Financial Analysis Report: Nine Entertainment Co Holdings (ACCY801)

This report provides a comprehensive financial analysis of Nine Entertainment Co Holdings. It begins with an introduction and a brief overview of the company, detailing its industry sector, primary activities, and recent performance. The report then presents a detailed table outlining the Board of Directors, including their names, ages, education, career history, and remuneration. An assessment of the Board's characteristics, including composition and expertise, is also provided. The report further examines important investment and financing decisions made by the company, along with an outline of the key recommendations of the ASX Corporate Governance Council. It also discusses the external audit function and business ethics, including ethical judgements. The analysis extends to identifying the top five investors and their ownership stakes, followed by an in-depth analysis of the financial statements, covering liquidity, asset management efficiency, capital structure, profitability, and market value ratios. The report concludes with a summary of the findings and includes a list of references.

Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Introduction:...............................................................................................................................2
Brief Company Overview:.........................................................................................................2
Board of Directors:.....................................................................................................................3
Investment Decision:..................................................................................................................7
Corporate Governance:..............................................................................................................8
Auditors:...................................................................................................................................10
Business Ethics and Ethical Judgements:................................................................................11
Investors and Significant Ownership of Stakes:......................................................................11
Analysis of Financial Statement:.............................................................................................12
Liquidity:..................................................................................................................................12
Asset Management Efficiency:................................................................................................12
Capital Structure:.....................................................................................................................13
Profitability Ratios:..................................................................................................................13
Market Value Ratios:...............................................................................................................13
Cash Management Ratio:.........................................................................................................14
Conclusion:..............................................................................................................................14
References:...............................................................................................................................15

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Introduction:
The current report is based on analysing and discussing operational functions of Nine
Entertainment Co Holdings. The report would outline the industry in which the company
operates, its primary activities and current performance. A detail outline of board of directors
including the name, age, educations, career history and other relevant details would be
provided. An evaluation of the composition of the board and board expertise of Nine
Entertainment Co Holdings would be provided. Emphasis would be paid on the investment
and financial decision made by the NEC Ltd throughout the year. Furthermore, the report
would cover the corporate governance of Nine Entertainment Col Ltd and recommendations
would be provided concerning the ASX Corporate Governance Council.
The study would cover the external audit functions of Nine Entertainment Co
Holdings with key measures taken by the company in making sure that the business
operations are carried on with ethical means. An identification of the top five investors for
NEC would be identified and comment on the ownership stake in the company would be
presented. The analysis of financial statement through relevant ratios would be covered in the
study as well.
Brief Company Overview:
Nine Entertainment Co Holdings Ltd is regarded as the publicly listed Australian
media organization. Initially the company is the 50/50 joint venture with the consolidated
media holdings (Nineentertainmentco.com.au 2018). The strategy of the company is to
establish a great content, to distribute it widely and indulge in audience or advertisers. Since
Australia is the home of the most trusted and loved brands ranging from news, lifestyle,
sports and entertainment. The company takes pride in creating the finest content that is

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accessed by the consumers when and how they want, while celebrating its ability to provide
the shared experiences among the audience.
The business functions of the company are engaged in the operations of four
divisions, free to air television, digital publishing, on demand video and production of
content. The company has the long standing strategic relations with the Microsoft, for selling
their suite of advertisement products while leveraging their world-leading technology data
insight, innovations together with the data relations with some Australia’s leading technology
providers such as Red Planet and Data Republics (Nineentertainmentco.com.au 2018). The
wide investment includes 50% interest in Stan and interest in Rate City with ASX-Listed
financial service company in Yellow Brick Road.
Board of Directors:
Name Age Gender Education Career History Remuneration
for FY 2015
($):
Peter
Costello
58 Male Bachelor of Arts and
Bachelor of LLB
Hons and Doctorate
of Laws LLB (Hons)
Mr Costello was
the member of the
Audit and Risk
management
committee. Mr
Costello served as
the member of the
House of
Representative.
Before entering
into the parliament
$850,000

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Mr Costello was
the barrister
Hugh
Marks
55 Male Bachelor of
Commerce and
Bachelor of Laws.
Mr Marks has the
20 years’
experience in
content
productions and
broad casting and
Pay TV. Prior to
joining the board
Mr Marks was the
authority member
of Australian
Communications
and Media
Authority for more
than two years.
$1,400,000
David
Gyngell
52 Male Bachelors in
Marketing and
Communications
Mr Gyngell was
the chief executive
officer for the
company and
earlier served as
the CEO of the
nine network. Mr
Gyngell was also
$869,307

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the director of the
International
Management
Group.
Janette
Kendall
45 Female Bachelor of Business
and Marketing
Ms Kendall was
appointed as the
Non-Executive
Director of the
Board and was the
Member of the
People and
Remuneration
Committee. Ms
Kendall worked in
wide range of
industries such as
marketing and
technologies,
advertisement and
arts.
$730,000
Samantha
Lewis
38 Female Bachelor of Arts
(Hons)
Ms Lewis has
more than 20 years
of experience in
Touche Tehmatsu
including 14 years
$425,000

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as the partner. She
also worked as the
auditor in several
number of listed
companies in
Australia. Ms
Lewis worked in
Deloitte and
provided
accounting advice
as well as due
Diligence.
Catherine
West
35 Female Bachelors of Laws
(Hons) and Bachelor
of Economics.
Ms West has more
than 20 years of
experience as the
business and legal
affairs in the media
industry both in
the Australia and
UK.
$434,654
During the year nine reviewed and amended the charter of board and the charter
relating to the People and Remuneration Committee as this would enable the board to be
responsible for considering the nominations of the new directors. The change in
responsibilities is reflected into the corporate governance of the nine entertainment (Arjoon

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2017). The corporate governance statement of the Nine Entertainment Ltd reflects the degree
to which the company has adhered with the ASX Corporate Governance principles and the
corporate governance best practices. The board of directors of Nine Entertainment Ltd plays
an important part in discharge of their responsibilities.
For instance, committees such as audit, risks management, obedience, nominations,
people policy and sustainability committees. Each and every committee is chaired
independently to carry-out the functions of attaining the overall organizational goals
(Nineentertainmentco.com.au 2018). The board members represent the organizations by
acting as the ambassadors since the charter of the company demands the members to be loyal
and remain committed to the organizational functions (Aguilera et al. 2015). These board of
directors are required to report directly to the shareholders and held accountable for
organization’s growth and development.
Investment Decision:
Over the period of last twelve months Nine Digital has strengthened its position in the
certain number of targeted customer facing verticals with investment in Nine now, Honey and
Car Advice. The current restructuring of the sales team has also commenced to render the
positive restructuring of the sales momentum and would continue to remain focussed in the
year ahead (Soltani and Maupetit 2015). The financial report of Nine Entertainment has been
prepared in accordance with the historical cost except on the circumstances of the derivative
financial instruments and investments in the listed equity firms that are measured based on
the fair value.
The makes investments in the associates that are accounted based on the method of
equity. Investment in the listed securities are based on the non-derivative financial assets,
principally in the equity shares that meets the concept of equity instrument

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(Nineentertainmentco.com.au 2018). The company determines the fair value of the
investment that are traded actively in the organized financial markets that are determined by
referring to the quoted market prices upon the closure of the business on the reporting date
(Crane and Matten 2016). The company has made investment in the associates and joint
ventures and are accounted in terms of the equity method of accounting in the consolidated
financial statements.
Corporate Governance:
S.NO Principle Recommendations
1 Laying down the solid
foundations for management
and oversight
Listed entities must establish
and disclosing the roles and
responsibilities of the
management and how their
performance assessment is
made (ArAs 2016).
2 Structuring the board to add
value
To efficiently discharge
their responsibilities, the
board of directors of the
companies must be of the
appropriate size and skills.

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3 Acting responsibly and
ethically
Companies listed under the
ASX are required to
discharge their duties
ethically and responsibilities
(García-Sánchez et al.
2015).
4 Safeguarding the integrity of
corporate reporting
The listed companies must
have the formal and the
rigorous procedure that
independently protects the
integrity of corporate
reporting.
5 Making disclosure in timely
manner
The companies that are
listed in the ASX are under
obligations of making timely
disclosure of all the matters
relating to the price of
securities and shares (Davies
2016).
6 Respecting the rights of the
shareholders
Companies listed under the
ASX are required to be the
security holders by offering
them with the correct
information’s and enabling
the shareholders to exercise

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their rights.
7 Identifying and managing
risks
Companies listed under
ASX should create a strong
risk management framework
and reviewing periodically
the effectiveness of the
framework.
8 Remunerating fairly and
responsibly
Companies that are listed
under the ASX are required
to pay the directors
remuneration fairly in order
to maintain the motivation
of the higher quality
management.
Auditors:
Earnest and Young was the independent auditor for the Nine Entertainment Ltd for
the financial year ended 2017. The Earnest and Young have conducted audit for the company
and its subsidiaries that consist of the consolidated statement of financial position. The
auditor statement stated that the financial report of the company and its group is in adherence
with the “Corporation Act 2001” (Abbott et al. 2016). The financial report of Nine
entertainment Co Ltd provided the true and fair view of the consolidated financial
performance during the year ended. Furthermore, the company complies with the Australian
Accounting Standard and the “Corporations Regulations Act 2001”.

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Key audit matters of the company refers to the professional judgement that were most
significant in its audit of the financial report in the present year. The auditor of the Nine
Entertainment Co Ltd was independent and in accordance with the auditor requirement set
down under the “Corporation Act 2001” (Lenz and Hahn 2015). The total amount of the
auditor’s remuneration paid to the auditors stands $1,355,031 (Nineentertainmentco.com.au
2018). The audit functions carried out by the Earnest and Young includes the performance
process that is designed to respond to its assessment of risks of materials misstatement stated
in the financial report.
Business Ethics and Ethical Judgements:
Being the holder of the commercial television licence Nine is bounded by the
Commercial Television Code of Practice that prohibits certain forms of programs and
advertisements. This requires classifying the program and broadcasting appropriate slots of
time by putting limits on the extent of advertisement and other non-programming materials
that can be broadcasted (Pizzini, Lin and Ziegenfuss 2014). The company has created certain
number policies that supports reward and governance along with the code of conduct. The
company has implemented the policies to promote the ethical behaviour and responsible
decision making. The company adheres with the ethical requirement of the Accounting
Profession and Ethical Standards of APES 110 code of ethics for the Professional
Accountants (Mat Zain, Zaman and Mohamed 2015). The code of ethics of the company is
relevant to its financial report and fulfils other ethical responsibilities in compliance with the
code.
Investors and Significant Ownership of Stakes:
The list of top five investors for the Nine Entertainment Ltd are stated below;
Names of Shareholders Total Units Percentage of Total Shares

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HSBC Custody Nominees
(Australia) Ltd
285,508,984 32.79%
JP Morgan Nominees
Australia Ltd
125,942,531 14.46%
Citicorp Nominees Pty Ltd 122,943,851 14.12%
Birketu Pty Ltd 99,677,718 11.45%
National Nominees Ltd 57,743,485 6.63%
As evident from the above stated tabular representation it can be stated that HSBC
Custody Nominees Australia Ltd holds significant amount of shares. The total share holdings
for HSBC Custody Nominees Australia Ltd stands 32.79%. While JP Morgan Nominees
Australia Ltd total shareholding stands 125,942,531 with total percentage of shareholdings
stands 14.46% (Nineentertainmentco.com.au 2018). Citicorp Morgan Nominees Australia Ltd
stands 122,943,851 units and total percentage of shareholdings stands at 14.12%. Birketu Pty
Ltd stands fourth in the line of the major shareholdings as the total shareholdings stands
99,677,718 with total proportion of shareholdings stands 11.45%. Finally, the National
Nominees Limited stands fifth in the line total shareholder as it holds 57,743,485 of the total
shareholdings with 6.63% of the Nine Entertainment total shareholdings.
Analysis of Financial Statement:
Liquidity:
Under the liquidity ratio current ratio is computed for Nine Entertainment Ltd. During
the year ended 2016 and 2017 the current ratio for Nine Entertainment Ltd stands 1.36 and
1.90 respectively. While the quick ratio for the company during the year 2016 stood 0.81
which subsequently increased to 1.03. The primary reason for increase in liquidity ratio for

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2017 is because NEC reported an increase in free cash flow with cash and cash equivalent
increased to $66,700.
Asset Management Efficiency:
The asset management ratio makes an attempt to assess the success of the firm in
administering its assets to derive sales. For NEC the asset management ratio for 2016 stands
0.55 while in 2017 it increased to 0.61. The rise in ratio signifies that the NEC has improved
the efficiency of its small business in managing its assets to generate its sales. Additionally,
the total asset turnover ratio stands 0.60 for 2016 while in 2017 stands 0.65. The total asset
turnover ratio has improved in the subsequent year primarily because of the increase in the
total assets.
Capital Structure:
The capital structure ratio refers to the mixture of the organizations long standing debt
as well as the short term debt, common equity and preferred equity. As evident the debt ratio
for NEC is computed to measure the extent of company’s liquidity. The debt ratio for the
company during 2016 stood 0.43 while in the subsequent year of 2017 the debt ratio for the
firm increased to 0.49. The rise in debt ratio is primary because of rise in debt to 224.5
million as while in 2016 it stood 177.6 million. The debt equity ratio on the other hand is
computed for NEC to measure the proportion of debt it uses to finance its assets comparative
to the sum of shareholder’s equity. The debt to equity ratio for NEC during the year 2016
stands 0.74 while in 2017 it stands 0.95. This signifies that a larger proportion of
shareholder’s fund is used to finance the assets of NEC.
Profitability Ratios:
Profitability ratios represents the class of financial metrics that is used to determine
the business ability of generating earnings in comparison to its expenditure. The net profit

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ratio for 2016 stands 0.25 while in 2017 the ratio stands negatively at -0.16. The primary
reason for decline in net profit ratio is because of fall in sales revenue by 4%.
Simultaneously, the return on assets for NEC stands 0.14 in 2016 while in 2017 the return on
assets for the company stands negatively at -0.10. The lower return on assets is due to the
decline in the profit margin as well as the fall in the average total assets.
Market Value Ratios:
The price earnings ratios are employed to assess the present share price of publicly-
held organizations stock. The price earnings share of NEC stands 0.08 in 2016 while in 2017
it stands 0.10. The increase in price earnings ratio is primarily because rise in the earnings per
share by 4%. Similarly, the dividend pay-out ratio for NEC during 2016 stood 0.88 while in
the subsequent year it declined to 0.67 primarily because of 20.8% variance in NPAT.
Cash Management Ratio:
The cash management ratio during the year ended 2016 stood 283.10 while in the
subsequent year of 2017 it stood -18.65 similarly operating cash flow ratio computed stood
0.012 for 2016 while in 2017 it stood 0.009. This represents that operating cash flow is
sufficient for NEC to pay-off its current debts.
Conclusion:
On a conclusive note it can be stated that the NEC in accordance with the ASX code
of principles has adhered with the principles. Additionally, the report provides that
management and operations of NEC creates a direct influence on the composition of major
shareholders. Furthermore, the audit functions are attained through the independent auditors
in order to evaluate and express the opinions of the fair presentation of the financial report.

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