SKY TV Announces 2018 Annual Result

Page 1 of 2

Appendix 1 Release to NZX

Full Year Preliminary Announcements and Full Year Results



Sky Network Television Limited
Results for announcement to the market

Reporting Period 12 months to 30 June 2018
Previous Reporting Period 12 months to 30 June 2017

Amount (000s) Percentage change
Revenue from ordinary
activities
$839,729 6.0% decrease
Underlying Net profit $119,326 2.6% increase
Net profit (loss) $(240,674) 306.9% decrease
Profit (loss) from ordinary
activities after tax
attributable to security
holder.
$(240,956) 307.7% decrease
Net profit (loss) attributable
to security holders.
$(240,956) 307.7% decrease

Interim/Final Dividend Amount per security Imputed amount per
security
Final $.075 $.013235


Record Date 7 September 2018
Dividend Payment Date 14 September 2018

Comments: The underlying net profit of $119.3 million, adjusted for
the impact of the $360 million goodwill impairment charge
is an increase of 2.6% over the $116.3 million net profit
reported in the previous year.
The net loss after tax for the year ended 30 June 2018 is
$240.7 million compared to a net profit after tax of $116.3
million in the previous year.
The net loss includes an impairment charge of $360
million. The SKY board is required to assess the fair value
of intangible assets at each reporting period and if this is
determined to be less than the book value, then the assets
are impaired. The impairment charge reduces the net book
value of SKY’s equity at 30 June 2018 to $1.03 billion
($2.64/share) compared to $1.33 billion ($3.41/share) at 30
June 2017. SKY shares closed at $2.60 per share on 30
June 2018. This goodwill asset arose on the merger of

Page 2 of 2

Full and Half-year Preliminary Announcements and Half Year Results

Independent Newspapers Ltd (“INL”) and SKY back in
June 2005 and reflected the difference between the fair
value of SKY’s assets at the date of the merger and the
price that INL shareholders agreed to exchange their
shares in INL for SKY shares. This is a non-cash charge
that has no impact on SKY’s 2018 cash flows or on any of
its bank covenants.

10
SKY NETWORK TELEVISION LIMITED
Financial Statements June 2018
REachINg
EVERY KIWI

SKY is building up a strong suite of online
products to meet the needs of all New
Zealanders, both now and in the future,
while continuing to deliver to our core
customer base, particularly those who don’t
yet have access to fast internet.
It’s a careful balance, but strategically
important. Our Sport partners know they
can rely on SKY to deliver their content to all
of their New Zealand fans, in ways that work
for each individual. They know SKY won’t
leave any fan behind.
That is why we have made such a significant
investment in the satellite for over 20 years,
to ensure we have a robust and reliable
platform. Delivering live sport to our nation
of rugby, netball, cricket, league, golf, tennis,
football and motorsport fans is a responsibility
we do not take lightly.
There is no question that our industry is
evolving into a world where internet delivery
of content will dominate, and we are well
placed to transition with it. SKY’s investment
in the Infinite Video Platform will allow us to
offer a viewing experience that is dramatically
different to today, for those customers who
want it - and we are on track to deliver new
products in the first half of 2019. They will
join our existing online products like NEON
and FAN PASS, providing SKY’s great
content to New Zealanders in ways and
at price points that work for different
customer segments.
These developments are timely, as the
market continues to be highly competitive.
Viewing habits have changed and continue
to evolve, and we need to keep responding
to those changes.
I am pleased to report that SKY has
continued to deliver a solid profit while
implementing the strategy. In the financial
year to 30 June 2018, SKY’s underlying net
profit after tax is $119.3 million, an increase
of 2.6% on the previous year.
You will note in the accounts that the SKY
Board has agreed to reduce the carrying
value of SKY’s Goodwill asset from $1.43
billion to $1.07 billion. When that impairment
charge is applied to the 2018 results, there is
a net loss of $240.7 million for the year.
Please note that this is a non-cash charge
that has no impact on SKY’s 2018 cash flows
or any of our bank covenants.
Those of you who have been shareholders
for some years may recall the background
to SKY’s Goodwill asset. It arose on the
merger of Independent Newspapers Ltd
(INL) and SKY back in June 2005, and
reflected the difference between the fair
value of SKY’s assets at the time and the
price that INL shareholders agreed to
exchange their shares in INL for SKY shares.
The SKY Board is required to assess the fair
value of intangible assets at each reporting
period, and this year decided to impair the
asset. The impairment charge reduces the
Chairman’s Letter
2018 has been a significant
year for SKY, with the board
and management team
setting and implementing a
transformational strategy
for the business.
SKY Network Television Limited02

net book value of SKY equity at 30 June
2018 to $1.03 billion ($2.64/share) compared
to $1.33 billion ($3.41/share) at 30 June 2017.
SKY shares closed at $2.60/share on
29 June 2018.
I note a few other key aspects of the
financial results:
• The Board was pleased to see
management’s focus on cost control,
with $47 million of costs taken out of the
business, offsetting the decline in revenue.
• SKY has 768,000 customers across
satellite and OTT services. In our highly
competitive market, it is worth reflecting
that SKY’s great content is in over 40%
of New Zealand homes. That is significant
penetration by Pay TV company standards
around the world.
• While it will take time for the full effect
of the March pricing and packaging
changes to be seen, there was an
improvement in churn in the second
half of the year compared to the first half.
SKY reported a 46,006 drop in subscribers
to 31 December 2017, and 11,049 in the six
months to 30 June 2018.
• Cash flow from operations is down from
$245 million in FY17 to $214 million, mainly
due to the timing of tax payments of $49
million in FY18 compared with $19 million
in the previous year.
As I advised at the Interim Results in March,
the dividend for the period is 7.5 cents per
share. During the year debt was reduced
from $299 million to $235 million, and the
board believes that the company should
continue to reduce debt to have the balance
sheet strength to meet competitive
challenges and to successfully negotiate
renewal of key content deals.
One area of ‘competition’ which is difficult
to address is the ongoing prevalence of
online piracy. Piracy is a threat to everyone
in the content industry, from the actors
and producers of entertainment content,
to sports teams, to distributors of content.
There is no single fix for piracy, but we
continue to seek stronger protection for
our business and rights holders. We have
had some success this year, with the District
Court finding against the promoters of
boxes pre-loaded with Kodi software that
offer access to piracy websites.
In my annual letter I always thank John Fellet
and SKY’s staff and contractors for their
work. This year is particularly poignant,
with John announcing his intention to
retire after 27 years with SKY, including 17
as Chief Executive.
In that time, John has led SKY from a
business with three channels and 125
employees to the multi-platform, highly
profitable company it is today. Innovations
like MY SKY, which revolutionised the way
New Zealanders viewed television, through
to the suite of online products available now
and in development, will be part of his
significant legacy.
The Board and I are grateful for John’s work
and immense contribution to SKY.
I am pleased that John will continue to serve
on the SKY Board once his successor is
appointed. One of John’s key strengths is
his deep knowledge of content and his
relationships with content providers, and
we are fortunate to be able to continue to
access this expertise at the board level.
Thank you for your support as a SKY
shareholder, and I look forward to talking
with you at the AGM.
The AGM will be held on 18 October 2018
at the Sofitel Hotel, 21 Viaduct Harbour
Avenue, Auckland, commencing at 10am.
Peter Macourt
Chairman
Our Sport partners know they can
rely on SKY to deliver their content
to all of their New Zealand fans, in
ways that work for each individual.
Financial Statements June 201803

The financial statements will present a
financial snapshot of the business. My goal,
as always, is to give you a deeper insight
into your company and the evolving
industry it operates in. I will attempt to do
this in a form that I hope suits the needs
of the individual investor as well as the
institutional one.
Financial year’s results
I am pleased with the results of our latest
financial year. Later in this letter I will dive
deeper into challenging trends in the media
field, but you should know that one of the
key goals of your management team has
been to take costs out of our traditional
pay TV business while continuing to invest,
build and absorb the start-up costs of
our new internet and over-the-top (OTT)
services. And doing it as we battle the
content wars to ensure we have the content
that is most important to New Zealanders.
I believe we are on the right path. Our
underlying profit for the year is $119.3 million
(excluding goodwill impairment), up from
last year’s $116.3 million. While we have seen
declining subscriber numbers and revenues,
we have cut $47 million of operating expenses
out of the business and also lowered our
capital spend by over $20 million.
Subscriber counts
In a seasonal business like SKY it is
important to compare subscriber counts
on a year-on-year basis. For the year ending
30 June 2018 the churn for the satellite
business was 15.4% compared to 15.9%
for the prior period. Churn was better in
part because of the splitting of the Basic
Package into a Starter Pack and an
Entertainment Pack. It will take some time
for the full impact of the changes to be
clear, but we are pleased with a couple
of early indicators. The spin down to the
cheaper Starter tier by existing Basic
Subscribers has been within budget and is
currently at around 10%. The positive benefit
of the move we think will come in years two
and three when new subscribers wanting a
cheaper Basic Package or a cheaper entry
to Sport gradually come aboard.
An unexpected benefit of splitting the Basic
into two packages has been the fact that
the ARPU of new subscribers is only $9.84
lower than the ARPU from customers in the
prior March to June period, meaning that
new subscribers are spending their ‘savings’
on other SKY products such as SoHo and
the SKY Movie Tier.
A year-on-year comparison shows the
subscriber count down 57,055. To give you
more detail, keep in mind that while we are
down 8,583 on NEON subscribers, a year
ago NEON was just starting season 7 of
Game of Thrones which attracted significant
interest. The much-anticipated next season
of Game of Thrones will be back on NEON in
the coming financial year. We also lost 8,269
subscribers as we shut down Fatso, our
online DVD rental service. Another key piece
of context is that last year’s number for FAN
PASS included 4,697 subscribers who could
Chief Executive’s Letter
It is my pleasure
to present to you
my 17th annual
shareholders’ letter.
SKY Network Television Limited04

buy the Sports Tier for one night or one
week, an option we discontinued. And
finally, the net loss figure recognises our
change in strategy of discontinuing
aggressive discount offers which had had
the combined effect of bringing in marginal
customers and at the same time irritating
loyal subscribers.
New strategy to deal with the
new reality
In the last few editions of this letter I have
stressed the fact that media is one of the
most unsettled industries. Let’s go over the
key reasons at play which have caused this.
Historically, the challenge was always to
build a platform big enough in order to
obtain the necessary scale. With the roll
out and acceptance of fast broadband,
getting into the content game has never
been easier. This has allowed any company
from a global tech giant to a niche content
App-based provider to launch a service in
New Zealand.
Competition has also come from non-media
third parties who are starting to give away
or subsidise content in packages with
their normal product in an effort to
“de-commoditize” their traditional offerings.
A few years ago these additional pipelines
into the home would not have mattered
because of a lack of content. We are now
living in the age of ‘peak content’. In 2012
there were 266 English scripted television
series. I predicted that in 2018 that figure
would jump to 534, and we are currently
on track to do so.
And the content itself is evolving. For much
of my life, in the animal kingdom of content,
most programmes fit into four species:
Sports, Movies, TV Series and News/
Documentaries. Over the last 20 years
there have been two important additions.
First there is a subsection of TV Series
of what we call Prestige Drama. Prestige
Drama was created by premium movie
channels like HBO and Showtime in the
United States. Think Sopranos and Sex
in the City. The economic driver for this
evolutionary change was that these
movie channels were finding it harder
to differentiate their channels. Movies had
become more commoditized and formulaic
as Hollywood made fewer of them and they
tended to focus more on super heroes
or extension of proven movie franchises
(i.e. Mission Impossible 6).
Prestige Dramas are television series on
steroids. They started about the year 2000.
They have huge budgets, they have the
pick of the best actors, writers and directors.
Today when people are talking about a new
television series they are probably talking
about a Prestige Drama.
The other important new segment is Reality
TV. Be it cooking, dating, dancing or home
remodelling, no matter how mundane the
endeavour is you can make a reality format
out of it. The economic driver for reality TV
has been the Free to Air Television industry.
With their broad reach they can drive
lucrative deals centred on product
placements inside their programmes,
from owners of hardware stores to cooking
ingredients. As an added bonus, instead
of paying actors, most contestants actually
volunteer to participate.
There has also been an evolution in how
content is being consumed. It used to
be that a person’s viewing history could
indicate their age, sex and income levels.
Now you can obtain even more insight on
them based on how they consume their
content. What device do they watch their
programmes on? Do they binge-watch four
episodes in one sitting or do they watch the
latest episode each week on their MY SKY?
Over the years, SKY has attempted to serve
as many customer interests as possible
by adding additional linear channels. In a
perfect world we would have a grab bag
of channels that subscribers could pick
and choose from. The reality is that rights
have not worked that way. Historically,
the suppliers of core channels would not
allow their channel to be added unless SKY
(and every other traditional pay TV platform)
put them on the lowest entry level of Basic.
It was impossible to customise our offering
other than offering a Sports Tier or a Movie
Tier. Each linear channel cost more and
forced up our retail prices, but each channel
we added attracted a higher number of
subscribers .... until it didn’t.
It is our intention to leverage
our content deals to offer new
products and services to appeal
to different customer segments.
Financial Statements June 201805

Ironically it was our goal to serve all of
New Zealand that morphed our traditional
business model into the object that has
drawn the biggest complaint ..... “You are
too expensive and have too many channels
I do not watch”.
With all the points made above it is easy
to see why there has been more disruption
in the media industry in the last five years
than the previous 30 years. SKY has been
disrupted more than any other media firm
in New Zealand because we are the largest
media firm in New Zealand. But our size
also gives us an advantage in this transition.
We were delivering content to mobile
phones a year before the first iPhone went
to market. We sent content over the internet
a year before Netflix had its first streaming
customer. Our strategy remains the same.
We are embracing the Internet and the
benefits that it derives while continuing
to super-serve our traditional subscribers,
who for the most part are happy with
the product they are getting from SKY.
There are some ‘technical gurus’ who
when interviewed are critical of SKY and
believe we should abandon our ‘antiquated’
business model and cut the umbilical cord
to the satellite. Nothing would please me
more. We spend circa $50 million dollars a
year for the satellite to ensure we can deliver
SKY to every home across New Zealand.
Over 30% of our subscribers are not even
connected to Ultra-Fast Broadband.
Our biggest challenge in using the internet
is with Sports delivery. We are not the only
ones. Around the world there are repeated
stories of failures with the internet delivery
of big live sporting events. Viewership
figures of sporting events on the internet are
also often overstated. My favourite viewing
statistic came out of the recent FIFA World
Cup out of England. Reports suggested that
24.3 million people watched the England vs.
Croatia semi-final match on traditional TV.
Other reports said that 4.3 million watched
it via streaming. That is not bad, it would
lead you to believe that streaming was up
to a very respectable 15% share. But when
you dig deeper you realize the total figures
are terribly misleading.
In England, the measurement for TV
viewership is based on an average viewers
per minute. The cumulative audience could
have been much bigger as viewers dipped
in and out of the coverage. The rigors of this
formula have been fought out for years
between Broadcasters and Advertising
Agencies. On the other hand the viewership
numbers for steaming defines a viewer as
anyone who saw a stream for 3 seconds or
more, and is cumulative. If we applied the
same rigours of TV viewing to streaming,
viewership would be 1.7 million or 6.5%.
This figure is high enough for us to offer
internet options, but not nearly high enough
for us to jettison use of the Satellite. We
stream millions of hours of viewing through
the internet with NEON, SKY GO and FAN
PASS. But we are conscious that it is still the
Satellite that does most of the heavy lifting.
As mentioned, historically we attracted new
market segments by launching new linear
channels. Now it is our intention to leverage
our content deals to offer new products and
services to appeal to different customer
segments. During much of 2015 and 2016
we slowed down our innovation track in
order to keep our promise to Vodafone to
launch their new TV platform, which has
launched and is doing well. Since then
we have had a flurry of new products
and services to offer our customers.
They include:
• Our subscription VOD service NEON
offers a strong TV and Movies service.
In order to attract those who are just
interested in TV we recently created a
TV-only option for $11.99 a month.
• FAN PASS offers access to the SKY Sport
channels 1-4 on a monthly and six monthly
basis via the internet. We have recently
launched a special mobile-only deal for
$15.99 a month for those customers who
want to access our great sport channels
just on their mobile phones.
• Our set top box’s TV guide now goes up
to 28 days when connected to the internet
instead of just a week, greatly expanding
your ability to review and record content
in the future. The feature is also available
on the SKY TV Guide App, allowing you
to remotely record while on the go.
• A handy Restart function on a selection
of our SKY Movies channels allows
you to restart a movie if you’ve missed
the beginning.
• We have installed an option of another 300
Movies for customers to order as part of an
expansion of our Pay per View platform.
• For some time with our decoders at
home, customers have had the ability to
access 1000s of hours of previously
played content as part of our Video on
Demand option. Now we have extended
this right to iPads and Mobile Phones as
an extension to our SKY GO platform.
• The SKY Sport Highlight App is one of the
most popular extra services we have
offered. We have now made it better, with
users able to personalise their own news
feed to display only content from their
favourite sport(s).
• Subscribers with children can now launch
the Cartoon Network Watch and Play and
Nickelodeon Play Apps for their children
to use when they are not close to a TV set.
Looking ahead, you can expect to see some
exciting product and service launches
within the next 6-12 months.
Continuing SKY’s innovation journey, we’re
investing further in internet-delivered TV
through a new platform based on the Cisco
Infinite Video Platform. Through new and
existing devices, we’ll enable a whole new
experience, getting customers to the
content they love more quickly, with
personalised recommendations and a
content-led, image-rich user experience.
We’ve always aggregated our own content
with the world’s leading entertainment
brands. And we’ll continue to do so through
a combination of loved linear channels, on
demand content and the best of global and
local Apps.
We’re also building on our voice capability,
and will be able to allow seamless voice
search across all content delivered via our
enhanced TV service. And our new fluid
viewing capability will mean your chosen
content will follow you from the big screen to
your mobile and tablet.
The Technology and Product teams are hard
at work on these projects and we look
forward to revealing them to you soon.
SKY Network Television Limited06

The content wars
Every now and then you will read a story
about a piece of content we have lost by
being out-bid by a competitor. Such stories
usually include an interview with a media
or technology expert (who, by the way, has
never bought a piece of content in their life)
predicting that this marks the start of SKY’s
decline or maybe we have badly misjudged
the public interest in this particular piece
of content.
The fact is, we get out-bid for content every
year. In fact, if there is a year that goes by
without an article regarding SKY losing a
content deal you should attend the AGM
to voice your concern.
In thinking about content it is important that
one understands the difference between
Price and Value. Price is the amount you pay
for something but Value is what you get with
that piece of content. The easiest thing to
do is win content auctions. All you need to
do is keep bidding until everyone else drops
out. But you don’t actually “win” the bid until
you extract enough value to cover your
costs. There are several contracts we have
lost over the years, but seldom has the same
company come back the next time and bid
the same amount.
We could double every one of our bids and
never lose anything, but before long we
would have half the content with the same
content costs.
The biggest advantage we have in bidding
is our 28 year history of viewing statistics.
When we lose bids they tend to be high
profile events which for whatever reason
have lost their way. The Oscars are a perfect
example. As I write this, SKY has been
informed that we were not the highest
bidder for the Oscars in 2019. The Oscars
are one of my favourite shows of the year,
in part because I am in the industry. But for
reasons I am not sure about, and in spite of
our best efforts, we have seen the ratings
decline four years in a row. I am not sure
who won the bid. I am not sure their bid
would have been as high if they had the
benefit of our data and content insights.
The other advantage we have is the breadth
of our content offerings. At any one time
SKY has 4,500 programmes on the go
contained in 3,000 different contracts.
The biggest one is a sports contract,
but it still only represents 23% of total
sports viewing (which is represented by
791 different contracts), and less than 6%
of overall viewing on SKY. And that is after
taking out all the free-to-air viewing on
the platform.
When our competitors pay above the value
on some content it means that they have
to bid under the value on other content.
In every country the debate always rages
on which platforms have the best content.
In New Zealand there is seldom any debate
around Movies, Sports and Basic Channels
which SKY dominates. Lately I have heard
the claims by competitors that they have
the best TV series, but I disagree. Don’t take
my word for it. The Emmy nominations are
in for 2018. SKY has the majority of the
nominated shows, with over 200
nominations across 59 titles.
Write down of a goodwill asset
SKY recorded a write down of Goodwill
of $360 million for the year ending
30 June 2018. Even with an accounting
degree the concept of Goodwill is not
always an easy one to follow.
In the last few years companies in the
media sector in Australia have recorded
accounting write downs. In one such
example one company determined that
content it had purchased on a long term
deal no longer retained its value to viewers
so it wrote down its accounting value.
In another case a media company acquired
another media company and determined
after a few years that the company acquired
had lost its value and wrote the purchase
price down. You should be aware that
the write down of SKY’s Goodwill did not
originate from your management devaluing
any content or companies purchased.
SKY’s accounting Goodwill originated when
INL, the former newspaper concern, started
buying shares in SKY eventually getting to a
78% shareholding. INL sold its newspapers
and in 2005 entered into a merger with SKY.
It is INL’s purchase of SKY shares which
created the Goodwill. After the merger
transaction was complete, your company
inherited the old balance sheet of INL which
included the Goodwill figure.
As I mentioned at the start of this letter,
the media industry is in transition more than
ever before. This is reflected in the outcome
of the impairment assessment and the write
down of Goodwill of $360 million.
The write down is noncash, not tax
deductible and does not affect the
underlying profit nor does it affect any
banking covenants.
And finally, if all goes according to plan
this will be my last CEO letter. I have been
with SKY 27 years. While the days have
been long the decades have flown by. I have
been blessed by having some of the best
and most dedicated employees that any
CEO in New Zealand could have. I also want
to thank all Directors and particularly the
Chairmen I have been able to serve under.
I also believe the challenges from reporters,
Investment Analysts and Investors
throughout the years made me a better
CEO. Likewise I have become good friends
over the years with Sport Administrators
and Content providers. We never allowed
conflicting agendas to get in the way of the
true goal, getting great content to mutual
customers. And finally, to my long suffering
family who over the years put up with
missed family gatherings and two hour
breaks on our vacations in order for me to
sit in on phone conference calls, I would
have not made it without your support.
John Fellet
Chief Executive Officer
Financial Statements June 201807

Financial Statements June 201808
Financial overview 09
Financial trends 13
Directors’ responsibility statement 15
Consolidated statement of comprehensive income 16
Consolidated balance sheet 17
Consolidated statement of changes in equity 18
Consolidated statement of cash flows 19
Notes to the consolidated financial statements 20
Independent auditor’s report 47
2018 Financials

Financial overview
Summary
The net loss after tax for the year ended 30 June 2018 is $240.7 million compared to a net profit after tax of $116.3 million in the previous year.
The net loss includes an impairment charge of $360 million. If SKY’s 2018 results are adjusted for the impact of this $360 million impairment
charge, the underlying net profit after tax is $119.3 million, an increase of 2.6% over the $116.3 million net profit after tax reported in the year
ended 30 June 2017.
The SKY board is required to assess the fair value of intangible assets at each reporting period and if this is determined to be less than the
book value, then the assets are impaired. The impairment charge reduces the net book value of SKY’s equity at 30 June 2018 to $1.03 billion
($2.64 per share) compared to $1.33 billion ($3.41 per share) at 30 June 2017. SKY shares closed at $2.60 per share on 30 June 2018. This goodwill
asset arose on the merger of Independent Newspapers Ltd (“INL”) and SKY back in June 2005 and reflected the difference between the fair
value of SKY’s assets at the date of the merger and the price that INL shareholders agreed to exchange their shares in INL for SKY shares.
This is a non-cash charge that has no impact on SKY’s 2018 cash flows or on any of its bank covenants.
Earnings before interest, tax, depreciation and amortisation (“EBITDA”) decreased by 2.2% to $285.8 million.
Operating expenses decreased by 7.9% due to cost saving initiatives being rolled out throughout the business, as well as higher programming
costs in the previous year due to the cost of the Rio Summer Olympics.
The results are summarised as follows:
For the years ended 30 June
IN NZD MILLIONS20182017 % inc/(dec)
Financial performance data
Total revenue
839.7893.5(6.0)
Total operating expenses
553.9601.2(7.9)
EBITDA
285.8292.3(2.2)
Less
Depreciation and amortisation
102.4105.1(2.6)
Net finance costs
17.519.6(10.7)
Net profit before income tax and impairment of goodwill
165.9167.6(1.0)
Impairment of goodwill360.0–n/a
Income tax expense46.651.3(9.2)
(Loss)/profit after tax
(240.7)116.3(307.0)
SKY Network Television Limited09

Revenue analysis
SKY’s total revenue decreased to $839.7 million, as follows:
For the years ended 30 June
IN NZD MILLIONS20182017 % inc/(dec)
Satellite subscription revenue681.2725.1(6.1)
Other subscription revenues84.782.23.0
Total subscription revenue
765.9807.3(5.1)
Advertising
57.168.1
(16.2)
Installation and other revenue
16.718.1
(7.7)
Total other revenue
73.886.2(14.4)
Total revenue
839.7893.5(6.0)
Satellite subscription revenue decreased by 6.1% to $681.2 million due to fewer satellite customers, a lower uptake of premium services
(Sports and Movies), lower pay-per-view buys, and a reduction in the price of SKY’s basic entry level package.
Other subscription revenue includes commercial revenue earned from SKY subscriptions at hotels, motels, restaurants and bars throughout
New Zealand and revenue from other subscriptions services such as NEON and, FAN PASS. This revenue increased 3.0% to $84.7 million in 2018
due mainly to an increase in subscriber numbers for NEON and FAN PASS.
Advertising sales revenue decreased by 16.2% to $57.1 million in 2018 due to a general weakening of market conditions for advertising
expenditure and high advertising sales in the prior year relating to the Rio Olympics.
Installation and other revenues decreased by 7.7% to $16.7 million in 2018. This is mainly the result of fewer installations undertaken.

Financial Statements June 201810

Expense analysis
A further breakdown of SKY’s operating expenses for 2018 and 2017 is provided below:
IN NZD MILLIONS2018
2018
% of revenue2017
2017
% of revenue % inc/(dec)
Programming
328.139.1349.439.1(6.1)
Subscriber related costs
83.19.9100.211.2(17.1)
Broadcasting and infrastructure
92.011.097.610.9(5.7)
Other costs
50.76.054.06.0(6.1)
Depreciation and amortisation
102.412.2105.111.8(2.6)
Total operating expenses
656.378.2706.379.0(7.1)
Programming costs comprise both the costs of purchasing programme rights and also programme operating costs. Programme rights
costs include the costs of sports rights, pass-through channel rights (e.g. Disney Channel, Living Channel, etc.), movies (including PPV) and
music rights. Programme operating costs include the costs of producing live sports events, satellite and fibre linking costs and in-house
studio produced shows.
SKY’s programming expenses have decreased by 6.1% and equated to 39.1% of revenue in 2018. This decrease is principally due to several
“one-off” sporting events purchased in 2017 which included the rights costs of the Summer Olympics and the Americas Cup. A significant
proportion of SKY’s programme rights costs are in Australian dollars (AUD 27% of rights costs) and United States dollars (USD 52% of rights costs).
This means the NZ dollar cost included in SKY’s accounts is affected by the strength of the NZ dollar during a particular year and by SKY’s foreign
exchange hedging policy.
The board’s policy is to hedge a minimum of 85% of the forecast exposures over 0 to 12 months, up to 50% of variable exposures over 13 to 24
months and up to 30% over 25 to 36 months. Fixed price contracts denominated in foreign currencies are fully hedged at the time of placing
the order.
Financial overview
2017
2018
14%
14%
49%
14%
50%
15%
EXPENSES
SPLIT
BROADCASTING
AND INFRASTRUCTURE
SUBSCRIBER
RELATED
COSTS
PROGRAMMING
13%
14%
15%
15%
8%
8%
DEPRECIATION
AND AMORTISATION
OTHER
COSTS
SKY Network Television Limited11

Subscriber related costs include the costs of servicing and monitoring equipment installed at subscribers’ homes, indirect installation
costs, the costs of SKY’s customer service department, sales and marketing costs and general administrative costs associated with SKY’s
provincial offices.
In 2018, subscriber related costs decreased by 17.1% due to lower employee and contractor costs of supporting a smaller subscriber base,
lower trouble calls and decoder repair costs.
Broadcasting and infrastructure costs consist of transmission and linking costs for transmitting SKY and Prime’s television signals from its
studios in Auckland to other locations in New Zealand and the costs of operating SKY’s television stations at Mt Wellington and Albany. The costs
of leasing seven transponders on the Optus D1 satellite are included, as is the cost of high definition television broadcasting. Broadcasting and
infrastructure costs have decreased by 5.7% to $92.0 million due a decrease in employee costs.
Other costs mainly include advertising costs and the overhead costs relating to corporate management. These costs have decreased by 6.1%
to $50.7 million due to a reduction in ad agency costs related to lower advertising revenue.
Depreciation and amortisation costs include depreciation charges for subscriber equipment including satellite dishes and decoders owned
by SKY and fixed assets such as television station facilities. Depreciation and amortisation costs have decreased by 2.6% to $102.4 million due
principally to an aging decoder base and fewer installations.
Finance costs, net have decreased by 10.7% to $17.5 million. The reduction in interest is due to reduced levels of debt. SKY’s weighted average
interest rates are as follows:
20182017
Bank loans
5.58%5.36%
Bonds
6.18%6.04%
Combined weighted average
5.79%5.65%
Capital expenditure
SKY’s capital expenditure, on a cash basis over the last five years is summarised as follows:
IN NZD MILLIONS20182017201620152014
Subscriber equipment
9.219.763.822.820.6
Installation costs
18.829.332.629.736.9
Other
30.230.732.463.035.5
Total capital expenditure
58.279.7128.8115.593.0
Capital expenditure decreased by $21.5 million in 2018 to $58.2 million.
The reduction in capital expenditure in both subscriber equipment and installation costs is reflective of the significant expenditure that was
made in prior years when the new internet enabled decoders were rolled out to replace the old legacy digital decoders and fewer installations.
Other capital expenditure of $30.2 million included $14.6 million of software additions, $2.2 million of other plant and equipment, as well as
$13.4 million of capital work in progress.


Financial Statements June 201812

Financial trends
Income statement – five year summary
IN NZD 00020182017201620152014
For the year ended 30 June
Total revenue
839,729893,485928,200927,525909,001
Total operating expenses
(1)
553,919601,145602,914547,756529,961
EBITDA
(2)
285,810292,340325,286379,769379,040
Less
Depreciation, amortisation and impairment
(3)
462,414105,148100,241119,194126,143
Net interest expense and financing charges
17,57620,47019,68421,69627,097
Unrealised (gains)/losses on currency and other
(66)(850)
371 – 1,293
Net (loss)/profit before income tax
(3)
(194,114)167,572204,990238,879224,507
Balance sheet – five year summary
IN NZD 00020182017201620152014
As at 30 June
Property, plant, equipment and
non-current intangibles268,925301,008331,157299,243302,929
Goodwill
1,065,3311,425,3311,425,3311,425,3311,426,393
Total assets
1,503,0021,887,2001,943,5641,942,0211,865,369
Interest bearing loans and liabilities
235,344298,663348,085350,763387,191
Working capital
(4)
(51,708)(54,035)(35,230)(36,285)(48,325)
Total liabilities
476,315559,322612,641604,818624,205
Total equity
1,026,6871,327,8781,330,9231,337,2031,241,164
Cash flow – five year summary
IN NZD 00020182017201620152014
As at 30 June
Net cash from operating activities
213,613244,536275,844282,915305,314
Net cash used in investing activities
(58,194)(79,640)(133,635)(115,416)(93,672)
Free cash flow available to shareholders
155,419164,896142,209167,499211,642
(1)
Exclusive of depreciation, amortisation and impairment.
(2)
Net (loss)/profit before income tax, interest expense, depreciation, amortisation and impairment, unrealised gains and losses on currency and interest rate swaps.
(3)
Includes goodwill impairment of $360 million (refer note 9).
(4)
Working capital excludes current borrowing, bonds, derivative financial instruments and available for sale investment.
SKY Network Television Limited13

Depreciation and capital expenditure
IN NZD 00020182017201620152014
Depreciation, amortisation and impairment
(1)
102,414105,148100,241119,194126,143
Capital expenditure58,20079,700128,800115,50093,000
History of dividend payments
BY CALENDAR YEAR IN CENTS PER SHARE20182017201620152014
Interim dividend (paid in March)7.515.015.015.014.0
Final dividend (paid in September)
–
12.515.015.015.0
Total ordinary dividend7.527.530.030.029.0
Subscriber base
20182017201620152014
Total subscribers767,727
824,782852,679851,561865,055
Average monthly revenue per residential subscriber
(2)
76.34
78.8278.6379.5477.52
Gross churn
(3)
15.4%
15.9%17.5%14.5%13.2%
(1)
Excludes goodwill impairment of $360 million.
(2)
Years 2016-2018 include IGLOO, NEON and FAN PASS not included in earlier periods.
(3)
Gross churn refers to the percentage of residential subscribers over the 12-month period ended on the date shown who terminated their satellite pay TV
subscription net of existing subscribers who transferred their service to new residences during the period.
Financial Statements June 201814

The directors of Sky Network Television Limited (the Group) are responsible for ensuring that the financial statements of the Group present
fairly the financial position of the Group as at 30 June 2018 and the results of its operations and cash flows for the year ended on that date.
The directors consider that the financial statements of the Group have been prepared using appropriate accounting policies, consistently
applied and supported by reasonable judgements and estimates and that all relevant financial reporting and accounting standards have
been followed.
The directors believe that proper accounting records have been kept which enable, with reasonable accuracy, the determination of the
financial position of the Group and facilitate compliance of the financial statements with the Financial Markets Conduct Act 2013.
The directors consider they have taken adequate steps to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
The directors have pleasure in presenting the financial statements of the Group for the year ended 30 June 2018.
The board of directors of Sky Network Television Limited authorise these financial statements for issue on 23 August 2018.
For and on behalf of the board of directors

Peter Macourt
Chairman

Susan Paterson
Director
23 August 2018
Directors’ responsibility statement
SKY Network Television Limited15

Consolidated statement
of comprehensive income
For the year ended 30 June 2018
IN NZD 000Notes2018 2017
Total revenue
2
839,729893,485
Expenses
Programming
328,109
349,426
Subscriber related costs
83,168
100,161
Broadcasting and infrastructure
91,982
97,578
Depreciation and amortisation
3
102,414
105,148
Other costs
50,660
53,980
656,333706,293
Operating profit before impairment
183,396187,192
Impairment of goodwill
3
360,000–
Operating (loss)/profit
(176,604)187,192
Finance costs, net
4
17,51019,620
(Loss)/profit before tax
(194,114)167,572
Income tax expense
5
46,56051,228
(Loss)/profit for the year
(240,674)116,344
Attributable to:
Equity holders of the Company
13
(240,956)116,026
Non-controlling interests
282318
(240,674)116,344
Earnings per share
Basic and diluted (loss)/earnings per share (cents)
13
(61.92)29.82
OTHER COMPREHENSIVE INCOME
(Loss)/profit for the year
(240,674)116,344
Items that may be reclassified subsequently to profit and loss
Cash flow hedges
25,131
(5,486)
(Loss)/gain on available for sale investments
1
(646) 2,147
Income tax effect
(6,856)935
Other comprehensive income/(loss) for the year, net of income tax
17,629(2,404)
Total comprehensive (loss)/income for the year
(223,045)113,940
Attributable to:
Equity holders of the Company
(223,327)113,622
Non-controlling interest
282318
(223,045)113,940
Financial Statements June 201816

Consolidated balance sheet
As at 30 June 2018
IN NZD 000Notes2018 2017
Current assets
Cash and cash equivalents4,6945,444
Trade and other receivables
6
63,11769,475
Available for sale investment
1
6,334
–
Programme rights inventory
7
78,37879,003
Derivative financial instruments
12
9,917176
162,440154,098
Non-current assets
Property, plant and equipment
8
209,582238,066
Intangible assets
9
1,124,6741,488,273
Available for sale investment
1
–
6,552
Derivative financial instruments
12
6,306211
1,340,5621,733,102
Total assets
1,503,0021,887,200
Current liabilities
Interest bearing loans and borrowings
11
1,040–
Trade and other payables
10
186,054186,187
Income tax payable11,84321,770
Derivative financial instruments
12
5959,038
199,532216,995
Non-current liabilities
Interest bearing loans and borrowings
11
234,304298,663
Deferred tax
5
40,82637,683
Derivative financial instruments
12
1,6535,981
276,783342,327
Total liabilities
476,315559,322
Equity
Share capital
13
577,403577,403
Hedging reserve
13
9,032(9,062)
Retained earnings

438,998758,247
Total equity attributable to equity holders of the Company
1,025,4331,326,588
Non-controlling interest1,2541,290
Total equity
1,026,6871,327,878
Total equity and liabilities
1,503,0021,887,200

Peter Macourt
Chairman
For and on behalf of the board 23 August 2018.
Susan Paterson
Director
SKY Network Television Limited17

Consolidated statement
of changes in equity
For the year ended 30 June 2018
ATTRIBUTABLE TO OWNERS OF THE PARENT
IN NZD 000Notes
Share
capital
Hedging
reserve
Retained
earningsTotal
Non-
controlling
interest
Total
equity
For the year ending 30 June 2018
Balance at 1 July 2017577,403(9,062)758,2471,326,5881,2901,327,878
(Loss)/profit for the year
– –
(240,956)(240,956)282(240,674)
Loss on available for sale investment, net of tax
1
– –
(465)(465)
–
(465)
Cash flow hedges, net of tax
13
–
18,094
–
18,094
–
18,094
Total comprehensive (loss)/income for the year
– 18,094(241,421)(223,327) 282 (223,045)
Transactions with owners in their capacity as owners
Dividend paid
– –
(77,828)(77,828)(318)(78,146)
Supplementary dividends
– –
(11,113)(11,113)
–
(11,113)
Foreign investor tax credits
– –
11,11311,113
–
11,113
–
–
(77,828)(77,828)(318)(78,146)
Balance at 30 June 2018
577,4039,032438,9981,025,4331,2541,026,687
For the year ending 30 June 2017
Balance at 1 July 2016577,403(5,112)757,4171,329,7081,2151,330,923
Profit for the year
– –
116,026116,026318116,344
Gain on available for sale investment, net of tax
1
– –
1,5461,546
–
1,546
Cash flow hedges, net of tax
13
–
(3,950)
–
(3,950)
–
(3,950)
Total comprehensive income for the year
– (3,950) 117,572 113,622 318 113,940
Transactions with owners in their capacity as owners
Dividend paid
– –
(116,742)(116,742)(243)(116,985)
Supplementary dividends
–
– (15,330)(15,330)
–
(15,330)
Foreign investor tax credits– – 15,33015,330
–
15,330
–– (116,742)(116,742)(243)(116,985)
Balance at 30 June 2017
577,403(9,062)758,2471,326,5881,2901,327,878
Financial Statements June 201818

Consolidated statement
of cash flows
For the year ended 30 June 2018
IN NZD 000Notes2018 2017
Cash flows from operating activities
(Loss)/profit before tax(194,114)167,572
Adjustments for:
Depreciation and amortisation
3
102,414105,148
Impairment of goodwill
3
360,000
–
Unrealised foreign exchange loss
4
7(212)
Interest expense
4
17,75621,010
Bad debts and movement in provision for doubtful debts
3
1,185
1,732
Other non-cash items83415
Movement in working capital items:
(Decrease)/increase in receivables
439(2,204)
(Decrease) in payables
(9,320)(7,749)
Decrease in programme rights
625762
Cash generated from operations
279,075286,474
Interest paid(15,766)(22,704)
Bank facility fees paid(696)(725)
Income tax paid(49,000)(18,509)
Net cash from operating activities
213,613244,536
Cash flows from investing activities
Proceeds from sale of property, plant and equipment29 42
Acquisition of property, plant, equipment and intangibles(58,223)(79,682)
Net cash used in investing activities
(58,194)(79,640)
Cash flows from financing activities
Repayment of borrowings – bank loan
11
(166,000)(111,000)
Advances received – bank loan
11
97,000 261,000
Vendor finance received
11
2,386
–
Repayment of other borrowings
11
(296)–
Repayment of borrowings – bond –
(200,000)
Dividend paid to minority shareholders
(318)(243)
Dividends paid
(88,941)(132,072)
Net cash used in financing activities
(156,169)(182,315)
Net decrease in cash and cash equivalents(750)(17,419)
Cash and cash equivalents at beginning of year
5,444 22,863
Cash and cash equivalents at end of year
4,694 5,444
SKY Network Television Limited19

Notes to the consolidated
financial statements
For the year ended 30 June 2018
1. General information
This section sets out the Group’s accounting policies that relate to the financial statements as a whole. Where an accounting policy is
specific to one note, the policy is described in the note to which it relates.
SKY 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 financial statements of the Group for the year ended
30 June 2018 comprise the Company, Sky Network Television Limited 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.
The financial statements of the Group have been prepared in accordance with the requirements of the Financial Markets Conduct Act 2013
and the NZX Main Board Listing Rules.
The Group’s primary activity is to operate as a provider of multi-channel, pay television and free-to-air television services in New Zealand.
These financial statements were authorised for issue by the Board on 23 August 2018.
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with Generally Accepted Accounting Practice in
New Zealand (NZ GAAP). The Group is a for-profit entity for the purpose of complying with NZ GAAP. The consolidated financial statements
comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), other New Zealand accounting standards and
authoritative notices that are applicable to entities that apply NZ IFRS. The consolidated financial statements also comply with International
Financial Reporting Standards (IFRS).
These financial statements are prepared on the basis of historical cost except where otherwise identified.
The financial statements are presented in New Zealand dollars.
Group structure
The Group has a majority share in the following subsidiaries, all of which are incorporated in and have their principal place of business
in New Zealand:
Name of entityPrincipal activity Parent Interest held
20182017
SKY DMX Music LimitedCommercial MusicSKY50.50%50.50%
SKY Ventures LimitedInvestmentSKY100.00%100.00%
Media Finance LimitedNon-tradingSKY100.00%100.00%
Outside Broadcasting Limited Broadcasting servicesSKY100.00%100.00%
Screen Enterprises Limited
(1)
Non-tradingSKY100.00%100.00%
Igloo Limited
(2)
Non-tradingSKY100.00%100.00%
Believe It Or Not LimitedEntertainment quizzesSKY51.00%51.00%
(1)
Ceased trading during the current year
(2)
Ceased trading during the prior year
In March 2016 SKY Ventures acquired a 15.78% interest in 90 Seconds Pty Limited (a cloud video production company) for a cost of $4.8 million.
In the following year the investment was diluted to 13.54%. 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 30 June 2018 was
$6.3 million (30 June 2017 $6.6 million). The investment has been reclassified to current assets due to its expected realisation in the coming
year (refer note 17).
Financial Statements June 201820

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
1. General information (CONTINUED)
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiaries.
The acquisition method of accounting is used to account for the acquisition of subsidiaries and businesses by the Group. The consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair value of the assets
transferred and the liabilities incurred. Each identifiable asset and liability is generally measured at its acquisition date fair value except if another
NZ IFRS requires another measurement basis. The excess of the consideration of the acquisition and the amount of any non-controlling interest
in the acquired company, less the Group’s share of the net of the acquisition date amounts of the identifiable assets acquired and the liabilities
assumed is recognised as goodwill. Acquisition related costs are expensed as incurred.
Subsidiaries
Subsidiaries are entities that are controlled, either directly or indirectly, by the Group. The Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns from its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on
which control ceases.
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in
preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as are unrealised gains unless the transaction
provides evidence of an impairment of the asset transferred.
Transactions with non-controlling interests
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions
with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of
the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also
recorded in equity.
New standards, amendments and interpretations
The new amendment to NZ IAS 7 effective for the first time for periods beginning on or after 1 January 2017 aims to improve information about
changes in liabilities arising from financing activities. This information is provided in Note 11 and provides a reconciliation of the opening and
closing carrying amounts for each item for which cash flows have been classified as financial activities and includes changes in financing cash
flows comprising drawdowns and repayments and other non-cash changes for example new finance leases and changes in fair value.
The Group is currently assessing the impact of the following new standards on its financial position, performance and cash flows:
NZ IFRS 9 “Financial Instruments” (effective date: 1 January 2018)
NZ IFRS 9 simplifies the model for classifying and recognising financial instruments and aligns hedge accounting more closely with common risk
management practices. Changes in own credit risk in respect of liabilities designated at fair value through profit or loss can now be presented
within OCI. This change can be adopted early without adopting NZ IFRS 9. The new impairment model requires the recognition of impairment
provisions based on expected credit losses (ECL) rather than only incurred credit losses as it the case under NZ IAS 39. It is likely that this will
result in earlier recognition of impairment losses.
NZIFRS 9 will impact the classification and measurement of the Group’s financial instruments and will require certain additional disclosures and
amended hedge documentation. The changes to recognition and measurement of financial instruments and changes to hedge accounting
rules are not currently considered likely to have any major impact on the Group’s current accounting treatment or hedging activities. Existing
hedge documentation has been updated to ensure compliance with NZ IFRS 9.
NZ IFRS 15 “Revenue from contracts with customers” (effective date: 1 January 2018)
NZ IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the
nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and has the ability to direct the use and obtain the benefits from the good or service.
The standard is effective for annual periods beginning on or after 1 January 2018. The standard permits either a full retrospective or a modified
retrospective approach for the adoption. The Group will adopt NZ IFRS 15 effective 1 July 2018 with full retrospective application.
SKY Network Television Limited21

The Group has carried out a review of its current sources of revenue with a view to determining whether the requirements of NZ IFRS 15 will
result in changes to the Group’s current reporting practices, whether those changes will affect the Group’s current reporting systems and
whether any reclassifications will be required. The Group has identified several sources of revenue which may be affected all of which are unlikely
to have a significant effect on the Group’s reported revenue or net results. These include installation revenue, customer acquisition
costs and discounted services. In addition a review of the agency versus principal considerations in certain third party contracts has indicated
that the Group will record revenue on the basis that its relationship with the end customer is as a principal. Revenue and expenses are expected
to increase by approximately $11.2 million in the year ending 30 June 2019 and in the comparative period with no effect on the net result, due to
reclassification of discounts or commission.
No significant changes to existing systems and processes have been identified as necessary to comply with NZ IFRS 15.
NZ IFRS 16 “Leases” (effective date: 1 January 2019)
NZ IFRS 16 will primarily change lease accounting for lessees; lease agreements will give rise to the recognition of an asset representing the
right to use the leased item and a loan obligation for future lease payables. Lease costs will be recognised in the form of depreciation of the
right to use asset and interest must be recognised on the lease liability. The new standard will be substantively different for current operating
leases where rental charges are currently recognised on a straight-line basis and no lease asset or lease obligation is recognised. The standard is
effective for accounting periods beginning on or after 1 January 2019. The Group intends to adopt the standard from 1 July 2019.
The Group has assessed the impact of applying NZ IFRS 16 and determined the adjustments to recognise right of use assets and corresponding
lease liabilities are likely to be significant. Most of this value relates to the Optus transponder lease which is currently treated as an operating
lease for accounting purposes. The estimated ratio of net liabilities to total assets would fall from approximately 3.3 to 3.0.
The adoption of NZ IFRS 16 will not have any significant effect on the Group’s banking covenants since adjustment is already in place to treat
Optus as if it was a finance lease contract.
Other than NZ IFRS 9 “Financial Instruments’, NZ IFRS 15 “Revenue from contracts with customers” and NZ IFRS 16 “Leases”, there are no new
standards, amendments or interpretations that have been issued and effective, or not yet effective, that are expected to have a significant
impact on the Group.
Goods and services tax (GST)
The consolidated statement of comprehensive income and consolidated statement of cash flows have been prepared so that all components
are stated exclusive of GST. All items in the consolidated balance sheet are stated net of GST, with the exception of receivables and payables,
which include GST invoiced.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to SKY’s group of executive directors who are the
chief operating decision-makers. SKY’s group of executive directors is responsible for allocating resources and assessing performance of the
operating segments. SKY operates in a single business segment; the provision of multi-channel television services in New Zealand.
2. Revenue
IN NZD 0002018 2017
Residential satellite subscriptions681,231725,066
Other subscriptions84,72882,247
Advertising57,04568,084
Other revenue16,72518,088
839,729893,485
Revenue comprises the fair value of the sales of goods and services, net of goods and services tax and is recognised as follows:
Subscription revenue – over the period to which the subscription relates; unearned subscriptions and deferred revenues are revenues
that have been invoiced relating to services not yet performed, principally subscriptions paid in advance (refer note 10);
Advertising revenue – over the period in which the advertising is screened; and
Other revenue – when the product has been delivered to the customer or retailer or in the accounting period in which the actual
service is provided. Other revenue comprises revenues received from installation of decoders and other non-subscriber related revenue.
Financial Statements June 201822

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
3. Operating expenses
(Loss)/profit before tax includes the following separate expenses/(credits):
IN NZD 000Notes2018 2017
Depreciation, amortisation and impairment
Depreciation of property, plant and equipment
(1)

8
81,22487,570
Amortisation of intangibles
9
21,19017,578
Impairment of goodwill
9
360,000
–
Total depreciation, amortisation and impairment
462,414105,148
Bad and doubtful debts
Movement in provision
6
(290)
165
Net write-off
6
1,185
1,732
Total bad and doubtful debts
8951,897
Fees paid to external auditors
Audit fees
(2)
409336
Other services
Assurance report on regulatory returns
23
Other services
(3)
–
17
Advisory services
Treasury
28
27
Total fees to external auditors
439383
Professional fees in relation to proposed acquisition of Vodafone NZ
21 2,145
Employee costs
(4)
92,69697,040
KiwiSaver employer contributions
2,1802,251
Donations251413
Operating lease and rental expenses36,15237,939
Related party transactions
Remuneration of key management personnel (included in employee costs)
11,41511,949
Directors' fees615555
Dividends paid to directors and key management personnel
(5)
5456
Total related party transactions
12,08412,560
(1)
The majority of depreciation and amortisation relates to broadcasting assets (refer note 8 and 9).
(2)
The audit fee includes the fee for both the annual audit of the financial statements and the review of the interim financial statements.
(3)
Other services comprise reporting on trust deed requirements and on matters related to proposed acquisition of Vodafone NZ.
(4)
All employee costs are short-term employee benefits.
(5)
The Group’s directors and key management personnel collectively had shareholdings of 268,988 shares (2017: 186,778 shares) which carry the normal entitlement
to dividends. Share transactions undertaken by directors can be found as part of the statutory disclosures in the annual report.

Leases under which all the risk and benefits of ownership are substantially retained by the lessor are classified as operating leases.
Operating lease payments are recognised as an expense in the periods the amounts are payable.
Employee entitlements to salaries and wages and annual leave, to be settled within 12 months of the reporting date represent present
obligations resulting from employees’ services provided up to the reporting date, calculated at undiscounted amounts based on
remuneration rates that the Group expects to pay.
Bonus plans are recognised as a liability and an expense for bonuses based on a formula that takes into account the economic value
added by employees during the reporting period. The Group recognises this provision where contractually obliged or where there is a
past practice that has created a constructive obligation.
SKY Network Television Limited23

4. Finance costs, net
IN NZD 0002018 2017
Finance income
Interest income(312)(540)
(312)(540)
Finance expense
Interest expense on bank loans10,39510,663
Interest expense on bonds6,1799,064
Finance lease interest 50
–
Amortisation of bond costs 272361
Bank facility finance fees860922
Total interest expense
17,75621,010
Unrealised exchange loss – foreign currency payables
2,520812
Unrealised exchange gain – foreign currency hedges
(2,513)(1,024)
Realised exchange loss/(gain) – foreign currency payables59(648)
Realised exchange loss – foreign currency hedges –
10
17,51019,620
Interest income is recognised on a time-proportion basis using the effective interest method, which is the rate that exactly discounts
estimated future cash flow receipts through the expected life of the financial asset to that asset’s net carrying amount.
Borrowing costs directly attributable to acquisition, construction or production of an asset that takes a substantial period of time to
prepare for its intended use are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the
period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurs with the borrowing of funds.
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Non-monetary items
carried at fair value that are denominated in foreign currencies are translated to New Zealand dollars at the rates prevailing on the date when
the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at the year-end
exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in profit and loss except where hedge
accounting is applied and foreign exchange gains and losses are deferred in other comprehensive income.
Financial Statements June 201824

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
5. Taxation
Income tax expense
The total charge for the year can be reconciled to the accounting (loss)/ profit as follows:
IN NZD 0002018 2017
(Loss)/profit before tax
(194,114)167,572
Prima facie tax (credit)/expense at 28%
(54,352)46,920
Non deductible expenses
1
101,098771
Prior year adjustment(132)3,537
Other(54)
–
Income tax expense
46,56051,228
Allocated between
Current tax payable
50,392
48,658
Deferred tax
(3,832)
2,570
Income tax expense
46,560 51,228
Imputation credits
IN NZD 0002018 2017
Imputation credits available for subsequent reporting periods based on a tax rate of 28% 100,903 80,158
(1)
$100.8 million relates to goodwill impairment.
The above amounts represent the balance of the imputation account as at the end of the reporting period adjusted for:
• Imputation credits that will arise from the payment of the amount of the provision for income tax;
• Imputation debits that will arise from the payment of dividends (excluding the final dividend announced in August).
Availability of these credits is subject to continuity of ownership requirements.
Current income tax expense
Income tax expense represents the sum of the tax currently payable and deferred tax, except to the extent that it relates to items
recognised directly in other comprehensive income, in which case the tax expense is also recognised in other comprehensive income.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in profit and loss because
it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group’s liability for current tax is calculated using the rates that have been enacted or substantively enacted by the
balance date.
SKY Network Television Limited25

Deferred tax liabilities and (assets)
The following are the major deferred tax liabilities and assets and the movements thereon during the current and prior reporting periods.
IN NZD 000Notes
Fixed
assets
Leased
assetsOther
Recognised
directly
in equityTotal
For the year ended 30 June 2018
At 1 July 201716,16827,697(3,259)(2,923)37,683
NZ IAS 39 hedging adjustment recognised through other
comprehensive income
13
– – – 7,0377,037
Revaluation of available for sale investment recognised
through other comprehensive income
1
– – – (62)(62)
(Credited)/charged to profit and loss1,375(5,333)126 – (3,832)
Balance at 30 June 2018
17,54322,364(3,133)4,05240,826
Deferred tax reversing within 12 months(5,621)(7,142)(3,133)2,786(13,110)
Deferred tax to reverse after more than 12 months23,16429,506 – 1,26653,936
17,54322,364(3,133)4,05240,826
For the year ended 30 June 2017
At 1 July 201611,91631,117(4,997)(1,989)36,047
NZ IAS 39 hedging adjustment recognised through other
comprehensive income
13
– – – (1,535)(1,535)
Revaluation of available for sale investment recognised
through other comprehensive income
1
– – – 601601
(Credited)/charged to profit and loss4,252(3,420)1,738 – 2,570
Balance at 30 June 201716,16827,697(3,259)(2,923)37,683
Deferred tax reversing within 12 months
701(6,950)(3,140)(1,404)(10,793)
Deferred tax to reverse after more than 12 months
15,46734,647(119)(1,519)48,476
16,16827,697(3,259)(2,923)37,683
Certain deferred tax assets and liabilities have been offset as allowed under NZ IAS 12 where there is a legally enforceable right to set off current
tax assets against current tax liabilities and where the deferred tax assets and liabilities are levied by the same taxation authority.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction neither affects
accounting nor taxable profit or loss. Deferred income tax is determined using tax rates that have been enacted or substantively enacted
by the balance date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability
is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Key estimates and assumptions
Deferred tax assets are recognised for unused tax losses and other deductible temporary differences to the extent that it is probable that
taxable profit will be available against which the losses and other deductible temporary differences can be utilised. Significant management
judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and level of
future taxable profits. No deferred tax asset has been recognised in relation to Igloo Limited’s (IGLOO) accumulated losses of $12,150,000
(30 June 2017: $12,150,000). Those tax losses can be carried forward for use against future taxable profits of IGLOO subject to meeting the
requirements of the income tax legislation including shareholder continuity.
Financial Statements June 201826

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
6. Trade and other receivables
IN NZD 000Notes2018 2017
Trade receivables
56,575 61,529
Less provision for impairment of receivables
(636)(926)
Trade receivables – net
55,939 60,603
Other receivables
1,300 2,739
Prepaid expenses
5,878 6,133
Balance at end of year
63,117 69,475
Deduct prepaid expenses
(5,878)(6,133)
Balance financial instruments
14
57,23963,342
2018 2017
IN NZD 000GrossImpairmentGrossImpairment
Residential subscribers
32,83750434,390380
Commercial subscribers
5,213185,21738
Wholesale customers
11,592– 9,860–
Advertising
5,197279,21961
Commercial music
982110737
Other
1,638662,736410
56,57563661,529926
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. Collectability of trade receivables is reviewed on an on-going basis. Debts which are known to be
uncollectible are written off. A provision for impairment of trade receivables is established when there is objective evidence, such as default
or delinquency in payments, that the Group will not be able to collect all amounts due according to the original terms of the receivables.
The amount of the provision is the difference between the asset’s carrying amount and the present value of the estimated future cash flows,
discounted at the effective interest rate. The amount of the provision is expensed in profit and loss.
As at 30 June, the ageing analysis of trade receivables is as follows:
20182017
IN NZD 000
Neither
past due nor
impaired
Past due
but not
impairedImpaired
Neither
past due nor
impaired
Past due
but not
impairedImpaired
Not past due
49,504– – 54,013– –
Past due 0-30 days
– 5,09326– 5,34480
Past due 31-60 days
– 1,11515– 89723
Past due 61-90 days
– 167213– 203197
Greater than 90 days
– 60 382– 146 626
49,5046,43563654,0136,590926
Accounts receivables relating to advertising sales are individually impaired when it is clear that the debt is unlikely to be recovered. Impairment
for all other trade receivables is calculated as a percentage of overdue subscribers in various time buckets based on historical performance of
subscriber payments.
SKY Network Television Limited27

Movements in the provision for impairment of receivables were as follows:
IN NZD 000Notes2018 2017
Opening balance
926 763
Charged during the year
3
895 1,897
Utilised during the year
(1,185)(1,734)
Closing balance
636 926
The creation and release of the provision for impaired receivables has been included in subscriber related costs in profit and loss. Amounts
charged to the allowance account are generally written off when there is no expectation of receiving additional cash. The maximum
exposure to credit risk at the reporting date is the fair value of each class of receivable. The Group holds collateral in the form of deposits
for commercial customers.
7. Programme rights inventory
IN NZD 0002018 2017
Opening balance79,00379,765
Acquired during the year267,829286,278
Charged to programming expenses(268,454)(287,040)
Balance at end of year
78,37879,003
Programme rights are recognised at cost, as an asset in the consolidated balance sheet provided the programme is available and the rights
period has commenced at the balance date. Long-term sports rights are executory contracts as the obligation to pay for the rights does not
arise until the event has been delivered. Most sports rights contracts are, however, payable in advance and as such, are recognised only to the
extent of the portion not yet utilised. Rights are expensed over the period they relate to on a proportionate basis depending on the type of
programme right and the expected screening dates, generally not exceeding twelve months. Any rights not expected to be utilised are
written off during the period.
Financial Statements June 201828

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
8. Property, plant and equipment
IN NZD 000
Land,
buildings and
leasehold
improvements
Broadcasting
and studio
equipment
Decoders and
associated
equipment
Capitalised
installation
costs
Other
plant and
equipment
Projects
under
developmentTotal
For the year ending 30 June 2018
Cost
Balance at 1 July 2017 64,271 139,786 352,918 306,246 81,631 5,228 950,080
Transfer between categories– 962 – – 906 (1,868)–
Transfer to software assets– – – – – (3,032)(3,032)
Additions 364 550 8,581 18,789 4,850 22,967 56,101
Disposals(53)(2,005)(29,779)(37,825)(10,325)– (79,987)
Balance at 30 June 2018
64,582139,293331,720287,21077,06223,295923,162
Accumulated depreciation
Balance at 1 July 201722,694122,987278,757228,87558,701– 712,014
Depreciation for the year 2,112 8,84630,89631,4597,911– 81,224
Disposals(53)(2,005)(29,554)(37,822)(10,224)– (79,658)
Balance at 30 June 2018
24,753129,828280,099222,51256,388– 713,580
Net book value at 30 June 201839,8299,46551,62164,69820,67423,295209,582
For the year ending 30 June 2017
Cost
Balance at 1 July 2016
63,589 155,268 480,382 403,530 81,551 18,655 1,202,975
Transfer between categories
– 2,043 – – 380 (2,423)–
Transfer to software assets
– – – – – (16,232)(16,232)
Additions
711 3,457 15,929 29,355 4,234 5,228 58,914
Disposals
(29)(20,982)(143,393)(126,639)(4,534) – (295,577)
Balance at 30 June 2017
64,271139,786352,918306,24681,6315,228950,080
Accumulated depreciation
Balance at 1 July 2016
20,478135,611389,194319,74654,630– 919,659
Depreciation for the year
2,244 8,32532,63435,7678,600– 87,570
Disposals
(28)(20,949)(143,071)(126,638)(4,529)– (295,215)
Balance at 30 June 2017
22,694122,987278,757228,87558,701– 712,014
Net book value at 30 June 201741,57716,79974,16177,37122,9305,228238,066
Land, buildings and leasehold improvements at 30 June 2018 includes land with a cost of $8,820,000 (30 June 2017: $8,820,000).
Depreciation related to broadcasting assets (including decoders and capitalised installation costs) of $71,201,000 (30 June 2017: $76,726,000)
accounts for the majority of the total depreciation charge. Due to immateriality of the remaining depreciation, no allocation of deprecation has
been made across expense categories in the consolidated statement of comprehensive income.
The net book value of assets subject to finance leases totals $3,050,000 (30 June 2017: nil).
SKY Network Television Limited29

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses except land which is shown
at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. Capitalised installation costs
are represented by the cost of satellite dishes, installation costs and direct labour costs. Where parts of and item of property, plant and
equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably.
The cost of additions to plant and other assets constructed by the Group consist of all appropriate costs of development, construction
and installation, comprising material, labour, direct overhead and transport costs. For qualifying assets directly attributable interest costs
incurred during the period required to complete and prepare the asset for its intended use are capitalised as part of the total cost. All other
costs are recognised in profit and loss as an expense as incurred. Additions in the current year include $110,000 of capitalised labour costs
(30 June 2017: $954,000).
Projects under development comprises expenditure on partially completed assets. The projects include items of property, plant and
equipment and intangible assets. At completion of the project the costs are allocated to the appropriate asset categories and depreciation
or amortisation commences.
Costs may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and recognised in other costs
in profit and loss.
Depreciation
Property, plant and equipment are depreciated using the straight-line method so as to allocate the costs of assets to their residual
values over their estimated useful lives as follows:
AssetsTime
Leasehold improvements5 – 50 years
Buildings50 years
Broadcasting and studio equipment5 – 10 years
Decoders and associated equipment4 – 5 years
Other plant and equipment3 – 10 years
Capitalised installation costs5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
Key estimates and assumptions
The estimated life of technical assets such as decoders and other broadcasting assets is based on management’s best estimates.
Changes in technology may result in the economic life of these assets being different from that estimated previously. The board and
management regularly review economic life assumptions of these assets as part of management reporting procedures.
Financial Statements June 201830

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
9. Intangible assets
IN NZD 000Software
Broadcasting
rights
Other
intangibles
Indefinite life
goodwillTotal
For the year ending 30 June 2018
Cost
Balance at 1 July 2017 135,690 2,185 3,167 1,426,293 1,567,335
Transfer from projects under development 3,032 – – – 3,032
Additions 14,559 – – – 14,559
Disposals(14,398)(2,185)(2,084)– (18,667)
Balance at 30 June 2018
138,883– 1,0831,426,2931,566,259
Accumulated amortisation and impairment
Balance at 1 July 2017 72,837 2,185 3,078 962 79,062
Amortisation for the year 21,134 – 56 – 21,190
Impairment– – – 360,000 360,000
Disposals(14,398)(2,185)(2,084)– (18,667)
Balance at 30 June 2018
79,573 – 1,050 360,962 441,585
Net book value at 30 June 201859,310– 331,065,3311,124,674
For the year ending 30 June 2017
Cost



Balance at 1 July 2016 133,593 2,185 3,167 1,426,293 1,565,238
Transfer from projects under development 16,232 – – – 16,232
Additions 16,447 – – – 16,447
Disposals(30,582)– – – (30,582)
Balance at 30 June 2017
135,6902,1853,1671,426,2931,567,335
Accumulated amortisation
Balance at 1 July 2016 86,607 1,419 3,078 962 92,066
Amortisation for the year 16,812 766 – – 17,578
Disposals(30,582)– – – (30,582)
Balance at 30 June 2017
72,837 2,185 3,078 962 79,062
Net book value at 30 June 2017
62,853– 891,425,3311,488,273
The majority of the amortisation charge relates to broadcasting and infrastructure assets. Consequently no allocation has been made across
expense categories in profit and loss.
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the net identifiable assets, liabilities
and contingent liabilities of the acquired subsidiary at the date of acquisition and the fair value of the non-controlling interest in the
acquiree. The goodwill balance is allocated to the Group’s single operating segment. The majority of the goodwill ($1,422,115,000) arose as
a result of the acquisition of SKY by Independent Newspapers Limited (INL) in 2005. Subsequent acquisitions have resulted in immaterial
increases to goodwill. In the current year testing indicated that the carrying value of goodwill would not be recovered , resulting in an
impairment charge of $360 million.
Broadcasting rights, consisting of UHF spectrum licences are recognised at cost and are amortised on a straight-line basis over the lesser
of the period of the licence term and 20 years.
Software development costs recognised as assets are amortised on a straight-line basis over their estimated useful lives (three to
five years).
Direct costs associated with the development of broadcasting and business software for internal use are capitalised where it is probable
that the asset will generate future economic benefits. Capitalised costs include external direct costs of materials and services consumed
and direct payroll-related costs for employees (including contractors) directly associated with the project and interest costs incurred during
the development stage of a project. Additions in the current year to software include $6,035,000 of accumulated capitalised labour costs,
$5,849,000 of which were incurred in the current year.
SKY Network Television Limited31

Goodwill
IN NZD 0002018 2017
Opening balance 1,426,293 1,426,293
Impairment(360,962)(962)
Closing balance
1,065,331 1,425,331
Key estimates and assumptions
Assets that are subject to amortisation and depreciation are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use.
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested at each reporting date for
impairment and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
The Group operates as a single business segment and monitors goodwill for the business as a whole. If the testing indicates the carrying
value exceeds the recoverable amount, goodwill is considered to be impaired. The recoverable amount of the cash generating unit (CGU)
which is classified within Level 3 of the fair value hierarchy has been determined based on fair value less cost of disposal calculations which
include the benefits of proposed changes to the cost structure of the business as SKY leverages new technologies and adapts its operating
model, some of which would be excluded from a value-in-use calculation.
Key assumptions used in fair value less cost of disposal calculations
Key assumptions are subscriber numbers, churn rates, foreign exchange rates, expected changes to revenue, costs and capital expenditure,
ability to secure key content, including retention of the SANZAAR rugby contract and a discount rate based on current market rates adjusted
for risks specific to the business. Growth rates are based on expected forecasts and changes in prices, direct costs and capital expenditure
are based on past experience and expectations of future changes in the market.
The fair value less cost of disposal calculation is based on the present value of estimated future cash flows, approved by the board, derived
from budgets for financial year 2019 and forecasts for the next four years prepared for the impairment model.
The review has resulted in the fair value less cost of disposal calculated falling below the $1.46 billion carrying value of goodwill by $360
million. This impairment loss recognised in the year ended 30 June 2018 reflects the following key assumptions used in SKY’s model:
- A further decrease in residential subscribers in total of 57,000 (8.3%) over five years (June 2017 – decrease of 56,000 -7.8%).
Core residential subscriber numbers have continued to decline in the year to 30 June 2018 and the impairment model has been updated
to assume they continue to decline at reducing rates over the five years. The decline in satellite subscribers is partially offset by a growth in
retransmission subscribers.
- A decrease in total subscriber ARPU of 17.6% over five years to $62.89 (June 2017 – 0.7% decrease in ARPU to $78.24).
The lower ARPU assumed in the model reflects the combined impacts of the pricing and product offering changes introduced in March
2018, of SKY wholesaling more of its products to third parties for on-sale and of growth in the number of subscribers to the lower price and
lower cost internet delivered products like NEON and FANPASS.
- A decrease in operating costs of $51 million (9.2%) over five years (June 2017 – decrease of $101 million – 16.5%).
The reduction in future operating cost savings reflects that actual savings of $47 million were achieved in FY18. The current model also
treats satellite costs as a finance lease from 1 July 2019, which results in these costs being excluded from future operating costs whereas
they were included as operating costs in the June 2017 model. The cash cost of the satellite lease is still reflected in the fair value calculation.
Other key assumptions in the model are:
- Capital expenditure averaging $80 million per annum over the five years reducing to $70 million in 2023.
- A 0% terminal growth assumption and a 9.0% after tax (12.5% pre-tax) discount rate (June 2017 – 0% and 9.0%).
- A weaker NZD to USD exchange rate, reducing to 0.67 from the second year (June 2017 – 0.70).
The forecast continuing reduction in SKY’s operating costs reflect the lower customer base and the benefits of cost saving initiatives that
have started to be rolled out throughout the business, including savings from using new technology. These reductions have been partially
offset by the effect of the weaker NZ dollar on programming costs.
The Group also compares the net book value of equity with the market capitalisation value at the balance date. The share price at 30 June
2018 was $2.60 (prior year $3.45) equating to a market capitalisation of $1.01 billion. This market value excludes any control premium and
may not reflect the value of 100% of SKY’s equity. The net book value of SKY equity at 30 June 2018 following the $360 million impairment
of goodwill is $1.03 billion ($2.64 per share).
Financial Statements June 201832

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
Sensitivity of recoverable amounts
The assessment of fair value less cost of disposal is most sensitive to the assumptions on the net gain in satellite subscriber numbers,
future average revenue per user (ARPU), future cost savings initiatives, the NZD cost of programming rights and the discount rate.
The fair value less cost of disposal calculation would reduce, resulting in a further impairment of goodwill, should there be the following
adverse changes in these key assumptions:
- If satellite subscriber numbers fall by a further 5% over five years, there would be an impairment of approximately $185 million.
- If residential subscriber ARPU fell by a further 5% over five years there would be an impairment of approximately $210 million.
- If cash outflows (either through increased operating costs or increased capital expenditure) were higher by 5% over 5 years there would
be an impairment of approximately $175 million.
- If the discount rate were higher by 1% there would be an impairment of approximately $130 million.
- If the USD/NZD falls 5% to 0.637 there would be an impairment of approximately $50 million.
10. Trade and other payables
IN NZD 000Notes2018 2017
Trade payables 86,103 80,731
Unearned subscriptions and deferred revenue 60,746 64,250
Employee entitlements 14,740 15,559
Accruals 24,465 25,647
Balance at end of year
186,054 186,187
Less
Unearned subscriptions and deferred revenue(60,746)(64,250)
Balance financial instruments
14
125,308121,937
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective
interest method.
11. Borrowings
20182017
IN NZD 000CurrentNon-currentTotalCurrentNon-currentTotal
Borrowings 458 132,625 133,083 – 199,685 199,685
Finance lease 582 2,429 3,011 – – –
Bonds – 99,250 99,250 – 98,978 98,978
1,040 234,304 235,344 – 298,663 298,663
Repayment terms
IN NZD 00020182017
Less than one year 1,040 –
Between one and five years 234,304 298,663
235,344 298,663
Bank Loans
The Group has a revolving credit bank facility of $300 million (30 June 2017: $300 million) expiring 17 July 2020 from a syndicate of banks
comprising ANZ National Bank Limited, Bank of New Zealand, Commonwealth Bank of Australia and Westpac Bank. Bank overdrafts of
$3,307,000 (30 June 2017: $5,701,000) have been set off against cash balances.
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in
profit or loss over the period of the borrowings, using the effective interest method. Arrangement fees are amortised over the term of the
loan facility. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the balance date.
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less. Bank overdrafts that are
repayable on demand and which form an integral part of the Group’s cash management are included as a component of cash and cash
equivalents for the purpose of the consolidated statement of cash flows.
SKY Network Television Limited33

Lease liabilities
2018
IN NZD 000
Future minimum
lease paymentsInterest
Present value of
minimum lease
payments
Less than one year727145582
Between one and five years2,7042752,429
3,4314203,011
The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets. The lease terms are for five years ending on
30 November 2022 and 30 June 2023.
Leases in terms of which the Group assumes substantially all the risk and rewards of ownership are classified as finance leases.
Assets acquired under finance leases are included as non-current assets in the consolidated balance sheet. The lower of fair value and the
present value of the minimum lease payments is recognised as an asset at the beginning of the lease term and depreciated on a straight-line
basis over the shorter of the lease term or the expected useful life of the leased asset. A corresponding liability is also established and each
lease payment is allocated between the liability and interest expense so as to produce a constant period rate of interest on the remaining
balance of the liability.
Bonds
On 31 March 2014 the Group issued bonds for a value of $100 million which were fully subscribed.
Terms and conditions of outstanding bonds are as follows:
20182017
Bond Bond
Nominal interest rate6.25%6.25%
Market yield4.55%4.92%
Issue date31-Mar-1431-Mar-14
Date of maturity31-Mar-2131-Mar-21
IN NZD 000
Carrying amount 99,250 98,978
Fair value 104,375 104,529
Face value 100,000 100,000
Bonds are recognised initially at fair value less costs of issue. Costs of issue are amortised over the period of the bonds. Subsequent to
initial recognition, bonds are stated at amortised cost with any difference between cost and redemption value being recognised in profit
or loss over the period of the bonds, using the effective interest method. Bonds are classified in the consolidated balance sheet as
non-current liabilities unless settlement of the liability is due within twelve months after the balance date.
The difference between carrying amount and fair value has not been recognised in the financial statements as the bonds are intended to
be held until maturity.
Financial Statements June 201834

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
11. Borrowings (CONTINUED)
Changes in liabilities arising from financing activities
IN NZD 0001 July 2017
Advances
receivedRepaymentFeesReclass
Change
in fair value 30 June 2018
Current liabilities
Borrowings– – – – 458– 458
Finance lease– – – – 582– 582
Derivatives – interest rate 2,502– (2,502)–412–412
Non-current liabilities
Borrowings199,685 97,000 (166,000)137– – 130,822
Vendor finance– 2,386(125)– (458)– 1,803
Finance lease– 3,182(171)–(582)– 2,429
Bonds98,978– – 272– – 99,250
Derivatives – interest rate 2,796– – –(412)(909)1,475
303,961102,568(168,798)409– (909)237,231
IN NZD 0001 July 2016
Advances
receivedRepaymentFeesReclass
Change
in fair value 30 June 2017
Current liabilities
Bonds199,912– (200,000)88– – –
Derivatives – interest rate 677– (677)– 2,502– 2,502
Non-current liabilities
Borrowings49,468261,000(111,000)217– – 199,685
Bonds98,705– – 273– – 98,978
Derivatives – interest rate 8,986– ––(2,502)(3,688)2,796
357,748261,000(311,677)578– (3,688)303,961
12. Derivative financial instruments
20182017
IN NZD 000NotesAssetsLiabilities
Notional
amountsAssetsLiabilities
Notional
amounts
Interest rate swaps – cash flow hedges– (1,887) 80,000 – (5,298) 188,000
Interest rate swaps – fair value through profit and loss 117 – 10,000 46 – 10,000
Total interest rate derivatives
117(1,887) 90,000 46(5,298) 198,000
Forward foreign exchange contracts – cash flow hedges14,485(336) 382,392 324(8,100) 421,797
Forward foreign exchange contracts – dedesignated 1,621 (25) 36,442 17 (1,621) 46,584
Total forward foreign exchange derivatives
16,106(361) 418,834 341(9,721) 468,381
16,223(2,248) 508,834 387(15,019) 666,381
Analysed as:
Current9,917(595)266,054176(9,038)361,286
Non-current 6,306 (1,653)242,780 211 (5,981)305,095
16,223(2,248)508,834387(15,019)666,381
Derivatives used for hedging – cash flow hedges
14
14,485(2,223)462,392324(13,398)609,797
At fair value through profit or loss
14
1,738 (25) 46,442 63 (1,621) 56,584
16,223(2,248)508,834387(15,019)666,381
SKY Network Television Limited35

Exchange rates
Foreign exchange rates used at balance date for the New Zealand dollar are:
20182017
USD
0.67740.7315
AUD
0.91470.9530
GBP
0.51280.5623
EUR
0.57930.6402
JPY
74.980781.9792
Credit risk – derivative financial instruments
The maximum exposure to credit risk on the derivative financial instruments is the value of the derivative assets’ receivable portion of
$16,233,000 (2017: $387,000).
Exposure to currency risk
The Group’s exposure to foreign currency risk that has been covered by forward foreign exchange contracts is as follows:
20182017
IN NZD 000USDAUDOtherUSDAUDOther
Foreign currency payables
(27,787)(16,668)(882)(28,822)(17,918) –
Dedesignated forward exchange contracts
21,59214,850 – 29,92116,664 –
Net balance sheet exposure
(6,195)(1,838)(882)1,099(1,254)–
Forward exchange contracts (for forecasted transactions)
223,652158,740 – 273,746147,082968
Total forward exchange contracts
245,244173,590–303,667163,746968
Sensitivity analysis
A 10% strengthening or weakening of the NZD against the following currencies as at 30 June would have resulted in changes to equity (hedging
reserve) and unrealised gain/losses (before tax) as shown below. Based on historical movements, a 10% increase or decrease in the NZD is
considered to be a reasonable estimate. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for the prior year.
10% rate increase10% rate decrease
IN NZD 000 gain/(loss)Equity
Profit
or lossEquity
Profit
or loss
As at 30 June 2018
Foreign currency payables
USD – 2,526– (3,087)
AUD– 1,823– (2,229)
Foreign exchange hedges
USD(20,058)(2,058)24,5152,515
AUD(14,353)(1,385)17,5441,692
(34,411)90742,059(1,109)
As at 30 June 2017
Foreign currency payables
USD – 2,622– (3,205)
AUD– 2,025– (2,475)
Foreign exchange hedges
USD(23,707)(1,725)29,0482,110
AUD(12,936)(1,475)15,8221,803
Other(85)– 103–
(36,728)1,44744,973(1,767)
Financial Statements June 201836

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
12. Derivative financial instruments (CONTINUED)
Interest rates
During the year ended 30 June 2018, interest rates on borrowings varied in the range of 3.3% to 6.5% (2017:3.2% to 6.5%).
The Group’s interest rate structure is as follows:
20182017
IN NZD 000Notes
Effective
interest rateCurrentNon-current
Effective
interest rateCurrentNon-current
Assets
Cash and cash equivalents3.87%4,694– 2.31%5,444–
Liabilities
Borrowings
11
5.58%(458)(132,625)5.36%– (199,685)
Financial leases
11
6.15%(582)(2,429)– – –
Bonds
11
6.18%– (99,250)6.04%– (98,978)
Derivatives
Floating to fixed interest rate swaps– 20,000 60,000– 108,000 80,000
Fixed to floating interest rate swaps–– 10,000 –– 10,000
23,654(164,304)113,444(208,663)
Gains and losses recognised in the hedging reserve in equity (note 13) on interest rate hedges as at 30 June 2018 will be continuously released to
profit or loss within finance cost until the repayment of the bank borrowings and bonds. In the prior year the revolving credit facility was utilised
to repay the bond. The interest rate swap designated to the bond were designated to the floating rate debt.
Sensitivity analysis for interest-bearing instruments
A change of 100 basis points in interest rates on the reporting date, would have increased/(decreased) equity (hedging reserve) and profit or loss
(before tax) by the amounts shown below. Based on historical movements a 100 basis point movement is considered to be a reasonably possible
estimate. The analysis is performed on the same basis for the prior year. This analysis assumes that all other variables remain constant.
100 BP increase100 BP decrease
IN NZD 000 gain/(loss)Equity
Profit
or lossEquity
Profit
or loss
As at 30 June 2018
Variable rate instruments - bank loans– (1,260)– 1,260
Interest rate hedges - cash flow698– (709)–
698(1,260)(709)1,260
As at 30 June 2017
Variable rate instruments - bank loans– (1,938)– 1,938
Interest rate hedges - cash flow1,710– (1,762)–
1,710(1,938)(1,762)1,938
Derivative financial instruments are used to hedge the Group’s exposure to foreign exchange and interest rate risks. The Group does not
hold or issue derivatives for trading purposes. However derivatives that do not qualify for hedge accounting are accounted for as trading
instruments. Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are
re-measured at their fair value at subsequent reporting dates. The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.
At inception the Group documents the relationship between hedging instruments and hedged items, as well as its risk management
objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as hedges to
specific assets and liabilities or to specific firm commitments or forecast transactions. The Group also documents its assessment, both at
hedge inception and on an on-going basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting
changes in cash flows of hedged items.
SKY Network Television Limited37

Derivatives consist of currency forwards and interest rate swaps. The fair value is recognised in the hedging reserve within equity until such
time as the hedged item will affect profit or loss. The amounts accumulated in equity are either released to profit or loss or used to adjust the
carrying value of assets purchased. For example, when hedging forecast purchase of programme rights in foreign currency, the gains and
losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the programme rights.
The deferred amounts are ultimately recognised in programme rights’ expenses in profit or loss.
Amounts accumulated in the hedging reserve in equity on interest rate swaps are recycled in profit or loss in the periods when the hedged
item affects profit or loss (for example when the forecast interest payment that is hedged is made). The gain or loss relating to any ineffective
portion is recognised in profit or loss as “interest rate swaps - fair value” in finance costs. The gain or loss relating to interest rate swaps which
do not qualify for hedge accounting is recognised in profit or loss within the interest expense charge in “finance costs, net”.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred
to profit or loss. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately
in profit or loss.
13. Equity
Share capital
Number of shares
(000)
Ordinary shares
(NZD 000)
Shares on issue at 30 June 2018 and 30 June 2017389,140577,403
Ordinary shares are fully paid and have no par value. The shares rank equally, carry voting rights and participate in distributions.
Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the year.
20182017
(Loss)/profit after tax attributable to equity holders of Parent (NZD 000)(240,956)116,026
Weighted average number of ordinary shares on issue (000)389,140389,140
Basic (loss)/earnings per share (cents)
(61.92)29.82
Underlying earnings per share
(Loss)/profit after tax attributable to equity holders of Parent (NZD 000)(240,956)116,026
Adjust goodwill impairment360,000–
Underlying profit after tax attributable to equity holders of the parent
119,044116,026
Weighted average number of ordinary shares on issue (000)389,140389,140
Underlying earnings per share (cents)
30.5929.82
Weighted average number of ordinary shares
NumberNumber
Issued ordinary shares at beginning of year
389,139,785389,139,785
Issued ordinary shares at end of year
389,139,785389,139,785
Weighted average number of ordinary shares
389,139,785389,139,785
Financial Statements June 201838

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
13. Equity (CONTINUED)
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. SKY had no dilutive potential ordinary shares during the current or prior period.
Hedging reserve
IN NZD 000Notes2018 2017
Balance at 1 July(9,062)(5,112)
Cash flow hedges
Revaluation14,258(11,189)
Transfer to profit or loss10,8735,704
Deferred tax
5
(7,037)1,535
18,094(3,950)
Balance at end of year
9,032(9,062)
14. Financial risk management
Financial risk management objectives
The Group undertakes transactions in a range of financial instruments which include cash and cash deposits, receivables, payables, derivatives
and various forms of borrowings including bonds and bank loans.
These activities result in exposure to financial risks that include market risk (currency risk, fair value interest rate risk, cash flow interest rate risk
and price risk), credit risk and liquidity risk.
The Group seeks to minimise the effects of currency and interest rate risks by using derivative financial instruments to hedge these risk
exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provides written
principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and
the investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
The Corporate Treasury function reports monthly to the board of directors. The board has an audit and risk committee which is responsible for
developing and monitoring the Group’s risk management policies.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the
value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return on risk.
The Group buys and sells derivatives in the ordinary course of business, and also incurs financial liabilities, in order to manage market risks.
All such transactions are carried out within the guidelines set by the board. Generally the Group seeks to apply hedge accounting in order to
manage income statement volatility.
a) Foreign exchange risk
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Australian dollar and the
United States dollar in relation to purchases of programme rights and the lease of transponders on the satellite. Foreign exchange risk arises
when purchases are denominated in a currency that is not the entity’s functional currency. The net position in each foreign currency is managed
by using forward currency contracts and foreign currency options and collars to limit the Group’s exposure to currency risk.
The Group’s risk management policy is to hedge foreign capital expenditure (Capex) and foreign operating expenditure (Opex) in accordance
with the following parameters. Approximately 90% of anticipated transactions in each major currency qualify as ‘highly probable’ forecast
transactions for hedge accounting purposes.
SKY Network Television Limited39

Period
Minimum
hedging
Maximum
hedging
CapexCapex order greater than NZD $250,000
Time of issuing order100%100%
OpexFixed commitments
Up to 3 years100%100%
> 3 years0%100%
OpexVariable commitments
0-12 months85%95%
13-24 months0%50%
25-26 months0%30%
b) Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate
risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain its borrowings in fixed rate
instruments as follows:
Period
Minimum
hedging
Maximum
hedging
Variable rate borrowings
1-3 years40%90%
3-5 years20%60%
5-10 years0%30%
The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic
effect of converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with other parties to exchange,
at specified intervals (quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the
agreed notional principal amounts. The Group also enters into fixed-to-floating interest rate swaps to hedge fair value interest rate risk arising
where it has borrowed at fixed rates.
c) Price risk
The Group does not have any price risk exposure.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations
and arises from cash and cash equivalents, deposits with banks, derivative financial instruments and the Group’s receivables from customers.
The Group has no significant concentrations of credit risk.
Credit risk with respect to trade receivables is limited due to the large number of subscribers included in the Group’s subscriber base. In addition,
receivables balances are monitored on an on-going basis with the result that the Group’s exposure to bad debts is not significant. The Group
establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. The main components
of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established
for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based
on historical data of payment statistics for similar financial assets. The maximum exposure is the carrying amount as disclosed in note 6.
Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the
amount of credit exposure to any one financial institution.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Prudent liquidity risk management
implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities
and the ability to close out market positions. The Group aims to maintain flexibility in funding by keeping committed credit lines available.
Management monitors the Group’s cash requirements on a daily basis against expected cash flows based on a rolling daily cash flow forecast
for at least 90 days in advance. In addition the Group compares actual cash flow reserves against forecast and budget on a monthly basis.
The Group had an undrawn facility balance of $169 million (June 2017: $100 million) that can be drawn down to meet short-term working capital
requirements. The facility limit at 30 June 2018 is $300 million (30 June 2017: $300 million)
Financial Statements June 201840

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
14. Financial risk management (CONTINUED)
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the balance date
to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, including interest payments in
respect of financial liabilities and the net settled interest rate derivatives that are in a loss position at balance date. Balances due within 12 months
equal their carrying value as the impact of discounting is not significant.
IN NZD 000Notes
Carrying
amount
Contractual
cash flows
Less than
one year1-2 years2-5 years
At 30 June 2018
Non derivative financial liabilities
Secured bank loans
11
130,822 (140,330)(4,559)(4,559)(131,212)
Other loans
11
2,261 (2,376)(500)(500)(1,376)
Finance leases
11
3,011 (3,402)(728)(728)(1,946)
Bonds
11
99,250 (117,188)(6,250)(6,250)(104,688)
Trade and other payables
10
125,308 (125,308)(125,308)– –
Derivative financial liabilities
Forward exchange contracts used for hedging –
net outflow/inflow
(1)
12
361 (373)(184)(189)–
Interest rate swaps
(1)
12
1,887 (1,708)(1,268)(440)–
362,900(390,685)(138,797)(12,666)(239,222)
At 30 June 2017
Non derivative financial liabilities
Secured bank loans
11
199,685 (221,204)(6,960)(6,960)(207,284)
Bonds
11
98,978 (123,438)(6,250)(6,250)(110,938)
Trade and other payables
10
121,937 (121,937)(121,937)– –
Derivative financial liabilities
Forward exchange contracts used for hedging –
net outflow/inflow
(1)
12
9,721 (9,911)(6,598)(2,279)(1,034)
Interest rate swaps
(1)
12
5,298 (5,242)(3,534)(1,257)(451)
435,619(481,732)(145,279)(16,746)(319,707)
(1)
The table excludes the contractual cash flows of the interest rate swaps and forward exchange contracts which are included in assets.
SKY Network Television Limited41

The table below analyses the Group’s foreign exchange derivative financial instruments which will be settled on a gross basis into relevant
maturity groupings based on the remaining period at the balance date to the contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows. Inflows have been calculated using balance date spot rates.
IN NZD 000
Exchange
rate
Contractual
cash flows
foreign
exchange
amount
Contractual
cash flows
Less than
one year1-2 years3-5 years
At 30 June 2018
Forward foreign exchange contracts
Outflow (at FX hedge rate)
USD––(245,244)(141,520)(77,212)(26,512)
AUD––(173,590)(104,534)(48,275)(20,781)
Inflow (at year end market rate)
USD0.6774 175,191 258,623149,24081,42427,958
AUD0.9147 161,516 176,578106,33449,10621,139
16,3679,5205,0431,804
At 30 June 2017
Forward foreign exchange contracts
Outflow (at FX hedge rate)
USD––(303,668)(151,636)(73,242)(78,790)
AUD––(163,746)(100,682)(43,218)(19,846)
YEN––(636)(636)– –
Inflow (at year end market rate)
USD0.7315 214,375 293,062146,34070,68476,038
AUD0.9530 153,221 160,77898,85742,43519,486
YEN81.9792 49,084 599599– –
(13,611)(7,158)(3,341)(3,112)
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group’s overall
strategy for capital risk management remains unchanged from 2017.
The capital structure of the Group consists of debt which includes the borrowings disclosed in note 11, cash and cash equivalents and equity
attributable to equity holders of the Parent comprising share capital, hedging reserve and retained earnings as disclosed in note 13.
The board reviews the Group’s capital structure on a regular basis. The Group has a facility agreement in place with a syndicate of banks and
a retail bond issue as described in note 11.
Financial Statements June 201842

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
14. Financial risk management (CONTINUED)
The gearing ratio at the year-end was as follows:
IN NZD 000Notes2018 2017
Debt
11
235,344 298,663
Cash and cash equivalents
(4,694)(5,444)
Net debt
230,650 293,219
Equity
1,026,687 1,327,878
Net debt to equity ratio
22%22%
The Group’s bank loan facility is subject to a number of covenants, including interest and debt cover ratios, calculated and reported quarterly,
with which it has complied for the entire year reported (2017: complied).
Fair value estimation
The methods used to estimate the fair value of financial instruments are as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or 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 1)
that is valued on a level 3 basis.
IN NZD 000Notes2018 2017
Assets measured at fair value
Trading derivatives – de-designated or not hedge accounted
12
1,738 63
Derivatives used for hedging – cash flow hedges
12
14,485324
Available for sale investment
1
6,3346,552
Total assets
22,5576,939
Liabilities measured at fair value
Trading derivatives – de-designated or not hedge accounted
12
(25)(1,621)
Derivatives used for hedging – cash flow hedges
12
(2,223)(13,398)
Total liabilities
(2,248)(15,019)
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
The Group uses a variety of methods and assumptions that are based on market conditions existing at each balance date. Techniques, such as
estimated discounted cash flows, are used to determine the fair value of financial instruments. The fair value of forward exchange contracts is
based on market forward foreign exchange rates at year end. The fair value of interest rate swaps is the estimated amount that the Group would
receive or pay to terminate the swap at the reporting date, taking into account current interest rates, observable yield curves and the current
creditworthiness of the swap counterparties.

SKY Network Television Limited43

Fair value of financial instruments carried at amortised cost
20182017
IN NZD 000Notes
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Financial assets
Loans and receivables
Cash and cash equivalents4,6944,6945,4445,444
Trade and other receivables
6
57,23957,23963,34263,342
Total assets
61,93361,93368,78668,786
Financial liabilities held at amortised cost
Bank loans
11
130,822128,580199,685198,037
Other loans
11
2,2612,059– –
Finance leases
11
3,0112,907– –
Bonds
11
99,520104,37598,978104,529
Trade and other payables
10
125,308125,308121,937121,937
Total liabilities
360,922363,229420,600424,503
The fair values of financial assets and financial liabilities are determined as follows:
Cash and short-term deposits, trade and other receivables carried at amortised cost, trade and other payables, and other current liabilities
approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of quoted notes and bonds is based on price quotations at the reporting date being a level 1 basis. The fair value of loans from
banks and lease liabilities is estimated on a level 3 basis by discounting future cash flows using rates currently available for debt on similar terms,
credit risk and remaining maturities. The fair value of related party receivables is estimated on a level 3 basis by discounting future cash flows
using rates currently available for deposits on similar terms.
Classification
Financial assets are classified in the following categories: at fair value through profit or loss, or loans and receivables. The classification
depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets
at initial recognition and re-evaluates this designation at each reporting date.
All purchases and sales of financial assets are recognised on the trade date, which is the date that the Group commits to purchase the
assets. Purchases or sales of financial assets are sales or purchases that require delivery of assets within the period generally established
by regulation or convention in the marketplace.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short-term. Derivatives are categorised as held for trading unless they are designated
as hedges. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are
recognised in profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those assets with maturities greater than 12 months after the balance date when they are
classified as non-current assets. The Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents
in the consolidated balance sheet. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or
impaired as well as through the amortisation process.
Impairment of financial assets
The Group assesses at each balance date whether there is objective evidence, such as default or delinquency in payment, that a financial
asset or group of financial assets is impaired. If there is objective evidence that an impairment loss on assets carried at amortised cost
has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced
through use of an allowance account with the amount of the loss being recognised in profit or loss.

Financial Statements June 201844

Notes to the consolidated
financial statements (CONTINUED)
For the year ended 30 June 2018
15. Commitments
IN NZD 0002018 2017
Operating leases – future minimum lease payments:
Year 1
34,78235,134
Year 2
34,27233,873
Year 3
34,60733,285
Year 4
14,28033,170
Year 5
–14,006
Later than five years
–72
117,941149,540
Contracts for transmission services:
Year 1
4,9874,697
Year 2
4,994539
Year 3
2,514245
12,4955,481
Contracts for future programmes:
Year 1
211,628202,415
Year 2
172,462181,110
Year 3
101,784146,953
Year 4
33,07683,361
Year 5
19,77633,391
Later than five years
2,66619,331
541,392666,561
Capital expenditure commitments:
Property, plant and equipment
Year 1
2,6618,813
2,6618,813
Other services commitments:
Year 1
11,3447,508
Year 2
2,0551,562
Year 3
1,188978
Year 4
233970
Year 5
–193
14,82011,211
The Group has entered into a contract with Optus Networks Pty Limited (Optus) to lease transponders on the D1 satellite which was launched
in October 2006 and commissioned in November 2006. The contract is for a period of 15 years from the time of commissioning with monthly
payments in Australian dollars. This contract is accounted for as an operating lease. Non-cancellable operating lease payments, including Optus
lease payments, are included in operating leases above.
SKY is currently utilising seven transponders, six of which are on a long-term lease. Access to the seventh transponder was negotiated, effective
from 1 April 2011.
SKY Network Television Limited45

16. Contingent liabilities
The Group has undrawn letters of credit at 30 June 2018 of $650,000 (30 June 2017: $650,000), relating to Datacom Employer Services for
SKY executive and Screen Enterprises Limited payroll liabilities in the current year.
The Group is subject to litigation incidental to their 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.
17. Subsequent events
On 23 August 2018 the Board of Directors announced that it will pay a fully imputed dividend of 7.5 cents per share with the record date being
7 September 2018. A supplementary dividend of 1.3235 cents per share will be paid to non-resident shareholders subject to the foreign investor
tax credit regime.
In July 2018 the available for sale investment in 90 Seconds was sold for book value of $6.3 million.
Financial Statements June 201846

The consolidated financial statements comprise:
• the consolidated balance sheet as at 30 June 2018;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include significant accounting policies.
Our opinion
In our opinion, the consolidated financial statements of Sky Network Television Limited (SKY or the Company), including its subsidiaries (the
Group), present fairly, in all material respects, the financial position of the Group as at 30 June 2018, its financial performance and its cash flows
for the year then ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International
Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs NZ) and International Standards on
Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners
(PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’
Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
Our firm carries out other services for the Group in the areas of treasury advisory services and assurance over regulatory reporting. In addition,
certain partners and employees of our firm may subscribe to SKY services on normal terms within the ordinary course of the trading activities of
the Group. The provision of these other services has not impaired our independence.
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement.
For the purpose of our audit, we applied a threshold of overall group materiality of $8.3 million, which represents 5%
of loss before tax, adjusted to exclude the goodwill impairment charge of $360 million.
We have determined that there is one key audit matter:
• Carrying value of goodwill
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for
the consolidated financial statements as a whole as set out above. These, together with qualitative considerations, helped us to determine the
scope of our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in
aggregate on the consolidated financial statements as a whole.
Independent auditor’s report
To the shareholders of Sky Network Television Limited
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
SKY Network Television Limited47

Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial statements and our application of materiality.
As in all of our audits, we also addressed the risk of management override of internal controls including among other matters, consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements
as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
The Group’s finance function is centralised at the Head Office in Auckland. All audit work in respect of the consolidated financial statements was
performed by the Group engagement team.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matterHow our audit addressed the key audit
Carrying value of goodwill
The Group has a goodwill balance of $1,065 million at 30 June 2018
(30 June 2017: $1,425 million) that arose on the acquisition of SKY by
Independent Newspapers Limited in 2005. An impairment charge of
$360 million has been recorded against this balance in the current
financial year.
SKY’s business is affected by digital disruption in the media industry
and this increases the risk of impairment. The carrying value of
goodwill is dependent on future cash flows and there is risk that if
these cash flows do not meet the Group’s expectations goodwill
may be impaired.
To assess whether or not there is an impairment in the carrying value
of goodwill management utilised a fair value less costs of disposal
methodology to determine the value of the business, including
goodwill, using discounted cash flows. The estimated future cash
flows used in the model were based on the budget for the next
financial year and forecast cash flows for the following four years
prepared for the purposes of the impairment model.
The forecasts in the current model include the benefit of cost
savings expected in response to the changes in SKY’s business and
the marketplace, some of which would be excluded under a value
in use methodology. Consequently, at 30 June 2018 management
considered the recoverable amount using the fair value less costs of
disposal methodology as being the most appropriate approach.
The cash flow forecasts used in the model involve subjective
estimates about future business performance. Certain assumptions
made by management in the impairment review are key estimates,
including subscriber numbers and churn rates, average revenue
per user (ARPU), ability to continue to secure key content, foreign
exchange rates, expected changes to revenue, costs and capital
expenditure, overall long-term growth rates and discount rates used.
Adverse changes in these assumptions might lead to an impairment
in the carrying value of goodwill.
In their assessment management determined that the model was
most sensitive to changes in the assumptions relating to subscriber
numbers, ARPU, reductions achieved in cash outflows through either
operating expenses or capital expenditure, the discount rate and the
USD/NZD exchange rate.
We obtained management’s fair value less costs of disposal model
used to assess the carrying value of goodwill at 30 June 2018.
Our audit procedures included the following:
Assessing management’s processes and controls over preparing
the model.
Assessing the appropriateness of using a fair value less costs of
disposal approach against the applicable accounting standard.
We tested the calculation of the valuation model, including the inputs
and the mathematical accuracy and compared the resulting balances
to the relevant net assets of the business.
We assessed the key estimates and assumptions made by
management. Our procedures included the following:
• Ensured that the impairment model used by management to assess
the impairment of goodwill was approved by the Board.
• Considered the reasonableness of key assumptions, including
movements in subscriber numbers, ARPU, foreign exchange rates,
expected revenue and costs in the next 5 years, the on-going level
of capex and the long-term growth rate with reference to SKY’s
performance historically, particularly in recent periods, analysis
of subscriber tenure and churn, key initiatives being taken and
comparison to available broker reports.
• We engaged our own expert to review the structure of the model, to
recalculate the weighted average cost of capital used as the discount
rate in the model and to review external evidence for the rate used for
cost of disposal. We determined that the rates used by management
were within a reasonable range given estimation uncertainty.
• We reviewed management’s secondary assessment of fair value less
costs of disposal based on market capitalisation at balance date.
• We obtained and evaluated management’s sensitivity analyses to
ascertain the impact of reasonably possible changes. For each of
the scenarios we tested the mathematical accuracy of the model,
assessed whether the changes were reasonably possible and
tested the impact of those changes on the valuation.
Financial Statements June 201848

Key audit matterHow our audit addressed the key audit
Management also considered market capitalisation at balance
date as a secondary assessment of fair value less costs of disposal,
taking into account that market capitalisation does not include any
control premium.
As a result of the impairment review, the Directors identified an
impairment in the carrying value of goodwill at 30 June 2018 and
reasonably possible changes in key assumptions that could result
in further impairment, as disclosed in note 9.
We reviewed the disclosures in note 9 to the financial statements
to ensure they are compliant with the requirements of the
accounting standards.
As a result of our audit procedures we had no significant matters
to report.
Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the consolidated financial statements does not cover the other information
included in the annual report and we do not, and will not, express any form of assurance conclusion on the other information.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the
date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard except that not all other information to be included in the annual report was available to us at the date of
our signing. Prior to the date of this report we had received and read the Chairman’s Letter, Chief Executive’s Letter, Financial Overview, Financial
Trends and Directors’ Responsibility Statement. The Other Information section of the annual report, including Corporate Governance and
Company and Bondholder Information, and the Board of Directors section are expected to be made available to us after the date of this report.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the consolidated financial statements
in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements, as a whole, are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs NZ and ISAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those matters
which we are required to state to them in an auditor’s 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 Company and the Company’s shareholders, as a body, for our audit work, for this report or for the
opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Leopino Foliaki.
For and on behalf of:
Chartered Accountants Auckland
23 August 2018
Independent auditor’s report (CONTINUED)
To the shareholders of Sky Network Television Limited
SKY Network Television Limited49

SKY Network Television Limited50
SKY NETWORK
TELEVISION LIMITED
PO Box 9059
Newmarket
Auckland 1149
New Zealand
10 Panorama Road
Mt Wellington
Auckland 1060
New Zealand
sky.co.nz

Other Information

Sky Network Television Limited
Year ended on 30 June 2018


• Net tangible assets per security:

Current period $(0.255): 1

Previous period $(0.415): 1

24 August 2018

SKY Television increases underlying profits and controls costs
Strategic commitment to satellite delivery as well as a strong suite of online products to
REACH ALL KIWIS

Highlights:
• Underlying net profit of $119.3 million (before Goodwill impairment), an increase of 2.6% on
previous year

• Savings in operating costs of $47 million

• EBITDA of $286 million, down 2.2% on FY17

• Shareholder dividend of 7.5 cents per share

• 768,000 customers across satellite and OTT services

• Strategic commitment to satellite delivery as well as a strong suite of online products:
our content reaches all New Zealanders

SKY Television has today released its results for the financial year to 30 June 2018. Chief Executive
John Fellet said that “The results for the year are pleasing. We have managed to increase underlying
profits and control costs while implementing a transformational strategy that ensures we keep
delivering our great content to New Zealanders in ways that they want.”
“SKY is building up a strong suite of online products to meet the needs of all New Zealanders, both
now and in the future, while continuing to deliver to our core customer base, particularly those who
don’t yet have access to fast internet.”
“It’s a careful balance, but strategically important. Our sport partners know they can rely on SKY to
deliver their content to all of their New Zealand fans, in ways that work for each individual. They
know SKY won’t leave any fan behind.”

Financial results
SKY has continued to deliver a solid underlying profit while implementing the strategy. In the
financial year to 30 June 2018, SKY’s underlying net profit after tax is $119.3 million, an increase of
2.6% on the previous year.

The SKY Board has agreed to reduce the carrying value of SKY’s Goodwill asset from $1.43 billion to
$1.07 billion. Please refer to the attached explanation of Goodwill. When the impairment charge is
included in the 2018 results, there is a net loss of $240.7 million for the year. This is a non-cash
charge that has no impact on SKY’s 2018 cash flows or bank covenants.
“The SKY management team has worked hard to take costs out of the business, and we are pleased
to report costs are down $47 million for the year.”
SKY also retired $69 million of bank debt in the year, and paid $49 million in tax.
At 30 June SKY had 768,000 customers across satellite and online services. “In December we
reported the loss of 46,006 customers for the first six months of the financial year, and it was
pleasing to see that churn improved with a loss of only 11,049 in the second half. While it is too
early to assess the full impact, the pricing and packaging changes in March 2018 have contributed to
this improvement in churn.”
“While we always report on churn, it is important to highlight that 768,000 customers choose to pay
for SKY’s services. By global standards, 40% market penetration for a Pay TV service is significant.
Over the next few years we anticipate that more customers will transition from our satellite service
to our online products, and our goal is to continue to serve them in ways that best meet their needs
and budgets.”

Strategic approach to delivering our great content
Mr Fellet said “Our industry is evolving into a world where internet delivery of content will
eventually dominate, and we are well placed to transition with it. SKY’s investment in Cisco’s Infinite
Video Platform (IVP) will allow us to offer a viewing experience that is dramatically different to
today, and we are on track to deliver new products in the first half of 2019.”
“But we know that many New Zealanders – around 240,000 households – don’t currently have
access to streaming-capable internet. Our significant investment in the satellite for over 20 years
has ensured we have a robust and reliable platform, and we will continue to use it to serve all New
Zealanders until the evolution to online delivery is complete. Delivering live sport to our nation of
rugby, netball, cricket, league, golf, tennis, football and motorsport fans is a responsibility we do not
take lightly. Recent experience around the world suggests it will be some time before internet
delivery of live sport meets the expectations of all sport fans, and the satellite will keep doing the
heavy lifting in the meantime”.

Great content
“Our core purpose is delivering great content to New Zealanders. Our strategy is to have exclusive
deals with all the best studios and the sports that we know New Zealanders love to watch. Our sport
portfolio alone involves over 791 contracts. SKY has the depth and breadth of content to ensure our
customers always have something great to watch.”

-ENDS

Background – Goodwill asset

The SKY Board has agreed to reduce the carrying value of SKY’s goodwill asset from $1.43 billion to
$1.07 billion. The goodwill asset arose on the merger of Independent Newspapers Ltd (INL) and SKY
in 2005, and reflected the difference between the fair value of SKY’s assets at the time and the price
that INL shareholders agreed to exchange their shares in INL for SKY shares.
The SKY Board is required to assess the fair value of intangible assets at each reporting period, and
indicated in the Interim Results in March that it would reassess the carrying value of goodwill once
there was more information about the impact of the new pricing regime and product offerings on
churn, subscriber numbers and ARPU. The Board has decided to impair the asset by reducing the
book value by $360 million.
The impairment charge reduces the net book value of SKY equity at 30 June 2018 to $1.03 billion
($2.64/share) compared to $1.33 billion ($3.41/share) at 30 June 2017. SKY shares closed at
$2.60/share on 29 June 2018.


For further information, please contact:
Leanne Carpenter
Senior Communications Advisor
+64 21 840 018

leanne.carpenter@skytv.co.nz

APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumber
Date
Nature of event
BonusIf ticked,
Rights Issue
Tick as appropriate
Issue
state whether:Taxable
/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
x
whether:
InterimYear
x
SpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per security
Payment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
Supplementary
Amount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceW ithholding Tax(Give details)
Foreign
FDP Credits
W ithholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
EMAIL: announce@nzx.com
Notice of event affecting securities
SKY NETW ORK TELEVISION LIMITED
JASON HOLLINGW ORTHDirectors' Resolution
09 579 999909 525 832423082018
NZSKTE0001S6
In dollars and cents
Retained Earnings
$0.075
Enter N/A if not
applicable
$$0.0052083$0.029167
$
NZD$0.013235
$29,185,484
Date Payable
14 September, 2018
7 September, 201814 September, 2018

---

REACHING
EVERY KIWI
SKY NETWORK TELEVISION
ANNUAL RESULTS 2018

UNDERLYING NET PROFIT
116.3
119.3
100.0 105.0 110.0 115.0 120.0 125.0
2017
2018
Millions
© SKY 2018 Annual Results 2018
Page 2

OPERATING COSTS
601.2
553.9
400.0 430.0 460.0 490.0 520.0 550.0 580.0 610.0 640.0
2017
2018
Millions
© SKY 2018 Annual Results 2018
Page 3

CAPITAL EXPENDITURE
128.8
79.7
58.2
2016
2017
2018
Millions
© SKY 2018 Annual Results 2018
Page 4

PRE TAX CASHFLOW
Page 5
-
TAX PAYMENT
TAX PAYMENT
Column1
2017
2018
Millions
183.4
204.1
© Photosport.nz
© SKY 2018 Annual Results 2018

JUNE 2018
767,727
CUSTOMERS
OUR PLATFORMS REACH CUSTOMERS ACROSS ALL OF NZ
© SKY 2018 Annual Results 2018
Page 6
100% NZ Reach

CHURN OF SATELLITE SKY
15.9%
15.4%
2017
2018
Page 7
© SKY 2018 Annual Results 2018

MOVING ANNUAL CHURN
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%
Jun 98
Jun 18
© SKY 2018 Annual Results 2018
Page 8

REVENUE
893.5
839.7
400500600700800900
2017
2018
Millions
© SKY 2018 Annual Results 2018
Page 9
© Photosport.nz

ARPU FROM SKY TRADITIONAL SUBSCRIBERS
$75.83
$77.52
$79.54
$81.67
$83.48
$83.09
$50.00 $55.00 $60.00 $65.00 $70.00 $75.00 $80.00 $85.00 $90.00
2013
2014
2015
2016
2017
2018
© SKY 2018 Annual Results 2018
Page 10

TOTAL ARPU
$75.83
$77.52
$79.54
$78.63
$78.82
$76.34
$50.00 $55.00 $60.00 $65.00 $70.00 $75.00 $80.00 $85.00
2013
2014
2015
2016
2017
2018
© SKY 2018 Annual Results 2018
Page 11

TOTAL TELEVISION ADVERTISING REVENUE(YOY QUARTERLY CHANGE)
-10%
-5%
0%5%
10%15%
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 Qtr
Dec 16 Qtr
Mar 17 Qtr
Jun 17 Qtr
Sept 17 Qtr
Dec 17 Qtr
Mar 18 Qtr
Jun 18 Qtr
© SKY 2018 Annual Results 2018
Page 12

ADVERTISING REVENUE
41.6
43.2
45.2
49.3
46.7
39.0
26.4
27.3
24.3
24.7
21.4
18.0
-
10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
2013
2014
2015
2016
2017
2018
SKY
Prime
Millions
© SKY 2018 Annual Results 2018
Page 13

Page 14

FINANCIAL DETAIL

RESULTS SUMMARY
2017
2018
% Change
Revenue
893.5
839.7
(6.0%)
Operating expenses
601.2
553.9
(7.9%)
EBITDA
292.3
285.8
(2.2%)
Depn & Amort
105.1
102.4
(2.6%)
EBIT
187.2
183.4
(2.0%)
Interest
19.6
17.5
(10.7%)
Tax
51.3
46.6
(9.2%)
Underlying NET PROFIT after TAX
116.3
119.3
2.6%
Impairment of Goodwill
0
360.0
NET PROFIT/(LOSS)
116.3
(240.7)
© SKY 2018 Annual Results 2018
Page 16

REVENUE ANALYSIS
2017
2018
% Change
Core satellite revenue
725.1
681.2
(6.1%)
Other subscriptions
82.2
84.7
3.0%
Advertising
68.1
57.1
(16.2%)
Installation and other revenue
18.1
16.7
(7.7%)
TOTAL REVENUE
893.5
839.7
(6.0%)
© SKY 2018 Annual Results 2018
Page 17

REVENUE
893.5
839.7
400500600700800900
2017
2018
Millions
© SKY 2018 Annual Results 2018
Page 18
$83.48
$83.09
$50.00 $55.00 $60.00 $65.00 $70.00 $75.00 $80.00 $85.00 $90.00
2017
2018
SATELLITE ARPU
91%
SKY customers have
SKY Entertainment

EXPENSE ANALYSIS
2017
2018
% Change
Programming
349.4
328.1
(6.1%)
Subscriber related costs
100.2
83.1
(17.1%)
Broadcasting and infrastructure
97.6
92.0
(5.7%)
Depreciation and amortisation
105.1
102.4
(2.6%)
Other costs
54.0
50.7
(6.1%)
TOTAL EXPENSE
706.3
656.3
(7.1%)
© SKY 2018 Annual Results 2018
Page 19

CAPITAL EXPENDITURE ANALYSIS
2017
2018
% Change
Install
29.3
18.8
(35.8%)
Decoders
19.7
9.2
(53.3%)
Projects
30.7
30.2
(1.6%)
TOTAL CAPITAL EXPENDITURE
79.7
58.2
(27.0%)
© SKY 2018 Annual Results 2018
Page 20

OPERATING CASH FLOW
2017
2018
% Change
Net Cash from operating activities
244.5
213.6
(12.6%)
Net Cash used in investing activities
(79.6)
(58.2)
(26
.9%)
FREE CASH FLOWavailable to Shareholders
164.9
155.4
(5.8%)
© SKY 2018 Annual Results 2018
Page 21

FUNDING PROFILE
FACILITY
DRAWN
MARGIN
MATURITY
Bank Debt
$300m
$131m
145bp
Jul 2020
Bond
$100m
$100m
Fixed rate at
6.25%
Mar 2021
Page 22
© SKY 2018 Annual Results 2018

FOREIGN CURRENCY HEDGING
For USD exposures
95% hedged for 30 June 2019 @ 0.716556% hedged for June 2020 year @ 0.7134
24% hedged for June 2021 year @ 0.7057
For AUD exposures
90% hedged for 30 June 2019 @ 0.930342% hedged for 30 June 2020 @ 0.938717% hedged for 30 June 2021 @ 0.9121
Average $US payment rate for Opex for the year
to
June 18 @ 0.7081
© SKY 2018 Annual Results 2018
Page 23

DIVIDEND
The Board has declared a fully imputed final divide
nd of 7.5 cps ($29.2m) to be
paid and a supplementary dividend of 1.3235 to be p
aid to non-residents.
Record date is 7 September 2018. Payment date is 14 September 2018.
2018
2017
2016
2015
2014
2013
2012
2011
2010
Interim
7.5
15.0
15.0
15.0
14.0
12.0
11.0
8.0
7.0
Final
7.5
12.5
15.0
15.0
15.0
12.0
11.0
10.5
7.0
Ordinary Total
15.0
27.5
30.0
30.0
29.0
24.0
22.0
18.5
14.0
Special
0
0
0
32.0
25.0
0
TOTAL
15.0
27.5
30.0
30.0
29.0
24.0
54.0
43.5
14.0
© SKY 2018 Annual Results 2018
Page 24

---

Page 25

STRATEGY AND PLANS

OUR STRATEGY
MULTIPLE PROPOSITIONS AND
PRICES
UNDERSTANDING OUR
CUSTOMERS AND DELIVERING
GREAT EXPERIENCES
WORLD CLASS CONTENT THAT
MATTERS
OUR STRATEGY

Page 28
WORLD CLASS
CONTENT THAT
MATTERS
EXCLUSIVE CONTENT

Page 29
UNDERSTANDING
OUR CUSTOMERS
AND DELIVERING
GREAT EXPERIENCES
IMPROVED CUSTOMER EXPERIENCE

REACHING EVERY KIWI WITH OUR RANGE OF PRODUCTS
Page 30
FROM JUST UNDER
$25
FROM JUST UNDER
$12
FROM JUST UNDER
$16
ON DEMAND
MULTIPLE
PROPOSITIONS
AND PRICES

CONTINUE WORKING WITH OUR PARTNERS
Page 31

GROW
RETAIN
THE SEGMENTS OF SKY CUSTOMERS
Pie charts show SKY’s
penetration of each segment

Page 34
Big Pacific
©2018 NHNZ Ltd.

PROGRAMMING COSTS % REVENUE
39%
39%
0%5%
10%15%20%25%30%35%40%45%50%
2017
2018
© SKY 2018 Annual Results 2018
Page 35

CONTENT WARS
VIEWERSHIP ON SKY NZ
AUGUST – MAY 2018
0.24%
© SKY 2018 Annual Results 2018
Page 36

RECENT DEALS
Page 37
•
UK Super League
•
French Top 14
•
Guinness Pro 14
•
World Snooker Tour
•
UCI Cycling
•
Australian Open Tennis
•
Roland Garros
•
Moto GP
•
FIM Speedway
•
NASCAR
•
Le Mans
•
US Open Golf
•
Youth Olympics
•
UEFA Champions League
•
UEFA Europa League

EMMY NOMINATIONS
© SKY 2018 Annual Results 2018
Page 38
OVER 200 NOMINATIONS AVAILABLE ON SKY
PLATFORMS

Page 39
INCREASE IN DRAMA

BLACK FERNS NOVEMBER 2018 TOUR
Page 40
Chicago, USATripleheader at Soldier Field 4
th
November 2018
Toulon, FranceStade Felix Mayol9
th
November 2018
Grenoble, FranceStade des Alpes17
th
November 2018
© Photosport.nz

MAORI ALL BLACKS NOVEMBER 2018 TOUR
Page 41
Chicago, USATripleheader at Soldier Field4
th
November 2018
Brazil, South America11
th
November 2018
Chile, South America18
th
November 2018
© Photosport.nz

ALL BLACKS “END OF YEAR 2018 TOUR”
Page 42
Tokyo, JapanAjinomoto Stadium3
rd
November 2018
Twickenham, LondonTwickenham Stadium10
th
November 2018
Dublin, IrelandAviva Stadium17
th
November 2018
Rome, ItalyOlimpico Stadio24
th
November 2018
© Photosport.nz

© SKY 2018 Annual Results 2018

Page 44
The Brokenwood Mysteries ©2018 South Pacific Pictures

KEY MESSAGES• We’ve managed to increase underlying profits and c
ontrol costs while implementing a transformational
strategy that
ensures we keep delivering our great content to New
Zealanders in ways that they want
• We’re building up a strong suite of online product
s while continuing to deliver to our core satellite
customer base,
particularly those who don’t yet have access to fas
t internet
• Our sport partners can rely on us – we won’t leave
any sport fan behind
• We have 768,000 customers across our satellite and
OTT services, and we appreciate every one of them.
In the next few
years we anticipate that more customers will transi
tion from our satellite service to our online produ
cts, and our goal is to
serve them all in ways that meet their needs and bu
dgets
• Underlying profit is up 2.6% on last year ($119m)
and we managed to take $47m of costs out of the bus
iness. When the
Goodwill impairment is applied to the accounts we e
nd up with a $240.7m net loss, but it’s important t
o understand the
context of the Goodwill issue and to note that it h
as no impact on our cash flows or bank covenants.
Page 45

REACHING
EVERY KIWI
SKY NETWORK TELEVISION
ANNUAL RESULTS 2018