REG - British Sky Broad. - Annual Financial Report

Tue Sep 25, 2012 2:00am EDT

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RNS Number : 0259N
British Sky Broadcasting Group PLC
25 September 2012
 



Headline: Annual Financial Report

 

British Sky Broadcasting Group plc - Annual Report and Annual General Meeting

 

British Sky Broadcasting Group plc (the 'Company') released its preliminary announcement of annual results for the year ended 30 June 2012 ('Preliminary Announcement') on 26 July 2012. Further to the Preliminary Announcement, the Company can now confirm that the Annual Review 2012, Annual Report 2012, Notice of Annual General Meeting 2012 and Form of Proxy were mailed to shareholders on 24 September 2012.

 

These documents (excepting the proxy card) are now available on the Company's website at www.sky.com/corporate.  The Annual Report 2012 and Annual Review 2012 can be accessed via http://annualreview2012.sky.com, and the Notice of Annual General Meeting 2012 can be accessed  at:  www.sky.com/corporate/investors/shareholder_information/annual_general_meeting.

 

All of the documents will be submitted to the National Storage Mechanism and will shortly be available for viewing at www.hemscott.com/nsm.do.

 

The Company's 2012 Annual General Meeting will be held at 11.00 a.m. on 1 November 2012 at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE.

 

The appendix to this announcement contains additional information which has been extracted from the Annual Report 2012 for the purposes of compliance with the Disclosure and Transparency Rules and should be read together with the Preliminary Announcement, which can be downloaded from the Company's website at www.sky.com/corporate/investors/latest_results.  This announcement should be read in conjunction with and is not a substitute for reading the full Annual Report 2012. A glossary of terms is available on pages 131 to 132 of the Annual Report 2012. Together these constitute the information required by DTR 6.3.5 which is required to be communicated to media in full unedited text through a Regulatory Information Service. Page and note references in the text below refer to page numbers and notes in the Annual Report 2012.

 

Appendix

Statement of Directors' responsibility

 

As set out above, the following responsibility statement is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. This statement relates to and is extracted from page 67 of the Annual Report 2012. Responsibility is for the full Annual Report not the extracted information presented in this announcement or the Preliminary Announcement.

 

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge:

1.   The financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

2.   The management report, which is incorporated into the Directors' report, includes a fair review of the development and performance of the business and the position of the        Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

By order of the Board

 

Jeremy Darroch                                                                 Andrew Griffith

Chief Executive Officer                                                      Chief Financial Officer

25July 2012                                                                        25 July 2012

 

Overview and recent developments

 

During the current year, total revenue from continuing operations increased by 3% to £6,791 million, compared to the year ended 30 June 2011 ("the prior year"). Adjusted operating profit from continuing operations for the current year increased by 14% to £1,223 million, resulting in an adjusted operating profit margin of 18%, compared to 16% in the prior year. Reported operating profit from continuing operations was £1,243 million, compared to £1,073 million in the prior year.

 

Adjusted profit for the year from continuing operations was £875 million, generating adjusted basic earnings per share from continuing operations of 50.8 pence, compared to an adjusted profit from continuing operations of £725 million and adjusted basic earnings per share from continuing operations of 41.6 pence in the prior year. Reported profit for the year was £906 million,  generating basic earnings per share of 52.6 pence, compared to a profit of £810 million and basic earnings per share of 46.5 pence in the prior year.

 

At 30 June 2012, the total number of TV Customers in the UK and Ireland was 10,288,000, representing a net increase of 101,000 TV Customers in the current year. Including our standalone home communications services, the total number of customers was 10,606,000 representing a net increase of 312,000 customers in the current year.

 

At 30 June 2012, the total number of HD customers was 4,343,000, representing 42% of total TV Customers. This represents growth in HD customers of 14% in the current year.

The number of Multiroom customers also continued to grow, increasing by 152,000 in the current year to 2,402,000; 23% penetration of total TV Customers. Wholesale subscribers to the Group's channels were 4,340,000 compared to 4,382,000 in the prior year.

 

Churn for the current year was 10.2% which is broadly in line with the prior year (2011: 10.4%).

 

Sky Broadband continues to grow strongly, increasing by 666,000 customers in the current year to 4,001,000. During the year we unbundled 388 additional exchanges, increasing our footprint to approximately 83% network coverage. The number of Sky Talk customers reached 3,768,000, representing an increase of 667,000 in the current year. The number of Line Rental customers increased by 883,000 in the current year to 3,563,000.

 

The Board of Directors is proposing a final dividend of 16.2 pence per ordinary share, resulting in a total dividend for the year of 25.4 pence, representing growth of 9% over the prior year full year dividend. The ex-dividend date will be 24 October 2012 and, subject to shareholder approval at the Company's Annual General Meeting ("AGM"), the dividend will be paid on 16 November 2012 to shareholders of record on 26 October 2012.

 

On 13 July 2011, News Corporation announced that it no longer intended to make an offer for the entire issued and to be issued share capital of the Company not already owned by News Corporation. A break fee of £39 million was received during the year which exceeded all of the Group's direct costs associated with the proposal.

 

On 3 November 2011, the Group re-financed the existing £750 million Revolving Credit Facility ("RCF") with a £743 million facility due to mature on 31 October 2016, syndicated across 10 counterparty banks.

 

On 29 November 2011, the Company's shareholders approved a resolution at the AGM for the Company to return £750 million of capital to shareholders via a share buy-back programme.

 

The Company has entered into an agreement with News Corporation under which, following any market purchases of shares by the Company, News Corporation will sell to

the Company sufficient shares to maintain its percentage shareholding at the same level as applied prior to those market purchases. The price payable to News Corporation is the price payable by the Company in respect of the relevant market purchases. The effect of the agreement is to provide that there will be no change in News Corporation's economic or voting interests in the Company as a result of the share buy-back programme.

 

Following approval and up to 30 June 2012, the Company repurchased for cancellation 78,387,718 ordinary shares for a total consideration of £546 million which included stamp duty and commission of £3 million. The closing share count at the end of the financial year was 1,674,454,881.

 

On 25 July 2012, the Board agreed to seek the necessary approvals to return a further £500 million of capital to shareholders via a share buy-back programme. Shareholder

approvals will be sought at the Company's AGM on 1 November 2012. The Company has entered into an agreement with News Corporation under substantially the same terms as those agreed for the share buy-back programme approved at the Company's AGM on 29 November 2011. The agreement is conditional on the appropriate shareholder approvals being granted. The effect of the agreement is to provide that there will be no change in News Corporation's economic or voting interests in the Company as a result of the share buy-back programme.

 

Principal risks and uncertainties

 

The Group risk register is reported formally to the Audit Committee twice a year and focused risk reporting on selected themes occurs on a quarterly basis. Additional information on the Group's internal control and risk management processes is set out in the Corporate Governance Report (see page 52).

 

This section describes the current principal risks and uncertainties facing the Group. In addition to summarising the material risks and uncertainties, the table below gives examples of how we mitigate those risks. The Group has a formal risk management framework embedded within the business to support the identification and effective

management of risk across the Group.

 

The divisions within the Group are each responsible for managing and reporting risk in accordance with the Group's risk management policy and standards that have been approved by the Audit Committee. The risks are then consolidated into a Group risk register which provides an overview of the Group risk profile.

 

Description of risk

Mitigation

1. Market and competition:

 

The Group operates in a highly competitive environment and faces competition from a broad range of organisations.  Technological developments also have the ability to create new forms of quickly evolving competition.

 

A failure to develop the Group's product proposition in line with changing market dynamics and expectations could erode the Group's competitive position.

 

Great content is central to Sky's product proposition and increased competition could impact the Group's ability to acquire content that its customers want on commercially attractive terms.

 

Economic conditions have been challenging in recent years and the future remains uncertain. A significant economic decline could impact on the Group's ability to continue to attract and retain customers.

 

The Group continues to make significant investments in innovation to maintain its market position.

 

The Group's product development strategic aim is to be at the forefront of progressive technology. The current year has seen the launch of Sky Go, a significant expansion of the Group's WiFi footprint and, most recently, the announcement of the launch of NOW TV.

 

Please see the "Review of our Business" section for further details of

these products.

 

The Group regularly reviews its pricing and packaging structures to ensure that its product proposition is appropriately placed within the market.

 

The Group works closely with its marketing partners to ensure that the value of its offering is understood and communicated effectively to its customers.

 

The Group makes significant investment in the origination of UK content as well as acquisition from across the world.

 

The Group also works to develop and maintain the brand value associated with its individual channels.

2. Regulatory breach and change:

 

The Group is subject to regulation primarily under UK, Irish and European Union legislation.

 

The regimes which apply to the Group's business include, but are not

limited to:

 

• Gambling - Alderney Gambling Commission regulation;

 

• Broadcasting - the Group is subject to Ofcom's licensing regime under the Broadcasting Acts 1990 and 1996 and the

Communications Act 2003.

 

These obligations include the requirement to comply with the relevant codes and directions issued by Ofcom including, for

example, the Broadcasting Code, the Code on the Scheduling of Television Advertising and the Cross Promotions Code.

 

Please see page 19 of the Business Review for further details of our UK broadcasting licences;

 

• Platform services - as an EPG provider the Group is subject to a Continuation Notice under the Communications Act 2003 which  requires the provision of EPG services to other broadcasters on fair, reasonable and non-discriminatory terms; and

 

• Telecommunications - the Group is subject to the General Conditions of Entitlement adopted under the Communications Act 2003 which impose detailed requirements on providers of communications networks and services.

 

The Group is also subject to generally applicable legislation including, but not limited to, competition (antitrust), consumer protection, data protection and taxation.

 

The Group is currently, and may be in the future, subject to proceedings, and/or investigation and enquiries, from regulatory authorities.

 

The Group's ability to operate or compete effectively could be adversely affected by the outcome of investigations or by the introduction of new laws, policies or regulations, changes in the interpretation or application of existing laws, policies and regulations, or failure to obtain required

regulatory approvals or licences.

The Group manages these risks through active engagement in the regulatory processes that affect the Group's business.

 

The Group actively seeks to identify and meet our regulatory obligations and to respond to emerging requirements. This includes, for example:

 

• Broadcasting - compliance controls, processes and contacts are in place in Entertainment, Movies, Sports and News services. Interaction with Ofcom is co-ordinated between Compliance, Regulatory and Legal;

 

• Platform services - processes are in place to monitor third party broadcaster access to the digital satellite platform; and

 

• Telecommunications - compliance controls, processes and contacts are in place overseen by the Customer Compliance Committee to monitor compliance and performance against the General Conditions of Entitlement.

 

The Group has also, more generally, appropriate oversight and reporting supported by training to provide assurance that it is compliant with

regulatory requirements.


3. Customer service:

 

The Group's business is based on a subscription model and its future success relies on building long-term relationships with its customers.

 

A failure to meet its customers' expectations with regards to service could negatively impact the Group's brand and competitive position.

The Group strives consistently to exceed its customer expectations, to put its customers first, to understand what they want and to be responsive to what they say.

 

The Group makes significant investments in order to deliver continuous development and improvement to its customer service capabilities.

 

The Group has increased and is continuing to, increase the number of contact centres located across the United Kingdom and has implemented ongoing training and development plans.

 

The Group benchmarks its customer service experience and strives to be the best in class.

 

Refer to page 20 for details of our customer service.

4. Technology and business interruption:

 

The products and services that the Group provides to its customers are reliant on complex technical infrastructure.

 

A failure in the operation of the Group's key systems or infrastructure, such as the broadcast platform, customer management systems or the telecommunications networks on which the Group relies could cause a failure of service to our customers and negatively impact our brand.

 

Details of our infrastructure and technology are set out on pages 16-18

of the Business Review.

The Group makes significant investment in technology infrastructure to ensure that it continues to support the growth of the business.

 

The Group is committed to achieve best in class business continuity standards and makes significant investments in the resilience and robustness of its business infrastructure.

 

The Group also organises regular scenario based group-wide business continuity exercises to ensure ongoing readiness of key staff, systems and sites.

5. Supply chain:

 

The Group relies on a number of third parties and outsourced suppliers operating across the globe to support its supply chain.

 

A significant failure within the supply chain could adversely affect the Group's ability to deliver products and service to its customers.

The Group continues to invest in its supply chain infrastructure to support its business plan commitments.

 

A robust supplier selection process is in place with appropriate ongoing management and monitoring of key partners and suppliers.

 

The Group performs regular audits of key suppliers and of their installations and, wherever possible, has dual supply capability.

6. Financial :

 

The effective management of its financial exposures is central to preserving the Group's profitability.

 

The Group has some exposure to the European financial crisis although the Group's net euro cash flows are approximately 3% of total group revenues and the Group's practice is to hold less than £10 million on deposit in euros.

 

A number of the Group's syndicate banks are headquartered in Europe but the Group does not currently anticipate drawing the RCF.

The Group's finance teams are embedded within the business to provide support to management and to ensure accurate financial reporting and tracking of our business performance. Reporting on financial performance is provided on a monthly basis to the Executive and the Board.

 

The Group continually invests in the improvement of its systems and processes in order to ensure sound financial management and reporting.

 

The Group manages treasury risk by minimising risk to capital and providing appropriate protection against foreign exchange and interest rate movements.

 

Cash investment is made in line with the Group's strict treasury policy which is approved by the Audit Committee and sets limits on deposits based on counterparty credit ratings. No more than 10% of cash deposits are held with a single bank counterparty, with the exception of

overnight deposits which are invested in a spread of AAA-rated liquidity funds.

 

All debt is swapped at inception to ensure appropriate currency and interest rate protection is in place, and trading currency risk is hedged up to 5 years in advance.

 

The Group manages its tax risk by ensuring that all the risks are identified and understood at an early stage and that effective compliance and reporting processes are in place.

 

The Group continues to maintain an open and proactive relationship with the regulating tax authorities which are primarily HM Revenue & Customs. The Group aims to deal with any taxation issues, wherever possible, as they arise in order to avoid unnecessary disputes.

7. Security:

 

The Group must protect its customer and corporate data and the safety of its people and infrastructure as well as needing to have in place fraud prevention and detection measures.

 

The Group is responsible to third party intellectual property owners for the security of the content that it distributes on various platforms (Sky's own and third party platforms).

 

A significant breach of security could impact the Group's ability to operate and deliver against its business objectives.

The Group takes measures ranging from physical and logical access controls to encryption, or equivalent technologies, to manage its security risks.

 

The Group continues to invest in new technological controls and in improving broader business process and works closely with law enforcement agencies and policy makers in order to protect its assets

and to comply with its contractual obligations to third parties.

8. Projects:

 

The Group invests in, and delivers, significant capital expenditure projects in order continually to drive the business forward.

 

The failure to deliver key projects effectively and efficiently could result in significantly increased project costs and impede our ability to execute our strategic plans.

A common project management methodology is used to enable the Group to manage, monitor and control its major capital expenditure projects and strategic programmes. This includes standardised

reporting and monthly reviews by Executive members.

 

Third party partners will, where appropriate, be engaged to provide support and expertise in our large strategic programmes, complex initiatives and for emerging technologies.

 

9. Intellectual property protection:

 

The Group in common with other service providers relies on intellectual property and other 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.

 

Please see page 14 of the Business Review.

We implement an ongoing programme to support appropriate protections of our intellectual property and other rights.

10. People:

 

People at Sky are critical to the Group's ability to meet the needs of its customers and achieve its goals as a business.

 

The failure to attract or retain suitable employees across the business could limit the Group's ability to deliver its business plan commitments.

Making Sky a great place to work is central to the Group's strategy.

 

The Group champions diversity and develops talent through a number of activities, including the Graduate program, Development Studio, an apprenticeship scheme and a leadership programme.

 

The Group has well established channels and procedures to recruit and retain its employees and to ensure that an adequate number of suitable employees work within its customer service teams and across all its operations.

 

Further detail on our people is set out on pages 25-27 of the Business Review.

 

Transactions with related parties and major shareholders

 

a)         Entities with joint control or significant influence

 

The Group conducts business transactions with companies that are part of the News Corporation group ("News Corporation"), a major shareholder:

 


2012

£m

2011

£m

Supply of services by the Group

79

49

Purchases of goods or services by the Group

(199)

(216)

Amounts owed by News Corporation to the Group

12

10

Amounts owed to News Corporation by the Group

(98)

(74)

 

At 30 June 2012 the Group had expenditure commitments of £462 million (2011: £567 million) with News Corporation companies of which £58 million (2011: £76 million) related to minimum television programming rights commitments and £404 million (2011: £491 million) related to expected ongoing smartcard costs.

 

Goods and services supplied to News Corporation

 

During the year, the Group supplied set-top boxes, programming, airtime, transmission, marketing, consultancy services, customer relationship management services and a licence to use the Sky brand to News Corporation.

 

Purchases of goods and services and certain other relationships with News Corporation

 

During the year, the Group purchased programming, digital equipment, smartcards and encryption services, set-top box technologies, advertising and IT services from News Corporation companies.

 

News Corporation has entered into an agreement with the Group pursuant to which it has been agreed that, for so long as News Corporation directly or indirectly holds an interest of 30% or more in the Group, News Corporation will not engage in the business of satellite broadcasting in the UK or Ireland.

 

On 13 July 2011, News Corporation announced that it no longer intended to make an offer for the entire issued and to be issued share capital of the Company not already owned by News Corporation. A break fee of £39 million was received during the year which exceeded all of the Group's direct costs associated with the proposal.

 

Share buy-back programme

 

During the year, the Company purchased, and subsequently cancelled, 30,679,157 ordinary shares held by News Corporation as part of its share buy-back programme. For further details, see note 26.

 

b) Joint ventures and associates

 

Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures and associates are disclosed below.

 

Transactions between the Company and its subsidiaries, joint ventures and associates are disclosed in the Company's separate financial statements.

 


2012

£m

2011

£m

Supply of services by the Group

24

23

Purchases of goods or services by the Group

(67)

(57)

Amounts owed by joint ventures and associates to the Group

15

23

Amounts owed to joint ventures and associates by the Group

(10)

(5)

 

Services supplied are primarily the provision of transponder capacity, marketing, airtime sales and support services. Purchases represent fees payable for channel carriage. Amounts owed by joint ventures and associates include £7 million (2011: £16 million) relating to loan funding. These loans bear interest at rates of six month LIBOR plus 1.5% and one month and six month LIBOR plus 1%. The maximum amount of loan funding outstanding in total from joint ventures and associates during the year was £16 million (2011: £17 million).

 

The Group took out a number of forward exchange contracts with counterparty banks during the year on behalf of the joint ventures AETN UK and Sky News Arabia FZ - LLC. On the same dates as these forward contracts were entered into, the Group entered into equal and opposite contracts with the joint ventures in respect of these forward contracts.

 

Consequently, the Group was not exposed to any of the net gains or losses on these forward contracts. The face value of forward exchange contracts with AETN UK that had not matured as at 30 June 2012 was £2 million (2011: £2 million).

 

During the year, US$3 million (2011: US$4 million) was paid to the joint ventures upon maturity of forward exchange contracts and US$14 million (2011: less than US$1 million) was received from joint ventures upon maturity of forward exchange contracts.

 

During the year, £2 million (2011: £3 million) was received from the joint ventures upon maturity of forward exchange contracts, and £7 million (2011: less than £1 million) was paid to the joint ventures upon maturity of forward exchange contracts.

 

During the year, no euro amounts were received from the joint ventures upon maturity of forward exchange contracts (2011: €1 million) and €2 million (2011: nil) was paid to the joint ventures upon maturity of forward exchange contracts.

 

At 30 June 2012 the Group had minimum expenditure commitments of £1 million (2011: £3 million) with its joint ventures and associates.

 

c) Other transactions with related parties

 

A close family member of one Director of the Company runs Freud Entertainment Limited ("Freud"), which has provided external support to the press and publicity activities of the Group. During the year the Group incurred expenditure amounting to £1 million (2011: £2 million) with Freud. At 30 June 2012 there was less than £1 million (2011: £1 million) due to Freud.

 

During the prior year, a close family member of one Director of the Company who served during the prior year had a controlling interest in Shine in which the Group also had an equity shareholding, until Shine was acquired by News Corporation on 5 April 2011 (see note 5). Shine continues to be a related party of the Group and transactions with Shine are included within the balances disclosed in note 30a.

 

In addition to the foregoing, the Group has engaged in a number of transactions with companies of which some of the Company's Directors are also directors. These do not meet the definition of Related Party Transactions.

 

d) Key management

 

The Group has a related party relationship with the Directors of the Group. At 30 June 2012, there were 14 (2011: 14) members of key management all of whom were Directors of the Company. Key management compensation is disclosed in note 7b.

 

Forward-looking statements

This document contains certain forward looking statements with respect to our financial condition, results of operations and business, and our strategy, plans and objectives. These statements include, without limitation, those that express forecasts, expectations and projections, such as forecasts, expectations and projections with respect to new products and services, the potential for growth of free-to-air and pay television, fixed line telephony, broadband and bandwidth requirements, advertising growth, Direct-to-Home ("DTH") customer growth, Over-the-top ("OTT") customer growth, Multiroom, Sky Anytime TV, Sky Anytime+, Now TV, Sky Go, Sky+, Sky+HD and other services' penetration, churn, DTH and other revenue, profitability and margin growth, cash flow generation, programming costs, subscriber management and supply chain costs, administration costs and other costs, marketing expenditure, capital expenditure programmes and proposals for returning capital to shareholders.

Although the Company believes that the expectations reflected in such forward looking statements are reasonable, these statements (and all other forward looking statements contained in this document) are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or implied or forecast in the forward looking statements. These factors include, but are not limited to, those risks that are highlighted in this document in the section entitled "Directors' report - Business review - Principal risks & uncertainties", and information on the significant risks and uncertainties associated with our business is described therein.

No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in the Company or any other entity and must not be relied upon in any way in connection with any investment decision. All forward looking statements in this document are based on information known to us on the date hereof. Except as required by law, we undertakeno obligation publicly to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

 

Related Party Announcement

 

On 26 July 2012, the Company announced an intention to seek the necessary shareholder approvals at its AGM on 1 November 2012 (the "AGM") to return a further £500 million of capital to shareholders via an additional share buy‑back programme (the "Share Buy-back Programme"). The Board believes that the Share Buy‑back Programme is a flexible and tax efficient means by which to make distributions to shareholders which are incremental to the ordinary dividend. Whilst the Share Buy-back Programme will result in a reduction of the Company's cash balances, the Board does not believe this will significantly reduce the Company's financial flexibility.

 

Consistent with the approach previously adopted for the Company's £750 million share buy-back programme, as approved by shareholders on 29 November 2011, the Company intends to implement the Share Buy-back Programme by way of both ongoing on-market repurchases on the Main Market of the London Stock Exchange and off-market repurchases from News Corporation, the Company's largest shareholder. If News Corporation were not to participate in the Share Buy-back Programme, any repurchase of ordinary shares by the Company would increase News Corporation's percentage shareholding in the Company and trigger the requirement under Rule 9 of the City Code on Takeovers and Mergers to make a general offer to all of the other shareholders to acquire their shares.

 

In order not to trigger this requirement, the off-market repurchases from News Corporation will be governed by an agreement entered into with News Corporation (the "News Agreement") under which, following any on-market purchases of ordinary shares by the Company, News Corporation will sell to the Company sufficient ordinary shares to maintain its percentage shareholding at the same level as applied prior to those on-market purchases. This approach was adopted to make off-market repurchases from News under the £750 million share buy-back programme approved at the 2011 AGM, and the commercial terms of the News Agreement mirror those agreed under the £750 million share buy-back programme. This will ensure that there will be no change to News Corporation's economic or voting interests in the Company as a result of the Share Buy-back Programme.

 

As a result of News Corporation's 39.14% shareholding in the Company, News Corporation is a related party of the Company under Listing Rule 11.1.4(1)(R) and the entry into the News Agreement (the "Transaction") is classified as a related party transaction, pursuant to Listing Rule 11.1.5(R).

 

On the basis of the size of News Corporation's pro rata stake in the Share Buy-back Programme, which would not exceed £195.7 million (being 39.14% of £500 million), the Transaction is classified as a smaller related party transaction, pursuant to Listing Rule 11.1.10(R) and therefore does not automatically require shareholder approval pursuant to Listing Rule 11.1.7R, but does require shareholder approval in accordance with the Companies Act 2006.

 

The Board announces that it has nevertheless voluntarily decided to obtain shareholder approval for the Transaction as a related party transaction. The reasons for the Board's decision are outlined in the AGM circular distributed to the Company's shareholders today.  As a consequence of the Board's decision to voluntarily treat the Transaction as a related party transaction in accordance with Listing Rule 11.1.7, the Transaction will require shareholder approval as a related party transaction, which the Board intends to seek from the Company's shareholders by ordinary resolution at the AGM in addition to the other approvals set out in the AGM circular.

 


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