EXHIBIT 99.1
13 MAY 2004
TELEWEST COMMUNICATIONS PLC
1ST QUARTER RESULTS 2004
FIRST QUARTER HIGHLIGHTS (UK GAAP)
FINANCIAL
o NET LOSS OF (POUND)36M REDUCED FROM (POUND)187M IN Q1 2003
o GROUP OPERATING LOSS OF (POUND)7M REDUCED FROM (POUND)25M IN Q1 2003
o GROUP OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS OF (POUND)2M COMPARED
TO (POUND)22M LOSS IN Q1 2003
o GENERATED (POUND)17M NET CASH INFLOW BEFORE USE OF LIQUID RESOURCES
AND FINANCING
OPERATIONAL
o ADDED 51,000 NET BROADBAND INTERNET SUBSCRIBERS IN Q1 2004
o ADDED 12,000 NET HOUSEHOLD CUSTOMERS AND 77,000 REVENUE GENERATING
UNITS IN Q1 2004
o RECORD AVERAGE REVENUE PER USER OF (POUND)45.05 PER MONTH OR
(POUND)541 ANNUALISED
o FINANCIAL RESTRUCTURING: CREDITOR AND SHAREHOLDER DOCUMENTS POSTED AND
MEETING DATES SET
London - Telewest Communications plc today reported financial results for the
first quarter ended 31 March 2004. Barry Elson, Acting Chief Executive Officer
of Telewest Communications plc commented:
"Today's results reflect a good first quarter with customer and RGU growth,
increased ARPU and continued cost control producing positive cash flow before
financing. Broadband growth, successful marketing and the value of our product
bundles are helping us to deliver good results in an increasingly competitive
environment.
We are building on our broadband leadership in our addressable areas and have
498,000 broadband internet subscribers as at 12 May 2004. We believe we now
offer a comprehensive and compelling range of services and we have now increased
broadband connection speeds by around 50 percent, at no additional cost to
customers.
Growing "triple play" penetration, now at 18.9% and improving customer care are
reducing churn, with household churn down at less than 1% per month.
Our content segment and our business sales division are also both showing strong
growth in advertising and data revenues, respectively.
We expect our focus on customer care, broadband and cost control will help us
continue to produce customer growth, good operating results and positive free
cash flow for the full year.
We are also pleased that we have now posted documents and set dates for meetings
of our shareholders and bondholders to seek approval for our proposed financial
restructuring and look forward to the completion of this process."
ENQUIRIES: INVESTORS
Richard Williams Head of investor relations 020 7299 5479
Vani Gupta Investor relations manager 020 7299 5353
MEDIA
Jane Hardman Director of corporate communications 020 7299 5888
Citigate Dewe Rogerson: Anthony Carlisle 07973 611888
Sue Pemberton 07779 572711
OPERATING RESULTS
COMPARISON OF THREE-MONTH PERIODS ENDED 31 MARCH 2004 AND 2003
Except where otherwise stated in this section, all comparisons compare the
three-month period ended 31 March 2004 to the three-month period ended 31 March
2003. All quarterly financial information is unaudited.
Total turnover (including our share of UKTV, our joint venture with the BBC)
increased (pound)9 million or 3% from (pound)335 million to (pound)344 million.
This increase reflects growth in cable segment revenue of (pound)9 million or
3%.
CABLE SEGMENT
CONSUMER SALES DIVISION
Three months Three months Percentage
ended 31 Mar 2004 ended 31 Mar 2003 inc/(dec)
Revenue (in(pound)millions)
Cable television 81 79 3%
Telephony 117 117 -
Internet 37 26 42%
----------------------------------------------------
Total Consumer Sales Division 235 222 6%
====================================================
Consumer sales division revenue increased 6% from (pound)222 million to
(pound)235 million, primarily due to an (pound)11 million growth in internet
revenues.
Overall, the consumer sales division's Average Revenue Per User ("ARPU") for the
quarter was up 8% to (pound)45.05 reflecting price rises and increasing
broadband internet and "triple play" penetration. During the quarter, customer
growth continued and the number of household customers increased by 12,000.
Growth was also helped by the reduction in quarterly annualised household churn
from 14.1% to 11.6% (1.0% per month) as we continued to concentrate on improving
customer care and improving the quality of customers acquired. These
improvements are also reflected in our call centre statistics. Our average speed
of answer is 13 seconds and we are answering 90% of calls in under 30 seconds.
Our customer care improvements have recently been noted by Good Housekeeping
magazine, which placed Telewest top of a survey of call centre performance for
speed of answer, helpfulness and efficiency of service.
CABLE TELEVISION REVENUE
Cable television revenues increased (pound)2 million to (pound)81 million due
mainly to an improvement in TV ARPU, which grew to (pound)21.18 from
(pound)20.50. This was due to a basic price increase in April 2003, together
with increased premium channel penetration.
The number of TV subscribers rose by 14,000 in the first quarter of 2004
compared to losses of 20,000 in the first quarter of 2003 as a result of
successful marketing, particularly for product bundles. TV churn has fallen to
14.4% from 18.6%.
At the quarter-end, 80% of our TV subscribers took our digital service compared
with 70% at the end of the first quarter of 2003. 94% of our network has been
upgraded for broadband and digital. We have started to upgrade the last
remaining sections of our network that have been unable to receive digital
television or broadband.
TELEPHONY REVENUE
Telephony revenues remained level at (pound)117 million as revenue increases
resulting from customers migrating to flat rate packages were offset by loss of
revenue due to the sale of our Indirect Access telephony business in July 2003.
The number of telephony subscribers increased by 12,000 in the first quarter
compared to losses of 13,000 in the comparative period in 2003. Telephony ARPU
per subscriber increased to (pound)24.20 from (pound)23.88 due to the increased
proportion of customers on flat rate "Talk" packages. Telephony churn fell from
14.1% to 11.7%.
2
INTERNET REVENUE
Internet revenues increased 42% from (pound)26 million to (pound)37 million due
to growth in the number of broadband internet subscribers.
The success of our broadband internet products was reflected in an acceleration
of subscriber growth with net broadband additions of 51,000 in the first
quarter. At the quarter end, we had 465,000 broadband internet subscribers.
Growth has remained strong since the quarter end and as at 12 May 2004, we had
498,000 broadband internet subscribers. 71% of broadband customers subscribe to
the full "triple play" and 94% to at least one other product.
We believe that we are the broadband internet market leader in our addressable
areas - those areas of the country where consumers are able to receive our
broadband internet services. We are moving to strengthen our leadership position
further and during the quarter we added a new tier of broadband internet service
at 256Kb in order to broaden the appeal of our range of broadband internet
products. In addition, on 26 April 2004, we announced plans to increase by
around 50% the connection speeds of our top three broadband tiers at no
additional cost to our customers. The standard blueyonder broadband service will
increase in speed from 512Kb to 750Kb. The 1Mb and 2Mb services will increase to
speeds of 1.5Mb and 3Mb respectively.
Broadband continues to prove successful in attracting new customers to Telewest.
In the first quarter, 34% of broadband installations were for customers who were
not existing customers of the Company.
Broadband ARPU was (pound)22.57, up marginally from (pound)22.50. Broadband
churn at 12.0% was down from 12.1% in the first quarter of 2003.
BUSINESS SALES DIVISION
The business sales division's revenue decreased (pound)4 million to (pound)65
million. (pound)2 million of this reduction resulted from lower Carrier Services
sales. Within the business sales division, our shift in emphasis towards the
faster growing data market that provides a better margin has seen data revenues
grow by 21%. In the business voice market, competitive pressures have remained
strong, negatively impacting growth.
CONTENT SEGMENT
THREE MONTHS ENDED THREE MONTHS ENDED PERCENTAGE
31 MAR 2004 31 MAR 2003 INC/(DEC)
REVENUE (IN(POUND)MILLIONS)
Programming, transactional and interactive revenues 26 27 (4%)
Share of joint ventures' turnover (UKTV) 18 17 6%
------------------------------------------------------
Total Content segment 44 44 -
======================================================
Content segment revenues remained flat at (pound)44 million as increases in the
main revenue streams of advertising and subscription were offset by a decline in
other non-core revenues. Advertising revenues of (pound)23 million (including
our 50% share of UKTV) were up 15% compared to a 2% growth in the overall
market. The content segment grew its market share with a 4.5% share of the TV
advertising market in the UK, up from 3.9%. Subscription revenues of (pound)19
million (including our 50% share of UKTV) were up 12%.
COMBINED CABLE AND CONTENT SEGMENTS
THREE THREE THREE THREE THREE THREE
MONTHS MONTHS MONTHS MONTHS MONTHS MONTHS
ENDED 31 ENDED 31 ENDED 31 ENDED 31 ENDED 31 ENDED 31
MAR 2004 MAR 2004 MAR 2004 MAR 2003 MAR 2003 MAR 2003
BEFORE BEFORE
OPERATING COSTS AND EXPENSES EXCEPT'L EXCEPT'L EXCEPT'L EXCEPT'L PERCENT
(IN (POUND)MILLIONS) ITEMS ITEMS TOTAL ITEMS ITEMS TOTAL INC/(DEC)
Cable programming expenses 33 - 33 32 - 32 3%
Cable telephony expenses 46 - 46 51 - 51 (10%)
Content segment cost of sales 16 - 16 17 - 17 (6%)
Depreciation of tangible fixed assets 114 - 114 116 - 116 (2%)
SG&A expenses 110 9 119 118 3 121 (2%)
Amortisation of goodwill and intangible assets 5 - 5 6 - 6 (17%)
---------------------------------------------------------------------------
Total operating costs 324 9 333 340 3 343 (3%)
===========================================================================
3
Total operating costs were (pound)333 million, down 3% from (pound)343 million.
Total operating costs and expenses (excluding the exceptional SG&A expenses)
decreased by (pound)16 million or 5% from (pound)340 million tO (pound)324
million.
Gross margin (Group revenue less cost of sales before deducting depreciation)
increased from 69% to 71% with improvements in telephony margins and the growing
number of high margin broadband subscribers offsetting declines in television
margins. Telephony margins improved from 73% to 75% due to lower telephony
interconnection costs. Television margins fell from 60% to 59% due to increases
in the cost of premium programming.
Reflecting our continued focus on reducing costs, selling, general and
administrative expenses ("SG&A") decreased 7% to (pound)110 million excluding
exceptional items, due mainly to headcount reductions, lower redundancy costs
and enhanced bad debt savings achieved through improved credit policies.
Including the impact of exceptional SG&A expenses, SG&A decreased by (pound)2
million to (pound)119 million, despite an increase of (pouND)6 million relating
to exceptional legal and professional costs of the Company's Financial
Restructuring.
GROUP OPERATING PROFIT/(LOSS)
Group operating loss was (pound)7 million, down (pound)18 million from a
(pound)25 million loss. The improvement resulted from increased rEVEnues and
lower operating costs offset by increased exceptional charges in relation to the
Company's Financial Restructuring.
Before exceptional items the Group made an operating profit of (pound)2 million
compared to an operating loss before exceptional items of (pouND)22 million.
NET LOSS
Net loss for the quarter decreased from (pound)187 million to (pound)36 million.
The movement resulted principally from foreign exchange lossES on our
dollar-denominated debt in the first quarter of 2003 being replaced by exchange
gains in the first quarter of 2004 resulting in an improvement of (pound)125
million.
Net loss for the quarter before exceptional items decreased from (pound)181
million to (pound)21 million. The movement resulted principally FRom the
movement in net foreign exchange gains described above as a result of the
decreasing value of the US dollar versus the pound sterling.
LIQUIDITY AND CAPITAL RESOURCES
Net cash inflow before use of liquid resources and financing for the quarter was
(pound)17 million compared to (pound)7 million in 2003.
Capital expenditure, on an accruals basis, declined by 20% to (pound)52 million.
The reduction was due mainly to improved utilisation of our network assets and
falling electronic equipment prices. We have included disclosure of capital
expenditure in accordance with National Cable and Telecommunications Association
guidelines in note 9.
As at 31 March 2004, net debt was (pound)5,357 million. This consisted of
(pound)3,640 million of notes and debentures, (including (pound)400 Million of
unpaid accrued interest), (pound)144 million of lease financing, (pound)7
million in other loans and (pound)2,000 million drawn down on our bANK facility
("Senior Secured Facility"), offset by cash balances and term deposits of
(pound)434 million.
We are currently in default on our outstanding notes and debentures, certain of
our finance leases and our bank facility. As a result of these defaults, the
senior lenders under our bank facility and many of our other creditors have the
right to accelerate obligations and demand immediate repayment. In current
conditions, we have been able to continue to operate and meet our working
capital needs as a direct result of the continued support of our creditors (in
generally not calling defaults or accelerating their claims) and the Directors'
belief that a financial restructuring is likely to be implemented. Because we
are not making current interest payments on our notes and debentures we have
been able to finance our remaining working capital needs through available cash
and cash generated by operations. However, we do not believe that our creditors
will continue to forebear from declaring defaults if our financial restructuring
is not implemented or it is not implemented in a timely manner.
4
GOING CONCERN
The financial statements included in this press release 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 continues to pursue a financial restructuring
of its balance sheet (the "Financial Restructuring") 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, 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 continued approval of a number of our bankers and various stakeholders.
Inherently, there can be no certainty in relation to any of these matters.
THE FINANCIAL RESTRUCTURING
We have now scheduled meetings of certain of our creditors, principally our
bondholders, and our shareholders to seek approval of various aspects of our
Financial Restructuring. The creditors' meetings are scheduled for 1 June 2004
and our shareholder meeting is scheduled for 21 May 2004. Successful completion
of our Financial Restructuring remains subject to a number of conditions,
including the approval of our creditors and our shareholders.
The terms of our Financial Restructuring would result in:
o the cancellation of all of the outstanding notes and debentures of the
Company and its finance subsidiary in return for the distribution of 98.5%
of the common stock of Telewest Global Inc. ("Telewest Global"), and the
distribution of the remaining 1.5% of Telewest Global's common stock to our
eligible shareholders;
o the execution of an amended Senior Secured Facility or an alternative
refinancing;
o the reorganisation of the Company's corporate structure under Telewest
Global, a holding company incorporated in Delaware; and
o the cessation of dealings in the Company's shares on the London Stock
Exchange and the quotation of Telewest Global's common stock on the Nasdaq
National Market.
Some of the statements in this release constitute "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, as amended. These statements relate to
future events or future financial performance, including, but not limited to,
product introductions and innovation, meeting customer expectations, planned
operational changes (including product improvements), liquidity, customer
service improvements, that involve known and unknown risks, uncertainties and
other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from those expressed or implied by
any forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will," "could," "would," "should,"
"expect," "plan," "anticipate," "intend," "believe," "estimate," "predict,"
"potential," or "continue" or the negative of those terms or other comparable
terminology. These statements are predictions only.
There are a number of important factors that could cause our actual results and
future development to differ materially from those expressed or implied by those
forward-looking statements, including, but not limited to:
o our ability to successfully conclude the restructuring of our balance
sheet;
o the extent to which we are able to compete with other providers of
broadband internet services, including British Telecommunications plc;
o the extent to which consumers regard cable telephony as an attractive
alternative to telephony services provided by, for example British
Telecommunications plc, or the emergence of voice-over-internet protocol as
a viable alternative to cable telephony;
o the extent to which we are able to successfully compete with mobile network
operators;
5
o the extent to which we are able to retain our current customers and attract
new customers;
o the extent to which we are able to migrate customers to additional products
or services or to high-margin products or services;
o the extent to which regulatory and competitive pressures in the UK
telephony market continue to reduce prices;
o our ability to develop and introduce attractive interactive and high-speed
data services in a rapidly changing and highly competitive business
environment;
o our ability to penetrate markets and respond to changes or increases in
competition;
o our ability to compete against digital television service providers,
including British Sky Broadcasting Group plc and Freeview, by increasing
our digital customer base;
o our ability to compete with other internet services providers;
o our ability to have an impact on, or respond to, new or changed government
regulations;
o our ability to improve operating efficiencies, including through cost
reductions;
o our ability to maintain and upgrade our network in a cost-efficient and
timely manner;
o adverse changes in the price or availability of telephony interconnection
or cable television programming; and
o disruption in the supply of programming, services and equipment.
Unless otherwise required by applicable securities laws, we disclaim any
intention or obligation to publicly update or revise any of the forward-looking
statements after the date of this release to conform them to actual results,
whether as a result of new information, future events or otherwise. All of the
forward-looking statements are qualified in their entirety by reference to the
factors discussed under the caption "Risk Factors" in the Registration Statement
on Form S-4 (No. 333-110815) filed by Telewest Global, Inc. with, and declared
effective by, the US Securities and Exchange Commission on April 28, 2004, which
describe risks and factors that could cause results to differ materially from
those projected in those forward-looking statements.
6
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTS
FOR THE THREE MONTHS ENDED 31 MARCH
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
31 MAR 31 MAR 31 MAR 31 MAR 31 DEC
2004 2004 2004 2003 2003
BEFORE EXCEPT'L TOTAL TOTAL AUDITED
EXCEPT'L ITEMS RESTATED
ITEMS (NOTE 8) (NOTE 1)
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
TURNOVER
Consumer Sales Division:
Cable television 81 - 81 79 317
Telephony 117 - 117 117 470
Internet 37 - 37 26 120
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
235 - 235 222 907
Business Sales Division 65 - 65 69 273
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
TOTAL CABLE SEGMENT 300 - 300 291 1,180
CONTENT SEGMENT
Programming, transactional and interactive revenues 26 - 26 27 112
Share of joint ventures' turnover (UKTV) 18 - 18 17 69
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
TOTAL CONTENT SEGMENT 44 - 44 44 181
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
TOTAL TURNOVER 344 - 344 335 1,361
Less: share of joint ventures' turnover (UKTV) (18) - (18) (17) (69)
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
GROUP TURNOVER (note 2) 326 - 326 318 1,292
TOTAL OPERATING COSTS (note 3) (324) (9) (333) (343) (1,379)
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
GROUP OPERATING PROFIT/(LOSS) (note 2) 2 (9) (7) (25) (87)
SHARE OF OPERATING PROFITS OF JOINT VENTURES 6 - 6 5 16
SHARE OF OPERATING LOSSES OF ASSOCIATED UNDERTAKINGS (1) - (1) (1) (2)
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
TOTAL OPERATING PROFIT/(LOSS) 7 (9) (2) (21) (73)
PROFIT ON DISPOSAL OF FIXED ASSETS - - - - 8
PROFIT ON DISPOSAL OF INVESTMENTS - - - - 1
INTEREST RECEIVABLE AND SIMILAR INCOME (note 4) 84 - 84 6 292
AMOUNTS WRITTEN OFF INVESTMENTS (1) - (1) - (1)
INTEREST PAYABLE AND SIMILAR CHARGES (note 5) (111) (6) (117) (171) (503)
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (21) (15) (36) (186) (276)
TAX ON LOSS ON ORDINARY ACTIVITIES - - - (1) 4
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (21) (15) (36) (187) (272)
MINORITY INTERESTS - - - - -
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
LOSS FOR THE FINANCIAL PERIOD (21) (15) (36) (187) (272)
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
BASIC AND DILUTED LOSS PER ORDINARY SHARE (pence) (0.7) (0.5) (1.2) (6.5) (9.5)
- -------------------------------------------------------------- ------------ ------------ ------------ -------------- ------------
The financial information presented above reflects the continuing operations of
the business. The consolidated financial information set out on pages 7 to 12,
has been prepared on a going concern basis, applying the accounting policies set
out in Telewest's Annual Financial Statements; the appropriateness of the going
concern basis is discussed further on page 5. The audited consolidated financial
information, set out on pages 7 to 12, does not constitute the Company's
statutory accounts for the year ended 31 December 2003 but is derived from those
accounts. Statutory accounts for 2003 will be delivered to the Registrar of
Companies following the Company's forthcoming Annual General Meeting. 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.
7
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED CONSOLIDATED BALANCE SHEETS
AS AT 31 MARCH
- -----------------------------------------------------------------------------------------------------------------
31 MAR 31 MAR 31 DEC
2004 2003 2003
RESTATED AUDITED
(NOTE 1)
(POUND)M (POUND)M (POUND)M
--------- --------- ---------
FIXED ASSETS
Intangible assets 146 155 148
Tangible assets 3,077 3,346 3,139
Investment in joint ventures:
Share of gross assets 52 67 50
Goodwill 224 237 227
Share of gross liabilities (145) (166) (146)
--------- --------- ---------
131 138 131
Loans to joint ventures 196 202 197
--------- --------- ---------
327 340 328
Investments in associated undertakings and
participating interests 2 7 2
--------- --------- ---------
Total investments 329 347 330
- ------------------------------------------------------------------------------------------------------------------
3,552 3,848 3,617
- ------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Stocks 31 36 27
Debtors 174 219 167
Secured cash deposits restricted for more than one year 13 12 13
Cash at bank and in hand (note 7) 434 390 427
- ------------------------------------------------------------------------------------------------------------------
652 657 634
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
(includes convertible debt of(pound)626m,(pound)925m
and(pound)627m, respectively) (6,245) (6,386) (6,252)
- ------------------------------------------------------------------------------------------------------------------
NET CURRENT LIABILITIES (5,593) (5,729) (5,618)
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES (2,041) (1,881) (2,001)
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (71) (110) (75)
MINORITY INTERESTS 1 1 1
- ------------------------------------------------------------------------------------------------------------------
NET LIABILITIES (2,111) (1,990) (2,075)
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' DEFICIT (2,111) (1,990) (2,075)
- ------------------------------------------------------------------------------------------------------------------
8
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED 31 MARCH
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
31 MAR 31 MAR 31 DEC
2004 2003 2003
AUDITED
(POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH INFLOW FROM OPERATING ACTIVITIES (note 6) 113 111 447
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 3 3 13
Interest received from joint ventures - 3 14
Interest paid (32) (39) (150)
Interest element of finance lease payments (3) (4) (18)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (32) (37) (141)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
TAXATION - Consortium relief received in respect of UKTV 2 - 3
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (66) (67) (228)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE (66) (67) (228)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
ACQUISITIONS AND DISPOSALS
Disposal of associated undertakings - - 10
Investments in subsidiary undertakings - - (1)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH INFLOW FROM ACQUISITIONS AND DISPOSALS - - 9
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 17 7 90
MANAGEMENT OF LIQUID RESOURCES
Net (increase)/decrease in term deposits (note 7) (12) 27 (39)
Net increase in secured deposits (note 7) - - (1)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH (OUTFLOW)/INFLOW FROM MANAGEMENT OF LIQUID RESOURCES (12) 27 (40)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
FINANCING
Repayments of loans made to joint ventures (net) 3 6 7
Repayment of other borrowings - - (1)
Capital element of finance lease payments (13) (13) (58)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
NET CASH OUTFLOW FROM FINANCING (10) (7) (52)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
(DECREASE)/INCREASE IN CASH IN THE YEAR (note 7) (5) 27 (2)
- ------------------------------------------------------------------------------- --------------- --------------- ---------------
9
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS
FOR THE THREE MONTHS ENDED 31 MARCH
- --------------------------------------------------------------------------------
1 RESTATEMENT
Subsequent to the issue of our consolidated financial statements for the year
ended 31 December 2002, we determined the need to adjust the classification of
debt previously reflected as non-current in the consolidated balance sheet at 31
December 2002 and write off deferred issue costs as at that date relating to the
restated debt. Accordingly, the unaudited consolidated accounts as at and for
the three months ended 31 March 2003 also need to be restated. The adjustment of
debt reclassifies (pound)811 million from "Creditors: amounts falling due after
more than one year" to "Creditors: amounts falling due within one year" at 31
March 2003. The write off of the deferred issue costs at 31 December 2002
increases "Creditors: amounts falling due within one year", and "Equity
shareholders' deficit" as at 31 March 2003 by (pound)11 million.
These adjustments have been made because the Company recently determined that
the effect of non-payment of a hedge contract of (pound)10.5 million in 2002
triggered a default on all bond debt with effect from 31 December 2002.
We also determined the need to accrue additional interest of (pound)2 million
relating to bonds in default as at 31 December 2002. This adjustment increases
"Equity shareholders' deficit" and "Creditors: amounts falling due within one
year" by (pound)2 million as at 31 March 2003.
Previously reported interest expense for the three months ended 31 March 2003
included a charge of (pound)3 million in respect of amortisation of deferred
issue costs. This charge has been written back now that all deferred issue costs
have been written off with effect from 31 December 2002. Additionally, a charge
of (pound)3 million has been made in the three months ended 31 March 2003 for
further interest on bonds in default. Consequently, the net effect of these
adjustments to "Interest payable and similar charges" for the three months ended
31 March 2003 is (pound)0.
- -------------------------------------------------------------------------------- ------------------------------
RESTATEMENT IMPACT ON 31
MARCH 2003
AS REPORTED AS RESTATED
(POUND)M (POUND)M
- -------------------------------------------------------------------------------- -------------- ---------------
BALANCE SHEET
Creditors: amounts falling due within one year (5,501) (6,386)
Net current liabilities (4,844) (5,729)
Total assets less current liabilities (996) (1,881)
Creditors: amounts falling due after more than one year (982) (110)
Net liabilities (1,977) (1,990)
Equity shareholders' deficit (1,977) (1,990)
PROFIT AND LOSS ACCOUNT
Interest payable and similar charges - after exceptional items (171) (171)
Loss for the financial period - after exceptional items (187) (187)
Basic and diluted loss per ordinary share (pence) (6.5)P (6.5)P
- -------------------------------------------------------------------------------- -------------- ---------------
- ------------------------------------- --------- ---------- ----------- --------- ------------ ------------ ----------- -----------
2 SEGMENTAL ANALYSIS CABLE CONTENT INTER- TOTAL CABLE CONTENT INTER- TOTAL
SEGMENTAL SEGMENTAL
2004 2004 2004 2004 2003 2003 2003 2003
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- ------------------------------------- --------- ---------- ----------- --------- ------------ ------------ ----------- -----------
Group Turnover 300 29 (3) 326 291 30 (3) 318
Operating expenses (195) (22) 3 (214) (198) (26) 3 (221)
Depreciation and amortisation (117) (2) - (119) (119) (3) - (122)
- ------------------------------------- --------- ---------- ----------- --------- ------------ ------------ ----------- -----------
GROUP OPERATING (LOSS)/PROFIT (12) 5 - (7) (26) 1 - (25)
- ------------------------------------- --------- ---------- ----------- --------- ------------ ------------ ----------- -----------
Note: Included in Cable segment operating expenses are(pound)9m and(pound)3m of
exceptional SG&A expenses in 31 Mar 2004 and 2003, respectively.
10
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS (CONTINUED)
FOR THE THREE MONTHS ENDED 31 MARCH
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
31 MAR 31 MAR 31 DEC
2004 2003 2003
AUDITED
(POUND)M (POUND)M (POUND)M
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
3 TOTAL OPERATING COSTS
COST OF SALES:
Cable programming expenses 33 32 125
Cable telephony expenses 46 51 193
Content segment cost of sales 16 17 81
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
PRIME COST OF SALES (cost of sales before depreciation) 95 100 399
Depreciation of tangible fixed assets 114 116 471
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
209 216 870
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
ADMINISTRATION EXPENSES
Selling, general and administrative expenses
(Includes exceptional items(pound)9m in 31 Mar 2004,(pound)3m in 31 119 121 486
Mar 2003 and(pound)25m in 31 Dec 2003)
Amortisation of goodwill and intangible assets 5 6 23
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
124 127 509
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
TOTAL OPERATING COSTS (Includes exceptional items(pound)9m in 31
Mar 2004,(pound)3m in 31 Mar 2003 and(pound)25m in 31 Dec 2003) 333 343 1,379
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
4 INTEREST RECEIVABLE AND SIMILAR INCOME
Interest receivable from associated undertakings and joint ventures 3 3 11
Bank interest receivable 4 3 13
Exchange gains on foreign currency translation 77 - 268
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
TOTAL INTEREST RECEIVABLE AND SIMILAR INCOME 84 6 292
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
5 INTEREST PAYABLE AND SIMILAR CHARGES
Share of interest of associated undertakings and joint ventures 2 1 8
On bank loans 34 36 144
Finance costs of Notes and Debentures (Includes exceptional items(pound)6m in 31
Mar 2004,(pound)3m in 31 Mar 2003 and (pound)22m in 31 Dec 2003) 78 81 334
Finance charges payable in respect of finance leases and hire purchase contracts 3 4 16
Exchange losses on foreign currency translation - 48 -
Other - 1 1
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
TOTAL INTEREST PAYABLE AND SIMILAR CHARGES (Includes exceptional items(pound)
6m in 31 Mar 2004,(pound)3m in 31 Mar 2003 and(pound)22m in 31 Dec 2003) 117 171 503
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
6 RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Group operating loss (7) (25) (87)
Depreciation of tangible fixed assets 114 116 471
Amortisation of goodwill and intangible assets 5 6 23
Increase in stocks and programming inventory (4) (8) (3)
(Increase)/decrease in debtors (9) (10) 40
Increase in creditors 14 32 3
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 113 111 447
- ----------------------------------------------------------------------------------- ------------ -------------- ---------------
11
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS (CONTINUED)
FOR THE THREE MONTHS ENDED 31 MARCH
- ------------------------------------------------------------------------------------------------------------------------------------
31 MAR 31 MAR 31 DEC
2004 2003 2003
RESTATED AUDITED
(POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------------------------------------------------------------------------
7 NET DEBT
Net debt, other than short-term creditors and accruals
- ------------------------------------------------------------------------------------------------------------------------------------
Convertible Notes (31 Mar 2003 - restated from(pound)901m) 626 925 627
Other Notes and Debentures (31 Mar 2003 - restated from(pound)2,591m) 3,014 2,776 3,011
Bank facility 2,000 2,000 2,000
Other loans 7 8 7
Vendor financing and obligations under finance leases and hire
purchase contracts 144 207 157
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DEBT (31 Mar 2003 - restated from(pound)5,707m) 5,791 5,916 5,802
Less cash at bank and in hand (434) (390) (427)
- ------------------------------------------------------------------------------------------------------------------------------------
NET DEBT (before restricted cash deposits) (31 Mar 2003 - restated from (pound)5,317m) 5,357 5,526 5,375
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Net debt includes (pound)400m, (pound)201m and (pound)352m of unpaid
accrued interest at 31 Mar 2004, 31 Mar 2003 and 31 Dec 2003, respectively.
ANALYSIS OF MOVEMENTS IN CASH AND DEPOSITS 31 DEC CASH 31 MAR
2003 FLOW 2004
(POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in cash at bank and in hand 151 (5) 146
Increase in short term deposits 276 12 288
- ------------------------------------------------------------------------------------------------------------------------------------
427 7 434
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in cash deposits restricted for more than one year 13 - 13
- ------------------------------------------------------------------------------------------------------------------------------------
8 EXCEPTIONAL ITEMS
During the periods presented, the Group incurred the following exceptional
items:
31 MAR 31 MAR 31 DEC
2004 2003 2003
(POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------------------------------------------------------------------------
Costs relating to the Financial Restructuring 9 3 25
Penalty interest on Notes and Debentures in default 6 3 22
- ------------------------------------------------------------------------------------------------------------------------------------
Total exceptional charges 15 6 47
- ------------------------------------------------------------------------------------------------------------------------------------
12
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE SUMMARISED UNAUDITED CONSOLIDATED ACCOUNTS (CONTINUED)
FOR THE THREE MONTHS ENDED 31 MARCH
- --------------------------------------------------------------------------------
9 CAPITAL EXPENDITURE
The following information is unaudited and included for information purposes.
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
31 MAR 2004 31 DEC 2003 30 SEP 2003 30 JUN 2003 31 MAR 2003
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- -----------------------------------------------------------------------------------------------------------------------------------
NCTA Capital Expenditure
CPE 23 25 23 20 25
Scaleable Infrastructure 7 11 12 5 13
Commercial 11 15 9 7 16
Line Extensions 1 - 1 1 1
Upgrade/Rebuild 2 - - - 3
Support Capital 8 12 10 5 7
- -----------------------------------------------------------------------------------------------------------------------------------
Total NCTA Capital Expenditure 52 63 55 38 65
Non NCTA Capital Expenditure
Content segment - 1 - 1 -
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL EXPENDITURE 52 64 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 SFAS 51 and customer premise equipment.
Scaleable Infrastructure - Costs, not CPE or network related, to secure growth
of new customers, revenue units and additional bandwidth revenues or provide
service enhancements.
Commercial - Costs to provide high speed data and telephony services to
businesses and institutions. Includes network and infrastructure expenditures.
Line extensions - Network costs associated with entering new service areas
including costs of 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
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
31 MAR 31 DEC 30 SEP 30 JUN 31 MAR
2004 2003 2003 2003 2003
RESTATED RESTATED RESTATED
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
TURNOVER
Consumer Sales Division:
Cable television 81 80 79 79 79
Telephony 117 116 117 120 117
Internet 37 34 31 29 26
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
235 230 227 228 222
Business Sales Division 65 67 69 68 69
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
TOTAL CABLE SEGMENT 300 297 296 296 291
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
CONTENT SEGMENT
Programming, transactional and interactive 26 32 27 26 27
revenues
Share of joint ventures' turnover (UKTV) 18 19 16 17 17
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
TOTAL CONTENT SEGMENT 44 51 43 43 44
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
TOTAL TURNOVER 344 348 339 339 335
Less: share of joint ventures' turnover (UKTV) (18) (19) (16) (17) (17)
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
GROUP TURNOVER 326 329 323 322 318
TOTAL OPERATING COSTS (after exceptional items) (333) (346) (344) (346) (343)
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
GROUP OPERATING LOSS (after exceptional items) (7) (17) (21) (24) (25)
SHARE OF OPERATING PROFITS OF JOINT VENTURES AND ASSOCIATES 5 2 4 4 4
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
TOTAL OPERATING LOSS (after exceptional items) (2) (15) (17) (20) (21)
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
(LOSS)/PROFIT FOR THE FINANCIAL PERIOD (after exceptional items) (36) 62 (123) (24) (187)
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
BASIC AND DILUTED (LOSS)/PROFIT PER ORDINARY SHARE (pence) (1.2) 2.1 (4.3) (0.8) (6.5)
- --------------------------------------------------------------------- ------------ ------------ ------------ ----------- -----------
1 - Exceptional items: in 31 Mar 2004 (pound)9m, 31 Dec 2003 (pound)9m, 30 Sep
2003 (pound)9m, 30 Jun 2003 (pound)4m, and 31 Mar 2003 (pound)3m charged to
operating costs and also (pound)6m, (pound)8m, (pound)6m, (pound)5m and
(pound)3m, respectively, charged to interest payable.
2 - As a consequence of restating the write off of deferred issue costs in
2002, the quarters ended 31 Mar, 30 Jun and 30 Sep 2003 have been restated by
(pound)3m, (pound)2m and (pound)2m, respectively, in relation to amortisation of
issue costs previously charged in those periods. Also, as a consequence of the
restatement of bond debt in default, we determined the need to accrue additional
interest of (pound)14 million relating to penalty interest for the bonds in
default for the nine-months ended 30 Sep 2003. The interest charges for the
quarters ended 31 Mar, 30 Jun and 30 Sep 2003 have accordingly been increased by
(pound)3m, (pound)5m and (pound)6m, respectively. These net adjustments restate
Finance costs of Notes and Debentures and the Loss for the financial periods
ended 31 Mar, 30 Jun and 30 Sep 2003 by (pound)0, (pound)3m and (pound)4m,
respectively and Basic and diluted loss per ordinary share by 0.0p, 0.1p and
0.1p, respectively.
14
TELEWEST COMMUNICATIONS PLC
UK GAAP
SUMMARISED UNAUDITED QUARTERLY CONSOLIDATED ACCOUNTS
FOR THE QUARTERS ENDED
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
31 MAR 31 DEC 30 SEP 30 JUN 31 MAR
2004 2003 2003 2003 2003
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
TOTAL OPERATING COSTS
COST OF SALES:
Cable programming expenses 33 32 31 30 32
Cable telephony expenses 46 46 47 49 51
Content segment cost of sales 16 27 19 18 17
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
PRIME COST OF SALES (cost of sales before depreciation) 95 105 97 97 100
Depreciation of tangible fixed assets 114 116 117 122 116
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
209 221 214 219 216
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
ADMINISTRATION EXPENSES:
Selling, general and administrative expenses 110 110 116 117 118
Exceptional selling, general and administrative expenses 9 9 9 4 3
Amortisation of goodwill and intangible assets 5 6 5 6 6
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
124 125 130 127 127
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
TOTAL OPERATING COSTS 333 346 344 346 343
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
INTEREST RECEIVABLE AND SIMILAR INCOME
Interest receivable 7 7 5 6 6
Exchange gains on foreign currency translation 77 184 15 117 -
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
TOTAL INTEREST RECEIVABLE AND SIMILAR INCOME 84 191 20 123 6
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
INTEREST PAYABLE AND SIMILAR CHARGES RESTATED RESTATED RESTATED
Share of interest of associated 2 2 2 3 1
undertakings and joint ventures
On bank loans 34 37 36 35 36
Finance costs of Notes and Debentures 72 76 79 79 78
Finance charges payable in respect of 3 4 4 4 4
finance leases and hire purchase contracts
Exchange losses on foreign currency translation - - - - 48
Other - - 1 (1) 1
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
TOTAL INTEREST PAYABLE BEFORE EXCEPTIONAL ITEMS 111 119 122 120 168
Exceptional items 6 8 6 5 3
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
TOTAL INTEREST PAYABLE AND SIMILAR CHARGES 117 127 128 125 171
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
NET DEBT RESTATED RESTATED RESTATED
Net debt, other than short-term creditors and accruals
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
Convertible Notes 626 627 641 633 925
Other Notes and Debentures 3,014 3,011 3,096 3,033 2,776
Bank facility 2,000 2,000 2,000 2,000 2,000
Other loans 7 7 7 8 8
Vendor financing and obligations under finance 144 157 194 203 207
leases and hire purchase contracts
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
TOTAL DEBT 5,791 5,802 5,938 5,877 5,916
Less cash at bank and in hand (434) (427) (394) (405) (390)
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
NET DEBT (before restricted cash deposits) 5,357 5,375 5,544 5,472 5,526
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------ ------------
15
TELEWEST COMMUNICATIONS PLC
QUARTERLY OPERATING DATA - UNAUDITED
FOR THE QUARTERS ENDED
The following table sets out certain operating data for the three-month periods
shown. The information represents combined operating statistics for all of our
franchises.
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE SEGMENT 31 MAR 31 DEC 30 SEP 30 JUN 31 MAR
2004 2003 2003 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER SALES DIVISION
Homes passed 4,897,036 4,899,852 4,891,492 4,894,069 4,893,525
Homes passed and marketed 4,678,182 4,674,764 4,679,688 4,686,974 4,690,343
Dual television and residential
telephony subscribers
853,566 876,142 895,740 913,137 945,486
Dual or triple-service subscribers (1) 1,291,141 1,264,756 1,239,659 1,220,545 1,223,700
Cable television only subscribers 89,601 92,565 95,429 99,226 111,078
Residential telephony only subscribers 333,681 347,122 362,971 378,169 387,937
Internet only subscribers 27,721 25,995 23,491 21,928 21,007
Total residential subscribers 1,742,144 1,730,438 1,721,550 1,719,868 1,743,722
Customer additions 61,997 64,278 62,553 43,684 46,846
Customer disconnects (50,291) (55,390) (60,871) (67,538) (61,749)
Net customer movement 11,706 8,888 1,682 (23,854) (14,903)
RGUs (18) 3,363,240 3,286,706 3,217,600 3,168,205 3,174,372
Net RGU additions 76,534 69,106 49,395 (6,167) 4,018
RGUs per customer 1.93 1.90 1.87 1.84 1.82
Household penetration 37.2% 37.0% 36.8% 36.7% 37.2%
Average household churn (2) 11.6% 12.8% 14.2% 15.6% 14.1%
Percentage of triple-service subscribers (1) 18.9% 16.8% 14.9% 13.2% 11.9%
Percentage of dual or
triple-service subscribers (1) 74.1% 73.1% 72.0% 71.0% 70.2%
Average monthly revenue per subscriber (3) (pound)45.05 (pound)44.42 (pound)43.93 (pound)43.61 (pound)41.83
CABLE TELEVISION
Cable television subscribers - analogue 256,038 284,191 312,954 339,320 386,239
Cable television subscribers - digital 1,029,759 987,873 945,595 911,191 887,306
Total cable television subscribers 1,285,797 1,272,064 1,258,549 1,250,511 1,273,545
Television subscriber net
additions/(disconnects) 13,733 13,515 8,038 (23,034) (20,266)
Penetration (4) 27.5% 27.2% 26.9% 26.7% 27.2%
Average subscriber churn rate (5) 14.4% 15.2% 16.9% 19.8% 18.6%
Average monthly revenue per subscriber (6) (pound)21.18 (pound)21.16 (pound)20.93 (pound)20.97 (pound)20.50
RESIDENTIAL TELEPHONY
3-2-1 subscribers 1,130,171 1,144,474 1,164,549 1,190,873 1,219,986
Talk subscribers (7) 481,976 455,559 427,092 397,485 381,620
Total residential telephony subscribers 1,612,147 1,600,033 1,591,641 1,588,358 1,601,606
Telephony subscriber net additions/(disconnects) 12,114 8,392 3,283 (13,248) (12,718)
Residential telephony penetration (8) 34.5% 34.3% 34.0% 33.9% 34.2%
Residential telephone lines 1,683,281 1,675,854 1,673,065 1,675,808 1,696,483
Second lines penetration 4.4% 4.7% 5.1% 5.5% 5.9%
Average subscriber churn rate (9) 11.7% 12.8% 14.2% 13.8% 14.1%
Average monthly revenue per line (10) (pound)23.14 (pound)23.00 (pound)23.29 (pound)23.35 (pound)22.49
Average monthly revenue per subscriber (11) (pound)24.20 (pound)24.13 (pound)24.53 (pound)24.68 (pound)23.88
INTERNET SUBSCRIBERS
Blueyonder broadband 465,296 414,609 367,410 329,336 299,221
Blueyonder SurfUnlimited 177,250 184,009 190,571 193,406 199,774
Blueyonder pay-as-you-go 50,953 49,368 52,353 64,958 72,481
Total internet subscribers 693,499 647,986 610,334 587,700 571,476
BLUEYONDER BROADBAND
Average subscriber churn rate (12) 12.0% 13.1% 14.7% 13.2% 12.1%
Average monthly revenue per subscriber (13) (pound)22.57 (pound)22.97 (pound)22.52 (pound)22.95 (pound)22.50
Broadband net additions 50,687 47,199 38,074 30,115 37,002
BUSINESS SALES DIVISION
Business customer accounts 67,411 69,269 69,921 70,782 72,662
Average annualised revenue per
customer account (14) (pound)3,260 (pound)3,227 (pound)3,182 (pound)3,144 (pound)3,134
16
TELEWEST COMMUNICATIONS PLC
QUARTERLY OPERATING DATA - UNAUDITED (CONTINUED)
FOR THE QUARTERS ENDED
- ------------------------------------------------------------------------------------------------------------------------------------
CONTENT SEGMENT 31 MAR 31 DEC 30 SEP 30 JUN 31 MAR
2004 2003 2003 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Pay multi-channel subscribers (15) 10,443,301 10,360,056 10,146,940 9,975,732 9,916,011
Flextech share of basic viewing (16) 20.4% 20.2% 19.6% 18.6% 18.8%
Share of total television
advertising revenues (17) 4.5% 3.9% 4.0% 4.0% 3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Notes
(1) Dual-service subscribers are those subscribers who take two of our cable
television, residential telephony and broadband internet services;
triple-service subscribers are those subscribers who take all three of
these services; and dual or triple-service subscribers are those
subscribers who take two or all three of these services.
(2) Average household churn rate for the period represents four times the total
number of subscribers who disconnected during the quarter divided by the
average number of subscribers in the quarter. Subscribers who move premises
within Telewest's addressable areas and retain Telewest's services are
excluded from this churn calculation.
(3) Average monthly revenue per subscriber (often referred to as "ARPU" or
"Average Revenue per User") represents (i) the average monthly revenue of
of residential subscribers for such period, divided by (ii) the average
number of residential subscribers in such period.
(4) Cable television penetration at a specified date represents (i) the total
number of cable television subscribers at that date, divided by (ii) the
total number of homes passed and marketed for cable television at that
date.
(5) Average cable television subscriber churn rate for the period represents
four times the total number of television subscribers who disconnected
during the quarter divided by the average number of subscribers in the
quarter. Subscribers who move premises within Telewest's addressable areas
and retain Telewest's services are excluded from this churn calculation.
(6) Average monthly revenue per cable television subscriber for each period
represents (i) the average monthly cable television revenue for that
period, divided by (ii) the average number of cable television subscribers
in that period.
(7) Includes subscribers to our Talk Unlimited, Talk International and Talk
Evenings and Weekends flat rate telephony services.
(8) Residential telephony penetration at a specified date represents (i) the
total number of residential cable telephony subscribers at that date
divided by (ii) the total number of homes passed and marketed for
residential cable telephony at that date.
(9) Average residential telephony subscriber churn rate for the period
represents four times the total number of telephony subscribers who
disconnected during the quarter divided by the average number of
subscribers in the quarter. Subscribers who move premises within Telewest's
addressable areas and retain Telewest's services are excluded from this
churn calculation.
(10) Average monthly revenue per residential telephony line for each period
represents (i) the average monthly residential cable telephony revenue for
that period, divided by (ii) the average number of residential cable
telephony lines in that period.
(11) Average monthly revenue per residential telephony subscriber for each
period represents (i) the average monthly residential cable telephony
revenue for that period, divided by (ii) the average number of residential
cable telephony subscribers in that period.
(12) Average blueyonder broadband internet subscriber churn rate for the period
represents four times the total number of broadband internet subscribers
who disconnected during the quarter divided by the average number of
subscribers in the quarter. Subscribers who move premises within Telewest's
addressable areas and retain Telewest's services are excluded from this
churn calculation.
(13) Average monthly revenue per blueyonder broadband internet subscriber for
each period represents (i) the average monthly blueyonder broadband
internet revenue for that period, divided by (ii) the average number of
blueyonder broadband internet subscribers in that period.
(14) Average annualised revenue per customer account represents (i) the average
monthly business sales division revenue (excluding revenues from carrier
services unit) for the 12 months to the end of that period, divided by (ii)
the average number of business sales division customers in that period, and
(iii) multiplied by 12 months.
(15) Pay multi-channel subscribers represents the number of pay multi-channel
subscribers as at the end of the last month of the period.
(16) Basic viewing over 24 hours in pay-television homes.
(17) Includes Flextech's wholly owned channels and UKTV's advertising revenues.
(18) Revenue Generating Units or RGUs represent total aggregate subscribers to
our television, telephony and broadband services (eg a single
triple-service subscriber would equal three RGUs.) 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.
17
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED FINANCIAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
3 MONTHS ENDED MARCH 31,
2003 2004 2004
(POUND)M (POUND)M $M
RESTATED
STATEMENT OF OPERATIONS DATA: (NOTE 3) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE
Consumer Sales Division:
Cable television 79 81 149
Telephony 117 117 215
Internet 26 37 68
- ------------------------------------------------------------------------------------------------------------------------------------
222 235 432
Business Sales Division 70 67 124
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CABLE SEGMENT 292 302 556
Content Segment 27 26 48
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 319 328 604
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Cable programming expenses (32) (33) (61)
Cable telephony expenses (51) (46) (85)
Content segment expenses (17) (16) (29)
Depreciation (96) (94) (173)
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales (196) (189) (348)
Selling, general and administrative expenses (121) (120) (221)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING COSTS AND EXPENSES (317) (309) (569)
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 2 19 35
OTHER INCOME/(EXPENSE)
Interest income 6 7 13
Interest expense, including amortization of debt discount (125) (109) (201)
Foreign exchange (losses)/gains, net (48) 77 142
Share of net profits of affiliates 2 3 6
Other, net (1) (1) (2)
Tax benefit 1 - -
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOSS (163) (4) (7)
- ------------------------------------------------------------------------------------------------------------------------------------
Basic and diluted loss per ordinary share (pound)(0.06) (pound)(0.00) $(0.00)
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted average number of ordinary shares outstanding (millions) 2,874 2,874 2,874
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA:
Cash provided by operating activities 74 82 151
Cash used in investing activities (61) (63) (116)
Cash used in financing activities (13) (12) (22)
Capital expenditure (2) 67 66 121
- ------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, 2003 MARCH 31, MARCH 31, 2004
2003 2004
RESTATED
(POUND)M (POUND)M (POUND)M $M
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (AT PERIOD END):
Property and equipment, net 2,421 2,566 2,379 4,377
Total assets (March 31, 2003 restated from(pound)4,083) (3) 3,889 4,072 3,866 7,113
Investments 362 371 365 672
Total debt and capital leases 5,433 5,699 5,375 9,890
Shareholders' deficit (March 31, 2003 restated from(pound)2,534m) (3) (2,558) (2,547) (2,561) (4,712)
- ------------------------------------------------------------------------------------------------------------------------------------
18
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED FINANCIAL DATA
- --------------------------------------------------------------------------------
Notes
(1) The economic environment in which the Company operates is the United
Kingdom and therefore its reporting currency is pounds sterling
("(pound)"). Some of the financial information as of and for the three
month-period ended March 31, 2004 has been translated into US dollars
("$"). The US dollar amounts are unaudited and presented solely for the
convenience of the reader, at the rate of $1.8400 = (pound)1.00, the noon
buying rate of the Federal Reserve Bank of New York on March 31, 2004. The
presentation of the US dollar amounts should not be construed as a
representation that the sterling amounts could be so converted into US
dollars at the rate indicated or at any other rate.
(2) Represents cash paid for property and equipment, net of cash received upon
dispositions of property and equipment, of(pound)0 and (pound)0 for the
three-month periods ended March 31, 2003 and 2004, respectively.
(3) As announced on January 20, 2004, we determined the need to adjust the
classification of certain debt previously reflected as non-current and
write off deferred financing costs as at December 31, 2002 relating to that
restated debt. This lead to restatement of our 2002 financial statements
and has, consequently, affected subsequent periods of our published
financial data. The effect of the restatement on our previously published
March 31, 2003 financial data has been to restate "Total assets" from
(pound)4,083 million to (pound)4,072 million and "Shareholders' deficit"
from (pound)2,534 million to (pound)2,547 million. Previously reported
"Interest expense" for the three months ended March 31, 2003 included a
charge of (pound)3 million in respect of amortisation of deferred financing
costs. This charge has been written back now that all deferred financing
costs have been written off with effect from December 31, 2002.
Additionally, a charge of (pound)3 million has been made in the three
months ended March 31, 2003 for further interest on bonds in default.
Consequently, the net effect of these adjustments to "Interest expense" for
the three months ended March 31, 2003 is (pound)0.
19
TELEWEST COMMUNICATIONS PLC
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GROUP OPERATING PROFIT/(LOSS) BEFORE EXCEPTIONAL ITEMS UNDER UK GAAP
Group operating profit/(loss) before exceptional items, is a measure of our
operating performance before the impact of non-recurring items classified as
"exceptional items" for purposes of UK GAAP. UK GAAP requires that we separately
present exceptional items and permits the presentation in our consolidated
profit and loss accounts of our results before the impact of exceptional items.
For purposes of the periods covered by this earnings release, these items
consisted of charges for legal and professional fees related to our Financial
Restructuring. We anticipate that the legal and professional costs associated
with our Financial Restructuring will cease on completion of that restructuring
in 2004.
We believe that the use of financial measures before exceptional items is
helpful to our management and investors in evaluating and comparing our
performance quarter to quarter and year to year, since the inclusion of
exceptional items having a disproportionate impact on one period as compared to
another tends to overstate or understate the underlying trends in our operating
results.
The following table shows our UK GAAP operating loss reconciled to our Group
operating profit/(loss) before exceptional items:
THREE MONTHS THREE MONTHS YEAR ENDED
ENDED ENDED
31 MAR 31 MAR 31 DEC
2004 2003 2003
(POUND)M (POUND)M (POUND)M
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GROUP OPERATING LOSS (7) (25) (87)
Exceptional selling, general and administrative expenses 9 3 25
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GROUP OPERATING PROFIT/(LOSS) BEFORE EXCEPTIONAL ITEMS 2 (22) (62)
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20