The update from Reach PLC:
On 26 March Reach PLC announced a number of key actions to safeguard the health and wellbeing of our colleagues, while continuing to serve customers by maintaining all business operations during the current COVID-19 crisis. These actions have been executed swiftly and efficiently and all our print and digital publications continue to be produced without interruption, delivering high quality editorial content at this crucial time.
There continues to be uncertainty around the severity and length of the crisis and the resulting impact on Reach in terms of advertising, print circulation and events. As a result Reach has suspended guidance for the financial year 2020 and beyond. However, we have taken a number of cash conservation measures including removal of discretionary spend, appropriate renegotiations with suppliers, cancellations of orders and negotiated payment delays.
Further to this we are today announcing a number of new cost mitigation measures. All of these actions will be subject to ongoing review in the light of the crisis and its continued impacts or any improvement in the current environment.
KEY ACTIONS TO MITIGATE COSTS AND CONSERVE CASH
All members of the PLC Board, along with some members of our most senior editorial and management team, will take a pay reduction of 20% effective immediately. All company bonus schemes for 2020 have been suspended and the Board retains its discretion over the Long Term Incentive Plan. We will also be communicating today with Reach employees regarding a 10% pay reduction (while ensuring no employee falls below Living Wage) and for 20% of Reach colleagues to be furloughed under the Government's Coronavirus Job Protection Scheme in the UK. We will also register for the Temporary Wage Subsidy Scheme in Ireland.
The Board has agreed that all stakeholder groups should be asked to contribute to ensuring the company is in as strong a position as it can be and as a result the company has requested discussions around a deferment of current contributions to all the group pension funds.
After due consideration, the Board has decided it will no longer propose a final dividend for the financial year ending 2019. While the Board recognises the importance of dividends to shareholders, given the uncertainty around the current crisis and the fact that the company is accessing the Government's Job Protection scheme it has been decided that it would be inappropriate to pay a dividend at this time. Any future decisions regarding the interim dividend for the financial year ending 2020 will be taken at the appropriate time in the light of the duration and impact of the current crisis.
BALANCE SHEET AND LIQUIDITY
As noted in our recent update, the business came into the year with a robust balance sheet position and confirms that it continues to have adequate liquidity. As a result of strong cash generation in 2019, the prior year net debt balance had become net cash of £20.4m and new 4-year revolving banking facilities of £65m are in place (with a 1.75x EBITDA covenant). The business has a proven track record for disciplined cost control and strong cash management, which will continue to be vital in the current uncertain trading environment.
Our AGM is scheduled for 7 May and a further announcement will be made in due course to detail arrangements.
IMPACT ON BUSINESS OPERATIONS
The Board believes these measures represent the most appropriate and responsible course of action in the light of the ongoing uncertainty around the length and impact of the current unprecedented crisis. All of our key national and regional publications will continue to operate at this vital time despite these measures and we have sought to spread the burden of these actions across all stakeholder groups. We continue to monitor the impact of this crisis on the Group, recognising that the situation is fast evolving.
Commenting on today's announcement Jim Mullen, CEO of Reach PLC said: "These are very challenging times and I would like to thank all our colleagues at Reach for their support and commitment. It remains difficult to predict the duration and long term impact of the crisis on our sector so it is key we take proactive measures now on cost to protect jobs and the Reach business for the long term."