|
|
|
|
|
England and Wales
|
|
001-35961
|
|
98-1112770
|
(State or other jurisdiction
of incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer
Identification #)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Class A ordinary shares
|
LBTYA
|
Nasdaq Global Select Market
|
Class B ordinary shares
|
LBTYB
|
Nasdaq Global Select Market
|
Class C ordinary shares
|
LBTYK
|
Nasdaq Global Select Market
|
|
99.1
|
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
LIBERTY GLOBAL PLC
|
|
|
|
|
|
By:
|
/s/ RANDY L. LAZZELL
|
|
|
Randy L. Lazzell
|
|
|
Vice President
|
Liberty Global Reports Second Quarter 2019 Results
|
|
|
|||||||
Completed the sale of our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone
Announcing intended tender offers for Class A and Class C shares of up to an aggregate of $2.5 billion
Disposal of UPC Switzerland remains on track to close in Q4 2019
Q2 2019 operating income down 43.7% YoY to $148.7 million for continuing operations
Confirming all 2019 guidance targets
Denver, Colorado: August 7, 2019
Liberty Global plc today announced its Q2 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. UPC Switzerland will continue to be included in our continuing operations until the pending sale transaction is approved by Sunrise shareholders. Unless otherwise indicated, the information in this release relates only to our continuing operations.
CEO Mike Fries stated, "Earlier this year we laid out our strategic and operating priorities for 2019, and I’m pleased to report that we are making substantial progress across the board. In July, we completed the sale of our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone for $21.3 billion1, and our transaction to sell our Swiss business for $6.3 billion2 remains on track for the end of this year. With the net proceeds from these deals, all valued at double-digit OCF multiples, our pro forma cash balance will be over $14 billion3."
|
|
Continuing Operations (Including Switzerland)
|
Q2 2019
|
|
H1 2019
|
|
|||
|
Organic RGU Additions
|
(28,800
|
)
|
(4,100
|
)
|
||||
|
Revenue Growth4
|
(0.9
|
)%
|
(0.7
|
)%
|
||||
|
OCF Growth4
|
(4.3
|
)%
|
(2.4
|
)%
|
||||
|
Cash Flows From:
|
|
|
||||||
|
Operating Activities
|
$1,322 mm
|
$1,629 mm
|
||||||
|
Investing Activities
|
$(315) mm
|
$(683) mm
|
||||||
|
Financing Activities
|
$(858) mm
|
$(1,595) mm
|
||||||
|
OFCF Growth4
|
14
|
%
|
37
|
%
|
||||
|
Adjusted FCF
|
$552 mm
|
$(73) mm
|
||||||
|
P&E Additions
|
$683 mm
|
$1,381 mm
|
||||||
|
|
|
|
||||||
|
Continuing Operations (Excluding Switzerland)5
|
Q2 2019
|
|
H1 2019
|
|
||||
|
Organic RGU Additions
|
(800
|
)
|
66,800
|
|
||||
|
Revenue Growth4
|
(0.6
|
)%
|
(0.4
|
)%
|
||||
|
OCF Growth4
|
(3.4
|
)%
|
(1.3
|
)%
|
||||
|
OFCF Growth4
|
34
|
%
|
74
|
%
|
||||
|
Adjusted FCF6
|
$546 mm
|
$(80) mm
|
||||||
|
P&E Additions
|
$605 mm
|
$1,245 mm
|
||||||
|
|
|
|||||||
|
2019 Guidance Targets7 (Excluding Switzerland)5
|
||||||||
|
OCF Growth4
|
Flat to Down
|
|
||||||
|
Adjusted FCF6
|
$550 - $600 mm
|
|
||||||
|
P&E Additions
|
~$2.7 bn
|
|
||||||
|
NASDAQ: LBTYA | LBTYB | LBTYK
|
"Today we are announcing the first step towards allocating our capital in a value-accretive manner with the intention to launch cash tender offers of up to $2.5 billion consisting of up to $625 million Class A ordinary shares at an expected price range of $25.25 to $29.00 and up to $1.875 billion Class C ordinary shares at an expected price range of $24.75 to $28.50. We expect to launch the tender offers around August 12. We are also focused on enhancing the strategic and financial value of our core operating businesses, particularly Virgin Media which remains the most advanced broadband and fixed/mobile provider in the U.K. with substantial opportunities for expansion and growth. With 500 Mbps already available to nearly 15 million homes and 1 Gbps speeds just around the corner, Virgin Media is miles ahead of other U.K. operators in providing ultrafast broadband, both today and into the future.”
|
|
“We are also delivering on our promise to reduce capital intensity and optimize free cash flow after three years of increased network and product expansion. Through June, our P&E additions were down 25% from last year and our operating free cash flow was up nearly 40% on a reported basis, and nearly 75% on a guidance basis which excludes Switzerland. Together with planned and executed reductions in our corporate costs and the restructuring of our technology operations to reflect our reduced customer base and significant TSA revenues, we are on track to hit both our OCF and free cash flow guidance for the year."
"Our second quarter 2019 earnings call is tomorrow morning at 9:00 a.m. ET."
|
Contacts
Investor Relations
Matt Coates +44 20 8483 6333
John Rea +1 303 220 4238
Stefan Halters +44 20 8483 6211
Corporate Communications
Molly Bruce +1 303 220 4202
Matt Beake +44 20 8483 6428
Corporate Website
www.libertyglobal.com
|
|
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.
|
Liberty Global (continuing operations)
|
|
Q2 2019
|
|
YoY Growth(i)
|
|
|
YTD 2019
|
|
YoY Growth(i)
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
Subscribers
|
|
|
|
|
|
|
|
|
||||||
Organic Net RGU Losses
|
|
(28,800
|
)
|
|
|
|
(4,100
|
)
|
|
|
||||
Organic Net RGU Additions (Losses) excl. Switzerland
|
|
(800
|
)
|
|
|
|
66,800
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
Financial (in millions, except percentages)
|
|
|
|
|
|
|
|
|
||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
2,850.4
|
|
|
(0.9
|
%)
|
|
$
|
5,718.4
|
|
|
(0.7
|
%)
|
Continuing operations excluding Switzerland
|
|
|
|
(0.6
|
%)
|
|
|
|
(0.4
|
%)
|
||||
Operating income
|
|
$
|
148.7
|
|
|
(43.7
|
%)
|
|
$
|
254.2
|
|
|
(33.4
|
%)
|
OCF:
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
1,190.7
|
|
|
(4.3
|
%)
|
|
$
|
2,374.0
|
|
|
(2.4
|
%)
|
Continuing operations excluding Switzerland
|
|
|
|
(3.4
|
%)
|
|
|
|
(1.3
|
%)
|
||||
|
|
|
|
|
|
|
|
|
||||||
Cash provided by operating activities
|
|
$
|
1,322.2
|
|
|
|
|
$
|
1,628.5
|
|
|
|
||
Cash used by investing activities
|
|
$
|
(315.0
|
)
|
|
|
|
$
|
(682.7
|
)
|
|
|
||
Cash used by financing activities
|
|
$
|
(857.9
|
)
|
|
|
|
$
|
(1,595.4
|
)
|
|
|
||
Adjusted FCF:
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
552.0
|
|
|
|
|
$
|
(72.5
|
)
|
|
|
||
Pro forma continuing operations(ii)
|
|
$
|
546.0
|
|
|
|
|
$
|
(79.9
|
)
|
|
|
(i)
|
Revenue and OCF 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 remaining Discontinued Operations and the Switzerland Disposal Group2. For additional details, see the information and reconciliation included within the Glossary
|
|
|
Three months ended
|
|
Six months ended
|
||||||||
|
|
June 30,
|
|
June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
|
|
||||||||||
Organic RGU net additions (losses) by product
|
|
|
|
|
|
|
|
|
||||
Video
|
|
(54,900
|
)
|
|
(7,700
|
)
|
|
(115,400
|
)
|
|
(52,900
|
)
|
Data
|
|
9,600
|
|
|
18,900
|
|
|
52,000
|
|
|
49,400
|
|
Voice
|
|
16,500
|
|
|
29,600
|
|
|
59,300
|
|
|
34,000
|
|
Total
|
|
(28,800
|
)
|
|
40,800
|
|
|
(4,100
|
)
|
|
30,500
|
|
|
|
|
|
|
|
|
|
|
||||
Organic RGU net additions (losses) by market
|
|
|
|
|
|
|
|
|
||||
U.K./Ireland
|
|
(4,900
|
)
|
|
112,200
|
|
|
54,300
|
|
|
157,100
|
|
Belgium
|
|
(20,000
|
)
|
|
(21,700
|
)
|
|
(55,700
|
)
|
|
(46,900
|
)
|
Switzerland
|
|
(28,000
|
)
|
|
(53,800
|
)
|
|
(70,900
|
)
|
|
(97,500
|
)
|
Continuing CEE (Poland and Slovakia)
|
|
24,100
|
|
|
4,100
|
|
|
68,200
|
|
|
17,800
|
|
Total
|
|
(28,800
|
)
|
|
40,800
|
|
|
(4,100
|
)
|
|
30,500
|
|
|
|
|
|
|
|
|
|
|
||||
Organic Mobile SIM additions (losses) by product
|
|
|
|
|
|
|
|
|
||||
Postpaid
|
|
125,800
|
|
|
81,200
|
|
|
198,100
|
|
|
194,300
|
|
Prepaid
|
|
(34,000
|
)
|
|
(36,300
|
)
|
|
(79,500
|
)
|
|
(85,700
|
)
|
Total
|
|
91,800
|
|
|
44,900
|
|
|
118,600
|
|
|
108,600
|
|
|
|
|
|
|
|
|
|
|
||||
Organic Mobile SIM additions by market
|
|
|
|
|
|
|
|
|
||||
U.K./Ireland
|
|
33,800
|
|
|
20,700
|
|
|
27,100
|
|
|
45,900
|
|
Belgium12
|
|
43,500
|
|
|
16,800
|
|
|
64,400
|
|
|
48,600
|
|
Other
|
|
14,500
|
|
|
7,400
|
|
|
27,100
|
|
|
14,100
|
|
Total
|
|
91,800
|
|
|
44,900
|
|
|
118,600
|
|
|
108,600
|
|
•
|
Cable Product Performance: During Q2 we lost 29,000 RGUs, as compared to a gain of 41,000 RGUs in the prior-year period, as improved performances in our CEE operations, Switzerland and Telenet were more than offset by weakness in Virgin Media. From a product perspective, gains in data and voice were more than offset by video losses
|
•
|
U.K./Ireland: Q2 RGU losses were 5,000 as we maintained a disciplined and balanced approach to customer acquisition and capital expenditure during a seasonally soft quarter in which market growth in broadband and video continued to slow
|
•
|
Belgium: RGU attrition of 20,000 in Q2 represents a sequential and year-over-year improvement as losses in the SFR footprint moderated
|
•
|
Switzerland: Lost 28,000 RGUs in Q2 compared to a loss of 54,000 in Q2 2018, with improved performance in all products driven by an enhanced value proposition
|
•
|
Continuing CEE (Poland and Slovakia): Gained 24,000 RGUs in Q2 as compared to 4,000 additions in the prior-year period, mainly driven by improved sales and churn reduction in Poland
|
•
|
Mobile: Added 92,000 mobile subscribers in Q2, as 126,000 postpaid additions were only partially offset by continued attrition in our low-ARPU prepaid base
|
◦
|
Q2 U.K./Ireland postpaid mobile net additions of 57,000 were supported by the launch of our FMC bundles. The postpaid gain was only partially offset by low-ARPU prepaid losses, resulting in a net gain of 34,000 mobile subscriptions; 4G subscriptions now represent 84% of our postpaid base
|
◦
|
Belgium added 44,000 mobile subscribers during Q2 including 54,000 net postpaid additions. This growth was supported by our converged WIGO offering
|
◦
|
Switzerland added 14,000 mobile subscribers in Q2 driven by bundling success and a revamped mobile offer following our MVNO switch in January 2019
|
|
|
Three months ended
|
|
Increase/(decrease)
|
|
Six months ended
|
|
Increase/(decrease)
|
||||||||||||||||||||
|
|
June 30,
|
|
|
June 30,
|
|
||||||||||||||||||||||
Revenue
|
|
2019
|
|
2018
|
|
%
|
|
Rebased %
|
|
2019
|
|
2018
|
|
%
|
|
Rebased %
|
||||||||||||
|
|
in millions, except % amounts
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.K./Ireland
|
|
$
|
1,644.0
|
|
|
$
|
1,734.9
|
|
|
(5.2
|
)
|
|
0.4
|
|
|
$
|
3,305.3
|
|
|
$
|
3,513.1
|
|
|
(5.9
|
)
|
|
0.1
|
|
Belgium
|
|
713.2
|
|
|
753.9
|
|
|
(5.4
|
)
|
|
(1.5
|
)
|
|
1,425.1
|
|
|
1,513.5
|
|
|
(5.8
|
)
|
|
(1.0
|
)
|
||||
Switzerland
|
|
315.0
|
|
|
332.2
|
|
|
(5.2
|
)
|
|
(3.6
|
)
|
|
631.0
|
|
|
677.1
|
|
|
(6.8
|
)
|
|
(3.6
|
)
|
||||
Continuing CEE
|
|
119.1
|
|
|
123.3
|
|
|
(3.4
|
)
|
|
2.9
|
|
|
238.2
|
|
|
252.8
|
|
|
(5.8
|
)
|
|
2.6
|
|
||||
Central and Corporate
|
|
60.2
|
|
|
72.9
|
|
|
(17.4
|
)
|
|
(19.6
|
)
|
|
120.9
|
|
|
125.6
|
|
|
(3.7
|
)
|
|
(11.4
|
)
|
||||
Intersegment eliminations
|
|
(1.1
|
)
|
|
(1.6
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|
(2.1
|
)
|
|
(3.0
|
)
|
|
N.M.
|
|
|
N.M.
|
|
||||
Total continuing operations
|
|
$
|
2,850.4
|
|
|
$
|
3,015.6
|
|
|
(5.5
|
)
|
|
(0.9
|
)
|
|
$
|
5,718.4
|
|
|
$
|
6,079.1
|
|
|
(5.9
|
)
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total continuing operations excluding Switzerland
|
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
(0.4
|
)
|
•
|
Reported revenue for the three and six months ended June 30, 2019 decreased 5.5% and 5.9% year over year, respectively
|
◦
|
The Q2 results were 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 0.9% and 0.7% in the Q2 and YTD periods, respectively. This result included:
|
◦
|
The favorable impact of $5.6 million related to revenue recognized by Virgin Media during the second quarter of 2019 in connection with the sale of rights to future commission payments on customer handset insurance arrangements
|
◦
|
For the YTD period, the favorable impact of a $4.1 million revenue reversal recorded in Switzerland during the first quarter of 2018
|
•
|
U.K./Ireland: Rebased revenue increased 0.4% in Q2 driven by the net effect of (i) an increase in residential cable revenue due to a year-over-year increase in our subscriber base and modest growth in cable ARPU, (ii) a decrease in residential mobile revenue driven by a lower volume of handset sales, partially offset by the aforementioned revenue benefit arising from the sale of future commissions and (iii) a decline in B2B revenue due to lower data and installation revenue in our non-subscription business, which offset the increase in revenue due to growth in SOHO subscribers
|
•
|
Belgium: Rebased revenue declined 1.5% in Q2 driven by (i) a decrease in B2B revenue, (ii) a decline in residential cable revenue primarily due to a decrease in subscribers and (iii) a decrease in mobile revenue primarily due to a decline in mobile ARPU
|
•
|
Switzerland: Rebased revenue declined 3.6% in Q2, primarily due to the net effect of (i) lower residential cable subscription revenue, which was primarily driven by lower average subscriber levels, and (ii) an increase in mobile revenue driven by an increase in revenue from handset sales and an increase in subscribers
|
•
|
Continuing CEE (Poland and Slovakia): Rebased revenue increased 2.9% in Q2 due to (i) growth in our B2B business and (ii) an increase in residential cable subscription revenue driven by new build areas
|
•
|
Central and Corporate: Rebased revenue decreased 19.6% in Q2 primarily due to a decrease in CPE sales to the VodafoneZiggo JV
|
•
|
Operating income was $148.7 million and $264.1 million in Q2 2019 and Q2 2018, respectively, representing a decrease of 43.7% YoY. For the six months ended June 30, 2019, our operating income of $254.2 million reflects a decrease of 33.4% as compared to $381.7 million in H2 2018
|
•
|
The decrease in operating income in both the QTD and YTD periods primarily resulted from the net effect of (i) lower OCF, as further described below, (ii) a decrease in depreciation and amortization expense, (iii) an increase in share-based compensation expense and (iv) an increase in impairment, restructuring and other operating items, net
|
|
|
Three months ended
|
|
Increase/(decrease)
|
|
Six months ended
|
|
Increase/(decrease)
|
||||||||||||||||||||
|
|
June 30,
|
|
|
June 30,
|
|
||||||||||||||||||||||
OCF
|
|
2019
|
|
2018
|
|
%
|
|
Rebased %
|
|
2019
|
|
2018
|
|
%
|
|
Rebased %
|
||||||||||||
|
|
in millions, except % amounts
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.K./Ireland
|
|
$
|
703.2
|
|
|
$
|
763.6
|
|
|
(7.9
|
)
|
|
(2.5
|
)
|
|
$
|
1,411.5
|
|
|
$
|
1,526.2
|
|
|
(7.5
|
)
|
|
(1.6
|
)
|
Belgium
|
|
349.4
|
|
|
383.7
|
|
|
(8.9
|
)
|
|
(3.6
|
)
|
|
688.4
|
|
|
741.3
|
|
|
(7.1
|
)
|
|
(0.8
|
)
|
||||
Switzerland
|
|
169.7
|
|
|
189.0
|
|
|
(10.2
|
)
|
|
(8.7
|
)
|
|
332.8
|
|
|
375.5
|
|
|
(11.4
|
)
|
|
(8.1
|
)
|
||||
Continuing CEE
|
|
57.9
|
|
|
62.0
|
|
|
(6.6
|
)
|
|
(0.5
|
)
|
|
115.1
|
|
|
124.3
|
|
|
(7.4
|
)
|
|
0.7
|
|
||||
Central and Corporate
|
|
(89.5
|
)
|
|
(87.9
|
)
|
|
(1.8
|
)
|
|
(11.0
|
)
|
|
(175.2
|
)
|
|
(195.0
|
)
|
|
10.2
|
|
|
(2.9
|
)
|
||||
Intersegment eliminations
|
|
—
|
|
|
(6.9
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|
1.4
|
|
|
(7.1
|
)
|
|
N.M.
|
|
|
N.M.
|
|
||||
Total continuing operations
|
|
$
|
1,190.7
|
|
|
$
|
1,303.5
|
|
|
(8.7
|
)
|
|
(4.3
|
)
|
|
$
|
2,374.0
|
|
|
$
|
2,565.2
|
|
|
(7.5
|
)
|
|
(2.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total continuing operations excluding Switzerland
|
|
|
|
|
|
|
|
(3.4
|
)
|
|
|
|
|
|
|
|
(1.3
|
)
|
•
|
Reported OCF for the three and six months ended June 30, 2019 decreased 8.7% and 7.5% year over year, respectively
|
◦
|
These results were primarily driven by the aforementioned revenue decline
|
•
|
Our rebased OCF decline of 4.3% and 2.4% in the Q2 and YTD periods, respectively, included:
|
◦
|
The aforementioned favorable impacts of certain items on our revenue, as discussed in the "Revenue Highlights" section above
|
◦
|
The following current year impacts:
|
▪
|
Unfavorable network tax increases of $11.7 million and $18.2 million for Q2 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
|
▪
|
Higher severance costs in U.K./Ireland of $6.6 million and $6.7 million for Q2 and YTD, respectively, associated with revisions to our operating model and decreases in senior management personnel
|
▪
|
Unfavorable increases in personnel costs in Central and Corporate related to a $5.0 million cash bonus associated with the renewal of an existing executive employment contract on similar terms
|
◦
|
The following Q2 2018 impacts in U.K./Ireland, which together have a net impact of $1.5 million:
|
▪
|
Higher costs of $5.3 million resulting from 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
|
▪
|
Lower costs of $6.8 million due to the reassessment of an accrual in U.K./Ireland in the second quarter of 2018
|
•
|
U.K./Ireland: Our rebased OCF decline of 2.5% was attributable to the aforementioned revenue growth and a reduction in service costs from operating efficiencies which was more than offset by higher programming costs, higher network taxes and the aforementioned increase in severance costs
|
•
|
Belgium: Rebased OCF decline of 3.6% was largely driven by the Medialaan MVNO contract loss
|
•
|
Switzerland: Rebased OCF decline of 8.7% in Q2 was largely due to the aforementioned loss of residential cable subscription revenue
|
•
|
Continuing CEE (Poland and Slovakia): Rebased OCF decline of 0.5% was largely driven by the aforementioned revenue trend which was more than offset by increased programming spend
|
•
|
Net earnings (loss) attributable to Liberty Global shareholders was $53.0 million and $912.6 million for the three months ended June 30, 2019 and 2018, respectively, and $60.0 million and ($273.9 million) for the six months ended June 30, 2019 and 2018, respectively
|
•
|
Total principal amount of debt and finance leases: $30.0 billion for continuing operations
|
•
|
Leverage ratios11: At June 30, 2019, our adjusted gross and net leverage ratios for the Full Company were 5.4x and 5.2x, respectively
|
◦
|
Q2 net leverage pro forma for Vodafone transaction of 3.0x11
|
•
|
Average debt tenor13: Approximately 7 years, with ~73% 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
|
•
|
Liquidity10: $3.9 billion for our continuing operations, including (i) $1.3 billion of cash at June 30, 2019 and (ii) aggregate unused borrowing capacity14 under our credit facilities of $2.6 billion
|
◦
|
Q2 liquidity pro forma for Vodafone transaction of approximately $13.1 billion10
|
|
|
Revenue
|
|
OCF
|
||||||||||||
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||||||
|
|
in millions
|
||||||||||||||
Acquisitions
|
|
$
|
15.2
|
|
|
$
|
31.5
|
|
|
$
|
2.1
|
|
|
$
|
3.7
|
|
Dispositions(i)
|
|
5.7
|
|
|
18.3
|
|
|
4.2
|
|
|
14.0
|
|
||||
Foreign Currency
|
|
(158.8
|
)
|
|
(367.3
|
)
|
|
(66.1
|
)
|
|
(150.0
|
)
|
||||
Total decrease
|
|
$
|
(137.9
|
)
|
|
$
|
(317.5
|
)
|
|
$
|
(59.8
|
)
|
|
$
|
(132.3
|
)
|
(i)
|
Includes rebase adjustments related to agreements to provide transitional and other services to the VodafoneZiggo JV, 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 and OCF of $5.7 million and $4.2 million and $18.3 million and $15.3 million, respectively, for the three and six months ended June 30, 2018.
|
|
|
|
|
Finance
|
|
Debt & Finance
|
|
Cash
|
||||||||
|
|
|
|
Lease
|
|
Lease
|
|
and Cash
|
||||||||
|
|
Debt(ii), (iii)
|
|
Obligations
|
|
Obligations
|
|
Equivalents
|
||||||||
|
|
in millions
|
||||||||||||||
Liberty Global and unrestricted subsidiaries
|
|
$
|
1,580.7
|
|
|
$
|
68.3
|
|
|
$
|
1,649.0
|
|
|
$
|
1,018.5
|
|
Virgin Media(iv)
|
|
15,791.0
|
|
|
69.6
|
|
|
15,860.6
|
|
|
41.7
|
|
||||
UPC Holding
|
|
6,031.1
|
|
|
29.4
|
|
|
6,060.5
|
|
|
50.4
|
|
||||
Telenet
|
|
5,999.2
|
|
|
465.0
|
|
|
6,464.2
|
|
|
158.4
|
|
||||
Total
|
|
$
|
29,402.0
|
|
|
$
|
632.3
|
|
|
$
|
30,034.3
|
|
|
$
|
1,269.0
|
|
(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 within the UPC Holding borrowing group. Subsequent to June 30, 2019, certain of these obligations were repaid with a portion of the proceeds from the disposition that was completed on July 31, 2019.
|
(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.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
in millions, except % amounts
|
||||||||||||||
Customer premises equipment
|
$
|
157.7
|
|
|
$
|
240.4
|
|
|
$
|
386.3
|
|
|
$
|
536.1
|
|
New Build & Upgrade
|
162.2
|
|
|
190.4
|
|
|
304.6
|
|
|
378.4
|
|
||||
Capacity
|
77.2
|
|
|
84.9
|
|
|
149.8
|
|
|
211.4
|
|
||||
Baseline
|
154.8
|
|
|
190.5
|
|
|
283.2
|
|
|
356.1
|
|
||||
Product & Enablers
|
130.8
|
|
|
156.6
|
|
|
257.4
|
|
|
364.4
|
|
||||
Total P&E Additions
|
682.7
|
|
|
862.8
|
|
|
1,381.3
|
|
|
1,846.4
|
|
||||
Reconciliation of P&E Additions to capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Assets acquired under capital-related vendor financing arrangements(i)
|
(417.4
|
)
|
|
(550.8
|
)
|
|
(926.3
|
)
|
|
(1,186.7
|
)
|
||||
Assets acquired under capital leases
|
(20.4
|
)
|
|
(22.6
|
)
|
|
(32.6
|
)
|
|
(46.5
|
)
|
||||
Changes in current liabilities related to capital expenditures
|
56.7
|
|
|
21.2
|
|
|
210.5
|
|
|
181.6
|
|
||||
Total capital expenditures, net(ii)
|
$
|
301.6
|
|
|
$
|
310.6
|
|
|
$
|
632.9
|
|
|
$
|
794.8
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures, net:
|
|
|
|
|
|
|
|
||||||||
Third-party payments
|
$
|
319.6
|
|
|
$
|
342.5
|
|
|
$
|
691.2
|
|
|
$
|
852.1
|
|
Proceeds received for transfers to related parties(iii)
|
(18.0
|
)
|
|
(31.9
|
)
|
|
(58.3
|
)
|
|
(57.3
|
)
|
||||
Total capital expenditures, net
|
$
|
301.6
|
|
|
$
|
310.6
|
|
|
$
|
632.9
|
|
|
$
|
794.8
|
|
|
|
|
|
|
|
|
|
||||||||
P&E Additions as % of revenue8
|
24.0
|
%
|
|
28.6
|
%
|
|
24.2
|
%
|
|
30.4
|
%
|
(i)
|
Amounts exclude related VAT of $63.9 million and $86.9 million for the three months ended June 30 2019 and 2018, respectively, and $148.7 million and $183.5 million for the six months ended June 30, 2019 and 2018, respectively, that were also financed by our vendors under these arrangements.
|
(ii)
|
The capital expenditures that we report in our condensed 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.
|
|
|
Three months ended June 30,
|
|
%
|
|
Rebased
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||
Liberty Global
|
|
$
|
59.50
|
|
|
$
|
62.05
|
|
|
(4.1
|
%)
|
|
1.0
|
%
|
U.K. & Ireland (Virgin Media)
|
|
£
|
51.35
|
|
|
£
|
51.11
|
|
|
0.5
|
%
|
|
0.5
|
%
|
Belgium (Telenet)
|
|
€
|
57.18
|
|
|
€
|
55.15
|
|
|
3.7
|
%
|
|
3.7
|
%
|
UPC
|
|
€
|
37.13
|
|
|
€
|
36.80
|
|
|
0.9
|
%
|
|
(1.8
|
%)
|
|
|
ARPU per Mobile Subscriber
|
||||||||||||
|
|
Three months ended June 30,
|
|
%
|
|
Rebased
|
||||||||
|
|
2019
|
|
2018
|
Change
|
|
% Change
|
|||||||
Liberty Global:
|
|
|
|
|
|
|
|
|
||||||
Including interconnect revenue
|
|
$
|
16.49
|
|
|
$
|
14.89
|
|
|
10.7
|
%
|
|
(2.6
|
%)
|
Excluding interconnect revenue
|
|
$
|
14.15
|
|
|
$
|
12.43
|
|
|
13.8
|
%
|
|
(2.7
|
%)
|
|
|
Consolidated Operating Data — June 30, 2019
|
|||||||||||||||||||||
|
|
|
|
|
Video
|
|
|
|
|
|
|
||||||||||||
|
|
Homes
Passed
|
Two-way
Homes
Passed
|
Cable Customer
Relationships
|
Basic Video
Subscribers(i)
|
Enhanced Video
Subscribers
|
Total
Video
|
Internet
Subscribers(ii)
|
Telephony
Subscribers(iii)
|
Total
RGUs
|
|
|
Total Mobile
Subscribers(iv)
|
||||||||||
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.K.
|
|
14,636,700
|
|
14,630,000
|
|
5,531,800
|
|
—
|
|
3,822,100
|
|
3,822,100
|
|
5,266,700
|
|
4,641,000
|
|
13,729,800
|
|
|
|
3,059,000
|
|
Belgium
|
|
3,366,100
|
|
3,366,100
|
|
2,091,600
|
|
183,700
|
|
1,718,500
|
|
1,902,200
|
|
1,661,100
|
|
1,234,800
|
|
4,798,100
|
|
|
|
2,748,300
|
|
Switzerland(v)
|
|
2,353,300
|
|
2,353,300
|
|
1,070,700
|
|
441,300
|
|
599,400
|
|
1,040,700
|
|
676,700
|
|
510,800
|
|
2,228,200
|
|
|
|
173,400
|
|
Ireland
|
|
941,400
|
|
909,300
|
|
434,500
|
|
1,100
|
|
268,300
|
|
269,400
|
|
376,200
|
|
345,800
|
|
991,400
|
|
|
|
91,500
|
|
Poland
|
|
3,500,200
|
|
3,446,400
|
|
1,468,100
|
|
177,000
|
|
1,058,500
|
|
1,235,500
|
|
1,203,400
|
|
679,000
|
|
3,117,900
|
|
|
|
3,000
|
|
Slovakia
|
|
616,400
|
|
601,700
|
|
192,700
|
|
27,800
|
|
142,400
|
|
170,200
|
|
138,300
|
|
85,600
|
|
394,100
|
|
|
|
—
|
|
Total continuing operations
|
|
25,414,100
|
|
25,306,800
|
|
10,789,400
|
|
830,900
|
|
7,609,200
|
|
8,440,100
|
|
9,322,400
|
|
7,497,000
|
|
25,259,500
|
|
|
|
6,075,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber Variance Table - June 30, 2019 vs. March 31, 2019
|
|||||||||||||||||||||
|
|
|
|
|
Video
|
|
|
|
|
|
|
||||||||||||
|
|
Homes
Passed
|
Two-way Homes
Passed
|
Cable Customer
Relationships
|
Basic Video
Subscribers(i)
|
Enhanced Video
Subscribers
|
Total
Video
|
Internet
Subscribers(ii)
|
Telephony
Subscribers(iii)
|
Total
RGUs
|
|
|
Total Mobile
Subscribers(iv)
|
||||||||||
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.K.
|
|
126,000
|
|
126,000
|
|
(2,400
|
)
|
—
|
|
(24,600
|
)
|
(24,600
|
)
|
7,100
|
|
23,700
|
|
6,200
|
|
|
|
28,400
|
|
Belgium
|
|
9,000
|
|
9,000
|
|
(8,200
|
)
|
(7,700
|
)
|
(6,900
|
)
|
(14,600
|
)
|
3,000
|
|
(8,400
|
)
|
(20,000
|
)
|
|
|
43,500
|
|
Switzerland(v)
|
|
8,900
|
|
8,900
|
|
(21,500
|
)
|
13,700
|
|
(33,200
|
)
|
(19,500
|
)
|
(9,500
|
)
|
(2,800
|
)
|
(31,800
|
)
|
|
|
14,300
|
|
Ireland
|
|
11,600
|
|
11,700
|
|
(3,200
|
)
|
(1,800
|
)
|
(900
|
)
|
(2,700
|
)
|
(1,900
|
)
|
(6,500
|
)
|
(11,100
|
)
|
|
|
5,400
|
|
Poland
|
|
20,800
|
|
21,400
|
|
5,300
|
|
(900
|
)
|
4,700
|
|
3,800
|
|
11,100
|
|
11,000
|
|
25,900
|
|
|
|
200
|
|
Slovakia
|
|
1,300
|
|
1,400
|
|
(2,000
|
)
|
500
|
|
(1,600
|
)
|
(1,100
|
)
|
(200
|
)
|
(500
|
)
|
(1,800
|
)
|
|
|
—
|
|
Total continuing operations
|
|
177,600
|
|
178,400
|
|
(32,000
|
)
|
3,800
|
|
(62,500
|
)
|
(58,700
|
)
|
9,600
|
|
16,500
|
|
(32,600
|
)
|
|
|
91,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Organic Change Summary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.K.
|
|
126,000
|
|
126,000
|
|
(2,400
|
)
|
—
|
|
(24,600
|
)
|
(24,600
|
)
|
7,100
|
|
23,700
|
|
6,200
|
|
|
|
28,400
|
|
Belgium
|
|
9,000
|
|
9,000
|
|
(8,200
|
)
|
(7,700
|
)
|
(6,900
|
)
|
(14,600
|
)
|
3,000
|
|
(8,400
|
)
|
(20,000
|
)
|
|
|
43,500
|
|
Other Europe
|
|
42,600
|
|
43,400
|
|
(18,000
|
)
|
(10,700
|
)
|
(5,000
|
)
|
(15,700
|
)
|
(500
|
)
|
1,200
|
|
(15,000
|
)
|
|
|
19,900
|
|
Total Organic Change
|
|
177,600
|
|
178,400
|
|
(28,600
|
)
|
(18,400
|
)
|
(36,500
|
)
|
(54,900
|
)
|
9,600
|
|
16,500
|
|
(28,800
|
)
|
|
|
91,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Q2 2019 Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Q2 2019 Adjustment - Switzerland
|
|
—
|
|
—
|
|
(3,400
|
)
|
22,200
|
|
(26,000
|
)
|
(3,800
|
)
|
—
|
|
—
|
|
(3,800
|
)
|
|
|
—
|
|
Total adjustments
|
|
—
|
|
—
|
|
(3,400
|
)
|
22,200
|
|
(26,000
|
)
|
(3,800
|
)
|
—
|
|
—
|
|
(3,800
|
)
|
|
|
—
|
|
(i)
|
We have approximately 200,900 “lifeline” customers that are counted on a per connection basis, representing the least expensive regulated tier of video cable service, with only a few channels.
|
(ii)
|
In Switzerland, we offer a 2 Mbps internet service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Internet Subscribers in Switzerland include 73,200 subscribers who have requested and received this service.
|
(iii)
|
In Switzerland, we offer a basic phone service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Telephony Subscribers in Switzerland include 167,000 subscribers who have requested and received this service.
|
(iv)
|
In a number of countries, our mobile subscribers receive mobile services pursuant to prepaid contracts. As of June 30, 2019, our mobile subscriber count included 466,300 and 320,200 prepaid mobile subscribers in Belgium and the U.K., respectively.
|
(v)
|
Pursuant to service agreements, Switzerland offers enhanced video, broadband internet and telephony services over networks owned by third-party cable operators (“partner networks”). A partner network RGU is only recognized if there is a direct billing relationship with the customer. At June 30, 2019, Switzerland’s partner networks account for 122,900 Cable Customer Relationships, 300,000 RGUs, which include 106,800 Enhanced Video Subscribers, 109,000 Internet Subscribers, and 84,200 Telephony Subscribers. Subscribers to our enhanced video services provided over partner networks receive basic video services from the partner networks as opposed to our operations. Due to the fact that we do not own these partner networks, we do not report homes passed for Switzerland’s partner networks.
|
1
|
Convenience translation based on USD/EUR rate of 1.12. The amount of net cash proceeds we received from the transaction differs from the
|
2
|
Represents the equivalent USD amount based on the February 27, 2019 agreement date.
|
3
|
The pro forma cash balance includes (i) the net cash proceeds from the Vodafone transaction of $11.3 billion, (ii) the expected net cash proceeds from the Sunrise transaction of $2.5 billion, (i) the prepayment of the $1.6 billion term loan at UPC, (iv) an expected $0.9 billion re-levering of our operations in Poland and Slovakia and (v) the $1.3 billion cash balance at June 30, 2019. The expected net cash proceeds from the Sunrise transaction differs from the amount we estimated at the agreement date due to FX movements.
|
4
|
With the exception of OFCF, the indicated growth rates are rebased for acquisitions, dispositions, FX and other items that impact the comparability of our year-over-year results. Please see Rebase Information for information on rebased growth. OFCF growth rates are presented on a reported basis.
|
5
|
The term "excluding Switzerland" represents our continuing operations excluding UPC Switzerland and certain holding companies within the UPC Holding borrowing group (together, the "Switzerland Disposal Group"), including the UPC Holding borrowing group’s existing senior and senior secured notes (the "UPC Notes"), associated derivatives and certain other debt items. This is the basis on which analyst consensus estimates for our key performance indicators are currently derived and on which we originally provided our 2019 guidance for OCF, Adjusted FCF and Property and Equipment Additions.
|
6
|
Pro forma Adjusted FCF incorporates our preliminary estimate of (i) assumed interest and related derivative payments that were made by the UPC Holding continuing operations during the period and (ii) the net cash flows that we would have received from transitional services agreements if the sale of the remaining Discontinued Operations and UPC Switzerland had occurred on January 1, 2019. A reconciliation of our Adjusted FCF guidance for 2019 to a U.S. GAAP measure is not provided as not all elements of the reconciliation are projected as part of our forecasting process, as certain items may vary significantly from one period to another.
|
7
|
Absolute full-year 2019 U.S. dollar guidance figures based on FX rates of EUR/USD 1.13 and GBP/USD 1.30
|
8
|
Includes subscription and non-subscription revenue. For additional information regarding how we define our revenue categories, see note 17 to the condensed consolidated financial statements included in our 10-Q.
|
9
|
Total B2B includes subscription (SOHO) and non-subscription revenue. B2B and SOHO growth rates include upsell from our residential businesses.
|
10
|
Liquidity refers to cash and cash equivalents plus the maximum undrawn commitments under subsidiary borrowing facilities, without regard to covenant compliance calculations. Pro forma liquidity for the Vodafone transaction is adjusted to reflect certain items, including (i) our preliminary estimate of the net cash and cash equivalents received upon closing of the transaction of €10.1 billion ($11.3 billion based on an FX rate of EUR/USD 1.12) and (ii) the prepayment of $1.6 billion outstanding principal amount of term loans under the UPC Holding Bank Facility.
|
11
|
Consistent with how we calculate our leverage ratios under our debt agreements, we calculate our debt ratios on a Full Company basis, which includes our continuing operations and our remaining Discontinued Operations, with the gross and net debt ratios defined as total debt and net debt, respectively, divided by annualized OCF of the latest quarter. Net debt is defined as total debt less cash and cash equivalents. For purposes of these calculations, debt is measured using swapped foreign currency rates, consistent with the covenant calculation requirements of our subsidiary debt agreements, and excludes the loans backed or secured by the shares we hold in ITV plc and Lions Gate Entertainment Corp. We have not presented leverage ratios on a continuing operations basis as we believe that such a presentation would overstate our leverage and would not be representative of the actual leverage ratios that we will report once all dispositions are completed. For additional information, see note 4 to the condensed consolidated financial statements included in our 10-Q. The following table details the calculation of our Full Company consolidated debt and net debt to annualized consolidated OCF ratios as of and for the quarter ended June 30, 2019:
|
|
As of and for the
quarter ended
June 30, 2019
|
||
|
in millions, except ratios
|
||
|
|
||
Consolidated Debt to Annualized Consolidated OCF:
|
|
||
Debt and finance lease obligations before deferred financing costs, discounts and premiums
|
$
|
39,938.9
|
|
Principal related projected derivative cash payments
|
(1,373.9
|
)
|
|
ITV Collar Loan
|
(1,374.1
|
)
|
|
Lionsgate Collar Loan
|
(82.9
|
)
|
|
Adjusted debt and finance lease obligations before deferred financing costs, discounts and premiums
|
$
|
37,108.0
|
|
|
|
||
Annualized quarterly OCF
|
$
|
6,854.0
|
|
Consolidated debt to annualized consolidated OCF ratio
|
5.4
|
|
|
|
|
||
Consolidated Net Debt to Annualized Consolidated OCF:
|
|
|
|
Adjusted debt and finance lease obligations before deferred financing costs, discounts and premiums
|
$
|
37,108.0
|
|
Cash and cash equivalents
|
(1,278.7
|
)
|
|
Adjusted net debt and finance lease obligations before deferred financing costs, discounts and premiums
|
$
|
35,829.3
|
|
|
|
||
Annualized quarterly OCF
|
$
|
6,854.0
|
|
Consolidated net debt to annualized consolidated OCF ratio
|
5.2
|
|
12
|
Our Q2 2018 mobile subscriber additions have been restated to correct the overstatement of our and Telenet's subscriber base in relation to the removal of inactive "pay as you go subscribers" within Telenet's postpaid subscriber base as these subscribers do not pay a monthly subscription fee and are only billed on their effective usage, which resulted in reductions to our mobile subscriber base of 58,800 at June 30, 2018, 49,400 at March 31, 2018 and 53,000 at December 31, 2017. In addition, our mobile subscriber counts at March 31, 2018 and December 31, 2017 have been restated to reflect the removal of 127,300 and 133,200, respectively, of small or medium enterprise mobile telephony subscribers that, beginning in Q2 2018, are now reflected as business customers and are no longer included in our mobile telephony subscriber count.
|
13
|
For purposes of calculating our average tenor, total third-party debt excludes vendor financing.
|
14
|
Our aggregate unused borrowing capacity of $2.6 billion represents the maximum undrawn commitments under the applicable facilities of our continuing operations without regard to covenant compliance calculations. Upon completion of the relevant June 30, 2019 compliance reporting requirements for our credit facilities, and assuming no further changes from quarter-end borrowing levels, we anticipate that the full unused borrowing capacity of our continuing operations will continue to be available, with the exception of the UPC Holding Bank Facility, which will have borrowing capacity limited to €730.9 million ($830.2 million). Our above expectations do not consider any actual or potential changes to our borrowing levels or any amounts loaned or distributed subsequent to June 30, 2019.
|
|
Three months ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Continuing operations
|
|
Discontinued Operations (i)
|
||||||||||||
|
in millions
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
1,322.2
|
|
|
$
|
1,457.8
|
|
|
$
|
370.1
|
|
|
$
|
528.0
|
|
Cash payments for direct acquisition and disposition costs
|
5.6
|
|
|
3.2
|
|
|
—
|
|
|
—
|
|
||||
Expenses financed by an intermediary(ii)
|
522.1
|
|
|
409.1
|
|
|
138.1
|
|
|
77.8
|
|
||||
Capital expenditures, net
|
(301.6
|
)
|
|
(310.6
|
)
|
|
(102.5
|
)
|
|
(122.4
|
)
|
||||
Principal payments on amounts financed by vendors and intermediaries
|
(977.6
|
)
|
|
(1,673.1
|
)
|
|
(216.8
|
)
|
|
(132.3
|
)
|
||||
Principal payments on certain finance leases
|
(18.7
|
)
|
|
(19.6
|
)
|
|
(1.9
|
)
|
|
(3.1
|
)
|
||||
Adjusted FCF
|
552.0
|
|
|
$
|
(133.2
|
)
|
|
$
|
187.0
|
|
|
$
|
348.0
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pro forma adjustments related to the sale of the remaining Discontinued Operations and the Switzerland Disposal Group:
|
|
|
|
|
|
|
|
||||||||
Switzerland Disposal Group(iii)
|
(65.0
|
)
|
|
|
|
|
|
|
|||||||
Interest and derivative payments(iv)
|
(1.0
|
)
|
|
|
|
|
|
|
|||||||
Transitional services agreements(v)
|
60.0
|
|
|
|
|
|
|
|
|||||||
Pro forma Adjusted FCF(vi)
|
$
|
546.0
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Continuing operations
|
|
Discontinued Operations (i)
|
||||||||||||
|
in millions
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
1,628.5
|
|
|
$
|
2,128.1
|
|
|
$
|
829.2
|
|
|
$
|
1,137.0
|
|
Cash payments for direct acquisition and disposition costs
|
18.0
|
|
|
4.8
|
|
|
—
|
|
|
—
|
|
||||
Expenses financed by an intermediary(ii)
|
1,086.1
|
|
|
916.4
|
|
|
276.9
|
|
|
128.3
|
|
||||
Capital expenditures, net
|
(632.9
|
)
|
|
(794.8
|
)
|
|
(213.1
|
)
|
|
(284.2
|
)
|
||||
Principal payments on amounts financed by vendors and intermediaries
|
(2,140.4
|
)
|
|
(3,349.0
|
)
|
|
(426.4
|
)
|
|
(253.2
|
)
|
||||
Principal payments on certain finance leases
|
(31.8
|
)
|
|
(37.6
|
)
|
|
(4.6
|
)
|
|
(6.1
|
)
|
||||
Adjusted FCF
|
(72.5
|
)
|
|
$
|
(1,132.1
|
)
|
|
$
|
462.0
|
|
|
$
|
721.8
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pro forma adjustments related to the sale of the remaining Discontinued Operations and the Switzerland Disposal Group:
|
|
|
|
|
|
|
|
||||||||
Switzerland Disposal Group(iii)
|
(105.9
|
)
|
|
|
|
|
|
|
|||||||
Interest and derivative payments(iv)
|
(22.5
|
)
|
|
|
|
|
|
|
|||||||
Transitional services agreements(v)
|
121.0
|
|
|
|
|
|
|
|
|||||||
Pro forma Adjusted FCF(vi)
|
$
|
(79.9
|
)
|
|
|
|
|
|
|
(i)
|
For the 2019 periods, our Discontinued Operations include our former operations in Germany, Hungary, Romania and the Czech Republic, which were sold on July 31, 2019, and our former DTH business, which was sold on May 2, 2019. For the 2018 period, our Discontinued Operations also include our former operation in Austria through July 31, 2018.
|
(ii)
|
For purposes of our condensed consolidated statements of cash flows, expenses financed by an intermediary are treated as hypothetical operating cash outflows and hypothetical financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our condensed consolidated statements of cash flows. For purposes of our Adjusted Free Cash Flow definition, we add back the hypothetical operating cash outflow when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary.
|
(iii)
|
The Switzerland Disposal Group is included within our Continuing Operations Adjusted FCF. In connection with the pending disposition, Sunrise will acquire the Switzerland Disposal Group, the UPC Notes, associated derivatives and certain other debt items. As a result, this pro forma adjustment represents the Adjusted FCF of the Switzerland Disposal Group, including 100% of the interest and related derivative payments made during the applicable period related to the UPC Notes.
|
(iv)
|
Represents the estimated interest and related derivative payments that have been made by UPC Holding in relation to the continuing UPC operations in Poland and Slovakia during the applicable period. These estimated payments are calculated based on Poland and Slovakia’s pro rata share of UPC Holding's OCF and UPC Holding's aggregate interest and derivative payments during the applicable period. Although we believe that these estimated payments represent a reasonable estimate of the annual interest and related derivative payments that will occur in relation to the continuing operations in Poland and Slovakia, no assurance can be given that the actual interest and derivative payments will be equivalent to the amounts presented. No pro forma adjustments are required with respect to Unitymedia's interest and derivative payments as substantially all of Unitymedia’s debt and related derivative instruments are direct obligations of entities within the Vodafone Disposal Group. As a result, the interest and related derivative payments associated with such debt and derivative instruments of Unitymedia are included in discontinued operations.
|
(v)
|
Represents our preliminary estimate of the net cash flows that we would have received from transitional services agreements if the sale of the remaining Discontinued Operations and the Switzerland Disposal Group had occurred on January 1, 2019. The estimated net cash flows are based on the estimated revenue that we expect to recognize from our transitional services agreements during the first 12 months following the completion of the sale of the remaining Discontinued Operations and Switzerland Disposal Group, less the estimated incremental costs that we expect to incur to provide such transitional services. As a result, the pro forma adjustments during the three and six months ended June 30, 2019 include $37.8 million and $76.0 million related to our discontinued operations in Germany, Hungary, Romania and the Czech Republic, respectively, $21.9 million and $44.0 million related to the Switzerland Disposal Group, respectively, and $0.3 million and $1.0 million related to our discontinued DTH business, respectively.
|
(vi)
|
Represents the Adjusted FCF that we estimate would have resulted if the sale of the remaining Discontinued Operations and the Switzerland Disposal Group had been completed on January 1, 2019. Actual amounts may differ from the amounts assumed for purposes of this pro forma calculation. For example, our Pro forma Adjusted FCF does not include any future benefits related to reductions in our corporate costs as a result of our operating model rationalization or any other potential future operating or capital cost reductions attributable to our continuing or discontinued operations.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
in millions
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
$
|
148.7
|
|
|
$
|
264.1
|
|
|
$
|
254.2
|
|
|
$
|
381.7
|
|
Share-based compensation expense
|
87.0
|
|
|
45.5
|
|
|
154.3
|
|
|
88.2
|
|
||||
Depreciation and amortization
|
921.8
|
|
|
964.0
|
|
|
1,861.4
|
|
|
2,004.7
|
|
||||
Impairment, restructuring and other operating items, net
|
33.2
|
|
|
29.9
|
|
|
104.1
|
|
|
90.6
|
|
||||
Total OCF
|
$
|
1,190.7
|
|
|
$
|
1,303.5
|
|
|
$
|
2,374.0
|
|
|
$
|
2,565.2
|
|