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Last checked at 
29 Jun 2018 07:00
29 June 2018
Reach plc
Trading Update
Reach plc is issuing a trading update for the 26 week period to 1 July 2018 ahead of its 2018 interim results announcement on 30 July 2018.
Revenue trends
Group revenue is expected to grow by 11% during the period reflecting the acquisition of the publishing assets of Northern & Shell in the UK (Express & Star) on 28 February 2018. Had Express & Star been owned from the beginning of 2017, Group revenue on a like for like** basis would have been expected to fall by 7% over the period with print declining by 9% and digital growing by 5%.
Group revenue on a like for like** basis over the period excluding Express & Star is expected to fall by 8%. Publishing revenue is expected to fall by 8% with print falling by 10% and digital increasing by 1%. Digital display and transactional revenue is expected to grow by 7% with classified advertising, which is predominantly upsold from print, expected to fall by 19%.
For the period from completion to 1 July 2018, revenue for Express & Star is expected to fall by 3% on a like for like** basis with print falling by 5% and digital growing by 25%.
Net debt
The Group continues to generate strong cash flows with net debt, reflecting the cash consideration paid for Express & Star, at the end of June estimated to be £85 million.
Historical legal issues
Whilst we continue to make progress on settling civil claims in relation to phone hacking, the costs associated with settling these claims, predominantly the legal fees of the claimants' lawyers, are expected to be higher than previously estimated. Therefore, we have increased the provision for settling these historical claims by £7.5 million.
Although there remains uncertainty as to how these matters will progress, the Board remains confident that the exposures arising from these historical events are manageable and do not undermine the delivery of the Group's strategy.
Outlook
The Board anticipates performance for the year to be in line with market expectations*.
The impact of higher than anticipated newsprint prices in the second half of the year is expected to be offset by the delivery of synergies resulting from the Express & Star acquisition following regulatory clearance on 20 June 2018. The Group is awaiting the decision of the regulatory authorities in Ireland.
Simon Fox, Chief Executive, commented:
"We have seen some improvement in May and June driven by stronger national print advertising. Following the welcome clearance by the Secretary of State, we will start the process of integrating Express & Star in order to accelerate the benefits that our combined scale will deliver."
Enquiries
Reach | ||
Simon Fox, Chief Executive Vijay Vaghela, Group Finance Director | 020 7293 3553 | |
Brunswick | ||
Nick Cosgrove, Partner | 020 7404 5959 | |
Will Medvei, Director | ||
The statement on future performance is given as at the date of this announcement and is subject to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated as reflected in the statement. The Company undertakes no obligation to update this forward-looking statement.
* The market consensus range for adjusted PBT for the 52 weeks ended 30 December 2018 is £131.7 million to £133.9 million. This range only includes estimates from analysts that have updated forecasts since our annual results announcement on 5 March 2018. Adjusted PBT excludes operating adjusted items (costs in relation to restructuring charges in respect of cost reduction measures, pension administrative expenses, amortisation of intangible assets and transaction costs in relation to the acquisition of Express & Star) and the pension finance charge.
** The like for like trends for 2018 exclude from the 2017 comparative the impact of portfolio changes.
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