Full Year SKY Network Television Ltd Earnings Call

August 27, 2026

Operator: Thank you for standing by, and welcome to the Sky Network Television FY26 annual results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Sophie Moloney, Chief Executive Officer. Please go ahead.

Operator: Thank you for standing by, and welcome to the Sky Network Television FY2026 annual results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Sophie Moloney, Chief Executive Officer. Please go ahead.

Speaker #1: If you wish to ask a question via the phones, you'll need to press the star key, followed by the number 1, on your telephone keypad.

Speaker #1: I would now like to hand the conference over to Sophie Maloney, Chief Executive Officer. Please go ahead.

Speaker #2: Kia ora koutou, ngā mihi nui. Hello everyone, and welcome to SKY's 2026 full-year results briefing. I'm Sophie Moloney, your Chief Executive, and I'm happy to be here with David McClure, SKY's Chief Financial Officer.

Sophie Moloney: Kia ora koutou. Nau mai, haere mai. Hello, everyone, and welcome to Sky's 2026 full year results briefing. I am Sophie Moloney, your Chief Executive, and I am happy to be here with David Mackrell, Sky's Chief Financial Officer. Let me take you through the plan for today. I will begin with the full year highlights before reviewing performance against the three-year targets set in FY23 and the strategic delivery this year. David will then take you through the financial and operational performance. I will then share the outlook, guidance, and capital management, along with our strategic position as we take a moment to look ahead to FY31.

Sophie Moloney: Kia ora koutou. Nau mai, haere mai. Hello, everyone, and welcome to Sky's 2026 full year results briefing. I am Sophie Moloney, your Chief Executive, and I am happy to be here with David Mackrell, Sky's Chief Financial Officer. Let me take you through the plan for today. I will begin with the full year highlights before reviewing performance against the three-year targets set in FY2023 and the strategic delivery this year. David will then take you through the financial and operational performance. I will then share the outlook, guidance, and capital management, along with our strategic position as we take a moment to look ahead to FY2031.

Speaker #2: Let me take you through the plan for today. I'll begin with the full-year highlights before reviewing performance against the three-year targets set in FY23, and the strategic delivery this year.

Speaker #2: David will then take you through the financial and operational performance. I will then share the outlook, guidance, and capital management, along with our strategic position as we take a moment to look ahead to FY31.

Speaker #2: We'll then open the line for your questions. So, looking at the highlights: FY26 was a year of strategic wins and strong financial performance, despite a difficult market.

Sophie Moloney: We will then open the line for your questions. Looking at the highlights. FY26 was a year of strategic wins and strong financial performance despite a difficult market. We delivered solid earnings growth supported by greater scale and diversity and disciplined cost management.

Sophie Moloney: We will then open the line for your questions. Looking at the highlights. FY2026 was a year of strategic wins and strong financial performance despite a difficult market. We delivered solid earnings growth supported by greater scale and diversity and disciplined cost management.

Speaker #2: We delivered solid earnings growth, supported by greater scale and diversity, and disciplined cost management. Strategically, the most notable wins were in programming and the integration of Sky 3.

Sophie Moloney: Strategically, the most notable wins were in programming and the integration of Sky Three. Over the past 12 months, we have strengthened our unrivaled sports rights portfolio through successive announcements of key long-term deals, and we have progressively implemented the radical refresh of our entertainment strategy. We also completed the technical and operational integration of Sky Three while continuing to deliver for audiences. As well as being a strong strategic fit, the acquisition delivered a NZD 31 million bargain gain on purchase, synergies ahead of target at NZD 8 million, and a cash flow positive outcome in year one. We also continue to generate strong free cash flows that underpin the FY26 fully imputed dividends of NZD 0.32 per share. The board's ongoing confidence in the cash generation profile, combined with a healthy balance sheet, is behind the dividend projections.

Sophie Moloney: Strategically, the most notable wins were in programming and the integration of Sky Three. Over the past 12 months, we have strengthened our unrivaled sports rights portfolio through successive announcements of key long-term deals, and we have progressively implemented the radical refresh of our entertainment strategy. We also completed the technical and operational integration of Sky Three while continuing to deliver for audiences. As well as being a strong strategic fit, the acquisition delivered a NZD 31 million bargain gain on purchase, synergies ahead of target at NZD 8 million, and a cash flow positive outcome in year one. We also continue to generate strong free cash flows that underpin the FY2026 fully imputed dividends of NZD 0.32 per share. The board's ongoing confidence in the cash generation profile, combined with a healthy balance sheet, is behind the dividend projections.

Speaker #2: Over the past 12 months, we've strengthened our unrivaled sports rights portfolio through successive announcements of key long-term deals, and we've progressively implemented the radical refresh of our entertainment strategy.

Speaker #2: We also completed the technical and operational integration of SKY 3 while continuing to deliver for audiences. As well as being a strong strategic bet, the acquisition delivered a $31 million bargain gain on purchase, synergies ahead of target at $8 million, and a cash flow positive outcome in year one.

Speaker #2: We also continue to generate strong free cash flows that underpin the FY26 fully imputed dividends of $0.32 per share. The board's ongoing confidence in the cash generation profile, combined with a healthy balance sheet, is behind the dividend projections.

Speaker #2: To our headline results, which we have adjusted to allow for a like-for-like view of underlying performance, given the number of significant one-off items. We delivered a strong result, with SKY 3 adding revenue momentum, while our cost discipline continued across the business.

Sophie Moloney: To our headline results, which we have adjusted to allow for a like-to-like view of underlying performance given the number of significant one-off items. We delivered a strong result with Sky Free adding revenue momentum while our cost discipline continued across the business. This meant that group revenue increased 9% and underlying EBITDA was up 6% towards the top of guidance. Underlying CapEx reduced by 9% and normalized free cash flow increased 60%, supporting dividend growth of 45%. Three years ago, we communicated bold targets for the Sky standalone business to allow the market to check our homework.

Speaker #2: This meant that group revenue increased 9%, and underlying EBITDA was up 6%—towards the top of 9%. Normalized free cash flow increased 60%, supporting dividend growth of 45%.

Speaker #2: Three years ago, we communicated bold targets for the SKY standalone business to allow the market to check our homework. For most of those three years, we've faced a prolonged economic downturn.

Sophie Moloney: For most of those three years, we have faced a prolonged economic downturn. We also navigated an accelerated satellite migration, acquired a strategically and financially valuable business, and completed its complex integration. Against this backdrop, today we are reporting against those three-year targets and reflecting on what else we have achieved over this time.

Speaker #2: We also navigated an accelerated satellite migration, acquired a strategically and financially valuable business, and completed its complex integration. Against this backdrop, today we're reporting against those three-year targets and reflecting on what else we've achieved over this time.

Speaker #2: Starting with the targets: we fell short on standalone revenue growth, given those market conditions, coupled with the impact of the satellite migration. Importantly, despite those revenue challenges, we delivered programming costs and CapEx ratios well within target ranges, improving earnings and cash generation.

Sophie Moloney: Starting with the targets. We fell short on standalone revenue growth given those market conditions, coupled with the impact of the satellite migration. Importantly, despite those revenue challenges, we delivered programming costs and CapEx ratios well within target ranges, improving earnings and cash generation. That lifts the Sky standalone EBITDA margin to 21% to 22%. Customer net promoter score improved 11 points. That is meaningful progress, but not yet where we want it to be, and we continue to chase this down. I am particularly proud of employee engagement, up 22 points and 57% above target. Bringing teams together is an important part of any acquisition, so the five-point uplift in FY26 is a great indicator of the progress we are making and the strong outcomes we have achieved.

Speaker #2: That lifts the SKY standalone EBITDA margin to 21% to 22%. Customer net promoter score improved 11 points. That is meaningful progress, but not yet where we want it to be, and we continue to chase this down.

Speaker #2: I'm particularly proud of employee engagement, which is up 22 points and 57% above target. Bringing teams together is an important part of any acquisition, so the 5-point uplift in FY26 is a great indicator of the progress we're making and the strong outcomes we've achieved.

Speaker #2: And perhaps the boldest of our targets—to double the FY23 dividend of $0.15 per share—has been well and truly delivered, with confirmation of a full-year dividend of $0.32 per share.

Sophie Moloney: Perhaps the boldest of our targets, to double the FY23 dividend of 15 cents per share, has been well and truly delivered, with confirmation of a full year dividend of 32 cents per share. On that note, I will now hand you over to David.

Speaker #2: And on that note, I'll now hand you over to David.

Speaker #3: Thanks, Sophie, and good morning, everyone. I'll now take you through the performance in more detail. The underlying EBITDA increased 6% to $157 million, reflecting the additional scale following the acquisition of SKY 3 and lower costs in the standalone business.

David Mackrell: Thanks, Sophie, and good morning, everyone. I will now take you through the performance in more detail. The underlying EBITDA increased 6% to NZD 157 million, reflecting the additional scale following the acquisition of Sky Free and lower costs in the standalone business. Sky Free contributed 11 months of incremental revenue and the associated cost impacted all cost lines. Lower programming costs in the Sky standalone business largely offset the program-related costs introduced with Sky Free. Also of note is the growth in the broadband business was a key driver of the increased broadcast and infrastructure costs.

Speaker #3: SKY 3 contributed 11 months of incremental revenue, and the associated cost impacted all cost lines. Lower programming costs in the SKY standalone business largely offset the program-related costs introduced with SKY 3.

Speaker #3: Also of note is that the growth in the broadband business was a key driver of the increased broadcast and infrastructure costs. Overall, the improved earnings are driven by increased scale, disciplined cost management, and synergies from the acquisition.

David Mackrell: Overall, the improved earnings are driven from increased scale, disciplined cost management, and synergies from the acquisition. Underlying revenue increased 9% to NZD 826.1 million, with Sky Free the key driver of the increase. The 11 months Sky Free contribution was NZD 77.2 million, comprising NZD 74.2 million of advertising revenue and NZD 3 million of other revenue.

Speaker #3: Underlying revenue increased 9% to $826.1 million, with SKY 3 the key driver of the increase. The 11-month SKY 3 contribution was $77.2 million, comprising $74.2 million of advertising revenue and $3 million of other revenue.

Speaker #3: SKY standalone revenue declined a modest 0.8%, with the trend improving in the second half. Within subscription revenue, streaming growth partially offset the reduction in SKY Box customer revenue.

David Mackrell: Sky standalone revenue declined a modest 0.8%, with the trend improving in the H2. Within subscription revenue, streaming growth partially offset the reduction in Sky Box customer revenue. Sky standalone advertising also recorded modest growth, despite the prior period including the Paris Olympics. Following the acquisition of Sky Free, the expanded advertising portfolio represents a much stronger proposition for the advertising market. Now turning to revenue by product, and beginning with the Sky Box, which has shown a continuing retention improvement. Annualized churn reduced to 10.2%, the lowest since FY22, helping to slow the decline in customers and revenue. Importantly, 86% of the base has been with Sky for more than five years, and churn in that group reduced to 8.3%. Revenue was NZD 446 million, compared with NZD 470 million in FY25, with 422,000 customers at the end of the year.

Speaker #3: SKY standalone advertising also recorded modest growth, despite the prior period including the Paris Olympics. Following the acquisition of SKY 3, the expanded advertising portfolio represents a much stronger proposition to the advertising market.

Speaker #3: Now turning to revenue by product, and beginning with the SKY Box, which has shown a continuous retention improvement. Annualized churn reduced to 10.2%, the lowest since FY22, helping to slow the decline in customers and revenue.

Speaker #3: Importantly, 86% of the base has been with SKY for more than 5 years, and churn and net growth reduced to 8.3%. Revenue was $446 million, compared with $470 million in FY25, with 422,000 customers at the end of the year.

Speaker #3: APU improved to more than $85 through sport price increases and higher sport penetration. Adoption of the digital Sky experience increased to 41% of the base.

David Mackrell: ARPU improved to more than NZD 85 through sport price increases and higher sport penetration. Adoption of the digital Sky experience increased to 41% of the base. Accelerating this transition is a priority for the year ahead, as the enhanced viewing experience has a positive impact on both NPS and churn. Sky Sport Now, our sports streaming product, has continued to grow, with revenue 13% higher at NZD 76 million, through a 9% increase in customers and a 7% increase in ARPU to NZD 48. Growth in the customer base included incremental day pass take-up and a 31% increase in monthly pass sales, both helped by the removal of the weekly pass in January 2025. The premium pass, launched in November 2025, added another tier of incremental revenue following the introduction of 4K. After a challenging H1 for our entertainment streaming product, Neon, the H2 rebound has been dramatic.

Speaker #3: Accelerating this transition is a priority for the year ahead, as the enhanced viewing experience has a positive impact on both NPS and churn. SKY Sport Now, our sports streaming product, has continued to grow, with revenue 13% higher at $76 million through a 9% increase in customers and a 7% increase in APU to $48.

Speaker #3: Growth in the customer base included incremental day-pass take-up and a 31% increase in monthly pass sales, both helped by the removal of the weekly pass in January 2025.

Speaker #3: The Premium Pass, launched in November 2025, added another tier of incremental revenue following the introduction of 4K. After a challenging first half for our entertainment streaming product, Neon, the second half rebound has been dramatic.

Speaker #3: With five consecutive months of growth, the customer base grew 17% to finish the year at $252,000, after being as low as $215,000 at the half-year.

David Mackrell: With five consecutive months of growth, the customer base grew 17% to finish the year on 252,000 after being as low as 215,000 at the half year. Revenue held up well, increasing by 2% on higher ARPU, a good result given average subscriber numbers were 9% lower than the prior year. We launched its new brand proposition in May, giving Neon a clearer voice and a steadier rhythm of premium content with a strong pipeline. There is more work ahead of course. It is great to see the refreshed approach in action. Broadband delivered another year of double-digit growth. Customers increased 15% to 59,000 in a competitive market, driving a 28% increase in revenue to NZD 47 million. ARPU increased to NZD 71.32 as a result of an October 2025 price increase, partially offset by more customers choosing the lower price starter plan.

Speaker #3: Revenue held up well, increasing by 2% on higher APU—a good result, given average subscriber numbers were 9% lower than the prior year. We launched its new brand proposition in May, giving Neon a clearer voice and a steadier rhythm of premium content, with a strong pipeline.

Speaker #3: There is more work ahead, of course, but it is great to see the refreshed approach in action. Broadband delivered another year of double-digit growth.

Speaker #3: Customers increased 15% to 59,000 in a competitive market, driving a 28% increase in revenue to $47 million. ARPU increased to $71.32 as a result of an October 25 price increase, partially offset by more customers choosing the lower-priced Starter plan.

Speaker #3: Bundling continues to demonstrate opportunity, with 11% of SKY Box customers currently taking SKY Broadband. This increases to 14% among customers acquired during the year.

David Mackrell: Bundling continues to demonstrate the opportunity, with 11% of Sky Box customers currently taking Sky broadband. This increases to 14% among customers acquired in the year Turning to our B2B business, which has performed well. Although revenue was 2% softer at NZD 52 million, with pressure in the accommodation and retail sectors partially offset by growth in licensed premises. There are some encouraging signs as we launch the new Sky Box Business Edition in the H1. Tailored to the needs of the sector, it has been well-received, with take-up already at 22% of accommodation sector devices. This solution brings Sky content, on-demand viewing, and selected third-party streaming apps together in one secure, in-room entertainment experience for guests. Now turning to advertising revenue on Slide 19, and a significant step change for the business. Revenue increased 131% to NZD 132 million.

Speaker #3: Turning to our Venue business, which has performed well, although revenue was 2% softer at $52 million, with pressure in the accommodation and retail sectors partially offset by growth in licensed premises.

Speaker #3: There are some encouraging signs as we launch the new SKY Box Business Edition in the first half. Tailored to the needs of the sector, it's been well received, with take-up already at 22% of accommodation sector devices.

Speaker #3: This solution brings Sky content on-demand viewing and selected third-party streaming apps together in one secure, in-room entertainment experience for guests. Now, turning to advertising revenue on slide 19 and the significant step-change for the business.

Speaker #3: Revenue increased 131% to $132 million. That reflects 11 months of Sky Free ownership and modest growth in the standalone business. Advertising now represents 16% of total Sky revenue, compared to just 8% previously.

David Mackrell: That reflects 11 months of Sky Free ownership and modest growth in the standalone business. Advertising now represents 16% of total Sky revenue, compared to just 8% previously. 22% of advertising revenue is from the fast-growing digital segment. Within Sky standalone, digital advertising revenue more than doubled during the year, including the launch of digital ads on the new Sky Box and Sky Go. The total digital advertising market is around NZD 3 billion, of which 22% is video, which demonstrates the digital advertising opportunity for Sky. Our share of the broadcast advertising market more than doubled to 35.2%, in line with the acquisition modeling. While the sector was under pressure, there were signs of market improvement in Q4. The unified sales team has been in place since the start of H2, presenting Sky's full range of advertising opportunities to customers.

Speaker #3: 22% of advertising revenue is from the fast-growing digital segment. Within SKY standalone, digital advertising revenue more than doubled during the year, including the launch of digital ads on the new SKY Box and SKY Go.

Speaker #3: The total digital advertising market is around $3 billion, of which 22% is video. This demonstrates the digital advertising opportunity for SKY. Our share of the broadcast advertising market more than doubled to 35.2%, in line with the acquisition modeling. And while the sector was under pressure, there were signs of market improvement in the fourth quarter.

Speaker #3: The unified sales team has been in place since the start of the second half, presenting SKY's full range of advertising opportunities to customers. Turning to operating expenses, lower programming costs in the standalone business and above-planned delivery of year-one synergies limited the cost increase to 10% across the expanded business.

David Mackrell: Turning to operating expenses, where lower programming costs in the standalone business and above-plan delivery of year one synergies limited the cost increase to 10% across the expanded business. Overall, the underlying total operating expenses increased to NZD 670.3 million as Sky Free was integrated into the group. The most significant movements were programming costs, with standalone costs reduced 8% to NZD 354.5 million, or 47.3% of revenue. This reflected major event timing and disciplined content negotiations and choices. These reductions more than offset new commitments, including additional entertainment content in H2. This reduction meant that across the group, the net increase in programming costs was limited to just NZD 7.9 million after the inclusion of Sky Free costs.

Speaker #3: Overall, the underlying total operating expenses increased to $670.3 million, as Sky Free was integrated into the group. The most significant movements were programming costs, with standalone costs reduced by 8% to $354.5 million, or 47.3% of revenue.

Speaker #3: This reflected major event timing and disciplined content negotiations and choices. These reductions more than offset new commitments, including additional entertainment content in the second half.

Speaker #3: This reduction meant that across the group, the net increase in programming costs was limited to just $7.9 million after the inclusion of Sky Free costs.

Speaker #3: Subscriber-related costs were $5.6 million higher, largely due to the addition of SKY Free costs, and included investment in brand and marketing across both paid and free products, with spend weighted to the second half of the year.

David Mackrell: Subscriber-related costs were NZD 5.6 million higher, largely due to the addition of Sky Free costs and included investment in brand and marketing across both paid and free products, with spend weighted to H2 of the year. Broadcasting and infrastructure costs reflected the growth in broadband together with the addition of Sky Free costs. While advertising costs increased with the scale and activity supporting the advertising revenue growth. The cost base now supports a much broader business with opportunities for further optimization across the group. Underlying CapEx expenditure reduced 9% to NZD 59.1 million. The reduction reflects lower spend on customer equipment and the fact that FY25 included early replacement of transmission equipment to support the satellite migration. This was partially offset by the increased investment in projects, including the Sky Free integration.

Speaker #3: Broadcasting and infrastructure costs reflected the growth in broadband, together with the addition of SKY Free costs. Advertising costs also increased with the scale and activity supporting the advertising revenue growth.

Speaker #3: The cost base now supports a much broader business, with opportunities for further optimization across the group. Underlying capex expenditure reduced 9% to $59.1 million.

Speaker #3: The reduction reflects lower spend on customer equipment and the fact that FY25 included early replacement of transmission equipment to support the satellite migration. This was partially offset by the increased investment in projects, including the Sky Free integration.

Speaker #3: Underlying capital expenditure represented 7.5% of SKY standalone revenue, well within the current target ratio of 7% to 9% of revenue. The core business generated $55.1 million of free cash flow, more than double last year's $24.8 million.

David Mackrell: Underlying capital expenditure represented 7.5% of Sky standalone revenue, well within the current target ratio of 7% to 9% of revenue. The core business generated NZD 55.1 million of free cash flow, more than double last year's NZD 24.8 million. Free cash flow benefited from improved earnings, lower capital expenditure, no tax payments, and favorable working capital movements, with some offset from higher lease principal payments. Cash on hand also benefited from NZD 24.9 million received on completion of the Sky Free acquisition and NZD 8.2 million from Optus compensation related to expenditure in prior years.

Speaker #3: Free cash flow benefited from improved earnings, lower capital expenditure, no tax payment, and favorable working capital movements, with some offset from higher lease principal payments.

Speaker #3: Cash on hand also benefited from $24.9 million received on completion of the SKY Free acquisition and $8.2 million from Optus compensation, related to expenditure in prior years.

Speaker #3: Some of this cash has been utilized to settle the acquired liabilities and to contribute to integration costs. Integration costs had a net impact of $7.1 million, with approximately $4.8 million expected in FY27.

David Mackrell: Some of this cash has been utilized to settle the acquired liabilities and to contribute to integration costs. Integration costs had a net impact of NZD 7.1 million, with approximately NZD 4.8 million expected in FY27. The NZD 100 million bank facility remained undrawn, and we closed the year with NZD 79.1 million of cash, an increase of NZD 46.7 million.

Speaker #3: The $100 million bank facility remained undrawn and we closed the year with $79.1 million of cash, an increase of $46.7 million. The strong free cash flow enabled the Board's decision to pay a final, fully imputed dividend of 17 cents per share.

David Mackrell: The strong free cash flow enabled the board's decision to pay a final fully imputed dividend of 17 cents per share, bringing the dividend for FY26 to 32 cents per share, demonstrating further growth in shareholder returns and exceeding the FY26 target dividend. The increased dividend represents 74.9% of normalized free cash flow, as shown in the table on the left of the slide. I will now hand back to Sophie to cover the outlook for FY27 and beyond.

Speaker #3: Bringing the dividend for FY26 to 32 cents per share, demonstrating further growth in shareholder returns and exceeding the FY26 target dividend. The increased dividend represents 74.9% of normalized free cash flow, as shown in the table to the left of the slide.

Speaker #3: I'll now hand back to Sophie to cover the outlook for FY27 and beyond.

Speaker #1: Thanks, David. Great job. I now want to talk about outlook, guidance, and our capital management plans before closing with a few comments on the critical building blocks that underpin our confidence as we plot a path to our ambitions in FY31.

Sophie Moloney: Thanks, David. Great job. I want to now talk about outlook, guidance, and our capital management plans before closing with a few comments on the critical building blocks that underpin our confidence as we plot a path to our ambitions in FY31. To the outlook for FY27. First up, we acknowledge trading conditions are likely to continue to be challenging, and our revenue guidance of NZ

Speaker #1: So, to the outlook for FY27. First up, we acknowledge trading conditions are likely to continue to be challenging, and our revenue guidance of $825 million to $840 million reflects that.

Sophie Moloney: D 825 to 840 million reflects that. That said, we remain focused on the opportunities to optimize the business following the successful integration of Sky Three, which is the basis of our EBITDA guidance of NZD 155 to 165 million. CapEx is expected to be similar to FY26. As I will speak to in a moment, we expect the dividends to be at least 35 cents per share. Looking ahead, we remain on track to deliver at least NZD 10 million of incremental EBITDA by FY28.

Speaker #1: That said, we remain focused on the opportunities to optimize the business following the successful integration of Sky Free, which is the basis of our EBITDA guidance of $155 million to $165 million.

Speaker #1: Capex is expected to be similar to FY26. As I'll speak to in a moment, we expect the dividend to be at least 35 cents per share.

Speaker #1: Looking ahead, we remain on track to deliver at least $10 million of incremental EBITDA by FY28. That brings us to capital management, where our approach is built around sustainable growth and free cash flow, to keep progressively increasing returns to shareholders.

Sophie Moloney: That brings us to capital management, where our approach is built around sustainable growth and free cash flow to keep progressively increasing returns to shareholders. From FY27 through to FY29, we are targeting 10% annual dividend growth, and we are moving to paying quarterly. We are targeting lower capital intensity of 6% to 8% of revenue, while continuing to invest selectively for growth. Beyond that, we will continue to weigh investment opportunities against other uses of capital, and where we do not see a superior opportunity, we will consider returning surplus capital to shareholders. That could include buybacks and special dividends, with the board signaling today it will consider initiating a buyback following the FY27 interim results. I now want to look beyond FY27 and share the ambition we are building towards, and why we believe Sky is well-positioned to deliver on it.

Speaker #1: From FY27 through to FY29, we're targeting 10% annual dividend growth, and we're moving to paying quarterly. We're targeting lower capital intensity of 6% to 8% of revenue, while continuing to invest selectively for growth.

Speaker #1: Beyond that, we'll continue to weigh investment opportunities against other uses of capital. And where we don't see a superior opportunity, we'll consider returning surplus capital to shareholders.

Speaker #1: That could include buybacks and special dividends, with the Board signaling today it will consider initiating a buyback following the FY27 interim results. I now want to look beyond FY27 and share the ambition we're building towards, and why we believe SKY is well positioned to deliver on it.

Speaker #1: Based on the work completed to date, the SKY Board and management team have an aligned ambition to significantly grow revenue by FY31, with 20% to 30% of that growth coming from non-subscription sources.

Sophie Moloney: On the basis of the work completed to date, the Sky board and management team have an aligned ambition to significantly grow revenue by FY31, with 20% to 30% of that growth coming from non-subscription sources. We intend to deliver that alongside margin expansion, earnings growth, and disciplined capital management while operating within our CapEx envelope. This is not growth at any cost. This is a growth ambition built around delivering sustainable value for shareholders. Our confidence is grounded in having the critical building blocks in place. This includes a match fit team with a demonstrated ability to drive margin and free cash flow, secured long-term sports rights, a flexible and audience-led entertainment strategy, and greater audience scale and reach across digital with a richer data set. Expanding first on our content, where Sky's formidable position in must-watch premium sport has been significantly reinforced.

Speaker #1: We intend to deliver that alongside margin expansion, earnings growth, and disciplined capital management, while operating within our capex envelope. So, this is not growth at any cost.

Speaker #1: This is a growth ambition built around delivering sustainable value for shareholders. Our confidence is grounded in having the critical building blocks in place. This includes a match-fit team with a demonstrated ability to drive margin and free cash flow.

Speaker #1: Secured long-term sports rights, a flexible and audience-led entertainment strategy, and greater audience scale and reach across digital with a richer dataset. Expanding first on our content.

Speaker #1: Sky's formidable position and must-watch premium sport have been significantly reinforced. We have secured the strategically important rights for key sports for the longer term, including an expanded slate of rugby content out to the end of 2030, with the greatest rivalry tour currently demonstrating the added value for our rugby fans.

Sophie Moloney: We have secured the strategically important rights for key sports for the longer term, including an expanded slate of rugby content out to the end of 2030, with the Greatest Rivalry tour currently demonstrating the added value for our rugby fans. The Olympic rights out to Brisbane in 2032, which is the closest we will get to have a home games in Aotearoa, New Zealand. The New Zealand cricket rights returning to Sky with the highly anticipated India tour now just 8 weeks away, adding to our strong complement of international cricket deals, including with the England Cricket Board and Cricket Australia. The latter of which will see us showcasing the Black Caps most likely winning this year's Boxing Day test. Last month, we renewed the hugely popular NRL rights for 7 years from the start of 2028, thereby extending these rights out to the end of 2034.

Speaker #1: The Olympic rights out to Brisbane in 2032, which is the closest we'll get to have a home game in Aotearoa New Zealand. The New Zealand cricket rights returning to SKY, with the highly anticipated India tour now just eight weeks away, adding to our strong complement of international cricket deals, including with the England Cricket Board and Cricket Australia, the latter of which will see us showcasing the Blackcaps most likely winning this year's Boxing Day test.

Speaker #1: Last month, we renewed the hugely popular NRL rights for seven years from the start of 2028, thereby extending these rights out to the end of 2034.

Speaker #1: And, as of today, the very exciting news that we've renewed the Premier League, also out until 2034. The power of these rights deals is not just in securing the sport we know New Zealanders love, but also the tenure—deliberately staggered—and enabled by the strength of our balance sheet.

Sophie Moloney: As of today, the very exciting news that we have renewed the Premier League also out until 2034. The power of these rights deals is not just in securing the sport we know New Zealanders love, but also the tenure, deliberately staggered and enabled by the strength of our balance sheet. Critically, Sky's value is not built around one code or one season. We showcase major local and global sport throughout the year. This is important because the average sports fan follows multiple sports with our bundle offering compelling year-round value. Our coverage brings audiences all the action of game time, providing the high attention opportunities that advertisers value. But it does not stop at the final whistle, with replays, highlights, expert analysis, and behind-the-scenes stories that keep viewers engaged and help grow fandom.

Speaker #1: Critically, SKY's value is not built around one code or one season. We showcase major local and global sport throughout the year. And this is important, because the average sports fan follows multiple sports, with our bundle offering compelling year-round value.

Speaker #1: Our coverage brings audiences all the action of game time, providing the high-attention opportunities that advertisers value. But it doesn't stop at the final whistle.

Speaker #1: With replays, highlights, expert analysis, and behind-the-scenes stories that keep viewers engaged and help grow fandom. And we do that across a full range of platforms—through SKY and Sky Sport Now, free-to-air with a strategic use of Three and ThreeNow, and across social media.

Sophie Moloney: We do that across a full range of platforms, through Sky and Sky Sport Now, free to air with the strategic use of Three and ThreeNow, and across social media. If you are a sports fan or a sport partner, there is simply no better place to be than with Sky. From an entertainment perspective, we have executed on our strategy to unshackle ourselves and Neon from a single supply risk to a more flexible multi-studio model that delivers a steadier drumbeat of quality content and also allows us to respond faster to audience trends guided by our data. Neon is a great example of that refreshed approach in action, as are the launch of our own curated channels such as Sky Drama, which not only reflects better customer choice, but also better margins.

Speaker #1: If you're a sports fan or a sport partner, there is simply no better place to be than with SKY. From an entertainment perspective, we've executed on our strategy to unshackle ourselves and NEON from a single supply risk to a more flexible, multi-studio model. This delivers a steadier drumbeat of quality content, and also allows us to respond faster to audience trends, guided by our data.

Speaker #1: NEON is a great example of that refreshed approach in action, as are the launch of our own curated channels, such as Sky Drama, which not only reflects better customer choice, but also better margins.

Speaker #1: Local content continues to resonate with audiences, and with the addition of Three and ThreeNow, and the support of New Zealand On Air, we have secured a stronger pipeline of new local titles.

Sophie Moloney: Local content continues to resonate with audiences, and with the addition of Three and ThreeNow and the support of New Zealand On Air, we have secured a stronger pipeline of new local titles. This builds on our FY26 success, including "Bust Up," a local title that was recently in our top 10 titles on Neon. The latest survey from NZ On Air reinforces the value that our audiences place on local, with 81% of New Zealanders liking seeing ourselves on screen. As an essential media business, you will have also seen us strengthen our presence in news, in partnership with leading news organizations Stuff and NZME. In the coming months, this includes special election programming designed to inform debate, and for Sky to play our part.

Speaker #1: This builds on our FY26 success, including Buster—a local title that was recently in our top 10 titles on NEON. The latest survey from NZ On Air reinforces the value that our audiences place on local, with 81% of New Zealanders liking seeing ourselves on screen.

Speaker #1: As an essential media business, you'll have also seen us strengthen our presence in news, in partnership with leading news organizations' staff and NZME. In the coming months, this includes special election programming designed to inform debate and for SKY to play our part.

Speaker #1: As we shared in the annual report letter, at the heart of where we're heading is a fundamental shift from thinking about products and subscribers to thinking about audiences.

Sophie Moloney: As we shared in the annual report letter, at the heart of where we're heading is a fundamental shift from thinking about products and subscribers to thinking about audiences. We're now reaching more New Zealanders than ever before, with the addition of Sky Free significantly broadening and diversifying our audience. That scale gives audiences more choice, gives us more ways to optimize content, and gives advertisers one integrated way to connect across the portfolio. Each one of these platforms is a window for audiences to engage with a part or all of our content bundle. Behind the scenes, it also creates opportunities to simplify and to unlock margin through unifying our data and technology. Part of this unlock reflects the reality that our audience is already increasingly digital, with 70% of paid customers already engaging with Sky through a digital service.

Speaker #1: We're now reaching more New Zealanders than ever before with the addition of SKY Free, significantly broadening and diversifying our audience. That scale gives audiences more choice, gives us more ways to optimize content, and gives advertisers one integrated way to connect across the portfolio.

Speaker #1: Each one of these platforms is a window for audiences to engage with a part or all of our content bundle. Behind the scenes, it also creates opportunities to simplify and to unlock margin through unifying our data and technology.

Speaker #1: Part of this unlock reflects the reality that our audience is already increasingly digital, with 70% of paid customers already engaging with Sky through a digital service.

Speaker #1: Our streaming position is strong across paid and free, with the addition of ThreeNow providing the opportunity to engage with younger and more diverse audiences.

Sophie Moloney: Our streaming position is strong across paid and free, with the addition of ThreeNow providing the opportunity to engage with younger and more diverse audiences. Our social following has doubled in the last year to reach 4.1 million followers, connecting new and younger audiences to relationship with our portfolio of programming. As partners appreciate, greater digital reach means richer audience data. This has a compounding impact on better decisions across content and opportunities to monetize through advertising. Bringing all of this together, we're working towards one audience-led, connected Sky ecosystem, enabled by data and technology with less cost and complexity. It's underpinned by our purpose to share stories, to share possibilities, and to share joy, and by our enduring commitment to be a sustainably profitable Aotearoa New Zealand-focused business. That is the Sky we are building, with the foundations already secured to drive sustainable value in the years ahead.

Speaker #1: And our social following has doubled in the last year to reach 4.1 million followers, connecting you and younger audiences to relationships with our portfolio of programming.

Speaker #1: As partners appreciate, greater digital reach means richer audience data. This has a compounding impact on making better decisions across content and creates opportunities to monetize through advertising.

Speaker #1: Bringing all of this together, we're working towards one audience-led, connected Sky ecosystem—enabled by data and technology, with less cost and complexity. It's underpinned by our purpose: to share stories, to share possibilities, and to share joy.

Speaker #1: And by our enduring commitment to be a sustainably profitable, Aotearoa New Zealand-focused business. That is the SKY we are building, with the foundations already secured to drive sustainable value in the years ahead.

Speaker #1: And with that, I'll now hand back to the operator, and we look forward to your questions.

Sophie Moloney: With that, I'll now hand back to the operator, and we look forward to your questions.

Speaker #2: Thank you. If you wish to ask a question, you will need to press the star key, followed by the number 1 on your telephone keypad.

Operator: Thank you. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Ben Crozier from Forsyth Barr. Please go ahead.

Speaker #2: If you wish to cancel your request, please press star 2. And if you're on a speakerphone, please pick up the handset to ask your question.

Speaker #2: Your first question comes from Ben Crozier from Fawcett Bar. Please go ahead.

Speaker #3: Morning, team. Kind of the first one on your comment around aiming for significant revenue growth. So can you sort of break this down between what is just achieving this 20% to 30% non-subscription target—which is presumably mostly advertising—and then sort of the core subscription platform? As we look at it, if you strip out broadband out of subscription, that has sort of ticked backwards slightly over the last couple of years.

Ben Crozier: Morning team. Can I just first one on your comment around aiming for significant revenue growth. Can you sort of break this down between what is just achieving this 20% to 30% non-subscription target, which is presumably mostly advertising, and then sort of the core subscription platform as we look at, if you strip out broadband out of subscriptions, that has sort of ticked backwards slightly over the last couple of years. Do you think you can get that back into growth too?

Speaker #3: Do you think you can get that back into growth, too?

Speaker #1: Hey, Ben. Nice to hear from you. Yeah, so we're obviously not giving much detail on how we're going to grow that revenue, other than to talk about that 20% to 30%.

Sophie Moloney: Hey, Ben. Nice to hear from you. Yeah. We're obviously not giving much detail of how we're going to grow that revenue other than to talk about that 20% to 30%, but we certainly see opportunity on the subscription side of our business as well. We've got an incredible array of content. What we're looking to do is to make it easier for our teams to actually deliver that great content to our customers, and alongside advertisers. You're spot on to think that the 20% to 30% is largely advertising. But we do have incredibly rich data that we think is valuable in this market. But on the subscription side, yeah, there's still a lot of opportunity for us, particularly as you'll appreciate with our new sport and entertainment strategy.

Speaker #1: But we certainly see opportunity on the subscription side of our business as well. And we've got an incredible array of content. What we're looking to do is make it easier for our teams to actually deliver that great content to our customers and alongside advertisers.

Speaker #1: So you're spot on to think that the 20% to 30% is largely advertising, but we do have incredibly rich data that we think is valuable in this market.

Speaker #1: But on the subscription side, yeah, there's still a lot of opportunity for us, particularly, as you'll appreciate, with our new sport and entertainment strategy.

Speaker #3: Yeah, and thank you. Maybe just one on content costs now. Obviously, you've signed a couple of these big deals, and there's a lot of movement in that sort of programming rights line, with cricket coming back in, HBO going out, and the NRL step up.

Ben Crozier: Yeah. And thank you. Maybe just one on content cost now. Obviously, you've signed a couple of these big deals, and there's a lot of movement in that sort of programming rights line with cricket coming back in, HBO going out, and NRL step up. Previously, you've had a 46% to 48% of revenue target. Is that sort of broadly where you're still targeting, or have you seen a bit of content cost inflation through that line?

Speaker #3: In a previous year, you've had a 46 to 48 percent percentage of revenue target. Is that sort of broadly where you're still targeting, or have you seen a bit of content cost inflation through that line?

Speaker #1: Well, we're super excited about those rights, and we're really comfortable with where we're at. We have delivered on that target, and it's a really important one for driving the free cash flow and margin in our business.

Sophie Moloney: Well, we're super excited about those rights, and we're really comfortable with the You're right, we have delivered on that target, and it's a really important one to driving the free cash flow, and margin in our business. The team has done an excellent job this past year in terms of, we've bought this new company with its content rights, and it's been a pretty low step-up. But you're right. We are looking to continue with that sort of target. We just haven't put it out into the market. David, I don't know if there's any other detail you want to add.

Speaker #1: The team have done an excellent job. This past year, we've bought this new company with its content rights, and it's been a pretty low step up.

Speaker #1: But you're right. We are looking to continue with that sort of target; we just haven't put it out into the market. David, I don't know if there's any other detail you want to add.

Speaker #4: Yeah. I think if you think about how we plan to monetize audiences and going into the future, the expectation will be to do better than what we've done in regard to content cost as a percentage of revenue in the future.

David Mackrell: Yeah. I think, if you think about how we plan to monetize audiences and going into the future, yeah, expectation will be able to do better than what we've done in regard to content cost as a percentage of revenue in the future.

Speaker #3: Yeah, that's helpful. And maybe just one last one. You've got a pretty healthy balance sheet—nearly $80 million in net cash. You've sort of got the signaling that surplus capital will be returned to shareholders, and dividends or buybacks will be after the first half result.

Ben Crozier: That's helpful. Maybe this last one, you've got a pretty healthy balance sheet, nearly NZD 80 million in net cash. You've sort of got the signaling of, for surplus capital will be returned to shareholders and dividends or buyback after the H1 result. Of that NZD 80 million, how much do you think is surplus versus you want to maintain on the balance sheet to have a pretty strong cash position?

Speaker #3: Of that $80 million, how much do you think is surplus versus what you want to maintain on the balance sheet to have a pretty strong cash position?

Speaker #4: So, we don't have a specific perspective on that. But obviously, we're talking to all of our shareholders all the time around what we think the right level of capital for us to have in there.

David Mackrell: Look, we don't have a specific perspective on that. We're talking to all of our shareholders all the time around what we think the right level of capital for us to have in there. I guess if we look at what's in front of us over the next little while, it's just pausing while we get through the election and the economic times that we're experiencing at the moment. Then, to have a relook at that as we go into the finish of the H1.

Speaker #4: And I guess if we look at what's in front of us over the next little while, it's just pausing while we get through the election and the economic times that we're experiencing at the moment, and then to have a relook at that as we go into the finish of the first half.

Speaker #1: And I think just to build, I do think that acknowledging, though, the board and management team's confidence in giving that 10% per annum progressive dividend growth from '27 to '29, and also paying quarterly, is quite a shift.

Sophie Moloney: I think just to build, I do think that acknowledging though the board and management team's confidence in giving that 10% per annum progressive dividend growth from 2027 to 2029, and also paying quarterly is quite a shift, in this market. We think that's positive for shareholders, but as David said, we're really well-placed. We're very good at managing our cash in this business. But the board, as I've signaled, will figure it out at the half year if there's going to be a buyback at that time, or some other distribution of capital.

Speaker #1: In this market, we think that's positive for shareholders. But as David said, we're really well placed. We're very good at managing our cash in this business.

Speaker #1: But the Board, as I've signaled, will figure it out at the half-year if there's going to be a buyback at that time, or some other distribution of capital.

Speaker #3: Yeah, perfect. No, that's all from me—thanks. Well done on the solid result, and good to see the dividend growth.

Ben Crozier: Yeah. Perfect. No, that is all for me. Thanks, and well done on a solid result and good to see the dividend growth.

Speaker #1: Thank you.

Sophie Moloney: Thank you.

Speaker #2: Thank you. Your next question comes from Rob Morrison from Craigs. Please go ahead.

Operator: Thank you. Your next question comes from Rob Morrison from Craigs. Please go ahead.

Speaker #5: Hey, good afternoon, guys. Congratulations to the team, and especially Sophie, for delivering on your 30-cent-per-share-plus dividend target.

Rob Morrison: Hey, good afternoon, guys. Congratulations to the team and especially Sophie for delivering on your NZD 0.30 per share plus dividend target.

Speaker #1: Thank you.

Sophie Moloney: Thank you.

Speaker #5: Just starting off on the FY27 guidance, it kind of reads like you're assuming the economy will improve in the back half of '27. Is that fair?

Rob Morrison: Just starting off on the FY27 guidance, it kind of reads like you are assuming the economy will improve in the back half of 2027. Is that fair?

Speaker #4: So we're certainly hoping that that is going to be the case. I guess I wouldn't be making too bold a statement, but our perspective is that there are some signs that there is some improving confidence.

David Mackrell: We are certainly hoping that that is going to be the case. I guess I would not be making too bold a statement. But our perspective is that, there are some signs that there is some improving confidence. But we do sense that there is a little bit of nervousness around the election in particular. Post that, we certainly hope to see some improvement, but we have not specifically factored a perspective on that into our thought process.

Speaker #4: But we do sense that there's a little bit of nervousness around the election in particular, and post that, we certainly hope to see some improvement.

Speaker #4: But we haven't specifically considered that perspective in our thought process.

Speaker #5: Sorry. So, to the midpoint, I would assume the midpoint of guidance, right, probably assumes the economy remains about as it is today over the year?

Rob Morrison: Sorry, so the midpoint of guidance track probably assumes the economy remains about as it is today over the year. Is that fair?

Speaker #5: Is that fair?

Speaker #4: Correct. That's correct.

David Mackrell: That is correct.

Speaker #5: Sure. Sure. And then maybe just—because if that's the case, then what are the assumptions around the top and the bottom end of guidance?

Rob Morrison: Well, maybe then just because if that is, then what are the assumptions around the top and the bottom end of guidance? What needs to happen for you to hit the top end? It looks like, it reads like a lot of it is to do with Sky Free. Is that fair?

Speaker #5: What needs to happen for you to hit the top end? It looks like, it reads like, a lot of it is a bit of sky free.

Speaker #5: Is that fair?

Speaker #4: So I think, I mean, a lot of it is around that economy, which ultimately, at the upper end, you would think things would go a little better.

David Mackrell: I think, a lot of it is around that economy, which ultimately, at the upper end, you would think things will go a little better and on the lower end is kind of things perhaps get a little worse. So that is the main driver. And yeah, we know what we are doing around the Sky Free integration. We have made great progress there. Yes, there is more that we are doing. We have got a line of sight into what that looks like. So, the range that is there, so it is more about how the economy plays out rather than anything else.

Speaker #4: And on the lower end, if things perhaps get a little worse, so that's the main driver. We know what we're doing around the Sky Free integration—we've made great progress there.

Speaker #4: Yes, there's more that we're doing, and we've got a line of sight into what that looks like. So, the range that's there is more about how the economy plays out rather than anything else.

Speaker #5: No, that's correct. So, it's the economy, okay. I want to ask a few questions about the free cash flow because, of course, that underpins the dividend.

Rob Morrison: No, that is correct. So it is the economy. Okay. I want to ask a few questions about the free cash flow, because of course, that underpins the dividend, and you have given some pretty ambitious targets for dividend growth over the next few years. So you have got this, chart on the slide there. You have got this NZD 59 million normalized free cash flow number you have delivered this year versus your number. But it kind of looks to me like maybe it was boosted by working capital. So can you give me the quantum of what that boost was and maybe what the normalized number is? Could it be around like 55 or is it worse than that?

Speaker #5: And you've given some pretty ambitious targets for dividend growth over the next few years. So, you've got this trust on the slide there. You've got this $59 million normalized free cash flow number you've delivered this year—a very strong number.

Speaker #5: But it kind of looks to me like maybe it was boosted by working capital. So can you give me the big quantum of what that boost was, and maybe what the normalized number is?

Speaker #5: Could it be around, like, 55, or is it worse than that?

David Mackrell: Oh, no. The level of working capital related improvement in that free cash flow is relatively small. If you think about that in the context of sub NZD 5 million, that is probably the right sort of way to think about it. It is not a large number, but there is some working capital benefit that remains in there that may reduce a little bit in the H1 of this year as we clear away some of the acquisition-related working capital. But it is not a significant number.

Speaker #4: No. So the level of working capital related improvement in that free cash flow is relatively small. So if you think about if you think about that in the context of sub 5 million dollars, that's probably the right sort of way to think about it.

Speaker #4: It's not a large number, but there is some working capital benefit that remains in there that may reverse a little bit in the first half of this year as we clear away some of the acquisition-related working capital.

Speaker #4: But it's not a significant number.

Speaker #5: Okay, because I'm just trying to get at what a sustainable base free cash flow is going forward. Because, A, on one hand, it seems like you're saying that this $59 million is a pretty sustainable base of free cash flow going forward.

Rob Morrison: Okay, because I am just trying to get at what a sustainable base free cash flow is going forward. Because on one hand, it seems like you are saying that this NZD 59 million is a pretty sustainable base of free cash flow going forward, but then on the other hand, the payout ratio was 75%. If it is sustainable, why not pay 9 share, pay like a 30, whatever, 5% dividend?

Speaker #5: But then, on the other hand, the payout ratio was 75. Why not, if it's sustainable, why not pay 90, or pay like a 35, whatever, 5 percent dividend?

Speaker #4: So, I think the answer to your question is that this is what we're working towards, and growing that free cash flow is our goal.

David Mackrell: I think that the answer to your question is, that is what we are working towards, is this and growing that free cash flow is our goal and our ambition. At the same time, we know that the world is an uncertain place, and that is why the payout ratio is a range as well. But certainly, our ambition is to do better.

Speaker #4: And our ambition. But at the same time, we know that the world's an uncertain place. So, in terms of -- and that's why the payout ratio is a range as well.

Speaker #4: But certainly, our ambition is to do better.

Speaker #1: And as you said, those are ambitious. It is an ambitious 10% per annum progressive dividend that we're talking about, which we think our shareholder base will appreciate.

Sophie Moloney: As you said, those are ambitious. It is an ambitious 10% per annum progressive dividend that we are talking about, which we think our shareholder base will appreciate. We would not be able to do that unless there is real confidence at a board level that free cash flow generation is there, notwithstanding working capital movement. Hopefully that gives you some comfort for your modeling.

Speaker #1: And we wouldn't be able to do that unless there's real confidence at a board level that that free cash flow generation is there, notwithstanding working capital movements.

Speaker #1: So hopefully, that gives you some comfort for your modeling.

Speaker #5: Yeah, no, that is helpful. Thank you. Just in terms of the detail, because we kind of need to understand this to put it into our modeling.

Rob Morrison: Yeah. No, that is helpful. Thank you. Just in terms of the detail, because we kind of need to understand this to put it into our modeling. You have NZD 59 million free cash flow this year, and then I think assuming flat shares, which it probably won't be, but let's say it is, to pay that NZD 0.43 per share dividend, you will need at least NZD 66 million at the top end of the range. So that is NZD 66 million minus NZD 49 million, NZD 7 million. So you are basically going into a NZD 7 million step-up over the next few years, right? In free cash flow. Almost all of that going to be revenue or, and maybe lower CapEx? Could you break that down between all the drivers, please, broadly?

Speaker #5: So you've got $59 million free cash flow this year. And then I think, assuming flat shares—which you probably won't have, but let's say it is—to pay that $0.43 per share dividend, you'll need at least $66 million at the top end of the range.

Speaker #5: So that's 66 minus 49, 17 mil. So you're basically going to a 17 mil step up over the next few years, right, in free cash flow.

Speaker #5: Can you kind of—is almost all of that going to be revenue, or maybe lower capex? Could you break that down between all the drivers, please?

Speaker #5: Broadly?

David Mackrell: Look, we are confident that we have got a pathway to improve our free cash flow. What that looks like over the next few years in terms of, we have talked about our ambition for revenue growth, our ambition for expanded margin, which says we are going to manage costs well. Then in the context of CapEx, what we plan to do, we can fit inside the window that we have talked about, and we have provided some guidance around the 6% to 8% of revenue being lower than where it has been previously. There is no greater detail than what we have provided in that context.

Speaker #4: They're confident that we've got a pathway to improve our free cash flow—where and what that looks like over the next few years in terms of, we've talked about our ambition for revenue growth. Our ambition says we're going to manage costs well.

Speaker #4: And then, in the context of capex, what we plan to do can fit inside the window that we've talked about. We've provided some guidance around the 6% to 8% of revenue, being lower than where it's been previously.

Speaker #4: So, in that, there is no greater detail than what we've provided in that context.

Speaker #5: Okay. But this is important because of the ambitious revenue target. So it's important to understand what's driving it. Within that revenue growth, are you (A) assuming that the core growth and the box customers—the revenue stock—is going backwards, one; and (B) are you assuming that the linear market for advertising will stop declining?

Rob Morrison: Okay. It is important because they are ambitious revenue targets, so it is important to understand what is driving it. Within that revenue growth, are you, A, assuming that the core growth and the box customers, the revenue will stop going backwards, one, and B, are you assuming that the linear market for advertising has stopped declining?

Speaker #4: So I think what's important is that we are growing our audiences, and we intend to monetize those audiences. That monetization will flow over advertising.

David Mackrell: I think what is important is that we are growing our audiences, and we intend to monetize those audiences, and that monetization will flow over advertising, it will flow over subscription-based products. That will be the key element of how we will grow revenue. Whether it lands in linear or other is not a significant matter. It is how we reach our customers and our audiences.

Speaker #4: It will flow over subscription-based products, and that will be the key element of how we'll grow revenue. Whether it lands in linear or other is not a significant matter.

Speaker #4: It's how we reach our customers and our audiences.

Speaker #1: And if I just build, I think that we are anticipating we really want to get as many of those Sky Box customers this year onto the new Sky experience.

Sophie Moloney: I think that we are anticipating, we really want to get as many of those Sky Box customers this year onto the new Sky experience. We see the benefits to turn our NPS. That is part of that, as you say, arresting the declines in the Sky Box space, and therefore the revenues there. That is an important part of it. Sky Sport Now continues to grow, as you know. We know that everyone is interested in Neon. I think we have shown that we have made some pretty good moves as we are reporting it the full year. I think that is the joy of our business, if I may say so, in that it is a balance of revenue opportunities that we have. But also, critically, we know how to manage our costs.

Speaker #1: We see the benefits to turn our net promoter score, so that is part of that, as you say. Arresting the declines in the Sky Box space and therefore the revenues there.

Speaker #1: So that's an important part of it. Sky Sport now continues to grow, as you know. We know that everyone's interested in Neon. I think we've shown that we've made some pretty good moves as we're reporting the full year.

Speaker #1: So I think that's the joy of our business, if I may say so, in that it is a balance of revenue opportunities that we have, but also—critically—we know how to manage our costs.

Speaker #1: We are in the process now of optimizing our business post-integration. And as you know, free cash flow is a combination of those.

Sophie Moloney: We are in a process now of optimizing our business post the integration. As you know, free cash flow is a combination of those. So, to David's point, yes, we are excited about the advertising opportunity. We talked about the opportunity, particularly in the digital video space. That is a big addressable market that we are keen to go after with our amazing content. We have a lot of different ways that we can invest once and monetize right across audiences in this country. So there are multiple facets that go into thinking about where our revenue is heading to, and we were talking about that significant growth by FY31, so a little bit further out. But in terms of that free cash flow generation, FY27 to FY29, highly confident in our ability to drive margin even if the economy does not perform as well as everyone would like.

Speaker #1: So, to David's point, yes, we're excited about the advertising opportunity. And we talked about the opportunity particularly in the digital video space. That's a big addressable market that we're keen to go after with our amazing content.

Speaker #1: So we have a lot of different ways that we can invest once and monetize across audiences in this country. So, there are multiple facets that go into thinking about where our revenue is heading.

Speaker #1: And we were talking about that significant growth by FY31, so a little bit further out. But in terms of that free cash flow generation in FY27 to FY29, we're highly confident in our ability to drive margin, even if the economy doesn't perform as well as everyone would like.

Speaker #1: So that's the joy of the acquisition, as it really does give us this ability to invest once and monetize right across the piece.

Sophie Moloney: That is the joy of the acquisition, as it really does give us this ability to invest once and monetize right across the piece.

Speaker #5: Okay, thank you. So final one from me. You just spoke to your confidence and ability to drive margin. I think, Sophie, when you were speaking to the presentation, you alluded—and correct me if I'm wrong—that a lot of that margin expansion is going to be driven by untangling that back end and getting some savings there.

Rob Morrison: Okay, thank you. Final one from me. You just spoke to your confidence and ability to drive margin. I think, Sophie, when you were speaking to the presser, you alluded that, and correct me if I am wrong, but a lot of that margin expansion is going to be driven by untangling that back end and getting some savings there. You have all these different systems now, Sky Free, Sky, Neon, Sky Sport Now.

Speaker #5: You've got all these different systems now—three: Sky, Neon, Sky Sport. A, is that right? And then B, how long will it take to realize?

Sophie Moloney: Yeah.

Rob Morrison: A, is that right? Then B, how long will it take to realize, and will there be meaningful CapEx associated with that?

Speaker #5: Would there be meaningful CapEx associated with that?

Speaker #1: So, comfort, you're right. It is about disentanglement and simplifying what we're doing, removing some of that complexity and the cost that goes with that.

Sophie Moloney: So, you're right, it is about the disentanglement and simplifying what we're doing, removing some of that complexity and the cost that goes with that. That's a bit of a multi-year play. But as David shared, we're really comfortable that that will sit within our CapEx profile, in talking about that 6% to 8%. So I think, again, just to give confidence in that cash flow generation. But we are excited about that opportunity because it's actually going to make it easier for our team and partners to get the benefit of that broader audience.

Speaker #1: That's going to be—that's a bit of a multi-year play. But as David shared, we're really comfortable that that will sit within our capex profile.

Speaker #1: And talking about that 6% to 8%. So I think, again, just to give confidence in that cash flow generation. But we are excited about that opportunity because it's actually going to make it easier for our team and partners to get the benefit of that broader audience.

Speaker #5: Okay, cool. Thanks, guys, and congratulations again.

Rob Morrison: Okay, cool. Thanks, guys, and congratulations again.

Speaker #1: Thank you.

Sophie Moloney: Thank you.

Speaker #2: Thank you. Once again, to ask a question, please press star one. Your next question comes from Phil Campbell from UBS. Please go ahead.

Sophie Moloney: Thank you. Once again, to ask a question, please press star one. Your next question comes from Phil Campbell from UBS. Please go ahead.

Operator: Thank you. Once again, to ask a question, please press star one. Your next question comes from Phil Campbell from UBS. Please go ahead.

Speaker #3: Yeah. Morning, everyone. Just a few from me. Sophie, how do you think the HBO Max launch has gone? Obviously, they launched—I think it was the middle of June.

Sophie Moloney: Yeah. Morning, everyone. Just a few from me. Sophie, how do you think the HBO Max launch has gone? Obviously, they launched, I think it was the middle of June. It was quite a promotional pricing, and they had some pretty good content. Then obviously now they have changed their pricing. Still a little bit cheaper than Neon, but how do you think it has been going so far, and has it had any impact on your subscriber numbers on Neon post-balance date?

Phil Campbell: Yeah. Morning, everyone. Just a few from me. Sophie, how do you think the HBO Max launch has gone? Obviously, they launched, I think it was the middle of June. It was quite a promotional pricing, and they had some pretty good content. Then obviously now they have changed their pricing. Still a little bit cheaper than Neon, but how do you think it has been going so far, and has it had any impact on your subscriber numbers on Neon post-balance date?

Speaker #3: It was quite a promotional pricing. They had some pretty good content. And then, obviously, now they've changed their pricing. Still, a little bit cheaper than Neon.

Speaker #3: But how do you think it's been going so far? And has it had any impact on your subscriber numbers or Neon post balance date?

Speaker #1: So, as probably a question for them: we know they had a big launch, and they have some awesome content—no question about that.

Sophie Moloney: So it probably is a question for them. We know they had a big launch, and they have some awesome content, no question about that. But we are really excited about what we have delivered in Neon. If you think we are at 215,000 subs at the half year, to be up to the 252 by the year-end. And we have got this multi-studio approach which enables us to. We are going to steady a drumbeat of content rather than being subject to supply from one significant studio. So we know that they are still competing in market for advertising and marketing and search in particular. But the team are feeling very good about the slate of content ahead. I am not going to talk to numbers in the interim. We obviously report on that six monthly basis.

Speaker #1: But we're really excited about what we've delivered in Neon. If you think we were at 215,000 subs at the half-year, to be up to 252,000 by the year-end.

Speaker #1: And we've got this multi-studio approach, which enables us to—we're going to steady a drumbeat of content, rather than being subject to supply from one significant studio.

Speaker #1: So we know that there's still competing in-market for advertising and marketing, and search in particular. But the team are feeling very good about the slate of content ahead.

Speaker #1: I'm not going to talk to numbers in the interim. We obviously report on that on a six-monthly basis. But suffice to say, we're really happy with the entertainment strategy and what it's doing in terms of our margin.

Sophie Moloney: But suffice to say, really happy with the entertainment strategy and what it is doing in terms of our margin.

Speaker #3: Okay, awesome. The second one I had was just on the programming cost as a percentage of sales. Going forward, will you, a bit like today, break out what the kind of Sky standalone programming costs are so we can then check against that 47% to 49%?

Sophie Moloney: Okay. Awesome. The second one I had was just on the programming cost as a percentage of sales. Going forward, a bit like today, will you break out what the Sky standalone programming costs are, so we can then check against that 47% to 49%?

Phil Campbell: Okay. Awesome. The second one I had was just on the programming cost as a percentage of sales. Going forward, a bit like today, will you break out what the Sky standalone programming costs are, so we can then check against that 47% to 49%?

Speaker #4: So, no. We're a combined group now. What we will do is, obviously, we'll talk to that number, but it will be the group number, not Sky standalone.

David Mackrell: No. We are a combined group now. What we will do is, obviously, we will talk to that number, but it will be the group number, not Sky standalone.

Speaker #3: Oh, okay. So, will that ratio change then?

David Mackrell: Oh, okay. Will that ratio change then?

Phil Campbell: Oh, okay. Will that ratio change then?

Speaker #4: A little bit, but it's not—at the end of the day, that business has content as well. And obviously, there's content that flows across all of those platforms, including the free and paid, and so it is an overall picture.

David Mackrell: A little bit, but at the end of the day, that business has content as well, and there is obviously content that flows across all of those platforms, including the free and paid. It is an overall picture, and the numbers do not change wildly as a percentage.

Speaker #4: And the numbers don't change wildly as a percentage.

Speaker #3: Oh, okay. Awesome. Sophie, just on that slide you had—I think on page five—you've got your kind of scorecard. And you had a kind of a red dot against the customer NPS.

David Mackrell: Oh, okay. Awesome. Sophie, just on that slide you had, I think on page 5, where you have your scorecard,

Phil Campbell: Oh, okay. Awesome. Sophie, just on that slide you had, I think on page 5, where you have your scorecard,

Sophie Moloney: Yeah

Sophie Moloney: you had a red dot against the customer NPS. But obviously, it still improved. What is the main thing do you think that, why you didn't get to your 2026 target on that score?

Phil Campbell: you had a red dot against the customer NPS. But obviously, it still improved. What is the main thing do you think that, why you didn't get to your 2026 target on that score?

Speaker #3: But obviously, it's still improved. But what's the kind of main thing, do you think, that—why it didn't get to your 26 target on that score?

Speaker #1: Well, it's a combined view across all of our products. I do, but there's a weighting towards Sky Box, and we just didn't get enough customers, in my view, onto the new Sky experience. We're going to ensure that we shift that. Forty-one percent attachment is good, but it needs to be higher.

Sophie Moloney: Well, it's a combined view across all of our products. But there's a weighting towards Sky Box, and we just didn't get enough customers, in my view, onto the new Sky experience. We are going to ensure that we shift that. That 41% attachment is good, but it needs to be higher, and I think that will be influential in where that net promoter score gets to. The good thing is we talk about this all the time. It's a really important lead indicator for our business. People advocating for you is pretty, word of mouth advertising like that is what we want to go after. So that is my view of why we didn't quite get there. But the team are very alive to it, so I know it's going to improve.

Speaker #1: And I think that will be influential in where that net promoter score gets to. The good thing is, we talk about this all the time.

Speaker #1: It's a really important lead indicator for our business. People advocating for you is pretty much word-of-mouth advertising, and that's what we want to go after.

Speaker #1: So that is my view of why we didn't quite get there. But the team are very alive to it, so I know it's going to improve.

Speaker #3: Okay, awesome. So I'm assuming the NPS on the new Sky Box is higher than the old one?

Sophie Moloney: Okay. Awesome. So I am assuming the NPS on the new Sky Box is higher than the old one.

Phil Campbell: Okay. Awesome. So I am assuming the NPS on the new Sky Box is higher than the old one.

Speaker #1: Yes, it is. It's a much better experience in terms of accessing our huge array of content. So we just need to make sure we get out there and inform our customers what it's like.

Sophie Moloney: Yes, it is. It is a much better experience in terms of accessing our huge array of content. We just need to make sure we get out there and inform our customers what it is like. Even my mom now has it, and she is thrilled about how much sports highlights she is watching. Yeah, much opportunity ahead.

Speaker #1: Even my mum now has it, and she's thrilled about how much support and highlights she's watching. So yeah, much opportunity ahead.

Sophie Moloney: Great. David, can you talk a little bit about. Looks as though there was a change in accounting policy on the amortization of content again. Can you just run us through what was happening there?

Phil Campbell: Great. David, can you talk a little bit about. Looks as though there was a change in accounting policy on the amortization of content again. Can you just run us through what was happening there?

Speaker #3: David, can you talk a little bit about—it looks as though there was a change in accounting policy on the amortization of content again? Can you just run us through what was happening there?

Speaker #4: So, relatively small in the computer the prior year, but the key change was around a genre-based amortization policy rather than a platform-based one. And so that aligns more closely with what is the general practice around the world.

David Mackrell: Relatively small compared to the prior year. But the key change was around a genre-based amortization policy rather than a platform-based. That it aligns more closely with what is the general practice around the world. As we went through the process of the acquisition and thinking about that, it was a good time to make that change, which as I said, aligns more closely with what is the typical practice across the world.

Speaker #4: And, as we went through the process of the acquisition and thought about that, it was a good time to make that change, which, as I said, aligns more closely with what is the typical practice across the world.

Speaker #3: Okay, awesome. And then maybe just the last one for Sophie, just in terms of pricing and the current environment—price increases. I suppose one of the things we're noticing in the Australian mobile market is that they've had a period of kind of putting up their prices quite a lot.

David Mackrell: Okay. Awesome. Then maybe just the last one for Sophie, just in terms of pricing in the current environment, price increases. I suppose one of the things we are noticing in the Australian mobile market is that they have had a period of putting up their prices quite a lot, and you are seeing a little bit of a pricing fatigue maybe at the pay monthly side in Australia. I was just wondering, in New Zealand, because obviously you do annually put up prices, is there any kind of change you are noticing here in terms of maybe some kind of pricing fatigue from the consumer, or is it pretty okay?

Phil Campbell: Okay. Awesome. Then maybe just the last one for Sophie, just in terms of pricing in the current environment, price increases. I suppose one of the things we are noticing in the Australian mobile market is that they have had a period of putting up their prices quite a lot, and you are seeing a little bit of a pricing fatigue maybe at the pay monthly side in Australia. I was just wondering, in New Zealand, because obviously you do annually put up prices, is there any kind of change you are noticing here in terms of maybe some kind of pricing fatigue from the consumer, or is it pretty okay?

Speaker #3: And you're kind of seeing a little bit of pricing fatigue maybe at the pay monthly side in Australia. I was just wondering, in New Zealand, are you—because obviously, you do kind of annually put up prices—are you seeing the same thing?

Speaker #3: Is there any kind of change you're noticing here in terms of maybe some kind of pricing fatigue from the consumer, or is it pretty okay?

Speaker #1: Yeah, I mean, we will consider it again. And you may appreciate as well that we haven't put up price on the entertainment side. Yes, we do in broadband.

Sophie Moloney: Yeah. I mean, we will consider it again, and you may appreciate as well that we have not put up price on the entertainment side. Yes, we do on broadband. That follows the market on an annual basis, and then we look at our sport because we do think that the sport offer is incredibly compelling. At this juncture, no, we have not seen that. Of course, people do not necessarily relish it, but they also understand the price of goods and services going up. I think a really interesting. What I would say is people do seem to want flexibility. So we have our NZD 29.99 day pass on Sky Sport Now. I have kind of been blown away about how many people have enjoyed the benefit of that transactional pass. You would only need a couple of those to do the monthly, but people are preferring the flexibility.

Speaker #1: That follows the market on an annual basis. And then we look at our sports, because we do think that the sport offer is incredibly compelling.

Speaker #1: So at this juncture, no, we haven't seen that. Of course, people don't necessarily relish it, but they also understand the price of goods and services going up.

Speaker #1: I think a really interesting point, what I would say is people do seem to want flexibility. So, we have our $29.99 Day Pass on Sky Sport Now.

Speaker #1: I've kind of been blown away by how many people have enjoyed the benefit of that transactional pass. You don't need a couple of those to do the monthly, but people are preferring the flexibility.

Speaker #1: So, and that may well be people in a flat sharing it to watch a game, but that's been a really interesting observation over the last year or so.

Sophie Moloney: That may well be people in flat sharing it to watch a game, but that has been a really interesting observation over the last year or so. People not necessarily wanting to even commit for the month, but being happy to pay a lot more for a day pass, and we are totally comfortable if that is the way they want to consume.

Speaker #1: People aren't necessarily wanting to even commit for the month, but they're happy to pay a lot more for a day pass. And we're totally comfortable if that's the way they want to consume.

Speaker #3: Great. And then just the last one for me on the dividend. Just looking in the annual report, it does look like you've got quite a large imputation balance.

Sophie Moloney: Great. Then just the last one from me on the dividend. Just looking in the annual report, it does look like you have got quite a large imputation balance. So I am assuming, have not done the numbers, but I am assuming you probably could impute those 2027, 2028, and 2029 dividends going forward.

Phil Campbell: Great. Then just the last one from me on the dividend. Just looking in the annual report, it does look like you have got quite a large imputation balance. So I am assuming, have not done the numbers, but I am assuming you probably could impute those 2027, 2028, and 2029 dividends going forward.

Speaker #3: So, I'm assuming—having done the numbers—but I'm assuming you probably could impute those '27, '28, and '29 dividends going forward?

Speaker #4: Correct. Yes, as you rightly point out, we've got a healthy imputation credit balance, which we can attach to dividends in the future.

David Mackrell: Correct. Yes. As you rightly point out, we have got a healthy imputation credit balance, which we can attach to dividends in the future.

Speaker #3: Yep. I think it's like $190 million or something, isn't it? It's quite, yeah, quite large.

David Mackrell: Yep. I think it is like NZD 190 million or something, isn't it? It is quite large.

Phil Campbell: Yep. I think it is like NZD 190 million or something, isn't it? It is quite large.

Speaker #4: That's right.

David Mackrell: That is right.

Speaker #3: Yep. Good one. Thanks.

David Mackrell: Yep. Good one. Thanks.

Phil Campbell: Yep. Good one. Thanks.

Speaker #1: Thank you.

Sophie Moloney: Thank you.

Speaker #2: Thank you. There are no further questions at this time. I'll now hand the conference back to Sophie Maloney for any closing remarks.

Sophie Moloney: Thank you. There are no further questions at this time. I will now hand the conference back to Sophie Moloney for any closing remarks.

Operator: Thank you. There are no further questions at this time. I will now hand the conference back to Sophie Moloney for any closing remarks.

Speaker #1: Thank you very much. And look, thanks to everyone who has participated in today's call. We really appreciate your interest and your support. We look forward to catching up with many of you in the coming days.

Sophie Moloney: Thank you very much. Thanks to everyone who has participated in today's call. We really appreciate your interest and your support. We look forward to catching up with many of you in the coming days. It really is an exciting time to be at Team Sky. I am grateful for the incredible amounts of hard work the team, from the support of our awesome board, and we are really excited to keep delivering for all of our shareholders. Thank you.

Speaker #1: It really is an exciting time to be at Team Sky, and I'm grateful for the incredible amount of hard work from the team and the support of our awesome board.

Speaker #1: And we're really excited to keep delivering for all of our shareholders. Thank you.

Sophie Moloney: That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.