SKY Network Television Limited (SKT) Earnings Call Transcript & Summary

Hello. Good morning, ladies and gentlemen. My name is James Bishop, and I'm Sky's Company Secretary. I will shortly hand the meeting over to your Chair, Philip Bowman. But first, I'll take this opportunity to outline a few procedural matters. As well as our live audience here in Auckland, we are joined today by shareholders and guests from around the world attending online who are able to watch the live webcast and see the presentation. In addition, shareholders and proxies attending online have the ability to ask questions and to submit votes. I'll now take a moment to outline the process for doing this. Online questions can be submitted at any time by selecting the Q&A icon to the right of your screen. Type your questions into the field provided and press send to submit your question. You can also use this method to ask for help and a member of the Computershare team will respond to you directly through the chat function. Alternatively, you can call Computershare on 0800-650-034. While you can submit questions from now on, we will not address them until the relevant times in the meeting. Whether you're attending the meeting virtually or in the room, we do ask you to ensure your questions are relevant to the meeting, and we encourage you to be succinct and specific. Please note that online questions may be moderated. And in the interest of time, if we receive multiple questions on the same topic, these may be grouped together. We will endeavor to answer all online shareholder questions during the meeting. However, if we run out of time, we will answer any outstanding questions directly via e-mail after the meeting. Voting today will be conducted by way of a poll on all 5 resolutions. Those in the room who are eligible to vote will have received a voting or proxy form with the notice of meeting or an alternative voting form when they registered upon arrival. If you do not have a voting form, please go to the Computershare registration desk, whereas the staff member will be able to assist you. For those online, if you are eligible, you will be able to cast your vote by selecting the vote tab to the right of your screen. To ensure those online have enough time, we will shortly open the voting. Once open, you can select your voting direction on each resolution from the options shown on the screen. You will know that your vote has been cast when the tick appears. To change your vote, simply select "change your vote". You have the ability to change your vote up until the time voting is declared closed. Lastly, for those in the room, if there is an emergency and we need to evacuate the building, please exit from the doors through which you entered to my right. The assembly area is outside the Wildfire Restaurant. If you entered via the elevator or need assistance, please make yourself known to a member of staff, they are here to help. Thank you, everyone. With the housekeeping now complete, I'll hand the meeting over to your Chair, Philip Bowman. Thank you, Philip.

Thank you, James. As you mentioned, my name is Philip Bowman, and I'm Chairman of Sky Network Television Limited. It's my pleasure to welcome you to Sky's 2022 Annual Shareholder Meeting to all our shareholders, proxy holders and guests joining today's meeting. Thank you for making the time to be with us, whether you are in the room here in Auckland or attending online. One of the advantages of a hybrid meeting is I can clearly see we have a quorum present, and I therefore declare our Annual Shareholders Meeting open. I'm also pleased to officially open online voting. I'm joined today by our Chief Executive, Sophie Moloney; our Chief Financial Officer, Tom Gordon; Sky's Company Secretary, James Bishop, who you've already met, and of course, by my fellow Board members. Mike Darcey, who appears on the screen is joining us by the online meeting platform. Welcome, Mike. In addition to his role as an independent director of Sky, Mike is the Chair of the British Gymnastics and is currently attending the World Gymnastics Championships in Liverpool, which was scheduled well in advance of our ASM today. And in the room today, we have Keith Smith, who is Chair of the Audit and Risk Committee; and next to him, Joan Withers. And then Geraldine McBride, the current Chair of Sky's People and Performance Committee, and as you'll have read in the annual report and Notice of Meeting, this will be Geraldine's last annual meeting as a Director. And finally, our newest member, Mark Buckman, who joined the Board earlier this year. We'll have an opportunity to hear from Joan, Mark and myself later in the proceedings as we ask you to consider the reelection of us as directors. Members of Sky's executive leadership team are also in attendance today. And I also welcome representatives from our auditors, PricewaterhouseCoopers, and our corporate solicitors, Chapman Tripp. Turning to the formal format of today's meeting. I will shortly comment on the 2022 fiscal year, as well as our plans for the current year. I'll then invite Sophie to provide more detail on the significant progress that the management team made in fiscal 2022, including a summary of our financial performance and our priorities for the coming period. We'll then move to the formal business of the meeting, and there are 5 resolutions as set out in the notice of meeting, including 1 special resolution on the return of capital. Finally, I will open the floor here and virtually for questions of a general nature from you, our shareholders. Sophie and I look forward to the opportunity to engage in a good discussion and following conclusion of the meeting, there will be an opportunity for those in the room to continue to converse over morning tea. So my address. Our fellow shareholders, welcome again to this hybrid Annual Shareholder Meeting of Sky Network Television Limited. It is good to see a number of you here in person today after the disruption of COVID over the past several years. I'd like to start by outlining the progress made in FY '22. And as I mentioned in my letter, which accompanied the annual results, Sky ended the 2022 fiscal year in a much improved position. Having made good progress against its strategic plan and having delivered a 41% increase in reported net profit after taxation of $62.2 million and significantly improved free cash flow. Importantly, results were significantly above the expectations we set out in our original guidance for the year with a substantial upgrade announced in December 2021, following a detailed review of costs. In particular, I would highlight 3 areas that contributed to this successful outcome. First, we saw continued growth in the number of customer relationships as Sky's strengthened content continues to attract new and returning customers to Sky platforms. Second, the 2022 year saw the return to revenue growth, the first increase in 6 years, pleasingly driven by growth in core subscription revenue. The increase in customer relationships was a contributing factor as was the improved retention of high-value Skybox customers. It's important to also recognize that we benefited from a price increase on Neon, taken in the previous fiscal year. And late in the fiscal year, we raised the price of Sky Sports package. Both increases were delivered without impacting customer numbers, a testament to the quality and value Sky's content offering represents. Third, the strong focus on cost control continued as evidenced by the successful delivery of $39 million in operating cost reductions enabling the investment for growth, including new content. These savings were identified for an initial cost review and include $29 million in ongoing permanent reductions that will carry through to future years. The successful sale of Sky's Mt. Wellington properties for $56 million was an additional highlight, releasing capital, delivering an immediate $14 million gain on sale and also ensuring an overall reduction in Sky's ongoing property costs. This performance, combined with greater confidence in the future despite a worsening economic backdrop, allowed our board to declare a fully imputed final dividend of $0.073 per share, delivering on the promise made at the interim results of a return to paying dividends. Underpinning these results for customers and shareholders is the very significant effort and commitment of a wider Sky crew. This is a credit to Sophie's leadership and the support of our strengthened executive leadership team, which came together during the year. Moving now to 2023. Whilst the Board and management recognize there's been significant progress, we are clear that there is much more to be done. Sky remains a business in transition. We do not underestimate the need to continue this progress and to capture the growth opportunities available to us as the media industry continues to evolve. FY '23 will be a crucial year for the business and one in which excellence in execution will be key. Priorities include new technology, an immediate focus is the successful delivery of the new Sky Box and Sky Pod that will provide customers with a significantly enhanced experience. We rightly see this as a crucial transformational moment that will unlock new opportunities for Sky, and the team is determined to deliver on this promise. Advertising, we've signaled our intention to strengthen capability and advertising to capture a larger share of this significant revenue pool. The opportunity to deliver additional value from Sky's unrivaled content offering and significant reach, including via free-to-air is real but will require investment to secure. And thirdly, cost base. While we are rightly investing for the future, our focus on continued reduction of our cost base remains firm. The rights we have secured are generally not subject to inflation-linked increases and Sky's hedging policy will provide protection from some near-term exchange rate fluctuations. However, the expected step-up in programming costs for 2023 and inflationary pressures in some areas of our business, such as people and production costs requires a sharpening of our focus on all cost lines. Like all businesses impacted by input cost inflation, we will maintain an ongoing review of the prices we charge. And you'll hear more from Sophie on the real cost out opportunities we have in our sites as well as the investment opportunities that I've touched on. Turning then to capital management strategy. I'd like to explain the path that has led us to the capital return resolution on which you will be voting later in this meeting. The turnaround in Sky's position over the past 2 years has been dramatic. And whilst there are still challenges to be navigated, Sky has a strong balance sheet and had $139 million cash balance at last year-end, including proceeds, of course, from the property sale. Sky also has strong and sustainable free cash flows and an undrawn banking facility of $150 million. During FY '22, your Board initiated a review of Sky's capital management strategy, taking into account likely capital needs, opportunities to invest to drive future growth as well as future performance projections. As part of this consideration, Sophie and her team took time to review investment opportunities. And these included assessing the merits of the potential acquisition of MediaWorks as a means to achieving scale and additional capability in advertising. With the benefit of hindsight, the timing proved less than optimal with a significant market correction taking place during discussions and due diligence. Whilst the ultimate decision was not to proceed with the transaction, the strategic rationale for a combination was broadly validated and the learnings for Sky from the exercise have been very valuable. So returning to capital management strategy, our investor base is a broad church and discussions with shareholders revealed a wide range of views on how much cash should be retained and the method by which returning surplus cash might be achieved. Ultimately, the Board's confidence in the company's position and outlook were behind the decision to return the sum of approximately $70 million, which proved to be comfortably above market expectations. Sky's capital allocation strategy strikes a careful balance between returning surplus capital, providing an income stream to shareholders through dividends and retaining the flexibility to invest for future growth, including the potential to accelerate the rollout of the new Sky box. A further consideration is future on-market buybacks, utilizing surplus capital to cancel shares if the Board believes that these are trading below their intrinsic value. The full range of methods available to return cash was considered with key considerations being equal treatment of all shareholders and the ability to execute with certainty and on a timely basis. While we understood the appeal to some shareholders of a share buyback, we rolled this out given the quantum of funds to be returned relative to the company's market capitalization, and the lack of liquidity in Sky stock. By comparison, a special dividend would have been relatively easy to execute, but would have used a substantial quantum of imputation credits, while triggering adverse consequences tax-wise for many shareholders. Decision we arrived at to return capital by way of a quarter-proof scheme of arrangement will be voted on later in the meeting. And I'd make 3 points on the rationale for this as the chosen method. It offers a fair and equitable outcome, treating all shareholders equally. The method also allowed us to seek a ruling from the Inland Revenue Department to deliver the most efficient tax outcome to maximize the value to New Zealand-based shareholders. And I'm pleased to be able to advise today that Sky has now received this positive ruling. And finally, the scheme provides certainty of execution. If supported by shareholders today, cash of approximately $0.40 per existing share should be in the hands of shareholders by late November. Your Board unanimously supports the proposed capital return and recommends that you vote in favor of the resolution as will all directors when the time comes. As a further demonstration of the Board's confidence with reference to our view on cash generation and appropriate levels of leverage, we've today announced an amendment to Sky's dividend policy. Going forward, the previously advised payout range of 50% to 80% of free cash flow, excluding one-off items, has been increased to 60% to 90% on the same basis. We're also confirming the definition of free cash flow is after CapEx spend, which includes both replacement and growth assets. In addition, we clarified the definition of one-off items as including a material acquisition or disposal of assets. As a result of this change, Sky's dividend guidance for FY '23 has been increased to between $18 million and $24 million. And this change is a positive demonstration of our ongoing commitment to return surplus cash to shareholders and 1 that I trust that shareholders will appreciate. Assuming shareholders approve the return of capital, the number of outstanding shares will reduce by 16.7% from approximately 174.7 million shares to 145.6 million shares. Completion of the capital return and share cancellation will deliver a theoretical share price of $2.18 based on the NZX share price at yesterday's market close of $2.22. At the midpoint of the FY '23 guidance given to the market in August, but amended for the dividend policy change today, key metrics for FY '23, assuming that the lower number of shares have been an issue throughout the financial year would be a return on invested capital of 16.4%, a valuation of 0.4x revenue or 1.8x EBITDA and a dividend yield of 9.2%. While Sky's shares listed on the NZX, provided a healthy 18% increase in the year to 31 October compared to the NZX50's fall of 13% and the ASX300's fall of 2%, we are yet to see the share price reflect the improved results and the outlook for the company. The Board believes that Sky's shares are significantly undervalued. With this in mind and consistent with the Board's stated capital allocation strategy and focus on value creation, the Board is currently minded to initiate an on-market buyback program following the announcement of the interim results, noting that the size of any program would be determined by reference at that time to the prevailing share price, the cash position of the company, the economic outlook and the liquidity of our shares in the market. But by way of an example, based on the reduced number of shares following the proposed return of capital and given Sky's net cash position, a $15 million buyback program would be expected to deliver a 5% uplift in both EBITDA and earnings per share. In conclusion, I'd first like to firstly thank my fellow Board members for their diligence and commitment on behalf of shareholders. We met frequently during the year as a Board, but directors were also co-opted to a number of ad hoc committees, some of which met many times. This year, we've welcomed Mark Buckman, who joined us in March and who still is an excellent contribution have made a positive impact. Geraldine McBride will stand down from the Board at the conclusion of the meeting. She leaves with our sincere thanks and appreciation for 9 years of service to Sky. A search has been underway for several months for a further new director as part of the process of refreshing the Board with an announcement to follow once this process is complete. I should also like, again, to reiterate the Board's thanks to Sophie, her leadership team, and the wider Sky crew for the positive progress and strong results achieved for shareholders. And I'd finally like to thank you, our shareholders, many of whom have supported Sky through difficult times. Thank you for your belief in Sky and your continued support for the company. The Board and management are committed to build on the progress made over the past 2 years, we'll continue to drive the transition that is reshaping Sky. I look forward to updating you on further progress as this financial year unfolds. With that, I'd like to hand over to our Chief Executive, Sophie Moloney. Sophie, please.

Thank you, Philip. [Foreign Language] Hello, and good morning, everyone. I'm Sophie, and it's my privilege to be here and serve as your CEO. It's also a privilege to do what we do at Sky, providing Kiwis with the sports and entertainment they love in ways that work for them. Now most great shows start with a recap of what happened in the previous episode to remind the audience of the story so far. With that in mind, building on Philips succinct summaries, and as I address you for the second time as your Chief Executive. I set out a quick recap of the distance we've traveled and why I believe we're poised for future growth. After sharing these highlights, along with our strategic competitive advantages, I will focus on the current episode of delivery. Before wrapping up with a key acknowledgment of our crew, and of our commitment to playing our part in Aotearoa, New Zealand. Starting then with that brief recap of the highlights of the past 2 years. I refer you to the time line and in particular, I draw your attention to the successful launch of Sky Broadband, which is a proof point of the ability of our team to deliver an excellent new service. Securing the renewal of the Rugby League until the end of 2027, a vitally important when given its popularity and full winter schedule. The launch of Sky Rewards, which has been appreciated by customers as we tangibly recognize the loyalty while at the same time, delivering a positive impact for Sky. Our disciplined and successful bid for the rights to the Premier League for the next 6 seasons, which was another key strategic content moment, supplying a summer schedule for our football loving customers. And of course, it's been very gratifying to return to paying dividends to you, our owners, an important milestone and Sky's continued turnaround. That time line clearly supports the current strategy of connecting New Zealanders to the content we know they love because of the viewership data we see every week. And from this rich data set, we can see that it isn't just sports that connects and engages our customer segments, whether they be native streamers or heartland champions, it can also be shows such as Love Island that connect them. Our content variety means it really is something for everyone, including New Zealand stories commissioned by our Sky Originals team. With our recent feature film Rurangi also getting notice abroad and securing an international Emmy Award nomination. This is our second nomination with Sky Original INSiDE, having won an Emmy last year. Speaking of international interest, undoubtedly, "shirts in black" on our screens continues to matter to Kiwis. And with this in mind, we are delighted to have secured rights to World Rugby content for the next 7 years, including 4 Rugby World Cups. This innovative deal also saw us transfer ownership of RugbyPass to World Rugby with the clear desire to continue to partner to drive a global audience to the game including, in particular, fueling more interest in the growth of the women's game. Now how do we deliver this amazing array of content? A vitally important plank of our strategic game plan is the ability to meet customers wherever they are. Here on this slide, we start that narrative with Sky business who serve close to 7,000 pubs, clubs, hotels, motels and gyms right across the country, where Kiwis can discover and enjoy Sky content for the price of a pint or a workout, whatever their preference may be. There is then the powerful reach of our advertising-supported free-to-air channel Prime, reaching close to 1.3 million New Zealanders each week. Prime is a key pillar of our current advertising business and also provides the opportunity to showcase key sporting moments to all New Zealanders for free. Then of course, there is the reliability of our existing Sky Box, which has 100% reach across the country, along with the significant value add of Sky Go, our companion app for Sky Box customers. Which takes us then to the exciting new hybrid Sky Box and the new Sky Pod, reconnecting Sky with our origin story of giving Kiwis choice and ease. More on the new box in a moment. The new Sky Pod is the first time New Zealanders can get Sky without a dish. If that's what they prefer, noting, of course, that it comes without recording functionality or the reliability of satellite. It's a great alternative for our Vodafone TV customers and in future for those who can't or choose not to install a dish. And it's quite a moment for the company and for you, our investors. Especially, when you couple it with Sky Broadband, creating many new product bundling opportunities, my Chief Customer Officer, seated in the front row here, to go after. And last but certainly not least, our streaming services, Neon and Sky Sport Now that have gone from strength to strength in the last financial year by serving the needs of those customers who simply want stand-alone entertainment and sports streaming services. Ultimately, what these 2 slides talk to, coupled with our high ARPU Sky Box customer base are our core competitive strengths of understanding what customers value based on what they watch, building on our strong market position as the ultimate aggregator with a compelling power of the bundle content offering. The ability to deliver reliably to the entire country, no 1 else can do this in the way that we can. With our multiproduct and platform play, including free to access options, that means we have something to offer for everyone. It's a compelling overall competitive advantage that I will reference again a bit later. This competitive advantage contributed to Sky achieving the positive inflection point of revenue growth and FY '22, a significant growth in both Neon and Sky Sport Now, coupled with a slowing decline of the box space, saw customer relationships and overall revenues each grow by 4%. In turn, this contributed to the healthy 41% lift in net profit after tax and a 130% increase in free cash flow to $42.8 million. And to complete this first recap and marking our homework since we last met, as you can see from this slide, we're largely on track to achieve our 3-year targets. But of course, there is more to do. So let's talk about delivery. As Philip referenced, the launch of the Sky Box and Sky Pod is a key moment for us. The new box is the most transformative products we have offered our customers in many years, and we're highly focused on delivering an excellent experience for them. Our immediate priority is meeting the needs of our Vodafone TV customers given the looming closure of that service. To give ourselves and our customers a little more breathing room, we have agreed with our partner, Vodafone, that the platform will stay open across the Kiwi summer break. While we start -- while we will start rolling out the new Box and the Pod as soon as possible, we're mindful that the Christmas period has a busy time for many Kiwis and this gives everyone a little more time to make the move to the new Sky products in the new year. But as we've seen from the outset, our core priority is to offer the new box to our most loyal customers first, which we will do. But please be assured, this is not a force migration, which means those who are happy with their current Sky Box can simply keep it. And yes, I am conscious that the new Sky Box has been a long time coming. Some of the reasons for the delays are outside of our control, including COVID, chipset shortages and global supply chain issues. We are currently undertaking rigorous final testing and fine-tuning and we look forward to starting customer trials very soon. Second, as also mentioned by Philip, we see significant opportunity in the advertising space. The MediaWorks process confirmed the need for specialist expertise at senior levels to seriously go after this high-margin revenue price. And with this in mind and to accelerate our plans, we have bought on highly experienced and talented experts from across the ditch as we leverage the learnings of the likes of Foxtel Media from the highly competitive Australian marketplace. Third, for both our core subscription business and our renewed advertising lens, the importance of data cannot be understated. We have access to an extraordinary amount of data about our customers and their preferences, but there is much more we can do to unlock its power and maximize this competitive edge within the bounds of our privacy laws, of course. Partnering with experts like Dot Loves Data will help us go faster, complementing our internal capability. This focus on delivery also extends to our cost base. While growing our revenues remains vital, it is our cost that we must control; split broadly between programming and non-programming cost lines. Starting with programming, which includes the cost of the broadcast rights as well as the production and related people costs. As Philip referenced, we have stepped into higher cost as we've secured key renewals and acquisitions in the past financial year. As with these recent deals, looking ahead to future content opportunities, we will be very disciplined in our approach and highly cognizant of our strategic competitive advantage mentioned earlier, in particular, the power of our viewership data. This data confirms what content is valuable to customers and therefore, a value to us and ultimately to you as shareholders as it allows us to assess the return of investment -- on investment over the life of each right negotiation. These advantages give us the confidence to be clear about what we need to hold exclusively and therefore, potentially pay a premium for, I say potentially, or we are happy to hold on a nonexclusive or co-exclusive shared basis. And on the production cost side, it's simple. We'll continue to review the right level of production and cost efficiencies based on the event or content value, again, understanding what our customers watch. With this approach in mind, in FY '22, we delivered $17 million of permanent savings from our programming cost line. And in terms of our nonprogramming costs last financial year, we delivered a further $12 million of permanent cost reductions and we're now embarking on the next phase of cost out. We talked about the first phase as we communicated in December last year as being the low-hanging fruit, and we've now stepped on to the next rung of the ladder, looking right across our business at the ways we can be more cost effective. As referenced here, we're being much more deliberate about the areas where we can use partners to achieve efficiencies. Our recent agreement with leading supply chain services provider, Pacific Group -- Pacificomm Group to take over the warehouse repairs, freight and logistics is a great example of this. You will also see us doing more partnering and outsourcing in areas where we can drive efficiency without compromising critically on our customer promise. In some instances, offshoring will be the most effective way to access the talent we need to support our business given the challenges of finding this talent locally, particularly in the technology sphere. The launch of Sky's new Box will also play a part in reducing our cost base with the Box rollout supporting a lower cost of acquisition by enabling a greater mix of self-install and lower repairs and maintenance costs. These are just 2 examples, both of which will drive lower capital intensity. Our twin focus on continuing to grow revenue, while also reducing costs leads nicely to the outlook for this current financial year. As we stand today, notwithstanding the delay in the delivery of our new Box and the new Sky Pod. We remain on track to deliver against the revenue, EBITDA, NPAT and CapEx guidance we provided at the time of our full year results. And as Philip mentioned, and as you can see, the dividend range has been increased following today's update to Sky's dividend policy. Delivering on these results takes enormous effort from our talented Sky crew. We're very mindful of the economic headwinds that we're all facing and the importance of securing the key talent in these times impacted by scarcity of labor. To tackle this head on, we have just announced our salary review, which included an increase of 8% for those earning less than $100,000 a year and 5% for those earning up to $250,000. In addition, in respect of our benefits package, notwithstanding what you may have read in the media, we are not taking away free Sky from our people. We are simply looking to adjust the way our crew access this benefit -- so it reflects how they and their households prefer to use Sky content just as the choice for all of our customers. And we have also invested in key workspace -- the key workspaces at our Mt. Wellington and vibrant new Viaduct Harbour locations. A clear draw card in attracting and welcoming new talent to Sky and ensuring a great workspace for all of our crew. Now I've spent most of today speaking about our sustainability from a competitive advantage and financial perspective, but we are equally committed to playing our part to support the environment and the communities in which we operate. It goes back to the comment I made at the start that we have a special and privilege role here at Sky. Each day, we're entrusted to deliver entertainment and much loved sport to New Zealanders on behalf of our partners. And we have communities and shareholders who expect us to act with integrity and empathy, minimizing our environmental impact and being a responsible corporate citizen. I haven't got time today to speak about everything we aim to do in this space. But on this slide, I draw your attention to our Sky for good program, where we use our platform, our people, and our presence in the community to make a difference, including free Sky at Starship Hospital and a 20-year partnership with the Special Children's Parties that positively impact around 10,000 disadvantaged children each year. We have also made a commitment to track and reduce our impact on the environment, working in partnership with environmental agency Toitu. And I'm also really proud of our commitment to showcasing and supporting women's sport, helping our Kiwi women and girls to "See the Possible". In closing, I want to join Philip and thanking you for your continued support as the owners of this business. My team and I remain focused on continuing to not only turn around Sky, but to transform it, all the while meeting customer needs and achieving the desired financial results for all of you. And now before I hand back to Philip, I'd like to play you a short video by our award-winning creative team, highlighting our superb brand of content. It speaks to the point I made earlier about the depth and breadth of content we have to offer and a clear competitive advantage that brings. Thank you. [Presentation]

Sophie, thank you very much for your address. We'll now open for questions relating specifically to the presentations that I and Sophie gave, noting that there will be a further opportunity for you to ask further questions relating to the resolutions during the formal business section of the meeting. A reminder that only shareholders and proxy holders are able to ask questions. James has already outlined the process for submitting questions online. For those in the room, we ask that you raise your hand and you wait for 1 of our team to bring you a microphone and please state your name and whether you're a shareholder or a proxy holder. So starting first with those in the room. Are there any questions on the 2 presentations you've just seen? Yes, sir. Let's wait for the microphone, please.

John Hume, shareholder. The new Sky Box that you're going to change, will you still use the same card on the current box or you get a new card of the new?

I'll pass that question to Sophie to answer.

You'll still hear the same customer account details, obviously, but the Box will have a new hand set up. So importantly, you [ don't want to ] transfer recording, it was part of our, but we do have a very good multi-room offer to speak with customers.

Any further questions?

Thank you, and thank you for your effort this year. What a fantastic result. Mr. Chairman, you mentioned during your presentation that you consulted a number of shareholders about the decision to repay capital and the method you used. What percentage of the total shareholding did you consult? Did you just talk to the major institutions? Or did you talk to some of the individual shareholders?

By and large, we spoke to the largest shareholders, but also we responded to any approaches that we actually had. So I've had conversations with 1 or 2 individual shareholders. I've had conversations with some large shareholders. That has been an ongoing process. Quite a number of people have contacted the company, all contacted me asking questions about this. So that has been the process. I think the rationale for what we did is set out clearly in the comments that I made, and I think it is the logical way to handle this given the various circumstances.

The next question then, with the new Sky Box, if it's very successful, what will be the capital investment by our company to fund the boxes before they're sold? I don't say $70 million because you're giving it back to shareholders.

No, I'm -- what I can safely say is that the investment has obviously been in our guidance, and we're very excited. We do think it's going to be very successful for those customers who are used to consuming [ by reps ]. Tom, is there anything else from your perspective you'd like to add in terms of the capital outlay?

Certainly. You can see in our guidance for this year, which, as Sophie says, includes the spend for rolling the box through new customers, which we expect through our existing base, which we expect to take the next 2 to 3 years. You can see an uplift from our current rate. After that, we would expect it to return.

Thank you for your questions. Any further questions in the room? Yes, over there, please.

Robert Gray, Shareholder. The share buyback, the share cancellation thing, where you pay us $2.40 for the shares. I believe that should be optionary. People want to accept it, fine. If they don't, we should be able to hold on to the shares. I've got hardly any shares left. I put a whole lot more money into it. I bought you 20 years ago, I paid about $5 for them. And I'm sort of -- I've lost most of my investment [indiscernible] at the time. And anyway, I got hard any shares left. I'm not going to have even less left. And I don't want to have to buy them back. I don't have to pay a broker's fee to do so. And also you did 10 for 1 consolidation. If you want to do that sort of thing, how about a 10 for 1 consolidation of directors' fees? The same as is $2.40, you're going to have a whole lot less [ here's an issue ]. Also, you've got a bank facility of something near what you're paying the shareholders back with rising interest rates wouldn't be better not to borrow money and just use this money to whatever you want to buy or need to spend money on.

Thank you for your questions. Let me try and respond to those, starting with a question about bank facility. We have a bank facility, it's for $150 million. It is undrawn. So from that perspective, we are not actually paying interest on that facility as we haven't drawn down any funds. But even if we pay the $70 million back to shareholders, we still have a comfortable margin before we would have to go into that facility. We've looked forward with our cash flow projections over the next several years. And the reality is we are unlikely to use that facility to any significant extent over that period. So from that perspective, I think what we are doing is sensible. In terms of your comment about the method of repaying this, we are never going to satisfy everybody returning capital. Well, unfortunately, if you do a court-sanctioned return, it cannot be optional. The way that, that structure works, the way that the IRD approval works requires that all shareholders are treated equally. And if some shareholders had the ability to opt out of that, then it would not be possible to go down that route. What we have tried to do is give all investors living in New Zealand the ability to get this cash back without any tax impact and without any costs. If we go down different parts, it becomes much more complicated and you will enter into what I would describe as the law of unintended consequences where different people end up with different tax positions and it becomes much less effective. In your case, sir, I can only encourage you to do what I will do notwithstanding the brokerage. It is my firm intention and I believe that of the other directors who are shareholders to reinvest the money that is returned in buying more Sky shares. Yes, please. Lady in the second row.

Thank you. [ Caroline Van Camp ], shareholder. I was going to leave this to the resolutions, but seeing as you're doing questions first. I'm agreed. I bought 3,250 Sky shares for $6 and something just under 20,000 in 2014. Every AGM since then, the company has been in transition promising a brighter future for the following year. Now on August 25, 2021, you canceled 3,000 of those shares without any recompense. Now I actually feel swindled by that. I have 325 remaining and I got paid the magnificent dividend of $22.08 in September of those shares. And now it's proposed that 1 share be canceled for every 6 held at $2.40 a share, that means another 54 shares that I'm to lose, which is great sum of $130. That's not a lot to reinvest in the market really is it. So how many shares do you actually need to be entitled to vote at all because they're just disappearing down the [indiscernible] as they canceled. So Mr. Bowman, you have been the chair and this has happened under your tenure and miss with us, and that's why I'll be voting against your reelection.

Thank you very much for making those points. I have enormous sympathy for the points that you're making. None of us like making an investment in a company and then watching the share price go down. I think to say that you feel swindled because we consolidated the capital is a rather harsh way of describing it. What we did was equitable for all shareholders. If you held 10 shares, you ended up with 1 share, if you held 1 million shares, you ended up with 100,000 shares. Why did we do it? It was to get the share price to a more realistic level, and we hope that it would actually improve liquidity to some extent in trading the shares. In terms of this latest proposal to return capital as I said at some considerable length in my address, there are a number of alternative ways of doing this. We looked at all of those, and they have different advantages and disadvantages. In terms of most shareholders -- in fact, all shareholders resident in New Zealand, the scheme we have gone down provides a tax-free return of capital and it provides certainty and that is the way that we have gone. The reality is that the shares that you have left should be worth the same, even though you have less at the end of that process. And that was the point I was making about the theoretical price after that was completed. In terms of reinvestment, that decision clearly is down to every individual shareholder, whether they want to reinvest those funds or add even more funds and buy there. In terms of your comments about the company since 2015, I would simply say this. When I was approached to become Chairman 3 years ago, it was clear that this was a company facing very significant difficulties. And the extent of those difficulties have been very real. We have also been impacted clearly by COVID and all the other issues that are ongoing at the same period. And I'm going to talk a little bit about that in the words I'm going to say when I stand for reelection. So rather than go through the gain now, I'd ask you to wait, and then we can potentially have another conversation at the end of the meeting. Any other questions? Yes. Yes, over there.

Hello, my name is [ Kevin Ortiz ]. I'm a recent Sky shareholder. I'd like to applaud the executive team for the past 2 years from the challenging position they've been put through. Are you able to tell us any details surrounding the World Rugby rights costs and any plus or negatives on the RugbyPass disposal?

Let me say that as a matter of general practice in this industry, the exact cost of rights are never disclosed for a number of, I think, reasons, some of which are self-evident. Sophie, do you want to comment any further?

Yes, happily. And thank you for your comments. What I would say to you is that the transfer of RugbyPass for us was absolutely the right thing to do. Circumstances have changed since we first acquired that asset. And actually, it has delivered on a strategic promise of connecting us with World Rugby and which we're excited about. In terms of rights, as I hope came through in the presentation, we really do look at what customers care about to drive that value analysis. And that's going to be vitally important for any renewal, including Rugby when that time comes. So we're very, very mindful of making sure we get the right returns for all of you, our shareholders.

I think that was another question from you, sir, in the blue shirt.

In regard to share consolidations, I've got shares and a whole a lot of companies. I've been answered a lot of these consolidations. I don't know if 1 of them has done the remotest bit of good. In fact, most of them, shareholder value has been destroyed. The value of the shares has come down. Now none of them, of course, the share price to rise. And also these sort of things, there's an administrative cost as well as doing all this. [indiscernible].

I think in response to your question, I mean, it's not actually just share consolidations. You also have share splits. So if you look recently, the U.S. market, Apple, for example, gave you 10 shares for every share you had. So it goes both ways. It would be 1 observation. I think in terms of what the impact of the market is, the reality is that, theoretically, if you consolidate your shares, it should have no impact on the actual overall value of the company. On the basis again of administration and the fact that, particularly when the price of the company shares gets down into the range of sort of $0.10 or somewhere like that, consolidating them tends to improve the liquidity somewhat. But the reality is, in this case, I'm perfectly prepared to accept, it is unlikely to have had that impact. Well, there are a variety of different views on that. But we did what we did, and it is not something that is out of line with what a lot of companies have done. What we need to do is to persuade the market that they are undervaluing our shares, as I said in my opening address. I mean, to be able to buy shares in the company at a multiple of cash flow of under [ 2 ] is a very unusual situation and with a dividend yield of nearly 10%. Any other questions? Yes, over there.

John Walker, shareholder. I was in America, and I've been consolidated 10 for 1 by many companies. I was come back to New Zealand and I bought shares in these penny dreadfuls and yours was one of them. And you said at the last meeting when I asked the question that you consolidated your shares because the institutions didn't want to buy penny dreadfuls. Is that correct?

I said that certainly, the response we have had, had from some of the institutions was that when the share price got down to that level, they were not necessarily keen to follow them. And I also made, I think, a comment about market capitalization.

Well, the problem is with it, when I saw the shares consolidated, sure, the price went up. But they got up, they will be up $2.80 and now they're come flying back down again?

Look, I agree with that. I mean, the comment I would make. If I look at my own share portfolio, there are companies in there, if I take Fisher & Paykel Healthcare, that was worth probably double at 12 months ago to what it is today. It's the same company. It's still doing very well. We have a former director on our board, but I could give you a significant number of those. The reality is that the market has come down a long way, partly COVID, partly the war in Ukraine, but more pressingly now, the reality of rising interest rates. So -- our share price went up. I think that reflected that, it has come down with the market. But as I did say in my opening address, we have still outperformed the market this year.

I'm [indiscernible], a shareholder [indiscernible] topic. Regarding your Toitu carbon emissions reductions, you see the most gains in the Scope 1 or Scope 2 emissions and will be buying carbon credits?

I'm asking is, I'm not into the -- I haven't done the assessment with the team, so I need to come back to you on that. If we need to be buying carbon credits, we will certainly look at that, and we've got the support of environmental agency Toitu to through that with us. From a personal perspective, I do buy trees because I choose [indiscernible] to come to work, but we're certainly very, very mindful of the environmental impact. And I will be able to come back to you very soon and confirm exactly where we are in due course.

Any other questions in the room? If not, James, do we have any questions online?

Yes, we do, Philip.

Okay.

The first question is from [indiscernible]. His question is, "Financials look great, well done. Regarding the future, a lot relies on the new Sky Box. Are there some fundamental development issues or what else is continuing to delay this outside of COVID and the chip shortage? Can you be more specific on the month that will be available?"

Thank you for that question. I think Sophie, that's one for you, please.

Yes, it is. Look, I acknowledge that we said it was going to be the middle of the year, and we are delayed in that delivery. What I can tell you is that the box is being heavily used in my house, my husband is a [indiscernible] watcher. It is a beautiful viewing experience. It is going to deliver on the customer promise that we had originally set out. But there is complexity in delivering a digital product of this nature. And the team are working really, really hard, but there are no fundamental issues and what we're doing is just when you want to -- when we deliver this, like we did Sky Broadband, I want to make sure that it absolutely meets the customer expectation. So we do have a product lead in the room, so we can add some more questions directly here. But I do acknowledge it is delayed. In terms of delivery, I'm still very keen that we get into customer trials in advance of the Christmas rate, but we are very mindful that many New Zealanders do start to travel from early to mid-December. So again, we're going to be communicating direct with customers, particularly those Vodafone TV customers. And I do look forward to start of the calendar year, the new year, we will be able to communicate more broadly with our loyal Sky Box space.

Thank you, Sophie. James, any other questions?

Yes, look, we have 1 more question. This question is from [ Eric Farrugia ]. "What would be an appropriate time to commence a share buyback? And what maximum price are we willing to pay?"

I think in terms of that question, I would really refer back to the address I gave. What I said was the Board is minded currently to initiate a share buyback at the time we announced the interim results. So that would be around February. And I also said that clearly, the size and by implication, the price will depend on a number of conditions, including how the shares have been trading at that time and what the general economic outlook is at that stage. So I can't give a specific answer to that now, but what I can say is to reiterate what I said in my address. Any other questions? James.

Certainly, no other questions. No other questions. Very good. Well, thank -- yes, there's 1 there, please. Lady in orange, we could have 1 more microphone, please.

My name is [indiscernible], a shareholder of this company. It's just -- I wish to give the shareholders, particularly from the U.S.A., some experiences that's recently from the Aussie market so that you feel very happy. Actually, consolidation from 5 shares to 1 is very minimal. Many companies have done that before. But for the Aussie market, I have bought the share health stock called the [ Osprey, is a ] [indiscernible] CDI. And then what gets consolidated first 100 shares into 1 share. And they're not long after, I just received a letter from there. They consolidated 200,000 shares into 1 share and my 6,000-odd investment turn out to get $4.20. And then I lost the commission -- brokers' commission of about $90. And they said that they consolidate to the shares of $100 each, and they were delisted from the Aussie market because they did not file their annual report and what, guess, they said, they are happy to get the labor subsidies from the Aussie government, and I'm really disappointed for buying into that share because I trust their PhD qualification, Master Degrees qualification and they are doing good jobs, I think -- and then -- and also their head office is in U.S.A., Minnesota, not too far away from where my nephew live and I have phoned him before to ask him whether this company there before. He said that he is always -- not too far away from his home, 50-minute drive. Yes, he said that he saw the brand name on the, say the building, not too far away from the famous Rochester, I think it's Rochester in Minnesota, very famous clinic where the ex-president always went there to have diagnosis, et cetera, et cetera. And then now, I just wish to tell you be patient. I'm happy that now Sky TV, I can get back about $4,000 to make good of the loss, at least that loss is $6,000 plus and it will be better under the guardianship of this capable Board. And yes, that is feel more optimistic, be happy, optimistic, and then you live long, particularly under this also, I say, this...

Thank you very much for your comments. First of all, I commiserate with you on your loss on the company in America. It sounds horrible. But I think the message you were giving us was things could be an awful lot worse in other places than they are at Sky. So thank you for the sentiment indeed. Good. After that last question, we will move on to the formal business of the meeting. And there are 4 ordinary resolutions and 1 special resolution for shareholders to consider. The ordinary resolutions relate to authorizing the Board to fix the auditor's remuneration and the reelection of myself, Joan Withers and Mark Buckman as Directors. Whilst the special resolution relates to the return of capital. These resolutions are set out in the Notice of Meeting, and you will also find them in the voting section of the online platform, as James described earlier. There will be an opportunity to ask questions on each of the resolutions. And a reminder once again that only shareholders and proxy holders are able to ask questions. As mentioned at the beginning of the meeting, voting today will be conducted by way of a poll. We've been accepting online votes throughout this meeting. And for those in the room, we ask that you vote by marking the card issued by Computershare. If you need a pen, please raise your hand and the Computershare team will provide 1 for you. Once the discussion of the final item of business has concluded, members of a Computershare team will collect voting cards in the room. For those online, I will give you notice shortly before voting will close. So we move to Resolution 1. The first resolution to be considered by this meeting relates to auditor remuneration. And I now move as an ordinary resolution that the Board be authorized to fix the auditor's remuneration for the ensuing year. Now do we have any questions on this specific resolution. I don't see any in the room. James, do we have any online?

No, Philip, we have no questions.

Very good. We have no questions. So -- thank you, ladies and gentlemen. I would now ask you to cast your vote on Resolution 1. As the next resolution concerns my own reelection. I'll now ask Keith Smith to chair this portion of the meeting. Keith, thank you.

Thank you, Philip, and good morning, ladies and gentlemen, and fellow shareholders. As Philip mentioned, the second resolution is to be considered by the meeting is the reelection of Philip Bowman as a Director. Philip was first appointed to the Board on the first of September 2019 and was reelected by the shareholders on 19th of October 2019. He serves as an independent director and is also the Chair of the Board and a member of the Audit and Risk Committee. Philip retires in accordance with NZX Listing Rule 2.7.1 and ASX Listing Rule 14.4, and being eligible, offers himself for reelection. The Board has determined that Philip is an independent director and unanimously supports his reelection. Philip's CV is well covered in the Notice of Meeting and in the annual report. So I won't cover it again for you at this point. I would now like to invite Philip, however, to address the meeting. Philip?

Keith, thank you very much. Fellow shareholders, it has been quite a 3-year period, since I first stood before the Annual Shareholder Meeting to see collection to the Sky Board. COVID, working from home, the war in Ukraine, supply chain disruption on a massive scale, rising interest rates and extreme volatility in the foreign exchange markets to name, but a few of the challenges. It's been a demanding and unpredictable environment in which boards and management of every business have had to make many difficult decisions. On the bright side, these challenges have been a catalyst for change, and many companies, Sky included, have emerged stronger. My international career spans a wide range of sectors in management, leadership and governance roles, each appointment bringing its own opportunities, challenges and learnings along the way. Most roles were turnarounds, where good businesses have got into difficulties for a variety of reasons. I bring a global perspective, having traveled extensively, worked in many countries and lived for periods in at least 8. I've been privileged to lead several major international corporations as Chief Executive, including through periods of significant disruption and change. My governance career has included director and shareholders at a number of leading and often high-profile global businesses including Burberry, Liberty, Scottish and Newcastle [indiscernible]. It also includes deep and highly relevant involvement in the media sector, having served on the Board of Sky U.K. for 10 years from just before the IPO, during the time, we built a great and very profitable analog business only to have to reinvent the business as digital technology generated greater opportunities to improve the offering to our customers. I've also worked extensively with private equity, having served on advisory boards and shared portfolio businesses for Charterhouse and Blackstone amongst others. Currently, I serve on 2 listed company boards other than Sky, Ferrovial, S.A., a global infrastructure and construction business based in Madrid and KMD Brands based in Christchurch in New Zealand. I'm also on the Board of several private companies including Majid Al Futtaim, a large privately held Dubai-based conglomerate operating across the Middle East and Africa. When first approached to join your Board, just over 3 years ago, it was clear that the business faced a number of challenges and the market did not recognize how deep these ran in the organization. As I mentioned previously, Sky has not adapted to rapid change in the media sector. The balance sheet was weak, with a bond repayment approaching. And like many quasi-monopolies, the culture had moved from being disruptive and entrepreneurial in the early years, to comfortable and lacking curiosity in later years. I saw a company under challenge, a previous high performer that had fallen from grace, but with potential to reemerge. I also saw the opportunity to contribute to help bring about a successful transformation, 1 where the strategic, financial and leadership experience and above all turnaround skills accumulated through my management and governance career could be brought to bear. You heard me say in my opening address, whilst we've made and continue to make good progress, there is much more to be done. And I would welcome the opportunity to continue to serve the job representative to build on that progress. As I mentioned in my opening remarks this morning, our investors are a broad church. Risk appetite range from aggressive to conservative. Many have differing views on strategy, not to mention dividend policy. Bottom line, I know from past experience that I can never keep all of you happy all of the time. What I can promise is that I listen to disparate views with an open mind, and we'll continue to do so. I've also invested a significant amount of time and enthusiasm in this role to challenge and support Sophie and her leadership team, and we'll continue to do this. The next stage of transition will not be easy. We want to get everything right, but being no doubt that I am committed to do my utmost with my Board colleagues to generate value for you, our shareholders. I'm pleased to have the support of my Board colleagues, and I ask you to endorse my reelection to your Board. Thank you.

Thank you, Philip. I'll now move as an ordinary resolution at Philip Bowman, who retires at the annual meeting and is eligible for reelection, be reelected as a Director of the company. I'll take any questions firstly from the floor. Once again, put your hands up and someone will bring a microphone. I don't see any questions here. Can I go to you, please, James?

Thank you, Keith. There are no questions.

Thank you, James, I mean I'll just get my notes here. Thank you, ladies and gentlemen. I would now ask you to cast your vote on Resolution 2. Whilst you're doing that, I'll pass the chair back to you, Philip. Thank you.

Keith, thank you very much indeed. So moving on to Resolution 3. This relates to the reelection of Joan Withers. Joan was first appointed to the Board on the 17th of September 2019, and was reelected by shareholders on the 19th of October 2019. Joan serves as an Independent Director and also as a member of the Audit and Risk Committee and the People and Performance Committee. Joan retires in accordance with NZX Listing Rule 2.7.1 and ASX Listing Rule 14.4, and being eligible, offers herself for reelection. The Board has determined that Joan is an independent director and unanimously supports her reelection. I'd now like to ask Joan to address the meeting.

Thank you, Chairman, and good morning. Firstly, I'd like to thank my fellow directors for their support and shareholders for their consideration of my reelection to the Board. As Philip outlined, I've now been on the Sky Board for 3 years and to say that it's been an interesting and challenging period would be an understatement. Of course, as Philip has outlined, every organization has, during that period, had to deal with the various and unprecedented curveballs that COVID and its aftermath has thrown globally. For Sky, the challenge and the complexity has extended well beyond the impacts of the global pandemic. We've needed to restructure the balance sheet, revitalize the Board, deal with a change in CEO, determine which are the critical sports and entertainment rights to invest in or to renew, develop and execute on a new set-top box, realized value through the sale of nonstrategic assets, work on meaningful cost-out initiatives and address the issues around both optimizing DTH subscriptions and providing our customers with compelling over-the-top service delivery. None of this has been easy and at times, I can tell you, it has been fraught. It is a testament to Philip's leadership of the Board that we are where we are today with a company that is no longer perceived as being in some sort of an exorable downward trajectory with a strong balance sheet, good cash flow generation and a proposed return of capital to shareholders. I'd also like to acknowledge Keith Smith, who as our Deputy Chair and Chair of Audit and Risk, has been fundamentally important and improving our financial situation materially from where it was when he joined the Board. Clearly, as you've heard this morning, there is still much to do, and I'm certainly keen to be involved in the next stage of the Sky story. Many of you will be aware that I do have significant experience in governance. I'm currently on the board of ANZ New Zealand, I'm on the Board of Origin Energy in Australia, and I chair The Warehouse Group. My executive career was in media, and I've also previously been Chair of TVNZ. In this current dynamic environment, I see along with the risks, significant opportunities for Sky. Content has always been king and Sky is incredibly well placed to be the curator and aggregator and in some instances, the creator of compelling content for New Zealanders. My role as a director is 1 that I take incredibly seriously and to which I apply considerable diligence. You'll sometimes hear directors talk about the need to think strategically and to operate at a helicopter level. Well, of course, that is true. But in my view, you also need to be across the detail to fully understand the critical risks the organization is facing and fully comprehend what are the amplifiers or inhibitors to value creation. I am very excited about the opportunities in front of us. I'm delighted that Mark has joined the Board and his experience certainly complements the skills that we already have around the table. Sophie, in the past couple of years since becoming a CEO has stepped up to address the myriad of issues that have confronted the business. I once heard [ Bruce Shipper ] described the role of the director in relation to the CEO as being one of being a loyally critical mentor. Sophie responds superbly to the interrogation and feedback she receives from the Board and has both internally and externally forged a highly credible reputation. Her enthusiasm and passion for the Sky business is palpable. So as the former CEO of 2 very large media organizations in New Zealand, I do hope that I had the opportunity to support Sophie, on her journey to reaching her own and the company's full potential. Thank you.

Thank you, Joan, for those words. I'd now like to move as an ordinary resolution that Joan Withers, who retires at the annual meeting and is eligible for reelection, be reelected as a Director of the company. Do we have any questions on this resolution? Don't see any in the room, James. Any online?

No, Philip, there are no questions.

Given there are no questions, I'd now ask you, ladies and gentlemen, to cast your vote on Resolution #3. Resolution 4 relates to the reelection of Mark Buckman. Mark was first appointed to the Board on the 21st of March 2022. He serves as an independent director. Mark is a member of the People and Performance Committee and subject to the outcome of today's meeting, Mark has agreed to take up the position of Chair of that committee following the retirement of Geraldine McBride. Mark retires in accordance with NZX Listing Rule 2.7.1 and ASX Listing Rule 14.4 and being eligible, offers himself for reelection. The Board has determined that Mark is independent and unanimously supports his reelection. So I'd now like to invite Mark to address the meeting.

Thank you, Chairman, and good morning, everybody. My name is Mark Buckman, and I'm asking for your support for reelection to the Sky Board. I was delighted to join the Sky Board in March as the Sky business runs through my veins, as I've operated in the media and marketing industries for over 30 years. I bring global experience to the Board, having worked in North and South America, in Asia Pacific and in Europe and have led large media organizations across the region and consulted to some of the largest media and communications organizations within the region. Prior to my advisory and Board career, I run the Consumer and Retail division of Foxtel and the Telstra Media Group, which is a diverse organization of media and TV assets. Now these were both multibillion-dollar organizations and distributed across the continents. In addition to my Board role at Sky, I'm the Chairman of OzTam, the television ratings industry business in Australia, which operates a complex shareholding agreement and under ACCC obligations and undertakings, which obviously involves extensive governance requirements. Further, I'm an adviser to Accenture Song, which is the customer and digital business within Accenture and provide advice to some of Australia's leading organizations, particularly those going through transformation. Since joining the Board in March last year -- this year, I've been impressed by Sophie's leadership, Sky strategy, the transformation ambitions of the Board led by Philip Bowman and the support and the insight and experience of my fellow directors, Joan Withers, Keith Smith and Mike Darcey and of course, the retiring Director, Geraldine McBride. I've already led into a number of Sky's key strategic priorities, including reimagining the advertising business as well as identifying new revenue opportunities. Throughout my professional career, I focused a lot on delivering exceptional customer experiences and profitable returns for shareholders and in particular, the role that data and digital can play in delivering these experiences, and I intend to bring all of this experience to the benefit of Sky and its shareholders. And as Philip said, I'm also a very big advocate of people and the value that they can bring to an organization. At Sky, we call them the crew. Attracting, developing and retaining the best people is what will set Sky apart from its competitors and others in the New Zealand market. Also creating the great culture of the organization will bring out to the New Zealand market. I joined the People and Performance Committee in September. And if I am reelected, will take on the chair role replacing Geraldine McBride, who retires at the end of this meeting. I'm passionate about the industry and about the future of Sky ahead, and I'm grateful for the support of my fellow directors, and I'm asking for your support in being reelected to the Board today. Thank you very much.

Mark, thank you for those words. I now move as an ordinary resolution that Mark Buckman, who was appointed to the Board on 21 March 2022, and retires at the Annual General Meeting, be reelected as a Director of the company. Do we have any questions on this resolution? Yes, 1 there, please.

Well, I live in Sydney, but I come to every Board meeting over here in New Zealand. I made a practice of not only coming to the meetings, but [indiscernible].

Any other questions in the room? If not, James, anything online?

There are no further questions, Philip.

Thank you for that. Thank you, ladies and gentlemen. I would now ask you to cast your vote on Resolution 4. The fifth and final resolution to be considered by this meeting is a special resolution concerning the proposed capital return. Full details of the proposal to return approximately $70 million of capital to shareholders by way of a scheme of arrangement were outlined in the explanatory notes contained in the Notice of Meeting. And as I spoke of a process, a rationale for determining the structure of the proposed return within my address. I, therefore, now move the special resolution with the scheme of arrangement relating to the return of capital to shareholders as set out in the explanatory notes accompanying the Notice of Meeting be and is hereby approved. Do we have any questions on this resolution? Sorry.

[indiscernible]. Mr. Bowman, you referred to on a number of occasions, shareholder value. Well, I don't have any anymore. And when you take another 1 in 6 of me, for a chickenfeed payment of $130, even if you pay a really good dividend, I've got 271 shares left. That's nothing. It's absolute chickenfeed because we've destroyed the value of what I had.

Thank you for your observations. In terms of the return of capital, you currently own a proportion of this company. After the return of capital, you will still own the same proportion of a company as you did before, but you will have in your bank account some proportion in accordance with your ownership interest of the surplus capital that the company is returning. In terms of the performance of the share price, I've addressed that earlier in the various comments I've made, I've also commented on what has happened in global markets, what has happened to other companies. I have sympathy, as I said earlier, I have made many investments myself, which have not been successful.

But Mr. Bowman, you're only returning capital on the very reduced number of shares that I have not the ones you took off me before.

The same argument, if I may say so, applies. Before the consolidation, you held a percentage of the equity in this company. After the share consolidation, you still own that same percentage. So your ownership of the company in percentage terms was exactly the same and unaffected by that capital return. Do we have any further questions? Over here? Yes, please. Just wait for a second for the microphone. James, that's going to be for you.

When do they go ex the entitlement?

When do these shares go ex the capital entitlement?

I think the record date will be confirmed once we get the final High Court ruling, but we're approximating it will be about the 26 of November, I believe. I think I'll just check the Notice of Meeting. Sorry, the 21 is the estimated record date. It is reliant on the final court order.

I think just in terms of context to your question, the process of returning capital by this method is we made an application to the court. We applied to the IRD for the tax ruling and we could go no further until shareholders have actually voted and voted in favor. Now if the outcome of this meeting is a vote in favor of the special resolution, we go back to court as soon as possible and the exact date when we get the order from the court will depend on the court schedule. But as I said, we are looking certainly to try and get cash back to shareholders by the end of November, and the record date will be a few days before that. But we can't give you an exact date today. Any other questions in the room? James, any questions online?

There are no further questions. Thank you, Philip.

Thank you, ladies and gentlemen. I'd now ask you to cast your vote on Resolution 5. Thank you, James. Ladies and gentlemen, that concludes our discussion on the resolutions. Please ensure that you have cast your vote on all resolutions. Computershare representatives will now collect votes and within the room, and following this, online voting will be closed. [Voting]

Just wait while the votes are collected. Anyone with any more votes. Can't see any. Everyone is handed in their voting cards. Very good. Thank you, ladies and gentlemen. Online voting is now closed. The outcome of the voting will be released to the NZX and the ASX later today. We will now open the meeting to questions of general business. Once again, we'll begin with questions from the floor, from the room before moving to online questions. Any further questions? Yes, 1 over here.

Thanks. My name is [ Walter Smile ]. I was impressed with the fact that the -- your social part to the Children's Hospital and everything like that. I just asked, maybe you could consider including the spinal unit at [indiscernible]. The guys out there, most of them probably lost their ability of their backs and things they can't walk. They've got no feeling in their legs and they lie out there. I've got a friend out there and regular -- I visit them regularly. And he's a mad sportsman. He played rugby for Auckland and was almost an All Blacks, but he has a serious back issue. And he lies out there. They have TVs, but they don't have a Sky. And I think that make a major difference to his well-being.

Thank you very much for that comment on your questions. Sophie, do you want to say anything to that?

Just to say, I'm terribly sorry to hear that. And yes, we'd love to connect with you, wanting to have a conversation and see what we can do because it absolutely sounds like someone who needs a bit more support.

Thank you very much. Any other questions? James, I don't see any more in the room. Any online?

Yes. So Philip, we do have a question online. This is from [indiscernible] of Mort Investments PTY Limited. "Congratulations on a strong set of financial results over the last 18 months or so that I have been a shareholder. You have executed well on most fronts under difficult circumstances. The capital return decision you have made is the right one, which will be better appreciated with time, and I support your comments on buybacks being explored post interim results. I have 2 questions. Pricing. A number of streaming services such as Apple, Disney and others have increased their prices significantly more than Sky has. There is other anecdotal evidence that customers are cutting the number of streaming services and focusing on the ones with the highest quality content. I believe Sky has secured very high quality content and deliver significantly more value than it charges that should be well placed. Can you talk to further opportunities for price increases across the core and streaming services, particularly noting content costs do not have CPI increases as our Chairman has rightly pointed out." You might pause there and let the...

James, thank you for that. I think let's respond to that question first. One for the Chief Executive, Sophie.

Thank you for the support. Yes, we agree. We do have medium content and we are very mindful in these inflationary times about striking the right balance. We did put through a price increase on Neon. We introduced a lower tier, so [ $1,799 ] premium and a lower tier of [ $1,299 ]. We also increased the sport packs that he referenced to $3. And as we look ahead, we do see opportunity, particularly on the sporting side, to have a look at that. Given those input costs and just given the quality of the content that we have, but remaining mindful for New Zealanders that not all of them have a household wallet that may be able to meet those levels. So again, thinking about what we can do in the free-to-air space as well at the same time.

Sophie, for that. James is the second part of the question?

Yes. The second part of the question relates to cost-out. "Can you give any further color on the target quantum of cost-out opportunities in FY '23, '24 and the areas for further cost out opportunities. Thank you very much."

Sophie?

As to quantum, I won't be giving specifics other than to note that we obviously reconfirmed our guidance today, which includes a number of these cost-out initiatives. Look, in terms of the -- in terms of the areas that we're looking at, it is about getting to a lower CapEx intensity model, as we said with the box. It's actually just looking at everything that we're doing. We have a ruthless prioritization process that we are still going after to make sure that we're focused on the right things. It's not about trying to do more with the lease. It's definitely about trying to do lease, but making sure it's customer focus. This does include looking at our agency partners and making sure that the spend is going in the right places there from a marketing perspective. It means that looking at automation and new technologies that actually can support our crew to do the work that's the most value add for customers. So we're really looking right across the piece, but very mindful of the scarcity of labor and the need to keep delivering for customers every day.

Sophie, thank you for that. James, any further online questions?

Yes, we have 1 further question, Philip. This is from [ Eric Farrugia ]. "What will our CapEx profile roughly look like in the next few years after the new Sky Box is released?

Sophie?

I'm going to hand over to my CFO, Tom, on this one.

Very good.

Thank you, Sophie. As we've said in the materials today, our long-term expectation of capital intensity is between 6% and 8%.

James, any further questions?

No, Philip, that was all of our questions. Thank you.

Very good. If there are no further questions, before I close the meeting, I'd like to thank each of you for your attendance, for your questions and for your support of Sky. As we've outlined today, there are exciting times ahead for Sky as we continue to transform the business. And the Board and the executive team look forward to reporting to you on the company's continued progress. I now declare today's meeting closed and invite those in the room to join the Board and management for morning tea. Thank you all very much indeed.

Thank you.