Reach (LSE:RCH) — Annual Results

0:00 Good afternoon, and welcome to the REACH PLC investor presentation. Throughout this recorded presentation, investors will be in a listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Piers North, CEO. Good afternoon, sir. Thank you very much, and welcome everyone, this afternoon to the full year results for REACH PLC. Thank you for taking the time out, to hear from us today. Before I get started, I would just draw your attention to the usual disclaimer side, which is obviously an important function of sharing this information.

0:49 So quick inter introduction. My name is Piers North. I'm chief executive of REACH. I'm joined today by Darren Fisher, who will be talking as CFO as well as Joe Britton, will take some and share some of your questions later on. So I wanted to start with me. I will do a brief summary of the year before passing over to Darren for the all important financial details, and then he will hand back to me where I'll cover off some of the progress that we've made around both our strategic priorities this year, but also, some of our operational and business, decisions that we've taken to set us for the future. So firstly, a high level, at a summary level, we've clearly had a good financial performance in 2025, with growing profits year over year and a market leading operating margin of of over 20%.

1:37 Aside from the financials, we've made good strategic progress against the priorities that we set out in the middle of last year, and these were designed to for the changing landscape that media and ourselves operate in these days. We've taken decisive actions across both the strategy, but also, as I said, the business to put our business on the right foot. That includes the strategy, which I'll talk more about later, but also operational decisions around printing and pensions, which both Darren and I will cover, later on. I should say that, obviously, the one standout challenge we've had has been on our digital business is the headwinds that has seen the market change in terms of referral, the change in behaviors of AI large language models, and also the change in the way platforms are circulating traffic around the Internet has impacted us in the back half of last year and has flowed through into the start of this.

2:32 This changeable environment is exactly what we had in mind when we designed the the strategic priorities that we outlined last year. And so the focus really over the course, we knew the weather was changing. We needed to prepare ourselves for it. And over the course of the back half of this year and obviously into net into this, we're implementing those initiatives at pace that, you know, include, but not limited to, a focus on video resource and output to make sure that we reach people where they live in terms of their social feeds and their applications. It's about adopting and integrating AI beyond just the way people may think. A media organization will use AI, but embedding it across our functions, whether that be the support function in in HR and legal, into commercial, and, obviously, into the way we create content and stories. Obviously, diversifying our revenue out of the pure ad led model. Our business in digital has been dominated for the past few years in terms of advertising revenues, and we've made some progress in ecommerce to broaden our portfolio, our revenue sources, but the one gap that we had was in the subscriptions model.

3:34 And so we took the decision in the middle part of last year to roll out that across our network, and I'll give you a bit of an update on that later on. To do all these strategic priorities, we also had to restructure the business in 2025. We set ourselves up with leaner central teams. It allowed us to put resource around video, and we've seen new people arrive into our business with new skill sets and a new outlook. And we've also driven efficiencies in the way that we operate both as the central support functions, but also in editorial. We announced recently plans to consolidate our print operations. I will as I said, I will talk Darren and I will both talk more about this. This is a significant step for us for the future as we reorientate our resource, and our our plans around digital.

4:19 I'm incredibly proud of the way the team here responded to the headwinds that I talked about. The challenge in referral traffic was, sudden in h two. You can see that from our quarterly breakdowns. But I'm pleased that our digital revenue largely held up, albeit we accept it was it was down slightly to a 129,000,000. And certainly, I and the management team are happy with a digital business that is not growing, but I'm also equally proud of the way the team's responded to the changing ecosystem we operate in. We've obviously done all of this while maintaining a very strong control of our costs, and we've made the decisions, necessary, and that obviously helped deliver that above expectation profit of a £105,000,000. So linking to the profit, I think that's probably a good segue now to hand over to Darren, our CFO, who'll take you through in detail the financial performance 2025.

5:09 Darren, if I can hand over to you and make sure you're off mute, and I will go on mute. Thank you. Thank you, Piers, and thank you, everybody, for joining. Just got a few a short number of slides which come out of the the presentation deck that we actually did a few days ago. But just to sort of summarize a few points for you. So firstly, just on a financial summary, we have delivered a strong set of financial results in 2025, and that's despite the challenging market conditions that we have found ourselves in. We delivered higher profits than last year. We've maintained our cost and cash discipline. And that we've also maintained a consistent strong cash conversion. We've continued to manage the overall decline in our revenue to 519,000,000, a reduction of 20,000,000.

5:55 And we continue our track record of proactive cost management with a reduction of costs of 5.2%, ahead of the four to 5% range that we guided to. This is underpinned by by the one percentage point increase in our industry leading adjusted operating margin to 20%. Operating profit increased 2.4% or 3,000,000 to 105,000,000. And we ended the period with a 35,000,000 net debt balance. Cash generation remains robust with adjusted operating cash flow of 104,000,000 and cash conversion at 99%. And we've maintained the full year dividend at 7.34p per share. Just moving on, just to cover the cost base. We have a strong track record of disciplined cost management and driving cost savings, which we've delivered again.

6:46 As mentioned earlier, our operating adjusted operating costs are reduced by 5.2%. During the second half of the year, we took the decision to restructure the group to align with our three key priorities to accelerate growth. As part of this, we have created new roles and teams which are focused on our video production, developing new commercial propositions, and driving growth in our off platform audiences. We also use the restructure to drive further efficiencies, reducing headcount by 4%, which contributed to our three and a half percent labor cost reduction in 2025. The 11% reduction in newsprint costs are due to reducing circulation volumes and longer and stable contracts. Production production and sale costs were both broadly in line with the prior year. Key savings were made in other overheads with the reduction in utilities and a step down in our use of contributors.

7:37 Now I'll just go over to the uses of cash. Again, a very important slide. So our balance sheet does remain strong. The slide illustrates the cash generated from our operations and where it has been allocated. Adjusted cash generated from operations remained strong at 124,000,000, reflecting the improved profitability of the group. Our largest cash commitment is the agreed funding arrangements with our pension schemes. Pension payments total 64,000,000 in 2025, which included 3,000,000 non recurring payments to the West Ferry pension scheme, and 4,500,000 of pension contributions paid into escrow. We paid 23,000,000 of dividends as we did in the previous year. Restructuring outflows of 23,000,000 in the main related people changes and the significant restructure we undertook to align our group with the three our key three priorities.

8:30 Capital expenditure of 14,000,000 is in line with our expected spend for maintenance and investment projects. We made payments of 4,000,000 for the settlement of claims relating to historic legal issues. Other includes 7,000,000 of pension related costs, including legal fees and administration, 7,000,000 of net lease payments and 5,000,000 of interest payments. And finally, we completed a disposal of our properties in Guildford, Liverpool and Teeside, which generated around 4,000,000 in sales proceeds during the period. We are not expecting any further sales in 2026. Net debt ended at 35,000,000. As a reminder, we have in place 145,000,000 revolving credit facility. During the year, we exercise the option to extend the term by an additional year to December 2029.

9:21 But finally, I just want to cover off the capital allocation history just as we give some context as to what we have paid over the years in line with our capital allocation priorities. Firstly, it's important to say our approach to capital allocation remains consistent with previous years. It is, I think it's worthwhile taking a step back and looking at our capital allocation history, which is all described on this slide. This shows how we've delivered consistent returns to our shareholders distributing 23,000,000 every year, totaling nearly 100,000,000 since 2022. The single largest annual capital allocation priority is our obligation to fund our pension schemes. This year, we contributed 65,000,000, which includes 1,000,000 paid into a secured bank account. Access across the four year period contribution to pension schemes has been 241,000,000.

10:13 However, these material obligations are getting close to ending based on the current contribution schedules in place with our pension schemes. The majority of these pension commitments will unwind in 2028. And that's really important for us in terms of therefore getting into a less constrained position than we are today. It is worth noting that the 2025 retrainer valuations have also started and are due to complete by 03/31/2027. Piers, I will now pass back to you. Thank you very much, Darren, for that overview of the financials. I wanted to take the presentation on to talk a little bit more about our business, but also the strategic priorities and the progress we've made on those, which are designed to help mitigate the challenges that we outlined at the top of the call around the referral traffic. I will go into some detail on that because there is a lot of interest on it.

11:09 So apologies for somebody who are very familiar with our portfolio, but for those of you who aren't, I think it's really important that we remind ourselves that the platform ultimately for our digital growth, leaving aside the hundreds of thousands of newspapers that we sell every day, is the digital asset that we manage and we curate across, The UK, Ireland, and The UK. Despite all the challenges around referral graphics, we remain, in possession of the sixth largest digital asset by audience in The UK. So, obviously, ahead of us is the likes of the BBC and the tech platforms. But we have significant audience reach at the top line. We have over a 120 trusted brands, some of which you may be familiar with. They include, obviously, our big national brands like the Mirror and Express, but our regional powerhouses.

11:54 But increasingly, obviously, in 2025, we supplemented that with some new digital only brands around all out football and all out gaming, all out rugby league, which is designed to tap into new video led, social led, younger audience demographics. Despite the volume challenges, our audience time with us grew 4% year over year. So whilst page views, which is obviously a key currency, declined, time spent with our network actually increased. The key strength on our network, leaving aside the scale, is a combination for advertisers of that local relevance, but also national and international scale. And clearly, obviously, with the supplement of the all out brands contextual relevance as well. It positions us uniquely in the ad market, and I'll talk about later some of the campaigns that we've taken that kind of really fit that profile for our, large advertisers.

12:47 On top of this kind of owned and operated base, we obviously extend our reach into the social platforms. We have now well over a 100,000,000 followers, and accounts, followers of our accounts across all the major social network platforms that you'll be familiar with, including TikTok and YouTube. So it is supplementing our own and operated base with an extension, again, which is important for our advertisers in terms of the social, reach as well. But I did wanna talk a little bit about the digital audience and how it's broken down because as we said at the top of the call, the change of the the change in this marketplace over the course of 2025 has had a dramatic impact on the industry as a whole, and that is both globally and here in The UK. As I said, we reach nearly 70% of The UK population. So at the top of the funnel sits a large pool of people.

13:35 However, they access they access us in very different ways and very different experiences from browsers that and and websites that we own to platforms and environments that we don't. We break down our audience into two buckets, what we call on platform and off platform. And it is on platform where we've seen the biggest change in the mix that we have there. On platform is obviously our most valuable, monetization route because we control not only the environment, but also the monetization routes than the advertising routes that follow. And you can see here from the chart what has happened in the course of 2025. Overall, it fell 8%, but that was much heavily weighted, to the back half, the last few months of last year. And indeed in h one last year, we were up in audience. So we did see quite a big, shift in the way our audience profile is is made up.

14:28 And you can see there the driver has been the decline from Google. Now Google is a multi headed, aspect a referrer for us. It's not just as you may expect, Google Search, which obviously has been under, huge scrutiny with the changes to AIO views, but it's also Google News, Google, Showcase, but most importantly for us, a platform called Google Discover. Google Discover is their curated media and content part of their business, and that is actually where we saw the material drop, in 2025. You can see that overall, our traffic declined from Google by nearly 50%, and that was predominantly through changes in their Google Discover platform. Balancing that partly off has been the rise that we've had in the work that we've done across other referral platforms in the social space, and that obviously includes the likes of of Facebook, aka Meta, and we've seen that grow 27%.

15:24 And then the other two buckets are the direct traffic. That is the traffic that comes direct to our browsers and our websites, and also another bucket, which is all the other referrers and uncategorized traffic. And those four buckets, the way we look at our on platform page views, but you can see the impact of the change that Google did in the back half the last year in terms of that traffic. On our off platform, that has been a key part of our strategy, and I'll talk a little bit about our view about being where people live. And clearly, of that, where they live and where they spend their time is not on the domains that we control and own. And we've made a big focus here to export and make sure our audiences are growing via distributed platforms, and these include the likes of, MSN, and Apple News and the like, AOL, Yahoo, etcetera. And we've seen that grow by 20% year over year. The US has been a big part of that success. As they as they as they have expanded their audience reach, they have done it through the big referral and use aggregator platforms that exist on the other side of The Atlantic.

16:32 I talked about our three priorities. Some of you will be familiar to these from the ones from when we laid them out in the summer, but they have been critical, as I said. We designed them because we had one eye on potential changes to that referral traffic, and they're broken down in three buckets. The first one is we have an absolute focus and mission to connect people where they live on and offline through their location, obviously, with a nod to what their geographical location and our heritage of our regional brands. But it's not just about where they are geographically. It's what they're interested in. Is it football, horse racing, whatever? It's their values. Clearly, many of you will know we operate a political spectrum in terms of our national titles from left and right. So the idea is that we connect people in where they live in the in the widest metaphorical sense. Now, obviously, that has meant, as I said, that means that we need to focus with people, maybe not on the browsers. Certainly, the younger demographic, use browsers way less than than the older demographic, and we need to make sure that we are there when they open their apps, whatever that may be. So part of connecting with our audiences has been a big focus on video.

17:39 Video unlocks, as I said, that social aspect to what we to what we do. So I'll talk a little bit more about that in a minute. On the far right, as I said earlier, we need to diversify our revenues away from purely an advertising model. In digital, clearly, in print, we have benefits of both cover price and advertising. For a long time, many publishers have only really had the advertising lever to pull in digital, and we made the conscious decision to to take the steps into digital subscriptions amongst other things, but I'll expand on that in a minute. And central to all of these three priorities is the middle pillar, and that's the importance for our business to embrace the use of AI across the group. Artificial intelligence is obviously a hot buzzword. It it is, to some extent, hard sometimes to to to sort of categorize and measure. But what I know is that I've been amazed about the take up that we've seen in the business around supporting what I would say day to day task of the business. How do we make our teams do their jobs in a more efficient way, take away some of the heavy lifting, whether that be analyzing spreadsheets? And I'll talk about one particular example of how we're gonna help our content creators and journalists make content that is more valuable to to to the brands and to our business.

18:54 So just taking them in step. As I said, connecting with audiences is about being where they live, and that is invariably in social media platforms and apps. And to access that, audiences and platforms, we need to increase our video content. We've done a quick a great job as a business shifting our resource from print to digital text and imagery. We are now in the next phase where we're gonna move and rebalance our portfolio to do more video. Video is a critical, content, creation and it unlocks huge audiences, and, of course, we hope the revenues to follow. We've had to as part of our restructure that Darren talked about last year, we have freed up, investments to bring new people into the business. This is new skill sets. This is people behind and in front of the camera, people who understand the kind of social marketing and the way to distribute content.

19:45 It's a two pronged approach to video. It is, one, creating more short form content where we are creating teams and embedding them in our newsrooms across The UK, Ireland, and The US. And they will do more video in what we call everyday journalism, and that may well be videos in their local environment about local events, news, sport, whatever. But it tends to be short form content, and it tends to be designed for more volume and more distribution via social platforms. And that is monetized by those social platforms and we get a rev share. Or in the deeds of YouTube, we can sell advertising against that creative inside of YouTube. The the the other part of the video push is the longer form, more high production value video content. And there, we've kind of reinforced our investment in what we call our studio function. And this is not only the physical studios, which we now have across The UK and all of our major, places that we operate, but it's also people as a set to make sure that we have the right people, but also that they have the right technology using video editing video and creating video has massively changed with the adoption of AI tools. What may have taken you a significant amount of people or experienced people in this field in terms of editing, etcetera, clipping, and distributing, we can now do much quicker and faster through AI. And that has meant we've created new programs, including, for example, on Data Express. They now run a daily half an hour video show, effectively like a magazine video show that you'd see on TV, and that's going exceptionally well. Hundreds of thousands

21:15 streams hosted by some of our great talent and has the great kind of guests you'd expect from a kind of Data Express style audience. But it's also, as I said, around we talked about the all out brands. All out rugby league has gone from small, almost nothing to over 2,000,000 views across the month. And there's plenty of other examples in Scotland with Hotline Live, some of our podcasts, which are obviously now effectively Vlogcast where we film the, content production. And, again, we're shouting out. I'll talk a little bit about all our football in terms of our ad partnership with Sky Bet. So, ultimately, what we're trying to do is we we pivot the output of our business to have more video, and that will have a significant improvement on state growing our digital revenues going forward.

22:01 The other one I wanted to talk about was obviously diversifying revenues. Some of you will know that we have not played in the digital subscription field at all to date. Realistically, we've had small trials, but we needed to embrace it more. There are some people who believe digital subscriptions won't work for us. There are a lot of people who believe it will. We're definitely in the camp of people who believe it will. It will not replace our core business in terms of digital, which will remain advertising, certainly not in the foreseeable future. But we believe, given that we have 70% of The UK population, plus 10% of The US, that there will be a percentage of people who will pay. What will they pay for? They will pay for a combination of things that we offer them, exclusive content, cleaner, better ad experience. That was one of the consistent feedbacks we get from both the public, investors, and even our employees that the experience on our digital websites was not good enough.

22:57 Before, the answer was simply, well, that's the way the market funds these websites. What we wanna give our users is optionality. I'm delighted to say we sort of announced that in July. The product team worked incredibly hard, we deployed our first subscription option on the Manchester Evening News in the mid part of November. And since then, we've rolled out to a further five sites. So we have six sites in our portfolio, so still a long way to go in terms of getting all of our network on there. We've chosen a mix of sites from the the big, the small, and the medium, and we're playing around with all the stuff you'd expect us to learn around offers, price, etcetera. We expect we set ourselves the target of 75,000 subscribers by the year end. We start the year we sort of finished the year with all our efforts in terms of those trials and early rollouts at 15.

23:47 And, clearly, we are, on track at the moment to deliver on that 75,000, So it's been a pleasing start, and the price ranges from $4.99 for our regional and local sites up to $6.99 for our for our national sites. So it's an exciting development. As I said, it will not replace all of our ad revenue overnight, but it it will be a useful addition to our portfolio. The last thing I wanted to talk about, was securing the future of our print operations. So, as many of you know, we announced proposals recently to to close two of our print two of our three print sites across The UK. I do wanna talk a little bit more about this because, we recognize that this is a big, big initiative and a big step for the company.

24:34 It is a decision that we carefully considered over the course of the summer and the autumn, last year. This is a plan that we have looked at, very closely. There are currently 11 print sites across The UK, and look, we were very keen to avoid a situation where we had excess capacity and therefore cost. So to get ahead of ourselves, we are proposing to close our Scotland plant in near Glasgow and also our Watford plant in the South. And in the place of that, we have done two things. Firstly, we're moving some of our Scotland production to our Manchester production facility. This not only preserves the life of the and the duration of the Manchester facility, which is one of our larger footprints, but also it's a key geographical area. Over half of our print subscription print market is in that middle of the country.

25:24 So that will take on some of our Scotland. We will also have supplemented that with an outsourcing contract with DC Thompson out of that Aberdeen branch. In the South, we will move our printing to the joint venture between the Daily Mail and News Corp. This is a decision, as said, we did not take lightly, but it's the right decision for the business overall. It underpins, as Darren says, our cost plans both partly in this year, but but going forward. We will obviously have a cost of change, as Darren outlined, this year, but we expect the asset disposal in the back half. The asset disposals come through in 2027. We recognize that our heart, we are a content and storytelling business. Manufacturing, we have done over the centuries because that is what we needed to do, get our newspapers out. But the world has changed, and it also this mitigates operational risk. Certainly, the case of Watford, this is an aging plant, and it protects us from increased expenditure on what we know ultimately has a finite lifestyle.

26:30 And what this does is it gives us security around our printing options and also gets the business firmly focused on the digital future. This together with progress, as Darren says, on our pensions, progress on our historical legal issues. This is about making sure that the business is as clean as possible to go forward into its digital future. So before we go to questions, I did just wanna, summarize. Ultimately, we're gonna focus more on our three priorities that we outlined to, mitigate the headwinds that we've seen over the course of last year from Google. As I said, making sure we're increasing our video offering, making sure we're dominating in the social space, accelerating the tech use of tech I tech and a take tech and a tech and AI, easy to say sometimes. I I apologize. I didn't talk a little bit more about one of the things that we're doing there, but we are giving new tools to our newsrooms, for example. I talked about this in the longer presentation.

27:23 So if you want to find out more about that, please feel free to check that presentation. But it's an exciting way for us to give AI in the hands of our editors to give them real time information in how they create content and the value that it drives. And as I said, we will continue to roll out, our premium subscriptions across our network to rebalance our revenue portfolio in digital. All the while, as I said, underpinned, as Darren says, we have a strong track record of managing our cost and our cash, and we are on track for our five to 6% reduction in operating costs this year. We do still expect to see some continued volatility in our on platform referrals. Clearly, this time last year, we were had exceptionally strong audience, so we are gonna struggle with the comparators for the first half of the year. Clearly, the World Cup in the July and August is the pivot between between the years, So there are some things that tailwinds that hopefully will help us, but we do expect Google to continue to be volatile, and we need to double down, on all of those other areas of audience growth that we talk talked about.

28:25 But overall, despite the challenges, I'm pleased with the foundations that we've put in place in 2025. We've got clear priorities. We've we have very clear viewed on what we need to do. And as I said, strategic progress mapped with those business and operational priorities around printing and the pensions sets the business well for the future. It is gonna be a defining year for the media sector and for us, but we definitely intend to define it rather than be defined by it. So we are all excited about the potential, but clear eye clear clear eyed on what we need to do. So with that, we will turn over to questions, which I think can be submitted on the portal, and I'll hand over to Joe to chair. Thanks, Pierce. Thanks, Darren. And if anyone would like to submit questions, I will make sure that we we cover as many as we can in the time. I just wanted to start firstly on pensions.

29:20 Darren, could you just give an update on where we are with pensions? Probably kind of the cost to complete and whether the objective for each of our schemes and with the trustees is to buy bulk annuity. Yeah. Thank you, Joe. I will do that. There's a there's a few there's a few questions on pensions in here actually. So just I'll I'll answer the potential the bulk annuity policies first. We are planning to bring all of our schemes into bulk annuity policies. We're not intending to run any of them on and then manage the surpluses. So that's that's the way we're thinking about it. In terms of the schemes themselves, so we we are going to a into a triennial valuation at the moment, which will end or is due to end by the end of March next year.

30:10 Having said that, all all of our schemes at the moment are in a good position. And I think what's really important is that the contribution schedules that we set up back in the 2022 triennial were all designed to get all of our schemes to their to their specific fully funded or position so that therefore, we don't need to make any more contributions beyond effectively what we've disclosed in the slides today. And what that what we currently have in that contribution schedule is 59,000,000 for 2026, 58,000,000 for 2029, and then 15,000,000 in sorry, I've said the wrong years there. So 2026 would be 59, 2027 will be 58, and then 2029 will be 15,000,000.

30:58 And at that point, we don't we will not need to make any more payments. So that's what we're expecting to also see when we get through this training as well. And that is important because that will mean that we we don't have those outflows, and that means that we have that money available to do other things for the business. The other one, actually, no. That's that's I think I've answered all of those. Is it did you is the objective that the bulk annuity for each one of the schemes? Yes. No. I said that, Joe. Yes. So absolutely, we are we are planning to go into bulk annuity for all all of our schemes. Actually, probably one more point, and I don't know whether you picked it up, but we had a scheme that actually went into full buy in in January sorry, in March in February, March. TRBS, which was we were due to pay 4,500,000 both this year and next year, has now gone into a full buy in, and therefore, we don't no no longer need to make those contributions. So we're already seeing these schemes mature.

32:00 We're already seeing these schemes going into bulk annuities, and the plan is to continue to do that with the remaining schemes. Brilliant. Thanks, Darren. Piers, this is one on general business performance. How do you determine, if digital performance is comparatively Can you give us a sense of any benchmarks or assurances around revenue, audience, subscriber growth, or reach that you look at? Yeah. Look, benchmarking our businesses obviously obviously, needs to be done in a kind of variety of of data points because, clearly, you can benchmark yourselves against a very narrow perspective to give it a positive story. But if you step back, you'd go, well, if you benchmark yourself against Meta or Google, then you're not not doing so well. So it is a combination of audience is critical. So we look a lot at Ipsos, IRIS data, to make sure that, you know, if we're seeing challenges, are other people seeing challenges as well? And the general answer is yes. For sure, there are some winners and losers at a smaller level. But, again, you have to weigh that audience performance off against your scale. It's it's much easier to move from a 100 people to a 105 than it is to move from sort of twenty, thirty five million to 36,000,000.

33:14 So there's there's that question about that scale, but audience is clearly one aspect we look at. We look at what we know from, revenue performance. Again, many we're fairly unique being in our sector, being a public company. Obviously, the mail went private, a couple of years ago. So, again but, obviously, we can we can gather some kind of intelligence to make sure we, we benchmark ourselves just purely from a revenue, point of view. And then on things like subs, it's again, you take, you take metrics and go where do you set yourself out against, say, where news quests are or where the Daily Mail is or, you know, ultimately, the telegraph or the quality high end premium publications. So there's numerous benchmarks you you look at kind of audience revenue, and then ultimately, if you've got specific tactical objectives, that's how you benchmark.

34:04 There isn't don't think there's a single thing that you can say, you know, that that is the that is the key marker of success because it is Nuance. But all I would say is, fundamentally, none of us here, myself, do not want you know, we do not are not satisfied that we're not growing our digital revenues. And there is some incredibly good stuff going on, growing ecommerce, growing subs, growing but the challenge is that it always has been offset in the last couple of years by something else going off. So that is why it's been a case of kinda one step forward, one step back in digital. And that is hugely frustrating and is, you know, is where we're entirely focused for this business going forward, and that flows through to decisions on printing right through to the way we run our business day to day. Brilliant. Thank you.

34:49 There have been a number of questions on the dividend, Darren. One, it doesn't appear that the market believes the sustainability. What assurances can you give around the sustainability of the dividend? And can you confirm whether it is affordable? Oh, you're on mute, Darren. Thank you, Terry. We do we do have the ability to sustain the dividend. So we have from a leverage point of view, we're only at point three times at the moment. You know, we have a comfort level of of one times. Our covenant is 1.75 times with our RCF. We have our RCF in place, is a £145,000,000, and we've just extended that by a further year to the end of twenty twenty nine.

35:39 Our plans show us that as we move into the next few years, and I've already talked about the pension schemes and the fact that they will start to reduce and go to nil over the next three three years or so. That means that we'll start to see well, we'll have a peak in debt in the next this year and next year, we will see that debt starting to come down and maintain that that affordability. So, yeah, I'm comfortable that we are in a position to be able to maintain the dividend in the future should we choose to do so. Brilliant. Thank you. Piers, a couple of questions have come in around digital subscriptions. Can you just highlight again how the rollout is going and whether there are any plans to bundle subs or create tiered offerings or develop a proposition?

36:28 So as a sort of intimated, we're definitely in the early stages of rollout across the network. Only six of our sites gone live, albeit we expect another four in the next four weeks or so, including Birmingham, Belfast. Obviously, Belfast is interesting because that is our one of our key stand stand alone digital brands that's been going just nearly ten years. Great success from a digital point of view. And, obviously, given the importance in the community side of Northern Ireland, we're we're really interested to see how that goes. We expect the rollout to continue through the course of q two with an aim to complete the bulk of the network by the sort of autumn time. We may decide to prioritize improving some of our bigger offerings at the expense of some of the smaller ones as we go through the year, but that will be a a decision for the teams.

37:17 Yes. In terms of one one thing we are very well aware of is that the product offering is quite basic at the moment. We're currently only really pursuing our existing audiences. We want to improve the product more, offer more offers, products, archive, and include bundling. I mean, that is ultimately what we wanna get to is the the ability to upsell and cross sell across our network that, say, if you subscribe to the to the express, but you put your postcode in as a as a Surrey postcode, the ability then to offer, you know, would you like to add Surrey live for x a 100%? So, again, all of this is always, as always, constrained by the technical deployment and resource and the pace that we can go out there. But bundling for sure, yes.

38:03 We are really in the early stages of the product. We, you know, we've got a long way to go to make it, as sophisticated as we like. But, again, that is all the opportunity that we have to kinda hit that 75,000 subscribers in the year. Brilliant. Thank you. Darren, could you give me some context around why it costs 25,000,000 to close two of the print sites? Yeah. So it does feel like a big number, doesn't it? But we there's a few reasons. The main the main reason is, you know, we will we will have to make redundancies of people in our in our print sites. Clearly, that's a you know, it'd be a sad thing to see those those guys go. Well, as people go, but but that's just the nature of the the change we're making. But they typically in the print size, have people who have been with the company for a long period of time, have a long a long service, therefore, that will drive redundancy costs. It will cost quite a bit of money. And that is a fair proportion of that 25,000,000.

39:03 And then obviously, we've got costs which relate to how we then sort of close the sites and make sure those sites are secured and all those sorts of costs associated with just closing those down. So that's where the 25,000,000 will primarily be spent. I think P has mentioned earlier that we're expecting in 2027 to sell or we'll be marketing those sites in '26 and then selling those sites hopefully in '27 or so. That's our expectation that will offset some of that 25,000,000 in the in the following year. Brilliant. Thank you. Here's the market reaction was pretty negative, but the full year '25 results looked pretty good. What are your views on this? Yeah. I think clearly been disappointed with the market reaction. I think as you said, the '25 results, I think, were very, very strong and yet again, a testament to sort of in a core strength of the of the business.

39:59 Clearly, the events around the overall market are not helpful, but I recognize that we've taken, more than our share of the the downturn given the events in The Gulf. I think, ultimately, it's that, question about, the Google, traffic referrers, and I I saw one analyst describe it as an AI panic. Obviously, there are always questions about the impact of AI on every different sector, whether that be legal publishing, you know, legal services, financials, whatever, but obviously media and content creation is front and center. So I think it's probably a reaction to that. But at the end of day, I'm you know, we're confident of the plan we've got. As I said, the core base of our digital business being that that asset of of people in The UK and and and beyond in The US, That is the the core strength. It's the inner strength of this business.

40:49 There are for sure headwinds that we've had to deal with over the course of last year and will as said, will impact us in in this year. But at the end of the day, the core the the demand for news has not gone unabated, but we do have to figure out the new ecosystem we operate in. Brilliant. Thank you. In terms Darren, this is one for you. In terms of cost cutting, we've achieved quite high levels of cost cost cutting or reduction in operating costs between four to 6%. You have a target of five to 6% for next year. How well underpinned is that cost saving? Yeah. Those cost savings are are well underpinned. So the cost savings for this year, we did a program of work last year in preparation for for 2026.

41:39 Part of that was transformational in terms of bringing some new skills into the business, but also it was around cost reduction. So that underpins our 2026 numbers. The print rationalization will underpin part of this year, but also underpin into 2027 as well. So over and above anything else we do, they are the main underpins fit for those two years. Obviously, we also have some organic reduction in costs, so things like newsprint costs and ink and plates and energy, which go into manufacturing newspapers, which are in decline, which does naturally mean that we have a a cost reduction in those areas as well. Brilliant.

42:25 Thank you. Piers, it feels like the pace of change is accelerating. What's your thoughts on that? Can REACH navigate the change? Yeah. I think I think we can. I think look. I would say that, wouldn't I? But I'm I'm very comforted by the the attitude of the teams here. We this has changed that we have been through in a in one way shape or form over the last couple of years. I said the business has had kind of a one step forward, one step back in terms of this digital. You know, we we we think about 2023 when Facebook stepped out of the news and content market. Obviously, what we've seen is them roaring back in 2025. So this we recognize that the world is quite fickle. I think as a business, we are we have the focus yet the flexibility to absorb those changes. We have a people and a team here that are passionate about what they do, passionate about the brands. They don't they do not underestimate the the the the change and the chaos that is going on in in the sector, but they're very focused on what they do.

43:26 So I think we can absorb it. I think, as you said, you know, to be down one when your audience is down eight or nine, in last year, it shows you that the the flow through of audience decline doesn't automatically mean a similar flow through in revenue. So we have a core of our digital business that is robust, but clearly, is not to underestimate where we need to sharpen our focus, do new things, whether that be subs or whatever, to make sure we can get through it. So, absolutely, I think this business can weather it. It has weathered challenges before, and it will it will weather challenges going forward. Thank you. And one last one on the pre submitted questions. Downs, just around peak debt. Can can you give an indication of when when you expect to be hitting peak debt and when you'll be able to start reducing reducing those levels. Yeah. So so peak deck will be over this year or next year, partly driven by, you know, the the the print rationalization we talked about with the disposals coming in next year, starting to offset some of that. And then as we've already spoken about in terms of the the obligations we have, we're starting to see them drop off as we get into into '28 '27, '28. So so I'd expect it deeply this year. Next year will be our peak debt years.

44:45 Brilliant. Thank you very much. I will pass back to Lily, I think, who's on the line. That's great. Thank you for answering all those questions you have from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Piers, could I please just ask you for a few closing comments? Yeah. Thank you, Lily, and thank you, Darren and Joe, for today. I mean, I'll I'll just close with, I guess, echoing a theme really that some of the questions brought out, that this business, had a very strong 2025, and I think that underpins the the core operational and strategic focus that we have in terms of digital. We know, the market is changing. We have the right priorities to do that, and we're we're moving at pace.

45:35 And so we're very confident about the future. We don't underestimate the change that we have always faced into and we will continue to face into, and the business will take, all the necessary steps to make sure we we keep delivering. So, as I said, business is a 100% focused on getting that digital engine growing again. And I see the work day to day, whether it be people on the front lines or people behind the scenes. So absolute confidence the team have it in them, and we look forward to updating our progress at the half years. That's great. Thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of REACH PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.

46:30 Thank you.