any ideas on this one. ubs/morgan stanley. rgds looks a bit...

any ideas on this one. ubs/morgan stanley.

rgds

looks a bit expensive. exposure to advertising, not a great sector imho

	Column 1
0	Column 1 0 APN Outdoor Group—$329.3–$348.9m IPO (ASX: APO)Leading outdoor advertising operator7 October 2014

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12	Column 13	Column 14	Column 15	Column 16	Column 17	Column 18	Column 19	Column 20	Column 21	Column 22	Column 23
0		The Shares have not been, and will not be, registered under the U.S. Securities Act, or the securities laws of any state of the United States and may not be offered or sold in the United States except in accordance with an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act laws and any other applicable securities laws.This email is a summary only of information in the pathfinder prospectus and management presentation issued by APN Outdoor Group Limited on 7 October 2014. It contains sales commentary and not independent research.		Table of contents	} Summary of the Offer } Key Offer statistics } Key strengths } Key risks } Who are the Existing Shareholders? } Broker Firm bookbuild } Offer documentation Click to go to relevant section		Summary of the OfferWe are delighted to offer you the opportunity to participate in the APN Outdoor Group Limited (APN Outdoor) Initial Public Offer.  Based on an Offer Price range of $2.55–$2.75 per Share, the Offer comprises of 129.1–126.9 million Shares and will raise $329.3–$348.9 million.  You can participate in the Offer by bidding for an allocation of Shares available through UBS Wealth Management in the Broker Firm Offer. APN Outdoor is a leading outdoor advertising operator in Australia and New Zealand by revenue. Management estimates in FY2014 year to date, APN Outdoor had 27% market share in the Australian outdoor advertising industry and 26%1 market share in the New Zealand outdoor advertising industry.2 APN Outdoor has built a national portfolio of premium, metro sites across a number of key categories including: Large format digital billboards—34 panels expected by end of December 2014; Static billboards—approximately 2,800 panels; Transit, across buses and trams—approximately 33,300 panels; Rail—approximately 2,000 panels; and Airports—approximately 1,0003. APN Outdoor’s network is well positioned to benefit from growth in digital outdoor advertising. Note:  1. New Zealand share is expected to significantly increase with a full year effect of the Auckland Airport contract.  2. The outdoor advertising industry is described further in Section 1.2 and Section 2 of the pathfinder prospectus.  3. Includes panels from Auckland Airport contract.		top		Key Offer statistics Column 1 0 Offer Price per Share	$2.55–$2.75 Shares available under the Offer	129.1–126.9m Total cash proceeds from the Offer	$329.3–$348.9m Shares on issue prior to the Offer	123.8m Total issued shares on Completion of the Offer	166.6–163.8m Market capitalisation at the Offer Price	$424.9–$450.4m Pro forma net debt (at IPO)	$78.8m Enterprise Value	$503.7–$529.2m Enterprise Value/pro forma FY2015 EBITDA	9.4–9.9x Enterprise Value/pro forma FY2015 EBITA	11.2–11.9x Offer Price/pro forma FY2015 NPATA per Share	15.0–15.9x FY2015 forecast dividend yield	4.0%–3.8%

Source: APN Outdoor, Management Presentation, October 2014, page 31. | | top | | Key strengths

• Operates in an attractive and growing industry:

−   Outdoor advertising in Australia is a growing segment and achieved a 6.2% CAGR over FY2003 to FY2013 increasing its share of total advertising spend in Australia from 3.1% to 4.1% over the same period1; and−   Outdoor advertising is favourably positioned relative to traditional media, in particular print media (including newspapers, magazines and print directories), which has experienced audience declines contributing to a reduced share of advertising spend. In contrast, outdoor advertising’s audience has increased at a CAGR of 6.1% over 2012 to 2014 (as measured by MOVE)2.

• Leading and defensive industry position:

−   #1 in metro billboards in Australia and New Zealand (by number of panels);−   #1 in large format digital billboards in Australia and New Zealand (by number of panels);−   #1 in Transit networks across Australia (by number of panels);−   #1 provider of Rail advertising on roadside locations and cross track across Australia and New Zealand (by number of panels); and−   A leading position in Airports across Australia and New Zealand3.

• Attractive growth outlook:

−   Core underlying market growth in the outdoor advertising industry;−   Digitisation and technology opportunities, where APN Outdoor has the first mover advantage in large format digital and a strong pipeline of potential conversions and new sites in Australia and New Zealand;−   Investment in asset upgrades; and−   Strategic opportunities in existing and adjacent outdoor formats.

• Strong financial track record:

−   APN Outdoor has a track record of revenue and EBITDA growth, together with strong cash flow generation. Pro forma consolidated EBITDA has grown from $27.8 million in FY2012 to $33.8 million in FY2013 and is forecast to increase to $53.7 million in FY2015.Note:  1. CEASA Australian Advertising Expenditure in Main Media (inc. classifieds and directories), December 2012 pg. 13, December 2013 pg. 16.  2. Management calculation using data from MOVE 2014 Data Release.  3. Includes pro-forma market share of Auckland Airport contract. | | top | | Key risksThere are a number of risks associated with an investment in APN Outdoor and the industries it operates in. These risks are set out in the attached offer summary and in more detail in Section 5 of the pathfinder prospectus.

• Exposure to advertising industry;
• Increased competition;
• Loss of sign sites or failure to achieve lease renewals on favourable terms;
• Reliance on key management personnel;
• Seasonality of revenue;
• Government regulation of outdoor advertising;
• Underperformance of digital products; and
• Relationships with key media agencies and customers.

| | top | | Who are the Existing Shareholders?The Existing Shareholders of APN Outdoor are:

• Quadrant Private Equity as a manager of Quadrant Funds pre-IPO has a 93.7% holding;
• Management and Board, pre-IPO, has a 6.3% holding.

Quadrant intends to retain an interest of 20% at listing. Shareholding structure1

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12	Column 13	Column 14	Column 15	Column 16	Column 17	Column 18	Column 19	Column 20	Column 21
0	Existing Shareholders	Shares immediately pre-IPO	% pre-IPO	Shares issued / acquired / (old)	Shares immediately post-IPO1	% post-IPO1 Quadrant Funds	116,000,000	93.7%	(82,707,685)	33,292,315	20.0% Management and Board	7,787,959	6.3%	(3,643,979)	4,143,979	2.5% Total	123,787,959	100.0%	(86,351,664)	37,436,295	22.5%

Note:  1. Based on Offer Price of $2.56 per Share.Summary of escrow arrangementsAll of the Existing Shares held at Listing by the Escrowed Shareholders (other than any Shares purchased by them under the Offer) will be subject to disposal restrictions as follows:

• existing Shares held by the Quadrant Funds will be subject to voluntary escrow restrictions until the date on which APN Outdoor’s yearly results for the period ending 31 December 2015 are released to the ASX, subject to potential early release as set out in Section 7.6.1 of the pathfinder prospectus; and
• existing Shares held by Doug Flynn and members of management will be subject to voluntary escrow restrictions until the date on which APN Outdoor’s yearly results for the period ending 31 December 2015 are released to the ASX.

After these dates, all of the relevant Existing Shares will be released.The residual holding held by Quadrant will be subject to partial early release: 50% upon release of the 31 December 2014 results; a further 50% upon release of the interim results for the period ending 30 June 2015, in both cases subject to share price being 20% above the IPO price.There are other customary exceptions to the escrow (e.g. in a takeover situation or upon death / illness). See section 7.6.1 of the pathfinder prospectus for more information on escrow arrangements. | | top | | Broker Firm bookbuildBids at the Offer Price range of $2.55–2.75 per Share are due for UBS Wealth Management by 3:00pm Monday, 13 October 2014. Please note, the Joint Lead Managers retain the ability to close the book early so you are encouraged to submit your bids early. Settlement is expected Monday, 17 November 2014 (see key dates in the pathfinder prospectus and summarised in the attached Offer Summary). | [/table][/table]