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Our performance

We have a clear and consistent strategy: to attract new customers to Sky; sell more products and services to our existing customers; and develop our other businesses. This year, we continued to see good demand across our product portfolio as customers responded to the great quality and value that we offer. This translated into strong financial results, with double-digit growth in each of revenue, operating profit, earnings per share and cash flow, on an adjusted basis.

We have identified a number of key performance indicators that we use to assess the Group's performance against its core strategic priorities, which include both operational and financial measures. In addition, we have developed 10 environmental KPIs. Our performance against these 10, together with a comprehensive review of our environmental initiatives can be found in the Bigger Picture Review at www.sky.com/biggerpicturereview2011.

Operational key performance indicators

TV Customer base (Million)

TV Customer base (million)

Description

A TV customer is defined as a subscriber to one or more of our DTH, Sky by Wire, Sky Player or Sky Mobile TV services. This number excludes wholesale subscribers to our channels.

Analysis

Our total TV customer base is a key determinant of the Group's value. In 2011, we added 327,000 net new TV customers, growing the total base by 3%.

HD Penetration (%)

HD Penetration (%)

Description

HD penetration is defined as the percentage of TV customers paying an additional monthly subscription to view HD content.

Analysis

Driving take-up of HD is important for customer satisfaction, while also generating incremental revenue and profit. In 2011 we added 883,000 HD customers.

Churn (%)

Churn (%)

Description

Churn represents the number of DTH customers over a given period who terminated their subscriptions, net of former customers who reinstated their subscription (within 12 months of their original subscription), expressed as a percentage of total average DTH customers.

Analysis

Churn is a good measure of customer satisfaction, which is a key driver of value for our business. Churn for 2011 was stable at 10.4%.

Customers taking each of TV, broadband and telephony (%)

Customers taking each of TV, broadband and telephony (%)

Description

The percentage of TV customers taking any of our TV products and both a Sky Broadband and a Sky Talk product. Customers may also opt for our line rental product.

Analysis

This is an important measure for our business, with higher penetration positively impacting ARPU and customer loyalty. At 30 June 2011, 2.8 million customers chose each of TV, broadband and telephony, up 37% from the prior year.

Financial key performance indicators

ARPU (£)

ARPU (£)

Description

Average revenue per user (ARPU) is calculated by taking the amount spent by the Group's residential customers (ex-VAT), divided by the average number of residential DTH customers.

Analysis

ARPU is impacted by the type of subscription package taken by a customer, as well as the number of additional paid-for products. ARPU increased by £31 as customers rewarded us with more of their business.

Adjusted Group revenue (£m)1,3

Adjusted Group revenue (£m)

Description

Adjusted Group revenue includes revenue from retail subscriptions, wholesale revenue, advertising, and installation, hardware and service revenue. It is adjusted for any exceptional items.

Analysis

Adjusted Group revenue is a key measure of how the Group is delivering on its strategy to grow the business. In 2011, adjusted revenue grew by £888 million to reach £6,597 million.

Adjusted operating profit (£m)1,3

Adjusted operating profit (£m)

Description

Adjusted operating profit for the Group excludes any exceptional or one-off items.

Analysis

Adjusted operating profit is a key measure of the underlying business performance. It increased by 23% in 2011.

Adjusted basic earnings per share (p)1,2

Adjusted basic earnings per share (p)

Description

Adjusted basic EPS is the profit after tax for the year, excluding exceptional items and related tax effects, divided by the weighted average number of ordinary shares.

Analysis

Adjusted basic EPS provides a measure of shareholder return that is comparable over time. Adjusted basic EPS increased by 30% to reach a record level of 41.6p.

Adjusted free cash flow (£m)1,3

Adjusted free cash flow (£m)

Description

Adjusted free cash flow is defined as cash generated from operations after the impact of capital expenditure, net interest and tax paid, cash flows to and from joint ventures, excluding exceptional items.

Analysis

Free cash flow is an important measure of the Group's success in converting profits to cash flow and of the underlying health of the business. Adjusted free cash flow increased by 51% as a result of higher profitability, strong working capital and lower net interest and tax payments.

Total shareholder return (%)

Total shareholder return (%)

Description

Total shareholder return (TSR) represents the change in value of a share held for the 12 months to 30 June, assuming that dividends are reinvested to purchase additional shares at the closing price applicable on the ex-dividend date. The value of the share is based on the average share price over the three months prior to 30 June.

Analysis

TSR represents a comparable measure of shareholder return over time. On this basis, BSkyB shares performed 26 percentage points better than the FTSE 100 index in the year to 30 June 2011; our share price was influenced by the proposed offer by News Corporation.

  • 1 From continuing operations.

  • 2 For further details see note 1 of the summary financial statement.

  • 3 For a reconciliation of non-GAAP measures, click here.