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HT&E reports falling Adshel revenue as it awaits merger approval

Here, There and Everywhere’s street furniture business, Adshel, is recovering from the loss of the Yarra Trams contract last year, as it awaits regulators’ approval for its acquisition by Ooh Media, investors were told today.

According to the half year results from HT&E – which owns Australian Radio Network, Adshel, Conversant Media, Unbound and Emotive – Adshel’s revenue was down by 9% from $108.7m to $98.9m.

CEO Ciaran Davis is pleased with today’s results

Earnings before interest tax and amortisation (EBITDA) also dipped by 7% year on year from $22.2m to $20.6m. Adshel is currently in a binding agreement to sell its out of home business to Ooh Media for an implied value of $570m. Should it proceed, Ooh Media will own 100% of the entity. The provisional date for the announcement of ACCC’s decision is August 30.

HT&E has said one of the biggest challenges was the loss of the national Adshel live digital network, with Melbourne digital street furniture aspects not being delivered to advertisers following the loss of the Yarra Trams contract.

The company said the latest results were driven by an $111.8m half year revenue impact and $8.7m in costs associated with the loss of the contract in Q4 2017. But, it said, the impact was ‘less than initially estimated’.

HT&E said they are trying to reinstate the network, by launching Metro Trains Melbourne assets in April. It is also hoping to improve the situation further once the digital street furniture conversions commence for the Public Transport Victoria contract later this year.

Adshel is currently being treated as a discontinued operation and as an asset held for sale. If it was considered a continued operation, group revenue would have been up 1%  and EBITDA would have climbed by 11%.

Excluding Adshel, HT&E’s revenue for the first half of 2018 grew sizeably, up from $124.8m the year prior to $137m. EBITDA climbed by 28% from $124.8m last year to $137m and net profit after tax (NPAT) for the business sits at $13.5m, a 57% change from last year’s results.

HT&E’s half year 2018 results

A majority of that revenue came from ARN – Kiss FM and Gold FM’s owner – which increased its half year growth by 7.8%. Total revenue for the half was $118m, up 9% from last year’s $108m and EBITDA grew by 13% to $37.7m. Most of ARN’s revenue came from growth from agency revenue, up 15% from $68.3m to $78.6m.

Hong Kong Outdoor was also a major driver of revenue for the year, up 24% compared to the year prior.

But revenue growth in ARN and Hong Kong Outdoor was partly offset by declines in content agency Emotive and publisher Conversant Media. HT&E has attributed those declines to the challenges of display advertising conditions. Group costs from continuing operations before EBITA were up 6% to $109.8m. EBITA up 28% to $30.4m for the first half.

Revenue from digital investments – which includes Emotive and Conversant Media was just $4.306m, down from last year’s $5.795m.

EBITDA for Emotive was $0.3m for the first half of 2018, up from 2017’s $0.4m. Conversant Media’s EBITDA was $0.5m, up from $0.3m for the same time last year.

Interim chairman Robert Kaye, said it had been a busy period, but today’s efforts were an “excellent outcome” for shareholders.

“What is also particularly pleasing is that the extensive sales process has not distracted management, and they have done an outstanding job delivering on important operational milestones across the business, with the continued improvement in our national radio business a real stand out,” Kaye said.

HT&E boss Ciaran Davis said the second half focus would be on radio ratings, particularly for Melbourne.

“There is significant potential for growth within Adshel, with key contract tenders in Brisbane and the City of Sydney and the continuation of the digital build out in Melbourne and New  Zealand,” Davis added.

“We will continue to optimise existing opportunities such as Adshel’s flexible trading platform which allows advertisers to buy digital screens by time, day and location.”

No mention was made of Generation E Media, which Davis flagged earlier this year. However the company did mention its ongoing matter with the Australian Tax Office, telling investors it would exercise ‘all available objection rights’ to the tax penalties and interest.

At close of business yesterday, HT&E’s market capitalisation was $732.12m.

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