Reach’s (RCH) market value rocketed by a fifth on results day following the release of half-year figures, which showed some signs of a recovery in its print business. But an exodus of advertisers since lockdown meant that gross profits dropped by 15 per cent to £137m in the first half.
The publisher transformed its business in the period, cutting back 12 per cent of its workforce and combining some national and regional editorial teams. It estimated that the restructuring will deliver £35m in annualised savings, at a one-off cost of £20m. Elsewhere, the company’s pension deficit narrowed by 14 per cent to £2109m, supported by cash contributions and strong asset returns.
Reach proposed a bonus issue to shareholders with an equivalent value of an interim dividend of 2.63p – but chief financial officer Simon Fuller said that if trading maintains its current momentum, then management “unquestionably would be looking to pay a cash dividend” at the end of the year. There is no formal guidance for the next six months, but the company is ‘performing materially ahead of market expectations’ for the year.
Broker Numis forecasts pre-tax profits of £114m and EPS of 30.7p in 2020, before moving to £117m and 30.5p in 2021.
| REACH (RCH) | ||||
| ORD PRICE: | 76p | MARKET VALUE: | £ 227m | |
| TOUCH: | 76-77p | 12-MONTH HIGH: | 180p | LOW: 51p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 3 | |
| NET ASSET VALUE: | 218p* | NET DEBT: | £2.9m | |
| Half-year to 28 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 353 | 58.2 | 15.90 | 2.50 |
| 2020 | 291 | 25.2 | -0.80 | nil |
| % change | -18 | -57 | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £852m or 285p a share | ||||
