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

SKY NETWORK TELEVISION ANNUAL RESULTS 2005

Subscribers

100,000 200,000 300,000 400,000 500,000 600,000

Jun-91 Jun-92 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05

UHF Satellite Wholesale

Subscriber Growth

576.6

7.2 83.9 394.2 91.3

2004

(14.8%) 77.8 UHF Residential

Total Subscribers

Commercial/Other DBS Wholesale DBS (Satellite) Residential

‘000

7.4% 619.2

29.2% 9.3 6.9% 89.7 12.2% 442.4

% Change 2005

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

Moving Annual Churn

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

Monthly Churn

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

2005 Monthly Churn Split

$262 $300 $345 $391 $441 $489

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500

$NZ millions

2000 2001 2002 2003 2004 2005

Year End 30 June

Total Revenue

$50.14 $51.83 $54.55 $56.86

$47.00 $48.00 $49.00 $50.00 $51.00 $52.00 $53.00 $54.00 $55.00 $56.00 $57.00 $58.00

$NZ

2002 2003 2004 2005

Total ARPU

$59.35 $61.33 $62.49 $40.36 $40.68 $39.42 $36.94 $41.86 $46.27

$20.00 $30.00 $40.00 $50.00 $60.00

$NZ

Satellite UHF Wholesale

2003 2004 2005 ARPU

8 16 24 32

BIG MAC's

Foxtel (Australia) Sky TV (NZ) DIRECTV (US) BSkyB (UK)

2003 2004 2005

Big Mac Index

$11.6 $12.6 $16.5 $19.6 $26.6 $35.6

$0 $5 $10 $15 $20 $25 $30 $35 $40

$NZ millions

2000 2001 2002 2003 2004 2005

Year End 30 June

Advertising Revenue

SKY Share of Television Advertising Spend

4.41 3.19 4.22 6.93 5.85 4.48 5.54 4.92 3.84 4.65 3.79 2.86 2.97

1 2 3 4 5 6 7 8 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05

Month % Percentage

Source: PricewaterhouseCooper/Television industry survey

Sky’s Share of All Television Viewing is Growing.

5 10 15 20 25 J u l

• 9

9 J a n

• J

u l

• J

a n

• 1

J u l

• 1

J a n

• 2

J u l

• 2

J a n

• 3

J u l

• 3

J a n

• 4

J u l

• 4

J a n

• 5

Month % Share of All NZ TV Viewing All Sky TV 12 Month Moving Average

% Share of viewing in all NZ Homes

Source: Nielsen TV Ratings, All New Zealanders 5+

Programming Costs % Revenue

47% 50% 48% 43% 40% 36%

30% 32% 34% 36% 38% 40% 42% 44% 46% 48% 50% 52%

2000 2001 2002 2003 2004 2005

Year End 30 June

$74.1 $75.7 $108.2 $150.8 $187.2 $230.5

$0.0 $50.0 $100.0 $150.0 $200.0 $250.0

$NZ millions

2000 2001 2002 2003 2004 2005

Year End 30 June

EBITDA

• $27.0
• $42.3
• $30.2

$0.7 $35.3 $103.4

• $60.0
• $40.0
• $20.0

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0

$NZ millions

2000 2001 2002 2003 2004 2005

Year End 30 June

Net Profit/(Loss)

$103.3 $153.3 $105.9 $86.1 $57.4 $73.6 $0 $20 $40 $60 $80 $100 $120 $140 $160 $NZ millions 2000 2001 2002 2003 2004 2005

Year End 30 June

Capital Expenditure

(excluding transponders)

Capital Expenditure Analysis

39.1% 3.2 2.3 Other

32.4% 76.0 57.4 Total Capital Expenditure

100% 5.4 0.0 Leasehold Improvements 100% 6.0 0.0 Studio Upgrade (100%) 0.0 0.2 Interactive Applications (63.6%) 0.8 2.2 Digital Expansion 10.4% 58.2 52.7 Subscriber Equipment 100% 2.4 0.0 Transponder

%Change 2005 2004

$ NZ million

DBS (Satellite) Decoder Stock

(including 11,604 broken) (including 13,161 broken)

32,861 Closing decoders 4,830 Net movement for the year (64,970) Less installed at customer (4,217) Less written off 74,017 Add purchases 28,031 Opening decoders

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $NZ

2002 2003 2004 2005 Forecast 2006

Decoder Material/Labour

DBS (Satellite) Install Costs

$512 $719 $803 $487 $442

Results Summary

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

$NZ Million

Free Cash Flow

117.8 (52.9) 170.7 2004 40.6% (74.4)

Net Investing Cash Flows

29.1% 220.3

Net Operating Cash Flow Free Cash Flow

$NZ million

23.9% 145.9 % Change 2005

Revenue Analysis

440.6

33.8 26.6 8.1 25.4 346.7

2004

11.6% 387.0 Residential

Total Revenue

Installation, programming sales & other Advertising SkyWatch Commercial

$NZ million

11.1% 489.4

(11.5%) 29.9 33.8% 35.6 11.1% 9.0 9.8% 27.9

% Change 2005

Expense Analysis

383.2

128.1 54.7 7.0 17.6 175.8

2004

1.0% 177.6

Programming

Total Operating Expenses

Depreciation & Amortisation Selling, General & Administration Transmission Subscriber Management

$ NZ million

(0.8%) 380.3

(6.9%) 119.3 6.4% 58.2 1.4% 7.1 2.8% 18.1

% Change 2005

Programming Expense Analysis

1.0% 177.6 175.8 Total

(3.4%) 16.9 17.5 Other 6.2% 22.2 20.9 Production 0.8% 138.5 137.4 Rights

%Change 2005 2004

$ NZ millions

Programming Expense Analysis

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

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.

• 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

Tax

• 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 Key Messages

• 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 )

2005 Guidance

• SKY TV with its content is in a great position to leverage itself into new
• pportunities
• 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

Dividend Policy

SKY NETWORK TELEVISION ANNUAL RESULTS 2005