Nine Entertainment Co. Holdings Limited · ASX:NEC
Nine Entertainment — H1 FY16 Earnings Presentation
25 slides from Nine Entertainment's earnings presentation, Feb 25, 2016
Slide 1: Interim Results Briefing 25 February 2016
2016 Interim Results Briefing Hugh Marks CEO Simon Kelly COO/CFO 25 February 2016 Peter Wiltshire Chief Revenue Officer Alex Parsons Chief Digital and Marketing Officer 2016
Slide 2: Disclaimer
Disclaimer Important notice and disclaimer expectations, estimates and intentions expressed in such forward This document is a presentation of general background information looking statements and many of these factors are outside the control of about the activities of Nine Entertainment Co. Holding
Slide 3: Strategic progress as business evolves
Strategic progress as business evolves Key Financials Operational highlights • Profit After Tax from Continuing businesses • #1 ratings share for the half across all key of $78.4m1, down 1% on an earnings per demographics, including All People share basis • Finalised NRL rights agreement through • D
Slide 4: Solid result in challenging ad market
Solid result in challenging ad market $m H1 FY16 H1 FY15 Variance • Profit After Tax2 of $80.0m, down from $88.8m Revenue1 690.3 726.7 -5.0% • Profit After Tax1 from Continuing Businesses of Group EBITDA1 127.9 135.0 -5.3% $78.4m NPAT1 (continuing 78.4 83.5 -6.1% • Operating results impacted by soft
Slide 5: Specific Items
Specific Items Reported $m H1 FY16 Relates to the provisioning for loss-making inventory Inventory write-off (12.1) under longer term international output deal Non-cash impairment charge (33.3) NBN reflecting regional market underperformance Sale of Nine Live 410.2 Includes Daily Mail write-off and
Slide 6: Divisionally – Digital outperforming
Divisionally – Digital outperforming Metro FTA market down 0.4%; Continuing regional market down 6.6%. businesses Metro FTA share of 38.2% $m H1 FY16 H1 FY15 Variance Strong growth in video and Revenue Network 610.7 645.5 -5.4% search, offset by lower display revenues Digital 79.6 81.3 -2.0% Total R
Slide 7: Focus on cash and capital management
Focus on cash and capital management Pro Forma Pro Forma Continuing businesses H1 FY16 H1 FY15 Variance Operating Free Cash Flow, $m 110.9 100.7 +$10.2m Operating Free Cash Flow Conversion 87% 75% +12 pts Capital Expenditure, $m 20.2 11.4 +$8.8m Reported Reported As at 31 Dec 2015 31 Dec 2014 Varian
Slide 8: Chief Revenue Officer Peter Wiltshire
Chief Revenue Officer Peter Wiltshire 8 2016
Slide 9: FTA – Embracing, and adapting to change
FTA – Embracing, and adapting to change • FTA Metro ad market decline of 0.4%1 • FTA Regional ad market down 6.6%1 across the six months Nine’s Metro Ratings2 and Revenue1 Share • Market leadership in all key advertising 40% demographics2 39% 38% • #1 25-54 • #1 16-39 37% 36% • #1 18-49 • #1 All Peo
Slide 10: Calendar 2016 programming line-up
Calendar 2016 programming line-up 20 to 01 AUSTRALIAN PRIME TIME DRAMA, REALITY & ENTERTAINMENT Q1 NEWS, CURRENT AFFAIRS & SPORT Q4 Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding. 10 2016
Slide 11: Chief Digital and Marketing Officer Alex Parsons
Chief Digital and Marketing Officer Alex Parsons 11 2016
Slide 12: Strong operational performance from Digital
Strong operational performance from Digital • Double digit earnings growth with strong margin improvement • Australia’s leading multi-medium new brand, 9News and an innovative News Alerts app • The Fix, Coach and Honey #1 brands in their respective categories1 • Launched 9Now, a world class streamin
Slide 13: Stan ahead of business plan
Stan ahead of business plan • Key milestones/achievements: – Signed up more than 700,000, approaching 400,000 active subs ‒ Available on all major devices • Leading line-up of first run, exclusive and original programming • Highly differentiated content offering with long term exclusive rights to th
Slide 14: Current trading and outlook
Current trading and outlook • Challenging Q3 market – very short and soft • Metro FTA market expected to be flat to marginally down over FY16 • Regional markets expected to continue to under-perform, offset by enhanced affiliate agreement • Competitive environment and timing of major events will imp
Slide 15: Key strategic initiatives
Key strategic initiatives NEC Group core focus Regulatory opportunities • World class, New platforms • Potential for regulatory change to impact on – Streaming and AVOD service, 9Now licence fees – SVOD - Stan • Reach rule/affiliate returns • Broadening content Capital Management – End of WB contrac
Slide 16: :33Nine entertainment co.
:33Nine entertainment co.
Slide 17: Appendices
Appendices • Appendix 1: Adjustment for discontinued businesses • Appendix 2: Divisionals • Appendix 3: Cash flow • Appendix 4: Cash flow reconciliation • Appendix 5: Debt and leverage calculations • Appendix 6: Glossary Refer to glossary in Appendix 4 for definitions of all capitalised terms. Total
Slide 18: Appendix 1: Adjustment for discontinued businesses
Appendix 1: Adjustment for discontinued businesses Less Pro Less Pro Reported discontinued Forma Reported discontinued Pro Forma Forma $m H1 FY16 businesses H1 FY16 H1 FY15 businesses H1 FY15 Variance Revenue 747.4 57.1 690.3 829.2 102.5 726.7 -5.0% Group EBITDA 135.5 7.7 127.9 171.0 36.0 135.0 -5.3
Slide 19: Appendix 2: Divisionals
Appendix 2: Divisionals $m H1 FY16 H1 FY15 Variance Revenue Network 610.7 645.5 -5.4% Digital 79.6 81.3 -2.0% Live 57.1 102.5 -44.3% Total Revenue 747.4 829.2 -9.9% Total Revenue, ex discontinued businesses 690.3 726.7 -5.0% EBITDA Network 120.5 131.8 -8.6% Digital 12.2 10.8 +13.4% Corporate (6.0) (
Slide 20: Appendix 3: Cash flow
Appendix 3: Cash flow Less Less Reported discontinued Pro Forma Reported discontinued Pro Forma $m H1 FY16 businesses H1 FY16 H1 FY15 businesses H1 FY15 Variance EBITDA 134.3 7.7 126.6 169.3 36.0 133.3 -6.7 Change in working capital (20.1) (2.9) (17.2) (37.5) (3.6) (33.9) +16.7 Distributions from 1.
Slide 21: Appendix 4: Cash flow reconciliation
Appendix 4: Cash flow reconciliation Adjust for Adjust for Reported Discontinued Pro Forma Reported Discontinued Pro Forma $m H1 FY16 businesses H1 FY16 H1 FY15 businesses H1 FY15 Statutory cashflows from 66.5 1.1 65.3 133.1 40.4 92.7 operating activities Statutory interest (1.1) (0.1) (0.9) (2.3) (
Slide 22: Appendix 5: Debt and leverage calculations
Appendix 5: Debt and leverage calculations Actual Actual Actual Dec- As at, $m 31 Dec 2015 31 Dec 2014 Dec Variance Interest bearing loans and borrowings (0.1) (585.0)1 -584.9 Less: Cash and cash equivalents 52.6 241.6 -189.0 Plus: Cash held on trust - (133.6) -133.6 Plus: Deferred payment related t
Slide 23: Appendix 6: Glossary
Appendix 6: Glossary • Continuing Businesses – Excludes the operations of Nine Live • Contra – Advertising time offered in lieu of cash payment • Discontinued business – Nine Live • EBITDA – earnings before interest, tax, depreciation and amortisation, before Specific Items • FTA – free-to-air • FY
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Nine Entertainment Co. Holdings — H1 FY16 Earnings Presentation on 6ix