INTERIM RESULTS December 2017 WINTER OLYMPICS Pae 1 Photosport.nz
NET PROFIT 70.0 66.7 60.0 Millions 59.5 50.0 40.0 30.0 20.0 10.0 - Dec-16 Dec-17 WINTER OLYMPICS Page 2 Photosport.nz
PROGRAMMING COSTS % REVENUE 42% 40% 40% 39% 38% 36% 34% 32% 30% 28% Dec-16 Dec-17 WINTER OLYMPICS Photosport.nz Page 3
CAPEX 60.0 Millions 40.0 52.6 20.0 28.1 - Dec-16 Dec-17 www.photosport.nz WINTER OLYMPICS Page 4
.0.0 FREE CASHFLOW.0.0.0 Millions.0.0 81.7.0 68.4.0.0 Dec-16 Dec-17 Page 5 Photosport.nz
TOTAL CUSTOMERS 840.00 810.00 780.00 816,135 778,776 750.00 720.00 690.00 660.00 630.00 600.00 DEC 16 DEC 17 DEC 2016 DEC 2017 NET MOVEMENT Satellite & OTT 805,527 778,776 (26,451) Fatso 10,608 0 (10,608) 816,135 778,776 (37,359) Page 6
TRADITIONAL SKY ARPU $90.00 $85.00 $83.58 $83.98 $80.00 $75.00 $70.00 $65.00 $60.00 $55.00 $50.00 Dec-16 Dec-17 SILVER FERNS Photosport.nz Page 7
SKY PREMIUM PRODUCTS PER SUBSCRIBER 3.9 3.7 3.7 3.8 3.9 3.5 3.3 3.1 2.9 2.7 2.5 Dec-15 Dec-16 Dec-17 BLACK CAPS Photosport.nz Page 8
5.00 TOTAL ARPU 0.00 $79.09 $76.69 5.00 0.00 5.00 0.00 5.00 0.00 Dec-16 Dec-17 Photosport.nz Page 9
TOTAL TELEVISION ADVERTISING REVENUE (YOY QUARTERLY CHANGE) 15% 10% 5% 0% -5% -10% Sep 10 Qtr Dec 10 Qtr Mar 11 Qtr Jun 11 Qtr Sep 11 Qtr Dec 11 Qtr Mar 12 Qtr Jun 12 Qtr Sept 12 Qtr Dec 12 Qtr Mar 13 Qtr Jun 13 Qtr Sept 13 Qtr Dec 13 Qtr Mar 14 Qtr Jun 14 Qtr Sept 14 Qtr Dec 14 Qtr Mar 15 Qtr Jun 15 Qtr Sept 15 Qtr Dec 15 Qtr Mar 16 Qtr Jun 16 Qtr Sept 16 Qtr2 Dec 16 Qtr3 Mar 17 Qtr4 Jun 17 Qtr5 Sep 17 Qtr Dec 17 Qtr Page 10
45 40 ADVERTISING REVENUE 35 30 25 Millions 20 15 10 5 0 35 Dec16 32 Dec17 BLACK CAPS Photosport.nz Page 11
MOVING ANNUAL CHURN 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Jun 98 Dec 17 Page 12
NEW SKY CUSTOMERS NETFLIX PROFILE JULY DECEMBER 2017 Never 36% Currently 49% Formerly 15% Page 13
FINANCIAL DETAIL Photosport.nz
INTERIM RESULTS SUMMARY 2016 2017 % Change Revenue 458.2 433.1 (5.5%) Operating Expenses 308.3 279.6 (9.3%) EBITDA 149.9 153.5 2.4% Depn & Amort 52.2 51.2 (1.9%) EBIT 97.7 102.3 4.7% Interest 9.3 9.6 3.2% Tax 28.9 26.0 (10.0%) NET PROFIT after TAX 59.5 66.7 12.1% Page 15
REVENUE ANALYSIS Residential Satellite subscriptions 2016 2017 % Change 371.2 350.7 (5.5%) Other subscriptions 42.2 42.7 1.2% Advertising 35.1 31.5 (10.3%) Other Income 9.7 8.2 (15.5%) TOTAL REVENUE 458.2 433.1 (5.5%) Page 16
EXPENSE ANALYSIS 2016 2017 % Change Programming rights 181.6 166.9 8.1% Subscriber related costs 48.9 42.0 (14.1%) Broadcasting and infrastructure 50.4 46.1 (8.5%) Depreciation and amortisation 52.2 51.2 (1.9%) Other costs 27.4 24.6 (10.5%) TOTAL EXPENSE 360.5 330.8 (8.2%) Page 17
CAPITAL EXPENSE ANALYSIS 2016 2017 % Change Install 17.2 9.3 (45.9%) Decoders 17.5 8.0 (54.3%) Land and Building Improvements Broadcasting and Technology equipment 0.1 0 (0%) 6.3 1.2 (81.0%) Other 11.5 9.7 (15.7%) TOTAL CAPITAL EXPENSE 52.6 28.2 (46.4%) Page 18
OPERATING CASHFLOW 2016 2017 % Change Operating Cashflow 121.0 109.8 (9.3%) Capex (52.6) (28.2) (46.4%) Net debt drawn/(repaid) 5.0 (9.0) 280.0% Dividends (65.9) (55.5) (15.8%) Other (0.3) (0.2) 0% NET CASH MOVEMENT 7.2 16.9 134.7% Page 19
FUNDING PROFILE FACILITY DRAWN MARGIN MATURITY Bank Debt $300m $191m 145bp Jul 2020 Bond - B $100m $100m Fixedrate at 6.25% Mar 2021 Page 20
FOREIGN CURRENCY HEDGING For USD exposures 93% hedged for 6 months to 30 June 2018 @ 0.7087 78% hedged for June 2019 year @ 0.7132 38% hedged for June 2020 year @ 0.7052 For AUD exposures 94% hedged for 6 months to 30 June 2018 @ 0.9364 52% hedged for 30 June 2019 @ 0.9318 18% hedged for 30 June 2020 @0.9299 Average $US payment rate for Opex for the 6 months to December 17 @ 0.7034 Page 21
DIVIDEND The Board has declared a fully imputed interim dividend of 7.5 cps ($29.2m) to be paid and a supplementary dividend of 1.3235 to be paid to non-residents. Record date is 15 March 2018. Payment date is 23 March 2018. 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Interim 7.5 15.0 15.0 15.0 14.0 12.0 11.0 8.0 7.0 7.0 7.0 Final 12.5 15.0 15.0 15.0 12.0 11.0 10.5 7.0 7.0 7.0 Ordinary Total 7.5 27.5 30.0 30.0 29.0 24.0 22.0 18.5 14.0 14.0 14.0 Special 0 0 0 0 0 32.0 25.0 0 0 0 TOTAL 7.5 27.5 30.0 30.0 29.0 24.0 54.0 43.5 14.0 14.0 14.0 Page 22
STRATEGY AND PLANS
MOVING ANNUAL CHURN 840.00 TOTAL CUSTOMERS 35.00% 810.00 816,135 30.00% 25.00% 20.00% 780.00 750.00 720.00 778,776 15.00% 690.00 10.00% 660.00 5.00% 630.00 0.00% Jun 98 Dec 17 600.00 DEC 16 DEC 17 SKY 2018 Interim Results Page 24
WE ENRICH OUR CUSTOMERS LIVES WITH AN EXCLUSIVE WORLD CLASS SPORTS AND ENTERTAINMENT OFFERING THAT GENERATES SOCIAL CURRENCY. THROUGH UNDERSTANDING OUR CUSTOMERS WE LL ALWAYS HELP THEM FIND SOMETHING GREAT TO WATCH. AND OUR CONTENT AND EXPERIENCES ARE AVAILABLE TO ALL KIWIS THROUGH OUR RANGE OF PRODUCTS AND PRICING SKY 2018 Interim Results Page 25
SKY CUSTOMER SEGMENTATION PROFILES KIWI VIEWERS GET VALUE FROM VIEWING IN DIFFERENT WAYS SOCIAL AVID ONLINE NEUTRAL FANATICAL HABITUAL MODERN I don t have much time for viewing video, I prefer to spend time with others. I view to develop new skills, follow my curiosity I m online A LOT. I like to be first to see trending shows and binge on my favourites I enjoy a little bit of everything, nothing too out there though I enjoy sport, my recorded shows and catch up online too I enjoy traditional TV, my regular shows most days, sport & news I enjoy viewing as a family and some me-time OWLS LEARNERS ADDICTS COUPLES HEARTLANDER HEARTLANDER HOMEMAKERS SKY 2018 Interim Results AUGUST Page 201626 SLIDE 26
WHICH IS SERVICING THE CHANGING FACE OF THE SKY CUSTOMER SKY CUSTOMERS NZ POPULATION* Fanatical and Habitual Heartlanders Online Addicts Neutral Couples Modern Homemakers Avid Learners Social Owls * SKY Internal customer research data SKY 2018 Interim Results Page 27
CLASSIC PAY TV SUPPLY AND DEMAND $$$ $$ $$ $ $ ENGAGEMENT SKY 2018 Interim Results Page 28
CLASSIC PAY TV SUPPLY AND DEMAND $$$ $$ $$ $ $ ENGAGEMENT SKY 2018 Interim Results Page 29
CURRENT PRICING SKY BASIC $49.91 Page 30 SKY 2018 Interim Results *SKY Basic also includes access to all Free to Air channels - www.sky.co.nz/packages
PRICING OPTIONS FOR CUSTOMERS Page 31 SKY 2018 Interim Results *SKY Starter also includes access to all Free to Air channels - www.sky.co.nz/packages
CLASSIC PAY TV SUPPLY AND DEMAND $$$ $$ $$ $ $ ENGAGEMENT SKY 2018 Interim Results Page 32
CLASSIC PAY TV SUPPLY AND DEMAND $$$ $$ $$ $ $ ENGAGEMENT SKY 2018 Interim Results Page 33
SKY BOX CUSTOMER AVERAGE MONTHLY CONTENT USAGE 350 300 250 200 142m HOURS of Live Viewing 108m HOURS Live viewing 150 100 50 177m HOURS Recorded to Planner 175m HOURS Recorded to Planner 0 DEC 17 DEC 16 SKY 2018 Interim Results * SKY Internal Audience Measurement data Page 34
SKY BOX CUSTOMER MONTHLY ON DEMAND VIEWING 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 SKY 2018 Interim Results Page 35
GOALS 1. CONTINUE TO ADD VALUE TO TRADITIONAL CORE CUSTOMERS 2. LAUNCH PRODUCTS AND SERVICES THAT ATTRACT UNDER SERVED SEGMENTS 3. BUILD THE PLATFORMS FOR NEW ZEALAND THAT AMORTISES CONTENT BETTER THAN ANYONE ELSE SKY 2018 Interim Results Page 36
ENRICHED OFFERING ON DEMAND 2018 VOD CISCO IVP ENHANCEMENTS SERIES LINK COMPANION APPS SKY 2018 Interim Results
MOST RECENT AWARDS NOMINATIONS BREAKDOWN BY RIGHTS HOLDERS IN NZ (INCLUDES EMMYS, BAFTA TV AWARDS, SAG AWARDS, GOLDEN GLOBES) 350 300 250 200 TV DRAMAS MOVIES 150 100 50 0 SKY 2018 Interim Results Page 38
NEW TO SKY COUNTERPART BRITANNIA PICNIC AT HANGING ROCK THE LOOMING TOWER JANE SKY 2018 Interim Results Page 39
WINTER OLYMPICS FEBRUARY 2018 SKY 2018 Interim Results Page 40
SKY 2018 Interim Results Page 41
SKY 2018 Interim Results Page 42
CRM CONSULTING CONTACT CENTRE AWARDS Industry Award Winners - Customer Support Services 2015, 2016 & 2017 CRM Contact Centre Awards Diamond Award - Live Chat in NZ Sep 2017 CRM Contact Centre Awards First Place Customer Retention in NZ Sep 2017 CRM Contact Centre Awards First Place Online Web/Email Customer Service in NZ Sep 2017 CRM Contact Centre Awards SKY 2018 Interim Results
INTERIM RESULTS December 2017 WINTER OLYMPICS Pae 44 Photosport.nz