Telewest Global (NASDAQ:TLWT)
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From Sep 2019 to Sep 2024
Telewest Global, Inc. ("Telewest" or the "Reorganized
Company") (NASDAQ: TLWT) today announces second quarter financial
results for 2005.
Highlights
-- Adjusted EBITDA growth of 30% over Q2 04 *
-- Operating income increased 140% over Q2 04 *
-- Consumer sales division revenue growth of 5% (before VAT
recovery) over Q2 04
-- Triple play penetration increased by 11 percentage points over
Q2 04 to 32.8%
-- Revenue Generating Units grew by 89,000 in the quarter; RGUs
per customer grew from 1.97 at Q2 04 to 2.11 at Q2 05
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*T
Financial highlights
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Telewest Telewest
Global, Inc.(a) Global, Inc. Predecessor
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(unaudited in GBP m) Q2 2005 Q1 2005 Q2 2004
Revenue 381 338 326
Operating income 48 24 20
Adjusted EBITDA 158 134 122
Net income/(loss) 19 1 (126)
Free cash flow 64 63 37
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Operational highlights
----------------------------------------------------------------------
Q2 2005 Q1 2005 Q2 2004
Customer net adds 15,000 23,000 10,000
Broadband net adds 66,000 88,000 72,000
RGU net adds 89,000 113,000 84,000
Triple play percentage 32.8% 30.3% 21.8%
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(a) Includes GBP 40m of Revenue, GBP 20m of Operating income, GBP 20m
of Adjusted EBITDA, GBP 22m of Net income, and GBP 20m of Free
cash flow resulting from (a) the consolidation of sit-up Limited
from May 12, 2005, (b) a GBP 16m VAT recovery and (c) a GBP 4m
rates (local government tax) rebate.
*T
Barry Elson, Acting Chief Executive Officer of Telewest Global,
Inc., commented:
"Telewest has delivered strong financial results and good
subscriber growth in television, telephony and broadband internet. Our
focus on marketing the bundle has led to increased triple play
penetration, now at 33%.
Our business sales division has returned to top-line revenue
growth and our Content assets, Flextech and UKTV along with sit-up are
performing well and continue to increase their market share.
We continue to focus upon free cash flow in all of our divisions
and remain confident of profitable growth."
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*T
ENQUIRIES
Richard Williams Head of investor relations +44 (0) 20 7299 5479
Vani Gupta Investor relations manager +44 (0) 20 7299 5353
Kirstine Cox Head of media +44 (0) 20 7299 5115
Brunswick
Diana Drobiner US +212 333 3810
Sarah Tovey UK +44 (0) 20 7396 5388
*T
OPERATIONAL REVIEW
Cable segment
Consumer sales division
The consumer sales division had a good quarter with a net increase
of 15,000 customer relationships, up 41% on the same quarter in 2004.
This was lower than in the previous quarter primarily due to
seasonally higher churn.
As expected, churn at 1.2%, was higher than the previous quarter.
It was affected by a higher level of movers due to a seasonal increase
in people moving house and students finishing college and an increase
in non-pay churn. Non-pay churn is up as a result of higher
acquisition levels in recent periods together with the impact of a
tightened credit policy under which we have reduced the time period
before we disconnect newly acquired customers who do not adhere to our
payment terms. This change is in line with our focus on maintaining
profitable growth and managing credit risk. It is likely that these
factors will continue to have an impact in the third quarter.
Household ARPU (excluding the revenue impact of the GBP 16 million
VAT recovery, described below) was GBP 44.86 in the quarter, down from
GBP 45.34 in the previous quarter. This reduction was principally
attributable to lower telephony usage due to the start of the summer
and the continued impact of fixed-to-mobile substitution. A reduction
in premium and pay-per-view revenue after the end of the football
season also negatively impacted ARPU.
Partially offsetting these impacts was the continued growth in
RGUs per customer, which grew to 2.11, and triple play penetration,
which grew to 32.8%. This reflects our successful focus on profitable
growth and on selling bundled products. We remain on target to achieve
40% triple play penetration during 2007.
Consumer internet
We experienced good growth in the number of broadband subscribers,
with 66,000 net additions in the quarter. Growth was slower than in
the previous quarter, partly due to the factors indicated above. We
believe that we have continued to maintain market share at around 67%
in our addressable areas.
Growth continued to be strongest in our lowest broadband tier.
This impacted the mix of broadband subscribers and broadband ARPU,
which fell GBP 0.50 to GBP 19.39 as compared to the previous quarter.
Broadband continued to be successful in attracting new customers
to Telewest - 49% of broadband installations in the quarter were for
customers who were not existing customers. Multi-service penetration
remained high in broadband, with 71% of all broadband internet
subscribers subscribing to the full "triple play" and 93% subscribing
to at least one other product.
In September 2005, we will commence the increase of our broadband
speeds, which we expect to complete by early 2006. This will be at no
additional charge to our customers. The 512Kb tier speed will be
increased to 2Mb. The 1Mb tier speed will be increased to 4Mb. The
currently existing 2Mb and 4Mb tier speeds will be increased to 10Mb.
Consumer television
The number of TV subscribers grew by 11,000 in the quarter
compared to 8,000 in the previous quarter. This represents the best
second quarter performance for four years.
TV ARPU (excluding the revenue impact of the GBP 16 million VAT
recovery, described below) of GBP 20.78 fell GBP 0.34 compared to the
previous quarter, primarily due to reduced premium and pay-per-view
revenue at the end of the football season. On July 1, 2005, we
increased the price of our two lowest digital TV tiers by GBP 1 each.
We expect this to have a positive impact on TV ARPU in the third
quarter.
The number of digital TV subscribers rose by 40,000 compared to
27,000 in the previous quarter. 89% of our TV subscribers now take our
digital service. We estimate that we will be fully digital by the end
of 2006. Once complete, this will free up significant amounts of
bandwidth in our network, which will allow extra capacity for
Video-On-Demand (VOD), High Definition TV, broadband speed increases
and other services.
Our VOD roll-out is continuing and is now available to
approximately 120,000 subscribers in the South West. We branded this
service "Teleport" and have expanded the content available. In
addition to the "Teleport Movies" service, we launched "Teleport
Replay" which gives access to some of the best television from the BBC
and others from the preceding seven days. Subscribers to our top tier
"Supreme" pack will also receive free access to "Teleport TV", which
makes available a range of library content from the BBC, Flextech,
Discovery and others. This service costs GBP 5 per month for
non-Supreme customers, therefore encouraging upward migration to
higher digital tiers. We plan to continue our region-by-region
roll-out during the second half of this year and to complete the
national roll-out by early 2006. We expect to launch DVR (Digital
Video Recorder) services towards the end of this year.
Consumer telephony
The number of telephony subscribers increased by 12,000 in the
quarter. This represents the best second quarter performance for four
years.
Telephony ARPU was GBP 22.42 in the quarter, down from GBP 23.00
in the previous quarter. This reduction was principally attributable
to lower telephony usage due to the start of the summer and the
continued impact of fixed-to-mobile substitution.
We have continued our strategy of migrating subscribers to flat
rate packages to reduce the impact of declining telephony usage. As a
result, 38% of all telephony subscribers now subscribe to one of our
two main "Talk" packages - "Talk Unlimited" or "Talk Evenings and
Weekends". On July 1, 2005 we migrated all of our existing "3-2-1"
subscribers to "Talk Weekends" which gives subscribers free local and
national calls at weekends. This package is charged at GBP 10.50 per
month compared to GBP 10 for the "3-2-1" service.
Business sales division
Our business sales division had an improved quarter with revenues
up GBP 2 million on the previous quarter to GBP 63 million, driven by
growth in new business acquired. The division is operating in
challenging market conditions and we are encouraged that this is the
first growth in quarterly revenues for seven quarters. In particular,
data revenues are up 12% compared to the same quarter last year.
Content segment
Overall revenue in Flextech was GBP 32 million in the quarter, up
14% on the second quarter of 2004, and up GBP 1 million on the
previous quarter.
Advertising revenue was up 14% on the same quarter last year at
GBP 16 million, resulting primarily from an increase in market share,
driven by improved viewing share of Flextech's channels. Advertising
revenue was down GBP 1 million from the previous quarter after an
exceptionally strong first quarter in the UK television advertising
market.
Subscription revenue remained flat at GBP 11 million compared to
both the previous quarter and the same quarter last year. During the
quarter we signed a new carriage agreement with NTL for Flextech and
UKTV channels to be carried on its platform for three years.
Other revenue increased by GBP 2 million compared to both the
previous quarter and the same quarter last year principally due to
sales of international programming rights and increased commercial
revenue.
sit-up segment
On May 12, 2005, Telewest acquired a controlling interest in
sit-up Limited ("sit-up") for an aggregate purchase price of
approximately GBP 103 million including fees. Telewest completed the
acquisition of 100% of the ordinary shares of sit-up on July 7, 2005.
sit-up markets and retails a wide variety of consumer products
primarily by means of televised shopping programs using an
auction-based format.
sit-up's financial results were consolidated into the Group's
results from May 12, 2005. As a result, Group revenues of GBP 24
million and Adjusted EBITDA of GBP 0 have been recognized in respect
of sit-up in the second quarter.
On a pro forma basis, assuming that sit-up was acquired on January
1, 2005, revenues would have been GBP 46 million in the second
quarter. Revenues in the same quarter last year were GBP 36 million on
a pro forma basis, assuming that sit-up was acquired on January 1,
2004, thus implying pro forma revenue growth of 28%. On the same pro
forma basis, Adjusted EBITDA in the quarter would have been GBP 0,
flat compared to the same quarter last year.
sit-up's revenues increased due to growth in multi-channel
penetration and the continued success of its innovative auction-based
home shopping channels.
sit-up recently launched a third live-auction channel, speed
auction tv, on Sky, NTL and Telewest.
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*T
FINANCIAL RESULTS
GAAP Financial Measures 3 months ended June 30,
-------------------------
(unaudited in GBP millions) 2005 2004
Reorganized Predecessor
Company Company
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Operating income 48 20
Net income/(loss) 19 (126)
Net cash provided by operating activities 123 88
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*T
Total revenue and consumer sales division revenue include a credit
of GBP 16 million resulting from the recovery of Value Added Tax (VAT)
from HM Customs and Excise, which had been the subject of a court case
and subsequent appeals since 2002. A GBP 16 million charge was taken
against revenue in 2002 when the case commenced. This recovery has not
been included in any ARPU calculations.
Operating income for the second quarter of 2005 was GBP 48
million, up from GBP 20 million for the second quarter of 2004, due
principally to the recovery of VAT, revenue growth in our consumer
sales division and content segment, and lower SG&A, partially offset
by increased depreciation and amortization. SG&A in the second quarter
of 2004 was impacted by GBP 12 million of financial restructuring
charges compared to GBP 0 in the second quarter of 2005. The second
quarter of 2005 was impacted by GBP 7 million of expense relating to
sit-up and GBP 3 million of stock-based compensation expense, neither
of which arose in the second quarter of 2004. Additionally GBP 4
million of rates (local government tax) rebate was received in the
second quarter of 2005 compared with GBP 0 in the second quarter of
2004.
The improvement from net loss of GBP 126 million for the second
quarter of 2004 to net income of GBP 19 million for the second quarter
of 2005 was due principally to significantly reduced interest costs
and decreased foreign exchange losses following our predecessor's
financial restructuring, and enhanced operating income.
Net cash provided by operating activities increased from GBP 88
million for the second quarter of 2004 to GBP 123 million for the
second quarter of 2005. This increase arose principally as a result of
improvements in operating income.
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*T
Non-GAAP Financial Measures 3 months ended June 30,
-------------------------
(unaudited in GBP millions) 2005 2004
Reorganized Predecessor
Company Company
----------------------------------------------------------------------
Adjusted EBITDA 158 122
Free cash flow 64 37
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*T
Adjusted EBITDA (earnings before interest, taxation, depreciation,
amortization and financial restructuring expenses) for the second
quarter of 2005 was GBP 158 million, up 30% as compared to the second
quarter of 2004. This increase reflects the recovery of VAT, the rates
rebate and increased revenues in the consumer sales division and
content segment, and lower operating costs and expenses in the cable
segment, partially offset by higher operating costs and expenses in
the content segment. Adjusted EBITDA margin (Adjusted EBITDA as a
percentage of revenue) has increased from 37.4% to 41.5%. Excluding
the VAT recovery and rates rebate, Adjusted EBITDA margin would have
been 37.8% for the second quarter of 2005.
Stock-based compensation expense ("SBCE") of GBP 3 million was
incurred in the second quarter of 2005. SBCE arises as a result of
options and restricted stock granted to our employees. SBCE will
similarly affect future periods. This is a non-cash item and no such
expense was incurred in the second quarter of 2004. Adjusted EBITDA
before the deduction of SBCE was GBP 161 million in the second quarter
of 2005, an increase of GBP 39 million, or 32%, over the second
quarter of 2004 on the same basis.
Free cash flow (cash flow from operating activities excluding
financial restructuring expenses less capital expenditure) for the
three months ended June 30, 2005 was GBP 64 million, compared with GBP
37 million for the three months ended June 30, 2004. The increase was
primarily due to increased Adjusted EBITDA.
Reconciliations of these and other non-GAAP financial measures to
the most directly comparable GAAP financial measures are explained and
shown on pages 16 to 19.
Costs
Total gross margin (excluding the credit of GBP 16 million VAT
recovery), was flat for the quarter as compared to 72% for the same
quarter last year due primarily to the growing number of high margin
broadband subscribers, television price increases and reduced cable
segment expenses partially offset by the consolidation of sit-up,
which is comparatively a much lower gross margin business. Total gross
margin was 73%, including the credit of GBP 16 million VAT recovery.
Gross margin was down from 74% in the previous quarter due to the
consolidation of the comparatively lower margin sit-up segment.
Selling, general and administrative expenses (SG&A)
SG&A of GBP 119 million was up GBP 4 million from the previous
quarter primarily due to the consolidation of GBP 7 million of sit-up
SG&A, partially offset by a rates rebate received of GBP 4 million.
This relates to rates charged on our core network. The rebate was for
the period April 1, 2001 to March 31, 2005 and is not expected to
recur in future quarters.
Debt and Capital Resources
Capital expenditure was GBP 59 million for the quarter. Capital
expenditure has been lower than expected in the first half of the year
due to further savings on consumer contract installation costs and the
phasing of capital project spend. As a result, capital expenditure for
the full year is now expected to be in the range of GBP 220 million to
GBP 230 million.
During the quarter, certain of Telewest's Flextech subsidiaries
entered into a new bank facility related to the acquisition of sit-up.
GBP 110 million of the facility has been fully drawn with a GBP 20
million revolver facility, currently undrawn. Interest rates on the
facility start at 1.75 percentage points above LIBOR with leverage
ratchets down to 1% above LIBOR. The facility matures in June 2009
repayable semi-annually over the life of the facility from December
2005. The facility is secured on the assets of certain Flextech
subsidiaries and sit-up along with Telewest's 50% share of the issued
equity of UKTV.
As at June 30, 2005, net debt was GBP 1,712 million. This
consisted of GBP 1,809 million drawn down on our credit facilities and
GBP 116 million of leases and other loans, offset by cash balances of
GBP 213 million. The GBP 1,809 million drawn amount includes US$150
million and Euro100 million.
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*T
Principal affiliate
UKTV
(unaudited in GBP millions) 3 months ended June 30,
-------------------------
2005 2004
----------------------------------------------------------------------
Share of net income of UKTV 7 5
Cash inflow from UKTV, being interest
received, repayment of loans made, net, and
dividends received 10 6
----------------------------------------------------------------------
*T
Telewest owns 50% of the companies that comprise UKTV, a group of
joint ventures formed with BBC Worldwide. UKTV offers a portfolio of
multi-channel television channels based on the BBC's program library.
Telewest accounts for its interest in UKTV under the equity method
and recognized its share of net income of GBP 7 million for the three
months ended June 30, 2005. This compares with GBP 5 million share of
net income for the three months ended June 30, 2004.
UKTV is funded by a loan from Telewest, the balance of which was
GBP 178 million at June 30, 2005. Total cash interest and repayments
received in respect of this loan by Telewest were GBP 8 million in the
second quarter of 2005. Telewest's cash interest receipts from UKTV
are recorded in free cash flow but not in Telewest's Adjusted EBITDA.
During the three months ended June 30, 2005, we received GBP 2 million
of dividends from UKTV. We expect to continue to receive dividends
from UKTV as it continues to generate cash.
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*T
Telewest Global, Inc.
Consolidated Statements of Operations
(amounts in GBP millions, except share and per share data)
(unaudited)
----------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Reorganized Predecessor Reorganized Predecessor
Company Company Company Company
----------------------------------------------------------------------
Revenue
Consumer Sales
Division 262 235 508 470
Business Sales
Division 63 63 124 130
----------------------------------------------------------------------
Total Cable
Segment 325 298 632 600
Content Segment 32 28 63 54
sit-up Segment 24 - 24 -
----------------------------------------------------------------------
Total revenue 381 326 719 654
----------------------------------------------------------------------
Operating costs
and expenses
Cable segment
expenses 70 74 139 153
Content segment
expenses 17 18 37 34
sit-up segment
expenses 17 - 17 -
Depreciation 101 90 202 184
Amortization 9 - 18 -
Selling, general
and
administrative
expenses 119 124 234 244
----------------------------------------------------------------------
333 306 647 615
----------------------------------------------------------------------
Operating income 48 20 72 39
Other
income/(expense)
Interest income 7 8 11 15
Interest expense
(including
amortization of
debt discount) (41) (121) (70) (230)
Foreign exchange
(losses)/gains,
net (3) (37) (7) 40
Share of net
income of
affiliates 7 5 13 8
Other, net 1 - 1 (1)
----------------------------------------------------------------------
Income/(loss)
before income
taxes 19 (125) 20 (129)
Income tax charge - (1) - (1)
----------------------------------------------------------------------
Net income/(loss) 19 (126) 20 (130)
----------------------------------------------------------------------
Basic and diluted
earnings per
share of common
stock GBP 0.08 GBP 0.08
Weighted average
number of shares
of common stock -
(millions) 245 245
----------------------------------------------------------------------
Telewest Global, Inc.
Consolidated Balance Sheets
(amounts in GBP millions, except share and per share data)
(unaudited)
----------------------------------------------------------------------
June 30, December 31,
2005 2004
------------ ------------
Reorganized Reorganized
Company Company
----------------------------------------------------------------------
Assets
Cash and cash equivalents 213 68
Restricted cash 16 26
Trade receivables 118 108
Other receivables 32 33
Prepaid expenses 38 17
Inventory for re-sale, net 15 -
Other assets 4 -
----------------------------------------------------------------------
Total current assets 436 252
Investments accounted for under the equity
method 286 304
Property and equipment, net 2,888 2,974
Intangible assets, net 296 314
Reorganization value in excess of amounts
allocable to identifiable assets 425 425
Goodwill 142 -
Programming inventory 30 24
Deferred financing costs (net of
amortization of GBP 3 million; 2004: GBP
0 million) 52 51
----------------------------------------------------------------------
Total assets 4,555 4,344
----------------------------------------------------------------------
Liabilities and shareholders' equity
Accounts payable 153 93
Other liabilities 446 424
Debt repayable within one year 55 21
Capital lease obligations repayable within
one year 45 38
----------------------------------------------------------------------
Total current liabilities 699 576
Other liabilities 6 -
Deferred taxes 105 105
Debt repayable after more than one year 1,760 1,686
Capital lease obligations repayable after
more than one year 65 69
----------------------------------------------------------------------
Total liabilities 2,635 2,436
----------------------------------------------------------------------
----------------------------------------------------------------------
Minority interest (1) (1)
----------------------------------------------------------------------
Shareholders' equity
Preferred stock - US$0.01 par value;
authorized 5,000,000 shares, issued none
(2005 and 2004) - -
Common stock - US$0.01 par value; authorized
1,000,000,000 shares, issued 245,171,054
(2005) and 245,080,629 (2004) 1 1
Additional paid-in capital 1,960 1,954
Accumulated other comprehensive loss (14) -
Accumulated deficit (26) (46)
----------------------------------------------------------------------
Total shareholders' equity 1,921 1,909
----------------------------------------------------------------------
----------------------------------------------------------------------
Total liabilities and shareholders' equity 4,555 4,344
----------------------------------------------------------------------
Telewest Global, Inc.
Consolidated Statements of Cash Flows
(amounts in GBP millions)
(unaudited)
----------------------------------------------------------------------
Six months ended June 30,
-------------------------
2005 2004
------------ ------------
Reorganized Predecessor
Company Company
----------------------------------------------------------------------
Cash flows from operating activities
Net income/(loss) 20 (130)
Adjustments to reconcile net income/(loss)
to net cash provided by operating
activities:
Depreciation 202 184
Amortization 18 -
Amortization of deferred financing costs and
debt discount 3 30
Deferred tax charge - 1
Fair value adjustment of interest rate swaps (10) -
Accretion expense 1 -
Unrealized losses/(gains) on foreign
currency translation 7 (40)
Stock-based compensation expense 6 -
Share of net income of affiliates (9) (8)
Profit on disposal of assets (1) -
Amounts written off investments - 1
Changes in operating assets and liabilities,
net of effect of acquisition of
subsidiaries:
Change in receivables (9) 9
Change in prepaid expenses (19) (25)
Change in other assets (11) (3)
Change in accounts payable 35 27
Change in other liabilities 6 124
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Net cash provided by operating activities 239 170
----------------------------------------------------------------------
Cash flows from investing activities
Capital expenditure (113) (127)
Proceeds from disposal of fixed assets 2 -
Cash paid for acquisition of subsidiaries,
net of cash acquired (107) -
Repayment/(advance) of loans made to
affiliates, net 9 (4)
Disposal of affiliate - 7
Proceeds from sale and leaseback 12 -
----------------------------------------------------------------------
Net cash used in investing activities (197) (124)
----------------------------------------------------------------------
Cash flows from financing activities
Release of restricted cash 10 2
Proceeds from new debt 110 -
Repayment of debt (6) -
Cash paid for financing costs (4) -
Principal element of capital lease
repayments (19) (23)
Proceeds from the issue of redeemable
preferred stock 12 -
----------------------------------------------------------------------
Net cash provided by/ (used in) financing
activities 103 (21)
----------------------------------------------------------------------
Net increase in cash and cash equivalents 145 25
Cash and cash equivalents at beginning of
period 68 427
----------------------------------------------------------------------
Cash and cash equivalents at end of period 213 452
----------------------------------------------------------------------
Supplementary cash flow information:
Cash paid for interest, net 41 61
Cash received for income taxes - (2)
Telewest Global, Inc.
Selected Quarterly Operating Data - unaudited
The following table sets out certain operating data for the
three-month periods shown. The information represents combined
operating statistics for all of our franchises.
----------------------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2005 2005 2004 2004 2004
Predecessor
Reorganized Company Company
-------------------------------------------- -----------
Customer Data
-------------
Homes passed
and marketed
(1) 4,698,510 4,694,480 4,686,794 4,686,799 4,682,777
Total customer
relationships
(2) 1,837,191 1,822,530 1,799,556 1,769,263 1,752,553
Customer
penetration 39.1% 38.8% 38.4% 37.7% 37.4%
Customer
additions 79,365 78,695 89,452 78,707 67,118
Customer
disconnections (64,704) (55,721) (59,159) (61,997) (56,709)
Net customer
additions 14,661 22,974 30,293 16,710 10,409
Revenue
Generating
Units
("RGUs")(3) 3,873,792 3,784,835 3,671,402 3,539,185 3,447,254
RGUs per
customer 2.11 2.08 2.04 2.00 1.97
Net RGU
additions 88,957 113,433 132,217 91,931 84,014
Average
monthly
revenue
per
customer(4) GBP 44.86 GBP 45.34 GBP 45.13 GBP 45.05 GBP 44.98
Average monthly
churn(5) 1.2% 1.0% 1.1% 1.2% 1.1%
---------------------------------------------------------- -----------
Bundled customers
-----------------
Customers
subscribing to
two or more
services 1,434,161 1,409,998 1,379,057 1,338,632 1,312,842
Customers
subscribing to
three services
("triple play") 602,430 552,307 492,789 431,290 381,859
Percentage of
dual or triple
play customers 78.1% 77.4% 76.6% 75.7% 74.9%
Percentage of
triple play
customers 32.8% 30.3% 27.4% 24.4% 21.8%
---------------------------------------------------------- -----------
Consumer Television
-------------------
Television
ready homes
passed and
marketed 4,698,510 4,694,480 4,686,794 4,686,799 4,682,777
Total
subscribers 1,331,742 1,320,487 1,312,825 1,297,304 1,288,272
Quarterly net
additions 11,255 7,662 15,521 9,032 2,475
Television
penetration 28.3% 28.1% 28.0% 27.7% 27.5%
Digital ready
homes passed
and marketed 4,501,169 4,451,420 4,420,388 4,405,162 4,401,860
Digital
subscribers 1,189,521 1,149,641 1,122,301 1,078,623 1,052,855
Quarterly net
digital
additions 39,880 27,340 43,678 25,768 23,096
Penetration of
digital
subscribers to
total
subscribers 89.3% 87.1% 85.5% 83.1% 81.7%
Average monthly
churn (5) 1.5% 1.4% 1.5% 1.4% 1.3%
Average monthly
revenue per
subscriber
(4) GBP 20.78 GBP 21.12 GBP 20.88 GBP 20.72 GBP 20.53
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Consumer Telephony
------------------
Telephony ready
homes passed
and marketed 4,694,030 4,691,704 4,683,153 4,682,002 4,677,861
"3-2-1" and
"Talk
Weekends"
telephony
subscribers 1,045,139 1,053,226 1,080,893 1,082,125 1,105,056
"Talk Unlimited"
and "Talk Evenings
and Weekends"
subscribers 644,073 624,417 579,448 552,534 516,313
Total
subscribers 1,689,212 1,677,643 1,660,341 1,634,659 1,621,369
Quarterly net
additions 11,569 17,302 25,682 13,290 9,222
Telephony
penetration 36.0% 35.8% 35.5% 34.9% 34.7%
Average monthly
churn(5) 1.2% 1.0% 1.1% 1.2% 1.1%
Average monthly
revenue per
subscriber(4) GBP 22.42 GBP 23.00 GBP 23.18 GBP 23.53 GBP 23.70
Telewest Global, Inc.
Selected Quarterly Operating Data - unaudited (continued)
----------------------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2005 2005 2004 2004 2004
Predecessor
Reorganized Company Company
-------------------------------------------- -----------
Consumer Internet
-----------------
Broadband ready
homes passed
and marketed 4,501,169 4,451,420 4,420,388 4,405,162 4,401,860
Total metered
dial-up
internet
subscribers 25,048 29,376 33,417 39,196 47,884
Total unmetered
dial-up
internet
subscribers 65,516 85,909 107,220 127,745 151,457
Total broadband
internet
subscribers 852,838 786,705 698,236 607,222 537,613
Quarterly net
broadband
internet
additions 66,133 88,469 91,014 69,609 72,317
Broadband
internet
penetration 18.9% 17.7% 15.8% 13.8% 12.2%
Average monthly
broadband
internet churn
(5) 1.3% 1.0% 1.0% 1.3% 1.2%
Average monthly
revenue per
broadband
internet
subscriber
(4) GBP19.39 GBP19.89 GBP20.23 GBP21.50(a) GBP22.45(a)
---------------------------------------------------------- -----------
NCTA Capital
expenditure(6) GBP m GBP m GBP m GBP m GBP m
------------ ------------------------------------------ -----------
Customer
premise
equipment
("CPE") 18 16 25 19 23
Scaleable
infrastructure 12 7 14 8 7
Commercial 11 8 8 12 9
Line extensions 1 2 1 1 1
Upgrade/rebuild 3 6 10 1 4
Support capital 12 13 7 10 9
------------------------------------------ -----------
Total NCTA
Capital
expenditure 57 52 65 51 53
Non NCTA
Capital
expenditure:
Content Segment 1 - 1 - 1
sit-up Segment 1 - - - -
Change in
capital
accruals - 2 (2) (1) 7
---------------------------------------------------------- -----------
Total Capital
expenditure 59 54 64 50 61
---------------------------------------------------------- -----------
(a) The product ARPUs for broadband internet in these quarters have
been adjusted to reflect the full value of promotional discounts
offered.
(1) The number of homes within our service area that can potentially
be served by our network with minimal connection costs.
Information concerning the number of homes "passed and marketed"
is based on physical counts made by us during network construction
or marketing phases.
(2) The number of customers who receive at least one of our
television, telephony or broadband internet services.
(3) Revenue Generating Units ("RGUs"), refer to subscriptions to each
of our analog television, digital television, telephony and
broadband internet services on an individual basis. For example,
when we provide one customer with digital television and broadband
internet services, we record two RGUs. Dial-up internet services,
second telephone lines and additional TV outlets are not recorded
as RGUs although they generate revenue for us.
(4) Average monthly revenue per customer (often referred to as "ARPU"
or "Average Revenue per User") represents the consumer sales
division's total quarterly revenue of residential customers,
including installation revenues, but excluding the recovery of GBP
16 million VAT, divided by the average number of residential
customers in the quarter, divided by three. The same methodology
is used for television, telephony and broadband internet ARPU.
(5) Average monthly churn represents the total number of customers who
disconnected during the quarter divided by the average number of
customers in the quarter, divided by three. Subscribers who move
premises within our addressable areas (known as "Moves and
Transfers") and retain our services are excluded from this churn
calculation.
(6) In order to provide comparable data to the US and UK cable
industry, and in accordance with NCTA (National Cable &
Telecommunications Association) reporting guidelines, Telewest has
allocated capital expenditure to the standard reporting categories
as per below. Telewest is not a member of the NCTA and is
providing this information solely for comparative purposes.
CPE - costs incurred at the customer's house to secure new
customers, revenue units and additional bandwidth revenues.
Includes connections to previously unserved houses in
accordance with SFAS 51 and customer premise equipment.
Scaleable infrastructure - costs, not CPE or network related,
to secure growth of new customers, revenue units and
additional bandwidth revenues or provide service enhancements.
Commercial - costs to provide high-speed data and telephony
services to businesses and institutions. Includes network and
infrastructure expenditures. Line extensions - network costs
associated with entering new service areas including costs of
fiber, coaxial cable, amplifiers, electronic equipment,
make-ready and design/engineering. Upgrade/rebuild - costs to
modify or replace existing coax and fiber networks. Includes
materials, contract labor, in-house labor, make-ready, design
engineering and other miscellaneous costs associated with all
aspects of the construction of the plant miles along an
existing route. Benefits include added bandwidth and/or
reliability/extended life to the existing plant. Support
capital - costs associated with the replacement or enhancement
of non-network assets due to obsolescence and wear-out,
replacement of network assets unrelated to line extensions,
rebuild/upgrade or customer growth.
*T
Telewest Global, Inc.
Supplemental Analysis
-- Forward-Looking Statements
-- Fresh-Start Reporting
-- Pro forma Consolidated Statements of Operations
-- Quarterly Historical Information
-- Segmental Information
-- Use of Non-GAAP Financial Measures
Forward-Looking Statements
Some of the statements in this earnings release constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements relate to
future events or our future financial performance, including, but not
limited to, strategic plans, potential growth (including customer net
additions and average monthly revenue per customer), product
introductions and innovation, meeting customer expectations, planned
operational changes (including product improvements and the impact of
price increases), expected capital expenditures, future cash sources
and requirements, liquidity, customer service improvements, cost
savings and the benefits of acquisitions or joint ventures - potential
and/or completed - that involve known and unknown risks, uncertainties
and other factors that may cause our or our businesses' actual
results, levels of activity, performance or achievements to be
materially different from those expressed or implied by any
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may," "will,"
"could," "would," "should," "expect," "plan," "anticipate," "intend,"
"believe," "estimate," "predict," "potential," or "continue," or the
negative of those terms or other comparable terminology.
There are a number of important factors that could cause our
actual results and future development to differ materially from those
expressed or implied by those forward-looking statements. These
factors include those discussed under the caption "Risk Factors" in
the Annual Report on Form 10-K for the year ended December 31, 2004
(No. 000-50886) filed by Telewest Global, Inc. on March 22, 2005 with
the United States Securities and Exchange Commission, although those
risk factors may not be exhaustive. Other sections of this earnings
release may describe additional factors that could adversely impact
our business and financial performance. We operate in a continually
changing business environment, and new risk factors may emerge from
time to time. Management cannot anticipate all of these new risk
factors, nor can they definitively assess the impact, if any, of new
risk factors on us or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those
projected in any forward-looking statements. Accordingly,
forward-looking statements should not be relied upon as a prediction
of actual results.
Unless otherwise required by applicable securities laws, we assume
no obligation to publicly update or revise any of the forward-looking
statements after the date of this earnings release to reflect actual
results, whether as a result of new information, future events or
otherwise.
Fresh-Start Reporting
As a result of the completion of the financial restructuring of
Telewest Communications plc, our predecessor, on July 15, 2004,
Telewest adopted fresh-start reporting in accordance with Statement of
Position 90-7, "Reporting by Entities in Reorganization under the
Bankruptcy Code", ("SOP 90-7"), with effect from July 1, 2004. Under
SOP 90-7, Telewest established a new accounting basis, recording our
predecessor's assets at their fair value and liabilities at the
present value of amounts to be paid.
A reconciliation of our predecessor's balance sheet at June 30,
2004 to the fresh-start balance sheet at July 1, 2004, is included in
Telewest's Annual Report on Form 10-K for the year ended December 31,
2004.
As a result of the adoption of fresh-start reporting, our balance
sheets and results of operations subsequent to July 1, 2004 will not
be comparable in many material respects to the balance sheets or
results of operations reflected in our predecessor's historical
financial statements for periods prior to July 1, 2004.
-0-
*T
Telewest Global, Inc.
Pro forma Consolidated Statements of Operations (a)
(amounts in GBP millions, except share and per share data)
(unaudited)
----------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
2005 2004 2005 2004
------------- ----------- ------------ ------------
Reorganized Predecessor Reorganized Predecessor
Company (a) Company (a) Company (a) Company (a)
----------------------------------------------------------------------
Revenue
Consumer Sales
Division 262 235 508 470
Business Sales
Division 63 63 124 130
----------------------------------------------------------------------
Total Cable
Segment 325 298 632 600
Content Segment 32 28 63 54
sit-up Segment 46 36 98 76
----------------------------------------------------------------------
Total revenue 403 362 793 730
----------------------------------------------------------------------
Operating costs
and expenses
Cable segment
expenses 70 74 139 153
Content segment
expenses 17 18 37 34
sit-up segment
expenses 34 27 72 57
Depreciation 101 91 203 185
Amortization 9 - 18 -
Selling, general
and
administrative
expenses 124 133 251 262
----------------------------------------------------------------------
355 343 720 691
----------------------------------------------------------------------
Operating income 48 19 73 39
Other
income/(expense)
Interest income 7 7 11 14
Interest expense
(including
amortization of
debt discount) (41) (122) (72) (233)
Foreign exchange
(losses)/gains,
net (3) (37) (7) 40
Share of net
income of
affiliates 7 4 12 7
Other, net 1 - 1 (1)
----------------------------------------------------------------------
Income/(loss)
before income
taxes 19 (129) 18 (134)
Income tax charge - (1) - (1)
----------------------------------------------------------------------
Net income/(loss) 19 (130) 18 (135)
----------------------------------------------------------------------
Basic and diluted
earnings per
share of common
stock GBP 0.08 GBP 0.07
Weighted average
number of shares
of common stock -
(millions) 245 245
----------------------------------------------------------------------
(a) To show pro forma effect as if sit-up Limited had been purchased
on January 1, 2005 and 2004, for the periods ended June 30, 2005
and 2004, respectively.
Pro forma adjustments reflect the revenue, segment expenses,
depreciation and SG&A for sit-up for the periods January 1, 2005 to
May 11, 2005 and January 1, 2004 to June 30, 2004. Interest income and
expense have been adjusted to reflect the interest income earned by
sit-up during the above periods and the additional interest expense
that would have been incurred by Telewest to fund the acquisition at
January 1, 2005 and 2004, respectively. Share of net income of
affiliates has been adjusted to reverse the equity accounting of
sit-up for the periods presented.
Telewest Global, Inc.
Quarterly Historical Information
(amounts in GBP millions, except share and per share data)
----------------------------------------------------------------------
Three months ended
-------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2005 2005 2004 2004 2004
Predecessor
Reorganized Company Company
---------------------------------------------------------- -----------
Revenue
Consumer Sales Division 262 246 241 238 235
Business Sales Division 63 61 63 63 63
---------------------------------------------------------- -----------
Total Cable Segment 325 307 304 301 298
Content Segment 32 31 32 27 28
sit-up Segment 24 - - - -
---------------------------------------------------------- -----------
Total revenue 381 338 336 328 326
---------------------------------------------------------- -----------
Operating costs and expenses
Cable segment expenses 70 69 69 72 74
Content segment expenses 17 20 25 17 18
sit-up segment expenses 17 - - - -
Depreciation 101 101 101 103 90
Amortization 9 9 9 9 -
---------------------------------------------------------- -----------
Cost of revenue 214 199 204 201 182
Selling, general and
administrative
expenses 119 115 114 117 124
---------------------------------------------------------- -----------
333 314 318 318 306
---------------------------------------------------------- -----------
Operating income 48 24 18 10 20
Other income/(expense)
Interest income 7 4 5 6 8
Interest expense
(including
amortization of
debt discount) (41) (29) (47) (49) (121)
Foreign exchange
(losses)/gains, net (3) (4) 3 - (37)
Share of net income
of affiliates 7 6 4 4 5
Other, net 1 - - - -
---------------------------------------------------------- -----------
Income/(loss) before
income taxes 19 1 (17) (29) (125)
Income tax charge - - - - (1)
---------------------------------------------------------- -----------
Net income/(loss) 19 1 (17) (29) (126)
---------------------------------------------------------- -----------
Basic and diluted
earnings/(loss) per
share of common
stock GBP 0.08 - GBP(0.07) GBP(0.12)
Weighted average
number of shares of
common stock -
(millions) 245 245 245 245
---------------------------------------------------------- -----------
Telewest Global, Inc.
Segment Information
(amounts in GBP millions)
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Reorganized Predecessor Reorganized Predecessor
Company Company Company Company
----------------------------------------------------------------------
CABLE SEGMENT
Consumer Sales
Division revenue 262 235 508 470
Business Sales
Division revenue 63 63 124 130
----------------------------------------------------------------------
Third party
revenue 325 298 632 600
Operating costs
and expenses
(before financial
restructuring
charges) (174) (181) (353) (369)
----------------------------------------------------------------------
Adjusted EBITDA
including inter-
segment costs 151 117 279 231
Inter-segment
costs (1) 2 2 5 5
----------------------------------------------------------------------
Adjusted EBITDA 153 119 284 236
----------------------------------------------------------------------
CONTENT SEGMENT
Content Segment
revenue 34 30 68 59
Operating costs
and expenses
(before financial
restructuring
charges) (27) (25) (55) (46)
----------------------------------------------------------------------
Adjusted EBITDA
including inter-
segment revenues 7 5 13 13
Inter-segment
revenues (1) (2) (2) (5) (5)
----------------------------------------------------------------------
Adjusted EBITDA 5 3 8 8
----------------------------------------------------------------------
SIT-UP SEGMENT
sit-up Segment
revenue 24 - 24 -
Operating costs
and expenses
(before financial
restructuring
charges) (24) - (24) -
----------------------------------------------------------------------
Adjusted EBITDA - - - -
----------------------------------------------------------------------
Reconciliation to
operating income
Cable Segment
Adjusted EBITDA 153 119 284 236
Content Segment
Adjusted EBITDA 5 3 8 8
sit-up Segment
Adjusted EBITDA - - - -
----------------------------------------------------------------------
Adjusted EBITDA 158 122 292 244
Financial
restructuring
charges - (12) - (21)
Depreciation (101) (90) (202) (184)
Amortization (9) - (18) -
----------------------------------------------------------------------
Operating income 48 20 72 39
----------------------------------------------------------------------
(1) Inter-segment revenues are revenues of our Content Segment which
are costs in our Cable Segment and which are eliminated on
consolidation.
*T
Telewest Global, Inc.
Use of Non-GAAP Financial Measures
Adjusted EBITDA
Telewest's primary measure of income or loss for each of our
reportable segments is Adjusted EBITDA. Our management, including our
chief operating decision-maker, considers Adjusted EBITDA an important
indicator of the operational strength and performance of our
reportable segments. Adjusted EBITDA for each segment and in total
excludes the impact of costs and expenses that do not directly affect
our cash flows or do not directly relate to the operating performance
of that segment. These costs and expenses include depreciation,
amortization, financial restructuring charges, interest expense,
foreign exchange gains/(losses), share of net income/(loss) from
affiliates and income taxes. It is the belief of management that the
legal and professional costs relating to our financial restructuring
are not characteristic of our underlying business operations.
Furthermore management believes that some of the components of these
charges are not directly related to the performance of a single
reportable segment.
Adjusted EBITDA is not a financial measure recognised under GAAP.
This measure is most directly comparable to the GAAP financial measure
net income/(loss). Some of the significant limitations associated with
the use of Adjusted EBITDA as compared to net income/(loss) are that
Adjusted EBITDA does not reflect the amount of required reinvestment
in depreciable fixed assets, financial restructuring charges, interest
expense, foreign exchange gains or losses, income taxes expense or
benefit and similar items on our results of operations. We believe
Adjusted EBITDA is helpful for understanding our performance and
assessing our prospects for the future, and that it provides useful
supplemental information to investors. In particular, this non-GAAP
financial measure reflects an additional way of viewing aspects of our
operations that, when viewed with our GAAP results and the
reconciliations to net income/(loss), shown below, provide a more
complete understanding of factors and trends affecting our business.
Because non-GAAP financial measures are not standardized, it may not
be possible to compare Adjusted EBITDA with other companies' non-GAAP
financial measures that have the same or similar names. The
presentation of this supplemental information is not meant to be
considered in isolation or as a substitute for net cash provided by
operating activities, operating income/(loss), net income/(loss), or
other measures of financial performance reported in accordance with
GAAP.
Free cash flow
Telewest's primary measure of cash flow is free cash flow. Free
cash flow is defined as net cash provided by/(used in) operating
activities excluding cash paid for financial restructuring charges,
less capital expenditure. Our management, including our chief
operating decision-maker, considers free cash flow an important
indicator of the operational performance of our business.
Free cash flow is not a financial measure recognized under GAAP.
This measure is most directly comparable to the GAAP financial measure
net cash provided by/(used in) operating activities. The significant
limitation associated with the use of free cash flow as compared to
net cash provided by/(used in) operating activities is that free cash
flow does not consider the amount of cash required to pay financial
restructuring charges. We believe free cash flow is helpful for
understanding our performance and it provides useful supplemental
information to investors. Because non-GAAP financial measures are not
standardized, it may not be possible to compare free cash flow with
other companies' non-GAAP financial measures that have the same or
similar names. The presentation of this supplemental information is
not meant to be considered in isolation or as a substitute for net
cash provided by/(used in) operating activities, or other measures of
financial performance reported in accordance with GAAP.
Net debt
Net debt is defined as the sum of debt repayable, capital lease
obligations and accrued interest payable on notes and debentures less
cash and cash equivalents. The Company's management, including its
chief operating decision-maker, considers net debt an important
measure of the financing obligations undertaken by the Company.
Net debt is not a financial measure recognized under GAAP. This
measure is most directly comparable to the GAAP financial measure,
total liabilities. The significant limitation associated with the use
of net debt as compared total liabilities is that net debt does not
consider current liabilities due in respect of accounts payable and
other liabilities. It also assumes that all of cash and cash
equivalents is available to service debt. Telewest believes net debt
is helpful for understanding its entire net debt funding obligations
and it provides useful supplemental information to investors. Because
non-GAAP financial measures are not standardized, it may not be
possible to compare net debt with other companies' non-GAAP financial
measures that have the same or similar names. The presentation of this
supplemental information is not meant to be considered in isolation or
as a substitute for total liabilities, or other measures of financial
performance reported in accordance with GAAP.
Telewest Global, Inc.
Use of Non-GAAP Financial Measures (continued)
Average monthly revenue per customer or "Household ARPU (excluding
impact of the GBP 16 million VAT recovery)"
For a three month period, Household ARPU (excluding impact of the
GBP 16 million VAT recovery) represents the consumer sales division's
total quarterly revenue of residential customers, including
installation revenues, but excluding the recovery of GBP 16 million
VAT, divided by the average number of residential customers in the
quarter, divided by three.
For a six month period, Household ARPU (excluding impact of the
GBP 16 million VAT recovery) represents the consumer sales division's
total half yearly revenue of residential customers, including
installation revenues, but excluding the recovery of GBP 16 million
VAT, divided by the average number of residential customers in the
half year, divided by six.
Household ARPU (excluding impact of the GBP 16 million VAT
recovery) is not a financial measure recognized under GAAP. This
measure is most directly comparable to the GAAP financial measure,
Household ARPU. The significant limitation associated with the use of
Household ARPU (excluding impact of the GBP 16 million VAT recovery)
as compared to Household ARPU is that Household ARPU (excluding impact
of the GBP 16 million VAT recovery) does not consider GBP 16 million
of revenues received in respect of recovered VAT. Telewest believes
Household ARPU (excluding impact of the GBP 16 million VAT recovery)
is helpful for understanding the trend in respect of its residential
revenues derived from customers during the periods and it provides
useful supplemental information to investors. The VAT recovery is not
expected to recur. Because non-GAAP financial measures are not
standardized, it may not be possible to compare Household ARPU
(excluding impact of the GBP 16 million VAT recovery) with other
companies' non-GAAP financial measures that have the same or similar
names. The presentation of this supplemental information is not meant
to be considered in isolation or as a substitute for Household ARPU,
or other measures of financial performance reported in accordance with
GAAP.
Average monthly revenue per television subscriber or "Television
ARPU (excluding impact of the GBP 16 million VAT recovery)"
For a three month period, Television ARPU (excluding impact of the
GBP 16 million VAT recovery) represents the sum of the consumer sales
division's total quarterly revenue of television subscribers,
including installation revenues, but excluding the recovery of GBP 16
million VAT, divided by the average number of television subscribers
in the quarter, divided by three.
For a six month period, Television ARPU (excluding impact of the
GBP 16 million VAT recovery) represents the sum of the consumer sales
division's total half yearly revenue of television subscribers,
including installation revenues, but excluding the recovery of GBP 16
million VAT, divided by the average number of television subscribers
in the half year, divided by six.
Television ARPU (excluding impact of the GBP 16 million VAT
recovery) is not a financial measure recognized under GAAP. This
measure is most directly comparable to the GAAP financial measure,
Television ARPU. The significant limitation associated with the use of
Television ARPU (excluding impact of the GBP 16 million VAT recovery)
as compared to Television ARPU is that Television ARPU (excluding
impact of the GBP 16 million VAT recovery) does not consider GBP 16
million of revenues received in respect of recovered VAT. Telewest
believes Television ARPU (excluding impact of the GBP 16 million VAT
recovery) is helpful for understanding the trend in respect of its
television revenues derived from subscribers during the periods and it
provides useful supplemental information to investors. The VAT
recovery is not expected to recur. Because non-GAAP financial measures
are not standardized, it may not be possible to compare Television
ARPU (excluding impact of the GBP 16 million VAT recovery) with other
companies' non-GAAP financial measures that have the same or similar
names. The presentation of this supplemental information is not meant
to be considered in isolation or as a substitute for Television ARPU,
or other measures of financial performance reported in accordance with
GAAP.
-0-
*T
Telewest Global, Inc.
Use of Non-GAAP Financial Measures (continued)
----------------------------------------------------------------------
Reconciliations of Non-GAAP Financial Measures
(amounts in GBP millions)
----------------------------------------------------------------------
Three months ended Six months ended Three months
June 30, June 30, ended
March 31,
----------------------- ----------------------- ------------
2005 2004 2005 2004 2005
----------- ----------- ----------- ----------- ------------
Reorganized Predecessor Reorganized Predecessor Reorganized
Company Company Company Company Company
----------------------------------------------------------------------
Reconciliation of Adjusted EBITDA to net income/(loss)
----------------------------------------------------------------------
Adjusted
EBITDA 158 122 292 244 134
Financial
restructuring
charges - (12) - (21) -
Depreciation (101) (90) (202) (184) (101)
Amortization (9) - (18) - (9)
----------------------------------------------------------------------
Operating income 48 20 72 39 24
Interest income 7 8 11 15 4
Interest expense
(including
amortization of
debt discount) (41) (121) (70) (230) (29)
Foreign exchange
(losses)/gains,
net (3) (37) (7) 40 (4)
Share of net
income of
affiliates 7 5 13 8 6
Other, net 1 - 1 (1) -
Income tax
charge - (1) - (1) -
----------------------------------------------------------------------
Net income/(loss) 19 (126) 20 (130) 1
----------------------------------------------------------------------
Reconciliation of free cash flow to net cash provided by operating
activities
----------------------------------------------------------------------
Free cash flow 64 37 127 62 63
Deduct cash paid
for financial
restructuring
charges - (10) (1) (19) (1)
Add capital
expenditure 59 61 113 127 54
----------------------------------------------------------------------
Net cash provided
by operating
activities 123 88 239 170 116
----------------------------------------------------------------------
Free cash flow is reported after cash paid for interest, net, and cash
received for income taxes.
Supplementary cash flow information:
Cash paid for
interest, net 29 29 41 61 12
Cash received for
income taxes - - - (2) -
----------------------------------------------------------------------
Jun. 30, Dec. 31,
2005 2004
------------ ------------
Reorganized Reorganized
Company Company
----------------------------------------------------------------------
Reconciliation of net debt to total liabilities
Net debt 1,712 1,746
Cash and cash equivalents 213 68
----------------------------------------------------------------------
Total debt 1,925 1,814
Accounts payable 153 93
Other liabilities 452 424
Deferred taxes 105 105
----------------------------------------------------------------------
Total liabilities 2,635 2,436
----------------------------------------------------------------------
Telewest Global, Inc.
Use of Non-GAAP Financial Measures (continued)
----------------------------------------------------------------------
Three months Six months
ended ended
June 30, 2005 June 30, 2005
----------------------------------------------------------------------
Reconciliation of Household ARPU to Household ARPU (excluding impact
of the GBP 16 million VAT recovery)
----------------------------------------------------------------------
Consumer sales division revenue in
the period GBP 262 million GBP 508 million
Average number of residential
customers in the period 1,830,895 1,820,654
---------------------------------
Household ARPU GBP 47.72 GBP 46.54
---------------------------------
Consumer sales division revenue in
the period GBP 262 million GBP 508 million
VAT recovery GBP(16) million GBP(16) million
---------------------------------
Consumer sales division revenue
(excluding GBP 16 million VAT
recovery) GBP 246 million GBP 492 million
Average number of residential
customers in the period 1,830,895 1,820,654
---------------------------------
Household ARPU (excluding impact of
the GBP 16 million VAT recovery) GBP 44.86 GBP 45.11
---------------------------------
----------------------------------------------------------------------
Reconciliation of Television ARPU to Television ARPU
(excluding impact of the GBP 16 million VAT recovery)
----------------------------------------------------------------------
Consumer television revenue in the
period GBP 98 million GBP 182 million
Average number of television
subscribers in the period 1,326,317 1,321,291
---------------------------------
Television ARPU GBP 24.72 GBP 22.93
---------------------------------
Consumer television revenue in the
period GBP 98 million GBP 182 million
VAT recovery GBP(16)million GBP(16) million
---------------------------------
Consumer television revenue
(excluding GBP 16 million VAT
recovery) GBP 82 million GBP 166 million
Average number of television
subscribers in the period 1,326,317 1,321,291
---------------------------------
Television ARPU (excluding impact of
the GBP 16 million VAT recovery) GBP 20.78 GBP 20.95
---------------------------------
----------------------------------------------------------------------
*T