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 November 2005
04 November 2005
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 1st Quarter Results released on
04 November 2005
4 November 2005
BRITISH SKY BROADCASTING GROUP PLC
Results for the three months ended 30 September 2005
BSkyB announces over one million Sky+ subscribers, a 14% increase in operating
profit to GBP215 million and a 19% increase in earnings per share to 7.5 pence
Operating highlights
- Net DTH subscriber growth of 57,000 (2004: 62,000) in the quarter to
7.8 million (2004: 7.4 million)
- Sky+ households increased by 139,000 (2004: 77,000) in the quarter to
1,027,000 (2004: 474,000)
- Multiroom households increased by 103,000 (2004: 64,000) in the quarter
to 748,000 (2004: 357,000)
Financial highlights
- Revenue increased by 8% to GBP1,023 million
- Gross margin increased by two percentage points to 61%
- Operating profit increased by 14% to GBP215 million, a margin of 21%
- Profit after tax increased by 15% to GBP140 million
- Earnings per share increased by 19% to 7.5 pence
James Murdoch, Chief Executive said:
"Sky increased sales to new customers and achieved strong profit growth this
quarter despite facing a challenging competitive environment and continued
economic pressures on consumers. The team has met or over-achieved core
performance measures including sales, operating profit and earnings per share,
notwithstanding an increase in churn. We remain on track for our 2005 and 2010
targets.
Sky is committed to providing the very best entertainment and giving customers
control and flexibility in how, where and when they enjoy it. Having achieved an
important milestone of more than one million Sky+ households this quarter, we
continue to focus on offering an array of easy-to-use products and services that
strengthen our relationships with Sky families and increase the value we deliver
to them. These initiatives, together with the proposed acquisition of Easynet,
will ensure that Sky continues to set the pace in a highly dynamic marketplace.
The Group's intended use of capital continues to be to invest in the significant
growth opportunity for pay-TV in the UK and Ireland, to consider potential
acquisitions such as Easynet and to continue the policy of returning capital
that has seen almost GBP700 million returned to shareholders over the last year"
Results highlights
All financial results have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), including comparatives.
Key subscriber information 2005 2004 Change % Change
Net DTH subscriber additions(1) 57,000 62,000 -5,000 -8%
Total DTH subscribers(2)(3)(4)(5) 7,844,000 7,417,000 427,000 6%
Net Sky+ household additions(1) 139,000 77,000 62,000 81%
Total Sky+ households(2) 1,027,000 474,000 553,000 117%
Net Multiroom household additions(1)
(6) 103,000 64,000 39,000 61%
Total Multiroom households(2) 748,000 357,000 391,000 110%
Income statement (GBPm) Three months to 30 September
2005 2004 Change % Change
Revenue 1,023 948 75 8%
Operating profit 215 189 26 14%
Operating profit margin 21.0% 19.9% 1.1% 5.5%
Profit before taxation 200 176 24 14%
Profit after taxation(7) 140 122 18 15%
Cash flow information (GBPm) Three months to 30 September
2005 2004 Change % Change
Cash inflow from operations 105 147 -42 -29%
Net debt(2)(8) 528 367 -161 -44%
Per share information (pence) Three months to 30 September
2005 2004 Change % Change
Earnings per share 7.5 6.3 1.2 19%
1. In the three months to 30 September
2. As at 30 September
3. Includes DTH subscribers in Republic of Ireland (372,000, as at 30
September 2005).
4. DTH subscribers include only primary subscriptions to Sky (no
additional units are counted for Sky+ or Multiroom subscriptions).
This does not include customers taking Sky's freesat offering or
churned customers viewing free-to-air channels.
5. DTH subscribers include subscribers taking Sky packages via DSL
through Kingston Interactive Television and Homechoice.
6. Multiroom includes households subscribing to more than one digibox.
(No additional units are counted for the second or any subsequent
Multiroom subscriptions.)
7. Equivalent to profit attributable to equity holders of the parent
8. Cash, cash-equivalents, short-term deposits, borrowings and debt
related financial instruments
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
Finsbury:
Alice Macandrew Tel: 020 7251 3801
A conference call for UK and European analysts and investors will be held at
8:30 a.m. (GMT) today. To register for this, please contact Silvana Marsh at
Finsbury on +44 20 7251 3801. A live webcast of this call will be available on
Sky's corporate website, www.sky.com/corporate which will also be available to
replay.
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 John Sutton at Taylor Rafferty on +1 212 889 4350.
OPERATING REVIEW
At 30 September 2005, the total number of direct-to-home ("DTH") digital
satellite subscribers in the UK and Ireland was 7,844,000, representing a net
increase of 57,000 in the three months to 30 September 2005 ("the quarter").
Gross DTH subscriber additions in the quarter were 286,000, representing the
fourth consecutive quarter of year on year growth in sales to new customers. Sky
remains on track to achieve its target of eight million subscribers by the end
of the second quarter ending 31 December 2005, which is expected to benefit from
seasonally strong additions in the run up to Christmas.
During the quarter, the number of households subscribing to Sky+ passed the
milestone of one million. Sky+ continues to drive new customer additions as well
as providing an upgrade path for existing customers, with 32% of new Sky+
customers in the quarter being new to Sky. The total number of Sky+ households
increased by 139,000 during the quarter to 1,027,000, reaching 13% penetration
of total DTH subscribers.
The total number of Multiroom households also continued to grow strongly,
increasing by 103,000 in the quarter to 748,000, to reach 10% penetration of
total DTH subscribers. The number of Multiroom households has more than doubled
within the last twelve months.
Annualised average revenue per DTH subscriber ("ARPU") increased by GBP1 on the
previous quarter to GBP385. This resulted from an increased volume of Multiroom
subscriptions and a one month uplift from the changes in UK and Ireland retail
pricing, which became effective on 1 September 2005, partially offset by fewer
pay-per-view sports events than in the previous quarter. The full benefit of the
revised pricing structure is expected to be recognised in the second quarter.
DTH churn for the quarter (annualised) was 11.7%, up from 10.5% in the previous
quarter. The increase in churn was the result of a challenging economic and
competitive climate and the price rise of between GBP1.50 and GBP3 per month for
most customers that took effect within the quarter. The impact of the price rise
is estimated to have increased churn by at least half a percentage point.
Management of churn will remain a key focus during the remainder of the
financial year and, whilst the Group's goal for churn remains around 10%, the
average churn rate for the year to 30 June 2006 is currently expected to be
around 11%.
On 1 September 2005, the Group's Customer Relationship Management ("CRM")
systems went live for new customers with the transition for existing customers
expected to be completed in the first half of calendar year 2006. These systems
are expected to offer many benefits which will support the continued growth and
future success of the business, including:
- Leading-edge technology that will enhance Sky's ability to understand
and serve individual needs in a diverse and growing customer base
- Continuous improvement in customer communication, including more
segmented and personalised marketing and correspondence
- Long-term scalability and cost efficiencies
- The flexibility to launch and integrate new products and services
across multiple platforms and devices
On 31 October 2005, The Group announced that Vodafone UK would be the launch
network partner for Sky Mobile TV. The service, which launched on Vodafone's 3G
network on 1 November 2005 currently includes 19 mobile channels and is
anticipated to be made available on other mobile networks in calendar year 2006.
During the quarter, the Group continued to develop the Sky by broadband and Sky
by mobile applications, which are scheduled to launch later this calendar year
as a bonus service to qualifying DTH satellite customers. Sky by mobile will
offer customers a range of news, sports and entertainment content in text and
video as well as the opportunity to trade up to Sky Mobile TV.
The Group's commitment to invest in on-screen programming continued during the
quarter. On 13 September 2005, Sky announced that it had been awarded a new
3-year agreement to broadcast the UEFA Champions League for the 2006/07 to 2008/
09 football seasons. Sky Sports also secured live and exclusive rights to the
'Louis Vuitton Cup', in the lead up to sailing's 'America's Cup,' and the
'America's Cup,' which will be held in 2007; 'Hicksteads Royal International
Horse Show' and 'The Horse of the Year Show' from 2005 to 2007 in its coverage
of equestrian events; and exclusive live coverage of the all new 'A1 Grand Prix'
series which started at Brands Hatch on 25 September 2005.
Sky News built upon a strong performance in the quarter, achieving its highest
share of viewing in multi-channel homes in over two years, with the unveiling of
its new on-air look and schedule when it began broadcasting from its recently
completed state-of-the-art studio complex on 24 October 2005. With a new line-up
of dedicated shows and a continued focus on innovative coverage, the award
winning news channel will seek to raise the standard even further to ensure that
it continues to be the first destination for breaking news in the UK.
FINANCIAL REVIEW
Total revenues increased by 8% over the three months ended 30 September 2004
("the comparable period") to GBP1,023 million.
DTH revenues increased by 7% on the comparable period to GBP746 million, behind
6% growth in the average number of DTH subscribers.
Wholesale revenues increased by 4% on the comparable period to GBP54 million
principally due to the changes in wholesale prices in September 2004.
Advertising revenues increased by 13% on the comparable period to GBP81 million.
This reflects 2% growth in the UK television advertising sector and continued
growth in Sky's overall share in this sector, which now stands at 12.4%, up from
11.5% last year. The Group expects to continue to outperform growth in the UK
television advertising sector for the remainder of this calendar year.
Total SkyBet revenues increased by a further 8% against strong comparatives to
GBP64 million, with good growth in sportsbook and gaming revenues generated
through the interactive TV portal.
Sky Active revenues of GBP22 million for the quarter were in-line with the
comparable period. Increased revenues from interactive advertising and enhanced
TV were offset by a reduction in revenues from other areas of the business,
including the SkyBuy retail service, which was wound down and closed in the
final quarter of last financial year.
Other revenues increased by 22% on the comparable period to GBP56 million
principally due to the growth in digibox revenues associated with the increase
in Sky+ and Multiroom sales and Sky's Credit Card, 'SkyCard'.
Total programming costs for the quarter increased by 3% on the comparable period
to GBP396 million, substantially lower than the rate of revenue growth. This
reflected increased investment in Sky One commissioned programming and increased
News costs relating to coverage of the London terror attacks and Hurricanes
Katrina and Rita. A slight increase in Movie costs, relating to an increase in
the number of Movie subscribers was offset by lower Sports costs mainly due to
the Ryder Cup, a bi-annual event, which fell in the first quarter of last
financial year.
Gross margin (defined as revenue less total programming expenses as a proportion
of revenue) grew by a further two percentage points on the comparable period to
61%.
Other operating costs for the quarter were GBP412 million, a GBP38 million
increase on the comparable period. Marketing costs increased by GBP27 million on
the comparable period to GBP139 million. This increase reflects the strong
growth in the number of new customers in the quarter, the increased number of
existing customers upgrading to Sky+ and Multiroom, and higher above-the-line
marketing and retention costs. Gaming costs increased in line with the growth in
SkyBet revenues and administration costs increased by GBP2 million on the
comparable period to GBP75 million. This increase is due to the recognition of a
higher proportion of charges for share based payments in the quarter, following
the Group's decision to only apply IFRS 2 ("Share-based Payment") to awards
granted after 7 November 2002, as disclosed previously.
Operating profit increased by GBP26 million on the comparable period to GBP215
million generating a one percentage point increase in operating profit margin to
21%.
After the Group's share of operating profits from joint ventures of GBP2 million
and a net interest charge of GBP17 million, the Group made a profit before tax
in the quarter of GBP200 million.
The total tax charge for the quarter was GBP60 million, reflecting a current tax
charge of GBP48 million and a deferred tax charge of GBP12 million. Excluding
the effect of joint ventures, the Group's underlying effective tax rate on
ordinary activities moved from 30.6% for the comparable period to 30.1% as a
result of a slight decrease in the level of profit and loss charges being
disallowed for tax purposes.
The mainstream corporation tax liability for the quarter was GBP48 million. In
accordance with the quarterly payment regime, GBP40 million was paid in the
period, being the third payment on account of corporation tax for the year ended
30 June 2005.
The Group's profit after tax for the quarter increased by GBP18 million to
GBP140 million generating a 19% increase in earnings per share on the comparable
period to 7.5 pence.
Earnings before interest, tax, depreciation and amortisation ("EBITDA")
increased by 12% on the comparable period to GBP239 million. After a GBP134
million working capital outflow, principally due to the timing of payment for
sports rights, the Group generated a cash inflow from operations of GBP105
million. After net interest payable of GBP29 million, taxation of GBP40 million
and other items, the Group invested GBP45 million in its capital expenditure
programme and returned GBP128 million to shareholders in the final stage of a
five percent share buy-back programme. Since approval of the programme at the
Group's previous AGM on 12 November 2004, a total of 97 million shares have been
repurchased for cancellation for total consideration of GBP544 million
(including stamp duty and commissions). Net debt increased during the quarter
from GBP388 million to GBP528 million as at 30 September 2005.
CORPORATE
On 14 October 2005, the Group announced a private placement with institutional
investors which raised net proceeds of approximately GBP1,025 million from the
issuance of guaranteed notes by its wholly owned subsidiary, BSkyB Finance UK
plc.
The notes, which were issued on 20 October 2005, consist of (i) US $750 million
aggregate principal amount of notes paying 5.625% interest and maturing on 15
October 2015, (ii) US $350 million aggregate principal amount of notes paying
6.500% interest and maturing on 15 October 2035 and (iii) GBP400 million
aggregate principal amount of notes paying 5.750% interest and maturing on 20
October 2017.
The net proceeds of the offering will be used for general corporate purposes,
for the refinancing of maturing debt and to extend the maturity profile of the
Group's debt. In addition, the Group may use the proceeds of the offering for
acquisitions of business and/or assets in support of its strategy.
On 21 October 2005, the Group and Easynet Group plc ("Easynet") announced that
they had agreed the terms of a recommended cash offer, made by advisors of the
Group, on behalf of the offeror, Sky Broadband Services Limited, a wholly-owned
subsidiary of BSkyB, for the entire issued and to be issued share capital of
Easynet.
The offer of 175 pence in cash for each Easynet share valued the entire issued
share capital of Easynet at approximately GBP211 million. On 21 October 2005,
Sky Broadband Services Limited acquired 28,750,000 Easynet shares, representing
approximately 23.9% of the issued share capital of Easynet.
Use of measures not defined under IFRS
This press release contains certain information on the Group's results and cash
flows that has 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 regard to the potential for growth of free-to-air and pay-TV,
advertising growth, DTH subscriber growth and Multiroom and Sky+ penetration,
DTH revenue, profitability and margin growth, cash flow generation, 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 government
regulation upon the Group's activities, its reliance on technology, which is
subject to risk, change and development, 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 UK and Ireland.
Information on some risks and uncertainties are described in the "Risk Factors"
section of Sky's Annual Report on form 20-F for the year ended 30 June 2005.
Copies of the Annual Report on form 20-F 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
Subscribers to Sky Channels
Prior year Q1 Prior quarter Q4 Q1 2005/06
as at as at as at
30/09/04 30/06/05 30/09/05
DTH homes(1),(2),(3) 7,417,000 7,787,000 7,844,000
Total TV homes
in the UK and
Ireland(4) 26,176,000 26,321,000 26,417,000
DTH homes as a
percentage of
total UK and
Ireland TV
homes 28% 30% 30%
Cable - UK 3,305,000 3,287,000 3,281,000
Cable - Ireland 575,000 585,000 588,000
Total Sky pay homes 11,297,000 11,659,000 11,713,000
Total Sky pay
homes as a
percentage of
total UK and
Ireland TV homes 43% 44% 44%
Sky+ homes 474,000 888,000 1,027,000
Multiroom homes(5) 357,000 645,000 748,000
DTT - UK(6) 3,451,000 4,940,000 5,316,000
1: Includes DTH subscribers in Republic of Ireland (372,000, as at 30 September
2005).
2: DTH subscribers includes only primary subscriptions to Sky (no additional
units are counted for Sky+ or Multiroom subscriptions). 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 Kingston
Interactive Television and Homechoice.
4: Total UK homes estimated by BARB and taken from the beginning of the month
following the period end (latest figures as at 1 October 2005). Total Ireland
homes estimated by Nielsen Media Research, conducted on an annual basis in
July with results available in September (latest figures as at July 2005).
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 1 October 2005). These include Sky or Cable homes
that already take multi-channel TV.
Appendix 2
Glossary
Useful Description
definitions
ARPU Average Revenue Per User: the amount spent by the Group's
residential subscribers in the quarter, divided by the average
number of residential subscribers in the quarter, annualised.
Churn The rate at which subscribers relinquish their subscriptions,
expressed as a percentage of total subscribers.
Digibox Digital satellite reception equipment.
EBITDA Earnings before interest, taxation, depreciation and
amortisation is calculated as operating profit before
depreciation and amortisation or impairment of goodwill and
intangible assets.
Effective tax Corporation tax charge expressed as a percentage of Profit
rate before tax, goodwill, interest, exceptional items and share of
results of joint ventures.
Gross margin Revenue less programming expenses as a proportion of revenue.
Mainstream Current corporation tax charge for the year.
corporation tax
liability
Multichannel Share of viewers of non-analogue terrestrial television.
viewing share
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
debt related derivative financial instruments.
Profit after Profit attributable to equity holders of the parent.
tax
PVR Personal Video Recorder: Digital TV receiver which utilises a
built in hard disk drive to enable viewers to record without
videotapes, pause live TV, and record one programme while
watching another.
Sky + Sky's fully-integrated Personal Video Recorder (PVR) and
satellite decoder.
Viewing share Number of people viewing a channel as a percentage of total
viewing audience.
Consolidated Income Statement for the three months ended 30 September 2005
2005/06 2004/05
Three months Three months
ended ended
30 September 30 September
GBPm GBPm
Notes (unaudited) (unaudited)
Revenue 1 1,023 948
Operating expenses 2 (808) (759)
EBITDA 239 213
Depreciation and amortisation (24) (24)
Operating profit 215 189
Share of results from joint ventures and
associates 2 1
Investment income 8 7
Finance costs (25) (21)
Profit before tax 200 176
Taxation (60) (54)
Profit for the quarter
attributable to equity holders of the parent 140 122
Earnings per share (in pence) from profit for
the quarter attributable to equity holders
of the parent
Basic and diluted 7.5p 6.3p
Notes:
1. Revenue
2005/06 2004/05
Three months Three months
ended ended
30 September 30 September
GBPm GBPm
(unaudited) (unaudited)
DTH subscribers 746 697
Cable subscribers 54 52
Advertising 81 72
Sky Bet 64 59
Sky Active 22 22
Other 56 46
1,023 948
2. Operating expenses
2005/06 2004/05
Three months Three months
ended ended
30 September 30 September
GBPm GBPm
(unaudited) (unaudited)
Programming 396 385
Transmission and related functions 45 44
Marketing 139 112
Subscriber management 94 91
Administration 75 73
Betting 59 54
808 759
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: 04 November 2005 By: /s/ Dave Gormley
Dave Gormley
Company Secretary