HY2017 RESULTS PRESENTATION 14 August 2017 1
HIGHLIGHTS HIGHLIGHTS 2
CONTINUE CONTINUED DOUBLE DOUBLE DIGIT DIGIT REV REVENUE ENUE AND AND EAR EARNING NINGS S GR GROWTH WTH UNDER UNDERLYING YING 1 REV REVENUE ENUE 18.0% 18.0% 33.6% 33.6% NP NPATA Sector outperforming • Out of Home (OOH) ad spend +8.5% vs 1.6% fall in total all other advertising media industry spend (SMI 2 data) mediums oOh! grew faster than Out of Home (OMA 3 data) • • More than half of group revenue now from digital Delivering on digital • 8,000 digital screens (inc 230 large format) strategy • Piloting Quantium data-driven campaigns • Gained valuable CBD and Millennial audiences from ECN and Junkee Media acquisitions Acquisitions • Acquired content and video capabilities integrated • ECN revenue growth slower than expected. Q3 strengthening now all sales plans and structures are in place 1) Underlying is financial measure which reflects adjustments for certain non-operating items including impairment, merger and acquisition-related expenses. Underlying represents the same concept as in the CY2016 Annual Report. In H1 2017 non-operating items include $2.1m of merger and acquisition related costs which had an after tax impact of $1.5m 2) Per the SMI Media Trends Report June 2017 3) Per the Outdoor Media Association Data for H1 2017 3
H1 20 H1 2017 17 FIN FINANCIAL ANCIAL HIGHL HIGHLIGHTS IGHTS: CONTINUE CONTINUED EAR EARNING NINGS S GR GROWTH WTH +32.7% +33.6% +18.2% +18.0% +27.0% +34.8% ($m) H1 2017 H1 2016 Change (%) Underlying NPATA 15.3 11.5 33.6% Underlying EPS (cps) 5.3 4.0 31.9% Interim dividend (cps, fully franked) 4.5 4.0 12.5% Net debt / Underlying EBITDA 1.7x 1.6x 0.1x • Revenue growth of 18.0% delivers underlying eps growth of 31.9% • Net debt remains within comfortable levels • A interim dividend of 4.5c has been declared, up 0.5c (12.5%) 1) Underlying is financial measure which reflects adjustments for certain non-operating items including impairment, merger and acquisition-related expenses. Underlying represents the same concept as in the CY2016 Annual Report. In H1 2017 non-operating items include $2.1m of merger and acquisition related costs which had an after tax impact of $1.5m 4
CONTINUI CONTINUING NG TO O DELIVE DELIVER R THE THE DIGIT DIGITAL AL ST STRA RATE TEGY • Digital revenue of $90.2m, up 38.1% on H1 Digital Digital Revenue enue % 2016 100.0 60.0% 52.1% • Digital revenue represented 52.1% of H1 90.0 revenue 50.0% 44.5% 80.0 • Total digital asset portfolio: 8,000 screens (230 70.0 $m Digital Revenue large format) and 8 online platforms 40.0% 90.2 60.0 29.0% • 17 new large format Road screens • 23 new large format EVOKE (Retail) 50.0 30.0% screens 20.7% 65.3 40.0 • Over 200 Shopalive screens 15.9% 20.0% 30.0 • Returns from digital roll-out remain compelling 20.0 36.0 10.0% • Significant revenue volume uplift by leveraging 24.2 10.0 18.5 asset use through digital conversions 0.0 0.0% 2013 2014 2015 2016 2017 H1 % Digital 5
FIN FINANCIAL ANCIAL PERFORMAN PERFORMANCE CE 6
BENE BENEFIT FIT OF A OF A DIVE DIVERSIF RSIFIED IED AUDIENC UDIENCE E POR PORTFOLIO TFOLIO 2.3% 4.6% ($m) H1 2017 H1 2016 Change (%) 9.2% Road Road 63.9 56.8 12.4% Retail H1 2017 36.9% REVENUE Fly 14.3% Retail 56.6 45.9 23.2% BY Locate PRODUCT AS A % Fly 24.7 26.5 -6.8% Other New Zealand Locate by oOh! 15.9 18.6% 13.4 32.7% New Zealand 4.0 4.0 0.7% • Road and Retail delivered strong double digit growth, through increased digital screen volumes Other 7.9 - n/a • Fly grew its customer base but was unable to offset reduced spending by some advertisers in this format having long lead times • Locate had double digit growth, but revenue growth from ECN was Total revenue 173.0 146.6 18.0% slower than anticipated • New Zealand grew revenue by 41% on a like for like basis • Other relates to Cactus Printing and Junkee Media 7
PR PROFIT FIT AN AND D LOSS SS ($m) H1 2017 H1 2016 Change (%) • Strong revenue growth Revenue 173.0 146.6 18.0% • Gross Profit driven by strong Cost of media sites and production (97.7) (86.5) (13.0%) performances in Road and Retail Gross Profit 75.3 60.1 25.1% • Underlying EBITDA growth of Gross profit margin (%) 27.0% with margin expansion of 43.5% 41.0% 2.5% 1.4ppts Total operating expenditure (41.3) (33.3) (23.6%) • Operating expenditure grew with Underlying EBITDA 34.0 26.8 27.0% 50% of the increase from the Underlying EBITDA margin 19.7% 18.3% 1.4% acquisitions, and the balance growth driven from investments in Non-operating items (2.1) - n/a data & insights, and digital volumes EBITDA 31.9 26.8 19.0% • $2.0m of costs relating to the Depreciation & Amortisation terminated APO merger included in (15.3) (12.6) (21.4%) non-operating items EBIT 16.6 14.2 16.9% • Depreciation increase driven by Net finance costs (2.8) (2.4) (16.8%) capex step up in 2016 and H1 2017 Profit/(loss) before tax 13.8 11.8 16.5% Income tax (expense)/benefit (6.7) (5.8) (14.6%) Net profit after tax (NPAT) 7.1 6.0 18.3% Underlying NPATA 15.3 11.5 33.6% Differences in balances due to rounding, and ppts refers to percentage points 8
KEY EY BAL ALAN ANCE CE SH SHEET EET ITE ITEMS MS AN AND D CR CRED EDIT IT RA RATIO TIOS ($m) 30 Jun 31 Dec Change • Strong balance sheet position to 2017 2016 ($) support future growth Cash and cash equivalents 8.0 8.2 (0.2) • Net debt / Underlying EBITDA ratio Trade and other receivables 79.6 79.4 0.2 of 1.7x Other current assets 9.0 8.7 0.3 • Net debt of $137.4m, up $23.2m with major movements related to: Property, plant & equipment 112.2 102.8 9.4 • EBITDA growth to $31.9m, Intangible assets and goodwill 322.9 329.4 (6.5) offset by Total assets 541.2 538.6 2.5 • Tax payments of $19.0m Trade payables 47.9 47.9 (0.0) inclusive of a FY2016 annual payment Other current liabilities 8.1 22.1 (14.0) • Capital expenditure of $18.0m Borrowings 145.4 122.4 23.0 • Final FY16 dividend of $16.4m Total liabilities 222.5 211.8 10.7 Net assets 318.7 326.9 (8.2) Credit metrics Gross debt 145.4 122.4 23.0 Net debt 137.4 114.2 23.2 Net debt / Underlying EBITDA 1.7x 1.6x 0.1x Differences in balances due to rounding, and this represents key balance sheet line items only 9
CA CASH SH FL FLOW • Net cash flow from operating ($m) H1 2017 H1 2016 Variance ($) activities of $11.5m tripled as a result of a stronger EBITDA and improved EBITDA 31.9 26.8 5.1 working capital management • Included in net cash from operating Net change in working capital and 1.0 (11.0) 12.0 activities is $1.8m in costs related to non-cash items the terminated APO merger • Investment in capital expenditure of Interest and income tax (included in (21.4) (12.3) (9.1) $18.0m includes $2.6m of investment net cash from operating activities) in systems to underpin the future growth of the business, in addition to Net cash from operating activities 11.5 3.5 8.0 $0.6m of maintenance Capital expenditure (18.0) (13.4) (4.6) Acquisition refunds 0.2 0.1 0.1 Concessional development advances / (0.4) (2.0) 1.6 (payments) Net cash flow before financing (6.7) (11.8) 5.1 Differences in balances due to rounding 10
BUSINESS USINESS STRA STRATEGY TEGY 11
TH THE E oO oOh! h! STR STRATEG TEGY 12
LEA LEADI DING DI DIVE VERS RSE E AUSTR STRAL ALIAN IAN OUT T OF F HOME ME PO PORTFO TFOLIO LIO BALANCED LEASE PORTFOLIO 21,000 SIGNS ONLINE INCL 8,000+ DIGITAL RETAIL ACROSS ROAD, RETAIL, FLY AIRPORT AND PLACE BASED LOCATIONS ROAD MOBILE GYM OFFICE EDGE STUDY SPORT CONTENT VENUE CAFE WIFI 13
IN INDE DEPEN PENDENT DENT STU STUDY 1 : : oO oOh! ! DE DELIV LIVER ERS S HIG IGHEST EST ROI I IN IN OOH Anal Analyt ytic ic Par artner tners s - st study udy of of Out Out of of Home audience en Home audience envir vironments onments to under to underst stand and rela elativ tive r e retur eturns t ns to o adv adver ertis tiser ers 1.8 1.67 1.59 1.6 1.4 1.2 1.05 1.02 1 2 1 0.91 0.8 0.74 0.7 0.6 0.4 0.32 0.2 0 3 Locate oOh!media Retail Experiential Airport Roadside Non oOh!media Street furniture Transit Rail Billboards Retail Audience environments – oOh!media Audience environments – no oOh!media presence presence 1) Study conducted by Analytic Partners demonstrating that oOh!media’s diversified product strategy delivers the highest ROI for advertisers. This is based on 14 years of data from more than 250 econometric studies created for more than 135 brands with a combined advertising spend in excess of $7 billion (2) 2) A score of 1 indicates the average return by Out of Home audience environment in the Analytic Partners study 14 3) Non oOh!media Retail includes shopping centres and supermarkets which are often smaller in footprint and audience than the oOh!media Retail portfolio
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