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Liberty Global Reports Full Year 2019 Results

Exceeded full-year FCF guidance; achieved all other guidance targets

Record year for share repurchases with $3.2 billion spent in 2019

2019 operating income down 11% YoY for continuing operations

Full-year OFCF1 grew 35% YoY fueled by 22% decrease in capital intensity

Liberty Global plc today announced its full-year 2019 and Q4 2019 financial results. Our former operations in Austria, Germany, Hungary, Romania and the Czech Republic, along with our DTH business (collectively, the "Discontinued Operations") have been accounted for as discontinued operations. Unless otherwise indicated, the information in this release relates only to our continuing operations.

CEO Mike Fries stated, "2019 was a transformational year on many fronts. In July, we sold our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone for over $21 billion. We are now geographically concentrated in five attractive Western European markets, while enjoying substantial financial firepower with over $11 billion of total liquidity.

Technologically, we continued to push the boundaries of our fiber-rich HFC networks by accelerating our gigabit broadband rollouts to more European homes and businesses. As a result, millions of our customers currently have access to 1 gigabit download speeds, far surpassing what our competitors are able to offer across the vast majority of our footprint.

In the U.K., our largest market, our focus on fixed-mobile convergence drove record mobile subscription growth in 2019. Last fall, we announced a transformational MVNO deal with Vodafone, which will allow Virgin Media to launch 5G mobile speeds. Combined with our fixed-line gigabit broadband speeds, our cutting-edge FMC bundles place us in an enviable position as we continue to extend the reach of our network with Project Lightning. And while we expect some unavoidable headwinds in 2020, we believe the medium-term outlook in the U.K. remains attractive, especially as we evaluate strategic options for value creation. From a leadership perspective, we recently appointed Severina Pascu as CFO and Deputy CEO of Virgin Media, and expect her depth of operating expertise to make a significant impact over the coming years.

In Switzerland, we are encouraged by the continued success of our turnaround plan. In January, we announced the appointment of Baptiest Coopmans as the incoming CEO of UPC Switzerland. He brings a wealth of experience to this important role. Meanwhile, we continue to believe the Swiss market remains ripe for fixed-mobile convergence over the medium term, and in addition to our organic growth, we will consider other strategic options in due course.

Looking ahead to 2020, for the full year we are forecasting a mid-single-digit rebased1 OCF decline, mid-single-digit rebased1 OFCF growth and approximately $1 billion of Adjusted FCF2, which represents 30% year-over-year growth. Also, our Board of Directors has authorized a new $1 billion share repurchase plan."

Full Year and Q4 Highlights (on a continuing operations basis unless otherwise noted)

  • FY and Q4 rebased1 revenue decreased 0.6% and 0.5%, respectively
    • Q4 residential cable revenue3 decreased 0.9% YoY to $1,902.1 million
      • Results driven by revenue contractions in Switzerland, Belgium and U.K./Ireland
    • Q4 residential mobile revenue3 increased 5.2% YoY to $429.9 million
      • Performance driven by strong Swiss result
    • Q4 B2B5 revenue3 decreased 0.8% YoY to $490.9 million
      • Strong growth in Switzerland and CEE offset by declines at our other operations
  • FY operating income decreased 11.2% YoY to $745.5 million
    • Q4 operating income increased 12.0% YoY to $282.5 million
  • FY rebased1 OCF4 declined 3.1% to $4,859.5 million, including a 4.1% decrease in Q4
  • Q4 property & equipment additions spend at 28.2% of revenue as compared to 32.9% in Q4 2018
  • Built 191,000 new premises during Q4, including 154,000 new premises in the U.K. & Ireland
  • Solid balance sheet with $11.1 billion of liquidity6 at Q4
  • Net leverage7 of 3.7x at Q4
  • Fully-swapped borrowing cost of 4.1% on debt balance of $27.6 billion

 

 

Q4 2019

 

YoY Growth(i)

 

YTD 2019

 

YoY Growth(i)

 

 

 

 

 

 

 

 

 

Subscribers

 

 

 

 

 

 

 

 

Organic Net RGU Losses

 

(128,300

)

 

 

 

(208,700

)

 

 

Organic Customer Losses

 

(25,500

)

 

 

 

(73,900

)

 

 

 

 

 

 

 

 

 

 

 

Financial (in millions, except percentages)

 

 

 

 

 

 

 

 

Revenue

 

$

2,982.2

 

 

(0.5

%)

 

$

11,541.5

 

 

(0.6

%)

Operating income

 

$

282.5

 

 

12.0

%

 

$

745.5

 

 

(11.2

%)

OCF

 

$

1,273.8

 

 

(4.1

%)

 

$

4,859.5

 

 

(3.1

%)

P&E additions

 

$

840.4

 

 

(13.5

%)

 

$

2,880.5

 

 

(22.3

%)

OFCF

 

$

433.4

 

 

18.2

%

 

$

1,979.0

 

 

34.5

%

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

1,493.9

 

 

 

 

$

3,714.1

 

 

 

Cash provided (used) by investing activities

 

$

(268.3

)

 

 

 

$

9,541.0

 

 

 

Cash used by financing activities

 

$

(487.5

)

 

 

 

$

(6,922.3

)

 

 

 

 

 

 

 

 

 

 

 

Adjusted FCF8 Pro forma continuing operations(ii)

 

$

774.7

 

 

 

 

$

770.1

 

 

 

(i)

Revenue, OCF and OFCF YoY growth rates are on a rebased basis

(ii)

Pro forma Adjusted FCF gives pro forma effect to certain adjustments to our recurring cash flows that we have or expect to realize following the disposition of the Discontinued Operations. For additional details, see the information and reconciliation included within the Glossary. Based on reported Adjusted FCF including PF Adjustments

Customer and Subscriber Growth

 

 

Three months ended

 

Year ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

Organic customer net additions (losses) by market

 

 

 

 

 

 

 

 

U.K./Ireland

 

(9,400

)

 

9,000

 

 

7,100

 

 

72,400

 

Belgium

 

(6,900

)

 

(20,700

)

 

(42,900

)

 

(75,400

)

Switzerland

 

(22,700

)

 

(32,000

)

 

(73,600

)

 

(121,000

)

Continuing CEE (Poland and Slovakia)

 

13,500

 

 

17,600

 

 

35,500

 

 

12,900

 

Total

 

(25,500

)

 

(26,100

)

 

(73,900

)

 

(111,100

)

 

 

 

 

 

 

 

 

 

Organic RGU net additions (losses) by market

 

 

 

 

 

 

 

 

U.K./Ireland

 

(110,900

)

 

23,500

 

 

(109,300

)

 

285,900

 

Belgium

 

(18,600

)

 

(54,400

)

 

(110,300

)

 

(154,200

)

Switzerland

 

(34,300

)

 

(48,600

)

 

(119,300

)

 

(187,600

)

Continuing CEE (Poland and Slovakia)

 

35,500

 

 

47,000

 

 

130,200

 

 

85,900

 

Total

 

(128,300

)

 

(32,500

)

 

(208,700

)

 

30,000

 

 

 

 

 

 

 

 

 

 

Organic RGU net additions (losses) by product

 

 

 

 

 

 

 

 

Data

 

15,700

 

 

24,800

 

 

78,500

 

 

98,100

 

Video

 

(91,300

)

 

(74,900

)

 

(272,400

)

 

(160,400

)

Voice

 

(52,700

)

 

17,600

 

 

(14,800

)

 

92,300

 

Total

 

(128,300

)

 

(32,500

)

 

(208,700

)

 

30,000

 

 

 

 

 

 

 

 

 

 

Organic Mobile SIM additions (losses) by product

 

 

 

 

 

 

 

 

Postpaid

 

130,500

 

 

73,800

 

 

496,000

 

 

328,700

 

Prepaid

 

(43,000

)

 

(40,500

)

 

(157,500

)

 

(163,400

)

Total

 

87,500

 

 

33,300

 

 

338,500

 

 

165,300

 

 

 

 

 

 

 

 

 

 

Organic Mobile SIM additions by market

 

 

 

 

 

 

 

 

U.K./Ireland

 

42,100

 

 

17,400

 

 

153,700

 

 

68,300

 

Belgium

 

29,500

 

 

7,500

 

 

124,500

 

 

66,300

 

Other

 

15,900

 

 

8,400

 

 

60,300

 

 

30,700

 

Total

 

87,500

 

 

33,300

 

 

338,500

 

 

165,300

 

  • Customer Relationships: During Q4 we lost 26,000 customer relationships, representing a slight year-over-year improvement
  • U.K./Ireland: U.K./Ireland lost 9,000 customer relationships in Q4, as growth from new build areas was offset by attrition in the non-Lightning footprint as competitor discounting increased
  • Belgium: Q4 losses of 7,000 customer relationships was a significant year-over-year improvement as compared to a loss of 21,000 in Q4 2018, primarily driven by successful quad-play bundles and end-of-year promotional campaigns
  • Switzerland: Customer attrition of 23,000 in Q4 represents a strong year-over-year improvement, primarily driven by lower churn. Q4 volumes are generally impacted by annual billing cycles
  • Continuing CEE (Poland and Slovakia): CEE added 14,000 customer relationships in Q4, as customer growth from new build areas has been largely in-line year-over-year
  • Mobile Subscribers: Added 88,000 mobile subscribers in Q4, as 131,000 postpaid additions were only partially offset by continued attrition in our low-ARPU prepaid base
    • Q4 U.K./Ireland postpaid mobile net adds of 76,000 were supported by the launch of our FMC bundles which drove an acceleration in Virgin Media's fixed-mobile converged penetration to 21.2% in Q4
    • Belgium added 30,000 mobile subscribers during Q4, including 39,000 net postpaid additions. This growth was supported by our converged WIGO offering
    • Switzerland added 12,000 mobile subscribers in Q4 driven by bundling success and a revamped mobile offer following our MVNO switch in January 2019

Revenue Highlights

The following table presents (i) revenue of each of our consolidated reportable segments for the comparative periods and (ii) the percentage change from period to period on both a reported and rebased basis:

 

 

Three months ended

 

Increase/(decrease)

 

Year ended

 

Increase/(decrease)

 

 

December 31,

 

 

December 31,

 

Revenue

 

2019

 

2018

 

%

 

Rebased %

 

2019

 

2018

 

%

 

Rebased %

 

 

in millions, except % amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.K./Ireland

 

$

1,715.1

 

 

$

1,694.3

 

 

1.2

 

 

1.3

 

 

$

6,600.3

 

 

$

6,875.1

 

 

(4.0

)

 

0.4

 

Belgium

 

746.0

 

 

733.3

 

 

1.7

 

 

(0.7

)

 

2,893.0

 

 

2,993.6

 

 

(3.4

)

 

(1.2

)

Switzerland

 

316.1

 

 

325.6

 

 

(2.9

)

 

(3.5

)

 

1,258.8

 

 

1,326.0

 

 

(5.1

)

 

(3.5

)

Continuing CEE

 

120.0

 

 

119.1

 

 

0.8

 

 

3.5

 

 

475.4

 

 

492.2

 

 

(3.4

)

 

2.7

 

Central and Corporate

 

85.0

 

 

76.8

 

 

10.7

 

 

(21.8

)

 

316.4

 

 

274.2

 

 

15.4

 

 

(9.5

)

Intersegment eliminations

 

 

 

 

 

N.M.

 

N.M.

 

(2.4

)

 

(3.2

)

 

N.M.

 

N.M.

Total continuing operations

 

$

2,982.2

 

 

$

2,949.1

 

 

1.1

 

 

(0.5

)

 

$

11,541.5

 

 

$

11,957.9

 

 

(3.5

)

 

(0.6

)

______________________________

N.M. - Not Meaningful

  • Reported revenue for the three months and year ended December 31, 2019 decreased 1.1% and 3.5% year over year, respectively
    • The full-year result was primarily driven by the impact of (i) negative foreign exchange ("FX") movements, mainly related to the weakening of the British Pound and Euro against the U.S. dollar, and (ii) organic revenue contraction
  • Rebased revenue declined 0.5% and 0.6% in the Q4 and YTD periods, respectively. This result included:
    • Favorable impact of $2.2 million and $7.8 million for Q4 and YTD, respectively, related to revenue recognized by Virgin Media in connection with the sale of rights to future commission payments on customer handset insurance arrangements

Q4 2019 Rebased Revenue Growth - Segment Highlights

  • U.K./Ireland: Rebased revenue increased 1.3% in Q4 driven by the net effect of (i) an increase in residential cable revenue due to an increase in cable ARPU, partially offset by a decline in cable RGUs and a decrease in cable non-subscription revenue, (ii) an increase in residential mobile revenue driven by the take-up of higher-value postpaid data bundles and the aforementioned revenue benefit arising from the sale of future commission payments on customer handset insurance arrangements and (iii) a decline in B2B revenue due to a reduction in revenue from data services, equipment sales and installations, which offset the benefit of dark fibre wholesale contract wins in the quarter and an increase in subscription revenue due to growth in SOHO RGUs
  • Belgium: Rebased revenue declined 0.7% in Q4 driven by the net effect of (i) lower B2B non-subscription revenue driven by a decrease in revenue from wholesale services and interconnect revenue, (ii) an increase in B2B subscription revenue due to an increase in SOHO RGUs, (iii) lower residential cable revenue driven by a decrease in subscribers, partially offset by higher ARPU and (iv) an increase in mobile revenue due to higher revenue from the sale of mobile handsets and other devices
  • Switzerland: Rebased revenue declined 3.5% YoY in Q4 primarily due to the net effect of (i) a decrease in residential cable subscription revenue driven by subscriber volume loss and lower ARPU (ii) an increase in mobile revenue driven by an increase in both subscribers and handset sales
  • Continuing CEE (Poland and Slovakia): Rebased revenue grew 3.5% YoY in Q4 due to an increase in residential cable subscription revenue driven by new build areas
  • Central and Corporate: Rebased revenue decreased 21.8% in Q4 primarily due to a decrease in CPE sales to the VodafoneZiggo JV. Commencing in Q3, TSA revenue received from Vodafone has been rebased

Operating Income

  • Operating income was $282.5 million and $252.2 million in Q4 2019 and Q4 2018, respectively, representing an increase of 12.0% YoY. For the year ended December 31, 2019, our operating income of $745.5 million reflects a decrease of 11.2% as compared to $839.1 million for the 2018 period
  • The changes in operating income in the QTD and YTD periods primarily resulted from the net effect of (i) lower OCF, as further described below, (ii) decreases in depreciation and amortization expense, (iii) increases in share-based compensation expense and (iv) lower impairment, restructuring and other operating items, net

Operating Cash Flow Highlights

The following table presents (i) OCF of each of our consolidated reportable segments for the comparative periods, and (ii) the percentage change from period to period on both a reported and rebased basis:

 

 

Three months ended

 

Increase/(decrease)

 

Year ended

 

Increase/(decrease)

 

 

December 31,

 

 

December 31,

 

OCF

 

2019

 

2018

 

%

 

Rebased %

 

2019

 

2018

 

%

 

Rebased %

 

 

in millions, except % amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.K./Ireland

 

$

763.0

 

 

$

773.3

 

 

(1.3

)

 

(1.4

)

 

$

2,800.5

 

 

$

2,995.5

 

 

(6.5

)

 

(2.3

)

Belgium

 

339.1

 

 

355.3

 

 

(4.6

)

 

(4.1

)

 

1,386.1

 

 

1,480.0

 

 

(6.3

)

 

(2.0

)

Switzerland

 

151.6

 

 

174.0

 

 

(12.9

)

 

(13.1

)

 

627.9

 

 

712.0

 

 

(11.8

)

 

(10.3

)

Continuing CEE

 

52.5

 

 

60.0

 

 

(12.5

)

 

(10.7

)

 

215.0

 

 

233.6

 

 

(8.0

)

 

(2.3

)

Central and Corporate

 

(32.4

)

 

(60.7

)

 

46.6

 

 

(0.8

)

 

(171.1

)

 

(257.8

)

 

33.6

 

 

3.5

 

Intersegment eliminations

 

 

 

(0.3

)

 

N.M.

 

N.M.

 

1.1

 

 

(11.8

)

 

N.M.

 

N.M.

Total continuing operations

 

$

1,273.8

 

 

$

1,301.6

 

 

(2.1

)

 

(4.1

)

 

$

4,859.5

 

 

$

5,151.5

 

 

(5.7

)

 

(3.1

)

______________________________

N.M. - Not Meaningful

  • Reported OCF for the three months and year ended December 31, 2019 decreased 2.1% and 5.7% year over year, respectively
    • The YTD result was primarily driven by (i) the aforementioned negative impact of FX movements and (ii) an organic OCF decline
  • Our rebased OCF decline of 4.1% and 3.1% in the Q4 and YTD periods, respectively, included:
    • The aforementioned favorable impacts of certain items of our revenue, as discussed in the "Revenue Highlights" section above
    • The following current year impacts:
      • Unfavorable network tax increases of $12.6 million and $42.2 million for Q4 and YTD, respectively, following an increase in the rateable value of our U.K. networks, which is being phased in over a six-year period ending in 2022
      • For the YTD period, higher severance costs in U.K./Ireland of $6.7 million
      • For the YTD period, an unfavorable increase in personnel costs in Central and Corporate recorded during the second quarter of 2019 related to a $5.0 million cash bonus associated with the renewal of an existing executive employment contract on similar terms
  • The following prior year impacts:
    • Lower costs of $2.6 million and $9.4 million for the Q4 and YTD periods, respectively, due to the reassessment of an accrual in U.K./Ireland in 2018
    • For the YTD period, higher costs of $5.3 million due to the impact of a credit recorded during the second quarter of 2018 in connection with a telecommunications operator's agreement to compensate Virgin Media and other communications providers for certain prior-period contractual breaches related to network charges

Q4 2019 Rebased Operating Cash Flow Growth - Segment Highlights

  • U.K./Ireland: Rebased OCF decline of 1.4% reflects the aforementioned revenue performance which was more than offset by a net increase in our cost base due to (i) a $12.6 million net increase in network taxes, (ii) a reduction in B2B cost of sales, (iii) higher mobile data costs, (iv) higher marketing spend and (v) an increase in programming costs
  • Belgium: Rebased OCF decline of 4.1% was largely driven by the Medialaan MVNO contract loss, certain regulatory headwinds and higher programming costs
  • Switzerland: Rebased OCF declined 13.1% in Q4, largely due to (i) the aforementioned loss of residential cable subscription revenue and (ii) higher interconnect and roaming costs
  • Continuing CEE (Poland and Slovakia): Rebased Segment OCF decreased 10.7% in Q4, as an increase in programming and project related external spend was only partially offset by the aforementioned increase in residential cable subscription revenue

OFCF Highlights

The following table presents (i) OFCF of each of our consolidated reportable segments for the comparative periods and (ii) the percentage change from period to period on a rebased basis:

 

 

Three months ended

 

 

 

Year ended

 

 

 

 

December 31,

 

 

December 31,

 

OFCF

 

2019

 

2018

 

Rebased %

 

2019

 

2018

 

Rebased %

 

 

in millions, except % amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

U.K./Ireland

 

$

313.5

 

 

$

280.2

 

 

11.9

 

 

$

1,222.5

 

 

$

1,006.6

 

 

26.4

 

Belgium

 

193.6

 

 

129.1

 

 

49.3

 

 

848.9

 

 

689.2

 

 

27.8

 

Switzerland

 

80.9

 

 

89.3

 

 

(9.1

)

 

350.0

 

 

462.4

 

 

(22.8

)

Continuing CEE

 

11.7

 

 

6.3

 

 

93.4

 

 

108.0

 

 

80.8

 

 

42.7

 

Central and Corporate

 

(166.3

)

 

(174.4

)

 

(20.9

)

 

(551.5

)

 

(781.3

)

 

18.1

 

Intersegment eliminations

 

 

 

(0.3

)

 

N.M.

 

1.1

 

 

(11.8

)

 

N.M.

Total continuing operations

 

$

433.4

 

 

$

330.2

 

 

18.2

 

 

$

1,979.0

 

 

$

1,445.9

 

 

34.5

 

Net Earnings (Loss) Attributable to Liberty Global Shareholders

  • Net earnings (loss) attributable to Liberty Global shareholders was ($1,386.5 million) and $25.1 million for the three months ended December 31, 2019 and 2018, respectively, and $11,521.4 million and $725.3 million for the year ended December 31, 2019 and 2018, respectively. The earnings during the year ended December 31, 2019 includes a $12.2 billion gain on the sale of our operations in Germany, Hungary, Romania and the Czech Republic recognized during the third quarter of 2019.

     

Leverage and Liquidity

  • Total principal amount of debt and finance leases: $28.3 billion for continuing operations
  • Leverage ratios7: At December 31, 2019, our adjusted gross and net leverage ratios were 5.4x and 3.7x, respectively
  • Average debt tenor9: Approximately 7 years, with ~74% not due until 2025 or thereafter for continuing operations
  • Borrowing costs: Blended fully-swapped borrowing cost of our debt was 4.1% for continuing operations
  • Liquidity6: $11.1 billion for our continuing operations, including (i) $8.1 billion of cash at December 31, 2019 and (ii) aggregate unused borrowing capacity10 under our credit facilities of $3.0 billion.

     

Share Repurchase Program

As announced today, our Board of Directors has authorized a new $1 billion share repurchase program. Under the program, Liberty Global may acquire from time to time its Class A ordinary shares, Class C ordinary shares, or any combination of Class A and Class C ordinary shares. The program may be effected through open market transactions and/or privately negotiated transactions, which may include derivative transactions. The timing of the repurchase of shares pursuant to the program will depend on a variety of factors, including market conditions and applicable law. The program may be implemented in conjunction with brokers for the Company and other financial institutions with whom the Company has relationships within certain pre-set parameters and purchases may continue during closed periods in accordance with applicable restrictions. The program may be suspended or discontinued at any time.

Forward-Looking Statements and Disclaimer

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements with respect to our strategies, future growth prospects and opportunities; expectations with respect to our rebased OCF decline, our rebased OFCF growth and our Adjusted FCF; expectations with respect to our share repurchase plan; expected launch of 5G speeds at Virgin Media; anticipated headwinds in 2020; our medium-term outlook in the U.K. as well as in Switzerland; expected impacts of new leadership at Virgin Media and in Switzerland; expectations with respect to the development, launch and benefits of our innovative and advanced products and services; the strength of our balance sheet and tenor of our third-party debt; and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include events that are outside of our control, such as the continued use by subscribers and potential subscribers of our and our affiliates’ services and their willingness to upgrade to our more advanced offerings; our and our affiliates’ ability to meet challenges from competition, to manage rapid technological change or to maintain or increase rates to subscribers or to pass through increased costs to subscribers; the effects of changes in laws or regulation; the effects of the U.K.'s exit from the E.U.; general economic factors; our and our affiliates’ ability to obtain regulatory approval and satisfy regulatory conditions associated with acquisitions and dispositions; our and affiliates’ ability to successfully acquire and integrate new businesses and realize anticipated efficiencies from acquired businesses; the availability of attractive programming for our and our affiliates’ video services and the costs associated with such programming; our and our affiliates’ ability to achieve forecasted financial and operating targets; the outcome of any pending or threatened litigation; the ability of our operating companies and affiliates to access cash of their respective subsidiaries; the impact of our operating companies' and affiliates’ future financial performance, or market conditions generally, on the availability, terms and deployment of capital; fluctuations in currency exchange and interest rates; the ability of suppliers, vendors and contractors to timely deliver quality products, equipment, software, services and access; our and our affiliates’ ability to adequately forecast and plan future network requirements including the costs and benefits associated with network expansions; and other factors detailed from time to time in our filings with the Securities and Exchange Commission, including our most recently filed Form 10-K. These forward-looking statements speak only as of the date of this release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Liberty Global

Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is one of the world’s leading converged video, broadband and communications companies, with operations in six European countries under the consumer brands Virgin Media, Telenet and UPC. We invest in the infrastructure and digital platforms that empower our customers to make the most of the digital revolution. Our substantial scale and commitment to innovation enable us to develop market-leading products delivered through next-generation networks that connect 11 million customers subscribing to 25 million TV, broadband internet and telephony services. We also serve 6 million mobile subscribers and offer WiFi service through millions of access points across our footprint.

In addition, Liberty Global owns 50% of VodafoneZiggo, a joint venture in the Netherlands with 4 million customers subscribing to 10 million fixed-line and 5 million mobile services, as well as significant investments in ITV, All3Media, ITI Neovision, Lionsgate, the Formula E racing series and several regional sports networks. For more information, please visit www.libertyglobal.com or contact:

Balance Sheets, Statements of Operations and Statements of Cash Flows

The consolidated balance sheets, statements of operations and statements of cash flows of Liberty Global are in our 10-K.

Rebase Information

For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2019, we have adjusted our historical revenue, OCF and OFCF for the three months and year ended December 31, 2018 to (i) include the pre-acquisition revenue, OCF and P&E additions of entities acquired during 2019 in our rebased amounts for the three months and year ended December 31, 2018 to the same extent that the revenue, OCF and P&E additions of these entities are included in our results for the three months and year ended December 31, 2019, (ii) include revenue and costs for the temporary elements of transitional and other services provided to the VodafoneZiggo JV, Vodafone, Deutsche Telekom (the buyer of UPC Austria), Liberty Latin America and M7 Group (the buyer of UPC DTH), to reflect amounts related to these services equal to those included in our results for the three months and year ended December 31, 2019 and (iii) reflect the translation of our rebased amounts for the three months and year ended December 31, 2018 at the applicable average foreign currency exchange rates that were used to translate our results for the three months and year ended December 31, 2019. We have reflected the revenue, OCF and P&E additions of these acquired entities in our 2018 rebased amounts based on what we believe to be the most reliable information that is currently available to us (generally pre-acquisition financial statements), as adjusted for the estimated effects of (a) any significant differences between U.S. GAAP and local generally accepted accounting principles, (b) any significant effects of acquisition accounting adjustments, (c) any significant differences between our accounting policies and those of the acquired entities and (d) other items we deem appropriate. We do not adjust pre-acquisition periods to eliminate nonrecurring items or to give retroactive effect to any changes in estimates that might be implemented during post-acquisition periods. As we did not own or operate the acquired businesses during the pre-acquisition periods, no assurance can be given that we have identified all adjustments necessary to present the revenue, OCF and OFCF of these entities on a basis that is comparable to the corresponding post-acquisition amounts that are included in our historical results or that the pre-acquisition financial statements we have relied upon do not contain undetected errors. The adjustments reflected in our rebased amounts have not been prepared with a view towards complying with Article 11 of Regulation S-X. In addition, the rebased growth percentages are not necessarily indicative of the revenue, OCF and OFCF that would have occurred if these transactions had occurred on the dates assumed for purposes of calculating our rebased amounts or the revenue, OCF and OFCF that will occur in the future. The rebased growth percentages have been presented as a basis for assessing growth rates on a comparable basis, and are not presented as a measure of our pro forma financial performance.

The following table provides adjustments made to the 2018 amounts to derive our rebased growth rates for our continuing operations:

 

Revenue

 

OCF

 

OFCF

 

Three months
ended
December 31,

 

Year ended
December 31,

 

Three months
ended
December 31,

 

Year ended
December 31,

 

Three months
ended
December 31,

 

Year ended
December 31,

 

2018

 

2018

 

2018

 

2018

 

2018

 

2018

 

in millions

Acquisitions

$

40.7

 

 

$

96.9

 

 

$

9.1

 

 

$

14.6

 

 

$

9.1

 

 

$

12.2

 

Dispositions(i)

33.4

 

 

87.7

 

 

27.7

 

 

71.3

 

 

27.7

 

 

71.3

 

Foreign Currency

(27.4

)

 

(531.6

)

 

(10.8

)

 

(225.0

)

 

(0.3

)

 

(58.4

)

Total increase (decrease)

$

46.7

 

 

$

(347.0

)

 

$

26.0

 

 

$

(139.1

)

 

$

36.5

 

 

$

25.1

 

_____________________

(i)

Includes rebase adjustments related to agreements to provide transitional and other services to the VodafoneZiggo JV, Vodafone, Liberty Latin America, Deutsche Telekom and M7 Group. These adjustments result in an equal amount of fees in both the 2019 and 2018 periods for those services that are deemed to be temporary in nature. The net amount of these adjustments resulted in increases in revenue of $33.6 million and $88.4 million and OCF of $28.0 million and $73.9 million for the three months and year ended December 31, 2018, respectively.

Summary of Debt, Finance Lease Obligations & Cash and Cash Equivalents

The following table(i) details the U.S. dollar equivalent balances of the outstanding principal amount of our continuing operations debt, finance lease obligations and cash and cash equivalents at December 31, 2019:

 

 

 

 

Finance

 

Debt & Finance

 

Cash

 

 

 

 

Lease

 

Lease

 

and Cash

 

 

Debt(ii), (iii)

 

Obligations

 

Obligations

 

Equivalents

 

 

in millions

Liberty Global and unrestricted subsidiaries

 

$

1,689.7

 

 

$

50.2

 

 

$

1,739.9

 

 

$

7,957.9

 

Virgin Media(iv)

 

15,854.9

 

 

70.1

 

 

15,925.0

 

 

45.7

 

UPC Holding

 

4,335.0

 

 

22.8

 

 

4,357.8

 

 

24.8

 

Telenet

 

5,768.5

 

 

474.0

 

 

6,242.5

 

 

114.0

 

Total

 

$

27,648.1

 

 

$

617.1

 

 

$

28,265.2

 

 

$

8,142.4

 

______________________

(i)

Except as otherwise indicated, the amounts reported in the table include the named entity and its subsidiaries.

(ii)

Debt amounts for UPC Holding and Telenet include notes issued by special purpose entities that are consolidated by the respective subsidiary.

(iii)

Debt amounts for UPC Holding include those amounts that were not direct obligations of the entities that were disposed of within the UPC Holding borrowing group.

(iv)

The Virgin Media borrowing group includes certain subsidiaries of Virgin Media, but excludes the parent entity, Virgin Media Inc. The cash and cash equivalents amount includes cash and cash equivalents held by the Virgin Media borrowing group, but excludes cash and cash equivalents held by Virgin Media Inc. This amount is included in the amount shown for Liberty Global and unrestricted subsidiaries.

Property and Equipment Additions and Capital Expenditures

The table below highlights the categories of the property and equipment additions of our continuing operations for the indicated periods and reconciles those additions to the capital expenditures of our continuing operations that are presented in the consolidated statements of cash flows in our 10-K.

 

Three months ended

 

Year ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

 

in millions, except % amounts

Customer premises equipment

$

138.6

 

 

$

202.1

 

 

$

657.2

 

 

$

930.3

 

New build & upgrade

176.4

 

 

166.4

 

 

629.9

 

 

698.1

 

Capacity

92.3

 

 

128.5

 

 

319.9

 

 

434.3

 

Baseline

256.4

 

 

291.2

 

 

695.5

 

 

922.4

 

Product & enablers

176.7

 

 

183.2

 

 

578.0

 

 

720.5

 

Total P&E additions

840.4

 

 

971.4

 

 

2,880.5

 

 

3,705.6

 

Reconciliation of P&E additions to capital expenditures:

 

 

 

 

 

 

 

Assets acquired under capital-related vendor financing arrangements(i)

(423.8

)

 

(519.2

)

 

(1,727.0

)

 

(2,175.5

)

Assets acquired under capital leases

(19.7

)

 

(34.6

)

 

(66.9

)

 

(102.4

)

Changes in current liabilities related to capital expenditures

(53.9

)

 

(103.2

)

 

156.5

 

 

25.3

 

Total capital expenditures, net(ii)

$

343.0

 

 

$

314.4

 

 

$

1,243.1

 

 

$

1,453.0

 

 

 

 

 

 

 

 

 

Capital expenditures, net:

 

 

 

 

 

 

 

Third-party payments

$

347.9

 

 

$

340.8

 

 

$

1,323.9

 

 

$

1,552.7

 

Proceeds received for transfers to related parties(iii)

(4.9

)

 

(26.4

)

 

(80.8

)

 

(99.7

)

Total capital expenditures, net

$

343.0

 

 

$

314.4

 

 

$

1,243.1

 

 

$

1,453.0

 

 

 

 

 

 

 

 

 

P&E additions as % of revenue

28.2

%

 

32.9

%

 

25.0

%

 

31.0

%

____________________________

(i)

Amounts exclude related VAT of $72.0 million and $79.5 million for the three months ended December 31, 2019 and 2018, respectively, and $286.1 million and $347.3 million for the year ended December 31, 2019 and 2018, respectively, that were also financed by our vendors under these arrangements.

(ii)

The capital expenditures that we report in our consolidated statements of cash flows do not include amounts that are financed under vendor financing or finance lease arrangements. Instead, these expenditures are reflected as non-cash additions to our property and equipment when the underlying assets are delivered, and as repayments of debt when the related principal is repaid.

(iii)

Primarily relates to transfers of centrally-procured property and equipment to our Discontinued Operations and the VodafoneZiggo JV.

ARPU per Cable Customer Relationship

The following table provides ARPU per cable customer relationship for the indicated periods:

...

 

 

Three months ended December 31,

 

%

 

Rebased

 

 

2019

 

2018

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Liberty Global