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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each | Name of each exchange | |
Class | on which registered | |
Ordinary shares (nominal value 50p per share) | New York Stock Exchange(1) | |
American Depositary Shares, each of which represents four Ordinary shares of British Sky Broadcasting Group plc (nominal value 50p per share) | New York Stock Exchange |
(1) | The listing of Registrant’s ordinary shares on the New York Stock Exchange is for technical purposes only and without trading privileges. |
Ordinary shares (nominal value 50p per share) | 1,867,523,599 |
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Year ended 30 June | |||||||||||||||||||||||||
2005(1) | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||
(In millions except per share data) | |||||||||||||||||||||||||
Profit and Loss Account: | |||||||||||||||||||||||||
Amounts in accordance with UK GAAP | |||||||||||||||||||||||||
DTH subscribers revenues | $ | 5,322 | £2,968 | £2,660 | £2,341 | £1,929 | £1,537 | ||||||||||||||||||
Cable and DTT subscribers revenues(2) | 393 | 219 | 215 | 202 | 279 | 299 | |||||||||||||||||||
Advertising revenues | 590 | 329 | 312 | 284 | 251 | 271 | |||||||||||||||||||
Sky Bet(3) | 468 | 261 | 191 | 117 | 95 | 78 | |||||||||||||||||||
Sky Active(3) | 165 | 92 | 116 | 101 | 91 | 15 | |||||||||||||||||||
Other revenues | 321 | 179 | 162 | 141 | 131 | 106 | |||||||||||||||||||
Group turnover | 7,259 | 4,048 | 3,656 | 3,186 | 2,776 | 2,306 | |||||||||||||||||||
Operating expenses, net, before amortisation of goodwill and exceptional items | (5,815 | ) | (3,243 | ) | (3,056 | ) | (2,822 | ) | (2,590 | ) | (2,154 | ) | |||||||||||||
Amortisation and impairment of intangible fixed assets | (208 | ) | (116 | ) | (119 | ) | (121 | ) | (119 | ) | (44 | ) | |||||||||||||
Release of provision against (provision against) ITV Digital programming debtors | 23 | 13 | — | 5 | (22 | ) | — | ||||||||||||||||||
Estimated cost of reorganisation of Sky Interactive | — | — | — | — | — | (23 | ) | ||||||||||||||||||
Release of analogue termination provision | — | — | — | — | 4 | — | |||||||||||||||||||
Operating expenses, net | (6,000 | ) | (3,346 | ) | (3,175 | ) | (2,938 | ) | (2,727 | ) | (2,221 | ) | |||||||||||||
Operating profit | 1,259 | 702 | 481 | 248 | 49 | 85 | |||||||||||||||||||
Share of joint ventures’ and associates’ operating results | 25 | 14 | (5 | ) | 3 | (76 | ) | (256 | ) | ||||||||||||||||
Joint ventures’ and associates’ goodwill amortisation and impairment, net* | — | — | 10 | — | (1,070 | ) | (101 | ) | |||||||||||||||||
Loss on disposal of investments in joint ventures | (41 | ) | (23 | ) | — | — | — | — | |||||||||||||||||
Profit on disposal of fixed asset investments | — | — | 51 | — | 2 | — | |||||||||||||||||||
Share of joint venture’s loss on disposal of fixed asset investments | — | — | — | — | — | (70 | ) | ||||||||||||||||||
Amounts written back to (written off) fixed asset investments, net | — | — | 24 | (15 | ) | (60 | ) | (39 | ) | ||||||||||||||||
Release of provision against (provision against) loss on disposal of subsidiary | — | — | — | — | 10 | (10 | ) | ||||||||||||||||||
Interest receivable and similar income | 54 | 30 | 10 | 4 | 11 | 18 | |||||||||||||||||||
Interest payable and similar charges | (165 | ) | (92 | ) | (91 | ) | (118 | ) | (148 | ) | (153 | ) | |||||||||||||
Exceptional finance credit | — | — | — | — | — | 3 | |||||||||||||||||||
Profit (loss) on ordinary activities before taxation | 1,132 | 631 | 480 | 122 | (1,282 | ) | (523 | ) | |||||||||||||||||
Tax (charge) credit on profit (loss) on ordinary activities | (369 | ) | (206 | ) | (158 | ) | 62 | (107 | ) | (24 | ) | ||||||||||||||
Profit (loss) on ordinary activities after taxation | 763 | 425 | 322 | 184 | (1,389 | ) | (547 | ) | |||||||||||||||||
Equity dividends(4) | (305 | ) | (170 | ) | (116 | ) | — | — | — | ||||||||||||||||
Retained profit (loss) | 458 | 255 | 206 | 184 | (1,389 | ) | (547 | ) | |||||||||||||||||
Earnings (loss) per share — basic | 39.8¢ | 22.2p | 16.6p | 9.6p | (73.6p | ) | (29.6p | ) | |||||||||||||||||
Earnings (loss) per share — diluted | 39.8¢ | 22.2p | 16.6p | 9.5p | (73.6p | ) | (29.6p | ) | |||||||||||||||||
Dividends per share(4) | 9.0p | 6.0p | — | — | — | ||||||||||||||||||||
Dividends per share(4) | 16.5¢ | 10.9¢ | — | — | — |
* | Included within joint ventures’ goodwill amortisation of £1,070 million for fiscal 2002 is £971 million in respect of an impairment of KirchPayTV GmbH & Co KGaA (“KirchPayTV”) goodwill. |
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Year ended 30 June | ||||||||||||||||||||||||
2005(1) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
(in millions except per share data) | ||||||||||||||||||||||||
Amounts in accordance with US GAAP | ||||||||||||||||||||||||
Total revenues | $ | 6,879 | £3,837 | £3,535 | £3,082 | £2,707 | £2,296 | |||||||||||||||||
Amortisation and impairment of intangible fixed assets | — | — | — | (5 | ) | (145 | ) | (58 | ) | |||||||||||||||
Operating profit (loss) | 1,485 | 828 | 666 | 370 | (30 | ) | (176 | ) | ||||||||||||||||
Joint ventures’ and associates’ goodwill amortisation and impairment, net | — | — | (3 | ) | — | (712 | ) | (71 | ) | |||||||||||||||
Loss on disposal of investments in joint ventures | (25 | ) | (14 | ) | — | — | — | — | ||||||||||||||||
Income (loss) before income tax | 1,422 | 793 | 595 | 260 | (940 | ) | (660 | ) | ||||||||||||||||
Net income (loss) | 1,035 | 577 | 434 | 286 | (1,047 | ) | (625 | ) | ||||||||||||||||
Basic earnings (loss) per share | 54.1¢ | 30.2p | 22.4p | 14.9p | (55.5p | ) | (33.8p | ) | ||||||||||||||||
Diluted earnings (loss) per share | 54.0¢ | 30.1p | 22.3p | 14.7p | (55.5p | ) | (33.8p | ) | ||||||||||||||||
Basic earnings (loss) per ADS(5) | 216.6¢ | 120.8p | 89.7p | 59.7p | (221.9p | ) | (135.4p | ) | ||||||||||||||||
Diluted earnings (loss) per ADS(5) | 215.9¢ | 120.4p | 89.3p | 58.9p | (221.9p | ) | (135.4p | ) |
As at 30 June | ||||||||||||||||||||||||
2005(1) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Balance Sheet: | ||||||||||||||||||||||||
Amounts in accordance with UK GAAP | ||||||||||||||||||||||||
Total assets | $ | 4,160 | £ | 2,320 | £ | 2,364 | £ | 1,990 | £ | 2,159 | £ | 3,858 | ||||||||||||
Long-term debt | (1,929 | ) | (1,076 | ) | (1,076 | ) | (1,152 | ) | (1,577 | ) | (1,768 | ) | ||||||||||||
Net (liabilities) assets | (61 | ) | (34 | ) | 90 | (152 | ) | (352 | ) | 1,035 | ||||||||||||||
Capital stock(6) | 4,552 | 2,539 | 2,614 | 3,772 | 3,837 | 3,901 | ||||||||||||||||||
Number of shares in issue (number) | 1,868 | 1,868 | 1,942 | 1,938 | 1,893 | 1,889 |
As at 30 June | ||||||||||||||||||||||||
2005(1) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Amounts in accordance with US GAAP | ||||||||||||||||||||||||
Total assets | $ | 5,527 | £ | 3,082 | £ | 2,988 | £ | 2,810 | £ | 2,853 | £ | 4,209 | ||||||||||||
Net assets (liabilities) | 1,468 | 818 | 812 | 448 | (141 | ) | 850 |
As at 30 June | ||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Distribution of Sky Channels | ||||||||||||||||||||
DTH homes | 7,787 | 7,355 | 6,845 | 6,101 | 5,453 | |||||||||||||||
Cable homes(7) | 3,872 | 3,895 | 3,871 | 4,091 | 3,486 | |||||||||||||||
ITV Digital homes | — | — | — | — | 1,105 | |||||||||||||||
Total Sky pay homes | 11,659 | 11,250 | 10,716 | 10,192 | 10,044 | |||||||||||||||
DTT homes(8) | 4,940 | 3,084 | 1,510 | — | — | |||||||||||||||
(1) | Solely for convenience, pounds sterling amounts for the year ended 30 June 2005 and as at that date have been translated into US dollars at the noon buying rate of the Federal Reserve Bank of New York on 30 June 2005, which was US$1.7930 per £1.00. |
(2) | From fiscal 2003, this relates solely to cable subscribers revenues. |
(3) | Additional detail has been provided with regard to the analysis of interactive revenues between the Group’s betting and games revenues — “Sky Bet” — and other interactive revenues — “Sky Active” — and the prior years comparatives have been reclassified accordingly. |
(4) | An interim dividend of £77 million, representing 4.0p per share, was paid for the six month period ended 31 December 2004 (7.7¢ in US dollars at date of payment on 22 April 2005) (six month period ended 31 December 2003: £53 million, representing 2.75p per share, 4.9¢ in US dollars at date of payment on 23 April 2004). A final dividend of £93 million, representing 5.0p per share was proposed for the year ended 30 June 2005 (8.8¢ in US dollars at 30 September 2005) (2004: £63 million, |
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representing 3.25p per share, 6.0¢ in US dollars at date of payment on 19 November 2004). No interim or final dividends were paid or proposed for fiscal 2003, 2002 or 2001. | |
(5) | In our Annual Reports filed on Form 20-F for fiscal 2002 and 2001, the earnings (loss) per American Depositary Share (“ADS”) was calculated using the weighted average number of ADSs outstanding on the basis of 1 ADS for 6 Ordinary Shares. On 23 December 2002, the ratio was revised to reflect a new ratio of 1 ADS representing 4 Ordinary Shares. Therefore, the current and prior periods earnings (loss) per ADS have been calculated using a weighted average number of ADSs outstanding on the basis of 1 ADS for 4 Ordinary Shares. Earnings (loss) per ADS is not exactly four times earnings (loss) per share due to rounding differences. |
(6) | Capital stock includes called-up share capital, share premium, shares to be issued, Employee Share Ownership Plan (“ESOP”) reserve, merger reserve, special reserve and capital redemption reserve. |
(7) | The number of cable subscribers is as reported to us by the cable operators. |
(8) | The number of DTT homes consists of the Broadcasters’ Audience Research Board’s (“BARB’s”) estimate of the number of homes with access to Freeview (the free DTT offering available in the UK). These figures may include DTH or Cable homes that already take multichannel television. |
Month | High | Low | ||||||
April 2005 | 1.9197 | 1.8733 | ||||||
May 2005 | 1.9048 | 1.8205 | ||||||
June 2005 | 1.8368 | 1.7930 | ||||||
July 2005 | 1.7753 | 1.7303 | ||||||
August 2005 | 1.8148 | 1.7695 | ||||||
September 2005 | 1.8420 | 1.7620 |
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Year ended 30 June | Period end | Average(1) | High | Low | ||||||||||||
2001 | 1.4041 | 1.4509 | 1.5182 | 1.3737 | ||||||||||||
2002 | 1.5347 | 1.4479 | 1.5347 | 1.4000 | ||||||||||||
2003 | 1.6529 | 1.5915 | 1.6840 | 1.5192 | ||||||||||||
2004 | 1.8126 | 1.7491 | 1.9045 | 1.5728 | ||||||||||||
2005 | 1.7930 | 1.8596 | 1.9482 | 1.7733 |
(1) | The average rate is calculated by using the average of the noon buying rates on the last day of each month during the relevant year. |
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Year ended 30 June | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(in £ millions) | ||||||||||||
DTH subscribers | 2,968 | 2,660 | 2,341 | |||||||||
Cable subscribers | 219 | 215 | 202 | |||||||||
Advertising | 329 | 312 | 284 | |||||||||
Sky Bet | 261 | 191 | 117 | |||||||||
Sky Active | 92 | 116 | 101 | |||||||||
Other | 179 | 162 | 141 | |||||||||
4,048 | 3,656 | 3,186 | ||||||||||
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Sky Channel | Multiplex/Multiplexes | Channel genre | ||
Sky Movies 1 | Sky Movies 3, Sky Movies 5, Sky Movies 7, Sky Movies 9 | Movies | ||
Sky Movies 2 | Sky Movies 4, Sky Movies 6, Sky Movies 8 | Movies | ||
Sky Cinema 1 | Sky Cinema 2 | Movies | ||
Sky Sports 1 | Sports | |||
Sky Sports 2 | Sports | |||
Sky Sports 3 | Sports | |||
Sky Sports Xtra | Sports | |||
Sky One | Sky Mix | Entertainment | ||
Sky Vegas Live | Interactive entertainment | |||
Artsworld | Entertainment | |||
Sky News | News | |||
Sky Sports News | Sports News | |||
Sky Travel | Sky Travel+1, Sky Travel Extra | Entertainment | ||
Sky Travel Shop | Shopping | |||
Flaunt | Music | |||
The Amp | Music | |||
Scuzz | Music |
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As at 30 June | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(in thousands) | ||||||||||||
Distribution of Sky Channels | ||||||||||||
DTH homes | 7,787 | 7,355 | 6,845 | |||||||||
Cable homes | 3,872 | 3,895 | 3,871 | |||||||||
Total Sky pay homes | 11,659 | 11,250 | 10,716 | |||||||||
DTT homes(1) | 4,940 | 3,084 | 1,510 |
(1) | The number in respect of DTT homes consists of BARB’s estimate of the number of homes in the UK with access to Freeview services. |
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Range of prices | ||||||||
for Sky Premium | ||||||||
Channel Packages | ||||||||
when taken with | ||||||||
Price of Family Pack | Family Pack | |||||||
(per month) | (per month) | |||||||
UK | ||||||||
As of 1 September 2005(1) | £21.00 | £30-£42.50 | ||||||
1 September 2004 to 31 August 2005 | £19.50 | £28-£41 | ||||||
1 January 2004 to 31 August 2004 | £19.50 | £27-£40 | ||||||
1 January 2003 to 31 December 2003 | £18.50 | £27-£38 | ||||||
1 July 2002 to 31 December 2002 | £16.00 | £26-£37 | ||||||
Ireland | ||||||||
As of 1 September 2005(1) | €30.50 | €41.50-€64.50 | ||||||
1 September 2004 to 31 August 2005 | €28.50 | €38.50-€62.50 | ||||||
1 January 2004 to 31 August 2004 | €28.50 | €40-€61 | ||||||
1 September 2002 to 31 December 2003 | €26.99 | €42-€60 | ||||||
1 July 2002 to 31 August 2002 | €27.00 | €37-€53 |
(1) | The price (inclusive of VAT, where applicable) to a residential DTH subscriber in the UK and Ireland of our post 1 September 2005 basic package containing all six genre mixes and therefore the largest number of basic channels (known as the “Entertainment Pack”) is currently £21.00 and€30.50 per month respectively. The range of prices (inclusive of VAT, where applicable) to a DTH subscriber in the UK and Ireland of taking the Entertainment Pack with Sky Premium Channels (which varies depending upon the number of Sky Premium Channels taken) is currently £32.00 to £42.50, and€41.50 to€64.50 respectively. |
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• | that the provision of conditional access services to other broadcasters should be on fair, reasonable and non-discriminatory terms; |
• | that providers of conditional access services should co-operate with cable operators regarding transcontrol (the process of changing a conditional access system) at cable head-ends; and |
• | that, where conditional access technology is licensed to manufacturers of digital decoders, such licences should be on fair, reasonable and non-discriminatory terms. |
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• | a criminal cartel offence has been created, applying to individuals participating in arrangements involving price fixing, market sharing, bid rigging or limitations of production. This criminal offence operates alongside the existing civil regime under the Competition Act. Investigations are carried out by the OFT and the Serious Fraud Office. The maximum penalty for infringement (for those individuals found to have committed the offence) is up to five years’ imprisonment or a fine, or both; |
• | provisions enabling company directors to be disqualified for involvement in (or failure to take steps to prevent) a breach of UK or European competition law have been introduced; and |
• | a turnover test has been introduced for establishing jurisdiction over mergers, together with a competition-based test to be applied in assessing them. The UK competition authorities exercise control over mergers that meet a turnover test or a share of supply test (“relevant merger situations”). The OFT has a duty to refer a case to the CC for investigation where it believes that it is or may be the case that a relevant merger situation has arisen or is proposed and that the relevant merger situation results or may be expected to result in a substantial lessening of competition in the UK. |
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Current | |||||||||||||||
annual | Approximate | ||||||||||||||
rent or | square foot | ||||||||||||||
licence | net internal | ||||||||||||||
Location | Tenure | Use | Term | fee | area | ||||||||||
1, 2, 3a/3b, 4, 5, 6 and 7 Grant Way | Freehold | Offices, studios, | n/a | n/a | 272,157 | ||||||||||
Centaurs Business Park, | technology and | ||||||||||||||
Osterley, Isleworth, England | storage | ||||||||||||||
8 Grant Way (Cromwell Centre) | Leasehold | Offices and storage | Lease expires | £ | 350,000 | 37,567 | |||||||||
Centaurs Business Park, Osterley, | 1 July 2008 | ||||||||||||||
Isleworth, England | |||||||||||||||
Athena Court, Centaurs Business | Leasehold | Offices | Lease expires | £ | 990,000 | 53,583 | |||||||||
Park, Osterley, Isleworth, England | 23 June 2008 | ||||||||||||||
New Horizons Court, | Leasehold | Offices | Lease expires | £ | 546,147 | 22,152 | |||||||||
Courtyard Units 1-7 | 25 June 2007 | ||||||||||||||
The Courtyard, Brentford, England | |||||||||||||||
New Horizons Court, | Leasehold | Offices | Lease expires | £ | 2,509,434 | 134,851 | |||||||||
Units 1-4, Brentford, England | 25 December 2011 | ||||||||||||||
West Cross House, | Leasehold | Offices | Lease expires | £ | 1,349,694 | 72,420 | |||||||||
Brentford, England | 26 March 2019 | ||||||||||||||
Unit 7 West Cross Industrial | Leasehold | Offices | Lease expires | £ | 125,944 | 11,248 | |||||||||
Estate, Centaurs Business Park, | 20 May 2014 with | ||||||||||||||
Osterley, Isleworth, England | break options on 21 May 2007, 21 May 2008 and 21 May 2009 | ||||||||||||||
206 Harlequin Avenue, | Freehold | Office and storage | n/a | n/a | 5,000 | ||||||||||
Brentford, England | |||||||||||||||
214 Harlequin Avenue, | Freehold | Office, industrial and | n/a | n/a | n/a | ||||||||||
Brentford, England | car park | ||||||||||||||
The Chilworth Research Centre, | Leasehold | Satellite uplink | Lease expires | £ | 1 | 93,810 | |||||||||
Southampton, England | 25 February 2087 | ||||||||||||||
Knowle Lane, Fair Oak, | Freehold | Satellite uplink | n/a | n/a | 43,087 | ||||||||||
Eastleigh, England | |||||||||||||||
123 Buckingham Palace Road, | Leasehold | Offices | Lease expires | £ | 1,834,300 | 36,500 | |||||||||
London, England | 31 March 2017 with an option to terminate at 24 March 2012 | ||||||||||||||
4 Millbank, Westminster, | Leasehold | Offices and studio | Lease expires | £ | 281,868 | 4,917 | |||||||||
London, England | 28 September 2014 with a break option on 28 September 2009 | ||||||||||||||
2nd Floor A, Central House, | Leasehold | Offices | Lease expires | £ | 56,460 | 5,473 | |||||||||
Otley Road, Harrogate, England | 16 March 2010 | ||||||||||||||
2nd Floor B, Central House, | Leasehold | Offices | Lease expires | £ | 121,600 | 11,830 | |||||||||
Otley Road, Harrogate, England | 15 August 2010 | ||||||||||||||
Marcopolo House and Arches, | Leasehold | Sub-let | Lease expires | £ | 2,409,900 | 85,509 | |||||||||
Queenstown Road, London, England | 24 December 2013 | ||||||||||||||
Welby House, 96 Wilton Road, | Leasehold | Offices | Lease expires | £ | 311,250 | 8,138 | |||||||||
London, England | 15 January 2015 |
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Current | |||||||||||||||
annual | Approximate | ||||||||||||||
rent or | square foot | ||||||||||||||
licence | net internal | ||||||||||||||
Location | Tenure | Use | Term | fee | area | ||||||||||
1, 2, 4 and 5 Macintosh Road, | Freehold | Contact centres | n/a | n/a | 128,000 | ||||||||||
Kirkton Campus, Livingston, Scotland | |||||||||||||||
Carnegie Campus, | Freehold | Contact centre | n/a | n/a | 75,431 | ||||||||||
Dunfermline, Scotland | |||||||||||||||
New Logic House, | Leasehold | Offices | Lease expires | £222,000 | 13,900 | ||||||||||
Kirkton South, Livingston, | 3 October 2017 | ||||||||||||||
Scotland | with a break option on 4 October 2007 | ||||||||||||||
Logic House, | Leasehold | Offices | Lease expires | £185,833 | 9,219 | ||||||||||
Kirkton South, Livingston, | 3 October 2017 | ||||||||||||||
Scotland | with a break option on 30 November 2008 | ||||||||||||||
Citygate, Dunfermline, | Leasehold | Offices | Lease expires | £294,081 | 9,650 | ||||||||||
Scotland | 30 June 2007 | ||||||||||||||
Centrex, Livingston, | Leasehold | Offices | Lease expires | £508,222 | 16,953 | ||||||||||
Scotland | 30 June 2006 |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
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Revenues | ||||||||||||||||
2005 | 2004 | |||||||||||||||
£m | % | £m | % | |||||||||||||
DTH subscribers | 2,968 | 73 | 2,660 | 73 | ||||||||||||
Cable subscribers | 219 | 6 | 215 | 6 | ||||||||||||
Advertising | 329 | 8 | 312 | 9 | ||||||||||||
Sky Bet(i) | 261 | 7 | 191 | 5 | ||||||||||||
Sky Active(i) | 92 | 2 | 116 | 3 | ||||||||||||
Other | 179 | 4 | 162 | 4 | ||||||||||||
4,048 | 100 | 3,656 | 100 | |||||||||||||
(i) | Additional detail has been provided with regard to the analysis of interactive revenues between the Group’s betting and games revenue — “Sky Bet” — and other interactive revenues — “Sky Active” — and the prior year comparatives have been reclassified accordingly. |
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Operating expenses, net | ||||||||||||||||
2005 | 2004 | |||||||||||||||
£m | % | £m | % | |||||||||||||
Programming | 1,636 | 49 | 1,711 | 54 | ||||||||||||
Transmission and related functions | 171 | 5 | 146 | 4 | ||||||||||||
Marketing | 515 | 15 | 396 | 12 | ||||||||||||
Subscriber management | 396 | 12 | 371 | 12 | ||||||||||||
Administration | 392 | 12 | 376 | 12 | ||||||||||||
Betting | 236 | 7 | 175 | 6 | ||||||||||||
3,346 | 100 | 3,175 | 100 | |||||||||||||
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Revenues | ||||||||||||||||
2004 | 2003 | |||||||||||||||
£m | % | £m | % | |||||||||||||
DTH subscribers | 2,660 | 73 | 2,341 | 74 | ||||||||||||
Cable subscribers | 215 | 6 | 202 | 6 | ||||||||||||
Advertising | 312 | 9 | 284 | 9 | ||||||||||||
Sky Bet(i) | 191 | 5 | 117 | 4 | ||||||||||||
Sky Active(i) | 116 | 3 | 101 | 3 | ||||||||||||
Other | 162 | 4 | 141 | 4 | ||||||||||||
3,656 | 100 | 3,186 | 100 | |||||||||||||
(i) | Additional detail has been provided with regard to the analysis of interactive revenues between the Group’s betting and games revenue — “Sky Bet” — and other interactive revenues — “Sky Active” — and the prior year comparatives have been reclassified accordingly. |
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Operating expenses, net | ||||||||||||||||
2004 | 2003 | |||||||||||||||
£m | % | £m | % | |||||||||||||
Programming | 1,711 | 54 | 1,604 | 54 | ||||||||||||
Transmission and related functions | 146 | 4 | 143 | 5 | ||||||||||||
Marketing | 396 | 12 | 400 | 14 | ||||||||||||
Subscriber management | 371 | 12 | 324 | 11 | ||||||||||||
Administration | 376 | 12 | 359 | 12 | ||||||||||||
Betting | 175 | 6 | 108 | 4 | ||||||||||||
3,175 | 100 | 2,938 | 100 | |||||||||||||
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Payments due by period | ||||||||||||||||||||
Less than | Between | Between | More than | |||||||||||||||||
Total | 1 year | 1-3 years | 3-5 years | 5 years | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Obligation or commitment | ||||||||||||||||||||
Purchase obligations: | ||||||||||||||||||||
— Television programme rights(1) | 2,260 | 801 | 1,070 | 380 | 9 | |||||||||||||||
— Digiboxes and related equipment | 155 | 155 | — | — | — | |||||||||||||||
— Third party payments(2) | 14 | 7 | 7 | — | — | |||||||||||||||
— Capital expenditure | 10 | 10 | — | — | — | |||||||||||||||
— Other | 36 | 25 | 11 | — | — | |||||||||||||||
Long-term debt(3) | 1,069 | — | 189 | 880 | — | |||||||||||||||
Interest costs | 294 | 84 | 146 | 57 | 7 | |||||||||||||||
Operating lease obligations(4) | 444 | 95 | 155 | 100 | 94 | |||||||||||||||
Capital lease obligations(5) | 7 | — | — | 1 | 6 | |||||||||||||||
Total cash obligations | 4,289 | 1,177 | 1,578 | 1,418 | 116 | |||||||||||||||
(1) | Purchase obligations — Television programme rights |
At 30 June 2005 we had minimum television programming rights commitments of £2,260 million (2004: £2,489 million), of which £642 million (2004: £766 million) related to commitments payable in US dollars for periods of up to eight years (2004: nine years), £45 million (2004: £87 million) related to commitments payable in Swiss francs for periods of up to one year (2004: two years), and £3 million (2004: £6 million) related to commitments payable in Euros for periods of up to one year (2004: two years). | |
An additional £302 million (US$535 million) of commitments (2004: £265 million (US$483 million)) would also be payable in US dollars over a period of five years (2004: six years), assuming that movie subscriber numbers remained unchanged from current levels. The pounds sterling television programme rights commitments include similar per subscriber based price clauses that would result in additional commitments of £10 million (2004: £3 million) over a period of three years (2004: two years), assuming that movie subscriber numbers remained unchanged from current levels. | |
The total decrease in our minimum television programming rights commitments of £229 million compared to 30 June 2004, is the result of a decreased average period remaining on our commitments for sports channels’ and movie channels’ programming, partly offset by the extension of contracts with certain movie studios and the acquisition of the England Cricket Board, Rugby Union and Football League rights. |
(2) | Purchase obligations — Third party payments |
The third party payment commitments are in respect of distribution agreements for Sky Distributed Channels and are for periods of up to four years (2004: five years). The extent of the commitment is largely dependent upon the number of DTH subscribers to the relevant Sky Distributed Channels, and in certain cases, upon inflationary increases. If both the DTH subscriber levels to these channels and the rate payable for each Sky Distributed Channel were to remain at 30 June 2005 levels, the additional commitment would be £522 million (2004: £844 million). |
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(3) | Long-term debt |
Further information concerning long-term debt is given in note 19 of the Consolidated Financial Statements included within Item 18. |
(4) | Operating lease obligations |
At 30 June 2005, our operating lease obligations totalled £444 million (2004: £447 million), the majority of which related to property and transponder leases. |
(5) | Capital lease obligations |
At 30 June 2005, our obligations under capital leases were £7 million (2004: £7 million). This represents financing arrangements in connection with the CRM centre in Dunfermline, Scotland. The CRM centre lease bears interest of 8.5% and expires in September 2020. |
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Name | Age | Position with the Company | ||||
Chase Carey | 51 | *Director | ||||
Jeremy Darroch | 43 | Director (Chief Financial Officer)(i) | ||||
David DeVoe | 58 | *Director | ||||
David Evans | 65 | **Director | ||||
Nicholas Ferguson | 57 | **Director | ||||
Andrew Higginson | 48 | **Director(ii) | ||||
Allan Leighton | 52 | **Director (Audit Committee Chairman) | ||||
James Murdoch | 32 | Director (Chief Executive Officer) | ||||
Rupert Murdoch | 74 | *Chairman | ||||
Jacques Nasser | 57 | **Director (Remuneration Committee Chairman) | ||||
Gail Rebuck | 53 | **Director | ||||
Lord Rothschild | 69 | **Director (Deputy Chairman & Senior Independent Non-Executive Director) | ||||
Arthur Siskind | 67 | *Director | ||||
Lord St John of Fawsley | 76 | *Director | ||||
Lord Wilson of Dinton | 63 | **Director (Corporate Governance & Nominations Committee Chairman) |
* | Non-Executive |
** | Independent Non-Executive |
(i) | Jeremy Darroch was appointed as Chief Financial Officer (“CFO”) of the Company with effect from 16 August 2004, following Martin Stewart’s resignation from the Board of the Company on 4 August 2004. |
(ii) | Andrew Higginson was appointed as a Director of the Company on 1 September 2004. |
Name | Age | Position with the Company | ||||
Dawn Airey | 44 | Managing Director, Sky Networks | ||||
James Conyers | 40 | General Counsel | ||||
Beryl Cook | 44 | Director for People and Organisational Development | ||||
Robin Crossley | 47 | Strategic Adviser, Technology | ||||
Mike Darcey | 40 | Group Director of Strategy | ||||
Julian Eccles | 47 | Director of Corporate Communications and Corporate Affairs | ||||
Jon Florsheim | 45 | Chief Marketing Officer | ||||
Richard Freudenstein | 40 | Chief Operating Officer | ||||
David Gormley | 42 | Company Secretary | ||||
Jeff Hughes | 35 | Group Director for IT and Strategy | ||||
Nick Milligan | 44 | Managing Director, Sky Media | ||||
Vic Wakeling | 62 | Managing Director, Sky Sports | ||||
Alun Webber | 39 | Group Director of Engineering and Platform Technology |
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2005 | 2004 | 2003 | ||||||||||
Programming | 1,424 | 1,295 | 1,106 | |||||||||
Transmission and related functions | 1,403 | 1,394 | 1,383 | |||||||||
Marketing | 238 | 209 | 199 | |||||||||
Subscriber management | 5,662 | 5,418 | 5,381 | |||||||||
Administration | 1,079 | 1,051 | 954 | |||||||||
Betting | 152 | 133 | 109 | |||||||||
9,958 | 9,500 | 9,132 | ||||||||||
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• | approval of the annual budget and any changes to it; |
• | a major change in the nature, scope or scale of the business of the Group; |
• | approval of the interim and final financial results; |
• | approval of any dividend policy; |
• | changes relating to the Group’s capital structure, including reductions of capital and share buy-backs; |
• | the entering into by the Group of a commitment or arrangement (or any series of related commitments or arrangements) which, whether budgeted or unbudgeted, involves or could reasonably involve, the payment or receipt by the Group of amounts equal to or in excess of £100 million in aggregate value; |
• | the entering into by the Group of a commitment or arrangement (or any related series of commitments or arrangements) with News Corporation, any of its subsidiaries, or a related party which involves, or could reasonably involve, the payment or receipt by the Group of amounts equal to or in excess of £25 million in aggregate value. |
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• | the identification and nomination, for approval by the Board of candidates to fill Board vacancies as they arise; |
• | the drafting of requirements for a particular appointment to the Board, taking into consideration the present balance of skills, knowledge and experience on the Board; |
• | the regular review of the structure, size and composition of the Board and to recommend any changes to the Board or succession planning; |
• | the provision of a formal letter of appointment, setting out clearly what is expected of new appointees to the Board, in terms of time commitment, term of office and committee service as well as their duties and liabilities as a Director, including details of the Company’s Corporate Governance policies and Directors & Officers Liability Insurance Cover; |
• | the monitoring of the Company’s compliance with applicable Codes and other requirements of Corporate Governance; |
• | the supervision of the annual review by the Board of the independence of directors and the performance of the Board and individual directors. |
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• | making recommendations to the Board in relation to the appointment, reappointment and removal of the external auditors and discussing with the external auditors the nature, scope and fees for the external auditors’ work; |
• | reviewing and making recommendations to the Board regarding the approval, or any amendment to, the quarterly, half year and annual financial statements of the Group; |
• | reviewing and approving the Group’s US Annual Report on Form 20-F prior to its filing; |
• | reviewing the Group’s significant accounting policies; |
• | reviewing the Group’s systems of internal control; |
• | reviewing the Group’s treasury policies; |
• | reviewing the plans, findings and resources of the Group’s internal audit function and assessing its effectiveness annually; |
• | monitoring the Group’s whistle-blowing policy; |
• | approving non-audit services provided by Deloitte & Touche LLP. |
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Number of shares under award | ||||||||||||||||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||||||||||||||
At | Granted | Exercised | Lapsed | At | price at | Date from | ||||||||||||||||||||||||||||||||||
Name of | 30 June | during the | during the | during the | 30 June | Exercise | date of | Date of | which | Expiry | ||||||||||||||||||||||||||||||
Director | 2004 | year | year | year | 2005 | price | exercise | award | exercisable | date | ||||||||||||||||||||||||||||||
James Murdoch | — | 450,000 | — | — | 450,000 | £ | 0.00 | — | 11.08.04 | 11.08.07 | 11.08.14 | |||||||||||||||||||||||||||||
Jeremy Darroch | — | 250,000 | — | — | 250,000 | £ | 0.00 | — | 16.08.04 | 16.08.07 | 16.08.14 | |||||||||||||||||||||||||||||
Martin Stewart | 150,000 | — | 150,000 | (ii) | — | — | £ | 8.30 | £ | 5.71 | 21.11.01 | n/a | n/a | |||||||||||||||||||||||||||
113,555 | — | 5,200 | (ii) | — | 108,355 | £ | 5.55 | £ | 5.71 | 02.08.02 | 31.07.05 | 31.07.12 | ||||||||||||||||||||||||||||
113,555 | — | — | 113,555 | (i) | — | £ | 5.55 | — | 02.08.02 | n/a | n/a | |||||||||||||||||||||||||||||
5,733 | — | 765 | (ii) | — | 4,968 | £ | 5.60 | £ | 5.71 | 13.08.02 | 31.07.05 | 31.07.12 | ||||||||||||||||||||||||||||
5,733 | — | — | 5,733 | (i) | — | £ | 5.60 | — | 13.08.02 | n/a | n/a | |||||||||||||||||||||||||||||
220,000 | — | — | 220,000 | (i) | — | £ | 0.00 | — | 13.08.03 | n/a | n/a |
(i) | These awards were released on 31 July 2004. Further details can be found in this Item (see “Agreements with Martin Stewart” below). |
(ii) | These awards vested on 31 July 2004 and were exercised by Martin Stewart during the fiscal year. The aggregate amount that he received was £890,560. In 2004, the aggregate amount received by Directors was £12,789,000. |
Number of shares under award(i) | ||||||||||||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||||||||||
At | Granted | Exercised | Lapsed | At | price at | Date from | ||||||||||||||||||||||||||||||
Name of | 30 June | during the | during the | during the | 30 June | Exercise | date of | which | Expiry | |||||||||||||||||||||||||||
Director | 2004 | year | year | year | 2005 | price(i) | exercise | exercisable | date | |||||||||||||||||||||||||||
Martin Stewart | 26,000 | — | 26,000 | (ii) | — | — | n/a | £5.71 | n/a | n/a | ||||||||||||||||||||||||||
26,000 | — | — | 26,000 | (iii) | — | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||
55,000 | — | — | 55,000 | (iii) | — | n/a | n/a | n/a | n/a |
(i) | Awards under the EBP take the form of a contingent right to acquire existing shares in the Company at the vesting date, for nil consideration. |
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(ii) | These awards vested on 31 July 2004 and were exercised by Martin Stewart during the fiscal year. The aggregate amount that he received was £148,460 (2004: nil). |
(iii) | These awards were released on 31 July 2004. Further details can be found in this Item (see “Agreements with Martin Stewart” below). |
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a) | His annual bonus was paid out at the 2003 level, as a ‘proxy’ for a ‘normal’ annual bonus, and paid in two equal instalments on 31 January 2005 and 31 July 2005. |
b) | He also received a sum of £1,273,982 to compensate him for the loss of the LTIP and EBP awards due to vest in 2005 and 2006. This was paid on 31 August 2004. The total payment was based on the average closing price of a BSkyB share for the period 1 January 2004 to 31 July 2004. The payment was a pro-rated amount as if his employment with the Company had ended on 31 July 2004, equal to 730/1096 of the LTIP and EBP award vesting in July 2005 and 365/1096 of the LTIP and EBP award vesting in August 2006. The balance of the 2002 LTIP award that did not vest at 31 July 2004 was carried over and measured at 31 July 2005. |
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The Company’s TSR performance | ||||||||||||||||
against the FTSE 100 | ||||||||||||||||
The Company’s TSR | Median | Upper | Upper | |||||||||||||
performance against the | Below | to upper | quartile | decile or | ||||||||||||
Media Comparator Group | median | quartile | or above | above | ||||||||||||
1st highest TSR | 70% | 80% | 100% | 100% | ||||||||||||
2nd highest TSR | 60% | 70% | 95% | 100% | ||||||||||||
3rd highest TSR | 50% | 65% | 80% | 90% | ||||||||||||
4th highest TSR | 45% | 55% | 65% | 75% | ||||||||||||
5th highest TSR | 40% | 50% | 60% | 70% | ||||||||||||
6th highest TSR | 30% | 40% | 50% | 60% | ||||||||||||
7th highest TSR or lower | 5% | 5% | 5% | 5% |
c) | During the notice period, Martin Stewart continued to participate in the Company’s pension scheme and received his company car and certain computer equipment. |
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Expiry date of | ||||||||
current service | ||||||||
agreement or letter | ||||||||
Commencement Date | of appointment | |||||||
Chase Carey(iii) | 13 February 2003 | 3 November 2006 | ||||||
David DeVoe(i) (ii) | 15 December 1994 | 4 November 2005 | ||||||
David Evans(i) | 21 September 2001 | 4 November 2005 | ||||||
Nicholas Ferguson | 15 June 2004 | November 2007 | * | |||||
Andrew Higginson | 1 September 2004 | November 2007 | * | |||||
Allan Leighton(i) | 15 October 1999 | 4 November 2005 | ||||||
Rupert Murdoch(i) (ii) | 3 November 1990 | 4 November 2005 | ||||||
Jacques Nasser | 8 November 2002 | November 2007 | * | |||||
Gail Rebuck | 8 November 2002 | November 2007 | * | |||||
Lord Rothschild | 17 November 2003 | November 2007 | * | |||||
Arthur Siskind(ii) | 19 November 1991 | 4 November 2005 | ||||||
Lord St John of Fawsley(iii) | 20 November 1991 | 3 November 2006 | ||||||
Lord Wilson of Dinton(i) | 13 February 2003 | 4 November 2005 |
* | These letters of appointment will expire on the day of the Company’s November 2007 AGM, the date of which has yet to be agreed. |
(i) | Directors retiring by rotation and offering themselves for reappointment by shareholders at the Company’s next AGM, to be held on 4 November 2005. |
(ii) | Arthur Siskind is subject to annual reappointment by shareholders in accordance with requirement A.7.2. of the Combined Code as he has served as a Non-Executive Director for longer than nine years. For the same reason, and assuming that they are reappointed at the AGM of the Company to be held on 4 November 2005, Rupert Murdoch and David DeVoe will thereafter be subject to annual reappointment by shareholders. |
(iii) | Chase Carey and Lord St John of Fawsley will be subject to retirement by rotation and reappointment by shareholders at the Company’s AGM in 2006, to be held on 3 November 2006. In accordance with the Company’s current Articles of Association, one-third of the Directors must retire by rotation. Therefore, assuming that the Board continues to comprise fifteen directors, five Directors will be required to retire by rotation at the Company’s AGM in 2006 (in addition to those then subject to annual reappointment). Accordingly, the remaining three Directors to retire by rotation in 2006 will be selected by drawing lots from those Directors who would otherwise be due to retire by rotation at the AGM of the Company to be held in 2007. |
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Total | Total | Total | ||||||||||||||||||||||||||||||
Total | emoluments | emoluments | emoluments | |||||||||||||||||||||||||||||
emoluments | including | including | including | |||||||||||||||||||||||||||||
Salary | Bonus | before | pensions | pensions | pensions | |||||||||||||||||||||||||||
and fees | scheme | Benefits | pensions | Pensions | 2005 | 2004 | 2003 | |||||||||||||||||||||||||
£ | £ | £ | £ | £ | £ | £ | £ | |||||||||||||||||||||||||
Executive | ||||||||||||||||||||||||||||||||
James Murdoch | 750,000 | 1,200,000 | 216,697 | 2,166,697 | 59,680 | 2,226,377 | 1,480,578 | 13,946 | ||||||||||||||||||||||||
Jeremy Darroch(i) | 440,000 | 640,000 | 14,049 | 1,094,049 | 33,168 | 1,127,217 | — | — | ||||||||||||||||||||||||
Non-Executive | ||||||||||||||||||||||||||||||||
Chase Carey | 40,600 | — | — | 40,600 | — | 40,600 | 38,600 | 13,946 | ||||||||||||||||||||||||
David Devoe | 40,150 | — | — | 40,150 | — | 40,150 | 48,151 | 17,741 | ||||||||||||||||||||||||
David Evans | 45,600 | — | — | 45,600 | — | 45,600 | 43,600 | 39,994 | ||||||||||||||||||||||||
Nicholas Ferguson | 45,600 | — | — | 45,600 | — | 45,600 | 2,012 | — | ||||||||||||||||||||||||
Andrew Higginson(ii) | 38,000 | — | — | 38,000 | — | 38,000 | — | — | ||||||||||||||||||||||||
Allan Leighton | 50,600 | — | — | 50,600 | — | 50,600 | 46,747 | 41,750 | ||||||||||||||||||||||||
Rupert Murdoch | 45,400 | — | — | 45,400 | — | 45,400 | 48,375 | 17,741 | ||||||||||||||||||||||||
Jacques Nasser | 50,700 | — | — | 50,700 | — | 50,700 | 43,792 | 26,923 | ||||||||||||||||||||||||
Gail Rebuck | 45,600 | — | — | 45,600 | — | 45,600 | 43,600 | 25,596 | ||||||||||||||||||||||||
Lord Rothschild | 50,600 | — | — | 50,600 | — | 50,600 | 29,744 | — | ||||||||||||||||||||||||
Arthur Siskind | 45,400 | — | — | 45,400 | — | 45,400 | 46,010 | 15,843 | ||||||||||||||||||||||||
Lord St John of Fawsley(iii) | 50,400 | — | — | 50,400 | — | 50,400 | 47,035 | 40,673 | ||||||||||||||||||||||||
Lord Wilson of Dinton | 50,600 | — | — | 50,600 | — | 50,600 | 44,894 | 13,946 | ||||||||||||||||||||||||
Former Directors | ||||||||||||||||||||||||||||||||
Tony Ball(iv) | — | — | — | — | — | — | 13,184,745 | 2,459,737 | ||||||||||||||||||||||||
Philip Bowman(v) | — | — | — | — | — | — | 18,069 | 46,750 | ||||||||||||||||||||||||
Martin Stewart(vi) | 500,000 | 1,773,982 | 20,000 | 2,293,982 | 23,145 | 2,317,127 | 1,059,926 | 956,436 | ||||||||||||||||||||||||
John Thornton(vii) | — | — | — | — | — | — | 46,110 | 53,744 | ||||||||||||||||||||||||
Total emoluments | 2,289,250 | 3,613,982 | 250,746 | 6,153,978 | 115,993 | 6,269,971 | 16,271,988 | 3,784,766 | ||||||||||||||||||||||||
(i) | Jeremy Darroch was appointed CFO of the Company on 16 August 2004. |
(ii) | Andrew Higginson was appointed as a Director of the Company on 1 September 2004. |
(iii) | Lord St John of Fawsley received a payment of £10,000 relating to unpaid fees for the period September 2002 to November 2003, when he was the Senior Independent Director and Chairman and member of the Nominations Committee. |
(iv) | Tony Ball resigned as a Director of the Company on 4 November 2003. Details of the emoluments Tony Ball received during the fiscal year ended 30 June 2004 were disclosed in the Company’s 2004 Annual Report on Form 20-F. |
(v) | Philip Bowman resigned as a Director of the Company on 14 November 2003. |
(vi) | Martin Stewart resigned as a Director of the Company on 4 August 2004. |
(vii) | John Thornton resigned as a Director of the Company on 11 May 2004. |
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Bonus | ||||
Executive Director | Scheme | |||
£ | ||||
James Murdoch | 1,200,000 | |||
Jeremy Darroch | 640,000 | |||
Martin Stewart(i) | 500,000 |
(i) | Martin Stewart also received a payment of £1,273,982 for the release of his share awards under the LTIP and EBP at 31 July 2004. |
At | At | At | ||||||||||
30 September | 30 June | 30 June | ||||||||||
Name of Director | 2005 | 2005 | 2004 | |||||||||
David Evans | 16,000 | * | 16,000 | * | 8,000 | * | ||||||
Nicholas Ferguson | 10,000 | 10,000 | — | |||||||||
Andrew Higginson | 2,000 | 2,000 | — | |||||||||
Lord Rothschild | 100,000 | 100,000 | 100,000 | |||||||||
Lord St John of Fawsley | 2,000 | 2,000 | 2,000 | |||||||||
Lord Wilson of Dinton | 486 | 486 | 486 |
* | Held in the form of 4,000 ADRs (2004: 2,000 ADRs), one ADR is equivalent to four ordinary shares. |
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Amount | Percent | |||||||
Identity of Person or Group | Owned | of Class | ||||||
News UK Nominees Limited(1) | 686,021,700 | 37.19% | ||||||
One Virginia Street London E98 1XY | ||||||||
Franklin Resources, Inc. and its affiliates | 168,104,571 | 9.01% | ||||||
One Franklin Parkway San Mateo CA 94403-1906 | ||||||||
Janus Capital Management LLC | 79,154,541 | 4.08% | ||||||
151 Detroit St. Denver CO 80206 | ||||||||
Barclays PLC | 77,388,712 | 4.15% | ||||||
54 Lombard Street London EC3P 3AH |
(1) | On 30 June 2004, BSkyB Holdco, Inc. transferred its entire shareholding in us to News UK Nominees Limited, a wholly-owned subsidiary of News Corporation which remains interested in the shares. |
Date Notified | Percentage Ownership | |||
9 August 2004 | 3.58% | |||
12 August 2004 | 4.08% | |||
15 September 2004 | 5.05% | |||
15 November 2004 | 6.00% | |||
3 May 2005 | 7.06% | |||
9 June 2005 | 8.03% | |||
11 July 2005 | 9.01% |
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Shares | ADSs(i) | |||||||||||||||
(Pence) | ($) | |||||||||||||||
High | Low | High | Low | |||||||||||||
Fiscal year ended 30 June | ||||||||||||||||
2001 | 1,320 | 642 | 80 2/3 | 37 7/100 | ||||||||||||
2002 | 936 | 544 | 53 | 32 1/100 | ||||||||||||
2003 | 706 | 458 | 47 3/25 | 28 53/100 | ||||||||||||
2004 | 776 | 584 1/2 | 59 6/25 | 40 13/50 | ||||||||||||
2005 | 625 | 465 1/2 | 46 33/100 | 33 39/50 |
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Shares | ADSs(i) | |||||||||||||||
(Pence) | ADSs(i) ($) | |||||||||||||||
High | Low | High | Low | |||||||||||||
Fiscal year ended 30 June | ||||||||||||||||
2004 | ||||||||||||||||
First Quarter | 724 | 614 1/2 | 47 6/25 | 40 13/50 | ||||||||||||
Second Quarter | 709 | 614 | 51 1/4 | 41 9/100 | ||||||||||||
Third Quarter | 776 | 678 1/2 | 59 6/25 | 50 3/5 | ||||||||||||
Fourth Quarter | 696 1/2 | 584 1/2 | 51 3/10 | 43 33/100 | ||||||||||||
2005 | ||||||||||||||||
First Quarter | 625 | 465 1/2 | 46 33/100 | 33 39/50 | ||||||||||||
Second Quarter | 570 3/4 | 483 | 44 1/2 | 34 67/100 | ||||||||||||
Third Quarter | 595 | 540 1/2 | 44 93/100 | 40 39/100 | ||||||||||||
Fourth Quarter | 572 1/2 | 509 | 43 63/100 | 36 19/25 | ||||||||||||
2006 | ||||||||||||||||
First Quarter | 579 | 522 | 42 11/25 | 36 49/100 |
Shares | ADSs(i) | |||||||||||||||
(Pence) | ($) | |||||||||||||||
High | Low | High | Low | |||||||||||||
Month ended | ||||||||||||||||
30 April 2005 | 572 1/2 | 540 | 43 63/100 | 41 1/10 | ||||||||||||
31 May 2005 | 548 | 515 | 41 43/100 | 38 31/20 | ||||||||||||
30 June 2005 | 541 1/2 | 509 | 39 3/5 | 36 19/25 | ||||||||||||
31 July 2005 | 547 1/2 | 522 | 38 7/10 | 36 49/100 | ||||||||||||
31 August 2005 | 576 | 541 | 41 1/2 | 38 7/20 | ||||||||||||
30 September 2005 | 579 | 552 | 42 11/25 | 39 11/25 |
(i) | Each ADS represents four ordinary shares (up until 23 December 2002, each ADS represented six ordinary shares). Prior year ADS figures in the above tables have been restated to reflect this change in ratio. |
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(i) | the giving of any guarantee, security or indemnity to him in respect of money lent to, or obligations incurred by him at the request of, or for the benefit of, the Company or any of its subsidiaries; |
(ii) | the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; |
(iii) | any proposal concerning an offer of any shares or debentures or other securities of or by the Company for subscription, purchase or exchange in which offer he is, or is to be, interested as a participant in the underwriting or sub-underwriting thereof; |
(iv) | any proposal concerning a superannuation fund or retirement benefits scheme which has been approved by, or is subject to, and conditional upon approval by the Board of the HMRC for taxation purposes; |
(v) | any arrangement for the benefit of employees of the Company or any of its subsidiaries including but not limited to, an employees share scheme which has been approved by, or is subject to and conditional upon approval by, the Board of the HMRC for taxation purposes and which does not accord to any Directors any privilege not accorded to the employees to whom the arrangement relates; and |
(vi) | any proposal concerning the purchase or maintenance of insurance for the benefit of Directors or persons who include Directors. |
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(i) | all Directors of the Company who are subject to retirement by rotation who held office at the time of the two preceding AGMs and who did not retire by rotation at either of them; and |
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(ii) | such additional number of Directors as shall, when aggregated with the number of Directors retiring under paragraph (i) above, equal either one third of the number of Directors, in circumstances where the number of Directors is three or a multiple of three, or in all other circumstances, the whole number which is nearest to but does not exceed one-third of the number of Directors (the “Relevant Proportion”) provided that: |
(a) | the provisions of this paragraph (ii) shall only apply if the number of Directors retiring under paragraph (i) above is less than the Relevant Proportion; and | |
(b) | subject to the provisions of the Act and to the relevant provisions of these Articles, the Directors to retire under this paragraph (ii) shall be those who have been longest in office since their last appointment or reappointment, but as between persons who became or were last reappointed Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. |
(i) | divide among the members in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and, for that purpose, set such values as he deems fair upon any property to be divided and determine how the division shall be carried out between the members; and |
(ii) | vest the whole or any part of the assets in trustees upon such trusts for the benefit of members as the liquidator shall think fit, |
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(i) | is lodged at the transfer office accompanied by the relevant share certificate(s); |
(ii) | is in respect of only one class of share; and |
(iii) | is in favour of not more than four persons jointly. |
(i) | and following consultation with Ofcom that, inter alia, by reason of the interest of a person in any shares of the Company transferred, Ofcom may vary, revoke, determine or refuse to award, grant, renew or extend a licence granted under the Broadcasting Acts; or |
(ii) | that any person has an interest in the shares of the Company which, inter alia, makes the Company a disqualified person under the Broadcasting Acts or which contravenes, or would cause a contravention of, any of the restrictions set out in Parts III, IV or V of Schedule 2 to the Broadcasting Act 1990 or any order, direction or notice made pursuant to the Broadcasting Acts or such other restrictions as may be applied by Ofcom from time to time to disqualify certain persons or bodies from having interests in such a licence or to restrict the accumulation of interests in relevant services as defined in Schedule 2 to the Broadcasting Act 1990; |
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(i) | increase its share capital by such sum to be divided into shares of such amounts as the resolution shall prescribe; |
(ii) | consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; |
(iii) | cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person and diminish the amount of its capital by the amount of the shares so cancelled; or |
(iv) | sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the provisions of the Statutes). |
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(i) | he acquires (or becomes aware that he has acquired) or ceases to have (or becomes aware that he has ceased to have) an interest in shares comprising any class of the Company’s issued and voting share capital; and |
(ii) | as a result, either he obtains, or ceases to have: |
(a) | a “material interest” in 3%, or more; or | |
(b) | an aggregate interest (whether “material” or not) in 10%, or more of the Company’s voting capital; or | |
(c) | the percentage of his interest in the Company’s voting capital remains above the relevant level and changes by a whole percentage point. |
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(i) | 75% or more of its gross income is passive income; or |
(ii) | its assets that produce passive income or that are held for the production of passive income amount to at least 50% of the value of its total assets on average. |
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ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
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ITEM 15. | CONTROLS AND PROCEDURES |
— | those services which the auditors are prohibited from providing; |
— | those services which are acceptable for the auditors to provide and the provision of which has been pre-approved by the Audit Committee; and |
— | those services for which the specific approval of the Audit Committee is required before the auditors are permitted to provide the service. |
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2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Audit fees | 1 | 1 | 1 | |||||||||
Audit-related fees | 1 | 1 | 1 | |||||||||
Audit and audit-related fees | 2 | 2 | 2 | |||||||||
Tax fees | — | — | 1 | |||||||||
CRM centre development | 7 | 7 | 5 | |||||||||
Other services | — | — | 1 | |||||||||
All other fees | 7 | 7 | 6 | |||||||||
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
Total number of | Maximum number | |||||||||||||||
shares purchased as | of shares that may | |||||||||||||||
Total number | Average price | part of publicly | yet be purchased | |||||||||||||
of shares | paid per | announced plans | under the plans | |||||||||||||
Period | purchased(i) | share | or programmes(ii) | or programmes | ||||||||||||
July | — | — | — | — | ||||||||||||
August | — | — | — | — | ||||||||||||
September | — | — | — | — | ||||||||||||
October | — | — | — | — | ||||||||||||
November | 6,535,000 | £5.49 | 6,535,000 | 90,465,000 | ||||||||||||
December | 16,304,000 | £5.59 | 16,304,000 | 74,161,000 | ||||||||||||
January | — | — | — | 74,161,000 | ||||||||||||
February | 21,000,000 | £5.79 | 21,000,000 | 53,161,000 | ||||||||||||
March | 8,150,000 | £5.70 | 8,150,000 | 45,011,000 | ||||||||||||
April | 500,000 | £5.75 | 500,000 | 44,511,000 | ||||||||||||
May | 6,800,000 | £5.30 | 6,800,000 | 37,711,000 | ||||||||||||
June(iii) | 17,700,000 | £5.29 | 15,030,000 | 22,681,000 | ||||||||||||
Total for year ended 30 June 2005 | 76,989,000 | £5.56 | 74,319,000 | 22,681,000 | ||||||||||||
July | 1,100,000 | £5.26 | 1,100,000 | 21,581,000 | ||||||||||||
August | 7,600,000 | £5.53 | 7,600,000 | 13,981,000 | ||||||||||||
September | 13,981,000 | £5.70 | 13,981,000 | — |
(i) | All share purchases were open market transactions and are included in the month of settlement. |
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(ii) | On 12 November 2004, the Company’s shareholders approved a resolution at the AGM for the Company to purchase up to 97,000,000 Ordinary Shares. The authority to buy-back these shares expires on 11 November 2005. |
(iii) | Included within the total number of shares purchased in June 2005, are a total of 2,670,000 of the Company’s Ordinary Shares, which were purchased by the Trustee of the British Sky Broadcasting Group ESOP. These shares are held by the ESOP and will be used to satisfy the future exercise of share options and share awards by the Group’s employees. |
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
Page | ||||
Report of Independent Registered Public Accounting Firm, Deloitte & Touche LLP | F-1 | |||
Consolidated Profit and Loss Accounts for the years ended 30 June 2005, 2004 and 2003 | F-2 | |||
Consolidated Balance Sheets at 30 June 2005 and 2004 | F-3 | |||
Consolidated Cash Flow Statements for the years ended 30 June 2005, 2004 and 2003 | F-4 | |||
Notes to Consolidated Financial Statements | F-7 |
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ITEM 19. | EXHIBITS |
Exhibit No. | ||||||||
In Document | ||||||||
Incorporated | ||||||||
Number | Description | By Reference | ||||||
1 | (i) | Memorandum and Articles of Association | A | |||||
2 | (ii) | Specimen share certificate | 2 | |||||
4.1 | Agreement dated 3 November 2004 with respect to a £1,000,000,000 Revolving Credit Facility among British Sky Broadcasting Group plc, as borrower, Barclays Bank plc, as agent, and others | — | ||||||
4.2 | (iii) | Service agreement dated 13 May 2004 with the Chief Executive Officer | 4.2 | |||||
4.3 | (iii) | Service agreement dated 16 August 2004 with the Chief Financial Officer | 4.3 | |||||
8 | List of Subsidiaries | — | ||||||
11 | (iv) | Code of Ethics | 11 | |||||
12.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | — | ||||||
12.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | — | ||||||
13 | Written statement of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) | — | ||||||
15 | Consent of Deloitte & Touche LLP | — |
(i) | Incorporated by reference to the Special Report on Form 6-K of British Sky Broadcasting Group plc filed with the SEC on 18 August 2003. |
(ii) | Incorporated by reference to the Annual Report on Form 20-F of British Sky Broadcasting Group plc for the fiscal year ended 30 June 2001 filed with the SEC on 1 October 2001. |
(iii) | Incorporated by reference to the Annual Report on Form 20-F of British Sky Broadcasting Group plc for the fiscal year ended 30 June 2004 filed with the SEC on 26 October 2004. |
(iv) | Incorporated by reference to the Annual Report on Form 20-F of British Sky Broadcasting Group plc for the fiscal year ended 30 June 2003 filed with the SEC on 5 December 2003. |
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British Sky Broadcasting Group plc |
By: | Jeremy Darroch |
Jeremy Darroch | |
Chief Financial Officer |
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F-1 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-7 |
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30 June 2005 | 30 June 2004 | 30 June 2003 | ||||||||||||||||||||||||||||||||||||||
Before | Before | Before | ||||||||||||||||||||||||||||||||||||||
goodwill | Goodwill | goodwill | Goodwill | goodwill | Goodwill | |||||||||||||||||||||||||||||||||||
and | and | and | and | and | and | |||||||||||||||||||||||||||||||||||
exceptional | exceptional | exceptional | exceptional | exceptional | exceptional | |||||||||||||||||||||||||||||||||||
Notes | items | items | Total | items | items | Total | items | items | Total | |||||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||||||||||||
Turnover: Group and share of joint ventures’ turnover | 4,115 | — | 4,115 | 3,738 | — | 3,738 | 3,263 | — | 3,263 | |||||||||||||||||||||||||||||||
Less: share of joint ventures’ turnover | (67 | ) | — | (67 | ) | (82 | ) | — | (82 | ) | (77 | ) | — | (77 | ) | |||||||||||||||||||||||||
Group turnover | 2 | 4,048 | — | 4,048 | 3,656 | — | 3,656 | 3,186 | — | 3,186 | ||||||||||||||||||||||||||||||
Operating expenses, net | 3 | (3,243 | ) | (103 | ) | (3,346 | ) | (3,056 | ) | (119 | ) | (3,175 | ) | (2,822 | ) | (116 | ) | (2,938 | ) | |||||||||||||||||||||
Operating profit | 805 | (103 | ) | 702 | 600 | (119 | ) | 481 | 364 | (116 | ) | 248 | ||||||||||||||||||||||||||||
Share of joint ventures’ and associates’ operating results | 13 | 14 | — | 14 | (5 | ) | 10 | 5 | 3 | — | 3 | |||||||||||||||||||||||||||||
Loss on disposal of investments in joint ventures | 4 | — | (23 | ) | (23 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Profit on disposal of fixed asset investments | 4 | — | — | — | — | 51 | 51 | — | — | — | ||||||||||||||||||||||||||||||
Amounts written back to (written off) fixed asset investments, net | 4 | — | — | — | — | 24 | 24 | — | (15 | ) | (15 | ) | ||||||||||||||||||||||||||||
Profit on ordinary activities before interest and taxation | 819 | (126 | ) | 693 | 595 | (34 | ) | 561 | 367 | (131 | ) | 236 | ||||||||||||||||||||||||||||
Interest receivable and similar income | 5 | 30 | — | 30 | 10 | — | 10 | 4 | — | 4 | ||||||||||||||||||||||||||||||
Interest payable and similar charges | 5 | (92 | ) | — | (92 | ) | (91 | ) | — | (91 | ) | (118 | ) | — | (118 | ) | ||||||||||||||||||||||||
Profit on ordinary activities before taxation | 6 | 757 | (126 | ) | 631 | 514 | (34 | ) | 480 | 253 | (131 | ) | 122 | |||||||||||||||||||||||||||
Tax (charge) credit on profit on ordinary activities | 8 | (202 | ) | (4 | ) | (206 | ) | (158 | ) | — | (158 | ) | (59 | ) | 121 | 62 | ||||||||||||||||||||||||
Profit on ordinary activities after taxation | 555 | (130 | ) | 425 | 356 | (34 | ) | 322 | 194 | (10 | ) | 184 | ||||||||||||||||||||||||||||
Equity dividends | 9 | (170 | ) | (116 | ) | — | ||||||||||||||||||||||||||||||||||
Retained profit for the financial year | 23 | 255 | 206 | 184 | ||||||||||||||||||||||||||||||||||||
Earnings per share — basic | 10 | 22.2p | 16.6p | 9.6p | ||||||||||||||||||||||||||||||||||||
Earnings per share — diluted | 10 | 22.2p | 16.6p | 9.5p | ||||||||||||||||||||||||||||||||||||
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30 June | ||||||||||||
Notes | 2005 | 2004 | ||||||||||
£m | £m | |||||||||||
Fixed assets | ||||||||||||
Intangible fixed assets | 11 | 301 | 417 | |||||||||
Tangible fixed assets | 12 | 526 | 376 | |||||||||
Investments: | ||||||||||||
Investments in associates | 1 | 1 | ||||||||||
Investments in joint ventures: | ||||||||||||
— Share of gross assets | 47 | 72 | ||||||||||
— Share of gross liabilities | (26 | ) | (45 | ) | ||||||||
— Transfer from creditors | 1 | 5 | ||||||||||
Total investments in joint ventures and associates | 13 | 23 | 33 | |||||||||
Other fixed asset investments | 14 | 2 | 2 | |||||||||
Total investments | 25 | 35 | ||||||||||
852 | 828 | |||||||||||
Current assets | ||||||||||||
Stocks | 15 | 340 | 375 | |||||||||
Debtors: Amounts falling due within one year | ||||||||||||
— deferred tax asset | 16 | 43 | 49 | |||||||||
— other | 17 | 299 | 321 | |||||||||
342 | 370 | |||||||||||
Debtors: Amounts falling due after more than one year | ||||||||||||
— deferred tax asset | 16 | 57 | 102 | |||||||||
— other | 17 | 32 | 42 | |||||||||
89 | 144 | |||||||||||
Cash and liquid resources: | ||||||||||||
— current asset investments | 54 | 173 | ||||||||||
— cash at bank and in hand | 643 | 474 | ||||||||||
697 | 647 | |||||||||||
1,468 | 1,536 | |||||||||||
Creditors:Amounts falling due within one year | 18 | (1,240 | ) | (1,170 | ) | |||||||
Net current assets | 228 | 366 | ||||||||||
Total assets less current liabilities | 1,080 | 1,194 | ||||||||||
Creditors:Amounts falling due after more than one year | ||||||||||||
— long-term borrowings | 19 | (1,076 | ) | (1,076 | ) | |||||||
— accruals and deferred income | 19 | (25 | ) | (28 | ) | |||||||
(1,101 | ) | (1,104 | ) | |||||||||
Provisions for liabilities and charges | 21 | (13 | ) | — | ||||||||
(34 | ) | 90 | ||||||||||
Capital and reserves — equity | ||||||||||||
Called-up share capital | 22 | 934 | 971 | |||||||||
Share Premium | 23 | 1,437 | 1,437 | |||||||||
Employee Share Ownership Plan (“ESOP”) reserve | 23 | (32 | ) | (30 | ) | |||||||
Merger reserve | 23 | 149 | 222 | |||||||||
Special reserve | 23 | 14 | 14 | |||||||||
Capital redemption reserve | 23 | 37 | — | |||||||||
Profit and loss account | 23 | (2,573 | ) | (2,524 | ) | |||||||
Shareholders’ (deficit) funds | 23 | (34 | ) | 90 | ||||||||
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30 June | ||||||||||||||||
Notes | 2005 | 2004 | 2003 | |||||||||||||
£m | £m | £m | ||||||||||||||
Net cash inflow from operating activities | a | 978 | 882 | 664 | ||||||||||||
Dividends received from joint ventures | 12 | 4 | 4 | |||||||||||||
Returns on investments and servicing of finance | ||||||||||||||||
Interest received and similar income | 28 | 7 | 3 | |||||||||||||
Interest paid and similar charges | (91 | ) | (89 | ) | (127 | ) | ||||||||||
Interest element of finance lease payments | — | — | (1 | ) | ||||||||||||
Net cash outflow from returns on investments and servicing of finance | (63 | ) | (82 | ) | (125 | ) | ||||||||||
Taxation | ||||||||||||||||
UK corporation tax paid | (101 | ) | (55 | ) | (18 | ) | ||||||||||
Consortium relief paid | (2 | ) | (3 | ) | — | |||||||||||
Net cash outflow from taxation | (103 | ) | (58 | ) | (18 | ) | ||||||||||
Capital expenditure and financial investment | ||||||||||||||||
Payments to acquire tangible fixed assets | (230 | ) | (132 | ) | (98 | ) | ||||||||||
Receipts from sales of fixed asset investments | 1 | 116 | 1 | |||||||||||||
Net cash outflow from capital expenditure and financial investment | (229 | ) | (16 | ) | (97 | ) | ||||||||||
Acquisitions and disposals | ||||||||||||||||
Funding to joint ventures and associates | (4 | ) | (5 | ) | (15 | ) | ||||||||||
Repayments of funding from joint ventures and associates | 8 | 6 | 5 | |||||||||||||
Receipts from sales of investments in joint ventures | 14 | — | — | |||||||||||||
Net cash inflow (outflow) from acquisitions and disposals | 18 | 1 | (10 | ) | ||||||||||||
Equity dividends paid | (138 | ) | (53 | ) | — | |||||||||||
Net cash inflow before management of liquid resources and financing | 475 | 678 | 418 | |||||||||||||
Management of liquid resources | c | 164 | (511 | ) | 1 | |||||||||||
Financing | ||||||||||||||||
Proceeds from issue of Ordinary Shares | — | 20 | 5 | |||||||||||||
Proceeds from issue of shares held in ESOP | 4 | — | — | |||||||||||||
Purchase of own shares for ESOP | (14 | ) | (22 | ) | — | |||||||||||
Share buy-back | (416 | ) | — | — | ||||||||||||
Capital element of finance lease payments | b | — | (1 | ) | (2 | ) | ||||||||||
Net decrease in debt due after more than one year | b | — | (75 | ) | (425 | ) | ||||||||||
Net cash outflow from financing | (426 | ) | (78 | ) | (422 | ) | ||||||||||
Increase (decrease) in cash | c | 213 | 89 | (3 | ) | |||||||||||
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2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
Before | Before | Before | ||||||||||||||||||||||||||||||||||
goodwill | Goodwill | goodwill | Goodwill | goodwill | Goodwill | |||||||||||||||||||||||||||||||
and | and | and | and | and | and | |||||||||||||||||||||||||||||||
exceptional | exceptional | exceptional | exceptional | exceptional | exceptional | |||||||||||||||||||||||||||||||
items | items | Total | items | items | Total | Items | Items | Total | ||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||||||||
Operating profit | 805 | (103 | ) | 702 | 600 | (119 | ) | 481 | 364 | (116 | ) | 248 | ||||||||||||||||||||||||
Depreciation | 92 | — | 92 | 102 | — | 102 | 98 | — | 98 | |||||||||||||||||||||||||||
Amortisation of goodwill and other intangible fixed assets | — | 116 | 116 | — | 119 | 119 | — | 121 | 121 | |||||||||||||||||||||||||||
Loss on disposal of tangible fixed assets | 2 | — | 2 | 1 | — | 1 | — | — | — | |||||||||||||||||||||||||||
Decrease (increase) in stock | 35 | — | 35 | (5 | ) | — | (5 | ) | 44 | — | 44 | |||||||||||||||||||||||||
Decrease in debtors | 34 | — | 34 | 17 | — | 17 | 88 | — | 88 | |||||||||||||||||||||||||||
(Decrease) increase in creditors | (14 | ) | — | (14 | ) | 170 | — | 170 | 66 | — | 66 | |||||||||||||||||||||||||
Increase (decrease) in provision | 12 | — | 12 | (3 | ) | — | (3 | ) | (1 | ) | — | (1 | ) | |||||||||||||||||||||||
Foreign exchange movement | (1 | ) | — | (1 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Net cash inflow from operating activities | 965 | 13 | 978 | 882 | — | 882 | 659 | 5 | 664 | |||||||||||||||||||||||||||
At | At | At | ||||||||||||||||||||||
1 July | 1 July | 30 June | ||||||||||||||||||||||
2003 | Cash flow | 2004 | Cash flow | Exchange | 2005 | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Overnight deposits | 33 | 40 | 73 | 172 | — | 245 | ||||||||||||||||||
Other cash | 14 | 49 | 63 | 41 | — | 104 | ||||||||||||||||||
Cash | 47 | 89 | 136 | 213 | — | 349 | ||||||||||||||||||
Short-term deposits | — | 338 | 338 | (45 | ) | 1 | 294 | |||||||||||||||||
Commercial paper | — | 173 | 173 | (119 | ) | — | 54 | |||||||||||||||||
Liquid resources | — | 511 | 511 | (164 | ) | 1 | 348 | |||||||||||||||||
Cash and liquid resources | 47 | 600 | 647 | 49 | 1 | 697 | ||||||||||||||||||
Debt due after more than one year | (1,144 | ) | 75 | (1,069 | ) | — | — | (1,069 | ) | |||||||||||||||
Capital element of finance leases | (8 | ) | 1 | (7 | ) | — | — | (7 | ) | |||||||||||||||
Total debt and capital element of finance leases | (1,152 | ) | 76 | (1,076 | ) | — | — | (1,076 | ) | |||||||||||||||
Total net debt | (1,105 | ) | 676 | (429 | ) | 49 | 1 | (379 | ) | |||||||||||||||
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Increase (decrease) in cash | 213 | 89 | (3 | ) | ||||||||
(Decrease) increase in short-term deposits | (45 | ) | 338 | (1 | ) | |||||||
(Decrease) increase in commercial paper | (119 | ) | 173 | — | ||||||||
(Decrease) increase in liquid resources | (164 | ) | 511 | (1 | ) | |||||||
Cash outflow resulting from decrease in debt and lease financing | — | 76 | 427 | |||||||||
Foreign exchange movement | 1 | — | — | |||||||||
Decrease in net debt | 50 | 676 | 423 | |||||||||
Net debt at beginning of year | (429 | ) | (1,105 | ) | (1,528 | ) | ||||||
Net debt at end of year | (379 | ) | (429 | ) | (1,105 | ) | ||||||
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2005 |
Corporate reorganisation |
Disposal of Granada Sky Broadcasting (“GSB”) |
2004 |
Share premium reduction |
WAPTV |
2003 |
F-6
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F-7
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Freehold buildings | 4% | |
Leasehold improvements | Lower of lease period or life of the asset | |
Equipment, fixtures and fittings: | ||
— Fixtures and fittings | 10% – 20% | |
— Computer equipment | 20% – 331/3% | |
— Technical equipment | 10% – 20% | |
— Motor vehicles | 25% |
F-8
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Sports | – | 100% on first showing, or where contracts provide for sports rights for multiple seasons or competitions, the amortisation of each contract is principally on a straight-line basis across the season or competition. | ||||||
Current affairs | – | 100% on first showing. | ||||||
General entertainment | – | Straight-line basis on each transmission. | ||||||
– | One showing planned – 100% | |||||||
– | Two showings planned – 60%; 40% | |||||||
– | Three showings planned – 50%; 30%; 20% | |||||||
– | Four showings planned – 40%; 30%; 20%; 10% | |||||||
Movies | – | Acquired movies are amortised on a straight-line basis over the period of transmission rights. Where acquired movie rights provide for a second availability window, 10% of the cost is allocated to that window. |
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— | Revenues from the provision of direct-to-home (“DTH”) subscription services are recognised as the services are provided, net of any discount given. Pay-per-view revenue is recognised when the event, movie or football match is viewed. |
— | Cable revenues are recognised as the services are provided to the cable retailers and are based on the number of subscribers taking the Sky Channels, as reported to the Group by the cable retailers, and the applicable rate card. |
— | Advertising sales revenues are recognised when the advertising is broadcast. |
F-10
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— | Sky Bet revenues include income from betting and gaming, which represent a) amounts receivable in respect of bets placed on events which occur in the year; and b) net customer losses in the year in respect of the online casino operations and casino-style interactive roulette games. |
— | Sky Active revenues include income from online advertising, e-mail, telephony income from the use of interactive services (e.g. voting), interconnect, text services and digibox subsidy recovery revenues earned through conditional access and access control charges made to customers on the Sky digital platform. All Sky Active revenues are recognised when the goods or services are delivered. |
— | Other revenues principally include income from installations, digibox sale revenues (including the sale of Sky+ and Multiroom digiboxes), Sky Talk revenues, service call revenue, warranty revenue, customer management service fees and access control fees. Other revenues are recognised, net of any discount given, when the relevant service has been provided. |
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
DTH subscribers | 2,968 | 2,660 | 2,341 | |||||||||
Cable subscribers | 219 | 215 | 202 | |||||||||
Advertising | 329 | 312 | 284 | |||||||||
Sky Bet(i) | 261 | 191 | 117 | |||||||||
Sky Active(i) | 92 | 116 | 101 | |||||||||
Other | 179 | 162 | 141 | |||||||||
4,048 | 3,656 | 3,186 | ||||||||||
(i) | Additional detail has been provided with regard to the analysis of interactive revenues between the Group’s betting and games revenues — “Sky Bet” — and other interactive revenues — “Sky Active” — and the prior year comparatives have been reclassified accordingly. |
F-11
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2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
Before | Before | Before | ||||||||||||||||||||||||||||||||||
goodwill | Goodwill | goodwill | Goodwill | goodwill | Goodwill | |||||||||||||||||||||||||||||||
and | and | and | and | and | and | |||||||||||||||||||||||||||||||
exceptional | exceptional | exceptional | exceptional | exceptional | exceptional | |||||||||||||||||||||||||||||||
items | items | Total | items | items | Total | items | items | Total | ||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||||||||
Programming(i) | 1,636 | — | 1,636 | 1,711 | — | 1,711 | 1,604 | — | 1,604 | |||||||||||||||||||||||||||
Transmission and related functions(i) | 171 | — | 171 | 146 | — | 146 | 143 | — | 143 | |||||||||||||||||||||||||||
Marketing | 515 | — | 515 | 396 | — | 396 | 400 | — | 400 | |||||||||||||||||||||||||||
Subscriber management | 396 | — | 396 | 371 | — | 371 | 324 | — | 324 | |||||||||||||||||||||||||||
Administration.(ii) | 289 | 103 | 392 | 257 | 119 | 376 | 243 | 116 | 359 | |||||||||||||||||||||||||||
Betting | 236 | — | 236 | 175 | — | 175 | 108 | — | 108 | |||||||||||||||||||||||||||
3,243 | 103 | 3,346 | 3,056 | 119 | 3,175 | 2,822 | 116 | 2,938 | ||||||||||||||||||||||||||||
(i) | The amounts shown are net of £11 million (2004: £11 million; 2003: £12 million) receivable from the disposal of programming rights not acquired for use by the Group, and £28 million (2004: £28 million; 2003: £26 million) in respect of the provision to third-party broadcasters of spare transponder capacity. |
(ii) | Administration costs include goodwill amortisation of £116 million (2004: £119 million, 2003: £121 million), net of an exceptional credit of £13 million (2004: nil, 2003: £5 million). |
F-12
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2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
Credit | Credit | Credit | ||||||||||||||||||||||||||||||||||
(charge) | Taxation | (charge) | Taxation | (charge) | Taxation | |||||||||||||||||||||||||||||||
before | (charge) | before | (charge) | before | (charge) | |||||||||||||||||||||||||||||||
taxation | credit | Total | taxation | credit | Total | taxation | credit | Total | ||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||||||||
Settlement of ITV Digital programming debtors (a) | 13 | (4 | ) | 9 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Release of provision against ITV Digital programming debtors (e) | — | — | — | — | — | — | 5 | (2 | ) | 3 | ||||||||||||||||||||||||||
Exceptional Operating Items | 13 | (4 | ) | 9 | — | — | — | 5 | (2 | ) | 3 | |||||||||||||||||||||||||
Loss on disposal of investment in joint ventures (b) | (23 | ) | — | (23 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Profit on disposal of fixed asset investments (c) | — | — | — | 51 | — | 51 | — | — | — | |||||||||||||||||||||||||||
Amounts written back to (written off) fixed asset investments, net (d) (f) | — | — | — | 24 | — | 24 | (15 | ) | — | (15 | ) | |||||||||||||||||||||||||
Recognition of deferred tax asset (g) | — | — | — | — | — | — | — | 123 | 123 | |||||||||||||||||||||||||||
Exceptional Non-Operating Items | (23 | ) | — | (23 | ) | 75 | — | 75 | (15 | ) | 123 | 108 | ||||||||||||||||||||||||
Total Exceptional Items | (10 | ) | (4 | ) | (14 | ) | 75 | — | 75 | (10 | ) | 121 | 111 | |||||||||||||||||||||||
a) | Settlement of ITV Digital programming debtors |
b) | Loss on disposal of investment in joint ventures |
c) | Profit on disposal of fixed asset investments |
d) | Amounts written back to fixed asset investments, net |
F-13
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f) | Amounts written off fixed asset investments, net |
F-14
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2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Interest receivable on cash and liquid resources | 29 | 8 | 2 | |||||||||
Other interest receivable and similar income | — | 1 | 1 | |||||||||
Share of joint ventures’ and associates’ interest receivable | 1 | 1 | 1 | |||||||||
Total interest receivable and similar income | 30 | 10 | 4 | |||||||||
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
On bank loans, overdrafts and other loans repayable within five years, not by instalments: | ||||||||||||
— £1 billion revolving credit facility (“RCF”)(i) | 2 | — | — | |||||||||
— £750 million RCF(i) | — | — | 27 | |||||||||
— £600 million RCF(i) | 4 | 6 | 4 | |||||||||
— £200 million RCF(ii) | — | 2 | 2 | |||||||||
US$650 million of 8.200% Guaranteed Notes repayable in 2009 | 33 | 30 | 31 | |||||||||
£100 million of 7.750% Guaranteed Notes repayable in 2009 | 8 | 8 | 8 | |||||||||
US$600 million of 6.875% Guaranteed Notes repayable in 2009 | 30 | 30 | 30 | |||||||||
US$300 million of 7.300% Guaranteed Notes repayable in 2006 | 14 | 14 | 14 | |||||||||
Finance lease interest | 1 | — | 1 | |||||||||
Other interest payable and similar charges | — | — | 1 | |||||||||
Share of joint ventures’ and associates’ interest payable | — | 1 | — | |||||||||
Total interest payable and similar charges | 92 | 91 | 118 | |||||||||
(i) | In November 2004, the Group entered into a £1 billion RCF. This facility was used to cancel an existing £600 million RCF (which was used to cancel a previously existing £750 million RCF), and is available for general corporate purposes, but was undrawn at 30 June 2005. The £1 billion RCF has a maturity date of July 2010. The £2 million charge for the year (2004: nil; 2003: nil) represents the commitment fee to 30 June 2005. |
(ii) | In March 2003, the Group voluntarily cancelled £100 million of its £300 million RCF. The remaining £200 million RCF expired without being renewed on 29 June 2004. |
F-15
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6. | Profit on ordinary activities before taxation |
2005 | 2004 | 2003 | |||||||||||
£m | £m | £m | |||||||||||
— depreciation: | |||||||||||||
— owned assets | 92 | 100 | 96 | ||||||||||
— assets held under finance leases | — | 2 | 2 | ||||||||||
— amortisation and impairment of intangible assets | 116 | 119 | 121 | ||||||||||
— joint ventures’ and associates’ goodwill amortisation, net | — | (10 | ) | — | |||||||||
— amounts (written back to) written off fixed asset investments, net | — | (24 | ) | 15 | |||||||||
— loss on disposal of investments in joint ventures | 23 | — | — | ||||||||||
— loss on disposal of fixed assets | 2 | 1 | — | ||||||||||
— profit on disposal of fixed asset investments | — | (51 | ) | — | |||||||||
— rentals on operating leases and similar arrangements: | |||||||||||||
— land and buildings | 10 | 10 | 9 | ||||||||||
— plant and machinery | 86 | 74 | 80 | ||||||||||
— sub-lease rentals on operating leases received in respect of plant and machinery | (22 | ) | (28 | ) | (26 | ) | |||||||
— sub-lease rentals on operating leases received in respect of land and buildings | (1 | ) | (1 | ) | (2 | ) | |||||||
— staff costs | 379 | 332 | 305 |
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Audit fees | 1 | 1 | 1 | |||||||||
Audit-related fees | 1 | 1 | 1 | |||||||||
Audit and audit-related fees | 2 | 2 | 2 | |||||||||
Tax fees | — | — | 1 | |||||||||
CRM centre development | 7 | 7 | 5 | |||||||||
Other services | — | — | 1 | |||||||||
All other fees | 7 | 7 | 6 | |||||||||
F-16
Table of Contents
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Wages and salaries | 327 | 275 | 234 | |||||||||
Costs of LTIP, KCP, EBP and other share-related incentive schemes | 6 | 16 | 33 | |||||||||
Social security costs | 32 | 29 | 26 | |||||||||
Other pension costs | 14 | 12 | 12 | |||||||||
379 | 332 | 305 | ||||||||||
2005 | 2004 | 2003 | ||||||||||
Number | Number | Number | ||||||||||
Programming | 1,424 | 1,295 | 1,106 | |||||||||
Transmission and related functions | 1,403 | 1,394 | 1,383 | |||||||||
Marketing | 238 | 209 | 199 | |||||||||
Subscriber management | 5,662 | 5,418 | 5,381 | |||||||||
Administration | 1,079 | 1,051 | 954 | |||||||||
Betting | 152 | 133 | 109 | |||||||||
9,958 | 9,500 | 9,132 | ||||||||||
F-17
Table of Contents
Total | Total | Total | ||||||||||||||||||||||||||||||
Total | emoluments | emoluments | emoluments | |||||||||||||||||||||||||||||
emoluments | including | including | including | |||||||||||||||||||||||||||||
Salary | Bonus | before | pension | pensions | pensions | |||||||||||||||||||||||||||
and fees | scheme | Benefits | pension | Pensions | 2005 | 2004 | 2003 | |||||||||||||||||||||||||
£ | £ | £ | £ | £ | £ | £ | £ | |||||||||||||||||||||||||
Executive | ||||||||||||||||||||||||||||||||
James Murdoch(i) | 750,000 | 1,200,000 | 216,697 | 2,166,697 | 59,680 | 2,226,377 | 1,480,578 | 13,946 | ||||||||||||||||||||||||
Jeremy Darroch(ii) | 440,000 | 640,000 | 14,049 | 1,094,049 | 33,168 | 1,127,217 | — | — | ||||||||||||||||||||||||
Non-Executive | ||||||||||||||||||||||||||||||||
Chase Carey | 40,600 | — | — | 40,600 | — | 40,600 | 38,600 | 13,946 | ||||||||||||||||||||||||
David Devoe | 40,150 | — | — | 40,150 | — | 40,150 | 48,151 | 17,741 | ||||||||||||||||||||||||
David Evans | 45,600 | — | — | 45,600 | — | 45,600 | 43,600 | 39,994 | ||||||||||||||||||||||||
Nicholas Ferguson(iii) | 45,600 | — | — | 45,600 | — | 45,600 | 2,012 | — | ||||||||||||||||||||||||
Andrew Higginson(iv) | 38,000 | — | — | 38,000 | — | 38,000 | — | — | ||||||||||||||||||||||||
Allan Leighton | 50,600 | — | — | 50,600 | — | 50,600 | 46,747 | 41,750 | ||||||||||||||||||||||||
Rupert Murdoch | 45,400 | — | — | 45,400 | — | 45,400 | 48,375 | 17,741 | ||||||||||||||||||||||||
Jacques Nasser | 50,700 | — | — | 50,700 | — | 50,700 | 43,792 | 26,923 | ||||||||||||||||||||||||
Gail Rebuck | 45,600 | — | — | 45,600 | — | 45,600 | 43,600 | 25,596 | ||||||||||||||||||||||||
Lord Rothschild(v) | 50,600 | — | — | 50,600 | — | 50,600 | 29,744 | — | ||||||||||||||||||||||||
Arthur Siskind | 45,400 | — | — | 45,400 | — | 45,400 | 46,010 | 15,843 | ||||||||||||||||||||||||
Lord St. John of Fawsley(vi) | 50,400 | — | — | 50,400 | — | 50,400 | 47,035 | 40,673 | ||||||||||||||||||||||||
Lord Wilson of Dinton | 50,600 | — | — | 50,600 | — | 50,600 | 44,894 | 13,946 | ||||||||||||||||||||||||
Former Directors | ||||||||||||||||||||||||||||||||
Martin Stewart(vii) | 500,000 | 1,773,982 | 20,000 | 2,293,982 | 23,145 | 2,317,127 | 1,059,926 | 956,436 | ||||||||||||||||||||||||
Tony Ball(viii) | — | — | — | — | — | — | 13,184,745 | 2,459,737 | ||||||||||||||||||||||||
Philip Bowman(ix) | — | — | — | — | — | — | 18,069 | 46,750 | ||||||||||||||||||||||||
John Thornton(x) | — | — | — | — | — | — | 46,110 | 53,744 | ||||||||||||||||||||||||
Total emoluments | 2,289,250 | 3,613,982 | 250,746 | 6,153,978 | 115,993 | 6,269,971 | 16,271,988 | 3,784,766 | ||||||||||||||||||||||||
(i) | James Murdoch was appointed CEO on 4 November 2003. James Murdoch’s salary and fees for fiscal 2004 include £13,015, received for his services as a Non-Executive Director. James Murdoch’s salary and fees for fiscal 2003 were received for his services as a Non-Executive Director. |
(ii) | Jeremy Darroch was appointed CFO of the Company on 16 August 2004. |
(iii) | Nicholas Ferguson was appointed as a Director of the Company on 15 June 2004. |
(iv) | Andrew Higginson was appointed as a Director of the Company on 1 September 2004. |
(v) | Lord Rothschild was appointed as a Director of the Company on 17 November 2003. |
(vi) | Lord St John of Fawsley received a payment of £10,000 relating to unpaid fees for the period September 2002 to November 2003, when he was Senior Independent Director and Chairman and member of the Nominations Committee. |
(vii) | Martin Stewart resigned as a Director of the Company on 4 August 2004. |
(viii) | Tony Ball resigned as a Director of the Company on 4 November 2003. |
(ix) | Philip Bowman resigned as a Director of the Company on 14 November 2003. |
(x) | John Thornton resigned as a Director of the Company on 11 May 2004. |
F-18
Table of Contents
Bonus | ||||
scheme | ||||
£ | ||||
Executive Director | ||||
James Murdoch | 1,200,000 | |||
Jeremy Darroch | 640,000 | |||
Martin Stewart(i) | 500,000 |
(i) | Martin Stewart also received a payment of £1,273,982 for the release of his share awards under the LTIP and EBP at 31 July 2004. |
Number of shares under award | ||||||||||||||||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||||||||||||||
At | Granted | Exercised | Lapsed | At | price | Date from | ||||||||||||||||||||||||||||||||||
30 June | during | during | during | 30 June | Exercise | at date of | Date of | which | Expiry | |||||||||||||||||||||||||||||||
2004 | the year | the year | the year | 2005 | Price | exercise | award | exercisable | Date | |||||||||||||||||||||||||||||||
Name of Director | ||||||||||||||||||||||||||||||||||||||||
James Murdoch | — | 450,000 | — | — | 450,000 | £ | 0.00 | — | 11.08.04 | 11.08.07 | 11.08.14 | |||||||||||||||||||||||||||||
Jeremy Darroch | — | 250,000 | — | — | 250,000 | £ | 0.00 | — | 16.08.04 | 16.08.07 | 16.08.14 | |||||||||||||||||||||||||||||
Martin Stewart | 150,000 | — | 150,000 | (ii) | — | — | £ | 8.30 | £ | 5.71 | 21.11.01 | n/a | n/a | |||||||||||||||||||||||||||
113,555 | — | 5,200 | (ii) | — | 108,355 | £ | 5.55 | £ | 5.71 | 02.08.02 | 31.07.05 | 31.07.12 | ||||||||||||||||||||||||||||
113,555 | — | — | 113,555 | (i) | — | £ | 5.55 | — | 02.08.02 | n/a | n/a | |||||||||||||||||||||||||||||
5,733 | — | 765 | (ii) | — | 4,968 | £ | 5.60 | £ | 5.71 | 13.08.02 | 31.07.05 | 31.07.12 | ||||||||||||||||||||||||||||
5,733 | — | — | 5,733 | (i) | — | £ | 5.60 | — | 13.08.02 | n/a | n/a | |||||||||||||||||||||||||||||
220,000 | — | — | 220,000 | (i) | — | £ | 0.00 | — | 13.08.03 | n/a | n/a |
F-19
Table of Contents
(i) | These awards were released on 31 July 2004. |
(ii) | These awards vested on 31 July 2004 and were exercised by Martin Stewart during the year. The aggregate amount that he received was £890,560. In 2004, the aggregate amount received by Directors was £12,789,000 (2003: nil). |
Number of shares under award(i) | ||||||||||||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||||||||||
At | Granted | Exercised | Lapsed | At | price | Date from | ||||||||||||||||||||||||||||||
30 June | during | during | during | 30 June | Exercise | at date of | which | Expiry | ||||||||||||||||||||||||||||
2004 | the year | the year | the year | 2005 | price(i) | exercise | exercisable | Date | ||||||||||||||||||||||||||||
Name of Director | ||||||||||||||||||||||||||||||||||||
Martin Stewart | 26,000 | — | 26,000(ii | ) | — | — | n/a | £5.71 | n/a | n/a | ||||||||||||||||||||||||||
26,000 | — | — | 26,000(iii | ) | — | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||
55,000 | — | — | 55,000(iii | ) | — | n/a | n/a | n/a | n/a |
(i) | Awards under the EBP take the form of a contingent right to acquire existing shares in the Company at the vesting date, for nil consideration. |
(ii) | These awards vested on 31 July 2004 and were exercised by Martin Stewart during the year. The aggregate amount that he received was £148,460 (2004: nil; 2003: nil). |
(iii) | These awards were released on 31 July 2004. |
Number of options | ||||||||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||||||
At | Granted | Exercised | At | price | Date from | |||||||||||||||||||||||||||
30 June | during | during | 30 June | Exercise | at date of | which | Expiry | |||||||||||||||||||||||||
2004 | the year | the year | 2005 | price | exercise | exercisable | Date | |||||||||||||||||||||||||
Name of Director | ||||||||||||||||||||||||||||||||
Jeremy Darroch | — | 4,281 | — | 4,281 | £3.86 | n/a | 01.02.10 | 01.08.10 |
F-20
Table of Contents
2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
Tax charge | Tax charge | Tax charge | ||||||||||||||||||||||||||||||||||
on profit | on profit | on profit | ||||||||||||||||||||||||||||||||||
before | before | before | Exceptional | |||||||||||||||||||||||||||||||||
exceptional | Exceptional | exceptional | Exceptional | exceptional | tax charge | |||||||||||||||||||||||||||||||
items | tax charge | Total | items | tax charge | Total | items | (credit)(i) | Total | ||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||||||||
Current tax: | ||||||||||||||||||||||||||||||||||||
UK corporation tax | 159 | 4 | 163 | 127 | — | 127 | 85 | 2 | 87 | |||||||||||||||||||||||||||
Adjustment in respect of prior years | (8 | ) | — | (8 | ) | (8 | ) | — | (8 | ) | — | — | — | |||||||||||||||||||||||
Total current tax charge | 151 | 4 | 155 | 119 | — | 119 | 85 | 2 | 87 | |||||||||||||||||||||||||||
Deferred tax: | ||||||||||||||||||||||||||||||||||||
Origination and reversal of timing differences | 68 | — | 68 | 34 | — | 34 | (26 | ) | (123 | ) | (149 | ) | ||||||||||||||||||||||||
(Decrease) increase in estimate of recoverable deferred tax asset in respect of prior years | (17 | ) | — | (17 | ) | 5 | — | 5 | (2 | ) | — | (2 | ) | |||||||||||||||||||||||
Total deferred tax charge (credit) | 51 | — | 51 | 39 | — | 39 | (28 | ) | (123 | ) | (151 | ) | ||||||||||||||||||||||||
Share of joint ventures’ and associates’ tax charges | — | — | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||||||
202 | 4 | 206 | 158 | — | 158 | 59 | (121 | ) | (62 | ) | ||||||||||||||||||||||||||
(i) | In 2003, the Group recorded a deferred tax credit of £163 million relating to deferred tax assets not previously recognised. The Directors considered that there was sufficient evidence to support the recognition of these deferred tax assets on the basis that it was more likely than not that there would be suitable taxable profits against which these assets could be utilised. £123 million of the deferred tax credit was treated as an exceptional item. |
F-21
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2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Profit on ordinary activities before taxation | 631 | 480 | 122 | |||||||||
Less: share of joint ventures’ and associates’ (profit) loss before taxation | (15 | ) | 5 | (3 | ) | |||||||
Profit on ordinary activities before taxation (excluding joint ventures and associates) | 616 | 485 | 119 | |||||||||
Profit on ordinary activities before taxation (excluding joint ventures and associates) multiplied by standard rate of corporation tax in the UK of 30% (2004 and 2003: 30%) | 185 | 146 | 36 | |||||||||
Effects of: | ||||||||||||
Loss (gain) exempt from taxation | 5 | (15 | ) | — | ||||||||
Goodwill amortisation | 35 | 33 | 36 | |||||||||
Other permanent differences | 2 | (9 | ) | 6 | ||||||||
Utilisation of tax losses | (49 | ) | (29 | ) | (7 | ) | ||||||
Other timing differences | (19 | ) | (4 | ) | 14 | |||||||
Consortium relief | 2 | 3 | — | |||||||||
Tax charge on partnership profits | 2 | 2 | 2 | |||||||||
Current tax charge for the year | 163 | 127 | 87 | |||||||||
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Interim dividend paid of 4.00p (2004: 2.75p; 2003: nil) per Ordinary Share | 77 | 53 | — | |||||||||
Final proposed dividend of 5.00p (2004: 3.25p; 2003: nil) per Ordinary Share | 93 | 63 | — | |||||||||
170 | 116 | — | ||||||||||
F-22
Table of Contents
2005 | 2004 | 2003 | ||||||||||
Millions | Millions of | Millions of | ||||||||||
of shares | shares | shares | ||||||||||
Ordinary Shares | 1,917 | 1,940 | 1,921 | |||||||||
ESOP trust Ordinary Shares | (4 | ) | (2 | ) | (6 | ) | ||||||
Basic shares | 1,913 | 1,938 | 1,915 | |||||||||
Dilutive Ordinary Shares from share options and other potential Ordinary Shares outstanding | 6 | 8 | 27 | |||||||||
Diluted shares | 1,919 | 1,946 | 1,942 | |||||||||
Goodwill | ||||||||||||
£m | ||||||||||||
Cost | ||||||||||||
At 30 June 2003 | 820 | |||||||||||
At 30 June 2004 | 820 | |||||||||||
At 30 June 2005 | 820 | |||||||||||
Amortisation | ||||||||||||
At 30 June 2003 | 284 | |||||||||||
Charge | 119 | |||||||||||
At 30 June 2004 | 403 | |||||||||||
Charge | 116 | |||||||||||
At 30 June 2005 | 519 | |||||||||||
Net book value | ||||||||||||
At 30 June 2003 | 536 | |||||||||||
At 30 June 2004 | 417 | |||||||||||
At 30 June 2005 | 301 | |||||||||||
F-23
Table of Contents
Freehold | Short | Equipment, | Assets in | |||||||||||||||||
land and | leasehold | fixtures | course of | |||||||||||||||||
buildings(i) | improvements | and fittings | construction | Total | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Cost | ||||||||||||||||||||
At 30 June 2003 | 45 | 70 | 649 | 29 | 793 | |||||||||||||||
Additions | — | — | 61 | 72 | 133 | |||||||||||||||
Disposals | — | — | (2 | ) | — | (2 | ) | |||||||||||||
At 30 June 2004 | 45 | 70 | 708 | 101 | 924 | |||||||||||||||
Additions | 25 | — | 66 | 153 | 244 | |||||||||||||||
Disposals | — | — | (167 | ) | — | (167 | ) | |||||||||||||
Transfers | — | (28 | ) | 28 | — | — | ||||||||||||||
At 30 June 2005 | 70 | 42 | 635 | 254 | 1,001 | |||||||||||||||
Depreciation | ||||||||||||||||||||
At 30 June 2003 | 10 | 43 | 394 | — | 447 | |||||||||||||||
Charge | 1 | 3 | 98 | — | 102 | |||||||||||||||
Disposals | — | — | (1 | ) | — | (1 | ) | |||||||||||||
At 30 June 2004 | 11 | 46 | 491 | — | 548 | |||||||||||||||
Charge | 2 | 5 | 85 | — | 92 | |||||||||||||||
Disposals | — | — | (165 | ) | — | (165 | ) | |||||||||||||
Transfers | — | (20 | ) | 20 | — | — | ||||||||||||||
At 30 June 2005 | 13 | 31 | 431 | — | 475 | |||||||||||||||
F-24
Table of Contents
Freehold | Short | Equipment, | Assets in | |||||||||||||||||
land and | leasehold | fixtures | course of | |||||||||||||||||
buildings(i) | improvements | and fittings | construction | Total | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Net book value | ||||||||||||||||||||
At 30 June 2003 | 35 | 27 | 255 | 29 | 346 | |||||||||||||||
At 30 June 2004 | 34 | 24 | 217 | 101 | 376 | |||||||||||||||
At 30 June 2005 | 57 | 11 | 204 | 254 | 526 | |||||||||||||||
(i) | The amounts shown include assets held under finance leases with a net book value of £6 million (2004: £6 million). The cost of these assets was £8 million (2004: £8 million) and the accumulated depreciation was £2 million (2004: £2 million). Depreciation charged during the year on these assets was nil (2004: £2 million; 2003: nil). |
2005 | 2004 | ||||||||
£m | £m | ||||||||
Cost and funding, excluding goodwill | |||||||||
Beginning of year | 234 | 235 | |||||||
Loans advanced | 4 | 5 | |||||||
Loans repaid | (8 | ) | (6 | ) | |||||
Disposals(iii) | (18 | ) | — | ||||||
Transfer to Group undertaking(iv) | (1 | ) | — | ||||||
End of year | 211 | 234 | |||||||
Transfer from creditors(i) | 1 | 5 | |||||||
Movement in share of underlying net liabilities | |||||||||
Beginning of year | (206 | ) | (207 | ) | |||||
Additions | — | 10 | |||||||
Share of operating results | 14 | (5 | ) | ||||||
Share of interest receivable | 1 | 1 | |||||||
Share of interest payable | — | (1 | ) | ||||||
Disposals(iii) | 14 | — | |||||||
Dividends received | (12 | ) | (4 | ) | |||||
End of year | (189 | ) | (206 | ) | |||||
Goodwill | |||||||||
Beginning of year | — | — | |||||||
Additions(v) | — | (10 | ) | ||||||
Amortisation, net(v) | — | 10 | |||||||
End of year | — | — | |||||||
Net book value | |||||||||
Beginning of year | 33 | 30 | |||||||
End of year(ii) | 23 | 33 | |||||||
F-25
Table of Contents
(i) | The investment in joint ventures and associates excludes cumulative losses of £1 million (2004: £5 million), which represent losses in excess of the funding provided. The related obligation is recorded within creditors. |
(ii) | The net book value above includes a listed investment with a net book value of £1 million at 30 June 2005 (2004: £5 million). The aggregate market value of this investment at 30 June 2005 was £1 million (2004: £8 million). |
(iii) | On 1 November 2004, the Group sold its 49.5% investment in GSB for £14 million in cash, realising a loss on disposal of £23 million. The carrying value of the investment prior to disposal was £4 million. |
(iv) | On 4 March 2005, the Group purchased 50% of the outstanding share capital of Artsworld Channels Limited (“Artsworld”), bringing its total shareholding to 100%. Accordingly, Artsworld is now consolidated within the Group from that date. |
(v) | In 2004, goodwill additions included £11 million of negative goodwill arising on the acquisition of an additional 16.7% stake in Attheraces Holdings Limited. This was written off to the profit and loss account immediately on acquisition. In addition, £1 million of goodwill has arisen on the purchase of certain joint ventures and associates. |
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Turnover | 72 | 83 | 77 | |||||||||
Fixed assets | 3 | 3 | 4 | |||||||||
Current assets | 47 | 71 | 83 | |||||||||
Liabilities due within one year | (27 | ) | (40 | ) | (48 | ) | ||||||
Liabilities due after more than one year | (1 | ) | (6 | ) | (11 | ) |
Country of | Description and | |||||
incorporation/ | proportion of | |||||
Name | operation | shares held (%) | Principal activity | |||
Subsidiaries: Direct Holdings | ||||||
British Sky Broadcasting Limited(a) | England and Wales | 10,000,002 Ordinary Shares of £1 each (100%) | Operation of a pay television broadcasting service in the UK and Ireland | |||
Sky Television Limited | England and Wales | 13,376,982 Ordinary Shares of £1 each (100%) | Holding company |
F-26
Table of Contents
Country of | Description and | |||||
incorporation/ | proportion of | |||||
Name | operation | shares held (%) | Principal activity | |||
Sports Internet Group Limited | England and Wales | 38,247,184 Ordinary Shares of 5p each (100%) | Holding company | |||
British Interactive Broadcasting Holdings Limited | England and Wales | 651,960 Ordinary Shares of £1 each (100%) | The transmission of interactive services | |||
BSkyB Investments Limited | England and Wales | 100 Ordinary Shares of £1 each (100%) | Holding company | |||
Subsidiaries: Indirect holdings | ||||||
Sky Subscribers Services Limited | England and Wales | 3 Ordinary Shares of £1 each (100%) | The provision of ancillary functions supporting the satellite television broadcasting operations of the Group | |||
Sky In-Home Service Limited | England and Wales | 1,576,000 Ordinary Shares of £1 each (100%) | The supply, installation and maintenance of satellite television receiving equipment | |||
Hestview Limited | England and Wales | 108 Ordinary Shares of £1 each (100%) | Licensed bookmakers | |||
Sky Interactive Limited | England and Wales | 3 Ordinary Shares of £1 each (100%) | The provision of interactive television services | |||
Sky Ventures Limited | England and Wales | 912 Ordinary Shares of £1 each (100%) | Holding company for joint ventures | |||
British Sky Broadcasting SA | Luxembourg | 12,500 Ordinary Shares of £12 each (100%) | Digital satellite transponder leasing company | |||
Sky New Media Ventures Limited | England and Wales | 12,500 Ordinary Shares of £1 each (100%) | Holding company for new media investments | |||
BSkyB Investments (Guernsey) LLP | England and Wales | 300,100,000 Ordinary Shares of £1 each (100%) | Investment of surplus cash | |||
Joint ventures and associates | ||||||
Nickelodeon UK | England and Wales | 104 B Shares of £0.01 each (50%) | The transmission of children’s television channels | |||
The History Channel (UK) | England and Wales | 50,000 A Shares of £1 each (50%) | The transmission of history and biography television programming |
F-27
Table of Contents
Country of | Description and | |||||
incorporation/ | proportion of | |||||
Name | operation | shares held (%) | Principal activity | |||
Paramount UK(b),(d) | England and Wales | Partnership interest (25%) | The transmission of general entertainment comedy channels | |||
Australian News Channel Pty Limited | Australia | 1 Ordinary Share of AUS$1 (33.33%) | The transmission of a 24-hour news channel | |||
MUTV Limited(e) | England and Wales | 100 B Shares of £1 each (33.33%) | The transmission of the Manchester United football channel | |||
National Geographic Channel(c) | England and Wales | Partnership interest (50%) | The transmission of natural history and adventure channels | |||
Music Choice Europe plc(d) | England and Wales | 11,880,303 Ordinary Shares of £0.01 each (35.80%) | The transmission of audio music channels | |||
Attheraces Holdings Limited(d) | England and Wales | 1,500 Ordinary Shares of £1 each (47.50%), 20 Recoupment Shares of £0.01 each | The transmission of a horse racing channel and related on-line activities | |||
Chelsea Digital Media Limited | England and Wales | 19,800 B Shares of £0.01 each (20%) and 7,000,000 redeemable preference shares of £1 each | The production and marketing of the Chelsea Football Club football channel |
(a) | 50.01% directly held by British Sky Broadcasting Group plc and 49.99% held by BSkyB Investments Limited. |
(b) | The registered address of Paramount UK is 180 Oxford Street, London W1D 1DS. |
(c) | The registered address of National Geographic Channel is Grant Way, Isleworth, Middlesex TW7 5QD. |
(d) | These entities report their financial results for each 12 month period ending 31 December. |
(e) | MUTV Limited reports its financial results for each 12 month period ending 30 September. |
F-28
Table of Contents
2005 | 2004 | |||||||
£m | £m | |||||||
Cost | ||||||||
Beginning of year | 1,020 | 1,105 | ||||||
Disposals (i) to (v) | (14 | ) | (85 | ) | ||||
End of year | 1,006 | 1,020 | ||||||
Provision | ||||||||
Beginning of year | 1,018 | 1,061 | ||||||
Disposals (i), (ii), (v) | (14 | ) | (19 | ) | ||||
Released during the year, net (iv), (vi) | — | (24 | ) | |||||
End of year | 1,004 | 1,018 | ||||||
Net book value | ||||||||
Beginning of year | 2 | 44 | ||||||
End of year | 2 | 2 | ||||||
(i) | In January 2005, the Group sold its 4.76% equity investment in Sunderland Football Club plc, reducing both the cost and the associated provision by £7 million to reflect the disposal. |
(ii) | In October 2004, the Group sold its investment in Innovation Finance & Equity Exchange NV (formerly known as Letsbuyit.com) reducing both the cost and the associated provision by £7 million to reflect the disposal. |
(iii) | In March 2004, the Group sold its 20% shareholding in QVC (UK), operator of QVC — The Shopping Channel, for £49 million in cash, realising a profit on disposal of £49 million. The carrying value of this investment prior to disposal was nil. |
(iv) | In October 2003, the Group announced that it had sold its entire holding in Manchester United plc for £62 million, recognising a profit on disposal of £2 million following the release of a £33 million provision previously held against the investment. |
(v) | In August 2003, the Group sold its 9.9% equity investment in Chelsea Village plc, reducing the cost by £25 million and the associated provision by £19 million to reflect the disposal. |
(vi) | The Group increased its provision against its remaining minority equity investments in football clubs by £9 million during the prior year. |
2005 | 2004 | |||||||
£m | £m | |||||||
Carrying value of listed investment included above (i) | 1 | 1 | ||||||
Aggregate market value of listed investment at end of year | 1 | 1 |
(i) | Investment listed on OFEX. |
F-29
Table of Contents
2005 | 2004 | |||||||
£m | £m | |||||||
Television programme rights | 310 | 322 | ||||||
Digiboxes and related equipment | 28 | 49 | ||||||
Raw materials and consumables | 2 | 2 | ||||||
Other goods held for resale | — | 2 | ||||||
340 | 375 | |||||||
2005 | 2004 | ||||||||
£m | £m | ||||||||
Included within debtors due within one year: | |||||||||
— tax losses carried forward | 34 | 43 | |||||||
— accelerated capital allowances | 9 | 6 | |||||||
43 | 49 | ||||||||
Included within debtors due after more than one year: | |||||||||
— tax losses carried forward | 34 | 75 | |||||||
— accelerated capital allowances | 5 | 15 | |||||||
— short-term timing differences | 18 | 12 | |||||||
57 | 102 | ||||||||
100 | 151 | ||||||||
Deferred tax asset | |||||||||
Beginning of year | 151 | 190 | |||||||
Charge in the profit and loss account during the year | (51 | ) | (39 | ) | |||||
End of year | 100 | 151 | |||||||
F-30
Table of Contents
2005 | 2004 | |||||||
£m | £m | |||||||
Amounts falling due within one year | ||||||||
Trade debtors | 134 | 165 | ||||||
Amounts owed by joint ventures and associates | 6 | 8 | ||||||
Amounts owed by other related parties | 1 | 2 | ||||||
Other debtors | 4 | 3 | ||||||
Prepaid programme rights | 47 | 35 | ||||||
Prepaid transponder rentals | 15 | 15 | ||||||
Other prepayments | 20 | 16 | ||||||
Accrued income | 72 | 77 | ||||||
299 | 321 | |||||||
Amounts falling due after more than one year | ||||||||
Prepaid programme rights | 4 | 6 | ||||||
Prepaid transponder rentals | 23 | 30 | ||||||
Other prepayments and accrued income | 5 | 6 | ||||||
32 | 42 | |||||||
2005 | 2004 | |||||||
£m | £m | |||||||
Trade creditors(i) | 345 | 390 | ||||||
Amounts due to joint ventures and associates | 3 | 8 | ||||||
Amounts due to other related parties | 34 | 40 | ||||||
UK corporation tax | 100 | 48 | ||||||
VAT | 101 | 92 | ||||||
Social security and PAYE | 10 | 8 | ||||||
Proposed dividend | 93 | 63 | ||||||
Defined contribution pension scheme creditor | 1 | 1 | ||||||
Other creditors | 42 | 60 | ||||||
Accruals | 324 | 293 | ||||||
Deferred income | 187 | 167 | ||||||
1,240 | 1,170 | |||||||
(i) | Included within trade creditors are £187 million (2004: £250 million) of US dollar-denominated programme creditors. Approximately 80% (2004: 80%) of these were covered by forward exchange contracts and collars. |
F-31
Table of Contents
2005 | 2004 | |||||||
£m | £m | |||||||
Long-term borrowings | ||||||||
US$650 million of 8.200% Guaranteed Notes repayable in 2009 (a) | 413 | 413 | ||||||
£100 million of 7.750% Guaranteed Notes repayable in 2009 (a) | 100 | 100 | ||||||
US$600 million of 6.875% Guaranteed Notes repayable in 2009 (a) | 367 | 367 | ||||||
US$300 million of 7.300% Guaranteed Notes repayable in 2006 (a) | 189 | 189 | ||||||
Obligations under finance leases (b) | 7 | 7 | ||||||
1,076 | 1,076 | |||||||
Other | ||||||||
Accruals and deferred income | 25 | 28 | ||||||
1,101 | 1,104 | |||||||
F-32
Table of Contents
Year ending 30 June | ||||||||||||||||
2007 | 2008 | 2009 | 2010 | |||||||||||||
£m | £m | £m | £m | |||||||||||||
US$650 million of 8.200% Guaranteed Notes repayable in July 2009 | — | — | — | 413 | ||||||||||||
£100 million of 7.750% Guaranteed Notes repayable in July 2009 | — | — | — | 100 | ||||||||||||
US$600 million of 6.875% Guaranteed Notes repayable in February 2009 | — | — | 367 | — | ||||||||||||
US$300 million of 7.300% Guaranteed Notes repayable in October 2006 | 189 | — | — | — | ||||||||||||
189 | — | 367 | 513 | |||||||||||||
£m | |||||
Amounts repayable in the year ending 30 June: | |||||
2006 | 1 | ||||
2007 | 1 | ||||
2008 | 1 | ||||
2009 | 1 | ||||
2010 | 1 | ||||
After five years | 17 | ||||
22 | |||||
£m | ||||
Capital amount | 7 | |||
Interest amount | 3 | |||
10 | ||||
F-33
Table of Contents
• | Net Debt to EBITDA must be no more than 3:1 |
• | EBITDA to Net Interest Payable must be at least 3.5:1 |
F-34
Table of Contents
F-35
Table of Contents
2005 | 2004 | |||||||||||||||||||||||
Fixed | Floating | Total | Fixed | Floating | Total | |||||||||||||||||||
£m | 777 | 299 | 1,076 | 827 | 249 | 1,076 | ||||||||||||||||||
Weighted average interest rate | 7.7 | % | 7.7 | % | 7.7 | % | 7.8 | % | 7.6 | % | 7.8 | % | ||||||||||||
Weighted average period for which the rate is fixed (years) | 3.3 | n/a | n/a | 4.3 | n/a | n/a | ||||||||||||||||||
Weighted average term (years) | 3.3 | 3.9 | 3.4 | 4.3 | 4.2 | 4.3 |
Net foreign currency monetary assets (£m) | ||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||
USD | Euros | Total | USD | Euros | Total | |||||||||||||||||||
Functional currency of Group operating unit | ||||||||||||||||||||||||
Pounds sterling | 6 | 85 | 91 | 42 | 41 | 83 |
2005 | 2004 | |||||||
£m | £m | |||||||
Expiring in more than two years | 1,000 | 600 | ||||||
Total | 1,000 | 600 | ||||||
F-36
Table of Contents
2005 | 2004 | |||||||||||||||
Book value | Fair value | Book value | Fair value | |||||||||||||
£m | £m | £m | £m | |||||||||||||
Primary financial instruments held or issued to finance the Group’s operations | ||||||||||||||||
Quoted bond debt | (1,069 | ) | (1,062 | ) | (1,069 | ) | (1,060 | ) | ||||||||
Finance leases | (7 | ) | (7 | ) | (7 | ) | (7 | ) | ||||||||
Bank deposits | 539 | 539 | 411 | 411 | ||||||||||||
Commercial paper | 54 | 54 | 173 | 173 | ||||||||||||
Cash at bank | 104 | 104 | 63 | 63 | ||||||||||||
Derivative financial instruments held to manage the interest rate and currency profile | ||||||||||||||||
Interest rate swaps and swaption agreements | — | 3 | — | (18 | ) | |||||||||||
Cross-currency swaps | — | (106 | ) | — | (87 | ) | ||||||||||
Forward exchange contracts | — | 5 | — | (41 | ) | |||||||||||
Currency options (collars) | — | 2 | — | — |
— | interest rate risk, using interest rate swap and swaption agreements |
— | transactional currency exposures, using forward exchange contracts and collars |
F-37
Table of Contents
— | exposures on long-term foreign currency debt, using cross-currency swap arrangements and interest rate swap and swaption agreements |
2005 | 2004 | |||||||||||||||||||||||
Total net | Total net | |||||||||||||||||||||||
gains | gains | |||||||||||||||||||||||
Gains | Losses | (losses) | Gains | Losses | (losses) | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Unrecognised gains and losses at the beginning of the year | 8 | (154 | ) | (146 | ) | 39 | (83 | ) | (44 | ) | ||||||||||||||
Gains and losses arising in previous years that were recognised in the year | (1 | ) | 41 | 40 | — | 46 | 46 | |||||||||||||||||
Gains and losses arising before the beginning of the year that were not recognised in the year | 7 | (113 | ) | (106 | ) | 39 | (37 | ) | 2 | |||||||||||||||
Gains and losses arising in the year that were not recognised in the year | 15 | (5 | ) | 10 | (31 | ) | (117 | ) | (148 | ) | ||||||||||||||
Unrecognised gains and losses on hedges at the end of the year | 22 | (118 | ) | (96 | ) | 8 | (154 | ) | (146 | ) | ||||||||||||||
Of which: | ||||||||||||||||||||||||
Gains and losses expected to be recognised in the next year | 3 | (3 | ) | — | 1 | (41 | ) | (40 | ) | |||||||||||||||
Gains and losses expected to be recognised after the next year | 19 | (115 | ) | (96 | ) | 7 | (113 | ) | (106 | ) | ||||||||||||||
21. | Provisions for liabilities and charges |
Provision for | ||||||||||||
redundancy | Other | Total | ||||||||||
expenses | provisions | provisions | ||||||||||
£m | £m | £m | ||||||||||
At 1 July 2003 | — | 3 | 3 | |||||||||
Utilised in year | — | (1 | ) | (1 | ) | |||||||
Released in year | — | (2 | ) | (2 | ) | |||||||
At 30 June 2004 | — | — | — | |||||||||
Provided in year | 11 | 2 | 13 | |||||||||
At 30 June 2005 | 11 | 2 | 13 | |||||||||
F-38
Table of Contents
22. | Called-up share capital |
2005 | 2004 | |||||||
£m | £m | |||||||
Authorised | ||||||||
3,000,000,000 (2004: 3,000,000,000) Ordinary Shares of 50p | 1,500 | 1,500 | ||||||
Allotted, called-up and fully paid — equity | ||||||||
1,867,523,599 (2004: 1,941,712,786) Ordinary Shares of 50p | 934 | 971 | ||||||
Number of | ||||
Allotted and fully paid during the year | Ordinary Shares | |||
Beginning of year | 1,941,712,786 | |||
Options exercised under the Sharesave Scheme at between £3.720 and £6.112 | 129,813 | |||
Shares repurchased and subsequently cancelled | (74,319,000 | ) | ||
End of year | 1,867,523,599 | |||
Number of | ||||
Scheme | Ordinary Shares | |||
Executive Share Option Scheme Options(a) | 45,309,551 | |||
Sharesave Scheme Options(b) | 5,131,741 | |||
LTIP Awards(c) | 4,827,243 | |||
KCP Awards(d) | 2,830,259 | |||
EBP Awards(e) | 348,000 | |||
58,446,794 | ||||
F-39
Table of Contents
Number of | Exercisable | |||||||||||
Date of grant | Ordinary Shares | Option price | from(i) | |||||||||
£ | ||||||||||||
10-Jun-97 | 5,020 | 5.975 | 10-Jun-00 | |||||||||
4-Feb-98 | 8,298 | 3.615 | 4-Feb-01 | |||||||||
1-Dec-98 | 2,491,840 | 5.010 | 1-Dec-01 | |||||||||
7-May-99 | 4,589 | 4.350 | 7-May-02 | |||||||||
29-Oct-99 | 3,007,150 | 6.385 | 29-Oct-02 | |||||||||
22-Nov-99 | 107,775 | 6.495 | 22-Nov-02 | |||||||||
5-Apr-00 | 41,517 | 13.970 | 5-Apr-03 | |||||||||
12-May-00 | 20,800 | 12.980 | 12-May-03 | |||||||||
22-May-00 | 21,842 | 10.530 | 22-May-03 | |||||||||
23-May-00 | 81,632 | 9.800 | 23-May-03 | |||||||||
12-Jun-00 | 12,247 | 11.430 | 12-Jun-03 | |||||||||
30-Jun-00 | 100,931 | 12.880 | 30-Jun-03 | |||||||||
26-Jul-00 | 29,101 | 12.370 | 26-Jul-03 | |||||||||
30-Aug-00 | 141,223 | 11.400 | 30-Aug-03 | |||||||||
23-Nov-00 | 3,724,008 | 9.900 | 23-Nov-01 | |||||||||
1-Dec-00 | 2,399,000 | 9.840 | 1-Dec-03 | |||||||||
26-Feb-01 | 66,746 | 9.340 | 26-Feb-02 | |||||||||
21-May-01 | 74,644 | 7.190 | 21-May-02 | |||||||||
4-Jun-01 | 94,480 | 7.165 | 4-Jun-02 | |||||||||
26-Jul-01 | 184,815 | 7.080 | 26-Jul-02 | |||||||||
6-Nov-01 | 7,017,358 | 7.940 | 6-Nov-02 | |||||||||
13-Nov-01 | 26,668 | 8.360 | 13-Nov-02 | |||||||||
4-Jan-02 | 53,593 | 7.890 | 4-Jan-03 | |||||||||
14-Feb-02 | 12,479 | 7.005 | 14-Feb-03 | |||||||||
26-Feb-02 | 20,343 | 6.850 | 26-Feb-03 | |||||||||
14-May-02 | 32,689 | 6.820 | 14-May-03 | |||||||||
5-Jun-02 | 600,000 | 7.350 | 31-May-04 | |||||||||
28-Jun-02 | 13,725 | 6.180 | 28-Jun-03 | |||||||||
5-Aug-02 | 7,368,094 | 5.300 | 5-Aug-04 | |||||||||
20-Sep-02 | 47,815 | 5.185 | 20-Sep-04 | |||||||||
30-Sep-02 | 17,912 | 5.305 | 30-Sep-04 | |||||||||
2-Jan-03 | 229,296 | 6.390 | 2-Jan-05 | |||||||||
18-Mar-03 | 74,672 | 6.100 | 18-Mar-05 | |||||||||
1-Sep-03 | 6,654,047 | 6.620 | 1-Sep-05 | |||||||||
25-Feb-04 | 1,498 | 7.155 | 25-Feb-06 | |||||||||
6-Aug-04 | 10,304,173 | 5.030 | 6-Aug-06 | |||||||||
9-Sep-04 | 74,051 | 4.930 | 9-Sep-06 | |||||||||
8-Oct-04 | 26,534 | 5.100 | 8-Oct-06 | |||||||||
17-Nov-04 | 104,157 | 5.473 | 17-Nov-06 | |||||||||
8-Jun-05 | 12,789 | 5.385 | 8-Jun-07 | |||||||||
45,309,551 | ||||||||||||
(i) | Unapproved options granted up to and including August 2000 became exercisable in full three years after the date of grant (subject to the satisfaction of performance conditions). Options granted between November 2000 and June 2002 inclusive become exercisable over a period of four years from the date of grant, with a quarter vesting on each of the first, second, third and fourth anniversaries of grant (subject to the satisfaction of performance conditions), with the exception of the options granted on 1 December 2000, which became exercisable in full three years after the date of |
F-40
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grant, and those granted on 5 June 2002, which became exercisable in full on 31 May 2004. Options granted since June 2002 become exercisable over a period of four years from the date of grant, with a third vesting on each of the second, third and fourth anniversaries of grant (subject to the satisfaction of performance conditions). All approved options become exercisable in full three years after the date of grant (subject to the satisfaction of performance conditions). |
Number of | Option | Exercisable | ||||||||||
Date of grant | Ordinary Shares | price | from | |||||||||
£ | ||||||||||||
27-Oct-97 | 1,467 | 3.720 | 1-Jan-05 | |||||||||
28-Sep-98 | 51,670 | 3.780 | 1-Dec-05 | |||||||||
18-Oct-99 | 511 | 4.620 | 1-Jan-05 | |||||||||
18-Oct-99 | 20,909 | 4.620 | 1-Jan-07 | |||||||||
3-Oct-00 | 39,353 | 9.710 | 1-Jan-06 | |||||||||
3-Oct-00 | 13,538 | 9.710 | 1-Jan-08 | |||||||||
28-Sep-01 | 12,800 | 6.112 | 1-Jan-05 | |||||||||
28-Sep-01 | 76,858 | 6.112 | 1-Jan-07 | |||||||||
28-Sep-01 | 22,592 | 6.112 | 1-Jan-09 | |||||||||
30-Sep-02 | 813,801 | 4.750 | 1-Feb-06 | |||||||||
30-Sep-02 | 219,044 | 4.750 | 1-Feb-08 | |||||||||
30-Sep-02 | 55,215 | 4.750 | 1-Feb-10 | |||||||||
3-Oct-03 | 452,843 | 5.300 | 1-Feb-07 | |||||||||
3-Oct-03 | 131,365 | 5.300 | 1-Feb-09 | |||||||||
3-Oct-03 | 29,933 | 5.300 | 1-Feb-11 | |||||||||
1-Oct-04 | 2,254,668 | 3.860 | 1-Feb-08 | |||||||||
1-Oct-04 | 935,174 | 3.860 | 1-Feb-10 | |||||||||
5,131,741 | ||||||||||||
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Number of | Option | Exercisable | ||||||||||
Date of grant | Ordinary Shares | price | from | |||||||||
£ | ||||||||||||
2-Aug-02 | 902,113 | 5.550 | 31-Jul-05 | |||||||||
13-Aug-02 | 43,250 | 5.600 | 31-Jul-05 | |||||||||
2-Jan-03 | 91,880 | 6.390 | 31-Jul-05 | |||||||||
13-Aug-03 | 860,000 | 0.000 | 31-Jul-06 | |||||||||
12-Feb-04 | 80,000 | 0.000 | 31-Jul-06 | |||||||||
11-Aug-04 | 2,600,000 | 0.000 | 11-Aug-07 | |||||||||
16-Aug-04 | 250,000 | 0.000 | 16-Aug-07 | |||||||||
4,827,243 | ||||||||||||
Number of | Option | Exercisable | ||||||||||
Date of grant | Ordinary Shares | price | from | |||||||||
£ | ||||||||||||
13-Aug-03 | 123 | 0.000 | 31-Jul-04 | |||||||||
13-Aug-03 | 1,058,794 | 0.000 | 31-Jul-05 | |||||||||
11-Aug-04 | 887,842 | 0.000 | 11-Aug-05 | |||||||||
11-Aug-04 | 883,500 | 0.000 | 11-Aug-06 | |||||||||
2,830,259 | ||||||||||||
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Number of | Option | Exercisable | ||||||||||
Date of grant | Ordinary Shares | Price | from | |||||||||
£ | ||||||||||||
2-Aug-02 | 93,000 | n/a | 31-Jul-05 | |||||||||
2-Jan-03 | 20,000 | n/a | 31-Jul-05 | |||||||||
13-Aug-03 | 215,000 | n/a | 31-Jul-06 | |||||||||
12-Feb-04 | 20,000 | n/a | 31-Jul-06 | |||||||||
348,000 | ||||||||||||
Total | |||||||||||||||||||||||||||||||||||||
equity | |||||||||||||||||||||||||||||||||||||
Shares | Capital | Profit | shareholders’ | ||||||||||||||||||||||||||||||||||
Share | Share | to be | ESOP | Merger | Special | redemption | and loss | (deficit) | |||||||||||||||||||||||||||||
capital | premium | issued | reserve | reserve | reserve | Reserve | account | funds | |||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | |||||||||||||||||||||||||||||
At 1 July 2002 | 947 | 2,410 | 256 | — | 267 | — | — | (4,180 | ) | (300 | ) | ||||||||||||||||||||||||||
Issue of share capital | 22 | 126 | (253 | ) | — | 111 | — | — | (1 | ) | 5 | ||||||||||||||||||||||||||
Profit for the financial year | — | — | — | — | — | — | — | 190 | 190 | ||||||||||||||||||||||||||||
Transfer from merger reserve | — | — | — | — | (79 | ) | — | — | 79 | — | |||||||||||||||||||||||||||
At 1 July 2003 — as previously stated | 969 | 2,536 | 3 | — | 299 | — | — | (3,912 | ) | (105 | ) | ||||||||||||||||||||||||||
Prior year adjustment | — | — | — | (35 | ) | — | — | — | (12 | ) | (47 | ) | |||||||||||||||||||||||||
At 1 July 2003 — as restated | 969 | 2,536 | 3 | (35 | ) | 299 | — | — | (3,924 | ) | (152 | ) | |||||||||||||||||||||||||
Issue of share capital | 2 | 21 | (3 | ) | — | — | — | — | — | 20 | |||||||||||||||||||||||||||
ESOP shares utilised | — | — | — | 27 | — | — | — | 11 | 38 | ||||||||||||||||||||||||||||
ESOP shares purchased | — | — | — | (22 | ) | — | — | — | — | (22 | ) | ||||||||||||||||||||||||||
Profit for the financial year | — | — | — | — | — | — | — | 322 | 322 | ||||||||||||||||||||||||||||
Dividends | — | — | — | — | — | — | — | (116 | ) | (116 | ) | ||||||||||||||||||||||||||
Share premium reduction | — | (1,120 | ) | — | — | — | 14 | — | 1,106 | — | |||||||||||||||||||||||||||
Transfer from merger reserve | — | — | — | — | (77 | ) | — | — | 77 | — | |||||||||||||||||||||||||||
At 1 July 2004 | 971 | 1,437 | — | (30 | ) | 222 | 14 | — | (2,524 | ) | 90 | ||||||||||||||||||||||||||
ESOP shares utilised | — | — | — | 12 | — | — | — | 7 | 19 | ||||||||||||||||||||||||||||
ESOP shares purchased | — | — | — | (14 | ) | — | — | — | — | (14 | ) | ||||||||||||||||||||||||||
Profit for the financial year | — | — | — | — | — | — | — | 425 | 425 | ||||||||||||||||||||||||||||
Dividends | — | — | — | — | — | — | — | (170 | ) | (170 | ) | ||||||||||||||||||||||||||
Transfer from merger reserve | — | — | — | — | (73 | ) | — | — | 73 | — | |||||||||||||||||||||||||||
Write back of goodwill on disposal | — | — | — | — | — | — | — | 32 | 32 | ||||||||||||||||||||||||||||
Share buy-back | (37 | ) | — | — | — | — | — | 37 | (416 | ) | (416 | ) | |||||||||||||||||||||||||
At 30 June 2005 | 934 | 1,437 | — | (32 | ) | 149 | 14 | 37 | (2,573 | ) | (34 | ) | |||||||||||||||||||||||||
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Number of | ||||||||
Ordinary Shares | £m | |||||||
Beginning of year | 4,747,515 | 30 | ||||||
Share options exercised during the year | (1,808,303 | ) | (12 | ) | ||||
Shares repurchased by the Group for the ESOP during the year | 2,670,000 | 14 | ||||||
End of year | 5,609,212 | 32 | ||||||
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24. | Guarantees, contingencies and other financial commitments |
(a) | Future expenditure |
Year ending 30 June | Total at | Total at | |||||||||||||||||||||||||||||||
After | 30 June | 30 June | |||||||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 5 years | 2005 | 2004 | ||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||||||
Contracted for but not provided for in the accounts | |||||||||||||||||||||||||||||||||
— television programme rights(i) | 801 | 744 | 326 | 255 | 125 | 9 | 2,260 | 2,489 | |||||||||||||||||||||||||
— Digiboxes and related equipment | 155 | — | — | — | — | — | 155 | 70 | |||||||||||||||||||||||||
— third party payments(ii) | 7 | 5 | 2 | — | — | — | 14 | 41 | |||||||||||||||||||||||||
— capital expenditure | 10 | — | — | — | — | — | 10 | 17 | |||||||||||||||||||||||||
— other purchase obligations | 25 | 9 | 2 | — | — | — | 36 | 61 | |||||||||||||||||||||||||
998 | 758 | 330 | 255 | 125 | 9 | 2,475 | 2,678 | ||||||||||||||||||||||||||
(i) | At 30 June 2005, the Group had minimum television programming rights commitments of £2,260 million (2004: £2,489 million), of which £642 million (2004: £766 million) related to commitments payable in US dollars for periods of up to eight years (2004: nine years), £45 million (2004: £87 million) related to commitments payable in Swiss francs for periods of up to one year (2004: two years) and £3 million (2004: £6 million) related to commitments payable in Euros for periods of up to one year (2004: two years). |
An additional £302 million (US$535 million) of commitments (2004: £265 million (US$483 million)) would also be payable in US dollars, assuming that movie subscriber numbers remain unchanged |
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from current levels. The pounds sterling television programme rights commitments include similar per subscriber based price clauses that would result in additional commitments of £10 million (2004: £3 million) if subscriber numbers were to remain at 30 June 2005 levels. |
(ii) | The third party payment commitments are in respect of distribution agreements for the television channels owned and broadcast by third parties, retailed by the Group to DTH viewers (“Sky Distributed Channels”) and are for periods of up to four years (2004: five years). The extent of the commitment is largely dependent upon the number of DTH subscribers to the relevant Sky Distributed Channels, and in certain cases, upon inflationary increases. If both the DTH subscriber levels to these channels and the rate payable for each Sky Distributed Channel were to remain at 30 June 2005 levels, the additional commitment would be £522 million (2004: £844 million). |
(b) | Contingent liabilities |
(c) | Contingent assets |
(d) | Guarantees |
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(e) | Lease and similar commitments |
Land | |||||||||||||
and | Plant and | ||||||||||||
buildings | machinery | Total | |||||||||||
£m | £m | £m | |||||||||||
30 June 2005 | |||||||||||||
Operating leases and similar arrangements which expire: | |||||||||||||
— within one year | 1 | 5 | 6 | ||||||||||
— between two and five years | 3 | 62 | 65 | ||||||||||
— after five years | 10 | 16 | 26 | ||||||||||
14 | 83 | 97 | |||||||||||
30 June 2004 | |||||||||||||
Operating leases and similar arrangements which expire: | |||||||||||||
— within one year | — | 3 | 3 | ||||||||||
— between two and five years | 3 | 52 | 55 | ||||||||||
— after five years | 10 | 23 | 33 | ||||||||||
13 | 78 | 91 | |||||||||||
Operating leases | |||||
and similar | |||||
arrangements | |||||
£m | |||||
Year ending 30 June: | |||||
2006 | 95 | ||||
2007 | 85 | ||||
2008 | 70 | ||||
2009 | 64 | ||||
2010 | 36 | ||||
After five years | 94 | ||||
444 | |||||
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Sub-leases | |||||
£m | |||||
Year ending 30 June: | |||||
2006 | 21 | ||||
2007 | 21 | ||||
2008 | 21 | ||||
2009 | 19 | ||||
2010 | 18 | ||||
After five years | 5 | ||||
105 | |||||
25. | Regulatory update |
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26. | Transactions with related parties and major shareholders |
(a) | Transactions with major shareholders |
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2005 | 2004 | |||||||
£m | £m | |||||||
Programming | 25 | 28 | ||||||
Telephony services | 2 | 5 | ||||||
Supply of smart cards and encryption services | 6 | 6 | ||||||
Advertising | — | 1 | ||||||
33 | 40 | |||||||
2005 | 2004 | |||||||
£m | £m | |||||||
Programming | 1 | 1 | ||||||
Consultancy | — | 1 | ||||||
1 | 2 | |||||||
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(b) | Transactions with joint ventures and associates |
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Revenue | 20 | 19 | 19 | |||||||||
Operating costs | 54 | 64 | 64 |
2005 | 2004 | |||||||
£m | £m | |||||||
Funding to joint ventures and associates (see note 13) | 211 | 234 | ||||||
Amounts owed by joint ventures and associates (see note 17) | 6 | 8 | ||||||
Amounts due to joint ventures and associates (see note 18) | 3 | 8 |
(c) | Other transactions with related parties |
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27. | Summary of differences between United Kingdom and United States Generally Accepted Accounting Principles |
(i) | Differences giving rise to accounting adjustments |
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Convenience | Year ended 30 June | ||||||||||||||||
translation | |||||||||||||||||
2005 | 2005 | 2004 | 2003 | ||||||||||||||
$m | £m | £m | £m | ||||||||||||||
(except per share data) | |||||||||||||||||
Operating income: | |||||||||||||||||
Operating profit under UK GAAP | 1,259 | 702 | 481 | 248 | |||||||||||||
Adjustments: | |||||||||||||||||
Goodwill — subsidiary(1) | 208 | 116 | 119 | 117 | |||||||||||||
Employee stock-based compensation(2) | 2 | 1 | (1 | ) | 10 | ||||||||||||
Derivative accounting(3) | 25 | 14 | 2 | 17 | |||||||||||||
Capitalised interest(4) | (4 | ) | (2 | ) | (3 | ) | (2 | ) | |||||||||
Fixed asset investments(6) | (25 | ) | (14 | ) | 68 | (18 | ) | ||||||||||
Development costs(7) | 20 | 11 | — | — | |||||||||||||
Sky+ digiboxes profit on sale(8) | — | — | — | (2 | ) | ||||||||||||
Operating income under US GAAP | 1,485 | 828 | 666 | 370 | |||||||||||||
Net income: | |||||||||||||||||
Profit on ordinary activities after taxation under UK GAAP | 763 | 425 | 322 | 184 | |||||||||||||
Adjustments: | |||||||||||||||||
Goodwill — subsidiary(1) | 208 | 116 | 119 | 117 | |||||||||||||
Goodwill — joint venture(1) | — | — | (2 | ) | — | ||||||||||||
Employee stock-based compensation(2) | 2 | 1 | (1 | ) | 10 | ||||||||||||
Derivative accounting(3) | 25 | 14 | 2 | 17 | |||||||||||||
Capitalised interest(4) | 19 | 11 | 2 | (1 | ) | ||||||||||||
Deferred taxation on US GAAP adjustments(5) | (18 | ) | (10 | ) | (2 | ) | (15 | ) | |||||||||
Other deferred taxation(1)(5) | — | — | — | (21 | ) | ||||||||||||
Fixed asset investments(6) | 16 | 9 | (7 | ) | (3 | ) | |||||||||||
Development costs(7) | 20 | 11 | — | — | |||||||||||||
Sky+ digiboxes profit on sale(8) | — | — | — | (2 | ) | ||||||||||||
Net income before cumulative effect of a change in accounting principle | 1,035 | 577 | 433 | 286 | |||||||||||||
Cumulative effect on prior years (to 30 June 2003) of adoption of EITF 00-21(8) | — | — | 1 | — | |||||||||||||
Net income under US GAAP | 1,035 | 577 | 434 | 286 | |||||||||||||
Basic earnings per share under US GAAP (before cumulative effect of accounting change)(9) | 54.1c | 30.2p | 22.4p | 14.9p | |||||||||||||
Basic earnings per share under US GAAP (after cumulative effect of accounting change)(9) | 54.1c | 30.2p | 22.4p | 14.9p | |||||||||||||
Diluted earnings per share under US GAAP (before cumulative effect of accounting change)(9) | 54.0c | 30.1p | 22.3p | 14.7p | |||||||||||||
Diluted earnings per share under US GAAP (after cumulative effect of accounting change)(9) | 54.0c | 30.1p | 22.3p | 14.7p | |||||||||||||
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Convenience | As at 30 June | ||||||||||||
translation | |||||||||||||
2005 | 2005 | 2004 | |||||||||||
$m | £m | £m | |||||||||||
Shareholders’ (deficit) funds: | |||||||||||||
Capital and reserves under UK GAAP | (61 | ) | (34 | ) | 90 | ||||||||
Adjustments: | |||||||||||||
Goodwill — subsidiary(1) | 1,311 | 731 | 615 | ||||||||||
Goodwill — joint venture(1) | 2 | 1 | 24 | ||||||||||
Employee stock-based compensation(2) | 36 | 20 | 31 | ||||||||||
Derivative accounting(3) | (34 | ) | (19 | ) | (21 | ) | |||||||
Capitalised interest(4) | 36 | 20 | 9 | ||||||||||
Deferred taxation(5) | (9 | ) | (5 | ) | 2 | ||||||||
Fixed asset investments(6) | — | — | (1 | ) | |||||||||
Development costs(7) | 20 | 11 | — | ||||||||||
Dividends(10) | 167 | 93 | 63 | ||||||||||
Shareholders’ funds under US GAAP | 1,468 | 818 | 812 | ||||||||||
Total assets: | |||||||||||||
Under UK GAAP | 4,160 | 2,320 | 2,364 | ||||||||||
Adjustments: | |||||||||||||
Goodwill — subsidiary(1) | 1,311 | 731 | 615 | ||||||||||
Goodwill — joint venture(1) | 2 | 1 | 24 | ||||||||||
Derivative accounting(3) | 7 | 4 | (25 | ) | |||||||||
Capitalised interest(4) | 36 | 20 | 9 | ||||||||||
Deferred taxation(5) | (9 | ) | (5 | ) | 2 | ||||||||
Fixed asset investments(6) | — | — | (1 | ) | |||||||||
Development costs(7) | 20 | 11 | — | ||||||||||
Under US GAAP | 5,527 | 3,082 | 2,988 | ||||||||||
Total liabilities: | |||||||||||||
Under UK GAAP | (4,221 | ) | (2,354 | ) | (2,274 | ) | |||||||
Adjustments: | |||||||||||||
Employee stock-based compensation(2) | 36 | 20 | 31 | ||||||||||
Derivative accounting(3) | (41 | ) | (23 | ) | 4 | ||||||||
Dividends(10) | 167 | 93 | 63 | ||||||||||
Under US GAAP | (4,059 | ) | (2,264 | ) | (2,176 | ) | |||||||
(1) | Goodwill |
Under UK GAAP, prior to 1 July 1998, goodwill arising on acquisitions was eliminated against reserves. From 1 July 1998, FRS 10 required future goodwill to be capitalised, although, as permitted by FRS 10, goodwill previously written off has not been restated on the balance sheet. On disposal or closure of a previously acquired business, any goodwill previously written off to reserves would be included when calculating the profit or loss on disposal. Where capitalised goodwill is regarded as having a limited useful economic life, FRS 10 provides that the cost is amortised on a straight-line basis over that life, of up to 20 years. Impairment reviews, as required by FRS 11, are carried out if events or circumstances indicate that the carrying value may not be recoverable, to ensure that goodwill is not carried at above the recoverable amount, being the higher of net realisable value and value in use. Goodwill is also reviewed for impairment at the end of the first full financial year after acquisition. The impairment review comprises a comparison of the carrying amount of the goodwill with the recoverable amount. To the extent that the carrying amount exceeds the recoverable amount, |
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the goodwill is impaired and is written down. The impairment loss is recognised in the profit and loss account. | |
Under US GAAP, prior to 1 July 2002, goodwill arising on acquisitions was amortised by charges against income over its useful life, which was not to exceed 40 years. From 1 July 2002, SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”) bases the accounting for goodwill on reporting units, which are operating segments, as defined in SFAS No. 131 “Disclosures about Segments of an Enterprise and Related Information”, or one level lower. SFAS No. 142 does not presume that goodwill is a wasting asset that should be amortised on a straight-line basis over its estimated useful life; instead, it must be tested for impairment on an annual basis and whenever indicators of impairment arise. Upon adoption of SFAS No. 142, the Group ceased the amortisation of goodwill with a net carrying value of £1,084 million. | |
The annual impairment test was completed during fiscal 2005, fiscal 2004 and fiscal 2003. Since there were no quoted market prices in active markets for the Group’s reporting units, the measurement of fair value for each reporting unit was based on the best information available for that reporting unit, which was determined to be future discounted cash flows. The fair value measurements were compared to the carrying amounts of each reporting unit and it was determined that goodwill was not impaired. | |
Under SFAS No. 142, equity method goodwill is no longer amortised. Equity method investments, however, continue to be reviewed for impairment in accordance with APB Opinion No. 18 “The Equity Method of Accounting for Investments in Common Stock”, which requires that a loss in value of an investment which is other than a temporary decline, be recognised. |
Goodwill of £492 million arising on the acquisition of Sky Television Limited on 3 November 1990 was being amortised under US GAAP on a straight-line basis over 40 years. From 1 July 2002, no further amortisation has been recorded under US GAAP following the adoption of SFAS No. 142. The goodwill balance under US GAAP at that date was £309 million. Under UK GAAP, the goodwill arising on the acquisition of Sky Television Limited was eliminated against reserves. |
Goodwill arising on the acquisition of the Group’s 67.5% interest in BiB was £543 million under UK GAAP, based on the fair value of the Group’s shares on 9 May 2001 for the acquisition of the 47.6% interest, and 28 June 2001 for the acquisition of the remaining 19.9% interest. Under US GAAP, the goodwill arising was £664 million, based on the fair value of the Group’s shares on 17 July 2000 for the acquisition of the 47.6% interest, and 14 May 2001 for the acquisition of the remaining 19.9% interest. Under UK GAAP, the fair value of consideration is determined as at the date the acquisition becomes unconditional. Under US GAAP, the fair value is based on the share price on the date of agreement and announcement of the acquisition. Under UK GAAP, the goodwill is being amortised on a straight-line basis over seven years from the dates of acquisition. Under US GAAP, no amortisation has been charged from 1 July 2002 following the adoption of SFAS No. 142. The goodwill balance under US GAAP at that date was £560 million. | |
During fiscal 2003, the Group recognised, under both UK and US GAAP, a deferred tax asset of £24 million in respect of BiB tax losses carried forward. Under UK GAAP, this resulted in a reduction of £24 million in the tax charge for fiscal 2003. Under US GAAP, the tax benefits of BiB’s tax losses carried forward that were not recognised at the acquisition date of £21 million were applied to reduce |
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goodwill relating to the acquisition. The remaining £3 million reduced the fiscal 2003 current tax charge. |
The goodwill of £272 million arising on the acquisition of SIG on 12 July 2000 was being amortised under UK and US GAAP on a straight-line basis over seven years. From 1 July 2002, no further amortisation has been recorded under US GAAP following the adoption of SFAS No. 142. The goodwill balance under US GAAP at that date was £189 million. | |
During fiscal 2003, under both UK and US GAAP, the Group made a provision of £5 million against goodwill which arose on the acquisition of BSkyB Sports Holdings Limited (formerly Opta Index Limited), a subsidiary of SIG. |
At 30 June 2004, a provision of £3 million was made under UK GAAP, included within amortisation, against goodwill which arose on the acquisition of Planetfootball.com Limited (“Planetfootball.com”) (a company which provides website services to the sports industry), reducing the carrying value to nil. The provision was made as a result of an impairment review which showed that the expected future cash flows of the business would not support a carrying value for the goodwill. Under US GAAP, the goodwill recorded upon acquisition of Planetfootball.com was allocated to a larger reporting unit, whose fair value exceeded book value during the year ended 30 June 2004. Accordingly, this impairment charge was not recorded under US GAAP. |
Goodwill of £32 million arising on the acquisition of an additional 9.5% interest in GSB in March 1998 was being amortised under US GAAP on a straight-line basis over 20 years, from 1 July 1998. From 1 July 2002, no further amortisation was recorded under US GAAP following the adoption of SFAS No. 142. The goodwill balance under US GAAP on that date was £26 million. In fiscal 2004, an other than temporary impairment of £3 million was recorded under US GAAP as the fair value of GSB, based on discounted cash flow forecasts, no longer exceeded the carrying value of the asset. The remaining goodwill balance of £23 million was reduced to nil on 1 November 2004, following the disposal of the Group’s investment in GSB. | |
Under UK GAAP, the goodwill arising on the acquisition of GSB was immediately eliminated against reserves. As required by FRS 10, this goodwill was included in the calculation of the loss on disposal of the Group’s investment. | |
In addition, under both UK and US GAAP, £1 million of goodwill has arisen on the purchase of certain other joint ventures and associates. Under UK GAAP, this goodwill is being amortised over its useful economic life; under US GAAP no amortisation charge is recognised. |
Under UK GAAP, the Group recognises a charge in the profit and loss account for its LTIP, EBP and KCP based on the difference between the exercise price of the award and the market price of a BSkyB share on the date of grant. The charge is allocated on a straight-line basis over the vesting period of the options. On exercise of options which are settled using shares which have been purchased through the ESOP trust, the difference between the amount accrued for the options and the cost of the ESOP shares is recognised as a movement within reserves. Under UK GAAP, where the vesting of options is contingent upon the satisfaction of performance conditions, the profit and loss charge in any |
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period may be reduced or increased, based on the latest estimate of the actual number of awards which will eventually vest. | |
Under US GAAP, for performance-related options deemed to be variable plans under APB Opinion No. 25 “Accounting for Stock Issued to Employees” (“APB No. 25”), compensation expense is measured as the difference between the quoted market price and the exercise price at the date when the number of shares that will vest and the exercise price is known (“the measurement date”); the cost is recognised over the period the employee performs the related services. Since the ultimate compensation is unknown until the performance conditions are satisfied, estimates of compensation expense are recorded before the measurement date based on the quoted market price of the common shares at the intervening dates, in situations where it is probable that the performance conditions will be attained. Options that will vest conditional only on continued employment over the life of the option are deemed to be fixed plans under APB No. 25, with the excess of the market price over the exercise price on the date of the grant being charged against income over the vesting period of the options. | |
In accordance with US GAAP, the cost of compensatory stock options is included within operating expenses in the income statement and recognised within shareholders’ funds in the balance sheet. Under UK GAAP, the cost of stock options is included within operating expenses. As the stock compensation expense under US GAAP was the same as that recorded under UK GAAP, there was no difference in the charge for the year (2004: reduction of £1 million; 2003: reduction of £8 million) under US GAAP as compared to the charge recorded under UK GAAP. | |
Contingent payments made to the selling shareholders of WAPTV Limited in June 2002 and September 2003, in the form of the Company’s shares, were linked to their continuing employment within the Group. Under UK GAAP, these amounts were included as purchase consideration in calculating goodwill. Under US GAAP, these payments were classified as stock-based compensation and, as such, were recorded within shareholders’ funds and were being amortised over the period of contingency, between 13 and 28 months from the date of acquisition, which was 29 May 2001. The US GAAP stock compensation charge for the year was nil (2004: nil; 2003: £1 million). | |
Under UK GAAP, employer’s National Insurance is accrued over the vesting period of the share options. Under US GAAP, EITF 00-16 “Recognition and Measurement of Employer Payroll Taxes on Employee Stock-Based Compensation” requires the accrual for National Insurance to be recognised on the date of the event triggering the measurement and payment of tax to the tax authority (i.e. the exercise date of the share options). The additional US GAAP credit arising for the year amounts to £1 million (2004: charge of £2 million; 2003: credit of £3 million), as the National Insurance paid was less than that accrued during the period under UK GAAP. | |
The cumulative balance sheet effect in respect of all employee stock-based compensation at 30 June 2005, amounts to a decrease in UK GAAP accruals of £20 million (2004: £31 million). The cumulative balance sheet effect comprises the movement out of liabilities and into shareholders’ funds of the accrual under UK GAAP for share options of £15 million (2004: £27 million), and a reduction in the accrual under UK GAAP for employer’s National Insurance of £5 million (2004: £4 million). |
Under UK GAAP, investments or derivative financial instruments accounted for as hedges are structured in order to reduce the market risk associated with the underlying transaction being hedged and are designated as hedges at the inception of the contract. Receipts and payments on interest rate instruments are recognised on an accruals basis, over the life of the instrument, within interest receivable and similar income and interest payable and similar charges. Gains and losses hedging forecast transactional cash flows are recognised in the hedged periods, within operating expenses, net. Under UK GAAP, all derivative contracts have been accounted for on the basis that they are |
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hedging applicable monetary items. Under UK GAAP, commercial activities denominated in foreign currencies are recorded in sterling at actual exchange rates as at the date of the transaction or at the contracted rate if the transaction is covered by a forward exchange contract or other hedging instruments. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end or, if hedged, at the appropriate hedged rate. | |
Under US GAAP, the Group has marked all derivative instruments to fair value. The fair value of derivative instruments is determined based on discounted present value techniques or valuations prepared by banks. Monetary assets and liabilities denominated in foreign currencies at year end are reported at the rates of exchange prevailing at the balance sheet date and derivative financial instruments are presented separately at their fair values. | |
As of 1 July 2003, the Group had sufficiently designated a number of interest rate swaps and cross-currency swaps as cash flow hedges of 100% of the Group’s exposure to US dollar interest rates on US dollar denominated bonds under US GAAP. As such, the effective portion of the gain or loss on the swaps designated and qualifying as cash flow hedging instruments is reported as a component of other comprehensive income (“OCI”), outside earnings, and is reclassified into earnings, within interest receivable and similar income and interest payable and similar charges, in the same periods during which the forecast transactions affect earnings (i.e. when the interest expense is incurred and/or gains or losses relating to the retranslation of US dollar denominated debt principal are recognised in the income statement). Any hedge ineffectiveness on the swaps is recognised directly in earnings, within interest receivable and similar income and interest payable and similar charges. The ongoing effectiveness testing is performed using the dollar-offset approach. If forecast transactions are no longer expected to occur, any amounts included in OCI related to that forecast transaction are recognised directly in earnings. Certain interest rate swap and swaption agreements which convert fixed interest rates to floating interest rates cannot be designated as hedges and movements in their fair values continue to be recorded directly in earnings. If any swap agreement should be terminated, the fair value recorded in OCI at the time of termination would be released to earnings immediately. | |
As at 30 June 2005, the Group had sufficiently designated a number of forward exchange contracts and currency options as cash flow hedges of approximately 80% of the Group’s exposure to US dollar payments on its long-term programming contracts with US movie licensors for a period of five years, thereafter nil. As such, the effective portion of the gain or loss on the forward exchange contracts and currency options designated and qualifying as cash flow hedging instruments is reported as a component of OCI, outside earnings, and is reclassified into earnings, within operating expenses, net, in the same periods during which the forecast transactions affect earnings (i.e. when US dollar-denominated creditors are retranslated and related programming stock is amortised through the income statement). For currency options, hedge accounting is only applied to changes in intrinsic value. For forward exchange contracts, hedge accounting is applied to changes in the full fair value. Any hedge ineffectiveness on the forward exchange contracts and currency options is recognised directly in earnings, within interest receivable and similar income and interest payable and similar charges. The ongoing effectiveness testing is performed using the dollar-offset approach. If forecast transactions are no longer expected to occur, any amounts included in OCI related to that forecast transaction are recognised directly in earnings, within interest receivable and similar income and interest payable and similar charges. Certain forward exchange contracts and currency options have not been sufficiently designated as hedges and movements in their fair values continue to be recorded directly in earnings, within interest receivable and similar income and interest payable and similar charges. If any forward exchange contract or currency option should be terminated, the fair value recorded in OCI at the time of termination would be released to earnings immediately, where the underlying exposure was no longer expected to occur. |
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The estimated net amount of existing losses which are included in OCI at 30 June 2005 that are expected to be reclassified into earnings within the next twelve months is £20 million, net of tax (2004: £17 million). | |
During fiscal 2005, the Group recognised a loss in the income statement of £5 million due to hedge ineffectiveness (2004: loss of £8 million). |
Under UK GAAP, the capitalisation of interest is not required, and the Group expenses interest charges to the profit and loss account in the year in which they are incurred. Under US GAAP, interest charges on funds invested in the construction of major capital assets are required to be capitalised and depreciated over the estimated useful life of the assets concerned. | |
Cumulative capitalised interest on assets under construction at 30 June 2005 amounted to £20 million (2004: £9 million). During the year, interest of £13 million (2004: £5 million; 2003: £1 million) was capitalised in respect of assets under construction, and depreciation of £2 million (2004: £3 million; 2003: £2 million) was charged in respect of capitalised interest on assets in use. |
Under UK GAAP, deferred tax is recognised in respect of timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it is regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses or from which the future reversal of underlying timing differences can be deducted. | |
Under US GAAP, deferred income taxes reflect the net tax effects of temporary differences (differences between the carrying value of assets and liabilities and their corresponding tax bases). A valuation allowance is recorded when it is more likely than not that some or all of a deferred tax asset will not be realised. | |
FRS 19 “Deferred tax” (“FRS 19”) is the current UK accounting standard on deferred taxes. While differences between FRS 19 and SFAS No. 109 “Accounting for Income Taxes” exist, such differences have not had a material effect on the Group from a measurement perspective and hence the UK and US GAAP accounting treatments for deferred tax are closely aligned. As a result, the net deferred tax asset recognised under UK and US GAAP has primarily differed only in respect of deferred tax on UK to US GAAP adjustments. | |
Under UK GAAP, at 30 June 2005, there is a deferred tax asset of £100 million (2004: £151 million), which arose principally as a result of carried forward trading losses. Under both UK GAAP and US GAAP at 30 June 2004, there was also an Advance Corporation Tax balance of £53 million which was netted against the tax liability within creditors, as there was a legal right of offset under UK tax legislation. This was utilised during the year to reduce the Group’s cash tax payments. |
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Deferred tax asset | Deferred tax asset | |||||||||||||||||||||||
30 June 2005 | 30 June 2004 | |||||||||||||||||||||||
Gross | Valuation | Net | Gross | Valuation | Net | |||||||||||||||||||
asset | allowance(iv) | asset | asset | allowance(iv) | asset | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Accelerated capital allowances | 30 | (16 | ) | 14 | 34 | (13 | ) | 21 | ||||||||||||||||
Tax losses carried forward(i) | 146 | (78 | ) | 68 | 195 | (77 | ) | 118 | ||||||||||||||||
Fixed asset investments(ii) | 354 | (354 | ) | — | 472 | (472 | ) | — | ||||||||||||||||
Short-term timing differences(iii) | 13 | — | 13 | 20 | (6 | ) | 14 | |||||||||||||||||
543 | (448 | ) | 95 | 721 | (568 | ) | 153 | |||||||||||||||||
(i) | At 30 June 2005, there is a valuation allowance of £64 million (2004: £64 million) against a deferred tax asset in respect of trading losses in the Group’s German holding companies of KirchPayTV, on the basis that these timing differences are not more likely than not to be realised. There is also a valuation allowance of £14 million (2004: £13 million) against a deferred tax asset arising from UK losses in the Group. These losses can be offset only against taxable profits generated in the entities concerned. Although the Directors ultimately expect sufficient profits to arise, there is currently insufficient evidence to support recognition of a deferred tax asset relating to these losses. The losses are available to be carried forward indefinitely under current law. Under US GAAP, the subsequent recognition of tax benefits relating to the deferred tax asset of £14 million arising from UK losses in the Group will be allocated to reduce goodwill arising on previously acquired entities. | |
(ii) | At 30 June 2005, there is a valuation allowance of £330 million (2004: £450 million) against a deferred tax asset in respect of potential capital losses related to the Group’s holding of KirchPayTV on the basis that these timing differences are not more likely than not to be realised. There is also a valuation allowance of £24 million (2004: £22 million) against a deferred tax asset in respect of realised and unrealised capital losses in respect of football club and other investments which have not been recognised as a deferred tax asset, on the basis that they are not more likely than not to be utilised and thus realised. | |
(iii) | During fiscal 2005, a deferred tax asset of £3 million (2004: £10 million) has been recognised through other comprehensive income, relating to derivative financial instruments. In addition, at 30 June 2004, there was a valuation allowance of £6 million against a deferred tax asset arising principally on other timing differences, on the basis that these timing differences were not more likely than not to be realised. | |
(iv) | The current year credit to the income statement in respect of these valuation allowances was £3 million (2004: charge of £2 million; 2003: credit of £105 million). |
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2005 | 2004 | 2003 | ||||||||||
% | % | % | ||||||||||
UK corporation tax rate | 30.0 | 30.0 | 30.0 | |||||||||
Permanent differences | (0.2 | ) | (0.9 | ) | 0.6 | |||||||
Loss (profit) on disposals of investments, net | 0.5 | (3.5 | ) | 2.1 | ||||||||
Joint venture (profits) losses | (0.1 | ) | 1.2 | 1.2 | ||||||||
Valuation allowance | 0.2 | 0.4 | (46.7 | ) | ||||||||
(Credit) charges relating to prior periods | (3.1 | ) | — | 1.9 | ||||||||
Other | (0.1 | ) | 0.1 | 0.5 | ||||||||
US GAAP income tax charge (benefit) | 27.2 | 27.3 | (10.4 | ) | ||||||||
(6) | Fixed asset investments |
Under UK GAAP, a fixed asset investment in a publicly-traded entity, which is not equity accounted for or consolidated on a group basis, is recorded at cost, less any provision for permanent diminution in value. Amounts provided against these investments for permanent diminution in value are charged to the profit and loss account below operating profit, and any reversals in these provisions are written-back to the profit and loss account. | |
Under US GAAP, the Group has accounted for these investments as “available for sale” securities and has therefore marked such investments to market, with any movements in the carrying values, net of tax, being recorded in other comprehensive income until realised. Market value is determined by reference to quoted market prices irrespective of the size of the Group’s interest. Provisions for other than temporary impairments are charged to operating income and the restoration of a previously recognised impairment loss is prohibited. Any premium to market value of investments acquired is charged to the income statement. | |
Under US GAAP, the Group has accounted for investments that do not have a readily determinable fair value under the cost method of accounting. When factors indicate that a decrease in value of the investment has occurred which is other than temporary, a charge to operating income is recorded. | |
The reconciling items between UK and US GAAP within operating income and net income, for fixed asset investments are summarised as follows: |
Convenience | Year ended 30 June | |||||||||||||||
translation | ||||||||||||||||
2005 | 2005 | 2004 | 2003 | |||||||||||||
$m | £m | £m | £m | |||||||||||||
Loss on disposal of investments in joint ventures(i) | (25 | ) | (14 | ) | — | — | ||||||||||
Write-down of football club investments(ii) | — | — | (9 | ) | (21 | ) | ||||||||||
Profit on disposal of football club investments(iii) | — | — | 38 | — | ||||||||||||
Write-down of other investments(iv) | — | — | — | (3 | ) | |||||||||||
Profit on disposal of other investments(v) | — | — | 49 | — | ||||||||||||
Other | — | — | (10 | ) | 6 | |||||||||||
Adjustment to operating income | (25 | ) | (14 | ) | 68 | (18 | ) | |||||||||
Reversal of differences relating only to reclassifications within operating income(i)(ii)(iii)(iv)(v) | 41 | 23 | (75 | ) | 15 | |||||||||||
Adjustment to net income | 16 | 9 | (7 | ) | (3 | ) | ||||||||||
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(i) | On 1 November 2004, the Group sold its 49.5% investment in GSB, realising a loss on disposal under UK GAAP of £23 million. This included the write back of £32 million of goodwill which had previously been written off to reserves. This was recorded as an exceptional item below operating profit. Under US GAAP, the carrying value of the goodwill at the time of disposal was £23 million, which resulted in a realised loss on disposal of £14 million, which was reclassified within operating income. | |
(ii) | In fiscal 2003 and fiscal 2004, a £21 million provision and a £9 million provision, respectively, were taken against football club investments under UK GAAP as exceptional items below operating profit. These provisions were made due to the continued decline over the previous months in the market value of these investments, leading the Group to believe that a permanent diminution in value had occurred. Under US GAAP, these were considered other than temporary diminutions in value and were reclassified within operating income. | |
(iii) | In fiscal 2003, under UK GAAP, the provision against football club investments was reduced by £3 million, following the agreement to sell the Group’s minority interest in Chelsea Village plc in July 2003. Under US GAAP, the reversal of a previously recognised impairment loss is not permitted. Therefore, under US GAAP, this amount was recognised as profit on disposal in fiscal 2004. |
In fiscal 2004, under UK GAAP the provision against football club investments was reduced by £33 million, following the disposal of the Group’s minority interest in Manchester United plc in October 2003. The reduction in the provision under UK GAAP was recorded as an exceptional item below operating profit. Under US GAAP, this amount was recognised as profit on disposal, and was reclassified within operating income. | |
On the Group’s disposal of its investment in Manchester United plc, a profit on disposal of £2 million was also realised under UK GAAP. This was also recorded as an exceptional item below operating profit under UK GAAP; under US GAAP, this was reclassified within operating income. |
(iv) | In fiscal 2003, under UK GAAP, a £3 million provision was taken against the Group’s investment in OpenTV shares, as an exceptional item below operating profit. Under US GAAP, the provision was reclassified within operating income. | |
(v) | In fiscal 2004, the Group sold its 20% shareholding in QVC (UK), operator of QVC — The Shopping Channel, for £49 million in cash, realising a profit on disposal of £49 million. This was recorded as an exceptional item below operating profit under UK GAAP; under US GAAP, this was reclassified within operating income. |
At 30 June 2005, there was no US GAAP reconciling adjustments to fixed asset investments, within assets and shareholders’ funds (2004: £1 million decrease to fixed asset investments) due to the marking to market of listed investments. |
Under UK GAAP, the Group has not capitalised any costs in relation to payments to a third party for development of encryption technology. Under US GAAP, the costs have been capitalised, as the technology is being developed exclusively for the Group’s internal use, and will not be sold, licensed or otherwise marketed to the Group’s customers. In accordance with AICPA Statement of Position 98-1 “Accounting for the Costs of Computer Software Developed or obtained for Internal Use”, therefore, these application development costs have been capitalised. |
Under UK GAAP, installation, digiboxes (including Sky+ digiboxes) and related equipment revenues and costs are recognised once the installation is complete. |
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Under US GAAP, prior to 1 July 2003, these revenues were recognised over the period that a customer was expected to subscribe to the related service. Under US GAAP, where installation or digiboxes and related equipment costs for a particular product exceeded revenues, the excess costs were charged in the income statement immediately upon installation. All other costs directly attributable to the income deferred were recognised over the same period as the revenues under US GAAP. | |
In fiscal 2003, under UK GAAP, installation, digiboxes and related equipment revenues of £61 million were recognised. The costs associated with these revenues were also expensed immediately. Under US GAAP, installation, digiboxes and related equipment revenues of £27 million were recognised during fiscal 2003, and related costs of £27 million were also expensed. Cumulative deferred revenue recorded on the balance sheet under US GAAP in respect of installation, digiboxes and related equipment at 30 June 2003 amounted to £219 million. The deferred costs relating to these deferred revenues amounted to £217 million. | |
Under US GAAP, following the adoption of EITF 00-21 from 1 July 2003, the accounting for installation, digiboxes and related equipment revenues changed. The sale of an installed digibox and DTH subscription constitutes an arrangement with multiple deliverables, and the installed digibox and DTH subscription met the criteria specified in EITF 00-21 to be treated as separate units of accounting. | |
Revenue attributable to each unit is recognised once delivery has been completed or the service has been delivered, based on the fair value of that unit relative to the total consideration received under the arrangement. Following the guidance in EITF 00-21, it has been determined that the amount allocated to each unit is equal to the fees received from the customer for each unit. As a result, the Group no longer defers and amortises installation, digibox and related equipment revenues. The US GAAP accounting treatment is therefore now consistent with UK GAAP. | |
The Group adopted EITF 00-21 by means of a cumulative effect adjustment in fiscal 2004. As a result, at 1 July 2003, the date of adopting EITF 00-21, a net gain of £1 million (net of tax) was recorded as a cumulative change in accounting principal in the income statement. |
The equivalent earnings per ADS outstanding is as follows: |
Convenience | Year ended 30 June | |||||||||||||||
translation | ||||||||||||||||
2005 | 2005 | 2004 | 2003 | |||||||||||||
£ | ||||||||||||||||
$ | £ | £ | ||||||||||||||
Basic earnings per ADS under US GAAP (before cumulative effect of accounting change)* | 216.6c | 120.8p | 89.4p | 59.7p | ||||||||||||
Basic earnings per ADS under US GAAP (after cumulative effect of accounting change)* | 216.6c | 120.8p | 89.7p | 59.7p | ||||||||||||
Diluted earnings per ADS under US GAAP (before cumulative effect of accounting change)* | 215.9c | 120.4p | 89.0p | 58.9p | ||||||||||||
Diluted earnings per ADS under US GAAP (after cumulative effect of accounting change)* | 215.9c | 120.4p | 89.3p | 58.9p |
* | Accounting change referred to is the cumulative effect on prior years (to 30 June 2003) of the adoption of EITF 00-21. |
Earnings per ADS is not exactly four times earnings per share due to rounding differences. |
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Under UK GAAP, dividends are recorded in the period in respect of which they are declared or proposed by the Directors. Under US GAAP, dividends are recorded in the period in which the dividend is declared. In August 2005, the Directors proposed a final dividend of £93 million (5.0 pence per share) relating to the year ended 30 June 2005 (2004: £63 million, representing 3.25 pence per share). This dividend has been recognised as a liability under UK GAAP at 30 June 2005, but not under US GAAP. |
Turnover | |
Under UK GAAP, amounts receivable from the disposal of programming rights not acquired for use by the Group and amounts received from the sale of advertising space in the Sky Magazine are classified within “operating expenses, net”. Under US GAAP, these amounts are classified within “turnover”. | |
Under UK GAAP, betting costs from on-line casino operations and casino-style interactive roulette games are offset against betting revenues within “turnover”. Costs from all other betting activities are shown within “operating expenses, net”. Under US GAAP, all betting costs are offset against betting revenues within “turnover”. | |
Exceptional items within operating profit | |
Under UK GAAP, exceptional items are material items which derive from events or transactions that fall within the ordinary activities of a reporting entity and which individually or, if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence if the financial statements are to give a true and fair view. US GAAP does not allow the presentation of exceptional items and such items would not be presented as such under US GAAP. | |
Exceptional items within non-operating profit | |
Under UK GAAP, profits or losses on disposals of operations, and provisions and releases of provisions against fixed asset investments are recognised as exceptional items below operating profit under the requirements of FRS 3. Under US GAAP, such items would be presented as components of discontinued operations, if certain criteria were met, or within operating income. | |
Share of results of joint ventures and associates | |
Under UK GAAP, the share of joint ventures’ and associates’ operating results excludes the share of joint ventures’ and associates’ interest and the share of joint ventures’ and associates’ tax. These amounts are included within “interest payable and similar charges” or “interest receivable and similar income”, and “tax charge” respectively. Under US GAAP, all of these amounts are included within “equity in earnings (losses) of affiliates”. | |
Under UK GAAP, the share of joint ventures’ and associates’ operating results in fiscal 2004 includes £11 million of negative goodwill arising on the acquisition of an additional 16.7% stake in ATR, which was written off to the profit and loss account immediately on acquisition. Under US GAAP, this amount was recognised as a gain on extinguishment of debt by ATR, and is included within “equity in earnings of affiliates”. |
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Under UK GAAP, long-term debtors (including prepaid programme rights and transponder rentals) are classified as “debtors falling due after more than one year” within current assets. Under US GAAP, long-term debtors are classified within other non-current assets. | |
Under UK GAAP, deferred tax assets are classified within “debtors falling due within one year” or “debtors falling due after more than one year” within current assets. Under US GAAP, deferred tax assets are classified within “other current assets” or “other non-current assets”. | |
Under UK GAAP, fixed asset investments (except investments in own shares) are classified under the heading “investments” within fixed assets. Under US GAAP, fixed asset investments are classified within “other non-current assets”, when the investments are not expected to be sold within one year, and within “other current assets” when the investments are expected to be sold within one year. | |
Under UK GAAP, investments in joint ventures and associates are classified under the heading “investments” within fixed assets. Under US GAAP, investments in joint ventures and associates are classified as “investments in equity affiliates”. | |
Under UK GAAP, a merger reserve is included as part of capital and reserves. The merger reserve was created in accordance with the merger relief provisions under section 131 of the United Kingdom Companies Act 1985 relating to accounting for acquisitions involving the issue of shares at a premium. Merger relief provides relief from the requirement to create a share premium account in a parent company’s balance sheet. In preparing group consolidated financial statements, the amount by which the fair value of the shares issued exceeds their nominal value is recorded within a merger reserve on consolidation, rather than in a share premium account. | |
Merger relief is available when three conditions have been satisfied: |
1. | When a company secures at least 90 per cent of the nominal value of each class of the equity share capital of another company, as a result of an arrangement. | |
2. | The arrangement provides for the allotment of equity shares by the acquirer. | |
3. | Consideration for the shares is either the issue or transfer of shares to the acquirer of equity shares in the acquired company, or the cancellation of those equity shares in the acquired company which the acquirer does not already hold. |
The merger reserve was created as a result of the acquisition by the Group of interests in two entities: |
The acquisition of 100% of SIG on 12 July 2000, where consideration was paid by the issue of equity shares in the Group. |
Consideration was paid in BSkyB shares on 28 June 2001 and on 11 November 2002; this consideration related to the acquisition by the Group of the 19.9% of BiB it did not previously own from British Telecommunications plc (the Group previously holding 80.1% of BiB). | |
Under UK GAAP, the amount recorded in the merger reserve can be transferred to the profit and loss reserve in line with the amortisation of the associated goodwill. Accordingly, the £73 million that was transferred from the merger reserve to the profit and loss reserve in the current year (2004: £77 million) equals the aggregate amortisation charge in that period relating to SIG goodwill and the goodwill recognised on the acquisition of the remaining 19.9% stake in BiB. |
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Under US GAAP, the amount by which the fair value of the BSkyB shares issued on acquisition of SIG and the remaining 19.9% of BiB exceeded their nominal value is recorded within additional-paid-in-capital. | |
Under UK GAAP, a special reserve is included as part of capital and reserves. The special reserve was created following the approval from the High Court on 10 December 2003 to reduce the Company’s share premium account by £1,120 million. This amount was equal to the Company-only profit and loss account reserve deficit at 30 June 2003. | |
As part of the application, the Company’s balance sheet at 30 September 2003 was required to be presented. At that date, the deficit on the Company-only profit and loss account reserve had reduced by £14 million, to £1,106 million. | |
As a condition of the reduction, the reduction in the share premium account of £1,120 million was permitted to be offset against the profit and loss account reserve by the amount of the deficit at 30 September 2003. The excess of £14 million was credited to a special reserve, and, under the terms of the reduction, will remain undistributable until all the creditors of the Company and its guarantors (as at 10 December 2003) are paid. | |
Under US GAAP, the balance held in the special reserve is recorded within additional-paid-in-capital. | |
Under UK GAAP, a capital redemption reserve is included as part of capital and reserves. On 12 November 2004, the Company’s shareholders approved a resolution at the AGM for the Company to purchase up to 97 million BSkyB Ordinary Shares. These shares are cancelled upon repurchase by the Company. | |
Under UK company law, where the shares of a company are purchased wholly out of that company’s retained profits, the amount by which the company’s issued share capital is reduced on cancellation of the shares repurchased is credited to a capital redemption reserve. | |
Under US GAAP, the balance held in the capital redemption reserve is recorded within additional-paid-in-capital. |
The Consolidated Cash Flow Statements prepared under UK GAAP in accordance with FRS 1 “Cash flow statements (revised 1996)”, present substantially the same information as is required under US GAAP. Under US GAAP, however, there are certain differences from UK GAAP with regard to classification of items within the cash flow statement and with regard to the definition of cash and cash equivalents. Cash flow under UK GAAP represents increases or decreases in “cash”, which comprises cash in hand and deposits repayable on demand and overdrafts. Under US GAAP, cash flow represents increases or decreases in “cash and cash equivalents”, which includes short-term, highly liquid investments with original maturities of less than three months, and excludes overdrafts. However, not all short-term, highly liquid investments which qualify as cash-equivalents are required to be treated as such, and the Group has elected to treat all short-term deposits and commercial paper investments as current asset investments. | |
Under UK GAAP, cash flows are presented separately for operating activities, dividends received from joint ventures, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, equity dividends paid, management of liquid resources and financing. Under US GAAP, only three categories of cash flow activity are reported, being cash flows relating to operating activities, investing activities and financing activities. Cash flows from dividends received from joint ventures, taxation and returns on investments and servicing of finance are included as operating activities under US GAAP. Equity dividends paid are included as financing activities under US GAAP. Management of liquid resources, which represents movements in short-term deposits and commercial paper, is included as operating activities under US GAAP. |
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A reconciliation between the consolidated statements of cash flows presented in accordance with UK and US GAAP is presented below: |
Convenience | Year ended 30 June | |||||||||||||||
translation | ||||||||||||||||
2005 | 2005 | 2004 | 2003 | |||||||||||||
$m | £m | £m | £m | |||||||||||||
Operating Activities | ||||||||||||||||
Net cash inflow from operating activities under UK GAAP | 1,754 | 978 | 882 | 664 | ||||||||||||
Cash outflow from development expenditure(i) | 20 | 11 | — | — | ||||||||||||
Dividends received from joint ventures | 22 | 12 | 4 | 4 | ||||||||||||
Interest received and similar income | 50 | 28 | 7 | 3 | ||||||||||||
Interest paid and similar charges | (163 | ) | (91 | ) | (89 | ) | (127 | ) | ||||||||
Interest element of finance lease payments | — | — | — | (1 | ) | |||||||||||
UK corporation tax paid | (181 | ) | (101 | ) | (55 | ) | (18 | ) | ||||||||
Consortium relief paid | (4 | ) | (2 | ) | (3 | ) | — | |||||||||
Management of liquid resources | 294 | 164 | (511 | ) | — | |||||||||||
Net cash provided by operating activities under US GAAP | 1,792 | 999 | 235 | 525 | ||||||||||||
Investing activities | ||||||||||||||||
Net cash outflow from capital expenditure and financial investment under UK GAAP | (411 | ) | (229 | ) | (16 | ) | (97 | ) | ||||||||
Cash outflow from development expenditure(i) | (20 | ) | (11 | ) | — | — | ||||||||||
Funding to joint ventures and associates | (7 | ) | (4 | ) | (5 | ) | (15 | ) | ||||||||
Repayments of funding from joint ventures and associates | 14 | 8 | 6 | 5 | ||||||||||||
Receipts from sales of investments in joint ventures | 25 | 14 | — | — | ||||||||||||
Net cash used in investing activities under US GAAP | (399 | ) | (222 | ) | (15 | ) | (107 | ) | ||||||||
Financing activities | ||||||||||||||||
Net cash outflow from financing under UK GAAP | (764 | ) | (426 | ) | (78 | ) | (422 | ) | ||||||||
Equity dividends paid | (247 | ) | (138 | ) | (53 | ) | — | |||||||||
Net cash used in financing activities under US GAAP | (1,011 | ) | (564 | ) | (131 | ) | (422 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents under US GAAP | 382 | 213 | 89 | (4 | ) | |||||||||||
Cash and cash equivalents under US GAAP at the beginning of the period | 244 | 136 | 47 | 51 | ||||||||||||
Cash and cash equivalents under US GAAP at the end of the period | 626 | 349 | 136 | 47 | ||||||||||||
(i) | Under UK GAAP, the Group has not capitalised any costs in relation to payments to a third party for development of encryption technology. Under US GAAP, the costs have been capitalised as intangible assets. |
(a) | Stock-based compensation |
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Convenience | Year ended 30 June | ||||||||||||||||
translation | |||||||||||||||||
2005 | 2005 | 2004 | 2003 | ||||||||||||||
$m | £m | £m | £m | ||||||||||||||
Net income under US GAAP: | |||||||||||||||||
As reported | 1,035 | 577 | 434 | 286 | |||||||||||||
Add: APB No. 25 stock-based employee compensation expense included in reported net income, net of related tax effects | 7 | 4 | 6 | 13 | |||||||||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | (39 | ) | (22 | ) | (38 | ) | (68 | ) | |||||||||
Pro-forma | 1,003 | 559 | 402 | 231 | |||||||||||||
Earnings per share under US GAAP: | |||||||||||||||||
Basic — as reported(i) | 54.1c | 30.2 | p | 22.4 | p | 14.9 | p | ||||||||||
Basic — pro-forma(i) | 52.5c | 29.3 | p | 20.8 | p | 12.1 | p | ||||||||||
Diluted — as reported(i) | 54.0c | 30.1 | p | 22.3 | p | 14.7 | p | ||||||||||
Diluted — pro-forma(i) | 52.4c | 29.2 | p | 20.7 | p | 11.9 | p |
(i) | Net earnings per share for fiscal 2004 is disclosed after cumulative effect on prior years (to 30 June 2003) of adoption of EITF 00-21. |
Number of shares | Weighted average | |||||||
under option | exercise price | |||||||
Outstanding at 30 June 2002 | 43,012,703 | £7.95 | ||||||
Granted during fiscal 2003 | 15,401,535 | £5.31 | ||||||
Forfeited during fiscal 2003 | (2,575,366 | ) | £7.23 | |||||
Exercised during fiscal 2003 | (2,235,488 | ) | £7.08 | |||||
Outstanding at 30 June 2003 | 53,603,384 | £7.26 | ||||||
Granted during fiscal 2004 | 12,479,870 | £4.66 | ||||||
Forfeited during fiscal 2004 | (7,083,232 | ) | £7.44 | |||||
Expired during fiscal 2004 | (104,319 | ) | £4.34 | |||||
Exercised during fiscal 2004 | (7,930,027 | ) | £7.42 | |||||
Outstanding at 30 June 2004 | 50,965,676 | £6.58 | ||||||
Granted during fiscal 2005 | 19,636,399 | £3.57 | ||||||
Forfeited during fiscal 2005 | (9,772,815 | ) | £6.29 | |||||
Expired during fiscal 2005 | (444,350 | ) | £6.05 | |||||
Exercised during fiscal 2005 | (1,938,116 | ) | £6.05 | |||||
Outstanding at 30 June 2005 | 58,446,794 | £5.64 | ||||||
F-68
Table of Contents
Number of | Number of | |||||||
Ordinary Shares | Ordinary Shares | |||||||
Scheme | 30 June 2005 | 30 June 2004 | ||||||
Executive Share Option Scheme options(i) | 45,309,551 | 41,362,873 | ||||||
Sharesave Scheme options(ii) | 5,131,741 | 3,711,041 | ||||||
LTIP awards(iii) | 4,827,243 | 3,700,219 | ||||||
KCP awards(iv) | 2,830,259 | 1,568,543 | ||||||
EBP awards(v) | 348,000 | 623,000 | ||||||
58,446,794 | 50,965,676 | |||||||
(i) | Included within the total Executive Share Option Scheme options outstanding at 30 June 2005, are 42,892,644 options (2004: 38,632,053) which may be exercised in the final year before their lapsing date, regardless of meeting performance criteria, provided that the employee remains in employment with the Group, 13,318 options (2004: 85,107) that vest only if performance conditions are met and provided that the employee remains in employment with the Group, and 2,403,589 options (2004: 2,645,713) to which no performance criteria are attached, other than the requirement that the employee remains in employment with the Group. |
(ii) | All Sharesave Scheme options outstanding at 30 June 2005 and 2004 have no performance criteria attached, other than the requirement that the employee remains in employment with the Group. |
(iii) | Included within the total LTIP awards outstanding at 30 June 2005, are 1,037,243 options (2004: 2,380,219) which may be exercised in the final year before their lapsing date, regardless of meeting performance criteria, provided that the employee remains in employment with the Group, and 3,790,000 options (2004: 1,320,000) that vest only if performance conditions are met and provided that the employee remains in employment with the Group. |
(iv) | All KCP awards outstanding at 30 June 2005 (2004: 1,290,043) vest only if performance conditions are met and provided that the employee remains in employment with the Group. The remaining 278,500 options outstanding at 30 June 2004 were exercisable in the final year before their lapsing date, regardless of meeting performance criteria, provided that the employee remained in employment with the Group. |
(v) | All EBP awards outstanding at 30 June 2005 and 2004 vest only if performance conditions are met and provided that the employee remains in employment with the Group. |
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Awards outstanding | Awards currently exercisable | |||||||||||||||||||
Weighted | ||||||||||||||||||||
average | Weighted | Weighted | ||||||||||||||||||
remaining | average | average | ||||||||||||||||||
Range of exercise prices | Number | contractual life | exercise price | Number | exercise price | |||||||||||||||
£0.00-£1.00 | 6,855,259 | 8.8 years | £0.00 | 123 | £0.00 | |||||||||||||||
£3.00-£4.00 | 3,251,277 | 3.6 years | £3.86 | 9,765 | £3.63 | |||||||||||||||
£4.00-£5.00 | 1,188,120 | 2.2 years | £4.76 | 5,100 | £4.38 | |||||||||||||||
£5.00-£6.00 | 22,030,838 | 7.2 years | £5.15 | 4,974,800 | £5.16 | |||||||||||||||
£6.00-£7.00 | 10,363,827 | 6.0 years | £6.53 | 3,279,115 | £6.39 | |||||||||||||||
£7.00-£8.00 | 8,038,867 | 6.4 years | £7.86 | 6,220,308 | £7.84 | |||||||||||||||
£8.00-£9.00 | 26,668 | 6.4 years | £8.36 | 20,001 | £8.36 | |||||||||||||||
£9.00-£10.00 | 6,324,277 | 5.4 years | £9.87 | 6,271,387 | £9.87 | |||||||||||||||
£10.00-£11.00 | 21,842 | 4.9 years | £10.53 | 21,842 | £10.53 | |||||||||||||||
£11.00-£12.00 | 153,470 | 5.2 years | £11.40 | 153,470 | £11.40 | |||||||||||||||
£12.00-£13.00 | 150,832 | 5.0 years | £12.80 | 150,832 | £12.80 | |||||||||||||||
£13.00-£14.00 | 41,517 | 4.8 years | £13.97 | 41,517 | £13.97 | |||||||||||||||
58,446,794 | 6.5 years | £5.64 | 21,148,260 | £7.66 | ||||||||||||||||
Convenience | Year ended 30 June | |||||||||||||||
translation | ||||||||||||||||
2005 | 2005 | 2004 | 2003 | |||||||||||||
$m | £m | £m | £m | |||||||||||||
Net income in accordance with US GAAP | 1,035 | 577 | 434 | 286 | ||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Unrealised gain (loss) on certain fixed asset investments: | ||||||||||||||||
— Unrealised holding gains arising during the period | — | — | 24 | 7 | ||||||||||||
— Less: reclassification adjustment for losses (gains) included in net income(i) | 2 | 1 | (36 | ) | 13 | |||||||||||
Foreign exchange gains recorded in cumulative translation reserve: | ||||||||||||||||
— Less: reclassification adjustment for losses included in net income | — | — | 10 | — | ||||||||||||
Unrealised loss on derivative financial instruments: | ||||||||||||||||
— Unrealised losses arising during the period | (32 | ) | (18 | ) | (36 | ) | — | |||||||||
— Less: reclassification adjustment for losses included in net income | 16 | 9 | 12 | — | ||||||||||||
Net comprehensive income in accordance with US GAAP | 1,021 | 569 | 408 | 306 | ||||||||||||
(i) | The reclassification adjustment for losses on certain fixed asset investments included in net income in the year includes realised losses of £1 million (2004: realised losses of £2 million and realised gains of £38 million; 2003: realised losses of £13 million). |
F-70
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(c) | Adoption of new standards |
SFAS No. 151 “Inventory Costs — an amendment of FASB Statements No. 66 and 67” |
SFAS No. 153 “Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29” |
SFAS No. 123 (revised 2004) “Share-Based Payment” |
Staff Accounting Bulletin No. 107 |
SFAS No. 154 “Accounting Changes and Error Corrections” |
F-71
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F-72
Table of Contents
(3) | |||||||||||||||||||||
British Sky | (1)(3) | BSkyB | |||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | |||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | |||||||||||||||||
Fixed assets | |||||||||||||||||||||
Intangible assets | — | — | 301 | — | 301 | ||||||||||||||||
Tangible assets | 24 | 471 | 22 | 9 | 526 | ||||||||||||||||
Investments | |||||||||||||||||||||
— Joint ventures and associates | — | — | 23 | — | 23 | ||||||||||||||||
— Other fixed asset investments | 1 | 33 | — | (32 | ) | 2 | |||||||||||||||
— Investments in subsidiary undertakings under the equity method | 1,162 | 378 | 45 | (1,585 | ) | — | |||||||||||||||
1,187 | 882 | 391 | (1,608 | ) | 852 | ||||||||||||||||
Current assets | |||||||||||||||||||||
Stocks | — | 311 | 29 | — | 340 | ||||||||||||||||
Debtors: Amounts due within one year | |||||||||||||||||||||
— Intragroup debtors | 817 | 1,038 | 1,424 | (3,279 | ) | — | |||||||||||||||
— Third party debtors | 35 | 272 | 35 | — | 342 | ||||||||||||||||
Debtors: Amounts due after one year | |||||||||||||||||||||
— Third party debtors | 36 | 39 | 14 | — | 89 | ||||||||||||||||
Cash and liquid investments | 26 | 354 | 317 | — | 697 | ||||||||||||||||
914 | 2,014 | 1,819 | (3,279 | ) | 1,468 | ||||||||||||||||
Creditors | |||||||||||||||||||||
Amounts falling due within one year | |||||||||||||||||||||
— Intragroup creditors | (939 | ) | (1,130 | ) | (1,345 | ) | 3,414 | — | |||||||||||||
— Third party creditors | (127 | ) | (1,054 | ) | (59 | ) | — | (1,240 | ) | ||||||||||||
(1,066 | ) | (2,184 | ) | (1,404 | ) | 3,414 | (1,240 | ) | |||||||||||||
Net current (liabilities) assets | (152 | ) | (170 | ) | 415 | 135 | 228 | ||||||||||||||
Total assets less current liabilities | 1,035 | 712 | 806 | (1,473 | ) | 1,080 | |||||||||||||||
Creditors | |||||||||||||||||||||
Amounts falling due after one year | |||||||||||||||||||||
— Intragroup borrowings | — | (65 | ) | (33 | ) | 98 | — | ||||||||||||||
— Third party borrowings | (1,069 | ) | (7 | ) | — | — | (1,076 | ) | |||||||||||||
— Other | — | (25 | ) | — | — | (25 | ) | ||||||||||||||
(1,069 | ) | (97 | ) | (33 | ) | 98 | (1,101 | ) | |||||||||||||
— Provisions | — | (11 | ) | (2 | ) | — | (13 | ) | |||||||||||||
(34 | ) | 604 | 771 | (1,375 | ) | (34 | ) | ||||||||||||||
Capital and reserves — equity | |||||||||||||||||||||
Called-up share capital | 934 | 10 | 882 | (892 | ) | 934 | |||||||||||||||
Share premium account | 1,437 | 342 | 2,041 | (2,383 | ) | 1,437 | |||||||||||||||
Profit and loss account | (2,573 | ) | 252 | 1,338 | (1,590 | ) | (2,573 | ) | |||||||||||||
Application of push down accounting | — | — | (4,405 | ) | 4,405 | — | |||||||||||||||
Capital redemption reserve | 37 | — | — | — | 37 | ||||||||||||||||
ESOP reserve | (32 | ) | — | — | — | (32 | ) | ||||||||||||||
Other reserves | 163 | — | 915 | (915 | ) | 163 | |||||||||||||||
TOTAL CAPITAL AND RESERVES | (34 | ) | 604 | 771 | (1,375 | ) | (34 | ) | |||||||||||||
Reconciliation to US GAAP: | |||||||||||||||||||||
Capital and reserves under UK GAAP | (34 | ) | 604 | 771 | (1,375 | ) | (34 | ) | |||||||||||||
Adjustments: | |||||||||||||||||||||
Goodwill | 732 | — | 732 | (732 | ) | 732 | |||||||||||||||
Employee stock-based compensation | 20 | 20 | — | (20 | ) | 20 | |||||||||||||||
Derivative accounting | (19 | ) | (12 | ) | — | �� | 12 | (19 | ) | ||||||||||||
Capitalised interest | 20 | 20 | — | (20 | ) | 20 | |||||||||||||||
Development costs | 11 | 11 | — | (11 | ) | 11 | |||||||||||||||
Deferred taxation | (5 | ) | (7 | ) | — | 7 | (5 | ) | |||||||||||||
Dividends | 93 | — | — | — | 93 | ||||||||||||||||
Capital and reserves under US GAAP | 818 | 636 | 1,503 | (2,139 | ) | 818 | |||||||||||||||
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(3) | |||||||||||||||||||||
British Sky | (1)(3) | Non- | BSkyB | ||||||||||||||||||
Broadcasting | Guarantor | Guarantor | Consolidation | Group and | |||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | |||||||||||||||||
Fixed assets | |||||||||||||||||||||
Intangible assets | — | — | 417 | — | 417 | ||||||||||||||||
Tangible assets | 10 | 347 | 19 | — | 376 | ||||||||||||||||
Investments | |||||||||||||||||||||
— Joint ventures and associates | — | — | 33 | — | 33 | ||||||||||||||||
— Other fixed asset investments | 1 | 31 | — | (30 | ) | 2 | |||||||||||||||
— Investments in subsidiary undertakings under the equity method | 1,360 | 225 | — | (1,585 | ) | — | |||||||||||||||
1,371 | 603 | 469 | (1,615 | ) | 828 | ||||||||||||||||
Current assets | |||||||||||||||||||||
Stocks | — | 323 | 52 | — | 375 | ||||||||||||||||
Debtors: Amounts due within one year | |||||||||||||||||||||
— Intragroup debtors | 887 | 973 | 1,472 | (3,332 | ) | — | |||||||||||||||
— Third party debtors | 32 | 294 | 44 | — | 370 | ||||||||||||||||
Debtors: Amounts due after one year | |||||||||||||||||||||
— Third party debtors | 73 | 44 | 27 | — | 144 | ||||||||||||||||
Cash and liquid investments | 46 | 588 | 13 | — | 647 | ||||||||||||||||
1,038 | 2,222 | 1,608 | (3,332 | ) | 1,536 | ||||||||||||||||
Creditors | |||||||||||||||||||||
Amounts falling due within one year | |||||||||||||||||||||
— Intragroup creditors | (1,152 | ) | (1,283 | ) | (1,042 | ) | 3,477 | — | |||||||||||||
— Third party creditors | (98 | ) | (978 | ) | (94 | ) | — | (1,170 | ) | ||||||||||||
(1,250 | ) | (2,261 | ) | (1,136 | ) | 3,477 | (1,170 | ) | |||||||||||||
Net current (liabilities) assets | (212 | ) | (39 | ) | 472 | 145 | 366 | ||||||||||||||
Total assets less current liabilities | 1,159 | 564 | 941 | (1,470 | ) | 1,194 | |||||||||||||||
Creditors | |||||||||||||||||||||
Amounts falling due after one year | |||||||||||||||||||||
— Intragroup borrowings | — | (240 | ) | (49 | ) | 289 | — | ||||||||||||||
— Third party borrowings | (1,069 | ) | (7 | ) | — | — | (1,076 | ) | |||||||||||||
— Other | — | (28 | ) | — | — | (28 | ) | ||||||||||||||
(1,069 | ) | (275 | ) | (49 | ) | 289 | (1,104 | ) | |||||||||||||
90 | 289 | 892 | (1,181 | ) | 90 | ||||||||||||||||
Capital and reserves — equity | |||||||||||||||||||||
Called-up share capital | 971 | 10 | 576 | (586 | ) | 971 | |||||||||||||||
Share premium account | 1,437 | 243 | 2,249 | (2,492 | ) | 1,437 | |||||||||||||||
Profit and loss account | (2,524 | ) | 36 | (3,259 | ) | 3,223 | (2,524 | ) | |||||||||||||
Application of push down accounting | — | — | 416 | (416 | ) | — | |||||||||||||||
ESOP reserve | (30 | ) | — | — | — | (30 | ) | ||||||||||||||
Other reserves | 236 | — | 910 | (910 | ) | 236 | |||||||||||||||
TOTAL CAPITAL AND RESERVES | 90 | 289 | 892 | (1,181 | ) | 90 | |||||||||||||||
Reconciliation to US GAAP: | |||||||||||||||||||||
Capital and reserves under UK GAAP | 90 | 289 | 892 | (1,181 | ) | 90 | |||||||||||||||
Adjustments: | |||||||||||||||||||||
Goodwill | 639 | — | 639 | (639 | ) | 639 | |||||||||||||||
Employee stock-based compensation | 31 | 31 | — | (31 | ) | 31 | |||||||||||||||
Derivative accounting | (21 | ) | (40 | ) | — | 40 | (21 | ) | |||||||||||||
Capitalised interest | 9 | 9 | — | (9 | ) | 9 | |||||||||||||||
Deferred taxation | 2 | 8 | — | (8 | ) | 2 | |||||||||||||||
Fixed asset investments | (1 | ) | — | — | — | (1 | ) | ||||||||||||||
Dividends | 63 | — | — | — | 63 | ||||||||||||||||
Capital and reserves under US GAAP | 812 | 297 | 1,531 | (1,828 | ) | 812 | |||||||||||||||
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(3) | |||||||||||||||||||||
British Sky | (1)(3) | BSkyB | |||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | |||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | |||||||||||||||||
Turnover | 116 | 3,955 | 834 | (857 | ) | 4,048 | |||||||||||||||
Operating expenses, net | (1 | ) | (3,309 | ) | (901 | ) | 865 | (3,346 | ) | ||||||||||||
Operating profit (loss) | 115 | 646 | (67 | ) | 8 | 702 | |||||||||||||||
Share of joint ventures’ and associates’ operating results | — | — | 14 | — | 14 | ||||||||||||||||
Share of (losses) profits of subsidiary undertakings | (150 | ) | 46 | 44 | 60 | — | |||||||||||||||
Loss on disposal of investments in joint ventures | — | — | (23 | ) | — | (23 | ) | ||||||||||||||
Amounts written back to fixed asset investments, net | — | 130 | — | (130 | ) | — | |||||||||||||||
(Loss) profit on ordinary activities before interest and taxation | (35 | ) | 822 | (32 | ) | (62 | ) | 693 | |||||||||||||
Interest receivable and similar income | 584 | 33 | 133 | (720 | ) | 30 | |||||||||||||||
Interest payable and similar charges | |||||||||||||||||||||
— on external financing | (91 | ) | (1 | ) | — | — | (92 | ) | |||||||||||||
— intragroup interest | — | (54 | ) | (14 | ) | 68 | — | ||||||||||||||
Profit on ordinary activities before taxation | 458 | 800 | 87 | (714 | ) | 631 | |||||||||||||||
Taxation | (33 | ) | (156 | ) | (17 | ) | — | (206 | ) | ||||||||||||
Profit on ordinary activities after taxation | 425 | 644 | 70 | (714 | ) | 425 | |||||||||||||||
Equity dividends | (170 | ) | (426 | ) | (221 | ) | 647 | (170 | ) | ||||||||||||
Retained profit (loss) for the financial year | 255 | 218 | (151 | ) | (67 | ) | 255 | ||||||||||||||
Reconciliation to US GAAP: | |||||||||||||||||||||
Net profit under UK GAAP | 425 | 644 | 70 | (714 | ) | 425 | |||||||||||||||
Adjustments: | |||||||||||||||||||||
Goodwill | 116 | — | 116 | (116 | ) | 116 | |||||||||||||||
Employee stock-based compensation | 1 | 1 | — | (1 | ) | 1 | |||||||||||||||
Derivative accounting | 14 | 13 | — | (13 | ) | 14 | |||||||||||||||
Capitalised interest | 11 | 11 | — | (11 | ) | 11 | |||||||||||||||
Development costs | 11 | 11 | — | (11 | ) | 11 | |||||||||||||||
Deferred taxation | (10 | ) | (10 | ) | — | 10 | (10 | ) | |||||||||||||
Fixed asset investments | 9 | — | 9 | (9 | ) | 9 | |||||||||||||||
Net income under US GAAP | 577 | 670 | 195 | (865 | ) | 577 | |||||||||||||||
F-75
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(3) | |||||||||||||||||||||
British Sky | (1)(3) | BSkyB | |||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | |||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | |||||||||||||||||
Turnover | 71 | 3,604 | 683 | (702 | ) | 3,656 | |||||||||||||||
Operating expenses, net | — | (3,108 | ) | (793 | ) | 726 | (3,175 | ) | |||||||||||||
Operating profit (loss) | 71 | 496 | (110 | ) | 24 | 481 | |||||||||||||||
Share of joint ventures’ and associates’ operating results | — | — | (5 | ) | — | (5 | ) | ||||||||||||||
Share of losses of subsidiary undertakings | (134 | ) | (14 | ) | — | 148 | — | ||||||||||||||
Joint ventures’ and associates’ goodwill amortisation, net | — | — | 10 | — | 10 | ||||||||||||||||
Profit on disposal of fixed asset investments | 2 | — | 49 | — | 51 | ||||||||||||||||
Amounts written back to fixed asset investments, net | 24 | 128 | — | (128 | ) | 24 | |||||||||||||||
(Loss) profit on ordinary activities before interest and taxation | (37 | ) | 610 | (56 | ) | 44 | 561 | ||||||||||||||
Interest receivable and similar income | 470 | 63 | 4 | (527 | ) | 10 | |||||||||||||||
Interest payable and similar charges | |||||||||||||||||||||
— on external financing | (89 | ) | (1 | ) | (1 | ) | — | (91 | ) | ||||||||||||
— intragroup interest | — | (45 | ) | (13 | ) | 58 | — | ||||||||||||||
Profit (loss) on ordinary activities before taxation | 344 | 627 | (66 | ) | (425 | ) | 480 | ||||||||||||||
Taxation | (22 | ) | (121 | ) | (15 | ) | — | (158 | ) | ||||||||||||
Profit (loss) on ordinary activities after taxation | 322 | 506 | (81 | ) | (425 | ) | 322 | ||||||||||||||
Equity dividends | (116 | ) | (417 | ) | (47 | ) | 464 | (116 | ) | ||||||||||||
Retained profit (loss) for the financial year | 206 | 89 | (128 | ) | 39 | 206 | |||||||||||||||
Reconciliation to US GAAP: | |||||||||||||||||||||
Net profit (loss) under UK GAAP | 322 | 506 | (81 | ) | (425 | ) | 322 | ||||||||||||||
Adjustments: | |||||||||||||||||||||
Goodwill | 117 | — | 117 | (117 | ) | 117 | |||||||||||||||
Employee stock-based compensation | (1 | ) | (1 | ) | — | 1 | (1 | ) | |||||||||||||
Derivative accounting | 2 | 14 | — | (14 | ) | 2 | |||||||||||||||
Capitalised interest | 2 | 2 | — | (2 | ) | 2 | |||||||||||||||
Deferred taxation | (2 | ) | (7 | ) | — | 7 | (2 | ) | |||||||||||||
Fixed asset investments | (7 | ) | — | (10 | ) | 10 | (7 | ) | |||||||||||||
Net income before cumulative effect of a change in accounting principle | 433 | 514 | 26 | (540 | ) | 433 | |||||||||||||||
Cumulative effect on prior years (to 30 June 2003) of adoption of EITF 00-21 | 1 | — | 1 | (1 | ) | 1 | |||||||||||||||
Net income under US GAAP | 434 | 514 | 27 | (541 | ) | 434 | |||||||||||||||
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(3) | |||||||||||||||||||||
British Sky | (1)(3) | BSkyB | |||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | |||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | |||||||||||||||||
Turnover | — | 3,179 | 580 | (573 | ) | 3,186 | |||||||||||||||
Operating expenses, net | (5 | ) | (2,804 | ) | (698 | ) | 569 | (2,938 | ) | ||||||||||||
Operating (loss) profit | (5 | ) | 375 | (118 | ) | (4 | ) | 248 | |||||||||||||
Share of joint ventures’ operating results | — | — | 3 | — | 3 | ||||||||||||||||
Share of profits (losses) of subsidiary undertakings | 129 | (21 | ) | — | (108 | ) | — | ||||||||||||||
Amounts written off fixed asset investments, net | (18 | ) | (91 | ) | — | 94 | (15 | ) | |||||||||||||
Profit (loss) on ordinary activities before interest and taxation | 106 | 263 | (115 | ) | (18 | ) | 236 | ||||||||||||||
Interest receivable and similar income | 73 | 130 | 7 | (206 | ) | 4 | |||||||||||||||
Interest payable and similar charges | |||||||||||||||||||||
— on external financing | (117 | ) | (1 | ) | — | — | (118 | ) | |||||||||||||
— intragroup interest | — | (75 | ) | (11 | ) | 86 | — | ||||||||||||||
Profit (loss) on ordinary activities before taxation | 62 | 317 | (119 | ) | (138 | ) | 122 | ||||||||||||||
Taxation | 122 | (58 | ) | (2 | ) | — | 62 | ||||||||||||||
Profit (loss) for the year | 184 | 259 | (121 | ) | (138 | ) | 184 | ||||||||||||||
Dividends | — | — | (116 | ) | 116 | — | |||||||||||||||
Transfer to (from) reserves | 184 | 259 | (237 | ) | (22 | ) | 184 | ||||||||||||||
Reconciliation to US GAAP: | |||||||||||||||||||||
Net profit (loss) under UK GAAP | 184 | 259 | (121 | ) | (138 | ) | 184 | ||||||||||||||
Adjustments: | |||||||||||||||||||||
Goodwill | 117 | — | 117 | (117 | ) | 117 | |||||||||||||||
Employee stock-based compensation | 10 | 4 | — | (4 | ) | 10 | |||||||||||||||
Derivative accounting | 17 | (4 | ) | — | 4 | 17 | |||||||||||||||
Capitalised interest | (1 | ) | (1 | ) | — | 1 | (1 | ) | |||||||||||||
Deferred taxation | (36 | ) | (3 | ) | (20 | ) | 23 | (36 | ) | ||||||||||||
Fixed asset investments | (3 | ) | — | — | — | (3 | ) | ||||||||||||||
Sky+ digiboxes profit on sale | (2 | ) | — | (2 | ) | 2 | (2 | ) | |||||||||||||
Net income (loss) under US GAAP | 286 | 255 | (26 | ) | (229 | ) | 286 | ||||||||||||||
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British Sky | (1) | BSkyB | ||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | ||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | ||||||||||||||||
Operating activities | ||||||||||||||||||||
Operating profit (loss) | 115 | 646 | (67 | ) | 8 | 702 | ||||||||||||||
Depreciation | — | 84 | 8 | — | 92 | |||||||||||||||
Amortisation of goodwill and other intangible fixed assets | — | — | 116 | — | 116 | |||||||||||||||
Loss on disposal of tangible fixed assets | — | 2 | — | — | 2 | |||||||||||||||
Decrease in stock | — | 12 | 23 | — | 35 | |||||||||||||||
Decrease in debtors | 1 | 25 | 8 | — | 34 | |||||||||||||||
(Decrease) increase in creditors | (3 | ) | 6 | (17 | ) | — | (14 | ) | ||||||||||||
Increase in provision | — | 11 | 1 | — | 12 | |||||||||||||||
Foreign exchange movement | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Net cash inflow from operating activities | 113 | 785 | 72 | 8 | 978 | |||||||||||||||
Dividends received from joint ventures | — | — | 12 | — | 12 | |||||||||||||||
Returns on investments and servicing of finance | �� | |||||||||||||||||||
Interest received and similar income | 4 | 18 | 6 | — | 28 | |||||||||||||||
Interest paid and similar charges | (91 | ) | — | — | — | (91 | ) | |||||||||||||
Net cash (outflow) inflow from returns on investments and servicing of finance | (87 | ) | 18 | 6 | — | (63 | ) | |||||||||||||
Taxation | ||||||||||||||||||||
UK corporation tax paid | — | (101 | ) | — | — | (101 | ) | |||||||||||||
Consortium relief paid | — | (2 | ) | — | — | (2 | ) | |||||||||||||
Net cash outflow from taxation | — | (103 | ) | — | — | (103 | ) | |||||||||||||
Capital expenditure and financial investment | ||||||||||||||||||||
Payments to acquire tangible fixed assets | (14 | ) | (197 | ) | (19 | ) | — | (230 | ) | |||||||||||
Receipts from sales of fixed asset investments | — | — | 1 | — | 1 | |||||||||||||||
Net cash outflow from capital expenditure and financial investment | (14 | ) | (197 | ) | (18 | ) | — | (229 | ) | |||||||||||
Acquisitions and disposals | ||||||||||||||||||||
Funding to joint ventures and associates | — | — | (4 | ) | — | (4 | ) | |||||||||||||
Repayments of funding from joint ventures and associates | — | — | 8 | — | 8 | |||||||||||||||
Receipts from sales of investments in joint ventures | — | — | 14 | — | 14 | |||||||||||||||
Net cash inflow from acquisitions and disposals | — | — | 18 | — | 18 | |||||||||||||||
Equity dividends paid | (138 | ) | — | — | — | (138 | ) | |||||||||||||
Net cash (outflow) inflow before management of liquid resources and financing | (126 | ) | 503 | 90 | 8 | 475 | ||||||||||||||
Management of liquid resources | 46 | 382 | (264 | ) | — | 164 | ||||||||||||||
Financing | ||||||||||||||||||||
Proceeds from issue of shares held in ESOP | — | 4 | — | — | 4 | |||||||||||||||
Purchase of own shares for ESOP | — | (14 | ) | — | — | (14 | ) | |||||||||||||
Share buy-back | (416 | ) | — | — | — | (416 | ) | |||||||||||||
Loans from (to) group companies | 522 | (728 | ) | 214 | (8 | ) | — | |||||||||||||
Net cash inflow (outflow) from financing | 106 | (738 | ) | 214 | (8 | ) | (426 | ) | ||||||||||||
Increase in cash | 26 | 147 | 40 | — | 213 | |||||||||||||||
Reconciliation to US GAAP | ||||||||||||||||||||
Net cash provided by (used in) operating activities | 72 | 1,093 | (174 | ) | 8 | 999 | ||||||||||||||
Net cash used in investing activities | (14 | ) | (208 | ) | — | — | (222 | ) | ||||||||||||
Net cash (used in) provided by financing activities | (32 | ) | (738 | ) | 214 | (8 | ) | (564 | ) | |||||||||||
Net increase in cash and cash equivalents | 26 | 147 | 40 | — | 213 | |||||||||||||||
Cash and cash equivalents under US GAAP at the beginning of the year | — | 123 | 13 | — | 136 | |||||||||||||||
Cash and cash equivalents under US GAAP at the end of the year | 26 | 270 | 53 | — | 349 | |||||||||||||||
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British Sky | (1) | BSkyB | ||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | ||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | ||||||||||||||||
Operating activities | ||||||||||||||||||||
Operating profit (loss) | 71 | 496 | (110 | ) | 24 | 481 | ||||||||||||||
Depreciation | — | 91 | 11 | — | 102 | |||||||||||||||
Amortisation of goodwill and other intangible fixed assets | — | — | 119 | — | 119 | |||||||||||||||
Loss on disposal of tangible fixed assets | — | 1 | — | — | 1 | |||||||||||||||
Decrease (increase) in stock | — | 7 | (12 | ) | — | (5 | ) | |||||||||||||
(Increase) decrease in debtors | — | (16 | ) | 33 | — | 17 | ||||||||||||||
Increase in creditors | — | 153 | 17 | — | 170 | |||||||||||||||
Decrease in provision | — | — | (3 | ) | — | (3 | ) | |||||||||||||
Net cash inflow from operating activities | 71 | 732 | 55 | 24 | 882 | |||||||||||||||
Dividends received from joint ventures | — | — | 4 | — | 4 | |||||||||||||||
Returns on investments and servicing of finance | ||||||||||||||||||||
Interest received and similar income | 2 | 5 | — | — | 7 | |||||||||||||||
Interest paid and similar charges | (88 | ) | (1 | ) | — | — | (89 | ) | ||||||||||||
Net cash (outflow) inflow from returns on investments and servicing of finance | (86 | ) | 4 | — | — | (82 | ) | |||||||||||||
Taxation | ||||||||||||||||||||
UK corporation tax paid | — | (55 | ) | — | — | (55 | ) | |||||||||||||
Consortium relief paid | — | — | (3 | ) | — | (3 | ) | |||||||||||||
Net cash outflow from taxation | — | (55 | ) | (3 | ) | — | (58 | ) | ||||||||||||
Capital expenditure and financial investment | ||||||||||||||||||||
Payments to acquire tangible fixed assets | (9 | ) | (114 | ) | (9 | ) | — | (132 | ) | |||||||||||
Receipts from sales of fixed asset investments | 67 | — | 49 | — | 116 | |||||||||||||||
Net cash inflow (outflow) from capital expenditure and financial investment | 58 | (114 | ) | 40 | — | (16 | ) | |||||||||||||
Acquisitions and disposals | ||||||||||||||||||||
Funding to joint ventures and associates | — | — | (5 | ) | — | (5 | ) | |||||||||||||
Repayments of funding from joint ventures and associates | — | — | 6 | — | 6 | |||||||||||||||
Net cash inflow from acquisitions and disposals | — | — | 1 | — | 1 | |||||||||||||||
Equity dividends paid | (53 | ) | — | — | — | (53 | ) | |||||||||||||
Net cash (outflow) inflow before management of liquid resources and financing | (10 | ) | 567 | 97 | 24 | 678 | ||||||||||||||
Management of liquid resources | (46 | ) | (465 | ) | — | — | (511 | ) | ||||||||||||
Financing | ||||||||||||||||||||
Proceeds from issue of Ordinary Shares | 20 | — | — | — | 20 | |||||||||||||||
Purchase of own shares for ESOP | — | (22 | ) | — | — | (22 | ) | |||||||||||||
Capital element of finance lease payments | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Net decrease in debt due after more than one year | (75 | ) | — | — | — | (75 | ) | |||||||||||||
Loans from (to) group companies | 111 | 4 | (91 | ) | (24 | ) | — | |||||||||||||
Net cash inflow (outflow) from financing | 56 | (19 | ) | (91 | ) | (24 | ) | (78 | ) | |||||||||||
Increase in cash | — | 83 | 6 | — | 89 | |||||||||||||||
Reconciliation to US GAAP | ||||||||||||||||||||
Net cash (used in) provided by operating activities | (61 | ) | 216 | 56 | 24 | 235 | ||||||||||||||
Net cash provided by (used in) investing activities | 58 | (114 | ) | 41 | — | (15 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 3 | (19 | ) | (91 | ) | (24 | ) | (131 | ) | |||||||||||
Net increase in cash and cash equivalents | — | 83 | 6 | — | 89 | |||||||||||||||
Cash and cash equivalents under US GAAP at the beginning of the year | — | 40 | 7 | — | 47 | |||||||||||||||
Cash and cash equivalents under US GAAP at the end of the year | — | 123 | 13 | — | 136 | |||||||||||||||
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British Sky | (1) | BSkyB | ||||||||||||||||||
Broadcasting | Guarantor | Non-Guarantor | Consolidation | Group and | ||||||||||||||||
Group plc | Subsidiaries | Subsidiaries | Adjustments | Subsidiaries | ||||||||||||||||
Operating activities | ||||||||||||||||||||
Operating (loss) profit | (5 | ) | 375 | (118 | ) | (4 | ) | 248 | ||||||||||||
Depreciation | — | 93 | 5 | — | 98 | |||||||||||||||
Amortisation of goodwill and other intangible fixed assets | — | — | 121 | — | 121 | |||||||||||||||
Decrease in stock | — | 36 | 8 | — | 44 | |||||||||||||||
Decrease in debtors | — | 59 | 29 | — | 88 | |||||||||||||||
Increase (decrease) in creditors | — | 75 | (15 | ) | 6 | 66 | ||||||||||||||
Decrease in provision | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Net cash (outflow) inflow from operating activities | (5 | ) | 638 | 29 | 2 | 664 | ||||||||||||||
Dividends received from joint ventures | — | — | 4 | — | 4 | |||||||||||||||
Returns on investments and servicing of finance | ||||||||||||||||||||
Interest received and similar income | — | 3 | — | — | 3 | |||||||||||||||
Interest paid and similar charges | (127 | ) | (1 | ) | — | — | (128 | ) | ||||||||||||
Net cash (outflow) inflow from returns on investments and servicing of finance | (127 | ) | 2 | — | — | (125 | ) | |||||||||||||
Taxation | ||||||||||||||||||||
UK corporation tax paid | — | (18 | ) | — | — | (18 | ) | |||||||||||||
Capital expenditure and financial investment | ||||||||||||||||||||
Payments to acquire tangible fixed assets | — | (89 | ) | (9 | ) | — | (98 | ) | ||||||||||||
Receipts from sales of fixed asset investments | — | — | 1 | — | 1 | |||||||||||||||
Net cash outflow from capital expenditure and financial investment | — | (89 | ) | (8 | ) | — | (97 | ) | ||||||||||||
Acquisitions and disposals | ||||||||||||||||||||
Funding to joint ventures | — | — | (15 | ) | — | (15 | ) | |||||||||||||
Repayment of funding from joint ventures | — | — | 5 | — | 5 | |||||||||||||||
Net cash outflow from acquisitions and disposals | — | — | (10 | ) | — | (10 | ) | |||||||||||||
Net cash (outflow) inflow before management of liquid resources and financing | (132 | ) | 533 | 15 | 2 | 418 | ||||||||||||||
Management of liquid resources | — | 1 | — | — | 1 | |||||||||||||||
Financing | ||||||||||||||||||||
Proceeds from issue of Ordinary Shares | 5 | — | — | — | 5 | |||||||||||||||
Decrease in total external debt | (425 | ) | (2 | ) | — | — | (427 | ) | ||||||||||||
Loans from (to) group companies | 552 | (533 | ) | (17 | ) | (2 | ) | — | ||||||||||||
Net cash inflow (outflow) from financing | 132 | (535 | ) | (17 | ) | (2 | ) | (422 | ) | |||||||||||
Decrease in cash | — | (1 | ) | (2 | ) | — | (3 | ) | ||||||||||||
Reconciliation to US GAAP | ||||||||||||||||||||
Net cash (used in) provided by operating activities | (132 | ) | 622 | 33 | 2 | 525 | ||||||||||||||
Net cash used in investing activities | — | (89 | ) | (18 | ) | — | (107 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 132 | (535 | ) | (17 | ) | (2 | ) | (422 | ) | |||||||||||
Net decrease in cash and cash equivalents | — | (2 | ) | (2 | ) | — | (4 | ) | ||||||||||||
Cash and cash equivalents under US GAAP at the beginning of the year | — | 42 | 9 | — | 51 | |||||||||||||||
Cash and cash equivalents under US GAAP at the end of the year | — | 40 | 7 | — | 47 | |||||||||||||||
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Table of Contents
BSkyB Limited | Operates one of the leading pay television broadcasting services in the UK and Ireland. The Company’s principal activities consist of the operation and distribution of 27 wholly-owned television channels in digital across various genres, including movies, sports, news, arts and general entertainment. In addition, the Company currently markets to DTH viewers channels owned and broadcast by third parties. | |
SSSL | Provides support services (including conditional access and subscriber management) and acts as an agent for the DTH pay television business of its fellow subsidiary undertaking (parent undertaking until 24 June 2005), BSkyB Limited. SSSL also provides similar services to a fellow subsidiary undertaking and to third party broadcasters. |
F-81
Table of Contents
ADS | American Depositary Share | |
ATC | Advanced Technology Centre | |
à la carte | A television channel which can be subscribed to on an individual basis by a DTH subscriber to one of our Basic Packages | |
Basic Packages | DTH subscription packages which exclude Premium Channels | |
bonus channel | A channel provided to a subscriber in addition to one or more subscription channels, but at no incremental cost to the subscriber | |
BSkyB or the Company | British Sky Broadcasting Group plc | |
CRM | Customer Relationship Management | |
DSL | Digital Subscriber Line | |
DTH | Direct-to-Home satellite television | |
DTT | Digital Terrestrial Television: DTT uses digital signals delivered to homes through a conventional aerial, converted through a set top box or integrated digital television set | |
EITF | Emerging Issues Task Force: a body which assists in providing financial reporting guidance under US GAAP | |
EPG | Electronic Programme Guide | |
fiscal year or fiscal | Refers to the twelve months ended on the Sunday nearest to 30 June of the given year | |
FRS | UK Financial Reporting Standard | |
GAAP | Generally Accepted Accounting Principles | |
the Group | BSkyB and its subsidiary undertakings | |
IFRS | International Financial Reporting Standards | |
Premium Channels | The Sky Premium Channels and the Premium Sky Distributed Channels | |
Premium Sky Distributed Channels | The Disney Channel (including three Disney multiplex channels, “Toon Disney”, “Playhouse Disney” and “Disney Channel +1 hour”), FilmFour (including the FilmFour multiplex channels, “FilmFour+1” and “FilmFour Weekly”), MUTV, Chelsea TV and Music Choice Extra | |
Pub Channel | A wholly-owned business-to-business television channel available only to the licensed retail trade | |
Sky Basic Channels | Sky One (and its multiplex version, Sky Mix), Sky News, Sky Travel (and its multiplex versions, Sky Travel +1 and Sky Travel Extra), Sky Travel Shop, Sky Sports News, Artsworld (all references to Sky Channels relating to periods prior to 4 March 2005 exclude Artsworld), Sky Vegas Live, Flaunt, The Amp and Scuzz | |
Sky Channels | Television channels wholly owned by the Group, being the Sky Basic Channels and Sky Premium Channels (including bonus and enhanced channels to the Sky Premium Channels, including Sky Sports 3, Sky Cinema 1 (and its multiplex version, Sky Cinema 2)) |
Table of Contents
Sky Distributed Channels | Television channels owned and broadcast by third parties, retailed by the Group to DTH viewers | |
Sky Premium Channel Package | DTH subscription package which includes one or more of the Sky Premium Channels | |
Sky Premium Channels | Sky Movies 1 (and its multiplex versions, Sky Movies 3, Sky Movies 5, Sky Movies 7 and Sky Movies 9), Sky Movies 2 (and its multiplex versions, Sky Movies 4, Sky Movies 6 and Sky Movies 8), Sky Sports 1, Sky Sports 2 and Sky Sports Xtra | |
SkyVenue | A wholly-owned business television channel available only to the licensed retail trade for viewing by their customers | |
Sky World | The top tier of packages that includes all Sky Premium Channels | |
UITF | Urgent Issues Task Force: a body which assists in providing financial reporting guidance under UK GAAP | |
VAT | Value Added Tax: a UK sales tax levied on most goods and services |