Nine Ent Co Posts $144.2m Net Profit

Nine Ent Co Posts $144.2m Net Profit
SHARE
THIS



Nine Entertainment Co.  has released the company’s final results for the 2014 financial year.

The company posted a $144.2m net profit with the the key points from the results:

  • Underlying Metro FTA advertising market growth of c2.5% (after adjusting for non-cash contra) in line with Forecast, whilst Regional FTA markets were flat
  • Nine Network Metro FTA market revenue share continued to improve – growing from 37.9% to 38.7% over the year, favourable to the Forecast of 38.4%
  • Solid first half of the 2014 FTA ratings year, retaining leadership in all key advertising demographics
  • Integration of Nine Adelaide and Nine Perth on track, with gap to East Coast narrowing
  • Record result for Nine Live with strong contributions from each of its principal business lines
  • Digital transition and evolution continuing following 100% acquisition of Mi9
  • Closing Net Debt of $537m and conservative Net Leverage of 1.7X

David Gyngell, chief executive officer of Nine Entertainment Co. said: “I am pleased with our performance in FY14 – we have exceeded our Prospectus forecasts across the board, and we are making good operational progress across each of our television, live and digital businesses. Following the completion of the IPO and subsequent debt refinancing, we have a very strong balance sheet with significant flexibility.

In what was an increasingly difficult advertising market, Nine continued its positive momentum, gaining ratings and revenue share across the year and retaining ratings leadership in all key advertiser demographics. Initiatives like the one hour News, added to our strong sport and drama line up and the overall consistency of our schedule, stand us in good stead to continue to drive towards our 40% revenue share target by the end of 2015.

The evolving integration of our leading television and digital businesses will differentiate us from our peers as will the significant and unique cross business opportunities opened up by the expansion of our Nine Live business.

While the more recent advertising environment has been challenging, we are focused on improving the things we can control and enhancing our relative positioning through market leadership, consistency, and innovation.”

On a Statutory Reported basis, Net Profit after Tax decreased from a profit of $1,201m to a profit of $58m. Statutory Reported results in the current and prior year were impacted by a number of one-off significant items, acquisitions, divestments and a recapitalisation of the Company’s balance sheet. This discussion therefore focuses on the Pro Forma results, which adjust for acquisitions and divestments, listed company costs, IPO and other one-off impacts, to provide a like-for-like comparison of underlying results year-on-year, on a basis consistent with that used for the Forecast.

Compared with FY13, Pro Forma Revenue increased 5.7% to $1,578m, Group EBITDA increased 4.7% to $311m and Pro Forma Net Profit after Tax increased from $137m to $144m. Each of these key metrics exceeded the Pro Forma Forecast.

Pro Forma Operating Free Cash Flow of $272m was up 16% on the prior corresponding period and 17% on Forecast.

The 4.2 cents per share dividend is 2.5% ahead of Forecast. This dividend, which is unfranked, is payable on 17 October 2014.

Net Debt at 30 June 2014 of $537m was down $64m from the 30 June 2013 Pro Forma despite approximately $36m of cash costs incurred closing out the previous debt facility in late June 2014. Net Leverage of 1.7 times compares favourably with the 30 June 2013 Pro Forma of 2.0 times and provides the Company with significant financial flexibility.

Compared with the prior year, Nine Network recorded EBITDA growth of 9.3% to $242m on Revenue of $1,228m, up 4.3% on a like-for-like basis. EBITDA was up 1.6% on Forecast on Revenue which fell $4m short of Forecast, due to weaker than anticipated regional markets and softer low margin non-advertising revenues.

After a solid rebound in the December half, when the Metro FTA advertising market grew by 5%, the June half was more subdued. Uncertainty relating to the 2014 Federal Budget saw a significant softening in the advertising market with the Metro FTA market growing just 1.7% in the second half. After adjusting for an increase in contra under new sport contracts, which is estimated to have contributed around 1.0 percentage point of market growth, the underlying FY14 Metro FTA advertising market is estimated to have grown c2.5% over the year, in line with Forecast.

Nine Network’s Metro FTA revenue share of 38.7% over the year was up 0.8 percentage points on the prior corresponding period, and was 0.3 percentage points above Forecast. Regional markets recorded overall TV advertising revenue which was flat on FY13 which muted overall growth.

Nine remained Australia’s most watched television network in the key 25-54, 18-49 and 16-39 age demographics, reporting audience share growth across all key demographics, as well as All People in FY14.

Over the year, Nine Network’s costs increased by $30m reflecting a full year of the step up in costs from the new 5 year contracts for the NRL and Cricket, as well as incremental investment in News and local programming, partially offset by the saving of Olympic costs from the prior year. Costs were however c$8m below Forecast, despite the increased News investment.

Nine Live reported EBITDA growth of 19% to $68m on Revenue of $228m, up 36% on the prior year. Revenue was $16m above Forecast, predominantly driven by Nine Touring and Events, while EBITDA was approximately $1m ahead of Forecast. All of the principal Live businesses contributed to this growth.

Ticketek, which accounts for the majority of Nine Live’s revenues, delivered a 7% increase in ticket sales volumes for the year, coupled with a 2.5% increase in average revenue per ticket. During the year, Ticketek renewed a number of key ticketing agency contracts including the Melbourne Olympic Park Trust, Melbourne Cricket Ground and ANZ Stadium.

Allphones Arena recorded a significantly improved performance for the year following a particularly soft prior year, with total attendances increasing by more than 50%. Higher attendances drove improvements across all related revenue streams.

The Nine Touring and Events business continued to grow in its second full year of operation, with the successful One Direction, Keith Urban and Ricky Martin tours, all in the first half, contributing much of its result, and demonstrating the benefits of integration across the Company’s different business units. The growth in the Nine Touring and Events business, which is at a markedly lower margin than the core ticketing business, was the main contributor to the decline in the overall Nine Live margin to 29.9%.

On an Underlying basis, Nine Digital recorded 7% revenue growth, which was driven primarily by a 90% lift in search revenues and a 28% increase in video revenues offset by lower display advertising revenue reflecting the continued fragmentation of the online display market. The EBITDA decline of 15% on an Underlying basis reflects an evolving change in mix to lower margin third party inventory and the impact of incremental product investment costs required to mitigate the impact of upcoming audience reduction from the Microsoft changes.
Certain changes to the operation of the Digital business will occur through the balance of calendar 2014 which will result in a reduction of web traffic to the Mi9 site, amongst other things. The Company continues to consider the $15.6m Pro Forma EBITDA run rate as reported in the Prospectus to be a realistic assessment of the new baseline results of this business following these changes.
Operating Free Cash Flow improved 16% on FY13 and was $39m or 17% favourable to Forecast. As anticipated, much of the first half outperformance was reversed in the second half as the benefits of the favourable timing of certain sport and local production payments unwound. Nevertheless, Operating Free Cash Flow Conversion improved 8.6 percentage points over the year to 87%, 11.1 percentage points favourable to Forecast.

As at 30 June 2014, Net Debt of $537m equated to Net Leverage of 1.7X. The Company’s debt facilities were refinanced in June 2014. These new facilities, with a maturity of 4-5 years, will reduce the Company’s cash interest expense by c$20m pa (assuming Net Debt remains broadly unchanged), provide increased operating flexibility and significant undrawn capacity. The Company’s comparatively modest leverage means it is well positioned to manage through economic cycles and/or take advantage of any strategic opportunities which might arise.

Dividend

The company will pay a final dividend of 4.2 cents, unfranked, on 17 October 2014, which is marginally ahead of the 4.1 cents forecast in the Prospectus.

The dividend will have exempting credits attached such that the exempting percentage of the dividend is 100%. The exempting credits will only provide an imputation benefit (in terms of no dividend withholding tax) to certain foreign resident shareholders who held more than 5% of NEC’s shares prior to the IPO and continue to hold more than 5% of NEC’s shares at the time the dividend is paid. The exempting credits attached to the dividend do not provide a tax offset for Australian resident shareholders. Individual shareholders should seek their own professional advice as to their eligibility to utilise these exempting credits.

Current trading environment and outlook

The Metro FTA advertising market has been soft since April, and has struggled to recover from the uncertainty leading into and following the Federal Budget. Exacerbated by Federal Election spending which boosted the market in 2013, it looks likely that the Metro FTA advertising market will be down 5 – 10% on the prior corresponding period in the September quarter. Against this backdrop, the Company remains confident of its FTA share performance and momentum and continues to target a 40% advertising revenue share by the end of calendar 2015.

The Live business continues to explore opportunities to build on the solid foundations of Ticketek and Allphones Arena. The recent announcement of its expansion into the promotion of international sporting events and a strong pipeline of developing touring and events opportunities will help to maintain the long term growth profile of this business.

FY15 will be a period of transition for Nine Digital, with a number of changes to the structure and operations of the business implemented across the year. The Company remains confident that the Pro Forma estimated result for the year to June 2014 included in the Prospectus is a representative baseline from which the business will grow. Since its launch, Daily Mail Australia (a 50/50 joint venture with Daily Mail Group) has grown to become the #5 most visited news website in the country and with its positive momentum, is well on track to achieve its target of becoming #1.

In light of the soft FTA market over the first quarter of the new financial year, first half results are likely to be subdued, although mitigated to some extent by the benefit of the annualised $20m savings on the Company’s interest costs following its debt refinancing late in FY14.

Please login with linkedin to comment

Latest News

Attention! B&T’s Inaugural Bootcamp Launches!
  • Advertising
  • Marketing
  • Media
  • Technology

Attention! B&T’s Inaugural Bootcamp Launches!

B&T announces its new industry bootcamp! And, if you're like us & didn't know anything about it, all's revealed here.

by B&T Magazine

B&T Magazine
Comexposium Takes Over NZ Partner MTS To Become Largest Trans-Tasman Events Group
  • Marketing

Comexposium Takes Over NZ Partner MTS To Become Largest Trans-Tasman Events Group

Marketing events group Comexposium has absorbed its New Zealand joint venture partner MTS to deliver an expanded event solutions business across the Trans-Tasman. The deal will see Ryf Quail (pictured above) return to Sydney to lead Comexposium Australian and Kiwi team, while his current MTS team remains in place as Comexposium employees. While the business […]

Amazon Go’s Checkout-Free Store Suffers Opening Day Backlash
  • Marketing

Amazon Go’s Checkout-Free Store Suffers Opening Day Backlash

As reported on B&T yesterday, Amazon launched its first Amazon Go store in Seattle yesterday heralding what many are calling a revolution in bricks and mortar retailing. However, its debut wasn’t without a few hiccups with snaking queues, reported attempts to evade the in-store technology and even threats of an Amazon boycott. The convenience store, which sells a […]

by B&T Magazine

B&T Magazine
Eyeota Kick-Starts 2018 With $15.6 Million In Additional Funding
  • Marketing

Eyeota Kick-Starts 2018 With $15.6 Million In Additional Funding

Audience data provider Eyeota has announced a $15.6 million Series B capital raise to spearhead additional growth in 2018. The company was founded simultaneously in Singapore, Australia and Europe in 2010, and has remained independent and enjoyed strong growth locally, as well as launching into the US. Peter Hunter (pictured above), Eyeota’s general manager for […]

Processed with VSCO with fp1 preset
  • Marketing

PRIA’s Brooke Williamson-Jones Joins VIVA! Communications

Boutique health and wellness PR agency VIVA! Communications has expanded its Sydney team, hiring Brooke Williamson-Jones as a junior account manager. Williamson-Jones joins VIVA! from the Public Relations Institute of Australia (PRIA), where she held the position of marketing and communication manager, and was responsible for driving PRIA’s communication channels, marketing strategy and company sponsorships. […]

Zenith’s ‘30 Rising Media Markets’ To Overtake Aussie Ad Spend By 2020
  • Advertising
  • Media

Zenith’s ‘30 Rising Media Markets’ To Overtake Aussie Ad Spend By 2020

New research by Publicis-owned media agency Zenith has identified a number of emerging advertising markets that it predicts will collectively overtake ad spend in Australia by 2020. According to Zenith, Iran will add more ad dollars than any of the other country included in the agency’s Thirty Rising Media Markets report, grow by US$713 million between […]

Zurich Partners With Melbourne Footy Club
  • Marketing

Zurich Partners With Melbourne Footy Club

Zurich Financial Services Australia Limited (Zurich) has become the co-principal sponsor of one of Australia’s oldest and most respected AFL clubs, Melbourne Football Club. The three-year partnership will see Zurich’s logo feature on the front of the Melbourne Demons’ guernseys, plus other branding rights including signage and game day advertising. Speaking at the signing of […]

Pureprofile Extends Confirmit Relationship
  • Marketing

Pureprofile Extends Confirmit Relationship

Data and programmatic player Pureprofile has announced it will extend its 10-year relationship with customer experience and market research provider Confirmit. Pureprofile will continue to use the Confirmit Horizons platform for its data collection, panel management and analytics solutions. The ASX-listed company uses the Confirmit Horizons platform on US, UK, and ANZ SaaS environments to […]

Bonds Releases ‘Killer Undies’ With AFL Superstar Dustin Martin
  • Advertising
  • Campaigns

Bonds Releases ‘Killer Undies’ With AFL Superstar Dustin Martin

Clothing brand Bonds has recruited Richmond Tigers star Dustin Martin to headline as its new underwear ambassador in a powerful stills and video campaign that launches this week. Martin champions Bonds’ latest men’s underwear range by showcasing his athletic physique and signature ink against the iconic Bonds underwear silhouette. The new fashion and sports underwear […]

Ex-Pat Aussie Nick Law Appointed Publicis’ Global Chief Creative Officer
  • Advertising

Ex-Pat Aussie Nick Law Appointed Publicis’ Global Chief Creative Officer

Ex-pat Australian Nick Law has quit his role at R/GA and will become Publicis Groupe’s new global creative officer. Law, who started his career at R/GA in Sydney, will take up his new role in May. According to a statement from Publicis, Law has been tasked “to take the Groupe’s creative performance to the next […]

by B&T Magazine

B&T Magazine
Poem Wins Four New Clients
  • Marketing

Poem Wins Four New Clients

Sydney-based PR and social agency Poem has announced it has won four new clients following another strong year of growth. The four clients are Property NSW (The Rocks and Darling Harbour), Fantastic Furniture, Ovolo Hotels and Purpose (a conference on purpose-driven business). Poem co-founder Matt Holmes said: “We’ve hit a nerve with clients who are […]

Four Things Every Marketer Should Know About Building Brand Identity
  • Marketing
  • Opinion

Four Things Every Marketer Should Know About Building Brand Identity

Brand identity gets thrown around a lot in the industry, but how do you know if you’re doing the right thing? Peter Harris (pictured below), CEO of franchise marketing platform Digital Stack, breaks it down for you, dear reader. Brand identity is not a new concept – it’s a fundamental part of any marketing strategy […]

Opinion

by B&T Magazine

B&T Magazine
Brand Safety “Considerably More Complex” Than The Industry Thinks: Inskin Media GM
  • Advertising
  • Marketing
  • Media

Brand Safety “Considerably More Complex” Than The Industry Thinks: Inskin Media GM

The relationship a reader has with a publisher has far more impact on the effectiveness of online ads than the surrounding editorial content, according to a new study, which suggests some concerns around brand safety may be misunderstood. The study – by Inskin Media, Research Now and Conquest Research – compared the conscious and subconscious […]

Nova’s ‘Kate, Tim & Marty’ Show Goes Regional
  • Media

Nova’s ‘Kate, Tim & Marty’ Show Goes Regional

Nova has announced that its Kate, Tim & Marty drive show will expand its reach beyond the metropolitan market to be syndicated across 48 regional stations from today. Kate Ritchie, Tim Blackwell and Marty Sheargold, who won the Best On-Air Team (Metro FM) trophy for the second year running at the 2017 Australian Commercial Radio […]

Over 50s Insurer Apia Unveils New Work Via DDB Melbourne
  • Campaigns

Over 50s Insurer Apia Unveils New Work Via DDB Melbourne

Apia takes a look at the real-life, relatable moments over 50s experience with its new campaign via DDB Group Melbourne. For 30 years Apia has been designing products and services for Australians over 50. This new Home Insurance, Health Insurance and Multi-Policy Discounts campaign aims to speak to people in a way that’s refreshing, relatable […]

Facebook Makes Another News Feed Change
  • Media

Facebook Makes Another News Feed Change

Social media behemoth Facebook has announced its second major update for News Feed to make sure the news people see, while less overall, is high quality. This week, Facebook announced that the platform will launch a small test in the US focused on prioritising news from publishers that users find trustworthy. Facebook is also exploring ways […]

Domain Boss Antony Catalano Exits
  • Media

Domain Boss Antony Catalano Exits

Mystery surrounds Domain boss's surprise exit, although the Mystery Machine nor a talking dog not spotted at Fairfax.

PHOTOPLAY Offers A Ghost Train Ride Like No Other At Sydney Festival
  • Media

PHOTOPLAY Offers A Ghost Train Ride Like No Other At Sydney Festival

Jasmin Tarasin, director at boutique production company PHOTOPLAY, is inviting invites audiences to take a trip through the inner-workings of the mind in ‘Ghost Train’, her latest multi-sensory VR project set to feature at this year’s Sydney Festival. Working in collaboration with musician and co-creative director Jonnine Standish, Tarasin’s uniquely immersive ‘Ghost Train’ is a […]

March One To Rebrand Fundraising Institute Australia
  • Marketing

March One To Rebrand Fundraising Institute Australia

Independent advertising and branding agency March One has been appointed to oversee the rebrand and repositioning of Fundraising Institute Australia (FIA). FIA is the national peak body representing professional fundraising in Australia. It was established to advance advocacy and professional standards, and has identified the need to better promote its role as the industry self-regulator, […]

Victorian Government Launches VR Bushfire Experience Via The Fuel Agency
  • Advertising
  • Campaigns
  • Technology

Victorian Government Launches VR Bushfire Experience Via The Fuel Agency

As part of its summer fire campaign, the Victorian government has launched a virtual reality (VR) bushfire experience and content series via The Fuel Agency. The VR experience places the user in the midst of a large bushfire, and is designed to encourage people to leave early on high-risk days before it’s too late. The […]

Local Ad Tech Company VeNA Partners With RugbyPass
  • Advertising
  • Media
  • Technology

Local Ad Tech Company VeNA Partners With RugbyPass

ad tech company VeNA has signed an exclusive reseller partnership covering Australia and New Zealand with digital rugby network RugbyPass. Across Asia and parts of Europe, RugbyPass is the exclusive digital rights holder and over-the-top broadcaster for live rugby, including the Super Rugby, the Rugby Championship and autumn internationals, the Six Nations, the Aviva Premiership, […]

SpotX Appoints Gavin Buxton As Asia MD
  • Advertising

SpotX Appoints Gavin Buxton As Asia MD

Video advertising platform SpotX has announced it has appointed Gavin Buxton as managing director of Asia to lead the company’s expansion in the region. Buxton has over 17 years’ global experience in the digital advertising space, having worked in leadership roles at tech and publishing companies, including Microsoft, Turner Broadcasting, and LinkedIn, with the last […]