Nine Entertainment Co. Holdings Limited · ASX:NEC
Nine Entertainment — H1 FY2017 Earnings Presentation
25 slides from Nine Entertainment's earnings presentation, Feb 23, 2017
Slide 1: H1 FY17 Results Briefing
H 1 F Y 1 7 R E S U LT S B R I E F I N G 23 FEBRUARY 2017 COMMERCIAL CONTENT STRATEGY HUGH MARKS CHIEF EXECUTIVE OFFICER GREG BARNES CHIEF FINANCIAL OFFICER MICHAEL STEPHENSON CHIEF SALES OFFICER ALEX PARSONS CHIEF DIGITAL & MARKETING OFFICER
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer Forward looking statements can generally be identified by or other forecast. Nothing contained in this presentation This document is a presentation of general background the use of forward looking words such as, ‘expect’, nor any information made available to you is,
Slide 3: Key Financials
GROUP EBITDA GROUP COSTS INTERIM DIVIDEND $120M, DOWN 6% DOWN 4% 4.5 CPS FULLY FRANKED KEY FINANCIALS Results for H1 FY17 Pre Specific Items, FY16 Pro Forma FTA EBITDA DIGITAL EBITDA NET DEBT-EBITDA $109M, DOWN 9% $14M, UP 13% OF 0.9X 3
Slide 4: Operational Highlights
MARKET LEADING, MARKEDLY IMPROVED 2.9M REGISTERED USERS ON O P E R AT I O N A L POST-OLYMPIC RATINGS START TO RATINGS 9NOW, NINE’S LIVE STREAMING HIGHLIGHTS PERFORMANCE SEASON 2017 AND CATCH UP SERVICE LAUNCH OF 9HONEY, STRONG GROW TH IN STAN NEW AFFILIATE DEAL W ITH AUSTRALIA’S LEADING ACTIVE SUBSC
Slide 5: Group Revenue Down 5%
• Group revenue down 5% • NPAT, continuing businesses − FTA market down 4.5% (pre-specific items) of $75m − Olympics impact ad market and share • EPS down 2% (pre-specific items) • Costs down 4%, group basis • DPS of 4.5 cents, fully franked ‒ FTA costs down 4%, timing and efficiencies ‒ Full year p
Slide 6: Resolved in Nine's Favour
IMPAIRMENT REPORTED $M H1 FY17 • Accounting led, non-cash adjustment − Reflects the sustained discrepancy NET IMPAIRMENT CHARGE NON- (260.0) between share price and book value CURRENT ASSETS − DCF valuation impacted by lower than CLOSE OUT OF WARNERS (84.9) CONTRACT (NPV) expected December half mark
Slide 7: Network
NETWORK CONTINUING BUSINESSES, H1 H1 $M FY17 FY16 VARIANCE • Revenue down 5% − Metro FTA market down 4.5%, Regional REVENUE NETWORK 578.2 610.7 -5% down 0.4% DIGITAL 78.3 79.6 -2% − 35% share of metro FTA market CORPORATE 2.7 - - • Costs down 4% − Lower local content costs TOTAL REV 659.2 690.3 -5%
Slide 8: Net Debt – H1 FY2017
CONTINUING BUSINESSES, $M H1 FY17 H1 FY161 EBITDA 119.5 126.6 WORKING CAPITAL (23.8) (17.2) ASSOCIATES 0.7 1.5 OPERATING CASH FLOW, PRE SPECIFIC ITEMS, TAX AND INTEREST 96.4 110.9 CASH IMPACT OF WARNER ONEROUS PROVISION (28.8) (22.3) OTHER SPECIFIC ITEMS (5.9) (1.9) CASH PREPAYMENT TO NRL (50.0) - I
Slide 9: Chief Sales Officer
MICHAEL STEPHENSON CHIEF SALES OFFICER
Slide 10: The Successful Launch of Married at First Sight
• Leading in key advertising demographics post Olympics1 - No.1 25-54 | No.1 16-39 | No.1 GBCH • Total Television advertising market decline of 2.7%2 and Metro FTA advertising decline of 4.5%2 cross the half • FTA Metro advertising revenue share2 of 35.0% • The successful launch of Married at First
Slide 11: Chief Digital & Marketing Officer
C H I E F D I G I TA L & M A R K E T I N G OFFICER 11
Slide 12: Continued Consumer Product Development
• O&O revenue growth offset by termination of DMA joint venture • Firm cost control in evolving business • Continued consumer product development along content pillars of News, Sport, Women’s Lifestyle and Video • 2.9m registered users for 9Now • Strong growth in long form streams • Realignment of c
Slide 13: Australia's News Brands
14,740 12,242 11,177 10,372 11,259 10,648 10,513 5,198 5,197 4,590 2,072 DIGITAL SALES REACH IN AUSTRALIA 1 AUSTRALIA’S NEWS BRANDS 2 7,534 2:14:40 1:55:32 6,014 5,635 5,530 3,029 0:52:21 1,347 0:24:19 0:14:22 AUSTRALIAN FEMALE NETWORKS 4 AUSTRALIAN TV APP BY ENGAGEMENT 3 1 - Commercial reach based
Slide 14: All Demos
#1 +15% +25% ALL DEMOS Source: OzTam Overnight Data. Tear on Year growth based on 5 city Metro 19.30 -21.00 timeslot W eeks 5-7 2017 where MAFS broadcast vs 14 same nights 2016. W eek on week growth based on week 5,2017 vs week 7, 2017. Survey week win based on W eek 7, 2017, 18:00 -MN, Overnight Co
Slide 15: Pe . oR netball ~ "y my
Sy Pe . oR netball ~ "y my == ——— CRMC KET ; NRL = 2 Clee Kile T rs |
Slide 16: Total Audiences – TV + Digital
• The Block and Married at First Sight highlight value of strong local franchises • Total audience growth with streamed viewing representing 5% and 19% respectively of total TOTAL AUDIENCES – TV + DIGITAL 1200000 +2.4% 1400000 +17% +25% 1200000 1000000 +97% +97% 1000000 800000 800000 600000 +1.5% +7
Slide 17: Create Great Content
CREATE GREAT CONTENT | DISTRIBUTE IT BROADLY ENAGAGE AUDIENCES & ADVERTISERS FTA DIGITAL ON CONTENT TELEVISION PUBLISHING DEMAND PRODUCTION Australia’s leading Diverse portfolio of leading Unique mix of leading local Television content FTA network in the digital platforms across advertising and subs
Slide 18: Accelerating Growth Trajectory
• Accelerating growth trajectory with more than 700,000 active subscribers • January 2017 a record 135,000 gross adds • Exceptionally strong slate for CY17 including Twin Peaks, one of the most anticipated shows of the year GROSS SUB ADDS PER MONTH 18
Slide 19: Marked Improvement in Recent FTA Ratings
• Marked improvement in recent FTA ratings to drive medium term momentum • Metro FTA market to be down in the low single digits for FY17. • Regional markets expected to continue to slightly outperform, impact of new affiliate agreement will also help • Second half revenue share expected to grow rela
Slide 20: Ratings Momentum
• Ratings leadership post Olympics RATINGS MOMENTUM • Strong start to season 2017 • Driven by 50% increase in premium local content hours in CY17 • Group-wide costs down 4% in H1 FY17 • FTA costs forecast to be 1.5% lower in FY17. $50m cost reduction FIRM COST DISCIPLINE target FY18/19 • Focussing o
Slide 21: Appendices
21 APPENDICES
Slide 22: Reported H1 FY17
REPORTED REPORTED LESS DISCONTINUED CONTINUING BUSINESS1 CONTINUING BUSINESS1 $M H1 FY17 H1 FY16 BUSINESSES H1 FY16 VARIANCE REVENUE 659.2 747.4 57.1 690.3 -5% GROUP EBITDA 119.7 135.5 7.7 127.9 -6% NET INTEREST1 (3.1) (3.1) (2.2) (0.9) +248% TAX (23.3) (34.0) (1.0) (33.0) +29% NPAT, BEFORE SPECIFIC
Slide 23: Actual 31 Dec 2016
ACTUAL ACTUAL ACTUAL ACTUAL DEC- $M 31 DEC 2016 30 JUN 2016 31 DEC 2015 DEC VARIANCE INTEREST BEARING LOANS AND BORROWINGS 300.8 220.5 0.1 +300.7 LESS: CASH AND CASH EQUIVALENTS 123.3 42.9 52.6 +70.7 NET DEBT/(CASH) 177.5 177.6 (52.5) +230.0 NET LEVERAGE 0.9X 0.8X NM 23 Refer to glossary in Appendix
Slide 24: Appendix 3: Glossary
Continuing Businesses – Excludes the operations of Specific Items and the cash impact of stock provisions and Nine Live the NRL prepayment Contra – Advertising time offered in lieu of cash payment Pro Forma – Adjusted to reflect the impact of the sale of Discontinued business – Nine Live Nine Live,
Slide 25: Nine
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Nine Entertainment Co. Holdings — H1 FY2017 Earnings Presentation on 6ix