SCA reports revenue dip but EBITDA rises and profits soar 91.6% to $48.1m

Southern Cross Media Group (SCA) has continued its recovery after a heavily COVID-impacted 2020 calendar year, with revenues and profits continuing to climb back.

Revenue for the 2021 Financial Year fell 2.2% year-on-year to $529.1 million, showing significant bounce back after revenues slid 15.9% in its half-year results.

Expenses fell 6.8% to $403.2 million for the year ending 30 June, while EBIDTA grew $125.9 million, a 16.4% increase. Net debt was also reduced by 59.8% to $53 million.

Meanwhile, chief executive officer, Grant Blackley, revealed the company has become the latest to reach a provisional agreement with Google to join Google News Showcase.

SCA (SXL) FY21 Results [click to enlarge]

SCA also reported free cash conversion of 122%, which it said was helped by lower capital expenditure and effective cash collection from advertisers.

Expenses fell despite $7 million of investment in new digital audio content and capabilities, with that investment appearing to pay off as SCA reported an increase in digital advertising revenue, up 40% to $15.4 million.

Digital revenue remains a small part of overall audio revenue however, which was reported at $359.7 million, a 3.1% decline. Revenue across SCA’s regional television assets was down 0.3% to $169 million.

Blackley said digital growth has been fuelled by its LiSTNR offering. “The launch of LiSTNR in February was an exciting moment for SCA, and our progress since launch has only added to the excitement.

“LiSTNR is scaling quickly with a growing community of signed-in listeners exploring and enjoying the range of premium and on-demand audio content.

Blackley revealed that podcast listening on the app has grown 200% in the five months since launch, but did not disclose actual numbers. He expects continued growth here to support a 75% to 100% increase in digital revenues during FY22.

SCA Operational Results [click to enlarge]

“Through LiSTNR, SCA is able to service [a] growing demand for digital audio and to help advertisers connect to addressable and targeted audiences at scale.”

Blackley also said SCA’s new two-year regional television affiliation agreement with Network Ten has seen a “seamless” transition away from its previous agreement with Nine. “Subject to the performance of television markets, we expect the change of affiliation to be earnings neutral in the year ahead.”

Speaking on SCA’s forthcoming Google deal, Blackley said the partnership “fairly recognises the value and reach of our national and local Triple M and Hit Network services.

“The partnership will not have a material impact on SCA’s earnings but will help support our digital news journalism.”

SCA will also pay a full franked dividend of $0.05 per share, which represents 85% of second-half NPAT. The dividend will be paid 1 October.

Blackley added: “With debt at historically low levels and a leaner operating model, these results put us in a strong position to invest for the future as well as to resume payment of fully franked dividends to our shareholders.

JobKeeper support ceased after $31.9 million in support was received during the first half of FY21.

Meanwhile, Blackley’s salary for the financial year was $1.692 million, a significant jump on the $788,000 he received the prior year. 25.2% of his salary was performance-related and included a $426,000 performance bonus.

Total executive pay was $5.557 million, up from the $2.897 million paid the prior year. CFO Nick McKechnie, COO John Jelly, CSO Brian Gallagher and CTO Stephen Haddad all received bonuses in excess of $100,000. Executive bonuses totaled $1.307 million.

Southern Cross Media Group has a current market capitalisation of $484.83m and a daily share price of $1.94.


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