Transformation accelerates – Sky raises FY22 guidance

© SKY 2021
Investor Update
7December2021

© SKY 2021
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2

© SKY 2021
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© SKY 2021
4
✓Acceleration of transformation –and robust review of Sky’s cost base
‣Substantial savings identified for FY22, with immediate boost to EBITDA and NPAT forecasts
‣Upgraded guidance delivers 27% increase in midpoint of previous EBITDA, and 96% increase in NPAT forecast
‣Full year impact of $40m to $45m p.a. of permanent annualised cost savings
‣More permanent savings targeted for FY23 and beyond
✓Cost reset, combined with growth in revenue, will deliver significant levels of free cash
flow, helping to inform capital management strategy
✓Propertysale progressing well
✓Strong Executive Leadership Team in place to ensure delivery of outcomes
Faster progress and substantial savings

Delivering additional opex cost savings of
$35m (net) in FY22, ($26m recurring and $9m
one offs) with an annualised impact of $40m
-$45m p.a.
Expecting capex savings of $5 -$10m in FY22
Minimal one-off cost associated with
achieving savings, estimated to be $0.5m in
FY22
Data and insights testing confirms minimal
impact on customer experience or revenue
lines
Targeting further recurring savings to be
delivered from FY23 through identified
medium to longer-term transformation
initiatives
Delivering $40-$45m of additional savings in FY22
1
Following business-wide initiative to reset the cost base
Transformational reset across all operating
and capex cost lines throughout the
business
Non-programming opex review of every cost
line, with a particular focus on third party
spending
Focus on Programming cost covering both
rights and production, including a strategic
‘from the ground up’ review of sports
production
Capex roadmap simplified to focus on
strategic deliverables
Wide consultation within the business to
capture and test initiatives
What we’ve doneWhat it means
5
1
Compared to previous FY22 forecasts that included $5-$10m
of targeted opex savings

Resulting in additional recurring savings
1
With further recurring savings from FY23
1
Compared to previous FY22 forecasts (including $5-$10m in
opex cost reduction target advised 25 August 2021 at FY21)
$mFY22 savings
1
FY22 one-off savings
Total FY22
savings
FY22 savings
1
p.a.
(recurring/annualised)
(recurring)(incl Covid related)
Programming costs$13$9$22
Non-Programming costs$17$17
Variable costs (due to growth)($4)($4)
Total opex savings$26$9$35$40-$45
Capex$5-$10$5-$10
Total savings$31-$36$9$40-$45
6
Forecast savings

Exceeding 3 year targets in year 1, and with more to come
Non-programming cost savings -permanent
•Broadcasting and Infrastructure (B&I) savings include vendor
rationalisation and streamlined applications net of variable cost
increases due to continued customer growth
•Marketing strategy consolidated across the business, creating a
more cohesive approach and reducing agency spend. Sales
activity retargeted to optimise acquisitions, reduce discounting
and lower the cost to acquire
Programming cost savings -permanent
•Strategic reset of sports production coverage against Sky’s
content strategy and audience opportunity, to align spending
with what matters to customers
•Recent content rights wins including HBO and NRL/NZRL see
Sky entering a period of lower renewals. Remaining spend to
drive incremental growth in customers and revenue
One off savings
•Programming cost savings include negotiated reductions in
rights costs and production savings across a number ofsports
codes due to Covid related cancellations and postponements
•Non-programming cost savings include B&I rebates
7
Significantly outperforming previous targets
Previous
1
Revised target
Non-programming
opexsavings
$5m-$10m$22m -$27m
3
Programming
costs
2
to revenue
50% -55%46% -48%
Capex cost to
revenue
7% -8.5%6% -7%
FY22 targets
1
Provided 25 August 2021, Sky FY21 Results Presentation (slide 31).
2
Programming
costs includes both rights and production costs.
3
Revised target includes original
$5-$10m FY22 target plus $17m additional FY22 opex savings

Property Update
Sale of Sky’s Mt Wellington properties progressing well
8
Negotiations with the preferred party for the sale of Sky’s Mt
Wellington properties are progressing well
An announcement of the terms of sale is expected to be made
shortly when negotiations and signature of a definitive
agreement are complete
Sky’s footprint at the Mt Wellington site will significantly
downsize through a long-term leasebackon the building known
as Studio One
Studio One

FY22 Guidance
Cost and revenue performance has driven a significant guidance uplift
$mFY22 guidance
1
Revised FY22 guidance
1
Revenue715 -745725 -745
EBITDA115 -130150 -160
NPAT17.5 –27.540 –48
Capex50 -6045 -50
‣Revenue guidance midpoint raised following solid growth in core
retail subscriber revenues above the level of shorter-term impact
from recent Covid restrictions
‣Guidance excludes the impact from any expected gain on sale of the
Mt Wellington properties
‣The Board is reviewing Sky’s capital structure and has mandated
external financial, legal and tax advisers to assist in determining the
most appropriate capital management strategy, including the
future dividend policy
‣The outcome of this review will be presented, as previously advised,
when Sky reports first half results on 24 February 2022, subject to
Board approval and the successful completion of the sale of its Mt
Wellington properties
1
Based on the Company’s best estimates of the realisable savings which are subject to delivery, and no
adverse change in operating conditions, including future economic impacts flowing from Covid-19, or any
extraordinary items or accounting changes (e.g.the potential impact of SaaS).
9

© SKY 2021
Questions

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Sky New Zealand
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




7 December 2021
Transformation accelerates - Sky raises FY22 guidance following completion of cost review
Following the completion of the first phase of a rigorous cost review and consideration by the Board,
Sky New Zealand has today provided significantly improved guidance, lifting the midpoint of
previous EBITDA and NPAT forecasts for the FY22 financial year by 27% and 96% respectively.
Highlights
• Operating costs reduction of an additional $35m to be delivered in FY22
1
, including $26m of
recurring cost reduction and $9m of one-off savings
• Full year impact of recurring annualised cost savings to deliver an additional $40m to $45m p.a.
1

• As a result, EBITDA guidance increases from $115m-$130m to $150m-$160m and NPAT guidance
increases from $17.5m–$27.5m to $40m-$48m
2

• Additional recurring savings targeted for FY23 and beyond through longer-term transformation
initiatives
• Sale of Sky’s Mt Wellington properties progressing well but not yet finalised and therefore not
included in guidance. An announcement of the terms of sale is expected to be made shortly
when negotiations and signature of a definitive agreement are complete
• Cost reset combined with revenue growth to deliver increased levels of free cash flow.
Cost review
As indicated at Sky’s recent Annual Shareholder Meeting, management, led by Sky Chief Executive
Sophie Moloney, have implemented a rigorous review of every cost and capex line throughout the
business, with the objective to deliver additional cost savings beyond the level indicated in the FY22
and 3-year targets previously advised to the market.
Sophie Moloney commented: “I am very pleased to report that the team has identified significant
savings as a result of this process. Our firm strategic focus is on growing revenues and reducing
operating costs, particularly against the background of the step-up in rights costs to secure the
sports and entertainment content that matters to our customers. We’ve sought to uncover
opportunities that are starting to reset Sky’s cost base, leveraging the learnings from operating in a
Covid-impacted environment as well as challenging the way we operate our business across every
area of spend.
“I’ve been particularly pleased with the significant level of engagement within the business to
identify the opportunities available to us to meet our cost-out objectives without impact on our core
revenues. The identified cost savings in FY22 are focused on areas of third party spend across the
business, including our vendors and contractors, our rights, how we produce and market our
content, and our capex profile.”

1
Compared to previous FY 2022 forecasts. In addition to a $5m - $10m target of non-programming operating cost
savings advised on 25 August 2021.

Sophie added: “Sky’s enhanced data and analytics capability has also been instrumental in validating
initiatives and importantly, to provide confidence that the targeted programme of savings will be
delivered without compromising the needs of our customers.”

$m FY22 savings
1

(recurring)
FY22 one-off savings
(incl Covid related)
Total FY22
savings
FY22 savings
1
p.a.
(recurring/annualised)
Opex savings $26 $9 $35 $40-$45
Capex saving $5-$10

$5-$10

Total savings $31-$36 $9 $40-$45


“As part of this exercise, we have also identified a number of medium to longer-term transformative
initiatives that are expected to deliver further savings in and from FY23. More details will be
provided when the savings are fully quantified.”

FY22 one-offs include a number of rebates and cancellations due to Covid-related impacts during the
2021 calendar year.

Property Sale
Negotiations with the preferred party for the sale of Sky’s Mt Wellington properties are progressing
well, with most commercial terms broadly agreed. The agreement will include a leaseback of the
building known as Studio One. Given negotiations are still ongoing, today’s revised guidance does
not include any profit or cash impact arising from this sale process.

Revised Guidance
The current financial year marks a positive inflection point for the business, with guidance provided
at Sky’s annual results presentation in August reflecting a return to revenue growth after a number
of years of decline. Despite the impact of recent Covid restrictions on Commercial revenues,
continued growth in core subscriber revenue has provided confidence that allows Sky to narrow the
previous guidance range.

As a result of the improved outlook for revenue, EBITDA, NPAT and capex, Sky’s FY22 guidance, net
of any impact from the expected gain on sale of property assets, has been increased to:

$m Previous guidance
3
Revised guidance
2

Revenue 715 – 745 725 - 745
EBITDA 115 – 130 150 - 160
NPAT 17.5 – 27.5 40 – 48
Capex 50 – 60 45 - 50



2
Based on the Company’s best estimates of the realisable savings which are subject to delivery, and no adverse change in operating
conditions, including future economic impacts flowing from Covid-19, or any extraordinary items or accounting changes (e.g. the potential
impact of SaaS).

Capital management
Sky will report its first half results on 24 February. As commented by the Chair at the ASM in
October, the Board is reviewing the company’s capital structure and has now appointed external
financial, legal and tax advisers to assist in determining the most appropriate capital management
strategy, including the future dividend policy. The outcome of this review will be presented, as
previously advised, at the time of the first half results announcement, subject to Board approval and
the successful completion of the sale of the Mt Wellington properties.

ENDS


Chief Executive Officer Sophie Moloney and Interim Chief Financial Officer Andrew Hirst will host an
investor webcast and call at 10:00am (NZDT) to discuss today’s announcement. Details on how to
participate are as follows:

To watch the live webcast: https://ccmediaframe.com/?id=1ZsVMI0l

To register for the conference call: https://s1.c-conf.com/diamondpass/10018373-wh3i4k.html
Registered participants will receive their dial in number upon registration. Only those participating
via the conference call will be able to ask questions.
A replay of the briefing will be made available on the company’s website as soon as practicable after
the event at: https://www.sky.co.nz/investor-centre/results-and-reports.

Authorised by James Bishop, Company Secretary

Investor queries to: Media queries to:
James Bishop Chris Major
Company Secretary Chief Corporate Affairs Officer
+64 21 630 635 +64 29 917 6127
james.bishop@sky.co.nz chris.major@sky.co.nz