QMS delivers FY17 guidance and achieves record full year result

QMS Media Limited (ASX: QMS) has announced its financial results for the 12 months to 30 June 2017 (FY17).

Financial highlights:

• Revenue up 51% to $168.6
• Strong Digital contribution – 57% of Group Media
• Underlying EBITDA up 40% to $37.5 million (guidance: $37.0 million).
• Statutory NPAT up 26% to $16.7
• Final dividend of 1.2 cps (fully franked), total FY17 dividend up 33% to 2.0 cps (fully franked).
• Dividend payout ratio of 40% of FY17 NPAT, consistent with target 30% – 50% NPAT payout

Operational highlights:

• 30 new landmark digital screens installed, bringing total network to 75 across Australia and New Zealand (above FY17 target of 68+).
• Significant progress in broadening geographic footprint to provide a compelling offer to advertisers across key
• QMS Sport acquisitions successfully integrated, with several new contracts/extensions secured and FY17 EBITDA contribution of $1.5 million exceeding initial guidance of $1
• Investment in digital, data and analytics continues, building QMS’ capabilities to deliver high-value, targeted campaigns across multiple

Commenting on the results, QMS Chief Executive Officer Barclay Nettlefold said:

“Our record FY17 performance was driven by a relentless focus on our landmark digital rollout and the contribution from our New Zealand and Sports acquisitions. In the last two years, we have successfully executed on our growth agenda, tripling our portfolio of premium landmark digital sites and extending our geographic footprint in key markets.”

“We see a lot of opportunity to continue to grow QMS Sport with advertisers valuing the ability to target highly- engaged sports fans via broadcast, digital viewership and live attendance. We have kicked some major goals in the second half, with new contracts secured with Suncorp Netball, Sydney Swans and Virgin Australia Supercar Championship, as well as contract extensions with Australian Rugby Union and major stadiums such as AAMI Park, Suncorp and Allianz Stadiums and the Sydney Cricket Ground.

“During the year, we switched on our first landmark digital sites in Sydney and Perth, and in July, we secured the Canberra Airport concession, further expanding our footprint and enabling us to develop the only landmark digital signs in the highly-regulated ACT market.

“Strong Out of Home industry growth continued in FY17, with Roadside Digital – the core of QMS’ portfolio – continuing to outperform. Advertisers are increasingly recognising the value of digital, which will only become more compelling as advancements in technology, data and analytics support greater engagement between advertisers and their target audiences.

Result commentary

Strong earnings and revenue growth was driven by our landmark digital rollout, a full period contribution from the New Zealand acquisitions completed in FY16, and a strong part-year contribution from the QMS Sport acquisitions which were successfully integrated in the second half.

The underlying EBITDA margin of 22% (FY16: 24%) reflects changes in QMS’ portfolio mix. Investment continued in systems, data and resources to support the business’ ongoing growth.

Strong EBITDA cash conversion was maintained (FY17: 99%, compared to 90% in the pcp), with a continued focus on working capital management. Capex was relatively flat year-on-year, reflecting the rollout of the digital development pipeline. Net debt increased to $45.8 million or 1.2x underlying EBITDA during the year, as a result of planned investment in the digital rollout. The Group remains well capitalised.

Dividend 

The Board has declared a final dividend of 1.2 cents per share (fully franked), bringing the total FY17 dividend to 2.0 cents per share (fully franked). The dividend payout ratio of 40% of NPAT is consistent with QMS’ policy to pay dividends of between 30% and 50% of NPAT.

FY18 outlook

QMS expects FY18 EBITDA to exceed $43m.