Cathy O’Connor, (the former CEO of Nova Entertainment) replaced founder Brendon Cook as chief executive, speaking at her first oOh!media AGM:
It’s my privilege to present my first address to shareholders at the AGM as Managing Director and CEO of oOh!.
I am honoured to serve in this position.
Today, I would like to provide my initial observations since joining the Company with a focus on the strong platform I believe we have to grow our business to deliver sustainable value creation for shareholders.
I will also provide some further information regarding our financial results for FY20 and conclude with some commentary on our trading for the first quarter of this year and an update on current market conditions, including audience metrics across our key formats.
Initial observations
First, I want to acknowledge the significant contribution of Brendon Cook as founder and CEO of oOh! for the past 30 years. As (chairman) Tony (Faure) has just said, Brendon has been a true pioneer of the Out of Home industry and his enormous contribution to the business will be felt for many years to come.
While I joined the company only 4 months ago; having worked in the media industry for 36 years, I have long been an admirer of oOh! and indeed the Out of Home sector more broadly.
Having now had the opportunity over that time to interact with our people, our clients and business partners, I am even more excited by the opportunity we have to grow our business.
Let me start with the Out of Home sector in a broad sense.
It is a media sector that has a number of natural, strategic advantages as a mass reach medium.
While COVID-19 has clearly reduced Out of Home audiences for the first time in the Company’s history, the long term trends of continued population growth and urbanisation remain very supportive for audience growth across Out of Home formats.
That provides the unmatched scale which enables the medium to reach millions of Australians and New Zealanders every day.
While traditional media continue to be disrupted by digitisation, Out of Home continues to benefit from changes to digital technology.
Digitisation and technology provide a number of benefits to Out of Home.
It allows us to improve our physical assetsto provide compelling creative media opportunities for advertisers.
It improves the measurement of the sector and ease of transacting.
And it will enhance the way content can be distributed in dynamic ways.
These drivers lead to improved Return on Investment for advertisers which is the key fundamental for continued share growth of the Out of Home sector compared to other forms of media.
The PWC media outlook report predicts continued growth in Out of Home in taking share from other forms of media through to 2024.
Let me now turn specifically to oOh!media.
As the market leader across both Australia and New Zealand, oOh! is uniquely placed to capitalise on the expected growth in Out of Home.
oOh! has unrivalled scale and diversity of formats to deliver for advertisers. This scale enables us to reach 77% of all metropolitan and regional Australians across more than 35,000 locations across our diverse formats. In New Zealand we reach a similar per cent of the population with over 4,000 locations.
The combination of these formats ensures we can provide maximum reach and frequency for advertisers.
At the same time, our data capability means we can combine oOh!’s audience environments and our extensive audience data sets (such as Quantium) to determine the best inventory to use and when to engage with the desired audiences to maximise campaign effectiveness.
We continue to educate our clients on how they can harness the power of oOh’s diversity of formats and compelling reach. As an example, we recently launched the Audience Intelligence Hub, which is a new online data resource to provide clients with up to date insights for engaging Out of Home audiences.
The platform references data from over 4,000 Out of Home locations across Australia for deep insight into people movement patterns and audience and behavioural trends across roadside billboards, shopping centres, offices, cafes and university campuses in Australia.
As people movement patterns remain dynamic due to COVID-19, this capability enables us to assist advertisers to target audiences more effectively in the current environment.
While I have mentioned the diversity of our formats, let me also mention the balance and diversity of our lease profile. This is an important aspect of the diversity of our revenue base across multiple formats and concessions.
No individual concession contributes more than 6% of group revenue.
That provides a high degree of revenue diversification and also supports our strategy to remain disciplined on contract renewals. We have continued to add quality assets to our network including digital large formats in iconic locations in the Eastern Suburbs and Northern Beaches of Sydney.
Looking forward, we have a pipeline of five new large format digitals and between 50 to 100 small format digitals across street furniture and retail in the next few months. We were very pleased to renew our partnership with Melbourne Airport earlier this year.
Meanwhile, nearly 60% of pre COVID-19 2019 revenue by concession is attached to contracts that expire beyond 2023.
Our People
Notwithstanding the key strengths of the business I have just mentioned, it is the people across oOh! that continue to be our greatest asset. Over the past months, I have been greatly impressed by the experience, calibre and also the resilience of our staff in delivering results for advertisers.
oOh! has a very strong culture and this was never more evident than during 2020 when our people responded admirably to the challenges of COVID-19 to deliver a financial result that exceeded our initial targets.
This included negotiation with property partners to deliver $63 million in net fixed rent savings, capital expenditure reduction of $49 million and operational cost savings of $16 million (excluding JobKeeper)
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