SKY NETWORK TELEVISION ANNUAL RESULTS 2004
Subscribers 500,000 400,000 300,000 200,000 100,000 0 Jun-04 Jun-03 Jun-02 Jun-01 Jun-00 Jun-99 Jun-98 Jun-97 Jun-96 Jun-95 Jun-94 Jun-93 Jun-92 Jun-91 Wholesale DBS (Satellite) UHF
Subscriber Growth 000 2003 2004 % Change UHF Residential 117.7 91.3 (22.4%) DBS (Satellite) Residential 340.3 394.2 15.8% DBS Wholesale 78.0 83.9 7.6% Commercial 6.9 7.2 4.3% Total Subscribers 542.9 576.6 6.2%
Moving Annual Churn Jun-04 Feb-04 Oct-03 Jun-03 Feb-03 Oct-02 Jun-02 Feb-02 Oct-01 Jun-01 Feb-01 Oct-00 Jun-00 Feb-00 Oct-99 Jun-99 Feb-99 Oct-98 Jun-98 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10%
May Jun Apr Jul Aug Sep Oct Nov Dec Jan Feb Mar 2.50% 2.00% 1.50% 1.00% Monthly Churn 2002 2003 2004 2005
2004 Monthly Churn Split 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun DBS (Sa te llite ) UHF
Mar May Jun Apr Jul Aug Sep Oct Nov Dec Jan Feb 4.50 4.00 3.50 3.00 2.50 2.00 Subscriber Viewer Hours per Day 2003 2004
% Share of All NZ TV Viewing Sky s Share of All Television Viewing is Growing. % Share of viewing in all NZ Homes All Sky TV 12 Month Moving Average 25 20 15 10 5 0 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Month Source: Nielsen TV Ratings/TVMap, All New Zealanders 5+
% Share of all NZ TV Viewing Sky now attracts more viewing than TV3 in all NZ homes % Share of viewing in all NZ Homes 35 30 25 20 15 10 5 0 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 12 Month Moving Average Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Source: Nielsen TV Ratings/TVMap, All New Zealanders 5+, Rolling 12 month moving average ALLSKY C4 PRIME TV1 TV2 TV3
% Change on Base Year Sky s average audience has increased by 36% in the last 12 months at the expense of TVNZ & Canwest % Change in average audience on base year Jul 02 Jun 03 40% 30% 20% 10% 0% -10% -20% -30% -40% Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 12 Month Moving Average Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Source: Nielsen TV Ratings/TVMap, All New Zealanders 5+, Rolling 12 month moving average ALLSKY C4 PRIME TV1 TV2 TV3
Viewer hours generated per subscriber 850 800 750 700 650 600 550 500 450 400 350 Sport Movies Pass Through Jun-02 Aug-02 Oct-02 Dec-02 Feb-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Source: Nielsen/TVMap, 12 month moving average, Digital Subs & Viewer Hours Only, Sport = Sport Subs, Movies = Movie Subs, Pass Through = Digital Subs
Monthly Net Gain Comparison 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0-1,000-2,000 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2003 2004
Total Revenue $450 $400 $350 $NZ millions $300 $250 $200 $150 $236 $262 $300 $345 $391 $441 $100 $50 $0 1999 2000 2001 2002 2003 2004 Year End 30 June
Total ARPU $55.00 $54.00 $53.00 $52.00 $54.55 $NZ $51.00 $50.00 $49.00 $48.00 $47.00 $50.14 $51.83 2002 2003 2004
ARPU $60.00 $50.00 $56.56 $59.35 $61.33 $NZ $40.00 $30.00 $20.00 $41.86 $40.68 $36.94 $42.06 $40.36 $36.09 Satellite UHF Wholesale 2002 2003 2004
Big Mac Index 32 BIG MAC's 24 16 8 0 Foxtel Sky NZ Direct TV BSkyB 2003 2004
Advertising Revenue $30 $25 $NZ millions $20 $15 $10 $5 $10.7 $11.6 $12.6 $16.5 $19.6 $26.6 $0 1999 2000 2001 2002 2003 2004 Year End 30 June
Programming Costs % Revenue 52% 50% 48% 46% 44% 47% 50% 48% 42% 40% 44% 43% 40% 38% 1999 2000 2001 2002 2003 2004 Year End 30 June
EBITDA $200.0 $180.0 $NZ millions $160.0 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $0.0 $187.2 $150.8 $108.2 $73.7 $74.1 $75.7 1999 2000 2001 2002 2003 2004 Year End 30 June
Capital Expenditure $160 $140 $120 $NZ millions $100 $80 $60 $40 $20 $114.7 $103.3 $153.3 $105.9 $86.1 $57.4 $0 1999 2000 2001 2002 2003 2004 Year End 30 June (excluding transponders)
Net Profit/(Loss) $40.0 $30.0 $20.0 $35.3 $NZ millions $10.0 $0.0 -$10.0 -$20.0 $4.5 -$27.0 -$42.3 -$30.2 $0.7 -$30.0 -$40.0 -$50.0 1999 2000 2001 2002 2003 2004 Year End 30 June
Results Summary $NZ million 2003 2004 % Change Revenue Operating Expenses 391.3 240.5 440.6 253.4 12.6% 5.4% EBITDA 150.8 187.2 24.1% Depn & Amort 124.1 128.1 3.2% EBIT Interest Other 26.7 28.0 (2.0) 59.1 22.2 1.6 121.3% (20.7%) (180.0%) Net Profit after Tax 0.7 35.3 4942.9%
Free Cash Flow $NZ million 2003 2004 % Change Net Operating Cash Flow 128.0 170.7 33.4% Net Investing Cash Flows (96.0) (52.9) (44.9%) Free Cash Flow 32.0 117.8 268.1%
Revenue Analysis $NZ million 2003 2004 % Change Residential 309.1 346.7 12.2% Commercial 22.3 25.4 13.9% Sky Watch 6.8 8.1 19.1% Advertising 19.6 26.6 35.7% Installation, programming sales & 33.5 33.8 0.9% other Total Revenue 391.3 440.6 12.6%
Expense Analysis $ million 2003 2004 % Change Programming 168.1 175.8 4.6% Subscriber Management 13.7 17.6 28.5% Transmission 7.0 7.0 0% Selling, General & Administration 49.7 54.7 10.1% Depreciation & Amortisation 124.1 128.1 3.2% Total Operating Expenses 362.6 383.2 5.7%
Programming Expense Analysis $ millions 2003 2004 %Change Rights 134.4 137.4 2.2% Production 16.3 20.9 28.2% Other 17.4 17.5 0.6% Total 168.1 175.8 4.6%
Programming Expense Analysis 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 2003 NZ$ % US$ % First Half 63.4 47.2% 25.2 48.4% Second Half 71.0 52.8% 26.9 51.6% Total Rights Cost 134.4 52.1
Foreign Currency Hedging Sky s hedging positions at 30 June 2004 91% hedged for 0-12 months $US exposures @.550 48% hedged for 13-24 months $US exposures @.559 29% hedged for 25-36 months $US exposures @.584 94% hedged for 0-12 months $A exposures @.892 69% hedged for 13-24 months $A exposures @.891 61% hedged for 25-36 months $A exposures @.869 average $US payment rate for opex for year to June 04 = 50.4c In 2004, 1c movement in USD/NZD rate impacts operating costs by NZ$ 2.0 million.
Tax Tax Assets of NZ$42.6m not recognised - timing 7.2 - losses carried forward 1.8 - INL offset 33.6 $42.6 Sky to utilise INL offset in 2005, will fund Sky provisional tax payments. Sky will receive imputation credits for payment recognition of INL receipts, will offset tax expense in 2005 DR Bank 33.6 CR Tax Expense 33.6 DR Tax Expense 33.6 CR Bank 33.6
Capital Expenditure Analysis $ million 2003 2004 % Change Transponder Lease 19.7 0.0 (100%) Subscriber Equipment 74.4 52.7 (29.2%) Digital Expansion 1.5 2.2 46.7% Interactive Applications 0.7 0.2 (71.4%) Right of renewal Other 7.6 1.9 0.0 2.3 (100%) 21.1% Total Capital Expenditure 105.8 57.4 (45.7%)
DBS (Satellite) Decoder Stock Opening decoders 50,224 (including 25,748 broken) Add purchases Less written off Less installed at customer 48,902 (3,083) (68,012) Net movement for the year Closing decoders (22,193) 28,031 (including 11,604 broken)
DBS (Satellite) Install Costs $900 $803 $719 $512 $800 $700 $452 $600 $NZ $500 $400 $300 $200 $100 $0 2002 2003 2004 2005 Forecast Decoder Material/Labour
2004 Key Messages Net profit of $35.3m, a $34.6m improvement Operating cash flow up 34% to $171m Free cash flow improved by $86m to $118m Subscriber numbers up 6.2% to 576,602. ARPU up 5.2% to $54.55, DBS ARPU up 3.3% to $61.33 Churn down 2.9% to 17.1%
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SKY NETWORK TELEVISION ANNUAL RESULTS 2004