Nzme Limited · NZX:NZM
Nzme — H1 2016 Earnings Presentation
29 slides from Nzme's earnings presentation, Aug 26, 2016
Slide 1: NZME H1 16 Results Presentation
For personal use only NZME H1 16 RESULTS PRESENTATION For the six months ended 30 June 2016 26 AUGUST 2016 1
Slide 2: Disclaimer
DISCLAIMER For personal use only The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in this presentation constitutes legal, financial, tax or other advice. This presentation constitutes summar
Slide 3: Agenda
AGENDA For personal use only H1 16 Results Summary and Highlights 4 Strategic Imperatives 5 Segment Highlights 6 Financial Summary 9 Fairfax Merger Update 16 H2 16 Priorities 19 Appendix 1: Audience Reach 21 Appendix 2: APN Demerger Illustration 27 3
Slide 4: H1 Results Summary
NZME H1 16 RESULTS SUMMARY TRADING1 PRO FORMA2 STATUTORY3 For personal use only $197.8m $32.5m Interim Revenue EBITDA3 NPAT $10.4m NPAT $60.8m 3.5cps 7.9% 0.5% Dividend REVENUE BY SEGMENT H1 HIGHLIGHTS • NZME delivered stable Trading EBITDA in H1 16 YoY despite a slower Q1 revenue performance. • Sig
Slide 5: We are continuing to deliver on our strategic imperatives
WE ARE CONTINUING TO DELIVER ON OUR STRATEGIC IMPERATIVES For personal use only GROWING AUDIENCE Overall NZME audience reach increased 5.5% from Q4 15 to Q1 16 to 3.2m1 ENGAGEMENT NZME’s print readership and subscriber base grew in H1 162 NZME Radio’s share of the 18-54 audience increased 0.6% durin
Slide 6: Print
NZME PRINT REVENUE STATEMENT H1 HIGHLIGHTS For personal use only • Print advertising revenue reduced by 13.6% • Launched “The Country” brand, merging Radio, Digital and YoY, however YoY trend has improved in Q2. Print assets to become the hub for all NZME rural content. • Newspaper circulation reven
Slide 7: Radio & Experiential
NZME RADIO & EXPERIENTIAL For personal use only REVENUE STATEMENT H1 HIGHLIGHTS • Following changes to the agency sales model • Farming Show rebranded to The Country and now over the past 12 months, agency radio revenue broadcasts on 59 Newstalk ZB, Radio Sport and returned to growth during H1 16. H
Slide 8: Digital & E-Commerce
NZME DIGITAL & E-COMMERCE REVENUE STATEMENT H1 HIGHLIGHTS For personal use only • Digital revenue increased 19.5% YoY in H1 16, • Launched digital video news show NZ Herald Focus, to meet the with growth accelerating in Q2. growing consumer demand for mobile video content. • Digital revenue growth d
Slide 9: Financial Summary
For personal use only SUMMARY FINANCIAL 9
Slide 10: Trading Result
NZME TRADING RESULT1 H1 15 - H1 16 For personal use only $M H1 16 H1 15 % CHANGE H2 15 Revenue 197.8 214.9 (7.9%) 218.1 Costs (165.3) (182.5) (9.4%) (175.6) EBITDA2 32.5 32.4 0.5% 42.5 Interim dividend (cps) 3.5 • EBITDA stable despite revenue headwinds. • Revenue impacted by a tough advertising mar
Slide 11: Costs
NZME COSTS1 • A continued focus on cost management contributed to a 9.4% reduction in costs in H1 16. For personal use only • Transformation and integration of the Publishing, Radio and GrabOne businesses contributed to a 7.7% reduction in people costs. • Property costs increased by 4.9%, reflecting
Slide 12: H1 Trading Reconciliation to Statutory Accounts
NZME H1 16 TRADING RECONCILIATION TO STATUTORY ACCOUNTS ACQUIRED & NON- STATUTORY For personal use only NZME TRADING $M RESULT1 TRADING ITEMS ACCOUNTS2 Revenue 197.8 (1.2) 196.6 Costs (165.3) (0.3) (165.6) EBITDA3 32.5 (1.5) 31.0 Depreciation and amortisation (12.1) (0.1) (12.2) EBIT 20.4 (1.6) 18.8
Slide 13: H1 Pro Forma Result
NZME H1 16 PRO FORMA RESULT For personal use only H1 16 PRO FORMA $M RESULT2 Trading1 EBITDA 32.5 Pro forma standalone costs2 (3.7) EBITDA3 28.8 Depreciation and amortisation (12.1) EBIT 16.7 Net interest expense4 (2.0) NPBT 14.6 Tax5 (4.2) NPAT 10.4 Earnings per share (c) 5.3 Dividend per share (c)
Slide 14: Exceptional Items
NZME EXCEPTIONAL ITEMS • $3.1m of redundancy costs related to ongoing restructuring and integration. For personal use only • In addition, $1.3m of costs were incurred in relation to the proposed Fairfax NZ merger and other ongoing integration programmes. • A profit on business divestments of $1.4m r
Slide 15: Balance Sheet
NZME BALANCE SHEET PRO FORMA NZME For personal use only $M NZME JUN 2016 PER EM1 DEC 2015 Cash and cash equivalents 13.8 7.7 Trade and other receivables 58.0 64.1 Trade and other payables (55.4) (71.2) Current tax liabilities (17.0) - Net working capital (0.6) 0.6 Fixed, intangible and other assets
Slide 16: Fairfax Merger Update
For personal use only FAIRFAX MERGER UPDATE 16
Slide 17: Proposed NZME / Fairfax Merger
PROPOSED NZME / FAIRFAX MERGER • NZME is in discussion with Fairfax about REGULATORY CONSIDERATIONS For personal use only merging with its New Zealand business. • NZME Management considers the businesses to • The transaction will also be subject to regulatory consents, including that of be complimen
Slide 18: H2 Priorities
For personal use only H2 PRIORITIES 18
Slide 19: H2 Priorities
H2 16 PRIORITIES For personal use only 1 Growing our audience reach 2 Continuing focus on retaining print revenues 3 Returning radio to growth 4 Growing digital and new revenue streams 5 Continuing focus on cost out and capital management 6 Developing our people and retaining our talent 7 Continuing
Slide 20: Q&A
For personal use only Q&A 20
Slide 21: Appendix 1: Audience Reach
For personal use only APPENDIX 1: AUDIENCE REACH 21
Slide 22: Content / Audiences / Data / Marketplaces
CONTENT / AUDIENCES / DATA / MARKETPLACES Our News, Sport and Entertainment assets generated $198m revenue. For personal use only NEWS SPORT ENTERTAINMENT 22
Slide 23: Our audience reach continues to grow
OUR AUDIENCE REACH CONTINUES TO GROW For personal use only 5% YoY growth delivered in H1 Note: Drop in entertainment reach in last twelve months to Q4-15 was largely driven by closure of the Living publication with its replacements Travel/Spy not included in sample until Q1 16. Source: Nielsen CMI,
Slide 24: Print readership has stabilised over the past three quarters
NZME PRINT READERSHIP HAS STABILISED OVER THE PAST THREE QUARTERS • Subscriber net acquisition has been strong in H1 16; NZ Herald and Herald on Sunday subscriber base grew by over 1,100 subscribers in H1 16 For personal use only • Subscriber yield in H1 16 was up 5.2% on H1 15, more than offsetting
Slide 25: Radio audience reach has grown and increased share
NZME RADIO AUDIENCE REACH HAS GROWN AND INCREASED SHARE IN KEY HOUSEHOLD SHOPPER DEMOS For personal use only • NZME’s unduplicated weekly radio reach has stabilised in H1 161 • Newstalk ZB continues to dominate NZ Radio with the largest share of any commercial station1 • NZME’s key 18-54 demographic
Slide 26: Digital audience reach has grown by 28%, and video streams by 37%
NZME’S DIGITAL AUDIENCE REACH HAS GROWN BY 28%1, AND VIDEO STREAMS BY 37%2 IN THE LAST YEAR For personal use only NZHERALD.CO.NZ NZME NATIVE VIDEO STREAMS UNDUPLICATED WEEKLY REACH • nzherald.co.nz has a unique monthly audience • NZME’s native video streams have grown by 36.7% in reach of 1.7m, with
Slide 27: Appendix 2: APN Demerger Illustration
For personal use only APPENDIX 2: APN DEMERGER ILLUSTRATION 27
Slide 28: APN Demerger Illustration
APN DEMERGER ILLUSTRATION On 29 June 2016 NZME demerged from APN and created a stand-alone NZ group comprising Print, Radio and Experiential, and Digital businesses. For personal use only Business segments were re-organised for reporting purposes at this point providing for visibility of the digital
Slide 29: Thank You
For personal use only THANK YOU 29