MACQUARIE AUSTRALIA CONFERENCE 1 MAY 2019
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MACQUARIE AUSTRALIA CONFERENC E 1 MAY 2019 HUGH M A RKS | C HI EF EX EC UT I V E O FFI C ER NOL A HODGSON | HEA D OF I NV ES T OR REL A T I ONS
Important Notice and Disclaimer ex pect at ions about t he performance of it s businesses. reasonableness of any forw ard looking st at ement s, forecast
This document is a present at ion of general background Forw ard looking st at ement s can generally be ident ified by financial informat ion or ot her forecast . Not hing cont ained in
informat ion about t he act iv it ies of Nine Ent ert ainment Co. t he use of forw ard looking w ords such as, ‘ex pect ’, t his present at ion nor any informat ion made av ailable t o y ou
Holdings Limit ed (“NEC”) current at t he dat e of t he ‘ant icipat e’, ‘likely ’, ‘int end’, ‘should’, ‘could’, ‘may ’, is, or shall be relied upon as, a promise, represent at ion,
present at ion, (1 May 2019). The informat ion cont ained in t his ‘predict ’, ‘plan’, ‘propose’, ‘w ill’, ‘believ e’, ‘forecast ’, w arrant y or guarant ee as t o t he past , present or t he fut ure
present at ion is of general background and does not purport ‘est imat e’, ‘t arget ’ and ot her similar ex pressions w ithin t he performance of NEC.
t o be complet e. I t is not int ended t o be relied upon as meaning of securit ies law s of applicable jurisdict ions.
adv ice t o inv est ors or pot ent ial inv est ors and does not t ake I ndicat ions of, and guidance on, fut ure earnings or financial Pro Forma Financial Information
int o account t he inv est ment object iv es, financial sit uat ion or posit ion or performance are also forw ard looking st at ement s.
The Company has set out in t his present at ion cert ain non-I FRS
needs of any part icular inv est or. These should be considered, Forw ard looking st at ement s inv olv e inherent risks and
financial informat ion, in addit ion t o informat ion regarding it s
w it h or w it hout professional adv ice, w hen deciding if an uncert aint ies, bot h general and specific, and t here is a risk I FRS st at ut ory informat ion.
inv est ment is appropriat e. t hat such predict ions, forecast s, project ions and ot her
The Company considers t hat t his non-I FRS financial
NEC, it s relat ed bodies corporat e and any of t heir respect iv e forw ard looking st at ement s w ill not be achiev ed. Forw ard
informat ion is import ant t o assist in ev aluat ing t he Company ’s
officers, direct ors and employ ees (“NEC Part ies”), do not looking st at ement s are prov ided as a general guide only ,
performance. The informat ion is present ed t o assist in making
w arrant t he accuracy or reliabilit y of t his informat ion, and and should not be relied on as an indicat ion or guarant ee of
appropriat e comparisons w it h prior periods and t o assess t he
disclaim any responsibilit y and liabilit y flow ing from t he use of fut ure performance. Forw ard looking st at ement s inv olv e
operat ing performance of t he business.
t his informat ion by any part y . To t he max imum ex t ent know n and unknow n risks, uncert aint y and ot her fact ors
For a reconciliat ion of t he non-I FRS financial informat ion
permit t ed by law , t he NEC Part ies do not accept any liabilit y w hich can cause NEC’s act ual result s t o differ mat erially from
cont ained in t his present at ion t o I FRS-compliant comparat iv e
t o any person, organisat ion or ent it y for any loss or damage t he plans, object iv es, ex pectat ions, est imat es and int ent ions
informat ion, refer t o t he Appendices of t his present at ion.
suffered as a result of reliance on t his document . ex pressed in such forw ard looking st at ement s and many of
t hese fact ors are out side t he cont rol of NEC. As such, undue All dollar v alues are in Aust ralian dollars (A$) unless ot herw ise
reliance should not be placed on any forw ard looking st at ed.
Forward Looking Statements
st at ement . Past performance is not necessarily a guide t o
This document cont ains cert ain forw ard looking st at ement s
fut ure performance and no represent at ion or w arrant y is
and comment s about fut ure ev ent s, including NEC’s
made by any person as t o t he likelihood of achiev ement or
2
POST MERGER – FOU R KEY PILLARS
BROADCASTING DIGITAL & PUBLISHING STAN DOMAIN (59.2%)
• Creator of Australia’s • Australia’s most read • Australia’s leading local • Ev olv ing Australian
leading broadcast digital publisher SVOD business property marketplace
brands, across telev ision
and radio • Dominant position in the • Strong positive subscriber • W ith core upside from
high growth digital v ideo growth momentum relationship with Nine –
• Reaches 19m Australians market to broaden reach and
nationally each week • Multiple long-term deepen engagement
• Strong brands, each with content supply
• The engine for all other a clear purpose and relationships • Focus on expanding
Group businesses – commercial model core residential listings
through content and business and scaling
marketing rev enue in aligned
consumer solutions
business
3
NINE TODAY – DIVERSIFIED, WITH A CLEAR GROWTH PROFILE
TRANSFORMING BUILDING RETURNING
Inv esting in the premium Using the core of broadcast to power Strong cash flows and
content that driv es profitability growth businesses div idends to shareholders
Nine Network and Strong cash flow
Metro Media Dominant player Grown brand to Leveraging conversion
focusing on the in a fast growing 1.5m subscribers Nine’s reach to
efficient delivery of segment, new in 4 years in a grow yield and 10c fully franked dividend
premium content revenue streams new market geographic forecast for FY19, equates
from existing segment share to a yield of c6%
content spend
Content decisions based on Other potential Digital Publishing
Low lev el of wholly owned debt
whole of business benefit v erticals including automotive –
CarAdv ice, Driv e
4
BUSINESSES OFFER AN INCREASING GROWTH PROFILE
BROADCASTING METRO MEDIA DOMAIN 9NOW STAN
Controls and carries the Premium content Local leader in high
Focused on building Deliv ers primarily Nine’s
costs for much of the enabling core focus on growth segment of SVOD
Australia’s leading digital broadcast content
Group content growth in readership and
destination for property through adv ertiser- Unique positioning with
subscription, supported
Content strategy through listings, editorial supported liv e streaming scale at >1.5m activ e
by adv ertising with
underpins strong ratings and associated consumer and catch-up subscribers
growing margins
momentum solutions
All v iewing through a
logged in env ironment
Aim to hold profitability A refocused business, with Significant lev erage to Strongly growing digital Strongly growing consumer
through the cycle, through a growing digital and property cycle plus growth segment as take-up, take-up of SVOD
share gains and cost focus subscription base driving through yield-focus and usage and addressability benefitting all players
longer term profitability geographic expansion ev olve
5
HIGH GROWTH ASSETS TO CONTRIBU TE HALF OF GROU P PROFIT1
EBITDA Contribution - FY18 EBITDA contribution – FY20est
13%
47%
45% 53%
87%
Broadcasting Stan Digital & Publishing Domain
6 1 P r o Fo r ma b as is, e con omic in teres t ad jus ted
FTA PROVIDES PREMIU M CONTENT AND MARKETING
NO.1 FOCUSSED ON GROWTH
EFFICIENCY OF
AUDIENCE
SHARE EVERY AUDIENCE ENGINE
KEY BUYING DELIVERY, FOR THE REST OF
DEMO1 ACROSS THE NINE
PLATFORMS GROUP
Higher Revenue Share on Lower Costs
$m 41%
540
40%
520 39%
500 38%
480 37%
36%
460
35%
440
34%
420 33%
400 32%
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18
TV costs TV revenue share
7 1 O z T A M d a ta, linear T V r a tings , m ain channel, 6 -1 0. 30pm, ca lenda r y ear to d ate
9NOW: A GROWING BU SINESS
83% 51% 75% CLEAR
Growth in 9Now Growth in MARKET
monthly activ e rev enue at Incremental EBITDA LEADER
users 9Now margin Through audience
Q1, VOD+Live stream, on pcp Six months to Dec 2018
and technology
Growth in BVOD Market to Continue
250 $m
200
150
100
%
50 +$25m
45%+
45%+
28.5% 35.6% 43.8%
0
CY16 CY17 CY18 CY19f CY20f
Nine Other
8
METRO MEDIA: A NEW MODEL
Consistent audience growth across SMH, The Age and AFR
10.6m1 •
Total de-duplicated • SMH – the most read masthead in Australia
audience across
digital and print • AFR – a growing B2B proposition
3.4% • Circulation/subscription revenues now exceed total advertising
Total growth in revenues
circulation revenues
H1 FY19 • Opportunities to tighten paywall
FOCUS • Cost out focused on printing and distribution which accounts for
Efficiency of c$100m of total Metro Media costs
audience deliv ery • Divestment of ACM acts to further variabilise the cost base
Print Ads . • Print advertising accounts for
NINE AND DOMAIN: WORKING TOGETHER
Deep integration of property content into Nine News and
Current Affairs programs
CONTENT
Launch ‘Your Domain’ TV show
Replicate SMH.com.au/Age.com.au digital property rails
PROMOTION through nine.com.au
Data unification project to enable effective identification
DATA and targeting across all Nine’s business segments
Extending Nine’s strength in premium advertising through
PREMIUM ADVERTISING data and content partnerships
10WELL POSITIONED LOCAL SVOD PLAYER
• Built a business of scale in a new category in just four years
• Clear local leader in the market with 1.5m -plus active subscribers
• Differentiated and exclusive content line-up. Partnerships with a broad base of studios and
networks, complemented by Stan Originals
• Recent sub adds and price increase -> EBITDA break-even notwithstanding continuing
investment in content and marketing
• Highly leveraged, reflecting predominately fixed cost base
Stan hits profitability in Q4 FY19
Q4 FY19
FY16 FY17 FY18 FY19 FY20
Revenue Costs
11TRADING U PDATE
BROADCASTING DIGITAL & PUBLISHING STAN DOMAIN (59.2%)
• Q3 FY19 FTA • Metro Publishing rev • Continued growth • Double digit growth
rev enue +4%. +3% Q3 FY19, with in subscribers in residential digital
Nine‘s share of growth in both print notwithstanding yield helping to
40.9% (+4.2 pts) and digital exceptionally offset decline in
adv ertising (total ad strong summer, listings market
• FTA market remains rev +12%) and Feb price
soft – Nine’s share increase • Improv ing cost
continues to grow. • 9Now rev enue profile
H2 FY19 share est +75% Q3 FY19. • Expect cash flow
40%-plus Share of 53.9% and EBITDA break-
(+10.3 pts) ev en from March
GROUP EBITDA OF $420M-$430M, UP 10%+ ON LIKE-BASIS PCP
12 CYTD – calendar year t o dat eFOU R KEY DRIVERS IN FY20
+$30M +$25m C$30M CYCLICAL
EBITDA delta as Stan Rev enue Incremental annualised Impacts on Domain
mov es from loss to growth at 9Now benefit of cost synergies and Broadcasting
profit (at 75% already deliv ered
incremental to benefit when cycle
margin) improv es + share gains
in FTA
OVERALL POSITIVE MOMENTUM EXPECTED TO CONTINUE
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