As reported by Reach plc:
Key Highlights
Positive profit performance which benefited from the acquisition of Express & Star
Group revenue increased by 10.6% to £353.8 million reflecting the acquisition of Express & Star on 28 February 2018. On a like for like basis revenue fell by 7.2%. Although like for like Publishing print revenue fell by 9.3% we delivered growth in like for like Publishing digital revenue of 6.0% with digital display and transactional revenue growing by 11.5% partially offset by a fall in digital classified revenue of 19.8%. Adjusted operating profit increased by 6.2% to £66.5 million.
Statutory performance impacted by non-cash impairment charge
Statutory operating loss of £107.3 million reflects the impact of a non-cash charge of £150.0 million as a result of more challenging than expected outlook for our regional businesses.
Structural cost savings of £9 million and synergy cost savings remain on track
We delivered structural cost savings of £9 million in the period and expect to deliver £18 million for the full year, £3 million ahead of the target of £15 million. Following regulatory clearance we have commenced delivery of the synergy savings from the acquisition of Express & Star and anticipate £2 million of savings in 2018 with further savings being achieved in 2019 and are on track to deliver annualised savings of £20 million by 2020.
Pension deficit fell by £80.6 million to £297.0 million
The IAS 19 pension deficit fell by £80.6 million to £297.0 million (£242.3 million net of deferred tax). This is net of an accounting surplus of £5.9 million for the Express & Star pension schemes at the period end.
Low leverage with net debt of £81.0 million
After payments of £90.1 million in the period in relation to the acquisition of Express & Star, net debt at the period end was £81.0 million, an increase of £72.0 million.
Historical legal issues
The provision for dealing with historical legal issues was increased by £7.5 million during the period as costs associated with the settlement of civil claims, in particular the claimants legal costs, have been higher than expected. After utilising £6.6 million, £11.6 million of the provision remains outstanding at the period end.
Interim dividend of 2.37 pence per share
An interim dividend of 2.37 pence per share for 2018 represents an increase of 5.3% from the 2017 interim dividend of 2.25 pence per share.
Strategy and outlook
We have a clear strategy and this will ensure we crystallise the benefits of scale whilst driving growth in digital audience and revenue. The Board has confidence in our strategy and anticipates trading for the year to be in line with market expectations.
Commenting on the interim results for 2018, Simon Fox, Chief Executive, Reach plc, said: “We have delivered a positive financial performance in what remains a difficult trading environment for the industry, in particular the regional businesses. The benefit of improved performance from national print advertising coupled with further cost mitigation will support profits over the year despite a further increase in newsprint prices for the second half. We have started the process of integrating Express & Star in order to accelerate the benefits that our combined scale will deliver and have a clear strategy which fully reflects the changing shape of the Group.”
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