Can you give us an overview of the financial performance for the
first half? What were the highlights, the key numbers?
The business performed well, from a financial point of view, in the first six
months. We grew our sales by 10%. That was despite a weakness in the overall UK
TV advertising market and a continued underperformance from our cable revenue
streams. I think the business is now showing its ability to shrug off some of
those short-term pressures and grow strongly.
What were the drivers of your sales growth?
Our core subscription revenues grew by 5%, and that was really on the back of
the customer growth that we’ve talked about. Our installation and service
revenues were up by 74%. That reflects the number of new products that customers
are taking from us. We also saw a good performance from SkyBet. It increased its
sales by 25%.
Other revenues were up strongly from the first-time consolidation of Easynet,
which we didn’t have this time last year. So that totalled 10% growth overall,
and offset a more difficult TV advertising market, where the strong share gains
that we’ve made were, in effect, offset by market declines, and a continued
underperformance in our wholesale revenues as a result of lower cable TV
And you’ve also talked about improving the mix of your customer base.
What are you really looking at there?
Well, over the past three years, we’ve grown our total customer base by 17%,
and we’ve done that on the back of offering more customers more choice. We’ve
also extended the range of price points that we offer customers. Today there are
an extra 500,000 customers who are taking a basic product from us, but over a
million customers are now paying us more than £50 a month.
Other operating costs have increased. Can you give me a sense of what
was behind this?
Well, again, that really reflects the investment we’re making for the future. So
we had the first time consolidation of Easynet, which wasn’t in the comparative
numbers last year, and the investments we’re making in rolling out Sky
There have been a lot of big numbers bandied around about the cost of
getting into broadband, but what is your current estimate here, and over what
First of all, we’re not changing any of the guidance we’ve given on estimates
for broadband investment over the next few years. We’d anticipate investing
about one-sixth of earnings over a three-year period. That’s about £400m, with
two reasonably heavy years this year and next.
The group’s strong underlying cash generation means we’ve been able to
comfortably fund all of the investments that we’ve talked about.
We had a seasonally higher working capital outflow in the first six months of
this year, largely driven by timing of stock payments and some transponder
payments. That will unwind over the course of the next six months. So the cash
generation of the business remains very, very healthy.
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