Reach (LSE:RCH) — Half Year Results

0:00 Good morning, and welcome to the REACH PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press end. 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 morning, sir.

0:29 Thank you, Lily, and thank you, everyone. Good morning, and welcome to the half year results for 2026 from REACH. My name is Piers North. I'm the chief executive, and we'll run you through a quick overview of the year as well as some financial details and some markets and strategic context. I'm conscious some of you may have seen some of these slides before, so we will strike the balance between slide turning and a summary of where we're at. This is our usual disclaimer, which I hope you'll be familiar with. But otherwise, if not, if you could take a read. I said I will start with a very quick summary of the year, and then I'll pass to Darren for the financials before I'll return, and I'll give you some of the context around our strategic progress as well as the market and the ever changing online landscape.

1:16 So I think it's fair to say that the first half this year has been marked, as by significant external change. The media landscape, and it doesn't matter whether you're the BBC or ITV or any of the like, is changing very, very quickly, and publishing is probably at the front of that change as well. We've seen material ways, our content is discovered online, which has led fundamentally to a decline in our referral traffic and our our traffic overall by 40%. However, against that backdrop, I'm reassured by the resilience we've shown, including being on track this year to deliver on our expectations. And we've been partly able to mitigate the stark decline in our page views, with other content and priority areas, which means our revenue declined only 11%, whereas, of course, our traffic declined by 40.

2:04 The priorities that we set out this time last year were did were deliberately set, a year or so ago because we knew the market would change, and those priorities remain the same, connect connecting with our audiences, accelerating the use of our technology, and diversifying our revenues. And I'm pleased that those have driven tangible results over the first half of this year. Although, as I said, we're acutely aware of the overall challenges we have. Excluding our local business, where our direct revenues grew by 6%, and that was supported by our expansion of our video, content and strategy as well as, of course, launching subscriptions, which is now live across about 16 17 sites as of today, 15 as when this presentation was originally written. We're over 40,000 subscribers, and we're well on track to meet our stated target of 75 by the end of this year. We've also made great strides in our technology.

2:56 All of the technology we've talked about that requires us, or that we need to make the transition, we're launching our new Launchpad content management system, is in the hands of some of our editorial teams, and that brings together all of our AI tools into one place rather than in many. Operationally, we've continued to take decisive action. Our print closures that we announced in the early part of this year are tracking ahead of plan. Darren will talk a little bit more of that. Our ongoing focus on cash and cost has ensured that we've delivered adjusted operating profit of £43,000,000. So in short, whilst we've had to navigate serious external change, the core of our business still remains strong. We're building a more focused brand led business, and I'm proud of the momentum we've maintained even against such a significant shift in the referral and online market.

3:45 I'll now hand over to our CFO, Darren, who'll take you through some of our financials. Good morning, everybody, and thank you for joining us. I think Piers has given a good summary there on maybe the some of the challenges in the market, but also the things that we're doing. Just in terms of financial highlights, Piers has already mentioned already mentioned the performance on profit was strong at $43,000,000 But also and importantly for us, we had a very strong cash conversion of 113%. We do continue to be disciplined with our strategic cost management. This is a real strength of the company. And reflecting the trading environment, we have reduced operating costs by 10%. I'll cover that in a bit more detail a bit later. But that's well ahead of our 5% to 6% target that we had set ourselves.

4:37 We've also had an increase in our margin to 18.5%. That's one basis point higher, again, just selling a strong performance. And cash generation remains robust with adjusted operating cash of AUD 49,000,000. Revenue, I'll just come into revenues. Revenue has declined 9% or $23,000,000 to $233,000,000 Within that, digital revenue declined 11% to 54,000,000 despite the 40% decline in page views, which Peter has already referenced. Our print revenues, which are about three quarters of our business, declined 8% to 178,000,000, and I'll come on to a bit more detail on that a bit later as well. And we ended the period with a 48,000,000 net debt balance, again, which is a strong number for us.

5:26 Turning to digital in bit more detail. So so revenue revenue overall has declined 11%. This is broken into direct and indirect. Direct revenues declined 1,000,000 or 4%, but that was partly affected by our decision to improve margins across our local advertising business by focusing on high quality revenue. So excluding local, we actually grew 6% on the direct side of our business. In terms of our indirect indirect performance, we have revenues for our diversified products, which include premium subscriptions, affiliates, ecommerce, and partnerships.

6:16 Subscriptions roll out some plan, as Piers has already said. And the direct revenues declined 1,000,000 for indirect. Let's move on to print revenue. So print revenues print revenues declined overall 6.6% with cover price increase mitigating an mitigating an elevated 20 a 22% volume decline. We have seen the volume decline a little bit elevated in comparison to prior years where we've typically seen a 17 to 20% reduction.

7:02 This has been caused partly by the the the most recent cover price increase that we put through in in May. We put in three cover price increases every year. This is the first time that we have seen a cover price increase, which has gone outside of our normal tolerances for for a decline. Now what we're doing is we're going to continue with the CPI that we have scheduled for August in order to get another data point because at the moment, we don't fully know all of the reasons for for that impact on the last CPI because it could be obviously the price increase itself, which is likely to be a part of it. But also, we are in a very difficult environment in terms of the macro at the moment. And oddly enough, it also could be things such as such as the weather where people aren't sort of getting out to get their daily paper as as the weather is so so warm.

8:02 Moving on to operating costs. So operating costs, as I said, we declined 10%, much higher than what we'd expected or what we had advised against. So firstly, it's mainly this is labor. So that we've had a restructuring program at the back end of last year, which we've got the run rate through the rest of this year, so so for the full year. We have the print rationalization, which I'll come to in a moment, but that has played a role in effectively reducing our costs as we've outsourced two of our print sites to news printers. And thirdly, we've been making sure that our vacancy management is really considered when we're looking at vacancies, whether we re recruit, whether we bring in new skills and so forth. So a very good performance on the labor, the labor cost reductions.

8:55 Newsprint's probably the other main one. And newsprint costs have come down organically. As you know, as we as our print volumes decline, obviously, we get a lower cost of cost of sale. Moving on to print operations. So this is what we announced at the start of the year where we have outsourced two of our sites, Soltyre and Watford to news printers. This is a major piece of work that we've that we've been been delivering during the course of this year. We are well ahead of our plan, both from a hospital cell delivery point of view. So it's been a very we're very proud of the teams who have been working through what is a very, very complex program.

9:46 In terms of where we are today, we have now exited all of our titles from both of those sites, either moving them into our Oldham site or into outsourcing arrangements, both with news printers, also DC Thompson in the Northeast Of Scotland. And we will see the benefits of those coming through this year and then into next year, we'll get the full benefit of that. This does give us an elevated cost of change. So we the cost of change attached to that program is around £25,000,000. And you'll see most of that money coming out in the back half of next year.

10:26 Moving on to uses of cash. So this is a very familiar slide. Firstly, pensions, the big number, the first big gray number there. As you know, we have pension scheme obligations. They are 57,000,000 a year. They will drop down in 2028 to 15,000,000 in January 2028, and then decline down to 1,000,000 beyond that point. So we are tantalizingly close to seeing the end of the pension scheme obligations that we've had for so many years. Dividends, 40,000,000. Now we have announced when we announced our results that we were going to reduce the dividend. So we paid 14,000,000 in the first half of the year. But next year, at the same point, this will be 7,000,000.

11:15 Restructuring is 8,000,000. That's typically what we'd expect our restructuring to be. It's normally around 12 to 13,000,000 on on an annual basis. That does exclude, of course, the cost of change for the print rationalization. So you will see in the second half of the year an elevated restructuring number in the cash flow. CapEx of 6,000,000, that's a fairly consistent number. Six so it'll be 12,000,000 on an annualized basis. And then HLI, we've only paid 1,000,000 out this year, this half year. That's primarily because we're still waiting for responses from a legal point of view on the final cases, which we have outstanding. We have a $4,000,000 provision, which I'd expect to pay in the next twelve months.

12:04 So that's leaving us with a net debt number, as I said earlier, of $48,000,000 I do expect in the second half of the year for that to be higher given that cost of change I've spoken about. Capital allocation. So as I've said, we have

12:21 reduced the dividend. And what we're doing is we're effectively rebalancing the dividend or that dividend reduction we've made toward our investments, making sure that we have those underpinned around our three priorities because they are clearly what we see as being the longer term future in terms of our revenue streams and our business. In terms of market expectations, so firstly, revenues, we retain the quarter's outlook for the remainder of this year. We still have, obviously, those headwinds from a macroeconomic perspective. We still have the uncertainty around traffic performance. So we'll continue to be cautious around around our revenue.

13:08 Costs, operational cost savings expected to be broadly similar to half one. Depreciation between 13 to 15% charge. Operating profit on track to deliver market profit expectations. Cash, print closures, cost of change estimated to be 25,000,000, which I've already spoken about. Also pensions of 57, which I've spoken about, and CapEx broadly similar to full year '25. And then 2027, we expect operating margins to remain at a similar level, a high level of circulation volume decline. We are expecting what we've seen in terms of an elevated decline in the last CPI to continue. But again, we will continue to look at that as we go through the next one. And we will continue our proactive management of the cost base.

13:58 I think that takes it back to you, Pearce. Thank you, Darren. So that's just a brief summary of not only the overall, but also the financials. I will now give some of the context around both the strategy and the market as we see it. Just a quick reminder, these are the three priorities that we set out last year, and I'll talk through each of them at a at a very high level. They remain our priorities because they were built and designed for the market that we're operating in now. So it's just a reminder they're connecting with our audiences, and that essentially means that we've gotta go whether our where our audiences are, not necessarily where that we want them to be. The idea that we are gonna build our business on referral traffic back to browsers, those days, I think, are gone. We need to think about what we're moving from world of SEO to kind of AIO, sort of artificial intelligent optimization.

14:47 We've gotta make sure we're on distributed platforms, so that is the likes of YouTube and the social platforms. And, also, we need to make sure that the content they're seeing on those platforms, namely video, is kind of what they expect. So those kind of that reprofiling of our content strategy is still very, very important. To do all of that, we need to make sure we are accelerating the use of tech and AI internally as a business. We cannot do what we want to do unless we are leveraging all of the tools and weapons in our arsenal to do so. That includes, as I said, revamping our content management platform, which is called Launchpad, to make sure that we give our content creators and journalists the best ability, to write the content. So that's bringing all of our AI tools that we've talked about before, Mantis, ContentScore, Guten, Originality score, all of those technologies into one dashboard as well as third party data.

15:37 Under that pillar is also our licensing conversations, which I'll I'll talk about very briefly. We see that world licensing to the LLMs and the AI companies as an important part of the mix going forward. And then, of course, lastly, diversifying our revenues. And that, I guess, the shorthand for many people has been our rollout of subscriptions into the into the market. Obviously, traditionally, we haven't been a subscriptions led business, but this time last year, we recognized that we need to make sure that we have at least the the top of the top of the pyramid or bottom of the funnel, depending on the way you like to store your diagrams of where we send our users, and that is the rollout that we've been pushing very hard this year. So in terms of connecting with their audiences, I think it's just worth reminding despite all of the challenges that we've had over the course of this last year with the change in referral traffic, we still reach over two thirds of the online population in The UK.

16:31 And that is obviously through our traditional brands, but it is also through our new brands like All Out Football and the podcast network. It's also, of course, when we've launched in The US. So, you know, what we know is 35,000,000 adults in The UK still still visit us every month. They have definitely seen us less as that browser profile has changed, but we still reach and can reach for both our advertising partners and also ourselves a huge amount of people. And despite the challenge in the page views, we're still delivering over 200 page views every sort of second, you know, every day, every week, every every year. So, within that challenge, we still have huge relevance, and that is all about that strategy of making sure we are being where people live. And we talk about that not just about geographically, but also in terms of their consumption.

17:17 Our social video views are up by over 50%. Our social followers are up over 15%. And, of course, we're now what we're now seeing is we can monitor when AI AI bots scrape our content, those numbers are are moving forward high. So we know the content that we create is still a value to both man and machine, but the challenge, of course, is how we reprofile our digital business, to take, advantage of that. In terms of tech and AI, clearly, tech has improved. It has allowed our infrastructure to roll out subscriptions in double quick time, but also at a very cost effective rate. And as I said, we are launching Launchpad in the back half of the year, which is gonna be a very important part of our maturing, in this space for our content creators. It means our journalists can use data for ideation.

18:06 They can grab images from our archive. They can edit and upload video more easily in one place. They can distribute it from their mobile rather than really realistically being on a much bigger device. We can use AI to look at headline optimization and also, you know, bring together all of the the kind of sites and the network of the content that we produce into one place. So it's a hugely important push for us in the back half of the year. Within that, of course, I'm increasingly optimistic about licensing revenues. The way I see it, where there are three buckets of licensing opportunities. There are the big companies that you'll be very familiar with. There are a large number of mid range companies. These tend to be the kind of financial services and b to b companies, and we're starting to do deals in that space.

18:52 And then also increasingly, we're seeing a long tail of AI companies wanting to access information. Now we can't and probably won't be able to do individual deals with the long tail, and these are the many hundreds of thousands of companies globally. What's increasingly happening is marketplaces are being set up where our content sits in a marketplace, and we get paid per transaction. A small fee every time that the transaction is, occurs and a small bit of data and a small bit of content leaves our ecosystem. Now, again, these are very nascent revenues, but I'm increasingly optimistic about how at least the market is understanding that there is a platform and a negotiating field to work on. I think all parties are figuring out the true value of all of this, but at least now we have, whereas we didn't have twelve months ago, commercial negotiations ongoing. And I'm optimistic in the back half of the year that we will announce a couple of deals in this space with some of the big players.

19:45 And finally, on the strategy is diversifying our revenues. I said it's clearly really, really important as the market shifts and the environment changes. You know, at the moment, it only represents about 15% of our digital revenue, but it's but it's growing. A lot has happened over the last seven months, and I'm I'm ambitious as to where this could go. We've obviously, as I said, rolled out to now 17 brands, Coventry and Teaside with the latest in the last couple of days. We're well over 45,000 subscribers, and we're on track to hit our target, of 75,000 for the for the end of the year. We've seen success across the network. We've launched them out big and small. The big ones, you'll be very familiar with. We've had real success in things like Wales online, but also smaller ones like the Stoke Sentinel. So it it it suggests to me that there is a market out there. Our challenge now is just to make sure we keep, managing the churn and growing that business overall.

20:40 I think video is probably one way to zoom in and you get a sense of how we're bringing all three areas of the strategy together in one. Obviously, as I said, video is important to be able to connect with them. The Daily Espresso is a great example. You'll see there on the charts. Our studio revenues are up 70%, so we make money through, primarily through advertising, and that is advertising that the platform sell, but it is also advertising that we sell and also sponsorships. A number of our shows now have sponsors, which is a really important part of it. Day Espresso, for example, is the most was the most watched show on news show on YouTube in June, so beating off some of the bigger and more high profile competitors that you'd been aware about. It's not to everyone's taste, but it's an important mark of the express. The Mirror is getting going in this space, and we have we'll have some news on that in the autumn of some of the programming that's gonna go on on the Mirror.

21:34 We clearly also make need to make sure that we are expanding those video shows and making sure they they sort of succeed off platform. Make Football Great Again was our World Cup podcast. That's gonna morph into, obviously, the Premier League with our all out football network, and that continues to grow very well. And then, of course, we we bring back all of it in terms of revenue. People like Nestle, not traditionally an advertiser with us. We've traditionally done well in retail and betting and government and the like, but to get FMCG brands like Nestle not only doing one campaign with us, they're now renewing for a second second time around. So that shows that the content that we're producing, the commercial relationships that we have are remain strong. And video is a virtuous circle. The more program we put out, the more briefs we get. The more briefs we get, the more we win. We we hopefully continue to push forward on on video overall, so I'm pleased with the way video is going.

22:30 In terms of the way we look forward, we have got to make sure that in this world that we have much more focus on our original content. We have always produced original content. Some of the criticism of the business has been that we haven't, but the reality is that's because we produce so much. And, of course, within that, there is a spectrum of kind of the original kind of high profile, high cost content. We do have gone right through the spectrum to the much cheaper, much more fluffy content. With that fluffy content, it's not cutting through in the new world, so we need to make sure we double down and renew our focus on the original content and also making sure that our brands have very clear distinctive places they can win. It's a very, very competitive space. Google has encouraged all publishers to be very bland and broad front. Those days are done, and therefore, we need to move to a much more focused approach.

23:23 In terms of the back half of the year, we've clearly gotta make sure we nail the continued rollout subscriptions. As part of that, we are rolling out three community brands to test whether a low cost, more subscription weighted product is gonna succeed in the market. Clearly, there are a number of small one man, two man bands out there in terms of local publishing. So we're looking to see whether using Launchpad, we can test that across three of our traditional print brands that have never had a digital presence. So we're gonna see how that goes. That's the Southport visitor, Newcastle Journal, and also the Ayrshire Post in Scotland. We will make sure that Launchpad is rolled out fully across all of our news desks across UK, Ireland, and The US. I've talked about the podcast. They will obviously relaunch as part of the new Premier League system, Premier League season, in a couple of weeks.

24:11 We've kicked off an investment with Amazon to archive our digitize our archive better, Again, all supported by AI to make sure that our both our consumers and our journalists can access the archive better, and we will continue to focus on licensing and with the large language models.

24:29 So I guess in summary, the priority really is make sure we continue to focus on those three pillars that I talked about. Make sure we've got that renewed focus on our content strategy. We will continue as always as a business. We always do, and we always have done, make sure we have very strong discipline around our and our cost, and and we have a long track record in doing so. The on platform audience has stabilized over the last hundred days, so that has been a pleasing sight, but we obviously have to retain a cautious outlook in terms of what comes.

24:59 As Darren said, this is just our penultimate year of the pension funding contributions that can't be underestimated in terms of both the outlook, but also the incumbency that we've had, on those those commitments. We are very, very close to being able to see the end of those. Overall, the business has strong foundations, big audiences. We have clear direction, and we're very focused on creating that long term value for our shareholders. And with that, I will draw the formal presentation for close, and I think we will move to q and a. Thanks, Chris. That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed by our investor dashboard.

25:50 And, Joe, if I could just hand back to you just to run through the q and a, and I'll pick up from you at the end. Thanks, Lily. I'll try I'll try and take some of these in kind of logical order. So kick starting with revenue, would you be able to give an overview of why the company revenues are in decline and whether this is a reflection of management?

26:08 Yeah. I mean, Darren can follow-up with the detail, but clearly, you know, many publishers have struggled with the shift away from print. Print remains three quarters of our revenue. And over the years, over the last decade or so, the last fifteen years, the business and all publishing businesses have tried to to turn kind of print dollars into digital dollars. But, of course, reality is it's print print into digital cents. We're not alone in that challenge. I think it's also worth thinking about the change that has gone on in the just in, well, frankly, the last two years, let alone the last ten years. So, you know, it's been there are very few publishers who have made that successful transition. It's different if you're a kind of a niche publisher or a b to b publisher, but for broad consumer publishers, it's a challenge. We obviously compete in an English language market, which competes with The US. And, of course, we have the BBC who continue to invest a significant amount of the license fee into the into the local news agenda. So there are a lot of headwinds. So I don't think the management team

27:09 this management team or prior management teams will be happy the way, you know, the state we wanna be in a growing business. But the key priority right now is to kind of manage the changes in the ecosystem. You think about how much it's just changed in the last six to twelve months. It is it is quite extraordinary. But I I remain focused on the fact that the priorities are right. We want to get to the point where we have a very, defensible sort of spine of digital business, and that is around getting control more of our of our own destiny, which, frankly, the platforms have hoovered up both the advertising and the and the copyright, for good or for real over the last

27:47 couple of years. And and, Peter, if I could just add to that, you know, I think the the the management of the print decline over many years has been a real success for the company. It's been managed managed has been managed very well. It's only just now that we're starting to see perhaps a bit of that elasticity start to be stretched slightly. So similarly, the the cost management has has been strong for many, many years, managing our profit number, which I'll come back to. And also, you know, we know that we are focusing on the right things in digital, particularly taking control of our revenue through our three priorities. So all of those things, I think, are the right things for us to be doing. But also just keep in mind that, you know, this company for some years has had some constraints around its ability to use its the cash it generates, given that we've had obligations to our pension schemes that we've talked about, thankfully coming to an end.

28:40 But also, you'll remember the days where we had significant funds going out of the business because of historic legal issues, which is an issue that we have resolved with only 4,000,000 to go. So so I think the way the business has been managed and ran has been appropriate by management. Thank you. And in terms of strategy, this touches on some of the brand work that you that you talked about, Piers. The the Mirror has has done quite a lot in terms of monetizing celebrity gossip in recent years. Would you consider moving the Mirror back to its roots as a left wing newspaper? Well, I I wouldn't I wouldn't accept that overall premise. The the Mirror has always had a very strong core of what it would call kind of a serious, you know, thoughtful tabloid left wing content.

29:28 Has has it done celebrity and the stuff? Yes. Of course. But, frankly, if you go back to the paper in the nineteen nineties, there was a significant amount of celebrity showbiz gossip in there. If you think back of the stuff the Mirror's done just recently in terms of covering the regime, the campaign they've got for the moment for saving lives in you know, out of drowning, there are you we could I could spend hours. The the awards they won for the Island of Strangers, video series that they did around, immigration in the back half last year, there is endless. People tend to sort of focus in on the the showbiz or the tittle tap or whatever you wanna call it. The truth is that is always part of a a a broad stream, a broad stream mirror brand. But having said that, of course, we need to make sure that the mirror, especially with the new prime minister and, you know, as he beds in, we need to make sure that the mirror is still the heart of the kind of center left labor, voice of labor. We have a great we had a great interview with Adi Byrne, and we've had a lot of content from over the weeks, this prime minister, and we'll continue to do that. And Mirror Plus, which is obviously the subscription element over there, will be there to make sure that the content that we, that we do deliver, that we stand by with, has has an option to be monetized through subscription. So it will continue to we're launching new video series for the Mirror in the autumn at the late party conference, so you'll hear more about that. So, look, the Mirror, you know, has been through a lot of change, but it is still at its heart, you know, that kind of home sense left thinking

30:59 on online and in print.

31:02 Brilliant. Thank you. Coming on to costs. As revenues decline, can you continue to reduce costs to maintain profit? And what are the costs hidden or costs of that change?

31:16 Thanks. Yes. So look, we will continue to manage the decline of particularly the print side of the business by using cost. Again, we've been doing that for a number of years. Some of that is managed, some of that is organic as I talked about earlier, newsprint being an example. What you may have picked up in our our announcement, our results announcement is we are looking to put a cap, if you like, on the margin. So we're not intending to take the margin above 20% going forward. What that will mean is that that will fall to profit. So just keep in mind that we are not continuing to do those same level of cost reductions in order to continue to increase margin. We will not go beyond a 20% cap to make sure we're protecting the business.

32:05 And the associated cost of changes of any cost measures? Oh, sorry. So yeah. Thank you. So yeah. Yeah. The the costs have changed. I mean, this year, they are elevated. So as I've already said, you know, you'll have 25,000,000 associated with the print rationalization. If we were to do those big sort of step change activities again in the future, you would see again a step up to make sure they are delivered. More more generally, you know, the costs have changed pretty pretty consistent at around about 12 to 15,000,000. And again, I'd expect that to be the the the the case as we go forward. Thank you. And an operational one. In the market, News UK recently awarded long term contracts to Smith News. Does that have any impact on our distribution choices for the Mirror and the Express?

32:53 I mean, I can take that one. Well, you know, obviously, we work with both as the News UK and Mail did. We work with both Menzies and Smith. Menzies is now owned by Inpost, which has subsequently been owned bought by FedEx. They actually operate we operate almost monopolies in regions, although there's two providers.

33:12 They effectively operate as monopolies in in certain regions. We're obviously engaged with both of those. This is, I think, a natural evolution of the print market. You know, we've we've consolidated down our printing works. There is inevitably gonna be consolidation down in things like distribution. So we're engaged with both parties. We're under contract with both for the foreseeable future, but we'll we'll have those conversations with with both parties or one party in the coming months and and quarters. Thank you. In terms of the print closures, these two sites, can you comment on the realizable values of the properties? So we're we're just at the moment in the decommissioning period. We we've literally, last week, handed over the last titles from the Watford site.

34:01 We will then move on to valuation further toward the back end of the year, and then we'll market them for sale. We don't have, at the moment, a valuation, a formal valuation, and I wouldn't feel comfortable therefore just giving an estimate at this point in time. Okay. Thank you. In terms of financial commitments, we've had we've had a number of these over the years, whether that's kind of additional payments for m and a, HLI, or historical legal issues, which is essentially phone hacking and and the pension contributions. Do you still foresee any future commitments coming and financial obligations? No. So the two the two big ones historically have been HLI, as you've said. I mean, at the m and a point, you know, if that's something that companies do from time to time, that would obviously be creating value for the business, whereas HLI and and pensions or obligations, we just need to pay from historic point of view.

35:01 So once once once HLI and, more importantly now, given the size of the pensions are over, I don't expect to see those sorts of commitments or obligations by any stretch in the future. Thank you. And a couple here on capital allocation. Firstly, did you consider a buyback? So we considered we considered all sorts of options around capital allocation. We decided that we would wanted to reduce the dividend in order to rebalance that capital toward toward investment. The reason we favored have favored the dividend is because we do have long term income based shareholders who have been very supportive over the years. And it felt at this point in time, at least to be the right outcome as we go through the next eighteen months to two years getting the pension schemes settled.

35:59 In real terms, the dividend has declined over a number of years and most recently being cut. When we when might we be able to expect it to increase again? So we will again, sorry for mentioning the pension so much today. But once we get through those obligations, that will be the opportunity for us to then relook at capital allocation and and have an open mind to what the the different options are and and take decisions at that point in time. And where do you expect net debt to be by 2028? Wouldn't it have been better to suspend the dividend altogether? So we we've considered, you know, that as well as part of the decision we've taken on the dividend. You know, we want to keep my comfort level around leverage is is one times. We do have a we do have a leverage target from a from a RCF point of view of 1.75, so that's well beneath that.

37:00 And our planning is assuming that we can continue to maintain a comfortable level of debt and continue to pay the dividend that we've announced last week as well. Thank you. On strategy, do you think more money and better journalists are needed to arrest the decline in print? The no. In short, to to be to be blunt. There is a the print is a declining market, and it doesn't matter whether we could throw tens of millions of pounds at at the product, and I think the decline would be the same. There is a material shift and has been now for many years in terms of consumer habits. We are very focused on the print product, though, overall, the quality of it. We often make sure that the quality of that product stacks up. We do pet charge a higher price than than many of our competitors.

37:47 So we need to make sure that both the content in it, importantly, also the offers that go with it, whether it be National Trust or FreeBets or whatever else. So when you're buying that paper, you're getting more than just just the justification, the cover price. But, look, we we have a a number of really, really good teams of journalists across all of our brands. But the reality is print is about managing decline, and it's finding the right balance between, that that kind of cover price strategy that Darren talked about earlier. Thank you. And another one for your for your peers. Do you think you have the right staff to make the adjustment to the new version of REACH? I do they have this right skill set to to operate in the world of video subs, etcetera? Yeah. We've got, you know, not we've got we've brought a lot of new talent in over the last twelve months. We have restructured and part of the restructure last year, mid part of last year after we announced the new strategy was to make sure we brought in, you know, video people, data people.

38:43 It's not you know, running a media organization now is not just about having a one dimensional view of skill sets. So we've we have in many ways changed a lot of the skill set. We also know a lot of lot of our own existing talent, can make the the jump seamlessly into the new world. If if any of you followed our World Cup, people like John Cross on the mirror, you know, there are a lot of great people who are doing great stuff both in text, in video, and in audio now. So, we're using AI because clearly when we're looking at video, what would have taken you a lot of resource to do video editing, a lot of that software now, clipping, subtitling, captioning, sound can be done through AI tools. So we're making sure that we've got the right profile of of both capability but also capacity in the business. And I'm heartened. I I you know, again, people take a there's a very binary view of content in the market. It's either kind of really, really good or it's really, really terrible. The truth is we just need to make sure that we're dialing up on the kind of middle and the better quality side of it. We'll always get criticized for the sort of engagement content that we do, and that's always gonna be part of what we do. We're just trying to make sure that we dial up some of the content that that we still do now that possibly just doesn't get as much coverage as the other stuff.

39:55 Thanks. One for you, Darren. Can you talk about the key differences between the statutory results and and the the the adjusted results? Do the statutory accounts give a better indication of performance? So the statutory accounts is the, you know, is ultimately the actual, you know, performance of the business. The re the reason we use adjusted is to remove some of the noise of those things which are non recurring or significant and so forth. So the things that you see in the the non operating items are those things that we don't believe to be the key key parts of our business, which actually are driving our our operational performance.

40:40 And you will see these come down. You know, we've already talked about things like pensions and so forth over time. But but but it's really important that we give we believe we give a view to our to our investors as to what the operational performance is. But what's equally important to us is that we give real detail around what those adjusting items are. Because if you want to think about the business differently, you can either add back or take things out to get to your own numbers from an operating point of view. But the stat the statutory number is the, you know, is the legal number, if you like, of of our business. Brilliant. And I think you both touched on this, but I think it's worth going back round on it. Competitively, when we look at some of our key competitors in the marketplace like the mail and the sun, we look relatively expensive.

41:28 Do you think the decline in circulation is a consequence of being so expensive? Well, it we obviously have I mean, I can't comment on other businesses and, you know, the other businesses operate on very different operating margins and requirements and obligations. What we know is obviously I think I said we we're very well aware that our products are more expensive. It isn't really a case, though, that people switch out between titles. What we tend to see is people buy our papers less, and that's kind of what we're we're focused on to try to make sure that we can manage that through the course of the cover price increases. But the price absolutely, as Darren touched on, we think has been part of the elasticity that we might have lost over the last sort of couple of months, and we'll look at that carefully. And we'll refine our strategy going forward if if the next data point, that we see and the data that we get from the from the sales figures, proves that point. But, look, the reality is is every every business in the public space is operating through very different requirements. And, you know, the reality is we believe that the cover price strategy that we have is is right for REACH as a business.

42:32 Thanks. And with declining print revenue and unpredictable digital growth, can we expect the company to grow again? Yeah. I think absolutely you can expect the company to grow again. I won't I won't pretend that it's a challenge. It prefaces the comments I made right at the top of the questions, which is publishing is going through a long multiyear disruption and a very short term disruption. And so when that point is is gonna be it's hard to see right now. But I know, though, that what we're doing right now is taking the right steps in digital to make sure we've got, as I said, a defensible spine of the business. Once you have a defensible spine, you can start to grow it more. All publishers, all consumer publishers, mainstream, whatever you wanna call them, mainstream consumer publishers, have been reliant on Google traffic for too long, and it's been it's been good for the time that we've had it. And as you know, we've if we think about all the commitments we've made over the last five years, we've paid down pension deficit. We have met our, historic legal obligations.

43:31 All of those have been served well by the strategy we had around making sure that Google bit. You only have to go online. Us, The Times, Hearst, Axios, Telegraph, we're all saying the same things, which is we are we're gonna need to drop our go for more. I mean, it's the cliche. It's quality over quantity, and that and that needs to be our focus going forward. And then a fairly good one to end up on. How and interrelated. How do you see the business in one to two years' time? That's a great question. But I think that's the right that is the right view and the right, time to look at it. I mean, if I think about it, if I could fast forward sort of 20 four or whatever the thirty six months, you see a business with much less financial drags on the business that Darren has talked about, HLI and and, obviously, the big one being being have pensions.

44:18 Streamline print operations. Obviously, we've made the progress that we have on on our print operations. That will continue to be run as efficiently as possible. We talked about distribution changes in the market, a kind of robust balance sheet as well. So coming out of our obligations, with a with a strong balance sheet. You then flip to digital. You've kind of got a kind of maturity on our subscriptions business, so a spine of of recurring and retained revenue across all of our titles. A much more developed AI con content licensing market, where there is a negotiating framework, and also brands that kind of have have retained that distinct identity through the changes that we've gone through in in content. So I think if you're if you're looking forward two years, this is a case that there is a storm going on, and we are weathering that storm. But there will be a time when the storm will pass. And once that is, I'm confident that we're gonna have a business that still reaches a significant chunk of the The UK, Ireland, and and and The US populations at the end of it.

45:20 Thank you very much. That's all from the q and a. That's great. Thank you for answering those questions you can 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? Well, look. Thank you very much for for tuning in this morning, and thank you for the the very thoughtful and intelligent questions. Mean, I I think I won't add much more to what I said before that this business is negotiating some challenging times, but at the same time, we are we focus, we have the right plan and the right strategy, and we're all focused in making sure that we can deliver some long term returns for our shareholders. But if you are shareholders, thank you for for your support, and thank you for your questions, and we will see you again soon.

46:09 That's great. Thank you for updating investors today. Now 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, we'd like to thank you for attending today's presentation, and good morning to you all.