- DailyDOOH - http://www.dailydooh.com -

oOh!media Limited Financial Results 1H19

oOh!media Limited (ASX:OML) (oOh!) this week announced its financial results for the half-year ended 30 June 2019 (1H19).

1H19 [1] Results Commentary

 Chief Executive Officer Brendon Cook said the result underscored the importance of oOh!’s diversification strategy, lifting revenue in a period when external factors slowed advertising spending.

“The diversity and scale of oOh!’s multi-platform portfolio delivered a solid performance in the half despite the external conditions. Growth in our key portfolio products, excluding Road, helped lift revenue by 5% on a pro forma basis. This was driven by a notable contribution from Commute, ongoing growth in our Fly and Locate products, and an improvement in Retail. The top line performance was impacted by subdued trading during the May federal election and the accompanying softer macroeconomic environment. This negatively affected the performance of Road in particular. Our gross profit was also impacted by the product mix.

“Opex growth is being tightly controlled, and yet we are still making strategic investments in data, sales excellence, content and creativity to drive future revenue growth. Capex spending will be at the lower to mid-range of our guidance. The team remains fully focused on the disciplined execution of our strategy to build a data-centric, scalable, multi-format Out of Home business. Advertisers continue to increasingly preference Out of Home as a key category for media spending supporting oOh!’s medium term growth prospects in this sector.

We continue to lead the industry in creating a new media business and we are best placed to help drive the Out of Home industry’s share of overall media spend from 6% to 10%.”

Operational highlights:

Product highlights:

Impact of new Accounting Standard AASB16

This is the first period where oOh!’s results are also reported in accordance with the new leasing standard AASB16. While this does not change the economic performance and cash flows of the business, it has resulted in changes to the Company’s reported statutory result. Full details of the result after the application of the AASB16 standard are contained in the Operating and Financial Report which should be read in conjunction with this announcement.

Financial position

Excluding the impact of AASB16, oOh!’s net debt/pro forma4 Underlying EBITDA ratio was 2.7 times at 30 June 2019. This level of gearing remains well within the Company’s banking covenants and debt will reduce over FY19 given the weighting of the Company’s earnings to the second half. oOh! Is targeting a leverage ratio below or approaching 2.0 times in 2020.

Capital expenditure was $28.3 million. This included investments in the digitisation of the Commute assets, the roll out of new assets in Brisbane Airport and the continued investments to digitise the network. For FY19, oOh! is targeting the lower to mid-range end of its stated capital expenditure guidance of between $55 million and $70 million.

Outlook

On 16 August 2019 oOh! delivered a trading update and revised guidance for FY19. Prior to that date, guidance was for underlying EBITDA of between $152 million and $162 million (excluding integration costs and the impact of AASB16). oOh! has since advised underlying EBITDA to be between $125 million and $135 million, excluding integration costs and the impact of AASB16.

As previously advised, the Company’s adjusted guidance was based on a view that a significant and broad-based decline in Q3 bookings could not be sufficiently offset by improved Q4 bookings.

“This has been a disappointing outcome for us and, from the available data and commentary from other media participants, we believe this to be a temporary but significant event driven predominantly by weaker market conditions,” said Mr Cook.

“While the recent adjustment to our earnings forecast for the year due to current market conditions is disappointing, the Company has tested a number of potential scenarios for future trading and has concluded that no equity raising is required, excluding the Company’s dividend reinvestment plan. This conclusion is, in part, because of the highly cash generative nature of the business,” Mr Cook said.

Dividend

In line with its dividend policy, oOh! declared a fully franked interim dividend of 3.5 cents per share, which was steady on the prior corresponding period.

The record date for entitlement to receive the interim dividend is 30 August 2019 [3] with a payment date of 20 September 2019 [4].

The Company’s dividend reinvestment plan (“DRP”) will operate for the interim dividend and the DRP has been fully underwritten. The DRP is consistent with the Company’s commitment to de-leverage.

The last date for receipt of the election notice for participation in the DRP is 2 September 2019 [5], the first working day after the dividend record date. Terms and conditions of the Company’s DRP are available on the oOh! investor website.

1 All Pro forma figures refer to oOh!’s results for 1H18 [6] combined with the management accounts for Commute for the period when it was not under OML ownership

2 Underlying results exclude the impact of certain non-operating items, including acquisition-related and other items. These items form the reconciliation between segment operating profit before depreciation and amortisation expense and statutory operating profit before depreciation and amortisation expense in Note 3 ‘Operating segments’ of the consolidated financial statements.

Underlying also excludes the impact of AASB16.

3 NPATA excludes the after tax impact on acquisition related amortisation charges, including the amortisation attached to the Adshel acquisition

4 Pro forma refers to oOh!’s results combined with the management accounts for Commute for the period when it was not under OML ownership