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SKY NETWORK TELEVISION ANNUAL RESULTS 2003. Subscribers. ‘000. 2002. 2003. % Change. UHF Residential. 136.3. 117.7. (13.6%). DBS (Satellite) Residential. 284.3. 340.3. 19.7%. DBS Wholesale. 75.4. 76.7. 1.7%. Commercial. 7.2. 8.1. 12.5%. Total Subscribers. 503.2. 542.9. - PowerPoint PPT Presentation
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SKY NETWORK TELEVISION ANNUAL RESULTS 2003
Subscribers
0
100,000
200,000
300,000
400,000
500,000
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UHF DBS (Satellite) Wholesale
Subscriber Growth
503.2
7.2
75.4
284.3
136.3
2002
(13.6%)117.7UHF Residential
Total Subscribers
Commercial
DBS Wholesale
DBS (Satellite) Residential
‘000
7.9%542.9
12.5%8.1
1.7%76.7
19.7%340.3
% Change2003
10%12%14%16%18%20%22%24%26%28%30%32%
Jun-98
Oct-98
Feb-99
Jun-99
Oct-99
Feb-00
Jun-00
Oct-00
Feb-01
Jun-01
Oct-01
Feb-02
Jun-02
Oct-02
Feb-03
Jun-03
Moving Annual Churn
1.00%
1.50%
2.00%
2.50%
2001 2002 2003 2004
Churn
2.00
2.50
3.00
3.50
2002 2003 2004
Viewer Hours per Day
$188
$236 $262$300
$345
$391
$0
$50
$100
$150
$200
$250
$300
$350
$400
$NZ
mil
lion
s
1998 1999 2000 2001 2002 2003Year End 30 June
Subscriber Revenue
$48.79
$50.14
$51.83
$47.00
$48.00
$49.00
$50.00
$51.00
$52.00
$N
Z
2001 2002 2003
Total ARPU
$54.41$56.56
$59.35
$42.55
$42.06
$40.36
$37.36
$36.09
$36.94
$20.00
$30.00
$40.00
$50.00
$60.00
$NZ
Satellite UHF Wholesale
2001 2002 2003
ARPU
$8.6$10.7 $11.6
$12.6$16.5 $19.6
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
$NZ
mil
lion
s
1998 1999 2000 2001 2002 2003Year End 30 June
Advertising Revenue
Programming Costs % Revenue
46%43%
49%50%
48%
43%
38%
40%
42%
44%
46%
48%
50%
52%
1998 1999 2000 2001 2002 2003Year End 30 June
$48.3$73.7 $74.1
$75.7
$108.2$150.8
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$NZ
mill
ions
1998 1999 2000 2001 2002 2003
Year End 30 June
EBITDA
$63.8
$114.7 $103.3
$153.3
$105.9$86.1
$0
$20
$40
$60
$80
$100
$120
$140
$160
$NZ
mil
lion
s
1998 1999 2000 2001 2002 2003Year End 30 June
Capital Expenditure
(excluding transponders)
-$6.1
$4.5
-$27.0
-$42.3
-$30.2
$0.7
-$45.0
-$40.0
-$35.0
-$30.0
-$25.0
-$20.0
-$15.0
-$10.0
-$5.0
$0.0
$5.0
$NZ
mill
ions
1998 1999 2000 2001 2002 2003
Year End 30 June
Net Profit/(Loss)
0
8
16
24
32
BIG
MA
C's
Foxtel Sky NZ Direct TV BSkyB
Big Mac Index
Results Summary
(30.2)
(1.3)
26.7
(4.8)
113.0
108.2
236.4
344.6
2002
53.8%(2.0)Other
13.6%391.3Revenue
Net Profit/(Loss) after Tax
Interest
EBIT
Depn & Amort
EBITDA
Operating Expenses
$NZ million
102.3%0.7
4.9%28.0
656.3%26.7
9.8%124.1
39.4%150.8
1.7%240.5
% Change2003
Free Cash Flow
(37.2)
(114.2)
77.0
2002
(15.9%)(96.0)Net Investing Cash Flows
66.2%128.0Net Operating Cash Flow
Free Cash Flow
$NZ million
186.0%32.0
% Change2003
Revenue Analysis
344.6
36.4
16.5
6.1
19.6
266.0
2002
16.2%309.1Residential
Total Revenue
Installation, programming sales & other
Advertising
Sky Watch
Commercial
$NZ million
13.6%391.3
(8.0)%33.5
18.8%19.6
11.5%6.8
13.8%22.3
% Change2003
Expense Analysis
347.9
113.1
48.6
6.9
12.7
166.6
2002
0.9%168.1Programming
Total Operating Expenses
Depreciation & Amortisation
Selling, General & Administration
Transmission
Subscriber Management
$ million
4.2%362.6
9.7%124.1
2.3%49.7
1.4%7.0
7.9%13.7
% Change2003
0
20
40
60
80
100
120
140
160
180
$ N
Z M
illi
on
s
2001 2002 2003
Rights Production Other
Programming Costs
Foreign Currency Hedging Sky’s hedging positions at 31 July 2003
• 97% hedged for 0 -12 months $US exposures @ .500
• 46% hedged for 13-24 months $US exposures @ .536
• 33% hedged for 25-36 months $US exposures @ .565
• 96% hedged for 0 -12 months $A exposures @ .899
• 74% hedged for 13-24 months $A exposures @ .904
• 66% hedged for 25-36 months $A exposures @ .892
• average $US payment rate for opex for year to June 03 = 44.8c
Funding
• New 5 year NZ$200m revolving bank facility refinanced in May 2003 - TD, HSBC, ANZ, BNZ, Westpac
• Event of review if News direct/indirect ownership of Sky is less than 27.5%
• Bank Facility drawn to NZ$148m. Margin is 75bp
• NZ$111m of Capital Notes raised October 2001 @ 9.3%. Election date October 2006, market yield on notes @ June 03 was 7.6%
Tax
• Tax losses carried forward of NZ$106m @ 33% = $35m
• Tax Asset of NZ$54m not recognised (includes June 02 offset to INL)
• NZ$53m of losses offset by INL for June 02 year, NZ$52m anticipated for June 03 year
• INL to repay cash to SKY when tax is due
• ie ($53m + $52m) x 33% = $35m
• Sky will receive imputation credit benefit of loss transfer
Capital Expenditure Analysis
123.4
4.5
10.7
3.0
2.0
85.7
17.5
2002
(29.0%)7.6Right of renewal
(14.3%)105.8Total Capital Expenditure
12.6%19.7Transponder Lease
Other
Interactive Applications
Digital Expansion
Subscriber Equipment
$ million
(57.8%)1.9
(76.7%)0.7
(25.0%)1.5
(13.2%)74.4
% Change2003
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$900.00
$NZ
2001 2002 2003 2004 Forecast
Decoder Material/Labour
DBS (Satellite) Install Costs
$719$803$832
$524
• Net profit of $0.7m a $30.9m improvement
• Operating cash flow up 66% to $128m
• Negative free cash flow improved by $69m to a positive $32m
• Subscriber numbers up 8% to 543k.
• ARPU up 3% to $51.83, DBS ARPU up 5% to $59.35
• Net Churn down 7% to 10.8%
2003 Key Messages
• Our July 2003 survey of brokers forecasts indicates
NZ$m Mean ($m)
EBITDA 175 - 199 187
NPAT 29 - 47 39
Capex 70 - 106 91
• Guidance is that SKY expects to be at the lower end of each of
these forecasts
2004 Guidance
Programming
Initiatives
2003/04
SKY NETWORK TELEVISION ANNUAL RESULTS 2003