First Half Results 2014 Jeremy Darroch, Chief Executive Fleming - PowerPoint PPT Presentation

First Half Results 2014 Jeremy Darroch, Chief Executive Fleming

Forward looking statements This document contains certain forward looking statements with respect to the Group’s financial condition, results of operations and business and our strategy, plans and objectives for the Group. These statements include, without limitation, those that express forecasts, expectations and projections, such as forecasts, expectations and projections in relation to new products and services, the potential for growth of free-to-air and pay television, fixed line telephony, broadband and bandwidth requirements, advertising growth, DTH and OTT customer growth, Multiroom, On Demand, NOW TV, Sky Go, Sky Go Extra, Sky+, Sky+HD and other products and services penetration, revenue, administration costs and other costs, advertising growth, churn, profit, cash flow, product penetration, our broadband network footprint, content, wholesale, marketing and capital expenditure and proposals for returning capital to shareholders. These statements (and all other forward-looking statements contained in this document) are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Group's control, are difficult to predict and could cause actual results to differ materially from those expressed or implied or forecast in the forward-looking statements. These factors include, but are not limited to, the fact that the Group operates in a highly competitive environment and faces competition from a broad range of organisations, the effects of laws and government regulation upon the Group's activities, the fact that the Group’s business is based on a subscription model and its future success relies on building long-term relationships with its customers, its reliance on a complex technical infrastructure which is subject to risk of failure, change and development, failure of key suppliers, the Group’s exposure to financial market, liquidity and counterparty risks, the fact that the Group must protect its customer and corporate data and prevent breaches of security, risks inherent in the implementation of large-scale capital expenditure projects, the fact that the Group relies on intellectual property and proprietary rights which may not be adequately protected under current laws or which may be subject to unauthorised use and the fact that people at Sky are critical to the Group’s ability to meet the needs of its customers and achieve its goals as a business. Information on the significant risks and uncertainties are described in the "Principal risks and uncertainties" section of Sky's Annual Report for the full year ended 30 June 2013 and Interim Report for the half year ended 31 December 2013. Copies of the Annual Report and Interim Report are available from the British Sky Broadcasting Group plc web page at www.sky.com/corporate. All forward-looking statements in this presentation are based on information known to the Group on the date hereof. The Group undertakes no obligation publicly to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

Strong first half • Highest rate of product growth in seven quarters • Investment in connected services delivering results • Strengthening the business – Content – Innovation – Service – Efficiency • Financial performance on track • Increasing returns 3

Widening and growing opportunity • More ways to reach customers than ever • Strong appetite from existing customers to take more • New emerging segments with significant potential • Opening up adjacent business opportunities Ironman 3 4

Priorities for 2013/14 • Grow products and customers • Extend leadership in core areas • Put Sky at heart of the connected home 5

Excellent growth in product sales 873 615 2013 2014 Product additions in 000’s For the 3 months ended 31 December 6

Strong demand across the board Q2 Net Adds: + 71 % + 43 % + 74 % + 111 % 5,000 4,000 3,000 + 14 % 2,000 1,000 0 Multiscreen Broadband Talk HD Line rental Dec 2010 Dec 2013 % indicates growth in product sales Net adds for the 3 months ended 31 December 7

Higher ARPU and stable churn ARPU and churn quarterly annualised For the 3 months ended 31 December 8

Sustained growth in core products 5.1m Broadband 5.0m HD Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 9

Britain’s biggest connected TV platform On Demand • Record 1 million boxes connected in Q2 • Added 12 new catch up channels • Doubled number of Box Sets • Threefold increase in usage 4.4 • Sky Store revenue up 100% 2.7 1.7 1.0 0.4 10

Further extended leadership in mobile TV • 3.3 million unique users • Added 14 new channels • Launched on Android tablets • Record 19.5 million views in Christmas week • 258,000 Sky Go Extra additions 11 11

Growth underpinned by market-leading content offering • Viewing to pay channels up 4% • Non-linear viewing requests up 60% • Record audiences for original drama • Sky Sports viewing at 6-year high 12

Building advantage in customer service • Service calls down 6% • In-sourcing of engineer workforce complete • Install re-visit rate halved • Greater customer satisfaction 13

Good financial performance 2014 Change Revenue £3,751m +7.6% EBITDA £813m flat Earnings per share 27.3p -3.5% Dividend per share 12.0p +9.1% For the six months ended 31 December, excluding adjusting items. Revenue adjusted for the discontinued retailing of the ESPN channel 14

Sustained growth over time Revenue (m) EBITDA (m) EPS £3,751 27.3p £813 £525 13.0p £2,601 2009 2014 2009 2014 2009 2014 For the six months ended 31 December, excluding adjusting items. Revenue adjusted for the discontinued retailing of the ESPN channel 15

Summary • Good first half • Strong performance across the board • Delivering against our plan • Well placed for future growth Game of Thrones 16

Widening and growing opportunity for Sky Subscription Products Pay light Subscription Products Transactional Adjacent Businesses 17

Exploit significant headroom in home entertainment 13 million homes in Britain and Ireland yet to take pay TV 5.5 million Sky customers yet to take HD 7 million Sky customers yet to use Sky Go 6 million Sky customers yet to connect their boxes £1.6 billion transactional market opportunity 18

Grow share in home communications 36% 7% 4.7m 0 2008 2014 Line rental % of triple play customers customers 19

Winning in our core areas of strength Content Innovation Service 20

Step change in our content offering 250 • Significant growth in commissioned content • 100+ hours of drama and comedy in production • 20 returning original series in 2014 93 • Top 6 must-have pay channels are all Sky channels 2006 2013 21 Sport Entertainment Content

Got to Dance Doll & Em Penny Dreadful A League Of Their Own Stella Strike Back The Moaning of Life Conquest of the Skies 22 Mr Sloane The Smoke Fleming Moone Boy

New long-term rights agreements 23

Build partnerships with leading content providers • Landmark new partnership with ITV – Brand new pay channel exclusive to Sky – ITV content on Sky Go, On Demand, NOW TV and Sky Store • Extending successful partnership with HBO – Sky Atlantic is exclusive home of HBO content through 2020 – Co-production agreement for major new drama 24 Content

Transform customer experience • Best home entertainment experience in Britain and Ireland • Delivering more value, greater loyalty and higher upgrades • Drive towards fully connected base 25 Innovation

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Greater interoperability across devices 27 Innovation

Grow share in transactional market • Entering a market worth £1.6 billion • Launch new ‘Buy & Keep’ service • Build on growth in connected boxes • Leverage core strengths • Make Sky Store available to everyone, on multiple devices 28 Innovation

Widen reach with NOW TV • Target 13 million Freeview homes • Leverage the NOW TV box • Roll out to more devices • Drive purchases with improved user interface 29 Innovation

Extend leadership in service • Build competitive advantage • Roll out ‘One Service’ model • Enhance diagnostic capability 30 30 Service

Best-in-class customer service Sky position in Ofcom customer service satisfaction survey Jul-10 Jul-11 Nov-11 Dec-12 Dec-13 31 Service

Summary • Broad and growing opportunity • Extending leadership in core areas • Strategy is delivering • Creating a bigger, more profitable business • Increasing returns to shareholders British and Irish Lions Tour 32

First Half Results 2014 Andrew Griffith, CFO Oblivion 33