Reach plc (RCH) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Reach plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand over to CEO, Jim Mullen. Good afternoon to you, sir.

Thank you very much. Good afternoon, everyone. Thank you for joining us on this presentation today. It's really important, for us, that we speak to as many investors or prospective investors as possible. And we don't take your interest for granted, so we do very much appreciate it. I just want to give you an overview of what has been quite an impressive 2024 for our business. The teams have came together and performed really well. And part of the reason for our strong '24 was the fact that Reach plc made the cost and restructuring decisions pretty early. In fact, we made it back in H2 2023. That's an important point to make, is that we have a history of basically acting quickly. I think we were the first -- if not one of the first, I think we were the first to structure our business so as we can [ prepare it ] for 2024. And when you restructure early, you allow the business some oxygen to actually breathe and not have the overhead of significant change hanging over them. And that's basically one of the reasons why we delivered such a strong 2024, strong in the sense that digital came back to growth, up 2% for the full year, and a particularly strong Q4 where we had the benefits of strong audience traffic as well as our e-commerce and our affiliate businesses and great content coming together. And Q4, for us, in 2024 was an exceptional quarter. So that's -- we're really, really proud of that. And some of you might say, who are maybe new to our business, well, 2% doesn't seem that impressive. I said, well, if you do a read across some of the consumer media industry, I think you might find it is somewhat in decline. We've actually delivered growth, so a really, really strong digital [ year ] for us coming back to growth. Overall, in print, it's a product that we love. We sell 670,000, 650,000 copies a day at roughly GBP 1.50, GBP 1.70. Now, just for a moment, just think about that. That's, every single day, we manufacture and produce a product which has a steady 600,000 to 650,000 sales. Now, that's declining it's 17%, but it is still extremely attractive to advertising. So advertising is only down 14% against 17% on volume. And calculation, which is our cover price, is only then 3%. Now, everyone talks about managed declines [indiscernible] scale, and we do it for print circulation at 3. And it is maintaining that loyalty because it's a habitual product that our customers have been buying for 20, 30 years. So it's part of the lifestyle. It's part of the daily habit. So we're really, really delighted that that significant revenue stream has been well managed. Overall, [indiscernible] an operating profit of GBP 102 million, and that's up GBP 7 million like-for-like with an excellent cash conversion, which Darren Fisher, our CFO, will take you through. But again, just think about our business. We are the second largest digital asset in the U.K., just after the BBC, which is the first. And then there's the 4 American platforms. [ We're ] the sixth digital asset in the U.K. And not all only that, on over GBP 0.5 billion of revenues, we make over GBP 100 million of profit. That's the way to look at it, is excellent operating margin, excellent management costs, delivering profit every year, which is a very strong, healthy business. What's driving that growth? Well, 6 years ago, we came up with our customer value strategy. What that base does is we are an ad-funded model, which means we don't have subscriptions because we deal in a segment of the U.K. consumer market, roughly 8 million of them, who basically don't have the money at the end of the month to actually pay GBP 6.99 or GBP 9.99 for content. And philosophically and from a profits perspective, we don't think that news should be paid for. It's not an option. It should be free. If you want to know what's going on in these communities, if you really want to know what's going on in Southport during the tragedy there and the riots that then came after, if you want to know how your government is operating during a pandemic, if you want to know how your council is dealing with essentially moss in houses, which are causing young people to have really damaging health issues, then why should you need to pay for that? And so we feel really, really strongly about that. And we've managed to find a model that works, which is unfunded. And certain segments of advertisers [ running in ] our papers are really strong to get to their audiences. But also, we have this deal with our readers which basically says, if you give us permission to contact you through your device, whether it's your phone, your laptop or your iPad, then we will get the content when you want it, exactly what you like. And as long as you can say, well, we can track when you came on and how long you spent on the article, we'll then basically send even more content. And what we've got is, of the 14 million people who have signed up, 9 million, because they trust the brands, they trust [indiscernible] they trust they're getting [indiscernible] they trust their [indiscernible] post and the dealer [indiscernible] have basically said, yes, I don't mind you sending me content to my phone because I know it's a brand that I trust, and you won't take advantage of it, 9 million of them have done so. So we don't charge 9 million a subscription fee, unlike -- it's not a Netflix flex approach. It's not The Economist. It's not Times. But what we basically say is we'll probably put some ad blocks in those content segments. And because of that, we charge advertisers. So think about that for a moment, 9 million people that essentially subscribed to our services on a daily basis, you just don't pay for a monthly fee. We get the money [ by the ] site, which is from the advertisers. And because we get that sign-ups, it essentially means that we can actually get better rates with our advertisers. We bill the advertisers and that is simply how it works. Either the advertiser on sites, which is essentially you don't know who you'll get, which way it spreads, which we do, and we do well from that, or we basically say, we'll go ahead and advertise it. We know exactly and how many people, say, 1 million or 1.5 million people, are thinking about the kids going back to school in the next 3 or 4 weeks. And they'll be looking at school uniforms and they're looking at pencil cases and looking at all this stuff that the retailers sell. And we will go to those retailers and basically say, out of the 9 million we have, we may have 1 million people who are thinking about getting new school shoes and school uniforms for kids. Would you like to get to them? Because you don't have to spend on a nationwide campaign. We've got them here. That's simply how it works. But what happens is, normally, in, say, an open market where the market sets the price, those advertisers might pay 20p for that advert and then collect through. But we will say, well, because we're not wasting your advertising spend, we're going to charge you 9 times that, all right? So that 20p is 9 times that, and that's how it works. That is simply how our model works. And how does that work? It basically means a data-driven revenue, that sort of revenue, is increased by 7%. And that now makes up 45% of our overall digital revenues. So we're not relying on Google for that part of it. We have that direct relationship. And that's up from [ GBP 43 million ] to [ GBP 45 million ] from last year. Now, it also basically means that our direct advertising where the market sets the price, because they'll get such scale, that's up as well. That's up 22%. So despite some of the stuff that you're hearing with regards to strain on the U.K. consumer economy, that's absolutely true, but you have to remember who our social demographic is. Our social demographic is usually the CDE, that sort of bottom end of the economics here. Now, the thing of that demographic is they still need to actually buy stuff, but are looking for value. So we find that things like the food retailers are very, very attractive to that market for offers. You'll see it test one brand, credit cards, all the big products, et cetera. So that's why we're seeing that up in the open market, because we're really, really strong in that area. So even though our page views have declined from 2023, but it's still up there around the high 30 million to 40 million a day. We're actually increasing the value of a page. So yields went up and the yield is essentially how much money do you need from advertising on a page. And that's been up 19%, which is great. So that's why we've got a strong digital business going back to growth. Now, overall, we're obviously managing decline of about 70%, 75% of our revenue from newspapers. So overall, we still need to maintain a good operating margin. Reach have been, since I have been here as Chief Executive for 6 years, and actually before that, well known for managing our costs, right? And one of the things that we do -- we do 2 things, but one of the things that we do well is we see things there and we'll do that. And then investors will say this, we surely can't keep doing that. Well, here's the trick. We can to an extent because actually -- because the revenues, 17-odd-percent, is in newspapers and as newspapers declined by 17%, that means you have less ink, more think. It's a chemical. It's a fusion of other minerals, and it needs to be heated up to a very high temperature to produce it. So our energy costs drop. Newspapers, newsprint are printed on paper. We use less paper, which is expensive and has to go on a [ ship ], which means less energy cost to do that, and then the electricity that goes with it. And then how do you print it? We usually print it with aluminum plates, a pretty expensive product. But as it declined 17%, that cost gradually comes down. So you can see how the model works where we decreased our cost base as the volume of the product that we make. And then if we do need -- if we get into and go for better -- another escalation award in Europe, which we got hit with, our energy crisis, which we get hit with which is called inflation, post the pandemic, which we get hit with, then we have a track record of finding those costs and we can do that. So our print is excellently managed despite 6% like-for-like revenue decline. So that's the overall story of our business. I'm going to hand you over to Darren, who's going to take you through some of the financials, and then it'll come back to me just to give you a bit more of the strategy. Darren?

Thanks, Jim. Can you please slide on -- okay. So I think the high-level summary is we had a good performance in 2024. You'll see that we had a revenue decline of just around 4%, and that's really a managed decline of our business. Jim has just talked about how we manage our print business. Overall, though, our digital revenue returned to growth, so a 2% improvement in our digital revenue and that -- excuse me, sorry, print -- print, which still remains the main driver, I'll talk about in a moment, but it declined 6%. That is the circulation revenues offsetting the circulation decline of 17%. From a cost point of view, Jim has already mentioned that we manage our costs very effectively. So we've had a saving of 6.5% in our cost base this year. And that's been driven really by the cost program we had in 2023, where we had to respond to the deprioritization of news in that year and also the online news inflation on our newsprint costs. Overall, we had a strong margin, an operating margin of 19%. That was up from 17%. So we've generated over GBP 100 million in overall profit. On the next slide, so you can see there digital revenue, a 2% return to growth. Circulation, while it sounds -- 6% overall. As I said before, this is effectively because we've been able to manage the decline, which is 17%, through our cover price increases. Print advertising, 15%, that's a good performance against, again, circulation volume decline of 17%. And overall, we had a 6% decrease in our overall revenues. On the next slide, so on uses of cash, we generated GBP 126 million of operating cash flow. As you know, a significant portion of that goes into our paying our obligations to our pension scheme holders, which is GBP 60 million. We paid dividends last year of GBP 23 million, as we did in the prior year. Historical legal issues, we had a provision at the end of 2023 of GBP 18 million, which was where we settled after we settled the claims of GBP 9 million this year. We put another GBP 9 million to pay in 2025. We expect that to be paid over the course of 2025 and 2026. A restructuring charge of GBP 17 million, much of that was related to the program we completed in 2023, with some of that just run over into January. And then CapEx of GBP 12 million is pretty much in line with where we normally expect our CapEx to be. And other is made up of a number of things, things like lease payments, vacant property costs and net interest. And that leaves us with a net number of GBP 14 million, flattered by the fact we had GBP 15 million of property sales proceeds which won't recur in 2025, certainly not materially. We may have GBP 1 million or GBP 2 million of cash coming in from the remaining properties that we have. Next slide.

Thank you, Darren. So that's just a quick overview of the numbers, and there'll be opportunity for you to ask some questions. I just wanted to take you through some of the key points in the presentation. Now, one of the things when you're dealing with consumer businesses, I think, as an investor, that we have seen, you have to really believe in the management because there are certain -- there are so many things going on in the macro environment and external world that you have to basically have a confidence level in the management that they can basically say that what they're going to do, they've done. So this slide is essentially just sort of -- but we're not crowing about it, though. Last year, we said, well, this is what we're going to do by the end of 2024. And I just want to go through to demonstrate that we've done so and also tell you why it's important. So we need to demonstrate the strategy is working. The strategy has been in place now for 5.5 years. And there's always a question about, well, is it still relevant? Well, we think it is. So what we've seen in the strategy is that's something called RPM. RPM is revenue per page, so it's revenue per 1,000 pages that we present. Now that's important. If you take a page on our website or on our app, there could be anything between 4 or 6 ad blocks there. Some of them you won't see, but when you're presented and if you read this top of the article to the bottom, if you look at a piece of video, we will charge advertisers for the time that you spent that that ad was presented, and that's called RPM. That's up 19%, right? That's really, really important. And the reason why it's up 19% is because of the effectiveness of our advertising. Going back to that point, I said we've got 9 million users. If you really like sports or we know that you like automobiles or your outbreaking news, and we get that content in front of you at the time you want to see it and we charge higher rates for it, that's a 19% RPM growth that's coming through. It also means that because -- but actually earning more revenue, that we can increase our operating margin. As I said, with our good cost management, our operating margin is set at 19%. This is really underlying -- and I'll come on to the historical legal obligations. This is a really healthy business. The other thing about digital is what is it the level of quality of the digital earnings? It's a really important question. And I'll tell you why it's important. If you go in and just say you're on Google now or one of the search engines, you will find that AI will sometimes create an answer for you, and that could be a blocker of going on to an individual, independent piece of content. Now the way around that is to build relationships with customers, which we have done. So here at Reach, we actually don't mind that because we think that gives us competitive advantage, which basically means, okay, we'll put in -- I'm searching for something, and it came up with AI. And I might go on to a piece of independent content, the BBC or the Daily Mail or Reach or whatever. But actually, we've got 9 million people who don't actually even go there that [ you ] sent to every day. And because we know when you access our content, how long we stay on our page, we can actually send content that's relevant to them. So actually, having those blockers in the open market is an advantage to us because we don't have subscriptions but we still relatively have access to those people. So that's really, really important, which is why that 45% of our overall digital revenue comes from a one-to-one relationship with a reader or a customer. Now, we built that strategy around that market using cookies. That was the start of it, back 6 years. What's actually materialized is cookies weren't actually the block of the content. It was AI. We use AI internally. So we quite welcome this issue, which it is for a lot of publishers, because it gives us a slight competitive advantage. We've got momentum in the digital business. Again, I think this is really strong. Again, you might look at the numbers. It's only up 2%. Jim, [ 5 ] really, is that not good? Well, quite a lot of digital businesses out there which are really healthy are in negative growth, and we're delivering too. And it comes back to that point about data. And in Q4 was an absolutely outstanding quarter for us. So we then built our anchor plans for this year, made sure it was fairly prudent, so we don't disappoint coming into the full year 2025. So we've had a really good start. Comp savings has been good. Just to let you let that [indiscernible] investors from that perspective. That's been good. So we're in a healthy place at the moment. Let's talk about cost. I don't want to dwell too much on it. But as our print declines over a period of time, our costs decline as well. And also, we're quite a big business. We've got a bit of property. We've proven that we can do it. You should read between the lines where the Chief Executive is speaking to you about the confidence that he and the CFO have in costs. Hopefully, I'm radiating some confidence that we can manage costs. So I don't think there's -- I don't think it's been an issue there for Reach and there wouldn't be one going forward. And then also because of that good profit number, because of the significant cash generation that we make, then we declare final dividends again. So again, if you build that in mind, that's -- you might look at, obviously, we've got a paper business, and that might [indiscernible] tone on the business. Do not do that. Look beyond. Look at the cash that it generates. Look how that cash pays for the obligations, how that cash is invested in digital. And then the final point, and this is really, really important, one of my primary jobs when the Board hired me 6 years ago is to solve 2 problems. One was pensions. And then with Darren's support, we're now on the final run rate to [ still ] pension for funding by 2020. What does that mean? Well, look, [indiscernible] we make GBP 100 million of profit, GBP 60 million of that was in pensions, right? And it's deserved. It was obviously -- everyone might not know the history of Reach. But that ends and that cash becomes available for investments. So we have managed the business well up to that point. We are getting so close. We're almost 30 months away now from this 2028 date. And it might not even mean that we have to wait until that point. We might actually say what the business is that will run, you can maybe actually invest earlier because you know you can get returns. The main point is we are material closer to that date when our obligations go away. Next slide, please. This slide is really important. So I made a statement about why is data [ that ] important? Because some people don't understand it. So this slide looks at -- if you look at that dark turquoise line at the bottom, that's basically the money that we get from open market. Now what the open market is it's research and [indiscernible] it comes up [indiscernible] comes out with a report for last night's game. If you go and look at the ad on one of our sites, whether it's Manchester Evening News or the Daily [ Matter ] and there'll be ads that will be put up there just because you find us. Now Reach are price-takers in that situation. We don't put the price for those ads. It depends upon the demand. There's a whole algorithm structure behind it, which is dictating demand and price and setting the pricing. We might get, I don't know, 14p of that. What's happening over that time is, because it's becoming more competitive for audience, you're seeing audience decline. That's where you're seeing at that white dotted line at the bottom, decline. But you're also seeing RPMs, the revenue per thousand, decline over time as well. I mean it's still a lot of money, it is significant, but it's in a declining platform. You then add into that things like AI, which is put in AI results, you might put it in and you might just say there was a draw between [indiscernible] give you the scores, and it'll give you a view and that may have enough for you if you're [ on the hoof ]. So that then takes audience away again. So the strategy was, well, if I get to know these people -- before they even put the search in, I'll send it to their phone, either WhatsApp or send it in newsletters, or when you go onto the site, you'll see your content right away without doing a search. That's the [indiscernible] right? And that's shown you how, since we started the strategy back in 2019, with that [indiscernible] COVID, what happened then was manufactures and advertisers thought the world was going to end and no advertising gets spent. Pretty soon after, people were baking banana bread at home. They realized they'd have to sell bananas and flour and milk. They all came back again and you've had this spike. Now, the interesting thing about this slide, if you notice the top [ fleck ] full line of [indiscernible] it says FB Referral, what happened then was Facebook decided to de-prioritize news and basically stop sending traffic to news providers in the U.K. And it dipped by 30%. Because we had direct relationships with our customers, we could still send them news directly, and actually our revenue increased. And it proves the point of, if we had subscribers, we wouldn't have to worry about that, but we don't. We don't have subscribers because it's all ad-funded. So despite a decline in Facebook referrals, we still managed to increase our revenue, which is essentially why we've seen this RPM as growth in revenue per thousand from 2020 to 2024 gone up to 65%. So this slide just really proves the numbers behind the strategy and that it's working. That's all. Some of you might not know our business. And we often forget internally that sometimes, which is why we're showing this slide again. Everyone knows, but some people don't actually know the scale. If you're the marketing director of a major new payment or the marketing director of a regional brand that's looking maybe to own its area or expand, then you want to get the most effective use of your spend. So if you're a major U.K. brand, you come to us and we will get you access to 80% of the United Kingdom, simple as that. And our reach is really, really important to us because, actually, you can come to us by our agents and direct and basically go, I need to get to the whole of the U.K. to maybe sell this stock, or you're in Manchester and you maybe want to just go in Manchester or Glasgow or Plymouth. We can do that for you. That's one of the benefits that we have, maintaining the scale of our business is really important. So we win business at -- we win business quite often that way. But what we then do is just what I spoke to you previously, they then go, well, I do want to spend the money, but I don't want to spend a lot. I mean, I am going to access to 8 million people, Jim and Darren, but I know only 0.5 million of them are going to buy my product. So I don't want spend it on 37.5 million people. And we go, don't worry about it. We can do the segmentation for you. So we bring the scale and we bring the deep dive on-site, which is one of the reasons why we have retained clients with Tesco, which we'll come onto in a minute. We keep retaining them because not only are they national clients, but they don't want to spend millions. Now, you might think that's a bit odd to say, well, don't you want them to spend millions? No, we don't. We want them to come back and say that advertising is really effective. We want them to come back and say that advertising was really effective. So rather than doing 1 campaign for GBP 1 million and never coming back, this [indiscernible], GBP 0.5 million, right? And then over time, you build up more and more loyalty. So we've done that. We've also launched in the United States, because we got to the stage where actually we're saturated in the U.K. So about 18 months or 2 years ago, we launched in the United States by the Mirror US, which is left of center, the Express, which is right of center, and then dealing with is the Irish [indiscernible] government content, which is relevant today with Irish Star. We now have an audience in the United States of 30 million uniques, which is only 7 million behind the Washington Post. And we've done that within an 18-month to 2-year period. We'll get [indiscernible] based in New York and California. And we've got a similar amount here based in Canadian Wharf and some home working, which allows us to do 24 7 years cycles. So that has been really, really successful for us, and that project is now profitable from a project basis within North America. So the next slide, please. So engagement is really important. There isn't much point in recording a unique user if that user only comes once a year, say, to read about the Grand National or to read about England and in the semis of the euros or just to look at general election results. So you can have these big numbers and it's -- some of you seasoned investors will know this -- is that you have to look beyond. If any media owner basically says, we've got that 8 million unique users, well, that sounds really impressive. You need to look beyond that and you need to look at engagement. And how many times do they come back. [indiscernible] might sound a lot, but you only come once, you're only tuning into that Tesco advertise once. You want them to come back every single day. That's why engagement is important. So our paid views per visit, which is essentially when I come onto your network, how many of your pages do I actually look at, not just for the election results, essentially when you look at other stuff, and what we do is because we know you well, we can go, look, I know you came on to look at the election results, but I'm really interested in this content here or this entertainment content, and we present that here. That has proven to work for us because our engagement of [ page views ] goes up 8% year-on-year. That's underlyingly supported by sign-ups. Now, people don't sign up for content like it's relevant. So I like -- I like e-sports, it's called Scottish football, right? And I read it every morning. And basically, the Reach system behind it picked up -- there was a chart and one that was taking up Scottish football 350 miles away, but that was fine. So what happened is, as [ time ] went on [indiscernible] read about in different news or the economy, strangely, if I didn't know, I would have been strange, [indiscernible] started to come up. And then I started packing which [indiscernible] in Scotland and that started to appear. And over a period, it didn't take long, maybe 12 weeks, I started getting content I liked. And it got to the stage, because the content was high quality, because that's what we do, we've done this organization with 1,700 journalists, we're the second biggest employer of journalists in the United Kingdom after the BBC because it's high quality, I eventually signed up. And that happened for 9 million people. So year-on-year, we're signing up another 26%. It has grown 26%, which is fantastic. Now I know some of you have sent in some questions about the UX and the quality of the experience. We hear you. We're an ad-funded business. We've got obligations on historical legal issues, which we've now resolved, the obligations of pensions, which are going to be funded. We need to pay that. And so what we do is we put more ads on our page and it was impacting the user experience. So a part of our capital allocation last year was [ essentially to build ] a new digital publishing platform, one which has increased -- which has decreased the latency and the experience for all of our sites. And by the end of this year, all of our sites by Express will be fully on the new platform. We ran NPS reviews of it for January to make sure the user experience was going back more positive than it was when that was presented to the Board. And then in Q1 2026, The Express will be fully on the platform as well. The reason why that's delayed is because, when we bought that platform, we bought that [indiscernible] and added the [ sport ] platform behind it. So the majority of the digital state will be created in 2025. And as you can see, there we're already reporting that they are 3x more quicker with our interest with our decreased latency for [indiscernible]. So here are some case studies. I think this is a really important slide. The first one is our Tesco case study, which is essentially we've got about 4 to 5 million post codes and post codes are hugely valuable pieces of data. Now, Tesco, you've probably seen them run a revised [indiscernible] campaign. But Tesco actually needs to be more competitive because they're actually getting attacked from all sides by different retailers. So with our data, we looked at the areas where there may or may not be under or over-indebtedness. And we used that through a post code analysis, which allowed them to, therefore, spend their advertising more wisely. Now when you deal with a company like Tesco, they are far more advanced data-wise than us. You need to make sure their advertising is effective. And what has actually been done, we used 1 segment, which is over-35 females, to see whether or not we can increase the spend with Tesco. And the cut-through rate increased by 3x the industry average just on 1 campaign. And the result of this has meant that we have renewed the Tesco contract with them. So for the last 4 or 5 years, we have renewed and rewon the business. And we run the threat as well because there are other publishers who are trying to take that business from us. But that 3x industry average is managed to allow us to win in that business. All in, essentially the [ national lottery ] operator, now one of the things that we just have to let you know, people just think we're a newspaper publisher or a digital business, they're not really social platform experts. So in the last 18 months, we've got 100 million followers. We might not have a loyalty to our brand, but we're raising building content. We've invested in studios in all of our major hubs, and we're now creating this social following which basically for all when we're trying to get to a younger market, we have 5 million views for them. So they are one of our key clients. And then the final one is just to show you an idea of the EFL on Sky was launching. And if you know the data for EFL, it's actually huge. It's a really big thing, but it's a regional product. So you can't just go for a whole campaign, because it's too generic. So we actually went with regional [indiscernible] this gives you idea here about, in 1 year, [indiscernible] where we actually got readers and consumers who either have subscribed to us or read our content in Yorkshire and basically made a way for those customers to pay launch. And that reached 4 million users for EFL [ regional ] football. That's kind of a good successful how we used data in 2024. And all that came through to our digital growth rates, as I spoke to previously. We are focused on our business. And that basically [ turns ] everything that we do. So just for -- I know you're investors here and you are here to make a return, and that's really important. And hopefully, I have demonstrated that we will deliver returns for you, get back to growth, managing our huge print revenue line, declaring a dividend again. So I think we've spent a lot of time on that. But I really want to let you know what you're investing in. And we represent communities that no one else does. So if you take the [ sulfur large ] club, sort of iconic club center, which essentially is part of [indiscernible] and part of Manchester, we're, in the end, going to make sure that that didn't follow them a bit. If you look at the assisted dying law, which was discussed in parliament, that came from The Express [indiscernible] Express. They thought this was important because they've been personally affected by this. So we wrote about it and basically had -- made sure there was a conversation in Parliament about it. And [indiscernible] and from our background, we are concerned that there's outsiders coming in, and it was our journalist that were on [ patch ] reporting it. It got to the point that was getting picked up by North American and European news agencies, but it was actually our journalists and a fair few of them got assaulted, but making sure that the truth of the matter was getting out there and, again, just reminding everyone why it happened, and it was not to be used for any political aims. It was because of the tragedy and just remind everyone what this was about. It is not about politics. It was just about families who have been -- undergone a tragedy. And it was [ they ] who did that and have been doing it for a while. And again, I want to echo as well, [indiscernible] is really, really important to us. And our strategy has to be a real strategy that is sustainable. And the [ Echo ] has been the main voice for the families of the Hillsborough victims to the point where it's now got Hillsborough Law. It has been passed to the Prime Minister, [indiscernible] [ 36 ] years of campaigning. That's what we pay for. Now, you might put ads at the site for shopping offers. You might put Christmas ads or [indiscernible] ads and we make money and we invest in it. But after 5 or 6 years, that pain will stay firm with those families and we got Hillsborough. This is what we do. So we have a sustainable long-term business. And then on our new studio, we've got the [ Euro Thrash ] and The Division Bell, which is a podcast and webcast services. And then the [ dealer effort ], which is my newspaper I was brought up with and about the continuing, obviously, stories about people who have been affected in Scotland and West Central Scotland. So we are delivering brilliant content. That is our purpose, and we've got this great opportunity that attracts people's attention and engagement. And what we found is people respond. They don't mind getting an ad for an offer or for advertising if the content is good enough, and we continue to do that. So the message from here is we still employ second volume -- I guess volume of journalists in the United Kingdom. We have committed to do that. We have an important role to play in democracy. But also if we don't do that, we can't make any money, and we've managed to get it to work together. So thanks for listening to that. That was an important focus for our business. Cool. Here is our investment case, very simple, but I thought we'd put it out there. We have great content. Content is not giving our people [indiscernible]. When they come and we get them to stay, we get them to stay through our customer value strategy, which essentially means it's growing at over 6%, and that's continued. That's been growing for a good while. We develop our audiences. We do things like e-commerce and affiliates. We sell beauty boxes. We sell gathering equipment. We do articles on gardening. It's coming into March. And at the bottom of that, because we get such scale, we sell our product, nothing wrong with that, content and commerce coming together, which is good. Do not underestimate our print business. There might be some of you who are reading this or listening here who don't buy newspapers. But a lot of people do. And just to give you some of the facts behind it, we've looked at the actuarial tables. This is the biggest issue that we have in this business is mortality. And on average, there's 20 to 25 years of life left for those people who are buying over 600,000 newspapers a day at GBP 1.50 or GBP 1.70. There are not many digital businesses out there who can rely on that and continue to grow the business and do not underestimate it. People say managing the client [ to turn ] off, I don't -- if it's of scale, it's a real value to us. We're highly profitable. This management team knows how manage the business. We are obsessed with margins. We are obsessed with our operating margins and we're obsessed by costs. And one of the good things about it, as our high-volume print business declines, so does the volume cost for them as well just to support that. But there's always places where we can go and we've proven that before. I'm not asking you to trust this. Just have our [ cost declines ] over the last 6 years of what we've done in costs, you'll see that we are a proven management team in doing that. We have resolved our long-term uncertainties. I have been 6 years in the business. It's taken us 5 years to get to this point. Historical legal issues, which is phone-hacking, has now been resolved. Next year will be the last year we will make a payment, which we're good for. That's fine. And we're on the path to fully fund it with the pensions, which is essentially the [ Robert Maxwell stolen ] pension money decades ago. We're now getting to it. It's now within months. And now is the time that I would say would be a great time to look at our business because that obligation goes. And then we've got a clear capital allocation framework, which you can ask Darren the questions on that, if you wish. So hopefully quite a simple and compelling investment case. So just a summary, to summarize, our customer value strategy is working. We get to know readers, and we can get them content, which makes them stay on site and we sell them more advertising. It's as simple as that. Our audience is growing and we're diversifying the revenue. We never used to do this. We've always seen it a bit of an easy event for us. If you get 32 million people coming on site and are reading stuff about products, whether it's car insurance, or whether it's gardening equipment or Taylor Swift tickets, then why don't we become part of our process? Just to let you know that we're getting better at it because you only make small margins in these things, maybe 1% or 2%. When you look at it, as I said, we're obsessed by margins. You might find we're giving 0.5 point away as a transaction fee for an e-commerce platform. Someone came up with the idea, well, why don't we build our own e-commerce platform, which we did. It's called Yimbly, and we saved ourselves 0.5 point. That's how we're looking at the business. Our digital business is growing, and you might see [indiscernible] 2%, [indiscernible] for us, some of our competitors quite feeling negatively growth. We are growing it too. When the tailwind comes to the economy, that will be multiplied. If it gets tougher, you know the customer value strategy is to be as competitive as we can in that area. Current revenues remain reliable. Please do not underestimate the huge amount of cash it gives us and how we can invest. A lot of people switch off. Our best investors keep them going and [indiscernible] manage across this. When we look at the numbers, it's huge, and that goes to digital investments, so that's good. We shouldn't have to be tested on cost efficiencies, right? We are just going at it. Darren and I lead it. I've been here for 6. Darren has been here for 2. We've delivered every year since. An interesting thing to look at, even before CEO and CFO were here, we were doing it. It's not just us. There's a whole team behind us in how we manage this business, and of course, they stay, they're here. And then our financial obligations are beginning to unwind. If we couple that with over GBP 0.5 billion of revenue, with over GBP 100 million of profit, we've got a pretty healthy business which will only get better in [ 2020 ]. Thank you.

Well, I'll jump on some questions that have come through. And I'll start with some financial [indiscernible] customer allocation, given current levels of valuation, would it make more sense to undertake a buyback? Whilst I appreciate this is a Board decision, if the answer is no, does this indicate that they feel the future share price is also risky?

Yes. So I think the first thing to say is we've been a dividend-paying company for some time. And from a capital allocation point of view, that's the way we have thought about it. It's interesting that this has come up from time to time. There's been -- it's certainly been talked about as we've been on the road show. As it is today, our model really is supporting a dividend for our shareholders. We'll continue to have these discussions at our Board on a half-yearly basis around whether we would want to look at that going forward. But right now, as you know, we just declared a dividend. That's where we feel the right thing to do is for the company.

Great. And can you tell me, where do you think peak level of debt will get to [indiscernible] key drivers of cash?

Yes. So the key drivers of cash, look, we have a really clear picture of our cash going forward now that we've got our pension contribution schedules agreed with our trustees. We have HLI resolved. As I said before, we only have GBP 9 million left to pay, which will be paid over '25, '26. We have routinely paid a dividend. Clearly, that is a decision for the Board each half year. But we know what that looks like, should we continue to do so. And we have a clear picture of the cash we're generating in terms of our cash conversion, 105% this year, typically probably in high 90s%. So going forward, we can sort of predict those forward really, really easily. We'll continue to go into our RCF over the next few years as we continue to pay those obligations down. Once that comes off in 2028, then we'll start to see that cash coming back in. The cash flow will increase significantly and that will give us the opportunities to be considering the way that we want to, again, look at our capital allocation model, how much we want to invest in the business, how much we want to pay down in debt and whether we think about the current model we have for holding shareholders as well. In terms of where that will get to, I'd expect the outflows over the next few years to be GBP 20 million, GBP 25 million a year adverse, or net debt. [ I'd prefer it go into ] net debt before that starts to come back.

Can you provide more information on the contribution of new revenue streams like affiliates and e-commerce? I think, on that, I'll move to Slide [Technical Difficulty].

Yes. So affiliates has actually performed really well over the last few years. We've put a significant amount of effort into it. It grew 50% in 2024. I mean, these aren't the biggest revenue streams, but they are important revenue streams to us in terms of supporting our overall digital revenue. So they're certainly making a strong contribution to our overall digital revenue. We also have obviously the OK! Beauty Box. Again, that's performed really well last year. We had a really good Q4. As we went into Black Friday, we increased quite materially, in fact, significantly the number of Advent calendar boxes that we had available to sell this year compared to last year -- compared to the prior year. They all sold out in advance of Christmas, which is hopefully what you'd expect to do for an Advent calendar. And we've introduced a new marketplace called Yimbly. So that is in its sort of early days. But again, we're seeing that grow, getting more partners signed up, and we're starting to see that also contribute to global digital revenue. So it's a very important series of revenue streams and the growth of that has been a contributor to the growth we saw this year -- last year, as I said.

Jim, probably one for you. How do you use AI Reach? And is some of your output AI generated? I'll move to the next slide.

Yes. I mean we use AI in 2. One is [indiscernible] AI [indiscernible]. I just need to add that nothing is published without the sign-off of an editor, human editor. And we don't use it to write the content. We use it to support the production of the content. To give you an example, it may be used for [ picture ] sourcing. [ Pictures ] help people engage with the content and stay on-site for longer. And we can search the library very, very quickly now. We use it for distribution. So if you need The Star, the Mirror or The Express, you might find the byline [indiscernible] the journalist will be the same person. But each of those publications have a style. So there will be a list of the category which is appropriate to each of the publications. If you read those 3 titles quite quickly within a [indiscernible], you'll find out what title you're reading. So it does that. And then distribution across our network, we have 120 brands, and we could use AI to distribute across the network if we are seeing audience are interested in a particular topic. So if it was, for instance, the Oscars and people were coming in to read it on the Mirror and we find that that audience is, say, from Glasgow, the new content that came out for that audience might be automatically put [indiscernible] record to see a response. So AI is used that way generatively, but always signed off by a senior journalist or editor. And we also use -- we're quite advanced in AI, which is nongenitve, which is essentially using algorithms to help us with our business. We have a tool called Mantis, which does essentially 4 things. One is it does brand safety. So it ensures that advertisers are not advertising next to content that they may feel wary about or which is a discussion of topics which are -- might be -- may be about war or crime or whatever else. And it also does content targeting. So we sell the facility to access -- to put content on to advertisers to other publishers. It will also generate content for you, if you wish, and detect your selections. So that service is also there and it also provides back-end statistics. Now, we've developed that internally, and we are now confident that it's working that we went out and have commercial and legal contracts for our publishers. So I think, recently, we signed up [ Live Table ]. We use immediate media and a team over, an ad conference in Australia and signed up 9 in Australia. So that's a separate unit where we're applying and commercializing AI. And it's a 7 -- I mean, it's a 7-figure income, including us. We are also a client of this product. But -- and we put the management team in an MD structure out there as well. So we think we're fairly, despite what Darren and I don't look like, California sort of software gurus, but we actually are. We [ merch ] and do very, very well in the [indiscernible] business because, behind us, we have all these [indiscernible].

Can you tell me, can you continue to grow the 9 million embedded customer base? And how can you increase the revenue profit contribution per individual customer?

Very good question, actually. Yes, I think we can. Obviously, we started off a low base. You find the percentage growth rates will naturally decline. And I get this question from investors quite well, where can you get to? I think there's probably a little bit more we can do, not much. I mean if you look at some of the subscriptions for the other publishers, I mean, it's probably 5 million or 6 million for paid. For the likes of Netflix and stuff, it's maybe a 11 million, 14 million. So you get to certain limits, and we're getting to approach that. But the key thing is about the profitability. It's not actually about the acquisition. We manage the churn. People fall away. Then you go why did you fall away, and bring them back in. But it's also about engagement. So someone signed up for, I don't know, say, a [ Town and House ] newsletter, which we do. And you might find that they're less frequent, maybe because the team is not doing so well or [indiscernible] and you start to stop reading the content as much. But the more you're on site, you pick up more things because we put links in the site and see where they go to, and then we track where they spent time. So you might find someone who might be a [ Town and House ] fan and actually are spending time on, say, a [ Visigoth ] product and they start to get a subscription for that. And that's the real-life example of [indiscernible] connector where you actually have to connect -- you can connect different content types to the individual. So how do you increase profit? You do more of that with data and insight. They might end up -- they might start as a football fan, but there might be an entirely different piece of content that they are interested in and you sign them up to that and that's about engagement.

We understand that the Premier is an important revenue stream. When, in your view, does the other revenues in digital outpace the decline in print?

I'm not -- I said this when we were going before the [indiscernible], which is a kickoff for a number of things, which is essentially cost inflation, input cost inflation and then consumer inflation happened post the [ convene ]. And it's not appropriate now to say when is that inflection point just because there's too many things going on in the environment. I think you need to look at single-digit growth for digital over a period of time. And when we get to 2028, a significant cash generation from print helps us to fund and accelerate our digital growth. So it wouldn't be appropriate for me to guess. I wouldn't do really any guidance on the point we overpaid. So I think just you need to look at digital growing funded by a strong revenue cash generating business.

I'm conscious that we're coming up to time. So I'll answer any of the other questions directly after the event.

Perfect. Jim, Darren, and [ Jo ], thank you very much for answering those questions from investors. Of course, the company can field the questions later today, and then we'll publish our responses on the Investor Meet Company platform. But just before we direct investors to provide you their feedback, which I know is particularly important to the company, Jim, could I just ask you for a few closing comments?

Yes, 3 things. One is the feedback is important to us because we work together on these things. If there are things that you don't have answers to or there's areas that you want more questions or just how we present the information, because we want you to become part of our company, then please do give us that feedback. We would appreciate it. It's really important to us. Second thing is underlying some of the narrative around the business, if you just look at the number, we are healthy. And we're getting rid of these historical obligations. And we have an old business, traditional business, which is funding a new one. And that new one is fixed [indiscernible] in the U.K. I think that's just an active reset, or I would ask you to think that. And then lastly, thanks for the time on the call. We do not take for granted your interest in our company, which is why we're always available. And if there's any questions, then [ Jo ] is available to take them, and we will get back to you. Thank you.

Thank you once again for updating investors today. Could I please ask investors not to close the session. As you know, we automatically redirect you to provide your feedback so that the management team can better understand your views and expectations. This will only take a few moments to complete and should be greatly valued by the company. On behalf of the management team for Reach plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.