New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Sky Network Television / Equity Bottom-Up

<h2>Sky TV FY20 — First Impressions</h2>

Sky TV’s (SKT) FY20 result was in line in our expectation and the company’s guidance. &nbsp;
FY21 guidance was upgraded, and is now in line with our current forecasts.
There were both positives and challenges highlighted in the result:
<ul>
<li>Revenue remains challenging. High-value satellite subscribers continues to decline sharply, down -5% yoy which, combined with a -NZ$1 decline in satellite ARPU to NZ$82, resulted in satellite revenue down -8% or –NZ$48m.</li>
<li>SKT again touted the growth in its streaming subs (which includes the acquisitions of Rugby Pass and Lightbox), however, the increase in revenue was only +NZ$15m, considerably below that lost from satellite.</li>
<li>Advertising revenue fell -13%, with the downward trend exacerbated by COVID-19.</li>
<li>Cost lifted +8% or +NZ$41m (excl. a -NZ$40m reduction from the adoption of the IFRS 16 accounting standard), but were flat in the 2H excluding one-off costs.</li>
<li>EBITDA, excluding the benefit from IFRS 16, declined -NZ$89m or -32%.</li>
<li>Free cash flow was healthy, at +NZ$37m helped by +NZ$23m working capital reduction, taking SKT to a net cash position of +NZ$8m at year end.</li>
</ul>
FY21 guidance
<ul>
<li>Revenue down -6-12% to NZ$660-700m (vs. previous NZ$610-640m).</li>
<li>EBITDA (like-for-like) down -27-35% to $125-140m (vs. previous NZ$100-130m). FY20 normalised EBITDA was NZ$192m, excluding redundancy and other one-off costs.</li>
</ul>
Investor briefing
Conference call: 10.00am (NZ time), NZ 0800 423 972, AU 1 800 590 693, Hong Kong 800 961 113, US 800 289 0459. Passcode: 778845.
Webcast:&nbsp;<a href="https://globalmeet.webcasts.com/starthere.jsp?ei=1352190&amp;tp_key=b5faa4164a" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://globalmeet.webcasts.com/starthere.jsp?ei%3D1352190%26tp_key%3Db5faa4164a&amp;source=gmail&amp;ust=1599780860520000&amp;usg=AFQjCNHvYBlFmJELgd78ZiWaec1Uwk-gvw" rel="noopener">https://globalmeet.webcasts.com/starthere.jsp?ei=1352190&amp;tp_key=b5faa4164a</a>
FY20 results summary
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1677395318894105240&amp;th=17474e27c2961298&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-m0KTCbEw82zJhMOmDCDvz-DtMISjQ96IEUEQhZE86P3w6hNi7ZTQY6w1bQxUHgj2clAihv2OypQ4NjMFVRWoj8PTmfMkmdmAADnqsLHDMDcWa8VjiSm3jWhM&amp;disp=emb" width="496" height="145" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Company reports, Forsyth Barr analysis
Matt Henry &nbsp;CFA Head of Wealth Management Research
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1677395318894105240&amp;th=17474e27c2961298&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-apL73tcOZPOacQUHPAv7unn0VdwkI4fqewgLDRnTkHyE96b0QIJaLdcBT35hlVyfpBiBO2cK4yJ9z0bXMPumuxd5nKCxqCWKum4dTEKDFxtkGg6zaSCVgXew&amp;disp=emb" class="editor-image img-responsive"></figure>
&nbsp; M: +64 21 329 291 |P: +64 9 368 0115 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Sky TV FY20 — First Impressions

Sky TV’s (SKT) FY20 result was in line in our expectation and the company’s guidance. &nbsp;
FY21 guidance was upgraded, and is now in line with our current forecasts.
There were both positives and challenges highlighted in the result:

Revenue remains challenging. High-value satellite subscribers continues to decline sharply, down -5% yoy which, combined with a -NZ$1 decline in satellite ARPU to NZ$82, resulted in satellite revenue down -8% or –NZ$48m.
SKT again touted the growth in its streaming subs (which includes the acquisitions of Rugby Pass and Lightbox), however, the increase in revenue was only +NZ$15m, considerably below that lost from satellite.
Advertising revenue fell -13%, with the downward trend exacerbated by COVID-19.
Cost lifted +8% or +NZ$41m (excl. a -NZ$40m reduction from the adoption of the IFRS 16 accounting standard), but were flat in the 2H excluding one-off costs.
EBITDA, excluding the benefit from IFRS 16, declined -NZ$89m or -32%.
Free cash flow was healthy, at +NZ$37m helped by +NZ$23m working capital reduction, taking SKT to a net cash position of +NZ$8m at year end.

FY21 guidance

Revenue down -6-12% to NZ$660-700m (vs. previous NZ$610-640m).
EBITDA (like-for-like) down -27-35% to $125-140m (vs. previous NZ$100-130m). FY20 normalised EBITDA was NZ$192m, excluding redundancy and other one-off costs.

Investor briefing
Conference call: 10.00am (NZ time), NZ 0800 423 972, AU 1 800 590 693, Hong Kong 800 961 113, US 800 289 0459. Passcode: 778845.
Webcast:&nbsp;https://globalmeet.webcasts.com/starthere.jsp?ei=1352190&amp;tp_key=b5faa4164a
FY20 results summary

Source: Company reports, Forsyth Barr analysis
Matt Henry &nbsp;CFA Head of Wealth Management Research

&nbsp; M: +64 21 329 291 |P: +64 9 368 0115 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Sky Network Television

Sky TV: FY20 — First Impressions