"Sky is Britain’s leading entertainment company. Although still young, reaching only its fifteenth birthday in February this year, it has grown from small beginnings to become the most popular provider of pay television services in Britain and Ireland."

The 2004 financial year has been another busy period at Sky. The Company has reached a number of significant operational and financial milestones, including the achievement in September 2003 of our previous subscriber target of seven million DTH customers, some three months early.

The Company has also now completed its transition from the investment phase that started when we launched the digital service, to a new phase of superior financial health, as demonstrated by a second straight year of profit on ordinary activities after taxation, up 75% year-on-year.

Sky has delivered another year of strong financial results, producing its second full year of positive earnings since the launch of Sky digital. This has been driven by double-digit revenue growth and strong operational gearing. Total revenues for the twelve months ending 30 June 2004 ("the year") increased by 15% over the twelve months to 30 June 2003 (“the comparable period”) to £3,656 million. Total operating costs before goodwill and exceptional items increased by 8% to £3,056 million, generating an operating profit before goodwill and exceptional items of £600 million. The operating profit margin before goodwill and exceptional items was 16.4%, up from 11.4% in the comparable period.

Profit after tax increased by £138 million to £322 million. Earnings per share before goodwill and exceptional items was 18.3 pence, representing an increase of 79% on the comparable period.

At 30 June 2004, the total number of DTH digital satellite subscribers in the UK and Ireland was 7,355,000, representing a net increase of 510,000 subscribers on the comparable period. The mix of packages taken by subscribers continues to be weighted towards premium packages, with 52.4% of all DTH subscribers taking the top tier Sky World package at the end of the year, a decline of just one percentage point from the level of 53.4% at 30 June 2003.

The total number of households in the UK and Ireland receiving one or more Sky channels increased to over 14 million in the year. This was driven by DTH growth, a small increase in the number of households subscribing to a television service via cable, and an increase in the number of households receiving the Freeview, free-to-air ("FTA") digital terrestrial channels, as FTA-only homes continued to replace analogue with digital reception equipment.

The number of Sky+ households continued to grow strongly, increasing by 292,000 to reach 397,000. Sky+ continues to drive new subscribers to Sky, with 22% of new Sky+ customers in the last quarter being new to Sky digital. The growth in Sky+ penetration continues to drive the uptake of the Multiroom product, with the number of households taking two or more digiboxes increasing from 165,000 to 293,000 in the year.