Nine Entertainment Co.

Transcription

1 AUSTRALIA NEC AU Price (at 06:47, 26 Feb 2015 GMT) Outperform A$2.03 Valuation A$ - DCF (WACC 8.2%, beta 1.2, ERP 5.0%, RFR 3.8%) month target A$ month TSR % Volatility Index Low/Medium GICS sector Media Market cap A$m 1, day avg turnover A$m 4.8 Number shares on issue m Investment fundamentals Year end 30 Jun 2014A 2015E 2016E 2017E Revenue m 1, , , ,685.2 EBIT m Reported profit m Adjusted profit m Gross cashflow m CFPS CFPS growth % nmf PGCFPS x PGCFPS rel x EPS adj EPS adj growth % nmf PER adj x PER rel x Total DPS Total div yield % Franking % ROA % ROE % EV/EBITDA x Net debt/equity % P/BV x NEC AU vs Small Ordinaries, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, February 2015 (all figures in AUD unless noted) 26 February 2015 Macquarie Securities (Australia) Limited Keeps to the script Event NEC reported 1H15 EBITDA of $169.3m, down 9.3% on 1H14 (pro-forma). Impact 1H numbers in line, FY guidance unchanged: The Group result was in line with expectations and consistent with previous guidance, while full-year guidance was also unchanged. In a difficult ad market, Nine Network continued to see share gains due to improvements in both its ratings and power ratio. It may be difficult to extend the latter much beyond current levels, suggesting that further ratings gains will be needed to continue to take share. Nine Live was a little softer than expected in the half, but guidance for segment EBITDA to be at least flat for the full year puts it on track over that period. Modest improvement in ad markets and good start to 2H15: Management did note that TV advertising markets appear to have returned to growth. Against that, Nine is achieving 8-9% metro revenue growth on the back of an aggressive season launch, the inclusion of World Cup Cricket, and the absence of the Winter Olympics on Ten. While clearly not being reflected in these numbers, Nine has had a mixed start to the year, with Gallipoli disappointing on ratings and The Block weaker than expected. Bright outlook for Nine Live: Nine management was upbeat on the medium term prospects of Nine Live, with the company working to secure a number of multi-year deals around international sports and major exhibitions that will boost future year earnings in both the promotions side of the business and at Ticketek. Share buyback a positive: The move to buy back $150m of shares (~7.8% of capital on issue), flags management s commitment to keep the balance sheet efficient, yet still flexible. A buyback of this scale is ~5% accretive to FY16 EPS on a pro-forma basis. Post-completion of the buyback, we estimate NEC s leverage ratio to be 1.74x, still comfortably below the company s target gearing level of 2.0x ND/EBITDA. Earnings and target price revision FY15: +0.8%; FY16: -1.2%; FY17: -2.4%. TP increased 5c to $2.25/sh. Price catalyst 12-month price target: A$2.25 based on a Sum of Parts methodology. Catalyst: Ongoing ratings and revenue data releases Action and recommendation Outperform. The key positive was the buyback, as well as suggestions of modest improvement in ad market conditions. Looking forward, Nine stands to benefit from lower costs as the Warner Bros deal runs out or is re-negotiated, and potentially also from improved terms to its affiliate deal when it is renewed at year-end. Please refer to page 8 for important disclosures and analyst certification, or on our website

2 Result overview Nine had a soft first half, with EBITDA down 9.3% and adjusted EPS down 6.6%. The second half will see this turn around, with improving ad markets, an easier comparable period in TV, and a return to strong earnings growth at Nine Live. Fig 1 1H15 result summary (vs pro-forma FY14) Year Ending 30 June A$m 1H15a % ch vs pcp 2H15e % ch vs pcp FY15e % ch vs pcp Revenue Network - FTA % % % Live % % % Digital % % % Total revenue % % % EBITDA Network - FTA % % % Live % % % Digital % % % Other EBITDA % % % Total EBITDA % % % Share of Associates Net Profits (Mi9) % % % EBITDA (incl Share of Associates) % % % D&A % % % Total EBIT % % % EBIT Non Recurring % % % Total EBIT (incl pre-tax NRI) % % % Net Interest Expense % % % EBT % % % Adjusted income tax % % % Non Recurring tax % % % Reported Profit % % % Cons. Adj. Profit % % % DPS 4.2 nmf % % EFPOWA % % % EPS % % % Adjusted EPS % % % Divisional summary TV Soft market offset by continued revenue share gains Another solid half for Nine Network, capturing a 39.2% revenue share, up from 38.7% a year earlier. Management remains confident of delivering a 40% revenue share by the end of CY15. On these share gains, Nine's TV revenues fell only 0.6% against a market that was down 3.0% in metro areas and down 3.1% nationally. Share gains ticked up in the west coast markets following the acquisition of WIN licences in Perth and Adelaide. Revenue share gains were 1.8 points in Perth and 0.8 points in Adelaide, compared to a 0.2 point gain across east coast markets. TV costs were up 2.9%, in part reflecting in-year programming decisions (Nine ran a number of key programs later in the year). Fig 2 Nine Network P&L summary: FY13-FY17e A$m FY13p 1H14p 2H14p FY14p 1H15a 2H15e FY15e FY16e FY17e Revenue % ch vs pcp 6.3% 4.7% 3.7% 4.2% -0.6% 5.1% 2.1% 0.6% 0.8% Opex % ch vs pcp 8.8% -0.1% 6.5% 3.1% 2.6% 3.3% 2.9% -1.3% -0.1% EBITDA % ch vs pcp -3.5% 24.7% -9.0% 9.3% -11.6% 14.8% -1.5% 8.5% 4.4% % margin 18.8% 23.0% 16.0% 19.7% 20.4% 17.4% 19.0% 20.5% 21.2% 26 February

3 TV revenue charts Fig 3 TV revenue share summary (1H05-1H15, financial year to June) 45% 40% 35% 30% 25% 41.4% 40.0% 40.3% 39.2% 38.4% 39.1% 40.5% 39.7% 41.3% 40.4% 38.5% 37.6% 38.0% 37.9% 37.5% 37.6% 38.1% 36.4% 35.9% 38.5% 36.3% 32.9% 36.6% 33.8% 38.1% 37.6%38.7% 38.6% 39.2% 30.9% 31.4% 30.8% 35.0% 33.6%34.9% 32.7% 30.8% 31.8% 33.2% 31.9% 33.2% 34.5% 30.9% 31.5% 30.1% 30.3% 30.9% 30.1% 27.5% 28.9% 27.0% 29.1% 28.9% 25.5% 28.1% 27.0% 27.7% 28.3% 21.6% 21.9% 21.5% 20.1% 20.4% 20% 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 Seven Nine Ten Source: FreeTV, Macquarie Research, February 2015 Fig 4 Metro TV ad revenue growth (1H05-1H15, financial year to June) % ch vs pcp 25% 20% 18.9% 16.9% 15% 10% 5% - (5%) (10%) 10.4% 6.3% (1.8%) (1.1%) (1.0%) 6.0% 9.0% 0.2% (5.3%) (5.0%) 1.1% (0.3%) (1.9%) (3.8%) (5.1%) 5.0% 1.7% (3.0%) (15%) (12.6%) 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 Source: FreeTV, Macquarie Research, February 2015 Nine Live Soft half against an abnormally high pcp. Medium term outlook remains robust. Some softness in revenues was expected, although the rate of decline exceeded our estimates. This appears attributable mostly to Nine Touring and Events cycling a tough pcp. As this is a lowmargin sub-segment, the impact on EBITDA was less material and this outcome was within $1m of our estimates. A healthy pipeline across sports, exhibitions and concerts, combined with initiatives to grow Ticketek through volume growth and cost cutting, bodes well for Nine Live. The division has recontracted a number of key venues over the past twelve months, which will increase the certainty around key ticketing volumes. Management expects a stronger second half and FY15 EBITDA to be "at least in line with pcp" (Macq +2.0%). 26 February

4 Fig 5 Nine Live P&L summary: FY13-17e A$m FY13p 1H14p 2H14p FY14p 1H15a 2H15e FY15e FY16e FY17e Revenue % ch vs pcp 14.0% 80.5% 0.6% 36.2% -23.8% 22.1% -5.0% 7.7% 6.8% Opex % ch vs pcp 21.4% 94.2% 6.6% 45.3% -29.6% 23.1% -8.0% 10.0% 7.7% EBITDA % ch vs pcp 1.9% 54.8% -11.1% 18.7% -10.2% 19.5% 2.0% 2.9% 4.7% % margin 34.2% 29.8% 29.8% 29.8% 35.1% 29.2% 32.0% 30.6% 30.0% Nine Digital Premium video a key driver Nine Digital continues to cycle out of the previous Mi9 arrangements. The 1H15 result still held one quarter of default Microsoft traffic, but with this caveat was called out as being "reflective of go forward earnings base". Bing Search and Video revenue were the key drivers. This outcome for the half was slightly ahead of our current estimates, although this doesn't move the needle too much in the context of the broader Group. Fig 6 Nine Digital P&L summary: FY13-17e A$m FY13p 1H14p 2H14p FY14p 1H15a 2H15e FY15e FY16e FY17e Revenue % ch vs pcp 7.4% -21.9% -11.5% -17.0% 32.4% 22.6% 27.5% 3.0% 3.0% Opex % ch vs pcp 20.2% -6.6% -6.8% -6.7% 31.5% 22.6% 27.1% 3.0% 3.0% EBITDA % ch vs pcp -21.6% -63.2% -34.5% -52.9% 38.0% 22.8% 30.4% 3.0% 3.0% % margin 22.4% 12.7% 12.7% 12.7% 13.2% 12.7% 13.0% 13.0% 13.0% Cash conversion Nine s cash conversion was soft at 78% in the period, with management guiding to an objective range of 80-90% going forward. Cash conversion should improve over time, as onerous contracts roll off and also as Nine gets to the back end of key sports rights contracts (Cricket and NRL). Fig 7 NEC operating FCF summary (FY14 FY16) $m, pro-forma 1H14p 2H14p FY14p 1H15a 2H15e FY15e FY16e EBITDA before share of associates' NPAT Change in working capital (9.6) (32.4) (42.0) (37.5) (10.5) (48.0) (20.5) Distributions from associates Net non cash IPO adjustments Operating Free cash flow Operating Free cash flow - Conversion 94% 77% 87% 78% 92% 84% 94% Capital expenditure and key money (26.8) (22.6) (49.4) (26.0) (29.0) (55.0) (55.6) Operating FCF after capital expenditure and key money Net debt at 31 December 2014 was $490.5m implying a net leverage ratio of 1.7x The company is targeting a 2.0x leverage ratio, which it will attempt to reach through a combination of the share buyback and ongoing dividend policy. As illustrated by Fig 14, even assuming completion of the buyback over the next 12 months, we see NEC s net debt position reducing over the next couple of years. Management also flagged the potential to free up capital invested in its Willoughby site. 26 February

5 Fig 8 NEC DPS vs FCF p/s (FY14 FY18e) Fig 9 NEC gearing profile (FY14 FY18e) 25 cps 800 $m 1.73x 1.66x 1.74x 1.8x x x x 1.2x 0.9x x x 0 FY14a FY15e FY16e FY17e FY18e FCF p/s DPS 0 FY14a FY15e FY16e FY17e FY18e Net debt Net debt / EBITDA 0.0x Fig 10 Group P&L summary by division: FY13-17e $m FY13p 1H14p 2H14p FY14p 1H15a 2H15e FY15e FY16e FY17e Revenues TV % ch v pcp 6.3% 4.7% 3.7% 4.2% (0.6%) 5.1% 2.1% 0.6% 0.8% Live % ch v pcp 14.0% 80.5% 0.6% 36.2% (23.8%) 22.1% (5.0%) 7.7% 6.8% Digital % ch v pcp 7.4% (21.9%) (11.5%) (17.0%) 32.4% 22.6% 27.5% 3.0% 3.0% Total % ch v pcp 7.2% 9.3% 1.8% 5.7% (1.9%) 8.7% 3.0% 1.8% 1.9% EBITDA TV % ch v pcp (3.5%) 24.7% (9.0%) 9.3% (11.6%) 14.8% (1.5%) 8.5% 4.4% Live % ch v pcp 1.9% 54.8% (11.1%) 18.7% (10.2%) 19.5% 2.0% 2.9% 4.7% Digital % ch v pcp (21.6%) (63.2%) (34.5%) (52.9%) 38.0% 22.8% 30.4% 3.0% 3.0% Corporate % ch v pcp (1.2%) 61.5% (31.3%) 1.7% (10.2%) 20.1% 3.0% 3.0% 3.0% Total % ch v pcp (5.1%) 16.5% (9.8%) 4.6% (9.3%) 16.1% 0.6% 7.2% 4.5% Associates % ch v pcp (8.9%) 2.4% 17.1% 9.8% (21.5%) (22.8%) (22.2%) 5.0% 5.0% Total EBITDA incl. assoc % ch v pcp (11.9%) 16.3% (9.4%) 4.6% (9.4%) 15.3% 0.3% 7.2% 4.5% EBITDA margin TV 18.8% 23.0% 16.0% 19.7% 20.4% 17.4% 19.0% 20.5% 21.2% Live 34.2% 29.8% 29.8% 29.8% 35.1% 29.2% 32.0% 30.6% 30.0% Digital 22.4% 12.7% 12.7% 12.7% 13.2% 12.7% 13.0% 13.0% 13.0% Group 19.9% 22.3% 16.7% 19.7% 20.6% 17.7% 19.2% 20.2% 20.7% 26 February

6 NEC A$ February 2015 Interim results 1H14a 2H14a 1H15a 2H15e Profit & Loss FY14a FY15e FY16e FY17e Revenue Revenue Network - FTA $m Network - FTA $m Nine Live $m Nine Live $m Nine Digital $m Nine Digital $m SVOD $m SVOD $m Inter-segment eliminations $m 0.0 (0.1) Inter-segment eliminations $m Total revenue $m Total revenue $m EBITDA EBITDA Network - FTA $m Network - FTA $m Events $m Events $m Digital $m Digital $m SVOD $m SVOD $m Other EBITDA $m (10.5) (8.1) (9.4) (9.7) Other EBITDA $m (18.6) (19.2) (19.7) (20.3) Total EBITDA $m Total EBITDA $m D&A $m D&A $m EBIT EBIT Network - FTA $m Network - FTA $m Events $m Events $m Digital $m Digital $m SVOD $m SVOD $m Other EBIT $m (9.6) (9.0) (9.4) (9.7) Other EBIT $m (18.6) (19.2) (19.7) (20.3) EBIT $m EBIT $m Net Interest Expense $m Net Interest Expense $m EBT $m EBT $m Adjusted income tax $m Adjusted income tax $m Net Profit after tax before MI $m Net Profit after tax before MI $m Minority Interests $m Minority Interests $m Reported Profit $m Reported Profit $m Cons. Adj. Profit $m Cons. Adj. Profit $m Profit and Loss ratios 1H14a 2H14a 1H15a 2H15e Profit and Loss ratios FY14a FY15e FY16e FY17e PER (adj Earnings) x PER (adj Earnings) x EPS (Reported) c EPS (Reported) c EPS (Adjusted) c EPS (Adjusted) c DPS c DPS c Dividend Yield % 0.0% 2.1% 2.1% 2.0% Dividend Yield % 2.1% 4.0% 4.4% 4.4% EBITDA margin % 22.1% 16.4% 20.4% 17.5% EBITDA margin % 19.4% 19.0% 20.0% 20.5% Payout ratio % 0.0% 150.8% 43.4% 48.9% Payout ratio % 68.2% 45.9% 45.4% 41.6% EV/EBIT x 12.9x 20.2x 8.2x 10.0x EV/EBIT x 15.9x 9.0x 8.3x 7.6x EV/EBITDA x 6.4x 10.2x 7.1x 8.7x EV/EBITDA x 8.0x 7.8x 7.1x 6.5x FCF Yield % 13.0% 0.9% 11.2% 9.1% FCF Yield % 6.9% 8.7% 7.4% 9.1% Balance sheet ratios 1H14a 2H14a 1H15a 2H15e Balance sheet ratios FY14a FY15e FY16e FY17e Net Debt $m Net Debt $m Adjusted Net Debt $m Adjusted Net Debt $m Net Debt/Equity x 0.3x 0.2x 0.2x 0.2x Net Debt/Equity x 0.2x 0.2x 0.2x 0.2x Net Debt/EBITDA x 1.3x 2.2x 1.4x 1.8x Net Debt/EBITDA x 1.7x 1.7x 1.7x 1.4x Net Interest Cover (EBIT) x 5.6x 3.6x 10.0x 8.1x Net Interest Cover (EBIT) x 4.7x 9.0x 9.0x 9.8x Net Interest Cover (EBITDA) x Net Interest Cover (EBITDA) x EFPOWA m EFPOWA m Cashflow Analysis 1H14a 2H14a 1H15a 2H15e Cashflow Analysis FY14a FY15e FY16e FY17e EBITDA $m EBITDA $m Increase in Working Capital $m 55.3 (37.1) (8.7) (10.5) - Increase in Working Capital $m 18.2 (19.3) (20.5) (21.3) - Net Interest Paid $m (27.1) (37.9) (2.1) (14.6) - Net Interest Paid $m (65.1) (16.7) (31.0) (30.0) - Tax Paid $m (21.3) (1.4) (4.3) Tax Paid $m (22.7) (4.3) (75.3) (80.0) + Associate Dividends $m 1.0 (1.0) Associate Dividends $m Other $m (44.6) (3.3) (22.2) Other $m (47.9) (22.2) Net Operating Cashflows $m Net Operating Cashflows $m Proceeds from Sale of assets $m Proceeds from Sale of asse $m Capex $m Capex $m Acquisitions and Investments $m (6.9) Acquisitions and Investments$m Other $m 0.0 (0.1) Other $m (0.1) Net Investing Cashflows $m (354.9) (30.6) (19.0) (66.0) Net Investing Cashflows $m (385.6) (85.0) (75.6) (56.2) - Dividends Paid $m Dividends Paid $m Equity Movements (inc. DRP) $m (37.5) + Equity Movements (inc. DRP$m (37.5) (112.5) Debt Movements $m (9.9) (213.7) (18.6) Debt Movements $m (223.6) (82.8) + Other $m (23.1) (4.5) (34.1) Other $m (27.5) (34.1) Net Financing Cashflows (218.2) (92.3) (49.4) Net Financing Cashflows $m 23.9 (141.7) (130.9) (160.9) Net Cashflow 37.0 (209.7) Net Cashflow $m (172.7) Balance Sheet FY14a FY15e FY16e FY17e Cash $m Receivables $m Inventories $m Investments $m Property, plant & equipment $m Intangibles $m Other Assets $m Total Assets $m Payables $m Short Term Debt $m Long Term Debt $m Other Liabilities $m Total Liabilities $m Retained Profits $m Reserves $m Issued Capital $m Total Shareholder Equity $m February

7 Fundamentals Macquarie Wealth Management Macquarie Quant View The quant model currently holds a neutral view on Holdings. The strongest style exposure is Growth, indicating this stock has good historic and/or forecast growth. Growth metrics focus on both top and bottom line items. The weakest style exposure is Quality, indicating this stock is likely to have a weaker and less stable underlying earnings stream. 170/296 Global Alpha Model Sector Rank % of BUY recommendations 92% (11/12) Number of Price Target downgrades 1 Number of Price Target upgrades 0 Attractive Quant Rank within Country Rank within Sector Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. The rankings are displayed relative to the sector and country. Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score. News Corp 0.8 News Corp Ho 0.0 Ho Seven West Media -0.3 Seven West Media Southern Cross Media Grou -0.7 Southern Cross Media Grou Ten Network Holdings -2.5 Ten Network Holdings % -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple. News Corp Ho Seven West Media Southern Cross Media Grou Ten Network Holdings News Corp Ho Seven West Media Southern Cross Media Grou Ten Network Holdings % -50% 0% 50% 100% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and country Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score Percentile relative to sector(/296) Percentile relative to country(/241) For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 26 February

8 Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down % in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 31 December 2014 AU/NZ Asia RSA USA CA EUR Outperform 51.80% 58.06% 45.07% 44.42% 60.54% 46.81% (for US coverage by MCUSA, 5.29% of stocks followed are investment banking clients) Neutral 31.80% 27.37% 30.99% 50.10% 35.37% 33.51% (for US coverage by MCUSA, 3.08% of stocks followed are investment banking clients) Underperform 16.39% 14.57% 23.94% 5.48% 4.08% 19.68% (for US coverage by MCUSA, 0.44% of stocks followed are investment banking clients) NEC AU vs Small Ordinaries, & rec history (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, February month target price methodology NEC AU: A$2.25 based on a DCF methodology Company-specific disclosures: NEC AU: MACQUARIE CAPITAL (AUSTRALIA) LIMITED or one of its affiliates managed or co-managed a public offering of securities of Nine Entertainment Co Holdings Ltd in the past 24 months, for which it received compensation. MACQUARIE EQUITIES LIMITED or one of its affiliates has provided Nine Entertainment Co Holdings Ltd with investment advisory services in the past 24 months, for which it received compensation. Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Nine Entertainment Co Holdings Limited's equity securities. Important disclosure information regarding the subject companies covered in this report is available at Date Stock Code (BBG code) Recommendation Target Price 15-Jan-2015 NEC AU Outperform A$ Aug-2014 NEC AU Outperform A$ Jan-2014 NEC AU Outperform A$ Jan-2014 NEC AU Outperform A$2.40 Target price risk disclosures: NEC AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Analyst certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN , AFSL No ) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN , AFSL No ) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN , AFSL No ) ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) 26 February

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