NZME Limited · NZX:NZM
NZME — H1 2019 Earnings Presentation
31 slides from NZME's earnings presentation, Aug 27, 2019
Slide 1: 2019 Half Year Results
For personal use only 2019 HALF YEAR RESULTS Six Months to 30 June 2019 27 August 2019
Slide 2: Disclaimer
DISCLAIMER For personal use only The information in this This presentation may contain projections or Prior period results have been adjusted to presentation is of a general forward-looking statements regarding a variety include revenue from contracts with customers of items. Such projections or for
Slide 3: Agenda
AGENDA For personal use only 04 2019 half year results summary and highlights 06 2019 Strategic priorities scorecard 07 Market update 10 Channel results 15 2019 half year financial results in detail 20 Strategic Priorities 24 Our Sustainability Commitment 25 Outlook 26 Q&A 27 Supplementary informati
Slide 4: NZME 2019 Half Year Results Summary
NZME 2019 HALF YEAR RESULTS SIX MONTHS TO 30 JUNE 2019 For personal use only RESULTS SUMMARY Total Revenue Statutory NPAT $181.1m $1.0m H1 18 $189.4m 4% H1 18 $3.7m 73% Operating EBITDA1 Operating NPAT1 $19.4m $4.7m Solid result given H1 18 $23.2m 16% H1 18 $5.5m 15% market headwinds Strong growth O
Slide 5: Highlights of the Half
TOTAL MONTHLY AUDIENCE1 HIGHLIGHTS OF THE HALF 3.3 million For personal use only • Successful launch of NZ Herald Premium – more than 15,000 paid subscribers, exceeding subscription and revenue expectations PRINT • NZ Herald daily brand audience up 4.5% to 1,098,000, average issue readership up 3.9%
Slide 6: 2019 Strategic Priorities Achievement Scorecard
2019 STRATEGIC PRIORITIES ACHIEVEMENT SCORECARD For personal use only Leading the future of news and Increasing radio capability Creating New Zealand’s leading journalism in New Zealand and performance real estate platform Key Success Metric Achievement to Date Key Success Metric Achievement to Date
Slide 7: Market Update
7 For personal use only Market Update
Slide 8: Agency Advertising Market Trends
AGENCY ADVERTISING MARKET TRENDS For personal use only • After a challenging agency advertising market in the first four months of the period, the agency advertising market grew in the months of May and June 2019. • Total agency advertising growth of 8.1%1 in the month of June, includes: o Newspaper
Slide 9: NZME Performance Against the Market
NZME PERFORMANCE AGAINST THE MARKET For personal use only FOR THE SIX MONTHS TO 30 JUNE 2019 DIGITAL – Q1: 3 months to March 20191 Total segment revenue NZME General Display digital revenue (8%) $178.3m 4% Total General Display market (8%) H1 18 $186.1m RADIO - 6 months to 30 June 20192 PRINT - 6 mo
Slide 10: Channel Results
10 For personal use only Results Channel
Slide 11: Print
PRINT $M H1 2019 H1 2018 % Change FOR THE SIX MONTHS Advertising revenue 51.1 55.5 (8%) ENDED 30 JUNE 2019 For personal use only Circulation Revenue 38.5 40.4 (5%) Other Revenue 7.0 7.7 (9%) Total Print Revenue 96.6 103.6 (7%) Direct Print Costs (34.2) (35.9) (5%) Total Print Contribution 62.4 67.7
Slide 12: Outstanding Readership and Audience Results
OUTSTANDING READERSHIP AND AUDIENCE RESULTS For personal use only • NZME daily newspapers reach 1,023,0001,2 Kiwis per week – more than the competitors combined. • The NZ Herald average issue readership is at a four year high at 477,0002, with the flagship Weekend Herald now read by 540,000 people e
Slide 13: Radio
RADIO $M H1 2019 H1 2018 % Change FOR THE SIX MONTHS Total Radio Revenue 53.5 53.4 0.2% ENDED 30 JUNE 2019 For personal use only Direct Radio Costs (16.1) (16.0) 0.6% Total Radio Contribution 37.4 37.4 - • Radio revenue market has returned to growth and NZME has maintained market share of 39.0%1 for
Slide 14: Digital
DIGITAL $M H1 2019 H1 2018 % Change FOR THE SIX MONTHS Advertising revenue 22.0 23.9 (8%) ENDED 30 JUNE 2019 For personal use only Classifieds revenue 1.4 0.2 n/a Subscription revenue 0.21 - n/a e-Commerce revenue 4.6 5.0 (8%) Total Digital Revenue 28.2 29.1 (3%) Direct Digital Costs (4.3) (5.0) (14
Slide 15: Financial Results in Detail
2019 Half Year Results Financial Results in Detail For personal use only
Slide 16: Operating Results for the Six Months Ended 30 June 2019
Six months Six months $M % change 30 June 20191 30 June 2018 OPERATING RESULTS Print, radio and digital revenue 178.3 186.1 (4%) For personal use only FOR THE SIX MONTHS Other revenue 2.8 3.3 (15%) ENDED 30 JUNE 2019 Total Revenue & Other Income 181.1 189.4 (4%) • Segment Revenue declined 4% in the
Slide 17: Impact of New Leases Standard NZ IFRS16
H1 2019 H1 2019 Operating NZ IFRS16 $M including Results1 Adjustment NZ IFRS162 IMPACT OF NEW Income Statement: For personal use only LEASES STANDARD Revenue 181.1 - 181.1 – NZ IFRS16 Costs (161.7) 8.2 (153.5) • NZ IFRS16 requires most leases to be EBITDA 19.4 8.2 27.6 recognised as a lease liabilit
Slide 18: Costs for the Six Months Ended 30 June 2019
Six months Six months $M % change 30 June 20191 30 June 2018 COSTS People costs & contributors 75.7 79.3 (5%) For personal use only FOR THE SIX MONTHS Print & distribution costs 29.6 31.2 (5%) ENDED 30 JUNE 2019 Agency commission & marketing 20.1 20.1 - • Cost initiatives resulted in reduced people
Slide 19: Capital Management
$M 30 June 2019 31 Dec 2018 CAPITAL Net working capital excluding cash ($m) 8.8 9.4 For personal use only MANAGEMENT Net Debt ($m) 90.2 98.3 Net interest cover 10.8 12.0 • Capital management policy objective to Net debt to EBITDA 1.8 1.8 reduce debt while maintaining investment in growth opportuniti
Slide 20: 2019 Strategic Priorities: Focused on Growth
2019 STRATEGIC PRIORITIES For personal use only FOCUSED ON GROWTH Leading the future of news and Increasing radio capability Creating New Zealand’s leading journalism in New Zealand and performance real estate platform 20
Slide 21: Strategic Priority #1: Leading the Future of News and Journalism
Strategic Priority #1 Leading the future of news and journalism in New Zealand NZ HERALD For personal use only PREMIUM CONTENT CAPABILITY AUDIENCE • Successful launch of NZ Herald Premium Delivered • Delivering first class NZ • Washington Post Arc • Achieved annual target in April 2019. in 2019 prem
Slide 22: Strategic Priority #2: Radio
Strategic Priority #2 RADIO Increasing radio capability and performance For personal use only CONTENT CAPABILITY AUDIENCE Delivered • Investment in new • Improved sales • Increased radio in 2019 talent and shows capability. audience market on Newstalk share to 37.7%2 as ZB and The Hits. • Technology
Slide 23: Strategic Priority #3: OneRoof
Strategic Priority #3 OneRoof Creating New Zealand’s leading real estate platform For personal use only LISTINGS AUDIENCE REVENUE Delivered • ~21,000 ‘for sale’ • Strong audience • OneRoof revenue in 2019 listings growth supported $1.3m in H1 2019 – • 68% of NZ by integrated up from $0.7m in residen
Slide 24: Our Sustainability Commitment
OUR SUSTAINABILITY lena COMMITMENT NZIVIE We are committed to protecting the craft of journalism and broadcasting to keep Kiwis in the know. OUR COMMUNITIES : OUR PEOPLE : OUR ENVIRONMENT We connect and empower E We provide a workplace that fosters 8 We take our responsibility to our communities. :
Slide 25: Outlook
Outlook For personal use only • Encouraging start to the second half. • Advertising market shows some signs of improvement – with our Q3 bookings up 6% compared to the same period last year. • However, we remain cautious of the potential impact of the softening economy and weaker business confidence
Slide 26: Q&A
26 For personal use only Q&A
Slide 27: Supplementary Information
For personal use only Supplementary Information 27
Slide 28: Reconciliation of Operating Results to Financial Statements, H1 2019
RECONCILIATION OF OPERATING RESULTS TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019 For personal use only Six months ended 30 June 2019 NZ IFRS16 Per Financial $M Operating results Exceptional Items Adjustment Statements Segment Revenue 178.3 - - 178.3 Other revenue 2.8 - - 2.8 Total R
Slide 29: Reconciliation of Operating Results to Financial Statements, H1 2018
RECONCILIATION OF OPERATING RESULTS TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2018 For personal use only Six months ended 30 June 2018 Reported operating NZ IFRS15 Adjustment to prior Restated Operating Per Financial $M Exceptional Items results adjustment period1 Results Statements S
Slide 30: Balance Sheet as at 30 June 2019
$M 30 June 2019 31 December 2018 BALANCE SHEET Trade, other receivables and inventory 57.0 60.6 For personal use only AS AT 30 JUNE 2019 Trade and other payables (50.4) (52.0) Current tax receivable 2.2 0.9 Net working capital 8.8 9.4 Fixed, intangibles and other assets 384.5 389.6 Right of use asse
Slide 31: Cashflow for the Six Months Ended 30 June 2019
Six months Six months $M 30 June 2019 30 June 2018 CASHFLOW Operating EBITDA1 19.4 23.2 For personal use only NZ IFRS16 impact on EBITDA 8.2 - FOR THE SIX MONTHS ENDED 30 JUNE 2019 Non-cash transactions 0.1 0.2 Interest paid on bank facilities (2.0) (2.0) Interest paid on leases (2.4) - Working capi