Exhibit 99.1
TELEWEST
6 NOVEMBER 2003
TELEWEST COMMUNICATIONS PLC
3RD QUARTER RESULTS 2003
STRENGTHENING FINANCIAL POSITION
- - CUSTOMER GROWTH
- - RECORD EBITDA AND MARGIN BEFORE EXCEPTIONALS
- - RECORD ARPU
- - FREE CASH FLOW POSITIVE YEAR TO DATE
- - RESTRUCTURING DISCUSSIONS PROGRESS
- --------------------------------------------------------------------------------------------------------------------------------
9 MONTHS ENDED 30 SEPTEMBER 3 MONTHS ENDED 30 SEPTEMBER
2003 2002 CHANGE 2003 2002 CHANGE
(POUND)M (POUND)M (POUND)M (POUND)M
TOTAL TURNOVER * 1,013 1,010 339 336 UP 1%
EBITDA ** 334 281 UP 19% 114 97 UP 18%
EBITDA MARGIN ** 33% 28% UP 5% PTS 34% 29% UP 5% PTS
TOTAL OPERATING LOSS (58) (183) DOWN 68% (17) (64) DOWN 73%
NET LOSS (327) (397) DOWN 18% (119) (158) DOWN 25%
CAPEX 159 330 DOWN 52% 55 89 DOWN 38%
FREE CASH FLOW *** 30 (338) UP(POUND)368M (1) (90) UP(POUND)89M
- --------------------------------------------------------------------------------------------------------------------------------
* includes Telewest's proportionate share of UKTV.
** includes Telewest's proportionate share of UKTV and is before exceptional
items of (pound)16m and (pound)9m in the 9 months and 3 months ended 30
September 2003, respectively.
*** net cash inflow/(outflow) before use of liquid resources and financing.
COMMENTING, CHARLES BURDICK, MANAGING DIRECTOR, SAID:
"As anticipated, we returned to modest customer growth across each of our
consumer product lines, with new product propositions and increased and more
efficient marketing combining with reduced churn. These trends have continued
into October.
"Our bundled products are proving popular, and 15% of our customers now take the
triple play of TV, telephony and broadband. Our ARPU, which remains the highest
of any European cable company, has again risen to a record level. We also
continue to be the broadband leaders in our franchise areas with an accelerating
growth driven by innovative services, including wireless broadband and 2Mb
speeds.
"Together with our focus on costs, this operational performance has delivered
record EBITDA and EBITDA margin for the quarter before exceptionals and positive
free cash flow for the year to date.
"Alongside our commercial and financial progress, we have announced agreement
with our principal shareholders and bondholders on the terms of our proposed
financial restructuring and are in discussions with our banks on the new term
sheet for our continued bank finance.
" We believe our strategy of customer focus, cost control and broadband
leadership across the strength of our franchises provides a good platform for
future growth and increasing cash generation."
ENQUIRIES TO
TELEWEST COMMUNICATIONS PLC
Charles Burdick Managing director 020 7299 5000
Jane Hardman Director of corporate communications 020 7299 5888
Richard Williams Head of investor relations 020 7299 5479
And at
CITIGATE DEWE ROGERSON 020 7638 9571
Anthony Carlisle 07973 611888
Sue Pemberton 07779 572711
2
FINANCIAL REVIEW
Except where stated otherwise, all profit and loss items are before exceptional
items, and all comparisons compare the first nine months of 2003 to the first
nine months of 2002. The Group has incurred (pound)16 million of exceptional
legal and professional costs in respect of the Financial Restructuring during
the nine months ended 30 September 2003.
TURNOVER
Total turnover (including our share of UKTV, our joint venture with the BBC) for
the nine months is (pound)1,013 million, marginally ahead year-on-year.
Business Division revenues grew 4%. Content Division revenues grew 2%, despite
the disposal of non-core businesses and the closure of ITV Digital. Overall
Consumer Division revenues were marginally up before the impact of the closure
of Cable Guide, our TV listings magazine, in November 2002 and the sale of our
Indirect Access ("IDA") telephony business in July 2003. Together, these two
items accounted for a (pound)8 million fall in revenue. Growth in broadband saw
internet and other revenues rise 51%.
MARGIN
Gross margin rose from 68% to 70% for the nine months with improvements in
telephony margins and the growing number of high margin broadband subscribers
offsetting declines in television margins. Telephony margins improved from 71%
to 74% with selected price increases, and improved routing of telephony traffic.
Television margins fell from 62% to 61% due to increases in the cost of premium
programming.
Reflecting our continued focus on costs, selling, general and administrative
expenses ("SG&A") for the nine months were down 8% to (pound)351 million. SG&A
for the quarter of (pound)116 million was down (pound)1 million from the second
quarter of 2003 and down (pound)11 million from the third quarter of 2002.
EBITDA
Reflecting the operational performance, EBITDA grew 19% to (pound)334 million
for the first nine months, including our (pound)16 million share of UKTV's
EBITDA, with an EBITDA margin up from 28% to a record 33%.
EBITDA margin for the Cable Division in the quarter was 36%, up from 35% in the
previous quarter. Excluding (pound)4 million from UKTV, EBITDA for the third
quarter was (pound)110 million, up 2% on the previous quarter.
NET LOSS
Net loss for the nine months after exceptional items decreased by 18% to
(pound)327 million, including (pound)84 million of foreign exchange gains on
dollar-denominated debt. The net loss for the quarter was (pound)119 million.
CAPITAL EXPENDITURE
Capital expenditure in the first nine months was reduced by 52% to (pound)159
million, which represents 17% of Group turnover, due to the lower levels of
customer acquisition and reduced network spend following negotiated reductions
in the cost of electronic equipment including set top boxes and more efficient
usage of network capacity. This quarter we have introduced new disclosure of
capital expenditure in accordance with National Cable & Telecommunications
Association guidelines in note 8.
In the first nine months, EBITDA (including UKTV) exceeded capital expenditure
by (pound)175 million compared to a shortfall of (pound)49 million in the first
nine months of 2002.
FREE CASH FLOW
The Group generated positive free cash flow of (pound)30 million during the year
to date. As expected, the phasing of capital expenditure, working capital and
restructuring costs led to free cash flow turning marginally negative by
(pound)1 million in the quarter. The phasing of capital expenditure,
restructuring costs and fluctuations in working capital will continue to impact
short-term cash flow generation.
3
DEBT
As at 30 September 2003, net debt was (pound)5,228 million. This comprised
(pound)3,421 million of notes and debentures (which are expected to be exchanged
for equity as part of the Financial Restructuring), (pound)194 million of lease
financing, (pound)7 million of other loans and (pound)2,000 million drawn down
on our bank facility, offset by cash balances and term deposits of (pound)394
million. In addition, unpaid and accrued interest on the notes and debentures
subject to the Financial Restructuring was (pound)294 million.
GOING CONCERN
These financial statements have been prepared on a going concern basis and do
not include any adjustments that would arise as a result of the going concern
basis of preparation being inappropriate. As previously announced, the Company
is in discussions with its bondholders and other major stakeholders with regard
to a Financial Restructuring of its balance sheet as the Directors consider that
the Company will not be able to meet all of its debts as they fall due. However,
the Board of Directors has confidence in the successful conclusion of the
Financial Restructuring (and any required amendments to the Senior Secured
Facility) and, together with and on the basis of cash flow information that they
have prepared, the directors consider that the Group will continue to operate as
a going concern for a period of at least 12 months from the date of issue of
these financial statements. Any restructuring will require the approval of our
bankers and various stakeholders. Inherently, there can be no certainty in
relation to any of these matters.
FINANCIAL RESTRUCTURING
The Company continues to engage in negotiations with its bondholders, senior
lenders and certain other major stakeholders and it believes that a final
agreement will be achieved in due course. On 9 June 2003, the Company announced
that it had been notified by the ad hoc committee of its bondholders (the
"Bondholder Committee") that, in order to obtain the support of certain of the
Company's bondholders, the Bondholder Committee had requested certain changes to
the economic and other terms of the preliminary non-binding agreement relating
to its balance sheet restructuring (the "Financial Restructuring") with the
Bondholder Committee as announced on 30 September 2002. On 17 June 2003,
representatives of the Bondholder Committee provided the Company with a new
proposal for the terms of the Financial Restructuring. On 28 July 2003, the
Company announced that it expected the final terms of the Financial
Restructuring to provide that ordinary shareholders will receive 1.5% of the
issued share capital immediately following the Financial Restructuring. On 15
September, the Company announced that it had reached agreement in principle,
subject to certain conditions, on the terms of the Financial Restructuring with
the Bondholder Committee, W.R. Huff Asset Management, the Liberty Media Group
and IDT Corporation pursuant to which the holders of all outstanding notes and
debentures issued by Telewest and Telewest Finance (Jersey) Limited would
receive in aggregate 98.5 per cent of the issued share capital of the
restructured company following the Financial Restructuring and the holders of
Telewest's existing share capital would receive the remaining 1.5 per cent of
the issued share capital.
BUSINESS REVIEW
CONSUMER DIVISION
Overall Consumer Division revenues were marginally up before the impact of the
closure of Cable Guide, our TV listings magazine, in the fourth quarter of 2002
and the sale of our Indirect Access ("IDA") telephony business in July 2003.
Together, these two items accounted for a (pound)8 million fall in revenue.
Household ARPU for the third quarter was a record (pound)43.93, up by 6% on the
third quarter of 2002, reflecting price rises and increasing `triple play'
penetration. Household ARPU remains the highest of any European cable company.
During the third quarter the number of household customers increased by 2,000 as
we returned to customer growth following customer losses in the two previous
quarters as we improved the quality of our customer base. Gross customer
additions before churn were 63,000 in the quarter, up 43% on the previous
quarter. This increase was achieved due to the introduction of new product
propositions, increased spend on marketing and promotions, and operational
improvements to improve sales efficiency. Tight credit control measures remain
in place to ensure that we continue to attract profitable customers.
4
Customer growth was also positively affected by the reduction in quarterly
annualised household churn from 15.6% in the second quarter to 14.2% in the
third quarter as we continued to focus on improving customer service and as the
profile of our customer base improved.
The improving profile of our customer base is illustrated by:
- - ARPU up to a record(pound)43.93
- - `Triple play' up 28,000 to 256,000 - now 15% of customers compared to 9%
a year ago
- - 27% of our telephony base now take higher ARPU flat rate telephony products
- - 75% of our TV base now take higher ARPU digital TV
(I) BROADBAND
Strong growth in the number of broadband subscribers drove up internet and other
revenues by 51% to (pound)86 million.
Net broadband additions in the third quarter were 38,000 representing an
acceleration of growth from the second quarter. At the quarter end, we had
367,000 broadband subscribers, up 12% since June 2003. Growth has remained
strong since the quarter end and as at 5 November 2003, we had 389,000 broadband
subscribers of which 32,000 subscribed to our 1Mb service and 7,000 to our 2Mb
service which we launched in May 2003. 70% of broadband customers subscribe to
the full `triple play' and 94% to one other product.
Broadband ARPU for the third quarter was (pound)22.52 down slightly from the
second quarter as expected as installation fees are spread over a greater
installed subscriber base. Broadband churn rose in the quarter to 14.7% due
mainly to three issues which affected the early part of the quarter; a much
publicised increase in virus activity, stability issues following an email
platform upgrade and the seasonal effect of increased customer property moves in
the summer months. These issues have now been resolved and churn in September
and October fell to 13.7% on a monthly annualised basis.
(II) RESIDENTIAL TELEPHONY
Residential telephony revenues of (pound)354 million were down 5% due to a
reduction in the average number of subscribers, lower telephony usage, the sale
of the IDA business and the continued migration of dial-up internet subscribers
to broadband.
The number of telephony subscribers increased by 3,000 in the third quarter
after five quarters of customer losses. This return to customer growth was as a
result of the reasons outlined above. Subscribers to our flat rate `Talk'
services continued to increase with 30,000 net additions in the quarter. At 30
September 2003, we had 427,000 `Talk' subscribers being 27% of our residential
telephony base.
ARPU per subscriber for the third quarter fell slightly to (pound)24.53 from the
previous quarter due to a seasonal reduction in usage. Telephony churn remains
significantly below last year's level but rose marginally in the quarter from
13.8% to 14.2%.
(III) CATV
CATV revenues of (pound)237 million were down 7% largely as a result of the
reduction in the average number of subscribers year-on-year.
The number of CATV subscribers rose by 8,000 in the third quarter due mainly to
the introduction of new product propositions, and the continued addition to the
range of channels offered, including the recently added Sky Sports Extra digital
channel. This customer growth followed the five previous quarters of customer
losses, during which we took steps to ensure that we were acquiring more cash
generative profitable customers. CATV ARPU has remained relatively flat at
(pound)20.93 for the third quarter whilst churn has fallen to 16.9%.
75% of our TV subscribers now take our digital service and since the quarter
end, in the Birmingham area, we have begun the upgrade of the first of the small
remaining sections of our network that are unable to receive digital television
or broadband.
5
BUSINESS DIVISION
The Business Division's revenues grew 4% to (pound)206 million for the nine
months ended 30 September 2003.
Telewest Business has enjoyed a number of significant contract wins across its
product set of voice, data and internet services. Among the major contracts are
deals with retail chain Rubicon, Intercall the conference communications service
provider and West Midlands Ambulance.
The Telewest Business contract with West Midlands Police to replace three
separate networks for voice, data and video, with one broadband infrastructure
was short listed in the Computing Awards for Excellence 2003. The service was
described as "delivering genuine operational and financial benefits for the
organisation."
As part of its ongoing drive to achieve our operational and financial targets
Telewest Business has announced plans to re-align the business to provide a
differentiated service to customers, based more closely on the services and
products they have or may require in the future from Telewest Business. Smaller
voice only customers will receive centralised support under a low cost service
model. Where customers have more complex communications requirements, we will
continue to provide regular face-to-face contact, ensuring support and
assistance meets the ongoing needs of the customer.
Carrier Services revenues within the Business Division were (pound)33 million,
compared to (pound)30 million for the same period a year ago after reductions in
the previous two years. Carrier Services offer our national network to other
carriers and operators (such as T-Mobile) for voice and data communications.
CONTENT DIVISION
Content Division revenues totalled (pound)130 million for the nine months,
including (pound)50 million from our 50% share of UKTV revenue. Revenues were up
2% on the same period in 2002 as strong growth in advertising offset the
disposal of non-core businesses and the closure of ITV Digital.
Advertising revenues of (pound)61 million (including our 50% share of UKTV) for
the nine months were up 14% in an overall market which had declined by 1%. The
Content Division grew its market share with a 4.0% share of the TV advertising
market in the UK in the quarter, up from 3.5% in the corresponding period in
2002.
Subscription revenues of (pound)52 million (including our 50% share of UKTV) for
the nine months were up 5% due to UK pay-TV growth.
Flextech, our content division, launched a new time-shifted channel, Trouble
Reload during the quarter.
UKTV is launching a new channel, UK G2 on 12 November 2003 on both cable and
satellite. UK G2 will feature a strong programme line-up including Have I Got
News For You, Room 101, They Think It's All Over and Shooting Stars and a range
of modern, innovative dramas including Spooks, Cutting It, The Lakes, and This
Life.
UKTV's factual channel, UK History won New Channel of the Year at the Edinburgh
TV Festival.
NOTES:
1. Non-statutory information provided in this document is defined as follows:
o EBITDA, which we consider is a standard measure commonly reported and
widely used by analysts, investors and other interested parties in the
cable television and telecommunications industry, represents group
operating profit before deducting depreciation of fixed assets and
amortisation of goodwill, and unless stated otherwise is before taking
into account exceptional items.
o Gross margin is defined as Group turnover less cost of sales before
deducting depreciation.
All commentary in this document is based on the Group's UK GAAP financial
results unless otherwise specified.
2. The following is included in connection with legislation in the United
States, the Safe Harbor Statement under the US Private Securities Litigation
Reform Act of 1995: the foregoing includes certain forward looking statements
that involve various risks and uncertainties which could lead to actual results
significantly different than those anticipated by Telewest. For a discussion of
certain of these risks and uncertainties, see the Company's Annual Report on
Form 20-F filed with the US Securities and Exchange Commission on 30 June 2003.
6
TELEWEST COMMUNICATIONS PLC
OPERATING STATISTICS - UNAUDITED
FOR THE QUARTERS ENDED
- ----------------------------------------------------------------------------------------------------------------
CONSUMER DIVISION 30 SEP 30 SEP
2003 2002
- ----------------------------------------------------------------------------------------------------------------
CUSTOMERS
Homes passed and marketed 4,679,688 4,697,861
Total customers 1,721,550 1,758,234
Customer additions 62,553 71,773
Customer disconnects (60,871) (83,976)
Net customer movement 1,682 (12,203)
Household churn (annualised) (1) 14.2% 19.0%
Household penetration 36.8% 37.4%
% of dual or triple play subscribers 72.0% 69.6%
% of triple play subscribers 14.9% 8.8%
RGUs (4) 3,217,600 3,136,198
RGUs per customer 1.87 1.78
Average monthly revenue per customer (5) (pound)43.93 (pound)41.59
- ----------------------------------------------------------------------------------------------------------------
INTERNET
Broadband subscribers 367,410 216,173
Total Internet subscribers 610,334 500,343
Broadband net additions 38,074 38,779
Broadband penetration 8.6% 5.0%
Broadband churn (annualised) 14.7% 15.0%
Broadband average monthly revenue (pound)22.52 (pound)25.02
- ----------------------------------------------------------------------------------------------------------------
TELEPHONY
Telephony subscribers 1,591,641 1,615,190
Telephony lines 1,673,065 1,725,904
Second line penetration 5.1% 6.9%
Talk subscribers (unmetered) 427,092 346,285
Telephony subscriber net additions 3,283 (10,815)
Telephony penetration 34.0% 34.4%
Telephony churn (annualised) 14.2% 19.0%
Telephony average monthly revenue (pound)24.53 (pound)24.78
- ----------------------------------------------------------------------------------------------------------------
TELEVISION
Total television subscribers 1,258,549 1,304,835
Television subscriber net additions 8,038 (28,248)
Television penetration 26.9% 27.8%
Television churn (annualised) 16.9% 23.9%
Television average monthly revenue (pound)20.93 (pound)20.36
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
BUSINESS DIVISION
- ----------------------------------------------------------------------------------------------------------------
Business customer accounts 69,921 74,052
Business telephony lines 464,751 458,388
Average revenue per customer account (pound)3,182 (pound)3,119
- ----------------------------------------------------------------------------------------------------------------
CONTENT DIVISION
Pay multichannel subscribers 10,146,940 9,624,498
Flextech share of basic viewing (6) 19.6% 19.9%
Share of total TV advertising revenues (7) 4.0% 3.5%
- ----------------------------------------------------------------------------------------------------------------
Notes - see page 17
7
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTS
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- -------------------------------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 30 SEP 30 SEP 31 DEC
2003 2003 2003 2002 2002
BEFORE EXCEPTIONAL TOTAL TOTAL TOTAL
EXCEPTIONAL ITEMS AUDITED
ITEMS (NOTE 7)
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- -------------------------------------------------------------------------------------------------------------------------------
TURNOVER
Consumer Division:
Cable television 237 - 237 254 336
Telephony 354 - 354 373 495
Internet and other 86 - 86 57 63
- -------------------------------------------------------------------------------------------------------------------------------
677 - 677 684 894
Business Division 206 - 206 199 267
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL CABLE DIVISION 883 - 883 883 1,161
CONTENT DIVISION
Programming, transactional and interactive revenues 80 - 80 79 106
Share of joint ventures' turnover (UKTV) 50 - 50 48 64
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL CONTENT DIVISION 130 - 130 127 170
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL TURNOVER 1,013 - 1,013 1,010 1,331
Less: share of joint ventures' turnover (50) - (50) (48) (64)
- -------------------------------------------------------------------------------------------------------------------------------
GROUP TURNOVER (note 1) 963 - 963 962 1,267
TOTAL OPERATING COSTS (note 2) (1,017) (16) (1,033) (1,149) (3,119)
- -------------------------------------------------------------------------------------------------------------------------------
GROUP OPERATING LOSS (note 1) (54) (16) (70) (187) (1,852)
- -------------------------------------------------------------------------------------------------------------------------------
Group Turnover 963 - 963 962 1,267
Operating expenses before depreciation and amortisation (645) (16) (661) (692) (937)
----------------------------------------------------------------------
EBITDA (note1) 318 (16) 302 270 330
Depreciation and amortisation (note 2) (372) - (372) (457) (2,182)
----------------------------------------------------------------------
Group operating loss (54) (16) (70) (187) (1,852)
- -------------------------------------------------------------------------------------------------------------------------------
SHARE OF OPERATING PROFITS OF JOINT VENTURES 14 - 14 8 10
SHARE OF OPERATING LOSSES OF ASSOCIATED UNDERTAKINGS (2) - (2) (4) (1)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING LOSS (42) (16) (58) (183) (1,843)
GAIN ON DISPOSAL OF INVESTMENTS - - - 33 36
INTEREST RECEIVABLE AND SIMILAR INCOME (note 3) 101 - 101 257 309
AMOUNTS WRITTEN OFF INVESTMENTS - - - (36) (117)
INTEREST PAYABLE AND SIMILAR CHARGES (note 4) (369) - (369) (468) (603)
- -------------------------------------------------------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (310) (16) (326) (397) (2,218)
TAX ON LOSS ON ORDINARY ACTIVITIES (1) - (1) - (1)
- -------------------------------------------------------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (311) (16) (327) (397) (2,219)
MINORITY INTERESTS - - - - 1
- -------------------------------------------------------------------------------------------------------------------------------
LOSS FOR THE FINANCIAL PERIOD (311) (16) (327) (397) (2,218)
- -------------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER ORDINARY SHARE (pence) (10.8) (0.6) (11.4) (13.9) (77.2)
- -------------------------------------------------------------------------------------------------------------------------------
The financial information presented above reflects the continuing operations of
the business. The consolidated financial information set out on pages 8 to 13,
has been prepared on a going concern basis, applying the accounting policies set
out in Telewest's 2002 Annual Financial Statements; the appropriateness of the
going concern basis is discussed further on page 4. Statutory accounts for 2002
were delivered to the Registrar of Companies following the Company's Annual
General Meeting on 12 June 2003. The auditors have reported on those accounts;
their report was unqualified and did not contain statements under section 237(2)
or (3) of the Companies Act 1985.
8
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED CONSOLIDATED BALANCE SHEETS
AS AT 30 SEPTEMBER
- ---------------------------------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 31 DEC
2003 2002 2002
AUDITED
(POUND)M (POUND)M (POUND)M
- ---------------------------------------------------------------------------------------------------------------------------------
FIXED ASSETS
Intangible assets 150 1,668 157
Tangible assets 3,202 3,472 3,398
Investment in joint ventures:
Share of gross assets 45 38 45
Goodwill 231 316 241
Share of gross liabilities (140) (140) (146)
Loans to joint ventures 192 221 208
--------- --------- ---------
328 435 348
Investments in associated undertakings and
participating interests 6 15 8
--------- --------- ---------
334 450 356
- --------------------------------------------------------------------------------------------------------------------------------
3,686 5,590 3,911
- --------------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Investment - 48 -
Stocks 38 68 28
Debtors 187 248 210
Secured cash deposits restricted for more than one year 13 12 12
Cash at bank and in hand (note 6) 394 351 390
- --------------------------------------------------------------------------------------------------------------------------------
632 727 640
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (includes convertible
debt of(pound)893m,(pound)nil and(pound)282m, Respectively) (5,504) (685) (4,410)
- --------------------------------------------------------------------------------------------------------------------------------
NET CURRENT (LIABILITIES)/ASSETS (4,872) 42 (3,770)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES (1,186) 5,632 141
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR (includes convertible debt of(pound)nil,(pound)893m and(pound)608m,
respectively) (932) (5,598) (1,932)
MINORITY INTERESTS 1 - 1
- --------------------------------------------------------------------------------------------------------------------------------
NET (LIABILITIES)/ASSETS (2,117) 34 (1,790)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS (2,117) 34 (1,790)
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9
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- --------------------------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 31 DEC
2003 2002 2002
AUDITED
(POUND)M (POUND)M (POUND)M
- --------------------------------------------------------------------------------------------------------------------------
NET CASH INFLOW FROM OPERATING ACTIVITIES (note 5) 319 246 391
- --------------------------------------------------------------------------------------------------------------------------
DIVIDENDS RECEIVED FROM ASSOCIATED UNDERTAKINGS - - 1
- --------------------------------------------------------------------------------------------------------------------------
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received 9 4 7
Interest received from joint ventures 8 9 12
Interest paid (125) (248) (287)
Dividend paid to minority interests in subsidiary undertaking - (1) (1)
Interest element of finance lease payments (14) (13) (18)
- --------------------------------------------------------------------------------------------------------------------------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (122) (249) (287)
- --------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (174) (358) (448)
Sale of tangible fixed assets 1 - 1
- --------------------------------------------------------------------------------------------------------------------------
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE (173) (358) (447)
- --------------------------------------------------------------------------------------------------------------------------
ACQUISITIONS AND DISPOSALS
Disposal of subsidiary undertakings - 10 14
Disposal of associated undertakings 7 15 59
Investments in associated undertakings and other participating interests (1) (2) (2)
- --------------------------------------------------------------------------------------------------------------------------
NET CASH INFLOW FROM ACQUISITIONS AND DISPOSALS 6 23 71
- --------------------------------------------------------------------------------------------------------------------------
NET CASH INFLOW/(OUTFLOW) BEFORE USE OF LIQUID RESOURCES AND FINANCING 30 (338) (271)
MANAGEMENT OF LIQUID RESOURCES
Net increase in term deposits (note 6) (17) (280) (229)
Net increase in secured deposits (note 6) (1) - -
- --------------------------------------------------------------------------------------------------------------------------
NET CASH OUTFLOW FROM MANAGEMENT OF LIQUID RESOURCES (18) (280) (229)
- --------------------------------------------------------------------------------------------------------------------------
FINANCING
Net proceeds from borrowings under new credit facilities - 640 640
Net proceeds from maturity of forward contracts - 76 76
Repayments/(Payments) of loans made to joint ventures (net) 16 (2) 9
Repayment of SMG equity swap - (6) (33)
Repayment of other borrowings - (2) (2)
Capital element of vendor finance and finance lease payments (41) (39) (51)
- --------------------------------------------------------------------------------------------------------------------------
NET CASH (OUTFLOW)/INFLOW FROM FINANCING (25) 667 639
- --------------------------------------------------------------------------------------------------------------------------
(DECREASE)/INCREASE IN CASH IN THE PERIOD (note 6) (13) 49 139
- --------------------------------------------------------------------------------------------------------------------------
10
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- ------------------------------------------------------------------------------------------------------------------------------
CABLE CONTENT INTER- TOTAL CABLE CONTENT INTER- TOTAL
DIVISIONAL 30 SEP DIVISIONAL 30 SEP
2003 2003 2003 2003 2002 2002 2002 2002
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------------------------------------------------------------------
1 SEGMENTAL ANALYSIS
Group Turnover 883 88 (8) 963 883 90 (11) 962
Operating expenses before(pound)16m
exceptional items in 2003,
depreciation and amortisation (578) (75) 8 (645) (622) (81) 11 (692)
- ------------------------------------------------------------------------------------------------------------------------------
EBITDA before exceptional items 305 13 - 318 261 9 - 270
Exceptional items (16) - - (16) - - - -
- ------------------------------------------------------------------------------------------------------------------------------
EBITDA after exceptional items 289 13 - 302 261 9 - 270
Depreciation and amortisation (364) (8) - (372) (450) (7) - (457)
- ------------------------------------------------------------------------------------------------------------------------------
GROUP OPERATING LOSS (75) 5 - (70) (189) 2 - (187)
- ------------------------------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 31 DEC
2003 2002 2002
AUDITED
(POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------------------------------------------------------------------------
2 TOTAL OPERATING COSTS
COST OF SALES:
Consumer programming expenses 93 96 128
Business and consumer telephony expenses 147 165 218
Content Division cost of sales 54 48 70
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME COST OF SALES (COST OF SALES BEFORE DEPRECIATION) 294 309 416
Depreciation of tangible fixed assets (Includes exceptional write down(pound)87m in 31 Dec 2002) 355 367 577
- ------------------------------------------------------------------------------------------------------------------------------------
649 676 993
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATION EXPENSES
Selling, general and administrative expenses (Includes exceptional items(pound)16m in 30 Sept 2003
and(pound)22m in 31 Dec 2002) 367 383 521
Amortisation of goodwill and intangible assets (Includes exceptional impairment charge(pound)1,486m
in 31 Dec 2002) 17 90 1,605
- ------------------------------------------------------------------------------------------------------------------------------------
384 473 2,126
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING COSTS (Includes exceptional items(pound)16m in 2003 and(pound)1,595m in 31 Dec 2002) 1,033 1,149 3,119
- ------------------------------------------------------------------------------------------------------------------------------------
3 INTEREST RECEIVABLE AND SIMILAR INCOME
Interest receivable 17 13 19
Exchange gains on foreign currency translation 84 244 290
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST RECEIVABLE AND SIMILAR INCOME 101 257 309
- ------------------------------------------------------------------------------------------------------------------------------------
4 INTEREST PAYABLE AND SIMILAR CHARGES
Share of interest of associated undertakings and joint ventures 6 7 9
On bank loans 107 97 135
Finance costs of Notes and Debentures 243 253 325
Finance charges payable in respect of finance leases and hire purchase contracts 12 13 17
Exchange losses on foreign currency translation - 87 74
Other (Includes exceptional items(pound)31m in 31 Dec 2002) 1 11 43
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST PAYABLE AND SIMILAR CHARGES (Includes exceptional items(pound)31m in 31 Dec 2002) 369 468 603
- ------------------------------------------------------------------------------------------------------------------------------------
11
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS (CONTINUED)
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- -----------------------------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 31 DEC
2003 2002 2002
AUDITED
(POUND)M (POUND)M (POUND)M
- -----------------------------------------------------------------------------------------------------------------------------
5 RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Group operating loss (70) (187) (1,852)
Depreciation of tangible fixed assets 355 367 490
Exceptional impairment of tangible fixed assets - - 87
Amortisation of goodwill and intangible assets 17 90 119
Exceptional impairment of goodwill - - 1,486
(Increase)/decrease in stocks and programming inventory (10) (2) 7
Decrease/(increase) in debtors 16 (16) 24
Increase/(decrease) in creditors 11 (6) 30
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 319 246 391
- -----------------------------------------------------------------------------------------------------------------------------
6 NET DEBT
Net debt, other than short-term creditors and accruals
- -----------------------------------------------------------------------------------------------------------------------------
Convertible Notes 893 893 890
Other Notes and Debentures 2,528 2,560 2,529
Bank facility 2,000 1,969 2,000
Other loans 7 35 9
Vendor financing and obligations under finance leases and hire
purchase contracts 194 221 231
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DEBT 5,622 5,678 5,659
Less cash at bank and in hand (394) (351) (390)
- -----------------------------------------------------------------------------------------------------------------------------
NET DEBT (before restricted cash deposits) 5,228 5,327 5,269
- -----------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF MOVEMENTS IN CASH AND DEPOSITS 31 DEC CASH 30 SEP
2002 FLOW 2003
(POUND)M (POUND)M (POUND)M
- -----------------------------------------------------------------------------------------------------------------------------
Decrease in cash at bank and in hand 153 (13) 140
Increase in short term deposits 237 17 254
- -----------------------------------------------------------------------------------------------------------------------------
390 4 394
- -----------------------------------------------------------------------------------------------------------------------------
Increase in cash deposits restricted for more than one year 12 1 13
- -----------------------------------------------------------------------------------------------------------------------------
7 EXCEPTIONAL ITEMS
During the nine months ended 30 September 2003, the Group incurred (pound)16
million of exceptional legal and professional costs in respect of its balance
sheet restructuring.
12
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS (CONTINUED)
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- --------------------------------------------------------------------------------
8 CAPITAL EXPENDITURE
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 (which represents Fixed
Asset Additions on an accruals basis) 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
FOR THE QUARTERS ENDED
30 SEP 2003 30 JUN 2003 31 MAR 2003
(POUND)M (POUND)M (POUND)M
- -------------------------------------------------------------------------------------------------------
NCTA Capital Expenditure
CPE 23 20 25
Scaleable Infrastructure 12 5 13
Commercial 9 7 16
Line Extensions 1 1 1
Upgrade/Rebuild - - 3
Support Capital 10 5 7
- -------------------------------------------------------------------------------------------------------
Total NCTA Capital Expenditure 55 38 65
Non NCTA Capital Expenditure
Content - 1 -
- -------------------------------------------------------------------------------------------------------
TOTAL CAPITAL EXPENDITURE 55 39 65
- -------------------------------------------------------------------------------------------------------
NCTA CAPITAL EXPENDITURE DEFINITIONS
CPE - Costs incurred at the customer house to secure new customers, revenue
units and additional bandwidth revenues. Includes connections to previously
unserved houses in accordance with FAS 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 fibre, coaxial cable, amplifiers, electronic equipment,
make-ready and design/engineering
Upgrade/Rebuild - Costs to modify or replace existing coax and fibre networks.
Includes materials, contract labour, in-house labour, 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
13
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED QUARTERLY CONSOLIDATED PROFIT AND LOSS ACCOUNTS
FOR THE QUARTERS ENDED
- -----------------------------------------------------------------------------------------------------------------------------------
30 SEP 30 JUN 31 MAR 31 DEC 30 SEP
2003 2003 2003 2002 2002
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- -----------------------------------------------------------------------------------------------------------------------------------
TURNOVER
Consumer Division:
Cable television 79 79 79 81 82
Telephony 117 120 117 122 122
Internet and other (31 Dec 2002 before exceptional item of(pound)16m) 31 29 26 23 22
- -----------------------------------------------------------------------------------------------------------------------------------
227 228 222 226 226
Business Division 69 68 69 68 68
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CABLE DIVISION 296 296 291 294 294
- -----------------------------------------------------------------------------------------------------------------------------------
Content Division
Programming, transactional and interactive 27 26 27 27 27
revenues
Share of joint ventures' turnover (UKTV) 16 17 17 16 15
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CONTENT DIVISION 43 43 44 43 42
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL TURNOVER (see 1 below) 339 339 335 337 336
Less: share of joint ventures' turnover (16) (17) (17) (16) (15)
- -----------------------------------------------------------------------------------------------------------------------------------
GROUP TURNOVER 323 322 318 321 321
TOTAL OPERATING COSTS before exceptional items (335) (342) (340) (375) (382)
EXCEPTIONAL ITEMS (see 2 below) (9) (4) (3) (1,611) -
- -----------------------------------------------------------------------------------------------------------------------------------
GROUP OPERATING LOSS (after exceptional items) (21) (24) (25) (1,665) (61)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Group Turnover (31 Dec 2002 before exceptional VAT adjustment) 323 322 318 321 321
Operating expenses (before exceptional items, depreciation and (213) (214) (218) (223) (227)
amortisation)
--------------------------------------------------------------
EBITDA (before exceptional items) 110 108 100 98 94
Exceptional items (9) (4) (3) (38) -
--------------------------------------------------------------
EBITDA (after exceptional items) 101 104 97 60 94
Depreciation and amortisation (122) (128) (122) (152) (155)
Exceptional item - impairment of tangible assets - - - (87) -
Exceptional item - impairment of goodwill - - - (1,486) -
- -----------------------------------------------------------------------------------------------------------------------------------
Group operating loss (after exceptional items) (21) (24) (25) (1,665) (61)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING LOSS (after exceptional items) (17) (20) (21) (1,660) (64)
- -----------------------------------------------------------------------------------------------------------------------------------
LOSS FOR THE FINANCIAL PERIOD (after exceptional items) (119) (21) (187) (1,821) (158)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER ORDINARY SHARE (pence) (4.2) (0.7) (6.5) (63.3) (5.6)
- -----------------------------------------------------------------------------------------------------------------------------------
1 - Total turnover in 31 Dec 2002 is stated before an exceptional item of
(pound)16m.
2 - Exceptional items: in 30 Sep 2003 (pound)9m, 30 Jun 2003 (pound)4m, 31 Mar
2003 (pound)3m and in 31 Dec 2002 (pound)1,611m comprised of (pound)1,595m
charged to operating costs and (pound)16m charged to turnover.
14
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED QUARTERLY CONSOLIDATED ACCOUNTS
FOR THE QUARTERS ENDED
- ----------------------------------------------------------------------------------------------------------------------------
30 SEP 30 JUN 31 MAR 31 DEC 30 SEP
2003 2003 2003 2002 2002
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING COSTS
COST OF SALES:
Consumer programming expenses 31 30 32 32 31
Business and consumer telephony expenses 47 49 51 53 52
Content Division cost of sales 19 18 17 22 17
- ----------------------------------------------------------------------------------------------------------------------------
PRIME COST OF SALES (COST OF SALES BEFORE DEPRECIATION) 97 97 100 107 100
Depreciation of tangible fixed assets 117 122 116 123 125
Exceptional write down of tangible fixed assets - - - 87 -
- ----------------------------------------------------------------------------------------------------------------------------
214 219 216 317 225
- ----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATION EXPENSES:
Selling, general and administrative expenses 116 117 118 116 127
Exceptional selling, general and administrative expenses 9 4 3 22 -
Amortisation of goodwill and intangible assets 5 6 6 29 30
Exceptional impairment of goodwill - - - 1,486 -
- ----------------------------------------------------------------------------------------------------------------------------
130 127 127 1,653 157
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING COSTS 344 346 343 1,970 382
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST RECEIVABLE AND SIMILAR INCOME
Interest receivable 5 6 6 6 5
Exchange gains on foreign currency translation 15 117 - 46 58
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST RECEIVABLE AND SIMILAR INCOME 20 123 6 52 63
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST PAYABLE AND SIMILAR CHARGES
Share of interest of associated 2 3 1 2 1
undertakings and joint ventures
On bank loans 36 35 36 38 36
Finance costs of Notes and Debentures 81 81 81 72 84
Finance charges payable in respect of 4 4 4 4 4
finance leases and hire purchase contracts
Exchange losses on foreign currency translation - - 48 (13) (6)
Other (31 Dec 2002 includes exceptional items(pound)31m) 1 (1) 1 32 2
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST PAYABLE AND SIMILAR CHARGES 124 122 171 135 121
- ----------------------------------------------------------------------------------------------------------------------------
NET DEBT
Net debt, other than short-term creditors and accruals
- ----------------------------------------------------------------------------------------------------------------------------
Convertible Notes 893 891 901 890 893
Other Notes and Debentures 2,528 2,517 2,591 2,529 2,560
Bank facility 2,000 2,000 2,000 2,000 1,969
Other loans 7 8 8 9 35
Vendor financing and obligations under finance 194 203 207 231 221
leases and hire purchase contracts
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL DEBT 5,622 5,619 5,707 5,659 5,678
Less cash at bank and in hand (394) (405) (390) (390) (351)
- ----------------------------------------------------------------------------------------------------------------------------
NET DEBT 5,228 5,214 5,317 5,269 5,327
- ----------------------------------------------------------------------------------------------------------------------------
15
TELEWEST COMMUNICATIONS PLC
OPERATING STATISTICS - UNAUDITED
FOR THE QUARTERS ENDED
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER DIVISION 30 SEP 30 JUN 31 MAR 31 DEC 30 SEP
2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
CUSTOMERS
Homes passed 4,891,492 4,894,069 4,893,525 4,895,956 4,913,954
Homes passed and marketed 4,679,688 4,686,974 4,690,343 4,699,694 4,697,861
Total customers 1,721,550 1,719,868 1,743,722 1,758,625 1,758,234
Customer additions 62,553 43,684 46,846 69,298 71,773
Customer disconnects (60,871) (67,538) (61,749) (68,907) (83,976)
Net customer movement 1,682 (23,854) (14,903) 391 (12,203)
Household churn (annualised) (1) 14.2% 15.6% 14.1% 15.7% 19.0%
Household penetration 36.8% 36.7% 37.2% 37.4% 37.4%
Cable television only subscribers 95,429 99,226 111,078 116,508 121,014
Residential telephony only subscribers 362,971 378,169 387,937 395,133 399,729
Broadband only subscribers 23,491 21,928 21,007 18,398 14,355
Dual service subscribers (2) 983,268 992,753 1,016,750 1,045,443 1,068,308
Triple service subscribers (3) 256,391 227,792 206,950 183,143 154,828
% of dual or triple play subscribers 72.0% 71.0% 70.2% 69.9% 69.6%
% of triple play subscribers 14.9% 13.2% 11.9% 10.4% 8.8%
RGUs (4) 3,217,600 3,168,205 3,174,372 3,170,354 3,136,198
RGUs per customer 1.87 1.84 1.82 1.80 1.78
Average monthly revenue per customer (5) (pound)43.93 (pound)43.61 (pound)41.83 (pound)41.96 (pound)41.59
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNET
Dial-up (metered) subscribers 52,353 64,958 72,481 85,025 96,309
Dial-up (unmetered) subscribers 190,571 193,406 199,774 193,201 187,861
Broadband subscribers 367,410 329,336 299,221 262,219 216,173
Total Internet subscribers 610,334 587,700 571,476 540,445 500,343
Broadband net additions 38,074 30,115 37,002 46,046 38,779
Broadband homes passed and marketed 4,292,032 4,294,480 4,299,000 4,304,422 4,301,504
Broadband penetration 8.6% 7.7% 7.0% 6.1% 5.0%
Broadband churn (annualised) 14.7% 13.2% 12.1% 12.6% 15.0%
Broadband average monthly revenue (pound)22.52 (pound)22.95 (pound)22.50 (pound)23.71 (pound)25.02
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONY
Telephony subscribers 1,591,641 1,588,358 1,601,606 1,614,324 1,615,190
Telephony lines 1,673,065 1,675,808 1,696,483 1,717,191 1,725,904
Second line penetration 5.1% 5.5% 5.9% 6.4% 6.9%
Talk subscribers (unmetered) 427,092 397,485 381,620 360,662 346,285
Telephony subscriber net additions 3,283 (13,248) (12,718) (866) (10,815)
Telephony homes passed and marketed 4,678,970 4,680,349 4,689,626 4,698,574 4,696,599
Telephony penetration 34.0% 33.9% 34.2% 34.4% 34.4%
Telephony churn (annualised) 14.2% 13.8% 14.1% 15.8% 19.0%
Telephony average monthly revenue per subscriber (pound)24.53 (pound)24.68 (pound)23.88 (pound)24.71 (pound)24.78
- -----------------------------------------------------------------------------------------------------------------------------------
TELEVISION
Digital television subscribers 945,595 911,191 887,306 857,472 829,196
Analogue television subscribers 312,954 339,320 386,239 436,339 475,639
Total television subscribers 1,258,549 1,250,511 1,273,545 1,293,811 1,304,835
Television subscriber net additions 8,038 (23,034) (20,266) (11,024) (28,248)
Television homes passed and marketed 4,679,688 4,686,974 4,690,343 4,699,694 4,697,861
Digital homes passed and marketed 4,292,032 4,294,480 4,299,000 4,304,422 4,301,504
Television penetration 26.9% 26.7% 27.2% 27.5% 27.8%
Television churn (annualised) 16.9% 19.8% 18.6% 19.6% 23.9%
Television average monthly revenue (pound)20.93 (pound)20.97 (pound)20.50 (pound)20.61 (pound)20.36
- -----------------------------------------------------------------------------------------------------------------------------------
16
TELEWEST COMMUNICATIONS PLC
OPERATING STATISTICS - UNAUDITED (CONTINUED)
FOR THE QUARTERS ENDED
- ----------------------------------------------------------------------------------------------------------------------------------
BUSINESS DIVISION 30 SEP 30 JUN 31 MAR 31 DEC 30 SEP
2003 2003 2003 2002 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Business customer accounts 69,921 70,782 72,662 73,746 74,052
Business telephony lines 464,751 462,883 463,484 466,820 458,388
Average business lines per customer account 6.6 6.5 6.4 6.3 6.2
Average annualised monthly revenue per business line
(pound)41.28 (pound)41.42 (pound)41.81 (pound)41.96 (pound)42.33
Average revenue per customer account (pound)3,182 (pound)3,144 (pound)3,134 (pound)3,114 (pound)3,119
- ----------------------------------------------------------------------------------------------------------------------------------
CONTENT DIVISION
Pay multichannel subscribers 10,146,940 9,975,732 9,916,011 9,764,233 9,624,498
Flextech share of basic viewing (6) 19.6% 18.6% 18.8% 19.9% 19.9%
Share of total TV advertising revenues (7) 4.0% 4.0% 3.9% 3.8% 3.5%
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Churn (annualised) represents four times the total number of customers
who disconnected or were disconnected during the quarter divided by the
average number of customers in the quarter. Customers who move premises
within Telewest's addressable areas and retain Telewest's services are
excluded from this churn calculation. The same methodology is used for
broadband, telephony and television churn
(2) Dual service subscribers are those subscribers who take any two of
Telewest's television, telephony and broadband internet services
(3) Triple service subscribers are those subscribers who take all three of
Telewest's television, telephony and broadband internet services
(4) RGUs or Revenue Generating Units represent total broadband, telephony and
television subscribers. This definition is in accordance with the
National Cable & Telecommunications Association (NCTA) reporting
guidelines. Dial-up internet subscribers, second telephone lines and
additional TV outlets are not included although they are revenue
generating for Telewest.
(5) Average monthly revenue per customer (often referred to as "ARPU" or
"Average Revenue per User") represents (i) the total quarterly revenue of
residential customers including installation revenues divided by the (ii)
the average number of residential customers in the quarter. The same
methodology is used for broadband, telephony and television ARPU
(6) Basic viewing over 24 hours in pay-TV homes for the quarter
(7) Includes Flextech's wholly owned channels and UKTV's advertising revenues
for the quarter
17
TELEWEST COMMUNICATIONS PLC
US GAAP
SUMMARISED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- ------------------------------------------------------------------------------------------------------------------------------------
3 MONTHS 3 MONTHS 3 MONTHS 9 MONTHS 9 MONTHS 9 MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
30 SEP 30 SEP 30 SEP 30 SEP 30 SEP 30 SEP
2003 2003 2002 2003 2003 2002
$M (POUND)M (POUND)M $M (POUND)M (POUND)M
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE
Cable television 131 79 81 394 237 254
Consumer telephony 194 117 122 588 354 373
Internet and other 52 31 23 143 86 57
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CONSUMER DIVISION 377 227 226 1,125 677 684
Business Services Division 118 71 70 349 210 213
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CABLE DIVISION 495 298 296 1,474 887 897
Content Division 45 27 27 133 80 79
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 540 325 323 1,607 967 976
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Consumer programming expenses (51) (31) (31) (155) (93) (96)
Business and consumer telephony expenses (78) (47) (52) (244) (147) (165)
Content expenses (32) (19) (17) (90) (54) (48)
Depreciation (160) (96) (126) (489) (294) (372)
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales (321) (193) (226) (978) (588) (681)
Selling, general and administrative expenses (211) (127) (128) (613) (369) (386)
- ------------------------------------------------------------------------------------------------------------------------------------
(532) (320) (354) (1,591) (957) (1,067)
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT/(LOSS) 8 5 (31) 16 10 (91)
OTHER INCOME/(EXPENSE)
Interest income 8 5 6 28 17 13
Interest expense (191) (115) (145) (597) (359) (397)
Foreign exchange gains, net 25 15 69 140 84 153
Share of net profits/(losses) of affiliates 3 2 (4) 7 4 (5)
Other, net 2 1 (30) - - 4
- ------------------------------------------------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (145) (87) (135) (406) (244) (323)
Income tax benefit 3 2 1 7 4 5
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOSS (142) (85) (134) (399) (240) (318)
- ------------------------------------------------------------------------------------------------------------------------------------
Basic and diluted loss per ordinary share $(0.05) (pound)(0.03) (pound)(0.05) $(0.13) (pound)(0.08) (pound)(0.11)
- ------------------------------------------------------------------------------------------------------------------------------------
Operating profit/(loss) 8 5 (31) 16 10 (91)
Add: depreciation 160 96 126 489 294 372
- ------------------------------------------------------------------------------------------------------------------------------------
EBITDA (AFTER NON-CASH SHARE-BASED COMPENSATION 168 101 95 505 304 281
CREDIT)
Less: non-cash share-based compensation credit - - - - - (1)
- ------------------------------------------------------------------------------------------------------------------------------------
EBITDA (BEFORE NON-CASH SHARE-BASED COMPENSATION 168 101 95 505 304 280
CREDIT)
- ------------------------------------------------------------------------------------------------------------------------------------
The consolidated financial information as set out on pages 18 to 20, which is
unaudited, has been prepared on the basis of the accounting policies set out in
Telewest's Annual Report, other than where changes are necessary to implement
new accounting standards. The economic environment in which the Company operates
is the United Kingdom and hence its reporting currency is Pounds Sterling
("(pound)"). Merely for convenience, the financial statements contain
translation of certain Pounds Sterling amounts into US Dollars ("$") at $1.6620
per (pound)1.00, the noon buying rate of the Federal Reserve Bank of New York on
30 September 2003. The presentation of the US Dollar amounts should not be
construed as a representation that the Pounds Sterling amounts could be so
converted into US Dollars at the rate indicated or at any other rate.
18
TELEWEST COMMUNICATIONS PLC
US GAAP
SUMMARISED UNAUDITED CONSOLIDATED BALANCE SHEETS
AS AT 30 SEPTEMBER
- -----------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 31 DEC
2003 2003 2002
$M (POUND)M (POUND)M
- -----------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents 655 394 390
Secured cash deposits restricted for more than one year 22 13 12
Receivables and prepaid expenses 314 189 215
- -----------------------------------------------------------------------------------------------------------
Total current assets 991 596 617
Investments 605 364 376
Property and equipment 4,095 2,464 2,598
Goodwill and other intangibles 743 447 447
Inventory 63 38 28
Other assets 48 29 40
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 6,545 3,938 4,106
- -----------------------------------------------------------------------------------------------------------
LIABILITIES
Debt 9,030 5,433 5,450
Other liabilities 1,847 1,111 1,030
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 10,877 6,544 6,480
MINORITY INTERESTS (2) (1) (1)
SHAREHOLDERS' DEFICIT (4,330) (2,605) (2,373)
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT 6,545 3,938 4,106
- -----------------------------------------------------------------------------------------------------------
19
TELEWEST COMMUNICATIONS PLC
US GAAP
SUMMARISED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
- --------------------------------------------------------------------------------------------------------------------------------
30 SEP 30 SEP 30 SEP
2003 2003 2002
$M (POUND)M (POUND)M
- --------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (399) (240) (318)
Adjustments to reconcile net loss to net cash provided by/(used in) operating
activities:
Depreciation 489 294 372
Loss on revaluation of investment - - 30
Amortisation of deferred financing costs and issue discount on Senior Discount Debentures 130 78 82
Deferred tax credit (7) (4) (5)
Unrealised gains on foreign currency translation (140) (84) (153)
Non-cash share-based compensation credit - - (1)
Share of net (profits)/losses of affiliates (7) (4) 5
Changes in operating assets and liabilities, net of effect of acquisition of
subsidiaries:
Change in receivables 40 24 3
Change in prepaid expenses (8) (5) 8
Change in other assets (16) (10) (3)
Change in accounts payable 5 3 (20)
Change in other liabilities 239 144 (12)
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES 326 196 (12)
NET CASH USED IN INVESTING ACTIVITIES (249) (150) (328)
NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES (70) (42) 677
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7 4 337
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 648 390 14
- --------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 655 394 351
- --------------------------------------------------------------------------------------------------------------------------------
20