“While revenue and profits predictably declined, our decisive early action to raise additional equity, reduce costs and capital expenditure and manage cash flows has reduced debt by 67 per cent and positioned the company well for the future,” says CEO Brendon Cook. Road (Billboard) assets were the outdoor advertiser's best performing format.
In its financial results announced to the ASX for the half year ended 30 June 2020 (“1H20”), oOh!media Limited said revenue declined by 33% to $205.0 million.
Underlying EBITDA of $10.8m compared to $56m in the prior corresponding period. Underlying NPATA loss of $16.9m compared to $18.2m profit in prior corresponding period. Net debt was $115.2m (down 67% from 31 December 2019); cash on hand was $125.1m at 30 June with over $230m in available undrawn facilities. Cashflow from operations $183.6m, and $86.2m after accounting for fixed rent payments
Reported Net Loss after Tax was $27.5m (post AASB16).
In a statement, oOh! said it had maintained its leading market share in Australia and New Zealand Out of Home markets and strengthened its balance sheet, focusing on cost reduction and cash management.
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| "Audiences starting to bounce back": Brendon Cook, CEO oOh!media |
Chief executive officer Brendon Cook said COVID-19 restrictions across Australia and New Zealand caused an unprecedented decline in Out of Home audiences. Combined with the general economic slow-down, this caused a significant decline in revenue for the second quarter. However, oOh! was quick to respond by implementing measures to manage through the current volatility while ensuring the business remains well positioned to benefit from longer term structural growth in Out Of Home markets.
“Although we are seeing national audiences starting to bounce back, Out of Home has been impacted disproportionately by the COVID-19 restrictions in people movement compared to other sectors, resulting in the market declining by 36% in Australia and 41% in New Zealand," Cook said.
“In response, our immediate focus was to strengthen our balance sheet, reduce our fixed cost base and optimise our organisational structure to address these challenges head on. The completion of the successful equity raising in April strengthened our financial position which we have further boosted with a strong focus on cash management resulting in a gearing ratio (net debt/EBITDA) of 1.2 times at June 30 which is comfortably within our covenants.
“We continue to have constructive discussions with our commercial partners, which delivered $17 million in fixed rent savings into the second quarter without oOh! releasing any material sites during the period. Meanwhile operational expenditure declined by $12 million while reducing our capital expenditure by $19 million compared to prior half year."
Cook said Out of Home remains a highly effective medium to deliver effective national broadcast reach in all markets during this period and beyond.
“As we have seen in New Zealand, audience growth has recovered strongly which has led to a 36% increase in our revenue in July from June, although the latest lockdown may affect the current quarter. Using advanced mobile data we can also see that Out of Home audiences are returning across Australia when looked at nationally, although of course some areas are still heavily impacted.
“Even with Victoria in lockdown and other movement restrictions, oOh! is still able to reach over +370 million contacts per week nationally across our billboards and shopping centre networks alone, which doesn’t include our other formats such as street furniture.”
Despite the challenges caused by COVID-19, Cook said the longer term fundamentals for Out of Home remain positive. “Our strategy remains focused on capitalising on these key structural drivers of growth and leveraging our diverse product portfolio, backed by data, to deliver results for advertisers. We continue to lead the industry in creating a new media business and we are uniquely positioned to help drive the Out of Home industry’s share of overall media spend over 7% in 2019 to 10% in the next few years."
Commute
Commute, which includes the Company’s rail assets in the major public transport markets of Sydney and Melbourne, was impacted significantly by restrictions in people movement in the second quarter. Revenue declined by 35% to $72.7 million.
Road
The Group’s Road (Billboard) assets were the best performing format. Revenue was impacted initially but recovered strongly in June as some restrictions were eased. Revenue declined by 19% to $54.6 million.
Retail
Retail revenue declined by 34% to $40.9 million. Performance in this segment was mixed with smaller/grocery weighted centres performing better than larger destination / Tier 1 shopping centres which were more impacted by movement restrictions.
Fly
As expected, the severe restrictions in air travel resulted in a significant impact in revenue for Fly which declined by 45% to $18.0 million. oOh!’s airport assets are weighted more towards domestic travel which can be expected to recover more quickly than international travel when COVID-19 air travel restrictions are lifted and include key major commuter route road facing sites in the Sydney Airport precinct.
Locate
Locate revenue was impacted by the closure of office buildings and employees working from home. Revenue declined by 51% to $11.2 million.
Dividend
The Company announced at the time of the equity raising on 26 March 2020 that following completion of the DRP for the final dividend for CY19, the Board would temporarily suspend future dividends.
Outlook for FY20
Trading in 3Q FY20 continues to build with August 2020 pacing at 60% of August 2019 compared to May 2020 which was pacing at 25% of May 2019. Trading conditions remain uncertain and difficult to forecast and the Company does not consider it appropriate to provide earnings guidance for FY20, Cook said.
