Nine Entertainment Co. Holdings Limited · ASX:NEC
Nine Entertainment — FY2019 Earnings Presentation
38 slides from Nine Entertainment's earnings presentation, Aug 22, 2019
Slide 1: FY19 Final Results
Gee e 3:Nine eee FY19 FINAL RESULTS 22 AUGUST, 2019
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer expectations about the performance of its businesses. likelihood of achievement or reasonableness of any This document is a presentation of general background Forward looking statements can generally be identified by forward looking statements, forecast financial info
Slide 3: Hugh Marks, Chief Executive Officer
HUGH MARKS CHIEF EXECUTIVE OFFICER 3
Slide 4: Strong Operational Performance
STRONG OPERATIONAL PERFORMANCE TELEVISION 9NOW METRO MEDIA STAN DOMAIN RADIO Dominance of 50%+ revenue growth Growth in advertising >1.7m active subs Yield and depth Audiences strong in a targeted demo with as 9Now leads the and subscription plus growth, and strong cost difficult ad climate 39.3% ra
Slide 5: 10% EBITDA Growth
10% EBITDA GROWTH 1 0 FY18 Group Broadcasting Digital & Stan Domain Corporate Associates FY19 Group EBITDA Publishing EBITDA 5 1 Continuing business, Pro Forma basis
Slide 6: Increased Contribution From Growth Assets
INCREASED CONTRIBUTION FROM GROWTH ASSETS Revenue contribution1 - FY18 Revenue contribution1 - FY19 84% 54% Broadcasting Digital & Publishing Stan Broadcasting Digital & Publishing Domain Stan 1 Pro Forma basis, economic interest adjusted 6
Slide 7: Greg Barnes, Chief Financial Officer
GREG BARNES CHIEF FINANCIAL OFFICER 7
Slide 8: Accounting Implications of Merger With Fairfax
ACCOUNTING IMPLICATIONS OF MERGER WITH FAIRFAX • Implementation date of the merger was 7 December 2018. • The Reported/Statutory results include the contribution from the Fairfax businesses from implementation date and have been adjusted for the impact of Purchase Price Accounting during the period
Slide 9: Reported Results
REPORTED RESULTS 1 GROUP GROUP GROUP REVENUE EBITDA NPAT 2 $1.8B $350M $187M A$M FY19 FY18 VARIANCE REVENUE 2 1,848.1 1,318.2 +40% GROUP EBITDA 2 349.9 257.2 +36% EBIT 2 276.2 220.5 +25% GROUP NPAT 2 187.1 156.7 +19% STATUTORY NET PROFIT, CONTINUING 216.6 209.7 +3% OPERATIONS, INCLUDING SPECIFIC ITE
Slide 10: Specific Items
SPECIFIC ITEMS A$M, CONTINUING BUSINESS BASIS H1 FY19 H2 FY19 FY19 RESTRUCTURING & TERMINATION RELATED COSTS (29.6) (7.0) (36.6) ACQUISITION RELATED COSTS (13.8) (7.4) (21.2) GAIN ON PROPERTY/ASSET SALES 9.4 - 9.4 GAIN ON CONSOLIDATION OF STAN 93.0 - 93.0 ACCOUNTING IMPAIRMENT ON CARADVICE/DRIVE MER
Slide 11: Pro Forma Group Results
P R O F O R M A G R O U P R E S U LT S CONTINUING BUSINESS BASIS 11
Slide 12: Pro Forma Combined Group Results
PRO FORMA COMBINED GROUP RESULTS DIVIDEND GROUP GROUP EPS 10 CENTS, EBITDA NPAT 11.6 CENTS FULLY $424M $198M UP 16% FRANKED A$M, CONTINUING BUSINESS BASIS FY19 FY18 VARIANCE REVENUE 2,341.7 2,364.0 -1% GROUP EBITDA 423.8 385.1 +10% EBIT 338.5 308.0 +10% NPAT 224.8 205.9 +9% GROUP NPAT (AFTER MINORIT
Slide 13: Pro Forma Combined Group Divisional Results
PRO FORMA COMBINED GROUP DIVISIONAL RESULTS Revenue1 contribution - FY19 TOTAL FY19 DIGITAL & BROADCASTING DOMAIN STAN CORPORATE ASSOCIATES INTERSEGMENT CONTINUING A$M PUBLISHING BUSINESS REVENUE 1,221.8 637.3 335.6 157.1 19.1 - (29.2) 2,341.7 PCP 1,290.8 619.6 357.3 96.8 18.9 - (19.4) 2,364.0 Broad
Slide 14: Broadcast
BROADCAST Revenue contribution1 - FY19 A$M FY19 FY18 VARIANCE REVENUE TELEVISION 1,090.0 1,154.4 -6% RADIO 131.7 136.4 -3% 54% TOTAL REV 1,221.8 1,290.8 -5% COSTS TELEVISION 876.6 916.2 +4% RADIO 104.6 103.8 -1% EBITDA contribution1,2 - FY19 TOTAL COSTS 981.2 1,020.0 +4% EBITDA TELEVISION 213.4 238.
Slide 15: Television
TELEVISION METRO FTA #1 REVENUE PREMIUM FTA COSTS MARKET SHARE AD REV DOWN (EX SPORT) -5.1% 1 39.6% 4% +20% $M FY19 FY18 VARIANCE TELEVISION REVENUE PREMIUM AD REVENUE 161.0 175.5 -8% OTHER2 929.0 978.9 -5% TOTAL TELEVISION REVENUE 1,090.0 1,154.4 -6% TOTAL TELEVISION COSTS 876.6 916.2 +4% TELEVISIO
Slide 16: Growth in Premium Revenue, Ex Cricket
GROWTH IN PREMIUM REVENUE, EX CRICKET 200 180 160 140 120 100 80 1% 60 40 +20% 20 20% 0 FY18 FY19 Entertainment NRL Cricket Tennis 16
Slide 17: Digital and Publishing
DIGITAL AND PUBLISHING Revenue contribution1 - FY19 A$M FY19 FY18 VARIANCE REVENUE METRO MEDIA 454.4 442.9 +3% 9 DIGITAL PUBLISHING 121.2 135.9 -11% 9NOW 61.7 40.8 +51% 30% TOTAL REV 637.3 619.6 +3% TOTAL COSTS METRO MEDIA 371.6 392.7 +5% 9 DIGITAL PUBLISHING 110.1 122.0 +10% EBITDA contribution1,2
Slide 18: Metro Media Growth in Subscription and Advertising
METRO MEDIA GROWTH IN SUBSCRIPTION TOTAL DIGITAL EBITDA AND REVENUE REVENUE +65% ADVERTISING +3% +10% REVENUES A$M FY19 FY18 VARIANCE PRINT REVENUE CIRCULATION/SUBSCRIPTION1 153.9 156.0 -1% ADVERTISING 133.1 133.4 - DIGITAL REVENUE SUBSCRIPTION1 70.6 64.1 +10% ADVERTISING 65.1 55.9 +17% OTHER INCL.
Slide 19: 9Now
9NOW BVOD MARKET1 INCREMENTAL +38% TO 9NOW SHARE REVENUE SALES $125M ~49% GROWTH MARGIN +51% 80C A$M FY19 FY18 VARIANCE REVENUE 61.7 40.8 +51% TOTAL COSTS 25.5 21.4 -19% EBITDA 36.2 19.4 + 87% INCREMENTAL SALES MARGIN, PER $ 80.4C 73.4C • Introduction of targeted advertising capabilities from August
Slide 20: Domain
DOMAIN A$M, FY19 FY183 VARIANCE Revenue contribution1 - FY19 REVENUE RESIDENTIAL 173.3 172.5 - MEDIA, DEVELOPERS & 47.1 54.1 -13% COMMERCIAL 9% AGENT SERVICES 32.2 27.9 +15% CORE DIGITAL 252.5 254.5 -1% CONSUMER SOLUTIONS 26.9 24.4 +10% TOTAL DIGITAL 279.4 278.9 - PRINT 54.3 77.1 -30% EBITDA contrib
Slide 21: Stan
STAN ACTIVE DAILY TOTAL REVENUE 1 ST HALF OF SUBSCRIBERS HOURS GROWTH POSITIVE >1.7M STREAMED ~1.5M +62% EBITDA CO ST S UP 23% A$M H1 FY19 H2 FY19 FY19 FY18 VARIANCE REVENUE 65.2 91.9 157.1 96.8 +62% TOTAL COSTS 87.0 91.4 178.4 145.3 -23% COSTS/$ REVENUE $1.33 $0.99 $1.14 $1.50 +24% EBITDA (21.8) 0.
Slide 22: Pro Forma Cash Flows
PRO FORMA CASH FLOWS A$M, WHOLLY-OWNED, CONTINUING BUSINESS BASIS H1 FY19 H2 FY19 FY19 EBITDA (BEFORE ASSOCIATES)1 185.6 115.9 301.5 CASH WORKING CAPITAL (6.0) (15.2) (21.2) CONVERSION 89% LICENCE/SPECTRUM FEE TIMING (11.2) (1.1) (12.3) ASSOCIATES 0.5 0.1 0.6 OPERATING CASH FLOW, PRE SPECIFIC ITEMS,
Slide 23: Post Merger Debt Position – June
POST MERGER DEBT POSITION – 30 JUNE Includes ACM $96.8m, Includes dividends Includes merger and Events $31m and NPC received of $26.6m restructuring costs of both of $10.5m offset by from Domain and parties of $71.0m and other Includes Spectrum charge of TXA acquisition of Macquarie Radio restructur
Slide 24: Hugh Marks, Chief Executive Officer
HUGH MARKS CHIEF EXECUTIVE OFFICER 24
Slide 25: Diversified With a Clear Growth Profile
DIVERSIFIED WITH A CLEAR GROWTH PROFILE TRANSFORMING BUILDING RETURNING Investing in the premium Using the core of broadcast to power Strong cash flows and content that drives profitability growth businesses dividends to shareholders Broadcasting and Strong cash flow conversion Metro Media Leading p
Slide 26: Key Drivers to FY20 and Beyond
KEY DRIVERS TO FY20 AND BEYOND DIGITAL & STAN DOMAIN BROADCASTING CORPORATE PUBLISHING COSTS A refocused business, with a Strong subscriber Significant leverage Expect revenue Further incremental growing digital and growth set to to property cycle share gains to merger synergies, subscription base c
Slide 27: Group Outlook
GROUP OUTLOOK • In terms of the FY20 result, premised on market assumptions as detailed in NEC’s ASX release dated 22 August 2019, Nine is expecting to report Pro Forma Group EBITDA growth of around 10%, pre the impact of the AASB16 and Purchase Price Accounting adjustments For FY20 Corporate costs1
Slide 28: Appendices
#Nine | APPENDICES
Slide 29: Appendix 1: Reconciliation
APPENDIX 1: RECONCILIATION PLUS PURCHASE PRO A$M, CONTINUING BUSINESS REPORTED FAIRFAX/STAN REPORTED PLUS PRO FORMA PRICE FORMA BASIS FY19 PRE FY18 FAIRFAX/STAN FY18 ACCOUNTING2 FY19 COMPLETION REVENUE 1,848.1 493.7 - 2,341.7 1,318.2 1,045.9 2,364.0 GROUP EBITDA 349.9 73.8 - 423.8 257.2 127.8 385.1
Slide 30: Appendix 2: Dep'n & Amort'n Impact From PPA
APPENDIX 2: DEP’N & AMORT’N IMPACT FROM PPA A$M FY19 – 7 MONTHS FY19 – 12 MONTHS INTANGIBLE ASSETS DOMAIN 3.5 6.4 STAN 5.0 8.8 METRO MEDIA 1.1 2.0 TOTAL INTANGIBLE ASSETS 9.6 17.2 TANGIBLE ASSETS DOMAIN (3.2) (3.8) MACQUARIE MEDIA (0.6) (1.2) METRO MEDIA 2.9 5.0 TOTAL TANGIBLE ASSETS (0.9) - TOTAL D
Slide 31: Appendix 3: Pro Forma Cash Flows
APPENDIX 3: PRO FORMA CASH FLOWS REPORTED STAN & FAIRFAX FAIRFAX PRO FORMA A$M MERGER COST 2 DOMAIN/MRN2 FY19 CONTINUING1 DISCONTINUED2 FY19 EBITDA 383.03 9.5 - (30.3) (60.6) 301.5 CHANGE IN WORKING CAPITAL (18.7) (10.0) - (2.6) (2.2) (33.5) DISTRIBUTIONS FROM ASSOCIATES 0.9 - - (0.3) - 0.6 OPERATIN
Slide 32: Appendix 4: Minority Interests
APPENDIX 4: MINORITY INTERESTS A$M (PRO FORMA) FY19 FY18 MACQUARIE RADIO (54.4%) 6.1 8.8 DOMAIN (59.2%) 20.5 26.51 TOTAL MINORITIES, CONTINUING BUSINESSES (PRO FORMA) 26.5 35.2 1 Pro Forma estimate assuming Domain was listed from 1 July 2018 32
Slide 33: Appendix 5: Divisionals – Metro Media
APPENDIX 5: DIVISIONALS – METRO MEDIA A$M H1 FY18 H2 FY18 FY18 H1 FY19 H2 FY19 FY19 SUBSCRIPTION REVENUE PRINT - OLD 85.9 84.3 170.2 86.4 82.1 168.5 DIGITAL - OLD 24.4 25.5 49.9 27.7 28.3 56.0 TOTAL SUBSCRIPTION REVENUE 110.3 109.8 220.1 114.1 110.4 224.5 SUBSCRIPTION EVENUE PRINT - NEW 78.6 77.3 15
Slide 34: Appendix 6: Additional Segment Information
APPENDIX 6: ADDITIONAL SEGMENT INFORMATION PRO FORMA, A$M DEPRECIATION, REVENUE EBITDA EBIT FY19 AMORTISATION BROADCASTING 1,221.8 240.6 (26.5) 214.1 DIGITAL & PUBLISHING 637.3 130.1 (21.5) 108.5 DOMAIN 335.6 98.0 (32.1) 66.0 STAN 157.1 (21.3) (2.8) (24.1) CORPORATE 19.1 (20.7) (2.3) (23.0) ASSOCIAT
Slide 35: Appendix 7: Impact of AASB16
APPENDIX 7: IMPACT OF AASB16 1,2 Digital & DELTA , A$M Group Broadcasting Stan Domain Publishing EBITDA +35 to +40 +15 to +17 +11 to +13 0 to +2 +7 to +9 DEPRECIATION, AMORTISATION -33 to -37 -14 to -16 -9 to -11 -1 to -2 -8 to -10 INTEREST EXPENSE -10 to -12 -5 to -7 -3 to -5 NM 0 to -2 NET IMPACT
Slide 36: Appendix 8: Discontinued, Held for Sale
APPENDIX 8: DISCONTINUED, HELD FOR SALE A$M FY19 FY18 VARIANCE REVENUE ACM Advertising 225.6 259.1 -13% Circulation 70.8 71.8 -1% Other 69.5 69.4 - TOTAL REVENUE - ACM 365.9 400.3 -9% Stuff1 Advertising 140.1 170.0 -18% Circulation 85.6 87.7 -2% Other2 26.9 23.0 +17% TOTAL REVENUE – STUFF1 252.7 280
Slide 37: Appendix 9: Glossary
A P P E N D I X 9 : G L O S S A RY AASB16 – The recently updated accounting standard balance sheet less available cash results for the former Nine and Fairfax businesses for for leases, which applies to reporting periods Net Debt (combined Group) - Gross debt per the the full 12 months, including th
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Nine Entertainment Co. Holdings — FY2019 Earnings Presentation on 6ix