NZME Limited · NZX:NZM
NZME — FY2019 Earnings Presentation
37 slides from NZME's earnings presentation, Feb 25, 2020
Slide 1: 2019 Full Year Results
For personal use only 2019 Full Year Results For the year ended 31 December 2019 25 February 2020
Slide 2: Agenda
For personal use only Results Summary 03 Market Dynamics 04 Channel Performance 07 2019 Full Year Financial Results 15 Strategic Priorities 24 Our Sustainability Commitment 28 Proposed Acquisition of Stuff 29 Outlook 30 Q&A 31 Supplementary Information 32 2
Slide 3: Results Summary
$371.7m $50.6m For personal use only For the year ending 31 December 2019 Operating Revenue1 Operating EBITDA1 2018 $388.9m 4% 2018 $54.7m 7% • Strong momentum in all of our key strategic priorities: • Growth of NZ Herald Premium with 46,000 subscribers – over 21,000 paid subscribers. $19.7m ($165.2
Slide 4: Market Dynamics
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Slide 5: Advertising demand and business confidence
For personal use only Net Index (% expecting improvement minus % expecting deterioration) • Agency advertising demand1 recovered during the year with total • The ANZ Business Confidence Index shows New Zealand agency advertising annual growth of 0.5% in 2019, in particular: business confidence has i
Slide 6: Operating revenue and market growth by channel
For personal use only Total Operating Revenue $371.7m Digital advertising and classifieds Radio advertising NZME digital advertising and classifieds NZME radio advertising revenue + 2.4% + 0.3% revenue Market growth – Radio revenue 3 + 2.0% Market growth – General Display + 4.5% NZME radio revenue m
Slide 7: Channel Performance
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Slide 8: Print, Radio, Digital
For personal use only PRINT RADIO DIGITAL Plus 20 other community publications and 8 Newspaper Inserted Magazines throughout NZ 8
Slide 9: Channel audience and market position
For personal use only PRINT RADIO DIGITAL • 35 print publications across New • 9 radio stations serving all key • 2.3 million digital users per month Zealand2 demographics across our digital platforms1 • 1.7 million NZ Herald weekly brand • 2.0 million weekly listeners5 • NZ Herald Premium: Over 21,
Slide 10: Print results
$ million 2019 2018 % change Print advertising revenue 102.2 114.2 (10%) For the year ended 31 December 2019 Circulation revenue 76.3 81.5 (6%) For personal use only Other print revenue 13.9 15.9 (13%) Print revenue 192.4 211.6 (9%) Direct print expenses (69.4) (77.0) (10%) Print contribution 123.0
Slide 11: Print readership and subscribers
For personal use only NZ Herald (Mon - Sat) and Herald on NZ Herald Daily and Weekly Brand NZME Subscriber Volume and Sunday Average Issue Readership1 Audience2 Yield3 Subscriber Volume (millions) Brand Audience (000’s) Readership (000’s) Yield ($) 1. Nielsen CMI Fused Q4 18 - Q3 19, AP 15+, annual
Slide 12: Radio results
$ million 2019 2018 % change Radio revenue 110.9 108.2 2% For the year ended Direct radio expenses (39.4) (38.3) 3% For personal use only 31 December 2019 Radio contribution 71.5 69.8 2% • Strong growth in the second half of the year of 5%, contributed to full year growth of 2% to $110.9 million. •
Slide 13: Radio audience and iHeart
For personal use only Radio Weekly Listeners – NZME NZME Major Markets 18-54 iHeart Average Monthly total including partners1 year old market share1 Total Listening Hours2 Average Monthly Listening Hours (million) Station Audience Market Share (%) Weekly Listeners (000’s) 1. GfK Radio Audience Measu
Slide 14: Digital results
$ million 2019 2018 % change Advertising revenue 45.9 48.0 (4%) For the year ended Classified revenue 3.2 0.9 257% For personal use only 31 December 2019 Subscription revenue 1.7 - - GrabOne revenue 9.7 11.0 (12%) Digital revenue 60.4 60.0 1% Direct digital expenses (12.6) (12.2) 3% Incremental digi
Slide 15: Digital audience
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Slide 16: 2019 Full Year Financial Results
$ million 2019 2018 % change Operating revenue 371.7 388.9 (4%) For personal use only Operating expenses (321.0) (334.2) (4%) For the year ended 31 December 2019 Operating EBITDA 50.6 54.7 (7%) • Operating revenue1 decreased 4% Depreciation and amortisation (18.9) (24.6) (23%) with a decline in prin
Slide 17: Half year analysis
Half year analysis For personal use only 2018 vs 2019 Operating EBITDA 2018 H2 Adjusted Adjusted $ million 2018 H2 excluding 2019 H2 H2 % FY % 53rd week Growth Growth Operating revenue 199.6 196.8 190.6 (3%) (4%) Operating expenses (168.0) (166.7) (159.4) (4%) (4%) Operating EBITDA 31.5 30.1 31.2 4%
Slide 18: Operating expenses
$ million 2019 2018 % change People and contributors 150.7 156.5 (4%) For the year ended 31 December 2019 Print and distribution 57.6 63.2 (9%) For personal use only • People and contributors expense Agency commission and marketing 40.9 40.4 1% reduced 4% reflecting the reduction in headcount. Prope
Slide 19: Impact of NZ IFRS16
2019 Operating Results 2019 after NZIFRS16 Operating Results before For personal use only $ million prior to adoption NZ IFRS16 Impact exceptional items Income Statement: Revenue 371.7 0.6 372.3 Expenses (321.0) 15.1 (306.0) EBITDA 50.6 15.7 66.3 • NZME adopted NZ IFRS16 from January 2019. Depreciat
Slide 20: Impairment of intangible assets
Masthead Other $ million Goodwill Brands Brands Total Non-amortising intangible assets For personal use only Opening balance – 1 January 2019 70.8 147.0 59.1 276.8 For the year ended 31 December 2019 Impairment (70.8) (74.3) (29.9) (175.0) • The assessment recognises that Closing balance – 31 Decemb
Slide 21: Balance sheet
$ million 31 December 2019 31 December 2018 Trade, other receivables and inventory 54.4 59.0 For personal use only Trade and other payables (51.5) (52.0) As at 31 December 2019 Current tax (payable)/receivable (0.3) 0.9 • Net working capital decreased due Net working capital excluding cash 2.7 7.9 t
Slide 22: Cash flow and net debt
$ million 2019 2018 Operating EBITDA 50.6 54.7 NZ IFRS 16 impact on EBITDA 15.1 - For personal use only For the year ended 31 December 2019 NZ IFRS 16 Interest paid on leases (4.8) - Interest paid on bank facilities (4.7) (4.0) • Net debt reduced by $23.6 million to $74.7 million as at 31 December 2
Slide 23: Net debt, leverage and dividend policy
31 December 2019 31 December 2018 Net Debt ($ million) 74.7 98.3 For personal use only Net interest cover 11.5 12.0 (Operating EBITDA / Interest Expense) Leverage Ratio 1.5 1.8 (Net debt to 12 month Operating EBITDA) • Capital management plan is to reduce debt while maintaining investment in growth
Slide 24: Focused on Growth
Focused on Growth For personal use only Leading the future of news and Growing radio and leading Creating New Zealand’s leading 1 journalism in New Zealand 2 digital audio 3 real estate platform 24
Slide 25: News and journalism priority
For personal use only • More than 46,000 total subscribers – over 21,000 paid subscribers plus 25,000 print subscribers who access premium content with their print bundle packages. • Exceeding subscription and revenue expectations. • More than 35% of subscribers have an annual subscription. • 2020 w
Slide 26: Radio and digital audio priority
For personal use only • Revenue returned to growth in second half with 5% contributing to full year growth of 2%. • Radio audience market share increased to 35.9%1 in December 2019, up from 34.9% in December 2018. • Continue momentum into 2020. 2019 Focus 2019 Achievements 2020 Focus 2020 Key Succes
Slide 27: OneRoof real estate platform
For personal use only • Real estate remains the largest vertical with revenue of $40.0 million, down 3.7% in 2019 negatively impacted by property market conditions. • OneRoof Revenue $2.8 million – up from $0.7 million in 2018. • Strong listings and audience growth achieved. • 2020 focus continues t
Slide 28: Our Sustainability Commitment
For personal use only We are committed to protecting the craft of journalism and broadcasting to keep Kiwis in the know. 28
Slide 29: Proposed Acquisition of Stuff
• NZME firmly believes it is the right owner for the Stuff Limited (Stuff) business. • An acquisition of Stuff is aligned with NZME’s strategic priorities, our For personal use only commitment to protecting the craft of journalism, and would deliver the following strategic benefits to NZME: • Creati
Slide 30: Outlook
For personal use only • It was an encouraging 2019 second half which provides momentum into 2020 – driven by continued growth in Radio, Digital classifieds, and Digital subscriptions. • Although NZ businesses are showing an increased confidence about the future, we remain cautious of the potential i
Slide 31: Q&A
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Slide 32: Supplementary Information
For personal use only 32
Slide 33: Reconciliation of operating results 2019
For personal use only For the 12 months ended 31 December 2019 12 MONTHS ENDED 31 DECEMBER 2019 $ million Operating Results NZ IFRS16 Exceptional Items Reclass interest Per Financial Adjustment income Statements Segment revenue 363.7 - - - 363.7 Other revenue 8.0 0.6 - 0.1 8.7 Total revenue 371.7 0.
Slide 34: Reconciliation of operating results 2018
For personal use only For the 12 months ended 31 December 2018 12 MONTHS ENDED 31 DECEMBER 2018 2018 Reported Reclass events 2018 Restated Exceptional Reclass Per Financial $ million Trading NZ IFRS15 to other Operating Items interest Statements Results revenue Results income Segment revenue 378.4 6
Slide 35: Revenue analysis
REVENUE ANALYSIS For personal use only Operating Revenue – 2018 to 2019 Movement $ million 35
Slide 36: Operating results on 52-week comparison
For personal use only Full Year % Growth FY 2019 FY 2018 FY 2018 Full Year Reported 2018 53rd Week compared to Operating Results Operating Results 52 Weeks % Growth 52 Weeks in 2018 Print revenue 192.4 211.6 2.6 209.0 (9%) (8%) Radio revenue 110.9 108.2 - 108.2 2% 2% Digital revenue 60.4 60.0 0.2 59
Slide 37: 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 For personal use only recommendation or advice. This presentation constitutes summary information only, and you should not rely on it in