Investor Briefing

INVESTOR BRIEFING

JUNE 2016 DISCLAIMER

You must read this disclaimer before reading or making any use of this document While reasonable care has been taken in compiling this presentation, none and the accompanying material or any information contained in it. of NZME, APN nor any subsidiary, director, employee, agent or adviser of NZME or APN (to the maximum extent permitted by law) gives any warranty or This presentation has been prepared as at 16 June 2016 to provide a general representation (express or implied) of the accuracy, completeness or reliability overview of the New Zealand business of APN News & Media Limited (APN) in of the information contained in it, nor takes any responsibility for it. The conjunction with the proposed demerger of Wilson & Horton Limited (NZME) information in this presentation has not been and will not be independently from APN. It has been prepared solely for informational purposes and does not verified or audited. purport to be complete or comprehensive and does not constitute financial product, investment, tax or other advice. This presentation should be read in This presentation contains historical financial information of APN after applying conjunction with the Explanatory Memorandum that was released to ASX and pro forma adjustments that were considered appropriate to reflect the indicative NZX on 11 May 2016 which can be found on the APN website (www.apn.com.au). effect of the Demerger as described in the Explanatory Memorandum.

This presentation is not a product disclosure statement or other offering The financial information in this presentation: document under the laws of New Zealand or any other jurisdiction or law. • has been prepared for illustrative purposes, to assist investors to understand This presentation is not and should not be construed as an offer to sell or a the financial position and financial performance of NZME; solicitation of an offer to buy securities and may not be relied upon in connection • is historical, and investors should note that past financial performance is not with any purchase of securities. necessarily a guide to future financial performance; and • has been prepared and presented in accordance with APN’s accounting Past performance information provided in this presentation may not be a reliable policies as disclosed in its 31 December 2013, 31 December 2014 and 31 indication of future performance. This presentation contains certain forward- December 2015 financial statements which are contained in APN’s 2013, 2014 looking statements and comments about future events, including with respect and 2015 Annual Reports which can be found on the APN website. to the financial condition, results, operations and business of NZME. Forward looking statements can generally be identified by use of words such as ‘project’, If you are not the intended recipient of this presentation, you are hereby notified ‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’, ‘may’, that any review, dissemination, distribution or copying of this presentation may ‘should’, ‘will’ or similar expressions. Forward-looking statements involve known be prohibited and you should not act upon anything in this presentation. and unknown risks, significant uncertainties, assumptions, contingencies, and other factors, many of which are outside the control of NZME, and which may Except to the extent required by law, no person is under any obligation to update cause the actual results or performance of NZME to be materially different this presentation at any time after its release to you or to provide you with from any results or performance expressed or implied by such forward-looking further information about NZME’s business. Receipt of this presentation and/ statements. Such forward-looking statements speak only as of the date of this or attendance at this presentation constitutes acceptance of the terms set out presentation. There can be no assurance that actual outcomes will not differ above in this disclaimer. materially from the forward-looking statements contained herein. Recipients are cautioned not to place undue reliance on forward-looking statements.

2 CONTENTS

NZME 4

Revenue Sources 12

Financials and capital structure 25

Board & management team 29

Proposed NZME / Fairfax NZ merger 32

Demerger Update 35

Recap 37

Appendix 39 Polly & Grant

Jeremy Wells Rachel Smalley & Matt Heath

Mike Hosking Tony Veitch

Simon Doull & Andrew Mulligan

Fran O’Sullivan Fletch, Vaughan & Megan BUSINESS HIGHLIGHTS

NZME is a leading integrated New Zealand media company

NZME is the home of many well-known publishing, radio and digital brands, 1 providing news, sport and entertainment content to over 3 million New Zealanders1

2 5HFHQWWUDQVIRUPDWLRQKDVGHOLYHUHGRQ¿QDQFLDODQGRSHUDWLRQDOWDUJHWV

Digital revenues have grown strongly with further digital and video initiatives 3 LPSOHPHQWHGLQ)< HJGLJLWDOFODVVL¿HGVDQG1=+HUDOG)RFXV

NZME is highly cash generative with a proposed dividend payout ratio of 60-80% 4 of underlying NPAT2, and capex is anticipated in line with or below historical levels

The proposed merger with Fairfax New Zealand offers the potential 5 IRUVLJQL¿FDQWV\QHUJLHVDQGHQKDQFHGFRQWHQWJHQHUDWLRQ

(1) Source: Nielsen CMI, fused database: February 2016 (based on population 10 years +). Based on unduplicated weekly reach of NZME newspapers, radio stations, and monthly domestic unique audience of NZME’s digital channels 6XEMHFWWRDSSURSULDWHOHYHUDJHDQGRWKHUVWUDWHJLFSULRULWLHV'LYLGHQGSROLF\VXEMHFWWRUHYLHZE\1=0(%RDUG7KHSD\PHQWRIGLYLGHQGVZLOOEHGHWHUPLQHGE\WKH1=0(%RDUGIURPWLPHWRWLPHDWLWVGLVFUHWLRQGHSHQGHQWRQSUR¿WDELOLW\ FRVWVDQGOHYHUDJHRI1=0(EXVLQHVVDQGLWV¿QDQFLDOSRVLWLRQDWWKHWLPH8QGHUO\LQJ13$7ZLOOEHFDOFXODWHGEDVHGRQVWDWXWRU\13$7DGMXVWHGIRUPDWHULDORQHRIILWHPVSDUWLFXODUO\WKRVHZLWKDQRQFDVKLPSDFW

5 6

audiences. We offer tailored We engage with target Advertisers amplify the NZME network to their message across impact of advertisers. media solutions, through use of data, to maximise the EVENTS DIGITAL SERVICES CONTENT BRANDED

S RADIO ENGAGEMENT L RADIO BRAND E N

S SPORT

H E

I EXPERIENTIAL C

S T

+ I

A T

DATA

NEWS

DIGITAL

O C ENT. E-COMMERCE PRINT STRATEGY STRATEGY AND PLANNING CREATIVE DIVERSE AUDIENCES VIDEO We deliver news, sport We and entertainment content every day – across digital, radio and print channels. NZME IS ONE OF NEW ZEALAND’S LEADING LEADING IS ONE OF NEW ZEALAND’S NZME BUSINESSES ENTERTAINMENT AND MEDIA AUDIENCE put our audiences at We the centre of everything we do – producing targeted content and connecting advertisers to their customers. CONTENT CAPABILITIES BRANDS NZME REACHES AN AUDIENCE OF OVER 3 MILLION NEW ZEALANDERS1

Our national and local presence allows us to offer advertisers broad access to their target markets

>80% ~85% of the North of Auckland Island a a month1 month1

13% of total NZ advertising spend a year (~NZ$2.4 billion market)2 ~65% of the South Island a month1

6RXUFH1LHOVHQ&0,)HEUXDU\IXVHGGDWDEDVH3ULQWDQG5DGLREDVHGRQZHHNO\FXPHGLJLWDOEDVHG (1) Source: Nielsen CMI, fused database: February 2016 (based on population 10 years +). Based on unduplicated weekly reach of on monthly domestic unique audience NZME newspapers, radio stations, and monthly domestic unique audience of NZME’s digital channels $GYHUWLVLQJ6WDQGDUGV$XWKRULW\

7 NZME’S SUCCESSFUL TRANSFORMATION IN 2015

NZME has transformed into an integrated media company; delivering quality content at a lower cost, maximising cross-selling opportunities, and leveraging NZME’s aggregated audience

TARGET ACHIEVED

• Deliver FY15 EBITDA of NZ$70.8 million1 • FY15 EBITDA of NZ$74.9 million delivered2

• Merged business – one newsroom, merged commercial teams • Relocated all Auckland businesses into • Merge three businesses into one new purpose built facility • Eleven regions co-located • Achieved on-time and on-budget

• Generate over NZ$55 million of annual • Over NZ$59 million generated revenue from digital and other growth • 33% growth in digital publishing revenue channels in FY15

• Deliver cost savings of NZ$18 million • Over NZ$20 million secured and an additional NZ$10 million targeted for 2016

1=PLOOLRQRIOLVWHGFRVWVZHUHLQFOXGHGLQWKH1RYHPEHUPDUNHWIRUHFDVWRI1=PLOOLRQOLNHIRUOLNHFRPSDULVRQWKHUHIRUH1=PLOOLRQ %HIRUHDOORFDWLRQRIFHUWDLQLQFRPHDQGH[SHQVHVWKDWKDYHKLVWRULFDOO\EHHQUHFRUGHGE\$31WKDWDUHDWWULEXWDEOHWR1=0(RI1=PLOOLRQ QHW LQFUHPHQWDOVWDQGDORQHFRVWVRI1=PLOOLRQDQG exceptional items

8 NEW HEADQUARTERS AND INTEGRATED NEWSROOM

9 INTEGRATION PROVIDES INCREASED OPPORTUNITIES

CONTENT AUDIENCE ADVERTISERS • Co-located newsroom producing • Engaging with new audiences • Improving customer experience content for all platforms through events and experiential through sales team integration • Leveraging talent across all activations VLQJOHSRLQWRIFRQWDFW platforms • Better breadth of audience, • CreateMe specialises in creating • Lower cost of content directing existing audience unique, cross-platform branding production to other NZME brands content solutions for advertisers • New digital content investments • Deeper audience engagement • Maximise cross-selling funded by cost savings e.g. driving radio audience to opportunities leveraging digital content extensive audience reach • Ability to harness the power to increase share of of the NZME audience network advertiser wallet and data to build audience segments based on user EHKDYLRXUDFURVV1=+HUDOG GrabOne and radio websites

10 KEY PRIORITIES

1 2 3

DIVERSIFYING GROWING OPTIMISING REVENUES AUDIENCE INTEGRATION ENGAGEMENT OPPORTUNITIES

• Diversify content delivery across • Improve content via audience • Leverage the ‘one newsroom’ to digital, video, activations and targeting and measurement LPSURYHFRQWHQWDQGHI¿FLHQFLHV transactions • Leverage talent to grow • 0D[LPLVHWKHLQWHJUDWHGPXOWL • Continued focus on growing digital new revenue areas and platform sales proposition audiences and revenues PXOWLSODWIRUPFRQWHQW • Explore further partnership • Explore ways to monetise and • Develop content to grow opportunities with other media expand data collection following DXGLHQFH organisations and distribution launch of digital registrations platforms (established examples • Extend digital verticals portfolio include the printing and distribution (e.g. Driven, Spy and Viva) agreements with Fairfax Media, Kiwi premium ad exchange • Investment in broader capabilities .3(; MRLQWYHQWXUHZLWK)DLUID[ and new revenue streams such as TVNZ and Mediaworks) NZME Vision, Driven, CreateMe and WatchMe

11 REVENUE SOURCES NZ ADVERTISING MARKET TRENDS

The New Zealand media industry generated approximately $2.4 billion in advertising revenue in 2014

$GYHUWLVLQJ6WDQGDUGV$XWKRULW\SXEOLVKHVGDWDRQDGYHUWLVLQJVSHQGLQ1HZ=HDODQG 1RFKDQQHOEUHDNGRZQGDWDKDVEHHQUHOHDVHGIRU+RZHYHUVRPHVHFWRUVKDYHUHOHDVHGWKHLURZQ¿JXUHV

$'9(57,6,1*63(1',11(:=($/$1'%<&+$11(/ 1=0

3,000 &$*5

1 121 +36% 112 212 2,000 211 2 210 Other Outdoor Magazines 366 5DGLR 1,000 Interactive Newspapers Television

0 2011 2012 2013

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1=0(RSHUDWHVLQWKH$6$FKDQQHOVRIUDGLRLQWHUDFWLYHDQGQHZVSDSHUV1=0(¶VUHYHQXHJURZWKUHODWLYHWRPDUNHWWUHQGVLV driven by its relative mix of revenue by channel. NZME’s business and revenue trends are described on the following pages.

6RXUFH,QWHUDFWLYH$GYHUWLVLQJ%XUHDX ,$% DQG1=0(DQDO\VLV (2) Other includes addressed mail, unaddressed mail and cinema.

13 NZME PRINT

#1 read newspaper in New Zealand: Newspaper-inserted-magazines facilitate targeted advertising THE NEW ZEALAND HERALD • 1=0(¶VOLIHVW\OHIRFXVHGQHZVSDSHU LQVHUWHGPDJD]LQH 7KH1HZ=HDODQG+HUDOG • :HHNO\UHDGHUVKLSRIDSSUR[LPDWHO\ • $ZDUGHG1HZVSDSHURIWKH

8% • Weekly readership of approximately 201,000 1=+HUDOG 19% 'RPLQLRQ3RVW 1HZVSDSHULQVHUWHGPDJD]LQHVFRQWULEXWHRYHU 43% Otago Daily Times RI1HZ=HDODQG+HUDOGSULQWDGYHUWLVLQJUHYHQXH

11% 7KH3UHVV Waikato Times 1=0(3ULQW3UR)RUPD5HYHQXH 1=P FY13 FY14 FY15 19% $GYHUWLVLQJ5HYHQXH Circulation 6RXUFH1HZ=HDODQG$XGLW%XUHDXRI&LUFXODWLRQ$YHUDJH'DLO\FLUFXODWLRQ 'HF±'HF 2WKHU5HYHQXH 12 13 6L[UHJLRQDOGDLO\SDSHUV 7KH1RUWKHUQ$GYRFDWH%D\RI3OHQW\7LPHV +DZNH¶V%D\7RGD\5RWRUXD'DLO\3RVW:DLUDUDSD7LPHV$JH1, and Total 287 276 264 Wanganui Chronicle) and 23 community papers, along with The New =HDODQG+HUDOGUHDFKPRUHWKDQP1HZ=HDODQGHUVHDFKZHHN Note: NZME print revenue is presented differently to the publishing revenue presented LQWKH([SODQDWRU\0HPRUDQGXP$QH[SODQDWLRQRIGLIIHUHQFHVDQGDUHFRQFLOLDWLRQLV 1=0(KDVHQWHUHGLQWRDFRQGLWLRQDOVDOHDQGSXUFKDVHDJUHHPHQWWRVHOOWKH:DLUDUDSD7LPHV$JH 7KHWUDQVDFWLRQLVH[SHFWHGWRFRPSOHWHRQ-XQH LQFOXGHGLQWKH$SSHQGL[

NZME continues to further monetise NZME is expanding its newspaper- its publishing content across digital inserted-magazines to digital channels, e.g. nzheraldfocus platforms, e.g. viva.co.nz

14 NZME RADIO & EXPERIENTIAL

NZME Radio is #1 nationally NZME is investing in the transition in News, Sport and Entertainment from terrestrial to digital radio

• Newstalk ZB is the most listened to radio station in New Zealand, • $IUHHDOOLQRQHGLJLWDOUDGLRDQGPXVLFVWUHDPLQJ ZKLOH&RDVWLVWKHFRPPHUFLDOPXVLFUDGLRVWDWLRQDQG5DGLR service that connects users with great music. 6SRUWLVUDQNHGFRPPHUFLDOGHGLFDWHGVSRUWVUDGLRVWDWLRQ1 2YHUUHJLVWHUHGXVHUV • Strong share in core consumer demographics • Offers a wide variety of content to match required moods or activities • 7KH+LWVLVIRUIHPDOHV • ([FOXVLYHULJKWWRRSHUDWHL+HDUW5DGLRLQ1HZ=HDODQG • =0LVIRUDJHGHPRJUDSKLF WKURXJKDVXEOLFHQFHIURP$51ZLWKDWHUPWR • Nine major stations across New Zealand

6RXUFH*IN1HZ=HDODQG&RPPHUFLDO0DMRU0DUNHWV6XUYHU\6WDWLRQ6KDUH Events and experiential campaigns offer advertisers $OO0RQ6XQPQPQXQOHVVVSHFL¿HG new ways to engage audiences $8',(1&(6+$5(2) • NZME Events produces business, lifestyle and entertainment RANKED COMMERCIAL NETWORKS events, providing sponsorship and partnership opportunities • NZME Experiential delivers campaigns across 26 markets that Newstalk ZB encourage direct interaction between customers and an advertiser’s 12% brand or product Coast 8% 3% NZME Radio and Experiential 5DGLR+DXUDNL FY13 FY14 FY15 NZME. 5% 3UR)RUPD5HYHQXH 1=P ZM 40% 2 SHARE 6% 5DGLRDQG([SHULHQWLDO 121 +LWV 2WKHU LQFOL+HDUWDQG(YHQWV 1 6 5% 2WKHU1=0(5DGLR6WDWLRQV Total 118 126 121 60% 0HGLDZRUNVDQG2WKHU5DGLR Note: NZME radio and experiential revenue is presented differently to the radio UHYHQXHSUHVHQWHGLQWKH([SODQDWRU\0HPRUDQGXP$QH[SODQDWLRQRIGLIIHUHQFHV DQGDUHFRQFLOLDWLRQLVLQFOXGHGLQWKH$SSHQGL[ $XGLHQFHVKDUHRIUDQNHGFRPPHUFLDOQHWZRUNV6RXUFH*IN1HZ=HDODQG&RPPHUFLDO0DMRU0DUNHWV6XUYH\ 6WDWLRQ6KDUH $OO0RQ6XQPQPQXQOHVVVSHFL¿HG 1=5DGLRPDUNHWGLVUXSWHGE\DFKDQJHWRWKHDJHQF\UDGLREX\LQJPRGHODQGRQO\RQHPDUNHWVXUYH\

15 NZME DIGITAL AND E-COMMERCE

NZME has a strong share in NZME’S DIGITAL FOCUS New Zealand’s digital audience

1=0(¶6',*,7$/1(7:25.5($&+(60.,:,6 • Video content: NZME operates Vision, $0217+'5,9(135,0$5,/<%< an internal production studio that creates YLGHRFRQWHQWIRU:DWFK0H1=+HUDOG)RFXV • Q]KHUDOGFRQ] ZKLFKKDVDXQLTXHDXGLHQFHRIPZLWKRYHU Experiential and sells production services PLOOLRQSDJHYLHZV 'LJLWDOUHJLVWUDWLRQVH[FHHG to customers • 5DGLRZHEVLWHVKDYHDXQLTXHDXGLHQFHRIPDQG ]PRQOLQHFRPLVWKHUDGLRZHEVLWHLQWKHFRXQWU\E\ • (FRPPHUFHDQGGLJLWDOFODVVLÀHGV unique audience

• Innovative display advertising

67521*6+$5(,11=',*,7$/6(*0(17 • Social media @nzherald

*RRJOH • Data and analytics 2. Microsoft 3. Facebook 4. NZME $GKXE )DLUID[0HGLD 1HZ=HDODQG*RYHUQPHQW NZME Digital & E-commerce FY13 FY14 FY15 7UDGH0H 3UR)RUPD5HYHQXH 1=P

16 NZME VISION

35 MILLION1 VIDEO STREAMS YEAR TO DATE AND GROWING2

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17 NZME E-COMMERCE AND DIGITAL CLASSIFIEDS

• *UDE2QHLV1HZ=HDODQG¶VODUJHVW • +HUDOG+RPHVDSSIRUL3KRQH • Online car listings daily deals website DQG$QGURLG • Enables user generated private • 1.6m registered users with over • 1HZ=HDODQG¿UVWIRUWKHUHDO YHKLFOHVDOHFODVVL¿HGVWREHFUHDWHG 600,000 visitors per week estate industry and displayed on Driven website • (&RPPHUFHVROXWLRQVWRORFDODQG • $OORZVUHDGHUVWRLQVWDQWDQHRXVO\ • /HYHUDJH7KH1HZ=HDODQG+HUDOG nationwide groups link to additional detailed online audience to drive online listings information about listings and: • *URZLQJVWUDWHJLFSDUWQHUVKLSVDQG • Listings are free for a limited time to relationships to further capitalise on • Share with friends and family; HVWDEOLVKWUDI¿F existing assets and enter new markets • Send inquires to agents; and • 3ODQWRPRYHWREDVLFSUHPLXP listing fee model • $GGGDWHVDQGWLPHVRIRSHQ homes to calendars

NEWS / REVIEWS / LISTINGS

18 INNOVATIVE DISPLAY ADVERTISING

NZME has launched a number of innovative new SURGXFWVLQ)<IRFXVLQJRQPRELOHDQGYLGHR

• &URVVSODWIRUP±6OLGHU DPDUNHW¿UVW $VDXGLHQFHVPRYH • 9LGHR±3KRWRVWLWFK to mobile and video, • 0RELOH±6KRZFDVH NZME is innovating to create new products • 0RELOH±3RUWDO to meet advertiser • 0RELOH±6NLQV demands

The Slider Product enables us to take a full page • Delivers an engaging user experience, while providing display print ad and recreate it to run a digital display advertisers a premium, high impact canvas to showcase their brand and messages. Slider across desktop and mobile, combining the • Illusion of appearing ‘underneath’ the page content power of NZME’s multi platform opportunities. as the user scrolls through the article.

19 SOCIAL MEDIA

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7+528*+62&,$/0(',$ AVERAGE INTERACTIONS1 PER FACEBOOK FAN 675$7(*,(61=0($,0672 JAN TO MAY 2016 • Deepen and extend engagement of fans 10 • 'ULYHDXGLHQFHVDQGWUDI¿FWR

our sites, shows and events 6

• Develop audience insight 6

• Develop new audiences e.g. youth through Snapchat 3 • Support commercial goals 3

2 NZME will continue to develop and respond to social trends to keep the 2 social media audience engaged 02 6 10 12 16 $QLQWHUDFWLRQLVDUHDGVKDUHOLNHRUFRPPHQW Source: Social Bakers, as at 26 May 2016

• 723,977 total followers • 231,675 total followers )DFHERRN7ZLWWHU,QVWDJUDP )DFHERRN7ZLWWHU • 24% Facebook audience • 32% Facebook audience growth since Jan 2016 growth since Jan 2016 = 98,827 new Facebook fans = 49,959 new fans • 6.7 million interactions • 572,292 interactions since Jan 2016 since Jan 2016

Source: Social Bakers, as at 26 May 2016

20 DATA

Capturing and monetising data is a key pillar of NZME’s ongoing digital strategy NZME has people, tools and processes to collect data and provide better audience, content and advertiser outcomes

nzherald.co.nz GrabOne L+HDUW5DGLR 424,000 1.6m 457,000 registered registered registered users users users

Data Management Analysts Data Analytics Platform

CONTENT AUDIENCE ADVERTISERS

• 6SHFL¿FFRQWHQWFUHDWLRQDQG • Better customer journey through • Targeted audience segments for channel distribution keeps directed content delivery and advertisers, resulting in higher audience at the centre regional options advertiser yields • Editorial feedback loop provides • 7DUJHWHGSXVKQRWL¿FDWLRQVWR • Measurable success of campaigns DEHWWHUXQGHUVWDQGLQJRIOLIH direct and develop audience • New revenue opportunities through cycles of content to better data products e.g. providing data leverage content value services to clients

21 NEW INITIATIVES

CREATE ME CAMPAIGN EXAMPLES

Is Your Business Running You? • $WKRXJKWSURYRNLQJFRQWHQW CLIENT PDUNHWLQJSLHFHFUHDWHGLQKRXVH BUSINESS targeting New Zealand’s large &+$//(1*( SME population • Designed to make people think NZME & CLIENT about how their business affects COLLABORATION their life in other ways and ultimately how technology can impact that • Engaging, rich content piece sat LQSULPHSRVLWLRQRQ7KH+HUDOG 7+( +RPH3DJH,QFOXGHGYLGHR ‘BIG IDEA’ interviews, interactive quiz and photography

CONTENT-LED STRATEGY First Time Buyers campaign • $VHULHVRIFRQWHQWSLHFHV FUHDWHGLQKRXVHODXQFKHGZLWKD competition that gives four winners EVENTS WKHLU¿UVWPRUWJDJHDWIRUWKH CREATIVE ‘BIG IDEA’ ¿UVW\HDU7KLVLVEHLQJIROORZHGXS with a series of stories focusing on %528*+772 MEDIA RADIO BRAND LIFE ACROSS Westpac’s products and services STRATEGY IRU¿UVWWLPHEX\HUV ENGAGEMENT NZME ASSETS & PLANNING

VIDEO EXPERIENTIAL

DIGITAL BRANDED SERVICES CONTENT

22 NEW INITIATIVES

NZME EVENTS NZME Events was launched in 2015, offering advertisers new ways to engage audiences G O L F • Dedicated to producing business, lifestyle and entertainment events • 2YHUHYHQWVDOUHDG\GHOLYHUHG • 1DWLRQZLGHFRYHUDJHZLWK:RPHQ¶V/LIHVW\OH+RPH Show and Speaker events held across regional markets • Events provide multiple revenue opportunities including sponsorship and partnerships with advertisers, exhibitor fees and ticket sales

Events are aligned to key NZME brands to drive audience engagement, amplify content and diversify revenue

SPEAKER INTERVIEWS SOCIAL PRINT & ONLINE

ON-AIR EVENT INTERVIEWS VIDEO

23 KPEX

• .3(;LVDMRLQWYHQWXUHEHWZHHQIRXU1HZ=HDODQG media businesses (NZME, Fairfax, Mediaworks, TVNZ) running an automated trading desk for digital DGYHUWLVLQJ,WZDVODXQFKHGLQ1RYHPEHUDQGLV still in the start up stage, offering growth opportunities to the joint venture partners • .3(;RIIHUVDGYHUWLVHUVWKHRSSRUWXQLW\WRSXUFKDVH high quality advertising inventory on the New Zealand publishers’ websites. It was established to meet GHPDQGIRUDORFDODGH[FKDQJHZLWKVXI¿FLHQWVFDOHWR compete more effectively with large international players RSHUDWLQJSURJUDPPDWLFDGH[FKDQJHVVXFKDV*RRJOH )DFHERRNDQG

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24 FINANCIALS & CAPITAL STRUCTURE PRO FORMA HISTORICAL INCOME STATEMENTS

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NZ$MILLION FY13 FY14 FY15

3URIRUPDUHYHQXHIURPFRQWLQXLQJRSHUDWLRQV

3URIRUPDRWKHUUHYHQXHDQGLQFRPH1 0.3 3.3 0.2

Pro forma total revenue and other income 449.3 449.2 433.2

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Pro forma EBITDA 80.8 73.8 67.5

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$GMXVWPHQWVWRDOORFDWHFHUWDLQFRUSRUDWHLQFRPHWKDWKDYHKLVWRULFDOO\EHHQUHFRUGHGE\$31WKDWDUHDWWULEXWDEOHWR1=0( 3URIRUPD¿QDQFHFRVWVDUHFDOFXODWHGEDVHGRQWKHHIIHFWLYHLQWHUHVWUDWHRIWKH1=0(GHEWIDFLOLW\DQGWKHQHWGHEWSHUWKHSURIRUPD)<EDODQFHVKHHW 3URIRUPDLQFRPHWD[H[SHQVHLVFDOFXODWHGDVRIWKHSURIRUPD(%,7'$LQFOXGLQJGHSUHFLDWLRQDPRUWLVDWLRQDQG¿QDQFHFRVWV

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26 PRO FORMA HISTORICAL CASH FLOW STATEMENTS

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NZ$MILLION FY13 FY14 FY15

Pro forma EBITDA 80.8 73.8 67.5

3URIRUPDFKDQJHLQZRUNLQJFDSLWDO (2.6)

3URIRUPDQHWRSHUDWLQJFDVKÁRZVEHIRUHFDSLWDO 78.2 74.3 73.8 H[SHQGLWXUHÀQDQFLQJFRVWVDQGWD[

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3URIRUPDQHWRSHUDWLQJFDVKÁRZVEHIRUH 67.4 59.7 55.3 ÀQDQFLQJFRVWVDQGWD[

)<VKRZQQHWRISURSHUW\OHDVHLQFHQWLYH

27 CAPITAL STRUCTURE

NZME established with capital structure WRUHÀHFWEXVLQHVVSUR¿OHDQGVWUDWHJLF TOTAL DEBT FACILITY NZ$160M direction

NZME balance sheet 1 • 3URIRUPD)<OHYHUDJHRI[(%,7'$ 3URIRUPDQHWGHEW NZ$102m • \HDUPDWXULWLHV

Bilateral bank loan facilities provided by 2 major New Zealand banks 3URIRUPDGUDZQGHEW1 1=P • 1=PUHYROYLQJFDVKDGYDQFHIDFLOLW\ • NZ$10m revolving cash advance/contingent instrument facility

• Leverage and interest cover covenants set at levels 8QGUDZQGHEWFDSDFLW\ 1=P appropriate for the business • Facility headroom provides capacity to fund growth initiatives and other potential commitments • 3URSRVHGGLYLGHQGSD\RXWUDWLRRIRI 3URIRUPD)<OHYHUDJH [(%,7'$ XQGHUO\LQJ13$7VXEMHFWWRDSSURSULDWHOHYHUDJHDQG strategic priorities2,3

$VDW'HFHPEHU%HIRUHFDSLWDOLVHGERUURZLQJFRVWVRI1=PLOOLRQIRU1=0( 6XEMHFWWRUHYLHZE\1=0(ERDUG7KHSD\PHQWRIGLYLGHQGVZLOOEHGHWHUPLQHGE\WKH1=0(%RDUGIURPWLPHWRWLPHDWLWVGLVFUHWLRQGHSHQGHQWRQSUR¿WDELOLW\FRVWVDQGOHYHUDJHRI1=0(EXVLQHVVDQGLWV¿QDQFLDOSRVLWLRQDWWKHWLPH 8QGHUO\LQJ13$7ZLOOEHFDOFXODWHGEDVHGRQVWDWXWRU\13$7DGMXVWHGIRUPDWHULDORQHRIILWHPVSDUWLFXODUO\WKRVHZLWKDQRQFDVKLPSDFW

28 BOARD & MANAGEMENT TEAM NZME BOARD1

SIR JOHN ANDERSON PETER CULLINANE CAROL CAMPBELL Independent Chairman Independent Director Independent Director • 6LU-RKQKDVH[WHQVLYHFRPPHUFLDO • $VWKHIRUPHU&KLHI2SHUDWLQJ2I¿FHURI • Carol is a chartered accountant and experience having held several senior 6DDWFKL 6DDWFKL :RUOGZLGH DQGLWV DPHPEHURI&KDUWHUHG$FFRXQWDQWV positions in the New Zealand banking and &KLHI([HFXWLYH2I¿FHU 1HZ=HDODQG $XVWUDOLDDQG1HZ=HDODQG&DUROLVD ¿QDQFHLQGXVWU\ DQG&KDLUPDQ $XVWUDODVLD IRURYHUHLJKW GLUHFWRURI7KH%XVLQHVV$GYLVRU\*URXS \HDUVSULRU3HWHULVZLGHO\UHVSHFWHGLQ a chartered accountancy practice, where • )RUPHUO\WKH&KLHI([HFXWLYH2I¿FHURI global advertising and marketing and has she advises privately owned businesses. WKH$1=1DWLRQDO%DQN6LU-RKQLVD extensive knowledge and expertise in 3ULRUWRWKDWVKHZDVDSDUWQHUDW(UQVW GLUHFWRURI137/LPLWHG &KDLUPDQ 6WHHO ERWK$XVWUDODVLDQDQGJOREDOPDUNHWV

7KLVVOLGHVKRZVWKHERDUGDVLWZLOOVWDQGRQOLVWLQJ$WOHDVWRQHIXUWKHU,QGHSHQGHQW'LUHFWRULVLQWHQGHGWREHDSSRLQWHGDIWHUOLVWLQJ

30 NZME MANAGEMENT TEAM

MICHAEL BOGGS CEO

CAROLYN LUEY SARAH JUDKINS SHAYNE CURRIE TBD &KLHI2SHUDWLQJ2I¿FHU &KLHI6WUDWHJ\2I¿FHU Managing Editor CFO1

LAURA RICHARD DEAN LIZA MICHELLE MAXWELL HARRISON BUCHANAN MCNALLY HAMILTON &KLHI&RPPHUFLDO2I¿FHU *URXS'LUHFWRU *URXS'LUHFWRU &KLHI0DUNHWLQJ2I¿FHU *URXS'LUHFWRU&XOWXUH HFRPPHUFH Entertainment DQG3HUIRUPDQFH

&)2UROHZLOOEH¿OOHGRQDFRQWUDFWEDVLVXQWLODSHUPDQHQWDSSRLQWPHQWLVPDGH 31 NZME / FAIRFAX MERGER PROPOSED NZME / FAIRFAX NZ MERGER

PROCESS UPDATE REGULATORY CONSIDERATIONS

• NZME is in discussion with Fairfax about merging with its • The transaction remains subject to board approval by New Zealand business NZME and Fairfax, and will require shareholder approval from NZME’s shareholders • $QDSSOLFDWLRQVHHNLQJDXWKRULVDWLRQRUFOHDUDQFHIRU the merger has been lodged with the New Zealand • The transaction will also be subject to regulatory consents, Commerce Commission including the New Zealand Commerce Commission • NZME Management considers the businesses to be • NZME and Fairfax consider there are strong grounds complementary to each other, and that the merger will for New Zealand Commerce Commission clearance, as: enhance the position the companies are in to continue to • There is little crossover in NZME and Fairfax’s deliver high quality, local content to audiences PDVWKHDGVZLWKOLPLWHGKHDGWRKHDGFRPSHWLWLRQ between paid dailies focussed on the same region • The merger will allow greater investment in generating quality content for distribution through the combined channels in order to attract consumers and advertisers • In digital, a combined NZME / Fairfax NZ will be better SODFHGWRFRPSHWHZLWK,QWHUQDWLRQDOVVXFKDV*RRJOH Microsoft and Facebook

33 PROFILE OF COMBINED GROUP

A combined NZME and Fairfax NZ will be a leading New Zealand media company. The merged entity will have the ability to provide value added solutions to advertisers, increasing the combined group’s ability to compete with global operators

NATIONAL REACH INVESTMENT RATIONALE DIGITAL ADVERTISING SPEND

Combination of the traditional areas of NZME • The combination of NZME and The merger will increase NZME and Fairfax and Fairfax will give the merged company a print Fairfax’s New Zealand businesses NZ’s ability to compete with international presence throughout New Zealand would create an opportunity to GLJLWDODGYHUWLVLQJSODWIRUPVVXFKDV*RRJOH deliver improved, innovative and Facebook offerings to advertisers and NATIONAL audiences &29(5$*(&+$11(/6 NZME • Synergies are likely to maintain 6% FAIRFAX NZ or enhance content, meaning more 18% 6% ‘NZ centric’ coverage

• On an aggregate basis, pro forma 1% UHYHQXHLV1=PDQG 1% 2% SURIRUPD(%,7'$LV1=P1 3%

7% 37%

16%

GOOGLE FACEBOOK AGENCY TRADING DESK TVNZ TRADEME <$+22 MEDIAWORKS METSERVICE 27+(56

6RXUFH1=0(SURIRUPD)<UHVXOWV)DLUID[DQQXDODQG half year reports. Fairfax NZ calendarised to a December \HDUHQG 6RXUFH60,)LQDQFLDO%RRNLQJ'DWDDW$SU \HDUWR)HE

34 DEMERGER UPDATE DEMERGER UPDATE

At the APN General Meeting on 16 June 2016, APN shareholders approved the demerger of NZME

• 1=0(ZLOOEHOLVWHGRQWKH1=;DQGWKH$6;RQ -XQH XQGHUDGHIHUUHGVHWWOHPHQWEDVLV XQWLO-XQH • +ROGLQJVWDWHPHQWVZLOOEHGLVSDWFKHGRQ-XQH • NZME shares will trade on a normal settlement on the 1=;DQG$6;RQ-XO\

Implementation of the Demerger is subject to a number RI&RQGLWLRQV3UHFHGHQWEHLQJVDWLV¿HGRUZDLYHG The key Conditions Precedent are summarised below1 • No order or injunction being issued by any court of competent jurisdiction and no other legal restraint or prohibition preventing the Demerger being implemented; • $OO5HJXODWRU\$SSURYDOVFRQVHQWVZDLYHUVRURWKHU DFWVIURP5HJXODWRU\$XWKRULWLHV LQFOXGLQJWKH1HZ =HDODQG2YHUVHDV,QYHVWPHQW2I¿FH UHTXLUHGIRURULQ WKHUHDVRQDEOHRSLQLRQRI$31GHVLUDEOHWRLPSOHPHQW the Demerger being obtained (either unconditionally or RQFRQGLWLRQVUHDVRQDEO\VDWLVIDFWRU\WR$31 2

'H¿QHGWHUPVDVSHUWKH([SODQDWRU\0HPRUDQGXP )RUIXUWKHUGHWDLOVHHSJRIWKH([SODQDWRU\0HPRUDQGXP

36 RECAP BUSINESS HIGHLIGHTS

NZME is a leading integrated New Zealand media company

NZME is the home of many well-known publishing, radio and digital brands, 1 providing news, sport and entertainment content to over 3 million New Zealanders1

2 5HFHQWWUDQVIRUPDWLRQKDVGHOLYHUHGRQ¿QDQFLDODQGRSHUDWLRQDOWDUJHWV

Digital revenues have grown strongly with further digital and video initiatives 3 LPSOHPHQWHGLQ)< HJGLJLWDOFODVVL¿HGVDQG1=+HUDOG)RFXV

NZME is highly cash generative with a proposed dividend payout ratio of 60-80% 4 of underlying NPAT2, and capex is anticipated in line with or below historical levels

The proposed merger with Fairfax New Zealand offers the potential 5 IRUVLJQL¿FDQWV\QHUJLHVDQGHQKDQFHGFRQWHQWJHQHUDWLRQ

38 APPENDIX

39 KEY RISKS

,QYHVWRUVVKRXOGEHDZDUHWKDWWKHUHDUHULVNVDVVRFLDWHGZLWKDQLQYHVWPHQWLQ1=0(ZKLFKDUHVHWRXWLQGHWDLOLQVHFWLRQRIWKH([SODQDWRU\ 0HPRUDQGXPDQG1RWLFHRI0HHWLQJORGJHGE\$31ZLWK$6;DQG1=;RQ0D\ Explanatory Memorandum), and summarised below. 7KHVHULVNVLIWKH\RFFXUFRXOGPDWHULDOO\DGYHUVHO\DIIHFW1=0(¶V¿QDQFLDOSRVLWLRQRUSHUIRUPDQFHWKURXJKORVVRIDVVHWVUHGXFHGUHYHQXH increased costs, loss of customers and suppliers, damage to reputation or a combination of these factors. These could reduce or eliminate the value of your NZME Shares or the returns on them. ,QYHVWRUVVKRXOGFRQVLGHUVXFKULVNIDFWRUVWRJHWKHUZLWKWKLVEULH¿QJDQGWKHRWKHULQIRUPDWLRQFRQWDLQHGLQWKH([SODQDWRU\0HPRUDQGXP Key Risks • Change in Advertiser and Audience Preferences±1=0(JHQHUDWHVDVLJQL¿FDQWSURSRUWLRQRILWVFXUUHQWHDUQLQJVIURPWKHSXEOLFDWLRQDQG distribution of newspapers. The newspaper industry has experienced declining circulation and advertising revenue over a number of years as there has been less consumption of printed media in favour of other sources, mostly online. NZME considers this trend is likely to continue. • Media Sector Competition±1=0(IDFHVFRPSHWLWLRQIURPH[LVWLQJPHGLDJURXSVDQGQHZPHGLDJURXSVXWLOLVLQJQHZWHFKQRORJLHVDQG1=0( expects this competition will continue. The actions of an existing competitor or the entry of new competitors, in either a media sector in which 1=0(RSHUDWHVRULQJHQHUDOPD\KDYHDPDMRUHIIHFWRQ1=0(¶VRSHUDWLQJDQG¿QDQFLDOSHUIRUPDQFH • Recruitment and Retention of Key Personnel±1=0(LVGHSHQGHQWRQWKHWDOHQWFUHDWLYHDELOLWLHVDQGWHFKQLFDOVNLOOVRILWVSHUVRQQHO $V1=0(LVLQFRPSHWLWLRQZLWKRWKHUFRPSDQLHVLQWKHPHGLDVHFWRUDQGPDUNHWJHQHUDOO\WRUHFUXLWDQGUHWDLQNH\H[HFXWLYHVDQGSURIHVVLRQDOV it is possible that it might not be able to do so on acceptable terms. • Information Technology Systems ±1=0(¶VDELOLW\WRFRPSHWHLQWKHPHGLDLQGXVWU\LQWKHIXWXUHLVOLNHO\WREHDIIHFWHGE\LWVDELOLW\WRPDLQWDLQ DQGGHYHORSDSSURSULDWHWHFKQRORJ\SODWIRUPVIRUWKHHI¿FLHQWGHOLYHU\RILWVVHUYLFHVKRZHYHUQRDVVXUDQFHFDQEHJLYHQWKDW1=0(ZLOOKDYH the resources available to do this. • Distribution Channels±DQ\ORVVRUIDLOXUHRI1=0(¶VHVWDEOLVKHGGLVWULEXWLRQFKDQQHOVFRXOGKDYHDVLJQL¿FDQWLPSDFWRQ1=0(,QDGGLWLRQLI 1=0(¶VVXEOLFHQFHIURP$51LQUHODWLRQWRWKHRSHUDWLRQRIL+HDUW5DGLRLQ1HZ=HDODQGLVWHUPLQDWHG IRUH[DPSOHGXHWRDFKDQJHRIFRQWURORI $51 WKLVFRXOGDOVRKDYHDPDWHULDOLPSDFWRQ1=0( • Litigation and Disputes±$VDSURPLQHQWPHGLDLQGXVWU\SDUWLFLSDQWLWLVOLNHO\WKDW1=0(ZLOOIDFHULVNVDVVRFLDWHGZLWKGHIDPDWLRQOLWLJDWLRQ DQGOLWLJDWLRQWRSURWHFWPHGLDDQGLQWHOOHFWXDOSURSHUW\ULJKWV$Q\DFWLRQRUFRPSODLQWDJDLQVW1=0(FRXOGKDYHDVLJQL¿FDQW¿QDQFLDORU reputational impact. • Taxation risks±7KH$31*URXSRSHUDWHVLQPXOWLSOHWD[MXULVGLFWLRQVDQGLVVXEMHFWWRUHYLHZE\WKHUHOHYDQWWD[DXWKRULWLHV7KH$XVWUDOLDQ 7D[DWLRQ$XWKRULW\DQGWKH1HZ=HDODQG,QODQG5HYHQXH'HSDUWPHQWKDYHDXGLWHGDQGUHYLHZHGFHUWDLQDUUDQJHPHQWVSHUWDLQLQJWRDQXPEHU RIPDWWHUVZLWKLQWKH$31*URXS1=0(LVFXUUHQWO\LQYROYHGLQDGLVSXWHZLWKWKH1HZ=HDODQG,QODQG5HYHQXH'HSDUWPHQWUHJDUGLQJFHUWDLQ ¿QDQFLQJWUDQVDFWLRQV)XUWKHULQIRUPDWLRQDERXWWKLVGLVSXWHFDQEHIRXQGLQWKH([SODQDWRU\0HPRUDQGXP$Q\UHTXLUHPHQWWRSD\UHOHYDQWWD[ SHQDOWLHVDQGLQWHUHVWV DVDSSOLFDEOH PD\KDYHDPDWHULDODGYHUVHHIIHFWRQWKHRSHUDWLQJDQG¿QDQFLDOSHUIRUPDQFHRI$31 DQG1=0(LIWKH Demerger proceeds). • Asset Impairment Risk±WKHUHLVDULVNWR1=0(¶V¿QDQFLDOSRVLWLRQLIWKHFDUU\LQJYDOXHRIPDVWKHDGVJRRGZLOORURWKHULQWDQJLEOHDVVHWVLV UHYLVHGGRZQZDUGE\LPSDLUPHQWGXHWR1=0(¶VIXWXUH¿QDQFLDOSHUIRUPDQFH

40 APPENDIX

• $VDVWDQGDORQHHQWLW\1=0(LQWHQGVWRVHJPHQW • This presentation has therefore provided segmented revenue in a different way to that reported historically. revenue in the format intended to be used in future, • NZME considers this new format will provide increased to assist investors. transparency for investors. • $UHFRQFLOLDWLRQWRUHYHQXHDVSUHVHQWHGLQWKH Explanatory Memorandum is provided on the following page.

EXPLANATORY MEMORANDUM INVESTOR PRESENTATION

NZME Publishing revenue includes: NZME Print revenue includes: • 3ULQWSXEOLFDWLRQVDGYHUWLVLQJDQGFLUFXODWLRQUHYHQXH • 3ULQWSXEOLFDWLRQVDGYHUWLVLQJDQGFLUFXODWLRQUHYHQXH • Other print revenue (third party printing and distribution) • Other print revenue (third party printing and distribution) • Digital advertising revenue related to publishing sites • Other digital services revenue • Events

NZME Radio revenue includes: NZME Radio & Experiential revenue includes: • 5DGLRDQGH[SHULHQWLDO • 5DGLRDQGH[SHULHQWLDO • L+HDUW • L+HDUW • Digital advertising revenue related to radio sites • Events

NZME eCommerce revenue includes: NZME Digital and eCommerce revenue includes: • *UDE2QH • Digital advertising revenue related to publishing sites • Digital advertising revenue related to radio sites • Other digital services revenue • *UDE2QH

41 APPENDIX

Reconciliation to Explanatory Memorandum

3XEOLVKLQJ3UR)RUPD5HYHQXH 1=P FY13 FY14 FY15 3UR)RUPD5HYHQXH 1=P FY13 FY14 FY15

3ULQW$GYHUWLVLQJ 1=0(35,17 3ULQW&LUFXODWLRQ 1=0(5$',2 (;3(5,(17,$/ 126 121 3ULQW2WKHU 12 13 NZME PRINT 287 276 264 1=0(',*,7$/ (&200(5&( plus3XEOLVKLQJ'LJLWDO 21 21 TOTAL 449 446 433 plus Events 0 1 3

NZME Publishing revenue per Explanatory Memorandum 308 298 295 3UR)RUPD5HYHQXH 1=P FY13 FY14 FY15

1=0(3XEOLVKLQJUHYHQXH per Explanatory Memorandum

5DGLR3UR)RUPD5HYHQXH 1=P FY13 FY14 FY15 1=0(5DGLRUHYHQXHSHU 121 120 5DGLRDQG([SHULHQWLDO 121 Explanatory Memorandum

2WKHU LQFOXGLQJL+HDUWDQG(YHQWV 1 6 NZME eCommerce revenue 21 21 NZME RADIO & EXPERIENTIAL 118 126 121 per Explanatory Memorandum plus 5DGLR'LJLWDO$GYHUWLVLQJ 333 TOTAL 449 446 433 less Events (0) (1) (3) NZME Radio revenue per Explanatory Memorandum 121 127 120

'LJLWDODQG1HZ,QLWLDWLYHV3UR)RUPD5HYHQXHDVSUHVHQWHGLQWKH ([SODQDWRU\0HPRUDQGXPLVDVXEVHWRIWKH3UR)RUPDUHYHQXH presented in the tables opposite. H&RPPHUFH3UR)RUPD5HYHQXH 1=P FY13 FY14 FY15

Digital 23 31 Digital and New Initiatives FY11 FY13 FY15 *UDE2QH 21 21 3UR)RUPD5HYHQXH 1=P NZME DIGITAL & ECOMMERCE 44 45 48 3XEOLVKLQJ'LJLWDO 21 less Digital (23) (31) 5DGLR'LJLWDO LQFOL+HDUW 13 NZME eCommerce revenue per Explanatory Memorandum 21 21 17 Events and Experiential 10

*UDE2QH 13 21 NZME Digital and New Initiatives TOTAL NZME PRO FORMA REVENUE revenue per Explanatory 29 44 59 449 446 433 FROM CONTINUING OPERATIONS Memorandum