QMS Media (QMS) - E.L. & C. Baillieu Limited · QMS Media Limited is an outdoor advertising company, with assets across digital, static billboard, retail, street furniture and transit

BAILLIEU HOLST RESEARCH 04 September 2015 INTERNAL ONLY

Baillieu Holst Ltd ABN 74 006 519 393 www.baillieuholst.com.au Please read the disclaimer at the end of this report. Page 1

RECOMMENDATIONS

Rating BUY ▲ Risk High

Price Target $1.10

Share Price $0.90 SNAPSHOT

Monthly Turnover $17.4mn

Market Cap $226mn

Shares Issued 251.6mn

52-Week High $0.91

52-Week Low $0.68

Sector Consumer Discretionary

BUSINESS DESCRIPTION QMS Media Limited is an outdoor advertising company, with assets across digital, static billboard, retail, street furniture and transit categories. The business has operations in Australia, New Zealand, and Indonesia, and is the culmination of a number of recent business and asset acquisitions.

12-MONTH PRICE & VOLUME

RESEARCH ANALYST Nicolas Burgess, CFA

+ 613 9602 9379

[email protected]

Nick Caley + 613 9602 9283

[email protected]

Josh Kannourakis

+ 613 9602 9265

[email protected]

Disclosure The author owns no shares in QMS. Baillieu Holst Ltd has raised capital for QMS Media Limited and earned fees in relation to that activity in the past 12 months.

QMS Media (QMS)

COMPANY REPORT – INITIATION OF COVERAGE

I saw the sign

Initiation of coverage: We initiate coverage of QMS Media with a BUY rating and $1.10 price target. QMS operates in the outdoor advertising market in Australia, New Zealand and Indonesia. Key attributes of our positive investment thesis include asset quality, asset tenure, digital exposure and balance sheet strength.

Sector on the rise: Outdoor advertising is a high growth market at the moment, with expenditure up 16% in the eight months to August over the pcp. One of the key reasons for this is digital technology, which brings significant flexibility and new features to outdoor advertising, including speed to market and consumer engagement. Especially for large format digital billboards, the value proposition to advertisers is increased and the financial returns to outdoor advertising companies are enhanced.

QMS has a large digital exposure: We expect QMS to generate 38% of its media revenue (28% total revenue) from large format digital billboards by FY17F. The company is targeting 33 signs around Australia by Jun-16 (22 operational now, the remaining 11 are permitted) and we forecast an additional five signs per year to enhance earnings growth over the forecast period. Given the higher margins available through digital, we expect QMS to have a sector-leading EBITDA margin of 25% by FY17F.

Other positive attributes: QMS has a strong balance sheet with net cash of $16m at 30 June, which positions it well to pursue further acquisitions. Meanwhile, the company’s average contract tenure is more than 13 years across its asset portfolio, reducing renewal risk for the company. We also note the company’s recent successful track record with contract tenders. Two significant contract wins have been in the Transit segment, being Auckland Transport and Bali Airport. We expect these two contracts to contribute around 30% of the revenue growth in FY16F.

Valuation and price target: Our blended valuation and price target is $1.10 ($1.23 DCF, $0.98 EV/EBITDA), using a blended EV/EBITDA (benchmarked against listed peers) and DCF methodology.

Investment risks: The key risk is execution. QMS is ramping up two significant contracts in Transit as well as managing digital sign constructionand conversions. That said, we note at its recent FY15 result the company beat its Prospectus forecast EBITDA and profit, suggesting plans are on track. Elsewhere, risks include: 1) an unexpected downturn in the advertising market; 2) non-renewal of the leases on the outdoor media assets; and 3) competition to find and develop new outdoor sites.

INVESTMENT SUMMARY

Year End: 30 June 2014 (A) 2015 (A) 2016 (E) 2017 (E) 2018 (E)

Revenue $mn 44 60 102 112 117

EBITDA $mn 3.7 4.6 24.0 28.2 29.6

EBIT $mn -1.0 0.6 19.6 23.0 23.9

Reported Profit $mn 1.3 -4.3 12.0 15.3 16.2

Adjusted Profit $mn 1.0 2.6 14.8 17.8 19.0

EPS (Reported) ¢ - - 4.8 6.1 6.4

EPS (Adjusted) ¢ - - 5.9 7.1 7.5

EPS Growth % - - - 19.8 7.0

PER (Reported) x - - 18.8 14.8 14.0

PER (Adjusted) x - - 15.3 12.8 11.9

Dividend ¢ - - 1.5 3.5 4.0

Yield % - - 1.7 3.9 4.4

Franking % - - 100 100 100

BAILLIEU HOLST RESEARCH QMS Media Limited


Financial summary Code: QMS Rating: BUY

Analyst: Price Target:

Date: Upside/downside:

Share Price: Valuation:

Market Capitalisation: Valuation method:

Year End: Risk:

PROFIT & LOSS (A$m) FY14A FY15A FY16E FY17E FY18E EARNINGS FY14A FY15A FY16E FY17E FY18E

Revenue 44.1 59.6 102.4 112.0 117.3 EPS - Underling cash (diluted) - 1.0 5.9 7.1 7.5

COGS -24.8 -35.3 -55.7 -59.9 -62.6 EPS Growth - underlying - - - 19.8% 7.0%

Gross profit 19.3 24.3 46.7 52.1 54.7 EPS - Reported (diluted) - -1.7 4.8 6.1 6.4

Operating costs -15.6 -19.7 -22.7 -23.9 -25.1 Diluted shares (m) - 252.0 252.0 252.0 252.0

EBITDA 3.7 4.6 24.0 28.2 29.6 DPS (cps) - - 1.5 3.5 4.0

Depreciation -2.0 -1.9 -2.1 -2.7 -2.9 Payout Ratio - - 25% 50% 53%

EBITA 1.7 2.7 21.9 25.5 26.7 Franking - - 100% 100% 100%

Amortisation -2.7 -2.1 -2.3 -2.5 -2.8

EBIT -1.0 0.6 19.6 23.0 23.9 VALUATION FY14A FY15A FY16E FY17E FY18E

Net interest -0.3 -0.3 -0.5 0.9 1.4 Underlying P/E (x) - 87.2 15.3 12.8 11.9

Other 2.6 -5.3 -0.5 0.0 0.0 EV/EBITDA (x) - 45.8 9.3 7.7 7.2

PBT 1.3 -5.0 18.6 24.0 25.3 EV/EBITA (x) - 351.3 10.2 8.6 8.0

Tax 0.0 0.7 -5.9 -7.2 -7.6 Dividend Yield (%) - 0.0% 1.7% 3.9% 4.4%

Minorities 0.0 0.0 -0.6 -1.5 -1.5 Price/Book (x) - 2.0 1.9 1.7 1.6

Reported NPAT 1.3 -4.3 12.0 15.3 16.2 Price/NTA (x) - 2.9 2.4 2.2 2.0

Price/FCF - -90.0 -518.6 14.1 13.0

Amortisation of intangibles -2.6 4.6 2.3 2.5 2.8

Non-recurring items (net tax) 2.3 2.3 0.5 0.0 0.0 GROWTH FY14A FY15A FY16E FY17E FY18E

Underlying profit 1.0 2.6 14.8 17.8 19.0 Revenue growth 27.1% 35.1% 71.9% 9.3% 4.7%

Operating cost growth 16.4% 26.3% 15.5% 5.0% 5.0%

BALANCE SHEET (A$m) FY14A FY15A FY16E FY17E FY18E EBITDA growth -11.9% 24.3% 421.1% 17.8% 4.9%

Assets PBT growth -114.9% -484.6% -471.9% 28.9% 5.6%

Cash - 21.4 7.7 11.5 15.5 Underlying NPAT growth -114.6% -430.8% -380.1% 26.8% 6.2%

Receivables - 9.9 18.4 20.2 21.1 Reported NPAT growth -28.6% 160.0% na 19.8% 7.0%

PPE - 19.0 30.9 33.8 36.7 MARGINS & RETURNS FY14A FY15A FY16E FY17E FY18E

Intangibles - 31.5 29.2 26.7 23.9 Gross margin 43.8% 40.8% 45.6% 46.5% 46.6%

Tax assets - 2.7 2.7 2.7 2.7 EBITDA Margin 8.4% 7.7% 23.4% 25.2% 25.3%

Goodwill - 61.9 61.9 61.9 61.9 EBITA Margin 3.9% 4.5% 21.4% 22.8% 22.7%

Other assets - 9.3 9.3 9.3 9.3 NPBT Margin 2.9% -8.4% 18.2% 21.4% 21.6%

Total Assets - 155.7 160.1 166.1 171.1 ROIC - 2.4% 14.0% 14.9% 14.9%

Liabilities ROE - 2.3% 12.7% 14.0% 14.0%

Payables - 10.3 14.9 16.2 17.0 ROA - 3.5% 13.9% 15.7% 15.8%

Borrowings - 3.1 3.1 3.1 3.1 Effective Tax Rate - 14.0% 32.0% 30.0% 30.0%

Provisions - 3.2 3.2 3.2 3.2 GEARING FY14A FY15A FY16E FY17E FY18E

Tax liabilities - 1.7 1.7 1.7 1.7 Net Debt / (cash) (A$m) - -16.0 -4.6 -8.4 -12.4

Deferred consideration - 21.5 8.2 4.2 0.2 Enterprise value - 211 222 218 214

Other liabilities - 4.8 6.8 6.5 5.8 Net Debt/Equity (%) - -14.4% -3.7% -6.4% -8.8%

Total Liabilities - 44.7 38.0 35.0 31.1 EBITDA/Net interest - 15.3 47.9 -30.2 -20.5

Equity

Share capital - 115.9 115.9 115.9 115.9 OPERATIONAL DATA (A$M) FY14A FY15A FY16E FY17E FY18E

Retained earnings - -4.8 6.2 15.2 24.1 Revenue by type:

Other equity - 0.0 0.0 0.0 0.0 Digital 3.0 7.1 24.3 31.3 33.1

Total shareholders equity - 111.1 122.2 131.1 140.1 Static 13.6 22.3 28.6 28.8 29.7

Street 0.0 0.5 2.0 2.1 2.2

BV per share (cps) - 44.1 48.5 52.0 55.6 Transit 4.9 5.3 18.0 18.9 19.9

NTA per share (cps) - 31.6 36.9 41.4 46.1 Retail 0.0 2.3 2.3 2.4 2.5

CASH FLOW (A$M) FY14A FY15A FY16E FY17E FY18E Media 21.5 37.5 75.2 83.5 87.3

Cash at Start 0.0 21.4 7.7 11.5 Production 22.6 22.1 27.2 28.5 30.0

Cash from from ops 0.1 13.6 21.6 23.3 Group 44.1 59.6 102.4 112.0 117.3

Capex -2.6 -14.0 -5.6 -5.9

Free cash flow -2.5 -0.4 16.0 17.4 Revenue growth % 27.1% 35.1% 71.9% 9.3% 4.7%

Free cash flow per share (cps) -1.0 -0.2 6.4 6.9 Digital 76.5% 136.7% 242.3% 28.7% 5.8%

Cash flow from investing -71.3 -27.3 -9.6 -9.9 Static 43.2% 64.0% 28.3% 0.6% 3.0%

Cash flow from financing 92.6 0.0 -8.2 -9.5 Other 69.0% 65.3% 175.6% 4.8% 5.0%

Cash at end 21.4 7.7 11.5 15.5 Production 9.7% -2.2% 23.0% 5.0% 5.0%

GOCF / EBITDA 95% 95% 95% 95% Number of digital billboards 3 21 33 38 43

FCF / Underlying cash NPAT 59% -4% 105% 107% Number of static billboards 108 237 240 240 240

Nicolas Burgess $1.10

22.6%

$1.10

4 September, 2015

$227m

30 June

DCF / EV/EBITDA

High

$0.90



Investment view We initiate coverage of QMS Media Group with a BUY rating and $1.10 price target.

Our positive investment thesis is based on a growing industry sector, the company’s digital rollout plans, increasing operating margins, strong balance sheet, asset tenure and experienced management and board.

Outdoor advertising increasing share

Growing faster: Outdoor is one of the best performing advertising categories in Australia. Expenditure on outdoor advertising has grown at a compound annual rate of 6.3% over the last ten years, compared to the growth of 2.2% for total media expenditure, as shown in the chart below.

Increasing share: We estimate the outdoor category accounted for 4.5% of the total advertising market in 2014. This is up from 3.0% ten years prior. In our view, key reasons behind this growth include the medium’s cost effectiveness, the fragmentation of other media, and the development of an industry standard audience measurement system (called MOVE, which started four years ago).

FIG.1: AUSTRALIAN ADVERTISING EXPENDITURE – OUTDOOR SEGMENT ($m)

327354

379

436 454

400

477 494 502544

602.1

3.0% 3.1% 3.2% 3.3% 3.3% 3.2%3.5% 3.7% 3.8%

4.1%4.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Outdoor Outdoor share

6.3% CAGR

Source: CEASA, Outdoor Media Association, Baillieu Holst estimates

Outdoor share should continue to grow: We expect outdoor advertising to continue to grow its share of the advertising market for a number of reasons. The development of digital outdoor technologies is likely to be a key driver of this growth, in our view. Digital technologies bring significant flexibility and new features to outdoor advertising, such as time-segment advertising (eg. the morning commute versus the evening commute), speed to market, increased consumer engagement and interactivity, and enhanced data collection and measurement techniques. We believe these developments may increase yield, increase the addressable market, and increase potential advertiser set.

Recent data remains positive: The most recent industry data, sourced from the Outdoor Media Association (OMA), shows total outdoor advertising expenditure in Australia increased 16% to $402m in the eight months to August over the pcp, as shown in the chart below. Growth rates have been moderating over the course of the year, from 24% in March to 6% in August. Digital outdoor advertising accounts for 24% of the total for the year to date, up from 16% in the pcp. In the context of moderate economic growth in Australia, we regard outdoor advertising as a high growth market.



FIG.2: AUSTRALIAN OUTDOOR ADVERTISING EXPENDITURE – ANNUAL GROWTH BY MONTH

19%

24% 24%

20%

13%

17%

10%

6%

16%

0%

5%

10%

15%

20%

25%

30%

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 CY15 -YTD

Source: Outdoor Media Association

Digital a key plank in the QMS growth strategy

Overall: Digital outdoor advertising is a key part of the QMS growth strategy. We expect digital to account for 38% of QMS’ media revenue by FY17F.

FIG.3: QMS DIGITAL EVOLUTION

Source: Company reports

Digital development: QMS plans to erect new digit billboards as well as convert static billboards to digital over time. Sites which are candidates for conversion are assessed on location and suitability, the planning and permit environment, and financial viability. QMS is targeting 33 digital billboards by the end of FY16F, up from 3 at December, 2014 (22 installed as at August, 2015).

Forecast financial impact: Based on our forecasts, 40% of the revenue uplift between FY15A and FY16F is from digital assets, including the development of 12 sites (conversions and new sites). We expect the company to generate 32% of its media revenue (24% overall) from digital assets by FY16F, increasing to 38% in FY17F (28% overall). More broadly, the company has identified 62 current static sites which would be suitable for conversion over the next few years.



FIG.4: SECTOR COMPARISON – PORTFOLIO OVERVIEW

Metric APN Outdoor oOh! Media QMS

Digital portfolio metrics

Static sites / Billboards Dec-14 2,800 4,221 230*

Large format digital Dec-14 34 10 16*

Large format digital CY15F target 51 25-30 33 (FY16F)

Additional sites planned +150 in future +50 over 3 years +62 in future

Asset portfolio Dec-14 Dec-14 Dec-14* FY16F

Static sites / Billboards 2,800 4,221 230 240

Retail - 14,018 400 1,150

Place - 6,201 - -

Transit and airports 34,300 2,027 400 ~2,700

Rail 2,000 - - -

Street - - 710 710+

Digital revenue 1H15A 1H15A FY15A

Group revenue A$m 136.3 124.1 59.6

Digital revenue total A$m 27.0 36.0 7.1

Proportion % 20% 29% 12%

Digital revenue billboard A$m na 3.0 7.1

Proportion of billboard % na 6% 24%

Source: QMS Prospectus, Company reports * Estimated Dec-14 based on Prospectus dated June, 2015

Other growth initiatives

Offshore: Offshore markets are also a key part of QMS growth strategy, notably Indonesia and New Zealand. Indonesia’s advertising market, in particular, has been growing rapidly over the last few years (18% CAGR over the last five years), where outdoor accounts for 2.9% of the total advertising market.

Existing asset development: QMS plans to develop its existing portfolio of outdoor media assets over time, through site upgrades and expansions.

New asset development: The company plans to participate in the tender process for new or existing concessions as and when they come up over the next few years. This includes new sites as well as maturing leases held by other outdoor advertising operators. QMS notes success in its recent tenders, including: Eastlink, VicTrack Roadside Billboards, Melbourne Square landmark digital billboard, and Bali Airport.

Acquisitions: QMS has stated it will continue to identify and evaluate potential acquisition opportunities over time.



Operating metrics from a premium asset portfolio

Margins: We are forecasting QMS’ EBITDA margin to grow from 7.7% in FY15 to 23.4% in FY16F, driven by the development of digital assets as well as the consolidation of a number of acquisitions. In addition, the company has previously built out its cost base ahead of revenue generation, much of which will begin flowing in FY16F.

Comparison: Noting that QMS’ two listed peers report on a December year end, analyst consensus data (source: Thomson Reuters) shows APN Outdoor’s EBITDA margin increasing to 22.4% in CY16F, up from 21.6% in CY15F, and oOh! Media’s EBITDA margin increasing to 20.3% in CY16F, up from 19.6% in CY15F.

Average tenure: We note QMS has a long term contract tenure on its existing asset portfolio, with an average of more than 13 years.

FIG.5: SECTOR COMPARISON – OPERATING METRICS

Metric APN Outdoor oOh! Media QMS

Code APO OML QMS

Market Cap A$m 608 436 226

CY or FY CY CY FY

CY15F/FY15A metrics Consensus Consensus Actuals (proforma)

Revenue A$m 293.7 273.7 59.6

EBITDA A$m 63.3 53.3 4.6

NPATA A$m 34.3 20.8 2.6

EBITDA margin 21.6% 19.6% 7.7%

CY/FY16F metrics BH Forecasts

Revenue A$m 317.9 295.4 102.4

EBITDA A$m 71.1 60.0 24.0

NPATA A$m 39.1 24.1 14.8

EBITDA margin 22.4% 20.3% 23.4%

Source: Thomson Reuters, Baillieu Holst estimates

Experienced management team

We believe the management team boasts a high level of experience. We note that the senior management team (nine individuals) has a wealth of experience in the outdoor and non-traditional advertising sector. Most members of the team have a minimum of 10 years outdoor experience.

We also note the high level of industry and relevant geographic experience of the board of directors. Of the five board members, three have substantial experience in the media sector and all five have offshore transactional or operational experience. Three directors have experience in South East Asia, a specific growth engine for QMS.

The profile of the Board of Directors and senior management are contained in Appendix A.

Robust financial position

At 30 June, 2015, QMS had net cash of $16.0m. The financial position of QMS compared to its listed peers is shown below. We note QMS had a deferred consideration liability of $21.5m at 30 June, 2015.

FIG.6: SECTOR COMPARISON – FINANCIAL POSITION

Metric Date APN Outdoor oOh! Media QMS

Net debt/(cash) Jun-15 $50.6m $61.2m ($16.0m)

Gearing (ND/ND+E) Jun-15 18.3% 19.9% -




Recent financial results We look at QMS’s result FY15 result, where the company exceeded its Prospectus

forecasts.

We also look at the results from APN Outdoor (APN) and oOh! Media (OML), both of which upgraded EBITDA guidance for the year ending December, 2015.

QMS: FY15 result overview

Drivers: QMS reported its FY15 result ahead of the Prospectus forecasts, as shown in the table below, driven by higher than expected gross margin (higher capture rate of gross margin through the Print Production division) and a lower amortisation charge. Revenue of $59.6m was in line with forecast and up 35% over the year (proforma basis), given recent acquisitions and the rollout of digital. Operating costs were in line with forecast.

FIG.7: QMS – FY15 RESULT OVERVIEW

Income Statement Actual ($m)

Prospectus Forecast

($m) Difference

Revenue 59.6 59.4 0%

COGS -35.3 -36.6 4%

Gross profit 24.4 22.8 7%

Operating costs -19.7 -19.7 0%

EBITDA 4.6 3.1 52%

D&A -4.0 -4.6 13%

EBIT pre significant items 0.6 -1.5 nm

Significant items -5.3 -5.4 2%

EBIT post significant items -4.7 -6.9 32%

Net interest -0.3 -0.4 nm

Tax 0.7 0.2 nm

NPAT -4.3 -7.1 39%

NPATA pre significant items 2.6 0.6 nm

Gross margin 40.9% 38.4% 2.6%

EBITDA margin 7.9% 5.2% 2.7%


Revenue by type: Group revenue was in line with Prospectus forecasts. Digital revenue (proforma basis) increased by 136% to $7.1m given an increase in the number of landmark digital billboards from 12 to 21 over the year, as shown in the table below. Digital revenue accounted for 24% of Australian media revenue over the year, up from 21% in FY14. Static revenue increased 64% as the billboard count increased from 108 to 237. Street furniture made a modest contribution as the Gold Coast Furniture representation commenced. Retail reflects New Zealand-based assets across institutional and independently-owned shopping centres.



FIG.8: QMS – FY15 REVENUE BY SEGMENT

Revenue by segment Actual ($m)

Prospectus Forecast

($m) Difference

Landmark Digital 7.1 7.0 1%

Static 22.3 22.3 0%

Street 0.5 0.2 150%

Transit 5.3 5.3 0%

Retail 2.3 2.2 5%

Media 37.5 37.0 1%

Print production 22.1 22.2 0%

Total 59.6 59.4 0%

% of total revenue - international 13.6% 14.5% -0.9%

% of total media revenue - digital 18.8% 18.9% -0.1%

% of Australian media revenue - digital 24.0% 22.1% 1.9%


Outlook: QMS confirmed its previous guidance of establishing 33 landmark digital signs by

the end of FY16F (12 additional required from the installed base of 21 at 30 June). The flagship Punt Road digital sign (Melbourne) was established post balance date and is now operational. The remaining 11 sites to achieve the year-end target are fully permitted. In fact, seven of the remaining 11 signs are expected to be operational by 31 December, 2015. Meanwhile, in Transit the key Bali International and Domestic airport terminal contract has been secured (revenue from September), as has the Auckland Transport services agreement (contract term of nine years including options).

Earnings guidance: The company has guided to 1H16F revenue of ~$41m and EBITDA of ~$9.5m. Plus, the company has re-stated it expects to pay a final dividend in FY16F at an annualised payout ratio of 30-50%.

Competitors

APN Outdoor: At its recent 1H15 result, APO reported 25% revenue growth, driven by digital conversions in the Billboard, Rail and Airport segments. Static revenue growth was 10%, driven by the Billboard and Transit segments. The group’s gross margin increased around 5 percentage points to 34.0% and the EBITDA margin increased from 11.6% in the pcp to 19.5%. The company increased its FY15F EBITDA guidance by “mid-teens percent” from its original Prospectus forecast. This implies ~43% EBITDA growth for APO over the year.

oOh! Media Limited: At its recent 1H15 result, OML reported 6% revenue growth, driven by the Fly and Retail segments, reflecting digital conversion, contract wins and increased advertiser demand. The group’s gross margin increased around 5 percentage points to 34.8% and the EBITDA margin increased from 11.4% in the pcp to 16.3%. The company increased its FY15F EBITDA guidance from its original Prospectus forecast of $48.6 to $53-55m, or ~11%. This implies ~75% EBITDA growth for OML over the year.



Valuation, price target and key risks We value QMS using a blended DCF and EV/EBITDA methodology.

Our equity valuation and price target for QMS is $1.10 per share.

Methodology

We value QMS using a blended EV/EBITDA and DCF methodologies.

Valuation and price target: our blended valuation and price target is $1.10 ($1.23 DCF, $0.98 EV/EBITDA).

FIG.9: VALUATION SUMMARY

Method Valuation per share

DCF $1.23

EV / EBITDA $0.98

Blended valuation $1.10

Price target $1.10

Source: Baillieu Holst estimates

Assumptions – DCF

The assumptions underlying the DCF include a weighted average cost of capital of 11.0%, a risk free rate of 5.0%, an expected return on the market of 6.0%, a terminal growth rate of 3.0% and a beta of 1.0.

Assumptions – EV/EBITDA

We use the listed peers in APN Outdoor (APO) and oOh! Media (OML) as QMS’ key comparables. These two are companies are listed on the ASX and whose principal business is outdoor advertising.

Our valuation methodology uses the average EV/EBITDA multiple of APO and OML, which is currently 9.6x FY16F EBITDA using consensus estimates sourced from Thomson Reuters (raw consensus estimates based on CY15F and CY16F adjusted for FY16F).

For the upper end of the range, we value QMS at a 10% premium to sector peers, which we justify on the basis of:

- the digital rollout plans for the business adding significantly to profitability,

- we forecast higher a EBITDA margin for QMS than peers in FY16F, and

- access to potentially high growth offshore markets such as Indonesia.

We apply a 10% discount for the lower end of the range, which we justify on the basis of:

- a lack of consolidated operating history given a number of recent acquisitions, and

- a significant jump in company profitability between FY14A and FY16F involving some risk (see risks below).

Our EV/EBITDA valuation range is from $0.89-1.07 as shown in the table below, with $0.98 being the mid point.



FIG.10: QMS VALUATION RANGE – EV/EBITDA

CY15F CY16F

Adjusted* for FY16F

APN Outdoor EV/EBITDA multiple x 11.1 9.8 10.5

oOh! Media EV/EBITDA multiple x 9.1 8.1 8.6

Average x 10.1 9.0 9.6

Low

(10% discount)

High

(10% premium) Mid

Applied multiple x 8.6 10.6 9.6

QMS EBITDA FY16F A$m 24.0 24.0 24.0

Enterprise value A$m 207.4 253.4 230.4

Net debt/(cash) A$m -16.0 -16.0 -16.0

Equity value A$m 223.4 269.4 246.4

Equity value per share A$ 0.89 1.07 0.98

Source: Baillieu Holst estimates, company reports, Thomson Reuters *Adjusted using a simple average

Financial forecasts – key assumptions (also refer Financial Summary on page 2)

Overall: Our forecasts show QMS increasing its revenue from $60m in FY15 to $102m and EBITDA from $4.6m to $24.0m in FY16F. This is largely driven by revenue growth and margin expansion from digital large format screens and the Transit segment. We assume the overall advertising market posts modest (3%) growth per annum over the forecast period.

Using 1H16F as a guide: As stated previously, QMS has guided to 1H16F revenue of ~$41m and EBITDA of ~$9.5m. The EBITDA margin of our FY16F forecasts (23.4%) is in line with the implied EBITDA margin of the company’s guidance for 1H16F (23.2%). In terms of revenue run rate, our forecasts imply a ~50% 2H16F increase on the guided 1H16F, which we believe is reasonable given the increase in large format digital screen (57% growth over the year from 21 to 33) and the Transit contract wins.

Digital: We assume QMS achieves its targeted 33 large format digital signs by Jun-16. We assume the company increases that by five screens per year over the subsequent two years. We assume the company achieves an average revenue per screen of $900k in the first full year, but the marginal revenue per sign after FY16F decreases, thus gradually decreasing the average revenue per sign over the forecast period. This drives revenue from $7.1m in FY15 to $24.3m in FY16F and $31.3m in FY17F. We assume the average gross margin for digital signs is 60%, reflecting the increased value proposition to advertisers.

Static: We assume QMS achieves its targeted 240 large format static signs by Jun-16 and this number remains unchanged thereafter. We assume the company achieves $120k revenue per sign reflecting the premium quality portfolio and metro locations (in line with the FY15 performance), which drives segment revenue from $22.3m in FY15 to $28.6m in FY16F. We assume media revenue, excluding digital, achieves a gross margin of 30%.

Other Media: We assume Street increases revenue to $2.0m in FY16F from the Gold Coast contract. Transit increases revenue of $18.0m from the Bali Airport and Auckland Transit contracts, which begin ramping up over the next 12 months. We expect Retail to deliver a largely flat revenue contribution in FY16F relative to FY15.

Print Production: We assume Print Product increases from $22.1m in FY15 to $27.2m in FY16F, as the company insources more of its work and the business benefits from recent increases in plant and equipment upgrades. We assume Print Production generates a gross margin of around 60%.



Key risks to the valuation and price target

Advertising market: the advertising market is a cyclical one, and linked to economic growth, consumer sentiment and the willingness of companies to advertise their products and services. A key risk to the valuation range would be an unexpected downturn in the advertising market.

Ownership of underlying assets: Outdoor advertising is a unique segment of the Australian media industry in that it leases the underlying assets from owners rather than owning them outright, in general. A key risk to the valuation range is if the leases on the media assets are not renewed.

Competition: The outdoor advertising market is competitive, with QMS joining two other large, listed players in APN Outdoor and oOh! Media. QMS faces competition in finding and developing new advertising sites, as well as with advertisers for their business.

Timing: QMS, as part of its growth strategy, is planning a number of new digital sites, either through greenfield expansion or conversion of static sites. Any delays in the conversion of these sites, through permit or construction delays, would potentially have an adverse effect on its financial performance.

FIG.11: GLOBAL MEDIA COMPARABLES Company Name YE Currency Price Mkt Cap Net Debt EV

TV/Radio (m) (m) (m) '15 '16 '15 '16 '15 '16

Seven West Media FY AUD 0.69$ 1,037 733 1,770 4.8 5.4 5.2 6.0 9.9% 18.3%

Nine Entertainment FY AUD 1.56$ 1,400 525 1,925 9.0 8.6 10.6 9.5 8.6% na

Ten Network FY AUD 0.17$ 461 82 562 na 21.1 na na 0.0% na

Sourthern Cross FY AUD 0.93$ 697 526 1,224 7.3 7.2 9.3 9.1 7.0% 7.0%

Prime Media FY AUD 0.63$ 229 107 322 5.1 5.3 6.8 7.0 11.0% na

Fairfax FY AUD 0.82$ 1,973 ‐60 2,033 6.6 6.5 12.2 11.8 5.3% 4.9%

APN News & Media CY AUD 0.48$ 494 450 1,016 6.4 6.2 6.9 6.3 0.8% na

Sky TV FY NZD 4.73$ 1,841 333 2,175 5.9 5.9 10.8 11.1 6.5% 6.8%

Average 6.4 6.4 8.8 8.7 6.1% 9.3%

Internet YE Currency Price Mkt Cap Net Debt EV

(m) (m) (m) '15 '16 '15 '16 '15 '16

SEEK FY AUD 12.1$ 4,181 535 5,383 14.1 12.5 21.9 18.8 2.9% 3.0%

Carsales.com FY AUD 9.5$ 2,284 188 2,474 14.5 13.2 20.2 17.9 4.0% 6.4%

REA Group FY AUD 40.4$ 5,325 ‐79 5,247 14.9 12.8 23.4 19.3 2.1% na

Trade Me Group FY NZD 3.5$ 1,389 118 1,507 10.6 10.0 16.5 15.5 4.9% 4.7%

Average 13.5 12.1 20.5 17.9 3.5% 4.7%

North America YE Currency Price Mkt Cap Net Debt EV

(m) (m) (m) '15 '16 '15 '16 '15 '16

Clear Channel Outdoor CY USD 7.9$ 2,869 4,748 7,853 11.3 10.7 na 189.0 0.0% na

Outfront (formerly CBS) CY USD 22.5$ 3,087 2,170 5,320 12.0 11.3 29.8 24.0 6.3% 8.4%

Lamar Advertising CY USD 52.2$ 5,042 1,874 6,955 11.7 11.3 19.9 17.7 5.3% 7.0%

Average 11.7 11.1 24.9 76.9 3.8% 7.7%

Rest of World YE Currency Price Mkt Cap Net Debt EV

(m) (m) (m) '15 '16 '15 '16 '15 '16

JC Decaux CY EUR 31.3€ 6,638 ‐66 6,548 10.2 9.4 26.8 23.2 1.8% 1.8%

Stroeer Media CY EUR 51.8€ 2,532 293 2,873 16.0 12.5 33.9 26.3 1.1% na

APG SGA SA CY CHF 365.0fr. 1,095 ‐148 1,006 12.5 13.0 19.9 20.3 6.6% 3.6%

Average 12.9 11.6 26.9 23.2 3.2% 2.7%

Australian Outdoor YE Currency Price Mkt Cap Net Debt EV

(m) (m) (m) '15 '16 '15 '16 '15 '16

Ooh! Media CY AUD 2.91$ 436 62 498 9.1 8.1 19.7 18.8 3.1% 3.8%

APN Outdoor CY AUD 3.65$ 608 79 687 11.1 9.8 18.3 15.9 3.2% 3.6%

Average 10.1 9.0 19.0 17.4 3.1% 3.7%

EV/EBITDA (x) P/E (x) DY (%)





Source: Bloomberg



Media sector overview The Australian media sector is classified into seven different categories. We estimate

outdoor represented 4.5% of the total advertising market in 2014.

Expenditure on outdoor advertising has grown at a compound annual rate of 6.3% over the last ten years, compared to the growth of 2.2% for total media expenditure.

Australia: outdoor advertising accounts for 4.5% of total expenditure

We estimate around $13.4bn was spent on advertising in Australia in 2014, including classified and directories.

The advertising market has been largely flat over the last few years, with total spend peaking in 2008 and 2010 with $13.7bn.

Over the last ten years, the compound growth on advertising spend has been 2.2%.

FIG.12: AUSTRALIAN ADVERTISING EXPENDITURE – TOTAL MARKET ($bn)

10.811.6 11.8

13.213.7

12.6

13.7 13.5 13.3 13.4 13.4

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2.2% CAGR

Source: CEASA Australian Advertising Expenditure in Main Media, Baillieu Holst estimates

Meanwhile, total spend on outdoor advertising has increased by a compound growth rate of

6.3%, as shown in the chart below.

FIG.13: AUSTRALIAN ADVERTISING EXPENDITURE – OUTDOOR SEGMENT ($m)

327354

379

436 454

400

477 494 502544

602.1

3.0% 3.1% 3.2% 3.3% 3.3% 3.2%3.5% 3.7% 3.8%

4.1%4.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


6.3% CAGR

Source: CEASA Australian Advertising Expenditure in Main Media, Baillieu Holst estimates



The advertising market is still dominated by television, which accounts for around 30% of total spend.

The online segment now accounts for a similar amount to television (30%), up significantly over the last 10 years (from 2%).

Radio has been stable (8%), whilst newspapers, magazines and directories have all seen their shares decline.

Outdoor advertising has increased its share of total spend to 4.1% in 2013 (and grew again in 2014 to 4.5%) up from 3.1% ten years ago.

FIG.14: AUSTRALIAN ADVERTISING EXPENDITURE – SHARE BY SEGMENT

30%

2%

34%

8%

13%

9%

3%1%

30% 30%

18%

8%5% 5% 4%

1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Television Online Newspapers Radio Printdirectories

Magazines Outdoor Cinema

2003 2013

Source: CEASA Australian Advertising Expenditure in Main Media

New Zealand: outdoor advertising accounts for 3.5% of total expenditure

Around NZ$2.4bn was spend on advertising in New Zealand in 2014.

The advertising market has been growing over the last few years, but annual spending is only just above the peak level of 2008.

Over the last ten years, the compound growth of advertising spend has been 1.3%.

FIG.15: NEW ZEALAND ADVERTISING EXPENDITURE – TOTAL MARKET (NZ$bn)

2.12.2 2.2

2.3 2.3

2.02.1

2.2 2.22.3

2.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1.3% CAGR

Source: New Zealand Advertising Standards Authority, New Zealand Advertising Industry Turnover



Meanwhile, total spending on outdoor advertising has increased by a compound growth rate of 5.0% over the last ten years, as shown in the chart below.

FIG.16: NEW ZEALAND ADVERTISING EXPENDITURE – OUTDOOR SEGMENT (NZ$m)

51

72

79 7874

68 70

83

67

76

83

2.4%

3.3%3.6% 3.4% 3.2% 3.4% 3.3%

3.8%

3.0%3.3% 3.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


5.0% CAGR

Source: New Zealand Advertising Standards Authority, New Zealand Advertising Industry Turnover

Indonesia: outdoor advertising accounts for 2.9% of total expenditure

Around US$6.9bn was spent on advertising in Indonesia in 2013, with a forecast of US$8.4bn in 2014F.

The advertising market has been growing strongly over the last few years, with a growth rate of 18%.

FIG.17: INDONESIA ADVERTISING EXPENDITURE – TOTAL MARKET (US$bn)

4.2

4.9

5.9

6.9

8.4

0

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014F

18% CAGR

Source: Aegis Global Advertising Expenditure Report – Ad Quest ACNielsen, Media Scene, Agency Estimate

Meanwhile, total spend on outdoor advertising has increased by a compound growth rate of

23% in Indonesia, as shown in the chart below. Outdoor accounts for 2.9% of the total advertising market.



FIG.18: INDONESIA ADVERTISING EXPENDITURE – OUTDOOR SEGMENT (US$m)

105

143

164

197

246

2.5%2.9% 2.8% 2.9% 2.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

50

100

150

200

250

300

2010 2011 2012 2013 2014F


23% CAGR

Source: Aegis Global Advertising Expenditure Report – Ad Quest ACNielsen, Media Scene, Agency Estimate



Company description and history Overview: QMS is an outdoor advertising company, with assets across digital, static

billboard, retail, street furniture and transit categories. The business has operations in Australia, New Zealand, and Indonesia, and is the culmination of a number of business and asset acquisitions over the last few years.

History: QMS was formed in 2014. The company has made a number of acquisitions, including QMS APAC which was established as a joint venture with Qatar Media Services in 2010. QMS APAC, itself, has made a number of business and asset acquisitions, developed its existing portfolio and converted static billboards into landmark digital sites.

Highlights of QMS APAC’s history include:

- Acquiring the print production businesses of Omnigraphics Australia Pty Ltd and MMTB Pty Ltd to establish a presence along the eastern seaboard;

- Acquiring landmark billboards across the majority of capital cities;

- Entering into the Indonesian market with PT INsite Media;

- Securing and developing concessions such as ConnectEast and VicTrack;

- Securing sales and marketing rights to signs across the country, including M2 Motorway in Sydney and Gold Coast street furniture concession.

QMS APAC has secured a number of significant concessions through competitive tender processes and long term partner relationships. This success along with selected strategic site development has enabled QMS APAC to expand into all major metropolitan markets in Australia and key categories in New Zealand and Indonesia.

FIG.19: QMS – CORPORATE STRUCTURE

Source: Prospectus



Asset portfolio and growth outlook

We provide an overview of QMS’ asset portfolio.

FIG.20: QMS ASSET PORTFOLIO

Medium Landmark Digital Static Billboard Retail Street Furniture Transit

Description QMS has a growing portfolio of landmark billboards that provide advertisers with scale, impact and dynamic engagement.

High quality static boards in key locations providing advertisers with a targeted solution, giving audience reach across major metro markets. Billboards can be freestanding or fixed to buildings owned by individual landlords or concession owners.

Outdoor advertising displays throughout retail precincts in New Zealand.

Exclusive sales and marketing agreement for the Gold Coast City Council street furniture concession. This concession expands QMS’ market coverage to include the 6th most populated city in Australia.

International footprint expanded into the key markets of Indonesia and New Zealand, through the transit category.

FY16F Signs 33 240+ 1,150

710+ ~2,700

Locations Sydney

Melbourne

Brisbane

Adelaide

Gold Coast

Sydney

Melbourne

Brisbane

Adelaide

Perth

Indonesia

New Zealand

Gold Coast

New Zealand

Indonesia

Key Assets / Concessions

Iconic Digital

‘Melbourne Square’

‘Melbourne South’

‘Brisbane Gabba’

VicTrack

Eastlink

M2 Motorway Sydney

Westfield

AMP

Kiwi

Range of independent shopping centres

Gold Coast

Auckland Transport

Jakarta Soekarno Hatta International Airport

Bali Ngurah Rai International Airport

Medan Kualanamu International Airport

% of FY16F Group Media Revenues (BH forecasts)

32% 38% 3% 3% 24%

Key Attributes High profile metro locations

Long dwell time

Maximum audience exposure

Premium quality

Greater than market average tenure

Broad metro market coverage

Premium quality assets

Variety of formats/sizes

Greater than market average tenure

Further digital expansion opportunity

Strong New Zealand footprint

High turnover, high footfall shopping centres

Proximity targeting

Exclusive coverage

Broadcast and/or target audience delivery

Future digital expansion opportunity

High profile assets

Domestic and International Audiences

Exclusive Auckland Transport concession across multiple transit formats

Source: Prospectus, Baillieu Holst estimates



Average tenure: The average tenure of its existing site leases is over 13 years.

Growth strategy: The company’s growth strategy is centred around four pillars:

- Digital development: QMS plans to erect new digit billboards as well as converting static billboards to digital over time. Sites which are candidates for conversion are assessed on location and suitability, the planning and permit environment, and financial viability. The company has identified 62 current static sites which would be suitable for conversion over the next few years.

- Organic growth: The company plans to drive organic growth through leveraging its existing static assets through site upgrades or expansions, the winning of new sites through various tenders, and innovation by increased utilisation of technology.

- Acquisitions: QMS has made a number of acquisitions in the past and plans to continue to evaluate attractive targets going forward.

- Asia Pacific Expansion: The Asia Pacific region is a key avenue of growth for the business, with the company already having a presence in Indonesia. QMS notes that a number of global media agencies are looking to the region as a whole for some multinational advertisers, for whom QMS is aiming to provide a one-stop service. We note the QMS Board of Directors has substantial Asia Pacific business experience.

Customer profile: QMS sells the majority of its advertising space through media agencies.

Print production: QMS owns and operates one of Australia’s largest wide format print production businesses, with operations in Brisbane and Melbourne. The company estimates its market share at around 30% and competes with other operators such as APN Outdoor, OPUS Group and Billboard Media. The print production business is part of QMS’ vertical integration strategy. Owning its own print and production assets allows the company to respond quickly to advertiser needs, control many aspects of the advertising process, remove duplicated costs and capture margin which would otherwise be lost to external parties.



FIG.21: QMS – SUBSIDIARIES AND CONTROLLED ENTITIES

Source: Prospectus



Geographic footprint We provide an overview of QMS’ geographic footprint:

FIG.22: QMS – GEOGRAPHIC FOOTPRINT

Source: Prospectus



Appendix A: Directors, Management and Shareholders Board of Directors

FIG.23: BOARD OF DIRECTORS

Name Position Biography

Wayne Stevenson Chairman Wayne is an experienced financial services executive with extensive finance, strategy and operational expertise across Australasian and international markets. Wayne has been involved in the finance industry for over 30 years, and has gained a wide range of experience, particularly with the ANZ Banking Group.

Wayne has been a director of various Australian and offshore companies for over 20 years, and is currently a non-executive director of OnePath Life Insurance Ltd, OnePath General Insurance Ltd, ANZ Lenders Mortgage Insurance Ltd and Credit Union Australia Limited.

Wayne’s career highlights include: over 15 years as chief financial officer for a number of ANZ’s Australian and International business divisions, leading various international and domestic merger and acquisition activities including due diligence, acquisition and integration, implementation of significant technology projects including core and internet banking and support systems, and establishment of greenfield joint venture banking operations in Asia.

Wayne is a chartered accountant and a fellow of the Australian Institute of Company Directors. He holds a Bachelor of Commerce (Accounting) from the University of Canterbury.

Barclay Nettlefold Managing Director & CEO Barclay is an experienced advertising and media executive with over 30 years’ experience in the Asia Pacific region. Barclay’s experience in this region is having managed and developed various outdoor advertising businesses spanning Indonesia, Thailand, Malaysia, Vietnam, Philippines, Singapore, China and Myanmar.

Barclay’s career highlights include: Co-Founder, with father David Nettlefold, of Nettlefold Advertising (outdoor advertising) which was sold to Hoyts Group, Co-Founder of Eye Corp, previously one of Australasia’s leading outdoor advertising companies with assets spanning airports, retail, rail and road, Founder of News Outdoor South East Asia, a leading Asia Pacific outdoor advertising company in partnership with News Corp, and formed QMS APAC as a joint venture with Qatar Media.

Barclay holds a bachelor’s degree from Monash University, majoring in Accounting and Marketing.

Anne Parsons Non-Executive Director Anne is a highly regarded advertising and media executive with over 20 years’ experience gained in a wide variety of roles across the globe. She has worked in many media channels and has extensive experience in multi-channel solutions.

Anne’s career highlights include: currently the managing partner of Cherry London, a strategic marketing agency specialising in brand partnerships, previously the chairman of MediaCom Australia (Australia’s second largest media communications agency) and CEO for 6 years, managing director of Zenith Media Melbourne (the largest planning and buying agency in Australia) for 10 years, trained in the full service agency environment of George Patterson.

Studied Journalism and Business Psychology.

David Edmonds Director of Corporate & Legal David is a corporate finance lawyer, with significant experience in mergers and acquisitions, project financing and business development in Australia, Indonesia and Thailand. Previously with Minter Ellison and Blake Dawson Waldron (now Ashurst), David has worked in the outdoor advertising industry for over 10 years throughout the Asia Pacific region.

David’s career highlights include: Jakarta, Indonesia (1995-2000) with Blake Dawson Waldron and then Minter Ellison affiliated firms, established the Thailand office of Minter Ellison Lawyers in Bangkok (2001-2004), Regional COO and general counsel for News Outdoor Group for Asia Pacific, led commercial strategy and negotiations for QMS APAC M&A team

David holds a Bachelor of Laws and Bachelor of Commerce (Hons) from the University of Melbourne.

Bob Alexander Non-Executive Director Bob is an experienced senior finance and operations executive who has over 30 years’ experience working in the commercial sector. Bob has worked in global organisations in industries such as media, entertainment, professional services and the print industry. He has considerable experience in mergers and acquisitions, and has successfully led numerous transactions and the integration of acquired businesses.

Bob’s career highlights include: Global CFO of Eye Corp Pty Ltd, which operated in the outdoor advertising sector with operations in Asia, UK and North America, Global CFO of OPUS Group Limited (an ASX listed company operating in the Asian region, servicing the publishing, government and outdoor media sectors), senior finance and operations experience with major organisations, including Universal Music Publishing in Australia and Europe and Hoyts Entertainment Ltd.

Bob is a Chartered Accountant and has a Bachelor of Commerce degree from the University of New South Wales.

Source: Prospectus



Senior Management

FIG.24: SENIOR MANAGEMENT Name Position Biography

Barclay Nettlefold Managing Director & CEO See above

David Edmonds Director – Corporate & Legals

See above

Peter Cargin Chief Financial Officer Peter is a senior financial executive with over 25 years’ experience across a broad range of local and international businesses, including 10 years in the outdoor advertising and related industries. His responsibilities have included finance, business analysis, budgeting and forecasting, acquisition and divestment modelling, treasury, policies and procedures and business systems implementation.

Peter’s achievements include: Group Financial Controller – News Outdoor South East Asia, where he was responsible for the investment and divestment financials and treasury, CFO for a digital and print production signage company, including responsibility for the functions of IT and HR.

Peter holds a Bachelor of Business and is CPA qualified.

Adam Trevena Chief Commercial Officer Adam has 16 years’ experience working with major outdoor advertising companies such as NLD, Eye, News Outdoor and QMS APAC. His responsibilities have included sales, marketing, development, operations and finance with on the ground experience in Australia, New Zealand, South East Asia and the Middle East.

Adam’s achievements include: Led the sales and marketing strategy and product development for Eye Corp’s airport advertising, secured the Kuala Lumpur Street Furniture Concession and led the design, development and rollout of 2,500 transport shelters across the City, and led the tender response for QMS APAC to secure the VicTrack Roadside Billboard Advertising Concession.

Malcolm Pearce Chief Operations Officer Malcolm is an experienced executive with over 25 years’ experience across a variety of industries, including the last 10 in outdoor advertising. He has commercial, operational, financial and treasury management experience, with previous responsibilities for finance and budgeting, operations and shared services.

Malcolm’s achievements include: the management of the integration of the acquisition of Eye Corp into oOh! Media in 2012, Commercial Project Manager of the Southern Cross Railway Station in Melbourne Victoria in 2002, and Corporate Treasurer of North Ltd Mining Pty Ltd, responsible for the project financing of the $US650m first copper/gold mine in Argentina and the corporate financing and hedging activities for the group.

Malcolm holds an MBA and Graduate Diploma in Banking and Finance.

John O’Neill Head of Sales John has over 18 years’ experience in outdoor advertising and media sales. John has extensive knowledge and sales relationships. He has developed and led a number of very successful sales teams across various outdoor advertising businesses.

John’s achievements include: Sales Director of the Eye Corp outdoor advertising business, specialising in Roadside, Airport and Retail out of home advertising, and managed the oOh! Media sales team through a significant period of growth over an 8 year period.

Sara Lappage Chief Marketing Officer With over 20 years’ experience in the media and outdoor advertising industries, Sara has significant knowledge and expertise in developing and marketing successful media brands.

Sara’s achievements include: responsible for the creation, launch and development of the Eye Corp outdoor advertising brand in Australia, responsible for the creation, launch and development of the oOh! Media brand in Australia & New Zealand, and managed the brand integration and refresh of the oOh! Media business during and after the integration process with Eye Corp.

Sara holds a Bachelor of Business Marketing from Monash University, Melbourne.

Steve Danaher General Manager - Sales Steve has over 15 years’ media experience, including 12 years in the outdoor advertising industry.

Steve’s achievements include: Commercial Director of the roadside billboard division of oOh! Media, responsible for sales and concession management of all large format assets, and management of the sales integration of assets and development of subsequent sales strategy, through the acquisition of Eye Corp by oOh! Media in 2012.

Mark Rowswell General Manager -Development

Mark has over 30 years’ experience in Australia and South East Asia, specialising in outdoor advertising. His knowledge and expertise extends across strategic asset development, risk management, design and development of advertising infrastructure and the source and establishment of global supply chains.

Mark’s achievements include: devised, designed and project managed the manufacture of street furniture assets in Indonesia and Malaysia, led the design and manufacture of new outdoor advertising assets for News Outdoor South East Asia (digital, LED, street furniture, airport media) for their regional network, and Business Development Director of NLD (Australia/NZ) responsible for all aspects of business development including M&A activity, new media development, strategic planning and liaison with government, regulatory authorities, the private sector and concession grantors.

Source: Prospectus

FIG.25: SUBSTANTIAL SHAREHOLDERS

Shareholder Shares % Wenvale Pty Ltd (Barclay Nettlefold) 52.0m 20.7%

Mediascape Pty Ltd 31.6m 12.6%

Ellerston Capital 18.9m 7.5%

Source: IRESS

BAILLIEU HOLST RESEARCH QMS Media Limited (QMS)


Appendix B: Outdoor advertising market FIG.26: OUTDOOR ADVERTISING SEGMENTS Segment Environment Formats Participants

Retail/Lifestyle Advertising that appears in shopping centres, malls, universities, office tower foyers and other place-based environments.

Shopping centres

Malls

Universities

Place-based media (indoor social sports centres, pharmacies, health clubs, clinics, bars and clubs, cafes, office buildings

oOh!media

Val Morgan

Inlink

Executive Channel

QMS

Roadside (Billboards) Advertising that appears on the side of, or near, the road.

Different size billboards including:

Supersites

Spectaculars

24 Sheet

oOh!media

APN Outdoor

QMS

Airports Advertising that appears on the exterior or interior of airports.

Airport externals

Airport externals (precinct)

Airport internals

Airport lounges

oOh!media

APN Outdoor

Transit Advertising that appears on the exterior or interior of public transportation vehicles or stations (buses, trains, trams, taxis, commuter rail, subways, platforms and terminals).

Rail platform and concourse

Bus interchange

Bus/tram interiors

APN Outdoor

Adshel

JCDecaux

QMS

Roadside (Others) Advertising that appears on the side of, or near, a footpath or exterior of public transportation vehicles.

Street furniture

Bus/tram shelters

Kiosks

Bus/tram exteriors

Phone booths

Taxi exteriors

Free-standing panels

Mobile billboards

Adshel

JCDecaux

APN Outdoor

Rova Media

QMS

Source: oOh! Media Limited Prospectus dated 5 Dec-14, Baillieu Holst estimates



Appendix C: Competitor Profiles

APN Outdoor (APN)

FIG.27: APO – REVENUE BY SEGMENT 1H15 FIG.28: APO – REVENUE BY SEGMENT 1H15

$ millions 2015 H1 2014 H1

Billboards 65.1 53.8

Transit 47.1 41.2

Rail 10.1 5.9

Airport 14 8.3

Total 136.3 109.2

48.0%

35.0%

7.0%

10.0%

Billboards

Transit

Rail

Airport

Source: Company reports Source: Company reports

FIG.29: APO – DIGITAL REVENUE 1H15 FIG.30: APO – DIGITAL REVENUE PROPORTION BY HALF

$ millions 2015 H1 2014 H1

Static 109.3 99.3

Digital 27.0 9.9

TOTAL 136.3 109.2

Digital % 19.8 9.0

5.5%7.3%

9.0%

15.9%

19.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2013 H1 2013 H2 2014 H1 2014 H2 2015 H1




oOh! Media Limited (OML)

FIG.31: OML – REVENUE BY SEGMENT 1H15

$'m H1 2015H2 2014

StatutoryChange (%)

Road 50.4 48.1 4.7%

Retail 40.6 37.4 8.6%

Fly 26.2 22.2 18.2%

Place 4.8 4.2 14.4%

Australia 122 111.9 9.0%

New Zealand 2.0 5.0 ‐59.1%

Total Revenue 124 116.9 6.1% Source: Company reports

FIG.32: OML – DIGITAL REVENUE BY SEGMENT 1H15 FIG.33: OML – DIGITAL REVENUE AS PROPORTION

1%

26%

54%

72%

6%

32%

59%

76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Road Retail Fly Place

1H 2014 H1 2015

11%

17%

23%

29%

0%

5%

10%

15%

20%

25%

30%

35%

CY12 CY13 CY14 H1 15


BAILLIEU HOLST RESEARCH

Baillieu Holst Ltd ABN 74 006 519 393 www.baillieuholst.com.au Page 26

This document has been prepared and issued by:

Baillieu Holst Ltd ABN 74 006 519 393

Australian Financial Service Licence No. 245421 Participant of ASX Group Participant of NSX Ltd

Analysts’ stock ratings are defined as follows:

Buy: The stock’s total return is expected to increase by at least 10-15 percent from the current share price over the next 12 months.

Hold: The stock’s total return is expected to trade within a range of ±10-15 percent from the current share price over the next 12 months.

Sell: The stock’s total return is expected to decrease by at least 10-15 percent from the current share price over the next 12 months.

Disclosure of potential interest and disclaimer:

Baillieu Holst Ltd (Baillieu Holst) and/or its associates may receive commissions, calculated at normal client rates, from transactions involving securities of the companies mentioned herein and may hold interests in securities of the companies mentioned herein from time to time. Your adviser will earn a commission of up to 55% of any brokerage resulting from any transactions you may undertake as a result of this advice.

When we provide advice to you, it is based on the information you have provided to us about your personal circumstances, financial objectives and needs. If you wish to rely on our advice, it is important that you inform us of any changes to your personal investment needs, objectives and financial circumstances.

If you do not provide us with the relevant information (including updated information) regarding your investment needs, objectives and financial circumstances, our advice may be based on inaccurate information, and you will need to consider whether the advice is suitable to you given your personal investment needs, objectives and financial circumstances. Please do not hesitate to contact our offices if you need to update your information held with us. Please be assured that we keep your information strictly confidential.

No representation, warranty or undertaking is given or made in relation to the accuracy of information contained in this advice, such advice being based solely on public information which has not been verified by Baillieu Holst Ltd.

Save for any statutory liability that cannot be excluded, Baillieu Holst Ltd and its employees and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.

Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication and are subject to change without notice. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments.

Baillieu Holst Ltd assumes no obligation to update this advice or correct any inaccuracy which may become apparent after it is given.

Baillieu Holst Ltd ABN 74 006 519 393

Australian Financial Service Licence No. 245421 Participant of ASX Group Participant of NSX Ltd www.baillieuholst.com.au Melbourne (Head Office) Address Level 26, 360 Collins Street Melbourne, VIC 3000 Australia Postal PO Box 48, Collins Street West Melbourne, VIC 8007 Australia Phone +61 3 9602 9222 Facsimile +61 3 9602 2350 Email [email protected] Bendigo Office Address Cnr Bridge & Baxter Streets Bendigo, VIC 3550 Australia Postal PO Box 40 North Bendigo, VIC 3550 Australia Phone +61 3 5443 7966 Facsimile +61 3 5442 4728 Email [email protected] Geelong Office Address 16 Aberdeen Street Geelong West Vic 3218 Postal PO Box 364 Geelong Vic 3220 Australia Phone +61 3 5229 4637 Facsimile +61 3 4229 4142 Email [email protected] Newcastle Office Address Level 1, 120 Darby Street Cooks Hill, NSW 2300 Australia Postal PO Box 111 The Junction, NSW 2291 Australia Phone +61 2 4925 2330 Facsimile +61 2 4929 1954 Email [email protected] Perth Office Address Level 10, 191 St Georges Terrace Perth WA 6000 Australia Postal PO Box 7662, Cloisters Square Perth, WA 6850 Australia Phone +61 8 6141 9450 Facsimile +61 8 6141 9499 Email [email protected] Sydney Office Address Level 18, 1 Alfred Street Sydney, NSW 2000 Australia Postal PO Box R1797 Royal Exchange, NSW 1225 Australia Phone +61 2 9250 8900 Facsimile +61 2 9247 4092 Email [email protected]

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