Seven West Media has revealed its end of year financials, which have taken a beating from CV-19 and a severe decline in the ad market.
Its statutory earnings tumbled 49 per cent to $129.5 million in the full financial year and it also reported a 14 per cent fall in revenue to $1.2 billion.
On the upside, net debt was reduced by $143.5 million from its half year results to $398 million. Net loss after tax was $200.1 million, which was an improvement from last year.
That said, the sharemarket didn’t like what it saw in the numbers, the share price was down almost 23 per cent on today’s news to $0.12 a share this morning.
Highlights of today’s results included:
• Advertising market conditions severely impacted by COVID-19
• FTA TV market down 14.1 per cent in the financial year (-33.7 per cent 4Q1 ) VS a total advertising market decline of -15.2 per cent
• Group revenue from continuing operations down 14 per cent due to weaker ad markets
• Underlying Group EBIT of $98.7 million, down 54 per cent YOY
• Digital EBIT growth of 92 per cent YOY
• Significant items of $352 millions before tax, relating to impairments and onerous contracts
• Net debt of $398 million, debt facilities amended
• Transformation strategy execution gaining momentum despite challenging markets o Content led growth strategy launched with strong results inlcuded $170 million gross cost savings initiatives actioned and $150 million proceeds from asset sales
Seven said it had generated $170 million from cost cuts, primarily out of its television division, and $150 million from the sale of assets including the West Australian headquarters and Pacific Magazines to Bauer. It has said it will aim for a $50 million in cost cuts over the next financial year.
Today’s results noted: “The Seven Network secured a 37.4 per cent free to air revenue share in the financial year, which was impacted by limited sport and an underperforming entertainment line-up. However, we launched our new tentpole strategy in early June with the premiere of Big Brother. This delivered a substantial improvement in our ratings performance, particularly in the key demographics explicitly targeted.”
It added: “Intense focus on our broadcast video on demand BVOD platform has seen 7plus dominate its competitors to become the top service in the commercial free-to-air television landscape in the final months of the reporting period. 7plus has delivered an average monthly commercial free-to-air BVOD share of 46 per cent from April to July, growing faster than any competitor BVOD service and at double the rate of market growth.”
Seven West Media CEO James Warburton said: “It’s been twelve months since I returned to Seven West Media and laid out our new strategy to transform the company. We have made material progress on our transformation plan despite the challenges that COVID-19 has thrown at us. It has not changed our plan, but assisted us to accelerate the transformation.
“Our content led growth strategy which launched in June with Big Brother and was followed by Farmer Wants a Wife is delivering dramatically improved results for Seven. Combined with our daily content spine which is a dominant number one in Sunrise, The Morning Show, 7NEWS, The Chase, Home and Away, Better Homes and Gardens and Sport with the AFL and Horse Racing, our tentpole focus at 7.30pm Sunday to Tuesday is working, helping us win the content battle.
“Seven has won 10 of the last 11 weeks of ratings. Our seamless Digital strategy with 7plus has also seen us transition from a distant number two to a dominant number one in the growing BVOD market. Real structural change is underway at The West. Generational change across regional and community mastheads is in motion, with a digital-first editorial focus. Digital subscribers have almost doubled to 60,000 over the last 12 months. We have actioned $170 million of gross cost out initiatives across the group including the renegotiation of our AFL agreement at a lower level and for an extended term. In addition, we benefited from an incremental $51 million of temporary savings to respond to the sudden impact of COVID-19.
“Net cost savings in the financial year were weighted to the second half with $92 million saved in the period, more than offsetting the $15 million increase in the first half. To support our goal of working down debt to improve balance sheet flexibility, we have realized $150 million of gross proceeds from asset sales and amended our debt facilities to secure flexibility, liquidity and certainty to execute our transformation strategy,” Warburton said.
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