Sky (SKY) shares crept up 2 per cent after the pay-TV and broadband giant revealed strong customer growth in the British Isles and early gains at newly acquired Sky Italia and Sky Deutschland. Treat those businesses as part of the group for the whole first half and operating profit rose 16 per cent to £675m.
Sky attracted 204,000 customers in the UK and Ireland - a nine-year high - to reach a total retail customer base of 20.6m. Domestic TV and broadband customer additions accelerated especially quickly, reflecting the group's sustained investment in high-quality content and internet-connected TV services. On the continent, Sky attracted a record 214,000 new retail customers in Germany and Austria - up 55 per cent - and also performed surprisingly well in Italy, given the tough economic conditions.
But Sky's European expansion swelled net debt to £6.3bn, or almost 3.2 times broker Investec's forecast full-year cash profit. That could limit its spending in the upcoming auction for the Premier League broadcasting rights; losing out could drive customers to rival BT. Sky's plan to offer mobile services on O2's network from 2016 also obscures the outlook.
Broker Numis forecasts full-year pre-tax profit of £1.17bn, giving EPS of 53p, rising to £1.36bn and 60.7p next year.
| SKY (SKY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 959p | MARKET VALUE: | £16.5bn | |
| TOUCH: | 958-959p | 12-MONTH HIGH: | 974p | LOW: 839p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 154p* | NET DEBT: | 227% | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 3.67 | 0.51 | 25.2 | 12.0 |
| 2014 | 4.30 | 1.21 | 63.6 | 12.3 |
| % change | +17 | +138 | +152 | +3 |
Ex-div: 26 Mar Payment: 21 Apr *Includes intangible assets of £8.87bn, or 516p a share | ||||
