GTN : Appendix 4D and half year financial statementsOpens in a new Window

GTN Limited

ABN 38 606 841 801 ASX Half-year information

31 December 2020

GTN Limited

Half-year ended 31 December 2020

(Previous corresponding period: Half-year ended 31 December 2019)

Results for Announcement to the Market

Net tangible assets / (liabilities) per security

Directors' Report

The Directors of GTN Limited (the "Company") submit the following report for GTN Limited and its subsidiaries (the "Group") for the half-year ended 31 December 2020. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

Directors

The following people were Directors of the Company for the entire half year ended 31

December 2020 (except as noted) and up to the date of this report:

• ○ Robert Loewenthal (Chairman until 27 January 2021)

• ○ William Yde III (Managing Director)

• ○ David Ryan

• ○ Corinna Keller

• ○ Peter Tonagh (appointed 1 September 2020)(appointed Chairman 27 January 2021)

Principal Activities

The principal activity of the Group during the course of the financial half year was that of provider of an advertising platform to advertisers in Australia, United Kingdom, Canada and Brazil.

Review and Results of Operations

The Group reported revenue of $70.8 million for the six-month period ended 31 December 2020, a decrease of 26.0% from $95.7 million for the same period in the prior year. Revenue continued to be negatively impacted by the COVID-19 pandemic. Revenue in Australia was especially impacted as the Melbourne market was in lockdown for the majority of the half-year period. The Melbourne lockdown ended 28 October 2020 and Australia had its best revenue performance of the half-year period (when measured against the previous year month) in December 2020.

Changes in foreign exchange rates had a negative impact on reported revenue from the United Kingdom, Canada and Brazil.

EBITDA for the six months ended 31 December 2020 decreased 77.4% to $3.1 million compared to $13.8 million for the six months ended 31 December 2019. Adjusted EBITDA, which is defined as EBITDA adding back the non-cash interest income related to the long-term prepaid affiliation agreement with Southern Cross Austereo which is treated as a financing transaction, foreign exchange gains or losses, gains on lease forgiveness, losses on refinancing and transaction costs decreased 60.4% to $7.1 million for the current period compared to $18.0 million for the prior half-year period. EBITDA and Adjusted EBITDA were negatively impacted by the revenue decrease as combined network operations and station compensation expenses, non-cash compensation and selling and general and administrative expenses decreased 17.2% ($14.1 million). The decrease in expenses was due to targeted expense reductions (including the termination of the Nine Radio station affiliation agreements), Jobkeeper/Canada Emergency Wage Subsidy ("CEWS") benefits and lower variable costs (primarily sales commissions and bonuses) due to the reduced revenue for the period.

The Group recognized Jobkeeper and CEWS benefit of $1.9 million for the half-year period ending 31 December 2020, which is reflected as a reduction in general and administrative expenses in the Group's consolidated statement of profit and loss and other comprehensive income. The Group received no similar benefits in its other jurisdictions (Brazil, United Kingdom and United States). Due to levels of revenue attained, the Group does not expect to receive material Jobkeeper subsidies in 2H FY21, if any.

EBITDA is earnings before interest, tax, depreciation, amortisation and intangible impairment charges. Management uses EBITDA to evaluate the operating performance of the business without the non-cash impact of depreciation and amortisation and before interest and tax charges, which are significantly affected by the capital structure and historical tax position of the Group. EBITDA can be useful to help understand the cash generation potential of the business because it does not include the non-cash charges for depreciation and amortisation. However, management believes that it should not be considered as an alternative to net free cash flow from operations and investors should not consider EBITDA in isolation from, or as a substitute for, an analysis of the Group's results of operations. Adjusted EBITDA is EBITDA adjusted to include the non-cash interest income arising from the long-term prepaid Southern Cross Austereo Affiliate Contract and excluding transaction costs, foreign exchange gains and losses, gains on lease forgiveness and loss on refinancing. The Directors consider that Adjusted EBITDA is an appropriate measure of the Group's underlying EBITDA performance.

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