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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bskyb | LSE:BSY | London | Ordinary Share | GB0001411924 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 850.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSKY
RNS Number : 2296A
Sky PLC
25 September 2015
25 September 2015
Headline: Annual Financial Report
Sky plc - Annual Report and Annual General Meeting
Sky plc (the "Company") released its preliminary announcement of annual results for the year ended 30 June 2015 ("Preliminary Announcement") on 29 July 2015.
Further to the Preliminary Announcement, the Company confirms that the Annual Report 2015, Notice of Annual General Meeting 2015 and Form of Proxy are being posted to shareholders today.
The documents have been submitted to the National Storage Mechanism and will shortly be available for viewing at www.morningstar.co.uk/uk/NSM.
The Annual Report and Notice of Annual General Meeting are available on the Company's website at www.sky.com/corporate/investors.
The Company's 2015 Annual General Meeting will be held at 11am on 4 November 2015 at the InterContinental London, One Hamilton Place, London, W1J 7QY.
A condensed set of the Company's financial statements was included in the Preliminary Announcement and the appendix to this announcement contains additional information which has been extracted from the Annual Report dated 28 July 2015 (the 'Annual Report') for the purposes of compliance with the Disclosure and Transparency Rules and should be read together with the Preliminary Announcement. Both documents can be downloaded from the Company's website at www.sky.com/corporate/investors.
Together these constitute the information required by Disclosure and Transparency Rule 6.3.5 which is required to be communicated to media in full unedited text through a Regulatory Information Service. Page and note references in the text below refer to page numbers and notes in the Annual Report. This announcement should be read in conjunction with and is not a substitute for reading the full Annual Report.
OVERVIEW AND RECENT DEVELOPMENTS
Our performance
With the successful acquisition of Sky Deutschland and Sky Italia, Sky today serves 21 million customers across five countries - Italy, Germany, Austria, Ireland, and the UK - and is Europe's leading investor in content.
As well as bringing greater scale, the transaction was also about building a great organisation and positioning the business for the future. The three Sky businesses are highly complementary. They share a powerful brand and have a common ethos of embracing change to provide customers with more choice, better content and a superior TV experience.
Sky is already at the forefront of delivering services over broadcast, on demand and mobile TV platforms. However, by joining the three businesses together, we are able to share our strengths and expertise across the group. This will enable us to serve customers better and to build a bigger and stronger business over the longer term, to the benefit of all shareholders.
Excellent performance across the group
At the same time as implementing the transaction, we delivered an excellent operational and financial performance as robust demand from customers drove strong trading across all of our markets.
We closed the financial year with revenues up 5% to GBP11.3 billion1 and operating profit up 18% to GBP1.4 billion. This was an outstanding result in a year of such change for the business.
The strength of our performance was fuelled by the addition of almost one million new customers over the year. This was 45% more than the prior year and took our customer base past the 21-million mark. At the same time, we added 4.6 million new paid-for products, reflecting strong levels of demand across our broad product offering.
2015 also saw us achieve significantly increased customer loyalty across the group. We reduced churn to below 10% in all our markets as customers responded positively to the investments we have made in the viewing experience, in areas such as the connected box platform and our own original drama.
Standout performance in UK and Ireland
At the heart of the group results was an outstanding performance in the UK and Ireland, demonstrating the success of the approach we have taken to segmenting the market with the complementary Sky and NOW TV brands.
Strong customer demand resulted in the highest organic customer growth for 11 years of 506,000 to take us past the 12-million milestone. At the same time, we grew paid-for products by 3.3 million thanks to accelerated growth across TV and broadband.
We achieved churn of 9.8% on a 12-month rolling basis, an 11-year low, as growing penetration and usage of connected TV services increased customer loyalty and overall satisfaction with Sky.
We closed the year with more than seven million TV customers connected, an increase of more than one million over the year.
Strong growth in Germany and Austria
Sky in Germany and Austria also achieved an excellent year of growth. We added 467,000 net new customers over the 12 months, the highest-ever annual customer growth, to take the base past four million. Paid-for product growth of almost one million represented an improvement of more than 50% on the prior year thanks to strong growth in HD.
Churn of 8.6% on a 12-month rolling basis was a record low for a full year as we continued to benefit from the take-up of two-year contracts.
Italy stabilised
In Italy, we held the customer base stable for the first time in three years, ending the 12-month period broadly flat year on year with 4.7 million customers. Paid-for product growth was 387,000 while churn hit a low of 9.6% on 12-month rolling basis as customers showed growing loyalty to the business. This was a good result in what remains a challenging market.
1 We have presented the results on an 'adjusted like for like' basis for the full 12-month period to 30 June
2015 down to operating profit. Comparative figures are translated at a constant currency of EUR1.31:GBP1.
Financial Review
We achieved an excellent year of growth across the group. Our investments in the viewing experience attracted record numbers of customers to join Sky and drove loyalty among existing customers to new highs with churn under 10% in each market. This operational performance translated into strong revenue growth and, alongside our good cost control, this resulted in an 18% increase in operating profit and over GBP1 billion of operating free cash flow. We also propose a further 3% increase in the dividend.
Group Financial performance
Adjusted Operating GBP1.4bn Profit -------------------- --------- Adjusted basic EPS 56.0p -------------------- --------- Dividend 32.8p -------------------- ---------
To provide a more representative analysis of ongoing performance of the Group, all commentary down to the operating profit level for the Group is on an adjusted basis as if we had owned Germany and Italy for the full year from 1 July. The financial results of Germany and Italy are translated into sterling at a constant currency rate of EUR1.31:GBP1.
Unless otherwise stated, adjusted figures below are from continuing operations and on a recurring basis excluding i) the impact of Sky Bet as this is presented as a discontinued operation; ii) set-top-box sales to Italy which are now an intragroup transaction; and iii) ESPN carriage revenue in the UK and Ireland from FY14 comparatives, as we no longer retail the channel.
Numbers below the operating profit line for the Group consolidate Germany and Italy only for the actual period of ownership from 12 November and are on an adjusted basis.
Our statutory financial reporting consolidates Germany and Italy for the period from 12 November 2014 to 30 June 2015. During this period Italy contributed revenue of GBP1,297 million and operating profit of GBP25 million while Germany contributed revenue of
GBP866 million and an operating loss of GBP21 million.
Revenue
We achieved excellent growth in Group revenues which were up 5% to GBP11,283 million (2014: GBP10,776 million). Revenue in Germany was up 9% to GBP1,377 million (2014: GBP1,262 million) whilst revenue in the UK was up 6% to GBP7,820 million (2014: GBP7,368 million). Revenues in Italy remained resilient at GBP2,086 million (2014: GBP2,140 million) despite the tough economic backdrop.
We have delivered strong rates of growth across all of our main revenue streams with good consumer demand for our products and services, helping drive subscription revenue up 5% whilst transactional revenue was our fastest growing area with revenue up 22%. We also achieved good growth in both advertising (+4%) and wholesale (+5%) revenues highlighting the strength of our ability to monetise content.
Subscription revenue growth of 5% was underpinned by excellent customer growth across the group of almost one million customers and strong product growth of 4.6 million, with the largest proportion of revenue growth continuing to be delivered through the UK where revenues were up over GBP300 million. Alongside this, our best year of customer growth in Germany drove a 10% increase in subscription revenues, whilst in Italy we held total customers and revenue flat.
Transactional revenues increased by 22% to GBP173 million (2014:GBP142 million) as we benefited from the success of our Buy and Keep service, which surpassed weekly revenue of GBP1 million in Q4, and NOW TV transactions, which totalled almost 1.5 million over the past 12 months.
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Our content-related revenues also performed well. Wholesale and syndication revenues were up 5% to GBP550 million (2014: GBP524 million) largely driven by continued growth in the UK where revenues were up 19% as success on screen led to more favourable terms for our channels with wholesale partners. Alongside this, revenues were strong through the distribution of our programming internationally and the first time consolidation of Znak&Jones and Love Productions. In Italy, underlying wholesale revenues were broadly flat year on year (excluding the benefit in the prior year from Champions League resale revenues), whilst revenues in Germany were slightly down following the successful migration of former Deutsche Telekom wholesale customers to a retail relationship
in the prior year.
We delivered good growth in advertising revenues of 4% to GBP716 million (2014: GBP690 million) with Germany delivering excellent growth of 26% through higher sellout rates and increased inventory around Bundesliga. Advertising revenues in the UK grew strongly, up 5%, due to the benefit of incremental AdSmart revenues combined with Sky Media increasing their share of net advertising revenue by almost 170 basis points, while advertising revenue was down in Italy as we lapped the EUR27 million benefit of the FIFA World Cup revenues in Q4 last year.
Costs
Total Group costs grew by just 3%, well below the rate of revenue growth, to GBP9,883 million (2014: GBP9,591 million) as we maintained tight discipline over our operating cost base while continuing to invest where our customers see the greatest value.
Programming costs increased 5%, in line with revenue growth as we increased the depth and breadth of our offering. We launched the exclusive ITV Encore channel in the UK in June 2014 and expanded our channel line-up in Germany, as well as having a full-year impact of the new Sky Atlantic channel in Italy. We continue to invest in
a diverse content portfolio, with an enhanced box set offering in the UK and increased investment on Sky originated content, with successes including Fortitude and 1992. The strong growth in Sky Store revenues has driven an increase in our transactional programming costs.
Our network costs in the UK were up only 3%, well below the rate of home communications revenue growth.
Sales, General and Administration costs grew by just 1% as the higher up-front cost of strong subscriber growth in Germany was offset by efficiencies made across the UK and Italy as part of their respective operating efficiency programmes.
Profits and earnings
Operating profit grew strongly, up 18% to GBP1,400 million (2014:GBP1,185 million) as we combined excellent revenue growth with careful choices within our cost base whilst continuing to invest in programming. This has driven a 140 basis point expansion in our operating margin.
The share of joint ventures and associates' profits was GBP28 million (2014: GBP35 million) and net finance costs increased by GBP91 million to GBP200 million (2014: GBP109 million) due to the interest charge associated with an additional GBP5.4 billion of gross debt that we issued during the year.
The tax charge of GBP251 million (2014: GBP237 million) was at an effective tax rate of 21%.
Profit after tax for the year grew by 6% to GBP945 million (2014:GBP892 million) resulting in adjusted earnings per share of 56.0 pence (2014: 57.1 pence) after accounting for the higher number of shares following our issuance in July 2014. Over the year the weighted average number of shares excluding those held by the Employee Share Ownership Plan ('ESOP') for the settlement of employee share awards was 1,690 million (2014: 1,562 million). The closing number of shares excluding the ESOP shares at 30 June 2015 was 1,704 million (2014: 1,546 million).
Adjusting items
Statutory profit for the year includes a gain of over GBP1 billion relating to a GBP492 million gain on the disposal of available-for-sale investments; a GBP299 million gain on the disposal of our stake in the National Geographic Channel; and a profit of GBP600 million on the sale of a controlling stake in Sky Bet. This was partially offset by operating expenses of GBP396 million principally comprising the costs of a corporate efficiency and restructuring programme, the costs of a programme to replace aged customer equipment, advisory and transaction fees incurred on the purchase of
Sky Deutschland and Sky Italia, costs of integrating those businesses in the enlarged Group and the ongoing amortisation of acquired intangible assets.
Statutory profit after tax was GBP1,332 million (2014: GBP820 million).
Following the sale of a controlling stake in Sky Bet on 19 March 2015, the results of Sky Bet are now presented as a discontinued operation. The sale resulted in a profit on disposal of GBP600 million which is included within profit for the year from discontinued operations.
A reconciliation of statutory to adjusted numbers is shown on page 144.
Group Cash flow and financial position
Group free cash flow increased year on year by 20% to GBP1,060 million (2014: GBP885 million) while net debt increased to GBP5,056 million (2014:GBP1,212 million) as a result of the acquisition of Sky Deutschland and Sky Italia in November 2014. Gross debt as at 30 June 2015 was GBP7,534 million with cash of GBP2,478 million. The ratio of net debt to EBITDA at 30 June 2015 was approximately 2.5 times. Sky has an investment grade credit rating, being rated BBB by Standard & Poors and Baa2 by Moody's, both with stable outlook.
Hot Features
Premium
As at
1 As at
July Cash Non-cash 30 June
2014 movements movements 2015
GBPm GBPm GBPm GBPm
----------------------- -------- ----------- ----------- ---------
Current borrowings 11 - 483 494
Non-current
borrowings 2,658 5,082 (322) 7,418
Borrowings-related
derivative financial
instruments (80) - (298) (378)
Gross debt 2,589 5,082 (137) 7,534
----------------------- -------- ----------- ----------- ---------
Cash and cash
equivalents (1,082) (296) - (1,378)
Short-term deposits (295) (805) - (1,100)
Net debt 1,212 3,981 (137) 5,056
----------------------- -------- ----------- ----------- ---------
Balance Sheet
During the year, total assets increased by GBP8,909 million to GBP15,358 million at 30 June 2015. Non-current assets increased by GBP6,923 million to GBP10,799 million, primarily due to an increase of GBP3,141 million in goodwill and an increase of GBP3,274 million in intangible assets largely as a result of the recognition of goodwill and customer contracts and relationships recognised on the acquisition of Sky Deutschland and Sky Italia. Current assets increased by GBP1,986 million to GBP4,559 million at 30 June 2015 principally due to a GBP805 million increase in short-term deposits, a GBP461 million increase in current trade and other receivables and a GBP301 million increase in inventories. Current inventories and trade and other receivables have increased mainly due to the impact of the consolidation of the inventories and trade and other receivables of Sky Deutschland and Sky Italia.
Total liabilities increased by GBP6,757 million to GBP12,134 million at 30 June 2015. Current liabilities increased by GBP1,685 million to GBP4,204 million, primarily due to a GBP1,144 million increase in trade and other payables, due to the impact of the consolidation of the trade and other payables of Sky Deutschland and Sky Italia, and a GBP483 million increase in current borrowings. Non-current liabilities increased by GBP5,072 million to GBP7,930 million, principally due to a GBP4,760 million increase in the Group's non-current borrowings. Current and non-current borrowings have increased as a result of the issue of euro, dollar and sterling bonds in the year.
Distributions to Shareholders
The Directors' proposed final dividend of 20.5 pence per share takes the total dividend payable in respect of the financial year to 32.8 pence per share, an increase of 3% on last year.
The proposed dividend continues the track record of shareholders benefiting from our strong financial performance and represents the 11th consecutive year-on-year increase in the dividend.
The ex-dividend date will be 22 October 2015 and, subject to shareholder approval at the 2015 Annual General Meeting, the final dividend of 20.5 pence will be paid on 20 November 2015 to shareholders appearing on the register at the close of business on 23 October 2015.
Post balance sheet events
Purchase of minority interests in Sky Deutschland
As announced on 17 February 2015, Sky initiated the necessary steps for the transfer of the remaining approximately 4% minority shareholdings in Sky Deutschland. The requisite shareholder resolution was subsequently approved by 99.4% of shareholders at an Extraordinary General Meeting of Sky Deutschland on 22 July 2015 and we expect the formal transfer of the minority shareholdings to be effective in the second quarter of the 2015/16 financial year.
For more detail see note 33: page 130
Principal risks and uncertainties
The Group risk register is reported formally to the Audit Committee twice a year and focused risk reporting on selected themes occurs on a quarterly basis. Additional information on the Group's internal control and risk management processes is set out in the Corporate Governance Report and the Audit Committee Report.
For Corporate Governance report: pages 40-50
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Detailed controls and any relevant action plans are prepared for the Audit Committee as part of the formal half-yearly reporting process. Additionally, we have established a procedure to monitor risks, and any changes thereto, across the Group. Any relevant information arising from such monitoring is also reported to the Audit Committee.
This section describes the current principal risks and uncertainties facing the Group. In addition to summarising the material risks and uncertainties, the table below gives examples of how we mitigate those risks.
The Group has a formal risk management framework embedded within the business to support the identification and effective management of risk across the Group.
The divisions within the Group are each responsible for managing and reporting risk in accordance with the Group's risk management policy and standards that have been approved by the Audit Committee. The risks are then consolidated into a Group risk register which provides an overview of the Group risk profile, taking into account the broader geographical spread and larger scale of the Group following the acquisitions of Sky Deutschland and Sky Italia.
Description of risk Mitigation
-------------------------------------- ------------------------------------
Market and competition:
The Group operates in The Group continues
a highly competitive to make significant
environment and faces investments in innovation.
competition from a broad The Group's product
range of organisations.Technological development strategic
developments also have aim is to be at the
the ability to create forefront of progressive
new forms of quickly technology.
evolving competition. Please see the 'Innovation'
A failure to develop section on page 7 of
the Group's product the Group Chief Executive's
proposition in line Statement for further
with changing market details of these products.
dynamics and expectations The Group regularly
could erode the Group's reviews its pricing
competitive position. and packaging structures
Great content is central to ensure that its
to Sky's product proposition product proposition
and increased competition is appropriately placed
could impact the Group's within the market.
ability to acquire content The Group works closely
that our customers want with its marketing
on commercially attractive partners to ensure
terms. that the value of its
Economic conditions offering is understood
have been challenging and communicated effectively
in recent years across to its customers.
the territories in which The Group makes significant
the Group operates and investment in the origination
the future remains uncertain. of content as well
A significant economic as in acquisition from
decline in any of those across the world.
territories could impact The Group also works
the Group's ability to develop and maintain
to continue to attract the brand value associated
and retain customers with its individual
in that territory. channels.
-------------------------------------- ------------------------------------
Regulatory breach and
change:
The Group's ability
The Group is subject to operate or compete
to regulation primarily effectively could be
under Austrian, German, adversely affected
Irish, Italian, UK and by the outcome of investigations
European Union legislation. or by the introduction
The regimes which apply of new laws, policies
to the Group's business or regulations, changes
include, but are not in the interpretation
limited to: or application of existing
Ø Broadcasting laws, policies and
- as a provider of audiovisual regulations, or failure
media services, the to obtain required
Group is subject to regulatory approvals
Austrian, German, Italian or licences. Please
and UK licensing regimes see page 36 of the
under the applicable 'Regulatory Matters'
broadcasting and communications section for further
legislation. These obligations details.
include requirements The Group manages these
to comply with relevant risks through active
codes and directions engagement in the regulatory
issued by the relevant processes that affect
regulatory authorities, the Group's business.
including for example, The Group actively
in the UK, Ofcom's Broadcasting seeks to identify and
Code, Code on the Scheduling meet its regulatory
of Television Advertising obligations and to
and Cross Promotions respond to emerging
Code; requirements. This
Ø Technical services includes, for example:
- as a provider of certain Ø Broadcasting
technical services in - compliance controls
the UK and Germany, and processes are in
Sky UK and Sky Deutschland place in the Group's
are subject to regulation content services. Interaction
in their respective with the relevant regulatory
countries; and authorities is co-ordinated
Ø Telecommunications between the relevant
- Sky UK is subject local Compliance, Regulatory
to the General Conditions and Legal departments;
of Entitlement adopted Ø Technical services
under the Communications - with respect to the
Act 2003 (UK) and the provision of certain
Conditions for the provision technical services
of Electronic Communications in the UK and Germany,
Networks and Services processes are in place
under the Communications to monitor third-party
Regulation Act 2002 broadcaster access
(Ireland), which impose to the relevant broadcast
detailed requirements platforms and to ensure
on providers of communications that this is provided
networks and services. on fair, reasonable
The Group is also subject and non-discriminatory
to generally applicable terms;
legislation including, Ø Telecommunications
but not limited to, - compliance controls
competition (antitrust), and processes are in
anti-bribery, consumer place in the UK and
protection, data protection Ireland, overseen by
and taxation. the Customer Compliance
The Group is currently, Committee, to monitor
and may be in the future, compliance and performance
subject to proceedings, against the General
and/or investigation Conditions of Entitlement
and enquiries from regulatory and the Conditions
and antitrust authorities. for the provision of
Please see page 36 of Electronic Communications
the 'Regulatory Matters' Networks and Services.
section for further The Group maintains
details. appropriate oversight
and reporting, supported
by training, to provide
assurance that it is
compliant with regulatory
requirements.
-------------------------------------- ------------------------------------
Customer service:
A significant part of The Group strives consistently
the Group's business to exceed its customers'
is based on a subscription expectations, to put
model and its future its customers first,
success relies on building to understand what
long-term relationships they want and to be
with its customers. responsive to what
A failure to meet its they say.
customers' expectations The Group makes significant
with regards to service investments in order
could negatively impact to deliver continuous
the Group's brand and development and improvement
competitive position. to its customer service
capabilities, including
investment in its contact
centres across the
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UK and Ireland, insourcing
of service centres
in Germany and implementing
ongoing training and
development plans.
The Group tracks its
customer service performance,
benchmarks its customer
service experience
and strives to be best
in class.
-------------------------------------- ------------------------------------
Technology and business
interruption:
The Group makes significant
The products and services investment in technology
that the Group provides infrastructure to ensure
to its customers are that it continues to
reliant on complex technical support the growth
infrastructure. of the business and
A failure in the operation has a robust selection
of the Group's key systems and monitoring process
or infrastructure, such of third-party providers.
as the broadcast platform, The Group is committed
customer management to achieve best-in-class
systems, OTT platforms business continuity
or the telecommunications standards and makes
networks on which the significant investments
Group relies, could in the resilience and
cause a failure of service robustness of its business
to our customers and infrastructure.
negatively impact our The Group also organises
brand. regular scenario based
group-wide business
continuity exercises
to ensure ongoing readiness
of key staff, systems
and sites.
-------------------------------------- ------------------------------------
Supply chain:
The Group relies on The Group continues
a number of third parties to invest in its supply
and outsourced suppliers chain infrastructure
operating across the to support its business
globe to support its plan commitments.
supply chain. A robust supplier selection
A significant failure process is in place
within the supply chain with appropriate ongoing
could adversely affect management and monitoring
the Group's ability of key partners and
to deliver products suppliers.
and service to its customers. The Group performs
regular audits of key
suppliers and of their
installations and,
wherever possible,
has dual supply capability.
-------------------------------------- ------------------------------------
Financial:
The effective management The Group's finance
of its financial exposures teams are embedded
is central to preserving within the business
the Group's profitability. to provide support
The Group is exposed to management and to
to financial market ensure accurate financial
risks and may be impacted reporting and tracking
negatively by fluctuations of our business performance.
in foreign exchange Reporting on financial
and interest rates which performance is provided
create volatility in on a monthly basis
the Group's results to senior management
to the extent that they and the Board.
are not effectively The Group continually
hedged. invests in the improvement
Any increase in the of its systems and
financial leverage of processes in order
the Group may limit to ensure sound financial
the Group's financial management and reporting.
flexibility. The Group manages treasury
The Group may also be risk by minimising
affected adversely by risk to capital and
liquidity and counterparty providing appropriate
risks. protection against
foreign exchange and
interest rate movements.
Cash investment is
made in line with the
Group's strict treasury
policy which is approved
by the Audit Committee
and sets limits on
deposits based on counterparty
credit ratings. No
more than 10% of cash
deposits are held with
a single bank counterparty,
with the exception
of overnight deposits
which are invested
in a spread of AAAf
rated liquidity funds.
All non-sterling debt
is swapped at inception
to ensure appropriate
currency and interest
rate protection is
in place, and trading
currency risk is hedged
up to five years in
advance.
The Group manages its
tax risk by ensuring
that risks are identified
and understood at an
early stage and that
effective compliance
and reporting processes
are in place.
The Group continues
to maintain an open
and proactive relationship
with the regulating
tax authorities, primarily
HM Revenue & Customs.
The Group aims to deal
with taxation issues,
wherever possible,
as they arise in order
to avoid unnecessary
disputes.
-------------------------------------- ------------------------------------
Security:
The Group must protect The Group takes measures
its customer and corporate ranging from physical
data and the safety and logical access
of its people and infrastructure controls to encryption,
as well as needing to or equivalent technologies,
have in place fraud raising employee awareness
prevention and detection and monitoring of key
measures. partners to manage
The Group is responsible its security risks.
to third-party intellectual The Group continues
property owners for to invest in new technological
the security of the controls and in improving
content that it distributes broader business process
on various platforms and works closely with
(Sky's own and third-party law enforcement agencies
platforms). and policy makers in
A significant breach order to protect its
of security could impact assets and to comply
the Group's ability with its contractual
to operate and deliver obligations to third
against its business parties.
objectives.
-------------------------------------- ------------------------------------
Projects:
The Group invests in, A common project management
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and delivers, significant methodology is used
capital expenditure to enable the Group
projects in order to to manage, monitor
continually drive the and control its major
business forward. The capital expenditure
level of the Group's projects
capital expenditure and strategic programmes.
has increased as a result This includes detailed
of the increased size reporting and regular
of the Group's business reviews by senior management
following completion as well as cross-functional
of the acquisitions executive steering
of Sky Deutschland and groups for major projects.
Sky Italia. Third-party partners
The failure to deliver will, where appropriate,
key projects effectively be engaged to provide
and efficiently could support and expertise
result in significantly in our large strategic
increased project costs programmes, complex
and impede our ability initiatives and for
to execute our strategic emerging technologies.
plans. .
-------------------------------------- ------------------------------------
Intellectual property
protection:
We maintain an ongoing
The Group, in common programme to support
with other service providers, appropriate protections
relies on intellectual of our intellectual
property and other proprietary property and other
rights, including in rights. This includes,
respect of programming for example, the use
content, which may not of automated online
be adequately protected monitoring tools, the
under current laws or implementation of on-screen
which may be subject imprinting of content
to unauthorised use. together with an active
programme to protect
our intellectual property
rights.
-------------------------------------- ------------------------------------
People:
People at Sky are critical Making Sky a great
to the Group's ability place to work is central
to meet the needs of to the Group's strategy.
its customers and achieve The Group champions
its goals as a business. diversity and develops
Failure to attract or talent through a number
retain suitable employees of activities, including
across the business the Graduate programme,
could limit the Group's Development Studio,
ability to deliver its an apprenticeship scheme
business plan commitments. and a leadership programme.
The Group has well
established channels
and procedures to recruit
and retain its employees,
and to ensure that
an adequate number
of suitable employees
work within its customer
service teams and across
all its operations.
Further details on
our people is set out
in the Employees section
of the Directors' Report
on pages 71-72.
-------------------------------------- ------------------------------------
Appendix
STATEMENT OF DIRECTORS' RESPONSIBILITIES
As set out above, the following responsibility statement is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. This statement relates to and is extracted from page 78 of the Annual Report 2015. Responsibility is for the full Annual Report not the extracted information presented in this announcement or the Preliminary Announcement.
Directors' responsibility statement
The Directors confirm that to the best of their knowledge:
1. The financial statements, prepared in accordance with IFRSs, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
2. The strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
3. The Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
By order of the Board
Jeremy Darroch Andrew Griffith
Chief Executive Officer Chief Financial Officer
28 July 2015 28 July 2015
Transactions with related parties and major shareholders
a) Entities with joint control or significant influence
During the year the Group conducted business transactions with companies that form part of the 21st Century Fox, Inc. group, a major shareholder in the Company.
Transactions with related parties and amounts outstanding in relation to those transactions and with related parties at 30 June are as follows:
2015 2014
GBPm GBPm
-------------------------------- ------ ------
Supply of goods or services
by the Group 45 82
-------------------------------- ------ ------
Purchases of goods or services
by the Group (275) (127)
-------------------------------- ------ ------
Amounts owed to the Group 26 5
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Amounts owed by the Group (180) (134)
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At 30 June 2015 the Group had expenditure commitments of GBP590 million in relation to transactions with related parties (2014: GBP99 million) which principally related to minimum television programming rights commitments.
Goods and services supplied
During the year, the Group supplied programming, airtime, transmission and marketing services to 21st Century Fox, Inc. companies.
Purchases of goods and services and certain other relationships
During the year, the Group purchased programming and technical and marketing services from 21st Century Fox, Inc. companies.
On 25 July 2014 the Company announced the placing of 156,132,213 new ordinary shares representing approximately 9.99% of existing issued share capital (see note 25). 21st Century Fox, Inc. subscribed for 61,106,496 of these shares so as to maintain its existing percentage shareholding in the Company following the placing.
On 12 November 2014, the Group acquired 100% of Sky Italia Srl and 57.4% of Sky Deutschland AG from 21st Century Fox, Inc. For further details, see note 31. In addition, the Group repaid the loan that Sky Deutschland AG had outstanding with 21st Century Fox, Inc. of GBP105 million. In connection with this, Sky disposed of its 21% stake in the National Geographic channel to 21st Century Fox, Inc. on the same date. For further details, see note 6.
On 12 June 2015 Sky increased its shareholding in Tour Racing Limited ('Team Sky') as a consequence of the transfer to Sky of a 25% shareholding from 21st Century Fox, Inc.. The shares were purchased for GBP25, being their par value.
There is an agreement between 21st Century Fox, Inc. and the Group, pursuant to which it was agreed that, for so long as 21st Century Fox, Inc. directly or indirectly holds an interest of 30% or more in the Group, 21st Century Fox, Inc. will not engage in the business of satellite broadcasting in the UK or Ireland.
Share buy-back programme
During the prior year, the Company purchased, and subsequently cancelled, 12,140,586 ordinary shares held by 21st Century Fox, Inc. as part of its share buy-back programme.
b) Joint ventures and associates
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures and associates are disclosed below.
(MORE TO FOLLOW) Dow Jones Newswires
September 25, 2015 06:09 ET (10:09 GMT)
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