NZME LIMITED ANNUAL REPORT
KEEPING
KIWIS
IN THE
KNOW
For the year ended 31 December 2021
2 NEW ZEALAND MEDIA AND ENTERTAINMENT
2021 Financial Results Summary
Business Snapshot
8 Chairman’s Report
10 Chief Executive Officer’s Report
Financial Commentary
17 Our Sustainability Commitment
The NZME Board
30 The NZME Executive Team
32 Corporate Governance
Statutory Disclosures
5
4
12
S
T
N
E
T
N
O
110 DirectoryC
104
44
28
48 Consolidated Financial Statements
Independent Auditor’s Report
This annual report is dated 22 February 2022 and is signed
on behalf of the Board of Directors by:
Barbara Chapman
Chairman
Carol Campbell
Director
ANNUAL REPORT 2021 3
4 NEW ZEALAND MEDIA AND ENTERTAINMENT
2021 FINANCIAL
RESULTS
SUMMARY
$349.2m
Operating Revenue1
2020 $331.2m
5%
$66.0m
Operating EBITDA1
2020 $66.0m
$34.4m
Statutory NPAT1
2020 $14.5m
138%
$23.6m
Operating NPAT1
2020 $22.2m
6%
11.9cps
Operating EPS1
2020 11.3cps
6%
5.0 cps
Final Dividend
Payable on 23 March 2022
$13.5m
Net Cash
Movement
$47.4m
1 Operating results presented are non-GAAP measures that include the impact of NZ IFRS 16 and the IFRIC agenda decision on Software-as-a-Service (SaaS)
arrangements, however, exclude exceptional items to allow for a like for like comparison between 2020 and 2021 financial years. For the avoidance of
doubt, 2020 has been restated to include the impact of the IFRIC agenda decision on SaaS arrangements. Please refer to pages 38-39 of this results
presentation for a detailed reconciliation. The 2020 operating and statutory results include $8.6 million (net) of Covid-19 government wage subsidy
received in H1 2020.
ANNUAL REPORT 2021 5
BUSINESS
SNAPSHOT
10
Audio brands
1.9 million
#1 Station
Weekly radio
total listeners1
Newstalk ZB is the number one
commercial radio station1
6 million
37.4%
40.9%
Over 6 million hours are
listened to monthly through
iHeartRadio2
NZME radio brand
audience market share1
NZME radio revenue
market share for 20213
32
2.2 million
Print publications across
New Zealand
NZ Herald weekly
brand audience4
191,000
Subscribers across
print and digital6
2 million
55.6%
47.4%
Average monthly unique
audience on nzherald.co.nz5
NZME print audience
market share4
NZME print advertising
revenue market share for 20217
12
Real estate
publications
853,000
90%
OneRoof
brand audience4
Increase in total digital
revenue year-on-year6
497,000
91%
23.5%
Average monthly unique
audience on oneroof.co.nz5
Nationwide residential
for-sale real estate listings8
Listings upgrades in Auckland
grew from 17.6%6
O
I
D
U
A
G
N
I
H
S
I
L
B
U
P
F
O
O
R
E
N
O
1 GfK RAM, Commercial Radio, Total NZ 4/2021, M-S 12mn-12mn, M-F 6am-9am, Share %, Cume 000, AP10+ 2 Adswizz Jul-Dec 2021 TLH averaged
3 PwC Radio advertising market benchmark report, Q1 2021 – Q4 2021. Note: report excludes independent broadcasters and contra revenue. 4 Nielsen CMI
Q4 20 – Q3 21 Fused Nov 2021 AP15+ Note. OneRoof includes weekly print and monthly digital. 5 Nielsen Online Ratings Q4 2021 AP15+ (excludes APP)
6 NZME Analysis 7 PwC NPA quarterly performance comparison report, Q1 2021 – Q4 2021. Note: report excludes any publishers that are not part of the NPA.
8 OneRoof’s listings as a percentage of residential for-sale real estate listings on trademe.co.nz. Note: From June 2021 onwards lifestyle properties and
sections were added to the OneRoof count.
6 NEW ZEALAND MEDIA AND ENTERTAINMENT
ANNUAL REPORT 2021 7
8 NEW ZEALAND MEDIA AND ENTERTAINMENT
CHAIRMAN’S
REPORT
Kia ora and welcome to the New Zealand Media and Entertainment Annual
Report for the year ended 31 December 2021.
New Zealand experienced another difficult
previous year. It has been pleasing to see
helping Kiwis stay safe against COVID-19
year in 2021 with COVID-19 re-emerging
NZME’s continued digital transformation
and go about their daily lives. Through this
in the community in August, resulting in
in 2021 with 37% growth in digital revenue
campaign we evidenced how seriously we
full lockdowns and intra-country border
across the business.
restrictions effectively isolating our largest
city – Auckland. As I reflect on 2021, I am
very proud of what NZME has been able
Statutory Net Profit After Tax in 2021 was
up $20 million to $34.4 million, partly as a
result of the gain on sale of GrabOne of
take our responsibility to be a trusted voice
for New Zealand and effectively use the
influence we have through our platforms to
make a positive impact for all Kiwis.
to achieve in what has been an incredibly
$15.4 million. Operating NPAT1 was
In 2021, NZME kept a close eye on the
challenging and uncertain trading and
$23.6 million – an improvement of 6% on
legislation passed by the Australian
operating environment for our customers
the year prior.
and our people.
Through The 90% Project we evidenced
how seriously we take our responsibility
to be a trusted voice for New Zealand and
effectively use the influence we have
through our platforms to make a positive
impact for all Kiwis.
government requiring Google and
Facebook (“Global Digital Platforms”) to
negotiate with news publishers to pay for
their content. In the absence of similar
legislation in New Zealand we are actively
engaging with the New Zealand Commerce
Commission and the Global Digital
Platforms to arrive at a satisfactory outcome
for NZME.
Just over three years ago the company’s
net debt position was around $100 million,
which led the Board to focus strongly on debt
reduction as part of its capital management
In 2020, NZME softened the impact of the
I was incredibly proud of the important
plan. I am very pleased to report that over the
initial COVID-19 outbreak by responding
role NZME played in keeping Kiwis in the
past three years NZME has repaid all its debt
know, particularly given the challenges
and was in a net cash position of $13.5 million
New Zealand faced with the emergence
as at 31 December 2021.
quickly and effectively. We prioritised the
health and safety of our people, made
some difficult restructuring decisions and
reduced costs where we could. With this
preparation, in 2021 the management team
were able to continue their commitment to
NZME’s 2023 strategy and continue steering
the business back to pre-pandemic levels
and a growth trajectory.
of COVID-19 in our communities.
A particular highlight was taking the lead
to initiate “The 90% Project”, a NZ Herald
campaign to drive the double vaccination
of New Zealand’s eligible population to
90% by Christmas 2021. NZME also ran an
internal campaign, #RollUpYourSleevesNZ,
to encourage our staff to support the
Continued strong cash flows during 2021
enabled NZME to re-commence dividend
payments to shareholders with a fully
imputed and fully franked 3.0 cents
per share interim dividend declared in
August 2021. Based on the business
outlook and capital requirements, the
Board has declared a fully imputed and
fully franked final dividend of 5.0 cents
Overall Operating Revenue1 was solid at
important vaccination message.
$349.2 million, up 5% higher on 2020.
This included a significant recovery
in advertising revenue, up 13% on the
The initiative was a huge success, with
per share bringing the total dividends
90% of the eligible population receiving
declared in relation to the 2021 year to
two doses of the vaccine by 16 December,
8.0 cents per share.
1 Operating results presented include the impact of NZ IFRS 16 and the IFRIC agenda decision on Software-as-a-Service (SaaS) arrangements, however,
exclude exceptional items to allow for a like for like comparison between 2020 and 2021 financial years. For the avoidance of doubt, 2020 has been
restated to include the impact of the IFRIC agenda decision on SaaS arrangements. Please refer to pages 38-39 of this results presentation for a detailed
reconciliation. The 2020 operating and statutory results include $8.6 million (net) of COVID-19 government wage subsidy received in H1 2020.
ANNUAL REPORT 2021 9
KEEPING
KIWIS
IN THE
KNOW
The 90% Project
An audacious bid by the NZ
Herald team to see 90% of the
eligible population immunised by
Christmas, helping Kiwis reach
the target by 16 December 2021.
Myth-busting in an age
of misinformation
NZME used its news and social
platforms to ensure audiences
were delivered accurate facts,
and fair and balanced journalism.
KICK
NZME's new digital brand,
Kāhu and Te Rito
NZME launched Kāhu in 2021, NZ
KICK, developed by youth and
Herald’s digital platform showcasing
focused on content formats and
Māori journalism across Aotearoa. Te
Impact of COVID-19 on business
Deep dives into how businesses are
coping during COVID-19, including
the self-isolation business trial
strategies for New Zealand's
Rito is a collaboration to train twenty-
campaign
youth audience, broadcast across
five new cadets, to help future-proof
multiple platforms.
journalism as a career pathway and
enhance content diversity.
Following the settlement of the GrabOne
sale in October 2021 and the repayment
of debt, NZME’s balance sheet is in a strong
position. With these factors in mind, the
Board determined that it would commence
a $30 million on-market share buyback
programme. The disclosure document
was issued on 17 December 2021 with
the buyback of up to 21,428,571 shares.
A further announcement will be made
ahead of the on-market share buyback
to confirm the commencement.
NZME is committed to delivering shareholder
value by focusing on our guiding principles,
our key strategic priorities and achieving
the targets we have set for 2023. Alongside
Net Debt Reduction
Net Debt / (Cash) (LHS)
1.8
1.5
)
m
$
(
t
b
e
D
t
e
N
120
100
80
60
40
20
-
-20.0
2.0
1.6
1.2
0.8
0.4
0.0
o
i
t
a
R
e
g
a
r
e
v
e
L
0.6
-
2018
2019
2020
2021
I
)
A
D
T
B
E
g
n
i
t
a
r
e
p
O
h
t
n
o
M
2
1
/
t
b
e
D
t
e
N
(
resuming the payment of dividends and
On behalf of the Board, I would like to
the expected execution of the on-market
express our sincere thanks to our people,
buyback, we remain in a strong position
our customers, partners and shareholders
to make future capital investments that
align with our strategic priorities and fuel
for your commitment and ongoing support
during what has been another disrupted
NZME for growth.
and challenging year.
Barbara Chapman
Chairman
10 NEW ZEALAND MEDIA AND ENTERTAINMENT
CHIEF EXECUTIVE
OFFICER’S REPORT
New Zealand Media and Entertainment remained steadfast in its goal of keeping
Kiwis in the know, despite significant uncertainty in 2021 due to COVID-19.
Our people have continued to demonstrate
an outstanding commitment to our purpose,
ensuring we are delivering quality journalism
and entertainment for our audiences.
The 2021 year started with promising signs of
recovery, with June 2021 revenues returning
to 2019 levels. However, the reintroduction
of restrictions across the nation in August
reduced overall business confidence and
momentum, impacting NZME’s advertising
revenues through until the end of October.
Throughout this time the business remained
agile, ensuring we continued to service our
audiences and our advertising customers
whilst keeping Kiwis in the know.
The Operating EBITDA1 for 2021 of
$66.0 million, was in line with last year’s
result. This is pleasing given the impact
of COVID-19 restrictions on revenue in
the second half of the year, particularly
without the benefit of the government wage
subsidies that helped offset impacts in 2020.
NZME’s Key Strategic Priorities
I am pleased to report that we continued
to make strong progress across NZME's
three strategic pillars: Audio, Publishing
and OneRoof.
NZME’s share of total radio audience grew
nearly two percentage points to 37.4%
in 2021 compared to 35.6% in 20202. We
worked hard to provide Kiwis with the best
local audio content and we are extremely
proud that Newstalk ZB has the number
one breakfast show3 and is New Zealand's
number one radio station for the 14th year
running3.5. We also announced exciting line-
up changes to NZME’s radio brands Flava,
The Hits and ZM.
Radio revenue share grew 0.5% in 2021 to
40.9%4 and NZME radio advertising revenue
grew 10% year-on-year. Revenue from
iHeartRadio, New Zealand’s leading digital
audio platform, increased 51% year-on-year.
iHeartRadio broadens our audio reach
across both terrestrial radio and digital
audio, positioning NZME as New Zealand’s
leading audio company.
The NZ Herald remained the number one
daily newspaper in New Zealand5 as NZME
continued to engage audiences across
both print and digital news publications.
The execution of the publishing division’s
digital media strategy continued to
perform strongly, resulting in strong digital
subscription and advertising revenue
growth. NZME reached 191,000 total
subscribers, up 13% compared to 2020.
83,000 of those subscribers were paid
digital-only subscribers, an increase of 54%
year-on-year. This was supported by strong
growth in total monthly digital users in 20216.
Digital and print publishing advertising
revenue grew 26% and 5% respectively
compared to 2020, with digital making
up 46% of total publishing advertising
revenue in 2021.
We were pleased to acquire BusinessDesk
in 2022 and welcome their team to NZME.
The acquisition is strongly aligned with
NZME’s strategic priorities and we are
excited to accelerate the digital growth of
BusinessDesk and further cement NZME
as the home of New Zealand’s premier
business offerings.
OneRoof grew digital national residential
listings penetration7 to 90.5% compared to
88.6% in 2020. Residential for-sale listings
upgrade conversion rates for Auckland
and Regional markets increased to 23.5%
and 5.4% respectively. This resulted in
OneRoof’s digital revenue increasing 90%
year-on-year as NZME’s digital real estate
platform continues to show strong growth.
OneRoof’s print advertising revenue
remained flat year-on-year, impacted by
the reintroduction of COVID-19 restrictions
in the second half of 2021. We continue
investment to increase brand awareness
and monetisation, striving to become ‘Your
Complete Property Destination’.
The GrabOne sale was completed on
29 October 2021. The business and assets
were sold for $17.5 million which, after
settling merchant liabilities and sale costs,
resulted in a net cash inflow of $13.1 million.
During the year Jason Winstanley was
appointed as the new Chief Radio Officer and
Paul Hancox as the new Chief Commercial
Officer. Both were internal appointments,
exhibiting the talent of our people and
the wealth of experience that they bring.
In addition, Carolyn Luey was appointed
Chief Digital and Publishing Officer.
Carolyn has significant experience across
telecommunications, technology and media.
2021 Financial Results
The first half of 2021 showed positive signs
of recovery compared to 2019 revenue
levels. By June 2021, monthly advertising
revenue exceeded the corresponding period
in 2019. The reintroduction of COVID-19
restrictions across the country in Q3 2021
impacted advertising revenue and print
retail sales. Despite these challenges, NZME
1 Operating results presented are non-GAAP measures that include the impact of NZ IFRS 16 and the IFRIC agenda decision on Software-as-a-Service (SaaS)
arrangements, however, exclude exceptional items to allow for a like for like comparison between 2020 and 2021 financial years. For the avoidance of doubt,
2020 has been restated to include the impact of the IFRIC agenda decision on SaaS arrangements. Please refer to pages 38-39 of this results presentation
for a detailed reconciliation. The 2020 operating and statutory results include $8.6 million (net) of Covid-19 government wage subsidy received in H1 2020.
2 GfK Radio Audience Measurement, Commercial Stations, NZME excl. Partners, M-S 12mn-12mn, Market Share %, S4 2020 – S4 2021, AP10+.3 GfK RAM,
Commercial Radio, Total NZ 4/2021, M-F 6am-9am, Share %, AP10+ 3.5 GfK RAM, Commercial Radio, Total NZ S1 2016 - S4 2021, M-S 12mn-12mn, Share %,
AP10+ Note: TNS Radios survey 2008-2015.4 PwC Radio advertising market benchmark report, Q1 2020 – Q4 2021. Note: report excludes independent
broadcasters and contra revenue. 5 Nielsen CMI Q4 20 – Q3 21 Fused Nov 2021 AP15+. 6 Nielsen Online Ratings monthly average Jan-Dec 2021 compared
to Jan-Dec 2020. 7 OneRoof’s listings as a percentage of residential for-sale real estate listings on trademe.co.nz. Note: From June 2021 onwards lifestyle
properties and sections were added to the OneRoof count.
ANNUAL REPORT 2021 11
NEW ZEALAND’S
LEADING AUDIO
COMPANY
Create New Zealand’s
best local audio content
Grow broadcast and
digital reach
Grow market revenue
share and digital revenue
NEW ZEALAND’S
HERALD
The #1 News brand for
all New Zealanders
Subscriber
first
Be a safe, scalable
destination for advertisers
YOUR COMPLETE
PROPERTY
DESTINATION
Strengthen core residential
listings business
Be indispensable
to agents
Expand the portfolio
ended the year strongly with both
November and December advertising
revenue exceeding 2019 levels.
2021 operating revenue1 was
$349.2 million, up 5% compared
to 2020. Excluding the government
wage subsidies received in 2020 of
$8.6 million (net), the growth year-
on-year was 8%.
Operating expenses1 were 7% higher
in 2021 in line with increased volumes
and higher revenue, but pleasingly
remain well below 2019 as a result of
the initiatives implemented in 2020
to permanently reduce the cost base
by $20 million. We remain focused on
ensuring that our cost base remains
efficient and appropriate.
NZME's revenue mix shifted with a
higher proportion of digital revenue in
2021. Digital revenue grew $21.6 million
to $79.5 million 2021 or 37% compared
to 2020. It was very pleasing to deliver
this growth as we execute our digital
transformation strategy.
Advertising revenue grew 13% to
$248.5 million in 2021 compared
to $220.1 million in 2020. Radio
advertising revenue was 10% higher
than 2020 with the first half of the
year up 17% on the same period
in 2020. Print advertising revenue
recovered marginally year-on-year,
with the majority of advertising
revenue growth coming from a 26%
lift in publishing digital advertising
revenue. We are positioned
exceptionally well to offer our
customers one of the broadest
integrated media offerings in the
country and our teams have done a
great job catering to our customers'
advertising needs across NZME’s
platforms.
The continued growth in digital
subscriptions revenue more than
offset the decline in print retail sales
to deliver a 3% growth in publishing
reader revenue for the year.
Conclusion
The positive results achieved in
2021 have been made possible by the
dedication of our team of people, and
through the support of our customers
and business partners.
I would also like to thank the millions
of Kiwis who choose to engage with
our news and entertainment platforms
every day.
On behalf of myself and the executive
team, I would like to thank the NZME
Board for their ongoing support
and guidance, which has been
particularly valuable as we have
navigated our way through the
challenges of recent years.
Michael Boggs
Chief Executive Officer
12 NEW ZEALAND MEDIA AND ENTERTAINMENT
FINANCIAL
COMMENTARY
Financial Results
NZME’s Operating NPAT1 for 2021 was
reduced term of the lease liabilities.
Statutory NPAT1 for 2021 was $34.4 million,
compared to $14.5 million in 2020. 2021
Statutory NPAT included a $15.4 million
$23.6 million, up 6% year-on-year resulting
A portion of the right of use asset related
in an operating earnings per share of
to the sub-leased part of the Auckland
11.9 cents versus 11.3 cents in 2020.
and Whangarei offices was reclassified
gain on sale of GrabOne. Operating EBITDA1
In 2021 the company reviewed the
was $66.0 million in 2021, flat year-on-year.
accounting treatment of configuration and
Operating Revenue2 was $349.2 million in
2021, up 5% compared to $333.2 million in
2020. Operating revenue in 2020 included
$8.6 million (net) of government wage
subsidies received in first half of 2020.
customisation costs in relation to Software
as a Service (SaaS) arrangements as a
result of IFRS Interpretations Committee’s
(IFRIC’s) agenda decision in April 2021.
As a result, the company has changed
its accounting policy in regard to the
Operating Expenses1 increased 7% to
capitalisation of these costs. The change
$283.2 million, largely due to increased
in policy has resulted in an increase
agency commission and marketing costs
in expenses of $1.7 million in 2021 and
in line with an increase in revenue. In
$1.4 million in 2020, together with
to finance lease receivables.
Operating cash flow was $51.8 million
in 2021, $3.8 million lower than 2020
primarily due to higher income tax paid
in the year.
Capital expenditure was $6.5 million in 2021
which was $1.5 million higher than 2020
given the pause on investment in 2020 in
response to the initial outbreak of COVID-19.
Taking into consideration the impact of the
change in accounting policy in relation to
addition, there were higher selling costs
corresponding adjustments to the balance
SaaS related arrangements, future capital
associated with the growing OneRoof
sheet. 2021 financial results have been
expenditure is expected to be between
business. Print and distribution costs1
prepared to reflect the changed policy and
$8 million and $10 million per annum.
increased 11% compared to 2020 with
2020 financial results have been restated.
2020 including temporary cost savings
Further detail has been provided in note
Divisional Performance
in response to the COVID-19 impacts.
1.2.3 of the financial statements for the
NZME is an integrated multi-channel media
Content expenses increased by 9%, as a
restatement of the 2020 balance sheet
business focused on engaging audience
result of increased music royalties and
and page 38 and 39 of the NZME 2021
and customers with top quality content
digital content costs which supported
Full Year Results Presentation for a detail
across multiple verticals, brands and
higher revenue.
reconciliation of the operating results.
products. The key divisions of the business
Depreciation and amortisation1 on owned
Balance Sheet and Cash Flow
assets decreased by $1.1 million for the
year as the overall asset base reduced and
some assets became fully amortised.
The company finished the year with
a net cash position of $13.5 million
representing an improvement of
Finance costs1 were 12% lower at $7.3 million
$47.7 million compared to the
as a result of lower average interest
$33.8 million net debt position at
bearing debt, with the majority of this cost
the end of 2020.
align with the company’s strategic
priorities: Audio (broadcast and digital
audio), Publishing (print and digital news
and journalism) and OneRoof (real estate
print and the OneRoof digital platforms).
To understand the performance of each
division, a framework has been developed
to allocate various shared cost pools on an
relating to the interest expense on leases.
Net working capital excluding cash
appropriate basis.
Exceptional items1 in 2021 totalled net
continued to be a net liability with
$10.8 million gains which included the
increases in tax payable, deferred
$15.4 million profit on the sale of GrabOne,
revenue and other accruals offsetting the
offset by $2.0 million relating to workforce
reduction in merchant liabilities as a result
restructuring costs, and $1.7 million of one-
of the sale of GrabOne.
off projects and other exceptional costs.
Plant property and equipment, intangibles
In 2020, exceptional items totalled a net
and other non-current assets decreased
cost of $8.0 million, predominately made
due to depreciation and amortisation
up of workforce restructuring costs in
exceeding capital expenditure. Right
response to COVID-19.
of use assets declined in line with the
1 Operating results presented are non-GAAP measures that include the impact of NZ IFRS 16 and the IFRIC agenda decision on Software-as-a-Service
(SaaS) arrangements, however, exclude exceptional items to allow for a like for like comparison between 2020 and 2021 financial years. For the avoidance
of doubt, 2020 has been restated to include the impact of the IFRIC agenda decision on SaaS arrangements. Please refer to pages 38-39 of this results
presentation for a detailed reconciliation. The 2020 operating and statutory results include $8.6 million (net) of Covid-19 government wage subsidy
received in H1 2020.
ANNUAL REPORT 2021 13
The audio division includes NZME’s radio brands
The growth in revenue was supported by average
and digital audio platform iHeartRadio.
monthly listening hours increasing to over
O
I
D
U
A
Total audio revenue was $105.7 million in 2021, up
6% year-on-year. Audio revenue in 2020 included
$3.7 million of government wage subsidy received
in the first half.
Radio advertising revenue grew 10% to
$101.0 million, with the first half of the year
showing signs of recovery with 17% growth
compared to the first half of 2020. Revenue for
the second half of 2021 was impacted by the
reintroduction of COVID-19 restrictions but was
still 4% higher than the second half 2020.
NZME’s share of total audience grew to 37.4% in
2021 compared to 35.6% in 20202 as optimisation
initiatives, talent and content changes made in
2020 led to audience engagement in 2021.
This was accompanied by an increase in radio
revenue market share to 40.9% compared to
40.4% in 20203.
We are extremely pleased to have received
recognition at the NZ Radio Awards with Newstalk
ZB the number one radio station and breakfast
talk show in New Zealand4.
Our digital audio platform, iHeartRadio,
celebrated a continued growth trajectory in 2021
with revenue increasing 51% year-on-year.
6 million5. NZME holds a leading position in the
podcast market and has the leading commercial
podcast network in New Zealand6.
)
$
(
s
n
o
i
l
l
i
M
)
m
$
(
e
u
n
e
v
e
R
270.0
260.0
250.0
240.0
230.0
220.0
210.0
200.0
190.0
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
-
Radio Market Revenue3
Market Revenue
NZME Share
41.5%
41.0%
40.5%
40.0%
39.5%
39.0%
38.5%
2019
2020
2021
Digital Audio Revenue1
+51%
+42%
2019
2020
2021
1 NZME Analysis. 2 GfK Radio Audience Measurement, Commercial Stations, M-S 12mn - 12mn, NZME excl. Partners, Market Share %, S4 2020 – S4
2021, AP10+. 3 PwC Radio advertising market benchmark report, Q1 2019 – Q4 2021. Rolling 4-quarter average for market share. Note: report excludes
independent broadcasters and contra revenue. 4 GfK RAM, Commercial Radio, Total NZ 4/2021, M-S 12mn-12mn, M-F 6am-9am, Share %, AP10+.
5 Adswizz Jul-Dec 2021 TLH averaged. 6 Triton NZ Podranker December 2021.
14 NEW ZEALAND MEDIA AND ENTERTAINMENT
G
N
I
H
S
I
L
B
U
P
The publishing division includes NZME’s print
and digital news and journalism products.
Total publishing revenue was $212.0 million
in 2021, up 5% compared to 2020. Publishing
revenue in 2020 included $4.5 million
government wage subsidy received in the
first half.
Overall, reader revenue increased by 3% with
digital subscription revenue growing 75%.
This more than offset a 12% decline in print
retail sales revenue and a 1% reduction in
print subscriber revenue. Total subscribers
across print and digital grew to 191,000,
up from 169,000 in 2020, including 83,000
digital-only subscribers.
NZ Herald Daily and Weekly Brand audience
was 11.8% and 15.1% higher respectively
compared to the prior corresponding period2.
Monthly digital users grew 8% to
2.8 million and the unique audience
of nzherald.co.nz also increased 10% to
2.1 million3. The increase in brand audience
across NZME’s publishing platforms
was pleasing, as we deliver on being
New Zealand’s most trusted publisher.
Print advertising revenue grew 5% to
$65.0 million in 2021. Although print
advertising revenue remained lower
than 2019 levels, NZME ended the year
maintaining its strong print revenue market
share position at 47.4%4, up from 47.1%
in 20204.
Digital advertising revenue grew 26% to
$56.1 million in 2021 with strong demand
from advertising customers.
Subscriptions Mix1
Print Only
Digital Entitled
Digital Only
s
r
e
b
i
r
c
s
b
u
S
f
o
r
e
b
m
u
N
200,000
150,000
100,000
50,000
-
)
m
$
(
e
u
n
e
v
e
R
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
2019
2020
2021
Digital Publishing Revenue1
Digital Subscriber Revenue
Digital Publishing Advertising Revenue
+32%
+17%
2019
2020
2021
1 NZME Analysis. 2 Nielsen CMI Q4 20 – Q3 21 AP15+ compared to Q4 19 – Q3 20. 3 Nielsen CMI fused Q4 20 – Q3 21, Nov 2021, AP 15+ Note: Dec is not
released until March 2021. 4 PwC NPA quarterly performance comparison report, Q1 2020 – Q4 2021. Note: report excludes any publishers that are
not part of the NPA.
ANNUAL REPORT 2021 15
F
O
O
R
E
N
O
The OneRoof division includes the OneRoof
property website and all NZME’s real estate
dedicated print publications.
Total OneRoof revenue increased 15% to
$21.5 million. OneRoof revenue in 2020 included
$0.7 million government wage subsidy received in
the first half.
Digital revenue grew 90% year-on-year as OneRoof’s
digital platform continued to grow. This year saw
a continued focus on using a data led approach to
provide agents with valuable tools and insights to
engage with their customers and the audience.
OneRoof’s digital platform has its highest listings
penetration in Auckland and showed strong growth
in other parts of New Zealand, ending the year
with a nationwide listings penetration of 91%, up
approximately two percentage points on 20202.
OneRoof’s growing ecosystem and engaged
audience led to an increase in listing upgrade
conversions, with Auckland listings conversion
increasing from 20.9% in Q4 2020 to 27.7% in Q4
2021. Other regions ended the year strongly with
upgrades increasing to 7.0% in Q4 2021, up from
4.3% in the prior corresponding period.
Leveraging OneRoof’s print publications across 19
local markets, the focus is on fuelling OneRoof’s
growth through continued investment in brand
awareness and engagement with relevant audience.
)
m
$
(
e
u
n
e
v
e
R
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
30%
25%
20%
15%
10%
5%
-
Digital OneRoof Revenue1
+90%
+53%
2019
2020
2021
OneRoof Digital Residential for-sale
Listings Upgrade %1
Auckland
Regional
Q1
20
Q2
20
Q3
20
Q4
20
Q1
21
Q2
21
Q3
21
Q4
21
1 NZME Analysis. 2 OneRoof’s listings as a percentage of residential for-sale real estate listings on trademe.co.nz. Note: From June
2021 onwards lifestyle properties and sections were added to the OneRoof count.
16 NEW ZEALAND MEDIA AND ENTERTAINMENT
Te Herora o Aotearoa
Auckland’s Sky Tower
lit up with vaccination
messages as part of
the 90% Project.
Photo / Chris Tarpey
FULLY VAXXED
ANNUAL REPORT 2021 17
OUR SUSTAINABILITY
COMMITMENT
Keeping Kiwis in the know requires a commitment to sustainable practices
and the well-being of our community, people and environment.
We are committed to protecting the craft of
immunised in Aotearoa by Christmas
We continue our sustainability journey
journalism and broadcasting to keep Kiwis
2021. The 90% Project and supporting
and look forward to the development of
in the know. In 2021, again impacted by the
#RollUpYourSleevesNZ activation is one
initiatives to ensure we have meaningful,
ongoing impacts of COVID-19, we felt this
of NZME’s proudest achievements.
sustainable practices for the wider
more keenly than ever, with a pandemic
that required an accelerated need for the
business to share its platforms to ensure
our communities were connected, and our
people kept safe.
Our people were supported throughout
lockdowns and alert levels with an
community, the wellbeing of our people
and the environment.
increased focus on Wellbeing and
Due to the ongoing impacts of COVID-19 in
Engagement. This work continues into 2022
2021, progress is likely to be affected when
where a number of the initiatives planned
compared to other years.
The 90% Project – a bold initiative driven
will be brought to life as restrictions ease.
by the NZ Herald and supported across the
The following tables outline the progress
entire business - successfully drove a call to
we've made to date on these, as well as our
action to see 90% of our eligible population
environmental initiatives.
We are committed to protecting the craft of journalism and
broadcasting to keep Kiwis in the know.
OUR COMMUNITIES
OUR PEOPLE
OUR ENVIRONMENT
We connect and empower
our communities.
We provide a workplace
that fosters innovation,
engagement and inclusion.
We take our responsibility
to the environment
seriously.
Responsible
reporting
Promoting a
healthy, diverse
and safe workplace
Recycling
Connecting
communities
Championing
the craft
Best practice
Sharing our
platforms
Equipping our
people
Responsibility
NZME’s sustainability programme is aligned to the guidelines set out in the UN Sustainable Development Goals
– an international blueprint to achieve a better and more sustainable future for everyone.
18 NEW ZEALAND MEDIA AND ENTERTAINMENT
Let’s vaccinate NZ by Xmas
WE DID IT NEW ZEALAND
Eligible population: 4.21m
i
90% Fully vaccinated
90.0%
Fully vaccinated
94.3%
One dose only
90%
Fully vaccinated: 86% • Tairāwhiti 82% • Taranaki 86% • Hawke’s Bay 87% • MidCentral 89% • Whanganui 84%
OUR COMMUNITIES
We connect and empower our communities.
With the presence of COVID-19 in
New Zealand during 2021, NZME (as an
essential service) had a critical role to play
to keep Kiwis informed and connected.
In 2021 NZME used its extensive range
of publications, radio networks and
digital platforms to connect and support
communities across New Zealand. Three
significant campaigns were undertaken -
The 90% Project, #RollUpYourSleevesNZ,
and a partnership with World Vision to
raise money for India to deliver aid.
The NZ Herald launched The 90% Project
in September 2021 in an audacious bid
to see 90% of the eligible population
immunised in Aotearoa by Christmas.
NZME utilised all platforms to reach as
many people as possible, to encourage
vaccination, and drive vaccination
knowledge and understanding. By
16 December, 90% of the eligible
population in NZ were fully vaccinated
having had received two doses of the
vaccine. With the live NZ Vaccine Tracker
at the top of print and digital NZ Herald
platforms, Kiwis were able to see the
nation’s target in real time. The tracker
would refresh daily, gathering data direct
from a Ministry of Health data feed.
Pictures /
Alex Burton,
Dean Purcell,
Michael Craig,
George Heard,
Sylvie Whinray,
Brett Phibbs
#RollUpYourSleevesNZ launched
simultaneously with The 90% Project and
was a NZME-wide campaign using the
power of our platforms to keep Kiwis in the
know, sharing our platforms with our wider
community to support the message to get
vaccinated. NZME staff were encouraged
to participate by showing their rolled-
up sleeves and using the hashtag
#RollUpYourSleevesNZ on their own social
media accounts.
NZME recognises the responsibility that
comes with acting as a voice of record
for New Zealand and, in addition to
the activity driven out of COVID-19, we
continued to use our reach to address
key topics and conversations important
to New Zealanders, as well as partner
with several organisations to champion
charitable causes.
Case Study: Launched in 2021, Kāhu
applies a cultural lens to stories affecting
Māori and is establishing meaningful
connections with iwi and Māori
communities. The intention is to launch
a Pasifika section in the future.
ANNUAL REPORT 2021 19
INITIATIVE
PROGRESS
RESPONSIBLE REPORTING
AND BROADCASTING
Through best practice broadcasting and
journalism, we will provide a diverse and
balanced reporting platform, promoting
the law and holding the powerful to
account.
CONNECTING COMMUNITIES
We are deeply involved in our communities
and as one of New Zealand’s largest media
platforms we will facilitate conversations
about the topics that matter to Kiwis.
Where justified in the interests of freedom of expression, open justice and holding
the powerful to account, NZME invests in legal challenges to suppression, take
down orders, access to court files and other media law challenges. In 2021 NZME
participated in more than 30 legal challenges, some of which involved continued
investment in opposing or appealing to the High Court, Court of Appeal and the
Supreme Court. In 2021 NZME was involved and will continue its involvement with
the Open Justice Project, which provides NZME with additional funding for court
reporting through Public Interest Journalism funding.
NZME strives to adhere to our Editorial Code of Ethics and the principles and
standards of the NZ Media Council and the Broadcasting Standards Authority (BSA).
The table below shows a decrease in 2021 from 2020, of the number of complaints
upheld by regulators.
Regulator
Number of Upholds
BSA
2020
One
2021
Nil
Media Council
Four
One uphold and
one partial uphold
We have maintained our commitment to our communities through the presence
of local journalists and broadcasters. We employ 550 journalists and broadcasters
nationwide, up from 526 in 2020.
We increased diversity of content and contributors across our platforms.
Initiatives in 2021 included:
• The launch of Kāhu, NZ Herald’s digital platform showcasing Māori journalism
from our newsrooms across Aotearoa.
• The Herald, E-Tangata and Tawera Productions joined forces to bring together
‘Waka’, a six-part online video series which traces the cultural revival of the craft
through four teams across the Pacific.
• NZME confirmed a media partnership with Auckland Unlimited across four major
summer cultural festivals – Diwali, Lantern Festival, Tāmaki Herenga Waka Festival
and Pasifika.
• Basic te reo Māori pronunciation and pepeha sessions.
• Cultural workshops and site visits for our journalists, including Sikh Temple visit
and cultural workshops with different communities in NZ, such as the NZ Jewish
Council and members of the Fijian Indian community.
We continue to participate in and support Local Democracy Reporters
(NZ On Air funded journalists), hosting two (of eight) democracy reporters
in our newsrooms in 2021.
We have utilised our platforms to fight for New Zealanders including the
disadvantaged, facilitating conversations that matter and holding the powerful
to account. Refer to example case studies on page 20.
SHARING OUR PLATFORMS
In 2021 we have championed and supported charitable causes, providing support to:
We will use our wide reach across New
Zealand to provide a range of opinion and
ensure a diversity of voices.
Attitude Trust, Cure Kids, Himalayan Trust – Everest Day, Prostate Cancer Foundation
of New Zealand, Ronald McDonald House, Rotorua Community Hospice, Variety
Warm Hearts Appeal and World Vision.
20 NEW ZEALAND MEDIA AND ENTERTAINMENT
OUR COMMUNITIES
CONTINUED
Case Study: ‘The Country’
(radio, print and digital) has over
many years been a companion
to farmers and families and had
a mission to use that privileged
position to focus on mental
health. ‘The Country’ launched
Rural Mental Health Week, aimed
at getting more Kiwis from
New Zealand’s rural communities
talking about mental health.
Case Study:
#RollUpYourSleevesNZ was a
NZME-wide campaign using
the power of our platforms
to keep Kiwis in the know
and support the message
to get vaccinated.
Case Study: Red Nose Day is Cure Kids’ biggest annual
appeal where Kiwis come together to help fund high-
impact, New Zealand-based medical research to save,
extend and improve the lives of children diagnosed
with serious life-impacting and life-limiting health
conditions.
Case Study: When the Delta strain of COVID-19 overwhelmed
India, The NZ Herald and World Vision responded immediately.
Building on our experience of working together in the past,
a successful fundraising campaign was instigated, inspiring
our audience to give generously. The India COVID-19 campaign
raised a record $606,000, which was used for oxygen, medical
supplies and other urgently needed essential services.
ANNUAL REPORT 2021 21
Case Study: Te Wiki o te Reo Māori
highlights included the launch of
Te Reo advocate and the Flava radio
host Stacey Morrison’s new podcast
series called ‘Up to Speed with Te Reo
Māori’ on iHeartRadio.
Case Study: Seven graduates
of the New Zealand
Broadcasting School in
Canterbury have designed and
built ‘KICK’, a youth-focused
digital audio network that lives
on iHeartRadio, extending
across all major digital
platforms. The KICK team have
support from across the NZME
business and are a breeding
ground for the future of radio,
content by ‘youth,’ for ‘youth.’
22 NEW ZEALAND MEDIA AND ENTERTAINMENT
OUR PEOPLE
We provide a workplace that fosters innovation,
engagement and inclusion.
NZME strives to maintain its position as an
volunteering to provide guidance and
and Inclusion Committee in 2021
employer of choice in the media industry.
support to anyone that is facing a
are outlined on the table on page 23.
Our people, policies and practices
challenging time either at home or work.
We have established a Head of Cultural
provide our people with opportunities
These advocates are trained on how
Partnerships in our newsroom to
for learning and development, the ability
to support team members and provide
continue to promote cultural (including
to choose how to manage a healthy
information regarding our relevant NZME
content) partnerships and support the
work-life balance, a focus on diversity
policies and guidance and where to seek
newsroom to improve cultural diversity
and inclusion and a commitment to
professional advice and support.
and awareness.
health, safety and wellness. We are proud
of the quality and speed of delivery to
ensure our people were safe and able
to contribute and support government
initiatives as an essential service, through
COVID-19 lockdowns and restriction
periods regionally and nationwide.
NZME continued to support a diverse
We are working on initiatives across
range of lifestyle choices (including
NZME to improve representation of
parenting and caring for others) through
Māori and Pasifika, including our intern
enabling flexible working options for our
programmes. A ground-breaking
people. During and post lockdowns and
initiative was announced in 2021, with
restrictions, our people were equipped
the formation of Te Rito, an industry
with resources and skills needed to
collaboration to train and develop
In 2021 we introduced a new employee
work from home. The mental health of
25 new journalism cadets – including
engagement tool. Our people were
our people during lockdowns and
those from Māori, Pasifika, LGBTQ and
surveyed frequently with greater levels
restriction periods was critical and
other communities traditionally under-
of engagement after each survey, and it
we had professional external
represented in media.
aided us to understand how our actions
support, training, and regular email
and communications were resonating
communication from our CEO.
with our people.
The Wellbeing Advocates initiative was
focus on improving ethnic and cultural
launched in 2021 with 41 of our people
diversity in our people and the content
established as Wellbeing Advocates,
we produce. The efforts of our Diversity
NZME has recognised the need to
GENDER / LEVEL
AGE GROUP
CONTRACT TYPE
44%
40%
56%
60%
70%
30%
47%
53%
ALL PEOPLE
BOARD
EXECUTIVE
PEOPLE
LEADERS
45-54
21%
F M 0
55+
18%
<24
10%
FULL TIME
68%
25-34
26%
LENGTH OF SERVICE
ETHNICITY
35-44
25%
CONTRACTOR
6%
CASUAL
18%
PART TIME
8%
250
200
150
100
50
0
< 1 Y
1 -2 Y
3 - 5 Y
6 - 10 Y 11 - 20 Y 21 - 30 Y
31 Y +
0%
20%
40%
60%
80%
100%
European
Māori
Indian
Chinese
Other Asian
Pacific Peoples
Other Ethnicity
Middle Eastern/Latin America/African
Undeclared
INITIATIVE
PROGRESS
ANNUAL REPORT 2021 23
PROMOTING A HEALTHY, DIVERSE
AND SAFE WORKPLACE
We will embed a high performing health
and safety culture and will regularly report
on our performance. We will strive for a
collaborative and welcoming place to work
that celebrates diversity. We will adopt and
strengthen policies for the promotion of
gender equality.
CHAMPIONING THE CRAFT
We will ensure we are mentoring the next
generation of journalists and broadcasters.
We will develop our people to maintain
and grow the craft.
EQUIPPING OUR PEOPLE
We will commit to offering our staff relevant
and impactful training to create new
opportunities for growth and innovation.
We have been highly focused on safety engagement in 2021, and have seen an
increase in the number of employees proactively reporting incidents. Please refer to
page 41 for further detail. We have been focused on engaging our leadership team in
health, safety and wellbeing and stepping in and taking preventative actions as soon
as an issue is identified.
The Diversity and Inclusion Committee hosted a calendar of events including:
• Chinese New Year and the Chinese Moon Festival
•
International Women’s Day panel event
• Rainbow Diversity, supporting the Rainbow Pride Parade
• Samoan Language Week - celebrating Samoan independence
• Matariki Event
•
Te Wiki o te Reo Māori
• Diwali – Festival of Lights
• Wellbeing Week
NZME has maintained the Rainbow Tick certification mark (awarded to organisations
that demonstrate diversity and inclusion, measured through a thorough assessment
process).
NZME supports initiatives that reduce the gender pay gap across the business.
We are striving for diversity at Board, Executive and People Leader levels.
In 2021, for gender, we have at Board level F60%:M40%, at Executive level F30%:M70%
and for our People Leaders F53%:M47%.
For ethnicity, we have at Board level all members identifying as European and at Executive
level 9% identifying as Chinese and 91% as European, and for our People Leaders we have
89.9% European, 6.8% Māori, 2.4% Indian, and 0.9% identifying as Other.
Cultural and ethnic diversity remains a focus and we have engaged with a cultural
consultant to commence cultural strategy work in 2022. We have mandated at least
20% of interns be non-European and have collaborated with other media outlets to
form the Te Rito partnership to train cadets. We are focused on diversity within our
recruitment process.
NZME supports flexible working for diverse needs and/or shared responsibility
in the household. Policies and initiatives in 2021 to support this included surveying
our people to understand what was important to them.
NZME was voted Top Graduate Employer in the media and communications category
and the second best-reviewed company in the country in the Top 100 Graduate
Employers in GradNewZealand’s 2021 Student Survey. 19 interns and cadets were
employed at NZME in 2021.
We highlighted our broadcast and journalistic talent through a series of campaigns.
NZME grew its digital audio brand KICK with the intention of incubating new,
youth focused content formats and strategies. Refer to case study on page 21.
A total of 115 hours of media law and regulation training was undertaken by our
journalists and broadcasters at NZME in 2021. In addition, the Board of Directors
undertook Media Law training to assist in their knowledge and understanding of the
legal issues encountered in journalism.
Refer to page 27 for our Awards list celebrating the talent and commitment of
our people.
Our people undertook a total of 136,011 hours of training in 2021 which is a
significant increase. This increase is due to several training initiatives that did not
occur in 2020 and a greater ability to capture this information within NZME. Learning
and development continued through our Editorial Learning and Development
programme, health and safety training, creative and production training, people
training (leadership, effective communication, and recruitment for example) finance,
digital and sales operation training.
24 NEW ZEALAND MEDIA AND ENTERTAINMENT
Case Study: NZ Herald Science
Reporter Jamie Morton answered
our questions on what COP26
meant for New Zealanders.
NZ Herald ran explainers, features
and stories in the lead-up to, and
during, the COP26 climate summit
in Glasgow.
OUR ENVIRONMENT
We take our responsibility to the environment seriously.
Case Study: Covering Climate Now:
NZ Herald Science Reporter Jamie
Morton, asked how can we make
New Zealand’s energy sector greener?
NZME continues to review the actual and potential impact its business practices
have on the environment. NZME has put in place policies and methods to
enable it to measure this impact. This has, and will continue to enable NZME to
reduce environmental impacts through recycling, reduction of greenhouse gas
emissions and sustainable procurement policies.
Some of our environmental initiatives were positively impacted by COVID-19
lockdowns (for example, less travel) in 2020 which created a low baseline and
consequently in 2021 we have seen increases in travel around New Zealand due
to reactivation of our client loyalty programme events. Similarly, production
was reduced in 2020 due to COVID-19 restrictions and the higher production
in 2021 lead to small increases in plastic and general waste. Initiatives to reduce
plastic and general waste were implemented in the second half of 2021 and
will deliver benefits in 2022. It is pleasing to see a reduction in electricity usage
through improved efficiency at the Ellerslie print plant. We look to expand these
initiatives further in 2022.
NZME is closely monitoring and reviewing the development of the climate-
related disclosures framework enacted in October 2021 through the Financial
Sector (Climate-related Disclosure and Other Matters) Act. NZME notes the
Xternal Reporting Board intends to issue its first climate standard by the end
of 2022 and NZME will be required to commence reporting for the full year
ending 31 December 2023. NZME is preparing for this by engaging in the
consultation process for development of the climate standards and undertaking
an assessment of climate-related risks to the business throughout 2022.
Kiwis’ concern over environmental issues continued to increase in 2021 and
as a media organisation we are cognisant of our responsibility to demonstrate
leadership and use our platforms to inform, raise awareness of the issues and
participate in the debate.
We will continue to seek ways to reduce our environmental footprint through
2022 and beyond.
INITIATIVE
PROGRESS
ANNUAL REPORT 2021 25
RECYCLING
We will separate our internal waste streams
– including paper, food and green waste,
and recyclables – to optimise value and
reduce environmental impacts.
BEST PRACTICE
We will maintain our print operation’s
Environmental Management System.
We will collaborate with our suppliers
and partners to ensure best practice
sustainable operations.
RESPONSIBILITY
We will share our platform to promote
environmental issues impacting Kiwis
including carbon emissions and
climate change.
In 2021, NZME continued to identify and initiate the recycling of batteries, ink
and toner cartridges at more of our offices. NZME supported Plastic-Free July
and Recycling Week in October throughout the organisation.
The Ellerslie print plant launched a Plastic Reduction Project in 2020 across both
its production and distribution teams, to reduce plastic usage. This is a phased
project which is expected to lead to a decline in plastic used in the production
process in the future. 2021 saw a year-on-year increase in plastic usage at the plant
from 49 tonnes (restated) to 52 tonnes reflecting normalised production levels (yet
showing a reduction from 77 tonnes in 2019). The team continues to work towards
identifying a practical alternative for the plastic used to protect the bundles of
papers. Consultation with suppliers is continuing with a goal of finding a more
environmentally friendly alternative. The team continues to work to improve our
processes and minimise the volumes directed to landfill. Refer to the case study on
page 26 as an example of where we removed plastic wrap.
A Waste Committee chaired by the Ellerslie plant’s General Manager was formed
in 2020 to reduce the general waste from the print plant. In 2021 36.5 tonnes of
general waste was from the plant, a slight reduction from 37 tonnes in 2020. This
Committee is tasked with a number of actions to ensure an annual decline in general
waste from the plant. In 2021 this began with a waste audit which presented the site
with a number of actions and waste reduction goals.
The COVID-19 lock-downs in 2021 restricted progress towards our waste reduction
goals. We were successful in removing and replacing the waste compactor with an
open bin. That allowed for constant surveillance of the contents directed to landfill
and for any recyclable items to be redirected. It also provided an opportunity to
trace the source and modify the behaviour.
At the Ellerslie plant the number of general waste bins has been reduced and
recycling stations have been ordered. Bulk cages are in place in the production
areas to capture recyclable waste streams.
NZME’s print operations were again awarded the Toitu Enviromark Gold certificate
in 2021.
We are continuing to evolve a responsible sourcing policy and work with a number
of sustainable suppliers.
Employees travelled 3.5 million kms within NZ in 2021, this is up from 3.3 million kms
(restated number) in 2020, due to reintroducing our client travel reward programme
in 2021 (no programme was completed in 2020).
Encouragingly there was a reduction of more than 40 motor vehicles from the NZME
motor vehicle fleet and we continue to look for ways to further maximise efficiencies
in this area. In 2021 carbon emissions from our motor vehicle fleet were 372 tCO2e
down from 544 tCO2e in 2020.
Our newspaper distribution network generated 2,423 tCO2e in 2021, this decreased
by 12% from 2020.
The NZ Herald continued to take part in the annual Covering Climate Now – a global
news media initiative highlighting the need for action against climate change. Refer
to the case study on page 24 as an example of the coverage of COP26 in Glasgow.
DRIVEN (driven.co.nz) assembled automotive leaders and industry representatives
to discuss the clean car feebate scheme with the government. See case study on
page 26.
The numbers in this table have not been independently audited.
26 NEW ZEALAND MEDIA AND ENTERTAINMENT
Case Study: DRIVEN led
conversations through a live
panel, to talk about unravelling
the tangle of detail around
New Zealand’s clean car
electric vehicle feebate
scheme.
Case Study: In 2021, our Ellerslie team
worked to reduce the amount of plastic
used to protect our newspapers as they
are delivered. NZ Herald subscribers in
Auckland were offered newspaper boxes
as shown below, made of polyethylene,
to ensure newspapers were kept dry and
reducing the use of plastic wrap.
ANNUAL REPORT 2021 27
2021 AWARDS
We are proud of our people and their
• Best Reporting - General:
• Best News or Sports Journalist:
achievements. In 2021 we celebrated the
Tom Dillane
Barry Soper, Newstalk ZB
craft of broadcasting and journalism with
the following award wins:
INMA
Categories won by NZME:
• Best Brand Awareness Campaign,
National Brad, 1st Place:
NZ Herald - ‘Headspace’
• Best Use of Print, Groups, 1st Place:
NZME ‘Viva Magazine’
• Best Use of Data to Automate or
Personalise: Groups, 1st Place:
NZME ‘Corona Surf Reports’
Voyager Media Awards
Categories won by NZME:
• News App of the Year
• News Website of the Year
• Best Reporting - Personal Finance:
• Best Sports Reader, Presenter
Tamsyn Parker
• Political Journalist of the Year:
Matt Nippert
• Regional Journalist of the Year:
Kurt Bayer
Pride in Print Awards
Categories won by NZME:
or Commentator: The Alternative
Commentary Collective
• Best Sports Story - Team Coverage:
The America’s Cup World Series
Auckland
• Best New Broadcaster - Journalist:
Aaron Dahmen - Newstalk ZB
• Gold Award - Coldset Publications
• Best New Broadcaster - Off-Air:
category for the NZ Herald Compact
Alex Lansdown - The Hits Network
GradNewZealand
Categories won by NZME:
• Top Grad Employer in the media
and communications category
NZ Radio Awards
Categories won by NZME:
• Best Station Imaging: ZM Network
(Alistair Cockburn, Brynee Wilson)
• Best Station Trailer:
ZM’s $100k Secret Sound
• The Johnny Douglas Award:
Joel Harrison - ZM and Static 88.1
• Best Feature Writing - General:
• Network Station of the Year:
(Canvas, NZ Herald) Greg Bruce:
Newstalk ZB
Goodwill Hunting
• Sir Paul Holmes Broadcaster of the Year:
• Feature Writer of the Year - (Short-form):
Mike Hosking, Newstalk ZB
NZ Herald Nicholas Jones
• Best Music Breakfast Show - Network:
• Best Newspaper Magazine:
ZM’s Fletch, Vaughan & Megan
• Sales Team of the Year:
NZME Auckland
• Best Single Commercial:
Taupo Violence Intervention
New York Festival
Categories won by NZME:
Travel, NZ Herald
• Best Music Breakfast Show - Local:
• World’s Best Radio Programmes:
• Regional Newspaper of the Year:
The Hits Dunedin (Callum Procter,
Silver Award
Rotorua Daily Post
Patrina Roche)
• Best Photographer - News:
• Best Music Host - Local:
Brett Phibbs
The Hits Bay of Plenty (Will Johnston)
• Best Photographer - Sport:
• Best Talk Presenter - Other:
Brett Phibbs
Marcus Lush, Nights Newstalk ZB
• Photographer of the Year:
Brett Phibbs
• ‘The Blackie Award’:
The Hits ‘The Siri Prank’
• Best Reporting - Crime and Justice:
• Outstanding Contribution to Broadcasting:
Kurt Bayer
Phil Gifford - Newstalk ZB
2021 NZ Marketing Awards
Categories won by NZME:
• Media/Publishing Sector Award:
Flava Old School Hip Hop & RnB
Monique Hodgson, Megan Sagar,
John Pelasio
28 NEW ZEALAND MEDIA AND ENTERTAINMENT
THE NZME
BOARD
Barbara Chapman
Independent Chairman
Barbara Chapman served as Chief Executive and Managing Director
of ASB Bank Limited from 2011 until February 2018. She has extensive
business experience gained through a successful career in banking
and insurance. During her career she has held a number of senior and
executive roles in retail banking, marketing, communications, human
resources and life insurance. Barbara is passionate about people and
culture, and promoting best practice in community, governance and
sustainability. She is the Chairman of Genesis Energy Limited and
holds an independent directorship on the board of Fletcher Building
Limited and Bank of New Zealand. She is also Deputy Chair of The
New Zealand Initiative and Patron of the New Zealand Rainbow Tick
Excellence Awards. Barbara was appointed Chairman of the NZME
Board in June 2020.
Carol Campbell
Independent Director
Carol Campbell is a Chartered Accountant and Fellow of CAANZ, and
Chartered member of the Institute of Directors. Carol was a partner at
Ernst & Young for over 25 years and has been a professional director
for the last 10 years. Carol has extensive financial experience and a
sound understanding of efficient board governance and chairs NZME’s
Audit and Risk Committee. Carol is a director of NZ Post Limited,
Kiwibank Limited, T&G Global Limited, Asset Plus Limited, Chubb
Insurance Limited and a number of other private companies.
ANNUAL REPORT 2021 29
David Gibson
Independent Director
David Gibson has a strong background in strategy and finance with
over 20 years investment banking experience, including as Co-Head of
Investment Banking in New Zealand for Deutsche Bank and Deutsche
Craigs. During his finance career David has advised on many of New
Zealand’s largest capital market transactions, including within the
media industry. David is director of Trustpower Limited, Goodman (NZ)
Limited and Rangatira Limited.
Sussan Turner
Independent Director
For the past 25 years Sussan has held senior leadership roles across
media companies, including Group CEO of MediaWorks, Managing
Director of Radio Otago and CEO of RadioWorks. She is currently Group
CEO and Director of Aspire2 Group Limited, one of the leading private
tertiary education groups in New Zealand and is passionate about
building executive teams and company cultures. Sussan has extensive
experience as a director and is currently Pro-chancellor of Auckland
University of Technology.
Guy Horrocks
Independent Director
Guy established himself as an early pioneer of the mobile app industry
co-founding the world’s first commercial iPhone app company in 2007,
Polar Bear Farm. He is one of a number of high powered, experienced
New Zealand entrepreneurs who’ve built internationally successful digital
enterprises – only to return to New Zealand to escape the worst of the
impacts of COVID-19 on their adopted homes. With clients including
Expedia, DreamWorks, HBO, OREO, CNN, Time Magazine as well as NZ
Herald, Horrocks helped launch over 100 mobile apps with his award
winning mobile agency Carnival Labs, many of which were featured by
Apple. Guy Horrocks has since launched a new real-time data warehouse
called SOLVE.
30 NEW ZEALAND MEDIA AND ENTERTAINMENT
THE NZME
EXECUTIVE TEAM
Michael Boggs
Chief Executive Officer
Michael was appointed CEO of NZME in March 2016. Prior to that he held the Chief Financial Officer position
at NZME. Michael’s core focus at NZME has been to develop and implement a group wide strategy to
accelerate growth across NZME’s brands particularly in the areas of subscription and classified offerings,
digital and video content, while ensuring the sustainable growth of the company’s print and radio platforms.
Michael has extensive senior executive experience including as Chief Financial Officer at leading insurance
company Tower Limited. While at Tower, Michael managed the company’s multibillion-dollar assets, its Pacific
Islands operations, earthquake recovery programme and the sale of Tower’s life insurance, health insurance
and investment management businesses. This industry leading work was recognised in 2014 when Michael was
awarded CFO of the year at the annual New Zealand CFO Awards. Michael also has significant background in
the telecommunications and technology sectors with executive roles in the finance, commercial and business
functions of major organisations including Telstra’s New Zealand operations.
Shayne Currie
Managing Editor
Shayne was appointed Managing Editor in 2015 and is responsible for NZME’s 300-plus journalists and the
company’s editorial and news strategy. His role includes overseeing NZME’s unique mix of digital, print, audio
and visual storytelling across the NZ Herald, nzherald.co.nz, Newstalk ZB, NZME’s five regional daily newspapers
and more than 17 community titles. In 2019, Shayne helped oversee the successful launch of NZ Herald Premium
digital subscriptions and he has helped lead some of the most significant projects at the Herald in the past 15 years
including the launch of the Herald on Sunday in 2004 and the Herald’s move to compact format in 2012.
In 2019, Shayne celebrated his 30th year in journalism, including two decades in senior editorial leadership roles
across New Zealand. In 2016 he was awarded the Wolfson Scholarship at Cambridge University in the UK, studying
audience patterns in the digital age.
Paul Hancox
Chief Commercial Officer
Paul was appointed as Chief Commercial Officer in 2021. Prior to this, Paul was part of the NZME Executive
Team as Chief Revenue Officer, where he was accountable for agency and key customer revenues, including
programmatic, trading and integration performance. In his new role, he continues to oversee his existing
portfolio in addition to direct clients, and is accountable for revenue growth across NZME platforms.
Prior to joining the Executive team, Paul led a significant commercial portfolio at NZME as Head of Agency,
Enterprise, Events, Partnerships, Government and Rural, a role he took up in January 2018.
Paul previously spent 9 years in various senior roles at MediaWorks including as Group Head of Revenue where he
successfully designed, implemented and managed the integration of the TV and radio sales teams. Paul brings with
him 25 years of experience in the media industry including a 9-year stint with The Radio Network early in his career,
operating in a variety of roles including as Newstalk ZB and Radio Sport Sales and Marketing Manager.
Carolyn Luey
Chief Digital and Publishing Officer
Carolyn was appointed Chief Digital and Publishing Officer in August 2021.
After 5 years at NZME, Carolyn left as Chief Operating Officer in December 2016. She then went on to senior
transformational roles at MYOB and Vodafone where she was Chief Consumer Officer.
With extensive experience as a strategic business leader in large New Zealand telecommunications, technology
and media companies, Carolyn brings a wealth of knowledge and understanding of how best NZME can deliver
growing digital audience engagement for our commercial partners.
ANNUAL REPORT 2021 31
David Mackrell
Chief Financial Officer
David was appointed Chief Financial Officer of NZME in March 2019, leading NZME’s Finance, Technology and
Strategy functions. He moved to NZME from Heartland Bank where he was Chief Financial Officer. David started
his professional career at Ernst & Young as an Auditor before joining Air New Zealand in 1992.
His career at Air New Zealand spanned 25 years and a large gamut of senior financial and commercial roles,
and was the Deputy Chief Financial Officer for 12 years.
Paul Maher
Chief of OneRoof
Paul was appointed to the newly created Chief of OneRoof role in February 2021. OneRoof is New Zealand’s
fastest growing multi-channel real estate and property platform, and Paul’s appointment reflects the
continued growth of OneRoof as a key pillar in NZME’s strategy. Paul has extensive commercial leadership
experience in numerous senior roles in New Zealand’s leading media companies including Commercial
Director and Business Strategy Director at TVNZ and Chief Executive of MediaWorks Television.
His commercial media experience includes establishing media communications agency Starcom MediaVest
Group in New Zealand and leading the group’s business as CEO of Canada, China and then the North Asia
region. Paul has over thirty years business experience and has previously served on the board of Freeview
New Zealand and Chair of the Kiwi Premium Media Exchange (KPEX) and Think TV New Zealand.
Katie Mills
Chief Marketing Officer
Katie joined the NZME Executive Team in December 2018 assuming leadership of the company’s Marketing and
Communications functions. She is also responsible for the creative function of NZME including Sound, Vision
and Creative departments. Prior to joining NZME, Katie held the role of Group Marketing Director at Aspire2
Group Limited and was previously General Manager (Global) Marketing & Communications at Opus International
Consultants.
Along with Katie’s wide marketing industry experience, she also brings to her role, more than 20 years of media-
specific experience. 15 of those years were spent at MediaWorks in senior leadership positions including as Head
of Marketing, successfully developing, and delivering marketing and brand strategies for a portfolio of radio,
digital, event and television ventures.
Allison Whitney
General Counsel and Company Secretary
Allison joined NZME in 2013. As General Counsel she heads up the legal team and manages the provision of legal
advice and company secretarial services across NZME; and leading NZME’s Culture & Performance function.
Prior to commencing her role at NZME, Allison held roles both in-house and in private practice, including five
years as Legal Counsel at Westpac, six years as Group Legal Advisor to a London-based international media
group and three years in private practice at Kensington Swan.
Allison brings over 20 years of legal experience to her role spanning areas from corporate and commercial
to intellectual property, consumer, and media law.
Matthew Wilson
Chief Operations Officer
Matt was appointed Chief Operations Officer in December 2016. In this role, Matt is responsible for NZME’s
print product performance; driving NZME’s Operations functions including print, distribution, print and digital
subscriptions and advertising production. Prior to that, Matt’s role was GM Print Operations for NZME. His
passion for media has resulted in over two decades of experience working across NZME’s newspaper brands,
including finance roles in print, commercial, content and corporate through to leading the Newspaper Sales,
Print and Herald product functions.
During his time, Matt has led the consolidation of newspaper sales and distribution functions across NZME,
the development of NZME’s highly successful distribution services business, and customer streams for the
launch of Herald on Sunday and NZH Premium digital subscribers. Matt’s focus on operating performance
has driven a strong passion for NZME’s people, their engagement and the culture fostered in the company.
Jason Winstanley
Chief Radio Officer
Jason was appointed as Chief Radio Officer in October 2021. Jason is one of New Zealand’s most experienced
audio executives with extensive experience across music and talk radio. He has led high profile and successful
music radio brands including 7 years as Assistant Content Director at ZM and 5 years as Content Director of
The Hits. He also led the successful transition of ‘Classic Hits’ to the ‘The Hits’ brand in 2014.
In his most recent role as Head of Talk for NZME, Jason has led Newstalk ZB to record audience growth and
continued commercial success.
Jason’s role includes responsibility for the radio business and the content delivery to support audience and revenue
growth across NZME’s radio networks.
32 NEW ZEALAND MEDIA AND ENTERTAINMENT
CORPORATE
GOVERNANCE
GOVERNANCE FRAMEWORK
The Company is listed on the NZX Main Board and has a Foreign
The Company also has an Editorial Code of Ethics highlighting that
Exempt Listing on the ASX (both under the ticker code “NZM”).
our principal responsibilities are to the community and the truth
The ASX Foreign Exempt Listing category is based on a principle
and our undertaking to maintain the highest ethical standards in
of substituted compliance recognising that, for secondary listings,
our journalism while balancing the right of the individual with the
the primary regulatory role and oversight rests with the home
public’s right to know.
exchange and the supervisory regulator in that jurisdiction.
As such, NZME is required to comply with a limited set of ASX
Securities Trading Policy
Listing Rules.
The Company’s corporate governance framework, as described
in this section, therefore primarily takes into consideration
contemporary standards in New Zealand, incorporating the
NZX Corporate Governance Code (“NZX Code”).
The Group is committed to having a strong governance
framework and therefore complies with the recommendations of
the NZX Code (unless specifically stated otherwise). The corporate
governance policies referred to in this section reflect the Group’s
governance framework as at 31 December 2021 (unless otherwise
stated) and are available on the Company’s website. The Board of
NZME has approved this corporate governance statement.
PRINCIPLE 1 - CODE OF ETHICAL BEHAVIOUR
Directors should set high standards of ethical behaviour, model
this behaviour and hold management accountable for these
standards being followed throughout the organisation.
Code of Conduct & Ethics
The Company’s Code of Conduct & Ethics governs the Company
and its subsidiaries’ commercial operations and the conduct of
directors, employees, consultants and all other people when
they represent the Company and its subsidiaries. The Code of
Conduct & Ethics comprises certain fundamental principles and
demonstrates the high standards of conduct expected of us. The
current Code of Conduct & Ethics was updated on 11 April 2019.
Reporting of breaches of the Code is encouraged and steps for
doing so are set out in the Code of Conduct & Ethics and the
Whistleblower Policy.
The Securities Trading Policy details the Company’s trading
policy and guidelines, including trading restrictions on dealing
in the Company’s quoted financial products. This policy applies
to the directors and all employees. The Securities Trading Policy
places additional trading restrictions on the directors, the Chief
Executive Officer (“CEO”) and his direct reports (and employees
reporting directly to them) and all participants in the NZME
Incentive Plans.
PRINCIPLE 2 - BOARD COMPOSITION
& PERFORMANCE
To ensure an effective Board, there should be a balance
of independence, skills, knowledge, experience and
perspectives.
Role of the Board and Board Charter
The business and affairs of the Company is managed under
the direction and supervision of the Board currently comprised
(and as at 31 December 2021 was comprised) of independent
Chairman, Barbara Chapman, and independent directors; Carol
Campbell, David Gibson, Sussan Turner and Guy Horrocks. The
directors acknowledge their duty to act in good faith and in the
best interests of the Company. The objective of the Company
is to generate growth, corporate profit and shareholder gain
from the activities of the Group. In pursuing this objective, the
role of the Board is to assume accountability for the success of
the Company by taking overall responsibility for the strategic
direction and monitoring of operational management of the
Group in accordance with good corporate governance principles.
More details regarding the main functions of the Board and the
distinction from the roles of management can be found in the
The Company has provided training on the Code of Conduct
& Ethics in the form of a video series on key points relevant
Board Charter available on the Company’s website. No person
ceased to be a director of the Company during the financial year
to employees.
ended 31 December 2021.
ANNUAL REPORT 2021 33
Director Nomination and Appointment
Diversity and Inclusion
Directors are appointed by the Company’s shareholders, with
The Group believes that a diverse and inclusive workforce
rotation and retirement being determined by the Constitution.
is essential for it to be able to deliver its strategic objectives
The Board may appoint directors to fill casual vacancies. Directors
and continue to meet its responsibilities to its customers,
appointed to fill casual vacancies are required to retire and stand
its employees, the communities in which it works, and its
for election at the first annual shareholders’ meeting after their
shareholders.
appointment. The Governance & Remuneration Committee
recommends to the Board potential candidates for appointment as
directors. The Committee follows the nomination and appointment
processes set out in the Governance & Remuneration Committee
The Group is currently operating in accordance with, and applying
the principles of, its Diversity and Inclusion Policy which is
available on the Company’s website.
Charter available on the Company’s website. The Company enters
The Our People section on pages 22 and 23 of the Annual Report
into written agreements with each newly appointed director
sets out more detail about our diversity and inclusion objectives
establishing the terms of their appointment.
Director Independence and Profiles
and progress towards achieving them. In accordance with the
Diversity and Inclusion Policy, the Board assesses those objectives
and NZME’s progress towards achieving them on an annual basis.
All of the Company’s directors, including the Chair, are
The Board is comfortable with the Company’s 2021 performance
independent directors for the purposes of the NZX Listing Rules
with respect to its Diversity and Inclusion Policy and objectives
as none of them are executives of the Company or have direct or
but notes the ongoing nature of efforts to meet those objectives.
indirect interests or relationships that could reasonably influence,
or could reasonably be perceived to influence, in a material way,
their decisions in relation to the Company. The profile for each
director is available on the Company’s website and on page 28-29
of the Annual Report. Information about director attendance at
meetings and ownership interests is set out on pages 34 and 44
of the Annual Report.
The table below includes the quantitative breakdown as to the
gender composition of NZME’s Board and Officers as at the
balance date.
As at
Board
Officers 1
31 December 2021
31 December 2020
Male
2
1
Female
3
3
Male
7
5
Female
3
4
Director Access to Training, Information and Advice
Performance Review
On appointment the Company’s directors are offered induction
The Chair meets annually with directors of the Company to
training as to the responsibilities of the directors and to enable
discuss their performances. The Board reviews its performance
the director to become familiar with the Company’s operations
as a whole, and the performance of its committees,
and sites. Further training on pertinent topics is provided to the
on an annual basis. The Board may choose to use external
Board during the year. All directors have access to the advice
facilitators, where appropriate, to assist with reviewing the
and assistance of the General Counsel on the Board’s affairs
performance of directors, the Board and its committees.
and governance matters. In addition, all directors may access
such information and seek independent advice as they consider
necessary to fulfil their duties and responsibilities.
1 The term ‘Officer’ is defined in the NZX Listing Rules as a person, however designated, who is concerned or takes part in the management of the Issuer’s
business, but excludes (i) a person who does not report directly to the Board or (ii) a person who does not report directly to a person who reports to the
Board. NZME has interpreted this to mean the Chief Executive and any person reporting to the Chief Executive or the Board directly. The numbers above
therefore include the CEO and other members of the Group Executive Team.
34 NEW ZEALAND MEDIA AND ENTERTAINMENT
CORPORATE
GOVERNANCE
CONTINUED
PRINCIPLE 3 - BOARD COMMITTEES
The Committee is also responsible for communicating and
engaging with the external auditors and for oversight and review
The Board should use committees where this will enhance its
of the risk management framework. For further information,
effectiveness in key areas, while retaining Board responsibility.
also refer to the Committee’s charter which is available on the
The Board has two standing Committees; the Audit & Risk
Company’s website.
Committee and the Governance & Remuneration Committee,
As at 31 December 2021, directors Barbara Chapman and David
to assist in carrying out its responsibilities. The Committees
Gibson were members of the Audit & Risk Committee and it was
operate under Board approved charters which are available on
chaired by Carol Campbell. Employees and external parties may
the Company’s website.
attend meetings of the Audit & Risk Committee at the invitation
The Board may establish other committees from time to time to
deal with specific projects or matters relating to the Company’s
various activities.
of the Audit & Risk Committee.
Governance & Remuneration Committee
The Governance & Remuneration Committee ensures that
The Board does not have a separate Health and Safety Committee,
remuneration policies and practices are consistent with the strategic
but Health and Safety is considered by the full Board. The Board
goals of the Group and are relevant to the achievement of those goals.
did not identify a need for any other standing Board committees.
The Committee also reviews the remuneration of the CEO and, in
The Company also has an NZME Takeover Response Manual (not
publicly available) as recommended by Recommendation 3.6 of
the NZX Code.
Audit & Risk Committee
The Committee consists of three independent directors
(one of whom has an accounting and financial background).
The functions of the Committee are to:
consultation with the CEO, the remuneration packages of executives
reporting directly to the CEO.
The Governance & Remuneration Committee also makes
recommendations to the full Board regarding the composition of
the Board, filling of vacancies, appointing additional directors to the
Board, and to review and adopt corporate governance policies and
practices which reflect contemporary standards in New Zealand,
incorporating principles and guidelines issued by the Financial
•
Review, consider and if necessary, investigate any reports
Markets Authority and the NZX. For further information, refer to the
or findings arising from any audit function either internally
Committee’s charter available on the Company’s website.
or externally;
As at 31 December 2021, director Sussan Turner was a member of
•
Evaluate financial information submitted to it, along with
the Governance & Remuneration Committee and it was chaired
relevant policies and procedures; and
by David Gibson. Employees and external parties may attend
• Assess the effectiveness of risk management throughout
the Group.
meetings of the Governance & Remuneration Committee at the
invitation of the Governance & Remuneration Committee.
Board & Committee Attendance 1 January 2021 to 31 December 2021
Director
Barbara Chapman
Carol Campbell
David Gibson
Guy Horrocks
Sussan Turner
Board
15 of 15
15 of 15
15 of 15
15 of 15
14 of 15
Audit & Risk
Governance & Remuneration
3 of 4
4 of 4
4 of 4
N/A
N/A
N/A
N/A
6 of 6
N/A
6 of 6
ANNUAL REPORT 2021 35
PRINCIPLE 4 - REPORTING & DISCLOSURE
The Board should demand integrity in financial and non-
• Whistleblower Policy
financial reporting, and in the timeliness and balance of
corporate disclosures.
Market Disclosure Policy
The Board has policies and procedures in place to keep investors
and staff informed of material information about the Company
and to ensure compliance with the continuous disclosure
obligations under the Financial Markets Conduct Act 2013 and
the NZX Listing Rules.
• Securities Trading Policy
• Audit & Risk Committee Charter
• Governance & Remuneration Committee Charter
• Risk Management Policy
Financial Reporting and Disclosure
The Company is committed to providing financial reporting that
is balanced, clear and objective. The Audit & Risk Committee
The Market Disclosure Policy (available on the Company’s website)
oversees the quality, integrity and timeliness of external reporting.
is designed to ensure that:
•
There is full and timely disclosure of the Company’s activities
and price sensitive information to shareholders and the
market; and
• All stakeholders (including shareholders, the market
The Group’s Consolidated Financial Statements for the year ended
31 December 2021 are set out on pages 48 to 103 of the Annual
Report. Also refer to the reports from the Chair and the CEO in this
Annual Report and the NZME Full Year 2021 Results Presentation
(available on the Company’s website) for additional information.
and other interested parties) have an equal opportunity to
Non-Financial Reporting and Disclosure
receive and obtain externally available information issued by
The Company provides non-financial disclosures relating to
the Company.
The Company will immediately notify the market of any material
information concerning the Company in accordance with
legislative and regulatory disclosure requirements.
Corporate governance documents
Health and Safety, Risk Management, our interaction with our
communities, people and our environment – see our Sustainability
Commitment. We also include information about our performance
against our operational priorities during the year.
NZME’s Sustainability Commitment aligns with the UN
Sustainability Development Goals – an international blueprint
The following documents have been adopted by the Company
to achieve a better and more sustainable future for everyone.
and are available on the Company’s website under the Corporate
Combined with our promise to keep Kiwis in the know, NZME’s
Governance section:
• NZME Constitution
• Board Charter
• Code of Conduct & Ethics
• Remuneration Policy
• Diversity and Inclusion Policy
•
•
Editorial Code of Ethics
Fraud Policy
• Market Disclosure Policy
commitment to sustainable practices contributes to the prosperity
of our business and our communities, people and
the environment.
In 2021 we measured our progress against key initiatives and
objectives for each of the three pillars of our Sustainability
Commitment: Our Communities, Our People and Our Environment.
This is discussed on pages 17 to 27 of the Annual Report.
NZME intends to continue to develop its Sustainability
Commitment with the guidance of the Board.
36 NEW ZEALAND MEDIA AND ENTERTAINMENT
CORPORATE
GOVERNANCE
CONTINUED
PRINCIPLE 5 - REMUNERATION
The remuneration of directors and executives should be
While the Company does not pay equity-based remuneration to
transparent, fair and reasonable.
Remuneration Policy
The Company’s Remuneration Policy (available on its website)
outlines the Company’s approach to the remuneration of its
directors and executives. The Governance & Remuneration
Committee is responsible for reviewing non-executive directors’
remuneration and benefits. The pool available to be paid to non-
executive directors is subject to shareholder approval. The levels
of fixed fees payable to non-executive directors should reflect the
time commitment and responsibilities of the role. The Governance
& Remuneration Committee will obtain independent advice, as
necessary, and will also consider the results of market comparison
and a benchmarking assessment in setting the fixed fees payable
to non-executive directors.
Directors’ Remuneration
its non-executive directors, it encourages those directors to hold
shares in the Company to better align their interests with the
interests of other shareholders.
The Governance & Remuneration Committee is also responsible
for reviewing the remuneration of the CEO and any executive
directors and, in consultation with the CEO, the remuneration
packages of executives reporting directly to the CEO. The
Company conducts external benchmarking analysis in order
to determine the market rate for a role. The Company provides
a combination of cash and non-cash benefits and takes a total
remuneration approach. The Company reviews remuneration with
the objective of achieving pay equity, including by gender.
The fees paid to each director depends on the duties of the director, including committee work. Current fees per annum are as follows:
1 January 2021 to 31 December 2021
Chairman of the NZME Board
Membership of the NZME Board
Chairman of NZME Board Committees
Membership of NZME Board Committees
Fees ($)
150,000
100,000
20,000
10,000
Total fees paid to each director during 2021 are shown in the following table:
Date appointed
Chairman of
the Board ($)
Board
Member ($)
Committee
Chair ($)
Committee
Member ($)
Total ($)
Barbara Chapman
18 April 2018
150,000
10,000
160,000
Carol Campbell
24 June 2016
100,000
20,000
120,000
David Gibson
8 December 2017
100,000
20,000
10,000
130,000
Guy Horrocks
8 February 2021
Sussan Turner
16 July 2018
Total fees paid 2021
89,087
100,000
89,087
10,000
110,000
609,087
ANNUAL REPORT 2021 37
Chief Executive Officer’s Remuneration
Salary ($) A
Bonus ($) B
TIP ($) C
Benefits ($) D
Total ($)
Michael Boggs
847,147
478,164
-
39,759
1,365,070
A Salary includes normal basic salary and paid leave. B Bonus payments are those paid during the current accounting period and excludes any bonus accrual not
yet paid. C TIP relates to the value of shares issued during the year under the Group’s Total Incentive Plan. D Benefits relate to company contributions for KiwiSaver.
Michael Boggs held 1,079,866 shares in the company as at 31 December 2021. In addition to the remuneration disclosed above as
at 22 February 2022, Michael Boggs held 1,814,448 performance rights issued to him under the Group’s Total Incentive Plan (“TIP”).
Please refer to note 4.3 of the Consolidated Financial Statements for a summary of the TIP and the performance criteria used to
determine performance based payments.
Employee Remuneration
The Group paid remuneration including benefits in excess of $100,000 to employees (other than directors) during the year ended
31 December 2021. The salary banding for these employees are disclosed in the following table (bands with zero number of employees
have been excluded).
Remuneration Amount
Employees
Remuneration Amount
Employees
$100,000 - $110,000
$110,001 - $120,000
$120,001 - $130,000
$130,001 - $140,000
$140,001 - $150,000
$150,001 - $160,000
$160,001 - $170,000
$170,001 - $180,000
$180,001 - $190,000
$190,001 - $200,000
$200,001 - $210,000
$210,001 - $220,000
$220,001 - $230,000
$230,001 - $240,000
$240,001 - $250,000
$250,001 - $260,000
$270,001 - $280,000
72
60
42
43
35
15
14
16
8
9
7
9
10
4
7
7
3
$280,001 - $290,000
$290,001 - $300,000
$300,001 - $310,000
$330,001 - $340,000
$350,001 - $360,000
$360,001 - $370,000
$390,001 - $400,000
$400,001 - $410,000
$410,001 - $420,000
$420,001 - $430,000
$440,001 - $450,000
$450,001 - $460,000
$460,001 - $470,000
$570,001 - $580,000
$680,001 - $690,000
$690,001 - $700,000
$1,360,001 - $1,370,000
5
6
3
1
1
1
2
1
1
3
2
1
2
1
1
1
1
Total number of employees that were paid remuneration of $100,000+
394
The remuneration above includes all remuneration paid to permanent employees, including fixed remuneration, employer KiwiSaver
contributions, medical aid contributions, bonuses, commission, settlements and redundancies.
38 NEW ZEALAND MEDIA AND ENTERTAINMENT
CORPORATE
GOVERNANCE
CONTINUED
Review of Total Incentive Plan
In FY21 the Governance & Remuneration Committee undertook
with NZME’s performance and value creation for shareholders over
a review of executive remuneration incentives and, in particular,
both the long and short term.
the Company’s Total Incentive Plan (TIP), which has been in place
since the Company listed in 2016. In light of the significant change
in the business since 2016, the objective of this review was to be
consistent with Australasian best practice by re-balancing the
cash and share rights components of the TIP and introducing a
true long-term incentive component to the TIP, increasing share
ownership for executives and better aligning executive awards
The Governance & Remuneration Committee engaged an
independent remuneration specialist to review the TIP and
related components of executive remuneration and this
resulted in an updated TIP framework being put in place for
the 2022 financial year.
The table below summarises the key changes adopted
in the updated TIP framework:
Change
Detail
Rationale and Outcome
Introduction of long-
The LTI component measures performance
Previously the TIP measured performance
term incentive (LTI)
conditions over three financial years with
conditions over one financial year. The addition
component.
executives receiving share rights at the start of
of a three-year performance period introduces a
that period. The number of share rights each
true long-term incentive component to executive
executive will receive is based on the volume
remuneration.
weighted average sale price of NZME shares for
the 20 consecutive NZX trading days after the
date of release of NZME’s FY21 annual financial
results.
The LTI performance conditions are based on
earnings per share (EPS) and total shareholder
return (TSR) targets, with each condition given
equal weighting.
If a performance condition is met, then each
share right allocated to that condition will vest
and the executive will receive one share following
the end of the three-year performance period,
subject to them remaining employed by the
Company at the end of the performance period.
Re-balancing the mix
Both the STI and LTI may confer share rights with
Previously, the TIP mix was set at 50% in cash,
between short-term
the STI also including a cash bonus.
payable following the end of the relevant
incentive (STI) and LTI
components.
The total TIP opportunity for each executive is
split into:
- STI: 60% of TIP opportunity – 35% cash and
25% share rights
- LTI: 40% of TIP opportunity as share rights
financial year, and 50% in share rights that were
exerciseable after a three-year restricted period.
The TIP now delivers an increased proportion
of incentives in share rights, rather than cash,
further aligning executive remuneration with
shareholder returns.
ANNUAL REPORT 2021 39
Change
Detail
Rationale and Outcome
Reduced deferral
The STI component has a deferral period of one
With the introduction of the LTI component
period for STI share
year which commences at the end of the STI
measured over a three-year performance period,
rights issued under
performance period. If an executive remains an
the Board considered a deferral period for the
the TIP.
employee at the end of this deferral period, share
STI share rights component of one year was
rights issued to them under the STI will vest and
appropriate. Executives must remain employed
they will receive shares.
during the performance period and the deferral
period in order to be eligible to receive their STI
share rights. If they cease to be an employee
during the deferral period, their STI share rights
will not vest.
Introduction of
For the STI component a minimum financial
EBITDA was previously only one element of the
a conditional
performance
earnings performance condition, measured
TIP calculation. It is now a minimum threshold
by group EBITDA, must be achieved in order
which must be met, ensuring that STI payouts are
gateway – minimum
for an award outcome to be considered. If this
dependent upon Company performance.
financial earnings
performance condition is not met, executives will
performance
condition.
not receive any STI award outcome.
Introduction of
For the STI component, the performance
Introduction of these performance conditions
new performance
conditions include role specific KPIs and may
ensures alignment to delivery of strategic
conditions.
be based on group, divisional and/or individual
priorities for NZME and shareholder returns.
performance aligned to NZME’s strategic
priorities. Each KPI will be measured for a
potential award pro rata between 50% -150%.
For the LTI component, as noted above, the
performance conditions are based on EPS and
TSR targets set by the Board at the beginning of
the three-year performance period and measured
on a cumulative basis.
Increased total
The total on-target TIP opportunity for executives
Previously the TIP opportunity was set at between
reward opportunity
is set as a percentage of their base remuneration.
50% and 100% of base remuneration for each
based on NZME’s
The range for the FY22 Offer is between 60% and
executive. The Board considers that with the
performance and
130% of base remuneration (with the opportunity
splitting of the incentive between a STI and LTI
shareholder returns.
for up to 150% of the STI award) and varies
and the lengthening of the performance period
according to their role in the Company.
and the service period, an increased total TIP
opportunity is appropriate in the circumstances.
40 NEW ZEALAND MEDIA AND ENTERTAINMENT
CORPORATE
GOVERNANCE
CONTINUED
PRINCIPLE 6 - RISK MANAGEMENT
Directors should have a sound understanding of the material risks
This committee provides assurance that the following aspects are
faced by the issuer and how to manage them. The Board should
managed appropriately:
regularly verify that the issuer has appropriate processes that
identify and manage potential and material risks.
Risk Management Framework
The Audit & Risk Committee is responsible for the oversight and
• Strategic and operational risk management;
• Workplace Health and Safety matters;
• Legal, regulatory and policy compliance;
independent review of the Group’s risk management framework,
• Technology and security matters; and
including:
• Business continuity planning.
•
•
Review and approval of the risk management policy;
Receiving and considering reports on risk management;
• Assessing the effectiveness of the Group’s responses to risk;
and
•
Providing the Board with regular reports on risk management.
The Group has a formal Risk Management Policy (available on
its website) and is committed to the consistent, proactive and
effective monitoring and management of risk throughout the
organisation, in accordance with best practice and the NZME Risk
Management Framework and Guidelines.
The Board is ultimately responsible for the effectiveness, oversight
and implementation of the Group’s approach to risk management.
The CEO is responsible for:
The Group is a diversified media company and is subject
to diverse types of risk including, but not limited to cyber
security, legal and regulatory compliance, financial and market,
government policy and political, reputation and brand, operational
risks and trading conditions.
The Group recognises that in order to achieve its strategic
objectives it must be willing to take and accept informed risks.
Risks relating to innovation, attracting and retaining talent, and
content to drive audiences and address the needs of advertisers
are encouraged within defined parameters. However, in doing so,
it is not acceptable to trade off financial or strategic returns by
compromising compliance with the law, the safety of our people,
or our reputation as a responsible corporate citizen and provider
of news, sport and entertainment.
When setting the appetite for taking and accepting risk, the Group
•
The management of strategic, operational and financial risk of
also considers the risk posed by inaction in what is a fast-paced
the Group;
and disrupted market.
• Continually monitoring the Group’s progress against financial
and operational performance targets;
•
The day-to-day identification, assessment and management of
risks applicable to the Group;
The Group’s approach to risk management is assessed at least
annually by the Audit & Risk Committee of the Board in order to
make a recommendation to the full Board on the appropriateness
of the Company’s Risk Management Framework and Guidelines.
•
Implementation of risk management controls, processes and
For additional information on financial risks, please also refer to
policies and procedures appropriate for the Group; and
Note 4.7 of the Consolidated Financial Statements.
• Driving a culture of risk management throughout the Group.
The Company’s Risk Committee (a management committee) acts
as a governance forum to assist the CEO and the Executive Team
in fulfilling their corporate governance responsibilities.
ANNUAL REPORT 2021 41
Health and Safety
The NZME Board Charter states that the role of the Board includes
5. We will actively manage risk to mental health and provide
ensuring that the Group health and safety, environmental practices
a work environment that is mentally healthy, supportive of
and culture comply with legal requirements, reflect best practice
our people and does not tolerate bullying, harassment or
and are recognised by employees and contractors as key priorities
unacceptable behaviour in the workplace.
for the Group. As noted earlier, NZME does not have a separate
Mental Health Support
Board-level Health and Safety Committee as Health and Safety is
dealt with by the full Board.
Health and Safety advice and direction are overseen by the
Culture and Performance team and a full-time Health, Safety and
Health and Safety is included on the Company’s Risk Register. The
Compliance Manager. The Company utilises the online safety
Company’s Annual Health and Safety Plan captures the projects and
management system “Damstra” as the framework for how safety
objectives for the year to respond to the identified risks.
is managed within the business. Damstra is used for incident
The Company records and monitors critical health and safety
risks in a separate Health and Safety Risk Register. Currently that
register is reviewed and monitored by the Risk Committee, who
meet monthly and receive and review reporting on health and
safety performance, trends and updates, with key matters and
reporting, contractor management, hazard and risk management,
management of hazardous substances, risk monitoring and
reporting. Worker engagement and involvement is recognised
as an important part of growing a positive workplace health and
safety culture.
progress against the annual plan being reported to the Board.
At NZME, being actively involved in and contributing to health and
In 2021, areas of focus included continuing to manage the ongoing
safety is included in the GuideMe performance review template as
risks associated with the Covid-19 pandemic, continuing to engage
a KPI for all employees and reviewed as part of the performance
leaders in health and safety, introducing further automation of
review process. Health and safety training forms part of induction
safety processes at the print site and installing GPS into a greater
and ongoing training schedules to ensure awareness of NZME’s
number of vehicles to promote and monitor safer driving. We also
health and safety obligations, critical risks and the resources
focused on managing mental health risks associated with bullying
available to satisfy these. NZME maintains a Wellness and Safety
and harassment, harmful comments and material and Covid-19.
page on its intranet with sections for safety at NZME (which
In 2021 there was a continued focus on ensuring our people were
aware of how to raise issues relating to bullying, harassment or
unacceptable behaviour in the workplace. Reporting was improved
and Wellbeing Advocates were introduced to support our people
includes training manuals, emergency procedures and safety
induction documents) and a Wellness section (which includes
information about our Employee Assistance Programme, wellness
videos and wellness success stories).
and provide guidance. A best practice review of health and safety
To ensure effective worker involvement, NZME has multiple
policies was commenced.
The Company intends to build on the effectiveness of health, safety
and wellbeing across the business, by following the following five
key priorities over 2022 – 2023:
Health and Safety Committees in place across New Zealand
that actively contribute to the management of risk and the
effectiveness of controls in place around the business. Health
and safety performance is communicated throughout all levels
of NZME through regular leadership team meetings and internal
1. Our Leaders will be actively involved in supporting the health,
business communications.
safety and wellbeing of the business.
Proactive Safety Leadership
2. We will have a consistent approach to managing health, safety
and wellbeing across locations. Consistency Across Sites
Embedding a high performing health and safety culture and
regularly reporting on our performance is a key initiative forming
part of our Sustainability Commitment.
3. We will maintain safety excellence within our Print Plant.
Lost Time Injuries have remained flat at 2 incidents year-on-year.
Print Safety Excellence
4. Our vehicle fleet will be managed and operated in a manner
that significantly reduces risk to people and property.
Proactive Vehicle Safety
Total reported incidents have increased from 21 to 33 year-on-
year (but are down on the 48 reported in 2019), with this increase
being largely in the ‘no treatment’ category and for minor injuries
treated solely with first aid measures.
42 NEW ZEALAND MEDIA AND ENTERTAINMENT
CORPORATE
GOVERNANCE
CONTINUED
PRINCIPLE 7 - AUDITORS
The Board should ensure the quality and independence of the
of fees relating to non-audit services provided during the year,
•
•
•
•
external audit process.
Refer to note 2.2.5 of the Consolidated Financial Statements for
fees paid to the auditors, PriceWaterhouseCoopers, for the year
ended 31 December 2021.
The Audit & Risk Committee Charter requires the Committee
to assess the following:
The independence of the auditors;
The ability of the auditors to provide additional services
which may be occasionally required;
including a description of potential threats to their independence
and the applicable safeguards implemented by the auditor and
the Company to either mitigate those threats or reduce them to an
acceptable level as required by PES 1. The Audit & Risk Committee
takes the nature of the services provided, the quantum of the fee,
the reason for the additional services and whether the services are
likely to be one-off or repetitive in nature into consideration when
evaluating and concluding on auditor independence.
For the year ended 31 December 2021, given the nature of the
services provided and based on the Committee’s continuous
monitoring of auditor independence, the Audit & Risk Committee
do not believe that the non-audit services provided by the auditors
The competency and reputation of the auditors;
compromised their objectivity and independence.
The projected audit fees; and
• Review the appointment, performance and remuneration
of external auditors.
The Audit & Risk Committee also monitors and approves any
services provided by the auditors other than in their statutory
role and receives confirmation from the auditors as to their
independence from the Company. This is undertaken on a service
by service basis and assesses whether the service is permissible
under Professional and Ethical Standard 1 (“PES 1”) issued by
the New Zealand Auditing and Assurance Standards Board,
ensuring that any potential threat to independence is identified
and appropriate safeguards to eliminate the threat or reduce the
threat to an acceptable level are established. The Audit & Risk
Committee receives an annual confirmation from the auditor as to
their independence from the Group. The auditor is also required
to provide the Audit & Risk Committee with a detailed analysis
The Company requires the external auditor to attend the
Annual Shareholders’ Meeting (“ASM”) to answer questions
from shareholders in relation to the audit. The Group’s auditor,
PricewaterhouseCoopers, attended the last ASM on 16 April 2021.
Internal Audit
The Audit & Risk Committee is responsible for reviewing the
integrity and effectiveness of the internal audit function. NZME
operates a co-sourced internal audit programme that utilises a
mix of self-certifications, scheduled control testing by Group
Financial Services, ad hoc assignments, investigations by risk and
compliance personnel and a structured internal audit programme
executed by an external firm.
Any reporting from external parties is presented to the Audit &
Risk Committee and any significant findings from other internal
activities are reported to the Audit & Risk Committee.
ANNUAL REPORT 2021 43
PRINCIPLE 8 - SHAREHOLDER RIGHTS & RELATIONS
The Board should respect the rights of shareholders and foster
Following each results announcement, NZME holds an investor call
constructive relationships with shareholders that encourage them
to present the results and to allow investors to ask questions. This
to engage with the issuer.
In addition to holding its Annual Shareholders’ Meeting, NZME
seeks to regularly engage with shareholders to ensure they are
is usually followed by an investor roadshow during which the CEO
and other members of the Executive aim to meet with as many
shareholders as possible. However, in 2021, as in 2020, such post-
result meetings were held virtually. In 2021 NZME also held a virtual
informed about our activities and our progress against our stated
priorities. NZME engages an Investor Relations Manager to ensure
Investor Day.
any questions or feedback from shareholders are responded to
Shareholders are entitled to exercise their voting rights as provided
promptly.
for under the applicable legislation and listing rules.
The NZME website has a dedicated Investor Relations section
In order for shareholders to fully participate in shareholder
containing NZX / ASX announcements, presentations and
meetings, the Board will endeavour where possible, to distribute
webcasts, financial reports, frequently asked questions and other
a notice of shareholder meeting as soon as possible and in any
information that might be useful to our shareholders.
event at least 20 working days prior to any shareholder meeting.
The share registry is maintained by Link Market Services and their
During the financial year ended 31 December 2021, shareholders
contact details are available under the Investor Relations section
were given 20 working days’ notice of the annual shareholder
of the Company’s website. Shareholders can elect to receive
meeting of the Company held on 16 April 2021.
communications electronically.
44 NEW ZEALAND MEDIA AND ENTERTAINMENT
STATUTORY
DISCLOSURES
INTEREST REGISTER ENTRIES
In accordance with section 211(1)(e) of the Companies Act 1993, particulars of general disclosures of interest in the Interest Register of
NZME for current directors are set out in the table below. Disclosures during 2021 are noted in italics.
Director
Barbara Chapman
Carol Campbell
Position
Chairman
Deputy Chair
Patron
Director
Director
Director
Director
Director
Director
Director
David Gibson
Director and shareholder
Company
Genesis Energy Limited
The New Zealand Initiative
New Zealand Rainbow Tick Excellence Awards
Fletcher Building Limited
Bank of New Zealand
T&G Global Limited
Asset Plus Limited
NZ Post Limited
Chubb Insurance New Zealand Limited
Kiwibank Limited
DG Advisory Limited
Director and shareholder
Sidehustle Ecommerce Limited
Director
Director
Director
Director
Shareholder
Rangatira Limited
Biostrategy Holdings Limited
Trustpower Limited
Goodman (NZ) Limited
Solve Data, Inc.
Director and shareholder
Aspire2 Group Limited
Shareholder
Pro-Chancellor
Organic Initiative Limited
Auckland University of Technology (AUT)
Guy Horrocks
Sussan Turner
Disclosures of Directors’ interests in share transactions
During 2021, no disclosures were made in the Interests Register by Directors as to the acquisition of relevant interests in Company shares
under section 148 of the Companies Act 1993.
Directors’ interests in shares
Ordinary shares held by directors and parties associated with them are as follows:
Director
Barbara Chapman
Carol Campbell
David Gibson
Number of shares as at 31 December 2021
73,000
150,000
50,000
ANNUAL REPORT 2021 45
Use of Company information
No notices have been received by the Board under section 145
Other than Mark O’Sullivan who received A$15,400 for his services
of the Companies Act 1993 with regard to the use of Company
as a director of NZME Australia Pty Limited, these directors did
information received by the Directors in their capacities as
not receive any fees or other benefit for their services as directors
Directors of the Company or its subsidiary companies.
to any of these companies. Michael Boggs, David Mackrell and
Indemnities or insurance effected for directors
Paul Maher receive remuneration as employees of the Company
which are not related to their duties as directors of these
In accordance with Section 162 of the Companies Act 1993 and
companies. Peng Yin receives remuneration through his company,
the Company’s Constitution, the Company has indemnified
Hougarden.com Limited, which provides services to OneRoof
and arranged insurance for all directors and executive officers
Limited. Laura Maxwell ceased to be a Director of OneRoof
to the extent permitted by law for liabilities arising out of the
Limited on 15 February 2021.
performance of their normal duties as directors and officers.
The total amount of insurance for directors and officers contract
premiums for the period was $730,000.
SUBSIDIARY COMPANY INFORMATION
NZME’s subsidiary companies are listed at Note 6.1 of the
Consolidated Financial Statements.
Directors of Subsidiary Companies
As at 31 December 2021, Michael Boggs (CEO) and David Mackrell
(CFO) were directors of the wholly owned subsidiaries listed in
Note 6.1 of the Consolidated Financial Statements, other than
NZME Australia Pty Limited. Michael Boggs and Mark O’Sullivan
(a professional director resident in Australia) were directors of
NZME Australia Pty Limited as at 31 December 2021. Michael
Boggs, David Mackrell, Paul Maher and Peng Yin (director
representing OneRoof’s minority shareholder) were directors of
the subsidiary OneRoof Limited, in which an 80% interest was held,
as detailed in Note 6.1 of the Consolidated Financial Statements.
Entries in interest registers of Subsidiary
Companies
For each subsidiary company in which they act as a director
Michael Boggs and David Mackrell have made general disclosures
of interests in all other subsidiary companies as a result of
their executive positions at the Company and their positions as
directors of the other subsidiary companies. Peng Yin has made
a general disclosure of interest in the OneRoof Limited Interest
Register arising from his position as director and shareholder of
Hougarden.com Limited and Hougarden Motors Limited.
SHAREHOLDER INFORMATION
Substantial Shareholders
The following information is given pursuant to Sub-Part 5 of Part 5
of the Financial Markets Conduct Act 2013. According to notices
given to the Company, the substantial product holders in the
Company as at 7 January 2022 are noted below:
Shareholder
Osmium Partners LLC
Auscap Asset Management Ltd.
Spheria Asset Management Pty Ltd
UBS Securities Australia Ltd (Collateral Account)
Number of shares held
% of shares held
33,013,889
18,976,962
17,844,175
13,928,980
16.71%
9.61%
9.03%
7.05%
The total number of ordinary shares issued by the Company as at 31 December 2021 was 197,570,061. The Company did not have any
other quoted voting products.
46 NEW ZEALAND MEDIA AND ENTERTAINMENT
STATUTORY
DISCLOSURES
CONTINUED
Top 20 shareholders
As at 18 February 2022
Rank
Investor Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Citicorp Nominees Pty Limited
Bnp Paribas Nominees Pty Ltd Acf Clearstream
Bnp Paribas Nominees Pty Ltd
Brispot Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Accident Compensation Corporation
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Pax Pasha Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Bnp Paribas Noms Pty Ltd
Goudy Park Capital Lp
JBWERE (Nz) Nominees Limited
HSBC Nominees (New Zealand) Limited
Leh Soon Yong
Pax Pasha Pty Ltd
Michael Raymond Boggs
20
Timothy John Eakin
Total Units
% Issued Capital
38,726,983
32,336,739
14,806,565
13,923,766
9,592,694
8,825,456
8,384,051
8,059,925
4,020,558
3,147,959
2,604,299
2,537,815
1,682,938
1,550,999
1,492,860
1,434,114
1,323,982
1,123,173
1,079,866
1,070,138
19.60
16.37
7.49
7.05
4.86
4.47
4.24
4.08
2.04
1.59
1.32
1.28
0.85
0.79
0.76
0.73
0.67
0.57
0.55
0.54
Total
157,724,880
79.85
ANNUAL REPORT 2021 47
Holders %
Issued Capital
Issued Capital %
67.96
17.44
5.22
6.47
1.04
1.87
848,749
2,087,960
2,004,167
7,497,536
3,654,826
181,476,823
0.43
1.06
1.01
3.79
1.85
91.85
100.00
Spread of Quoted Security Holders
As at 18 February 2022
Range of Securities Held
1-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
Greater than 100,000
Total
Holders
3,413
876
262
325
52
94
5,022
100.00
197,570,061
OTHER INFORMATION
Waivers from NZX
During the financial year ended 31 December 2021, the Company
was not granted any waivers from any of the NZX Listing Rules,
nor did the Company rely on any previously granted or published
waiver from the NZX Listing Rules.
Donations
In accordance with section 211(1)(h) of the Companies Act 1993,
NZME notes that the Group made donations of $14,313 during
the year ended 31 December 2021.
Credit rating
As at the date of this Annual Report NZME does not have a
credit rating.
Exercise of NZX disciplinary powers
During the financial year ended 31 December 2021, NZX exercised
its powers under Listing Rule 9.9.3 to refer two matters concerning
the conduct of NZME Limited to the NZ Markets Disciplinary
Tribunal. In particular:
(b) NZX found that NZME had breached Listing Rules 3.1.1 and
3.20.1 by failing to release material information and information
about a decision to change a director to the market promptly
and without delay in relation to the resignation on 11 June 2020
of NZME’s former chair.
In each case, NZME entered into a settlement agreement with NZX
and, amongst other things, agreed to pay a financial penalty for the
listing rule breaches, and to pay costs to NZX and the NZ Markets
Disciplinary Tribunal. Each settlement agreement was approved
by the NZ Markets Disciplinary Tribunal and on 20 April 2021 the
Tribunal issued a public censure for the breaches referred to above.
Copies of the public censure documents issued by the Tribunal are
available on the NZX website at www.nzx.com under NZME’s market
announcements tab.
Direct director appointments under the Company’s
Constitution
Rule 2.4.1 of the NZX Listing Rules allows a company to include in its
Constitution a right for a product holder to appoint a director to the
Board under certain circumstances. As at 31 December 2021, none
(a) NZX found that NZME breached Listing Rules 3.1.1 and 3.2.1 by
of the Directors were appointed pursuant to Rule 2.4.1.
not disclosing material information in relation to the possible
purchase of Stuff, omitting material information from two
market announcements made by NZME on 11 May 2020,
and failing to release material information to prevent the
development or subsistence of a false market that had been
materially influenced by misleading information emanating
from NZME in the 11 May 2020 market announcements.
48 NEW ZEALAND MEDIA AND ENTERTAINMENT
NZME LIMITED
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
ANNUAL REPORT 2021 49
50 NEW ZEALAND MEDIA AND ENTERTAINMENT
CONTENTS
Directors' Statement
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements*
1.0 Basis of Preparation
2.0 Group Performance
3.0 Operating Assets and Liabilities
4.0 Capital Management
5.0 Taxation
6.0 Group Structure and Investments in Other Entities
7.0 Related Parties
8.0 Commitments and Contingent Liabilities
9.0 Subsequent Events
Independent Auditor's Report
51
52
53
54
55
56
57
62
70
81
94
97
102
103
103
104
* The notes to the financial statements have been grouped into nine sections; aimed at grouping items of a similar nature together.
The Basis of Preparation section presents a summary of material information and general accounting policies that are necessary
to understand the basis on which these consolidated financial statements have been prepared. Accounting policies specific to a
particular note are included in that note and are boxed for ease of reference. Key judgments and estimates relevant to a particular
note are also included in the relevant note, and are clearly marked as such. A summary of the key judgments and estimates is also
included under the Basis of Preparation section on pages 57 to 61.
ANNUAL REPORT 2021 51
DIRECTORS’ STATEMENT
The Directors are pleased to present the consolidated financial statements of NZME Limited (the “Company”) and
its subsidiaries (together the “Group”) for the year ended 31 December 2021, incorporating the consolidated financial
statements and the auditor’s report.
The Directors are responsible, on behalf of the Company, for presenting these consolidated financial statements in
accordance with applicable New Zealand legislation and generally acceptable accounting practices in New Zealand
in order to present consolidated financial statements that present fairly, in all material respects, the financial position
of the Group as at 31 December 2021 and the results of the Group’s operations and cash flows for the year then ended.
The consolidated financial statements for the Group as presented on pages 52 to 103 are signed on behalf of the
Board of Directors, and are authorised for issue on the date below.
For and on behalf of the Board of Directors
Barbara Chapman
Chairman
Date: 22 February 2022
Carol Campbell
Director
52 NEW ZEALAND MEDIA AND ENTERTAINMENT
CONSOLIDATED INCOME
STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
Revenue
Finance and other income
Total revenue and other income
Expenses from operations before finance costs, depreciation, amortisation
Depreciation and amortisation
Profit before finance costs, income tax and impairment of assetsB
Finance costs
Share of joint ventures and associates net loss after tax
Impairment of assets
Profit before income tax expense
Income tax expense
Net profit after tax
Profit for the year is attributable to:
Owners of the Company
Non-controlling interests
A Refer to note 1.2.3 for details of the restatement.
B This is a non-GAAP measure refer to note 1.2.
Note
2.1
2.1
2.1
2.2.1
2.2.2
2.2.3
6.2.2
2.2.4
5.1
2021
$’000
2020
RestatedA
$’000
348,559
322,139
17,075
13,061
365,634
335,200
(286,854)
(275,301)
(26,319)
(28,548)
52,461
(7,282)
(450)
(2,477)
42,252
(7,818)
34,434
34,645
(211)
34,434
31,351
(8,253)
(417)
(3,470)
19,211
(4,729)
14,482
14,787
(305)
14,482
Earnings per share attributable to the ordinary shareholders of the Company
Basic earnings per share
Diluted earnings per share
Cents
Cents
2.3
2.3
17.54
16.93
7.48
7.29
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
ANNUAL REPORT 2021 53
Net profit after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Effective gain / (loss) on hedging instruments
Hedging reclassification to profit or loss
Tax impact of hedging transactions
Net gain / (loss) on hedging instruments
Net exchange differences on translation of foreign operations
Items that will not be reclassified to profit or loss
Share of revaluation of joint ventures' and associates' assets
Other comprehensive income, net of tax
Total comprehensive income
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests
Note
2021
$’000
2020
Restated A
$’000
34,434
14,482
4.2
4.2
4.2
4.2
4.2
396
168
-
564
(17)
-
547
(656)
82
70
(504)
(21)
1,271
746
34,981
15,228
35,192
(211)
34,981
15,533
(305)
15,228
A Refer to note 1.2.3 for details of the restatement.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
54 NEW ZEALAND MEDIA AND ENTERTAINMENT
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2021
2021
$’000
31 December 2020
Restated A
$’000
1 January 2020
Restated A
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Assets classified as held for sale
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Capital work in progress
Other financial assets
Equity accounted investments
Other receivables and prepayments
Derivative financial instruments
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current lease liabilities
Derivative financial instruments
Current tax provision
Note
4.6
3.5
3.6
3.9
6.3.1
3.1
3.2
3.3
3.4
6.2.2
3.5
3.9
5.2
3.7
4.5.2
3.9
13,538
45,176
1,909
25
60,648
-
60,648
138,195
26,976
67,513
4,006
815
3,623
6,879
228
3,485
251,720
312,368
53,780
11,340
-
4,689
69,809
Liabilities directly associated with assets classified
as held for sale
6.3.1
-
Total current liabilities
Non-current liabilities
Non-current lease liabilities
Interest bearing liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Retained earnings
Total Company interest
Non-controlling interests
Total equity
4.5.2
4.5.1
3.9
4.1
4.2
69,809
85,445
-
-
85,445
155,254
157,114
361,758
4,920
(209,478)
157,200
(86)
157,114
A Refer to note 1.2.3 for details of the restatement.
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
11,560
43,882
1,480
-
56,922
2,165
59,087
142,773
34,978
85,382
2,220
815
4,162
1,079
-
1,913
273,322
332,409
43,838
10,931
16
1,575
56,360
7,338
63,698
96,521
45,379
310
142,210
205,908
126,501
361,758
3,485
(238,867)
126,376
125
126,501
14,416
52,449
1,943
-
68,808
-
68,808
146,029
39,902
75,538
9,774
815
3,308
1,329
248
1,661
278,604
347,412
51,483
11,076
-
254
62,813
-
62,813
84,807
89,149
-
173,956
236,769
110,643
360,768
2,984
(253,539)
110,213
430
110,643
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
ANNUAL REPORT 2021 55
Attributable to owners of the company
Note
Share
capital
$’000
Reserves
Retained
earnings
$’000
$’000
Non-
controlling
interests
$’000
Total
$’000
Total
equity
$’000
Balance at 1 January 2020
360,768
2,984
(247,712)
116,040
430
116,470
Change in accounting policy
1.2.2
(5,827)
(5,827)
-
(5,827)
Restated balance at 1 January 2020
360,768
2,984
(253,539)
110,213
430
110,643
Net profit / (loss) after tax
Other comprehensive income
Total comprehensive income
Deferred tax on share based payments
Share based payments expense
4.2
-
-
-
-
-
-
14,787
14,787
(305)
14,482
746
746
-
1,095
-
746
-
746
14,787
15,533
(305)
15,228
(115)
(115)
-
-
1,095
(350)
-
-
-
(115)
1,095
(350)
2017 TIP settlement
990
(1,340)
Balance at 31 December 2020
361,758
3,485
(238,867)
126,376
125
126,501
Balance at 1 January 2021
361,758
3,485
(238,867)
126,376
125
126,501
Net profit / (loss) after tax
Other comprehensive income
Total comprehensive income
Dividends paid
Supplementary dividends paid
Tax credit on supplementary dividends
paid
Transfer from revaluation reserve
Share based payments expense
4.4.2
4.4.2
4.2
4.2
-
-
-
-
-
-
-
-
-
34,645
34,645
(211)
34,434
547
547
-
-
-
(671)
1,559
-
547
-
547
34,645
35,192
(211)
34,981
(5,927)
(5,927)
(678)
(678)
678
671
-
678
-
1,559
-
-
-
-
-
(5,927)
(678)
678
-
1,559
Balance at 31 December 2021
361,758
4,920
(209,478)
157,200
(86)
157,114
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
56 NEW ZEALAND MEDIA AND ENTERTAINMENT
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Government grants
Dividends received
Interest received on bank facilities
Interest received on leases
Interest paid on bank facilities
Interest paid on leases
Income taxes paid
Net cash inflows from operating activities
Cash flows from investing activities
Note
2021
$’000
2020
Restated A
$’000
346,859
324,146
(281,074)
(267,857)
328
89
43
102
(2,100)
3.5.4
4.5.2
(5,097)
(7,308)
51,842
4.6
9,900
2
67
-
(3,175)
(4,833)
(2,674)
55,576
Payments for property, plant and equipment and intangible assets (including work
in progress)
(6,505)
(4,997)
Proceeds from sale of GrabOne Limited’s assets and certain liabilities
6.3.1
17,500
Proceeds from sale of property, plant and equipment
1,853
-
30
Net cash inflows / (outflows) from investing activities
12,848
(4,967)
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Payments for borrowing cost
Dividends paid to Company's shareholders
Payments for lease liability principal
Net cash outflows from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
4.5.1
4.5.1
4.5.1
4.4.2
4.5.2
Cash and cash equivalents at end of the year
4.6
37,000
10,000
(83,000)
(53,500)
-
(5,927)
(490)
-
(10,785)
(9,475)
(62,712)
(53,465)
1,978
(2,856)
11,560
13,538
14,416
11,560
A Refer to note 1.2.3 for details of the restatement.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL REPORT 2021 57
1.0 BASIS OF PREPARATION
1.2.2 Change in accounting policy
1.1
REPORTING ENTITY AND
STATUTORY BASE
NZME Limited (NZX:NZM and ASX:NZM) is a for-profit company
limited by ordinary shares which are publicly traded on the NZX
Main Board and the Australian Securities Exchange as a Foreign
Exempt Listing. NZME Limited is incorporated and domiciled in
New Zealand. It is registered under the Companies Act 1993 and
is a FMC reporting entity under Part 7 of the Financial Markets
Conduct Act 2013. The entity’s registered office is 2 Graham
Street, Auckland, 1010, New Zealand.
NZME Limited (the “Company” or “Parent”) and its subsidiaries’
In March 2021 the IFRS Interpretations Committee (IFRIC), which is
responsible for interpreting the application of IFRS, published an
agenda decision on Configuration or Customisation Costs in a Cloud
Computing Arrangement (ratified by the International Accounting
Standards Board (IASB) in April 2021). The ratified decision is that
costs are to be expensed, as incurred, unless they relate to activities
that create an intangible asset that the Group controls, and the
intangible asset meets the recognition criteria. Costs to be expensed
that are paid to the suppliers (or contractors of the supplier) of the
cloud-based supplier can, under certain circumstances, be recorded
as prepayments for services and amortised over the expected terms
of the cloud computing arrangement.
(together the “Group”) principal activity during the financial year was
Prior to the agenda decision the Group capitalised costs incurred
the operation of an integrated media and entertainment business.
in configuring or customising certain suppliers’ application
1.2 GENERAL ACCOUNTING POLICIES
These consolidated financial statements have been prepared in
accordance with New Zealand Generally Accepted Accounting
Practice (“NZ GAAP”). They comply with New Zealand equivalents
to International Financial Reporting Standards (“NZ IFRS”) and
other applicable Financial Reporting Standards, as appropriate
for for-profit entities. The consolidated financial statements also
comply with International Financial Reporting Standards (“IFRS”).
software in cloud computing arrangements as intangible assets
as the Group considered that it would benefit from those costs
over the expected terms of the arrangements. Prior to a project’s
completion, costs to be capitalised were held in capital work in
progress. Following the publication of the agenda decision the
Group has reconsidered its accounting treatment, adopted the
principles set out in the IFRIC agenda decision and has changed
its accounting policy in relation to Software-as-a-Service (SaaS)
arrangements, see note 3.1.
The consolidated financial statements have also been prepared in
As a result of this change in accounting policy, the Group has
accordance with Part 7 of the Financial Markets Conduct Act 2013
determined that certain intangible assets should be de-recognised
and the NZX Listing Rules.
The Group has used non-GAAP measures which are not prepared
in accordance with New Zealand International Financial Reporting
Standards (NZ IFRS) in relation to the following:
• profit before finance costs, income tax and impairment
of assets (income statement);
•
total segment adjusted EBITDA (note 2.4.2); and
• net tangible assets (note 3.8).
These measures should not be viewed in isolation, nor considered
as a substitute for measures reported in accordance with NZ IFRS.
Non-GAAP financial measures may not be comparable to similarly
titled amounts reported by other companies.
The principal accounting policies adopted in the preparation of
the financial statements are either set out below, or in the relevant
note. These policies have been consistently applied to all the years
presented, unless otherwise stated. These consolidated financial
statements are presented for the Group and were approved for
issue by the Board of Directors on 22 February 2022.
1.2.1
Basis of measurement
These consolidated financial statements have been prepared
under the historical cost convention with the exception of certain
items for which specific accounting policies are identified.
as the costs did not create separate intangible assets controlled
by the Group. The change in accounting policy has been applied
retrospectively by restating the opening equity position (as at
1 January 2020) and the comparative financial statements. To
determine the level of restatement required, the Group identified
all SaaS arrangements for which configuration and customisation
costs had been capitalised, but not fully amortised at 1 January
2020, to determine which no longer met the requirements for
capitalisation under the Group’s revised accounting policy. The
Group has presented a balance sheet as at 1 January 2020 as the
retrospective application had a material impact on the opening
balance sheet of the preceding period. The impact of this change in
accounting policy is presented below.
1.2.3 Comparatives
The change in the accounting policy for software has resulted
in the restatement of the consolidated balance sheet as at
31 December 2020, the opening consolidated balance sheet at
1 January 2020, the consolidated income statement for the year
ended 31 December 2020 and the consolidated statement of
cash flows for the year ended 31 December 2020. The restatement
adjustments are detailed in the following tables.
58 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED BALANCE SHEET
As at 31 December 2020
Intangible assets
Capital work in progress
Deferred tax asset
Deferred tax liability
Net assets
Retained earnings
Total equity
As at 1 January 2020
Intangible assets
Capital work in progress
Deferred tax asset
Deferred tax liability
Net assets
Retained earnings
Total equity
SaaS
Previously
reported
$’000
adjustment
Reclassification
(note 1.2.2)
of deferred tax
$’000
$’000
Restated
$’000
150,478
(7,705)
2,275
-
260
132,088
(233,280)
132,088
150,263
13,633
-
605
116,470
(247,712)
116,470
(55)
2,173
-
(5,587)
(5,587)
(5,587)
(4,234)
(3,859)
2,266
-
(5,827)
(5,827)
(5,827)
-
-
(260)
(260)
-
-
-
-
-
(605)
(605)
-
-
-
142,773
2,220
1,913
-
126,501
(238,867)
126,501
146,029
9,774
1,661
-
110,643
(253,539)
110,643
ANNUAL REPORT 2021 59
CONSOLIDATED INCOME STATEMENT AND COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2020
Expenses from operations before finance costs,
depreciation, amortisation
SaaS
Previously
reported
$’000
adjustment
Reclassification
(note 1.2.2)
of impairment
$’000
$’000
Restated
$’000
(274,279)
(1,343)
321
(275,301)
Depreciation and amortisation
(30,224)
1,676
-
(28,548)
Profit before finance cost, income tax
and impairment of assets
Impairment of assets
Profit before income tax expense
Income tax expense
Net profit after tax
30,697
(3,149)
18,878
(4,636)
14,242
333
-
333
(93)
240
321
31,351
(321)
(3,470)
-
-
-
19,211
(4,729)
14,482
Earnings per share attributable to the ordinary shareholders
of the Company
Basic earnings per share
Diluted earnings per share
Previously
reported
Cents
SaaS
adjustment
(note 1.2.2)
Cents
Restated
Cents
7.36
7.17
0.12
0.12
7.48
7.29
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020
Previously
reported
$’000
SaaS
adjustment
(note 1.2.2)
$’000
Restated
$’000
Payments to suppliers and employees
(266,514)
(1,343)
(267,857)
Net cash inflows from operating activities
56,919
(1,343)
55,576
Payments for property, plant and equipment and intangible assets
(including work in progress)
(6,340)
1,343
(4,997)
Net cash outflows from investing activities
(6,310)
1,343
(4,967)
60 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
In addition to the restatement of comparatives required as
a result of the change in the software accounting policy some
prior period information has been re-presented to ensure
consistency with current year disclosures and to provide more
meaningful comparison. The prior period information that has
been re-presented is:
1.3
SIGNIFICANT ACCOUNTING
ESTIMATES AND JUDGEMENTS
The preparation of the consolidated financial statements requires
the use of certain significant judgements, accounting estimates and
assumptions, including judgements, estimates and assumptions
concerning the future. The estimates and assumptions are based on
•
The Income statement has been amended so that “impairment
historical experiences and other factors that are considered to be
of software” is now “Impairment of assets”, the 2020
relevant. The resulting accounting estimates will by definition, seldom
comparative now includes $321,375 of impairment to right-of-
equal the related actual results and are reviewed on an ongoing basis.
use assets that was in the “Expenses from operations before
A list of those areas of significant estimation or judgement and a
finance costs, depreciation, amortisation” in 2020.
reference to the notes containing further information is provided below:
•
•
In note 2.1 $5,301,952 of digital advertising revenue has been
reclassified to other revenue.
The Impairment of right-of-use-assets has been moved from
Areas of significant accounting estimates
or judgements
Note
Determination of the number of reportable segments
2.4.1
note 2.2.2 and included in the impairment of assets grouping
Intangible assets with indefinite useful lives
in note 2.2.4.
•
Other lease adjustments in note 4.5.2 have been included with
“Changes in scope or lease terms and other adjustments”.
1.2.4 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (functional currency).
The consolidated financial statements are presented in New
Zealand dollars, which is the Company’s functional and the Group’s
presentation currency, and rounded to the nearest thousand, except
where otherwise stated.
1.2.5 Goods and Services Tax (‘GST’)
The income statement has been prepared so that all components are
stated exclusive of GST. All items in the balance sheet are stated net
of GST, with the exception of receivables and payables, which include
GST invoiced. In the statement of cash flows, receipts from customers
and payments to suppliers are shown exclusive of GST.
3.1
3.1
3.1.1
Identification of intangible assets in relation to the
integration and customisation of SaaS arrangements
Assumptions used in testing for impairment
of indefinite life intangible assets
Right-of-use assets; discount rates and lease terms
3.3
1.4 NEW STANDARDS AND INTERPRETATIONS
As detailed in note 1.2.2 the Group changed its accounting policy
for software intangible assets to ensure compliance with the IFRIC
decisions for configuration and customisation costs incurred in
relation to the implementation of SaaS arrangements. There have
been no other changes to accounting policies and no other new
standards adopted during the period.
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2021 reporting periods and have not
been early adopted by the Group. These standards, amendments
or interpretations are not expected to have a material impact on the
entity in the current or future reporting periods and on foreseeable
future transactions.
ANNUAL REPORT 2021 61
1.5
COVID-19
The global pandemic that was declared by the World Health
Organisation on 11 March 2020 continues to impact the world while
New Zealand remains relatively isolated with closed borders. In the
first half of the year New Zealand experienced three short regional
lockdowns with little impact on the Group’s results while the extensive
lockdown in Auckland, and to a lesser degree various regional
lockdowns, during the period from 18 August 2021 to 3 December
2021 has had a larger impact although the impact was significantly
less than in 2020.
•
Rent concessions of $1,800,708 are included in finance and
other income in the income statement of which $1,377,300
is in respect of transmission tower rental savings under the
Government’s Media Relief package. The gain recognised in
the income statement resulted from the Group’s adoption of
the practical expedient to NZ IFRS 16 where the reduction in
lease liabilities from rent concessions could be recognised as a
gain in the income statement.
There remains a heightened level of uncertainty given the continued
presence of COVID-19.
No Government assistance has been received in 2021. The 2020
The risks and uncertainty faced by the Group relate to (and are not
comparatives include the following amounts in relation to Government
limited to):
assistance received by NZME in response to the pandemic:
•
Government wage subsidy: $9,899,738 which is included in
the income statement in finance and other income. Note 2.4.2
(footnote B) provides a further detail of the treatment of the
total amount received.
•
•
the impact of wider economic pressures in New Zealand
and globally; and
a potential outbreak at one of the Group’s facilities warranting
closure may significantly affect operations.
62 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
2.0 GROUP PERFORMANCE
2.1
DISAGGREGATION OF REVENUE AND OTHER INCOME
For the year ended 31 December 2021
Advertising
78,271
104,593
65,631
248,495
Print
$’000
Radio
$’000
Digital &
e-Commerce
$’000
Total
$’000
Circulation and subscription
External printing and distribution
Other
Segment revenue from integrated media
and entertainment activities
Revenue from shared services centre
Events
Total revenue from external customers
Government grants
Rental income from owned and sub-leased property
Loss on disposal of property, plant and equipment
Lease rent concessions
Other lease adjustments
Gain on sale of transmission site
Gain on sale of GrabOne Limited's assets
and certain liabilities
Other income
Finance income
Total finance and other income
Total revenue and other income
70,323
4,655
2,407
-
-
779
11,598
-
7,245
81,921
4,655
10,431
155,656
105,372
84,474
345,502
1,156
1,901
348,559
328
317
(23)
361
115
465
15,367
16,930
145
17,075
365,634
ANNUAL REPORT 2021 63
Print
$’000
Radio
$’000
Digital &
e-Commerce
$’000
Total
$’000
75,451
72,710
4,994
2,628
94,037
50,612
220,100
-
-
873
6,621
-
9,414
79,331
4,994
12,915
155,783
94,910
66,647
317,340
3,409
1,390
322,139
2
9,900
455
22
1,801
34
780
12,994
67
13,061
335,200
For the year ended 31 December 2020
Advertising
Circulation and subscription
External printing and distribution
Other
Segment revenue from integrated media
and entertainment activities
Revenue from shared services centre
Events
Total revenue from external customers
Dividends
Government grants A
Rental income from owned and sub-leased property
Gain on disposal of property, plant and equipment
Lease rent concessions A
Other lease adjustments
Compensation for franking credits
Other income
Finance income
Total finance and other income
Total revenue and other income
A See the COVID-19 note (note 1.5) for further information.
Accounting policies
The Group applies the following accounting policies in relation
street performances etc. These activities are highly integrated
to revenue:
Advertising
The Group operates an integrated media and entertainment
business and contracts with customers to provide advertising
on multiple platforms consisting of a series of distinct services
that are substantially the same and that have the same pattern
of transfer to the customer. Advertising is often bundled
to include print, radio and/or digital components. In most
cases each component of the bundle is treated as a distinct
performance obligation and the transaction price is allocated
on a relative stand-alone selling price basis. Experiential
campaigns are a type of bundling focused on providing an
experience utilising a mix of traditional advertising mediums
with bespoke elements like competitions, product sampling,
and inter-dependent and are therefore a single performance
obligation with revenue recognised over the period of the
campaign. These campaigns often include elements that are
provided by external parties and the Group acts as the principal
in those instances. These campaigns are typically run over a
short period of time and are typically completed and billed for in
the same reporting or billing period. Where the Group provides
advertising for non-cash consideration, revenue is recognised
at the fair value of the consideration received, unless the Group
cannot reasonably estimate the fair value of the non-cash
consideration; in which case revenue is recognised by reference
to the stand-alone selling price of the advertising promised to
the customer. When advertising is exchanged for advertising,
revenue is recognised on a gross basis as set out above.
64 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
Subscriptions
Deferred revenue
The Group enters into contracts with customers to deliver
When a customer pays for goods or services in advance, the
a specified publication on specified days. The performance
Group recognises a deferred revenue liability which is reduced,
obligation is satisfied, and revenue is recognised, when the
and revenue recognised, as the Group satisfies each distinct
publication is delivered.
Circulation
performance obligation.
Government grants
The Group enters into contracts with customers to deliver
Cash received from Government grants is recorded as
specified publications on specified days which the customer
“Other income”.
will on-sell to the public. The performance obligation is satisfied
when the publication is delivered. Certain customers have
Significant financing component
a right to return any unsold publications which is treated as
The Group does not expect, at contract inception, that the period
variable consideration. Customers are required to report unsold
between transferring the promised goods or services from
publications using an online system on a weekly basis. The
contracts with customers and when the customer pays for those
Group therefore includes in the transaction price an estimate of
goods and services to be more than one year. The Group applies
the unsold publications using the most likely amount method
the practical expedient in NZ IFRS 15 to not adjust the promised
based on the weekly reporting from customers to the extent
amount of consideration it expects to receive for those goods or
that it is highly probable that a significant reversal in the
services for the effects of a significant financing component.
amount of cumulative revenue recognised will not occur when
the uncertainty associated with the variable consideration is
subsequently resolved.
External printing and distribution
Incremental cost of obtaining a contract
The Group applies the practical expedient in NZ IFRS 15 to
recognise the incremental cost of obtaining a contract (such
as commission) when incurred if the amortisation period is one
The Group enters into contracts with customers to print their
year or less. If material, the Group will recognise an asset for
publications and, in certain cases, distribute those publications
any incremental cost of obtaining a contract with a customer
on their behalf; including maintaining a distribution network.
if the Group expects to recover those costs and the amortisation
The printing, delivery and maintenance of a distribution
period is expected to be more than one year. Those costs will
network are distinct performance obligations. The performance
be amortised on a systematic basis that is consistent with the
obligation to print a publication is satisfied when those
transfer of the good or service to which the asset relates.
publications are printed. Similarly, the performance obligation
to deliver a publication is satisfied when it is delivered. The
Costs to fulfil a contract
performance obligation to maintain a distribution network is
If the costs incurred in fulfilling a contract with a customer
a service that is largely the same on a monthly basis and is
are material and not within the scope of another standard, the
satisfied, and revenue recognised, in equal increments over the
Group recognises an asset from the costs incurred if all of the
billing period.
e-Commerce (GrabOne)
The Group acts as an agent for merchants selling their products
following criteria are met:
•
•
the costs relate directly to the contract;
the costs generate or enhance resources that the Group
or services to the public using the GrabOne platform. The Group
will use to satisfy the performance obligations in that
does not control the product or service before it is transferred to
contract; and
the purchaser. Revenue is recognised in the amount of any fees
or commissions the Group expects to be entitled to in exchange
•
the costs are expected to be recovered.
for arranging for the product or service to be promoted on the
Those costs will be amortised on a systematic basis that is
GrabOne platform.
Shared services centre
consistent with the transfer of the goods or services promised
in that contract. Given the nature of the Group’s activities, this
is expected to be rare.
The Group provides back-office support services to customers.
These services consist of a number of functions that are largely
consistent on a month-to-month basis. Revenue is therefore
recognised in equal increments over the billing period.
2.2
EXPENSES
2.2.1 Expenses from operations before finance costs,
depreciation, amortisation
Employee benefits expense B
Production and distribution expense
Selling and marketing expense
Rental and occupancy expense
Costs in relation to one-off projects
Redundancies and associated costs
Repairs and maintenance costs
Travel and entertainment costs
Other
Total expenses from operations before finance costs, depreciation, amortisation
A Refer to note 1.2.3 for details of the restatement.
ANNUAL REPORT 2021 65
2021
$’000
2020
Restated A
$’000
141,565
60,427
48,040
6,497
1,673
2,023
8,103
1,625
16,901
286,854
137,126
55,194
38,637
5,607
519
9,609
8,361
1,339
18,909
275,301
B The 2021 expense includes $1.7m of expenses relating to configuration and customisation costs of SaaS arrangements that would have been capitalised
under the prior software accounting policy. The 2020 number has been restated to reflect costs incurred for the configuration and customisation of
SaaS arrangements that are now classed as operating expenses as opposed to being capitalised. (see note 1.2.3 for details).
2.2.2 Depreciation and amortisation
Depreciation on owned assets
Depreciation on right-of-use assets
Amortisation
Total depreciation and amortisation
2.2.3 Finance costs
Interest and finance charges on bank facilities
Interest expense on interest rate swaps
Interest expense on leases
Fair value adjustment on interest rate swaps
Borrowing cost amortisation
Total finance costs
2.2.4
Impairment of assets
Impairment of right-of-use assets A
Impairment of property, plant and equipment B
Impairment of software C
Total impairment of assets
8,323
11,443
6,553
26,319
1,776
175
5,097
(15)
249
7,282
1,126
1,351
-
2,477
8,352
12,515
7,681
28,548
2,919
82
5,032
-
220
8,253
321
-
3,149
3,470
A The impairment of right-of-use assets relates to the Graham Street and Whangarei offices with adjustments resulting from the sub-lease of office space
in both buildings. The 2020 cost is in relation to the Whangarei office where business changes resulted in a floor being vacated with the available space
being marketed for rent.
B The impairment to property, plant and equipment is for the portion of Graham Street building fitout costs that relate to the area of the head lease that
has been sub-leased.
C 2020 costs relate to the impairment of the WideOrbit radio scheduling system.
66 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
2.2.5 Fees paid to auditors
Fees paid to the Group's auditors, PricewaterhouseCoopers, consist of:
Audit or review of financial statements A
485
405
2021
$’000
2020
$’000
Other services
Other assurance services B
Tax services C
Other services D
Total other services
Total fees paid to auditors
7
8
18
33
518
-
-
17
17
422
A Fee for both the audit of the annual financial statements and the independent review of the interim financial statements.
B Compliance engagement of NZME Publishing Limited with the Rules and Circulation Audit Guidelines established by the Audit Bureau of Circulations Incorporated for the year
ended 31 March 2021.
C Taxation services provided on the franked dividend declared to NZME’s shareholders.
D Agreed upon procedures performed for monthly market revenue benchmarking and the 2020 Broadcasting Standards Authority return.
2.3
EARNINGS PER SHARE
Reconciliation of earnings used in calculating basic / diluted earnings per share ("EPS")
Profit attributable to owners of the parent entity
Profit attributable to owners of the parent entity used in calculating EPS
A Refer to note 1.2.3 for details of the restatement.
2021
$’000
34,645
34,645
2020
Restated A
$’000
14,787
14,787
2021
Number
2020
Number
Weighted average number of shares
Weighted average number of shares in the denominator in calculating basic EPS
197,570,061
197,570,061
Adjusted for calculation of diluted EPS
7,126,686
5,235,314
Weighted average number of shares in the denominator in calculating diluted EPS
204,696,747
202,805,375
Basic / diluted earnings per share
Basic earnings per share
Diluted earnings per share
2021
Cents
17.54
16.93
2020
Cents
7.48
7.29
ANNUAL REPORT 2021 67
Accounting policies
Basic earnings per share
Diluted earnings per share
Basic earnings per share is determined by dividing:
Diluted earnings per share adjusts the figures used in the
•
•
the profit or loss attributable to owners of the Company; by
determination of basic earnings per share by taking into account:
the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the financial year.
•
the after-tax effect of dividends, interest and other changes in
income or expense associated with dilutive potential ordinary
shares; and
•
the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
2.4
SEGMENT INFORMATION
2.4.1 Determination and description of segments
Significant judgements: The Group has one reportable segment – being “Integrated Media and Entertainment”. All significant
operating decisions are based upon analysis of NZME as one operating segment. The Executive Team and the Board of Directors
have been identified as the Chief Operating Decision Maker. The Group’s major products and services are split by channel only at
the revenue level into Print, Radio and Digital & e-Commerce which is the way in which revenue is reported to the Chief Operating
Decision Maker. Although the Group operates in many different markets within New Zealand, for management reporting purposes
the Group operates in one principal geographical area being New Zealand as a whole.
Integrated Media and Entertainment incorporates the sale of advertising, goods and services generated from the audiences attached
to the Group’s media platforms.
68 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
2.4.2 Segment revenue and results
The segment information provided to the Directors and Executive Team for the year ended 31 December 2021 is as follows:
Revenue from external customers by channel
Print
Radio
Digital and e-Commerce
Segment revenue from integrated media and entertainment activities
Revenue from shared services centre
Events
2021
$’000
2020
Restated A
$’000
155,656
105,372
84,474
345,502
1,156
1,901
155,783
94,910
66,647
317,340
3,409
1,390
Total revenue from external customers
348,559
322,139
Dividend income
Government grants B
Rental income from owned and sub-leased property C
(Loss) / gain on disposal of property, plant and equipment
Expenses from operations before finance costs, depreciation, amortisation
and exceptional items
Total segment adjusted EBITDA D
Depreciation and amortisation on owned assets
Depreciation on right-of-use assets
Total depreciation and amortisation
Interest income
Finance costs
Impairment of assets
Share of joint ventures and associates net loss after tax
Gain on sale of transmission site
Gain on sale of GrabOne Limited's assets and certain liabilities
Other lease adjustments E
Exceptional items
Compensation for franking credits F
Redundancies and associated costs G
Costs in relation to one-off projects H
Net profit before income tax expense
-
328
317
(23)
2
8,554
455
22
(283,158)
(265,173)
66,023
(14,876)
(11,443)
(26,319)
145
(7,282)
(2,477)
(450)
465
15,367
476
-
(2,023)
(1,673)
42,252
65,999
(16,033)
(12,515)
(28,548)
67
(8,253)
(3,470)
(417)
-
-
1,835
780
(8,263)
(519)
19,211
ANNUAL REPORT 2021 69
A Refer to note 1.2.3 for details of the restatement.
B Government grants in 2021 relate to amounts received from the Ministry of Culture
and New Zealand On Air for the production of content, journalism training & creating
greater cultural awareness. In 2020 the Government grants relate to the wage subsidy
received from the Government in response to the effect of COVID-19 on businesses.
The total received was $9,899,738 which is included in finance and other income
in the consolidated income statement. For segment reporting the wage subsidy is
allocated to other income ($8,554,198), where it related to employees who continued
to work in the business, and exceptional costs ($1,345,540), where the subsidy related
to employees who were made redundant and who were given extended notice
periods, and is offset against redundancies and associated costs.
C Rental income of $254,952 was received from the sub-lease of right-of-use assets
(2020: $310,213)
D Adjusted Earnings before Interest, Tax, Depreciation and Amortisation (Adjusted
EBITDA) from continuing operations which excludes exceptional items, is a non-
GAAP measure that represents the Group’s total segment result which is regularly
monitored by the Chief Operating Decision Maker. Exceptional items are those
gains, losses, income and expense items that are not directly related to the primary
business activities of the Group which are determined in accordance with the NZME
Exceptional Items Recognition Framework adopted by the Board. Exceptional items
include redundancies, impairment, one-off projects and the disposal of properties
or businesses. These items are excluded from the segment result that is regularly
reviewed by the Chief Operating Decision Maker.
E The Group adopted the practical expedient under NZ IFRS 16 in relation to COVID-19
rent concessions. The rent concessions received by the Group reduced lease liabilities
by $360,863 in 2021 (2020: $1,800,680), a corresponding amount recognised within
other income in the income statement with other adjustments and changes to leases
contributing $114,875 (2020: $34,103).
F NZME franking credits were utilised by HT&E as part of an ATO settlement and related
to the 2016 demerger agreement.
G The redundancies and associated costs relate to the restructuring and integration of
the New Zealand operations and in 2020 includes the wage subsidy offset for those
employees who were given an extended notice period.
H 2021 costs include building costs for the Graham Street sub-lease, onerous contract
costs and costs incurred in relation to the acquisition of BusinessDesk (see note 9).
The 2020 costs are in relation to the final costs incurred in connection with trying to
acquire Stuff Limited and some additional provisions for historical pay claims.
As the Group has one operating segment, the assets and liabilities as reported on the consolidated balance sheet are also the segment
assets and liabilities, and the income tax expense in the consolidated income statement is also the segment income tax.
70 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
3.0 OPERATING ASSETS AND LIABILITIES
3.1
INTANGIBLE ASSETS
Significant judgement: The Directors have determined that masthead brands and brands have indefinite lives and are therefore not
amortised. Refer to the accounting policies below for further information. The Directors have also determined that where the Group
control identifiable assets in relation to the configuration and customisation costs of SaaS arrangements these costs will be capitalised
and amortised over the life of the arrangement. Control exists where the Group determines that the asset could be transfered to an
alternative supplier without incurring substantial additional costs.
As at 1 January 2020
Cost
Goodwill
$’000
Software A
$’000
Masthead
brands
$’000
Radio
licences
$’000
Brands
$’000
Total
$’000
166,397
67,762
146,976
77,547
59,079
517,761
Accumulated amortisation and impairment
(166,397)
(56,860)
(74,336)
(44,258)
(29,881)
(371,732)
Net book value
For the year ended 31 December 2020
Opening net book amount
Amortisation
Impairment
Transfer to assets held for sale
Transfers from capital work in progress
Net book value
As at 31 December 2020
-
-
-
-
-
-
-
10,902
72,640
33,289
29,198
146,029
10,902
72,640
33,289
29,198
146,029
(4,686)
(3,149)
(939)
7,610
-
-
-
-
(2,995)
-
-
932
-
-
(29)
-
(7,681)
(3,149)
(968)
8,542
9,738
72,640
31,226
29,169
142,773
Cost
166,397
66,437
146,976
78,479
59,019
517,308
Accumulated amortisation and impairment
(166,397)
(56,699)
(74,336)
(47,253)
(29,850)
(374,535)
Net book value
For the year ended 31 December 2021
Opening net book amount
Additions
Disposals
Amortisation
Other transfers and adjustments
Transfers from capital work in progress
Net book value
As at 31 December 2021
-
-
-
-
-
-
-
-
9,738
72,640
31,226
29,169
142,773
9,738
72,640
31,226
29,169
142,773
(55)
(7)
(3,497)
(82)
1,539
-
-
-
-
-
396
-
(3,056)
-
184
-
-
-
-
-
341
(7)
(6,553)
(82)
1,723
7,636
72,640
28,750
29,169
138,195
Cost
166,397
53,909
146,976
79,059
59,019
505,360
Accumulated amortisation and impairment
(166,397)
(46,273)
(74,336)
(50,309)
(29,850)
(367,165)
Net book value
-
7,636
72,640
28,750
29,169
138,195
A The prior year numbers have been restated due to the change in accounting policy for software intangible assets (see note 1.2.3 for details).
ANNUAL REPORT 2021 71
Accounting policies
Goodwill
Masthead brands
Goodwill represents the excess of the cost of an acquisition
Masthead brands, being the titles, logo’s and similar items
over the fair value of the Group’s share of the net identifiable
of the integrated media assets of the Group are accounted
assets of the acquired business at the date of the acquisition.
for as identifiable assets and are initially recognised at cost
Goodwill is not amortised but rather is subject to periodic
and subsequently measured at cost less any accumulated
impairment testing (refer to note 3.1.1 below) with all goodwill
impairment losses. The Directors believe the masthead brands
now fully impaired.
Software
have indefinite lives as there is no foreseeable limit over which
they are expected to generate net cash inflows for the Group.
Accordingly, masthead brands are not amortised but are
Costs incurred in developing systems, acquiring software
tested for impairment each year (refer to note 3.1.1 below).
and licences are capitalised to software where the activities
create an intangible asset that the Group controls and
Radio licences
the intangible asset meets the recognition criteria. Costs
Commercial radio licences are accounted for as identifiable
capitalised include materials, services, payroll and payroll
assets and are initially recognised at cost. The current New
related costs of employees involved in development. Costs
Zealand radio licences expire on 31 March 2031 and are being
incurred in acquiring software or licences and configuration
amortised on a straight line basis to that date.
and customisation of Software-as-a-Service systems that are
not capitalised, are expensed as incurred unless they are paid
Brands
to the suppliers (or subcontractors of the supplier) of the
Brands are accounted for as identifiable assets and are initially
cloud-based software. In the latter case, the costs paid upfront
recognised at cost and subsequently measured at cost less
are recorded as prepayments for services and expensed over
any accumulated impairment losses. The Directors have
the expected terms of the cloud computing arrangements.
considered the geographic location, legal, technical and other
Amortisation of software assets is calculated on a straight-line
commercial factors likely to impact the assets’ useful lives and
basis over the useful life of the asset (typically 2 to 10 years).
consider that they have indefinite lives. Accordingly, brands
are not amortised but are tested for impairment each year
(refer to note 3.1.1 below).
3.1.1 Year-end impairment review
Significant judgement: As disclosed in note 2.4 the Directors have determined that the Group has one reportable segment –
being “Integrated Media and Entertainment”. The Directors have also determined that this is the only cash generating unit (CGU)
for impairment testing because this is the lowest level for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets. Accordingly all assets and liabilities attributable to the
operations of the Group are allocated to one CGU except for financing, assets held for sale and equity accounted investments. This
note also includes details of certain key estimates and assumptions made during the impairment testing process. The Directors
should assess, at each reporting date, whether there is any indication that an impairment loss for an asset, other than goodwill, either
no longer exists or has decreased. The Directors have determined that, while there is improvement in the headroom since the last
impairment was recognised, no reversal of the previous impairment to masthead brands and brands is required.
The recoverable amount of the CGU is determined based on
in the income statement (2020: $nil). The impairment review used
the higher of fair value less costs to sell and value-in-use (VIU)
a set of assumptions which are considered the most appropriate
calculations using management forecasts. The recoverable
for impairment testing but are more conservative than the Group’s
amount of the CGU is compared against the carrying value of
medium term plans.
the CGU to determine whether there has been impairment. Any
impairment is recognised immediately as an expense and in
relation to goodwill, is not subsequently reversed.
The VIU calculations use cash flow projections which cover a
five-year period. Cash flows beyond the five-year period are
extrapolated using the estimated terminal growth rate, which is
A comprehensive impairment review was conducted at
the weighted average growth rate used to extrapolate cash flows
31 December 2021. The recoverable amount of the CGU has been
beyond the forecast period. This assessment is required to be
determined based on VIU. Based on the assumptions below no
made based on events and knowledge as at 31 December 2021.
impairment of indefinite life intangible assets has been recognised
72 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
Key estimates and assumptions used for the value-in-use (VIU) of the cash generating unit
(CGU) are as follows:
Discount Rate
A post tax discount rate used of 9.0% (2020: 9.0%).
The discount rate represents the current market assessment of the risks specific to the CGU, taking into account the time value
of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates.
Terminal Value
The terminal value within the VIU assessment has been calculated using a terminal growth rate assumption of -1.2% (2020: -1.5%).
Forecasts prepared over the forecast period (2022-2026)
The forecasts used in impairment testing have been prepared by management, and approved by the Board, for that specific
purpose. Actual results may differ materially from those forecast or implied. The forecasts used in the impairment assessment
were prepared to comply with the requirements of IAS 36.
The forecasts are not, and should not be read as, a forecast of, or guidance as to, the future financial performance and earnings
of the Group.
The forecasts used in impairment testing require assumptions and judgements about the future, such as discount rates, long
term growth rates, forecasted revenues, to which the model is sensitive and which are inherently uncertain.
Revenue and operating cost forecasts are prepared based on management’s current expectations, with consideration given
to internal information and relevant external industry data and analysis. The business performance is forecast to be impacted
by the forecast continuing decline of the print advertising market as indicated by market surveys. Management’s assessment
of cash flows and growth assumptions for the forecast periods take into account this uncertainty. Whilst there are further
uncertainties around forecasting in a COVID-19 environment and the potential impact on revenue, it is considered that the
forecast assumptions are reasonable.
Future capex spend is estimated at historical replacement levels, and no incremental revenue or costs savings are assumed as a
result of this expenditure.
The key forecast assumptions for compound annual growth rates used were:
Print revenue
Radio revenue
Digital advertising revenue
Digital classifieds revenue
Digital subscriptions revenue
Operating expenses
2021
-4.92%
1.55%
4.47%
31.57%
12.28%
0.77%
2020
-6.50%
3.70%
1.30%
26.00%
28.00%
1.80%
ANNUAL REPORT 2021 73
Short term volatility may be experienced due to the impact
The Group compares the carrying amount of net assets with the
of external environmental and economic conditions.
market capitalisation value at each balance date. The share price
The Directors have reviewed the potential changes to the
recoverable amount that could arise from changes in key
assumptions and concluded that, at this time, there are no
reasonably possible adverse changes in the key assumptions
that would result in material impairment. The Directors
determined that the increase in the headroom, since the
impairment recognised as at 31 December 2019, is not directly
attributable to the brands and as a result a reversal of previously
recognised impairment of indefinite life intangible assets has not
been recognised.
at 31 December 2021 was $1.43 equating to a market capitalisation
of $282.6 million. This market value excludes any control premium
and may not reflect the value of 100% of NZME’s net assets. The
carrying amount of NZME’s net assets at 31 December 2021 was
$157.1 million ($0.80 per share).
Accounting policy
Goodwill and intangible assets that have an indefinite
the lowest levels for which there are separately identifiable
useful life are not subject to amortisation and are tested
cash inflows which are largely independent of the cash
annually for impairment and at the end of each reporting
inflows from other assets or groups of assets (cash-
period if there is an indication that they may be impaired.
generating units). Currently, the Group has only one CGU,
An impairment charge is recognised for the amount by
being Integrated Media and Entertainment. Intangible
which the asset’s carrying amount exceeds its recoverable
assets, other than goodwill, that suffer impairment are
amount. The recoverable amount is the higher of an
reviewed for possible reversal of the impairment at each
asset’s fair value less costs to sell and value-in-use. For the
reporting date.
purposes of assessing impairment, assets are grouped at
74 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
3.2
PROPERTY, PLANT AND EQUIPMENT
Freehold
land A
$’000
Buildings A
$’000
Leasehold
improvements
$’000
Plant and
equipment
$’000
Total
$’000
As at 1 January 2020
Cost or fair value
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2020
Opening net book amount
Additions
Disposals
Depreciation
Transfer to assets held for sale
Transfers from capital work in progress
Net book amount
As at 31 December 2020
Cost or fair value
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2021
Opening net book amount
Additions
Disposals
Depreciation
Impairment
Other adjustments
Transfers from capital work in progress
Net book amount
As at 31 December 2021
Cost or fair value
Accumulated depreciation and impairment
Net book amount
1,165
-
1,165
1,165
-
-
-
(900)
-
265
265
-
265
265
-
-
-
-
-
-
157
(42)
115
115
-
-
(4)
(39)
(12)
60
67
(7)
60
60
-
-
(7)
-
-
-
14,540
337,165
353,027
(7,436)
(305,647)
(313,125)
7,104
31,518
39,902
7,104
31,518
39,902
-
-
111
(8)
111
(8)
(1,209)
(7,139)
(8,352)
-
187
-
4,089
(939)
4,264
6,082
28,571
34,978
14,727
339,327
354,386
(8,645)
(310,756)
(319,408)
6,082
28,571
34,978
6,082
28,571
34,978
-
(8)
(1,005)
(1,076)
(1)
140
25
(309)
(7,311)
(275)
61
1,764
25
(317)
(8,323)
(1,351)
60
1,904
265
53
4,132
22,526
26,976
265
-
265
67
(14)
53
14,854
264,070
279,256
(10,722)
(241,544)
(252,280)
4,132
22,526
26,976
A Freehold land and buildings are held at fair value based on independent valuations. If land and buildings were stated on the historical cost basis, the net book value of land
would have been $214,000 (2020: $214,000) and the net book value of buildings would have been $23,286 (2020: $24,989). The last revaluation was performed for the year ended
31 December 2015.
ANNUAL REPORT 2021 75
Accounting policies
Land is not depreciated. Depreciation on other assets is
revaluation reserves in equity. To the extent that the increase
calculated using the straight line method to allocate their cost
reverses a decrease previously recognised in the income
or revalued amounts, net of their residual values, over their
statement, the increase is first recognised in the income
estimated useful lives, as follows:
•
Furniture and fittings
• 3 to 25 years
• Buildings
•
Leasehold improvements
• Motor vehicles
•
Plant & equipment
•
•
•
•
10 to 50 years
2.5 to 50 years
5 to 10 years
1.5 to 29 years
The assets’ residual values and useful lives are reviewed
and adjusted, if appropriate, at each balance sheet date.
Gains and losses on disposals are determined by comparing
proceeds with carrying amounts and are included in the
income statement.
Land and buildings (excluding leasehold improvements)
are recorded at fair value, based on valuations by external
independent valuers, less subsequent depreciation for
buildings. Independent valuations are performed on a
periodic basis, as the Directors deem necessary, to ensure
that the carrying value of assets is materially consistent
statement. Decreases that reverse previous increases of the
same asset are first charged against the revaluation reserves
directly in equity to the extent of the remaining reserve
attributable to the asset. All other decreases are charged to
the income statement.
Plant and equipment, furniture and fittings and motor
vehicles are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Subsequent
costs are included in the assets carrying amount or
recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can
be reliably measured. All other repairs and maintenance are
charged to the income statement during the financial period
in which they are incurred.
Impairment of assets
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount is
with their fair value. At the end of each reporting period, the
greater than its estimated recoverable amount. Assets that are
Directors update their assessment of the fair value of each
property, taking into account the most recent independent
valuations. Any accumulated depreciation at the date of
revaluation is eliminated against the gross carrying amount
of the asset and the net amount is restated to the revalued
amount of the asset. Increases in the carrying amounts
arising on revaluation of land and buildings are credited to
subject to depreciation are tested for impairment whenever
changes in circumstances indicate that the asset’s carrying
amount may exceed its recoverable amount. An impairment
charge is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. Assets that
suffer an impairment are reviewed for possible reversal of the
impairment at each reporting date.
3.3
RIGHT-OF-USE ASSETS
Significant judgments: Where a discount rate is not explicit in a lease the Group determines an applicable discount rate to use
based on publicly available rates for Government Bonds, Bloomberg corporate bond spreads and yields and New Zealand swap
rates and then applies an adjustment to these rates to apply a company specific credit risk. In determining the lease term the
Group includes any periods covered by options to extend where the Group is reasonably certain to exercise that option.
76 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
As at 31 December 2020
Net book amount
58,399
25,985
994
4
85,382
Buildings
$’000
Transmission
$’000
Vehicles
$’000
Other
$’000
Total
$’000
Year ended 31 December 2021
Additions
Depreciation
Impairment of right-of-use assets
Transfer to lease receivables
175
638
(7,411)
(3,359)
(1,126)
(5,898)
-
-
Changes in scope or lease terms
(653)
(224)
Net book amount
43,486
23,040
730
(667)
-
-
(70)
987
-
(6)
-
-
2
-
1,543
(11,443)
(1,126)
(5,898)
(945)
67,513
Accounting policies
The Group leases various offices, transmission towers, vehicles
Assets and liabilities arising from a lease are initially measured
and other equipment which are all classified as operating
on a present value basis. Lease liabilities include the net
leases.
present value of the following lease payments:
Leases are recognised as a right-of-use asset and a
corresponding lease liability. Each lease payment is allocated
between the lease principal and finance costs. Finance costs
are charged to profit or loss over the lease period and the
right-of-use asset is depreciated over the shorter of the asset’s
useful life and the lease term on a straight-line basis.
•
•
•
•
•
fixed payments (including in-substance fixed payments),
less any lease incentives receivable:
variable lease payments that are based on an index
or a rate;
amounts expected to be payable by the lessee under
residual value guarantees;
the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the
lease term reflects the lessee exercising that option.
3.4 CAPITAL WORK IN PROGRESS
As at 1 January
Additions
Disposals
Transfers to intangible assets
Transfers to property, plant and equipment
As at 31 December
A Refer to note 1.2.3 for details of the restatement.
2021
$’000
2,220
5,482
(69)
(1,723)
(1,904)
4,006
2020
Restated A
$’000
9,774
5,252
-
(8,542)
(4,264)
2,220
Capital work in progress is transferred to the relevant asset category once the project is completed. Capital work in progress is not
depreciated or amortised prior to being transferred to the relevant asset category. Intangible assets not yet available for use, that are
included in capital work in progress, are subject to annual impairment tests.
ANNUAL REPORT 2021 77
Note
7.2
3.5.4
3.5.4
2021
$’000
38,813
(634)
38,179
9
356
6,632
45,176
717
51
(134)
634
1,101
5,778
6,879
2020
$’000
38,241
(717)
37,524
37
-
6,321
43,882
632
721
(636)
717
1,079
-
1,079
3.5
TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for impairment
Amounts due from related companies
Finance lease receivables
Other receivables and prepayments
Total current trade and other receivables
Movements in the provision for impairment are as follows:
Balance at beginning of the year
Provision for impairment expense
Receivables written off
Provision for impairment
Other receivables and prepayments
Finance lease receivables
Total non-current trade and other receivables
3.5.1 Classification
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Receivables
and other financial assets are classified and subsequently measured at amortised cost on the basis of both the Group’s business model for
managing the financial assets and the contractual cash flow characteristics of the financial asset. If collection of the amounts is expected in
one year or less they are classified as current assets. If collection is expected to be in greater than one year they are classified as non-current.
3.5.2 Fair values of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
3.5.3
Impairment and risk exposure
The maximum exposure to credit risk at the reporting date is the higher of the carrying value and fair value of each receivable.
The Group does not hold any collateral as security. Refer to note 4.7.3 for credit risk and note 4.8 for fair value information.
Accounting policies
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment.
Receivables are monitored on an individual basis and the Group considers the probability of default upon initial recognition of
the receivable and throughout the period and provides for receivables expected to be impaired. The amount of loss is recognised
in the income statement within other expenses. When a trade receivable is uncollectible, it is written off against the provision
account for trade receivables. Subsequent recoveries of amounts previously written off are credited to the income statement
against the impairment losses on receivables.
78 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
3.5.4 Finance lease receivables
Finance lease receivables relate to the sub-leases of parts of the Auckland and Whangarei right-of-use assets sub-let during the year.
As at 1 January
Transfer from right-of-use assets
Other direct costs
Total additions for the year
Interest on lease receivables
Total lease receivables before cash payments
Interest received
Principal received
Net investment in lease receivables at 31 December A
Current assets
Non-current assets
Net investment in lease receivables at 31 December
A Make good provisions are included in material sub-leases to ensure the Group’s exposure to risk is minimised.
The table below details the Group’s contractual undiscounted cash flows for the finance lease receivable assets to maturity.
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
Greater than 5 years
Total lease payments receivable
Unearned finance income
Net investment in lease receivables at 31 December
2021
$’000
-
5,898
338
6,236
102
6,338
(102)
(102)
6,134
356
5,778
6,134
2021
$’000
655
684
682
771
1,000
3,980
7,772
(1,638)
6,134
ANNUAL REPORT 2021 79
Accounting policies
When the Group acts as a lessor in sub-leasing its right-of-use
assets, it determines, at lease commencement date, whether
each lease is a finance lease or an operating lease by assessing
whether the lease transfers to the lessee substantially all
the risks and rewards of ownership incidental to ownership
of the underlying asset. If this is the case then the lease is a
finance lease; if not then it is an operating lease. As part of this
assessment the Group considers certain indicators such as
whether the lease is for the major part of the economic life
of the asset.
For the purposes of classifying the sub-lease, reference is
to the right-of-use asset arising from the head lease, not
with reference to the underlying asset.
•
•
•
•
•
•
initial direct costs incurred in acquiring the sub-lease;
fixed payments (including in-substance fixed payments),
less any lease incentives payable:
variable lease payments that are based on an index
or a rate;
amounts expected to be receivable under residual
value guarantees;
the exercise price of a purchase option if the lessee
is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the
lease term reflects the lessee exercising that option.
The discount rate applied to calculate the present value of the
lease receivable asset is the rate that was applied in calculating
Assets arising from a sub-lease are initially measured
the right-of-use asset for the head lease to which the sub-lease
on a present value basis and include the following:
relates.
3.6
INVENTORIES
Inventories is predominantly the stock of newsprint held at the Ellerslie print plant and is valued at cost. The stock of newsprint held is,
on average, six to eight weeks supply. The longevity of the commodity, and the short period of time that stock is on hand, reduces the
Group’s risk of holding obsolete stock.
During the year ended 31 December 2021 inventories totalling $9,934,471 were expensed (2020: $10,002,578).
Accounting policy
Inventories are measured at cost and are expensed as used. All paper stock is inspected on delivery and, if damaged returned
to the supplier, with undamaged stock recorded in the stock system. Weekly stock takes are performed to ensure stock on hand
agrees to the inventory system.
3.7
TRADE AND OTHER PAYABLES
Current payables
Amounts due to related companies
Employee entitlements
Deferred revenue
Trade payables and accruals
Total current trade and other payables
Note
7.2
2021
$’000
24
5,664
16,882
31,210
53,780
2020
$’000
64
4,605
13,400
25,769
43,838
80 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
Accounting policies
Trade and other payables
Short-term incentive plans
Trade payables, including accruals not yet billed, are recognised
when the Group becomes obliged to make future payments
as a result of a purchase of assets or services. Trade payables
A liability for short-term incentives is recognised in trade
payables when there is an expectation of settlement and at
least one of the following conditions is met:
are carried at amortised cost which is the fair value of the
•
there are contracted terms in the plan for determining
consideration to be paid in the future for goods and services
the amount of the benefit;
received. Trade payables are unsecured and are generally settled
within 30 to 45 days.
Employee entitlements
Wages and salaries and annual leave
•
the amounts to be paid are determined before the time
of completion of the financial statements; or
• past practice gives clear evidence of the amount
of the obligation.
Liabilities for wages and salaries, including non-monetary
Liabilities for short-term incentives are expected to be settled
benefits and annual leave expected to be wholly settled within
within 12 months and are recognised at the amounts expected
12 months from the reporting date are recognised in payables
to be paid when they are settled.
and accruals in respect of employees’ services up to the
reporting date and are measured at the amounts expected to
Refer to note 4.3 for disclosures relating to share based
be paid when the liabilities are settled. Amounts to be settled
payments and note 7.1 for key management compensation.
more than 12 months after the reporting date are recognised
as a non-current payable. Liabilities for non-accumulating sick
leave are recognised when the leave is taken and measured at
Deferred revenue
The accounting policy for deferred revenue is disclosed in
the rates paid or payable.
note 2.1.
3.8 NET TANGIBLE ASSETS
Net tangible assets per share is a non-GAAP measure that is required to be disclosed by the NZX Listing Rules.
The calculation of the Group’s net tangible assets per share and its reconciliation to the consolidated balance sheet is
presented below:
As at 31 December
Total assets
Deferred tax asset
Intangible assets
Total liabilities
Net tangible assets
Number of shares issued (in thousands)
Net tangible assets per share (in $)
A Refer to note 1.2.3 for details of the restatement.
2021
$’000
2020
Restated A
$’000
312,368
332,409
(3,485)
(1,913)
(138,195)
(142,773)
(155,254)
(205,908)
15,434
197,570
0.08
(18,185)
197,570
(0.09)
ANNUAL REPORT 2021 81
3.9 DERIVATIVE FINANCIAL INSTRUMENTS
Accounting policies
For each cash flow hedge relationship, the effective part of any gain or loss on the derivative financial instrument is recognised
directly in other comprehensive income. Gains or losses that are recognised in other comprehensive income are transferred to
the income statement in the same period in which the hedged exposure affects the income statement. The ineffective part of
any gain or loss is recognised immediately in the income statement at the time hedge effectiveness is tested.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer
qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in other
comprehensive income is kept in other comprehensive income until the forecasted transaction occurs. If a hedged transaction
is no longer expected to occur, the net cumulative gain or loss recognised in other comprehensive income is immediately
transferred to the income statement.
The Group has invested $25 million (2020: $30 million) in four (2020: five) different interest rate swaps with maturity dates from
February 2022 to August 2023 (2020: August 2021 to August 2023) to minimise the Group’s interest rate risk. As at 31 December 2021
the Group had a current asset of $25,054 (2020: $16,400 current liability) and a non-current asset of $228,242 (2020: $309,692 non-
current liability) and has recycled interest expense of $168,113 (2020: $82,121) through other comprehensive income. The hedges
became ineffective in November 2021 resulting in $15,789 of fair value adjustment being recognised directly in finance costs on the
income statement.
4.0 CAPITAL MANAGEMENT
4.1
SHARE CAPITAL
2021
’000
2020
’000
2021
$’000
2020
$’000
Authorised, issued and paid up share capital
Balance at the beginning of the year
197,570
196,556
361,758
360,768
Shares issued during the year
-
1,014
-
990
Balance at the end of the year
197,570
197,570
361,758
361,758
Accounting policy
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
On 17 December 2021 the Group announced that a share buyback programme is to commence in February 2022. The buyback programme
will be for up to 21,428,571 shares, approximately 11% of NZME’s issued share capital on 17 December 2021 for an aggregate purchase price
of $30.0 million. A further announcement will be made ahead of the on-market share buyback to confirm the commencement.
82 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
4.2 RESERVES
Share based payments reserve
Balance at the beginning of the year
Share based payment expense
2017 TIP settlement
Balance at end of the year
Cash flow hedge reserve
Balance at the beginning of the year
Effective gain / (loss) on hedging instruments
Reclassification to profit or loss
Tax impact of hedging transactions
Balance at end of the year
Asset revaluation reserve
Balance at beginning of the year
Transfer to retained earnings
Balance at end of the year
Equity investments revaluation reserve
Balance at beginning of the year
Share of revaluation of joint ventures' and associates' assets
Balance at end of the year
Foreign currency translation reserve
Balance at beginning of the year
Net exchange difference on translation of foreign operations
Balance at end of the year
Total reserves
Note
7.1
2021
$’000
1,501
1,559
-
3,060
(326)
396
168
-
238
722
(671)
51
1,271
-
1,271
317
(17)
300
2020
$’000
1,746
1,095
(1,340)
1,501
178
(656)
82
70
(326)
722
-
722
-
1,271
1,271
338
(21)
317
4,920
3,485
ANNUAL REPORT 2021 83
4.2.1
Nature and purpose of reserves
Share based payments reserve
in note 3.2. In the event of the sale of an asset, the revaluation
The share based payments reserve is used to recognise the fair
value of the performance rights issued but not yet vested as
surplus is transferred to retained earnings.
Equity investments revaluation reserve
described in note 4.3.
Cash flow hedge reserve
The cash flow reserve is used to record unrealised gains or losses
on hedging instruments that are recognised directly in equity. The
modified fair value method has now been applied to the interest
rate swaps and therefore no tax adjustments are required.
The equity investments revaluation reserve is used to record the
Group’s share of increments and decrements on the revaluation
of assets owned by its joint ventures and associates. In the event
of the sale of an asset, the revaluation surplus is transferred to
retained earnings.
Foreign currency translation reserve
Asset revaluation reserve
The asset revaluation reserve is used to record increments and
Exchange differences arising on translation of any foreign
controlled entities are taken to the foreign currency translation
decrements on the revaluation of non-current assets as described
reserve, as described in the basis of preparation.
4.3 SHARE BASED PAYMENTS
As at 1 January
Granted (2019 TIP) A
Granted (2020 TIP) B
Granted (2021 TIP) c
Surrendered D
Issued E
As at 31 December
Average price
per right ($)
0.41
0.95
0.95
0.72
-
-
2021
Number
of rights
5,235,314
89,916
36,173
1,765,283
-
-
0.52
7,126,686
Average price
per right ($)
0.72
-
0.36
-
0.89
0.89
0.41
2020
Number
of rights
3,024,181
-
3,724,664
-
(499,468)
(1,014,063)
5,235,314
A In 2021 the Board approved that under the 2019 TIP, participants will be entitled
compared to the estimated number reported at 31 December 2020.
to additional shares when the rights are exercised (on 31 December 2022) for any
dividends foregone during the period 1 January 2020 to 31 December 2021. For
dividends declared during the period 1 January 2021 to 31 December 2021, this
resulted in an additional 89,916 shares being issued to participants.
B The number of performance rights granted in 2021 in respect of the 2020 TIP. The
total of 36,173 comprises 263,537 rights issued in relation to dividends foregone in
2021 less an adjustment of 227,363 for rights actually awarded in 2021 for the 2020 TIP
C The number of performance rights expected to be granted in 2022 in respect of the
2021 TIP.
D The 2020 surrendered shares relate to the 2017 TIP with participants surrendering shares
in lieu of PAYE owing on the issue of shares.
E The rights granted under the 2017 TIP were exercised on 31 December 2020 with
1,014,063 shares being issued. The share price at the date of issue was $0.70.
Share rights outstanding at the end of the year have the following exercise date and grant date price per right:
Grant price
per right ($)
2021
Number
of rights
2020
Number
of rights
Grant date
29 March 2019
5 March 2020
4 December 2020
10 December 2020
5 November 2021
As at 31 December
Vesting date
Exercise date
31 Dec 2020
31 Dec 2022
31 Dec 2021
31 Dec 2023
31 Dec 2022
31 Dec 2024
31 Dec 2022
31 Dec 2024
31 Dec 2022
31 Dec 2024
0.55
0.36
0.71
0.66
1.25
Weighted average remaining time until rights outstanding at the end of the period
automatically convert to ordinary shares
1,600,566
1,510,650
3,760,837
3,724,664
1,131,675
553,845
79,763
-
-
-
7,126,686
5,235,314
2021
2020
24 months
33 months
84 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
4.3.1 Background
Total incentive plan (“TIP”)
The TIP is designed to align the reward outcomes with the
shareholders’ interest and to support the achievement of the
Group’s business strategy and was approved by the Board on
20 December 2016. Under the TIP, and at the absolute discretion
of the Board, the CEO and other executive key management
personnel are eligible to participate in the TIP. Eligible participants
have a target award opportunity, which varies between 50% and
100% of fixed remuneration, depending on the participant’s role
and responsibilities. A new TIP opportunity will be offered at the
commencement of each financial year. The award is dependent
•
Individual performance conditions (25%): This portion is
determined against individual performance conditions, as
determined for each participant. The TIP award is earned if all
of the individual performance conditions have been achieved,
although the Board has discretion to award less than a 100%
of the target for partial performance and more than a 100% of
the target for exceptional performance.
Awards under the TIP are granted to participants following the
assessment of performance. To the extent that performance
measures are met:
on performance over a one year period (“performance period”)
• 50% of awards are made in cash; and
and there is no opportunity for retesting. Performance is formally
evaluated after the date that the full year financial performance is
announced to the market.
4.3.2 2021, 2020 and 2019 TIP Schemes
Performance measures
• Financial performance conditions (50% to 75%): Performance
will be measured against earnings before interest, tax,
depreciation and amortisation (“EBITDA”). This portion
is determined based on actual EBITDA against budgeted
EBITDA on the following scale:
• 50% of awards are granted in rights to acquire fully paid
ordinary shares in the Company for nil consideration (“Rights”).
The performance period for the awards is a twelve month
period commencing on 1 January of the relevant year. Subject
to remaining employed by the Company for a further one year
period following the performance period (“service period”),
rights will vest. The vested rights cannot be exercised for
a further two years (“deferral period”). Vested rights will
automatically convert into ordinary shares for nil consideration
at the end of the deferral period without the requirement for the
participant to exercise their rights. At the discretion of the Board,
validly exercised rights may be satisfied in cash, rather than in
% of EBITDA
% of target opportunity awarded
shares. Participants are not entitled to receive any dividends for
< 95%
0%
> 95% to 100%
Pro-rata vesting between
25% and 100%
> 100% to 110%
Pro-rata vesting between
100% and 150%
• Business Unit Goals (0% to 25%): This portion is determined
based on actual achievement against Business Unit (“BU”)
Goals on the following scale:
the rights they hold, but the Board may, at its sole discretion,
allocate shares or make a cash payment to participants equal
to the value of dividends that were payable whilst holding the
unvested and / or vested rights. The Company may reduce
unvested equity awards in certain circumstances such as gross
misconduct, material misstatement or fraud. The Board may also
reduce unvested awards to recover amounts where performance
that led to payments being awarded is later determined to
have been incorrectly measured or not sustained. Awards are
normally forfeited if the participant leaves before the end of the
performance period, except in limited circumstances that are
approved by the Board on a case-by-case basis. If a participant
% of target opportunity awarded
leaves during the service period, the rights that will vest will be
% of BU Goal
achieved
< 95%
25%
> 95% to 100%
Pro-rata vesting between
25% and 100%
> 100% to 110%
Pro-rata vesting between
100% and 150%
determined on a pro-rata basis based on when they leave during
the service period. If a participant leaves during the deferral
period, no rights will be forfeited, but rights will still only convert
into ordinary shares at the end of the deferral period.
The fair value of the rights at grant date was estimated based on
the NZME share price at that date, being the date after the Board
approved the TIP and the terms were communicated to the
eligible participants. The number of rights awarded are based on
the Volume Weighted Average Price (VWAP) of the Company’s
shares for the first 5 trading days of each Performance Period.
ANNUAL REPORT 2021 85
Model inputs
The following is a summary of the key inputs in calculating the share-based payment expense under the 2021 TIP:
• Performance period
• Service period
1 January 2021 to 31 December 2021
1 January 2022 to 31 December 2022
• Vesting period (being the performance period and the service period)
1 January 2021 to 31 December 2022
• Deferral period
1 January 2023 to 31 December 2024
• Share price at grant date 4 December 2020
• Share price at grant date 10 December 2020
• Share price at grant date 5 November 2021
• VWAP
71 cents
66 cents
$1.25
73.7 cents
The following is a summary of the key inputs in calculating the share-based payment expense under the 2020 TIP:
• Performance period
• Service period
1 January 2020 to 31 December 2020
1 January 2021 to 31 December 2021
• Vesting period (being the performance period and the service period)
1 January 2020 to 31 December 2021
• Deferral period
• Share price at grant date
• VWAP
1 January 2022 to 31 December 2023
36 cents
39.8 cents
The following is a summary of the key inputs in calculating the share-based payment expense under the 2019 TIP:
• Performance period
• Service period
1 January 2019 to 31 December 2019
1 January 2020 to 31 December 2020
• Vesting period (being the performance period and the service period)
1 January 2019 to 31 December 2020
• Deferral period
• Share price at grant date
• VWAP
1 January 2021 to 31 December 2022
55 cents
50.4 cents
It is assumed that all participating employees will remain employed with the Company until the end of the vesting period.
4.3.3 2018 TIP
No TIP was offered for the 2018 Financial Year.
86 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
4.3.4 Total Incentive Plan (TIP) for 2022
In February 2022 the Board approved an updated framework for the
the same time and deferred for an additional year before they vest,
Company’s Total Incentive Plan (TIP). The TIP is designed to align
subject to continued employment over that extended period.
reward outcomes with individual performance and the performance
of the Company and value creation for shareholders over both the
short and long term.
In addition, a new long-term incentive component has been added
in the TIP framework, which is based on a three-year performance
period commencing that would commence on 1 January 2022
The updated TIP framework includes a short-term component that
with awards subject to both earnings per share (EPS) and total
will be based on the performance of the Company for the financial
shareholder return (TSR) performance hurdles. The long-term
year ending 31 December 2022 measured in terms of earnings and
component comprises an issue of share rights that may vest at
the achievement of various specific targets set for each individual
the end of three years, subject to achievement of the EPS and TSR
participant that align with the Company’s strategic goals. The short-
performance hurdles and continued employment by the Company.
term component includes both a cash bonus element and a share
rights element. The cash payment would be payable following the
end of the 2022 financial year period, with share rights issued at
Offers will be made to eligible executives in due course with further
details provided in the 2022 financial statements.
Accounting policies
Total incentive plan (TIP)
The fair value of rights granted under the TIP plan is recognised
Non-market vesting conditions are included in assumptions
as an employee benefits expense with a corresponding increase
about the number of rights that are expected to vest. At each
in equity over the vesting period, being the performance period
reporting date, the Group revises its estimate of the number of
and the service period. The fair value is measured at grant date
rights that are expected to become exercisable.
and the number of rights are determined using the volume
weighted average price of NZME’s shares on the NZX over the
first 5 trading days of the performance period.
The employee benefits expense recognised each period takes
into account the most recent estimate. The impact of the revision
to the original estimates, is recognised in profit or loss with a
The fair value at grant date is determined taking into account the
corresponding adjustment to equity.
share price, any market performance conditions and any non-
vesting conditions, but excluding the impact of any service and
non-market performance vesting conditions.
4.4 DIVIDENDS
4.4.1 Dividend policy
The Group’s dividend policy is to pay dividends of between
30-50% of free cash flow while having regard to the Company’s
capital requirements, operating performance and financial
of 0.00529412 cents per share to those shareholders who are
not tax residents and who hold less than 10% of the shares in
the Company. The total of the supplementary dividend paid,
on 22 September 2021, was $677,911.
position. The payment of dividends is also subject to the Company
On 21 February 2022, the Board of Directors declared a fully
being within the leverage ratio range of 0.5 to 1 times the rolling
imputed and franked final dividend of 5.0 cents per share for the
12 month trading EBITDA.
4.4.2
Dividends paid and declared
On 23 June 2021 an inter-company dividend was paid by NZME
Investments Limited, with A$9,163,691 of franking credits
attached, to NZME Limited.
2021 financial year. The dividend is to be paid on 23 March 2022
to registered shareholders as at 11 March 2022.
The dividends declared on 23 August 2021 and 21 February 2022
were approved by the Board to be paid out of profits from NZME
Limited, as a standalone legal entity, which had been specifically
earmarked as being available for the declaration of the dividends
On 22 September 2021 a fully imputed and franked dividend of
and had not been appropriated or earmarked for other purposes.
3.0 cents per share was paid to registered shareholders as at
10 September 2021, the total amount paid was $5,927,102. The
Board also approved the payment of a supplementary dividend
ANNUAL REPORT 2021 87
4.4.3
Franking and imputation credits
Imputation credits available for subsequent reporting periods based on the New Zealand
28% tax rate for the Group
Franking credits available to the Company for subsequent reporting periods based on the
Australian 30% tax rate for the Group
2021
$’000
2020
$’000
NZ$ 25,047
NZ$ 18,061
A$ 6,700 A
A$ 0 A
A Franking credits of A$6,699,711 are available for use by the Company following the payment of the inter-company dividend in June 2021 (see note 4.4.2). At 31 December 2020
the Company did not have any franking credits available for use although other entities within the Group had A$9,163,691 available that Directors expected to be available to
the Company in future periods.
.
4.5
INTEREST BEARING LIABILITIES
The following table details the Group’s combined net debt at 31 December 2021.
The movements in these balances during the year are provided in notes 4.5.1 Secured bank loans and note 4.5.2 Lease liabilities.
Bank loans
Cash and cash equivalents
Net (cash) / bank debt
Lease liabilities
Net debt at 31 December
4.5.1
Secured bank loans
Bank loans
As at 1 January
Net cash flows
Capitalised borrowing costs
Amortisation of borrowing costs
Reclassification of unamortised borrowing costs to prepayments
As at 31 December
Cash and cash equivalents
As at 1 January
Cash flows
As at 31 December
Net (cash) / bank debt
2021
$’000
-
(13,538)
(13,538)
96,785
83,247
2020
$’000
45,379
(11,560)
33,819
107,452
141,271
2021
$’000
2020
$’000
45,379
89,149
(46,000)
(43,500)
-
249
372
-
(490)
220
-
45,379
(11,560)
(14,416)
(1,978)
2,856
(13,538)
(11,560)
(13,538)
33,819
88 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
Capitalised borrowing costs of $372,671 at 31 December 2021
and by a further $5.0 million from 1 January 2023. This facility expires on
have been reclassified as current prepayments ($248,507) and
1 July 2023.
non-current prepayments ($124,254) as there were nil drawings
on the loan facilities at this date. No change has been made to the
The interest rate for the drawn facility is the BKBM plus credit margin.
comparative amounts with $621,268 of borrowing costs included in
The NZME bilateral facilities contain undertakings which are
the secured bank loans balance at 31 December 2020. Capitalised
customary for facilities of this nature including, but not limited
borrowing costs are the costs incurred on acquiring the loan less
to, provision of information, negative pledge and restrictions on
accumulated amortisation to 31 December 2021 with the costs
priority indebtedness and disposals of assets. The assets of the
being amortised over the period of the loan facility.
Group are collateral for the interest bearing liability.
The Group is funded from a combination of its own cash reserves
In addition, the Group must comply with financial covenants (a net
and NZ$50.0 million bilateral bank loan facilities, which NZME
refinanced on 21 November 2018 and 22 July 2020, of which
$nil million (2020: $46.0 million) is drawn and $50.0 million
debt to EBITDA ratio and an EBITDA to net interest expense ratio) for
each 12 month period ending on 31 March, 30 June, 30 September
and 31 December. The Group has complied with these covenants
(2020: $74.0 million) is undrawn as at 31 December 2021. The
throughout the reporting period.
facility limit will step down by a further $10.0 million from 1 July 2022
Accounting policy
Borrowings are initially recognised at fair value less attributable
Costs incurred in connection with the arrangement of
transaction costs and subsequently measured at amortised cost.
borrowings are deferred and amortised over the period of the
Any difference between cost and redemption value is recognised
borrowing. These costs are netted off against the carrying value
in the income statement over the period of the borrowing on an
of borrowings in the balance sheet.
effective interest basis.
4.5.2
Lease liabilities
As at 1 January
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Interest on lease liabilities
New leases
Rent concessions
Changes in scope, lease terms and other adjustments
Total lease liabilities before cash payments
Interest paid on leases
Principal payments
Total cash payments
Total lease liabilities at 31 December
Current lease liabilities
Non-current lease liabilities
Total lease liabilities at 31 December
2021
$’000
10,931
96,521
107,452
5,097
1,538
(361)
(1,059)
112,667
(5,097)
(10,785)
(15,882)
96,785
11,340
85,445
96,785
2020
$’000
11,076
84,807
95,883
5,032
157
(1,801)
22,489
121,760
(4,833)
(9,475)
(14,308)
107,452
10,931
96,521
107,452
ANNUAL REPORT 2021 89
4.6 CASH FLOW INFORMATION
Reconciliation of cash
Cash at end of the year, as shown in the statement of cash flows, comprises:
Cash and cash equivalents
13,538
11,560
Reconciliation of net cash inflows from operating activities to profit for the year:
2021
$’000
2020
Restated A
$’000
Profit for the year
Depreciation and amortisation expense
Borrowing cost amortisation
Fair value movement on over hedged swaps
Change in current / deferred tax payable
Gain on sale of non-current assets
Group's share of retained losses in joint ventures and associates
Lease rent concessions and other lease adjustments
Interest accrual on leases
Impairment of property, plant and equipment
Impairment of software
Impairment of right-of-use assets
Share based payment expense
Changes in assets and liabilities net of effect of acquisitions:
Trade and other receivables
Inventories
Prepayments
Trade and other payables and employee entitlements
Net cash inflows from operating activities
A Refer to note 1.2.3 for details of the restatement.
34,434
26,319
249
(15)
510
(15,809)
539
(476)
-
1,351
-
1,126
1,559
(503)
(429)
182
2,805
51,842
14,482
28,548
220
-
2,056
(22)
417
(1,835)
199
-
3,149
321
1,095
7,718
464
503
(1,739)
55,576
Accounting policy
For the purposes of presentation on the statement of cash flows, cash and cash equivalents includes cash on hand and short term
deposits held at call with finance institutions, net of bank overdrafts.
90 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
4.7
FINANCIAL RISK MANAGEMENT
4.7.1 Capital and risk management
4.7.2 Market risk
The Group’s objectives when managing capital are to:
Cash flow and fair value interest rate risk
•
safeguard their ability to continue as a going concern,
so that they can continue to provide returns for shareholders
and benefits for other stakeholders; and
• maintain an optimal capital structure to reduce the cost
of capital.
Long term borrowings issued at variable rates expose the Group
to cash flow interest rate risk. Borrowings issued at fixed interest
rates expose the Group to fair value interest rate risk. The Group
has undertaken hedging transactions to mitigate this risk (note
3.9). Current interest bearing debt is fixed for 30 days on a
rolling basis.
In order to maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce debt.
Refer to note 4.5 for undrawn facilities to which the Group has
access to as well as the net debt calculation that is used by the
NZME’s interest rate risk is managed with interest rate derivatives.
Hedge accounting is applied to derivatives that are effective
in offsetting the changes in fair value or cash flows of the
hedged items. The hedge relationship is documented and the
effectiveness of such hedges is tested at regular intervals, at least
group to manage capital requirements.
on a semi-annual basis.
The Group’s activities expose it to a variety of financial risks:
The Company had no debt at 31 December 2021 and therefore
• market risk, including interest rate risk and price risk;
•
•
credit risk; and
liquidity risk.
no sensitivity analysis on changes in interest rates has been
performed. Based on the outstanding net floating debt at
31 December 2020 a change in interest rates of +/-1% per annum
with all other variables being constant would have impacted
post-tax profit and equity by $0.2 million lower / higher.
The Group’s overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise
Price risk
potential adverse effects on the financial performance of the
The Group is not exposed to significant price risk.
Group. The Group uses different methods to measure different
There is some risk associated with other financial assets
types of risk to which it is exposed. These methods include
however this is not deemed to be significant.
sensitivity analysis in the case of interest rate and ageing analysis
for credit risk.
4.7.3 Credit risk
Financial risk management is carried out by the Group Treasury
function. The Group Treasury function meet regularly with
the Group CFO to cover specific areas, such as interest rate
risk and credit risk, use of derivative financial instruments
and non-derivative financial instruments, and investment of
excess liquidity. Due to the Group’s limited operations in foreign
jurisdictions, the Group does not have a significant foreign
exchange exposure.
Credit risk is managed on a Group basis. Credit risk arises
from cash and cash equivalents and deposits with banks and
financial institutions, as well as credit exposures to wholesale
and retail customers, including outstanding receivables and
committed transactions. For banks and financial institutions, the
creditworthiness is assessed prior to entering into arrangements
and approved by the Board. For other customers, NZME’s credit
control department assesses the credit quality, taking into
account financial position, past experience and other factors.
The utilisation of credit limits is regularly monitored and the
Group does not normally obtain collateral from its customers.
ANNUAL REPORT 2021 91
The table below sets out additional information about the credit quality of trade receivables net of the provision for impairment.
2021
Expected loss rate
Trade receivables
Impaired receivables
2020
Expected loss rate
Trade receivables A
Impaired receivables
Current
$’000
Less than
one month
$’000
One to three
months
$’000
Three to
six months
$’000
Over six
months
$’000
Total
$’000
Past due
0.3%
29,464
(103)
29,361
1.4%
5,828
(81)
5,747
7.2%
1,516
(109)
1,407
25.9%
13.4%
580
(150)
430
1,425
(191)
1,234
38,813
(634)
38,179
Current
$’000
Less than
one month
$’000
One to three
months
$’000
Three to
six months
$’000
Over six
months
$’000
Total
$’000
Past due
0.7%
28,699
(205)
2.9%
7,085
(203)
28,494
6,882
7.7%
-145.2%
1,529
(117)
1,412
(32)
(46)
(78)
14.0%
1,042
(146)
896
38,323
(717)
37,606
A Trade receivables includes $82,326 of receivables in relation to GrabOne Limited that are classified as assets held for sale.
Trade receivables are generally settled within 30 to 45 days.
The maximum exposure to credit risk at 31 December 2021 is equal
The Directors consider the carrying amount of trade receivables
to the carrying amount of cash and cash equivalents and trade and
approximates to their net fair value. Trade receivables are
other receivables. The Group is not exposed to any concentrations
monitored on an individual basis and the company considers the
of credit risk within cash and cash equivalents or trade and other
probability of default upon initial recognition of the trade receivable
receivables.
and throughout the period and provides for trade receivables
considered to be impaired.
As of 31 December 2021, trade receivables of $3,071,000 (2020:
$2,230,000) were past due but not impaired.
Credit risk further arises in relation to financial guarantees given to
certain parties from time to time.
92 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
4.7.4 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
The tables below analyse the Group’s financial liabilities including
cash and marketable securities, the availability of funding through
interest to maturity into relevant maturity groupings based on the
an adequate amount of committed credit facilities and the
remaining period at the reporting date to the contractual maturity
ability to close out market positions. Due to the dynamic nature
date. The amounts disclosed in the tables are the contractual
of the underlying business, Group Treasury aims at maintaining
undiscounted cash flows.
flexibility in funding by keeping committed credit lines available.
Management monitors rolling forecasts of the Group’s liquidity
reserve on the basis of expected cash flows.
31 December 2021
Trade payables and accruals
Lease liabilities
Bank loans
Gross liability
(Less): interest
Less than
one year
$’000
Between one
and two years
$’000
Between two
and five years
$’000
Over
five years
$’000
Total
cash flows
$’000
31,210
15,954
-
-
-
-
31,210
15,006
40,845
46,733
118,538
-
-
-
-
47,164
15,006
40,845
46,733
149,748
-
-
-
-
-
Total financial liabilities
47,164
15,006
40,845
46,733
149,748
31 December 2020
Trade payables and accruals A
Lease liabilities
Bank loans
Gross liability
(Less): interest
31,688
16,241
3,001
50,930
(3,001)
-
15,829
3,001
18,830
(3,001)
Total financial liabilities
47,929
15,829
-
42,411
49,001
91,412
(3,001)
88,411
-
31,688
59,511
133,992
-
55,003
59,511
220,683
-
(9,003)
59,511
211,680
A Total includes $5,918,262 of GrabOne Limited trade payables and accruals which are included in liabilities directly associated with assets classified as held for sale.
4.8
FAIR VALUE MEASUREMENT
4.8.1 Fair value hierarchy
The Group measures and recognises the following assets and
NZ IFRS 13 requires disclosure of fair value measurements by level
liabilities at fair value on a recurring basis:
of the following fair value measurement hierarchy:
• Financial assets at fair value through profit or loss (FVTPL);
• Level 1: quoted prices (unadjusted) in active markets for
• Land and buildings (excluding leasehold improvements).
identical assets or liabilities;
• Level 2: inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly
or indirectly; and
• Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
ANNUAL REPORT 2021 93
4.8.2 Recognised fair value measurements
Recurring fair value measurements
Financial assets (Level 2)
Derivative financial instruments: current assets / (current liabilities)
Derivative financial instruments: non-current assets / (non-current liabilities)
Financial assets (Level 3)
There are no financial assets carried at fair value. Other financial assets of $815,000
(2020: $815,000) are measured at amortised cost and therefore have been
excluded from this table.
Total financial assets
Non-financial assets (Level 3)
Freehold land
Buildings (excluding leasehold improvements)
Total non-financial assets
Note
2021
$’000
2020
$’000
3.9
3.9
3.2
3.2
25
228
(16)
(310)
253
(326)
265
53
318
265
60
325
All fair value measurements referred to above are in either level 2
4.8.4 Valuation techniques used to derive
or level 3 of the fair value hierarchy and there were no transfers
at level 2 and 3 fair values
between levels. The Group’s policy is to recognise transfers between
fair value hierarchy levels as at the end of the reporting period.
Recurring fair value measurements
4.8.3 Disclosed fair values
The fair value of financial instruments that are not traded in an
active market is determined using valuation techniques. These
The Group also has a number of assets and liabilities which are not
valuation techniques maximise the use of observable market
measured at fair value but for which fair values are disclosed in
data where it is available and rely as little as possible on entity
these notes.
specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
The carrying amounts of current trade receivables and payables
are assumed to approximate their fair values due to their
If one or more of the significant inputs is not based on observable
short-term nature.
market data, the instrument is included in level 3.
The fair value of the non-current trade receivables are assumed
The Group obtains independent valuations for its freehold land and
to approximate their carrying values as the balances comprise
buildings less subsequent depreciation for buildings, to ensure that
of prepayments, in relation to cash already received by the
the carrying value of the assets is materially consistent with their fair
Group, and lease receivables where the carrying value has been
value. The land and buildings owned by the Group are transmission
calculated based on net present values of future cash inflows.
sites and associated buildings, and as such are specialised and have
The fair value of interest bearing liabilities disclosed in note 4.5 is
estimated by discounting the future contractual cash flows at the
current market interest rates that are available to the Group for
similar financial instruments. For the year ended 31 December 2021,
the borrowing rates were determined to be between 3.0% and
3.6% (2020: between 2.5% and 4.0%), depending on the type of
borrowing. The fair value of borrowings approximates the carrying
amount, as the impact of discounting is not significant (level 2).
limited saleability. The best evidence of fair value is current prices in
an active market for similar properties; however, these are not readily
available for such specialised sites in such locations. The Directors
believe that the current carrying value of the assets equates to their
fair value given the nature and location of the assets. All resulting fair
value estimates for properties are included as level 3.
94 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
5.0 TAXATION
5.1
INCOME TAX EXPENSE
Reported income tax expense comprises:
Current tax expense
Deferred tax benefit
Over provision in prior years
Income tax expense
Income tax is attributable to:
Taxable profit from continuing operations
Total income tax expense
Income tax expense differs from the amount prima facie payable as follows:
Profit before income tax expense
Prima facie income tax at 28%
Non-assessable asset sales and exempt distribution receipts
Non-assessable receipt
Non-assessable loss from equity accounting of investments in joint ventures and associates
Non-deductible expenses
Differences in international tax rates
Re-instatement of tax depreciation on buildings
Over provision in prior years
Income tax expense
A Refer to note 1.2.3 for details of the restatement.
2021
$’000
9,416
(1,573)
(25)
7,818
7,818
7,818
42,252
11,831
(4,446)
-
126
332
-
-
(25)
7,818
2020
Restated A
$’000
5,789
(326)
(734)
4,729
4,729
4,729
19,211
5,379
(2)
(218)
117
220
(15)
(18)
(734)
4,729
ANNUAL REPORT 2021 95
5.2 DEFERRED TAX
Deferred tax assets and liabilities are attributable to:
Opening
Balance
$’000
Recognised
in income
$’000
Recognised
in equity
$’000
Other
movements
$’000
Closing
Balance
$’000
2020
Employee entitlements
1,485
(742)
Provision for impairment
Accruals / restructuring
Intangible assets
Property, plant and equipment A
Leases
Share schemes
Other
2021
Employee entitlements
Provision for impairment
Accruals / restructuring
Intangible assets
Property, plant and equipment
Leases
Share schemes
177
119
(418)
173
(331)
526
(70)
1,661
729
201
168
(381)
348
427
421
24
49
37
190
758
10
-
326
293
(23)
184
37
156
490
436
1,913
1,573
-
-
-
-
-
-
(115)
-
(115)
-
-
-
-
-
-
-
-
(14)
-
-
-
(15)
-
-
70
41
(2)
-
1
-
-
-
-
729
201
168
(381)
348
427
421
-
1,913
1,020
178
353
(344)
504
917
857
(1)
3,485
A The opening deferred tax balance and the movement during the year have been restated. Refer to note 1.2.3 for details.
There are unrecognised tax losses of $1,852,045 (A$1,744,812) (2020: $1,859,348 (A$1,744,812)) in an Australian subsidiary of the
Company which have not been recognised as there is uncertainty as to their future recoverability. The deferred tax asset on these
losses was not offset against the deferred tax liabilities of the rest of the Group because they are levied by a different tax authority.
The 2020 other movements in employee entitlements and property, plant and equipment are the transfer of the deferred tax assets of
GrabOne Limited to assets held for sale (see note 6.3.1).
96 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
Accounting policies
The tax expense for the period comprises current and
neither accounting nor taxable profit or loss. Deferred income
deferred tax. Tax is recognised in the income statement,
tax is determined using tax rates (and laws) that have been
except to the extent that it relates to items recognised in other
enacted or substantially enacted by the balance sheet date and
comprehensive income or directly in equity. In this case the tax
are expected to apply when the related deferred income tax
is also recognised in other comprehensive income or directly in
asset is realised or the deferred income tax liability is settled.
equity, respectively.
The current income tax charge is calculated on the basis of the
that it is probable that future taxable profit will be available
tax laws enacted or substantively enacted at the balance sheet
against which the temporary differences can be utilised.
Deferred income tax assets are recognised only to the extent
date in the countries where the company and its subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provision where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill;
deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries and associates, except
for deferred income tax liability where the timing of the reversal
of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
business combination that at the time of the transaction affects
net basis.
ANNUAL REPORT 2021 97
6.0 GROUP STRUCTURE AND INVESTMENTS IN OTHER ENTITIES
6.1
CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the subsidiaries listed below. Unless otherwise
stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership
interest held equals the voting rights held by the Group. All entities are incorporated in, and operate in, New Zealand unless otherwise
stated. There were no changes in control during the years ended 31 December 2020 and 2021.
Name of entity
NZME Advisory Limited (previously GrabOne Limited) A
NZME Australia Pty Limited B
NZME Educational Media Limited
NZME Holdings Limited
NZME Investments Limited
NZME Print Limited
NZME Publishing Limited
NZME Radio Investments Limited
NZME Radio Limited C
NZME Specialist Limited
The Hive Online Limited
New Zealand Radio Network Limited
The Radio Bureau Limited
OneRoof Limited
2021
Ownership
interest
2020
Ownership
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
A GrabOne Limited’s name was changed to NZME Advisory Limited on 29 October 2021 following the sale of GrabOne Limited’s assets and certain liabilities (see note 6.3.1).
B Incorporated in, and operates in, Australia.
C One “Kiwi Share” held by the Minister of Finance. The rights and obligations are set out in the NZME Radio constitution.
98 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
Accounting policies
The Group controls an entity when the Group is exposed to,
Intercompany transactions, balances and unrealised gains
or has rights to, variable returns from its involvement with the
on transactions between Group companies are eliminated.
entity and has the ability to affect those returns through its
Accounting policies of subsidiaries have been changed where
power to direct the activities of the entity. Subsidiaries are fully
necessary to ensure consistency with the policies adopted by
consolidated from the date on which control is transferred to
the Group. Non-controlling interests in the results and equity of
the Group. They are de-consolidated from the date that control
subsidiaries are shown separately in the consolidated income
ceases. The acquisition method of accounting is used to account
for business combinations by the Group.
statement, statement of comprehensives income, statement of
changes in equity and balance sheet respectively.
6.2
INTERESTS IN OTHER ENTITIES
6.2.1 Associates, joint ventures and joint operations
The Group has the following associates, joint ventures and joint operations:
2021
Ownership
Interest
2020
Ownership
Interest
40%
40%
38.82%
38.82%
38%
21%
49%
38%
21%
49%
40.41%
40.41%
50%
50%
Name of entity
Eveve New Zealand Limited A
New Zealand Press Association Limited A
Restaurant Hub Limited A
The Beacon Printing & Publishing Company Limited A
The Gisborne Herald Company Limited (held through Essex Castle Limited as a trust company
for NZME Publishing Limited) A
The Wairoa Star Limited A
The Radio Bureau B
The Newspaper Publishers Association of New Zealand Incorporated C
Online Media Association C
New Zealand Media Council C
Radio Broadcasters Association Incorporated C
A These entities are classified as joint ventures or associates and are accounted for using the equity method in the consolidated financial statements.
B The Radio Bureau is classified as a joint operation and the Group has included its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any
jointly held or incurred assets, liabilities, revenues and expenses in these consolidated financial statements.
C These are bodies with which entities in the Group have memberships, but no ownership interest.
ANNUAL REPORT 2021 99
Accounting policies
Associates
Equity method of accounting
Associates are all entities over which the Group has significant
Under the equity method of accounting, the investments
influence but not control or joint control. Interests in
are initially recognised at cost and adjusted thereafter to
associates are accounted for in the consolidated financial
recognise the Group’s share of the post-acquisition profits or
statements using the equity method (see below), after initially
losses of the investee in profit or loss, and the Group’s share
being recognised at cost. The Group’s investment in associates
of movements in other comprehensive income of the investee
includes goodwill (net of any accumulated impairment loss)
in other comprehensive income. Dividends received or
identified on acquisition.
Joint arrangements
receivable from associates and joint ventures are recognised
as a reduction in the carrying amount of the investment.
Under IFRS 11: Joint Arrangements investments in joint
arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights
and obligations of each investor, rather than the legal structure
of the joint arrangement.
When the Group’s share of losses in an equity-accounted
investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the
Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the other entity.
The Group recognises its direct right to the assets, liabilities,
revenues and expenses of joint operations and its share of
any jointly held or incurred assets, liabilities, revenues and
expenses. These have been incorporated in the financial
statements under the appropriate headings.
Unrealised gains on transactions between the Group and its
associates and joint ventures are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are
also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies
of equity accounted investees have been changed where
The Group’s interests in joint ventures are accounted for using
necessary to ensure consistency with the policies adopted
the equity method (see below) after initially being recognised
by the Group.
at cost in the consolidated balance sheet.
6.2.2 Equity accounted investments
Opening balance 1 January
Share of operating losses
Dividends received
Asset revaluation (Gisborne Herald)
Total equity accounted investments
The carrying amount of equity-accounted investments
is tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable.
2021
$’000
4,162
(450)
(89)
-
3,623
2020
$’000
3,308
(417)
-
1,271
4,162
The equity accounted investments are not considered to be material to the Group’s operations or results and therefore no disclosures
of the summarised financial information for these investments have been made.
The 2020 revaluation of land owned by the Gisborne Herald was processed through the equity investments revaluation reserve
(see note 4.2).
100 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
6.3 ASSETS HELD FOR SALE
On 29 October 2021 the Group sold the assets and certain liabilities of GrabOne Limited and renamed the company as
NZME Advisory Limited, (see note 6.3.1 for further details), and the Mt Victoria transmission site was sold on 30 April 2021.
At 31 December 2020 the Group had net liabilities held for sale of $5.2 million in respect of these assets.
Accounting policies
Non-current assets (or disposal groups) are classified as held
A discontinued operation is a component of the entity that
for sale if their carrying amount will be recovered principally
has been disposed of or is classified as held for sale and that
through a sale transaction rather than through continuing
represents a separate major line of business or geographical
use. They are measured at the lower of their carrying amount,
area of operations, is part of a single coordinated plan to
and their fair value less costs to sell, except for assets such
dispose of such a line of business or area of operations, or is
as deferred tax assets, assets arising from employee benefits,
a subsidiary acquired exclusively with a view to resale. The
financial assets and investment property that are carried at fair
results of discontinued operations are presented separately on
value and contractual rights under insurance contracts, which
the face of the income statement.
are specifically exempt from this requirement.
6.3.1 Sale of assets previously classed as held for sale
The sale of assets and certain liabilities by GrabOne Limited to Global Market Place was for $17.5 million resulting in a gain on sale
of $15.4 million. GrabOne Limited was not considered to be a significant component of the Group, or separate major line of business,
and is therefore not a discontinued operation. The Group is responsible for settling the outstanding merchant liabilities as at
29 October 2021 which were $3.9 million and at balance date these outstanding merchant liabilities were $1.1 million and are
included in trade and other payables on the balance sheet.
For information purposes additional disclosures in respect of GrabOne Limited’s performance are shown in note 6.3.2 and 6.3.3.
The Mt Victoria transmission site was sold on 30 April 2021 with a gain on sale of $0.5 million.
6.3.2
Income statement for GrabOne Limited
Revenue
Other incomeB
2021A
$’000
2020
$’000
7,030
8,952
15,367
-
Expenses from operations before finance costs, depreciation and amortisation
(3,396)
(4,574)
Depreciation and amortisation
Profit before income tax expense
Income tax expense
Profit after tax
A For the period ended 29 October 2021.
B Gain on sale of GrabOne Limited's assets and certain liabilities (see note 6.3.1)
-
19,001
(682)
3,696
(1,173)
(1,039)
17,828
2,657
ANNUAL REPORT 2021 101
2021A
$’000
2020
$’000
(15)
4,187
17,828
-
1,173
(15,367)
42
147
(3,838)
(15)
2,657
682
(140)
-
75
(112)
1,025
4,187
6.3.3 Cash flows from GrabOne Limited
Net cash (outflows) / inflows from operating activities
Reconciliation of net cash inflows / (outflows) from operating activities to profit
for the year:
Profit for the year
Depreciation and amortisation expense
Change in current / deferred tax payable
Gain on sale of GrabOne Limited's assets and certain liabilities
Changes in assets and liabilities net of effect of acquisitions:
Trade and other receivables
Prepayments
Trade and other payables and employee entitlements
Net cash (outflows) / inflows from operating activities
A For the period ended 29 October 2021.
102 NEW ZEALAND MEDIA AND ENTERTAINMENT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTINUED
7.0 RELATED PARTIES
7.1
KEY MANAGEMENT COMPENSATION
Note
2021
$’000
2020
$’000
Total remuneration for Directors and other key management personnel:
Short term benefits
Termination benefits
Dividends (relating to shares held in the Company during the year)
Share-based payments
4.2
6,598
5,583
306
56
1,559
8,519
-
-
1,095
6,678
The table above includes remuneration of the Board of Directors and the Executive Team, including amounts paid to members of the
Executive Team who left during the year. Where a staff member was acting in a position on the Executive Team, that portion of their
remuneration has been included in the table above.
7.2 OTHER TRANSACTIONS WITH RELATED PARTIES
The Beacon Printing & Publishing Company Limited purchased advertising from the Group during the year ended 31 December 2021
totalling $666 (2020: $559) and reimbursed $1,493 for paper used in 2021 (2020: $62,077).
The Group has commitments to provide future services (such as house advertising, occupancy space at NZME offices, business as
usual finance and human resources support) to certain joint ventures and associates. During the year such services were provided to
Eveve New Zealand Limited, valued at $27,992 (2020: $27,992) and Restaurant Hub Limited, valued at $12,008 (2020: $12,008). The
outstanding balances for future services are included in the table below, along with other receivables and payables.
During the year the Group received advertising revenue from The Wairoa Star Limited totalling $9,322 (2020: $8,288). The Wairoa Star
Limited also purchased other services totalling $1,176 (2020: $1,177) from the Group. The Group purchased services from The Wairoa Star
Limited totalling $1,386 (2020: $1,583) during the year.
The Group’s transactions with the New Zealand Press Association Limited during the year were $nil (2020: $nil).
Balances with related party
Restaurant Hub Limited
Total related party receivables and payables
2021
Receivables
$’000
2020
Receivables
$’000
2021
Payables
$’000
2020
Payables
$’000
9
9
37
37
24
24
64
64
ANNUAL REPORT 2021 103
8.0 COMMITMENTS AND
CONTINGENT LIABILITIES
In 2021 the Group entered into an agreement to lease office
space in Christchurch. The agreement is for an initial period of
10 years with two 5 year renewal periods. The lease commences in
September 2022 and includes fixed rent increases of 1.5% on the
9.0 SUBSEQUENT EVENTS
On 17 January 2022 the Group acquired BusinessDesk from
Content Limited for the price of $3.4 million. In addition to the
purchase price a maximum earn-out of $1.5 million is payable on
31 December 2023 with the exact amount payable on that date
to be determined in accordance with the terms of the sale and
anniversary of the commencement date. A market rent review will
purchase agreement.
take place at each renewal date. The total amount payable over
the initial 10 years is $3.5 million.
In relation to net assets of the Group at 31 December 2021 the
acquisition of BusinessDesk is not considered to be a material
The Group is subject to litigation incidental to the business, none
purchase for the Group.
of which is expected to be material. No provision has been made
in the consolidated financial statements in relation to its current
litigation and the directors believe that such litigation will not have
a significant effect on the Group's financial position, results of
operations or cash flows.
The Group also acquired Radio Wanaka on 1 February 2022 and the
financial impact from acquiring this radio station is not considered
material to the Group.
The Directors are not aware of any other material events
subsequent to the balance sheet date.
104 NEW ZEALAND MEDIA AND ENTERTAINMENT
Independent auditor’s report
To the shareholders of NZME Limited
Our opinion
In our opinion, the accompanying consolidated financial statements of NZME Limited (the Company),
including its subsidiaries (the Group), present fairly, in all material respects, the financial position of
the Group as at 31 December 2021, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards
(NZ IFRS) and International Financial Reporting Standards (IFRS).
What we have audited
The Group's consolidated financial statements comprise:
● the consolidated balance sheet as at 31 December 2021;
● the consolidated income statement for the year then ended;
● the consolidated statement of comprehensive income for the year then ended;
● the consolidated statement of changes in equity for the year then ended;
● the consolidated statement of cash flows for the year then ended; and
● the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of taxation services, non-audit
assurance in respect of the compliance with the Rules and Circulation Audit Guidelines established by
the Audit Bureau of Circulations Incorporated, agreed upon procedures relating to the benchmarking
of market revenue data, and agreed upon procedures relating to the Group’s return to the
Broadcasting Standards Authority. In addition, certain partners and employees of our firm may
subscribe to NZME services on normal terms within the ordinary course of the trading activities of the
Group. These relationships and provision of other services have not impaired our independence as
auditor of the Group.
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
ANNUAL REPORT 2021 105
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Description of the key audit matter
How our audit addressed the key audit matter
Intangible assets impairment assessment
As at 31 December 2021 the total carrying
amount of the Group’s indefinite life intangible
assets, comprising masthead brands and other
brands (the brands), amounts to $101.8 million.
Annual impairment testing is required under NZ
IFRS.
The NZME business has been identified as a
single cash generating unit (CGU) and the
brands have therefore been tested for
impairment at this level. The Group prepared a
discounted cash flow model to assess the
recoverable amount of the CGU on a Value-In-
Use (VIU) basis.
Impairment testing of the CGU is considered a
key audit matter due to the significance of the
carrying value of the brands, the inherent
judgement involved in performing an impairment
assessment and the inherent uncertainty in
relation to the continuing impact of the forecast
print industry decline.
The recoverable amount of the CGU was
determined to be greater than the carrying value
of the CGU and that no reasonable adverse
change in key assumptions will lead to further
impairment.
It was determined that the increase in the
recoverable amount (and therefore headroom
over carrying value) since the previous
impairment assessment is not as a result of a
change in the estimates used to calculate the
recoverable amount at that time. As a result an
impairment reversal has not been recognised.
Key judgements and estimates included in the
impairment assessment are:
● the assessment that the NZME business
continues to constitute one CGU;
● expected future trading results and cash
flows of the CGU which include estimates
We performed the following audit procedures in
relation to the impairment assessment and key
management judgements:
● considered the appropriateness of the one
CGU assessment;
● gained an understanding of the forecast
outlook for the industry and the strategic
direction of the business;
● held discussions with management and
understood the processes undertaken and
basis for determining the key assumptions
in preparing the impairment assessment;
● considered whether the
methodologies applied were appropriate;
● compared the forecast cash flows used for
2022 to the Board approved budget; and
● performed lookback procedures, comparing
actual results achieved against forecasts
and industry performance and considered
the impact on our assessment of forecast
cash flows.
In relation to the recoverable amount
determined, we:
● tested the mathematical accuracy of the VIU
model;
● assessed and challenged the
reasonableness of key assumptions,
including revenue and operating costs
growth rates, with reference to historical
performance and external market evidence;
● reperformed management’s sensitivity
assessment;
● engaged our auditor’s valuation expert to
assist us to assess and challenge the
reasonableness of the discount rate and
terminal growth rate; and
PwC
2
106 NEW ZEALAND MEDIA AND ENTERTAINMENT
Description of the key audit matter
and assumptions around print, radio and
digital revenue forecasts, the continued
sustainability of operating expense
restructuring measures undertaken in the
prior year and the reasonableness of a
maintainable gross margin;
● the discount rate of 9%; and
● the application of a negative long-term
growth rate of 1.2%.
Refer to note 3.1.1 of the consolidated financial
statements for further information.
Recognition of revenue
The recognition of revenue is a key area of
focus for our audit.
As set out in notes 2.1 and 2.4.2 to the
consolidated financial statements, the Group
has significant revenue from advertising,
circulation and subscriptions. Other revenue
earned consists of external printing, digital
classifieds, shared service centre functions and
events. Together, these form revenue from
integrated media and entertainment activities
totalling $348.6 million for the year.
Advertising arrangements are often customised
and consist of multiple performance obligations
and a series of distinct goods and services. It
meets the definition for revenue recognition over
time in accordance with IFRS 15.
Circulation and subscription revenue is
recognised at a point in time as single
performance obligations.
Other revenue is recognised over time in
accordance with IFRS 15.
Management judgment in the form of estimates
are applied in the following areas:
● measuring progress towards complete
satisfaction of a performance obligation;
● allocating the transaction price to
performance obligations; and
● determining the transaction price in respect
of contracts with non-standard
consideration.
How our audit addressed the key audit matter
● assessed and challenged the
reasonableness of not recognising an
impairment reversal.
We also considered the appropriateness of
disclosures made.
As a result of our procedures, we have no
matters to report.
Our audit approach for revenue is largely
substantive. We performed the following
procedures in responding to the management
judgments involved in determining whether the
revenue has been recognised in accordance
with the relevant accounting standards:
● updated our understanding of the systems,
processes and controls in place over the
recognition of revenue;
● performed disaggregated risk assessment
analytics over all revenue streams;
● examined invoices and contracts with
customers and ensured revenue recognition
was appropriate based on the terms of the
arrangements;
● validated that the payment and pricing
arrangements supporting the recognition of
revenue;
● tested the cut-off around the year end to
check if revenue was recognised in the
correct accounting period;
● tested the completeness of revenue by
agreeing cash receipts to invoices raised.
Additionally, we tested the completeness of
advertising revenue by agreeing published
and broadcasted advertisements to booking
schedules and invoices;
● tested the classification of revenue into the
disaggregation analysis presented in notes
2.1 and 2.4.2;
PwC
3
ANNUAL REPORT 2021 107
Description of the key audit matter
How our audit addressed the key audit matter
The recognition of revenue is a judgemental
area requiring significant audit focus and
attention. As a result, we consider it a key audit
matter.
● performed analytical procedures over
revenue recognised through the Group’s
joint operation;
● recalculated commission earned from
merchant advertising; and
● tested accounts receivables by reconciling
cash payments received after year end
against these receivables.
As a result of our procedures, we have no
matters to report.
Our audit approach
Overview
Overall Group materiality: $1,742,500, which represents
approximately 0.5% of total revenues.
We chose total revenues as the benchmark because, in our view, it
is a key metric used in assessing the performance of the Group and
is a generally accepted benchmark. In our judgement, revenue
provides a more stable measure for establishing our materiality
benchmark and best reflects performance of the Group. We chose
0.5% based on our professional judgement, noting that it is also
within the range of commonly accepted thresholds for entities where
revenue is considered the appropriate benchmark.
We performed a full scope audit over the consolidated information of
the Group.
As reported above, we have two key audit matters, being:
● Intangible assets impairment assessment
● Recognition of revenue
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where
management made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of internal controls, including among
other matters, consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
PwC
4
108 NEW ZEALAND MEDIA AND ENTERTAINMENT
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the consolidated financial statements as a whole.
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the consolidated financial statements
and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
PwC
5
ANNUAL REPORT 2021 109
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Lisa Crooke.
For and on behalf of:
Chartered Accountants
22 February 2022
Auckland
PwC
6
110 NEW ZEALAND MEDIA AND ENTERTAINMENT
Registred Office Contact Details
Postal Address: Private Bag 92198
Victoria St West
Auckland 1142
New Zealand
+64 9 379 5050
www.nzme.co.nz
Investor_Relations@nzme.co.nz
Auditors
PricewaterhouseCoopers
Email:
Phone:
Website:
NZME Limited
2 Graham St
Auckland 1010
New Zealand
Y Registered Address
R
O
T
C
E
R
I
D
Principal Solicitors
Bell Gully
Principal Bankers
Westpac
Share Registry
Link Market Services
Website:
Phone:
Email:
Share Registry Contact Details
Postal Address: PO Box 91976
Auckland 1142
Street Address: Level 30 PwC Tower
15 Customs Street West
Auckland
+64 9 375 5998
www.linkmarketservices.co.nz
enquiries@linkmarketservices.co.nz
ANNUAL REPORT 2021 111
TUKUTUKU KŌREROEducation Gazette NEW ZEALAND