NZME Half Year Results to 30 June 2020
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Results for announcement to the market
Name of issuer NZME
Reporting Period 6 months to 30 June 2020
Previous Reporting Period 6 months to 30 June 2019
Currency NZD
Amount (NZ$000s) Percentage change
Revenue from continuing
operations
$159,301 (12%)
Total Revenue $159,301 (12%)
Net profit/(loss) from
continuing operations
$3,011 217%
Total net profit/(loss) $3,011 217%
Interim/Final Dividend
Amount per Quoted Equity
Security
None
Imputed amount per Quoted
Equity Security
Not applicable
Record Date Not applicable
Dividend Payment Date Not applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$(0.17) $(0.24)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to attached NZX results announcement commentary, the
2020 Interim Report and the 2020 Half Year Results
Presentation for full commentary on the results.
Authority for this announcement
Name of person
authorised
to make this announcement
Michael Boggs, CEO
Contact person for this
announcement
David Mackrell, Chief Financial Officer
Contact phone number 021 311 911
Contact email address david.mackrell@nzme.co.nz
Date of release through MAP
25/08/2020
Unaudited financial statements accompany this announcement.
---
1
NZX/ASX RELEASE
25 August 2020
NZME LIMITED 2020 HALF YEAR FINANCIAL RESULTS
Strong performance as NZME quickly navigates Covid-19 impacts
2020 Half Year Results Highlights:
• NZME reports 5% growth in 2020 Half Year Operating Earnings before Interest, Tax
Depreciation and Amortisation (“EBITDA”)
1
to $28.9 million.
• 2020 Half Year Statutory Net Profit After Tax (“NPAT”) of $3.0 million, compared to
Statutory NPAT of $0.9 million in H1 2019.
• 2020 Half Year Operating NPAT
1
of $6.8 million and Operating Earnings per Share
(“EPS”)
1
of 3.5 cents, an increase of 1.4 cents per share compared to the previous
corresponding period
2
.
• NZME deemed an Essential Service during New Zealand’s Covid-19 lockdown; keeping
Kiwis in the know.
• Significant audience maintained at 3.2 million
3
representing 80% of the New Zealand
population and over 2.4 million digital users per month
3
.
• More than 82,000 NZ Herald Premium digital subscribers, including more than 43,000
paid digital subscribers, generating revenue of $2.4 million in H1 2020.
• OneRoof now has more residential for-sale listings in Auckland than any other digital
real estate site and holds more than 83% of listings in New Zealand
4
, contributing
$1.4 million of digital classifieds revenue in H1 2020.
• Growth in revenue market share achieved across all key channels in H1 2020; to
39.7% in radio advertising
5
, 46.8% in print advertising
6
and 24.3% in digital display
7
.
• Radio revenue in growth year-on-year prior to the impact of Covid-19.
• Cost initiatives and reduced volumes delivered a significant decrease in Operating
expenses
1
of 16% year-on-year.
• Operating results
1
include the government wage subsidy of $8.6 million as other
revenue.
• Net Debt reduced by $19.5 million to $55.2 million and leverage ratio reduced to 1.0
times Operating EBITDA
1
.
1
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-
for-like comparison between 2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results
Presentation for a detailed reconciliation. Operating and statutory results include $8.6 million of Covid-19 government
wage subsidy received in H1 2020.
2
Previous corresponding period refers to the 6 months ended 30 June 2019.
3
Nielsen CMI Fused Q2 19 – Q1 20, June, People 10+. Digital: May 2020 AP10+.
4
OneRoof’s listings as a percentage of residential for-sale real estate listings on trademe.co.nz.
5
PwC Radio advertising market benchmark report, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
6
PwC NPA quarterly performance comp. report, June 2020, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
7
IAB digital advertising revenue – General Display, IAB NZ Digital advertising revenue report, Q2 2020.
2
Financial summary
$million
H1 2020 H1 2019 % Change
Segment revenue 147.3 178.3 (17%)
Other revenue 10.5 2.8 277%
Operating Revenue
8
157.8 181.1 (13%)
Operating expenses
8
(128.9) (153.5) (16%)
Operating EBITDA
8
28.9 27.6 5%
Operating NPAT
8
6.8 4.1 66%
Statutory Net Profit After Tax 3.0 0.9 217%
Operating EBITDA
8
excluding
IFRS 16
21.8 19.4 13%
2020 HALF YEAR FINANCIAL SUMMARY
NZME Limited (NZME) is pleased to announce its financial results for the half year ended 30
June 2020 (H1 2020) after withstanding and rebounding from the impacts of the Covid-19
pandemic.
NZME was deemed an essential service during New Zealand’s Covid-19 lockdown, highlighting
the reliance on the business by the government to communicate critical content, and by NZME’s
audience to keep them in the know during these times of unprecedented crisis.
However, NZME’s key revenue streams were significantly impacted, with NZME’s total
advertising revenue down 47% in April and 39% in May, before recovering to 23% in June.
Print circulation revenues were down 5% for the half year-on-year largely due to a 35%
decrease in retail sales in the second quarter, partially offset by the first increase in print
subscriber volumes from Q1 to Q2 since 2017 as demand for access to quality news at home
increased. NZ Herald Premium digital subscriptions simultaneously grew, with more than
82,000 now accessing this content.
NZME reported total Operating Revenue
8
of $157.8 million, down 13% on the comparable
period. Segment revenue of $147.3 million was down 17% on the comparable period largely
due to the impacts of Covid-19. Other Revenue of $10.5 million in H1 2020 includes an $8.6
million wage subsidy received from the government.
NZME continued to make positive progress against each of its three strategic priorities in H1
2020. NZME’s ability to lead the future of news and journalism was highlighted during this
testing period. Of the 82,000 now accessing NZ Herald Premium content, more than 43,000
are paid digital subscribers, up from 25,000 in February 2020, with the remaining 39,000
accessing this content as part of their print bundle. This digital subscriber base delivered $2.4
million of revenue in H1 2020. Growth has been supported by an upgrade to the NZ Herald
8
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-
for-like comparison between 2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results
Presentation for a detailed reconciliation. Operating and statutory results include $8.6 million of Covid-19 government
wage subsidy received in H1 2020.
3
App, providing enhanced personalisation, allowing offline reading and enabling in-App
purchases of subscriptions.
NZME continued to deliver on its second strategic objective, with growth in radio revenue
continuing until Covid-19 impacted at the end of the first quarter. In June, enhancements were
made in radio brand optimisation, talent and content to support future growth in music listener
market share. In terms of leading digital audio, iHeartRadio achieved 39% revenue growth in
H1 2020, supported by strong growth in registered users and listening hours
9
.
OneRoof continues to focus on being New Zealand’s leading real estate listing platform, now
having more residential for-sale listings in Auckland than any other digital real estate site, and
more than 83% of New Zealand’s listings
10
. OneRoof generated $1.4 million of revenue in H1
2020 despite a 29% decrease in property sales volumes in New Zealand due to Covid-19
11
.
In response to Covid-19, the business prioritised the implementation of appropriate measures
to protect the health and safety of its people including access to support services and regular
communications.
Combined with the ongoing focus on cost efficiencies, NZME implemented a number of cost
initiatives in H1 2020 to mitigate the impact of Covid-19 on the business. These included the
temporary suspension of some newspaper inserted magazines and community newspapers,
the closure of Radio Sport and a wide scale workforce restructuring. Directors’ fees and
employee salaries were also reduced temporarily by 15-20% on a voluntary basis.
These initiatives led to a 16% reduction in Operating expenses
12
for the half year-on-year.
Operating EBITDA
12
grew 5% to $28.9 million in H1 2020 supported by cost reduction initiatives
and success against all three strategic priorities.
Operating NPAT
12
was $6.8 million and Operating EPS
12
was 3.5 cents in H1 2020, an increase
of 1.4 cents per share due to higher Operating EBITDA
12
and a comparably lower depreciation
charge in the period.
Statutory NPAT was $3.0 million, compared to $0.9 million in H1 2019.
Capital expenditure was lower in H1 2020 at $3.3 million, a decrease from $4.5 million in the
comparable period. Capital expenditure is expected to be significantly lower for the full year
comparably.
Net debt was $55.2 million for 30 June 2020, a significant $19.5 million reduction from $74.7
million as at 31 December 2019. Net debt to Operating EBITDA
12
decreased to 1.0 times for
the half, demonstrating significant progress on capital management objectives.
9
iHeartMedia, Adobe Analytics, June 2020.
10
OneRoof’s listings as a percentage of residential for-sale real estate listings on trademe.co.nz.
11
OneRoof / Valocity
12
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-
for-like comparison between 2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results
Presentation for a detailed reconciliation. Operating and statutory results include $8.6 million of Covid-19 government
wage subsidy received in H1 2020.
4
AUDIENCE AND ENGAGEMENT
NZME’s combined radio, print and digital audience of more than 3.2 million New Zealanders
represents 80% of the New Zealand population
13
. NZME’s significant radio audience has been
maintained with 2.0 million
14
weekly listeners. Talk radio major market share grew 0.8% year-
on-year
to 14.8% due to the continued success of Newstalk ZB
14
.
Music radio major market share was down 0.9% to 25.0% in the same period
15
however several
brand optimisation, talent and content changes have since been introduced to support future
growth in music listener market share. iHeartRadio achieved significant improvement in
engagement with 4.9 million average monthly listening hours in H1 2020, an increase of 34%
year-on-year
16
.
NZME print readership continues to be strong with 1.2 million weekly print readers and a NZ
Herald weekly brand audience of 1.6 million people
13
. NZME’s digital platforms now reach 2.4
million digital users per month
13
, a testament to NZME’s brand strength and quality of content.
OneRoof has grown to be a prominent national brand, now with a monthly unique web audience
of 300,000
17
, with less than a quarter now referred from the NZ Herald site
18
. OneRoof now
has more residential for-sale listings in Auckland than any other digital real estate site and has
grown to more than 83% of New Zealand listings
19
.
New Zealand’s reliance on NZME to be a trusted source of news was significantly highlighted
during the Covid-19 lockdown. During Alert Level 4, 50% of New Zealanders relied on the daily
paper for news, up from 43% on average
20
. Digital audiences reached an all-time peak, with
2.8 million digital users of NZME’s platforms in the month of April
21
.
CHANNEL PERFORMANCE
$ million H1 2020 H1 2019 % Change
Radio 43.7 53.5 (18%)
Print 75.3 96.6 (22%)
Digital 28.3 28.2 0%
Total Segment Revenue 147.3 178.3 (17%)
13
Nielsen CMI Fused Q2 19 – Q1 20, June, People 15+. Digital: April, May 2020, AP 10+.
14
GfK Radio Audience Measurement, Commercial Talk Radio Stations, Market Share, S1 2020, People 10+.
15
GfK Radio Audience Measurement, Commercial Music Radio Stations, Market Share, S1 2020, People 25-54 y/o.
16
AdsWizz and StreamGuys, June 2020.
17
Nielsen Online Ratings, June 2020.
18
Google Analytics (July 2020).
19
OneRoof’s listings as a percentage of active residential for-sale real estate listings on trademe.co.nz.
20
Nielsen CMI Q2 2019 – Q1 2020 compared to Q2 2020 dip (26 Apr – 17 Apr)
21
Nielsen CMI Fused Q2 19 – Q1 20, April, People 10+.
5
Radio Performance
$million H1 2020 H1 2019 % Change
Total Radio revenue 43.7 53.5 (18%)
Direct radio costs (14.6) (17.7) (17%)
Radio contribution 29.1 35.8 (19%)
Growth in NZME’s radio revenue continued up until Covid-19 began to impact revenues. Radio
revenue for the first half was $43.7 million, down 18% year-on-year. NZME achieved growth
in radio revenue market share to 39.7% in H1 2020
21
, up from 39.3% in the comparable period
as the total radio advertising revenue market declined 19.5%
22
year-on-year.
iHeartRadio grew its registered users by 12% year-on-year to 1,021,000 registered users
23
and
average monthly listening hours grew 34% year-on-year to 4.9 million hours
24
. iHeartRadio
continues to achieve growth in revenue from advertising and podcasts, increasing 39% year-
on-year and contributing 2% of total radio revenue.
Direct radio costs include radio licence fees, transmission costs, iHeartRadio licence fees, radio
talent costs and agency commission specifically related to radio products. Direct costs exclude
integrated head office, content generation and sales costs. Direct radio costs decreased 17%
in H1 2020 to $14.6 million. Radio contribution was $29.1 million, a decrease of 19% from
$35.8 million in H1 2019.
Print Performance
$million H1 2020 H1 2019 % Change
Print advertising revenue 35.3 51.1 (31%)
Circulation revenue 36.5 38.5 (5%)
Other print revenue 3.6 7.0 (49%)
Total Print revenue 75.3 96.6 (22%)
Direct print costs (25.8) (33.5) (23%)
Print contribution 49.6 63.1 (21%)
Print revenue, including print advertising and circulation revenue, was $75.3 million in H1 2020
representing a decline of 22% from H1 2019. Print advertising revenue of $35.3 million
decreased 31%, largely due to Covid-19 impacts. However, NZME achieved market share
growth to 46.8% as the total print advertising market experienced slightly greater decline
25
.
Print circulation revenue declined 5% to $36.5 million due to an 8% decrease in volume
partially offset by a 3% increase in yield. Retail subscriber volumes were particularly impacted
by Covid-19 lockdown, decreasing 25% year-on-year in H1 2020. Due to an increase in demand
22
PwC Radio advertising market benchmark report, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
23
iHeartMedia, Adobe Analytics, June 2020.
24
AdsWizz and StreamGuys, June 2020.
25
PwC NPA quarterly performance comp. report, June 2020, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
6
for quality news from home, subscriber volumes increased from Q1 to Q2 for the first time
since 2017, down 4% for the half overall.
Other print revenue, relating to printing and distribution services provided to external parties,
decreased 49% or $3.4 million to $3.6 million, primarily due to Stuff removing several
publications previously printed by NZME. Combined with reduced volumes, the annual impact
on third-party print revenue is expected to be approximately $5.0 million, however this will be
substantially offset by print expense reductions.
Direct print costs include printing and distribution costs, occupancy costs at the Ellerslie print
plant and agency commission specifically related to print products. Direct print costs declined
23% in H1 2020 to $25.8 million, largely reflecting the temporary suspension of some
newspaper inserted magazines and community newspapers due to Covid-19. Print contribution
declined 21% to $49.6 million in H1 2020.
Digital Performance
$million H1 2020 H1 2019 % Change
Advertising revenue 20.2 22.0 (8%)
Subscription revenue 2.4 0.2 -
Classified revenue 1.7 1.4 16%
GrabOne revenue 4.0 4.6 (12%)
Total Digital revenue 28.3 28.2 0%
Direct digital costs
26
(9.3) (9.0) 3%
Digital contribution 19.0 19.2 (1%)
NZME digital revenue held flat for H1 2020 at $28.3 million after achieving growth of 7% in the
first quarter as growth in digital subscriptions and classifieds revenue offset the impacts of
Covid-19 on advertising revenue.
Digital advertising was impacted by a decline in the total digital agency advertising market of
15.4% in H1 2020
27
. However, NZME achieved growth in total digital display market share to
24.3% compared to 22.8% in H1 2019
28
, as advertisers increasingly turned to NZME to connect
with their target audiences.
The decline in digital advertising revenue was offset by $2.4 million of new digital subscription
revenue from the NZ Herald Premium digital subscription base. Subscriber numbers continue
to grow after the launch in April 2019, now with more than 43,000 paid digital subscribers and
more than 82,000 in total including activated print subscriptions. The upgrade of the NZ Herald
App to enhance personalisation, allow offline reading and in-App purchasing of Premium digital
subscription access has helped to drive this significant growth.
26
H1 2019 previously reported direct digital costs include reclassifications.
27
Standard Media Index (SMI) NZ Data Release, June 2020.
28
IAB digital advertising revenue – General Display, IAB NZ Digital advertising revenue report, Q2 2020.
7
OneRoof continues to grow in listings, audience and revenue. The platform now has 83% of
New Zealand’s residential for-sale real estate listings
29
. OneRoof generated $1.4 million of
revenue in H1 2020 of which approximately 75% now relates to listings upgrades.
GrabOne revenue decreased 12% in H1 2020 to $4.0 million. However, the platform has quickly
recovered from the impacts of Covid-19 and is now delivering year-on-year growth.
Direct digital costs include fulfilment costs, production costs, merchant fees related to GrabOne,
and agency commission related to digital products. Direct digital costs, including digital
classified costs, increased 3% in 2020 to $9.3 million due to growth in certain revenue streams.
Digital contribution declined 1% to $19.0 million.
FINANCE AND CORPORATE
Costs
On 14 April 2020, NZME provided a market update on initiatives swiftly implemented to mitigate
the impacts of Covid-19 on the business. These included several cost saving initiatives including
the temporary suspension of some newspaper inserted magazines and community newspapers,
the closure of Radio Sport, a wide scale workforce restructuring, temporary voluntary salary
reductions for employees and a reduction in overall discretionary spend.
Combined with the ongoing focus on cost containment, these initiatives resulted in a 16%
decrease in Operating expenses
30
to $128.9 million in H1 2020. The majority of the savings
were in people and contributors, down $8.2 million or 11%, and print and distribution, down
$7.1 million or 24%.
Costs were down $24.6 million for the first half, with approximately $7.0 million relating to
permanent cost reductions and the balance relating to variable or short-term savings. The
annualised permanent reduction in cost base is expected to be $20.0 million per annum.
Exceptional items were $7.2 million in H1 2020 including redundancy costs of $7.0 million
relating to workforce restructuring and one-off project costs and other exceptional items of
$0.2 million.
Cash flow and capital management
NZME is pleased to report strong cash flows and progress in capital management objectives of
reducing debt and gearing while maintaining investment in growth opportunities.
Cash inflow from operations was $27.7 million in H1 2020, compared to $18.3 million in H1
2019. This increase was due to strong Operating EBITDA
28
and a reduction in both working
capital and capital expenditure.
Tax paid was lower in H1 2020 at $1.2 million, compared to $2.0 million in H1 2019.
29
OneRoof’s listings as a percentage of residential for-sale listings on trademe.co.nz.
30
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-
for-like comparison between 2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results
Presentation for a detailed reconciliation. Operating and statutory results include $8.6 million of Covid-19 government
wage subsidy received in H1 2020.
8
Capital expenditure was contained at $3.3 million in H1 2020 and is expected to be
approximately $7.0 million for FY 2020.
Lease liability principal repayments reduced to $4.8 million in H1 2020 compared to $5.7 million
in the comparable period due to transmission cost relief received from the government and
rent concessions.
Net debt reduced by $19.5 million in 6 months to $55.2 million as at 30 June 2020, including
$80.5 million of drawn borrowings (December 2019: $89.5 million) and $25.0 million of cash
and cash equivalents (December 2019: $14.4 million). The ratio of net debt to rolling 12-month
Operating EBITDA
31
was 1.0 times at 30 June 2020, a reduction from 1.5 times as at 31
December 2019.
In June 2020 an extension of debt facilities, due to expire in January 2022, to 1 July 2023 was
agreed and includes additional covenant headroom over the term of the facility. The terms of
these facilities limit dividend payments until after 30 June 2021.
OUTLOOK
NZME has seen a stronger than anticipated recovery from Covid-19. However, the business
remains cautious regarding the future economic environment.
NZME’s total advertising revenue is expected to be down 16% year-on-year in Q3 2020. Cost
containment remains a focus.
Based on current expectations of recovery, NZME expects to deliver a FY 2020 Operating
EBITDA of $60 - $63 million, inclusive of IFRS 16.
Based on continued improvement in economic conditions, Covid-19 recovery, improved
revenue trends and permanent cost reductions, NZME would expect profit growth in 2021.
Based on this outlook and NZME’s capital requirements, the Board expects to be able to
consider a dividend payment when facility terms permit, which is after 30 June 2021.
NZME looks forward to providing investors with further updates on strategic priorities at an
Investor Day in Q4.
The full set of 2020 Half Year Results materials can be found at:
www.nzx.com/markets/NZSX/securities/NZM/announcements
ENDS
31
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a
like-for-like comparison between 2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results
Presentation for a detailed reconciliation. Operating and statutory results include $8.6 million of Covid-19 government
wage subsidy received in H1 2020.
9
Briefing Audio:
NZME will host a webcast for investors and analysts, hosted by Michael Boggs (Chief Executive
Officer) and David Mackrell (Chief Financial Officer) commencing at 10.00am NZT today,
Tuesday 25 August 2020 to discuss the 2020 Half Year Results.
Please CLICK HERE to register for and access the webcast.
Once registered, you will be able to join the webcast either online or by telephone. Please note
only participants online will be able to ask questions. If your computer does not have a
microphone, you can use the Zoom app on your smart phone or join the audio with a phone
call. Enter the webcast online, then choose "Join by Phone" when prompted about audio and
enter the supplied Webinar ID when dialing.
A recording of the webcast will be available on NZME’s website one hour after the call at:
https://www.nzme.co.nz/investor-relations/webcasts/
Investor enquiries:
David Mackrell
Chief Financial Officer
T: +64 21 311 911
Email: david.mackrell@nzme.co.nz
Media enquiries:
Cliff Joiner
GM Communications
T: +64 21 270 9995
Email: cliff.joiner@nzme.co.nz
---
2020 Half Year Results
Six months to 30 June 2020
25 August 2020
KEEPING
KIWIS IN
THE KNOW.
AGENDA
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
RESULTS
SUMMARY.
For the half year ending 30 June 2020
•NZME reports strong performance, quickly
navigating the impacts of Covid-19.
•Positive momentum in our key strategic priorities:
•Growth of NZ Herald Premium with 82,000
subscribers - more than 43,000 paid digital
subscribers. Combined Print and Digital
circulation revenues grew year-on-year.
•Continued growth in Radio Revenue market
share and iHeartRadio listening.
•OneRoof continues to grow; now #1 in
Auckland for residential for-sale real estate
listings and hosting more than 83% of
New Zealand’s listings
2
•Operating EBITDA
1
$28.9 million, up 5%.
•Operating result includes wage subsidy
of $8.6 million other revenue.
•16% reduction in Operating cost base.
•Net debt reduced by $19.5 million to $55.2 million.
•Statutory Net Profit After Tax $3.0 million, up from
$0.9m in H1 2019.
1. Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a
like-for-like comparison between 2019 and 2020 interim financial years. Please refer to pages 31-32 of this results
presentation for a detailed reconciliation. Operating and statutory results include $8.6 million of Covid-19 government
wage subsidy received in H1 2020.
2. OneRoof’s listings as a percentage of residential for-sale real estate listings on trademe.co.nz.
$157.8m
Operating Revenue
1
H1 2019 $181.1m 13%
$28.9m
Operating EBITDA
1
H1 2019 $27.6m 5%
H1 2019 $4.1m 66%
$6.8m
Operating NPAT
1
H1 2019 $0.9m 217%
$3.0m
Statutory NPAT
H1 2019 2.1cps 65%
3.5cps
Operating EPS
1
Reduced by $19.5m
$55.2m
Net Debt
3
COVID-19 IMPACT.
The majority of NZME’s operations are deemed an Essential Service.
However, key revenue streams were significantly impacted in the first half:
1. Advertising Revenue:
2. Circulation Revenue down 5% with retail newspaper sales down 35%
year-on-year in Q2, however print subscriber volume grew from Q1 to Q2
2020 for the first time since 2017.
KEY TIMELINE*
28 February: NZ’s first Covid-19 case
19 March: Borders closed
23 March: Alert Level 3 ‘Restrict’
25 March: Alert Level 4 ‘Lockdown’
28 April: Alert Level 3 ‘Restrict’
14 May: Alert Level 2 ‘Reduce’
8 June: Alert Level 1 ‘Prepare’
12 August: Alert Level 3 in Auckland,
Alert Level 2 rest of NZ
NZME Total Advertising Revenue Growth YoY
0%
-10%
-20%
-30%
-40%
-50%
Jan 20
-2%
Feb 20
-3%
Mar 20
-9%
Apr 20
-47%
May 20
-39%
Jun 20
-23%
* Information on the NZ government’s Covid-19 Alert Levels and their implications can be found at covid19.govt.nz.
4
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 flow,
contributing to a $24.6 million reduction in Operating expenses:
• Temporarily suspended products including a number of newspaper inserted
magazines and community newspapers.
• Ceased broadcasting of Radio Sport.
• Implemented wide scale workforce restructuring, resulting in reduction
of more than 200 positions, representing 15% of the workforce.
• Directors’ fees and employee salaries reduced temporarily by 15-20%
on a voluntary basis.
• Accelerated annual leave utilisation.
• Negotiated temporary reductions in key contracts and property leases.
• Reduced overall discretionary spend.
• Significantly reduced capital expenditure for the remainder of 2020.
ACTIONS TO MITIGATE THE
IMPACTS OF COVID-19.
5
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.
• Will receive a cash advance in H2 2020
as prepayment of 12 months of government
advertising.
COVID-19 GOVERNMENT RESPONSE.
6
MARKET
DYNAMICS.
7
AGENCY YoY
ADVERTISING
MARKET TRENDS.
NEW ZEALAND
BUSINESS
CONFIDENCE.
(7.2)
Jan 2019
(4.2)
(6.2)
Mar 2019
(6.0)
2.2
7.3
Jun 2019
3.5
4.8
(2.4)
(0.9)
2.0
2.4
(37.9)
(37.8)
25%
15%
5%
-5%
-15%
-25%
-35%
-45%
0%
15.0
Sep 2019
(1.5)
Dec 2019
1.1
Mar 2020
(32.7)
Jun 2020
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
-80%
Jan 2019
(30.9)
Mar 2019
(38)
(32)
Jun 2019
(38.1)
(44.3)
(42.4)
(26.4)
Dec 2019
(13.2)
(37.5)
(52.3)
Sep 2019
(53.5)
(19.4)
(41.8)
(34.4)
Jun/Jul 2020
(29.8)
(63.5)
Mar 2020
(66.6)
•Agency advertising market up 2.1% in Q1, prior to demand being
affected by Covid-19, before falling 18.3% in the full six months
to June 2020
1
, with pressure across all channels:
•Radio agency advertising up 7.7% in Q1, then down 11.0%
for the half year-on-year;
•Newspaper agency advertising up 7.4% in Q1, then down
14.2% for the half year-on-year; and
•Digital agency advertising down 2.1% in Q1, then down
15.4% for the half year-on-year.
• The ANZ Business Confidence Index
2
for New Zealand shows
initial signs of recovery in July 2020 after the impacts of Covid-19
earlier in the year. The July confidence score of -29.8% is an
improvement on the 2019 average of -34.1% after progressively
improving since April 2020.
2. Net Index (% expecting improvement minus
% expecting deterioration)
1. Standard Media Index (SMI) NZ Data Release, June 2020
Net Index (% expecting improvement minus %
expecting deterioration)
Year-on-year monthly agency revenue growth %
8
NZME PERFORMANCE
COMPARED TO THE MARKET.
NZME has outperformed the market in all four key pillars.
Radio advertising (YoY growth)
NZME radio advertising revenue(18.2%)
Market movement – Radio revenue
3
(19.5%)
NZME radio revenue market share
3
39.7%
Digital advertising (YoY growth)
NZME digital advertising revenue(8.4%)
Market movement – General Display
revenue
4
(10.4%)
NZME general display market
share
4
24.3%
Print advertising (YoY growth)
NZME print advertising revenue(30.9%)
Market movement – Print revenue
1
(31.4%)
NZME print revenue market share
1
46.8%
Print circulation (YoY growth)
NZME circulation revenue(5.3%)
NZME movement – print readership
2
(2.0%)
Market movement – print readership
2
(4.7%)
NZME print readership market share
2
51.1%
1. PwC NPA quarterly performance comparison report, June 2020, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
2. Nielsen CMI Fused Q2 19 – Q1 20, People 15+.We are unable to provide a market comparable for circulation growth at this time
due to ABC suspending all audits until March 2021 due to Covid-19.
3. PwC Radio advertising market benchmark report, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
4. IAB digital advertising revenue – General Display, IAB NZ Digital advertising revenue report, Q2 2020.
PRINT
CIRCULATION
$36.5m
25%
TOTAL RADIO
$43.7m
30%
PRINT
ADVERTISING
$35.3m
24%
TOTAL DIGITAL
$28.3m
19%
PRINT OTHER
$3.6m
2%
H1 2020 Total Segment Revenue $147.3m
9
CHANNEL
PERFORMANCE.
10
RADIO.
For the half year
ended 30 June 2020
$ millionH1 2020H1 2019% Change
Radio revenue43.753.5 (18%)
Direct radio expenses(14.6)(17.7)(17%)
Radio contribution29.1 35.8 (19%)
•Radio revenue commenced the year in growth prior to the impact of Covid-19.
•Radio revenue market share grew year-on-year to 39.7% in H1 2020, up from 39.3%
for the comparable period
1
.
•iHeartRadio revenue grew 39% in H1 2020 to $0.9 million, supported by significant
growth in users and engagement in music and podcasts
2
.
•Initiatives implemented in March 2020 to mitigate the impact of Covid-19 included
the closure of Radio Sport.
•Significant audience maintained with 2.0 million weekly radio listeners
3
.
1. PwC Radio advertising market benchmark report, June 2020.
2. iHeartMedia, Adobe Analytics, June 2020.
3. GfK Radio Audience Measurement, Commercial Stations,
NZME and Partners, Cumulative Audience, S1 2020, AP10+.
11
RADIO LISTENERS
& MARKET SHARE.
2,100
2,000
1,900
1,800
1,700
1,600
1,500
S1 / 2018S2 / 2018S3 / 2018S4 / 2018S1 / 2019S2 / 2019S3 / 2019S4 / 2019S1 / 2020
15
14
13
12
11
10
9
8
7
6
5
S1 / 2018S2 / 2018S3 / 2018S4 / 2018S1 / 2019S2 / 2019S3 / 2019S4 / 2019S1 / 2020
30
25
20
15
10
5
S1 / 2018S2 / 2018S3 / 2018S4 / 2018S1 / 2019S2 / 2019S3 / 2019S4 / 2019S1 / 2020
1. GfK Radio Audience Measurement, Commercial Stations, NZME and Partners, Cumulative Audience, S1 2020. AP10+
2. GfK Radio Audience Measurement, Commercial Talk Stations, NZME, Market Share, S1 2020, AP10+.
3. GfK Radio Audience Measurement, Commercial Music Stations, NZME, Market Share, S1 2020, People 25 54 y/o.
NZME Radio weekly listeners
– Total including partners
1
Weekly Listeners (000’s)
NZME Talk Radio –
Major Markets All 10+ Share
2
Market Share (%)
NZME Music Radio –
Major Markets 25-54 Share
3
Market Share (%)
12
PRINT.
For the half year
ended 30 June 2020
$ millionH1 2020H1 2019% Change
Print advertising revenue35.3 51.1 (31%)
Circulation revenue 36.5 38.5 (5%)
Other print revenue3.67.0 (49%)
Print revenue75.396.6(22%)
Direct print expenses(25.8)(33.5)(23%)
Print contribution49.663.1 (21%)
•Print advertising market share maintained year-on-year at 46.8% for the 6 months
to June 2020
1
.
•Print circulation revenue was down 5% due to a volume decrease of 8% (subscriber
-4%, retail -25%), partially offset by a 3% increase in yield in H1 2020. First subscriber
volume lift from Q1 to Q2 20 since 2017 (79% of total volume, 75% of circulation
revenue).
•In 2019 Stuff removed a number of publications previously printed by NZME which
continues to impact other print revenue in H1 2020. Combined with reduced volumes,
we expect an annual impact on third-party print revenue of approximately $5 million,
however this will be substantially offset by a reduction in print expenses.
•Initiatives implemented in March 2020 to mitigate the impact of Covid-19 included
the temporary suspension of some newspaper inserted magazines and community
newspapers.
•Readership continues to be strong with a NZ Herald brand audience of 1.6 million
and 1.2 million weekly readers of NZME print publications
2
.
1. PwC NPA quarterly performance comparison report, June 2020.
2. Nielsen CMI Fused Q2 19 – Q1 20, June 2020, People 15+.
13
PRINT AUDIENCE
& READERSHIP.
500
450
400
350
300
250
200
Q2 16 – Q1 17Q3 16 – Q2 17Q4 16 – Q3 17Q1 17 – Q4 17Q2 17 – Q1 18Q3 17 – Q2 18Q4 17 – Q3 18Q1 18 – Q4 18Q2 18 – Q1 19Q3 18 – Q2 19Q4 18 – Q3 19Q1 19 – Q4 19Q2 19 – Q1 20
NZ Herald Herald on Sunday
1900
1700
1500
1300
1100
900
700
500
Q2 16 – Q1 17Q3 16 – Q2 17Q4 16 – Q3 17Q1 17 – Q4 17Q2 17 – Q1 18Q3 17 – Q2 18Q4 17 – Q3 18Q1 18 – Q4 18Q2 18 – Q1 19Q3 18 – Q2 19Q4 18 – Q3 19Q1 19 – Q4 19 Q2 19 – Q1 20
Weekly Brand Audience Daily Brand Audience
40
38
36
34
32
30
28
26
24
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
1.80
1.70
1.60
1.50
1.40
1.30
1.20
1.10
1.00
Q1 17Q2 17Q3 17Q4 17Q1 18Q2 18Q3 18Q4 18Q1 19Q2 19Q3 19Q4 19Q1 20Q2 20
Subscriber Volume Yield
1. Nielsen CMI Q2 16 – Q1 20, June, AP 15+, average issue readership trend.
2. Nielsen CMI Q2 16 – Q1 20, June, AP 15+.
3. Subscriber volume drives revenue and represents the count of individual paid papers delivered including the NZ Herald,
Herald on Sunday and Regionals. Subscriber yield includes promotional volumes.
NZ Herald (Mon-Sat) and Herald on
Sunday Average Issue Readership
1
NZ Herald Daily and Weekly
Brand Audience
2
Print Subscriber Volume
and Yield
3
Readership (000’s)
Brand Audience (000’s)
Subscriber Volume (millions)
Yield ($)
14
DIGITAL.
For the half year
ended 30 June 2020
•Digital revenue held flat for the half at $28.3 million after growing 7% in Q1, as growth
in digital subscriptions and classifieds revenue offset the impacts of Covid-19 on
advertising revenues.
•Growth in Digital display market share to 24.3% compared to 22.8% in H1 2019
2
.
•Subscription revenue of $2.4 million represents revenue from the NZ Herald Premium
digital subscriber base.
•OneRoof, now #1 in Auckland for residential for-sale real estate listings, contributed
$1.4 million of digital classifieds revenue, of which 73% relates to listings and 18%
sponsorship
3
.
•GrabOne revenue has quickly recovered from the impacts of Covid-19 and is now
delivering year-on-year growth.
•2.4 million digital users per month across NZME’s digital platforms
4
and 1.6 million
monthly unique audience on nzherald.co.nz
5
.
1. H1 2019 direct digital costs include reclassifications.
2. IAB digital advertising revenue General Display, IAB NZ Digital advertising
revenue report, Q2 2020.
3. OneRoof’s listings as a percentage of residential for-sale real estate listings
on trademe.co.nz.
4. Nielsen CMI Fused Q2 19 – Q1 20, May, People 10+.
5. Nielsen Online Ratings, June 2020.
$ millionH1 2020H1 2019% Change
Advertising revenue20.222.0 (8%)
Subscription revenue2.40.2 -
Classified revenue1.71.4 16%
GrabOne revenue4.04.6(12%)
Digital revenue28.3 28.2 0%
Direct digital expenses
1
(9.3)(9.0)3%
Digital contribution19.0 19.2 (1%)
15
2020 HALF YEAR
FINANCIAL RESULTS.
16
OPERATING
RESULTS.
For the half year ended 30 June 2020
$ millionH1 2020H1 2019% Change
Segment Revenue147.3178.3(17%)
Other revenue10.52.8277%
Operating Revenue
1
157.8181.1(13%)
Operating expenses
1
(128.9)(153.5)(16%)
Operating EBITDA
1
28.927.65%
Depreciation and amortisation on owned assets(8.7)(10.6)(18%)
Depreciation on leased assets(6.3)(6.4)(1%)
Net interest expense on loans(1.6)(2.4)(33%)
Interest expense on leases(2.3)(2.5)(5%)
Operating NPBT
1
9.95.676%
Taxation expense(3.1)(1.6)98%
Operating NPAT
1
6.84.166%
Operating Earnings per Share
1
3.52.165%
Operating EBITDA excl. IFRS 1621.819.413%
1. Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-for-like
comparison between 2019 and 2020 interim financial years. Please refer to pages 31-32 of this results presentation for a detailed
reconciliation. Operating and statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
•Operating EBITDA and Operating
NPAT grew in H1 2020.
•Segment revenue decreased 17% to
$147.3 million reflecting the significant
impacts of Covid-19.
•Other revenue includes an $8.6 million
government wage subsidy in H1 2020.
•Cost initiatives implemented in response
to Covid-19 pandemic resulted in a
decrease in Operating expenses
1
of 16%.
•Operating EBITDA
1
increased 5%.
•Depreciation and amortisation on owned
assets reduced 18% as some assets
became fully depreciated.
•Operating NPAT
1
increased $2.7 million
to $6.8 million, and Operating earnings
per share increased to 3.5 cents per
share.
17
EXPENSES.
For the half year ended 30 June 2020
$ millionH1 2020H1 2019% Change
People and contributors69.277.4(11%)
Print and distribution22.5 29.6(24%)
Agency commission and marketing16.421.1(22%)
Property2.8 3.4 (19%)
Content7.2 8.1 (11%)
IT and communications6.0 5.8 3%
Other4.8 8.1(40%)
Total Operating expenses
1
128.9 153.5(16%)
Exceptional items:
Redundancies7.03.2
One off projects and other exceptional items0.21.1
Total exceptional items7.24.3
Note: Net exceptional items of $5.8 million on pages 31-32 includes other revenue relating
to transmission and property lease cost relief.
•People and contributors expense
reduced 11% reflecting cost saving
initiatives in response to Covid-19.
•Printing and distribution expense reduced
24% due to an 8% reduction in print
volumes, mostly relating to the temporary
suspension of some print products due
to Covid-19.
•Property costs decreased 19% due
to transmission cost relief and savings
in repairs and maintenance.
•IT and communications costs increased
3% due to implementation of new
systems.
•Exceptional items largely relate
to redundancies due to workforce
restructuring.
1. Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-for-like
comparison between 2019 and 2020 interim financial years. Please refer to pages 31-32 of this results presentation for a detailed
reconciliation. Operating and statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
18
ONGOING
COST BASE
REDUCTIONS.
While some of the impacts and actions taken in response to Covid-19 were
temporary, Management expect to achieve a permanent reduction in cost
base as a result of:
•Permanent product changes; and
•Improved efficiency following the restructure.
Costs were down $24.6 million for the first half, with approximately
$7.0 million relating to permanent cost reductions and the balance relating
to variable or short-term savings.
The annualised permanent reduction in cost base is expected to be
$20.0 million per annum.
19
BALANCE
SHEET.
As at 30 June 2020
$ million31 June 202031 December 2019
Trade, other receivables and inventory40.854.4
Trade and other payables(48.5)(51.5)
Current tax (payable)/receivable(0.5)(0.3)
Net working capital excluding cash(8.1)2.7
Plant property & equipment, intangibles and
other non-current assets
203.1209.5
Right of use assets (NZ IFRS 16)69.175.5
Lease liabilities (NZ IFRS 16)(89.6)(95.9)
Net interest-bearing liabilities(55.2)(74.7)
Lease liabilities (NZ IFRS 16)(0.2)(0.6)
Net Assets119.1116.5
•Net working capital decreased due
to revenue decline, resulting in a lower
receivables balance, partially offset
by lower payables at June 2020.
•Agreed terms to extend existing debt
facilities to 1 July 2023 (due to expire
January 2022), including additional
covenant headroom over the term
of the facility.
•Net debt reduced by $19.5 million
in 6 months to $55.2 million as at
30 June 2020.
•Net debt reduction is expected to be
lower in the second half as net working
capital is expected to grow.
20
CASH
FLOWS.
For the half year ended 30 June 2020
$ millionH1 2020H1 2019
Operating EBITDA
1
28.9 27.6
NZ IFRS 16 Interest paid on leases(2.3) (2.5)
Interest paid on bank facilities(1.5)(2.0)
Working capital movement11.0 0.4
Exceptional items(7.2)(4.3)
Tax paid(1.2)(2.0)
Non-cash items in EBITDA(0.2)1.0
Cash flow from operations27.7 18.3
Capital expenditure(3.3)(4.5)
NZ IFRS 16 lease liability principal repayment(4.8)(5.7)
Cash movement in Net Debt19.68.1
Non-cash borrowing costs
(0.1)(0.1)
Movement in Net Debt19.58.0
•Operating cash flows increased
$9.4 million in the half to $27.7 million,
substantially due to lower working
capital.
•Capital expenditure was $3.3 million
in H1 2020, a decrease compared to
$4.5 million in H1 2019.
•Full year 2020 capital expenditure
is expected to be approximately
$7.0 million.
•Lease liability principal repayments
reduced to $4.8 million due to
transmission cost relief received from
the government and rent concessions.
1. Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-for-like
comparison between 2019 and 2020 interim financial years. Please refer to pages 31-32 of this results presentation for a detailed
reconciliation. Operating and statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
21
CAPITAL
MANAGEMENT.
FY16FY17FY18FY19H120
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
120.0
100.0
80.0
60.0
40.0
20.0
0
1.4
1.4
1.8
NET DEBT (LHS) LEVERAGE RATIO (RHS)
1.5
1.0
•Capital management plan is to reduce
debt while maintaining investment
in growth opportunities across the
business.
•Net debt reduced by $19.5 million
in 6 months to $55.2 million as at
30 June 2020.
•Leverage ratio (Net Debt to 12-month
Operating EBITDA
1
) decreased to
1.0 times as at 30 June 2020.
•New bank facilities limit dividend
payments until after 30 June 2021.
30 June 202031 December 2019
Net Debt ($ million)55.274.7
Net interest cover
(Operating EBITDA
1
/ Interest Expense)
14.811.5
Leverage Ratio
(Net debt to 12-month Operating EBITDA
1
)
1.01.5
Dividend Policy
Subject to achieving the annual debt reduction target, and having regard to NZME’s capital
requirements, operating performance, financial position and cash flow at the time, NZME intends
to pay dividends of 30% to 50% of reported NPAT.
Full dividend policy is available at www.nzme.co.nz/investor-relations/dividends/
Net Debt ($m)
Leverage Ratio
(Net Debt / 12-month Operating EBITDA)
1. Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like-for-like
comparison between 2019 and 2020 interim financial years. Please refer to pages 31-32 of this results presentation for a detailed
reconciliation. Operating and statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
22
STRATEGIC PRIORITIES.
Focused on Growth:
1. Nielsen CMI Fused Q2 19 – Q1 20, May, People 10+.
2. AdsWhizz and StreamGuys, June 2020.
3. OneRoof’s listings as a percentage of residential
for-sale real estate listings on trademe.co.nz.
NZME Total Monthly
Digital Users
1
NZ Herald Premium Digital
Subscriptions
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
Q2 16 - Q1 17Q3 16 - Q2 17Q4 16 - Q3 17Q1 17 - Q4 17Q2 17 - Q1 18Q3 17 - Q2 18Q4 17 - Q3 18Q1 18 - Q4 18Q2 18 - Q1 19Q3 18 - Q2 19Q4 18 - Q3 19Q1 19 - Q4 19Q2 19 - Q1 20
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
Apr 19
Jun 19
Aug 19
Oct 19
Dec 19
Feb 20
Apr 20
Jun 20
Digital Only Print entitled
Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020
6.0
5.0
4.0
3.0
2.0
1.0
-
May 19
Jun 19
Jul 19
Aug 19
Sep 19
Oct 19
Nov 19
Dec 19
Jan 20
Feb 20Mar 20
Apr 20
May 20
Jun 20
Jul 20
120%
100%
80%
60%
40%
20%
0%
1
Leading the future of
news and journalism
in New Zealand
2
Growing radio and
leading digital audio
3
Creating New Zealand’s
leading real estate
platform
iHeartRadio Average Monthly
Total Listening Hours (million)
2
OneRoof Auckland residential
for-sale listings as a % of total
3
23
LEADING THE FUTURE OF NEWS &
JOURNALISM IN NEW ZEALAND.
1
nzherald.co.nz/premium
Your Premium
2020 FocusKey Success Metrics2020 Results to date
Grow digital
subscription
revenues
Growth in digital
subscriptions and
revenue while
maintaining NZ Herald
site audience and
engagement
• 82,000 NZ Herald Premium subscribers; 43,000 paid, up from 21,000 at February 2020, and 39,000 print
subscribers who have activated their premium access, up from 25,000 at February 2020
• Digital subscription revenue of $2.4 million in H1 2020, an annualised revenue run-rate of $7.5 million
based on current subscriber volumes
• Investment in Business and Regional journalism to enhance content offering
Enhance digital
product and
revenues
Return digital
advertising revenue
to growth
• 2.4 million digital users per month across NZME’s digital platforms
1
and 1.6 million monthly unique
audience on nzherald.co.nz
2
• Total Digital revenue flat despite impacts of Covid-19
• Growth in Digital display market share to 24.3% compared to 22.8% in H1 2019
3
• NZ Herald App upgraded to enhance personalisation, allow offline reading and in-App purchasing
of Premium subscription access
Improve core
print revenue
trends
Improve print
subscriber retention
and reduce advertising
revenue declines
• Print advertising and circulation revenues impacted by Covid-19
• Print subscribers grew in the half, representing 83% of total print volume and 75% of total circulation
revenue
1. Nielsen CMI Fused Q2 19 – Q1 20, May, People 10+.
2. Nielsen Online Ratings, June 2020.
3. IAB digital advertising revenue – General Display, IAB NZ Digital advertising revenue report, Q2 2020.
24
GROWING RADIO AND
LEADING DIGITAL AUDIO.
2
2020 FocusKey Success Metrics2020 Results to Date
Enhance radio
sales capability
Growth in radio
revenue
• Radio revenue in growth year-on-year prior to the impact
of Covid-19
• Radio revenue market share grew year-on-year to 39.7%
for the half, up from 39.3% for the comparable period
1
Improve
radio content
offering
Grow radio
audience share
in the 25-54
demographic
Brand optimisation, talent and content changes in June 2020:
• Launch of Gold FM to replace Mix Auckland
• Coast’s new ‘Feel Good’ sound
• Flava ‘Old School Hip Hop & R&B’
• The Hits Breakfast
Maximise the
potential of the
iHeart product
Growth in
iHeartRadio
and podcast
consumption
iHeartRadio revenue growth of 39% in H1 2020 supported
by significant growth in users and engagement in music and
podcasts:
• 1,021,000 registered users, up 12%
2
from June 2019
• 4.9 million average monthly listening hours in H1 2020,
up 34%
3
from H1 2019
• Significant growth in iHeartRadio weekly listening hours since
new content launched; Flava +290%, The Hits +224%
3
Revenue growth
from digital audio
products
1. PwC Radio advertising market benchmark report, June 2020.
2. iHeartMedia, Adobe Analytics, June 2020.
3. AdsWizz and StreamGuys, June 2020
25
CREATING NEW ZEALAND’S LEADING
REAL ESTATE PLATFORM.
3
$ millionH1 2020H1 2019
Revenue1.41.3
Direct Expenses(2.1)(2.6)
OneRoof
Contribution
(0.6)(1.3)
Total NZME
Real Estate
Revenue
5
15.320.3
2020 FocusKey Success Metrics2020 Results to Date
Develop
OneRoof as
a prominent
national
brand
Improve listings,
audience and
engagement
metrics
• Now having more residential for-sale listings in Auckland than
any other site and 83% of NZ’s residential for-sale listings
1
• Monthly unique web audience has grown to 300,000
2
, with
less than a quarter
3
now referred from the NZ Herald site
• More than 175,000 app downloads
• Enquiries to agents in June were up 24% in February
(pre-Covid-19) and more than 50% up year-on-year
Deliver data
driven agent
promotion
product
Increase
revenue from
agent products
• Agent profile product revenue increase of 89% YoY
• Product range includes data based on user search behaviour,
NZME wider-network data points and geo-location. Ads
served across print, radio and digital channels
• Off-NZME network amplification products due to launch in H2
Maximise
potential
of existing
products
OneRoof
revenue growth
and improved
contribution
• 73% of OneRoof revenues year to date generated from
vendor listings upgrades
• Year-on-year revenue growth to $1.4 million despite a 29%
decrease in market property sales volumes due to Covid-19
4
• June 2020 listings revenue ~3 times June 2019
• H1 development has improved the foundations for audience
growth along with launching Virtual Viewings, Open Homes
and Auctions during lockdown
• New OneRoof local print products launched and have
increased print revenue share
1. OneRoof’s listings as a percentage of active residential for-sale real estate
listings on trademe.co.nz.
2. Nielsen Online Ratings, 2020.
3. Google Analytics (July 2020).
4. OneRoof / Valocity.
5. Total NZME Real Estate revenue restated for H1 2019
due improvements in industry booking tagging processes
and therefore reporting accuracy.
26
OUTLOOK.
•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 expectation of recovery we expect to deliver a FY 2020 Operating
EBITDA of $60 - $63 million
1
.
•Based on continued improvement in economic conditions, Covid-19 recovery, improved
revenue trends and permanent cost reductions, we would expect profit growth in 2021.
•Based on this outlook and NZME’s capital requirements, the Board expects to be able
to consider a dividend payment when facility terms permit, after 30 June 2021.
•We look forward to providing you with further updates on our strategic priorities at an
Investor Day in Q4.
1. Operating EBITDA includes IFRS 16.
27
Q&A.
28
SUPPLEMENTARY
INFORMATION.
29
OUR SUSTAINABILITY COMMITMENT
HEALTH AND SAFETY
NZME promoted a healthy
and safe workforce through all
levels of Covid-19 lockdown with
regular transparent communications
and support from senior leaders.
OUR PEOPLEOUR COMMUNITIESOUR ENVIRONMENT
RESPONSIBLE
REPORTING AND
BROADCASTING
NZME provided a balanced
reporting platform keeping Kiwis in the
know as Covid-19 swept the globe and
directly impacted New Zealanders.
CONNECTING
COMMUNITIES
During Covid-19’s impact
NZME’s Go NZ! campaign
across newspapers, websites and
radio networks highlighted how we can all
play a part in rebuilding local economies.
NZME delivered stories of local business
innovation, success stories and tales of
inspirational thinking.
SHARING OUR
PLATFORMS
NZME has partnered with
the following organisations to
champion charitable causes and
facilitate conversations that matter.
• Surf Lifesaving NZ
• KidsCan End Child Poverty
• MusicHelps (Covid-19)
• KidsCan ‘19’ (Covid-19)
• Fairfood (Covid-19)
CHAMPIONING
THE CRAFT
NZME has started ten Internships
and /or cadetships including a virtual
internship during Covid-19.
• NZME voted in Top 100
Graduate Employers in Grad
NZ’s 2020 Student Survey.
• 18 x NZ Radio Awards
• 14 x Voyager Media Awards
• PRINZ Awards – finalist for best Internal
Communications (our Purpose)
• 4 x INMA Awards
(International News Media Association)
RECYCLING
Identified and initiated
recycling of batteries, ink
and toner cartridges at our
seven largest offices.
Encouraging the use of photocopy paper
that comes in a fully recyclable wrapper.
BEST PRACTICE
Reduced our motor vehicle
fleet.
Reduction in domestic
travel.
RESPONSIBILITY
Climate Change and
environmental stories to
promote environmental issues
impacting Kiwis.
EQUIPPING OUR
PEOPLE
Covid-19 meant the successful,
rapid deployment of working
from home guidelines and video
conferencing for our people. NZME has
embraced videoconferencing to stay
connected.
No one could have anticipated the
impact of Covid-19 on the nation, our
economy, our business or our people
– nor the flow on effect across our
sustainability commitment.
Covid-19 in many respects has
accelerated our sustainability initiatives,
from ways of working through to
reductions in travel and our fleet. In
other respects, it has simply brought
initiatives to a complete halt (as we
have been unable to access our
buildings, for example).
The following is a snapshot of 2020
activity – results will be reported
following the conclusion of the
financial year.
JUNE 2020 UPDATE
30
RECONCILIATION OF OPERATING RESULTS
TO FINANCIAL STATEMENTS.
For the 6 months ended 30 June 2020
6 MONTHS ENDED 30 JUNE 2020
$ million
Operating
Results excl.
IFRS 16
NZ IFRS 16
Adjustments
Operating
Results incl.
IFRS 16
Exceptional
Items
Per Financial
Statements
Segment revenue147.3-147.3-147.3
Other revenue10.5-10.51.5*12.0
Total revenue 157.8-157.81.5159.3
Expenses(136.0)7.1(128.9)7.2(136.1)
EBITDA21.87.128.9(5.8)23.2
Depreciation and amortisation(8.7)(6.3)(15.0)-(15.0)
EBIT13.20.713.9(5.8)8.2
Net interest expense(1.6)(2.3)
(4.0)
-(4.0)
Net profit/(loss) before tax11.5(1.6)9.9(5.8)4.2
Ta x(3.1)-(3.1)
1.9
(1.2)
Net profit/(loss) after tax8.4(1.6)6.8(3.8)3.0
*This $1.5 million relates to the accounting treatment of rent concessions received as a direct result of Covid-19 which,
under an IFRS 16 practical expedient provision, has been classified as other revenue.
31
RECONCILIATION OF OPERATING RESULTS
TO FINANCIAL STATEMENTS.
For the 6 months ended 30 June 2019
6 MONTHS ENDED 30 JUNE 2019
$ million
Operating Results
excl. IFRS 16
NZ IFRS 16
Adjustments
Operating Results
incl. IFRS 16
Exceptional
Items
Per Financial
Statements
Segment revenue178.3-178.3-178.3
Other revenue2.8-2.8-2.8
Total revenue 181.1-181.1-181.1
Expenses(161.7)8.2(153.5)(4.3)(157.8)
EBITDA19.48.227.6(4.3)23.3
Depreciation and amortisation(10.6)(6.4)(17.0)-(17.0)
EBIT8.81.810.64.3)6.3
Net interest expense(2.4)(2.5)(5.0)-(4.9)
Net profit/(loss) before tax6.4(0.7)5.6(4.3)1.4
Ta x(1.7)0.2(1.6)1.1(0.5)
Net profit/(loss) after tax4.7(0.5)4.1(3.2)0.9
32
OPERATING RESULTS.
H1 2019
Total
Revenue
Print
Advertising
Radio
Advertising
Digital
Advertising
Digital
Classifieds
CirculationDigital
Subscriptions
GrabOneOther Print
Revenue
Wage
Subsidy
Other
Revenue
H1 2020
Total
Revenue
200.0
190.0
180.0
170.0
160.0
150.0
140.0
130.0
120.0
110.0
100.0
181.1
(15.8)
(9.7)
(1.8)
(2.0)
(0.6)
157.8
2.2
(3.4)
8.6
(1.1)
0.3
$ million
Operating Revenue - H1 2019 to H1 2020 Movement
REVENUE ANALYSIS
33
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 from the full detail set out in NZME’s Consolidated Interim Financial Statements for
the half year ended 30 June 2020.
This presentation may contain projections or forward-looking statements regarding a variety
of items. Such projections or forward-looking statements are based on current expectations,
estimates and assumptions and are subject to a number of risks and uncertainties. There is
no assurance that results contemplated in any projections or forward-looking statements in
this presentation will be realised. Actual results may differ materially from those projected in
this presentation. No person is under any obligation to update this presentation at any time
after its release to you or to provide you with further information about NZME Limited.
The Group adopted NZ IFRS 16 Leases on 1 January 2019. Operating results as stated
throughout this presentation refer to results including the adjustments for the adoption of
NZ IFRS 16 and prior to exceptional items. Please refer to pages 31-32 of this presentation
for a detailed reconciliation to these results excluding IFRS 16 adjustments and to the
statutory results.
While reasonable care has been taken in compiling this presentation, none of NZME Limited
nor its subsidiaries, directors, employees, agents or advisers (to the maximum extent
permitted by law) give any warranty or representation (express or implied) as to the accuracy,
completeness or reliability of the information contained in it nor take any responsibility for it. The
information in this presentation has not been, and will not be, independently verified or audited.
34
35
TUKUTUKU KŌRERO
Education Gazette
NEW ZEALAND
&
---
For the six months ended 30 June 2020
CONSOLIDATED
INTERIM FINANCIAL
S TAT EMEN T S
NZME Limited
KEEPING
KIWIS IN
THE KNOW.
2 NEW ZEALAND MEDIA AND ENTERTAINMENT
Chairman's Report
04
Chief Executive Officer's Report
06
Directors' Statement
08
Consolidated Interim Income Statement
09
Consolidated Interim Statement of Comprehensive Income
10
Consolidated Interim Balance Sheet
11
Consolidated Interim Statement of Changes in Equity
12
Consolidated Interim Statement of Cash Flows
13
Notes to the Consolidated Interim Financial Statements*
Basis of Preparation
14
Group Performance
16
Operating Assets and Liabilities
21
Capital Management
25
Group Structure and Investments in Other Entities
29
Other Notes
31
Independent Auditors' Review Report
32
* In an attempt to make these financial statements easier to read, the notes to the financial statements have been grouped into six
sections; aimed at grouping items of a similar nature together. The Basis of Preparation section presents a summary of material
information and general accounting policies that are necessary to understand the basis on which these consolidated interim financial
statements have been prepared. The material accounting policies used in the preparation of these consolidated interim financial
statements are generally consistent with those used in the audited consolidated financial statements for the year ended 31 December
2019. Where there have been changes to accounting policies or the Directors consider it necessary to disclose an accounting policy
in these consolidated interim financial statements, accounting policies have been included in the relevant note. Key judgments and
estimates relevant to a particular note are also included in the relevant note, and are clearly marked. A summary of the key judgments
and estimates is also included under the Basis of Preparation section on page 14.
CONTENTS.
Consolidated Interim Financial Statements
for the six months ended 30 June 2020 (unaudited)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 3
CHAIRMAN'S
REPORT.
It is a privilege to Chair the Board of
New Zealand Media and Entertainment, a
truly essential, exciting and resilient business.
Delivering on NZME’s purpose of keeping
Kiwis in the know has never been more
crucial than during the Covid-19 pandemic.
This year will be remembered for Covid-19
and the disruption it has caused around
the world.
I am proud of how NZME continues to
serve our country and our communities
as an Essential Service during this
unprecedented time, fulfilling our
responsibilities to all New Zealanders
whether they be part of our audience or
amongst our many commercial partners.
Swift action, taken by your Board and
management to mitigate the impacts of
Covid-19 on the business, has reduced
risk and stabilised the foundations for
sustainable future growth for shareholders.
Progress against our strategic priorities
and effective capital management has
allowed NZME to continue to operate
effectively during these testing times and
deliver a positive interim result.
Success in leading the future of news
and journalism in New Zealand is
evidenced by the strong growth in
NZ Herald Premium digital subscriptions,
now more than 82,000, including more
than 43,000 paid digital subscriptions.
We have regularly seen NZ Herald online
and iHeartRadio audiences reach twice
normal levels
1
as New Zealanders seek to
be informed and entertained during these
challenging times.
Achievements in journalism and the
strength of NZME’s editorial platforms were
recognised at the 2020 Voyager Media
Awards where The New Zealand Herald
took the ‘Triple Crown’ of ‘Newspaper of
the Year’, ‘Website of the Year’ and ‘Best
News Website or App’. For the second year
running, NZME was also awarded the top
Asia/Pacific prize at the annual INMA media
awards of ‘Best Global Media Brand in Asia
Pacific’. These awards are testament to the
quality of our talent and commitment of our
people, of whom I am extremely proud.
We continue to focus on our three key
strategic priorities of leading the future
of news and journalism in New Zealand,
growing radio and leading digital audio,
and creating New Zealand’s leading real
estate platform.
NZME has again made significant progress
against our capital management targets
in the half year. Net Debt reduced to
$55.2 million as at 30 June 2020, with
the leverage ratio reduced to 1.0 times
Operating Earnings before Interest, Tax,
Depreciation and Amortisation (“EBITDA”)
2
.
We will continue to progress with our
capital management commitment, to
strengthen our Balance Sheet while
maintaining the ability to invest in growth
opportunities across the business.
Progress against our strategic priorities and effective capital
management has allowed NZME to continue to operate effectively
during these testing times and deliver a positive interim result.
New Zealand Media and Entertainment’s role is to ensure New Zealanders have access
to news and information they can trust and have confidence in. Rarely, has that role been
more vital than during the events of the past six months.
1
Nielsen Online Ratings, June 2020.
2
Operating results presented include the impact of NZ IFRS 16,
however exclude exceptional items to allow for a like for like comparison between 2019 and 2020 half
years. Please refer to the 2020 Half Year Results Presentation for a detailed reconciliation. Operating and
statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
4 NEW ZEALAND MEDIA AND ENTERTAINMENT
We introduced our Sustainability
Commitment in 2019, focused on
supporting our communities, our people
and our environment in order to support
long term shareholder value creation.
NZME’s Sustainability Commitment is
ongoing and we will provide an update on
achievements against these measurable
objectives at the full year.
New Zealand is cautious regarding the
future economic environment and so are
we. Cost agility and containment remain a
focus. Based on continued improvement
in economic conditions, Covid-19 recovery,
improved revenue trends and permanent
cost reductions, we would expect profit
growth in 2021. Based on this outlook and
NZME’s capital requirements, the Board
expects to be able to consider a dividend
payment for 2021.
I would like to thank our CEO and the
Executive Team. They have displayed
exemplary leadership during the most trying
of times. And thank you to NZME’s people who
have served our audiences and communities
during a challenging first half of the year.
Finally, your Board thanks shareholders for
their ongoing support. We remain focused
on delivering long term shareholder value
and look forward to updating you on our
progress later in the year.
Barbara Chapman
Chairman
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 5
CHIEF EXECUTIVE
OFFICER’S REPORT.
At the heart of all that we do is a desire
to put people first - our audiences,
our customers and our people. New
Zealanders trust New Zealand Media
and Entertainment to provide them with
the most accurate, informative, and
timely news and journalism during this
difficult time. We remain steadfastly
dedicated to deliver for our audiences
and to keep our advertisers connected
with their customers.
NZME’s impressive suite of brands
and unrivalled pool of talent keep our
audiences engaged. We attract more
than 1.2 million print readers
3
, 2.0 million
radio listeners
4
and 2.4 million digital
consumers
3
each month.
H1 2020 Financial Results
Commercial partners and advertisers
continue to value NZME as a powerful
multi-platform connection to their target
customers. Whilst advertising and retail
circulation revenues came under significant
pressure in the second quarter, we were
very pleased to gain market share across
key revenue channels within radio, print
and digital advertising.
Total Operating Revenue
5
of $157.8 million
was down 13% on the comparable period.
Included in this is Segment revenue of
$147.3 million, down 17% largely due to the
impacts of Covid-19. Other Revenue of
$10.5 million included an $8.6 million wage
subsidy received from the government, partially
offsetting advertising revenue declines.
Our focus on cost efficiencies continued
and was supplemented by additional cost
initiatives in the first half, helping to mitigate
the impact of Covid-19 on the business.
These included the temporary suspension
of some newspaper inserted magazines
and community newspapers, the closure
of Radio Sport and a wide scale workforce
restructuring. Directors' fees and employee
salaries were also reduced temporarily by
15-20% on a voluntary basis.
Combined, these initiatives led to a
16% year-on-year reduction in Operating
expenses
5
for the half.
Operating EBITDA
5
was $28.9 million for the
half year, an increase of 5% against the first
half of 2019
Operating Net Profit After Tax (“NPAT”)
5
was $6.8 million and Operating Earnings
Per Share (EPS)
5
was 3.5 cents per share in
H1 2020, an increase of 1.4 cents per share
due to higher Operating EBITDA
5
and a
comparably lower depreciation charge in
the period.
Statutory NPAT was $3.0 million, compared
to $0.9 million in the comparable period.
Capital expenditure was lower in H1 2020
at $3.3 million, a decrease from $4.5 million
in the comparable period.
NZME’s key strategic priorities
We have made good progress against
our three strategic priorities in the half
year - our commitment to lead the future
of news and journalism in New Zealand,
growing radio and leading digital audio,
and creating New Zealand’s leading real
estate platform.
NZ Herald Premium digital subscriptions
delivered $2.4 million revenue in the half
year, representing an annualised run rate
More than 3.2 million New Zealanders
3
rely on us to keep them informed and entertained.
The importance of this responsibility continues to be highlighted during the unprecedented
events of this year. This has represented a challenging time for many New Zealanders,
here and abroad.
We remain steadfastly dedicated
to deliver for our audiences
and to keep our advertisers
connected with their customers.
3
Nielsen CMI Fused Q2 19 – Q1 20, June, People 15+. Digital: May 2020, People AP10+
4
GfK Radio Audience Measurement, Commercial Radio Stations, NZME and
Partners, Cumulative Audience, S1 2020, People 10+.
5
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow
for a like for like comparison between 2019 and 2020 half years. Please refer to the 2020 Half Year Results Presentation for a detailed reconciliation. Operating
and statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
6
PwC Radio advertising market benchmark report, 6months
to 30 June 2020 vs 6 months to 30 June 2019.
7
iHeartMedia, Adobe Analytics, June 2020.
8
AdsWizz and StreamGuys, June 2020.
9
GfK Radio Audience
Measurement, Commercial Radio Stations, Market Share, S1 2020, People 10+.
10
GfK Radio Audience Measurement, Commercial Radio Stations, Market Share, S1
2020, People 25-54 y/o.
11
OneRoof’s listings as a percentage of active residential for-sale real estate listings on trademe.co.nz.
12
Nielsen Online Ratings, June 2020.
13
Google Analytics (July 2020).
6 NEW ZEALAND MEDIA AND ENTERTAINMENT
of $7.5 million based on current subscriber
volumes. Our unwavering ambition to be
the leading provider of quality news in
New Zealand will be supported by recent
investment in our business and regional
journalism, enabling us to provide a further
enhanced content offering, increasing
audience and subscribers.
We were pleased to see growth in NZME’s
radio revenue continue up until Covid-19
began to impact advertising revenues
towards the end of the first quarter. Whilst
radio advertising markets tightened in
the second quarter, NZME gained radio
revenue market share
6
. iHeartRadio
continues to achieve revenue growth
through increased listener volume
7
and
engagement
8
.
In terms of radio listener market share, talk
radio major market share grew 0.8% year-
on-year to 14.8%
9
, due to the continued
success of Newstalk ZB. Music radio
major market share was down 0.9% to
25.0%
10
. In June, we made several exciting
enhancements in radio brand optimisation,
talent and content to support future growth
in music listener market share.
Michael Boggs
Chief Executive Officer
OneRoof’s real estate listings platform
has continued to grow and hit a strategic
milestone during this period, now having
more residential for-sale listings in Auckland
than any other site
11
. The platform now hosts
more than 83% of New Zealand’s for-sale
listings
11
. OneRoof generated revenue
growth in the first half to $1.4 million despite
a decrease in total property sales volumes
in New Zealand due to Covid-19.
OneRoof continues to grow its presence in
the market. The platform's monthly unique
digital audience has grown to 300,000
12
, with
less than a quarter now referred from the NZ
Herald site
13
, indicating an increased brand
strength. The launch of virtual offerings during
lockdown provide the foundation for future
audience and revenue growth.
These priorities will remain a focus for the
remainder of 2020 and we look forward to
updating you on our progress later in the year.
Conclusion
I’m very proud to have led NZME’s success
in providing quality journalism and access
to customers for advertisers at a time
more critical than ever. This, as well as the
pleasing financial results achieved in this
half, would not have been possible without
our people’s commitment.
I thank our suppliers, business partners,
and advertisers for their ongoing support
and partnership during the year to date.
I thank our audience of 3.2 million
New Zealanders
3
for choosing to read,
listen and connect with us. We are here
to deliver quality news and entertainment
from New Zealand and around the world -
to keep Kiwis in the know every day.
I appreciate the ongoing support and
active interest of our shareholders and
I would like to thank the Board for their
continued support and guidance.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 7
DIRECTORS'
STATEMENT.
The Directors are pleased to present the consolidated interim
financial statements of NZME Limited (the "Company") and its
subsidiaries (together the "Group") for the six months ended 30 June
2020, incorporating the consolidated interim financial statements
and the auditor's independent review report.
The Directors are responsible, on behalf of the Company, for
presenting these consolidated interim financial statements in
accordance with applicable New Zealand legislation and New
Zealand equivalent to International Accounting Standard 34:
Interim Financial Reporting and International Accounting Standard
34:
Interim Financial Reporting and the NZX Listing Rules.
The consolidated interim financial statements for the Group as
presented on pages 9 to 31 are signed on behalf of the Board of
Directors, and are authorised for issue on the date below.
Barbara Chapman Carol Campbell
Chairman Director
Date: 24 August 2020
For and on behalf of the Board of Directors
8 NEW ZEALAND MEDIA AND ENTERTAINMENT
Note
June 2020
$’000
June 2019
$’000
Revenue2.1
149,039
180,741
Finance and other income2.1
10,262
399
Total revenue and other income
2.1
159,301
181,140
Expenses from operations before finance costs, depreciation and amortisation
(136,093)
(157,7 50)
Depreciation and amortisation2.3.2
(14,997)
(17,0 10)
Finance costs2.3.2
(4,024)
(4,953)
Profit before income tax expense4,187
1,427
Income tax expense
(1,176)
(477)
Net profit after tax3,011
950
Profit for the period is attributable to:
Owners of the Company
3,217
1,176
Non-controlling interests
(206)
(226)
3,011
950
Cents
Cents
Earnings per share attributable to the ordinary shareholders of the
Company
Basic earnings per share (cents per share)2.2
1.64 0.60
Diluted earnings per share (cents per share)2.2
1.61 -
The above Consolidated Interim Income Statement should be read in conjunction with the accompanying notes.
CONSOLIDATED INTERIM
INCOME STATEMENT.
for the six months ended 30 June 2020 (unaudited)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 9
CONSOLIDATED INTERIM STATEMENT
OF COMPREHENSIVE INCOME.
for the six months ended 30 June 2020 (unaudited)
Note
June 2020
$’000
June 2019
$’000
Net profit after tax
3,011
950
Other comprehensive income
Items that may be reclassified to profit or loss
Effective loss on hedging instruments
(810)
-
(Less): recycling of cash flow hedge reserve
(25)
-
Tax impact of hedging transactions
234
-
Net (loss) / gain on hedging instruments
(601)
-
Exchange differences on translation of foreign operations
(40)
(2)
Other comprehensive (loss) net of taxation
(641)
(2)
Total comprehensive income
2,370
948
Total comprehensive income attributable to:
Owners of the Company
2,576
1,174
Non-controlling interests
(206)
(226)
2,370
948
The above Consolidated Interim Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
10 NEW ZEALAND MEDIA AND ENTERTAINMENT
CONSOLIDATED INTERIM
BALANCE SHEET.
Note
June 2020
$’000
December 2019
$’000
as at 30 June 2020 (unaudited)
Cash and cash equivalents
25,013
14,416
Trade and other receivables
39,126
52,449
Inventories
1,671
1,943
Total current assets
65,810
68,808
Non-current assets
Intangible assets
3.1
152,842
150,263
Property, plant and equipment
3.2
36,999
39,902
Right-of-use assets
3.3
69,145
75,538
Capital work in progress
3.4
8,600
13,633
Other financial assets
4,123
4,123
Other receivables and prepayments
1,092
1,329
Derivative financial instruments
-
248
Total non-current assets
272,801
285,036
Total assets
338,611
353,844
Current liabilities
Trade and other payables
48,478
51,483
Current lease liabilities
3.6
9,717
11,076
Current tax provision
429
254
Total current liabilities
58,624
62,813
Non-current liabilities
Non-current lease liabilities
3.6
79,905
84,807
Interest bearing liabilities
4.2
80,245
89,149
Derivative financial instruments
587
-
Deferred tax liability
198
605
Total non-current liabilities
160,935
174,561
Total liabilities
219,559
237,374
Net assets
119,052
116,470
Equity
Share capital
360,768
360,768
Reserves
2,555
2,984
Retained earnings
(244,495)
(247,7 12)
Total Company interest
118,828
116,040
Non-controlling interests
224
430
Total equity
119,052
116,470
The above Consolidated Interim Balance Sheet should be read in conjunction with the accompanying notes.
as at 30 June 2020 (unaudited)
CONSOLIDATED INTERIM STATEMENT
OF COMPREHENSIVE INCOME.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 11
CONSOLIDATED INTERIM STATEMENT
OF CHANGES IN EQUITY.
Attributable to owners of the company
Note
Share
capital
$’000
Reserves
$’000
Retained
earnings
$’000
To t a l
$’000
Non-
controlling
interests
$’000
To t a l
Equity
$’000
Balance at 1 January 2019
360,3632,998(83,593)
279,768
937
280,705
Profit for the period--1,176
1,176
(226)
950
Other comprehensive (loss) -(2)-
(2)
-
(2)
Total comprehensive income
-(2)1,176
1,174
(226)
948
Share based payments-118-
118
-
118
Balance at 30 June 2019
360,3633,114(82,417)
281,060
711
281,771
Balance at 1 January 2020
360,7682,984(247,7 12)
116,040
430
116,470
Profit for the period--3,217
3,217
(206)
3,011
Other comprehensive (loss) -(641)-
(641)
-
(641)
Total comprehensive income
-(641)3,217
2,576
(206)
2,370
Share based payments-212-
212
-
212
Balance at 30 June 2020
360,7682,555(244,495)
118,828
224
119,052
The above Consolidated Interim Statement of Changes in Equity should be read in conjunction with the accompanying notes.
for the six months ended 30 June 2020 (unaudited)
12 NEW ZEALAND MEDIA AND ENTERTAINMENT
CONSOLIDATED INTERIM STATEMENT
OF CASH FLOWS .
Note
June 2020
$’000
June 2019
$’000
Cash flows from operating activities
Receipts from customers
158,514
182,837
Payments to suppliers and employees
(136,198)
(158,151)
Government grants
10,235
-
Dividends received
-
79
Interest received
50
53
Interest paid on bank facilities
(1,450)
(1,994)
Interest paid on leases
(2,302)
(2,451)
Income taxes paid
(1,175)
(2,030)
Net cash inflows / (outflows) from operating activities
4.3
2 7,6 74
18,343
Cash flows from investing activities
Payments for property, plant and equipment and intangible assets
(including work in progress)
(3,300)
(4,465)
Proceeds from sale of property, plant and equipment
-
11
Net cash inflows / (outflows) from investing activities(3,300)
(4,454)
Cash flows from financing activities
Proceeds from borrowings
4,000
27,50 0
Repayments of borrowings
(13,000)
(36,500)
Borrowing costs paid
-
(36)
Payments for lease liability principal
(4,777)
(5,706)
Net cash inflows / (outflows) from financing activities(13,777)
(14,742)
Net increase / (decrease) in cash and cash equivalents
10,597
(853)
Cash and cash equivalents at beginning of the period
14,416
11,717
Cash and cash equivalents at end of the period25,013
10,864
The above Consolidated Interim Statement of Cash Flows should be read in conjunction with the accompanying notes.
for the six months ended 30 June 2020 (unaudited)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 13
1.0 BASIS OF PREPARATION
1.1 REPORTING ENTITY AND STATUTORY BASE
NZME Limited (NZX:NZM, ASX:NZM) is a for-profit company limited by
ordinary shares which are publicly traded on the NZX Main Board and
the Australian Securities Exchange as a Foreign Exempt Listing. NZME
Limited is incorporated and domiciled in New Zealand. It is registered
under the Companies Act 1993 and is a FMC reporting entity under
Part 7 of the Financial Markets Conduct Act 2013. The entity’s
registered office is 2 Graham Street, Auckland, 1010, New Zealand.
NZME Limited (the "Company" or "Parent") and its subsidiaries'
(together the "Group") principal activity during the financial period
was the operation of an integrated media and entertainment business.
1.2 GENERAL ACCOUNTING POLICIES
These consolidated interim financial statements have been prepared
in accordance with New Zealand equivalent to International
Accounting Standard 34:
Interim Financial Reporting, International
Accounting Standard 34:
Interim Financial Reporting and the
NZX Listing Rules.
The consolidated interim financial statements do not include all
notes of the type normally included in an annual financial report.
Accordingly, these consolidated interim financial statements should
be read in conjunction with the audited consolidated financial
statements for the year ended 31 December 2019 and any public
announcements made by NZME Limited during the interim reporting
period and up to the date of these consolidated interim financial
statements. These consolidated interim financial statements are
presented for the Group.
The material accounting policies used in the preparation of these
consolidated interim financial statements are generally consistent with
those used in the audited consolidated financial statements for the
year ended 31 December 2019. Where there have been changes to
accounting policies or the Directors consider it necessary to disclose
an accounting policy in these consolidated interim financial statements,
accounting policies have been included in the relevant note.
These consolidated interim financial statements are presented in
New Zealand dollars, which is the Company's functional and the
Group's presentation currency, and rounded to the nearest thousand,
except where otherwise stated.
These consolidated interim financial statements were approved
for issue by the Board of Directors on 24 August 2020. These
consolidated interim financial statements have not been audited,
but have been reviewed in accordance with New Zealand Standard
on Review Engagement 2410:
Review of Financial Statements
Performed by the Independent Auditor of the Entity
.
1.3 SIGNIFICANT ACCOUNTING ESTIMATES
AND JUDGMENTS
The preparation of the consolidated interim financial statements
requires the use of certain significant judgments, accounting estimates
and assumptions, including judgments, estimates and assumptions
concerning the future. The estimates and assumptions are based on
historical experiences and other factors that are considered to be
relevant. The resulting accounting estimates will by definition, seldom
equal the related actual results and are reviewed on an ongoing basis.
Significant areas of estimation and judgment in these consolidated
interim financial statements are consistent with those disclosed
in the audited consolidated financial statements for the year ended
31 December 2019, and are as follows:
Areas of significant accounting estimates or judgments Note
Determination of the number of reportable segments 2.3.1
Assumptions and judgments used in the impairment review 3.1.1
of indefinite life intangible assets
Right-of-use assets 3.3
1.4 NEW STANDARDS AND INTERPRETATIONS
ADOPTED IN THE CURRENT PERIOD
The Group early adopted the practical expedient provided in the
amendment to NZ IFRS 16:
Leases in relation to rent concessions
received as a result of Covid-19. In adopting the practical expedient
the impact of the rent concessions on the current liabilities were
credited to other income within the income statement.
The Group adopted a new accounting policy in relation to
Government Grants and Government Assistance that it received as
a result of Covid-19. The accounting policy adopted is set out in note
2.1 of these consolidated interim financial statements and is a policy
that adheres to NZ IAS 20:
Accounting for Government Grants and
Disclosure of Government Assistance
.
There have been no other changes to accounting policies or
new standards adopted during the period.
1.5 COVID-19
The global pandemic was declared by the World Health Organisation
on 11 March 2020. The subsequent full lockdown of New Zealand's
non-essential services has had a significant impact on the Group.
NZME's core news and broadcast media business operated as an
essential service during lockdown. Some community newspapers
were unable to be delivered and some NZME run events had to be
cancelled or postponed.
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
14 NEW ZEALAND MEDIA AND ENTERTAINMENT
The following paragraphs provide some detail on the impacts of
Covid-19 and on the Group's response to the pandemic:
1.5.1 Revenue
The impact of Covid-19 on the Group's revenue began in the final two
weeks of March. March advertising revenue was 10.0% below last
year with April 47.6% down, May 39.2% down and June 23.7% down.
Other revenue channels were also impacted to varying degrees.
1.5.2 The Group's Response to Covid-19
The Group responded immediately to the revenue decline with the
Directors and CEO reducing their fees and salary respectively and
employees also asked to take a voluntary 15% reduction for 12 weeks.
Restructuring of the work force was undertaken with over 200 roles
being disestablished. The Group also negotiated with its landlords
to obtain rent relief on various properties. The Group adopted
the Covid-19 Practical Expedient in relation to rent concessions
and as such the relief obtained from these is reflected through a
reduction in lease liabilities with a corresponding gain recognised
in other income in the Income Statement ($458,155). The Group has
increased its bad debt provision by $235,399 to take into account an
expected increase in losses related to the economic impact of the
pandemic on the Group's advertisers.
1.5.3 Government Assistance
The Group applied for and received the Government's wage subsidy
and the income statement for the six months ended 30 June
2020 contains $9,966,184 of wage subsidy. This subsidy has been
recognised as other income ($8,559,469) and as an offset to costs
($1,406,715) as per the Group's accounting policy for Government
Grants detailed in note 2.1.
The Government announced a Media Relief package on 23 April
2020 whereby media companies would receive relief from paying
transmitter tower rental, power and contracted maintenance costs
for six months beginning 1 May 2020 for the transmitter sites leased
from Kordia and Radio New Zealand. The relief obtained for the
tower rental is reflected through a reduction in lease liabilities with
a corresponding gain recognised in other income in the Income
Statement ($994,325).
1.5.4 Other
The rent concessions received as a result of Covid-19 have
decreased the deferred tax assets relating to NZ IFRS 16 by $116,967.
The impacts of Covid-19 have been taken into account as part of the
Group's impairment assessment as at 30 June 2020, see note 3.1.1.
While Covid-19 has had a material impact on the Group's revenue,
the Group's cost base has been significantly reduced. The Group's
net debt position at 30 June 2020 is lower than the 31 December
2019 position and the Group expects to be able to meet its liabilities
as they fall due and remain in compliance with all relevant banking
covenants for the foreseeable future. As such there is no change to
the Directors' assessment that it is appropriate to apply the going
concern basis of accounting.
1.5.5 Subsequent to Balance Date
On 12 August the Auckland region of New Zealand was placed at
alert level 3* while the rest of New Zealand was placed at alert level
2* for an expected period of two weeks in response to community
Covid-19 outbreak in Auckland. The Group has continued to operate
safely with all staff able to, working from home. This development
highlights the uncertainty of Covid-19 impacts into the future, but at
this stage does not change the Group's judgments or estimates.
*These levels are defined at covid19.govt.nz.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 15
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
2.0 GROUP PERFORMANCE
2.1 DISAGGREGATION OF REVENUE AND OTHER INCOME
Print
$’000
Radio
$’000
Digital &
e-Commerce
$’000
To t a l
$’000
For the six months ended 30 June 2020
Advertising35,28543,29624,319
102,900
Circulation and subscription36,473-2,437
38,910
External printing and distribution1,032--
1,032
Other2,5464451,511
4,502
Segment revenue from integrated media and
entertainment activities
75,33643,74128,267
147,3 4 4
Shared services centre
1,694
Events
1
Total revenues from external customers149,039
Government grants
A
8,559
Rental income from sub-leases
201
Lease rent concession
A
1,452
Other income10,212
Finance income
50
Total finance and other income10,262
Total revenue and other income 159,301
A
See the Covid-19 note (note 1.5) for further information.
16 NEW ZEALAND MEDIA AND ENTERTAINMENT
Print
$’000
Radio
$’000
Digital &
e-Commerce
$’000
To t a l
$’000
For the six months ended 30 June 2019
Advertising51,09653,03226,571
130,699
Circulation and subscription38,516-212
38,728
External printing and distribution3,948--
3,948
Other3,0774281,431
4,936
Segment revenue from integrated media and
entertainment activities
96,63753,46028,214
178,311
Shared services centre
1,701
Events
729
Total revenues from external customers180,741
Dividends
79
Rental income from sub-leases
256
Gain on disposal of property, plant and equipment
11
Other income346
Finance income
53
Total finance and other income399
Total revenue and other income 181,140
Accounting policies
Cash received from Government grants is recorded as “Other income” however, where a portion of the cash received relates to costs that
are recognised as Exceptional items in accordance with the NZME Exceptional Items Recognition Framework, that portion is recognised
as an Exceptional item and deducted from the related expense.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 17
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
2.2 EARNINGS PER SHARE
June 2020
$’000
June 2019
$’000
Reconciliation of earnings used in calculating basic / diluted earnings per share ("EPS")
Profit attributable to owners of the parent entity
3,217
1,176
Profit attributable to owners of the parent entity used in calculating EPS
3,217
1,176
June 2020
$’000
June 2019
$’000
Weighted average number of shares
Weighted average number of shares for calculating basic EPS
196,555,998
196,011,282
Adjusted for calculation of diluted EPS
3,024,181
-
Weighted average number of shares in the denominator in calculating diluted EPS
199,580,179
196,011,282
June 2020
Cents
June 2019
Cents
Basic / diluted earnings per share
Basic earnings per share (cents per share)
1.64
0.60
Diluted earnings per share (cents per share)
1.61
-
2.3 SEGMENT INFORMATION
2.3.1 Determination and description of segments
Significant judgments: The Group has one reportable segment – being “Integrated Media and Entertainment”. All significant
operating decisions are based upon analysis of NZME as one operating segment. The Executive Team and the Board of Directors
have been identified as the Chief Operating Decision Maker. The Group’s major products and services are split by channel only at
the revenue level into Print, Radio and Digital & e-Commerce which is the way in which revenue is reported to the Chief Operating
Decision Maker. Although the Group operates in many different markets within New Zealand, for management reporting purposes
the Group operates in one principle geographical area being New Zealand as a whole.
Integrated Media and Entertainment incorporates the sale of advertising, goods and services generated from the audiences attached
to the Group's media platforms.
18 NEW ZEALAND MEDIA AND ENTERTAINMENT
2.3.2 Segment revenues and results
The segment information provided to the Directors and Executive Team for the six months ended 30 June 2020 is as follows:
June 2020
$’000
June 2019
$’000
Revenues from external customers by channel
Print
75,336
96,637
Radio
4 3,741
53,460
Digital and e-Commerce
28,267
28,214
Segment revenue from integrated media and entertainment activities147,3 4 4
178,311
Revenue from shared services centre
1,694
1,701
Events
1
729
Total revenues from external customers149,039
180,741
Dividend income
-
79
Government grants
A
8,559
-
Rental income from sub-leases
B
201
256
Gain on disposal of property, plant and equipment
-
11
Expenses from operations before finance costs, depreciation, amortisation
and exceptional items
(128,888)
(153,477)
Total segment adjusted EBITDA
C
28,911
27,6 10
Depreciation and amortisation on owned assets
(8,658)
(10,599)
Depreciation on right-of-use assets
(6,339)
(6,411)
Total depreciation and amortisation(14,997)
(17,0 10)
Interest expense on bank facilities
(1,699)
(2,502)
Interest expense on leases
(2,325)
(2,451)
Total finance cost(4,024)
(4,953)
Interest income
50
53
Lease rent concession
D
1,452
-
Exceptional items:
Redundancies and associated costs
E
(7,017)
(3,193)
Costs in relation to one-off projects
F
(188)
(1,080)
Profit before tax4,187
1,427
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 19
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
A
Government grants is the wage subsidy received from the Government in response to
the effect of Covid-19 on businesses. The total received was $10,235,441 allocated to
Other income ($8,559,469); Exceptional costs ($1,406,715) ,where the subsidy relates
to employees who were made redundant; and the balance sheet ($269,256) where the
sum received is in respect of employees who subsequently left the Company.
B
Rental income of $122,036 was received from the sub lease of right-of-use assets
(2019: $166,506).
C
Adjusted Earnings before Interest, Tax, Depreciation and Amortisation (Adjusted
EBITDA) from continuing operations which excludes exceptional items, is a non-
GAAP measure that represents the Group’s total segment result which is regularly
monitored by the Chief Operating Decision Maker. Exceptional items are those
gains, losses, income and expense items that are not directly related to the primary
business activities of the Group which are determined in accordance with the NZME
Exceptional Items Recognition Framework adopted by the Audit & Risk Committee.
Exceptional items include redundancies and one-off projects. These items are
excluded from the segment result that is regularly reviewed by the Chief Operating
Decision Maker.
D
The Group early adopted the Practical Expedient under NZ IFRS 16 in relation to
Covid-19 rent concessions. The rent concessions received by the Group reduced lease
liabilities by $1,452,480. A corresponding amount is recognised within other income in
the income statement.
E
The redundancies and associated costs relate to the restructuring and integration
of the New Zealand operations.
F
2020 and 2019 costs are primarily in relation to the Group's further attempt to acquire
Stuff Ltd.
As the Group has one operating segment, the assets and liabilities as reported on the consolidated balance sheet are also the segment assets
and liabilities, and the income tax expense in the consolidated income statement is also the segment income tax. A corresponding amount is
recognised within other income on the income statement.
20 NEW ZEALAND MEDIA AND ENTERTAINMENT
3.0 OPERATING ASSETS & LIABILITIES
3.1 INTANGIBLE ASSETS
Goodwill
$’000
Software
$’000
Masthead
Brands
$’000
Radio
Licences
$’000
Brands
$’000
To t a l
$’000
As at 31 December 2019
Cost166,39773,987146,9767 7,5 4759,079
523,986
Accumulated amortisation and impairment(166,397)(58,851)(74,336)(44,258)(29,881)
(373,723)
Net book value-15,13672,64033,2892 9,198150,263
For the period ended 30 June 2020
Opening net book amount-15,13672,64033,28929,198
150,263
Amortisation-(3,060)-(1,479)-
(4,539)
Adjustment and transfers-14---
14
Transfers from capitalised work in progress-7,104---
7,1 0 4
Net book value-19,19472,64031,8102 9,198152,842
As at 30 June 2020
Cost166,39781,105146,9767 7,5 4759,079
531,104
Accumulated amortisation and impairment(166,397)(61,911)(74,336)(45,737)(29,881)
(378,262)
Net book value-19,19472,64031,8102 9,198152,842
3.1.1 Half year impairment review
Significant judgments: As disclosed in note 2.3.1 the Directors have determined that the Group has one reportable segment –
being “Integrated Media and Entertainment”. The Directors have also determined that this is the only cash generating unit ("CGU")
for impairment testing because this is the lowest level for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets. Accordingly, all goodwill and intangibles with indefinite useful
lives are allocated to one CGU. This note also includes details of certain key estimates and assumptions made during the impairment
testing process.
A comprehensive impairment review was conducted at 31 December
2019. The recoverable amount of the CGU (which includes goodwill
and indefinite life intangible assets) is determined based on the
higher of fair value less costs to sell and value in use calculations
using management budgets and forecasts. The recoverable amount
of the CGU is compared against the carrying value of the CGU to
determine whether there has been impairment.
Covid-19 has had a significant impact on the Group, see note 1.5 for
further information. While advertising revenue was greatly reduced in
April 2020, May 2020 and June 2020 the Group's cost management
response, together with the Government's wage subsidy and Media
Relief package, has mitigated the effects on the Group's result
with the six months to 30 June 2020 returning an increased profit
compared to both last year and the forecast included in the year end
impairment model.
The current year's forecast has been reflected in the value in use model.
The value in use model also reflects a worsening revenue forecast of 7%
for 2021 and 4% for 2022 offset by the cost savings implemented by the
Group in response to Covid-19. The resulting value in use assessment
supports the carrying value of the non-amortising intangible assets.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 21
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
With the exception of the impacts of Covid-19 outlined above, the
forecasts and assumptions used in the impairment assessment
are consistent with those disclosed in the consolidated financial
statements for the year ended 31 December 2019. The forecasts
have been prepared by management for the specific purpose of
impairment testing. Actual results may differ materially from those
forecast or implied. The forecasts are not, and should not be read as,
a forecast of, or guidance as to, the future financial performance and
earnings of the Group.
Revenue forecasts are prepared based on management’s current
expectations, with consideration given to internal information
and relevant external industry data and analysis. The forecasts
used in impairment testing require assumptions and judgments
about the future, such as discount rates, long term growth rates,
forecasted revenues, to which the model is sensitive, and which
are inherently uncertain.
Management has identified that there are reasonably possible
changes to key assumptions that could result in impairment. The
sensitivity of the assessment to reasonably possible changes to
key assumptions is largely unchanged from that disclosed in the
consolidated financial statements for the year ended 31 December
2019. Key factors in the current environment which may impact on
future performance include:
- the level of recovery in advertising spend following the negative
impact of lockdowns during the Covid-19 pandemic;
- the future economic outlook and overall business confidence
levels, given the Covid-19 impacts on advertising revenues;
- the level of digital transformation across business and consumer
markets, impacting advertising and subscription revenues; and
- the ongoing ability to manage costs in line with changes
in revenue.
The Group compares the carrying amount of net assets with the
market capitalisation value at each balance date. The share price
at 30 June 2020 was $0.27 equating to a market capitalisation of
$53.1 million. This market value excludes any control premium and
may not reflect the value of 100% of NZME’s net assets. The carrying
amount of NZME’s net assets at 30 June 2019 was $119.1 million
($0.61 per share) . Management considered the reasons for this
difference and whether all relevant factors had been allowed for
in their value in use model.
3.2 PROPERTY, PLANT AND EQUIPMENT
Freehold
land
$’000
Buildings
A
$’000
Plant and
equipment
$’000
To t a l
$’000
As at 31 December 2019
Cost or fair value1,16514,6973 37,16 5
353,027
Accumulated depreciation and impairment-(7,478)(305,647)
(313,12 5)
Net book amount1,1657, 2 1 931,51839,902
For the period ended 30 June 2020
Opening net book amount1,1657, 2 1931,518
39,902
Additions--73
73
Depreciation-(605)(3,514)
(4,119)
Other adjustments and transfers--(14)
(14)
Transfers from capitalised work in progress--1,157
1,157
Net book amount1,1656,61429,22036,999
As at 30 June 2020
Cost or fair value1,16514,697338,381
354,243
Accumulated depreciation and impairment-(8,083)(309,161)
(317,244)
Net book amount1,1656,61429,22036,999
A
Buildings include leasehold improvements with a netbook value of $6,500,978 (2019: $7,104,280).
22 NEW ZEALAND MEDIA AND ENTERTAINMENT
3.3 RIGHT-OF-USE ASSETS
Significant judgments: The Group has used the practical expedient of applying a single discount rate to a portfolio of assets and
has further applied the same incremental borrowing rate of 5% to each portfolio of assets. In determining the discount rate to use,
Management reviewed publicly available rates for Government Bonds, Westpac swap rates and Treasury Risk-free discount rates and
then applied an adjustment to these rates to apply a company specific credit risk. The Group has also used the practical expedient
of relying on previous assessments of whether leases are onerous and the practical expedient offered in relation to rent concessions
received in response to Covid-19. .
Buildings
$’000
Transmission
$’000
Vehicles
$’000
Other
$’000
To t a l
$’000
As at 31 December 2019
Net book amount6 7, 5 5 36,2191,7303675,538
For the period ended 30 June 2020
Additions--117-
117
Depreciation(4,021)(1,873)(417)(28)
(6,339)
Changes in lease payments or lease terms(171)---
(171)
Net book amount63,3614,3461,430869,145
3.4 CAPITAL WORK IN PROGRESS
June 2020
$’000
As at 31 December 201913,633
Additions
3,228
Transfers to property, plant and equipment
(1,157)
Transfers to intangible assets
( 7,1 0 4)
As at 30 June 20208,600
Capital work in progress is transferred to the relevant asset category once the project is completed. Capitalised work in progress
is not depreciated or amortised prior to being transferred to the relevant asset category.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 23
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
3.5 NET TANGIBLE ASSETS
Net tangible assets per share is a non-GAAP measure that is required to be disclosed by the NZX Listing Rules. The calculation of the Group's
net tangible assets per share and its reconciliation to the consolidated balance sheet is presented below:
June 2020
$’000
December 2019
$’000
Total assets
338,611
353,844
(Less): intangible assets
(152,842)
(150,263)
(Less): total liabilities
(219,559)
(237,374)
Net tangible assets(33,790)
(33,793)
Number of shares issued (in thousands)
196,556
196,011
Net tangible assets per share($0.17)
($0.17)
3.6 LEASE LIABILITIES
June 2020
$’000
As at 31 December 2019
Current lease liabilities
11,076
Non-current lease liabilities
84,807
Total lease liabilities95,883
(Add): Interest on lease liabilities
2,325
(Add): New leases
117
(Less): Rent concessions
(1,452)
(Less): Adjustments
(172)
Total lease liabilities before cash payments96,701
(Less): Interest paid on leases
(2,302)
(Less): Principal payments
(4,777)
Total cash payments( 7,079)
Total lease liabilities at 30 June 202089,622
Current lease liabilities
9,717
Non-current lease liabilities
79,905
Total lease liabilities at 30 June 202089,622
24 NEW ZEALAND MEDIA AND ENTERTAINMENT
4.0 CAPITAL MANAGEMENT
4.1 DIVIDENDS
4.1.1 Dividends paid
On 24 February 2020 the Board of Directors confirmed that NZME Ltd would not be declaring a final dividend for the year
to 31 December 2019.
4.1.2 Dividends declared after balance date
The Board of Directors have not declared an interim dividend for the year to 31 December 2020.
4.1.3 Franking and imputation credits
June 2020
$’000
December 2019
$’000
Imputation credits available for subsequent reporting periods based on the New Zealand 28%
tax rate for the Group
NZ$ 13,492
NZ$ 12,596
Franking credits available to the Company for subsequent reporting periods based on the
Australia 30% tax rate for the Group
AU$ 0
A
AU$ 0
A
A
Although the Company does not have any franking credits available for use, other entities within the Group have AU$10,828,676 (December 2019: AU$10,828,676) available that
Directors expect to be available to the Company in future periods.
4.2 INTEREST BEARING LIABILITIES
June 2020
$’000
December 2019
$’000
Non-current interest bearing liabilities
Bank loans – secured
80,500
89,500
Deduct:
Capitalised borrowing costs
(255)
(351)
Total non-current interest bearing liabilities80,245
89,149
Net debt
Cash and cash equivalents
(25,013)
(14,416)
Total debt less cash and cash equivalents55,232
74,733
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 25
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
4.3 CASH FLOW INFORMATION
June 2020
$’000
June 2019
$’000
Reconciliation of cash
Cash at end of the period, as shown in the statement of cash flows, comprises:
Total current assets
25,013
10,864
Reconciliation of net cash inflows / (outflows) from operating activities to profit for the
period:
Profit for the period
3,011
950
Depreciation and amortisation expense
14,997
17,0 10
Borrowing cost amortisation
96
97
Net (gain) on sale of non-current assets
-
(11)
Change in current / deferred tax payable
1
(1,554)
Lease rent concession
(1,452)
-
Interest accrual on leases
23
-
Share based payment expense
212
118
Changes in assets and liabilities net of effect of acquisitions:
Trade and other receivables
13,068
4,189
Inventories
272
(382)
Prepayments
490
(1,250)
Trade and other payables and employee benefits
(3,044)
(824)
Net cash inflows from operating activities
2 7,6 74
18,343
4.4 FAIR VALUE MEASUREMENT
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis:
• Financial assets at fair value through profit or loss (FVTPL);
• Land and buildings (excluding leasehold improvements).
The Group is funded from a combination of its own cash reserves
and NZ$150 million bilateral bank loan facilities, which NZME
refinanced on 21 November 2018, of which $80.5 million
(December 2019: $89.5 million) is drawn and $69.5 million
(December 2019: $60.5 million) is undrawn as at 30 June 2020.
The facility limit would have stepped down by $10 million annually
from 1 January 2020 and was to have expired on 1 January 2022.
The interest rate for the drawn facility is the BKBM plus credit margin.
The NZME bilateral facilities contain undertakings which are
customary for facilities of this nature including, but not limited to,
provision of information, negative pledge and restrictions on priority
indebtedness, acquisition and disposals of assets. The assets of the
Group are collateral for the interest bearing liability.
In addition, the Group must comply with financial covenants
(a net debt to EBITDA ratio and an EBITDA to net interest expense
ratio) for each 12 month period ending on 30 June and 31 December.
The Group has complied with all relevant covenants.
On 22 July 2020 the parties agreed further amendments to the
banking facilities with an extension of the facilities for an additional
eighteen months. The new expiry date is 1 July 2023. The new
agreement has amended financial covenants with revised leverage
ratios and requires no distributions until after 30 June 2021.
The facility limit of the extended facilities is $120 million and
will step down by $10 million at 30 June 2021.
26 NEW ZEALAND MEDIA AND ENTERTAINMENT
4.4.1 Fair value hierarchy
NZ IFRS 13 requires disclosure of fair value measurements by level of
the following fair value measurement hierarchy:
• Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
• Level 2: inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly
or indirectly, and
• Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
4.4.2 Recognised fair value measurements
June 2020
$’000
December 2019
$’000
Recurring fair value measurements
Financial assets (Level 2)
Derivative financial instruments
(587)
248
Financial assets (Level 3)
There are no financial assets carried at fair value. Other financial assets of $4,122,569
(December 2019: $4,122,569) are held at cost and therefore have been excluded from this
table. The balance relates to the Group's investments in associates and joint arrangements.
Total financial assets(587)
248
Non-financial assets (Level 3)
Freehold land and buildings
Freehold land
1,165
1,165
Buildings (excluding leasehold improvements)
113
115
Total non-financial assets1,278
1,280
All fair value measurements referred to above are either level 2 or level 3 of the fair value hierarchy and there were no transfers between
levels.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 27
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
4.4.3 Disclosed fair values
Performance measures
The Group also has a number of assets and liabilities which are
not measured at fair value but for which fair values are disclosed
in these notes.
The carrying amounts of trade receivables and payables
are assumed to approximate their fair values due to their
short-term nature.
The fair value of interest bearing liabilities disclosed in note 4.2 is
estimated by discounting the future contractual cash flows at the
current market interest rates that are available to the Group for
similar financial instruments. For the period ending 30 June 2020,
the borrowing rates were determined to be between 2.5% and 4.0%
(December 2019: between 3.4% and 4.6%), depending on the type of
borrowing. The fair value of borrowings approximates the carrying
amount, as the impact of discounting is not significant (level 2).
4.4.4 Valuation techniques used to derive at level 2 and 3 fair values
Recurring fair value measurements
The fair value of financial instruments that are not traded in an active
market is determined using valuation techniques.
These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable
market data, the instrument is included in level 3.
The Group obtains independent valuations for its freehold land and
buildings (classified as property, plant and equipment in note 3.2),
less subsequent depreciation for buildings, with sufficient regularity
to ensure that the carrying value of the assets is materially consistent
with their fair value. All resulting fair value estimates for properties
are included as level 3.
28 NEW ZEALAND MEDIA AND ENTERTAINMENT
5.0 GROUP STRUCTURE AND INVESTMENTS IN OTHER ENTITIES
5.1 CONTROLLED ENTITIES
The consolidated interim financial statements incorporate the assets, liabilities and results of the subsidiaries listed below. Unless otherwise
stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership
interest held equals the voting rights held by the Group. All entities are incorporated in, and operate in, New Zealand unless otherwise stated.
There were no changes in control during the period ended 30 June 2020.
June 2020 June 2020
Ownership Ownership
InterestInterest
December 2019
Ownership
Interest
Name of entity
Grabone Limited
100%
100%
NZME Australia Pty Limited
A
100%
100%
NZME Educational Media Limited
100%
100%
NZME Holdings Limited
100%
100%
NZME Investments Limited
100%
100%
NZME Print Limited
100%
100%
NZME Publishing Limited
100%
100%
NZME Radio Investments Limited
100%
100%
NZME Radio Limited
B
100%
100%
NZME Specialist Limited
100%
100%
The Hive Online Limited
100%
100%
New Zealand Radio Network Limited
100%
100%
The Radio Bureau Limited
100%
100%
OneRoof Limited
80%
80%
A
Incorporated in, and operates in, Australia.
B
One "Kiwi Share" held by the Minister of Finance. The rights and obligations are set out in the NZME Radio constitution.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 29
5.2 INTERESTS IN OTHER ENTITIES
The Group has the following associates, joint ventures and joint operations:
June 2020 June 2020
Ownership Ownership
InterestInterest
December 2019
Ownership
Interest
Eveve New Zealand Limited
A
40%
40%
KPEX Limited
D
25%
25%
New Zealand Press Association Limited
A
38.82%
38.82%
Restaurant Hub Limited
A
40%
40%
The Beacon Printing & Publishing Company Limited
A
21%
21%
The Gisborne Herald Company Limited
(held through Essex Castle Limited as a trust company for NZME Publishing Limited)
A
49%
49%
The Radio Bureau
B
50%
50%
The Wairoa Star Limited
A
40.41%
40.41%
The Newspaper Publishers Association of New Zealand Incorporated
C
Online Media Association
C
New Zealand Media Council
C
Radio Broadcasters Association Incorporated
C
A
These entities are classified as joint ventures or associates. Because the effects of equity accounting are immaterial, these investments are carried at cost.
B
The Radio Bureau is classified as a joint operation and the Group has included its direct right to the assets, liabilities, revenues and expenses of joint operations and its share
of any jointly held or incurred assets, liabilities, revenues and expenses in these consolidated financial statements.
C
These are bodies with which entities in the Group have memberships, but no ownership interest.
D
In August 2019 it was announced that KPEX Limited would be wound up. The notice that KPEX is to be removed from the Register of Companies was issued on 16 July 2020.
NOTES TO THE CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
CONT.
30 NEW ZEALAND MEDIA AND ENTERTAINMENT
6.0 OTHER NOTES
6.1 RELATED PARTIES
The Beacon Printing & Publishing Company Limited purchased
advertising from the Group during the six months ended 30 June
2020 totalling $270 (2019: $3,559) and reimbursed $nil (2019:
$6,200) for paper used.
In November 2015, the Company, Stuff, TVNZ and MediaWorks
launched a new local advertising exchange service, KPEX Limited,
offering media agencies and clients a programmatic option for
purchasing online advertising. The Group received advertising
revenue of $nil (2019: $1,061,448) from KPEX Limited and paid
commission of $nil (2019: $97,487) to KPEX Limited. On
19 August 2019 it was agreed that KPEX would be wound up.
The Group has commitments to provide future services (such as
house advertising, occupancy space at NZME offices, business
as usual finance and human resources support) to certain joint
ventures and associates. During the period such services were
provided to Eveve New Zealand Limited, valued at $13,996
(2019: $21,496) and Restaurant Hub Limited, valued at $6,004
(2019: $37,898). The outstanding balances for future services
are included in the table below, along with other receivables
and payables.
During the period the Group received advertising revenue from
The Wairoa Star Limited totalling $1,736 (2019: $5,913). The Wairoa
Star Limited also purchased other services totalling $nil (2019: $709)
from the Group. The Group purchased services from The Wairoa
Star Limited totalling $904 (2019: $608) during the year.
The Chinese New Zealand Herald ceased being a related party in
December 2019. In the period ending June 2019 the Group received
advertising revenue totalling $52,118 from The Chinese New Zealand
Herald Limited and paid commission totalling $24,932.
June 2020
Receivables
$’000
December 2019
Receivables
$’000
June 2020
Payables
$’000
December 2019
Payables
$’000
Balances with related party
Eveve New Zealand Limited
-
-
12
26
Restaurant Hub Limited
58
47
6
78
The Wairoa Star Limited
-
1
-
-
The Beacon Printing & Publishing Company Limited
-
1
-
-
Total related party receivables and payables 58
49
18
104
6.2 CONTINGENT LIABILITIES
The Group did not have contingent liabilities as at 30 June 2020.
6.3 SUBSEQUENT EVENTS
An amendment to the existing loan facilities was signed on 22 July 2020, see note 4.2.
The changes to New Zealand's lockdown levels on 12 August 2020 are discussed in note 1.5.5.
The Directors are not aware of any other material events subsequent to the reporting date.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 31
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Independent review report
To the shareholders of NZME Limited
Report on the consolidated interim financial statements
We have reviewed the accompanying consolidated interim financial statements of NZME Limited (the
Company) and its subsidiaries (the Group) on pages 9 to 31, which comprise the consolidated interim
balance sheet as at 30 June 2020, and the consolidated interim income statement, the consolidated
interim statement of comprehensive income, the consolidated interim statement of changes in equity
and t
he consolidated interim statement of cash flows for the six months ended on that date, and
selected explanatory notes.
Directors’ responsibility for the consolidated interim financial statements
The Directors are responsible on behalf of the Company for the preparation and fair presentation of
these consolidated interim financial statements in accordance with International Accounting Standard
34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting (NZ IAS 34) and for such
internal control as the Directors
determine is necessary to enable the preparation of consolidated interim financial statements that are
free from material misstatement, whether due to fraud or error.
Our responsibility
Our responsibility is to express a conclusion on the accompanying consolidated interim financial
statements based on our review. We conducted our review in accordance with the New Zealand
Standard on Review Engagements 2410 Review of Financial Statements Performed by
the
Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude whether
anything has come to our attention that causes us to believe that the consolidated interim financial
statements, taken as a whole, are not prepared in all material respects, in accordance with IAS 34 and
NZ IAS 34. As the auditors of the Company, NZ SRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial statements.
A review of consolidated interim financial statements in acc
ordance with NZ SRE 2410 is a limited
assurance engagement. The auditor performs procedures, primarily consisting of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and
other review procedures.
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with International Standards on Auditing (New Zealand) and International
Standards on Auditing. Accordingly, we do not express an audit opinion on these consolidate
d interim
financial statements.
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA
Code), and we have fulfi lled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of
agreed upon procedures for the
benchmarking of market revenue data and agreed upon procedures relating to the Group’s return to
the Broadcasting Standards Authority. I n addition, certain partners and employees of our firm may
32 NEW ZEALAND MEDIA AND ENTERTAINMENT
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Independent review report
To the shareholders of NZME Limited
Report on the consolidated interim financial statements
We have reviewed the accompanying consolidated interim financial statements of NZME Limited (the
Company) and its subsidiaries (the Group) on pages 9 to 31, which comprise the consolidated interim
balance sheet as at 30 June 2020, and the consolidated interim income statement,
the consolidated
interim statement of comprehensive income, the consolidated interim statement of changes in equity
and the consolidated interim statement of cash flows for the six months ended on that date, and
selected explanatory notes.
Directors’ responsibility for the consolidated interim financial statements
The Directors are responsible on behalf of the Company for the preparation and fair presentation of
these consolidated interim financial statements in accordance with International Accounting Standard
34 Interim Financial Reporting (IAS
34) and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting (NZ IAS 34) and for such internal control as the Directors
determine is necessary to enable the preparation of consolidated interim financial statements that are
free from material misstatement, whether due to fraud or error.
Our responsibility
Our responsibility is to express a conclusion on the accompanying consolidated interim financial
statements based on our review. We conducted our
review in accordance with the New Zealand
Standard on Review Engagements 2410 Review of Financial Statements Performed by the
Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude whether
anything has come to our attention that causes us to believe that the consolidated interim financial
statements, taken as a whole, are not prepared in all material respects, in accordance with IAS 34 and
NZ IAS 34. As the auditors of the Company, NZ SRE 2410 requires that we comply with the ethical
requirement
s relevant to the audit of the annual financial statements.
A review of consolidated interim financial statements in accordance with NZ SRE 2410 is a limited
assurance engagement. The auditor performs procedures, primarily consisting of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and
other review procedures.
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with
International Standards on Auditing (New Zealand) and International
Standards on Auditing. Accordingly, we do not express an audit opinion on these consolidate
d interim
financial statements.
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including
International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA
Code), and we have fulfi lled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of
agreed upon procedures for the
benchmarking of m
arket revenue data and agreed upon procedures relating to the Group’s return to
the Broadcasting Standards Authority. I n addition, certain
partners and employees of our firm may
subscribe to NZME services on normal terms within the ordinary course of the trading activities
of the Group.
The provision of these other services has not impaired our independence.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that these
consolidated interim financial statements of the Group do not present fairly, in all material respects,
the financial position of the Group as at 30 June 2020, and its financial performance and cash flows
for the six months t
hen ended, in accordance with IAS 34 and NZ IAS 34.
Who we report to
This report is made solely to the Company’s Shareholders, as a body. Our review work has been
undertaken so that we might state to the Company’s Shareholders those matters which we are required
to state to them in our review report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Shareholders, as a body, for our
review procedures, for this re
port, or for the conclusion we have formed.
For and on behalf of:
Chartered Accountants Auckland
24 August 2020
CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2020 33
TUKUTUKU KŌRERO
Education Gazette
NEW ZEALAND
&
---
1
MEDIA RELEASE 25 August 2020
STRONG PERFORMANCE AS NZME QUICKLY NAVIGATES COVID-19 IMPACTS
New Zealand Media and Entertainment (NZME) has today announced its financial results for
the half year ended 30 June 2020, reporting 5% growth in Operating EBITDA
1
to $28.9
million.
Releasing NZME’s Interim Report today CEO Michael Boggs paid tribute to NZME’s people.
“They have ensured NZME withstands the extraordinary challenges Covid-19 continues to
pose. They have also remained absolutely committed to NZME’s purpose of keeping Kiwis in
the know by delivering leading news and information that all New Zealanders can trust,” said
Boggs.
NZME’s Chairman, Barbara Chapman, also thanked New Zealand businesses for their ongoing
support.
“Owning, running and leading a business has never been tougher. That so many Kiwi
businesses have continued to see the value in staying connected to their customers by
continuing to invest in advertising with us, is an absolute testimony to the resilience and
commitment of our commercial partners,” said Chapman.
NZME’s Half Year results were also driven by the Company’s strong audience performance.
“More than 3.2 million New Zealanders
2
rely on us to keep them informed and entertained.
The importance of this responsibility continues to be highlighted during the ongoing
unprecedented events of 2020,” said Boggs.
As advertising and retail circulation revenues came under significant pressure in the second
quarter, NZME gained market share across key revenue channels within radio
3
, print
4
and
digital
5
advertising. NZME’s highly engaged audiences kept commercial partners and
advertisers turning to NZME as a powerful multi-platform connection to engage with their
customers.
Today NZME reported total Operating Revenue
1
of $157.8 million for the half year, down
13% on the comparable period, largely due to the impacts of Covid-19.
Effective capital management resulted in a significant $19.5 million reduction in Net Debt
over the half year to $55.2 million, representing a Net Debt to Operating EBITDA
1
ratio of 1.0
times.
1
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like for like comparison between
2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results Presentation for a detailed reconciliation. Operating and
statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
2
Nielsen CMI Fused Q2 19 – Q1 20, June, People 10+.
3
PwC Radio advertising market benchmark report, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
4
PwC NPA quarterly performance comp. report, June 2020, 6 months to 30 June 2020 vs 6 months to 30 June 2019.
5
IAB digital advertising revenue – General Display, IAB NZ Digital advertising revenue report, Q2 2020.
2
NZME’s Operating EBITDA
6
includes $8.6 million the business received from the government
as a wage subsidy.
“NZME’s ongoing focus on cost efficiencies prior to Covid-19 meant we were in a good
position as the initial impacts of Covid-19 became clear. We moved swiftly to ensure NZME
did not just withstand the impacts but was best placed to quickly implement a number of
additional initiatives that helped mitigate Covid-19 impacts on earnings. The government
wage subsidy also helped us retain roles that are now supporting our recovery,” said Boggs.
NZME continued to make significant progress in each of its three key strategic priorities – to
lead the future of news and journalism in New Zealand, grow radio and lead digital audio, and
create New Zealand’s leading real estate platform.
NZ Herald Premium digital subscriptions continue to grow and now total more than 82,000,
including 43,000 paid digital subscribers.
“This further reinforces our belief that now and into the future, New Zealanders are prepared
to support quality journalism, delivered by news teams they can trust. We will continue to
invest in this growing part of our business with initiatives such as the enhanced NZ Herald
App launched in late February,” said Boggs.
Growth in NZME’s radio revenue continued until Covid-19 began to impact advertising
revenues towards the end of the first quarter.
Talk radio major market audience share grew 0.8% year-on-year to 14.8% due to the
continued success of Newstalk ZB
7
. NZME has recently made some exciting content and
talent enhancements to increase music radio listener market share.
OneRoof goes from strength to strength, now hosting more residential for-sale listings in
Auckland than any other digital real estate site. The platform now hosts over 83% of
residential for-sale listings nationwide
8
.
Barbara Chapman said NZME went into the Covid-19 pandemic in a strong position.
“Continued success against our strategic priorities and effective capital management has
enabled NZME to rebound quickly and deliver a pleasing interim result.
“I am proud that NZME has served as an Essential Service during this unprecedented time,
fulfilling our responsibilities to our audience and advertisers in connecting a growing number
of New Zealanders with leading news, quality journalism and entertainment,” said Chapman.
6
Operating results presented include the impact of NZ IFRS 16, however exclude exceptional items to allow for a like for like comparison between
2019 and 2020 half years. Please refer to pages 31-32 of the 2020 Half Year Results Presentation for a detailed reconciliation. Operating and
statutory results include $8.6 million of Covid-19 government wage subsidy received in H1 2020.
7
GfK Radio Audience Measurement, Commercial Radio Stations, Market Share, S1 2020, People 10+.
8
OneRoof’s listings as a percentage of residential for-sale listings on trademe.co.nz.
3
NZME warned against expectations that any Covid-19 recovery would be straight forward.
“Given the experience of the past month, navigating the Covid-19 recovery is likely to remain
a focus for some time. But there will be a recovery. That means we need to continue to be
adaptable, look for new opportunities to support our customers, stay focussed on costs and
continue to deliver the high-quality news, information and entertainment New Zealanders
deserve and expect from NZME,” said Boggs.
ENDS
The full set of New Zealand Media and Entertainment’s 2020 half year results materials can
be found at https://www.nzx.com/companies/NZM/announcements
For further information please contact:
Cliff Joiner
GM Communications
T: +64 21 270 9995
Email: cliff.joiner@nzme.co.nz
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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