Slide 1: Full Year 2017 Results Presentation
Full Year 2017 Results Presentation 22 February 2018
Slide 2: Disclaimer
DISCLAIMER 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 summary information only, an
Slide 3: Agenda
AGENDA 06 Results Summary & Achievement of Operational Priorities 10 Channel Results Print, Radio & Experiential, Digital & e-Commerce 20 Financials 24 FY18 Focus 28 Q&A 29 Supplementary Information Page 3
Slide 4: A leading New Zealand media and marketing capabilities company
CH INE A LEADING SE NZ HE RA LD CAPABILITIES .CO .NZ NEW ZEALAND MARKETPLACES EXPERIENTIAL MEDIA AND DATA & REC T ONTEN + CHAN NE ENTERTAINMENT INSIGHTS LS DIGITAL CO CLASSIFIEDS NEWS BUSINESS CREATIVE NATIVE PRINT RADIO CONTENT CONTENT CREATION ENT. SPORT EVENTS AUDIENCE TARGETING BRAND VIDEO & DIG
Slide 5: New Zealand 2017 General Election
NEW ZEALAND 2017 GENERAL ELECTION LIVE Election night live stream: BROADCAST LEADERS' DEBATES EXLPORE ELECTORATE RESULTS Over 470k views Pre-election campaign coverage: across Digital and · The PM Job Interview: Bill English and Jacinda Ardern grilled live by our panel of experts 5 HOURS · Expert an
Slide 6: FY17 Results Summary
NZME FY17 RESULTS SUMMARY Statutory NPAT1 Trading Trading EBITDA2 Revenue2 $20.9m $387.7m $66.2m 4% 2% FY16 Pro forma2 $404.7m FY16 Pro forma2 $67.2m Trading NPAT2 Trading Earnings Final Dividend Per Share2 Fully Imputed3 $26.7m 13.6cps 6.0cps 4% 4% Scheduled for payment on 3 May 2018 FY16 Pro forma
Slide 7: United in battle - We'll be there
We’ve been here before United in battle We’ve shared the battle We’ll be there We’ve heard that roar The NZ Herald, Newstalk ZB and Radio Sport The NZ Herald, Newstalk ZB and Radio Sport are joining forces are joining forces to bring you unbeatable to bring you unbeatable coverage of the upcoming Se
Slide 8: FY17 Achievement of Operational Priorities
NZME FY17 ACHIEVEMENT OF OPERATIONAL PRIORITIES 1. Continued audience growth of 2% YoY to more than 3.2m1 driven by growth in NZ Herald Digital audience and Radio listeners 2. Print advertising revenue trends improved compared to FY16 and subscriber revenue retained 3. Radio revenue returned to grow
Slide 9: NZ Herald site redesign
You said your life was busier – Over 60% of you read the news that you had less time to read on your phone. the news. So we redesigned the Herald site So we redesigned the Herald site with mobile in mind – with to give you an instant snapshot dynamic content, larger imagery, of what’s going on, righ
Slide 10: We continue to exceed market growth in all measurable segments
WE CONTINUE TO EXCEED MARKET GROWTH IN ALL MEASURABLE SEGMENTS Digital & E-Commerce 15% Print FY16 13% Display Revenue Radio & Experiential Advertising NZME +19% 57% Revenue YoY to Q3 17 28% FY16 Market +10%4 Radio Agency FY16 59% YoY to Q3 17 Revenue 28% NZME Pro forma -9% YoY in FY17 NZME +4% Mark
Slide 11: NZME's reach continues to grow and cross-pollinate
NZME’S REACH CONTINUES TO GROW AND CROSS-POLLINATE Up 2% YoY, 3.2 million1 New Zealanders read, watch, listen to or otherwise engage with our brands NZME reaches: 2.6million 1.2million 0.7million in the North Island1 in Auckland1 in South Island1 2% YoY 2% YoY 2% YoY Our growing national and local p
Slide 12: Print
NZME PRINT · Print advertising revenue decline slowed relative to 2016 NZME Print Revenue ($m) FY17 FY16 % Change despite a challenging Q3. Q3 reflected reduced spending Advertising Revenue 121.0 132.7 (9%) ahead of the NZ general election in September 2017 and a Circulation Revenue 83.3 86.1 (3%) s
Slide 13: Print readership and subscriber revenues retained
PRINT READERSHIP AND SUBSCRIBER REVENUES RETAINED The NZ Herald Mon-Sat NZME Subscriber NZ Herald Daily Average Issue Readership1 Volume and Yield2 Brand Audience3 500 16.0 1.80 1,200 14.0 1.70 1,100 450 12.0 1.60 Daily Brand Audience (000s) Subscriber Volume (m) 1,000 Readership (000s) 10.0 1.50 Yi
Slide 14: Radio & Experiential
NZME RADIO & EXPERIENTIAL · Positive growth in audience immediately reflected in agency NZME Radio & FY17 FY16 % Change revenue, however, direct market slower to respond. Experiential Revenue ($m) Radio & Experiential 103.7 108.7 (5%) · Operational initiatives included a nationwide sales team Revenu
Slide 15: Enhancements in coverage, talent and content to support audience and revenue growth
ENHANCEMENTS IN COVERAGE, TALENT AND CONTENT TO SUPPORT AUDIENCE AND REVENUE GROWTH 1. Expansion of Radio footprint · Modest investment in new frequencies, providing coverage in the Coromandel region and delivering an attractive payback as integrated with existing assets. · Incremental population of
Slide 16: Digital & e-Commerce
NZME DIGITAL & E-COMMERCE · Digital revenue growth across all products with mobile, video NZME Digital & FY17 FY16 % Change and programmatic being the largest drivers. Washington Post arc e-Commerce Revenue ($m) software implemented during the year, providing enhanced Digital Revenue 44.9 38.2 18% c
Slide 17: Digital Initiatives
DIGITAL INITIATIVES Page 17
Slide 18: Fuel your passion / We're all about what YUDU / OneRoof
All things property, WE'RE ALL under OneRoof ABOUT WHAT YUDU FUEL YOUR PASSION Page 18
Slide 19: Digital classifieds: market opportunity and competitive advantage
“Fuel your Passion” “We’re all about “All things property, what YUDU” under OneRoof” Market · TradeMe 20171: $64 million · TradeMe1 2017: $28 million · TradeMe 20171: $34 million opportunity · TradeMe listings3: 80,000 · Seek 20172: $36 million · realestate.co.nz: $ unknown · Seek listings3: 22,000
Slide 20: FY17 Financials
FY17 FINANCIALS Page 20
Slide 21: Trading Result
NZME TRADING RESULT · Trading EBITDA1 down 2% compared to previously reported NZME Trading FY17 FY16 Pro % Change FY16 Pro forma1. The Pro forma adjusts FY16 for standalone Result1 ($m) forma1 costs previously disclosed and businesses divested. Trading Revenue1 387.7 404.7 (4%) Other Income 3.7 4.0
Slide 22: Costs
NZME COSTS · People costs down 4% due to ongoing benefits of integration NZME Costs ($m) FY171 FY16 % Change across the business and a focus on reducing contributor and Pro forma2 contractor costs. People & contributors 162.2 168.2 (4%) Print & distribution 66.9 73.9 (9%) · Print and distribution co
Slide 23: Balance Sheet
NZME BALANCE SHEET · Net debt has reduced to $90.2m at 31 December NZME Balance Sheet ($m) Dec 17 Jun 17 Dec 16 2017, from $95.9m at 31 December 2016, with an Cash and cash equivalents 9.6 8.4 16.2 interest rate payable on gross debt of 3.5% p.a. Trade and other receivables 57.2 58.4 55.9 Trade and
Slide 24: FY18 Focus
FY18 FOCUS Page 24
Slide 25: Outlook
OUTLOOK · Traditional advertising markets continued to face headwinds in FY17 and we anticipate a similar climate in FY18. · Operational efficiency remains a focus, however the rate of cost reduction is slowing and, consistent with FY17, EBITDA will therefore likely continue to be pressured in the n
Slide 26: Proposed NZME/Stuff Limited Merger Update
PROPOSED NZME/STUFF LIMITED MERGER UPDATE Process update · The New Zealand Commerce Commission declined to approve the merger on 3 May 2017. · NZME and Fairfax’s appeal to the High Court was declined in a judgment issued on 19 December 2017. · On 7 February 2018, NZME and Fairfax applied for leave t
Slide 27: FY18 Strategic Plan
FY18 STRATEGIC PLAN Horizon 1: Optimising the Core Horizon 2: Beyond Advertising Horizon 3: Re-imagining Offsetting declines in Print Growing new revenue streams that Identifying opportunities to develop advertising with growth in Radio leverage our audiences to generate new business models that gro
Slide 28: Q&A
Q&A NZ’s No. 1 Breakfast Host, Mike Hosking, interviewing Nigella Lawson Page 28
Slide 29: Supplementary Information
SUPPLEMENTARY INFORMATION Page 29
Slide 30: FY17 Reconciliation of Trading Result to Consolidated Financial Statements
NZME FY17 RECONCILIATION OF TRADING RESULT TO CONSOLIDATED FINANCIAL STATEMENTS $m FY17 Trading Exceptional FY17 Financial Result1 Items2 Statements Trading Revenue1 387.7 - 387.7 Other Income 3.7 - 3.7 Total Revenue & Other Income 391.4 - 391.4 Costs (325.3) (7.5) (332.8) EBITDA 66.2 (7.5) 58.6 Dep
Slide 31: FY16 Reconciliation of Pro Forma Result to Consolidated Financial Statements
NZME FY16 RECONCILIATION OF PRO FORMA RESULT TO CONSOLIDATED FINANCIAL STATEMENTS Other than the Trading NPAT calculated on page 30, the results used in this presentation for FY17 are the same as those disclosed in note 2.4.2 - Segment revenues and results of the Consolidated Financial Statements fo
Slide 32: FY16 Reconciliation of Trading Result to Pro Forma Result
NZME FY16 RECONCILIATION OF TRADING RESULT TO PRO FORMA RESULT (AS PREVIOUSLY REPORTED, FEBRUARY 2017) $m FY16 Previously Divestments2 Standalone Acquired & FY16 Reported Costs3 Reclassified Pro forma Trading Result1 Items4 Result1 Trading Revenue1 407.4 (2.6) - - 404.7 Other Income 2.4 - - 1.6 4.0
Slide 33: FY16 Reconciliation of Previously Reported Trading to Pro Forma Costs
NZME FY16 RECONCILIATION OF PREVIOUSLY REPORTED TRADING TO PRO FORMA COSTS $m FY16 Previously Standalone Divested, Acquired FY16 Reported Costs2 and Reclassified Pro forma Trading Costs1 Items3 Costs1 People costs & contributors 163.0 4.0 1.1 168.2 Print & distribution costs 73.8 - 0.1 73.9 Agency c
Slide 34: Exceptional Items
NZME EXCEPTIONAL ITEMS · Redundancy costs relate to ongoing integration programmes. NZME Exceptional Items ($m) FY17 FY16 Redundancies 4.3 6.0 · FY17 one-off project costs primarily relate to the proposed Costs in relation to one-off projects 3.0 6.9 merger with Stuff Limited (formerly Fairfax NZ),