FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of August 2003
12 August 2003
BRITISH SKY BROADCASTING GROUP PLC
(Name of Registrant)
Grant Way, Isleworth, Middlesex, TW7 5OD England
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): Not Applicable
EXHIBIT INDEX
Exhibit
EXHIBIT NO.1 Press release of British Sky Broadcasting Group plc
announcing Final Results released on 12 August 2003
12 August 2003
BRITISH SKY BROADCASTING GROUP PLC
Results for the year ended 30 June 2003
- Net DTH subscriber growth of 133,000 in the quarter to 6.8 million
- Total revenue increases by 15% to GBP3,186 million
- DTH revenue increases by 21% to GBP2,341 million
- Advertising revenue increases by 13% to GBP284 million
- Operating profit before goodwill and exceptional items increases by 94%
to GBP371 million
- Net operating cash inflow increases by 166% to GBP664 million
- Profit before tax, goodwill and exceptional items of GBP260 million
- Earnings before goodwill and exceptional items increases to 10.5 pence
per share
Tony Ball, Chief Executive of British Sky Broadcasting Group plc, said:
"Over the last five years Sky has grown significantly, doubling its revenues and
almost doubling its DTH subscriber base. We are highly confident of reaching our
7 million subscriber target by the end of 2003 and, with only half of households
signed up to digital television, there is still plenty of growth potential in
the UK. We will continue to focus on sustainable improvements in our operating
margin."
Enquiries:
Analysts/Investors:
Neil Chugani Tel: 020 7705 3837
Andrew Griffith Tel: 020 7705 3118
E-mail: investor-relations@bskyb.com
Press:
Julian Eccles Tel: 020 7705 3267
Robert Fraser Tel: 020 7705 3036
E-mail: corporate.communications@bskyb.com
Portland:
Tim Allan Tel: 020 7404 5344
There will be a presentation to analysts and investors at 10.00 a.m. (BST) today
at The Gibson Hall, 13 Bishopsgate, London, EC2M 4QB and to press at 11.30 a.m.
at the same venue.
A conference call for US analysts will be held at 10.00 a.m. (EST) today.
Details of this call have been sent to US institutions and can be obtained from
John Sutton at Taylor Rafferty on +1 212 889 4350.
A live webcast of the presentation to analysts, together with this press
release, will be available today on Sky's corporate website, which may be found
at www.sky.com/corporate. Interviews with Tony Ball, CEO and Martin Stewart, CFO
in video/audio and text will be available from 7.00 a.m. today at www.sky.com/
corporate and at www.cantos.com.
OVERVIEW
Total revenue for the twelve months ending 30 June 2003 ("the year") exceeded
GBP3 billion for the first time, an increase of 15% over the year to 30 June
2002 (" the comparable period") to GBP3,186 million. Total operating costs
before goodwill and exceptional items increased by 9% to GBP2,815 million
generating an operating profit margin before goodwill and exceptionals of 12%
(2002: 7%). Sky continues to benefit from strong operational gearing; operating
profit before goodwill and exceptional items increased by 94% over the
comparable period to GBP371 million. Profit after tax was GBP190 million, the
Group's first full year of positive earnings since the launch of Sky digital.
Since net debt peaked at 31 December 2001 at GBP1,833 million, the Group has
reduced its net debt by GBP728 million, to end the period at GBP1,105 million.
OPERATING REVIEW
At 30 June 2003, the number of direct-to-home ("DTH") satellite subscribers in
the UK and Ireland was 6,845,000 representing a net increase of 133,000 in the
three months to June 2003 ("the quarter") and an increase of 744,000 in the
year. Sky remains highly confident of achieving its target of 7 million
subscribers by the end of calendar year 2003.
As a result of the continued growth in the number of DTH subscribers and the
launch of the digital terrestrial free-to-air service, Freeview, in October
2002, the total number of UK and Ireland households receiving one or more of
Sky's channels increased by 2.0 million to a record 12.2 million in the year.
DTH churn for the year stands at 9.4%, a reduction of over one percentage point
on the comparable period. Churn has now been below 10% for four consecutive
quarters.
The annualised average revenue per DTH subscriber ("ARPU") at 30 June 2003 was
GBP366. The increase of 5% over the comparable period reflected the change in
Sky's UK retail prices which was effective from 1 January 2003, along with
increased contributions from products such as Sky+ and the Extra Digibox and
higher usage of interactive services.
At 30 June 2003, there were 105,000 subscribers to Sky+ representing an increase
of 77,000 in the year, successfully achieving Sky's target of having 100,000
subscribers by 30 June 2003. Sky+ enhances Sky's reputation for innovation and
continues to lead the growing Personal Video Recorder ("PVR") category in the
UK. The early evidence is that Sky+ customers demonstrate encouraging levels of
customer loyalty and a high propensity to subscribe to top-tier packages. In
addition, at 30 June 2003, there were 165,000 subscribers to the Extra Digibox
representing 111,000 net additions during the year. Approximately 57% of Sky+
subscribers are also Extra Digibox subscribers.
Sky digital continues to offer the widest choice in multichannel television in
the UK and Ireland. At 30 June 2003, there were over 395 channels available via
digital satellite, including over 120 channels retailed by Sky, around 160 free
TV and radio channels, and over 85 pay-per-view channels.
Sky's own channels have recently increased their potential reach. Under the
terms of an arrangement recently agreed with NTL, Sky One, Sky News and Sky
Sports News will continue to be carried on NTL's digital cable network, for a
further three and a half years. An additional six Sky channels, including Sky
One Mix, Sky Travel, Sky Travel Extra and the recently launched channels from
Sky Music (The Amp, Flaunt and Scuzz), will be distributed on NTL's cable
network for the first time.
Sky concluded a new 5-year agreement with the BBC in June 2003 ensuring that all
of the BBC's channels, including all regional variations, will be listed on
Sky's Electronic Programme Guide ("EPG"). The BBC channels are unencrypted but
the BBC has secured a regionalisation service using Sky's conditional access
technology to ensure that Sky subscribers will continue to receive their
appropriate national and regional variation of BBC One and BBC Two. Sky also
announced the renewal for five years of its conditional access agreement with
Channel Five.
Programming
As multichannel penetration continued to rise, the viewing share of Sky channels
across all UK television homes grew to 6.4% for the year compared to 6.1% in the
previous year.
Sky News continues to be the leading 24-hour news channel within multichannel
homes, beating the viewing share of BBC News 24 and the ITV News channel
combined. Industry recognition has continued with a second British Academy award
and the Royal Television Society News Channel of the Year award for the second
year running, underlining Sky News' reputation as the home of breaking news.
Over 15 million individuals watched Sky News in the quarter.
Sky One continues to lead audience delivery amongst the key 16-34 year old
demographic. The combined viewing share of 16-34 year olds within multichannel
homes of Sky One and Sky One Mix was 5% in the quarter, some 23% higher than
that of Channel Five. Sky One combines a commitment to commissioning and
developing factual entertainment programmes with a growing reputation for fast
turn-around documentaries such as 'Michael Jackson: The Untold Story'.
Sky Sports had another strong year. Its viewing share across UK homes grew by
13% on the comparable period and programming was increased across its five
dedicated channels. Memorable moments during the year included Europe's dramatic
Ryder Cup victory at The Belfry, the England Rugby Union team's record-breaking
run of victories against the Southern Hemisphere sides in both the Autumn
Internationals and Summer Tour, and the Cricket World Cup. The live Premiership
match between Arsenal and Manchester United in April attracted Sky's highest
audience for five years with an in-home peak of 3.8 million viewers. On the
final day of the Premiership season Sky Sports' three live matches attracted the
highest ever final day audience and over the entire FA Premier League season,
average audiences were up 17% on the prior year.
Over the past twelve months Sky has secured three significant football rights
agreements. In September 2002, Sky won the rights to cover live UEFA Champions
League football for the first time, and from September 2003 will show exclusive
live coverage of all Wednesday matches in the UK and up to six live ties on
Tuesday nights. Sky has also recently announced that it will share the rights
with the BBC to broadcast the Football Association's key properties in a new
four-year agreement commencing at the start of the 2004/05 season. The new
contract has yielded a significant cost saving compared to the existing
contract. Finally, on 8 August 2003, it was announced that Sky had successfully
bid for all four packages of exclusive live UK rights to FA Premier League
football from the beginning of the 2004/05 season to the end of the 2006/07
season. This new agreement offers our subscribers unparalleled coverage of
Premier League football with more games available for live broadcast than ever
before. The total cost of the new agreement for the four UK live packages is
GBP1,024 million over three years.
Sky Movies' share of viewing for the year within multichannel homes was 3.6%
with Saturday Premieres continuing to perform strongly. From June 2003 there has
been a shift in emphasis in movie scheduling away from weekday slots and towards
the weekend line-ups. A record number of megahits were broadcast this year,
almost triple the number shown five years ago. Sky's innovative use of
multiplexes to allow a film to be shown at multiple start times on the same day
has proved to be very popular generating 1.8 million viewers for "Jurassic Park
III" and 1.3 million viewers for "Harry Potter and the Philosopher's Stone". The
same approach will be used for future selected blockbuster premieres.
FINANCIAL REVIEW
Turnover
Total revenue for the year grew by 15% to GBP3,186 million driven by further
strong DTH revenue growth and continued growth in advertising and interactive
revenues.
DTH revenue, which now accounts for 74% of total turnover (2002: 69%), grew by
21% to GBP2,341 million for the year. This growth reflects the 14% increase in
the average number of DTH subscribers and an increase in the non-interactive
component of ARPU, largely driven by the change to Sky's UK retail prices in
January 2003, but also by the introduction of new products such as Sky+ and the
Extra Digibox.
Cable revenues, which account for 6% of total revenue, fell by 11% on the
comparable period with the number of UK cable homes and the average number of
premium channels taken by each cable subscriber falling. Sky announced on 23
June 2003 that it had concluded an agreement for the supply of nine basic Sky
channels to NTL, effective until the end of 2006.
The termination of ITV Digital's DTT operation on 30 April 2002 has resulted in
a one-off reduction in total wholesale revenue of around 19%.
Sky's advertising revenue continued to outperform the market with a 13% increase
on the comparable period to GBP284 million, principally reflecting the benefit
from strong share deals negotiated with advertising agencies for calendar year
2003, and strong growth in Sky's overall subscriber base. Sky currently expects
this above-market growth to continue for at least the remainder of the calendar
year.
Interactive applications continue to contribute to Sky's revenue growth with
total interactive revenue increasing by 17% to GBP218 million, of which GBP117
million related to Sky Bet, Sky's wholly owned bookmaker. The increase in
betting revenue was driven by a threefold increase over the comparable period in
the total volume of bets placed to over 15 million, of which 12 million were
interactive television bets. Sky Active revenue amounted to GBP101 million,
increasing by 11% on the comparable period. The increase was principally due to
the success of interactive advertising and Sky Buy. Interactive advertising is
demonstrating strong potential with revenue increasing 54% on the comparable
period.
Other revenue for the year increased by 8% to GBP141 million, primarily due to
hardware-related revenue on the sale of Sky+ and Extra Digiboxes.
Programming costs
Programming costs increased by 11% to GBP1,604 million, principally as a result
of contractual increases in sports costs and volume-related increases in movie
and third party channel costs.
Sports costs, which represent 45% of total programming spend, increased by GBP60
million to GBP723 million. This was principally driven by contractual increases
in rights costs and the costs of non-annual events such as the Ryder Cup and the
Cricket World Cup. Contractual increases were partly offset by savings achieved
by the decisions made not to renew agreements to broadcast UEFA Cup and Scottish
Premier League football, and Six Nations Rugby.
An increase in movie costs of GBP37 million to GBP397 million reflected the
increase in the average number of movie subscribers, around a 30% increase in
the number of output titles qualifying as megahits over the comparable period,
and contractual increases. The increase was offset by savings resulting from the
continued weakness of the US dollar.
DTH distribution fees paid to third party channels rose by GBP54 million to
GBP351 million, due to the increased number of subscribers, contractual
per-subscriber fee increases and small changes to the channel line-up. These
increases were partly offset by savings generated by the renewal, on improved
terms, of contracts with Flextech and UKTV (five-year agreements from January
2002), Sci-Fi (a two-year extendable agreement from November 2002) and Cartoon
Network (a five-year agreement from January 2003). In all cases, savings of at
least 15% on the pence per-subscriber cost of channel carriage were achieved.
Entertainment programming costs increased by GBP9 million to GBP94 million
principally due to the scheduling of new acquired programming and the launch of
four new Sky channels during the year (Sky One Mix, Flaunt, The Amp and Scuzz).
Operating costs of Sky News rose by GBP5 million to GBP39 million driven
predominantly by the additional costs of coverage of the conflict in Iraq.
Other operating costs
Transmission and related costs before exceptional items decreased by GBP4
million to GBP143 million, mainly due to reductions in technical operations
costs.
Marketing costs at GBP401 million declined by GBP16 million on the comparable
period despite broadly the same number of digital installations. The subscriber
acquisition cost ("SAC") was GBP207 representing a reduction of GBP27 on the
comparable period. The reduction was due to the combination of reduced hardware
costs, an increase in install revenues and a greater proportion of direct
acquisitions.
Subscriber management costs increased by GBP33 million to GBP324 million.
Subscriber management costs comprise two main activities: customer relationship
management ("CRM") costs associated with managing the existing subscriber base;
and supply chain costs relating to systems and infrastructure and the hardware
costs of new products purchased by subscribers such as Sky+ and Extra Digiboxes.
As a result of customer contact centre efficiencies and lower incoming call
volumes, CRM costs per subscriber have fallen by 15%, leading to an absolute
cost reduction of 3% over the comparable period to GBP148 million. Supply chain
costs increased by 28% over the comparable period to GBP176 million reflecting
the growth in the number of Sky+ and Extra Digiboxes and costs associated with
the smartcard swap-out as part of stringent on-going anti-piracy measures.
Administration costs before goodwill and exceptional items increased by GBP33
million to GBP236 million, including increases in insurance costs, and disaster
recovery planning costs.
Betting costs increased by GBP20 million to GBP108 million directly as a result
of the continued strong growth in betting revenues.
Earnings before interest, tax, depreciation and amortisation before exceptional
items ("EBITDA") for the year increased by 72% to GBP469 million.
Goodwill
Goodwill amortisation increased by GBP3 million on the comparable period to
GBP122 million. This increase was largely due to a GBP5 million provision
against goodwill which originally arose on the acquisition of Opta Index Limited
("Opta "). This provision was made as a result of the Group's announcement in
December 2002 that it would close Opta and the carrying value of this goodwill
has been reduced to nil. The Group is currently in negotiations to sell or
license some or all of Opta's assets to a third party.
Exceptional items
During the comparable period, the Group made an exceptional operating provision
of GBP22 million against the wholesale revenues that it was owed by ITV Digital.
During the quarter, the Group received a payment amounting to GBP5 million of
this debt generating a credit to the profit and loss account. This operating
exceptional item has been included within operating profit.
As reported at the interim results for the financial year 2002/03, the Group has
also made a provision against some of its minority equity investments. This has
led to a net non-cash exceptional charge of GBP15 million, which is accounted
for below operating profit.
The Group recognised an exceptional deferred tax credit of GBP123 million during
the year. This is explained in more detail in the Taxation section below.
Joint Ventures
The Group's share of net operating profits in joint ventures increased to GBP3
million in the period, an increase of GBP80 million on the comparable period,
principally reflecting the cessation of equity accounting for the Group's share
of losses incurred by KirchPayTV from 8 February 2002.
Taxation
The net tax credit for the period includes a current pre-exceptional tax charge
of GBP85 million and a deferred tax credit of GBP3 million (which is included
within the total GBP28 million non-exceptional deferred tax credit) due to the
Group generating profits chargeable to corporation tax in this fiscal year.
Before the effect of goodwill, joint ventures and exceptional items this results
in an underlying effective rate of 31%, slightly higher than the UK statutory
rate due to a number of standard disallowable items.
As a result of the significant investment made in digital, and the resultant
losses incurred, the Group has accumulated significant tax losses within
different Group companies.
Under the UK Accounting Standard 'FRS19', a deferred tax asset in respect of
these tax losses may only be recognised in the Group's balance sheet at the
point when it is 'more likely than not' that there will be sufficient future
taxable profits to offset the tax losses thereby being capitalised.
As the Group's and individual entities' profitability has continued to rise it
has become increasingly possible to satisfy the requirements of FRS19. As
reported with the first half results, during the six months ended 31 December
2002, the Group recognised a GBP40 million deferred tax asset, principally as a
result of the forecast future profitability of one of the Group's trading
subsidiaries.
Subsequently, following a review of the forecast utilisation of tax losses
within the Group, and as a consequence of a planned reorganisation of certain
assets within the Group, the Directors have been able to conclude that the
required FRS19 conditions have also now been satisfied, in respect of other tax
losses in the Group, permitting the Group to recognise a further deferred tax
asset of GBP123 million, which has been treated as an exceptional credit due its
size. This brings the total deferred tax asset recognised within the year to
GBP151 million, net of utilisation and an adjustment arising from the prior
period. Following this recognition, the Group has no further significant
unrecognised UK losses, and therefore over the long-term, the Group's ongoing UK
tax charge in the profit and loss account is expected to continue at a rate of
around 31%.
After the GBP85 million current pre-exceptional tax charge for the period, the
GBP151 million deferred tax credit, the tax charge on exceptional items (GBP1
million) and Sky's share of joint ventures' tax (GBP2 million), the net tax
credit for the period was GBP63 million.
During the period, GBP45 million of Advanced Corporation Tax (ACT) brought
forward was utilised to reduce the Group's cash tax liability.
Earnings
The Group has recorded the first full year of positive earnings since the launch
of Sky digital after generating a profit after tax of GBP190 million. With the
weighted average number of ordinary shares outstanding during the year
(excluding those shares held by the ESOP trust) at 1,915 million, earnings per
share before goodwill and exceptional items of 10.5 pence per share was
achieved, compared to a loss per share of 2.7 pence for the comparable period.
Cashflow and interest
With EBITDA of GBP469 million, exceptional items of GBP5 million and cash
generated from the movement in working capital of GBP191 million, the Group
generated GBP664 million of net operating cash inflow. This represents the
conversion of 179% of operating profit before goodwill and exceptional items to
cash inflow. After taking into account cash outflows principally comprising net
cash interest payments of GBP125 million, capital expenditure of GBP98 million
and tax paid of GBP18 million, net debt decreased by GBP423 million in the
period, from GBP1,528 million to GBP1,105 million. At 30 June 2003, leverage
(the ratio of net debt to EBITDA) was 2.4 times, and interest cover (the ratio
of EBITDA to net interest payable) was 4.1 times.
Despite the continued growth of the business, Sky generated cash from the
movement in working capital this year due to a combination of one-off factors
(for example the unwinding of prepayments of certain sports rights) and factors
which will continue to apply as the business continues to grow. The latter
includes Sky's subscription collection cycle, and the payment in arrears for
certain programming costs, such as those incurred in respect of the carriage of
third party channels.
Other recurring components of the positive working capital movement include the
reversal, over time, of prepayments made for Sky's long-term satellite
transponder leases, and the accounting treatment for certain share-based
employee remuneration schemes which, under UK GAAP, result in charges to the
profit and loss account, despite being non-cash in nature.
Net interest costs of GBP115 million decreased by GBP22 million on the
comparable period due to lower levels of indebtedness and lower average interest
rates.
CORPORATE
British Sky Broadcasting Group plc ("the Company") had a deficit of GBP1,120
million on its company-only profit and loss reserve at 30 June 2003. In order to
improve the presentation of the Company's balance sheet and give the Company
greater flexibility in any future distribution policy, the Directors intend to
propose a resolution at the Annual General Meeting to eliminate the deficit by
reducing the Company's share premium account. In order for this to take effect,
the reduction will require the subsequent approval of the High Court.
Appendix 1
Distribution of Sky Channels
As at As at
30/06/02 30/06/03
DTH Digital 1,2 6,101,000 6,845,000
Cable - UK 3,486,000 3,266,000
Cable - Ireland 605,000 605,000
Total Sky pay homes 10,192,000 10,716,000
DTT - UK 3 - 1,510,000
Total Sky homes 10,192,000 12,226,000
% of all UK and RoI homes 4 39% 47%
DTH Churn rate for year to date (annualised) 10.5%5 9.4%
1: Includes DTH subscribers in Ireland (286,000 as at 30 June 2003).
2: DTH subscribers includes only primary subscriptions to Sky (no additional
units are counted for Sky+ or Extra Digibox subscriptions).
3: BARB estimates taken from the beginning of the following month.
4: Total UK homes estimated by BARB (latest figures available as at June 2003)
and RoI homes estimated by the Nielsen establishment survey (latest figures
available as at June 2002), calculated using Total Sky homes.
5: Excludes analogue churn up to 27 September 2001 and the effect of the
termination of the analogue service on 27 September 2001.
Consolidated Profit and Loss Account for the year ended 30 June 2003
Notes Before Goodwill and 2003 Before Goodwill and 2002
goodwill and exceptional Total goodwill and exceptional Total
exceptional items GBPm exceptional items GBPm
items GBPm items GBPm
GBPm (audited) (audited) GBPm (audited) (audited)
(audited) (audited)
Turnover: Group turnover and share of 3,262.5 - 3,262.5 2,915.3 - 2,915.3
joint ventures' turnover
Less: share of joint ventures' (76.5) - (76.5) (139.2) - (139.2)
turnover
Group turnover 1 3,186.0 - 3,186.0 2,776.1 - 2,776.1
Operating expenses, net 2 (2,815.3) (116.7) (2,932.0) (2,584.6) (136.5) (2,721.1)
EBITDA 18 468.6 4.8 473.4 272.7 (18.2) 254.5
Depreciation (97.9) - (97.9) (81.1) - (81.1)
Amortisation - (121.5) (121.5) (0.1) (118.3) (118.4)
Operating profit (loss) 370.7 (116.7) 254.0 191.5 (136.5) 55.0
Share of operating results of joint 3 3.4 - 3.4 (76.7) - (76.7)
ventures
Joint ventures' goodwill - - - - (1,069.9) (1,069.9)
amortisation, net
Profit on sale of fixed asset 4 - - - - 2.3 2.3
investments
Amounts written off fixed asset 4 - (15.1) (15.1) - (60.0) (60.0)
investments, net
Release of provision for loss on 4 - - - - 10.0 10.0
disposal of subsidiary
Profit (loss) on ordinary activities 374.1 (131.8) 242.3 114.8 (1,254.1) (1,139.3)
before interest and taxation
Interest receivable and similar 5 3.7 - 3.7 11.1 - 11.1
income
Interest payable and similar charges 5 (118.2) - (118.2) (148.0) - (148.0)
Profit (loss) on ordinary activities 259.6 (131.8) 127.8 (22.1) (1,254.1) (1,276.2)
before taxation
Tax on profit (loss) on ordinary 6 (58.7) 121.2 62.5 (28.6) (77.8) (106.4)
activities
Profit (loss) on ordinary activities 200.9 (10.6) 190.3 (50.7) (1,331.9) (1,382.6)
after taxation
Equity dividends - paid and proposed - -
Retained profit (loss) for the 16 190.3 (1,382.6)
financial year
Basic earnings (loss) per share 7 10.5p (0.6p) 9.9p (2.7p) (70.6p) (73.3p)
Diluted earnings (loss) per share 7 10.3p (0.5p) 9.8p (2.7p) (70.6p) (73.3p)
Details of movements on reserves are shown in note 16.
The accompanying notes are an integral part of this consolidated profit and loss
account.
All results relate to continuing operations.
Consolidated Profit and Loss Account for the three months ended 30 June 2003
Before Goodwill and Three months Before Goodwill and Three months
goodwill and exceptional ended 30 goodwill and exceptional ended 30
exceptional items June exceptional items June
items GBPm 2003 items GBPm 2002
GBPm (unaudited) Total GBPm (unaudited) Total
(unaudited) GBPm (unaudited) GBPm
(unaudited) (unaudited)
Turnover: Group turnover and share of 874.6 - 874.6 768.1 - 768.1
joint ventures' turnover
Less: share of joint ventures' (19.1) - (19.1) (20.2) - (20.2)
turnover
Group turnover 855.5 - 855.5 747.9 - 747.9
Operating expenses, net (738.6) (24.0) (762.6) (685.7) (25.2) (710.9)
EBITDA 143.2 4.8 148.0 83.1 4.1 87.2
Depreciation (26.3) - (26.3) (20.8) - (20.8)
Amortisation - (28.8) (28.8) (0.1) (29.3) (29.4)
Operating profit (loss) 116.9 (24.0) 92.9 62.2 (25.2) 37.0
Share of operating results of joint 2.1 - 2.1 (3.2) - (3.2)
ventures
Amounts written back to fixed asset - 3.2 3.2 - - -
investments
Profit (loss) on ordinary activities 119.0 (20.8) 98.2 59.0 (25.2) 33.8
before interest and taxation
Interest receivable and similar 0.8 - 0.8 1.0 - 1.0
income
Interest payable and similar charges (25.1) - (25.1) (32.2) - (32.2)
Profit (loss) on ordinary activities 94.7 (20.8) 73.9 27.8 (25.2) 2.6
before taxation
Tax on profit (loss) on ordinary (37.9) 121.2 83.3 (12.0) 11.1 (0.9)
activities
Profit (loss) on ordinary activities 56.8 100.4 157.2 15.8 (14.1) 1.7
after taxation
Basic earnings (loss) per share 2.9p 5.2p 8.1p 0.8p (0.7p) 0.1p
Diluted earnings (loss) per share 2.9p 5.2p 8.1p 0.8p (0.7p) 0.1p
Consolidated Statement of Total Recognised Gains and Losses for the year ended
30 June 2003
Notes 2003 2002
GBPm GBPm
(audited) (audited)
Profit (loss) for the financial year 16 190.3 (1,382.6)
Translation differences on foreign currency net investment - 1.4
Total recognised gains and losses relating to the year 190.3 (1,381.2)
The accompanying notes are an integral part of this consolidated statement of
total recognised gains and losses.
Consolidated Balance Sheet at 30 June 2003
Notes 2003 2002
GBPm GBPm
(audited) (audited)
Fixed assets
Intangible assets 8 535.9 657.4
Tangible assets 9 346.2 343.0
Investments 10 108.9 128.9
991.0 1,129.3
Current assets
Stocks 11 370.4 414.2
Debtors: Amounts falling due within one year
- deferred tax assets 30.8 13.9
- other 363.3 387.0
12 394.1 400.9
Debtors: Amounts falling due after more than one year
- deferred tax assets 159.0 24.9
- other 63.9 182.1
12 222.9 207.0
Cash at bank and in hand 46.4 50.3
1,033.8 1,072.4
Creditors: Amounts falling due within one year
- short-term borrowings 13 (0.2) (1.5)
- other creditors 13 (955.0) (903.9)
(955.2) (905.4)
Net current assets 78.6 167.0
Total assets less current liabilities 1,069.6 1,296.3
Creditors: Amounts falling due after more than one year
- long-term borrowings 14 (1,151.6) (1,576.9)
- other creditors 14 (20.5) (16.0)
(1,172.1) (1,592.9)
Provisions for liabilities and charges 15 (3.2) (4.1)
(105.7) (300.7)
Capital and reserves - equity
Called-up share capital 16 968.9 946.7
Share premium 16 2,535.5 2,409.8
Shares to be issued 16 2.7 255.8
Merger reserve 16 299.0 266.7
Profit and loss account 16 (3,911.8) (4,179.7)
16 (105.7) (300.7)
The accompanying notes are an integral part of this consolidated balance sheet.
Consolidated Cash Flow Statement for the year ended 30 June 2003
Notes 2003 2002
GBPm GBPm
(audited) (audited)
Net cash inflow from operating activities 17a 663.6 249.7
Dividends received from joint ventures 4.0 -
Returns on investments and servicing of finance
Interest received and similar income 3.2 8.8
Interest paid and similar charges on external financing (127.3) (141.0)
Interest element of finance lease payments (0.5) (0.6)
Net cash outflow from returns on investments and servicing of finance (124.6) (132.8)
Taxation
UK corporation tax paid (17.6) -
Consortium relief (paid) received (0.3) 22.5
Net cash (outflow) inflow from taxation (17.9) 22.5
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (98.4) (100.8)
Receipts from sales of tangible fixed assets 0.6 -
Receipts from sales of fixed asset investments 0.8 0.4
Receipts from sales of intangible fixed assets - 0.6
Purchase of own shares for Employee Share Ownership Plan ("ESOP") - (26.9)
Net cash outflow from capital expenditure and financial investment (97.0) (126.7)
Acquisitions and disposals
Funding to joint ventures (14.6) (11.6)
Repayments of funding from joint ventures 4.5 4.8
Net cash outflow from acquisitions and disposals (10.1) (6.8)
Net cash inflow before management of liquid resources and financing 418.0 5.9
Management of liquid resources
Decrease in short-term deposits 17c 0.5 69.5
Financing
Proceeds from issue of Ordinary Shares 4.8 14.3
Payments made on the issue of Ordinary Shares (0.1) (1.8)
Capital element of finance lease payments 17b (1.6) (1.7)
Net decrease in total debt 17b (425.0) (190.0)
Net cash outflow from financing (421.9) (179.2)
Decrease in cash 17c (3.4) (103.8)
Decrease in net debt 17c 422.7 18.4
The accompanying notes are an integral part of this consolidated cash flow
statement.
1. Turnover
2003 2002
GBPm GBPm
(audited) (audited)
DTH subscribers 2,341.2 1,929.2
Cable and digital terrestrial television ("DTT") subscribers 202.2 279.4
Advertising 283.6 250.7
Interactive 218.3 186.0
Other 140.7 130.8
3,186.0 2,776.1
2. Operating expenses, net
Before Goodwill and 2003 Before Goodwill and 2002
goodwill and exceptional Total goodwill and exceptional Total
exceptional items GBPm exceptional items GBPm
items GBPm (audited) items GBPm (audited)
GBPm (audited) GBPm (audited)
(audited) (audited)
Programming (i) 1,603.9 - 1,603.9 1,439.3 - 1,439.3
Transmission and related 142.8 - 142.8 146.6 (4.1) 142.5
functions (i)
Marketing 400.5 - 400.5 416.6 - 416.6
Subscriber management 324.4 - 324.4 291.1 - 291.1
Administration 236.1 116.7 352.8 203.2 140.6 343.8
Betting 107.6 - 107.6 87.8 - 87.8
2,815.3 116.7 2,932.0 2,584.6 136.5 2,721.1
(i) The amounts shown are net of GBP12.0 million (2002: GBP15.3 million)
receivable from the disposal of programming rights not acquired for use by the
Group, and GBP25.5 million (2002: GBP23.7 million) in respect of the provision
to third party broadcasters of spare transponder capacity.
3. Share of operating results of joint ventures
2003 2002
GBPm GBPm
(audited) (audited)
KirchPayTV GmbH & Co KGaA ("KirchPayTV") operating - (70.0)
loss
Programming joint ventures operating profit 3.4 (6.7)
(loss), net 3.4 (76.7)
This relates to the Group's equity share of the operating results of the Group's
joint ventures.
KirchPayTV
By 8 February 2002, the Group considered that its relationship with KirchPayTV
had irrevocably changed and that the Group had not exercised significant
influence since that date. Therefore, the Group believed that, from 8 February
2002, it was no longer appropriate to account for its interest in KirchPayTV as
a joint venture, and ceased accounting for KirchPayTV's losses using the gross
equity method from that date.
As the Group has no intention of providing any future funding to KirchPayTV and
the Group, on a consolidated basis, has no financial commitments, outstanding
financial liabilities or contingent liabilities in respect of KirchPayTV, an
amount of GBP13.5 million was released from the impairment provision made at 31
December 2001, in order to match the Group's share of KirchPayTV's losses for
the period from 1 January 2002 to 8 February 2002.
4. Exceptional items
Charge Taxation 2003 Charge Taxation 2002
(credit) charge Total (credit) charge Total
before (credit) before (credit)
taxation taxation
GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited)
(Release of provision) provision against ITV
Digital programming debtors (i) (iv) (4.8) 1.4 (3.4) 22.3 (6.7) 15.6
Release of analogue termination provision (v) - - - (4.1) 1.2 (2.9)
Exceptional operating items (4.8) 1.4 (3.4) 18.2 (5.5) 12.7
Joint ventures' goodwill amortisation, net (vi) - - - 971.4 - 971.4
Profit on sale of fixed asset investment (vii) - - - (2.3) - (2.3)
Amounts written off fixed asset investments, net 15.1 15.1
(ii) (viii) - 60.0 - 60.0
Release of provision for loss on disposal of -
subsidiary (ix) - - (10.0) - (10.0)
(Recognition) write-down of deferred tax asset - (122.6) (122.6) - 83.3 83.3
(iii) (x)
Total exceptional items 10.3 (121.2) (110.9) 1,037.3 77.8 1,115.1
2003
Exceptional operating items
(i) ITV Digital
The Group provided in full against all unprovided balances owed by ITV Digital,
following the announcement made on 30 April 2002 (see note (iv) below). During
the year, the Group received GBP4.8m from ITV Digital's administrators and
released GBP4.8 million of its exceptional operating provision accordingly.
Other exceptional items
(ii) Amounts written off fixed asset investments, net
At 31 December 2002, the Group made a further provision against its minority
investments in football clubs, leading to a non-cash exceptional charge of
GBP21.0 million. Subsequently, the Group reduced its provision against its
investment in Chelsea Village plc at 30 June 2003 by GBP3.2 million, following
the agreement to sell its minority investment in July 2003.
At 31 December 2002, the Group reduced its deferred revenue balance relating to
minority investments in new media companies by GBP5.1 million, and reduced both
its investment and its provision against the investment in these companies
accordingly.
At 31 December 2002, the Group made a provision against its investment in Open
TV shares, leading to a non-cash exceptional charge of GBP2.9 million, bringing
the carrying value of the Group's investment in Open TV to GBP0.3 million.
During February and March 2003, the Group disposed of its entire investment in
Open TV shares, leading to a loss on disposal of GBP0.1 million.
(iii) Recognition of deferred tax asset
Following a review of the forecast utilisation of tax losses within the Group,
and as a consequence of a planned reorganisation of certain assets within the
Group, there is now sufficient evidence to support the recognition of a deferred
tax asset arising on losses incurred in the Company. Accordingly, a deferred tax
credit of GBP122.6 million has been recognised as an exceptional item.
2002
Exceptional operating items
(iv) ITV Digital
At 27 March 2002, the date on which the ITV Digital DTT platform was put into
administration, the Group had balances owed to it and unprovided for, in respect
of programming licensed to ITV Digital, of GBP22.3 million. On 30 April 2002,
the joint administrators of ITV Digital announced the closure of pay television
services on the platform and their intention to close the administration.
Accordingly, the Group made an exceptional operating provision against the whole
of this balance. (see note (i) above)
(v) Release of analogue termination provision
On 27 September 2001, the Group terminated its analogue operation. From the
original exceptional operating provision of GBP41.0 million, taken at 30 June
2000, GBP4.1 million of provision had not been utilised at 30 June 2002, and was
therefore released to the profit and loss account as an exceptional credit.
Other exceptional items
(vi) Joint ventures' goodwill amortisation, net
The exceptional item of GBP971.4 million of joint ventures' goodwill
amortisation, net, relates to the impairment charge taken against the carrying
value of the Group's interest in KirchPayTV of GBP984.9 million at 31 December
2001, net of an amount of GBP13.5 million released from the provision matching
the Group's share of losses for the period from 1 January 2002 to 8 February
2002, at which date the Group ceased to gross equity account for KirchPayTV's
results.
(vii) Profit on sale of fixed asset investment
On 2 July 2001, the Group disposed of its unlisted investment in Static 2358
Limited, realising a profit on disposal of GBP2.3 million.
(viii) Amounts written off fixed asset investments
At 31 December 2001, the Group made a provision against its minority investments
in football clubs, leading to a non-cash exceptional charge of GBP60.0 million.
4. Exceptional items (continued)
(ix) Release of provision for loss on disposal of subsidiary
On 16 October 2001, the Group and Ladbrokes, the betting and gaming division of
Hilton Group plc, announced that they had agreed not to pursue the proposed
joint venture to offer a fixed odds betting service on Sky Sports channels and
other media. As a result, the provision for loss on disposal of subsidiary,
taken at 30 June 2001, was written back, resulting in a non-cash exceptional
profit of GBP10.0 million. The Group continues to operate and develop
interactive TV betting services through its wholly-owned bookmaker, Sky Bet
(formerly known as Surrey Sports).
(x) Write-down of deferred tax asset
Following the impairment charge made in respect of the Group's investment in
KirchPayTV at 31 December 2001 there was insufficient evidence to support the
recognition of a deferred tax asset arising on losses incurred by certain UK
companies. Accordingly, the deferred tax asset of GBP95.6 million was written
off in full at 31 December 2001, although by 30 June 2002, GBP12.3 million of
this amount had been written back due to the utilisation of tax losses.
5. Interest
a) Interest receivable and similar income
2003 2002
GBPm GBPm
Group
Interest receivable on short-term deposits 2.6 8.2
Interest receivable on funding to joint ventures 0.1 0.3
Other interest receivable and similar income 0.5 0.6
3.2 9.1
Joint ventures
Share of joint ventures' interest receivable 0.5 2.0
Total interest receivable and similar income 3.7 11.1
b) Interest payable and similar charges
2003 2002
GBPm GBPm
Group
On bank loans, overdrafts and other loans repayable within five years, not
by instalments:
- GBP200 million revolving credit facility ("RCF") (previously
GBP300 million RCF)* 2.5 10.8
- GBP750 million RCF ** 27.0 46.3
- GBP600 million RCF ** 3.7 -
US$650 million of 8.200% Guaranteed Notes, repayable in 2009 31.1 31.6
GBP100 million of 7.750% Guaranteed Notes, repayable in 2009 7.8 7.8
US$600 million of 6.875% Guaranteed Notes, repayable in 2009 30.1 30.1
US$300 million of 7.300% Guaranteed Notes, repayable in 2006 13.8 15.1
Finance lease interest 1.0 1.0
Other interest payable and similar charges 0.9 0.4
117.9 143.1
Joint ventures
Share of joint ventures' interest payable 0.3 4.9
Total interest payable and similar charges 118.2 148.0
* In March 2003 the Group voluntarily cancelled GBP100 million of its GBP300
million RCF. The maturity date of the resultant GBP200 million RCF is still June
2004 (see note 14).
** In addition, in March 2003 the Group entered into a new GBP600 million RCF.
This facility was used to cancel the GBP750 million RCF, which was entered into
in July 1999, and will be used for general corporate purposes. The new GBP600
million RCF has a maturity date of March 2008.
6. Taxation
a) Analysis of charge (credit) in year
Tax charge Tax charge
(credit) on on profit
profit before Exceptional before Exceptional
exceptional tax charge 2003 exceptional tax charge 2002
items (credit) Total items (ii) Total
GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited)
Current tax 85.0 1.4 86.4 - - -
Deferred tax:
Origination and reversal of timing (26.6) (122.6) (149.2) 27.3 77.8 105.1
differences
Increase in estimate of recoverable (1.8) - (1.8) - - -
deferred tax asset in respect of prior
years
Total deferred tax (i) (28.4) (122.6) (151.0) 27.3 77.8 105.1
Share of joint ventures' tax charge 2.1 - 2.1 1.3 - 1.3
58.7 (121.2) (62.5) 28.6 77.8 106.4
(i) During the year the Group recorded a deferred tax credit of GBP163.3 million
relating to deferred tax assets not previously recognised. The Directors
consider that there is now sufficient evidence to support the recognition of
these deferred tax assets on the basis that it is more likely than not there
will be suitable taxable profits against which these assets can be utilised.
GBP122.6 million of the deferred tax credit has been treated as an exceptional
item.
(ii) An exceptional deferred tax charge of GBP95.6 million was made at 31
December 2001, against which GBP12.3 million has been written back at 30 June
2002 as a result of the utilisation of tax losses. This was offset by a GBP5.5
million tax credit on the provision against ITV Digital debtors and the release
of the analogue termination provision, treated as exceptional operating items.
b) Factors affecting the current tax charge for the year
The current tax charge for the year is higher than the standard rate of
corporation tax in the UK (30%). The differences are explained below:
2003 2002
GBPm GBPm
Profit (loss) on ordinary activities before tax 127.8 (1,276.2)
Less: Share of joint ventures' (profit) loss before tax (3.6) 79.6
Group profit (loss) on ordinary activities before tax 124.2 (1,196.6)
Group profit (loss) on ordinary activities multiplied by standard rate of corporation 37.3 (359.0)
tax in the UK of 30% (2002: 30%)
Effects of:
Write-down of KirchPayTV not deductible for tax purposes - 291.4
Other expenses not deductible for tax purposes (primarily goodwill amortisation) 42.5 77.8
Other timing differences 11.8 19.2
Utilisation of tax losses (7.3) (30.6)
Consortium relief 2.1 1.2
Current tax charge for the year 86.4 -
c) Factors that may affect future tax charges
At 30 June 2003, a deferred tax asset of GBP12.5 million (2002: GBP149.6
million) arising from UK losses in the Group, has not been recognised. These
losses can be offset only against taxable profits generated in the entities
concerned. Although Directors ultimately expect sufficient profits to arise,
there is currently insufficient evidence to support recognition of a deferred
tax asset relating to these losses. The losses are available to be carried
forward indefinitely under current law.
Deferred tax assets of GBP63.7 million (2002: GBP63.7 million) have not been
recognised in respect of trading losses in the Group's German holding companies
of KirchPayTV, and GBP450.0 million (2002: GBP450.0 million) have not been
recognised in respect of potential capital losses related to the Group's holding
of KirchPayTV. A deferred tax asset of GBP4.6 million (2002: GBP18.0 million)
arising principally on other timing differences has not been recognised on the
basis that these timing differences are not more likely than not to reverse.
7. Earnings (loss) per share
Before Goodwill Exceptional 2003 Before Goodwill Exceptional 2002
goodwill and (audited) items After goodwill and (audited) items After
exceptional (audited) goodwill and exceptional (audited) goodwill and
items exceptional items exceptional
(audited) items (audited) items
(audited) (audited)
Profit (loss) on GBP200.9m (GBP121.5m) GBP110.9m GBP190.3m (GBP50.7m) (GBP216.8m) (GBP1,115.1m) (GBP1,382.6m)
ordinary
activities after
taxation
Basic earnings 10.5p (6.4p) 5.8p 9.9p (2.7p) (11.5p) (59.1p) (73.3p)
(loss) per share
Diluted earnings 10.3p (6.2p) 5.7p 9.8p (2.7p) (11.5p) (59.1p) (73.3p)
(loss) per share
Basic earnings (loss) per share represents the profit (loss) on ordinary
activities after taxation attributable to the equity shareholders, divided by
the weighted average number of Ordinary Shares in issue during the year of
1,921.2 million (2002: 1,891.2 million), less the weighted average number of
shares held in the Group's ESOP trust of 6.2 million (2002: 3.8 million).
Diluted earnings (loss) per share represents the profit (loss) on ordinary
activities after taxation attributable to the equity shareholders divided by the
weighted average number of Ordinary Shares in issue during the year of 1,921.2
million (2002: 1,891.2 million), less the weighted average number of shares held
in the Group's ESOP trust of 6.2 million (2002: 3.8 million), plus the weighted
average number of dilutive shares resulting from share options and other
potential shares outstanding of 27.2 million (2002: nil).
Earnings (loss) per share is shown calculated by reference to losses both before
and after goodwill and exceptional items and related tax, since the Directors
consider that this gives a useful additional indication of underlying
performance.
8. Intangible fixed assets
The movement in the year was as follows:
Goodwill (i), (ii) Other intangible Total
GBPm fixed assets GBPm
(audited) GBPm (audited)
(audited)
Net book value at 1 July 2002 657.2 0.2 657.4
Charge (116.3) - (116.3)
Impairment losses (ii) (5.2) - (5.2)
Net book value at 30 June 2003 535.7 0.2 535.9
(i) Goodwill of GBP272.4 million, GBP542.1 million and GBP5.2 million, arising
on the acquisitions of Sports Internet Group ("SIG"), British Interactive
Broadcasting ("BIB") and WAPTV respectively, is being amortised over periods of
seven years on a straight-line basis.
In accordance with FRS 11, impairment reviews were performed on the carrying
values of BiB and SIG goodwill balances at the end of the first full financial
year after acquisition, at 30 June 2002. These reviews showed that no
impairment was identified in either case. Consistent with the Group strategy,
the business plans on which these reviews were based reflected significant
projected increases in betting and other interactive revenues over the
subsequent five years. Since the time of these reviews the performance of these
operations has been broadly in line with the forecasts in the business plans
used for these reviews, and no indications of impairment have arisen.
(ii) At 31 December 2002, the Group made a provision of GBP5.2 million, included
within amortisation, against goodwill which arose on the acquisition of Opta
Index Limited ("Opta") (a subsidiary of SIG, which provides statistics on the
sports industry), reducing the carrying value of the goodwill to nil. The
provision was made as a result of the Group's announcement in December 2002 that
it would close Opta. The Group is currently in negotiations to sell or license
some or all of Opta's assets to a third party.
9. Tangible fixed assets
The movement in the year was as follows:
Freehold land Short Equipment, Assets in Total
and buildings leasehold fixtures course of GBPm
GBPm improvements and fittings construction (audited)
(audited) GBPm GBPm GBPm
(audited) (audited) (audited)
Net book value at 1 July 2002 31.9 40.0 241.2 29.9 343.0
Additions 0.4 3.2 73.0 24.8 101.4
Disposals - - (0.3) - (0.3)
Transfers - - 25.8 (25.8) -
Depreciation (2.3) (4.0) (91.6) - (97.9)
Net book value at 30 June 2003 30.0 39.2 248.1 28.9 346.2
10. Fixed asset investments
2003 2002
GBPm GBPm
(audited) (audited)
Investments in joint ventures 30.4 21.8
Investment in own shares 34.6 42.2
Other investments 43.9 64.9
Total fixed asset investments 108.9 128.9
11. Stocks
2003 2002
GBPm GBPm
(audited) (audited)
Television programme rights 337.2 367.3
Set-top boxes and related equipment 29.0 42.2
Raw materials and consumables 1.6 4.4
Goods held for resale 2.6 0.3
370.4 414.2
At least 79% (2002: 77%) of the existing television programme rights at 30 June
2003 will be amortised within one year.
12. Debtors
2003 2002
GBPm GBPm
(audited) (audited)
Debtors: Amounts falling due within one year
Trade debtors 170.9 177.5
Amounts owed by joint ventures 16.0 15.2
Amounts owed by other related parties 0.4 1.0
Other debtors 6.4 8.5
Prepaid programme rights 53.8 80.5
Prepaid transponder rentals 16.9 15.5
Advance Corporation Tax 39.7 18.2
Deferred tax assets 30.8 13.9
Prepaid media agency rights 2.6 3.7
Other prepayments and accrued income 56.6 66.9
394.1 400.9
Debtors: Amounts falling due after more than one year
Prepaid programme rights 2.7 38.6
Prepaid transponder rentals 48.7 55.6
Advance Corporation Tax - 67.1
Deferred tax assets 159.0 24.9
Prepaid media agency rights 5.5 12.8
Other prepayments and accrued income 7.0 8.0
222.9 207.0
13. Creditors: Amounts falling due within one year
2003 2002
GBPm GBPm
(audited) (audited)
Short-term borrowings
GBP200 million RCF (see note 14) - -
Obligations under finance leases 0.2 1.5
0.2 1.5
Other
Trade creditors 323.4 311.1
Amounts due to joint ventures 0.8 -
Amounts due to related parties 24.6 20.4
UK corporation tax 27.6 4.7
VAT 61.7 86.2
Social security and PAYE 0.4 7.0
Other creditors 43.5 42.0
Accruals and deferred income 473.0 432.5
955.0 903.9
955.2 905.4
Included within trade creditors are GBP226.2 million (2002: GBP243.6 million) of
US dollar-denominated programme creditors. At least 90% (2002: 90%) of these
were covered by forward rate currency contracts.
14. Creditors: Amounts falling due after more than one year
2003 2002
GBPm GBPm
(audited) (audited)
Long-term borrowings
GBP750 million RCF - 500.0
GBP600 million RCF 75.0 -
US$650 million of 8.200% Guaranteed Notes, repayable in 2009 412.5 412.5
GBP100 million of 7.750% Guaranteed Notes, repayable in 2009 100.0 100.0
US$600 million of 6.875% Guaranteed Notes, repayable in 2009 367.2 367.2
US$300 million of 7.300% Guaranteed Notes, repayable in 2006 189.2 189.2
Obligations under finance leases 7.5 7.8
Other borrowings 0.2 0.2
1,151.6 1,576.9
Other
Accruals and deferred income 20.5 16.0
1,172.1 1,592.9
In March 2003 the Group entered into a new GBP600 million RCF. This facility was
used to cancel the GBP750 million RCF, which was entered into in July 1999, and
will be used for general corporate purposes. The new GBP600 million RCF has a
maturity date of March 2008 and interest accrues at a margin of between 0.600%
and 1.125% above the London Inter-Bank Offer Rate ("LIBOR"), dependent on the
Group's Net debt:EBITDA leverage ratio (as defined in the loan agreement). Until
June 2004, the margin is fixed at 1.125% and shall not fall below 0.700% per
annum above LIBOR prior to March 2006.
Also in March 2003, the Group voluntarily cancelled GBP100 million of the GBP300
million March 2001 RCF. The maturity date of the resultant GBP200m RCF is still
June 2004 and should it be drawn upon, accrues interest at a rate (presently
1.250%) above LIBOR dependent on the Group's credit rating. This facility
reduction, together with the replacement of the Group's GBP750 million RCF as
described above, reduced the Group's aggregate available facilities from
GBP1,050 million to GBP800 million. In June 2004, when the GBP200 million RCF
matures, the aggregate facilities available to the Group will be reduced to
GBP600 million. These reductions in committed bank facilities are consistent
with the Group's anticipated liquidity requirements.
15. Provisions for liabilities and charges
Sky Interactive Sky In-Home Total
reorganisation Service Limited (audited)
provision reorganisation GBPm
(audited) provision
GBPm (audited)
GBPm
At 1 July 2002 3.9 0.2 4.1
Utilised in the year (0.8) (0.1) (0.9)
At 30 June 2003 3.1 0.1 3.2
16. Reconciliation of movement in shareholders' funds
Movement in shareholders' funds includes all movements in reserves.
Share Share Shares to Merger Profit Total equity
capital premium be issued reserve and loss shareholders'
GBPm GBPm GBPm GBPm account deficit
(audited) (audited) (audited) (audited) GBPm GBPm
(audited) (audited)
At 1 July 2002 946.7 2,409.8 255.8 266.7 (4,179.7) (300.7)
Issue of share capital 22.2 125.8 (253.1) 111.5 (1.6) 4.8
Share issue costs - (0.1) - - - (0.1)
Profit for the financial year - - - - 190.3 190.3
Transfer from merger reserve - - - (79.2) 79.2 -
At 30 June 2003 968.9 2,535.5 2.7 299.0 (3,911.8) (105.7)
During the year the Company issued shares with a market value of GBP6.4 million
(2002: GBP35.2 million) in respect of the exercise of options awarded under
various share option schemes, with GBP4.8 million (2002: GBP14.3 million)
received from employees.
On 11 November 2002, the Company issued 43.2 million shares with a fair value of
GBP253.1 million to HSBC, Matsushita and BT in respect of deferred consideration
for the acquisition of the remaining 67.5% of BiB in May and June 2001.
Additional Group merger reserve of GBP111.5 million was created in relation to
20.8 million shares issued to BT in respect of deferred consideration for the
acquisition of 19.9% of BiB.
17. Notes to consolidated cash flow statement
a) Reconciliation of operating profit to operating cash flows
Before Goodwill and 2003 Before Goodwill and 2002
goodwill and exceptional Total goodwill and exceptional Total
exceptional items GBPm exceptional items GBPm
items GBPm (audited) items GBPm (audited)
GBPm (audited) GBPm (audited)
(audited) (audited)
Operating profit (loss) 370.7 (116.7) 254.0 191.5 (136.5) 55.0
Depreciation 97.9 - 97.9 81.1 - 81.1
Amortisation of goodwill and other - 121.5 121.5 0.1 118.3 118.4
intangible fixed assets
Profit on sale of fixed assets (0.3) - (0.3) - - -
Decrease in stock 43.8 - 43.8 9.9 - 9.9
Decrease in debtors 88.0 - 88.0 77.9 22.3 100.2
Increase (decrease) in creditors 59.6 - 59.6 (80.5) - (80.5)
Provision utilised, net (0.9) - (0.9) (0.3) (34.1) (34.4)
Net cash inflow (outflow) from operating 658.8 4.8 663.6 279.7 (30.0) 249.7
activities
17. Notes to consolidated cash flow statement (continued)
b) Analysis of changes in net debt
At 1 July Cash flow At 30 June
2002 GBPm 2003
GBPm (audited) GBPm
(audited) (audited)
Overnight deposits 38.7 (6.0) 32.7
Other cash 11.1 2.6 13.7
49.8 (3.4) 46.4
Short-term deposits 0.5 (0.5) -
Cash at bank and in hand 50.3 (3.9) 46.4
Debt due after more than one year (1,569.1) 425.0 (1,144.1)
Finance leases (9.3) 1.6 (7.7)
Total debt (1,578.4) 426.6 (1,151.8)
Total net debt (1,528.1) 422.7 (1,105.4)
c) Reconciliation of net cash flow to movement in net debt
Notes 2003 2002
GBPm GBPm
(audited) (audited)
Decrease in cash (3.4) (103.8)
Decrease in short-term deposits (0.5) (69.5)
Cash outflow resulting from decrease in debt and lease financing 426.6 191.7
Decrease in net debt 422.7 18.4
Net debt at beginning of year (1,528.1) (1,546.5)
Net debt at end of year 17b (1,105.4) (1,528.1)
d) Major non-cash transactions
2003
Issue of shares - deferred consideration for BiB
On 11 November 2002, the Company issued 43.2 million shares with a fair value of
GBP253.1 million to HSBC, Matsushita and BT in respect of deferred consideration
for the acquisition of the remaining 67.5% of BiB in May and June 2001.
2002
Impairment of investment in KirchPayTV
Effective 31 December 2001, the Group wrote down the carrying value of its
investment in KirchPayTV to nil (see note 4). The write-down resulted in a net
non-cash exceptional charge to the profit and loss account of GBP971.4 million.
18. EBITDA
EBITDA (Earnings before interest, taxation, depreciation and amortisation) is
calculated as operating profit before depreciation and amortisation of goodwill
and intangible fixed assets.
19. Regulatory update
Office of Fair Trading ("OFT")
On 5 December 2000 the UK Office of Fair Trading, or the OFT, announced that it
was to conduct an inquiry into the affairs of British Sky Broadcasting Limited
("BSkyB Limited"), under the UK Competition Act 1998 ("Competition Act"), in
particular the wholesale supply by BSkyB Limited of certain of its channels to
third party distributors in the UK.(1) BSkyB Limited maintained that it had not
infringed the Competition Act and, on 17 December 2002, following submission by
BSkyB Limited of written and oral representations, the OFT announced that BSkyB
Limited had not been found in breach of competition law in respect of its
investigation. Such findings by the OFT may be appealed by third parties who
have a "sufficient interest" in accordance with the provisions of the
Competition Act.
EC Investigation - FAPL
The EC Commission has commenced investigations into a number of agreements,
decisions or practices leading to the acquisition of broadcast rights to
football events within the European Union, including the sale of exclusive
broadcast rights to Premier League football by the Football Association Premier
League Limited, or the FAPL ("FAPL"). On 21 June 2002, BSkyB Limited and the
FAPL notified the BSkyB Limited's current agreements for FAPL rights to the EC
Commission seeking either a clearance or an exemption from Article 81 of the EC
Treaty. The FAPL has also notified the rules of the FAPL to the EC Commission.
On 20 December 2002, the EC Commission issued a Statement of Objections to the
FAPL outlining certain concerns in respect of the FAPL's joint selling of
broadcast rights to Premier League football. On 30 July 2003, the Group
received a request for information from the EC Commission concerning the current
bidding process being undertaken by the FAPL. The Group is currently unable to
assess whether this EC investigation will have a material effect on the Group.
EC Investigation - Movie Contracts
The EC Commission is investigating the terms on which movies produced by major
US movie studios are supplied to distributors, including pay TV operators,
throughout the European Union. The Group has co-operated with this
investigation. At this stage, the Group is unable to determine whether it will
have a material effect on the Group.
20. Post balance sheet events
On 22 July 2003, the Group entered into a binding agreement for the sale of its
9.9% equity investment in Chelsea Village plc for consideration in cash of
GBP5.9 million.
On 8 August 2003, it was announced that the Group has successfully bid for all
four packages of exclusive live UK rights to FA Premier League football from the
beginning of the 2004/05 season to the end of the 2006/07 season. The total
cost of the new agreement for the four UK live packages is GBP1,024 million over
three years.
--------------------------
(1) Where an undertaking has intentionally or negligently infringed the
Competition Act, it may be fined up to a maximum of 10% of its total UK turnover
for each year it is found to be in breach, up to a maximum of three years. In
addition, third parties, such as customers and competitors, may be entitled to
recover damages where they have suffered loss as a result of conduct in breach
of the Competition Act.
--------------------------
This financial information does not constitute statutory accounts for the
purpose of section 240 of the Companies Act 1985. The financial information for
the year ended 30 June 2003 has been extracted from the statutory accounts of
British Sky Broadcasting Group plc for the year ended 30 June 2003, which have
not yet been filed with the Registrar of Companies, but on which the auditors
gave an unqualified report, which did not contain a statement under section 237
(2) or (3) of the Companies Act 1985, on 11 August 2003. The preliminary
announcement was approved by the Board of Directors on 11 August 2003.
The financial information for the three months ended 30 June 2003 and 30 June
2002 is unaudited.
The financial information for the year ended 30 June 2002 has been extracted
from the statutory accounts of British Sky Broadcasting Group plc for the year
ended 30 June 2002, which have been filed with the registrar of Companies, on
which the auditors gave an unqualified report, which did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRITISH SKY BROADCASTING GROUP PLC
Date: 12 August 2003 By: /s/ Dave Gormley
Dave Gormley
Company Secretary