Slide 1: Full Year Results Presentation
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For personal use only For the year ended 4 1 On a like for like basis, excluding Lightbox wholesale at FY20.
Slide 5: Our Strategy
Forpersonal use only Our Strategy WHAT MATTERS: wes Ur Customers WHAT DO 7 Weso ~=©We connect New Zealanders with the sport and entertainment they love, in ways that work for them, right across the country WHAT ie Nurturing and Being the Growing /,» Beinga WE'RE (1) grewing our 2) preferred ) revenu
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For personal use only • • • • • • • • • • • • • • • • • • • • For the year ended 6 1 Excludes bundled Lightbox wholesale customers at 30 June 2020.
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Slide 8: Total customer relationships
For personal use only • Total customer relationships reduced by 3% year on year with underlying relationships (excluding Lightbox wholesale at FY20) increasing by 16% over the same period • Continuing to progress towards stabilising the Sky Box customer base, which declined 3.8% in FY21 compared to
Slide 9: Sky Box customer activations and disconnections
For personal use only • Net growth in direct customers in H1 with 12.8k net loss in H2 partly reflecting seasonal patterns early in H2 • Customer activations returned to growth with an improvement of 15% achieved in FY21 • 29% of activations were due to customers returning to Sky • Disconnections lo
Slide 10: Churn improvement
For personal use only • Total annualized churn of 12.2% compares to 12.6% in prior year and 15.3% at FY18 (a 20% improvement over 3 years) • Significant improvement in the important 0-1 year tenure segment where customers are most at risk of churning with 31% YoY improvement • Customers under contra
Slide 11: New Sky Box development
For personal use only • Consumer research1 provides strong support for the new Sky Box development: 85% of existing customers found the new Box appealing, while 77% of non- customers open to Sky2 found the concept appealing • What’s been achieved so far: — In-depth consumer research informing all ke
Slide 12: Sky Broadband
For personal use only • Early marketing initiatives creating strong awareness, particularly within the Sky Box customer base (unprompted 18% / prompted 36%) • Recognising Broadband is not an immediate purchase decision, early response to targeted campaigns is validating pre-launch research2 suggesti
Slide 13: Streaming customer growth
For personal use only • Continued strong growth in streaming customers of 57% YoY on a like for like basis, well above 4-year CAGR of 37%. Neon customer growth of 39% since the launch of the merged platform in July • Strong improvement in content engagement for Neon (+28%) and SSN (+15%), a lead ind
Slide 14: Commercial customers recovery
Recovery continues; capturing opportunities from tiered pricing and service upgrades For personal use only • Some customer churn in H1, largely related to accounts already suspended due to COVID-impact. Acquisitions weighted to the second half and achieved despite the absence of international touris
Slide 15: Content partnerships
For personal use only • Clear positioning as an aggregator with high value content plus strong market penetration - key reasons Sky is considered a trusted partner for content providers and a ‘one stop shop’ for customers • Attractive partner, enabling content providers to access a significant 955k+
Slide 16: New leadership structure and culture
For personal use only • New leadership structure established in April, underpinning refreshed operating model that places Sky’s customers front and centre and empowers Sky’s capable team of senior leaders - Enabling and empowering teams that are aligned to customer priorities and value - Introducing
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Slide 18: Financial results
For personal use only $m FY21 FY20 vs % • Results were at the top-end (revenue) or slightly above (EBITDA Adjusted Reported Adjusted Reported Adjusted Adjusted and NPAT) guidance • Further slow-down of Revenue decline: 4.7% in FY21 vs 6.1% in Revenue 711.2 711.2 746.6 746.6 (35.5) (5%) FY20 Other In
Slide 19: Revenue
For personal use only • Revenue1 decline of 4.7%, but after removing the direct impact of COVID-19 and other one-off and structural impacts, the decline was 2.4% vs 6.1% in prior year • Majority of direct COVID-19 impact on Advertising and Commercial revenues in H1 netted off against recovery in H2
Slide 20: Sky Box revenue
For personal use only • Sky Box revenue decline of 9% compared to 8% in prior year, reflecting customer loss in FY20 (which has since stabilised in FY21), reseller customer churn prior to November migration, and lower ARPU in the period • FY21 ARPU $3.7 lower than FY20, with approx. half this due (~
Slide 21: Streaming revenue
For personal use only • Streaming revenue increased 24%, compared to 35% in the prior period and compound average growth of 34% since FY18 • Significant growth in Neon customers following Lightbox acquisition on 31 January 2020 and further growth following the merger of Lightbox and Neon in July 202
Slide 22: Commercial revenue
For personal use only • Commercial revenue was significantly impacted by border and gathering restrictions, with H1 FY21 revenue down $7.5m (27%) compared to H1 FY20 • There has been significant recovery, with the lifting of accommodation discounts in H2 back towards pre COVID-19 levels, although th
Slide 23: Advertising revenue
- For personal use only • Advertising revenue down $0.3m (1%) compared to FY20, with significant disruption in H1 (and H2 FY20), but a recovery in H2 vs a COVID-impacted H2 FY20. • Television spend for the NZ market1 was up ~5.6% YoY. Sky’s overall market share was maintained at 8.8%, even with the
Slide 24: Operating expenses
For personal use only • Operating expenses (excl. Depreciation & Amortisation) decreased by $45m (8%) on FY20; decrease was $27m (5%) after excluding one-offs in each year • Reduction of $13m in Programming costs reflects: — COVID-19 related equitable reductions for content rights and lower producti
Slide 25: EBITDA bridge
For personal use only – • COVID-19 impact on revenue of $8m was outweighed by $18m of reductions in sports rights and production costs for cancelled or postponed events • The impact of COVID-19 on commercial and advertising did continue from FY20, but was offset by recovery in H2 vs COVID-impacted H
Slide 26: Capital expenditure
For personal use only • FY21 capex of $51m was 7.2% of revenue, down from 7.6% in FY20. We continue to target capex spend within our long-term range of 7%- 9% of revenue • Satellite installation capex increased from $12.6m to $14.8m due to higher customer acquisition volumes in the year • Further gr
Slide 27: Free cash flow and liquidity
For personal use only – • $69m of free cash flow generated in the period • This is after adjusting for an unusual $43m increase in net working capital, due to inflated cash and payables balances at the end of FY20 (due to ongoing sport equitable reduction negotiations at that time) which returned to
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Slide 29: FY22 guidance
For personal use only • FY22 guidance is provided subject to the continuing uncertainty regarding the ongoing impacts of COVID-19 • Revenue shows a return to growth for the first time since FY16 • Reduced EBITDA (and cash flow generation) and NPAT in FY22 vs FY21 reflects the removal of one-off bene
Slide 30: FY22 EBITDA bridge
For personal use only – • FY22 EBITDA reflects stripping out one-offs and COVID-19 impacts from FY21, then adjusting for known FY22 events and changes • Net cost of $15m for the Summer & Winter Olympics and ICC Women’s Cricket World Cup in New Zealand is a one-off in FY22 (with Summer Olympics origi
Slide 31: Sky's strategy and FY22 targets
SKY’S STRATEGY 3 YEAR TARGETS FY22 Targets For personal use only OUR 1 Nurturing and growing Sky Box • and Streaming customers • 11.5% - 12.0% • 3% - 5% FOCUS • 10% - 15% • 12+ months AREAS Being the preferred partner for • 2 key rights holders, content • Neon 80%, creators and distributors • SSN 75
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Slide 33: Disclaimer
For personal use only This presentation has been prepared by Sky Network Television Limited and its group of companies (“the Company”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. Information in this presentation