2017 FINANCIAL HALF YEAR RESULTS PRESENTATION 27 FEBRUARY 2017 - - PowerPoint PPT Presentation

2017 FINANCIAL HALF YEAR RESULTS PRESENTATION

27 FEBRUARY 2017 BARCLAY NETTLEFOLD, CEO PETER CARGIN, CFO

AGENDA

• HIGHLIGHTS
• OPERATIONAL REVIEW & STRATEGY
• H1 FY17 FINANCIAL RESULTS
• FY17 OUTLOOK
• APPENDIX

THE MURRAY | WA

QMS Media Limited | H1 2017 Financial Year Results | 2

HIGHLIGHTS

THE KING | VIC

QMS Media Limited | H1 2017 Financial Year Results | 3

H1 FY17 FINANCIAL HIGHLIGHTS DELIVERING ON RESULTS

78% TO $79m

QMS Media Limited | H1 2017 Financial Year Results | 4

UNDERLYING EBITDA NPAT NPATA CASH CONVERSION % NET DEBT / EBITDA DIVIDEND CPS REVENUE 67% TO $17.9m 32% TO $7.5m 0.5x 0.8

FY17 UNDERLYING EBITDA GUIDANCE

51% TO $10.3m 70bps TO 90% $37.0m

• NB. Percentage increase is based on prior comparative period

H1 FY17 OPERATIONAL HIGHLIGHTS DELIVERING ON DIGITAL & ACQUISITIONS

Delivery on strong digital pipeline in Australia and New Zealand.

• 16 landmark digital billboards delivered H1.
• On track for 68+ by end FY17.

QMS Media Limited | H1 2017 Financial Year Results | 5

ACQUISITIONS DATA, TECHNOLOGY & ANALYTICS DIGITAL

Investment in research, data and analytics via Datalab and Digilab expansion. Launch of QMS Sport as part of multi-platform offering:

• OAMM, LIVE Docklands and Sportsmate.
• Coordinated sales platform across outdoor, stadia, social,

mobile and experiential asset bases.

Source: OMA, OMANZ

QMS REVENUE GROWTH OUTPERFORMING IN GROWING MARKETS

QMS Media Limited | H1 2017 Financial Year Results | 6

66%

• f QMS Australian

media revenue

40%

• f Australian OOH

industry revenue

VS

DIGITAL REVENUE

Source: OMA – Dec 2016

OPERATIONAL REVIEW & STRATEGY

THE ICB | QLD

QMS Media Limited | H1 2017 Financial Year Results | 7

FY 17 STRATEGIC PRIORITIES UNLOCKING ADDITIONAL VALUE

QMS Media Limited | H1 2017 Financial Year Results | 8

MULTI-PLATFORM ENGAGEMENT: CONTENT CREATION & APPLICATIONS:

• Expand content capabilities across new and existing

portfolio to engage with audiences QMS Sport

• OAMM, LIVE Docklands, Sportsmate
• Increased digital screen coverage

DATA, TECHNOLOGY & ANALYTICS:

• Investment in Research, Data and Analytics.
• Launched the Datalab – epicentre of QMS’

measurement and audience analysis.

• Provides accountable, engaging audience driven

insights offering clients tailored solutions to ensure effective outdoor campaigns.

DIGITAL DEVELOPMENT STRONG PIPELINE

Delivering strong digital pipeline in Australia and New Zealand.

• 16 new digital sites delivered in H1 FY17.
• Additional 19 digital sites approved for development.
• Significant uplift in digital revenue contribution – now 43% of

Total Group Media Revenue. Ongoing small format development complements landmark digital presence in strategic markets.

• 3,531 digital screens across Gold Coast Street Furniture, Bali

Airport, Auckland Transport Commuter Network and Sports IPTV screens. Dynamic campaign capabilities driven by Digilab.

• Now with physical presence in Melbourne and Sydney to

showcase capabilities and foster campaign innovation.

QMS Media Limited | H1 2017 Financial Year Results | 9

GROWTH IN DIGITAL MEDIA REVENUE

H1 FY16 H1 FY17

AUSTRALIA NEW ZEALAND

H1 FY16 H1 FY17

DIGITAL DEVELOPMENT PIPELINE

NEW SITES DELIVERED TO PLAN

QMS Media Limited | H1 2017 Financial Year Results | 10

BREAKY CREEK | QLD THE BURLEIGH | QLD AUCKLAND | NZ WELLINGTON | NZ THE GATE | VIC

Ongoing enhancement of Australian portfolio, coverage and audience reach.

• Developments, conversions and acquisitions providing improved coverage in

major capital cities and regional centres.

• Quality static inventory delivering results.

Expansion into Sports advertising provides access to high-value, engaged audiences in key markets.

• Investments in OAMM, LIVE Docklands and Sportsmate completed in H1.
• Complements QMS’ existing portfolio:

 Extension of dynamic digital capabilities across broader Sports asset base.  Provides access to millions of engaged sports attendees and broadcast viewers each year.  Enhances coverage in key markets (Sydney, New Zealand).  Ability to foster deep audience engagement via co-ordinated campaigns across outdoor and in-stadia assets, digital (including social and mobile integration) and experiential.

• Integration progressing well, new contracts/extensions secured since

acquisition:

• Sydney Cricket Ground Trust.
• Netball Australia.
• Australian Rugby Union.

AUSTRALIA EXPANDING GEOGRAPHICAL COVERAGE AND AUDIENCE

QMS Media Limited | H1 2017 Financial Year Results | 11

NEW ZEALAND STRENGTHENING DIGITAL MARKET POSITION

QMS Media Limited | H1 2017 Financial Year Results | 12

Leading position in landmark digital billboards.

• Landmark digital pipeline progressing well, with 9 new landmark digital

billboards delivered H1 FY17.

• Includes some of New Zealand’s most iconic locations:
• Britomart Towers
• Downtown
• Fanshawe Blades

Ongoing rollout of Auckland Transport.

• Commuter Digital Network ready for launch across major train, bus and

ferry terminals in H2 FY17.

• First phase development of 39 fully animated, small format digital

screens impacting commuters entering and exiting the terminals as well as on platform.

• Multi-platform transit media solution providing touchpoints across a world

class digital network, in addition to billboards and experiential media.

COMMUTER NETWORK BRITOMART TOWERS

H1 FY17 FINANCIAL RESULTS

FANSHAWE BLADES | NZ

QMS Media Limited | H1 2017 Financial Year Results | 13

STRONG RESULT DRIVEN BY DIGITAL ROLLOUT AND ACQUISITIONS

• Result underpinned by the continued growth in our digital portfolio and

contributions from acquisitions:

• Revenue increased 78% to $79m.
• Underlying EBITDA increased 67% to $17.9m.
• Underlying EBITDA margin 23%, reflecting contribution from New Zealand

and investment in overhead.

• NPATA increased 51% to $10.3m.
• Significantly stronger operating cash conversion in H1 FY17 vs H1 FY16.
• Interim fully franked dividend of 0.8 cents per share (cps) declared, consistent

with payout ratio range.

Note: NPATA defined as Net Profit After Tax, before Amortisation Underlying numbers used throughout this presentation exclude non-underlying costs as detailed in the Appendix on Slide 24 in order to provide a more meaningful comparison of the performance of the business.

QMS Media Limited | H1 2017 Financial Year Results | 14

H1 FY17 H1 FY16 Actual Actual Change ($ million) ($ million) % Revenue - statutory 79.0 44.4 78% EBITDA 17.3 9.9 75% EBITDA - underlying 17.9 10.7 67% EBITDA Margin - underlying 23% 24% NPAT 7.5 5.7 32% NPATA 10.3 6.8 51% EPS (cents) 2.3 2.2 5% Operating Cash Conversion % 90% 19% Net Debt / EBITDA ratio (x) 0.5x 0.2x Interim dividend (cents per share) 0.8

EXPANDED PLATFORM DRIVING SIGNIFICANT REVENUE AND EARNINGS GROWTH

• Revenue and earnings uplift reflects:
• Delivery on digital development strategy.
• Expanded platform, including contribution from acquisitions.
• Slight reduction in gross profit margin to 49.0%, reflecting the increased contribution

from New Zealand.

• Increase in operating expenses reflects the ongoing investment in systems and

resources to support our growth initiatives.

• Depreciation and amortisation increase due to the digital rollout and acquisitions.
• Finance costs reflect increased borrowings and include a one-off write-off of

capitalised borrowing costs following the refinancing of banking facilities.

• OAMM acquisition completed in December 2016 contributed $0.2m EBITDA.
• 1. Non-underlying items: H1 FY17 relates to acquisition, restructuring and integration costs $0.6m.

QMS Media Limited | H1 2017 Financial Year Results | 15

H1 FY17 H1 FY16 Actual Actual Change ($ million) ($ million) % Revenue 79.0 44.4 78% Cost of sales (40.3) (21.8) 85% Gross profit 38.7 22.6 71% Gross profit margin 49% 51% Operating expenses (21.4) (12.7) 69% EBITDA 17.3 9.9 75% Non-underlying items1 0.6 0.8 Underlying EBITDA 17.9 10.7 67% Underlying EBITDA margin 23% 24% D&A (5.5) (2.2) 150% EBIT 11.8 7.7 53% Net finance costs (1.7) (0.4) 325% Tax (2.6) (1.7) 53% NPAT 7.5 5.7 32% Amortisation 2.8 1.1 154% NPATA 10.3 6.8 51%

STRONG PERFORMANCE ACROSS AUSTRALIA AND NEW ZEALAND

REVENUE BREAKDOWN

QMS Media Limited | H1 2017 Financial Year Results | 16

• 28% growth in Australia, driven by digital development.
• 513% growth in New Zealand, due to a full period

contribution from the acquisitions and digital development.

• 12% growth in Other (Indonesia), reflecting the Bali Airport

development.

CONTINUED GROWTH ACROSS DIGITAL AND STATIC

REVENUE BY FORMAT

QMS Media Limited | H1 2017 Financial Year Results | 17

• Growth across all revenue categories, in particular landmark digital

and static billboards, reflecting organic growth, inventory development and acquisitions.

H1 FY17 H1 FY16 % Change Landmark digital billboards 61 33 84.8% Small format digital screens 3,531

• n/m

Static billboards 791 691 14.5% Small format static 662

• n/m

STRONG BALANCE SHEET

QMS Media Limited | H1 2017 Financial Year Results | 18

Dec-16 Jun-16 Statutory Statutory ($ million) ($ million) Cash and cash equivalents 22.3 12.6 Trade and other receivables 28.4 23.6 Property, plant and equipment 67.0 56.1 Goodwill and Intangible assets 172.3 133.9 Investments 1.1

• Other assets

24.2 15.2 Total assets 315.3 241.4 Trade and other payables 14.0 11.6 Loans and borrowings 39.6 17.8 Deferred and contingent consideration 24.4 11.0 Provisions 8.7 7.4 Other liabilities 32.3 22.3 Total liabilities 119.0 70.1 Net assets 196.3 171.3 Net Debt (cash) 17.3 5.2 Net Debt / EBITDA ratio (x)1 0.5x 0.2x Net Debt / (Net Debt + Equity) 8% 3%

• Growth in net assets predominantly relates to the OAMM acquisition and

associated capital raising.

• Increase in Net Debt reflects the investment in digital rollout, acquisitions and

payments of deferred consideration.

• Adjusting for OAMM settlement post balance date, Net Debt / EBITDA 0.8x.
• Conservative Net Debt / EBITDA ratio.
• 1. Net Debt / EBITDA ratio (x): For the purpose of the Net Debt / EBITDA ratio calculation at 31 December 2016, a rolling 12 months historical EBITDA has been used, so as to compare the ratio on a consistent basis.

MOVEMENT IN NET DEBT POSITION

QMS Media Limited | H1 2017 Financial Year Results | 19

• Movement in Net Debt

predominantly attributable to acquisitions and continued digital rollout.

• Strong EBITDA contribution
• f $17.3m.
• Capital expenditure of

$12.8m for digital development.

• $24.9m of acquisitions which

includes a number of individual site acquisitions and deferred consideration payments.

• Successful completion of

$19.2m equity raise, net of transaction costs.

• Total bank facilities of

$67.9m available to the Group.

SIGNIFICANT IMPROVEMENT IN CASH CONVERSION

• H1 FY17 operating cash conversion 90%, with continued focus on

working capital management. Prior corresponding period was impacted by New Zealand acquisitions.

QMS Media Limited | H1 2017 Financial Year Results | 20

H1 FY17 H1 FY16 Actual Actual ($ million) ($ million) EBITDA 17.3 9.9 Non-cash items in EBITDA 0.7 0.5 Change in working capital (2.5) (8.5) Operating cash flow 15.5 1.9 Operating cash flow conversion % 90% 19% Capital Expenditure (12.8) (7.6) Acquisitions (24.9) (45.3) Investing cash flow (37.7) (52.9) Net proceeds from issue of shares 19.2 48.3 Dividend paid (4.5)

• Net proceeds from borrowings

18.5 (3.6) Income tax and interest paid (1.9) (0.3) Financing cash flow 31.3 44.4 Net cashflow 9.1 (6.6)

THE BRIGHTON | VIC

QMS Media Limited | H1 2017 Financial Year Results | 21

FY17 OUTLOOK

QMS Media Limited | H1 2017 Financial Year Results | 22

FY17 OUTLOOK

• QMS increases its FY17 EBITDA guidance to $37 million,

including approximately a $1 million contribution from the Sports acquisitions (before transaction costs).

• This guidance reflects:
• Ongoing strength of Out-of-Home fundamentals in Australia

and NZ.

• Delivery of upgraded landmark digital billboard target of 68+

in FY17, plus full year contribution from billboards switched

• n in FY16.
• Full year contributions from FY16 acquisitions, Auckland

Transport and Bali Airport concessions.

• Advertising market seasonality, with underlying revenue and

earnings more weighted to H1.

• Ongoing investment in corporate overheads, reflecting

previously highlighted commitment to systems, resources and capability development.

• Dividend policy remains unchanged – 30-50% of NPAT, weighted

to second half.

• We will continue to look for strategic opportunities where we

can add value for shareholders.

DOWNTOWN | NZ

THE FLINDERS | VIC

QMS Media Limited | H1 2017 Financial Year Results | 23

APPENDIX

QMS Media Limited | H1 2017 Financial Year Results | 24

RECONCILIATION OF STATUTORY TO UNDERLYING RESULTS

H1 FY17 H1 FY17 H1 FY17 Actual Statutory Non-underlying items Actual Underlying ($ million) ($ million) ($ million)

Revenue 79.0

• 79.0

Total costs (61.7) 0.6 (61.1) EBITDA 17.3 0.6 17.9

• H1 FY17 non-underlying costs of $0.6m relates to

restructuring, integration and acquisition transaction costs.

THANK YOU