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Sky 9-month Operating Profit Up 20% As Revenues Grow 5%

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European pay-TV group Sky Plc (BSYBY, BSY.L) reported Tuesday a 20 percent increase in operating profit for the nine months ended March 31, and revenues also improved five percent from last year, reflecting strong new customer additions amid customer demand and loyalty across the group.

Sky was formed by combining UK-based BSkyB, Sky Deutschland and Sky Italia in late 2014.

"We have delivered an excellent third quarter as customers across the enlarged Sky group respond to the quality and breadth of what we offer. In all, we attracted almost 70% more new customers than the prior year and over one million new products. By continuing the strong operating momentum of the first half, we have grown revenues by 5% and operating profit by 20% over the nine months," Group Chief Executive Jeremy Darroch stated.

The company reported that group operating profit for the nine-month period grew 20 percent to 1.03 billion pounds from 854 million pounds in the year-ago period. The group operating profit exceeded 1 billion pounds for the first time in a nine-month period.

The company attributed that profit growth to revenue growth combined with good cost control that led to a 150 basis point expansion in operating margin.

The company noted that its strong financial performance was achieved in spite of adverse currency movements which have seen the value of the Euro weaken relative to Sterling since the start of the fiscal year.

Group revenues for the period also grew 5 percent to 8.45 billion pounds from 8.05 billion pounds last year.

Revenues in the UK and Ireland improved 6 percent to 5.82 billion pounds, and revenues in Germany were up 9 percent to 1.04 billion pounds from the prior-year period.

Revenues in Italy totaled 1.59 billion pounds, only edging down from 1.61 billion pounds last year, despite the challenging economic environment.

The company reported a near 70 percent growth in new customer additions in the third quarter to 242,000, with exceptional customer growth in all territories, to take its customer base to 20.8 million.

It was also the highest third-quarter growth in 11 years in UK and Ireland, and record growth rate in Germany and Austria. Further, it was the best third-quarter performance in Italy for three years.

Meanwhile, group operating costs grew only 3 percent, well below the rate of revenue growth, to 7.43 billion pounds, demonstrating excellent operating cost control whilst the company continued to invest in content in all markets.

In Tuesday's regular trading session on the LSE, Sky shares are currently trading at 1,100.00 pence, up 48.00 pence or 4.56%.

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