Austereo Group Limited Annual Report 2010 Report Annual Limited Group Austereo Austereo Group Limited Annual Report 2010
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J0005676_AustereoAnnualReport10_CoverPRINT_FA.indd 1 25/08/10 10:52 AM CONTENTS P01 REVIEW 2010 HIGHLIGHTS PERFORMANCE SUMMARY P02 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT P03 BOARD OF DIRECTORS P09 AUSTEREO SENIOR EXECUTIVES P12 P13 REPORT FINANCIAL STATEMENTS J0005676_AustereoAnnualReport10_CoverPRINT_FA.indd 2 25/08/10 10:52 AM 2010 HIGHLIGHTS CREATING AUSTRALIA’S LEADING RADIO AND ONLINE / INTERACTIVE GROUP > Audience Leadership in all key under 54 demographics: • 22.0% of all 10+ listeners¹ • 33.9% of 25-39 audience¹ • 28.4% of 25-54 audience¹ > Over 40% of people 10+, totalling 5 million listeners via FM digital, radio, online and mobile. > #1 FM Sydney, Melbourne, Brisbane and Perth¹ > Leader in sales share: • Top 40 client retention 100% • Today Network outpaced 2009 sales • Triple M re-build driving improved revenue > Austereo’s online platforms continue their robust growth: • Unique browsers up 25% year on year² • Podcast downloads averaging 5 million per month, more than double the prior year³ • Video Streams 135% growth year on year⁴ > Austereo owns the largest share of capital city DAB+ Spectrum, 27.1%. ¹ Nielsen Media Research Survey 4, 2010 ² Nielsen Netratings ³ Avacast ⁴ Brightcove 1 J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:1 14/09/10 4:39 PM PERFORMANCE SUMMARY FINANCIAL SUMMARY DOLLARS IN MILLIONS 2010 2009 % Total Revenue 263.6 258.9 1.8 Underlying EBITDA 88.6 87.6 1.1 Underlying EBIT 80.6 79.8 1.0 Underlying Profi t Before Tax 67.2 65.3 2.9 Tax Expense 20.1 20.1 0.0 Underlying Net Profi t After Tax 47.1 45.2 4.2 Statutory Profi t After Tax 47.1 41.4 13.8 Underlying EBITDA Margin 33.6% 33.8% Earnings Per Share (excl material items) 13.66 cents 13.08 cents 4.4 Dividends Per Share (fully franked) 9.7 cents 9.1 cents 6.6 MARKET SHARE OVERVIEW Metropolitan Radio Market Metropolitan Radio Market Metropolitan Radio Market Share 10+* Share 25–39* Share 25–54* Austereo 22.0% Austereo 33.9% Austereo 28.4% ARN 13.4% ARN 14.6% ARN 16.4% DMG 12.7% DMG 18.2% DMG 14.7% Fairfax 15.3% Fairfax 6.1% Fairfax 10.5% Other 36.6% Other 27.3% Other 29.9% * Nielsen Media Research, Survey 4, 2010 2 J0005676_AustereoAnnualReport10_SpreadsPRINT_FA2.indd Sec1:2 15/09/10 3:43 PM CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT Austereo Group Limited continued to lead the Australian capital city commercial radio market through a year marked by a high degree of economic uncertainty. Th e leadership in audiences was driven by the strength of the on-air talent. Th e stars of Austereo’s programmes are well known and many are multi-media leaders, including Hamish & Andy, Kyle & Jackie O, Matt & Jo, Eddie McGuire and Roy & HG. Austereo’s networks deliver popular culture, music, sport and other topics of interest to Australians under 54. Austereo stations are also vital hubs in their cities, focusing on local news and events, building communities through ongoing special events, fund-raising and support of community activities and issues. Austereo actively supports Australian music and has created industry-leading online and interactive social media operations, which seamlessly fold into the overall radio and communication strategy of the group. Th e more than 660 members of the Austereo team comprise on-air talent, programmers, music specialists, creative and production, sales, integration, fi nance, IT and online/interactive experts. Each member contributed to the many successes enjoyed by Austereo in fi nancial year 2010. Our major media platform commercial radio, again demonstrated its strength. Radio was the best-performing and most resilient traditional medium through the year and Austereo’s online growth paralleled the dynamic growth of the total social media category. Austereo has enjoyed a long-term consulting partnership in Malaysia, taking a leading role in the construction and development of the nation’s leading commercial radio group. In the course of the year, there were strong audience gains and a successful sales outcome. Austereo staff across all business disciplines are involved on-site in Kuala Lumpur and the Malaysian executives are also involved in training programmes at the company’s Australian stations. Austereo is also involved in two joint venture radio enterprises in Canberra and Newcastle who both had a very successful year. Th e two stations in Canberra along with the two stations in Newcastle won audience leadership in both markets, along with solid sales growth. Marketing is an important function of the business. Most of our income is derived from advertising and we, in turn, are fi rm believers in the power of well-targeted and creative advertising campaigns. Our audience leadership is underpinned to an important degree by marketing campaigns. Allied with marketing is a focus upon research into our audiences, tracking changes in audience attitudes, as well as providing a strong base for our sales teams in their contact with advertisers, creative advertising agencies and media buyers. AUDIENCE LEADER IN AUSTRALIA FM RADIO Th e ten capital city stations, divided equally between the Today and Triple M Networks, achieved an exceptional combined audience of over 5 million listeners. Th is is an exceptional fi gure. Of equal signifi cance, the group achieved a 37.2% share of the under 40 capital city audience and 28.4% of the 25-54 demographic. Th ese are the key age groups sought by the majority of advertisers. Apart from the strength of audiences achieved, the consistency of results is a prime factor in encouraging media-buyer support. It is signifi cant that Austereo enjoys a number of longer-term contracts with the major buyers of media, who recognise the ongoing leadership results achieved by the group. In the fi nal survey of fi nancial year 2010, Austereo achieved Number 1 FM places in Sydney, Melbourne, Brisbane and Perth and Number 2 FM place in Adelaide1. Of note, solid recent results were achieved in Triple M Sydney and Melbourne, which have been the focus of audience rebuilding strategies. Year on year, key demographic groups achieved increased share, resulting in increased advertiser support. 1 Nielsen Media Research Survey 4, 2010 3 J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:3 14/09/10 4:39 PM Austereo continues to share Australia’s passion for sport. Both the Today and Triple M Networks provide strong sporting coverage and Triple M, in particular, covers AFL and NRL football codes. Triple M Melbourne and Adelaide broadcast AFL matches and have achieved 96 consecutive Melbourne ratings wins in the under 55 target audience. In the fi nal survey of the fi nancial year, Triple M Melbourne more than doubled the nearest competitive under 55 AFL broadcast. Triple M Sydney and Brisbane cover AFL home team match calls as well as live coverage of Monday night NRL. Th e Triple M Network also covers Cricket, V8 Supercars, eTh Sprint Racing Carnival and other major sports events. Austereo invests signifi cantly in new talent and works to a system of ongoing talent identifi cation and training. Th is strategy is led by the CEO and Content Director and also involves content heads in each city. Th ere is also focus upon the current leading talent in the group, to enhance their performance and survey results. We are fortunate in Australia to have an environment that encourages a wide range of skills suited to on-air exposure, often at world standard. Austereo is committed to retaining its place as the home of the most outstanding personalities in the nation and invests accordingly in capital, time and training. MAINTAINING SALES SUPREMACY Austereo has consistently punched above its weight in sales results. Strong audience ratings must be converted to leading sales shares, to ensure commercial success. Austereo’s over 200 sales-related staff benefi t from robust ratings, along with a well-credentialed and ongoing training programme. Th e sales teams are supported by integration experts who develop, amongst other initiatives, programmes for advertising clients to enhance the strength of radio campaigns on our networks. Creative and production teams are used for the creation of radio commercials for direct clients who do not have the benefi t of advertising agency support. In fi nancial year 2010, $260.2 million sales were written by Austereo, an increase on the previous fi nancial year. In the same period, the total capital city radio industry grew 2.3%. Austereo sales yield is driven not only by radio commercials, but also (and to a growing degree) by non-spot revenue. Th is growing resource opportunity utilises sponsorship, “presents” etc. to further utilise the value of available airtime. In the course of the year, the group achieved the leading market share in the industry and the Today Network clearly outpaced the previous year. Signs of potential Triple M Sydney and Melbourne recovery also emerged as the two stations recorded higher sales fi gures in the last two months of the fi nancial year. In June 2010, the total group posted its highest sales in 10 years. Amongst the top forty clients, there was little change of position despite the economic diffi culties. Th e retention rate of the top forty clients was an exceptional 100%, endorsing the success of our sales operations as well as the strength of radio in achieving highly eff ective, cost effi cient campaigns for advertisers. Th e categories of Retail, Media, Medical and Financial grew in the period and we received exceptional support from the leading buying agencies. Highly competitive trading conditions, both within the commercial radio industry and also from external media sources placed Austereo’s rates under some pressure, but the group held rate integrity at a satisfactory level, through one of the most diffi cult trading periods ever experienced in the media category.