SKY NETWORK TELEVISION ANNUAL RESULTS 2005 Jun-05 Jun-04 - PowerPoint PPT Presentation

SKY NETWORK TELEVISION ANNUAL RESULTS 2005

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-91 600,000 500,000 400,000 300,000 200,000 100,000 0

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

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%

Monthly Churn 2.00% 1.75% 1.50% 1.25% 1.00% Dec Oct Jan Feb Apr Jun Jul Aug Sep Nov Mar May 2003 2004 2005

2005 Monthly Churn Split 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Dec Oct Jan Feb Apr Jun Jul Aug Sep Nov Mar May DBS (Satellite) UHF

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

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

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

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

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

SKY Share of Television Advertising Spend 8 6.93 7 5.85 5.54 6 4.92 4.48 4.65 5 Percentage 4.41 4.22 3.84 3.79 % 4 2.97 3.19 2.86 3 2 1 0 Sep-02 Dec-02 Sep-03 Dec-03 Sep-04 Dec-04 Jun-02 Mar-03 Jun-03 Mar-04 Jun-04 Mar-05 Jun-05 Month Source: PricewaterhouseCooper/Television industry survey

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 0 1 2 3 4 5 9 0 1 2 3 4 9 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - n n n n n n l l l l l l u u u u u u a a a a a a J J J J J J J J J J J J Month Source: Nielsen TV Ratings, All New Zealanders 5+

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

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

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

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

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 Expenditure 57.4 76.0 32.4%

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)

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

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%

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

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

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

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%

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

Foreign Currency Hedging � 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 $A exposures @ .872 • 29% hedged for 25-36 months $A exposures @ .905 • average $US payment rate for opex for year to June 05 = 58.0c • In 2005, 1c movement in USD/NZD rate impacts operating costs • by NZ$ 1.7 million.

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 the balance of $11.4m due from INL on 1 July 2005

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%

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 )

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 ratio • In the short term cash generated by the business will be used to strengthen balance sheet to take advantage of future opportunities • The company expects to declare a fully imputed dividend in February 2006, having regard to the desire to strengthen Sky’s balance sheet

SKY NETWORK TELEVISION ANNUAL RESULTS 2005