FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of May 2007
2 May 2007
BRITISH SKY BROADCASTING GROUP PLC
(Name of Registrant)
Grant Way, Isleworth, Middlesex, TW7 5QD England
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): Not Applicable
EXHIBIT INDEX
Exhibit
EXHIBIT NO. 1 Press release of British Sky Broadcasting Group plc
announcing 3rd Quarter Results released on 2 May 2007
BRITISH SKY BROADCASTING GROUP PLC
Results for the nine months ended 31 March 2007
Customer response to "See, Speak, Surf" and Sky+ drives record
product sales in the third quarter
More customers are choosing more of Sky's products than ever before
* New customer additions of 340,000 in the third quarter, up 25% year-on-year
* Net customer growth of 51,000, up 28% year-on-year to 8.492 million
* Third quarter growth in Sky+ households of 199,000, up 34% year-on-year to
2.167 million, 25% penetration target exceeded three years ahead of plan
* HD subscribers of 244,000 within 10 months, third quarter growth of 60,000
* Sky Broadband customers more than double to 553,000 with gross bookings of
669,000 by 29 April 2007(1)
* Sky Talk customers increase by 83% to 408,000(1)
* 974 exchanges unbundled, 61% coverage of the U.K.(1)
Strong top-line growth and accelerating underlying operating profit growth
* Revenue increased by 10% to GBP3,376 million, includingGBP41 million from
residential broadband and GBP117 million from Easynet Enterprise
* Adjusted gross margin excluding residential broadband and Easynet
Enterprise of 62% up from 60% in the comparable period(2)
* EBITDA of GBP750 million (2006: GBP756 million) including a net exceptional
gain of GBP56 million
* Operating profit of GBP613 million including losses of GBP137 million in
residential broadband and Easynet Enterprise and a net exceptional gain of
GBP56 million
* Underlying operating profit up by 4% to GBP694 million (excluding
residential broadband, Easynet Enterprise and exceptional items), an
increase of 8% year-on-year in the third quarter
* Basic EPS of 22.1p (2006: 23.2p) and adjusted EPS of 19.5p (2006: 23.3p)(3)
James Murdoch, Chief Executive said:
"Customer response to our "See, Speak, Surf" campaign has been very encouraging.
Total sales of our TV, broadband and telephony products surpassed one million
for the second consecutive quarter and now exceed three million in the year to
date, an increase of more than 50% on the prior year and almost double that of
two years ago.
"In just eight months, Sky Broadband has passed the milestone of 500,000
customers who are enjoying fast speeds, wireless access and significant savings.
Our network now reaches over 60% of U.K. homes and we are on track for our goal
of more than 700,000 broadband customers by the end of June.
"Our investments in customer service, value and quality are driving more
customers to choose more services from Sky than ever before.
"Changes to our retention and acquisition strategy are delivering valuable
benefits to the quality and profitability of our business. We are delivering on
our multi-product strategy and customers are responding in record numbers."
Enquiries:
Analysts/Investors:
Andrew Griffith Tel: 020 7705 3118
Robert Kingston Tel: 020 7705 3726
E-mail: investor-relations@bskyb.com
Press:
Matthew Anderson Tel: 020 7705 3267
Robert Fraser Tel: 020 7705 3036
E-mail: corporate.communications@bskyb.com
A conference call for U.K. and European analysts and investors will be held at
8:30 a.m. (BST) today. To register for this, please contact Silvana Marsh at
Finsbury on +44 20 7251 3801. A live webcast of this call and replay facility
will be available on Sky's corporate website, http://www.sky.com/corporate.
There will be a separate conference call for US analysts and investors at 10.00
a.m. (EST) today. Details of this call have been sent to US institutions and can
be obtained from Dana Johnston at Taylor Rafferty on +1 212 889 4350. A live
webcast of this call and replay facility will be available on Sky's corporate
website, http://www.sky.com/corporate.
(1) Data stated as at 29 April 2007. As at 31 March 2007 there were 574,000 Sky
Broadband gross bookings, 457,000 activated broadband customers and 355,000
Sky Talk customers
(2) Adjusted gross margin excludes an exceptional gain from a third party
channel provider of GBP65 million, included within programming expenses
(3) Adjusted EPS excludes mark-to-market in derivative financial instruments
that do not qualify for hedge accounting, an exceptional gain of GBP65
million and an exceptional charge of GBP9 million
Results highlights
All financial results have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), including comparatives.
Customer Metrics
'000s 31-Mar-07 31-Dec-06 Net additions
----------------------------------- ----------------------- ----------------------- -----------------------
Total customers(1)(2)(3) 8,492 8,441 51
Additional products:
Sky+(4) 2,167 1,968 199
Multiroom(5) 1,297 1,226 71
HD 244 184 60
Broadband 457 193 264
Telephony 355 223 132
Other KPI's:
Churn 13.7% 11.9% -
ARPU GBP406 GBP394 -
=================================== ======================= ======================= =======================
(1) Includes DTH subscribers in Republic of Ireland. (484,000 as at 31 March
2007, 407,000 as at 31 March 2006.)
(2) DTH subscribers include only primary subscriptions to Sky (no additional
Sky+ or Multiroom subscriptions are counted). This does not include
customers taking Sky's freesat offering or churned customers viewing
free-to-air channels.
(3) DTH subscribers include subscribers taking Sky packages via DSL through
Homechoice.
(4) Sky+ includes HD households
(5) Multiroom includes households subscribing to more than one digibox. (No
additional units are counted for the second or any subsequent Multiroom
subscriptions within one household.)
Financial Summary (unaudited)
9 months to Mar-07 9 months to Mar-06
GBP'millions Reported Exceptional(6) Adjusted Reported
----------------------------------- ---------------- --------------- ---------------- ---------------------
Income statement:
Revenue 3,376 - 3,376 3,079
Gross Profit 2,223 (65) 2,158 1,872
% Margin 65.8% - 63.9% 60.8%
Operating Profit 613 (56) 557 660
% Margin 18.2% - 16.5% 21.4%
Profit for the period 388 (45) 343 425
Cash flow information:
Cash generated from operations 732 (56) 676 696
Net debt(9) 1,810 - 1,810 667
=================================== ================ =============== ================ =====================
Per share information (pence): 9 months to Mar-07 9 months to Mar-06
----------------------------------- ------------------------ ------------------------ ---------------------
EPS - basic 22.1 23.2
EPS - adjusted(10) 19.5 23.3
=================================== ================ =============== ================ =====================
(6) Exceptional items include a one-off receipt from a third party channel
provider for GBP65 million,GBP9 million charge for litigation costs and
GBP8 million mark-to-market gain on financial derivatives
(7) Revenue includes GBP41 million from residential broadband and GBP117
million from Easynet Enterprise
(8) Operating profit includes a net operating loss of GBP120 million from
residential broadband and GBP17 million from Easynet Enterprise
(9) Cash, cash-equivalents, short-term deposits, borrowings and borrowings
related financial instruments
(10) Adjusted EPS excludes mark-to-market in derivative financial instruments
that do not qualify for hedge accounting, an exceptional gain of GBP65
million and an exceptional charge of GBP9 million
OVERVIEW
The third quarter saw record levels of demand for our portfolio of products and
services, with total new product and upgrade sales volumes of over 1.2 million,
more than double third quarter sales in the prior year. At the same time we
continued to implement changes to our promotional strategy leading to a GBP12
increase in ARPU from the previous quarter to GBP406 and, as expected, a higher
quarterly churn rate of 13.7%. The combined impact of record demand and our
focus on subscriber profitability led to strong year-on-year revenue growth and
accelerated operating profit growth in the third quarter.
The third quarter marked the launch of our "See, Speak, Surf" campaign, the
first time Sky has marketed a combined TV, broadband and telephony offering and
which emphasised the leading quality and value of our products. This, together
with our outstanding TV offering, led to a number of important achievements
during the period:
* Gross DTH additions of 340,000 were the highest third quarter additions in
six years;
* Sky+ broke through 25% penetration three years ahead of target;
* Sky broadband surpassed half a million customers within eight months of
launch;
* Sky Talk customers reached 408,000 after a quarter of record growth;
* HD remains our fastest selling additional TV product with 244,000
subscribers in just 10 months; and
* Record new product and upgrade sales of over 1.2 million in the quarter
reaching more than three million year-to-date, an increase of over 50% on
the comparable period.
Good net customer growth of 51,000, a 28% increase year-on-year, was achieved
despite the changes made to our promotional strategy as detailed on 31 January
2007. The third quarter saw the first full quarter of impact from steps taken to
improve price transparency, through the removal of viewing package discounts
previously used to acquire and retain customers. Churn increased to 13.7%, up by
1.8 percentage points from the previous quarter. On an underlying basis, we
estimate that churn fell by 0.4 percentage points to 11.0% when compared to the
third quarter of the prior year. ARPU, which increased by GBP12
quarter-on-quarter or GBP11 year-on-year to GBP406, is now benefiting as a
direct result of these changes, as well as from increased new product
penetration.
The financial performance of the group was strong in the third quarter,
reflecting the operational strength of the business. Revenue increased by 9%
year-on-year in the third quarter or by 10% in the nine months ("the period").
Year-on-year growth in third quarter underlying operating profit accelerated to
8%, up from 1% at the half-year, leading to 4% growth for the period.
Operating profit for the period also reflected a net exceptional gain of GBP56
million, with the majority recognised in the second quarter, consisting of two
items: a GBP65 million one-off payment received from a third party channel
provider as a result of a contractual entitlement to a proportion of the value
of certain of its channels; and a GBP9 million charge within other operating
expenses as part of our litigation with EDS, an information and technology
solutions provider, in relation to work carried out between 2000 and 2002 on our
customer relationship management systems.
Following the expiry of an agreement at the end of February 2007, Sky's basic
channels ceased to be carried on Virgin Media's platform. On 12 April 2007
Virgin Media ("VM") issued legal proceedings in the High Court against Sky in
relation to the supply of VM TV channels to Sky and the supply of Sky basic
channels to VM, alleging infringement of Chapter II of the Competition Act 1998
and/or Article 82 of the EC Treaty. We have acknowledged service of VM's claim
and are due to file our defence with the High Court in due course. We dispute
VM's claims, which we consider to be without foundation and which we will defend
vigorously. Were Sky's basic channels to remain off VM's platform, the Company
estimates the impact of lower wholesale carriage fees and advertising revenues
would adversely affect operating profit by GBP15 to GBP20 million in the year to
30 June 2007. Excluding this financial impact we remain on track for our 2007
financial year targets.
OPERATIONAL REVIEW
Gross additions of 340,000 were 25% higher than the prior year and were the
highest third quarter additions in six years. Investment in new products is
accelerating demand; during the quarter, 26% of Sky+ additions, 17% of HD
additions and around 25% of broadband additions were new Sky customers.
As detailed on 31 January 2007, we took steps to improve price transparency part
way through the second quarter by reducing and then removing viewing package
discounts in retention and acquisition. The three months to March 2007 saw a
full quarter of impact from this change in strategy, resulting in a short-term
increase in churn to 13.7%, up 1.8 percentage points from the previous quarter.
Excluding the impact of this change in strategy, we estimate that churn fell by
0.4 percentage points to 11.0% compared with the third quarter of the prior
year. Third quarter ARPU started to see the positive impact from this change in
strategy, with quarter-on-quarter growth of GBP12 to a record GBP406 and we
expect continued benefits to the quality and profitability of the business.
Net additions in the third quarter of 51,000 were 28% higher than the third
quarter of 2006. This performance was despite changes made to our promotional
strategy, as detailed above. Both the mix of products and the balance of
packages remain strong, with increasing new product penetration across the
customer base.
Sky+ households exceeded our 2010 penetration target of 25% three years ahead of
plan, increasing by 199,000 to 2.167 million in the third quarter. Our premium
TV product, Sky HD, is our fastest selling additional TV product with 244,000
subscribers in only 10 months. Penetration of our multiroom product continues to
show steady progress with 1.297 million subscribers or 15.3% of the base.
Gross Sky Broadband bookings reached 669,000 by 29 April 2007. Broadband
customers of 553,000 by 29 April 2007 increased from 259,000 at the end of
January and 74,000 at the end of October, with 82% on-net. Of these on-net
customers, approximately 70% opted for a paid-for package. Growth in off-net
customers benefited from the launch of "See, Speak, Surf", for which the
standard price of GBP26 per month is available to all customers within our
targeted 70% exchange footprint. The Group had a further 32,000 customers
registered to UK Online, Easynet's residential broadband service, bringing the
total number of broadband customers to 585,000. A total of 928 exchanges were
unbundled by 31 March 2007 increasing to 974 by 29 April 2007, with 61% coverage
of U.K. households. We expect to achieve 70% coverage by the end of this
financial year, six months ahead of plan.
Our telephony (Sky Talk) customer base increased by around 60% to 355,000 with
record net additions of 132,000 in the third quarter, benefiting from its
inclusion for the first time in a large-scale above-the-line marketing campaign
"See, Speak, Surf" and the re-launch of two Sky Talk packages. A third of
broadband customers as at the end of March had also opted for a Sky Talk
package, up from 19% in the second quarter and 17% in the first quarter,
illustrating the attractiveness of our new packages. Growth continued in the
month of April with 408,000 Sky Talk customers at 29 April 2007.
FINANCIAL SUMMARY
The financial performance in the period reflects a full nine months
consolidation of residential broadband and Easynet Enterprise, compared to just
three months in the comparable period. Group revenue of GBP3,376 million
includedGBP41 million from residential broadband and GBP117 million from Easynet
Enterprise. Group operating profit of GBP613 million included net operating
losses of GBP120 million from residential broadband, GBP17 million of losses
from Easynet Enterprise and a net exceptional gain of GBP56 million.
Revenue
Group revenue showed good growth increasing by 10% on the comparable period to
GBP3,376 million (2006:GBP3,079 million), despite the advertising sector
downturn and a fall in wholesale subscription revenue.
Retail subscription revenue increased by 7% on the comparable period to GBP2,514
million (2006:GBP2,355 million) and included GBP40 million from residential
broadband and Easynet Enterprise. Underlying growth was primarily driven by a 5%
increase in the average number of DTH customers. ARPU saw a marked acceleration
in the third quarter to GBP406, benefiting from the changes made to our
promotional strategy part-way through the second quarter.
Wholesale subscription revenue fell by 5% to GBP162 million and included the
impact from the expiry (and non-renewal) of the contract to supply Sky's basic
channels to Virgin Media part way through the quarter.
Advertising revenue increased by GBP1 million to GBP258 million, significantly
outperforming the overall TV advertising sector, which we estimate contracted by
5% over the same period. Outperformance was driven by higher advertising share
year-on-year, up from an average of 13% in nine months to March 2006 to 14% in
the nine months to March 2007.
Sky Bet revenue was GBP34 million, an increase of 26% on the comparable period,
benefiting from two months of consolidation of 365 Media Group plc and good
growth in internet sports betting and TV games. The integration of 365 Media
Group plc (acquired in February 2007) is on track and performing in line with
our expectations. We have also made a good start to the launch of Sky Poker,
with around 20,000 paying customers registered since its launch on 8 February
2007.
Installation, hardware and service revenue was GBP167 million, up from GBP103
million in the comparable period. This increase reflects the strong gross
additions and customer upgrades, as well as a higher proportion of premium
priced hardware sales and new contribution from sales of residential broadband
equipment.
Other revenue was GBP241 million (2006:GBP167 million) with the majority of the
increase driven by the full inclusion of Easynet Enterprise for the nine months
to 31 March 2007 of GBP114 million, compared to just three months in 2006 of
GBP38 million. On an underlying basis, other revenues were broadly level
year-on-year, with declines in Sky Active offset by growth in website revenues
including revenues from 365 Media Group plc.
Gross margin
Reported programming costs were GBP1,153 million, including an exceptionalGBP65
million credit from a third party channel provider. Programming costs excluding
this exceptional gain increased by GBP11 million on the comparable period. The
largest increase came from sports costs which increased by GBP57 million due to
one-off events in cricket and golf, and several England football international
away games.
Profit
Reported operating profit of GBP613 million (2006: GBP660 million) included a
net exceptional gain of GBP56 million, residential broadband losses of GBP120
million and Easynet Enterprise losses of GBP17 million.
Excluding residential broadband, Easynet and exceptional gains, operating profit
was GBP694 million, an increase of 4% on the comparable period with 8% growth
year-on-year in the third quarter as the benefits of changes made to our
promotional strategy flowed through. Offsetting this, year-on-year profit growth
in the first nine months was affected by a substantially weaker TV advertising
sector, continued decline in cable wholesale revenue and the high levels of new
customers joining Sky and customer upgrades which lead to higher short-term
costs.
Total operating costs excluding programming increased by GBP398 million to
GBP1,610 million on the comparable period, including GBP295 million of operating
expense from residential broadband and Easynet Enterprise.
Marketing costs increased by GBP72 million to GBP546 million, the majority of
which was driven by the inclusion of residential broadband and Easynet
Enterprise. On an underlying basis, the short-term costs associated with strong
gross additions were partially offset by efficiencies in subscriber acquisition
costs. Subscriber management costs increased by GBP128 million to GBP467
million, reflecting the inclusion of residential broadband and Easynet
Enterprise, higher installation costs (partially offset by higher revenue),
higher call-centre costs and increased depreciation relating to the
implementation of new customer relationship management ("CRM") systems.
Administration and transmission costs increased by GBP77 million and GBP121
million respectively, primarily due to the inclusion of residential broadband
and Easynet Enterprise costs and higher depreciation from infrastructure
investment. Administration costs also included a GBP9 million exceptional charge
relating to the legal costs of the Group's claim against EDS, which provided
services to the Group as part of the Group's investment in CRM systems software
and infrastructure. The amount which may be recovered by the Group will not be
finally determined until the resolution of the claim and we currently expect to
incur costs of around GBP20 million during the current financial year, which
will be recognised as an exceptional cost.
After the Group's share of operating profits from joint ventures of GBP9 million
(2006:GBP9 million) and a net interest charge of GBP66 million (2006:GBP60
million) which included a positive GBP8 million mark-to-market movement
(2006:GBP4 million loss) on the value of non-IFRS hedge accounted derivatives
and GBP13 million of dividends declared by ITV plc during the quarter, the Group
made a profit before tax in the period of GBP556 million (2006: GBP609 million).
The total tax charge for the period was GBP168 million (2006: GBP184 million),
at an effective rate of 30% (2006: 30%).
Earnings
The Group's profit for the period was GBP388 million (2006: GBP425 million),
generating basic EPS of 22.1p (2006: 23.2p). Adjusted profit for the period was
GBP343 million (2006:GBP428 million), generating adjusted earnings per share of
19.5 pence compared to 23.3 pence in the comparable period. The 2005/6 share
buyback programme resulted in the number of shares outstanding falling by 3% to
1,753 million at 31 March 2007 (2006: 1,809 million).
Exceptional items
The Group reported a net exceptional gain of GBP56 million within operating
profit, consisting of two items. Included within third party costs is a GBP65
million credit resulting from the payment relating to a proportion of the value
of certain third party channels. Partially offsetting this was a charge of GBP9
million recorded within administration expenses relating to the legal costs of
the Group's claim against EDS.
Cash flow
Operating profit for the period was GBP613 million, generating reported EBITDA
of GBP750 million. Excluding Easynet Enterprise and residential broadband losses
and exceptional items, underlying EBITDA increased by 6% to GBP803 million.
Following a working capital outflow of GBP18 million (2006:GBP60 million), the
Group generated a cash inflow from operations of GBP732 million (2006:GBP696
million). Capital expenditure of GBP254 million includedGBP135 million
investment in residential broadband and Easynet Enterprise. After acquisition
spend of GBP1,061 million, relating to the investment in ITV, You Me TV and 365
Media Group plc, interest of GBP93 million, cash taxes of GBP86 million and
returns to shareholders of GBP331 million, net debt as at 31 March 2007 was
GBP1,810 million.
CORPORATE
As requested by the Secretary of State for Trade and Industry, Ofcom and the OFT
submitted reports on 27 April 2007 on the acquisition by BSkyB of a 17.9% stake
in ITV plc. On the same day, Ofcom and the OFT published statements indicating
the key findings in their respective reports. Ofcom has advised that the
investment raises public interest issues, in relation to sufficient plurality of
news provision for both cross media and television news in the U.K.. The OFT has
reported that it believes that the test for a merger reference of the investment
to the Competition Commission is met on competition grounds. The decision
whether to refer the investment to the Competition Commission lies with the
Secretary of State for Trade and Industry and we continue to engage fully in the
process.
CORPORATE RESPONSIBILITY
During the quarter, Sky continued its commitment to engage customers and
employees in its environmental programme, The Bigger Picture, and broke
significant new ground as it extended its activities in the field of education.
In March, Sky began the introduction of an innovative new feature that will help
customers to reduce their household energy bills by automatically switching
inactive Sky HD and Sky+ boxes into standby mode overnight. The 'Auto Standby'
feature will be introduced to more than two million customers' boxes in phases
over the next few months and Sky plans to extend it to the majority of DTH
customers by mid-2008. When 'Auto Standby' is available in all Sky HD and Sky+
boxes, the total energy savings could reduce the U.K.'s carbon dioxide emissions
by 32,000 tonnes a year. On 23 April, Sky joined with seven other leading U.K.
companies to unveil 'We're In This Together', a new campaign to provide
customers with products and services that make it easier to reduce household
emissions. The campaign has the support of the Prime Minister, the National
Consumer Council, and The Church of England.
As part of a broad 'Sky Learning' initiative, Sky launched an online search tool
that makes recommendations for television programmes related to GCSE subjects.
The Sky Learning website, www.sky.com/learning, is a free service that
highlights the broad range of educational programming available on the hundreds
of channels on the satellite platform. During the quarter, Sky also launched a
new subscription offer for schools and its Living For Sport programme reached
the milestone of its 500th school in the UK.
Sky received further external recognition for its environmental programme after
being awarded the Climate Change award at the City of London Corporation's
annual Sustainable City Awards. The judges commended Sky for engaging customers
through "practical and inspiring ways to become better informed and more
progressive about energy use". The company also retained its position as the
only broadcast company in the Global 100 Most Sustainable Corporations Index
2007.
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 of the
related IFRS measures.
Forward-looking statements
This document contains certain forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995 with respect
to the Group's financial condition, results of operations and business, and
management's strategy, plans and objectives for the Group. These statements
include, without limitation, those that express forecasts, expectations and
projections with respect to the potential for growth of free-to-air and pay-TV,
fixed line telephony, broadband and bandwidth requirements, advertising growth,
DTH subscriber growth, Multiroom, Sky+ and other services penetration, churn,
DTH and other revenue, profitability and margin growth, cash flow generation,
programming and other costs, subscriber acquisition costs and marketing
expenditure, capital expenditure programmes and proposals for returning capital
to shareholders.
These statements (and all other forward-looking statements contained in this
document) are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the Group's control,
are difficult to predict and could cause actual results to differ materially
from those expressed or implied or forecast in the forward-looking statements.
These factors include, but are not limited to, the fact that the Group operates
in a highly competitive environment, the effects of laws and government
regulation upon the Group's activities, its reliance on technology, which is
subject to risk, change and development, failure of key suppliers, its ability
to continue to obtain exclusive rights to movies, sports events and other
programming content, risks inherent in the implementation of large-scale capital
expenditure projects, the Group's ability to continue to communicate and market
its services effectively, and the risks associated with the Group's operation of
digital television transmission in the U.K. and Ireland.
Information on some risks and uncertainties are described in the "Risk Factors"
section of Sky's Interim Report on form 6-K for the period ended 31 December
2006. Copies of the Interim Report on form 6-K are available on request from
British Sky Broadcasting Group plc, Grant Way, Isleworth TW7 5QD or from the
British Sky Broadcasting web page at www.sky.com/corporate. All forward-looking
statements in this document are based on information known to the Group on the
date hereof. The Group undertakes no obligation publicly to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Appendix 1 - TV Subscriber and Market Data
Third quarter as at Second quarter as at Third quarter as at
31 March 2007 31 December 2006 31 March 2006
DTH homes(1),(2) (3) 8,492,000 8,441,000 8,099,000
Total TV homes in the U.K. and Ireland(4) 26,837,000 26,766,000 26,634,000
DTH homes as a percentage of 32% 32% 30%
total U.K. and Ireland TV homes
Cable - U.K. 3,406,000 3,397,000 3,298,000
Cable - Ireland 596,000 605,000 602,000
Total pay TV homes 12,494,000 12,443,000 11,999,000
Total pay TV homes as a percentage of total U.K. 47% 46% 45%
and Ireland TV homes
Sky+ homes 2,167,000 1,968,000 1,430,000
Multiroom homes(5) 1,297,000 1,226,000 990,000
HD homes 244,000 184,000 -
DTT - U.K.(6) 9,233,000 7,971,000 6,875,000
(1) Includes DTH subscribers in Republic of Ireland 484,000, as at 31 March
2007.
(2) DTH subscribers includes only primary subscriptions to Sky (no additional
Sky+ or Multiroom subscriptions are counted). This does not include
customers taking Sky's Freesat offering or churned customers viewing
free-to-air channels.
(3) DTH homes include subscribers taking Sky packages via DSL through
Homechoice.
(4) Total U.K. homes estimated by BARB and taken from the beginning of the
month following the period end (latest figures as at 31 March 2007). Total
Ireland homes estimated by Nielsen Media Research as at January 2007.
(5) Multiroom includes households subscribing to more than one digibox. (No
additional units are counted for the second or any subsequent Multiroom
subscriptions.)
(6) DTT homes estimated by BARB and taken from the beginning of the following
month (latest figures as at 31 March 2007). These include Sky or Cable
homes that already take multi-channel TV.
Appendix 2 - Glossary
------------------------------------------- ------------------------------------------------------------
Useful definitions Description
------------------------------------------- ------------------------------------------------------------
Adjusted profit for the period Profit for the period adjusted to remove mark-to-market
movements in derivative financial instruments that do not
qualify for hedge accounting, exceptional items and any
changes in the estimate of recoverable tax assets in
respect of prior years.
------------------------------------------- ------------------------------------------------------------
Adjusted earnings per share Adjusted profit divided by the weighted average number of
ordinary shares during the year.
------------------------------------------- ------------------------------------------------------------
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.
------------------------------------------- ------------------------------------------------------------
Gross margin Revenue less programming expenses as a proportion of
revenue.
------------------------------------------- ------------------------------------------------------------
Gross profit Revenue less programming expense.
------------------------------------------- ------------------------------------------------------------
Gross Sky broadband bookings The number of customers that have requested our broadband
product, passed pre-sale checks and have been accepted by
our booking system and invoiced for any relevant
activation fees.
------------------------------------------- ------------------------------------------------------------
Residential broadband Sky Broadband and UK Online combined.
------------------------------------------- ------------------------------------------------------------
Gross Sky Bet revenue Gross stakes placed by customers on events taking place in
the period and net customer losses in respect of casino,
online roulette and similar interactive casino style games.
------------------------------------------- ------------------------------------------------------------
HD High Definition.
------------------------------------------- ------------------------------------------------------------
Underlying Excluding contribution from Sky Broadband and Easynet
Enterprise and net exceptional amounts.
------------------------------------------- ------------------------------------------------------------
Multichannel viewing share Share of viewers of non-analogue terrestrial television.
------------------------------------------- ------------------------------------------------------------
Multiroom Installation of one or more additional Digiboxes in the
household of an existing DTH subscriber.
------------------------------------------- ------------------------------------------------------------
Net debt Cash, cash-equivalents, short-term deposits, borrowings
and borrowings related derivative financial instruments.
------------------------------------------- ------------------------------------------------------------
On-net Customers subscribing to our unbundled broadband product.
------------------------------------------- ------------------------------------------------------------
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.
------------------------------------------- ------------------------------------------------------------
Appendix 3 - Re-analysis of reported revenue by category
To provide a more relevant presentation, management has chosen to re-analyse the
revenue categories from those previously reported. Other revenue now principally
includes income from Easynet Enterprise, Sky Active and technical platform
service revenue.
------------------------------------- -- --------------- -------------- -------------- -------------- ---------------
Nine months
to 31 March Transfer Separate Nine months
2006 as of installation, to 31 March
previously Sky hardware and 2006
reported Active service Other Re-analysed
GBP million GBP million GBP million GBP million GBP million
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------------------------------- -- --------------- -------------- -------------- -------------- ---------------
Retail Subscription 2,352 - - 3 2,355
Wholesale Subscription 170 - - - 170
Advertising 257 - - - 257
Sky Bet 27 - - - 27
Sky Active 67 (67) - - -
Installation, Hardware and Service - - 103 - 103
Other 206 67 (103) (3) 167
3,079 - - - 3,079
------------------------------------- -- --------------- -------------- -------------- -------------- ---------------
------------------------------------- -- --------------- -------------- -------------- -------------- ---------------
2005/06
Full Year Separate 2005/06
as Transfer of installation, Full
previously Sky hardware and Year
reported Active service Other Re-analysed
GBP million GBP million GBP million GBP million GBP million
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------------------------------- -- --------------- -------------- -------------- -------------- ---------------
Retail Subscription 3,154 - - 3 3,157
Wholesale Subscription 224 - - - 224
Advertising 342 - - - 342
Sky Bet 37 - - - 37
Sky Active 91 (91) - - -
Installation, Hardware and Service - - 131 - 131
Other 300 91 (131) (3) 257
4,148 - - - 4,148
------------------------------------- -- --------------- -------------- -------------- -------------- ---------------
Consolidated Income Statement for the nine months ended 31 March 2007
Notes 2006/07 2005/06
Nine months Nine months
ended ended
31 March 31 March
GBPmillion GBPmillion
(unaudited) (unaudited)
Revenue 1 3,376 3,079
Operating expense 2 (2,763) (2,419)
_____________________________________________________________________________________________________
EBITDA 750 756
Depreciation and amortisation (137) (96)
_____________________________________________________________________________________________________
Operating profit 613 660
-------------------------------------------- -------------- ------------------- ---------------------
Share of results from joint ventures and associates 9 9
Investment income 42 37
Finance costs (108) (97)
Profit before tax 556 609
-------------------------------------------- -------------- ------------------- ---------------------
Taxation (168) (184)
Profit for the period 388 425
-------------------------------------------- -------------- ------------------- ---------------------
Earnings per share from profit for the period (in pence)
Basic 22.1 23.2
Diluted 22.1 23.1
_____________________________________________________________________________________________________
Adjusted basic 19.5 23.3
Adjusted diluted 19.5 23.3
_____________________________________________________________________________________________________
Consolidated Income Statement for the three months ended 31 March 2007
2006/07 2005/06
Three months Three months
ended ended
31 March 31 March
GBPmillion GBPmillion
(unaudited) (unaudited)
Revenue 1,156 1,063
Operating expense (938) (817)
_____________________________________________________________________________________________________
EBITDA 264 286
Depreciation and amortisation (46) (40)
_____________________________________________________________________________________________________
Operating profit 218 246
-------------------------------------------- --------------- ------------------ ---------------------
Share of results from joint ventures and associates 3 2
Investment income 18 17
Finance costs (39) (46)
Profit before tax 200 219
-------------------------------------------- --------------- ------------------ ---------------------
Taxation (58) (68)
Profit for the quarter 142 151
-------------------------------------------- --------------- ------------------ ---------------------
Earnings per share from profit for the quarter (in pence)
Basic 8.1 8.3
Diluted 8.1 8.3
Adjusted - basic 8.2 8.6
Adjusted - diluted 8.2 8.6
-------------------------------------------- --------------- ------------------ ---------------------
Notes:
1. Revenue
2006/07 2005/06
Nine months ended Nine months
31 March ended
GBPmillion 31 March
(unaudited) GBPmillion
(unaudited)
Retail subscription 2,514 2,355
Wholesale subscription 162 170
Advertising 258 257
Sky Bet 34 27
Installation, hardware and service 167 103
Other 241 167
3,376 3,079
---------------------------------------------- ------------------------------- ---------------------
2. Operating expense
2006/07 2005/06
Nine months ended Nine months
31 March ended
GBPmillion 31 March
(unaudited) GBPmillion
(unaudited)
Programming 1,153 1,207
Transmission and related functions 278 157
Marketing 546 474
Subscriber management 467 339
Administration 319 242
2,763 2,419
---------------------------------------------------- ------------------------- ---------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRITISH SKY BROADCASTING GROUP PLC
Date: 2 May 2007 By: /s/ Dave Gormley
Dave Gormley
Company Secretary