Southern Cross Media Group Limited · ASX:SXL
Southern Cross Media — Investor Presentation (August 2019)
34 slides from Southern Cross Media's investor presentation, Aug 22, 2019
Slide 1: Southern Cross Austereo FY19 Investor Presentation
Southern Cross Austereo FY19 Investor Presentation 22 August 2019
Slide 2: Disclaimer
Disclaimer Summary information The material in this presentation has been prepared by Southern Cross Media Group Limited ABN 91 116 024 536 (SCA) and contains summary information about SCA’s activities current as at 22 August 2019. The information in this presentation is of a general background natu
Slide 3: FY19 Results
FY19 Results Grant Blackley
Slide 4: Executive Summary
EXECUTIVE SUMMARY SCA has delivered a strong result in a challenging media environment Audio is a vibrant and growing sector - digital audio remains at the forefront of that growth SCA outperformed the market in both Audio and Television Strong cost discipline demonstrated across the year in F
Slide 5: Group Results Summary
GROUP RESULTS SUMMARY $ millions FY19 FY181 Var. • Underlying Net Profit After Tax grows 3.1% to $76.2m Revenue 661.0 657.8 0.5% EBITDA 147.4 158.4 (7.0%) • Group revenue up 0.5%, with Audio segment growth offsetting weaker Television revenues Underlying EBITDA2 159.9 158.4 0.9% Underlying NPAT2 76.
Slide 6: Headline Achievements
HEADLINE ACHIEVEMENTS • Group revenue up 0.5% against a challenging media market. Sales • Audio revenues increase 2.4% - driven by a strong 9.2% increase in national revenues Performance • Television revenues outperformed the market - up 3.9% in Q4 (aided by the federal election) • Digital audio opp
Slide 7: FY19 Financial Results
FY19 FINANCIAL RESULTS Nick McKechnie
Slide 8: Group Reported Statutory Results
GROUP REPORTED STATUTORY RESULTS $ millions FY19 FY181 Var. • Underlying NPAT up 3.1% to $76.2m Revenue 661.0 657.8 0.5% • Group revenues up 0.5% - led by Audio revenues up Expenses (513.6) (499.4) 2.9% 2.4% EBITDA 147.4 158.4 (7.0%) Underlying EBITDA2 159.9 158.4 0.9% • Group expenses up 2.9% inclu
Slide 9: Group Underlying Results
GROUP UNDERLYING RESULTS $ millions FY19 FY181 Var. • Transmission Services Agreement - $9.2m non- Reported EBITDA 147.4 158.4 (7.0%) cash significant item relating to sale of assets Significant Items 9.2 - nm upon outsourcing of transmission services Restructure Costs 3.3 - nm • Restructuring Charg
Slide 10: Cashflow
CASHFLOW $ millions FY19 FY18 • Quality of Result - consistently high delivery of Opening Cash 56.1 49.0 operating cashflow with free cash conversion Cash from Operations 144.9 144.1 of 91% Tax Payment (34.6) (34.8) • FY19 cash capex of $27m will reduce in FY20 Net Payments for Non-Current Assets (2
Slide 11: Consistent Cashflow Generation
CONSISTENT CASHFLOW GENERATION Cashflow Pre-Dividend and Non-Recurring • Strong cashflow generation maintained while Items transforming the business of SCA 70.0 66.2 67.4 • Audio earnings over last three years have NNSW increased from ~75% to 86% of EBITDA TV (pre-corporate costs) • Core Audio earni
Slide 12: Strong Balance Sheet
STRONG BALANCE SHEET • Net debt further reduced by $11.3m to Net Debt $292.6m through use of free cashflow 340.2 • Credit Metrics: • Leverage Ratio 1.76x - within 321.0 company target range of 1.5x to 2.0x • Interest Cover Ratio 13.0x 303.9 $m's 292.6 • Balance Sheet strength continues to improve -
Slide 13: Dividend Maintained
DIVIDEND MAINTAINED Dividend Paid (cps) • Full Year dividend maintained at 7.75 cents per share, fully franked • Dividend payout policy range unchanged 4.00 4.00 4.00 at 65% - 85% of NPAT 3.50 • Strong cash generation supports stable shareholder returns 3.75 3.75 3.75 3.25 FY16 FY17 FY18 FY19 Interi
Slide 14: Operational Review
OPERATIONAL REVIEW
Slide 15: Operational Review
OPERATIONAL REVIEW $ millions FY191 FY182 Var. • Underlying EBITDA up 0.9% to $159.9m Audio Revenue 453.4 442.7 2.4% Television Revenue 206.5 213.4 (3.2%) • Group revenues up 0.5% to $661m Corporate Revenue 1.1 1.7 (33.1%) Total Revenue 661.0 657.8 0.5% • Audio segment delivered EBITDA growth Audio
Slide 16: Audio - Overview
AUDIO - OVERVIEW $ millions FY191 FY182 Var. • Underlying EBITDA improved 3.4% from $147.7m to $152.7m Total Revenue 453.4 442.7 2.4% • Underlying EBITDA margins improved to 33.7% Broadcast & Production (25.6) (23.1) 10.8% • Employee costs reduced year-on-year led by Employee (155.3) (156.5) (0.8%)
Slide 17: Audio – Metro Advertising Revenues
AUDIO – METRO ADVERTISING REVENUES • SCA achieves stronger revenue share in every 236.4 227.0 quarter – after posting metro revenue growth of 4.2% or $9.4m. The broader radio market for 55.7 FY19 was back 0.5% 60.8 • National revenue growth was up 8.8% or $14.5m led by improving FM performances coup
Slide 18: Audio – Regional Advertising Revenues
AUDIO – REGIONAL ADVERTISING REVENUES • Regional radio revenue grew 1.5% or $2.7m – 184.7 187.4 driven by a substantial increase in national revenues • National advertiser investment in regional radio 113.7 was up 10.6% or $7.1m 118.1 • The industry trade marketing campaign $m's “Boomtown” is drivin
Slide 19: Audio – Podcasting
AUDIO – PODCASTING • Investment in PodcastOne Australia will pay CONTENT YOY GROWTH dividends. Expected to be cashflow breakeven during H2 FY20 – after FY19 net investment of Australian Creators +44% $1.6m • Leading premium original podcast company – Episodes Produced +82% employing 65 unique Austra
Slide 20: Audio - Premium Podcasters P1A Australia
AUDIO - PREMIUM PODCASTERS P1A AUSTRALIA • PodcastOne network built on growing premium original content • Content focussed on key genres with strong audience and commercial appeal including: • Business • Comedy • Health and Fitness • Kids and Family • Sports • True Crime 20
Slide 21: 'Smart Audio' Is Expanding Rapidly
‘SMART AUDIO’ IS EXPANDING RAPIDLY 2.5 million Australians have a smart speaker in their home • 23% USA smart speaker adoption (2019) • ‘Smart Audio’ is growing through mobile and speaker adoption • 13% Australia (2019) • 8% Canada (2018) • Audio listening through voice enabled devices accelerating
Slide 22: Television - Overview
TELEVISION - OVERVIEW $ millions FY191 FY182 Var. • Underlying EBITDA of $33.7m was up 1.2% Total Revenue 206.5 213.4 (3.2%) on FY18 Broadcast & Production (98.0) (103.2) (5.0%) Employee (31.0) (31.0) (0.0%) • Underlying EBITDA margins improved to 16.3% Selling, General & Admin (43.8) (45.9) (4.4%)
Slide 23: Television – Power Ratio
TELEVISION – POWER RATIO Commercial Share & Power Ratio • SCA delivered a power ratio of 1.05 for the 4-agg markets, delivering a 1.09 1.08 1.06 1.06 1.06 1.05 consistent premium and monetising the growth in Nine’s ratings over time • Sales representation for both national 38.1% 38.1% and local sale
Slide 24: Television – Advertising Revenues
TELEVISION – ADVERTISING REVENUES • National revenues flat year on year – assisted by federal election spending and 201.9 national trade marketing campaign – 191.0 ‘Boomtown’ 93.8 82.9 • Local market spending soft in Q4 due to federal election and general economic uncertainty $m's 108.0 108.1 FY18 F
Slide 25: Television - Progressive Transformation
TELEVISION - PROGRESSIVE TRANSFORMATION Progressive actions over last 3 years to improve Television asset – with more valuable content, enhanced sales capability and simplified business processes Affiliation Rebranding Sale of Sale of NNSW Transmission Change Towers Licence to WIN TV Playout Service
Slide 26: Strategic Focus – "Front of House"
STRATEGIC FOCUS – “FRONT OF HOUSE” “Front of House” “Back of House” Playout Distribution Transmission Audio Content Sales TV: 105 channels (NPC) Telstra DVN network 541 Services Creation Monetisation Radio: 154 playout streams (SCA) (+ Satellite) Broadcast Australia INVESTMENT FOCUS ASSET INTENSIVE
Slide 27: Corporate
CORPORATE $ millions FY19 FY18 Var. • Corporate has been simplified with earnings from Radio and Television joint ventures Total Revenue 1.1 1.7 (33.1%) moved to Audio and Television segments Total Expenses (27.6) (24.3) 13.7% • Overhead increases include increased software EBITDA (26.5) (22.6) (17.
Slide 28: Outlook
OUTLOOK Grant Blackley
Slide 29: Key Priorities - The Year Ahead
KEY PRIORITIES - THE YEAR AHEAD • Maximise the value of SCA brands - focus on growing audience and reach Audio • PodcastOne Australia - achieve cashflow breakeven during the year • Accelerate development in ‘smart audio’ experiences for audiences • Leverage success of Boomtown - grow national invest
Slide 30: Trading Update
TRADING UPDATE • Advertising markets remain challenging in July & August – expectation back mid-single digits • Forward pacing indicates stabilising market for September and return to growth in October • Podcasting and digital audio continuing to grow strongly year on year • Group expenses tracking
Slide 31: Appendix
APPENDIX
Slide 32: Financial Outlook – Impact of Key Contracts and New Accounting Standards
FINANCIAL OUTLOOK – IMPACT OF KEY CONTRACTS AND NEW ACCOUNTING STANDARDS Introduction of AASB16 Leases, together with outsourcing contracts for playout and transmission services will impact reported results in FY20 in the income statement. Estimated changes are: AASB16 (Leases) Back office outsourci
Slide 33: Restatement of FY18 Results
RESTATEMENT OF FY18 RESULTS FY18 Reported CGUs FY18 ATN Restated Metro Regional Corporate Total Adjustment Results Revenue 242.7 393.0 18.3 654.0 3.8 657.8 Expenses (185.0) (278.3) (36.1) (499.4) - (499.4) EBITDA 57.7 114.7 (17.8) 154.7 3.8 158.5 Audio Television Total Restated Restated Reported Reg
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