Reach PLC

Good morning everyone. Thank you for joining us today, either online or in person. My name is Piers North, I'm Chief Executive of Reach PLC and welcome to our half year results for 2026. I will assume you are familiar with our usual disclaimers, but they are here if not. So this morning I'm going to run through our performance highlights for the first half of the year and then as usual I will pass to Darren Fisher our CFO for the financial details. Then I will come back and I'll take a closer look at our current strategic progress and explain more how we're viewing the current online market and how we see the opportunity in it moving forward. So let's take a snapshot of the year. To put it mildly, this period has continued to be characterised by significant external change. The media, and obviously publishing in particular, the landscape is evolving rapidly, and we face notable shifts in how our digital content is discovered. Most notably, the low referral volumes, which saw our on-platform page views decline by 40%. However, against that backdrop, I am reassured by the resilience we've shown, including being on track to deliver on our expectations for the year. We've been able to partially mitigate this stark browser page view decline, as well as grow our priority areas, which means that our digital revenue declined 11%. Again, when on-platform page views, which has traditionally been our single biggest driver of our revenue, declined by a much higher number. The priorities that we set out to navigate the market, connecting with our audiences, accelerating the use of technology and AI, and diversifying our revenues have driven positive, tangible results, excluding our local business direct revenues grew 6%. supported by the quality of our video content and the successful rollout of our subscription model. On that model, we've rolled out subscriptions across 15 of our sites and we're well over 40,000 subscribers to date. We're firmly on track to meet our year-end target of 75,000. We've also made great strides in the technology space that makes this progress possible. Our new AI-powered Launchpad platform is now in the hands of our editorial teams, streamlining content creation. and we've seen promising developments with new AI licensing revenues, not only in terms of progress with the big tech firms, but now also in smaller scalable payment models. Operationally, we've continued to take decisive action. Our print closures, which we announced in the early part of the year, are tracking ahead of plan. Our ongoing focus on cost and cash discipline has ensured that we've delivered an adjusted operating profit of 43 million. In short, whilst we've had to navigate this significant external change, the core of our business remains strong. We are building a more focused brand-led business, and I'm proud of the momentum that we've maintained against such a significant shift in the referral market. I'll now hand you over to Darren, who'll take you through our financials.

Thank you, Piers, and good morning, everyone. Thank you also for taking the time to join us today. As we did last time, we have quite a lot to talk about again this morning. So far this year, we've seen a continuation of the disruption that we first reported in July last year, in particular with how content is discovered, and as I've been consistently saying, an unhelpful macroeconomic environment. This has made these six months particularly challenging, but I take comfort from two things. Firstly, it has reinforced our three priorities as the right course of action for our business, which we've made good progress on, as Piers will cover later. Secondly, despite these market conditions, we're investing where we need to support our plans, while continuing our disciplined and strategic focus on costs. Consolidation of our print operations has progressed successfully, ahead of schedule, and with the savings currently tracking ahead of plan. These actions will help underpin the savings necessary in the second half of the year. Finally, it is important to note that we are now in the penultimate year of our pension payments. These payments stepping down materially in 2028. As for our financial highlights for the first half of the year, we have delivered a strong profit performance of $43 million and we've continued on our track record of strong cash conversion at 113%. We continue our disciplined and strategic cost management. Reflecting the trading environment, we have reduced operating costs by 10%, well ahead of the 5% to 6% target. This underpinned a one percentage point increase in our adjusted operating margin to 18.5%. Cash generation remains robust, with adjusted operating cash flow of $49 million. As we enter the final phase of the bridging period, we have taken a decision to rebase the interim dividend to 1.4 pence per share, rebalancing capital towards our organic investments. I'll cover this in more detail a bit later. In terms of summary financial results, revenues declined 9%, or 23 million to 233 million, Within revenue, our digital revenues declined 11% to $54 million, despite 40% decline in paid views. Our print revenues, which represent about three quarters of our total revenue, declined 8% to $178 million. Operating profit decreased by 4% or $2 million to $43 million. And we ended the period with a $48 million net debt balance. And now turning to digital in more detail. We categorised digital revenue in two component parts, direct and indirect. These direct revenues declined by 1 million, or 4%, partly affected by our decision to drive margin improvements across our local advertising business by focusing on higher quality revenue. Excluding these local revenues, direct revenues grew 6% as we saw the benefit of our video expertise in attracting more agency work as we were able to deliver more complex briefs. Within direct revenues are our diversified products, which include premium subscriptions, affiliates, e-commerce and partnerships. These grew 2.5%. Our subscriptions rollout is on plan, with 15 brands now live. Piers will talk more about this, but we continue to develop and drive this new revenue stream. Our on-platform paid views currently remain our key monetisation engine. Across the first half of the year, on-platform page views declined 40%, continuing the trend we saw across the second half of 2025, mainly due to lower referrals from Google. This adversely impacted our volume-sensitive programmatic business and meant that overall, indirect revenues declined 16%. The disruption in how content is discovered reinforces the importance of investment and progress against our three priorities, so that we can grow more of our revenue, which is not dependent on referral traffic. Despite the on-platform impact, content viewed off-platform, that is across social media platforms such as YouTube and Facebook, is of increased importance. Our monetisation of these audiences has improved through our focus in this area, with the platforms increasingly rewarding engaging content. Now turning to print revenue. Print revenue comprises circulation, print advertising and other print. In circulation, which is the majority of print revenue, we continue to optimise revenue by carefully managing cover price increases to offset declines in circulation volumes. In this half, circulation revenue decline was higher than historic averages with Q2 at minus 7.8%. This is because of higher volume declines, in particular Q2, where we have seen the decline elevated at 23%. This is against our normal decline rates of between 17% and 20%. Our view of this is a combination of the latest cover price increase with a continued cost of living pressures for our readers. We'll continue to carefully review future increases to optimise this revenue stream over the medium term. Print advertising revenue declined 11%, but continued to outperform volume trends, supported by food retail, including incremental spend around the World Cup. Government spending also continued to be an important print advertiser. This demonstrates the continuing relevance of this format to our advertisers. Printing and other print decreased as expected as the prior year was supported by a number of one-off sporting revenues such as football souvenir editions. I will now cover operating costs. We have a strong track record of discipline cost management which we continue to actively manage. Our adjusted operating costs reduced by 10% ahead of my original guidance, responding to the challenging market conditions. Taking a closer look, employee costs, our largest cost category, declined 10% despite the inflationary pressures from the company-wide pay rise and strategic hires to deliver our priorities. The majority of the savings were driven by the restructure undertaken in the second half of 2025, rigorous control of vacancies, along with a contribution from the closure of our Scottish print plant during April this year. The 17% reduction in newsprint costs is due to reducing print volumes. It is worth noting that newsprint procurement remains the region's responsibility, retaining control over negotiation of price and volumes of this critical supply. Production and sales costs declined by 5%, or $2 million, the majority of this saving coming from direct costs of sales. Other savings of $5 million were across all categories as we continue to focus on overhead management. In February, We took the decision to consolidate our print operations and close two of our printing facilities. This has progressed successfully, ahead of schedule, and with the savings currently tracking ahead of plan. The Scottish site transition has gone well. Here, we have moved much of our Saltire printing to our retained facility in Oldham, near Manchester, with the remaining printing requirements served by long-term outsourcing agreements. It is important to note that there has been no operational disruption during this transition and the early closure of Saltire has driven savings ahead of plan. We have decommissioned the site and over the next 12 months we expect it to be disposed of. Our southern site transfer is also on track. We have completed the transfer of our southern titles to the news printer site in Broxbourne with the final transition completed just this week. As stated at our full year results, the closure of the two print sites will create a one-off cash cost of change of around $25 million, primarily relating to severance, of which the majority is payable across the second half of the year. As a reminder, the Saltire and Watford print sites will be marketed for sale during 2026, and we are targeting to complete disposal of both sites during 2027. Decommissioning and valuation work is ongoing. Now over to cash. Our balance sheet remains strong. We generated $57 million of adjusted cash from operations. Our largest cash commitment is the agreed funding arrangements with our pension schemes. Pension payments totaled $28 million in half one, which includes $1 million returned from escrow following the Trinity Retirement Benefit Scheme buy-in. We paid $14 million of dividends, as we did in the same period the previous year. Restructuring outflows of $8 million in the main relate to people changes and the significant prior year restructure we undertook along with the salt site closures. Capital expenditure of $6 million is in line with our expected spend for maintenance and investment projects. We are waiting for the final settlement cost bills relating to historic legal issues and as a result we made a payment of just $1 million in the first half of the year. Net debt ended at $48 million. As a reminder, we have in place a $145 million revolving credit facility committed to the end of 2028. Now just a reminder of our capital allocation priorities. We have material print profits, sustainable cash generation, and a strong balance sheet, which remains key as we continue to reduce our financial obligations. Nonetheless, we recognise that the current market conditions remain challenging, requiring increased cost of change as we manage through the bridging period. Whilst we recognise the importance of returns to shareholders, we've taken the decision to reduce the interim dividend to 1.4 pence. This creates greater flexibility, balancing capital towards our organic investments. Piers will talk a bit more about those later. It is important we make these investments to deliver our priorities, including our brand development, subscriptions and new tech platforms. This is expected to drive more value to our investors over the medium term. We continue to adopt a prudent approach to managing our leverage, which is currently 0.4 times EBITDA, and which we target to maintain below one times. This is the outlook. So stepping through our business from the top, we retain our cautious outlook for the remainder of the year for both our digital and print businesses. I expect to deliver around 10% of operational cost savings in the second half. This is partially underpinned by the announced changes to the printing operations. Importantly, that means we are on track to deliver profit in line with market expectations for the year despite the revenue headwinds. In terms of cash, there is no change to estimates relating to the closure of the two print sites. These are expected to create a one-off cash cost of change of around 25 million, mainly relating to severance payable this year. Pension contributions are expected to be 57 million. You can assume that capital expenditure will be similar to 2025. Our provision estimate to settle historic legal issues is unchanged. We expect to pay the remaining four million over the next 12 months. No meaningful disposal proceeds are expected in 2026. The Saltire and Watford Prince sites will be marketed for sale this year and we are targeting to complete the sale of these sites in 2027. We view the next 18 months of pension contributions as a bridging period with the end being clearly in sight. This period will require our continued financial discipline and focus as I expect the higher levels of circulation volume decline to continue and that our margins during the bridging period will not exceed 20%. I do remain confident that we have the resources and the expertise to ensure we can navigate across the bridging period to be well positioned for 2028. I'll pass back to Piers to provide more colour on our strategic focus. Thank you for your time.

Thank you Darren. So we've given you the headlines, now I want to go back over some of the progress that we've made over the past six months and also to give you some more colour and context, as Darren says, around those shifts we're seeing in the market. Before I do so, just a quick reminder, I've already referenced these and I will do so again. These are the three priorities that I shared with you all this time last year. They are the connecting with our audiences, accelerating the use of tech and AI, and more importantly than ever, and many more. I want to lay out the environment we're operating, starting with some of those changes that we've talked about. We have seen a material change in how content is discovered online, and as Darren said, this is down to significant decline in referral volumes, particularly and primarily from Google. It is worth noting, however, that in the last 100 days, we have seen a stabilization in on-platform audiences, though we have to work to the assumption that these referrals are unlikely to recover. but the real story isn't just about the traffic decline, it's about our response to it and how our strengths and our brands stood up to this despite the change. To state the obvious, the landscape illustrates exactly why with a strategic decision to move further away from a reliance on referral traffic is the right one. It's why we've placed so much focus on original content, paid subscriptions, quality video, social engagement, off-platform distribution and a range of moves in the AI licensing space. In short, our focus areas are making sure we have more control on how our content is consumed and used by other parties. In other words, we're actively creating a more sustainable digital business model and that is beginning to pay off. For example, whilst lower yielding, off platform revenues have grown over 90%. We're getting going with emerging licensing deals and some of the regulation around how the tech platforms engage with other businesses in the UK is moving us in the right direction. So let's take a quick look at the three priorities in brief, starting with connecting with audiences. I've given you the context, and looking at this slide reminds me that amongst all this change, it's worth remembering what our strengths are and remain. For starters, despite all this change, we still reach two thirds of the UK online population. This is an immense footprint and unmatched by our commercial competitors. and even in this new world, scale is still enormously helpful when it comes to weathering the storms, reaching new consumers for our subscriptions and attracting commercial partners. I've talked before about reaching people where they live and whilst the geographic reach will always be a point of pride for us, we also take this to mean reaching people where they spend their time. For example, the platforms. This is where our off platform and our video focus really comes in. which are both now an increasingly important source of revenue. And to put it in perspective, despite all these changes, we have so many indicators which demonstrate that our content and our services remain highly relevant and valuable to humans and machines alike. 35 million adults in the UK still engage with our content every month. Every second we are still delivering 200 pages on browsers. Since this time last year, social video views are up 55%, social followers are up 15%, and now of course AI bots are scraping our content many millions of times a day. So we've seen a clear fundamental shift in how people and machines access our content, but through our strategy we'll be able to take advantage of these opportunities as they come. What's more, our value is increasingly tied to the real-time, on-the-ground content and journalism that our teams provide all around the UK, Ireland, and now the US, obviously, too. And this is what the AI machines cannot replicate, because even the best large language model doesn't know what happened at the end of your road just recently. So how will we make this relationship with our audience even stronger over time? A key push will be strengthening our network of brands, driving digital subscriptions with more marketing investment than we've had in recent years. Of course, this slide highlights some of our much well-loved brands and well-known brands, such as the Match Review News, the Echo, the Mirror, but also some of our more recently launched ones, including our all-out football network of club podcasts, which sees a combined 1.4 million monthly views and listens. and whilst it complements our digital subscription diversification, it is also worth pointing out we're looking at trialing new subscription-based community brands, often around our smaller legacy print brands which so far have had no online home or business model. So for example, we're starting next month with the Southport Visitor, Ayrshire Post and The Journal in the northeast of England. Moving on to tech and AI. Most visibly, our tech has obviously provided the infrastructure necessary for our subscription rollout. The team integrated an ad-light digital subscription across 15 sites in only a few months, which has allowed us to monetize those existing online products. Looking ahead to the rest of the year, I'm excited about Launchpad, a new publishing platform bringing in all the in-house AI-powered tools you've heard us talk about over the last 12 months, Mantis, Guten, Content Score, and the like. This means as a content creator or a journalist on the move, you can use AI to give you headline options, use data for ideation, content originality and value, grab an image from our archive, edit, upload video, all distributed from your mobile. And Launchpad will be key not only to our existing brands, but also those community brands that I talked about, but also in the future possible for independent creators. Last but not least, a nascent area, but I'm increasingly optimistic about the future revenue opportunity in licensing. Within AI licensing, you are seeing a funnel with different profiles of revenues. At the top of that funnel, we continue to engage the large platforms. I've talked before about courtship and courts, and I mentioned our deal with Amazon in March, and that's now providing ongoing revenues. And we're close to agreeing terms with some of the largest businesses in this space over the course of H2. In the middle of that funnel, we have a whole potential category of what is essentially a B2B, outside of the more obvious tech giants. For example, we're working with a financial services business, our content providing contextual information, that help serve their data and their clients. And then for the long tail, we're working with the likes of Amazon Web Services and other players such as Tolbit where we're putting in place effective real-time content marketplaces. These will enable us to get paid small amounts at high volume every time content get used by an AI bot. The industry obviously is referred to this practice as scraping, but if policy, regulation, the tech, and the markets can catch up to these developments, it will mean a much fairer and clearer value exchange for content businesses like us in an AI world, akin to the real-time bidding that we've had in advertising for decades. We know our content has tremendous value. The numbers validate that to our audiences and to other businesses, including AI firms. And we're just at the start of monetizing this. Moving on to diversifying revenues. Clearly important given the environment we're in. This strand has moved on considerably in recent months, obviously driven, as I said, by subscriptions. It represents just under 15% of our revenues, our digital revenues, and remains a big opportunity for us. A lot has happened over the last six months, and I'm very ambitious about where this could go next. During this time, we've moved fast. We've successfully rolled out paid subscription across 15 of our brands. giving our subscribers premium content, AdLite experiences, offers and more. We've already secured well over 40,000 subscribers and we're well on track for our 75 target that we set for the full year. We've seen success across our network, across the more well-known brands, but also in the likes pleasingly of Wales Online and Stoke Sentinel. Over the next half of the year, we still have a few more brands to launch which will keep driving that momentum, but the real work now will be around finessing our proposition as I said earlier, proactively marketing our brands and our content in ways that we haven't done before. And through this work, it's been fascinating to see what the users value in each of our brands and what content drives conversion. Now there is sometimes a tension in our subscription focus, which means there will be trade-off that maybe impacts page views. But we're fully committed to serving the core of our paying customers who value our content and it's exciting to see where this goes next. To add some more colour, I did just want to zoom in on video for a minute. This has been always part of our connecting with audiences strand, but it really brings together all of our three priorities with tech and revenue diversification too. So it's a really good example of how we're doing all of the strategy with this one initiative. Overall, I'm pleased with the success we've seen so far from doing more quality video, which we know packs real commercial value. We do a huge amount in everyday journalism, but also in the high-end production, which we call studio, often longer-form content and often featuring external talent and guests. Our performance here demonstrates exactly how this push has translated into commercial success with studio revenues up 70%. Our work with partners like Nestle on their Made by Britain campaign is a good example of how this pays off with our ad partners. We've worked with them in improving the trust in their brand using high-end, high-performing social video around farming and communities. We started this work last year and they've just renewed their partnership with us again and the new campaign gets underway later this month. As I said, we're seeing this quality capability keeping us top of mind with big agencies for multi-platform campaigns supported by direct sponsorships with the likes of NordVPN on All Out Rugby League, Scottish Water on Hotline Live, our football product north of the border during the World Cup, or our new partnership with Pure Gold on our Daily Expresso show. As an aside, Daily Expresso was YouTube's most-watched UK news show in June, ahead of some of the really established players. and beyond these individual examples what's exciting is this creates that virtuous circle of video where every time we can showcase our improved capability we in turn attract bigger briefs often from new brands that we traditionally have not worked with. So this is an area where we're seeing good revenue growth from multiple sources and good future prospects too and as we continue to finesse and expand our video offering in the back half including now from our US teams who have more capability in this space. This area is a big factor in why, excluding that local business, our direct revenues are up by 6%. We're doing more to monetise our scale audience in a way that we can more effectively control. To bring this to life, for the last couple of presentations, we've always got a bit of a new tradition of highlighting our editorial in video, but this time, given the recent World Cup, I thought it would be fitting to make it a football-specific one. So if we could roll the VT...