Appendix 4D Release to ASX under rule 42017/02/22 · Appendix 4D Release to ASX under rule 4.2A Half Year Information for Sky Network Television Limited for the six months to 31

Appendix 4D Release to ASX under rule 4.2A

Half Year Information for Sky Network Television Limited for the six months to 31 December 2016

To be read in conjunction with Sky Network Television Limited financial statements for the year

ended 30 June 2016

CONTENTS

Results for announcement to the market

Results commentary

Consolidated interim financial statements

Independent review opinion

Directors declaration

Other information

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Results for announcement to market

SKY Network Television Limited

Half year ended on 31 December 2016 (In NZD)

Total operating revenues of $458,183,000 has decreased $17,371,000 from the prior half year,

which is a 3.7% decrease.

Net profit of $59,459,000 has decreased $27,878,000 from the prior half year, which is a 31.9%

decrease.

Net profit attributable to security holders of $59,300,000 has decreased $27,792,000 from the

prior half year, which is a 31.9% decrease.

Dividends Amount per security

Franked amount per Security

Interim Dividend payable (22 February 2017) 15.0 cents N/A

Final Dividend (paid September 2016) 15.0 cents N/A

Previous corresponding period – Interim Dividend (paid March 2016)

15.0 cents N/A

Previous corresponding period – Final Dividend (paid September 2015)

15.0 cents

N/A

Record date for determining entitlements to the dividend 15 February 2017

Brief explanation of any figures reported above, refer attached results commentary.

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SKY TV PO Box 9059 Newmarket Auckland 1149 New Zealand 10 Panorama Road Mt Wellington Auckland 1060 New Zealand T. +64 9 579 9999 sky.co.nz skybusiness.co.nz

22 February 2017

Client Market Services

NZX Limited

[email protected]

Market Announcements Office

ASX Limited

Level 4, 20 Bridge Street

Sydney, NSW

Australia

Confirmation of Guidance

SKY Network Television Limited (SKY) confirms the Guidance provided on 14 December 2016 that EBITDA will be 5% to 7% below the $296 million forecast for the year ended 30 June 2017 included in the Explanatory Memorandum dated 13 June 2016.

End.

For further information, please contact:

Jason Hollingworth

Chief Financial Officer

SKY Network Television

(09) 579 9999

021 312 928

[email protected]

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SKY NETWORK TELEVISION LIMITED INTERIM REPORT DECEMBER 2016

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NEW PLATFORMS. MORE CONTENT, MORE CHOICE. IT’S FAST FORWARD FOR SKY.

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2 Chief Executive’s Review

7 Subscriber Base

7 History of Dividend Payments

8 Consolidated Interim Statement of Comprehensive Income

9 Consolidated Interim Balance Sheet

10 Consolidated Interim Statement of Changes in Equity

11 Consolidated Interim Statement of Cash Flows

12 Notes to the Interim Financial Statements

18 Independent Review Report

19 Directors and Executives

20 Directory

CONTENTS

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2 SKY INTERIM REPORT 2016

CHIEF EXECUTIVE’S REVIEW

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SKY INTERIM REPORT 2016 3

Dear shareholders

As I write this we are still awaiting the outcome of the review of the proposed merger between SKY and Vodafone by the Commerce Commission. The original date given for the release of the result was to be in November. It has now been pushed back to 23 February 2017.

While I believe the Commerce Commission decision will have a greater long-term impact on the value of your investment in SKY than just this interim six month result; the purpose of this CEO letter, as always, is to provide you insights beyond the raw numbers.

In my last few letters to you I have discussed how SKY and for that matter all the media industry, was going through a disruption phase. Be it SKY, a free to air advertising supported television channel, a newspaper or a magazine, even radio – all traditional media companies are under some form of stress from digital disruption.

This digital disruption has also brought a massive increase in the supply of additional viewing options for consumers and spending options for advertisers. Yet without much increase in overall demand. Since SKY has the lion’s share of the New Zealand subscription television customers, it faces the biggest challenges. In this letter I will try and update you on what we are doing to improve your company’s position, and to counter this often accentuated view of disruption on SKY – a company some would have you believe is the only one affected by such disruption.

In the 30 June Annual Report SKY reported 852,679 subscribers. For the period ending 31 December this number fell to 816,135. It is important to understand this change. We do not break out the categories of subscribers for competitive reasons but in the annual letter I did disclose that the bulk of net subscriber gains came from Internet delivered services such as FAN PASS and NEON. Likewise, in the December figure it was FAN PASS and NEON that accounted for more than half of this loss.

In a mature pay television market, subscriptions will tend to peak in the middle of the winter (the earlier it gets dark and the rainier it is, the better we like it). Similarly, services like FAN PASS and NEON are even more seasonal. FAN PASS allows customers to buy our SKY Sport tier by the month, week or day. It has been quite successful in attracting non SKY subscribers. But there will always be greater interest in the service during the winter months when Netball, Rugby and Rugby League are of peak interest.

NEON is also event driven. The biggest entertainment event each year is Game of Thrones, which also hits this market in the middle of the winter this year. This will mean that NEON will also hit its peak subscribers around June and July as well. Despite a compelling array of other HBO, Showtime, CBS, Warner’s, AMC and other studio dramas; and the biggest blockbuster movies in their first pay window, Game of Thrones will always over index in attracting NEON subscribers compared to any other single piece of entertainment content. It is a unique international television phenomenon, the likes of which may never be seen again.

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OUR STRATEGY TO DEAL WITH THIS DISRUPTION IS TO HARNESS THIS DIGITAL REVOLUTION FOR THE BENEFIT OF OUR SUBSCRIBERS.

For several reasons such as high churn rates, NEON and FAN PASS are not as profitable as traditional SKY subscribers. Hence the subscriber gains last June and the subscriber losses in December, whilst still an important metric, do not impact us as much as if they were traditional subscribers.

Earlier I mentioned that all media companies were facing digital disruption. In our industry the biggest impact is that it has never been easier to start a “subscription business”, both domestically and internationally. These new businesses fall under half a dozen commercial models, and to date it is uncertain which will survive, let alone be ultimately profitable. The biggest challenge we face with each of these models is that they all need to be fed content to be able to offer a product.

Recognising this, a few years ago your company went out and bought a temporary insurance policy by determining what content (be it sport or entertainment) was the most important to SKY. We contracted this content on a long term basis and with the flexibility that would allow us to deliver that content in an array of different options like NEON and FAN PASS. In some cases other parties with different economic models outbid us for pockets of content but before too long some of this content like Golf and the English Premier League have since landed back on SKY’s subscription television platform.

This insurance policy came at a cost but one I would pay again if I could go back in time. The biggest impact during this period was the steep increase in SANZAR Rugby rights. This increase straddles our fiscal year so half of the impact hit in the financial year between January 2016 and June 2016 and the other half in the latest period between July 2016 and December 2016. The good news is that at least the Rugby rights are flat for another four years. Also impacting the profit of $59 million in the latest period was the cost of the four yearly event of the 2016 Summer Olympics in August.

The Summer Olympics are a good example of how we are dealing with increased costs. With technical improvements and investments we created more ways to watch the Olympics than ever before. SKY Sport customers enjoyed unprecedented coverage across SKY Sport 3 and SKY Sport 4 as well as ten comprehensive Rio 2016 Olympic Games Pop-Up channels. A SKY Olympics App, SKY Go and SKY On Demand offered additional ways to view and free to air channel Prime offered comprehensive coverage with up to 15 hours daily.

Our strategy to deal with this disruption is to harness this digital revolution for the benefit of our subscribers, and SKY Go was the first step. This app allows SKY customers to access their favourite live channels no matter where they are in New Zealand. As mentioned, during the Summer Olympics over 600,000 viewer hours of content was consumed online in one month. This monthly record was not broken until January 2017 when over 640,000 viewer hours of content was consumed, presumably customers watching Cricket or movies at the beach.

The second step was increasing our share of the “on demand” world. For years we owned the On Demand category with our MY SKY decoders, but increasingly the Internet has stolen market share from us. Last year we downloaded a new operating system to our decoders that allowed them to connect to the Internet. Currently, SKY subscribers who have activated this option download on average an additional 2.5 pieces of content each week, which is equivalent to one night of television viewing. At last count, depending on what packages customers have, they can avail themselves to another 4,700 pieces of content.

And finally, the third leg of our strategy was to create a package of services that would accommodate individuals whose lifestyle or living circumstances does not lend itself to the SKY traditional package. It might be a university student living in a dorm, or a young

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professional who is flatting. To address their needs we launched NEON, a Subscription Video On Demand service; and FAN PASS, an over the top Internet delivered sports service. These new services are not without their challenges. However, our unwavering belief throughout the history of this company is to deliver great value to our customers. Ensuring they have something great to watch each day, no matter what mood they are in or who they are with. To do this we will continually evolve and adapt the way we deliver content to meet the needs, lifestyles and expectations of today’s and tomorrow’s customers.

HIGHLIGHTS

• The Rio 2016 Olympic Games were broadcast during August on over 12 SKY channels, free to air on Prime and through SKY Go, On Demand, and a SKY Olympic App. Working with the National Foundation for the Deaf we were able to offer captions on Prime for the first time. SKY was asked to be the host producer of the international feed for three Olympic events; the Open Water Swim, Triathlon and Rugby Sevens.

• In the middle of 2016 both the PGA and LPGA Golf Tours were secured back on SKY.

• In August 2016 we launched premium beIN SPORTS channels dedicated entirely to Football and bringing fans unprecedented live coverage and analysis of some of the best Football leagues and tournaments in the world. One channel is dedicated to the Premier League, and another features some of the best Football competitions across the world.

• We agreed a deal with Prime and BBC Worldwide Australia & New Zealand (ANZ) in December 2016. This will see a range of BBC Worldwide’s best factual and documentary series, including Sir David Attenborough’s highly acclaimed Planet Earth II, premiere exclusively on the free-to-air channel in New Zealand.

• Global youth media company VICE partnered with SKY to bring New Zealanders a new lifestyle and cultural TV channel VICELAND which launched on 1 December 2016.

VICELAND is a channel for and by young people curious about life right now, and has been made available to all SKY Basic customers.

In September 2016, valued board member John Waller sadly passed away. I personally want to thank John for his unwavering dedication to SKY. As I said at the time we have lost our most trusted advisor, mentor and friend. A man whose unwavering commitment to our company since 2009, and whose governance and insight, remains a testimony to his stature in the New Zealand business community.

DIVIDENDS

The board of directors has evaluated the performance of the business over the six months to 31 December 2016 and its prospects for the full year. On 31 January 2017 the board announced a fully imputed interim dividend of 15 cents per share (prior interim dividend 15 cents) with the record date being 15 February 2017 and a payment date of 22 February 2017. A supplementary dividend of 2.65 cents per share will be paid to non-resident shareholders.

John Fellet Chief Executive Officer

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INTERIM FINANCIAL STATEMENTS TO 31 DECEMBER 2016

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SUBSCRIBER BASEThe following operating data has been taken from the company records and is not audited.

31 Dec 16 31 Dec 15 31 Dec 14 31 Dec 13 31 Dec 12

Total subscribers 816,135 860,445 856,348 857,115 846,988

Average monthly revenue per residential subscriber (1) 79.09 79.56 79.43 77.51 75.78

Gross churn (2) 17.7% 15.4% 13.7% 13.3% 14.6%

(1) Dec 2016 and Dec 2015 include IGLOO, NEON and FAN PASS not included in previous periods.(2) Gross churn relates to satellite subscribers only and refers to the percentage of residential subscribers over the 12-month period

ended on the date shown who terminated their subscription, net of existing subscribers who transferred their service to new residences during the period.

HISTORY OF DIVIDEND PAYMENTSBy calendar year in cents per share

2016 2015 2014 2013 2012

Interim dividend (paid in March) 15.0 15.0 14.0 12.0 11.0

Final dividend (paid in September) 15.0 15.0 15.0 12.0 11.0

Total ordinary dividend 30.0 30.0 29.0 24.0 22.0

Add special dividend - - - - 32.0

Total dividend for the year 30.0 30.0 29.0 24.0 54.0

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CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOMEFor the six months ended 31 December 2016 (unaudited)

IN NZD 000 Notes31 Dec 2016

(6 months)31 Dec 2015

(6 months)

30 Jun 2016 (1 year)

(audited)

Total revenue 4 458,183 475,554 928,200

Expenses

Programming 181,553 162,905 331,050

Subscriber related costs 48,937 53,403 106,340

Broadcasting and infrastructure 50,374 47,765 96,040

Depreciation and amortisation 52,207 49,181 100,241

Other costs 27,456 30,614 69,484

360,527 343,868 703,155

Operating profit 97,656 131,686 225,045

Finance costs, net 9,310 10,315 20,055

Profit before tax 88,346 121,371 204,990

Income tax expense 28,887 34,034 57,867

Profit for the period 59,459 87,337 147,123

Attributable to:

Equity holders of the Company 59,300 87,092 146,718

Non-controlling interests 159 245 405

59,459 87,337 147,123

Earnings per share

Basic and diluted earnings per share (cents) 15.24 22.38 37.70

OTHER COMPREHENSIVE INCOME

Profit for the period 59,459 87,337 147,123

Items that may be reclassified subsequently to profit and loss

Cash flow hedges 7,008 (24,654) (49,989)

Gain on available for sale investments 2,142 - -

Income tax effect (2,562) 6,903 13,997

Other comprehensive income for the period, net of income tax 6,588 (17,751) (35,992)

Total comprehensive income for the period 66,047 69,586 111,131

Attributable to:

Equity holders of the Company 65,888 69,341 110,726

Non-controlling interests 159 245 405

66,047 69,586 111,131

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Peter Macourt ChairmanFor and on behalf of the board 21 February 2017

Susan Paterson Director

CONSOLIDATED INTERIM BALANCE SHEETAs at 31 December 2016 (unaudited)

IN NZD 000 Notes 31 Dec 2016 31 Dec 201530 Jun 2016

(audited)

Current assets

Cash and cash equivalents 10 30,074 36,347 22,863

Trade and other receivables 10 68,424 70,065 70,030

Programme rights inventory 64,898 66,868 79,765

Derivative financial instruments 10 2,334 15,712 2,982

165,730 188,992 175,640Non-current assetsProperty, plant and equipment 270,409 298,139 283,316

Intangible assets 1,482,358 1,439,283 1,473,172

Available for sale investment 9 6,905 - 4,832


1,768,457 1,753,201 1,767,924

Total assets 1,934,187 1,942,193 1,943,564

Current liabilitiesBorrowings/bonds 7/10 - 199,763 199,912

Trade and other payables 10 179,672 195,047 200,817

Income tax payable 8,752 7,679 7,071


194,435 406,277 417,470

Non-current liabilities

Borrowings 7/10 254,578 39,421 49,468

Bonds 7/10 98,843 98,570 98,705


Deferred tax 39,986 41,226 36,047

401,153 187,498 195,171

Total liabilities 595,588 593,775 612,641

Equity

Share capital 577,403 577,403 577,403

Hedging reserve (66) 13,129 (5,112)

Retained earnings 759,888 756,162 757,417

Total equity attributable to equity holders of the Company 1,337,225 1,346,694 1,329,708

Non-controlling interest 1,374 1,724 1,215

Total equity 1,338,599 1,348,418 1,330,923

Total equity and liabilities 1,934,187 1,942,193 1,943,564 For

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CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITYFor the six months ended 31 December 2016 (unaudited)

ATTRIBUTABLE TO OWNERS OF THE PARENT

IN NZD 000 NotesShare

capitalHedging

reserveRetained earnings Total

Non- controlling

interestTotal

equity

Balance at 1 July 2016 577,403 (5,112) 757,417 1,329,708 1,215 1,330,923

Profit for the period - - 59,300 59,300 159 59,459Gain on available for sale investment, net of tax 9 - - 1,542 1,542 - 1,542

Cash flow hedges, net of tax - 5,046 - 5,046 - 5,046Total comprehensive income for the period - 5,046 60,842 65,888 159 66,047Transactions with owners in their capacity as ownersDividend paid - - (58,371) (58,371) - (58,371)Supplementary dividends - - (7,532) (7,532) - (7,532)Foreign investor tax credits - - 7,532 7,532 - 7,532

- - (58,371) (58,371) - (58,371)Balance at 31 December 2016 577,403 (66) 759,888 1,337,225 1,374 1,338,599

For the six months ended 31 December 2015 (unaudited)Balance at 1 July 2015 577,403 30,880 727,441 1,335,724 1,479 1,337,203

Profit for the period - - 87,092 87,092 245 87,337Cash flow hedges, net of tax - (17,751) - (17,751) - (17,751)Total comprehensive income for the period - (17,751) 87,092 69,341 245 69,586

Transactions with owners in their capacity as ownersDividend paid - - (58,371) (58,371) - (58,371)Supplementary dividends - - (7,376) (7,376) - (7,376)Foreign investor tax credits - - 7,376 7,376 - 7,376

- - (58,371) (58,371) - (58,371)Balance at 31 December 2015 577,403 13,129 756,162 1,346,694 1,724 1,348,418

For the year ended 30 June 2016 (audited)Balance at 1 July 2015 577,403 30,880 727,441 1,335,724 1,479 1,337,203

Profit for the year - - 146,718 146,718 405 147,123Cash flow hedges, net of tax - (35,992) - (35,992) - (35,992)Total comprehensive income for the period - (35,992) 146,718 110,726 405 111,131

Transactions with owners in their capacity as ownersDividend paid - - (116,742) (116,742) (669) (117,411)Supplementary dividends - - (14,965) (14,965) - (14,965)Foreign investor tax credits - - 14,965 14,965 - 14,965

- - (116,742) (116,742) (669) (117,411)Balance at 30 June 2016 577,403 (5,112) 757,417 1,329,708 1,215 1,330,923

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CONSOLIDATED INTERIM STATEMENT OF CASH FLOWSFor the six months ended 31 December 2016 (unaudited)

IN NZD 000 Notes31 Dec 2016


(6 months)

30 Jun 2016(1 year)

(audited)

Cash flows from operating activities

Profit before tax 88,346 121,371 204,990

Adjustment for non-cash items:

Depreciation and amortisation 52,207 49,181 100,241

Unrealised foreign exchange (gain)/loss (490) 190 305

Interest expense 10,588 10,150 20,379

Bad debts and movement in provision for doubtful debts 578 795 2,427

Amortisation of bond issue costs 226 288 573

Other non-cash items (1,934) (1,471) 419

Movement in working capital items:

Increase in receivables (550) (1,140) (2,736)

(Decrease)/increase in payables (14,283) 14,240 23,576

Decrease/(increase) in programme rights 14,867 5,945 (6,952)

Cash generated from operations 149,555 199,549 343,222

Interest paid (10,361) (10,618) (20,920)

Income tax paid (18,200) (31,272) (46,458)

Net cash from operating activities 120,994 157,659 275,844

Cash flows from investing activities

Proceeds from sale of property, plant and equipment 24 - -

Acquisition of available for sale investment 9 - - (4,832)

Acquisition of property, plant, equipment and intangibles 8 (52,640) (59,535) (128,803)

Net cash used in investing activities (52,616) (59,535) (133,635)

Cash flows from financing activities

Advances received – bank loan 7 220,000 33,000 103,000

Repayment of borrowings – bank loan 7 (15,000) (43,000) (103,000)

Repayment of bonds (200,000) - -

Payment of finance lease liabilities - (3,294) (3,294)

Payment of bank facility fees (264) (631) (1,571)

Dividend paid to minority shareholders - - (669)

Dividends paid (65,903) (65,747) (131,707)

Net cash used in financing activities (61,167) (79,672) (137,241)

Net increase in cash and cash equivalents 7,211 18,452 4,968

Cash and cash equivalents at beginning of the period 22,863 17,895 17,895

Cash and cash equivalents at end of the period 30,074 36,347 22,863

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NOTES TO THE INTERIM FINANCIAL STATEMENTSFor the six months ended 31 December 2016 (unaudited)

1. GENERAL INFORMATIONSKY Network Television Limited (“SKY”) is a company, incorporated and domiciled in New Zealand. The address of its registered office is 10 Panorama Road, Mt Wellington, Auckland, New Zealand. The consolidated interim financial statements of the Group for the six months ended 31 December 2016 comprise SKY and its subsidiaries.

SKY is a company registered under the Companies Act 1993 and is a reporting entity under Part 7 of the Financial Markets Conduct Act 2013.

SKY is a leading media company in New Zealand and operates as a provider of multi-channel, pay-per-view and free-to-air television services in New Zealand.

These consolidated interim financial statements were approved by the Board of Directors on 21 February 2017.

2. BASIS OF PREPARATIONThese consolidated interim financial statements have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013, the NZX Main Board Listing Rules and the ASX Listing Rules.

These consolidated interim financial statements of SKY are for the six months ended 31 December 2016. They have been prepared in accordance with New Zealand generally accepted accounting practice, NZ IAS 34 Interim Financial Reporting and International Accounting Standard 34 (IAS 34). They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2016. For the purposes of financial reporting SKY is a profit-oriented entity.

The preparation of interim financial statements in accordance with NZ IAS 34 Interim Financial Reporting requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

These financial statements have been prepared under the historical cost convention except for the revaluation of certain financial instruments (including derivative instruments).

3. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies applied by the Group in these consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2016.

4. REVENUE

IN NZD 00031 Dec 2016


(6 months)

30 Jun 2016(1 year)

(audited)

Residential satellite subscriptions 371,214 383,492 753,115

Other subscriptions 42,182 38,789 79,286

Advertising 35,086 42,322 74,046

Other revenue 9,701 10,951 21,753

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NOTES TO THE INTERIM FINANCIAL STATEMENTS (CONTINUED)

For the six months ended 31 December 2016 (unaudited)

5. GROUP STRUCTUREAt 31 December 2016 SKY had the following subsidiaries:

• SKY Ventures Limited• IGLOO Limited• Media Finance Limited (non-trading)• Outside Broadcasting Limited• Screen Enterprises Limited• SKY DMX Music Limited (50.5%)• Believe It or Not Limited (51.0%)

6. RELATED PARTY TRANSACTIONSThere were no loans to directors by the Group or associated parties at any of the reporting dates above.

The gross remuneration of directors and key management personnel during the period was $7,827,000 (31 December 2015: $8,266,000; 30 June 2016: $12,798,000).

7. BORROWINGSBondsTerms and conditions of outstanding bonds are as follows:

31 Dec 2016 31 Dec 201530 Jun 2016

(audited)

Bond A

Nominal interest rate - 3.38% 3.38%

Issue date - 16 Oct 2006 16 Oct 2006

Date of maturity - 16 Oct 2016 16 Oct 2016

IN NZD 000

Carrying amount - 199,763 199,912

Face value - 200,000 200,000

Fair value - 197,548 199,000

Market yield - 5.05% 4.97%

Bond B

Nominal interest rate 6.25% 6.25% 6.25%

Issue date 31 Mar 2014 31 Mar 2014 31 Mar 2014

Date of maturity 31 Mar 2021 31 Mar 2021 31 Mar 2021

IN NZD 000

Carrying amount 98,843 98,570 98,705

Face value 100,000 100,000 100,000

Fair value 106,460 107,657 109,644

Market yield 4.57% 4.60% 4.01%

On 31 March 2014 the Group issued bonds for a value of $100 million which were fully subscribed (Bond B).

On 16 October 2006, the Group issued bonds for a value of $200 million which were fully subscribed (Bond A). These bonds were repaid on 16 October 2016. Repayment was effected by a drawdown on the Group’s bank facility.

Bank Loans

During the period bank borrowings of $200 million were drawn down to repay Bond A.

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8. CAPITAL EXPENDITUREThe Group acquired the following property, plant and equipment and intangibles during the period:

Group

IN NZD 00031 Dec 2016


(6 months)

30 Jun 2016(1 year)

(audited)

Capital projects in progress 11,508 13,225 10,655

Land and buildings 59 396 2,986

Broadcasting and studio equipment 899 53 703

Plant and equipment and other 2,084 2,191 2,039

Decoders 13,634 30,831 67,292

Installation costs 17,241 14,475 32,559

Intangibles 3,317 864 15,949

48,742 62,035 132,183

Movement in capital expenditure creditors 3,898 (2,500) (3,380)

Cash outflow in the period 52,640 59,535 128,803

9. AVAILABLE FOR SALE INVESTMENTIn March 2016 SKY Ventures acquired a 15.79% interest in 90 Seconds Pty Limited (a cloud video production company) for a cost of $4.8 million. This investment is classified as an available for sale financial asset recognised initially and subsequently at fair value with changes in fair value recognised in other comprehensive income. The fair value as at 31 December 2016 was $6,905,225.

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10. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTSThe Group’s activities expose it to a variety of financial risks, market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk) credit risk and liquidity risk.

The consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements, they should be read in conjunction with the Group’s annual financial statements as at 30 June 2016. There have been no changes in any risk management policies since year end.

Financial assets of the Group include cash, and cash equivalents, trade and other receivables, available for sale investment and derivative financial assets. Financial liabilities of the Group include trade and other payables, borrowings, bonds and derivative financial liabilities. The Group does not hold or issue financial instruments for trading purposes.

Based on NZ IFRS 13 Fair Value Measurement, the fair value of each financial instrument is categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:

Level 1: Quoted prices (unadjusted in active market for identical assets and liabilities;

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs), for example discounted cash flow.

SKY’s financial assets and liabilities carried at fair value are valued on a level 2 basis other than the available for sale investment (refer note 9) that is valued on a level 3 basis.

Financial instruments measured at fair value

The following financial instruments are subject to recurring fair value measurements:

IN NZD 000 31 Dec 2016 31 Dec 2015 30 Jun 2016

Derivative financial instruments (Level 2)

Current assets 2,334 15,712 2,982

Non-current assets 8,785 15,779 6,604

Current liabilities (6,011) (3,788) (9,670)

Non-current liabilities (7,746) (8,281) (10,951)

(2,638) 19,422 (11,035)

Available for sale investment (Level 3)

Non-current assets 6,905 - 4,832

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10. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (CONTINUED)

Financial instruments not measured at fair value

The following financial instruments are not measured at fair value in the consolidated interim financial statements. These had the following fair values as at December 2016:

31 Dec 2016 31 Dec 2015 30 Jun 2016

IN NZD 000Carrying

amountFair

valueCarrying

amountFair

valueCarrying

amountFair

value

Financial assets

Cash and cash equivalents 30,074 30,074 36,347 36,347 22,863 22,863

Trade and other receivables 62,614 62,614 63,204 63,204 61,752 61,752

92,688 92,688 99,551 99,551 84,615 84,615

Financial liabilities

Trade and other payables (86,284) (86,284) (98,313) (98,313) (110,634) (110,634)

Bank borrowings (254,578) (253,419) (39,421) (38,704) (49,468) (44,366)

Bonds (98,843) (106,460) (298,333) (305,205) (298,617) (308,644)

(439,705) (446,163) (436,067) (442,222) (458,719) (463,644)

Prepaid expenses, deferred revenue, unearned subscriptions, tax payables and employee benefits do not meet the definition of a financial instrument and have been excluded from the “Trade and other receivables” and “Trade and other payables” categories above. Prior period balances for trade and other payables have been restated to exclude tax payables and employee benefits so as to be consistent with the current period.

Due to their short-term nature, the carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables is assumed to approximate their fair value.

The fair value of long-term borrowings are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially the same characteristics and maturities. The interest rates used in estimating the fair value of long-term debt were as follows:

Interest Rates31 Dec 2016 31 Dec 2015 30 Jun 2016

Bond A - 5.05% 4.97%

Bond B 4.57% 4.60% 4.01%

Bank Borrowings 3.38% 4.19% 3.84%

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable inputs. The fair value of forward foreign exchange contracts is based on market forward foreign exchange rates at period end.

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11. CONTINGENT LIABILITIESThe Group is subject to litigation incidental to its business, none of which is expected to be material. No provision has been made in the Group’s financial statements in relation to any current litigation and the directors believe that such litigation will not have a significant effect on the Group’s financial position, results of operations or cash flows.

12. SUBSEQUENT EVENTSAcquisition of Vodafone: At a special meeting on 6 July 2016 SKY shareholders voted to approve the acquisition of Vodafone NZ for a proposed transaction price of $3.44 billion, to approve the incurrence of new debt and to approve the issue of new shares to Vodafone Plc.

Subject to regulatory approvals (which is expected to be by 23 February 2017), SKY will acquire all of the shares in Vodafone NZ from Vodafone Europe B.V for a total purchase price of $3.44 billion, paid for through a mixture of cash and SKY shares. The issue of shares will result in Vodafone owning 51% of the total number of shares in SKY. The purchase price will consist of the issue of 405,023,041 shares at a price of $5.40 and a cash payment of $1.25 billion totalling approximately $3.44 billion.

The transaction will be financed by new debt of up to $1.8 billion which has been negotiated at favourable terms with Vodafone Overseas Finance Limited. However SKY retains the right to renegotiate the revolving credit portion of this debt with one or more third parties. The balance of the bank debt which is currently shown as a non-current liability is expected to be settled shortly after the merger date.

For further details relating to this transaction please refer to the Explanatory Memorandum on SKY’s website www.skytv.co.nz/investor.

On 31 January 2017 the Board of Directors announced that it will pay a fully imputed dividend of 15 cents per share with the record date being 15 February 2017. A supplementary dividend of 2.6471 cents per share will be paid to non-resident shareholders subject to the foreign investor tax credit regime.



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INDEPENDENT REVIEW REPORTto the shareholders of Sky Network Television Limited

Report on the Interim Financial Statements

We have reviewed the accompanying condensed consolidated interim financial statements (“interim financial statements”) of Sky Network Television Limited (“the Company”) on pages 8 to 17 which comprise the balance sheet as at 31 December 2016 and the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the period ended on that date and selected explanatory notes for the Group. The Group comprises the Company and the entities it controlled at 31 December 2016 or from time to time during the period.

Directors’ Responsibility for the Financial Statements

The Directors are responsible on behalf of the Company for the preparation and presentation of these interim financial statements in accordance with New Zealand Equivalent to International Accounting Standard 34 Interim Financial Reporting (NZ IAS 34) and for such internal controls as the directors determine are necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error.

Our Responsibility

Our responsibility is to express a conclusion on the accompanying interim financial statements based on our review. We conducted our review in accordance with the New Zealand Standard on Review Engagements 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements, taken as a whole, are not prepared in all material respects, in accordance with NZ IAS 34. As the auditors of the Company, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial statements.

A review of interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement. The auditors perform procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on these interim financial statements.

We are independent of the Group. Our firm carries out other services for the Group in the area of assurance and advisory services. In addition, certain partners and employees of our firm may deal with the Group on normal terms within the ordinary course of trading activities of the Group. The provision of these other services has not impaired our independence.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that these interim financial statements of the Company are not prepared, in all material respects, in accordance with NZ IAS 34.

Restriction on Use of Our Report

This report is made solely to the Company’s shareholders, as a body. Our review work has been undertaken so that we might state to the Company’s shareholders those matters which we are required to state to them in our review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the shareholders, as a body, for our review procedures, for this report, or for the conclusion we have formed.

For and on behalf of:

Chartered Accountants Auckland

21 February 2017

PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.co.nz

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DIRECTORS AND EXECUTIVES

DIRECTORS

John Fellet Chief ExecutiveDerek HandleyPeter Macourt ChairmanGeraldine McBrideSusan Paterson ONZM John Waller ONZM (Retired 15 September 2016)

EXECUTIVES

John Fellet Director and Chief Executive OfficerJason Hollingworth Chief Financial Officer and Company SecretaryTravis Dunbar Director Entertainment Programming Megan King Director of Content: Strategy, Planning and DeliveryRichard Last Director of Sport Chris Major Director of Government RelationsRawinia Newton Director of Advertising SalesCathryn Oliver Chief of StaffMatthew Orange Director of Products and VenturesTex Texeira Director of Broadcast and MediaMichael Watson Director of MarketingKirsty Way Director of Corporate CommunicationsJulian Wheeler Director of TechnologyMartin Wrigley Director of Operations

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NEW ZEALAND REGISTERED OFFICE

10 Panorama Road Mt Wellington Auckland 1060 New Zealand

Tel: +64 9 579 9999 Fax: +64 9 579 8324 Website: www.skytv.co.nz

AUSTRALIAN REGISTERED OFFICE

c/- Allens Arthur Robinson Corporate Pty LimitedLevel 28, Deutsche Bank PlaceCorner Hunter and Philip StreetsSydney, NSW 2000 Australia

Tel: +61 2 9230 4000 Fax: +61 2 9230 5333

AUDITORS TO SKY

PricewaterhouseCoopers PricewaterhouseCoopers Tower 188 Quay Street Auckland 1010 New Zealand

Tel: +64 9 355 8000 Fax: +64 9 355 8001

SOLICITORS TO SKY

Buddle FindlayPricewaterhouseCoopers Tower188 Quay Street Auckland 1010 New Zealand

Tel: +64 9 358 2555 Fax: +64 9 358 2055

DIRECTORY

REGISTRARSShareholders should address questions relating to share certificates, notify changes of address or address any administrative questions to SKY’s share registrar as follows:

NEW ZEALAND ORDINARY SHARE REGISTRAR

Computershare Investor Services LimitedLevel 2, 159 Hurstmere Road Takapuna, North Shore City 0622New Zealand

Mailing address: Private Bag 92119Auckland Mail Centre Auckland 1142 New Zealand

Tel: +64 9 488 8777 Fax: +64 9 488 8787Email: [email protected]

AUSTRALIAN BRANCH REGISTER

Computershare Investor Services Pty LimitedYarra Falls, 452 Johnston StreetAbbotsford, VIC 3067GPO Box 2975EEMelbourne VIC 3000 Australia

Freephone: 1300 850 505 (within Australia)Tel: +61 3 9415 4000 Fax: +61 3 9473 2500Email: [email protected]

BONDHOLDER TRUSTEE

The New Zealand Guardian Trust Company LimitedLevel 7, Vero Centre, 48 Shortland Street Auckland 1010 New Zealand

Mailing address: P.O. Box 1934Auckland 1140 New Zealand

Tel: +64 9 377 7300 Fax: +64 9 377 7470Email: [email protected]

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SKY NETWORK TELEVISION LIMITED

PO Box 9059 Newmarket Auckland 1149 New Zealand

10 Panorama Road Mt Wellington Auckland 1060 New Zealand

sky.co.nz

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Other Information

SKY Network Television Limited Half Year ended on 31 December 2016 (In NZD)

• Net tangible assets per security: Current period $(0.373): 1 Previous period $(0.238): 1

• Control gained over entities There was no control gained over entities during the half year.

• Loss of control of entities There was no loss of control of entities during the half year.

• Dividends Interim dividend payable: $58.4 million Record date to determine entitlements to the interim dividend: 15 February 2017 Date interim dividend payable: 22 February 2017 Previous corresponding period – interim dividend (paid March 2016): $58.4 million (ordinary securities) Previous corresponding period – final dividend (paid September 2015) $58.4 million.

• Amount per security

Amount per security

Franked amount

per Security

Amount per security of

foreign sourced dividend

Amount per security payable on each dividend to non resident

shareholders

Final Dividend NA

Interim Dividend 15.0 cents NA NA

NZ imputation credits - final NA

NZ imputation credits - interim 5.8333 cents

Supplementary dividend - final NA

Supplementary dividend - interim

2.6471 cents

• Details of aggregate share of profits (losses) of associates and joint venture entities

Not applicable

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• Accounting standards

New Zealand international financial reporting standards used in compiling report.

• Directors’ Details

The directors of Sky Network Television Limited at any time during the half year are as follows: Peter Macourt Chairman John Fellet Director & Chief Executive John Waller Director (Retired 15 September 2016) Derek Handley Director Geraldine McBride Director Susan Paterson Director

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SKY Network Television Limited

10 Panorama Road, Mt Wellington

PO Box 9059, Newmarket

Auckland, New Zealand

Tel: +64 579 9999

Fax: +64 525 8324

www.skytv.co.nz

Director’s Declaration

The directors declare that the consolidated financial statements set out on pages 8 - 17:

(i) comply with New Zealand International Financial Reporting Standards

(ii) give a true and fair view of the financial position of SKY Network Television Limited and its

subsidiaries as at 31 December 2016 and of their performance, as represented by the

results of their operations and their cash flows for the year ended on that date.

In the directors’ opinion at the date of this declaration there are reasonable grounds to believe that

SKY Network Television Limited will be able to pay its debts as and when they become due and

payable.

This declaration is made in accordance with a resolution of Directors and is signed for and on

behalf of the Board of Directors.

Dated at Auckland this 21st day of February 2017.

Peter Macourt John Fellet

Chairman Director

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SKY TELEVISIONINTERIM RESULTS

DECEMBER 2016

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TOTAL SUBSCRIBERS

Page 2

852,679

816,135

600.00

630.00

660.00

690.00

720.00

750.00

780.00

810.00

840.00

870.00

30-Jun-16 31-Dec-16

Last Week Tonight with John Oliver ©2017 Home Box Office, Inc. All rights reserved. HBO® and all related programs are the property of

Home Box Office, Inc.

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TRADITIONAL CHURN

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

Ju

l-15

Aug

-15

Sep

-15

Oct-1

5

No

v-1

5

De

c-1

5

Ja

n-1

6

Fe

b-1

6

Ma

r-16

Apr-1

6

Ma

y-1

6

Ju

n-1

6

Ju

l-16

Aug

-16

Sep

-16

Oct-1

6

No

v-1

6

De

c-1

6

Ja

n-1

7

Monthly AnnualisedFor

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MYSKY CHURN

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

2.2%

2.4%

2.6%

Ju

l-15

Aug

-15

Sep

-15

Oct-1

5

No

v-1

5

De

c-1

5

Ja

n-1

6

Fe

b-1

6

Ma

r-16

Apr-1

6

Ma

y-1

6

Ju

n-1

6

Ju

l-16

Aug

-16

Sep

-16

Oct-1

6

No

v-1

6

De

c-1

6

Ja

n-1

7

MYSKY SKY TotalFor

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New SKY BOX rollout

87% Completed

ON DEMAND

Catch Upnow available

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CONNECTIVITY ON SKY BOXES

18%

29%

0%

5%

10%

15%

20%

25%

30%

35%

Launch Feb 16 Jan-17

Mill

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Page 6©Disney Enterprises, Inc.

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304,242 304,168

200,000.0200,220.0200,440.0200,660.0200,880.0201,100.0201,320.0201,540.0201,760.0201,980.0202,200.0202,420.0202,640.0202,860.0203,080.0203,300.0203,520.0203,740.0203,960.0204,180.0204,400.0204,620.0204,840.0205,060.0205,280.0205,500.0205,720.0205,940.0206,160.0206,380.0206,600.0206,820.0207,040.0207,260.0207,480.0207,700.0207,920.0208,140.0208,360.0208,580.0208,800.0209,020.0209,240.0209,460.0209,680.0209,900.0210,120.0210,340.0210,560.0210,780.0211,000.0211,220.0211,440.0211,660.0211,880.0212,100.0212,320.0212,540.0212,760.0212,980.0213,200.0213,420.0213,640.0213,860.0214,080.0214,300.0214,520.0214,740.0214,960.0215,180.0215,400.0215,620.0215,840.0216,060.0216,280.0216,500.0216,720.0216,940.0217,160.0217,380.0217,600.0217,820.0218,040.0218,260.0218,480.0218,700.0218,920.0219,140.0219,360.0219,580.0219,800.0220,020.0220,240.0220,460.0220,680.0220,900.0221,120.0221,340.0221,560.0221,780.0222,000.0222,220.0222,440.0222,660.0222,880.0223,100.0223,320.0223,540.0223,760.0223,980.0224,200.0224,420.0224,640.0224,860.0225,080.0225,300.0225,520.0225,740.0225,960.0226,180.0226,400.0226,620.0226,840.0227,060.0227,280.0227,500.0227,720.0227,940.0228,160.0228,380.0228,600.0228,820.0229,040.0229,260.0229,480.0229,700.0229,920.0230,140.0230,360.0230,580.0230,800.0231,020.0231,240.0231,460.0231,680.0231,900.0232,120.0232,340.0232,560.0232,780.0233,000.0233,220.0233,440.0233,660.0233,880.0234,100.0234,320.0234,540.0234,760.0234,980.0235,200.0235,420.0235,640.0235,860.0236,080.0236,300.0236,520.0236,740.0236,960.0237,180.0237,400.0237,620.0237,840.0238,060.0238,280.0238,500.0238,720.0238,940.0239,160.0239,380.0239,600.0239,820.0240,040.0240,260.0240,480.0240,700.0240,920.0241,140.0241,360.0241,580.0241,800.0242,020.0242,240.0242,460.0242,680.0242,900.0243,120.0243,340.0243,560.0243,780.0244,000.0244,220.0244,440.0244,660.0244,880.0245,100.0245,320.0245,540.0245,760.0245,980.0246,200.0246,420.0246,640.0246,860.0247,080.0247,300.0247,520.0247,740.0247,960.0248,180.0248,400.0248,620.0248,840.0249,060.0249,280.0249,500.0249,720.0249,940.0250,160.0250,380.0250,600.0250,820.0251,040.0251,260.0251,480.0251,700.0251,920.0252,140.0252,360.0252,580.0252,800.0253,020.0253,240.0253,460.0253,680.0253,900.0254,120.0254,340.0254,560.0254,780.0255,000.0255,220.0255,440.0255,660.0255,880.0256,100.0256,320.0256,540.0256,760.0256,980.0257,200.0257,420.0257,640.0257,860.0258,080.0258,300.0258,520.0258,740.0258,960.0259,180.0259,400.0259,620.0259,840.0260,060.0260,280.0260,500.0260,720.0260,940.0261,160.0261,380.0261,600.0261,820.0262,040.0262,260.0262,480.0262,700.0262,920.0263,140.0263,360.0263,580.0263,800.0264,020.0264,240.0264,460.0264,680.0264,900.0265,120.0265,340.0265,560.0265,780.0266,000.0266,220.0266,440.0266,660.0266,880.0267,100.0267,320.0267,540.0267,760.0267,980.0268,200.0268,420.0268,640.0268,860.0269,080.0269,300.0269,520.0269,740.0269,960.0270,180.0270,400.0270,620.0270,840.0271,060.0271,280.0271,500.0271,720.0271,940.0272,160.0272,380.0272,600.0272,820.0273,040.0273,260.0273,480.0273,700.0273,920.0274,140.0274,360.0274,580.0274,800.0275,020.0275,240.0275,460.0275,680.0275,900.0276,120.0276,340.0276,560.0276,780.0277,000.0277,220.0277,440.0277,660.0277,880.0278,100.0278,320.0278,540.0278,760.0278,980.0279,200.0279,420.0279,640.0279,860.0280,080.0280,300.0280,520.0280,740.0280,960.0281,180.0281,400.0281,620.0281,840.0282,060.0282,280.0282,500.0282,720.0282,940.0283,160.0283,380.0283,600.0283,820.0284,040.0284,260.0284,480.0284,700.0284,920.0285,140.0285,360.0285,580.0285,800.0286,020.0286,240.0286,460.0286,680.0286,900.0287,120.0287,340.0287,560.0287,780.0288,000.0288,220.0288,440.0288,660.0288,880.0289,100.0289,320.0289,540.0289,760.0289,980.0290,200.0290,420.0290,640.0290,860.0291,080.0291,300.0291,520.0291,740.0291,960.0292,180.0292,400.0292,620.0292,840.0293,060.0293,280.0293,500.0293,720.0293,940.0294,160.0294,380.0294,600.0294,820.0295,040.0295,260.0295,480.0295,700.0295,920.0296,140.0296,360.0296,580.0296,800.0297,020.0297,240.0297,460.0297,680.0297,900.0298,120.0298,340.0298,560.0298,780.0299,000.0299,220.0299,440.0299,660.0299,880.0300,100.0300,320.0300,540.0300,760.0300,980.0301,200.0301,420.0301,640.0301,860.0302,080.0302,300.0302,520.0302,740.0302,960.0303,180.0303,400.0303,620.0303,840.0304,060.0304,280.0304,500.0304,720.0304,940.0305,160.0305,380.0305,600.0305,820.0306,040.0306,260.0306,480.0306,700.0306,920.0307,140.0307,360.0307,580.0307,800.0308,020.0308,240.0308,460.0308,680.0308,900.0309,120.0309,340.0309,560.0309,780.0310,000.0

Dec-15 Dec-16

SKY BASIC AND SPORTS PACKAGE

Page 7SUPER RUGBY

www.photosport.nz

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SKY’S NEW WORLDOF DOWNLOADS

Page 8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

6 M

on

ths

De

c 2

01

5

6 m

on

ths

De

c 2

01

6For

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|

3.723.8

2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

Dec-15 Dec-16

SKY PREMIUM PRODUCTS PER SUBSCRIBER

Page 9www.photosport.nz

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TRADITIONAL SKY ARPU

$80.87

$83.58

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

$80.00

$85.00

$90.00

Dec-15 Dec-16

Page 10www.photosport.nz

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TOTAL ARPU

$79.56 $79.09

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

$80.00

$85.00

Dec-15 Dec-16

Page 11www.photosport.nzSIVLER FERNS

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ADVERTISING REVENUE

42

35

0

5

10

15

20

25

30

35

40

45

Dec 15 Dec-16

Mill

ion

s

Page 12

Running With Bear Gryls ©2016 NBCUniversal Media, LLC

Mill

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s

Taboo

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TOTAL TELEVISION ADVERTISING REVENUE(YOY QUARTERLY CHANGE)

-10%

-5%

0%

5%

10%

15%M

ar

10 Q

tr

Ju

n 1

0 Q

tr

Sep

10

Qtr

De

c 1

0 Q

tr

Ma

r 1

1 Q

tr

Ju

n 1

1 Q

tr

Sep

11

Qtr

De

c 1

1 Q

tr

Ma

r 1

2 Q

tr

Ju

n 1

2 Q

tr

Sep

t 12

Qtr

De

c 1

2 Q

tr

Ma

r 1

3 Q

tr

Ju

n 1

3 Q

tr

Sep

t 13

Qtr

De

c 1

3 Q

tr

Ma

r 1

4 Q

tr

Ju

n 1

4 Q

tr

Sep

t 14

Qtr

De

c 1

4 Q

tr

Ma

r 1

5 Q

tr

Ju

n 1

5 Q

tr

Sep

15

Qtr

De

c15

Qtr

Ma

r 1

6 Q

tr2

Ju

n 1

6 Q

tr3

Sep

16

Qtr

4

De

c16

Qtr

5

Page 13

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REVENUE

476458

300

320

340

360

380

400

420

440

460

480

500

Dec-15 Dec-16

Mill

ion

s

Page 14Copyright: © eOne Films (EITS) Limited

Mill

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s

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PROGRAMMING COSTS % REVENUE

34%

39%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Dec-15 Dec-16

Page 15© Photosport.nz OLYMPICS 2016

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EBITDA

180.9

149.9

50.0

70.0

90.0

110.0

130.0

150.0

170.0

190.0

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Must have TLC and OWN logo on frame

www.photosport.nz

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NET PROFIT

87.3

59.5

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Dec-15 Dec-16

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Mili

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© 2016 Marvel.

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FINANCIAL DETAIL

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INTERIM RESULTS SUMMARY

2015 2016 % Change

Revenue 475.6 458.2 (3.7%)

Operating Expenses 294.7 308.3 4.6%

EBITDA 180.9 149.9 (17.2%)

Depn & Amort 49.2 52.2 6.1%

EBIT 131.7 91.7 (25.8%)

Interest 10.3 9.3 (9.7%)

Tax 34.0 28.9 (15.0%)

NET PROFIT after TAX 87.3 59.5 (32.0%)

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REVENUE ANALYSIS

2015 2016 % Change

Residential Satellite

subscriptions

383.5 371.2 (3.2%)

Other subscriptions 38.8 42.2 8.7%

Advertising 42.3 35.1 (17.1%)

Other Income 10.9 9.7 (11.0%)

TOTAL REVENUE 475.5 458.2 (3.6%)

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EXPENSE ANALYSIS

2015 2016 % Change

Programming rights 162.9 181.6 11.5%

Subscriber related costs 53.4 48.9 (8.4%)

Broadcasting and infrastructure 47.8 50.4 5.4%

Depreciation and amortisation 49.2 52.2 6.1%

Other costs 30.6 27.5 (10.3%)

TOTAL EXPENSE 343.9 360.5 4.8%

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CAPITAL EXPENSE ANALYSIS

2015 2016 % Change

Install 14.5 17.2 18.9%

Decoders 28.3 17.5 (43.2%)

Land and Building

Improvements

0.3 0.1 (66.7%)

Broadcasting and

Technology equipment

3.2 6.3 96.9%

Other 13.2 11.5 (7.5%)

TOTAL CAPITAL

EXPENSE

59.5 52.6 (11.5%)

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OPERATING CASHFLOW

2015 2016 % Change

Operating Cashflow 157.7 121.0 (23.3%)

Capex (59.5) (52.6) (11.5%)

Net debt drawn/(repaid) (10.0) 5.0 (150.0%)

Dividends (65.7) (65.9) 0.3%

Other (3.9) (0.3) (92.3%)

NET CASH MOVEMENT 18.5 7.2 (61.6%)

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FUNDING PROFILE

FACILITY DRAWN MARGIN MATURITY

Bank Debt $300m $255m 145bp Jul 2020

Bond - B $100m $100mFixed rate at

6.25%Mar 2021

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FOREIGN CURRENCY HEDGING

For For For For USD exposuresUSD exposuresUSD exposuresUSD exposures

90% hedged for 6 months to 30 June 2017 @ 0.6823

86% hedged for June 2018 year @ 0.7025

39% hedged for June 2019 year @ 0.7044

For For For For AUD exposuresAUD exposuresAUD exposuresAUD exposures

93% hedged for 6 months to 30 June 2017 @ 0.9208

77% hedged for 30 June 2018 @ 0.9363

17% hedged for 30 June 2019 @0.9137

Average $US payment rate for Opex for the 6 months to December 16 @ 0.6824

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DIVIDEND

The Board has declared a fully imputed interim dividend of 15.0 cps ($58.4m)

to be paid and a supplementary dividend of 2.6471 to be paid to non-residents.

Record date is 15 February 2017.

Payment date is 22 February 2017.

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

Interim 15.0 15.0 15.0 14.0 12.0 11.0 8.0 7.0 7.0 7.0

Final 15.0 15.0 12.0 11.0 10.5 7.0 7.0 7.0

Ordinary

Total

15.0 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 15.0 30.0 30.0 29.0 24.0 54.0 43.5 14.0 14.0 14.0

Page 26

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SKY HIGHLIGHTS

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Average Audience YOY growth of

11% all overseas NEWS CHANNELS

124%US NEWS CHANNELS

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SKY SPORT APPS

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IGLOO

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Gaycation ©VICELAND

Launched

Dec 2016

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SKY confirms the Guidance provided on 14 December 2016 that EBITDA will

be 5% to 7% below the $296 million forecast for the year ended 30 June

2017 provided in the EM dated 13 June 2016.

GUIDANCE

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SKY TELEVISIONINTERIM RESULTS

DECEMBER 2016

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Documents

Appendix 4D Release to ASX under rule 42017/02/22 · Appendix 4D Release to ASX under rule 4.2A Half Year Information for Sky Network Television Limited for the six months to 31