Good morning, everyone. My name is Tony Faure. I'm the chair of oOh!media Limited. It's now the scheduled time for the meeting, and I am advised that the necessary quorum is present. I therefore have the pleasure of declaring the 2026 oOh!media Limited Annual General Meeting open. I would like to begin by acknowledging the traditional custodians of the land on which we meet today, the Cammeraygal people of the Eora nation. I pay my respects to their elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander peoples joining us today. I live on Gadigal land, work here on Cammeraygal land in North Sydney, and I was raised in London in the U.K., where the history and presence of indigenous communities is far less visible and less formally acknowledged.
Living and working in Australia has given me a deeper appreciation for the enduring connection that First Nations peoples have to country, a connection that spans more than 60,000 years. It's a privilege to live and work on this land, and I acknowledge the importance of continuing to listen, learn, and reflect. I'd like to thank our shareholders for their attendance, whether it's in person here at oOh!'s North Sydney office or listening to the audio of the meeting through the webcast. Today, I'm joined by my fellow directors, CEO and Managing Director James Taylor, and non-executive directors Philippa Kelly, Tim Miles, who is joining us online. Have we got Tim? On audio, sorry, Jo Pollard and David Wiadrowski.
Also here today is Chris Roberts, our Chief Financial Officer and Joint Company Secretary, Jonathan Swain, our Joint Company Secretary, and oOh!media's external auditor, KPMG, represented by Audit Partner Patrick Maloney. I'll start today with a recap of 2025, which was a year of execution and renewal for oOh!. I'll move to an update on recent announcements regarding non-binding indicative offers for the company. As we navigated challenging macroeconomic and advertising market conditions, we focused on executing our growth strategy and announced a leadership transition. In April 2025, Cathy O'Connor advised the board of her intention to step down as CEO after more than four years leading the company. The board thanks Cathy for her leadership of oOh! through what was a transformative period.
We were consciously looking for a new CEO who could drive execution and transformation over the next several years, and we're delighted to be able to announce the appointment of James Taylor in August. James joined oOh! on the 8th of December after an orderly transition. He brings a wealth of media and commercial experience and a track record of proven end-to-end execution, most recently from his roles as Managing Director and CFO of SBS, having previously worked at Deloitte, British Telecom, and the ABC. We are pleased to report that he is quickly making a big impact. James has accelerated execution of our strategy and focused on operating efficiency and expense discipline. He will make his first AGM address shortly, but on behalf of the board, we welcome James to oOh! And look forward to continuing to work in partnership to grow the business and drive operational excellence.
Moving on to our performance for the year, oOh! Entered 2025 with strong momentum, double-digit revenue growth, and adjusted EBITDA margin expansion in the first half. This reflected disciplined operational focus and execution from the business. As a result, we delivered total revenue growth of 9% to AUD 691.4 million for 2025, with adjusted underlying EBITDA increasing by 8% to AUD 139.1 million and adjusted underlying NPAT up 7% to AUD 63 million. In the second half of 2025, to accelerate performance improvement, we strengthened our sales execution by aligning sales and marketing under one structure and enhancing our senior sales team, which drove improved customer wins and engagement.
We advanced key asset rollouts, with Sydney Metro trains continuing to perform exceptionally well, while the rollouts for Waverley and Woollahra Councils are nearly complete, giving us a strong footprint across the high-value Eastern Sydney corridor. We also launched our Melbourne Metro trains assets, where early performance is exceeding expectations. oOh! Secured several landmark contract wins in 2025, including Transurban's 42 premium motorway sites across Brisbane and Melbourne, solidifying our national road leadership, and we won Transport for New South Wales in Sydney Metro, reinforcing our leadership in rail, sorry. We also reset the New Zealand cost base following the non-renewal of the Auckland Transport contract, reflecting our commitment to cost discipline. Statutory NPAT of AUD 16.9 million was down 54%, due largely to a non-cash impairment following the non-renewal of the company's contract with Auckland Transport.
oOh!'s financial position remains strong, enabling the company to invest for profitable growth while delivering returns to shareholders. The board declared a final dividend of AUD 0.04 per share, fully franked, equating to a full year dividend payout ratio of 53% of adjusted net profit for 2025, which is in line with the company's dividend policy of 40%-60% of adjusted net profit. Net debt as at the 31st of December was AUD 112.8 million, and gearing was 0.8x , remaining within the board's target range. In February 2026, we announced an on-market share buyback of up to 10% of the company's issued share capital, reflecting our belief that oOh! shares were materially undervalued given the strong and profitable growth trajectory of the business and attractive market fundamentals.
The board recognizes the importance of growing earnings per share, the share price following the FY 2025 results release represented an attractive opportunity. The buyback has been executed opportunistically, subject to market conditions, and in accordance with oOh!'s capital management framework, which includes maintaining a target gearing level of at or below one times. As we announced last month, after almost 12 years on the oOh! board, including more than eight as chair, I will retire as a director of the company at the conclusion of today's meeting. It's been a privilege to have been part of oOh! since we listed in 2014. As I prepare to retire from the board, I've never been more confident about the strength of the business, its market position, and its future. As part of an orderly transition, the board has appointed Philippa Kelly as Chair elect.
Philippa has served as an independent non-executive director of the company since September 2019, and is currently chair of the Talent and Culture Committee. In addition to her deep knowledge of the company, Philippa brings extensive executive and non-executive experience across the real estate, asset management, and financial services sectors, and is exceptionally qualified to lead the board through the next chapter of oOh!'s e volution. I note the recent announcements regarding the receipt of unsolicited, non-binding indicative offers, one from Pacific Equity Partners to acquire 100% of the fully diluted share capital of the company for AUD 1.40 per share, and another from I Squared Capital to acquire 100% of the company at AUD 1.45 per share. oOh! is also engaging with other parties regarding a potential change of control transaction.
The board, together with our advisors, has considered and unanimously determined that these offers do not adequately reflect the intrinsic value of oOh!. However, we are prepared to engage with all parties to assess whether any proposal may emerge that is capable of being recommended by the board. oOh! will provide parties with access to a limited amount of due diligence information to enable them to assess revised proposals that may be capable of the board's recommendation. We are committed to moving at pace as we evaluate the offers with a firm focus on achieving the best outcome for shareholders. We will update shareholders on this in due course. However, beyond this update, we will not be discussing these matters further today. To close, I would like to reiterate the board's confidence in oOh! and the opportunity ahead for the business.
As is referenced on the slide here, we operate in a sector with compelling long-term growth fundamentals, and oOh! is well-placed to benefit from these. In a dynamic and evolving media landscape, Out of Home remains the fastest growing media sector in Australia and New Zealand, continuing to outpace television, radio, and other channels. This growth is underpinned by structural tailwinds, including urban population growth, ongoing digitization, and increasing advertiser demand for a high impact public environments. oOh! continues to lead the Out of Home category with a multi-format portfolio of more than 30,000 strategic assets, reaching 99% of metropolitan Australians every week. This scale and reach supported a record 16.4 share, 16.4% share of agency media spend in 2025. On behalf of the board, I'd like to thank our leadership team and the entire oOh! team for their passion and commitment to delivering for our clients, partners, and shareholders.
I'd also like to thank you, our shareholders, for your ongoing support. It's been a privilege to serve as chair, and I'm confident the business has a strong future. I'll now hand over to James to provide more detail on operational performance and the outlook for 2026.
Well, good day everyone. I am indeed James. It's a pleasure to be here with you today. Thank you, Tony, for that lovely introduction, and thank you all for joining us, whether you're online or in the room, as I see many people here. Before I begin, I'd also like to congratulate you, Tony, for your tenure as Chair of oOh!, and really thank you for the contribution you made to the whole team and to me as the incoming CEO. You've brought deep experience in media, marketing, and innovation. The business is better for it. Thank you. Equally, can I congratulate you, Philippa, on being named Chair of oOh! and look forward to continuing to work with you and the whole board. In February, I committed to come back to you today with updates in four key areas.
Firstly, an update on our strategy. Secondly, our position in relation to reo, our retail media business. Thirdly, an update on the significant program of work to optimize our operating model and core operating processes. Finally, our approach to improving the performance of our retail Out of Home channel. Now, to help bring that last point to life, I've asked two highly experienced members of our team, Mark Fairhurst, our Chief Revenue Officer, and Bel Harper, Chief Product and Marketing Officer, to speak to you today. Of course, you all know Chris Roberts well, our CFO. He'll complete today's presentation with a trading update and outlook. Five months in, I'm more convinced than ever in the quality of this business and the size of the opportunity ahead. oOh! has the best Out of Home network in the country, the strongest and most experienced team, and a clear plan.
My job is to accelerate that plan. Out of Home continues to outperform other major media channels. Tony mentioned it captured a record 16.4% of agency media spend in FY 2025. I can add that over the first quarter of FY 2026, the Standard Media Index reports that Out of Home has taken a further 1% share. O ut of Home offers a unique pathway to consumers, placing brands in front of audiences in meaningful real world moments, connecting with them physically and emotionally in ways no other platform can.
At the same time, Out of Home is becoming increasingly distinctive and differentiated, driven by the creative canvas it provides brands and the new performance capabilities afforded by digital measurement and the MOVE currency. The long-term outlook for Out of Home is compelling. Our focus now must be on leveraging that position to drive stronger profitability and long-term value creation.
I said in February I'd come back to you with an update on our strategy. Since then, we've aligned around a clear plan. oOh!'s strategy amplifies the connection between three pillars: our network, our operating model, and our customers. Each pillar reinforces the other, and together they define how we grow profitably. On the left of the screen, you'll see the network pillar, which reflects the imperative to manage our 30,000 assets as a truly connected network. The back-end systems work we've undertaken will enable a much clearer understanding of the impact individual network choices have on broader business returns. oOh! operates the largest Out of Home network in Australia. Over the remainder of FY 2026, we will build on this advantage with a far more sophisticated understanding of network-wide economics, ensuring we maximize the financial performance of this significant and interconnected asset.
On the right of the screen, you see the customer pillar, which describes the vital and ongoing work of becoming more responsive to and interoperable with our customers, winning more business by being easy to buy, faster to respond, and simpler to measure. We're making great progress here, and our preexisting and funded plans to integrate our platforms have been accelerated. Pleasingly, and in part as a result of the first tranche of this work, our Australian business has held share across the first four months of this year. In the center of the screen, you see the operating model pillar, new work that enables us to operate our business as efficiently and effectively as possible. It is, if you will, the connective tissue that links our market-leading network to our valuable customers.
In a cyclical and a high fixed cost business such as ours, optimizing operating leverage is everything. Our job is to ensure wherever we are in the economic cycle, we're extracting maximum value from the cost base. Now, I'll speak more on this later and share some significant gains we've made and since February linked to a series of operational excellence initiatives. Moving on from strategy, I'd like to now address the three other commitments I made in February. In relation to reo, our in retailer media business, in April, we decided that we will no longer pursue new partnerships under the reo brand. Retailer acquisition in Australia progressed more slowly than anticipated, and we found that most retailers have opted for in-house retail media models. Exiting reo will deliver a full-year ongoing EBITDA improvement of AUD 2 million in FY 2027 and beyond.
Turning now to our operational excellence program. In February, I said that we had completed an initial review of our operating model that identified opportunities within the AUD 100 million of annual expenditure that covers non-rental cost of goods sold and CapEx. At the time, I said we needed to get assets in the ground faster, at lower cost, and with a shorter path to revenue, whilst also on operating and maintaining them more efficiently over the life cycle. This is the first time an operating model review has been undertaken at oOh!, it will drive margin expansion, cost efficiency, and improved cash generation. Since launching the operational excellence program three months ago, we have already identified more than AUD 10 million in annualized ongoing benefits from FY 2027, with a number of initiatives already delivering or well underway.
Per the slide you can see now, these benefits are being realized by four streams of work. In FY 2026, the operational excellence program will deliver a neutral earnings impact, and from FY 2027, the picture changes materially. Implementation costs fall away entirely, and the run rate benefit of AUD 10 million in pre-tax cash materializes in full, comprising AUD 6.7 million in EBITDA plus AUD 3.3 million in CapEx savings. Importantly, these initiatives don't just reduce cost. They also improve business performance. Together, the actions taken since February through our operational excellence program and the reo exit have resulted in a headcount reduction of 82 roles, which represents about 9% of our total workforce. Every individual affected has been notified and will have left the business by June 30 of this year. I acknowledge the people affected by these changes.
I thank them for their contribution to oOh!, some over many years of loyal service. From the first of January 2027, AUD 12 million per annum in pre-tax cash benefits, representing the AUD 10 million from operational excellence and the AUD 2 million in reo losses voided, will materialize, and a gross margin improvement of 1% will be delivered. Following the successful implementation of this first tranche of operational excellence initiatives, I'm confident that further initiatives will be identified, and I look forward to providing an update on our progress at the half-year results in August. Finally, in relation to retail Out of Home, we're starting to see a turnaround in performance.
The retail channel grew in both March and April, supported by a more active approach to sales execution and the launch of the new Out of Home measurement system MOVE, which reinforces the quality and value of the oOh! r et ail Out of Home network. To provide some more detail on what we're doing to sharpen sales delivery, I'd like to introduce our Chief Revenue Officer, Mark Fairhurst. Mark joined oOh! in November 2024. He brings with him extensive experience in media, spanning television, digital, publishing, agency, and of course, a strong background in Out of Home . Over to you, Mark.
Thank you, James, and good morning. I joined oOh! at the end of 2024, having spent most of the prior 15 years competing against it. What attracted me was simple, the opportunity to represent the broadest portfolio of recognized Out of Home formats, with the deepest national networks of consistent quality and coverage. That scale and breadth create a powerful platform to elevate what Out of Home can deliver and when executed well, deepens connection with customers. With that in mind, in 2025, we commenced a significant transformation program across the sales organization under the banner of simpler, faster, and smarter. This program was designed to address both efficiency and effectiveness, and improve how we go to market.
The work included restructuring for greater alignment, coherence, and speed to market, streamlining processes to deliver faster and more accurate responses to brief, improving reporting and analytics capability and moving decision-making closer to the customer, lifting capability and accountability through key hires, clearer role definition, and more measurable performance expectations, and finally, resetting agency and key customer partnerships to support long-term sustainable growth. As you see on the slide, the results have been very encouraging. We were recognized as the Mediaweek Australian Media Sales Team of the Year across all media in 2025. We actually recorded the highest ever Net Promoter Score in oOh!'s history and the highest net promoter score across all media channels in 2025.
We reduced the time it takes to turn a customer brief into a booking by 30% across key formats, including street furniture and rail, and we believe that supported significant share growth in those formats. We delivered a 15% year-on-year increase in partnership revenue from key customers and an overall efficiency gain of 17% in revenue per sales FTE. Together, these initiatives are building a more consistent and scalable commercial engine. Now in year two, our focus is moving beyond established sales fundamentals towards fully enabled sales excellence and sustained market performance. That next phase includes enhanced planning tools to build optimized campaign schedules faster and with greater precision, advanced analytics and trading capability to drive smarter pricing, improved asset utilization, and stronger yield outcomes.
A new sales commission framework designed to sharpen portfolio focus and increase commercial flexibility, and the introduction of agentic AI across the brief to booking process to improve efficiency, consistency, and effectiveness at national scale. The objective of this work is clear, to unlock the full value of our unique competitive advantage and the power of our network. That combination positions oOh! strongly to deliver greater customer value, stronger commercial returns, and sustained growth over time. I'd like to now hand over to our Chief Product and Marketing Officer, Bel Harper, who brings more than 25 years of Out of Home experience to the oOh!'s executive table.
With a strong background in product strategy, commercialization, and go-to-market functions, Bel has worked across numerous Out of Home operators and has gained herself a proven track record of driving asset value, developing marketing, innovative marketing strategies, and scalable solutions for brands and partners. Over to you, Bel.
Thank you, Mark. Underpinning our work to deliver better customer outcomes is the long-awaited audience measurement system, now known as MOVE. This AUD 20 million industry investment is world-class and represents a step change in how Out of Home is measured compared to MOVE 1.5. MOVE gives advertisers greater depth of audience insight, reach and impression delivery, and a much clearer view on how location, movement, seasonality, and time influence campaign outcomes. Put simply, we can now prove value in a way that we never could before. Importantly for oOh!media, MOVE is validating what we have long believed. Quality matters. Scale matters. Premium environments matter, and classic, that is non-digital Out of Home, remains a fundamental reach and ROI driver, not a legacy channel. MOVE modeling shows that adding classic Out of Home to campaigns help brands reach significantly more people.
For example, shifting just 20% of spend onto classic can increase audience reach by up to 22%, while an even split of classic and digital can increase reach by up to 50%. Classic campaigns deliver continuous visibility with 100% share of time compared with digital billboards, which typically only deliver around 10% of time on the overall share of the asset. It's that constant presence that delivers brands reach and stronger impact and that's why we see leading brands like Nike, Apple, Telstra, Westpac all continue to invest in classic Out of Home as a core part of their media plan. While we're only two months into using MOVE In-Market, early signs are very encouraging. The data is already playing directly to our strengths, rewarding the combination of classic and digital, premium environments, and the scale advantage of our network. Measurement changes behaviors.
It changes how agencies plan and how they clients value environments. It changes where dollars flow. We're seeing that play out in our retail channel. Following MOVE's launch in March, our retail Out of Home business returned to growth for the first time since 2023. That's not a coincidence. It's a result of a step change in how retail Out of Home is measured. That advantage is clear in the numbers. As this slide indicates, MOVE data shows that our retail panels reach 60% more audience than our industry peers. This is due to the fact we have nearly twice the number of medium and large centers than our nearest competitor. That scale gives advertisers access to stronger impressions, better campaign outcomes, and a more compelling return of investment.
Alongside the launch of MOVE, we've implemented targeted retail remediation initiatives, including staff and agency education, programs grounded in data, tours of key shopping centers, and we've strengthened our agency partnerships, all contributing to the uplift in retail performance that we're now seeing reflected in our revenue. We're still early in our MOVE story, but what's becoming increasingly clear is that better measurement is changing planning and buying behaviors across the market, and it's environments that are genuinely delivering scale, quality, that are being recognized accordingly. For oOh!media, MOVE is not just improving transparency for advertisers, it's increasingly validating the strength and diversity of our portfolio, the quality of our assets, and the long-term strategic value of our network. I'll now hand over to Chris Roberts, Chief Financial Officer, who you know well, to take you through our trading update and outlook. Thank you.
Thank you, Bel, and good morning all. Q1 CY 2026 revenue grew 7% in Australia and 4% for the group, slightly ahead of the February pacing which we provided with our CY 2025 results. As James mentioned earlier, the Australian Out of Home business, as reported by the SMI, has continued to build share, lifting from 16.9% in Q1 last year to 17.9% over the March quarter, a traditionally strong period for Out of Home . Q2 is pacing similarly to Q1, with +6% in Australia and +2% for the group against a very strong +19% revenue growth in the PCP.
However, we remain mindful of macro uncertainty and the potential impact on advertiser demand. Growth continues to be led by airport and rail, while billboard revenues declined in the quarter, noting that the OMA, which is the industry body, reported a 1% decline for billboard in the first quarter.
With billboard representing about 40% of the revenue base, this mix, combined with higher rents on the new premium billboard contracts, will put pressure on the gross margin in the first half. Underlying adjusted OpEx is expected to be slightly below the PCP with further savings expected to be contributed in the second half. We expect first half one-off costs of around AUD 6 million tied to the Operational Excellence Program and the closure of reach, reo, and additional restructuring outlined by James. As James noted, the Operational Excellence Program is cost neutral over the full year and delivers AUD 10 million in annual savings from CY 2027 onwards, supporting the AUD 12 million in pre-tax free cash flow savings previously outlined.
CY 2026 CapEx is expected to be in the range of AUD 45 million-AUD 55 million, around AUD 10 million below the range provided in February, and this reduction is a function of both the procurement saving initiatives that James outlined and a constant evaluation of the company's needs. On capital management, the company has acquired more than 10 million shares, which represents about 2% of the issued share capital life to date in the program at an average of AUD 0.93 per share. The buyback is currently paused in the context of the NBIOs that the company has received and consistent with our target of maintaining gearing at or below one times . I will now hand over to James to go to the conclusion. Thank you.
Thank you, Chris. Well, to conclude, I'm really pleased by the progress the oOh! team has made since February. We have a clear strategy, a renewed focus on performance and execution, and we're leveraging our strong fundamentals, our network, our operating model, and our deep customer relationships. My priority is to ensure we continue to build momentum and deliver results. And I thank the board for their support, the whole oOh! Team for their dedication and commitment as we take this business forward together. Finally, thank you, our shareholders, for your continued support. Thank you.
Thanks, James. Onto the meeting procedures. The notes of the meeting was lodged with the ASX and made available to shareholders on the 10th of April, and I will take that as read. I will now outline the procedures for today's meeting. Before moving to the various resolutions to be considered, for those here in person, I'd like to draw your attention to the voting and question procedures for today's meeting, which is shown on the screen. Please take a moment to read the slide. Please note that only shareholders, proxy holders, or shareholder company representatives may vote. Eligible shareholders will be able to cast their vote for, against, or abstain for each resolution during the meeting in accordance with the company's constitution and as set out in the notes of the meeting.
As chair, I have determined that voting on each of the resolutions will be conducted by a poll. The results of the meeting will be released to the ASX as soon as possible after the conclusion of the meeting. I now declare the poll open. Where the chair has been appointed as proxy, I intend to vote all undirected proxies in favor of each resolution. We will attempt to answer all questions raised during the meeting. If the same or a similar question is received multiple times, we will answer the question only once. We will now move to the formalities of the meeting. The first item is to receive and consider the company's report for the financial year ended 31st of December, 2025. James and I have already discussed the company's performance during the year.
Patrick Maloney from KPMG is available to take questions about the conduct of the audit and the preparation and content of the independent audit report. There is a separate agenda item dealing with the remuneration report. There will be no vote on this item related to the financial report. It is a discussion item only. I will now address any questions relating to this item of business or any general business questions, including questions on the presentations given earlier. Are there any questions from the floor? David.
David.
Good morning. [inaudible] Congratulations on the run. You've chaired very well. Very well. Well done. I don't always say this, but I think this is a well-run company. When I was around the corner a week ago with our team, I made somewhat different comments. Look, certainly Out of Home has been the best sector in media, which has collapsed in traditional media with TV, radio, and print valuations falling dramatically. O ut of Home is not particularly vulnerable to the mighty U.S. tech giants, YouTube, Meta, et cetera, et cetera. It's held up well. It's been pretty steady, Chair. With the exception of recent brief drop to AUD 0.90, it's traded mainly in the AUD 1.20-AUD 1.80 range over the past five years.
Overall, solid performance in a difficult sector of media. Well done on your value-enhancing buyback. A lot of companies, I think, do that at the wrong price for the wrong reason, but well done to the board. 2% bought back at AUD 0.93. Well done. Great traders. Got a few comments and questions. If we add the net debt of AUD 212 million, the company has a enterprise value of around AUD 800 million. Little bit below what Nine paid for QMS. OML has a much larger market share and much larger revenue. Conversely, I'll come to a question in a little while, it arguably has more CapEx on digitizing its billboards and Out of Home facilities. On financials, look, your revenue's pretty good, AUD 691 million, AUD 190.39 adjusted EBITDA, adjusted NPAT AUD 63.
I do have a question on that. At the moment, stat NPAT is just AUD 16.9 million. The majority of the difference between stat NPAT and underlying NPAT is AUD 30 million impairment, which I'll comment on in a minute on the Auckland lost contract. Look, if we look at free cash flow, which is crucial, I always look at it pretty closely. Page 32 of the annual report, Chair. Net cash flow before financing free cash flow, only AUD 28.1 million in 2025, a mere AUD 8 million in 2024. Page 52 of the annual report states free cash flow per share, AUD 0.049 in 2025, AUD 0.015 in 2024, AUD 0.084 in 2023. Look, your outlook is terrific.
I admire the fact that you're forecasting 7% or so revenue growth in a subdued market, increased market share. Extraordinarily, and congratulations to whoever's responsible, you are forecasting operating costs being flat. You're saving money, which is pretty remarkable, bearing in mind your rents on your facilities are going up and your labor costs are going up. If you can hold costs flat, you're doing really well. One of the big issues, and I'll get to some questions in a second, is CapEx to digitize. The press aren't always right, but DataRoom last this week quoted OML is a challenging turnaround opportunity and can bidders, quote, Solve OML's fundamental challenge of financing the digital conversion of its portfolio. A few questions, Chair.
Free cash flow has been modest for some years, a long way below underlying NPAT, EPS, those things. CapEx on signage, with digitization is expensive. Good to hear that your estimated CapEx for 2026, which was AUD 55 million-AUD 65 million, has now dropped to AUD 45 million-AUD 55 million. You're a well-run company conscious of controlling costs, there's a number of positives in that announcement. Share price has already gone up AUD 0.05 this morning, Chair, people like it. My first question is, will the large CapEx on digitization of signage continue to consume a substantial portion of operating cash flow? Your notional profits are a long way ahead of your cash flow. How far behind QMS is OML in digitizing its signage? Over the next few years, what's your estimated CapEx to catch up?
Now, the press are making those comments. They may or may not be correct, and the press are being worded up by competitors and various people. You may disagree with the press comments, but certainly QMS is more advanced in digitization. Whether the press are overplaying that, I'm not sure, but that's my first question. Thank you, Chair.
Do you wanna take that, James? Chris?
Well, well, well, let's talk about digitization first, I'll hand to Chris to talk about some of the technical responses around the cash position of the business, if that's all right, David. Thank you for the-
Thanks.
Thank you for the question.
Yes.
You know, I think it is true that we have been on the pathway to digitize. I think I don't think I'd characterize us being behind. I think we are being very tactical about which assets we digitize, and yes, there's been a capital impact associated with that. I think as Bel mentioned, one of the very positive outcomes for the much awaited and now delivered MOVE currency is that it re-weights the value of our classic inventory. Whilst there was a very strong push to digitize inventory for obvious reasons, what MOVE has done is demonstrated the value of that classic inventory because of course brands get 100% of share, and now the audience is being properly attributed to those assets.
That reframes the forward capital intensity of the business in my mind. Chris, do you wanna speak to the cash issue?
Sure. Thank you. I'll just add one point before I go into cash flow. In terms of absolute quantum of digital assets in Australia, we are by far the market leader. We dwarf both QMS and JCDecaux on that front. I think the question is about percentage of your assets which are digitized. Then one important distinction is we dominate the regional space. A large quantum of our assets are out in the arterials in regional Australia, where economically it doesn't make sense for us to digitize. I wouldn't think of it in absolute dollar terms. We've got a long way to chase anyone else.
In terms of cash flow generation and expectations going forward, as announced, we've won AUD 93 million of key contracts over the last two and a half odd years. We're only at the beginning of rolling out the digital inventory on there. What you could expect is an elevated CapEx profile, probably similar to what we've outlined in our updated guidance today, for the next two to three or so years. In terms of conversion of operating cash flows as a function of earnings, in 2024, We're still playing catch up on tax payments because when we entered COVID, we had tax losses, and there's a timing impact of when you have elevated provisional payments rates. When we look in terms of 2025, there were a couple of things in there.
We paid rents in advance on some contracts in December, which we otherwise sometimes do in January, paid tax in advance. We've had make good payments. This is in relation to leases which we had expensed in the prior year, cashed out this year. Also, as noted in the accounts, we've got a several million dollars that we have booked into our earnings from media for equity arrangements, and there's delayed cash settlement on that, and currently we're expecting the largest tranche of that to be receipted in July. What you should expect to look to is an improving cash conversion profile in the years ahead. Thank you.
Thanks, Chris.
Look, thank you. Thanks for those detailed responses. Just one follow-up on that particular question. As I said, the press, you know, respond to comments made to them by competitors and industry people. Is it too harsh that the press are describing you as a challenging turnaround opportunity?
Yes.
I thought you'd say yes. We'll move on. My second question, Chair, is, as I said, congratulations, I think it's a well-run company. One of the challenges of Out of Home is that you don't control your assets in perpetuity. 52% of your contracts by revenue expire in, by 2029. We all know what happens. Your great contracts, the competitors come in and bid. You know, to retain them, you've got to pay a higher price. They don't necessarily bid for your less attractive contracts. It's a challenge to everyone, not just to OML. In 2025, you lost Auckland, you gained Transurban Motorways Brisbane and elsewhere. I think in 2024, you lost the Vicinity contract.
Question is, in your accounts, in your annual report, presentations, you are adding back the AUD 30 million impairment, which resulted from the loss of the Auckland contract. You're adding that back to underlying NPAT, which is jumping your underlying NPAT from AUD 16.9 million up to AUD 63 million. There's a few other adjustments there as well, the main adjustment is the AUD 30 million impairment. The question is, to me, you're always gonna lose some contracts, doesn't matter how brilliant you are. There's always gonna be some impairments of equipment you've got on the sites or goodwill associated with those facilities. Is it fair to add that AUD 30 million back? To me, it's a recurring expense. Not specifically on Auckland, but on, you are gonna keep losing contracts, and you're gonna gain contracts.
I'm just trying to get a handle on.
Yep.
Which is the more accurate figure? Is it the statutory at NPAT, or is it the underlying NPAT that you're claiming?
I'm happy to take that. I think if you take a look back in our accounts, you'll notice two things, David. One, we don't have a scenario of year in, year out. We have non-operating items, so we really try to be selective where we think it's a material divergence from our underlying business activities. In the case of that AUD 30 million, there's two things in particular. It wasn't specifically linked to the Auckland contract. Rather, it was an impairment of the entire New Zealand business, where clearly Auckland was the largest contract. Your observations are right about it's part of Out of Home, of continued bidding for, sometimes winning, sometimes retaining. That's normally what we do. We've got an excellent track record on retention, and occasionally losing contracts.
What made this one very specific is the original contract dated back over 20 years. It was at a profit structure that was set pre-digitization, when there was very little rent paid. It is completely abnormal, not just for us, but for the entire industry. There is no other contract like that, so it truly is a one-off in that case.
Okay. Thank you. Look, again, the conundrum in assessing the value of OML is, on all your key metrics, you're making various adjustments. The industry generally is pricing these businesses at six times EBITDA. The issue is whether it's statutory EBITDA or underlying EBITDA. That's a conundrum for investment people to assess. My final question on the first item, Chair, is that obviously Nine now own QMS. They're claiming significant synergies. Obviously, there will be some synergies between TV and outdoor, some, maybe not huge. Probably not too many between the AFR and outdoor, but and probably not many with Stan. Bearing in mind your most direct competitor, Chair, now is part of a wider group, are you at a disadvantage?
This has only just happened because QMS was independent until very recently. You know, the synergies they get, is that gonna mean that they can take some of your advertisers? Thank you.
Look, James may wanna add something, but my comment here would be a lot of the revenue synergies you're talking about are theoretical. We will see whether it's correct that they are gonna play out and do work for Nine as the owner of QMS. I think if you look historically at the performance of Out of Home companies standalone or as part of broader media groups, it's fairly clear that the ones that standalone perform better. That's certainly the view that we have going into the next period. We welcome the fact that Nine understood the value of Out of Home and wants to add that to what it's doing. We would prefer, I think, to remain an independent operator. James, would you add anything to that?
Yeah, I'd just add that, you know, to clarify, the synergies Nine identified were cost synergies. They've, I don't think they've put a number on the revenue synergies, which isn't to say they don't exist, but they've certainly not valued them publicly. I'd say that, you know, as we look around the world, it is, as I've said before, we cannot find a single example anywhere in the world of an Out of Home business being integrated into a more traditional media business. We think the normative model for Out of Home is independent, and we are very confident about our position in the market as an independent operator.
Okay. Thank you.
Thanks. Any other questions? In which case, we'll move on. Thank you. Let's move to the resolutions of the meeting. Resolution one is the adoption of the remuneration report. The resolution is set out on the slide. I'll now address any questions relating to this item of business. Are there any questions from the floor on the rem report? David.
Just an opportunity to ask James, obviously a new person, but a question. On the face of it, there's a huge number of positives for what you're doing. I think you're a very well-run company. I don't necessarily say that about everyone, but I think you're a well-run company. Why is the market, James, pricing outdoor media companies, which are protected to a significant degree from the American tech giants who are killing TV, killing radio, why is the market pricing them Your big competitor overseas is priced at less than a six times multiple of EBITDA. On the face of it, given the dynamics of this industry, that seems a pretty modest multiple. Just interested in your thoughts, James. You've come from TV background.
Why is the market applying a relatively low multiple to your EBITDA and your competitors too?
It's a confounding question, isn't it, David? I think we would, we'd be aligned in the view that the valuation should be higher. I think perhaps in the case of oOh!, I think we need to continue to tell a good story about the growth drivers in the business. The growth opportunity for oOh! and Out of Home is not just linked to the demise of linear television, although that is certainly one of the foundational drivers of growth. We have a very good story to tell in terms of bringing brands to life. I think we have not been as measurable in the past as we are now, and I think measurability is everything in contemporary media markets.
I think other media operators have been easier to trade and to buy, and a lot of the work we're doing at oOh! is to make ourselves more interoperable with agencies, making ourselves easier to buy by them. Also making ourselves easier buys to buy by organizations that don't have large agency relationships. It's one of the benefits of technology, one of the benefits of measurement, and one of the benefits of digitization. I think in our case, we have now started to describe our business slightly differently. Of course we're a very large advertising platform. We are as much a large network business, aren't we?
I think the work we're doing to unlock network economics and to understand them better will drive real value, will help us understand the optimize size of our asset base for a given flow of revenue. Of course, in our case, working our operating model will free up cash and allow us to operate more efficiently. I think there are new things we're talking to the market about. I would hope the market acknowledges those as value creating initiatives, and we're gonna keep driving those initiatives hard.
Thanks, James.
Just to follow up, James, under the rem report, look, I think it's a great effort. If you can deliver 7% revenue growth this year or thereabouts, I think you're doing very well. There's a lot of uncertainty out there in the marketplace. The budget certainly hasn't helped. It's shocked a few people. Generally, fuel prices, interest rates, Iran War seems like it's gonna go on for a while. Great performance if you get 7%, how confident are you? Is there a risk you might come along at the end of this year with zero growth in revenue?
Well, you know, we understand the volatile nature of the market. We've provided an outlook for Q2. We're confident about the outlook we've provided at 7% for Q2.
How long are your bookings generally? In traditional television and radio, they're pretty short, but because of the nature of what you do, maybe yours are much longer.
I think they perhaps are a little longer than TV, but they are relatively volatile at the moment. You know, I think Bel mentioned, or maybe she didn't, we were speaking about earlier, that in moments like now where we've got international conflicts afoot, it tends to change the shape of investments between billboards and smaller format, et cetera. Thankfully, we're capturing that revenue, which means we're able to hold our outlook for Q1 and for Q2. You know, there's a bit of shortening, there's a bit of volatility, but that tends to unwind pretty quickly too when market conditions change.
Thank you.
Great. Thank you. Detailed on the slide are the proxy votes for the item submitted prior to the meeting. Please do now record your vote for resolution one on your voting card. Resolution two is the reelection of Director Mr. Timothy Miles. The board strongly supports the reelection of Tim Miles, as Tim contributes to the board with significant experience in technology and digital development, and sales and marketing matters. As mentioned earlier, Tim's currently unable to travel and joins us online from New Zealand. Tim will now say a few words.
Thank you, Tony. Good morning, fellow shareholders. It has been my privilege to represent you over the past seven years. I've served as a member of the Audit, Risk, and Compliance Committee. I've been chair of the Transformation and Technology Committee, and more recently, a member of the Talent and Culture Committee. Today's business environment is even more dynamic and fast-moving, and Out of Home is certainly no exception. Through my background in technology and digital, I've been fortunate to work in environments that are fast-changing and face both the opportunity and disruption that comes with that. I would appreciate your support to work with James and the other board members to execute on plans to reshape the business and create shareholder value. I currently serve on the boards of NZX-listed Genesis Energy, where I'm chair of the HR and Remuneration Committee, and as a member of the Nominations Committee.
I also chair a privately held mobile infrastructure business, Fortysouth. I confirm that I have sufficient time to dedicate to oOh!media on behalf of shareholders. Thank you for your consideration.
Thank you, Tim. Are there any questions on resolution two? As there are no questions, I will now put resolution two to the meeting. Again, processes are detailed. The directors, with Tim abstaining, unanimously recommend that shareholders vote in favor of this resolution. Please now record your vote for resolution two on your voting card. We will now move to resolution three, which is the reelection of Director David Wiadrowski. The board strongly supports the reelection of David Wiadrowski, as David contributes to the board with significant experience in audit, risk, and finance areas. David will now say a few words.
Thank you, Tony, and good morning to shareholders, management, and guests. I'm honored to stand for reelection for the board of oOh!media. A live takeover offer is underway, and our new CEO, James, is actively building relationships with the client, management, the market, and obviously executing on our strategy. My board portfolio over the last five years has included three private equity takeover processes and three CEO transitions. I'm not sure if that's a good thing or a bad thing. This experience positions me very well to add real value to oOh! and its shareholders, both navigating the current process to maximize returns to shareholders and in supporting James to become a highly effective and successful CEO.
I've served on the oOh! Board now for nearly six years and bring a deep understanding of oOh!'s business, its strategy and its culture. During this period, oOh! has continued to be the preeminent and unmissable Out of Home business in Australia. oOh! c ontinues to strengthen its portfolio of major contracts securing significant wins, including Sydney Metro, Waverley and Woollahra Councils, Transurban Melbourne and Brisbane, and Transport for New South Wales. As these opportunities have come to the board, I've played an active role to ensure that we bid competitively but with financial discipline, and management can attest that we have robust conversations about CapEx on those projects. David, I'm sure if you talk to management after the meeting, they'll attest to the robustness of those conversations.
I've chaired the Audit, Risk and Compliance Committee since mid-2020 and partnered with management to ensure that we continue to strengthen control systems, reporting and governance across the business. In 2025, we were required for the first time to report on climate change under AASB S2, which I'm sure you're all very familiar with. I took an active leadership role with the team in developing our reporting and to make sure that we met all our obligations, and we were one of the first public companies to report due to our December year-end.
I take an active role in all of the board meetings, dedicate significant time to deepen my understanding of the operations of the business and ideally provide some strategic support to the team, and at the same time provide constructive challenge in those discussions. I currently serve on three other public company boards and one not-for-profit board. I believe I have the time and capacity to attend to all of my obligations while being on the board of oOh!media. Given the profound and accelerating impact of AI on business, I've recently completed the AI Business Strategy Transformation Program at the Kellogg School of Management at the Northwestern University in Chicago. I would highly recommend that program to you.
Staying at the forefront of that knowledge, I believe, is a core obligation of every director, and it's something I take very seriously. Today, I respectfully ask for your support and commit to continuing to serve oOh! and its shareholders with diligence, independence and purpose. Thank you.
Thank you, David. Any questions on resolution three? David.
Thank you. A couple of questions, bearing in mind you're a Chair of the Audit, Risk, et cetera, Committee, and your background as PricewaterhouseCoopers. The easy one, firstly, I do empathize for this company and most companies of you've had to write 45 pages in the annual report on compliance and sustainability. In my view, that's an unnecessary burden on listed companies, but that's just an observation. A lot of pages that I don't think too many people would read closely. More relevantly to the finances, bearing in mind you are Chair of the Audit Committee and Risk Committee, your total intangibles in the accounts are AUD 655 million. I'm not too fussed by that because that is consistent with your shareholders' funds.
If you go to your balance sheet, you're not in a situation where your shareholders' funds in, are inflated by the intangibles, and so the market is basically saying they're probably okay with that. In contrast to a lot of media companies, including ARN, where I made the comment that their licenses needed to be written down because their shareholders' funds were a mile above market cap. Just interested in your view, are you comfortable that goodwill, it's not the only intangible, you've got software and other things capitalized in there, but are you comfortable goodwill at AUD 582 million?
Yes, I am. I mean, obviously the market value of the company doesn't actually reflect the intrinsic value of the company. management prepares obviously an ongoing three to five-year model which looks at discounted cash flows. we are very confident those models and discounted cash flows do support the carrying value of all the intangibles.
Thank you. Final one, bearing in mind your committee that you chair also includes risk. In a context that media is challenged, the economy is subdued, you know, Australian stock market's weak, interest rates going up, et cetera, how do you see the risks over the next three years? What would you see as the biggest three risks to the earnings and the value of this company if it remains independent?
It's a very timely question. We discussed this yesterday. I mean, I think our biggest challenge and risk is really just the volatility of the market. And we all know that Out of Home as a sector is a good barometer for the economic environment. When we see the economy slowing, Out of Home tends to be the first that has that impact, and when the economy starts to recover, we also benefit from that impact as well. It's a little bit of an unknown, but at this stage we're pretty confident that from a risk perspective, we're well positioned. We've got a good team, we've got a good business plan. But at the same time, we are a little bit beholden to what happens in the broader macro environment. That's probably all I can say on that, David.
Just finally, the 7% indicated revenue growth, is that optimistic, base case, or conservative?
I mean, it's well-supported by, I suppose, the business plan, and also the management team. As, I mean, James has sort of said that we are a little bit beholden to sort of the macro and the market here, and so there will be volatility. I think at this stage, based on the trends and the pacing we have got, 'cause we have got good accurate records of pacing, comparing the current year bookings to prior year bookings, that we're confident that that's a realistic number that we can deliver.
Bearing in mind, you're indicating costs are gonna be flat, that indicates pretty strongly your base case is that your earnings per share is gonna be going up.
I think that's a pretty good assumption, yes.
Thank you.
Thank you, David. Let's go to, in that case, put resolution three to the meeting. Again, to reinforce, the Directors, with David abstaining, unanimously recommend that shareholders do vote in favor of this resolution. Please record your votes for that resolution on the card as well. I'll move to item four, which is the grant of performance rights under the equity incentive plan to James. This was as outlined in the notes of meeting. Are there any questions on resolution four? I'll put resolution four to the meeting. The Directors, with James obviously abstaining, unanimously recommend shareholders vote in favor of this resolution. Please record your resolution on the card. I'll move to resolution five, which is the grant of deferred restricted shares under the equity incentive plan to James.
This also was outlined in the notes of meeting. Are there any questions on this? Okay. Detail on the slide are proxy votes for this item submitted prior to the meeting. Please record your vote on resolution five . Okay. As there's no other business, I will now close the meeting. Please provide MUFG with your voting cards for those of you at the venue today. The results of the poll will be announced to the ASX later today. On behalf of the board, I'd like to thank you for your support and for your attendance and participation in this meeting, and I now declare the meeting closed. Thank you.