Sky Network Television Ltd · NZX:SKT

Sky Network Television — FY2005 Earnings Presentation

32 slides from Sky Network Television's earnings presentation, June 2005

  1. Slide 1: Sky Network Television Annual Results 2005

    SKY NETWORK TELEVISION ANNUAL RESULTS 2005

  2. Slide 2: Subscribers by Platform

    Jun-05 Jun-04 Wholesale Jun-03 Jun-02 Jun-01 Jun-00 Jun-99 Jun-98 Satellite Jun-97 Jun-96 Jun-95 Jun-94 Jun-93 Subscribers UHF Jun-92 Jun-91 0 600,000 500,000 400,000 300,000 200,000 100,000

  3. Slide 3: Subscriber Growth

    Subscriber Growth ‘000 2004 2005 % Change UHF Residential 91.3 77.8 (14.8%) DBS (Satellite) Residential 394.2 442.4 12.2% DBS Wholesale 83.9 89.7 6.9% Commercial/Other 7.2 9.3 29.2% Total Subscribers 576.6 619.2 7.4%

  4. Slide 4: Moving Annual Churn

    Jun-05 Dec-04 Jun-04 Dec-03 Jun-03 Dec-02 Jun-02 Dec-01 Jun-01 Moving Annual Churn Dec-00 Jun-00 Dec-99 Jun-99 Dec-98 Jun-98 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10%

  5. Slide 5: Monthly Churn

    Monthly Churn 2.00% 1.75% 1.50% 1.25% 1.00% ec ct n r b n v ug ar p ay l Ju Ap No Fe Se Ja Ju O M D M A 2003 2004 2005

  6. Slide 6: 2005 Monthly Churn Split

    2005 Monthly Churn Split 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% ec ct n pr b n v g ar p ay l Ju No Fe Se Ja Ju Au O M A D M DBS (Satellite) UHF

  7. Slide 7: Total Revenue

    Total Revenue $500 $450 $400 $350 $NZ millions $300 $489 $250 $441 $200 $391 $300 $345 $150 $262 $100 $50 $0 2000 2001 2002 2003 2004 2005 Year End 30 June

  8. Slide 8: Total ARPU

    Total ARPU $58.00 $57.00 $56.00 $55.00 $56.86 $54.00 $53.00 $NZ $52.00 $54.55 $51.00 $50.00 $51.83 $49.00 $50.14 $48.00 $47.00 2002 2003 2004 2005

  9. Slide 9: ARPU

    ARPU $60.00 $62.49 $50.00 $61.33 $NZ $46.27 $40.00 $59.35 $41.86 $40.68 $39.42 $36.94 $30.00 $40.36 $20.00 Satellite UHF Wholesale 2003 2004 2005

  10. Slide 10: Big Mac Index

    Big Mac Index 32 24 BIG MAC's 16 8 0 Foxtel Sky TV (NZ) DIRECTV (US) BSkyB (UK) (Australia) 2003 2004 2005

  11. Slide 11: Advertising Revenue

    Advertising Revenue $40 $35 $30 $NZ millions $25 $20 $35.6 $15 $26.6 $19.6 $10 $12.6 $16.5 $11.6 $5 $0 2000 2001 2002 2003 2004 2005 Year End 30 June

  12. Slide 12: Sky Share of Television Advertising Spend

    SKY Share of Television Advertising Spend 8 6.93 7 5.54 5.85 6 4.65 4.92 4.48 5 4.41 Percentage 4.22 3.79 3.84 % 4 2.97 3.19 3 2.86 2 1 0 02 2 3 3 04 4 02 03 04 05 3 4 5 -0 -0 -0 -0 -0 -0 -0 p- p- n- n- n- n- ep ec ec ec ar ar ar Se Se Ju Ju Ju Ju M M M D D D S Month Source: PricewaterhouseCooper/Te

  13. Slide 13: Sky's Share of All Television Viewing is Growing

    Sky’s Share of All Television Viewing is Growing. % Share of viewing in all NZ Homes All Sky TV 12 Month Moving Average 25 % Share of All NZ TV 20 Viewing 15 10 5 0 00 01 02 03 04 05 Ja 9 Ja 0 Ja 1 Ja 2 Ja 3 Ja 4 -9 l-0 l-0 l-0 l-0 l-0 n- n- n- n- n- n- l Ju Ju Ju Ju Ju Ju Month Source: Nielsen TV R

  14. Slide 14: Programming Costs % Revenue

    Programming Costs % Revenue 52% 50% 48% 46% 44% 42% 50% 40% 47% 48% 38% 43% 36% 40% 34% 36% 32% 30% 2000 2001 2002 2003 2004 2005 Year End 30 June

  15. Slide 15: EBITDA

    EBITDA $250.0 $200.0 $N Z m illions $150.0 $230.5 $187.2 $100.0 $150.8 $50.0 $108.2 $74.1 $75.7 $0.0 2000 2001 2002 2003 2004 2005 Year End 30 June

  16. Slide 16: Net Profit/(Loss)

    Net Profit/(Loss) $120.0 $100.0 $80.0 $NZ m illions $60.0 $103.4 $40.0 $20.0 $0.7 $35.3 $0.0 -$27.0 -$42.3 -$30.2 -$20.0 -$40.0 -$60.0 2000 2001 2002 2003 2004 2005 Year End 30 June

  17. Slide 17: Capital Expenditure

    Capital Expenditure $160 $140 $120 $NZ millions $100 $80 $153.3 $60 $103.3 $105.9 $40 $86.1 $73.6 $57.4 $20 $0 2000 2001 2002 2003 2004 2005 Year End 30 June (excluding transponders)

  18. Slide 18: Capital Expenditure Analysis

    Capital Expenditure Analysis $ NZ million 2004 2005 %Change Transponder 0.0 2.4 100% Subscriber Equipment 52.7 58.2 10.4% Digital Expansion 2.2 0.8 (63.6%) Interactive Applications 0.2 0.0 (100%) Studio Upgrade 0.0 6.0 100% Leasehold Improvements 0.0 5.4 100% Other 2.3 3.2 39.1% Total Capital Expend

  19. Slide 19: DBS (Satellite) Decoder Stock

    DBS (Satellite) Decoder Stock Opening decoders 28,031 (including 11,604 broken) Add purchases 74,017 Less written off (4,217) Less installed at customer (64,970) Net movement for the year 4,830 Closing decoders 32,861 (including 13,161 broken)

  20. Slide 20: DBS (Satellite) Install Costs

    DBS (Satellite) Install Costs $900 $803 $719 $800 $700 $512 $487 $600 $442 $500 $NZ $400 $300 $200 $100 $0 2002 2003 2004 2005 Forecast 2006 Decoder Material/Labour

  21. Slide 21: Results Summary

    Results Summary $NZ Million 2004 2005 % Change Revenue 440.6 489.4 11.1% Operating Expenses 253.4 258.9 2.2% EBITDA 187.2 230.5 23.1% Depn & Amort 128.1 119.3 (6.9%) EBIT 59.1 111.2 88.2% Interest 22.2 15.2 (31.5%) Tax 0.0 (9.6) 100% Other 1.6 2.2 (37.5%) Net Profit after Tax 35.3 103.4 193.0%

  22. Slide 22: Free Cash Flow

    Free Cash Flow $NZ million 2004 2005 % Change Net Operating Cash Flow 170.7 220.3 29.1% Net Investing Cash Flows (52.9) (74.4) 40.6% Free Cash Flow 117.8 145.9 23.9%

  23. Slide 23: Revenue Analysis

    Revenue Analysis $NZ million 2004 2005 % Change Residential 346.7 387.0 11.6% Commercial 25.4 27.9 9.8% SkyWatch 8.1 9.0 11.1% Advertising 26.6 35.6 33.8% Installation, programming sales 33.8 29.9 (11.5%) & other Total Revenue 440.6 489.4 11.1%

  24. Slide 24: Expense Analysis

    Expense Analysis $ NZ million 2004 2005 % Change Programming 175.8 177.6 1.0% Subscriber Management 17.6 18.1 2.8% Transmission 7.0 7.1 1.4% Selling, General & Administration 54.7 58.2 6.4% Depreciation & Amortisation 128.1 119.3 (6.9%) Total Operating Expenses 383.2 380.3 (0.8%)

  25. Slide 25: Programming Expense Analysis

    Programming Expense Analysis $ NZ millions 2004 2005 %Change Rights 137.4 138.5 0.8% Production 20.9 22.2 6.2% Other 17.5 16.9 (3.4%) Total 175.8 177.6 1.0%

  26. Slide 26: Programming Expense Analysis

    Programming Expense Analysis 2005 NZ$ % US$ % First Half 70.0 50.5% 27.2 48.1% Second Half 68.5 49.5% 29.4 51.9% Total Rights Cost 138.5 56.6 2004 NZ$ % US$ % First Half 67.7 49.3% 27.9 49.8% Second Half 69.7 50.7% 28.1 50.2% Total Rights Cost 137.4 56.0

  27. Slide 27: Foreign Currency Hedging

    Foreign Currency Hedging Q Sky’s hedging positions at 30 June 2005 • 91% hedged for 0 -12 months $US exposures @ .613 • 49% hedged for 13-24 months $US exposures @ .623 • 40% hedged for 25-36 months $US exposures @ .659 • 94% hedged for 0 -12 months $A exposures @ .895 • 67% hedged for 13-24 months

  28. Slide 28: Tax

    Tax • SKY’s tax note comprises 2005 $m Net Profit before Tax 93.9 Tax expense @ .33 31.0 Timing difference recognised (6.8) Group tax offset received (22.1) Tax loss utilised (2.1) Group offset accrual (9.7) Other 0.1 Tax Credit P&L ($9.6) • Deferred tax asset of $9.7m now recognised • SKY received

  29. Slide 29: 2005 Key Messages

    2005 Key Messages • Net profit of $103.4m, a $68.1m improvement • Operating cash flow up 29.1% to $220m • Free cash flow improved by $28m to $146m • Subscriber numbers up 7.4% to 618,168 • ARPU up 4.2% to $56.86, DBS ARPU up 1.9% to $62.49 • Churn down 7.6% to 15.8%

  30. Slide 30: 2005 Guidance

    2005 Guidance • Our August 2005 survey of brokers forecasts indicates: NZ$m EBITDA 239 - 264 NPAT 58 – 82 Capex 71– 102 Subscribers 643 – 653 • Capex high-end of analysts range due to: Studio upgrade & PVR $34m PVR decoders $10m Leonard Road ($5m )

  31. Slide 31: Dividend Policy

    Dividend Policy • SKY TV with its content is in a great position to leverage itself into new opportunities • These opportunities include “Traditional Media” as well as “New Media” (IPTV, 3G Mobile phone content, Terrestrial Digital, Video on Demand) • Hence impossible to lock into a fixed payout rat

  32. Slide 32: Sky Network Television Annual Results 2005

    SKY NETWORK TELEVISION ANNUAL RESULTS 2005

Sky Network Television — FY2005 Earnings Presentation on 6ix