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Edited Transcript of APN.AX earnings conference call or presentation 12-Feb-19 10:00pm GMT

Full Year 2018 HT&E Ltd Earnings Call

Sydney Dec 18, 2019 (Thomson StreetEvents) -- Edited Transcript of HT&E Ltd earnings conference call or presentation Tuesday, February 12, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ciaran Davis

HT&E Limited - CEO, MD & Executive Director

* Jeffrey Peter Howard

HT&E Limited - Executive Officer

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Conference Call Participants

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* Entcho Raykovski

Crédit Suisse AG, Research Division - Research Analyst

* Roger Colman

CCZ Equities Pty Limited, Research Division - Former Director of Media

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Presentation

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Operator [1]

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Thank you for standing by, and welcome to the HT&E Full Year Results Conference Call. (Operator Instructions) I would now like to hand the conference over to Mr. Ciaran Davis, CEO. Please go ahead.

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [2]

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Good morning, and thank you for joining the call. Our presentation today will start with a high-level review of the business and our statutory results. Jeff will take you through the financials, I'll end by outlining our priorities and direction in 2019 before closing with any questions you may have.

In September 2018, HT&E completed the sale of Adshel to oOh!media for $570 million, delivering compelling value for shareholders. It marked another transformative year where in a short number of years, we have eliminated all exposure to newspaper advertising, strengthened our balance sheet to be one of the most enviable in the media sector today and continued to grow our radio business. Pleasingly, despite the corporate activity in 2018, the operations remained focused and delivered strong revenue, EBITDA and NPAT growth. Our net cash position provides plenty of headroom for any tax outcome, should it be required. We are currently reconstituting the Board with a team of highly skilled directors with relevant experience and expertise in media to oversee the company's strategy, direction and culture going forward.

I'm particularly pleased to welcome Hamish McLennan as Chair, and I look forward to working with him. There has been a lot of change at HT&E, and the Board is taking a methodical and balanced approach in their assessment of the company. And that includes understanding the opportunities and risks sitting before them. We have commenced the process of moving away from being a multidivisional management structure to a much more simplified business, improving efficiencies and reducing corporate overheads. This work will continue in 2019.

So today, HT&E is predominantly made up of ARN, one of Australia's leading radio and audio entertainment businesses, highly cash generative with exceptional margins, operating in a sector of media that is still growing in Australia. Strategically, our core focus is on this core asset, where the priority is to drive further strong performance and position it for the next phase of industry growth. Audio is having a renaissance, and we believe our business is very well placed.

Looking to the statutory results on Slide 4, which is a reported result from continuing operations, so excludes Adshel. A solid performance is reflected in the numbers, where revenues increased 5% to $272 million, EBITDA was up 7% to $72 million, driven by a strong first half performance at ARN and an excellent year from Hong Kong, which turned a profit for the first time since 2015. EBIT was up 10% to $67 million and NPAT up 23% to $37 million. And as mentioned earlier, our strong balance sheet is reflected in a net cash position of $128 million. A fully franked dividend of $0.04 a share is declared, representing a 55% payout, which is at the higher end of our dividend policy.

Looking at ARN and after a strong first-half, the radio revenue market softened in H2, delivering growth of 1%. Overall, revenue for ARN was up 3% to $235 million and EBITDA up 1% to $85 million, maintaining margin at 36%. At the start of the year, ARN implemented a strategy to extend ratings growth and ended the year experiencing the highest network ratings in the history of the business. Three new breakfast shows were launched: Christian O'Connell on GOLD; Jase & PJ on KIIS 101.1; Paul & Lise on 96FM in Perth; and Will & Woody, a new national drive show across the KIIS network, joining our established on-air stars, who are all collectively focused on driving listener engagement and delivering better integration and value for clients. Familiarity with these new shows is growing, and we are confident that 2019 will yield further rating success.

In Sydney, we maintained our dominance with Kyle & Jackie O and Jonesy & Amanda the #1 and #2 breakfast shows. Gold 104.3 finished the year strongly and is the #2 station. And Christian's breakfast show has made a great connection with listeners in a short space of time. KIIS 101.1 saw ratings growth over the year and the breakfast show is gaining momentum. Mix 102.3 in Adelaide maintained its lead in 2018, finishing the year as the #1 station overall and the #1 breakfast show. Brisbane is one of the most competitive radio markets in Australia with 5 changes in station leadership during the year. 97.3 ended the year as #4 FM and is an area of focus for us this year. And finally, 96FM in Perth grew in 2019 and we expect that growth to continue. Our ambition remains to be the clear #1 national network. And we believe we have the talents to do that and we will continue to dedicate resources to achieving this outcome.

Our exclusive platform partnership with iHeartRadio is a long-term license arrangement. Globally, the app has been downloaded over a billion times. It is the #1 streaming and audio platform in the U.S., has over 125 million registered users, a team of over 280 technical staff, working on the latest audio advancements in areas such as VSEARCH and smart speaker integration. We are benefiting from this scale. We have been investing in iHeartRadio for over 5 years and have learned a lot. And as audio consumption habits broaden in conjunction with our core business, we believe this multi-platform offering is creating an unrivaled commercial proposition that will grow in importance.

I will talk about this later in the presentation, but a quick review of the numbers show that the platform in Australia has grown to 1.3 million registered users with 600,000 active monthly. We will reach 2 million downloads in 2019 with nearly 4 million hours of listening content consumed each month. Over 60% usage is in our core demographic of 25 to 54 year olds. But with 30% under the age of 25, we are building a new audience that we don't traditionally broadcast to or monetize on FM.

Looking at Conversant Media and after a challenging year that saw the founders depart the business, changes to algorithms impact audience generation and a decline in its category demand for advertising, there's no doubt that 2018 was a tough year for CM brands. Recent announcements and staff cutbacks by global operators confirmed that the market is shifting, which is why the integration of ARN was an important milestone to complete in 2018 -- sorry, the integration into ARN was an important milestone.

The benefits of integration are working with the number of users doubling in quarter 4 to 4.3 million. Return visitors are up 83% and direct traffic is up 33%. The Roar can now deliver user-generated sports content across broadcast, audio, social and digital platforms and is providing new commercial opportunities in a category that ARN has the potential to increase its share in. New formats of shows and podcasts will launch later in quarter 1 as we become less reliant on Facebook algorithms.

Turning briefly to our emerging digital investment and our eSports business had a solid first year, establishing and producing the first city-based eSports league, running 2 tournaments, generating a reach of 3.5 million in Australia and creating 150 hours of broadcast content. Good revenue partnerships in year 1 were signed, along with the first commercial media rights deal with Twitch. And it built state-of-the-art permanent boutique eSports arena in conjunction with HOYTS. The eSports market in Australia is still developing. And while we are pleased with the progress we are making, establishing Gfinity as the leading provider of integrated eSports solutions, we are revising our OpEx number down from our previous estimate of $10 million with a view to breaking even in 2020.

Emotive had another successful year with increased earnings and gross margin and continues to produce global and domestic award-winning contracts. Unbound is a creative technology business acquiring new and immersive content projects in the VR and AR space. The business is aiming to create value via a content-driven strategy monetized through subscription, pay-per-view, advertising and sponsorship with some exciting content partnerships already in the pipeline. And finally, Soprano Design, in which HT&E has a 25% investment, continues its momentum through market, channel and customer acquisition and growth. The business manages more than 3 billion mobile interactions per annum for some of the largest enterprises and governments in 14 countries. Soprano paid HT&E a dividend of $1.25 million during 2018.

Jeff?

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Jeffrey Peter Howard, HT&E Limited - Executive Officer [3]

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Thanks, Ciaran. Good morning, everyone. On Slide 10, we have shown the reported results of HT&E in 2018. Like the half year results, a number of things have impacted the reported results in 2018, including the Adshel sale and changes to a couple of accounting standards. The statutory results are on a continuing operations basis with Adshel's operating performance for 9 months pre sale and the related gain on sale, shown as NPAT from discontinued operations. There is an Adshel performance table in the appendix that shows the detail behind this $188 million.

As noted at the half year, the table on Page 10 reverts to the traditional EBIT and NPAT format rather than the EBITDA and NPATA format used last year. On a continuing basis, the statutory results include like-for-like revenue up 5% after solid results at ARN and Hong Kong, partially offset by a soft Australian digital display market. From a cost perspective, growth of $6 million was mostly in radio. Reinstatement of prior year savings and new shows drove marketing higher while cost savings were achieved in Hong Kong and Corporate year-on-year. Underlying EBITDA was up nearly $5 million or 7%. D&A was down slightly as radio kit reached end of life, studio and office resurged in 2018 and 2019. We'll see this slightly higher in 2019. Interest cost savings were achieved despite the $51 million tax deposit due to lower debt post the Adshel sale. Interest costs in 2019 will be dependent upon cash levels and, for example, the timing of the buyback completion. Net interest income is expected to partly offset commitment fees and facility cost amortization.

Effective tax rate was steady at 31%. And combined, this delivered NPAT attributable to HT&E shareholders of $36.7 million, up 23% year-on-year. Exceptional items in continuing operations relates to the Conversant acquisition earn-out provision reversal in the first half, offset by costs associated with closing out a contract in Hong Kong late in the year. Underlying EPS for HT&E's continuing operations was $0.119 per share. When we calculate EPS based on the actual numbers of shares now in issue, notional EPS was $0.128 per share or up 34% year-on-year. As Ciaran said, a final dividend of $0.04 per share has been declared today, payable on the 15th of March, but DRP remains suspended at this time.

Turning to radio on Slide 11. ARN delivered revenue growth of 3% in 2018 compared to market growth of just a bit higher at 3.5%. After strong first half performance momentum in the metro market stalled in September, with the market up 1% in the second half, ARN share declined marginally. ARN second half revenue was in line with the first half up to August. From September, revenue fell approximately 2% compared to growth of 5% in the same period in 2017. The direct market remains challenging, down 3% in 2018. ARN finished the year down 4% compared to down 5% in the first half. Agency revenue delivered a better full year result, where ARN growth of 6% was in line with market. However, it was a tale of 2 periods. ARN's agency revenue was up more than 12% for the first 8 months and then declined 4% in the final 4 months of 2018 against pretty strong comps in the prior year.

Changes have been made to restructure the commercial team to reflect the continuing evolution of these market conditions. As noted earlier, most of HT&E's continuing operations' cost growth occurred in radio. Staff costs and talent remained flat year-on-year while cost of sales moved in line with revenue. Operating cost growth of just under $4 million was mainly due to reinstatement of prior year marketing savings and the marketing spend related to the new show launches that Ciaran talked to at the beginning. As noted at the August results, circa $1 million in OpEx cost was incurred over the year, reinstating costs such as staff recruitment, training and dealing with above CPI increases in areas like insurance. The late in the year ad market shift made it difficult to react with cost savings. However, a number of actions were taken to limit OpEx growth.

2017 comparatives have been restated to reflect the adoption of accounting standard changes as well as the full integration of Conversant Media into ARN that was completed during the second half as Ciaran mentioned earlier. Revenue for Conversant was weak during 2018, down 28% year-on-year while costs were in line and account for approximately $4 million of the 2017 restatement. Full integration will deliver efficiencies during 2019. This combination of tough late market conditions, limited ability to react with cost savings and the revenue challenges in Conversant means EBITDA for the full year was up $1 million. Margin was maintained within our target sort of at 36%.

Hong Kong Outdoor continued its recovery and delivered a particularly pleasing result. 2018 was its first full year of profit since 2015 and a significant turnaround on the pre-provision release EBITDA loss of $5.7 million in 2017. All key assets delivered revenue growth year-on-year, including a substantial 21% on the business' marquee asset, the Western Harbour Tunnel. Selective shelter upgrades attracted new major advertisers and helped drive yield on that asset class. The decommissioning of Hung Hing Rd billboard at the end of the year, while coming at a cost, sees the last of the unprofitable contracts leave the portfolio. Pleasingly, it wasn't just the revenue story. The strategic review in 2017 identified a number of efficiencies. And cost on a local currency basis were down 6% for the full year. A number of potentially lucrative contracts come off the tender over the next 12 to 18 months and we will explore these, subject to strict capital management criteria.

Turning to Corporate costs on Page 13. As noted at this time last year, we made a number of changes to Corporate costs for 2018 to drive greater return for shareholders, including headcount reductions and rebalancing salary costs towards at-risk elements. Costs were down $600,000 in the year. Salaries and incentives of $8 million were in line with 2017, albeit rebalanced towards those at-risk components, reflecting headcount reductions, offset by the TIP increase on the limited outcomes of 2017.

Savings in compliance and adviser costs were offset by an increase in costs associated with the tax dispute. The 2017 group integration costs weren't repeated this year. We also saw a significant increase in insurance premiums in 2018. And we've taken steps to mitigate these as best we can for 2019. Some further changes have been made to the Corporate team early in 2019. And combined with other headcount changes at radio, we found approximately $1.5 million to $2 million in group savings so far this year, and we continue to look at ways to reduce Corporate and broader overhead.

Slide 14 shows the balance sheet at the end of 2018. We have shown how the restated balance sheet translates into a pro forma balance sheet for 2017 for the Adshel sale with Adshel assets and liabilities summarized into one line. The 2017 restatement relates to the adoption of AASB 15 with an increase in receivables and payables of about $2 million. The material changes comparing the actual and pro forma balance sheet are essentially the increase in cash and repayment of debt from the net Adshel proceeds and the $51 million tax deposit.

Cash flow for the year is outlined on Slide 15. Reported cash flow is shown on a continuing and discontinued basis. Adshel cash flow is included for 9 months in 2018 compared to the full year in 2017. And we've again split it out to hopefully to make it easier to understand. Operating cash flow included $6 million from Adshel and was $45 million before the $51 million tax deposit. The Adshel sale and a $20 million increase in current and prior year tax installments materially reduced operating cash flow in 2018 but was in line with our expectations at this time last year.

CapEx in the year was largely related to Adshel with a combined $5 million at ARN and Hong Kong. Radio will be a few million higher in 2019 as we complete the previously flagged move in Brisbane and the Sydney office refurbishment. The sale of Adshel delivered net cash of $564 million with about $8 million cash transferred with the business and was used to fund the $222 million special dividend, debt repayment of about $190 million and the buyback of $39 million. Investments reflect these net cash proceeds less loan to fund the eSports and Unbound joint ventures. Borrowing costs were incurred to refinance the group's debt facilities and ordinary dividends of $22 million were paid in 2018. In the appendix, we've included a table that breaks down the net changes in working capital, noncash and exceptional items. Transaction costs reflect a large component of this in 2018.

Net cash is outlined on Slide 16. It is great to be able to see HT&E's net cash after years of talking about debt metrics. As noted just now, we've refinanced our debt facilities in late 2018 with a group of 5 very supportive lenders. Most of the new $260 million in limits have been extended to 2023 with significantly greater flexibility than the previous arrangements. With roughly 25% of the buyback to go and today's announced dividend, pro forma net cash will reduce to about $100 million once these have been completed or paid. Between that and the available limits, we have sufficient capacity to cover any tax outcome.

And quickly with regards to the dispute. Things continue to track according to our expectations. As you know, we have received the amended assessments during 2018 and were notified of the ATO's penalty and interest positions. We've objected to the assessments and paid the deposit, leaving $128 million in potential exposure. We continue to work through the ATO's review of our objection and await their feedback. We remain resolute in our view and have not provided for the dispute. We will continue to pursue this to a satisfactory conclusion, which may still take some time. And the ATO is also auditing a number of other matters. And as yet, there is no certainty of any proposed adjustments or disputes.

Before handing back to Ciaran, a brief outline of the additional material in appendix. We've included the usual reconciliation of segment to statutory results. The Adshel results table are referenced earlier as well as the second table showing the impact of Adshel on 2017 results. Results by half are summarized as are the exceptional items for continuing operations in Adshel split out. And there's a table showing the results of the various digital investments, Ciaran spoke to at the outset.

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [4]

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Thanks, Jeff. Before closing, I just want to spend a few moments looking at the priorities for 2019 and beyond and outline why we believe it's an exciting time for our business. Corporately, HT&E and ARN will increasingly run as a single entity and we will be simplifying the organizational structure to reduce corporate costs. The process has already started and our aim is to run the business with approximately $10 million overhead once the ATO dispute has been finalized. As Jeff has outlined, we fully intend to pursue the matter. We remain confident in our position and of achieving an acceptable outcome for shareholders. But final resolution could take several years with the cost running about $2 million per annum.

As previously stated, the Board is adopting a methodical and balanced approach to capital management. We will restart the buyback with a view to completing as previously guided and our investment framework is focused on our radio and audio business. Against this backdrop, we are driving performance at ARN. Our brands, our talent, our partnerships are well positioned and our aim is to be the #1 radio network in the country. While being brilliant at the basics, we will look to expand our digital and data capabilities to build out our audience base and create the future of audio entertainment as digital platforms, such as iHeartRadio, grow in relevance to better influence audience behavior and client solutions.

Speaking of the basics, radio and the power of radio continues to grow. Commercial radio reached an all-time high in 2018, growing 12% over the past 5 years, 22% over the past decade with 10.7 million people tuning each week across the 5 metro cities. And every demographic has seen growth, debunking the myth that younger audiences are not tuning in. At breakfast time, it's favored, a time when 75% of the population consume media, radio is the country's #1 media channel for reaching Australians, a clear favorite preferred over the Internet, including social media, TV and newspapers. Radio is more human, interactive and community-focused than any other media. It's live, it's free and our talents deliver closer and more trusted connections, very important for clients as global platforms face questions of trust and privacy.

Radio is also the dominant platform for audio consumption with 62% of all time spent listening to audio being to live radio. And Australians spend more than 2 hours every day listening, 4x higher than streaming. But consumption is broadening as the diagram on Slide 20 illustrates with streaming at 15% or podcasting at 4%. And these will continue to become more mainstream as mobile apps and unlimited data plans expand, especially with smartphone ownership amongst 25 to 54 year olds reaching 96%.

Smart speakers, such as Amazon's Alexa and Google Home, have brought new services in voice interaction. And although ownership in Australia is only at 5%, this is expected to double in the next 2 years with music being users' #1 activity, which is bringing radio back into the home. The opportunity is highlighted by the fact that in December alone, 300,000 hours of our iHeart content was listened to on these devices. These broadening consumption habits, together with the growth of terrestrial radio, means that HT&E/ARN is ideally positioned as we gradually transitioned to a digitally enabled audio business.

And that's because from an advertiser perspective, ARN and iHeartRadio, complement each other perfectly. As terrestrial radio still reaches mass audiences with content broadcast by trusted personalities in efficient and integrated buying models, all supported by a growing all-in-one listening platform, providing local content on a national scale with multi-device approach, including mobile and smart speakers, it includes the largest library of podcast material in Australia, a subscription service capable of being launched in 2019 with fully customizable content and data-rich targeting, supported by real-time reporting, an exciting combination for our partners.

Before turning to questions, I'll just finish with the trading update. Trading in 2019 is broadly in line with 2018 against strong comps. We are seeing improved briefing activity after a soft last 4 months in 2018, however remain cautious with federal and state elections during 2019. We have commenced the integration of the Corporate and ARN cost bases and continue to pursue cost savings across the group.

I'll now hand over for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Entcho Raykovski from Crédit Suisse.

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Entcho Raykovski, Crédit Suisse AG, Research Division - Research Analyst [2]

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A couple for me. This one is related to ARN. And it looks like, Jeff, as you made mention, you've pulled back the cost growth at ARN in the second half. Just interested whether you may well need to put some of those costs back in FY '19 or if you think that this represents a reasonable base that we can look at. And just secondly, in the trading update, you've mentioned that you remain cautious, given the elections are coming up. How do you usually see radio perform during those elections? Do you find that a lot of money gets sucked into TV? Is that part of the issue?

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Jeffrey Peter Howard, HT&E Limited - Executive Officer [3]

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So I'll cover the first one, Entcho. In terms of costs, yes, there is always that sort of ebb and flow of things that we pull out to try and offset market challenges or revenue challenges. And when we need to put them back in, one of the biggest swing factors, as we've talked about before, is things like marketing. There's the usual sort of CPI cost-related pressure on quite a number of lines in the radio business, but we're always looking for ways to make things more efficient. So I think the numbers that we've got for 2018 are a good base, subject to things like how revenue performs, CPI-type effects and where we can find opportunities.

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Entcho Raykovski, Crédit Suisse AG, Research Division - Research Analyst [4]

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Got it. Okay. Third question, if I read into that, you've got a level of flexibility depending on the top line?

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Jeffrey Peter Howard, HT&E Limited - Executive Officer [5]

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A relatively small level. The variable cost of sales is a relatively small piece of the total cost base. And a large piece of the cost base is related to people, which are essentially in the business. So the tougher decisions need to be made around things like marketing in the event that we see a material revenue change to expectations.

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [6]

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Obviously, we monitor that very closely. And I think where we can, if needed, we are good at managing those costs and think we've demonstrated that in the previous couple of years as well. Just in terms of the election, I think as an industry, first of all, the radio industry is doing a very good job talking to government around the power of radio in the runup to an election, not just from an advertising perspective but from an editorial perspective. And that work is continuing, which is very pleasing. I think the point to raise about elections, there's probably no real trend, other than the fact that sometimes retail may pull back a little bit.

In the runup to the election, just a little bit of noise by the other parties maybe. And why we're sort of cautious is if you look at what happened to Victoria through the end of last year, the market just took a couple of months to kick back in before and spend was back up post the election. So it's -- we're working hard in terms of the buildup to the election to make sure that radio is seen by both the government and opposition parties and any candidates as a very powerful medium from an advertising and editorial perspective. And obviously then, we drive very hard with our other advertising partners to reinforce that message around the power of radio as well.

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Operator [7]

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(Operator Instructions) Your next question comes from Roger Colman from CCZ Equities.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [8]

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Could I just ask on the bits and pieces components of the business, namely Soprano, Hong Kong, eSports and so forth though? What's the plan with these little [appendums]? Are you going to expand into outdoor from Hong Kong other than your contracts indicatively? And when are you going to sell Soprano and things like that? Could you just give us a broad overview on some of the diversification as you look back at their performance and where you expect to add on anything, if anything?

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [9]

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Roger, just to reinforce what we've said throughout the presentation is that, firstly, the Board is a new Board. Hamish came in as Chair in sort of November. Roger came in December and we announced Belinda last week. So as a Board, they're taking a very methodical approach to the business, looking at all the opportunities, looking at all the risks that are there. And it's been a great start to the year in terms of engagement of the Board around their views of the business. I think I'll also want to call out that we are absolutely focused on our radio and audio business. We said that several times. We think we're in a very good spot with ARN as our core business, which is performing very well and is set up to continue that trend. We think audio has got a great future. There's a lot happening in the audio consumption space that we called out there. And our partnership with iHeartRadio sets us apart, I think, from other operators in terms of our ability to grow new audiences and to be able to custom -- commercialize those audiences.

In terms of the other bits and pieces, eSports had a good year. But we revised down of what we talked to around through a $10 million OpEx to make it breakeven. We've revised that down. It's a very fluid market, it's changing a lot. And we're working hard to see what the business model could evolve into as being a leading eSports integrated provider. But we won't be putting more cash into it than we've been talking around already. Hong Kong is a -- had a great year. It's in a very good position. It started the year well from a revenue perspective. It would have been the wrong time to have sold it 18 months ago, when we did that strategic review. It's much more profitable today. And if an offer comes in for the business that we think is right for shareholders, then yes, we will look to take it. In terms of Soprano, we're a 25% shareholder there. The trajectory of that business is also going well. We're working with the founder and owner, who owns 75% on opportunities that are there. And again, if the right outcome comes, the one that we believe maximizes our value in that business, then yes, we would look to consider that as well.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [10]

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I mean you've got Soprano, allowing a 5% dividend yield, is worth $25 million. Now it has fluctuated between whatever that figure is and a higher figure. So there must be some good cash available there for something that minimally contributes to the group overall.

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [11]

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It doesn't take Jeff or I any time at all. But we attend Board meetings and -- but from a resource perspective, it doesn't take up much time. It's a very strong business. And if the right opportunity comes along to exit at the right price, then yes, we will consider it absolutely. And that's why we've called out that we're working with Richard. He's paid $1.25 million to us as in a dividend last year. So it's a good business.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [12]

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Right. Understood. But just as a quick follow-up, CapEx for this time of the year was $5.1 million last year. So give us a ballpark figure?

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Jeffrey Peter Howard, HT&E Limited - Executive Officer [13]

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A bit higher this year. As we called out, there's some move in Brisbane, so there's a bit of CapEx due in Brisbane. And there is a refurb in Sydney that we're doing. So CapEx can be a bit higher than sort of the standard $4 million to $5 million of maintenance CapEx in radio for 2019.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [14]

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Right. And then in respect of -- I do want to double-check iHeartRadio. How long does the contract got to run still? When does it expire?

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [15]

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We don't give the date on that. But it's a long-term contract.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [16]

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So long term, being more than 5 or more than 10 years? Could you give us at least a little bit of a hint?

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [17]

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Sorry, more than 10 years, Roger.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [18]

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Are you there?

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [19]

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Sorry, I think we lost you. It's more than 10 years.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [20]

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Okay, that's good. Excellent. And just with respect to digital signals, this radio market is split between 4 national networks with the 2 to market rule. Will the company be lobbying with industry to consolidate? And is it necessary for ARN in terms of digital signal acquisition to do a merger with somebody who has got spare digital assets?

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [21]

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I think in answer to that question, you've got to look to where the market is going. Increasingly, as we pointed out there, Smartphone, speaker integration, smart speakers, they are all going to change how audio will be consumed. So the -- necessarily the need for FM/AM licenses is not as pertinent as it would have been maybe 5 or 10 years ago. I think from our perspective, we look at the 2 per market rule. We've got very good brands in the markets that we're in. And we're complementing it with a digital offering as well that is driving over time, it's not going to happen overnight -- and we see that streaming is at 15%, podcasting is at 4%. So it's an evolvement over time. But more people will consume more data on digital and mobile platform than the desktops. And that's where, I think, we've got to focus how we deliver our content.

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Roger Colman, CCZ Equities Pty Limited, Research Division - Former Director of Media [22]

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Okay. That's good. That's good performance in the circumstances, you know what I mean? A couple years ago, plus 2% against the market, a couple of years, a little bit less. It's a cycle-through.

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Operator [23]

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(Operator Instructions) There are no further questions at this time. I'll now hand back to Mr. Davis for closing remarks.

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Ciaran Davis, HT&E Limited - CEO, MD & Executive Director [24]

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Thank you, everybody, for your time, look forward to catching up with most of you on the one-on-ones. Thank you.