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Virgin Media – Half Year And Second Quarter 2012 Results

Stocks in this article: VMED

Virgin Media Inc. (NASDAQ: VMED; LSE: VMED) announces results for the six months and quarter ended June 30, 2012.

Strong financial performance

  • Revenue up 3.3% to £2,033m for the half-year
    • Revenue up 4.2% to £1,027m for the quarter
  • OCF 1 up 2.7% to £789m for the half-year
    • OCF up 5.1% to £412m for the quarter
    • Operating income up 26% to £311m for the half-year; up 33% to £180m for the quarter
    • Net income of £72m for the half-year; £65m for the quarter
  • FCF 2 down 3.2% to £216m for half-year
    • FCF up 4.6% to £128m for the quarter
    • Net cash provided by operating activities down 21% to £443m for the half-year, down 19% to £231m for the quarter

Multiple sources of high quality revenue growth

  • On-going improvement of customer base mix in Q2
    • TiVo customer base increased 261,700 to 938,800; reaching 1m this week
    • 37,800 increase in the paying TV base 3
    • Superfast broadband base (30Mb and above) increased by 459,800 to 1.3m
  • Continued improvement in cable customer attraction and retention
    • Gross customer additions up 7.0% and disconnections down 4.6% with churn at 1.4%
    • Net disconnections improved from 36,000 to 14,700
    • Cable ARPU up 3.1% to £48.82 in Q2
  • Mobile revenue up 2.9% to £136m in Q2, with contract mobile revenue up 15% to £102m
    • Contract mobile customers increased 53,900 to 1.6m
    • Quad-play penetration continues to grow; now at 15.4%
  • Business division revenue up 9.8% to £166m in Q2

Capital Return programme continued

  • £60m of stock buybacks executed in Q2; £235m remaining buyback authority this year
  • Initiation of next $175m Accelerated Stock Repurchase announced today

Neil Berkett, Chief Executive Officer of Virgin Media, said: "This has been a quarter of improved revenue and OCF growth. We are well placed to benefit from the fast-growing demand for superfast broadband and TiVo positions us well to lead the evolving TV market. Customer ARPU and churn have improved and, together with our growing Business division and great value mobile offerings, we have maintained steady financial progress across the company which is translating into strong free cash flow as well as continued shareholder returns."

Note: The notes preceding the Appendices relating to non-GAAP financial measures and other matters and the Appendices to this earnings release are considered an integral part of the financial and operational information in this release. Financial and statistical information is as at and for the three months ended June 30, 2012, unless otherwise stated. Comparisons of financial and operating statistics are to the second quarter of 2011, unless otherwise stated. Where financial information is given for the first half of 2012, any comparisons are to the first half of 2011, unless otherwise stated.

Conference call details

There will be a presentation today for analysts and investors in London at 1pm UK time / 8am ET, which can be accessed live on the Company’s website, www.virginmedia.com/investors. For details of the presentation, please contact Lulu Bridges of Tavistock Communications using the contact details above. Analysts and investors can dial in to the presentation on +1 646 254 3367 in the United States or +44 (0) 20 7136 6283 outside of the US - passcode 4374765# for all participants. The conference call replay will be available approximately two hours after the end of the call until midnight on Tuesday, July 31, 2012. The dial-in replay number for the US is: +1 347 366 9565 and the international dial-in replay number is: +44 (0)20 3427 0598 - passcode: 4374765#.

Forward-looking statements

This release contains certain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Please refer below to “Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995” for a more detailed discussion regarding these forward-looking statements.

 

SUMMARY FINANCIAL RESULTS

     

3 Months ended

      6 months ended
June 30, 2012       June 30, 2011 June 30, 2012       June 30, 2011
£m   £m £m £m
Revenue
Cable 706.1 682.3 1,384.4 1,348.3
Mobile 136.4 132.6 274.9 269.5
Non-cable 18.4 19.7 37.4 40.0
Consumer segment - Total 860.9 834.6 1,696.7 1,657.8
Business segment 166.0 151.2 336.4 310.3
Total Revenue 1,026.9 985.8 2,033.1 1,968.1
 
OCF 412.1 392.1 788.6 768.2
 
Operating income 179.6 134.9 310.5 245.5
 
FCF 128.4 122.7 215.5 222.6
 
Net cash provided by operating activities 231.0 286.1 443.1 557.7
 

SELECTED CONSUMER OPERATIONS STATISTICS

June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
000's 000's 000's 000's
 
Consumer cable customers 4,812.1 4,784.3 4,812.1 4,784.3
 
Consumer cable products
Broadband 4,152.6 4,048.6 4,152.6 4,048.6
Television 3,767.7 3,767.7 3,767.7 3,767.7
Telephone 4,148.3 4,155.0 4,148.3 4,155.0
12,068.6 11,971.3 12,068.6 11,971.3
 
Mobile - contract 1,641.9 1,346.6 1,641.9 1,346.6
 
 
3 Months ended 6 months ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
000's 000's 000's 000's
 
Consumer cable customer net (disconnections) additions (14.7) (36.0) 6.5 (15.8)
 
Net consumer cable product additions (disconnections)
Broadband 4.0 (12.6) 49.7 37.5
Television (7.6) (21.2) 4.6 (11.1)
Telephone 0.7 (26.0) 15.6 (6.8)
(2.9) (59.8) 69.9 19.6
 
Mobile - contract 53.9 83.2 118.0 135.8
 
£ £ £ £
 
Cable ARPU 48.82 47.35 47.90 46.78
 
Mobile ARPU 14.86 14.27 14.90 14.51
 

OVERVIEW

Improved revenue growth from across the company

Revenue growth improved in the second quarter, up 4.2% to £1,027m. Gross margin 4 improved by 4.7% to £624m. SG&A increased 3.8% to £212m, resulting in OCF of £412m, up 5.1%. Operating income increased 33% to £180m and net income was £65m, down by £33m.

Free Cash Flow was up 4.6% to £128m. Net cash provided by operating activities was down 19% to £231m.

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