Reach Plc Regulatory News (RCH)

14 December 2018

Reach plc (the 'Group')

Trading Update

The Board is confident that performance for 2018 will be marginally ahead of market expectations*.

Revenue trends

Group revenue in the fourth quarter grew by 23%, reflecting the acquisition of Express & Star. On a like for like** basis Group revenue in the fourth quarter is expected to fall by 5%, an improvement on the third quarter. Circulation revenue and Publishing print advertising revenue is expected to fall by 4% and 15% respectively on a like for like basis. Publishing digital revenue is expected to grow by 5% with display and transactional revenue growing by 8% on a like for like basis.

Express & Star

Integration of Express & Star is progressing well and we now expect to deliver £3 million of synergy savings in 2018, ahead of the £2 million we forecast in October and remain on track to deliver at least £20 million per annum by 2020.

Cash flow and net debt

During the fourth quarter the Group disposed of two vacant properties in Liverpool and Cardiff generating net proceeds of £5 million. These proceeds, together with the continued strong cash generation of the business, will enable net debt to fall to approximately £55 million by the year end, down from £81 million at the half year.

Simon Fox, Chief Executive, commented:

"I am pleased with the improved trading in the final quarter. This coupled with continued tight management of the business provides me with confidence that performance for the year is expected to be marginally ahead of expectations. We head into 2019 having made good progress with the integration of Express & Star and with clear plans in place for driving digital growth in the year ahead."

Enquiries

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 £132.2 million to £133.9 million. This range includes estimates from analysts that have updated forecasts since our interim results announcement on 30 July 2018. Adjusted PBT excludes operating adjusted items (impairment of goodwill and other intangible assets, restructuring charges in respect of cost reduction measures, provision for historical legal issues, 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 include Express & Star as if it had been owned from the beginning of 2017 and exclude from the 2017 comparative and 2018 the impact of portfolio changes and the disposal of Communicator Corporation Ltd which was reported Specialist digital.