GTN LIMITED — Interim / Quarterly Report 2021

Feb 24, 2021

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GTN Limited ABN 38 606 841 801 ASX Half-year information 31 December 2020

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GTN Limited Half-year ended 31 December 2020 (Previous corresponding period: Half-year ended 31 December 2019)

Results for Announcement to the Market

				$ (,000’s)
Revenue from ordinary activities	down	26.0%	to	70,781
Net profit for the period attributable to members	down	95.2%	To	367

Dividends/distributions	Amount per security	Franked amount per security
Final dividend – Year ended 30 June 2020	N/A	N/A
Interim FY2021 dividend	N/A	N/A

Net tangible assets / (liabilities) per security

	31 December 2020	31 December 2019
Net tangible assets/ (liabilities) per security (cents per share)	$0.37	$0.41

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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.

December 2020.
Revenue		31 December	31 December
		2020	2019
		$’000	$’000
Australia		30,592	46,769	(34.6)%
United Kingdom		22,463	23,339	(3.8)%
Canada		14,161	16,731	(15.4)%
Brazil		3,565	8,835	(59.6)%
Total		70,781	95,674	(26.0)%

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

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Revenue: Local Currency		31 December	31 December
		2020	2019
		$’000	$’000
Australia	AUD	30,592	46,769	(34.6)%
United Kingdom	GBP	12,432	12,682	(2.0)%
Canada	CAD	13,495	15,123	(10.8)%
Brazil	BRL	13,884	24,442	(43.2)%

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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Otherwise, the EBITDA would reflect significant non-cash station compensation charges without offsetting non-cash interest income arising from the treatment of the Southern Cross Austereo contract as a financing arrangement, one-off costs related to purchasing businesses and raising capital and the non-operating impact of the fluctuation in foreign exchange rates. See Note 8 for a reconciliation of EBITDA and Adjusted EBITDA to profit before taxes.

Cash Resources and Liquidity

The Group continues to maintain significant cash resources with $48.5 million of cash and cash equivalents at 31 December 2020 and net debt (debt less cash) of $15.3 million. Debt consists of a $60 million bank debt facility (fully drawn) and $3.8 million of leases that are considered debt under AASB 16.

Net cash used in operating activities for the period was $7.0 million. This was primarily due to a $12.8 million increase in accounts receivable from 30 June 2020 to 31 December 2020. Accounts receivable increased due to the higher revenue in 1H FY21 compared to 4Q FY20. The impact was magnified because 2Q FY21 revenue (which constitutes a substantial majority of accounts receivable at 31 December 2020) was $20.7 million higher than that of 4Q FY20 (which constituted a substantial majority of the accounts receivable at 30 June 2020). We expect, should revenue continue to grow compared to previous periods in the future, that accounts receivable will continue to grow and act as a drag on net cash provided from operating activities.

COVID-19 impact

The ongoing COVID-19 pandemic continues to have a negative impact on the Group’s revenue, which due to the fixed cost nature of the Company’s business model has a large negative impact on all measurements of profitability, including NPAT, NPATA, EBITDA and Adjusted EBITDA. The impact has varied across the Group’s operating regions. United Kingdom and Canada recovered the most, with decreases in revenue in local currency of 2% and 11% respectively. Both of these markets had months where revenue was larger than the corresponding month in the previous year and Canada actually generated more EBITDA in 1H FY21 than in 1H FY20. Australia lagged behind both United Kingdom and Canada. We attribute this to the lockdown in Melbourne (which ended 28 October 2020) as revenue was much stronger in December 2020 than it had been for the previous five months. While certain advertising categories (such as travel) have remained significantly down, the Group’s business has proven to be fairly resilient absent lockdowns in the markets in which we operate. Unfortunately, both the United Kingdom and Canada have recently instituted lockdowns of varying degrees and we anticipate this will have a negative impact on revenue from these markets until activities return to a more normal state. Brazil revenue, while down significantly in local currency, has appreciably improved over the course of the half-year period when compared to the previous year. We attribute the lower overall half-year performance to the fact that Brazil had the sharpest negative impact from the COVID-19 pandemic in 4Q FY20 (down 94% in 4Q FY20 v. 4Q FY19). Brazil has also recently enacted restrictions related to the country’s attempt to combat the impact of COVID-19. We anticipate that the Group’s results will continue be highly dependent on the impact of the COVID-19 pandemic in the markets in which we operate, and any lockdown or other tightening of restrictions will have further negative impact on the Group’s financial results.

Bank debt facility

In December 2020, the Group and its lender agreed to modify certain covenants and other terms of its debt facility. The purpose of these modifications was to allow the Group to remain in compliance with the terms of the debt facility given the ongoing impact of the COVID-19

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pandemic on its financial results. As a condition of this relief, the Company agreed to restricted distributions (including the elimination of dividends and share buy-backs) and other “tightening” of the terms of the debt facility agreement for the period of the modification. Consistent with these restrictions, the Board has terminated the share buy-back and the Company has filed an Appendix 3F ( Final share buy-back notice) effective 25 February. The Group has also agreed to an interest rate margin of 3.25% for the period of the modification. Previously the margin was based on the total gearing ratio with the margin set at 2.50% at a total gearing ratio of less than 2.00x increasing to a maximum of 3.25% at a total gearing ratio in excess of 2.25x.

The Group is currently in compliance with the revised covenants by a wide margin and expects to continue to be in compliance in the future should the impact of the COVID-19 pandemic remain roughly comparable to what it has been for 1H FY21. For example, the Group generated more EBITDA in 2Q FY21 than is required to remain in compliance for the ninemonth period from 1 October 1 2020 to 30 June 2021. However, if the Group has negative EBITDA in 2H FY21, it is possible that the Group would no longer be in compliance despite the EBITDA “overage” for the period ending 31 December 2020. The lender’s definition of EBITDA for purposes of the debt facility covenants differs from the EBITDA and Adjusted EBITDA definitions used herein.

Key operating metrics

Radio sell-out and spot rate were generally negatively impacted by the lower advertising demand related to the impact of the COVID-19 pandemic. Australia radio spots inventory was lower than the previous year period primarily due to the termination of the Nine Radio group affiliation agreement in July 2020. The termination of Nine Radio resulted in a considerable savings to the Group.

Key operating metrics by jurisdiction (local currency)

Notes Australia Radio spots inventory ('000s) 1 Radio sell-out rate(%) 2 Average radio spot rate(AUD) 3 Canada Radio spots inventory ('000s) 1 Radio sell-out rate(%) 2 Average radio spot rate(CAD) 3 United Kingdom Total radio impacts available('000) 4 Radio sell-out rate(%) 5 Average radio net impact rate(GBP) 6 Brazil Radio spots inventory ('000s) 1 Radio sell-out rate(%) 2	1H FY21 1H FY20
	472 540
	49% 62%
	121 135
	344 342
	52% 61%
	71 68
	9,807 9,806
	94% 99%
	1.3 1.3
	221 209
	40% 60%

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Average radio spot rate (BRL) 3, 7 177 224

1. Available radio advertising spots (primarily adjacent to traffic, news and information reports).

2. The number of radio spots sold as a percentage of the number of radio spots available.

3. Average price per radio spot sold net of agency commission.

4. The UK market measures inventory and units sold based on impacts instead of spots. An impact is a thousand listener impressions.

5. The number of impressions sold as a percentage of the number of impressions available.

6. Average price per radio impact sold net of agency commission.

7. Not adjusted for taxes or advertising agency incentives that are deducted from net revenue.

Foreign exchange rates

A significant portion of the Group’s revenue and expenses are in a currency other than Australia dollars (“AUD”). The actual annual exchange rates utilized in preparing the halfyear consolidated statement of profit or loss and other comprehensive income are as follows:

	1H FY21	1H FY20
	Actual	Actual
AUD:USD	0.72	0.68
AUD:CAD	0.95	0.90
AUD:GBP	0.55	0.54
AUD:BRL	3.89	2.77

Rounding of amounts

The Company is of a kind referred to in ASIC Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the directors’ report and annual report. Amounts in the directors’ report and annual report have been rounded off in accordance with that ASIC Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Distributions and Dividends

The Company did not declare a final dividend for FY 2020 or an interim dividend for 1H FY 2021 consistent with its strategy to conserve cash during the COVID-19 pandemic. As previously discussed, the Company is prohibited from paying dividends (or repurchasing its shares) while the modifications to its debt facility are in place. Consistent with these restrictions, the Board has terminated the share buy-back and the Company has filed an Appendix 3F ( Final share buy-back notice) effective 25 February.

Directors Holdings of Shares

The aggregate number of Company fully paid shares held directly, indirectly or beneficially by Directors of the Company at the date of this report and 30 June 2020 is as follows:

Director	25 February 2021	30 June 2020
William Yde III	2,803,408	3,603,408

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David Ryan Robert Loewenthal Corinna Keller Peter Tonagh Total	150,000 75,475 98,293 98,293 87,600 58,100 567,287 N/A*
	3,706,588 3,835,276

*Joined Board of Directors 1 September 2020. Owned 422,519 shares at the time he joined the board as well as at 30 June 2020.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 9.

This report is made in accordance with a resolution of directors.

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Peter Tonagh Chairman GTN Limited Sydney, Australia 25 February 2021

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Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration

To the Directors of GTN Limited

In accordance with the requirements of section 307C of the Corporations Act 2001 , as lead auditor for the review of GTN Limited for the half-year ended 31 December 2020, 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 review; and

• b no contraventions of any applicable code of professional conduct in relation to the review.

Grant Thornton Audit Pty Ltd Chartered Accountants

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S M Coulton Partner – Audit & Assurance

Sydney, 25 February 2021

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

GTN Limited For the half year ended 31 December 2020

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Contents

	Page
Consolidated Statement of Profit or Loss and Other Comprehensive Income	11
Consolidated Statement of Financial Position	12
Consolidated Statement of Changes in Equity	13
Consolidated Statement of Cash Flows	14
Notes to the Consolidated Financial Statements	15
Directors’ Declaration	21

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by GTN Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

GTN Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is at Level 42, Northpoint, 100 Miller Street, North Sydney, NSW. Its shares are listed on the Australian Securities Exchange.

GTN Limited For the half year ended 31 December 2020

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the half year ended 31 December 2020

Notes Revenue 3 Other income 3 Interest income on long-term prepaid affiliate contract 3 Gains on lease forgiveness 3 Network operations and station compensation expenses Selling, general and administrative expenses Equity based compensation expenses Depreciation and amortisation Finance costs Foreign currency transaction gain Profit before income tax Income tax expense 5 Profit for the half year Other comprehensive income (loss) for the half year, net of income tax: Items that may be reclassified to profit or loss Foreign currency translation reserve Total other comprehensive income (loss) for the half year Total comprehensive income (loss) for the half year Earnings per share attributable to the ordinary equity holders: Basic and diluted earnings per share (cents)	31 December 31 December 2020 2019 $’000 $’000 70,781 95,674 86 137 4,096 4,139 93 - (55,036) (61,028) (12,225) (20,516) (500) (319) (5,516) (5,860) (925) (1,569) 5 4
	859 10,662
	(492) (3,051)
	367 7,611
	(1,745) 1,405
	(1,745) 1,405
	(1,378) 9,016
	Cents Cents 0.2 3.4

Total profit for the year and other comprehensive income are fully attributable to members of the Group

This statement should be read in conjunction with the notes to the financial statements.

GTN Limited

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For the half year ended 31 December 2020

Consolidated Statement of Financial Position

As at 31 December 2020

Notes Assets Current Cash and cash equivalents Trade and other receivables Current tax asset Other current assets Current assets Non-current Property, plant and equipment 7 Intangible assets 6 Goodwill 6 Deferred tax assets Other assets Non-current assets Total assets Liabilities Current Trade and other payables Deferred revenue Current tax liabilities Financial liabilities Provisions Current liabilities Non-current Trade and other payables Financial liabilities Deferred tax liabilities Provisions Non-current liabilities Total liabilities Net assets Equity Share capital Reserves Accumulated losses Total equity	31 December 30 June 2020 2020 $’000 $’000 48,527 57,040 32,688 19,910 6,588 6,700 5,303 2,856
	93,106 86,506
	7,988 9,858 42,247 45,686 96,325 95,998 3,854 4,269 94,380 94,988
	244,794 250,799
	337,900 337,305
	33,165 30,874 707 1,266 205 - 1,366 1,525 1,037 932
	36,480 34,597
	66 74 62,260 62,768 20,717 20,344 409 416
	83,452 83,602
	119,932 118,199
	217,968 219,106
	437,508 437,508 6,959 8,464 (226,499) (226,866)
	217,968 219,106

This statement should be read in conjunction with the notes to the financial statements.

GTN Limited For the half year ended 31 December 2020

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Consolidated Statement of Changes in Equity

Notes Balance at 1 July 2019 Total comprehensive income: Net profit Other comprehensive income Transactions with owners in their capacity as owners: Equity based compensation Shares repurchased and retired Dividends Balance at 31 December 2019 Balance at 1 July 2020 Total comprehensive income: Net profit Other comprehensive loss Transactions with owners in their capacity as owners: Equity based compensation Repurchase and retire stock options Balance at 31 December 2020	Issued Capital Common Control Reserve Foreign Currency Translation Reserve Equity Based Payments Reserve Accumulated Losses Total Equity $’000 $’000 $’000 $’000 $’000 $’000
	444,041 (24,655) 30,390 3,483 (217,003) 236,256
	- - - - 7,611 7,611 - - 1,405 - - 1,405
	- - 1,405 - 7,611 9,016 - - - 319 - 319 (674) - - - - (674) - - - - (7,167) (7,167)
	(674) - - 319 (7,167) (7,522)
	443,367 (24,655) 31,795 3,802 (216,559) 237,750
	437,508 (24,655) 28,781 4,338 (226,866) 219,106
	- - - - 367 367 - - (1,745) - - (1,745)
	- - (1,745) - 367 (1,378) - - - 500 - 500 (260) - (260)
	- - - 240 - 240
	437,508 (24,655) 27,036 4,578 (226,499) 217,968

This statement should be read in conjunction with the notes to the financial statements.

GTN Limited For the half year ended 31 December 2020

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Consolidated Statement of Cash Flows

For the half year ended 31 December 2020

Notes Operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Net cash from/(used) in operating activities Investing activities Purchase of property, plant and equipment Net cash used in investing activities Financing activities Principal element of lease payments Deferred financing costs Shares repurchased Stock options repurchased Dividends Net cash used in financing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of year Exchange differences on cash and cash equivalents Cash and cash equivalents, end of half year Property acquired under leases	31 December 31 December 2020 2019 $’000 $’000 66,702 106,041 (71,770) (91,553) 86 137 (897) (1,244) (1,142) (3,949)
	(7,021) 9,432
	(545) (1,731)
	(545) (1,731)
	(824) (804) (18) - - (674) (260) - - (7,167)
	(1,102) (8,645)
	(8,668) (944) 57,040 50,728 155 921
	48,527 50,705
	280 2,030

This statement should be read in conjunction with the notes to the financial statements.

GTN Limited For the half year ended 31 December 2020

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Notes to the Consolidated Financial Statements

1 Basis of preparation of half year report

This condensed consolidated interim financial report for the half-year reporting period ended 31 December 2020 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Act 2001.

This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by GTN Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period except for the adoption of new and amended standards as set out below:

2 Changes in accounting policies

2.1 New and revised standards that are effective for these financial statements

Standards adopted during the period

The Group has adopted all new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group. As such, no significant changes are required to the Group’s current accounting policies from those disclosed in the financial report for the year ended 30 June 2020.

The following Accounting Standards and Interpretations are most relevant to the Group:

Amendment to AASB 16 Leases Covid-19-Related Rent Concessions (“AASB 2020-4”)

AASB 2020-4 allows, as a practical expedient, a lessee to elect not to assess whether a rent concession that meets the conditions in paragraph 46B of AASB 16 is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying AASB 16 if the change were not a lease modification. The practical expedient in paragraph 46A of AASB 16 applies only to rent concessions occurring as a direct consequence of the covid-19 pandemic and only if all of the following conditions are met:

(a) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

(b) any reduction in lease payments affects only payments originally due on or before 30 June 2021 (for example, a rent concession would meet this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021); and

(c) there is no substantive change to other terms and conditions of the lease.

GTN Limited For the half year ended 31 December 2020

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AASB 2020-4 is effective for annual periods beginning on or after 1 June 2020 and early adoption is permitted. The Group applied the practical expedient of AASB 2020-4 to all its qualifying leases. The Group recognized $93 thousand of pre-tax income from the adoption of AASB 2020-4 which in included in the consolidated statement of profit and loss and other comprehensive income as gains on lease forgiveness.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

2.2 Accounting Standards issued but not yet effective and have not been adopted early by the Group

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group. Management anticipates that all the relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. None of these new standards and interpretations are expected to have a material impact on the Group’s financial statements.

3 Revenue

Sales revenue Sale of advertising commercials – net of agency commissions Other income Interest on cash balances Interest from tax refund Interest income on long-term prepaid affiliate contract Gains on lease forgiveness	31 December 31 December 2020 2019 $’000 $’000 70,781 95,674
	70,781 95,674
	6 137 80 -
	86 137
	4,096 4,139
	93 -

4 Expenses

4 Expenses
Profit before income tax includes the following specific expenses: Defined contribution superannuation expenses Amortisation and depreciation Finance costs of bank loan and leases Rental expenses relating to leases Foreign exchange losses/(gains)	31 December 31 December 2020 2019 $’000 $’000 425 543
	5,516 5,860
	925 1,569
	216 317
	(5) (4)

GTN Limited For the half year ended 31 December 2020

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5 Income tax expense

The major components of tax expense and the reconciliation of the expected tax expense based on the statutory tax rate at 30% (2019: 30%) and the reported tax expense in profit or loss are as follows:

Profit before tax Tax rate: 30% Taxes on foreign earnings Tax effect of permanent differences (Recognition of previously unrecognized tax losses)/unrecognized tax losses State taxes Other Income tax expense	31 December 31 December 2020 2019 $’000 $’000 859 10,662 258 3,199 (28) (100) 191 194 145 (219) 1 3 (75) (26)
	492 3,051

Expense Current Deferred Income tax expense	31 December 31 December 2020 2019 $’000 $’000 (296) 2,266 788 785
	492 3,051

The recognition of deferred tax assets is limited to the extent that the Group anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences. The Group has an unrecognised net deferred tax asset of $17,593 thousand (30 June 2020: $20,748 thousand) in relation to the tax losses as management does not anticipate the Group will make sufficient taxable profits in the foreseeable future to utilise this asset in those jurisdictions.

6 Intangible assets

Detail of the Group’s intangible assets and their carrying amounts are as follows:

Gross carrying amount Balance at 1 July 2020 Net exchange differences Balance at 31 December 2020 Amortisation Balance at 1 July 2020 Amortisation Net exchange differences Balance at 31 December 2020 Carrying amount 31 December 2020	Goodwill $’000	Trade names Station contracts Advertising contracts Total $’000 $’000 $’000 $’000
	95,998 327	12,513 88,461 65,599 166,573 (81) (586) (429) (1,096)
	96,325	12,432 87,875 65,170 165,477
	-	- (55,288) (65,599) (120,887)
	- -	- (3,154) - (3,154) - 382 429 811
	-	- (58,060) (65,170) (123,230)
	96,325	12,432 29,815 - 42,247

The Group expects to either renew or replace its advertiser contracts and renew its station contracts beyond their expected life. Amortisation expense for the half-years ended 31

GTN Limited For the half year ended 31 December 2020

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December 2020 and 31 December 2019 was $3,154 thousand and $3,182 thousand, respectively.

Due to the long term and indefinite nature of goodwill and trade names, amortisation expense is not reflected and the Group annually reviews goodwill and trade names for impairment or more frequently should there be indicators of possible impairment.

Management is not currently aware of any other reasonably possible changes in key assumptions that would result in an impairment.

7 Property, plant and equipment

Details of the Group’s property, plant and equipment and their carrying amount are as follows:

Gross carrying amount Balance 1 July 2020 Additions during period Disposals Net exchange differences Balance 31 December 2020 Depreciation and impairment Balance 1 July 2020 Disposals Net exchange differences Depreciation Balance 31 December 2020 Carrying amount 31 December 2020	Helicopters and fixed wing aircraft Recording, broadcasting and studio equipment Furniture, equipment and other Right of use assets – real property Total $’000 $’000 $’000 $’000 $’000
	25,413 981 2,793 6,442 35,629
	506 3 36 280 825 - - - (165) (165) (842) (21) (103) (139) (1,105)
	25,077 963 2,726 6,418 35,184
	(20,762) (814) (2,028) (2,167) (25,771)
	- - - 94 94 680 15 83 65 843 (1,361) (28) (181) (792) (2,362)
	(21,443) (827) (2,126) (2,800) (27,196)
	3,634 136 600 3,618 7,988

Right of use assets consist of leases of premises.

8 Segment information

The Group’s management analyses the Group’s performance by geographic area and has identified four reportable segments: Australia, Brazil, Canada and United Kingdom.

The segments’ revenues are as follows:

Australia United Kingdom Canada Brazil	31 December 31 December 2020 2019 $’000 $’000 30,592 46,769 22,463 23,339 14,161 16,731 3,565 8,835
	70,781 95,674

Management tracks performance primarily by Adjusted EBITDA which is defined as EBITDA adjusted for any foreign exchange profit or loss, interest income on the long-term prepaid affiliate agreement, gains on lease forgiveness, transaction costs and other unusual non-recurring items.

GTN Limited For the half year ended 31 December 2020

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Adjusted EBITDA by Segments Australia United Kingdom Canada Brazil Other Adjusted EBITDA Foreign exchange gain Gains on lease forgiveness Less: Interest income on long-term prepaid affiliate contract EBITDA Depreciation and amortization Interest income on long-term prepaid affiliate contract Financing costs net of interest income Profit before income tax Income tax expense Profit	31 December 31 December 2020 2019 $’000 $’000 5,122 14,415 1,762 2,015 2,221 1,822 17 1,845 (2,006) (2,147)
	7,116 17,950 5 4 93 - (4,096) (4,139)
	3,118 13,815 (5,516) (5,860) 4,096 4,139 (839) (1,432)
	859 10,662
	(492) (3,051)
	367 7,611

Segment assets and liabilities are classified by their physical location.

Segment assets Total Assets: Australia UK Canada Brazil Total segment assets Unallocated: Deferred tax assets Other Total assets Segment liabilities Total liabilities: Australia UK Canada Brazil Total segment liabilities Unallocated: Deferred tax liabilities Borrowings Intercompany eliminations Others Total liabilities	31 December 31 December 2020 2019 $’000 $’000 250,926 258,859 40,565 41,024 28,874 34,773 3,920 8,034
	324,285 342,690 3,854 2,869 9,761 10,432
	337,900 355,991 76,826 80,510 7,966 7,016 4,163 4,116 1,725 2,840
	90,680 94,482 20,717 19,675 63,626 63,999 (63,346) (67,563) 8,255 7,648
	119,932 118,241

GTN Limited For the half year ended 31 December 2020

20

9 COVID-19 pandemic impact

On 11 March 2020, the World Health Organisation declared COVID-19 as a pandemic. As at the date of the financial report the pandemic is ongoing. The outbreak and the response of governments in dealing with the pandemic is interfering with general activity levels within the community, the economy and the operations of the Group’s business.

The COVID-19 pandemic has had a material negative impact on the Group’s business in all of its operating regions, including a decrease in Group revenue of 57% in fourth fiscal quarter 2020. Group revenue for the first six months of the current fiscal year has improved compared to the fourth fiscal quarter of 2020 decreasing 26% compared to the previous fiscal year. Due to the fixed cost nature of the Group’s business, the impact on profitability is generally greater on a percentage basis than the reduction in revenue. The largest fixed cost for the Group is station compensation, which is payments to radio and television stations to provide the commercial spot inventory which is virtually the Group’s sole source of revenue.

Because of this, the Group has focused on conserving cash in order to be able to “ride out” the COVID-19 pandemic and at 31 December 2020 the Group had cash and cash equivalents of $48.5 million. Part of this strategy has included modifying the financial covenants of the Group’s existing bank debt facility to attempt to ensure the Group will remain in compliance with the facility.

However, there can be no assurances that there will not be a covenant default in the future, and should there be a covenant default that the bank facility will not be terminated early, and the loan be required to be repaid prior to 30 September 2023. In such a scenario, it would be extremely difficult to find a suitable replacement lender on terms that the Group finds acceptable, or even at all and the Company may be unable to raise sufficient additional equity or sell enough Group assets to satisfy its outstanding debt obligations.

Based on the factors noted above, the Directors have determined that the financial report should be prepared on a going concern basis. Whilst the estimated potential impact of COVID-19 on the future operations of the Group has been taken into account in preparing the financial statements, the scale and duration of the pandemic and impact on the Group’s operations remain inherently uncertain.

10 Events subsequent to the reporting period

Other than the matters referred to above, no matters or circumstances have arisen since the end of the financial half year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

GTN Limited For the half year ended 31 December 2020

21

Directors’ declaration

In the directors’ opinion:

1. The financial statements and notes set out on pages 11 to 20 are in accordance with the Corporations Act 2001, including:

(a) complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

(b) giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date and

1. There are reasonable grounds to believe that GTN Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

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Peter Tonagh Chairman GTN Limited Sydney, Australia

Dated 25[th] day of February 2021

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Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Review Report

To the Members of GTN Limited

Report on the review of the half year financial report

Conclusion

We have reviewed the accompanying half year financial report of GTN Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2020 and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half year ended on that date, a description of accounting policies, other selected explanatory notes, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of GTN Limited does not comply with the Corporations Act 2001 including:

(a) giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the halfyear ended on that date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

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Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and 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 annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Directors’ responsibility for the half year financial report

The Directors of the Company are responsible for the preparation of the half year 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 half year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

2

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Auditor’s responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its performance for the half year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Grant Thornton Audit Pty Ltd Chartered Accountants

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S M Coulton Partner – Audit & Assurance Sydney, 25 February 2021