Nine Entertainment Co. Holdings Limited · ASX:NEC
Nine Entertainment — H1 FY19 Earnings Presentation
38 slides from Nine Entertainment's earnings presentation, Feb 21, 2019
Slide 1: The Greatest Search for Love campaign kicks off
THE GREATEST. 4 SEARCH FOR-LOVE campaign kicks off
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer expectations about the performance of its businesses. reasonableness of any forward looking statements, forecast This document is a presentation of general background Forward looking statements can generally be identified by financial information or other forecast. No
Slide 3: Hugh Marks, Chief Executive Officer
HUGH MARKS Cin |= REIMER OFFICER
Slide 4: Maximising returns from Nine's investment in content
MAXIMISING RETURNS FROM NINE’S INVESTMENT IN CONTENT LEADING TELEVISION AND RADIO BROADCASTERS LARGE SCALE BRANDS IN DIGITAL AND PUBLISHING DESTINATION FOR PROPERTY CLASSIFIEDS, HOME OWNERSHIP AND RELATED LARGE SCALE ONLINE VIDEO PLATFORM WITH STRATEGIC FLEXIBILITY SERVICES AUTOMOTIVE FINANCE LIFEST
Slide 5: Increasing contribution from core growth assets
INCREASING CONTRIBUTION FROM CORE GROWTH ASSETS1 Revenue Contribution - H1 FY18 Revenue contribution - H1 FY19 14% 45% 46% 54% 86% Broadcasting Digital & Publishing Stan Broadcasting Digital & Publishing Domain Stan 5 Ref er t o gl ossary i n Appendi x 7 f or def i ni t i ons. 1 Pro F orm a basi s,
Slide 6: Operational Highlights H1 FY19
O P E R AT I O N A L H I G H L I G H T S H 1 - F Y 1 9 TELEVISION 9NOW METRO DOMAIN STAN RADIO PUBLISHING 39.3% 50% INCREASED YIELD GROWTH ~1.5M ACTIVE TALK RADIO SHARE OF FTA PLUS REVENUE READERSHIP AND COST SUBS (+60%) CONTINUES TO REVENUE GROWTH AS DRIVES CONTROLS OUT-PERFORM 9NOW SUBSCRIPTION OF
Slide 7: Greg Barnes, Chief Financial Officer
GREG BARNES COE SEIN ANG IVAINOFFICER
Slide 8: Accounting implications of merger with Fairfax
A C C O U N T I N G I M P L I C AT I O N S O F M E R G E R W I T H F A I R F A X • Implementation date of the merger was 7 December 2018. • The Reported/Statutory results include the contribution from the Fairfax businesses from implementation date. • The Pro Forma results consolidate the results fo
Slide 9: Reported Results: Group Revenue $710M
R E P O R T E D R E S U LT S 1 GROUP GROUP STAT NET DPS REVENUE EBITDA PROFIT 5.0 CPS $710M $178M $171M FULLY FRANKED A$M H1 FY19 H1 FY18 VARIANCE REVENUE 2 709.8 719.6 -1% GROUP EBITDA 2 177.8 181.3 -2% EBIT 2 157.4 163.3 -4% GROUP NPAT (AFTER MINORITIES) 2 108.5 116.2 -7% STATUTORY NET PROFIT/(LOS
Slide 10: Specific Items
SPECIFIC ITEMS A$M, CONTINUING BUSINESS BASIS H1 FY19 RESTRUCTURING & TERMINATION RELATED COSTS (29.6) ACQUISITION RELATED COSTS (13.8) GAIN ON PROPERTY/ASSET SALES 9.4 GAIN ON CONSOLIDATION OF STAN 93.0 TOTAL SPECIFIC ITEMS BEFORE TAX 59.0 TOTAL TAX RELATING TO SPECIFIC ITEMS 3.8 NET SPECIFIC ITEMS
Slide 11: Pro Forma Group Results, Continuing Business Basis
PROFORMA GROUP RESULTS CONTINUING BUSINESS BASIS
Slide 12: Pro Forma Combined Group Results
P R O F O R M A C O M B I N E D G R O U P R E S U LT S GROUP GROUP GROUP EPS1 REVENUE EBITDA +6% NPAT1 7.4 CENTS, -3% TO $252M $126M UP 5% A$M, CONTINUING BUSINESS BASIS H1 FY19 H1 FY18 VARIANCE REVENUE 1 1,203.5 1,246.6 -3% GROUP EBITDA 1 251.6 238.0 +6% EBIT 1 211.0 200.7 +5% NPAT 1 140.2 138.9 +1
Slide 13: Pro Forma Combined Group Divisional Results
P R O F O R M A C O M B I N E D G R O U P D I V I S I O N A L R E S U LT S Revenue contribution - H1 FY19 TOTAL DIGITAL & A$M BROADCASTING DOMAIN STAN CORPORATE ASSOCIATES INTERSEGMENT CONTINUING PUBLISHING BUSINESS REVENUE 631.7 327.5 183.9 65.2 9.1 - (13.8) 1,203.5 PCP 705.3 315.3 183.3 43.4 8.9 -
Slide 14: Broadcast
BROADCAST Revenue contribution1 - H1 FY19 A$M H1 FY19 H1 FY18 VARIANCE REVENUE TELEVISION 563.5 636.6 -11% RADIO 68.2 68.7 -1% 54% TOTAL REV 631.7 705.3 -10% COSTS TELEVISION 402.3 464.6 +13% RADIO 52.8 52.4 -1% EBITDA contribution1,2 - H1 FY19 TOTAL COSTS 455.1 517.0 +12% EBITDA TELEVISION 161.1 17
Slide 15: Television
TELEVISION 28.6% MARGIN – METRO #1 REVENUE PREMIUM AD REV HIGHEST POST FTA MARKET SHARE (EX SPORT) +10% IPO (2013) -5%1 39.3%1 $M H1 FY19 H1 FY18 VARIANCE TELEVISION REVENUE PREMIUM AD REVENUE 67.6 105.2 -36% OTHER2 495.8 531.3 -7% TOTAL TELEVISION 563.5 636.6 -11% REVENUE TOTAL TELEVISION 402.3 464
Slide 16: Digital & Publishing
D I G I TA L & P U B L I S H I N G Revenue contribution1 - H1 FY19 A$M H1 FY19 H1 FY18 VARIANCE REVENUE METRO MEDIA 240.8 231.9 +4% 9 DIGITAL PUBLISHING 57.5 64.1 -10% 30% 9NOW 29.1 19.3 +51% TOTAL REV 327.5 315.3 +4% TOTAL COSTS METRO MEDIA 201.3 207.0 +3% 9 DIGITAL PUBLISHING 53.3 56.5 +7% EBITDA
Slide 17: Metro Media: Strong Growth in Subscription
METRO MEDIA STRONG GROWTH IN SUBSCRIPTION REVENUES AND TOTAL REVENUE DIGITAL REVENUE EBITDA READERSHIP1 +4% +12% +58% A$M H1 FY19 H1 FY18 VARIANCE PRINT REVENUE CIRCULATION/SUBSCRIPTION 86.4 85.9 +1% ADVERTISING 71.0 71.5 -1% DIGITAL REVENUE SUBSCRIPTION 27.7 24.4 +14% ADVERTISING 32.7 27.1 +21% OTH
Slide 18: 9Now
9NOW BVOD 9NOW EBITDA LONG FORM MARKET SHARE OF +54% STREAMS +41% MKT +66% 47.5% OPERATIONAL HIGHLIGHTS • Love Island Series 1 recorded 44% of total audience from VOD • Introduction of targeted advertising capabilities from August 2018 • Introduction of live ad insertion from January 2019 • Strong s
Slide 19: Domain
DOMAIN Revenue contribution1 - H1 FY19 A$M, H1 FY19 H1 FY183 VARIANCE REVENUE RESIDENTIAL 93.6 86.1 +9% 10% MEDIA, DEVELOPERS 25.8 28.7 -10% & COMMERCIAL AGENT SERVICES 15.8 13.7 +15% CORE DIGITAL 135.2 128.6 +5% CONSUMER 14.9 11.1 +34% SOLUTIONS TOTAL DIGITAL 150.1 139.7 +7% PRINT 32.8 43.0 -24% CO
Slide 20: Stan
S TA N COSTS Other ACTIVE SUBS DAILY TOTAL REV GROWTH ~1.5M HOURS STREAMED OF 50% Marketing Content >1M COSTS UP 19% A$M H1 FY19 H1 FY18 VARIANCE REVENUE 65.2 43.4 +50% TOTAL COSTS 87.0 73.3 -19% EBITDA (21.8) (29.9) +27% • Year end revenue run rate forecast c$185m • Inclusive of price increase impl
Slide 21: Pro Forma Cash Flows
PRO FORMA CASH FLOWS CASH FINAL CONVERSION1 PAYMENT TO 91% WARNER BROS A$M, WHOLLY-OWNED, CONTINUING BUSINESS BASIS H1 FY19 EBITDA (BEFORE ASSOCIATES)2 185.6 WORKING CAPITAL (6.0) LICENCE/SPECTRUM FEE TIMING (11.2) ASSOCIATES 0.5 OPERATING CASH FLOW, PRE SPECIFIC ITEMS, TAX AND INTEREST 168.8 CASH I
Slide 22: Post Merger Debt
P O S T M E R G E R D E B T PIncludes I TandI O N – 3 1 D E C E M B E R O Smerger restructuring costs of Includes Capex of $27.0m, both parties of CarAdvice $26.5m offset $61.2m and other Includes dividends by proceeds from restructuring costs of 19.6 Includes Spectrum charge of received of $16.9m $
Slide 23: Hugh Marks, Chief Executive Officer
HUGH MARKS Cin |= REIMER OFFICER
Slide 24: Integration Update
I N T E G R AT I O N U P D AT E On 7th December 2018, Nine successfully implemented the merger of Nine and Fairfax. COST SYNERGIES • Annualised cost out at IT implementation of c$35m • $50m forecast by June 2019 Digital & • $65m to be realised by June 2020 General • Excludes much of the benefit Publ
Slide 25: Broadcasting Strategy Outlook
BROADCASTING STRATEGY OUTLOOK • Core content creator/aggregator • Metro FTA market currently softer across television and radio than expected • Reaches 19m Australians nationally • Nine’s ratings and revenue share each week continues to perform strongly • Maximise share through premium • FY19 FTA co
Slide 26: Digital & Publishing Strategy Outlook
D I G I TA L & P U B L I S H I N G STRATEGY OUTLOOK • Australia’s most read digital publisher • BVOD market forecast to grow at 25%+ • Strong brands, each with a clear for at least the next 3 years. 9Now purpose and commercial model continues to dominate share • Metro Media focussed on distinct • Me
Slide 27: Domain Strategy Outlook
DOMAIN STRATEGY OUTLOOK • Continue to expand core residential • Continued lower listing volumes in a listings business through both geography seasonally low listings period and yield, expedited by the relationship • Continued growth in yield with Nine • Continued investment in growth • Scaling reven
Slide 28: Stan Strategy Outlook
S TA N STRATEGY OUTLOOK • Unchallenged local SVOD leader • Strong subscriber growth continues • Broad range of content supply • $2 average price increase agreements – Showtime, MGM, Sony, implemented from 1 February Disney, STARZ – providing key market • Limited variability in cost base exclusives a
Slide 29: Group Outlook
GROUP OUTLOOK • In terms of the FY19 result, Nine is expecting to report Pro Forma Group EBITDA on a continuing business basis of at least $420m, which equates to growth of at least 10% on the FY18 like-basis result of $385m. It is expected that positive momentum will continue at the Group level in
Slide 30: Appendices
APPENDICES
Slide 31: Appendix 1: Reconciliation
A P P E N D I X 1 : R E C O N C I L I AT I O N PLUS PRO REPORTED REPORTED PRO FORMA H1 A$M FAIRFAX/STAN PRE FORMA PLUS FAIRFAX/STAN H1 FY19 H1 FY18 FY18 COMPLETION H1 FY19 REVENUE 709.8 493.7 1,203.5 719.6 527.0 1,246.6 GROUP EBITDA 177.8 73.8 251.6 181.3 56.8 238.0 DEPRECIATION, AMORTISATION (20.3)
Slide 32: Appendix 2: Divisionals - Nine
APPENDIX 2: DIVISIONALS - NINE A$M H1 FY19 H1 FY18 VARIANCE REVENUE FTA 563.5 636.6 -11% NINE DIGITAL 86.7 83.4 +4% TOTAL REVENUE 650.1 720.0 -10% EBITDA FTA 161.1 171.9 -6% NINE DIGITAL 20.7 18.3 +13% CORPORATE (8.8) (9.3) +5% ASSOCIATES (2.0) 0.3 NM GROUP EBITDA 171.1 181.3 -6% DEPRECIATION (17.3)
Slide 33: Appendix 3: Divisionals - Fairfax
AP P E N D I X 3 : D I V I S I O N AL S - FAI R FAX A$M H1 FY19 H1 FY18 VARIANCE REVENUE METRO MEDIA 228.2 218.7 +4% DOMAIN 183.9 183.3 - MRN 68.2 68.7 -1% DIGITAL VENTURES 12.6 13.2 -5% CORPORATE 9.1 8.9 +2% TOTAL REVENUE, CONTINUING 502.0 492.8 +2% BUSINESSES TOTAL REVENUE 842.8 873.2 -3% EBITDA M
Slide 34: Appendix 4: Minority Interests
APPENDIX 4: MINORITY INTERESTS A$M (PRO FORMA) H1 FY19 H1 FY18 MACQUARIE RADIO (54.5%) 3.3 4.4 DOMAIN (59.4%) 10.8 14.61 TOTAL MINORITIES, CONTINUING 14.1 19.0 BUSINESSES (PRO FORMA) 1 Pro Forma estimate assuming Domain was listed from 1 July 2018 34
Slide 35: Appendix 5: Pro Forma Cash Flows
APPENDIX 5: PRO FORMA CASH FLOWS REPORTED STAN & FAIRFAX FAIRFAX PRO FORMA A$M MERGER COST 2 DOMAIN/MRN2 H1 FY19 CONTINUING1 DISCONTINUED2 H1 FY19 EBITDA 184.33 9.5 - (4.6) (3.6) 185.6 CHANGE IN WORKING CAPITAL (3.7) (10.0) - (0.4) (3.1) (17.2) DISTRIBUTIONS FROM ASSOCIATES 0.8 - - (0.3) - 0.5 OPERA
Slide 36: Appendix 6: Assets Held for Sale
APPENDIX 6: ASSETS HELD FOR SALE A$M H1 FY19 H1 FY18 VARIANCE REVENUE ACM Advertising 121.2 138.7 -13% Circulation 35.9 36.9 -3% Other 37.0 36.5 +1% TOTAL REVENUE - ACM 194.1 212.1 -8% Stuff1 Print – Advertising 55.8 70.7 -21% Print - Circulation 43.1 44.7 -4% Digital 22.1 22.1 - Other 4.9 9.1 -47%
Slide 37: Appendix 7: Glossary
APPENDIX 7: GLOSSARY BVOD – Broadcast Video on Demand Net Leverage (wholly owned) – Net Debt (wholly Media and Printing (ACM), Stuff New Zealand and Continuing Businesses – excludes those businesses owned) divided by wholly owned Group EBITDA plus Events, which are separately classified as held for
Slide 38: Slide 38
Nine Entertainment Co. Holdings — H1 FY19 Earnings Presentation on 6ix