SCA profit soars 91.6% thanks to cost control & Government stimulus

Southern Cross Austereo (SCA) is the first cab off rank, with the broadcast company revealing its financial performance to the market today.

Its net profit after tax (NPAT) including significant items was $48.1 million, up 91.6% from last financial year’s $25.1 million. Excluding the significant items, it was up 40.7% from last year.

A snapshot of SCA’s results (A full breakdown can be found at the end of this article) 

Asked whether the results were actually good – or if the growth seemed significant due to a dire year last year – CEO Grant Blackley said it was a “combination of both, to be honest”.

“Firstly, I think we’ve seen a very strong recovery in the market to such a point that you’ve got nine out of 10 major [advertising] categories all in double-digit growth now, recovering from the depths of COVID last year, and the market is just responding to that and obviously we’re getting the benefit of that,” he told Radio Today.

“And the other half of this as well is that we have spent the best part of 18 months reimagining the network, reimagining the contribution by each of the segments within our business at SCA, and how we can create a more effective and efficient operating model, coupled with an investment with our digital audio segment, that as we’ve seen today, revenues have grown by 40% and we expect that they will grow by a further 75 to 100% over the course of the next year.

“So I think it’s a combination of both.”

The results revealed that revenue for the metro radio business declined 5.5% over the course of the 2021 financial year, compared to FY2020. This was attributed to a decline in the metropolitan free-to-air radio advertising market, which was down 2.4%. The sharpest decline was in Melbourne (down 5.5%), followed by Brisbane (down 2.4%) and Sydney (down 2.2%). Perth and Adelaide were up 2.9% and 2.1% respectively.

Regional radio revenues declined 2.7%, but revenue from national agencies was up 10% on the year prior.

Digital revenues grew to $15.4 million, a 40% increase.

Overall audio revenue dropped by over 3% to $359.7 million.

The company’s improved profit and EBITDA (earnings before interest, tax, depreciation and amortisation) was thus primarily put down to cost control and Government stimulus.

SCA benefitted from $31.9 in Federal Government JobKeeper payments in the financial year, and received $8.6 million from the Public Interest News Gathering (PING) program.

These payments reduced its employee expenses from the financial year from what would have been $188 million to $147.6 million. Last financial year, employee expenses were $192.5 million, which with $16.1 million in JobKeeper, fell to $176.4 million.

Blackley took home a total remuneration of $1.692 million, up from $788,641 last year. The increase was driven by the award of 50% of his short-term incentives, compared to 0% last financial year. He also had 25.2% of his performance-related proportion, compared to 0% last year.

Chief sales officer Brian Gallagher also took home a significantly larger pay packet – $771,929 compared to $426,051 the year prior. And chief content officer, Dave Cameron, had a total remuneration package of $555,572.

The company’s net debt was down 59.8% from $132 million at the end of last financial year to $53 million.

SCA said its balance sheet is now robust and it has healthy liquidity. It is now in a position to pay a dividend of five cents per share.

In a media release about the results, Blackley said the increased NPAT and EBITDA, as well as its historically low debt levels, put it in a strong position to invest for the future.

Its investor report also revealed a new corporate strategy, which you can read about here.

SCA’s full financial results