Results for the twelve months ended 30 June 2015

SKY PLC

Results for the twelve months ended 30 June 2015

OUTSTANDING RESULTS IN A YEAR OF TRANSFORMATION

Excellent financial performance

· 5% increase in group revenue to £11,283 million

· 18% increase in operating profit to £1,400 million

· 3% increase in full year dividend per share

Growing customer demand and loyalty

· 973,000 new customer additions, 45% more than prior year

· 4.6 million new paid-for subscription products

· Stand-out performance on churn: under 10% in each market

Strong performance across all five territories

· Highest organic customer growth for 11 years in UK and Ireland to pass 12-million milestone

· Highest-ever customer growth in Germany and Austria

· Italy held customer base stable after three years of negative growth

Building for the future

· Growing momentum in entertainment: 35 original dramas planned in the next three years

· Scaling new businesses: revenues from Sky Store, AdSmart and Sky Vision up 122%

· Good progress with bringing the three Skys together: integration working well

Our statutory results include the results of Sky Italia and Sky Deutschland following acquisition on 12 November 2014. We have also included the results on an "adjusted like for like" basis for the full 12 month period to 30 June 2015 down to operating profit with comparative figures, translated at a constant currency of €1.31:£1. Unless otherwise stated, the narrative is on an adjusted like for like basis.

Jeremy Darroch, Group Chief Executive, commented:

"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.

"It's clear that the steps we have taken to broaden out our business are paying off. By distributing our content over multiple platforms and launching new products and services, we are now able to offer something for every household.

"The strength of the customer response is evident in our results: across the group, we added almost one million new customers over the year, 45% more than the prior year. Our operating momentum delivered a 5% increase in revenues which combined with a relentless focus on costs to achieve an 18% increase in operating profit. This was an excellent performance in a year of such change for the business.

"The UK and Ireland, where our strategy is most progressed, put in a particularly strong performance. We passed the 12-million customer milestone with the highest growth in 11 years; we surpassed 38 million paid-for subscription products; and we delivered the lowest churn in 11 years. This is the direct result of the investments we've made in connected services and quality content with more than 7 million customers now connected.

"Germany and Italy also posted strong performances. Germany delivered its highest-ever customer growth, while Italy maintained its subscriber base in a tough market. Both businesses also achieved significantly increased customer loyalty, thanks to continued investment in the customer experience.

"This has been a big year on screen. Across the portfolio, we've secured a series of big rights deals and made exciting progress in our push into original content. Crime drama Fortitude and Italian political drama 1992 became the first of our home-grown dramas to launch simultaneously across all five territories and there's much to look forward to. We're taking another step up in 2016 with a string of new commissioned dramas, including crime drama, The Last Panthers, coming this autumn, and The Young Pope, a major new co-production with HBO and Canal+. Both show the scale of our ambition as we build a new European powerhouse for TV content.

"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."

Results highlights

Group operational performance (Q4)

Group financial performance (12 months)

SUMMARY OF GROUP OPERATIONAL AND FINANCIAL PERFORMANCE

We achieved an excellent year of growth as the investments we made in content and innovation attracted record numbers to Sky and drove loyalty among existing customers to new highs.

Group revenues for the year increased by 5% to £11,283 million. This translated into an 18% increase in operating profit to £1,400 million, an outstanding result in a year of change for the business. Reflecting the strength of this performance, the Board has proposed a full-year dividend of 32.8 pence per share. This is a 3% increase on the prior year and represents the eleventh consecutive year of growth in the dividend.

Our financial performance was fuelled by strong operating momentum across the 12-month period with growing customer demand contributing to a strong finish to the year.

Across our five territories (UK, Ireland, Germany, Austria & Italy), we added just under a million new customers at 973,000. This was 45% more than the prior year and included 158,000 new customers in Q4. At the same time, we increased our paid-for subscription products by 4.6 million for the year, reflecting strong demand across the breadth of our offering. This included 829,000 new paid-for products in Q4.

UK and Ireland

At the heart of the group results was an outstanding performance in the UK and Ireland which delivered revenues up 6% to £7,820 million and operating profit up 12% to £1,350 million. Customer growth of 506,000 was the highest annual organic customer growth in eleven years and took our base past the 12-million milestone. Q4 growth of 124,000 was 65% higher than the previous year and the highest organic growth for a fourth quarter in six years.

Paid-for product growth in the UK and Ireland for the year was 3.3 million, taking us past 38 million products. Within this, we delivered 721,000 new subscription product sales in Q4, bolstered by accelerated growth across TV and broadband. Quarterly TV growth increased by 49% to 113,000, while broadband additions of 96,000 were up 92% year on year.

We achieved churn of 9.8% on a 12-month rolling basis, a reduction of 110 basis points on the prior year and the lowest churn in 11 years.

Germany and Austria

Sky in Germany and Austria also delivered a strong year's performance, achieving a 9% increase in revenues to £1,377 million (2014: £1,262 million) and an 81% improvement in operating profit to record a loss of £11 million (2014: -£57 million). We added 467,000 new customers, the highest customer growth since launch, including 55,000 new customers in Q4.

Total product growth in Germany and Austria for the year was 969,000, a 56% improvement on the prior year, with the addition of 127,000 products in Q4. Meanwhile, churn fell by 180 basis points on the prior year to 8.6% aided by the impact of 24-month contracts.

Italy

Sky in Italy delivered revenues of £2,086 million, down principally due to the absence this year of wholesale revenue from Champions League rights. This, combined with a disciplined approach to costs achieved a 56% improvement in operating profit to £61 million (2014: £39 million). We held our customer base stable at 4.7 million after three years of decline - a good result in a challenging market. Meanwhile, we added 387,000 paid-for products with a decline of 19,000 in Q4 after completing the one-off repackaging of customers onto HD products.

Churn fell to to 9.6% on a 12-month rolling basis as customers responded to the investments we have made in the viewing experience.

Content

2015 has been a strong year on screen as we hit a number of important milestones to advance our ambition to create a powerhouse for content in Europe. We grew our capability in original production, landing a series of homegrown dramas at scale, while also strengthening our offering across the portfolio with the agreement of a number of key rights deals.

Fortitude and 1992 became the first of our home-grown dramas to premiere simultaneously across all five territories in the spring. Building on that success, we launched our first original production out of Germany in March, crime drama 100 Code, attracting a total of 1.8 million views over the series. Meanwhile, in the UK and Ireland, our own commission Enfield Haunting delivered the highest-ever audience for a show on Sky Living and the third-highest audience for a Sky original drama series.

We have established good momentum in original production with a clear set of plans for 2016. In drama, we now have a mix of pan-European and local projects in the pipeline with 35 productions in development, on air or in production in the next three years. At least 10 of these will launch as priority projects across Europe.

Our own Sky original productions are designed to stand shoulder to shoulder with the best shows from around the world as we continue to act as the biggest partner for the major studios outside the US. In April, the fifth series of HBO hit Game of Thrones launched exclusively on Sky. It set a new record for a show on Sky in Germany and Austria with 5.4 million views across the series while the finale achieved a record audience of 3.1 million in the UK and Ireland.

Elsewhere in the portfolio, we've completed a series of important sports rights deals which put Sky in a strong position for the coming year.

In the UK and Ireland, Sky Sports has concluded a total of 35 deals in the last 18 months. We achieved success in the Premier League auction in February with the rights to 126 live games a season from 2016 to 2018, three times as many live matches as any other broadcaster. Additionally, we secured exclusive live coverage of The Open golf championship and strengthened our offering in boxing with the extension of our exclusive partnership with Matchroom Sport in May. This will see us offer up to 120 nights of live boxing over the next six years. Also in boxing, the Mayweather Pacquiao pay-per-view fight in May became the highest grossing pay-per-view fight ever for Sky in the UK and Ireland, and also in Germany and Austria.

In Italy, we strengthened our position in football by winning the live and exclusive rights to all 472 matches in Serie B football for the next three seasons. When added to the rights to all Serie A matches, of which one third are exclusive, and all Europa League matches, this confirms Sky as the number 1 choice for football fans in Italy.

Innovation

2015 has been a record-breaking year of innovation for Sky as we transformed the viewing experience for customers across our markets.

In the UK and Ireland, we firmly established Sky at the heart of the connected home, connecting more than one million set-top boxes to the internet to surpass 7 million households.

With almost 65% of Sky homes now connected, on demand usage grew steeply as customers embraced the greater choice and flexibility it offers. Total on demand downloads surpassed 1.5 billion in 2015, up 60% on the prior year.

Our investment in Sky Box Sets has proven particularly successful. In a little over two years, we've established clear market leadership and created an entirely new service to add more value for customers. Sky Box Sets has generated more than 600 million views since launch while viewing in 2015 was equivalent to our fourth most popular Sky channel.

We see opportunity ahead to expand our connected homes strategy to Germany and Austria and Italy. Though less advanced than the UK and Ireland, our strategy in Italy is progressing well. We had connected 1.7 million households at the end of June, just over one third of the customer base, driving a 136% increase in on demand downloads over the year. Meanwhile, we are only just getting going in Germany. We launched our connected box service in satellite homes in December and had connected around 250,000 boxes by the end of June.

As we establish our leadership in connected TV services, we are opening up attractive new revenue streams. In 2015, we increased revenues to Sky Store, our movie purchase and rental service, by 77% for the year, thanks to a growing contribution from Buy & Keep, launched just over a year ago. With all six major studios now on board, this continued to grow strongly, delivering more sales on Universal title Fifty Shades of Grey, for example, than any digital retailer has ever sold on one of their titles in the UK. Currently available only in the UK and Ireland, we see the potential to roll Sky Store out across the rest of our territories over time.

Away from our core TV platform, we continued to make good progress in developing our streaming services as an effective new way of distributing our content to customers. In the UK, NOW TV grew strongly, selling almost three times as many sports passes as last year thanks to increased awareness and the introduction of the new NOW TV week pass. We're continuing to build momentum with NOW TV into the summer with the launch of the new Sky Sports month pass and the introduction of a new faster box in August.

Building on the success of NOW TV, we launched a brand new Sky Online service in Germany in December with a streaming box based on the same technology in the NOW TV box. We followed this with the launch of a similar streaming box to support Sky Online in Italy in May. We also opened up new headroom for growth in Italy with a new IPTV service in April in partnership with Telecom Italia. This gives us access to the many Italian households who are unable to install a satellite dish.

Away from the main TV set, we extended our lead as Europe's biggest mobile TV provider as we continue to see increased customer appetite to watch content flexibly. Sky Go in the UK and Ireland surpassed 6 million registered households by year-end, while Sky Go Extra, our paid-for service, became Sky's fastest-ever growing product. In Italy, Sky Go reached 50% of all Sky homes with 2.4 million registered households and in Germany and Austria, Sky Go closed the year with 1.6 million registered households.

Service

In a fast-moving market with an ever-greater choice of products and providers, we believe our capability in service delivery gives us a competitive advantage.

Our main focus for 2015 has been on building out our digital capabilities in service, simplifying the customer experience whilst improving efficiency. In the UK and Ireland, where our strategy is most advanced, we succeeded in reducing the number of calls to our service centres by 11% as record numbers of customers interacted with us online, via our service app or through our automated voice service. We ended the year with twice as many visits to our online help centre as calls to our service centres.

At the same time, we closed the year with customer satisfaction at a record high. This was reflected in the latest Ofcom survey which showed Sky leading the market on customer satisfaction with the fewest complaints across TV, broadband and home phone services.

In Italy, we reduced our calls per customer by 12% over the year as we moved more customer interactions online with downloads to our self service mobile app surpassing 1.5 million by year-end. Meanwhile, we almost doubled customer satisfaction scores on the prior year.

Synergies and integration

Eight months post completion of the acquisition of Sky Italia and Sky Deutschland, integration is proceeding well. We have achieved good collaboration across the group and have started working on a clear set of priority workstreams that will help to bring the businesses closer together and improve efficiency across the group.

In technology, we are making good progress towards establishing a roadmap for a single set-top box across the group and are also working to align the development roadmap for our OTT products. As part of this, we have established a virtual technology and product team to design and build common products and OTT infrastructure for use across all five territories.

In content, we have established a clear structure for commissioning, with a good mixture of local and international projects in the pipeline and agreement on which shows will be shared as priority projects across Europe in the next three years.

Meanwhile, we are building on the strength of the Sky brand in the UK and Ireland by rolling out our Sky 'spectrum' brand to Italy and Germany. In addition, we are implementing a common look and feel across all our channels by summer 2016.

We are on track to hit our target of £200 million run-rate synergies as we exit FY2017.

GROUP FINANCIAL PERFORMANCE

To provide a more representative analysis of ongoing performance of the Group, all commentary down to the operating profit level for the Group is on an adjusted basis as if we had owned Italy and Germany for the full year from 1 July. The financial results of Italy and Germany are translated into sterling at a constant currency rate of €1.31:£1.

Unless otherwise stated, adjusted figures below are from continuing operations and on a recurring basis excluding i) the impact of Sky Bet as this is presented as a discontinued operation; ii) set-top-box sales to Italy which are now an intra-Group transaction; and iii) ESPN carriage revenue in the UK and Ireland from FY14 comparatives, as we no longer retail the channel.

Numbers below the operating profit line for the Group consolidate Italy and Germany only for the actual period of ownership from 12 November and are on an adjusted basis.

Our statutory financial reporting consolidates Italy and Germany for the period from 12 November 2014 to 30 June 2015. During this period Italy contributed revenue of £1,297 million and operating profit of £25 million while Germany contributed revenue of £866 million and an operating loss of £21 million.

Revenue

We achieved excellent growth in group revenues which were up 5% to £11,283 million (2014: £10,776 million). Revenue in Germany was up 9% to £1,377 million (2014: £1,262 million) whilst revenue in the UK was up 6% to £7,820 million (2014: £7,368 million). Revenues in Italy remained resilient at £2,086 million (2014: £2,140 million) despite the tough economic backdrop.

We have delivered strong rates of growth across all of our main revenue streams with good consumer demand for our products and services, helping drive subscription revenue up 5% whilst transactional revenue was our fastest growing area with revenue up 22%. We also achieved good growth in both advertising (+4%) and wholesale (+5%) revenues highlighting the strength of our ability to monetise content.

Subscription revenue growth of 5% was underpinned by excellent customer growth across the Group of almost one million customers and strong product growth of 4.6 million, with the largest proportion of revenue growth continuing to be delivered through the UK where revenues were up over £300 million. Alongside this, our best year of customer growth in Germany drove a 10% increase in subscription revenues, whilst in Italy we held total customers and revenue flat.

Transactional revenues increased by 22% to £173 million (2014: £142 million) as we benefited from the success of our Buy and Keep service, which surpassed weekly revenue of £1 million in Q4, and NOW TV transactions, which totalled almost 1.5 million over the past twelve months.

Our content related revenues also performed well. Wholesale and syndication revenues were up 5% to £550 million (2014: £524 million) largely driven by continued growth in the UK where revenues were up 19% as success on screen led to more favourable terms for our channels with wholesale partners. Alongside this, revenues were strong through the distribution of our programming internationally and the first time consolidation of Znak&Jones and Love Productions. In Italy, underlying wholesale revenues were broadly flat year on year (excluding the benefit in the prior year from Champions League resale revenues), whilst revenues in Germany were slightly down following the successful migration of former Deutsche Telekom wholesale customers to a retail relationship in the prior year.

We delivered good growth in advertising revenues of 4% to £716 million (2014: £690 million) with Germany delivering excellent growth of 26% through higher sellout rates and increased inventory around Bundesliga. Advertising revenues in the UK grew strongly, up 5%, due to the benefit of incremental AdSmart revenues combined with Sky Media increasing their share of net advertising revenue by almost 170 basis points, whilst advertising revenue was down in Italy as we lapped the €27 million benefit of the FIFA World Cup revenues in Q4 last year.

Costs

Total Group costs grew by just 3%, well below the rate of revenue growth, to £9,883 million (2014: £9,591 million) as we maintained tight discipline over our operating cost base while continuing to invest where our customers see the greatest value.

Programming costs increased 5%, in line with revenue growth as we increased the depth and breadth of our offering. We launched the exclusive ITV Encore channel in the UK in June 2014 and expanded our channel line-up in Germany, as well as having a full-year impact of the new Sky Atlantic channel in Italy. We continue to invest in a diverse content portfolio, with an enhanced box set offering in the UK and increased investment on Sky originated content, with successes including Fortitude and 1992. The strong growth in Sky Store revenues has driven an increase in our transactional programming costs.

Our network costs in the UK were up only 3%, well below the rate of home communications revenue growth.

Sales, General and Administration costs grew by just 1% as the higher up-front cost of strong subscriber growth in Germany was offset by efficiencies made across the UK and Italy as part of their respective operating efficiency programmes.

Profits and earnings

Operating profit grew strongly, up 18% to £1,400 million (2014: £1,185 million) as we combined excellent revenue growth with careful choices within our cost base whilst continuing to invest in programming. This has driven a 140 basis point expansion in our operating margin.

The share of joint ventures and associates' profits was £28 million (2014: £35 million) and net finance costs increased by £91 million to £200 million (2014: £109 million) due to the interest charge associated with an additional £5.4 billion of gross debt that we issued during the year.

The tax charge of £251 million (2014: £237 million) was at an effective tax rate of 21%.

Profit after tax for the year grew by 6% to £945 million (2014: £892 million) resulting in adjusted earnings per share of 56.0 pence (2014: 57.1 pence) after accounting for the higher number of shares following our issuance in July 2014. 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 1,690 million (2014: 1,562 million). The closing number of shares excluding the ESOP shares at 30 June 2015 was 1,704 million (2014: 1,546 million).

Adjusting items

Statutory profit for the year includes a gain of over £1 billion relating to a £492 million gain on the disposal of available-for-sale investments; a £299 million gain on the disposal of our stake in the National Geographic Channel; and a profit of £600 million on the sale of a controlling stake in Sky Bet. This was partially offset by operating expenses of £396 million principally comprising the costs of a corporate efficiency and restructuring programme, the costs of a programme to replace aged customer equipment, advisory and transaction fees incurred on the purchase of Sky Italia and Sky Deutschland, costs of integrating those businesses in the enlarged Group and the ongoing amortisation of acquired intangible assets.

Statutory profit after tax was £1,332 million (2014: £820 million).

Following the sale of a controlling stake in Sky Bet on 19 March 2015, the results of Sky Bet are now presented as a discontinued operation. The sale resulted in a profit on disposal of £600 million which is included within profit for the year from discontinued operations.

Group cash flow and financial position

Group free cash flow increased year on year by 20% to £1,060 million (2014: £885 million) while net debt increased to £5,056 million (2014: £1,212 million) as a result of the acquisition of Sky Deutschland and Sky Italia in November 2014. Gross debt as at 30 June 2015 was £7,534 million with cash of £2,478 million. For an analysis of movements in net debt see Appendix 2. The ratio of net debt to EBITDA at 30 June was approximately 2.5 times. Sky has an investment grade credit rating, being rated BBB by Standard & Poors and Baa2 by Moody's, both with stable outlook.

Distribution to shareholders

The Directors' proposed final dividend of 20.5 pence per share takes the total dividend payable in respect of the financial year to 32.8 pence per share, an increase of 3% on last year.

The proposed dividend continues the track record of shareholders benefiting from our strong financial performance and represents the eleventh consecutive year-on-year increase in the dividend.

The ex-dividend date will be 22 October 2015 and, subject to shareholder approval at the 2015 Annual General Meeting, the final dividend of 20.5 pence will be paid on 20 November 2015 to shareholders appearing on the register at the close of business on 23 October 2015.

CORPORATE

At the conclusion of this year's AGM in November, David DeVoe, Danny Rimer and Arthur Siskind will step down from the Board. Immediately following the AGM, it is intended that John Nallen, CFO of 21st Century Fox, will be appointed by the Board as a Non-Executive Director. As a result of these proposed changes, the number of Board members would reduce from 14 to 12 and at least half of the Board (excluding the Chairman) would continue to be comprised of Independent Non-Executive Directors in compliance with the UK Corporate Governance Code.

Purchase of minority interests in Sky Deutschland

As announced on 17 February 2015, Sky initiated the necessary steps for the transfer of the remaining approximately 4% minority shareholdings in Sky Deutschland. The requisite shareholder resolution was subsequently approved by 99.4% of shareholders at an Extraordinary General Meeting of Sky Deutschland on 22 July 2015 and we expect the formal transfer of the minority shareholdings to be effective in the second quarter of the 2015/16 financial year.

Schedule 1 - Group KPI Summary (unaudited)

Page 3 and table above:

- Wholesale customers taking at least one paid-for Sky channel. The customer numbers are as reported to us at the end of June 2015.

- In the UK and Ireland, paid-for products includes TV, Sky+ HD, Multiscreen, Sky Go Extra, Broadband, Line Rental and Telephony.

- In Italy, paid-for products includes TV, Multivision and paying HD.

- In Germany and Austria, paid-for products includes TV, Second Smartcard, Premium HD and Mobile.

- ARPU is quarterly annualised, residential and presented as a monthly amount. For the UK and Ireland, it excludes revenues earned from retailing the ESPN channel and revenues earned from Sky Bet.

- Churn is 12 month rolling and includes residential customers only, unless otherwise stated.

The product KPI in Italy has changed to reflect the alignment of disclosure across the Group. Where customers have more than one Multivision subscription, we now only count this as one Multivision product. All previous quarters have been restated.

Enquiries:

There will be a conference call for analysts and investors at 8.30 a.m. (BST). Participants should register by contacting Holly Dymock 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 at http://www.event-taylor-rafferty.com/_sky/2015Q3/Default.htm. A live webcast of both conference calls will be available via the Sky website at http://www.sky.com/corporate. Replays will subsequently be available.

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, On Demand, NOW TV, Sky Go, Sky Go Extra, Sky+ HD, Sky Store, Sky Online, mobile, Multiscreen 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, synergies and integration, and capital expenditure.

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 2014 (as updated in Sky's results for the six months ended 31 December 2014).

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 at https://corporate.sky.com/investors/annual-report-2014/glossary. Copies of the Annual Report are available from the Sky plc web page at www.sky.com/corporate and in hard copy from the Company Secretary, Sky plc, Grant Way, Isleworth, Middlesex TW7 5QD.

Appendix 1 - Consolidated Financial Information

Consolidated Income Statement for the year ended 30 June 2015

Consolidated Statement of Comprehensive Income for the year ended 30 June 2015

 Consolidated Balance Sheet as at 30 June 2015

Consolidated Cash Flow Statement for the year ended 30 June 2015

 Consolidated Statement of Changes in Equity for the year ended 30 June 2015

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 2015 or 2014, for the purpose of the Companies Act 2006, but is derived from those financial statements. Statutory financial statements for 2015, 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 2015. Statutory financial statements for 2014 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 consolidated financial statements have been prepared using accounting policies and methods of computation consistent with those applied in the financial statements for the year ended 30 June 2014, except for new accounting pronouncements which have become effective this year, none of which had a material impact on the Group's results or financial position, and except for material changes to the Group resulting from the acquisition of Sky Italia and Sky Deutschland in the year, being:

- Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity. Non-controlling interests consist of the amount of those interests at the date of the acquisition and the non-controlling shareholders' share of changes in equity since the date of the acquisition. The interest of the non-controlling shareholders in the acquiree may initially be measured either at fair value or at the non-controlling shareholders' proportion of the net fair value of the identifiable assets acquired and liabilities and contingent liabilities assumed. The choice of measurement basis is made on an acquisition-by-acquisition basis. In transactions with non-controlling parties that do not result in a change in control, the difference between the fair value of the consideration paid or received and the amount by which the non-controlling interest is adjusted is recognised in equity.

- Set-top boxes owned and leased to customers are accounted for within property, plant and equipment, and are depreciated over their useful economic lives of 5-7 years.

- Exchange differences arising from the translation of the net investment in foreign operations are recognised directly in equity. Gains and losses on those instruments designated as hedges of the net investments in foreign operations are recognised in equity to the extent that the hedging relationship is effective; these amounts are included in exchange differences on translation of foreign operations as stated in the statement of comprehensive income. Gains and losses relating to hedge ineffectiveness are recognised immediately in the income statement for the period. Gains and losses accumulated in the translation reserve are included in the income statement when the foreign operation is disposed of.

- Liabilities in relation to employee obligations which are economically similar to defined benefit pension schemes are accounted for as such under IAS 19.

The Group maintains a 52 or 53 week fiscal year ending on the Sunday nearest to 30 June in each year. In fiscal 2015, this date was 28 June 2015, this being a 52 week year (fiscal year 2014: 29 June 2014, 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 Operating Segments

On 12 November 2014, the Group purchased operations in Italy, Germany and Austria and as a result has reassessed the number of reportable operating segments.

The Group now has three reportable segments that are defined by geographic area to reflect how the Group's operations are monitored and managed. The reportable segments presented reflect the Group's management and reporting structure as viewed by the Board of Directors, which is considered to be the Group's chief operating decision maker.

Segmental income statement for the year ended 30 June 2015

Segmental income statement for the year ended 30 June 2014

Results for each segment are presented on an adjusted basis. A reconciliation of statutory to adjusted results is shown in the Non GAAP measures section which also includes a description of the adjusting items. Transactions between segments are based on estimated market prices.

To provide a more relevant presentation, management has chosen to reanalyse the revenue and operating expense categories from those previously reported. The revenue categories have been changed to reflect the increasing breadth of the business and a number of operating expense sub-categories have been combined within a single Sales, general and administration operating expense line as previously announced.

3 Discontinued operations

On 19 March 2015, the Group completed the sale of a controlling stake in its online betting and gaming business, Sky Betting & Gaming ("Sky Bet"), to funds advised by CVC Capital Partners and members of the Sky Bet management team. Sky has retained an equity stake of 20% post completion in Sky Bet.

Sky Bet represented a separate major line of business for the Group. As a result its operations have been treated as discontinued for the year ended 30 June 2015 and the year ended 30 June 2014. A single amount is shown on the face of the consolidated income statement comprising the post-tax result of discontinued operations and the post-tax profit recognised on the disposal of the discontinued operation. A pre-tax profit of £600 million arose on the disposal of Sky Bet, being the net proceeds of disposal less the carrying amount of Sky Bet's net liabilities and attributable goodwill.

The results of discontinued operations, which have been included in the consolidated income statement, were as follows:

(i) Results for the year ended 30 June 2015 include the results of discontinued operations up to the date of disposal (19 March 2015).

(ii) Attributable tax expense comprises £9 million (2014: £12 million) in respect of operating activities and £1 million (2014: nil) arising as a result of the disposal.

During the year, cash flows attributable to Sky Bet comprised of a net cash inflow in respect of operating activities of £44 million (2014: inflow of £62 million) and a net cash inflow in respect of investing activities of £560 million (2014: outflow of £3 million).

4 Profit on disposal of available-for-sale investments

On 17 July 2014, the Group sold a shareholding of 6.4% in ITV plc, consisting of 259,820,065 ITV shares for an aggregate consideration of £481 million. A profit of £429 million was realised on disposal, being the excess of the consideration above the previously written-down value of the shares for accounting purposes (£52 million).

On 5 November 2014, the Group sold a further shareholding of 0.8% in ITV plc, consisting of 31,864,665 ITV shares for an aggregate consideration of £65 million. A profit of £58 million was realised on disposal, being the excess of the consideration above the previously written-down value of the shares for accounting purposes (£7 million).

The Group recognised a gain of £5 million as a result of measuring to fair value its equity interest in Sky Deutschland held prior to the acquisition. For further details see note 23.

5 Profit on disposal of associate

On 12 November 2014, the Group transferred a shareholding of 21% in NGC Network International LLC and a shareholding of 21% in NGC Network Latin America LLC to Twenty-First Century Fox, Inc. for an aggregate consideration of £410 million as part of the purchase of Sky Italia. A profit of £299 million was realised on disposal.

7 Taxation

Taxation recognised in the income statement

8 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 attributable to equity shareholders of the parent company 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.

9 Dividends

The 2015 final dividend proposed is 20.5 pence per ordinary share being £349 million. The dividend was not declared at the balance sheet date and is therefore not recognised as a liability as at 30 June 2015.

10 Intangible assets