Presentation - Jetix Europe

Jetix Europe NV
FY04 Financial Results
December 8, 2004
Slide 2
Operating Review
Paul Taylor
Chief Executive Officer
Slide 3
FY04 Operating Highlights
Another strong year
‹ Launch of Jetix, a new global entertainment alliance with The
Walt Disney Company (Disney)
‹ Successful relocation of UK and French operations
‹ Subscribers up 3.5 mil to 38.3 mil
‹ 4 new co-productions underway
‹ Library expanded with acquisition of 271 new episodes
‹ Strong financial performance on all measures
Slide 4
Jetix
Success to date
‹ Jetix blocks launched on all Fox Kids channels from April 2004
‹ Strong ratings performance since launch
‹ Transition to Jetix named channels on schedule for completion by
June 2005. Renaming already complete in France and Scandinavia
‹ Two Jetix co-productions underway with Disney
‹ Objective is to reduce our cash investment in programming whilst
improving the quality of our shows even further
Slide 5
Channels & Online
Strong performance
‹ Subscribers up by 3.5 mil to 38.3 mil
‹ Strong ratings performance, particularly in UK and France
‹ Launch of pan-European commercial sales unit
‹ Channels in the UK and Spain extended to 24 hours
‹ Exclusive co-production agreement signed with Marathon
‹ Successful launch of interactive service on Sky Active
Now
Now broadcasting
broadcasting in
in 58
58 countries
countries in
in 17
17 languages
languages
via
via 14
14 channel
channel feeds
feeds
Slide 6
Market Positioning
Europe & Middle East
50
45
Sept 30, 2004
TV Households (Million)
40
38.3
35
30.4
30
25
21.6
20
14.7
15
10
5
0
Disney *
Source: Market research and Jetix estimates
*Available as a premium channel
Nickelodeon
Cartoon Network
Fox Kids/Jetix
Slide 7
Channel Growth Continues
Increasing in both cable and DTH
45
40
38.3
35
**
30
G
CA
R
9%
3
=
34.8
31.4
19.9
Million
HH’s 25
24.7
15.1
15
10.7
10
5
3.5
Cable
DTH
17.7
19.9
20
18.5
14.3
12.2
9.0
6.4
3.5
4.3
6.1
1997
1998
1999
10.4
7.7
13.7
16.3
18.4
0
2000
2001
As of May 31
*As of June 30 + as of September 30 ** CAGR is calculated on 7.33 years
2002*
2003+
+
2004
Slide 8
Households Reached
By territory
Greece
Israel
0.3
0.3
Hung/Czech/Slov
1.4
1.6
Turkey
1.6
Italy
1.7
Germany
Spain
Scandinavia
Poland
Sep-03
Sep-04
0.6
0.7
2.8
New
1.6
1.8
feed in
Turkey
1.8
1.7
1.9
2.1
2.0
2.3
2.6
France
3.0
CEE
4.5
5.4
6.8
6.8
Netherlands
8.7
UK & Ireland
0.0
2.0
4.0
Million HH’s
6.0
8.0
9.1
10.0
Slide 9
Programme Distribution
Increasing profitability
‹ Improvement in both quality and quantity of programming
acquired
‹ Two Jetix co-productions underway with Disney: W.I.T.C.H.
and Super Robot Monkey Team Hyperforce Go!
‹ Two other co-productions in progress: A.T.O.M. - Alpha
Teens on Machines and Oban Star Racers
‹ Branded blocks are a key part our free TV strategy
‹ 3-year agreement signed with Kabel 1 in Germany for
the launch of our first Jetix branded block on free TV
‹ Output deal concluded in Russia with CTC
Slide 10
Growing Programme Library
‹ 271 new episodes added including:
‹
‹
‹
‹
Sonic X
Shaman King
Tutenstein
Daigunder the Battle Robot
‹ 142 episodes in progress as at September 30, 2004 including:
‹
‹
‹
‹
‹
‹
‹
Power Rangers Dino Thunder
The Tofus
Oban Star Racers
W.I.T.C.H.
Super Robot Monkey Team Hyperforce Go!
A.T.O.M. – Alpha Teens on Machines
Sonic X (second season)
‹ Over 6,600 episodes* in library as at September 30, 2004
* Half
hour equivalents
Slide 11
Consumer Products
‹ Power Rangers performs well during first year of agency
agreement with Disney Consumer Products
‹ Key new licensing rights secured including:
‹ Sonic X
‹ Oban Star Racers
‹ A.T.O.M – Alpha Teens on Machines
‹ Master toy licensees appointed
‹ Hasbro: A.T.O.M – Alpha Teens on Machines
‹ FEVA: Sonic X
Slide 12
Financial Review
Martin Weigold
Chief Financial Officer
Slide 13
Financial Highlights
As reported basis
FY
FY 04
04
FY
FY 03
03
Change
170.7
152.0
12%
51.0
56.0
Operating Income
5.2
4.2
24%
Diluted EPS (cents)
6.9
4.6
50%
30.9
10.4
197%
(US$mil)
Total Revenues+
EBITDA
Operating Cash Flow
+ Adjusted
to include our share of non-consolidated joint ventures
(9%)
Slide 14
Pro Forma Adjustments
(US$mil)
5.2
Operating Income as Reported
Relocation Costs
– Costs and Expenses
7.1
– Depreciation
0.9
8.0
Operating Income Pro Forma
13.2
Slide 15
Financial Highlights
Pro forma basis
FY
FY 04
04
FY
FY 03
03
Change
170.7
152.0
12%
EBITDA
58.0
56.0
4%
Operating Income
13.2
4.2
214%
Diluted EPS (cents)
16.1
4.6
250%
Operating Cash Flow
30.9
10.4
197%
(US$mil)
Total Revenues+
+ Adjusted
to include our share of non-consolidated joint ventures
Slide 16
Non-Recurring Relocation Costs
Recognition in accounts
12.0
(2.1)
Income
Statement
+$1 mil
p.a.
9.9
Income
to be
recognised
over next
3 years
(US$mil)
3.1
8.0
Disney
50%
4.9
0.9
0.9
Capital
Items
Assets
Written
Off
Jetix
50%
Cost
Expected
Relocation Reduction
Costs
Actual
Costs
Jetix 50%
Share
Operating
Lease
Incentive
FY04
Income
Charge
Slide 17
Revenue Contribution
Breakdown by LOB and geographic segment
Line
Line of
of Business
Business
Country
Country
$170.7 m
$152.0 m
20.7
Americas
9.6
13.8
Others
21.4
14.4
9.8
12.6
13.7
$170.7 m
$152.0 m
Consumer
Products
11.3
Channels
Advertising
30.0
Channels
Subscription
and others
Programme
Distribution
13.3
42.8
79.0
Germany
Spain/Port
CEE
89.9
18.0
Italy
11.7
14.4
Benelux
15.3
France
17.1
20.2
20.5
UK
31.4
FY 03
40.1
49.6
24.7
FY 04
FY 03
FY 04
Channels & Online
Slide 18
Continued growth for our core business
31
%
21
%
Financial
Financial Performance
Performance ($mil)
($mil)
132.7
FY 02
FY 03
FY 04
109.4
83.6
%
16
%
45 41.2
47.7+
28.4
Revenues
Overview
Overview
‹ Revenues up 21% to $132.7mil
‹ Advertising revenues up 41%;
now represents 32% of channel
revenues
‹ New brands up by 30%
‹ EBITDA margin* impacted by
additional marketing in support
of name change
EBITDA
*Calculated on net revenues
+
Pro-forma results stated after exclusion of non-recurring relocation charges
Slide 19
Channel & Online Revenues
Breakdown by type
Subscription
Subscription ($mil)
($mil)
63
%
28
%
75.2
3.9
42.8
41
%
86.9
%
36
58.9
FY 02
3.0
30.3
2.4
22.3
FY 03
FY 04
Total
Total channel
channel &
& online
online revenues:
revenues: $132.7
$132.7 mil
mil
)
3%
(2
%
16
Other
Other ($mil)
($mil)
Advertising
Advertising ($mil)
($mil)
Programme Distribution
Slide 20
Better than we expected
Financial
Financial Performance
Performance ($mil)
($mil)
)
2%
(2
FY 02
FY 03
FY 04
40.1
)
1%
(2
31.4
(2
9%
28.8
)
)
3%
(2
24.7
20.4
15.7 *
Revenues
Overview
Overview
‹
Revenues down by 21%, better than
previous guidance
‹
Primary reason for revenue fall is
reduction in rights acquired outside of
Europe
‹
Overhead reduced by $1.8 mil limiting
margin compression
‹
EBITDA margin of 64%, just 1% below
prior year
‹
Cash investment in programming
reduced by 33%
‹
Operating income just $0.6mil* down on
previous year
EBITDA
* Pro-forma results stated after exclusion of non-recurring relocation charges
Slide 21
Consumer Products
An increasingly significant part of our business
Financial
Financial Performance
Performance ($mil)
($mil)
Overview
Overview
‹ Revenues up 18% to $13.3 mil
%
18
13.3
%
21 11.3
FY 02
FY 03
FY 04
‹ 38% increase in EBITDA from
$4.0 mil to $5.5 mil
9.3
%
(9% 38
)
5.5*
4.4 4.0
Revenues
‹ Power Rangers particularly
strong with revenues up by 40%
EBITDA
* Pro-forma EBITDA stated after exclusion of non-recurring relocation charges
‹ EBITDA margin of 41% within
target range
Corporate Overhead*
Underlying increase is 2%
$ mil
0.9
0.2
FX
Real
increase
1.2
9.9
12.2
Relocation
Costs
FY03
* At operating income level
FY04
Slide 22
Foreign Exchange
Slide 23
Impact on results
(US$mil)
FY04
FY04
Actual
Actual
Change
Change
due
due to
to FX
FX
FY04
FY04 @
@
FY03
FY03 rates*
rates*
Relocation
Relocation
Group revenues
- Channels and online
Change
Change
FY03
FY03
Actual
Actual
Core
Core
132.7
10.1
122.6
13.2
109.4
- Programme distribution
24.7
1.3
23.4
(8.0)
31.4
- Consumer products
13.3
0.4
12.9
1.7
11.2
170.7
11.8
158.9
6.9
152.0
0.5
(5.2)
Unconsolidated revenues in JV’s
Cost and expenses
EBITDA
Depreciation and amortisation
Operating income
(5.3)
(0.6)
(4.7)
(114.4)
(10.4)
(104.0)
(7.1)
(6.1)
(90.8)
51.0
0.8
50.2
(7.1)
1.3
56.0
(45.8)
(0.5)
(45.3)
(0.9)
7.4
(51.8)
4.9
(8.0)
8.7
4.2
5.2
0.3
Translation FX gain
0.6
Income before tax
0.9
* Average of actual rates for year ended September 30, 2003
Slide 24
Origination of Transactions
By source currency
Revenues
Costs & Expenses
Net Exposure
Largest net
exposure;
expected to
increase in
future
GBP
Euro
USD
Other
Slide 25
Change of Reporting Currency
‹ Three currencies are significant for Jetix Europe:
‹ Sterling
‹ US Dollar
‹ Euro
‹ Jetix Europe NV has always reported its results in US dollars (USD) as historically most
of its revenues and costs were incurred in USD.
‹ However, due to a changing mix in our business, the primary currency in which we
expect the group’s revenues and expenses to be transacted in future is the Euro.
‹ As well as continuing our strategy of natural hedging (matching revenues and costs by
currency), we are considering changing our reporting currency to Euros
‹ We expect that this will help mitigate further the impact of FX on our results.
Slide 26
Cash Flow
Reduced programming spend benefits cash flow
(US$mil)
FY
FY 04
04
FY
FY 03
03
5.8
3.8
43.6
50.1
(34.0)
(44.1)
Other non-current items
3.1
-
Working capital
12.4
0.6
OPERATING CASH FLOW
30.9
10.4
Dividends and loans repaid by affiliates
-
2.3
Acquisition of FKI
-
(20.8)
(1.2)
(1.2)
Exercise of options
4.3
-
Cash flow pre FX
34.0
(9.3)
Net income as reported
Non-cash items
Programming
Capex
+197%
Slide 27
Operating Cashflow
A record year!
$mil
30.9
30
25
20
15
10.4
8.9
10
5
0
FY00
FY01
FY02
-5
-10
(9.9)
-15
(15.6)
-20
FY03
FY04
Summary
Slide 28
Jetix well positioned for future growth
‹ Global brand alliance
‹ No 1 kid’s Pan-European channel network
‹ One of the largest children’s programme libraries in the world
‹ Free cash flow positive
‹ Strong balance sheet; $86 mil net cash balances
‹ Support from Disney, the world’s leading provider of family
entertainment
Slide 29
Thank you and questions