Rule 424(b)(3)
Registration No. 333-50201
FOR US LAW PURPOSES ONLY:
PROSPECTUS SUPPLEMENT TO OFFER TO PURCHASE/PROSPECTUS DATED 29 JUNE 1998
(CONTAINED IN REGISTRATION STATEMENT NO. 333-50201)
THIS LETTER IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
Not for release, publication or distribution in or into Canada, Australia
or Japan.
20 August 1998
To holders of General Cable securities and, for information only, to
participants in the General Cable Share Schemes
Dear sir or madam
Offer for General Cable PLC (the "Offer")
You will recently have received the Offer Document and the Disclosure Document
dated 29 June 1998 in connection with Telewest's offer to acquire General Cable.
I am writing to you now to provide you with an update on the progress of the
Offer and to provide you with additional information on Telewest.
The Offer for General Cable
Telewest announced on 19 August 1998 that it intended to declare the offer
unconditional in all respects on 28 August 1998 provided it had received
acceptances in respect of not less than 75% or more of General Cable shares
(including the General Cable shares represented by General Cable ADSs) to which
the Offer relates and subject to satisfaction of the remaining conditions of the
Offer.
Acceptance form
If you are a holder of General Cable shares and you have lost your acceptance
form or if you have any questions relating to its completion, you should contact
Telewest's registrar, Lloyds Bank Registrars, telephone number 01903 702767.
If you are a holder of General Cable ADSs and you have lost your acceptance form
or if you have any questions relating to its completion, you should contact
Telewest's Information Agent, Innisfree, on 888 750-5834.
Additional information
I enclose a number of announcements made by Telewest over the last few days in
connection with:
o the proposed appointment of Tony Illsley as its new Chief Executive;
o Telewest's recent agreement with Comcast and NTL in relation to interests
in Birmingham Cable and Cable London; and
o the Offer and the associated Pre-emptive Issue.
I also enclose a copy of Telewest's Interim Report for the six months to 30 June
1998 for your information.
Yours sincerely
Gary Ames
Chairman
This letter does not provide any advice as to whether you should or should not
accept the Offer. If you are in any doubt about the action you should take, you
are recommended to seek your own financial advice from your stockbroker, bank
manager, solicitor, accountant or other independent financial adviser authorised
under the Financial Services Act 1986 immediately.
Schroders, which is regulated in the UK by The Securities and Futures Authority
Limited, is acting for Telewest and no one else in connection with the Offer and
will not be responsible to anyone other than Telewest for providing the
protections afforded to customers of Schroders or for providing advice in
relation to the contents of this letter.
The Directors and the Proposed Directors of Telewest, whose names are set out on
page III-3 of the Offer Document, accept responsibility for the information
contained in this letter. To the best of the knowledge and belief of the
Directors and Proposed Directors of Telewest (who have taken all reasonable care
to ensure that such is the case), the information contained in this letter for
which they accept responsibility is in accordance with the facts and does not
omit anything likely to affect the import of such information.
Unless otherwise stated, terms used in this letter are as defined in the Offer
Document of Telewest dated 29 June 1998.
THIS PROSPECTUS SUPPLEMENT CONSISTS OF THIS LETTER PLUS THE ACCOMPANYING: (1)
PRESS RELEASE DATED 17 AUGUST 1998 RELATING TO THE PROPOSED APPOINTMENT OF TONY
ILLSLEY; (2) PRESS RELEASE DATED 17 AUGUST 1998 RELATING TO THE AGREEMENT
CONCERNING BIRMINGHAM CABLE AND CABLE LONDON; (3) PRESS RELEASE DATED 19 AUGUST
1998 RELATING TO THE OFFER AND THE PRE-EMPTIVE ISSUE; AND (4) INTERIM REPORT FOR
THE SIX MONTHS 30 JUNE 1998. THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE
OFFER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION APPROVED OR PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS LETTER OR THE ACCOMPANYING MATERIALS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENCE.
Not for release, publication or distribution in or into Canada,
Australia or Japan.
Telewest Communications plc ("Telewest")
Telewest names Illsley as new Chief Executive
Telewest today announced the appointment of Tony Illsley as its new Chief
Executive. Illsley will be formally appointed to the board and take up his
appointment in the autumn.
Illsley, 42, has been with PepsiCo, Inc. since 1984 and has been President of
Walkers Snack Foods Limited since 1995. Walkers Snack Foods is one of PepsiCo's
leading business units with a turnover of more than (pound)500 million and
employing approximately 4,000 people.
Gary Ames, Chairman of Telewest, said:
"We are delighted to welcome Tony Illsley to Telewest. He has a strong
record in marketing and leadership and joins Telewest at a time when
our proposed merger with General Cable PLC will create one of the
largest UK cable companies. We look forward to Tony building on our
company's momentum and establishing Telewest as the leader in broadband
video, voice and data."
Tony Illsley, Chief Executive designate of Telewest, said:
"I look forward to joining Telewest. It is now well past the major
build phase and has enormous potential as it develops its product and
service range and deploys customer focussed marketing and
communications. The forthcoming digital launch will only expand this
potential."
17 August 1998
- --------------------------------------------------------------------------------
Press enquiries
Telewest 01483 750900
David Van Valkenburg, interim Chief Executive
Ian Hood, Director of Communications
Dewe Rogerson 0171 638 9571
Anthony Carlisle
Notes to editors
Tony Illsley
Prior to his current role, Illsley was President of Pepsi-Cola Asia Pacific,
responsible for the company's operations in the region and for developing and
executing their expansion strategy for China. Before this, Illsley spent five
years as Pepsi-Cola's President in Japan restructuring the company's operations
in this market and improving the company's market share and profitability. From
1984 to 1988 he held leadership roles in the group's European soft drinks
operations culminating in responsibility for the then 7-UP European Division
with general management responsibility for ten countries.
Before joining PepsiCo, Illsley worked for five years at Colgate Palmolive in
the United Kingdom, holding various senior marketing roles for key brands. He
was born in Newark, Nottinghamshire, is a business administration graduate of
Bath University and is married with two children.
Telewest
Telewest is a leading provider of cable television and residential and business
cable telephony services in the UK. Telewest owns and operates 28 cable
franchises and has minority equity interests in a number of affiliated companies
which own and operate nine affiliated franchises. As at 30 June 1998, these
owned and operated and affiliated franchises covered approximately 27% of the
homes in the United Kingdom in areas for which cable franchises have been
awarded. At that date, these franchises together included approximately 5.2
million homes and approximately 344,500 businesses, of which approximately 4.4
million and approximately 290,000 were the Telewest Group's equity homes and
equity businesses, respectively. As at 30 June 1998, the network in those
franchises had passed approximately 3.4 million of the Telewest Group's equity
homes (approximately 3.2 million of which had been passed and marketed) and the
Telewest Group had approximately 725,500 equity cable television customers,
988,500 equity residential telephone lines and 134,900 equity business telephone
lines.
On 15 April 1998, Telewest and General Cable PLC announced the terms of a
proposed merger. The enlarged group's owned and operated and affiliated
franchises will cover approximately 32% of the homes in the United Kingdom in
areas for which cable franchises have been awarded.
Not for release, publication or distribution in or into Canada,
Australia or Japan.
Telewest Communications plc ("Telewest")
Agreement between Telewest, Comcast and NTL
Telewest announced today that it has entered into an agreement with Comcast UK
Cable Partners Limited ("Comcast") and NTL Incorporated ("NTL") relating to
Comcast's ownership interest in Birmingham Cable Corporation Limited
("Birmingham Cable") and Telewest's and Comcast's respective ownership interest
in Cable London plc ("Cable London") and other related matters.
Under the terms of the agreement, amongst other things:
* Telewest has agreed to acquire Comcast's 27.47% interest in Birmingham
Cable for (pound)125 million, plus (pound)5 million for certain
subordinated debt and fees owed to Comcast. Completion is expected to
occur by no later than 31 December 1998; and
* Telewest and Comcast have agreed within a certain timeframe to
rationalise their interests in Cable London. Consequently, by no later
than 30 September 1999, Comcast (or NTL following the amalgamation of
Comcast and NTL) will notify Telewest of a price at which Telewest, at
its option, will be required either to purchase Comcast's 50% interest
in Cable London or sell its 50% interest in Cable London to Comcast (or
NTL).
In addition, Telewest and General Cable PLC ("General Cable") have agreed that
Telewest will now acquire General Cable's 44.95% interest in Birmingham Cable
through its merger with General Cable rather than as a separate purchase of such
interest, as previously announced. On completion of these transactions, Telewest
will own over 99% of Birmingham Cable.
Birmingham Cable operates in the Birmingham and Solihull area of the United
Kingdom. As at 31 December 1997, Birmingham Cable had some 471,000 homes of
which approximately 95% had been built and passed. It had some 126,000 cable
television customers and some 117,000 cable telephony customers in its franchise
area. In the financial year ended 31 December 1997, it generated revenues of
approximately (pound)67 million, operating cash flow of approximately (pound)9
million and reported a consolidated loss on ordinary activities before taxation
of approximately (pound)30 million. As at 31 December 1997, Birmingham Cable had
consolidated net assets of approximately (pound)71 million.
Telewest currently intends to fund the acquisition of Comcast's interest in
Birmingham Cable through new borrowings.
Commenting on these developments, Charles Burdick, Group Finance Director of
Telewest, said:
"This deal strengthens Telewest and resolves the various ownership
issues associated with Birmingham Cable and Cable London. Birmingham
Cable's operations are contiguous with our Midlands franchises and
together they will represent one of the largest clusters of cable
franchises in the United Kingdom with almost one million homes. This
will enable enhanced economics to be realised as we develop and deliver
voice, video and data products to our customers."
17 August 1998
- --------------------------------------------------------------------------------
Press enquiries
Telewest 01483 750900
Charles Burdick
Dewe Rogerson 0171 638 9571
Anthony Carlisle
Not for release, publication or distribution in or into Canada,
Australia or Japan.
TELEWEST COMMUNICATIONS PLC ("TELEWEST")
ACCEPTANCE LEVELS AND CLOSING DATE FOR TELEWEST'S RECOMMENDED OFFER
FOR GENERAL CABLE PLC ("GENERAL CABLE") AND TELEWEST'S PRE-EMPTIVE ISSUE
In connection with its offer for General Cable, Telewest announces the following
matters.
OFFER FOR GENERAL CABLE
1. As at 3.00 p.m. (London time) on 18 August 1998, valid acceptances of
Telewest's recommended offer for General Cable (the "Offer") had been
received in respect of 230,488,876 General Cable shares (representing
approximately 63 per cent. of General Cable's issued share capital).
2. As contemplated in its press release dated 4 August 1998, Telewest
reserves the right to reduce the percentage threshold in condition 1 of
the Offer (set out in Part A of Appendix I of the Offer Document) (the
"Acceptance Condition") from 90% to 75%.
3. Telewest intends to implement such reduction on 28 August 1998 and to
declare the Offer unconditional in all respects on that day, or as soon
as possible thereafter, once:
(a) valid acceptances of the Offer have been received (and not,
where permitted, withdrawn) in respect of 75% or more of
General Cable shares (including General Cable shares
represented by General Cable ADSs) to which the Offer relates;
and
(b) all the remaining conditions of the Offer have been and remain
fulfilled or there are, at that date, no circumstances
indicating that any such conditions may not be capable of
fulfilment.
4. When the Offer is declared unconditional, holders of General Cable
shares (including General Cable shares represented by General Cable
ADSs) will no longer have withdrawal rights under the Offer. Holders of
General Cable shares who do not want to accept the Offer if the
Acceptance Condition is reduced from the 90% level should either not
accept the Offer until after 28 August or withdraw their acceptances
prior to 28 August 1998.
5. The mix and match election under the Offer will remain open for five
days following the date the Offer is declared unconditional. All
holders of General Cable securities accepting the Offer after the mix
and match election terminates will receive the basic terms of the
Offer.
6. On 23 February 1998, the date when General Cable announced that it had
received indications that certain of the discussions which it was
having with third parties might lead to an offer, Telewest held no
General Cable shares or rights over General Cable shares.
7. On 29 March 1998, the date when Telewest and General Cable announced
that merger discussions were at an advanced stage which might result in
a recommended offer being made by Telewest for General Cable and the
likely terms thereof, General Utilities Holding Limited ("GUHL"), a
subsidiary of Compagnie Generale des Eaux S.A. (now Vivendi S.A.),
irrevocably undertook to accept such an offer, if made, in respect of
its holding of 146,785,916 General Cable shares (representing 40.2 per
cent. of General Cable's then issued share capital), if Telewest
announced a firm intention to make such an offer on or before 15 April
1998. On 15 April 1998, Telewest announced the terms of the Offer
(subject to certain pre-conditions which have been waived or satisfied)
and GUHL confirmed its previous undertaking to accept the Offer.
Acceptances in respect of these shares have now been received and are
included in the acceptance figures given above.
PRE-EMPTIVE ISSUE
1. The latest time and date for acceptance and payment under the
Pre-emptive Issue is 3.00 p.m. (London time) on 28 August 1998.
Telewest does not presently intend to extend the Pre-emptive Issue
beyond 28 August. Any announcement of an extension will be made by 5
p.m. (London time) on 21 August 1998.
2. Consequently, at present, the latest time and date for the splitting of
the Application Forms under the Pre-emptive Issue is 3.00 p.m. (London
time) on 26 August 1998.
3. Pending fulfilment of the conditions of the Pre-emptive Issue
(including the Offer becoming unconditional in all respects and
Admission (as defined in the Pre-emptive Issue Circular dated 29 June
1998)), application monies will be kept in a separate bank account and
any interest earned on such monies will be retained for the benefit of
Telewest.
4. If the conditions of the Pre-emptive Issue are not fulfilled by 18
September (or such later date as Telewest and Schroders may agree), the
Pre-emptive Issue will lapse and all application monies will be
returned to applicants.
19 August 1998
- --------------------------------------------------------------------------------
PRESS ENQUIRIES
TELEWEST 01483 750900
Charles Burdick
J. HENRY SCHRODER & CO. LIMITED ("SCHRODERS") 0171 658 6000
James Steel
Schroders, which is regulated in the UK by The Securities and Futures Authority
Limited, is acting for Telewest and no one else in connection with the Offer and
the Pre-emptive issue and will not be responsible to anyone other than Telewest
for providing the protections afforded to customers of Schroders or for giving
advice in relation to the Offer and the Pre-emptive issue.
1998 Interim Report
TELEWEST COMMUNICATIONS
[Graphic Omitted]
The above omitted graphic includes photographs of a television and its remote
control, a telephone and a computer keyboard.
TELEWEST COMMUNICATIONS PLC THE FIRST SIX MONTHS OF 1998 HAVE BEEN A DEFINING
PERIOD IN THE DEVELOPMENT OF THE UK CABLE INDUSTRY AND OF TELEWEST IN
PARTICULAR. WE BELIEVE VIRTUALLY ALL THE KEY INDICATORS OF OUR BUSINESS
PERFORMANCE AND GROWTH POTENTIAL SHOW OUR FUTURE PROSPECTS TO BE POSITIVE
WE EXPECT OUR PROGRESS AND POTENTIAL TO BE ENCHANCED BY OUR PLANNED MERGER WITH
GENERAL CABLE PLC AND WE ARE ENCOURAGED BY THE RENEWED INTEREST IN OUR INDUSTRY
A. Gary Ames Chairman
968,503
RESIDENTIAL CUSTOMERS
More than a third of the homes Telewest has marketed now take at least one of
our services. Of these more than 50% subscribe to both telephone and television
services.
27,498
BUSINESS CUSTOMERS
Our business customers take an average of 4.2 lines - or 116,634 lines in total.
As we add General Cable to the Group we expect to see significant future growth
in this sector.
NATIONAL NETWORK
Our franchises are now connected by a high capacity fibre network. In addition
to margin improvements this positions us well to benefit from anticipated rapid
growth in the wholesale and retail data market.
(pound)54.3m
EBITDA
Earnings before interest, tax, depreciation and amortisation were more than
three times higher than in the first half of 1997 and were more than the total
for the whole of last year.
(pound)225.9m
REVENUE
Revenue in the first half of 1998 was up 24.5% over the first half of 1997.
MARGIN IMPROVING
A continuing focus on costs and suppliers, together with continuing economies of
scale have produced a 3.4 percentage point improvement in telephony margin and a
6.7 percentage point rise in television margin.
Page 1
1998 Interim Report
TELEWEST COMMUNICATIONS
TELEVISION
SINCE WE INTRODUCED OUR `MILLENNIUM' PACKAGES
IN FEBRUARY, OUR CUSTOMERS HAVE ENJOYED MORE
CHOICE AND GREATER FLEXIBILITY. THEY HAVE
REWARDED US BY SUBSCRIBING IN RECORD NUMBERS
[Graphic Omitted]
The above omitted graphic depicts in bar graph format television penetration
rates of 21.1%, 22% and 22.8% for the first half of 1996, the first half of 1997
and the first half of 1998, respectively.
642,303
CABLE TELEVISION CUSTOMERS
Our `Millennium' packages are attracting a new audience for cable television
services, while providing a better service for our existing customers.
22.8%
CABLE TELEVISION PENETRATION
Cable television penetration in the first half of 1998 was our highest to date
and is further evidence of the success of our `Millennium' packages. The
improvement has been achieved despite the significant reduction in our build
programme and the consequent reduction in the number of potential new
subscribers available.
33.7%
CABLE TELEVISION CHURN
Though churn increased marginally on the corresponding period in 1997, it
improved on the first quarter and we are determined to make further
improvements. Our research indicates that churn is no longer related primarily
to product issues, which we believe we have now successfully addressed.
Consequently, our focus now is on making further improvements to the quality of
customer service we offer.
(pound)1.7m
CABLE TELEVISION REVENUE
The provision of television to business customers is an increasingly important
aspect of our service. Not just for the (pound)1.7m of revenue it has generated
in the year to date, but also because business customers are increasingly
looking for added value and single supplier relationships.
20%
ON THE FRONT ROW
We have now launched the `Front Row' Pay Per View movie service in all Telewest
franchises. At 20%, the average buy rate exceeds our expectations. We are now
accelerating our plans to expand the service from four to eight channels.
46%
CABLE TELEVISION MARGIN
Our cable television margin in the first half of 1998 increased by 6.7
percentage points on the corresponding period in 1997. Growing customer numbers,
complemented by an improving regulatory environment, have enabled us to
negotiate more favourable terms with programmers and structure our packages to
improve our margin opportunity.
Page 2
1998 Interim Report
TELEWEST COMMUNICATIONS
TELEPHONY
THE TELEPHONY SERVICES OFFERED BY TELEWEST
HAVE BECOME FIRMLY ESTABLISHED IN BOTH THE
RESIDENTIAL AND BUSINESS TELECOMS MARKETS
OUR PERFORMANCE DURING THE FIRST HALF OF 1998 IS A REFLECTION OF TELEWEST'S KEY
ADVANTAGE - THE COST EFFECTIVE PROVISION OF A BROAD RANGE OF TELECOMS SERVICES,
THROUGH OUR HIGH CAPACITY BROADBAND NETWORK
[Graphic Omitted]
The above omitted graphic depicts in bar graph format 498,646, 720,508 and
853,121 residential telephony customers for the first half of 1996, the first
half of the 1997 and the first half of 1998, respectively; 17,365, 23,173 and
27,498 business telephony customers for the first half of 1996, the first half
of 1997 and the first half of 1998, respectively; and 516,011, 743,681 and
880,619 total telephony customers for the first half of 1996, the first half of
1997 and the first half of 1998, respectively.
853,121
RESIDENTIAL TELEPHONY CUSTOMERS
The number of our residential customers is up 18.4% over the corresponding
period in 1997.
27,498
BUSINESS TELEPHONY CUSTOMERS
We have achieved significant growth during the period, boosted by a flexible
approach to service provision and strong local account management.
116,634
BUSINESS TELEPHONY LINES
The number of our business telephony lines is up 4I.2% on the same period in
1997.
30.6%
RESIDENTIAL TELEPHONY PENETRATION
Despite significant `win back' activity by BT, penetration has continued to
climb and is up 1.7 percentage points on the corresponding period in 1997.
Second-line penetration more than doubled to 5%, reflecting growing use of the
Internet and a change in the working habits of our customers.
21.1%
RESIDENTIAL TELEPHONY CHURN
This is a small increase over the corresponding period in 1997. Ongoing
investment in IT support systems and staff training are being implemented to
reduce churn.
4.2
BUSINESS TELEPHONY LINES PER CUSTOMER
Our business customers now take an average of 4.2 lines, up from 3.6 for the
same period in 1997.
Page 3
1998 Interim Report
TELEWEST COMMUNICATIONS
DATA
AS OWNER OF A NATIONAL BROADBAND NETWORK WITH LOCAL LOOP ACCESS IN THE AREAS WE
SERVE, TELEWEST IS WELL POSITIONED TO TAKE ADVANTAGE OF THE STRONG GROWTH IN
DEMAND FOR DATA SERVICES
[Graphic Omitted]
The above omitted graphic is a map of the UK depicting national coverage of the
broadband network and international linkage via leased lines to the US and
Europe.
19,810
CABLE INTERNET DIAL-UP CUSTOMERS
Because around 60% of our Cable Internet customers also subscribe to our
telephony service, the provision of this Internet service generates high margin
telephony revenues, as well as subscription revenues. Telewest's Cable Internet
service has been consistently highly rated by users and, as a result, little
churn is evident.
BROADBAND INTERNET ACCESS
An increasing number of our business customers access our Internet service via
leased line at speeds of up to 2Mb. We expect the number of customers to grow
significantly as more businesses recognise the benefits of being online.
WHOLESALE INTERNET SERVICES
In addition to the direct Internet service, Telewest also provides backbone
Internet services to 30 smaller Internet Service Providers and cable operators.
CABLE MODEM INTRODUCTION
Telewest expects to introduce a high speed Internet service using cable modem
technology during the first half of 1999. This will enable users to access the
Internet at speeds up to 7Mb more than 100 times faster than dial-up speeds
currently available. The service will initially be offered as a premium product
to high spending residential and business users, before a more widespread
consumer launch.
MANAGED DATA SERVICES
Telewest's networks are particularly well suited to the implementation of
managed data networks. An increasing number of customers are taking advantage of
this service.
NATIONAL NETWORK
With our national network complete Telewest is now able to enter the wholesale
data market by offering point-to-point Virtual Private Networks and national
enterprise networks.
Page 4
1998 Interim Report
TELEWEST COMMUNICATIONS
OUR FUTURE
ON 15TH APRIL 1998 WE ANNOUNCED THAT THE
BOARDS OF TELEWEST AND GENERAL CABLE PLC
HAD AGREED A PROPOSED MERGER. WE EXPECT
THE MERGER TO STRENGTHEN THE COMBINED
GROUP'S STRATEGIC POSITION AS A LEADING
UK CABLE OPERATOR
THE INCREASED SCALE AND SCOPE OF THE COMBINED
GROUP WILL PROVIDE OPPORTUNITIES TO ENHANCE
OUR COMPETITIVE POSITION IN THE DELIVERY OF
EXISTING AND NEW SERVICES
David R. Van Valkenburg Chief Executive
[Graphic Omitted]
The above omitted graphic depicts in bar graph format sector leadership in homes
(NTL, CWC and Telewest with 5,182,000, 5,867,000 and 6,101,203 homes,
respectively), homes marketed (NTL, CWC and Telewest with 2,429,000, 3,850,000
and 4,241,934 homes marketed, respectively), residential cable telephony
subscribers (NTL, CWC and Telewest with 846,000, 950,950 and 1,210,780
residential cable telephony subscribers, respectively) and cable television
subscribers (NTL, CWC and Telewest with 702,000, 780,000 and 934,517 cable
television subscribers, respectively).
ONE THIRD OF THE UK CABLE MARKET
Opportunities exist to enhance our business telephony capabilities, using
General Cable's expertise in this area. There are also opportunities to produce
incremental revenues from integrated residential services across a wider base.
In addition, we believe we can achieve cost savings and scale economies across
the Group.
NO.1
THE LARGEST UK CABLE OPERATOR
In addition to the merger with General Cable we have stated our intention
(subject to price and financing) to exercise our rights to acquire Comcast UK
Cable Partners' interests in Birmingham Cable and Cable London. Once acquired
the combined group would be the largest UK cable operator with access to 6.1m
homes and approximately 400,000 businesses.
POSITIONED FOR GROWTH
After completion of the merger with General Cable, Telewest believes it will be
in a stronger position to exploit its competitive position. As a locally
responsive provider of bundled services we have already experienced strong
growth and increasing market share. We believe that the additional scale and
scope coupled with growing demand for services will position us for market
leadership.
DIGITAL SERVICES
Telewest expects to begin the introduction of digital services in the last
quarter of 1998, with a trial service in one franchise area. This is expected to
be followed by a rollout to the other franchises beginning in the first half of
1999. Telewest's digital service is designed to offer a greatly expanded range
of broadcast television, Pay Per View and Near Video on Demand, as well as
Internet access and a broad range of interactive services from a variety of
content suppliers. In strategic terms the introduction of digital services will
enable us to harness the power and capacity of broadband cable networks.
We believe Telewest's key advantages over the other delivery platforms include:
(Y) Significant network capacity which will enable us to expand the range of
services on offer according to demand, complemented by the ability to
tailor services for specific geographic areas and demographic groups.
(Y) A high capacity return path which eliminates the need for a secondary
connection to a telephony network, provides instant interactivity and
allows for the development of increasingly sophisticated services.
(Y) The ability to provide the consumer with an easy upgrade path from analogue
services and no requirement to purchase a set top box.
We believe the launch of digital service provides us with a powerful opportunity
to leverage the investment we have made by developing new products and services
that utilise our existing infrastructure.
Page 5
1998 Interim Report
TELEWEST COMMUNICATIONS
FINANCIAL REVIEW
OUR STRONG PERFORMANCE IN THE FIRST HALF
OF 1998 HAS RESULTED IN AN EBITDA OF (pound)54.3M,
WHICH EXCEEDS THE FULL YEAR 1997 RESULT
WE BELIEVE THESE ARE EXCELLENT RESULTS AND
PROVIDE A FIRM BASE FOR THE NEXT STAGE IN
OUR DEVELOPMENT
Charles J. Burdick Group Finance Director
(pound)54.3M EBITDA
Earnings before Interest, Tax, Depreciation and Amortisation Our EBITDA in the
first half of 1998 is already ahead of the full year result for 1997.
(pound)88.8M
CABLE TELEVISION REVENUE
Our `Millennium' packages have provided consumers with much greater choice and
flexibility. We believe this new approach to marketing our services appeals to
many who would not have subscribed to our services previously. Revenue per
customer has remained stable despite the introduction of `small basic' entry
level packages.
(pound)98.9M
RESIDENTIAL TELEPHONY REVENUE
An increase in our total customer base, improving margins and greater
second-line penetration have all contributed to a 27.1% increase in revenue over
the corresponding period in 1997.
(pound)28.1M
BUSINESS TELEPHONY REVENUE
Business telephony revenue has increased by 41%. Our increasing revenue
indicates that our customers are using us more as they come to appreciate our
products and our ability to deliver service excellence.
(pound)110M
CAPITAL EXPENDITURE
Capital expenditure has declined to almost half the (pound)208 million for the
first half of 1997. This decline is primarily the result of our strategic
decision last year to reduce construction activity and of our continued focus on
costs.
((pound)39.8M)
OPERATING LOSS
Operating losses through the first half of 1998 have declined in line with
expectations and are approximately two thirds of the figure for the
corresponding period in 1997.
Page 6
1998 Interim Report
TELEWEST COMMUNICATIONS
Financial Review Continued
We have achieved a strong performance in the first half of 1998. EBITDA of
(pound)54.3m has already exceeded the full year 1997 result. We believe our
decision to focus the operations on consumer and business packaging, service and
choice is paying off. Penetration of the customer base continues to improve,
with CATV reaching 22.8% and residential telephony reaching 30.6%. These are the
highest levels to date. Revenue has grown by 24.5% over the corresponding period
in 1997. Business telephony is producing substantial growth, up 41%, with
increased revenue per customer. Internet sales have provided the Company with
more than one million pounds of additional revenue so far this year.
Margins continue to grow, with telephony up 3.4 percentage points to 75.3
percentage points and CATV up 6.7 percentage points to 46%. We continue to
benefit from a redistribution of the packages of products in our customer base
with new CATV customers increasingly choosing `Basic' only or `3-4 premium pay
channels', our higher margin products. Second-line penetration in our
residential telephone customer base at 5% is up from 2.2% a year ago. Churn
results to date are not satisfactory and they remain a focus of attention.
SG&A costs for the first half of 1998 were 40.9% of revenues compared to over
50% in 1997 and capital expenditure of (pound)110m is substantially reduced from
(pound)208m last year. Expense and cash management continue to receive strong
focus.
Telewest ended the first half of 1998 with (pound)1.51 billion of debt split
between (pound)0.60 billion of senior bank debt and (pound)0.91 billion of bond
debt. Telewest is operating within its recently restructured bank facilities. We
are looking at financing options in regard to the exercise of our pre-emption
rights resulting from the Comcast/NTL merger.
All references to financial information above are UK GAAP.
Safe Harbour 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 Telewest's 1997 Annual Report and Second
Quarter 10Q.
Page 7
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED FRANCHISES
2nd Quarter 1998 Net Additions
Net additions Net additions Net additions Net additions
Q2 YTD Q2 YTD
1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 27.720 62,372 103,615 207,039
CATV customers 24,426 36,315 18,235 31,821
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 29,398 65,070 119,243 242,020
Residential telephony customers 21,536 42,763 50,931 100,131
Residential telephony lines 31,334 59,491 56,282 109,168
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 966 2,023 1,668 2,291
Business telephony lines 6,619 15,645 8,061 14,778
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
As at 30 June As at 30 June
1998 1997
- ---------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 2,822,566 2,542,992
CATV customers 642,303 559,963
CATV penetration 22.8% 22.0%
Quarterly churn rate (annualised) 28.8% 32.9%
Rolling 12 month churn rate 33.7% 32.2%
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 2,790,224 2,496,754
Residential telephony customers 853,121 720,508
Residential telephony penetration 30.6% 28.9%
Residential telephony lines 895,659 736,177
Quarterly churn rate per line (annualised) 21.7% 19.1%
Rolling 12 month churn rate 21.1% 19.2%
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 27,498 23,173
Business telephony lines 116,634 82,601
Average number of lines per customer 4.2 3.6
- ---------------------------------------------------------------------------------------------------
INTERNET
Dial-up customers 19,810 8,806
Cable television and residential
telephony customers 528,614 422,484
Cable television only customers 113,689 137,479
Residential telephony only customers 324,507 298,024
Internet only customers 1,825 2,454
- ---------------------------------------------------------------------------------------------------
Page 8
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED AND OPERATED
AND AFFILIATED FRANCHISES*
2nd Quarter 1998 Net Additions
Net additions Net additions Net additions Net additions
Q2 YTD Q2 YTD
1998 1998 1997 1997
- ---------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 30,355 66,041 114,776 233,044
CATV customers 24,880 38,127 19,445 36,854
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 32,102 68,452 130,503 268,184
Residential telephony customers 23,527 48,318 55,835 109,647
Residential telephony lines 33,795 66,006 61,423 119,129
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 1,192 2,381 1,764 2,508
Business telephony lines 8,164 18,297 8,988 16,535
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
As at 30 June As at 30 June
1998 1997
- ---------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 3,162,623 2,859,879
CATV customers 725,479 636,453
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 3,130,779 2,811,225
Residential telephony customers 943,000 795,747
Residential telephony lines 988,547 812,650
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 30,712 25,806
Business telephony lines 134,970 95,104
Average number of lines per customer 4.4 3.7
- ---------------------------------------------------------------------------------------------------
*Operating statistics for affiliated franchises represent Telewest's equity
interests in Cable London plc (50.0% interest), Birmingham Cable Corporation
(27.5% interest) and The Cable Corporation (16.5%).
Page 9
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED FRANCHISES
As at 30 June 1998
London and Midlands and Scotland and
South East South West North East North West Total
- --------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 630,203 838,017 757,473 596,863 2,822,556
CATV customers 149,808 185,740 178,507 128,248 642,303
CATV penetration 23.8% 22.2% 23.6% 21.5% 22.8%
- ---------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 624,210 838,140 731,783 596,091 2,790,224
Residential telephony customers 160,580 278,555 230,664 183,322 853,121
Residential telephony penetration 25.7% 33.2% 31.5% 30.8% 30.6%
Residential telephony lines 175,602 289,383 238,958 191,716 895,659
- ---------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony customers 6,583 9,105 6,410 5,400 27,498
Business telephony lines 31,669 42,493 20,759 21,713 116,634
Average number of lines per customer 4.8 4.7 3.2 4.0 4.2
- ---------------------------------------------------------------------------------------------------
Page 10
1998 Interim Report
TELEWEST COMMUNICATIONS
OPERATING STATISTICS OWNED AND OPERATED FRANCHISES
As at 30 June 1998
London South South West North East Scotland South East North West Midlands Total
- --------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 364,964 382,232 225,079 532,394 265,239 596,863 455,785 2,822,556
CATV customers 81,224 85,153 55,711 122,796 68,584 128,248 100,587 642,303
CATV penetration 22.3% 22.3% 24.8% 23.1% 25.9% 21.5% 22.1% 22.8%
- --------------------------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 358,947 382,355 222,882 508,901 265,263 596,091 455,785 2,790,224
Residential telephony
customers 76,583 121,904 76,346 154,318 83,997 183,322 156,651 853,121
Residential telephony
penetration 21.3% 31.9% 34.3% 30.3% 31.7% 30.8% 34.4% 30.6%
Residential telephony
lines 85,729 128,809 78,004 160,954 89,873 191,716 160,574 895,659
- --------------------------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony
customers 5,034 5,229 1,790 4,620 1,549 5,400 3,876 27,498
Business telephony
lines 25,478 23,266 5,071 15,688 6,191 21,713 19,227 116,634
Average number of
lines per customer 5.1 4.5 2.8 3.4 4.0 4.0 5.0 4.2
OPERATING STATISTICS AFFILIATED FRANCHISES
As at 30 June 1998
Cable London Birmingham Cable The Cable Corporation Total Affiliates
Total Equity Total Equity Total Equity Total Equity
- --------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION
Homes marketed 358,497 179,249 415,099 114,152 282,827 46,666 1,056,423 340,067
CATV customers 87,604 43,802 116,893 32,146 43,809 7,228 248,306 83,176
CATV penetration 24.4% 24.4% 28.2% 28.2% 15.5% 15.5% 23.5% 24.5%
- --------------------------------------------------------------------------------------------------------------------
RESIDENTIAL TELEPHONY
Homes marketed 358,497 179,249 415,099 114,152 285,782 47,154 1,059,378 340,555
Residential telephony
customers 88,094 44,047 128,247 35,268 64,027 10,564 280,368 89,879
Residential telephony
penetration 24.6% 24.6% 30.9% 30.9% 22.4% 22.4% 26.5% 26.4%
Residential telephony
lines 94,110 47,055 128,247 35,268 64,027 10,564 286,384 92,887
- --------------------------------------------------------------------------------------------------------------------
BUSINESS TELEPHONY
Business telephony
customers 3,202 1,601 4,523 1,243 2,234 369 9,959 3,213
Business telephony
lines 16,568 8,284 20,022 5,506 27,548 4,545 64,138 18,335
Average number of lines
per customer 5.2 5.2 4.4 4.4 12.3 12.3 6.4 5.7
- --------------------------------------------------------------------------------------------------------------------
Page 11
1998 Interim Report
TELEWEST COMMUNICATIONS
UK GAAP UNAUDITED SUMMARISED CONSOLIDATED PROFIT
AND LOSS ACCOUNT
For the six months ended 30 June 1998
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
1998 1997 1997
Note (pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
TURNOVER
Cable television 88,758 76,845 159,918
Telephony - residential 98,918 77,849 166,645
Telephony - business 28,106 19,901 43,882
Other (Internet, Ad Sales etc) 10,095 6,847 16,053
- --------------------------------------------------------------------------------------------------
225,877 181,442 386,498
- --------------------------------------------------------------------------------------------------
OPERATING LOSS (39,816) (59,985) (127,764)
Share of results of associated undertakings (3,457) (5,418) (11,126)
Other interest receivable and similar income 2,968 5,266 14,662
(includes the group share of interest receivable
in associated undertakings of(pound)104,(pound)683 and
(pound)5,565 respectively)
Interest payable and similar charges 3 (101,317) (82,206) (185,681)
- --------------------------------------------------------------------------------------------------
Loss on ordinary activities before tax (141,622) (142,343) (309,909)
Tax on loss on ordinary activities 3 (115) (521)
- --------------------------------------------------------------------------------------------------
Loss on ordinary activities after tax (141,619) (142,458) (310,430)
Minority interests (68) (210) (293)
- --------------------------------------------------------------------------------------------------
Loss for the financial period (141,687) (142,668) (310,723)
- --------------------------------------------------------------------------------------------------
Loss per equity share (pence) (10.0) (10.0) (21.8)
- --------------------------------------------------------------------------------------------------
1 EARNINGS/ (loss) BEFORE INTEREST, TAXES,
DEPRECIATION, AND AMORTISATION ("EBITDA")
- --------------------------------------------------------------------------------------------------
Operating loss (39,816) (59,985) (127,764)
Add: Depreciation 94,079 76,358 177,341
- --------------------------------------------------------------------------------------------------
EBITDA 54,263 16,373 49,577
- --------------------------------------------------------------------------------------------------
2 OPERATING COSTS
- --------------------------------------------------------------------------------------------------
Programming expenses 47,923 46,626 93,441
Telephony expenses 31,315 27,440 50,145
Selling, general, and administrative expenses 92,376 91,003 193,335
Depreciation 94,079 76,358 177,341
- --------------------------------------------------------------------------------------------------
265,693 241,427 514,262
- --------------------------------------------------------------------------------------------------
Page 12
1998 Interim Report
TELEWEST COMMUNICATIONS
3 Interest payable and similar charges
- --------------------------------------------------------------------------------------------------
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
1998 1997 1997
(pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
Share of interest of associated undertakings 7,721 5,588 15,751
On bank loans and overdrafts and other loans
Wholly repayable within 5 years 41 8,207 16,941
Wholly or partly repayable in more than five years 24,398 5,282 14,741
Finance costs of Senior Discount Debentures 40,548 34,344 71,661
Finance costs of Senior Debentures 11,370 11,318 22,657
Finance charges payable in respect of finance
lease and hire purchase contracts 2,490 1,976 4,702
Exchange losses on foreign currency translation, net 5,218 15,023 30,954
Other 9,531 468 8,274
- --------------------------------------------------------------------------------------------------
101,317 82,206 185,681
- --------------------------------------------------------------------------------------------------
The consolidated financial statements as set out on pages 10 and 11 which are
unaudited, have been prepared on the basis of the accounting policies set out in
the Company's 1997 Annual Report. The balance sheet, profit and loss account and
cash flow statement at 31 December 1997 is derived from the statutory accounts
for 1997 which have been delivered to the Registrar of Companies. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
Page 13
1998 Interim Report
TELEWEST COMMUNICATIONS
UK GAAP UNAUDITED SUMMARISED CONSOLIDATED BALANCE SHEET
At 30 June 1998
30 June 30 June 31 December
1998 1997 1997
(pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
FIXED ASSETS 1,790,807 1,720,546 1,809,213
- --------------------------------------------------------------------------------------------------
CURRENT ASSETS
Stocks 91 72 32
Debtors 81,479 68,242 70,457
Cash at bank and in hand 26,295 61,732 29,582
- --------------------------------------------------------------------------------------------------
107,865 130,046 100,071
CREDITORS: amounts falling due within one year (197,523) (210,395) (334,756)
- --------------------------------------------------------------------------------------------------
Net current liabilities (89,658) (80,349) (234,685)
- --------------------------------------------------------------------------------------------------
Total assets less current liabilities 1,701,149 1,640,197 1,574,528
CREDITORS: amounts falling due after
more than one year (1,573,948) (1,203,004) (1,305,708)
Minority interests (708) (557) (640)
- --------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES 126,493 436,636 268,180
- --------------------------------------------------------------------------------------------------
Page 14
1998 Interim Report
TELEWEST COMMUNICATIONS
UK GAAP UNAUDITED SUMMARISED CONSOLIDATED STATEMENT
OF CASH FLOWS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
1998 1997 1997
(pound)000 (pound)000 (pound)000
- --------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 40,861 (2,493) 68,624
- --------------------------------------------------------------------------------------------------
Returns on investments and servicing of finance
Interest received 1,833 2,988 3,599
Interest paid (32,501) (20,044) (63,479)
Interest element of finance lease payments (2,490) (2,594) (4,702)
- --------------------------------------------------------------------------------------------------
Net cash outflow from returns on investments
and servicing of finance (33,158) (19,650) (64,582)
- --------------------------------------------------------------------------------------------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (110,304) (207,504) (436,100)
Sale of tangible fixed assets 4,354 922 6,066
- --------------------------------------------------------------------------------------------------
Net cash outflow from Capital expenditure
and financial investment (105,950) (206,582) (430,034)
- --------------------------------------------------------------------------------------------------
Acquisitions and disposals
Investment in associated undertakings and
other participating interests (3,719) (9,113) (9,633)
- --------------------------------------------------------------------------------------------------
Net cash outflow from Acquisitions
and disposals (3,719) (9,113) (9,633)
- --------------------------------------------------------------------------------------------------
Management of liquid resources
Decrease in fixed deposits, net 8,710 21,523 53,288
- --------------------------------------------------------------------------------------------------
Financing
Cash paid for credit facility arrangement costs (5,900) 0 0
Proceeds from borrowings 110,000 222,500 392,500
Repayment of borrowings (10) 0 (2,375)
Capital element of finance lease payments (5,397) (2,063) (3,971)
- --------------------------------------------------------------------------------------------------
Net cash outflow from financing 98,693 220,437 386,154
- --------------------------------------------------------------------------------------------------
Increase in cash 5,437 4,122 3,817
- --------------------------------------------------------------------------------------------------
Page 15
1998 Interim Report
TELEWEST COMMUNICATIONS
US GAAP UNAUDITED SUMMARISED CONSOLIDATED STATEMENTS OF OPERATIONS
3 months 3 months 3 months 6 months 6 months 6 months
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
1998 1998 1997 1998 1998 1997
$000 (pound)000 (pound)000 $000 (pound)000 (pound)000
- -------------------------------------------------------------------------------------------------------------------
Revenue
Cable television 74,267 44,578 38,744 147,871 88,758 76,845
Telephony - residential 84,103 50,482 38,175 164,797 98,918 77,849
Telephony - business 24,330 14,604 10,614 46,825 28,106 19,901
Other 9,644 5,789 3,519 16,818 10,095 6,847
- -------------------------------------------------------------------------------------------------------------------
192,344 115,453 91,052 376,311 225,877 181,442
- -------------------------------------------------------------------------------------------------------------------
Operating loss (42,403) (25,452) (36,421) (88,325) (53,016) (73,187)
Interest income 1,626 976 1,748 3,444 2,067 4,110
Interest expense (66,085) (39,667) (32,920) (137,258) (82,388) (63,234)
Foreign exchange losses, net (13,396) (8,041) (172) (2,351) (1,411) (24,299)
Share of losses of affiliates (7,280) (4,370) (5,345) (18,449) (11,074) (10,323)
Minority interest in profits of
consolidated subsidiaries, net (70) (42) (93) (113) (68) (210)
Other, net 417 251 352 1,327 797 473
- -------------------------------------------------------------------------------------------------------------------
Loss before income taxes (127,191) (76,345) (72,851) (241,725) (145,093) (166,670)
Income tax expense (28) (17) (51) 5 3 (115)
- -------------------------------------------------------------------------------------------------------------------
NET LOSS (127,219) (76,362) (72,902) (241,720) (145,090) (166,785)
- -------------------------------------------------------------------------------------------------------------------
Loss per ordinary share
(dollars/pounds) (0.14) (0.08) (0.08) (0.26) (0.16) (0.18)
- -------------------------------------------------------------------------------------------------------------------
1 Earnings/(loss) before interest, taxes,
depreciation and amortisation ("EBITDA")
- -------------------------------------------------------------------------------------------------------------------
Operating loss (42,403) (25,452) (36,421) (88,325) (53,016) (73,187)
Add: depreciation and amortisation
of goodwill 89,891 53,956 45,510 178,727 107,279 89,560
- -------------------------------------------------------------------------------------------------------------------
EBITDA 47,488 28,504 9,089 90,402 54,263 16,373
- -------------------------------------------------------------------------------------------------------------------
2 Operating costs and expenses
- -------------------------------------------------------------------------------------------------------------------
Programming (37,762) (22,666) (23,428) (79,840) (47,923) (46,626)
Telephony (28,512) (17,114) (13,061) (52,171) (31,315) (27,440)
Selling, general and administration (78,584) (47,169) (45,474) (153,898) (92,376) (91,003)
Depreciation (78,893) (47,355) (38,902) (156,736) (94,079) (76,358)
Amortisation of goodwill (10,997) (6,601) (6,608) (21,991) (13,200) (13,202)
- -------------------------------------------------------------------------------------------------------------------
(234,748) (140,905) (127,473) (464,636) (278,893) (254,629)
- -------------------------------------------------------------------------------------------------------------------
The consolidated financial statements as set out on pages 12 and 13 which are
unaudited, have been prepared on the basis of the accounting policies set out in
the Company's 1997 Annual Report. The balance sheet, profit and loss account and
cash flow information at 31 December 1997 is derived from the statutory accounts
for 1997 which have been delivered to the Registrar of Companies. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985. The
economic environment in which the Company operates is the United Kingdom ("UK")
and hence its reporting currency is Pounds Sterling ("(pound)"). Merely for
convenience, the financial statements contain translations of certain Pounds
Sterling amounts into US Dollars at $1.666 per (pound)1.00, the 10.00am
mid-point of the buying and selling rates of the Federal Reserve Bank of New
York on June 30, 1998 (the Noon Buying Rate of the Federal Reserve Bank of New
York on such date was $1.6695 per (pound)1.00). 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.
Page 16
1998 Interim Report
TELEWEST COMMUNICATIONS
US GAAP Unaudited summarised consolidated balance sheets
30 June 30 June 31 December
1998 1998 1997
$000 (pound)000 (pound)000
- -------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents 43,807 26,295 29,582
Receivables and prepaid expenses 135,744 81,479 70,459
Investments 125,072 75,073 85,373
Property and equipment 2,854,173 1,713,189 1,705,520
Goodwill 754,215 452,710 465,905
Other assets 73,049 43,847 56,513
- -------------------------------------------------------------------------------------------------
Total assets 3,986,060 2,392,593 2,413,352
- -------------------------------------------------------------------------------------------------
Liabilities
Debt 2,513,154 1,508,496 1,373,054
Other liabilities 482,689 289,729 300,908
- -------------------------------------------------------------------------------------------------
Total liabilities 2,995,843 1,798,225 1,673,962
Minority interests 1,180 708 640
Shareholders' equity 989,037 593,660 738,750
- -------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity 3,986,060 2,392,593 2,413,352
- -------------------------------------------------------------------------------------------------
Page 17
1998 Interim Report
TELEWEST COMMUNICATIONS
US GAAP Unaudited summarised consolidated statements
of cash flows
6 months 6 months 6 months
ended ended ended
30 June 30 June 30 June
1998 1998 1997
$000 (pound)000 (pound)000
- ---------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net loss (241,720) (145,090) (166,785)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation 156,736 94,079 76,358
Amortisation of goodwill 21,983 13,195 13,202
Amortisation of deferred financing costs and
issue discount on senior discount debentures 71,761 43,074 37,178
Unrealised loss on foreign currency translation 2,161 1,297 24,061
Share of losses of affiliates 18,448 11,073 10,323
Gain on disposals of assets (1,211) (727) (473)
Minority interests in profits of consolidated
subsidiaries, net 113 68 210
Changes in operating assets and liabilities
Change in receivables (8,963) (5,380) (117)
Change in prepaid expenses (3,430) (2,059) (1,089)
Change in accounts payable 18,356 11,018 (8,648)
Change in other liabilities (21,402) (12,845) (6,363)
Net cash provided by/(used) in operating activities 12,832 7,703 (22,143)
Net cash used in investing activities (182,709) (109,669) (215,695)
Net cash provided by financing activities 164,423 98,693 220,437
- ---------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (5,454) (3,273) (17,401)
Effect of exchange rate changes on cash and cash equivalents (23) (14) 17
Cash and cash equivalents at beginning of period 49,284 29,582 79,116
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 43,807 26,295 61,732
- ---------------------------------------------------------------------------------------------------
Page 18
1998 Interim Report
TELEWEST COMMUNICATIONS
The contents of this Interim Report, for which the directors of Telewest are
solely responsible, have been approved by J. Henry Schroder & Co. Limited, a
member of The Securities and Futures Authority Limited, for the purposes of
Section 57 of the Financial Services Act 1986.
The Directors and the Proposed Directors of Telewest, whose names are set out on
page III-1 of the Offer Document dated June 29, 1998 accept responsibility for
the information contained in this Interim Report. To the best of the knowledge
and belief of the Directors and Proposed Directors of Telewest (who have taken
all reasonable care to ensure that such is the case), the information contained
in this Interim Report for which they accept responsibility is in accordance
with the facts and does not omit anything likely to affect the import of such
information.
Schroders, which is regulated in the UK by The Securities and Futures Authority
Limited, is acting for Telewest and no one else in connection with the offer by
Telewest for the entire issued share capital of General Cable PLC and will not
be responsible to anyone other than Telewest for providing the protections
afforded to customers of Schroders or for providing advice in relation to the
contents of this Interim Report.
Telewest Communications plc
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom
Telephone: 01483 750900
Facsimile: 01483 750901
E-mail: info@webmail.telewest.co.uk
Homepage: http://www.telewest.co.uk
Registered in England 2983307
London Stock Exchange symbol: `TWT'
NASDAQ symbol: `TWSTY'
Page 19