Mirror and Express publisher Reach has suspended its interim dividend for the six months to June, after a national lockdown during the pandemic bit into sales and hammered revenue at the newspaper owner.
Revenue slipped 17.5 per cent to £290.8m in the six months to 28 June at the newspaper publisher, down from £352.6m last year.
Print revenue plummeted 20.1 per cent year-on-year to £241m over the period, after circulation revenue slipped 11.5 per cent and the harder-hit print advertising declined 31.9 per cent.
Operating profit dropped 23 per cent to £54.9m over the half-year, down from £71.3m last year.
The group said it “continues to maintain a strong balance sheet”, with a positive net cash balance of £41.9m “reflecting the cash generation of the group during the crisis and providing a level of protection in the event of any further extensive lockdowns”.
Earnings per share slipped 25 per cent to 14.6p, down from 19.1p in the same period last year.
The publishing group suspended its interim dividend “due to Covid-19 uncertainty”, adding that it would resume cash dividends “at an appropriate time [and] subject to market conditions”.
It has instead proposed a special dividend in the form of a bonus share issue “in lieu of and with a value equivalent to, an interim dividend of 2.63p”, which shareholders will vote on shortly.
Why it’s interesting
The outbreak of coronavirus in the UK wiped out a strong start for the publishing group, with the announcement of a national lockdown decimating advertising revenue and circulation numbers — even at a time of increased news consumption.
Group revenue plummeted 27.5 per cent in the first three months of the year, followed by a steeper slump of 30.5 per cent year-on-year in April, when the impact of Covid-19 was at its worst.
The company said in July it would cut about 550 jobs, equivalent to roughly 12 per cent of its workforce, as the group attempted to preserve cash in the wake of the crisis.
However, Reach has seen a slight improvement over the last three months, with the publishing group announcing it has restored some financial health from “gradual improvements in circulation revenue”.
The company’s digital business grew 12.9 per cent over the last three months, helped by the Mirror’s high-profile scoop on the Prime Minister’s chief aide Dominic Cummings flouting lockdown rules to drive to Barnard Castle.
Reach, which also own titles including the Newcastle Chronicle, Daily Star, Liverpool Echo and Bristol Post, said it is now the fifth-largest platform in the UK after Google, Facebook Microsoft and Amazon.
The publishing group saw 42.9m unique visitors in August and a digital market share of 63 per cent of the UK’s regional publishing audience.
Shares hiked 19 per cent to 76p at market open this morning as the group said it is now performing “materially ahead of market expectations”.
Analysts at Numis said both adjusted operating and pretax profit for the first half comfortably beat their expectations.
What Reach said
Jim Mullen, Reach chief executive, said:
“We have seen a strong recovery in the digital advertising market since the worst impacts of Covid-19 in April which has driven a return to healthy digital revenue growth since July, assisted by increased customer engagement and loyalty.
Following the implementation of the major parts of the transformation programme, Reach now has a strong foundation to drive the next phase of the customer value strategy with increased efficiency and agility in our advertising and editorial operations.
Award-winning journalism and content enable our news brands to shape the daily conversations of millions of people.
With the business currently performing materially ahead of market expectations, the Board is recommending an issue of bonus shares to shareholders.”