Southern Cross Media Group Limited · ASX:SXL
Southern Cross Media — FY2018 Earnings Presentation
32 slides from Southern Cross Media's earnings presentation, Aug 23, 2018
Slide 1: Southern Cross Austereo FY18 Investor Presentation
For personal use only SOUTHERN CROSS AUSTEREO FY18 INVESTOR PRESENTATION 23 August 2018 1
Slide 2: Disclaimer
Disclaimer For personal use only 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 23 August 2018. The
Slide 3: FY18 Results
For personal use only FY18 Results Grant Blackley 3
Slide 4: Executive Summary
EXECUTIVE SUMMARY For personal use only 2018 has been a year of transition and investment ✓ Prior year asset disposals have impacted short term earnings – resulting in stronger financial stability ✓ Investment in core operations delivered higher revenue growth in H2 ✓ Invested for the future in crea
Slide 5: Group Results Summary
GROUP RESULTS SUMMARY For personal use only • EBITDA $154.7m • FY18 EBITDA impacted by non-recurring items – $ millions FY18 FY17 Var. NNSW TV ($10m), FY17 profit on asset disposal ($3m), Spectrum tax ($3m), FY17 H1 credits - ACMA Revenue 654.1 690.8 (5.3%) and copyright dispute ($5m) EBITDA 154.7 1
Slide 6: Headline Achievements
HEADLINE ACHIEVEMENTS For personal use only • Group revenues up 0.6% (on a like for like basis) • Regional revenues up 3.2% (on a like for like basis) Sales • Regional Radio revenues up 4.5% – led by National revenue up 15.3% Performance • Metro performance improving with stronger ratings and revenu
Slide 7: FY18 Financial Results
For personal use only FY18 FINANCIAL RESULTS Nick McKechnie 7
Slide 8: Group Reported Statutory Results
GROUP REPORTED STATUTORY RESULTS For personal use only FY18 Var. $ millions FY18 (excl. FY17 Impairment) Revenue 654.1 654.1 690.8 (5.3%) • Impairment of Regional TV assets - $105m charge less $31m deferred tax credit Expenses (499.4) (499.4) (513.4) 2.7% EBITDA 154.7 154.7 177.4 (12.8%) • Statutory
Slide 9: Cashflow
CASHFLOW For personal use only $ millions FY18 FY17 Opening Cash 49.0 94.8 • EBITDA to cash conversion at 94.2% - up Cash from Operations 145.8 152.7 from 86.1% in previous period Tax payment (34.8) (36.4) • Modest capital investment of $25.5m Net Payments for Non-Current Assets (25.5) (29.0) Net Fi
Slide 10: Debt Reduction Program
DEBT REDUCTION PROGRAM For personal use only $m's Net Debt • Debt Reduction Program has been a priority for the company in last three years, debt levels 506.9 reduced by ~$200m since 2015 • Net debt reduced further in FY18 to $304m • Cycling out of low to negative growth and “back 340.2 of house” as
Slide 11: Financial Covenants
FINANCIAL COVENANTS For personal use only Interest Cover Ratio 11.75 • Material improvement in financial 10.00 10.60 covenants over past two years following debt reduction – and resulting reduction 3.00 3.00 3.00 in financing costs • Significant headroom exists under covenants with interest cover of
Slide 12: Dividend Policy
DIVIDEND POLICY For personal use only Dividend Paid (cps) • Full Year fully franked dividend maintained at 7.75 cents • Dividend payout policy 65% - 85% range of NPAT 4.00 4.00 • Strong cash generation supports payout 3.50 ratio to shareholders 3.00 • Maintained dividend in conjunction with organic
Slide 13: Operational Review
For personal use only OPERATIONAL REVIEW 13
Slide 14: Operational Review
OPERATIONAL REVIEW For personal use only FY17 (excl Var. • Underlying EBITDA back 8.1% (adjusting for $ millions FY18 FY17 Var. NNSW) sale of NNSW TV) Metro Revenue 242.7 247.2 (1.8%) 247.2 (1.8%) • Metro revenues – “tale of two halves” with Regional Revenue 393.0 421.4 (6.7%) 381.0 3.2% improving m
Slide 15: Advertising Revenue Analysis by Half
ADVERTISING REVENUE ANALYSIS BY HALF For personal use only 5.4% 5.3% H1 H2 3.7% 2.8% 1.9% 1.7% 1.4% (3.7%) Metro Radio Regional Radio Regional TV Total Advertising Revenue (exc. NNSW) • H2 FY18 advertising revenue growth 2.8% • Metro Radio - advertising revenue rebounds in H2. Q4 Metro radio revenue
Slide 16: Metro Radio
METRO RADIO For personal use only $ millions FY18 FY17 Var. • Metro Radio revenues down 1.8%, impacted by H1 performance (-3.7%) Total Revenue 242.7 247.2 (1.8%) • Metro full year market grew by 4.0% in FY18 Broadcast & Production (13.9) (13.2) (5.3%) aided by strong growth in H2 at 5.8% Staff & Tal
Slide 17: Metro Radio Digital Stack Strategy
METRO RADIO “DIGITAL STACK’ STRATEGY For personal use only 4,567,000 Listen to SCA’s FM Network 302,000 Listen to only both SCA’s FM and 329,000 Digital Radio Listen exclusively to SCA’s Digital Radio Network only Source: GFK audience survey 4, 2018 17
Slide 18: Metro Ratings – Improving Audiences Up ~12%
METRO RATINGS – IMPROVING AUDIENCES UP ~12% For personal use only Simultaneous release of DAB+ survey data from S1 2018 5.3m 5.1m 5.2m 5.2m 4.9m 4.8m 5.0m 4.9m 4.9m 4.8m Survey 7 2017 Survey 8 2017 Survey 1 2018 Survey 2 2018 Survey 3 2018 Survey 4 2018 FM Audience DAB+ Audience • Investment in FM a
Slide 19: PodcastOne
PODCASTONE For personal use only PodcastOne Downloads: Weekly & Cumulative 50,000,000 1,800,000 • The pre-eminent commercial podcast company in Australia - achieving 45 45,000,000 1,600,000 million downloads since launch Aug 17 40,000,000 1,400,000 • Premium original content driving 35,000,000 1,200
Slide 20: Regional – TV & Radio
REGIONAL – TV & RADIO For personal use only • Regional revenue growth of 3.1% (on a like FY17 for like basis) $ millions FY18 FY17 Var. (excl Var. NNSW) • Regional Radio a consistent performer – revenue up 4.5% - driven by national Total Revenue 393.0 421.4 6.7% 381.0 3.1% revenues up 15% Broadcast
Slide 21: Regional Radio Advertising Revenues
REGIONAL RADIO ADVERTISING REVENUES For personal use only 172.9 • Regional radio revenues grew 4.5%, consolidating 4.4% growth in the prior 165.4 year and marking 7th consecutive year of 162.1 growth • National revenues up 15.3% or $7.9m 152.8 after concerted effort to educate and 147.6 attract incr
Slide 22: Regional TV Advertising Revenues
REGIONAL TV ADVERTISING REVENUES For personal use only $m's 195.0 201.9 • TV revenues up 3.6% or $6.9m (excl. NNSW TV) after gains in market share supported by improved programming and premium selling 90.6 93.8 • Revenue across Tasmanian and Spencer Gulf markets remained flat 104.4 108.0 FY17 FY18 (
Slide 23: Regional TV Power Ratio for Nine Affiliation
REGIONAL TV POWER RATIO FOR NINE AFFILIATION For personal use only NINE - QLD, SNSW & VIC Commercial Share, Audience Share & Power Ratio • Full year power ratio (ratings to revenue 1.06 1.09 1.06 conversion) strengthened to 1.07 1.03 38.1% • H1 power ratio grew from a 1.03 to a 1.09 35.8% 34.9% 35.9
Slide 24: Corporate
CORPORATE For personal use only $ millions FY18 FY17 Var. • ~$2m of FY17 sundry revenue has been reallocated to Regional Total Revenue 18.4 22.2 17.1% • Expenses impacted by ~$5m favourable prior year Total Expenses (36.1) (30.7) 16.6% movements, including resolution of copyright dispute EBITDA (17.
Slide 25: Creating a Smarter Workplace – Positive Cost Control
CREATING A SMARTER WORKPLACE – POSITIVE COST CONTROL For personal use only Talent & labour costs Revenue related & contracted • Substantial technological costs investment. Creating a • Variable nature of revenue more efficient workplace related costs • Systems investment in • Local revenues leverage
Slide 26: Outlook
For personal use only OUTLOOK Grant Blackley 26
Slide 27: Radio Is a Strong & Growing Platform
RADIO IS A STRONG & GROWING PLATFORM For personal use only Radio Audiences • Radio market continues to grow underpinned by continuous audience growth ✓ Metro 4.0% revenue growth FY18 ✓ Regional 4.5% revenue growth FY18 • Radio consumption is expanding ✓ Radio portability on the rise (home, car, work
Slide 28: Regional Growth Strategy
REGIONAL GROWTH STRATEGY For personal use only SCA attracted 15% higher national revenue into regional radio in FY18 Metro Radio Regional Radio Local, 26% National, 35% Local, National, 65% 74% • 9.1m Australians live & work in Regional Australia • Regional markets hold 36% of the national buying po
Slide 29: Key Priorities - The Year Ahead
KEY PRIORITIES - THE YEAR AHEAD For personal use only • Optimise key audio assets – maximise the value and monetisation of all audio brands Metro • Improve accessibility of our audio products to a wider range of devices • Create personalised audio experiences for our audiences • Accelerate the educa
Slide 30: Trading Update
TRADING UPDATE For personal use only • Strong radio market conditions – across both Metro & Regional, with improved visibility and lead times Trading • Group revenue for July & August up 5% (with growth in all asset classes) update • National investment in regional markets continuing to grow • Expen
Slide 31: Q&A
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Southern Cross Media Group — FY2018 Earnings Presentation on 6ix