After Demerger’S Approach to Dividends Will Be Determined by the APN Board Post the Demerger at Its Demerger on APN’S Dividends? Discretion and May Change Over Time

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After Demerger’S Approach to Dividends Will Be Determined by the APN Board Post the Demerger at Its Demerger on APN’S Dividends? Discretion and May Change Over Time EXPLANATORY MEMORANDUM For the Demerger of NZME by APN VOTE IN FAVOUR Your Directors unanimously recommend that you vote in favour of the resolutions to approve the Demerger and the Share Consolidation. This is an important document and requires your immediate attention. You should read this Explanatory Memorandum in its entirety, taking particular notice of the advantages, disadvantages and risks of the Demerger (see Sections 5.1 to 5.5) and the risks of an investment in NZME (see Section 8.13) and in APN (after the Demerger) (see Section 6.12), prior to deciding whether or not to vote in favour of the resolution to approve the Demerger. APN Shareholders who have any questions in relation to this Explanatory Memorandum or the Demerger should consult their financial, legal, taxation or other professional adviser. APN Shareholders can also call the APN Shareholder Information Line on 1300 365 969 (within Australia) or +61 1300 365 969 (outside Australia) between 8:30am and 5:30pm (Sydney time) Monday to Friday, or 0800 729 276 (within New Zealand) between 8.30am and 5.30pm (Sydney time), Monday to Friday. For personal use only APN News & Media Limited ABN 95 008 637 643 For personal use only APN NEWS & MEDIA LIMITED EXPLANATORY MEMORANDUM APN NEWS & MEDIA LIMITED | ABN 95 008 637 643 CONTENTS IMPORTANT INFORMATION AND DISCLAIMER IMPORTANT INFORMATION IFC Purpose of this document Status of this document AND DISCLAIMER The purpose of this Explanatory Memorandum Important information for Shareholders is to explain the terms of the Demerger and in Australia CHAIRMAN’S LETTER 2 the manner in which the Demerger will be This document is not a prospectus or other considered and implemented (if approved), disclosure document under chapter 6D of the 1 Demerger proposal 3 to set out certain information required by law Corporations Act. overview and to provide all other information (other than information previously disclosed to Important information for Shareholders in 2 Key dates and times 6 APN Shareholders) which is known to APN New Zealand which is material to the decision of APN 3 What you need to do and 7 This document is not a New Zealand Shareholders whether or not to vote in favour prospectus, investment statement or product how to vote of the resolution to be considered at the disclosure statement and has not been General Meeting. 4 Frequently asked questions 9 registered, filed with or approved by any New Zealand regulatory authority under or on the Demerger This Explanatory Memorandum includes a statement of all the information known to in accordance with the Securities Act 1978 5 Advantages, disadvantages, 15 APN that is material to APN Shareholders or the Financial Markets Conduct Act 2013 in deciding how to vote on the Demerger (or any other relevant New Zealand law). The and key risks associated NZME shares will be distributed to existing with the Demerger Resolution, as required by Section 256C(4) of the Corporations Act. New Zealand shareholders in reliance on the Financial Markets Conduct (APN News 6 Information on APN 19 APN Shareholders should read this Explanatory & Media Limited) Exemption Notice 2016. (after the Demerger) Memorandum in its entirety before making a decision as to how to vote on the resolutions Notice to certain foreign Shareholders 7 Pro forma APN 35 to be considered at the General Meeting. Shareholders who are Ineligible Overseas (after the Demerger) Shareholders will not receive NZME Shares financial information Responsibility statements under the Demerger. NZME Shares that would This Explanatory Memorandum (other otherwise be transferred to these Shareholders 8 Information on NZME 47 than Sections 12 and 13) has been prepared under the Demerger will be transferred to the Sale Agent to be sold, with the net 9 NZME Pro Forma Financial 66 by APN and its Directors as at the date of this Explanatory Memorandum and is the proceeds of such sale to be paid to Ineligible Information responsibility of APN. Overseas Shareholders. See Section 10.3 for further information. 10 Details of the Demerger 75 PwCS has prepared the Investigating Accountant’s Report set out in Section 12 APN Shareholders resident outside Australia 11 Tax Implications for 81 in relation to the pro forma APN (after the and New Zealand for tax purposes should seek Shareholders Demerger) historical financial information specific tax advice in relation to the Australian included in Section 7 and the pro forma and overseas tax implications of the Demerger. 12 Investigating Accountant’s 85 NZME historical financial information For a discussion of the tax implications of Report included in Section 9 and takes responsibility the Demerger for resident Australian and for that report. New Zealand APN Shareholders please refer 13 Independent Expert’s 91 to Section 11 for further information. Report Deloitte has prepared the Independent Expert’s Report as set out in Section 13 of This Explanatory Memorandum does not in 14 Additional Information 131 this Explanatory Memorandum, and takes any way constitute an offer of securities in any responsibility for that report. place in which, or to any person to whom, it 15 Glossary 137 would be unlawful to make such an offer. ASIC 16 Annexures A: Australian 139 A copy of this Explanatory Memorandum has This Explanatory Memorandum is neither an Media Industry Overview been lodged with ASIC in accordance with offer to sell nor a solicitation of an offer to buy section 256C(5) of the Corporations Act. securities as those terms are defined under 17 Annexure B: New Zealand 142 the US Securities Act. The NZME Shares Media Industry Overview Neither ASIC nor any of its officers takes to be transferred under the Demerger have any responsibility for the contents of this not been and will not be registered under 18 Annexure C: Notice of 146 Explanatory Memorandum. the US Securities Act or the securities laws General Meeting of any jurisdiction and may not be offered, sold or resold in, or to persons in, the United CORPORATE DIRECTORY IBC States except in accordance with an available exemption from registration under the US Securities Act. None of the US Securities and Exchange Commission (“SEC”), any US state securities For personal use only commission or any other US regulatory authority has passed comment upon or endorsed the merits of the Demerger or the accuracy, adequacy or completeness of this Explanatory Memorandum. Refer to Section 14.12 for information about selling restrictions in other foreign jurisdictions. EXPLANATORY MEMORANDUM | 1 NZX and ASX listing Forward looking statements Entitlement to inspect APN’s Share Register NZME will apply to NZX for permission to Certain statements in this Explanatory Under Section 173 of the Corporations Act, list NZME and to quote the NZME Shares on Memorandum relate to the future. While APN persons are entitled to inspect and copy APN’s the NZX Main Board. NZME will also apply and NZME believe there is a reasonable basis Share Register. APN’s Share Register contains for admission to the Official List of ASX as a for these forward looking statements they do personal information about APN’s Shareholders. involve known and unknown risks, uncertainties, Foreign Exempt Listing and for official quotation Privacy and personal information of all NZME Shares on ASX. A copy of this assumptions and other important factors that Explanatory Memorandum has been lodged with could cause the actual results, performance or The collection of certain personal information is ASX and NZX. None of ASX, NZX or any of their achievements of APN or NZME to be materially required or authorised by the Corporations Act respective officers takes any responsibility for different from the future results, performance in Australia. the contents of this Explanatory Memorandum. or achievements expressed or implied by such statements. Such forward looking statements APN, NZME and their respective share registries The fact that NZX may list NZME on the NZX (each an “Organisation”), may collect personal Main Board, or that ASX may admit NZME to are based on numerous assumptions regarding present and future business strategies and information in the process of implementing the Official List does not make any statement the Demerger. The personal information may regarding, and should not be taken in any way as the environment in which APN or NZME will operate in the future. Certain important factors include the names, addresses, other contact an indication of, the merits of an investment in details and the details of the shareholdings of NZME or NZME Shares. that could cause actual results, performance or achievements to differ materially from those Shareholders, and the names of individuals Financial information in the forward looking statements include, appointed by Shareholders as proxies, among others, the risk factors described in this corporate representatives or attorneys at the Other than as noted in this Explanatory General Meeting. Memorandum, the financial information Explanatory Memorandum, and other unknown contained in this Explanatory Memorandum risks and uncertainties. Forward looking Shareholders who are individuals, and individuals has been prepared and presented in accordance statements should, therefore, be construed in appointed as proxies, corporate representatives with APN’s accounting policies as disclosed light of such risk factors. You are cautioned not or attorneys, in respect of whom personal in its 31 December 2015 financial statements to place undue reliance on these statements.
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