Reach reports on tumultuous year
Monday, March 1, 2021
Media group Reach has made a near-£50m write-down in connection to the closure of two of its print sites, which also involved almost £17m in costs.
The PLC has just announced its results for the 52 weeks ending 27 December 2020.
Overall sales were down 14.6% at £600.2m, with print revenues down 29.5% in Q2 2020 after the first Covid-19 lockdown resulted in the closure of many newspaper sales outlets.
However, Reach said that things improved in the second half of the year.
“Improving circulation revenues during H2 demonstrates resilience of our print titles,” the group stated.
For the year, digital sales were up 10.6%, while print was down 18.9%.
The group is the biggest third-party newspaper printer in the country. Following a review of its printing operations last autumn it decided to close its site in Luton, formerly West Ferry Printers, and the Fort Dunlop facility in Birmingham with the loss of 150 jobs.
Luton has closed, while Birmingham is still in the process of being shut down.
The restructure involved £6.4m in severance payments, £3.7m in closure costs, and £6.8m in property-related costs.
Reach has also made an impairment charge of £48.4m, made up of fixed asset of £34.7m and right-of-use-assets of £13.7m.
It expects the restructure to result in annualised net savings of £11m. Reach Printing Services now has four print sites: Watford, Oldham, Teesside and Cardonald.
The group’s adjusted operating margin increased from 21.8% in 2019 to 22.3% in 2020. The statutory operating profit was £7.6m for the year compared to £131.7m in 2019 once restructuring and other costs were taken into account.
Chief executive Jim Mullen said the group was now a stronger business.
“A radical reorganisation of our business model not only makes us more efficient, it also enables our changing culture, which is evolving to support a growth led agenda. We have delivered our strategic milestones ahead of our original expectations and will now increase investment to accelerate delivery, focusing on the use of enhanced customer insight to drive engagement and our medium-term objective of doubling digital revenues,” he stated.
The group’s pension deficit under IAS19 increased by £12.6m to £255.5m.