Nine Entertainment Co. Holdings Limited

Good morning everyone, and thank you for joining us for our H1FY26 results briefing. I'm Matt Stanton, CEO of Nine Entertainment. Joining me here today is our CFO, Martin Roberts. And we are coming to you from our studio in North Sydney, which was upgraded in preparation for the Winter Olympics. The studio has been integral to the coverage of all the action from Milano Cortino that has enthralled Australian audiences on Nine, Nine Now and Stan over recent weeks. I'd like to start off by acknowledging the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past, present and emerging and extend that respect to all First Nations people today. For myself, I am on the land of the Camaro Gaul people of the Eora Nation. For the six months to December, Nine has reported Group EBITDA, including Radio and NBN and Darwin, of $201 million, up 6% on PCP, on revenue of $1.1 billion. On a continuing business basis, this equated to EBITDA of $192 million, also up 6%, and net profit after tax of $95 million, up 30% on PCP. EPS of 6 cents per share was also up 30% and enabled the declaration of a 4.5 cent interim dividend. We were very pleased to report another half of EBITDA growth for the six months to December 2025, consistent with our guidance from August last year. Nine's diversity of revenue and strong cost performance helped to counter the weak advertising market, with growth from Stan, the mastheads, and robust results from Total Television. Overall, Nine's group EBITDA margin increased by nearly two percentage points to 18.2%. Subscription revenues grew by 13% across the half, underpinned by double-digit growth at Stan and in digital subscription revenues at Publishing. Across the half, we continue to see digital revenue at our mastheads growing faster than the rate of decline in print revenue. We removed a further $43 million of costs from the business across the half, $32 million on an ongoing basis. This was the result of our focused program of improving efficiencies in parts of our business whilst continuing to invest in the areas of growth. we continue to expect delivery of at least $160 million across FY25, 26 and 27, with $92 million delivered to date. Since our last result, we have also made significant progress in our strategic initiatives. To this end, the announcement in late January of the acquisition of QMS, sale of Nine Radio and restructuring of MBN and today's announcement on Nine Darwin are key to accelerating Nine's strategic transformation by increasing our exposure to growth assets. The outdoor assets enhance our scale and reach, and are resilient to the power of the global platforms. As a result, we have streamlined Nine's business around our focus on premium content, digital growth, as well as subscription and licensing assets. We believe this portfolio offers the greatest opportunities for optimising the combined value of our assets, underpinning longer-term growth opportunities and value to the shareholders. While these big moves may have grabbed the headlines, we have also been working behind the scenes improving the operating effectiveness of our existing businesses. during the HALF 9 Strategic Transformation Program 9-2028 enabled the delivery of a number of cost and growth initiatives, helping to offset the challenges of the external advertising market, while capitalising also on growth opportunities. We have made significant progress with our AI initiatives. Focusing on both improving the operating efficiency of our business and also the further commercialization of 9's pool of proprietary content. Our own use of our AI continues to gather momentum. We are through the establishment phase. Democratizing the usage of AI across the company with Gemini platform rolled out and being utilized daily by an increasing number of our employees. We are now focused on accelerating the redesign phase, driving efficiencies as well as driving growth in new product and new revenue streams. We are pleased with the progress we are making across customer support, sales, finance automation, consumer engagement, content creation and engineering. One clear example of reimagining the use of NIE's content is evidenced as corporates look to fuel their own in-house LLMs with quality, reliable content in volume. On this point, we have already signed two Australian corporates as licensors of NIE's content into their own proprietary AI ecosystems, with a lot more opportunities to come. These strategic moves have resulted in a step change in the balance of our business. In the latest results, we estimate that around 51% of our revenue and 49% of our EBITDA was sourced from growth assets . Looking forward to FY27, we estimate that on a pro forma basis, around 60% of our revenue and almost 70% of our EBITDA will be sourced from growth assets. adding in the higher margin outdoor business and reducing our reliance on broadcast. Whilst we are not motivated by scale alone, it is also an important outcome enabling us to maximize the impact of our content and remain relevant in a fragmented media market. Moreover, as our business becomes more digital, we expand our ability to build and exploit the opportunities of our integrated consumer platform. At this point, I'd like to ask Martin Roberts, our Chief Financial Officer, to talk through the group financials.

Thanks, Matt, and good morning, everyone. As Matt summarised earlier, for the six months to December, inclusive of the results of Radio, MBN and Darwin, the reported EBITDA of $201 million equated to growth of 6%. On a continuing business basis, Nine reported group revenue of $1.1 billion and group EBITDA of $192 million, which was also up 6% on half one FY25. Group net profit after tax and before specific items was $95 million, up 30% on the previous corresponding period on a continuing business basis. Inclusive of a specific item cost of $14 million, the net profit for the half was $81 million. Slide 9 details the composition of specific items, which totaled a pre-tax cost of $18 million for the half. A bit over half of this related to restructuring costs, primarily redundancies. We incurred almost $5 million of costs relating to the development of our in-house total training platform and HRIS projects. There was also around $3 million of pre-transaction costs relating to sales of Nine Radio, MBN and Darwin, and the acquisition of QMS. The waterfall chart on page 10 illustrates our continuing work on costs. Reported costs on a continuing business basis were $59 million lower. Pre the impact of the Paris Games, costs were up $36 million or 4%. Within this, nine offset the impacts of returning costs, inflation relating to employee salaries investment, whilst continuing to invest in growth businesses, stand and drive. This resulted in a total cost saving of more than $43 million, including $32 million of ongoing costs. We expect to take a further $70 million of underlying costs out across half to FY26 and into FY27, consistent with a three-year total of around $160 million. Page 11 shows a transition of Nye's net debt from the starting position at the 1st of July 2025 of $450 million to the $158 million in cash we have reported for the 31st of December 2025. This includes the $720 million proceeds from Domain, net of the dividend paid and tax of course. Within this we paid a special dividend of $777 million fully franked to our shareholders. We continue to expect leverage to peak at around 1.8 times by June 2026, post-completion of our M&A transactions. The enhanced EBITDA of the combined entity and the benefit of the tax losses, which are expected to be realized around January 2027, are projected to reduce leverage to within nine's targeted range of one to one and a half times by the end of FY27. For the six months to 31st of December, cash flow from operating activities was $96 million. with the breakdown of this shown in detail in Appendix 3 of the presentation pack.

Turning now to our divisional results. Together, our streaming and broadcasting businesses recorded growth in the first half, with a record result at Stan and a pleasingly robust result for Total Television. We continue to focus on broadening our advertising offering in the digital video market, with the introduction of ads on Stan Sport, coupled with our sales agreement for HBO Max. The logic behind bringing these two businesses together and the appointment of Amanda Lang is playing out, with both revenue and cost initiatives across the half. So in particular, we have accelerated the restructuring of streaming and broadcast under the 9-20-28 program. Specifically, we consolidated the creative and promos teams, resulting in both cost efficiencies and engagement opportunities. We've also stepped up our cross-promotion and collaboration, clearly evidenced during the Winter Olympics. In particular, I'd like to mention the maths spin-off, After the Dinner Party, which launched last week as Stan's highest ever single episode subscription driver in a 24-hour period, beating global phenomenon Yellowstone, and with a massive 15% of the total user base watching the first episode over the first four days. Again, highlighting the benefits of our cross-platform offering. We've also introduced a Pathways to Stand initiative, which uses Nine's digital assets and associated Nine user ID to direct subscribers and non-subscribers to Stand content. Also, earlier this year, we announced plans to consolidate NBN and Nine Darwin within our regional affiliate Wynn Network. enabling both businesses to focus on their strengths. And in mid-2025, we rolled our advertising into StandSport, which together with NineNow and our agency agreement with HBO, further increases our offering in the digital video market. Nine's advertisers are now able to reach audiences across live broadcast, live streaming and on-demand platforms, creating the most powerful video platform in Australia. And finally, we've progressed the Future News Transformation Project with rollout beginning in Sydney and go-live dates starting mid-2026. So, it's been a time of transformation for streaming and broadcast as we position ourselves for the future and enable these latest results with strong growth at Stan and a resilient result for Total TV in a very difficult ad market.