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 2003
14 November 2003
BRITISH SKY BROADCASTING GROUP PLC
(Name of Registrant)
Grant Way, Isleworth, Middlesex, TW7 5OD 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 14 November 2003
press release
14 November 2003
BRITISH SKY BROADCASTING GROUP PLC
Results for the three months ended 30 September 2003
- Net DTH subscriber growth of 170,000 in the quarter to 7.0 million
- Total revenue increases by 17% to GBP850 million
- Operating profit before goodwill and exceptional items doubles to
GBP151 million
- Net operating cash inflow increases by 39% to GBP135 million
- Profit after tax of GBP90 million
- Earnings before goodwill and exceptional items increases to 4.8 pence
per share
James Murdoch, Chief Executive of British Sky Broadcasting Group plc, said:
"The current financial year has started well and we continue to grow both
subscribers and revenues. In particular, the most significant achievements are
the doubling of operating profit and the considerable increase in profit
margin."
Enquiries:
Analysts/Investors:
Neil Chugani Tel: 020 7705 3837
Andrew Griffith Tel: 020 7705 3118
E-mail: investor-relations@bskyb.com
Press:
Julian Eccles Tel: 020 7705 3267
Robert Fraser Tel: 020 7705 3036
E-mail: corporate.communications@bskyb.com
Portland:
Tim Allan Tel: 020 7404 5349
Finsbury Group:
James Leviton Tel: 020 7251 3801
A conference call for UK and European analysts will be held at 8.30 a.m. (GMT)
today. To register for this, please contact Laura Martin at Portland on +44 20
7421 6120. A live webcast of this call will be available on Sky's corporate
website (www.sky.com/corporate) and available to replay.
There will be a separate conference call for US analysts 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
On 1 October 2003, British Sky Broadcasting Group plc ("the Group" or "Sky")
announced the achievement of its target of seven million direct-to-home ("DTH")
satellite subscribers by the end of the calendar year 2003, three months early.
The Group added 170,000 net new subscribers in the three months to 30 September
2003 ("the quarter"), increasing the total number of DTH subscribers to
7,015,000.
DTH churn (annualised) continues to remain below 10% at 9.6% for the quarter,
the same level as the three months to 30 September 2002 ("the comparable
period").
The annualised average revenue per DTH subscriber ("ARPU") in the quarter was
GBP366, an increase of GBP18 over the comparable period and the same as ARPU
reported for the quarter to 30 June 2003. ARPU remains on track to reach Sky's
target of GBP400 in 2005. The Group expects the next significant increase in
ARPU to take effect from January 2004 as a result of the recently announced
changes in UK and Ireland retail pricing. These price changes will therefore be
reflected in ARPU from the third quarter of this financial year.
At 30 September 2003, there were 184,000 subscribers to the Extra Digibox and
121,000 subscribers to Sky+, representing increases of 12% and 15% respectively
in the quarter. The percentage of Sky+ subscribers taking Sky's top tier
package, Sky World, was around 80%. Sky recently announced that, from 1 October
2003, the GBP10 monthly Sky+ subscription would be waived for those customers
who subscribe to two or more Sky premium sports or movie channels, and that this
change, together with the recently launched marketing campaign, is expected to
increase the take-up of Sky+ and Extra Digibox. Since 1 October 2003, the
average number of daily bookings has significantly increased compared to the
average over the quarter.
One of the main programming highlights of this quarter has been Sky Sports'
coverage of the UEFA Champions League, which commenced in September. Sky's
coverage, which includes the interactive service that allows viewers to choose
between up to eight live matches simultaneously, has attracted an average
cumulative in-home audience for Wednesday nights of 1.9 million viewers. Sky
Sports attracted the highest multichannel audience ever recorded, with an
in-home peak of 4.2 million viewers, for England's qualifying tie against Turkey
for the European Championship Finals in 2004. On 17 October 2003, Sky announced
that it had successfully bid for the exclusive live rights to European Rugby
Union's Heineken Cup, for three seasons from 2003/04 to 2005/06.
FINANCIAL REVIEW
Sky has delivered a strong financial performance this quarter. Operating profit
before goodwill and exceptional items for the quarter increased by 101% to
GBP151 million and the Group's operating profit margin before goodwill and
exceptional items was 18%, up from 10% for the comparable period. The Group made
a profit after tax of GBP90 million, compared to nil in the comparable period.
Total revenues increased by 17% to GBP850 million.
DTH revenues increased by 17% to GBP628 million mainly as a result of the 12%
increase in the average number of DTH subscribers.
The Group's advertising revenue increased by 7% on the comparable period to
GBP64 million, reflecting Sky's continued outperformance compared with the UK
advertising market as a whole, which is estimated to have declined by 2% during
the quarter.
The 6% increase in wholesale revenue to GBP52 million is solely due to the
one-off receipt of revenue resulting from an audit of NTL's reporting systems
for various periods up to December 2002. Excluding this one-off effect,
wholesale revenue was broadly in line with the comparable period.
Interactive revenues were GBP75 million for the quarter, an increase of 70% on
the comparable period. Sky Active revenues increased by 14% on the comparable
period to GBP25 million. The main areas of growth this quarter have been premium
rate telephony revenues, third party betting, retail through SkyBuy, and revenue
from the operation of our websites. SkyBet revenues increased by 127% on the
comparable period to GBP50 million, mainly as a result of the increased number
of interactive and telephone bets.
Programming costs for the period increased by GBP13 million to GBP367 million.
This reflects contractual increases in sports rights costs, including the
addition of the Champions League this season; volume and contractual rate
increases in movies, partially offset by savings resulting from the continued
weakness of the US dollar; and higher subscriber volumes in third party channel
costs. The improvement in terms achieved in the renegotiation of the Viacom
channels in August, is reflected in the cost per subscriber this quarter.
Other operating costs before goodwill increased by 12% on the comparable period
to GBP332 million. This was mainly due to the significant rise in betting costs,
which is directly related to the increase in SkyBet revenue, administration
costs and transmission costs.
Included within operating costs are marketing costs of GBP98 million, which
reduced by 4% on the comparable period mainly as a result of lower digital
installs and lower set-top box unit prices. Consequently, subscriber
acquisition cost continues to fall and remains comfortably on track to achieve
the Group's target of below GBP200 by 30 June 2004.
Earnings before interest, tax, depreciation and amortisation ("EBITDA") before
exceptional items, for the quarter increased by 80% from GBP97 million to GBP175
million.
The Group's share of the operating profits of joint ventures increased to GBP3
million in the quarter and, after deducting net interest payable, the Group made
a profit before tax, goodwill and exceptional items of GBP131 million.
The tax charge for the quarter of GBP37 million includes a current tax charge of
GBP36 million (based on an effective rate of 30% on profits before tax, goodwill
and joint ventures); a deferred tax charge of GBP3 million; and a joint ventures
tax credit of GBP2 million.
The profit after tax for the quarter was GBP90 million. With the weighted
average number of shares outstanding during the quarter (excluding those shares
held in ESOP trust) at 1,935 million, this generates earnings per share before
goodwill and exceptional items of 4.8 pence compared to 1.6 pence for the
comparable period.
The Group continues to generate significant operating cashflow, with an inflow
of GBP135 million in the quarter, compared to GBP97 million in the comparable
period. This represented the conversion of 90% of operating profit before
goodwill and exceptional items to operating cash inflow. Despite seasonal
working capital outflows in the quarter relating to payments for sporting
rights, including payments totalling over GBP250 million to the FA Premier
League, the Football Association and UEFA, the Group again reduced net debt in
the first quarter by GBP71 million to GBP1,034 million from GBP1,105 million at
30 June 2003.
CORPORATE
On 3 November 2003, the Board of Directors announced the appointment of James
Murdoch as Chief Executive Officer. He has replaced the outgoing Chief
Executive, Tony Ball, effective November 4. Mr Ball also resigned as a
director of the Company with effect from 4 November 2003.
James Murdoch was appointed following the unanimous recommendation of a
four-member Nominations Committee of non-executive Board members. The Committee
was supported by the Executive Search firm Spencer Stuart.
The Board has invited Lord Rothschild to fill the new role of non-executive
Deputy Chairman and he will take up the post on 17 November 2003. As of such
date, Lord Rothschild will also assume the role of the Senior Independent
Director from Lord St John of Fawsley.
Also on 3 November 2003, the Board announced the appointment of Allan Leighton
as Chairman of the Audit Committee. He will take up this position upon the
retirement from the Board of the Committee's current Chairman, Philip Bowman,
immediately after today's AGM.
Following Philip Bowman's retirement from the Board, the Board has instigated a
search for a new Independent non-executive Director.
On 12 August 2003, the Group announced that it had a deficit of GBP1,120 million
on its company-only profit and loss reserve at 30 June 2003. In order to
improve the presentation of the Group's balance sheet and give the Group greater
flexibility in any future distribution policy, the Directors are proposing a
resolution at today's AGM to eliminate the deficit by reducing the Group's share
premium account. In order for this to take effect, the reduction will require
the subsequent approval of the High Court.
On 7 October 2003, the Group announced that it had sold the whole of its 9.9%
shareholding in Manchester United plc. The price per share paid of GBP2.39
reflected the closing price on 6 October and both the final and special declared
dividends. Prior to the sale, the Group held 25,950,827 Manchester United plc
shares. The cash received from this sale will be reflected in the cashflow for
the second quarter. In accordance with the accounting treatment required by UK
GAAP, the GBP33 million provision held against the Group's investment in
Manchester United plc was released at 30 September 2003. Further to this, a
profit on disposal of GBP2 million will be recognised during the second quarter.
Appendix 1
Subscribers to Sky Channels
Prior Year Prior Quarter
Q1 2002/03 Q4 2002/03 Q1 2003/04
as at as at as at
30/09/02 30/06/03 30/09/03
DTH digital homes1,2 6,318,000 6,845,000 7,015,000
Total TV homes in the UK and 25,911,000 26,154,000 26,200,000
Ireland3
Total Sky digital homes as a 24% 26% 27%
percentage of total UK and Ireland
TV homes
Cable - UK 3,405,000 3,266,000 3,267,000
Cable - Ireland 594,000 605,000 584,000
Total Sky pay homes 10,317,000 10,716,000 10,866,000
DTT - UK 3, 4 - 1,510,000 1,710,000
Total Sky homes 10,317,000 12,226,000 12,576,000
Total Sky homes as a percentage of 40% 47% 48%
total UK and Ireland TV homes
DTH Churn rate for year to date 9.6% 9.4% 9.6%
(annualised)
1: Includes DTH subscribers in Ireland (297,000 as at 30 September 2003, 286,000
at 30 June 2003 and 255,000 at 30 September 2002).
2: DTH subscribers includes only primary subscriptions to Sky (no additional
units are counted for Sky+ or Extra Digibox subscriptions).
3: Total UK homes estimated by BARB and taken from the beginning of the
following month (latest figures as at October 2003). Total Ireland homes
estimated by Nielsen Media Research, conducted on an annual basis in July
(latest figures as at July 2003).
4: DTT homes estimated by BARB and taken from the beginning of the following
month (latest figures as at October 2003). These figures may include Sky or
Cable homes that already take multichannel TV.
Consolidated Profit and Loss Account for the three months ended 30 September
2003
2003/2004 2002/2003
Three Three
months months
Before ended ended
goodwill Goodwill 30 30
and and September September
exceptional exceptional 2003 Before 2002
items items Total goodwill Goodwill Total
GBPm GBPm GBPm GBPm GBPm GBPm
Notes (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Turnover: Group turnover and
share of joint
ventures' turnover 871 - 871 744 - 744
Less: share of joint ventures'
turnover (21) - (21) (18) - (18)
Group turnover 1 850 - 850 726 - 726
Operating expenses, net 2 (699) (29) (728) (651) (29) (680)
EBITDA 175 - 175 97 - 97
Depreciation (24) - (24) (22) - (22)
Amortisation - (29) (29) - (29) (29)
Operating profit (loss) 151 (29) 122 75 (29) 46
Share of operating results of
joint ventures 3 - 3 (1) - (1)
Write back of provision against
fixed asset investments, net 3 - 25 25 - - -
Profit (loss) on ordinary
activities before interest
and taxation 154 (4) 150 74 (29) 45
Interest receivable and similar 1 - 1 1 - 1
income
Interest payable and similar (24) - (24) (32) - (32)
charges
Profit (loss) on ordinary
activities before taxation 131 (4) 127 43 (29) 14
Tax on profit (loss) on ordinary (37) - (37) (14) - (14)
activities
Profit (loss) on ordinary
activities
after taxation 94 (4) 90 29 (29) -
Equity dividends - paid and - -
proposed
Retained profit for the 90 -
financial period
Basic earnings (loss) per share 4.8p (0.2p) 4.6p 1.6p (1.6p) 0.0p
Diluted earnings (loss) per 4.8p (0.2p) 4.6p 1.6p (1.6p) 0.0p
share
Notes:
1. Turnover
2003/2004 2002/2003
Three months Three months
ended ended
30 September 30 September
GBPm GBPm
(unaudited) (unaudited)
DTH subscribers 628 538
Cable subscribers 52 49
Advertising 64 60
Interactive 75 44
Other 31 35
850 726
2. Operating expenses, net
2003/2004 2002/2003
Three months Three months
ended Ended
Before 30 September Before 30 September
goodwill Goodwill Total Goodwill Goodwill Total
GBPm GBPm GBPm GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Programming (i) 367 - 367 354 - 354
Transmission and related 43 - 43 38 - 38
functions (i)
Marketing 98 - 98 102 - 102
Subscriber management 80 - 80 78 - 78
Administration 64 29 93 58 29 87
Betting 47 - 47 21 - 21
699 29 728 651 29 680
(i) The amounts shown are net of GBP5 million (2002/2003 three months ended 30
September: GBP2 million) receivable from the disposal of programming rights not
acquired for use by the Group, and GBP8 million (2002/2003 three months ended 30
September: GBP6 million) in respect of the provision to third party broadcasters
of spare transponder capacity.
3. Exceptional items
Effective at 30 September 2003, the Group reduced its provision against its
minority equity investments in football clubs by GBP33 million, following the
disposal of its investment in Manchester United plc in October 2003 for GBP62
million in cash. The Group also increased its provision against its remaining
minority equity investments in football clubs by a further GBP8 million.
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: 14 November 2003 By: /s/ Dave Gormley
Dave Gormley
Company Secretary