Southern Cross Media Group Ltd
Annual Report 2023

Plain-text annual report

A N N U A L R E P O R T Southern Cross Austereo Year In Review SCA’s Audio audiences continued to grow, while Audio revenue was flat in challenging market conditions. Digital revenue outpaced the market, increasing by 36.2%. Group revenue declined 3.7%, weighed down by a 14.5% decline in Television revenue. Despite inflationary pressures, non-revenue-related expenses reduced by 1.3% and total expenses reduced by 2.0%. Comparison to FY22 FY23 $505.6M $(428.4M) $77.2M $21.9M $19.1M $105.0M 75.8% 6.80 cps FY22 $524.9M $(436.9M) $87.9M $27.4M $(153.7M) $78.5M 67.2% 9.25 cps Variance (3.7%) 2.0% (12.2%) (20.1%) n.m. 33.8% 860 bps (2.45 cps) Revenue Expenses EBITDA NPAT Reported NPAT Net debt Free cash conversion Full year dividends (cps) SCA is all about Audio. Nationally, the combination of SCA’s Triple M and Hit Networks have nearly nine million weekly listeners and the largest metro Radio audiences for the key People 10+, 25-54 Men and 25-54 Women. Highlights included The Fox having Melbourne’s biggest audience, 2Day FM continuing to grow its audience, Triple M and SAFM Breakfast shows rating first and second in Adelaide, and B105 reclaiming the number one Breakfast position in Brisbane. LiSTNR achieved positive milestones during the year, with more than 1.5 million signed-in users and a monetisable audience network of over eight million monthly listeners, the largest in the Australian Podcast Ranker. This is increasing consideration by media buyers, as demonstrated by growth of 36.2% in Digital Audio revenues. Our strategic sales representation and distribution partnerships with leading global and local publishers such as Wondery, SiriusXM, Stitcher, Schwartz Media and Diamantina Media position LiSTNR to take a leading share of the $235.6 million Australian Digital Audio market. Source: IAB Australia’s FY23 Online Advertising Expenditure Report (OAER) prepared by PwC. We were proud that LiSTNR’s production of The Children in the Pictures podcast won Gold at the New York Radio Festival Awards for best narrative documentary. Our Television sales teams did well to achieve a parity sales-to-ratings power ratio in our Network 10 markets, mitigating the impacts of declining advertising markets, a comparatively softer ratings performance by Network 10 programming, and our regional Television competitors having more unified sales processes. In the year ahead, we are targeting further gains in our Broadcast and Digital Audiences and commercial shares, while optimising the structure of our regional television operations to improve our national sales proposition and returns. Our strategic cost review will remove $12 to $15 million in annualised operating costs, with $5 to $7 million targeted for the current financial year. Our reduced capital expenditure (capex) program focuses on innovation to increase the size of and returns from our monetisable audiences. Contents Year In Review Chairman’s Statement CEO’s Report Operational Review Television Boomtown Year In Review IFC 02 04 06 11 12 Governance SCA Embrace and Community The Board and Leadership Team Financial Report Additional Stock Exchange Information Corporate Directory 13 14 20 25 97 99 REGIONAL REGIONAL 8.89M* 6.65M* Total FM, AM and DAB+ audience Total Hit FM and DAB+ audience 4.57M* Total Triple M FM and DAB+ audience 3.36M** Total TV reach 4.48M^ Average monthly unique podcast listeners 1.94M*** 9.15M*** Average monthly unique radio streamers Average monthly streaming total listening hours 1.52M^^ 10M^^^ Total LiSTNR signed-up users Total digital audio network audience * Source: GFK Radio 360 Ratings, Total Radio. Survey #5 2023 – Metro (FM & DAB+). Canberra, Gold Coast, Newcastle Survey #2 2023. Mon-Sun 5:30-12mn Cume. Geraldton Survey, Port Macquarie, Roma, Albany, Wheatbelt, Bundaberg, Esperance, Toowoomba, Kalgoorlie, Bendigo #1 2021. Karratha, Mt Gambier, Coffs Harbour, Griffith, Port Hedland Broome, Wagga Wagga, Central Qld, Central Coast, Townsville, Orange, Bunbury, Cairns, Atherton, Albury, Warragul #1 12022 (FM/AM) Mon-Sun ROS Cume. Xtra Insights Survey #1 2023 Mon-Sun ROS, Cume Reach, Mt Isa, Kingaroy, Shepparton, Emerald, Mildura, Hobart, Maryborough, Bendigo, Mackay, Bundaberg. ** Source: Regional TAM Data. Total People. 4AGGS (Network 10 + SKY NEWS Regional), WA (Network 10) & TAS (Seven Network & Network 10). Average weekly reach (1 Min Cume). 0200-2600. Consolidated 7. Sun-Sat. (03/07/22-01/07/23) WK 28 2021 – WK 26 2022 (Excl. Summer & Easter). Diary Markets – Last available survey. 0600-2400. CEN – 2007. DAR – 2011. SGT – 2015. *** Source: Triton Streaming Metrics. ^ Source: Triton Podcast Metrics. ^^ Source: Firebase Authenticated User Counts. ^^^ Source: LiSTNR Digital Audio Network: 10M Australians per month, including LiSTNR streaming, podcasts, Soundcloud and Sonos. Year In Review | 1 2023 Annual ReportChairman’s Statement Southern Cross Austereo performed solidly during the year, increasing audience for our core Radio and Digital Audio assets, and growing our commercial share of metro and regional Radio and Digital Audio markets. Nationally, the combination of SCA’s Triple M and Hit Networks have nearly nine million weekly listeners and the largest metro Radio audiences for People 10+ and in the key buying demographics of People 25-54, Women 25-54 and Men 25-54. Signed-in users to LiSTNR surged past 1.5 million and our LiSTNR podcast audience network reached eight million. Group revenue of $505.6 million ended 3.7% down on the prior year, and EBITDA of $77.2 million was down 12%. Metro Radio revenue grew 0.6% in a flat market, while regional Radio revenues declined by 4.6%. Promising growth in broadcast media markets in the first four months of FY23 changed to a sharp contraction over the remainder of the year. 2 | Chairman’s Statement Southern Cross AustereoOur regional Television business dragged on our results, with the impact of declining advertising markets exacerbated by a comparatively softer ratings performance by Network 10 programming and our regional Television competitors having more unified sales processes. Our Television sales teams did well to achieve a parity sales-to-ratings power ratio in our Network 10 markets, and steps are underway this year to provide a one-stop shop to media agencies and national advertisers and more reliable returns to SCA and our shareholders. Our ongoing development of LiSTNR positions SCA to take a leading share of the growing Australian Digital Audio market, currently estimated by the Internet Advertising Bureau at $235.6 million. SCA’s digital audio revenue increased by 36% to $21.3 million, bringing forward our expected earnings breakeven point for LiSTNR to the last quarter of FY24. Source: IAB Australia’s FY23 Online Advertising Expenditure Report (OAER) prepared by PwC. During the year, we made further improvements in the user experience on LiSTNR, enhanced our data analytics capability, and significantly expanded the content on LiSTNR both through our own podcasts and streaming music stations and through strategic sales representation and distribution partnerships with leading global and local publishers such as Wondery, SiriusXM, Stitcher, Schwartz Media and Diamantina Media. SCA represents six of the top 20 podcasts in the Australian Podcast Ranker for July 2023: Hamish and Andy, 7am (Schwartz Media), Crime Junkie (SiriusXM), Morbid (Wondery), It’s A Lot with Abbie Chatfield, and Triple M Footy (AFL). Following the retirement of Melanie Willis in August 2022, the Board revised its skills matrix to update relevant descriptions and to emphasise the importance of skills in people leadership, innovation, digital transformation, risk management, and specific aspects of SCA’s core media business. Being satisfied the Board’s reduced size and its mix of skills and experience are appropriate for SCA’s needs, we did not seek a replacement for Melanie but adjusted the compositions of committees to balance responsibilities and plan for future succession. This included Heith Mackay-Cruise taking over as Chair of the People and Culture Committee and Carole Campbell joining the Digital Transformation Committee. The Board oversaw several changes in SCA’s senior executive ranks during FY23. SCA’s Chief Executive Officer, Chief Financial Officer and Chief Sales Officer resigned during the year. After eight years, Grant Blackley stepped down as Managing Director. Grant made a significant contribution in transforming SCA to a truly national media business and navigating SCA through the challenges presented by the lockdowns and uneven recovery from the COVID-19 pandemic. It is to Grant’s credit that he embraced and led a robust succession planning process throughout his tenure which gave the Board confidence in appointing John Kelly as Grant’s successor. John brings extensive strategic, operational and financial leadership experience from 25 years working for Australian media and sporting organisations, including the last seven as SCA’s Chief Operating Officer. An external candidate, Tim Young, was appointed as Chief Financial Officer in February 2023 and Seb Rennie, who had joined SCA in a different role in March 2023, was appointed as Chief Commercial Officer in May 2023. As outlined in John’s CEO’s report, our refreshed and streamlined leadership team has clear goals to drive improvements in financial performance and returns for shareholders in the year ahead. On behalf of the Board, I thank our shareholders and all our people and partners around Australia for your ongoing support of SCA. I trust you will enjoy reading our Annual Report. Rob Murray Chair Chairman’s Statement | 3 2023 Annual ReportCEO’s Report I am pleased to present my first Annual Report to shareholders as CEO and Managing Director. Having been with SCA as Chief Operating Officer since 2016, I have an intimate understanding of our Radio, Digital Audio and Television portfolio of assets, and am confident our digital transformation of the Group’s business model positions us for future growth. We did not achieve our revenue and profitability targets in FY23. While we don’t shy away from those failures, they were largely due to falls in Radio and Television advertising markets. We performed reasonably in areas we could control, growing commercial share in metro Radio and especially in Digital Audio, achieving a parity sales-to-ratings power ratio in regional Television, investing in our LiSTNR growth engine, and controlling costs. Despite inflationary pressures, non-revenue- related expenses reduced by 1.3% and total expenses reduced by 2.0%. With media markets continuing to be short and inconsistent, we will continue to drive initiatives to grow our share of available advertising markets and improve our operating efficiency. Our strategic cost review will remove $12 to $15 million in annualised operating costs, with $5 to $7 million targeted for FY24. Capex reduced by 30% to $19.2 million in FY23 and will reduce further in FY24. Over 80% of this capex is directed to innovation to increase the size of and returns from our monetisable audiences. For the future, SCA is all about Audio. This includes broadcast and livestreamed radio and on-demand podcasts. Our broadcast Radio operations remain at the centre of our business. Our Triple M and Hit Network radio stations create live and local content 24 hours a day, seven days a week to entertain, inform and inspire our audiences around Australia. A Deloitte Access Economics report in August 2023 found that 17 million Australians listen to commercial radio, and 74% believe radio and audio build a sense of community. In the most recent official Radio survey in July 2023, SCA’s metro stations recorded their highest-ever cumulative audience of 6.1 million listeners. Importantly, however, our audiences increasingly are choosing to enjoy our Radio shows on digital devices – mobile phones, tablets, laptop and desktop computers, smart speakers and car dashboards – and many of our listeners are choosing to listen to a catch-up podcast or watch snippets on social media of our Radio shows at a time and place that suits them. The 2023 Infinite Dial Australia study found that 81% of Australians aged 12+ listen to Digital Radio monthly. Our Radio content teams think digital first, so our Radio shows can continue to grow and engage our audiences on the platforms our audiences prefer. We retired our former Triple M and Hit apps in September 2022 and were pleased to see our dedicated fans seamlessly moved to LiSTNR, which now exclusively hosts all our live Radio streams. Around 80% of consumption on LiSTNR is live listening to our Radio stations. Recognising this accelerating digital trend, our peak industry body has re-branded to Commercial Radio and Audio and modernised its trusted metro Radio audience measurement currency. Radio 360 captures radio listening on all platforms and devices, anywhere, any time. It incorporates data from regular audience surveys; streaming 4 | CEO’s Report Southern Cross Austereoinformation from radio station websites, apps and logs; and information from a 2,000-people panel wearing a watch meter that captures their Radio listening. Delivering total, broadcast and streaming audience figures for each metro Radio station, Radio 360 gives the industry, media agencies and advertisers deep and accurate information about listening behaviour and the size of the Digital opportunity. Apart from our live radio streams, LiSTNR is also home to a diverse library of more than 800 podcasts from SCA’s own creators and from leading local and international publishers. We were proud that LiSTNR’s production of The Children in the Pictures won Gold at the New York Radio Festival Awards for best narrative documentary. In the Radio Today Podcast Awards, LiSTNR was judged Podcast Platform of the Year, Publisher of the Year and Company of the Year, as well as taking home individual awards for Hamish & Andy, Sports Bizarre, The Children in the Pictures, Blak Matters and Along for the Ride. This investment in growing LiSTNR’s library is feeding our listeners’ appetite for high quality podcasts. The 2023 Infinite Dial Australia study found that 43% of Australians aged 12+ listen to podcasts monthly, up from 40% in 2022 and ahead of the U.S. for the first time. LiSTNR itself now has more than 1.5 million signed-in users and a podcast audience network of eight million. Our podcast audience network is important because it includes consumption of LiSTNR original and partner podcasts on all podcast platforms in Australia (including, for example, Apple Podcasts, Spotify and Amazon Music). This network maximises the reach of LiSTNR podcasts for our creators and advertisers. No matter where you hear an advertisement in a LiSTNR original or partner podcast in Australia, the advertisement will have been sold by our LiSTNR sales team. Although we benefit from advertising impressions on all Australian podcast platforms, it is important over time for us to grow the on- platform audience for LiSTNR original and partner podcasts, because on-platform listening provides deeper first-party data and insights to help advertisers connect to addressable and targeted audiences at scale. Advertisers will pay a premium to target their messages to known Digital audiences, rather than mass unknown broadcast audiences. We are therefore continuing targeted investment to further improve the user experience on LiSTNR and our data analytics capabilities to optimise the services we provide to listeners, media agencies and advertisers. In the year ahead, we are targeting further gains in our Radio Broadcast and Digital audience and commercial shares, while optimising the structure of our regional Television operations to improve our national sales proposition and returns. At the same time, we will leave no stone unturned around the business to find ways to do things more efficiently. I am grateful for the welcome I have received from our people around Australia to my appointment as CEO and look forward to working with you to achieve our goals for the year ahead. Thank you to all our shareholders, advertisers, communities and employees for your support. I believe we are well placed to deliver on our mission to entertain, inform and inspire Australians any time, anywhere. John Kelly Chief Executive Officer and Managing Director CEO’s Report | 5 2023 Annual ReportOperational Review – Highlights • SCA has more than 8.8 million listeners across its FM, AM and DAB+ networks. Source: GfK Metro Survey #4 2023 Radio 360, GfK Gold Coast/Newcastle/Canberra. Xtra Insights All current SCA regional Radio markets surveyed to 11th August 2023. P10+, Mon-Sun ROS, Cume Reach (000’s). • SCA remains the number one commercial radio network for People 10+ and the key buying demographics of people 25 to 54 years of age. The Hit Network is number one among women aged 25 to 54 and Triple M is number one among men aged 25 to 54. Source: GfK Metro Survey #4 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. • SCA also recorded its highest ever cumulative audience for metro radio in 2023 at more than 6.1 million listeners. Source: GfK Metro Survey #4 2023 Radio 360 v GfK Metro Survey #1 2018. P10+, Mon-Sun ROS, Cume Reach (000’s). • LiSTNR is Australia’s fastest growing audio brand, with more than 1.5 million signed-in users. • LiSTNR served its users more than 9 million content streams in June 2023, a new record. • LiSTNR is Australia’s largest podcast network with an audience of more than eight million monthly listeners, up by 145% in less than a year. Source: Australian Podcast Ranker Top Sales Representation July 2023. • LiSTNR publishes more co-created original podcast titles and episodes than any other Australian commercial Digital Audio company. • LiSTNR this year won Podcast Company of the Year, Platform of the Year, and Publisher of the Year, as well as five individual podcast awards in Radio Today’s Podcast Awards. • The Hit Network’s The Fox in Melbourne continued to break records in 2023 and has the biggest audience in the city, with more than 1.3 million weekly listeners. Source: GfK Melbourne Survey #4 2023 Radio 360, P10+, Mon-Sun ROS, Cume Reach (000’s). • The Hit Network’s B105 Brisbane and 104.7 Triple M Adelaide have the number one Breakfast shows in each city. Source: GfK Radio 360 Ratings, Metro Survey #5 2023. P10+, Brisbane/Adelaide. Mon-Fri 5:30am-9am. Share to All %. • The Triple M Network recorded its biggest cumulative audience in 19 years with more than three million listeners every week. Source: GfK Sydney Survey #4 2023 – Survey #1 2004. P10+, Mon-Sun ROS, Cume Reach (000’s). • 104.7 Triple M Adelaide recorded its highest share ever for the station overall and its Breakfast show. Source: GfK Metro Survey #4 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. • SCA extended its regional Television affiliation agreement with Paramount/ Network 10. • SCA has 96 free-to-air TV signals across regional Australia and represents or has a joint venture with 39 TV stations, reaching 3.36 million people a week. Source: Regional TAM data. Total people. 4aggs (network 10 + sky news regional), WA (Network 10) & Tas (Seven Network & Network 10). Average weekly reach (1 min cume). 0200-2600. Consolidated 7. Sun-Sat. (03/07/22-01/07/23) wk 28 2021 – wk 26 2022 (excl summer and Easter). Diary markets – last available survey. 0600-2400. Cen – 2007. Dar – 2011. Sgt – 2015. 6 | Operational Review Southern Cross AustereoOperational Review – LiSTNR In just over two years since its launch, LiSTNR is Australia’s fastest growing audio brand, with more than 1.5 million signed-in users and targeting two million by 30 June 2024. LiSTNR broke new records in 2023 including serving its users more than nine million content streams in June 2023, and targeting 10 million by 30 June 2024. LiSTNR is Australia’s largest podcast network with an audience of more than eight million monthly listeners, representing growth of more than 4.8 million listeners, or 145%, in less than a year. In FY23, LiSTNR continued its strong growth trajectory, with revenue climbing by 36.2% and its EBITDA loss narrowing by more than 30% to $15 million, improving the path to cash flow breakeven, which is expected to be achieved in the fourth quarter of FY24, a year ahead of previous guidance. This year, LiSTNR added to its accolades, winning the Radio Today Podcast Awards’ Podcast Platform of the Year, Publisher of the Year and Company of the Year, as well as five individual podcast awards for Hamish & Andy, Sports Bizarre, The Children in the Pictures, Blak Matters and Along for the Ride. The Children in the Pictures also won a prestigious Gold at the New York Radio Festival Awards for best narrative documentary. Australia’s Digital Audio listening now leads the world, with 81% of people listening to Digital Radio monthly; and podcast audiences have set new records, with 43% of people listening monthly. Source: Infinite Dial Australia 2023. LiSTNR sits at the heart of SCA’s Digital transformation and is the Company’s owned and operated, curated and personalised, free app offering radio, podcasts, music, sport and news, creating a new audio destination for all Australians. Highly personalised, it provides listeners a new world of audio entertainment, with their own daily feed of audio and easy discovery of new content through curated recommendations. The LiSTNR app houses SCA’s 99 Hit and Triple M stations and DAB+ radio stations, 29 genre and mood-driven music streaming stations, more than 800 podcasts comprising 300 locally created podcasts and 500 podcasts from LiSTNR’s international and local partners including SiriusXM, Wondery, Schwartz Media, Diamantina Media and SBS. In addition, LiSTNR is home to Australia’s number one podcast – Hamish & Andy; and has Australia’s number one news podcast, 7am in partnership with Schwartz Media. Sources: Australian Podcast Ranker Top Sales Representation June 2023; Australian Podcast Ranker Top 150 Podcasts June 2023. LiSTNR also features some of Australia’s most trusted and loved talent including Andy Lee, Hamish Blake, Mark Howard, Abbie Chatfield, Tom Tilley and Jess Rowe, as well as all of SCA’s radio talent. In 2023, LiSTNR has launched more than 20 podcasts including Secrets We Keep – Shame, Lies & Family, Luke and Sassy Scott, Defending Democracy with Malcolm Turnbull, Sooshi Mango Saucy Meatballs, Blak Matters, You Don’t Know Me, Jock and Journo, This Arvo in Sydney, Beanies Dreamies, and Footy Talk, and welcomed Sit with Us, Darling, Shine!, Wilosophy, TOFOP and FOFOP, and Sports Bizarre. LiSTNR’s music streaming stations, including Hard n Heavy, Oldskool 90s, Trending Now, Almost Acoustic and Good Vibes, provide more than 730,000 total listening hours per month and have grown by more than 150% year on year. Commercially, LiSTNR offers advertisers valuable known users and is seeing a growing cohort of Digital Audio exclusive advertisers come to LiSTNR. By understanding its audience in-app behaviour and preferences, LiSTNR delivers a personalised experience in a premium, data-rich environment with addressable, known audiences at scale. Among consumers, unprompted brand awareness of LiSTNR increased by 37% and prompted awareness increased by 23% Jul-Jun YoY1. In 2023, LiSTNR app installs increased 107% from 1.2 million to 2.5 million2. 1Source: SCA-LiSTNR Consumer Brand Tracking, July 2022 (N=1,210) vs. June 2023 (N=706). External Sample (Fonto & TEG Rewards), P18-64. 2Cumulative Apple & Android App Store Installs from Feb 17 2021; July 2022 vs. June 2023. Today, LiSTNR publishes more co-created original podcast titles and episodes than any other Australian commercial Digital Audio company. Operational Review | 7 2023 Annual ReportOperational Review – Radio SCA owns 99 radio stations across FM, AM and DAB+ Radio under the Triple M and Hit network brands and provides national sales representation for 56 regional Radio stations. The Hit and Triple M Networks continued to entertain, inform and inspire more than 8.89 million Australians each week. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. SCA is #1 Metro People 10+ and remains the number one commercial Radio network for the key buying demographic of people 25 to 54 years of age. The Hit Network is number one among women aged 25 to 54 and Triple M is number one among men aged 25 to 54. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. SCA also recorded its highest ever cumulative audience for metro Radio in 2023 at more than 6.15 million listeners. SCA’s metro Radio stations have added more than one million listeners over the past five years. Source: GfK Metro Survey #4 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. Like many across the media sector, Radio has experienced challenging market conditions; however SCA has outperformed the total Audio market in all segments. It has grown its market share in metro Radio by 0.6% and regional Radio by 1.1%. 2.7 million Australian songs, 42,000 hours of news and 2,200 hours of emergency service content in 2022. In addition, 17 million Australians listen to commercial radio, 74% believe radio and audio build a sense of community and 58% have listened to hear emergency broadcasts. Source: ‘Connecting Communities: The Economic and Social Contribution of Commercial Radio and Audio in Australia’ report was commissioned by industry body Commercial Radio & Audio and produced by Deloitte Access Economics. At SCA, the Hit and Triple M networks are home to some of the best and most loved radio talent in the country including Carrie Bickmore, Fifi Box, Tommy Little, Brendan Fevola, Nick Cody, Ed Kavalee, Dave Hughes, Erin Molan, Stav Davidson, Abby Coleman, Matt Acton, Mark Soderstrom, Rebecca Morse, Pete Curulli, Matt Dyktnski and Kymba Cahill on Hit, and Marty Sheargold, Mick Molloy, Mark Geyer, Margaux Parker, Dave Gleeson, Wendell Sailor, Ryan Girdler, Leisel Jones, Xavier Ellis, Michelle Anderson, Peter Sterling, James Brayshaw, Billy Brownless, Gorden Tallis, Greg Martin, Jude Bolton, Laura O’Callaghan, Mark Ricciuto, Chris Dittmar, Peter ‘Spida’ Everitt and Andrew Jarman on Triple M. SCA has 11 DAB+ stations and this year has launched Triple M Tradie Radio and Triple M 2000s. Overall broadcast Radio revenue declined in FY23 by 1.2%, or $4.5 million. Metro Radio revenues grew 0.6%, or $1.1 million, lifting SCA’s revenue share of the market to 27.2%. Regional Radio revenue fell by 4.6%, or $7.8 million, largely due to the decline in Government spending. SCA also launched the SCA Audio Academy in 2023, a new online bootcamp open to everyone to learn more about audio from Australia’s biggest creator of audio content. The academy is open to anyone outside SCA looking to build their audio production skills. Radio’s EBITDA of $92.2 million was a decline of $11.6 million, or 11.2%, with an underlying margin of 24.7%. Radio is a robust media channel and saw listening and audiences surge in 2023. In Radio Ratings Survey 4, people aged 10+ listened to radio for 13 hours and 25 minutes a week, 54 minutes more than the same period in 2022. Radio reaches 82% of people every week across metro markets with 220,000 more people listening to Radio this year compared to 2022. The number of people streaming Radio each week grew to 3.29 million, an increase of 122,000 since Survey 3 2023. Source: GfK 360 Radio Ratings, SMBAP S4 2023, compared to S4 2022, All people 10+, Mon-Sun 12mn-12mn, Cume (000’s), unless otherwise stated. Cume (%) Weekly Time Spent Listening (hh:mm). Radio also plays an important role in Australians’ lives with commercial radio stations broadcasting 1.1 million hours of Australian content, In late December 2022, SCA announced an exclusive sales representation and program supply agreement with ACE Radio and its 21 FM and AM radio stations in regional Victoria and New South Wales and metro stations in Sydney, Melbourne and Brisbane. The ACE stations include TRFM and Gold (Sale/Traralgon), Coast FM and 3YB (Warrnambool), Mixx and 3CS (Colac), Mixx and 3HA (Hamilton), Mixx and 3WM (Horsham), Mixx and 3SH (Swan Hill) and Edge and 3NE (Wangaratta) in Victoria; 2AY (Albury) and Edge and 2QN (Deniliquin) in New South Wales; and in metro markets 4BH (Brisbane), Magic and 3MP (Melbourne), and 2UE (Sydney). SCA also supplies Hit Network programs, including the Carrie and Tommy Drive show, and 2Day FM’s Hughesy, Ed & Erin catch-up show among others, to six of ACE Radio’s stations. 8 | Operational Review Southern Cross AustereoOperational Review – Hit Network The Hit Network has 50 stations around the country and entertains more than 6.6 million Australian Radio listeners across B105, 2Day, The Fox, SAFM, Mix 94.5, Sea FM, 41 Hit stations plus DAB+ stations including Oldskool 90s Hits, Easy 80s Hits, RnB Fridays Radio, Blender Beats and Dance Hits. All Hit Network content is also available live or on demand on the LiSTNR app. Source: GfK Metro Survey #4 2023 Radio 360, GfK Gold Coast/Newcastle/Canberra. Xtra Insights. All current SCA regional radio markets surveyed to 11th August 2023. All HIT Network stations P10+, Mon-Sun ROS, Cume Reach (000’s). Audiences remained strong across Hit stations and it is the number one network with women aged 25 to 54. The Fox continued to break records in 2023 and has the biggest audience in Melbourne, with more than 1.3 million weekly listeners. The Fifi, Fev and Nick Breakfast show reached number one FM in 2023. The Fox in Melbourne continued its popular ‘Breakfast in the Burbs’ with Fifi, Fev and Nick travelling throughout the suburbs from Mentone to Frankston. Fifi hosted another ‘Big Night Out’ taking lucky listeners to Las Vegas; and the team broadcast from Victoria’s Mount Buller ski resort. The Fox also broke another official GUINNESS WORLD RECORD® for ‘Longest marathon for a radio music show DJ (team)’. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. In Brisbane, B105 again delivered the number one Breakfast show with Stav, Abby and Matt, for the fourth consecutive time. The Breakfast team has delivered listeners many memorable moments, including hosting a ‘Bris-vegas Wedding’ for multiple couples, creating the now famous Brisbane Brown Snake with Allen’s Snakes Alive confectionery, turning the Prime Minister Anthony Albanese into DJ Albo and taking to the streets for Santa in the Suburbs. 2Day FM in Sydney continues to grow its cumulative audience, particularly on the Hughesy, Ed and Erin Breakfast show, where its audience has grown from 196,000 to 363,000, an increase of 85%, in the last two years. Hughesy, Ed and Erin made headlines earlier this year when they staged the ‘wedding of the year’ or more specifically, a wedding for one, with Erin and eight other lucky brides making a commitment to honour themselves by marrying themselves. Source: GfK Sydney Survey #4 2023 Radio 360, P10+, Mon-Fri 05.30-09.00, Cume Reach (000’s). SAFM in Adelaide welcomed a brand new Breakfast show in 2023 with radio and television favourite Mark Soderstrom joining Rebecca Morse on Bec and Soda. The Carrie & Tommy national Drive show is the number one FM Drive show in Melbourne and Adelaide and number one with women aged 25-54 in Brisbane. This year, the duo held a competition to take some lucky listeners to Paris to attend the P!NK concert. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected % Hit’s regional stations also reached audience records in 2023, with Hit 99.5 Sunraysia and Hit 100.9 Hobart recording their highest-ever cumulative audience reach. Sources: Xtra Insights Mildura Survey #1 2023. P10+, Cume Reach (00’s), Mon-Sun ROS. Xtra Insights Hobart Survey #1 2023. P10+, Cume Reach (00’s), Mon-Sun ROS. The Hit Network announced its continued partnership with Mushroom Group with RnB Fridays Radio presents: Fridayz Live. The tour brings back Australia’s biggest party with global acts taking to the stage around the country and hosted by Abbie Chatfield and Fatman Scoop. Hit also announced four new Workday announcers in 2023 – Jordan Bocock joined Hobart’s Hit 100.9 as Mornings Announcer, Shannon Freeman became Mornings announcer on the New South Wales Central West’s Hit 105.9, and Chris Jarrold is Mornings Announcer for The Border’s Hit 104.9. Aimee Craig joined Hobart’s Hit 100.9 as its new Mornings announcer. Operational Review | 9 2023 Annual ReportOperational Review – Triple M The Triple M network reaches more than three million listeners every week, which is the highest cumulative audience for the network since 2004 and it is the number one network for males aged 25 to 54. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected. This year, Mick Molloy returned to his spiritual home joining Mark ‘MG’ Geyer on the Triple M Sydney Breakfast show with respected newsreader Natarsha Belling also joining the show. James Graham, current players Wade Graham and Aaron Woods and commentators Dan Ginnane, Anthony Maroon, Ben Dobbin, Emma Lawrence and Andy Raymond. The Marty Sheargold Show continues to grow its audience and has the number one share nationally for men aged 25-54 it the 3-4pm timeslot and is one of LiSTNR’s biggest podcasts. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected % Triple M has some of the country’s best radio talent including Marty Sheargold, Mick Molloy, James Brayshaw, Billy Brownless, Mark Geyer, Gus Worland, Jude Bolton, Wendell Sailor, Greg Martin, Margaux Parker, Leisel Jones, Ben Dobbin, Liam Flanagan, Mark Ricciuto, Laura O’Callaghan, Bernie Vince, Greg Blewett, Andrew Jarman, Xavier Ellis and Michelle Anderson. Adelaide’s Triple M has increased its market dominance with Roo, Ditts and Loz at Breakfast the number one FM for the seventh time. Source: GfK Metro Survey #5 2023 Radio 360. P10+/P25-54/W25-54/M25-54. Mon-Sun ROS, Cume Reach (000’s)/Share to All %/Share to Selected %. This year, Triple M won the prestigious ‘Licensee of the Year’ award from APRA AMCOS, for its long-standing commitment to supporting Australian music. Triple M was selected against the criteria of consistent compliance and demonstrated support of music such as the presentation of local content or innovative use of music. Triple M continued its ‘No Talk Day’ initiative, where over 12 powerful hours from 6am to 6pm, Triple M, with support from Beyond Blue, creates space to encourage listeners and friends to have a courageous conversation around men’s mental health and suicide. All 45 stations across the Triple M network, from Townsville to Tassie, Perth to Parramatta and everywhere in between, were involved. Triple M continued its commitment to providing fans with world-class footy commentary teams for the AFL and NRL, this year adding the legendary Steve ‘Stevie J’ Johnson to the AFL line-up sitting alongside returning legends, players and experts of the game including James Brayshaw, Dale Thomas, Billy Brownless, Abbey Holmes, Nathan Brown, Leigh Montagna, Xavier Ellis, Bernie Vince, Jason Dunstall, Brian Taylor, Kate McCarthy, Luke Darcy, Damian Barrett, and many more. Triple M features its trusted team and expert commentary analysis of AFL with The Rush Hour Drive shows, The Midweek Rub, The Friday Huddle, The Saturday Rub, The Sunday Rub and Dead Set Legends. The NRL commentary team kicked off with the best in the business including league legends Wendell Sailor, Gorden Tallis, Ryan Girdler, Triple M’s NRL coverage is featured on its The Rush Hour Drive shows in Sydney and Brisbane and its State-wide regional New South Wales and Queensland markets. Triple M launched two new DAB+ stations this year, Tradie Radio and MMM 2000s, and its other DAB+ stations are MMM Classic Rock, MMM 80s, MMM Country and MMM Almost Acoustic. Triple M’s regional stations broke audience records during 2023. 102.9 Triple M Newcastle’s Breakfast show with Tanya and Steve was number one again for Survey 2 2023 and their highest cumulative audience ever. Source: GfK Newcastle Survey #2 2023. P10+/P25-54/P10-39/P40+/W25-54, Mon-Sun ROS/ Mon-Fri 06.00-09.00/Mon-Fri 15.00-16.00/Mon-Fri 16.00-18.00/Mon-Fri 15.00-18.00, ShareToAll%/ Cume Reach (000’s)/Cume Reach (%). Audience records were also broken across other Triple M regional stations including Triple M Bundaberg highest audience ever; while Triple M Shepparton, Triple M Bendigo and Triple M Mackay had their highest ever cumulative audience zreach. Sources: Xtra Insights Bundaberg Survey #1 2023. P10+/M35-54, Station Listened to Most %/ Cume Reach (00’s)/Cume Reach (%), Mon-Sun ROS/Mon-Fri 05.30-09.00/Mon-Fri 12.00-16.00. Xtra Insights Shepparton Survey #1 2023. P10+, Cume Reach (00’s), Mon-Sun ROS. Xtra Insights Bendigo Survey #1 2023. P10+, Cume Reach (00’s), Mon-Sun ROS. Xtra Insights Mackay Survey #1 2023. P10+, Cume Reach (00’s), Mon-Sun ROS. In other highlights, Triple M Townsville legend and Breakfast announcer Steve ‘Pricey’ Price OAM announced he will hang up the microphone this year after 32 years in Radio. In Queensland, Justin ‘JB’ Bell joined Tammy Barker for Tammy and JB for Breakfast on 99.5 Triple M in Cairns; while in Bundaberg, the new team of Elerrina McPherson and Joseph Baxter came together for El and Joe for Breakfast on 93.1 Triple M. Triple M Limestone Coast moved to an FM signal after 75 years and a new frequency at 90.5 FM. On the New South Wales Mid North Coast, retiring Radio legend Mark ‘Strawny’ Strachan OAM handed the baton on Strawny for Breakfast to his son, Alex Strachan, on 100.7 and 106.7 Triple M. In Griffith, Matt Collins joined Triple M Riverina MIA 963 as its new Breakfast announcer and in Central Queensland, Anthony Stefanos joined Shannon ‘Pinky’ Neven on Triple M 101.5 and 95.1’s Breakfast show. 10 | Operational Review Southern Cross AustereoOperational Review – Television SCA broadcasts 96 free-to-air TV signals across regional Australia and represents or has a joint venture with 39 TV stations, reaching 3.36 million people a week. Source: Regional TAM data. Total people. 4aggs (network 10 + sky news regional), WA (Network 10) and Tas (Seven Network and Network 10). Average weekly reach (1 min cume). 0200-2600. Consolidated 7. Sun-Sat. (03/07/22-01/07/23) wk 28 2021 – wk 26 2022 (excl summer and Easter). Diary markets – last available survey. 0600-2400. Cen – 2007. Dar – 2011. Sgt – 2015. SCA broadcasts Network 10 programs in regional Queensland, southern New South Wales, and Victoria and provides national advertising sales representation for Network 10 programming in all Australian States and Territories. SCA also broadcasts and provides sales representation for Seven Network programming in Tasmania, Darwin and Remote Central and Eastern Australia and for Seven and Nine Network programming in Spencer Gulf and Broken Hill. SCA has a multi-year free-to-air program supply agreement with Sky News Australia. Sky News content is broadcast across SCA’s largest regional markets on a dedicated 24-hour news channel. Sky News Regional broadcasts in 17 of SCA’s regional markets across Victoria, Southern New South Wales and Queensland. SCA also performs sales representation for Sky News Regional on behalf of WIN in Northern New South Wales, Griffith, and Mount Gambier/Riverland. SCA’s regional Television affiliation agreement with Network 10 in the three aggregated markets of Queensland, Southern New South Wales and Victoria has been extended to 31 December 2023. SCA represents national sales for Network 10 programming in Northern New South Wales (including Gold Coast), Tasmania, Western Australia and Mildura. SCA is collaborating with Network 10 to provide a consolidated national sales representation team, offering advertisers a one-stop shop, and aligning with other regional Television players. Challenging Television market conditions, particularly impacting national advertisers for regional TV, saw revenue contract by 14.5% due to the duplicated national sales process and a comparatively softer ratings performance by Network 10 in the second half of FY23. Underlying EBITDA for Television reduced by $11.1 million, or 37%, to $18.7 million and a decline in EBITDA margin of 17.3% FY23. Despite the significant headwinds for regional television this year, SCA achieved a parity power ratio for its regional network with affiliate partner Network 10. 7 Tasmania is the number one Television network in Tasmania, delivering a 59.1% commercial share of viewing in peak. The network reaches 339,000 unique viewers, or 62.5% of people in Tasmania, on average each month. 7 Tasmania delivered 18 of the top 20 regular Television programs in Tasmania including 7 Nightly News, Home and Away, Farmer Wants a Wife, Australia’s Got Talent and The 1% Club. 7 Nightly News is the number one program in Tasmania, with a 75.5% commercial share of viewing. Over the summer ratings period, 7 Cricket dominated, reaching 319,000 unique viewers, or 58.8% of people in Tasmania. Source: Regional TAM Data, TAS, Total People, Consolidated 7, 1 July 2022 – 30 June 2023, 1800-2230 unless specified, Sun-Sat, Commercial Share, AUD, Commercial Channels, Regular programs (0200-2600, grouped, min 4 eps, sports ungrouped, excl. encores, repeats and specials), Top telecasts (0200-2600, ungrouped), Avg monthly reach = 1 min cume (0200-2600), Comm Games reach (entire telecast incl. rpts, 29/7-9/8, 0200-2600), Cricket reach (based on typology, Summer: weeks 49-6, 0200-2600). Network 10’s range of programming includes MasterChef, I’m a Celebrity Get Me Out of Here, The Bachelor, Have You Been Paying Attention?, The Project, Googlebox, Thank God You’re Here, Hunted and Traitors, plus NBL and A League football. As part of its commitment to regional communities, SCA provides local news services for regional television viewers. In addition to SCA’s one- hour daily bulletin in Tasmania, the company also produces 140 daily local news updates for broadcast in 17 regional markets. SCA’s total local news output on weekdays is four hours and 34 minutes. These news services meet or exceed the local content obligations under the Broadcasting Services Act. In Southern New South Wales, there are nine news updates each weekday in Canberra, Wollongong, Wagga Wagga and Orange regions. Victoria has a similar number of weekday news updates broadcast to Bendigo, Ballarat, Gippsland, and Albury/Wodonga. In Queensland, SCA provides nine news updates each weekday in the markets of Cairns, Townsville, the Sunshine Coast, Rockhampton, and Bundaberg. News updates are also produced for Darwin in the Northern Territory and across a large proportion of the central Australian region including the NT, Queensland, NSW and South Australia through the VAST satellite network. SCA also produces nine news updates each weekday in the Hobart and Launceston markets for its joint venture, TDT, which carries Network 10 programming. In Darwin, SCA broadcasts six news updates and city-specific content to meet the requirements of our broadcast licences. In regional South Australia, the Spencer Gulf News on 7TWO broadcast its final service on 12 April 2023. Operational Review | 11 2023 Annual ReportBoomtown Five years since its launch in market, the Boomtown collective continues to go from strength to strength with advertisers increasingly recognising the value to be gained by advertising outside the five metro capitals of Australia. The size and opportunity of advertising in regional Australia is really resonating with brands and media agencies and the trends are clear. The combined population of regional Queensland and New South Wales is now greater than that of Adelaide/Perth/Brisbane combined and the 2021 Australian Census showed the population of regional Australia has grown 6% in the last five years. The launch of ‘Boomtown City Spotlights’ campaign – designed to highlight the top 14 regional cities throughout Boomtown in a series of reports. The development of a range of ‘go-to-market’ materials, including case studies, reports, and studies designed to demonstrate the reach and return on investment for Boomtown campaigns. The counter-urbanisation trend is still strong with metro-to-regional migration continuing to significantly out-pace pre-COVID levels. The ‘spiral of success’ that’s happening in many regional hubs around Australia is driven by employment opportunities and a subsequent shift in the traditional regional migrant – they are now likely to be younger, wealthier and more highly educated than ever; and investments in infrastructure and technology, backed by Federal and State Governments, continue to make living outside the five metro capitals more appealing than ever. It’s a trend that’s not slowing down any time soon. In this environment, marketers recognise the enormous opportunities in advertising to the 36%, or 9.3 million Australians, who live in regional Australia; and interest in Boomtown continues to grow. Aligned with its mission of ‘connecting ambitious brands with the power of regional audiences’, the Boomtown collective drove a range of initiatives over the last 12 months designed to help overcome the barriers that have traditionally been found when looking to invest in regional media and overcome misconceptions when it comes to the return on investment on regional audiences. A silver sponsorship of the ‘Cannes in Cairns’ industry conference attended by more than 1,400 of Boomtown’s core audience. The Boomtown activation at the conference was designed to raise the profile of Boomtown among participants. Boomtown has also recently launched its first campaign designed to primarily target marketers called ‘Untapped & Uncapped’. This campaign, developed in partnership with seven of Australia’s top marketers including Mim Haysom (Executive General Manager, Brand & Marketing, Suncorp), Jenni Dill (CMO, Arnott’s Group) and Clinton Hearne (Global Head of Marketing, Flight Centre), features a series of in-depth case studies from some of Australia’s top brands, and demonstrates the range of ways in which regional media and audiences can be leveraged to great effectiveness for brands across all consumer categories. As we move into FY24 it’s an exciting time for Boomtown, with a brand campaign planned for the new calendar year – the first since the collective was first established – along with ongoing rollout of the CMO campaign initiatives, the continued improvement to our professional development offering, ongoing partnerships with key industry bodies, and other initiatives designed to continuously advocate for the power of local media in regional markets. Key achievements and initiatives over the last year include: An increase in attendees of more than 90% in Boomtown Masterclass and Education initiatives. In addition to key initiatives planned, the Boomtown collective is also pleased to acknowledge the collective agreement and ongoing involvement of Brian Gallagher as independent Chair for FY24. An increase of 50% and 44% on Boomtown’s owned e-News newsletter and LinkedIn following respectively. 12 | Boomtown Southern Cross AustereoGovernance Values SCA prides itself on creating a culture where people feel valued and can perform at their very best. We don’t just focus on what we do; we care about how we do it. As a business, SCA has undergone significant change. As a digitally enabled Audio powerhouse, our ways of working have evolved, and our behaviours and focus need to change accordingly to continue to drive success. SCA has undertaken extensive work in the last 12 months to understand the values and behaviours required to continue this transformative journey. This has led to the development of five new values that guide day-to-day decision making for all and enable our teams to reflect on their own performance. • People Are Our Power • Be Genuine • Always Curious • We Push Doors Open • We’re Better Together. Diversity, Equity, Inclusion and Belonging With a footprint across 95% of Australia, SCA recognises that we have a diverse listener and Digital audience. A meaningful and sustainable focus on diversity and inclusion, that enables us to build and maintain a diverse workforce that reflects the communities we serve, will enhance business performance. In January 2023, SCA engaged consultancy Diversity Partners to review the business and provide recommendations relating to the ways in which SCA can better its efforts in Diversity, Equity, Inclusion and Belonging (DEIB). This process involved: a) A review of workforce data, people policies, processes and initiatives. b) Consultation with executive team members and focus groups with a cross-section of 90 employees. c) Strategy development and leadership team endorsement. This work has led to the development of a three-year strategy, commencing July 2023, that will guide our efforts to: a) Continue building a diverse and inclusive workplace for our SCA YourFamily sees the introduction of several new initiatives, including: • 20 weeks paid parental leave for a primary carer • 20 weeks paid parental leave for those adopting or expecting a child through a surrogate • Four weeks paid parental leave for a secondary carer • Support for SCA’s people in the tragic event of the loss of a child • Flexibility to take leave across multiple blocks over a 12-month period. Developing and looking after our people SCA continues to invest in leadership with a focus on the skills that SCA requires of its leaders now and in the future. SCA takes a values- based approach to leadership. We train and develop our leaders to exhibit values-based behaviours that align with our code of conduct and leadership behaviours framework, and recruit talent that show capability in these areas. SCA has a high expectation of our leaders. We review leadership styles through a 360-degree feedback tool called the Leadership Styles Inventory (LSI) with our partner Human Synergistics. SCA puts at least 40 leaders through the LSI process annually and, once this process is completed, a supporting coaching program is put in place to support development in highlighted areas. SCA’s People Team is an accredited practitioner of the LSI tool. The LSI tool indicates SCA’s Senior Management Team has a highly constructive culture. At SCA, Learning and Development is a key focus for all our people, to equip them with the skills they require to deliver our strategic goals. Accordingly, we offer a robust suite of learning including: • Women in Content Program • Executive Ready Women in Leadership Program • Leaders of the Future Program • SCA Leads Leadership Development Program • ‘Leading Teams’ for National Executive functional groups and new managers • LSI and Coaching for Leadership Development • Executive coaching • Mentoring program employees where all our people can do their best work and thrive. • Specialised high performance sales training b) Support a proactive and preventative approach to psychological • Managing Mental Health training safety risk management. • Managing underperformance training. c) Reflect the diversity of Australia’s community in our consideration of programming and content. d) Ensure that SCA’s approach to DEIB planning is best practice and responsive to current trends and workplace legislation. Enhanced Paid Parental Leave – SCA YourFamily SCA recognises the role businesses play in breaking down gender normal in family and work life. In March 2023, SCA announced SCA YourFamily – an industry-leading and inclusive parental leave policy. SCA YourFamily provides further benefits for our people, and continues to embrace a diverse, equitable and inclusive workplace. In acknowledging that there is no one-size-fits-all approach to parenthood, and that everyone’s journey to parenthood is unique, SCA YourFamily creates a more equitable and inclusive environment for our people in a changing society and workplace. SCA manages workplace health and safety risks in an active way. Local managers monitor and manage risks at their workplaces, ensuring that risks are identified, assessed and managed proactively and not only in response to an incident. Key risks managed on a day-to-day basis include security arrangements for high profile performers and on-air announcers and conducting ‘stunts’ for on-air radio content. SCA has undertaken a review of how our risk assessments are completed. Measures have been implemented in all our locations to educate our people about workplace risks associated with COVID-19 and to manage those risks. Proactive steps are taken to promote the mental health and wellbeing of SCA’s people, including a wellbeing portal on SCA’s intranet, training on managing mental health in the workplace and an employee assistance program and counselling service. Governance | 13 2023 Annual ReportSCA Embrace and Community SCA Embrace is SCA’s charity initiative launched in September 2016. Under our national framework of supporting selected charities for a two- year period, SCA engages with these charities to ensure there is growth in awareness during this period. Through our diverse employee group, SCA provides the charities with support through Radio, Digital and Television advertising; digital, social and research support; event and meeting spaces; brainstorming sessions; concert and sporting tickets; on-air interviews; and staff volunteering. SCA has now been working with our two National Charity Partners, Foodbank and Make-A-Wish Australia for 18 months. During that time, we have provided more than $28 million of in-kind Radio, Digital and Television advertising along with digital social, creative and research support to these two partners. Testimonials Foodbank Australia CEO, Brianna Casey, said: “The media partnership with SCA Embrace has been a game changer for Foodbank. Now in our second year of the partnership, we can look back and see tangible results from things such as the monthly CSA which has amplified our key messages or boosted fundraising appeals. Having this invaluable resource at the tip of our fingers over the past 18 months has allowed us to grow our brand, raise awareness on food insecurity in Australia and educate listeners on what we do, the impact we have, and how we are helping the many, many Aussies doing it tough right now as we all battle against the cost of living crisis. “We truly thank the entire SCA team, right around the country, for supporting the work we do. SCA has given us the voice we needed during times of disasters, times when we needed more support, or simply the megaphone to direct people, who have never had to ask for food relief before, where to go to find food. Thank you for giving us a nationwide voice.” Make-A-Wish Australia CEO, Sally Bateman, said: “The opportunity to be part of the SCA Embrace program has been a true highlight again this year. The amazing support from the SCA team and exposure across metro and regional Australia has helped to shine a bright light on our wish program and raise important awareness for Make-A-Wish about critically ill kids and the lasting impact of wishes. Over the past 12 months, we’ve seen a record number of applications into our program. We are delighted to be currently supporting our largest-ever number of kids on their wish journey and to be delivering a growing number of wishes each and every day to critically ill children. “We really can’t thank SCA enough for everyone’s wonderful support. We remain enormously grateful for the team’s help not only in providing a platform for our wish families and kids to share their important stories, but also in connecting us to a new generation of givers. The cross-platform support of our signature fundraising events – ‘Wear it Blue to Make Wishes Come True’ and ‘Hungry Jack’s Wishmaker Month’ will allow us to create more incredible experiences for the wish kids it’s our privilege to support and ensure there’s moments to look forward to, moments that can be treasured forever by a growing number of Australian families.” SCA has also extended its charity program to support local charities in regional markets providing similar opportunities. SCA has provided more than $1.636 million of in-kind advertising to over 31 different local charity organisations since the Local Embrace model commenced in July 2021. SCA also continued to partner with Beyond Blue for a further period of six months from July 2022 to January 2023. During this period SCA provided $27.5 million of in-kind advertising and in July 2023 Beyond Blue was a bespoke partner of the fifth national Triple M ‘No Talk Day’ on-air event to raise awareness around men’s mental health and suicide. We continue to be very proud of SCA Embrace, a program that has now provided more than $237 million of in-kind advertising to charities over the past seven years in both metro and regional areas. Over the period from July 2021 to April 2023, SCA has supported 33 different local charities in our regional markets. State Market ACT Charity name RSPCA ACT NSW Central Coast Coast Shelter Griffith Griffith Suicide Prevention and Support Group Newcastle Soul Café Wagga Wagga The Cancer Council – Local Branch QLD Townsville Be Kind Townsville Mackay Broken Ballerina Inc Bundaberg Bundaberg Health Services Foundation Cairns Cairns Couch Ltd Central QLD Capricorn Helicopter Rescue Service Fraser Coast Dunga Derby Fraser Coast Inc Central Qld Fitzroy Community Hospice Fraser Coast Fraser Coast Mates Inc Bundaberg Friendlies Hospital Foundation Ltd Townsville Fuel For Schools Ltd Gold Coast Gold Coast Community Fund Toowoomba Momentum Mental Health Toowoomba Protea Place Inc Cairns Rosies Youth Mission (Cairns Branch) SA Mount Gambier Anglican Community Care (AC Care) Mount Gambier Foodbank Limestone Coast TAS Hobart VIC Bendigo Albury Mildura Mildura MND Tasmania Bendigo Foodshare Carevan Sunraysia Mallee Ethnic Communities Council Zoe Support Australia WA Busselton Busselton Hospice Care Inc Broome Kyle Andrews Foundation Karratha/Pilbara Reach Us – Pilbara Inc Kalgoorlie/Goldfields/ Esperance Rotary Club of Boulder Bunbury Waratah Support Centre 14 | SCA Embrace and Community Southern Cross Austereo SCA Embrace and Community SCA’s local news and information services on Radio, Digital Audio and Television keep communities up to date on the issues that matter most to them. They also provide local skilled jobs, support local businesses, provide local advertising opportunities, and support local events, charities and community initiatives. SCA produces nightly news bulletins for its Channel 7 television service in Tasmania and local television news updates in regional Victoria, Southern New South Wales, regional Queensland, and other regional television markets. SCA prides itself on its ‘fiercely local’ engagement with communities through good times and bad. In addition to the SCA Embrace national charity program, SCA is an active contributor to communities. Here are some examples of SCA engaging with local communities, resulting in meaningful connections and contributions, from the past year: SAFM Riverland Garden Party The Riverland floods were the biggest natural disaster in South Australia’s history, and SAFM teamed up with the ‘Garden of Unearthly Delights’ to take comedians and performers for a one-night only free performance in Renmark. Held at Renmark footy oval, stars such as Tom Gleeson, Harley Breen, Dave Thornton, Laser Kiwi and more took to the stage while local vendors supplied food and drinks to help support the region. The event focused on the mental health of the flood affected regions, bringing one night of joy amongst the devastation; and supported the launch of mental health programs in the area by Breakthrough Mental Health Foundation. SAFM had around 2,000 people attend the event, plus media coverage with Channel 7 broadcasting sport and weather live from Renmark. SAFM – Bec & Soda’s Buns Kickstart for Kids feeds more than 60,000 South Australian school kids with their breakfast and lunch programs and was in dire need of a new refrigerated van. SAFM’s Breakfast team of Bec & Soda teamed up with Romeo’s Foodland to create ‘Bec & Soda’s Buns’, specially marked packets of Balfour’s Hot Cross Buns where proceeds were donated towards the new van. There was signage in every single Romeo’s Foodland supermarket across South Australia. Donations were collected from local businesses, such as Easy Auto 123, the Calvary Hospital and Auto Masters, plus a very special donation from Russell Crowe. The total funds came to $45,000, with 12,000 packets of buns sold. An outside broadcast Romeo’s Foodland in Kilkenny was held at the conclusion, where kids from the local school came by and grabbed their breakfast by Kickstart, with the Easter Bunny and Travis Boak making an appearance and two special Kickstart kids were taken to school in a McLaren and a Lamborghini. Triple M Adelaide – ‘Roo’s Riverland Road Trip’ Earlier this year the South Australian Riverland reached record flood levels as massive amounts of water travelled down the Murray River from New South Wales, and as a result, hundreds of businesses were suffering from the loss of tourism. As a legend of the SA Riverland, Roo, from Triple M’s Breakfast show, took the Triple M team on a ‘Riverland Road Trip’ to encourage South Australians to head up to the Riverland for their next road trip and experience all it has to offer. In the lead-up to the trip, Breakfast team Roo, Ditts & Loz gave away experiences and stays in the Riverland all thanks to some of the small business who had been affected. SCA Embrace and Community | 15 2023 Annual ReportSCA Embrace and Community Triple M Adelaide’s ‘Hike For Hope’ Last year Triple M brought back its ‘Hike for Hope’ bigger than ever before! There are so many charities that need help, Triple M’s Breakfast team, Roo, Ditts & Loz, completed three walks for three different charities on the same day to support the kids of Adelaide. The charities were: Kickstart for Kids, Youth Opportunities, and Puddle Jumpers; with $105,000 raised. 101.9 The Fox’s ‘Doing it for the Kids’ The Fox’s Breakfast team Fifi, Fev & Nick’s annual Christmas charity drive raised money for Anglicare Victoria to provide Christmas presents to families suffering from financial hardship around the State. They have raised more than $385,000 so far. Anglicare estimates at least 7,000 vulnerable clients have been supported by ‘Doing it for the Kids’. 101.9 The Fox’s ‘Brekky in the Burbs’ The Fox’s Breakfast team Fifi, Fev & Nick took their ‘Brekky in the Burbs’ to Melton, with more than 500 listeners joining them for the outside broadcast, which raised more than $2,500 for the local school community of Exford Primary School, who were involved in a tragic bus crash in May 2023. Triple M Bendigo’s ‘Blanket Bendigo’ Triple M’s Breakfast show, Cogho & Mandy, and the whole team at Triple M Bendigo ran a blanket drive, asking listeners to donate any new or unwanted blankets to for homelessness across the region. With more than 2,000 blankets collected across the campaign, on 19 May the station attempted to cover the playing surface of the Queen Elizabeth Oval. All donated blankets have since been distributed to local charities supporting the homeless population of Central Victoria. 16 | SCA Embrace and Community Southern Cross AustereoSCA Wagga Wagga ‘Takes 2’ SCA has supported Wagga Wagga ‘Takes 2’ since its inception in 2007, and each year the show gets bigger and better. SCA continued its support this year to ensure the 10 charities benefiting from the show raised as much money as they possibly could. SCA Regional Content Director, Duncan Potts, was the MC with support from Triple M’s Leigh Ryan and Hit’s Jake Tracey, and Triple M breakfast co-host Jamie Way was a judge and guest entertainer. This year, this event raised more than $476,000 for the local charities. Since ‘Take 2’ started in 2007, the event has returned more than $4 million for local charities. SCA Albury ‘Carevan’ The Carevan Foundation provides a meal service each night in various locations across the border and needed help to fundraise towards buying a new van. SCA decided to auction the Border Monopoly Board games it had produced. Over one week SCA raised more than $6,500 which included a one-off donation of $5,000 from Rob at Xypex who upped the ante and bought the van for Carevan after hearing Lu and Al on Triple M. SCA Bendigo – Kangan Institute SCA Bendigo hosted a Video Production Masterclass at its offices. Also this line should read: Transition and Work Education (TWED) special needs and disadvantaged students from Bendigo TAFE,, in association with education network Kangan Institute. The Bendigo studio was transformed to welcome the students, complete with eight cameras, microphones, lights, a teleprompter and a green screen. To then support the TWED Film Festival, organisers joined SCA announcers to implore Bendigo businesses to sponsor the event, which was a great success. SCA Hobart – Ronald McDonald House Charities SCA Hobart remained dedicated to supporting Ronald McDonald House Charities (RMHC) Hobart by actively engaging with the community through several initiatives such as the annual RMHC Ball, McHappy Day, and RMHC Hobart Group Volunteering. During McHappy Day, SCA’s breakfast teams from Hit 100.9 and 107.3 Triple M generously donated their time to support the cause at a local McDonald’s store with live broadcasts and aired 40 x 30-second promotional spots across the stations. The Hit Hobart Breakfast and Content teams also dedicated several hours preparing and cooking dinner for families staying at Hobart’s Ronald McDonald Charity House. SCA Embrace and Community | 17 2023 Annual ReportSCA Embrace and Community Triple M Hobart – Build Up Tassie Build Up Tassie aimed to construct a four-bedroom home, utilising donated resources and support, on land gifted by the State Government. St Joseph Affordable Homes, the primary builder, collaborates with participants from the Build Up Tassie program, offering them personalised coaching and training to prepare them for employment opportunities. Once completed, the house is then sold to generate funds to allow Build Up Tassie to improve employment and life outcomes for young Tasmanians. This initiative presents an opportunity to provide 50 young and vulnerable Tasmanians with a pathway to a career in the building industry. Triple M Hobart has been a dedicated supporter of Build Up Tassie and organised a special live broadcast from Herdsman’s Cove with Breakfast team Woody and Tubes as the project was nearing completion – with the unveiling of the newly-built house. Triple M Toowoomba ‘It’s a Bloke Thing’ Every August the who’s who of Toowoomba gather at Wellcamp Airport for a luncheon like no other: It’s a Bloke Thing. 864 Triple M proudly partners with the event that has raised more than $12 million over the last 12 years for education, care and awareness for prostate cancer. 864 Triple M supports the event with commercial airtime and content interviews and Breakfast host Lee Faulkner hosts the event’s Q&A with some of Australia’s best known personalities. Triple M Toowoomba ‘Hang your boss out to dry’ 864 Triple M has partnered with the Toowoomba Hospice for ‘Hang your boss out to dry’ for the last 15 years. An idea from Breakfast host Lee Faulkner, local business leaders, owners and managers are sent high above Toowoomba in a 25 metre cherry picker. They will only be let down once fundraising targets are met. More than $57,000 was raised as part of this year’s event. For the first time ever Lee ventured up in the cherry picker – even though he is scared of heights. Triple M Shepparton ‘Blanket the GV’ Triple M Shepparton called on the people of the Goulburn Valley to send in some old blankets they no longer use in a bid to try and ‘Blanket the GV’. The response was overwhelming with the community donating almost 400 blankets. Over this time Triple M listeners heard heartbreaking stories from locals about their homelessness and how a simple blanket helped them keep warm over the colder months. The blankets were then donated to various local charities such as Beyond Housing. 18 | SCA Embrace and Community Southern Cross AustereoTriple M Newcastle ‘Tanya & Steve’s Tuckshop’ Triple M Newcastle was so alarmed to hear about the number of kids who go to school without eating any breakfast, the station team made it a mission to change that, one school at a time, with ‘Tanya & Steve’s Tuckshop’. Every month, Tanya & Steve visit a school in the Newcastle/ Hunter Region, where they broadcast their Breakfast show, live from the school!. This initiative was a great way to not only fill the tummies of kids at school but also raise awareness and shine a light on schools that need it the most. Hit 106.9 ‘Ducko’s stair run’ Ducko from Hit 106.9’s Nick, Jess and Ducko Breakfast show ran the tough Merewether Stairs for the Top Bloke Charity to raise awareness for young men’s mental health. The Hit 106.9 Black Thunder Street Team were there as well, bringing the vibes, cooking up delicious bacon and egg rolls and handing out fresh fruit and coffee to listeners who checked out the fun and donated to a good cause. Overall, Ducko raised $26,000 for men’s mental health while topping 58 laps of Merewether Stairs, capping off an amazing event. Sea FM ‘Helping Hand’ When the Gold Coast’s Sea FM heard that the Currumbin Community Special School had been trying to raise funds to put air conditioning in the school hall, it had to help. Staff at the school had been working hard for years at fundraising for the air conditioning but had only managed to raise $4,000 but needed a whopping $45,000. Due to Sea FM’s relationship with the charity 4ASD Kids, founded by former NRL footy player Mat Rogers and his wife Chloe Maxwell, they made the extremely generous donation of $45,000 which was presented at the school assembly. Triple M Fraser Coast ‘Good Luck Truck’ The Good Luck Truck is a successful hallmark of the Triple M brand, however 2023 saw it run for the first time on the Fraser Coast; and with great success. Partnering with Harvey Norman, Triple M brought much needed relief to the region. The station received a huge number of genuine entries from people looking for support or a bit of a leg up. This was a clear indication that things were getting tough with housing and rental markets and everything else putting the pinch on listeners. The challenge became how to have the most meaningful impact for the most people, so over a four-week campaign Triple M did everything from paying bills and buying groceries to buying a fridge for listeners. SCA Embrace and Community | 19 2023 Annual ReportThe Board and Leadership Team Robert Murray Chairman and Independent Director Appointed: 1 September 2014 Most recently elected by shareholders: 21 October 2022 Board Committees: Nomination Committee (Chair) Rob Murray became Chair of the Company on 19 August 2020. Rob has had a successful career in sales, marketing and general management having served most recently as the CEO of Lion (formerly Lion Nathan), one of Australasia’s leading food and beverage companies, including during its acquisition by Kirin Holdings in 2009. Before joining Lion Nathan in 2004, Rob worked for Procter & Gamble for 12 years, and then for eight years with Nestlé, first as MD of the UK Food business, and then as CEO of Nestlé Oceania. Rob brings valuable strategic and commercial insight to the Board, along with his in-depth understanding of consumer behaviour and global experience in mergers and acquisitions and other corporate transactions. Rob is a director the Bestest Foundation, and Advisory Chair of the Hawkes Brewing Company. He was previously a director of Metcash Ltd, Dick Smith Holdings, Super Retail Group and Linfox Logistics. Glen Boreham AM Independent Director Appointed: 1 September 2014 Most recently elected by shareholders: 13 October 2021 Board Committees: Digital Transformation Committee, People and Culture Committee, Nomination Committee Glen’s executive career culminated in the role of CEO and Managing Director of IBM Australia and New Zealand in a period of rapid change and innovation from 2006 to 2010. He was the inaugural Chair of Screen Australia from 2008 to 2014, and chaired the Australian Government’s Convergence Review of the media industry. The Board benefits from Glen’s extensive knowledge, insights and networks in the technology and data industries. Having lived in Asia, Europe and Australia, Glen brings a global perspective. Glen is also a director of Cochlear and Link Group and was formerly Chair of the Advisory Board at IXUP where he remains a Strategic Adviser. He was previously Chair of the Industry Advisory Board at the University of Technology Sydney, Chair of Advance, representing the one million Australians living overseas, as well as Deputy Chair of the Australian Information Industry Association and a Director of the Australian Chamber Orchestra. In 2010, he became a founding member of Australia’s Male Champions of Change group. Glen is a Member of the Order of Australia for services to business and the arts. Carole Campbell Independent Director Appointed: 1 September 2020 Most recently elected by shareholders: 30 October 2020 Board Committees: Audit and Risk Committee (Chair), Digital Transformation Committee. Carole Campbell has over 30 years’ financial executive experience in a diverse range of industries including professional services, financial services, media, mining, and industrial services. Carole started her career with KPMG and has held executive roles with Macquarie Group, Westpac Institutional Bank, Seven West Media, BIS Industries and Merivale. Carole transitioned to a non-executive director career in 2018 and is a non-executive director of GUD Holdings Limited where she chairs the audit committee. She was previously a non-executive director of IVE Group Ltd and Humm Group Limited. Carole is also Deputy Chair of Council of the Australian Film, Television and Radio School. Carole is a Fellow of Chartered Accountants Australia and New Zealand and brings extensive experience in accounting, treasury, finance and risk management to her role on the Board and as Chair of the Audit and Risk Committee. 20 | The Board and Leadership Team Southern Cross AustereoIdo Leffler Independent Director Appointed: 30 October 2020 Most recently elected by shareholders: 30 October 2020 Board Committees: Digital Transformation Committee, People and Culture Committee Ido Leffler has long and successful experience in developing digital brands and extensive networks in the start-up communities of Silicon Valley and Australasia. Ido is the co-founder and Chief Executive Officer at Yoobi, a leading US-based school supplies company. He is also a co- founder of Yes To Inc. – a global natural beauty brand; and of Beach House Group – a consumer product house. Ido is a non-executive director of Vestergaard – one of the world’s largest producers of malaria prevention bed nets – and The Lux Group (Luxury Escapes). He was a non-executive director of Spark New Zealand Limited for six years until November 2020. Ido also sits on other corporate and advisory boards, including as an emeritus member of the United Nations Foundation Global Entrepreneur Council. Heith Mackay-Cruise Independent Director Appointed: 30 October 2020 Most recently elected by shareholders: 30 October 2020 Board Committees: People and Culture Committee (Chair), Audit and Risk Committee, Heith Mackay-Cruise has been involved in the media, education, and technology sectors for 25 years. He was the founding CEO of Sterling Early Education, Global CEO and Managing Director of Study Group Limited, and CEO of PBL Media New Zealand. He held senior executive positions with Australian Consolidated Press and sales and marketing roles for PepsiCo around Australia. Heith is Chair of Straker Limited and a member of its People & Culture Committee and Audit & Risk Committee. He is a director of Codan Limited and a member of the it’s Remuneration & Nomination Committee. He is a non-executive director of the Australian Institute of Company Directors and he chairs the Board’s Technology & Innovation Committee. Heith was previously Chair of LiteracyPlanet, hipages Limited and the Vision Australia Foundation, and a director of LifeHealthcare and Bailador Technology Investments. Heith is a mentor with Kilfinan Australia, a Fellow of the AICD and has a Bachelor of Economics degree from the University of New England. Heith brings to the Board his executive leadership experience, as well as global platforms exposure, and marketing, media and digital knowledge. Helen Nash Independent Director Appointed: 23 April 2015 Most recently elected by shareholders: 21 October 2022 Board Committees: Audit and Risk Committee, People and Culture Committee Helen Nash has more than 20 years’ executive experience in consumer packaged goods, media and quick service restaurants. As Chief Operating Officer at McDonald’s Australia, she oversaw restaurant operations, marketing, menu, insights and research, and information technology. This mix of strategic and operational experience allows Helen to bring broad commercial skills and acumen, as well as a consumer focus, to the Board. Helen also brings robust financial skills to her role having initially trained in the UK as a Certified Management Accountant. Since transitioning to her non-executive career in 2013, Helen has served as a director of companies in a range of industries. She is Chair of Inghams Group Limited, a director of Metcash Ltd, and was formerly a director of Pacific Brands Ltd and Blackmores Ltd. Our Board benefits from Helen’s governance experience and skills, including her membership of audit and remuneration committees at these other companies. The Board and Leadership Team | 21 2023 Annual ReportThe Board and Leadership Team John Kelly Chief Executive Officer and Managing Director Appointed: 1 July 2023 John Kelly brings extensive strategic, operational and financial leadership experience from 25 years working for Australian media and sporting organisations. John spent 16 years in executive roles at the Ten Network, including eight years as Group CFO, and then three years as Chief Operating Officer at Football Federation Australia, before joining SCA as Chief Operating Officer in 2016. In that role, he oversaw SCA’s general management teams, strategy, research and insights, and Digital Audio, as well as facilitating SCA’s key sporting rights, Television affiliations, and Digital Audio partnerships. As CEO, John leads development and execution of SCA’s strategy with a view to increasing shareholder value, profitability, and the sustainability of the organisation in the long term. Rebecca Ackland Chief People and Culture Officer Rebecca Ackland is an experienced people and culture leader and has had a successful career at SCA including key roles within talent acquisition, people operations and as People and Culture Manager. Rebecca passionately champions SCA’s award-winning culture, ensuring the Company places its people and values at the core of what it does every day. As Chief People and Culture Officer, Rebecca is responsible for development and execution of SCA’s people and culture strategy and leads a team of experienced executives across specialties of talent, human resources operations, capability and learning, as well as people services. Dave Cameron Chief Content Officer Dave Cameron has been with SCA for more than 25 years and brings to the role of Chief Content Officer a wealth of experience and expertise in content strategy, programming and premium talent management. Dave spent several years in Content and Music Director roles and prior to his appointment to Chief Content Officer held the position of General Manager of the Melbourne office. As Chief Content Officer, Dave is responsible for overseeing and delivering strategic leadership and creative excellence for SCA’s key content initiatives across all of its stations including FM, DAB and extended digital and associated on-demand content. 22 | The Board and Leadership Team Southern Cross AustereoNikki Clarkson Chief Marketing Officer Nikki Clarkson is an experienced marketing and communications executive with more than 20 years of proven, award winning experience across multiple industries. Prior to joining the Leadership Team, Nikki held the position of Head of Marketing and Communications at SCA for 10 years and has also held senior executive positions in creative advertising agencies including Clemenger Harvie Edge. As Chief Marketing Officer, Nikki is responsible for all marketing and communication strategy and execution for SCA’s radio, digital (including LiSTNR) and TV brands, trade and corporate marketing and group corporate communications and publicity. Stephen Haddad Chief Technology and Operations Officer Stephen Haddad is an experienced technology, information security and business transformation executive who has demonstrated his ability to drive strategic business growth more than 25 years in Australian media, finance and consulting organisations. Before joining SCA, he held Chief Information Officer roles at Bauer Media and Fuji Film and senior technology management roles within banking and telecommunications. As Chief Technology and Operations Officer, Stephen is responsible for all technology domains across SCA, including business systems; corporate networks and infrastructure; digital product, design and development; audio engineering, technology and operations; television broadcast engineering and operations; and SCA’s project management office. From 1 July 2023, Stephen also oversees SCA’s general management teams in our 60 locations around Australia to drive operational excellence and ensure delivery of corporate strategy. Seb Rennie Chief Commercial Officer Seb Rennie has more than 20 years’ experience in media, having worked in and with significant media agencies, media owners, advertisers and tech vendors in Australia, the United Kingdom and Canada. Most recently before joining SCA, Seb was GroupM’s Chief Investment Officer for Australia. Seb joined SCA in early 2023 to lead SCA’s commercial strategy for its LiSTNR Digital Audio division. He became Chief Commercial Officer in May 2023 with responsibility for driving commercial performance and value for clients across SCA’s suite of broadcast and digital media channels and brands. The Board and Leadership Team | 23 2023 Annual ReportThe Board and Leadership Team Tim Young Chief Financial Officer Tim is a seasoned senior executive with almost 30 years of experience honed across corporate, professional and start-up environments. His focus has been around the media sector in the UK, Europe and Australia, covering most facets from traditional print and radio to TV, stage and film production; content and ad sales; and all forms of theatrical, physical and digital distribution. In his most recent role as CFO and Head of Strategy ANZ at The Walt Disney Company, Tim played a strategic role in launching the Disney+ SVOD service in Australia and led the evolution of the finance function into shared services and business partners. As CFO of SCA, Tim is responsible for the financial stewardship of the Group, including the allocation of capital and resources and management of returns to shareholders. Financial objectives include optimising the cost of capital through the use of an appropriate balance of equity and debt capital and through investing in projects that enhance the Group’s return on invested capital. Tim is responsible for managing relationships and communication with providers of equity and debt capital and for ensuring a strong and effective governance framework exists. Tony Hudson General Counsel and Company Secretary Tony Hudson has over 25 years’ experience in senior legal and governance roles. Tony was General Counsel and Company Secretary at ConnectEast from 2005 until 2015. Before that, Tony was a partner of Blake Dawson Waldron (now Ashurst Australia), working in the firm’s Melbourne office and from 1993 until 2000 in its Jakarta associated office. Tony manages the Group’s national legal and corporate affairs teams, including responsibility for regulatory affairs and Board governance. 24 | The Board and Leadership Team Southern Cross Austereo2023 Annual Report Directors’ Report and Financial Report Financial Report | 25 Contents Directors’ Report Corporate Governance Statement Review and Results of Operations Distributions and Dividends Significant Changes in State of Affairs Events Occurring After Balance Date Likely Developments and Expected Results of Operations Indemnification and Insurance of Officers and Auditors Non-Audit Services Environmental Regulation Information on Directors Information on Company Secretary Meetings of Directors Remuneration Report Auditor’s Independence Declaration Financial Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Key Numbers Capital Management Group Structure Other Notes to the Financial Statements Directors’ Declaration Independent auditor’s report to the members of Southern Cross Media Group Limited 27 27 27 31 31 31 31 31 31 31 32 33 33 34 55 56 56 57 58 59 60 61 76 83 85 90 91 The financial statements were authorised for issue by the Directors on 17 August 2023. The Directors have the power to amend and re-issue the financial statements. 26 | Directors’ Report Southern Cross AustereoDirectors’ Report For the year ended 30 June 2023 Corporate Governance Statement The statement outlining Southern Cross Media Group Limited’s corporate governance framework and practices in the form of a report against the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, 4th Edition, will be available on the Southern Cross Austereo website, www.southerncrossaustereo.com.au, under the investor relations tab in accordance with listing rule 4.10.3 when the 2023 Annual Report is lodged. Directors’ Report The Directors of Southern Cross Media Group Limited (‘the Company’) submit the following report for Southern Cross Austereo, being Southern Cross Media Group Limited and its subsidiaries (‘the Group’) for the year ended 30 June 2023. Directors The following persons were Directors of the Company during the whole of the year, unless otherwise stated, and up to the date of this report: – Rob Murray (Chairman) – John Kelly (Managing Director) (Appointed 1 July 2023) – Grant Blackley (Managing Director) (Retired 30 June 2023) – Glen Boreham – Carole Campbell – Ido Leffler – Heith Mackay-Cruise – Helen Nash – Melanie Willis (Retired 31 August 2022) Principal Activities The principal activities of the Group during the course of the financial year were the creation of audio content for distribution on broadcast (AM, FM and DAB radio) and digital networks. The Group also broadcasts free-to-air television content in regional markets. All of these media assets are monetised via revenue generated from the development and sale of advertising solutions for clients. There were no changes in the nature of the Group during the full year. Review and Results of Operations Operational Review Group Results The Group reported revenues of $504.3 million, a decrease of 3.9% on the prior year revenues of $524.8 million with digital audio growth (36.2%) and broadcast radio resilience (-1.2%) unable to offset softness in regional TV (-15.5%). Similarly, excluding significant items and income from the PING grant, tight cost control saw combined Non-Revenue Related (NRR) expenses decrease 1.3%, with Employee Expenses (+1.9%) partially offsetting higher savings on Other NRR Expenses (-6.8%). Earnings before Interest, Taxes, Depreciation and Amortisation (‘EBITDA’) excluding significant items was $77.2 million with reported EBITDA of $73.2 million. EBITDA excluding significant items in the prior year was $89.6 million – although this included government grants of $1.7 million. Net profit after tax was $19.1 million for the year ended 30 June 2023, up from a loss after tax of $153.7 million for the same period in the prior year. Prior year results included impairment charges against the audio intangible assets of $250.9 million ($178.6 million net of tax) and impairment of investments of $0.8 million. Excluding these impairment charges, net profit after tax in FY2022 was $25.7 million. EBITDA is a measure that, in the opinion of the Directors, is a useful supplement to net profit in understanding the cash flow generated from operations and available for payment of income taxes, debt service and capital expenditure. EBITDA is useful to investors because analysts and other members of the investment community largely view EBITDA as a widely recognised measure of operating performance. EBITDA disclosed within the Directors’ Report is equivalent to ‘Profit/(loss) before income tax expense for the year from continuing operations’ included within the Consolidated Statement of Comprehensive Income after adding back depreciation, amortisation, impairments and net interest. Significant Items There are $4.0 million of significant items relating principally to restructuring included in net profit before tax in the year ended 30 June 2023. In the prior year, the Group recognised impairment charges against intangible assets of $250.9 million, which related to an impairment in the carrying value of radio licences, goodwill and brands in the Audio Cash-Generating Unit (‘CGU’). There was also a related derecognition of a deferred tax liability in respect of certain brands and licences for $72.3 million. There were also $0.8 million of impairment charges against investments and $4.0 million of other significant items relating to restructuring costs and expenses associated with terminated finance systems. In FY23 there has been no impairment recognised. Government Grants As part of its response to COVID-19, in March 2020 the Australian Government announced various stimulus measures resulting from the economic fallout due to the Coronavirus lockdown. The Group applied and was found eligible for funding under the Commonwealth Government’s Public Interest News Gathering (PING) program. During 2021 SCA received $10.3 million for the period September 2020 to August 2021 of which $1.7 million was recognised as income during the 2022 financial year. Audio The Audio business consists of two complementary radio networks operating across Australian capital cities and regional Australia along with the digital assets associated with the same. Each network’s brands target different audience demographics with the Triple M network skewed towards males in the 25 to 54 age bracket and the Hit Network targeted towards females in the 25 to 54 age bracket. Group total audio revenues declined by 0.2% across the year in a broadcast market that declined 4.7%1. The Group’s metro radio revenue increased by 0.6%, due to an increase in revenue market share to 27.2% following an improvement in audience ratings in a flat, competitive market. The Group’s digital platform, LiSTNR, continued to grow significantly in FY23, with strong adoption by users attracted to the compelling product and the increasing choice of content on the product. Total listenership of SCA and partner digital audio content measured across all digital platforms exceeded 8.1 million listeners on a monthly basis, and the number of listeners who have registered with LiSTNR has now exceeded 1.1 million active users. Digital audio advertising revenues continue to grow with an increase of 31.6% year on year. SCA anticipates strong digital audio growth will continue into FY24. EBITDA fell on prior year, due to high inflation and a return to normalised operations to support both listener and revenue share growth, including content, sales activations, increased promotions and outside broadcast activity. 1 SMI FY23 – Regional and metro radio markets combined. Directors’ Report | 27 2023 Annual ReportThe Group’s debt facilities were refinanced in January 2022 through to January 2026, and have been reduced in the year from $250 million to $160 million. However, with gross debt at $118 million, the Group has $42 million available to draw upon, providing security of financing into the medium term. Further, on 14 June 2023 the Group negotiated a short-term $25 million overdraft facility with the ANZ Banking Group, renewable on an annual basis. Strategic update The Group’s mission is ‘To entertain, inform and inspire Australians. Anytime. Anywhere.’ With a continued focus on being Australia’s leading Audio company, and a particular emphasis on the growing Digital Audio sector, the Group will leverage its localism and audio ecosystem to maximise total shareholder returns for investors. In FY21 the Group developed a new and refreshed Corporate Strategy. This strategy provides an overall strategic pathway for the Company over the ensuing six years which stipulates specific objectives and targets whilst enabling the Group to remain agile. In FY22 the Group refined its four specific objectives to: 1. Entertain, inform and inspire our audiences 2. Evolve LiSTNR into a Unique World Class Audio Platform 3. Optimise and simplify our sales offering to grow revenue 4. Re-imagine and restructure SCA’s operating model 2024 Outlook SCA is now at the half-way point through that strategic horizon. The Group’s focus will be on being the leader in Audio in Australia, for broadcast live and on-demand, and podcasting by continuing to grow Digital Audio as an increment to the widest reaching broadcast business in the country. The Group maintains a highly competitive position in traditional Radio (licences), which in combination with our in house production capability and market-leading representation agreements will provide a solid audience and understanding from which to drive Digital Audio. Whilst currently c.5% of audio revenues, the premium that Digital Audio attracts through the ability to target is expected to attract an improved valuation multiple and broader range of addressable markets thereby providing greater rates and potential for growth. Overall, the Group is looking in FY24 to: – reverse the overall decline in revenues in particular through Digital Audio continuing to outperform the market and becoming an increasing portion of the Audio segment – prioritise earnings by focusing on the cost base to reflect scale, shape and phase of the Group and market – monetise long-term investment, audience and our leading position with LiSTNR to get on the glide path to EBITDA breakeven in the course of last quarter of the financial year Television The Television business consists of 96 regional television licences. Each regional television licence receives programming from a metropolitan television network affiliate. During the financial year the Group received the majority of its programming from the Ten Network, whilst Tasmania, Darwin and Central licence areas received Seven Network programming. Total television revenues decreased by 15.5% – ahead of a market that declined 10.6%1 largely due to steep falls in affiliate network ratings and increased competitive pressure particularly in relation to integrated national sales. EBITDA fell on prior year predominantly due to a fall in income – with non-revenue related expenses rising at less than inflation. Corporate The Corporate function comprises the Group-wide centralised functions that cannot be clearly attributable to the Audio or Television CGUs. Corporate expenses decreased by $6.9 million, mainly due to savings in employment and insurance expenses. 1 SMI FY23 – Regional and metro TV market combined (excluding production, subscription and community TV). Segment Profit & Loss Revenue Audio Television Corporate Total Revenue EBITDA Audio Television Corporate EBITDA excluding significant items2 Reported EBITDA Group NPAT 2023 $’m 397.2 106.7 0.4 504.3 80.3 18.7 (21.8) 77.2 73.2 19.1 2022 (Restated) $’m 397.9 126.2 0.7 Variance (0.2%) (15.5%) (42.9%) 524.8 (3.9%) 87.6 30.7 (28.7) 89.6 85.6 (153.7) (8.3%) (39.1%) 24.0% (13.8%) (14.5%) 112.4% 2 Restructuring costs and other (refer to Note 4 ‘Significant Items’ to the Financial Statements). Group Financial Position Cash flow generation was consistent throughout the year. In the period to 30 June 2023 the Group executed its share buy-back purchasing a further $21.3 million in shares in addition to the $5.5 million bought back in 2022 funded from existing cash reserves and debt facilities. The increase in interest rates since May 2022 resulted in higher net interest payable to banks of $4.7 million (2022: $3.5 million). The combination of the higher net interest payable and reduced EBITDA saw the Interest cover decrease to 15.09 times from 23.45 in June 2022 – although remaining well above the minimum Interest cover covenant of 3.0 times. Similarly, the Group’s key leverage ratio increased to 1.48 times, up from 0.95 times in June 2022 – whilst higher, it remains manageable and well within the maximum covenant of 3.5 times. 28 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Material Risks Business and operational risks that could affect the achievement of the Group’s financial prospects include the following risks: Risk LiSTNR product does not reach sustainable profitability at an appropriate level and pace Revenues for Broadcast Radio grow more slowly than forecast Global technology companies more aggressively enter the Audio market; make SCA’s distribution less profitable; or increase subsidy from other business lines Mitigation Strategies SCA has core expertise in the development of market leading content and constantly reviews the evolving distribution landscape to understand how it can continue to serve market leading content through new and innovative products. Consumption of digital audio continues to grow strongly, with 74% of Australians 12+ listening to online audio each week, up from 71% in 2021, which goes up to 78% for the age 35-54 demographic and to 89% in the under 35s1. This is expanding the range of Audio content and diversifying the ways in which Audio can be consumed. LiSTNR is a curated and personalised free app offering radio, podcasts, music and news and an important part of SCA’s digital transformation, building on the success of PodcastOne Australia. LiSTNR features all of SCA’s existing digital content plus a huge range of new and compelling premium content, all located in one free and easy to use app. Since launch in February 2021, approaching 1.5 million users have signed-up to LiSTNR with almost half of those in FY23, resulting in significant Audio consumption through the product and generating first-party data from our signed-in audience that gives SCA enhanced ability to offer our clients targeted, engaged audiences at scale. This targeted advertising is enabled by an Instream advertising product, which also delivers it across the digital inventory of SCA’s partners such as SoundCloud. SCA believes that with continued investment it will be able to offer its listeners compelling content across the medium of their choice – being Broadcast Radio or Digital Audio. Further resources will be deployed towards the ongoing development of LiSTNR to ensure that SCA’s Digital Audio offering is a market leader in terms of content depth and quality, product capability and digital sales expertise. SCA is a member of Commercial Radio and Audio (‘CRA’), which represents the interests of commercial radio broadcasters throughout Australia. CRA has improved the accuracy and trust in the survey measurements it commissions including the introduction of additional surveying methodologies. Further, SCA is developing attribution tools and self-serve platforms to provide enhanced comparability with global technology solutions, which have been attracting revenue away from traditional media. As described above, SCA has developed LiSTNR to take advantage of the increased consumption in digital audio. As well as offering live radio, catch-up radio podcasts are available – in combination this is the majority of listening hours on LiSTNR1. SCA believes that with continued investment it will be able to offer and target audiences ever more effectively with content across the medium of their choice – either Broadcast Radio or Digital Audio, which will mitigate the impact of any reduction in Broadcast Radio growth alone. SCA has a core expertise in content creation and is focused on providing localised content as a key differentiator to international operators to ensure it receives strong engagement and listening from its customer base across all of its platforms and environments. SCA launched LiSTNR in February 2021 and continues to develop the product so that it directly attracts and retains listeners and establishes itself as a destination for Audio listening, providing a significant signed-in user base that enables SCA to compete effectively in providing digital advertising solutions. The Group’s team of digital experts are integrated into the Group’s day to day operations and analytical teams in order to leverage existing content and sales capabilities. SCA aims to continue to grow market share quickly with LiSTNR, so that it builds and retains a strong, engaged, loyal audience that can compete with both domestic and international competitors. LiSTNR’s podcasting and streaming monthly audience has grown to around 9 million listeners in the first half of 2023, retaining its number 1 position as Australia’s largest podcast network2. The Group invests in engaging digital audiences through the simulcast of its FM radio stations online and the creation of additional stations on DAB that extends its brands across broadcast and online platforms. This is coupled with a large range of digital only content that ensures the LiSTNR product has a deep and often exclusive content offering for users. SCA utilises its own media assets as well as paid media to drive both awareness and adoption of LiSTNR to build a strong market position. 1 The Infinite Dial Australia 2023 study. 2 Australian Podcast Ranker – Top Sales Representatives – June 2023. Directors’ Report | 29 2023 Annual ReportRisk Revenues from a declining regional TV market decrease faster than forecast Mitigation Strategies In FY23, the Group saw a decline in its Television revenues of 15.5% year on year, in an overall market that declined 10.6%. Although FTA Television continues to deliver scale audiences and retains a key place in media buying strategies, the economics of FTA Television remains challenging due to ongoing audience declines. Key mitigation strategies are focused on improving the share of media spending directed towards regional markets (which have historically lagged metro market behaviour); focusing on the efficiency of our Television operations; and accelerating the shift of the Group’s sales emphasis towards Audio. The Group’s sales teams’ Regional Development Program continues to drive incremental marketing in regional markets where there is an underinvestment in media spend on a per capita basis and is supported in this regard by the industry trade marketing Boomtown campaign. The Group is a diversified business covering Television, Radio and Online, which provides a degree of protection against individual market weaknesses, with the Television CGU representing less than 20% of the Group’s EBITDA (prior to corporate costs) and declining. As a Television affiliate the Group pays a percentage of revenue to program supply partners resulting in a more variable cost structure than our Radio or Online businesses, thereby reducing the profit impact of declines in FTA Television revenue. Operational impact of a cyber security breach A security breach could result in loss of content playout; compromise of secondary supporting systems or the operational platform; or lead to a data breach. The Group is measuring and maturing its information security management system against the internationally recognised NIST (National Institute of Standards and Technology) cybersecurity framework. The Group has appointed Telstra Purple to provide an outsourced Chief Information Security Officer (CISO) service. Providing access to the collective knowledge, experience, and insights of Telstra Purple’s expert team, this arrangement provides a depth of specialist resources and strengthened processes and controls to better protect the Group’s systems and confidential data and assist in the management of any breach of the same. The Group has commissioned ongoing cyber vigilance for malware, spam and phishing attempts. Regular penetration and breach testing is conducted, and breach simulations are performed regularly with outcomes reported to management and Directors. Continuous incident detection and response services including proactive threat hunting and break glass digital forensics in the event of a major incident have been engaged. User education on Cyber Security has been uplifted through friendly phishing campaigns, in person awareness sessions, and course-based compliance training. Multifactor authentication is applied based on the impact profile of the service. The Group maintains a Cyber Security insurance policy. The Group has outsourced its transmission to Broadcast Australia and TV playout to NPC Media, which have disaster recovery and business continuity plans in place, that are periodically tested to ensure continuity of their services in case of a security breach or other interruption. Systems security questionnaires are completed for all new and existing third parties that require access to data held by SCA or that host or manage data on SCA’s behalf. 30 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Distributions and Dividends Total Amount $’m Type Final 2022 Ordinary Interim 2023 Ordinary 4.6 cents $11.0 million Date of Payment 4.75 cents $12.3 million 4 October 2022 11 April 2023 Cents per share Since the end of the financial year the Directors have declared the payment of a final 2023 ordinary dividend of $5.28 million (2.20 cents per fully paid share) out of ‘Retained Profits – 2019 reserve’. This dividend will be paid on 4 October 2023. Significant Changes in State of Affairs In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the year under review. Events Occurring After Balance Date Events occurring after balance date are outlined in Note 26 ‘Events Occurring after Balance Date’ to the Financial Statements. Likely Developments and Expected Results of Operations Further information on likely developments relating to the operations of the Group in future years and the expected results of those operations have not been included in this report because the Directors of the Company believe it would be likely to result in unreasonable prejudice to the commercial interests of the Group. Indemnification and Insurance of Officers and Auditors During the year the Company paid a premium of $1,452,657 to insure its officers. So long as the officers of the Company act in accordance with the Constitution and the law, the officers remain indemnified out of the assets of the Company and the Group against any losses incurred while acting on behalf of the Company and the Group. The auditors of the Group are in no way indemnified out of the assets of the Group. Non-Audit Services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Group are important. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers Australia) for audit and non-audit services provided during the year are set out in Note 23. The Board has considered the position and, in accordance with advice received from the Audit and Risk Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: – all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor; and – none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Environmental Regulation The operations of the Group are not subject to any significant environmental regulations under Australian Commonwealth, State or Territory law. The Directors are not aware of any breaches of any environmental regulations. Directors’ Report | 31 2023 Annual ReportInformation on Directors Chairman and Independent Director Robert Murray Independent Director Glen Boreham AM Independent Director Carole Campbell Independent Director Ido Leffler Independent Director Heith Mackay-Cruise 32 | Directors’ Report Appointed: 1 September 2014 Most recently elected by shareholders: 21 October 2022 Board Committees: Nomination Committee1 (Chair) Rob Murray became Chair of the Company on 19 August 2020. Rob had a successful career in sales, marketing and general management having served most recently as the CEO of Lion (formerly Lion Nathan), one of Australasia’s leading food and beverage companies, including during its acquisition by Kirin Holdings in 2009. Before joining Lion Nathan in 2004, Rob worked for Procter & Gamble for 12 years, and then for eight years with Nestlé, first as MD of the UK Food business, and then as CEO of Nestlé Oceania. Rob brings valuable strategic and commercial insight to the Board, along with his in-depth understanding of consumer behaviour and global experience in mergers and acquisitions and other corporate transactions. Rob is a director the Bestest Foundation, and Advisory Chair of the Hawkes Brewing Company. He was previously a director of Metcash Ltd, Dick Smith Holdings, Super Retail Group, and Linfox Logistics. Appointed: 1 September 2014 Most recently elected by shareholders: 13 October 2021 Board Committees: Digital Transformation Committee, People and Culture Committee, Nomination Committee1 Glen’s executive career culminated in the role of CEO and Managing Director of IBM Australia and New Zealand in a period of rapid change and innovation from 2006 to 2010. He was the inaugural Chair of Screen Australia from 2008 to 2014, and chaired the Australian Government’s Convergence Review of the media industry. The Board benefits from Glen’s extensive knowledge, insights and networks in the technology and data industries. Having lived in Asia, Europe and Australia, Glen brings a global perspective. Glen is also a director of Cochlear and Link Group and was formerly Chair of the Advisory Board at IXUP where he remains a Strategic Adviser. He was previously Chair of the Industry Advisory Board at the University of Technology Sydney, Chair of Advance, representing the one million Australians living overseas, as well as Deputy Chair of the Australian Information Industry Association and a Director of the Australian Chamber Orchestra. In 2010, he became a founding member of Australia’s Male Champions of Change group. Glen is a Member of the Order of Australia for services to business and the arts. Appointed: 1 September 2020 Most recently elected by shareholders: 30 October 2020 Board Committees: Audit and Risk Committee (Chair), Digital Transformation Committee Carole Campbell has over 30 years’ financial executive experience in a diverse range of industries including professional services, financial services, media, mining, and industrial services. Carole started her career with KPMG and has held executive roles with Macquarie Group, Westpac Institutional Bank, Seven West Media, BIS Industries and Merivale. Carole transitioned to a non-executive career in 2018 and is a non-executive director of GUD Holdings Limited where she chairs the audit committee. She was previously a non-executive director of IVE Group Ltd and Humm Group Limited. Carole is also Deputy Chair of Council of the Australian Film Television and Radio School. Carole is a Fellow of Chartered Accountants Australia and New Zealand and brings extensive experience in accounting, treasury, finance, and risk management to her role on the Board and as Chair of the Audit and Risk Committee. Appointed: 30 October 2020 Most recently elected by shareholders: 30 October 2020 Board Committees: Digital Transformation Committee, People and Culture Committee Ido Leffler has long and successful experience in developing digital brands and extensive networks in the start-up communities of Silicon Valley and Australasia. Ido is the co-founder and Chief Executive Officer at Yoobi, a leading US-based school supplies company. He is also a co-founder of Yes To Inc. – a global natural beauty brand; and of Beach House Group – a consumer product house. Ido is a non-executive director of Vestergaard – one of the world’s largest producers of malaria prevention bed nets – and The Lux Group (Luxury Escapes). He was a non-executive director of Spark New Zealand Limited for six years until November 2020. Ido also sits on other corporate and advisory boards, including as an emeritus member of the United Nations Foundation Global Entrepreneur Council. Appointed: 30 October 2020 Most recently elected by shareholders: 30 October 2020 Board Committees: People and Culture Committee (Chair), Audit and Risk Committee Heith Mackay-Cruise has been involved in the media, education, and technology sectors for 25 years. He was the founding CEO of Sterling Early Education, Global CEO and Managing Director of Study Group Limited, and CEO of PBL Media New Zealand. He held senior executive positions with Australian Consolidated Press and sales and marketing roles for PepsiCo around Australia. Heith is Chair of Straker Limited and a member of its People & Culture Committee and Audit & Risk Committee. He is a director of Codan Limited and a member of its Remuneration & Nomination Committee. He is a non-executive director of the Australian Institute of Company Directors and he chairs the Board’s Technology & Innovation Committee. Heith was previously Chair of LiteracyPlanet, hipages Limited and the Vision Australia Foundation, and a director of LifeHealthcare and Bailador Technology Investments. Heith is a mentor with Kilfinan Australia, a Fellow of the AICD and has a Bachelor of Economics degree from the University of New England. Heith brings to the Board his executive leadership experience, as well as global platforms exposure, and marketing, media and digital knowledge. Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Independent Director Helen Nash Managing Director and CEO John Kelly Appointed: 23 April 2015 Most recently elected by shareholders: 21 October 2022 Board Committees: Audit and Risk Committee, People and Culture Committee Helen Nash has more than 20 years’ executive experience in consumer packaged goods, media and quick service restaurants. As Chief Operating Officer at McDonald’s Australia, she oversaw restaurant operations, marketing, menu, insights and research, and information technology. This mix of strategic and operational experience allows Helen to bring broad commercial skills and acumen, as well as a consumer focus, to the Board. Helen also brings robust financial skills to her role having initially trained in the UK as a Certified Management Accountant. Since transitioning to her non-executive career in 2013, Helen has served as a director of companies in a range of industries. She is Chair of Inghams Group Limited, a director of Metcash Ltd, and was formerly a director of Pacific Brands Ltd and Blackmores Ltd. Our Board benefits from Helen’s governance experience and skills, including her membership of audit and remuneration committees at these other companies. Appointed: 1 July 2023 John Kelly brings extensive strategic, operational and financial leadership experience from 25 years working for Australian media and sporting organisations. John spent 16 years in executive roles at the Ten Network, including eight years as Group CFO, and then three years as Chief Operating Officer at Football Federation Australia, before joining SCA as Chief Operating Officer in 2016. In that current role, he oversaw SCA’s general management teams, strategy, research and insights, and Digital Audio, as well as facilitating SCA’s key sporting rights, Television affiliations, and Digital Audio partnerships. As CEO, John leads development and execution of SCA’s strategy with a view to increasing shareholder value, profitability, and the sustainability of the organisation in the long term. Former Managing Director and CEO Grant Blackley Appointed: 29 June 2015 Resigned: 30 June 2023 Grant Blackley joined the Board in June 2015 as Chief Executive Officer and Managing Director with responsibility for leading the strategic and operational performance of the company. Before joining SCA, Grant enjoyed a distinguished career with more than 30 years’ experience in the media and entertainment sectors including as CEO at Network 10 from 2005 to 2010. Grant resigned as Managing Director and CEO of SCA on 30 June 2023. Information on Company Secretary General Counsel and Company Secretary Tony Hudson Appointed: 7 September 2015 Tony Hudson has over 25 years’ experience in senior legal and governance roles. Tony was General Counsel and Company Secretary at ConnectEast from 2005 until 2015. Before that, Tony was a partner of Blake Dawson Waldron (now Ashurst Australia), working in the firm’s Melbourne office and from 1993 until 2000 in its Jakarta associated office. Tony manages the Group’s national legal and corporate affairs teams, including responsibility for regulatory affairs and Board governance. 1 The Board disbanded its Nomination Committee in June 2023. Meetings of Directors The number of meetings of the Board of Directors and its committees held during the year and the number of meetings attended by each Director are summarised in the table below. The Nomination Committee did not meet during the year. As a result, the members of the Nomination Committee (Rob Murray, Glen Boreham and Heith Mackay-Cruise) did not receive any fees in respect of their membership of the Nomination Committee during the year. Board Audit and Risk People and Culture Meetings of Committees Director Rob Murray Grant Blackley Glen Boreham Carole Campbell Ido Leffler Heith Mackay-Cruise Helen Nash Melanie Willis Attended 14 14 14 14 14 14 13 1 Held1 Attended 3 3 2 4 – 4 3 1 14 14 14 14 14 14 14 2 Held1 Attended 4 3 4 4 4 4 4 – * * * 4 * 4 4 1 Digital Transformation Held1 * * 3 1 3 1 * * Held1 Attended 2 3 3 3 3 2 – – * * 4 * 4 3 4 1 1 Held refers to the number of meetings held during the time the Director held office or was a member of the relevant committee during the year. * Not a member of the relevant committee during the year. Directors’ Report | 33 2023 Annual ReportExecutive remuneration in FY23 The Board made no change to the base remuneration of the CEO and CFO for FY23, and approved increases of between 4.0% and 6.0% in the base remuneration of other Senior Leadership Team members. The Board considered these adjustments were reasonable to ensure SCA’s executive remuneration remained competitive in a tightening labour market. Under the FY23 EIP, the performance of each executive KMP was assessed against a mix of financial and non-financial performance measures. The profitability and financial performance measures under the EIP for FY23 were Group EBITDA, earnings per share (EPS), and non-revenue related costs compared to budget. The EBITDA and EPS targets were not achieved. The Board acknowledged external economic factors had contributed to these outcomes and these were beyond the control of the executive team. The Board also acknowledged that management had been effective in controlling non-revenue related costs. Despite the inflationary environment, non-revenue related costs of $306.2 million were 4% below the target of $317.5 million. Based on this cost discipline, the Board approved achievement of one- third of each executive’s profitability and financial performance incentive opportunity. The non-financial goals of leadership executives targeted growth in SCA’s Broadcast Radio and Digital Audio audiences, expansion of Digital revenues, building Digital Audio capability, procuring, and rolling out improved systems to support that Digital Audio capability, and embedding understanding of SCA’s Digital transformation strategy. The Board assessed that executive KMP and other leadership executives achieved between 29% and 59% of their respective EIP opportunities. However, considering that corporate revenue and earnings outcomes fell short of targets and the significant deterioration in SCA’s share price during the year, the Board exercised discretion to reduce the awards of all leadership executives to between 20% and 50% of their respective EIP opportunities. The Board also directed that awards to other participants under the FY23 EIP be capped at a maximum of 50% of each participant’s opportunity. Half of each executive’s award will be paid in cash and the remainder will be settled by grant of performance rights that will be eligible for vesting after 30 June 2025, strongly aligning executives’ interests with those of other shareholders. Two of SCA’s executive KMP – Grant Blackley and Brian Gallagher – who resigned during the year will receive the cash portion of their EIP award and will not receive any performance rights. Details of the EIP outcome for each executive KMP are provided in the Remuneration Report. Remuneration Report Letter from People and Culture Committee Overview On behalf of the Board, I am pleased to present SCA’s Remuneration Report for the year ended 30 June 2023 (FY23). The People and Culture Committee (PCC) assists the Board in its oversight of management activities in developing and implementing strategies to improve SCA’s financial performance, culture, and diversity, consistent with our values. The PCC also oversees the composition, performance, and remuneration of SCA’s executive Key Management Personnel (KMP) and the other members of SCA’s Senior Leadership Team. An important part of the committee’s role is to ensure SCA’s remuneration policies align executive reward with creation of value for shareholders, having regard to applicable governance, legal and regulatory requirements, and industry standards. SCA’s executive remuneration includes fixed and variable components. SCA operates a combined Executive Incentive Plan (EIP), which provides a simple and direct way to link executive performance and reward to generation of sustainable positive returns for shareholders. Executive Incentive Plan Under the EIP, the performance of the executive KMP and other executives is assessed annually against a mix of financial and non-financial performance measures. The EIP uses a balanced scorecard to assess an executive’s performance. Sixty percent of the annual award for SCA’s Senior Leadership Team is based on performance against annual financial performance hurdles. Non-financial measures – accounting for 40% of the annual award – include execution of strategic projects designed to drive future financial performance, and cultural and behavioural influences. This balanced scorecard recognises the long-term benefits to the organisation of SCA’s leaders committing to develop and maintain a strong culture and operational discipline. In all cases, executives’ maximum EIP opportunity is capped at target. The Board also maintains a corporate balanced scorecard to assess overall performance against agreed targets for Radio audience survey performance, advertising market commercial share, growth in Digital Audio reach and monthly active users of LiSTNR, as well as financial performance measures. Several of the measures from the corporate scorecard are reflected in the scorecards of individual executives, and the Board also uses the scorecard to inform its exercise of discretion when considering the performance and incentive opportunities of individual executives. The annual EIP award to each executive KMP is settled partly in cash and the remainder in equity performance rights. The cash component is 40% for the CEO and 50% for other executive KMP. These performance rights are eligible for vesting and conversion to ordinary shares at the end of Year 3, subject to ongoing employment. Vesting of one-half of the performance rights will potentially be scaled back according to SCA’s achieving satisfactory growth in earnings per share over this three-year performance period. A further restriction on disposal of vested shares applies until the end of Year 5, two years after allocation of any vested shares. 34 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Board remuneration There were no changes to the remuneration of Non-Executive Directors in FY23. The same remuneration framework for Non- Executive Directors will continue in FY24. Melanie Willis retired as a Director during the year. The Board decided not to seek a replacement for her, being satisfied the Board’s reduced size and its mix of skills and experience are appropriate for SCA’s needs. The Board also adjusted the compositions of its committees to balance the responsibilities of Directors and plan for future succession. This included my taking over from Helen Nash as Chair of the PCC, and Carole Campbell replacing me as a member of the Digital Transformation Committee. The Board also decided in June 2023 to disband its Nomination Committee with its former responsibilities being assumed by the full Board. These changes resulted in aggregate Board fees reducing from $1,280,600 in FY22 to $1,156,750 in FY23. Further details of current Board remuneration arrangements are provided in the Remuneration Report. The PCC continues to strive to ensure SCA’s remuneration framework will drive behaviours to generate sustainable value for shareholders. I look forward to your feedback and to welcoming you to our 2023 Annual General Meeting. Yours faithfully, Heith Mackay-Cruise Chair of the People and Culture Committee FY21 LTI plan SCA has suspended its LTI plan; however, performance rights granted to executives in FY21 were eligible for vesting after 30 June 2023. Shareholders will recall this bespoke LTI plan focused on increasing SCA’s market capitalisation and resuming a reliable flow of dividends over the three-year performance period to 30 June 2023. The sole performance measure under the FY21 LTI plan was total shareholder return (TSR). While SCA has resumed payment of dividends and conducted an on-market buy-back during the year, the Group’s market capitalisation has deteriorated over the three-year performance period and, as a result, the threshold TSR was not achieved. The performance rights granted under the FY21 LTI plan did not vest. Details of the FY21 LTI plan are outlined in section 2.3.2 of the Remuneration Report. There are no other entitlements outstanding under SCA’s LTI plan. Executive remuneration planning for FY24 There were several changes in SCA’s senior executive ranks during the year. SCA’s Chief Executive Officer, Chief Financial Officer and Chief Sales Officer resigned during the year. The Board appointed Tim Young as Chief Financial Officer in late January 2023, setting his remuneration with the assistance of external search consultants, Korn Ferry. In considering the later appointments of John Kelly as Chief Executive Officer and Seb Rennie as Chief Commercial Officer, the Board engaged KPMG to benchmark the base and incentive remuneration of executives in similar roles. At the time of the benchmarking, SCA’s market capitalisation ranked 429 in the ASX 500. With the Board’s endorsement, KPMG selected a comparator group comprising 34 companies in the Consumer Staples, Consumer Discretionary, Communication Services and Information Technology sectors with an average market capitalisation of between $200 million and $420 million along with certain other companies with similar market capitalisation. The Board approved total remuneration for these roles between the 60th and 80th percentile of the comparator group. The first performance rights granted under SCA’s EIP in FY22 will be eligible for vesting at the end of the applicable three-year service period on 30 June 2024. We look forward to reporting on vesting of those rights in next year’s Annual Report. Directors’ Report | 35 2023 Annual Report1. Overview of FY23 remuneration This section provides an overview of the remuneration received by executive KMP and Non-Executive Directors in FY23. 1.1 Executive KMP The principles for remuneration of executive KMP are set out in section 2. Details of remuneration paid during the year are provided in sections 3 (Remuneration of executive KMP and Directors), 4 (Analysis of incentives) and 5 (Share-based incentives). This table provides an overview of statutory remuneration received by executive KMP in FY22 and FY23. Total remuneration Short-term incentive opportunity1 Long-term incentive eligible for vesting2,3 Name Grant Blackley Chief Executive Officer and Managing Director Nick McKechnie4 Chief Financial Officer Tim Young5 Chief Financial Officer John Kelly Chief Operating Officer Brian Gallagher6 Chief Sales Officer Seb Rennie7 Chief Commercial Officer Total executive KMP Fin Year Amount $ 2023 2,432,688 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 1,692,408 92,749 768,705 330,104 – 926,587 787,462 596,629 766,238 56,638 – 4,435,394 4,014,813 Performance- related proportion % Awarded % Forfeited % Vested2 % 12.7 26.5 (69.9) 20.6 20.2 – 25.7 22.0 8.0 21.7 – – 13.5 23.6 50.0 39.0 – 38.0 50.0 – 50.0 41.0 20.0 40.0 – – 44.6 39.0 50.0 61.0 – 62.0 50.0 – 50.0 59.0 80.0 60.0 – – 55.4 61.0 – – – – – – – – – – – – – – Forfeited % 100.0 – 100.0 – – – 100.0 – 100.0 – – – 100.0 – 1 The short-term incentive opportunity awarded or vested during FY23 is the cash component of awards made under the Executive Incentive Plan. 2 Entitlements under the FY21 LTI plan were eligible for vesting in FY23. 3 A portion of the awards made under the Executive Incentive Plan in FY23 will be satisfied by the grant of performance rights that will be eligible for vesting after expiry of the three-year performance period on 30 June 2025. 4 Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022. 5 Tim Young joined SCA as Chief Financial Officer on 30 January 2023. 6 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. 7 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. He did not participate in the EIP during FY23 but was eligible for a cash short-term incentive in respect of his original role. 1.2 Non-Executive Directors The aggregate remuneration of the Company’s Non-Executive Directors during FY23 was $1,156,750, compared to $1,280,600 in FY22. Changes are due principally to reduction in the number of Non-Executive Directors from seven to six and changes in the compositions of the Board’s Committees. The principles for remuneration of Non-Executive Directors are set out in section 2. Details of the remuneration of Non-Executive Directors during the year are provided in section 3. 36 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 20232. Remuneration principles 2.1 Overview of executive remuneration The Company aims to ensure remuneration is competitive and appropriate for the results delivered. Executive reward is aligned with the achievement of strategic objectives and the creation of value for shareholders and is informed by market practice for executive reward. Executive remuneration packages include a mix of fixed and variable remuneration. More senior roles in the organisation have a greater weighting towards variable remuneration. The table below shows the target remuneration mix for executive KMP in FY22 and FY23. The STI portion is shown at target levels and the LTI portion is based on the value granted or to be granted in the relevant year Executive KMP Grant Blackley John Kelly Nick McKechnie3 Tim Young4 Brian Gallagher5 Seb Rennie6 Fixed remuneration Short-term1 Long-term2 Target remuneration mix FY23 40% 50% 50% 50% 50% 50% FY22 40% 50% 50% – 50% – FY23 30% 25% 25% 25% 25% 25% FY22 30% 25% 25% – 25% – FY23 30% 25% 25% 25% 25% 25% FY22 30% 25% 25% – 25% – 1. The EIP is a combined incentive plan under which awards are paid partly in cash and partly in equity performance rights that are eligible for vesting at the end of Year 3. The percentages in this column are the cash component of the EIP awards in FY23. 2. The EIP is a combined incentive plan under which awards are paid partly in cash and partly in equity performance rights that are eligible for vesting at the end of Year 3. The percentages in this column are the equity performance rights component of the EIP awards in FY23. 3 Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022. 4 Tim Young joined SCA as Chief Financial Officer on 30 January 2023. 5 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. 6 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. The remuneration mix in the table above will apply from 1 July 2023. 2.2 Fixed remuneration for executive KMP Fixed remuneration for executives is structured as a total employment package. Executives receive a combination of base pay, superannuation and prescribed non-financial benefits at the executive’s discretion. SCA contributes superannuation on behalf of executives in accordance with the superannuation guarantee legislation. Fixed remuneration is reviewed annually to ensure the executive’s pay is competitive and appropriate for the results delivered. There are no guaranteed fixed remuneration increases included in any executive KMP contracts. The Board made no change to the base remuneration of the CEO and CFO for FY23, and approved increases of between 4.0% and 6.0% in the base remuneration of other Senior Leadership Team members. The Board considered these adjustments were reasonable to ensure SCA’s executive remuneration remained competitive in a tightening labour market. Directors’ Report | 37 2023 Annual Report2.3 Variable remuneration for executive KMP 2.3.1 Executive Incentive Plan The table below outlines details of the Company’s Executive Incentive Plan (EIP) in FY23. The EIP operated for the first time in FY22. What is the incentive? The EIP is an annual at-risk bonus designed to reward executives for meeting or exceeding financial and non-financial objectives. How is each executive’s entitlement determined? Each executive is allocated a dollar value target (which may be a fixed percentage of the executive’s total remuneration) representing the executive’s maximum EIP opportunity for the one-year performance period. How is the incentive delivered? The EIP operates over five years as follows: – a one-year performance period commencing on 1 July in the first year of the EIP, after which individual and corporate performance is assessed and an EIP award may be made partly in cash and partly in grant of performance rights; – a two-year service period commencing on 1 July in the second year of the EIP, after which performance rights will be eligible for vesting and conversion to fully paid ordinary shares; and – a two-year retention period commencing on 1 July in the fourth year of the EIP, during which any shares allocated at the end of the service period are subject to a disposal restriction. To the extent the EIP performance conditions for an executive are satisfied during the performance period, SCA will make an EIP award to the executive. SCA will satisfy the dollar value of the EIP award by: – paying the executive the cash component of the EIP award; and – granting the executive performance rights with a face value equal to the equity component of the EIP award in two equal tranches. The number of performance rights granted to the executive is calculated by dividing the dollar value of the equity component of the EIP award by the face value of a performance right at the end of the applicable performance period. The face value of a performance right is: – the volume weighted average price of SCA’s shares for the five trading days commencing seven days after SCA’s results for the performance period are announced to the ASX; less – the amount of any final dividend per share declared as payable in respect of the performance period. These performance rights will be eligible for vesting at the end of Year 3, two years after their grant to the executive. This two-year period is referred to as the service period. What are the performance measures and hurdles? The Board sets the annual goals for the CEO near the beginning of each financial year. The goals are allocated to three categories having regard to SCA’s business strategy: financial performance (60%), strategic execution (30%) and culture and behaviour (10%). The CEO determines the annual goals for other Leadership Executives in the same three categories and having regard to their areas of responsibility. Financial performance (60%) The financial performance metrics that apply under the EIP in FY23 are summarised below. – Group EBITDA compared to budget: This is a core measure of operational profitability and, as such, is measured excluding significant items. This EBITDA measure is the one used throughout the Remuneration Report unless otherwise noted. This metric is relevant for all Leadership Executives. – Earnings per share (EPS) compared to budget: This uses net profit after tax (NPAT) as the core profitability driver while also taking account of any capital management initiatives that increase or reduce the number of shares on issue. This metric is relevant for all Leadership Executives. – Revenue compared to budget: Targets may be set for total revenue or for specific categories of revenue, such as digital audio revenue. This metric is relevant for several Leadership Executives including the Chief Sales Officer. – Non-revenue-related costs compared to budget: These controllable costs exclude costs such as agency commissions and television affiliation fees that are variable with revenue. This metric is relevant for all Leadership Executives. Achievements against financial metrics are based on SCA’s audited annual financial report. The Board has discretion to adjust targets and outcomes to ensure executive reward is appropriately linked to corporate performance. For this purpose, the Board may consider matters including SCA’s overall corporate performance and progress against strategic objectives; significant non-cash items (for example impairment losses); acquisitions, divestments, and one-off events; and abnormal or non-recurring items. Strategic execution (30%) Goals for strategic execution are tailored to the individual responsibilities of each executive. These goals focus on implementation of strategic initiatives, major projects, and material operational improvements designed to deliver growth, improved and sustainable business performance, and shareholder value. Culture and behaviour (10%) Goals for culture and behaviour are tailored to the individual responsibilities of each executive. These goals focus on maintaining a positive corporate culture, effective leadership, and development, retaining talent, and building effective external relationships to improve and sustain long-term business performance and shareholder value. 38 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Is there a gateway? The following minimum performance and vesting schedules apply for EIP awards based on financial metrics: EBITDA – percentage of budget Below 95% 95% Above 95% to 102.5% Above 102.5% EPS – percentage of budget Below 90% 90% Above 90% to 105% Above 105% Revenue – percentage of budget Below 97% 97% Above 97% to 100% Above 100% Digital revenue – percentage of budget Below 85% 85% Above 85% to 107.5% Above 107.5% Vesting percentage Nil 50% Straight-line vesting between 50% and 100% 100% Vesting percentage Nil 50% Straight-line vesting between 50% and 100% 100% Vesting percentage Nil 50% Straight-line vesting between 50% and 100% 100% Vesting percentage Nil 50% Straight-line vesting between 50% and 100% 100% Non-revenue-related costs – percentage of budget Vesting percentage Above budget Nil On budget or below 100% None of the above financial measures operates as a gateway to an award being made under any other financial or non-financial measure. Individual performance must be at a ‘meets expectations’ level before any EIP award will be made. The maximum award under the FY23 EIP is 100% of an executive’s EIP target opportunity if all vesting conditions are fully satisfied over the one-year performance period. The Board will calculate the financial measures under the EIP at the end of the performance period. SCA may engage an independent consultant to review or carry out these calculations. The Board has discretion to adjust targets and outcomes to ensure executive reward is appropriately linked to corporate performance. CEO: At the end of each financial year, with the assistance of the Board’s People & Culture Committee, the Board assesses the performance of the CEO against the applicable non-financial measures and determines the extent to which the CEO has achieved applicable targets. In doing so, the Board may consider the CEO’s achievements in the context of SCA’s overall performance. Other Leadership Executives: At the end of the financial year the CEO assesses the performance of the other Leadership Executives against the applicable non-financial measures and determines the extent to which each Leadership Executive has achieved applicable targets. In doing so, the CEO may consider each Leadership Executive’s achievements in the context of SCA’s overall performance. The CEO provides these assessments to the People & Culture Committee for review. What is the maximum amount payable? How is performance assessed? Directors’ Report | 39 2023 Annual ReportVesting of performance rights after service period If the executive remains employed by SCA at the end of the service period: – Tranche 1 of the executive’s EIP award will vest at that time; and – Tranche 2 of the executive’s EIP award will be eligible for vesting according to the following scale. 3-year EPS CAGR 1.5% or below Above 1.5% – 8.0% Above 8.0% % of Tranche 2 that vests Nil Straight-line vesting between 0% and 100% 100% SCA will allocate one fully paid ordinary share for each of the executive’s performance rights that vests at the end of the two-year service period. An executive will receive an additional allocation of fully paid ordinary shares with a value equal to the dividends paid on vested rights in respect of the two-year service period. The Board has discretion to settle vested awards in cash. Any performance rights that do not vest at the end of the service period will lapse. The Board has discretion to fulfil SCA’s obligation to allocate shares on vesting by issuing new shares or acquiring shares on market. The Board has decided that any shares to be allocated on vesting of performance rights under the FY23 EIP grant will be acquired on-market. Shares allocated under the EIP to Leadership Executives will be subject to disposal restrictions for two years (until the end of Year 5) or cessation of the Leadership Executive’s employment, whichever is earlier. These shares will be subject to further disposal restrictions under the Senior Executive Share Ownership Policy unless the Leadership Executive has accumulated the target shareholding required under that policy. Cessation of employment If an executive ceases employment with SCA during the five-year term of the FY23 EIP grant, the treatment of executive’s rights under the EIP will be determined by the time and circumstances of the cessation of employment as explained below. During performance period Bad Leavers (who resign or are terminated for cause) during the Year 1 performance period will not be eligible for an award under the FY23 EIP. For an executive who ceases employment for other reasons during the performance period, the Board has discretion to make an award to the executive under the EIP on a pro-rata basis considering time and the performance to date against the applicable performance measures, to hold the EIP award to be tested against the applicable performance measures at the end of the original performance period, or to treat the EIP award in any other manner it considers appropriate. During service period Bad Leavers (who resign or are terminated for cause) during the two-year service period will forfeit any unvested performance rights, unless otherwise determined by the Board. For executives who cease employment during the service period for other reasons, the Board has discretion to vest any unvested performance rights on a pro-rata basis considering time and the performance to date against the EPS performance hurdle, to hold all or a part of any unvested performance rights to be tested against the EPS performance hurdle at the end of the original service period, or to treat the award in any other manner it deems appropriate. After service period If an executive ceases employment with SCA after the service period, SCA will release the executive’s shares from any remaining restrictions on disposal. If a change of control event in relation to SCA occurs before assessment of performance under an EIP award or before vesting of performance rights granted under an EIP award, the Board has discretion as to how to treat the unassessed award or unvested performance rights, including to forfeit or make an award in whole or in part and to determine performance rights will vest or lapse in whole or in part, or that performance rights will continue subject to the same or different conditions. In exercising its discretion, the Board may consider the proportion of the performance period and the service period that has passed at the time of the change of control, the performance to date of SCA and the executive against applicable performance conditions, and any other matters the Board considers to be relevant. The Board may reconsider the level of satisfaction of a performance hurdle and take steps to reduce the benefit of an EIP award to the extent its vesting was affected by fraud, dishonesty, breach of obligation or other action likely to result in long-term detriment to SCA. Change of control Clawback 40 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Other features Treatment of dividends: There are no dividends payable to executives on unvested performance rights. Once performance rights have vested to fully paid ordinary shares, the executive will be entitled to dividends on these shares. In addition, upon vesting of an executive’s performance rights, the executive will receive an additional allocation of fully paid ordinary shares with a value equal to the dividends paid on vested rights in respect of the service period. Sourcing of shares: The Board has discretion to purchase shares on-market or to issue new shares in respect of vested performance rights. The Board typically chooses to purchase shares on-market for this purpose and will do so for any performance rights that vest under the FY23 EIP. Retention of shares: Participants must retain any shares allocated to them upon vesting of performance rights for two years or cessation of employment, whichever is earlier. SCA’s Senior Executive Share Ownership Policy also applies to shares allocated to Leadership Executives on vesting of performance rights under the EIP. 2.3.2 Long-term Incentive Plan The table below outlines details of the Company’s LTI plan in FY21. The LTI plan has been suspended for subsequent financial years. Entitlements granted under the FY21 LTI plan were eligible for vesting after expiry of the three-year performance period on 30 June 2023. The sole performance measure under the FY21 LTI plan was total shareholder return (TSR). While SCA resumed payment of dividends and conducted an on-market buy-back during the year, the Group’s market capitalisation deteriorated over the three-year performance period and, as a result, the threshold TSR was not achieved. As explained in section 5.4, the performance rights granted under the FY21 LTI plan did not vest. What is the incentive? How is each executive’s entitlement determined? The LTI plan provides executive KMP and about 20 other executives with grants of performance rights over ordinary shares, for nil consideration. Performance rights granted under the LTI plan are subject to a three- year performance period. Each executive is allocated a dollar value (which may be a fixed percentage of the executive’s total remuneration) representing the executive’s maximum LTI opportunity for the year. This dollar value is converted into a number of performance rights in the LTI plan based on the face value of performance rights at the applicable grant date. The face value of performance rights is calculated as: – the weighted average price of the Company’s shares for the five trading days commencing seven days after the Company’s results for the prior financial year are announced to ASX; less – the amount of any final dividend per share declared as payable in respect of the prior financial year. The face value of each performance right for the FY21 grant was determined to be $0.1623. Following implementation on 2 November 2020 of a one for 10 consolidation of the Company’s share capital, the face value of each performance right for the FY21 grant has been adjusted to $1.6230. Because of the severe impacts of the COVID-19 pandemic on the Australian economy and the financial performance and market capitalisation of SCA, the dollar value of each executive’s entitlement under the LTI plan in FY21 was discounted by 76%, subject to each participant receiving a minimum grant of 6,161 performance rights (which, after implementation on 2 November 2020 of the one for 10 consolidation of the Company’s share capital, is the number of performance rights that has a total face value of $10,000). How is the incentive delivered? To the extent the applicable vesting conditions are satisfied at the end of the applicable performance period, LTI awards are delivered by allocation to participants of one fully paid ordinary share for each performance right that vests. The Board has discretion to settle vested awards in cash. Shares allocated under the LTI plan to executive KMP may be subject to restrictions on disposal under the Senior Executive Share Ownership Policy until the executive has accumulated the minimum shareholding required under that policy. Directors’ Report | 41 2023 Annual ReportWhat are the performance measures and hurdles? In FY21, each grant under the LTI plan had a single performance hurdle over a three-year performance period: Absolute Total Shareholder Return (TSR). The absolute TSR performance hurdle considers share price appreciation plus reinvested dividends, expressed as a percentage of investment, and adjusted for changes in the Company’s capital structure. The share price at the beginning and end of the performance period is the volume-weighted average price of the Company’s shares on the ASX for the 10 trading days before and after the relevant date (and on the relevant date if the relevant date is a trading day). The starting share price, based on the volume-weighted average price on 30 June 2020, was $0.1819 per share. Following implementation on 2 November 2020 of the one for 10 consolidation of the Company’s share capital, the starting share price has been adjusted to $1.819 per share. Dividends paid during the performance period will be assumed to have been re-invested on the ex-dividend date. Tax and any franking credits (or equivalent) will be ignored. The LTI plan for FY21 is designed to incentivise executives to increase the Company’s market capitalisation following the substantial decline that occurred since a trading update released in October 2019 and onset of the COVID-19 pandemic in early 2020. In broad terms, an absolute TSR of 100% over the three-year performance period would restore the Company’s market capitalisation to the average level experienced during the 2019 calendar year. The LTI plan for FY21 considers the severe impact of COVID-19 on the Company’s operations and market capitalisation and the ongoing uncertain economic environment. The Board wishes to provide a targeted incentive to executives focused on increasing the market capitalisation of the Company over the three- year performance period. The number of performance rights to be granted to executives was 24% of their standard entitlement (Base Amount) (this is subject to each participant receiving a minimum grant of 6,161 performance rights with a total face value of $10,000). Dependent on the TSR of the Company’s securities over the three-year performance period, the maximum number of performance rights that could vest will be 2.5 times the Base Amount or 60% of the executive’s standard entitlement under the LTI plan. TSR performance rights granted in FY21 were eligible to vest according to the following schedule: TSR performance to 30 June 2023 0% or below % of standard entitlement that vests Nil Above 0% – 150% Straight-line vesting between Base Amount (24% of standard entitlement) and 2.5 x Base Amount (60% of standard entitlement) Above 150% 2.5 x Base Amount (60% of standard entitlement) The above schedule illustrates that each executive’s vesting opportunity commences at 24% of an executive’s standard entitlement. The number of performance rights that vest will be subject to a multiplier according to the TSR performance of the Company over the three-year performance period. For TSR performance of 100%, a multiplier of 2x applies so that the number of performance rights that vests will be double the Base Amount granted to the executive. The maximum multiplier is 2.5x for TSR performance of 150% over the three-year performance period. In that case, the number of performance rights that vests will be 60% of an executive’s standard entitlement. The Absolute TSR performance hurdle will be achieved only if the Company’s TSR performance over the performance period is above zero. The maximum award under the FY21 LTI plan is 150% of an executive’s grant if all vesting conditions are fully satisfied over the performance period. Because the grant under the FY21 LTI plan to each executive in FY21 will be at a discount of 76% to the executive’s standard entitlement, the maximum number of performance rights to be awarded under the FY21 LTI plan is 60% of the executive’s standard entitlement. Is there a gateway? What is the maximum amount payable? How is performance assessed? The Board will calculate the Company’s TSR performance at the end of the performance period for each LTI grant. The Company will engage an independent party to report on the Company’s TSR at the vesting date. Cessation of employment ‘Bad Leavers’ (who resign or are terminated for cause) will forfeit any unvested performance rights, unless otherwise determined by the Board. There is no subsequent testing of performance hurdles under the LTI plan. For executives who cease employment for other reasons, the Board has discretion to vest any unvested performance rights on a pro-rata basis considering time and the current level of performance against the performance hurdle, or to hold the LTI award to be tested against performance hurdles at the end of the original vesting period. If a change of control occurs before vesting of an LTI award, the Board has discretion as to how to treat the unvested award, including to determine that the award will vest or lapse in whole or in part, or that it will continue subject to the same or different conditions. The Board may reconsider the level of satisfaction of a performance hurdle and take steps to reduce the benefit of an LTI award to the extent its vesting was affected by fraud, dishonesty, breach of obligation or other action likely to result in long-term detriment to the Company. Change of control Clawback 42 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Other features Treatment of dividends: There are no dividends payable to participants on unvested performance rights. Once performance rights have vested to fully paid ordinary shares, the participant will be entitled to dividends on these shares. Sourcing of shares: The Board has discretion to purchase shares on-market or to issue new shares in respect of vested performance rights. The Board typically purchases shares on-market for this purpose and will do so for any performance rights that vest under the FY21 LTI plan. Retention of shares: The rules of the LTI plan do not require participants to retain any shares allocated to them upon vesting of performance rights. However, the Company’s Senior Executive Share Ownership Policy requires executive KMP to retain 25% of the shares allocated to them upon vesting of performance rights until they achieve the required minimum shareholding under that policy or cease to be employed by the Company. 2.4 Consequences of performance on shareholder value In considering the Group’s performance and the benefits for shareholder value, the Board has regard to the following indicators in the current financial year and the preceding four financial years. Revenue EBITDA1 EBITDA % Net (loss)/profit before tax Net (loss)/profit after tax (NPAT) NPAT % Net profit after tax excluding significant items NPAT % excluding significant items EPS (cents)1 TSR Opening share price2,4 Closing share price2,4 Dividend/Distribution5 30 June 2023 $’000 504,294 77,169 30 June 2022 $’000 519,682 89,646 30 June 2021 $’000 528,649 125,936 30 June 2020 $’000 540,152 111,133 30 June 2019 $’000 660,088 156,605 15.3% 27,253 19,109 3.8% 21,882 4.3% 8.85 (1.9%) $0.99 $0.865 9.35c 17.3% (214,068) (153,722) (29.6%) 28,554 5.5% 10.82 (49.5%) $2.093 $0.99 9.50c 23.8% 71,282 48,096 9.1% 48,096 9.1% 24.1 8.2% $1.75 $2.093 0.00c 20.0% 38,294 25,100 4.6% 34,193 6.3% 17.69 (79.7%) $8.60 $1.75 4.00c 22.3% (129,475) (91,395) (13.8%) 73,879 11.2% 65.11 1.4% $8.48 $8.60 7.75c 1 EBITDA and EPS are shown after adjustments to exclude the impact of significant or non-recurring items (both income and costs) as approved by the Board for the purposes of the Company’s LTI plan and EIP. 2 On 4 May 2020, the Company completed a $169.6 million equity raising. The equity raising consisted of a pro-rata accelerated non-renounceable rights issue and placement, resulting in the issue of 1,873,092,080 shares. 3 On 30 October 2020, the Company’s shareholders approved a one for 10 consolidation of the Company’s share capital. The consolidation was implemented on 2 November 2020. As a result, the number of shares on issue reduced from 2,642,105,685 to 264,214,027. 4 Opening and closing share prices and dividends per share have been adjusted for the rights issue component of the equity raising referred to in note 2 and the consolidation of share capital referred to in note 3 (Source: Capital IQ) 5 Dividends paid during FY18, FY19 and FY20 represent amounts paid per share prior to the equity raising and prior to the share consolidation. 2.5 Executive service contracts SCA has entered service contracts setting out the terms of employment of each executive KMP. All service contracts are for an indefinite term, subject to termination by either party on up to six months’ notice. Each executive service contract provides for the payment of base salary and participation in SCA’s incentive plans, along with other prescribed non-monetary benefits. 2.6 Services from remuneration consultants KPMG was engaged during the year to advise on benchmarking of the remuneration of SCA’s CEO and Chief Commercial Officer. KPMG did not make any remuneration recommendations (as defined in the Corporations Act). KPMG was paid $24,000 for these services. Deloitte was engaged during the year to advise on valuation of outstanding entitlements granted under SCA’s EIP and LTI plan. Deloitte also performed the TSR calculation for the FY21 LTI plan. Deloitte did not make any remuneration recommendations (as defined in the Corporations Act). Deloitte was paid $2,000 for these services. Directors’ Report | 43 2023 Annual Report2.7 Remuneration of Non-Executive Directors SCA enters a letter of appointment with each Non-Executive Director. The letter sets out the Board’s expectations for Non-Executive Directors and the remuneration payable to Non-Executive Directors. The maximum annual aggregate fee pool for Non-Executive Directors is $1,500,000. This was confirmed in amendments to the Constitution approved by shareholders at the 2020 AGM. The Chair receives a fixed aggregate fee. Other Non-Executive Directors receive a base fee for acting as a Director and additional fees for participation as Chair or as a member of the Board’s committees. Non-Executive Directors do not receive performance-based fees and are not entitled to retirement benefits as part of their fees. The table below sets out the scale of fees for Non-Executive Directors that applied in FY22 and FY23 and those that will apply in FY24. The amounts shown for FY22 and FY23 do not take account of the temporary 10% reduction in fees between April 2020 and September 2020 in response to the impact of COVID-19. The Board disbanded the Nomination Committee in June 2023 and has resumed responsibility for the matters formerly delegated to the Nomination Committee. Base fees – Annual Chair1 Deputy Chair1 Other non-executive directors Committee fees – Annual Audit & Risk Committee – Chair Audit & Risk Committee – member People & Culture Committee – Chair1 People & Culture Committee – member Digital Transformation Committee – Chair Digital Transformation Committee – member Nomination Committee – Chair1 Nomination Committee – member2 FY223 $ FY233 $ FY24 $ 273,000 – 136,500 273,000 – 136,500 273,000 – 136,500 23,000 15,500 23,000 15,500 23,000 15,500 16,500 11,000 23,000 15,500 23,000 15,500 23,000 15,500 16,500 11,000 23,000 15,500 23,000 15,500 23,000 15,500 – – 1 The Chair (and formerly the Deputy Chair) do not receive additional fees for committee work. Accordingly, the fees set out above for Chair of the Nomination Committee have not been paid in any of the above years and will not be paid in FY23. The Board has not appointed a Deputy Chair since FY22. 2 Members of the Nomination Committee waived their fees in FY21, FY22 and FY23 because the Nomination Committee did not meet during that year. The Board disbanded the Nomination Committee in June 2023. 3 Because of the impact on SCA’s business of the COVID-19 health crisis and the lockdown measures implemented by Federal, State and Territory governments in response to the crisis, the fees paid to Non-Executive Directors for the period from 1 April 2020 to 30 September 2020 were reduced by 10%. The above fees relate to the Board approved amounts prior to the 10% reduction. 44 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 20233. Remuneration of executive KMP and directors during the year 3.1 Total remuneration received by executive KMP in FY23 (non-statutory disclosures) The remuneration in the table below is aligned to the current performance period and provides an indication of alignment between the remuneration received in the current year and its alignment with long-term performance. The amounts in this table will not reconcile with those provided in the statutory disclosures in section 3.2. For example, the executive KMP table in section 3.2 discloses the value of performance rights granted under the LTI plan and the EIP which might or might not vest in future years, while the table below discloses the value of LTI grants from previous years which vested in the current year. Executive KMP2 Grant Blackley Chief Executive Officer and Managing Director Nick McKechnie2 Chief Financial Officer Tim Young3 Chief Financial Officer John Kelly Chief Operating Officer Brian Gallagher4 Chief Sales Officer Seb Rennie5 Chief Commercial Officer Total executive KMP Year 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Cash salary and fees $ EIP cash bonus1 $ Non- monetary benefits $ Super- annuation benefits $ LTI vested in the year $ 1,168,086 350,200 4,371 25,292 1,203,709 272,974 168,127 561,207 246,777 – 595,166 576,512 488,300 561,632 52,781 – – 111,077 55,729 – 159,250 122,916 60,900 117,648 – – 2,719,236 2,903,060 626,079 624,615 2,789 1,511 1,020 – – 4,588 3,698 3,699 3,718 – – 14,169 11,225 23,568 8,661 23,568 12,646 – 25,292 23,568 22,105 23,568 2,824 – 96,821 94,272 – – – – – – – – – – – – – – Total $ 1,547,949 1,503,040 178,299 696,872 315,152 – 784,297 726,694 575,003 706,566 55,605 – 3,456,305 3,633,172 1 The EIP cash bonus is for performance during the year using the criteria set out in section 2.3.1. The amount was finally determined by the Board on 16 August 2023 after considering recommendations of the People & Culture Committee. 2 Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022. 3 Tim Young joined SCA as Chief Financial Officer on 30 January 2023 and received a $50,000 sign-on payment included in salary and fees above. 4 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. 5 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. The remuneration details in the table above applied from his appointment as Chief Commercial Officer on 15 May 2023. He did not participate in the EIP during FY23 but was eligible for a cash short-term incentive. Directors’ Report | 45 2023 Annual Report3.2 Total remuneration received by executive KMP in FY23 (statutory disclosure) The table below sets out the nature and amount of each major element of the remuneration of each executive KMP in FY23 and FY22. Short-term employee benefits Salary and fees $ Year EIP cash bonus2 $ Non- monetary $ Post- e’ment Super con- tribution $ Total $ Long Service Leave1 Termin- ation benefits $ $ Share- based pay- ments Perfor- mance rights3 Perfor- mance- related pro- portion Total $ % 2023 1,168,086 350,200 4,371 1,522,657 25,292 60,446 864,582 (40,289) 2,432,688 12.7% Executive KMP4 Grant Blackley4 2022 1,203,709 272,974 2,789 1,479,472 23,568 14,690 – 174,678 1,692,408 26.5% CEO and Managing Director Nick McKechnie5 2023 Chief Financial Officer 2022 Tim Young6 Chief Financial Officer 2022 John Kelly 2023 Chief Operating Officer 2022 Brian Gallagher7 Chief Sales Officer Seb Rennie8 Chief Commercial Officer 168,127 561,207 – 111,077 2023 246,777 55,729 – – 595,166 159,250 576,512 122,916 2023 488,299 60,900 117,648 561,632 2022 2023 52,781 2022 – – – 1,511 1,020 – – 4,588 3,698 3,699 3,718 – – 169,638 673,304 302,506 – 759,004 703,126 552,898 682,998 8,661 (20,745) 23,568 24,852 12,646 4,062 – – 25,292 63,523 23,568 10,206 22,105 34,843 11,123 23,568 52,781 2,824 1,033 – – – – (64,805) 46,981 – – 10,890 – – – 78,767 – 50,562 – (13,217) – 48,549 – – – – 92,749 768,705 330,104 – 926,586 787,462 596,629 766,238 56,638 – (69.9%) 20.6% 20.2% – 25.7% 22.0% 8.0% 21.7% 0.0% – 13.5% 23.6% Total executive KMP 2023 2,719,236 626,079 2022 2,903,060 624,615 14,169 3,359,484 11,225 3,538,900 96,820 143,162 864,582 (28,654) 4,435,394 4,014,813 94,272 60,872 – 320,770 1 Long service leave relates to amounts accrued during the year. 2 The EIP cash bonus is for performance during the year using the criteria set out in section 2.3.1. The amount was finally determined by the Board on 16 August 2023 after considering recommendations of the People & Culture Committee. 3 The value disclosed is the portion of the fair value of the rights recognised as an expense in each reporting period. 4 Grant Blackley resigned as Chief Executive Officer with effect from 30 June 2023. The Board approved payment to him of the cash component of his award under the FY23 EIP based on his performance during FY23. However, the Board declined to grant performance rights to him under the FY23 EIP. The termination benefits relate to his nine-month restraint of trade period commencing on 1 July 2023. 5 Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022 and did not participate in the EIP during FY23. The Board approved payment to him of the cash component of his award under the FY22 EIP based on his performance during FY22. However, the Board declined to grant performance rights to him under the FY22 EIP. 6 Tim Young joined SCA as Chief Financial Officer on 30 January 2023 and received a $50,000 sign-on payment included in Salary and fees above. 7 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. The Board approved payment to him of the cash component of his award under the FY23 EIP based on his performance during FY23. However, the Board declined to grant performance rights to him under the FY23 EIP. 8 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. The remuneration mix in the table above applied from his appointment as Chief Commercial Officer on 15 May 2023. 46 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 20233.3 Non-Executive Directors The table below sets out the nature and amount of each major element of the remuneration of each Non-Executive Director in FY23 and FY22. A Non-Executive Director’s salary and fees are based on the scale set out in section 2.7 and membership of the Board’s committees as set out in the Directors’ Report. Short-term employee benefits Non-executive Director Rob Murray Chair Glen Boreham Non-Executive Director Carole Campbell Non-Executive Director Ido Leffler Non-Executive Director Heith Mackay-Cruise Non-Executive Director Helen Nash Non-Executive Director Melanie Willis1 Non-Executive Director Total Salary and fees $ 248,708 273,000 175,000 175,000 153,695 143,295 151,584 150,273 156,109 150,273 153,846 167,045 25,263 153,977 1,064,205 1,212,863 Year 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Non- monetary $ – – – – – – – – – – – – – – – – Post- employment Super contribution $ 25,292 – – – 16,138 14,330 15,916 15,027 16,391 15,027 16,154 7,955 2,654 15,398 Total $ 274,000 273,000 175,000 175,000 169,833 157,625 167,500 165,300 172,500 165,300 170,000 175,000 27,917 169,375 Total $ 248,708 273,000 175,000 175,000 153,695 143,295 151,584 150,273 156,109 150,273 153,846 167,045 25,263 153,977 1,064,205 1,212,863 92,545 67,737 1,156,750 1,280,600 1. Melanie Willis resigned as a Director on 31 August 2022. 4. Analysis of incentives included in remuneration 4.1 EIP performance outcomes 4.1.1 Selected EIP measures The table below summarises SCA’s performance against the financial and profitability measures and selected other corporate measures included in the KPIs for executive KMP under the EIP in FY23. Group EBITDA Target $’000 $105,100 Actual % $’000 $77,169 EPS (excluding significant items) Actual Target Cps Cps 8.85 16.3 Non-revenue related costs Target $’000 $317,500 Actual $’000 $306,200 Group revenue Target $’000 $548,100 Audio revenue Target $’000 $420,400 Actual $’000 $504,294 Actual $’000 $397,196 % Target 73% % Target 54% % Target 96% % Target 92% % Target 95% Vesting % – Vesting % – Vesting % 100% Vesting % – Vesting % – Executive KMP CEO, CFO, COO, CSO Executive KMP CEO, CFO, COO, CSO Executive KMP CEO, CFO, COO, CSO Executive KMP CSO Executive KMP CSO Directors’ Report | 47 2023 Annual ReportRegional Radio revenue Target $’000 $180,000 Television revenue Target $’000 $127,100 Digital Audio revenue Target $’000 $32,000 Digital Audio EBITDA Target $’000 ($13,100) Actual $’000 $161,967 Actual $’000 $106,742 Actual $’000 $26,047 Actual $’000 ($11,927) Digital Audio net cash investment Actual Target $’000 $’000 ($20,133) ($19,600) SCA Radio audiences Measure Top 7 markets (15%) 2Day FM All People (20%) 2Day FM P25-54 (20%) 2Day FM B’fast All People (20%) 2Day FM B’fast P25-54 (20%) LiSTNR Measure Sign-ups (1,250,000) % Target 90% % Target 84% % Target 81% % Target 91% % Target 103% Vesting % – Vesting % – Vesting % – Vesting % – Vesting % – Executive KMP CSO Executive KMP CSO Executive KMP CSO Executive KMP CEO, CFO, COO Executive KMP CEO, CFO, COO Actual % growth 17.7% 30% 35% 52% 54% % Target 118% 150% 175% 260% 270% Vesting % 100% 100% 100% 100% 100% Actual 1,481,400 % Target 119% Vesting 100% Executive KMP CEO Executive KMP CEO 4.1.2 EIP outcomes for executive KMP The table below summarises the key performance indicators (KPIs) applicable for each executive KMP under SCA’s EIP for FY23. The Board assessed that executive KMP and other leadership executives achieved between 29% and 59% of their respective EIP opportunities for FY23. However, considering that corporate revenue and earnings outcomes fell short of targets and the significant deterioration in SCA’s share price during the year, the Board exercised discretion to reduce the awards of all leadership executives to between 20% and 50% of their respective EIP opportunities. The Board also directed that awards to other participants in the FY23 EIP be capped at a maximum of 50% of each participant’s opportunity. Half of each executive’s award will be paid in cash and the remainder will be settled by grant of performance rights that will be eligible for vesting after 30 June 2025, strongly aligning executives’ interests with those of other shareholders. Two of SCA’s executive KMP – Grant Blackley and Brian Gallagher – who resigned during the year will receive the cash portion of their EIP award and will not receive any performance rights. The table below shows the outcome for each executive KMP in each EIP component. Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022 and did not participate in the EIP during FY23. Seb Rennie was appointed as Chief Commercial Officer on 15 May 2023. Given the short time during FY23 for which he was an executive KMP, his incentive remuneration was assessed separately from other executive KMP and is not reported below. 48 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023Executive KMP Goals Grant Blackley, CEO and Managing Director Profitability and financial performance (60%) Group EBITDA, EPS, non-revenue related Group operating expenses compared to budget Outcomes Refer to tables in section 4.1.1. 19.8% Strategy execution (30%) Embed Horizon 2 of corporate strategy within SCA and with key external stakeholders Achieved Achieve Digital Audio EBITDA loss less than $13.1M and net cash investment below $19.6M Not achieved Grow LiSTNR sign-ups and monthly active users above target Grow SCA Radio audiences in top seven markets by 15%. Grow 2DayFM total and Breakfast All People and All People 25-54 by 20% Cultural and behavioural influences (10%) Improve diversity of leadership and executive teams. Improve employee perceptions of job security and job significance Achieve 70% agreement in employee pulse surveys to confirm employees understand SCA’s corporate strategy and their and their team’s roles in that strategy Achieved Achieved Achieved Achieved 22.5% 10% Total 52.3% After Board discretion 50% Refer to tables in section 4.1.1. 19.8% Achieved Achieved Achieved Achieved 30% Tim Young, Chief Financial Officer Profitability and financial performance (60%) Group EBITDA, EPS, non-revenue related Group operating expenses compared to budget Strategy execution (30%) Broadcast Radio costs below $214M, Digital Audio costs below $37M (excluding approved growth initiatives) Cultural and behavioural influences (10%) Business case to uplift finance capability with links to improved earnings performance Improve SCA’s budget setting process with links to increased earnings and shareholder value Achieve 70% agreement in employee pulse surveys to confirm employees understand SCA’s corporate strategy and their and their team’s roles in that strategy All people within area of influence demonstrate achievement of digital development goal Achieved 10% Total 59.8% After Board discretion 50% John Kelly, Chief Operating Officer Profitability and financial performance (60%) Group EBITDA, EPS, non-revenue related Group operating expenses compared to budget Strategy execution (30%) Grow LiSTNR monthly active users above target Grow LiSTNR podcast audience (owned) by 20% Achieve Digital Audio net loss below $13M and net cash investment below $19.6M Refer to tables in section 4.1.1. 19.8% Achieved Achieved Achieved Ensure at least 50% of employees have a Digital Audio component and driver in their role Achieved 30% Cultural and behavioural influences (10%) Achieve 70% agreement in employee pulse surveys to confirm employees understand SCA’s corporate strategy and their and their team’s roles in that strategy Achieved All people within area of influence demonstrate achievement of digital development goal Achieved 10% Total 59.8% After Board discretion 50% Brian Gallagher, Chief Sales Officer Profitability and financial performance (60%) Group EBITDA, EPS, non-revenue related Group operating expenses compared to budget Strategy execution (30%) Grow total revenues to $548.1M (Audio $420.4M, Television $127.1M) Grow Digital Audio revenues to $32M, with satisfactory average annual revenue per active user Achieve forecast revenues for all premium podcast partners Grow Regional Radio revenues to $180M Refer to tables in section 4.1.1. 19.8% Not achieved Not achieved Not achieved Not achieved 0% Cultural and behavioural influences (10%) Achieve 70% agreement in employee pulse surveys to confirm employees understand SCA’s corporate strategy and their and their team’s roles in that strategy Achieved All people within area of influence demonstrate achievement of digital development goal Achieved 10% Total 29.8% After Board discretion 20% Directors’ Report | 49 2023 Annual Report4.2 EIP awards The table below sets out details of the incentive awards granted as remuneration to executive KMP for the year. Considering that corporate revenue and earnings outcomes fell short of targets and the significant deterioration in SCA’s share price during the year, the Board exercised discretion to reduce the awards of all leadership executives to between 20% and 50% of their respective EIP opportunities. This is shown in the adjusted total column in the table below. Executive incentive plan % achieved in year Cash award1 $ 350,200 – 55,729 159,250 60,900 – Performance rights to be granted2 $ – – 55,729 159,250 – – Profitability and financial performance4 19.8 – 19.8 19.8 19.8 – Strategy execution 22.5 – 30.0 30.0 – – Cultural and behavioural influences 10.0 – 10.0 10.0 10.0 – KMP Grant Blackley Nick McKechnie4 Tim Young5 John Kelly Brian Gallagher6 Seb Rennie7 Total 52.3 – 59.8 59.8 29.8 – Adjusted total 50.0 – 50.0 50.0 20.0 – Forfeited3 50.0 – 50.0 50.0 80.0 – 1 Amounts included in remuneration for the year represent the cash component of EIP awards related to the year based on achievement of corporate and personal goals for each executive. These amounts were approved by the Board on 16 August 2023. 2 Performance rights will be granted during September 2023 based on the face value of performance rights to be determined as set out in section 2.3.1. 3 The amounts forfeited are due to corporate and personal goals not being achieved in the year. 4 Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022. He did not participate in the EIP during FY23. 5 Tim Young joined SCA as Chief Financial Officer on 30 January 2023. 6 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. 7 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. His incentive remuneration was assessed according to his performance against goals relevant to his previous role as Head of LiSTNR Commercial and is not disclosed in this table. 5. Share-based incentive payments All references to rights in this section are to performance rights over fully paid ordinary shares in SCA issued under SCA’s EIP or LTI plan. Rights are convertible into fully paid ordinary shares in SCA on a one-for-one basis upon vesting in accordance with SCA’s EIP or LTI plan. There are no options on issue under SCA’s EIP or LTI plan. 5.1 Rights granted as remuneration during the year The tables below set out details of the rights over shares granted as remuneration during the year to SCA’s executive KMP under SCA’s FY22 EIP. As noted in section 4.2, these performance rights were granted under the EIP during September 2022 based on the face value of performance rights determined as set out in section 2.3.1. Executive KMP Grant Blackley1 John Kelly Nick McKechnie2 Tim Young3 Brian Gallagher4 Seb Rennie3 EIP FY22 FY22 FY22 FY22 FY22 FY22 Vesting date 30 Jun 2024 30 Jun 2024 30 Jun 2024 30 Jun 2024 30 Jun 2024 30 Jun 2024 Perf rights granted 406,574 122,049 – – 116,819 – Face value 1.0071 1.0071 – – 1.0071 – 1 Grant Blackley resigned and his performance rights were forfeited with effect from 30 June 2023. 2 Nick McKechnie resigned as Chief Financial Officer with effect from 14 October 2022. The Board approved payment to him of the cash component of his award under the FY22 EIP based on his performance during FY22. However, the Board declined to grant performance rights to him under the FY22 EIP. 3 Tim Young commenced as Chief Financial Officer on 30 January 2023 and Seb Rennie commenced as Chief Commercial Officer on 15 May 2023. Neither participated in the FY22 EIP. 4 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023 and his performance rights were forfeited with effect from 8 August 2023. There were no rights over shares granted as remuneration to executive KMP during the year under SCA’s LTI plan which has been suspended since FY21. All performance rights expire on the earlier of their vesting date or termination of the executive’s employment. When an executive ceases employment as a good leaver, the executive’s rights will typically be forfeited on a pro-rata basis according to the executive’s period of service. The rights vest at the end of the performance period specified at the time of their grant. This is 30 June 2024 for performance rights granted under the FY22 EIP. In addition to a continuing employment condition, vesting is conditional on SCA achieving specified performance hurdles. Details of the performance hurdles are included in the discussion of the EIP in section 2.3.1. As set out in section 2.3.1, each executive will also receive an additional allocation of fully paid ordinary shares with a value equal to the dividends paid on vested rights in respect of FY23 and FY24. 50 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023 5.2 Details of equity incentives affecting current and future remuneration The table below sets out the vesting profiles of rights held by each executive KMP on 30 June 2023 and details of rights that vested during the year. At the end of the year, there were no rights that had vested and had not been exercised by conversion to fully paid ordinary shares. At grant date During FY23 At year end Perf rights granted2,3 Vesting date 1/7/24 406,574 Grant date1 FY23 Perf rights vested and exercised – Perf rights vested and Perf exercised rights forfeited % – 406,574 Perf right value4 $ 416,738 Perf rights forfeited %4 100% Perf rights cancelled4 – Perf rights cancelled5 % – Perf rights not vested – Executive KMP Grant Blackley Nick McKechnie6 Tim Young7 John Kelly Brian Gallagher8 Seb Rennie9 FY22 01/7/23 125,989 201,582 Total FY23 532,563 – – 618,320 – FY22 01/7/23 33,420 Total FY23 Total FY23 33,420 – – 122,049 1/7/24 1/7/24 FY22 01/7/23 34,307 Total FY23 156,356 116,819 1/7/24 53,471 53,471 – – 125,100 54,891 179,991 119,739 FY22 01/7/23 33,124 52,998 Total FY23 Total Total 149,943 – – 172,737 – – – 872,282 1,024,519 – – – – – – – – – – – – – – – – – 125,989 – 532,563 – – – – – – – – – – – – – – 33,420 33,420 – – – – – – – – – – 100% 100% – 100% 100% – – – – – – – – – – – – – – – – – – 34,307 34,307 – 33,124 33,124 – Perf rights not vested value2 $ – – – – – – – – – – – – – – – – – – – – – – – 122,049 125,100 100% – – 100% 122,049 125,100 119,739 116,819 – 100% – – 52,998 116,819 119,739 – – – – 565,983 64.9% 67,431 7.7% 238,868 244,839 – – – – 1 Performance rights granted during FY22 were granted under the FY21 LTI plan. The LTI plan has been suspended since that time. Performance rights granted during FY23 were granted under the FY22 EIP. 2 The number of performance rights granted under the FY21 LTI plan (Base Amount) is stated after adjustment for the one for 10 consolidation of the Company’s share capital implemented on 2 November 2020. As explained in section 2.3.2, the number of performance rights eligible to vest was subject to a multiplier according to the TSR performance of the Company over the three-year performance period. For TSR performance of 100%, a multiplier of 2x applied so that the number of performance rights that vests would be double the Base Amount granted to the executive. The maximum multiplier was 2.5x for TSR performance of 150% over the three-year performance period. 3 As set out in section 2.3.1, upon vesting of performance rights granted under the FY22 EIP, each executive will receive an additional allocation of fully paid ordinary shares with a face value equal to the dividends paid on vested rights in respect of FY23 and FY24. 4 The value of rights granted is the fair value of rights calculated at the grant date adjusted, in the case of performance rights granted under the FY21 LTI plan, for the one for 10 consolidation of the Company’s share capital implemented on 2 November 2020. The total value of rights granted in the table is allocated to remuneration over the vesting period. 5 The number and percentage of rights forfeited during the year is the reduction from the maximum number of rights available to vest due to the performance criteria not being satisfied or to rights being cancelled by the Board. 6 Nick McKechnie resigned as Chief Financial Officer with effect from October 2022. Performance rights granted to him under the FY21 LTI plan were cancelled upon his resignation. The Board approved payment to him of the cash component of his award under the FY22 EIP based on his performance during FY22. However, the Board declined to grant performance rights to him under the FY22 EIP. 7 Tim Young joined SCA as Chief Financial Officer on 30 January 2023. He participated in the FY23 EIP. 8 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023 and his performance rights were forfeited with effect from 8 August 2023. 9 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. He did not participate in the EIP during FY23 but was eligible for a cash short-term incentive. Directors’ Report | 51 2023 Annual Report5.3 Vesting of rights during the year (based on performance to 30 June 2022) There were no performance rights granted under the EIP or the LTI plan that were eligible for vesting during the year. 5.4 Grants and vesting of rights since 30 June 2023 Under the FY23 EIP, the Board has approved grant to executive KMP of performance rights with the total face values set out below. As explained in section 2.3.1, the face value of these performance rights will be calculated during September 2023 and the applicable number of performance rights will then be granted to each executive. Executive KMP Grant Blackley1 John Kelly Tim Young Brian Gallagher2 Seb Rennie3 EIP FY23 FY23 FY23 FY23 FY23 Vesting date 30 Jun 2025 30 Jun 2025 30 Jun 2025 30 Jun 2025 30 Jun 2025 Perf rights face value – $159,250 $159,250 – – 1 Grant Blackley resigned as Chief Executive Officer with effect from 30 June 2023. The Board approved payment to him of the cash component of his award under the FY23 EIP based on his performance during FY23. However, the Board declined to grant performance rights to him under the FY23 EIP. 2 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. The Board approved payment to him of the cash component of his award under the FY23 EIP based on his performance during FY23. However, the Board declined to grant performance rights to him under the FY23 EIP. 3 Seb Rennie joined SCA as Head of LiSTNR Commercial on 20 March 2023. He was appointed Chief Commercial Officer and joined SCA’s Senior Leadership Team on 15 May 2023. His incentive remuneration was assessed according to his performance against goals relevant to his previous role as Head of LiSTNR Commercial which was not reviewed by the Board. No performance rights, whether granted under the former LTI plan or the EIP, have vested since 30 June 2023. SCA has suspended its LTI plan; however, performance rights granted to executives under the FY21 LTI plan were eligible for vesting based on the total shareholder return on SCA shares over the three-year performance period ended on 30 June 2023. These performance rights granted in FY21 were eligible to vest according to the following schedule: TSR performance to 30 June 2023 0% or below Above 0% – 150% % of standard entitlement that vests Nil Straight-line vesting between Base Amount (24% of standard entitlement) and 2.5 x Base Amount (60% of standard entitlement) Above 150% 2.5 x Base Amount (60% of standard entitlement) SCA’s TSR performance over the three-year performance period to 30 June 2023 was negative 46.45%. Accordingly, as shown in the table in section 5.2, none of these performance rights vested. 6. Payments to executives before taking office During the year, SCA paid Tim Young an amount of $50,000 as consideration for his taking office as Chief Financial Officer. There were no other payments made during the year to any person as part of the consideration for the person taking office. 7. Transactions with KMP 7.1 Loans to KMP There were no loans made to KMP or their related parties during the year. 7.2 Other transactions and balances with KMP There were no other transactions with KMP or their related parties during the year. 52 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 20238. KMP shareholdings 8.1 Balances and movements in KMP shareholdings The table below sets out the movements in shares held directly or indirectly by KMP during the year. Non-Executive Directors Rob Murray Glen Boreham Carole Campbell Ido Leffler Heith Mackay-Cruise Helen Nash Melanie Willis Executives Grant Blackley1 Nick McKechnie Tim Young John Kelly Brian Gallagher Seb Rennie Received during the year Share balance at start of year Vesting of EIP rights Vesting of LTI rights Other changes during the year Share balance at end of year2 65,167 48,462 78,250 65,800 74,570 28,875 40,796 401,920 219,519 82,760 – 46,049 75,907 –3 424,235 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 25,430 – – – – 16,307 148,000 8,690 – 172,997 65,167 48,462 78,250 65,800 100,000 28,875 40,796 386,554 219,519 82,760 16,307 194,049 84,597 – 429,875 1 Grant Blackley resigned from SCA with effect from 30 June 2023. 2 Share balance at end of year, or for Melanie Willis, Nick McKechnie and Brian Gallagher on the date they ceased being a KMP. The totals consequently exclude their balances. 3 Seb Rennie did not own shares when he became a KMP on 15 May 2023. 8.2 Board’s target share ownership policies The Board’s Non-Executive Director Share Ownership Policy requires Non-Executive Directors to invest an amount not less than the base fee of a Non-Executive Director in acquiring SCA shares. A Non-Executive Director is required to do so within three years after appointment as a Director. The proceeds of any sales of shares will be deducted from a Non-Executive Director’s invested amount. The current base fee for Non-Executive Directors is $136,500. The table below shows the status under this policy of Non-Executive Directors’ shareholdings on 30 June 2023. Non-Executive Director Rob Murray Glen Boreham Carole Campbell Ido Leffler Heith Mackay-Cruise Helen Nash Share balance at end of year FY23 Base fee $ Invested amount $ Achieved target? Due date to achieve target 65,167 48,462 78,250 65,800 100,000 28,875 386,554 136,500 136,500 136,500 136,500 136,500 136,500 245,286 199,884 137,011 114,608 163,075 144,033 1,003,897 Yes Yes Yes No Yes Yes – – – Oct 2023 – – Directors’ Report | 53 2023 Annual ReportThe Board’s Senior Executive Share Ownership Policy requires executive KMP (and the CEO’s other direct executive reports) to invest an amount not less than 50% of the executive’s base salary (excluding superannuation) in acquiring SCA shares. The CEO must invest an amount not less than 100% of the CEO’s base salary (excluding superannuation) in acquiring SCA shares. The market price at the time of allocation to an executive of shares under one of SCA’s executive incentive plans is included in the executive’s invested amount. The proceeds of any sales of shares will be deducted from an executive’s invested amount. There is no due date by which an executive must acquire the target shareholding. The table below shows the status under this policy of the shareholding of each executive KMP on 30 June 2023. Executive KMP Grant Blackley1 Tim Young John Kelly2 Brian Gallagher3 Seb Rennie Balance at end of year FY23 Base salary $ Invested amount $ Achieved target? 219,519 16,307 194,049 84,597 – 514,472 1,143,709 535,000 611,556 558,316 415,000 1,044,293 15,001 295,248 310,738 – 1,665,280 No No No Yes No 1 Grant Blackley resigned as Chief Executive Officer and Managing Director with effect from 30 June 2023. Restrictions on disposal of his SCA shares were removed from that date. 2 John Kelly was appointed as Chief Executive Officer and Managing Director with effect from 1 July 2023. From that date, the target amount for his investment in acquiring SCA shares has increased from 50% to 100% of his base salary (excluding superannuation). 3 Brian Gallagher resigned as Chief Sales Officer with effect from 15 May 2023. He continued in employment with SCA until 8 August 2023. Restrictions on disposal of his SCA shares were removed from that date. Auditor’s Independence Declaration A copy of the Auditor’s Independence Declaration, as required under s307C of the Corporations Act 2001, is set out on page 55. This report is signed in accordance with resolutions of the Directors of Southern Cross Media Group Limited. Rob Murray Chair Southern Cross Media Group Limited Sydney, Australia 17 August 2023 John Kelly Managing Director Southern Cross Media Group Limited Sydney, Australia 17 August 2023 54 | Directors’ Report Southern Cross AustereoDirectors’ ReportFor the year ended 30 June 2023 Auditor’s Independence Declaration Auditor’s Independence Declaration As lead auditor for the audit of Southern Cross Media Group Limited for the year ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Southern Cross Media Group Limited and the entities it controlled during the period. Trevor Johnston Partner PricewaterhouseCoopers Melbourne 17 August 2023 PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Directors’ Report | 55 2023 Annual ReportConsolidated Statement of Comprehensive Income For the year ended 30 June 2023 Revenue from continuing operations Revenue related expenses Employee expenses Program and production Technical expenses Promotions and marketing Administration costs Other income Share of net profit of investments accounted for using the equity method Depreciation and amortisation expense Impairment of intangibles and investments Interest expense and other borrowing costs Interest revenue Profit/(Loss) before income tax expense for the year from continuing operations Income tax (expense)/credit from continuing operations Profit/(Loss) from continuing operations after income tax expense for the year Other comprehensive income that may be reclassified to profit or loss: Changes to fair value of cash flow hedges, net of tax Total comprehensive Profit/(Loss) for the year attributable to shareholders Earnings per share attributable to the ordinary equity holders of the Company: Basic earnings per share (cents) Diluted earnings per share (cents) 2023 $’000 504,294 (126,130) (203,091) (25,305) (42,481) (14,859) (21,181) 1,264 697 (29,155) – (17,920) 1,120 27,253 (8,144) 19,109 2022 (Restated) $’000 524,838 (130,850) (197,797) (24,130) (41,801) (21,667) (23,790) 16 761 (31,851) (251,718) (16,219) 140 (214,068) 60,346 (153,722) (38) 19,071 1,658 (152,064) 7.73 7.63 (58.30) (58.30) Note 3 6 5 19 4 17 7 15 15 The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. 56 | Consolidated Statement of Comprehensive Income Southern Cross AustereoConsolidated Statement of Financial Position For the year ended 30 June 2023 Current assets Cash and cash equivalents Receivables Derivative financial instruments Current tax asset Total current assets Non-current assets Receivables Derivative financial instruments Right-of-use assets Investments Property, plant and equipment Intangible assets Total non-current assets Total assets Current liabilities Payables Deferred Income Provisions Lease liability Total current liabilities Non-current liabilities Deferred income Provisions Borrowings Lease liability Deferred tax liability Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Equity attributable to equity holders Total equity Note 11 12 18 7 12 18 25 19 8 9 12 12 12 25 12 12 17 25 7 16 2023 $’000 12,963 98,650 – 1,295 112,908 10,919 736 109,723 6,326 76,813 712,120 916,637 2022 $’000 49,462 100,947 787 2,622 153,818 11,932 – 110,759 6,465 84,554 703,796 917,506 1,029,545 1,071,324 43,739 5,532 20,333 7,105 76,709 86,269 4,107 117,243 122,936 187,132 517,687 594,396 435,149 48,930 6,742 20,620 6,497 82,789 88,260 4,854 126,943 120,322 187,749 528,128 610,917 460,407 1,516,105 5,990 (1,086,946) 435,149 435,149 1,537,404 5,749 (1,082,746) 460,407 460,407 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Consolidated Statement of Financial Position | 57 2023 Annual ReportConsolidated Statement of Changes in Equity For the year ended 30 June 2023 Contributed equity $’000 Share-based payment reserve $’000 Hedge reserve $’000 Other equity transactions $’000 (Accumulated losses)/ retained profits $’000 2023 Total equity at 1 July 2022 Profit for the year Other comprehensive income Total comprehensive income Transactions with equity holders in their capacity as equity holders: Buy-back of ordinary shares Employee share entitlements Dividends Paid 1,537,404 – – – (21,299) – – (21,299) 5,196 – – – – 279 – 279 553 – (38) (38) – – – – (1,082,746) 19,109 – 19,109 – – (23,309) (23,309) – – – – – – – – – Total equity at 30 June 2023 1,516,105 5,475 515 (1,086,946) 435,149 2022 Total equity at 1 July 2021 Loss for the year Other comprehensive income Total comprehensive income Transactions with equity holders in their capacity as equity holders: Buy-back of ordinary shares Transfer of reserves1 Employee share entitlements Dividends Paid Total equity at 30 June 2022 Contributed equity $’000 Share-based payment reserve $’000 Hedge reserve $’000 Other equity transactions $’000 (Accumulated losses)/ retained profits $’000 1,542,884 – – – (5,480) – – – (5,480) 4,664 – – – – – 532 – 532 (1,105) – 1,658 1,658 – – – – – (77,406) – – – – 77,406 – – (826,518) (153,722) – (153,722) – (77,406) – (25,100) 1,537,404 5,196 553 – (1,082,746) 460,407 77,406 (102,506) (30,048) Total equity $’000 460,407 19,109 (38) 19,071 (21,299) 279 (23,309) (44,329) Total equity $’000 642,519 (153,722) 1,658 (152,064) (5,480) – 532 (25,100) 1 The Group transferred the reverse acquisition reserve of $77.406 million in connection with the IPO of the Group, into Accumulated losses effective 30 June 2022. The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 58 | Consolidated Statement of Changes in Equity Southern Cross AustereoConsolidated Statement of Cash Flows For the year ended 30 June 2023 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received from external parties Tax paid net of refunds received Net cash inflows from operating activities Cash flows from investing activities Payments for purchase of property, plant and equipment Payments for purchase of intangibles Proceeds from sale of property, plant and equipment Payments for acquisitions of unlisted equity securities Dividends received from equity accounted investments Net cash flows used in investing activities Cash flows from financing activities Dividends paid to security holders Proceeds from borrowings Repayment of borrowings from external parties Refinancing costs paid to external parties Buy back of ordinary shares Interest paid to external parties Principal elements of lease payments Net cash flows used in financing activities Net decrease in cash and cash equivalents Cash assets at the beginning of the year Cash assets at the end of the year Note 2023 $’000 2022 $’000 11 550,304 (487,175) 1,120 (7,419) 56,830 (11,745) (13,039) 3,490 (214) 1,050 563,782 (488,932) 140 (20,780) 54,210 (24,574) (5,321) 80 (1,173) 640 (20,458) (30,348) (23,309) 15,000 (25,000) – (21,299) (11,762) (6,501) (72,871) (36,499) 49,462 12,963 (25,100) – – (1,235) (5,480) (10,018) (7,987) (49,820) (25,958) 75,420 49,462 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Consolidated Statement of Cash Flows | 59 2023 Annual ReportKey Numbers Capital Management Group Structure Other 1. Summary of Significant Accounting Policies 13. Capital Management 19. Non-Current Assets – Objectives Investments 22. Share-Based Payments 2. Segment Information 14. Dividends Paid and Proposed 20. Subsidiaries 23. Remuneration of Auditors 3. Revenue 15. Earnings per Share 21. Parent Entity Financial Information 24. Related Party Disclosures 4. Significant Items 16. Contributed Equity and Reserves 5. Other Income 17. Borrowings 6. Government Grants 18. Financial Risk Management 25. Leases and Other Commitments 26. Events Occurring after Balance Date 27. Other Accounting Policies 7. Income Tax Expense 8. Non-Current Assets – Property, Plant and Equipment 9. Non-Current Assets – Intangible Assets 10. Impairment 11. Cash flow Information 12. Receivables, Payables, Deferred Income and Provisions 60 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 2023Key Numbers 1. Summary of Significant Accounting Policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. In addition, significant and other accounting policies that summarise the measurement basis used and that are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Southern Cross Media Group Limited (‘the Company’) and its subsidiaries (‘the Group’). Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards and the Corporations Act 2001 (where applicable). The Group is a for-profit entity for the purpose of preparing the financial statements. These financial statements have been prepared on a going concern basis. The Group has performed an assessment of its ability to continue as a going concern. The assessment has considered the balance sheet position, including $13.0 million of cash and cash equivalents at 30 June 2023; forecast performance; and the expectations that the Group will comply with its debt facility covenants. Based on the assessment, the Group concluded that these financial statements should be prepared on a going concern basis. Information in respect of the parent entity in this financial report relates to Southern Cross Media Group Limited. i) Compliance with IFRS Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’). Consequently, this financial report has also been prepared in accordance with and complies with IFRS as issued by the IASB. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at 30 June 2023 and the results of all subsidiaries for the year then ended. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. The effects of all transactions between entities in the Group are eliminated in full. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group except as follows: – At the time of Initial Public Offering (‘IPO’) Southern Cross Media Australia Holdings Pty Limited (‘SCMAHL’) was deemed to be the accounting acquirer of both Southern Cross Media Group Limited (‘SCMGL’) and Southern Cross Media Trust (‘SCMT’), which was neither the legal parent nor legal acquirer; and – This reflects the requirements of AASB 3 that in situations where an existing entity (SCMAHL) arranges to be acquired by a smaller entity (SCMGL) for the purposes of a stock exchange listing, the existing entity SCMAHL should be deemed to be the acquirer, subject to consideration of other factors such as management of the entities involved in the transaction and relative fair values of the entities involved in the transaction. This is commonly referred to as a reverse acquisition. At the time of IPO, in November 2005, the reverse acquisition guidance of AASB 3 was applied to the Group and the cost of the Business Combination was deemed to be paid by SCMAHL to acquire SCMGL and SCMT. The cost was determined by reference to the fair value of the net assets of SCMGL and SCMT immediately prior to the Business Combination. The investment made by the legal parent SCMGL in SCMAHL to legally acquire the existing Radio assets is eliminated on consolidation. In applying the guidance of AASB 3, this elimination resulted in a debit of $77.4 million to other equity transactions. The Group transferred this reserve to Accumulated losses effective 30 June 2022. This does not affect the Group’s distributable profits or ability to pay dividends. ii) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities (including derivative instruments) at fair value through profit or loss. All amounts are presented in Australian dollars, unless otherwise noted. Rounding of amounts The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the Directors’ Report and Financial Report. Amounts have been rounded off in accordance with the Instrument to the nearest thousand dollars, unless otherwise indicated. iii) Comparative figures Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. During the year the Group reviewed its contracts with customers and identified instances of contracts where the Group was the principal in the agreement but had been accounting for recoveries under those contracts net against expenses. In line with accounting standards the Group has restated the comparatives to gross up revenue and expenses which has resulted in an increase of $5.156 million to Revenue, $3.553 million to Revenue related expenses and $1.603 million to Promotions and marketing costs with no impact on profit before tax. Critical accounting estimates and judgement The preparation of the financial report in accordance with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. Management believes the estimates used in the preparation of the financial report are reasonable. Actual results in the future may differ from those reported. Judgements and estimates which are material to the financial report are found in the following notes: Note 9 Non-Current Assets – Intangible Assets Note 10 Note 12 Receivables, Payables, Deferred Income and Provisions Note 25 Leases and Other Commitments Impairment Notes to the Consolidated Financial Statements | 61 2023 Annual Report1. Summary of Significant Accounting Policies (continued) Environmental factors Although the Group’s operations have not been impacted by continuous COVID-19 lock-downs as in prior years, other external factors including natural disasters, the war in Ukraine and the possibility of recession have all contributed to the pace of recovery. As a consequence, management has: – Continued to evaluate areas of judgement or estimation uncertainty; – Updated its economic outlook, principally for the purposes of input into its expected credit losses through the application of forward- looking information, but also for the input into the impairment analysis of financial and non-financial assets classes and disclosures such as fair value disclosures of financial assets and liabilities; and – Reviewed public forecasts and experience from previous downturns for input into the impairment assessment of the Audio CGU. Impairment Further judgements and estimates were required due to these external factors and are detailed further in the notes to the financial statements, in particular: Note 10 Note 12 Receivables, Payables, Deferred Income and Provisions Note 13 Capital Management Objectives Note 18 Financial Risk Management Note 19 Non-Current Assets – Investments. Notes to the financial statements Notes relating to individual line items in the financial statements now include accounting policy information where it is considered relevant to an understanding of these items, as well as information about critical accounting estimates and judgements. Details of the impact of new accounting policies and all other accounting policy information are disclosed at the end of the financial report in Note 27. 2. Segment Information AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. The Group has determined operating segments are based on the information reported to the Group CEO and the Company Board of Directors. The Group has determined that it has two main operating segments being: – Audio, comprising Metro and Regional Radio, Digital and other related businesses; and – Television, comprising the Regional Television business. Segment revenue National revenue1 Local revenue2 Other Total revenue EBITDA before significant items3 Reported EBITDA EBITDA % of Revenue Impairment of intangibles and investments Depreciation and amortisation Statutory EBIT/Segment Result Financing costs Income tax (expense)/credit Profit/(Loss) for the year attributable to shareholders Audio Television Corporate Consolidated 2023 $’000 397,196 211,401 136,923 48,872 2022 $’000 397,967 215,721 139,358 42,888 2023 $’000 106,742 61,932 37,824 6,986 2022 $’000 126,216 77,572 41,382 7,262 397,196 397,967 106,742 126,216 2023 $’000 356 – – 356 356 2022 $’000 655 – – 655 2023 $’000 504,294 273,333 174,747 56,214 2022 $’000 524,838 293,293 180,740 50,805 655 504,294 524,838 80,276 78,246 19.7% – – – – – – 87,596 85,824 21.6% (251,718) – – – – – 18,684 18,668 17.5% 30,710 30,010 23.8% (21,791) (28,660) (23,706) N/A (30,254) N/A 77,169 73,208 14.5% 89,646 85,580 16.3% – – – – – – – – – – – – – – – – – – – – – – – – – (29,155) 44,053 (16,800) (8,144) (251,718) (31,851) (197,989) (16,079) 60,346 19,109 (153,722) 1 National revenue is sold by SCA’s national sales team who are able to sell all SCA products across all markets. 2 Local revenue is sold directly by SCA’s local sales team who are only able to sell local products specific to the particular market. 3 Refer to Note 4 ‘Significant Items’. 62 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 20233. Revenue The profit before income tax from continuing operations included the following specific items of revenue: Revenue from continuing operations Sales revenue Rental revenue Total revenue from continuing operations Consolidated 2023 $’000 2022 $’000 503,951 343 504,294 524,554 284 524,838 Recognition and Measurement Revenues are recognised at fair value of the consideration received or receivable net of the amount of GST payable to the relevant taxation authority. Sales revenue Under AASB 15 Revenue from Contracts with Customers revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control requires judgement. The Group recognises revenue at the point the underlying performance obligation has been completed and control of the services or goods passes to the customer. Revenue represents revenue earned primarily from the sale of Radio, Digital and Television advertising airtime and related activities, including sponsorship and promotions. Based on the Group being considered the principal entity in the sale of Radio, Digital and Advertising, revenue is recognised gross of rebates and agency commissions. For significant payment terms refer to Note 12. Advertising revenue is recognised at a point in time when the underlying performance obligation has been satisfied, being primarily when the advertisement is aired. Sponsorship revenue is included within advertising revenue and the length of the sponsorship can vary in length of time. Revenue is recognised over the period to which the sponsorship relates. Production services used to create advertising suitable for broadcast is treated as a separate performance obligation. Production revenue is recognised at a point in time when the Group has completed the production service, which is likely to be before the relevant advertising is broadcast. Included within advertising revenue is the Australian Traffic Network (ATN) contract where revenue is recognised over time. The ATN contract has been deemed to contain a significant financing component. Revenue from this contract has been recalculated over the 30-year contract period and has been grossed up to account for interest expense (for further detail refer to Note 12). Digital revenue is recognised at the point the underlying performance obligations of the contract have been delivered to the customer. SCA determines whether it is the principal or agent under AASB 15. SCA is the principal in a transaction when it has primary responsibility for fulfilling the promise, the inventory risk and discretion in establishing price. Revenue is recognised as gross when SCA is principal, with a corresponding expense for any fees which could include agency commission. SCA is the agent in a transaction when it receives a commission/revenue share, has no inventory risk and little or no discretion in establishing price. Revenue is recognised as net when SCA is an agent, with no corresponding expense for any fees. The Group derives other regular sources of operating revenue including commercial production for advertisers, facility sharing revenue and third-party agency commissions. 4. Significant Items The net profit after tax includes the following items whose disclosure is relevant in explaining the financial performance of the Group. Significant items are those items of such a nature or size that separate disclosure will assist users to understand the financial statements. Impairment of intangibles and investments (refer to Notes 9, 10 and 19) Other (after tax) Total significant items included in net profit after tax 2023 $’000 – (2,773) (2,773) 2022 $’000 (179,430) (2,846) (182,276) Notes to the Consolidated Financial Statements | 63 2023 Annual Report5. Other Income Net gain from disposal of assets Total other income Net assets disposed Gross cash consideration Net gain from disposal of assets before tax 6. Government Grants Consolidated 2023 $’000 1,264 1,264 2023 $’000 (2,226) 3,490 1,264 2022 $’000 16 16 2022 $’000 (65) 81 16 PING The Group applied and was found eligible for funding under the Commonwealth Government’s Public Interest News Gathering (PING) program. During FY2021 SCA received $10.3 million for the period September 2020 to August 2021 of which $1.7 million was recognised as income in the FY2022 year. There were no PING payments in FY23. PING payments are government grants and are accounted for under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. Government grants are recognised over the period of the grant at their fair value when there is reasonable assurance that the grant will be received, and the Group will comply with all attached conditions. The impact on the Consolidated Statement of Comprehensive Income is shown below. PING Program Employee Costs Total employee costs after Government Assistance Consolidated 2023 $’000 – (203,091) (203,091) 2022 $’000 1,711 (199,508) (197,797) Income Tax Expense 7. The income tax expense for the financial year differs from the amount calculated on the net result from continuing operations. The differences are reconciled as follows: Income tax expense Current tax Current tax on profits for the year Adjustments for current tax of prior periods Total current tax expense Deferred income tax Decrease in net deferred tax liabilities Adjustments for deferred tax of prior periods Total deferred tax expense Income tax (credit)/expense Reconciliation of income tax expense to prima facie tax payable (Loss)/profit before income tax expense Tax at the Australian tax rate of 30% Tax effect of amounts which are not deductible/(taxable) in calculating taxable income Impairment of intangibles and investments Share of net profits of associates Non-deductible entertainment expenses Other (non-assessable income)/non-deductible expenses Adjustments recognised in the current year in relation to prior years Income tax (credit)/expense 64 | Notes to the Consolidated Financial Statements Consolidated 2023 $’000 2022 $’000 8,957 (212) 8,745 (511) (90) (601) 8,144 27,253 8,176 – (209) 748 (269) (302) 8,144 10,806 1,510 12,316 (71,065) (1,597) (72,662) (60,346) (214,068) (64,220) 3,227 (228) 797 165 (87) (60,346) Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 20237. Income Tax Expense (continued) Deferred Taxes The balance comprises temporary differences attributable to: Licences and brands Employee benefits Provisions Interest rate swaps Right-of-use assets Lease liabilities Deferred revenue Other Net balance disclosed as deferred tax liability Consolidated 2023 $’000 2022 $’000 (206,561) 6,920 487 (221) (32,917) 39,013 3,895 2,252 (187,132) (206,641) 6,882 865 (236) (33,327) 38,145 3,459 3,104 (187,749) For the year ended 30 June 2023, the Group did not have a deferred income tax expense (2022: $0.7 million of deferred income tax expense) recognised directly in equity in relation to cash flow hedges, with a corresponding reduction in deferred tax assets being recognised. There are $58.966 million available of unused tax losses on the capital account for which no deferred tax asset has been recognised (2022: $60.644 million). There are no other unused tax losses for which no deferred tax asset has been recognised. Recognition and Measurement Income Tax Income tax amounts recognised in the Group’s financial statements relate to tax paying entities within the Group and have been recognised in accordance with Group policy. The income tax expense for the year is the tax payable on the current year’s taxable income based on the applicable tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and adjusted by changes to unused tax losses. Deferred Taxes Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. In determining the extent of temporary differences of assets, the carrying amount of assets is assumed to be recovered through use. Tax Consolidated Group The Company is the head entity of the tax consolidated group. For further information, refer to Note 21. Notes to the Consolidated Financial Statements | 65 2023 Annual Report8. Non-Current Assets – Property, Plant and Equipment Consolidated 2023 Cost Accumulated depreciation expense Net carrying amount Movement Net carrying amount at beginning of year Additions Disposals Depreciation expense Transfers Net carrying amount at end of year Consolidated 2022 Cost Accumulated depreciation expense Net carrying amount Movement Net carrying amount at beginning of year Additions Disposals Depreciation expense Transfers1 Net carrying amount at end of year Land and Buildings $’000 Leasehold Improvements $’000 Plant and Equipment $’000 Assets under Construction $’000 Total $’000 66,596 (38,786) 27,810 259,849 (229,839) 30,010 5,195 – 5,195 353,777 (276,964) 76,813 18,166 54 – (2,622) 12,212 27,810 35,364 3,697 (162) (9,863) 974 30,010 14,864 3,540 – – (13,209) 5,195 Land and Buildings $’000 Leasehold Improvements $’000 Plant and Equipment $’000 Assets under Construction $’000 54,331 (36,165) 18,166 256,267 (220,903) 35,364 18,053 2,877 (20) (4,470) 1,726 18,166 46,881 2,998 (60) (13,893) (562) 14,864 – 14,864 5,475 14,584 – – (5,195) 35,364 14,864 22,137 (8,339) 13,798 16,160 213 (2,063) (535) 23 13,798 25,433 (9,273) 16,160 16,790 101 (67) (664) – 16,160 84,554 7,504 (2,225) (13,020) – 76,813 Total $’000 350,895 (266,341) 84,554 87,199 20,560 (147) (19,027) (4,031) 84,554 1 The transfer of $4,031 million of net intangibles relate to the LiSTNR app, which was transferred from Property, plant and equipment following a review of the accounting treatment. Recognition and Measurement Property, Plant and Equipment at Cost Property, plant and equipment is recorded at cost less accumulated depreciation and cumulative impairment charges. Cost includes those costs directly attributable to bringing the assets into the location and working condition necessary for the asset to be capable of operating in the manner intended by management. The estimated cost of dismantling and removing infrastructure items and restoring the site on which the assets are located is only included in the cost of the asset to the extent that the Group has an obligation to restore the site and the cost of restoration is not recoverable from third parties. Additions, renewals and improvements are capitalised, while maintenance and repairs are expensed. The carrying values of property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 66 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 20238. Non-Current Assets – Property, Plant and Equipment (continued) Depreciation Land is not depreciated. Depreciation on other assets is calculated on a straight-line basis to amortise the cost of the asset over its estimated useful life. Estimates of remaining useful life are made on a regular basis for all assets, with annual reassessments for major items. The expected useful life of property, plant and equipment is as follows: 25 – 50 years Buildings 3 – 16 years Leasehold improvements 2 – 10 years Network equipment 3 – 5 years Communication equipment 2 – 20 years Other plant and equipment 2 – 20 years Leased plant and equipment 9. Non-Current Assets – Intangible Assets Consolidated 2023 Cost Accumulated impairment expense Accumulated amortisation expense Net carrying amount Movement Net carrying amount at beginning of year Additions Amortisation expense Net carrying amount at end of year Consolidated 2022 Cost Accumulated impairment expense Accumulated amortisation expense Net carrying amount Movement Net carrying amount at beginning of year Additions Transfers1 Impairment expense (Note 10) Amortisation expense Net carrying amount at end of year Goodwill $’000 Broadcasting Licences $’000 Brands and Tradenames $’000 362,088 (362,088) – – – – – – 1,502,031 (854,478) – 647,553 647,553 – – 647,553 90,409 (41,662) – 48,747 48,576 171 – 48,747 Goodwill $’000 Broadcasting Licences $’000 Brands and Tradenames $’000 362,088 (362,088) – 1,502,031 (854,478) – – 647,553 9,959 – – (9,959) – 871,700 – – (224,147) – – 647,553 90,238 (41,662) – 48,576 65,308 82 – (16,814) – 48,576 Other $’000 25,712 – (9,892) 15,820 7,667 12,868 (4,715) 15,820 Other $’000 12,844 – (5,177) 7,667 936 5,073 4,031 – (2,373) 7,667 Total $’000 1,980,240 (1,258,228) (9,892) 712,120 703,796 13,039 (4,715) 712,120 Total $’000 1,967,201 (1,258,228) (5,177) 703,796 947,903 5,155 4,031 (250,920) (2,373) 703,796 1 The transfer of $4,031 million of net intangibles relate to the LiSTNR app, which was transferred from Property, plant and equipment following a review of the accounting treatment Notes to the Consolidated Financial Statements | 67 2023 Annual Report9. Non-Current Assets – Intangible Assets (continued) Goodwill and intangible assets with indefinite useful lives The Group tests at least annually whether goodwill and intangible assets with indefinite useful lives have suffered any impairment, and when there is an indication of impairment. The tests incorporate assumptions regarding future events which may or may not occur, resulting in the need for future revisions of estimates. There are also judgements involved in determination of cash-generating units (‘CGUs’). Key Judgement Useful Life A summary of the useful lives of intangible assets is as follows: Commercial Television/Radio Broadcasting Licences Brands and Tradenames Indefinite Indefinite Licences Television and radio licences are initially recognised at cost. Analogue licences are renewable for a minimal cost every five years under provisions within the Broadcasting Services Act. Digital licences attach to the analogue licences and renew automatically. The Directors understand that the revocation of a commercial television or radio licence has never occurred in Australia and have no reason to believe the licences have a finite life. During the year, the free-to-air commercial television and radio broadcasting licences have been assessed to have indefinite useful lives. Brands Brands are initially recognised at cost. The brands have been assessed to have indefinite useful lives. The Group’s brands operate in established markets with limited restrictions and are expected to continue to complement the Group’s media initiatives. On this basis, the Directors have determined that brands have indefinite lives as there is no foreseeable limit to the period over which the assets are expected to generate net cash inflows. Other intangible assets IT development and software Costs associated with maintaining software programs are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets where the following criteria are met: – it is technically feasible to complete the software so that it will be available for use – management intends to complete the software and use or sell it – there is an ability to use or sell the software – it can be demonstrated how the software will generate probable future economic benefits – adequate technical, financial and other resources to complete the development and to use or sell the software is available, and – the expenditure attributable to the software during its development can be reliably measured. Directly attributable costs that are capitalised as part of the software include employee and contractor costs. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use. The Group amortises other intangible assets with a limited useful life using the straight-line method over the following periods: IT development and software Customer contracts 3 – 5 years 5 years 68 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202310. Impairment a) Impairment tests for licences, tradenames, brands and goodwill The value of licences, tradenames, brands and goodwill is allocated to the Group’s cash-generating units (‘CGUs’), identified as being Audio and Television. As the indefinite lived intangible assets relating to the Television CGU were fully impaired in the year ended 30 June 2019, and no indicator of impairment has been identified for the remaining assets based on the Television CGU’s performance for FY23 relative to its remaining carrying value, no impairment test was performed on the Television CGU at 30 June 2023. The recoverable amount of the Audio CGU at 30 June 2023 and 30 June 2022 was determined based on the fair value less costs of disposal (‘FVLCD’) discounted cash flow model utilising probability weighted scenarios, and approximates the carrying value. Allocation of goodwill and other intangible assets Consolidated 2023 Goodwill allocated to CGU Indefinite lived intangible assets allocated to CGU Finite lived intangible assets allocated to CGU Total goodwill, finite and indefinite lived intangible assets Consolidated 2022 Goodwill allocated to CGU Indefinite lived intangible assets allocated to CGU Finite lived intangible assets allocated to CGU Total goodwill, finite and indefinite lived intangible assets Audio CGU $’000 Television CGU $’000 – 696,300 15,820 712,120 Audio CGU $’000 – 696,129 7,667 703,796 – – – – Television CGU $’000 – – – Total $’000 – 696,300 15,820 712,120 Total $’000 – 696,129 7,667 – 703,796 b) Key assumptions used 30 June 2023 The FVLCD calculations used cash flow projections based on the 2024 Board approved financial budgets extended over the subsequent four-year period (‘Forecast Period’) and applied a terminal value calculation using estimated growth rates approved by the Board for the business relevant to the Audio CGU. In determining appropriate growth rates to apply to the Forecast Period and to the terminal calculation, the Group considered forecast reports from independent media experts and publicly available broker reports as well as internal Company data and assumptions. In respect of the Audio CGU the long-term growth rates did not exceed the average of the independent forecast reports. The discount rate used is based on a range provided by an independent expert and reflects specific risks relating to the Audio CGU in Australia. The Group considered three scenarios: the Base case; Lower case; and Upper case and applied a probability weighting to each scenario as outlined below to determine a recoverable amount. The key assumptions under each scenario are as follows: Extent and duration of audio market recovery Long-term growth rate Discount rate (post-tax) Growth in digital audio revenues – 5-year CAGR Metro market share – Year 5 Probability weighting Lower case To 82% of CPI adjusted FY19 revenue base in FY25 declining to 76% by FY28 Base case To 83% of CPI adjusted FY19 revenue base in FY25 declining to 82% in FY26 and flat thereafter Upper case To 84% of CPI adjusted FY19 revenue base by FY25 and increasing to 88% by FY28 0.0% 10.0% 17% 26% 1.5% 10.0% 27% 29% 2.5% 10.0% 31% 30% 40% – lower case considered more likely than upper case due to potential for worsening economic conditions 50% – base case considered most likely outcome 10% – upper case considered less likely than lower case due to potential for worsening economic conditions Notes to the Consolidated Financial Statements | 69 2023 Annual Report10. Impairment (continued) The market capitalisation of the Group at 30 June 2023 was $208 million, which represented a $227 million deficiency against the net assets of $435 million. The Group considered reasons for this difference and concluded the recoverable amount resulting from the FVLCD methodology is appropriate in supporting the carrying value of the Audio CGU. 30 June 2022 The FVLCD calculations used cash flow projections based on the 2023 Board approved financial budgets extended over the subsequent four-year period (‘Forecast Period’) and applied a terminal value calculation using estimated growth rates approved by the Board for the business relevant to the Audio CGU. In determining appropriate growth rates to apply to the Forecast Period and to the terminal calculation, the Group considered forecast reports from independent media experts; publicly available broker reports; in addition to internal Company data and assumptions. In respect of the Audio CGU the market growth rates did not exceed the independent forecast reports. The discount rate used is based on a range provided by an independent expert and reflects specific risks relating to the Audio CGU in Australia. The Group considered three scenarios: the Base case; Lower case; and Upper case and applied a probability weighing to each scenario as outlined below to determine a recoverable amount. The key assumptions under each scenario are as follows: Extent and duration of audio market recovery Long-term growth rate Discount rate (post-tax) Growth in digital audio revenues – 5-year CAGR Metro market share – Year 5 Probability weighting Lower case To 82% of CPI adjusted FY19 revenue base in FY24 declining to 76% by FY27 Base case To 83% of CPI adjusted FY19 revenue base in FY24 declining to 80% by FY27 Upper case To 90% of CPI adjusted FY19 revenue base by FY24 and flat thereafter 0.5% 9.75% 17% 26% 1.5% 9.75% 29% 29% 2.5% 9.75% 41% 30% 40% – lower case considered more likely than upper case due to potential for worsening economic conditions 50% – base case considered most likely outcome 10% – upper case considered less likely than lower case due to potential for worsening economic conditions c) Impact of a reasonably possible change in key assumptions Audio CGU Sensitivity Any variation in the key assumptions used to determine the FVLCD would result in a change in the recoverable amount of the Audio CGU. The assumptions in the lower-case scenario for 30 June 2023 described above represent a reasonably possible change in assumptions, which together would lead to a pre-tax impairment of $375 million. The following reasonably possible changes in a key assumption would result in the following approximate impact on recoverable amount (as derived on a probability weighted basis) and carrying value for the Audio CGU: Sensitivity Increase in post-tax discount rate from 10.0% to 12.0% Reduction in long-term growth rate by 2% in each scenario Reduction in digital growth in the Base case from FY25 to FY28 to 5% p.a. Reasonable change in variable % 2.0% (2.0)% Between 5% and 25% p.a. Impact of change on Audio CGU carrying value $ million (84.9) (60.5) (60.5) 70 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202311. Cash flow information a) Reconciliation of Profit after Income Tax to Net Cash Inflow from Operating Activities Profit/(loss) after income tax Impairment of intangibles and investments Depreciation and amortisation Net gain from disposal of assets Share of associate profit Interest expense and other borrowing costs included in financing activities Share-based payments Change in operating assets and liabilities: Decrease/(increase) in receivables (Decrease) in deferred taxes (net of tax movement in hedge reserve) (Decrease) in payables (excluding interest expense classified as financing activities) (Decrease) in deferred income Increase/(decrease) in provision for income tax (Decrease)/increase in provisions Net cash inflows from operating activities b) Net debt reconciliation Cash and liquid investments Borrowings – repayable within one year Borrowings – repayable after one year Lease liabilities Net debt Consolidated 2023 $’000 19,109 – 29,155 (1,264) (697) 17,920 277 3,830 (832) (2,761) (8,430) 1,557 (1,034) 56,830 2022 $’000 (153,722) 251,718 31,851 (16) (761) 16,219 532 (1,687) (72,662) (3,824) (7,777) (8,465) 2,804 54,210 Consolidated 2023 $’000 12,963 – (117,243) (130,041) (234,321) 2022 $’000 49,462 – (126,943) (126,819) (204,300) Notes to the Consolidated Financial Statements | 71 2023 Annual Report11. Cash flow information (continued) Balance as at 1 July 2021 Payment for leases Other cash flows Changes from financing activities Other Changes Finance costs Amortisation of borrowing costs Addition of leases Other remeasurements Subtotal of other changes Balance as at 30 June 2022 Payment for leases Proceeds from borrowings Repayment of borrowings Other cash flows Changes from financing activities Other Changes Finance costs Amortisation of borrowing costs Addition of leases Other remeasurements Subtotal of other changes Balance as at 30 June 2023 c) Cash and cash equivalents Current Cash at bank and at hand Consolidated Cash $’000 Bank Loans $’000 75,420 – (25,958) (25,958) – – – – – 49,462 – 15,000 (25,000) (26,499) (36,499) – – – – (127,225) – – – 1,235 (953) – – 282 (126,943) – (15,000) 25,000 – 10,000 – (300) – – Lease Liabilities $’000 (112,969) 14,256 – 14,256 (6,271) – (21,646) (189) (28,106) (126,819) 13,077 – – – 13,077 (6,576) – (8,231) (1,492) Total $’000 (164,774) 14,256 (25,958) (11,702) (5,036) (953) (21,646) (189) (27,824) (204,300) 13,077 – – (26,499) (13,422) (6,576) (300) (8,231) (1,492) – 12,963 (300) (117,243) (16,299) (130,041) (16,599) (234,321) Consolidated 2023 $’000 12,963 12,963 2022 $’000 49,462 49,462 Recognition and Measurement For the purpose of presentation in the Statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet. 72 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 2023Consolidated 2023 $’000 83,554 13,122 1,974 98,650 2022 $’000 88,458 10,974 1,515 100,947 Consolidated 2023 $’000 369 10,439 111 10,919 2022 $’000 334 11,468 130 11,932 Total $’000 83,835 (281) 83,554 Total $’000 89,896 (1,438) 88,458 12. Receivables, Payables, Deferred Income and Provisions a) Receivables Current Trade receivables Prepayments Other Non-current Refundable deposits Prepayments Other The carrying amounts of the non-current receivables approximate their fair value. Ageing analysis of trade receivables The tables below summarise the ageing analysis of trade receivables as at 30 June. Consolidated As at 30 June 2023 Expected loss rate Trade receivables Expected credit losses (‘ECL’) Trade receivables net of ECL Consolidated As at 30 June 2022 Expected loss rate Trade receivables Expected credit losses (‘ECL’) Trade receivables net of ECL Current – not past due $’000 Past due – up to 60 days $’000 Past due – 60 to 90 days $’000 Past due – >90 days $’000 0.15% 77,389 (116) 77,273 0.2% 4,967 (10) 4,957 2.0% 903 (18) 885 23.8% 576 (137) 439 Current – not past due $’000 1.1% 83,626 (921) Past due – up to 60 days $’000 2.2% 4,691 (103) Past due – 60 to 90 days $’000 21.0% 991 (208) Past due – >90 days $’000 35.0% 588 (206) 82,705 4,588 783 382 The Group has recognised bad debts during the year ended 30 June 2023 of $183,919 (2022: $140,536). The Group applies a simplified model of recognising lifetime expected credit losses immediately upon recognition. The expected loss rates are historically based on the payment profile of sales over a period of three years before the end of the current period. Historical loss rates have been adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the receivables. The amount of the loss allowance is recognised in profit or loss. Where a debt is known to be uncollectible, it is considered a bad debt and written off. Recognition and Measurement Trade Receivables Trade receivables are recognised at fair value, being the original invoice amount and subsequently measured at amortised cost less ECL provision. Generally, credit terms are for 30 days from date of invoice or 45 days for an accredited agency. Notes to the Consolidated Financial Statements | 73 2023 Annual Report12. Receivables, Payables, Deferred Income and Provisions (continued) b) Prepayments On 2 September 2019, the Group paid $15 million to Broadcast Australia for the outsourcing of the Group’s transmission services which is being recognised as an expense over a 15-year period. Current Broadcast Australia transmitter services Other Non-current Broadcast Australia transmitter services c) Payables Current Trade creditors GST payable Accruals and other payables 2023 $’000 1,027 12,095 13,122 10,439 10,439 2022 $’000 1,027 9,947 10,974 11,468 11,468 Consolidated 2023 $’000 16,994 2,466 24,279 43,739 2022 $’000 9,938 2,658 36,334 48,930 Recognition and Measurement Trade Creditors, Accruals and Other Payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Consolidated 2023 $’000 5,532 5,532 2022 $’000 6,742 6,742 Consolidated 2023 $’000 86,269 86,269 2022 $’000 88,260 88,260 d) Deferred income Current Deferred income Non-current Deferred income 74 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202312. Receivables, Payables, Deferred Income and Provisions (continued) Recognition and Measurement Deferred Income In 2016, the Group entered into a long-term contract with Australian Traffic Network (ATN) for it to provide traffic reports for broadcast on Southern Cross Austereo (SCA) radio stations. SCA received payment of $100 million from ATN in return for its stations broadcasting advertising tags provided by ATN attached to news and traffic reports. The contract has a term of 20 years, with an option for ATN to extend it by a further 10 years. The $100 million payment has been recorded on the balance sheet under ‘Deferred Income’ and will be released to the Income Statement over a 30-year period, unless the contract ends after 20 years at which point the remaining balance will be recognised as revenue in Year 20. This treatment will match the receipt of future broadcasting services, airtime and traffic management services that the Group is required to provide over the life of the contract. ATN revenue recognised that was included in the deferred income balance at the beginning of the period was $7.1 million. The ATN revenue recognised of $7.1 million (2022: $7.1 million) has been offset by the recognition of $5.2 million (2022: $5.4 million) in interest expense as the unwind of discounting. In addition to the payment received from ATN, deferred income represents government grants received and income invoiced in advance. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are deferred and recognised in profit or loss on a straight-line basis over the expected useful lives of the related assets. e) Provisions Current Employee benefits Lease provisions Non-current Employee benefits Lease provisions Movements in current and non-current provisions, other than provisions for employee benefits, are set out below: Balance at the beginning of the financial year Additional provisions made in the period, including increases to existing provisions Utilisation of provisions Unused amounts reversed during the period Balance at the end of the financial year Consolidated 2023 $’000 20,253 80 20,333 2022 $’000 19,930 690 20,620 Consolidated 2023 $’000 2,813 1,294 4,107 2022 $’000 3,010 1,844 4,854 Consolidated 2023 $’000 2,534 121 (691) (590) 1,374 2022 $’000 2,831 – – (297) 2,534 Recognition and Measurement Provisions A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Notes to the Consolidated Financial Statements | 75 2023 Annual Report12. Receivables, Payables, Deferred Income and Provisions (continued) Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market estimates of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Wages and salaries, leave and other entitlements Liabilities for unpaid salaries, salary related costs and provisions for annual leave are recorded in the Consolidated Statement of Financial Position at the salary rates which are expected to be paid when the liability is settled. Provisions for long service leave and other long-term benefits are recognised at the present value of expected future payments to be made. In determining this amount, consideration is given to expected future salary levels and employee service histories. Expected future payments are discounted to their net present value using high quality corporate bond rates with terms that match as closely as possible to the expected future cash flows. Onerous Contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the obligation under the contract. The provision is measured at the lower of the cost of fulfilling the contract and any compensation or penalties arising from the failure to fulfil it. Lease Provisions The provision comprises of the makegood provisions included in lease agreements for which the Group has a legal or constructive obligation. The present value of the estimated costs of dismantling and removing the asset and restoring the site is recognised as a provision. At each reporting date, the liability is remeasured in line with changes in discount rates, estimated cash flows and the timing of those cash flows. Capital Management 13. Capital Management Objectives The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide appropriate returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, maintain a fully underwritten dividend reinvestment plan, return capital to shareholders, issue new shares, buy back existing shares or sell assets to reduce debt. The Group has taken measures to maintain net debt at a level consistent with a leverage ratio of below 1.5 times. The following outlines the capital management policies that are currently in place for the Group: Dividend Policy Dividend Payout Ratio The Group has a policy to distribute between 65-85% of underlying financial year Net Profit After Tax. Dividend Reinvestment Plan (‘DRP’) The Group operates a DRP whereby shareholders can elect to receive their dividends by way of receiving shares in the Company instead of cash. The Company can elect to either issue new shares, or to buy shares on-market. The DRP has been suspended since the 2016 interim dividend. Further details on the Group’s dividends are outlined in Note 14. Share buy-back On 24 March 2022 the Group announced its intention to conduct an on-market share buy-back of up to $40 million over the 12-month period from 8 April 2022 to 7 April 2023. In the year to 30 June 2023, the Group completed its share buy-back program, with 20,948,644 shares bought for $21.3 million (2022: 3,366,234 shares for $5.5 million). Debt Facilities Syndicated Debt Facility At 30 June 2023 the Group had a $160 million (2022: $250 million) revolving four year (2022: four year) facility expiring on 10 January 2026. This facility is used as core debt for the Group and may be paid down and redrawn in accordance with the SFA. Covenants For the duration of the SFA the Banking Group, being Southern Cross Austereo Pty Ltd and its subsidiaries, has a maximum leverage ratio covenant of 3.5 times and a minimum interest cover ratio of 3.0 times. As at 30 June 2023, the leverage ratio was 1.48 times, and the interest cover ratio was 15.09 times. Further details on the Group’s debt facilities are outlined in Note 17. Property, Plant and Equipment and Intangibles The capital expenditure for 2023 was $7.5 million (2022: $20.6 million) with further additions to intangible assets of $13.0 million (2022: $5.1 million). Further details on the Group’s fixed assets are outlined in Note 8 and on the Group’s intangible assets in Note 9. 76 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202314. Dividends Paid and Proposed The dividends were paid as follows: Interim dividend paid for the half year ended 31 December 2022/2021 – fully franked at the tax rate of 30% Final dividend paid for the year ended 30 June 2022/2021 – fully franked at the tax rate of 30% Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan were as follows: Paid in cash Interim dividend paid for the half year ended 31 December 2022/2021 Final dividend paid for the year ended 30 June 2022/2021 Consolidated 2023 $’000 11,043 12,266 23,309 23,309 23,309 Cents per share 4.60 4.75 9.35 2022 $’000 11,890 13,210 25,100 25,100 25,100 Cents per share 4.50 5.00 9.50 The Group has $180.9 million of franking credits at 30 June 2023 (2022: $183.0 million). Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the financial year but not distributed at the end of the reporting period. Since the end of the financial year the Directors have declared the payment of a final 2023 ordinary dividend of $5.28 million (2.20 cents per fully paid share) out of ‘Retained Profits – 2019 reserve’. This dividend will be paid on 4 October 2023. 15. Earnings per Share Continuing Operations Profit attributable to shareholders from continuing operations ($’000) Profit attributable to shareholders from continuing operations excluding significant items ($’000) Weighted average number of shares used as the denominator in calculating basic earnings per share (shares, ’000) Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share (shares, ’000) Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Excluding significant items (refer to Note 4) Basic earnings per share excluding significant items (cents per share) Diluted earnings per share excluding significant items (cents per share) Dividends paid/proposed for the year as a % of NPAT Consolidated 2023 $’000 19,109 21,882 2022 $’000 (153,722) 28,554 247,327 263,681 250,483 7.73 7.63 8.85 8.74 74.6% 265,200 (58.3) (58.3) 10.82 10.77 85.0% On 24 March 2022 the Group announced its intention to conduct an on-market share buy-back of up to $40 million over the 12-month period from 8 April 2022 to 7 April 2023. In the year to 30 June 2023, the Group completed its share buy-back program, with 20,948,644 shares bought for $21.3 million in the year (30 June 2022: 3,366,234 shares for $5.5 million). Recognition and Measurement Basic earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of shares outstanding during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential shares. Notes to the Consolidated Financial Statements | 77 2023 Annual Report16. Contributed Equity and Reserves Ordinary shares Contributed equity On issue at the beginning of the financial year Buy-back of ordinary shares On issue at the end of the financial year Consolidated 2023 $’000 1,516,105 1,516,105 2022 $’000 1,537,404 1,537,404 Consolidated Consolidated 2023 $’000 1,537,404 (21,299) 1,516,105 2022 $’000 1,542,884 (5,480) 1,537,404 2023 Number of securities ’000 260,848 (20,949) 239,899 2022 Number of securities ’000 264,214 (3,366) 260,848 On the 24 March 2022, the Group announced its intention to conduct an on-market share buy-back of up to $40 million. For the period to 30 June 2023, the Group purchased $21.3 million (30 June 2022: $5.5 million) in shares. This was funded from existing cash reserves and debt facilities. Ordinary shares in Southern Cross Media Group Limited Ordinary shares entitle the holder to participate in distributions and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands, each shareholder present in person and each other person present as a proxy has one vote and upon a poll, each share is entitled to one vote. Ordinary shares have no par value, and the Company does not have a limited amount of authorised capital. Employee share entitlements The Group operates an EIP for its senior executives. Information relating to the employee share entitlements, including details of shares issued under the scheme, is set out in the Remuneration Report. Nature and purpose of reserves a) Share-based payments reserve The share-based payments reserve is used to recognise the fair value of future potential shares to be issued to employees for no consideration in respect of performance rights offered under the Executive Incentive Plans and Long-Term Incentive Plan. During the year no performance rights vested (2022: nil). In the current year $276,733 has been recognised as an expense (2022: $532,887 expense) in the Consolidated Statement of Comprehensive Income as the fair value of potential shares to be issued. b) Hedge reserve The hedge reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in Other Comprehensive Income. Amounts are reclassified to the Consolidated Statement of Comprehensive Income when the associated hedged transaction affects profit or loss. c) Reverse Acquisition Reserve As described in Note 1, the Group transferred the reverse acquisition reserve of $77.406 million in connection with the IPO of the Group, into Accumulated losses effective 30 June 2022. 78 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202317. Borrowings a) Total interest-bearing liabilities Non-current secured borrowings Bank facilities Borrowing costs Total secured non-current interest bearing liabilities Total current and non-current borrowings Consolidated 2023 $’000 2022 $’000 118,000 (757) 117,243 117,243 128,000 (1,057) 126,943 126,943 For all non-current borrowings, the carrying amount approximates fair value in the Consolidated Statement of Financial Position. Of the $0.757 million of borrowing costs, $0.300 million (2022: $0.300 million) will unwind during the year ending 30 June 2024. There are no current liabilities as at 30 June 2023. b) Interest expense Interest expense and other borrowing costs External banks AASB 15 – Revenue from customers with contracts interest expense AASB 16 – Lease interest expense Amortisation of borrowing costs Total interest expense and other borrowing costs Consolidated 2023 $’000 5,815 5,228 6,577 300 17,920 2022 $’000 3,664 5,331 6,271 953 16,219 c) Bank facilities and assets pledged as security The $160 million debt facilities (2022: $250 million) of the Banking Group are secured by a fixed and floating charge over the assets and undertakings of the Banking Group and its wholly-owned subsidiaries and also by a mortgage over shares in Southern Cross Austereo Pty Ltd. The facility matures on 9 January 2026 and has an average variable interest rate of 5.10 % (2022: 3.31%). On 14 June 2023 the Group negotiated a short-term $25 million overdraft facility with the ANZ Banking Group, renewable on an annual basis. The Group’s bank facilities are denominated in Australian dollars. There are certain financial and non-financial covenants which are required to be met by subsidiaries in the Group. One of these covenants is an undertaking that the subsidiary is in compliance with the requirements of the facility before any amount may be distributed to the benefit of the ultimate parent entity, Southern Cross Media Group Limited. Covenant testing dates fall at 30 June and 31 December each year until the facility maturity date. At 30 June 2023, the Group complied with all the covenants. The carrying amounts of assets pledged as security by Southern Cross Austereo Pty Ltd for current and non-current borrowings are: Current assets Floating charge Cash and cash equivalents Receivables Total current assets pledged as security Non-current assets Floating charge Receivables Investments accounted for using the equity method Property, plant and equipment Intangible assets Total non-current assets pledged as security Total assets pledged as security Consolidated 2023 $’000 2022 $’000 12,963 97,114 110,077 10,919 4,734 76,805 712,120 804,578 914,655 49,352 99,175 148,527 11,932 5,107 84,554 703,796 805,389 953,916 Notes to the Consolidated Financial Statements | 79 2023 Annual Report17. Borrowings (continued) c) Bank facilities and assets pledged as security (continued) Recognition and Measurement Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Transaction costs that have been paid or accrued for prior to the drawdown of debt are classified as prepayments. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Borrowing costs Borrowing costs are expensed over the life of the facility to which they relate. 18. Financial Risk Management The Group’s activities expose it to a variety of financial risks: market risk (the Group’s main exposure to market risk is interest rate risk), liquidity risk and cash flow interest rate risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as interest rate swaps to hedge certain risk exposures. The Risk Management Policy is carried out by management under policies approved by the Board. Senior management of the Group identify, quantify and qualify financial risks as part of developing and implementing the risk management process. The Risk Management Policy is a written document approved by the Board that outlines the financial risk management process to be adopted by management. Specific financial risks that have been identified by the Group are interest rate risk and liquidity risk. a) Interest rate risk Nature of interest rate risk Interest rate risk is the Group’s exposure to the risk that interest rates move in a way that adversely affects the ability of the Group to pay its interest rate commitments. The Group’s interest rate risk arises from long-term borrowings which are taken out at variable interest rates and therefore expose the Group to a cash flow risk. Interest rate risk management Whilst there is no formal policy in place mandating hedging levels, it is considered by the Board regularly and SCA has historically hedged the interest rate risk by taking out floating to fixed rate swaps against a portion of its drawn debt. Such interest rate swaps have the economic effect of converting borrowings from variable rates to fixed rates. Generally, the Group raises long-term borrowings at variable rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (quarterly), the difference between fixed contract rates and variable rate interest amounts calculated by reference to the agreed notional principal amounts. Exposure and sensitivity to interest rate risk External borrowings of the Group currently bear an average variable interest rate of 5.10% (2022: 3.31%). In 2020 the Group entered into $100 million of interest rate swap contracts under which it is obliged to receive interest at variable rates and pay interest at fixed rates starting in January 2021 at an average fixed rate of 1.04%. These interest rate swap contracts expired in January 2023. In 2023 the Group entered into $35 million of interest rate swap contracts under which it is obliged to receive interest at variable rates and pay interest at fixed rates starting in April 2023 at an average fixed rate of 3.6%. These interest rate swap contracts will expire in April 2026. Details on how the Group accounts for the interest rate swap contracts as cash flow hedges is disclosed in Note 27. Derivative financial instruments Interest rate swap contracts – current asset Interest rate swap contracts – non-current asset Total derivative financial instruments Consolidated 2023 $’000 – 736 736 2022 $’000 787 – 787 Swaps currently in place cover 30% (2022: 78%) of the variable loan principal outstanding. The fixed interest rates of the swaps is 3.6% (2022: 1.0%) and the variable rates on the loans are 1.40% (2022: 1.30%) above the three months bank bill rate, which at the end of the reporting period was 3.7% (2022: 2.0%). The swap contracts require settlement of net interest receivable or payable every three months. The settlement dates coincide with the dates on which interest is payable on the underlying debt. 80 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202318. Financial Risk Management (continued) a) Interest rate risk (continued) Effects of hedge accounting on the financial position and performance The effects of the interest rate swaps on the Group’s financial position and performance are as follows: Carrying amount asset Notional Maturity date 2023 2026 Hedge ratio Change in fair value of outstanding hedging instruments since 1 July Change in value of hedged item used to determine hedge effectiveness Weighted average hedged rate for the year Consolidated 2023 $’000 736 35,000 – 35,000 1:1 685 (685) 1.36% 2022 $’000 787 100,000 100,000 – 1:1 1,168 (1,168) 1.20% Hedging reserve The Group’s hedging reserve disclosed in the Consolidated Statement of Changes in Equity relate to the following hedging instruments: Opening balance 1 July 2021 Add: Change in fair value of hedging instrument recognised in OCI for the year Less: reclassified from OCI to profit or loss Less: Deferred tax Closing balance 30 June 2022 Add: Change in fair value of hedging instrument recognised in OCI for the year Less: reclassified from OCI to profit or loss Less: Deferred tax Closing balance 30 June 2023 Hedge Reserve for Interest rate swaps $’000 (1,105) 1,168 1,200 (710) 553 685 (738) 15 515 Interest rate swap contracts The contracts require settlement of net interest receivable or payable and are timed to coincide with the approximate dates on which interest is payable on the underlying debt. These interest rate swaps are cash flow hedges as they satisfy the requirements for hedge accounting. Any change in fair value of the interest rate swaps is taken to the hedge reserve in equity in the relevant period. In assessing interest rate risk, management has assumed a +/- 100 basis points movement (2022: +/- 25 basis points) in the relevant interest rates at 30 June 2023 for financial assets and liabilities denominated in Australian Dollars (‘AUD’). The following table illustrates the impact on profit or loss with no impact directly on equity for the Group. Consolidated AUD exposures 2023 Cash at bank Interest rate swaps Borrowings 2022 Cash at bank Interest rate swaps Borrowings Carrying Value $’000 12,963 736 (118,000) 49,462 787 (128,000) Impact on post-tax profits Increase/(decrease) +/- 100 (25) basis points Impact on reserves Increase/(decrease) +/- 100 (25) basis points $’000 +100 91 245 (826) +25 87 92 (224) $’000 -100 (91) (245) 826 -25 (87) (92) 224 $’000 +100 – 916 – +25 – 125 – $’000 -100 – (914) – -25 – (125) – Notes to the Consolidated Financial Statements | 81 2023 Annual Report18. Financial Risk Management (continued) b) Liquidity risk Nature of liquidity risk Liquidity risk is the risk of an entity encountering difficulty in meeting obligations associated with financial liabilities. Liquidity risk management Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group and Company have a liquidity management policy which manages liquidity risk by monitoring the stability of funding, surplus cash or near cash assets, credit facility headroom, anticipated cash in and outflows and exposure to connected parties. Exposure and sensitivity Financing arrangements Unrestricted access was available at balance date to the following lines of credit: Consolidated As at 30 June 2023 Line of credit value Used at balance date Unused at balance date Consolidated As at 30 June 2022 Line of credit value Used at balance date Unused at balance date Bank facilities (non-current) $’000 160,000 (118,000) 42,000 Bank facilities (non-current) $’000 250,000 (128,000) 122,000 Bank facilities (current) $’000 25,000 – 25,000 Bank facilities (current) $’000 – – – Working capital facility $’000 7,000 (5,164) 1,836 Working capital facility $’000 7,000 (6,109) 891 Total facilities $’000 192,000 (123,164) 68,836 Total facilities $’000 257,000 (134,109) 122,891 The $160 million debt facility for the Group matures on 9 January 2026. On 14 June 2023 the Group negotiated a short-term $25 million overdraft facility with the ANZ Banking Group, renewable on an annual basis. In addition to the above, the Group has a $1.5 million credit card facility. The Group’s bank facilities are denominated in Australian dollars as at 30 June 2023 and 30 June 2022. Undiscounted future cash flows The tables below summarise the maturity profile of the financial liabilities as at 30 June based on contractual undiscounted repayment obligations. Repayments which are subject to notice are treated as if notice were given immediately. Consolidated As at 30 June 2023 Borrowings – Principal Interest cash flows1 Payables2 Lease liabilities Total Consolidated As at 30 June 2022 Borrowings – Principal Interest cash flows1 Payables2 Lease liabilities Total Less than 1 year $’000 – 6,983 39,863 12,606 59,452 Less than 1 year $’000 – 3,312 45,473 12,143 60,928 1-2 years $’000 2-3 years $’000 3-5 years $’000 – 6,965 – 12,711 19,676 1-2 years $’000 – 4,519 – 11,933 118,000 3,663 – 12,209 133,872 2-3 years $’000 – 4,507 – 11,042 – – – 26,351 26,351 3-5 years $’000 128,000 2,371 – 23,136 16,452 15,549 153,507 Greater than 5 years $’000 – – – 114,902 114,902 Greater than 5 years $’000 – – – 125,004 125,004 Total contractual cash flows $’000 118,000 17,611 39,863 178,779 354,253 Total contractual cash flows $’000 128,000 14,709 45,473 183,258 371,440 Carrying amount liabilities $’000 118,000 N/A 43,739 130,041 291,780 Carrying amount liabilities $’000 128,000 N/A 48,930 126,819 303,749 1 Calculated using a weighted average variable interest rate. Interest cash flows includes interest on principal borrowings, swap interest and the commitment fee on the Syndicated Facility Agreement. 2 The payables balance excludes interest payable as the cash flows are included in ‘Interest cash flows’ above and excludes GST payable as this is not a financial liability. 82 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 2023Group Structure 19. Non-Current Assets – Investments a) Investments accounted for using the Equity Method Carrying amount at the beginning of the financial year Share of profit after income tax Dividends Total Investments accounted for using the Equity Method b) Financial assets at fair value through profit or loss Carrying amount at the beginning of the financial year Acquisition of unlisted equity securities Impairment of unlisted equity securities Total Financial assets at fair value through profit or loss Total Investments Consolidated 2023 $’000 5,212 697 (1,050) 4,859 2022 $’000 5,091 761 (640) 5,212 Consolidated 2023 $’000 1,253 214 – 1,467 6,326 2022 $’000 878 1,173 (798) 1,253 6,465 20. Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries: Name of entity Southern Cross Media No 1 Pty Limited (SCM1) Southern Cross Media Australia Holdings Pty Limited (SCMAHL) Southern Cross Media Group Investments Pty Ltd (SCMGI) Southern Cross Austereo Pty Limited (SCAPL) and controlled entities Country of incorporation Australia Australia Australia Australia Class of shares/units Ordinary Ordinary Ordinary Ordinary Effective ownership interest 2023 100% 100% 100% 100% Effective ownership interest 2022 100% 100% 100% 100% The proportion of ownership interest is equal to the proportion of voting power held unless otherwise indicated. Recognition and Measurement Subsidiaries Subsidiaries are those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Where control of an entity is obtained during a financial year, its results are included in the Consolidated Statement of Comprehensive Income from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for that part of the year during which control existed. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Statement of Comprehensive Income and Consolidated Statements of Financial Position respectively. Notes to the Consolidated Financial Statements | 83 2023 Annual Report21. Parent Entity Financial Information a) Summary financial information The following aggregate amounts are disclosed in respect of the parent entity, Southern Cross Media Group Limited: Statement of Financial Position Current assets Non-current assets Total assets Current liabilities Total liabilities Net assets Issued capital Reserves Accumulated losses – 2014 reserve Accumulated losses – 2015 H2 reserve Retained profits – 2019 reserve Retained profits – 2020 reserve Accumulated losses – 2021 reserve Accumulated losses – 2022 reserve Retained profits – 2023 reserve Total equity Profit/(loss) for the year Total comprehensive income Southern Cross Media Group Limited 2023 $’000 1,536 444,139 445,675 1,666 1,666 444,009 1,418,517 5,475 (96,805) (323,833) 47,424 55,054 (355,442) (323,270) 16,889 444,009 27,932 27,932 2022 $’000 1,882 460,258 462,140 1,733 1,733 460,407 1,439,815 5,198 (96,805) (323,833) 59,690 55,054 (355,442) (323,270) – 460,407 (311,379) (311,379) In FY2022, the parent entity recorded an impairment of $355.8 million due to a reduction in the recoverable amount of the investment in a subsidiary determined using fair value less costs of disposal. b) Guarantees entered into by the parent entity The parent entity has not provided any financial guarantees in respect of bank overdrafts and loans of subsidiaries as at 30 June 2023 (2022: nil). The parent entity has not given any unsecured guarantees at 30 June 2023 (2022: nil). c) Contingent liabilities of the parent entity The parent entity did not have any contingent liabilities as at 30 June 2023 (30 June 2022: nil). d) Contractual commitments for the acquisition of property, plant or equipment As at 30 June 2023, the parent entity had no contractual commitments (30 June 2022: nil). Recognition and Measurement Parent entity financial information The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except as set out on the following page. i) Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries are accounted for at cost in the financial statements of the Company, less any impairment charges. ii) Tax consolidation legislation The Company and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 23 November 2005. The Company is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement in order to allocate income tax expense to the wholly-owned subsidiaries on a stand-alone basis. The tax sharing arrangement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. The possibility of such a default is considered remote at the date of this report. Members of the tax consolidated group have entered into a tax funding agreement. The Group has applied the group allocation approach in determining the appropriate amount of current taxes to allocate to members of the tax consolidated group. The tax funding agreement provides for each member of the tax consolidated group to pay a tax equivalent amount to or from the parent in accordance with their notional current tax liability or current tax asset. Such amounts are reflected in amounts receivable from or payable to the parent company in their accounts and are settled as soon as practicable after lodgement of the consolidated return and payment of the tax liability. 84 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 2023Other Notes to the Consolidated Financial Statements 22. Share-Based Payments The Company operates a long-term incentive plan for Executive KMP and certain senior executives. The share-based payment expense for the year ended 30 June 2023 was $276,733 (2022: $532,887). The following table reconciles the performance rights outstanding at the beginning and end of the year: Number of performance rights Balance at beginning of the year Granted during the year Exercised during the year Forfeited during the year Balance at end of year 2023 403,052 1,131,948 – (589,046) 945,954 2022 427,861 – – (24,809) 403,052 Recognition and Measurement Share-based compensation benefits are provided to employees via certain Employee Agreements. Information relating to these Agreements is set out in the Remuneration Report. The fair value of entitlements provided is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised as an expense over the period during which the employees become unconditionally entitled to the shares. To the extent the FY23 Executive Incentive Plan (‘EIP’) performance conditions are satisfied during FY23, the Company will award performance rights in FY23, however the one-year performance period started on 1 July 2023 and the fair value of the related share-based compensation will be recognised as an expense over the three-year period from that date to the end of the service period on 30 June 2026 when the performance rights will be eligible for vesting and conversion to fully paid ordinary shares. The fair value and number of the performance rights relating to the FY23 EIP will be remeasured on the grant date of the performance rights. The fair value of the share-based compensation provided during FY23 was determined using a Black-Scholes-Merton model for the Absolute Total Shareholder Return performance rights, with the following inputs: Valuation date Valuation date share price Fair value at grant date Exercise price Dividend yield Risk free interest rate Expected volatility 30 June 2023 $0.865 $0.865 Nil 0.00% 4.027% 41.192% The fair value at grant date of the securities granted is adjusted to reflect any market vesting conditions but excludes the impact of any non- market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of shares that are expected to be issued. At each balance sheet date, the entity revises its estimate of the number of shares that are expected to be issued. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in profit or loss with a corresponding adjustment to equity. Where the terms of the share-based payment entitlement are modified in the favour of the employee, the changes are reflected when determining the impact on profit or loss. Notes to the Consolidated Financial Statements | 85 2023 Annual Report23. Remuneration of Auditors a) Audit and other assurance services PricewaterhouseCoopers Australian firm: Statutory audit and review of financial reports Other assurance services Regulatory returns Total remuneration for audit and other assurance services b) Taxation services PricewaterhouseCoopers Australian firm: Tax services Total remuneration for taxation services c) Other services PricewaterhouseCoopers Australian firm: Debt advisory Total remuneration for other services Total Consolidated 2023 $’000 2022 $’000 792,111 – 19,911 812,022 758,462 – 18,200 776,662 – – – – 812,022 – – 150,000 150,000 926,662 The Group may decide to employ the auditor on assignments additional to its statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. The Board has considered the position and, in accordance with the advice received from the Audit & Risk Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: – all non-audit services have been reviewed by the Audit & Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor; and – none of the services undermine the general principles relating to auditor independence as set out in APES 110: Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards. 24. Related Party Disclosures Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. a) KMP During the year, no KMP of the Company or the Group has received or become entitled to receive any benefit because of a contract made by the Group with a KMP or with a firm of which a KMP is a member, or with an entity in which the KMP has a substantial interest except on terms set out in the governing documents of the Group or as disclosed in this financial report. The aggregate compensation of KMP of the Group is set out below: Short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payments Consolidated 2023 $ 4,423,689 189,365 143,162 864,582 (28,654) 5,592,144 2022 $ 4,751,763 162,009 67,550 – 320,770 5,302,092 Note: Changes to KMP during the year can be found in the Remuneration Report. The number of ordinary shares in the Company held during the financial year by KMP of the Company and Group, including their personally related parties, are set out in the Remuneration Report in the Directors’ Report. There were no loans made to or other transactions with KMP during the year (2022: nil). b) Subsidiaries and Associates Ownership interests in subsidiaries are set out in note 20. Details of interests in associates and distributions received from associates are disclosed in Note 19. 86 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 202325. Leases and Other Commitments Capital commitments Commitments for the acquisition of plant and equipment contracted for at the reporting date but not recognised as liabilities are payable as follows: Within one year Consolidated 2023 $’000 2022 $’000 1,556 1,556 2,400 2,400 Leases From 1 July 2019, the Group recognised right-of-use assets for these leases, except for short-term and low value leases. The Group leases various premises, IT equipment and vehicles. Premises typically have initial rental periods of five to 10 years, with options, exercisable by the Group, for periods extending the total lease period up to 30 years. Other leases are typically for less than four years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Extension options are included in a number of property leases across the Group, which provide flexibility in terms of managing the assets used in the Group’s operations. The extension options are exercisable by the Group, which applies judgement to determine whether these options are reasonably certain or not. Extension and termination options have been included in all property leases across the Group except those that are surplus to the Group’s operational requirements. The Group sub-leases buildings under an operating lease and rent revenue is recorded as income in the profit or loss on a straight-line basis. Where the Group assumes that extension options in leases will be exercised these are included in the calculations for the lease liability and ROU asset. Thirty leases were renegotiated during the year resulting in a total net lease liability and ROU remeasurements of $1.5 million. a) Amounts Recognised in the Consolidated Statement of Comprehensive Income The Consolidated Statement of Comprehensive income shows the following amounts relating to leases: Depreciation charge of right-of-use assets Premises IT equipment Vehicles Interest expense on lease liabilities b) Amounts Recognised in the Consolidated Statement of Financial Position The Consolidated Statement of Financial Position includes the following amounts relating to leases: Lease liabilities as at 30 June 2023: Lease Liabilities Current Non-current Total lease liabilities The associated right-of-use assets as at 30 June 2023 by asset class: Premises IT Equipment Vehicles Total right-of-use asset 2023 $’000 9,116 1,364 281 10,761 6,576 2022 $’000 7,978 1,509 363 9,850 6,271 30 June 2023 $’000 7,105 122,936 130,041 30 June 2022 $’000 6,497 120,322 126,819 30 June 2023 $’000 104,147 4,872 704 109,723 30 June 2022 $’000 107,034 3,275 450 110,759 At 30 June 2023, the total cash outflow for leases was $13.1 million (2022: $14.3 million) and additions to the right-of-use asset was $8.2 million (2022: $21.6 million), excluding acquisition leases. Rental contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. Notes to the Consolidated Financial Statements | 87 2023 Annual Report26. Events Occurring after Balance Date No matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods. 27. Other Accounting Policies Defined contribution scheme The Group operates a defined contribution scheme. The defined contribution scheme comprises fixed contributions made by the Group with the Group’s legal or constructive obligation being limited to these contributions. Contributions to the defined contribution scheme are recognised as an expense as they become payable. Prepaid contributions are recognised in the Consolidated Statement of Financial Position as an asset to the extent that a cash refund or a reduction in the future payments is available. The defined contribution plan expense for the year was $16.8 million (2022: $15.6 million) and is included in employee expenses. Derivative financial instruments The Group enters into interest rate swap agreements to manage its financial risks. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The Group may have derivative financial instruments which are economic hedges, but do not satisfy the requirements of hedge accounting. Gains or losses from changes in fair value of these economic hedges are taken through profit or loss. If the derivative financial instrument meets the hedge accounting requirements, the Group designates the derivatives as either (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast transactions (cash flow hedge). The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. The fair values of over-the-counter derivatives are determined using valuation techniques adopted by the Directors with assumptions that are based on market conditions existing at each balance sheet date. The fair values of interest rate swaps are calculated as the present values of the estimated future cash flows. Hedge accounting The Group designated interest rates swaps as cash flow hedges and has applied hedge accounting from this date. The Group documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking the hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in cash flows of hedged items. The fair values of derivative financial instruments used for hedging purposes are presented within the balance sheet. Movements in the hedging reserve are shown within the Statement of Changes in Equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Derivatives Hedge ineffectiveness Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Group enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, reset dates, payment dates, maturities and notional amount. The Group hedges up to 100% of its loans, and the hedged item is identified as a proportion of the outstanding loans up to the notional amount of the swaps. As all critical terms matched during the year, the economic relationship was 100% effective. The Group therefore performs a qualitative assessment of effectiveness. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness. Hedge ineffectiveness may occur due to: – the credit value/debit value adjustment on the interest rate swaps which is not matched by the loan; and – differences in critical terms between the interest rate swaps and loans. There was no ineffectiveness during 2023 or 2022 in relation to the interest rate swaps. 88 | Notes to the Consolidated Financial Statements Southern Cross AustereoNotes to the Consolidated Financial StatementsFor the year ended 30 June 2023The fair value of financial instruments that are not traded in an active market (for example, unlisted convertible notes) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The nominal values less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. New accounting standards and interpretations The year-end financial statements have been prepared on a basis of accounting policies consistent with those applied in the 30 June 2022 financial statements. The Group adopted certain accounting standards, amendments and interpretations during the financial year, which did not result in changes in accounting policies nor an adjustment to the amounts recognised in the financial statements. They also do not significantly affect the disclosures in the Notes to the financial statements. 27. Other Accounting Policies (continued) Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Consolidated Statement of Comprehensive Income. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in profit or loss within ‘interest expense and other borrowing costs’. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss. Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The Group has adopted AASB 7 Financial Instruments: Disclosures which requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). Notes to the Consolidated Financial Statements | 89 2023 Annual ReportDirectors’ Declaration The Directors of the Company declare that: 1. in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. in the Directors’ opinion, the financial statements and notes as set out on pages 56 to 89 are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Company and the consolidated entity; and 3. the Directors have been given the declarations required by section 295A of the Corporations Act 2001. 4. Note 1(i) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act. On behalf of the Directors Rob Murray Chairman Sydney, Australia 17 August 2023 John Kelly Managing Director Sydney, Australia 17 August 2023 90 | Notes to the Consolidated Financial Statements Southern Cross Austereo Independent Auditor’s Report to the members of Southern Cross Media Group Limited Independent auditor’s report To the members of Southern Cross Media Group Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Southern Cross Media Group Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises:       the consolidated statement of financial position as at 30 June 2023 the consolidated statement of comprehensive income for the year then ended the consolidated statement of changes in equity for the year then ended the consolidated statement of cash flows for the year then ended the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information the directors’ declaration. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999 Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report | 91 2023 Annual Report92 | Independent Auditor’s Report Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality For the purpose of our audit we used overall Group materiality of $1.8 million, which represents approximately2.5% of the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA).We applied this threshold, together with qualitative considerations, to determine the scope of our audit and thenature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financialreport as a whole.We chose Group EBITDA, because, in our view, it is the benchmark against which the performance of theGroup is most commonly measured and is a generally accepted benchmark. We determined that a 2.5%threshold was appropriate based on our professional judgement, noting it is within the range of commonlyacceptable thresholds.Audit Scope Our audit focused on where the Group made subjective judgements; for example, significant accountingestimates involving assumptions and inherently uncertain future events.Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee. Southern Cross AustereoIndependent Auditor’s Reportto the members of Southern Cross Media Group LimitedKey audit matter How our audit addressed the key audit matter Impairment tests for licences, tradenames, brands and goodwill (Refer to note 10) The Group continues to have significant indefinite lived intangible assets in the Audio cash generating unit (CGU), totalling $696.3 million as at 30 June 2023. These are subject to an annual impairment test by the Group using a fair value less costs of disposal discounted cash flow model (“the model”). This was a key audit matter due to the size of the indefinite lived intangible assets and on the basis that the impairment test involves judgemental estimates of future profits and cash flows. This involves making assumptions about internal and external factors including long-term growth rate, growth in digital audio revenues and the extent and duration of audio market recovery. In performing our audit work we considered, amongst other things: ● whether the Group’s identification of CGUs remains appropriate ● ● the market capitalisation of the Group in comparison to the carrying value of its net assets the appropriateness of adopting a fair value less costs of disposal methodology for estimating the Audio CGU’s recoverable amount. To evaluate the model used by the Group in its Audio CGU impairment assessment, with assistance from PwC valuation experts in aspects of our work, we performed the following procedures, amongst others: ● ● ● ● ● ● tested the mathematical accuracy of the model’s calculations assessed the appropriateness of the discount rate incorporated in the model in consideration of the forecasted cash flows assessed the appropriateness of the significant assumptions within the model compared to observable market information where available evaluated the Group’s historical ability to forecast future cash flows by comparing forecast cash flows with reported actual performance considered whether the model’s allocation of corporate costs between CGUs was appropriate and reflective of actual costs incurred assessed the sensitivity of changes in significant assumptions incorporated in the model Independent Auditor’s Report | 93 2023 Annual ReportKey audit matter How our audit addressed the key audit matter ● compared the Group’s valuation to external data sources including broker reports. We evaluated the reasonableness of the disclosures in note 10 in light of the requirements of Australian Accounting Standards. Indefinite lived classification of intangible assets (Refer to note 9) In assessing the classification of indefinite useful lived intangible assets, we performed the following procedures, amongst others: As at 30 June 2023, the Group has Audio intangible assets totalling $696.3 million, including Radio Broadcasting Licences, Brands and Tradenames classified as indefinite lived intangible assets. This was a key audit matter because determination of whether or not intangible assets are indefinite lived involves significant judgement by the Group. The determination has an impact on the financial report as it affects whether amortisation is recorded in the consolidated statement of comprehensive income. ● ● ● ● ● considered relevant regulatory developments in the year which could change the licence renewal process or use of the brands assessed whether there had been any revocation of radio licences by Australian Communications and Media Authority (ACMA) in the year considered the forecasted growth of the associated cash flows of the assets evaluated the directors’ strategic plans for the intended use of the assets compared the Group’s classification of indefinite lived intangible assets against a selection of similar assets held by other industry participants in the radio broadcasting market. We considered the reasonableness of the disclosures in note 9 with regard to Australian Accounting Standards. 94 | Independent Auditor’s Report Southern Cross AustereoIndependent Auditor’s Reportto the members of Southern Cross Media Group Limited Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we obtained included the directors’ report. We expect the remaining other information to be made available to us after the date of this auditor's report. Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon through our opinion on the financial report. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the other information not yet received, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action to take. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. Independent Auditor’s Report | 95 2023 Annual ReportA further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 34 to 54 of the directors’ report for the year ended 30 June 2023. In our opinion, the remuneration report of Southern Cross Media Group Limited for the year ended 30 June 2023 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Trevor Johnston Partner Melbourne 17 August 2023 96 | Independent Auditor’s Report Southern Cross AustereoIndependent Auditor’s Reportto the members of Southern Cross Media Group LimitedAdditional information The information below is provided pursuant to ASX Listing Rule 4.10 and was current on 23 August 2023. SCA has only one class of shares, which are fully paid ordinary shares. All holders listed below hold fully paid ordinary shares and each holder has the same voting rights. There are no unlisted securities and there is currently no on-market buy-back. Twenty largest holders The names of the 20 largest holders of SCA’s quoted equity securities are listed below. Name Citicorp Nominees Pty Limited Gulgong Pty Ltd HSBC Custody Nominees (Australia) Limited J P Morgan Nominees Australia Limited National Nominees Limited BNP Paribas Noms Pty Ltd Hub24 Custodian Serv Ltd (DRP) BNP Paribas Noms Pty Ltd (DRP) John William Harbot Tom Hadley Enterprises Pty Ltd Netyard Pty Ltd Birbal Investments Pty Ltd Wearne Webber Capital Pty Limited UBS Nominees Pty Ltd Anthony John Huntley BNP Paribas Noms (NZ) Ltd (DRP) Lesley J Norton Pty Ltd (Leslie J Norton S/F A/C) Darren Edward Bates BNP Paribas Noms Pty Ltd Barclays (DRP) Hong Quang Dao Li Thi Ninh Distribution of shareholdings Analysis of numbers of equity security holders by size of holding: Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Holding less than a marketable parcel Fully paid ordinary shares 45,614,399 35,505,074 32,900,453 28,151,467 7,692,900 1,949,940 1,845,758 1,600,000 1,500,000 1,250,000 1,000,000 1,000,000 999,892 807,500 772,500 624,293 586,359 571,947 548,858 530,000 165,451,340 Number of shareholders 5,040 3,389 1,059 1,327 112 10,927 3,840 Fully paid ordinary shares 2,225,759 8,476,781 8,108,898 37,566,077 183,521,634 1,175,648 % Issued capital 19.01 14.80 13.71 11.73 3.21 0.81 0.77 0.67 0.63 0.52 0.42 0.42 0.42 0.34 0.32 0.26 0.24 0.24 0.23 0.22 68.97 % Issued capital 0.93 3.53 3.38 15.66 76.50 100.00 Additional information | 97 2023 Annual ReportSubstantial holders Substantial holders in SCA (with holdings notified to SCA most recently before 23 August 2023) are set out below: Name Allan Gray Australia Pty Ltd and its related bodies corporate* ARN Media Limited and its related bodies corporate Ubique Asset Management Pty Limited Retail Employees Superannuation Pty Limited Dimension Fund Advisors LP and related entities* Fully paid ordinary shares 39,431,083 35,505,074 23,377,246 13,573,639 % Issued capital 16.44 14.80 9.75 5.66 5.00 51.65 * The most recent notices given by this holder pre-dated one or both of SCA’s equity raising (comprising a placement and entitlements offer) in April 2020 and the one for 10 consolidation of share capital in November 2020. The percentage interest held by this holder shown in the above table is based on the most recent notice given by this holder. It is not meaningful to state the number of shares held by this holder on the date of its most recent notice because of the changes in SCA’s capital structure since the date of that notice. Voluntary escrow Securities subject to voluntary escrow are set out below: Type Voluntary escrow Date escrow period ends N/a Fully paid ordinary shares – – On-market purchases for employee incentive plans During the year ended 30 June 2023, SCA purchased the following shares on-market for allocation to employees under SCA’s executive incentive plans: Type Short-term incentive plan Long-term incentive plan Executive incentive plan Fully paid ordinary shares – – – Average price – – – – – 98 | Additional information Southern Cross AustereoAdditional informationSouthern Cross Media Group Limited ABN 91 116 024 536 Company Secretary Tony Hudson Registered office Level 2, 101 Moray Street South Melbourne VIC 3205 Tel: +61 3 9252 1019 Web: https://www.southerncrossaustereo.com.au Share registry Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC 3067 Tel: 1300 555 159 (within Australia) +61 3 9415 4062 (from outside Australia) Investor Centre: https://www-au.computershare.com/investor/ ecoStar+ is an environmentally responsible paper made FSC® Recycled certified and manufactured with 100% post consumer recycled fibre in a elemental chlorine free environment under the ISO 14001 environmental management system. Corporate Directory | 99 2023 Annual ReportCorporate Directory 

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