Southern Cross Media Group Limited · ASX:SXL
Southern Cross Media — Macquarie Australia Conference 2018
27 slides from Southern Cross Media's conference presentation, May 1, 2018
Slide 1: Southern Cross Austereo Investor Presentation to Macquarie Australia Conference 2018
ASX RELEASE 1 MAY 2018 SOUTHERN CROSS AUSTEREO INVESTOR PRESENTATION TO MACQUARIE AUSTRALIA CONFERENCE 2018 Please see attached a copy of the presentation being delivered by Grant Blackley to the 2018 Macquarie Australian Conference on Tuesday 1st May at 4.00pm. For further information, please conta
Slide 2: Macquarie Investor Conference
SOUTHERN CROSS AUSTEREO Macquarie Investor Conference Grant Blackley, CEO 1 May 2018 1
Slide 3: Disclaimer
DISCLAIMER Summary information The material in this presentation has been prepared by Southern Cross Media Group Limited ABN 91 116 024 536 (“Southern Cross Austereo”) and contains summary information about Southern Cross Austereo’s activities current as at 1 May 2018. The information in this presen
Slide 4: SCA's Winning Aspiration
SCA’s ‘WINNING ASPIRATION’ Winning Aspiration “SCA is an entertainment company that seeks to deliver market-leading value-creating brands. Leveraging off our core competencies we provide content and insightful services that bind communities together to facilitate rewarding interactions. As a result
Slide 5: SCA Core Asset Base
SCA CORE ASSET BASE METRO REGIONAL NATIONAL 10 metro radio stations TV affiliation in 94 websites + apps, 68 regional plus a Digital radio regional Australia digital agency & new radio stations network (excl. WA) out of home network 4
Slide 6: Southern Cross Austereo
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Slide 7: Strategic Vision - Core Competencies
STRATEGIC VISION - CORE COMPETENCIES SCA has developed a corporate strategy that leverages its core competencies: • National reach of over 95% of Australians – strong brand amplification • Localism – SCA is focussed on providing What localised content and in connecting makes communities SCA? • Brand
Slide 8: Strategic Vision - Core Attributes
STRATEGIC VISION - CORE ATTRIBUTES SCA core competencies are further supported and activated by: • Our People – over 2,500 skilled people in 60 offices throughout Australia • Sales co-ordination – the largest sales What team in Australian media – circa 800 makes sales experts with multi-asset SCA? m
Slide 9: SCA Strategy – Four Key Pillars
SCA STRATEGY – FOUR KEY PILLARS CONTENT DISTRIBUTION MONETISATION NEW GROWTH Ensure an improved Monetize all available Explore non-audio Optimise key audio audio experience for audience efficiently entertainment in assets our audience with clients growth markets 8
Slide 10: Radio Is a Growth Platform
RADIO IS A GROWTH PLATFORM Radio audience growth supported by population increases, portability of radio (home, car, work, mobile) and underpinned by targeted investment in local content Cumulative Audiences (All People 10+) 10.2m 10.1m 9.9m 9.8m 9.6m 9.3m 9.3m 9.1m 8.9m 8.7m 8.8m 2007 2008 2009 201
Slide 11: Digital Radio Adding New Growth
DIGITAL RADIO ADDING NEW GROWTH 3.8m DAB+ 47% of new Expanding into devices (+24%)1 vehicles have DAB+2 regional markets - Canberra and Hobart in 2019 Notes: 1 CRA December 2017, increase of 24% year on year, 2 CRA, increase from 34% at September 2016 10
Slide 12: Metropolitan Radio – Strong & Improving Assets
METROPOLITAN RADIO – STRONG & IMPROVING ASSETS • Australia’s largest network – targeting Women 25 – 54 • 2DAY Sydney Breakfast – greatest challenge – strongest opportunity – 2 surveys and “green shoots emerging” • Expanded drive offering enhanced premium revenue opportunity • Early Drive (3.00 - 4.3
Slide 13: Digital Radio Expands Audience Reach
DIGITAL RADIO EXPANDS AUDIENCE REACH 4,550,000 Listen to SCA’s FM Network 303,000 Listen to only both SCA’s FM and 344,000 Digital Radio Listen exclusively to SCA’s Digital Radio Network only Source: GFK audience survey 2, 2018 12
Slide 14: Podcasting Is a Rapidly Growing Medium
PODCASTING IS A RAPIDLY GROWING MEDIUM US market forecast to grow to Podcasting AD Spend Trends 1 534 over $500m by 2020 411 316 243 190 2016 2017 2018 2019 2020 Australian podcasting usage Monthly Podcasting Usage2 26% 24% benchmarks strongly against US 21% 18% 17% market 11% 12% 12% 14% 12% 15% 9%
Slide 15: Podcast One – Premium Original Content
PODCAST ONE – PREMIUM ORIGINAL CONTENT 25,000,000 PodcastOne Downloads: Weekly & Cumulative 1,400,000 • Over 22.5 million downloads since 20,000,000 1,200,000 launch 1,000,000 • 35 unique podcasters, 15,000,000 500+ episodes to date 800,000 • Focus only on unique 10,000,000 600,000 original content
Slide 16: Quality Regional Asset Base – Regional Radio
QUALITY REGIONAL ASSET BASE – REGIONAL RADIO Regional Radio – “the consistent performer” Annual Revenue ($'m) 174.5 169.0 159.3 154.7 153.2 2013 2014 2015 2016 2017 15
Slide 17: Quality Regional Asset Base – Regional TV
QUALITY REGIONAL ASSET BASE – REGIONAL TV Regional TV – “step change in monetisation” Commercial Share & Power Ratio 1 50.0% 1.20 1.06 1.09 1.03 0.95 0.96 1.00 40.0% 38.1% 35.8% 32.8% 0.80 30.0% 21.7% 0.60 20.8% 20.0% 0.40 10.0% 0.20 0.0% - H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 1 Source: KPMG regi
Slide 18: Regional Markets – Digital Media Advice
REGIONAL MARKETS – DIGITAL MEDIA ADVICE • Digital Media Agency – established 9 months ago • 19 dedicated digital experts – serving 19 regional markets • Trusted advisor – establishing an “eco system” including web design, e-commerce, social media and search engine optimisation • Servicing SCA’s exte
Slide 19: Regional Out of Home Entertainment
REGIONAL OUT OF HOME ENTERTAINMENT • Development and trial phase of innovative partnership with QIC • High impact screens located throughout food courts • Bespoke local content and advertising • Trial covering 6 large format regional malls • Revenue share model – QIC investing capex – SCA responsibl
Slide 20: Regional Markets – New Client Investment Phase
REGIONAL MARKETS – NEW CLIENT INVESTMENT PHASE • 40% of Australians live & work in Regional Australia • Key markets: Newcastle, Gosford, Canberra, Gold Coast, Townsville & Hobart • Years of underinvestment in regions by national advertisers • Education is the key – “The Economic Benefit of Investmen
Slide 21: A Smarter Workplace – Positive Cost Implications
A SMARTER WORKPLACE – POSITIVE COST IMPLICATIONS Radio playout system System consolidation National SCAsat radio Unified sales and improving content creating standardised distribution booking systems ingest processes New Television playout TX replacement system underway – CRM upgrade driving Automat
Slide 22: Debt Reduction Program – Stronger Balance Sheet
DEBT REDUCTION PROGRAM – STRONGER BALANCE SHEET $m's Net Debt • Debt Reduction Program has been a priority for the company in last two 472.6 years • Stronger Balance Sheet – platform for 347.8 investment and growth 324.8 • Cycling out of low to negative growth and “back of house” assets • 43% reduct
Slide 23: Cashflow – SCA Cash Conversion Leads the Sector
CASHFLOW – SCA CASH CONVERSION LEADS THE SECTOR (Cash from Operations less CAPEX) to EBITDA1 72.3% 61.7% 56.4% 55.6% 54.5% 48.9% 39.9% SXL Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 1 Data represents last twelve months to December 2017. Source: company filings 22
Slide 24: Sustainable Dividend Policy
SUSTAINABLE DIVIDEND POLICY Dividend Paid (cps) • Dividend payout policy 65% - 85% range of NPAT • Strong cash generation supports 4.00 payout ratio to shareholders 3.00 3.50 • Modest capital investment for earnings growth sourced from cashflow (e.g. Digital Radio Portfolio, PodcastOne and Quik 3.75
Slide 25: Trading Update
TRADING UPDATE • Advertising markets remain consistent with growth expectations similar to H1 • SCA H2 group revenue growth forecast to be 2.5 – 3.5% v p.c.p (excl. NNSW TV) • Regional assets continue steady growth on p.c.p • Metro radio had weaker end to Q3 than expected but pacing stronger in Q4 •
Slide 26: Conclusion
CONCLUSION Clearly defined corporate strategy guiding execution of operating plan • Radio audiences increasing • Digital radio providing growth platform Focus on growing audio assets • Podcasting creating complementary audio on-demand revenue stream • Consistent growth in regional radio Strength of
Slide 27: Southern Cross Austereo
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Southern Cross Media Group — Macquarie Australia Conference 2018 on 6ix