##### Table of Contents




















|  |                                                                                                     
|- | ----------------------------------------------------------------------------------------------------
|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




1-13488


British Sky Broadcasting Group plc


(Exact name of Registrant as specified in its charter)


England & Wales


(Jurisdiction of incorporation or organisation)


Grant Way, Isleworth, Middlesex, TW7 5QD, England


(Address of principal executive offices)







|                                                                                                                                                      |  |                                
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------
|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.

NONE


NONE




|                                              |  |  |               | 
|--------------------------------------------- |  |  | ------------- | 
|Ordinary shares (nominal value 50p per share) |  |  | 1,867,523,599 | 



x o




o x




o x










---










TABLE OF CONTENTS


|                           |  |                                                                                  |  |     
|-------------------------- |  | -------------------------------------------------------------------------------- |  | ----
|                           |  |                                                                                  |  | Page
|                           |  |                                                                                  |  |     
|FORWARD LOOKING STATEMENTS |  | 3                                                                               
|PART I                    
|ITEM 1:                    |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
    AND ADVISERS                        |  | 4   
|ITEM 2:                    |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                          |  | 4   
|ITEM 3:                    |  | KEY INFORMATION                                                                  |  | 4   
|ITEM 4:                    |  | INFORMATION ON THE COMPANY                                                       |  | 11  
|ITEM 5:                    |  | OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS                                 |  | 46  
|ITEM 6:                    |  | DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES                                   |  | 73  
|ITEM 7:                    |  | MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS                            |  | 91  
|ITEM 8:                    |  | FINANCIAL INFORMATION                                                            |  | 92  
|ITEM 9:                    |  | THE OFFER AND LISTING                                                            |  | 93  
|ITEM 10:                   |  | ADDITIONAL INFORMATION                                                           |  | 94  
|ITEM 11:                   |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK                   |  | 106 
|ITEM 12:                   |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES                       |  | 108 
|                          
|PART II                   
|ITEM 13:                   |  | DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES                              |  | 108 
|ITEM 14:                   |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF
    SECURITY HOLDERS AND USE OF PROCEEDS |  | 108 
|ITEM 15:                   |  | CONTROLS AND PROCEDURES                                                          |  | 109 
|ITEM 16A:                  |  | AUDIT COMMITTEE FINANCIAL EXPERT                                                 |  | 109 
|ITEM 16B:                  |  | CODE OF ETHICS                                                                   |  | 109 
|ITEM 16C:                  |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                           |  | 109 
|ITEM 16D:                  |  | EXEMPTIONS FROM THE LISTING STANDARDS FOR
    AUDIT COMMITTEES                   |  | 110 
|ITEM 16E:                  |  | PURCHASES OF EQUITY SECURITIES BY THE
    ISSUER AND AFFILIATED PURCHASERS       |  | 110 
|                          
|PART III                  
|ITEM 17:                   |  | FINANCIAL STATEMENTS                                                             |  | 111 
|ITEM 18:                   |  | FINANCIAL STATEMENTS                                                             |  | 111 
|ITEM 19:                   |  | EXHIBITS                                                                         |  | 112 
|GLOSSARY OF TERMS          |  |                                                                                 
|Exhibit 4.1               
|Exhibit 8                 
|Exhibit 12.1              
|Exhibit 12.2              
|Exhibit 13                
|Exhibit 15                





---



##### Table of Contents






FORWARD LOOKING STATEMENTS








3



---



##### Table of Contents






PART I





ITEM 1.     IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISERS







ITEM 2.     OFFER STATISTICS
AND EXPECTED TIMETABLE







ITEM 3.     KEY INFORMATION


SELECTED FINANCIAL DATA








4



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##### Table of Contents



|                                                     |                                                                                      |                                     |        |        |      |  |        |        |   |  |        |        |   |      |        |        |      |  |        |        |   |  |        |        |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------- | ------ | ------ | ---- |  | ------ | ------ | - |  | ------ | ------ | - | ---- | ------ | ------ | ---- |  | ------ | ------ | - |  | ------ | ------ | -
|                                                     |                                                                                      | 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.



5



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##### Table of Contents



|                                                                              |  |                                     |        |   |      |  |        |      |  |  |        |   |  |      |        |   |      |  |         |   |  |  |         |  
|----------------------------------------------------------------------------- |  | ----------------------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | - |  | ---- | ------ | - | ---- |  | ------- | - |  |  | ------- | -
|                                                                              |  | 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,

6



---



##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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.                                                                                                                                                                                                                                                                                                                                                                                      

Factors which materially affect the comparability of the
selected financial data


Accounting changes






Business combinations




Exchange rates








|               |  |      |        |  |     |  |        | 
|-------------- |  | ---- | ------ |  | --- |  | ------ | 
|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 | 

7



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##### Table of Contents



|                   |  |            |        |  |            |  |        |      |  |  |        |  |  |  |        | 
|------------------ |  | ---------- | ------ |  | ---------- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|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.



RISK FACTORS




Our business is heavily regulated and changes in regulations,
changes in interpretation of existing regulations or failure to
obtain required regulatory approvals or licences could adversely
affect our ability to operate or compete effectively.








8



---



##### Table of Contents







We operate in a highly competitive environment that is
subject to rapid change and we must continue to invest and adapt
to remain competitive.










We cannot guarantee that the anticipated business benefits
associated with the significant investments in the modernisation
of our customer relationship management (CRM)
centres, and the replacement of our CRM systems, that we have
made and continue to make, will be fully achieved.




9



---



##### Table of Contents





Our business is reliant on technology which is subject to the
risk of failure, change and development.








We are reliant on encryption technologies to restrict
unauthorised access to our services.




We undertake significant capital expenditure projects,
including technology and property projects.




10



---



##### Table of Contents



We, in common with other services providers that include
third party services which we retail, rely on intellectual
property and proprietary rights, including in respect of
programming content, which may not be adequately protected under
current laws or which may be subject to unauthorised use.




We generate wholesale revenues from a limited number of
customers.






We are subject to a number of medium and long-term
obligations.







ITEM 4.     INFORMATION ON THE
COMPANY


HISTORY AND DEVELOPMENT OF THE GROUP AND BUSINESS OVERVIEW


Introduction






11



---



##### Table of Contents





|                  |  |                    |       |  |      |  |       |      |  |  |       | 
|----------------- |  | ------------------ | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                  |  | 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 | 
|                  |  |                    |       |  |      |  |       |      | 












Programming




12



---



##### Table of Contents







|                |  |                                                            |  |                          
|--------------- |  | ---------------------------------------------------------- |  | -------------------------
|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                    







13



---



##### Table of Contents

















Premium Channels


Sky Premium Channels


Sky Movies 1, Sky Movies 2 and Sky Cinema 1




14



---



##### Table of Contents









Sky Sports 1, Sky Sports 2, Sky Sports 3 and Sky
Sports Xtra














15



---



##### Table of Contents



Premium Sky Distributed Channels


The Disney Channel




Chelsea TV




MUTV




FilmFour




Music Choice Extra




Basic Channels


Sky Basic Channels








16



---



##### Table of Contents











Basic Sky Distributed Channels






Music Choice




Pay-Per-View








17



---



##### Table of Contents



Distribution




|                             |  |                |        |  |      |  |        |      |  |  |        | 
|---------------------------- |  | -------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                             |  | 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.

DTH Distribution










18



---



##### Table of Contents



|                                     |  |                      |        |                  |             |  |               | 
|------------------------------------ |  | -------------------- | ------ | ---------------- | ----------- |  | ------------- | 
|                                     |  |                      |        | 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.



 




19



---



##### Table of Contents



Digital Satellite Reception Equipment


UK














20



---



##### Table of Contents









Ireland








Sky Active










21



---



##### Table of Contents











Sky Bet




Cable Distribution


United Kingdom




22



---



##### Table of Contents











Ireland






DTT Distribution




DSL Distribution




23



---



##### Table of Contents



Free-to-view Satellite Proposition




Seasonality




Marketing Channels




Advertising










24



---



##### Table of Contents









Sponsorship










Competition




Competition from other Television Channels








25



---



##### Table of Contents









Cable Operators










26



---



##### Table of Contents



Digital Terrestrial Television


Freeview








Top Up TV






Free-to-view Satellite Propositions






Other Technologies (Competition)




27



---



##### Table of Contents







Competition in Programming




Competition in Distribution




Digital Switchover






28



---



##### Table of Contents





Home Videos and DVDs




Advertising








29



---



##### Table of Contents





Technology and Infrastructure








Encryption of Digital Services










30



---



##### Table of Contents





Encryption of Channels Retailed by Third Parties






Satellites












31



---



##### Table of Contents







Capital Expenditure Programme








The Customer Relationship Management Centres and Sky
In-Home Service Limited








32



---



##### Table of Contents







Playout and Uplink Facilities








Emerging Technologies








33



---



##### Table of Contents





















Minority Equity Investments






34



---



##### Table of Contents









New Markets




GOVERNMENT REGULATION




BROADCASTING AND TELECOMMUNICATIONS REGULATION


UK


Communications Act 2003






Ofcom review of public service broadcasting








35



---



##### Table of Contents





Our Television Services Licences






Ofcom Powers






Media Ownership




36



---



##### Table of Contents





Digital Terrestrial Television




Listed Events  Limits on Exclusive Distribution
Rights






Television Access Services




Our Telecommunications Licences




37



---



##### Table of Contents



European Union


The Television Without Frontiers Directive






Programme and Independent Productions Quotas










38



---



##### Table of Contents





Electronic Communications Directives




Conditional Access Services and Technology






|  |                                                                                                                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                        





Access Control Services






39



---



##### Table of Contents



Regulation of Electronic Programme Guides




inter alia


Transmission Standards




Interoperability




Ireland




inter alia


40



---



##### Table of Contents



Environmental










COMPETITION (ANTI-TRUST) LAW




UK Competition Law Regime


The Competition Act 1998




Anti-Competitive Agreements






Abuse of a Dominant Position






Effect on Our Affairs




41



---



##### Table of Contents





Enterprise Act 2002


Market Investigations








Additional Measures






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



42



---



##### Table of Contents



Effect on our Affairs




Ofcom Competition Jurisdiction






Irish Competition Law Regime




European Union Regime


Anti-Competitive Agreements




Abuse of a Dominant Position






Mergers




43



---



##### Table of Contents



Effect On Our Affairs


European Commission Investigation  Football
Association Premier League Limited






European Commission Investigation  Movie
Contracts




European Commission Sector Inquiry  New
Media Sports Rights










44



---



##### Table of Contents



PROPERTY, PLANT AND EQUIPMENT






|                                     |                                    |           |  |                        |                |               |                                                                       |         |           |  |              |  |         |  | 
|------------------------------------ | ---------------------------------- | --------- |  | ---------------------- | -------------- | ------------- | --------------------------------------------------------------------- | ------- | --------- |  | ------------ |  | ------- |  | 
|                                     |                                    |           |  |                        |                |               |                                                                       | 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    |         |           |  |              |  |         |  | 
|                                    
|2ndFloor
    A, Central House,       |                                    | Leasehold |  | Offices                |                | Lease expires |                                                                       | £       | 56,460    |  |              |  | 5,473   | 
|                                     | Otley Road, Harrogate, England     |           |  |                        |                |               | 16 March 2010                                                         |         |           |  |              |  |         |  | 
|                                    
|2ndFloor
    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                                                       |         |           |  |              |  |         |  | 

45



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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

INTRODUCTION




OVERVIEW AND RECENT DEVELOPMENTS






46



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Corporate




47



---



##### Table of Contents





OPERATING RESULTS


Revenues
















Operating expenses








48



---



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49



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2005 FISCAL YEAR COMPARED TO 2004 FISCAL YEAR


Revenues




|                  |  |          |       |  |      |  |     |    |  |  |       |  |  |  |     | 
|----------------- |  | -------- | ----- |  | ---- |  | --- | -- |  |  | ----- |  |  |  | --- | 
|                  |  | 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.

DTH subscriber revenues








Cable subscriber revenues






Advertising revenues






Sky Bet revenues




50



---



##### Table of Contents





Sky Active revenues




Other revenues




Operating expenses, net




|                                   |  |                         |       |  |      |  |     |    |  |  |       |  |  |  |     | 
|---------------------------------- |  | ----------------------- | ----- |  | ---- |  | --- | -- |  |  | ----- |  |  |  | --- | 
|                                   |  | 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 | 
|                                   |  |                         |       |  |      |  |     |    |  |  |       | 

Programming




Football First






51



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Transmission and related functions




Marketing




Subscriber management




Administration




Betting




Operating profit and operating margin






52



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##### Table of Contents



Goodwill




Non-operating exceptional items


2005


Loss on disposal of investments in joint ventures




2004


Profit on disposal of fixed asset investments






Amounts written back to fixed asset investments, net




Joint ventures and associates




Joint ventures and associates goodwill
amortisation, net




53



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Net interest payable




Taxation










Profit after taxation




Equity dividends




Earnings per share




54



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2004 FISCAL YEAR COMPARED TO  FISCAL YEAR


Revenues




|                  |  |          |       |  |      |  |     |    |  |  |       |  |  |  |     | 
|----------------- |  | -------- | ----- |  | ---- |  | --- | -- |  |  | ----- |  |  |  | --- | 
|                  |  | 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.

DTH subscriber revenues








Cable subscriber revenues






Advertising revenues






55



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##### Table of Contents



Sky Bet revenues




Sky Active revenues




Other revenues




Operating expenses, net




|                                   |  |                         |       |  |      |  |     |    |  |  |       |  |  |  |     | 
|---------------------------------- |  | ----------------------- | ----- |  | ---- |  | --- | -- |  |  | ----- |  |  |  | --- | 
|                                   |  | 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 | 
|                                   |  |                         |       |  |      |  |     |    |  |  |       | 

Programming












56



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Transmission and related functions




Marketing




Subscriber management




Administration




Betting




Operating profit and operating margin






Goodwill




57



---



##### Table of Contents



Non-operating exceptional items


2004




2003


Amounts written off fixed asset investments, net










Joint ventures and associates




Joint ventures and associates goodwill
amortisation, net




Net interest payable




Taxation




58



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Profit after taxation




Equity dividends




Earnings per share




2005 BALANCE SHEET COMPARED TO 2004 BALANCE SHEET






59



---



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FOREIGN EXCHANGE




CONTINGENT LIABILITIES




LIQUIDITY AND CAPITAL RESOURCES










60



---



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Cash flows




















61



---



##### Table of Contents



Major non-cash transactions


2005


Corporate reorganisation




Disposal of GSB




2004


Share premium reduction




WAPTV




2003


Issue of shares  deferred consideration for BiB




62



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##### Table of Contents



Tabular disclosure of contractual obligations




|                                     |  |       |       |                        |        |  |         |           |  |         |           |  |           |         |       |  |  |  |     | 
|------------------------------------ |  | ----- | ----- | ---------------------- | ------ |  | ------- | --------- |  | ------- | --------- |  | --------- | ------- | ----- |  |  |  | --- | 
|                                     |  |       |       | 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).

63



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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.

Trends and other information


















64



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65



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OFF-BALANCE SHEET ARRANGEMENTS




RESEARCH AND DEVELOPMENT




US GAAP RECONCILIATION






CRITICAL ACCOUNTING POLICIES






66



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Goodwill












Revenues and bad debt provisions




67



---



##### Table of Contents











Tangible fixed assets






68



---



##### Table of Contents



Amortisation of programme stock




Deferred tax










69



---



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Exceptional items










ADOPTION OF NEW ACCOUNTING STANDARDS






UITF abstract 38  Accounting for ESOP trusts
(UITF 38)








Adoption of IFRS






70



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Share-based payments






Financial instruments and hedge accounting










71



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##### Table of Contents





Goodwill






Dividends




Intangible assets




Presentation of the financial statements




72



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##### Table of Contents






ITEM 6.     DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES


DIRECTORS AND SENIOR MANAGEMENT




|                        |  |     |    |  |                           |                                                                             
|----------------------- |  | --- | -- |  | ------------------------- | ----------------------------------------------------------------------------
|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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Board of Directors


Chase Carey


Jeremy Darroch


David DeVoe


David Evans


Nicholas Ferguson


Andrew Higginson


Allan Leighton


James Murdoch


74



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##### Table of Contents



Rupert Murdoch


Jacques Nasser


Gail Rebuck


Lord Rothschild


Arthur Siskind


Lord St John of Fawsley


75



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##### Table of Contents





Lord Wilson of Dinton


Alternate Directors








Leslie Hinton


Senior Executives




Dawn Airey


James Conyers


Beryl Cook


Robin Crossley


Mike Darcey


76



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##### Table of Contents



Julian Eccles


Jon Florsheim


Richard Freudenstein


David Gormley


Jeff Hughes


Nick Milligan


Vic Wakeling


Alun Webber




EMPLOYEES




|                                   |  |      |       |  |      |  |       |      |  |  |       | 
|---------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                   |  | 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 | 
|                                   |  |      |       |  |      |  |       |      | 



CORPORATE GOVERNANCE






77



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THE BOARD






BOARD PRACTICES






|  |                                                                                                                                                                                                                                                                                                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



78



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Board Committees


Remuneration Committee








79



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Corporate Governance & Nominations Committee






|  |                                                                                                                                                                                                                                                                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                  









Audit Committee




80



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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.                                                                                                                                                                     





COMPENSATION




Salary




Annual bonus






81



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Long Term Incentive Plan




Design of LTIP plan












Performance conditions attaching to past LTIP
awards










82



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2004 Awards






|               |  |                              |         |  |            |  |         |            |  |  |            |      |  |         |         |     |          |  |          |          |  |   |         |           |  |             |      |  |        |  |          |  |  |  |          |  |  |  |          | 
|-------------- |  | ---------------------------- | ------- |  | ---------- |  | ------- | ---------- |  |  | ---------- | ---- |  | ------- | ------- | --- | -------- |  | -------- | -------- |  | - | ------- | --------- |  | ----------- | ---- |  | ------ |  | -------- |  |  |  | -------- |  |  |  | -------- | 
|               |  | 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.

Equity Bonus Plan






|               |  |                                 |        |  |            |  |        |            |  |  |            |      |  |         |        |       |          |  |          |          |  |           |             |  |  |        |       |  |  |  |     |  |  |  |     | 
|-------------- |  | ------------------------------- | ------ |  | ---------- |  | ------ | ---------- |  |  | ---------- | ---- |  | ------- | ------ | ----- | -------- |  | -------- | -------- |  | --------- | ----------- |  |  | ------ | ----- |  |  |  | --- |  |  |  | --- | 
|               |  | 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.

83



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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).                             

Management LTIP




Share option schemes




Executive Schemes
















Sharesave Scheme




84



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Pensions














Other benefits




Service agreements


Policy




James Murdoch




85



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Jeremy Darroch








Agreements with Martin Stewart








|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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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2002 Awards


|                         |  |                               |     |        |          |  |       |          |  |       |           |  |  |  |      | 
|------------------------ |  | ----------------------------- | --- | ------ | -------- |  | ----- | -------- |  | ----- | --------- |  |  |  | ---- | 
|                         |  | 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.

Non-Executive Directors






87



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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.



88



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Directors emoluments




|                                 |  |          |           |  |        |  |           |            |  |        |          |       |            |          |           |            |      |          |            |      |          |  |           |  |  |  |            |  |  |  |           | 
|-------------------------------- |  | -------- | --------- |  | ------ |  | --------- | ---------- |  | ------ | -------- | ----- | ---------- | -------- | --------- | ---------- | ---- | -------- | ---------- | ---- | -------- |  | --------- |  |  |  | ---------- |  |  |  | --------- | 
|                                 |  |          |           |  |        |  |           |            |  |        |          | 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.                                                                                                                                                                    

89



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Executive Bonuses




|                      |  |        |           | 
|--------------------- |  | ------ | --------- | 
|                      |  | 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.

Executive Directors Bonus




Share interests




|                        |  |              |         |   |         |  |         |         |  |  |         |  
|----------------------- |  | ------------ | ------- | - | ------- |  | ------- | ------- |  |  | ------- | -
|                        |  | 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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ITEM 7.     MAJOR SHAREHOLDERS AND
RELATED PARTY TRANSACTIONS




PRINCIPAL SHAREHOLDERS




|                                                     |  |        |             |  |          |  |        | 
|---------------------------------------------------- |  | ------ | ----------- |  | -------- |  | ------ | 
|                                                     |  | 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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RELATED PARTY TRANSACTIONS







ITEM 8.     FINANCIAL INFORMATION


CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION


Financial statements




Legal proceedings






Dividend distributions






92



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SIGNIFICANT CHANGES







ITEM 9.     THE OFFER AND LISTING


LISTING DETAILS AND MARKETS






|                          |  |         |       |  |         |  |         |      |  |  |           |  |  |  |           | 
|------------------------- |  | ------- | ----- |  | ------- |  | ------- | ---- |  |  | --------- |  |  |  | --------- | 
|                          |  | 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  | 

93



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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.




ITEM 10.     ADDITIONAL
INFORMATION


MEMORANDUM AND ARTICLES OF ASSOCIATION








Directors material interests




94



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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.                                                                                                                                                                                                                                                                                          





Directors compensation






95



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Borrowing powers




No age disqualification for Directors




No share qualification for Directors




Dividends








Directors appointment and removal








|    |                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

Winding-up






|     |                                                                                                                                                                                                                                                                                                                                          
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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,                                                                                                                                                                                              



Redemption




Further capital calls




Variation of rights




General meetings




97



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Limitations on non-resident or foreign shareholders




Transfer of shares








|      |                                                                                       
|----- | --------------------------------------------------------------------------------------
|(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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Untraced shareholders




Alteration of share capital








|      |                                                                                                                                                                                                                                 
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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).                                         







99



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Issue of shares




100



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Disclosure of interests in the Companys
shares








|     |                                                                                                                                                                                                                                 
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.















101



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MATERIAL CONTRACTS




RCFs




EXCHANGE CONTROLS






TAXATION








102



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Taxation of distributions
















103



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Taxation of capital gains








US passive foreign investment company rules






|     |                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.





Inheritance and gift taxes




UK stamp duty and stamp duty reserve tax




104



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US information reporting and backup withholding






105



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DOCUMENTS ON DISPLAY









ITEM 11.     QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Introduction








Interest rate management




106



---



##### Table of Contents

















Currency exchange rates






107



---



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ITEM 12.     DESCRIPTION OF
SECURITIES OTHER THAN EQUITY SECURITIES







PART II







|         |                                                
|-------- | -----------------------------------------------
|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






ITEM 16A.     AUDIT COMMITTEE
FINANCIAL EXPERT







ITEM 16B.     CODE OF ETHICS







ITEM 16C.     PRINCIPAL ACCOUNTANT
FEES AND SERVICES






|  |                                                                                                                                                     
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | 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






ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
AFFILIATED PURCHASERS




|                                      |  |              |            |  |               |                     |       |                   |                    |  |                  |  |  |  |            | 
|------------------------------------- |  | ------------ | ---------- |  | ------------- | ------------------- | ----- | ----------------- | ------------------ |  | ---------------- |  |  |  | ---------- | 
|                                      |  |              |            |  |               | 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.

110



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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.




PART III







|         |                     
|-------- | --------------------
|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 | 

111



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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.

112



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SIGNATURES






| |                                       
| | --------------------------------------
| | British Sky Broadcasting
    Group plc



| |     |               
| | --- | --------------
| | By: | Jeremy Darroch

| |                        
| | -----------------------
| |                        
| | Jeremy Darroch         
| | Chief Financial Officer



113



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##### Table of Contents



FINANCIAL STATEMENTS OF BRITISH SKY BROADCASTING GROUP PLC


INDEX TO CONSOLIDATED 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 | 

114



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Members of:


British Sky Broadcasting Group plc


Grant Way


Isleworth


Middlesex


TW7 5QD












Deloitte & Touche
LLP






F-1



---



##### Table of Contents






CONSOLIDATED PROFIT AND LOSS ACCOUNTS


|                                                                       |  |       |    |              |       |  |              |       |        |              |       |             |    |        |             |    |       |  |        |             |  |    |             |   |    |       |        |    |       |  |        |   |  |  |      |   |  |  |        |  
|---------------------------------------------------------------------- |  | ----- | -- | ------------ | ----- |  | ------------ | ----- | ------ | ------------ | ----- | ----------- | -- | ------ | ----------- | -- | ----- |  | ------ | ----------- |  | -- | ----------- | - | -- | ----- | ------ | -- | ----- |  | ------ | - |  |  | ---- | - |  |  | ------ | -
|                                                                       |  |       |    | 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   |  
|                                                                       |  |       |    |              |       |  |              |       |        |              |       |             |    |        |             |    |       |  |        |             |  |    |             |   |    |       |        |    |       | 







See notes to consolidated financial statements.


F-2



---



##### Table of Contents






CONSOLIDATED BALANCE SHEETS


|                                                       |  |       |    |         |      |  |        |      |  |  |        |  
|------------------------------------------------------ |  | ----- | -- | ------- | ---- |  | ------ | ---- |  |  | ------ | -
|                                                       |  |       |    | 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     |  
|                                                       |  |       |    |         |      |  |        |      | 

See notes to consolidated financial statements.


F-3



---



##### Table of Contents






CONSOLIDATED CASH FLOW STATEMENTS


|                                                                          |  |       |   |         |      |  |      |      |  |    |      |   |  |  |      |  
|------------------------------------------------------------------------- |  | ----- | - | ------- | ---- |  | ---- | ---- |  | -- | ---- | - |  |  | ---- | -
|                                                                          |  |       |   | 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   | )
|                                                                          |  |       |   |         |      |  |      |      |  |    |      |  

See notes to consolidated financial statements.


F-4



---



##### Table of Contents



CONSOLIDATED CASH FLOW STATEMENTS  (Continued)


a)  Reconciliation of operating profit to operating
cash flows


|                                                           |  |             |     |   |             |  |        |       |  |             |       |        |             |       |     |   |       |             |      |       |             |  |       |   |  |       |     |   |  |  |      |   |  |  |     |  
|---------------------------------------------------------- |  | ----------- | --- | - | ----------- |  | ------ | ----- |  | ----------- | ----- | ------ | ----------- | ----- | --- | - | ----- | ----------- | ---- | ----- | ----------- |  | ----- | - |  | ----- | --- | - |  |  | ---- | - |  |  | --- | -
|                                                           |  | 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 |  
|                                                           |  |             |     |   |             |  |        |       |  |             |       |        |             |       |     |   |       |             |      |       |             |  |       |   |  |       |    

b)  Analysis of changes in net debt


|                                                 |  |        |        |   |           |  |        |      |  |  |           |   |  |          |      |   |      |  |   |  |  |  |        |  
|------------------------------------------------ |  | ------ | ------ | - | --------- |  | ------ | ---- |  |  | --------- | - |  | -------- | ---- | - | ---- |  | - |  |  |  | ------ | -
|                                                 |  | 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   | )
|                                                 |  |        |        |   |           |  |        |      |  |  |           |   |  |          |      |   |      | 

c)  Reconciliation of net cash flow to movement in
net debt


|                                                                 |  |      |      |   |      |  |        |      |  |  |        |  
|---------------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ------ | ---- |  |  | ------ | -
|                                                                 |  | 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 | )
|                                                                 |  |      |      |   |      |  |        |      | 

F-5



---



##### Table of Contents



CONSOLIDATED CASH FLOW STATEMENTS  (Continued)


d)  Major non-cash transactions




| |     
| | ----
| | 2005



| |                         
| | ------------------------
| | Corporate reorganisation





| |                                             
| | --------------------------------------------
| | Disposal of Granada Sky Broadcasting (GSB)





| |     
| | ----
| | 2004



| |                        
| | -----------------------
| | Share premium reduction





| |      
| | -----
| | WAPTV





| |     
| | ----
| | 2003

Issue of shares  deferred consideration for
British Interactive Broadcasting Limited (BiB)




F-6



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





1.  Accounting policies


Description of business










a)   Basis of accounting






b)  Basis of consolidation








c)   Acquisitions




F-7



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




d)  Goodwill and other intangible assets








e)   Tangible fixed assets






|                                  |  |                                           
|--------------------------------- |  | ------------------------------------------
|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)   Impairment of fixed assets and
goodwill




g)  Interests in joint ventures




F-8



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


h)   Fixed asset investments




i)   Stocks


Acquired and commissioned television programme rights








|                      |  |  |   |  |  |                                                                                                                                                                                                                       |  | 
|--------------------- |  |  | - |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|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.    

Digiboxes and related equipment




Raw materials, consumables and goods held for resale




j)   Transponder rental prepayments




F-9



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


k)   Taxation




l)   Deferred taxation








m)  Foreign currency




n)   Derivatives and other financial
instruments






o)  Turnover






|  |                                                                                                                                                                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                      



p)  Pension costs




q)  Leases






2.  Turnover


|                  |  |      |       |  |      |  |       |      |  |  |       | 
|----------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                  |  | 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



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)












3.  Operating expenses, net


|                                          |  |             |       |  |             |  |        |       |  |             |       |        |             |       |       |  |       |             |     |       |             |  |       |  |  |       |       |  |  |  |     |  |  |  |       | 
|----------------------------------------- |  | ----------- | ----- |  | ----------- |  | ------ | ----- |  | ----------- | ----- | ------ | ----------- | ----- | ----- |  | ----- | ----------- | --- | ----- | ----------- |  | ----- |  |  | ----- | ----- |  |  |  | --- |  |  |  | ----- | 
|                                          |  | 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



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


4.  Exceptional items


|                                                                               |  |          |     |   |          |  |        |       |  |          |          |        |          |        |    |  |       |          |   |          |          |  |        |  |  |       |     |   |  |  |     |   |  |  |     |  
|------------------------------------------------------------------------------ |  | -------- | --- | - | -------- |  | ------ | ----- |  | -------- | -------- | ------ | -------- | ------ | -- |  | ----- | -------- | - | -------- | -------- |  | ------ |  |  | ----- | --- | - |  |  | --- | - |  |  | --- | -
|                                                                               |  | 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 |  
|                                                                               |  |          |     |   |          |  |        |       |  |          |          |        |          |        |    |  |       |          |   |          |          |  |        |  |  |       |    

2005




|   |                                              
|-- | ---------------------------------------------
|a) | Settlement of ITV Digital programming debtors





|   |                                                 
|-- | ------------------------------------------------
|b) | Loss on disposal of investment in joint ventures



2004




|   |                                              
|-- | ---------------------------------------------
|c) | Profit on disposal of fixed asset investments







|   |                                                     
|-- | ----------------------------------------------------
|d) | Amounts written back to fixed asset investments, net



F-13



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




2003


e)   Release of provision against ITV Digital
programming debtors






|   |                                                 
|-- | ------------------------------------------------
|f) | Amounts written off fixed asset investments, net







g)  Recognition of deferred tax asset




F-14



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


5.  Interest


a)  Interest receivable and similar income


|                                                                 |  |      |    |  |      |  |    |      |  |  |   | 
|---------------------------------------------------------------- |  | ---- | -- |  | ---- |  | -- | ---- |  |  | - | 
|                                                                 |  | 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 | 
|                                                                 |  |      |    |  |      |  |    |      | 

b)  Interest payable and similar charges


|                                                                                               |  |      |    |  |      |  |    |      |  |  |     | 
|---------------------------------------------------------------------------------------------- |  | ---- | -- |  | ---- |  | -- | ---- |  |  | --- | 
|                                                                                               |  | 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



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|   |                                              
|-- | ---------------------------------------------
|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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


7.  Staff costs


a)  Employee costs




|                                                                  |  |      |     |  |      |  |     |      |  |  |     | 
|----------------------------------------------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                                                                  |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


b)  Directors emoluments




|                                  |  |          |           |  |        |  |           |            |  |        |         |       |            |          |           |            |      |          |            |      |          |  |           |  |  |  |            |  |  |  |           | 
|--------------------------------- |  | -------- | --------- |  | ------ |  | --------- | ---------- |  | ------ | ------- | ----- | ---------- | -------- | --------- | ---------- | ---- | -------- | ---------- | ---- | -------- |  | --------- |  |  |  | ---------- |  |  |  | --------- | 
|                                  |  |          |           |  |        |  |           |            |  |        |         | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


Executive bonuses




|                      |  |        |           | 
|--------------------- |  | ------ | --------- | 
|                      |  | 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.

Executive Directors Bonus




Pensions








LTIP




|                 |  |                              |         |  |          |  |         |           |        |  |          |      |  |         |         |     |          |  |         |            |  |   |         |           |  |             |      |  |        |  |          |  |  |  |          |  |  |  |          | 
|---------------- |  | ---------------------------- | ------- |  | -------- |  | ------- | --------- | ------ |  | -------- | ---- |  | ------- | ------- | --- | -------- |  | ------- | ---------- |  | - | ------- | --------- |  | ----------- | ---- |  | ------ |  | -------- |  |  |  | -------- |  |  |  | -------- | 
|                 |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








|     |                                                                                                                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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).

EBP




|                 |  |                                 |        |  |          |  |   |           |        |  |            |   |  |         |             |   |          |  |       |            |  |           |             |  |  |        |       |  |  |  |     |  |  |  |     | 
|---------------- |  | ------------------------------- | ------ |  | -------- |  | - | --------- | ------ |  | ---------- | - |  | ------- | ----------- | - | -------- |  | ----- | ---------- |  | --------- | ----------- |  |  | ------ | ----- |  |  |  | --- |  |  |  | --- | 
|                 |  | 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.                                                                                                                                 



Sharesave Scheme options




|                 |  |         |   |                   |          |  |       |           |  |  |         |  |  |          |       |       |            |  |           |             |  |  |        |  |  |  |          |  |  |  |          | 
|---------------- |  | ------- | - | ----------------- | -------- |  | ----- | --------- |  |  | ------- |  |  | -------- | ----- | ----- | ---------- |  | --------- | ----------- |  |  | ------ |  |  |  | -------- |  |  |  | -------- | 
|                 |  |         |   | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


8.  Taxation


a)  Analysis of charge (credit) in year


|                                                                                                |  |             |     |   |             |  |            |       |  |             |       |            |             |            |             |   |       |             |   |       |            |  |             |   |  |       |     |   |  |  |      |   |  |  |      |  
|----------------------------------------------------------------------------------------------- |  | ----------- | --- | - | ----------- |  | ---------- | ----- |  | ----------- | ----- | ---------- | ----------- | ---------- | ----------- | - | ----- | ----------- | - | ----- | ---------- |  | ----------- | - |  | ----- | --- | - |  |  | ---- | - |  |  | ---- | -
|                                                                                                |  | 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



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


b)  Factors affecting the current tax charge for
the year




|                                                                                                                                                                                     |  |      |     |   |      |  |     |      |  |  |     |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | - | ---- |  | --- | ---- |  |  | --- | -
|                                                                                                                                                                                     |  | 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  |  
|                                                                                                                                                                                     |  |      |     |   |      |  |     |      | 

c)  Factors that may affect future tax charges








9.  Equity dividends


|                                                                                 |  |      |     |  |      |  |     |      |  |  |   | 
|-------------------------------------------------------------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | - | 
|                                                                                 |  | 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



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


10. Earnings per share








|                                                                                                |  |           |       |   |             |  |       |             |  |  |       |  
|----------------------------------------------------------------------------------------------- |  | --------- | ----- | - | ----------- |  | ----- | ----------- |  |  | ----- | -
|                                                                                                |  | 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 |  
|                                                                                                |  |           |       |   |             |  |       |             | 



11. Intangible fixed assets




|                |  |          |     |  |  |  |  |  |  |  |  | 
|--------------- |  | -------- | --- |  |  |  |  |  |  |  |  | 
|                |  | 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



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)










12. Tangible fixed assets




|                |  |              |    |  |              |  |     |              |  |  |              |   |  |       |     |  |  |  |       |  
|--------------- |  | ------------ | -- |  | ------------ |  | --- | ------------ |  |  | ------------ | - |  | ----- | --- |  |  |  | ----- | -
|                |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


|                |  |              |    |  |              |  |    |              |  |  |              |  |  |       |     |  |  |  |     | 
|--------------- |  | ------------ | -- |  | ------------ |  | -- | ------------ |  |  | ------------ |  |  | ----- | --- |  |  |  | --- | 
|                |  | 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).



13. Investments in joint ventures and associates




|                                                |                                       |      |   |      |      |  |   |      |  
|----------------------------------------------- | ------------------------------------- | ---- | - | ---- | ---- |  | - | ---- | -
|                                                |                                       | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|     |                                                                                                                                                                                                                                               
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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).

2005




|      |                                                                                                                                                                                                                                                            
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

2004




|    |                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 | )



14. Other fixed asset investments


Principal Group investments




|                                        |  |                   |  |                                              |  |                                                                             
|--------------------------------------- |  | ----------------- |  | -------------------------------------------- |  | ----------------------------------------------------------------------------
|                                        |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


|                                                  |  |                   |  |                                               |  |                                                                                                                  
|------------------------------------------------- |  | ----------------- |  | --------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|                                                  |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


|                                    |  |                   |  |                                                                                               |  |                                                                               
|----------------------------------- |  | ----------------- |  | --------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|                                    |  | 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




Notes




|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|(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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                                         |  |      |       |   |      |  |       |  
|---------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | -
|                                         |  | 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     |  
|                                         |  |      |       |   |      | 

2005




|     |                                                                                                                                                                                                                                   
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

2004




|      |                                                                                                                                                                                                                                                                           
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


15. Stocks


|                                |  |      |     |  |      |  |     | 
|------------------------------- |  | ---- | --- |  | ---- |  | --- | 
|                                |  | 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 | 
|                                |  |      |     |  |      | 





16. Deferred tax asset


|                                                      |                                  |      |     |    |      |  |     |    | 
|----------------------------------------------------- | -------------------------------- | ---- | --- | -- | ---- |  | --- | -- | 
|                                                      |                                  | 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



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


17. Other debtors


|                                              |  |      |     |  |      |  |     | 
|--------------------------------------------- |  | ---- | --- |  | ---- |  | --- | 
|                                              |  | 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  | 
|                                              |  |      |     |  |      | 





18. Creditors: Amounts falling due within one year


|                                             |  |      |       |  |      |  |       | 
|-------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|                                             |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


19. Creditors: Amounts falling due after more than one
year


|                                                                    |  |      |       |  |      |  |       | 
|------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|                                                                    |  | 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 | 
|                                                                    |  |      |       |  |      | 

(a)  Guaranteed notes










F-32



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








|                                                                         |  |                     |     |  |      |  |   |      |  |  |      |  |  |  |     | 
|------------------------------------------------------------------------ |  | ------------------- | --- |  | ---- |  | - | ---- |  |  | ---- |  |  |  | --- | 
|                                                                         |  | 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 | 
|                                                                         |  |                     |     |  |      |  |   |      |  |  |      | 

(b) Finance leases




|                                              |                  |    |    |    | 
|--------------------------------------------- | ---------------- | -- | -- | -- | 
|                                              |                  | £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 | 
|                |  |    |   



(c)  Undrawn RCFs




F-33



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








|  |                                                      
|- | -----------------------------------------------------
| | Net Debt to EBITDA must be no more than 3:1          
| 
| | EBITDA to Net Interest Payable must be at least 3.5:1







20. Derivatives and other financial instruments


Treasury policy and risk management








Interest rate management




F-34



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)










Currency exchange rates














F-35



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


Interest rate risks




|                                                            |  |       |     |   |          |  |     |       |  |  |       |   |  |          |     |   |       |  |     |   |  |  |       |  
|----------------------------------------------------------- |  | ----- | --- | - | -------- |  | --- | ----- |  |  | ----- | - |  | -------- | --- | - | ----- |  | --- | - |  |  | ----- | -
|                                                            |  | 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   |  







Currency risks




|                                            |  |                                           |   |  |       |  |    |       |  |  |     |  |  |       |    |  |       |  |    |  |  |  |    | 
|------------------------------------------- |  | ----------------------------------------- | - |  | ----- |  | -- | ----- |  |  | --- |  |  | ----- | -- |  | ----- |  | -- |  |  |  | -- | 
|                                            |  | 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 | 



Liquidity risks






|                                |  |      |       |  |      |  |     | 
|------------------------------- |  | ---- | ----- |  | ---- |  | --- | 
|                                |  | 2005 |       |  | 2004 | 
|                                |  |      |       |  |      | 
|                                |  | £m   |       |  | £m   | 
|Expiring in more than two years |  |      | 1,000 |  |      |  | 600 | 
|                                |  |      |       |  |      | 
|Total                           |  |      | 1,000 |  |      |  | 600 | 
|                                |  |      |       |  |      | 

F-36



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




Fair values




|                                                                                           |  |            |        |   |            |  |        |            |  |  |            |   |  |  |        |  
|------------------------------------------------------------------------------------------ |  | ---------- | ------ | - | ---------- |  | ------ | ---------- |  |  | ---------- | - |  |  | ------ | -
|                                                                                           |  | 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      |            |  |  |           |   |  |  |       |  









Hedges






|  |                                                                                   
|- | ----------------------------------------------------------------------------------
| | interest rate risk, using interest rate swap and swaption
    agreements          
| 
| | transactional currency exposures, using forward exchange
    contracts and collars

F-37



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|  |                                                                                                                                            
|- | -------------------------------------------------------------------------------------------------------------------------------------------
| | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|    |                        
|--- | -----------------------
|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 |  
|                                                                              |  |                 |              



Share option and contingent share award schemes






|                                             |  |                 |            | 
|-------------------------------------------- |  | --------------- | ---------- | 
|                                             |  | 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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


(a)  Executive Share Option Scheme Options




|              |  |                 |            |   |              |  |             |         |  |  |           | 
|------------- |  | --------------- | ---------- | - | ------------ |  | ----------- | ------- |  |  | --------- | 
|              |  | 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



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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).









(b) Sharesave Scheme Options




|              |  |                 |           |   |        |  |       |             |  |  |          | 
|------------- |  | --------------- | --------- | - | ------ |  | ----- | ----------- |  |  | -------- | 
|              |  | 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 |   |        |  |       |             |  |  |          | 
|              |  |                 |           |   |        |  |       |             | 



F-41



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


(c)  LTIP Awards




|              |  |                 |           |   |        |  |       |             |  |  |           | 
|------------- |  | --------------- | --------- | - | ------ |  | ----- | ----------- |  |  | --------- | 
|              |  | 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 |   |        |  |       |             |  |  |           | 
|              |  |                 |           |   |        |  |       |             | 







(d) KCP Awards




|              |  |                 |           |   |        |  |       |             |  |  |           | 
|------------- |  | --------------- | --------- | - | ------ |  | ----- | ----------- |  |  | --------- | 
|              |  | 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 |   |        |  |       |             |  |  |           | 
|              |  |                 |           |   |        |  |       |             | 



F-42



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


(e)  EBP Awards




|              |  |                 |         |   |        |  |     |             |  |  |           | 
|------------- |  | --------------- | ------- | - | ------ |  | --- | ----------- |  |  | --------- | 
|              |  | 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 |   |        |  |     |             |  |  |           | 
|              |  |                 |         |   |        |  |     |             | 





23. Reconciliation of movement in shareholders
funds




|                                      |                                    |         |     |     |         |        |       |        |   |  |         |      |   |         |         |     |         |        |     |            |               |  |          |    |  |           |    |    |  |  |        |       |   |  |      |      |  
|------------------------------------- | ---------------------------------- | ------- | --- | --- | ------- | ------ | ----- | ------ | - |  | ------- | ---- | - | ------- | ------- | --- | ------- | ------ | --- | ---------- | ------------- |  | -------- | -- |  | --------- | -- | -- |  |  | ------ | ----- | - |  | ---- | ---- | -
|                                      |                                    |         |     |     |         |        |       |        |   |  |         |      |   |         |         |     |         | 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  | )   
|                                      |                                    |         |     |     |         |        |       |        |   |  |         |      |   |         |         |     |         |        |     |            |               |  |          |    |  |           |   

F-43



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


Share buy-back




Goodwill






Share premium reduction




Share option schemes








|                                                             |  |                 |            |   |    |  |     |  
|------------------------------------------------------------ |  | --------------- | ---------- | - | -- |  | --- | -
|                                                             |  | 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  |  
|                                                             |  |                 |            |   |    | 

Merger reserve




F-44



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


Dividends




Contingent consideration








|    |                                                          
|--- | ---------------------------------------------------------
|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

F-45



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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







F-46



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








|    |                              
|--- | -----------------------------
|(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 |   
|                     |                  |                  |    

F-47



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                     |                  |            |     |    | 
|-------------------- | ---------------- | ---------- | --- | -- | 
|                     |                  | 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

European Commission Investigation  Football
Association Premier League Limited (FAPL)






European Commission Investigation  Movie
Contracts




European Commission Sector Inquiry  New
Media Sports Rights






F-48



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








Ofcom review of conditional access guidelines








|    |                                                         
|--- | --------------------------------------------------------
|26. | Transactions with related parties and major shareholders



|    |                                     
|--- | ------------------------------------
|(a) | Transactions with major shareholders













F-49



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)














|                                              |  |      |    |  |      |  |    | 
|--------------------------------------------- |  | ---- | -- |  | ---- |  | -- | 
|                                              |  | 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 | 
|            |  |      |   |  |      | 





F-50



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








|    |                                                
|--- | -----------------------------------------------
|(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





F-51



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)








|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|27. | Summary of differences between United Kingdom and United
    States Generally Accepted Accounting Principles



|    |                                                  
|--- | -------------------------------------------------
|(i) | Differences giving rise to accounting adjustments





F-52



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


|                                                                                                    |                                                 |                         |       |     |                    |  |       |      |   |  |       |     |   |  |       |     |  
|--------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------- | ----- | --- | ------------------ |  | ----- | ---- | - |  | ----- | --- | - |  | ----- | --- | -
|                                                                                                    |                                                 | 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 |    
|                                                                                                    |                                                 |                         |       |     |                    |  |       |      |   |  |       |    

F-53



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


|                                   |                                          |             |        |       |               |  |        |      |   |  |        |     |  
|---------------------------------- | ---------------------------------------- | ----------- | ------ | ----- | ------------- |  | ------ | ---- | - |  | ------ | --- | -
|                                   |                                          | 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 | )  
|                                   |                                          |             |        |       |               |  |        |      |  




Notes




|    |         
|--- | --------
|(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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Subsidiaries


Sky Television Limited




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

BiB




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | goodwill relating to the acquisition. The remaining
    £3 million reduced the fiscal 2003 current tax charge.

SIG




| |                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                      

Planetfootball.com Limited




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

Joint ventures


GSB




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

(2)  Employee stock-based compensation




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

(3)  Derivative accounting




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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).                                                                            

(4)  Capitalised interest




| |                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

(5)  Deferred taxation




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                                       |  |                    |     |  |                    |  |      |       |  |  |       |  |  |               |     |  |       |  |      |   |  |  |     | 
|-------------------------------------- |  | ------------------ | --- |  | ------------------ |  | ---- | ----- |  |  | ----- |  |  | ------------- | --- |  | ----- |  | ---- | - |  |  | --- | 
|                                       |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-60



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                                               |  |      |      |   |      |  |      |      |  |  |       |  
|---------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ----- | -
|                                               |  | 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  | )
|                                                                                                               |  |             |     |   |                    |  |     |      |  |  |      |  

| | 
| | 
| | 

F-61



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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.

(7)  Development costs




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

(8)  Installation, digiboxes and related equipment
revenues and costs




| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under UK GAAP, installation, digiboxes (including Sky+
    digiboxes) and related equipment revenues and costs are
    recognised once the installation is complete.

F-62



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                                                                       

(9)  Per share data




| |                                                           
| | ----------------------------------------------------------
| | 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.

F-63



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


(10) Dividends




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

(11) Consolidated Statements of Financial Performance




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                    

F-64



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)


(12) Consolidated Balance Sheets




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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:

SIG




| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | The acquisition of 100% of SIG on 12 July 2000, where
    consideration was paid by the issue of equity shares in the
    Group.

BiB




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

F-65



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                                            

(13) Consolidated Cash Flow Statements




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                          

F-66



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




| |                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

(ii) Additional US GAAP Disclosures




|    |                         
|--- | ------------------------
|(a) | Stock-based compensation



F-67



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                                  |                                                                                                                                                     |             |  |       |                    |  |  |      |   |  |      |      |   |  |  |      |  
|--------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- |  | ----- | ------------------ |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | -
|                                  |                                                                                                                                                     | 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



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                                             |  |                 |            |  |                 |  |            | 
|-------------------------------------------- |  | --------------- | ---------- |  | --------------- |  | ---------- | 
|                                             |  | 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.







F-69



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




|                         |  |                    |            |           |                              |  |           |                |  |  |        |          |  |                |            |  |  |  |        | 
|------------------------ |  | ------------------ | ---------- | --------- | ---------------------------- |  | --------- | -------------- |  |  | ------ | -------- |  | -------------- | ---------- |  |  |  | ------ | 
|                         |  | 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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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)






|    |                          
|--- | -------------------------
|(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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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(continued)




28. Supplemental guarantor information






F-72



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET


As at 30 June
2005(2)


(£ millions)


|                                                                     |                                   |              |        |     |              |  |        |               |   |  |               |       |  |              |        |      |   |  |        |     |  
|-------------------------------------------------------------------- | --------------------------------- | ------------ | ------ | --- | ------------ |  | ------ | ------------- | - |  | ------------- | ----- |  | ------------ | ------ | ---- | - |  | ------ | --- | -
|                                                                     |                                   | (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    |    
|                                                                     |                                   |              |        |     |              |  |        |               |   |  |               |       |  |              |       

See notes to supplemental guarantor information.


F-73



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET


As at 30 June
2004(2)


(£ millions)


|                                                                     |                                   |              |        |     |              |  |        |              |   |  |               |     |       |              |        |      |   |  |        |     |  
|-------------------------------------------------------------------- | --------------------------------- | ------------ | ------ | --- | ------------ |  | ------ | ------------ | - |  | ------------- | --- | ----- | ------------ | ------ | ---- | - |  | ------ | --- | -
|                                                                     |                                   | (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    |    
|                                                                     |                                   |              |        |     |              |  |        |              |   |  |               |     |       |              |       

See notes to supplemental guarantor information.


F-74



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS


For the year ended 30 June
2005(2)


(£ millions)


|                                                                      |                                   |              |      |     |              |  |        |               |   |  |               |       |  |              |      |      |   |  |        |     |  
|--------------------------------------------------------------------- | --------------------------------- | ------------ | ---- | --- | ------------ |  | ------ | ------------- | - |  | ------------- | ----- |  | ------------ | ---- | ---- | - |  | ------ | --- | -
|                                                                      |                                   | (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    |    
|                                                                      |                                   |              |      |     |              |  |        |               |   |  |               |       |  |              |     

See notes to supplemental guarantor information.


F-75



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS


For the year ended 30 June
2004(2)


(£ millions)


|                                                                      |                                                                                  |              |      |     |              |  |        |               |   |  |               |       |   |              |      |      |   |  |        |     |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------------ | ---- | --- | ------------ |  | ------ | ------------- | - |  | ------------- | ----- | - | ------------ | ---- | ---- | - |  | ------ | --- | -
|                                                                      |                                                                                  | (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    |    
|                                                                      |                                                                                  |              |      |     |              |  |        |               |   |  |               |       |   |              |     

See notes to supplemental guarantor information.


F-76



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS


For the year ended 30 June
2003(2)


(£ millions)


|                                                                      |                                   |              |      |     |              |  |        |               |   |  |               |       |   |              |      |      |   |  |        |     |  
|--------------------------------------------------------------------- | --------------------------------- | ------------ | ---- | --- | ------------ |  | ------ | ------------- | - |  | ------------- | ----- | - | ------------ | ---- | ---- | - |  | ------ | --- | -
|                                                                      |                                   | (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    |    
|                                                                      |                                   |              |      |     |              |  |        |               |   |  |               |       |   |              |     

See notes to supplemental guarantor information.


F-77



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH
FLOW


For the year ended 30 June
2005(2)


(£ millions)


|                                                                                   |  |              |      |   |              |  |       |               |  |  |               |       |  |              |    |   |  |  |      |  
|---------------------------------------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | ----- | ------------- |  |  | ------------- | ----- |  | ------------ | -- | - |  |  | ---- | -
|                                                                                   |  | 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  |  
|                                                                                   |  |              |      |   |              |  |       |               |  |  |               |       |  |              |   

See notes to supplemental guarantor information.


F-78



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH
FLOW


For the year ended 30 June
2004(2)


(£ millions)


|                                                                                   |  |              |     |   |              |  |      |               |  |  |               |       |  |              |     |   |  |  |      |  
|---------------------------------------------------------------------------------- |  | ------------ | --- | - | ------------ |  | ---- | ------------- |  |  | ------------- | ----- |  | ------------ | --- | - |  |  | ---- | -
|                                                                                   |  | 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  |  
|                                                                                   |  |              |     |   |              |  |      |               |  |  |               |       |  |              |    

See notes to supplemental guarantor information.


F-79



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH
FLOW


For the year ended 30 June
2003(2)


(£ millions)


|                                                                                   |  |              |      |   |              |  |      |               |  |  |               |       |  |              |    |   |  |  |      |  
|---------------------------------------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | ---- | ------------- |  |  | ------------- | ----- |  | ------------ | -- | - |  |  | ---- | -
|                                                                                   |  | 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   |  
|                                                                                   |  |              |      |   |              |  |      |               |  |  |               |       |  |              |   

See notes to supplemental guarantor information.


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##### Table of Contents



Notes to Supplemental Guarantor Information






|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                                                                          







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##### Table of Contents






GLOSSARY OF TERMS




|                                 |  |                                                                                                                                                                                                                                                                                                                                             
|-------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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))                                                                    



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##### 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