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OVERVIEW
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At our last shareholder AGM the Board discussed the programming investments being made as a
result of the cost reductions implemented during 2011
Ten performed adequately until August with returning shows such as MasterChef, The Biggest Loser
and Offspring combined with some strong US content such as Homeland and Modern Family providing
a good foundation
The Board undertook a $200 million capital raising in June to reduce debt and to allow for investment
in new shows
In the first quarter of FY13, the advertising market has continued to be weak and uncertain, and
within that market, our execution has been poor
In September the Board requested management to further review the cost base to improve EBITDA
performance for FY13 and be in line with covenants
To be prudent, the Board has decided to reduce Ten’s debt by $210 million by undertaking a capital
raising of $230 million
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FINANCIAL RESULTS FY12
FY12 Divisional Results
2012
2011
Fav / (Unf)
Television
728.0
851.8
(14.5%)
Out of Home
137.2
148.5
(7.6%)
Total Operating Revenue
865.2
1,000.3
(13.5%)
Television
645.6
697.7
7.5%
Out of Home
125.6
130.1
3.4%
Total Expenses
771.2
827.8
6.8%
82.4
154.1
(46.5%)
OPERATING REVENUE
EXPENSES1
EBITDA1
Television
Out of
Home2
Total EBITDA (before non recurring items)
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2
Before Non Recurring Items (NRI’s) of $11.4m (2011: $85.4m)
Out of Home Cash EBITDA loss of $3.6m for FY 2012 (2011: Cash EBITDA $3.2m)
11.6
18.4
(36.9%)
94.0
172.5
(45.5%)
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CAPITAL RAISING
OFFER
4 for 5 accelerated pro rata non-renounceable entitlement offer at
$0.20 to raise $230 million (offer is fully underwritten)
USE OF FUNDS
To repay the USPP of $210 million due in March 2013
SHAREHOLDER SUPPORT
Shareholders representing approximately a third of issued capital are
pre-committed to participating
IMPACT OF CAPITAL RAISING
• On a pro-forma basis, post
capital raising, Ten will have net
cash of $45 million
• Ten will have a $150m USPP
debt due in Dec 2015 and a new
working capital facility
• Ten will have materially
strengthened its capital
structure, while implementing
the operating initiatives
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TEN’S BOARD HAS CONTINUED TO FOCUS
ON REDUCING COSTS AND DEBT
Ten’s Television Cost Base (ex-selling) ($m)
Ten’s Net Debt / (Net Cash) ($m)
637
595
416
~560
FY11
FY12
FY13
guidance
263
FY11
FY12
(1) As at quarter ending November 2012, pro forma for capital raising (net of associated costs of approximately $5 million).
(2) Pro forma for repayment of US$125 million (swapped into A$210 million) USPP due in March 2013.
Note: Past performance is not an indicator of future performance.
Drawn debt:
150(2)
(45)
Pro forma for
$230m capital
raising (1)
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REMUNERATION REPORT
KEY ISSUES
• Redundancy payments in accordance with contractual
obligations
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Individual Directors’ fees reduced by 10% from
September 1, 2012
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No Short Term Incentive payments due to the
company’s FY12 performance
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Remuneration consultant hired to establish a new
executive plan that will better align interests of
executives and shareholders
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LOOKING FORWARD
• The Board is determined that Ten must return to levels of adequate performance
―The Board is hopeful that viewers will re-engage with Ten, particularly in January and February
when Ten’s schedule improves with returning shows
―The Board is hopeful that advertising clients will increase their support of Ten
―The Board is confident costs for FY13 will not exceed ~$560 million (6% reduction on FY12)
• The Board is of the view that the television advertising market will remain short, resulting in ongoing
limited visibility in forward ad bookings, and for this reason the Board is taking these prudent steps
• The Board thanks staff, advertising clients and shareholders for their patience during this difficult
period and for their ongoing support
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OPERATIONAL INITIATIVES
• Improved content agreements with increased rights
and reduced costs
• Improved program development process
• Focused media plan and marketing budget to
support programming
• Major new initiatives in place to reduce costs
• Deals with major media agency groups for 2013
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FY12 IN REVIEW
• Stringent cost control program continued and
expanded
• Television costs (excluding selling costs) down 6.6% or
$42 million during FY12
• Strategic, Operating and News Review started in FY12
• Review does not impact investment in programming
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FY12 IN REVIEW
• Ratings and revenue performance below
expectations
• TEN early evening: growth among 18 to 49s and
25 to 54s
• TEN: #1 in daytime
• ELEVEN and ONE: #1 digital channel
combination in 18 to 49s and 25 to 54s
• ONE: audience growth of more than 22%
Source: OzTAM, 5 City Metro, weeks 7-48 2012 (excl. Easter & Olympics). Based on Consolidated to week 47, Overnight data in week 48. Growth based on Weeks 7-48,
2012 v 2011 (excl. Easter & Olympics), Overnight data for week 48 (2011 & 2012). Early Evening: 1700-2000, Mon-Fri, TEN primary. Daytime: 0900-1800, Mon-Fri.
ONE’s growth: 1800-2230, Sun-Sat. Winning Digital Combination: 1800-2230, Sun-Sat.
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