Reach plc (RCH) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for joining today online or in person. It is good to see some familiar faces in the room. For those of you joining online, I apologize, there is some construction noise outside, so I hope it's not affecting the audio too much. But welcome to the Reach full year results for 2025. Before I start, I would just highlight the usual disclaimer slide. My name is Piers North, I'm Chief Executive Officer of Reach plc. And today, I'm joined for these results by Darren Fisher, our Chief Financial Officer. I'm going to start with some highlights of the year and then pass to Darren for some of the detailed overview of the financials before I will return and talk about some of the progress we've made this year, explain some of the key developments since the year-end, but also our priorities for 2026. So let's talk about 2025 at a summary and high level. It has been a busy year for us. We've clearly had a good financial performance with growing profits and standout operating margin of over 20%. And we've made some really good strategic progress against the priorities that we set out last year and were designed for the changing landscape that we operate in digitally. And that's in video, in AI, but also in diversifying our revenues with subscriptions. But also importantly, we've taken decisive action to put our business on the right course. And by decisive action, I don't just mean on strategy, but also on our operational decisions, for example, around pensions, but also our print operations. And both Darren and I will give some more detail on that. But for the big factors that impacted the year in digital, after starting the year in audience growth, we did see major referral changes in H2, something the whole industry, both here in the U.K. and globally has had to deal with. And these changes have continued into the start of this year. This is the very changeable environment that we had in mind when we first developed the strategic priorities that I shared with you back in July. And certainly, the shifts that we've seen this year and the start of this -- sorry, last year and the start of this year have only confirmed our belief that these are the right priorities for our business. I'm happy to say that we've begun implementing these initiatives at pace, which include, but are not limited to, adding resource capability and skills in our business and increasing our video output from integrating AI tools across our workforce and to launching, as I said, our premium digital subscription offerings. Now in order to make this happen, we have had to restructure the business, creating leaner central teams, putting more of our resources firmly behind these priorities to drive the revenues of the future. And as we announced last month, we've taken a big step to consolidate our printing operation and focus the business more firmly on our digital priorities. All of these changes are big and will make a big difference to our business. But at the same time, I can't ignore that we have faced some challenging headwinds that have impacted our digital performance and some of our long established revenue streams in this space. Most significantly, as I said, was the drop-off in referral traffic to our sites across the second half of the year, mainly from Google. This impacts several revenue streams for us, not only programmatic, but also to a lesser extent, direct advertising, browser-based video, which also benefit from our scale. I'll get into more detail on how this impacted our numbers and how we're responding later on. But taking a step back, when I think about the speed and magnitude of the impact of the Google changes, I'm incredibly proud about how the business and the teams responded and how our digital revenues held up, moving down only marginally to GBP 129 million. So taking all of these things together, I'm proud of the strong financial delivery across my first year here as CEO in the face of some challenging market conditions. And whilst I'll never be content until we have a growing digital business, I am pleased with the direction of travel and the momentum we've built. We foresaw the issues in the market, and we're taking the right steps to counteract them. Crucially, we've also maintained strong control of our costs and made the necessary decisions to support that profit increase to GBP 105 million. So talking about that profit, it's the right time to hand over to Darren, who will now take you through more detail on our financial performance.

Thank you, Piers, and good morning, everyone. Thank you for taking -- thank you, Piers, and good morning, everyone. Thank you for taking the time to join us today. There is quite a lot to talk about. 2025 was a year of significant delivery at Reach through which we have completed a complex transformation program and made good progress on our strategic plans, which Piers will give more color to. We've delivered a strong set of financial results despite the challenging market conditions, delivering higher profits than last year, maintaining our cost and cash discipline and consistently strong cash conversion. Following a comprehensive review, we announced complex changes to our print operations' operating model last month. This included the closure of our Saltire and Watford print sites in favor of improved utilization of our Oldham site and outsource arrangements. And I'm pleased to say we worked in collaboration with the Trinity Retirement Benefit Scheme, or TRBS, who completed a buy-in on the 12th of February with all benefits for their members now fully insured. As for our financial highlights for the year, we have continued to manage the overall decline in our revenue to GBP 518 million, a reduction of GBP 20 million. We continue our track record of proactive cost management with a reduction of costs of 5.2% ahead of the 4% to 5% range we guided to. This underpinned a 1 percentage point increase in our industry-leading adjusted operating margin of 20%. Cash generation remains robust with adjusted operating cash flow of GBP 104 million and cash conversion of 99%. And we have maintained the full year dividend of 7.34p per share. In terms of the summary financial results, revenue overall declined 3.7% across the period. Our digital revenues declined 0.9% to GBP 129 million. Our print revenues, which represent 75% of our total revenue, declined 4.6% to GBP 388 million. Operating profit increased 2.4% or GBP 3 million to GBP 105 million, and we ended the period with a GBP 35 million net debt balance. Now turning to digital in more detail. As a reminder, digital revenue is now categorized in 2 component parts, direct and indirect. This is the second time I've reported our digital performance in this way, having introduced it at the half year. These categories reflect how we think about performance internally to deliver our 3 priorities. I've included the definitions and comparatives on Page 31 in the appendix to this presentation for your information. However, I'll summarize. Direct revenues are advertising or commercial revenues generated from direct engagement with the advertiser, agency or consumer. These declined 5.9%, partly affected by the broader macroeconomic environment, in particular, impacting our local advertising business. While within direct revenues are our diversified products, which include premium subscriptions, affiliates, e-commerce and partnerships. These grew 4.5%, driven by e-commerce, particularly the success of OK! Beauty Box. Early indicators for subscriptions have been positive with 6 brands now live. Piers will talk more about this, but we continue to build our success to date and invest in growth across this area. Indirect revenues are advertising or commercial revenues, which are generated programmatically on our owned and operated websites, which we refer to as on-platform. Other platforms such as social or third party, we refer to as off-platform. Our on-platform page views currently remain our key monetization engine. Across the first half of the year, on-platform page views grew 6%. However, in the second half of the year, we saw a sharp decline in referral traffic, mainly Google. This meant that for the full year, on-platform page views declined 8%, adversely impacting our volume-driven programmatic business. Volatility in referral traffic reinforces the importance of investment in our 3 priorities. As we said at the half year, we see content viewed off-platform that is across social media platforms such as YouTube and Facebook as having an increased importance. Our monetization of these audiences has improved through both our focus and investment in this area and platforms are increasingly rewarding engaging content. Overall, indirect revenues grew 2.8%. Now turning to print revenue. Print revenue comprises circulation, print advertising and other print. Circulation revenue, which declined 3.4%, generates just over half of our total print revenues. We continue to optimize circulation revenue by carefully managing cover price increases with 3 increases implemented during the year. These increases offset the majority of the volume decline of 19%. I'll talk more about circulation performance on the next slide. Print advertising revenue declined 14.8%, but continued to outperform volume trends. This demonstrates the continuing relevance of our audiences to our advertisers. Printing and other print increased 2.6%, benefiting from one-off stand-alone products such as football souvenir editions, which we don't see repeating. Coming back to circulation. I'm often asked what gives me confidence that our operational experts can manage the volume decline in newspaper sales, recognizing that circulation is our single largest revenue stream. What can often be overlooked is that there is a large, albeit declining market of loyal and valued readership who on average buy over 0.5 million papers a day. Keeping in mind that the average age of our print readership is 52, this will remain an important revenue stream for some years to come. The chart shows key circulation data by quarter since the start of 2023. The gray shadow represents the quarterly trend of volume decline. The dark bars show the quarterly decline in circulation revenues. These are similarly consistent, typically in the low single digits with an average of 2.1% over the past 3 years. To maintain this important and resilient revenue stream, we are laser-focused on the value exchange for our readers to support the cover price increases, ensuring the product delivers engaging content, market-leading offers and promotional activity. I'll now move on to operating costs. We have a strong track record of disciplined cost management and driving cost savings, which we have delivered again. As mentioned earlier, our adjusted operating costs reduced by 5.2%. During the second half of the year, we took the decision to restructure the group to align with our 3 priorities to accelerate growth. As part of this, we have created new roles and teams which are focused on our video production, developing new commercial propositions and driving growth in off-platform audiences. We also used the restructure to drive further efficiencies, reducing headcount by 4%, which contributed to our 3.5% labor cost reduction in 2025. The 11% reduction in newsprint costs are due to reducing circulation volumes and longer and stable supply contracts. Production and sales costs were broadly in line with prior year. And key savings were made in other overheads with the reduction in utilities and a step down in the use of contributors. Now to cover cash. Our balance sheet remains strong. This slide illustrates the cash generated from our operations and where it has been allocated. Adjusted cash generated from operations remained strong at GBP 124 million, reflecting the improved profitability of the group. Our largest cash commitment is the agreed funding arrangements with our pension schemes. Pension payments totaled GBP 64 million in 2025, which included a GBP 3 million nonrecurring payment to the West Ferry Pension Scheme and GBP 4.5 million of pension contributions paid into escrow. We paid GBP 23 million of dividends as we did in the previous year. Restructuring outflows of GBP 23 million in the main relate to people changes and the significant restructure we undertook to align our group with 3 priorities. Capital expenditure of GBP 14 million is in line with our expected spend for maintenance and investment projects. We made payments of GBP 4 million for the settlement of claims relating to historic legal issues. And other includes GBP 7 million of pension-related costs, including legal fees and administration, GBP 7 million of net lease payments and GBP 5 million interest paid. And finally, we completed the disposal of our properties in Guildford, Liverpool and Teesside, which generated around GBP 4 million in sales proceeds during the period. We are not expecting any further sales in 2026. Net debt ended at GBP 35 million. As a reminder, we have in place a GBP 145 million revolving credit facility. During the year, we exercised the option to extend the term of an additional year to December 2029. I do see a few of our lenders in the audience today. Thank you for your support. Now just a reminder of our capital allocation priorities. Our approach to capital allocation remains consistent with previous years. We have resilient print profits, sustainable cash generation and a strong balance sheet, which remain our priorities as we continue to reduce our financial obligations. We have carefully invested to drive forward our priorities, including our U.S. business, our e-commerce offering and continued rollout of the improved digital platform and our new subscriptions platform as we continue to recognize the importance -- and we continue to recognize the importance of dividends to our shareholders. We take a prudent approach to managing our leverage, which is currently 0.3x EBITDA and which we do not expect to exceed 1x. Before I talk about the year ahead, I think it's worthwhile taking a step back and looking at our capital allocation history. This shows we have delivered consistent returns to our shareholders, distributing GBP 23 million every year, totaling nearly GBP 100 million since 2022. The single largest annual capital allocation priority is our obligation to fund our pension schemes. This year, we contributed GBP 65 million, which includes GBP 1 million paid into a secure bank account. Across the 4-year period, contributions to pension schemes have totaled GBP 241 million. However, these material obligations are getting close to ending. Based on the current contribution schedules in place with our pension schemes, the majority of these pension commitments will unwind in 2028, at which time, we'll see a material improvement in cash generation, giving us greater optionality. It is worth noting that the 2025 triennial valuations have started and are due to complete by 31 March 2027. Now we come to the outlook for the rest of the year. We are on track to deliver in line with market expectations for the year, albeit we expect a volatile referrer environment to continue into 2026. During the year, we expect to reduce total operating costs by 5% to 6%, which will be partially underpinned by the announced changes to our printing operations. In terms of cash, the closure of our 2 print sites will create a one-off cash cost of change of around GBP 25 million, mainly relating to severance, which is expected to be payable this year. Pension contributions in 2026 and 2027 were reduced in total by GBP 9 million due to the successful buy-in completed by the TRBS pension scheme. From a cash modeling perspective, please keep in mind that this will attract a 25% tax charge as the pension relief falls away. Also note that in 2025, we paid a nonrecurring payment of GBP 3 million to the West Ferry Pension Scheme. You can assume that capital expenditure will be similar to 2025. Our provision estimate to settle the historic legal issues is unchanged. We expect to pay the remaining GBP 5 million during 2026. No meaningful disposal proceeds are expected in 2026, with the previous property disposal program materially complete. The Saltire and Watford print sites will be marketed for sale during 2026, which we are targeting to complete in 2027. We progressed through 2026 with a clear focus, executing our 3 priorities, in particular, expanding our video offering and the rollout of subscriptions across our titles, which is key to building a more successful and sustainable digital business. Now finally, to leave you with a thought, a less constrained future is clearly within sight with increasing certainty on the resolution of our historic pension liabilities and HLI all but resolved. I'll now pass you back to Piers to cover -- or give a bit more color on the strategic focus. Thank you.

Thank you, Darren, for the detailed overview of the finances. As Darren said, I just wanted to add now a bit more color to the business and a bit more detail on some of the stuff I talked about earlier. I think sometimes it's worth getting back to basics for a minute. So I do want to talk a little bit about what drives us, what our mission is and what we seek to achieve and also highlighting the power and the scale of our portfolio. I will also get into more detail on those referral changes we talked about earlier, and I'll explain how our priorities directly address those shifts. And I'll know you want to hear about some of the progress that we've made, so I will share a bit more there as well. And finally, I will give some more context on our recent decision to consolidate our print operations, just one of the steps we've taken to move our business forward. So let's talk a little bit about our business model and talk about some of the basics of our business. Fundamentally, we are -- we connect people with where they live on and offline. So that is obviously a nod to our geographical heritage, but it is also a look to our digital future. We connect them with through their locations, but also their passions, whether that be football or indeed their values, whether it be political or otherwise. We make our revenues for advertising around the content that we create. We have over 2,000 journalists and content creators in the business, and they create content that we sell our advertising against. And that is that middle bucket there. These content creators know their stuff. They know their communities and they know their fandoms, and that's whether they're in a neighborhood in Hull or a Liverpool football supporter. And they tell these stories in a way that outsiders and AI machines never really could. As I said, we use that content to make advertise -- sell advertising against that content, whether it be print or online, and clearly, for many of our advertisers, across both. That money flows through indirect advertising, most of which is programmatic in digital, but also includes growing social revenues, as Darren has outlined, for example, from Facebook. But increasingly important is the bucket to the right, which covers the revenue streams we generate by direct relationships with our consumers, whether that be through e-commerce, of course, selling newspapers. And recently, we've added a new string to our bow here in the introduction of digital subscriptions. But before I talk about that, it is worth touching further on the power of our brands and the considerable online footprint we still have despite all the changes in our ecosystem. Some of you may be familiar with this slide, but it is worth reminding ourselves that we continue to yield market-leading scale as the sixth largest digital asset in the U.K. by audience. We have over 100 trusted brands, at least 70% of the U.K. and reaching just over 10% of the U.S. population, too. And we know from Ipsos iris data that time spent with us from our audiences increased last year 4%. So despite the page view challenge, people are still engaged with our content. We are well known for our flagship brands like the Mirror and Express and also our major local and regional titles such as the Manchester Evening News or WalesOnline. But last year, we've added new brands to that stable, too, not only the U.S. brands over recent years, but in the past few months, stand-alone brands and the likes of All Out Football, All Out Gaming and All Out Rugby League, which we launched last year and which are helping us access brand-new audiences and advertisers. We know that it's our scale combined with our local relevance and our contextual relevance that gives us an advantage, both in our relationship with our audiences, but also clearly with our advertisers as well. And on top of this, we now boast a growing global social audiences of over 110 million people across the usual platforms, YouTube, TikTok, Facebook and WhatsApp. But like many publishers across our industry, our year was marked, as I said, by a drop in browser referral traffic in H2. As I said when we spoke at the half year, we will always make the most of opportunities from referrals when they arrive, but we've only been too aware of how quickly these can change and how fickle they are. This slide gives you an overview of where we get our audiences from and how that has been changing over the course of 2025. What we see, as I said at the top, our overall reach remains incredibly strong, nearly 70% of the online audience in the U.K. But how does that reach us? Our on-platform audience, which is the traffic that comes to the platforms we own, is the largest audience for us. So for example, people coming to the Mirror or the Express websites. And within those on-platform audiences, we see 4 main referral sources, Google, social, direct and other. And this overall on-platform is where we saw the decline of 8%, as we said over the year due to these referral changes. When we talk about Google, we are mainly talking about Discover and Search. And certainly, the buzz has been around search. But for us and many publishers, the change has really been in Google Discover, which has had the far greater impact. If we look at the Google referrals, we see the number of referrals from that source declining by nearly 50%, meaning now Google represents around 35% of our on-platform number. The obvious question here is why is that change happening? Now Google is infamously opaque. Our content was doing exceptionally well here, but they are now prioritizing more user-generated content from the likes of Reddit and indeed their own networks such as YouTube Shorts. As a publisher, we are still getting a significant share, but there is less of it to go around. But looking at the other on-platform sources, the social hexagon here, we have worked to make sure that we have grown that, and we've increased our traffic that we get from that -- those sources. Referrals from the like of Facebook and WhatsApp grew 21% and now account for nearly 1/3 of our traffic. We spoke in July about the growing importance of new audiences and especially the off-platform. We've been actively focused on that through our strategy, and it's now up 20% year-over-year. Our U.S. business does particularly well here on sites like MSN and AOL. What does this mean for us going forward? Well, we're now managing our business on the assumption that our on-platform volume will not return to its former heights, certainly in the short term. On-platform is still important to us, but it's essential we spread our audiences across a wide range of sources and live up to that promise of being where our audiences are. And that will be through growing our off-platform audiences, and that is where video plays its part. But it is also making sure we balance our digital with growing our non-advertising revenue. And that is, of course, the e-commerce we've talked about before, but also the premium subscriptions, which I'll talk about a bit more later. Coming back to the priorities. As you might remember, at the half year last year, we shared our 3 strategic priorities for the first time. Connecting with our audiences is our first one, and it means something new now to what it meant, as I said, a few years ago. The size of the news market has matured. And within this, we've seen a big shift towards social and video. But also on the far right, diversifying beyond our core ad-led model was a clear priority. And we told you then we will be developing a paid subscription offering and monetizing more quality video with our partners. And in the center, central to it all is accelerating the use of tech and AI. It enables all of these changes and supports our people to be able to do their work in the best and most efficient way possible. All of these moves will make our business more efficient, more relevant to our audiences and more resilient as we move a bigger part of our revenue away from the ad-led model. I'd like to take each of these in turn now briefly. But before I do, I do want to thank the teams for their work in making all of this happen so quickly and against the challenging backdrop. The commitment and pace over the year has been exceptional, and I've really valued not only the hard work, but the ideas and the enthusiasm all of our people have brought to the table as we work together to deliver these priorities. So let's talk about connecting with audiences. When we talk about reaching people where they live, I said we don't just mean their geographical location, but it's where they spend their time online every day. It's no secret that video has and is important to us reaching new audiences, but it's worth breaking down our activities here as we've essentially taken a two-pronged approach. Firstly, we've built on our expertise and resource, investing in teams in our newsrooms of around 4 to 5 specialists, videographers and those people skilled in the art of video. These teams are tasked with embedding video in our everyday journalism and their output is largely short-form video. We now create over 300 social videos a day, and we expect this to grow. The second piece here is around our in-house studio teams and their facilities. These teams allow us to create high-quality bespoke and longer-form video content, which helps us attract new audiences with highly engaging content. So something like All Out Rugby League came from a standing start and already has a loyal engaged audience in the realm of 2 million monthly views and an average view time of 10 minutes. This price level of engagement is really attractive to advertisers. Besides the incremental revenue value video bring, having this type of content is another string to our bow when we talk to our advertisers. Our commercial teams are increasingly winning campaigns off the back of our quality video. For example, the Sky Bet partnership with All Out Football, which I'll talk a little bit more of later. But also recently, we teamed up with Tesco Mobile around Safer Internet Day to create a miniseries with celebrity, Giovanna Fletcher, talking to families about how they keep their kids safe online. Whilst we talk about content, I do always like to take a minute to reflect on some of our editorial highlights from the year. When we talk about connecting with our audiences, this is, as I said, all down to the fantastic content and stories that we tell. So here is just a short video highlighting what 2025 meant for all of our communities and readers. If we can roll VT. [Presentation]

Thank you to all the teams that created a fantastic amount of content in 2025. And I hope that video just gives you a flavor of some of the impactful reporting campaigning we do just on top of all the other engaging and sticky content we produce every day, whether that be in the local, national or indeed international arena. Coming on to our second pillar we've talked about, which is accelerating the use of tech and AI. This is absolutely critical for us to get right, not only for its own sake, but to support the delivery of all our priorities. I know there's a lot on this slide, and I will just highlight a couple of points. In large part, this is about making sure we are enabling our business to do more, to do it faster and remove a lot of the repetitive tasks. We've been able to roll out Google Gemini across the business. And we know that on any given day, around half of our people are using it for various different tasks. As I announced in July, a key priority for us has been to upgrade our data platform and ensuring that we're using all of our data as effectively as we can and as fast as we can. There's a lot going on behind the scenes here, but there's one I would like to call out, which is the rollout in beta in our newsrooms of a new content score. Our journalists deal with hundreds of increasing data points every single day. Their jobs have become way more complex than they ever have been and making judgments requires assessments of, as I said, hundreds of data points, whether that be engagement times, brand safety, scroll depth, viewability of ads, brand safety, the list goes on. It is impossible to do this on a manual basis, and we need AI to help us. Plus with the addition of digital subscriptions, we now have conversion metrics to weigh in as well. And what content score will do is will turn all of these complex metrics into a single score, helping our teams make faster and better informed decisions about the stories that will drive the best and different outcomes, whether that be for brand, engagement and subscriptions, but ultimately revenue. Now AI isn't just about how we use it. It is also about how our content is being used by the AI models around the world. This is obviously a major industry topic. And I, of course, believe there must be a fair return for content creators. Without our information, analysis, archive and indeed breaking news, AI models quickly lose their value. We're starting to see some of the tech platforms come to the table on this issue. And I'm pleased to say we've agreed a deal with Amazon, in which put simply, our content supports answers that Alexa gives to its users. This deal is interesting for us and has the potential as a repeatable model as it's not just a flat fee, but it's also based on usage. It gives us more control and crucially more visibility. Beyond this, we're in conversation with a number of major platforms, and these potential deals represent an ongoing stream of revenue, which we will continue to explore. Turning to the last strategic priority, diversifying revenues. So at half year, I told you about the opportunity I saw in paid digital subscriptions. This is an area largely untapped for us, and we know there is a growing market, which makes this exciting. I was clear then, and I'm clear now that I don't see paid subscriptions as completely replacing our core model, which is still advertising led. But I've convinced a portion of our audience would want to access exclusive content as well as better experience, better offers, better access to archives, et cetera. And with a scale audience like ours is the one I demonstrated earlier, even at a modest conversion rate, this can mean a very useful revenue stream in digital. We began rolling this out very quickly from sharing the plan at the end of July. We essentially launched our first paid subscription offering on the Manchester Evening News only 4 months later. We've now rolled it out across 6 titles in total, including the Express and WalesOnline, and we will continue to roll out the subscriptions across our portfolio. We expect another 4 by the end of March, including Birmingham and Belfast Live. As of year-end, we have around 15,000 paid subscribers, which does include some legacy subscribers from early experiments as well as new paid customers from these launches. It's worth saying, too, that this number of subscribers is on top of the 17,000 that we have with our e-edition. That product is essentially a page turn of the newspaper, which some people might access on a tablet. I'm mindful that many of our peers would include these numbers together. However, I see these as quite different categories and use cases, so we will keep them separate. So what are our ambitions here? We expect to have at least 75,000 paid subscribers by the end of the year. And during this time, we will continue to finesse our acquisition as well as, of course, our product offering for our readers. As always, our diversified revenues include e-commerce as well, and affiliates and revenues here grew 4.5%. So I wouldn't want these efforts to go unnoticed in the push for subscriptions. Our OK! Beauty Box had another sellout year, nearly doubling their sales. And meanwhile, our e-commerce marketplace, Yimbly continues to scale with over 30,000 products live. I've talked before that advertising is still key to our business despite all the priorities we're making elsewhere. And I just, as always, want to give just 3 examples of how I think our -- as I said, our unique offering of both -- of connecting audiences with where they are and leveraging our national scale and local relevance. You'll see with ALDI for their Christmas creative, we linked our market-leading entertainment content with their Kevin the Carrot to make sure we turned a fun creative into an exciting activation across our network and was able to drive purchase intent well above the industry standards. The Keep Britain Tidy was a campaign of how we can drive local action, again, in a way that no one else could, not just through our ability to target hyperlocally, but also that our teams have a real understanding of their communities, and that really brings to life the concept of where people live. And All Out Football. You've heard me talk about this before, but it's worth updating you on this piece of branded content, especially in a World Cup year. We launched All Out Football as a new channel in the autumn, featuring football talent and trusted football journalists. We're proud to work with Sky Bet on this, and it's a great example of how this kind of bespoke content can be effective for advertisers with over 14 million social views and a recall rate well above industry average. And finally, I did want to talk about our print operations. We shared some of the plans to consolidate our printing operations last month. Darren has touched on some of the financial aspects, but it's worth taking a step back to look at the rationale behind this decision because it is something we have considered very carefully over the summer and autumn months. It is absolutely not lost on me that print has served us very well for decades and continues to do so, as Darren has outlined. But there is no moving away from the fact that U.K. printed news products are in structural decline. As you can see from the map here, there are still 11 print sites around the U.K. And as that audience demand decline continues, we could see facilities and demand becoming mismatched, and we would all face excess capacity across the market. To get ahead of this, we've proposed shutting both our Saltire plant in Scotland and Watford in the South over the course of 2026. In terms of how we move forward, we've retained our Oldham facilities near Manchester, and we will move much of our Saltire work here. And we've put in place long-term outsourcing agreements to serve the printing needs that Oldham won't be taking on. Oldham is strategically located for us in a region where nearly half of our print readership is based. So in making this move, our aim is to extend the life of the remaining facility and keep it strong and efficient. We now have much more certainty around our print costs, and we've removed much of the operational risk that comes with operating these large and in some cases, aging sites. And crucially, we're able to focus all of our energies firmly on our future, which is digital. Because at our heart, despite how valuable these facilities have been in the past and the fantastic work those teams do and have done, we are not fundamentally a manufacturing business. We are and always have been a business around content and telling stories for our communities and advertisers. This underpins our mission, our focus and is what drives us. So just before we turn to questions, to sum up, we remain focused on our 3 priorities. And as the year progresses, that means more video from our newsrooms and from our studio. It means further development of AI, not just in pulling content together, but in our day-to-day business and speeding up all of our administrative tasks. It means rolling out more premium subscriptions across our portfolio and strengthening the relationship we have with our audiences who will pay for exclusive content for that better experience and offers. All of this is underpinned in the present by a focus on cash and cost, delivering on our 5% to 6% reduction in operating costs. And of course, that is supported by the consolidation of our printing operations. The continual change we've been seeing in audience behavior and declines in the traditional referrers and the rapid adoption of AI is now simply the norm. But we are not standing still. We're building the capabilities, the culture and the commercial model to lead us through this shift. Change at our scale is never easy. It demands focus yet flexibility, plus it demands speed and conviction. And whilst I won't underestimate the challenges in front of us this year, I'm confident in the actions we're taking because within this disruption lies opportunities to strengthen our brands' relationships with audience, to diversify how and where we reach them and to build a publishing business that is more resilient, more innovative and more sustainable for the long term. This will be a defining year for our industry, but we intend to define it and not be defined by it. Thank you, and I look forward to your questions.

Gareth Davies From Deutsche Numis. A couple from me. The first one, with indirect revenues, you called out the headwinds in local markets. I know that was something called out at the half year as well. Can you -- I suppose the hope had been that once we got through the budget, you might start to see a little bit of improvement there. Can you talk about how that's felt in January, February stabilization? Or is it still very tough?

Yes. Sorry [indiscernible].

Second one, the audience trend in indirect and the minus 46% decline with Google in H2, did that kind of go off a cliff in July or did it sort of build through the half? And then I suppose in terms of run rate, the assumption is it kind of continues at that level for the next 6 months. Just any thoughts there and expansion? And then final one, just in terms of subscriptions, interesting to see you're going to be at 10 by the end of March. Can you talk a little bit sort of the difference you're seeing between larger regions and some of the more specific titles? I suppose I could see why it worked for WalesOnline or Manchester, but it's interesting to see that you're going beyond that.

Okay. So just taking -- firstly, on the direct side of it. Direct obviously encompasses both our dealings with the large advertisers and the smaller regional business. There remains quite a difference between the 2. We've -- there is solid demand on our big agency business as we start the year. The local market remains a challenge. We've -- as part of the restructure, we have also changed the teams up there to focus on video for those smaller regional advertisers, again, trying to get ahead of their demand curve. There is a transition period of that, but we remain optimistic that, that will pick up. On your point, I think your next question was around Google. Really, the Google trend has not really been cliff-edge moves. It's been a general degradation since sort of the summer period. So there isn't -- you don't see massive falloffs. What you tend to see is regular decrease. So we have -- as I said, we are flowing that through into the start of the year. Clearly, the comparators are tough and will probably be so until that sort of summer/autumn period where we catch up with last year. So the tail off is more gradual, but we'll only see the benefit of that when we come through to the half year. Your other question was on subscriptions. We deliberately chose in our 6 sites a broad church of sites from the large with the Express to the midsize with the likes of, as you say, Wales, but also we've rolled out a small one in Leicester as well. So we wanted to be able to see the difference in take-ups. It's -- we're obviously learning a lot as we go. But clearly, the positive thing is there is demand across the board, whether it be big, small or medium. But clearly, some sites have a much stronger take-up. They tend to be the bigger sites, obviously, just through sheer number, but also the loyalty of the users. So you talked about Wales. Rugby is clearly a big driver for our WalesOnline audience. Express is still quite early. We're 2 weeks in, but we're off to a good start with that. But it is pleasing also to see that there is demand for the likes of the smaller sites. But clearly, the smaller sites just by definition will be less big, but there is still good constant demand. So we're pleased with all of the lessons we've taken. There are obviously different price points. The Express is slightly more expensive than some of our regions. So we will learn all the time, but we're pleased with the start that we've made.

It's Nick Dempsey from Barclays. So just to dig into Google a bit more. So we've got Google Discover and Google Search. And I can see why Google Search would be weak with AI summaries, bit of a change to the structure of everything. But Google Discover, what have you been seeing there? Has that got worse? Have they changed the algorithm? And what visibility do you have on Google Discover, any changes, et cetera, this year? Second question, so do we have to wait until the triennial review is complete end of March '27 to have 100% confidence on those pension top-up numbers that you're talking about going down to GBP 15 million in 2028? And then the third question, you've been managing the declining circulation in print with cover price increases for quite a while. So are there any signs at all that those increases will be harder to put through? Is there a place GBP 2.50, GBP 3 or something where we kind of hit a cap and we can't keep doing that?

Okay. Thank you. I'll take the first. Darren, you can take the second and third. On the patterns between Discover and Search, as I said in the script, Discover is a larger portion of it. Search is relatively stable. Actually for us, it is a smaller part, but it is still a little bit under pressure. The big change has been around Google Discover. That is their publisher showcase. We're not alone. Many global publishing companies have talked about the changes of that. We have engaged with Google. They share some of their sort of intention/plans around it, whether they match up with reality is another question. But their focus has been, as I said, they want to focus more on UGC and video. And again, that maps to the fact that we need to do more video as well to make sure we can cater for it. There are some positive signs. They talk a lot about the importance of local relevance. We're yet to see that flow through, but we will continue to engage with them and take what lessons we can and obviously look at the real-time data that we get from that bucket. But it remains volatile for publishers. And as I said, we need to plan for continued changes in that space. Do you want to take the other?

Yes. So on the triennial, Nick, so I've certainly got an ambition to get it done earlier. The regulatory deadline is 31 March 2027. I have spoken to all of the pension scheme trustees before Christmas and just put to them, do we sort of try and make this a quicker process, which they're all aligned to. They are tackling new regulatory requirements around the covenant that came out from the [ TPR ] prior to this triennial starting, so they'll be dealing with those. But I certainly will be working hard to get those completed as early as we can as possible as that may be. But yes, the deadline -- the regulatory deadline is March. On the declining print, so one of the reasons I put that slide up today was just to give a bit of a sense of how they performed over the last 3 years. You can see there's consistency there across those 3 years. We will continue to do them, and we believe that they can continue to be absorbed. We do a lot of work planning for these. We -- in terms of making sure the product is giving value back to the customers. So yes, we believe we can continue to use that as a lever to manage our print decline.

Any other questions from the room? Jo, you've got some from online?

Yes. I've got a couple of questions here from Johnathan Barrett, Panmure Liberum. Is it reasonable to assume or do you have plans that assume the company maintains the current dividend through '26 and '27 and then assuming satisfactory triennial pension reviews consider an increase in the step-up in free cash flow?

Do you want to take the dividend question?

So our capital allocation priorities are clear. We certainly want to give returns to shareholders. We will continue to review our dividend as we go through each half year, each full year. But at the moment, I think our capital allocation priorities are quite clear.

Can you talk us through the timing execution of the content score? Will this also enable greater internal efficiency?

Yes. The content score, as I said, is rolled out in beta across a couple of newsrooms. So the intention is to take the learnings from that and then roll out as quickly as possible. It's fundamental basis is if we believe that our on-network audience is going to be smaller, we need to make sure that the stuff we're producing is delivering the right value. And that doesn't necessarily always mean financially, it could be for brand reasons, engagement, but it is to make sure that our teams are focused in producing the right content with the right amount of effort. So in a way, yes, it drives efficiencies, but it's not about designing or taking resource out. It's just about making sure that our people are smarter and can make better decisions because at the moment, in truth, whilst we have a lot of retrospective data, that's great, but it doesn't help you in the moment if you're making decisions on a real-time basis in the newsroom.

Should we expect further volume growth in video releases?

Yes. So part of the requirement on the video is that we need to produce more video. By definition, there is always an element of more volume will deliver better results. So yes, our output in our -- both in our everyday journalism and also our studio facilities will only improve. As I said at the half year, AI is going to help us on that production side of it as well. Clearly, the ability to cut and edit long-form video, the effort and the cost that is required maybe 5 years ago is exponentially less this year. So it is all about making sure we've got the right amount of people in the newsrooms producing more video content.

I've also got 3 questions in from Chris [ Morley ]. Firstly, one relating to the 2 print site sales. When these are sold, what plans do you have for the disposal proceeds?

So as we have with all of the disposal proceeds, which we've had coming in from sales over the years, this just becomes a part of our cash that we use and we apply through our capital allocation priorities. So it just becomes a part of our normal operational cash.

A question on AI. What actions are you taking to protect content from AI abuse, ensuring that Reach receives fair value for the content?

So I touched a little bit this on the presentation. We're engaged with all of the major platforms. We firmly believe that, that content, we have the right to receive the fair value. As I said, we've seen positive moves in the likes of Amazon. We're engaged in good conversations with Google and [ Metas ]. There are some tougher conversations with some of the other organizations. So we will keep our options open about how we proceed them. But we absolutely, both through engagement with government, but also clearly our engagement with those platforms direct that we are seeking to make sure we get fair value.

And last one. How will you address the fall in referral volumes and decline in on-platform page view numbers?

Well, clearly, I mean, a large part of the presentation today was about making sure we have set out the priorities are a direct -- almost a direct response to that to make sure we continue -- yes, we will continue to push on-platform. It's really important that we're not -- that is still an important part of our business, but we recognize both off-platform, making sure we grow that as much as possible and then also generating revenues in different ways and the diversification. Those things combined will help us insulate from more referral disruption. Any other questions either online or from the room? No? Well, in which case, thank you very much for taking the time today online or in person, and I will speak to you all soon. Bye-bye.

Thank you.