oOh!media Limited (OML) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the oOh!media Limited Half Year FY '24 Results Presentation. [Operator Instructions] I would now like to hand the conference over to Ms. Cathy O'Connor, MD and CEO.

Thank you, and good morning, everyone, and welcome. I'm here today with oOh!media's Chief Financial Officer, Chris Roberts, and together, we'll take you through the company's interim results for 2024. Before we start, I would like to acknowledge the traditional owners of the land on which we're meeting today, the Gadigal people of the Eora Nation, and we pay our respects to their elders, past and present, and recognize their enduring connection to this land. For today's agenda, we'll turn to Slide 3. I'll provide a couple of slides to set the context for today's presentation before I speak to the headline and this will include an overview of our revenue performance and the actions we're taking to deliver a stronger outcome in the second half. Chris will then dive into the financials and update you on our work with commercial contracts. Today, we're also going to cover at a high level some of the work we've been doing in the half to build the oOh!media business for the future, including an update on our retail media business, reooh. So before we get to the results, I want to recap the strong case for investing in oOh!media. oOh!media operates in a sector with a very strong structural growth story and as the media landscape evolves, this is a clear point of difference for the Out of Home medium and the trend is playing out globally. Across the half, Out of Home rose to a record share of SMI of oOh!media of 15% and it remains the fastest-growing media sector across Australia and New Zealand. Against this strong industry backdrop, oOh!media is the clear #1 company in revenues, profits, margins and scale, with the largest network of over 35,000 assets and delivers mass audience reach of over 98% of all metropolitan Australians every week. Within that, oOh!media is also the largest digital network in Out of Home. This is complemented by an experienced management team who are focused on driving Out of Home's share of total media and creating long-term shareholder value through disciplined contract bidding and broader cost control. So the positioning, the structure and the discipline of our company is a key advantage in a growing sector, and we are confident of oOh!media's prospects for continued growth. So over on Slide 5, we'll talk about what underpins my confidence. As I've said, it's a strong industry story. We remain a mass reach medium in a fragmenting market and the industry continues to expand, to improve, to digitize and to innovate. Second thing, underpinning my confidence are the investments we've made into some key drivers of revenue growth specific to oOh!media. These include the further digitization in our retail networks and some enhancements to our go-to-market capabilities designed to drive improved pricing and yield optimization. Thirdly underpinning the confidence, we're now live with the contracts we announced at the full year, the Sydney Metro rail, which launched today, and street assets in the highly attractive Woollahra Council, all playing into our second half. Further to that, we have over $38 million annualized of expected new contract wins. And these are in addition to those I just mentioned, and these build out on our future earnings base. And finally, we are upbeat and committed to our retail media business, reooh and have progressed our focus and our growth ambitions in that adjacency. So with that context, let's go to the headline results over on Slide 7. We've continued our commitment to disciplined bidding and cost control in the half, which has contributed to an adjusted underlying gross profit and EBITDA margin expansion of 1.8 percentage points and 0.1 percentage point, respectively. This margin performance was delivered against a 2.8% revenue decline in the half. Contributing to the revenue result was the exit of the Vicinity retail contract as well as a change in the structure of a key contract renewal, which reduced non-media revenues on the pcp. Adjusting for these impacts, our revenue growth rate of 3% was below growth in the broader Out of Home sector in the half. A number of actions have been taken to improve our performance in H2 and pleasingly, we are seeing an improved outlook into Q3 and beyond. As I signaled earlier, these revenue initiatives include some one-off investments in our go-to-market capabilities designed to improve our competitiveness in the market. And we further developed our approach to realizing our growth ambitions in oOh!media's retail media business, reooh. We also expect some attractive new contracts, as mentioned, to come online from 2025. So I'll say a bit more about these opportunities later in the presentation. Further detail on key financials over on Slide 8. Revenue, as mentioned, on a reported basis, declined by 2.8% for the period. We were disappointed with the revenue performance given the strength of our network, yet encouraged at the improvements we're seeing into the second half. The business has improved its margins through a continued focus on cost control, which is pleasing, and Chris will talk more in detail on this later in the presentation. The softer first-half revenue led to a 7% decline in adjusted underlying NPAT per share and for this reason, the Board has held the interim dividend consistent with last year at $0.0175 per share fully franked. And gearing remains under our target of 1x and the business remains in a strong financial position. Moving into Slide 9, we'll take a look into the revenue by format. Firstly, Road. oOh!'s solid first quarter growth in Road of 8% was disappointedly followed by a particularly weak second quarter of negative 12%, resulting in an overall decline of 3%. This is not a structural change in the attractiveness of Road, but rather due to poor execution in the quarter, albeit acknowledging there was a slight impact from the exit of some Vicinity Road sites. Weakness in Road continued into the first half of the third quarter, but we are seeing a strong turnaround in bookings from September onwards. Coupled with some of the strong new assets that we are bringing into the market over the remainder of this year and into 2025, I am confident that Road as a key revenue engine of oOh! is returning to its past strength. Street and rail reported revenue was down by 3% for the half, with strong performance in digital inventory, offset by declines in the classic portfolio. Additionally, a significant contract was amended during the half, and this resulted in an ongoing decline in non-media cleaning and maintenance revenues in return for a reduction in fixed rent attached to that particular contract. And Chris will talk more about this in detail later. The Woollahra assets are now a little over 50% complete, with the remainder expected to be rolled out over the second half, and this has been slower than anticipated. And like Road, street and rail are returning to growth in late Q3. Retail's revenues were, as expected, significantly impacted with the exit of Vicinity with a reported decline of 10% for the half. Excluding the revenue attributed to Vicinity, underlying growth was 8%. oOh! has increased its pace on digital rollouts, particularly in Victoria to bolster its position ex-Vicinity. And this will provide a gradual improvement to our competitive position in the channel. Fly returned to growth in the second quarter, leading to an overall 6% increase in revenues and a strong outlook and City & Youth generated an overall 16% improvement across the half. In overall terms, for the half, revenue share was 36% across the combined Australia, New Zealand markets. We are expecting that based on current forward pacing, our performance relative to the market will improve from September. And this will be helped by our new metro rail assets, which came online, as I mentioned, from today. I'll now cover the actions we've taken to improve our revenue performance on the next slide. We've had 3 main areas of focus to improve revenue share and outlook. Firstly, we've accelerated deployment of digital assets into a broad spectrum of retail centers. These plans were immediately executed once the outcome with Vicinity was known in late 2023. During the half, we installed over 200 retail digital portraits and expect to exceed this rollout in the second half. Secondly, in addition to the previously announced Woollahra and Sydney Metro wins, we anticipate significant enhancements to our core Sydney and Melbourne metropolitan offerings, with new contracts that Chris will cover when he gives an overview of our lease expiry portfolio. During the half, we also invested in external expertise to help us accelerate a program of work aimed at strengthening our go-to-market offering in terms of processes, systems and our speed to market and we've doubled down on the future capabilities needed to remain competitive in an increasingly digital marketplace. The go-to-market improvements are initially orientated on improving the yield we're delivering on our existing network and the first deployment of the associated pricing tools will occur later this half. These new tools will ensure that our pricing remains competitive and responsive to customers and is transparent and value-driven. And one of the key considerations of this work has been ensuring that oOh!media is ready for MOVE 2.0 when it comes online, and we've taken steps to ensure that we are well-positioned to benefit from the additional data that MOVE 2.0 will give us to advocate for the unique breadth and strength of our network. Additionally, we completed a piece of work that affirms our strategy for our retail media business, reooh, focusing on the competitive advantage that oOh!media can bring to this fast-growing market. And we believe we can leverage our competitive strengths to create a strong pathway to diversified revenues for the business. So I'll now hand over to Chris to take you through the financials and some comments on the contract expiry profile. Chris?

Thank you, Cathy, and good morning. Turning to Slide 12. The 2 charts on the left demonstrate that the discipline applied to contract bidding and cost management delivered adjusted gross profits and margins in line with or superior to the prior periods, despite a decline in revenues in the half. And note that 2022's margins benefited from COVID reinstatements. Cathy referred earlier to a decline in non-media revenues as part of a contract change. During the past year, we have been negotiating on one of our more substantial street furniture contracts. The net impact was a reduction in revenue for the cleaning and maintenance services we provided under this contract in return for a lower fixed rent expense. This change contributed to an increase in adjusted gross margin percentage and gross profit. The impact of this change will be more modest in the second half as the prior year's second half already encompassed some of these benefits. The third chart along gives some color to how we have continued to be diligent with operating costs this year. While the total underlying operating cost base increased by 3.8% over the pcp, a little over 1/4 of this increase funded new hires to seed our reooh efforts, and now the reooh management team is largely built out. The final chart illustrates the impact of this cost discipline on our adjusted EBITDA margins. Despite a largely fixed cost base, we have managed to slightly increase the underlying operating profit margin on the pcp, even with a decrease in revenues. As we return to more meaningful growth in our annual revenues from 2025 onwards, we expect margins to strengthen. I will now turn to our financial performance on Slide 13. As outlined earlier, despite the $8 million decline in revenues, our adjusted gross profit increased in both absolute dollars and in margin percentage terms. This slowed down to our underlying EBITDA operating margin, which improved by 10 basis points as we contained underlying operating costs to 4% growth in line with inflation. You will note that we have called out $3.4 million in non-operating consulting costs that we excluded from underlying earnings. These represent the one-off costs that Cathy noted earlier and do not represent an ongoing expense, apart from the approximate $600,000 that we will incur in the second half. Cathy will cover this in more detail later, noting that we are confident that we will see meaningful returns from this investment from 2025 onwards. The increase in net finance costs is a function of both increased net debt and the rising base interest rates. I will cover the reasons for the increase in net debt in the next slide. As Cathy outlined, the Board has declared a fully franked interim dividend of $0.0175 per share, which is consistent with the prior year. I will now address the cash flow on Slide 14. The first half of each year generally has a seasonally weak cash flow due to the timing of revenue collection. The impact this year was pronounced due to the payment of a tax liability related to a matter that we settled with the ATO late last year as well for the payments made to make good the advertising sites we have installed in the Vicinity Centres, which we exited with the related cost expense last year. Further, the business has increased its investment in digital screens to strengthen its footprint in retail post the Vicinity exit in addition to securing screens ahead of its rollout in Woollahra and other digitization locations. CapEx of $23.4 million for the half is in line with the full-year guidance of $45 million to $55 million provided at the beginning of the year. I anticipate that the gearing of 0.97x at June will decline over the second half as is typically the case. I'll now turn to Slide 15 to provide an update on contract expiry profile. The chart outlines that year-to-date we have renewed over 3% of the FY '23 revenue base. Importantly, the FY '23 revenue attached to the larger contracts expiring this year or prior has reduced by 28%. The most substantial contract for renewal, Auckland Transport, remains in tender, and we expect an outcome in the not-too-distant future. We have confidence in our position with contracts being renewed based on our performance for landlords, both in revenues and in associated service levels. Importantly, in addition to contracts held by oOh!, there are always new contracts, either with other incumbents or greenfields that we compete for and this is the subject of the next slide. As Cathy touched on earlier, we have already won and anticipate further wins across an exciting portfolio of contracts covering metropolitan Sydney and Melbourne audiences. These are expected to attract projected run rate revenues of $38 million per annum from 2025 onwards. An example is the Metro Melbourne tunnel, which will open next year, complementing both the existing Melbourne train network and the brand-new Sydney Metro network, which opened today. The chart outlines that these anticipated contracts representing an over 80% win rate for tenders bid for by oOh! this year, when combined with the previously announced wins for Woollahra, Sydney Metro and Martin Place, more than doubled the revenue foregone on the exited Vicinity contract. This results in a net opportunity of more than 6% growth from our FY '23 revenue base. These new contracts were bid on terms that we are comfortable will add to the overall profitability of the group. We are still awaiting decisions on the remaining contracts within the $60 million to $80 million range outlined at the beginning of the year. The pipeline of new opportunities has always been added to with the greenfield opportunities from new infrastructure projects and existing contracts that are currently with competitors, as I mentioned earlier. I will now hand back to Cathy.

Thanks, Chris. I'll now talk to our focus on growth over on Slide 18. Out of Home's projected CAGR is estimated at over 6% through to $1.9 billion in 2026 due to a combination of factors, namely Out of Home delivering lower CPMs and generating higher ROI per dollar for advertisers. Measurement improvements are coming with the launch of MOVE 2.0, and these will better capture the performance of all forms of Out of Home. New investments in digital assets right across the sector will continue as cities and populations and infrastructure grows. Programmatic trading is established now and it provides a great new channel to market for advertisers. And increased innovation continues around dynamic creative campaigns and data-led targeting. These factors are all contributing to the significant transformation of the Out of Home sector and are part of its strong structural growth story. As mentioned earlier, we've made some key investments recently to better capture our share of this growth. To summarize these over on Slide 19. Last year, we announced the launch of reooh, oOh!media's retail media division, designed to capture a new addressable market for oOh!media and to provide opportunities for us to diversify our current revenue streams through entry into the high-growth in-store retail media space. Working with external experts, we've been able to rapidly broaden our understanding of this opportunity. And we now have a more informed view of the true market size and the most attractive niche for oOh! in this space. We've also gained advice on the right operational design and resourcing to rapidly capitalize on the opportunity. As part of the work, we've broadened our value proposition beyond screens to a broader end-to-end offering, which encompasses broader omnichannel media sales. Secondly, as a key enabler of improving our sales performance, we have reset our revenue strategies and have moved quickly to deliver improvements to our systems, processes and people capabilities in an increasingly digital marketplace. This work is now largely complete and we're feeling confident that these improvements will drive stronger top-line growth into the second half and beyond. And just for context, beyond these one-off investments in the top line, our underlying OpEx will grow at no more than CPI in the second half. I will now turn to Slide 20 to provide a brief further update on reooh. As mentioned, we've undertaken work to better understand the market opportunity in the nascent retail media market and where our competitive strengths lie. And we've recently been involved in several trials with major retailers who are all forming their individual strategies in the retail media space. And we're currently in advanced negotiations with several retailers and anticipate we will have announcements on contract wins in the second half. Now onto our outlook on Slide 22. The Out of Home industry is expected to continue taking revenue share from other media and the industry expects mid to high single-digit revenue growth in 2024. oOh!'s start to the third quarter was weak, but we have seen a return to growth in August and a robust pacing in September, with a blended Q3 growth of 2% currently and strengthening into Q4. With the launch of the new Sydney Metro rail network today, we expect some revenue contribution in the second half and the full suite of assets will reach full potential later in the year or early in 2025. Adjusted gross margin is expected to be in line with the prior year, consistent with the outlook provided to you in February and will continue to be diligent with operating costs. CapEx is expected to be between $45 million and $55 million, in line with recent tender wins and, of course, the final result is always contingent on development approvals. And so we'll finish on Slide 23 with a quick wrap-up. Our key messages from today's presentation. Out of Home as a category continues to outperform. And while we had a disappointing first half in revenue terms, we have a focused plan, and we've taken action to drive stronger revenue and a flow-on into operating margins. The early signs of this in late Q3 and into the beginning of Q4 are very positive with a strong pickup in media revenue pacing. oOh! continues to be successful in securing highly priced key metropolitan contracts, particularly across Sydney and Melbourne and these will contribute to the business from 2025 onwards. And the strategic one-off investments we made into the first half will further our growth ambitions and -- both into the current business but also into the emerging retail media category. So with that said, thank you. That concludes the presentation. And Chris and I are now happy to go to any questions.

[Operator Instructions] Your first question comes from Cissy Xu with UBS.

Cathy, Chris, just a couple of questions from me. First question, just on Woollahra and the new Metro Martin Place contracts. How are those -- how has Woollahra been ramping? And I know Metro Martin Place opened today. So can you just give us a sense for how much of the $30 million annualized revenue potential we can expect in this year?

Cissy, Chris here. Thanks for the question. In terms of Woollahra, we're currently about halfway out in our rollout. We've done 41 out of the 78 sites. The rest will be completed this year. In terms of metros, as Cath touched on the call, we're a little bit uncertain when all of our assets are going to come into the ground. We opened up with 18 today. We're still not in 3 of the stations being Gadigal, Crows Nest and Victoria Cross. We think in terms of Metro/Martin Place, which we previously said was about 2/3 on a run rate basis of the $30 million. The contribution this year will be in the low to mid millions. It's a little bit unclear until we have exact certainty when the rest of the sites come in the ground. And then Woollahra is probably going to be running at about 3/4 of what we would expect its run rate to be once we get into the back end of the year.

Great. And just a second question as well. If we think about market share and we exclude the new contract additions for the year, how do we think about the underlying market share for kind of the underlying portfolio and how that changes in the second half? Does that grow at market or above? Like, is digitization happening at a fast-enough pace in retail and street for it to grow at market or above in the second half?

Probably the way to think about it, Cissy, in terms of the third quarter, Cath mentioned that we had a poor start to July. We've just gone positive into August. We would expect we'll probably have a market share decline in the third quarter. Then in the fourth quarter, when those assets really start coming online, coupled with what we can see is really solid pacing, we would expect we would be much closer to the market. If we had all of those assets up today, we'd be more confident in taking share in the fourth quarter. What we are confident about is our market share performance going into 2025.

Your next question comes from Tom Chapman with Jefferies.

Sorry, I think we've got -- it's actually John Campbell, not Tom. Yes, just in terms of those comments, Cathy, around what you're doing to address revenue performance, what are the sort of specific initiatives that you could point towards?

Sure. Thanks for that question. We are investing in being able to improve our speed to market now flexibility in what has been a pretty competitive marketplace. So a lot of our -- the feedback we've had from customers is that at times we can be slow to move to get to pricing outcomes, notwithstanding the strength of our networks and our sales team. So we're doing more to put tools into the hands of our frontline sales force to give them more autonomy in the trade and that's having good effect into Q3 and beyond. And we are getting great feedback that the tools are being effective. So that's important. Obviously, with the approach of MOVE 2.0, we also want to make sure that our systems are right so that we can optimize the breadth of our reach and our pricing across all of our environments. And so being able to rebase price across 35,000 assets is a lot of work. But we are absolutely ready now and looking forward to that improvement in the outlook. We've made some changes to our digital sales capability. So we've brought in a strong team in programmatic, and we're seeing really strong uptick in programmatic right across the board for oOh!media. I think we expected our revenue would double. On a year-to-date basis, it's closer to 3x what it was in the prior year. So some good progress there as well. And we've had some new leadership in areas of the business as well. Again, all designed to balance the important experience we have in Out of Home, but also new digital skills. So a combination of those things.

Okay. And your comments around the market being -- I can't remember whether you said highly competitive or intensely competitive, whatever the addictive, but, I mean, is there -- are we seeing -- in what is a tough advertising market where obviously outdoor is outperforming, are we seeing -- in your view, is it more sort of competitive for contracts than, say, a couple of years ago? Or is, I mean, yes, just a flavor for -- to that comment.

So, I guess there's 2 elements to the competitiveness. Firstly, on contracts, we have been really upbeat and positive with the terms that we're renewing our contracts. So that speaks to how rational the market has been. We have obviously made some really strong improvements to the earnings base of the company with some great new wins. And we've done it at clearly terms that are going to drive good profits and margins into the future. So feeling pretty comfortable and confident that the market is competitive but rational, which is important in that commercial space. On the trading side of it, in the advertising marketplace, no surprises, it's been a terrible half for media generally. And so agencies, clients are pretty used to driving high value and they're getting it right across the advertising spectrum. In Out of Home we're treading that fine line between short-term competitiveness and long-term growth. And I think we're treading it very well. So what we are seeing is, we're driving occupancies more in the current environment to deliver campaign outcomes. But we're already seeing pressure on some of our inventories into September and beyond and that will drive good pricing outcomes in terms of rates moving ahead. So I think we're collectively negotiating and navigating that balance well, of course, operating as individual companies, which is important.

Very good. Sorry, just one last question before passing back. In the contract renewal Slide 15, you obviously called out Auckland Transport as a key contract. Can you give us an indication of the revenue significance of that contract?

We haven't given that material out previously other than to say it is our biggest contract in New Zealand. What you can get from our statutory results is New Zealand is about 10% of the group revenues. Obviously, something that we said to the market that's just important to bear in mind is what -- whoever is the successful contractor going forward, that contract is going to have a rebase of profitability that it -- given it was the last of the legacy Adshel contracts. So the delta from an earnings perspective, if we were to retain it or if we were not to in relation to the 2025 earnings that would otherwise earn is not significant.

I think the other point we'd like to remind the market of is that no one contract is worth more than 6% of revenue to the group. And just to give you some context there, Auckland is certainly not our biggest contract.

Your next question comes from Entcho Raykovski with E&P.

My first question is on Road. And then -- you've obviously -- you've mentioned that there was some impact from the loss of Vicinity sites. Can you quantify that impact on the Road segment? How many sites were lost? What revenue were they previously generating? Just to give us an idea of how that's impacted perhaps that 12% decline in Q2. And just as a related question, you said in February that you expected 30% to 50% of the Vicinity contract revenues to be retained across the broader network. Have you seen that happen? I mean, it's difficult for us to judge, given that it falls in terms of fall within Road and Retail. My impression was it was only sitting within Retail. But just interested on whether you managed to retain those revenues or whether there was greater revenue leakage than what you previously expected.

Sure. Thanks, Entcho. I'll start with the second question, then I'll come back to the first. And just for clarity, we did have some of the revenue sitting in Road, and these were basically large-format sites that were on the outside of Vicinity Centres that we sold as large format. In terms of how we went versus the anticipated quantum of retail revenues that we're hoping to hold, we achieved our objectives in the first quarter. We did not, in the second quarter. And that's why you can see on the revenue slide where we split Q1 into Q2, you saw a marked drop-off in terms of retail performance. We are starting to see a better outcome going forward when we go late Q3 into Q4. In terms of the Road contribution, it was a little bit over $2 million in the half, Entcho.

Okay. Got it. So that wasn't -- it seems like that obviously wasn't a significant driver.

No.

Yes. And so maybe then a related question, the Road decline of 12% in Q2, did it come across the network? Were there any particular regions where you saw weakness? Was it digital or static inventory that was impacted? Sorry, I know a lot of questions on this, but it just seems quite stark for that moved from plus 8% to minus 12%.

Yes. Look, it was definitely a competitive quarter for us, and we didn't execute as well as we might have in Q2. So we have to cope to that. The important thing is we've moved through it and Road is certainly showing some very good recovery from September onwards. I think it's also important to note we've added a lot of new capacity into the network. So 9 new large-format sites in Melbourne and this will help us in the second half. And we also picked up a fairly significant contract at the -- in '23, which is helping us to build the base in Sydney with EI Media as well. So I have no problems in the outlook for Road. We are executing better. We can see it in the pacing in late Q3 and into Q4, and it will continue to be a really important part of what we do. I think we just traded poorly throughout the second quarter. We have to cope to that. But importantly, we've moved through it.

Okay. Great. And sorry, one very last question. You've noted on Slide 27, and I'm going all the way out to 27, but in one of the footnotes, I think you've said that some of the market share losses were driven by attrition in the sales team. Are you able to give us any more color on what went on there? Was this natural attrition? Was this something that you planned? And is that a team that needs to be rebuilt now? And if that's the case, what gives you confidence you can rebuild the team, given the process can sometimes be quite lengthy?

Sure. Look, I think in terms -- there are a couple of ways to answer that. Firstly, in terms of sales leadership, all of the changes we've made to sales leadership have been quite intentional and I couldn't be happier with them. I think we are really starting to build out our digital performance, and that's going to be incredibly important in a more digital economy where we have MOVE 2.0 as part of our key trading pillar. There was some attrition and there always is in media at that business manager level. And some of the people that left the business did have some experience, particularly in the road format, that may have hurt us in the short term. But I'm not seeing that as a sticky impact. I think we've moved right through it now, looking at the forwards. And I think importantly, you've got to always keep your eye on those people. And one day, I'm sure we can welcome them back. We have a pretty high percentage of boomerangs in media. So a lot of people do go often for promotions, but they tend to come back in the longer term and of course, we stay close to them.

Your next question comes from Kane Hannan with Goldman Sachs.

Maybe just firstly, just the commentary on the significantly stronger 4Q. I mean, given the volatility we've seen and continue to see in the ad market annual numbers, just is there any more color you can give us around those pacing trends? How broad-based it is from a customer's perspective, I suppose, how short the market is trading currently?

Yes, of course. It's broad based. It's every one of our environments pacing positively and on a strong upward trajectory. So it's not isolated to any 1 thing. And I think that's a byproduct of us trading a little more effectively in the market, meeting the market better and also the further out we go, the more the new assets will come into that advantage as well. The market is short-term, but we have a healthy pipeline and there's no doubt the structural shift is a consistent trend. We only have 1 listed media company having reported yet, and that was 7 West Media, and they said they were back 4% in September and 5% in October. And we noticed that they actually grew revenue shares to June 30. So that obviously might swing back a little bit with the Olympics, a 9%. But it's not rosy on the other -- in the other sectors from what we can see, particularly television. And so I think, given what we're seeing, given the structural story, which is well and truly supported in data, and given that other media seem to be reducing declines, I think it's still going to be a very good quarter and second half for Out of Home.

Yes. Perfect. And just the New Zealand business during the half. Is there any color you can give us around how that traded? I mean, obviously, the economy over there has its challenges. So just interested if you could talk about that as well, please.

Yes, it was a tough-ish half for New Zealand. We have obviously larger small format -- a small-format asset base down there. So a lot of consumer discretionary, retail and FMCG money. So that was somewhat flat in the first half, but we are probably seeing a stronger recovery into late -- the second half in New Zealand than we are in Australia. So I would say, it's a rebound in New Zealand from what I can see.

Perfect. And then just on the cash flow. You touched on a couple of the one-off impacts in the first half. Is there anything we should think about in the second half, I suppose, outside of, obviously, the ongoing CapEx you've guided to and the programmatic drag on working capital that will impact that second half cash flow?

It's predominantly around CapEx that I expect will be the critical determinant, but very confident that we will have lower gearing as we get typically through the second half cycle.

Your next question comes from Darren Leung with Macquarie.

I just wanted to confirm the first one on the project contracts. That $38 million of projected revenue in FY '25, can you -- is this confirmed or is this an anticipation of an 80% win rate into 2025?

Yes. So what that attaches to are contracts that we've either won like Metro Tunnel Melbourne or we are very confident we will be able to announce wins in the weeks ahead based on progress through those tenders and that they will start to generate revenue from 2025. So that contract that will be won this year that will have a revenue impact from '25 onwards. And a mix of some have already been won as Metro Tunnel Melbourne, which we've announced, and the others that are unannounced.

Okay. Sorry, so just to be clear, is this $30 million -- if I think about Woollahra and Sydney Metro, that's $30 million annualized, is this $38 million on top of that?

Yes, it's additional.

Yes. Understand. Just a second one, just on the trading. There's obviously been a lot around market share. Maybe to approach it a different angle, is it possible to get a feel for what the revenue performance looks like between the static against the digital assets in the portfolio?

Yes. Our classic revenue has declined markedly during the half. It's very clear. Specifically, if you look at street furniture, we've had fantastic digital street furniture growth. But with the bulk of our assets still being classic, that's been a drag on our performance. And it's one of the reasons why we're so focused on digitization going forward. But as we said previously, one of the challenges is, specifically in terms of street furniture, you're not able to digitize those until you either renew or win the contract. So there is a time delay on how we can respond. But a good example is the metro network. Cath and I actually took the train here this morning and went through Martin Place and looks fantastic.

Okay. Understand that. I guess if I reconcile that against one of the earlier questions around the balance sheet and capital intensity, should we be expecting an uplift in CapEx over the next few years as they kind of work towards those static assets?

I think what we previously said, probably from a run rate perspective, I don't see us in the absence of potentially reooh really taking off, spending any more than, call it, $65 million to maybe $70-odd million because one of the things, Darren, that we are very focused at is bringing cost out of the supply chain and of the procurement process. And, sorry, as a follow-on, and the other aspect is there's always an ability to delay certain installations. So from a timing of cash flows -- and there's a limit as well as how many we can stall over any given period. And that gives us the ability to manage those cash flows.

That makes sense. And then just the final one for me, just in relation to the Airtasker partnership, so that $6 million partnership. But it looks like with the 5.8% coupon for 2 years, I mean, I guess the sort of 2 questions is, why do you need this kind of financing versus your regular sort of bank debt? And then the second one is just on face value, like, if I'm comparing the amount of capital you receive and the amount of coupons, it looks like a little bit of a discount compared to the $6 million of inventory Airtasker is receiving. So I guess I'm just keen to understand the difference between the 2, please.

Okay, Darren, I just want to clarify something. That is not borrowings from us. So what Airtasker has done, and they put this on the ASX platform, they did a similar thing with ARN, they've effectively done a media for equity arrangement, but it's been done through a convertible note. So Airtasker did not have the cash available to prosecute its media plan across ARN and oOh!media. And so effectively, this is just tactical, this isn't strategic from our perspective. What we have an arrangement in return for about $6 million worth of media inventory, we will either get cash at a future point at that coupon rate or at their call, it will convert to equity on a 10% discount on the VWAP at that point in time. So this is funding Airtasker, not oOh!.

Okay. No, that's clear.

Your next question comes from Brian Han with Morningstar.

Cathy, the recontracting of the street contract that you were referring to, accepting lower non-media revenue for lower concession rent, is that something we should expect more of going forward in your renewals?

Brian, I don't think so. This was a particular contract, one of the original Adshel contracts that we inherited when we acquired the business. And it did have quite a high number against cleaning and maintenance, probably higher than we would normally see in a council contract of its kind. So I think it's normalizing and coming back to what we would consider to be the more normal structure of those types of concessions. So, yes, I think you can see it as the outlier.

Okay. And you mentioned somewhere that Out of Home is generating higher ROI than other media on lower CPM. Can you provide some rough figures as to how much higher ROI Out of Home generates compared to the others?

Sure. Look, we have a number of sort of -- we know that our relative CPMs are much lower than Out of Home's digital media, such as VVOD and digital audio and so forth. And we know about the ROI from the bespoke data that oOh! maps to all of its assets. So we have approximately 500,000 different buyer-graphics, where we can work with advertisers to tell them pre- and post-campaign results. And we know that when we plan Out of Home to a biographic, i.e., a yogurt buyer or a carbonated soft drink consumer, we know that the ROI is approximately double in sales. So that claim is based in hundreds of case studies that we've developed over the many years that we've done this type of strategic selling. And it's a pretty compelling case for not just the mass reach and effectiveness of Out of Home relative to its CPM, but also the genuine source of truth, which is transactional sales. So we have high conviction around that.

There are no further questions at this time. I'll now hand back to Ms. O'Connor for closing remarks.

Well, thank you, everyone. We hope you enjoyed today's presentation and importantly, the positive outlook that we've given for the rest of the year. Delighted that we're starting to see some of the hard work with our assets come to life. And catching the metro rail here was just the boost we needed to come and start the conversations with you all this week. So we look forward to getting more into the detail and thanks for your time this morning.

That does conclude our conference for today. Thank you for participating. You may now disconnect.