SCA, with cost cutting rounds done, headcount reduced and regional television unloaded, is poised for a strong run as a flag bearer of pure audio.
The company now has what CEO John Kelly described as a “fully refurbished broadcast business”
The broadcaster has just reported revenue up 5% to $421.9 million for the full year to June, delivering on its “transformation strategy” in a challenging advertising market. Underlying net profit after tax was $15.1 million, up $10.6 million.
And shareholders got a fully franked dividend of 4 cents a share, due to “sustained operational momentum and strong financial discipline” across the business.
The market loved the results, sending SCA shares up 26% to 83.5 cents.
“A lot of hard work has gone into this in the last couple of years, and it's good to see us now back on the right pathway and returning the dividends,” CEO John Kelly told AdNews.
Staff numbers are down 22%, or 348, with about 120 roles relating to the exit of TV. About 40% of the current workforce are in revenue generating roles, with the rest in content production and back office.
Cost savings total about $60 million in the last three years.
The strategic focus is now on the “Audience that Matters”, building on radio and digital audio assets, led by LiSTNR, HIT and Triple M.
“Our strong operating momentum has allowed SCA to maintain our dominant audience shares in our core metro, regional and digital audio markets,” Kelly said.
“We have been able to achieve this dominance despite continued challenging advertising market conditions by focusing on executing our key commitments, including revenue growth, LiSTNR profitability and cost and capital discipline which have translated to improved financial performance and balance sheet strength.”
SCA in May sold the last of its television assets for $3.75 million to Seven West Media. The company in December announced the sale to Network 10 of television licences in Queensland, southern New South Wales and Victoria.
“TV has always been a drag on our results,” Kelly told AdNews.
“You're hiding nothing having the regional TV assets because you were exposed … but receiving none of the benefit of the BVOD uptick, because that was all being retained by the network.
“I'm glad to be able to say that we're all about audio because it means the focus of myself and the team is 100% on how we maximise the audio assets.”
Kelly said the advertising market was hard to assess at the moment.
SCA had been pacing at 5% growth for July and August but this had dropped back a little to early single digits.
“The pacing beyond that looks good but it's just hard to read. You have good weeks and then bad weeks. It's not consistent.
The work of restructuring the group is done, with headcount reduced and costs under tight control.
But the hard work on the cost base has been done.
“The SCA team has successfully balanced improving the operational and financial performance of the business, while at the same time achieving critical and strategic milestones,” Kelly told market analysts in a briefing.
“SCA is now in the final stages of transformation from a traditional media company to a digitally focused, technology driven audio company. Our challenge and opportunity is now to create the future of Australian audio.”
“We have built a best in class and proudly Australian digital audio business in LiSTNR.”
The total LiSTNR Audience Network - including podcasts, in-stream radio and music playlists - hits a peak of 10 million people each month.
Digital revenue grew 29% in the year to June, with the AdTech Hub being a key driver.
“We are committed to continuing our efficiency drive, and expect our cost base to reduce further in the years ahead,” Kelly said.
Slides from SCA's presentation to market analysts:
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