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 2005
3 August 2005
BRITISH SKY BROADCASTING GROUP PLC
(Name of Registrant)
Grant Way, Isleworth, Middlesex, TW7 5QD 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 3 August 2005
3 August 2005
BRITISH SKY BROADCASTING GROUP PLC
Results for the twelve months ended 30 June 2005
BSkyB announces total revenue of over GBP4 billion, record profits and year on
year growth in gross subscriber additions
Operating highlights
- Net DTH subscriber growth of 83,000 (2004: 81,000) in the quarter to
7.8 million (2004: 7.4 million)
- Sky+ households increased by 118,000 (2004: 75,000) in the quarter to
888,000 (2004: 397,000)
- Multiroom households increased by 82,000 (2004: 23,000) in the quarter
to 645,000 (2004: 293,000)
Financial highlights
- Turnover increased by 11% to GBP4,048 million
- Operating profit before goodwill and exceptional items increased by 34%
to GBP805 million, a margin of 20%
- Profit after tax increased by 32% to GBP425 million
- Earnings per share before goodwill and exceptional items increased by
58% to 29.0 pence
- Proposed final dividend of 5 pence per share generating a full year
dividend of 9 pence per share
James Murdoch, Chief Executive said:
"The team delivered a set of results this year that demonstrates the health of
our business and the strong position that the Company occupies in this rapidly
evolving marketplace. We remain focused on providing the leading entertainment
service in the UK and Ireland that continues to meet the changing needs of our
customers and their families, offering great value and world-beating quality. In
a highly competitive environment, we are confident in our ability to achieve our
goals"
Results highlights
---------------------------- --------- -------- -------- --------
Key subscriber information 2005 2004 Change % Change
--------------------------
Net DTH subscriber additions(1) 83,000 81,000 2,000 2%
Total DTH subscribers(2) 7,787,000 7,355,000 432,000 6%
Net Sky+ household additions(1) 118,000 75,000 43,000 57%
Total Sky+ households(2) 888,000 397,000 491,000 124%
Net Multiroom household 82,000 23,000 59,000 257%
additions(1)
Total Multiroom households(2) 645,000 293,000 352,000 120%
---------------------------- --------- -------- -------- --------
---------------------------- --------- -------- -------- --------
Profit and loss account (GBPm) Twelve months to 30 June
----------------------------
2005 2004 Change % Change
Turnover 4,048 3,656 392 11%
Operating profit before
goodwill and exceptional items(3) 805 600 205 34%
Operating profit margin before
goodwill and exceptional items 19.9% 16.4% 3.5% 21%
Profit before taxation,
goodwill and exceptional items(3) 757 514 243 47%
Profit after taxation before
goodwill and exceptional items(3) 555 356 199 56%
Profit after taxation 425 322 103 32%
---------------------------- --------- -------- -------- --------
---------------------------- --------- -------- -------- --------
Cash flow information (GBPm) Twelve months to 30 June
----------------------------
2005 2004 Change % Change
Operating cash inflow 978 882 96 11%
Net debt 379 429 -50 -12%
---------------------------- --------- -------- -------- --------
---------------------------- --------- -------- -------- --------
Per share information (pence) Twelve months to 30 June
----------------------------
2005 2004 Change % Change
Earnings per share before
goodwill and exceptional items(3) 29.0 18.3 10.7 58%
Earnings per share 22.2 16.6 5.6 34%
---------------------------- --------- -------- -------- --------
1. In the three months to 30 June
2. As at 30 June
3. The reconciliation to the nearest equivalent GAAP measure can be found
in Appendix 2
Enquiries:
Analysts/Investors:
Andrew Griffith Tel: 020 7705 3118
Robert Kingston Tel: 020 7705 3726
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
Finsbury:
Alice Macandrew Tel: 020 7251 3801
There will be a presentation to analysts and investors at 9:30 a.m. (BST) today
at Goldman Sachs, River Court Conference & Training Centre, 7th Floor, River
Court, 120 Fleet Street, London EC4A 2BB and a press conference at 11:30 a.m. at
the same venue.
A conference call for US analysts and investors will be held at 10:00 a.m. EST
today. Details of the 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 and investors, together with this
presentation will be available today on Sky's website, which may be found at
www.sky.com/corporate.
Interviews with James Murdoch, CEO, and Jeremy Darroch, CFO, in video, audio and
text, are available from Sky's website and at www.cantos.com.
OPERATING REVIEW
At 30 June 2005, the total number of direct-to-home ("DTH") digital satellite
subscribers in the UK and Ireland was 7,787,000, representing a net increase of
83,000 subscribers in the three months to 30 June 2005 ("the quarter"). During
the year, the number of subscribers to one or more premium channels increased by
over 250,000 to 5,619,000. The Group remains on track to achieve its target of
eight million DTH subscribers by 31 December 2005.
The Group recorded gross DTH subscriber additions in the quarter of 303,000,
reflecting further progress since the launch of a number of strategic
initiatives, including the 'What do you want to watch?' marketing campaign on 1
October 2004, and despite a more challenging consumer environment.
The total number of Sky+ households increased by 118,000 in the quarter to
888,000, reflecting an 11% penetration of total DTH subscribers. Since
relaunching with a revised pricing structure in October 2003, the number of Sky+
subscribers has increased at an average rate of 110,000 every quarter, equal to
the growth in total DTH subscribers over the same period. This product continues
to receive high satisfaction ratings and attract new customers to Sky with 14%
of new additions in the quarter taking Sky+.
The total number of Multiroom households has more than doubled year on year,
increasing by 82,000 in the quarter to 645,000, 8% penetration of total DTH
subscribers.
DTH churn for the quarter (annualised) was in-line with the fourth quarter of
last year at 10.5% and down from 11.1% for the previous quarter. Churn for the
twelve months ended 30 June 2005 ("the year") was 10.3%, in-line with the
Group's stated goal of around 10%.
Annualised average revenue per DTH subscriber ("ARPU") in the quarter was
GBP384, GBP2 higher than the previous quarter reflecting increased Multiroom
subscriptions, a greater number of pay-per-view ("PPV") events and higher net
revenues from SkyBet.
During the year the business delivered a set of initiatives to further extend
the range of products and services available to its customers.
- Today, Sky is announcing the introduction of the 'Sky Gnome', an innovative
portable and wireless device that will enable customers to listen to the
audio output from their favourite digital TV and radio channels throughout
the home.
- In June 2005, Sky announced a simplified pricing and packaging structure that
offers customers increased choice and flexibility. The basic-tier package will
be replaced by six distinct "genre-mixes" allowing customers to select various
combinations of basic-tier channels alongside premium sports and movies.
Whilst increasing the number of available packages fivefold, Sky also reduced
the number of price points from 96 to 15.
- Before the end of this calendar year, customers who subscribe to a top-tier
package and have a broadband internet connection will be able to download
movies 'on-demand' and enjoy Sky Sports programming through their PC
free of charge. Initially planned to launch with over 200 movies, which will
increase over time, customers will be able to browse and download movies,
trailers, behind the scenes footage and reviews at any time through an easy to
use, intuitive application. From day one, over 5 million Sky Sports
subscribers will have access to highlights from all their favourite sports,
including Barclays Premier League and UEFA Champions League football, rugby,
golf and cricket. As an added benefit, Sky World customers will also be able
to receive the latest video updates from Sky News and Sky Sports News via
their mobile phone.
- In October 2004, Sky added Sky+160 to its product portfolio. This product
offers customers around four times as much storage as the standard Sky+
box and has two USB connections, increasing its compatibility for future
developments.
- At the same time, Sky launched a new freesat service offering customers
around 200 television and radio channels and interactive services for a
one-off fee. This provides an attractively priced alternative for
approximately 50% of UK households who either cannot receive Freeview or
require an aerial upgrade.
- Following on from the success of Sky+, Sky plans to launch Europe's most
comprehensive high definition television service ("HDTV") in the first half
of calendar year 2006. Good progress was made during the year building the
required broadcast infrastructure and facilities and developing the HDTV box,
which has the connectivity and flexibility to offer advanced services in the
future. This service will initially comprise a number of HD channels,
including sports, movies and documentaries and will offer customers the
ultimate TV experience.
- Sky Sports share of viewing (according to viewing figures from the
Broadcasters Audience Research Board ("BARB"))in UK television homes was
12% higher than the same quarter last financial year, with England playing
Australia in cricket's NatWest Challenge and the British and Irish Lions tour
of New Zealand both achieving record audience figures. During the year, Sky
concluded a number of major sports agreements including:
- Exclusive live rights from the England and Wales Cricket Board to
broadcast all international and the primary domestic cricket series in
England and Wales until 2009
- Exclusive live rights from the Rugby Football Union to broadcast England's
Autumn Internationals and Zurich Premiership matches until 2010
- Exclusive live rights to the European Rugby Cup until 2010
- Exclusive live rights from the Football League to broadcast around 100
matches per season from the League's competitions until 2009
In addition to these, Sky Sports also added coverage of equestrian events,
international netball, badminton and yachting to further increase the range of
programming on its dedicated channels, which includes coverage of over 150
different sporting disciplines.
- During the year, Sky made progress in the renegotiation of three major movie
studio contracts, focusing on better quality, better rights and improved
value. Sky Movies screens over 450 different films every week across its 11
multiplex screens, offering unrivalled choice and convenient viewing.
- Named as 'News Channel of the Year' by the Royal Television Society for the
fourth year running, Sky News remains the UK's leading news channel both in
terms of ratings and critical acclaim. Later this year, Sky News will unveil a
new on-air look and schedule when it begins broadcasting from its recently
completed state-of-the-art studio complex at Sky's main campus in Osterley.
- Sky One relaunched in September 2004 with a new on-air look and strong line-up
of acquired and commissioned programming. The channel's commitment to offer
modern, quality programming is reflected by a 3.9% increase in the share
of viewing by ABC1 adults in network homes in the first half of calendar year
2005. The upcoming Autumn schedule features a strong line-up with 'Nip/Tuck'
returning in a two series exclusive agreement, the second co-produced series
of the '4400' and new US drama series 'Weeds' and 'Threshold'.
FINANCIAL REVIEW
Total revenue for the year increased by 11% over the year ended 30 June 2004
("the comparable period") to GBP4,048 million. Operating profit before goodwill
and exceptional items increased by 34% on the comparable period to GBP805
million, resulting in operating profit margin before goodwill and exceptional
items of 20%, up from 16% for the comparable period.
The Group generated earnings per share before goodwill and exceptional items of
29.0 pence, up from 18.3 pence for the comparable period, and returned a total
of GBP551 million to shareholders through an ordinary dividend and a share
buy-back programme.
Revenue
Total revenues increased by 11% on the comparable period to GBP4,048 million.
DTH revenues increased by 12% on the comparable period to GBP2,968 million. This
was mainly driven by 6% growth in the average number of DTH subscribers and a 5%
increase in the average revenue per DTH subscriber, mainly as a result of the
January and September 2004 price rises and increased Multiroom subscription
revenues.
Wholesale revenues increased by 2% on the comparable period to GBP219 million.
After adjusting for a one-off receipt of monies from NTL following an audit of
sums due to the Group in the first quarter of last financial year, this
represents a 5% increase on the comparable period. This has primarily been
driven by the changes to wholesale prices in January and September 2004 and the
payment for carriage of Sky Sports Extra and PREMPLUS.
Advertising revenues increased by 5% on the comparable period to GBP329 million.
This has been driven by 4% growth in the UK television advertising sector and
continued growth in the Group's share of this sector.
Total SkyBet revenue for the year was GBP261 million, a 37% increase on the
comparable period. Gross margin increased from 8% to 10% driven by the
introduction of fixed odds games during the year, such as roulette and
multi-line slot games. On 8 April 2005, the Gambling Act was passed by
Parliament. Once implemented, the Act will present an opportunity to offer
'gaming' services combining TV and interactivity. 'Gaming' includes games of
chance and skill and therefore the Act will permit the launch of true casino
games such as poker, in addition to the fixed odds games already available on
SkyBet.
The SkyBuy retail service was wound down and closed during the year. This,
together with the expiry of a number of historical interactive contracts and
services led to a reduction in Sky Active revenues of GBP24 million to GBP92
million. Underlying revenues (excluding these items) rose by 10% to GBP87
million, reflecting the growth in areas such as interactive advertising, games
and third party betting and gaming.
Programming costs
Total programming costs decreased by GBP75 million on the comparable period to
GBP1,636 million. This reduction has been primarily driven by contractual
savings in the renewal of sports contracts and the benefit of improved rates at
which the group is able to purchase US dollars to satisfy its movie commitments.
Sports costs, which represent 46% of total programming costs, decreased by GBP56
million on the comparable period to GBP747 million. The renewal of the FA
Premier League and Football Association contracts led to substantially all of
this reduction which was partly offset by the Ryder Cup, a bi-annual event and
investment in production costs behind increased coverage in a number of sports,
most notably football, with an increase of 32 live Barclays Premiership games
and delayed footage or extended highlights of every Barclays Premiership match
through the Football First service.
Movie costs decreased by GBP37 million on the comparable period to GBP356
million primarily due to an improved rate at which the Group's US dollar
denominated movies were amortised as a result of the weaker dollar. Savings from
the renewal of a non-major studio agreement were offset by the additional costs
associated with an increase in the average number of movie subscribers.
News and entertainment costs were GBP171 million, an increase of GBP16 million
on the comparable period. This increase is primarily due to the higher operating
costs of Sky News following the commencement of the contract to supply news to
'five' and the coverage of the Tsunami disaster and the elections at home and
abroad. After adjusting for the GBP17 million accelerated stock amortisation
charge in the final quarter of last financial year, entertainment costs
increased by 22% on the comparable period. This increase reflects the greater
investment in acquired and commissioned programming for Sky One.
Third party channel costs increased by 1% on the comparable period to GBP362
million, representing a 6% increase in the average number of DTH subscribers
offset by a 6% reduction in the cost per subscriber. This saving has been
primarily been driven by the renewal of our contracts on improved terms and the
termination of our contract with Granada Sky Broadcasting ("GSB"), slightly
offset by new channels joining the pay-TV line-up, including FX, Turner Classic
Movies ("TCM") and UKTV Style Gardens.
Gross margin (defined as total revenues less total programming costs) for the
year was 60%, representing an increase of 7 percentage points on the comparable
period.
Other operating costs
Total other operating costs before goodwill and exceptional items increased by
GBP262 million on the comparable period to GBP1,607 million.
Transmission and related costs for the year were GBP171 million, an increase of
GBP25 million on the comparable period reflecting higher engineering, broadcast
support and maintenance costs associated with an expanding broadcast
infrastructure, resulting from projects including the creation of the new Sky
News Centre and the Advanced Technology Centre ("ATC").
Marketing costs increased by GBP119 million to GBP515 million, 13% of total
revenue, equal to the average rate over the last three years. During the year,
the Group launched a number of marketing initiatives to attract new subscribers
and drive the penetration of the yield enhancing Sky+ and Multiroom products.
This increase reflects the strong growth in the number of gross additions, with
three times as many new joiners taking Sky+ from the outset compared to last
year. As a consequence of this activity, the blended subscriber acquisition cost
("SAC") for the year was GBP237. The number of existing customers upgrading to
Sky+ increased by over 40% year on year and the number upgrading to Multiroom
increased by almost 150% over the same period. These products generate high
levels of satisfaction and offer an attractive return on investment through
lower churn and a higher propensity to take premium packages and multiple
subscriptions. Above the line marketing costs for the year were GBP74 million,
an increase of 50% on the comparable period as a result of the continuation of
the 'What do you want to watch?' campaign and marketing of the new Sky One
schedule.
Subscriber management costs increased by GBP25 million on the comparable period
to GBP396 million. This reflects the growing subscriber base, increased call
volumes due to higher levels of sales activity and a higher level of Sky+ and
Multiroom installations.
Administration costs before goodwill and exceptional items increased by GBP32
million on the comparable period to GBP289 million, mainly due to increased
technology, facility, IS development costs and a one-time charge of GBP14
million for restructuring costs following an efficiency and effectiveness review
of the business.
Betting costs increased by GBP61 million to GBP236 million in line with the
strong growth in SkyBet revenues.
Operating profit before goodwill and exceptional items increased by 34% on the
comparable period to GBP805 million. Operating profit margin before goodwill and
exceptional items increased from 16% to 20%, despite the small dilutive effect
of the structurally lower margin SkyBet business, which currently generates a
margin of around 10%.
Goodwill
The goodwill associated with planetfootball.com was fully written off in June
2004 resulting in a GBP3 million reduction in goodwill on the comparable period
to GBP116 million.
Exceptional items
During the second quarter, the Group sold its 49.5% investment in GSB to ITV for
GBP14 million cash consideration. After deducting the carrying value of the
investment in GSB and writing back the original goodwill relating to the
increase of the Group's interest in GSB to 49.5% in March 1998, which had
previously been eliminated against reserves, the disposal generated an
accounting loss under UK Generally Accepted Accounting Principles ("UK GAAP") of
GBP23 million.
In the quarter, the Group received GBP13 million from the liquidators of ITV
Digital as a full and final settlement in respect of amounts owed to the Group.
These amounts had been fully provided for in the year ended 30 June 2002
therefore generating a non-recurring operating exceptional item.
Joint Ventures
The Group's share of net operating profits from its joint ventures was GBP14
million for the year, compared to a GBP5 million net operating loss for the
comparable period. After adjusting for a one-off GBP11 million write down in
relation to Attheraces ("ATR") in the final quarter of last financial year, this
represents an increase in net operating profits of GBP8 million, generated
primarily from ATR.
Interest
Total net interest payable for the year reduced by GBP19 million to GBP62
million primarily as a result of an increase in interest receivable due to
higher levels of cash on deposit at higher interest rates.
Taxation
The total net tax charge for the period of GBP206 million includes a current tax
charge of GBP159 million, a deferred tax charge of GBP68 million and a tax
charge in relation to exceptional items of GBP4 million, offset by a GBP25
million adjustment in respect of prior years. Excluding the effect of goodwill,
joint ventures and exceptional items, the Group's underlying effective tax rate
on ordinary activities for the year was 30%.
The net GBP25 million adjustment in respect of prior years comprises a GBP7
million benefit in respect of consortium relief on losses purchased from ATR and
the favourable settlement of some prior year items.
The mainstream corporation tax liability for the year was GBP161 million and in
accordance with the quarterly instalment regime, GBP75 million was paid in the
year and GBP40 million was paid in July 2005. The final payment is due in
October 2005.
Earnings
Profit after tax for the year was GBP425 million, generating earnings per share
before goodwill and exceptional items of 29.0 pence, an increase of 58% on the
comparable period. At 30 June 2005, the total number of shares outstanding was
1,867,523,599.
Cash flow
Earnings before interest, tax, depreciation and amortisation ("EBITDA") before
exceptional items increased by 28% on the comparable period to GBP897 million.
After a GBP55 million positive movement in working capital, a GBP13 million
receipt from the liquidators of ITV digital and other items, the Group generated
an operating cash inflow of GBP978 million. After taxation of GBP103 million and
net interest payable of GBP63 million the Group utilised cash in a number of
areas, including the share buy-back programme (GBP416 million, including GBP3
million of stamp duty and commissions), capital expenditure (GBP230 million) and
dividend payments (GBP138 million) resulting in a reduction in net debt during
the year from GBP429 million to GBP379 million at 30 June 2005.
During the year, the Group progressed a number of capital expenditure and
infrastructure projects in line with the plans announced on 4 August 2004. The
Group spent GBP75 million on a combination of infrastructure projects including
the acquisition of four freehold properties previously leased at its Osterley
campus and the construction of the Sky News centre. The Group continued work on
the CRM programme to upgrade its customer service systems, investing GBP59
million during the year, with roll-out scheduled to commence in the second half
of this calendar year. As part of the Group's business continuity plan, GBP24
million was invested to build and fit out the Advanced Technology Centre. The
remaining GBP72 million, regarded as 'core' capital expenditure, was spent on IS
infrastructure, broadcast equipment and new product development, including HDTV.
IFRS
The Group is required to adopt International Financial Reporting Standards
("IFRS") in the preparation of its consolidated financial statements from 1 July
2005. In November 2005, the Group will report its first results under IFRS for
the quarter ending 30 September 2005. In order to provide comparative figures
under IFRS in advance, the Group will publish detailed information regarding the
transition on 14 September 2005. This will include audited reconciliations of
the 2005 Income Statement, Balance Sheet and Cash Flow to UK GAAP from IFRS
detailing the impact of the Group's new accounting policies, and unaudited
quarterly 2005 Income Statements to provide comparatives for 2006.
Further details on the transition to IFRS, including unaudited headline results
for the 2005 financial year, will be provided at the Group's preliminary results
presentation today.
Distributions to shareholders
The Board of Directors are proposing a final dividend of 5 pence per ordinary
share, resulting in a total dividend for the year of 9 pence per share. The
ex-dividend date will be 26 October 2005 and, subject to shareholder approval at
the Company's Annual General Meeting ("AGM"), the dividend will be paid on 18
November 2005 to shareholders of record on 28 October 2005.
At the Company's AGM on 12 November 2004, the Company received approval from
shareholders to repurchase up to 97 million shares, representing approximately
five percent of its issued share capital. During the year, the Company
repurchased for cancellation 74.3 million shares for a total consideration of
GBP416 million, including stamp duty and commissions. The programme is ongoing,
and will continue until the authority granted on 12 November 2004 expires at the
next AGM on 4 November 2005.
It remains the overall financial policy of the Board to achieve an appropriate
balance between distributions arising from strong free cash flow generation to
shareholders, and maintaining a prudent degree of strategic and financial
flexibility.
The Board considers that an on-market share repurchase programme is a flexible,
equitable and tax-efficient means by which to make distributions to shareholders
which are incremental to the ordinary dividend. As a result, the Board currently
intends to propose resolutions at the AGM in November 2005 to renew the annual
authority last granted by shareholders in 2004 to buy back up to a further 5% of
its issued share capital.
In pursuing a continued buy-back authority, the Board is sensitive to the
concerns expressed by some Independent Shareholders. Accordingly, as part of the
buy-back proposals, the Board intends to enter into an agreement with News UK
Nominees Limited, which would limit the exercise of its voting rights to the
level held at the time of the 2005 AGM (expected to be no more than 37.2%). This
voting arrangement will be conditional on the buy-back proposals being approved
by shareholders. Further details of the proposals will be sent to shareholders
in advance of the AGM.
Use of non-GAAP financial information
This results announcement contains certain information on the Group's results
and cash flows that have been derived from amounts calculated in accordance with
UK Generally Accepted Accounting Principles ("UK GAAP"), but are not themselves
UK GAAP measures. These should not be viewed in isolation as alternatives to the
equivalent UK GAAP measure and should be read in conjunction with the equivalent
UK GAAP measures. Further disclosures are also provided under "Use of Non-GAAP
Financial Information" in Appendix 2.
Forward-looking statements
This document contains certain forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995 with respect
to the Group's financial condition, results of operations and business, and
management's strategy, plans and objectives for the Group. These statements
include, without limitation, those that express forecasts, expectations and
projections with regard to the potential for growth of free-to-air and pay-TV,
advertising growth, DTH subscriber growth and Multiroom and Sky+ penetration,
DTH revenue, profitability and margin growth, cash flow generation, subscriber
acquisition costs and marketing expenditure, capital expenditure programmes and
proposals for returning capital to shareholders.
These statements (and all other forward-looking statements contained in this
document) are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the Group's control,
are difficult to predict and could cause actual results to differ materially
from those expressed or implied or forecast in the forward-looking
statements. These factors include, but are not limited to, the fact that the
Group operates in a highly competitive environment, the effects of government
regulation upon the Group's activities, its reliance on technology, which is
subject to risk, change and development, its ability to continue to obtain
exclusive rights to movies, sports events and other programming content, risks
inherent in the implementation of large-scale capital expenditure projects, the
Group's ability to continue to communicate and market its services effectively,
and the risks associated with the Group's operation of digital television
transmission in the UK and Ireland.
Information on some risks and uncertainties are described in the "Risk Factors"
section of Sky's Interim Report on Form 6-K for the period ended 31 December
2004. Copies of the Interim Report on Form 6-K are available on request
from British Sky Broadcasting Group plc, Grant Way, Isleworth TW7 5QD or from
the British Sky Broadcasting web page at www.sky.com/corporate. All
forward-looking statements in this document are based on information known to
the Group on the date hereof. The Group undertakes no obligation publicly to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Appendix 1
Subscribers to Sky Channels
As at As at
30/06/04 30/06/05
DTH homes1,2 3 7,355,000 7,787,000
Total TV homes in the UK and
Ireland4 26,066,000 26,321,000
DTH homes as a percentage of
total UK and Ireland TV homes 28% 30%
Cable - UK 3,321,000 3,287,000
Cable - Ireland 574,000 585,000
Total Sky pay homes 11,250,000 11,659,000
Total Sky pay homes as a
percentage of total
UK and Ireland TV homes 43% 44%
Sky+ homes 397,000 888,000
Multiroom homes5 293,000 645,000
DTT - UK 6 3,084,000 4,940,000
1: Includes DTH subscribers in Republic of Ireland (363,000, as at 30 June
2005).
2: DTH subscribers includes only primary subscriptions to Sky (no additional
units are counted for Sky+ or Multiroom subscriptions). This does not include
customers taking Sky's freesat offering or churned customers viewing
free-to-air channels.
3: DTH homes include subscribers taking Sky packages through Kingston
Interactive Television and Homechoice.
4: Total UK homes estimated by BARB and taken from the beginning of the month
following the period end (latest figures as at 1 July 2005). Total Ireland
homes estimated by Nielsen Media Research, conducted on an annual basis in
July with results available in September (latest figures as at July 2004).
5: Multiroom includes households subscribing to more than one digibox. (No
additional units are counted for the second or any subsequent Multiroom
subscriptions.)
6: DTT homes estimated by BARB and taken from the beginning of the following
month (latest figures as at 1 July 2005). These include Sky or Cable homes
that already take multi-channel TV.
Appendix 2
Use of Non-GAAP Financial Information
A summary of certain non-GAAP measures included in this results
announcement, together with the most comparable GAAP measure and
descriptions of certain non-GAAP measures, is shown below.
-------------------- --------------------------
Non-GAAP measure Most comparable GAAP measure
-------------------- --------------------------
Operating profit before
goodwill Operating profit
-------------------- --------------------------
Profit before taxation,
goodwill and exceptional
items Profit before taxation
-------------------- --------------------------
Profit after taxation before
goodwill and exceptional
items Profit after taxation
-------------------- --------------------------
Earnings per share before
goodwill and exceptional
items Earnings per share
-------------------- --------------------------
EBITDA Operating profit
-------------------- --------------------------
Glossary
-------------------- --------------------------
Useful definitions Description
-------------------- --------------------------
ARPU Average Revenue Per User: the amount
-------------------- spent by the Group's residential
subscribers in the quarter, divided by
the average number of residential
subscribers in the quarter,
annualised.
-------------------- --------------------------
Churn The rate at which subscribers
relinquish their subscriptions,
expressed as a percentage of total
subscribers.
-------------------- --------------------------
Digibox Digital satellite reception
equipment.
-------------------- --------------------------
EBITDA Earnings before interest, taxation,
depreciation and amortisation is
calculated as operating profit before
depreciation and amortisation or
impairment of goodwill and intangible
assets.
-------------------- --------------------------
Effective tax rate Corporation tax charge expressed as a
percentage of Profit before Tax,
goodwill, interest, exceptional items
and share of results of joint
ventures.
-------------------- --------------------------
Mainstream Corporation Current corporation tax charge for the
Tax liability year.
-------------------- --------------------------
Multichannel viewing share Share of viewers of non-analogue
terrestrial television.
-------------------- --------------------------
Multiroom Installation of one or more additional
digiboxes in the household of an
existing DTH subscriber.
-------------------- --------------------------
PVR Personal Video Recorder: Digital TV
receiver which utilises a built in hard
disk drive to enable viewers to record
without videotapes, pause live TV, and
record one programme while watching
another.
-------------------- --------------------------
Sky + Sky's fully-integrated Personal Video
Recorder (PVR) and satellite decoder.
-------------------- --------------------------
Viewing share Number of people viewing a channel as a
percentage of total viewing audience.
-------------------- --------------------------
Consolidated Profit and Loss Account for the year ended 30 June 2005
Before Goodwill Before Goodwill
goodwill and and goodwill and and
exceptional exceptional 2005 exceptional exceptional 2004
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
Notes (audited) (audited)(audited) (audited) (audited) (audited)
Turnover:
Group and
share of joint
ventures'
turnover 4,115 - 4,115 3,738 - 3,738
Less: share of
joint
ventures'
turnover (67) - (67) (82) - (82)
Group turnover 1 4,048 - 4,048 3,656 - 3,656
-------------------- ----- ------- ------- ------- ------- ------- -------
Operating
expenses, net 2,4 (3,243) (103) (3,346) (3,056) (119) (3,175)
-------------------- ----- ------- ------- ------- ------- ------- -------
EBITDA 897 13 910 702 - 702
Depreciation (92) - (92) (102) - (102)
Amortisation - (116) (116) - (119) (119)
-------------------- ----- ------- ------- ------- ------- ------- -------
Operating
profit 805 (103) 702 600 (119) 481
-------------------- ----- ------- ------- ------- ------- ------- -------
Share of joint
ventures' and
associates'
operating
results 3 14 - 14 (5) 10 5
Loss on
disposal of
investments in
joint ventures 4 - (23) (23) - - -
Profit on
disposal of
fixed asset
investments 4 - - - - 51 51
Amounts
written back
to fixed asset
investments, net 4 - - - - 24 24
Profit on
ordinary
activities
before interest
and taxation 819 (126) 693 595 (34) 561
-------------------- ----- ------- ------- ------- ------- ------- -------
Interest
receivable and
similar income 5 30 - 30 10 - 10
Interest
payable and
similar
charges 5 (92) - (92) (91) - (91)
Profit on
ordinary
activities
before
taxation 757 (126) 631 514 (34) 480
-------------------- ----- ------- ------- ------- ------- ------- -------
Tax charge on
profit on
ordinary
activities 6 (202) (4) (206) (158) - (158)
Profit on
ordinary
activities
after taxation 555 (130) 425 356 (34) 322
-------------------- ----- ------- ------- ------- ------- ------- -------
Equity
dividends 7 (170) (116)
Retained
profit for the
financial year 255 206
-------------------- ----- ------- ------- ------- ------- ------- -------
Earnings per
share - basic 8 29.0p (6.8p) 22.2p 18.3p (1.7p) 16.6p
Earnings per
share -
diluted 8 29.0p (6.8p) 22.2p 18.3p (1.7p) 16.6p
-------------------- ----- ------- ------- ------- ------- ------- -------
There were no recognised gains or losses in either year other than those
included within the profit and loss account.
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 2005
Three Three
Before months Before months
goodwill Goodwill ended 30 goodwill Goodwill ended 30
and and June and and June
exceptional exceptional 2005 exceptional exceptional 2004
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
(unaudited) (unaudited)(unaudited)(unaudited) (unaudited) (unaudited)
Group and
share of joint
ventures'
turnover 1,103 - 1,103 979 - 979
Less: share of
joint
ventures'
turnover (15) - (15) (20) - (20)
Group turnover 1,088 - 1,088 959 - 959
----------------------- ------- ------- ------- ------- ------- -------
Operating
expenses, net (857) (18) (875) (797) (32) (829)
----------------------- ------- ------- ------- ------- ------- -------
EBITDA 253 13 266 184 - 184
Depreciation (22) - (22) (22) - (22)
Amortisation - (31) (31) - (32) (32)
----------------------- ------- ------- ------- ------- ------- -------
Operating profit 231 (18) 213 162 (32) 130
----------------------- ------- ------- ------- ------- ------- -------
Share of joint
ventures' and
associates'
operating
results 2 - 2 (1) 10 9
Profit on
ordinary
activities
before
interest and
taxation 233 (18) 215 161 (22) 139
----------------------- ------- ------- ------- ------- ------- -------
Interest
receivable and
similar income 8 - 8 5 - 5
Interest
payable and
similar
charges (23) - (23) (23) - (23)
Profit on
ordinary
activities
before
taxation 218 (18) 200 143 (22) 121
----------------------- ------- ------- ------- ------- ------- -------
Tax charge on
profit on
ordinary
activities (44) (4) (48) (42) - (42)
Profit on
ordinary
activities
after taxation 174 (22) 152 101 (22) 79
----------------------- ------- ------- ------- ------- ------- -------
Equity
dividends (93) (63)
Retained
profit for the
period 59 16
----------------------- ------- ------- ------- ------- ------- -------
Earnings per
share - basic 9.2p (1.2p) 8.0p 5.2p (1.1p) 4.1p
Earnings per
share - diluted 9.2p (1.2p) 8.0p 5.2p (1.1p) 4.1p
----------------------- ------- ------- ------- ------- ------- -------
Consolidated Balance Sheet at 30 June 2005
2005 2004
GBPm GBPm
Notes (audited) (audited)
Fixed assets
Intangible fixed assets 9 301 417
Tangible fixed assets 10 526 376
Investments:
Investments in associates 1 1
Investments in
joint : Share of gross
ventures assets 47 72
: Share of gross
liabilities (26) (45)
: Transfer to
creditors 1 5
Total investments in
joint ventures and
associates 23 33
------------------------ -------- ------- ------ ------- -------
Other fixed asset
investments 2 2
Total investments 25 35
------------------------ -------- ------- ------ ------- -------
852 828
------------------------ -------- ------- ------ ------- -------
Current assets
Stocks 11 340 375
Debtors: Amounts falling due within
one year
- deferred tax asset 12 43 49
- other 12 299 321
342 370
------------------------ -------- ------- ------ ------- -------
Debtors: Amounts falling due after
more than one year
- deferred tax asset 12 57 102
- other 12 32 42
89 144
------------------------ -------- ------- ------ ------- -------
Cash and liquid resources:
- current asset
investments 54 173
- cash at bank and
in hand 643 474
697 647
------------------------ -------- ------- ------ ------- -------
1,468 1,536
------------------------ -------- ------- ------ ------- -------
Creditors: Amounts
falling due within one year 13 (1,240) (1,170)
Net current assets 228 366
------------------------ -------- ------- ------ ------- -------
Total assets less
current liabilities 1,080 1,194
------------------------ -------- ------- ------ ------- -------
Creditors: Amounts falling due
after more than one year
- long-term borrowings 14 (1,076) (1,076)
- accruals and deferred
income 14 (25) (28)
(1,101) (1,104)
------------------------ -------- ------- ------ ------- -------
Provisions for
liabilities and charges 15 (13) -
(34) 90
------------------------ -------- ------- ------ ------- -------
Capital and reserves - equity
Called-up share capital 16 934 971
Share premium 16 1,437 1,437
Employee Share Ownership
Plan ("ESOP") reserve 16 (32) (30)
Merger reserve 16 149 222
Special reserve 16 14 14
Capital redemption
reserve 16 37 -
Profit and loss account 16 (2,573) (2,524)
(34) 90
------------------------ -------- ------- ------ ------- -------
The accompanying notes are an integral part of this consolidated balance sheet.
Consolidated Cash Flow Statement for the year ended 30 June 2005
Notes 2005 2004
GBPm GBPm
(audited) (audited)
Net cash inflow from operating activities 17a 978 882
-------------------------------- ------- -------- --------
Dividends received from joint ventures 12 4
-------------------------------- ------- -------- --------
Returns on investments and servicing of finance
Interest received and similar income 28 7
Interest paid and similar charges (91) (89)
Net cash outflow from returns on investments and
servicing of finance (63) (82)
-------------------------------- ------- -------- --------
Taxation
UK corporation tax paid (101) (55)
Consortium relief paid (2) (3)
Net cash outflow from taxation (103) (58)
-------------------------------- ------- -------- --------
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (230) (132)
Receipts from sales of fixed asset investments 1 116
Net cash outflow from capital expenditure and
financial investment (229) (16)
-------------------------------- ------- -------- --------
Acquisitions and disposals
Funding to joint ventures and associates (4) (5)
Repayments of funding from joint ventures and
associates 8 6
Receipts from sales of investments in joint
ventures 14 -
Net cash inflow from acquisitions and disposals 18 1
-------------------------------- ------- -------- --------
Equity dividends paid (138) (53)
-------------------------------- ------- -------- --------
Net cash inflow before management of liquid
resources and financing 475 678
-------------------------------- ------- -------- --------
Management of liquid resources 17c 164 (511)
-------------------------------- ------- -------- --------
Financing
Proceeds from issue of Ordinary Shares - 20
Proceeds from issue of shares held in ESOP 4 -
Purchase of own shares for ESOP (14) (22)
Share buy-back (416) -
Capital element of finance lease payments 17b - (1)
Net decrease in debt due after more than one 17b - (75)
year
Net cash outflow from financing (426) (78)
-------------------------------- ------- -------- --------
Increase in cash 17c 213 89
-------------------------------- ------- -------- --------
The accompanying notes are an integral part of this consolidated cash flow
statement.
1. Turnover
2005 2004
GBPm GBPm
(audited) (audited)
Direct-to-home subscribers 2,968 2,660
Cable subscribers 219 215
Advertising 329 312
Sky Bet 261 191
Sky Active 92 116
Other 179 162
4,048 3,656
--------------------------------- ---------- ----------
2. Operating expenses, net
Before Goodwill Before Goodwill
goodwill and and goodwill and and
exceptional exceptional 2005 exceptional exceptional 2004
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited)
Programming (i) 1,636 - 1,636 1,711 - 1,711
Transmission
and related
functions (i) 171 - 171 146 - 146
Marketing 515 - 515 396 - 396
Subscriber
management 396 - 396 371 - 371
Administration
(ii) 289 103 392 257 119 376
Betting 236 - 236 175 - 175
3,243 103 3,346 3,056 119 3,175
----------------- ------- ------- ------- ------- ------- -------
(i) The amounts shown are net of GBP11 million (2004: GBP11 million)
receivable from the disposal of programming rights not acquired for
use by the Group, and GBP28 million (2004: GBP28 million) in respect
of the provision to third party broadcasters of spare transponder
capacity.
(ii) Administration costs include a goodwill amortisation charge of GBP116
million (2004: GBP119 million), net of an exceptional credit of GBP13
million (2004: nil) (see note 4).
3. Share of joint ventures' and associates' operating results
Goodwill
In the prior year, a credit of GBP11 million arose on the write back of negative
goodwill which had arisen on the acquisition of an additional 16.7% stake in
Attheraces Holdings Limited in April 2004, taking the Group's stake in
Attheraces to 50%. The remaining net GBP1 million charge relates to amortisation
of goodwill arising on the acquisition of certain joint ventures and associates.
4. Exceptional items
Credit
(charge) Taxation Credit Taxation
before (charge) 2005 before (charge) 2004
taxation credit Total taxation credit Total
GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited)
Settlement of ITV
Digital programming
debtors (i) 13 (4) 9 - - -
Exceptional
operating
items 13 (4) 9 - - -
------------------------- ------ ------ ------ ------ ------ ------
Loss on disposal of
investment in joint
ventures (ii) (23) - (23) - - -
Profit on disposal of fixed
asset investments (iii) - - - 51 - 51
Amounts written back
to fixed asset
investments,
net (iv) - - - 24 - 24
Exceptional
non-operating
items (23) - (23) 75 - 75
Total exceptional
items (10) (4) (14) 75 - 75
------------------------- ------ ------ ------ ------ ------ ------
2005
(i) Settlement of ITV Digital programming debtors
In July 2005, the Group received GBP13 million from the liquidators of ITV
Digital as a full and final settlement in respect of amounts owed to the Group.
(ii) Loss on disposal of investments in joint ventures
In November 2004, the Group sold its 49.5% investment in Granada Sky
Broadcasting Limited ("GSB") for GBP14 million in cash, realising a loss on
disposal of GBP23 million. This included the write back of GBP32 million of
goodwill which had previously been written off to reserves, as permitted prior
to the implementation of Financial Reporting Standard ("FRS") 10, "Goodwill and
Intangible Assets" ("FRS 10").
2004
(iii) Profit on disposal of fixed asset investments
In March 2004, the Group sold its 20% shareholding in QVC (UK), operator of QVC
- The Shopping Channel, for GBP49 million in cash, realising a profit on
disposal of GBP49 million.
In October 2003, the Group disposed of its listed investment in Manchester
United plc, realising a profit on disposal of GBP2 million.
(iv) Amounts written back to fixed asset investments, net
The Group reduced its provision against its minority equity investments in
football clubs by GBP33 million, due to the disposal of its investment in
Manchester United plc in October 2003, for GBP62 million in cash. The Group also
increased its provision against its remaining minority equity investments in
football clubs by GBP9 million.
5. Interest
(a) Interest receivable and similar income
2005 2004
GBPm GBPm
(audited) (audited)
Group
Interest receivable on cash and liquid
resources 29 8
Other interest receivable and similar
income - 1
29 9
----------------------------- ------- -------
Joint ventures and associates
Share of joint ventures' and associates'
interest receivable 1 1
----------------------------- ------- -------
Total interest receivable and similar
income 30 10
----------------------------- ------- -------
(b) Interest payable and similar charges
2005 2004
GBPm GBPm
(audited) (audited)
Group
On bank loans, overdrafts and other loans repayable within
five years, not by instalments:
- GBP1 billion revolving credit facility ("RCF")(i) 2 -
- GBP600 million RCF (i) 4 6
- GBP200 million RCF (ii) - 2
US$650 million of 8.200% Guaranteed Notes, repayable in 2009 33 30
GBP100 million of 7.750% Guaranteed Notes, repayable in 2009 8 8
US$600 million of 6.875% Guaranteed Notes, repayable in 2009 30 30
US$300 million of 7.300% Guaranteed Notes, repayable in 2006 14 14
Finance lease interest 1 -
92 90
------------------------------- --------- -------
Joint ventures and associates
Share of joint ventures' and associates'
interest payable - 1
------------------------------- --------- -------
Total interest payable and similar charges 92 91
------------------------------- --------- -------
(i) In November 2004, the Group entered into a GBP1 billion RCF. This facility
was used to cancel an existing GBP600 million RCF, and is available for
general corporate purposes, but was undrawn at 30 June 2005. The GBP1
billion RCF has a maturity date of July 2010. The GBP2 million charge for
the year (2004: nil) represents the commitment fee to 30 June 2005.
(ii) The GBP200 million RCF expired without being renewed on 29 June 2004.
6. Taxation
Tax charge Tax charge
(credit) on (credit) on
profit profit
before Exceptional before
exceptional tax 2005 exceptional Exceptional 2004
items charge Total items tax charge Total
GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited)
Current tax
UK corporation tax 159 4 163 127 - 127
Adjustment in respect
of prior years (8) - (8) (8) - (8)
Total current
tax charge 151 4 155 119 - 119
---------------------- ------- ------- ------- ------- -------- -------
Deferred tax
Origination
and reversal
of timing
differences 68 - 68 34 - 34
(Decrease)
increase in
estimate of
recoverable
deferred tax
asset in
respect of
prior years (17) - (17) 5 - 5
Total deferred
tax charge 51 - 51 39 - 39
---------------------- ------- ------- ------- ------- -------- -------
Share of joint
ventures' and
associates' tax
charge - - - - - -
---------------------- ------- ------- ------- ------- -------- -------
202 4 206 158 - 158
---------------------- ------- ------- ------- ------- -------- -------
All taxation relates to UK corporation tax.
7. Equity dividends
2005 2004
(audited) (audited)
GBPm GBPm
Interim dividend paid of 4.00p (2004: 2.75p)
per Ordinary Share 77 53
Final dividend proposed of 5.00p (2004:
3.25p) per Ordinary Share 93 63
170 116
------------------------------- ------ -------
The ESOP has waived its rights to dividends.
8. Earnings per share
2004
Before 2005 After
goodwill After Before goodwill
and goodwill and goodwill and and
exceptional Exceptional exceptional exceptional Exceptional exceptional
items Goodwill items items items Goodwill items items
(audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited)
Profit on
ordinary
activities
after
taxation GBP555m (GBP116m) (GBP14m) GBP425m GBP356m (GBP109m) GBP75m GBP322m
Earnings
per
share -
basic 29.0p (6.1p) (0.7p) 22.2p 18.3p (5.6p) 3.9p 16.6p
Earnings
per
share -
diluted 29.0p (6.1p) (0.7p) 22.2p 18.3p (5.6p) 3.9p 16.6p
---------- ------- ------- ------- ------- ------- ------- ------- -------
Earnings per share is shown calculated by reference to profits 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.
9. Intangible fixed assets
The movement in the year was as follows:
Goodwill
GBPm
(audited)
Net book value at 1 July 2004 417
Additions -
Amortisation charge (116)
Net book value at 30 June 2005 301
-------------------------------------- -------------
Goodwill of GBP272 million, GBP543 million and GBP5 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 of fixed assets and goodwill", 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,
which did not indicate impairment. Consistent with Group strategy, the business
plans on which these reviews were based reflect significant projected increases
in betting and other interactive revenues over the subsequent five years. The
Group continues to monitor the performance of these businesses and is satisfied
that no impairment of goodwill has occurred.
10. Tangible fixed assets
The movement in the year was as follows:
Freehold Equipment,
land Short fixtures Assets in
and leasehold and course of
buildings improvements fittings construction Total
GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited)
Net book value
as at 1 July
2004 34 24 217 101 376
Additions 25 - 66 153 244
Disposals - - (2) - (2)
Transfers - (8) 8 - -
Depreciation (2) (5) (85) - (92)
Net book value
as at 30 June
2005 57 11 204 254 526
----------------- -------- -------- -------- -------- --------
11. Stocks
2005 2004
GBPm GBPm
(audited) (audited)
Television programme rights 310 322
Digiboxes and related equipment 28 49
Raw materials and consumables 2 2
Other goods held for resale - 2
340 375
---------------------------- ---------- --------
At least 86% (2004: 87%) of the existing television programme rights at 30 June
2005 will be amortised within one year.
12. Debtors
2005 2004
GBPm GBPm
(audited) (audited)
Amounts falling due within one year
Trade debtors 134 165
Amounts owed by joint ventures and associates 6 8
Amounts owed by other related parties 1 2
Other debtors 4 3
Prepaid programme rights 47 35
Prepaid transponder rentals 15 15
Deferred tax asset 43 49
Other prepayments and accrued income 92 93
342 370
----------------------------------- --------- ---------
Amounts falling due after more than one year
Prepaid programme rights 4 6
Prepaid transponder rentals 23 30
Deferred tax asset 57 102
Other prepayments and accrued income 5 6
89 144
----------------------------------- --------- ---------
13. Creditors: Amounts falling due within one year
2005 2004
GBPm GBPm
(audited) (audited)
Trade creditors (i) 345 390
Amounts due to joint ventures and associates 3 8
Amounts due to related parties 34 40
UK corporation tax 100 48
VAT 101 92
Social security and PAYE 10 8
Proposed dividend 93 63
Defined contribution pension scheme creditor 1 1
Other creditors 42 60
Accruals and deferred income 511 460
1,240 1,170
----------------------------- ----------- ---------
(i) Included within trade creditors are GBP187 million (2004: GBP250 million) of
US dollar-denominated programme creditors. Approximately 80% (2004: 80%) of
these were covered by forward rate currency contracts.
14. Creditors: Amounts falling due after more than one year
2005 2004
GBPm GBPm
(audited) (audited)
Long-term borrowings
US$650 million of 8.200% Guaranteed Notes, repayable
in 2009 413 413
GBP100 million of 7.750% Guaranteed Notes, repayable in 2009 100 100
US$600 million of 6.875% Guaranteed Notes, repayable in 2009 367 367
US$300 million of 7.300% Guaranteed Notes, repayable in 2006 189 189
Obligations under finance leases 7 7
1,076 1,076
-------------------------------- ------------ ---------
Other
Accruals and deferred income 25 28
-------------------------------- ------------ ---------
1,101 1,104
-------------------------------- ------------ ---------
Undrawn RCFs
In November 2004, the Group entered into a GBP1 billion RCF. This facility was
used to cancel an existing GBP600 million RCF and is available for general
corporate purposes. The GBP1 billion facility has a maturity date of July 2010,
and interest accrues at a margin of between 0.45% and 0.55% above LIBOR,
dependent on the Group's leverage ratio of net debt to earnings before interest,
taxes, depreciation and amortisation ("EBITDA") (as defined in the loan
agreement). At the current ratio of Net Debt: EBITDA, the margin would be 0.45%
above LIBOR if the Group were to make a drawing on the facility.
Both the bank facilities and the publicly-traded guaranteed notes have been
issued by the Company and guaranteed by both British Sky Broadcasting Limited
and Sky Subscribers Services Limited. Additionally, the GBP1 billion RCF has
been guaranteed by BSkyB Investments Limited.
15. Provisions for liabilities and charges
Provision for
redundancy Other Total
expenses provisions provisions
GBPm GBPm GBPm
(audited) (audited) (audited
At 1 July 2004 - - -
Provided in the year 11 2 13
At 30 June 2005 11 2 13
------------------------- ----------- ---------- ----------
16. Reconciliation of movement in shareholders' funds
Movement in shareholders' funds includes all movements in reserves.
Capital Profit Total equity
Share Share ESOP Merger Special redemption and loss shareholders'
capital premium reserve reserve reserve reserve account funds (deficit)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited)
At 1 July 2004 971 1,437 (30) 222 14 - (2,524) 90
--------------- ------ ------ ------ ------ ------ ------ ------ -------
ESOP shares
utilised - - 12 - - - 7 19
ESOP shares
purchased - - (14) - - - - (14)
Profit for the
financial year - - - - - - 425 425
Dividends - - - - - - (170) (170)
Transfer from
merger reserve - - - (73) - - 73 -
Write back of
goodwill on
disposal - - - - - - 32 32
Share buy-back (37) - - - - 37 (416) (416)
--------------- ------ ------ ------ ------ ------ ------ ------ -------
At 30 June
2005 934 1,437 (32) 149 14 37 (2,573) (34)
--------------- ------ ------ ------ ------ ------ ------ ------ -------
Share buy-back
On 12 November 2004, the Company's shareholders approved a resolution at the
Annual General Meeting for the Company to purchase up to 97 million Ordinary
Shares. During the financial year, the Company purchased, and subsequently
cancelled, 74 million Ordinary Shares at an average price of GBP5.60 per share,
with a nominal value of GBP37 million, for a consideration of GBP416 million.
Consideration included stamp duty and commission of GBP3 million. This
represents 4% of called-up share capital at the beginning of the financial year.
Goodwill
In accordance with FRS 10, the Company has included the write off of GBP32
million of unamortised goodwill in the calculation of the loss on disposal of
GSB, the effect of which has been included in the profit for the financial year.
The goodwill arose on the purchase of GSB and had previously been written off to
the profit and loss reserve as permitted prior to FRS 10. Accordingly, an
adjustment has been made to write back the GBP32 million charge to the profit
and loss reserve.
At 30 June 2005, the cumulative goodwill written off directly to reserves by the
Group amounted to GBP492 million (2004: GBP524 million).
Share option schemes
During the period, the Company issued shares with a market value of GBP1 million
(2004: GBP26 million) in respect of the exercise of options awarded under
various share option schemes.
At 30 June 2005, the Group's ESOP held 5,609,212 Ordinary Shares in the Company
at an average value of GBP5.78 per share. The 1,808,303 shares utilised during
the period relate to the exercise of Long Term Incentive Plan ("LTIP"), Equity
Bonus Plan ("EBP"), Key Contributor Plan ("KCP"), Executive Share Option Scheme
and Sharesave Scheme awards.
17. Notes to consolidated cash flow statement
(a) Reconciliation of operating profit to operating cash flows
Before Before
goodwill Goodwill goodwill Goodwill
and and and and
exceptional exceptional 2005 exceptional exceptional 2004
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited) (audited) (audited)
Operating profit 805 (103) 702 600 (119) 481
Depreciation 92 - 92 102 - 102
Amortisation of goodwill and other
intangible fixed assets - 116 116 - 119 119
Loss on disposal of fixed assets 2 - 2 1 - 1
Decrease(increase) in stock 35 - 35 (5) - (5)
Decrease in debtors 34 - 34 17 - 17
(Decrease) increase in creditors (14) - (14) 170 - 170
Increase (decrease) in provision 12 - 12 (3) - (3)
Foreign exchange movement (1) - (1) - - -
Net cash inflow from operating
activities 965 13 978 882 - 882
---------------------- ------- ------- ------- ------- ------- -------
(b) Analysis of changes in
net debt
At At
1 July Cash 30 June
2004 flow Exchange 2005
GBPm GBPm GBPm GBPm
(audited) (audited) (audited) (audited)
Overnight deposits 73 172 - 245
Other cash 63 41 - 104
Cash 136 213 - 349
--------------------- ------- ------- ------- -------
Short-term deposits 338 (45) 1 294
Commercial paper 173 (119) - 54
Liquid resources 511 (164) 1 348
--------------------- ------- ------- ------- -------
Cash and liquid resources 647 49 1 697
--------------------- ------- ------- ------- -------
Debt due after more than
one year (1,069) - - (1,069)
Capital element of finance
leases (7) - - (7)
Total debt and capital
element of finance leases (1,076) - - (1,076)
--------------------- ------- ------- ------- -------
Total net debt (429) 49 1 (379)
--------------------- ------- ------- ------- -------
(c) Reconciliation of net cash flow to movement in net debt
2005 2004
GBPm GBPm
(audited) (audited)
Increase in cash 213 89
----------------------------------- ------ ------
(Decrease) increase in short-term deposits (45) 338
(Decrease) increase in commercial paper (119) 173
(Decrease) increase in liquid resources (164) 511
----------------------------------- ------ ------
Cash outflow resulting from decrease in debt and
lease financing - 76
Foreign exchange movement 1 -
----------------------------------- ------ ------
Decrease in net debt 50 676
----------------------------------- ------ ------
----------------------------------- ------ ------
Net debt at beginning of year (429) (1,105)
Net debt at end of year (379) (429)
----------------------------------- ------ ------
(d) Major non-cash transactions
2005
Corporate reorganisation
On 13 April 2005, the High Court approved a reduction in the share capital of
BSkyB Investments Limited, a 100% owned subsidiary. This formed part of a
corporate reorganisation, allowing the Company access to additional
distributable reserves.
Disposal of GSB
In accordance with FRS 10, the Group has included the write off of GBP32 million
of unamortised goodwill in the calculation of the loss on disposal of GSB, the
effect of which has been included in the profit for the financial year. The
goodwill arose on the purchase of GSB and had previously been written off to the
profit and loss reserve as permitted prior to FRS 10. Accordingly, an adjustment
has been made to write back the GBP32 million charge to the profit and loss
reserve.
2004
Share premium reduction
On 10 December 2003, the High Court approved a reduction in the Company's share
premium account of GBP1,120 million, as approved by the Company's shareholders
at the Annual General Meeting held on 14 November 2003. The reduction had the
effect of eliminating the Company's deficit on its profit and loss account as at
30 September 2003 of GBP1,106 million, and creating a non-distributable special
reserve of GBP14 million, which represents the excess of the share premium
reduction over the deficit.
WAPTV
On 30 September 2003, the Company issued 338,755 Ordinary Shares to satisfy the
remaining contingent consideration in respect of the acquisition of the
remaining 5% interest in WAPTV Limited which occurred in May 2001.
-----------------------
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 2005 has been extracted from the statutory accounts of
British Sky Broadcasting Group plc for the year ended 30 June 2005, which have
not yet been filed with the Registrar of Companies, but on which the auditors
gave an unqualified report, and which did not contain a statement under section
237 (2) or (3) of the Companies Act 1985, on 2 August 2005. The preliminary
announcement was approved by the Board of Directors on 2 August 2005.
The financial information for the three months ended 30 June 2005 and 30 June
2004 is unaudited.
The financial information for the year ended 30 June 2004 has been extracted
from the statutory accounts of British Sky Broadcasting Group plc for the year
ended 30 June 2004. The statutory accounts on which the auditors gave an
unqualified report and which did not contain a statement under section 237 (2)
or (3) of the Companies Act 1985, have been filed with the registrar of
Companies.
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: 3 August 2005 By: /s/ Dave Gormley
Dave Gormley
Company Secretary