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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended 30 June 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 Commission file number: 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)
 David Gormley
 Company Secretary
 British Sky Broadcasting Group plc
 Grant Way, Isleworth, Middlesex, TW7 5QD, England
 Telephone +44 20 7705 3000
 Facsimile +44 20 7705 3008
 (Name, telephone, e-mail and/or facsimile number and address of Company
 Contact Person)
  Title of each
    
    Name of each exchangeClass
    
    on which registeredOrdinary shares (nominal value 50p per share)
    
    New York Stock Exchange(1)American Depositary Shares, each of which represents four
    
    New York Stock ExchangeOrdinary shares of British Sky Broadcasting Group plc(nominal value 50p per share)
 (1)
    
    The listing of Registrants ordinary shares on the New York Stock Exchange is for technical
purposes only and without trading privileges.
     þ o
 o þ
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
  U.S. GAAP o
    
    International Financial Reporting Standards as issued by the International Accounting Standards Board þ
    
    Other o
  o o
 o þ




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##### 



Table of contents
 Chairmans statement
    
    
    2Directors report  review of the businessChief
Executive Officers statement
    
    
    3The
business, its objectives and its strategy
    
    
    5Corporate
responsibility
    
    
    20People
    
    
    22Principal
risks and uncertainties
    
    
    24Government
regulation
    
    
    27Directors report  financial reviewIntroduction
    
    
    36Financial
and operating review
    
    
    37Property
    
    
    46Directors report  governanceBoard
of Directors and senior management
    
    
    47Corporate
governance report
    
    
    49Report
on Directors remuneration
    
    
    55Other
governance and statutory disclosures
    
    
    64Consolidated financial statementsStatement
of Directors responsibility
    
    
    66Auditors
reports
    
    
    67Consolidated
financial statements
    
    
    68Group
financial record
    
    
    107Shareholder information
    
    
    109Glossary of terms
    
    
    118Form 20-F cross reference guide
    
    
    120
 British Sky Broadcasting Group plcAnnual Report 2009
1




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Chairmans statement
 James Murdoch
 2
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Directors report  review of the business
 
 
 British Sky Broadcasting Group plcAnnual Report 2009
3




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continued
  2
  One and Other
      Jeremy Darroch
 4
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2009
    
    
    2008For the year to 30 June
    
    £m
    
    
    £mRetail subscription
    
    
    4,184
    
    
    
    3,769Wholesale subscription
    
    
    206
    
    
    
    181Advertising
    
    
    308
    
    
    
    328Sky Bet
    
    
    48
    
    
    
    44Installation, hardware and service
    
    
    235
    
    
    
    276Other
    
    
    378
    
    
    
    354Revenue
    
    
    5,359
    
    
    
    4,952
  
 3rd PartyPackage
    
    ChannelsVariety Mix
    
    
    37Style & Culture Mix
    
    
    25Kids Mix
    
    
    19Knowledge Mix
    
    
    24Music Mix
    
    
    17News & Events Mix
    
    
    11ROI Bonus Mix
    
    
    11Adult Pay-Per Night
    
    
    11Disney Cinemagic*
    
    
    2MUTV
    
    
    1Chelsea TV
    
    
    1
 *
    
    Disney Cinemagic also available as a bonus channel to customers of both Movies Mix
packages.
 British Sky Broadcasting Group plcAnnual Report 2009
5




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Directors report  review of the business
 continued
  continued
  Multiplex/
    
    
    
    EPG Channel
    
    Basic/Sky Channel
    
    Multiplexes
    
    Simulcasts
    
    Genre
    
    PremiumSky Movies Premiere
    
    Sky Prem+1
    
    Sky Premiere HD
    
    Movies
    
    PremiumSky Movies Comedy
    
    
    
    Sky Comedy HD
    
    Movies
    
    PremiumSky Movies 
Action/Thriller
    
    
    
    Sky Action HD
    
    Movies
    
    PremiumSky Movies Family
    
    
    
    Sky Family HD
    
    Movies
    
    PremiumSky Movies Drama
    
    
    
    Sky Drama HD
    
    Movies
    
    PremiumSky Movies SciFi/
    
    
    
    Sky SciFi/HorrorHorror
    
    
    
    HD
    
    Movies
    
    PremiumSky Movies Classics
    
    
    
    
    
    Movies
    
    PremiumSky Movies Modern Greats
    
    
    
    Sky ModernGreats HD
    
    Movies
    
    PremiumSky Movies Indie
    
    
    
    
    
    Movies
    
    PremiumSky Movies Screen 1
    
    
    
    Sky Screen 1HD
    
    Movies
    
    PremiumSky Movies Screen 2
    
    
    
    Sky Screen 2HD
    
    Movies
    
    PremiumSky Sports 1
    
    
    
    Sky Sports HD1
    
    Sports
    
    PremiumSky Sports 2
    
    
    
    Sky Sports HD2
    
    Sports
    
    PremiumSky Sports 3
    
    
    
    Sky Sports HD3
    
    Sports
    
    PremiumSky Sports Xtra
    
    
    
    
    
    Sports
    
    PremiumSky Sports News
    
    
    
    
    
    Sports
    
    BasicSky1
    
    
    
    Sky1 HD
    
    Entertainment
    
    BasicSky2
    
    
    
    
    
    Entertainment
    
    BasicSky3
    
    
    
    
    
    Entertainment
    
    BasicSky News
    
    
    
    
    
    News
    
    BasicSky Real Lives
    
    Sky Real
    
    Sky Real Lives HD
    
    Lifestyle &
    
    BasicLives+1
    
    
    
    CultureSky RealLives 2Sky Arts 1
    
    
    
    Sky Arts 1 HD
    
    Lifestyle &Culture
    
    BasicSky Arts 2
    
    
    
    Sky Arts 2 HD
    
    Lifestyle &Culture
    
    BasicSky Travel
    
    
    
    
    
    Shopping
    
    BasicSky Vegas
    
    
    
    
    
    Gaming
    
    BasicSkyPoker.com
    
    
    
    
    
    Gaming
    
    Basic
 Premium channels  Sky Premium Channels  Sky Movies channels
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Disney Cinemagic
  Chelsea TV
  MUTV
 British Sky Broadcasting Group plcAnnual Report 2009
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Directors report  review of the business
 continued
 continued
 Music Choice Extra
  ESPN
   Sky Basic Channels
 Basic Sky Distributed Channels
   Pay-per-view
  Sky Anytime TV
 8
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As at 30 June(In thousands)(1)
    
    2009
    
    
    2008Distribution of Sky ChannelsDTH homes
    
    
    9,442
    
    
    
    8,980Cable homes(2)
    
    
    4,271
    
    
    
    1,248Total Sky pay homes
    
    
    13,713
    
    
    
    10,228DTT homes(3)
    
    
    9,900
    (4)
    
    
    9,700
 
 (1)
    Each of the above figures includes homes that receive Sky Channels via more than one
means of distribution.(2)
    The number of cable homes is reported to us by the cable operators.(3)
    The DTT homes number
consists of the Office of Communications (Ofcom) estimate of the number of homes where DTT is
the only digital TV platform supplying services and includes Top-Up-TV DTT homes. The number of DTT
homes for all periods disclosed above is based on Ofcoms Digital Television Update published
quarterly in arrears.(4)
    Latest data available is at 31 March 2009 with an estimated number of DTT homes of over 9.9
million. DTH distribution
     
  
 Digital satellite reception equipment
 UK
 British Sky Broadcasting Group plcAnnual Report 2009
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Directors report  review of the business
 continued
  continued
      Sky Active
     Sky Betting and Gaming
  Digital subscriber line (DSL) and other fixed line distribution
 Sky Player
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Sky Broadband
      Sky Talk
   Online
 Mobile networks  Sky Anytime on Mobile and Sky Mobile TV
     Cable distribution
 UK
 British Sky Broadcasting Group plcAnnual Report 2009
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Directors report  review of the business
 continued
 continued
      DTT distribution
   Free-to-view satellite proposition
 Emerging forms of distribution
          Advertising sales
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Sponsorship sales
     Introduction
   
    
    competition from other video distributors and video distribution channels;
    
    competition from
broadband and telephony (fixed and mobile) providers;
    
    competition from other broadcasters; and
    
    competition from sellers of advertising air time.
   Competition from other video distributors and video distribution channels
 Cable Services
 IPTV services
    Programming available over the internet
 British Sky Broadcasting Group plcAnnual Report 2009
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Directors report  review of the business
 continued
 continued
 DTT
  Other DTH pay TV providers
  DVDs
    Analogue television services
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Freeview
        Free-to-view satellite propositions
  Competition from broadband and telephony providers
 Broadband and telephony services
  Broadband
 British Sky Broadcasting Group plcAnnual Report 2009
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Directors report  review of the business
 continued
  continued
  Fixed telephony
   Mobile telephony
    Mobile broadband
  Competition from Triple Play/Quad Play providers
  Competition from Dual Play providers
      Competition from other broadcasters
 16
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Competition from other sellers of advertising air time
  Encryption of digital services
        Encryption of channels retailed by third parties
 British Sky Broadcasting Group plcAnnual Report 2009
17




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##### Table of Contents



Directors report  review of the business
 continued
  continued
   Satellites
  Capital expenditure programme
    The customer management centres and Sky In-Home Service Limited
    Playout and uplink facilities
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ITV
   NGC Network International LLC and NGC Network Latin America LLC
    PL
 Revolving Credit Facility
    News Corporation voting agreement
  EMTN bond issue
    February 2008 and November 2008 bond issues
 British Sky Broadcasting Group plcAnnual Report 2009
19




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Directors report  review of the business
 continued
  continued
  UK broadcasting licences
      Bond issues
  1.
    
    Operate our business day-to-day in a responsible manner, and strive to do the right thing for
every part of the Sky community, based on our understanding of their needs and expectations.2.
    
    Work to foster a culture of doing the right thing and taking responsibility throughout our
business so that our people will know how to act in a way that reflects these principles.3.
    
    Create an environment where consumers can trust our products and services; and where they have
the ability to consume them with minimum risk.4.
    
    Play our part in contributing positively in areas where we believe Sky has a unique opportunity
to make a difference - Sport, Arts and the Environment - and look for ways to enable our customers
and people an opportunity to join in with our activities in the UK & Ireland.
   Responsibility
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2
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Directors report  review of the business
 continued
  continued
  
    
    Providing individual and team volunteering opportunities linked to community partners in Arts,
Sport and Environment.
    
    Providing 16 hours of paid volunteering time per employee, per year.
    
    Having a generous matched funding policy in place for staff fundraising or payroll giving to the
charity of their choice.
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
    
    Tuned-in - Were in tune with our customers, our people and society.
    
    Irrepressible - Our energy and innovation is reflected in everything we do.
    
    Inviting - We work together in an open way to engage customers and each other.
    
    Fun - We love what we do and we think that shows through.
 
    
    direct access to counsellors
    
    debt management advice
    
    eldercare and childcare advice
    
    health risk assessments with individualised reports on
completion.
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Directors report  review of the business
 continued
 continued
  
   The Groups 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 the Groups ability to operate or compete effectively.
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The Group operates in a highly competitive environment that is subject to rapid change and it must
continue to invest and adapt to remain competitive.
  The Groups business is reliant on technology which is subject to the risk of failure, change and
development.
 British Sky Broadcasting Group plcAnnual Report 2009
25




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Directors report  review of the business
 continued
  continued
    Failure of key suppliers could affect the Groups ability to operate its business.
  The Group is reliant on encryption and other technologies to restrict unauthorised access to its
services.
   The Group undertakes significant capital expenditure projects, including technology and property
projects.
  The Groups investment in ITV could be subject to future events outside of the Groups control
which could result in a loss in value of the Groups investment.
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The Group, in common with other service providers that include third party services which the Group
retails, relies 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.
  The Group generates wholesale revenue principally from one customer.
  The Group is subject to a number of medium and long-term obligations.
  EC law
 The Electronic Communications Directives
 British Sky Broadcasting Group plcAnnual Report 2009
27




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Directors report  review of the business
 continued
 
    
    putting in place an effective market-oriented strategy for spectrum management in Europes
internal market;
    
    regulating less, but more effectively, by phasing out ex-ante regulation in a number of markets
currently regulated;
    
    streamlining the market review procedure to make it faster, less burdensome and better focused on
real bottlenecks;
    
    consolidating the single market, by ensuring that EU rules and remedies are applied consistently
across all EU Member States;
    
    preserving and enhancing consumer protection and user rights; and
    
    enhancing the security and reliability of European communications networks.
   General Conditions of Entitlement
   
    
    a requirement to ensure that any end-user can access the emergency services;
    
    a requirement to support number portability for customers wishing to switch to or from another
network provider;
    
    a requirement that customers are offered contracts that satisfy certain minimum standards;
    
    a requirement to ensure that any end-user can access directory enquiry and operator assistance
services;
    
    a requirement to facilitate the migration by customers between broadband service providers;
    
    a requirement to publish up-to-date price and tariff information;
    
    a requirement to provide accurate billing, including itemisation on request; and
    
    a requirement to publish codes of practice concerning, among other things, the services provided,
the handling of customer complaints and sales and marketing.
 Access-related conditions
    
    
    a requirement to provide conditional access services upon request, on fair and reasonable terms;
    
    where a broadcaster in receipt of conditional access services from SSSL also provides programme
services to providers of other electronic communications networks (e.g. cable operators), a
requirement to cooperate with providers of such other electronic communications networks so that
such providers are able to transcontrol (the process of changing a conditional access system) and
re-transmit the programme services;
    
    an obligation to keep separate financial accounts regarding activities as provider of conditional
access services;
    
    where conditional access products and systems are the subject of intellectual property rights, a
requirement to make such products and systems available upon reasonable terms and at reasonable
charges; and
    
    a requirement not to discriminate unduly against particular persons or against a particular
description of persons.
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
    
    the costs that Sky should be entitled to recover from TPS Customers should be restricted to
costs which it reasonably, necessarily and efficiently incurs in the provision of TPS to those
customers or in order to develop and operate the digital satellite platform;
    
    Sky should be entitled to recover its allowable costs and make a risk adjusted return on its
investment;
    
    costs should only be recovered from those customers that directly cause the costs to be incurred,
or that benefit from the costs being incurred; and
    
    where costs incurred are of benefit to more than one TPS Customer then they should be recovered
from each TPS Customer in a way that takes due account of the benefits derived by TPS Customers
from those costs being incurred.
   Ofcom Review of Wholesale Digital Television Broadcasting Platforms
 SMP Conditions
      Enforcement of General Conditions, SMP Conditions, Access-related Conditions and Continued Licence
Conditions
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Directors report  review of the business
 continued
 continued
    
    
    to make a declaration setting out the rights and obligations of the parties to the dispute;
    
    to give a direction fixing the terms and conditions of transactions between the parties to the
dispute;
    
    to give a direction imposing an obligation, enforceable by the parties to the dispute, to enter
into a transaction between themselves on the terms and conditions fixed by Ofcom; and
    
    to give a direction, enforceable by the party to whom the sums are to be paid, requiring the
payment of sums by way of adjustment of an underpayment or overpayment.
 Transmission standards
    Broadcasting Regulation
  The Audiovisual Media Services Directive (amending the Television Without Frontiers Directive)
    
    
    a country of origin principle to ensure that broadcasters are not required to comply with
different rules in different EU Member States. Instead, each
 broadcaster is subject to the primary jurisdiction only of its home Member State,
determined in accordance with criteria laid down in the TWF;
    
    rules governing the proportion of transmission time that must be reserved for European works
and for European works created by producers who are independent of broadcasters;
    
    qualitative rules governing the substance of advertising and the standards that must be
complied with and quantitative rules regulating the insertion of advertising between or during
programmes and/or specifying the maximum duration of advertising;
    
    rules to ensure that broadcasters do not broadcast on an exclusive basis events which are seen as
being of major importance for society, including sporting events, in such a way as to deprive a
substantial proportion of the public of the possibility of following such events via live coverage
or deferred coverage on free television; and
    
    rules to ensure the protection of minors and the prevention of incitement to hatred on grounds of
race, sex, religion or nationality.
   Broadcasting Act licences
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
    
    Broadcasting Code:this includes requirements relating to, among other things, the
impartiality and accuracy of news programming, the protection from harm and offence and the
portrayal of sex and violence;
    
    Code on the Scheduling of Television Advertising:this Code sets out the rules with which
television broadcasters licensed by Ofcom must comply when carrying advertising;
    
    Cross Promotions Code:this is designed to ensure that cross-promotions on television are
distinct from advertising and are limited to informing viewers of services likely to be of
interest to them as viewers. The Code allows broadcasters to promote broadcasting-related
services in promotional airtime subject to the requirement that the promotion is provided
for no consideration. No consideration will be presumed to have passed where the promoting
channel has a shareholding of 30% or more in the promoted channel (or vice versa). The Code
also contains additional rules, applicable only to ITV1, Channel 4 and five, requiring all
references to digital retail television services or digital television broadcasting platforms
to be on an equal and impartial basis;
    
    Code on Sports and other Listed Events:the Broadcasting Act 1996 (as amended by the
Communications Act) provides that no UK broadcaster may undertake the exclusive live broadcast
of certain sporting or other events of national interest designated by the Secretary of State
from time to time (Listed Events), whether on a free-to-air basis or subscription basis,
without the prior consent of Ofcom. The effect of these rules is that many leading sports
events cannot be shown exclusively live on pay television in the UK. The Code on Sports and
other Listed Events was drafted by the Independent Television Commission (ITC), Ofcoms
predecessor, and sets out how the ITC (and now Ofcom) will apply the rules on Listed Events.
In April 2009 an independent advisory panel, appointed by the Secretary of State for Culture,
Media and Sport opened a review of the listed events regime. The panel is expected to report
to the Secretary of State in the second half of 2009.
    
    Code on Television Access Services:the Communications Act prescribes certain annual targets
for television access services (subtitling, audio description and signing) that broadcasters
licensed channels must meet. The Code on Television Access Services sets out Ofcoms guidance
on ensuring compliance with these requirements. The Code requires broadcasters to provide
quarterly returns on their compliance. In 2008, all of Skys channels exceeded their relevant
target. In December 2007, following a consultation reviewing the provision of signing services
by low-audience channels, Ofcom published new arrangements for signing on low audience
channels. With effect from 1 January 2009, all channels with an audience share of
between 0.05% and 1% other than public service channels are excluded from obligations to meet the
signing targets set out in the Code on Television Access Services. Excluded channels are instead
required to either transmit a
 minimum of 30 minutes of sign presented programming each month between 7am and 11pm or, with the
consent of Ofcom, to implement alternative arrangements which would be likely to provide better
assistance for deaf people using sign language. As such an alternative arrangement the Group
participates in the BSLBT, which produces sign presented programmes currently broadcast on the
Community Channel. The Groups participation in the BSLBT removes the obligation to broadcast sign
presented programming on the Groups own channels (with the exception of Sky Sports 1 which
continues to be subject to the signing targets set out in the Code on Television Access Services);
and
    
    Code on Electronic Programme Guides:this requires all providers of EPGs licensed under the
Broadcasting Acts to give public service channels (which currently comprise all BBC television
channels, ITV1, Channel 4, five, and S4C Digital and the digital public teletext service) such
degree of prominence as Ofcom considers appropriate. The Code also requires that undue
prominence is not given on an EPG to channels connected to the EPG operator, that an objective
policy for allocating listings on the EPG is maintained and published; and that there is no
requirement for exclusivity on an EPG for any service.
    Enforcement of Broadcasting Act licences
 British Sky Broadcasting Group plcAnnual Report 2009
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Directors report  review of the business
 continued
 continued
  Media ownership rules
    Public Service Broadcasting
  Digital Britain Report
 EC competition rules
 32
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Investigation of Premier League agreements
    Mergers
 UK competition rules
         Legal proceedings initiated by Virgin Media group
 British Sky Broadcasting Group plcAnnual Report 2009
33




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Directors report  review of the business
 continued
 continued
 Ofcom market investigation of pay TV industry
 34
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Irish competition rules
 British Sky Broadcasting Group plcAnnual Report 2009
35




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Directors report  financial review
 
 Overview and recent developments
 Corporate
     Operating results Revenue
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Operating expense
 2009 fiscal year compared to 2008 fiscal year
   2009
    
    
    
    
    
    
    2008For the year to 30 June
    
    £m
    
    
    %
    
    
    £m
    
    
    %Retail subscription
    
    
    4,184
    
    
    
    78
    
    
    
    3,769
    
    
    
    76Wholesale subscription
    
    
    206
    
    
    
    4
    
    
    
    181
    
    
    
    4Advertising
    
    
    308
    
    
    
    6
    
    
    
    328
    
    
    
    7Sky Bet
    
    
    48
    
    
    
    1
    
    
    
    44
    
    
    
    1Installation, hardware and service
    
    
    235
    
    
    
    4
    
    
    
    276
    
    
    
    5Other
    
    
    378
    
    
    
    7
    
    
    
    354
    
    
    
    75,359
    
    
    
    100
    
    
    
    4,952
    
    
    
    100
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Directors report  financial review
 continued
 continued
      2009
    
    
    
    
    
    
    2008For the year to 30 June
    
    £m
    
    
    %
    
    
    £m
    
    
    %Programming
    
    
    1,750
    
    
    
    38
    
    
    
    1,713
    
    
    
    40Transmission, technology andnetworks
    
    
    726
    
    
    
    16
    
    
    
    542
    
    
    
    13Marketing
    
    
    907
    
    
    
    20
    
    
    
    743
    
    
    
    18Subscriber
management and supply chain
    
    
    662
    
    
    
    15
    
    
    
    700
    
    
    
    17Administration
    
    
    501
    
    
    
    11
    
    
    
    530
    
    
    
    124,546
    
    
    
    100
    
    
    
    4,228
    
    
    
    100
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2009
    
    
    2008pence
    
    
    penceEarnings (loss) per share from profit (loss) for the yearBasic
    
    
    14.9
    
    
    
    (7.3
    )Diluted
    
    
    14.8
    
    
    
    (7.3
    )Adjusted earnings per share from adjusted profit for the
yearBasic
    
    
    25.9
    
    
    
    25.1Diluted
    
    
    25.7
    
    
    
    25.0
 British Sky Broadcasting Group plcAnnual Report 2009
39




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##### Table of Contents



Directors report  financial review
 continued
 continued
   As at 1 July
    
    
    Cash
    
    
    Non-cash
    
    
    As at 30 June2008
    
    
    movements
    
    
    movements
    
    
    2009£m
    
    
    £m
    
    
    £m
    
    
    £mCurrent borrowings
    
    
    338
    
    
    
    (509
    )
    
    
    636
    
    
    
    465Non-current borrowings
    
    
    2,108
    
    
    
    398
    
    
    
    (227
    )
    
    
    2,279Debt
    
    
    2,446
    
    
    
    (111
    )
    
    
    409
    
    
    
    2,744Borrowings-related
derivativefinancial instruments
    
    
    214
    
    
    
    75
    
    
    
    (396
    )
    
    
    (107
    )Cash and cash equivalents
    
    
    (632
    )
    
    
    (179
    )
    
    
    
    
    
    
    (811
    )Short-term deposits
    
    
    (185
    )
    
    
    95
    
    
    
    
    
    
    
    (90
    )Net debt
    
    
    1,843
    
    
    
    (120
    )
    
    
    13
    
    
    
    1,736
       Cash flows
 2008 fiscal year compared to 2007 fiscal year
   2008
    
    
    
    
    
    
    2007For the year to 30 June
    
    £m
    
    
    %
    
    
    £m
    
    
    %Retail subscription
    
    
    3,769
    
    
    
    76
    
    
    
    3,406
    
    
    
    75Wholesale subscription
    
    
    181
    
    
    
    4
    
    
    
    208
    
    
    
    4Advertising
    
    
    328
    
    
    
    7
    
    
    
    352
    
    
    
    8Sky Bet
    
    
    44
    
    
    
    1
    
    
    
    47
    
    
    
    1Installation, hardware and service
    
    
    276
    
    
    
    5
    
    
    
    212
    
    
    
    5Other
    
    
    354
    
    
    
    7
    
    
    
    326
    
    
    
    74,952
    
    
    
    100
    
    
    
    4,551
    
    
    
    100
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##### Table of Contents



2008
    
    
    
    
    
    
    2007For the year to 30 June
    
    £m
    
    
    %
    
    
    £m
    
    
    %Programming
    
    
    1,713
    
    
    
    40
    
    
    
    1,539
    
    
    
    41Transmission, technology andnetworks
    
    
    542
    
    
    
    13
    
    
    
    402
    
    
    
    11Marketing
    
    
    743
    
    
    
    18
    
    
    
    734
    
    
    
    20Subscriber
management and supply chain
    
    
    700
    
    
    
    17
    
    
    
    618
    
    
    
    16Administration
    
    
    530
    
    
    
    12
    
    
    
    443
    
    
    
    124,228
    
    
    
    100
    
    
    
    3,736
    
    
    
    100
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41




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##### Table of Contents



Directors report  financial review
 continued
 continued
             2008
    
    
    2007pence
    
    
    pence(Loss) earnings per share from (loss) profit for the yearBasic
    
    
    (7.3
    )
    
    
    28.4Diluted
    
    
    (7.3
    )
    
    
    28.2Adjusted earnings per share from adjusted profit for the
yearBasic
    
    
    25.1
    
    
    
    26.3Diluted
    
    
    25.0
    
    
    
    26.1
 Less than
    
    
    Between
    
    
    Between
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mObligation or commitmentPurchase obligations Programme
 rights(1)
    
    
    3,911
    
    
    
    1,024
    
    
    
    1,973
    
    
    
    865
    
    
    
    49 Set-top boxes
    
    
    496
    
    
    
    496
    
    
    
    
    
    
    
    
    
    
    
     Third party payments(2)
    
    
    204
    
    
    
    93
    
    
    
    85
    
    
    
    26
    
    
    
     Transponder
 capacity(3)
    
    
    282
    
    
    
    52
    
    
    
    85
    
    
    
    66
    
    
    
    79 Property, plant and
equipment(4)
    
    
    51
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
     Intangible assets
    
    
    191
    
    
    
    30
    
    
    
    41
    
    
    
    38
    
    
    
    82 Smartcards(5)
    
    
    491
    
    
    
    49
    
    
    
    104
    
    
    
    108
    
    
    
    230 Other
    
    
    107
    
    
    
    57
    
    
    
    43
    
    
    
    7
    
    
    
    Borrowings(6)
    
    
    2,596
    
    
    
    480
    
    
    
    
    
    
    
    
    
    
    
    2,116Interest costs
    
    
    1,422
    
    
    
    140
    
    
    
    235
    
    
    
    235
    
    
    
    812Operating leases(7)
    
    
    235
    
    
    
    55
    
    
    
    76
    
    
    
    38
    
    
    
    66Finance leases(8)
    
    
    71
    
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    6610,057
    
    
    
    2,528
    
    
    
    2,644
    
    
    
    1,385
    
    
    
    3,500
  (1)
    
    At 30 June 2009, the Group had minimum television programming rights commitments of £3,911
million (2008: £2,356 million), of which £445 million (2008: £367 million) related to commitments
payable in US dollars for periods of up to seven years (2008: eight years).
Assuming that movie customer numbers remain unchanged from current levels, an additional £551
million (US$879 million) of commitments (2008: £296 million (US$590 million)) would also be payable
in US dollars, relating to price escalator clauses. The pound sterling television programme rights
commitments include similar price escalation clauses that would result in additional commitments of
£1 million (2008: £3 million) if customer numbers were to remain at current levels.(2)
    
    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 retail and
commercial customers (Sky Distributed Channels) and are for periods of up to five years (2008:
six years). The extent of the commitment is largely dependent upon the number of retail customers
to the relevant Sky Distributed Channels, and in certain cases, upon inflationary increases. If
both the retail customer levels to these channels and the rate payable for each Sky Distributed
Channel were to remain at current levels subject to inflationary increases, the additional
commitment would be £533 million (2008: £636 million).(3)
    
    Transponder capacity commitments are in respect of the Astra and Eurobird satellites that the
Group uses for digital transmissions to both retail customers and cable operators. The commitments
are for periods of up to eleven years (2008: twelve years).(4)
    
    On 21 December 2007, the Group entered into a property development agreement to construct a new
production and broadcast centre.(5)
    
    In December 2008, the Group entered into a new contractual agreement with NDS, a related party,
for the provision of smartcards.(6)
    
    Further information concerning borrowings is given in note 22 of the consolidated financial
statements.
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##### Table of Contents



(7)
    
    At 30 June 2009, our operating lease obligations totalled £235 million (2008: £233 million),
the majority of which related to property leases.(8)
    
    At 30 June 2009, our obligations under finance leases were £71 million (2008: £67 million).
This primarily represents financing arrangements in connection with the customer management centre
in Dunfermline, Scotland (which expires in September 2020) and the broadband network infrastructure
(which expires in November 2039). For further details see note 22 of the consolidated financial
statements.
 British Sky Broadcasting Group plcAnnual Report 2009
43




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##### Table of Contents



Directors report  financial review
 continued
 continued
          
    
    Selecting the appropriate timing for, and amount of, revenue to be recognised requires
judgment. This may involve estimating the fair value of consideration before it is received.
When the Group sells a set-top box, installation or service and a subscription in one bundled
transaction, the total consideration from the arrangement is allocated to each element based
on its relative fair value. The fair value of each individual element is determined using
vendor specific or third party evidence. The amount of revenue the Group recognises for
delivered elements is limited to the cash received.
    
    Judgment is also required in evaluating the likelihood of collection of customer debt after
revenue has been recognised. This evaluation requires estimates to be made, including the
level of provision to be made for amounts with uncertain recovery profiles. Provisions are
based on historical trends in the percentage of debts which are not recovered, or on more
detailed reviews of individually significant balances.
  
    
    The Groups tax charge is the sum of the total current and deferred tax charges. The
calculation of the Groups total tax charge necessarily involves a degree of estimation and
judgment in respect of certain items whose tax treatment cannot be finally determined until
resolution has been reached with the relevant tax authority or, as appropriate, through a
formal legal process.
    
    Accruals for tax contingencies require management to make judgments and estimates in relation
to tax audit issues and exposures. Amounts accrued are
 based on managements interpretation of country-specific tax law and the likelihood of settlement.
Tax benefits are not recognised unless the tax positions are probable of being sustained. Once
considered to be probable, management reviews each material tax benefit to assess whether a
provision should be taken against full recognition of the benefit on the basis of the likely
resolution of the issue through negotiation and/or litigation.
    
    The amounts recognised in the consolidated financial statements in respect of each matter are
derived from the Groups best estimation and judgment, as described above. However, the
inherent uncertainty regarding the outcome of these items means the eventual resolution could
differ from the provision and in such event the Group would be required to make an adjustment
in a subsequent period which could have a material impact on the Groups profit and loss
and/or cash position.
  
    
    Judgment is required in determining the fair value of identifiable assets, liabilities and
contingent assets assumed in a business combination. Calculating the fair values involves the
use of significant estimates and assumptions, including expectations about future cash flows,
discount rates and the lives of assets following purchase.
    
    Judgment is also required in evaluating whether any impairment loss has arisen against the
carrying amount of goodwill. This may require calculation of the recoverable amount of cash
generating units to which the goodwill is associated. Such a calculation may involve estimates
of the net present value of future forecast cash flows and selecting an appropriate discount
rate. Alternatively, it may involve a calculation of the fair value less costs to sell of the
applicable cash generating unit.
  
    
    The assessment of the useful economic lives of these assets requires judgment. Depreciation
and amortisation is charged to the income statement based on the useful economic life
selected. This assessment requires estimation of the period over which the Group will benefit
from the assets.
    
    Determining whether the carrying amount of these assets has any indication of impairment also
requires judgment. If an indication of impairment is identified, further judgment is required
to assess whether the carrying amount can be supported by the net present value of future cash
flows forecast to be derived from the asset. This forecast involves cash flow projections and
selecting the appropriate discount rate.
    
    Assessing whether assets meet the required criteria for initial capitalisation requires
judgment. This requires a determination of whether the assets will result in future benefits
to the Group. In particular, internally generated intangible assets must be assessed during
the development phase to identify whether the Group has the ability and intention to complete
the development successfully.
  
    
    The key areas of judgment in respect of available-for-sale investments are the assessment of
whether there is objective evidence that a loss event has occurred after initial recognition
of an available-for-sale investment, and whether such a loss event has a reliably measurable
impact on the estimated future cash flows of the investment. At each balance sheet date,
management considers whether there is objective evidence that a loss event has occurred and
whether it has had an impact on the estimated future cash flows of the available-for-sale
investment. If a loss event has occurred, management would then consider whether an impairment
loss has occurred and the quantum of that loss.
    
    As at 30 June 2009, the Groups available-for-sale investments included a material investment
in ITV which has been impaired in the year. The factors management considered in determining
whether an impairment loss in ITV had occurred included observable data about the estimated
future cash flows
 44
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##### Table of Contents



of ITV based on ITVs publicly available financial reporting and announcements, publicly available
information from financial commentators about ITV and the market in which it operates, the
historical performance of ITVs share price, and the regulatory environment affecting ITV and the
Group. The ITV impairment losses accounted for have been determined with reference to ITVs closing
equity share price at 27 March 2009, the last trading day of the Groups third fiscal quarter. All
subsequent increases in the fair value of the ITV investment above this impaired value have been
recorded in the available-for-sale reserve.
  
    
    The key area of judgment in respect of deferred tax accounting is the assessment of the
expected timing and manner of realisation or settlement of the carrying amounts of assets and
liabilities held at the balance sheet date. In particular, assessment is required of whether
it is probable that there will be suitable future taxable profits against which any deferred
tax assets can be utilised.
  
    
    The key area of accounting for programming inventory requiring judgment is the assessment of
the appropriate profile over which to recognise amortisation in the income statement. This
assessment requires the Group to form an expectation of the number of times a programme will
be broadcast and the value associated with each broadcast.
 
    
    For general entertainment programming, in order to perform this assessment of amortisation
profile, we consider the expected number of viewers a programme is likely to achieve on repeat
broadcast, the alternative programming available to the programming scheduler, the potential
marketing benefits relating to the scheduling of certain programmes and the Groups assessment
of its competitors scheduling intentions when determining the amount of programme expense to
recognise for each broadcast. Acquired movie rights are amortised on a straight-line basis
over the period of the transmission rights. Where contracts for sports rights provide for
multiple seasons or competitions, they are amortised on a straight-line basis across the
season or competition as our estimate of the benefits received from these rights is determined
to be most appropriately aligned with a straight-line amortisation profile.
 British Sky Broadcasting Group plcAnnual Report 2009
45




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##### Table of Contents



Consolidated financial statements
 continued
 Approximatesquare footnet internalLocation
    
    Tenure

    
    Use

    
    area1 to 8 Grant Way, Isleworth, England
    
    Freehold
    
    Offices, studios, technology and storage
    
    
    313,085New Horizons Court, Brentford, England
    
    Leasehold
    
    Offices
    
    
    159,6321, 2, 3, 4 and 5 Macintosh Road, Livingston, Scotland
    
    Freehold
    
    Contact centres
    
    
    153,030Carnegie Campus, Dunfermline, Scotland
    
    Freehold
    
    Contact centre
    
    
    95,852Marcopolo House and Arches, Queenstown Road, London, England
    
    Leasehold
    
    Sub-let offices
    
    
    85,5091 Brick Lane, London, England
    
    Leasehold
    
    Office & technical
    
    
    77,000West Cross House, Brentford, England
    
    Leasehold
    
    Offices
    
    
    72,194Unit 1 West Cross Industrial Park, Brentford, England
    
    Leasehold
    
    Warehouse & Offices
    
    
    72,194The Chilworth Research Centre, Southampton, England
    
    Leasehold
    
    Satellite uplink
    
    
    61,937Athena Court, Isleworth, England
    
    Freehold
    
    Offices
    
    
    53,583Chancellor House, 19 Thomas More Square, London, England
    
    Leasehold
    
    Offices
    
    
    53,293Great West House (floors 4-9, 13), Brentford, England
    
    Leasehold
    
    Offices
    
    
    36,749123 Buckingham Place Road, London, England
    
    Leasehold
    
    Offices
    
    
    36,686Centre Helfent, 1 rue Pletzer, L-8080 Betrange, Luxembourg
    
    Leasehold
    
    Offices
    
    
    2,637
 46
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##### Table of Contents



Directors
report  governance
 
  Name
    
    Age
    
    
    
    Position with the CompanyJeremy Darroch
    
    
    47
    
    
    
    
    Director (Chief Executive Officer)David F. DeVoe
    
    
    62
    
    
    *
    
    DirectorDavid Evans
    
    
    69
    
    
    **
    
    DirectorNicholas Ferguson
    
    
    60
    
    
    **
    
    Director (Senior Independent
Director & Remuneration Committee Chairman)Andrew Griffith
    
    
    38
    
    
    
    
    Director (Chief Financial Officer)Andrew Higginson
    
    
    52
    
    
    **
    
    Director (Audit Committee Chairman)Allan Leighton
    
    
    56
    
    
    **
    
    DirectorTom Mockridge
    
    
    54
    
    
    *
    
    DirectorJames Murdoch
    
    
    36
    
    
    *
    
    Director (Chairman)Jacques Nasser
    
    
    61
    
    
    **
    
    DirectorDame Gail Rebuck
    
    
    57
    
    
    **
    
    Director (The Bigger Picture Committee Chairman)Daniel Rimer
    
    
    38
    
    
    **
    
    DirectorArthur Siskind
    
    
    70
    
    
    *
    
    DirectorLord Wilson of Dinton
    
    
    66
    
    
    **
    
    Director(Corporate Governance and Nominations Committee Chairman)
 *
    
    Non-Executive**
    
    Independent Non-Executive
   Name
    
    Age
    
    
    
    Position with the CompanyDeborah Baker
    
    
    50
    
    
    
    
    Director for PeopleAndy Brent
    
    
    49
    
    
    
    
    Group Brand Marketing DirectorJames Conyers
    
    
    44
    
    
    
    
    General CounselRobin Crossley
    
    
    50
    
    
    
    
    Strategic Adviser, TechnologyMike Darcey
    
    
    44
    
    
    
    
    Chief Operating OfficerBarney Francis
    
    
    38
    
    
    
    
    Managing Director, Sky SportsDave Gormley
    
    
    46
    
    
    
    
    Group Company SecretaryDidier Lebrat
    
    
    49
    
    
    
    
    Chief Technology OfficerGraham McWilliam
    
    
    37
    
    
    
    
    Group Director of Corporate AffairsWilliam Mellis
    
    
    53
    
    
    
    
    Group Director of Business PerformanceDavid Rowe
    
    
    50
    
    
    
    
    Managing Director, EnterpriseBrian Sullivan
    
    
    47
    
    
    
    
    Managing Director, Customer GroupSophie Turner Laing
    
    
    48
    
    
    
    
    Managing Director, Entertainment and NewsAlun Webber
    
    
    43
    
    
    
    
    Group Director of Strategic Project Delivery
   Board of Directors
 Jeremy Darroch
 David F. DeVoe
 David Evans
 Nicholas Ferguson
 Andrew Griffith
 Andrew Higginson
 Allan Leighton
 Tom Mockridg
 James Murdoch
 British Sky Broadcasting Group plcAnnual Report 2009
47




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##### Table of Contents



Directors report  governance
 continued
 continued
  Jacques Nasser
 Dame Gail Rebuck
 Daniel Rimer
 Arthur Siskind
 Lord Wilson of Dinton
 Alternate Directors
    Directors interests
  Directors powers
  Senior executives
  Deborah Baker
 Andy Brent
 James Conyers
 Robin Crossley
 Mike Darcey
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##### Table of Contents



Barney Francis
 Dave Gormley
 Didier Lebrat
 Graham McWilliam
 William Mellis
 David
Rowe
 Brian Sullivan
 Sophie Turner Laing
 Vic Wakeling
 Alun Webber
  Employees
  2009
    
    
    2008
    
    
    2007number
    
    
    number
    
    
    numberChannels and services
    
    
    2,628
    
    
    
    2,624
    
    
    
    2,472Customer service, sales andmarketing
    
    
    8,671
    
    
    
    7,918
    
    
    
    7,591Transmission and technology
    
    
    2,276
    
    
    
    1,943
    
    
    
    1,560Management and administration
    
    
    1,347
    
    
    
    1,660
    
    
    
    1,46414,922
    
    
    
    14,145
    
    
    
    13,087
 
      Corporate policies
 British Sky Broadcasting Group plcAnnual Report 2009
49




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Directors report  governance
 continued
 continued
   The Board
      The Chairman
  
    
    to encourage and ensure effective communication with shareholders, and ensure shareholder views
are communicated to the Board as a whole;
    
    to facilitate a structure to allow the effective contribution of all Directors, and of
non-executive Directors in particular;
    
    to create an environment which engenders constructive relations between executive and
non-executive Directors;
    
    to organise the business of the Board so that it can be carried out effectively and efficiently;
    
    to lead the Board in discussions regarding the Companys strategy and in the achievement of its
objectives;
 
    
    to ensure Board committees are properly established, composed and operated; and
    
    to enhance the Companys public standing and image overall.
 The Chief Executive Officer
  
    
    to be responsible and accountable to the Board for the management and operation of the Group;
    
    to prepare and implement plans and programmes for the attainment of approved objectives and to
recommend such plans and programmes to the Board as appropriate;
    
    to provide leadership in the Groups commitment to attaining high business standards generally;
    
    to create the conditions within the Group for the efficient operation of all business units;
    
    to establish and maintain relationships with shareholders and potential shareholders, and major
external bodies;
    
    to keep the Board informed on all matters of material importance; and
    
    to chair meetings of the Executive Committee.
 Senior Independent Director
  Non-Executive Directors
  Expiry date of currentCommencement date
    
    letter of appointmentDavid DeVoe(iii)
    
    15 December 1994
    
    23 October 2009David Evans(iii)
    
    21 September 2001
    
    22 October 2010*Nicholas Ferguson(ii)
    
    15 June 2004
    
    23 October 2009Andrew Higginson(ii)
    
    1 September 2004
    
    23 October 2009Allan Leighton(iii)
    
    15 October 1999
    
    23 October 2009Tom Mockridge(i)
    
    10 February 2009
    
    23 October 2009James Murdoch
    
    7 December 2007
    
    October 2011*Jacques Nasser(ii)
    
    8 November 2002
    
    23 October 2009Dame Gail Rebuck(ii)
    
    8 November 2002
    
    23 October 2009Daniel Rimer
    
    7 April 2008
    
    October 2011*Arthur Siskind(iii)
    
    19 November 1991
    
    23 October 2009Lord Wilson of Dinton
    
    13 February 2003
    
    October 2011*
 
 *
    These letters of appointment will expire on the day of the Companys AGM in either 2010 or
2011. The date of the AGM in 2011 has yet to be agreed.   (i)
    
    Tom Mockridge retires and offers himself for reappointment by shareholders in accordance with
the Companys Articles of Association at the Companys next AGM to be held on 23 October 2009.
 50
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##### Table of Contents



(ii)
    
    Non-Executive Directors retiring by rotation and offering themselves for reappointment by
shareholders at the Companys next AGM to be held on 23 October 2009.(iii)
    
    David DeVoe, Allan Leighton and Arthur Siskind are subject to annual reappointment by
shareholders in accordance with requirement A.7.2. of the Combined Code as they have served as
Non-Executive Directors for longer than nine years. David Evans will have served as a Non-Executive
Director for nine years in September 2010 and will therefore be subject to annual reappointment
with effect from the Companys AGM in 2010.
   The Company Secretary
  Board Practices
   CorporateGovernance andBoard
    
    
    Audit
    
    
    Remuneration
    
    
    NominationsNumber of meetings held in year
    
    
    6
    
    
    
    5
    
    
    
    5
    
    
    
    4DirectorJames Murdoch, Chairman
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Jeremy Darroch, CEO
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Andrew Griffith, CFO
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    David DeVoe
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    David Evans(i)
    
    
    6
    
    
    
    
    
    
    
    5
    
    
    
    Nicholas Ferguson(i)(ii)
    
    
    6
    
    
    
    
    
    
    
    5
    
    
    
    4Andrew Higginson(iii)
    
    
    4
    
    
    
    3
    
    
    
    
    
    
    
    Allan Leighton(iii)
    
    
    6
    
    
    
    5
    
    
    
    
    
    
    
    Tom Mockridge
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Jacques Nasser(i)
    
    
    5
    
    
    
    
    
    
    
    4
    
    
    
    Dame Gail Rebuck(iii)
    
    
    6
    
    
    
    5
    
    
    
    
    
    
    
    Daniel Rimer
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Arthur Siskind(ii)
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    4Lord Wilson of Dinton(ii)
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    4Chase Carey
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Lord Rothschild
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1
 
 (i)
    Remuneration Committee member(ii)
    Corporate Governance and Nominations Committee member(iii)
    Audit Committee member
 Board role
  
    
    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 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 series of related
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;
    
    approval of resolutions to be put forward to shareholders at a general meeting;
    
    changes to the structure, size and composition of the Board, following, if applicable,
recommendations from any committee to which the Board delegates consideration of such issues;
    
    appointment and removal of the Chairman of the Board and the CEO; and
    
    determining the independence of Non-Executive Directors.
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Directors report  governance
 continued
  continued
     Conflicts of Interest
Directors conflicts of interest
  Board Committees
  Remuneration Committee
  Corporate Governance and 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 and officers liability insurance cover; and
    
    the monitoring of the Companys compliance with applicable Corporate Governance Codes and other
similar requirements.
     The Bigger Picture Committee
 52
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##### Table of Contents




    
    reviewing and approving the Bigger Picture strategy;
    
    reviewing the reputational risk register and assigning clear roles and responsibilities for
ensuring effective mitigation of identified risks;
    
    seeking external stakeholders views on the Bigger Picture strategy and performance;
    
    reviewing and approving the annual reporting of Bigger Picture activities;
    
    monitoring progress in achieving Bigger Picture objectives and key performance indicators;
    
    ensuring the resources and skills are available to implement the Bigger Picture strategy; and
    
    providing the Board with an overview of the social, environmental and ethical impacts of the
Companys activities and how they are being managed.
  Audit Committee
   
    
    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;
    
    recommending the appointment of the Groups Director of Internal Audit;
    
    reviewing the audit plan and findings of the Groups internal audit function;
    
    monitoring and reviewing the effectiveness of the Groups internal audit function;
 
    
    approving all non-audit services provided by the Groups external auditors in accordance with the
Groups policy;
    
    monitoring the Groups whistle-blowing policy;
    
    News UK Nominees Limited, a subsidiary of News Corporation, is a major shareholder in the
Group. The Audit Committee receives, on a quarterly basis, a schedule of all transactions
between companies within the News Corporation Group and the Group, and any other related party
transactions, showing all transactions which have been entered into during the year and which
cumulatively exceed £100,000 in value;
    
    Audit Committee approval is required for the entering into by the Group of a commitment or
arrangement (or any series of related commitments or arrangements) with News Corporation or
any of its subsidiaries, or any other related party which involves or could reasonably involve
the payment or receipt by the Group of amounts equal to or in excess of £10 million, but not
exceeding £25 million in aggregate value with News Corporation. Any transaction in excess of
£25 million in aggregate value must be submitted to the Audit Committee and, if approved by
the Audit Committee, must also be submitted to the full Board for approval.
  Internal control
 British Sky Broadcasting Group plcAnnual Report 2009
53




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Directors report  governance
 continued
  continued
 Managements report on internal control over financial reporting
      Disclosure controls and procedures
   Changes in internal controls
 Use of external auditors
  
    
    those services which the auditors are not permitted to provide;
    
    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.
    Communication with shareholders
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Directors responsibilities
  
  1. Remuneration Committee
   
    
    the design and implementation of incentive compensation arrangements including share-based
schemes;
    
    remuneration packages for Executive Directors of the Company, including basic salary,
performance-based bonus and long-term incentives, pensions and other benefits; and
    
    the Companys policy on remuneration for Board Directors and other Senior Executives of the Group
who report directly to the CEO. In the latter case, decisions shall be recommended to the Committee
by the CEO.
    
    any payments or benefits offered to employees in excess of £250,000 which do not form part of an
employees expected remuneration or benefits require the approval of the Committee.
 Members
 
    
    David Evans
    
    Nicholas Ferguson (Chairman)
    
    Jacques Nasser
 2.  Advisors
    3. Remuneration policy overview
  
    
    Total remuneration is heavily geared towards paying for performance. If targets are not met a
large amount of pay is at risk. The mix of fixed to variable pay remains one of the lowest in
the FTSE 100.
    
    Pay is competitive if BSkyBs stretching targets are delivered.
    
    Pensions are provided through a defined contribution plan. The company pension contribution
rates for senior executives are well below market norms.
    
    Appropriate benchmarks are used when reviewing the salaries of the Executive Directors and
Senior Executives. The Company uses a subset of the FTSE 100 as its benchmark.
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55




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##### Table of Contents



Directors report  governance
 continued
  continued
 4.  Elements of Executive Director and senior management pay
  Performance Period
    
    ConditionsFixed PayBasic salary
(see section 4.2)
    
    Reflects the market value of the
position, as well as the skills and
experience of the incumbent
    
    Salaries reviewed annually
    
    Any increases are reviewed in accordance
with market benchmarking and only if
individual performance merits an increasePension and other benefits
(see sections 4.3 and 4.4)
    
    At below market norms
    
    Not applicable
    
    Not applicableVariable PayAnnual cash bonus
(see section 4.5)
    
    Payable against achievement of
short-term objectives set during
the year
    
    1 year
    
    Targets set by the Committee for Operating profit Free cash flow Customer growthLong Term Incentive Plan (LTIP) award
(see section 4.6)
    
    Payable against achievement of
stretching long-term objectives
    
    3 years
    
    30% subject to TSR performance vs. the
FTSE 100 over three years.70% subject to 3 year targets EPS Operating cash flow Revenue growthCo-Investment LTIP award
(see section 4.6)
    
    Only operates if employee invests own
money to buy shares. Company matches
shares with an LTIP award which vests
after 3 years if performance conditions
are met
    
    3 years
    
    The investment will be matched by up to
a maximum of 1.5 shares for every
1 invested, subject to a three-year
EPS performance condition. The
investment eligible for matching awards
will be limited to an amount equivalent to
50% of individuals annual bonus
 56
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
    
    Target performance assumes target annual bonus and threshold vesting under the LTIP.
    
    Maximum performance assumes maximum annual bonus and maximum vesting under the LTIP.
    
    The LTIP assumes maximum investment into the co-investment element.
    
    The LTIP ignores share price growth.
 Bonus amount
    
    
    As a(£)
    
    
    % of salaryJeremy Darroch
    
    
    1,485,000
    
    
    
    180
    %Andrew Griffith
    
    
    548,500
    
    
    
    113
    %
     
    
    subject to stretching performance and TSR measures.
    
    made to any employee or full-time Executive Director of the Group at the discretion of the
Committee.
    
    normally made as a nil priced option.
    
    not transferable or pensionable
    
    made over a number of shares in the Company, determined by the Committee.
    
    are usually satisfied using shares purchased by the Company in the market.
 British Sky Broadcasting Group plcAnnual Report 2009
57




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##### Table of Contents



Directors report  governance
 continued
  continued
  Design of LTIP plan
    1 2
 How the LTIP operates
  Performance ConditionsEPS growth
    
    
    FCF
    
    
    DTH customer growthPerformance
    
    
    
    
    
    
    PerformancePerformance
    
    Points
    
    
    achieved
    
    
    Points
    
    
    achieved
    
    
    Pointsachieved
    
    awarded
    
    
    (% of target)
    
    
    awarded
    
    
    (% of target)
    
    
    awarded105
    %
    
    
    
    
    
    
    105
    %RPI + 8% pa
    
    
    10
    
    
    or more
    
    
    10
    
    
    or more
    
    
    10RPI +7% pa
    
    
    8
    
    
    
    100
    %
    
    
    8
    
    
    
    100
    %
    
    
    8RPI +6% pa
    
    
    6
    
    
    
    95
    %
    
    
    6
    
    
    
    95
    %
    
    
    6RPI +5% pa
    
    
    4
    
    
    
    90
    %
    
    
    4
    
    
    
    90
    %
    
    
    4RPI +4% pa
    
    
    2
    
    
    
    85
    %
    
    
    2
    
    
    
    85
    %
    
    
    2RPI +3% pa
    
    
    1
    
    
    
    75
    %
    
    
    1
    
    
    
    75
    %
    
    
    1Less than
    
    
    
    
    
    Less than
    
    
    
    
    
    Less thanRPI + 3% pa
    
    
    0
    
    
    
    75
    %
    
    
    0
    
    
    
    75
    %
    
    
    0
 Actual Points AwardedEPS growth
    
    FCF
    
    DTH customer growthActual points awarded
    
    Actual points awarded
    
    Actual points awarded4.34
    
    
    10.00
    
    
    
    9.29
   Performance ConditionsEPS growth
    
    Operating cash flow
    
    
    Revenue growthPerformance
    
    
    
    
    
    
    PerformancePerformance
    
    Points
    
    
    achieved
    
    
    Points
    
    
    achieved
    
    
    Pointsachieved
    
    awarded
    
    
    (% of target)
    
    
    awarded
    
    
    (% of target)
    
    
    awarded105
    %
    
    
    
    
    
    
    105
    %RPI + 8% pa
    
    
    10
    
    
    or more
    
    
    10
    
    
    or more
    
    
    10RPI +7% pa
    
    
    8
    
    
    
    100
    %
    
    
    8
    
    
    
    100
    %
    
    
    8RPI +6% pa
    
    
    6
    
    
    
    95
    %
    
    
    6
    
    
    
    95
    %
    
    
    6RPI +5% pa
    
    
    4
    
    
    
    90
    %
    
    
    4
    
    
    
    90
    %
    
    
    4RPI +4% pa
    
    
    2
    
    
    
    85
    %
    
    
    2
    
    
    
    85
    %
    
    
    2RPI +3% pa
    
    
    1
    
    
    
    75
    %
    
    
    1
    
    
    
    75
    %
    
    
    1Less than
    
    
    
    
    
    Less than
    
    
    
    
    
    Less thanRPI + 3% pa
    
    
    0
    
    
    
    75
    %
    
    
    0
    
    
    
    75
    %
    
    
    0
  Resulting vesting% of
    
    
    % ofTotal points achieved
    
    operational portion
    
    
    overall awardLess than 1
    
    
    0
    %
    
    
    0
    %1
    
    
    10
    %
    
    
    7
    %1-21
    
    10%  100% on a
    
    7%  70% on astraight-line basis
    
    straight-line basis21 or more
    
    
    100
    %
    
    
    70
    %
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1 2
 Jeremy Darroch
      Andrew Griffith
 British Sky Broadcasting Group plcAnnual Report 2009
59




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Directors report  governance
 continued
 continued
 At
    
    
    At30 June
    
    
    30 JuneName of Director
    
    2009
    
    
    2008Jeremy Darroch
    
    
    60,000
    
    
    
    60,000David Evans
    
    
    16,000
    (i)
    
    
    16,000
    (i)Nicholas Ferguson
    
    
    10,000
    
    
    
    10,000Andrew Griffith
    
    
    5,000
    
    
    
    Andrew Higginson
    
    
    2,248
    
    
    
    2,160Lord Wilson of Dinton
    
    
    486
    
    
    
    486
 
 (i)
    Held in the form of 4,000 ADSs, one ADS is equivalent to four ordinary shares.
 60
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Total
    
    
    
    
    
    
    Total
    
    
    Total
    
    
    Totalemoluments
    
    
    
    
    
    
    emoluments
    
    
    emoluments
    
    
    emolumentsSalary and
    
    
    Bonus
    
    
    
    
    
    
    before
    
    
    
    
    
    
    including
    
    
    including
    
    
    includingfees
    
    
    scheme
    
    
    Benefits
    
    
    pension 2009
    
    
    Pensions
    
    
    pension 2009
    
    
    pension 2008
    
    
    pension 2007£
    
    
    £
    
    
    £
    
    
    £
    
    
    £
    
    
    £
    
    
    £
    
    
    £ExecutiveJeremy Darroch(i)
    
    
    825,000
    
    
    
    1,485,000
    
    
    
    10,164
    
    
    
    2,320,164
    
    
    
    16,406
    
    
    
    2,336,570
    
    
    
    1,962,050
    
    
    
    1,423,752Andrew Griffith(ii)
    
    
    487,500
    
    
    
    548,500
    
    
    
    12,129
    
    
    
    1,048,129
    
    
    
    9,906
    
    
    
    1,058,035
    
    
    
    567,504
    
    
    
    Non-ExecutiveJames Murdoch(iii)
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    
    
    
    
    75,000
    
    
    
    1,357,475
    
    
    
    2,993,124David Devoe
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    50,000
    
    
    
    50,000
    
    
    
    44,700David Evans
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    60,000
    
    
    
    60,000
    
    
    
    49,700Nick Ferguson
    
    
    110,000
    
    
    
    
    
    
    
    
    
    
    
    110,000
    
    
    
    
    
    
    
    110,000
    
    
    
    104,603
    
    
    
    59,700Andrew Higginson
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    60,000
    
    
    
    60,000
    
    
    
    49,700Allan Leighton
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    59,700Tom Mockridge(iv)
    
    
    21,875
    
    
    
    
    
    
    
    
    
    
    
    21,875
    
    
    
    
    
    
    
    21,875
    
    
    
    
    
    
    
    Jacques Nasser
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    60,000
    
    
    
    60,000
    
    
    
    49,700Dame Gail Rebuck
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    60,000
    
    
    
    60,000
    
    
    
    49,700Daniel Rimer(v)
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    50,000
    
    
    
    11,795
    
    
    
    Arthur Siskind
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    60,000
    
    
    
    60,000
    
    
    
    49,700Lord Wilson of Dinton
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    59,700Former DirectorsChase Carey(vi)
    
    
    30,512
    
    
    
    
    
    
    
    
    
    
    
    30,512
    
    
    
    
    
    
    
    30,512
    
    
    
    50,000
    
    
    
    44,700Rupert Murdoch(vii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,404
    
    
    
    54,700Lord Rothschild(viii)
    
    
    17,500
    
    
    
    
    
    
    
    
    
    
    
    17,500
    
    
    
    
    
    
    
    17,500
    
    
    
    68,629
    
    
    
    59,700Lord St John of Fawsley(ix)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,244Total emoluments
    
    
    2,137,387
    
    
    
    2,033,500
    
    
    
    22,293
    
    
    
    4,193,180
    
    
    
    26,312
    
    
    
    4,219,492
    
    
    
    4,674,460
    
    
    
    5,063,520
  (i)
    
    Jeremy Darroch, appointed CEO on 7 December 2007, received a salary of £825,000 from 1 July
2008 (£750,000 following his appointment as CEO).(ii)
    
    Andrew Griffith, appointed CFO on 7 April 2008, received a salary of £475,000 from 1 July 2008
(£450,000 following his appointment as CFO). Following an interim review to take account of his
performance, the previous CFOs salary and below market benchmark position, this was increased to
£500,000 from 1 January 2009.(iii)
    
    James Murdoch received a salary of £1,045,000 per annum up to 6 December 2007, which was
reduced to £75,000 per annum on 7 December 2007 following his appointment as Chairman.(iv)
    
    Tom Mockridge was appointed as a Director of the Company on 10 February 2009.(v)
    
    Daniel Rimer was appointed as a Director of the Company on 7 April 2008.(vi)
    
    Chase Carey resigned as a Director of the Company on 10 February 2009.(vii)
    
    Rupert Murdoch resigned as a Director of the Company on 6 December 2007.(viii)
    
    Lord
Rothschild resigned as a Director of the Company on 26 September 2008.(ix)
    
    Lord St John of Fawsley
resigned as a Director of the Company on 3 November 2006.
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Directors report  governance
 continued
 continued
   Number of shares under awardAt
    
    
    Granted
    
    
    Exercised
    
    
    Lapsed
    
    
    At
    
    
    
    
    
    
    Market price
    
    
    
    
    
    
    Date from30 June
    
    
    during
    
    
    during
    
    
    during
    
    
    30 June
    
    
    Exercise
    
    
    at date
    
    
    Date of
    
    
    whichName of Director
    
    2008
    
    
    the year
    
    
    the year
    
    
    the year
    
    
    2009
    
    
    price
    
    
    of exercise
    
    
    Award
    
    
    exercisable
    
    
    Expiry dateJames Murdoch
    
    
    550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550,000
    (i)
    
    
    n/a
    
    
    
    n/a
    
    
    
    03.08.06
    
    
    
    03.08.09
    
    
    
    03.08.10550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550,000
    (i)
    
    
    n/a
    
    
    
    n/a
    
    
    
    30.07.07
    
    
    
    03.08.09
    
    
    
    03.08.10Jeremy Darroch
    
    
    290,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    03.08.06
    
    
    
    03.08.09
    
    
    
    03.08.10290,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    30.07.07
    
    
    
    03.08.09
    
    
    
    03.08.10295,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    06.02.08
    
    
    
    03.08.09
    
    
    
    03.08.10
    
    
    
    600,000
    
    
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    31.07.08
    
    
    
    31.07.11
    
    
    
    31.07.12Andrew Griffith
    
    100,000
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    03.08.06
    
    
    
    03.08.09
    
    
    
    03.08.1050,000
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    30.05.07
    
    
    
    03.08.09
    
    
    
    03.08.10125,000
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    30.07.07
    
    
    
    03.08.09
    
    
    
    03.08.10125,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    30.04.08
    
    
    
    03.08.09
    
    
    
    03.08.10
    
    
    
    320,000
    
    
    
    
    
    
    
    
    
    
    
    320,000
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    31.07.08
    
    
    
    31.07.11
    
    
    
    31.07.12
  (i)
    
    These options remain exercisable to the fullest extent subject to the achievement of the
performance conditions, the Company may elect to pay cash.(ii)
    
    These awards were made under the Companys Management LTIP plan, prior to Andrew Griffiths appointment as a Director of the Company
on 7 April 2008.   Number of optionsAt
    
    
    Granted
    
    
    Exercised
    
    
    Lapsed
    
    
    At
    
    
    
    
    
    
    Market price
    
    
    Date from30 June
    
    
    during
    
    
    during
    
    
    during
    
    
    30 June
    
    
    Exercise
    
    
    at date
    
    
    which
    
    
    ExpiryName of Director
    
    2008
    
    
    the year
    
    
    the year
    
    
    the year
    
    
    2009
    
    
    price
    
    
    of exercise
    
    
    exercisable
    
    
    dateAndrew Griffith(i)
    
    
    3,030
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,030
    
    
    
    £9.90
    
    
    
    n/a
    
    
    
    23.11.03
    
    
    
    23.11.1025,222
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,222
    
    
    
    £9.90
    
    
    
    n/a
    
    
    
    23.11.03
    
    
    
    23.11.1040,025
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,025
    
    
    
    £7.94
    
    
    
    n/a
    
    
    
    06.11.04
    
    
    
    06.11.1144,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,184
    
    
    
    £6.62
    
    
    
    n/a
    
    
    
    01.09.07
    
    
    
    05.09.1319,819
    (ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,819
    
    
    
    £5.03
    
    
    
    n/a
    
    
    
    06.08.08
    
    
    
    06.08.14
 
 (i)
    These are all awards that are outstanding following Andrew Griffiths appointment as a Director
on 7 April 2008. As a reminder, the Company has not made any Executive Share Option awards to any
employee since 2004.(ii)
    These options vested following the achievement of the performance target, being the growth in
BSkyBs EPS being equal to or greater than the increase in RPI plus 3% per annum.   Number of shares under optionsAt
    
    
    Granted
    
    
    Exercised
    
    
    At
    
    
    
    
    
    
    Date30 June
    
    
    during the
    
    
    during the
    
    
    30 June
    
    
    Exercise
    
    
    from whichName of Director
    
    2008
    
    
    year
    
    
    year
    
    
    2009
    
    
    price
    
    
    exercisable
    
    
    Expiry dateJeremy Darroch
    
    
    4,281
    
    
    
    
    
    
    
    
    
    
    
    4,281
    
    
    
    £3.86
    
    
    
    01.02.10
    
    
    
    01.08.10Andrew Griffith
    
    
    
    
    
    
    2,580
    
    
    
    
    
    
    
    2,580
    
    
    
    £3.72
    
    
    
    01.02.12
    
    
    
    01.08.12
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Number of shares under awardAt
    
    
    Granted
    
    
    Exercised
    
    
    At
    
    
    
    
    
    
    Market price
    
    
    Date30 June
    
    
    during the
    
    
    during the
    
    
    30 June
    
    
    Exercise
    
    
    at date of
    
    
    from whichName of Director
    
    2008
    
    
    year
    
    
    year
    
    
    2009
    
    
    price
    
    
    exercise
    
    
    exercisable
    
    
    Expiry dateJeremy Darroch
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    05.02.12
    
    
    
    05.04.12Andrew Griffith
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    05.02.12
    
    
    
    05.04.12
  Nicholas Ferguson
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Directors report  governance
 continued
 Amount
    
    PercentIdentity of person or group
    
    owned
    
    of classNews UK Nominees Limited(i)
    
    
    686,021,700
    
    
    
    39.14Capital Research and Management Company(ii)
    
    
    88,008,696
    
    
    
    5.02Brandes Investment Partners L.P.(ii)
    
    
    56,867,820
    
    
    
    3.12The Capital Group Companies, Inc.(ii)
    
    
    55,977,854
    
    
    
    3.10Legal & General Group plc(ii)
    
    
    53,183,483
    
    
    
    3.03
 
 (i)
    Direct holding which is subject to restrictions on its voting rights (please see Voting rights
below).(ii)
    Indirect holding.
 64
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
    
    so far as the Director is aware, there is no relevant audit information (as defined in the
Companies Act 2006) of which the Companys auditors are unaware; and
    
    the Director has taken all
the steps that he/she ought to have taken as a Director to make himself/herself aware of any
relevant audit information (as defined) and to establish that the Companys auditors are aware of
that information.
  Dave Gormley
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65




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Consolidated financial statements
 
    
    properly select and apply accounting policies;
    
    present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
    
    provide additional disclosures when compliance with the specific requirements in IFRSs are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entitys financial position and financial performance; and
    
    make an assessment of the Companys ability to continue as a going concern.
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67




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Consolidated financial statements
 continued
 2009
    
    
    2008
    
    
    2007Notes
    
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    2
    
    
    
    5,359
    
    
    
    4,952
    
    
    
    4,551Operating expense
    
    
    3
    
    
    
    (4,546
    )
    
    
    (4,228
    )
    
    
    (3,736
    )Operating profit
    
    
    
    
    
    
    813
    
    
    
    724
    
    
    
    815Share of results of joint ventures and associates
    
    
    15
    
    
    
    19
    
    
    
    15
    
    
    
    12Investment income
    
    
    4
    
    
    
    35
    
    
    
    47
    
    
    
    46Finance costs
    
    
    4
    
    
    
    (220
    )
    
    
    (177
    )
    
    
    (149
    )Profit on disposal of joint venture
    
    
    5
    
    
    
    
    
    
    
    67
    
    
    
    Impairment of available-for-sale investment
    
    
    6
    
    
    
    (191
    )
    
    
    (616
    )
    
    
    Profit before tax
    
    
    7
    
    
    
    456
    
    
    
    60
    
    
    
    724Taxation
    
    
    9
    
    
    
    (197
    )
    
    
    (187
    )
    
    
    (225
    )Profit (loss) for the year attributable to equity shareholders of the parent company
    
    
    
    
    
    
    259
    
    
    
    (127
    )
    
    
    499Earnings (loss) per share from profit (loss) for the year (in pence)Basic
    
    
    10
    
    
    
    14.9p
    
    
    
    (7.3
    p)
    
    
    28.4
    pDiluted
    
    
    10
    
    
    
    14.8p
    
    
    
    (7.3
    p)
    
    
    28.2
    p
     2009
    
    
    2008
    
    
    2007Notes
    
    
    £m
    
    
    £m
    
    
    £mProfit (loss) for the year attributable to equity
shareholders of the parent company
    
    
    
    
    
    
    259
    
    
    
    (127
    )
    
    
    499Net profit (loss) recognised directly in equityGain (loss) on available-for-sale investments
    
    
    16
    
    
    
    96
    
    
    
    (192
    )
    
    
    (151
    )Gain (loss) on cash flow hedges
    
    
    
    
    
    
    377
    
    
    
    43
    
    
    
    (70
    )Tax on cash flow hedges
    
    
    
    
    
    
    (105
    )
    
    
    (13
    )
    
    
    21Exchange differences on translation of foreign operations
    
    
    25
    
    
    
    19
    
    
    
    4
    
    
    
    387
    
    
    
    (158
    )
    
    
    (200
    )Amounts reclassified and reported in the income statementCash flow hedges
    
    
    
    
    
    
    (351
    )
    
    
    2
    
    
    
    109Tax on cash flow hedges
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    (33
    )Transfer to profit (loss) on impairment of
available-for-sale investment
    
    
    16
    
    
    
    
    
    
    
    343
    
    
    
    (253
    )
    
    
    345
    
    
    
    76Net profit (loss) recognised directly in equity
    
    
    
    
    
    
    134
    
    
    
    187
    
    
    
    (124
    )Total recognised income and expense for the year
    
    
    
    
    
    
    393
    
    
    
    60
    
    
    
    375
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2009
    
    
    2008Notes
    
    
    £m
    
    
    £mNon-current assetsGoodwill
    
    
    12
    
    
    
    852
    
    
    
    852Intangible assets
    
    
    13
    
    
    
    345
    
    
    
    303Property, plant and equipment
    
    
    14
    
    
    
    799
    
    
    
    722Investments in joint ventures and associates
    
    
    15
    
    
    
    135
    
    
    
    114Available-for-sale investments
    
    
    16
    
    
    
    261
    
    
    
    338Deferred tax assets
    
    
    17
    
    
    
    17
    
    
    
    23Trade and other receivables
    
    
    19
    
    
    
    21
    
    
    
    19Derivative financial assets
    
    
    23
    
    
    
    202
    
    
    
    132,632
    
    
    
    2,384Current assetsInventories
    
    
    18
    
    
    
    386
    
    
    
    310Trade and other receivables
    
    
    19
    
    
    
    613
    
    
    
    566Short-term deposits
    
    
    23
    
    
    
    90
    
    
    
    185Cash and cash equivalents
    
    
    23
    
    
    
    811
    
    
    
    632Derivative financial assets
    
    
    23
    
    
    
    37
    
    
    
    51,937
    
    
    
    1,698Total assets
    
    
    
    
    
    
    4,569
    
    
    
    4,082Current liabilitiesBorrowings
    
    
    22
    
    
    
    465
    
    
    
    338Trade and other payables
    
    
    20
    
    
    
    1,492
    
    
    
    1,294Current tax liabilities
    
    
    
    
    
    
    173
    
    
    
    151Provisions
    
    
    21
    
    
    
    18
    
    
    
    27Derivative financial liabilities
    
    
    23
    
    
    
    46
    
    
    
    832,194
    
    
    
    1,893Non-current liabilitiesBorrowings
    
    
    22
    
    
    
    2,279
    
    
    
    2,108Trade and other payables
    
    
    22
    
    
    
    66
    
    
    
    67Provisions
    
    
    21
    
    
    
    12
    
    
    
    22Derivative financial liabilities
    
    
    23
    
    
    
    82
    
    
    
    1602,439
    
    
    
    2,357Total liabilities
    
    
    
    
    
    
    4,633
    
    
    
    4,250Share capital
    
    
    24
    
    
    
    876
    
    
    
    876Share premium
    
    
    25
    
    
    
    1,437
    
    
    
    1,437Reserves
    
    
    25
    
    
    
    (2,377
    )
    
    
    (2,481
    )Deficit attributable to equity shareholders of the parent company
    
    
    25
    
    
    
    (64
    )
    
    
    (168
    )Total liabilities and shareholders deficit
    
    
    
    
    
    
    4,569
    
    
    
    4,082
 British Sky Broadcasting Group plcAnnual Report 2009
69




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Consolidated financial statements
 continued
 2009
    
    
    2008
    
    
    2007Notes
    
    
    £m
    
    
    £m
    
    
    £mCash flows from operating activitiesCash generated from operations
    
    
    26
    
    
    
    1,205
    
    
    
    997
    
    
    
    1,007Interest received
    
    
    
    
    
    
    47
    
    
    
    43
    
    
    
    46Taxation paid
    
    
    
    
    
    
    (178
    )
    
    
    (163
    )
    
    
    (128
    )Net cash from operating activities
    
    
    
    
    
    
    1,074
    
    
    
    877
    
    
    
    925Cash flows from investing activitiesDividends received from joint ventures and associates
    
    
    
    
    
    
    20
    
    
    
    11
    
    
    
    9Net funding to joint ventures and associates
    
    
    
    
    
    
    (3
    )
    
    
    (6
    )
    
    
    (3
    )Purchase of property, plant and equipment
    
    
    
    
    
    
    (261
    )
    
    
    (215
    )
    
    
    (292
    )Purchase of intangible assets
    
    
    
    
    
    
    (139
    )
    
    
    (124
    )
    
    
    (64
    )Purchase of available-for-sale investments
    
    
    
    
    
    
    (19
    )
    
    
    (6
    )
    
    
    (947
    )Purchase of subsidiaries (net of cash and cash equivalents purchased)
    
    
    
    
    
    
    
    
    
    
    (72
    )
    
    
    (104
    )Proceeds from the sale of subsidiaries
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    Proceeds on disposal of property, plant and equipment
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Decrease (increase) in short-term deposits
    
    
    
    
    
    
    95
    
    
    
    (170
    )
    
    
    632Net cash used in investing activities
    
    
    
    
    
    
    (305
    )
    
    
    (579
    )
    
    
    (769
    )Cash flows from financing activitiesProceeds from borrowings
    
    
    
    
    
    
    398
    
    
    
    383
    
    
    
    295Repayment of borrowings
    
    
    
    
    
    
    (434
    )
    
    
    (16
    )
    
    
    (192
    )Repayment of obligations under finance leases
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    Proceeds from disposal of shares in Employee Share Ownership Plan (ESOP)
    
    
    
    
    
    
    1
    
    
    
    22
    
    
    
    37Purchase of own shares for ESOP
    
    
    
    
    
    
    (40
    )
    
    
    (45
    )
    
    
    (76
    )Purchase of own shares for cancellation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (214
    )Interest paid
    
    
    
    
    
    
    (217
    )
    
    
    (165
    )
    
    
    (154
    )Dividends paid to shareholders
    
    
    
    
    
    
    (298
    )
    
    
    (280
    )
    
    
    (233
    )Net cash used in financing activities
    
    
    
    
    
    
    (590
    )
    
    
    (102
    )
    
    
    (537
    )Effect of foreign exchange rate movements
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    179
    
    
    
    197
    
    
    
    (381
    )Cash and cash equivalents at the beginning of the year
    
    
    
    
    
    
    632
    
    
    
    435
    
    
    
    816Cash and cash equivalents at the end of the year
    
    
    
    
    
    
    811
    
    
    
    632
    
    
    
    435
 70
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i. Subsidiaries
  ii. Associates and joint ventures
 i. Intangible assets
    ii. Property, plant and equipment
 British Sky Broadcasting Group plcAnnual Report 2009
71




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Consolidated financial statements
 continued
 continued
 (continued)
   Freehold buildings
    
    25 yearsEquipment, furniture and fixtures
    
    3 to 15 yearsAssets under finance leases and
leasehold improvements
    
    Lesser of lease term and the useful
economic life of the asset
     Derivatives that qualify for cash flow hedge accounting
 Derivatives that qualify for fair value hedge accounting
   Embedded derivatives
   i. Acquired and commissioned television programme inventories
 72
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##### Table of Contents



ii. Set-top boxes, routers and related equipment
  iii. Raw materials, consumables and goods held for resale
    i. Available-for-sale investments
 ii. Trade and other receivables
  iii. Cash and cash equivalents
  iv. Short-term deposits
  v. Trade and other payables
  vi. Borrowings
 British Sky Broadcasting Group plcAnnual Report 2009
73




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Consolidated financial statements
 continued
 continued
 (continued)
         
    
    Retail subscription revenue, including subscriptions for Sky TV, Sky
Broadband and Sky Talk services, is recognised as the goods or services are provided, net of any
discount given. Pay-per-view revenue is recognised when the event or movie is viewed.
    
    Wholesale revenue is recognised as the services are provided to the cable retailers and is based
on the number of subscribers taking the Sky channels, as reported to the Group by the cable
retailers, and the applicable rate card or contract.
    
    Advertising sales revenue is recognised when the advertising is broadcast.
Revenue generated from airtime sales, where Sky acts as an agent on behalf of third
parties, is recognised on a net commission basis.
    
    Sky Bet revenue is recognised in accordance with IAS 39. Sky Bet revenue
represents income in the period for betting and gaming activities, defined as amounts
staked by customers less winnings paid out.
    
    Installation, hardware and service revenue is recognised in the income statement
when the goods and services are delivered.
    
    Other revenue principally includes income from Sky Active, Sky Card, Sky Mobile TV, technical
platform services, Easynet Enterprise and Amstrad. Other revenue is recognised, net of any discount
given, when the relevant goods or service are provided.
 74
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
    
    IFRS 8 Operating Segments (effective 1 January 2009)
    
    IFRIC 17 Distributions of Non Cash Assets to Owners (effective 1 July 2009)
    
    IFRIC 18 Transfers of Assets to Customers (effective 1 July 2009)
    
    Revision to IAS 1 Presentation of Financial Statements (effective 1 January 2009)
    
    Amendments to IAS 23 Borrowing Costs (effective 1 January 2009)
    
    Revision to IFRS 3 Business Combinations (effective 1 July 2009)
    
    Revision to IAS 27 Consolidated and Separate Financial Statements (effective 1 July 2009)
    
    Amendment to IFRS 2 Share-Based Payment (effective 1 January 2009)
    
    Amendment to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (effective 1 July 2009)
    
    Amendments to IAS 28 Investment in Associates (effective 1 January 2009)
    
    Amendment to IAS 32 Financial Instruments: Presentation (effective 1 January 2009)
    
    Amendments to IAS 38 Intangible Assets (effective 1 January 2009)
    
    Amendment to IAS 39 Financial Instruments: Recognition and Measurement (effective 1 January 2009)
 British Sky Broadcasting Group plcAnnual Report 2009
75




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Consolidated financial statements
 continued
 continued
 (continued)
 (i)
    
    Revenue (see note 2)
    
    Selecting the appropriate timing for, and amount of, revenue to be recognised requires judgment.
This may involve estimating the fair value of consideration before it is received. When the Group
sells a set-top box, installation or service and a subscription in one bundled transaction, the
total consideration from the arrangement is allocated to each element based on its relative fair
value. The fair value of each individual element is determined using vendor specific or third party
evidence. The amount of revenue the Group recognises for delivered elements is limited to the cash
received.
    
    Judgment is also required in evaluating the likelihood of collection of customer debt after
revenue has been recognised. This evaluation requires estimates to be made, including the level of
provision to be made for amounts with uncertain recovery profiles. Provisions are based on
historical trends in the percentage of debts which are not recovered, or on more detailed reviews
of individually significant balances.
 (ii)
    
    Taxation (see note 9)
    
    The Groups tax charge is the sum of the total current and deferred tax charges. The calculation
of the Groups total tax charge necessarily involves a degree of estimation and judgment in respect
of certain items whose tax treatment cannot be finally determined until resolution has been reached
with the relevant tax authority or, as appropriate, through a formal legal process.
    
    Accruals for tax contingencies require management to make judgments and estimates in relation to
tax audit issues and exposures. Amounts accrued are based on managements interpretation of
country-specific tax law and the likelihood of settlement. Tax benefits are not recognised unless
the tax positions are probable of being sustained. Once considered to be probable, management
reviews each material tax benefit to assess whether a provision should be taken against full
recognition of the benefit on the basis of the likely resolution of the issue through negotiation
and/or litigation.
    
    The amounts recognised in the consolidated financial statements in respect of each matter are
derived from the Groups best estimation and judgment, as described above. However, the inherent
uncertainty regarding the outcome of these items means the eventual resolution could differ from
the provision and in such event the Group would be required to make an adjustment in a subsequent
period which could have a material impact on the Groups profit and loss and/or cash position.
 (iii)
    
    Goodwill (see note 12)
    
    Judgment is required in determining the fair value of identifiable assets, liabilities and
contingent assets assumed in a business combination. Calculating the fair values involves the use
of significant estimates and assumptions, including expectations about future cash flows, discount
rates and the lives of assets following purchase.
    
    Judgment is also required in evaluating whether any impairment loss has arisen against the
carrying amount of goodwill. This may require calculation of the recoverable amount of cash
generating units to which the goodwill is associated. Such a calculation may involve estimates of
the net present value of future forecast cash flows and selecting an appropriate discount rate.
Alternatively, it may involve a calculation of the fair value less costs to sell of the applicable
cash generating unit.
 (iv)
    
    Intangible assets and property, plant and equipment (see notes 13 and 14)
    
    The assessment of the useful economic lives of these assets requires judgment. Depreciation and
amortisation is charged to the income statement based on the useful economic life selected. This
assessment requires estimation of the period over which the Group will benefit from the assets.
    
    Determining whether the carrying amount of these assets has any indication of impairment also
requires judgment. If an indication of
 impairment is identified, further judgment is required to assess whether the carrying amount can be
supported by the net present value of future cash flows forecast to be derived from the asset. This
forecast involves cash flow projections and selecting the appropriate discount rate.
    
    Assessing whether assets meet the required criteria for initial capitalisation requires
judgment. This requires a determination of whether the assets will result in future benefits to the
Group. In particular, internally generated intangible assets must be assessed during the
development phase to identify whether the Group has the ability and intention to complete the
development successfully.
 (v)
    
    Available-for-sale investments (see note 16)
    
    The key areas of judgment in respect of available-for-sale investments are the assessment of
whether there is objective evidence that a loss event has occurred after initial recognition of an
available-for-sale investment, and whether such a loss event has a reliably measurable impact on
the estimated future cash flows of the investment. At each balance sheet date, management considers
whether there is objective evidence that a loss event has occurred and whether it has had an impact
on the estimated future cash flows of the available-for-sale investment. If a loss event has
occurred, management would then consider whether an impairment loss has occurred and the quantum of
that loss.
    
    As at 30 June 2009, the Groups available-for-sale investments included a material investment in
ITV plc (ITV) which has been impaired in the year. The factors management considered in
determining whether an impairment loss in ITV had occurred included observable data about the
estimated future cash flows of ITV based on ITVs publicly available financial reporting and
announcements, publicly available information from financial commentators about ITV and the market
in which it operates, the historical performance of ITVs share price, and the regulatory
environment affecting ITV and the Group. The ITV impairment losses accounted for have been
determined with reference to ITVs closing equity share price at 27 March 2009, the last trading
day of the Groups third fiscal quarter. All subsequent increases in the fair value of the ITV
investment above this impaired value have been recorded in the available-for-sale reserve (see
accounting policy j).
 (vi)
    
    Deferred tax (see note 17)
    
    The key area of judgment in respect of deferred tax accounting is the assessment of the expected
timing and manner of realisation or settlement of the carrying amounts of assets and liabilities
held at the balance sheet date. In particular, assessment is required of whether it is probable
that there will be suitable future taxable profits against which any deferred tax assets can be
utilised.
 (vii)
    
    Programming inventory (see note 18)
    
    The key area of accounting for programming inventory requiring judgment is the assessment of the
appropriate profile over which to recognise amortisation in the income statement. This assessment
requires the Group to form an expectation of the number of times a programme will be broadcast and
the value associated with each broadcast.
    
    For general entertainment programming, in order to perform this assessment of amortisation
profile, we consider the expected number of viewers a programme is likely to achieve on repeat
broadcast, the alternative programming available to the programming scheduler, the potential
marketing benefits relating to the scheduling of certain programmes and the Groups assessment of
its competitors scheduling intentions when determining the amount of programme expense to
recognise for each broadcast. Acquired movie rights are amortised on a straight-line basis over the
period of the transmission rights. Where contracts for sports rights provide for multiple seasons
or competitions, they are amortised on a straight-line basis across the season or competition as
our estimate of the benefits received from these rights is determined to be most appropriately
aligned with a straight-line amortisation profile.
 76
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##### Table of Contents



2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRetail subscription(i)
    
    
    4,184
    
    
    
    3,769
    
    
    
    3,406Wholesale subscription
    
    
    206
    
    
    
    181
    
    
    
    208Advertising
    
    
    308
    
    
    
    328
    
    
    
    352Sky Bet
    
    
    48
    
    
    
    44
    
    
    
    47Installation, hardware and service
    
    
    235
    
    
    
    276
    
    
    
    212Other
    
    
    378
    
    
    
    354
    
    
    
    3265,359
    
    
    
    4,952
    
    
    
    4,551
 
 (i)
    Included within retail subscription revenue for the year ended 30 June 2009 is £36 million of
additional revenue representing amounts invoiced in 
prior years, which did not meet revenue
recognition criteria under IFRS until March 2009.   2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mProgramming(i)
    
    
    1,750
    
    
    
    1,713
    
    
    
    1,539Transmission, technology and networks
    
    
    726
    
    
    
    542
    
    
    
    402Marketing
    
    
    907
    
    
    
    743
    
    
    
    734Subscriber management and supply chain
    
    
    662
    
    
    
    700
    
    
    
    618Administration(ii)(iii)
    
    
    501
    
    
    
    530
    
    
    
    4434,546
    
    
    
    4,228
    
    
    
    3,736
 
 (i)
    Included within programming for the year ended 30 June 2007 is a £65 million credit due to the
Group, arising from certain contractual rights under one of the Groups channel distribution
agreements.(ii)
    Included within administration for the year ended 30 June 2009 is £3 million (2008: £21
million; 2007: £16 million) of expense relating to legal costs incurred on the Groups ongoing
claim against EDS (the information and technology solutions provider).(iii)
    Included within administration for the year ended 30 June 2008 is £7 million of expense
relating to a restructuring exercise undertaken following a review of operating costs.
No further costs have been incurred during the year ended 30 June 2009.  2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mInvestment incomeCash, cash equivalents and short-term deposits
    
    
    30
    
    
    
    25
    
    
    
    33Dividends receivable from available-for-sale investments
    
    
    5
    
    
    
    22
    
    
    
    1335
    
    
    
    47
    
    
    
    46
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mFinance costs Interest payable and similar charges£1 billion Revolving Credit Facility (RCF)
    
    
    (3
    )
    
    
    (6
    )
    
    
    (12
    )Guaranteed Notes (see note 22)
    
    
    (186
    )
    
    
    (167
    )
    
    
    (135
    )Finance lease interest
    
    
    (7
    )
    
    
    (7
    )
    
    
    (8
    )(196
    )
    
    
    (180
    )
    
    
    (155
    ) Other finance (expense) incomeRemeasurement of borrowings and borrowings-related derivative financial instruments(not qualifying for hedge accounting)
    
    
    (21
    )
    
    
    4
    
    
    
    Remeasurement of programming-related derivative financial instruments (not qualifying for hedge accounting)
    
    
    (3
    )
    
    
    (1
    )
    
    
    6Gain (loss) arising on derivatives in a designated fair value hedge accounting relationship
    
    
    46
    
    
    
    14
    
    
    
    (5
    )(Loss) gain arising on adjustment for hedged item in a designated fair value hedge accounting relationship
    
    
    (46
    )
    
    
    (14
    )
    
    
    5(24
    )
    
    
    3
    
    
    
    6(220
    )
    
    
    (177
    )
    
    
    (149
    )
 British Sky Broadcasting Group plcAnnual Report 2009
77




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##### Table of Contents



Consolidated financial statements
 continued
  continued
        2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mCost of inventories recognised as an expense
    
    
    1,547
    
    
    
    1,436
    
    
    
    1,387Depreciation and impairment of property, plant and equipment
    
    
    173
    
    
    
    155
    
    
    
    120Amortisation and impairment of intangible assets
    
    
    118
    
    
    
    91
    
    
    
    72Rentals on operating leases and similar arrangements
    
    
    47
    
    
    
    46
    
    
    
    32Sub-lease rentals received on operating leases
    
    
    (1
    )
    
    
    (2
    )
    
    
    (1
    )
      2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mFees payable to the Companys auditors for the audit of the Companys annual accounts
    
    
    1
    
    
    
    1
    
    
    
    1Fees payable to the Companys auditors for other services:The audit of the Companys subsidiaries pursuant to legislation
    
    
    1
    
    
    
    1
    
    
    
    1Total audit fees
    
    
    2
    
    
    
    2
    
    
    
    2Other services pursuant to legislation
    
    
    1
    
    
    
    1
    
    
    
    1Information technology services
    
    
    
    
    
    
    1
    
    
    
    1Total non-audit fees
    
    
    1
    
    
    
    2
    
    
    
    23
    
    
    
    4
    
    
    
    4
 78
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##### Table of Contents



2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mWages and salaries
    
    
    572
    
    
    
    506
    
    
    
    451Social security costs
    
    
    60
    
    
    
    52
    
    
    
    48Costs of employee share option schemes(i)
    
    
    50
    
    
    
    40
    
    
    
    35Contributions to the Groups pension schemes(ii)
    
    
    27
    
    
    
    24
    
    
    
    20709
    
    
    
    622
    
    
    
    554
 (i)
    
    £48 million relates to equity-settled share-based payments (2008: £36 million; 2007: £33
million) and £2 million relates to cash-settled share-based payments (2008: £4 million; 2007: £2
million). At 30 June 2009, the total expense relating to non-vested awards not yet recognised was
£34 million which is expected to be recognised over a weighted average period of 1 year. At 30 June
2009, £8 million was recognised as liabilities arising from share-based payment transactions (2008:
£6 million), for which the counterparties right to cash had vested by the end of the year.(ii)
    
    The Group operates defined contribution pension schemes. The pension charge for the year
represents the cost of contributions payable by the Group to the schemes during the year. The
amount payable to the schemes by the Group at 30 June 2009 was £4 million (2008: £3 million).
  2009
    
    
    2008
    
    
    2007Number
    
    
    Number
    
    
    NumberChannels and services
    
    
    2,628
    
    
    
    2,624
    
    
    
    2,472Customer service, sales and marketing
    
    
    8,671
    
    
    
    7,918
    
    
    
    7,591Transmission and technology
    
    
    2,276
    
    
    
    1,943
    
    
    
    1,560Management and administration
    
    
    1,347
    
    
    
    1,660
    
    
    
    1,46414,922
    
    
    
    14,145
    
    
    
    13,087
   2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mShort-term employee benefits
    
    
    4
    
    
    
    5
    
    
    
    5Share-based payments
    
    
    7
    
    
    
    4
    
    
    
    311
    
    
    
    9
    
    
    
    8
    2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mCurrent tax expenseCurrent year
    
    
    191
    
    
    
    172
    
    
    
    204Adjustment in respect of prior years
    
    
    10
    
    
    
    7
    
    
    
    (15
    )Total current tax charge
    
    
    201
    
    
    
    179
    
    
    
    189Deferred tax expenseOrigination and reversal of temporary differences
    
    
    6
    
    
    
    5
    
    
    
    22Adjustment in respect of prior years
    
    
    (10
    )
    
    
    3
    
    
    
    14Total deferred tax (credit) charge
    
    
    (4
    )
    
    
    8
    
    
    
    36Taxation
    
    
    197
    
    
    
    187
    
    
    
    225
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79




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##### Table of Contents



Consolidated financial statements
 continued
  continued
 (continued)
  2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mDeferred tax charge (credit) relating to share-based payments
    
    
    3
    
    
    
    7
    
    
    
    (5
    )Deferred tax charge relating to cash flow hedges
    
    
    7
    
    
    
    13
    
    
    
    1210
    
    
    
    20
    
    
    
    7
   2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mProfit before tax
    
    
    456
    
    
    
    60
    
    
    
    724Profit before tax multiplied by standard rate of corporation tax in the UK of 28% (2008: 29.5%; 2007: 30%)
    
    
    128
    
    
    
    18
    
    
    
    217Effects of:Non-deductible expense(i)
    
    
    65
    
    
    
    220
    
    
    
    19Deferred tax write off following change in legislation
    
    
    6
    
    
    
    
    
    
    
    Tax exempt revenue(ii)
    
    
    (1
    )
    
    
    (61
    )
    
    
    (11
    )(Over) under-provision in respect of prior years
    
    
    (1
    )
    
    
    10
    
    
    
    Taxation
    
    
    197
    
    
    
    187
    
    
    
    225
 
 (i)
    Included within non-deductible expense is the tax effect of the impairment in
available-for-sale investments relating to the Groups investment in ITV, see note 6.(ii)
    For the year ended 30 June 2008, included within tax exempt revenue is the tax effect of the
profit on disposal of a joint venture relating to the Groups disposal of its 50% interest in the
NGC-UK Partnership, see note 5.   2009
    
    
    2008
    
    
    2007Millions of
    
    
    Millions of
    
    
    Millions ofshares
    
    
    shares
    
    
    sharesOrdinary shares
    
    
    1,753
    
    
    
    1,753
    
    
    
    1,759ESOP trust ordinary shares
    
    
    (13
    )
    
    
    (5
    )
    
    
    (4
    )Basic shares
    
    
    1,740
    
    
    
    1,748
    
    
    
    1,755Dilutive ordinary shares from share options
    
    
    13
    
    
    
    
    
    
    
    12Diluted shares
    
    
    1,753
    
    
    
    1,748
    
    
    
    1,767
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##### Table of Contents



2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mReconciliation from profit (loss) for the year to adjusted profit for the yearProfit (loss) for the year
    
    
    259
    
    
    
    (127
    )
    
    
    499Remeasurement of all derivative financial instruments (not qualifying for hedge accounting)
    
    
    24
    
    
    
    (3
    )
    
    
    (6
    )Recognition of deferred revenue (see note 2)
    
    
    (36
    )
    
    
    
    
    
    
    Deferred tax write off following change in legislation
    
    
    6
    
    
    
    
    
    
    
    Cost relating to restructuring exercise
    
    
    
    
    
    
    7
    
    
    
    Amount receivable from channel distribution agreement (see note 3)
    
    
    
    
    
    
    
    
    
    
    (65
    )Legal costs relating to claim against EDS (see note 3)
    
    
    3
    
    
    
    21
    
    
    
    16Profit on disposal of joint venture (see note 5)
    
    
    
    
    
    
    (67
    )
    
    
    Impairment of available-for-sale investment (see note 6)
    
    
    191
    
    
    
    616
    
    
    
    Tax effect of above items
    
    
    4
    
    
    
    (8
    )
    
    
    17Adjusted profit for the year
    
    
    451
    
    
    
    439
    
    
    
    461
 2009
    
    
    2008
    
    
    2007pence
    
    
    pence
    
    
    penceEarnings (loss) per share from profit (loss) for the yearBasic
    
    
    14.9
    
    
    
    (7.3
    )
    
    
    28.4Diluted
    
    
    14.8
    
    
    
    (7.3
    )
    
    
    28.2Adjusted earnings per share from adjusted profit for the yearBasic
    
    
    25.9
    
    
    
    25.1
    
    
    
    26.3Diluted
    
    
    25.7
    
    
    
    25.0
    
    
    
    26.1
   2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mDividends declared and paid during the year2006 Final dividend paid: 6.70p per ordinary share
    
    
    
    
    
    
    
    
    
    
    1172007 Interim dividend paid: 6.60p per ordinary share
    
    
    
    
    
    
    
    
    
    
    1162007 Final dividend paid: 8.90p per ordinary share
    
    
    
    
    
    
    156
    
    
    
    2008 Interim dividend paid: 7.125p per ordinary share
    
    
    
    
    
    
    124
    
    
    
    2008 Final dividend paid: 9.625p per ordinary share
    
    
    167
    
    
    
    
    
    
    
    2009 Interim dividend paid: 7.50p per ordinary share
    
    
    131
    
    
    
    
    
    
    
    298
    
    
    
    280
    
    
    
    233
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81




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##### Table of Contents



Consolidated financial statements
 continued
  continued
 12. Goodwill
 2009
    
    
    2008£m
    
    
    £mCarrying value
    
    
    852
    
    
    
    852
   2009
    
    
    2008£m
    
    
    £mBroadcast(i)
    
    
    673
    
    
    
    364Betting and gaming(ii)
    
    
    149
    
    
    
    149Easynet Enterprise(iii)
    
    
    30
    
    
    
    30Interactive
    
    
    
    
    
    
    302Multiple units without significant goodwill
    
    
    
    
    
    
    7852
    
    
    
    852
 82
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##### Table of Contents



13. Intangible assets
 Internallygenerated
    
    
    OtherInternally
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    intangible
    
    
    intangiblegenerated
    
    
    Software
    
    
    
    
    
    
    Other
    
    
    assets not yet
    
    
    assets not yetintangible
    
    
    development
    
    
    Software
    
    
    intangible
    
    
    available
    
    
    availableassets
    
    
    (external)
    
    
    licenses
    
    
    assets
    
    
    for use
    
    
    for use
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCostAt 1 July 2007
    
    
    62
    
    
    
    223
    
    
    
    77
    
    
    
    41
    
    
    
    
    
    
    
    52
    
    
    
    455Additions from business combinations
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3
    
    
    
    8Foreign exchange movements
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Other additions
    
    
    33
    
    
    
    21
    
    
    
    12
    
    
    
    1
    
    
    
    4
    
    
    
    58
    
    
    
    129Disposals
    
    
    (4
    )
    
    
    (19
    )
    
    
    (1
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (29
    )Transfers
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    (11
    )
    
    
    At 30 June 2008
    
    
    91
    
    
    
    237
    
    
    
    89
    
    
    
    41
    
    
    
    4
    
    
    
    102
    
    
    
    564Foreign exchange movements
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Other additions
    
    
    34
    
    
    
    20
    
    
    
    19
    
    
    
    35
    
    
    
    13
    
    
    
    39
    
    
    
    160Disposals
    
    
    (5
    )
    
    
    (5
    )
    
    
    (8
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (23
    )Transfers
    
    
    4
    
    
    
    50
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (55
    )
    
    
    At 30 June 2009
    
    
    124
    
    
    
    302
    
    
    
    101
    
    
    
    72
    
    
    
    17
    
    
    
    86
    
    
    
    702AmortisationAt 1 July 2007
    
    
    25
    
    
    
    127
    
    
    
    39
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    194Foreign exchange movements
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Amortisation for the year
    
    
    14
    
    
    
    52
    
    
    
    15
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    91Disposals
    
    
    (4
    )
    
    
    (19
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (25
    )At 30 June 2008
    
    
    35
    
    
    
    160
    
    
    
    54
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    261Foreign exchange movements
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Amortisation for the year
    
    
    27
    
    
    
    50
    
    
    
    15
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    117Impairments
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Disposals
    
    
    (5
    )
    
    
    (5
    )
    
    
    (8
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (23
    )At 30 June 2009
    
    
    58
    
    
    
    205
    
    
    
    62
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    357Carrying amountsAt 1 July 2007
    
    
    37
    
    
    
    96
    
    
    
    38
    
    
    
    38
    
    
    
    
    
    
    
    52
    
    
    
    261At 30 June 2008
    
    
    56
    
    
    
    77
    
    
    
    35
    
    
    
    29
    
    
    
    4
    
    
    
    102
    
    
    
    303At 30 June 2009
    
    
    66
    
    
    
    97
    
    
    
    39
    
    
    
    40
    
    
    
    17
    
    
    
    86
    
    
    
    345
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013Estimated amortisation charge
    
    
    116
    
    
    
    102
    
    
    
    72
    
    
    
    32
    
    
    
    13
 British Sky Broadcasting Group plcAnnual Report 2009
83




---



##### Table of Contents



Consolidated financial statements
 continued
  continued
 14. Property, plant and equipment
 Land and
    
    
    
    
    
    
    Equipment,
    
    
    Assets not yetfreehold
    
    
    Leasehold
    
    
    furniture and
    
    
    available forbuildings
    (i)(ii)
    
    improvements
    
    
    fixtures
    
    
    use
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCostAt 1 July 2007
    
    
    105
    
    
    
    64
    
    
    
    761
    
    
    
    37
    
    
    
    967Additions from business combinations
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Foreign exchange movements
    
    
    
    
    
    
    1
    
    
    
    9
    
    
    
    
    
    
    
    10Other additions
    
    
    3
    
    
    
    7
    
    
    
    148
    
    
    
    46
    
    
    
    204Disposals
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    (30
    )Transfers
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    (25
    )
    
    
    At 30 June 2008
    
    
    108
    
    
    
    72
    
    
    
    914
    
    
    
    58
    
    
    
    1,152Foreign exchange movements
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Other additions
    
    
    25
    
    
    
    5
    
    
    
    85
    
    
    
    136
    
    
    
    251Disposals
    
    
    (5
    )
    
    
    
    
    
    
    (74
    )
    
    
    (2
    )
    
    
    (81
    )Transfers
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (1
    )
    
    
    At 30 June 2009
    
    
    128
    
    
    
    77
    
    
    
    931
    
    
    
    191
    
    
    
    1,327DepreciationAt 1 July 2007
    
    
    17
    
    
    
    19
    
    
    
    261
    
    
    
    
    
    
    
    297Foreign exchange movements
    
    
    
    
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    8Depreciation
    
    
    3
    
    
    
    2
    
    
    
    150
    
    
    
    
    
    
    
    155Disposals
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    (30
    )At 30 June 2008
    
    
    20
    
    
    
    22
    
    
    
    388
    
    
    
    
    
    
    
    430Foreign exchange movements
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Depreciation
    
    
    4
    
    
    
    7
    
    
    
    154
    
    
    
    
    
    
    
    165Impairments
    
    
    1
    
    
    
    
    
    
    
    5
    
    
    
    2
    
    
    
    8Disposals
    
    
    (3
    )
    
    
    
    
    
    
    (73
    )
    
    
    (2
    )
    
    
    (78
    )At 30 June 2009
    
    
    22
    
    
    
    29
    
    
    
    477
    
    
    
    
    
    
    
    528Carrying amountsAt 1 July 2007
    
    
    88
    
    
    
    45
    
    
    
    500
    
    
    
    37
    
    
    
    670At 30 June 2008
    
    
    88
    
    
    
    50
    
    
    
    526
    
    
    
    58
    
    
    
    722At 30 June 2009
    
    
    106
    
    
    
    48
    
    
    
    454
    
    
    
    191
    
    
    
    799
 
 (i)
    The amounts shown include assets held under finance leases with a net book value of £4 million (2008: £5 million). The cost of these assets was £9 million (2008: £9 million)
and the accumulated depreciation was £5 million (2008: £4 million). Depreciation charged during the year on such assets was £1 million (2008: £1 million; 2007: nil).(ii)
    Depreciation was not charged on £32 million of land (2008: £27 million).
 84
British Sky Broadcasting Group plcAnnual Report 2009




---



##### Table of Contents



15. Investments in joint ventures and associates
   2009
    
    
    2008£m
    
    
    £mShare of net assets:At 1 July
    
    
    114
    
    
    
    34Acquisitions and disposals  Disposal of joint venture
    
    
    
    
    
    
    (15
    )  Acquisition of associates
    
    
    
    
    
    
    82Movement in net assets  Funding, net of repayments
    
    
    3
    
    
    
    6  Dividends received
    
    
    (20
    )
    
    
    (11
    )  Share of profits
    
    
    19
    
    
    
    15  Exchange differences on translation of foreign joint ventures and associates
    
    
    19
    
    
    
    3At 30 June
    
    
    135
    
    
    
    114
    2009
    
    
    2008£m
    
    
    £mNon-current assets
    
    
    4
    
    
    
    4Current assets
    
    
    45
    
    
    
    49Current liabilities
    
    
    (22
    )
    
    
    (24
    )Non-current liabilities
    
    
    (1
    )
    
    
    (1
    )Shareholders equity
    
    
    26
    
    
    
    28Revenue
    
    
    68
    
    
    
    72Expense
    
    
    (55
    )
    
    
    (58
    )Taxation
    
    
    (4
    )
    
    
    (3
    )Share of profit from joint ventures
    
    
    9
    
    
    
    11
   2009
    
    
    2008£m
    
    
    £mTotal assets
    
    
    343
    
    
    
    289Total liabilities
    
    
    (52
    )
    
    
    (64
    )Shareholders equity
    
    
    291
    
    
    
    225Revenue(i)
    
    
    172
    
    
    
    132Profit(i)
    
    
    45
    
    
    
    38
 
 (i)
    Revenue and profit numbers are provided for the full year ended 30 June 2009 and 30 June 2008. 16. Available-for-sale investments
 2009
    
    
    2008£m
    
    
    £mInvestment in ITV at cost
    
    
    946
    
    
    
    946Unrealised gain on ITV investment
    
    
    96
    
    
    
    Impairment of ITV investment
    
    
    (807
    )
    
    
    (616
    )Fair value of ITV investment
    
    
    235
    
    
    
    330Other investments at cost
    
    
    26
    
    
    
    8261
    
    
    
    338
 British Sky Broadcasting Group plcAnnual Report 2009
85




---



##### Table of Contents



Consolidated financial statements
 continued
  continued
 16. Available-for-sale investments (continued)
    17. Deferred tax
  Share-based
    
    
    FinancialFixed asset
    
    
    
    
    
    
    Short-term
    
    
    payments
    
    
    instrumenttemporary
    
    
    
    
    
    
    temporary
    
    
    temporary
    
    
    temporarydifferences
    
    
    Tax losses
    
    
    differences
    
    
    differences
    
    
    differences
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 July 2007
    
    
    (9
    )
    
    
    15
    
    
    
    9
    
    
    
    28
    
    
    
    11
    
    
    
    54Credit (charge) to income
    
    
    3
    
    
    
    (8
    )
    
    
    (1
    )
    
    
    (3
    )
    
    
    1
    
    
    
    (8
    )Charge to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (13
    )
    
    
    (20
    )Business combinations
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )At 30 June 2008
    
    
    (9
    )
    
    
    7
    
    
    
    8
    
    
    
    18
    
    
    
    (1
    )
    
    
    23Credit (charge) to income
    
    
    7
    
    
    
    (5
    )
    
    
    (2
    )
    
    
    7
    
    
    
    (3
    )
    
    
    4Charge to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (7
    )
    
    
    (10
    )At 30 June 2009
    
    
    (2
    )
    
    
    2
    
    
    
    6
    
    
    
    22
    
    
    
    (11
    )
    
    
    17
     2009
    
    
    2008£m
    
    
    £mDeferred tax assets
    
    
    30
    
    
    
    36Deferred tax liabilities
    
    
    (13
    )
    
    
    (13
    )17
    
    
    
    23
  2009
    
    
    2008£m
    
    
    £mTax losses arising from trading
    
    
    341
    
    
    
    128Tax losses arising from capital disposals and provisions against investments
    
    
    406
    
    
    
    407747
    
    
    
    535
 86
British Sky Broadcasting Group plcAnnual Report 2009




---



##### Table of Contents



18. Inventories
 2009
    
    
    2008£m
    
    
    £mTelevision programme rights
    
    
    274
    
    
    
    219Set-top boxes and related equipment
    
    
    97
    
    
    
    81Other inventories
    
    
    15
    
    
    
    10386
    
    
    
    310
  19. Trade and other receivables
 2009
    
    
    2008£m
    
    
    £mGross trade receivables
    
    
    297
    
    
    
    279Less: provision for impairment of receivables
    
    
    (118
    )
    
    
    (84
    )Net trade receivables
    
    
    179
    
    
    
    195Amounts receivable from joint ventures and
associates
    
    
    5
    
    
    
    10Amounts receivable from other related parties
    
    
    
    
    
    
    6Prepayments
    
    
    221
    
    
    
    149Accrued income
    
    
    116
    
    
    
    105VAT
    
    
    52
    
    
    
    51Other
    
    
    40
    
    
    
    50Current trade and other receivables
    
    
    613
    
    
    
    566Non current prepayments
    
    
    21
    
    
    
    19Total trade and other receivables
    
    
    634
    
    
    
    585
 2009
    
    
    2008£m
    
    
    £mUp to 30 days past due date
    
    
    56
    
    
    
    4230 to 60 days past due date
    
    
    11
    
    
    
    960 to 120 days past due date
    
    
    7
    
    
    
    8More than 120 days past due date
    
    
    5
    
    
    
    1379
    
    
    
    72
   Provisions for doubtful debts
 2009
    
    
    2008£m
    
    
    £mBalance at beginning of year
    
    
    84
    
    
    
    72Amounts utilised
    
    
    (7
    )
    
    
    (14
    )Income statement charge
    
    
    41
    
    
    
    26Balance at end of year
    
    
    118
    
    
    
    84
 20. Trade and other payables
 2009
    
    
    2008£m
    
    
    £mTrade payables
    
    
    434
    
    
    
    270Amounts owed to joint ventures and associates
    
    
    3
    
    
    
    3Amounts owed to other related parties
    
    
    42
    
    
    
    32VAT
    
    
    93
    
    
    
    105Accruals
    
    
    586
    
    
    
    534Deferred income
    
    
    269
    
    
    
    289Other
    
    
    65
    
    
    
    611,492
    
    
    1,294
 British Sky Broadcasting Group plcAnnual Report 2009
87




---



##### Table of Contents



Consolidated financial statements
 continued
  continued
 21. Provisions
 At
    
    
    Provided
    
    
    
    
    
    
    Utilised
    
    
    At
    
    
    Provided
    
    
    Utilised
    
    
    At1 July
    
    
    during
    
    
    On acquisition
    
    
    during
    
    
    1 July
    
    
    during
    
    
    during
    
    
    30 June2007
    
    
    the year
    
    
    of subsidiary
    
    
    the year
    
    
    2008
    
    
    the year
    
    
    the year
    
    
    2009£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCurrent liabilitiesProvision for termination benefits(i)
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring provision(ii)
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    (6
    )
    
    
    Acquired and acquisition related provisions(iii)
    
    
    
    
    
    
    2
    
    
    
    22
    
    
    
    (10
    )
    
    
    14
    
    
    
    8
    
    
    
    (8
    )
    
    
    14Other provisions(iv)
    
    
    5
    
    
    
    4
    
    
    
    
    
    
    
    (2
    )
    
    
    7
    
    
    
    1
    
    
    
    (4
    )
    
    
    48
    
    
    
    12
    
    
    
    22
    
    
    
    (15
    )
    
    
    27
    
    
    
    9
    
    
    
    (18
    )
    
    
    18Non-current liabilitiesAcquired and acquisition related provisions(iii)
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    (7
    )
    
    
    1Other provisions(v)
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    14
    
    
    
    
    
    
    
    (3
    )
    
    
    1118
    
    
    
    
    
    
    
    8
    
    
    
    (4
    )
    
    
    22
    
    
    
    
    
    
    
    (10
    )
    
    
    12
 
 (i)
    At 30 June 2007, the Group provided £3 million for expected costs of redundancy and related expenses. During the year ended 30 June 2008 this provision was fully utilised.(ii)
    During the year ended 30 June 2008 the Group provided £6 million for the expected costs of a restructuring exercise undertaken. During the year ended 30 June 2009 this
provision was fully utilised.(iii)
    During the year ended 30 June 2008 the Group took control of Amstrad. Following the purchase method of accounting the Group has recognised at fair value both the
provisions and contingent liabilities acquired in the business combination. The provisions recognised primarily relate to warranties and repair costs, the settlement of
outstanding customer claims and the fair value of a contingent liability in respect of importation duty on set-top boxes, see note 27. It is expected for these provisions to be
utilised within the next two years.(iv)
    Included in other provisions are amounts provided for onerous contracts for property leases, maintenance and legal disputes. The timing of the cash flows for onerous property
leases and maintenance are dependent on the terms of the remaining leases. The timing of the cash flows for legal disputes cannot be reasonably determined.(v)
    Included within non-current other provisions are onerous property leases. The timing of the cash flows are dependent on the terms of the leases, but are expected to
continue up to August 2016. 22. Borrowings and non-current other payables
 2009
    
    
    2008£m
    
    
    £mCurrent borrowingsUS$600 million of 6.875% Guaranteed Notes repayable in February 2009(i)
    
    
    
    
    
    
    301£100 million of 7.750% Guaranteed Notes repayable in July 2009(i)
    
    
    100
    
    
    
    US$600 million of 8.200% Guaranteed Notes repayable in July 2009(i)
    
    
    363
    
    
    
    Loan Notes(ii)
    
    
    2
    
    
    
    37465
    
    
    
    338Non-current borrowings£100 million of 7.750% Guaranteed Notes repayable in July 2009(i)
    
    
    
    
    
    
    100US$650 million of 8.200% Guaranteed Notes repayable in July 2009(i)
    
    
    
    
    
    
    326US$750 million of 5.625% Guaranteed Notes repayable in October 2015(i)
    
    
    477
    
    
    
    379£400 million of 5.750% Guaranteed Notes repayable in October 2017(i)
    
    
    404
    
    
    
    398US$750 million of 6.100% Guaranteed Notes repayable in February 2018(i)
    
    
    459
    
    
    
    372US$600 million of 9.500% Guaranteed Notes repayable in November 2018(i)
    
    
    367
    
    
    
    £300 million of 6.000% Guaranteed Notes repayable in May 2027(i)
    
    
    295
    
    
    
    295US$350 million of 6.500% Guaranteed Notes repayable in October 2035(i)
    
    
    206
    
    
    
    171Obligations under finance leases(iii)
    
    
    71
    
    
    
    672,279
    
    
    
    2,108Non-current other payablesAmounts owed to other related parties
    
    
    5
    
    
    
    Accruals
    
    
    18
    
    
    
    19Deferred income
    
    
    43
    
    
    
    4866
    
    
    
    67
 88
British Sky Broadcasting Group plcAnnual Report 2009




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##### Table of Contents



Interest Rate Hedging
    
    
    Hedged Interest RatesHedged Value*
    
    
    Fixed
    
    
    Floating
    
    
    Fixed
    
    
    Floating£m
    
    
    £m
    
    
    £m£100 million of 7.750% Guaranteed Notes repayable in July 2009
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    7.750%
    
    
    
    N/AUS$600 million of 8.200% Guaranteed Notes repayable in July 2009
    
    
    380
    
    
    
    254
    
    
    
    126
    
    
    
    7.653%
    
    
    6m LIBOR + 2.829%US$750 million of 6.100% Guaranteed Notes repayable in February 2018
    
    
    387
    
    
    
    290
    
    
    
    97
    
    
    
    6.829%
    
    
    6m LIBOR + 1.892%US$600 million of 9.500% Guaranteed Notes repayable in November 2018
    
    
    401
    
    
    
    
    
    
    
    401
    
    
    
    N/A
    
    
    6m LIBOR + 5.542%£300 million of 6.000% Guaranteed Notes repayable in May 2027
    
    
    300
    
    
    
    300
    
    
    
    
    
    
    
    6.000%
    
    
    
    N/A1,568
    
    
    
    944
    
    
    
    624
  Interest Rate Hedging
    
    
    Hedged Interest RatesHedged Value*
    
    
    Fixed
    
    
    Floating
    
    
    Fixed
    
    
    Floating£m
    
    
    £m
    
    
    £mUS$750 million of 5.625% Guaranteed Notes repayable in October 2015
    
    
    428
    
    
    
    171
    
    
    
    257
    
    
    
    5.427%
    
    
    6m LIBOR + 0.698%£400 million of 5.750% Guaranteed Notes repayable in October 2017
    
    
    400
    
    
    
    330
    
    
    
    70
    
    
    
    5.750%
    
    
    6m LIBOR  0.070%US$350 million of 6.500% Guaranteed Notes repayable in October 2035
    
    
    200
    
    
    
    200
    
    
    
    
    
    
    
    5.826%
    
    
    
    N/A1,028
    
    
    
    701
    
    
    
    327
  Interest Rate Hedging
    
    
    Hedged Interest RatesHedged Value*
    
    
    Fixed
    
    
    Floating
    
    
    Fixed
    
    
    Floating£m
    
    
    £m
    
    
    £m$600 million of 6.875% Guaranteed Notes repayable February 2009
    
    
    367
    
    
    
    306
    
    
    
    61
    
    
    
    8.210%
    
    
    6m LIBOR + 3.490%£100 million of 7.750% Guaranteed Notes repayable in July 2009
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    7.750%
    
    
    
    N/AUS$650 million of 8.200% Guaranteed Notes repayable in July 2009
    
    
    412
    
    
    
    286
    
    
    
    126
    
    
    
    7.653%
    
    
    6m LIBOR + 2.829%US$750 million of 6.100% Guaranteed Notes repayable in February 2018
    
    
    387
    
    
    
    290
    
    
    
    97
    
    
    
    6.829%
    
    
    6m LIBOR + 1.892%£300 million of 6.000% Guaranteed Notes repayable in May 2027
    
    
    300
    
    
    
    300
    
    
    
    
    
    
    
    6.000%
    
    
    
    N/A1,566
    
    
    
    1,282
    
    
    
    284
  Interest Rate Hedging
    
    
    Hedged Interest RatesHedged Value*
    
    
    Fixed
    
    
    Floating
    
    
    Fixed
    
    
    Floating£m
    
    
    £m
    
    
    £mUS$750 million of 5.625% Guaranteed Notes repayable in October 2015
    
    
    428
    
    
    
    171
    
    
    
    257
    
    
    
    5.427%
    
    
    6m LIBOR + 0.698%£400 million of 5.750% Guaranteed Notes repayable in October 2017
    
    
    400
    
    
    
    330
    
    
    
    70
    
    
    
    5.750%
    
    
    6m LIBOR  0.070%US$350 million of 6.500% Guaranteed Notes repayable in October 2035
    
    
    200
    
    
    
    200
    
    
    
    
    
    
    
    5.826%
    
    
    
    N/A1,028
    
    
    
    701
    
    
    
    327
 
 *
    Note: Hedged value is the final redemption value including any hedging
 British Sky Broadcasting Group plcAnnual Report 2009
89




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##### Table of Contents



Consolidated financial statements
 continued
  continued
 22. Borrowings and non-current other payables (continued)
   2009
    
    
    2008£m
    
    
    £mWithin one year
    
    
    8
    
    
    
    9Between one and two years
    
    
    8
    
    
    
    8Between two and three years
    
    
    8
    
    
    
    8Between three and four years
    
    
    8
    
    
    
    8Between four and five years
    
    
    8
    
    
    
    8After five years
    
    
    176
    
    
    
    184216
    
    
    
    225Future finance charges on finance lease
liabilities
    
    
    (145
    )
    
    
    (154
    )Present value of finance lease liabilities
    
    
    71
    
    
    
    71
 
 The main obligations under finance leases are in relation to:(a)
    finance arrangements in connection with the broadband network infrastructure. During the
year, repayments of £7 million (2008: £5 million) were made against the lease.
A proportion of these payments have been allocated against the capital outstanding. The lease
bears interest at a rate of 11.1% and expires in November 2039.(b)
    finance arrangements in connection with the contact centre in Dunfermline. During the year,
repayments of £1 million (2008: £1 million) were made against the lease.
A proportion of these payments have been allocated against the capital amount outstanding. The
lease bears interest at a rate of 8.5% and expires in September 2020.
 90
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##### Table of Contents



23. Derivatives and other financial instruments
  2009
    
    
    2008Asset
    
    
    Liability
    
    
    Asset
    
    
    LiabilityFair Value
    
    
    Notional
    
    
    Fair Value
    
    
    Notional
    
    
    Fair Value
    
    
    Notional
    
    
    Fair Value
    
    
    Notional£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mFair value hedgesInterest rate swaps and swaptions
    
    
    54
    
    
    
    800
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    276
    
    
    
    
    
    
    
    94Cash flow hedgesCross-currency swaps
    
    
    104
    
    
    
    661
    
    
    
    (17
    )
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    (180
    )
    
    
    1,441Forward exchange contracts
    
    
    37
    
    
    
    512
    
    
    
    (43
    )
    
    
    514
    
    
    
    5
    
    
    
    231
    
    
    
    (11
    )
    
    
    300Currency options (collars)
    
    
    11
    
    
    
    105
    
    
    
    (2
    )
    
    
    105
    
    
    
    2
    
    
    
    121
    
    
    
    (10
    )
    
    
    121Derivatives not in a formal
hedge relationshipInterest rate swaps and swaptions
    
    
    1
    
    
    
    83
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    20
    
    
    
    (3
    )
    
    
    135Forward exchange contracts
    
    
    4
    
    
    
    34
    
    
    
    (2
    )
    
    
    61
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    13Cross-currency swaps
    
    
    28
    
    
    
    353
    
    
    
    (63
    )
    
    
    401
    
    
    
    
    
    
    
    
    
    
    
    (39
    )
    
    
    353Embedded derivatives
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    11
    
    
    
    2
    
    
    
    19
    
    
    
    
    
    
    
    Total
    
    
    239
    
    
    
    2,548
    
    
    
    (128
    )
    
    
    1,483
    
    
    
    18
    
    
    
    671
    
    
    
    (243
    )
    
    
    2,457
  2009
    
    
    
    2008Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability£m
    
    
    £m
    
    
    £m
    
    
    £mIn one year or less
    
    
    33
    
    
    
    (42
    )
    
    
    4
    
    
    
    (81
    )Between one and two years
    
    
    13
    
    
    
    (16
    )
    
    
    2
    
    
    
    (90
    )Between two and five years
    
    
    7
    
    
    
    (7
    )
    
    
    3
    
    
    
    (3
    )In more than five years
    
    
    186
    
    
    
    (63
    )
    
    
    9
    
    
    
    (69
    )Total
    
    
    239
    
    
    
    (128
    )
    
    
    18
    
    
    
    (243
    )
     Group treasury activity
 British Sky Broadcasting Group plcAnnual Report 2009
91




---



##### Table of Contents



Consolidated financial statements
 continued
  continued
 23. Derivatives and other financial instruments (continued)
 92
British Sky Broadcasting Group plcAnnual Report 2009




---



##### Table of Contents



   
 British Sky Broadcasting Group plcAnnual Report 2009
93




---



##### Table of Contents



Consolidated financial statements
 continued
  continued
 23. Derivatives and other financial instruments (continued)
 Between
    
    
    Between
    
    
    MoreLess than 12
    
    
    one and two
    
    
    two and five
    
    
    than fivemonths
    
    
    years
    
    
    years
    
    
    years£m
    
    
    £m
    
    
    £m
    
    
    £mAt 30 June 2009Non derivative financial liabilitiesBonds  USD
    
    
    481
    
    
    
    102
    
    
    
    305
    
    
    
    2,086Bonds  GBP
    
    
    149
    
    
    
    41
    
    
    
    123
    
    
    
    1,026Loan Notes
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    Obligations under finance leases and other borrowings
    
    
    8
    
    
    
    8
    
    
    
    24
    
    
    
    176Trade and other payables
    
    
    1,090
    
    
    
    41
    
    
    
    5
    
    
    
    Provisions
    
    
    4
    
    
    
    5
    
    
    
    8
    
    
    
    4Net settled derivativesFinancial assets
    
    
    (25
    )
    
    
    (25
    )
    
    
    (76
    )
    
    
    (85
    )Financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross settled derivativesOutflow
    
    
    470
    
    
    
    74
    
    
    
    223
    
    
    
    1,892Inflow
    
    
    (457
    )
    
    
    (78
    )
    
    
    (235
    )
    
    
    (2,008
    )
 Between
    
    
    Between
    
    
    MoreLess than 12
    
    
    one and two
    
    
    two and five
    
    
    than fivemonths
    
    
    years
    
    
    years
    
    
    years£m
    
    
    £m
    
    
    £m
    
    
    £mAt 30 June 2008Non derivative financial liabilitiesBonds  USD
    
    
    404
    
    
    
    395
    
    
    
    167
    
    
    
    1,352Bonds  GBP
    
    
    49
    
    
    
    149
    
    
    
    123
    
    
    
    1,067Loan Notes
    
    
    2
    
    
    
    2
    
    
    
    5
    
    
    
    44Obligations under finance leases and other borrowings
    
    
    9
    
    
    
    8
    
    
    
    24
    
    
    
    184Trade and other payables
    
    
    979
    
    
    
    36
    
    
    
    5
    
    
    
    Provisions
    
    
    8
    
    
    
    3
    
    
    
    9
    
    
    
    7Net settled derivativesFinancial assets
    
    
    (5
    )
    
    
    (5
    )
    
    
    (15
    )
    
    
    (13
    )Financial liabilities
    
    
    
    
    
    
    (1
    )
    
    
    (5
    )
    
    
    (8
    )Gross settled derivativesOutflow
    
    
    915
    
    
    
    635
    
    
    
    303
    
    
    
    1,476Inflow
    
    
    (807
    )
    
    
    (520
    )
    
    
    (248
    )
    
    
    (1,332
    )
  2009
    
    
    2008£m
    
    
    £mExpiring in more than one year but not more than two years
    
    
    1,000
    
    
    
    Expiring in more than two years but not more than three years
    
    
    
    
    
    
    1,000Expiring in more than three years but not more than four years (not available for drawing until July 2010)
    
    
    750
    
    
    
    
 94
British Sky Broadcasting Group plcAnnual Report 2009




---



##### Table of Contents



Held to
    
    
    
    
    
    
    Derivatives
    
    
    Derivatives inmaturity
    
    
    Available
    
    
    deemed held
    
    
    hedging
    
    
    Loans and
    
    
    
    
    
    
    Total carrying
    
    
    Total fairinvestments
    
    
    for sale
    
    
    for trading
    
    
    relationships
    
    
    receivables
    
    
    Other liabilities
    
    
    value
    
    
    values£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 30 June 2009Quoted bond debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,671
    )
    
    
    (2,671
    )
    
    
    (2,692
    )Derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    111Loan notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Trade and other payables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,147
    )
    
    
    (1,147
    )
    
    
    (1,147
    )Provisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )
    
    
    (15
    )Obligations under finance
leases and other borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (71
    )
    
    
    (71
    )
    
    
    (71
    )Available-for-sale investments
    
    
    
    
    
    
    261
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261
    
    
    
    261Trade and other receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    392
    
    
    
    
    
    
    
    392
    
    
    
    392Short-term deposits
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    90Cash and cash equivalents
    
    
    165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    646
    
    
    
    
    
    
    
    811
    
    
    
    811At 30 June 2008Quoted bond debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,342
    )
    
    
    (2,342
    )
    
    
    (2,233
    )Derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (185
    )
    
    
    
    
    
    
    
    
    
    
    (225
    )
    
    
    (225
    )Loan notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37
    )
    
    
    (37
    )
    
    
    (37
    )Trade and other payables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,024
    )
    
    
    (1,024
    )
    
    
    (1,024
    )Provisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    (22
    )
    
    
    (22
    )Obligations under finance
leases and other borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    (67
    )
    
    
    (67
    )Available-for-sale investments
    
    
    
    
    
    
    338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    338
    
    
    
    338Trade and other receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393
    
    
    
    
    
    
    
    393
    
    
    
    393Short-term deposits
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    185Cash and cash equivalents
    
    
    412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    632
    
    
    
    632
  
    
    The fair value of financial assets and financial liabilities with standard terms and
conditions and which are traded on active liquid markets is determined with reference to
quoted market prices;
    
    The fair value of other financial assets and financial liabilities (excluding derivative
instruments) is determined in accordance with generally accepted pricing models based on
discounted cash flow analysis using prices from observable current market transactions and
dealer quotes for similar instruments;
    
    The fair value of derivative instruments is calculated using quoted prices. Where such prices
are not available, use is made of discounted cash flow analysis using the applicable yield
curve for the duration of the instruments for non-optional derivatives, and option pricing
models for optional derivatives;
    
    Foreign currency forward contracts are measured using quoted forward exchange rates and yield
curves derived from quoted interest rates matching maturities of the contracts;
    
    Interest rate swaps are measured at the present value of future cash flows estimated and
discounted based on the applicable yield curves derived from quoted interest rates; and
    
    The fair value of obligations under finance leases and other borrowings is estimated by
discounting the future cash flows to net present value. The fair value of short-term deposits
and cash and cash equivalents is equivalent to book value due to the short-term nature of
these instruments.
 British Sky Broadcasting Group plcAnnual Report 2009
95




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##### Table of Contents



Consolidated financial statements
 continued
  continued
 23. Derivatives and other financial instruments (continued)
 24. Share capital
 2009
    
    
    2008£m
    
    
    £mAuthorised ordinary shares of 50p
3,000,000,000 (2008: 3,000,000,000)
    
    
    1,500
    
    
    
    1,500Allotted, called-up and fully paid
1,752,842,599 (2008: 1,752,842,599)
    
    
    876
    
    
    
    876
 96
British Sky Broadcasting Group plcAnnual Report 2009




---



##### Table of Contents



2009
    
    
    2008Number of
    
    
    Number ofordinary
    
    
    ordinaryshares
    
    
    sharesExecutive Share Option Scheme options(i)
    
    
    17,945,045
    
    
    
    19,705,967Sharesave Scheme options(ii)
    
    
    6,514,732
    
    
    
    5,010,788All Employee awards(iii)
    
    
    1,595,700
    
    
    
    Management LTIP awards(iv)
    
    
    19,276,851
    
    
    
    11,563,264LTIP awards(v)
    
    
    9,293,347
    
    
    
    6,048,98354,625,675
    
    
    
    42,329,002
 (i) Executive Share Option Scheme options
   (ii) Sharesave Scheme options
 (iii) All Employee awards
 
 (iv) Management LTIP awards
   (v) LTIP awards
 British Sky Broadcasting Group plcAnnual Report 2009
97




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##### Table of Contents



Consolidated financial statements
 continued
  continued
 24. Share capital (continued)
  Executive Scheme
    
    
    Sharesave Schemes
    
    
    Senior Management Schemes
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise price
    
    
    
    
    
    
    exercise price
    
    
    
    
    
    
    exercise price
    
    
    
    
    
    
    exercise priceNumber
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £Outstanding at 1 July 2007
    
    
    24,909,710
    
    
    
    6.89
    
    
    
    5,795,544
    
    
    
    4.24
    
    
    
    19,286,465
    
    
    
    0.00
    
    
    
    49,991,719
    
    
    
    3.93Granted during the year
    
    
    
    
    
    
    
    
    
    
    2,018,443
    
    
    
    5.38
    
    
    
    7,780,625
    
    
    
    0.00
    
    
    
    9,799,068
    
    
    
    1.11Exercised during the year
    
    
    (2,848,742
    )
    
    
    5.45
    
    
    
    (1,765,973
    )
    
    
    3.77
    
    
    
    (5,261,399
    )
    
    
    0.00
    
    
    
    (9,876,114
    )
    
    
    2.25Forfeited during the year
    
    
    (2,355,001
    )
    
    
    7.36
    
    
    
    (803,709
    )
    
    
    4.72
    
    
    
    (4,193,444
    )
    
    
    0.00
    
    
    
    (7,352,154
    )
    
    
    2.87Expired during the year
    
    
    
    
    
    
    
    
    
    
    (233,517
    )
    
    
    5.42
    
    
    
    
    
    
    
    
    
    
    
    (233,517
    )
    
    
    5.42Outstanding at 30 June 2008
    
    
    19,705,967
    
    
    
    7.05
    
    
    
    5,010,788
    
    
    
    4.73
    
    
    
    17,612,247
    
    
    
    0.00
    
    
    
    42,329,002
    
    
    
    3.84Granted during the year
    
    
    
    
    
    
    
    
    
    
    4,911,084
    
    
    
    2.49
    
    
    
    12,533,050
    
    
    
    0.00
    
    
    
    17,444,134
    
    
    
    0.70Exercised during the year
    
    
    
    
    
    
    
    
    
    
    (261,998
    )
    
    
    4.26
    
    
    
    (304,266
    )
    
    
    0.00
    
    
    
    (566,264
    )
    
    
    1.97Forfeited during the year
    
    
    (1,463,143
    )
    
    
    6.73
    
    
    
    (1,458,128
    )
    
    
    4.68
    
    
    
    (1,269,546
    )
    
    
    0.00
    
    
    
    (4,190,817
    )
    
    
    3.98Expired during the year
    
    
    (297,779
    )
    
    
    5.01
    
    
    
    (91,314
    )
    
    
    4.33
    
    
    
    (1,287
    )
    
    
    0.00
    
    
    
    (390,380
    )
    
    
    4.84Outstanding at 30 June 2009
    
    
    17,945,045
    
    
    
    7.11
    
    
    
    8,110,432
    
    
    
    3.40
    
    
    
    28,570,198
    
    
    
    0.00
    
    
    
    54,625,675
    
    
    
    2.84
    Executive Scheme
    
    
    Sharesave Schemes
    
    
    Senior Management Schemes
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageremaining
    
    
    
    
    
    
    remaining
    
    
    
    
    
    
    remaining
    
    
    
    
    
    
    remainingcontractual life
    
    
    
    
    
    
    contractual life
    
    
    
    
    
    
    contractual life
    
    
    
    
    
    
    contractual lifeRange of exercise prices
    
    Number
    
    
    Years
    
    
    Number
    
    
    Years
    
    
    Number
    
    
    Years
    
    
    Number
    
    
    Years£0.00  £1.00
    
    
    
    
    
    
    
    
    
    
    1,595,700
    
    
    
    2.6
    
    
    
    28,570,198
    
    
    
    1.9
    
    
    
    30,165,898
    
    
    
    2.0£2.00  £3.00
    
    
    
    
    
    
    
    
    
    
    43,868
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    43,868
    
    
    
    0.8£3.00  £4.00
    
    
    
    
    
    
    
    
    
    
    3,675,121
    
    
    
    3.1
    
    
    
    
    
    
    
    
    
    
    
    3,675,121
    
    
    
    3.1£4.00  £5.00
    
    
    
    
    
    
    
    
    
    
    1,598,744
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    1,598,744
    
    
    
    1.3£5.00  £6.00
    
    
    5,431,296
    
    
    
    4.6
    
    
    
    1,181,736
    
    
    
    2.5
    
    
    
    
    
    
    
    
    
    
    
    6,613,032
    
    
    
    4.2£6.00  £7.00
    
    
    5,050,304
    
    
    
    3.1
    
    
    
    15,263
    
    
    
    0.0
    
    
    
    
    
    
    
    
    
    
    
    5,065,567
    
    
    
    3.1£7.00  £8.00
    
    
    3,728,360
    
    
    
    2.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,728,360
    
    
    
    2.3£9.00  £10.00
    
    
    3,609,581
    
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,609,581
    
    
    
    1.4£11.00  £12.00
    
    
    12,247
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,247
    
    
    
    1.0£12.00  £13.00
    
    
    113,257
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,257
    
    
    
    1.017,945,045
    
    
    
    3.0
    
    
    
    8,110,432
    
    
    
    2.5
    
    
    
    28,570,198
    
    
    
    1.9
    
    
    
    54,625,675
    
    
    
    2.4
  Executive Scheme
    
    
    Sharesave Schemes
    
    
    Senior Management Schemes
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageremaining
    
    
    
    
    
    
    remaining
    
    
    
    
    
    
    remaining
    
    
    
    
    
    
    remainingcontractual life
    
    
    
    
    
    
    contractual life
    
    
    
    
    
    
    contractual life
    
    
    
    
    
    
    contractual lifeRange of exercise prices
    
    Number
    
    
    Years
    
    
    Number
    
    
    Years
    
    
    Number
    
    
    Years
    
    
    Number
    
    
    Years£0.00  £1.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,612,247
    
    
    
    2.1
    
    
    
    17,612,247
    
    
    
    2.1£2.00  £3.00
    
    
    
    
    
    
    
    
    
    
    67,567
    
    
    
    1.6
    
    
    
    
    
    
    
    
    
    
    
    67,567
    
    
    
    1.6£3.00  £4.00
    
    
    
    
    
    
    
    
    
    
    817,632
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    817,632
    
    
    
    1.7£4.00  £5.00
    
    
    22,658
    
    
    
    6.2
    
    
    
    2,220,084
    
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    2,242,742
    
    
    
    2.3£5.00  £6.00
    
    
    6,201,075
    
    
    
    5.3
    
    
    
    1,886,502
    
    
    
    3.5
    
    
    
    
    
    
    
    
    
    
    
    8,087,577
    
    
    
    4.9£6.00  £7.00
    
    
    5,559,102
    
    
    
    4.1
    
    
    
    15,263
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    5,574,365
    
    
    
    4.1£7.00  £8.00
    
    
    3,969,943
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,969,943
    
    
    
    3.3£9.00  £10.00
    
    
    3,827,685
    
    
    
    2.4
    
    
    
    3,740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,831,425
    
    
    
    2.4£11.00  £12.00
    
    
    12,247
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,247
    
    
    
    2.0£12.00  £13.00
    
    
    113,257
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,257
    
    
    
    2.019,705,967
    
    
    
    4.0
    
    
    
    5,010,788
    
    
    
    2.6
    
    
    
    17,612,247
    
    
    
    2.1
    
    
    
    42,329,002
    
    
    
    3.0
 98
British Sky Broadcasting Group plcAnnual Report 2009




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##### Table of Contents



2009
    
    
    2008Average remaining
    
    
    
    
    
    
    
    
    
    
    Average remainingOptions exercisable
    
    
    contractual life of
    
    
    Weighted average
    
    
    Options exercisable
    
    
    contractual life of
    
    
    Weighted averageat 30 June
    
    
    exercisable options
    
    
    exercise price
    
    
    at 30 June
    
    
    exercisable options
    
    
    exercise priceExecutive Scheme
    
    
    17,945,045
    
    
    
    3.0
    
    
    
    £7.11
    
    
    
    18,270,869
    
    
    
    3.8
    
    
    
    £7.20Sharesave Schemes
    
    
    453,217
    
    
    
    0.1
    
    
    
    £4.73
    
    
    
    174,043
    
    
    
    0.1
    
    
    
    £4.04Senior Management Schemes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312,804
    
    
    
    0.1
    
    
    
    £0.0018,398,262
    
    
    
    3.0
    
    
    
    £7.05
    
    
    
    18,757,716
    
    
    
    3.7
    
    
    
    £7.05
   (i) Sharesave Schemes
   2009
    
    
    2008Share price
    
    
    £4.38
    
    
    
    £6.93Exercise price
    
    
    £2.49
    
    
    
    £5.38Expected volatility
    
    
    22.4%
    
    
    
    23.0%Expected life
    
    3.7 years
    
    
    4.1 yearsExpected dividends
    
    
    3.9%
    
    
    
    2.2%Risk-free interest rate
    
    
    4.1%
    
    
    
    5.0%
 (ii) Senior Management Schemes
    2009
    
    
    2008Share price
    
    
    £4.54
    
    
    
    £6.53Exercise price
    
    
    £0.00
    
    
    
    £0.00Expected volatility
    
    
    21.9%
    
    
    
    18.9%Expected life
    
    3.0 years
    
    
    1.9 yearsExpected dividends
    
    
    3.7%
    
    
    
    2.4%Risk-free interest rate
    
    
    4.7%
    
    
    
    5.3%
 British Sky Broadcasting Group plcAnnual Report 2009
99




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##### Table of Contents



Consolidated financial statements
 continued
   continued
  TotalAvailable-
    
    
    
    
    
    
    
    
    
    
    shareholders'Share
    
    
    Share
    
    
    ESOP
    
    
    Hedging
    
    
    for-sale
    
    
    Other
    
    
    Retained
    
    
    (deficit)capital
    
    
    premium
    
    
    reserve
    
    
    reserve
    
    
    reserve
    
    
    reserves
    
    
    earnings
    
    
    equity£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 July 2007
    
    
    876
    
    
    
    1,437
    
    
    
    (54
    )
    
    
    (25
    )
    
    
    (151
    )
    
    
    331
    
    
    
    (2,367
    )
    
    
    47Recognition and
transfer of cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45Tax on items taken
directly to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (16
    )Impairment of
available-for-sale
investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151
    
    
    
    
    
    
    
    
    
    
    
    151Exchange
differences on
translation of
foreign
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4Share-based payment
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    8Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )
    
    
    (127
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (280
    )
    
    
    (280
    )At 30 June 2008
    
    
    876
    
    
    
    1,437
    
    
    
    (37
    )
    
    
    7
    
    
    
    
    
    
    
    335
    
    
    
    (2,786
    )
    
    
    (168
    )Recognition and
transfer of cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26Tax on items taken
directly to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (10
    )Revaluation of
available-for-sale
investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    96Exchange
differences on
translation of
foreign
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    3
    
    
    
    22Share-based payment
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    9Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    259Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (298
    )
    
    
    (298
    )At 30 June 2009
    
    
    876
    
    
    
    1,437
    
    
    
    (73
    )
    
    
    26
    
    
    
    96
    
    
    
    354
    
    
    
    (2,780
    )
    
    
    (64
    )
       Total number
    
    
    Averageof shares
    
    
    price paidPeriod
    
    purchased(i)
    
    
    per shareJuly
    
    
    789,283
    
    
    
    £4.52August
    
    
    7,710,717
    
    
    
    £4.75September
    
    
    
    
    
    
    October
    
    
    
    
    
    
    November
    
    
    
    
    
    
    December
    
    
    
    
    
    
    January
    
    
    
    
    
    
    February
    
    
    
    
    
    
    March
    
    
    
    
    
    
    April
    
    
    
    
    
    
    May
    
    
    
    
    
    
    June
    
    
    
    
    
    
    Total for the year ended 30 June 2009
    
    
    8,500,000
    
    
    
    £4.73
 (i)
    All share purchases were open market transactions and are included in the month of settlement.
 100
British Sky Broadcasting Group plcAnnual Report 2009




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##### Table of Contents



AverageNumber of
    
    
    price paidordinary shares
    
    
    per share
    
    
    £mAt 1 July 2007
    
    
    8,605,442
    
    
    
    £6.29
    
    
    
    54Share options exercised during the year
    
    
    (9,876,114
    )
    
    
    £6.34
    
    
    
    (62
    )Shares purchased by the ESOP during the year
    
    
    7,500,000
    
    
    
    £6.02
    
    
    
    45At 30 June 2008
    
    
    6,229,328
    
    
    
    £5.87
    
    
    
    37Share options exercised during the year
    
    
    (599,677
    )
    
    
    £6.73
    
    
    
    (4
    )Shares purchased by the ESOP during the year
    
    
    8,500,000
    
    
    
    £4.73
    
    
    
    40At 30 June 2009
    
    
    14,129,651
    
    
    
    £5.15
    
    
    
    73
        Reconciliation of profit before taxation to cash generated from operations
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mProfit before taxation
    
    
    456
    
    
    
    60
    
    
    
    724Depreciation and impairment of property, plant and equipment
    
    
    173
    
    
    
    155
    
    
    
    120Amortisation and impairment of intangible assets
    
    
    118
    
    
    
    91
    
    
    
    72Profit on disposal of joint venture
    
    
    
    
    
    
    (67
    )
    
    
    Impairment of available-for-sale investment
    
    
    191
    
    
    
    616
    
    
    
    Share-based payment expense
    
    
    48
    
    
    
    36
    
    
    
    33Net finance costs
    
    
    185
    
    
    
    130
    
    
    
    103Share of results of joint ventures and associates
    
    
    (19
    )
    
    
    (15
    )
    
    
    (12
    )1,152
    
    
    
    1,006
    
    
    
    1,040Increase in trade and other receivables
    
    
    (52
    )
    
    
    (59
    )
    
    
    (47
    )(Increase) decrease in inventories
    
    
    (76
    )
    
    
    88
    
    
    
    (59
    )Increase (decrease) in trade and other payables
    
    
    190
    
    
    
    (30
    )
    
    
    68(Decrease) increase in provisions
    
    
    (19
    )
    
    
    (2
    )
    
    
    1Increase (decrease) in derivative financial instruments
    
    
    10
    
    
    
    (6
    )
    
    
    4Cash generated from operations
    
    
    1,205
    
    
    
    997
    
    
    
    1,007
 British Sky Broadcasting Group plcAnnual Report 2009
101




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##### Table of Contents



Consolidated financial statements
 continued
  continued
  a) Future minimum expenditure contracted for but not recognised in the financial statements
 Year ending
    
    
    Year ending
    
    
    Year ending
    
    
    Year ending
    
    
    Year ending
    
    
    
    
    
    
    Total at
    
    
    Total at30 June 2010
    
    
    30 June 2011
    
    
    30 June 2012
    
    
    30 June 2013
    
    
    30 June 2014
    
    
    After 5 years
    
    
    30 June 2009
    
    
    30 June 2008£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mTelevision programme rights(i)
    
    
    1,024
    
    
    
    1,017
    
    
    
    956
    
    
    
    743
    
    
    
    122
    
    
    
    49
    
    
    
    3,911
    
    
    
    2,356Set-top boxes and related equipment
    
    
    496
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    496
    
    
    
    201Third party payments(ii)
    
    
    93
    
    
    
    58
    
    
    
    27
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    115Transponder capacity(iii)
    
    
    52
    
    
    
    44
    
    
    
    41
    
    
    
    41
    
    
    
    25
    
    
    
    79
    
    
    
    282
    
    
    
    294Property, plant andequipment(iv)
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    145Intangible asset
    
    
    30
    
    
    
    20
    
    
    
    21
    
    
    
    19
    
    
    
    19
    
    
    
    82
    
    
    
    191
    
    
    
    13Smartcards(v)
    
    
    49
    
    
    
    51
    
    
    
    53
    
    
    
    54
    
    
    
    54
    
    
    
    230
    
    
    
    491
    
    
    
    Other
    
    
    57
    
    
    
    24
    
    
    
    19
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    107
    
    
    
    701,852
    
    
    
    1,214
    
    
    
    1,117
    
    
    
    890
    
    
    
    220
    
    
    
    440
    
    
    
    5,733
    
    
    
    3,194
  (i)

    At 30 June 2009, the Group had minimum television programming rights commitments of £3,911
million (2008: £2,356 million), of which £445 million (2008: £367 million) related to commitments
payable in US dollars for periods of up to seven years (2008: eight years).Assuming that movie subscriber numbers remain unchanged from current levels, an additional £551
million (US$879 million) of commitments (2008: £296 million, (US$590 million)) would also be
payable in US dollars, relating to price escalator clauses. The pound sterling television
programme rights commitments include similar price escalation clauses that would result in
additional commitments of £1 million (2008: £3 million) if subscriber numbers were to remain at
current 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 retail and
commercial subscribers (Sky Distributed Channels) and are for periods of up to five years (2008:
six years). The extent of the commitment is largely dependent upon the number of retail subscribers
to the relevant Sky Distributed Channels, and in certain cases, upon inflationary increases. If
both the retail subscriber levels to these channels and the rate payable for each Sky Distributed
Channel were to remain at current levels subject to inflationary increases, the additional
commitment would be £533 million (2008: £636 million).(iii)
    Transponder capacity commitments are in respect of the Astra and Eurobird satellites that the
Group uses for digital transmissions to both retail subscribers and cable operators. The
commitments are for periods of up to eleven years (2008: twelve years). No additional agreements
were entered into in the year ended 30 June 2009.(iv)
    On 21 December 2007, the Group entered into
a property development agreement to construct a new production and broadcast centre.(v)
    In December 2008, the Group entered into a new contractual agreement with NDS, a related party,
for the provision of smartcards.
 102
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##### Table of Contents



2009
    
    
    2008£m
    
    
    £mWithin one year
    
    
    55
    
    
    
    45Between one and two years
    
    
    43
    
    
    
    43Between two and three years
    
    
    33
    
    
    
    34Between three and four years
    
    
    23
    
    
    
    28Between four and five years
    
    
    15
    
    
    
    24After five years
    
    
    66
    
    
    
    59235
    
    
    
    233
   2009
    
    
    2008£m
    
    
    £mWithin one year
    
    
    3
    
    
    
    3Between one and two years
    
    
    3
    
    
    
    3Between two and three years
    
    
    2
    
    
    
    3Between three and four years
    
    
    2
    
    
    
    3Between four and five years
    
    
    1
    
    
    
    2After five years
    
    
    
    
    
    
    111
    
    
    
    15
 British Sky Broadcasting Group plcAnnual Report 2009
103




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##### Table of Contents



Consolidated financial statements
 continued
  continued
  a) Entities with joint control or significant influence
  2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mSupply of services by the Group
    
    
    40
    
    
    
    36
    
    
    
    18Purchases of goods or services by the Group
    
    
    (212
    )
    
    
    (202
    )
    
    
    (195
    )Amounts owed by related parties to the Group
    
    
    
    
    
    
    6
    
    
    
    1Amounts owed to related parties by the Group
    
    
    (42
    )
    
    
    (32
    )
    
    
    (36
    )
 Services supplied to News Corporation
  Purchases of goods and services from News Corporation
 Purchase of subsidiary from News Corporation
  Purchase of associate interest from News Corporation
     2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mSupply of services by the Group
    
    
    15
    
    
    
    16
    
    
    
    15Purchases of goods or services by the Group
    
    
    (51
    )
    
    
    (53
    )
    
    
    (49
    )Amounts owed by joint venturesand associates to the Group
    
    
    24
    
    
    
    28
    
    
    
    25Amounts owed to joint venturesand associates by the Group
    
    
    (3
    )
    
    
    (3
    )
    
    
    (3
    )
 104
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British Sky Broadcasting Group plcAnnual Report 2009
105




---



##### Table of Contents



Consolidated financial statements
 continued
 continued
   Description and proportionName
    
    Country of incorporation
    
    of shares held (%)
    
    Principal activitySubsidiaries:Direct holdings of the CompanyBritish Sky Broadcasting Limited
    
    England and Wales
    
    10,002,002 ordinary shares of
£1 each (100%)(i)
    
    Operation of pay television
broadcasting in the
UK and IrelandBritish Interactive Broadcasting Holdings
Limited
    
    England and Wales
    
    651,960 ordinary shares of £1
each (100%)
    
    The transmission of interactive
servicesBSkyB Investments Limited
    
    England and Wales
    
    100 ordinary shares of £1
each (100%)
    
    Holding companyBSkyB Finance UK plc
    
    England and Wales
    
    50,000 ordinary shares of £1
each (100%)
    
    Finance companySubsidiaries:Indirect holdings of the CompanySky Subscribers Services Limited
    
    England and Wales
    
    3 ordinary shares of £1 each
(100%)
    
    The provision of ancillary
functions supporting
the pay television broadcasting,
residential
broadband and telephone
operations of the
GroupSky Holdings Limited
    
    England and Wales
    
    600 ordinary shares of £1
each (100%)
    
    Holding companySky 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
equipmentBSkyB Publications Limited
    
    England and Wales
    
    2 ordinary shares of £1 each
(100%)
    
    The supply of magazinesBritish Sky Broadcasting SA
    
    Luxembourg
    
    12,500 ordinary shares of £12
each (100%)
    
    Satellite transponder leasingSky Broadband SA
    
    Luxembourg
    
    310 ordinary shares of £100
each (100%)
    
    Provision of broadband and
telephony servicesSky Interactive Limited
    
    England and Wales
    
    3 ordinary shares of £1 each
(100%)
    
    The provision of interactive
television servicesEasynet Group Limited
    
    England and Wales
    
    121,308,490 ordinary shares of
£0.04 each (100%)
    
    Holding companySky Ventures Limited
    
    England and Wales
    
    912 ordinary shares of
£1 each (100%)
    
    Holding company365 Media Group Limited
    
    England and Wales
    
    151,970,072 ordinary shares of
£0.01 each (100%)
    
    Holding companyAmstrad Satellite Products Limited
    
    England and Wales
    
    7 ordinary shares of £1 each
(100%)
    
    The design, development,
marketing and
distribution of satellite productsJoint ventures and associates:Nickelodeon UK Limited(ii)
    
    England and Wales
    
    104 B Shares of £0.01 each
(40%)
    
    The transmission of childrens
television
channelsThe History Channel (UK)(iii)
    
    England and Wales
    
    50,000 A Shares of £1 each
(50%)
    
    The transmission of history,
biography, crime
and investigation television
programmingParamount UK(ii),(iv)
    
    England and Wales
    
    Partnership interest (25%)
    
    The transmission of general
entertainment
comedy channelsAustralian News Channel Pty Limited
    
    Australia
    
    1 ordinary share of AUS$1
(33.33%)
    
    The transmission of news and
business
channelsNGC Network International LLC
    
    United States of America
    
    Partnership interest (21%)
    
    The transmission of natural
history and
adventure channelsNGC Network Latin America LLC
    
    United States of America
    
    Partnership interest (21%)
    
    The transmission of natural
history and
adventure channelsMUTV Limited
    
    England and Wales
    
    800 B Shares of £1 each
(33.33%)
    
    The transmission, production and
marketing of
the Manchester United football
channelAttheraces Holdings Limited(ii)
    
    England and Wales
    
    1,500 ordinary shares of £1
each (45.86%),
20 Recoupment Shares of £0.01
each
    
    The transmission of a horse
racing channel
and related online activitiesChelsea Digital Media Limited
    
    England and Wales
    
    42,648 B Shares of £0.01 each
(35%) and 7 million
redeemable
preference shares of
£1 each
    
    The transmission, production and
marketing
of the Chelsea Football Club
football channel
and websiteInvestments:ITV(ii)
    
    England and Wales
    
    696,046,825 ordinary shares
of £0.10 each (17.9%)
    
    The transmission of free-to-air
channels
 106
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##### Table of Contents



Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended30 June 2009
    
    
    30 June 2008
    
    
    30 June 2007
    
    
    30 June 2006
    
    
    30 June 2005Consolidated Income Statement
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mRetail subscription
    
    
    4,184
    
    
    
    3,769
    
    
    
    3,406
    
    
    
    3,157
    
    
    
    2,974Wholesale subscription
    
    
    206
    
    
    
    181
    
    
    
    208
    
    
    
    224
    
    
    
    219Advertising
    
    
    308
    
    
    
    328
    
    
    
    352
    
    
    
    342
    
    
    
    329Sky Bet
    
    
    48
    
    
    
    44
    
    
    
    47
    
    
    
    37
    
    
    
    32Installation, hardware and
service
    
    
    235
    
    
    
    276
    
    
    
    212
    
    
    
    131
    
    
    
    128Other
    
    
    378
    
    
    
    354
    
    
    
    326
    
    
    
    257
    
    
    
    160Revenue
    
    
    5,359
    
    
    
    4,952
    
    
    
    4,551
    
    
    
    4,148
    
    
    
    3,842Operating expense(i)
    
    
    (4,546
    )
    
    
    (4,228
    )
    
    
    (3,736
    )
    
    
    (3,271
    )
    
    
    (3,020
    )Operating profit
    
    
    813
    
    
    
    724
    
    
    
    815
    
    
    
    877
    
    
    
    822Share of results of joint
ventures and associates
    
    
    19
    
    
    
    15
    
    
    
    12
    
    
    
    12
    
    
    
    14Investment income
    
    
    35
    
    
    
    47
    
    
    
    46
    
    
    
    52
    
    
    
    29Finance costs
    
    
    (220
    )
    
    
    (177
    )
    
    
    (149
    )
    
    
    (143
    )
    
    
    (87
    )Profit on disposal of joint
venture
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    9Impairment of
available-for-sale investment
    
    
    (191
    )
    
    
    (616
    )
    
    
    
    
    
    
    
    
    
    
    Profit before tax
    
    
    456
    
    
    
    60
    
    
    
    724
    
    
    
    798
    
    
    
    787Taxation
    
    
    (197
    )
    
    
    (187
    )
    
    
    (225
    )
    
    
    (247
    )
    
    
    (209
    )Profit (loss) for the year
    
    
    259
    
    
    
    (127
    )
    
    
    499
    
    
    
    551
    
    
    
    578Net profit (loss) recognised
directly in equity
    
    
    134
    
    
    
    187
    
    
    
    (124
    )
    
    
    (38
    )
    
    
    (13
    )Total recognised income and
expense for the year
    
    
    393
    
    
    
    60
    
    
    
    375
    
    
    
    513
    
    
    
    565Earnings (loss) per share from
profit (loss) for the year (in
pence)Basic
    
    
    14.9p
    
    
    
    (7.3)
    p
    
    
    28.4
    p
    
    
    30.2
    p
    
    
    30.2
    pDiluted
    
    
    14.8p
    
    
    
    (7.3)
    p
    
    
    28.2
    p
    
    
    30.1
    p
    
    
    30.2
    pEarnings (loss) per ADS from
profit (loss) for the year (in
pence)Basic
    
    
    59.6p
    
    
    
    (29.2)
    p
    
    
    113.6
    p
    
    
    120.8
    p
    
    
    120.8
    pDiluted
    
    
    59.2p
    
    
    
    (29.2)
    p
    
    
    112.8
    p
    
    
    120.4
    p
    
    
    120.8
    pDividends per shareDividends declared per share
(in pence)
    
    
    17.6p
    
    
    
    16.8
    p
    
    
    15.5
    p
    
    
    12.2
    p
    
    
    9.0
    pDividends declared per share
(in cents)
    
    
    28.0¢
    
    
    
    33.6
    ¢
    
    
    30.2
    ¢
    
    
    21.8
    ¢
    
    
    16.7
    ¢Dividends declared per ADS (in
pence)
    
    
    70.4p
    
    
    
    67.0
    p
    
    
    62.0
    p
    
    
    48.8
    p
    
    
    36.0
    pDividends declared per ADS (in
cents)
    
    
    111.8¢
    
    
    
    134.5
    ¢
    
    
    121.0
    ¢
    
    
    87.0
    ¢
    
    
    67.0
    ¢
 Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended30 June 2009
    
    
    30 June 2008
    
    
    30 June 2007
    
    
    30 June 2006
    
    
    30 June 2005Consolidated Cash Flow Statement
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCash and cash equivalents
    
    
    811
    
    
    
    632
    
    
    
    435
    
    
    
    816
    
    
    
    503Purchase of plant,
property, equipment and
intangible assets
    
    
    400
    
    
    
    339
    
    
    
    356
    
    
    
    212
    
    
    
    241
 30 June 2009
    
    
    30 June 2008
    
    
    30 June 2007
    
    
    30 June 2006
    
    
    30 June 2005Consolidated Balance Sheet
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mNon-current assets
    
    
    2,632
    
    
    
    2,384
    
    
    
    2,557
    
    
    
    1,504
    
    
    
    1,093Current assets
    
    
    1,937
    
    
    
    1,698
    
    
    
    1,363
    
    
    
    2,283
    
    
    
    1,363Total assets
    
    
    4,569
    
    
    
    4,082
    
    
    
    3,920
    
    
    
    3,787
    
    
    
    2,456Current liabilities
    
    
    (2,194
    )
    
    
    (1,893
    )
    
    
    (1,499
    )
    
    
    (1,547
    )
    
    
    (1,150
    )Non-current liabilities
    
    
    (2,439
    )
    
    
    (2,357
    )
    
    
    (2,374
    )
    
    
    (2,119
    )
    
    
    (1,119
    )Net (liabilities) assets
    
    
    (64
    )
    
    
    (168
    )
    
    
    47
    
    
    
    121
    
    
    
    187Capital stock(ii)
    
    
    2,313
    
    
    
    2,313
    
    
    
    2,313
    
    
    
    2,333
    
    
    
    2,371Number of shares in issue
(in millions)
    
    
    1,753
    
    
    
    1,753
    
    
    
    1,753
    
    
    
    1,791
    
    
    
    1,868
 British Sky Broadcasting Group plcAnnual Report 2009
107




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##### Table of Contents



Consolidated financial statements
 continued
 (continued)
 (continued)
 Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended30 June 2009
    
    
    30 June 2008
    
    
    30 June 2007
    
    
    30 June 2006
    
    
    30 June 2005Statistics
    
    
    
    
    
    
    
    
    
    (In thousands)Distribution of Sky
ChannelsDTH homes
    
    
    9,442
    
    
    
    8,980
    
    
    
    8,582
    
    
    
    8,176
    
    
    
    7,787Cable homes(iii)
    
    
    4,271
    
    
    
    1,248
    
    
    
    1,259
    
    
    
    3,898
    
    
    
    3,872Total Sky pay homes
    
    
    13,713
    
    
    
    10,228
    
    
    
    9,841
    
    
    
    12,074
    
    
    
    11,659DTT homes(iv)
    
    
    9,900
    
    
    
    9,700
    
    
    
    9,139
    
    
    
    6,402
    
    
    
    5,178Sky Broadband homes
    
    
    2,203
    
    
    
    1,628
    
    
    
    716
    
    
    
    
    
    
    
    Sky Talk homes
    
    
    1,850
    
    
    
    1,241
    
    
    
    526
    
    
    
    
    
    
    
    Average number of
full-time equivalent
employees
    
    
    14,922
    
    
    
    14,145
    
    
    
    13,087
    
    
    
    11,216
    
    
    
    9,958
 Notes(i)
    Included within operating expense for the year ended 30 June 2009 is £3 million (2008: £21
million; 2007: £16 million) of expense relating to the legal costs of the Groups claim against EDS
(an information and technology solutions provider), which provided services to the Group as part of
the Groups investment in customer management systems software and infrastructure. Included within
operating expense for the year ended 30 June 2008 is £7 million of expense relating to a
restructuring exercise undertaken following a review of operating costs. Included within operating
expense for the year ended 30 June 2007 is a £65 million credit due to the Group, arising from
certain contractual rights under one of the Groups channel distribution agreements. This item was
previously disclosed as a contingent asset in the consolidated financial statements as at 30 June
2006.(ii)
    Capital stock comprises called-up share capital and share premium.(iii)
    The number of cable homes is as reported to us by the cable operators. Between February 2007
and November 2008, the reported number of cable homes reflects the impact of Virgin Media (VM)
ceasing to carry Skys Basic Channels on its platform. A new agreement was reached in November 2008
and VM has now resumed carriage of the Sky Basic Channels.(iv)
    The Digital Terrestrial Television (DTT) homes number consists of Ofcoms estimate of the
number of homes where DTT is the only digital TV platform supplying services and includes Top-Up-TV
DTT homes. The number of DTT homes for all periods disclosed above is based on Ofcoms Digital
Television Update published quarterly in arrears. Latest data available for the year ended 30 June
2009 is at 31 March 2009.
  Available-for-sale investment
 108
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##### Table of Contents



Shares
    
    
    ADSs(i)(pence)
    
    
    ($)High
    
    
    Low
    
    
    High
    
    
    LowFiscal year ended 30 June2005
    
    
    625
    
    
    

4651/2
    
    
    

4633/100
    
    
    

3339/502006
    
    
    579
    
    
    
    4781/2
    
    
    

4249/100
    
    
    

334/52007
    
    
    6631/2
    
    
    
    5171/2
    
    
    

5299/100
    
    
    

3747/502008
    
    
    7131/2
    
    
    
    465
    
    
    

587/10
    
    
    

3633/502009
    
    
    5021/2
    
    
    
    329
    
    
    

381/25
    
    
    

2051/100


British Sky Broadcasting Group plcAnnual Report 2009
109




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##### Table of Contents



Shareholder information
 continued
 Shares
    
    
    ADSs (i)(pence)
    
    
    ($)High
    
    
    Low
    
    
    High
    
    
    LowFiscal year ended 30 June2008First Quarter
    
    
    7131/2
    
    
    
    6351/2
    
    
    

587/10
    
    
    

5129/50Second Quarter
    
    
    696
    
    
    
    588
    
    
    

5719/100
    
    
    

4711/20Third Quarter
    
    
    610
    
    
    
    506
    
    
    

481/20
    
    
    

4081/100Fourth Quarter
    
    
    5801/2
    
    
    
    465
    
    
    

4549/50
    
    
    

3633/502009First Quarter
    
    
    5021/2
    
    
    
    4071/2
    
    
    

381/25
    
    
    

2821/100Second Quarter
    
    

4831/4
    
    
    
    329
    
    
    

3077/100
    
    
    

2051/100Third Quarter
    
    
    500
    
    
    

4053/4
    
    
    

291/50
    
    
    

2277/100Fourth Quarter
    
    

4893/4
    
    
    
    417
    
    
    

301/50
    
    
    

243/5
 Shares
    
    
    ADSs (i)(pence)
    
    
    ($)High
    
    
    Low
    
    
    High
    
    
    LowMonth ended31 January 2009
    
    
    500
    
    
    

4053/4
    
    
    

291/50
    
    
    

2277/10028 February 2009
    
    
    4981/2
    
    
    
    450
    
    
    

2822/25
    
    
    

2523/5031 March 2009
    
    

4663/4
    
    
    
    4171/2
    
    
    

271/20
    
    
    

2317/2530 April 2009
    
    

4863/4
    
    
    
    417
    
    
    

289/20
    
    
    

243/531 May 2009
    
    

4893/4
    
    
    
    442
    
    
    

2943/50
    
    
    

2759/10030 June 2009
    
    

4591/4
    
    
    
    4291/2
    
    
    

301/50
    
    
    

2791/10
 (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.
   Amount
    
    
    PercentIdentity of person or group
    
    owned
    
    
    of classNews UK Nominees Limited(i)
    
    
    686,021,700
    
    
    
    39.14Capital Research and Management Company(ii)
    
    
    88,008,696
    
    
    
    5.02Brandes Investment Partners L.P.(ii)
    
    
    56,867,820
    
    
    
    3.12The Capital Group Companies, Inc.(ii)
    
    
    55,977,854
    
    
    
    3.10Legal & General Group plc(ii)
    
    
    53,183,483
    
    
    
    3.03
 (i)
    Direct holding which is subject to restrictions on its voting rights (please see Memorandum
and Articles of Association - Alteration of share capital on page 114 to 115).(ii)
    Indirect holding.
 PercentageDate notified
    
    ownership2 February 2006
    
    
    10.09
    %23 May 2006
    
    
    9.98
    %21 June 2006
    
    
    10.00
    %
 110
British Sky Broadcasting Group plcAnnual Report 2009




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##### Table of Contents



Month
    
    High
    
    
    LowDecember 2008
    
    
    1.5457
    
    
    
    1.4395January 2009
    
    
    1.5254
    
    
    
    1.3658February 2009
    
    
    1.4936
    
    
    
    1.4224March 2009
    
    
    1.4730
    
    
    
    1.3757April 2009
    
    
    1.4990
    
    
    
    1.4402May 2009
    
    
    1.6160
    
    
    
    1.4881June 2009
    
    
    1.6547
    
    
    
    1.5976
 PeriodYear ended 30 June
    
    end
    
    
    Average(i)
    
    
    High
    
    
    Low2005
    
    
    1.7930
    
    
    
    1.8596
    
    
    
    1.9482
    
    
    
    1.77332006
    
    
    1.8491
    
    
    
    1.7808
    
    
    
    1.8911
    
    
    
    1.71382007
    
    
    2.0063
    
    
    
    1.9463
    
    
    
    2.0063
    
    
    
    1.82032008
    
    
    1.9906
    
    
    
    2.0105
    
    
    
    2.1104
    
    
    
    1.94052009
    
    
    1.6452
    
    
    
    1.6028
    
    
    
    2.0038
    
    
    
    1.3658
 (i)
    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.
 British Sky Broadcasting Group plcAnnual Report 2009
111




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##### Table of Contents



Shareholder information
 continued
  (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.
  (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(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 Acts 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.
 112
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##### Table of Contents



(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,
  (i)
    
    is lodged at the transfer office accompanied by the relevant share certificate(s);
 British Sky Broadcasting Group plcAnnual Report 2009
113




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##### Table of Contents



Shareholder information
 continued
  continued
 (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, as amended by the Communications Act, or any order, direction or notice made
pursuant to the Broadcasting Acts or Communications Act 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, as amended by the Communications Act;
     (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).
 114
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British Sky Broadcasting Group plcAnnual Report 2009
115




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##### Table of Contents



Shareholder information
 continued
  
  (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.
 116
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British Sky Broadcasting Group plcAnnual Report 2009
117




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##### Table of Contents



Glossary of terms
 Useful Definitions
    
    Description365 Media
    
    365 Media Group LimitedADS
    
    American Depositary Share (each ADS currently represents four
ordinary shares of BSkyB)Bonus channel
    
    A channel provided to a subscriber in addition to one or more
subscription channels, but at no incremental cost to
the subscriberBSkyB or the Company
    
    British Sky Broadcasting Group plcChurn
    
    The number of DTH customers over a given period that terminate
their subscription in its entirety, net of former
customers who reinstated their subscription in that period
(where such reinstatement is within a twelve month period
of the termination of their original subscription), expressed
as an annualised percentage of total average subscribers for
the periodCustomer
    
    A subscriber to a DTH serviceDSL
    
    Digital Subscriber LineDTH
    
    Direct-to-Home: the transmission of satellite services with
reception through a minidish. The Group also retails certain
Sky Channels to a limited number of DSL subscribers (references
throughout to DTH subscribers include DSL subscribers)DTT
    
    Digital Terrestrial Television: digital signals delivered to
homes through a conventional aerial, converted through a
set-top
box or integrated digital television setEPG
    
    Electronic Programme GuideESOP
    
    Employee Share Ownership PlanFiscal year or fiscal
    
    Refers to the twelve months ended on the Sunday nearest to 30
June of the given yearFreeview
    
    The free DTT offering available in the UKThe Group
    
    BSkyB and its subsidiary undertakingsHD
    
    High Definition TelevisionIFRS
    
    International Financial Reporting StandardsIP
    
    Internet Protocol: the mechanism by which data packets may be
routed between computers on a networkLLU
    
    Local Loop Unbundling: a process by which BTs exchange lines
are physically disconnected from BTs network and
connected to other operators networks. This enables operators
other than BT to use the BT local loop to provide
services to customersMinidish
    
    Satellite dish required to receive digital satellite televisionMultiroom
    
    Installation of an additional set-top box in the household of
an existing subscriberOfcom
    
    UK Office of CommunicationsPL
    
    Premier LeaguePremium Channels
    
    The Sky Premium Channels and the Premium Sky Distributed
ChannelsPremium Sky Distributed Channels
    
    Disney Cinemagic, MUTV, Chelsea TV and Music Choice ExtraPVR
    
    Personal Video Recorder: satellite decoder which utilises a
built-in hard disk drive to enable viewers to record without
videotapes, pause live television and record one programme
while watching anotherRCF
    
    Revolving Credit FacilitySet-top box
    
    Digital satellite reception equipment
 118
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##### Table of Contents



Useful Definitions
    
    DescriptionSky
    
    British Sky Broadcasting Group plc and its subsidiary undertakingsSky+
    
    Skys fully-integrated Personal Video Recorder (PVR) and
satellite decoder. This includes Sky+HD decodersSky+HD
    
    High Definition box with PVR functionality, formerly known as Sky HDSky Active
    
    The brand name for Skys transactional interactive television
services, including customer services, games, betting and
messagingSky Basic Channels
    
    Sky1, (and its simulcast version, Sky1 HD), Sky2, Sky3, Sky News,
Sky Travel, Sky Real Lives (and its multiplex versions,
Sky Real Lives +1 and Sky Real Lives 2 and the simulcast Sky Real
Lives HD), Sky Sports News, Sky Arts 1 and Sky Arts 2
(including their simulcast versions Sky Arts 1 HD and Sky Arts 2
HD), Sky Vegas, Sky Poker.comSky Bet
    
    Skys betting services, provided through set-top boxes, the
internet and via phoneSky Broadband
    
    Home broadband service provided for Sky digital customers. UK
Online customers are excluded from quoted subscriber
figuresSky Box Office
    
    Our pay-per-view service offering movies, sporting events and
concertsSky Channels
    
    Television channels wholly owned by the Group, being the Sky
Basic Channels and Sky Premium ChannelsSky Distributed Channels
    
    Television channels owned and broadcast by third parties,
retailed by the Group to DTH viewersSky Premium Channel Package
    
    DTH subscription package which includes one or more of the Sky
Premium ChannelsSky Premium Channels
    
    Sky Movies Pack 1 (Sky Movies Comedy (& HD), Sky Movies Classics,
Sky Movies Modern Greats (& HD), Sky Movies Family
(& HD) and Sky Movies Screen 1 (& HD)), Sky Movies Pack 2 (Sky
Movies Action/Thriller (& HD), Sky Movies Indie, Sky Movies
SciFi/Horror (& HD), Sky Movies Drama (& HD) and Sky Movies
Screen 2 (& HD)) and Bonus Channels (Sky Movies Premiere
(& HD) and Sky Movies Premiere +1), Sky Sports 1 (& HD1), Sky
Sports 2 (& HD2), Sky Sports 3 (& HD3) and Sky Sports Xtra.
Channels have an HD simulcast where specified. (Sky Sports HD3
will simulcast Sky Sports Xtra programming occasionally)Sky Talk
    
    Home telephony service provided for Sky digital subscribersSMATV
    
    Satellite Master Antenna TelevisionSMPF
    
    Shared Metallic Path FacilityTransponder
    
    Communication devices on satellites which send programming
signals to minidishesViewing share
    
    Number of people viewing a channel as a percentage of total
viewing audienceVM
    
    Virgin MediaWAN
    
    Wide Area Network: Companies link networks at different sites
over the internet to form a secure WAN
 British Sky Broadcasting Group plcAnnual Report 2009
119




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##### Table of Contents



Form 20-F cross reference guide
 Item
    
    Form 20-F caption
    
    Location in this document
    
    Page1
    
    Identity of directors, senior
management and advisers
    
    Not applicable
    
    
    n/a2
    
    Offer statistics and expected timetable
    
    Not applicable
    
    
    n/a3
    
    Key informationA
    
    Selected financial data
    
    Group financial record
    
    
    107Shareholder Information - Exchange rates
    
    
    111B
    
    Capitalization and indebtedness
    
    Not applicable
    
    
    n/aC
    
    Reason for the offer and use of proceeds
    
    Not applicable
    
    
    n/aD
    
    Risk factors
    
    Principal risks and uncertainties
    
    
    244
    
    Information on the CompanyA
    
    History and development of the Company
    
    The business, its objectives and its strategy
    
    
    5B
    
    Business overview
    
    The business, its objectives and its strategy
    
    
    5Government regulation
    
    
    27C
    
    Organizational structure
    
    Consolidated financial statements - Note 30 Group
investments
    
    
    106D
    
    Property, plants and equipment
    
    Property
    
    
    464A
    
    Unresolved staff comments
    
    No unresolved staff comments
    
    
    n/a5
    
    Operating and financial review and
prospectsA
    
    Operating results
    
    Financial review
    
    
    36Financial and operating review
    
    
    37Government regulation
    
    
    27B
    
    Liquidity and capital resources
    
    Financial and operating review - Liquidity and
    
    
    40capital resourcesC
    
    Research and development, patents and
licenses, etc
    
    Financial and operating review - Research and
development
    
    
    44D
    
    Trend information
    
    Financial and operating review - Trends and other
information
    
    
    43E
    
    Off-balance sheet arrangements
    
    Financial and operating review - Off-balance sheet
arrangements
    
    
    43F
    
    Tabular disclosure of contractual
obligations
    
    Financial and operating review - Tabular disclosure
of contractual obligations
    
    
    42G
    
    Safe harbor
    
    Forward looking statements
    
    
    16
    
    Directors, senior management and
employeesA
    
    Directors and senior management
    
    Board of Directors and senior management
    
    
    47B
    
    Compensation
    
    Report on Directors remuneration
    
    
    55C
    
    Board practices
    
    Report on Directors remuneration - 6. Service
agreements,7. Non-Executive Directors
    
    
    59Corporate governance report - Board committees
    
    
    52D
    
    Employees
    
    Board of Directors and senior management - Employees
    
    
    49Consolidated financial statements - Note 8 Employee
benefits and key
management compensation
    
    
    79E
    
    Share ownership
    
    Report on Directors remuneration - 9. Share interests
    
    
    60Report on Directors remuneration - 11. LTIP, 13.
Sharesave Scheme options
    
    
    627
    
    Major shareholders and related party
transactionsA
    
    Major shareholders
    
    Shareholder information - Major shareholders
    
    
    110B
    
    Related party transactions
    
    Financial and operating review - Related party
transactions
    
    
    44Consolidated financial statements - Note 29
Transactions with related
parties and major shareholders
    
    
    104C
    
    Interests of experts and counsel
    
    Not applicable
    
    
    n/a8
    
    Financial informationA
    
    Consolidated statements and other
financial information
    
    Auditors reports
    
    
    67Consolidated financial statements
    
    
    68Financial and operating review - Trends and other
information
    
    
    43B
    
    Significant changes
    
    None
    
    
    n/a9
    
    The offer and listingA
    
    Offer and listing details
    
    Shareholder information - Share price information
    
    
    109B
    
    Plan of distribution
    
    Not applicable
    
    
    n/aC
    
    Markets
    
    Shareholder information - Share information
    
    
    109D
    
    Selling shareholders
    
    Not applicable
    
    
    n/aE
    
    Dilution
    
    Not applicable
    
    
    n/aF
    
    Expenses of the issue
    
    Not applicable
    
    
    n/a
 120
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##### Table of Contents



Item
    
    Form 20-F caption
    
    Location in this document
    
    Page10
    
    Additional informationA
    
    Share capital
    
    Not applicable
    
    
    n/aB
    
    Memorandum and Articles of Association
    
    Shareholder information - Memorandum and Articles of
Association
    
    
    112C
    
    Material contracts
    
    The business, its objectives and its strategy -
Significant agreements
    
    
    19Report on Directors remuneration
    
    
    55D
    
    Exchange controls
    
    Shareholder information - Exchange controls
    
    
    115E
    
    Taxation
    
    Shareholder information - Taxation
    
    
    115F
    
    Dividends and paying agents
    
    Not applicable
    
    
    n/aG
    
    Statement by experts
    
    Not applicable
    
    
    n/aH
    
    Documents on display
    
    Shareholder information - Documents on Display
    
    
    117I
    
    Subsidiary information
    
    Not applicable
    
    
    n/a11
    
    Quantitative and qualitative
disclosures about market risk
    
    Consolidated financial statements - Note 23
Derivatives and other
financial instruments
    
    
    91Forward looking statements
    
    
    112
    
    Description of securities other than
equity securities
    
    Not applicable
    
    
    n/a13
    
    Defaults, dividend arrearages and
delinquencies
    
    Not applicable
    
    
    n/a14
    
    Material modifications to the rights
of security holders
and use of proceeds
    
    Shareholder information - Material modifications to
the rights of
security holders and use of proceeds
    
    
    11715
    
    Controls and procedures
    
    Corporate governance report
    
    
    49Auditors reports
    
    
    6715T
    
    Controls and procedures
    
    Not applicable
    
    
    n/a16A
    
    Audit committee financial expert
    
    Corporate governance report - Audit Committee
    
    
    5316B
    
    Code of ethics
    
    Corporate governance report - Corporate policies
    
    
    4916C
    
    Principal accountant fees and services
    
    Consolidated financial statements - Note 7 Profit
before taxation
    
    
    78Corporate governance report - Use of external auditors
    
    
    5416D
    
    Exemptions from the listing standards
for audit
committees
    
    None
    
    
    n/a16E
    
    Purchases of equity securities by the
issuer and affiliated
purchasers
    
    Consolidated financial statements - Note 25
Reconciliation of
shareholders equity - Purchase of own shares for
cancellation and
capital redemption reserve
    
    
    10016F
    
    Change in Registrants Certifying
Accountant
    
    Not applicable
    
    
    n/a16G
    
    Corporate Governance
    
    Corporate governance report
    
    
    4917
    
    Financial statements
    
    Not applicable
    
    
    n/a18
    
    Financial statements
    
    Auditors reports
    
    
    67Consolidated financial statements
    
    
    6819
    
    Exhibits
    
    Filed with the SEC
 British Sky Broadcasting Group plcAnnual Report 2009
121




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##### Table of Contents



SIGNATURES
  BRITISH SKY BROADCASTING GROUP PLCBY:

/s/  ANDREW GRIFFITHANDREW GRIFFITHChief Financial Officer




---



##### Table of Contents



EXHIBITS
  Exhibit No. InDocumentIncorporated ByNumber
    
    Description
    
    Reference1
    
    Memorandum and Articles of Association
    
    *2.1
    
    Specimen share certificate
    
    
    2
    (i)2.2
    
    Form of Indenture, dated as of July 2, 1999, among the Company, as the Issuer, and British Sky
Broadcasting Limited and Sky Subscribers Services Limited, as Initial Guarantors, and The Bank of New
York, as Trustee, relating to 7.75% Notes due 2009 and 8.20% Notes due 2009
    
    10.2 (ii)2.3
    
    First Supplemental Indenture dated as of January 31, 2007 and Second Supplemental Indenture dated as of
May 3, 2007 to the Indenture dated as of July 2, 1999
    
    2.6(iii)2.4
    
    Third Supplemental Indenture dated as of August 29, 2008 to the Indenture dated as of July 2, 1999
    
    *2.5
    
    Form of Indenture, dated as of October 20, 2005, among the Company, British Sky Broadcasting Limited, and
Sky Subscribers Services Limited, as Initial Guarantors, BSkyB Finance UK plc, as the Issuer, and The
Bank of New York, as Trustee, relating to 5.625% Senior Unsecured
Notes due 2015, 6.500% Senior Unsecured
Notes due 2035 and 5.750% Senior Unsecured Notes due 2017
    
    2.4 (iv)2.6
    
    First Supplemental Indenture dated as of January 31, 2007 and Second Supplemental Indenture dated as of
May 3, 2007 to the Indenture dated as of October 20, 2005
    
    2.5(iii)2.7
    
    Third Supplemental Indenture dated as of August 29, 2008 to the Indenture dated as of October 20, 2005
    
    *2.8
    
    Indenture dated as of February 15, 2008 among the Company, as the Issuer, and British Sky Broadcasting
Limited, BSkyB Finance UK plc, BSkyB Investments Limited, BSkyB Publications Limited and Sky Subscribers
Services Limited, as Initial Guarantors, and The Bank of New York, as Trustee, relating to 6.10% Senior
Unsecured Notes due 2018
    
    
    2.9
    (v)2.9
    
    First Supplemental Indenture dated as of August 29, 2008 to the Indenture dated as of February 15, 2008
    
    *2.10
    
    Indenture dated as of November 24, 2008 among the Company, as the Issuer, and British Sky Broadcasting
Limited, BSkyB Finance UK plc, BSkyB Investments Limited, BSkyB Publications Limited, Sky In-Home Service
Limited and Sky Subscribers Services Limited, as Initial Guarantors, and The Bank of New York Mellon, as
Trustee, relating to 9.50% Senior Unsecured Notes due 2018
    
    *2.11
    
    Trust Deed relating to the BSkyB Finance UK plc and British Sky Broadcasting Group plc £1,000,000,000 Euro
Medium Term Note Programme
    
    2.8(iii)2.12
    
    Supplemental Trust Deed relating to the BSkyB Finance UK plc and British Sky Broadcasting Group plc
£1,000,000,000 Euro Medium Term Note Programme
    
    *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
    
    4.1(vi)4.2
    
    Service agreement dated 25 June 2008 with the Chief Executive Officer
    
    
    4.2
    (v)4.3
    
    Service agreement dated 25 June 2008 with the Chief Financial Officer
    
    
    4.3
    (v)4.4
    
    Rules of the British Sky Broadcasting Group Long-Term Incentive Plan
    
    
    4.4
    (v)4.5
    
    Rules of the British Sky Broadcasting Group Management Long-Term Incentive Plan
    
    
    4.5
    (v)4.6
    
    Rules of the British Sky Broadcasting Group 2008 Long-Term Incentive Plan
    
    *4.7
    
    Rules of the British Sky Broadcasting Group Management Long-Term Incentive Plan amended on 30 July 2008
    
    *4.8
    
    Agreement dated 19 June 2009 with respect to a £750,000,000 Revolving Credit Facility among British Sky
Broadcasting Group plc, as borrower, Barclays Bank plc, as agent, and others
    
    *8
    
    List of Subsidiaries
    
    *11
    
    Code of Ethics
    
    11 (vii)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
    
    Certification pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    *15
    
    Consent of Independent Registered Public Accounting Firm
    
    *
 
 *
    
    Filed herewith.(i)
    
    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.(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 1999
filed with the SEC on 27 October 1999.(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 2007
filed with the SEC on 27 July 2007.(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 2006
filed with the SEC on 31 July 2006.(v)
    
    Incorporated by reference to the Annual Report on Form 20-F of British Sky Broadcasting Group plc for the fiscal year ended 30 June 2008
filed with the SEC on 1 August 2008.(vi)
    
    Incorporated by reference to the Annual Report on Form 20-F of British Sky Broadcasting Group plc for the fiscal year ended 30 June 2005
filed with the SEC on 7 October 2005.(vii)
    
    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.