"Sky continues to deliver excellent operational and financial performance. The results for 2004 showed strong growth in profitability as a result of the Group’s highly successful business model. We continue to focus on building on our market leadership, whilst ensuring that we achieve attractive returns for our shareholders."

Sky had 7.4 million direct-to-home (“DTH”) subscribers at the end of June 2004, and continues to attract new customers to its wide range of subscription packages. Sky’s DTH subscribers are highly satisfied with the breadth and depth of programming and interactive services on our platform. The relaunch of the Group’s brand and a series of new advertising campaigns are raising awareness of our products and introducing Sky to a wider audience. With its high quality product range, Sky is well positioned to benefit from the future growth of multichannel television in the UK and Ireland.

Sky+ is our most significant new product since the launch of digital and its adoption continues to grow. At the end of June 2004, 397,000 DTH subscribers had access to the enhanced control that Sky+ provides over the television viewing experience. By increasing customer satisfaction and providing new revenue streams, our new products’ strategy is delivering incremental profitability and new opportunities for growth. We will continue to lead the market to provide the best for our customers. Offering the best programming is fundamental to attracting and retaining subscribers. Through Sky’s own channels, we are able to invest in the best sport, movies and entertainment, reinforcing the message that pay television offers the best selection and widest choice of programming available.

During the year, there were a number of changes to the Company’s Board of Directors. Tony Ball left his post as Chief Executive in November 2003. I would like to thank Tony for the outstanding performance Sky achieved under his leadership. James Murdoch was appointed Chief Executive on 4 November 2003. James was previously Chairman and Chief Executive Officer of Star, News Corporation’s Asian satellite television and multi-media service.

In February 2004, Martin Stewart announced that he would step down as Chief Financial Officer by 4 August 2004. Martin joined the Board in 1998 and was closely involved in the key strategic decisions taken during Sky’s transition to digital. On behalf of the Board, I would like to thank him for his contribution to Sky and wish him well for the future. On 16 August 2004, Jeremy Darroch will join the Group as Chief Financial Officer from Dixons Group plc, where he was Group Finance Director.

On 14 November 2003, the Company announced that it had established an ad hoc committee of the Board chaired by Lord Wilson of Dinton to examine all relevant corporate governance codes and statutory obligations, and their impact on the processes of the Board and composition of its Committees. Following the conclusion of the Committee’s review, all of its recommendations were approved by the Board unanimously on 15 June 2004. The recommendations approved by the Board included an increase in the number of independent Non-Executive Directors, who will form a majority of the Board, and changes to the composition of Board committees, including the Audit and Remuneration Committees, which are now composed entirely of independent Non-Executive Directors.

Lord Jacob Rothschild was appointed to the new position of Non-Executive Deputy Chairman and Senior Independent Director on 17 November 2003. Following Philip Bowman’s retirement from the Board, Allan Leighton replaced him as Chairman of the Audit Committee. John Thornton resigned as a Non-Executive Director of the Company on 11 May 2004. Nicholas Ferguson was appointed as an independent Non-Executive Director of the Company with effect from 15 June 2004. Andy Higginson will also join the Board as an independent Non-Executive Director with effect from 1 September 2004.

These appointments and the implementation of the Committee’s recommendations represent a clear strengthening of the Board and its committees, demonstrating Sky’s commitment to embrace best practice in corporate governance.

In a year of change, it is testament to the strength and depth of Sky’s management that the progress towards achieving the Group’s targets has continued unabated. I would like to thank all of our staff for their continued support in building long-term value for shareholders.

3 August 2004