MYOB New Zealand Economic & Business Issues Monitor September Highlights

MYOB New Zealand Economic & Business Issues Monitor - Highlights Confidence in near term New Zealand economic recovery still compressed Most New Zealand business owners are still pessimistic about economic recovery, and only one quarter (25%) now expect economic recovery in New Zealand within the next 12 months. This is only half of the number who expected New Zealand s economic recovery to be within 12 months when surveyed in April 2010 (49%). While only 17% expected the economic recovery to take more than 18 months in April 2010, 41% now do so 18 months later. (In Australia, confidence in a recovery is even lower, with only 21% now expecting that recovery to arrive within 12 months.) Confidence of most business owners is half what it was 18 months ago Confidence of economic recovery has shrunk to around half the level measured in April 2010, and this is true of business owners in most industry categories. As an example, the confidence in an economic recovery over the next 12 months held by the previously most confident business owners (in the Manufacturing and Wholesale sector) halved from 59% in November 2010, to 28% in April 2011, and has dropped still further (to 25%) in. While the level of confidence about medium term economic recovery of business owners in the Agriculture, Forestry and Fishing sector remains very low (20%), it is 5% higher than it was in April 2011. Business owners in Wellington (30%) are slightly more confident than business owners in other locations about an economic recovery in the next 12 months. Massive loss of confidence amongst sole traders and medium business owners Only one quarter (24%) of both sole traders and medium (20-199 employees) business owners now expect economic recovery in the next 12 months, compared with the one half (50% and 49% respectively) who predicted such a recovery in the April 2010 survey. These expectations contrast sharply with the confidence in an economic recovery in the next 12 months held by start-up (<2 years) business owners (36%), and, understandably, by business owners whose revenue has increased over the last year (31%). Subdued confidence is despite a slight increase in revenue gains In, 30% of business owners surveyed reported business revenue gains vs. a year ago, compared with the 28% in April 2011 and 25% in November 2010 reporting the same. And fewer business owners reported business revenue losses vs. a year ago in (31%) and April 2011 (32%) than reported business revenue losses in November 2010 (38%). Despite this, only 25% of business owners surveyed in expect the economy to improve from its present position within the next 12 months (see above), compared with 37% of business owners surveyed in November 2010 who expected an economic recovery in this timeframe. As expected, revenue losses vs. a year ago are most evident in Christchurch (41%), and are least evident in the Rest of New Zealand (28%). Page 1 of 29

These findings compare with the two fifths (38%) of all business owners surveyed in Australia in who report business revenue losses vs. a year ago, and only one fifth (19%) who report business revenue gains vs. a year ago. Reports of work or sales in the pipeline now as positive as in mid-2010 up 2% since April 2011 One third (33%) of business owners now report more than usual in pipeline, while one fifth (21%) report less. These findings closely parallel the results of the August 2010 survey wherein 34% reported more and 20% reported less in the pipeline than usual. It is pleasing to see that business owners in Christchurch (35%) are more likely than business owners in other locations to report more than usual sales or work in the pipeline. Also, these reports in New Zealand better than those from the concurrent MYOB Business Monitor survey in Australia, where 29% of business owners reported more sales or work than usual in the pipeline, and 30% of them reported less. Businesses with more employees have more work or sales in the pipeline. Close to half (44%) of small (5-19 employees) business owners say that they have more than normal work or sales in the pipeline, which contrasts with 30% of sole traders who report the same. Owners of establishing (2-5 years) businesses or with a business website (43% vs. 28% of those who do not have a business website) are more likely to have more in pipeline right now. Big turnarounds in pipeline work for Transport, Warehousing, Finance and Insurance businesses Although pipeline reports in the Construction and Trades sector are still more negative (37%) than they are positive (29%), more than two fifths (43%) of business owners in the Transport and Warehousing sector now report more than usual in the pipeline, compared with only one quarter (25%) who did so in April 2011. Likewise, 43% of Finance and Insurance business owners now report more work in the pipeline than usual, compared with 29% of them who reported the same just months ago in April 2011. Optimism about future business revenue increases and returns to 2010 levels In, two fifths (41%) of business owners surveyed expect their business revenue to have increased in a year s time, which is well ahead of the 33% who report more work or sales than usual in the pipeline, and has returned to the levels of optimism expressed in the November 2010 (42%) and August 2010 (43%) MYOB Business Monitor surveys. Business owners in New Zealand are now more optimistic than business owners in Australia, where only 32% of business owners surveyed in expect their revenue to have increased in a year s time. Correspondingly, expectations of revenue losses in a year s time are now less in New Zealand (13%) than they are in Australia (20%). Page 2 of 29

Those with more employees, more revenue in last year, a business website, and who are start-ups by far most positive about future revenue More than three fifths (63%) of medium business owners and close to one half (46%) of small business owners expect their business revenue to have increased in a year s time, compared with 39% of sole traders who expect the same. More than three fifths (63%) of those who have enjoyed revenue increases in the last year expect increases over the next year, while more than half (56%) of those who have their own business website expect revenue gains, which compares with less than a third (31%) of those business owners who do not have a dedicated business website expecting their revenue to have increased in a year s time. And half (50%) of start-up (<2 years) business owners expect revenue gains over the year, compared to just over one third (36%) of maturing (5-10 years) business owners who expect their business revenue to have increased in a year s time. Business owners in Wellington most optimistic, in Christchurch least pessimistic Business owners in Wellington (49%) are the most likely to have optimistic expectations of their revenue in a year s time, just ahead of business owners in Christchurch who are almost as optimistic (46%) about increased revenue, and who are by far the least pessimistic of all business owners about decreased revenue in a year s time (6%). Page 3 of 29

Nearly half of businesses buy online, one quarter sell online, one third have own business website Nearly half (44%, +6% on April 2011) of New Zealand business owners surveyed in now buy products and/or services online (e.g. on ebay, Trade Me, and other such sites), whereas one quarter (24%, +5% on April 2011) now sell products and/or services online (on the same or similar sites). One third (32%) of all businesses now have their own business website and domain name, which is up 2% since November 2010. Business owners in medium businesses (75%), in small businesses (57%), in Manufacturing and Wholesale businesses (55%), and in Retail and Hospitality businesses (47%) remain the most likely to have their own business website. And only one in 10 (10%) of business owners in Agriculture, Forestry and Fishing report having their own business website (although this is +4% on April 2011). The Internet is now the major channel for buying business products and services and for marketing to customers and prospects More than two fifths (44%) of business owners surveyed in New Zealand now buy products and services online on sites such as ebay and Trade Me, and two fifths (40%) of business owners in New Zealand now pay bills on suppliers websites online (both substantial increases since April 2011). The Internet is also the major channel for getting business information in telecoms directories Although Yellow Pages usage for business is increasing online and offline, more now use Yellow Pages for business purposes online (39% vs. 32% in April 2011) than use Yellow Pages for business purposes offline (32% vs. 23% in April 2011). Similarly, although White Pages usage for business is increasing online and offline, more now use White Pages for business purposes online (39% vs. 31% in April 2011) than use White Pages for business purposes offline (29% vs. 23% in April 2011). More businesses now promote their business online than promote it offline One third (33%) of business owners are using Internet Search Engines (like Google or Bing) to promote their business, compared with 25% who use Newspaper Advertising to promote their business, and with only one in 10 (10%) who still advertise on Radio to promote their business. Moreover, one quarter (25%) of business owners now use Email marketing online, compared with 18% who use Direct Mail marketing offline. Page 4 of 29

Table of Contents MYOB New Zealand Economic & Business Issues Monitor - Highlights... 1 About the study... 6 Industry, Location and Business Size Sample Segments... 7 Business Issues... 8 Expectations of future economic improvement in New Zealand... 8 Business revenue compared with 12 months ago... 11 Work or sales in the pipeline for next three months... 16 Expectations of business revenue in 12 months time... 20 Profiles of businesses with their own business website... 24 Intentions of those with no business website... 26 Business activities conducted online compared with business activities conducted offline... 27 Page 5 of 29

About the study The MYOB Business Monitor is designed to research key areas of business performance, including profitability, cash flow and pipeline work, as well as business confidence and satisfaction in the support of Government. This report presents the summary findings for key indicators from the MYOB Business Monitor comprising a national sample of 1,004 business proprietors and directors, conducted in August and. The businesses participating in the online survey are defined as both non-employing and employing businesses with zero employees ( sole traders ), 1-4 employees ( micro businesses ), 5-19 employees ( small businesses ) and 20-199 employees ( medium businesses ). Industries have been grouped (see next page) for the purposes of providing meaningful results based upon sample segments of reasonable size, and with a lower margin of error. (The business weightings in this report are in line with Statistics New Zealand: New Zealand Business Demography Statistics: At February 2010: ISSN 1174-1988.) This research report was prepared by The Financial Research Company and fieldwork was completed by Colmar Brunton (a Millward Brown Company) for Julian Smith, General Manager New Zealand, MYOB NZ Limited julian.smith@myob.com www.myob.co.nz The findings in this study are reported here under the following main headings: Economic & Business Issues 2011: Expectations of future economic improvement in New Zealand Business revenue compared with 12 months ago Projected work or sales in pipeline for next 3 months compared with usual Expectations of business revenue in 12 months time Profiles of businesses with their own business website Intentions of those with no business website Business activities conducted online compared with business activities conducted offline How their (external) Accountants can add better value to their business Page 6 of 29

Industry, Location and Business Size Sample Segments The sample segments in Wave 2, (September) 2011 very closely parallel those in Wave 1, (April) 2011. Their results have been reweighted to reflect their actual proportions of all GST registered businesses in New Zealand. Industry Reweighting W1/11 W2/11 Agriculture, Manufacturing and Wholesale 23% 169 182 Construction, Trades, Transport and Warehousing 14% 185 173 Finance and Insurance 6% 34* 48* Professional and Business Services 34% 297* 272 Retail and Hospitality 9% 123 113 Other Industries* (included in total results) 14% 222** 216** Total 100% 1,000 1,004 (* Caveat: There is high margin of error of +/-12% @ 20% on this small base in W2 (+/-13% in W1). Also note that the Finance & Insurance sectors and the Professional & Business Services sectors usually have very similar responses to questions.) (**Other Industries, combined to minimise their margin of error, include these sectors: Communication Services; Cultural & Recreational Services; Education; Electricity, Gas & Water Supply Services; Health & Community Services; Mining; and Personal & Other Services.) Owing to the earthquake, Canterbury and Christchurch were excluded from the first wave (W1) of the MYOB Business Monitor Research in 2011, but business owners from those regions have been included in this report on the second wave (W2) of the Business Monitor Research in 2011, and the results have been reweighted to match population by location. Location Reweighting W1/11 W2/11 AUCKLAND 31% 389 353 WELLINGTON 10% 133 103 CHRISTCHURCH 13% - 110 REST OF NEW ZEALAND 46% 478 438 Total 100% 1,000 1,004 The segments by business size (number of employees in the business) have been reweighted to their exact present proportions of all GST registered businesses in New Zealand, as below: Number of Employees/Business Type Reweighting W1/11 W2/11 0 Employees/Sole Traders 69% 595 596 1-4 Employees/Micro Business 21% 258 270 5-19 Employees/Small Business 7% 117 102 20-199 Employees/Medium Business 3% 30* 36* 0-199 Employees/ Sole, Micro, Small, Medium Businesses 100% 1,000 1,004 (* Caveat: There is high margin of error of +/-13% @ 20% on this small base in W2. For this reason, results for medium businesses are only reported if above or below this margin of error in relation to other businesses by size.) Page 7 of 29

Business Issues Expectations of future economic improvement in New Zealand Shrinkage of confidence in near term economic recovery continues after 18 months Base: Business owners and directors (n = 1,004) Q. When do you believe that New Zealand s economy will improve from its present position? Most New Zealand business owners still pessimistic about economic recovery Only one quarter (25%) now expect economic recovery in New Zealand within the next 12 months. This is only half of the number who expected New Zealand s economic recovery to be within 12 months when surveyed in April 2010 (49%). And this is just 2% above this expectation in April 2011 (23%). While only 17% expected the economic recovery to take more than 18 months in April 2010, 41% now do so 18 months later. (See Figure 1) In Australia, confidence in a recovery is even lower, with only 21% now expecting that recovery within 12 months. (See Figure 1.2) Almost three quarters of business owners now see economic recovery more than a year away In the survey 68% of business owners predict that the economy will recover at some time after the next 12 months, compared with 46% of New Zealand business owners who had this expectation a year ago in April 2010. (See Figure 1) Massive loss of confidence amongst sole traders and medium business owners Only 24% of both sole traders and medium (20-199 employees) business owners now expect economic recovery in the next 12 months, compared with the 50% and 49% respectively who predicted recovery in the April 2010 survey. (See Figure 1.1) Most confident of an economic recovery in the next 12 months are start-up (<2 years) business owners (36%), and business owners whose revenue has increased over the last year (31%). Business owners in Wellington now more confident about medium term economic recovery Business owners in Wellington (30%) are somewhat more confident than business owners in Auckland (28%), Christchurch (25%) or the Rest of New Zealand (22%) about a medium term (next 12 months) economic recovery. Christchurch business owners were most optimistic (42%) about an economic recovery over the next 12 months in the November 2010 survey, (which was conducted during the reconstruction phase following the first Christchurch earthquake, in September 2010). (See Figure 1.2) Recovery confidence lacking in all sectors, remains around half the level of 18 months ago Business owners in most sectors maintain the relatively low levels of confidence in the economy s likely recovery that they expressed in April 2011, which are at about half the levels of confidence expressed in the April 2010 survey. And while the level of confidence about medium term economic recovery of business owners in the Agriculture, Forestry and Fishing sector (20%) remains very low (but is 5% higher than in April 2011), the confidence of the previously most confident business owners in the Manufacturing and Wholesale sector halved from 59% in November 2010 to 28% in April 2011, and dropped still further, to 25%, in. (See Figure 1.3) Page 8 of 29

Figure 1: Time expectations for future economic improvement in New Zealand (% of n = 1,004) Sep 11 Apr11 Nov10 Apr10 Nov09 Aug09 Next 3 months 3% 3% 2% 5% 7% 13% 3% 3-6 months 6% 6% 3% 7% 11% 13% 8% 6-12 months 16% 16% 18% 25% 31% 29% 26% 12-18 months 18-24 months >2 years 19% 22% 27% 27% 28% 28% 29% 26% 32% 19% 23% 18% 10% 7% 18% 22% 20% 12% 7% 5% 7% Don't Know 7% 7% 6% 5% 5% 7% 6% Figure 1.1 Expectation of economic improvement in the next 12 months: by Number of Employees (% of n = 1,004) Sep 11 Apr11 Nov10 Apr10 Nov09 ALL 25% 25% 23% 37% 49% 55% SOLE (0) 24% 24% 25% 33% 50% 56% MICRO (1-4) 28% 28% 17% 45% 40% 50% SMALL (5-19) 28% 28% 24% 39% 59% 59% MEDIUM (20-199) 24% 24% 23% 48% 49% 60% Page 9 of 29

Figure 1.2 Expectation of economic improvement in the next 12 months: by Location (% of n = 1,004) Sep 11 Apr11 Nov10 Apr10 Nov09 NZ TOTAL 25% 25% 23% 37% 49% 55% (AUSTRALIA) 21% 21% 35% 47% 54% 58% AUCKLAND 28% 28% 28% 39% 49% 61% WELLINGTON 30% 30% 19% 38% 57% 55% CHRISTCHURCH 25% 25% N/M 42% 39% 55% REST OF NZ 22% 22% 21% 32% 49% 50% Figure 1.3 Expectation of economic improvement in the next 12 months: by Industry (% of n = 1,004) Sep 11 Apr11 Nov10 Apr10 Nov09 Agriculture, Forestry, and Fishing 20% 15% 20% 39% 38% Manufacturing and Wholesale 25% 25% 28% 59% 55% 55% Construction and Trades 26% 27% 35% 41% 52% Transport and Warehousing 30% 32% 28% 57% 42% Finance and Insurance 27% 27% 26% 30% 50% 62% Professional and Business Services 25% 25% 24% 40% 56% 59% Retail and Hospitality 29% 29% 28% 42% 49% 61% Page 10 of 29

Business revenue compared with 12 months ago Subdued confidence in economic recovery is despite more reporting revenue gains over past year Base: Business owners and directors (n = 1,004) Q. At the present time, is your business revenue (i.e. your gross from sales) up or down on a year ago, or about the same? Please indicate how much your business revenue (i.e. your gross from sales) is up or down on a year ago? (Please type in the percentage in the box below) Despite cautious economic expectations, slightly more report revenue gains, slightly fewer report revenue losses In, 30% of business owners surveyed reported business revenue gains vs. a year ago, compared with the 28% in April 2011 and 25% in November 2010 reporting the same. And fewer business owners reported business revenue losses vs. a year ago in (31%) and April 2011 (32%) than reported business revenue losses in November 2010 (38%). (See Figure 2) Despite this, only 25% of business owners surveyed in expect the economy to improve from its present position within the next 12 months, compared with 37% of business owners surveyed in November 2010 who expected this recovery. (See Figure 1) Figure 2: Revenue increases vs. decreases last 12 months, as reported by total sample (% of n=1,004) 4% Sep 11 Apr11 Nov10 Apr10 Increase Remain the same Decrease 31% Increase 30% 28% 25% 26% Same 35% 38% 34% 36% Don't know/not sure Decrease 31% 32% 38% 35% 35% Don t Know 4% 2% 3% 3% Page 11 of 29

Revenue increases of between 10-29% and decreases of between 10-29% reported by majority The majority (61%) of the 30% who report revenue increases still report increases of between 10-29%, as they did in November 2010 (The average of all revenue increases reported in September 2011 is 22%, compared with 21% in April 2011 and 24% in November 2010.) Of the 31% of business owners reporting a revenue decrease in the last 12 months, three fifths (60%) still report a decrease of 10-29%, as they did in April 2011. (The average of all revenue decreases reported in September 2011 is, as in April 2011, -25%, whereas in November 2010 it was -30%). (See Figure 2.1 and Figure 2.2) Figure 2.1: Revenue increase percentages in last 12 months, as reported by 30% of the total sample (% of n = 300) Sep11 Apr11 Nov10 Aug10 Apr10 0-9% 15% 15% 21% 13% 21% 16% 10-19% 36% 36% 34% 31% 35% 39% 20-29% 25% 25% 24% 29% 20% 17% 30-49% 50-59% 60% or more 6% 6% 12% 12% 9% 11% 13% 11% 6% 5% 4% 5% 8% 6% 7% 9% 6% 9% Figure 2.2: Revenue decrease percentages in last 12 months, as reported by 31% of the total sample (% of n = 315) Sep11 Apr11 Nov10 Apr10 Nov 09 0-9% 8% 8% 9% 4% 12% 8% 10-19% 20-29% 30-49% 19% 27% 33% 33% 25% 25% 30% 28% 27% 35% 27% 28% 32% 19% 17% 19% 18% 21% 50-59% 60% or more 6% 9% 9% 8% 9% 8% 9% 6% 6% 12% 4% 4% Page 12 of 29

Despite pessimism about economy, micro and medium business owners continue to report more business revenue gains than losses, as they did in April 2011 Although they are considerably more pessimistic about the economy s recovery than in 2010 (See Figure 1.1) medium business owners (42% of a very small base of 28), and micro business owners (34%) are more likely to report business revenue gains vs. a year ago than are sole traders (28%) and small business owners (30%). (See Figure 2.3) Start-up business owners no longer more likely to report gains than losses Only 19% of owners of start-up (<2 years) businesses in New Zealand report revenue gains in, while 28% report revenue losses, which contrasts with the April 2001 survey, wherein 32% reported revenue gains and 28% reported revenue losses. Figure 2.3 Revenue increases and decreases: by Number of Employees (% of n=1,004) Revenue Decreases Last 12 Months Sep11 Apr11 Nov10 NZ TOTAL 30% 31% 31% 32% 38% SOLE (0) 28% 32% 32% 32% 39% MICRO (1-4) 34% 31% 31% 30% 32% SMALL (5-19) 30% 31% 31% 34% 36% MEDIUM (20-199) 42% 24% 24% 29% 42% Increases Decreases 4% 5% Page 13 of 29

Two fifths of Christchurch business owners lose revenue, as with all business owners in Australia While less than a third (31%) of all New Zealand business owners surveyed in report revenue decreases over the last year, 41% of business owners in Christchurch now do so, as an anticipated effect of the Christchurch earthquakes. This is close to the 38% of all business owners in Australia who report revenue decreases over the last year, in the concurrent survey in Australia. It is interesting to note that business owners in Wellington (27%) are, nevertheless, the least likely to report revenue increases over the last year. (See Figure 2.4) Figure 2.4 Revenue increase and decrease percentages reported over last 12 months: by Location (% of n = 1,004) Revenue Decreases last 12 Months Sep11 Apr11 Aug10 Apr10 NZ TOTAL 30% 31% 31% 32% 38% 26% (AUSTRALIA) 19% 38% 38% 34% 34% 22% AUCKLAND 30% 32% 32% 35% 39% 26% WELLINGTON 27% 31% 31% 25% 32% 25% CHRISTCHURCH 29% 41% 41% n/m 35% 28% REST OF NZ 31% 28% 28% 31% 38% 26% Increases Decreases Page 14 of 29

Business owners in Agriculture, Forestry and Fishing, Finance and Insurance have most positive revenue reports More than two fifths of business owners in the Agriculture, Forestry and Fishing sector (45%) and the Finance and Insurance sector (41%) report business revenue gains vs. a year ago (despite the fact that only 20% of the former predict an economic recovery in the next 12 months). (See Figure 2.5 and Figure 1.3) Business owners in Finance and Insurance report the greatest turnaround, with 41% reporting last year revenue gains in, compared with only 9% of business owners in this sector who reported gains in the April 2011 survey. Those business owners most likely to report a revenue decrease vs. a year ago are in the Transport and Warehousing (43%) and the Manufacturing and Wholesale (41%) sectors. Figure 2.5 Revenue increase and decrease percentages reported over last 12 months: by Industry (% of n = 1,004) Revenue Decreases last 12 Months Apr11 Nov10 Aug10 Agriculture, Forestry and Fishing 45% 16% 16% 25% 41% 28% Manufacturing and Wholesale 24% 41% 41% 34% 39% 29% Construction and Trades 25% 38% 38% 47% 48% 28% Transport and Warehousing 21% 43% 43% 38% 44% 25% Finance and Insurance 41% 32% 32% 35% 18% Professional and Business Services 28% 31% 31% 25% 31% 26% Retail and Hospitality 23% 38% 38% 37% 39% 26% Increase Decrease Page 15 of 29

Work or sales in the pipeline for next three months Reports of work or sales in the pipeline now as positive as a year ago up 2 since April 2011 Base: Business owners and directors (n = 1,004) Q. Please indicate how much work you have got on in the next 3 months, compared to what you would usually expect or normally have. One third of business owners report more than usual in pipeline, one fifth report less In, one third (33%) of business owners surveyed report more work or sales than usual in the pipeline, and one fifth (21%) report less, which closely parallel the results of the August 2010 survey wherein 34% reported more, and 20% reported less, in the pipeline than usual. This is almost identical to the New Zealand survey in April 2011, and more favourable than the pipeline results of the MYOB Business Monitor survey in Australia, where 29% of business owners report more sales or work than usual in the pipeline, and 30% of them report less. (See Figure 3 and Figure 3.1) Figure 3: Work or sales in pipeline compared with usual: by Total Sample (% of n = 1,004) Sep11 Apr11 Nov10 Aug10 7% 4% A lot more 8% 8% 7% 9% 14% A little more About the same 25% 23% 19% 25% 42% 46% 39% 42% A little less 14% 14% 18% 13% 42% A lot less Don't know 7% 7% 14% 7% 4% 2% 3% 4% Page 16 of 29

Businesses with more employees have more work or sales in the pipeline One half (50% but of a small base of 28) of medium sized business owners say that they have more than normal work or sales in the pipeline, which contrasts with 30% of sole traders who report the same. (See Figure 3.1) Owners of establishing businesses or with business website more likely to have more in pipeline Two fifths (40%) of owners of establishing (2-5 years) businesses report more work or sales than usual in the pipeline, as do 43% of owners of businesses who have a dedicated business website (compared with 28% of business owners who do not have a business website reporting more than usual in the pipeline). Figure 3.1: More or less work or sales in pipeline compared with usual: by Number of Employees (% of n = 1,004) More Work/Sales Than Usual Sep11 Apr11 Nov10 Aug10 NZ TOTAL 33% 21% 33% 31% 26% 34% (AUSTRALIA) 29% 30% 29% 33% 28% 49% SOLE (0) 30% 23% 30% 27% 23% 32% MICRO (1-4) 35% 19% 35% 36% 22% 39% SMALL (5-19) 44% 16% 44% 35% 37% 18% MEDIUM (20-199) 50% 14% 50% 53% 39% 49% More than usual Less than usual Page 17 of 29

Christchurch businesses now lead reports of more than usual work or sales in the pipeline While 33% of all business owners surveyed in April 2011 report more than usual in the pipeline, and the reports by location are similar, it is pleasing to see that business owners in Christchurch (35%) are the most likely to report more than usual sales or work in the pipeline. (See Figure 3.2) Figure 3.2: Work or sales in pipeline compared with usual: by Location (% of n = 1,004) More Work/Sales Than Usual Sep11 Apr11 Nov10 Aug10 Apr10 NZ TOTAL 33% 21% 33% 31% 26% 34% 29% (AUSTRALIA) 29% 30% 29% 33% 28% 49% 37% AUCKLAND 33% 21% 33% 30% 27% 35% 32% WELLINGTON 32% 21% 32% 27% 28% 28% 21% CHRISTCHURCH 35% 19% 35% n/m 25% 40% 29% REST OF NZ 31% 23% 31% 31% 26% 34% 27% More than usual Less than usual Page 18 of 29

Many more positive shifts in pipeline sales reported, especially in Transport and Warehousing, Finance and Insurance Pipeline sales and projects have recovered well across New Zealand since November 2010, although the reports in the Construction and Trades sector are still more negative (37%) than positive (29%). The best turnarounds in pipeline sales are in the Transport and Warehousing sector (from 25% reporting more than usual in the pipeline in April 2011 to 43% reporting the same in September 2011), and the Finance and Insurance sector (from 29% reporting more than usual in the pipeline in April 2011 to 43% reporting the same in ). (See Figure 3.3) Figure 3.3 Work or sales in pipeline compared with usual: by Industry (% of n = 1,004) More Work/Sales Than Usual Sep11 Apr11 Nov10 Aug10 Apr10 Agriculture, Forestry & Fishing 27% 9% 27% 34% 26% 24% 28% Manufacturing & Wholesale 42% 17% 42% 39% 40% 42% 33% Construction & Trades 29% 37% 29% 30% 25% 34% 25% Transport & Warehousing 43% 18% 43% 25% 19% 36% 28% Finance & Insurance 43% 18% 43% 29% 24% 38% 30% Professional & Business Services 30% 24% 30% 27% 25% 35% 29% Retail & Hospitality 36% 18% 36% 29% 25% 19% 22% More than usual Less than usual Page 19 of 29

Expectations of business revenue in 12 months time Optimism about future business revenue increases returning to 2010 levels Base: Business owners and directors (n = 1,004) Q. And how do you expect your business revenue (your gross turnover or sales) in 12 months time to compare with your business revenue at the present time? Future revenue expectations well ahead of immediate pipeline sales and work reports In, 41% of business owners surveyed expect their business revenue to have increased in a year s time, which is well ahead of the 33% who report more work or sales than usual in the pipeline, and has returned to the levels of optimism expressed in the November 2010 (42%) and August 2010 (43%) MYOB Business Monitor surveys. (See Figure 3 and Figure 4) Business owners in New Zealand are now more optimistic than business owners in Australia, where only 32% of business owners surveyed in expect their revenue to have increased in a year s time. Expectations of revenue losses in a year s time are now less in New Zealand (13%) than they are in Australia (20%). (See Figure 4 and Figure 4.2) Figure 4: Expectations of business revenue increases and decreases in 12 months time (% of n = 1,004) 7% Sep11 Apr11 Nov10 Aug10 13% Increase 41% 36% 42% 43% Increase Remain the same Decrease Don't know/not sure 39% Same 39% 44% 41% 41% Decrease 13% 13% 12% 10% Don t Know 7% 7% 5% 6% Page 20 of 29

Businesses with more employees more optimistic about future revenue gains While business owners are now much more optimistic than they are pessimistic about future revenue growth, the most optimistic (63%) and least pessimistic (7%) are owners of medium businesses (caveat low base of 28), followed by owners of small businesses (46% optimistic / 10% pessimistic). (See Figure 4.1) Those with revenue increase in last year, with business website, and start-up businesses remain by far most positive about next 12 months revenue More than three fifths (63%) of those who have enjoyed revenue increases in the last year expect increases over the next year, and only 6% of them expect revenue decreases over the next year. More than half (56%) of those who have their own business website expect revenue gains, compared with less than a third (31%) of those business owners who do not have a dedicated business website. And half (50%) of start-up (<2 years) business owners expect revenue gains, compared to just over one third (36%) of maturing (5-10 years) business owners who expect revenue to have increased in a year s time. Figure 4.1: Expectations of revenue increases and decreases in 12 months time: by Number of Employees (% of n = 1,004) % Expecting Revenue Increase Sep11 Apr11 Nov10 Aug10 ALL (0-199) 41% 13% 41% 36% 42% 43% SOLE (0) 39% 13% 39% 32% 40% 39% MICRO (1-4) 43% 14% 43% 39% 42% 50% SMALL (5-19) 46% 10% 46% 52% 52% 45% MEDIUM (20-199) 63% 7% Increases Decreases 63% 52% 61% 71% Page 21 of 29

Business owners in Wellington most optimistic, in Christchurch least pessimistic Business owners in Wellington (49%) are more likely to have optimistic expectations of their revenue in a year s time, while business owners in Christchurch are now the least pessimistic (6%) about their revenue being less than it is now in a year s time. (See Figure 4.2) Figure 4.2 Expectations of business revenue increases and decreases in 12 months time: by Location (% of n = 1,004) % Expecting Revenue Increase Sep11 Apr11 Nov10 Aug10 Apr10 NZ TOTAL 41% 13% 41% 36% 42% 43% 45% (AUSTRALIA) 32% 20% 32% 41% 43% 47% 48% AUCKLAND 41% 11% 41% 39% 44% 45% 49% WELLINGTON 49% 16% 49% 37% 45% 39% 44% CHRISTCHURCH 46% 6% 46% n/m 44% 49% 42% REST OF NZ 37% 15% 37% 33% 39% 40% 43% Increases Decreases Page 22 of 29

Most sectors similarly confident of growth, except more bullish business owners in Finance and Insurance, more cautious business owners in Agriculture, Forestry and Fishing Business owners in every sector except Manufacturing and Wholesale (45% in vs. 55% in April 2011) are now more confident than they were in the last survey about future business revenue growth. The greatest increases in confidence between the April 2011 and the September 2011 surveys are amongst business owners in the Finance and Insurance sector (from 39% to 60%) and business owners in the transport and warehousing sector (from 20% to 40%). (See Figure 4.3) Figure 4.3 Expectations of business revenue increases in 12 months time: by Industry (% of n = 1,004) Expect Revenue Increase 12 Months Time Sep11 Apr11 Nov10 Aug10 Apr10 Agriculture, Forestry, and Fishing 32% 32% 33% 36% 45% 45% Manufacturing and Wholesale 47% 47% 55% 55% 57% 50% Construction and Trades 40% 40% 34% 32% 33% 38% Transport and Warehousing 40% 40% 20% 31% 35% 52% Finance and Insurance 60% 60% 39% 54% 47% 50% Professional and Business Services 42% 42% 33% 42% 42% 45% Retail and Hospitality 42% 42% 35% 49% 41% 39% Page 23 of 29

Profiles of businesses with their own business website One third of business owners have own business website Base: Business owners & directors (n = 1,004) Q. Do you use your own business website (under your business name and your own domain name) to promote and/or sell your products or services? In (as in April 2011) it appears that 32% of all businesses with less than 200 employees (as represented by the total sample in this study) now have their own business website. Both are increases of 2% on those business owners reporting having their own business website in the MYOB November 2010 survey. (See Figure 5) Figure 5: Have own business website (under own business name and own domain name): by Total Sample (% of n = 1,004) Website Sep11 Apr11 Nov10 Yes Website No Website 68% YES 32% 32% 30% NO 68% 68% 70% Page 24 of 29

Business owners in medium businesses (74%) and in Manufacturing & Wholesale (57%) or Retail and Hospitality (47%) remain by far the most likely to report having their own business website. Those by far the least likely to have their own business website are business owners in Agriculture, Forestry and Fishing (yet 10% in vs. 6% in April 2011). (See Figure 5.1) Figure 5.1: Have own business website: by Business Size and Industry Category (% of n = various within 1,004 sample) Transport and Warehousing 20% Retail and Hospitality 47% Professional and Business Services 33% Manufacturing and Wholesale 55% Finance and Insurance 40% Construction and Trades 24% Agriculture Forestry and Fishing 10% Medium 74% Small 57% Micro 36% Sole 26% All Businesses 32% Page 25 of 29

Intentions of those with no business website Only one fifth of business owners in New Zealand without their own business website intend to get one in future Base: Business owners & directors who do not have own business website: (n = 682) Q. You ve said you don t have a website specifically for your business. Do you plan to create one in the future, and within what timeframe? Of the two thirds (68%) who report having no business website, only 13% (being only 9% of the total sample, and a 1% increase on the April 2011 result) now say that they do plan to create (or have created) such a website within the next 12 months. A further 11% of these (being a further 7% of the total sample of 1,004) say that they don t know or are not sure. (See Figure 6) Just as in April 2011, only one fifth (20%) of business owners in New Zealand without a business website intend to build one within the next couple of years. (See Figure 6) This contrasts with two fifths (40%) of business owners in Australia who do not yet have a business website intending to build one in the next couple of years, which means that future business website adoption in Australia will be at around twice the rate of future business website adoption in New Zealand. Figure 6: Future intentions on business website: by those who do not have a business website (% of n = 682) Yes, intend website within next month 1% Yes, intend website within next 1-6 months 5% Yes, intend website within next 7-12 months 7% Yes, intend website within next couple of years 7% No, don't intend to create website for business 69% Don't know, not sure 11% Page 26 of 29

Business activities conducted online compared with business activities conducted offline The Internet is now the major channel for buying products and services, for using Yellow or White Page directories, and for marketing, and its use for these activities is now increasing every month Base: Business owners & directors (n = 1,004) Q. Which of the following activities are currently undertaken in this business, for business purposes rather than personal purposes? Buying Products and Services: The internet is now a major channel More than two fifths (44% vs. 38% in April 2011) of business owners surveyed in New Zealand now buy products and services online on sites such as ebay and Trade Me. (See Figure 7) And two fifths (40% vs. 32% in April 2011) of business owners now pay bills on suppliers websites online. (See Figure 7) Contact Information: The internet is now the major source Although Yellow Pages usage for business is increasing online and offline, more now use Yellow Pages for business purposes online (39% vs. 32% in April 2011) than use Yellow Pages for business purposes offline (32% vs. 23% in April 2011). (See Figures 7 and 7.1) Similarly, although White Pages usage for business is increasing online and offline, more now use White Pages for business purposes online (39% vs. 31% in April 2011) than use White Pages for business purposes offline (29% vs. 23% in April 2011). (See Figures 7 and 7.1) Marketing: The internet is now the major medium One third (33% vs. 22% in April 2011) of business owners are using Internet Search Engines (like Google or Bing) to promote their business, compared with 25% (vs. 19% in April 2011) who use Newspaper Advertising to promote their business, and only 1 in 10 (10% vs. 7% in April 2011) who still advertise on Radio (7%) to promote their business. (See Figures 7 and 7.1) Moreover, one quarter (25% vs. 20% in April 2011) of business owners now use Email Marketing online, compared with 18% (vs. 16% in April 2011) who now use Direct Mail Marketing offline. (See Figures 7 and 7.1) Page 27 of 29

Figure 7: Business activities conducted online on the Internet: by Total Sample (% of n = 1,004) Sep11 Apr11 Have internet access but do not do any of the online activities above/ not interested in any 21% 21% 19% Sell products and/or services online directly to customers/consumers using your own website (including any online credit card payment facility you 15% 15% 9% Use Skype or VOIP to make free business phone calls over the internet 17% 17% 27% Share business knowledge with other business owners (e.g. online business network) 18% 18% 14% Sell products /services online (e.g. ebay, Trading Post, Trade Me or Other Website) 24% 24% 19% Use networking/social media forums such as LinkedIn, MySpace, Facebook, Twitter 24% 24% 22% Conduct email marketing to potential or existing customers 25% 25% 20% Accept online payment from your customers (e.g. via a shopping cart) 29% 29% 23% Use Internet Search Engines (like Google or Bing) to promote your business 33% 33% 22% Use online White pages for business 39% 39% 31% Pay your bills on suppliers websites 40% 40% 32% Use online Yellow Pages for business 39% 39% 32% Buy products/services online (e.g. ebay, Trading Post, Trade Me or Other Website) 44% 44% 38% Online Page 28 of 29