U.S. Markets open in 7 hrs 47 mins

Edited Transcript of NZM.NZ earnings conference call or presentation 26-Aug-19 10:00pm GMT

Half Year 2019 NZME Ltd Earnings Call

AUCKLAND Sep 4, 2019 (Thomson StreetEvents) -- Edited Transcript of NZME Ltd earnings conference call or presentation Monday, August 26, 2019 at 10:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* David Mackrell

NZME Limited - CFO

* Julia Belk

Air New Zealand Limited - Investor Relations Manager

* Michael Raymond Boggs

NZME Limited - CEO

================================================================================

Conference Call Participants

================================================================================

* Arie Dekker

Jarden Limited, Research Division - Head of Research

* Matthew Allan Henry

Forsyth Barr Group Ltd., Research Division - Head of Wealth Management Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Julia Belk, Air New Zealand Limited - Investor Relations Manager [1]

--------------------------------------------------------------------------------

Hello, and welcome to the NZME 2019 Half Year Results Webcast. I'm Julia Belk, Investor Relations Manager for NZME. And presenting on the call today will be the NZME Chief Executive Officer, Michael Boggs; and NZME Chief Financial Officer, David Mackrell. (Operator Instructions)

I will now hand you over to Michael Boggs, who will start the presentation.

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [2]

--------------------------------------------------------------------------------

Good morning. Michael Boggs here, the CEO of New Zealand Media and Entertainment. And with me today in Auckland is our Chief Financial Officer, David Mackrell.

Thanks for joining us today for our 2019 half year results briefing. I'll be taking you through the highlights of NZME's financial results and update on the agency and advertising market and will also run through our channel results before I hand over to David, who will take you through the financial results in more detail. I'll then talk about our strategic priorities and introduce NZME's sustainability commitment. I will also share our outlook for the remainder of 2019 financial year before opening up for questions.

Slide 4 provides a summary of financial performance in the first half of 2019. This is a solid result, given the well-documented market headwinds, which I'll talk about in more detail shortly. It is a result supported by strong growth in our Digital initiatives, namely our real estate platform OneRoof and the launch of our online New Zealand Herald Premium subscription service.

I'll just take a moment to note that throughout this presentation, we will mainly refer to operating results. These exclude the impact of IFRS 16 Leases and exceptional items. David will take you through the impact of this a little bit later.

Revenue was $181.1 million for the half. That's down 4% compared to the first half of 2018 and was primarily due to a softening advertising market. Our operating EBITDA was $19.4 million compared to $23.2 million in the same period last year, while statutory NPAT was $1 million for the period. Your operating earnings per share performed in line with operating NPAT and is $0.024 per share for the 6 months.

I'm really proud of what our team has delivered this half, and it's highlighted on Slide 5. You'll no doubt be aware of the successful launch of New Zealand Herald Premium in April of this year. I'm pleased to advise that we now have more than 15,000 paid premium subscribers. Combined with the number of Print subscribers who have activated their Digital premium subscription, we now have around 40,000 premium subscribers in total.

The improved performance of Radio is a key priority for NZME, and it's pleasing to see Radio return to growth in the half and it continues to show positive momentum.

Earlier, I mentioned the impact of growth in some of our Digital platforms, particularly OneRoof, with continued listings and audience growth. Revenue grew to $1.3 million in the half. We've also been very focused on cost savings and efficiencies and have reduced our net debt by $8.1 million in the half, a pleasing result. This year, we set ourselves 3 strategic priorities with key metrics to measure performance. These are covered on Slide 6.

We are leading the future of news and journalism in New Zealand through our Premium subscription offering. We've exceeded our subscription targets, and Digital audience engagement levels are very encouraging.

Our focus on Radio capability and performance has seen Radio revenue return to growth. Through improved content and capability, we've also increased our market share of Radio audience and increased the number of users on our Digital audio platform iHeart Radio. Our plan for OneRoof is to create New Zealand's leading real estate platform. OneRoof is achieving growth in listings, improved audience engagement and is now achieving meaningful revenue growth.

Let me now provide you with a brief update on the advertising market, starting with the Agency trends on Slide 8.

We've talked previously about the headwinds in the market, and we've discussed the challenges this presents, particularly in advertisings being generated by our agencies. You can see in the chart on the right that the first 4 months of this year experienced year-on-year declines. However, there are signs of improvement, with May and June up year-on-year. In particular, newspapers and Digital display advertising showed significant improvement in June, while Radio performed well in the 6 months and continued growth in the month of June. That's the Agency picture.

Slide 9 looks at the total advertising market and NZME's performance within that. As you'll see, Print remains our largest revenue contributor at 54% of total segment revenue. While the overall Print market did show a decline, it's pleasing to note that NZME's continued focus on its Print publications has delivered a performance that's significantly better than the market. This translates to an increased market share for NZME.

The Radio market is showing a resurgence, and it's pleasing to see NZME's performance is helping to drive that, again reflecting our strategic focus on Radio capability and performance.

Digital advertising has been challenging across the market in the past 6 months, with our advertising revenue from Digital channels down 8%. This is in line with the total market.

Moving on to the detailed results for each of our operating segments. I'll start with Print on Slide 11. Our Print operations have performed well in a market that continues to be challenging. There are positives from the past 6 months to reflect on from a financial and an editorial perspective. Our Print advertising revenue decline was consistent with the prior year, but as mentioned, performed much better than the market. As a result, NZME increased its market share of Print advertising revenue from 43.6% for the 6 months to June 2018 to 46.7% for the 6 months to June 2019.

White Print circulation revenue declined 5%, the decrease in volumes were partially offset by an improvement in yield, an area we continue to focus on.

The retention of Print subscribers has improved in the second quarter, assisted by the subscriber benefit of bundling our New Zealand Herald Premium offering. The good news is that more and more people are reading newspapers and engaging with the New Zealand Herald content. This is shown on Slide 12. Readership figures released during the half show our daily newspapers reach over 1 million Kiwis every week, more than all of our competitors combined. The New Zealand Herald average issue readership is at a 4-year high at 477,000 people. And the flagship Weekend Herald is now read by 540,000 people each week.

In addition, our magazines have increased readership year-on-year. New Zealand Herald's Travel magazine is now the best-read newspaper magazine in New Zealand with more than 320,000 readers. Overall, I'm delighted that we're seeing readership in younger audiences, with those aged 18 to 29, making up over half of the growth we're seeing.

Moving on to Radio and Slide 13. Our return to revenue growth reflects an improving Radio market. Our focus on Radio capability and investment in new talent is reflected in NZME's growing audience share and our awards. For example, Newstalk ZB is the #1 commercial radio network in New Zealand, while ZM has been recognized as station of the year and the most popular music station for 18- to 34-year olds.

I'd also like to draw your attention to the growth of iHeart, our Digital Radio platform, that continues to deliver in terms of audience engagement. It's building a solid foundation in the emerging Digital audio space.

Turning now to Digital on Slide 14. There is no doubt the half provided a difficult set of results for the wider Digital market. NZME's Digital advertising revenue reduced 8%, which is in line with the decline of the total general display market. While down in the first half of the year, the agency digital display market is showing early signs of recovery in June and into the second half. e-Commerce revenue declines in the first half were offset by cost reductions.

I'll now hand you over to our CFO, David Mackrell, to take you through a closer look at the financials. I'll be back shortly.

--------------------------------------------------------------------------------

David Mackrell, NZME Limited - CFO [3]

--------------------------------------------------------------------------------

Thank you, Michael, and thank you to those joining us on the call today. As Michael mentioned, we have presented the half year results on an operating basis, which means excluding the impact of IFRS 16 and exceptional items, allowing a like-for-like comparison between 2019 and 2018.

I'll cover the impact of IFRS 16 shortly. A full reconciliation of these operating results to the financial statements is included in the Supplementary Information section on Slides 28 and 29 of this presentation.

Looking at our operating results on Slide 16. Michael has covered the individual segment results, with total segment revenue declining 4% in the period to $178.3 million. This includes total advertising revenue, which declined 5% to $130.7 million for the 6 months ended 30 June 2019.

Other revenue decreased primarily due to the reduced number of promotional events held in the period. Cost reduced by $4.8 million, while Digital Classified costs increased with the accelerated development of OneRoof.

This results in an operating EBITDA of $19.4 million, down 16% on the previous period. Depreciation and amortization was lower in this half, as the corresponding half included in accelerated level of depreciation on some assets. Interest expense increased in the period as a result of higher interest rates following the bank loan facility refinancing in November 2018. These higher rates were partially offset by the reduction in net debt of $8.1 million during the 6 months. This results in an operating profit after tax for the first half of $4.7 million, down 15% on the first half of 2018.

Moving on to Slide 17 and the impact of the new leasing standard IFRS 16. At a high level, IFRS 16 requires that operating leases are recognized in the balance sheet as a right-of-use asset and a corresponding lease liability. We have ensured that these changes are transparent in the accounts by separating the operating lease-related amounts within the balance sheet, cash flow and income statement. In the income statement, the operating lease expense is reclassified to interest expense relating to the lease liability and to depreciation of the right-of-use asset.

For the 2019 half year, this results in an increase in EBITDA of $8.2 million, due to the reclassification of operating lease expense to depreciation and interest below the EBITDA line.

Net operating profit after tax is negatively impacted by $0.5 million due to the higher interest costs in our lease's early years, which will be offset by a positive impact in our lease's later years. In terms of the cash flow statement, we have shown the lease payment cash flow separately within operating activities in regard to the interest portion and within financing activities for the principal portion.

Turning to Slide 18. Total operating costs decreased $4.8 million or 3% in the half year through a continued focus on cost initiatives, improved efficiencies and reduced Print volumes. Many of the cost initiatives reduced headcount, resulting in the lower people costs, while improved efficiencies and reduced Print volumes reduced Printing and distribution costs. Exceptional items were $4.3 million for the half, including redundancy costs incurred and other exceptional items relating to settlement amounts and historical holiday pay adjustments.

Moving to Slide 19. Our capital management policy objective in the near term is to reduce debt, while maintaining investment growth opportunities across the business. We are pleased to report that we have made good progress and have reduced net debt by $8.1 million in the 6 months to $90.2 million as at 30 June 2019. Our leverage ratio has remained at 1.8x, still above our target 1 to 1.5x. We remain on target to achieve a net debt reduction in excess of $10 million to $15 million per annum, in line with our capital management plan.

Capital expenditure has been contained in the half to $4.5 million compared to $7.1 million in the same period last year and is expected to be around $12 million for the year.

Consistent with the revised capital management policy, the Board has elected not to pay a dividend for the half ended 30 June 2019.

I'll now hand you back to Michael to discuss the strategic priorities and outlook for this year.

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [4]

--------------------------------------------------------------------------------

Thank you, David. We've talked about how we have performed against our strategic priorities over the half. And now, I would like to talk about our focus for the second half of 2019 and beyond.

Let's start on Slide 21. As you've heard, we're very pleased with what we have delivered so far with the launch and ongoing subscription growth of New Zealand Herald Premium. To ensure it continues to support our strategic priority, to lead the future of news and journalism in New Zealand, our focus is on ensuring we continue to deliver premium content to our subscribers.

A big focus for the team in the upcoming weeks and months will be driving revenue growth by leveraging premium content opportunities across some big upcoming events like the Rugby World Cup.

We're working closely with our partners at the Washington Post to continuously improve the user experience, with development focused on enhancing the value of subscriptions and making the sign-up experience as seamless as possible.

On to Slide 22 and our second strategic priority of increasing Radio capability and performance. As I mentioned, we've seen good audience market share growth in our Radio channel. This growth is a reflection of the investment on new on-air talent. And given a number of these hosts are relatively new to market, we expect that they'll deliver more good audience growth as their shows embed. A big part of our future in audio is how we grow and develop the monetization of our Digital audio platform, iHeart Radio.

Our focus on capability isn't just reflected in our on-air teams, as we've invested in our sales teams too with the appointment of key Radio and Digital specialists.

Moving to our third strategic priority, OneRoof, on Slide 23. And we are well on course to creating New Zealand's leading real estate platform. Our focus for the second half is on securing remaining agency listings and also delivering a new home section in quarter 3. Any meaningful digital offering requires constant development and improvement to keep ahead of our audiences' expectations. So we'll continue to develop the platform to enhance the audience engagement. We're also very focused on growing advertising revenue across native content, video series, podcast and regular property reports.

We've long been committed to doing the right things in the right way for our communities, our people, our stakeholders and New Zealand. I'm delighted today to share with you for the first time on Slide 24 New Zealand Media and Entertainment sustainability commitment. From our purpose of keeping Kiwis in the know, our sustainability commitment focuses on protecting the craft of journalism and broadcasting and continually amplifying our ability to create positive changes in our society.

Through responsible reporting and sharing of our platforms, we connect and empower our communities. By fostering innovation, engagement and inclusion in our workplaces, we support our people to thrive. By taking our environmental responsibility seriously, we support our commitment to take care of the world around us.

We've adopted the UN sustainable development goals and have aligned the issues which are most important to NZME and our stakeholders with the goals we believe are most relevant to our business, our people and our communities. We remain committed to have initial measurement undertaken in 2019 and reporting against the framework commencing in 2020.

Before we open up for your questions, I'll update you on our outlook for the remainder of the 2019 financial year. These are on Slide 25. We've had an encouraging start to the second half. The advertising market is showing some signs of improvement, and our third quarter bookings are up 6% compared to the same period last year. However, we do remain cautious of the potential impact of the softening economy and weaker business confidence. Our focus on cost reduction continues, with initiatives delivering improvements in our cost base. We are on target to reduce debt in line with our capital management policy.

Thank you for your time today, and we'll now open up the webcast for any questions you may have.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Julia Belk, Air New Zealand Limited - Investor Relations Manager [1]

--------------------------------------------------------------------------------

Thank you, Michael, and thank you, David. I'll now open up the webcast for questions. (Operator Instructions)

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [2]

--------------------------------------------------------------------------------

Sorry, Arie, it's Michael here. Sorry, we didn't hear you.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [3]

--------------------------------------------------------------------------------

I didn't know that I've been invited to ask this question. Yes. Firstly, just on the display advertising, I mean, you guys have tended to outperform the market. So well, I know that you're sort of down with the market with your Premium site. And I guess I would have hoped that you might have outperformed. Is there anything you can sort of point to there? And have you sort of seen any signs of reduced audience associated with the PayGate implementation perhaps impacting that?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [4]

--------------------------------------------------------------------------------

Yes. No problem at all, Arie. So firstly, as you pointed out, yes, we are about the same as the market during the period. I think that fundamentally is just the overall market performance. And if I come to your specific question on the PayGate and Herald Premium, so we did initially see, as we planned, a small reduction in the unique audience that was coming to the site. We've seen that increase back up again. We're seeing much higher engagement of the users who are behind the PayGate. And so those 40,000 people are 3x higher engaged than the rest. And so we're continuing to see that improve over time. So absolutely nothing that's worrying us. We're absolutely disappointed that we were down net 8% year-on-year in the Digital display revenue, but we're seeing good signs into the second half, and we -- again, we think we'd be outperforming the market again.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [5]

--------------------------------------------------------------------------------

And in terms of those signs of recovery, albeit sort of in the early parts of the second half, are they -- is that improvement in terms of, I guess, sequentially getting back what you lost in first half? Or are you seeing growth on second half '18?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [6]

--------------------------------------------------------------------------------

We're absolutely seeing growth on second half '18.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [7]

--------------------------------------------------------------------------------

Great. Well, that's quite a strung around, isn't it?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [8]

--------------------------------------------------------------------------------

It really is. I guess we obviously have team [put] it a bit. The first couple of months of '18 were lighter, as you will have seen in those Agency charts. And we're not very concerned about what's happening with the economy and business and consumer confidence. But at the same time, we're pleased to see that we are up 6% year-on-year. So that's setting us up well moving into the second half.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [9]

--------------------------------------------------------------------------------

Sure. Just around the PayGate, and obviously, I appreciate that it's early days and you have provided some useful guides in other areas of the business in terms of momentum. I guess if I -- back-of-the-envelope if I sort of annualize the 15,000 for the mix that you've got and clearly assuming no churn and -- on the weekly subscribers sort of, I guess, I get a sort of annualized revenue rate around $3.5 million. So I'm sort of interested in the momentum you're seeing in subscribers there, I guess, the transition of trial subscribers to full-time subscribers, the amount of churn you are seeing in the weekly. And then, I guess, as you've gone through that initial period, what you're sort of saying in terms of ongoing growth, was that 15,000 subscribers, 10,000 2 months ago? Or has the growth already sort of started to moderate a bit? Just some guides on that.

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [10]

--------------------------------------------------------------------------------

Great. So we have sort of announced back in mid-June that we were at 10,000 subscribers. So that was sort of many early adopters, I guess, in that first 6 weeks since launching. So in the next 8 weeks effectively, we've got another 5,000, and we're seeing pretty consistent through that. And yes, we are seeing churn, but nowhere near the levels we again had expected to see. So -- and the other thing we're actually seeing is an improvement in our Print churn rates, because people who have the Premium obviously are getting that as part of the Print bundle. So we're seeing that reducing a little overall as well. So we're finding that really helpful.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [11]

--------------------------------------------------------------------------------

Yes. That is helpful, because, I guess, in terms of circulation, that was down 5%. I guess you've been tracking more closer to 2% to 3% over the last couple of years. Do you sort of -- because of that fact that you have noted there, do you sort of see potential in the second half to do better than that 5% down that you were running in the first half?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [12]

--------------------------------------------------------------------------------

Yes, we would expect that improvement in the second half. However, the other thing worth just noting on the Premium subscriptions is more than 30% of them are paid in annual subscription. So those again are really sticky customers for us, which is great.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [13]

--------------------------------------------------------------------------------

Yes, that is good. Just a couple of more. Just in terms of OpEx, that was down 3% in the first half. Do you sort of expect the same in second half in terms of quantum? And then, I guess, the other question sort of just came to sort of get some visibility on, you incurred some redundancies in the first half, which I guess have been a normal part of business now for a while. Can you just also talk to the areas in which you've been taking staff out of the business?

--------------------------------------------------------------------------------

David Mackrell, NZME Limited - CFO [14]

--------------------------------------------------------------------------------

Arie, it's David. So yes, in terms of the run rate, as we've managed to take cost out of it, continue to focus on cost savings -- sorry, so the -- we've some -- that should continue through the second half at a similar sort of rate and we continue to focus on areas. In terms of which areas, it's really across the business, as we've looked to find those places where we can manage costs to find those efficiencies. So it is actually across all areas of the business.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [15]

--------------------------------------------------------------------------------

Sure. In terms of the $8 million, I think, you outlined to spend on Digital Classifieds in FY '19, are you still looking at that sort of quantum?

--------------------------------------------------------------------------------

David Mackrell, NZME Limited - CFO [16]

--------------------------------------------------------------------------------

Yes, that's where we're tracking to at this stage, and that development continues at that pace.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [17]

--------------------------------------------------------------------------------

And CapEx for -- any update on sort of CapEx guidance for FY '19?

--------------------------------------------------------------------------------

David Mackrell, NZME Limited - CFO [18]

--------------------------------------------------------------------------------

Yes, as I mentioned, the CapEx for the half was down at $4.5 million, but we do expect to still be on target for around $12 million for the year.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [19]

--------------------------------------------------------------------------------

Yes. Great. Sorry, I missed that. The audience momentum in OneRoof, I mean, it does look like it stalled a bit. It does look like it's sort of tracking a lot -- looks like you get the odd blip probably associated with, say, a news of interest or something, which is one of the benefits of the platform. That sort of seems to be tracking reasonably closely now with real estate. I mean what's your perspective on that? And what are some of the things you'd be looking to do to get that audience up sort of the next leg and sort of tracking towards TradeMe?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [20]

--------------------------------------------------------------------------------

Yes. So -- I mean key thing probably to note is TradeMe's audience also includes what they do from a rental listing perspective, which obviously isn't a big focus for us right at the moment, but is fundamentally for-sale listings, and that's exactly the same with realestate.co.nz. Having said that, we are continuing to see growth, and we're seeing more and more of that growth being from people coming directly to the site. So the amount of traffic coming from the Herald site now is a minority of the traffic, whereas obviously a year ago, it was the majority of the traffic.

So we are finding that pleasing that people are recognizing the brand, coming directly to the site for listings as opposed to just for news overall. But we do think people coming for news is obviously really important as well, because that's creating a new audience or a new buyer into the market. So we are continuing to see growth, and that will remain a focus for us in the next half.

--------------------------------------------------------------------------------

Arie Dekker, Jarden Limited, Research Division - Head of Research [21]

--------------------------------------------------------------------------------

Sure. And then a final question. I mean putting all of that together and some other things obviously too, in terms of the EBITDA in the second half, do you see potential for that to improve from around sort of the 15%, 16% decline level of the last 2 or 3 halves and second half?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [22]

--------------------------------------------------------------------------------

Well, that's certainly what we're focused on. I mean there's obviously some guidance in the market from analysts at the moment already. I think consensus is just over sort of $15 million for us. So that would be an improvement, and that's where we're targeted.

--------------------------------------------------------------------------------

Julia Belk, Air New Zealand Limited - Investor Relations Manager [23]

--------------------------------------------------------------------------------

And our next question is from Matt Henry.

--------------------------------------------------------------------------------

Matthew Allan Henry, Forsyth Barr Group Ltd., Research Division - Head of Wealth Management Research [24]

--------------------------------------------------------------------------------

I've just got a couple of things. You sort of mentioned before on Digital Classifieds, you weren't going to be very patient if you didn't see success in those businesses. Obviously, the net cost this year is going to be quite considerable. Where are you on that kind of patience spectrum across all 3 of those platforms?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [25]

--------------------------------------------------------------------------------

Yes, good questions. So firstly, on OneRoof, I think we're obviously continuing to invest the -- invest where the majority of the money is going, and we are seeing good solid increases in revenue and we would expect to continue to see that. DRIVEN, in the coming days, weeks and months, you will start to see a bit more of us in market. And we still think there's a real opportunity there, because there isn't a significant demand and competition to TradeMe in that market at the moment. And I think YUDU, where we're currently spending less and less on and becoming more and more impatient. And so, again, you should watch that figure in the next 6 months.

--------------------------------------------------------------------------------

Matthew Allan Henry, Forsyth Barr Group Ltd., Research Division - Head of Wealth Management Research [26]

--------------------------------------------------------------------------------

Okay. So in terms of looking to next year, what's the chance you scale back the sort of level of investment that you're currently making?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [27]

--------------------------------------------------------------------------------

I wouldn't be predicting that we'll be scaling back the investments significantly. What I would be looking forward is to be scaling up the revenue significantly.

--------------------------------------------------------------------------------

Matthew Allan Henry, Forsyth Barr Group Ltd., Research Division - Head of Wealth Management Research [28]

--------------------------------------------------------------------------------

Okay. I hope, fingers crossed. And just on the change in advertising year-on-year growth, can you just give us some color around what segments you're seeing that come from? And the Agency numbers there, obviously the June number particularly looks quite strong year-on-year, but coming off of a significantly weak prior year June. Can you just give us some sense around if that order of magnitude has been continued into the second half?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [29]

--------------------------------------------------------------------------------

Yes. So to your point on Slide 8, where we do have those advertising market trends. And again, just to report out that, that's the total market overall, not just the platforms or products that we have. But we are continuing to see that trend that you saw there in June. So Agency continues to be showing year-on-year growth. Now some of that obviously will be that recovery from the declines of the prior year. But we absolutely are pleased with how Agency is traveling and are seeing growth in that.

--------------------------------------------------------------------------------

Matthew Allan Henry, Forsyth Barr Group Ltd., Research Division - Head of Wealth Management Research [30]

--------------------------------------------------------------------------------

Where is it coming from? Like can you give us some color on what segments? Like it's quite -- it's obviously quite a material shift. I'd just be interested to know what parts of the economy that's coming from.

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [31]

--------------------------------------------------------------------------------

Yes. Probably the ones you'd expect. There's certainly a fair bit happening in banking, a fair bit happening in telco, some in -- tourism is a one big obviously and specifically around cruising, which we have a number of assets, which we're really focused on. So those are the key demographics.

--------------------------------------------------------------------------------

Julia Belk, Air New Zealand Limited - Investor Relations Manager [32]

--------------------------------------------------------------------------------

And our next question is from [Fedell Campbell]. Are you there, [Fedell]?

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [33]

--------------------------------------------------------------------------------

We see your notes, what you're saying. Sorry, the microphone is not working. So I think we've talked a little bit about driving YUDU in that notes you've seen through. So thank you for those. You've also just asked regarding the press around TVNZ, does they move to possible resurrect Stuff merger? And obviously, there were a few rumors being reported out of the Australian media on that last week. And as you all have probably seen, we've reported our policy is certainly not to comment on any rumors in the marketplace.

--------------------------------------------------------------------------------

Julia Belk, Air New Zealand Limited - Investor Relations Manager [34]

--------------------------------------------------------------------------------

And I think we've got one more question from Matt. Do you have another question, Matt?

--------------------------------------------------------------------------------

Matthew Allan Henry, Forsyth Barr Group Ltd., Research Division - Head of Wealth Management Research [35]

--------------------------------------------------------------------------------

No, I haven't got any.

--------------------------------------------------------------------------------

Michael Raymond Boggs, NZME Limited - CEO [36]

--------------------------------------------------------------------------------

Okay. Well, I think that's everyone. So thank you for your interest today and for the participants on the call and for those of who asked questions, we'll be catching up with many of you over the next week or so. So we look forward to that. But also at the same time, feel free to call out to David or I if there's anything further we can help you in the meantime. We look forward to catching up. Thank you.