In an odd note, OohMedia chief executive Brendon Cook yesterday ruled out an equity raising and moved to settle nervous shareholders after confirming downgraded guidance issued earlier this month for the year to December.
In what he described as a “disappointing” trading update, Mr. Cook said the current weaker market conditions were temporary.
Investors took fright at the mention of an issue, even if it was to rule one out and the shares closed down 4.6% at $2.91. That was in a wider market that sold off all day and closed down 1.3%.
“While the recent adjustment to our earnings forecast for the year due to current market conditions is disappointing, the Company has tested a number of potential scenarios for future trading and has concluded that no equity raising is required, excluding the Company’s dividend reinvestment plan.
“This conclusion is, in part, because of the highly cash generative nature of the business,” The CEO told investors in yesterday’s release.
The company said that in the six months to June 30 its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 4% to $56 million, while underlying net profit after tax fell 24% to $9 million.
“The top-line performance was impacted by subdued trading during the May federal election and the accompanying softer macroeconomic environment,” Mr. Cook said in a statement.
OohMedia downgraded its guidance for the full 2019 financial year on August 16, slashing expected EBITDA from between $152 million and $172 million to a range of $125 million to $135 million.
This has been a disappointing outcome for us and, from the available data and commentary from other media participants, we believe this to be a temporary but significant event-driven predominantly by weaker market conditions,” said Mr. Cook.
“While the recent adjustment to our earnings forecast for the year due to current market conditions is disappointing, the Company has tested a number of potential scenarios for future trading and has concluded that no equity raising is required, excluding the Company’s dividend reinvestment plan. This conclusion is, in part, because of the highly cash generative nature of the business,” Mr Cook said.
The company will pay a steady interim dividend of 3.5 cents a share. That was the most confident part of yesterday’s announcement.
