NZME LIMITED — AGM Information 2020

Jun 10, 2020

Annual Shareholders Meeting

11 June 2020

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WELCOME Carol Campbell INDEPENDENT DIRECTOR

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A ~~GE~~ NDA

Chair’s Address	04
Chief Executive Officer’s Address	15
Ordinary Resolutions	24
Supported by your Board
2 Election of Director – Barbara Chapman
3 Auditors Remuneration
Not Supported by your Board

4 Shareholder Proposal
5 Shareholder Proposal
6 Shareholder Proposal
General Business	30

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Carol Campbell INDEPENDENT DIRECTOR

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Building Shareholder Value

1. NZME participating in market consolidation

2. Cost management and efficiency

3. Building topline revenue performance and growth

4. Prudent capital management and dividend policy

5. Reviewing Board and management expertise

6. Improving communications with shareholders

7. Effectively managing the impacts of Covid-19 and Government support

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Building Shareholder Value

1. NZME Participating in market consolidation

1. Cost management and efficiency

2. Building topline revenue performance and growth

3. Prudent capital management and dividend policy

4. Reviewing Board and management expertise

5. Improving communications with shareholders

6. Effectively managing the impacts of Covid-19 and Government support

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Building Shareholder Value

1. NZME Participating in market consolidation

2. Cost management and efficiency

1. Building topline revenue performance and growth

2. Prudent capital management and dividend policy

3. Reviewing Board and management expertise

4. Improving communications with shareholders

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1. Effectively managing the impacts of Covid-19 and Government support

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BUILDING TOPLINE REVENUE PERFORMANCE AND GROWTH

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Leading the future of news and journalism in New Zealand

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Growing radio and leading
2
digital audio
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Creating New Zealand’s leading 3 real estate platform

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PRUDENT CAPITAL MANAGEMENT AND DIVIDEND POLICY

Dividend Policy

• Capital management plan is to reduce debt while maintaining investment in growth opportunities across the business.

• Net debt reduced by $23.6 million in 12 months to $74.7 million as at 31 December 2019, and to $62.0 million at 31 May 2020.

• Agreed terms to extend existing debt facilities to 1 July 2023. The new term of the bank facilities provides the Company with certainty of funding for the next three years.

• Focus on strengthening balance sheet to enable a return to Dividend payments in 2021

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Net Debt ($m)
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Subject to achieving the annual debt reduction target, and having regard to NZME’s capital requirements, operating performance and financial position 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/

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THE NZME BOARD

Carol Campbell Independent Director

A

Barbara Chapman Independent Director

B

David Gibson Independent Director

C

Sussan Turner D Independent Director

A

C

B

D

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THE NZME EXECUTIVE TEAM

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Michael Boggs
A
Chief Executive Officer
David Mackrell
B
Chief Financial officer
Laura Maxwell
Chief Digital Officer C A B C
Wendy Palmer
Chief Radio & Commercial Officer D
Shayne Currie
E
Managing Editor
Matt Wilson
Chief Operations Officer F D E F
Allison Whitney
G
General Counsel
Paul Hancox
Chief Revenue Officer H
Katie Mills
Chief Marketing Officer I G H I
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Building Shareholder Value

1. NZME Participating in market consolidation

2. Cost management and efficiency

3. Buidling topline revenue performance and growth

4. Prudent capital management and dividend policy

5. Reviewing Board and management expertise

6. Improving communications with shareholders

1. Effectively managing the impacts of Covid-19 and Government support

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Building Shareholder Value

1. NZME Participating in market consolidation

2. Cost management and efficiency

3. Buidling topline revenue performance and growth

4. Prudent capital management and dividend policy

5. Reviewing Board and management expertise

6. Improving communications with shareholders

7. Effectively managing the impacts of Covid-19 and Government support

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OUR PURPOSE AND SUSTAINABILITY COMMITMENT

We are committed to protecting the craft of journalism and broadcasting to keep Kiwis in the know.

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Michael Boggs CHIEF EXECUTIVE OFFICER

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RESULTS SUMMARY

For the year ending 31 December 2019

$371.7m

$50.6m

Operating Revenue[1] Operating EBITDA[1] 2018 $388.9m 4% 2018 $54.7m 7%

$19.7m

($165.2m)

Operating NPAT[1] 2018 $18.9m 4%

Statutory Net Loss after Tax 2018 Stat. NPAT $11.6m

$74.7m

10.0cps

Operating EPS[1] 2018 9.6cps 4%

Net Debt Reduced by $23.6m

1. Operating results are presented excluding the impact of NZ IFRS 16 and exceptional items to allow for a like for like comparison between 2018 and 2019 financial years.

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NZME CONTENT REACHES 3.3 MILLION[1] NEW ZEALANDERS

PRINT

RADIO

DIGITAL

• 33 print publications across New Zealand[2]

• 1.6 million NZ Herald weekly brand audience[3]

• 1.2 million weekly print readers[3]

• 455,000 average issue readership[3]

• Print revenue market share 46.9%[4] for 12 months to March 2020

• 8 radio stations serving all key demographics

• 2.0 million weekly listeners[5]

• Newstalk ZB - number one station and Mike Hosking Breakfast Show the most popular breakfast show[6]

• Radio audience market share 39%[7]

• Radio revenue market share 39.6%[8 ] for 12 months to April 2020

• iHeart Radio – 1 million registered users (up 13%), 4.7 million listening hours in April 2020 (up 21% compared to 2019)[9]

• 2.6 million digital users per month across our digital platforms[1]

• NZ Herald Premium: Over 36,000 paid premium digital subscribers, 1.9 million monthly unique audience on nzherald.co.nz[10]

• OneRoof: 363,000 monthly unique audience[10] , 81% of active residential for sale listings in New Zealand[11]

• Driven: Over 45,000 for sale vehicle listings, 164,000 monthly unique audience[10]

• GrabOne: 322,000 monthly unique audience[10]

• Nielsen CMI Q1 19 - Q4 19, Fused March 2020, People 10+.

• Print publications include 8 Metro and Regional newspapers, 18 community publications and 7 Newspaper Inserted Magazines.

• Nielsen CMI Fused Q1 19 - Q4 19, People 15+.

• PwC NPA quarterly performance comparison report, March 2020, NZME revenue market share for the 12 months to March 2020.

• GfK Radio Audience Measurement, Commercial Radio Stations, NZME and Partners, Cumulative Audience, S1 2020, AP10+. (1,982,800)

• GfK Radio Audience Measurement, Commercial Radio Stations, NZME, S1 2020, Commercial Market Share (%).

• GfK Radio Audience Measurement, Commercial Radio Stations, NZME and Partners in major markets, S1 2020, Monday-Sunday 12mn-12mn, station share %, AP 10+.

• PwC Radio advertising market benchmark report, April 2020.

• AdsWizz and StreamGuys, April 2020.

• Nielsen Online Ratings, April 2020.

• OneRoof’s listings as a percentage of residential for sale listings on Trade Me.

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STRATEGIC PRIORITIES

Focused on Growth

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Leading the future of news and Growing radio and leading
2
journalism in New Zealand digital audio
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Creating New Zealand’s leading
real estate platform
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LEADING THE FUTURE OF NEWS & JOURNALISM IN NEW ZEALAND

Grow digital subscription revenues

Enhance digital product and revenues

• Over 36,000 paid NZ Herald Premium Subscribers up from 21,000 at February 2020

Improve core print revenue trends

• An additional 34,000 print subscribers who have activated their premium access up from 25,000 at February 2020

• NZ Herald App upgraded to allow in App Purchasing of Premium access

Growth in digital subscriptions and revenue while maintaining NZ Herald site audience and engagement

• NZ Herald awarded Website of the Year, Best News Website or App, Newspaper of the Year

Return digital advertising revenue to growth

• NZME NZ Herald awarded Best Global media brand in Asia/Pacific (for the second year running)

Improve print subscriber retention and reduce advertising revenue declines

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GROWING RADIO AND LEADING DIGITAL AUDIO

Enhance radio sales capability

Improve radio content offering

Maximise the potential of the iHeart product

• Radio revenue market share continues to increase year on year

• Content changes in progress and will be completed in June 2020

Growth in radio revenue.

Grow radio audience share in the 2554 demographic

• iHeart Radio registered users more than 1 million[1] and average monthly listening hours 4.7m[2] per month year to date.

Growth in iHeart Radio and podcast consumption

Revenue growth from digital audio products

1. 20 iHeartMedia, Adobe Analytics, April 2020.

2. AdsWizz and StreamGuys, April 2020

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CREATING NEW ZEALAND’S LEADING REAL ESTATE PLATFORM

Develop OneRoof as a prominent national brand

Deliver data driven agent promotion product

Maximise potential of existing products

• OneRoof now the largest platform for sales listings in Auckland

• OneRoof for sales listings increased to 81%[1 ] of NZ residential listings

• 70% of OneRoof revenues year to date generated from vendor listings upgrades

Improve listings, audience and engagement metrics

Increase revenue from agent products

• New OneRoof local print products launched to fill gap in market

• Awarded second place globally for best idea to acquire or retain advertising clients

OneRoof revenue growth and improved contribution

1. OneRoof’s listings as a percentage of active residential for sale real estate listings on Trade Me.

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TRADING UPDATE

• It was an encouraging start to 2020 – driven by continued growth in Radio, Digital classifieds, and Digital subscriptions.

• The impacts of Covid-19 have been significant with Advertising Revenue in April 2020 around 47% lower than April 2019, May 2020 39% lower than May 2019.

• June 2020 expected to be around 30% lower than June 2019.

• The cost initiatives, including temporary salary reductions, are currently tracking 25% below 2019 levels for quarter two of this year, and significant reduction on last year will continue.

• It’s impossible to predict with any accuracy the impact of the pandemic on NZME’s full year financial performance.

• We expect first half 2020 operating EBITDA, including the wage subsidy, to be higher than that achieved in the first half of 2019.

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CURIOUS, CONFIDENT & CONNECTED

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ORDINARY RESOLUTIONS

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ORDINARY RESOLUTIONS Resolution 2 Resolution supported by your board

To consider and, if thought fit, to pass the following ordinary resolutions:

Resolution 2: Election of Director

It is hereby resolved, as an ordinary resolution, that Barbara Chapman, who stands for re-election before the end of her term and is eligible for re-election, be re-elected as a Director of NZME.

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ORDINARY RESOLUTIONS Resolution 3 Resolution supported by your board

To consider and, if thought fit, to pass the following ordinary resolutions:

Resolution 3: Auditor’s Remuneration

It is hereby resolved, as an ordinary resolution, that the Directors of NZME are authorised to fix the auditor’s remuneration.

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ORDINARY RESOLUTIONS Resolution 4 Resolution not supported by your board

To consider and, if thought fit, to pass the following ordinary resolutions:

Resolution 4: Shareholder Proposal

That the directors instigate a plan to breakup the Company so as to realise the commercial values of Masthead brands and encourage an ethos of shareholder wealth creation in the endeavours that make up NZME.

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ORDINARY RESOLUTIONS Resolution 5 Resolution not supported by your board

To consider and, if thought fit, to pass the following ordinary resolutions:

Resolution 5: Shareholder Proposal

That the directors acknowledge the importance of dividend income to shareholders and there be a more appropriate dividend policy.

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ORDINARY RESOLUTIONS Resolution 6 Resolution not supported by your board

To consider and, if thought fit, to pass the following ordinary resolutions:

Resolution 6: Shareholder Proposal

That the directors obtain the approval of shareholders before they proceed with any action (costing more than $1 million, including legal fees) to acquire Stuff.

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GENERAL BUSINESS

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Carol Campbell INDEPENDENT DIRECTOR

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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 Financial Statements for the year ended 31 December 2019.

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 IFRS16 Leases on 1 January 2019 without restating the full year 2018 comparatives. Operating results as stated throughout this presentation refers to results prior to adjustments for the adoption of NZ IFRS16 and prior to exceptional items.

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.

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