Reach (RCH) completed its acquisition of the ‘Express & Star’ titles last February, and the integration process is ostensibly running to schedule. Synergy cost savings of £3m were achieved over the course of 2018, and the media group is targeting annualised savings of at least £20m by 2020. It achieved additional structural cost savings of £20m last year, £5m ahead of plan.
Meanwhile, the Express deal underpinned double-digit revenue growth. And adjusted operating profits rose 16.8 per cent to £146m, beating market expectations which had been upgraded as recently as December.
That said, like-for-like sales dipped 7 per cent – suggesting that the overall business is still in slow decline. Moreover, the group swung to statutory pre-tax losses after a £200m non-cash impairment charge. This entailed a previously disclosed £150m provision in June 2018, and another in December 2018. Reach cited a “more challenging than expected trading environment for advertising revenue generated locally” and short-term Brexit uncertainty. Legal costs from the phone-hacking scandal have also been higher than expected, driving Reach to increase the provision for settling claims by £12.5m last year.
House broker Numis expects adjusted pre-tax profits of £145m and EPS of 39.4p in 2019 – down from earlier forecasts of £152m and 41.2p (2018: £142m and 39.2p).
REACH (RCH) | ||||
ORD PRICE: | 60p | MARKET VALUE: | £ 180m | |
TOUCH: | 57.8-60p | 12-MONTH HIGH: | 90p | LOW: 40p |
DIVIDEND YIELD: | 10.2% | PE RATIO: | na | |
NET ASSET VALUE: | 186p* | NET DEBT: | 7.3% |
Year to 30 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2014 | 636 | 82.0 | 28.1 | 3.00 |
2015 | 593 | 67.2 | 33.9 | 5.15 |
2016 | 713 | 76.5 | 24.9 | 5.45 |
2017 | 623 | 81.9 | 23.0 | 5.80 |
2018 | 724 | -120 | -41.0 | 6.14 |
% change | +16 | - | - | +6 |
Ex-div: | 09 May | |||
Payment: | 07 Jun | |||
*Includes intangible assets of £852m, or 285p a share |