Reach PLC, the publisher of The Mirror, the Daily Express and the Daily Star has confirmed that it will furlough nearly 1,000 staff, and withhold dividend payments.
Reach has announced that a number of key actions to safeguard the health and well-being of its employees had been taken, while it continues to serve customers by maintaining all business operations during the current COVID-19 crisis. It said that the actions it has taken 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.
In a statement to the stock market, the company said; “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.”
The company went on to outline the measures it is taking to safeguard its future.
All members of the Reach PLC Board, along with some members of the most senior editorial and management team at Reach, 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.
It will be communicating 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.
Reach PLC Dividend Payments
The Board of Reach PLC will no longer propose a final dividend for the financial year ending 2019. While the Board said it recognises the importance of dividends to shareholders, it said that given the uncertainty around the current crisis and the fact that the company is accessing the Government’s Job Protection scheme, 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.
On the current position of the business, Reach said that 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 said that it 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.
Impact on Business
The Board of Reach has that it believes the measures it has taken 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.
The company confirmed that its key national and regional publications will continue to operate despite the measures it has put into place, and added that it has sought to spread the burden of these actions across all stakeholder groups.
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.”
The company said it will continue to monitor the impact of this crisis on the Group, and recognised that the situation is fast evolving.
The National Union of Journalists has responded to the move, and in a statement said that “approximately 4,700 staff, meaning around 940 employees being furloughed, and at this stage the company has not made specific figures available on how many editorial staff will be affected. The company has said furloughed staff will receive 90 per cent of their existing pay.”
Michelle Stanistreet, NUJ general secretary, said: “This is yet another blow to journalists as they struggle to cover the biggest story in generations and it will hit our members hard as they do this while coping with working from home and looking after their loved ones.
“We are in discussions with the company about the measures they have announced to staff today and will engage fully with them about these provisions and how management seeks to apply them.
“As a union, we will be taking extensive feedback from our members and chapels in the coming days and weeks to make sure whatever is asked of them is fair and proportionate. We have been given assurances that the company regards these as temporary measures and it is important that this is monitored closely to make sure the situation returns to normality as soon as possible.”