David Gyngell CEO Interim Results Briefing Simon Kelly COO/CFO Peter Wiltshire Group Sales Director 26 February 2015 Geoff Jones MD, Nine Live Alex Parsons MD, Nine Digital
Disclaimer Important notice and disclaimer expectations, estimates and intentions expressed in such forward looking statements and many of these factors are outside the control of This document is a presentation of general background information NEC. As such, undue reliance should not be placed on any forward about the activities of Nine Entertainment Co. Holdings Limited (“NEC”) looking statement. Past performance is not necessarily a guide to current at the date of the presentation, (26 February 2015). The future performance and no representation or warranty is made by any information contained in this presentation is of general background and person as to the likelihood of achievement or reasonableness of any does not purport to be complete. It is not intended to be relied upon as forward looking statements, forecast financial information or other advice to investors or potential investors and does not take into forecast. Nothing contained in this presentation nor any information account the investment objectives, financial situation or needs of any made available to you is, or shall be relied upon as, a promise, particular investor. These should be considered, with or without representation, warranty or guarantee as to the past, present or the professional advice, when deciding if an investment is appropriate. future performance of NEC. NEC, its related bodies corporate and any of their respective officers, directors and employees (“NEC Parties”), do not warrant the accuracy or reliability of this information, and disclaim any responsibility and Pro Forma Financial Information liability flowing from the use of this information by any party. To the The Company has set out in this presentation certain non-IFRS maximum extent permitted by law, the NEC Parties do not accept any financial information, in addition to information regarding its IFRS liability to any person, organisation or entity for any loss or damage statutory information. suffered as a result of reliance on this document. The Company considers that this non-IFRS financial information is important to assist in evaluating the Company’s performance. The Forward looking statements information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the This document contains certain forward looking statements and comments about future events, including NEC’s expectations about the business. For information regarding historic Pro Forma results, including the associated definitions, refer to the Company’s IPO performance of its businesses. Forward looking statements can Prospectus dated 8 November 2013 and the FY14 Interim Results generally be identified by the use of forward looking words such as, release dated 27 February 2014. ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’ and other For a reconciliation of the non-IFRS financial information contained in similar expressions within the meaning of securities laws of applicable this presentation to IFRS-compliant comparative information, refer to jurisdictions. Indications of, and guidance on, future earnings or the Appendices of this presentation. financial position or performance are also forward looking statements. All dollar values are in Australian dollars (A$) unless otherwise stated. Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. Forward looking statements are provided as a general guide only, and should not be relied on as an indication or guarantee of future performance. Forward looking statements involve known and unknown risks, uncertainty and other factors which can cause NEC’s actual results to differ materially from the plans, objectives, 2 Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding.
H1 FY15 result in line with AGM guidance Pro Forma • Profit After Tax 1 of $88.8m, in line with $85m-$90m 1 AGM $m H1 FY15 H1 FY14 Variance guidance Revenue 829.2 845.6 -1.9% • FTA Revenue impacted by weak advertising environment, Group EBITDA 171.0 188.7 -9.4% Net Interest Expense 14.0 28.7 -51.2% partially offset by revenue share gains NPAT 1 • 88.8 95.2 -6.7% Integration of Nine Adelaide and Nine Perth continuing with Operating Free Cash 133.2 178.0 -25.2% clear progress made – in line with expectations Flow • Solid Live result against record prior corresponding period Operating Free Cash 78% 94% -16 pts Flow Conversion • Digital transition and integration continuing following 100% Earnings per Share, 9.4 10.1 -6.9% acquisition of Mi9 before Specific Items – cents • Operating Free Cash Flow conversion of 78% Dividend per Share - 4.2 - +4.2 • Lower interest costs following June 2014 debt refinancing cents • Conservative Net Leverage of 1.7X, Interest Cover of 12.2X Pro Forma As at 31 Dec 30 Jun • Interim dividend of 4.2 cents per share, unfranked 2014 2014 Variance • On-market share buy back of up to $150m Net Debt, $m 490.5 537.3 -$46.8m Net Leverage 1.7X 1.7X - Interest Cover 12.2X 5.7X +6.5X 3 Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding. 1 Before $2.2m net after tax gain in relation to Specific Items (Pro Forma H1 FY14 $57.5m loss)
Focus on cash and capital management Pro Forma H1 FY15 H1 FY14 Variance Operating Free Cash Flow, $m 133.2 178.0 -44.8 Operating Free Cash Flow Conversion 78% 94% -16 pts Capital Expenditure and Purchased -26.0 -26.8 +0.8 Ticketing Rights, $m Pro Forma As at 31 Dec 2014 30 Jun 2014 Variance Net Debt, $m 490.5 537.3 -46.8 Net Leverage 1.7X 1.7X - Objectives Outcomes and Actions • • Maintain an efficient, but conservative capital Interim dividend of 4.2 cents per share structure • $150m on market share buy-back over next 12 • Retain balance sheet flexibility months • • Operating Free Cash Flow Conversion of 80- Shares acquired on-market to satisfy all outstanding 90% employee share entitlements • • Willoughby site options being explored – potential to Target 2.0X leverage unlock capital • 50-60% dividend payout ratio 4 Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding.
H1 – solid result in a challenging ad market Market down 3%, share up Pro Forma $m H1 FY15 H1 FY14 Variance Lower Touring and Events Revenue Network 645.5 649.6 -0.6% contribution Live 102.5 134.6 -23.9% Extra quarter of Microsoft default Digital 81.3 61.4 +32.4% traffic + new revenue initiatives Total Revenue 829.2 845.6 -1.9% EBITDA Network 131.8 149.2 -11.7% Half on half programming timing Live 36.0 40.1 -10.2% Digital 10.8 7.8 +38.5% Soft Q1 consumer sentiment, Corporate (9.3) (10.5) +11.4% down but vs a record pcp EBITDA 169.3 186.6 -9.3% Revenue drop through and cost Share of Associates’ 1.6 2.1 -23.8% focus NPAT Group EBITDA 171.0 188.7 -9.4% 5 Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding.
television
Nine Network – positive share momentum Pro Forma $m H1 FY15 H1 FY14 Variance Revenue 645.5 649.6 -0.6% EBITDA 131.8 149.2 -11.7% Margin 20.4% 23.0% -2.6 pts • FTA Metro market decline of 3% 1 . Trend improving from 5% Q1 decline to 1% decline in Q2 • FTA Regional market down 3% 1 in half • Market leadership in all key advertising demographics 2 • #1 25-54 #1 16-39 • #1 18-49 #2 All People • FTA Metro advertising revenue share 1 of 39.2%, up from 38.7% in pcp • Nine Adelaide and Nine Perth narrowing the gap – revenue share 1 gains of 0.8 share pts and 1.8 share pts respectively compared with East Coast gain of 0.2 share pts • TV costs up 2.9% - impacted by program schedule changes 7 1 Free TV data 2 OzTAM data. 6 mths to December 2014, 6am-midnight, survey weeks Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding.
Revenue share follows ratings improvement Nine’s Metro Ratings 1 and Revenue 2 Share 40.0% 39.0% 38.0% 37.0% 36.0% 35.0% 34.0% 33.0% 32.0% 31.0% 30.0% H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 FY07 FY08 FY08 FY09 FY09 FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13 FY14 FY14 FY15 Ratings share Revenue share 8 1 OzTAM data, Years to June, 6am-midnight, 2 Free TV data Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding.
Programming News and Current Affairs Sport TO COME Drama TO COME Family Entertainment 9 Refer to glossary in Appendix 4 for definitions of all capitalised terms. Totals may not add due to rounding.
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