Liberty Global | Annual Report 2015 Liberty Global | Annual Report 2015

People and Culture People and Culture

Our purpose at Liberty Global is to give people around the world the freedom to connect, the freedom to converse, the freedom to work, the freedom to be entertained. At the core of who we are, this is what we strive to achieve both externally with our customers and internally with our employees.

That’s why we actively measure engagement among our vibrant workforce of 37,000 employees, working across 16 countries, in a remarkably diverse culture of over 80 nationalities.

Liberty Global as a Great Place to Work

In an industry as competitive and dynamic as ours, having a highly engaged workforce is crucial to realizing our ambitious growth agenda. Therefore, we do a number of things to actively foster a culture that empowers people to grow and achieve their highest potential.

Our global employee engagement survey, aptly named Zoom, serves as a powerful measurement tool for us to hone in on our strengths and areas of improvement as an organization.

Amy Blair
Chief People Officer

Employee engagement is an integral part of how we build our culture in order to win with our people and our customers.

Employee engagement in action

Several of our operating companies have a long history of measuring employee engagement and tailoring company priorities and management actions to address employee feedback. To scale our efforts and lift our game at a global level, we launched Zoom across all our operations, reaching 37,000 employees, in early 2015. 2016 marked our second year measuring engagement with Zoom, and our global participation rate exceeded 83%, sending a clear message that our employees want to be heard and contribute to making Liberty Global an even better place to work.
Among the more than 30,000 employees across 16 countries who participated, we achieved a global engagement score of 60%, an impressive six percentage points above Aon Hewitt’s global benchmark. Our employees expressed pride in our local brands, appreciation for our diverse and inclusive environment, conveyed a strong relationship with their line managers and sufficient influence and involvement in decisions about their work. These indicators tell us that we are making good progress in developing a culture that empowers people to grow and achieve their highest potential.

We have, of course, also identified opportunities for improvement. For instance, Zoom told us that employees are concerned about complex structures and processes in the organization, which can slow decision-making. They also indicated a desire for more interaction with and clarity from senior leaders regarding the strategic direction of the company. This is invaluable feedback that we need to take on board to boost engagement and realize our growth ambitions.

Zoom presents a unique opportunity for all employees to share their views on what the Company is doing well and where we can improve

Developing leaders

We pride ourselves on our world-class global development programs for senior and emerging leaders, which are aimed at building our unique culture of entrepreneurship and innovation and preparing leaders to take on the challenges in our ever-changing industry. Our recent Zoom survey shows that our leadership development efforts continue to pay off.

Zoom affirmed our strong retention rate as well as a robust leadership engagement score of 84%, up 4% compared to last year, which will be instrumental in driving overall engagement even higher in the years ahead.

Driving actions globally and locally

With impressive participation and positive engagement scores comes great responsibility to take action. Our philosophy is that it’s the sum of targeted and personalized actions that make a BIG difference. Therefore, we take a multi-faceted approach to action planning for maximum impact. At a global level, we work with a network of 28 engagement specialists across all of our entities to both analyze the results and share local anecdotal feedback to inform our evolving global people strategy: the People Agenda.

Then, all leaders who manage a team are accountable for setting tailored actions, preferably with their teams in a collaborative and co-creative way, and it’s our managers that are responsible for boosting engagement within their team. In a company as dynamic as ours, engagement priorities differ; therefore, we want to ensure that actions are localized.

At Virgin Media, employee engagement consistently exceeds UK country benchmarks by more than 20%

Zoom spotlight

While several of our operating companies are recognized as a ‘Best Employer’, Virgin Media is undoubtedly one with a unique cultural ‘buzz’ that is as contagious as it is successful. Employee engagement consistently exceeds UK country benchmarks by more than 20 percentage points, making Virgin Media one of the ‘Best Employers’ in the UK*. Virgin Media understands how engagement has a customer and financial impact. In customer call centers, for example, highly engaged employees generate, on average, a net promoter score (NPS) score 15 points higher than disengaged employees. So, engagement is engrained in the fabric of the company. Every manager carries the responsibility to act on engagement results, and company-wide actions are sustained across the organization, for example:

  • Analyzing feedback from Zoom is taken very seriously and there are a number of people involved to take action. Leaders form action groups to understand the feedback, formulate action plans, move the plans and communicate progress within their respective areas and anecdotal feedback is gathered on an ongoing basis.
  • Employees are encouraged to bring their unique personality to work, helping fuel a culture of inclusiveness, innovation and fun.
  • Management communicates openly, often and in a relatable and genuine tone to connect with employees.
  • Recognition is seen as one of the most powerful ways to manage culture and promote behavior, and platforms like ‘Dazzle’ and ‘Shout’ and an annual ‘Sparkle Awards’ event to celebrate people allow for people across all levels and roles to be recognized for their contributions.
  • Employees are entitled one volunteer day per year to support the local community, and employees who participate are, on average, 2% points more engaged.
  • Employees are asked to challenge conventional rules in meetings to push boundaries and create a sense of involvement. Employees can also voice their opinions openly on the intranet.

As the business evolves, Virgin Media’s approach to engagement provides a strong anchor point for employees to assimilate into and adapt with the business, creating positive shared values.

* Source: Aon Hewitt ‘Best Employers’

Notes

Information presented in our Online Annual Report is as of December 31, 2015, unless otherwise stated. Highlights that refer to statements such as ‘current’ or ‘to date’ are as of our earnings release dated February 15, 2016.

Forward-Looking Statements

This online Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our expectations with respect to our future growth prospects. See pages I-5, I-6 and I-7 of the Annual Report on Form 10-K available on this website for a description of other forward-looking statements included in this review and certain of the risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. 

Notes on Defined Terms

When reviewing and analyzing our operating results and statistics, it is important to keep in mind that other third party entities own significant interests in certain of our subsidiaries. For additional information, see note 18 to our consolidated financial statements in the Annual Report on Form 10-K.

Financial metrics

  1. As used herein, operating cash flow or OCF has the same meaning as the term “Adjusted OIBDA” that is referenced in our Form 10-K. For our definition of Adjusted OIBDA and the related reconciliation, see note 18 to our consolidated financial statements in the Annual Report on Form 10-K. 
  2. Rebased revenue and OCF growth is presented to show growth on a comparable basis by neutralizing the effects of acquisitions and foreign currency exchange rate fluctuations. For purposes of calculating rebased revenue and OCF growth, we have adjusted our historical 2014 revenue and OCF to (i) include the pre-acquisition revenue and OCF of certain entities acquired during 2014 and 2015 in the respective 2014 rebased amounts to the same extent that the revenue and OCF of such entities are included in our 2015 results and (ii) reflect the translation of our 2014 rebased amounts at the applicable average exchange rates that were used to translate our 2015 results.
  3. Our OCF margin is calculated by dividing OCF by total revenue for the applicable period. 
  4. We define free cash flow or FCF as net cash provided by our operating activities, plus (i) excess tax benefits related to the exercise of share-based incentive awards, (ii) cash payments for third-party costs directly associated with successful and unsuccessful acquisitions and dispositions and (iii) expenses financed by an intermediary, less (a) capital expenditures, as reported in our consolidated statements of cash flows, (b) principal payments on amounts financed by vendors and intermediaries and (c) principal payments on capital leases (exclusive of the portions of the network lease in Belgium and the duct leases in Germany that we assumed in connection with certain acquisitions), with each item excluding any cash provided or used by our discontinued operations. For additional information concerning these definitions and calculations, please see our earnings release dated February 15, 2016.
  5. Basis of Presentation: with the exception of Net earnings (loss) and Net earnings (loss) attributable to Liberty Global shareholders, all Operating and Financial information contained herein is that of our continuing operations.
  6. Revenue, OCF and Operating Income for the year ended 2015. For a reconciliation of combined OCF to operating income, see our earnings releases dated February 15, 2016.

Subscriber metrics

  1. Unless otherwise indicated in this online Annual Report, subscriber growth statistics exclude subscribers of acquired entities at the date of acquisition, but include the impact of changes in subscribers from the date of acquisition. These statistics are presented on a net basis.
  2. Homes Passed are homes, residential multiple dwelling units or commercial units that can be connected to our networks without materially extending the distribution plant, except for DTH and Multi-channel Multipoint (“microwave”) Distribution System (“MMDS”) homes. Our Homes Passed counts are based on census data that can change based on either revisions to the data or from new census results. We do not count homes passed for DTH. With respect to MMDS, one MMDS customer is equal to one Home Passed. Due to the fact that we do not own the partner networks (defined below) used in Switzerland and the Netherlands (see note 11) we do not report homes passed for Switzerland’s and the Netherlands’ partner networks.
  3. Two-way Homes Passed are Homes Passed by those sections of our networks that are technologically capable of providing two-way services, including video, internet and telephony services.
  4. Customer Relationships are the number of customers who receive at least one of our video, internet or telephony services that we count as Revenue Generating Units (“RGUs”), without regard to which or to how many services they subscribe. To the extent that RGU counts include equivalent billing unit (“EBU”) adjustments, we reflect corresponding adjustments to our Customer Relationship counts. For further information regarding our EBU calculation, see Additional General Notes to Tables. Customer Relationships generally are counted on a unique premises basis. Accordingly, if an individual receives our services in two premises (e.g., a primary home and a vacation home), that individual generally will count as two Customer Relationships. We exclude mobile-only customers from Customer Relationships.
  5. Revenue Generating Unit or "RGU" is separately a Basic Video Subscriber, Enhanced Video Subscriber, DTH Subscriber, MMDS Subscriber, Internet Subscriber or Telephony Subscriber. A home, residential multiple dwelling unit, or commercial unit may contain one or more RGUs. For example, if a residential customer in our Austrian market subscribed to our enhanced video service, telephony service and broadband internet service, the customer would constitute three RGUs. Total RGUs is the sum of Basic Video, Enhanced Video, DTH, MMDS, Internet and Telephony Subscribers. RGUs generally are counted on a unique premises basis such that a given premises does not count as more than one RGU for any given service. On the other hand, if an individual receives one of our services in two premises (e.g., a primary home and a vacation home), that individual will count as two RGUs for that service. Each bundled cable, internet or telephony service is counted as a separate RGU regardless of the nature of any bundling discount or promotion. Non-paying subscribers are counted as subscribers during their free promotional service period. Some of these subscribers may choose to disconnect after their free service period. Services offered without charge on a long-term basis (e.g., VIP subscribers, free service to employees) generally are not counted as RGUs. We do not include subscriptions to mobile services in our externally reported RGU counts. In this regard, our December 31, 2015 RGU counts exclude our separately reported postpaid and prepaid mobile subscribers.
  6. Basic Video Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video service over our broadband network either via an analog video signal or via a digital video signal without subscribing to any recurring monthly service that requires the use of encryption-enabling technology. Encryption-enabling technology includes smart cards, or other integrated or virtual technologies that we use to provide our enhanced service offerings. With the exception of RGUs that we count on an EBU basis, we count RGUs on a unique premises basis. In other words, a subscriber with multiple outlets in one premises is counted as one RGU and a subscriber with two homes and a subscription to our video service at each home is counted as two RGUs. In Europe, we have approximately 133,800 “lifeline” customers that are counted on a per connection basis, representing the least expensive regulated tier of video cable service, with only a few channels.
  7. Enhanced Video Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video service over our broadband network or through a partner network via a digital video signal while subscribing to any recurring monthly service that requires the use of encryption-enabling technology. Enhanced Video Subscribers that are not counted on an EBU basis are counted on a unique premises basis. For example, a subscriber with one or more set-top boxes that receives our video service in one premises is generally counted as just one subscriber. An Enhanced Video Subscriber is not counted as a Basic Video Subscriber. As we migrate customers from basic to enhanced video services, we report a decrease in our Basic Video Subscribers equal to the increase in our Enhanced Video Subscribers. Subscribers to enhanced video services provided by our operations in Switzerland and the Netherlands over partner networks receive basic video services from the partner networks as opposed to our operations.
  8. DTH Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video programming broadcast directly via a geosynchronous satellite.
  9. MMDS Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video programming via a MMDS.
  10. Internet Subscriber is a home, residential multiple dwelling unit or commercial unit that receives internet services over our networks, or that we service through a partner network. Our Internet Subscribers exclude 53,000 digital subscriber line (“DSL”) subscribers within Austria that are not serviced over our networks. Our Internet Subscribers do not include customers that receive services from dial-up connections. In Switzerland, we offer a 2 Mbps internet service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Internet Subscribers in Switzerland include 100,000 subscribers who have requested and received this service.
  11. Telephony Subscriber is a home, residential multiple dwelling unit or commercial unit that receives voice services over our networks, or that we service through a partner network. Telephony Subscribers exclude mobile telephony subscribers. Our Telephony Subscribers exclude 41,300 subscribers within Austria that are not serviced over our networks. In Switzerland, we offer a basic phone service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Telephony Subscribers in Switzerland include 57,200 subscribers who have requested and received this service.
  12. Pursuant to service agreements, Switzerland and, to a much lesser extent, the Netherlands offer enhanced video, broadband internet and telephony services over networks owned by third-party cable operators (“partner networks”). A partner network RGU is only recognized if there is a direct billing relationship with the customer. At December 31, 2015, Switzerland’s partner networks account for 139,500 Customer Relationships, 284,400 RGUs, 104,400 Enhanced Video Subscribers, 106,600 Internet Subscribers, and 73,400 Telephony Subscribers.

Additional general notes to tables:

Most of our broadband communications subsidiaries provide telephony, broadband internet, data, video or other B2B services. Certain of our B2B revenue is derived from small or home office (“SOHO”) subscribers that pay a premium price to receive enhanced service levels along with video, internet or telephony services that are the same or similar to the mass marketed products offered to our residential subscribers. All mass marketed products provided to SOHOs, whether or not accompanied by enhanced service levels and/or premium prices, are included in the respective RGU and customer counts of our broadband communications operations, with only those services provided at premium prices considered to be “SOHO RGUs” or “SOHO customers”. With the exception of our B2B SOHO subscribers, we generally do not count customers of B2B services as customers or RGUs for external reporting purposes.

Certain of our residential and commercial RGUs are counted on an EBU basis, including residential multiple dwelling units and commercial establishments such as bars, hotels and hospitals in Chile and Puerto Rico and certain commercial and residential multiple dwelling units in Europe (with the exception of Germany and Belgium, where we do not count any RGUs on an EBU basis). Our EBUs are generally calculated by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. As such, we may experience variances in our EBU counts solely as a result of changes in rates. In Germany, homes passed reflect the footprint and two-way homes passed reflect the technological capability of our network up to the street cabinet, with drops from the street cabinet to the building generally added, and in-home wiring generally upgraded, on an as needed or success-based basis. In Belgium, Telenet leases a portion of its network under a long-term capital lease arrangement. These tables include operating statistics for Telenet's owned and leased networks.

While we take appropriate steps to ensure that subscriber statistics are presented on a consistent and accurate basis at any given balance sheet date, the variability from country to country in (i) the nature and pricing of products and services, (ii) the distribution platform, (iii) billing systems, (iv) bad debt collection experience and (v) other factors add complexity to the subscriber counting process. We periodically review our subscriber counting policies and underlying systems to improve the accuracy and consistency of the data reported on a prospective basis. Accordingly, we may from time to time make appropriate adjustments to our subscriber statistics based on those reviews.

Subscriber information for acquired entities is preliminary and subject to adjustment until we have completed our review of such information and determined that it is presented in accordance with our policies.

Promotional videos

The promotional videos included in this online Annual Report are examples of recent marketing campaigns. The videos may contain information and product offerings that are no longer valid.