Sky releases results and update on 2017/18 plans

Sky has released results for the twelve months ended 30 June 2017.

Jeremy Darroch, Group Chief Executive, commented: “We continue to attract new customers to our services across all our markets and through our ongoing investment in the customer experience, generating even higher customer engagement. At 30 June 2017, we had 22.5 million customers taking almost 60 million products, having added 686,000 new customers and almost 2.7 million products in the last year. In the fourth quarter, we added 77,000 new customers and 333,000 additional products. It was a record year for Sky Store, with more than 18 million transactions driving us to a 34% share of the digital retail ownership market. We increased reach by 2% in Q4 and we now regularly achieve over 100 million viewers across Europe.

Plans for 2017/18

We have significant plans to further develop and improve the customer viewing experience in each of our territories. Today, we have announced that Sky Soundbox, our brand new all-in-one sound system for use with Sky Q, Sky+ and standalone TVs, will launch later this year to transform the TV sound experience for customers. We will introduce Sky Q into Italy and Germany & Austria later this year and will continue to enhance Sky Q features and functionality. We have a strong pipeline including voice control and greater personalisation, building Sky Q’s position as one of the world’s leading TV platforms. We will also launch our Sky TV service without the need for a satellite dish, opening up new headroom for growth by giving people who can’t or won’t have a dish on their property the Sky Q experience.

Building on our position as one of Europe’s leading technology companieswe are announcing today the creation of 300 new tech roles – representing a 25% increase in our software engineering workforce. The new roles will be split between Milan, Leeds and London under our new innovation centre, Sky Labs. This additional resource will enhance our capability to deploy the market leading in and out-of-home streaming platforms that our customers demand; create brilliantly usable on-screen interfaces; develop enhanced personalization and appbased platforms.

Our loyalty programme in Italy continues to be an outstanding success and we will now export this to our other markets. In the Autumn, we are launching a similar programme in the UK, recognising and rewarding the longevity of our customers in order to build even stronger relationships. Initial trials have been encouraging. Our move to a digital first customer service experience is also progressing well. We have launched new digital service apps in all our markets and we will be looking to accelerate customer take up of these services over the next 12 months.

We will continue to expand our portfolio of growth opportunities, including accelerating the growth of Sky Mobile which launched earlier in 2017. Both our SIM-only and handset propositions have landed well with customers and having initially been focused on building awareness amongst our customer base, we now plan to scale growth.

Our associate, Sky Bet, has continued to experience strong growth since we sold an 80% stake to CVC Capital Partners and, for the 12 months to 31 March 2017, grew revenues by 46% to £488 million. As a result of its strong financial performance, the shareholders have undertaken a review of its capital structure and in June 2017 Sky Bet fully redeemed a Sky vendor loan note amounting to £83 million in cash. In 2017/18, we expect to receive an additional c.£100 million in distribution from a re-capitalisation of the business whilst also retaining our 20% stake.

Having created a high growth business for Sky’s shareholders, conservatively realising value in excess of £1 billion, we intend to re-invest some of the latest Sky Bet proceeds to create future value by expanding the footprint of our OTT services, leveraging the success of our existing multi-territory streaming platform and our capability in creating original content. Accordingly, during the first half of our fiscal year, we intend to launch a simple and affordable OTT service in Spain, the Eurozone’s fourth largest economy and the market which has the largest free-to-air (FTA) headroom in Europe outside of our existing footprint.”