2016 Financial Full Year Results Presentation 29 August 2016 - - PowerPoint PPT Presentation

2016 Financial Full Year Results Presentation

29 August 2016 Barclay Nettlefold, CEO Peter Cargin, CFO

Agenda

Highlights FY16 Financial Results Growth Strategy FY17 Outlook Appendix

Bunbury | WA

Highlights

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FY16 Highlights – Strong growth in revenue and earnings

EBITDA margin of

24% 1.5

cps fully franked dividend declared

Revenue growth

88%

EBITDA growth

477%

QMS Media Limited | 2016 Financial Year Results | 4 *FY15 Pro Forma

FY16 Highlights – Strong industry dynamics

Australia up 17% NZ up 12% Australia up 18% NZ up 18%

OOH Industry Growth

CY15 H1 CY16

Source: OMA/OMANZ

QMS

94%

FY16 Australian media revenue growth

QMS Media Limited | 2016 Financial Year Results | 5

Melbourne Auckland Auckland Melbourne

FY16 Highlights – Strong delivery on digital and acquisitions

66+

Landmark digital billboards by end of FY17

62%

• f QMS Australian

media revenue

37%

• f Australian OOH

industry revenue

VS

Largest landmark digital billboard provider in New Zealand.

49

Landmark digital billboards currently

• perational

Digital Revenue

Successfully completed and integrated all acquisitions.

88%

FY17 digital pipeline permitted

Wellington | NZ

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Source: OMA

FY16 Financial Results

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Strong result driven by Digital

• Result underpinned by significant uplift in digital, expanded platform and

contributions from acquisitions:

• Revenue increased 88%.
• Underlying EBITDA up more than 4.5 times FY15 pro forma, Underlying

EBITDA margin up to 24.0%.

• Digital contribution reflects delivery on development strategy:
• Digital now 61.8% of Australian media revenue, up from 24.0% in FY15.
• Seasonally stronger operating cash conversion in H2 FY16.
• Net debt position reflects funding of digital development pipeline and

settlements of deferred consideration on IPO acquisitions.

• Final fully franked dividend of 1.5 cents per share (cps) declared, consistent

with payout ratio range.

Note: Underlying numbers used throughout this presentation exclude non-underlying revenue and costs as detailed in the Appendix on Slide 26 in order to provide a more meaningful comparison of the performance of the

• business. The Group was not trading for the full comparative period. Therefore, all FY16 information in this presentation has been compared against the FY15 pro forma results. Refer to Appendix for reconciliation

between statutory and underlying results.

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2016 2015 June year end Actual Pro forma ($ million) ($ million)

Revenue 111.8 59.6 EBITDA 27.1 4.7 EBITDA – underlying 26.8 4.7 EBITDA Margin - underlying 24.0% 7.9% NPAT 13.3 (4.3) EPS (cents) 4.8 (3.3) Operating Cash Conversion % 90.7% 59.6% Net Debt / EBITDA ratio (x) 0.2x Net cash % of Australian Media Revenue - Digital 61.8% 24.0% Final dividend (cents per share) 1.5

Expanded platform supporting strong earnings growth

• Revenue and earnings uplift reflects:
• Delivery on digital development strategy.
• Expanded platform, including contribution from acquisitions.
• Gross margins increased to 52.6% from 40.9%, reflecting greater

contribution from digital and benefit from integrated print production business.

• Increase in operating expenses reflects investment in sales, development

and operations infrastructure to support growth.

• NZ acquisitions completed in Dec 2015 contributed $3.7m EBITDA.

1. Non-underlying items: FY2016 relates to the release of $2.1m of deferred and contingent consideration relating to IPO acquisitions. This has been offset by $0.7m acquisition transaction costs and $1.1m restructuring and integration costs. FY2015 relates to $4.6m impairment expense and $0.8m provision for bad debts expense which related to individual businesses pre QMS Media’s ownership.

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2016 2015 June year end Actual Pro forma Change ($ million) ($ million) % Revenue 111.8 59.6 88% Cost of sales (53.0) (35.3) 50% Gross profit 58.8 24.4 141%

Gross profit margin 52.6% 40.9%

Operating expenses (31.7) (25.1) 26% EBITDA 27.1 (0.7) nm Non-underlying items1 (0.3) 5.4 Underlying EBITDA 26.8 4.7 477%

Underlying EBITDA margin 24.0% 7.9%

D&A (8.0) (4.0) 100% EBIT 19.1 (4.7) nm Net finance costs (0.9) (0.3) 204% Tax (4.9) 0.7 nm NPAT 13.3 (4.3) nm

Strong performance in Australia and New Zealand

FY15 FY16

Growth in Australian digital revenue Revenue Breakdown

QMS Media Limited | 2016 Financial Year Results | 10 *FY15 Pro Forma

Delivering growth across all platforms

• Growth across all revenue categories, in particular landmark digital and static

billboards, reflecting organic growth, inventory development and acquisitions.

• Small format digital conversions supporting growth in Transit and Street

Furniture:

• Bali Airport upgrade completed in Feb 2016.
• Gold Coast Street Furniture phase 1 digital conversions completed.
• Increase in Transit reflects NZ acquisitions and commencement of Bali Airport

concession.

• Integrated print production business providing margin benefits. Revenue

growth was up 19%, excluding eliminations.

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*One underperforming Australian digital site sold in H2 FY2016, 4 sites completed post year end. **Includes 270 small format billboards.

2016 2015 June year end Actual Pro forma Change ($ million) ($ million) %

Total number of landmark digital billboards 45* 21 114% Total number of small format digitals 132

• nm

Total number of static billboards 642** 237 181% Revenue Landmark digital 33.8 7.1 376% Static 31.6 22.3 42% Street furniture 2.2 0.5 340% Retail 2.6 2.3 13% Transit 16.7 5.3 215% Total media revenue 86.9 37.5 132% Print production 22.8 22.1 3% Total underlying revenue 109.7 59.6 84% % of total revenue - international 31.6% 13.6% 18.0% % of total media revenue - digital 40.2% 18.8% 21.4% % of Australian media revenue - digital 61.8% 24.0% 37.8%

Strong balance sheet, well positioned for growth

• Growth in net assets predominantly relates to the NZ

acquisitions and associated capital raising.

• Increase in net debt reflects the investment in digital rollout and

acquisition payments.

• Net debt / EBITDA ratio well within banking covenants.
• Cash reserves, operating cash flow and undrawn bank facilities

available to fund development pipeline, acquisition commitments and proposed dividends.

• Total bank facilities of $41.1m available to the Group.

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2016 2015 June year end Statutory Statutory ($ million) ($ million)

Cash and cash equivalents 12.6 21.4 Trade and other receivables 23.6 9.9 Property, plant and equipment 56.1 19.0 Goodwill and Intangible assets 133.9 89.3 Other assets 15.2 12.0 Total assets 241.4 151.6 Trade and other payables 11.6 10.3 Loans and borrowings 17.8 3.3 Deferred and contingent consideration 11.0 21.5 Other liabilities 29.7 9.6 Total liabilities 70.1 44.7 Net assets 171.3 106.9 Net debt (cash) 5.2 (18.1) Net debt / EBITDA ratio (x) 0.2x Net cash Net debt / (Net Debt + Equity) 3% Net cash

Strong cash conversion

• Strong H2 FY16 operating cash conversion due to:
• Cash receipts in Q3 from seasonally strong revenues in Q2.
• Additional lunar billing periods in H2.
• Capex reflects continued investment in digital development across the

Group.

• Acquisitions include iSite, ABsee and deferred consideration

payments from previous IPO acquisitions.

• Digital roll-out and deferred consideration payments partly funded by

drawdown on bank facilities.

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2016 2015 June year end Actual Actual ($ million) ($ million) EBITDA – underlying 26.8 4.7 Non-cash items in EBITDA (1.4) 0.4 Change in working capital (1.1) (2.3) Operating cash flow 24.3 2.8 Operating cash flow conversion % 91% 60% Capital Expenditure (26.3) (2.6) Acquisitions (66.6) (71.8) Investing cash flow (92.9) (74.4) Net proceeds from issue of shares 48.5 99.1 Net proceeds from (repayment of) borrowings 13.5 (6.0) Income tax and interest paid (2.5) 0.0 Financing cash flow 59.4 93.1 Net cash flow (9.1) 21.5

Operational Review & Strategy

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FY16 Strategic Priorities

• New developments
• Static to digital conversions
• Focus on expanding quality

national footprint

• Data and technology

DIGITAL DEVELOPMENT

• Leverage existing assets /

concessions

• Securing new contracts
• High quality static

development

• Innovation
• Strong presence in New

Zealand

• Strategic platform in

Indonesia

• Potential for significant

digital growth

• Leverage existing presence
• Disciplined approach to

value-accretive

• pportunities
• Focus on complementary

businesses including platforms and content

• Leveraging generational

and stakeholder relationships

ORGANIC DEVELOPMENT ASIA PACIFIC ACQUISITIONS / ALLIANCES

Build a strong platform and pipeline of premium quality outdoor media assets, underpinned by a digital development strategy and complemented by strong market coverage in key geographies. Opportunity to unlock additional value from QMS’ platform and capabilities through targeted and customised content and multi-platform engagement channels.

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Digital Development - Strong delivery on digital in FY16

Successful delivery of landmark digital rollout across Australia and New Zealand.

• Landmark digital portfolio more than doubled since FY15.
• Portfolio quality a priority, one underperforming Australian digital site sold in

H2 FY16.

• Digital revenue 62% of Australian media revenue, compared to 37% for the

industry. Strong digital pipeline for FY17.

• Forecast 21+ additional landmark digital billboards, 4 already operational,

further 15 sites permitted.

• Continuation of strategic development of small format digital portfolio.

Significant progress on small format development, complementing QMS’ landmark digital presence in strategic markets.

• 132 small format digital assets developed in FY16, primarily across the

Gold Coast street furniture portfolio and Bali Airport concession upgrades.

• Continued small format digital rollout on Gold Coast and across key

Auckland Transport hubs planned for FY17.

Strong growth in landmark digital presence

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New Digital sites delivered to plan

Carrum Downs Kew Junction Gold Coast Christchurch

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Australia - Strengthening market position and digital capabilities

Strong Out of Home market growth.

• Delivered 5 times above-market growth with high quality assets.

Broadened geographic coverage across key markets.

• Strengthened ability to deliver integrated national campaigns.
• Landmark digital expansion in major capital cities, regional centres and

new road infrastructure.

• ABsee acquisition provided scale in the important Gold Coast market, first

phase of digital conversion program complete.

• Expanded sales representation providing extended network coverage.
• Continue to maintain a high quality static portfolio.

Investment in digital innovation and operations.

• Launched the Digilab - dedicated technology hub and platform for

dynamic ad-serving and content management.

• Live platform to schedule client content in real-time.
• Monitoring, management and operational intelligence across the digital

signage network.

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Gold Coast Peninsula Link Fortitude Valley

Digilab

Fairfax – Dynamic Feeds Featuring live headlines from The Age Newspaper as news broke. Fairfax were able to update copy and broadcast dynamic content in a matter of seconds as the day’s stories unfolded. Lazy Yak – Weather Triggers The campaign employed real time weather feeds, sourced from the Bureau of Meteorology, to dynamically change the Lazy Yak creative based on the temperature at each digital billboard location. Star Wars – Social Media Integration Consumers were able to vote for #lightside or #darkside via Twitter and Instagram with the results broadcast live across the QMS digital network.

Weather Triggers Social Media Dynamic Feeds

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Wind Rain

New Zealand - Leading position in growth market

Leading presence established in New Zealand.

• iSite delivered a leading market position.
• Opportunity to leverage QMS’ digital development and marketing

capability.

• Auckland Transport concession provides access to multiple high traffic

platforms. iSite integration successfully completed.

• Acquired in December 2015.
• Rebranded to QMS NZ, relaunch well received by advertisers.
• Capitalising on digital opportunity – 8 new landmark digital billboards

switched on since acquisition.

• Has performed ahead of initial acquisition guidance.

Auckland Transport implementation underway.

• As previously highlighted, contract commenced later than initially

forecast and handover of assets has been more gradual than anticipated, impacting FY16 contribution.

• Rollout of digital network across major train, bus and ferry terminals

commenced in H2 FY16.

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Auckland | NZ

Asia Pacific – Strategic position in key market

Asia – Indonesia

• Strategic position in attractive Asian market.
• Successfully developed Bali Airport International & Domestic

terminals, completed in February 2016:

• 50 portrait digital screens and 21 lightboxes throughout the

terminals.

• 22 landscape digital screens at baggage carousels.
• 3 video walls.
• Complemented by strategic assets in Jakarta and other major

cities in Indonesia.

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Bali International Airport

FY17 Outlook

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QMS – Unlocking additional value

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Opportunity to unlock additional value from QMS’ platform and capabilities through complementary channels, targeted and customised content, supported by data and analytics. QMS is focused on being integral to the ‘Digital Media Screen Stack.’

FY17 Outlook

• Strong Out of Home market growth underpinned by:
• Disruption of traditional media.
• Growth in outdoor audiences:
• CY15 market growth, 17% in Australia and 12% in New Zealand.
• H1 CY16 up 18% in Australia and New Zealand.
• Advertisers continuing to embrace digital across multiple platforms.
• Well placed to deliver strong revenue and earnings growth:
• Strong pipeline of new premium landmark digital signs - 21+ new signs in FY17, 4 already operational, 15 permitted.
• Full year contribution from acquisitions, FY16 digital conversions, Auckland Transport and Bali Airport concessions.
• QMS forecasts FY17 EBITDA of $35m.
• Dividend policy remains unchanged – 30-50% of NPAT.

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Appendix

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FY16 Financial Results – Reconciliation of Statutory to Underlying results

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FY16 non-underlying items of $(0.3)m refer to:

• Revenue relating to reductions in deferred and contingent consideration ($2.1m).
• Costs relating to $0.7m acquisition transaction costs and $1.1m restructuring and integration costs.

2016 2016 2016 June year end ($million) Actual Statutory Non-underlying revenues and costs Actual Underlying ($ million) ($ million) ($ million)

Revenue 111.8 (2.1) 109.7 Total Costs (84.7) 1.8 (82.9) EBITDA 27.1 (0.3) 26.8

Important notice

QMS Media Limited’s Financial statements for the period ended 30 June 2016 are presented in accordance with Australian Accounting Standards. The company has chosen to include certain “non-financial IFRS” financial

• information. The Directors believe this non-IFRS financial information provides

useful information to users in measuring financial performance, and allows investors to compare the performance of the business to the pro forma financial information outlined in the Prospectus. Non-IFRS and pro forma measures have not been subject to review or audit. Glossary: EBIT: earnings before interest and tax EBITDA: earnings before interest, tax, depreciation and amortisation NPAT: net profit after tax (after minorities)

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Melbourne

Important notice and disclaimer

This document is issued by QMS Media Limited ACN 603 037 341 (“QMS”) to provide summary information about QMS and its associated entities and their activities as known by QMS at the date of this document. The information contained in this document is of general background and does not purport to be complete. The information set out in this document does not constitute or purport to be a recommendation by QMS or any other person to buy or sell securities and has been prepared without taking into account the objectives, financial situation or needs of any recipient or other person. The information in this document does not constitute financial product advice (nor investment, taxation or legal advice). This document presents financial information on both a statutory basis (prepared in accordance with Australian Accounting Standards that comply with International Financial Reporting Standards) as well as information provided on a non-IFRS basis. The distribution of this presentation including in jurisdictions outside of Australia may be restricted by law. Any person who receives this presentation must seek advice on and observe any such restrictions. This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities in any jurisdiction and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. This presentation may not be distributed or released, directly or indirectly, in the United States. QMS does not represent or warrant that this document is complete or that it contains all material information about QMS or that a prospective investor may require in evaluating a possible investment in QMS. Nothing contained in this document nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee, whether as to the past, present or the future. To the maximum extent permitted by law, QMS, its respective officers, employees, related bodies corporate, affiliates, agents or advisers expressly disclaims any and all liability (including without limitation for negligence) for any statements, representations or warranties or in relation to the accuracy or completeness of the information, statements, opinions or matters, express or implied, contained in, arising out of or derived from, or for omissions from, this document including, without limitation, any financial information, any estimates or projections and any other financial information derived therefrom. In particular, this document does not constitute, and shall not be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance or activities of QMS. This document contains certain forward-looking statements and opinions (including forecast financial information) which are provided as a general guide only and should not be relied on as an indication or guarantee

• f future performance which involves known and unknown risks, uncertainties and other factors, many of which are outside the control of QMS and which may cause actual results, performance or achievements to

materially differ from any results, performance or achievements expressed or implied by forward looking statements and opinions. Neither QMS or any other person makes any representation or gives any guarantee

• r assurance that the occurrence of any event expressed or implied by any forward-looking statement will actually occur. Past performance is not necessarily a guide to future performance and no statement,

representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward looking statements, forecast financial information or other forecast. All figures in this document are in Australian dollars (AUD) unless stated otherwise. The information in this document remains subject to change without notice. This presentation should be read in conjunction with QMS periodic and continuous disclosure announcements lodged with ASX, which are available at www.asx.com.au

QMS Media Limited | 2016 Financial Year Results | 28

Thank You