Reach H1 2026 Earnings Report

Reach EPS Results

• Actual EPS: GBX 11.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Reach Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Reach Announcement Details

• Quarter: H1 2026
• Date: 7/22/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 22, 2026
• Conference Call Time: 4:00AM ET

Reach (LON:RCH) is the UK’s and Ireland’s largest commercial news publisher. It is home to over 120 trusted brands, from national titles like the Mirror, Express, Daily Record and Daily Star, to local brands like MyLondon, BelfastLive and the Manchester Evening News. With a purpose to enlighten, empower and entertain through brilliant journalism, these brands deliver the latest news, entertainment and sport to communities throughout the UK and Ireland and around the world every day. It’s proudly mainstream and each trusted title is a platform to represent and campaign for the voices of the communities they serve and to hold power to account. Reach is transforming how it delivers value to stakeholders, evolving and growing a digitally-focused business while maintaining strong foundations in print. This transition is underpinned by the strength of talented people and iconic brands, united and guided by a purpose and focused on providing the content that attracts the largest audience of any commercial news publisher in the UK and Ireland.

Reach H1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Reach said digital revenue fell 11% as on-platform page views dropped 40%, largely due to lower Google referrals, underscoring the hit from changing online discovery patterns.
• Positive Sentiment: Management highlighted better-than-expected cost control, with operating costs down 10% and adjusted operating profit held at GBP 43 million, helping margins rise to 18.5%.
• Positive Sentiment: The company’s subscription rollout is gaining traction, with paid access now live on 15 sites and subscriber counts above 40,000, putting Reach on track for its 75,000-year-end target.
• Neutral Sentiment: Reach is pushing its AI and licensing strategy, including the new Launchpad platform and emerging revenue streams from larger tech firms, B2B partners, and pay-per-use content models.
• Negative Sentiment: The interim dividend was reduced to GBP 0.014 per share as the company shifts capital toward organic investment, while management also warned that the business faces a cautious outlook and continued print volume declines.

Presentation

[Piers North, CEO at Reach plc]

Good morning, everyone. Thank you for joining us today, either online or in person. My name's Piers North. I'm Chief Executive of Reach plc. Welcome to our half-year results for 2026. I will assume you are familiar with our usual disclaimers, but they are here, if not. This morning, I'm going to run through our performance highlights for the first half of the year. 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 opportunities in it moving forward. Let's take a snapshot of the year. To put it mildly, this period has been continuing to be characterized by significant external change.

[Piers North, CEO at Reach plc]

The media, 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 to 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.

[Piers North, CEO at Reach plc]

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. 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.

[Piers North, CEO at Reach plc]

Our ongoing focus on cost and cash discipline has ensured that we've delivered an adjusted operating profit of GBP 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.

[Darren Fisher, CFO at Reach plc]

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 are 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.

[Darren Fisher, CFO at Reach plc]

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 GBP 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%-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 GBP 49 million.

[Darren Fisher, CFO at Reach plc]

As we enter the final phase of the bridging period, we have taken the decision to rebase the interim dividend to GBP 0.014 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 GBP 23 million to GBP 233 million. Within revenue, our digital revenues declined 11% to GBP 54 million, despite 40% decline in page views. Our print revenues, which represent about 3/4 of our total revenue, declined 8% to GBP 178 million. Operating profit decreased by 4%, or GBP 2 million to GBP 43 million, and we ended the period with a GBP 48 million net debt balance. Now turning to digital in more detail. We categorize digital revenue in two component parts, direct and indirect.

[Darren Fisher, CFO at Reach plc]

These direct revenues declined by GBP 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 page views currently remain our key monetization 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.

[Darren Fisher, CFO at Reach plc]

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. Monetization of these audiences has improved through our focus in this area, with the platforms increasingly rewarding engaging content. 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 optimize 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 -7.8%.

[Darren Fisher, CFO at Reach plc]

This is because of high volume declines, in particular Q2, where we have seen the decline elevated at 23%. This is against our normal decline rates of between 17%-20%. Our view of this is a combination of the latest cover price increase with the continued cost of living pressures for our readers. We will continue to carefully review future increases to optimize 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.

[Darren Fisher, CFO at Reach plc]

We have a strong track record of disciplined 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 Reach's responsibility, retaining control over negotiation of price and volumes of this critical supply. Production and sales costs declined by 5% or GBP 2 million.

[Darren Fisher, CFO at Reach plc]

The majority of this saving coming from direct costs of sales. Other savings of GBP 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.

[Darren Fisher, CFO at Reach plc]

We have completed the transfer of our Southern titles to the newsprint 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 GBP 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. Over to cash. Our balance sheet remains strong. We generated GBP 57 million of adjusted cash from operations. Our largest cash commitment is the agreed funding arrangements with our pension schemes.

[Darren Fisher, CFO at Reach plc]

Pension payments totaled GBP 28 million in half one, which includes GBP 1 million return from escrow following the Trinity Retirement Benefit Scheme buy-in. We paid GBP 14 million of dividends as we did in the same period the previous year. Restructuring outflows of GBP 8 million in the main relate to people changes and the significant prior year restructure we undertook along with the Saltire site closures. Capital expenditure of GBP 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 GBP 1 million in the first half of the year. Net debt ended at GBP 48 million. As a reminder, we have in place a GBP 145 million revolving credit facility committed to the end of 2028. Just a reminder of our capital allocation priorities.

[Darren Fisher, CFO at Reach plc]

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 recognize that the current market conditions remain challenging, requiring increased cost of change as we manage through the bridging period. Whilst we recognize the importance of returns to shareholders, we've taken the decision to reduce the interim dividend to GBP 0.014. 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 derive more value to our investors over the medium term. We continue to adopt a prudent approach to managing our leverage, which is currently 0.4x EBITDA, and which we target to maintain below 1x. This is the outlook.

[Darren Fisher, CFO at Reach plc]

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 GBP 25 million, mainly relating to severance payable this year. Pension contributions are expected to be GBP 57 million. You can assume that capital expenditure will be similar to 2025. Our provision estimate to settle historic legal issues is unchanged.

[Darren Fisher, CFO at Reach plc]

We expect to pay the remaining GBP 4 million over the next 12 months. No meaningful disposal proceeds are expected in 2026. The Saltire and Watford print 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 color on our strategic focus. Thank you for your time.

[Piers North, CEO at Reach plc]

Thank you, Darren. 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 color 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 our 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, diversifying our revenues. These have been our guide over the past 12 months, despite the scale of the change, these priorities have not changed. The reason, because they were created with these shifts in mind.

[Piers North, CEO at Reach plc]

This strategy builds in the dominance of the tech platforms, the changing audience behaviors, and of course, AI. Let's talk a little bit more about the digital in the first half of the year. 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. As Darren said, this is down to significant decline in referral volumes, particularly and primarily from Google. It is worth noting, however, that over 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. 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.

[Piers North, CEO at Reach plc]

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 U.K. is moving us in the right direction.

[Piers North, CEO at Reach plc]

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 2/3 of the U.K. online population. This is an immense footprint and unmatched by our commercial competitors. 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.

[Piers North, CEO at Reach plc]

This is where our off-platform and our video focus really comes in, which are both now an increasingly important source of revenue. 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 U.K. 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. 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.

[Piers North, CEO at Reach plc]

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 U.K., Ireland, and now the U.S. obviously too. 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. 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 "Manchester Evening 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.

[Piers North, CEO at Reach plc]

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. For example, we're starting next month with "The Southport Visiter," "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.

[Piers North, CEO at Reach plc]

This means, as a content creator or 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. Launchpad will be key not only to our existing brands, but also those community brands that I talked about, but also in 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.

[Piers North, CEO at Reach plc]

I've talked before about courtship and courts. I mentioned our deal with Amazon in March, and that's now providing ongoing revenues. 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 helps serve their data and their clients. Then for the long tail, we are working with the likes of Amazon Web Services and other players such as TollBit, 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 gets used by an AI bot.

[Piers North, CEO at Reach plc]

The industry obviously has referred to this practice as scraping. 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. 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 the recent months, obviously driven, as I said, by subscriptions. It represents just under 15% of our revenues and remains our digital revenues and remains a big opportunity for us.

[Piers North, CEO at Reach plc]

A lot has happened over the last six months. 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, ad light experiences, offers, and more. We've already secured well over 40,000 subscribers. 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, also in the likes, pleasingly, of WalesOnline and Stoke Sentinel. Over the next half the year, we still have a few more brands to launch, which will keep driving that momentum. 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.

[Piers North, CEO at Reach plc]

Through this work, it's been fascinating to see what the users value in each of our brands and what content drives conversion. There is sometimes a tension in our subscriptions focus, which means there will be trade-off that maybe impacts page views. 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 color, 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. It's a really good example of how we're doing all of the strategy with this one initiative.

[Piers North, CEO at Reach plc]

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 Reach 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 Reach Studio revenues up 70%. Our work with partners like Nestlé 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 proving 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.

[Piers North, CEO at Reach plc]

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 U.K. news show in June, ahead of some of the really established players. 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. This is an area where we're seeing good revenue growth from multiple sources and good future prospects, too.

[Piers North, CEO at Reach plc]

As we continue to finesse and expand our video offering in the back half, including now from our U.S. 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 monetize 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. This time, given the recent World Cup, I thought it'd be fitting to make it a football-specific one. If we could roll the VT. [Presentation] I think when we launched our connection with audience strategy, we didn't think we'd reach Clarence House and Prince William, but that was him hanging out with our Aston Villa podcast team.

[Piers North, CEO at Reach plc]

Before I wrap up, I want to leave you with a little bit of a mantra that will define our path forward. We are moving away from a pure volume play and focusing on original content, distinctive brands for better returns. This isn't just an editorial choice, it will form the likes of the commercial of a refocused brand-led business. We're transforming how we operate using our three core priorities to navigate the complex market while keeping our feet firmly on the ground with disciplined cost and cash management. Over this year, we're investing GBP 9 million exactly where it needs to be, in our video capabilities, our technologies, and the undeniable strength of our brands. We are simplifying, we are focused, and we are executing. My confidence in our trajectory comes from the core we've begun to build.

[Piers North, CEO at Reach plc]

We are not just holding steady, we're actively building the future of this company with a few key milestones still to come this year. We're scaling our digital subscriptions towards that 75,000 target and beyond. We're introducing new subscription products with the community brands. We're deploying our Launchpad platform across every news desk, ensuring our teams have the best tools to drive smarter, faster content decisions and creation. We're opening up new revenue frontiers through strategic licensing deals and using AI to support large-scale digitization of our archive. Before we move to questions, let me sum up where we stand. While we've seen some welcome stabilization in our on-platform referrals since the start of Q2, we remain prudent and maintain a cautious outlook for the year. Our approach moving forward is singular, disciplined execution against our three core priorities, guided by this renewed focus on our brands.

[Piers North, CEO at Reach plc]

Meanwhile, we're simplifying the group through strategic cost actions, ensuring we operate with agility that the market demands. As part of this agility, we'll manage our print business to give the optimum returns for the medium term. We're building on good foundations, and we're approaching a significant turning point for the business as we enter the penultimate year of our material pension funding contributions. We have a clarity, we have direction, and the resilience to create long-term value. We're confident in our path, and we are ready for the future. Thank you, and I'll now take questions. Gareth. Do you need a mic?

[Gareth Davies, Analyst at Deutsche Numis]

Morning. Gareth Davies from Deutsche Numis. Maybe two with a few bits from me. Firstly, the direct revenue, you said you're sort of proactively managing at a lower margin local, and +6% is a strong performance in the stuff that's kind of going well is higher margin. As we look into H2, presumably you've got a similar headwind until we get into 2027 around that local. How are you thinking about monetization on the local in terms of what you're swapping out really for the stuff you're getting rid of? Just really understanding that trajectory a bit more on direct. Then on circulation, a couple of questions around it. Is it local? Is it national? Is it across the board? Is it a specific title? Did it feel like it was specific to a cover price increase?

[Gareth Davies, Analyst at Deutsche Numis]

How should we think about a cover price increase in the second half of the year in that context? You also mentioned the trade-off of page views to subscription. Is there any evidence from what you can see that you're also having to accept a little bit of a trade-off for subscription and circulation?

[Piers North, CEO at Reach plc]

Darren, to take the circulation question, I can come back on that page view trade-off. On the direct revenues, as you said, the focus for us really is we restructured the sales organization for this year, where we've effectively created a single entity. We try not to look in a way now of kind of regional and national. We're looking at the scale of the opportunity with the advertiser. Really we're focused on kind of the head and the torso of our advertiser portfolio. We will, as you say, expect sort of headwinds across the back half of the year with that local before we go into 2027. It is about making sure those teams, when they're dealing direct with advertisers of a certain size, they're able now to offer a lot more in terms of video.

[Piers North, CEO at Reach plc]

We're rolling out new AI-supported video creative for those local teams. Clearly, if you're a small to medium-sized business, creating video creative has traditionally been hard. We can now offer advertisers the ability to create video out of their own assets through AI, that is early stages but is seeing promising results. Yes, we will continue to see the sort of headwinds in the back half of the year, we're optimistic as we re-profile that business. I'll let Darren come in on the circulation question about where it falls, on the page views versus subscriptions, there's no evidence that that's linked to the trade-off on circulation, if that was the question. We do see them as two distinct entities.

[Piers North, CEO at Reach plc]

As I said, we have accelerated subscriptions over the last three months, actually, as I've referred to, we've seen a relative stabilization of our page view number. There are times where we will need to make decisions. Sometimes the correlation and causation is hard to match. I believe that the priority has to be building that subscription model more. Darren, do you want to take the circulation question?

[Darren Fisher, CFO at Reach plc]

Yeah. No problem. Look, first thing I'd say, Gareth, is this is the first CPI, certainly in my time, I'm sure probably for much longer, that we've seen has declined outside of our tolerance levels, our sort of expected tolerance levels. In that context, the only real data we have is around what we've seen recently. Therefore, in terms of is it really just the CPI itself, it's just a little bit difficult to unpick at the moment. We've clearly moved into an increasingly probably difficult macro environment. The cost of living is certainly going up for people. Then you get odd factors like we've had a really hot summer of people getting out and buying their newspapers. Then you've got the World Cup as well. There's all sorts of things that it could be.

[Darren Fisher, CFO at Reach plc]

What's important to us is that we get another data point. It's likely we will do the next CPI increase just to see how that one performs in order to be able to get more data. Needless to say, though, I think I've had this question over the years many, many times as to when will this come? It's come now, again, we just need to make sure we understand it before we take any real action. Needless to say, our teams are expert at managing this. They understand their business very well, we will get to the bottom of it. In the meantime, we will be looking at what the strategic options are going into 2027 should we decide that we need to change tack based on data points. Oh, you did ask a question about where it was coming from.

[Darren Fisher, CFO at Reach plc]

It's primarily the nationals.

[Piers North, CEO at Reach plc]

Yeah. Sean. Sorry, I'll go to Barclays.

[Nick Dempsey, Analyst at Barclays]

Nick Dempsey from Barclays. I've got two, please. Kind of anecdotally, local news agents, sort of corner shops, et cetera either struggling to continue with the weekly paper boy kind of approach or struggling to continue at all. Is there any factor that retail has got worse and so people are having to go further afield to pick up their papers, or they can't get that regular delivery that they used to? Has that been any part of the weakening of volumes? The second question, just on the pension. If we maybe are now talking about a higher rate of top-line decline for the group, which I'm looking at your commentary on 2026 and 2027 at least, does that change the dynamic in terms of your next negotiations for the pension?

[Nick Dempsey, Analyst at Barclays]

Might we see those guys want to see top-ups for longer if the top line is predicted to be weaker for longer?

[Piers North, CEO at Reach plc]

Shall I take the circulation, you take the pensions? The question, no, the retail point we don't think is a factor in the change in trajectory on the circulation. As Darren says, this is more likely around the cost of living, retail distribution and availability remains fairly constant. Clearly as that market evolves, all of the distribution and retail, we will make sure we optimize to ensure the retail partners have the available copies. Do you want to take the pension?

[Darren Fisher, CFO at Reach plc]

Yeah. On pensions, we are, I'm sure you're all aware, we're currently in the triennial process, which will end at the end of March next year. Yeah, we may be able to get it done a bit earlier, but let's assume it'll be the end of March. In terms of, if I park the link, if you like, to performance for a moment, the reality is we are really in sight of the end of the pension contributions. At the moment, on the current schedule, they step down to GBP 15 million in January 2028. I don't expect at the moment at all that we will have any change to those contribution schedules as the backstop, if you like.

[Darren Fisher, CFO at Reach plc]

The way I think about this is when we get to March next year, we've finished the triennials, we only literally have nine or 10 months to go, in terms of getting to a point where we have the contribution schedules completed. I don't at the moment feel that we need to go into the triennial looking to negotiate or renegotiate the pension contributions to a lower number. I just think we would prefer to just make sure that we get these closed down, not only for the company, but also for the pension schemes as well.

[Piers North, CEO at Reach plc]

Sean.

[Sean Kealy, Analyst at Panmure Liberum]

Morning, everybody.

[Piers North, CEO at Reach plc]

Press the button.

[Sean Kealy, Analyst at Panmure Liberum]

[Is that one on, that mic? Sorry]. Thanks, everyone. Morning. Sean Kealy from Panmure Liberum. I've got three questions, if I may, gents. First of all, on AI revenues sort of going forwards, you've pointed to a couple of different models, licensing, TollBit, et cetera. More of a sort of thematic question. Where are you seeing in your conversations with the LLM providers that they see the real value in your content? Is it sort of some of the local content that maybe others don't have? Is it the back catalog, and I think you referenced sort of a digitization project going there, or are they mainly looking for big national stories? Secondly, just touching on newsprint very quickly. Obviously, we've got ongoing conflicts in Iran.

[Sean Kealy, Analyst at Panmure Liberum]

Could you just remind us what the outlook is for costs on newsprint, if you're seeing any impact from potential energy prices, any sort of hedging or to the extent to which you feel forward bought on that. Thirdly, just on the subscriptions, I think you touched on both marketing investment and product improvement for subscriptions. Could you just give us a little bit more detail as to what sort of the plans are in the next six, 12, 18 months? Are you looking at changing the ad loads, the formats, and anything else you're doing on that as well?

[Piers North, CEO at Reach plc]

Again, Darren, if you take the newsprint costs, I'll take the other two. On the AI question, well, look, the conversations with the large language platforms are as varied as they are. They all require slightly different things. At a thematic level, they have a huge interest in real-time information because that is the thing that keeps those engines burning. Clearly archive is of interest to them, but like any archive or evergreen content, that is a one-time value. They all have a broad thematic that they want real-time content. They obviously need it to be accurate, and again, as a professional curated news organization, that is our USP. They want it to be original, of course, because they want as many different original sources to play into.

[Piers North, CEO at Reach plc]

I'd say those are the broad themes, but I think that for me is the reason that when we engage with certainly some of the more established tech players where we have existing relationships, they see that value. That's where I'm most hopeful to progress it. They all have slightly nuanced plays and platforms on that. On the point around sort of improving subscriptions, we sort of talk internally that we've kind of launched subscriptions, but really we've just launched paywalls. There's a huge amount of stuff that we need to do, even just in the way, for example, you experience the kind of paywall experience. We're relatively unsophisticated. We need to be much better in terms of driving conversion through that. Small things like Apple Pay and Google Wallet, all of that sort of stuff.

[Piers North, CEO at Reach plc]

That is where the technology investment will go to make sure that when our users land, we drive up conversions and all that, and that's where the opportunity lies. We will invest in people in terms of making sure that our brands have brand representation, so that our local, for example, in a Manchester or Newcastle or Belfast. Actually, Belfast, we've already trialed successfully over the last year or so, those kind of activations, whether it be the local marathon or the local event. That's our kind of focus. It'll be a combination of technology, and people to make sure that we kind of broaden out the offering. As I said, we do consider ourselves still in the foothills of subscriptions. We've got a long way to go, but I'm pleased with the progress we've made.

[Piers North, CEO at Reach plc]

Do you want to take the question around newsprint?

[Darren Fisher, CFO at Reach plc]

Yeah. We will all remember going back a few years when prices certainly did escalate, as part of, I think it was the Ukraine War at the time. We haven't seen that, in relation to what's going on in Iran. It's been pretty stable. We have just had around, actually, just a half year around with our main suppliers. While there may be a little bit of upside pressure, that's more, I think, more market driven rather than specific to anything else. What I would say is, the industry is also contracting, we just have to keep an eye on that. We're seeing some suppliers considering moving to things like packaging. That would be one thing we do need to just keep an eye on as we go forward.

[Darren Fisher, CFO at Reach plc]

No, we have an excellent negotiator of our newsprint in the business, at the moment we're seeing relative stability in that area.

[Company Representative at Reach plc]

Just a couple that have come through on the webcast. Can you give me a sense of what's happened to Google referrals and on-platform audiences in H2 compared to H1 of this year, what you've seen in the last few weeks?

[Piers North, CEO at Reach plc]

The last few weeks has been, as I said, relatively stable. I think we've put a lot of effort into making sure things like the technology and the UX that sits behind or on browser. Certainly, we're not giving up on page views. As I said, we will just be very cautious to the outlook going forward.

[Company Representative at Reach plc]

Thank you. A technical one on capital allocation. Your dividend policy states that total shareholder returns in any year cannot exceed the aggregate pension contributions made to address past deficits. Given your deficit recovery payments will be falling to GBP 15 million in 2028 and drop to zero in 2029, does that mean total distributions will be capped at that level?

[Darren Fisher, CFO at Reach plc]

In terms of the dividend or the contributions themselves?

[Company Representative at Reach plc]

Well, the dividend.

[Darren Fisher, CFO at Reach plc]

There's an agreement in place with two of our schemes actually that have that condition. As part of the triennial, that is one of the items that we'll be negotiating to remove. It has become irrelevant. It was relevant at the time it was put in place, but given that the contribution schedules are due to come to an end, we'll be negotiating that out of the contracts.

[Company Representative at Reach plc]

Any update on the estimated market values and sale of Watford and Saltire?

[Darren Fisher, CFO at Reach plc]

It's a little bit finger in the air, to be honest. We still are going through the process of valuation. In fact, we're only really getting into that process of valuation. I would say Saltire is probably of less value than Watford. We've had quite a bit of interest already just on listed coming in. Difficult to put a number on it if you wanted to put something in the model. Don't hold me to this, I'll put in probably around GBP 10 million. Again, that's based on some very limited sort of view, really.

[Company Representative at Reach plc]

Thank you. Regarding the print consolidation, you guided to a GBP 25 million one-off cash cost of change and mentioned a two-year payback. Does this imply GBP 12.5 million of annualized operational savings?

[Darren Fisher, CFO at Reach plc]

The two-year payback relates to the cash payback. Not all of that cash will turn into ongoing savings. The disposals proceeds, for example, would not be a recurring item. You just need to be mindful of that.

[Company Representative at Reach plc]

Final one. Do you see in the near future the share price will start to improve?

[Darren Fisher, CFO at Reach plc]

What Piers and I do, and the executive team do is run the company in the way that we think is right for the business. The share price tends to look after itself.

[Company Representative at Reach plc]

Thank you. That's all from the webcast.

[Piers North, CEO at Reach plc]

Okay. Are there any more questions in the room? If there's not, thank you all very much for attending and tuning in today. With that, I'll bring proceedings to a close

Participants

Executives

• Piers North, CEO
• Darren Fisher, CFO
• Company Representative

Analysts

• Gareth Davies, Analyst at Deutsche Numis
• Nick Dempsey, Analyst at Barclays
• Sean Kealy, Analyst at Panmure Liberum