Sky Network Television Ltd · NZX:SKT
Sky Network Television — H1 2006 Earnings Presentation
37 slides from Sky Network Television's earnings presentation, Feb 17, 2006
Slide 1: Sky Network Television Half Year Results 2006
SKY NETWORK TELEVISION HALF YEAR RESULTS 2006 John Fellet / Jason Hollingworth 17 February, 06
Slide 2: Subscribers
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 UHF Jun-92 Jun-91 Subscribers 0 600,000 500,000 400,000 300,000 200,000 100,000
Slide 3: Total Net Gain
Total Net Gain 20,000 15,000 17,118 $NZ 10,000 11,980 5,000 5,150 0 Dec-03 Dec-04 Dec-05
Slide 4: Subscriber Growth – Dec v Dec
Subscriber Growth – Dec v Dec ‘000 Dec Dec % Change 2004 2005 UHF Residential 80.9 70.0 (13.4%) DBS (Satellite) Residential 413.9 463.5 12.0% DBS Wholesale 86.5 92.4 6.9% Commercial 7.4 10.3 40.1% Total Subscribers 588.6 636.3 8.1%
Slide 5: Moving Annual Churn
Dec-05 Jun-05 Dec-04 Jun-04 Dec-03 Jun-03 Dec-02 Jun-02 Dec-01 Jun-01 Dec-00 Jun-00 Moving Annual Churn Dec-99 Jun-99 Dec-98 Jun-98 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10%
Slide 6: Monthly Churn
Monthly Churn 2.50% 2.00% 1.50% 1.00% 0.50% ec ct n r b n v ug ar p ay l Ju Ap No Fe Se Ja Ju O M D M A 2004 2005 2006
Slide 7: UHF v Digital Churn
UHF v Digital Churn 2.00% 1.75% 1.50% 1.25% 1.00% 0.75% 0.50% c ct n v g p l Ju De No Se Ja Au O UHF Dig ita l
Slide 8: 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 % S hare o f A ll N Z T V V iew in g 30 25 20 15 10 5 0 9 0 1 2 3 4 5 00 01 02 03 04 05 06 l- 9 l- 0 l- 0 l- 0 l- 0 l- 0 l- 0 n- n- n- n- n- n- n- Ju Ju Ju Ju Ju Ju Ju Ja Ja Ja Ja Ja Ja Ja Month All Sky TV 12 Month
Slide 9: Total ARPU
Total ARPU $59.00 $58.00 $57.00 $56.00 $58.38 $55.00 $54.00 $56.68 $NZ $53.00 $52.00 $54.61 $51.00 $50.00 $49.00 $50.85 $48.00 $47.00 Dec-02 Dec-03 Dec-04 Dec-05
Slide 10: Total Revenue
Total Revenue $500 $450 $400 $492.4 $350 $NZ millions $300 $250 $441 $200 $391 $266 $345 $240 $150 $262 $300 $236 $100 $50 $0 1999 2000 2001 2002 2003 2004 2005 2006 Year End 30 June Note: prior 2005, numbers are SKY only, 2005 & 2006 restated for merger & IFRS
Slide 11: Advertising Revenue
Advertising Revenue $40 $35 $30 $NZ millions $25 $35.6 $20 $15 $26.6 $10 $16.5 $19.6 $16.3 $19.8 $11.6 $12.6 $10.7 $5 $0 1999 2000 2001 2002 2003 2004 2005 2006 Year End 30 June Note: prior 2005, numbers are SKY only, 2005 & 2006 restated for merger & IFRS
Slide 12: Programming Costs % Revenue
Programming Costs % Revenue 50% 45% 40% 47% 50% 48% 35% 44% 43% 40% 34% 30% 32% 25% 1999 2000 2001 2002 2003 2004 2005 First 1/2 2006 Year End 30 June Note: prior 2005, numbers are SKY only, 2005 & 2006 restated for merger & IFRS
Slide 13: EBITDA
EBITDA $250.0 $200.0 $NZ m illions $219.8 $150.0 $100.0 $150.8 $187.2 $108.2 $108.6 $123.8 $50.0 $73.7 $74.1 $75.7 $0.0 1999 2000 2001 2002 2003 2004 2005 2006 Year End 30 June Note: prior 2005, numbers are SKY only, 2005 & 2006 restated for merger & IFRS
Slide 14: Net Profit/(Loss)
Net Profit/(Loss) $80.0 $60.0 $74.5 $40.0 $NZ m illions $20.0 $35.3 $35.9 $29.7 $0.0 $4.5 -$27.0 $0.7 -$30.2 -$20.0 -$42.3 -$40.0 -$60.0 1999 2000 2001 2002 2003 2004 2005 2006 Year End 30 June Note: prior 2005, numbers are SKY only, 2005 & 2006 restated for merger & IFRS
Slide 15: Capital Expenditure
Capital Expenditure $160 $140 $120 $NZ millions $100 $80 $153.3 $60 $114.7 $103.3 $105.9 $40 $86.1 $57.4 $20 $40.5 $26.6 $0 1999 2000 2001 2002 2003 2004 2005 2006 Year End 30 June Half Year only (excluding transponders) Note: prior 2005, numbers are SKY only, 2005 & 2006 restated for merger & IFRS
Slide 16: Capital Expenditure Analysis
Capital Expenditure Analysis $ million 2004 2005 % Change Decoder 9.1 12.0 31.9% Capitalised Install Costs 14.9 16.9 13.4% Other 2.6 11.6 346.2% Total 26.6 40.5 52.3%
Slide 17: DBS (Satellite) Decoder Stock
DBS (Satellite) Decoder Stock Opening decoders 32,861 (including 13,161 broken) Add purchases 40,128 Less written off (1,328) Less installed at customer (31,449) Net movement for the year 7,351 Closing decoders 40,212 (including 24,744 broken)
Slide 18: Results Summary
Results Summary $NZ Million 2004 2005 % Change Revenue 240.3 266.1 10.8% Operating Expenses 131.7 142.3 8.0% EBITDA 108.6 123.8 14.1% Depn & Amort 56.6 54.7 (3.3%) EBIT 52.0 69.1 33.0% Interest (1.1) 24.7 (2297.6%) Tax 17.2 14.7 (14.7%) Net Profit after Tax 35.9 29.7 (17.3%)
Slide 19: Revenue Analysis
Revenue Analysis $NZ million 2004 2005 % Change Residential satellite subscriptions 164.6 186.6 13.4% Other subscriptions 43.5 43.8 0.8% Installation 6.2 6.8 9.7% Advertising 16.3 19.8 21.7% Other income 9.7 9.0 (6.3%) Total Revenue 240.3 266.1 10.8%
Slide 20: Expense Analysis
Expense Analysis $million 2004 2005 % Change Programme rights 70.8 71.8 1.4% Programme operations 11.6 13.7 18.0% Subscriber management 14.3 16.8 17.9% Sales and marketing 12.9 15.1 17.3% Advertising 5.2 6.0 16.1% Broadcasting and infrastructure 9.1 10.5 14.9% Depreciation and amortisation 56.6 54.7
Slide 21: Free Cash Flow
Free Cash Flow $NZ million 2004 2005 % Change Net Operating Cash Flow 94.6 87.9 (7.1%) Net Investing Cash Flows (13.1) (145.3) 1009.2% Net Financing Cash Flows (67.3) (177.1) 163.2%
Slide 22: IFRS Impact June 2005 Balance Sheet (Assets)
IFRS Impact June 2005 Balance Sheet Current Assets Previous GAAP IFRS Impact NZ IFRS Cash and cash equivalents 305,056 305,056 Trade and other receivables 53,367 53.367 Programme rights 40,197 (24,047) 16,150 Derivative financial 19 19 Income tax receivable 641 641 399,261 (24,028) 375,233 Non Curre
Slide 23: IFRS Impact June 2005 Balance Sheet (Liabilities)
IFRS Impact June 2005 Balance Sheet Current Liabilities Previous GAAP IFRS Impact NZ IFRS Trade and other payables 115,482 (30,564) 84,918 Borrowings 23,737 23,737 Derivative financial 6,621 6,621 Income tax payable 1,814 1,814 141,033 (23,943) 117,090 Non Current Liabilities Capital notes 109,868 1
Slide 24: IFRS Impact June 2005 Income Statement
IFRS Impact June 2005 Income Statement Previous GAAP IFRS Impact NZ IFRS Income 492,359 492,359 Expenses Programme rights 140,648 (106) 140,542 Programme operations 27,875 27,857 Subscriber management 23,694 6,150 29,844 Sales and marketing 26,431 26,431 Advertising 11,132 11,132 Broadcasting 18,222
Slide 25: Business Combinations June 2001
Business Combinations June 2001 of 66.25% Fair value net assets acquired 64,780 Less minority interest (21,904) INL Share of Net Assets 42,876 Less acquisition cost (660,564) Acquired goodwill 617,688
Slide 26: Business Combinations October 2003
Business Combinations October 2003 Purchase of 12.05% Sky equity @ 24 October 2003 64,010 INL Share (12.05%) 7,713 Less acquisition (220,015) Acquired goodwill 212,302
Slide 27: Business Combinations July 2005
Business Combinations 1 July 2005 Acquired 21.7% SKY adjusted equity 119,241 Minority interest acquired 26,494 Acquired goodwill 575,179 Consideration paid 601,673
Slide 28: Business Combinations Result
Business Combinations Result $000 84.2 million shares issued @ $5.75 484,395 84.2 million shares @ $1.28 cash 107,831 Acquisition costs 9,447 Total consideration paid 601,673
Slide 29: Foreign Currency Hedging
Foreign Currency Hedging Q For USD exposures Q 91% hedged for 6 months to 30 June 2006 @ 0.6390 (average rate for the June 2006 year of 0.6222) Q 74% hedged for June 2007 year @ 0.6412 Q 51% hedged for June 2008 year @ 0.6587 Q For AUD exposures Q 98% hedged for 6 months to 30 June 2006 @ 0.8916 (av
Slide 30: SKY Highlights
SKY Highlights • 2 new basic channels • Food TV 1 Nov • Playhouse Disney 24 Dec 2. Launched ‘MY SKY’ 3. Sports Rights • Formula One • World Rally Championships 4. Acquisition of free to air channel - Prime
Slide 31: Purchase of Prime Strategy
Purchase of Prime Strategy • Programming flexibility • Delayed FTA Sports rights • Market size – 4 channels • Growth potential • Synergy benefits • Terrestrial digital
Slide 32: Prime Results Summary
Prime Results Summary $NZ Million June 2005 5 month Forecast Feb – Jun 2006 Total Revenue 20.9 6.0 Programming expenses 12.0 3.4 Other operating expenses 11.7 6.4 Total Operating Expenses 23.6 9.8 EBITDA (2.7) (3.8) Depn & Amort 1.3 0.6 EBIT (4.0) (4.4) Interest/Tax/other 0.0 0.0 Net Profit after Ta
Slide 33: Purchase of Prime
Purchase of Prime Result $m Land 1.6 Building 2.2 Plant & Equipment 7.6 Net Programming Assets 3.5 Goodwill / Intangible Assets 14.6 Purchase price 29.5
Slide 34: Prime Programming Highlights
Prime Programming Highlights • Super 14 replay 9.00pm Saturday • BP Ultimate Sports Sunday • An anchored Sports block compiled and hosted starting at 2.30pm every Sunday. • Combining the best of Rugby Union, Motorsport, Cricket, Rugby League, Golf and a host of other compelling sports • Holmes • Aus
Slide 35: 2006 Guidance
2006 Guidance Our February 2006 survey of brokers forecasts indicates NZ$m Mean ($m) EBITDA 253 - 265 258 NPAT 63 – 83 69 Capex 82 – 102 95 Subscribers 643 – 663 654 Guidance is that SKY expects to be at the low end of the range of the analyst forecasts (including capex)
Slide 36: Dividend Policy
Dividend Policy The Board has declared a fully imputed interim dividend of 4.0 cps to be paid (=$15.6m). Supplementary dividend of 0.706 cps to non-residents. Record date is 10 March 2006. Payment date is 17 March 2006. The Board has decided not to set a specific dividend payout policy but will cons
Slide 37: Sky Network Television Half Year Results 2006
SKY NETWORK TELEVISION HALF YEAR RESULTS 2006 John Fellet / Jason Hollingworth 17 February, 06
Sky Network Television — H1 2006 Earnings Presentation on 6ix