SOURCE: British Sky Broadcasting Group PLC

July 26, 2012 02:00 ET

Results for the twelve months ended 30 June 2012

MIDDLESEX, UNITED KINGDOM--(Marketwire - Jul 26, 2012) -




                 BRITISH SKY BROADCASTING GROUP PLC
          Results for the twelve months ended 30 June 2012


                         Adjusted results             Reported results

Twelve months  2012       2011    Variance  2012       2011    Variance
to 30 June

Revenue        GBP6,791m  GBP6,597m  +3%    GBP6,791m  GBP6,597m  +3%
EBITDA         GBP1,567m  GBP1,405m  +12%   GBP1,587m  GBP1,405m  +13%
Operating      GBP1,223m  GBP1,073m  +14%   GBP1,243m  GBP1,073m  +16%
profit
Earnings per   50.8p      41.6p      +22%   52.6p      43.5p      +21%
share (basic)



 ANOTHER YEAR OF STRONG OPERATIONAL GROWTH AND RECORD FINANCIAL RESULTS


Record financial performance

. Revenue up 4.5% to GBP6.791 billion on a like-for-like basis(1)
. Record adjusted operating profit of GBP1.223 billion, up 14% with
  continued margin expansion to reach 18.0%, the highest level for six
  years
. Adjusted basic EPS up 22% to 50.8 pence
. Full year dividend increased by 9% to 25.4 pence per share
. Additional GBP500 million capital return to shareholders via share
  buy-back

Consistent and strong operational growth

. Total products increase by 12% to reach 28.4 million
. 10.6 million customers choose Sky, up 312,000 on the prior year
. Strong customer loyalty with churn of 9.9% in the quarter
. Four million customers choose Sky Broadband for great quality and
  value
. Largest and fastest growing triple play customer base in Britain
  at 3.4 million, up 21%

Delivering the best experience for customers

. Breadth of sports coverage continues with new rights renewals for
  Spanish football, British and Irish Lions rugby and Premier League
. Our second brand, NOW TV, launched on 17 July to give millions of
  people easy, instant access to Sky content
. Bringing a full suite of Sky services to Irish customers with the
  launch of Sky Broadband and Talk later this year
. Extending Sky Go with eight kids' channels now available including
  Disney and Nickelodeon; access to 32 live channels and a broad range
  of on demand content
. Free-to-air catch-up service to launch in the autumn to include
  BBC iPlayer, ITV Player and Demand 5; Sky Anytime+ surpasses one
  million homes, up 57% on last quarter

Results highlights

Customer Metrics (unaudited)
                          As at     As at     Annual  Quarterly Growth
                          30-Jun-12 30-Jun-11 Growth  to 30-Jun-12

Total products ('000s)    28,365    25,375    +2,990  +631
 TV                       10,288    10,187    +101    +20
 HD                       4,343     3,822     +521    +121
 Multiroom                2,402     2,250     +152    +24
 Broadband                4,001     3,335     +666    +138
 Telephony                3,768     3,101     +667    +141
 Line rental              3,563     2,680     +883    +187

Total customers ('000s)   10,606    10,294    +312    +57

Products per customer     2.7       2.5       +0.2

Other metrics
Customers taking each of
TV, broadband & talk      32%       27%       +500 bps
ARPU (2)                  GBP548    GBP538    +GBP10
Churn (quarterly
annualised)               9.9%      10.4%     -50 bps

An additional KPI summary table containing further detailed disclosure
may be found in Schedule 1.


Business Performance (3)(unaudited)

GBP'millions                   12 mths to   12 mths to
                                30-Jun-12    30-Jun-11    Movement
Revenue                             6,791        6,597         +3%
Adjusted EBITDA                     1,567        1,405        +12%
% Adjusted EBITDA margin            23.1%        21.3%    +180 bps
Adjusted operating profit           1,223        1,073        +14%
% Adjusted operating profit
margin                              18.0%        16.3%    +170 bps
Adjusted free cash flow               910          869         +5%
Adjusted basic earnings per         50.8p        41.6p        +22%
share (4)
Net debt as at end of period          876          750        +17%


1 Like-for-like revenue growth of 4.5% is calculated by removing one
  week of trading (an estimated GBP100 million of revenue) from 2011
  which was a 53 week year.

2 Quarterly annualised. Calculations have been restated to include
  customers taking standalone home communications products and to
  reflect the impact of the Sky magazine closure.

3 A reconciliation of adjusted operating profit and adjusted EBITDA
  from continuing operations to reported measures as well as cash
  generated from continuing operations to adjusted free cash flow from
  continuing operations is set out in Appendix 2.

4 Adjusted basic EPS is calculated from adjusted profit from continuing
  operations for the year. A reconciliation of reported profit from
  continuing operations to adjusted profit from continuing operations is
  set out in note 7 to the consolidated financial information.

Jeremy Darroch, Chief Executive, commented:"We have delivered record
financial results after another year of
strong operational growth. Our consistent approach of investing where
it matters most to customers and improving efficiency behind the scenes
is working extremely well."In what remains a tough economic environment,
customers are choosing
Sky over other providers. We've continued to add new households and
existing customers are remaining loyal and taking more products from
us. More than 9 million homes are now choosing to watch their TV
through Sky+, we're helping more customers to save money in home
communications and innovative services like Sky Go are adding even more
value to their subscription."We continue to transform our financial
performance through discipline
on costs combined with strong revenue growth from three million product
additions and over 300,000 new Sky households during the year. We have
delivered double-digit growth in operating profit, free cash flow and
EPS, which has now doubled over the last four years. On the back of
this sustained strong performance we are increasing returns to
shareholders with the eighth consecutive year of growth in the ordinary
dividend and we intend to seek approval for a further GBP500 million of
share repurchases."Looking ahead, we will continue to deploy capital
consistently to
achieve our goals. We will invest sensibly in areas where customers see
value - in getting better on screen and improving our products and
services - and maintain a strong focus on operating efficiency and cost
control to underpin our investments and deliver increasing returns for
shareholders."This month, we have seen how our growth is leading to
positive results
for the UK as a whole. First, our contribution to the wider UK economy
has been quantified in a new report by independent consultants Oxford
Economics. It finds that Sky contributes over GBP5 billion a year to UK
GDP, and supports nearly 120,000 jobs and a GBP2.3 billion contribution
to tax revenues. In the last 12 months, we have created 2,200 new
permanent jobs at Sky as we continue to invest in customer service,
programme production and technology innovation."Second, we are proud to
have played our part in the wonderful
achievement of Team Sky and Bradley Wiggins, who created sporting
history this week by becoming the first British winner of the Tour de
France. Our support for Team Sky forms part of our broad partnership
with British Cycling to get more people cycling regularly through
inspiration from elite success and participation in grassroots
activity, including our successful programme of Sky Ride events. We all
hope that success at the Tour de France will add fuel to Britain's
cycling boom and inspire a whole new generation to get on their
bikes."These are good examples of the important economic and social
contribution that a successful British company can make and we hope to
do even more in the future."


OPERATIONAL REVIEW

Sky has delivered another year of strong operational growth and record
financial results. Despite the tough economic environment, more
customers are choosing more of our products than ever before with
almost three million net product additions to reach a base of 28.4
million, up 12% on the prior year. We added 312,000 new households to
reach 10.6 million customers, of which 32% now take our triple-play of
television, broadband and telephony. Customer loyalty remains strong
with annualised churn of 9.9% in the fourth quarter, reflecting
increased take-up of our products and strong rates of overall
satisfaction with our service.

Alongside our strong operating performance we have delivered record
financial results with double-digit growth in each of operating profit,
EPS and adjusted free cash flow(1). Like-for-like revenue growth of
4.5%(2),combined with our focus on cost efficiency, translated into 14%
growth in adjusted operating profit and 22% growth in adjusted basic
EPS to reach 50.8p, now double the level of four years ago. The final
dividend of 16.2 pence per share is 11% higher year on year, resulting
in the eighth consecutive year of growth in the full year dividend.

Operational Performance

We continued to see strong demand for our products with 631,000
additions in the quarter to reach a total of 28.4 million. We added
57,000 new Sky households in the quarter, including 37,000 standalone
home communications customers and 20,000 TV customers.

Following good growth across all product categories, our customers are
now taking an average of 2.7 products each, up from 2.5 a year ago and
double the level of five years ago. ARPU increased by GBP10 on last year
to GBP548, as the impact of this year's price freeze was more than
offset by success in selling more products to new and existing
customers. While the consumer environment remains challenging,
customers are responding to the quality and value of our offering with
quarterly annualised churn of 9.9%; lower than both the prior quarter
and the prior year.

We delivered another good quarter in home communications as customers
continue to choose Sky over other providers; we added 138,000
broadband, 141,000 telephony and 187,000 line rental products. As a
result, we closed the year with 3.4 million triple play customers, up
21%, to extend our lead as the nation's favourite triple-play provider.

We continue to make good progress in unbundling. During the quarter, we
added 165,000 customers to our own network such that 69% of our on-net
broadband customers are fully unbundled. Through the unbundling
process, we can further improve the economics of our home
communications business.

Today we are announcing plans to launch home communications services in
the Republic of Ireland later this year, making our high quality, great
value broadband and telephony available to an additional 1.6 million
homes. We have reached a wholesale agreement with BT Ireland allowing
us to bring greater choice to customers and allowing them to take their
entertainment and communications services from one trusted provider.
Pricing will be announced closer to launch but we will offer customers
a great value proposition at attractive ongoing economics for our
business.

Our 'Summer of Sport in HD' campaign combined with the continued
success of our Sky Sports F1 HD channel contributed to 121,000 HD
additions in the quarter. With over half a million additions across
the year, HD penetration of our base has now reached 41%. Multiroom
benefitted from a successful marketing campaign with 24,000 net
additions in the quarter to reach 2.4 million.

Our continued focus on customer service is delivering meaningful
benefits to the business. This quarter, average calls per customer fell
by more than 15% despite continued strong product growth while service
visits to customers' homes to fix a problem were the lowest in eight
years. These improvements reflect continued focus on even better
reliability of our products and services and resolving customer issues
first time, through increased training and moving more conversations
in-house. Our focus on e-enablement deflected over 6 million telephone
calls online over the course of the year and has led to sky.com being
consistently our most popular sales channel. In June, Ofcom published
their sixth quarterly complaints report in which we performed strongly
once again with the fewest complaints of any provider in both broadband
and TV.

Getting even better on screen

We continued to extend our leadership in content through building on
our traditional areas of strength in sports, movies and news and at the
same time driving a step change in our entertainment offering.

We had a very strong quarter in sport both on and off screen. The
crucial Monday Night Football match between Manchester City and
Manchester United set a new record for live Premier League football and
for Sky, peaking at 4.29 million viewers. In addition, many customers
watched the game on the move or online via Sky Go, with the platform
achieving a record 230,000 unique views for the game. Overall, the
dramatic 2011/12 Premier League season generated average audiences that
were up 12% on the prior year and on the final day of the season 4.6
million viewers watched the climax on one of the Sky Sports channels.

Our innovative new coverage of Formula 1 on Sky Sports F1 HD continues
with an unprecedented and exciting start to the season with seven
different winners in the first ten races and over 7.3 million viewers
watching the new channel. Looking ahead, Sky customers can look forward
to a strong period on Sky Sports with golf'sUS PGA Championship and
Ryder Cup, US Open tennis, Test and One-Day cricket and the return of
UEFA Champions League football.

We renewed a broad range of sports rights in the quarter, ensuring the
continued breadth and quality of our sports offering and giving us
greater certainty than ever before over the largest item in our cost
base. In the recent Premier League ('PL') tender process, for live
rights for the three seasons beginning in August 2013, we successfully
secured five packs including 116 live matches per year, ensuring that
Sky remains the home of PL football.

In addition, we have renewed multi-year agreements to show more live
football from La Liga and next year's British & Irish Lions tour to
Australia. With these latest renewals we have now secured the majority
of our sports rights for at least the next three years ensuring
continuity of Sky Sports' unparalleled sports coverage.

We've continued to develop our entertainment offering and achieved
success with a combined reach of 25 million viewers to our
entertainment channel portfolio per month. Our decision to invest in
original British comedy is proving very successful with a number of Sky
1 shows recommissioned for further series after their successful first
runs, including 'Stella', 'Starlings' and 'Trollied'. Following its
successful launch last year, Sky Atlantic continues to hold very strong
appeal to both existing and new customers. The channel's first UK
drama, 'Hit & Miss', proved popular during the quarter and the return
of 'Game of Thrones' is the best show ever on the channel achieving an
average weekly cumulative audience of 1.2 million viewers.

After its move higher up the Electronic Programme Guide in February,
Sky Arts strongly increased viewing share, with the 'Playhouse
Presents' series delivering the highest ever ratings for the channel.

Alongside our continued investment in content, we are widening the
distribution of our channels and broadening the monetisation of our
content. Today we are announcing a new comprehensive wholesale
distribution agreement that will allow TalkTalk to offer its YouView
customers a wide range of Sky's standard definition entertainment,
sports and movies channels in the UK.

Improving our products and services

We continue to focus on improving our products to deliver the best
customer experience and get more of our services into customers' homes.

Sky Go, our ground breaking over the top service, continues to resonate
strongly with customers enjoying the convenience and flexibility of
being able to access a wide selection of our content on the move.
Customers can choose from hundreds of hours of TV live or on demand
across 32 channels, download a movie from the Sky Movies library of
over 450 titles, or rent a movie instantly on a laptop from the new Sky
Store. We saw 2.7 million unique users access the service in the
quarter, up by 5% on the previous quarter. In July we made content from
our entertainment channels available on demand for all customers and
today we are launching on-demand shows from eight kids' channels to all
devices in time for the summer holidays, including Disney and Nick
Junior. Over the next 12 months we will continue to extend the service
to make it available to more devices and add new features such as pause
and rewind, search and personal recommendations.

In addition to the convenient local storage of the set-top box, our
video on demand service, Anytime+, is now available to more than five
million homes. We made the service available to all HD boxes
irrespective of their ISP and have now surpassed one million active
users in total. As part of our plans to extend the Anytime+ service, we
are announcing today a new agreement to add free-to-air catch-up
content from Channel 5 later this year, which will be available
alongside catch-up content from BBC and ITV, as well as the best in
on-demand content from Sky.

In home communications, we have further enhanced our broadband service
with the launch of The Cloud WiFi hotspots in April, to give seamless
internet access free of charge to Sky Broadband Unlimited, Sky Fibre
Unlimited and Sky Connect customers. We now have over 11,000 public
access hotspots live across the UK, providing valued WiFi access for
customers in convenient locations.

In the year ahead, we have a strong pipeline of innovative new products
and services planned for release. We plan to enhance the functionality
of the Sky+ app to allow customers to use the iPad as a remote control
for browsing the EPG, managing their Sky+ planner and selecting
programmes to watch, pause, fast forward and rewind.

NOW TV, a new internet TV service giving millions more people an easy
and flexible way to access some of Sky's best content, launched on 17
July across a wide range of internet-connected devices.

Starting initially with Sky Movies, NOW TV offers access to an
extensive range of classic movies and the latest Hollywood
blockbusters. Customers can rent more than 1,000 movies, from classic
titles to the latest 'now on DVD' releases, on a simple, pay-as-you-go
basis. Alternatively, customers can choose a monthly pass providing
exclusive access to over 600 movies including titles from major studios
such as Disney, Fox, Paramount, Sony, Warner Bros. and Universal. This
includes up to five new premieres each week at least 12 months before
other subscription services. Rental prices range from 99p to GBP3.49 and
the Sky Movies pass is available for GBP15 a month. Both options will
offer movies to stream instantly with no set-up costs, installation or
contract. More Sky content will be added to NOW TV in the coming
months, including content from Sky Sports and Sky entertainment
channels.

NOW TV is available to anyone in the UK with an internet connection on
devices including PC, Mac, and selected Android smartphones. The
service will become available on iPhone, iPad and Xbox within the next
month, on YouView when it launches and other platforms including Sony
PlayStation 3 and Roku later this year. We estimate associated launch
costs of approximately GBP30 million will be required for a through the
line marketing campaign and support of the new product in the fiscal
year to 30 June 2013.

The Bigger Picture

As part of our commitment to making a positive contribution to the
community, we delivered a number of initiatives this quarter through
our Bigger Picture programme, which focuses on the environment, sport
and the arts.

Through our partnership with British Cycling, which aims to increase
participation in the sport, our pro cycling team, 'Team Sky', created
sporting history in this year's Tour de France. Team Sky won a third of
the stages in the Tour with Bradley Wiggins becoming the first British
rider ever to win the event alongside teammate and fellow Brit Chris
Froome in second place, with Mark Cavendish claiming his fourth
consecutive final stage victory in Paris. Alongside this, the 2012
Skyride programme is underway with over 70,000 people having
participated to date in city centre and local rides, with further
events planned over the summer.

Also in sport, our eight year partnership with the Youth Sports Trust,
Sky Sports Living for Sports, has had its best year ever with over 850
schools and 18,000 students taking part. Our 50 athlete mentors,
including Darren Campbell and Sky Sports' Kirsty Gallacher, have made
over 1,400 school visits.

In May, we announced the extension of our Sky Rainforest Rescue
campaign in partnership with WWF for a further three years. The first
phase of the campaign hit its GBP2 million fundraising target six months
early and Sky has matched all donations pound for pound to reach a
total of GBP4 million.

In May, Sky Arts returned to the Hay and Brighton festivals building on
our work to open up the arts to more people. At Hay, six episodes of
the Book Show along with 20 other sessions were filmed and shown on Sky
Arts. In addition, the 'Sky Arts Ignition: Futures Fund' awarded
further bursaries of GBP30,000 each to three young artists in order to
assist their emerging careers.

FINANCIAL SUMMARY

For the twelve months ended 30 June 2012 ("the year") we delivered
record financial results. Revenue increased by 4.5% on a like-for-like
basis(3), reflecting our continued growth in households and total
products, and good contribution from other businesses. Top-line growth
translated into strong profitability with adjusted EBITDA up 12% at
GBP1,567 million and adjusted operating profit at its highest ever level
of GBP1,223 million, at an expanded adjusted operating margin of 18.0%.
Adjusted basic earnings per share increased by 22% to reach 50.8 pence.

Unless otherwise stated, all figures and growth rates included within
this financial summary exclude exceptional items and are from
continuing operations.

Revenue

Reported group revenue increased by GBP194 million to GBP6,791 million
(2011: GBP6,597 million). Like-for-like revenue3 increased by 4.5% as
the growth in customers and products more than offset headwinds in
advertising and Sky Business.

Retail subscription revenue increased to GBP5,593 million (2011:
GBP5,471 million) as a result of strong product growth over the year
and a larger customer base more than offsetting our decision to freeze
subscription prices. Excluding the impact of the additional week of
revenue in the comparative, subscription revenue grew 4% on the prior
year on a like-for-like basis(3).

Our wholesale business continues to perform strongly with revenue up by
9% to GBP351 million (2011: GBP323 million), due to increased take-up
for our channels and their HD versions across other platforms, the
launch and success of our new Formula 1 channel and new carriage deals
from the first quarter of the fiscal year.

Advertising revenue was 4% lower year on year at GBP440 million (2011:
GBP458 million). We continued to increase our market share, by 100 basis
points year on year to 21.2%, with the majority of growth due to
improved channel ratings for our third party partners with whom we
share revenue upside. Looking over a longer period, the benefits of
increased scale have enabled us to grow revenue by GBP111 million since
2008/09 at an average annual growth of 10%. Looking ahead, we expect TV
advertising will remain challenging and anticipate an overall market
decline in the second half of calendar 2012.

Installation, hardware and service revenue of GBP98 million was lower
year on year (2011: GBP112 million). In the context of continued growth
in customers and product penetration, our work on product reliability
and right-first-time installation rates led to the lowest level of
service visits for eight years.

Other revenue increased by 33% to GBP309 million (2011: GBP233 million),
including GBP52 million from the sale of set-top boxes to Sky Italia,
for which the corresponding cost is recognised in subscriber management
and supply chain. Excluding these sales, other revenue was up by 22%
benefiting from continued strong performance in Sky Bet and the
consolidation of 'The Cloud' (acquired on 23rd February 2011).

Direct Costs

Programming costs increased by 5% to GBP2,298 million (2011: GBP2,188
million) reflecting our continued investment in high quality content.
Entertainment costs increased by GBP70 million as a result of a full
twelve months of Sky Atlantic programming, alongside increased
investment in original UK content. Third party channel costs were GBP30
million higher as a result of adding seven HD channels in the year and
14% growth in HD customers year on year. Sports costs were GBP12 million
higher year on year with the first time inclusion of the Formula 1
channel being partly offset by lower costs for cricket, golf and boxing
due to the absence of biennial and other events such as the Ryder Cup
and the Haye Klitschko fight that were included in the comparative
year. Movies costs were flat year on year.

Direct network costs increased by 16% to GBP676 million (2011: GBP584
million), with 24% growth in home communications products partially
offset by our continued progress in migrating customers to our fully
unbundled network, thereby reducing the per customer cost. Gross margin
of our home communications products improved as a result of revenue
growth, additional scale and cost savings achieved as a greater
proportion of customers are on our network.

Other Operating Costs

We have delivered another strong performance in costs, where efficiency
programmes have contributed to a 6% reduction in adjusted other
operating costs for the period to GBP2,594 million (2011: GBP2,752
million)and a 350 basis points reduction as a percentage of sales.

Marketing costs were 13% lower year on year at GBP1,064 million (2011:
GBP1,220 million) with lower cost route-to-market sales, less
above-the-line spend and fewer gross additions. Online is now
consistently our single largest route-to-market, with our best offers
available via sky.com. In addition to savings from the closure of the
Sky customer magazine, above-the-line costs were GBP25 million lower
year on year. Overall, the cost to acquire a new TV customer ("SAC") was
GBP397 (2011: GBP376), with lower costs of direct marketing and set-top
box costs offset by lower customer acquisition volumes.

Subscriber management and supply chain costs increased by GBP25 million
year on year to GBP621 million (2011: GBP596 million). The largest
contributor to the increase was the cost of sales of set-top boxes to
Sky Italia (with corresponding revenue recorded within other revenue).
Excluding the impact from these box sales, in both the current and
comparative year, subscriber management and supply chain costs were
down in absolute terms year on year; a good result in the context of a
growing customer base and a 12% increase in the sale of total products
year on year.

Transmission, technology and fixed network costs were flat at GBP395
million (2011: GBP395 million) as a result of favourable negotiations
with suppliers and improved broadcasting efficiency due to the move to
tapeless production within Sky Studios.

Administration costs fell by GBP27 million to GBP514 million (2011:
GBP541 million) helped by a lower non-cash IFRS 2 'Share-based payment'
charge and associated National Insurance costs than in the prior year.

Earnings

On an adjusted basis, profit before tax was GBP1,148 million (2011:
GBP987 million), which included the Group's share of joint ventures and
associates' profits of GBP32 million (2011: GBP34 million) and a net
interest charge of GBP107 million (2011: GBP120 million).

Adjusted taxation for the period was GBP273 million (2011: GBP262
million). The adjusted effective tax rate was 24% (2011: 27%)
reflecting the reduction in the rate of UK Corporation Tax, and one-off
tax losses recognised in the third quarter largely inherited at the
time of acquisition of Sky's core network, formerly part of Easynet, in
2006.

Adjusted profit for the period was GBP875 million (2011: GBP725
million), generating an adjusted basic earnings per share from
continuing operations of 50.8 pence (2011: 41.6 pence).

Over the year the weighted average number of shares excluding those
held by the Employee Share Ownership Plan for the settlement of
employee share awards was 1,721 million (2011: 1,743 million). The
number of shares at the end of the year was 1,674 million (2011: 1,753
million).

Exceptional Items

Reported operating profit of GBP1,243 million included a net benefit of
GBP20 million consisting of a GBP31 million gain relating to the break
fee from News Corporation net of related costs, and GBP11 million of
restructuring costs which comprise severance payments in relation to
approximately 35 senior roles as part of a restructuring initiative to
improve operational efficiency. Both exceptional items were recognised
in administration costs.

Reported profit after tax of GBP906 million also included an additional
GBP11 million exceptional gain, which consisted of a GBP7 million profit
on disposal of our stake in Chelsea Digital Media, an exceptional gain
of GBP19 million relating to the re-measurement of derivative financial
instruments not qualifying for hedge accounting (2011: GBP18 million
gain), a GBP5 million charge due to writing-off the fees relating to the
previous revolving credit facility, and a GBP10 million charge relating
to the tax effect on exceptional items. See Appendix 2 for a
reconciliation of the reported to adjusted income statement.

Cash Flow and Financial Position

Adjusted free cash flow increased by 14% to GBP992 million (2011: GBP869
million), excluding a one-off payment of GBP82 million in respect of the
Premier League rights deposit for the season starting August 2013
(including the one-off payment, adjusted free cash flow was GBP910
million. See Appendix 2 for a reconciliation of adjusted free cash
flow.). The strong underlying cash flow growth reflects 12% increase in
adjusted EBITDA and a 9% improvement in working capital, offset by
increased capital expenditure.

Capital expenditure increased by GBP34 million to GBP457 million (2011:
GBP423 million), 6.7% of sales. The largest contributor to growth was
the growing scale of our broadband network as we unbundled a further 388
exchanges to reach 83% coverage of the UK, expanded The Cloud WiFi
network and launched a fibre product.

Net debt as at 30 June 2012 was GBP876 million (2011: GBP750 million).
The value of shares repurchased to date under the GBP750 million share
repurchase plan approved by shareholders on 29 November 2011 totalled
GBP549 million, of which GBP236 million was completed in the fourth
quarter.

The Group's liquidity and headroom are comfortable with no bond
redemptions until October 2015 when GBP428 million falls due. As at the
end of the year, cash and cash equivalents and short-term deposits were
GBP1,174 million and the Company's GBP743 million revolving credit
facility remains wholly undrawn.

Distributions to Shareholders

In setting the Company's financial strategy and policy for the use of
capital, our aim is to strike a balance between value accretive
investment in the business and cash returns to shareholders. We are a
growth company and our first priority for the use of capital is to
re-invest in the business where we see the opportunity to grow revenues
and earnings. Alongside this, we expect our shareholders to continue to
benefit from our commitment to increase our ordinary dividend in line
with earnings growth. Where appropriate we will also look to pursue
acquisition opportunities and/or to return capital to shareholders.

Our policy with respect to the ordinary dividend is to pay-out 50% of
adjusted earnings each year to shareholders and for the fiscal year
ended 30 June 2012 the Directors propose a final dividend of 16.20
pence per share, resulting in a full year dividend of 25.40 pence per
share, up 9%. The proposed dividend continues our strong track record
of growth and represents the eighth consecutive year-on-year increase.

In addition, this year we intend to seek shareholder approval at the
Company's AGM on 1 November 2012 for a further GBP500 million of share
repurchases.

As with the current share repurchase programme, we have entered into an
agreement with News Corporation under which, following any market
purchases of shares by the Company, News Corporation will sell to the
Company sufficient shares to maintain its percentage shareholding at
the same level as applied prior to those market purchases, ensuring
that there will be no change in News Corporation's economic or voting
interests in the Company as a result of the share buy-back programme.
The agreement is conditional on the appropriate shareholder approvals
being granted.

The ex-dividend date will be 24 October 2012 and, subject to
shareholder approval at the Annual General Meeting to be held on 1
November 2012, the final dividend of 16.20 pence will be paid on 16
November 2012 to shareholders appearing on the register at the close of
business on 26 October 2012.

Corporate

The company continues to engage with Ofcom as part of its ongoing
assessment of whether BSkyB is fit and proper to hold its broadcasting
licences. We continue to believe that Sky remains a fit and proper
licence holder, as demonstrated by our strong record of regulatory
compliance and high standards of governance.

Sky also makes a positive contribution to UK audiences, employment and
the broader economy. To measure and explain the scale of our economic
impact in particular, we commissioned a report from independent
consultants Oxford Economics. The study, 'The Economic Impact of Sky on
the UK'(4), found that Sky contributes over GBP5 billion a year to UK
GDP, and supports nearly 120,000 jobs and a GBP2.3 billion contribution
to tax revenues. The full report is available at  www.sky.com/corporate .

Roku

Sky has made a $10m equity investment in Roku, a leading platform which
delivers over-the-top (OTT) services via its innovative and low-cost
streaming devices. This follows earlier confirmation that NOW TV will
be made available through Roku's UK devices. In addition to this
carriage deal, the equity stake gives Sky the option to rebrand and
distribute versions of Roku's streaming devices in the future, should
it wish to complement the OTT distribution it currently receives over
third-party platforms.

Notes:
1) References to Roku are to Roku Inc.
2) Gross assets subject to this transaction were $10m
3) Profits attributable to the assets subject to this transaction were
   $nil



Enquiries:

Analysts/Investors:

Francesca Pierce          Tel: 020 7032 3337
Edward Steel              Tel: 020 7032 2093
Lang Messer               Tel: 020 7032 2657

E-mail:  investor-relations@bskyb.com 

Press:

Robert Fraser  Tel:       020 7705 3000
Stephen Gaynor Tel:       020 7705 3000

E-mail:  corporate.communications@bskyb.com 


Click on, or paste the following link into your web browser, to view
the associated PDF document that includes the table Schedule 1 - KPI
Summary.

 http://www.rns-pdf.londonstockexchange.com/rns/5374I_1-2012-7-26.pdf 


There will be a presentation to analysts and investors at 08.45 a.m.
(BST) today. Participants must register by contacting Yasmin Charabati
on +44 20 7251 3801 or at  yasmin.charabati@RLMfinsbury.com . In
addition, the live webcast will be available via  http://www.sky.com/ 
investors and subsequently available for replay.

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. A live conference call and supporting materials will
be available on Sky's corporate website,  http://www.sky.com/corporate .
A replay will subsequently be available.


(1) Adjusted free cash flow of GBP910 million further excluding an GBP82
    million deposit in relation to Premier League rights for the season
    starting August 2013.
(2) Like-for-like revenue growth of 4.5% is calculated by removing one
    week of trading (estimated GBP100 million of revenue) from 2011 which
    was a 53 week year.
(3) Like-for-like revenue growth is calculated by removing one week of
    trading (estimated GBP100 million of revenue) from 2011 which was a
    53 week year.
(4) Source: The Economic Impact of Sky on the UK, Oxford Economics,
    June 2012. The full report is posted at  http://corporate.sky.com/ 
    documents/pdf/publications/2012/the_economic_impact_of_sky_on_the_uk


                    This information is provided by RNS
          The company news service from the London Stock Exchange

END

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