News October 27, 2015

SCA records $284m loss following writedowns

Southern Cross Austereo has an 18.6% decline in Net Profit after Tax (excluding significant items) of$64.8m, however including significant items, the company reported a post-tax net loss of$284.9m.

The loss is 'on paper' and follows write-downs on the book value of the metropolitan and regional assets of$361m, perhaps not an unexpected move with a new CEO and Chairman as they look to reset the business.

CEO Grant Blackley (pictured) said:“The full year FY 2015 results reflect a weaker television advertising market and a reduced, but stabilised metro radio market share.

"Whilst the financial results have been disappointing, I am excited by the opportunities that the Group presents and have begun implementing a number of strategic and operational initiatives that are focussed not only on delivering short term improvements in financial performance, but positioning Southern Cross Austereo for long term success.”

SCA have noted some highlights in the financials as being:

Regional Radio advertising revenue growth for the 4th consecutive year, up by 3.5%
Regional EBITDA up 1.9%, margins up 0.7%
Net debt reduced by $81.0m to $506.9m and net finance costs down 13.7%

Looking at the radio performance, the regional group has grown, unsurprisingly it is in metropolitan radio where the revenues have been impacted; however SCA point to ratings growth on a national basis over the last few surveys as a positive trend:

The report notes that SCA will continue to look for Operational improvements:

Nevertheless, the financials appear to be a clearing of the decks with the massive impairment charges taken seeming to be a kind of financial reset for the business to grow from here.