Results for the twelve months ended 30 June 2014

BRITISH SKY BROADCASTING GROUP PLC

Results for the twelve months ended 30 June 2014

VERY STRONG PERFORMANCE ACROSS THE BOARD

Good financial performance

· Adjusted revenue1 up 7% to £7.6 billion

· Strong finish to the year

· Adjusted basic earnings per share flat at 60.0 pence, despite investment in connected TV services and one-off step-up in Premier League costs

· 7% increase in full year dividend to 32.0 pence per share

Core businesses growing well

· Added 3.1 million new paid-for products, 23% more than prior year2

· 342,000 new customers, highest customer growth in 3 years2

· TV growth of 264,000, double rate of prior year

· Sky Sports share of viewing at highest level in seven years

· New Sky+ homepage rolled out to 8.3 million homes

New areas of business accelerating

· Over 50% TV customers now connected driving threefold increase in On Demand usage

· 19% increase in Sky Go customers

· Sky Store revenues doubled year on year

· Sky AdSmart attracted 180 advertisers in first six months, 68% new to Sky

· One in five NOW TV customers take both Entertainment and Movies monthly passes

Creating a world-class multinational pay TV business

· Acquiring 100% of Sky Italia and 57.4% of Sky Deutschland from 21st Century Fox

· Expanded growth opportunity, benefits of scale and significant synergy potential

· Combining complementary businesses with shared brand and market-leading capabilities

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1 Adjusted revenue as presented here is from recurring activities. It excludes revenues earned from the discontinued retailing of the ESPN channel of £6 million (2013: £89 million). The current period includes the consolidation of revenues from the acquired O2 broadband customers. The adjusted figures presented here differ only in respect of ESPN from those included within Appendix 1.

2 Excluding the acquired O2 customer and product base.

Jeremy Darroch, Chief Executive, commented:

"We have delivered an excellent year of growth as customers responded in record numbers to the combination of high-quality TV and innovative new services. This has resulted in the addition of 23% more products than last year and the highest rate of customer growth for three years.

"Strong demand across the board has translated to a 7% increase in revenues. Combined with a continued focus on operating efficiency, this means we have matched last year's record level of earnings per share. This is an excellent result in a year in which we have had a one-off step up in Premier League costs and invested to accelerate take-up and usage of connected TV services. As we anticipated, we are starting to see the returns from our investment come through, leading us to increase the dividend for the tenth consecutive year.

"We saw a particularly good performance in TV, adding twice as many new customers as last year. This growth was underpinned by the increasing quality and range of content that we offer for the whole family, making Sky the number one destination for customers who want the best choice of TV. Our entertainment channels - Sky 1, Sky Atlantic and Sky Living - now account for three of the top four slots in customers' ranking of must-have pay TV channels while Sky Sports enjoyed its highest share of viewing in seven years.

"Our investment to increase take-up and usage of new connected TV services is delivering excellent results. After connecting 3 million boxes this year, more than half of TV customers now have access to our market-leading On Demand services and the benefits are coming through in increased viewing, satisfaction and loyalty. Our expanded Box Sets offering has been a particular hit among customers with Game of Thrones, 24 and Grey's Anatomy each achieving over 10 million downloads over the course of the year.

"We are also making good progress in developing new revenue streams. More than one million customers now take our premium mobile TV service, Sky Go Extra, and we've opened up the movie purchase market with our Buy & Keep service in Sky Store. In addition, Sky Bet grew strongly and we attracted new advertisers to Sky with our targeted advertising service AdSmart.

"Looking ahead, we see a broader opportunity for growth than ever before as we bring our core products to more customers, and open up new revenue opportunities. After a successful year of investment, we are well placed to exploit these opportunities and continue to deliver growth and returns for shareholders."

Results Highlights

Customer Metrics (unaudited)

An additional KPI summary table containing further detailed disclosure can be found in Schedule 1.

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1 Wholesale customers taking at least one paid-for Sky channel. The customer numbers are as reported to us at June 2014.

2 Quarterly annualised. Excluding revenues earned from retailing the ESPN channel.

3 Quarterly annualised.

OPERATIONAL PERFORMANCE

We have had an excellent year of performance delivering broad growth across both products and customers while successfully executing the investment plans we set out last July.

We saw strong top-line growth across the year with adjusted revenues up by 7%, driven by strong demand across the board. Combined with a continued focus on operating efficiency, this resulted in adjusted basic earnings per share being flat year on year. This is an excellent result in a year where the business absorbed a one-off step up in Premier League costs and invested to accelerate take-up and usage of new connected TV services. A 7% increase in the full year dividend to 32.0 pence per share is the tenth consecutive year of growth and reflects the underlying strength of the business.

We continued to reap the benefits of our broadly-based approach to growth, adding 3.1 million net new paid-for subscription products in the year, 23% more than the prior year on an organic basis. With the addition of 704,000 new products in the fourth quarter, customers now take an average of 3.0 paid-for products from Sky.

We closed the year with 11.5 million retail customers, an increase of 342,000 over the year and 75,000 in the quarter. Overall, we added a third1 more customers than in the previous year, our highest rate of growth in three years.

We had another strong quarter in TV, adding 76,000 net new products in Q4, more than double the same period last year. Total annual growth of 264,000 was the strongest growth in TV since hitting the 10-million mark in 2010 and contributed to total growth in the year of 1.8 million across our TV product set.

Our investment to accelerate take-up and usage of connected TV services was key to our strong performance in TV. Demand for our expanded Box Sets offering drove upgrades to the higher-tier HD packages while Sky Go Extra, our paid-for mobile TV service, grew by a million products over the 12 month-period.

In home communications, we added 341,000 net new broadband products in the year, 50,000 in the fourth quarter. This reflects our decision, in a highly promotional environment, to focus on growing TV products and responding to strong customer demand for our connected TV services. At the end of the year, 37% of customers took all three of TV, broadband and telephony from Sky, up 2 percentage points on the prior year.

ARPU increased by a further £7 on last year to reach £576 while annualised churn for the fourth quarter was 10.7%, down slightly on last year's figure of 10.9%.

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1.Excluding the acquired O2 customer base.

Content

We have had another successful 12 months on screen. Sky's pay channels outperformed the market in share of viewing and now account for all of the top 5 'must-have' pay channels among customers, with Sky 1 rated top.

Our investment in original British production, and particularly drama, has continued to deliver good results. The stand-out success in Q4 was the critically-acclaimed Victorian thriller, Penny Dreadful. A co-production with Showtime, this has become the biggest-ever commissioned series on Sky Atlantic and will return for a second series to premiere in 2015. Meanwhile, in acquired content, the fourth series of HBO's epic Game of Thrones set new records to become the highest-rating show ever for Sky Atlantic with average viewing up 60% on series 3, supported by the availability of Box Sets of series 1-3 On Demand.

Our investment in content won external recognition in the last three months with BAFTA TV Awards for A League of Their Own, David Attenborough's Natural History Museum Alive in 3D and Sky Sports' coverage of last year's Ashes.

Sky Sports ended the year with its share of viewing at a seven-year high, boosted by the open race for the Premier League title. Sky Sports showed more games than ever before with 116 live fixtures including 49 of the 50 most watched Premier League matches. It also delivered its highest share in Sky homes on a single day for two years in the last weekend of May with a non-stop weekend of sports including the Championship Play-Off Final, the Heineken Cup Final and the Monaco Grand Prix.

Connected TV Services

Our focus in the last 12 months has been on driving take-up and usage of connected TV services to enable more customers to benefit from a much richer entertainment experience. The investment we have made to put Sky at the heart of the 'connected home' has delivered results. We connected 3 million Sky+HD boxes to broadband in the year, more than doubling our base of connected homes to 5.7 million, over 50% of all Sky TV customers.

This rapid roll-out drove a threefold increase in On Demand usage with our expanded Box Sets offering proving particularly popular. Box Set usage grew rapidly throughout the year to hit 86 million downloads in Q4, a fourfold increase year on year. With more than 250 Box Sets now available on Sky and more of the latest titles than anyone else in the market, titles like 24 and Grey's Anatomy achieved over 10 million downloads each.

The launch of a new home page for our electronic programming guide ('EPG') in March, showcasing the full range of On Demand content, helped fuel this growth. Now in 8.3 million homes, the EPG has delivered an uplift in On Demand usage. Overall, our connected customers are watching more TV and more pay TV. They are more satisfied with their service and more loyal to Sky.

It is a similar story with Sky Go. The number of Sky Go customers increased by 19% over the year to 5.5 million with viewing up by a quarter to 16 million sessions a week by the end of the year. The addition of more content and on-demand functionality has driven an increase in viewing to entertainment and movies which accounted for 60% of all Sky Go views in Q4.

Our investment in connected services is opening up attractive new sources of revenue. Revenues to Sky Store, our movie transaction service, doubled year on year with top titles including Frozen and Captain Phillips. We also launched our 'Buy & Keep' movies service in Q4 enabling customers to buy, watch and keep the very latest and best movies on their TV. This has got off to a very strong start, achieving, for example, being the number one digital retailer for the Warner Bros.' blockbuster title The Lego Movie in its first week of sales.

Our targeted advertising service, Sky AdSmart, has also had a strong start. After just six months, we have run almost 600 separate campaigns from 180 different advertisers, of whom 68% are new to Sky. We are now increasing the proportion of our inventory available through AdSmart, extending the services to our third party channels and adding additional segments. A new partnership with Johnston Press further strengthens the offering by enabling local companies to create and deliver campaigns that combine Johnston's regional print titles with TV advertising focused on specific local markets.

We continue to see a very good opportunity in wholesale. In May, we signed a new long-term distribution agreement with Virgin Media for our premium and basic channels. This week, we also announced a new deal with TalkTalk for distribution of Sky Sports and Sky Movies to its YouView customers.

Service

We have continued to make good progress in service, extending our lead in the quality of service delivery whilst also increasing the efficiency of our operations.

Our most reliable Sky+HD box is now in 83% of homes versus 75% last year. At the same time, we have continued to develop our online help centre, providing more information and tools to enable customers to resolve themselves many of the common problems that arise. As a result, the number of online help visits has doubled over two years to more than 1 million visits per week. This summer, we took another important step with the launch of our dedicated customer service smartphone app.

The results are clear in our customer satisfaction scores. Our internal satisfaction scores are at an all-time high while our One Service model, which aims to join up different elements of the service experience more effectively and now covers around 20% of customer calls, is achieving even higher scores. We also retained our lead as number 1 for customer satisfaction in the triple play sector in Ofcom's latest Customer Service Satisfaction report.

Broader Contribution

In November, we made a step change in our contribution to the communities in which we operate with the launch of Sky Academy, a set of initiatives focused on helping young people to build skills and experience. We are pleased with the progress that we have made so far with Sky Academy reaching 105,000 young people in its first year. This includes initiatives such as Sky Academy Skills Studios which sees classes of school students visit our Osterley campus to make their own TV news report on a subject linked to the curriculum in a dedicated state-of-the-art facility. To help us reach even more schools across the country, we have started construction of a second Skills Studios in Livingston to open next year. We are also trialling a major new work experience initiative for 16-18 year-olds for launch in the autumn.

Beyond Sky Academy, we launched a new cycling brand campaign in May to sit alongside our Sky Ride programme of mass participation and local cycling events and highlight the positive impact of Sky's partnership with British Cycling, tapping into the excitement around the start of this year's Tour de France in Yorkshire.

FINANCIAL PERFORMACE

We delivered a good financial performance for the twelve months to 30 June 2014. Adjusted revenue growth was 7% and this, together with continued discipline on costs, allowed us to deliver adjusted EBITDA of £1,667 million, down only 1%, despite our connected services investment and the step up in Premier League amortisation. Adjusted basic earnings per share were 60.0 pence, flat on the prior year's record level.

Unless otherwise stated, all figures and growth rates below exclude adjusting items.

Revenue

Revenue increased by 7% to £7,611 million (2013: £7,146 million) excluding ESPN revenue in both periods, with continued strong growth in both our retail and commercial businesses.

Retail subscription revenue, after adjusting for £6 million of ESPN revenue (2013: £89 million), grew by 7% to £6,249 million (2013: £5,862 million) reflecting strong product and customer growth and price rises in the year. Our investments in connected services are paying back, driven by a strong performance from Sky Store which saw revenues more than double on last year.

Our commercial businesses also performed well. Advertising revenue was up 7% to £472 million (2013: £440 million) through a combination of market growth, share gains through our consolidation of two small sales houses in this financial year and a first time contribution from AdSmart. Wholesale revenue increased by 3% to £407 million (2013: £396 million) as renewed carriage agreements and price increases were partially offset by lower customer volumes on third party platforms.

Other revenue increased by 10% to £398 million (2013: £361 million) with continued strong performance from Sky Bet which saw mobile users up 29%, driving revenues up 18% to £183 million.

Our statutory reported revenue grew 5%.

Costs

Excluding the one-off step up in the new Premier League deal of £217 million and the discontinuation of ESPN carriage, programming costs of £2,439 million (2013: £2,408 million) were up 1% in the year as we made disciplined choices across our diverse content portfolio. Sports accounted for the majority of the increase given our investment in a large number of renewed and new rights agreements. Movies costs increased from a broader grant of rights facilitating new propositions like NOW TV, Sky Go Extra and Sky Store, while payments to third party channel providers were lower than prior year as we negotiated more favourable terms on several renewed agreements.

Direct network costs of £819 million were up 15% (2013: £715 million) as we continued to grow our customer base and absorbed the acquired O2 customer base onto our network.

Marketing costs of £1,199 million (2013: £1,116 million) were driven by the increased growth of paid-for products compared to last year and promotions behind our drive to connect our base of set-top boxes. Above the line marketing was also higher as we maintained our share of voice in the market with targeted campaigns throughout the year.

Subscriber management and supply chain costs were up 6% at £688 million (2013: £647 million) as we continued to see strong growth in products and customers, invested in our connected services and integrated the acquired O2 customers into the Sky base.

Transmission, technology and fixed network costs increased by 11% to £447 million (2013: £401 million) largely due to the first time consolidation of the cost base associated with the acquired O2 broadband business. Administration costs of £542 million were broadly flat on last year (2013: £540 million).

Profits and earnings

Adjusted EBITDA of £1,667 million (2013: £1,692 million) and adjusted operating profit of £1,260 million (2013: £1,330 million) is an excellent result in a period where the business absorbed a one-off step up in Premier League costs and invested to accelerate take-up and usage of new connected TV services.

Depreciation and amortisation was up 12% at £407 million (2013: £362 million) due to the integration of the acquired O2 business, a higher base of depreciable assets with more unbundled exchanges, network upgrades carried out across the year and a higher fixed asset base as we begin to depreciate the development costs of products such as NOW TV and AdSmart.

Profit before tax was £1,186 million (2013: £1,264 million), which included the Group's share of joint ventures and associates' profits of £35 million (2013: £37 million) and a net interest charge of £109 million (2013: £103 million). Taxation for the period was £249 million (2013: £295 million), at an adjusted effective tax rate of 21% (2013: 23%) mainly as a result of the reduction in the rate of UK corporation tax.

Profit after tax for the year was £937 million (2013: £969 million), generating adjusted basic earnings per share of 60.0 pence (2013: 60.0 pence). Over the year the weighted average number of shares excluding those held by the Employee Share Ownership Plan ('ESOP') for the settlement of employee share awards was 1,562 million (2013: 1,614 million). The closing number of shares, excluding the ESOP shares, at 30 June 2014 was 1,546 million (2013: 1,573 million).

Adjusting items

Statutory operating profit of £1,161 million (2013: £1,291 million) includes a net exceptional cost of £99 million (2013: £39 million) which reflects integration costs of the acquired O2 business and the ongoing amortisation of acquired intangibles, the costs of a corporate efficiency programme undertaken through the year, offset in part by a net gain from the termination of an escrow agreement with a wholesale customer.

Statutory profit after tax of £865 million (2013: £979 million) also includes a net exceptional gain of £27 million, primarily due to a tax credit and the tax effect on all adjusting items. Full details of all of these items are set out in Appendix 1.

Cash flow and financial position

Adjusted free cash flow, excluding campus redevelopment investment, was 3% lower at £1,006 million (2013: £1,040 million) reflecting lower EBITDA and higher capital expenditure, offset by a positive working capital movement and lower cash tax.

Capital expenditure increased by £89 million to £543 million (2013: £454 million) due to the phasing of campus redevelopment investment, the integration and migration of acquired O2 customers and product development investment. Excluding the campus redevelopment, underlying capital expenditure was £481 million (2013: £442 million).

Net debt increased slightly to £1,212 million (2013: £1,183 million) as a result of the £750 million cash returned to shareholders via dividends and share buy-back in the year. Gross debt was £2,589 million, with £1,377 million of cash and cash equivalents and short-term deposits at 30 June 2014. The Group's liquidity and headroom remain comfortable.

We have once again increased our ordinary dividend. The Directors' proposed final dividend of 20.0 pence per share takes the total dividend payable in respect of the financial year to 32.0 pence per share, an increase of 7% on last year and double the level of seven years ago. Shareholders have now benefited from a decade of sustained dividend growth such that a holder of a single Sky share over that period would have received over 200 pence in dividends.

The ex-dividend date will be 13 November 2014 and, subject to shareholder approval at the 2014 Annual General Meeting, the final dividend of 20.0 pence will be paid on 5 December 2014 to shareholders appearing on the register at the close of business on 14 November 2014.

At the Company's AGM on 22 November 2013, we received shareholder approval to return up to £500 million of capital to shareholders via a share buy-back. We still have headroom to return up to £285 million to shareholders under the existing authority which runs until the 2014 AGM.

Corporate

ITV

On 17 July 2014 Sky placed a shareholding of approximately 6.4% in ITV which resulted in aggregate consideration of £481 million.

Creating the new Sky

Sky today announced it has entered into agreements with 21st Century Fox to acquire its 100% stake in Sky Italia and its 57.4% (on a fully diluted basis) interest in Sky Deutschland. The total consideration for the acquisition of Sky Italia is £2.45 billion with approximately £2.07 billion to be paid in cash and the balance to be satisfied through the transfer of Sky's 21% stake in National Geographic to 21st Century Fox at a value of £380 million.1

The acquisition of 21st Century Fox's shareholding in Sky Deutschland is for a consideration of £2.9 billion in cash, valuing Sky Deutschland at €6.75 a share. The transactions are subject to regulatory and independent shareholder approval.

The cash consideration will be funded through the market issuance of 156,132,213 new Ordinary Shares representing approximately 9.99% of the issued share capital and a combination of new debt facilities and cash resources.

Sky is also making a required offer to minority shareholders in Sky Deutschland at €6.75 a share.

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1. The value of the stake in National Geographic is fixed in US$ and converted to sterling, based on the £ to US$ exchange rate as derived from Bloomberg on 23 July 2014.

Enquiries:

There will be a presentation for analysts and investors at 8.30 a.m (BST) at Allen & Overy, One Bishops Square, London, E1 6AD. CEO, Jeremy Darroch and CFO, Andrew Griffith, will present. Participants should register by contacting Felicity Marshall on +44 20 7251 3801 or at [email protected].

There will be a separate conference call for US analysts and investors at 10.00 a.m. (EDT). To register for this please contact Dana Diver at Taylor Rafferty on +1 212 889 4350. Alternatively you may register online by using the following linkhttp://invite.taylor-rafferty.com/_bskyb/2013Q2CC/Default.htm.

A live webcast of the UK and US call will be available to analysts and investors via the BSkyB website at http://www.sky.com/corporate. Replays will be subsequently available.

Schedule 1 - KPI Summary

1 Calculations have been restated to exclude revenue earned from retailing the ESPN channel.

Use of measures not defined under IFRS

This press release contains certain information on the Group's financial position, results and cash flows that have been derived from measures calculated in accordance with IFRS. This information should not be read in isolation from the related IFRS measures.

Forward looking statements

This document contains certain forward looking statements with respect to the Group's financial condition, results of operations and business, and our strategy, plans and objectives for the Group. These statements include, without limitation, those that express forecasts, expectations and projections, such as forecasts, expectations and projections in relation to new products and services, the potential for growth of free-to-air and pay television, fixed line telephony, broadband and bandwidth requirements, advertising growth, DTH and OTT customer growth, Multiscreen, On Demand, NOW TV, Sky Go, Sky Go Extra, Sky+, Sky+HD and other services penetration, revenue, administration costs and other costs, advertising growth, churn, profit, cash flow, products and our broadband network footprint, content, wholesale, marketing and capital expenditure and proposals for returning capital to shareholders. Other factors which may cause future outcomes to differ from those foreseen in forward-looking statements include, but are not limited to: general economic and business conditions; demand for the Company's products and services; competitive factors in the industries in which the Company operates; exchange rate fluctuations; legislative, fiscal and regulatory developments; political risks; terrorism, acts of war and pandemics; changes in law and legal interpretations affecting the Company's intellectual property rights and internet communications; and the impact of technological change.

Although the Company believes that the expectations reflected in such forward looking statements are reasonable, these statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our 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. Information on the significant risks and uncertainties are described in the "Principal risks and uncertainties" section of Sky's Annual Report for the full year ended 30 June 2013 (as updated in Sky's results for the six months ended 31 December 2013). Copies of the Annual Report and 31 December 2013 results are available from the British Sky Broadcasting Group plc 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.

Glossary of Terms

A glossary of terms is included within the Annual Report and on our corporate investor relations web page at http://corporate.sky.com/investors/glossary. Copies of the Annual Report are available from the British Sky Broadcasting Group plc web page at www.sky.com/corporate and in hard copy from the Company Secretary, British Sky Broadcasting Group plc, Grant Way, Isleworth, Middlesex TW7 5QD.

Appendix 1 - Consolidated Financial Information

Consolidated Income Statement - reconciliation of statutory and adjusted numbers

Notes: explanation of adjusting items for the year ended 30 June 2014

A. Revenue of £15 million relating to termination of an escrow agreement with a current wholesale operator.

C. Costs of £31 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business.

D. Costs of £15 million in relation to a corporate restructuring and efficiency programme and costs of £1 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business.

E. Costs of £3 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business and costs of £3 million in relation to a corporate restructuring and efficiency programme (principally an impairment of £2 million in relation to associated intangible and tangible assets).

F. Costs of £13 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business (including amortisation of £4 million in relation to associated intangible assets).

G. Costs of £24 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business (including amortisation of £23 million in relation to associated intangible assets), costs of £22 million relating to a corporate restructuring and efficiency programme and costs of £2 million relating to an expense as a result of the termination of an escrow agreement with a current wholesale operator.

I. Remeasurement of all derivative financial instruments not qualifying for hedge accounting and hedge ineffectiveness.

J. Tax adjusting items and the tax effect of above items.

Notes: explanation of adjusting items for the year ended 30 June 2013

B. Costs of £1 million relating to a corporate efficiency programme.

C. Credit of £32 million relating to a credit note received following an Ofcom determination and costs of £3 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business.

D. Costs of £1 million relating to a corporate efficiency programme.

E. Credit of £33 million relating to the final settlement of disputes with a former manufacturer of set-top boxes (net of associated costs and including an impairment of £6 million in relation to associated intangible assets), costs of £31 million relating to one-off upgrade of set-top boxes, costs of £25 million relating to a programme to offer wireless connectors to selected Sky Movies customers, costs of £2 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business and costs of £1 million relating to a corporate efficiency programme.

F. Costs of £1 million relating to a corporate efficiency programme, significantly an impairment of associated intangible and tangible assets, and £3 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business.

G. Costs of £29 million relating to a corporate efficiency programme, primarily redundancy costs and including an impairment of £5 million in relation to associated intangible and tangible assets, and £7 million relating to the acquisition and integration of the O2 consumer broadband and fixed-line telephony business, including amortisation of £4 million in relation to associated intangible assets.

H. Profit on disposal of the Group's interest in MUTV Limited.

I. Remeasurement of all derivative financial instruments not qualifying for hedge accounting and hedge ineffectiveness.

J. Tax adjusting items and the tax effect of above items.

Consolidated Income Statement for the year ended 30 June 2014

Consolidated Statement of Comprehensive Income for the year ended 30 June 2014

 Consolidated Balance Sheet as at 30 June 2014

Consolidated Cash Flow Statement for the year ended 30 June 2014

Consolidated Statement of Changes in Equity for the year ended 30 June 2014

Notes to the consolidated financial statements

1 Basis of Preparation

The financial information set out in this preliminary announcement does not constitute statutory financial statements for the years ended 30 June 2014 or 2013, for the purpose of the Companies Act 2006, but is derived from those financial statements. Statutory financial statements for 2014, on which the Group's auditors have given an unqualified report which does not contain statements under s. 498(2) or (3) of the Companies Act 2006, will be filed with the Registrar of Companies by 31 December 2014. Statutory financial statements for 2013 have been filed with the Registrar of Companies. The Group's auditors have reported on those accounts; their reports were unqualified and did not contain statements under s. 498(2) or (3) of the Companies Act 2006.

Whilst the financial information included in this press release has been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRS. The accounting policies applied in preparing this financial information are consistent with the Group's financial statements for the year ended 30 June 2013 except in relation to the mandatory adoption of new accounting standards and revisions and amendments to existing accounting standards, none of which had any significant impact on the Group's results or financial position.

The Group maintains a 52 or 53 week fiscal year ending on the Sunday nearest to 30 June in each year. In fiscal year 2014, this date was 29 June 2014, this being a 52 week year (fiscal year 2013: 30 June 2013, 52 week year). For convenience purposes, the Group continues to date its consolidated financial statements as at 30 June and to refer to the accounting period as a "year" for reporting purposes.

2 Revenue

3 Operating expense

4 Investment income and finance costs

(i) Not qualifying for hedge accounting.

5 Taxation

Taxation recognised in the income statement

Taxation relates to a £215 million UK corporation tax charge (2013: £275 million) and £2 million overseas corporation tax charge (2013: £3 million).

6 Earnings per share

The weighted average number of shares for the year was:

Basic and diluted earnings per share are calculated by dividing the profit for the year into the weighted average number of shares for the year. In order to provide a measure of underlying performance, management have chosen to present an adjusted profit for the year which excludes items that may distort comparability. Such items arise from events or transactions that fall within the ordinary activities of the Group but which management believes should be separately identified to help explain underlying performance.

7 Dividends

The 2014 final dividend proposed is 20.0 pence per ordinary share being £309 million. The dividend was not declared at the balance sheet date and is therefore not recognised as a liability as at 30 June 2014.

8 Goodwill

9 Intangible assets

10 Property, plant and equipment