Liberty .(US:LBTYA)2020-02-13 21:20Financial Performance - Total revenue for the consolidated reportable segments decreased by $416.4 million, or 3.5%, from $11,957.9 million in 2018 to $11,541.5 million in 2019[334]. - The overall revenue for the company in 2019 was $4,859.5 million, a decrease of 5.7% compared to 2018[357]. - Consolidated revenue decreased by $416.4 million or 3.5% in 2019 compared to 2018, with an organic decrease of $87.2 million or 0.7%[371]. - Total residential revenue declined by $512.1 million or 5.3%, with a significant impact from fixed-line telephony services decreasing by $129.8 million or 8.1%[371]. - The company reported that 53.0% of its revenue during the three months ended December 31, 2019, was derived from subsidiaries with functional currencies in British pounds, highlighting exposure to foreign currency risks[324]. Assets and Liabilities - Total assets decreased from $53,153.6 million in 2018 to $49,046.3 million in 2019, a decline of approximately 7.9%[299]. - Debt and finance lease obligations decreased from $29,805.2 million in 2018 to $28,182.5 million in 2019, a reduction of about 5.4%[299]. - The consolidated debt at December 31, 2019, was $28.3 billion, with $3.9 billion classified as current and $20.7 billion not due until 2025 or thereafter[442]. - The ratio of consolidated debt to Adjusted OIBDA was 5.4x as of December 31, 2019, while the ratio of consolidated net debt to Adjusted OIBDA was 3.7x[440]. - The aggregate carrying value of property and equipment and intangible assets comprised 58.0% of total assets as of December 31, 2019[467]. Cash Flow and Investments - Net cash provided by operating activities decreased from $3,985.0 million in 2018 to $3,714.1 million in 2019, a change of $(270.9) million[445]. - Net cash provided by investing activities increased significantly by $8,939.5 million, from $601.5 million in 2018 to $9,541.0 million in 2019, primarily due to higher net cash proceeds from the sale of discontinued operations[446]. - Adjusted free cash flow increased from $107.8 million in 2018 to $631.3 million in 2019, reflecting a significant improvement[455]. - The company reported a net increase in cash and cash equivalents of $6,333.2 million in 2019, compared to a decrease of $(1,743.3) million in 2018, marking a significant turnaround[445]. - The company anticipates maintaining significant levels of interest expense due to its capital structure and debt levels[423]. Revenue Segments - In the U.K./Ireland segment, revenue decreased by $274.8 million, or 4.0%, primarily due to a decline in RGUs and ARPU[334][336]. - Belgium's revenue decreased by $100.6 million, or 3.4%, with a notable impact from foreign exchange fluctuations of $117.5 million[334][341]. - The average number of RGUs in the U.K./Ireland increased, contributing to a $42.4 million increase in residential cable subscription revenue[336]. - The B2B revenue in Belgium increased by $31.7 million, despite a decrease in non-subscription revenue[341][344]. - The increase in residential mobile revenue was $28.8 million, driven by a rise in the average number of mobile subscribers[350]. Operating Costs and Expenses - Adjusted OIBDA margins for the consolidated reportable segments showed a decline due to increased operating costs and revenue-based taxes[329]. - Other operating expenses (excluding share-based compensation) decreased by $75.4 million or 4.4% in 2019 compared to 2018, with an organic decrease of $11.6 million or 0.7%[383]. - SG&A expenses (excluding share-based compensation) decreased by $41.6 million or 2.3% in 2019 compared to 2018, with an organic increase of $5.4 million or 0.3%[388]. - Personnel costs increased by $29.8 million or 3.7% in SG&A expenses, primarily due to higher incentive compensation costs and higher average costs per employee[389]. - Programming and other direct costs of services decreased by $7.4 million or 0.2%, but increased by $81.2 million or 2.5% on an organic basis[379]. Market and Competitive Environment - The company is facing competition across all markets, adversely affecting the ability to maintain RGUs and ARPU[332]. - The impact of regulatory changes on interconnection fees could affect future revenue and costs, influencing Adjusted OIBDA[330]. - The company is focusing on expanding its B2B services, particularly in broadband internet for SOHO subscribers in the U.K.[339]. - The company experienced inflationary pressures and foreign currency exchange risks that could impact operating margins[331]. - The company connected approximately 649,000 additional residential and commercial premises to its networks in 2019, with expectations to continue this expansion in 2020[315]. Acquisitions and Investments - The company completed the De Vijver Media Acquisition on June 3, 2019, impacting the comparability of its 2019 and 2018 results of operations[322]. - The company continues to invest in new technologies to enhance internet speeds, offering broadband services with download speeds of up to 1.1 Gbps depending on location[308]. - The capital costs associated with network extensions are expected to decline in 2020 compared to 2019, although they will still represent a significant portion of capital costs[316]. - The company capitalizes costs associated with the construction and installation of new cable and mobile transmission facilities[474]. - Significant management judgment is required to estimate the fair value of reporting units and long-lived assets, with a focus on subscriber growth and retention rates[470]. Tax and Legal Matters - Income tax expense significantly decreased to $253.0 million in 2019 from $1,573.3 million in 2018[418]. - The company recognized a net provision for litigation of £41.3 million ($54.0 million) related to a VAT matter in the U.K. during Q4 2019[396]. - The amount of unrecognized tax benefits was $664.3 million as of December 31, 2019, with $546.5 million potentially favorable to the effective income tax rate if recognized[484]. - The valuation allowance against deferred tax assets was $4,235.5 million as of December 31, 2019[483]. - The company did not record any significant impairment charges for property and equipment and intangible assets during the three years ended December 31, 2019[472].