Liberty Global (LBTYA) Q4 2014 earnings summary

Executive summary

• 2014 marked the fourth consecutive year of more than 1 million organic customer additions; 1.3 million additions lifted total customer relationships to 27.3 million and RGUs to 55.9 million.

• Full-year financial targets were met or exceeded: revenue reached $18.2 billion, rebased growth was 3%, operating cash flow (OCF) rose 5.5% on a rebased basis, and adjusted free cash flow (FCF) grew 25% to $2.2 billion.

Financial highlights

• Revenue was $18,248.3 million, up 26.1% reported and 3.6% organically; the reported increase included $3,096.0 million from acquisitions.

• Operating income was $2,228.2 million versus $2,012.1 million; continuing-operations net loss was $980.9 million versus $882.0 million.

• Net loss attributable to shareholders was $695.0 million, or $0.87 per share; continuing-operations loss attributable to shareholders was $1,028.5 million, or $1.29 per share.

• OCF was $8,522.3 million, up 6.2% organically; adjusted FCF was $2,154.2 million, with 25% growth versus combined 2013 adjusted FCF.

• Net cash from operating activities was $5,612.8 million; cash capital expenditures were $2,684.4 million, and depreciation and amortization was $5,500.1 million.

Outlook and guidance

• 2015 OCF margins were expected to increase slightly in Europe and Chile; Netherlands margins were expected to remain relatively unchanged as Ziggo synergies offset competition and the full-year mix impact.

• Organic revenue and OCF growth were expected over the next few years, supported by ARPU, broadband and digital cable RGUs, mobile and B2B growth, cost efficiencies, and integration synergies.

• The U.K. network extension could connect up to 4 million premises from 2015–2020; estimated incremental property and equipment additions were £2.9–£3.1 billion, with meaningful growth benefits expected from 2017.

• Including the extension, 2015 consolidated property and equipment additions were expected at 21%–23% of revenue; 2015 VAT changes were expected to add £30–£35 million for Virgin Media and €12–€14 million for UPC DTH.

• Ziggo integration synergy target was raised by over 50% to €250 million; Business Services revenue was expected to continue strong top-line growth.