29th Jul 2015 10:51
LONDON (Alliance News) - Sky PLC Wednesday increased its full-year dividend as it posted a rise in pretax profit, a year after it agreed to acquire Sky Italia and Sky Deutschland and changed its name from British Sky Broadcasting.
Sky posted a pretax profit of GBP1.52 billion for the year to end-June, up from GBP1.03 billion a year before, as revenue rose to GBP9.99 billion from GBP7.45 billion. Sky's profit includes a gain of over GBP1 billion related to the sale of its stake in the National Geographic Channel and a controlling stake in Sky Bet, which helped offset operating costs of GBP396 million principally related to restructuring, replacing equipment, and integrating the Italian and German businesses.
The reported results include Sky Italia and Sky Deutschland following their acquisition in November.
On an adjusted basis, including the results of the Italian and German businesses for the full year and at constant currency, pretax profit rose to GBP1.20 billion from GBP1.13 billion a year before, on revenue of GBP11.28 billion, up from GBP10.78 billion. It has translated its results from the Italian and Germany business at a constant currency rate of EUR1.31 to GBP1.
According to consensus forecasts of 20 analysts provided by the company, analysts had expected Sky to post group revenue of GBP11.3 billion.
In the UK and Ireland, revenue rose 6% to GBP7.82 billion from GBP7.37 billion, with customer growth of 506,000 over the year. In Germany and Austria revenue rose 9% to GBP1.38 billion from GBP1.26 billion, whilst revenue in Italy fell to GBP2.09 billion from GBP2.14 billion. The company said it held its customer base stable in Italy after three years of negative growth.
The company proposed a final dividend of 20.5 pence, which takes its total dividend for the year to 32.8 pence, up from 32.0 pence a year before.
Sky said that across its five territories, being the UK, Ireland, Germany, Austria and Italy, it added just under a million new customers during the year, 45% more than in the previous year. This included 158,000 new customers in the fourth quarter.
The company said its integration of the Italian and German businesses is proceeding well, and it is on track to hit its target of GBP200 million in run-rate synergies as it exits the financial year 2017.
Sky highlighted a strong year for its original content, as it launched two original shows across all of its territories in 'Fortitude' and '1992.' Looking ahead, the company said it has a pipeline of 35 drama productions in Europe, which will be on air or in production in the next three years.
Although it does not break out the subscription figures, Sky said that in the UK its over-the-top streaming service NOW TV grew strongly. It is launching a new Sky Sports monthly pass on the streaming service ahead of the Premier League season, and is introducing an upgraded streaming box in August. It launched similar services in Germany in December and in May in Italy.
"The past 12 months have been an outstanding period of growth for Sky. We've successfully completed a deal that has transformed the size and scale of opportunity for the business whilst delivering an excellent financial and operational performance as more customers chose Sky and took more of our products," said Chief Executive Officer Jeremy Darroch in a statement.
"Looking ahead, we see an expanded opportunity for growth by serving the market broadly with multiple products and services. The investments we have made have given us a strong platform on which to build, and we have a clear set of plans to deliver long-term growth and returns for our shareholders," Darroch added.
Numis reiterated its Add rating for Sky saying its results were "impressive", and citing a strong operational performance in all areas.
Liberum reiterated its Sell rating on the stock, noting that Sky's average revenue per user has remained flat over the past few quarters despite price rises.
On a call with journalists Darroch said that average revenue per user was "getting a lot less relevant" as a measure for the company as it is broadening out. Sky has traded off a bit of ARPU in Germany for volume growth in the short term, Darroch noted. In the UK, Sky expects ARPU to continue to grow over time.
Shares in Sky are trading down 0.4% Wednesday midday at 1,119.00 pence, having rise to 1,180.00p in the morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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