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Results for the nine months ended 31 March 2013

Results for the nine months ended 31 March 2013 
MIDDLESEX, UK -- (Marketwired) -- 05/02/13 --  *T 
BRITISH SKY BROADCASTING GROUP PLC 
Unaudited results for the nine months ended 31 March 2013 
Adjusted results 
Nine months to 31 March     2013         2012         Variance 
Revenue                    GBP5,381m   GBP5,078m      +6% 
EBITDA                     GBP1,253m   GBP1,161m      +8% 
Operating profit           GBP994m     GBP908m        +9% 
Earnings per share (basic) 43.7p       37.8p          +16% 
Strong financial results 
- Revenue of GBP5,381 million, up 6% 
- Adjusted operating profit of GBP994 million, up 9% 
- Adjusted basic earnings per share of 43.7p, up 16% 
Broad product growth delivering good operating performance 
- Total paid-for subscription product base exceeds 30 million for the
first time 
- Subscription product growth of 715,000 in Q3 
- ARPU up GBP30 year on year to GBP576 
Rapid growth in take-up of new connected TV services 
- 2.3 million internet-connected Sky+HD boxes, up almost 600,000 in
the quarter 
- 4.5 million average weekly On Demand downloads, up more than
fivefold year on year 
- 3.5 million movie rental transactions, up 37% year on year 
Jeremy Darroch, Chief Executive, commented:"We have had a good third
quarter and our multi-product strategy is delivering strong results.
Increased take-up across our product set led to another improvement in
financial performance with growth in revenues and profits accelerating in
the third quarter. Group revenues are up 6%, operating profit up 9% and
earnings per share up 16% for the first nine months."Despite the tough
consumer environment, we added 715,000 more subscription products in three
months, taking the total past 30 million for the first time. On the back of
this growth, we are creating 550 new jobs to meet demand for our products
and serve our growing customer base."In our television business, we
continue to see rapid growth in our connected TV services as customers take
advantage of new ways to watch our content. The number of internet-connected Sky+HD boxes grew by almost 45,000 every week in the quarter,
leading to a fivefold increase in On Demand downloads and 37% growth in
movie rentals against last year. Alongside the expansion of our mobile
video service with the launch of Sky Go Extra, these trends are opening up
new sources of future growth and value creation."These results highlight
the way that our successful transition to more broadly-based growth has
created a bigger, more profitable business.
And having more ways to grow serves us particularly well at a time when
household budgets look likely to remain stretched. We will continue to
focus on overall product sales as the best means of delivering
sustainable growth and returns for shareholders." 
Results highlights 
Customer Metrics (unaudited) 
As at     As at     Annual  Quarterly Growth 
31-Mar-13 31-Mar-12 Growth  to 31-Mar-13 
Paid-for subscription     30,228    27,734    +2,494   +715
products ('000s)
 TV                       10,388    10,268    +120     +30
 HD                       4,669     4,222     +447     +108
 Multiroom                2,476     2,378     +98      +9
 Sky Go Extra             44        -         +44      +44
 Broadband                4,387     3,863     +524     +152
 Telephony                4,208     3,627     +581     +186
 Line rental              4,056     3,376     +680     +186 
Paid-for products per
retail customer           2.8       2.6 
New connected TV services
('000s)
 Internet-connected       2,284     604       +1,680   +569
 Sky+HD boxes
 Sky Go unique users      3,262     2,607     +655     +196 
Other metrics
Total customers ('000s)   14,613    14,206    +407     +120
 Retail customers         10,812    10,549    +263     +70
 Wholesale customers(4)   3,801     3,657     +144     +50 
ARPU(2)                   GBP576    GBP546    +GBP30   +GBP8
Customers taking each of
TV, broadband & talk      34%       31%
Churn(2)                  10.8%     10.1% 
An additional KPI summary table containing further detailed disclosure
can be found in Schedule 1. 
Business Performance(1)(unaudited) 
9 months to  9 months to 
31-Mar-13    31-Mar-12   Movement 
Revenue                                GBP5,381m    GBP5,078m    +6% 
Adjusted operating profit                GBP994m      GBP908m    +9% 
% Adjusted operating profit margin         18.5%        17.9%    +60bps 
Adjusted profit before tax               GBP934m       GBP853m   +9% 
Adjusted basic earnings per share(3)       43.7p         37.8p   +16% 
(1) A reconciliation of adjusted operating profit and adjusted EBITDA to
reported measures is set out in Appendix 2. 
(2) Quarterly annualised. 
(3) Adjusted basic EPS is calculated from adjusted profit for the
period. A reconciliation of reported profit to adjusted profit is set
out in note 3 to the consolidated financial information. 
(4) Wholesale customers taking at least one paid for Sky channel. 
Operating review 
We performed well in the third quarter as the successful execution of
our multi-product strategy and improved operational efficiency
delivered strong financial results. Revenues for the first nine months
were up 6%, adjusted operating profit up 9% and adjusted basic earnings
per share grew by 16% as we saw acceleration in revenue and profit
growth during the third quarter. 
In what remains a tough economic environment, we added 715,000 new
subscription products in the three months to 31 March 2013. This took
the total base of paid-for subscription products to 30.2 million, up 9%
year on year. Over the last five years, our base of paid-for
subscription products has more than doubled. Overall, customers now
take an average of 2.8 paid-for products from Sky, up from 2.6 a year
ago. 
ARPU continued to grow reaching GBP576, GBP30 higher than the previous
year. Quarterly annualised churn was slightly up year on year at 10.8%
reflecting the continuing pressure on household budgets. 
Our growth was broadly-based in the quarter. We saw good growth in our
TV products with a further 108,000 HD customers, 9,000 multiroom and
44,000 paying customers to our new mobile TV service Sky Go Extra. We
also enjoyed another strong quarter in home communications, adding
152,000 broadband customers and 186,000 customers to each of telephony
and line rental. This helped us end the quarter with 34% of our
customer base taking all three of TV, broadband and telephony, up from
31% a year ago. In broadband, we have continued to expand our network
reach with a presence in 2,202 exchanges at the end of the quarter. We
have also continued to improve the economics of broadband, moving more
customers over to our fully unbundled product. At the end of Q3, 96% of
customers were on-net, with 75% of these customers on our
fully-unbundled MPF product.
Over the quarter, we added 70,000 retail customers and 50,000 wholesale
customers. This gave us a total of 14.6 million customers, across
retail and wholesale, at the end of Q3 (10.8 million retail customers
and 3.8 million wholesale customers) as we continue to seek to broaden
the reach of our channels across all platforms where we see scale and
opportunity. 
Content 
We continue to bring the best new content to Sky customers and to
develop new ways for them to enjoy that content. 
In movies, we built on our longstanding relationship with Disney with
the creation of a brand new channel, Sky Movies Disney - the first time
that Disney has ever been involved in a co-branded linear movie channel
and the first time that viewers in the UK and Ireland have been able to
watch all Disney movies on one channel. The launch of the channel on 28
March was a big hit with customers, with Disney titles accounting for
40% of all downloads through On Demand and attracting 685,000 views
across Sky Go in its first weekend. 
In sport, we have announced the renewal of both ATP and US Open tennis
contracts and have, for the first time, secured the rights for
RaboDirect Pro 12 rugby. These rights further reinforce the strength of
our sports offering in what promises to be a fantastic year on Sky
Sports. 
Products 
Our focus on giving customers new ways to consume content - and giving
ourselves new opportunities for future growth - is working well, with a
rapid increase in the take-up and usage of our On Demand and mobile
video services in the third quarter. 
The number of internet-connected Sky+HD set-top boxes rose by 33% on
the previous quarter to 2.3 million. The launch of 4oD in the quarter,
along with on demand content from leading partners including National
Geographic and The History Channel, means that we now offer the UK's
most complete catch-up service at no extra cost to customers. We also
expanded the range of movies available on Sky Store. Recent
blockbusters like Skyfall, Argo and Taken 2 were all available to
customers at the same time as the DVD release, helping to drive
significant demand. The number of average weekly On Demand downloads in
the quarter increased by almost 500% year on year to 4.5 million, while
the number of movie rental transactions, through both Sky Store and Sky
Box Office, increased 37% over the same time period. 
Customers using our On Demand services consistently report the highest
levels of satisfaction: they are more loyal, more likely to recommend
Sky and more likely to take up additional products. As a result, we are
offering wireless connectors to selected Sky Movies customers - a
segment that derives a particularly strong benefit from our On Demand
service. These devices will make it easy for them to connect their
Sky+HD box to the internet at no extra cost and enable them to access
the full range of On Demand services including over a thousand movie
rentals on Sky Store. 
In Sky Go, we have developed the UK's leading mobile video service
which continues to get a great response from customers. Quarterly
unique users were up 25% year on year to 3.3 million, and a record
319,000 customers used the service to watch the recent UEFA Champions
League match between Real Madrid and Manchester United. During the
quarter, we launched our new paid-for service Sky Go Extra, the first
subscription service to allow customers in the UK and Ireland to
download movies and TV shows to watch offline. This has got off to a
good start with 44,000 customers paying for the service by the end of
the quarter. 
We continued to develop our internet TV service NOW TV in the quarter
with the launch in March of the new 24-hour pass to Sky Sports. This
gives customers unlimited access for a 24-hour period to the full range
of sports that we offer over all six Sky Sports channels for just
GBP9.99. 
Service 
Our continued work on quality of service and operating efficiency
delivered improvements across all aspects of customer service in the
quarter. Increasing penetration of our most reliable Sky+HD box
contributed to a 25% reduction in service visits in the quarter versus
the prior year, and we are on track to report the lowest level of
annual service visits for nine years despite significant product growth
throughout that time. Meanwhile, the number of upgrading customers
choosing to self-set-up their equipment rose 7 percentage points in the
quarter to 27% and the re-launch of our online Help Centre led to a 40%
increase in usage year on year. 
Additionally, we are creating 550 new jobs to meet demand for our
products and serve our growing customer base over the next 12 months.
These will be based across the UK with 200 in Sky Retail Sales, Sky's
in-house sales team, and 350 in our customer service centre in
Newcastle, supporting growth in our broadband customer base following
the acquisition of the O2 and BE consumer broadband and fixed-line
telephony business. 
Financial Performance 
We have delivered a strong financial performance for the nine months
to 31 March 2013 ("the period"). Revenue growth of 6% combined with
good cost control to deliver adjusted operating profit of GBP994
million, up 9%, and adjusted basic earnings per share of 43.7 pence, up
16%. 
Unless otherwise stated, all figures and growth rates included below
exclude adjusting items. 
Revenue 
Group revenue increased by 6% to GBP5,381 million (2012: GBP5,078
million) with good growth in retail, wholesale and Sky Bet revenues
more than offsetting slight declines in advertising and installation,
hardware and service revenue. 
Costs 
We delivered a strong performance on costs, with the operating
efficiencies which we created being used for greater investment on
screen whilst still allowing the Group's operating margin to expand by
60 basis points to 18.5%. 
Programming costs increased by GBP151 million (9%) to GBP1,860 million
(2012: GBP1,709 million). Sports accounted for GBP69 million of the
increase predominantly driven by the inclusion of Formula 1 and Ryder
Cup rights, and England football World Cup qualifying matches in the
recent quarter. Entertainment costs increased by GBP33 million year on
year as we continued to invest in new and exclusive UK-commissioned
content. Movie costs accounted for GBP30 million of the increase
reflecting the recent rights agreements which support new product
offerings such as Sky Go Extra, and the increased usage of our movie
rental services. 
Our work on network efficiency within our communications business,
combined with lower access charge controls, resulted in excellent
operating leverage in direct network costs, up only 4% to
GBP529 million (2012: GBP510 million) despite a 16% increase in home
communications products. 
Our focus on efficiency saw a further reduction in other operating
costs as a percentage of sales which fell by 130 basis points to
GBP1,998 million (2012: GBP1,951 million). Despite a higher product and
customer base, each of marketing, subscriber management, transmission
and technology, and administration costs grew well below the rate of
revenue growth. 
Earnings 
Profit before tax increased by 9% to GBP934 million (2012: GBP853
million), which included the Group's share of joint ventures and
associates' profits of GBP28 million (2012: GBP25 million) and a net
interest charge of GBP88 million (2012: GBP80 million). Taxation for
the period was GBP224 million (2012: GBP198 million), resulting in
profit after tax of GBP710 million (2012: GBP655 million) and basic
earnings per share of 43.7 pence (2012: 37.8 pence), an increase of 16%. 
Exceptional items 
Reported operating profit of GBP1,007 million
includes a net exceptional gain of GBP13 million in the period. This
represented the net impact of two exceptional credits from the positive
settlement of former supplier disputes, the benefit of which we have
passed back to customers via two one-time initiatives. 
In December we recognised an exceptional gain of GBP32 million relating
to a credit note received from BT following an Ofcom determination that
BT had overcharged for Ethernet services between 2006 and 2009. During
the quarter we also reached a final settlement of disputes with a
former manufacturer of set-top boxes supplied between 2004 and 2008,
resulting in a further exceptional gain of GBP33 million. 
In each of these instances it was our customers who were most impacted.
Accordingly, we have decided to pass the benefits of the resolution of
these disputes back to customers with two one-time programmes. First,
we are targeting a small cohort of around 150,000 of our customers who
currently have one of the earliest versions of our Sky+ HD box to offer
them a free upgrade to the current version allowing them the same
functionality as the vast majority of HD customers. Second, we are
offering wireless connectors to selected Sky Movies customers, enabling
them to connect their existing Sky+ HD box to the full range of On
Demand services. We recognised an exceptional cost in the quarter for
these two one-off initiatives of GBP52 million. 
Reported profit after tax of GBP736 million (2012: GBP689 million)
includes an additional net exceptional gain of GBP13 million; see
Appendix 2 for further details. 
CORPORATE 
As we announced in March, the Group has reached an agreement with
Telefonica UK for the acquisition of its O2 and BE consumer broadband
and fixed line telephony business. The transaction completed on 30
April 2013 and both subscriber and financial impacts will be included
in future periods, including any exceptional costs incurred as a result
of the transaction. 
On 26 April 2013, the Court of Appeal granted BT permission to appeal
the Competition Appeal Tribunal's judgment of August 2012 in the
appeals against Ofcom's decision to impose wholesale must-offer
obligations on Sky. The Court will schedule the appeal hearing in due
course. In the meantime, the limited wholesale must-offer obligations
which were established on an interim basis at the outset of Sky's
original appeal of Ofcom's decision in April 2010, remain in place. 
Enquiries: 
Analysts/Investors: 
Edward Steel          Tel:  020 7032 2093
Lang Messer           Tel:  020 7032 2657 
E-mail: investor-relations@bskyb.com 
Press: 
Alice Macandrew       Tel: 020 7705 3000
Stephen Gaynor        Tel: 020 7705 3000 
E-mail: corporate.communications@bskyb.com 
A conference call for UK and European analysts and investors will be
held at 8.30 a.m. (BST) today. Participants must register by contacting
Camilla Regan on +44 20 7251 3801 or at Camilla.Regan@RLMFinsbury.com. 
There will be a separate conference call for US analysts and investors
at 10.00 a.m. (EDT) today. Details of this call have been sent to US
institutions and can be obtained from Dana Diver at Taylor Rafferty on
+1 212 889 4350. 
The live conference calls of the UK and US calls will be available to
analysts and investors via the BSkyB website at
http://www.sky.com/corporate. Replays will be subsequently available. 
Schedule 1 - KPI Summary 
All figures (000)
Unless Stated  FY10/11              FY11/12              FY12/13 
Q3     Q4     Q1     Q2     Q3     Q4     Q1     Q2     Q3 
Total
paid-for
sub-scription
products 24,591 25,375 26,058 26,830 27,734 28,365 28,898 29,513 30,228 
TV      10,147 10,187 10,213 10,253 10,268 10,288 10,308 10,358 10,388 
Sky+HD   3,686  3,822  3,925  4,063  4,222  4,343  4,468  4,561  4,669 
Multi- room     2,237  2,250  2,295  2,350  2,378  2,402  2,423  2,467  2,476 
Sky Go
 Extra        -      -      -      -      -      -      -      -     44 
Broad- band     3,161  3,335  3,485  3,651  3,863  4,001  4,103  4,235  4,387 
Tele- phony    2,916  3,101  3,248  3,407  3,627  3,768  3,888  4,022  4,208
 Line
 Rental   2,444  2,680  2,892  3,106  3,376  3,563  3,708  3,870  4,056 
New
connected
TV Services   -      -  1,829  2,549  3,211  3,735  4,023  4,781  5,546 
Connected
HD boxes      -      -    204    442    604    995  1,255  1,715  2,284 
Sky Go
unique
users         -      -  1,625  2,107  2,607  2,740  2,768  3,066  3,262 
Total
products
services 24,591 25,375 27,887 29,379 30,945 32,100 32,921 34,294 35,774 
Other
metrics 
Total    13,758 13,816 13,940 14,100 14,206 14,278 14,368 14,493 14,613
customers 
Retail   10,223 10,294 10,371 10,471 10,549 10,606 10,654 10,742 10,812
customers 
Wholesale 3,535  3,522  3,569  3,629  3,657  3,672  3,714  3,751  3,801
customers 
ARPU (GBP)  537    538    535    544    546    548    550    568    576 
Triple-play 26%    27%    28%    29%    31%    32%    33%    33%    34% 
Churn     10.4%  10.4%  11.1%   9.6%  10.1%   9.9%  10.9%  10.3%  10.8% 
Fixed
Network
Metrics
On-net
base      2,856  3,045  3,205  3,403  3,636  3,778  3,882  4,031  4,190
 MPF
 base     1,435  1,686  1,869  2,146  2,423  2,588  2,762  2,926  3,159 
SMPF
 base     1,421  1,359  1,336  1,257  1,213  1,190  1,120  1,105  1,031 
MPF %      50%    55%    58%    63%    67%    69%    71%    73%    75% 
SMPF %     50%    45%    42%    37%    33%    31%    29%    27%    25% 
Off-net
base        305    290    280    248    227    223    221    204    197 
Total
Broadband 3,161  3,335  3,485  3,651  3,863  4,001  4,103  4,235  4,387 
On-net %    90%    91%    92%    93%    94%    94%    95%    95%    96% 
Total no.
of LLU
exchanges 1,549  1,577  1,732  1,907  1,964  1,965  2,036  2,108  2,202 
Use of measures not defined under IFRS 
This press release contains certain information on the Group's
financial position, results and cash flows that have been derived from
measures calculated in accordance with IFRS. This information should
not be read in isolation from the related IFRS measures. 
Forward looking statements 
This document contains certain forward looking statements with respect
to the Group's financial condition, results of operations and business,
and our strategy, plans and objectives for the Group. These statements
include, without limitation, those that express forecasts, expectations
and projections, such as forecasts, expectations and projections in
relation to new products and services, the potential for growth of
free-to-air and pay television, fixed-line telephony, broadband and
bandwidth requirements, advertising growth, DTH and OTT customer
growth, On Demand (previously Anytime+), NOW TV, Sky Go, Sky Go Extra,
Sky+HD and other services penetration, revenue, administration costs
and other costs, advertising growth, churn, profit, cash flow, products
and our broadband network footprint, content, wholesale, marketing and
capital expenditure and proposals for returning capital to
shareholders. 
Although the Company believes that the expectations reflected in such
forward looking statements are reasonable, these statements are not
guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control,
are difficult to predict and could cause actual results to differ
materially from those expressed or implied or forecast in the forward
looking statements. Information on the significant risks and
uncertainties are described in the "Principal risks and uncertainties"
section of Sky's Annual Report for the full year ended 30 June 2012 (as
updated in Sky's results for the six months ended 31 December 2012).
Copies of the Annual report and 31 December 2012 results are available
from the British Sky Broadcasting Group plc 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. 
Glossary of Terms 
A glossary of terms is included within the Annual Report and on our
corporate investor relations web page at
http://corporate.sky.com/investors/glossary. Copies of the Annual
Report are available from the British Sky Broadcasting Group plc web
page at www.sky.com/corporate and in hard copy from the Company
Secretary, British Sky Broadcasting Group plc, Grant Way, Isleworth,
Middlesex TW7 5QD. 
Click on or paste the following link into your web browser to view
associated PDF document. 
http://www.rns-pdf.londonstockexchange.com/rns/8122D_-2013-5-1.pdf 
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The company news service from the London Stock Exchange 
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