Nzme Limited · NZX:NZM
Nzme — H1 2017 Earnings Presentation
35 slides from Nzme's earnings presentation, Aug 24, 2017
Slide 1: Half Year 2017 Results Presentation
HALF YEAR 2017 RESULTS PRESENTATION 24 AUGUST 2017
Slide 2: Disclaimer
Disclaimer T he 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, a
Slide 3: Agenda
Agenda • Results Summary & Achievement of Operational Priorities – 6 • Channel Results Print, Radio & Experiential, Digital & e-Commerce – 12 • Financials – 19 • FY17 Focus and Current Trading – 24 • Q&A – 28 • Supplementary Information – 30 3
Slide 4: NZME's Transformation, Integration & Demerger
PRODUCT BRANDS NZME’s Transformation, Integration & Demerger CAPABILITIES E-COMMERCE EXPERIENTIAL ENT + CHA CONT NN ORE EL S C CREATIVE BRANDED Merger of three leading CONTENT NEWS New Zealand traditional and digital media businesses. PRINT RADIO Listed on NZX Main Board and ASX on 27 June 2016. VID
Slide 5: Team NZ win America's Cup; NZME's multi-platform content distribution
Team NZ win America’s Cup; NZME’s multi-platform content distribution 7:07 AM 5:37 AM THE AFTERGUARD The Afterguard: Mark Orams “Team New Zealand are bringing 6:11 AM on Team NZ’s victory home the America’s Cup” June 27, 2017 5:35 AM BREAKING “How Team New Zealand PJ Montgomery’s won the America’s C
Slide 6: H1 Results Summary
NZME H1 17 Results Summary STATUTORY NPAT1 TRADING EBITDA2 TRADING NPAT2 $7.8m $28.2m $9.9m ▲ 1% H1 16 PRO FORMA2 $27.9m ▲ 1% H1 16 PRO FORMA2 $9.8m TRADING REVENUE2 TRADING EARNINGS PER SHARE2 INTERIM DIVIDEND FULLY IMPUTED3 $189.1m 5.0cps 3.5cps ▼ 3% H1 16 PRO FORMA2 $195.3m ▲ 1% H1 16 PRO FORMA2
Slide 7: Lions Series 2017 coverage
NZME’s coverage of the Lions Series reached over 1.5 million unique browsers, with over 1.5 million readers viewing NZ Herald’s Social content on the day of the deciding test alone 1. Photographer – Mark Mitchell (The New Zealand Herald) Lions Series 2017 7 (1) Adobe Digital Analytix, domestic brows
Slide 8: H1 Achievements against Operational Priorities
NZME H1 17 Achievements against Operational Priorities 1. Audience growth 4% YoY to 3.3 million1 2. Print revenue decline slowed further 3. Radio revenue audience share growth achieved, agency growth continues 4. Digital revenue 20% YoY growth 5. Cost savings 4% YoY2 6. Talent developed leadership e
Slide 9: Cyclone Cook audience week
The week that Cyclone Cook hit NZ was the second largest audience week to date for nzherald.co.nz, reaching over 4.2 million unique browsers. NZ Herald social content reached more than 2 million people on Facebook1. Photographer – Paul Taylor (Hawkes Bay Today) Cyclone Cook, April 14, 2017 (1) Niels
Slide 10: H1 Market Comparables
NZME H1 17 Market Comparables (1) Pro forma Revenue is a non-GAAP measure that is explained and reconciled in the supplementary information on page 33. (2) PwC NPA Quarterly Performance Comparison Report Q2 2017. (3) SMI New Zealand Agency Advertising Expenditure Report June 2017. (4) IAB / PWC New
Slide 11: NZME's reach is growing
NZME’s reach is growing 82%1 of New Zealanders now read, watch, listen to, or otherwise engage with our brands NZME reaches: 85% 87% 74% of the of of the North Island1 Auckland1 South Island1 ▲ 1% YoY ▲ 1% YoY ▲ 11% YoY Our national and local presence allows us to offer advertisers broad access to t
Slide 12: Print
NZME Print • Print revenue rate of decline slowed due to ongoing focus on NZME Print Revenue ($m) H1 17 H1 16 % Change customer retention and benefits of integrated selling, assisted Advertising Revenue 60.2 63.2 (5%) by revenue relating to the America’s Cup and Lions Series. Circulation Revenue Mai
Slide 13: Maintaining print readership of our award winning brands
Maintaining print readership of our award winning brands The NZ Herald Mon – Sat Average Issue Readership1 • Exceeding market revenue growth trends has led to a year on 500 year increase in print advertising revenue market share to 41%2. Readership (000s) 450 • Subscriber revenue growth achieved thr
Slide 14: Radio & Experiential
NZME Radio & Experiential • Growth in radio agency revenue continues due to improvements in sales and support for agencies. NZME Radio & Experiential H1 17 H1 16 % Change Revenue ($m) • Momentum change in radio survey results, reversing previous Radio & Experiential Revenue1 50.4 53.6 (6%) losses, g
Slide 15: Focus on key initiatives continues in H2
Focus on key initiatives continues in H2 Proportion of Direct Sales Team Equipped Initiatives in place to drive revenue growth: to Sell Radio 2017 100% • Sales team transformation to be completed in September 2017, equipping and incentivising all direct frontline staff to sell radio; 80% • New natio
Slide 16: Digital & e-Commerce
NZME Digital & e-Commerce • Dollar growth in digital revenue exceeded decline in print advertising revenue for the second consecutive half year, suggesting digital strategy is contributing to group stability1. NZME Digital & H1 17 H1 16 % Change • Digital revenue growth across all products with mobi
Slide 17: NZME's digital audience has grown by 14% YoY
NZME’S digital audience has grown by 14% YoY1 and native video streams by 101% YoY2 NZME Digital Un-duplicated Monthly Reach1 • The nzherald.co.nz audience has increased 17% YoY, supported by nationwide growth, with the site now reaching more than 3,000 2 million New Zealanders each month1. 2,633 2,
Slide 18: Kaikoura earthquake audience week
During the week of the Kaikoura earthquake, nzherald.co.nz reached over 4.4 million unique browsers, our largest week to date. On the day of the quake, NZ Herald social content reached more than 11 million people on Facebook1. Photographer – Mark Mitchell (NZ Herald) November 14, 7.7 earthquake, nor
Slide 19: H1 17 Financials
H1 17 Financials 19
Slide 20: Trading Result
NZME Trading Result H1 16 • Trading EBITDA up 1% comparted to H1 2016 Pro forma. The Pro NZME Trading Result1 H1 17 % Change Pro forma1 forma adjusts H1 2016 for Pro forma standalone costs previously Trading Revenue1 189.1 195.3 (3%) disclosed and businesses divested. Other Income 1.9 2.0 (2%) Costs
Slide 21: Costs
NZME Costs • People costs down 3% due to ongoing benefits of integration across the business. H1 16 NZME Costs H1 171 % Change Pro forma2 • Print and distribution costs down 6% due to volume declines People & Contributors 82.1 84.3 (3%) and initial savings from print plant technology improvements. P
Slide 22: Balance Sheet
NZME Balance Sheet • Payment of historical tax liabilities was made on 26 August NZME Balance Sheet ($m) Jun 17 Dec 16 Jun 16 2016, reflected in the reduction of current tax liabilities and other liabilities since last year. Cash and cash equivalents 8.4 16.2 13.8 Trade and other receivables 58.4 55
Slide 23: NZ Herald Chief Photographer Brett Phibbs
NZ Herald Chief Photographer Brett Phibbs, Eden Park, 2017 23
Slide 24: FY17 Focus
FY17 Focus 24
Slide 25: Current Trading
NZME Current Trading • Headwinds evident in recent years in traditional advertising markets have continued in 2017, with no respite immediately evident. • First half revenue was a little better than we expected due to major sporting events in the period: the America’s Cup yachting and the British an
Slide 26: Proposed NZME / Fairfax Merger Update
Proposed NZME / Fairfax Merger Update PROCESS UPDATE RATIONALE FOR APPEAL • The New Zealand Commerce Commission • NZME and Fairfax believe the Commission was wrong in fact declined to approve the merger on and wrong in law to decline clearance or authorisation for the 3 May 2017. merger. There are t
Slide 27: FY17 Priorities
NZME FY17 Priorities 1. Grow audience reach by leveraging Washington Post platform and tools to enhance audience analytics, content performance and advertising targetting 2. Continue to retain Print revenue by further innovating the print proposition and leveraging integrated sales 3. Return Radio r
Slide 28: Q&A
Q&A 28
Slide 29: ZM's Floating Music Festival, Taupo 2017
ZM’s Floating Music Festival, Taupo 2017 29
Slide 30: Supplementary Information
Supplementary Information 30
Slide 31: H1 17 Reconciliation of Trading Result to Consolidated Interim Financial Statements
NZME H1 17 Reconciliation of Trading Result to Consolidated Interim Financial Statements H1 17 Trading Exceptional H1 17 Statutory $m Result1 Items2 Result Trading Revenue1 189.1 - 189.1 Other Income 1.9 - 1.9 Costs (162.8) (2.6) (165.5) EBITDA 28.2 (2.6) 25.6 Depreciation and amortisation (12.1) -
Slide 32: H1 16 Reconciliation of Pro forma Result to Consolidated Interim Financial Statements
NZME H1 16 Reconcilliation of Pro forma Result to Consolidated Interim Financial Statements Other than the Trading NPAT calculated on page 31, the results used in this presentation for H1 17 are the same as those disclosed in note 2.3.2 - Segment revenues and results of the Consolidated Interim Fina
Slide 33: Reconciliation of Previously Reported Trading Result to Restated Pro forma Result
NZME H1 16 Reconciliation of Previously Reported Trading Result to Restated Pro forma Result H1 16 Previously Pro forma H1 16 Previously Timing H1 16 Restated Reclassified $m Reported Standalone Reported Pro Divestments2 Adjustment for Pro forma Items4 Trading Result1 Costs1 forma Result1 Standalone
Slide 34: Reconciliation of Previously Reported Trading to Pro Forma Restated Costs
NZME H1 16 Reconciliation of Previously Reported Trading to Pro Forma Restated Costs H1 16 Previously Acquired & H1 16 Restated Standalone $m Reported Divestments2 Reclassified Pro forma Costs3 Trading Costs1 Items4 Costs1 People & Contributors 82.1 (0.8) 2.0 1.0 84.3 Print & Distribution 37.7 (1.2)
Slide 35: Exceptional Items
NZME Exceptional Items • Redundancy costs relate to ongoing integration programs. NZME Related Exceptionals ($m) H1 17 H1 16 Redundancies 1.4 3.1 • One-off project costs relate to the proposed merger with Fairfax NZ, for which an appeal process against the NZ Commerce Costs in relation to one-off pr