4th May 2005 07:01
British Sky Broadcasting Group PLC04 May 2005 4 May 2005 BRITISH SKY BROADCASTING GROUP PLC Results for the nine months ended 31 March 2005 BSkyB announces 95,000 net DTH subscriber additions for the third quarter, 31% year on year growth in operating profit (before goodwill) and a 51% increase in earnings per share (before goodwill and exceptional items) to 19.9 pence • Net DTH subscriber growth of 95,000 (2004: 66,000) in the quarter to over 7.7 million (2004: 7.3 million) • Sky+ households increase by 128,000 (2004: 72,000) in the quarter to 770,000 (2004: 322,000) • Multiroom households increase by 90,000 (2004: 33,000) in the quarter to 563,000 (2004: 270,000) • Turnover increases by 10% to £2,960 million • Operating profit before goodwill increases by 31% to £574 million, a margin of 19.4% • Operating cash inflow increases by 23% to £635 million • Profit after tax before goodwill and exceptional items up 49% to £381 million • Profit after tax increases by 12% to £273 million • Earnings per share before goodwill and exceptional items increase by 51% to 19.9 pence • Net debt reduced to £414 million after returning £291 million through a share buy-back programme Commenting on the announcement, James Murdoch, Chief Executive said: "Continued focus on the implementation of our strategy is returning strongsubscriber growth, a good mix of customers, growth in Sky+ and multiroom, andsubstantial profit and cashflow. The whole team at Sky put in a strongperformance to deliver these results and we remain focussed and energetic inpursuing our long-term growth plan." Results highlights --------------------------------- -------- -------- -------- --------Key subscriber information 2005 2004 Change % Change--------------------------------- Net DTH subscriber additions(1) 95,000 66,000 29,000 44% Total DTH subscribers(2) 7,704,000 7,274,000 430,000 6% Net Sky+ household additions(1) 128,000 72,000 56,000 78% Total Sky+ households(2) 770,000 322,000 448,000 139% Net multiroom household 90,000 33,000 57,000 173%additions(1)Total multiroom households(2) 563,000 270,000 293,000 109%--------------------------------- -------- -------- -------- -------- --------------------------------- Profit and loss account (£m) Nine months to 31 March------------------------------ 2005 2004 Change % Change Turnover 2,960 2,697 263 10% Operating profit before 574 438 136 31%goodwill(3)Operating profit margin before 19.4% 16.2% 3.2% 20%goodwill Profit before taxation, 539 371 168 45%goodwill and exceptional items(3) Profit after taxation before 381 255 126 49%goodwill and exceptional items(3) Profit after taxation 273 243 30 12%--------------------------------- -------- -------- -------- -------- --------------------------------- Cashflow information (£m) Nine months to 31 March--------------------------- 2005 2004 Change % Change Operating cash inflow 635 518 117 23% Net debt(4) 414 662 -248 -37%--------------------- --------- -------- -------- -------- --------------------------------- Per share information (pence) Nine months to 31 March------------------------------- 2005 2004 Change % Change Earnings per share before 19.9 13.2 6.7 51%goodwill and exceptional items(3) Earnings per share 14.2 12.5 1.7 14%--------------------- --------- -------- -------- -------- 1. In the three months to 31 March 2. As at 31 March 3. The reconciliation to the nearest equivalent GAAP measure can be found in Appendix 2, "Use of Non-GAAP Financial Information" 4. Net debt reduced to £414 million at 31 March 2005 from £662 million at 31 March 2004 after returning £407 million to shareholders between 1 April 2004 and 31 March 2005 Enquiries: Analysts/Investors: Robert Kingston Tel: 020 7705 3726 E-mail: [email protected] Press: Julian Eccles Tel: 020 7705 3267Robert Fraser Tel: 020 7705 3036 E-mail: [email protected] Finsbury: Alice Macandrew Tel: 020 7251 3801 A conference call for UK and European analysts and investors will be held at8.30 a.m. (BST) today. To register for this, please contact Silvana Marsh atFinsbury on +44 20 7251 3801. A live webcast of this call will be available onSky's corporate website, http://www.sky.com/corporate and available to replay. There will be a separate conference call for US analysts and investors at 10.00a.m. (EST) today. Details of this call have been sent to US institutions and canbe obtained from John Sutton at Taylor Rafferty on +1 212 889 4350. OPERATING REVIEW At 31 March 2005, the total number of direct-to-home ("DTH") digital satellitesubscribers in the UK and Ireland was 7,704,000, representing a net increase of95,000 subscribers in the three months to 31 March 2005 ("the quarter"). TheGroup remains on track to achieve its target of eight million DTH subscribers by31 December 2005. Gross DTH subscriber additions for the quarter were 308,000, an increase of72,000 on the prior year. This is the second consecutive quarter that grossadditions have exceeded the levels set 12 months previously and demonstrates theGroup's ability to stimulate continued demand for pay television in acompetitive and dynamic environment. The number of Sky+ households grew strongly, increasing by 128,000 in thequarter to 770,000, representing 10% penetration of total DTH subscribers.Whilst offering an attractive upgrade for existing Sky subscribers, Sky+ alsoattracts consumers who previously had not chosen Sky. One third of new Sky+households in the quarter were first-time subscribers, higher than the twopreceding quarters and significantly higher than the 21% achieved last financialyear. As highlighted in August 2004, this has been a key area of focus. The growth in Sky+ penetration continues to drive growth in the number ofhouseholds taking two or more subscriptions, with over 50% of Sky+ subscriberstaking two or more subscriptions as at 31 March 2005. The total number ofmultiroom households increased by 90,000 in the quarter to 563,000, 7%penetration of total DTH subscribers. DTH churn (annualised) for the nine months to 31 March 2005 ("the period") was10.2%, an increase of 0.8% percentage points over the nine months to 31 March2004 ("the comparable period"). Churn (annualised) for the quarter was 11.1%following a lower level of reinstates from retention marketing activity. TheGroup expects churn to remain at around 10% over time. Annualised average revenue per DTH subscriber ("ARPU") in the quarter was £382,in-line with the three months to 31 March 2004. ARPU for the quarter was £4lower than the three months to 31 December 2004 ("the second quarter")reflecting a £1 decrease in DTH ARPU, principally driven by the seasonalmovement between subscription tiers following Christmas. ARPU generated from SkyActive and SkyBet decreased by £3 on the second quarter. During the quarter, Sky progressed the range of initiatives launched in thesecond quarter. The 'What do you want to watch?' advertising campaign continuedin March 2005, promoting the range and depth of programming available from paytelevision and encouraging consumers to re-appraise the Sky brand. Installationcharges continued to be waived on all popular Sky channel packages, eliminatingthe higher upfront costs for subscribers not choosing the top tier 'Sky World'package. Good progress was made in the quarter in building the broadcast infrastructureand production facilities required to launch high definition television ("HDTV")in 2006. On 2 March 2005, Sky announced that Thomson will be the initialsupplier of HDTV set-top boxes, which will be integrated with personal videorecorder ("PVR") functionality. The introduction of HDTV to the current productportfolio will offer our customers the highest quality viewing experienceavailable and further extend the range of products to meet the individual needsof different consumers. Sky Sports recorded its highest ever quarterly share of viewing in Sky digitalhomes. In Rugby League, Super League audiences were up 30% on the same periodlast year and in Football, this season's Carling Cup Final set a new viewingrecord for any Cup match on Sky. The final quarter of the financial year alsofeatures a strong line up of sporting events, as the domestic League andEuropean Cup competitions in Football and Rugby Union reach their final stages;in International Cricket England challenge Australia and Bangladesh in theNatwest Series; and the British and Irish Lions depart for their Rugby Uniontour of New Zealand. Sky Sports will provide the first view of Sir CliveWoodward's team when they face the Pumas at the Millennium Stadium in Cardiff on23 May 2005, and will provide live and exclusive coverage of all 11 matches fromtheir New Zealand Tour in June. Sky One and Sky Movies performed well during the quarter, with the return offlagship drama series on Sky One, such as '24' and the award winning 'Nip/Tuck,'and premieres of 'Bruce Almighty' and 'The League of Extraordinary Gentlemen' onSky Movies, all achieving strong viewing share. As it continues to broaden itsappeal to subscribers, Sky One has announced that it will broadcast a newwildlife series, 'Last Chance to Save', in the autumn and the pro-am golf'Celebrity Cup' during the August Bank Holiday weekend. On 25 February 2005, Sky News was named 'News Channel of the year' by the RoyalTelevision Society ("RTS") for the fourth year running, beating strongcompetition from the BBC and ITV. Sky News' reputation has been built on itsfast and accurate coverage of breaking news, as well as its innovative approachto covering stories as illustrated by its coverage of the 2005 General Electioncampaign and its reconstructions of the current Michael Jackson trial. FINANCIAL REVIEW The Group has delivered a strong set of financial results during the period,with a 51% increase in earnings per share (before goodwill and exceptionalitems) over the comparable period. Operating profit before goodwill increased by31% on the comparable period to £574 million, resulting in operating profitmargin before goodwill of 19.4%, up from 16.2% for the comparable period. Total revenues increased by 10% on the comparable period to £2,960 million. DTH revenues increased by 10% on the comparable period to £2,171 million. Thiswas mainly driven by 6% growth in the average number of DTH subscribers and a 3%increase in the average revenue per DTH subscriber, mainly as a result of theJanuary and September 2004 prices rises and increased multiroom revenues. Cable wholesale revenues increased by 4% on the comparable period to £166million. Adjusting for a one-off receipt of audit monies received from NTL inthe first quarter of last financial year, this represents a 7% increase on thecomparable period. This has primarily been driven by the changes to wholesaleprices in January and September 2004 and the carriage of Sky Sports Extra and PREMPLUS. Advertising revenue increased by 9% on the comparable period to £242 million,principally driven by 8% growth in the UK television advertising sector andcontinued expansion in the Group's share of this sector. Growth in SkyBet revenues accelerated during the quarter to reach £186 millionfor the period, a 40% increase on the comparable period. The introduction of newfixed odds games, such as Roulette and multi-line slot games, continued to drivegross margins, which increased by 2 percentage points on the comparable periodto 10%. On 8 April 2005, the Gambling Bill was successfully passed throughParliament, which will present further opportunities from the end of 2006 forSkyBet and Sky Active to continue to extend the range of gaming services thatthey provide. Lower revenues from the SkyBuy retail service, and from the expiry of a numberof contracts and services, led to a 22% reduction in Sky Active revenues on thecomparable period to £67 million. Underlying revenues in Sky Active (excludingthese items) rose by 5% to £62 million, reflecting growth in areas such asinteractive advertising, games and third party betting and gaming. Total programming costs decreased by £32 million on the comparable period to£1,216 million. Sports costs increased by £7 million on the comparable period to£571 million. After adjusting for the change in amortisation phasing, asdisclosed previously, sports costs would have fallen by £43 million on thecomparable period. This underlying reduction is principally due to savingsachieved in the renewal of the FA Premier League and Football Associationcontracts. Other programming costs, including Movies, News, Entertainment andThird Party Channels, reduced by £39 million on the comparable period to £645million, principally as the result of the continued weakness of the US dollar. Gross margin (defined as total revenues less total programming costs, divided bytotal revenue) increased from 54% for the comparable period to 59%. Marketing costs increased by £80 million to £379 million, 13% of total revenue.This increase reflects strong growth in gross additions and in the number ofexisting subscribers upgrading to Sky+ and multiroom. These upgrades generatehigh levels of customer satisfaction, lower churn and a higher uptake of premiumpackages and multiroom subscriptions. Whilst upgrades to existing customers doincrease marketing costs in the short-term, they offer increased yield andattractive returns on investment. Above-the-line marketing costs are higher thanthe comparable period due to the continuation of the "What do you want to watch"campaign, launched on 1 October 2004. Year on year growth in above-the-linecosts declined during the quarter to 47% as the campaign moved out of launchphase. The Group expects above-the-line marketing costs to increase by 40% to50% in the 2005 financial year compared to the 2004 financial year, in line withprevious guidance. Betting costs increased by £45 million to £168 million, in line with theincrease in SkyBet revenue. The remaining other operating costs, includingsubscriber management, transmission and related functions and administrationcosts, increased by £34 million on the comparable period to £623 million. Thisincrease is primarily attributable to increased infrastructure and broadcastsupport and development costs, including the Advanced Technology Centre, ITsystems and facility costs. Operating profit before goodwill increased by 31% on the comparable period to£574 million. Operating profit margin before goodwill increased by 3.2percentage points to 19.4%, despite the small negative mix effect of the stronggrowth in SkyBet revenue in the period. After goodwill of £85 million, the Group's share of operating profits of jointventures and associates of £12 million, loss on disposal of the Group's share inGranada Sky Broadcasting of £23 million (as disclosed in the second quarter) andnet interest payable of £47 million, the Group made a profit before tax of £431million. The total net tax charge for the period was £158 million. This reflects acurrent tax charge of £109 million, a deferred tax charge of £50 million and a£1 million tax credit from the Group's share of the tax balances in associatedundertakings. Excluding the effect of goodwill, joint ventures and exceptionalitems, the Group's effective tax rate on ordinary activities increased from29.9% for the comparable period to 30.7%, as a result of a decrease in theproportion of allowable tax deductions. The mainstream corporation tax liability for the period was £114 million and, inaccordance with the quarterly instalment regime, £39 million was paid in April2005. Profit after tax for the period grew by 12% on the comparable period to £273million. The rate of growth was lower than operating profit due to a netmovement of £98 million in exceptional items, principally resulting from thedisposal of the Group's shareholdings in QVC and Manchester United plc lastfinancial year. Earnings per share, before goodwill and exceptional items,increased by 6.7 pence on the comparable period to 19.9 pence. Earnings before interest, tax, depreciation and amortisation ("EBITDA"),excluding exceptional items, increased by 24% on the comparable period to £644million. Operating cashflow generation increased by 23% on the comparable periodto £635 million. After taking into account cash outflows, principally comprisingcapital expenditure of £172 million, the share buy-back programme of £293million (including £2 million of stamp duty and fees), dividend paymentsrelating to the final dividend for the 2004 financial year of £63 million, netinterest payable of £61 million and taxation of £64 million, the Group reducednet debt marginally from £429 million at 30 June 2004 to £414 million at 31March 2005. Capital expenditure increased by £76 million on the comparable period to £172million with further good progress being made on the Group's infrastructureprogramme in line with the plans outlined on 4 August 2004. IFRS The Group is required to adopt International Financial Reporting Standards('IFRS') in the preparation of its consolidated financial statements from 1 July2005. The Group's first results reported under IFRS will therefore be theresults for the quarter ended 30 September 2005. In order to provide comparativeinformation under IFRS in advance, the Group intends to release its results forthe year to 30 June 2005, restated under IFRS, in September 2005. Informationregarding the Group's transition to IFRS was provided in the Group's 2004 AnnualReport and the Group's interim results presentation on 2 February 2005. DIVIDEND On 2 February 2005, the Directors declared an interim dividend of 4 pence perOrdinary Share. This dividend was paid on 22 April 2005 to shareholders ofrecord on 1 April 2005. The total amount paid was £75 million and this will berecognised in the consolidated cashflow statement in the fourth quarter. CORPORATE At the Company's AGM on 12 November 2004, Sky received approval fromshareholders to repurchase up to 97 million shares, representing approximatelyfive percent of issued share capital. During the quarter, Sky repurchased forcancellation 28.5 million shares for a total consideration of £165 million,including stamp duty and commissions. As at 31 March 2005, 51.3 million shares,representing approximately 2.6% of issued share capital had been repurchased andthe total number of shares outstanding was 1,890,501,108. In August 2004, the Group announced its intention to increase the level ofdistributable reserves of British Sky Broadcasting Group plc. On 1 April 2005the Group announced that BSkyB Investments Limited, a newly-formed subsidiary ofBritish Sky Broadcasting plc, had applied to the High Court for a reduction ofits share capital. This application was approved by the High Court on 13 April2005 and has resulted in an increase in the level of distributable reservesavailable to British Sky Broadcasting plc. Use of non-GAAP financial information This results announcement contains certain information on the Group's resultsand cash flows that have been derived from amounts calculated in accordance withUK Generally Accepted Accounting Principles ("UK GAAP"), but are not themselvesUK GAAP measures. These should not be viewed in isolation as alternatives to theequivalent UK GAAP measure and should be read in conjunction with the equivalentUK GAAP measures. Further disclosures are also provided under "Use of Non-GAAPFinancial Information" in Appendix 2. Forward-looking statements This document contains certain forward-looking statements within the meaning ofthe United States Private Securities Litigation Reform Act of 1995 with respectto the Group's financial condition, results of operations and business, andmanagement's strategy, plans and objectives for the Group. These statementsinclude, without limitation, those that express forecasts, expectations andprojections with regard to DTH subscriber growth, churn and marketingexpenditure. These statements (and all other forward-looking statements contained in thisdocument) 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 materiallyfrom those expressed or implied or forecast in the forward-lookingstatements. These factors include, but are not limited to, the fact that theGroup operates in a highly competitive environment, the effects of governmentregulation upon the Group's activities, its reliance on technology, which issubject to risk, change and development, its ability to continue to obtainexclusive rights to movies, sports events and other programming content, risksinherent in the implementation of large-scale capital expenditure projects, theGroup's ability to continue to communicate and market its services effectively,and the risks associated with the Group's operation of digital televisiontransmission 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 December2004. Copies of the Interim Report on Form 6-K are available on requestfrom British Sky Broadcasting Group plc, Grant Way, Isleworth TW7 5QD or fromthe British Sky Broadcasting web page at www.Sky.com/corporate. Allforward-looking statements in this document are based on information known tothe Group on the date hereof. The Group undertakes no obligation publicly toupdate or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise. Appendix 1 Subscribers to Sky Channels Prior quarter Prior year Opening Q3 2005 Q2 2005 Q3 2004 Q4 2004 as at as at as at as at 31/03/05 31/12/04 31/03/04 30/06/04 DTH homes1,2 3 7,704,000 7,609,000 7,274,000 7,355,000 Total TV homes in 26,273,000 26,249,000 26,010,000 26,066,000the UK andIreland4 DTH homes as a 29% 29% 28% 28%percentage oftotal UK andIreland TV homes Cable - UK 3,277,000 3,292,000 3,302,000 3,321,000Cable - Ireland 584,000 584,000 575,000 574,000Total Sky pay 11,565,000 11,485,000 11,151,000 11,250,000homesTotal Sky pay 44% 44% 43% 43%homes as apercentage oftotal UK andIreland TV homes Sky+ homes 770,000 642,000 322,000 397,000 Multiroom homes5 563,000 473,000 270,000 293,000 DTT - UK 6 4,674,000 4,216,000 2,695,000 3,084,000 1: Includes DTH subscribers in Republic of Ireland (355,000, as at 31 March2005). 2: DTH subscribers includes only primary subscriptions to Sky (no additionalunits are counted for Sky+ or multiroom subscriptions). This does not includecustomers taking Sky's freesat offering or churned customers viewing free-to-airchannels. 3: DTH homes include subscribers taking Sky packages through KingstonInteractive Television and Homechoice. 4: Total UK homes estimated by BARB and taken from the beginning of the monthfollowing the period end (latest figures as at 1 April 2005). Total Irelandhomes estimated by Nielsen Media Research, conducted on an annual basis in Julywith results available in September (latest figures as at July 2004). 5: Multiroom includes households subscribing to more than one set-top box. (Noadditional units are counted for the second or any subsequent multiroomsubscriptions.) 6: DTT homes estimated by BARB and taken from the beginning of the followingmonth (latest figures as at 1 April 2005). These include Sky or Cable homes thatalready take multichannel 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 certainnon-GAAP measures, is shown below. --------------------- ---------------------------------------------------------Non-GAAP measure Most comparable GAAP measure--------------------- ---------------------------------------------------------Operating profit Operating profitbefore goodwill --------------------- ---------------------------------------------------------Profit before Profit before taxationtaxation, goodwill and exceptional items--------------------- ---------------------------------------------------------Profit after taxation Profit after taxationbefore goodwill and exceptional items--------------------- ---------------------------------------------------------Earnings per share Earnings per sharebefore goodwill and exceptional items--------------------- ---------------------------------------------------------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 year.Tax liability --------------------- ---------------------------------------------------------Multichannel viewing Share of viewers of non-analogue terrestrialshare television.--------------------- ---------------------------------------------------------Multiroom Installation of one or more additional digiboxes in the household of an existing 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 nine months ended 31 March 2005 -------------------- ----- ------------ ------------ ----------- ------------ ----------- ----------- 2004/05 2003/04 Before Nine Months Before Goodwill Nine months goodwill and Goodwill and ended goodwill and and ended exceptional exceptional 31 March exceptional exceptional 31 March items items Total items items Total £m £m £m £m £m £m Notes (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Turnover: Group and 3,012 - 3,012 2,759 - 2,759share of jointventures' turnoverLess: share of joint (52) - (52) (62) - (62)ventures' turnoverGroup turnover 1 2,960 - 2,960 2,697 - 2,697-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Operating expenses, 2 (2,386) (85) (2,471) (2,259) (87) (2,346)net-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------EBITDA 644 - 644 518 - 518Depreciation (70) - (70) (80) - (80)Amortisation 2 - (85) (85) - (87) (87)-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Operating profit 574 (85) 489 438 (87) 351-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Share of joint 12 - 12 (4) - (4)ventures' andassociates' operatingresultsLoss on disposal of 3 - (23) (23) - - -investments in jointventuresProfit on disposal of 3 - - - - 51 51fixed assetinvestmentsAmounts written back 3 - - - - 24 24to fixed assetinvestments, netProfit on ordinary 586 (108) 478 434 (12) 422activities before interest andtaxation-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Interest receivable 22 - 22 5 - 5and similar incomeInterest payable and (69) - (69) (68) - (68)similar chargesProfit on ordinary 539 (108) 431 371 (12) 359activities before taxation-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Tax on profit on (158) - (158) (116) - (116)ordinary activitiesProfit on ordinary 381 (108) 273 255 (12) 243activities after taxation-------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Equity dividends (77) (53)Retained profit for 196 190the period -------------------- ----- ------------ ------------ ----------- ------------ ----------- -----------Earnings per share - 19.9p (5.7p) 14.2p 13.2p (0.7p) 12.5pbasicEarnings per share - 19.9p (5.7p) 14.2p 13.2p (0.7p) 12.5pdiluted -------------------- ----- ------------ ------------ ----------- ------------ ----------- ----------- Consolidated Profit and Loss Account for the three months ended 31 March 2005 --------------------- ------------- --------- ------------ ------------- ------------ ------------ 2004/05 2003/04 Before Three months Before Goodwill Three months goodwill and ended 31 goodwill and and ended 31 exceptional March 2005 exceptional exceptional March 2004 items Goodwill Total items items Total £m £m £m £m £m £m (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)--------------------- ------------- --------- ------------ ------------- ------------ ------------Turnover: Group and 1,029 - 1,029 950 - 950share of jointventures' turnoverLess: share of joint (14) - (14) (19) - (19)ventures' turnoverGroup turnover 1,015 - 1,015 931 - 931--------------------- ------------- --------- ------------ ------------- ------------ ------------Operating expenses, (795) (28) (823) (776) (29) (805)net--------------------- ------------- --------- ------------ ------------- ------------ ------------EBITDA 242 - 242 176 - 176Depreciation (22) - (22) (21) - (21)Amortisation - (28) (28) - (29) (29)--------------------- ------------- --------- ------------ ------------- ------------ ------------Operating profit 220 (28) 192 155 (29) 126--------------------- ------------- --------- ------------ ------------- ------------ ------------Share of joint 4 - 4 1 - 1ventures' andassociates' operatingresultsProfit on disposal of - - - - 49 49fixed assetinvestmentsProfit on ordinary 224 (28) 196 156 20 176activities before interest and taxation--------------------- ------------- --------- ------------ ------------- ------------ ------------Interest receivable 7 - 7 2 - 2and similar incomeInterest payable and (22) - (22) (23) - (23)similar chargesProfit on ordinary 209 (28) 181 135 20 155activities before taxation--------------------- ------------- --------- ------------ ------------- ------------ ------------Tax on profit on (62) - (62) (42) - (42)ordinary activitiesProfit on ordinary 147 (28) 119 93 20 113activities after taxation--------------------- ------------- --------- ------------ ------------- ------------ ------------Equity dividends - -Retained profit for 119 113the period --------------------- ------------- --------- ------------ ------------- ------------ ------------Earnings per share - 7.8p (1.5p) 6.3p 4.8p (1.0p) 5.8pbasicEarnings per share - 7.8p (1.5p) 6.3p 4.8p (1.0p) 5.8pdiluted --------------------- ------------- --------- ------------ ------------- ------------ ------------ Notes to Financial Statements 1 Turnover The Group's turnover, whilst deriving from one class of business, has beenanalysed as follows: -------------------------------------- ------------ ----------- 2004/05 2003/04 Nine months Nine months ended ended 31 March 31 March £m £m (unaudited) (unaudited)-------------------------------------- ------------ -----------DTH subscribers 2,171 1,973Cable subscribers 166 160Advertising 242 223Sky Bet (i) 186 133Sky Active (i) 67 86Other 128 122 2,960 2,697-------------------------------------- ------------ ----------- (i) Additional detail has been provided with regard to the analysis of interactive revenues between the Group's betting and games revenues - "Sky Bet" - and other interactive revenues - "Sky Active" - and the prior yearcomparatives have been restated accordingly. 2 Operating expenses, net ---------------- ------------- ----------- ----------- --------------- ----------- ----------- 2004/05 2003/04 Nine months Nine months ended ended 31 March 31 March Before goodwill Goodwill Total Before goodwill Goodwill Total £m £m £m £m £m £m (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)---------------- ------------- ----------- ----------- --------------- ----------- -----------Programming (i) 1,216 - 1,216 1,248 - 1,248Transmission and 128 - 128 115 - 115related functions(i)Marketing 379 - 379 299 - 299Subscriber 288 - 288 279 - 279managementAdministration 207 85 292 195 87 282Betting 168 - 168 123 - 123 2,386 85 2,471 2,259 87 2,346---------------- ------------- ----------- ----------- --------------- ----------- ----------- (i) The amounts shown are net of £7 million (2003/04: nine months ended31 March: £10 million) receivable from the disposal of programming rights notacquired for use by the Group, and £22 million (2003/04: nine months ended 31March: £21 million) in respect of the provision to third party broadcasters ofspare transponder capacity. 3 Exceptional items 2004/05 (i) Loss on disposal of investments in joint ventures On 1 November 2004, the Group sold its 49.5% investment in Granada SkyBroadcasting for £14 million in cash, realising a loss on disposal of £23million. This included the write back of £32 million of goodwill which hadpreviously been written off to reserves, as permitted prior to theimplementation of Financial Reporting Standard ("FRS") 10, "Goodwill andIntangible Assets". 2003/04 (ii) Profit on sale of fixed asset investments On 7 October 2003, the Group disposed of its listed investment in ManchesterUnited plc, realising a profit on disposal of £2 million. On 1 March 2004, the Group sold its 20% shareholding in QVC (UK), operator ofQVC - The Shopping Channel, for £49 million in cash, realising a profit ondisposal of £49 million. (iii) Amounts written back to fixed asset investments, net The Group reduced its provision against its minority equity investments infootball clubs by £33 million, following the disposal of its investment inManchester United plc in October 2003 for £62 million in cash. The Group alsoincreased its provision against its remaining minority equity investments infootball clubs by a further £9 million. 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