Reach (RCH)

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Formerly Trinity Mirror – A national and regional news publisher engaged in producing and distributing content through newspapers and associated digital platforms.

9-Oct-2017

Trading Update For Q3 2017 – Confident that performance for the year will be in-line with expectations. Has bought back £9m in shares in the past 12 months and started paying down the pension deficit (which I think is £400m+). And, also progressing discussions to acquire 100% of the publishing assets of Northern & Shell.

Can’t help but think this is positive news for a company yielding 6.5%+ on a PER of 2.45. Cheap if you accept the risks; the print sector (is not in terminal decline) and the pension deficit (can be sorted).

15-Dec-2017 – 71.75p – £196.2m – PER 2.11

Trading Update – In-line. Buy Back of 10m shares in November. Pension scheme contributions to rise £8m to £44m for the next 10 years.

Really cheap now. The pension deficit is HUGE and it seems this is priced to reflect the fact the print sector is in terminal decline. However, there will probably be a need for print for the next few years and that pension contribution is around the 50% of PBT mark. The circa 8% Dividend is well covered and there’s no mention so far of it being cut. Interesting enough but will wait to see the next results.

9-Feb-2018 – 69.8p – £190.9m – PER 2.05

Trading Update For The 12 Months To End December 2017 – Board expects FY Adjusted Results to be marginally ahead meaning Group Revenue will be down about 9%. Print is almost but not quite being supported by growth on-line. Net Debt circa £10m, seems to have almost halved. Pension Deficit expected to be £378m, down £88m. Final Dividend of 3.55p per share proposed – This, together with the Interim Dividend, gives 5.8p per share (a 6.4% increase). Outlook in-line with market expectations.

So cheap! But there’s that Pension Deficit and the terminal decline of the print sector (although on-line is almost compensating now). That 8% Dividend is well covered and looks like it’s going to be maintained. Looking a little more tempting here.

5-Mar-2018 – 75.5p – £225.9m – PER 2.22

Results For The 12 Months To End December 2017 – Revenue down by 12.6% to £623.2m (weak print trading environment – Digital Revenue up 7% to £83.9m), Operating profit of £124.7m (statutory is reported as up 4.7% to £97.9m), EPS 36.1p versus 38.1p last time. Pension down by £88.4m to £377.6m, Net Debt down from £25m to £9m and the Final Dividend increase of 6% means a total of 5.8p for the year. “Board remains confident that our strategy will meet our objective to deliver sustainable growth in revenue, profit and cash flow over the medium term”.

Even with the Pension Deficit overhead and the terminal decline of the print sector, could this turnaround to be a decent on-line player? It’s a gamble but with that well covered Dividend circa 8%,decrease in Pension and Net Debt, Northern and Shell acquisition and improvement in on-line Revenue – Considering a small opening position, if I don’t it will be on my Watchlist at 70p.

3-May-2018 – 86.5p – £258.9m – PER 2.38

Trading Update For The 4 Months To End April 2018 – In-line (although everything seems down), Net Debt £85m (before payment of £10m Dividend), expects 2018 will be another year of progress.

Still quite a few negatives here – The Pension Deficit, the terminal decline of the print sector and the integration of Northern and Shell. The Dividend now equates to about 7% and it’s unloved on a PER of 2.38. This is a bit of a tricky update to fully understand so although this was on my Watchlist at 70p, for now I am going to go Neutral.

30-Jul-2018 – 72.8p – £217.9m – PER 1.94

Financial Report For The 26 Weeks To The 1st July 2018 – Revenue up 10% with a Statutory Loss of £107.3m (£150.0m impairment charge). Pension deficit is down from £80.6m to £297m and the Interim Dividend will be paid, 2.37p versus 2.25p last time. FY in-line with market expectations.

I just can’t get away from the Pension Deficit, the terminal decline of the print sector although some might fancy the 8% yield! I will remain Neutral for now.

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