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 2003
13 May 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 Third Quarter Results released on
13 May 2003
EXHIBIT NO. 1
BRITISH SKY BROADCASTING GROUP PLC
Results for the nine months ended 31 March 2003
The following portion of this Report is incorporated by reference in the
prospectus contained in the Registration Statement on Form F-3 (SEC File No.
333-08246) filed by the Registrant under the Securities Act of 1933: the
consolidated profit and loss account for the nine months ended 31 March 2003,
the consolidated profit and loss account for the three months ended 31 March
2003, and the notes to these accounts, annexed hereto, excluding the
term EBITDA and the related EBITDA amounts.
13 May 2003
BRITISH SKY BROADCASTING GROUP PLC
Results for the nine months ended 31 March 2003
* Net DTH subscriber growth of 150,000 in the quarter to 6.7 million
* DTH revenue increases by 23% to GBP1,726 million
* Advertising revenue increases by 15% to GBP204 million
* Operating profit before goodwill and exceptional items increases by 96%
to GBP254 million
* Operating cash inflow of GBP396 million
* Profit before tax, goodwill and exceptional items of GBP165 million
Tony Ball, Chief Executive of British Sky Broadcasting Group plc, said:
"We are reporting another strong set of results today. In what is normally a
quiet period we have delivered healthy subscriber growth and an operating profit
which has almost doubled year on year, thanks to strong revenue growth and
sustained cost control. We remain on track to hit all of our targets."
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 5344
A conference call for analysts will be held at 8.30 a.m. (BST) today. To
register for this, please contact Diane Barnes at Portland PR on +44 20 7404
5351. In addition, a live webcast of the call will be available (in listen only
mode) on Sky's corporate website (www.sky.com/corporate).
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 Nikki Sheridan at Taylor Rafferty on +1 212 889 4350.
OPERATIONAL REVIEW
At 31 March 2003 the total number of direct-to-home (DTH) digital satellite
subscribers in the UK and Ireland was 6,712,000. This represents a net increase
of 150,000 in the three months to 31 March 2003 ("the quarter") and keeps Sky
comfortably on track to achieve its target of 7 million subscribers by the end
of the calendar year. Including both cable and estimated digital terrestrial
homes from BARB, at least one or more of Sky's channels are now distributed to
12 million homes in the UK and Ireland.
DTH churn for the year to date (annualised) fell to 9.3%, a new record low level
of total churn achieved despite the price rise in the quarter.
The annualised average revenue per DTH subscriber (ARPU) in the quarter was
GBP364, an increase of 7% over the same quarter last year and GBP13 higher than
the ARPU for the quarter to 31 December 2002. This step change in ARPU reflects
the changes to UK retail pricing that took effect from 1 January 2003.
At 31 March 2003, there were 137,000 subscribers to the Extra Digibox and 79,000
subscribers to Sky+, representing increases of 17% and 21% respectively over the
quarter.
Multi-channel television continues its increase in popularity, with viewing
share across all UK television homes up 7% on the nine months ended 31 March
2002 ("the comparable period"). During the Easter week and for the first time
ever, multi-channel viewing share exceeded both BBC1 and ITV1, recording a 26%
share of viewing in all UK television homes compared to 24% each for BBC1 and
ITV1. Multi-channel viewing followed these record audiences in the week after
Easter by beating BBC1 and ITV1 for the second consecutive week.
Through the strength and depth of its programming, Sky Sports made a significant
contribution to this achievement and also increased its viewing share during the
quarter. In particular, on the afternoon of Sunday 2 March 2003, Sky Sports
attracted 47% of multi-channel viewing during simultaneous live coverage of the
Worthington Cup Final between Liverpool and Manchester United and the World Cup
cricket match between England and Australia. Last month, Sky Sports announced
new golf agreements securing the exclusive live coverage of the Ryder Cup
matches in 2006 and 2008, the US Open until 2009, US PGA Championship until 2007
and World Golf Championship and European Tour events for the next five years.
Following on from its success at the Royal Television Society Awards earlier
this year, Sky News was honoured in April with a British Academy Film and
Television Award (BAFTA) for its coverage of the Soham tragedy. Sky News has
also been the 24-hour news channel of choice during the conflict in Iraq.
During the first three weeks of the conflict, Sky News consistently out-rated
BBC News 24 and the ITV News channel in multi-channel homes, recording an
average weekly reach of over 10.5 million individuals and an average weekly
viewing share of 5.7%, more than double that of its rivals combined.
On 17 April 2003, Sky added to its channel line up with the successful launch of
three wholly-owned music channels, The Amp, Flaunt, and Scuzz. The three
channels feature more extensive interactive opportunities than any previous
music channel.
Sky One also reached a new milestone over Easter when it showed the 300th
episode of its most popular programme, the Simpsons.
FINANCIAL REVIEW
Operating profit before goodwill and exceptional items increased to GBP254
million, an increase of 96% on the comparable period. This reflects the
operational gearing within Sky's business model, with both continued strong
top-line performance and a substantial proportion of costs being largely fixed.
Total revenues grew by 15% on the comparable period to GBP2,331 million, whilst
operating expenditure rose by just 9% to GBP2,077 million, generating a net
operating margin of 11%.
DTH revenues increased by 23% to GBP1,726 million in the nine months ended 31
March 2003 ("the period"), the third successive nine-month period of over 20%
growth. This is principally a result of the 14% increase in the average number
of DTH subscribers and the continued growth in ARPU.
The Group's advertising revenues continue to increase, achieving 15% growth on
the comparable period to GBP204 million, reflecting the first quarter of benefit
from the strong share deals negotiated with advertising agencies for calendar
2003, growth in viewing share and the agency commissions earned on the sale of
airtime for certain third party channels.
Wholesale revenues fell by 34% on the comparable period to GBP146 million. On a
like-for-like basis (excluding the effect of the closure of ITV Digital) the
decline was 16%, consistent with the trend in the first half of this financial
year. This reduction in revenue is a direct result of the loss of cable
subscribers by NTL and Telewest over the last 12 months and the fall in cable
ARPU as the number of premium units taken by subscribers has declined.
Conversely, the penetration of Sky's basic channels, Sky One and Sky News, has
increased to 100% of all cable homes and Sky Sports News has now increased its
penetration to 85% of digital cable homes. Sky remains in ongoing discussions
with the cable operators in order to improve the number of Sky premium channels
taken by their subscribers.
Interactive revenues increased by 7% on the comparable period to GBP146 million.
Sky Active revenues performed strongly, increasing by 12% on the comparable
period to GBP74 million. This increase was principally driven by further usage
of interactive advertising, SkyBuy (Sky's wholly owned retail business) and
increased revenues from interactive programming. During the quarter, ITV
embraced interactive applications on digital satellite for the first time across
the UK with 'Who Wants To Be A Millionaire?' and has now followed this with the
current series of 'I'm A Celebrity Get Me Out Of Here.' Interactivity will again
be prominent on Channel 4's Big Brother, to be broadcast at the end of May.
While the gross revenues of SkyBet increased by 3% on the comparable period to
GBP72 million, there has been a continued improvement in the mix of revenues
between low margin telephone betting and high margin interactive television
betting. The launch of Sky Bet Vegas in the quarter, as well as growth in the
existing Sports betting business, has resulted in interactive television betting
generating over three times the volume of bets than in the comparable period.
Programming costs increased by GBP122 million on the comparable period to
GBP1,168 million. The increase in sports costs was mainly due to increased
contractual rights costs and the Ryder Cup which is a bi-annual event, partly
offset by savings from dropping agreements to televise UEFA Cup Football,
Scottish Premier League Football and Six Nations Rugby. A 25% increase in the
number of mega-hit movies delivered by the movie studios also contributed to the
increase. Third party channel costs increased on the comparable period mainly
due to a rise in the average number of subscribers. This was partly offset by
savings from channel rate reductions for UKTV and Sci-Fi, as well as Cartoon
Network whose agreement was renewed during the quarter achieving at least a 15%
saving on the current terms.
Other operating costs increased by GBP56 million on the comparable period to
GBP909 million due to increased supply chain costs and administration costs
offset by a reduction in customer relationship management (CRM) costs and
transmission costs.
Marketing costs are included in other operating costs and are broadly in line
with the comparable period at GBP312 million. Subscriber acquisition cost (SAC)
remains at GBP210 year-to-date, representing a reduction of GBP25 on the
comparable period. This is principally due to lower set-top box costs and an
increase in the use of more cost-effective routes to market. Sky remains focused
on continuing to drive reductions in SAC.
EBITDA before exceptional items increased by GBP135 million from GBP190 million
in the comparable period to GBP325 million.
The Group's share of the operating profits of joint ventures increased to GBP1
million in the period from an operating loss of GBP74 million in the comparable
period. This principally reflects the cessation of equity accounting for the
Group's then share of losses incurred by KirchPayTV from 8 February 2002.
After its share of the results of joint ventures, goodwill and exceptional
items, the Group made a profit before tax of GBP54 million. The profit after tax
in the period was GBP33 million, resulting in earnings per share of 1.7 pence
compared to a loss per share of 73.4 pence for the comparable period.
The tax charge for the period includes a current tax charge of GBP49 million and
a deferred tax charge of GBP3 million due to the Group moving into
profitability. This is offset by a GBP33 million deferred tax credit principally
arising from the recognition of a deferred tax asset on certain trading losses,
net of an adjustment arising from the prior year. After Sky's share of joint
ventures' tax (GBP2 million), the charge for the period was GBP21 million (GBP20
million for the quarter).
In the quarter, the group's underlying effective tax rate, ignoring the effect
of joint ventures, exceptional items and goodwill, remained at 31% compared to a
UK statutory rate of 30%.
GBP14 million of ACT has been offset against the group's tax liability for the
quarter. At 31 March 2003, the Group had GBP27 million of Advanced Corporation
Tax (ACT) expected to be recoverable in less than one year and GBP37 million of
ACT recoverable in more than one year.
As a result of non-cash items that include depreciation of GBP72 million and
amortisation of GBP93 million, and a positive movement in working capital of
GBP70 million, the Group recorded an operating cash inflow of GBP396 million for
the period. This represented the conversion of 156% of operating profit before
goodwill to cash inflow. After taking into account cash outflows principally
comprising interest payments of GBP116 million, capital expenditure of GBP64
million and corporation tax of GBP8 million, Sky reduced its net debt by GBP211
million to GBP1,317 million from GBP1,528 million at 30 June 2002.
CORPORATE
On 20 March 2003 the Group signed a new, five-year, GBP600 million Revolving
Credit Facility. The new facility was used to cancel the Group's GBP750 million
facility, originally due to mature in June 2004. In addition, the Group's
existing GBP300 million facility has been reduced to GBP200 million and will
mature, as before, in June 2004. Total available facilities now total GBP800
million, and will reduce to GBP600 million from June 2004, in line with the
anticipated reduced capital requirements of the Group, which has been cashflow
positive since January 2002.
Appendix 1
Distribution of Sky Channels
Prior Year
Q3 2001/02 Q1 2002/03 Q2 2002/03 Q3 2002/03
As at 31/03/02 as at as at as at
30/09/02 31/12/02 31/03/03
DTH Digital (1,2) 5,887,000 6,318,000 6,562,000 6,712,000
Cable - UK 3,601,000 3,405,000 3,355,000 3,312,000
Cable - Ireland 610,000 594,000 596,000 604,000
Total Sky pay homes 10,098,000 10,317,000 10,513,000 10,628,000
DTT - UK (3) - - 813,000 1,370,000
Total Sky homes 10,098,000 10,317,000 11,326,000 11,998,000
% of all UK homes (4) 41% 42% 46% 48%
DTH Churn rate for year to date 10.5%(5) 9.6% 9.4% 9.3%
(annualised)
(1): Includes DTH subscribers in Ireland (279,000 as at 31 March 2003).
(2): DTH subscribers includes only primary subscriptions to Sky (no additional
units are counted for Sky+ or Extra Digibox subscriptions).
(3): BARB estimates taken from the beginning of each month
(4): Total UK homes estimated by BARB, calculated using Total Sky homes.
(5): Excludes analogue churn up to 27 September 2001 and the effect of the
termination of the analogue service on 27 September 2001.
Consolidated Profit and Loss Account for the nine months ended 31 March 2003
Before Goodwill 2002/2003 Before Goodwill 2001/2002
goodwill and Nine months goodwill and Nine months
and exceptional ended 31 and exceptional ended 31
exceptional items March 2003 exceptional items March 2002
items Total items Total
GBPm GBPm GBPm GBPm GBPm GBPm
Notes (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Turnover: Group and share of joint 2,387.9 - 2,387.9 2,147.2 - 2,147.2
ventures' turnover
Less: share of joint ventures' (57.4) - (57.4) (119.0) - (119.0)
turnover
Group turnover 1 2,330.5 - 2,330.5 2,028.2 - 2,028.2
Operating expenses, net 2 (2,076.7) (92.7) (2,169.4) (1,898.9) (111.3) (2,010.2)
EBITDA 325.4 - 325.4 189.6 (22.3) 167.3
Depreciation (71.6) - (71.6) (60.3) - (60.3)
Amortisation - (92.7) (92.7) - (89.0) (89.0)
Operating profit (loss) 253.8 (92.7) 161.1 129.3 (111.3) 18.0
Share of operating results of joint 3 1.3 - 1.3 (73.5) - (73.5)
ventures
Joint ventures' goodwill - - - - (1,069.9) (1,069.9)
amortisation, net
Profit on sale of fixed asset - - - - 2.3 2.3
investment
Amounts written off fixed asset - (18.3) (18.3) - (60.0) (60.0)
investments, net
Release of provision for loss on - - - - 10.0 10.0
disposal of subsidiary
Profit (loss) on ordinary activities 255.1 (111.0) 144.1 55.8 (1,228.9) (1,173.1)
before interest and taxation
Interest receivable and similar 2.9 - 2.9 10.1 - 10.1
income
Interest payable and similar charges (93.1) - (93.1) (115.8) - (115.8)
Profit (loss) on ordinary activities 164.9 (111.0) 53.9 (49.9) (1,228.9) (1,278.8)
before taxation
Taxation charge on profit (loss) on (20.8) - (20.8) (16.6) (88.9) (105.5)
ordinary activities
Profit (loss) on ordinary activities 144.1 (111.0) 33.1 (66.5) (1,317.8) (1,384.3)
after taxation
Equity dividends - paid and proposed - -
Retained profit (loss) 33.1 (1,384.3)
Earnings (loss) per share - basic 7.5p (5.8p) 1.7p (3.5p) (69.9p) (73.4p)
Earnings (loss) per share - diluted 7.4p (5.7p) 1.7p (3.5p) (69.9p) (73.4p)
Consolidated Profit and Loss Account for the three months ended 31 March 2003
Before Goodwill Three Before Goodwill Three
goodwill and months goodwill and months
and exceptional ended and exceptional ended
exceptional items 31 March exceptional items 31 March
items 2003 items 2002
Total Total
GBPm GBPm GBPm GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Turnover: Group and share of joint ventures' 838.1 - 838.1 733.5 - 733.5
turnover
Less: share of joint ventures' turnover (18.9) - (18.9) (25.9) - (25.9)
Group turnover 819.2 - 819.2 707.6 - 707.6
Operating expenses, net (723.7) (29.0) (752.7) (648.4) (51.5) (699.9)
EBITDA 122.9 - 122.9 78.5 (22.3) 56.2
Depreciation (27.4) - (27.4) (19.3) - (19.3)
Amortisation - (29.0) (29.0) - (29.2) (29.2)
Operating profit (loss) 95.5 (29.0) 66.5 59.2 (51.5) 7.7
Share of operating results of joint ventures (0.4) - (0.4) (13.7) - (13.7)
Joint ventures' goodwill amortisation - - - - 13.5 13.5
Amounts written back to fixed asset - 0.5 0.5 - - -
investments
Profit (loss) on ordinary activities before 95.1 (28.5) 66.6 45.5 (38.0) 7.5
interest and taxation
Interest receivable and similar income 0.9 - 0.9 1.6 - 1.6
Interest payable and similar charges (30.2) - (30.2) (35.5) - (35.5)
Profit (loss) on ordinary activities before 65.8 (28.5) 37.3 11.6 (38.0) (26.4)
taxation
Tax (charge) credit on profit (loss) on (21.8) 1.5 (20.3) (11.1) 6.7 (4.4)
ordinary activities
Profit (loss) on ordinary activities after 44.0 (27.0) 17.0 0.5 (31.3) (30.8)
taxation
Equity dividends - paid and proposed - -
Retained profit (loss) 17.0 (30.8)
Earnings (loss) per share - basic 2.3p (1.4p) 0.9p 0.0p (1.6p) (1.6p)
Earnings (loss) per share -diluted 2.3p (1.4p) 0.9p 0.0p (1.6p) (1.6p)
Notes:
1. Turnover
The Group's turnover, whilst deriving from one class of business, has been
analysed as follows:
2002/2003 2001/2002
Nine months Nine months
ended ended
31 March 31 March
GBPm GBPm
(unaudited) (unaudited)
Direct-To-Home subscribers 1,725.5 1,400.1
Cable and DTT subscribers (i) 145.7 221.1
Advertising 204.1 178.2
Interactive 146.2 136.3
Other 109.0 92.5
2,330.5 2,028.2
(i) Excludes revenue from DTT subscribers from 30 April 2002 when the ITV
Digital pay television service was closed.
2. Operating expenses, net
Before Goodwill and 2002/2003 Before Goodwill and 2001/2002
goodwill and exceptional Nine months goodwill and exceptional Nine months
exceptional items ended exceptional items ended
items 31 March items 31 March
Total Total
GBPm GBPm GBPm GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Programming (i) 1,167.9 - 1,167.9 1,045.9 - 1,045.9
Transmission and related 108.4 - 108.4 110.3 - 110.3
functions (i)
Marketing 311.5 - 311.5 307.6 - 307.6
Subscriber management 242.1 - 242.1 217.3 - 217.3
Administration (ii) 179.9 92.7 272.6 152.1 111.3 263.4
Betting 66.9 - 66.9 65.7 - 65.7
2,076.7 92.7 2,169.4 1,898.9 111.3 2,010.2
(i) The amounts shown are net of GBP9.1 million (2001/2002: nine months ended 31
March GBP9.3 million) receivable from the disposal of programming rights not
acquired for use by the Group, and GBP18.7 million (2001/2002: nine months ended
31 March GBP17.8 million) in respect of the provision to third party
broadcasters of spare transponder capacity.
(ii) Included within goodwill and exceptional items for the nine months ended 31
March 2003 is a charge in respect of goodwill amortisation of GBP92.7 million
(2001/2002: nine months ended 31 March GBP89.0 million). In the nine months
ended 31 March 2002, a charge of GBP22.3 million in respect of an exceptional
operating provision was made against ITV Digital programming debtors following
the closure of the ITV Digital pay television operation on 30 April 2002.
3. Share of operating results of joint ventures
2002/2003 2001/2002
Nine months Nine months
ended ended
31 March 31 March
GBPm GBPm
(unaudited) (unaudited)
KirchPayTV GmbH & Co KgaA ("KirchPayTV") operating loss - (70.0)
Programming joint ventures' operating profit (loss), net 1.3 (3.5)
1.3 (73.5)
This relates to the Group's equity share of the operating results of the Group's
joint ventures.
KirchPayTV
By 8 February 2002, the Group considered that its relationship with KirchPayTV
had irrevocably changed and that the Group has not exercised significant
influence since that date. Therefore the Group considered that from 8 February
2002 it was no longer appropriate to account for its interest in KirchPayTV as a
joint venture, and ceased accounting for KirchPayTV's losses using the gross
equity method from that date.
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: 13 May 2003 By: /s/ Dave Gormley
Dave Gormley
Company Secretary