AmazonScience/document-haystack

12023 VIABILITY 2STATEMENT3In accordance with the UK Corporate Governance 4Code the directors have assessed the Group’s 5prospects over an appropriate period of time 6selected by them.7The directors assessed the prospects of the Group 8over a three-year period as it enables thorough 9consideration of the investment required to drive 10growth in digital and the impact of declining print 11revenues, and this time period is deemed to 12appropriately reflect the evolving environment in 13which the Group operates. The assessment took 14into account the Group’s current financial position, 15principal and emerging risks and uncertainties 16facing the Group which have the greatest 17potential impact on viability in that period.18When approving the annual budget, projections 19for the next two years are also considered. The 20annual budget is also used by the Remuneration 21Committee to set targets for the annual incentive 22plan. The directors also consider projections for the 23next 10 years used in connection with the Group’s 24impairment review.25Scenario Associated principal risk(s) Description26Significant revenue 27reduction28Deceleration of digital 29growth alongside 30acceleration in decline 31of print revenues32Material reduction in digital and print revenues  33(net of direct cost reductions) compared to the 34three-year plan of 10% per annum.35Adverse changes in 36external environment 37leading to lower than 38expected revenue 39and higher than 40expected costs41Deterioration in 42macroeconomic 43conditions44Supply chain disruption45Inflationary pressure in relation to energy and 46newsprint costs, together with key supplier failure  47in the manufacturing business.48Cyber security breach Cyber security breach49Data protection failure50Damages to brand 51reputation52An external cyber attack which leads to breaches 53of confidential data and interruption to our systems 54and services, resulting in a material reduction in page 55views and subsequent digital revenues, together with 56additional investigation and remediation costs whilst 57the attack is rectified, in addition to associated 58regulatory costs and fines.59A number of key assumptions were made in 60generating the baseline three-year forecast 61as follows:62• digital growth supported by investment in 63the Customer Value Strategy;64• print revenue declines with reference to 65recent trends and reduction in related costs;66• overall stability in total revenues and 67operating profit;68• funding of the historical defined benefit pension 69obligations based on the existing schedule of 70contributions agreed with the Trustees;71• payments in relation to historical legal and 72tax issues reflecting the provisions held in the 73balance sheet;74• covenant compliance on existing financing 75facilities; and76• dividend payments in each year.77The assessment was undertaken recognising the 78principal risks and uncertainties that could have the 79greatest potential impact on viability in that period. 80A number of hypothetical scenarios have been 81modelled. While each of the principal risks on 82pages 68 to 72 has a potential impact and has 83been considered as part of the assessment, only 84those that represent severe but plausible scenarios 85were selected for modelling, summarised opposite:86These scenarios were assessed individually and 87in unison to understand our capacity for each 88risk incident and further stress test viability. The 89modelling showed that the Group would be able to 90withstand the impact of these scenarios occurring 91over the assessment period. The Board also assessed 92the likely effectiveness of any proposed mitigating 93actions. This did not change the conclusions of 94the assessment.95The Strategic Report was approved on behalf of the Board on 5 March 2024.96Darren Fisher97Chief Financial Officer985 March 202499Based on the above, the directors have a 100reasonable expectation that the Group will 101remain viable and be able to continue operations 102and meet its liabilities as they fall due over the 103three-year period considered.104Such future assessments are subject to a level of 105uncertainty that increases with time and, therefore, 106future outcomes cannot be guaranteed or 107predicted with certainty.10873109Reach plc Annual Report 2023Strategic Report Governance Financial Statements