conditions. They won't necessarily be a new or surprise to you, but they will just illustrate a bit of our thinking and why we see the opportunities in those spaces. So let's start with audiences and connecting with them. So clearly, our first priority, as you'd expect being a media business, is making sure that we are taking advantage of growing audiences. They are our lifeblood for us as a media organisation. And when we considered this area, we were faced with a few realities about how people are consuming media. Clearly, we know the news market has matured, and whilst we can take share, we do need to look for other opportunities. We know video is more important than ever in news consumption, so increasing our video output considerably is essential to our ambitions here. And this will mean changes to the way we run and operate our newsrooms and how we reach our audiences. We also mentioned here the importance of on and off platform because most video consumption happens off our own network, for example, on TikTok and YouTube. And there's also reaching new audiences. This is an interesting challenge when you reach 70% of the UK population, but our work with social and video will play an important part here, connecting with younger demographics. We've also got room for growth in the US. As I said, we reach about 10% of the online population. There's clearly more to play for here in what is a sizeable market. Our US expansion is also opening up other opportunities, such as trialing Spanish language, powered by the use of Mantis, our AI tool. It's still in its early days, but it shows another opportunity. But connecting with audiences does not only mean reaching new ones. It means engaging more deeply than the ones we already have, and whether that be through our content or our tech to make sure that they see what they want to see. And of course, that will mean enriching our brands to make sure that we differentiate our strong brands in what we know with a distinct voice in a crowded market. The second priority is the use of tech and AI. Now, I know there's a lot on this slide, so let me guide you through it. I think it's a reflection of the work that has gone on here. In terms of the market additions, I don't think you can seriously have a conversation about media or maybe any business these days without talking about AI. AI is transforming our sector as it indeed transforming others. We've talked about before a lot about how editorial teams use AI, and so far we've done well, but only scratched the surface in terms of other departments across the business. AI is obviously the hot topic right now, and I'd forgive anyone for taking a slightly cynical lens, but what gives me confidence in the way that we are actually using it today If we take this slightly chronologically, we've been using large language models for commercial tools for several years now with Mantis. It's driven higher yield, it's powered recommender tools, and it's unlocked inventory for our clients. And we will continue to look for new ways that we can expand Mantis, including translation, as I've already said. We've been developing and using our own editorial AI tool, Guten, now for over two years. We've rolled out this tool across all of our newsroom, and it supports the creation of about a quarter to a third of our articles that we publish. I believe this is a point of differentiation for us as a publisher, and we're seeing the benefits of that adoption. Now, of course, I will caution here that we will continue to view this as much a tool for our journalists. It is important to understand that humans will always be connected with the content that we publish. It is what makes us different to the machines out there, but it's a critical part of the future. And now we've done that early work in commercial editorial, there is huge opportunity in the wider business. I'm always excited by people coming up to me in the office, in the corridor, and excited about the work that they're doing at a small level, trialing AI, which is making their life better and more productive. whether that be with lead generation for sales, analysis on auction dynamics, summarising complex information in rapid, quick time. Also, the potential for us to expand our video production capabilities. The list goes on. AI is clearly transforming many of our systems, but also those of our partners, which we will take full advantage of. But in order to get the most out of AI on the data that we own, we do need to take a bit of hygiene in the terms of cleaning up our own data infrastructure. Starting this year, we will be looking to tidy up our data platforms to make it easier and faster for our teams and for our advertising partners to integrate with, standardizing, improving things like taxonomies and tagging. Not only will this allow AI and its agents to utilize that information, it will also allow us to continue to improve and create large advertising cohorts for our partners, which makes all of this data advertising come to life. Scale of addressable audiences is critical for us here and for our partners. And this cohort approach, whether that be for behavioral, contextual, location-based, we will continue to offer advertisers effective brand and performance solutions off the back of our data engine. To sum up here, our future requires us to embrace tech and AI, to remain curious and open to it, recognising its limitations and where we add value, making it work for us and for us to add value on top of it in the media space. Our third priority, diversifying revenues. In terms of diversifying revenues, there is obviously one market trend you'll be aware we haven't fully taken advantage of yet, which you'll be familiar with, and that's the growth of new subscriptions, offering ad-free premium content, plus importantly, offers, products, and other services. We are well aware that the UK is on the lower end of adoption of paid-for subscriptions, lower than we've seen in other Western markets, but there is still 10% of the market to play with, and we believe that's worth playing for. We've done some initial trials, and we believe that we're in a good space to do more. It's given us confidence that there is a demand for this proposition and insight to form our next steps. So in the coming months, we'll develop it more seriously. And in terms of what you can see, we're planning to roll out a pilot this year ahead of a wider offering in 2026. But I do just want to take a step back and remind people, whilst we see this as an important addition to the business, we will continue to be primarily an ad-funded business in digital. And whilst we remain committed to providing free news in the main, it's right for us, right for advertisers, and right for large swathes of our audiences and our role in society. There is also, we believe, a potential to drive this forward. Of course, expanding into different areas isn't entirely new for us. We've been happy with the growth we've seen from our e-commerce and affiliates lines, and over the course of the year, delivered year-on-year growth of 9%. We will continue to focus on the OK Beauty box and with our newer e-commerce marketplace, Yimbli, which I believe we can keep scaling. All of this gives us further resilience outside the traditional ad model. On all of these priorities, you can expect to hear further details at our full year results in March, both in terms of how we've progressed and more detail on how we will measure and manage these areas. Of course, I'll be first to say there is no silver bullet here. By sharpening our focus and increasing our pace, I'm confident these are the right initiatives to drive long-term value for the business. Now, all of these priorities involve a fair bit of change, which I know is often easier said for an organisation. That is why at the same time as looking at our strategy, we've been clear that we wanted to look at our vision and mission at Reach. We are blessed with a hugely diverse portfolio in our business, a network that can leverage and take a job opportunities, but also mitigate risk. But we need to be clear about how we can differentiate and how we can align. What thread connects the politics of the Express with our gigantic archive, with the newspaper in your local Tesco, with our mirror books business, with our podcasts, our Belfast Live coverage, NASCAR in the US, whatever it may be. I could go on. And what connects this is that we reach people where people live. And that's a strand that unifies, a thread that differentiates what we do, the stories we create and the brands we own. They all meet people where they live. Yes, that means geographically, obviously, as we've talked about as part of our USP, but it's more than just their streets and their parks around them. It's their politics. It's their passion. It's their social media feeds. It's whether it's video or print. All of this has been critical to make sure that we can take advantage of the priorities that we've set out. But given we've been talking about video as an important priority, I thought the best way to bring this concept to life is a very short 90-second showreel. So if we could cue the VT, please. I hope that brought to life not only the brand proposition, but also some of the highlights and the change that you have seen in the way we bring our content and story to life. And I will touch on some of those stories more in a moment. We've talked a lot about our future. We've talked a little bit about our past. But I do now want to take a look a bit more in the present, in the here and now. And that's the performance of our business over the first half of the year. So let's start with audience. I talked about how that is the most important priority we have. So let's look at how we've grown in engaging our audience over the past six months. We've made real headway here with audience growth growing 6% year over year. It's partly supported by our content hub, which we further invested in further this year. As a reminder, this is an agile editorial team that establishes subject matter experts who have authority on certain topics. It's good for our audiences, and it's good for referrers such as Google. Our distribution hub has also played a big part in this growth, using expertise and data to inform where our content goes, and often, importantly, when. These experts have driven success with a range of referrers, such as Facebook's new commercial model, Reddit, and Google Discover. Both Facebook and Google Discover have been helpful to us this half year. and we've made the most of these opportunities when they appear. But we are only too aware of how fast changing the referral market can be and how important it is to invest our efforts broadly across referrers instead of being dependent on one. On this note, I know there's been a lot of industry debates about the future of search traffic in light of AI overviews rolling out across the market. I won't pretend to predict the future of this space. It remains fast-moving and ever-changing. But clearly, change is underway, and we're focused on preparing for this kind of change now, and we have been through several big shifts in the past. We're mindful of the need to prepare for what some people are calling Google Zero, or certainly a future that is different from the search-based ecosystem that's driven online for the past 25 years or so. However, our aim continues to cultivate a diverse ecosystem of referrers, build up our direct audience, as we've talked about, and utilizing the strength of a diverse audience network with the aim of reducing dependency on any one individual source. So whilst Google Discover has worked well for us this half year, we're also investing in growing relevance with other platforms. Now, I've already touched on how important video will be to our priorities to attract and engage new audiences. As you know, we've built out new state-of-the-art facilities in many of our hubs across the UK, and we're bedding it in this year. Production and operational teams are in place, and they're building out a strong pipeline of activity. This structure not only supports some of the brilliant editorial video I just showed you, but also has attracted commercial partnerships, which I'll talk more about shortly. Of course, a huge part of the delivery this year lies in how we serve our audiences every single day, and we saw that in spades this half year. There is so much in this chart to be proud of, and I'll just go through some of the highlights. It's been great to see strong video content, and this ranges from the serious, like Express's really impactful reports from the front lines in Ukraine, all the way to Curiously's great series of interviews leading up to the Eurovision Song Contest. We saw the Daily Record in Scotland successfully campaign to ban disposable vapes, the Mirrors Mist campaign reuniting a vulnerable teenager with his family, and the Manchester Even News uncovering a local far-right group which led to nine police arrests. Of course, sport continues to do well for us across many different formats and brands. In the last few months, our print specials have performed exceptionally well, celebrating huge club wins for the likes of Crystal Palace, a topic dear to my heart, Arsenal Women's and Liverpool. And you don't need to take our word for it either. We were recognised externally this year with plenty of awards, including the Regional Press Awards, where we swept the board with nine wins and where the Liverpool Echo took home Brand of the Year. The beauty here is in our mix of content, serious, light and formative. And it's great to see all of our titles looking at all of their content from the approach of meeting audiences and potential new audiences where they are. Going on to diversified revenues. In terms of diversified revenues, I'm proud to say these have grown 6.5% over the past six months. And these revenues include e-commerce, affiliates and partnerships. And we've seen the teams are making incremental improvements in how they operate and manage these important revenue streams. As you know, the beauty box has been an important source of growth for us. And we continue to find new ways to get that product into the hands of new customers. And this year we've seen success marketing on new platforms such as the TikTok shop. The beauty market remains competitive, but our customer metrics demonstrate that our proposition is standout, with low returns and low churn. We also continue to scale Yimbly, our e-commerce marketplace, which we launched last year, with more products and suppliers. And last quarter, our seasonal outdoor market was standout, with orders up 20%. We've done really well in seasonal products, driven by our ability to link the news agenda to purchase. garden sheds in the spring, fans and air conditioners in the heat waves. We continue to do well with affiliates, which works well within our broader content offering, and we're also trialing new formats and driving stronger commercial deals, testament to our maturing expertise in this area. But let's look at advertising. Advertising remains central to what we do. In terms of advertising, I think it's probably helpful to just draw on a few case studies. I think these demonstrate how advertisers respond to our strength, that scale and local relevance, but also how we're increasingly demonstrating our effectiveness now in other areas, data, which we talked about before, and commercial partnerships for audio and video content. Tesco has been, as you know, a great partner for us for some time. We've worked together to help better target their customers. But this year was the first time we overlapped their retail data with ours, which meant we were able to target campaigns to their specific audiences of their customers that they want to reach. And this work had a measurable return for Tesco and further cemented that relationship and a good sign of things to come on how we can use our data practically. I worked with Boots with another access. Boots is another client of ours that we have a strong relationship with in terms of that mainstream Britain. We drove a 30% uplift in consideration for their New Pharmacists First campaign, again perfectly aligned with our mirror editorial with a focus of lightening the load on the NHS. This multi-format campaign leveraged the power of huge breadth of our portfolio from display advertising to branded content to activation on our hyperlocal site in your area. Our Man City collaboration with the Manchester Evening News. Man City is a global brand, of course, but they still need to activate their local community, their ability to champion their stadium tours and their women's footballs. Again, partnering with them saw results exceeding industry averages. And looking ahead, I'm personally excited about the launch of our new all-out football channel, launching obviously for the new season from our studio team. We'll be serving our huge football audience a weekly show, featuring not only football talent, but of course leveraging our fantastic football journalists from across the network. We're proud to be working with Skybet on this for the new season, and it's a great example of the opportunities our teams can unlock as we further establish ourselves in video. As I wrap up my summary of our performance of the past six months, I do just want to say a massive thank you to all of our teams at Reach, whether you've delivered the content, the commercial partnerships, the tech development, getting our papers out, or any of the other work that goes into getting us here. So I'll now hand over to Darren, who'll talk you through the financials for this first half of the year.

Thank you, Piers. Good morning and thank you all for joining us. Good to see you all today. Thank you for coming. I'm now going to take you through the financial results for the first half of the year and also explain more about how we are going to measure and report our progress going forward. I'll end with my sharing my thoughts on the remainder of 2025. To summarise, this has been a good half year. We have delivered a strong financial performance, our digital business has continued to grow and we continue to manage cash effectively. This in spite of ongoing uncertain macro environment and pressure from the increase in national insurance contributions, not only for our business, but also for our client base as well. We're also trading against a strong comparative from events which took place over the second quarter of 2024. So before getting into detail, let me draw out the key financial highlights for the half year from the next few slides. As I said a moment ago, this has been a good half year. We managed to decline our overall revenue to $256 million, a reduction of $9 million. Digital revenue grew $1 million to $61 million. This was supported by 6.5% growth in diversified revenues, which relates in the main to affiliates and e-commerce. We continue our track record of managing our operating cost base efficiently, with a reduction in costs of 4.2% in the first half, within the 4-5% range we guided to for the full year. This underpinned growth in our industry-leading adjusting operating margin to 17.5%. Cash generation remains strong, despite some unwinding of working capital inflows, with adjusted operating cash flow at 46 million, and cash conversion is 102%. And we've maintained the interim dividend 2.88 pence per share. Moving on to the summary P&L, just a couple of items to call out on this slide. The overall revenue declined at 3.4% across the period, results from the decline on our print revenues, which represents 75% of our total revenue. These declined 4.8% to 194 million. This was partially offset by digital growth of 1.8%. We ended the period with a 26 million net debt balance. I'll cover this more in detail when I get to the use of cash slide later in the presentation. Now turning to revenue. While digital revenue grew 1.8%, momentum improved across the period. Q2 growth was ahead of Q1, despite the tough comparative, given the buildup to major events held in late spring and early summer last year, such as the Men's Euros and the Taylor Swift Tour. Print revenue, which comprises circulation, print advertising and other print, declined overall by 10 million. Circulation declined by 6 million, or 4%, to just over 144 million. The teams continue to focus on the quality of our product and the value it provides our readers, delivering ever more reader offers and promotional activity. This means over the last six months, we have sold on average over half a million copies a day. We've also developed one-off standalone products, such as football souvenir editions and magazine specials. Our experienced circulation team optimises this revenue stream by carefully managing cover price increases, with two increases made so far this year, to partially offset the majority of the 19% volume decline. Print advertising revenue, which was down 15%, continued to outperform volume trends. This demonstrates the continuing relevance of our readership and the print format to advertisers, with our scale and reach continuing to be valued and supported in sectors such as retail and from the government. Now turning to digital in more detail. I would now like to introduce you to the new way that we will measure and report our digital performance. Revenue will be categorised in two component parts, direct and indirect, which have different characteristics. These reflect how we think about performance internally and provide improved visibility on how we manage the business to deliver the three priorities Piers has introduced this morning, connecting with audiences, accelerating the use of tech and AI, and diversifying revenues. I've included the definitions and comparatives for this view of digital revenue in the appendix of this slide for your information. However, to summarise, the first category are direct revenues, which are advertising or commercial revenues generated from direct engagement with advertiser, agency or consumers. This includes areas such as direct sales and agency revenues, as well as Mantis, our B2B offering. Over the last six months, these have declined 7.9%, partly affected by the macro backdrop, especially for our local business. With indirect revenues are our diversified revenues, which are a growth priority. These include subscriptions, affiliates, and e-commerce, which grew 6.5% as we continue to build in our success to date and invest in the growth in these areas. Indirect revenues are advertising or commercial revenues, which are generated indirectly. The largest part is our on-platform scale programmatic business, but this also includes revenue-generated off-platform, such as social or third-party platforms. A strong performance over the last six months delivered 9.2% growth, this in part attributable to the 6% growth in paid views and increased commercial revenues from social platforms. The indirect RPM increased by 3%. Indirect, the largest component, is also important to the success of our strategy, not just due to its scale, but because it includes videos sold programmatically and content viewed across social media platforms, both of which are included in the priorities we've presented today. Our content and distribution hubs are a key driver of this growth. These are increased in scale and improve both productivity and perhaps more importantly, improve distribution so that people can have access to our content. Bringing these together, as I've already said, our overall digital grew 1.8%. Momentum, which improved Q1 at 1.6% into Q2 at 2.1%, is encouraging, given both the national insurance changes and the prior year events comparative I mentioned earlier, which provided good support to our direct advertising last year. I will now cover costs. We have a strong track record of consistently delivering cost savings. The disciplined approach we take to effectively manage our cost base continued in the first half, with operating costs reducing 4.2%. Labor costs, representing about half of our cost base, were broadly flat, with some structural changes offsetting the increase in national insurance and the annual company-wide pay rise, which are awarded each April. Headcount is down 1% versus full year 24. The reduction in newsprint costs is partly due to the reducing volumes and partly price, as we continue to extend our supply contracts to create stability in this cost category. Production and sales costs, which include marketing direct cost of sales, reduced by 6.2%. Depreciation amortisation, which relates to our print sites and internally generated assets, is broadly aligned with our prior year. Key savings were made in overheads with a reduction in utilities costs, and we focused on reducing our use of contributors by a third. Now over to operating profit. We have a history of consistently delivering healthy profits Profit for the half year is where I would expect it to be. To demonstrate this, I've added some new information on the left hand side of this slide. This shows the reported half year profit and operating margin back to 2023. On the right hand side, I've added the full year outcome for the past two years. This demonstrates that the second half performance is typically stronger than the first half of the year, particularly Q4, which benefits from events such as Black Friday and the build up to Christmas, and also television programming during the autumn and early winter period. With a predominantly fixed cost base, profit typically benefits both in absolute terms and in margin percentage during this period. This supports a statement I've made in previous results announcements that we typically see a circa half on half, 45, 55% phasing of our profitability over the course of the year. I'll now move on to uses of cash. Our balance sheet remains strong. We have in place a 145 million revolving credit facility with a four year maturity to December, 2028, which includes an option to extend by up to one year. This provides material headroom to our current debt position with a revolving credit facility drawn at 38 million, while net debt is 26 million. I'll now step you through the graph on this slide, which illustrates the cash generated from our operations and where it has been allocated. Adjusted cash generated from operations remains strong at $56 million. Our largest cash commitment is the agreed funding arrangements with our pension schemes, which totaled $32 million. This includes a payment of $2 million to the West Ferry pension scheme. I would expect the remaining balance to be paid in the second half. As a reminder, based on the current contribution schedules in place with our pension schemes, the majority of these pension commitments will unwind in 2028, at which time we'll see a material improvement in cash generation. It is worth noting that the 2025 pre-annual valuations for all of our live schemes commences on the 1st of January next year. We paid a $14 million final dividend, as we did in the previous year. Restructuring outflows of $6 million in the main relate to people changes. Capital expenditure of $7 million is in line with our expected spend for maintenance and investment projects. And finally, we completed the disposal of our property in Guildford, which generated around $2 million in sale proceeds during the period. This completes the sale of the remaining property from which I expected any meaningful sale proceeds. Now just a reminder on our capital allocation priorities. Our approach to capital allocation remains consistent with previous years. We have a resilient Prince Profit, sustainable cash generation, and a strong balance sheet, which remain our priorities as we continue to reduce our financial obligations. We have continued to selectively invest in our business, including our US expansion, Mantis, and our B2B platform, and the continued rollout of the improved digital platform. And we continue to recognise the importance of returns to shareholders. Now we come to the outlook for the rest of the year. We are on track to deliver in line with market expectations for the year. We expect the macro environment to remain uncertain, and we continue to follow developments in new and evolving regulation. Nonetheless, we expect digital revenue to grow. During the year, we expect to reduce total operating costs by four to five percent, in line with the guidance we set out at the start of the year. In terms of cash, ongoing pension contributions will be around 65 million, including the one-off payment to the West Ferry pension scheme. Capital expenditure will be similar to 2024. HLI estimates for settlements are unchanged, with an eight million provision remaining, which we expect to settle over 2025 and 2026. We progress through 2025 mindful of market conditions, but in good shape and with clear priorities for growth. I'll pass you back to Piers for final words before we go into your questions. Thank you very much.

Thank you, Darren, for running through the numbers. So just before we move to questions, in conclusion, as we look to the future, we're focused on our three priorities, connecting more deeply with our audiences, accelerating the use of technology and AI, and diversifying our revenue streams. And whilst we talk of the future, this is all underpinned in the presence by a focus on cash and cost efficiency and delivering a reduction in our operating costs. The trends that we're seeing in audience behavior, in platform shifts, content changes, and the rapid adoption of AI, they are not challenges to fear, but opportunities to seize. We have strong foundations, we've clear priorities and a vision, and we're ready to move forward with focus, speed, and ambition. Thank you again for joining us for the half year results, and we'll now move to your questions. There's a microphone going around the room. If you could just say your name and where you're from.

Thank you very much. Good morning. It's Fiona Orford-Williams from Edison. From me, first of all, can you tell us more about the US strategy, how that is progressing and what your next moves are there? The second question revolves around the type of content that you're doing in video, whether there's a shift away from news-based, if you like, ephemeral content to more long-lasting content. And the third one is about what you expect between the balance of direct and indirect in digital in half two. Thank you.

Okay, so taking those in terms. In terms of our US business, obviously that is progressing well, as we said. We're progressing mindfully and delighted that it's profitable in terms of our expansion, so we will keep an eye on that. The team is growing, and the content portfolio across our three brands out there is expanding, so we're happy with the progress. As we said, the prize is large, but we're mindful of taking sensible steps to take advantage of that. In terms of your question in the types of video content, clearly video opens up a differing model for the type of content we produce. Where does news start and stop versus opinion or in some ways everything is news. So there will be clearly a shift in the type of news that we're producing in terms of video. But I would say also, if you're looking at all out football, You know, that is bringing to life, I guess, much of the stuff that would have lived in text is now going to be brought out in audiovisual. And it's giving our teams and our brands just different ways to explore the stories in different formats. So we're very excited about that. But it will clearly mean changes to the way, you know, our news teams operate and gather stories. In terms of your third one, which was about the balance between direct and indirect, clearly that fluctuates through the year based on factors. Q4 is clearly – when you have events, you have more direct revenue, as we saw from our comparison last year. So clearly, as we lead up to Christmas, there are bigger opportunities for direct. But we want – To be clear, we want both levers to be going forward. That's where the sweet spot is when you're growing your volume and you've got more impressions and more data points that you can then send out to direct.

Morning, Gareth Davis from Deutsche Neumis. Just one follow-up on that direct question. You specifically called out local level kind of macro headwinds on the back of NI, et cetera. Are you seeing a stabilization there or any improvement as we've moved into the second half of the year, or should we just expect more of the same at a local level?

We've seen a stabilization on that, but not necessarily improvement.

Okay. And then sort of interest in evolution and the thinking around subscriptions. When we're thinking about your kind of intentions there, is it around special interest type stuff? Or should, I mean, at the extreme kind of news quest, I can't get on pretty much anything interesting on the South Wales Argus now, so I go to Wales Online. But how are you thinking about the kind of balance between

audience versus and sort of keeping the audience up for advertisers versus subscription well gareth you're exactly the person we want to keep you on the whales online so um no absolutely it's it's going to be a broad brushstroke as i said the bulk of our content will remain free to air that's for lots of different reasons that are outlined what we what we will be looking at is across our product and services i think people view us as a slightly in many ways one-dimensional business but we have an archive we have an e-commerce platform we obviously have the beauty box we have you know there are many things that we can offer in terms of products and services that we can offer to readers so there will be some content that we sits behind sits behind that paper what that is will be led by some of the experimentation that we will continue to do over the back half of the year but we absolutely want to make sure that exactly like you say the people that want to come to our site to maintain our volume because that's important from a data point of view can still do that but we need to give them an opportunity and that might be simply for better ux it might be for an offer We want to give people the opportunity to have that direct reader revenue engagement with them.

Thank you.

Hi there. Paul Richards from Dagaid. A couple of questions. You talk about AI for assisting articles in that quarter of production. Where do you see that moving over the medium term? And second question is, do you think there's opportunities to use AI in video production as well?

Thank you. Yeah, so I think, so I'm not sure I caught your full question on the first one. That was like whether you see the growth in editorial AI adoption from where it is now.

Yeah, exactly. So you said about a quarter of articles are helped by AI with human oversight and the extent to which that can increase.

Yeah, I think it may not be necessarily about the quantity, but more about the quality. We will get better at using that and our teams will understand where the opportunities and the shortfalls lie. As I said, it is critical to understand that we view this as a tool to assist the journalists in their role. It is not, you know... going full publication, we will still have humans involved in that. But I certainly think, if not the quantity, how we deploy it, I think is probably an area that we will see improvement on. And yes, on video, I think that is absolutely an opportunity for us. We want to expand in the video space. We're doing great content. Clearly, any ability that we can shortcut on video editing or subtitling or captioning or whatever it may be, that remains a huge opportunity for us to break into video in a more... sort of aggressive way.

Good morning. It's Jonathan Barrett from . I've got three questions. all quite different. Perhaps if we start with video. I wonder if you could just give us a quick synopsis of where you're at with your video capabilities, and then what sort of steps are next, just so we understand roughly what's going to happen there in terms of evolution of those capabilities. And then secondly, just on the subscriptions model, are we looking at a model whereby it's premium content and within that there'll be both subscriptions and you'll still carry advertising? Or are we considering a pure subscription content only, no ads type model, or perhaps it differs by product type? And then thirdly, just on diversified revenues, did you actually give us a number for that? No? Okay. Well, I'll ask anyway. Thank you.

Okay. So just on video, I think you asked the question about how we're going to evolve our capabilities. I mean, when you're moving into video, the first thing is obviously infrastructure, and that's something that's rolled out across our network, just the physical space to do that, and that's really important. The second thing is new roles. So we have and we will continue to bring in new roles in that space that give you that technical skill, complemented as we just discussed by AI and how we can leverage that. There's also just making sure that we're giving the ability for our, I mean, we have fantastic journalists. You know, we've recently launched All Out Rugby League. And if you watch that, you can see some of our rugby league. experts bring to life in a way that is complementary to what they do in text, whether that be digital and print. So it's a sort of capacity question, but it's also a capability question. And we will continue to move forward in that as fast as we can. On the subs, as to the specifics of will it be completely ad-free, I think that's for us to work out as we roll out the pilot. We want to strike the balance that if, you know, there has always been the value exchange of you get our content and services free in return for advertising. Clearly, if you wish to pay, I think there's the balance that you're giving us your returns in a different way, so we need to respect that. But as for the specifics, I don't know. Your third question was a number on diversified revenues. Yeah, diversified revenues number. I mean, it's a growing part of what we do. It's a relatively small part in terms of our overall, well, certainly group revenues. But, you know, again, the focus there is just to grow as quickly as possible.

I've got two questions here from Nick Dempsey at Barclays. Have you seen any impact on your business from changes in search due to AI, or is that still too small to move the needle? And what gives you confidence in this stage to say that digital growth is likely to continue? Are there any early indicators? Thanks.

Okay, so the first question was around search and AI. This is a hugely complex topic which we could spend a lot of time talking about. It's been reduced to quite a binary debate. In fact, Google Zero literally has the number zero in it, and I think that's... over reductive argument about where we're at what we haven't understanding we know change is happening it depends which time span you look at it on in this half year it's not been a material impact but that's not to say that we're complacent about the near or long-term future but it's it's hugely complex and it's changing every step of the way our focus we're very good at managing the data we can we can spot the trends um And we respond accordingly and we'll continue to do that. But it's too early to say whether it's going to have material. But as I said, we feel the weather is changing and we will adapt. And we've overcome different challenges in the past, whether it be the rise of the iPhone or the change in social distribution. These things come at us, but we're very adept at managing that change. Sorry, the second question was on digital growth and the confidence of. Yeah, we've guided that we're gonna grow full year for digital and all the signs are that we'll meet our expectations on that one. Any other questions? Last chance. Okay, thank you very much for joining us. Thank you for your questions, and we will see you soon.