Nine Entertainment Co. Holdings Limited · ASX:NEC
Nine Entertainment — FY2020 Earnings Presentation
39 slides from Nine Entertainment's earnings presentation, Aug 27, 2020
Slide 1: FY20 Final Results
FY20 FINAL RESULTS | 27 AUGUST, 2020
Slide 2: Important Notice and Disclaimer
ANNUAL RESULTS FY20 IMPORTANT NOTICE AND DISCLAIMER This document is a presentation of general background ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, representation, warranty or guarantee as to the past, information about the activities of Nine Entertainment Co. ‘may’, ‘predict’,
Slide 3: Hugh Marks, Chief Executive Officer
ANNUAL RESULTS FY20 HUGH MARKS CHIEF EXECUTIVE OFFICER 3
Slide 4: Operational Highlights
ANNUAL RESULTS FY20 OPERATIONAL HIGHLIGHTS Migration Strong cash flow Audiences Revenue Share Costs to Digital Stan & balance sheet • Growth in audiences • Growth in revenue • $225m CY20 cash • Digital comprising • Strong growth in • Strong cash across all mediums share at FTA, BVOD cost out program
Slide 5: The Benefits of a Portfolio
ANNUAL RESULTS FY20 THE BENEFITS OF A PORTFOLIO Investment in Business Growth Cost Savings in COVID-Impacted Divisions +85.0 +33.8 +20.0 TV Radio Digital & Publishing Domain Corporate +6.8 Stan 9Now -7.9 -4.9 -13.3 -15.0 -29.2 -32.8 -29.8 -48.6 -50.4 1 Revenue Costs 1 -138.3 EBITDA +51.2 +13.2 -89.6
Slide 6: Digital Transformation Accelerating
ANNUAL RESULTS FY20 DIGITAL1 TRANSFORMATION ACCELERATING $m 450 400 350 300 250 200 150 ~48% 100 +40% OF OR TOTAL 50 EBITDA2 ~$47M 0 FY18 FY19 FY20 Domain - digital only Digital ex Domain Non-Digital 6 1 Digital includes 9Now, 9Digital, Stan and the digital components of Domain (59%) and Metro Media
Slide 7: Graeme Cassells, Acting Chief Financial Officer
ANNUAL RESULTS FY20 GRAEME CASSELLS ACTING CHIEF FINANCIAL OFFICER 7
Slide 8: Accounting Basis
ANNUAL RESULTS FY20 ACCOUNTING BASIS The Reported/Statutory results include Pro Forma results are presented for and the ASX release dated 27 August the contribution from Fairfax Media and Continuing Operations and exclude 2020, the operations of 9Now are Stan from 7 December 2018. Australian Communi
Slide 9: Reported Results
ANNUAL RESULTS FY20 REPORTED RESULTS 1 GROUP REVENUE GROUP EBITDA STAT. LOSS $2.2B $397M $509M A$M FY20 FY19 VARIANCE REVENUE 2 2,170.6 1,848.1 +17% GROUP EBITDA 2 396.7 349.9 +13% EBIT 2 246.8 276.2 -11% GROUP NPAT, PRE MINORITIES 2 155.9 187.1 -17% SPECIFIC ITEMS (NET OF TAX) (664.7) 29.5 NM STATU
Slide 10: Impact of COVID-19
ANNUAL RESULTS FY20 IMPACT OF COVID-19 Spectrum charge: The Government waived payment of Nine’s annual spectrum charges across CY20. Timing of Advertising markets: Advertising markets, across the benefit is complicated by the number of licences all mediums, were significantly impacted by applied. P&
Slide 11: Specific Items
ANNUAL RESULTS FY20 SPECIFIC ITEMS A$M, CONTINUING BUSINESS BASIS H1 FY20 H2 FY20 FY20 DOMAIN – IMPAIRMENT OF INTANGIBLES - (188.2) (188.2) DOMAIN – OTHER, REFER DOMAIN ACCOUNTS (ASX:DHG), 20th AUG 2020 7.9 (1.1) 6.8 ASSET IMPAIRMENT - (61.4) (61.4) IMPAIRMENT OF INTANGIBLES - (403.6) (403.6) RESTRU
Slide 12: Group Results
ANNUAL RESULTS FY20 GROUP RESULTS CONTINUING BUSINESS BASIS 12
Slide 13: Group Results
ANNUAL RESULTS FY20 GROUP RESULTS GROUP GROUP DIVIDEND LIKE BASIS EBITDA EBITDA NPAT 1,2 7 CENTS, FULLY DOWN 16% $397M 1 $141M FRANKED FY20 FY20 FY19 A$M, CONTINUING BUSINESS BASIS VARIANCE REPORTED 1,2 EX AASB16/PPA 2 PRO FORMA 2 REVENUE 2,170.6 2,171.6 2,341.7 -7% GROUP EBITDA 396.7 354.6 423.8 -1
Slide 14: Reconciliation of Accounting Changes
ANNUAL RESULTS FY20 P&L impact – AASB16 (from RECONCILIATION 1 July 2019) OF ACCOUNTING CHANGES • Rental costs ($42.1m) recategorized as depreciation ($41.9m) $m and financing costs ($11.6m) P&L impact – PPA • Increase in D&A of $17.2m • Combined net impact of PPA and AASB16 on Pre Tax Profit of -$2
Slide 15: Significant Cost Initiatives Across the Business
ANNUAL RESULTS FY20 SIGNIFICANT COST INITIATIVES (NET P&L IMPACT) ACROSS THE BUSINESS1 $m 180 160 Includes est. annualised savings and cost initiatives 140 that manifest in revenue 120 100 80 $28m 60 incl in Specific 40 Items 20 0 FY20 FY21 FY22/23 FY20 FY21 FY22/23 FY20 FY21 FY22/23 2 Television Ra
Slide 16: Cash Flow
ANNUAL RESULTS FY20 CASH FLOW $95M REDUCTION IN WORKING CASH CONVERSION CAPITAL 137% FY20 ADJUST FY20 FY19 PRO A$M, WHOLLY-OWNED, CONTINUING BUSINESS BASIS ADJUST1 REPORTED AASB16 ADJUSTED FORMA EBITDA (BEFORE ASSOCIATES) 395.8 (91.1) (32.3) 272.3 301.5 WORKING CAPITAL 157.3 (50.7) (11.5) 95.1 (21.2
Slide 17: Balance Sheet Remains Strong with Leverage ~0.9x
ANNUAL RESULTS FY20 BALANCE SHEET REMAINS STRONG WITH LEVERAGE ~0.9X1 A$M WHOLLY OWNED GROUP DOMAIN CONSOLIDATED GROUP INTEREST BEARING LOANS AND BORROWINGS 413.1 171.3 584.3 LESS: CASH AND CASH EQUIVALENTS 121.9 65.5 187.4 NET DEBT/(CASH) 291.2 105.8 396.9 NET LEVERAGE 0.9X 1.3X 1.0X Refer to gloss
Slide 18: Divisional Results
ANNUAL RESULTS FY20 DIVISIONAL RESULTS CONTINUING BUSINESS BASIS 18
Slide 19: Broadcast
ANNUAL RESULTS FY20 BROADCAST Revenue contribution1 – FY20 FY20 FY19 A$M FY20 REPORTED EX VARIANCE PRO FORMA AASB16 REVENUE FTA TELEVISION 951.8 951.8 1,090.0 -13% 9NOW 81.7 81.7 61.7 +32% 51% RADIO 102.6 102.6 131.7 -22% BROADCAST REV 1,136.0 1,136.0 1,283.5 -11% COSTS FTA TELEVISION 813.9 828.0 87
Slide 20: Free to Air Television
ANNUAL RESULTS FY20 FREE TO AIR TELEVISION 39.8% SHARE OF H2 METRO FTA H2 REVENUE H2 FTA COSTS 3 MARKET DOWN MARKET SHARE DOWN 14.1% 1 -21.9% 2 41.4% 16% FY20 FY20 FY19 $M REPORTED EX AASB16 PRO FORMA VARIANCE TELEVISION REVENUE PREMIUM AD REVENUE 161.4 161.4 161.0 - OTHER4 790.4 790.4 929.0 -15% TO
Slide 21: Free to Air Costs Trends Continue to Improve
ANNUAL RESULTS FY20 FREE TO AIR COSTS TRENDS CONTINUE TO IMPROVE TOTAL FREE TO AIR COSTS1 $m 1,200 1,000 -5% 800 600 400 200 0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21e News Local Sport Overseas Olympics Non-program Licence Fees 21 1 like-for-like, pre AASB16
Slide 22: 9Now
ANNUAL RESULTS FY20 9NOW FY20 H2 METRO BVOD H2 REVENUE 50% SHARE OF BVOD MARKET SHARE 51% MARKET UP 31% 1 +20% 1 +0.8pts FY20 FY20 FY19 A$M VARIANCE REPORTED EX AASB16 PRO FORMA REVENUE 81.7 81.7 61.7 +32% COSTS 32.0 32.3 25.5 -27% EBITDA 49.7 49.4 36.2 +36% MARGIN 60.8% 60.4% 58.6% +1.8 PTS • NBC U
Slide 23: Nine Radio
ANNUAL RESULTS FY20 NINE RADIO RADIO MARKET1 MRN REV -22% FY20 COSTS FURTHER COST -20% REFLECTS DOWN 8% DECLINES SHARE DECLINE IN FY21e FY20 FY20 FY19 A$M VARIANCE REPORTED EX AASB16 PRO FORMA REVENUE 102.6 102.6 131.7 -22% COSTS 92.8 96.6 104.6 +8% EBITDA 9.8 5.9 27.2 -78% MARGIN 9.5% 5.8% 20.6% -1
Slide 24: Nine Digital & Publishing
ANNUAL RESULTS FY20 NINE DIGITAL & PUBLISHING Revenue contribution1 – FY20 25% FY19 FY20 FY20 A$M PRO VARIANCE REPORTED EX AASB16 FORMA REVENUE METRO MEDIA 426.3 426.3 454.4 -6% 9 DIGITAL PUBLISHING 98.9 98.9 121.2 -18% 25% TOTAL REV 525.2 525.2 575.6 -9% COSTS METRO MEDIA 338.1 351.8 371.7 -5% EBIT
Slide 25: Metro Media
ANNUAL RESULTS FY20 METRO MEDIA R E AD E R R E V E N U E D I G I T AL >20% GROWTH IN COSTS ~59c OF EVERY REVENUE D I G I T AL D O W N 8 %, E X W Z , $1 RECEIVED ~ 4 1 % O F T O T AL SUBSCRIPTIONS1 EVENTS FY20 FY20 FY19 A$M VARIANCE REPORTED EX AASB16 PRO FORMA DIGITAL REVENUE SUBSCRIPTION 77.3 77.3
Slide 26: Domain
ANNUAL RESULTS FY20 DOMAIN FY20 FY20 FY193 Revenue contribution1 – FY20 A$M, CONTINUING BUSINESS BASIS VARIANCE REPORTED EX AASB16 PRO FORMA REVENUE RESIDENTIAL 161.6 161.6 173.3 -7% 8% MEDIA, DEVELOPERS & COMMERCIAL 43.0 43.0 47.1 -9% AGENT SERVICES 22.4 22.4 22.2 +1% CORE DIGITAL 227.0 227.0 242.6
Slide 27: Stan
ANNUAL RESULTS FY20 STAN GROWTH IN ACTIVE STRONG USER REVENUE EBITDA (AND SUBSCRIBERS TO ENGAGEMENT GROWTH CASH) 2.2M CURRENTLY ~+20% 1 IMPROVEMENT +54% COSTS UP 19% ~$50M FY20 FY20 FY19 A$M VARIANCE REPORTED EX AASB16 PRO FORMA REVENUE 242.1 242.1 157.1 +54% COSTS 211.1 212.2 178.4 -19% EBITDA 31.0
Slide 28: Outlook
ANNUAL RESULTS FY20 OUTLOOK 28
Slide 29: Three Key Operating Platforms
ANNUAL RESULTS FY20 THREE KEY OPERATING PLATFORMS TELEVISION PUBLISHING CLASSIFIEDS Investing in the premium content Cross platform publisher of digital Customer-centric, market-place that drives profitability content, primarily news model Focusing on the efficient, and Focusing on reader revenues,
Slide 30: By FY24, Nine Is Focussed on Achieving
ANNUAL RESULTS FY20 BY FY24, NINE IS FOCUSSED ON ACHIEVING ~$230M ~60% >35% ~30% STRUCTURAL (P&L) OF EBITDA1 FROM OF GROUP OF NINE’S COST OUT FROM DIGITAL BUSINESSES REVENUES1 REVENUE1 FROM FY19 (NET ACROSS FROM VOD 60% FTA, RADIO AND SUBSCRIPTION METRO MEDIA) 1 Includes 59% of Domain revenue and EB
Slide 31: Trading Update and Outlook
ANNUAL RESULTS FY20 TRADING UPDATE AND OUTLOOK BROADCAST 9NOW METRO MEDIA STAN DOMAIN FTA market conditions BVOD market Growing digital and Expect positive July trading benefited remain weak with continues to grow with subscription base (Q1 subscriber momentum from unseasonally Nine’s Q1 FTA revs Q1
Slide 32: Appendices
ANNUAL RESULTS FY20 APPENDICES 32
Slide 33: Appendix 1. Combined Group Divisional Results
ANNUAL RESULTS FY20 APPENDIX 1. COMBINED GROUP DIVISIONAL RESULTS TOTAL BROADCAST (INCL DIGITAL & FY20, A$M 9NOW) PUBLISHING DOMAIN STAN CORPORATE ASSOCIATES INTERSEGMENT CONTINUING BUSINESS REVENUE - REPORTED 1,136.0 525.2 267.8 242.1 14.2 - (14.9) 2,170.6 PCP 1,283.5 575.6 335.6 157.1 19.1 - (29.2
Slide 34: Combined Group Divisional Results (Continued)
ANNUAL RESULTS FY20 COMBINED GROUP DIVISIONAL RESULTS (CONTINUED) DIGITAL & TOTAL CONTINUING FY20, A$M BROADCAST (INCL 9NOW) PUBLISHING DOMAIN STAN CORPORATE ASSOCIATES BUSINESS EBITDA – 197.3 92.0 86.0 31.0 (10.6) 0.9 396.7 REPORTED D,A (EX AASB16 (27.9) (25.6) (33.5) (3.2) (0.5) - (90.9) & PPA) AA
Slide 35: Appendix 2. Reconciliation – Divisional Split
ANNUAL RESULTS FY20 APPENDIX 2. RECONCILATION – DIVISIONAL SPLIT FY20 FY20 FY19 FY19 A$M 9NOW 9NOW ADJUSTMENT1 STATUTORY REPORTED STATUTORY PRO FORMA REVENUE BROADCAST 1,054.3 (81.7) 1,136.0 1,160.3 61.7 61.5 1,283.5 DIGITAL & 606.9 81.7 525.2 425.6 (61.7) 211.8 575.6 PUBLISHING STAN 242.1 - 242.1 1
Slide 36: Appendix 3. Minority Interests
ANNUAL RESULTS FY20 APPENDIX 3. MINORITY INTERESTS FY20 FY20 FY19 A$M REPORTED EX AASB16 PRO FORMA MACQUARIE RADIO (54.4% UNTIL COMPLETION) 1.3 1.2 6.1 DOMAIN (59%) 13.8 14.4 20.5 TOTAL MINORITIES, CONTINUING BUSINESSES (PRO FORMA) 15.1 15.6 26.5 36
Slide 37: Appendix 4. Forward Estimates
ANNUAL RESULTS FY20 APPENDIX 4. FORWARD ESTIMATES FY21 FY22 CORPORATE COSTS – WHOLLY OWNED ~$20M TO 25M ~$25-30M ~$175M TO 180M DEPRECIATION & AMORTISATION - REPORTED ~$160M TO 165M INTEREST EXPENSE - REPORTED ~$30M TO $35M TAX RATE - REPORTED ~30% ~30% CAPITAL EXPENDITURE – WHOLLY OWNED ~$90M TO $9
Slide 38: Appendix 5. Glossary
ANNUAL RESULTS FY20 APPENDIX 5 AASB16 – The recently updated accounting standard for Key demographics - All People 25-54, 16-39, 18-49 and Stan, which is now wholly owned. Results include leases, which applies to reporting periods beginning on or Grocery Buyers with Children synergies realised since
Slide 39: Nine
Nine
Nine Entertainment Co. Holdings — FY2020 Earnings Presentation on 6ix