NZME Limited · NZX:NZM
NZME — FY2018 Earnings Presentation
36 slides from NZME's earnings presentation, Feb 19, 2019
Slide 1: Full Year 2018 Results Presentation
For personal use only Full Year 2018 Results PRESENTATION For the year ended 31 December 2018 19 February 2019
Slide 2: Disclaimer
DISCLAIMER The information in this presentation is of a general nature and does not constitute financial product advice, investment For personal use only advice or any recommendation. Nothing in this presentation constitutes legal, financial, tax or other advice. This presentation constitutes summar
Slide 3: Agenda
24 AGENDA 18 For personal use only 04 FY18 Results Summary and FY18 Operational Priorities 06 Market Dynamics 11 Channel Results 17 FY18 Financials 22 FY19 Strategic Priorities and Outlook 31 Q&A 32 Supplementary Information 3
Slide 4: FY18 Results Summary
NZME FY18 RESULTS SUMMARY For personal use only Statutory NPAT Trading Revenue $11.6m $378.4m FY17 $20.9m 44% FY17 $387.7m 2% Trading EBITDA Trading NPAT Results impacted by Pro-active investment in Digital Classifieds $54.7m $18.9m FY17 $66.2m 17% FY17 $26.7m 29% Agency market headwinds Trading Ear
Slide 5: FY18 Achievement of Operational Priorities
NZME FY18 ACHIEVEMENT OF OPERATIONAL PRIORITIES For personal use only • NZ Herald audience at an all time high with a daily brand audience of more than 1 million (up 5% YoY).1 Continued audience • Engagement on nzherald.co.nz continues to grow with ongoing focus on premium content. Online engagement
Slide 6: Market Dynamics
For personal use only DYNAMICS MARKET
Slide 7: NZME's Audience Reach Is 3.3 Million
NZME’S AUDIENCE REACH IS 3.3 MILLION1 80% OF NEW ZEALANDERS For personal use only Print 1.3 Million Weekly readers1 Radio 2.0 Million Weekly listeners2 Digital Unique audience of 2.5 Million per month1 1 Nielsen CMI October Fused Q4 17 - Q3 18 (population 10+ years). 2GfK Radio Audience Measurement,
Slide 8: FY18 Performance Against the Market
NZME FY18 PERFORMANCE AGAINST THE MARKET For personal use only Digital Trading Revenue Display & Mobile Revenue NZME 3% $60.0m 16% $378.4m YoY to Q4 18 FY17 15% FY17 $387.7m 2% Market 5%1 YoY to Q4 18 NZME < Market $106.8M $211.6m 28% 56% Print Advertising Revenue Radio FY17 28% FY17 57% Advertising
Slide 9: Agency Market Declined in FY18
AGENCY MARKET DECLINED IN FY18 For personal use only Total Agency Demand YoY Growth %1 • Agency represents approximately 30% 20% of NZME’s Print and Radio revenues and 50% of Digital revenues. 15% 10% • The Agency market declined 4.2% in 2018, impacting all advertising channels except YoY growth 5%
Slide 10: For personal use only
For personal use only New Zealand’s Prime Minister, Jacinda Ardern, guest editing The New Zealand Herald suffrage edition, September 2018
Slide 11: Channel Results
For personal use only RESULTS CHANNEL
Slide 12: Print
NZME PRINT For personal use only • Total Print revenue decline improved in FY18 NZME Print ($m) FY18 FY17 % Change to -4% (FY17: -7%). Print revenue decline slowed in H2 18, helped to some extent by an extra Advertising Revenue 114.2 121.0 (6%) week’s trading. Circulation Revenue 81.5 83.3 (2%) • Gr
Slide 13: NZ Herald Readership and Audience Trends Positive
NZ HERALD READERSHIP AND AUDIENCE TRENDS POSITIVE For personal use only The NZ Herald Mon-Sat Average NZME Subscriber Volume NZ Herald Daily Brand Audience3 Issue Readership1 and Yield2 470 16.0 1.90 1,100 460 14.0 1.80 1,050 450 1.70 1,000 12.0 Daily Brand Audience (000s) Subscriber Volume (million
Slide 14: Radio & Experiential
NZME RADIO & EXPERIENTIAL For personal use only • Radio market was challenging, particularly in H2 18, NZME Radio & Experiential ($m) FY18 Trading1 FY17 % Change with Radio & Experiential revenue down 4% in FY18. Radio & Experiential Revenue 100.0 103.7 (4%) • Radio Agency advertising revenue declin
Slide 15: Digital & E-Commerce
NZME DIGITAL & E-COMMERCE • Digital revenue growth slowed in H2 18, impacted For personal use only NZME Digital & e-Commerce ($m) FY18 Trading 1 FY17 % Change by a contraction in the Agency advertising market. Digital Revenue 48.9 44.9 9% • Digital Agency revenue grew 15% in H1 and -7% in H2, 3% YoY
Slide 16: An open letter to New Zealand
An open letter to New Zealand Dear New Zealand, Teclay marks 128 years since women won theright to vote in New Zealand, making us the frst country in te wortd.to do so. What a proucl and powerful moment fora small ‘country tocelebrate. tshows that no matter how smal weare, we can lead the way with c
Slide 17: FY18 Financials
For personal use only FY18 FINANCIALS
Slide 18: Trading Results
NZME TRADING RESULTS • NZME was pleased to contain the decline in trading For personal use only revenue to just 2% ($9.3m) in FY18 (-4% in FY17) in $m FY18 Trading1 FY17 % Change part due to an extra publishing week. Revenue 378.4 387.7 (2%) • Revenue declines in Print and Radio were partially offse
Slide 19: Costs
NZME COSTS For personal use only Costs $m FY18 Trading FY17 Trading % Change • Underlying costs1 down 1%, largely in the areas People costs & contributors 156.5 162.2 (4%) of people costs and print and distribution costs. H2 costs impacted by additional publishing Print & distribution costs 63.2 66.
Slide 20: Balance Sheet
NZME BALANCE SHEET For personal use only • The Capital Management Policy, announced $m Dec 18 Jun 18 Dec 17 in November 2018, supports long-term strategic objectives and operational priorities to maximise Trade, other receivables and inventory 60.6 54.2 57.2 shareholder value. Trade and other payabl
Slide 21: Cash Flow
NZME CASH FLOW For personal use only • Year end net debt increased $7.9m from $m FY18 Trading FY17 Trading 31 December 2017 due to reduced trading EBITDA ($11.5m), investment in working capital, tax, and Trading EBITDA 54.7 66.2 dividend payments. Share based payment scheme (non-cash) 0.8 1.7 • A ne
Slide 22: FY19 Strategic Priorities and Outlook
For personal use only FY19 STRATEGIC PRIORITIES AND OUTLOOK
Slide 23: 2019 Strategic Priorities
2019 STRATEGIC PRIORITIES FOCUSED ON GROWTH For personal use only 1 Leading the future of news and journalism in New Zealand 2 Increasing radio capability and performance 3 Creating New Zealand's leading real estate platform 23
Slide 24: News: Leading the Future of News and Journalism
1. NEWS LEADING THE FUTURE OF NEWS AND JOURNALISM IN NEW ZEALAND For personal use only FY19 Focus NZME is New Zealand’s leading publisher with The New Zealand New Zealand’s destination for Herald's daily brand audience, across print and digital, at more trusted premium news content than 1 million1.
Slide 25: Digital Subscriptions Progress and Launch
DIGITAL SUBSCRIPTIONS PROGRESS AND LAUNCH For personal use only TECHNOLOGY CONTENT AUDIENCE • Technology platform • Access to the best • Audience of 1.7 implemented in stories from four top million1 to be partnership with global publishers. maintained with Washington Post Arc. Freemium model. • Stro
Slide 26: Radio: Increasing Radio Capability and Performance
2. RADIO INCREASING RADIO CAPABILITY AND PERFORMANCE For personal use only NZME is the second largest radio operator in New Zealand, with a weekly radio FY19 Focus audience of 2.0 million1. NZME has the exclusive licence for the iHeart Radio platform in New Zealand and is well positioned to take adv
Slide 27: Radio & Experiential
NZME RADIO & EXPERIENTIAL For personal use only TECHNOLOGY SALES CAPABILITY AUDIENCE • New content formats •R adio specialists • New NewstalkZB including podcasts line-up and Alexa skills. • Improved radio sales training • Embed new music shows • Regional focus • iHeart registered •C ross channel us
Slide 28: Creating New Zealand's Leading Real Estate Platform
LISTINGS + AUDIENCE REVENUE CREATING NEW ZEALAND'S LEADING REAL ESTATE PLATFORM OneRoof1 is New Zealand’s newest real estate platform incorporating superior user experience and search functionality. For personal use only LISTINGS AUDIENCE • Launched end March 2018. • Strong audience growth supported
Slide 29: Creating New Zealand's Leading Real Estate Platform: FY19 Focus
CREATING NEW ZEALAND'S LEADING REAL ESTATE PLATFORM For personal use only FY19 Focus REVENUE Secure further market listings and launch new property categories (e.g. new homes) ($m) FY18 Revenue 0.7 Continue to develop user features and tools to enhance Direct Costs (3.9) listings engagement OneRoof
Slide 30: Outlook
OUTLOOK For personal use only • Advertising bookings for Q1 19 are tracking at -2% YoY compared with -4% for FY18. • The Agency market remains challenged however trends are improving. • NZME is continuing to focus on cost reduction. Savings made in Q4 18 will benefit FY19. However, given the ongoing
Slide 31: Q&A
For personal use only Q&A Mike Hosking, NewstalkZB Breakfast Host
Slide 32: Supplementary Information
For personal use only SUPPLEMENTARY INFORMATION
Slide 33: Channel Direct Costs
CHANNEL DIRECT COSTS NEW MEASURE TO ENHANCE UNDERSTANDING OF OUR BUSINESS AND STRATEGY For personal use only DIRECT COSTS HAVE BEEN ATTRIBUTED TO EACH SEGMENT WHERE POSSIBLE AS FOLLOWS: $ Print direct costs include: Radio direct costs include: Digital direct costs include: Centralised costs that hav
Slide 34: FY18 Reconciliation of Trading Result to Consolidated Financial Statements
NZME FY18 RECONCILIATION OF TRADING RESULT TO CONSOLIDATED FINANCIAL STATEMENTS For personal use only For a detailed explanation of the NZ IFRS 15 adjustment 1 please refer to Note 2.1.1 of the Consolidated Financial FY18 NZ IFRS Exceptional FY18 Financial Statements. $m Trading 151 Items7 Statement
Slide 35: FY17 Reconciliation of Trading Result to Consolidated Financial Statements
NZME FY17 RECONCILIATION OF TRADING RESULT TO CONSOLIDATED FINANCIAL STATEMENTS For personal use only Segment revenue agrees with the segment 1 revenue as disclosed in note 2.4.2 of the Consolidated Financial Statements for the FY17 Exceptional FY17 $m year ended 31 December 2018. Trading Result Ite
Slide 36: For personal use only
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