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ARN MEDIA 2023 HALF YEAR RESULTS

ARN MEDIA 2023 HALF YEAR RESULTS

Miko Santos
August 24, 2023

ARN Media delivers audience growth across all audio platforms; realising regional synergies despite overall revenues impacted by economic conditions; seeing improving trading conditions in current quarter.

ARN continued to perform well in terms of audience ratings, and in four of the last five surveys, the brand claimed to be Australia's top network for metro AM/FM stations. Additionally, according to ARN, 23% more people—6.6 million people—listen to podcasts on a monthly average basis.

ARN’s strong audience ratings performance continued, holding the #1 network position for metro AM/FM stations in Australia for four of the last five surveys.

The economy's slowdown, falling government spending, and decreased consumer spending have all had an impact on radio advertising revenues.

According to the law, the ARN Group's revenues from normal operations were $165.9 million, down $6.1 million from the previous quarter.

Delivered $2 million of the $5 million in annual national revenue synergies targeted; building on the $7 million growth in 2022; and gaining share in important markets, according to the report.

Digital audio advertising revenue increased 37% to $8.8 million, with a target run-rate of cash flow break-even by the end of 2024.

Although an increase in digital audio revenues partially offset this, lower consumer spending and a weak economy had an impact on advertising revenues. Following the 2022 Federal Election, government spending was also significantly lower year over year. According to the law, the ARN Group's revenues from normal operations were $165.9 million, down $6.1 million from the prior quarter, and its EBITDA was $35.5 million, down 27%.

"ARN has delivered a good result in a highly competitive market against a backdrop of reduced consumer spend, a slowing economy, and a reduction in government spend, which has impacted revenues," said Hamish McLennan, chairman of ARN Media.

“The strength of audio is undeniable as both radio and podcast listening continues to grow. We continue to have the number one metropolitan network in Australia with our newly integrated regional network performing strongly as advertisers increasingly pay attention to audio in regional Australia. Importantly, the final components of the regional integration with our metropolitan network are on-track for completion in 2023,” McLennan said

“We are strong believers in the future of the sector reflecting our decision in June to acquire a 14.8% interest in Southern Cross Austereo for $38.3 million – a business we know well in a sector that is undervalued, positioning ourselves for future value creation”. He added.

The $66.3 million that was received from the sale of Soprano in March 2023 was used to fund the Southern Cross Austereo investment, and additional funds were used to pay off debt.

With $52.4 million in nett debt and 0.8 times EBITDA before significant items on a pre-AASB 16 basis, the Group's balance sheet is still strong. ARN Media will have the flexibility to continue pursuing its "All Audio" strategy and seizing any potential future growth opportunities if the Group can keep its debt levels under one times EBITDA before significant items, subject to trading conditions.

Because the business generates a lot of cash, with a free cash conversion of 85.5%, the Board is still committed to keeping strong dividends for shareholders.

A half-year fully franked dividend of 3.5 cents per share was declared by the company, representing an effective yield of more than 10%. Additionally, ARN Media continued its accretive share buy-back programme during the period, improving returns for shareholders.

Ciaran Davis, CEO & MD of ARN Media, stated: "All of our audio measurement metrics are showing steadily upward trends. According to the most recent industry survey, 82% of metro residents 10 years of age and older listened to radio in the previous week, which is an extraordinary indication of the power of audio. Metro commercial radio audiences are also growing in terms of listenership, key daypart listening, and the amount of content consumed.

ARN’s iHeartPodcast Network is a clear market leader, with more podcast hits over 1 million monthly downloads than anyone else in the Australian Podcast Ranker18 and reaching over 72% of Australian Podcast Listeners.

ARN’s podcast network increased by +23% listeners and +25% downloads for the first half of 2023 (vs avg CY-22). Measured investment in the production of original content that attracts listeners to our network is important to capitalise on this growth.

Several new podcasts were successfully launched in the period, including Concealed, The Pool Room with Tony Armstrong, Hooked, Hitched & Hung Up and Astrology Coach.

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