o OH!MEDIA ANNUAL REPORT 2020 2020 ANNUAL REPORT CONTENTS 2 COMPANY OVERVIEW 4 2020 SUMMARY 6 CHAIR REVIEW 8 CEO REVIEW 11 OPERATING AND FINANCIAL REVIEW 18 BOARD OF DIRECTORS 21 DIRECTORS’ REPORT 31 REMUNERATION REPORT 49 SUSTAINABILITY REPORT 65 FINANCIAL STATEMENTS 112 DIRECTORS’ DECLARATION 113 INDEPENDENT AUDITOR’S REPORT 119 SHAREHOLDER INFORMATION 122 GLOSSARY 124 CORPORATE DIRECTORY The Annual Report was authorised for issue, in accordance with a resolution of the Directors. The Directors have the power to amend and reissue the Annual Report. Through the use of the internet, we have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the Company. All media releases, financial reports and other information are available at the Investors section on our website: ww w.oohmedia. com.au. 3 011 COMPANY OVERVIEWoOh!media is a leading Out of Home media company that is enhancing public spaces through the creation of engaging environments that help advertisers, landlords, leaseholders, community organisations, local councils and governments reach large and diverse public audiences. The company’s extensive network of more than 37,000 digital and static asset locations includes roadsides, retail centres, airports, train stations, bus stops, office towers, cafes, bars and universities. Listed on the ASX, oOh! employs around 800 people across Australia and New Zealand, and had revenues of $426.5 million in 2020 and $649 million in 2019. The company invests strategically in technology, and is pioneering the use of sophisticated data techniques that enable clients to maximise their media spend through unrivalled and accurate audience targeting. oOh! also owns digital publisher Junkee Media and printing business Cactus. Find out more at oohmedia.com.au BILLBOARDS OFFICE FLY Billboards deliver impact, dominance Office has over 3,500 digital advertising Fly spans 16 cities, 20 terminals, and scale across 3,850 classic and displays in over 640 prominent 16 Qantas Lounges and Qantas Inflight digital sites in all metro and regional Australian office towers, which house Entertainment. With a combination markets, including the most sought 4,900 different organisations. Office of digital, static, video pre-rolls, WIFI after sites in the country. Billboards reaches 3 million professionals, and activations, Fly engages affluent are the original Unmissable format enabling brands to target CBD business professionals on their end for building brands, launching professionals while they are at work. to end journeys throughout all major products, call to actions, directional Australian airports. and informative messaging, path to purchase and proximity. RETAIL CAFÉ STREET Retail is the largest retail advertising Café is Australia’s only digital café Street Furniture provides advertising network in Australia with multi formats media portfolio, connecting with on bus shelters and roadside locations in over 500+ shopping centres, over 800,000 of the metro workforce Australia-wide. With 12,700 classic reaching 12 million unique shoppers during their daily routine and ‘me time’. poster-format sites, and over 400 each month. Including local, medium Available in over 400 Australian city digital sites, Street Furniture has the and large shopping centre types, with and urban cafés, brands are able to flexibility and scale to provide precision 2.2 billion shopper visits each year connect with café audiences through targeting to the right audience at equating to over $82 billion in spend, digital displays, brand experiences, the right location during their daily Retail can reach a breadth of shoppers branded coffee cups, mobile journeys. that no-one else can. activations and Wi-Fi products. RAIL STUDY VENUE Rail connects with 14.5 million commuter Study is the most powerful and Venue is the original social network, journeys each week in 41 CBD and inner simplest way to connect and engage with 220 national metro venues where city stations in Sydney and Melbourne, with students across Australia at scale. screens are positioned behind, above across the largest digital rail offering With over 100 Uni and TAFE campuses, or next to the bar area showcasing in Australia. With full digital animation Study reaches over 1.2 million students entertaining Bite TV content. A place across portrait, large format and WOW with 220 digital screens and 120 static where Australians gather to eat, drink walls, as well as station domination and panels located in student hubs on and socialise, allowing brands to experiential opportunities, Rail ensures campus. connect with a relaxed and receptive brands connect with professional affluent audience. commuters on their daily journeys. 2 3 2020 SUMMARY FINANCIAL SUMMARY The COVID-19 pandemic and government containment responses adversely impacted Out of Home disproportionately compared to other media. While conditions remain uncertain, the Company finished 2020 with a strong audience recovery in its key formats of road, retail and street furniture in Australia and New Zealand, and in a strong financial position with net debt reduced by $243 million on the prior year. GROUP FINANCIAL RESULTS – Pre-adoption of AASB16 REVENUE GROSS PROFIT UNDERLYING1 EBITDA $426.5 $180.2 $63.2 MILLION MILLION MILLION ^ ^ ^ 34% 36% 55% NET DEBT LEVERAGE RATIO NPAT $111. 2 1.8 ($23.9) MILLION TIMES MILLION ^ ^ 69% FROM 2.6 TIMES 188% 1. Underlying results exclude the impact of integration related expenses and non-cash impairment expenses in the current year, and acquisition and integration expenses in the prior year. Underlying EBITDA is disclosed in Note 4 ‘Segment information’ of the Annual Report. Refer to the same Note 4 for a reconciliation between information on reportable segments to IFRS measures. Underlying also excludes the impact of AASB16 4 OPERATIONAL HIGHLIGHTS Notwithstanding the challenges of 2020, oOh! continued to implement its strategy to deliver the most diverse and integrated Out of Home network to connect audiences to advertisers. We continue to deliver ground-breaking and innovative campaigns for clients across our network in Australia/New Zealand. INCREASED MARKET SHARE UPGRADES TO KEY DIGITAL SITES oOh! increased market share by refining its offer oOh! continued to develop key sites to protect market to advertisers through leveraging the strength of share, including two new Signature Series digital signs; our suburban and regional network. The business “The King” outside Sydney Airport and a large format continued to invest in key assets through the cyclical digital sign on Military Road in Mosman. audience and advertising revenue challenge created by COVID-19. The Company is confident in the long term The sites are highly desirable, in-demand assets for growth of our industry as audiences recover from the premium, well-known brands and advertisers seeking pandemic impact. unrivalled impact and deeper engagement for their brands. BALANCED, DIVERSE AND LONG TERM LEASE GROUND-BREAKING CAMPAIGNS MATURITY PROFILE In CY20 oOh! continued to deliver ground-breaking and oOh! continues to maintain a balanced and diverse lease award-winning campaigns for clients, across multiple maturity profile with nearly 60 per cent of pre COVID-19 formats demonstrating the diversity, reach and 2019 revenue by concession attached to contracts that effectiveness of the oOh! portfolio. expire beyond 2023. During CY2020, oOh! continued to implement its strategy of building the most diverse portfolio backed by data-led innovation in the Out of Home industry. 5 CHAIR REVIEW Our strategy remains focused on capitalising on the positive key structural drivers of growth in Out of Home and leveraging our diverse product portfolio, backed by data, to deliver results for advertisers and to create value for our shareholders. INTRODUCTION As a result of these initiatives, oOh! Underlying EBITDA (pre AASB16) declined successfully addressed the myriad by 55% to $63.2 million. 2020 was in many ways an challenges faced over the past year. Our unprecedented and very challenging continued focus is to ensure the strength The Net Loss After Tax (pre AASB16) was year. COVID-19 had a major impact on of the business is maintained in the $23.9 million compared to a Net Profit advertising spend and the Out of Home short term while preserving our assets After Tax (pre AASB16) for the prior year sector was impacted more heavily and resources to ensure revenue and of $27.2 million. than other forms of media, given the earnings recovery as audiences return On a reported basis, (including the significant audience decline as a direct to our advertising environments. adoption of AASB16), Net Loss After Tax result of restrictions on the movement of was $35.7 million. people caused by the pandemic. OVERVIEW OF FINANCIAL RESULTS A detailed explanation of the financial In response, our priority was to ensure results is contained within the Operating the Company’s balance sheet position In a very challenging market due to and Financial Review. remained sufficiently robust to manage the pandemic, total revenue in CY20 through the short term volatility whilst decreased by 34% to $426.5 million. As supporting our strong competitive people movement restrictions were CAPITAL MANAGEMENT position for the medium term. relaxed in the third quarter, revenue in the key formats of Road, Retail, Street Given the significant uncertainty caused At the same time, we focused on Furniture and New Zealand started to by the onset of COVID-19, we responded reducing the Company’s costs to adjust recover. However, the Fly, Rail and Office quickly to ensure the Company was to the significantly reduced revenue formats remained impacted by travel equipped to manage through the environment with a specific emphasis and working restrictions. short term volatility whilst remaining in on negotiating rent relief from our a strong competitive position for the commercial partners and swiftly and The 34% decline in revenue resulted in a medium term. significantly reducing the Company’s gross profit of $180.2 million, which was capital and operating expenditure for down 36% on the prior year.