NZME Limited · NZX:NZM
NZME — H1 2020 Earnings Presentation
36 slides from NZME's earnings presentation, Aug 25, 2020
Slide 1: Keeping Kiwis in the Know: 2020 Half Year Results
For personal use only KEEPING KIWIS IN THE KNOW. 2020 Half Year Results Six months to 30 June 2020 25 August 2020
Slide 2: Agenda
AGENDA For personal use only Results Summary 3 Covid-19 Impact 4 Market Dynamics 7 Channel Performance 10 2020 Half Year Financial Results 16 Strategic Priorities 23 Outlook 27 Q&A 28 Supplementary Information 29 2
Slide 3: Results Summary
RESULTS $157.8m $28.9m SUMMARY. Operating Revenue Operating EBITDA1 For personal use only 1 H1 2019 $181.1m 13% H1 2019 $27.6m 5% For the half year ending 30 June 2020 • NZME reports strong performance, quickly navigating the impacts of Covid-19. $6.8m $3.0m • Positive momentum in our key strategic
Slide 4: Covid-19 Impact
COVID-19 IMPACT. For personal use only The majority of NZME’s operations are deemed an Essential Service. However, key revenue streams were significantly impacted in the first half: KEY TIMELINE* 1. Advertising Revenue: 28 February: NZ’s first Covid-19 case NZME Total Advertising Revenue Growth YoY
Slide 5: Actions to Mitigate the Impacts of Covid-19
ACTIONS TO MITIGATE THE IMPACTS OF COVID-19. For personal use only 1. Prioritised implementation of appropriate measures to protect the health and safety of our people, including access to support services and regular communications. 2. Took swift action to mitigate impacts on profitability and cash
Slide 6: Covid-19 Government Response
COVID-19 GOVERNMENT RESPONSE. For personal use only NZME applied for available government assistance: • Received the 12 week government wage subsidy ($8.6 million net). • Received transmission cost relief for 6 months from May to October 2020 ($1.7 million) - not included in Operating earnings. • Wi
Slide 7: Market Dynamics
For personal use only MARKET 7 DYNAMICS.
Slide 8: Advertising Market Trends and Business Confidence
AGENCY YoY NEW ZEALAND ADVERTISING BUSINESS For personal use only MARKET TRENDS. 25% CONFIDENCE. 0% Year-on-year monthly agency revenue growth % Net Index (% expecting improvement minus % 15.0 -10% 15% 7.3 (13.2) 3.5 4.8 -20% expecting deterioration) 5% 2.2 2.0 2.4 1.1 (19.4) 0% -30% (26.4) -5% (2.4
Slide 9: NZME Performance Compared to the Market
NZME PERFORMANCE COMPARED TO THE MARKET. For personal use only NZME has outperformed the market in all four key pillars. H1 2020 Total Segment Revenue $147.3m PRINT OTHER Print advertising (YoY growth) $3.6m Radio advertising (YoY growth) 2% NZME print advertising revenue (30.9%) NZME radio advertis
Slide 10: Channel Performance
CHANNEL PERFORMANCE. For personal use only 10
Slide 11: Radio
RADIO. $ million H1 2020 H1 2019 % Change Radio revenue 43.7 53.5 (18%) Direct radio expenses (14.6) (17.7) (17%) For the half year For personal use only ended 30 June 2020 Radio contribution 29.1 35.8 (19%) • Radio revenue commenced the year in growth prior to the impact of Covid-19. • Radio revenu
Slide 12: Radio Listeners & Market Share
RADIO LISTENERS & MARKET SHARE. For personal use only NZME Radio weekly listeners NZME Talk Radio – NZME Music Radio – – Total including partners1 Major Markets All 10+ Share2 Major Markets 25-54 Share3 2,100 15 30 14 2,000 13 25 12 Weekly Listeners (000’s) 1,900 Market Share (%) Market Share (%) 11
Slide 13: Print
PRINT. $ million H1 2020 H1 2019 % Change Print advertising revenue 35.3 51.1 (31%) For personal use only For the half year Circulation revenue 36.5 38.5 (5%) ended 30 June 2020 Other print revenue 3.6 7.0 (49%) Print revenue 75.3 96.6 (22%) Direct print expenses (25.8) (33.5) (23%) Print contributi
Slide 14: Print Audience & Readership
PRINT AUDIENCE & READERSHIP. For personal use only NZ Herald (Mon-Sat) and Herald on NZ Herald Daily and Weekly Print Subscriber Volume Sunday Average Issue Readership1 Brand Audience2 and Yield3 NZ Herald Herald on Sunday Weekly Brand Audience Daily Brand Audience Subscriber Volume Yield 500 1900 1
Slide 15: Digital
DIGITAL. $ million H1 2020 H1 2019 % Change Advertising revenue 20.2 22.0 (8%) For personal use only For the half year Subscription revenue 2.4 0.2 - ended 30 June 2020 Classified revenue 1.7 1.4 16% GrabOne revenue 4.0 4.6 (12%) Digital revenue 28.3 28.2 0% Direct digital expenses1 (9.3) (9.0) 3% D
Slide 16: 2020 Half Year Financial Results
For personal use only 2020 HALF YEAR FINANCIAL RESULTS. 16
Slide 17: Operating Results
OPERATING $ million H1 2020 H1 2019 % Change RESULTS. Segment Revenue 147.3 178.3 (17%) For personal use only Other revenue 10.5 2.8 277% Operating Revenue1 157.8 181.1 (13%) For the half year ended 30 June 2020 Operating expenses1 (128.9) (153.5) (16%) • Operating EBITDA and Operating NPAT grew in
Slide 18: Expenses
EXPENSES. For the half year ended 30 June 2020 $ million People and contributors Print and distribution H1 2020 69.2 22.5 H1 2019 77.4 29.6 % Change (11%) (24%) For personal use only • People and contributors expense Agency commission and marketing 16.4 21.1 (22%) reduced 11% reflecting cost saving
Slide 19: Ongoing Cost Base Reductions
ONGOING COST BASE While some of the impacts and actions taken in response to Covid-19 were For personal use only temporary, Management expect to achieve a permanent reduction in cost REDUCTIONS. base as a result of: • Permanent product changes; and • Improved efficiency following the restructure. Co
Slide 20: Balance Sheet
BALANCE $ million 31 June 2020 31 December 2019 SHEET. Trade, other receivables and inventory 40.8 54.4 Trade and other payables (48.5) (51.5) For personal use only Current tax (payable)/receivable (0.5) (0.3) As at 30 June 2020 Net working capital excluding cash (8.1) 2.7 • Net working capital decr
Slide 21: Cash Flows
CASH $ million Operating EBITDA H1 2020 28.9 H1 2019 27.6 FLOWS. 1 For personal use only NZ IFRS 16 Interest paid on leases (2.3) (2.5) Interest paid on bank facilities (1.5) (2.0) For the half year ended 30 June 2020 Working capital movement 11.0 0.4 • Operating cash flows increased Exceptional ite
Slide 22: Capital Management
CAPITAL Net Debt ($ million) 30 June 2020 55.2 31 December 2019 74.7 MANAGEMENT. Net interest cover 14.8 11.5 For personal use only (Operating EBITDA1 / Interest Expense) • Capital management plan is to reduce Leverage Ratio 1.0 1.5 debt while maintaining investment (Net debt to 12-month Operating E
Slide 23: Strategic Priorities
STRATEGIC PRIORITIES. Focused on Growth: For personal use only NZME Total Monthly Leading the future of Creating New Zealand’s 1 2 3 Growing radio and Digital Users1 news and journalism leading digital audio leading real estate in New Zealand platform NZ Herald Premium Digital iHeartRadio Average Mo
Slide 24: Leading the Future of News & Journalism in New Zealand
1 LEADING THE FUTURE OF NEWS & JOURNALISM IN NEW ZEALAND. For personal use only Your Premium nzherald.co.nz/premium 2020 Focus Key Success Metrics 2020 Results to date Growth in digital • 82,000 NZ Herald Premium subscribers; 43,000 paid, up from 21,000 at February 2020, and 39,000 print subscriptio
Slide 25: Growing Radio and Leading Digital Audio
2 GROWING RADIO AND LEADING DIGITAL AUDIO. For personal use only 2020 Focus Key Success Metrics 2020 Results to Date • Radio revenue in growth year-on-year prior to the impact Enhance radio Growth in radio of Covid-19 sales capability revenue • Radio revenue market share grew year-on-year to 39.7% f
Slide 26: Creating New Zealand's Leading Real Estate Platform
3 CREATING NEW ZEALAND’S LEADING REAL ESTATE PLATFORM. For personal use only 2020 Focus Key Success Metrics 2020 Results to Date • Now having more residential for-sale listings in Auckland than Develop any other site and 83% of NZ’s residential for-sale listings1 Improve listings, OneRoof as • Month
Slide 27: Outlook
OUTLOOK. For personal use only • We have seen a stronger than anticipated recovery from Covid-19. • We remain cautious regarding the future economic environment. • Advertising revenue expected to be down 16% year-on-year in Q3 2020. • Cost containment remains a focus. • Based on our current expectat
Slide 28: For personal use only
a ‘hy i a... 28 ENTERTAINMENT g 5 MEDIA AND
Slide 29: Supplementary Information
SUPPLEMENTARY INFORMATION. For personal use only 29
Slide 30: Our Sustainability Commitment
OUR SUSTAINABILITY COMMITMENT For personal use only OUR COMMUNITIES OUR PEOPLE OUR ENVIRONMENT RESPONSIBLE HEALTH AND SAFETY RECYCLING JUNE 2020 UPDATE REPORTING AND NZME promoted a healthy Identified and initiated No one could have anticipated the BROADCASTING and safe workforce through all recycli
Slide 31: Reconciliation of Operating Results to Financial Statements (2020)
RECONCILIATION OF OPERATING RESULTS TO FINANCIAL STATEMENTS. For personal use only For the 6 months ended 30 June 2020 6 MONTHS ENDED 30 JUNE 2020 Operating Operating NZ IFRS 16 Exceptional Per Financial $ million Results excl. Results incl. Adjustments Items Statements IFRS 16 IFRS 16 Segment reven
Slide 32: Reconciliation of Operating Results to Financial Statements (2019)
RECONCILIATION OF OPERATING RESULTS TO FINANCIAL STATEMENTS. For personal use only For the 6 months ended 30 June 2019 6 MONTHS ENDED 30 JUNE 2019 Operating Results NZ IFRS 16 Operating Results Exceptional Per Financial $ million excl. IFRS 16 Adjustments incl. IFRS 16 Items Statements Segment reven
Slide 33: Operating Results: Revenue Analysis
OPERATING RESULTS. REVENUE ANALYSIS For personal use only 200.0 Operating Revenue - H1 2019 to H1 2020 Movement 190.0 181.1 180.0 170.0 160.0 (15.8) 8.6 157.8 0.3 2.2 (1.1) $ million 150.0 (9.7) (1.8) (0.6) (2.0) (3.4) 140.0 130.0 120.0 110.0 100.0 H1 2019 Print Radio Digital Digital Circulation Dig
Slide 34: Disclaimer
DISCLAIMER. The information in this presentation is of a general nature and does not constitute financial product advice, investment advice, legal, financial, tax or any other recommendation or advice. This presentation constitutes summary information only, and you should not rely on it in isolation
Slide 35: For personal use only
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Slide 36: For personal use only
For personal use only Education Gazette NEW ZEALAND TUKUTUKU KŌRERO &