Debt piles up in latest half-year result for SCA; revenue flattening

Southern Cross Media Group (SCA) has posted its earnings for the half year ended 31 December 2022. The revenue was up 0.1% year-on-year (YoY), but perhaps more glaringly, net debt was also up 51.7%.

The owner of LiSTNR, and radio networks Triple M and The Hit Network reported group revenue of $260.1 million in the first six months of FY23, compared to$259.8 million in the previous corresponding period.

Its earnings before interest, taxes, depreciation and amortisation (EBITDA) was down 7.3% YoY, from $46.5 million in H1 FY22 to $43.1 million in this reporting period.

SCA has already seen a worrying proportion of debt increase in itsfull-year result of FY22, with a 49.4% spike to $78.5 million compared to FY21.

In this reporting period, net debt sat at $102.5 million, compared to $67.7 million in HI FY22. Group expenses were up 1.7% to $217 million during the period.

SCA said in the report that the debt amount is “modest and debt facilities are locked in until January 2026”.

The company is in the process of a share buyback. As of 1 January 2023, SCA has acquired 22 million shares, or 83.3% of the maximum amount for the FY, at the cost of $24.4 million.

Audio revenue accounted for $200.4 million and was up 3.5% YoY, but audio EBITDA of $40.6 million was down 8.3%. The company said this is due to ongoing investment in scaling LiSTNR, as well as wage increases and CPI-linked increases in broadcast transmission costs.

LiSTNR hit 1.2 million signed-up users and monthly stream starts reached 5.9 million.

Digital audio revenue grew 37.5% to $10.5 million, exceeding digital audio market growth of 11%. The digital audio EBITDA loss of $9.3 million was narrowed by 12.3% compared to the prior year.

Regional radio revenue was down 2.5% while television revenue was down 9.5%. SCA attributed this to lower spending by some key national advertiser segments and subdued recovery by small and medium businesses.

SCA CEO, Grant Blackley, said: “SCA’s portfolio of audio assets, supported by our efficient and resilient operating structure, is positioning us for growth while continuing to return funds to shareholders through fully franked dividends and our on-market share buy-back.

“Despite reducing our headcount by 12% since 2019, we have grown our content output by 66% or 400,000 hours over the same period.

“Our exclusive Australian sales representation of premium partners, such as Wondery and Stitcher, has expanded the reach of the LiSTNR sales network to 6.6 million monthly listeners.

“对于LiSTNR,我们针对200万帐号users by July 2024, and we currently forecast achieving cashflow break-even during the 2025 financial year.

“On the expense side, we expect non-revenue related costs to be up between 0 and 2% for the full year to 30 June, below prior guidance of 2-4%.

“Financing costs will be around $17 million and full year capex is forecast to reduce by $10 million to around $20 million for FY23.”

Last week, SCA announced the hire of GroupM’s chief investment officer,Seb Rennie as its new executive head of commercial at LiSTNR.

SCA trades at $1.12 on 16 February, with a market capitalisation of $270.01 million.