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Ziggo N.V. Annual Report 2013

Connecting people

CEO Statement 3

Ziggo at a glance 5

Products and services 6

Facts & figures 7

Mission, trends

and strategy 9

Operational review 13

Financial review 19

Corporate social

responsibility 28

Investor relations 31

Corporate Governance 36

Chairman’s Statement 37

Supervisory Board 39

Board of Management 41

Dutch Corporate

Governance Code 43

Risk Management and

Internal Control 45

In Control and

Compliance Statement 53

Report of the

Supervisory Board 54

Remuneration Report 56

Consolidated statement

of income 62


of comprehensive

income 63


of financial position 64


of changes in equity 65


of cash flows 66

Notes to the

consolidated financial

statements 67

Corporate financial

statements 102

Notes to the corporate

financial statements 106

Appropriation of result 114

Independent auditor’s

report 115

Contact details and

address 116

Ziggo N.V. Annual Report 2013 2

Ziggo at a glance Governance Financial statementsPerformance

This pdf is interactive. The content is clickable so you can navigate through this document.

René Obermann, CEO

“ The company’s people, their motivation and their achievements impress me.”

“ Focus on the customer”

CEO Statement



Contents

The growth was supported by a revised marketing strategy,

which was implemented early in the year. Higher investments

in sales, promotions and customer retention all contributed to

Ziggo’s performance in 2013.

This was also the year the Company took its first steps in

offering mobile services and rolled out over 1 million WifiSpots,

resulting in more than 300,000 unique users every week.

In a converging world, these milestones are important for

our future ambitions of connecting our customers anywhere,

anytime. Driving innovation, together with customer

satisfaction, are key to differentiate Ziggo in a competitive

landscape where technology changes so rapidly.

Growth in 2014 will be based on our strong network and

appealing product offerings, such as superior broadband

internet, Ziggo Mobile and our B2B services. As we anticipate

no substantial change in the intense market competitiveness,

we intend to make further investments in sales and promotions,

customer retention and product development to strengthen

our position. We expect that these additional investments,

which will be skewed towards the first half of the year, to result

in a flat EBITDA for 2014 compared to last year. Following

increased network investments to stay ahead of ever-increasing

customer demand for bandwidth, the investments in set top

boxes to support the customer experience, and the continuation

of investments to upgrade our IT systems to enable converged

services, Capex will increase to around €370 million in 2014.

In early 2014, the Company was presented with a potential

change in ownership. This is still awaiting the acceptance of

shareholders and approval by the authorities. However, given the

great potential of the merger of two strong regionally operating

Dutch companies, it has the full support of the Supervisory

Board and the Board of Management. Until completion of the

transaction, the Company has agreed not to pay or declare any

further (interim) dividend or to make any distribution.

” Growth in 2014 will be based on our strong network and appealing product offerings such as superior broadband internet, Ziggo Mobile and our B2B services.“

The dedication of our employees was extremely important in

driving customer satisfaction levels in 2013. Again, we were

able to outperform the previous year. I would like to thank all

of them. Also, I would like to thank our customers, for their

appreciation and trust in Ziggo. It is my strong belief that 2014

will be a challenging, but successful year.

René Obermann

Chief Executive Officer Ziggo

March 5, 2014

As the new CEO of Ziggo, the Company’s people, their motivation and their achievements impress me. In a competitive market, characterized by rapid technological changes, the Company managed solid growth, especially in All-in-1 bundles, broadband internet subscriptions and the segment of home offices and small and medium-sized businesses of the business market.



Contents

Ziggo at a glance

Ziggo is a Dutch provider of entertainment, information and communication through television, broadband internet and telephony services. We supply around 2.8 million households and small businesses with television, almost 2.3 million with digital television, about 1.9 million with broadband internet, and 1.6 million with telephony services. About 1.5 million customers are subscribers to our All-in-1 bundle.



Contents

Products and servicesZiggo owns a next-generation network capable of providing the

bandwidth required for all future services currently foreseen.

Today we provide 150 Mbps download speed throughout our

complete service area. With the technology currently in place

in the network, we can upgrade this to 400 Mbps, while higher

speeds are already tested over our kind of network, proving our

infrastructure is a next-generation future-proof network.

TelevisionZiggo offers customers three digital TV packages, all of which

include interactive television- and premium packages. With this

offering, customers have access to high quality digital and

HD TV and interactive and recording facilities depending on

the set top box they have selected. In addition to our TV

packages, we offer subscriptions to premium channels such as

HBO, Fox Sports, Film1, Sport1 and channels with a lifestyle

angle. We have also developed a TV app to enable customers

to watch live TV on smartphones and tablets, in and around

the house and around our 1 million WifiSpots.

InternetZiggo offers the highest internet speeds in the market. This is

due to our ultramodern hybrid fibre coaxial network, with fibre

very close to the home – within less than 300 meters – and

the implementation of EuroDOCSIS 3.0. We are able to provide

higher speeds and capacity in line with the development of

the demand for broadband.

TelephonyZiggo telephony subscribers can phone each other, other

landlines and mobile numbers within The Netherlands for an

additional fixed fee of €9.95 per month.

All-in-1 bundlesOver half our customers subscribe to our products in the

triple-play product All-in-1. This is the best bundle in the

market, with highest quality content, best HD signal quality,

highest internet speeds and high quality telephony services

for an attractive price.

Business to businessBusiness-to-business customers use services such as data

communication, telephony, television and internet. Ziggo

provides these services over the same network to business

customers such as home offices, small and medium-sized

businesses, hospitals, hotels, schools and student dorms.

We have a range of different products and services bundled

in ways particularly suited to the business sector. For home

offices and small businesses, these services are provided

through business bundles, such as Office Basis and Internet Plus.

Introduced in 2013

Cloud User InterfaceOn March 15, Ziggo officially introduced the first fully cloud-

based interactive DVB-C TV service in the world. By combining

the IP protocol with the DVB-C television standard, even set

top boxes without inbuilt hardware functionality for

interactivity are now able to utilize interactive services via

cable. This enables customers to access interactive services

like Video on Demand or ‘TV Gemist’ via a simple and basic

digital receiver.

Ziggo WifiSpotsAt the end of April, we launched the roll-out of our WiFi

Homezone concept in our footprint, called ‘Ziggo WifiSpots’,

starting with the activation of 65,000 ‘Ziggo WifiSpots’ in the

city of The Hague. The wifi-hotspot concept utilizes the public

channel of our wifi EuroDOCSIS 3.0 modems at the customer’s

premises, enabling all Ziggo internet customers to access

high-speed internet in the vicinity of an activated Ziggo

modem. Since its launch in April, 2013, Ziggo has activated

over 1 million WifiSpots.

Ziggo MobileOn September 16, Ziggo launched its mobile voice and data

service: Ziggo Mobile. Ziggo Mobile has been specially created

for existing Ziggo customers. Ziggo Mobile has two SIM-Only

subscription options for consumers and two for business

clients. The basic consumer subscription is available for

€15 per month (incl. VAT). This subscription offers 300 minutes

call time/text messages, 1,000 MB data and unlimited access to

more than 1 million Ziggo WifiSpots. There is an introductory

subscription for business clients of €20 (excl. VAT) with 400

minutes call time/text messages, 1,000 MB data and unlimited

access to the Ziggo WifiSpots. Both Ziggo Mobile propositions

come with one-month notice periods.

CI+ 1.3 moduleOn November 5, we introduced the CI+ 1.3 module, enabling

interactive services such as on-demand movies, television

series or missed TV programmes, without the use of a set top

box and using the remote control of the television set.

Ziggo is the first in the world to enable interactive television

via such a CI+ module. Since the beginning of 2013, an

increasing number of televisions have been enabled for

usage of this CI+ 1.3 module. The CI+ 1.3 module makes use

of the streaming graphical user interface (SGUI) which was

deployed earlier in 2013.



Contents

2.8Mln

Connected households and businesses

Serving about 2.8 million

households, home offices and

small businesses, Ziggo is one

of the largest providers of media

and communication services in

the Netherlands.

1.9

Broadband internet connections

With over 1.9 million broadband

internet customers, Ziggo is one

of the leading companies in

high-speed internet connections

up to 150Mbps.

3,354

Employees

Our dedicated employees work

day in, day out to meet our

customers’ expectations.

Mln2.3

Digital TV customers

With over 2.3 million digital TV

customers, we are the largest digital

television provider, offering the best

digital TV quality, in Standard

Definition, 3D, High Definition and VoD.

98%

Hybrid Fibre Coaxial network

The Ziggo Hybrid Fibre Coaxial (HFC)

network consists of 98% fibre,

extending on average to less than

300 metres from customer homes

and offices, which are connected

by a high-capacity coaxial cable.

Facts & figures

1.6

Telephony customers

More than 1.6 million customers

use Ziggo telephony.

Mln

Mln FTEs



Contents

Service area& locations Rijswijk

Eindhoven

Groningen

Heerhugowaard

Utrecht

Zwolle

Service area

Analog

Digital

Analog

Digital

Television subscriptions

2013

505

2,291

2012

636

2,256

2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Product overview

Total RGUs Homespassed

Total TVcustomers

Digital pay TVcustomers

Internetsubscribers

Telephonysubscribers

Total triplepay

7,186 7,102

4,247 4,213

2,796 2,892

872 929

1,910 1,788 1,608 1,493 1,538 1,423



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Mission, trends and strategyAt Ziggo, we want our customers to experience the highest level of convenience and pleasure in the field of information, communication and entertainment. We offer customers access to high-quality content and differentiating services, anywhere and at any time through our state-of-the-art network. In doing so, our mission is to be the preferred media and entertainment company.

Ziggo is the largest Dutch cable operator with a network

that covers approximately 56% of total homes passed in the

Netherlands. Our service portfolio includes TV, broadband

internet and (fixed and mobile) telephony services to

consumers and businesses. Our strategy is to combine

individual services in attractive packages, offering customers

benefits in terms of convenience and cost while optimizing

our network’s utilization.

Superior network and product offeringInstrumental to the success of Ziggo’s strategy is our fully-

owned Hybrid Fibre Coaxial (HFC) network, which is very dense

and brings high-capacity fibre very close (on average less than

300 metres) to the premises of our customers. As a result,

we provide individual households in our service area with

connections consisting for 98% out of fibre and a constant

capacity of 3-4 Gbps. Our superior network enables us to offer

our customers the best-value products and services now and

in the foreseeable future. As DOCSIS 3.0 is completely rolled

out, Ziggo chooses to deliver internet speeds up to 150 Mbps

to all our homes passed today, whilst having the option to

increase speeds to 400 Mbps at our discretion using our

current technology.

Furthermore, we focus on providing our customers with highly

attractive propositions which differentiate us from our

competitors in terms of content, speed, functionality and

quality of service. Thanks to our network strength and

differentiating service propositions, we have developed leading

positions in triple-play, digital pay TV and broadband internet

services within our service area.

We will continue to leverage our network and proposition

advantages to grow by increasing the product penetration of

existing products and realizing our innovation roadmap. These

topics will be discussed in the following paragraph.

Innovation and growth opportunities Innovation is key to capturing new growth opportunities and

strengthening our leading position in the dynamic Dutch

telecom and media market. Our strategy is fully focused on

providing customers access to high-quality content and

services – anywhere and anytime – by leveraging and further

improving our superior infrastructure and introducing new

products and services.

“ Our superior network enables us to offer our customers the best-value products and services now and in the foreseeable future.”

Ziggo continuously monitors the demand for bandwidth and

increases the capacity of its network in order to deliver the

best possible service to our customers. At the same time, since

DOCSIS 3.1 has been defined as the next industry standard, we

closely monitor the development of the next generation of

corresponding hardware, so we can roll out DOCSIS 3.1 and

gradually increase internet speeds to up to 10 Gbps as our

customers need it. In doing so, Ziggo makes sure it maintains

its superior network advantage in the longer run.

Ziggo believes that ubiquitous broadband connectivity will

become increasingly important for end users and we are

deploying a mix of technologies and infrastructures to cater

to this need. In 2013, Ziggo successfully rolled out more than

1.1 million WifiSpots, using Ziggo wifi routers at the premises of



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our consumer and business customers as public hotspots for

other Ziggo customers. Moreover, we have started pilots in

2013 to further expand the wifi coverage in the public space

for our customers by installing public hotspots on Ziggo’s

existing street cabinets. The use of public hotspots using wifi

routers and street cabinets implies a significant expansion of

the accessibility of our high-capacity network for individual

customers far beyond proximity of their homes. Finally, we

further complement our fixed and wifi coverage with a range

of mobile solutions and infrastructures, such as an MVNO

(mobile virtual network operator) and our 2.6Ghz LTE license

acquired in 2010. In September 2013, Ziggo successfully

launched its first mobile propositions offering mobile voice

and data to existing customers. The fact that Ziggo already has

a continually expanding high-density wifi network in place

means low-cost, high-speed connectivity to customers and

low-cost benefits to Ziggo due to mobile data offloading.

Taken together, these elements constitute important steps

towards the realization of our connectivity strategy focused

on providing ubiquitous broadband access to truly converged

voice and video services.

We continue to improve our TV proposition by offering

interactive solutions. In 2013, we launched our cloud-based

user interface offering an interactive TV experience through

a high-end user interface on our customers’ non-interactive

set top boxes. Furthermore, we have rolled out the Interactive

CI+1.3 CAM module; combined with our cloud-base UI this

enables us to offer interactive services on over 260 CI-certified

television sets, which eliminates the use of set top boxes

altogether. Both innovations will increase the penetration of

Interactive Television amongst our customers and, combined

with our ubiquitous connectivity, contribute to the realization

of our TV Everywhere strategy enabling customers to watch

interactive television on tablets and smartphones wherever

they want, whenever they want.

Customer servicesIncreasing customer satisfaction is of crucial importance

to Ziggo. About one-third of our workforce is active in direct

customer service. We have invested and will continue to invest

heavily in our customer services. The fact that a significant

part of our employees’ and management performance

bonuses are based on customer satisfaction criteria

underscores the importance we attach to customer service.

The increase of customer satisfaction and Net Promoter Score

ratings exceeded our objectives in 2013. We continue to invest

in improving our products and services in order to meet the

highest standards of customer satisfaction.

Business ClientsZiggo is traditionally a service provider to private households,

but our superior network also enables us to deliver premium-

quality services with attractive pricing in the business market.

In recent years we have been gaining market share among home

offices and small and medium-sized companies and we aim to

further strengthen this position. At the same time, we aim to

further grow in the business market by serving customers in the

segments of medium and large companies. To this end, Ziggo

acquired Esprit Telecom in 2013, providing access to their base

in the medium and large segment, indirect sales channels and

national DSL network. Furthermore, we continue to cater to

the business market by developing tailored solutions to our

business customers in selected industry verticals.



Contents

Connecting peopleZiggo MobileProviding customers with television, internet and telephone services at home was just the beginning. Ziggo Mobile now makes communication, content and information available anywhere, anytime. Already competitively priced, Ziggo Mobile is supplemented by unlimited access to our more than one million WifiSpots. Mobile telephony is an important step towards offering customers fully converged services.



Contents

PerformanceOperational review

Over the full year, Ziggo added 27,000 new subscriptions in the

consumer market. At the end of December 2013, total

consumer RGUs reached 6.94 million, an increase of 0.4% year

on year. The number of subscribers to the All-in-1 bundle grew

by 100,000 or 7.1% to 1.495 million. The number of internet

subscribers grew by 104,000 to a total of 1.86 million at

year-end 2013 and by 6.0% compared to last year, driven by

the growth in All-in-1 and the increase of the internet speeds

and the roll-out of Ziggo WifiSpots. The number of digital TV

subscribers increased to 2.25 million, representing a

penetration of over 84.7% of our customer base. The number

of TV-only subscribers decreased to a total of 747,000 at

December 31, 2013. The decrease was mainly due to the upsell

of the dual play and triple play bundle to our TV-only

subscribers as well as churn. Among TV-only subscribers,

churn came down compared to the end of last year and the

first half of 2013, following higher investments in customer

retention, the upsell to dual play and triple play and the

investment in improved product propositions, like the increase

of the internet speeds and the roll-out of Ziggo WifiSpots.

However, we expect to continue to experience churn among

our TV-only customers as a result of a market moving towards

triple-play and a competitive environment. Churn on all other

product lines, and for the All-in-1 bundle in particular, is

significantly lower than churn among TV-only subscribers.

Therefore, we will continue to focus on upgrading customers

to our dual play and triple play bundles.

The total number of consumer telephony subscribers rose to

1.56 million at year-end 2013, an increase of 6.9% compared to

a year ago. This increase is mainly the result of the increase in

All-in-1 subscriptions, partly mitigated by a number of

customers who churn their fixed-line telephony subscription

and switched from triple play to dual play.

RGUs per customer grew to 2.56, up 4.6% compared to last

year, following a growth in RGUs combined with a lower

number of customers. Excluding digital Pay TV as a separate

RGU, Ziggo recorded an average of 2.24 RGUs per customer

or a 5.8% growth compared to the previous year.


Financial statementsGovernancePerformanceZiggo at a glance

Contents

Marketing & SalesAt the start of January, a campaign was launched to counter

local FttH (Fiber to the Home) activities. The initiative

emphasized the future-proof network of Ziggo, delivering

high-speed internet (up to 150Mbps today), superb High

Definition television channels and the best quality telephony,

combined with a special offer. These targeted retention and

win-back campaigns were supported by special retention offers

granting a free interactive receiver or recorder, in combination

with a twelve- or twenty-four month contract, respectively.

The campaign was launched in areas where FttH initiatives are

about to set off, and continued to run throughout 2013.

In February we started several new sales and promotional

campaigns focusing on triple play, dual play and upsell to

interactive TV services. New subscribers to our All-in-1 bundle

with a minimum twelve-month contract period were invited

to choose their own ’special offer’: either an introduction

discount on their monthly subscription fee or a free set top

box. The Android tablet was added in the second quarter.

During the second quarter we also launched a number of

new campaigns focusing on customer loyalty and customer

retention, whereby existing customers can purchase an

interactive HD receiver or an interactive HD recorder at

an attractive discount.

In addition to the sales and retention campaigns that

continued from the second quarter onwards, several new

campaigns were launched in the third quarter. The successful

sales campaign ‘Overstapweken’ (switching weeks) ran

throughout the summer period and invited new All-in-1

customers to choose their own promotional offer, varying

from a discount on the subscription for the first six months,

a free Android tablet, or a free interactive HD receiver to

a one-off discount for an interactive HD recorder.

In August, our new branding campaign was introduced,

emphasizing the new Ziggo pay-off: ‘connected for ever’.

Maintaining close contact plays an important role with the five

characters in the campaign. In different settings, this new line

of TV commercials focuses on the emotional connection

people have.

In September the HBO ‘Series Nights and sales campaign’

started. The campaign had a two-phased approach. The first

phase kicked off with a loyalty campaign for the existing Ziggo

customers. On the free accessible Ziggo TV channel, several

high-quality HBO series were broadcast for a full week. In the

second phase of the campaign, a discount of 50% for four

months was offered to new HBO subscribers.

On September 16, the introduction of Ziggo Mobile was

supported by a brand and promotional campaign through

TV commercials, advertisements in daily newspapers and

several direct mail campaigns, emphasizing the special offer

for existing Ziggo customers and the additional access to

our Ziggo WifiSpots for subscribers to Ziggo Mobile.

The launch of Ziggo Mobile in the 2nd half of September was

followed up by promotions through TV and radio commercials,

online banners and direct mail campaigns. The two SIM-Only

subscriptions for consumers and the two for business clients

were well received.

In December of 2013, a special campaign was launched called

the ‘Ziggo Decemberdagen’. Besides the typical bundle

promotional offers for new customers, existing customers

were offered several free movies on our event channel and a

live cooking workshop with Rudolf van Veen in cooperation

with the 24Kitchen channel. During the broadcast, participants

had the opportunity to ask advice and share photos of their

home cooked meals via social media.

Products & ServicesOn March 15, Ziggo officially introduced the first fully cloud-

based interactive DVB-C TV service in the world, as announced

in the fourth quarter of 2012. By combining the IP protocol

with the DVB-C television standard, even set top boxes without

built-in hardware functionality for interactivity, are now able

to utilize interactive services via cable. Part of this innovation

is the migration of the new streaming graphical user interface

(SGUI). The user-friendly GUI, which is based on HTML5, is

streamed to the user over the DVB-C network using a

temporary personal connection. This enables customers to

access interactive services like Video on Demand or ‘TV Gemist’

via a simple and basic digital receiver. By December 31, the

number of activated decoders with this new SGUI had grown

to over 310,000 (excl. CI+ 1.3). On December 31, we had over

566,000 customers with an interactive device, while those

devices with streaming graphical user interface were already

accounting for 40-50% of total VOD activity.

At the end of April, we launched the roll-out of our WiFi

Homezone concept in our footprint, called ‘Ziggo WifiSpots’,

starting with the activation of 65,000 ‘Ziggo WifiSpots’ in the

city of The Hague. The wifi-hotspot concept utilizes the public

channel of our wifi EuroDOCSIS 3.0 modems at the customer’s

premises, enabling all Ziggo internet customers to access

high-speed internet in the vicinity of an activated Ziggo

modem. The introduction was supported by a special

communication campaign through television commercials,

advertising and mailings to explain the concept and

communicate the benefits for Ziggo customers: mobility and

high-quality internet access on any device, anywhere in our

footprint. Since its launch in April, 2013, Ziggo has activated

over 1 million WifiSpots.


Ziggo at a glance Governance Financial statementsPerformanceZiggo at a glance Governance Financial statementsPerformance

Contents

Since the launch, we saw an anticipated strong increase in the

number of active users of WifiSpots as well as in the size

of data offloaded every day. In the municipality of The Hague

we started with a pilot of adding 120 public, high-quality

WifiSpots in the public domain as part of a project between

the city council of The Hague and Ziggo. On top of this

public wifi initiative, we expect to expand the number of

Ziggo WifiSpots in The Hague on streetcabinets (non-public)

to 450 by the end of December, enabling Ziggo customers

to access the internet in the streets and city centre of

The Hague. The implementation of WifiSpots, together with

the internet speed increase, led to a significant increase in

our Net Promoter Score in the third quarter.

By the end of July, we finalized the internet speed increase for

approximately 800,000 internet subscribers. The internet

speed for basic internet subscriptions was raised from 8/1

MBit/s to 20/2 MBit/s and for All-in-1 Basis from 10/1 MBit/s to

20/2 MBit/s. The increase further widens the gap with DSL-

based offerings, particularly when the actual speed delivered is

considered. In addition, the highest internet speed for internet

Z3 and All-in-1 Extra increased to 150/15 MBit/s and are on

a par with FttH offered internet speeds.

On September 15, Ziggo received an award from the

International Broadcast Convention (IBC) in the Content

Delivery category with the first fully cloud-based interactive

DVB-C TV service in the world. By combining the IP protocol

with the DVB-C television standard, even set top boxes without

built-in hardware functionality for interactivity are able to

provide interactive services via a cable.

On September 16, Ziggo launched its mobile voice and data

service on the back of the roll-out of our Ziggo WifiSpots:

Ziggo Mobile. Ziggo Mobile has been specially created for

existing Ziggo customers. Ziggo strives to offer the best

possible access to its services everywhere, connecting

customers wherever they are, at attractive rates. Ziggo Mobile

plays an essential role in this respect. Ziggo Mobile has two

SIM-Only subscription options for consumers and two for

business clients. The basic consumer subscription is available

for €15 per month (incl. VAT). This subscription offers 300

minutes call time/text messages, 1,000 MB data and unlimited

access to more than 1 million Ziggo WifiSpots, a number that

will continue to grow. There is an introductory subscription for

business clients of €20 (excl. VAT) with 400 minutes call time/

text messages, 1,000 MB data and unlimited access to the

Ziggo WifiSpots. Both Ziggo Mobile propositions come with

one-month notice periods, rather than the 1 or 2 years that is

currently common in the market. The introduction of Ziggo

Mobile was very well received by the media and customers.

On November 5, we introduced the CI+ 1.3 module, enabling

interactive services such as on-demand movies, television

series or missed TV programmes, without the use of a set top

box and using the remote control of the television set. Ziggo is

the first in the world to enable interactive television via such a

CI+ module. Since the beginning of 2013, an increasing

number of televisions have been enabled for usage of this CI+

1.3 module. Many Samsung, LG and Philips televisions have

already been certified by Ziggo for this service and many more

brands are to be expected in 2014. The CI+ 1.3 module makes

use of the streaming graphical user interface (SGUI) which was

deployed earlier in 2013.

OtherOn March 2, the dance event ‘Energy’ was held in the Ziggo

Dome. A live broadcast was made available to all Ziggo

customers via the Ziggo event channel, enabling them to

experience the dance event live at home through our digital

TV service.

On June 16, a very popular live concert from the Ziggo Dome

(‘Holland Zingt Hazes’) was broadcasted for our customers via

the Ziggo TV App and via the Ziggo Event Channel. The event

was viewed by approximately 300,000 Ziggo customers. Later

that month, the Ziggo Dome celebrated its first anniversary

with a contest in which Ziggo customers could win golden

seats, enabling them to attend all concerts in the Ziggo Dome

for a whole year. Approximately one million people have

attended a concert or event since the Ziggo Dome was opened

in June 2012.

On June 30, the ParkPop concert was broadcasted live via the

Ziggo Event Channel. During this music festival in The Hague,

Ziggo WifiSpots were placed in the concert area for the

concertgoers, and a social media campaign was launched

offering participants the chance to win backstage passes for

the event.

In early November we presented the Ziggo MTV Music Week.

In the week prior to the MTV EMA Awards ceremony, which

was held in the Ziggo Dome, several artists gave small

concerts which were broadcasted through our own Ziggo

Event TV channel. In addition to this Music Week, Ziggo

sponsored the MTV EMA Awards and live broadcasted the

ceremony to its customers.

At the Ziggo Congress of November 7, it was announced that

Bits of Freedom had won the Ziggo Open Society Award 2013.

Bits of Freedom is the Dutch digital rights organization focusing

on privacy and communications freedom in the digital age.

Bernard Dijkhuizen – Ziggo’s former CEO – presented the



Contents

award, a trophy and €15,000. The other finalists were NoXqs

and Internet Protection Lab. According to the jury, both

organizations fulfill an important role in Dutch (open) society.

On November 21, Ziggo and the Ziggo Dome won a prestigious

award at the ‘SponsorRing’ event. The SponsorRing is a yearly

event where the best sponsor promotions are rewarded in

several categories. Ziggo and the Ziggo Dome were praised for

the successful partnership and won the award in the innovation

and entertainment categories.

Business MarketDuring 2013, almost 18,000 new subscribers signed up to our

Office Basis, Office Plus and Internet Plus business bundles,

bringing the total to more than 54,800 subscribers for our

business bundles targeted at home offices and SME (Small and

medium-sized) businesses. Relative growth in B2B was

particularly strong with a total of 251,400 RGUs as at year-end

compared to 193,800 RGUs in 2012.

In the first quarter of 2013 Ziggo Zakelijk focused on specific

sectors like social health care, educational institutes and

recreation and several larger new contracts were won.

In addition, new product innovations, including IP-VPN services

with Quality of Service over both fiber and hybrid fiber coax

(HFC), supporting multi-site services at cost efficient and

attractive rates for our subscribers, were introduced, offering

new areas of future growth for our business operations.

On March 14, Ziggo announced the acquisition of Esprit

Telecom, a leading provider of voice and data services for

the SME market in the Netherlands, through which it can

further expand its services to these segments. Esprit Telecom

has an active sales channel of dealers across the country.

The acquisition includes Zoranet, an ICT service provider

that focuses on the retail sector. In 2012, Esprit Telecom

generated revenues of €35 million. With this acquisition

we have strengthened our propositions and services for the

mid-market. We expect that Esprit Telecom, together with

our state-of-the-art infrastructure, will bring new growth

opportunities. Following the go-ahead from the Dutch

Authority for Consumers and Markets (ACM), we finalized

the acquisition of Esprit Telecom, which was consolidated

as of May 1, 2013.



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Television is a mass medium, but the way people use it has become very personal. Ziggo caters to all tastes and requirements. Whether a customer only wants to watch public service programmes on a conventional television, or requires an interactive HD experience: we can provide the right solution. And it doesn’t end there. Tablets can be used as a ‘second screen’ or for taking your favourite programme with you, to be watched anywhere in or around the house and around 1.1 million Ziggo WifiSpots.

Connecting peopleDigital & Interactive TV



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Financial review

Financial performance

RevenuesWe generated revenues of €1,564.8 million, an increase of

1.8% compared to 2012 (€1,536.9 million). Excluding ‘Other

Revenues’, revenues increased by 2.9% and by 1.2% excluding

the revenue contribution from Esprit Telecom. Esprit Telecom

was consolidated as of May 1, 2013 and has contributed

€25.2 million in revenues since its consolidation. The main

drivers of growth in revenues were continued growth in RGUs

for internet and telephony, driven by a further uptake of our

All-in-1 bundle, and revenues from business services.

Revenues from business services were spurred by organic

growth of 10.3% in the business market which, combined

with a €25.2 million revenue contribution from Esprit Telecom,

reported total revenue growth of 34.2%.

Consumer market revenues declined by 0.6% to €1,423.1 million

in 2013 (2012: €1,431.3 million). Excluding ‘Other revenues’,

consumer revenues increased by 0.5%. This was driven primarily

by a further uptake of our All-in-1 bundle during the year,

with 100,000 net additions, or 7.1% year-on-year growth.

This resulted in growth in both internet and telephony RGUs

by 6.0% and 6.9%, respectively. In addition, the price increase

effective February 1, 2013 contributed to the revenue growth

by approximately 1.7%. Revenue growth was partly offset by a

decline in revenues from digital pay TV by 0.4% and revenues

from telephony usage by 2.8%. Revenues generated through

our All-in-1 bundle increased by 8.3% from €672.0 million

in 2012 to €727.5 million in 2013, representing 52.3% of

total revenues from subscriptions and usage in the consumer

market, versus 48.6% in 2012.

Revenues from digital pay TV, including video on demand

(VOD), declined by 0.4%, driven by a decline in the number of

subscribers to digital pay TV from 917,000 at the end of 2012

to 853,000 at the end of 2013, which was partly offset by an

increase in ARPU for digital pay TV by 7.1%, from €14.97 in 2012

to €16.04 in 2013. The ARPU increase was driven by a strong

increase in the number of VOD transactions by 48%.

The decline in RGUs for digital pay TV was driven by (a)

depressed consumer confidence given the macro environment,

(b) the growing popularity of VOD which does not count as an

RGU, and (c) our marketing focus on customer retention and

All-in-1, and the launch of Ziggo Mobile instead of premium

pay TV. The growth in VOD transactions was negatively

impacted by the price increase for watching live football per

match from €6.95 to €11.95 in the second half of 2013.

In addition to the growing popularity of VOD, growth was

also supported by the rise in the number of customers with

an interactive set top box to 566,000 at the end of 2013,

compared to 359,000 at the end of 2012.

Revenues from telephony usage decreased by 2.8% from

€179.7 million in 2012 to €174.7 million in 2013. Excluding

interconnection revenues, revenues from telephony usage

were flat. Interconnection rates were approximately 20.0%

lower as at September 1, negatively affecting revenue by

approximately €5 million. A 6.9% increase in the number of

telephony subscribers was more than offset by a lower ARPU

for telephony usage, as more subscribers selected a flat-fee

subscription for calls within the Netherlands and several

foreign countries. The lower ARPU for telephony was also



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Financial highlights

As per December 31

Amounts in € million 2013 2012 Change

Subscriptions + usage 1,391.3 1,383.8 0.5%

Other revenues 31.8 47.5 (33.0%)

Total consumer revenues 1,423.1 1,431.3 (0.6%)

Business services revenues 141.7 105.6 34.2%

Total revenues 1,564.8 1,536.9 1.8%

Cost of goods sold 289.1 294.4 (1.8%)

Gross margin 1,275.7 1,242.5 2.7%

% of total revenues 81.5% 80.8%

Operating expenses 312.0 301.5 3.5%

Marketing & Sales 76.9 60.5 27.0%

Total operating expenses 388.9 362.0 7.4%


Adjusted EBITDA 886.8 880.4 0.7%


IPO-related costs 0.0 39.7

EBITDA 886.8 840.8 5.5%

Depreciation and amortization 277.2 279.1 (0.7%)

Operating income 609.6 561.6 8.5%

Share-based payments 0.5 20.2 (97.5%)

Movement in provisions (4.1) (1.0) 305.4%

Change in net working capital (46.1) 61.1 (175.4%)

Cash flow from operating activities 837.1 921.0 (9.1%)

Capital expenditure (Capex) 342.6 279.7 22.5%


Acquisition 15.2 -

Interest received 0.0 (0.4)

Change in financial assets 0.4 0.2

Funding joint venture 7.9 13.0 (38.6%)

Free cash flow 470.9 628.7 (25.1%)


Adjusted EBITDA - Capex 544.2 600.8 (9.4%)


Net result 347.3 192.8 80.2%

Outstanding shares (in # million) 200.0 200.0

Earnings per share (in €) 1.74 0.96 80.2%



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attributable to a higher share of free on-net calls following

growth in the number of telephony subscribers. When a

Ziggo telephony customer makes a fixed-line call to another

Ziggo telephony customer, the call qualifies as on-net, with

no costs being charged as a result. Both trends resulted in a

higher percentage of non-billable calling minutes compared

with the previous year, as well as an overall decline in average

usage per fixed-line telephony subscriber.

Total call minutes excluding interconnection decreased by

1.0% compared to 2012. On-net calling grew by 4.5%, with

the number of billable minutes declining by almost 9.4% as

a result of growth in on-net calling and growth in the number

of flat-fee subscriptions by 13%. Average call minutes per

subscriber declined by 8.4%. The gross margin on telephony

usage improved by over 2.3%, supported by reduced FTA rates.

Blended ARPU for consumers in 2013 was €42.10, up €2.36

(+5.9%) from 2012. This increase was driven by growth in the

number of subscribers to our All-in-1 bundle and internet,

which, combined with churn in TV-only subscribers, resulted

in a 4.6% increase in RGUs per customer to 2.56 (based on

a maximum of four RGUs per customer). Excluding digital

pay TV as a separate RGU, Ziggo recorded an average of

2.24 RGUs per customer. Additionally, blended ARPU was

positively affected by the price increase which became

effective on February 1, 2013.

Revenue from other sources, predominantly consisting of

set top box sales, collection fees and revenues from service

numbers, declined by 33.0% y-o-y to €31.8 million in 2013.

Part of this decline was the result of accounting for costs of

tablets, which are provided to new subscribers to All-in-1 or

our dual-play proposition TV plus internet with a one-year

contract. The costs of these tablets are deferred and allocated

as a discount for the contract period to other revenues, rather

than being expensed. This resulted in a discount as a result of

deferred tablet costs of €3.2 million during 2013. Excluding this

adjustment, revenues from other sources decreased by

€12.5 million, or 26.2%. Although we shipped a higher

number of set top boxes, we recorded a decline in revenues

due to a lower average sales price per set top box and the

capitalization of set top boxes covered by a subscription period

of 12 months for which the ownership of the set top boxes

remains with Ziggo.

2013 2012 Change

Expensed Interactive recorders 140,829 189,742 (48,913)

Interactive receivers 91,938 - 91,938

HD decoders - 89,024 (89,024)

CI+ modules 16,374 25,138 (8,764)

249,141 303,904 (54,763)

Capitalized Interactive recorders 82,380 - 82,380

Interactive receivers 34,106 - 34,106

116,486 - 116,486

Total 365,627 303,904 61,723

Our business services activities generated revenues of

€141.7 million in 2013, up 34.2% from €105.6 million in 2012.

This was the result of strong growth in revenues from

subscriptions to business bundles and the acquisition and

consolidation of Esprit Telecom effective May 1, 2012.

Excluding Esprit Telecom, revenues grew organically by 10.3%.

In 2013, Ziggo added almost 18,000 new subscribers to its

main B2B bundles products Internet Plus, Office Basis and

Office Plus bundle, reaching a total of over 54,800 subscribers

by December 31, 2013. Total revenues from coaxial products

TOM and TOMi, our collective TV contracts, and business

bundles for the year grew by over 37% compared to 2012

to €48.9 million, representing 42.0% of total B2B revenues

(2012 – 33.7%), excluding revenues from Esprit Telecom.

Cost of goods sold and gross marginCost of goods sold includes the costs of materials and services

directly related to revenues. It consists of copyrights, signal costs

and royalties paid to procure our content, interconnection fees

paid to other network operators, materials and logistics costs

and costs of guarantees relating to the sale of set top boxes

and other products and materials used to connect customers

to our network.

In 2013 cost of goods sold decreased slightly to €289.1 million,

down 1.8% from 2012. The gross margin for 2013 was 81.5% of

revenue versus 80.8% in 2012. Excluding the acquisition of

Esprit Telecom (2013 COGS of €15.5 million), which has been

consolidated since May 1, cost of goods sold would have

declined by 7.1% and the gross margin would have been 82.2%.



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Margin improvement was mainly the result of higher gross

margins on internet, telephony and business services

(excluding Esprit Telecom) and a lower negative margin

contribution realized on the sale of set top boxes. The lower

negative margin contribution from the sales of set top boxes is

the result of a lower volume of set top boxes recognized as

sales (233,000 in 2013 versus 279,000 in 2012, and 16,000 CI+

modules versus 25,000 in 2012) at a lower negative margin

contribution per set top box. A lower average sales price during

the year compared to 2012 was more than offset by a lower

average purchase price. In addition, 116,000 set top boxes

were capitalized, as these boxes were provided to customers

as part of our sales and retention promotions covered by a

one-year contract, with the ownership of the set top boxes

remaining with Ziggo. These capitalized set top boxes

represented a total value of €14.5 million in 2013.

“ Our business services activities generated revenues of €141.7 million in 2013, up 34.2% from €105.6 million in 2012.”

Operating expenses (opex)Operating expenses increased by €26.9 million (excluding IPO

costs in 2012), or 7.4%, to €388.9 million in 2013, from

€362.0 million in 2012. As a percentage of revenue, operating

expenses increased from 23.6% to 24.9%, mainly as a result

of a 27.0% increase in marketing and sales expenses from

€60.5 million in 2012 to €76.9 million in 2013. The majority

of marketing and sales expenses were spent on sales and

customer retention campaigns, the Ziggo branding campaign

and the launch of Ziggo Mobile.

Excluding marketing and sales, operating expenses increased

by 3.5%, or €10.5 million, compared to 2012. Excluding the

acquisition of Esprit Telecom (€5.4 million), operating expenses

amounted to €306.9 million, up 1.8% compared to 2012. This

was mainly due to higher costs of contracted work driven by

higher costs of our external call centres and costs of customer

maintenance & visits.

Personnel costs increased by 1.6% (excluding IPO costs in 2012)

compared to 2012. Excluding Esprit Telecom (€4.3 million),

personnel costs decreased by 0.6%, or €1.2 million.

Although headcount increased by 7.7%, excluding Esprit

Telecom, and average salary costs by 3.3%, the resulting

increase in personnel expenses was offset by higher capitalized

personnel costs and a reduction of accrued bonuses by

approximately €4.8 million as company targets were only

partially achieved.

The increase in average salary costs was driven by both

discretionary individual salary increases and a general salary

increase in line with the collective labour agreement, including

an increased employer’s contribution to the pension premium,

which was partly offset by a decrease in employer charges for

social securities. The increase in headcount was predominantly

the result of an increase in the number of external resources,

an increase that was more than offset by an increase in

capitalized personnel costs of approximately €29.5 million, or

52%. The increased headcount is the result of an increase in

external personnel hired for projects relating to investments in

innovation and in our core infrastructure and service platforms,

facilitating the addition of new services such as mobility and

converged services and TV Everywhere.

At the end of 2013, our workforce totalled 3,354 FTEs.

Excluding Esprit Telecom, we recorded 3,248 FTEs, compared

to 3,018 FTEs at the end of 2012. Excluding external and

temporary employees, we had 2,500 employees versus 2,502 in

the previous year. The number of external resources increased

from 278 FTEs at the end of 2012 to 521 at the end of 2013.

The number of temporary call centre agents decreased slightly

from 238 FTEs at the end of 2012 to 226 at the end of 2013.

Costs of contracted work, excluding Esprit Telecom, increased

by 12.8% compared to 2012 (excluding IPO costs in 2012).

This increase was mainly driven by higher costs of our

external call centres and costs of customer maintenance &

visits. As a result of a strong growth in RGUs in the second

half of 2013 and the roll-out of Ziggo WifiSpots, call volumes

rose by approximately 5% compared to 2012. In combination

with an increase in the average handling time of approximately

23% and a relatively higher percentage of the call volume being

outsourced, external call centre costs and costs of customer

maintenance & visits rose by almost 30%. Consultancy costs

and costs of maintenance of network and technology were

stable. The higher costs of our external call centres and

customer maintenance & visits was partly offset by lower

consultancy costs. Costs of maintenance of our network and

technology rose slightly compared to 2012 as a result of an

increase in the capacity of our infrastructure, as well as rising

maintenance costs following investments in our core

infrastructure and systems facilitating the addition of new

services, such as mobility and TV Everywhere.

Office expenses, excluding Esprit Telecom, decreased by

2.0% compared to 2012 (excluding IPO costs in 2012) to

€52.8 million. Costs of housing and sites increased by almost

1.6% as the result of the opening of a new data centre in the

third quarter to support the new IT infrastructure and service

platforms, facilitating the addition of new services such as

mobility and converged services and TV Everywhere.

Investments in innovations for our converged platform and



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business applications resulted in additional license and

maintenance costs on top of recurring costs of existing IT

business applications. The increase was more than offset by a

refund of energy tax for prior years and an increase in coverage

of office expenses and office IT as a result of the increase in

the headcount and hours capitalized. Excluding the coverage

of office expenses and the refund of energy tax, office

expenses increased by 4.6%.

Other operating expenses, excluding Esprit Telecom, increased

by 62.4% to €5.0 million, mainly as a result of a release relating

to the provision for bad debts in 2012 due to improved quality

and ageing of our trade accounts receivable at the time. Other

expenses also include the proceeds and gain of €6.9 million

from the sale of our transmission towers and an impairment

of €6.5 million. This impairment was due to our decision to

replace certain components of a project to build our new

video platform.

Adjusted EBITDA and operating profitWe achieved an adjusted EBITDA of €886.8 million in 2013, up

0.7% versus 2012. The EBITDA margin was 56.7% compared to

57.3%. Excluding the EBITDA contribution of €4.3 million from

Esprit Telecom, EBITDA increased by 0.2%, resulting in an

EBITDA margin of 57.3% compared to an EBITDA margin of

57.3% in the prior year.

Adjusted EBITDA in 2012 excludes IPO-related expenses.

In March 2012, we recognized €39.7 million in costs directly

related to our IPO on NYSE Euronext Amsterdam. The IPO

costs include share-based remuneration of €20 million

awarded and settled by the shareholders before the IPO,

which, in accordance with IFRS 2, was accounted for as an

equity-settled share-based payment transaction. Therefore,

this transaction is reflected as personnel costs and equity,

but did not affect the Company’s cash flow or diluted

shareholders’ equity.

Depreciation expenses and amortization of software in 2013

decreased by €1.9 million to €277.2 million, from €279.1 million

in 2012. Excluding the acquisition of Esprit Telecom and

excluding the amortization of other intangible fixed assets,

depreciation expenses and amortization of software decreased

by €3.4 million. This decrease is the result of high historical

network and infrastructure investments as well as investments

related to the merger of the three predecessor companies,

which has led to relatively high depreciation expenses in recent

years. However, with the current investment programme in

place in our core infrastructure and systems facilitating the

addition of new services such as mobility and TV Everywhere,

depreciation and amortization will increase in the future.

In 2013, we recognized €0.8 million in amortization of

other intangible assets, which is the result of the recognition

of the amortization of the Esprit Telecom customer list.

The Esprit Telecom customer list has been valued based on

the allocation of the purchase price paid for the acquisition

to the individual assets.

Operating income (EBIT) in 2013 increased by 8.5% to

€609.6 million, compared to €561.6 million in 2012. Excluding

the acquisition of Esprit Telecom, operating income increased

by 7.9% to €606.1 million, due to the increase in EBITDA of

5.5%, lower depreciation and amortization expenses and the

absence of IPO-related expenses.

Net incomeInterest costs decreased by 4.0% to €199.1 million in 2013,

compared to €207.3 million in 2012. In 2013, €12.6 million

was allocated as borrowing costs to work in progress,

resulting in an interest credit, compared to €10.4 million in

2012. Excluding borrowing costs, interest costs decreased by

2.8% or €6.1 million. A reduction in our average debt by

approximately €160 million lowered our interest expenses

compared to 2012. The blended interest rate for 2013 was

6.9% versus approximately 6.8% for 2012.

Interest on shareholder loans fell from €52.2 million in 2012

to nil in 2013 following the full conversion of the shareholder

loans to equity prior to the IPO on March 21, 2012.

Banking and financing fees increased by 94.9% to €2.0 million

in 2013, from €1.0 million in the previous year. This increase

is mainly attributable to the new revolving credit facility of

€400 million, which was put into place in March 2013, replacing

a revolving credit facility of €50 million.

Amortization of funding costs increased by €38.6 million to

€51.8 million in 2013. As a result of the refinancing of the old

€1.1 billion senior credit facility in March 2013, we impaired

the remaining balance of the capitalized financing costs of

€42.7 million related to this old senior credit facility. The total

financing fees of €12.7 million relating to (1) the new

€750 million, 3.625% senior secured notes issue, (2) the

new €150 million term loan A and (3) the new €400 million

revolving credit facility, have been capitalized and will be

amortized over the terms of the senior secured notes, the

term loan and revolving credit facility.

As Ziggo does not apply hedge accounting rules for interest

rate swaps under IFRS, any change in fair value is recognized

as financial income and expense. In 2013 Ziggo recorded

a €29.1 million gain on other income, due to: (1) the periodic

amortization of our negative hedge reserve of €4.6 million,

(2) a fair value gain on IRS contracts of €33.7 million as a

result of shortened expiration periods of underlying hedges

and an increase in the underlying interest. In 2012, we



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reported a fair value loss of €10.8 million. A foreign exchange

gain on US dollar-denominated purchases of €0.2 million is

recognised in 2013.

The €9.1 million net loss from joint ventures predominantly

relates to our 50% share in the results of HBO NL, our joint

venture with HBO. Investments in and results from the joint

venture are accounted for using the equity method. Our share

in the funding of this joint venture amounts to approximately

€7.9 million in 2013.

For 2013 Ziggo reported an income tax expense of €29.5 million,

compared with an income tax expense of €74.7 million in 2012.

Higher operating income, combined with reduced interest

costs, partly offset by the impairment of capitalized financing

costs, resulted in a strong increase in the result before income

taxes to €385.9 million, compared to €276.8 million for the

prior year. The result before income taxes of €385.9 million

would have led to a corporate income tax charge of

€96.5 million at an effective tax rate of 25%. However, we

formalized an agreement with the Dutch tax authorities in

the first quarter of 2013 regarding the innovation box, which

will reduce the effective tax rate going forward, as well as

reducing it retrospectively for the period 2010 to 2012.

The innovation box is a tax facility under Dutch corporate

income tax law, which taxes profits attributable to innovation

at an effective tax rate of 5% instead of the statutory rate of

25%. The application of the innovation box resulted in a

one-off benefit of €35.1 million reflecting the period 2010

to 2012, as well as reducing corporate income tax charges

for 2013 by € 31.9 million.

In 2013 Ziggo posted a net profit of €347.3 million, versus

a net profit of €192.8 million in 2012. Adjusted for (1) interest

on shareholder loans, amortization of the customer list,

(2) amortization of financing fees, (3) non-recurring IPO costs,

and (4) changes in fair value on our interest rate hedges (all

adjustments net of income taxes), the net result would

have increased from approximately €285 million in 2012 to

€364 million in 2013, representing an increase of 28%.

Working capital, cash flow and liquidity

Working capitalNet working capital excluding accrued interest and corporate

income tax due increased by €46.9 million, from €270.4 million

negative at year-end 2012 to €223.5 million negative at year-

end 2013. In 2012 working capital decreased by €68.9 million.

The closing balance as at December 31, 2012 was adjusted

for the opening balance of working capital of the acquisition

of Esprit Telecom. The increase in working capital in 2013 is

mainly due to (1) an increase in inventories of €12.0 million

as higher inventories for network equipment and interactive

recorders and receivers are kept to avoid shortages, (2) an

increase in trade accounts receivable of €17.9 million as

a result of a one-off delay of the collection of part of the

December 2013 bill run, due to the implementation of Sepa

in December, while in the prior year the billing of quarterly

subscriptions was postponed from the end of December

to the beginning of January; this reduced the balance for trade

receivables at end-2012 by approximately €8 million, and

(3) the balance deferred revenue by €9.2 million, and (4) a

decrease in Other current liabilities of €11.2 million due to the

relatively high capital expenditure in the last months of 2012.

Working capital excludes corporate income tax due of

€4.7 million as at December 31, 2013. This balance due is the

result of an intragroup transaction as part of which certain

assets were transferred in 2012 in order to renew part of

Ziggo’s tax loss carry-forward position so as to avoid expiry

of these losses. One of its subsidiaries is required to report

profit for tax purposes based on a percentage of the value

of transferred assets, which cannot be offset against the

remaining losses of the fiscal unit according to Dutch

carry-forward rules.

The decrease in working capital in the prior year was mainly

attributable to VAT being payable on a quarterly rather than

on a monthly basis (effective 2012), resulting in a reduction

in net working capital of approximately €29 million.

Cash flow from operating activitiesCash flow from operating activities decreased by €83.9 million,

or 9.1%, to €837.1 million versus €921.0 million in 2012.

Although EBITDA excluding share-based payments improved

by €26.3 million, the cash outflow of €46.1 million as a result

of the increase in working capital in 2013 versus a €61.1 million

cash inflow from a decrease in net working capital in 2012

and a €3.1 million higher cash outflow from a movement in

provisions resulted in a decrease in cash flow from operating

activities of €83.9 million.

Capital expenditure (capex)Capital expenditure and investments relate primarily to

extending, upgrading and maintaining the network, installing

new service equipment at customer premises, cost of modems

and investments in the core infrastructure, service platforms

and systems facilitating the addition of new services such as

mobility and TV Everywhere. They also include increases in

intangible assets, primarily expenditures on software, which are

capitalized. Set top boxes are capitalized if these boxes are

provided to customers covered by a 1- or 2-year subscription

and ownership remains with Ziggo.



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In 2013 Ziggo recorded capital expenditures of €342.6 million,

an increase of 22.5% compared to 2012 (€279.7 million).

The increase of €62.9 million compared to 2012 was mainly

driven by investments in core infrastructure and systems to

€ million

YTD December

2013 % of total Increase 2012 % of total

Customer installation 75.3 22% 19.2% 63.2 23%

Network growth 147.0 43% 22.4% 120.1 43%

Maintenance and other 120.3 35% 24.8% 96.4 34%

Total Capex 342.6 100% 22.5% 279.7 100%

In 2013, €75.3 million (22%) of capital expenditure related to

installations of service equipment, modem installations at

customer premises and set top boxes covered by a one-year

subscription with the ownership of the set top boxes remaining

with Ziggo (compared to €63.2 million, or 23%, in 2012),

whereas 43% (43% in 2012) related to new homes connected

(new build) and growth of our network capacity

to accommodate our increased subscriber base for internet

and the continuously increasing internet speed and bandwidth

requirements.

The increase in customer installations compared to 2012 is

predominantly due to capitalization of set top boxes (which

were not capitalized in the prior year), partly offset by a lower

number of modems installed at customer premises. In 2013

Ziggo capitalized 82,400 interactive recorders and 34,100

interactive receivers, representing a total value of €14.5 million.

More than 432,000 modems were shipped, versus 488,000 in

2012, reflecting a continuous upgrade of internet subscribers

to a Wifi-enabled EuroDOCSIS 3.0 modem and growth in the

number of internet subscribers. At the end of 2013, Ziggo had

activated 1,566,000 EuroDOCSIS 3.0 modems at customer

premises, of which 1,165,000 were Wifi-enabled, representing

an increase of 343,000 compared to December 31, 2012.

Network capacity grew by €26.9 million or 22.4% compared to

2012, mainly due to the additional required network and access

capacity to process an approximately 41% increase in internet

traffic, in line with the prior year (approximately 40%), as well as

from the roll-out of Ziggo WifiSpot and the upgrading of our

office IT systems and computer equipment of our employees.

The remainder of our capital expenditure represents

maintenance and replacement of network equipment and

recurring investments in our IT platform and systems, as well

as other investments in core infrastructure and systems to

facilitate the addition of new services such as mobility and

TV Everywhere. In 2013, investments in this category increased

by €23.9 million, or 24.8%, to €120.3 million (or 35% of total

facilitate the addition of new services such as mobility and

TV Everywhere, growth of access capacity and the

capitalization of interactive recorders and receivers.

capital expenditure for the year) compared to €96.4 million

for the previous year. In the fourth quarter of 2011, we had

launched an investment programme for core infrastructure and

systems facilitating the addition of new services such as

mobility and TV Everywhere. This led to a step-up in capital

investments in the category maintenance and other.

Following increased network investments to stay ahead of

ever-increasing customer demand for bandwidth, the

investments in set top boxes to support customer experience

and the continuation of investments to upgrade our IT systems

to enable converged services and TV everywhere, Capex will

increase to around €370 million in 2014.

Operational free cash flowOperational free cash flow adjusted for IPO-related costs

(OpFCF, or adjusted EBITDA minus capex) decreased by

9.4% to €544.2 million as a result of an increase in capital

expenditure of €62.9 million.

Free cash flow and net cash used in financing activitiesIn 2013 free cash flow (cash flow before financing activities)

decreased by €157.8 million to €470.9 million, down 25.1%

from 2012. Although EBITDA excluding share-based payments

increased by €26.3 million, or 3.1%, compared to the previous

year, the increase in capital expenditure of €62.9 million

combined with the cash outflow from a change in working

capital of €46.1 million compared with a cash inflow from

a change in working capital of €61.1 million in 2012, resulted

in the decrease of the free cash flow. Free cash flow for 2012

includes a sum of approximately €18.8 million for IPO-related

expenses that has been settled.

Net cash used in financing activities for the year comprises

interest costs, banking and financing fees related to our loan

facilities, prepayments on the senior credit facilities and

drawings on the revolving credit facility. In 2013 we drew

an amount of €90.2 million under our facilities.



Contents

Cash interest paid in 2013 amounted to €190.8 million,

representing a €27.1 million drop from the previous year.

The difference can be explained by a slightly lower average

debt and a different timing of interest payments following

the refinancing in March 2013. Our senior credit facility with

interest payable on a monthly basis was partly replaced by

a new senior secured note of €750 million with an annual

interest payment. Interest on both the 6.125% senior secured

and 8.0% senior unsecured notes is payable semi-annually, in

May and November, and interest on the 3.625% senior secured

note is payable annually in March.

At the end of 2013, accrued interest on the senior secured and

senior unsecured notes was €38.8 million, compared to

€17.8 million at the end of 2012. The increase is due to a different

timing of interest payments following the refinancing in March

2013. At the end of 2013, Ziggo held €77.4 million in cash and

cash equivalents, compared to €92.4 million at the end of 2012.

Ziggo has a revolving credit facility of €400.0 million in

place, expiring in March 2018. As at December 31, 2013,

€255.0 million had been drawn under this facility.

Net debt and financing structureAs at December 31, 2013, we carried a total debt balance

of €3,073.5 million, including the principal amount, capitalized

funding costs and discount on the issuance date. An amount

of €405.0 million is owed under our senior credit facility

(term loan A and revolving credit facility), €750.0 million

was lent on by Ziggo Finance B.V. (term loan E), which had

issued senior secured notes for a similar amount in 2010,

€750.0 million related to senior secured notes issued in

March 2013 and €1,208.9 million related to senior unsecured

notes issued in 2010. A summary of the capital structure

with notional amounts outstanding as at December 31, 2013

is provided below.

€ million December 31, 2013 x LTM EBITDA Margin / Coupon Maturity

Senior Credit Facility 405.0 0.46 E + 1.75% Mar 2018

6.125% Senior Secured Notes 750.0 0.85 6.125% Nov 2017

3.625% Senior Secured Notes 750.0 0.85 3.625% Mar 2020

Total Senior Secured Debt 1,905.0 2.15

8.000% Senior Unsecured Notes 1,208.9 1.36 8.000% May 2018

Total Debt 3,113.9 3.51

Accrued interest 38.8 0.04

MtM SWAPS 29.5 0.03

Cash and cash equivalents (77.4) (0.09)

Total Net Debt 3,104.8 3.50

As at December 31, 2013, the outstanding balance of the senior

credit facility and revolving credit facility amounted to

€399.6 million, including the principal amount (€150.0 million

plus €255.0 million drawn under the revolving credit facility of

€400.0 million) and capitalized financing fees. Financing fees

for the senior credit facility and revolving credit facility

amounted to €6.4 million, to be amortized over a period of five

years. As at December 31, 2013, an amount of €0.9 million was

amortized, resulting in capitalized financing fees of €5.4 million

as at the end of Q4 2013.

As at December 31, 2013, senior unsecured notes (8.0%,

May 2018) amounted to €1,187.4 million. This item is carried

at amortized cost, including the principal amount

(€1,208.9 million), capitalized funding costs and discount

on the issuance date. Financing fees for the notes issuance

amounted to €25.8 million, to be amortized over a period

of eight years. The capitalized discount upon issuance

amounted to €8.8 million, to be amortized as interest

expense over a period of eight years.

As at December 31, 2013, an amount of €13.2 million was

amortized, resulting in capitalized financing fees of

€16.0 million and a capitalized discount of €5.5 million as at

the end of Q4 2013. The unsecured notes become callable on

May 15, 2014 at a premium of 4.0% of the principal value.

As at December 31, 2013, the balance of senior secured notes

(6.125%, March 2017) amounted to €743.6 million, stated at

amortized cost, including the principal amount (€750.0 million)

and capitalized funding costs. Financing fees for the senior

secured notes issuance amounted to €10.6 million, to be

amortized over a period of seven years. As at December 31,

2013, a total amount of €4.2 million had been amortized

since issuance, resulting in capitalized financing fees of

€6.4 million as at the end of Q4 2013. The secured notes

became callable on November 15, 2013 at a premium of

3.063% of the principal value.



Contents

As at December 31, 2013, the balance of senior secured notes

(3.625%, March 2020) amounted to €742.9 million, stated at

amortized cost, including the principal amount (€750.0 million),

capitalized funding costs and capitalized discount. Financing

fees for the notes issuance amounted to €6.4 million, to be

amortized over a period of seven years. The capitalized

discount upon issuance amounted to €1.5 million, to be

amortized as interest expense over a period of seven years.

As at December 31, 2013, an amount of €0.7 million was

amortized, resulting in capitalized financing fees of €5.7 million

and a capitalized discount of €1.4 million as at the end of 2013.

These secured notes are non-callable.

Interest on the 6.125% senior secured notes and 8.0% senior

unsecured notes is due semi-annually. The coupon for the

new 3.625% is due annually in March. As at December 31, 2013,

an amount of €38.8 million was accrued under current liabilities

(December 31, 2012: €17.8 million).

As at December 31, 2013, the fair value of the interest rate

swaps (IRS) amounted to €29.5 million negative, compared

to €63.2 million negative as at December 31, 2012. Since the

issuance of the senior secured notes on October 28, 2010,

any change in fair value has been recognized as financial

income and expense, as Ziggo does apply hedge accounting.

Before the issuance of the senior secured notes, any changes

in fair value were recorded in the hedge reserve as part of

equity. As at December 31, 2013, the hedge reserve amounted

to €0.9 million negative, which will be charged to profit or

loss during the remaining term of the outstanding IRS.

In 2013 we entered into forward-starting interest rate swaps

for the period May 2014 to May 2024 for an amount of

€900 million. Using this instrument we have hedged the base

interest rate and consequently reduced our interest rate

exposure for the period 2014-2024, assuming we would call

our unsecured notes ultimately at the first call date in May 2014.

As a result of the intended public offer on all outstanding

shares of Ziggo N.V. by Liberty Global on January 27, 2014

and the exchange offer launched for the unsecured notes

in combination with the availability of the term loan B3 to

refinance the remainder of the unsecured notes which are

not tendered, these forward interest rate swaps were settled

in February 2014 after the exchange offer was successfully

completed and the interest exposure was no longer existing.

As at December 31, 2013, our Net Debt to Adjusted LTM

EBITDA leverage ratio was 3.50, up from 3.42x as at year-end

2012. The leverage of 3.50x is in line with our stated leverage

target of around 3.5x. Net debt is defined as the outstanding

balance of the principal amount of our borrowings, plus

interest accrued on those borrowings (€38.8 million as at

December 31, 2013) and the market-to-market value of the

interest rate swaps (€29.5 million negative as at December 31,

2013), reduced by the balance of cash and cash equivalents.

The average debt maturity was 4.7 years as at December 31,

2013, down from 4.9 years as at the end of December 31, 2012.

The refinancing in March 2013 of our senior credit facility

with a maturity in 2017 by a new senior secured note of

€750 million with a maturity in March 2020 extended the

average debt maturity.

Intangible assets and goodwill and the acquisition of Esprit TelecomFollowing the acquisition of Esprit Telecom and the purchase

price allocation, we allocated €5.1 million to the customer list

of Esprit Telecom and recognized goodwill of €11.3 million.

The customer list will be amortized in four and a half years.

The cash paid amounted to €17.8 million and an earn-out of

€0.5 million has been recognized under provisions.

Outlook Based on our strong network and appealing product offerings,

we will continue to focus on our top line in 2014. This will

predominantly be facilitated by ongoing growth in broadband

internet, Ziggo Mobile and our B2B activities.

As we anticipate no substantial change in the current

competitiveness in the market, we intend to make further

investments in sales and promotions, customer retention and

product development to strengthen our position and improve

our services. We expect these additional investments, which

will be skewed towards the first half of the year, will result in

a flat EBITDA for 2014 compared to 2013. Following increased

network investments to stay ahead of ever-increasing

customer demand for bandwidth, the investments in set top

boxes to support customer experience and the continuation

of investments to upgrade our IT systems to enable converged

services, Capex will increase to around €370 million in 2014.

We believe the investments we are making will help secure

continued long-term earnings growth and generate new

revenue streams for the business in the medium term. We will

continue to exercise financial self-discipline, which underpins

the financial flexibility we enjoy. Our strong cash generation

enables us to invest in the future while also gradually

increasing shareholder returns.

Dividend policy and capital structureAs a result of the public offer on all outstanding shares of

Ziggo N.V. by Liberty Global with the positive recommendation

of both the Board of Management and Supervisory Board

of Ziggo, Ziggo has agreed not to pay or declare any further

(interim) dividend or to make any distribution in kind until

completion of the transaction.



Contents

Corporate social responsibilityZiggo takes its responsibility as a provider of television, internet and telephony services very seriously. The high-quality, reliable products and services we deliver perform an important role in the lives of millions of people. Information, communication and entertainment support and enrich society and support social interaction.

Ziggo and the Open SocietyDutch society is one of the most open societies in the world.

Ziggo believes that the quality, availability and accessibility of

information, as well as the digitization required to facilitate it

all, can play an important role in maintaining and advancing

an Open Society.

Ziggo wants to be actively involved in thinking about, and

acting towards, an open society, from the perspective of

computerization and digitization. Where are the barriers?

How can we get more people involved? How can we ensure

that everyone is able to participate? How will we maintain

the high-quality and diversity levels of the information upon

which people base their opinions and, in some cases, even

their identities?

Ziggo Open Society Award 2013To address these issues Ziggo has established an annual prize:

the Ziggo Open Society Award (de Ziggo Prijs voor de Open

Samenleving). The prize is awarded to organizations or

individuals who have clearly contributed through their ideas,

initiatives or projects to an Open Society; a society in which

everyone is included and has the opportunity to act, think and

imagine, and in doing so, increases pluriformity and quality.

In 2013, the Ziggo Open Society Award was won by Bits of

Freedom, a Dutch digital rights organization that focuses

on privacy and communications freedom in the digital age.

The other finalists were NoXqs and Internet Protection Lab.

According to the jury, the two runners-up also play an

important role in Dutch (open) society.

“The focus that Bits of Freedom puts on protecting civil rights

on the internet will continue to increase, and remain important,

in the coming years. We hope that this award acts as both

recognition and an additional incentive,” the jury said following

its decision. Bernard Dijkhuizen, Ziggo’s CEO at the time,

presented the award, a trophy and €15,000 to Tim Toornvliet

of Bits of Freedom at the annual Ziggo Congres.

Ziggo also plays an active role in government and industry

initiatives and programmes that shape the present and future

of our industry. As a vital member of the ECP (Electronic

Commerce Platform), we participate in initiatives that promote

internet safety and prevent abuse of the internet.

Meldpunt KinderpornoThe ‘Meldpunt Kinderporno’, (the Registration Centre for Child

Pornography) is a foundation that fights against the distribution

of child sex abuse on and through the internet. Ziggo

financially supported the foundation in 2013.

Unicef Kinderrechten FilmfestivalZiggo also supports the Unicef Rights of the Child Movie

Festival (Unicef Kinderrechten Filmfestival), the biggest movie

project for primary school children in the Netherlands. This

project enables children, together with their school, to create

their own movies on the subject of the rights of children.



Contents

© Onno Feringa

Quality of contentIn 2013 we supported several initiatives that are aimed at

enhancing the quality of content. A series of ‘Debatlabb’,

a televised debate on Open Society topics hosted in

Club Ziggo, was broadcast live via our event channel. As in

2012, we supported ‘de Tegel’ (the most important annual

award for Dutch journalism) together with the ‘Nipkow-schijf’.

The Nipkow-schijf is an annual award given by Dutch media

journalists to the best television programme, interview, radio

broadcast and multimedia performance of the past season.

‘DE TV-BEELDEN’The Netherlands plays an important role in the international

television industry. It is the third most successful country in

terms of developing (successful) new TV formats, behind only

the United Kingdom and the United States. Dutch television

makers are known globally for the quality of their work, but in

their own country these achievements are still under-exposed.

‘DE TV-BEELDEN’, a new Dutch television trade award through

which industry producers and creators can honour each

other’s work annually, was established to redress this. Ziggo is

a founding partner of DE TV-BEELDEN.

‘Universiteit van Nederland’In 2013 we joined forces with the University of the Netherlands

(Universiteit van Nederland). This initiative, led by Alexander

Klöpping and Marten Blankensteijn, provides the country’s

leading university professors with a platform to share their

knowledge with a broader audience. The classes are free and

are broadcast on Ziggo’s events channel and over the internet.

We believe these projects will not only stimulate the quality of

broadcast content, but will also contribute to an Open Society.

Our peopleZiggo’s direct sphere of influence is formed by its employees.

Our employees enjoy a range of modern, flexible benefits,

and are able to make choices that fit their personal priorities.

Throughout the year the Company organizes internal meetings

and events, both formal and informal, to exchange information

and get together. Employees are increasingly taking the

opportunity to do voluntary work, or to make donations to

good causes. Ziggo is an inclusive employer, offering equal

opportunities to everyone, irrespective of country of origin,

beliefs, handicap, sexual orientation, gender or age.

In 2013 we continued to invest in our people, ensuring our

customers receive the best quality products and services and

allowing our employees to lead rewarding and fulfilling lives,

both at work and at home. Within the Company, employees

have a personal budget that can be spent on items such as

extra free days, a subscription to a gym or extra pension

payments. In addition to the personal budget, we also offer

opportunities for personal development through training

courses and coaching programmes.

Employee representationZiggo is in frequent contact with its works council, targeting

a level of transparency and cooperation beyond legal

requirements. The relationship is constructive, professional

and mutually beneficial.

Universiteit van Nederland



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Ziggo supports Enactus, a non-profit platform for social

entrepreneurialism and leadership development that is active

in more than 1,500 schools and universities across

39 countries. Enactus and Ziggo aim to develop sustainable

leadership among students by introducing them to social

entrepreneurialism. Enactus students, together with key

representatives from Ziggo, set up projects aimed at

sustainably improving the living standards and circumstances

of people less well off than themselves.

At the end of 2013, Ziggo employees selected the ‘Nationale

Voedselbank’ (national food bank) as their charity of choice,

donating €75,000.

SustainabilityZiggo’s approach to environmental sustainability rests on

three pillars: energy conservation, material use and waste

management.

In the last quarter of 2012, we were the first company in the

Netherlands to receive BREEAM-NL certification for one of our

new data centres. BREEAM determines the sustainability

performance of buildings, and the data centre was constructed

to be environment friendly (all materials are reusable) and uses

an optimal temperature management system. As a result, the

new data centre consumes 40% less energy. In 2013, a total of

seven data centres received BREEAM-NL certification.

Ziggo is a member of The Green Grid. The Green Grid is a

group of companies, government and educational institutions

that aim to decrease the environmental impact of the IT

industry. All members cooperate on research, as well as

sharing practical tips to achieve greater efficiency in the use of

energy and power management devices, thereby reducing the

CO2 footprint of information and communications

technologies (ICT).

Customer dataInformation security and integrity are a priority at Ziggo.

Our guidelines are established in the Code of Conduct,

available to all staff. Information security starts with

knowledge and awareness. In 2013, an intensive training

programme was finalized to raise the level of awareness

among our employees.

Our National Operations Centre and our Security Operations

Centre monitor our systems and operations continuously

(24/7), ensuring security and continuity remain at the highest

possible level.



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Investor relationsOn a regular basis, Ziggo engages in communication with financial analysts and investors, both from the equity and credit side. The core of its communication to the financial community takes place through corporate press releases which are broadly distributed and made available on the investor relations section of the corporate website of Ziggo (www.ziggo.com).

In addition, Ziggo regularly engages in direct investor contacts,

typically through road shows, broker conferences, Company

visits and telephone contacts. These contacts can either take

place with (large) groups of shareholders or on a 1-on-1

bilateral basis. The purpose of these meetings is to inform

our shareholders, investors and analysts about the Company,

the results, the operations and the strategy, all to the extent

publicly disclosed, as well as on the general market environment.

Therefore, the timing of these communication moments are

skewed towards the first days and weeks following the

Company’s quarterly earnings releases.

Furthermore, to maintain an effective dialogue, Ziggo also

engages in investor meetings with the purpose to receive

feedback from its shareholders and bondholders. This

communication takes place either at the initiative of the

Company or at the initiative of individual investors. During

these meetings the Company is generally represented by its

Investor Relations department, frequently accompanied by one

or more members of the Board of Management. The Company

is strict in its compliance with applicable rules, regulations and

best practices on fair and nonselective disclosure and equal

treatment of shareholders, bondholders and other investors.

Dividend As a result of the intended public offer on all outstanding

shares of Ziggo N.V. by Liberty Global on January 27, 2014,

the Company has agreed not to pay or declare any (interim)

dividend or to make any distribution in kind until completion

of the transaction.

Historic overviewOver the fiscal year 2013, Ziggo has paid an interim dividend of

€190 million, equal to €0.95 per share, on September 10, 2013.

The dividend payments since the Initial Public Offering of

Ziggo N.V. in 2012 are listed in the table below:

Financial year Interim dividend Payment date Final dividend Payment date

2013 € 190.0 million September 10, 2013

2012 € 110.0 million September 11, 2012 € 180.0 million April 29, 2013

Capital Distribution PolicyZiggo capital distribution policy (which is suspended in view of

the recommended intended public offer on all outstanding

shares of Ziggo N.V. by Liberty Global) is derived from its

financial strategy and is built around the following principles:

■ Distribution of around 100% of Equity Free Cash Flow to

Equity1 (FCFE).

1 Free Cash Flow to Equity (“FCFE”) is defined as EBITDA minus capital expenditure minus movement in provisions minus change in working capital minus net interest minus taxes paid. FCFE is a non-IFRS measure and may not be comparable to similarly titled measures used by other companies.

■ Capital distribution is in principle by means of dividend,

potentially supplemented by share buybacks in the future.

■ Dividend to be paid twice per year.

■ Maintain a leverage ratio (net debt/adjusted EBITDA) of

around 3.5.



Contents

Share price development x €1

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec20

25

30

35

96

100

104

108

112

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

3.625% Senior Secured Notes


8.000% Senior Unsecured Notes

Market prices

(Source: Bloomberg)

Total Shareholder Return1

%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 Total shareholder Return is the combination of the shareprice development and dividend distributed to shareholders.

-15

0

15

30

45

Daily volume and 20 day average x 1,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

2,000

4,000

6,000

8,000

Volume Euronext 20-day average volume Euronext

Analysts’ coverageZiggo is covered by approximately 40 equity and credit

analysts who frequently issue reports and provide

recommendations on the Company.

Credit RatingsZiggo is rated by the leading international rating agencies

Moody’s and Standard & Poor’s.

Rating agency Date Corporate family rating Senior Secured Notes Senior Unsecured Notes

S&P October 1, 2013 BB+ (stable) BBB- BB-

Moody’s 1 November 11, 2013 Ba1 (stable) Baa3 Ba2

1 As per January 28, 2014 Moody’s placed Ziggo’s ratings under review following the intended public offer by Liberty Global.



Contents

All amounts in € unless otherwise indicated

Relevant trading data (on Euronext Amsterdam)

Number of outstanding shares at year-end 200,000,000

Lowest price intraday (January 24, 2013) 22.02

Lowest closing price (January 24, 2013) 22.02

Highest price intraday (December 12, 2013) 33.98

Highest closing price at year-end (December 31, 2013) 33.20

Share price at year-end 33.20

Market capitalization at year-end 6,640,000,000

Average daily trading volume (in #’s) 608,651

ShareholdersThe following shareholders have reported shareholdings in the

AFM register regarding substantial participations:

Shareholder Notification date

Number of ordinary

sharesCapital

interestPrevious

notification Direct / Indirect

Liberty Global Plc. July 25, 2013 57,000,738 28.50% 15.00% Indirectly Real

Morgan Stanley November 22, 2013 1,549,042 7.39% 8.53% Indirectly Real / Indirectly Potential

Ameriprise Financial Inc. October 11, 2013 10,024,853 5.01% 4.85% Directly Real / Indirectly Real

Blackrock Inc. December 27, 2013 9,614,229 4.93% 5.06% Indirectly Real / Indirectly Potential

Note: Substantial participations shown above 3% capital interest notification requirement as per December 31, 2013.

For more information please visit www.ziggo.com/en/investors

[email protected]

Tel: +31 (0)88 717 1799

Postbus 43038

3540 AA Utrecht

January April July October

Financial calender

1

Start of quiet period ahead

of FY and Q4 2013 Results

24

FY and Q4 2013 Results

1


of Q1 2014 Results

16

Q1 2014 Results

17

Annual General Meeting of

Shareholders

1


of Q2 2014 Results

17

Q2 2014 Results

1


of Q3 2014 Results

16

Q3 2014 Results



Contents

Connecting peopleWifiSpotsThe idea is simple: if every Ziggo customer was to host a public wifi hotspot, these combined networks would add up to one large network with complete coverage in a town or city. And that is just what Ziggo is doing. Over 1 million Ziggo WifiSpots are now active enabling Ziggo customers to have wifi connectivity away from home.



Contents

Corporate GovernanceStructureZiggo has a two-tier board structure consisting of a Board of

Management (Raad van Bestuur) and a Supervisory Board (Raad

van Commissarissen), in accordance with the Dutch complete

structure regime for large companies (volledig structuurregime)

as set forth in the provisions of sections 2:158 to 2:162 inclusive

and 2:164 of the Dutch Civil Code (Burgerlijk Wetboek), which

is being applied by Ziggo.

The Board of Management is the executive body and is

responsible for the day-to-day management of the operations,

supervised by the Supervisory Board. The Board of

Management is required to keep our Supervisory Board

informed, consult with our Supervisory Board on important

matters and submit certain important decisions to our

Supervisory Board for its approval. The Board of Management

has three members, supported by seven Vice Presidents.

The Supervisory Board is responsible for supervising the

activities of our Board of Management and the general course

of our affairs and our business. Our Supervisory Board may

also, at its own initiative, provide the Board of Management

with advice and may request any information from the Board

of Management that it deems appropriate. The Supervisory

Board is authorized to appoint the members of the Board of

Management. In performing their duties, our Supervisory Board

members must act in accordance with our interests and those

of our business and all stakeholders. The members of our

Supervisory Board are generally not authorized to represent us

in dealings with third parties. The Supervisory Board bears

collective responsibility for carrying out its duties.

The powers of the General Meeting of Shareholders include

appointing the Supervisory Board members based on

nominations by the Supervisory Board (for one third of the

appointments the Works Council has an enhanced right of

recommendation), adopting the financial statements and

endorsing the manner in which affairs were conducted during

the financial year by the Board of Management and the

supervision thereof by the Supervisory Board. The annual

report, the policy on reserves and dividends and the proposal

to distribute a dividend are discussed with the General Meeting

of Shareholders. Furthermore, the Board of Management and

the Supervisory Board report to the General Meeting of

Shareholders on the Corporate Governance Structure.

The General Meeting of Shareholders may resolve to

amend the articles of association of Ziggo on proposal

of the Board of Management which has been approved

by the Supervisory Board.

Share capitalThe authorized share capital of Ziggo N.V. consists of

800,000,000 ordinary shares, each with a nominal value

of €1, of which 200,000,000 shares have been issued and

paid up. All shares are registered shares and are transferable

based on the Dutch Securities Giro Act. Each share entitles

the holder to cast one vote.



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Andy Sukawaty

Chairman Supervisory Board

“ Ziggo continued to establish itself as a leading provider of exciting new and entertaining services.“

Chairman’s Statement

“ Setting the best course for the future”


Ziggo at a glance Governance Financial statementsPerformance Financial statementsGovernancePerformanceZiggo at a glance

Contents

The year 2013 was our first full year as a listed company. The year brought on many changes in services, management and competition. In addition, the headwinds presented by the general economic situation in the Netherlands were also a challenge.

to change the ownership of the Company. I will not describe

this proposal in great detail here. The benefits and risks that

come with this proposal will be fully described in a document

that will be issued shortly. In addition, it is described in the

merger protocol which can be reviewed online. I will say at this

point that the Supervisory Board and the Board of Management

at Ziggo were rigorous and diligent in our consideration of this

proposal. In doing so, we deeply considered the interests of all

of our stakeholders. In arriving at the conclusion that this offer

should be recommended to our shareholders, we also

considered the strength and quality of Liberty Global as a

potential owner of Ziggo. In combining Ziggo, not only with

UPC Netherlands (the subsidiary of Liberty Global), but also the

large-scale global cable TV business that Liberty Global owns,

we put Ziggo in a position to further invest and deliver world-

leading services to our customers. We believe that the scale and

diversification this brings could generate many benefits for the

customers, employees and shareholders of Ziggo. Of course,

this combination is subject to various conditions, including

regulatory approval. However, at this stage, weighing all of the

factors, we are convinced this is the best course for the future.

On behalf of my fellow Supervisory Board members, I would

like to thank our customers for continuing to trust Ziggo to

provide services to you to enhance your lives. We thank our

staff for your dedication and hard work in delivering world-

leading services in a way that is sustainable and can grow.

We also thank our investors for supporting us in our first

full year as a listed company.

Andy Sukawaty

Chairman Supervisory Board

Utrecht, the Netherlands

March 5, 2014

The Company was also presented with a potential change in

ownership, which of course represents additional uncertainty.

Despite this level of change and challenge, Ziggo as a business

continued to perform well, with all-important improvements in

our customer satisfaction ratings and a decrease in customer

churn or defection levels. Significant increases in total internet

subscribers and All-in-1 bundles subscribers were also

encouraging. These combined developments bode well for

our future. Financially, both Revenues and EBITDA increased,

but not at the same rate as previous years, due primarily to our

reactions to competitive pressures and the delay in the

implementation of our new service platforms. Debt levels

also continued to decrease during the year. Overall, Ziggo

continued to establish itself as a leading provider of exciting

new and entertaining services to consumers in the Netherlands,

while maintaining a solid financial condition, enabling us to

look forward to further investments and growth.

We were pleased to welcome a new Chief Executive Officer to

the business, René Obermann, who stepped into the role to

start 2014. Mr. Obermann brings a wealth of experience in our

sector to the role, joining us from his most recent position as

Chief Executive of the global telecoms provider, Deutsche

Telekom. We look forward with great anticipation to his

leadership in working with the Ziggo team to take the Company

to the next stage in its growth. We also owe enormous thanks

to Bernard Dijkhuizen who, with the team, really created

Ziggo as we know it today, from three regional companies.

He not only led the Company through its creation phase and

through its IPO, but he managed the service development and

financial performance in such a way that Ziggo has become

a recognized leader in the global Cable TV sector.

Of course, the second half of the year presented Ziggo

with proposals from our largest shareholder, Liberty Global,



Contents

Supervisory Board

Andrew (Andy) Sukawaty

David Barker

Joseph Schull

Dirk Jan van den Berg

Chairman

Male, American national, 1955

Andy Sukawaty joined Zesko Holding B.V.’s Supervisory Board

in 2008 and Ziggo’s Supervisory Board in 2012 and serves as

its Chairman. He is also the Executive Chairman of Inmarsat,

a global mobile satellite communications service provider.

He was formerly Chairman of Xyratex Ltd, Chairman of Telenet

Communications NV and Deputy Chairman of O2 plc.

Andy was CEO and President of Sprint PCS in the United States

from 1996 to 2000. Andy Sukawaty is the Chairman of the

Selection, Appointment and Remuneration Committee.

The term of appointment of Andrew Sukawaty is 4 years as

from 20 March 2012.

Member

Male, Canadian national, 1961

Joseph Schull joined Zesko Holding B.V.’s Supervisory Board

in 2006 and Ziggo’s Supervisory Board in 2012. He joined

Warburg Pincus in 1998, and currently bears responsibility

for the firm’s European investment activities, and is member

of the firm’s Executive Management Group, which coordinates

the firm’s activities on a worldwide basis. He was involved in a

number of investments, including Zentiva, Loyalty Management

Group, Fibernet, Multikabel and United Internet. He is currently

a Director of MACH, a leading global provider of billing and

settlement services to the mobile telecom industry.

Joseph Schull is a member of the Selection, Appointment

and Remuneration Committee. The term of appointment of

Joseph Schull is 4 years as from 20 March 2012.

Member

Male, British national, 1968

David Barker joined Zesko Holding B.V.’s Supervisory Board

in 2006 and Ziggo’s Supervisory Board in 2012. David Barker

joined Cinven in 1996 and is head of Cinven’s Technology,

Media and Telecommunications sector team. He was involved

in a number of transactions, including Ziggo, Eutelsat,

Springer, Aprovia and MediMedia. David Barker is a member

of the Selection, Appointment and Remuneration Committee.

The term of appointment of David Barker is 4 years as from

20 March 2012.

Member

Male, Dutch national, 1953

Dirk Jan van den Berg joined Zesko Holding B.V.’s Supervisory

Board in March 2009 and Ziggo’s Supervisory Board in 2012.

He has been President of the Executive Board of Delft University

of Technology since March 2008. Dirk Jan van den Berg was

formerly her Majesty’s ambassador in China, Permanent

Representative for the Netherlands to the United Nations in

New York, Secretary General of the Ministry of Foreign Affairs

and Deputy Director General at the Ministry of Economic

Affairs. Dirk Jan van den Berg is a member of the Selection,

Appointment and Remuneration Committee. The term of

appointment of Dirk Jan van den Berg is 3 years as from

20 March 2012.



Contents

Pamela BoumeesterAnne Willem Kist

Rob Ruijter

Member


Anne Willem Kist joined Zesko Holding B.V.’s Supervisory Board

in 2009 and Ziggo’s Supervisory Board in 2012. Anne Willem Kist

regularly advises the Ministry of Infrastructure and Environment.

He was the first Director General of the Dutch Competition

Authority (NMA), where he worked from 1997 to 2003. He served

as a member of the Board of the Netherlands Authority for the

Financial Markets (AFM) between 2005 and 2007. Anne Willem

Kist also served as Chairman of the Board of the University of

Leiden from 2003 to 2005. He began his career as a lawyer,

and was a partner at Loeff Claeys Verbeke and Pels Rijcken &

Droogleever Fortuijn between 1979 and 1997. Anne Willem Kist

is a member of the Audit Committee. The term of appointment

of Anne Willem Kist is 3 years as from 20 March 2012.

Member

Female, Dutch national, 1958

Pamela Boumeester joined Ziggo’s Supervisory Board in 2013.

Pamela Boumeester had various positions at Nederlandse

Spoorwegen (Dutch Railways), including CEO of NS Poort

(property and retail activities) and NS Reizigers (services to

customers, planning and execution of timetable, specification

and purchase of equipment). Additionally, she is member of

the Supervisory Board of Heijmans, Persgroep Nederland B.V.,

Ordina N.V. and Jaarbeurs Holding B.V. Pamela Boumeester

chairs the Selection, Appointment and Remuneration Committee.

The term of appointment of Pamela Boumeester is 4 years as

from April 18, 2013.

Member


Rob Ruijter joined Ziggo’s Supervisory Board in 2012.

Rob Ruijter previously held financial Executive Board positions

at Philips Lighting, Baan, KLM, VNU and ASM International.

He currently has an advisory role at Verdonck Klooster &

Associates and is a Supervisory Board member at Unit 4 N.V.

and Wavin N.V. Rob Ruijter is the chairman of the Audit

Committee. The term of appointment of Rob Ruijter is 4 years

as from 20 March 2012.



Contents

Bert GroenewegenRené Obermann

Board of ManagementThe statutory Board of Management of Ziggo is comprised of three members, the Chief Executive Officer, the Chief Financial Officer and the Chief Technology Officer. The Company intends to appoint a new Chief Commercial Officer as per April 18, 2014.

Chief Executive Officer

Male, German national, 1963

René Obermann started as Chief Executive Officer in January

2014. Prior to Ziggo, René Obermann worked at Deutsche

Telekom Group from 1998 till 2013. After fulfilling several roles

within that Group, he was appointed as Chief Executive Officer

of Deutsche Telekom AG in November 2006, which he

remained until December 2013.

René Obermann began his career with a business traineeship

at BMW AG in Munich. Next, he founded his own business in

Münster in 1986: ABC Telekom, a company marketing and

distributing telecommunication equipment and providing

technical services. After the acquisition of ABC Telekom by

Hutchison Whampoa in 1991, he became managing partner

of the resulting company: Hutchison Mobilfunk GmbH.

Additionally, he was appointed Chief Executive Officer from

1993-1998 of that same company.

Chief Financial Officer


Bert Groenewegen has been Chief Financial Officer of the

Company since March 2010. Prior to joining Zesko Holding B.V.’s

Board of Management, Bert Groenewegen was Chief Executive

Officer of PCM Publishers from 2007 to 2009 after having

served as its Chief Financial Officer from 2005 to 2007. From

2004 to 2005 Bert Groenewegen worked for US-based private

equity firm General Atlantic. From 1995 to 2004, he was CFO

of Exact Software, where he also served as Group Financial

Controller from 1993 to 1994 and supervised the Company’s

initial public offering in June 1999. Before joining Exact, Bert

Groenewegen worked for Arthur Andersen as an auditor

from 1989 to 1991 and as financial manager for Sokkia Europe

from 1991 to 1993. From 1986 to 1989, Bert Groenewegen also

worked for Exact Software in sales and product development.

Bert Groenewegen studied business administration at the

Tilburg University.

Reporting to the Company’s Chief Executive 1. Operations

2. Human Resources

3. Strategy & Legal

4. Corporate Communications

Reporting to the Chief Financial Officer1. Accounting, Financial & Business Control

2. Internal Control & Risk Management (IC&RM)

3. Internal Audit

4. Investor Relations

5. Facilities

6. Procurement & Logistics

7. Tax



Contents

Paul HendriksMarcel Nijhoff

Hendrik de Groot

Chief Commercial Officer (left Ziggo as of March 1, 2014)


Marcel Nijhoff has been Chief Commercial Officer of the

Company since February 2007. He became Zesko Holding B.V.’s

Chief Commercial Officer in 2007 and was appointed

Managing Director in accordance with the Articles of

Association in 2006. Prior to joining Zesko Holding B.V.’s

Board of Management, Marcel Nijhoff was Chief Executive

Offer of Multikabel N.V. for two years and Commercial Director

from 2001 to 2005. Marcel Nijhoff worked for PrimaCom

RegionMitte in Leipzig, Germany between 2000 and 2001.

During the late 1990s, he was Vice President Marketing at

Amsterdam cable operator UPC/A2000. Marcel Nijhoff left

the Company as per March 1, 2014. The Company intends

to appoint Hendrik de Groot as statutory director and Chief

Commercial Officer as per April 18, 2014.

Chief Technology Officer


Paul Hendriks has been Chief Technology Officer of the

Company since February 2008. He became Zesko Holding B.V.’s

Chief Technology Officer in 2008 and was appointed Managing

Director in accordance with the Articles of Association in 2010.

Between 1992 and 2007 he managed a range of divisions at

KPN, including Design & Development, Operations South-East,

and Business Lines (Telephony and Broadband Internet), as well

as leading a range of major change programmes, including

VoIP and All IP. Paul Hendriks has been a consultant, project

manager and the architect in a range of restructurings,

reorganizations and innovations.

Reporting to the Chief Commercial Officer1. B2B (Ziggo Zakelijk)

2. Consumer Markets & Sales

3. Consumer Relations

4. Consumer Products & Innovation

Reporting to the Chief Technical Officer1. Innovation & Development

Chief Commercial Officer

(Intended appointment April 18, 2014)


Hendrik de Groot has been Managing Director of Business-to-

Business at Ziggo since January 2010. Before he joined Ziggo,

he served as Group Director Voice Products at COLT

Telecommunications since 2006 and Head Global Accounts

at Vodafone Group since 2003. From 1994 to 2003 Hendrik de

Groot served in various senior roles at MCI International before

its acquisition by Verizon in 2005 as Vice President responsible

for Business Development and later for Corporate Accounts

and Services. He started his career at BT Benelux in several

Sales and Marketing positions. Hendrik de Groot graduated

in business administration and business economics at the

Nyenrode University and at the Vrije Universiteit in Amsterdam.



Contents

Dutch Corporate Governance CodeThe Dutch Corporate Governance Code, which was first

published on December 9, 2003, contains both principles and

best practice provisions governing relations between the Board

of Management, the Supervisory Board and the shareholders

(i.e. the General Meeting of Shareholders). Dutch companies

whose shares are listed on a government recognized stock

exchange, whether in the Netherlands (such as Euronext

Amsterdam) or elsewhere, are required under Dutch law to

disclose in their annual reports whether or not they apply the

provisions of the Dutch Corporate Governance Code. In the

event that they do not apply a certain provision, they are

required to explain why.

We recognize the importance of good corporate governance.

The Board of Management and the Supervisory Board have

reviewed the Dutch Corporate Governance Code and support

the best practice provisions thereof. Therefore, except as noted

below or in the case of any future deviation, subject to an

explanation at the relevant time, we comply with the relevant

best practice provisions of the Dutch Corporate Governance

Code, as per December 31, 2013.

Departures from the Best Practice Provisions of the Dutch Corporate Governance CodeWhile we endorse the principles and best practice provisions of

the Dutch Corporate Governance Code, we do not comply

with the following best practice provisions of the Dutch

Corporate Governance Code:

1. Until May 2, 2013 Ziggo did not comply with best practice

provision III.2.1, which requires that all members of the

Supervisory Board, with the exception of no more than

one person are independent during the year under review.

Until the aforementioned date, Messrs. Schull and Barker

were non-independent members of the Supervisory Board

within the meaning of best practice provision III.2.1. As a

result of the sale by Warburg Pincus and Cinven of their

shares in Ziggo, the Relationship Agreement concluded

between Warburg Pincus, Cinven and Ziggo no longer

applied as of March 22, 2013.

2. Ziggo does not comply with best practice provision III.5,

which requires that if the Supervisory Board consists of more

than four members, it shall appoint from among its members

an Audit Committee, a Remuneration Committee and a

Selection and Appointment Committee. Our Remuneration

Committee and our Selection and Appointment Committee

are combined. Ziggo is of the opinion that a combined

committee is more efficient than two separate committees.

3. Until May 2, 2013 Ziggo did not comply with best practice

provision III.5.1 as only two of the four members of the

Selection, Appointment and Remuneration Committee are

independent. Please refer to sub 1.

4. Until March 1, 2013, Ziggo did not comply with best practice

provision III.5.11, which requires that the Remuneration

Committee may not be chaired by the chairman of the

Supervisory Board as Mr. Sukawaty chaired the Selection,

Appointment and Remuneration Committee. As of

April 18, 2013 Mrs. Boumeester chaired this Committee.

5. Ziggo does not comply with best practice provision

IV.3.1, which requires that provision shall be made for

all shareholders to follow any meetings with analysts,

presentations to analysts, presentations to investors and

institutional investors and press conferences real time

by means of webcasting or telephone. Ziggo finds it not

practical to make these arrangements and regards the lack

of flexibility resulting from such arrangements, as not in the

interests of relations with the investment community.

6. Ziggo was not in compliance with best practice provision

II.2.8, which provides that remuneration, in the event of a

dismissal, may not exceed one year’s fixed salary. In the

event that Mr. Dijkhuizen’s employment agreement was

terminated at Ziggo’s initiative for a reason which would

have been not mainly or solely attributable to acts or

omissions by Mr. Dijkhuizen and as a result would have

ended prior to January 1, 2014, the basic assumption was

that Mr. Dijkhuizen’s severance arrangement would be based

on the neutral Cantonal Court Formula (kantonrechters-

formule) (as currently applicable). This would be increased

by the average amount of the short-term annual cash

incentive awarded over the two years prior to the

termination date of his employment agreement. This was a

result of commitments in the employment agreement with

Mr. Dijkhuizen made prior to the IPO. Mr. Dijkhuizen retired

as per January 1, 2014 without the aforementioned

severance arrangements having been applied.

7. Ziggo does not comply with best practice provision

II.2.5, which provides that shares granted to the Board of

Management without financial compensation must be held

for at least five years. Ziggo grants shares to its Board of

Management that must be held for at least four years.



Contents

Diversity in genderZiggo aims for a diverse composition of its Boards regarding

experience, background, age and gender. Regarding gender,

Ziggo endeavours to comply with article 166 of book 2 Dutch

Civil Code and has as a first step appointed Mrs. Pamela

Boumeester as a member of the Supervisory Board.

Corporate Governance declarationThis declaration is made pursuant to the Decree regarding

further stipulations for the content of annual reports dated

March 20, 2009 (“the Decree”). The statements as meant in

article 3, 3a and 3b of the Decree can be found in the following

chapters and on the following pages of this annual report and

are deemed to be inserted and repeated herein:

■ Compliance with principles and best practices of the

Corporate Governance Code: chapter Corporate

Governance Structure, page 36.

■ Most important characteristics of the management and

control systems in connection with the Company’s financial

reporting process: chapter risk management, page 45.

■ Information on the functioning of the General Meeting of

Shareholders and the most important powers and rights of

the General Meeting of Shareholders: chapter Corporate

Governance Structure, page 36.

■ The composition and functioning of the Board of

Management: chapter Corporate Governance Structure,

page 36 and chapter Board of Management, page 41.

■ The composition and functioning of the Supervisory Board:

chapter Corporate Governance Structure, page 36 and

Supervisory Board page 39.

■ Information as meant in the article 3b of the Decree (art 10

Decree Take Over Directive): chapter Corporate Governance,

page 43.

■ The Board of Management, subject to prior approval of the

Supervisory Board, has been designated as competent body

by the General Meeting of Shareholders to issue shares and

grant rights to subscribe for shares in the capital of Ziggo,

up to a maximum of 10% of the issued and outstanding

share capital of Ziggo and to limit or exclude pre-emptive

rights of shareholders upon such issue of shares or a grant

of rights to subscribe for shares. Furthermore, the Board of

Management, subject to approval of the Supervisory Board,

has been authorized by the General Meeting of Shareholders

to acquire, other than for no consideration, shares held

by Ziggo of its own capital up to a maximum of 10% of

the issued and outstanding share capital of Ziggo. These

designations and authorizations end on October 18, 2014.

The Board of Management has not used these designations

and authorizations.

The Corporate Governance Declaration can also be found on

the website of Ziggo: www.ziggo.com

Board of Management

René Obermann

Bert Groenewegen

Paul Hendriks

Utrecht, The Netherlands

March 5, 2014



Contents

Risk Management and Internal ControlAligning Risk and Strategy – a focus on true relevance

Ziggo’s strategy to become the preferred media and

entertainment company remained unchanged. Our superior

network that allows us to offer our customers the best value in

products and services, now and in the foreseeable future, is still

at the foundation of our strategy. Innovation is however key to

capturing new growth opportunities and strengthening our

leading position in the Dutch telecom and media market.

Our risk appetite (the amount of risk Ziggo is willing to accept

in pursuit of value) is clearly linked to our strategy, defining the

boundaries for our business model and taking into account

internal and external factors, including financial, commercial

and reputational aspects, thus allowing us to focus on truly

relevant risks. In line with our innovation strategy, we strongly

favour exploring new opportunities and are prepared to accept

a reasonable amount of risk if these opportunities are likely to

contribute to the realisation of our strategic, operational and

financial goals. Taking into account our risk appetite, we

require our management to pro-actively manage risks and

control in order to ensure an acceptable level of risk for Ziggo.

As the execution of our strategy brings its own, unique risks,

the challenge for our management is to determine how much

risk to accept while realizing our (strategic) objectives.

This requires a clear strategy in terms of the amount of risk

our management is willing to accept and the corresponding

level of control required.

In setting our risk management strategy, we initiated the

implementation of an integrated Risk Management and Internal

Control framework in 2012 where, based on strategic

objectives, risks are identified in a structured way and key

(financial) controls defined, implemented and executed in

accordance with defined risk tolerances. Our integrated

approach aids us in developing and achieving our strategic,

operational and financial objectives and is both fundamental to

the day-to-day management of our Company and a critical

success factor in ensuring that our strategy is executed in

a controlled, transparent and compliant manner.

During 2013 we enhanced our Risk Management framework

with a clear focus on strategic and project risk management

and focussed on simplifying our Internal Control framework

based on lessons learned from 2012.

Our Risk Management Framework – three lines

of defence

We apply a COSO Enterprise Risk Management (COSO ERM)

based Internal Control and Risk Management framework to

continuously and proactively manage risks and to realise our

(strategic) objectives effectively and efficiently, in accordance

with our brand values. In addition to COSO ERM, we apply the

COSO Internal Control – Integrated Framework as it enables

us to more effectively and efficiently develop and maintain

our systems of internal control. During 2013 we assessed the

impact of the updated COSO Internal Control – Integrated

Framework (Framework) and related illustrative documents,

released on May 14, 2013. We found that the updated

Framework confirmed our approach to Internal Control and

defined additional areas for enhancements to be implemented

during 2013-2014.

Although the implementation of the Ziggo Internal Control and

Risk Management framework initially had a strong focus on

managing financial reporting risks, during 2013 we continued

to extend our scope to managing risks on strategic, tactical

and operational levels also incorporating other than financial

reporting risk factors in line with our Risk Management Roadmap

2015. Despite all efforts exercised, the implementation of

an internal control and risk management system only provides

a reasonable level of assurance, risks that are currently

not considered material, could however in a later stage have

a significant negative effect on the realization of our

(strategic) goals.

The three lines of defence against which we review significant

risks are illustrated below.



Contents

Ownership & responsibilties

Roles

Activities

Governance Oversight

Internal independent from operations and finance

Independent from design, implementation and execution of risk & control activities

Highlight control weakness and inefficiencies to management

Provide assurance on the effectiveness of the 1st and 2nd lines in managing risk & control

Support management in identifying and managing risk & control

Support management in design and implementation of the Ziggo Control Framework

Design risk & control activities

Support in implementation of risk & control activities

Define procedures for monitoring & reporting, that support 1st line in meeting its risk and control responsibilities

Ownership, responsibility and accountability for identifying and managing risk & control

Define requirements for design & control activities

Identify and manage (monitor) risk & control

Continuously improve, monitor and report on risk & control activities

Management Specialist departments (e.g. Internal Control & Risk Management)

Internal Audit & other assurance

providers

Design, support & challenge AssuranceOwn and operate

Board of Management

Audit Committee

1st line 2nd line 3rd line

First, our management has ownership, responsibility and

accountability for assessing, controlling and mitigating risk

(first line of defence) on a daily basis.

Second, our management is supported by subject matter

experts (second line of defence) originating from Business

Control, Internal Control & Risk Management, Security &

Integrity and Compliance.

Finally, Internal Audit helps us in accomplishing our objectives

by bringing a systematic, disciplined approach to evaluate and

improve the effectiveness of risk management, internal control,

and governance processes (third line of defence). Internal Audit

directly reports to the Board of Management, represented

by the CFO, and has direct access to the Audit Committee

of the Supervisory Board.

Our Board of Management is the executive body and is

responsible for the day-to-day management of the operations,

supervised by the Supervisory Board. The Audit Committee

assists the Supervisory Board in fulfilling its oversight

responsibilities for the integrity of the Company’s financial

statements, the financial reporting process, the internal control

and risk management systems, the internal and external audit

process, the internal and external auditor’s qualifications,

independence and performance, as well as the Company’s

process for monitoring compliance with laws and regulations.

What has this meant in practice this year?

Core values

Ziggo’s core values are best characterized by innovative,

co-operative, challenging and aiming for simplicity. Integrity

and ethical values are vital elements embedded in our core

values. Ziggo’s performance management cycle is based on

High Performance principles; as a result we have defined a

High Performance leadership profile which focuses on quality

of personal leadership, also including integrity and ethical

values. Evaluation of these competences has become a

continuous process throughout the year and therefore

improvement opportunities can be addressed at an early stage.

The Board of Management and management at various levels

in the organization articulate and demonstrate the importance

of integrity and ethical values, applying various forms and

mechanisms including, but not limited to:



Contents

■ Companywide communications underpinning the expected

standards of conduct as laid out in the Code of Conduct;

■ Timely inquiries and investigations into any alleged conduct

that is inconsistent with the Code of Conduct;

■ Corrective action when deviations from expected standards

of conduct occur.

Ziggo’s Code of Conduct, available on the Ziggo intranet,

addresses the fundamental integrity and ethics-related rules

and principles. In order to further enhance and embed

employee’s awareness of the Code of Conduct, we apply a

“Serious Gaming” concept. The Ziggo Serious Game is based

on gaming principles and contains True/False and multiple

choice questions as well as intervention moments (dilemmas)

covering the fundamentals of the Code of Conduct to ensure

the best possible learning curve. During 2013 the Serious Game

has been made available to all employees for replay after the

initial launch in 2012 and has become part of the Ziggo

introduction day for new joiners. A new release of the Ziggo

Serious Game is targeted for 2014 and will focus on further

guidance to our rules and principles and more specific

security-related topics.

Along with the Code of Conduct, a whistle blower procedure is

in place, ensuring that incidents can be reported, anonymously

if desired.

Risk and control assessment

We systematically identify, prioritize and analyse risks based

on likelihood and impact on all relevant organizational levels,

including but not limited to strategic, tactical, operational and

project levels. During 2013 we focussed our risk management

efforts on enhancing strategic and project risk management as

the execution of a substantial part of our strategy is performed

by means of projects.

As our management is responsible for the design and operating

effectiveness of the risk management and controls systems in

the organization, we deem transparency on the outcomes of

this process of the utmost importance. Throughout the year

control self-assessments are performed by management for

key financial and operational controls. The results of these

control self-assessments are reported to and discussed with

management every quarter by means of the Risk and Control

reports, providing a consolidated view on the, predominantly

financial reporting, risk and control profile of the business area.

Every year the results of these control self-assessments are

reported to and discussed with the Board of Management and

the Audit Committee of the Supervisory Board.

“ During 2013 we focussed our risk management efforts on enhancing strategic and project risk management.”

Subsequent to the implementation of the control self-

assessment process during 2012 and in line with our core value

of aiming at simplicity, the focus of the second line of defence

for 2013 has been on supporting our management with the

rationalisation of the Ziggo Business Control Framework and

enhancing the quality of control documentation. In line with

our IT strategy and transformation efforts towards an

entertainment company, we will be replacing multiple IT

systems during the period 2013-2015. These developments

provide us with a unique opportunity to implement our control

by design concept, aiming at replacing manual controls by

automated controls to the maximum extent possible, which

will remain a key element in our In Control strategy for the

coming years.

Planning and control cycle

Ziggo has clearly defined requirements, formats and dates for

our planning reporting and review cycles in order to facilitate

setting company and departmental objectives, budgets,

forecasts and reports, including both financial and operational

aspects. Reporting on the outcome of our risk management

and internal control systems has been synchronised with our

regular planning and control cycle during 2013 through close

cooperation between our Internal Control & Risk Management

teams and Internal Audit, thus providing our management with

an actionable and integrated view on the, predominantly

financial, Risk and Control next to the financial and operational

results for their business area of responsibility.

The IIRC (International Integrated Reporting Council), a global

organization comprising primarily regulators, investors,

companies and standard setters, launched the International

Integrated Reporting Framework on December 9, 2013. Its goal

is to bring greater cohesion and efficiency to the reporting

process, and adopting “integrated thinking” as a way of breaking

down internal silos and reducing duplication. It’s intent is to

improve the quality of information available to providers of

financial capital to enable a more efficient and productive



Contents

allocation of capital. During 2013 we initiated a preliminary

assessment of our approach to Corporate Reporting compared

to the IIRC framework, by that stage available in draft for public

exposure. Based on our initial assessment and the final

framework released December 9, 2013, we will finalise our

efforts to prepare a draft framework for Ziggo in 2014 and will

determine a roadmap to implement accordingly.

Policies and procedures

Management establishes and clearly articulates financial

reporting objectives, including those related to internal control

over financial reporting. We apply a uniform set of operational

and financial procedures, including those related to our

financial reporting and closing process. Our main accounting

policies have been incorporated in a digitalized accounting

manual which is available on our intranet, accessible for all

employees, and which is updated on a regular basis.

Furthermore, necessary segregation of duties is in place and

the risk of singular decision making is minimized.

During 2013 we further professionalised the policies and

procedures of our second line of defence functions in

accordance with our assessment of the updates to the

COSO Internal Control – Integrated Framework. As a result,

the Internal Control and Risk Management team updated

and documented the principles of our Ziggo Business

Control Framework.

Information Security

Information Risk Management (IRM), an integral part of

Enterprise Risk Management, enables Ziggo to protect the

Company assets, including but not limited to our people,

customer services, information sources and other assets.

The IRM function has a key role in our security management

system by identifying and classifying information risks and thus

supporting our management in the design and execution of

information risk management and the implementation of

security controls systems in the organization.

During 2013 Ziggo opened the Security Operations Centre

(SOC), one of the major results of the information security

programme initiated in 2012. The SOC is a major step in

improving security within Ziggo and key to the detection of

and response to operational security threats in our network.

From an IRM perspective the SOC is a key security control

to mitigate our security risks. The IRM function will now start

monitoring the quality of the SOC performance as a next

level of security control.

Internal Audit

Internal Audit applies a risk-based approach to testing key

financial reporting controls, and reports the outcome of their

procedures performed to the Board of Management and the

Audit Committee of the Supervisory Board. Internal Audit also

performs planned audits on specific (key) risk areas and audits

on request of management, both financial and operational by

nature. Audit findings are discussed with responsible (senior)

management. Updates to the audit plan, major findings and

the results of follow-up activities are discussed with the

Audit Committee on a quarterly basis.

Significant risks facing the business

The nature of the industry in which we operate, combined

with our chosen strategy, expose Ziggo to a number of risks.

We have considered the nature and extent of the significant

risks we face and have summarised our most significant risks,

their level and trend as well as our mitigation strategy in the

table below. We have categorized1 our risks in accordance

with our Risk Management framework as strategic, operational,

compliance and financial reporting risks.

We have visualised the trends in our risk levels (2013 compared

to 2012) in the following table.



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Strategic Risks Definition Mitigation

Business and Industry

Level – High

Trend – Rising

We operate in a highly competitive industry and face significant competition from established and new competitors. Over the course of 2013 the level of competition for the Dutch market continued to increase, including more aggressive price- and promotional campaigns from competitors like KPN and Telfort as well as the entrance of new competitors like Netflix. In addition, Fibre to the Home (FTTH) initiatives have been continued by our competitors, challenging Ziggo to adequately manage the perception of the general public towards FTTH networks compared to the Hybrid Fibre Coax (HFC) network of Ziggo. As a result, we encounter more challenges to attract new subscribers and/or retain existing subscribers, resulting in less usage of our services and increased price pressure. If we are not able to compete successfully against our current or future competitors in any of our businesses, this may result in a material adverse effect on our business in terms of increasing churn levels and decreasing results of operations.

We continuously monitor our competitive environment, also performing deep dives into competitive product and service offerings, preparing ourselves in the best possible way to diligently assess how and where we can differentiate ourselves from our competition. While considering our response to the competitive environment we take into account perspectives from both new and existing subscribers to ensure a balanced view between attracting new subscribers and retaining existing subscribers (churn prevention).

We have been and will be continuing and strengthening our fact-based communication with (potential) customers on FTTH, meanwhile highlighting the differentiating factors of our own products and services. Based on various reputable sources, we estimate that the demand for bandwidth for fixed connections will grow exponentially in the Netherlands, by approximately 30% to 40% per year, between now and 2020, which we deem to be a conservative estimate. Due to the very high intrinsic capacity of coax, our fibre-coax network (cable) can deal with such exponential growth in demand for bandwidth1.

The video, broadband internet and telephony businesses in which we operate are capital-intensive. Significant capital expenditures, including expenditures for equipment and labour costs, are required to add customers to our network and to increase the capacity of our network in order to keep up with the increasing demand for broadband speed. If we are unable to pay for costs and capital expenditure associated with adding new customers, expanding or upgrading our network or making our other planned or unplanned capital expenditures, our growth could be limited and our competitive position could be harmed.

The multitude of capital-intensive projects Ziggo executes requires strong portfolio management to ensure the proper allocation of resources and funds for achieving our strategic ambitions. Our integrated roadmap allows us to determine an appropriate balance between successful introductions of both commercial and technological enhancements to existing products and services, and the introduction of new, innovative, products and services. Although we continuously monitor our integrated roadmap to ensure we are well positioned to achieve our strategic and operational objectives, it remains difficult to predict the effect of technological innovations on our business.

Our growth prospects also depend on a continuing demand for cable and telecommunications products and services and an increasing demand for bundled offerings. As we exclusively operate in the Dutch market, our success is therefore closely tied to general economic developments in the Netherlands and cannot be offset by developments in other markets. Negative developments in or the weakness of the Dutch economy, in particular increasing levels of unemployment, may have a direct negative impact on the spending patterns of retail consumers, both in terms of the products they subscribe for and usage levels.

Although hard to mitigate, we believe we have effective measures in place to respond to market conditions in the best possible way. Our mitigation strategy aims at reinforcing measures around:

■ planning, budgeting and forecasting processes; ■ resource allocation processes; ■ debt reduction and refinancing; ■ cost reduction, pricing and gross margin

management initiatives; ■ customer service and productivity improvement.

Innovation

Level – High

Trend – Stable

One of our main challenges is the rapidly increasing growth of IPTV and Over The Top (OTT) service offerings. These types of service offerings forces us to invest in innovative offerings and to develop new, attractive services and propositions in order to stay competitive. We strongly favour exploring new opportunities and are prepared to accept a reasonable amount of risk if such opportunities contribute to the achievement of our strategic and operational objectives.

In order to ensure an appropriate speed of innovation, we have aligned ourselves with key players in innovative technologies to leverage their knowledge and experience. We initiated the implementation of partner management processes in 2012 and continued enhancing these processes during 2013. While exploring new opportunities, we exercise strict quality controls to ensure the best possible customer experience.

Developing new, attractive services and propositions also requires an innovative Information Technology (IT) infrastructure to support the delivery of our services and propositions. The implementation of such innovative IT infrastructure requires a clear transformation strategy. If our transformation strategy is not executed adequately this may result in the inability to deliver new services and propositions, thus harming our competitive position.

In order to ensure our IT infrastructure adequately supports the delivery of our products and services, a clear IT strategy has been defined and translated into Critical To Quality (CTQ) factors which are at the heart of each system implementation. We also translated our IT strategy into a multi-year transformation plan which is diligently executed. Risk Management, Programme Assurance and Quality Assurance have been embedded into the transformation plan.

1 This has been verified in a study of November 2010 commissioned by the Dutch Ministry of Economic Affairs that addressed forecasting the supply of and demand for Next Generation Infrastructures in the Netherlands until 2020.



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Operational Risks Definition Mitigation

Service Excellence

Level – Medium

Trend – Stable

Our products are at the heart of society and tightly integrated in our customers’ day-to-day lives, making service levels, customer satisfaction and service excellence our key priorities. The continuity and quality of our (network) services is the primary condition for providing our services and subject to the highest service levels. Our challenge is to be pro-active and demonstrate customer insight, resulting in an increase in customer satisfaction and with the possibility to clearly distinguish ourselves from our competitors. If, however, our service levels are not met, our customers may not be satisfied by our products or services. This may lead to customer churn or additional costs to maintain our customer base.

We continuously monitor our customer satisfaction using Net Promoter Scores (NPS) as a key indicator. Based on NPS results, we set our priorities for improving our current processes and training our staff. In addition, the implementation of our IT strategy will allow us to be more pro-active and demonstrate customer insight.

The success of our products depends on, among other things, the quality and variety of the television programming delivered to our subscribers. We do not produce our own content and depend upon broadcasters for programming.

We continuously monitor the quality and variety of the television programming delivered by broadcasters as perceived by our customers. As a result, we have updated our television programming multiple times during 2013.

Systems and Infrastructure capabilities and resilience

Level – Medium

Trend – Stable

Our day-to-day operations are highly dependent on our IT infrastructure and network. Disruptions to our IT infrastructure and network may have a negative impact on the continuity of our services to our customers and the support of our operations. Despite all efforts exercised, the potential impact of losses as a result of sabotage or other external disasters may still be considerable.

We continuously monitor a variety of business continuity and security aspects, for example by performing impact analyses on our critical IT infrastructure and network components. We also ensure our critical IT infrastructure and network components are installed taking into account appropriate levels of redundancy, and continuously replace old technologies by new ones.

A dedicated Business Continuity Officer was appointed as of September 1, 2013 to further enhance our mitigation efforts to disruptions to our IT infrastructure and network.

During 2012 a security programme was initiated to enhance our baseline security controls and as a result decrease security risks. We opened our Security Operations Centre as of September 1, 2013, implemented vulnerability scanning, SIEM and IDS tooling and enhanced our (security) patch management processes during 2013.

Human Capital

Level – Medium

Trend – Increasing

To support our investments in capital-intensive projects, we need to ensure the availability of personnel of the highest quality. Especially introductions of innovative products and services, and the changing nature of our business which requires the ability to continuously adjust our processes, require specific knowledge and skills (competences) from our employees. We may however not be able to attract and retain those resources at all times, which may adversely affect our operations.

Our people strategy, including the strategic staffing plan, provides a solid base to prepare ourselves in the best possible way to attract and retain appropriate resources, taking High Performance Organizations (HPO) as a benchmark. As a result, an HPO development programme was initiated during 2012 and continued during 2013 for (senior) management, next to our regular investments in training and education for all our staff. In addition, the set-up of our performance management cycle ensures a continuous dialogue between management and staff, allowing us to quickly identify any lack of specific knowledge and skills and take appropriate actions.



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Compliance Risks Definition Mitigation

Extensive legislation

Level – Low

Trend – Stable

The television, broadband internet and telephony markets in which we operate are regulated more extensively than many other industries. We are subject to extensive supervision and regulation by Dutch regulatory authorities, including the ACM (Autoriteit Consument en Markt), the Dutch Media Authority, Consumer Data Protection Agency and the Radio Communications Agency (Agentschap Telecom), as well as European Union authorities. Regulatory agencies continuously monitor the level of competition within our market and may conclude, based on changes in the competitive environment, that any organization has obtained “significant market power”. Although hard to predict the effect of such regulatory changes, these changes may influence how we operate our business and may either result in decreasing revenues caused by increased churn levels or additional price pressure, or result in additional costs of adjusting our current processes and systems. In addition, if despite all efforts exercised, a violation of laws and regulations occurs, this may result in fines and loss of reputation.

We continuously monitor changes to the legislative and regulatory environment, including but not limited to those on country and European level, to ensure an appropriate level of compliance. During 2013 we successfully amended our processes to comply with the requirements for the notification of personal data breaches under Directive 2002/58/EC on privacy and electronic communications.

In addition, we performed a Compliance Risk Assessment taking into account both internal (e.g. Code of Conduct) and external laws and regulations in close cooperation between various subject matter experts in our organization who are monitoring our compliance to these laws and regulations on a daily basis. The outcome of this Compliance Risk Assessment provides a stepping stone for enhancing our current Compliance framework in 2014.

The upcoming change from an EU directive to an EU regulation with a likely effective date in 2014 will result in more strict privacy requirements towards all companies processing personal information. Next to Ziggo being in control of personal data processed at or on behalf of Ziggo, customers should be more empowered to control their personal information stored, including the right to know what personal information is stored and the right to erasure. This change is likely to result in additional costs due to required adjustments to our current processes and systems.

As customer privacy has been a key element in legislation, regulations or government policies, including the Dutch “Telecomwet”, over the last years we have intensified our compliance efforts in this domain. Ziggo’s Legal and Regulatory Affairs department is in charge of assessing the impact of the new EU regulation on the organization and providing internal policies and procedures where required, to provide further guidance on how these regulations should be embedded in the day-to-day operations. Furthermore, Ziggo will formalize and enhance their Compliance framework as laid out in the Compliance plan 2014.

Tax compliance

Level – Low

Trend – Stable

In the normal course of business, a company may enter into discussions about tax positions with the tax authorities based on its tax returns. There is a risk that the Dutch tax authorities take a different stance on the Company’s tax positions, which may have an impact on the tax position of the Company and result in additional taxation.

On February 7, 2013, we signed a compliance agreement with the Dutch tax authorities based on horizontal monitoring. Horizontal monitoring incorporates a forward-looking way of working ensuring transparency between the Company and the tax authorities and incorporates two key elements: A relationship between the tax payer and the tax authorities based on mutual trust and understanding which is recorded in a compliance agreement (‘handhavingsconvenant’). Appropriate risk management based on a tax control framework.

The Dutch tax authorities found the tax controls and procedures in the Ziggo Business Control Framework (part of the Ziggo Internal Control and Risk Management framework) more than adequate to conclude a compliance agreement. This agreement confirms our good relationship with the Dutch tax authorities.



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Financial Reporting Risks Definition Mitigation

Capital structure

Level – Low

Trend – Stable

Changes in our business model or the introduction of new and innovative products or services may require a revision of our current capital structure and the introduction of alternative financial instruments. A downgrade in our credit rating may negatively affect our ability to obtain funds from financial institutions. It may also hurt our ability to retain investors and banks, and may increase our financing costs by raising the interest rates on our outstanding debt or the interest rates for refinancing existing debt or incurring new debt.

Our agreements and instruments governing the loans contain restrictions, covenants and limitations that could adversely affect our ability to operate our business, to fund capital expenditure, to incur additional debt and to pay dividends.

We continuously manage our capital structure in order to safeguard the Company’s ability to continue as a going concern, providing returns for our shareholders and benefits for our other stakeholders, thus maintaining the best possible capital structure. As a result, we have refinanced a substantial amount of our debt, €800 million, during 2013.

Interest rate risk

Level – Low

Trend – Stable

Our capital structure includes a substantial number of loans at floating interest rates, which exposes us to interest rate risk. Fluctuations in interest rates may have a material adverse effect on our financial results in any given reporting period.

Our interest rate risk is managed by hedging at least 65-70% of the floating interest rate risk. Fluctuations in interest rates may however still result in changes in interest expenses and changes in fair value for the interest rate swaps.

Foreign exchange risk

Level – Low

Trend – Stable

A portion of our purchases is made in foreign currency, predominantly in US dollars, exposing us to exchange rate fluctuations from future commercial transactions.

We apply hedging arrangements and other contracts in order to reduce our exposure to exchange rate fluctuations and to minimise our operating or financing costs.

Increases in operating costs and inflation risks

Level – Low

Trend – Stable

We are subject to increases in operating costs mainly due to our intensified Marketing and Sales efforts in order to counter the increasing level of competition and an increase in personnel costs mainly due to our investments in innovation as well as inflation risks which may adversely affect our earnings as operating costs may rise faster than associated revenues, resulting in a negative impact on our cash flow and net earnings.

We attempt to increase our subscription fees to offset increases in operating costs as a result of inflationary increases in salaries, wages, benefits and other administrative costs. As a result, we updated the pricing structure for our products and services as of February 2013.

In addition, our mitigation strategy aims at reinforcing measures around:

■ planning, budgeting and forecasting processes; ■ resource allocation processes; ■ debt reduction and refinancing; ■ cost reduction, pricing and gross margin

management initiatives; ■ customer service and productivity improvement.



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In Control and Compliance StatementThe Board of Management is responsible for establishing and maintaining adequate internal risk management and control systems. Such systems are designed to manage rather than eliminate the risk of failure to achieve important business objectives and can only provide reasonable and not absolute assurance against material misstatement, fraud and violations of laws and regulations.

in full compliance with statutory and regulatory requirements, nor

will we be able to prevent all human errors, including errors of

judgement and mistakes. While doing business, we will however

make a conscious effort at all times to weigh the potential

impact of risk and the cost of control in a balanced manner.

Referring to section 5.25c paragraph 2, sub c of the Financial

Markets Supervision Act, the Board of Management states that,

to the best of its knowledge:

■ The annual financial statements for 2013 give a true and fair

view of the assets, liabilities, financial position and profit or

loss of Ziggo and its consolidated companies, and

■ The Annual Report gives a true and fair view of the position

as per December 31, 2013 and Ziggo’s development during

2013 and that of its affiliated companies is included in the

annual financial statements, together with a description of

the principal risks Ziggo faces.

Board of Management

René Obermann

Bert Groenewegen

Paul Hendriks


March 5, 2014

The implementation of internal risk management and control

systems at Ziggo has been initiated with a strong focus on

managing financial risks, but has gradually been enhanced

with the management of operational risks. New developments,

programmes and projects, and new ICT applications and

processes are input to our control systems. During 2013 we

evaluated our key controls and strengthened the Ziggo

Business Control Framework based on improvements identified

as well as inclusion of key controls for supply chain processes

and new business acquisitions. Administrative changes in

outsourced supply chain processes however required separate

evaluations which have to be further embedded in our regular

Control Self Assessment process during 2014. Independent

analysis has been performed in critical domains to supplement

the Ziggo Business Control Framework and enhance

the level of control. The outcome of the assessment of our

Internal Risk Management and Control systems has been

shared with the Audit Committee of the Supervisory Board and

discussed with our external auditors.

Based on the adoption of the Dutch Corporate Governance

Code, Ziggo prepared the In Control Statement 2013 in

accordance with best practice provision II.1.5.

With due consideration to the above, we believe that our

internal risk management and control systems provide

reasonable assurance that the financial reporting does not

contain any errors of material importance and that the internal

risk management and control systems relating to financial

reporting risks operated properly in the year under review.

Our risk management and control systems can however not

provide full assurance that strategic, operational and financial

objectives will be fully achieved and that we will at all times be

In Control and Compliance Statement



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Report of the Supervisory BoardHighlightsThe year 2013 was again an eventful one for Ziggo. It was

Bernard Dijkhuizen’s last year as CEO. The Supervisory Board is

most grateful for the vital contribution he has made over the

years to the merger of three preceding companies into Ziggo,

the growth of the business and customer satisfaction, the

introduction of new products and services, and the successful

IPO in 2012. The Supervisory Board was also happy to

announce René Obermann’s appointment as CEO as Bernard’s

successor as of January 1, 2014. Furthermore, the Supervisory

Board has spent much time in evaluating the preliminary

proposal for a potential public offer on all outstanding shares

of Ziggo N.V. by Liberty Global Plc. and the subsequent

discussions. In assessing the proposals of Liberty Global, the

Supervisory Board has given due regard to the interests of all

stakeholders in Ziggo, including shareholders, customers and

employees. The discussions with Liberty Global resulted on

January 27, 2014 in a conditional agreement on a public offer

by Liberty Global on all outstanding shares of Ziggo N.V.,

recommended by the Supervisory Board and the Board of

Management.

CompositionAs a result of Ziggo’s former majority shareholders Warburg

Pincus and Cinven reducing their stake in Ziggo, Paul Best and

Caspar Berendsen decided to resign as per December 31, 2012.

Warburg Pincus and Cinven sold their remaining stakes in

Ziggo in May 2013 and since then all members of the

Supervisory Board are independent in the context of the

Dutch Corporate Governance Code. Pamela Boumeester

was appointed as a member of the Supervisory Board at the

Annual General Meeting on April 18, 2013. She chairs the

Selection, Appointment and Remuneration Committee,

replacing Andrew Sukawaty. The Audit Committee continued

to be chaired by Rob Ruijter.

In the view of the Supervisory Board, its current size and

composition are appropriate considering the nature and size

of Ziggo. The Supervisory Board reflects all aspects of Ziggo,

including expertise in fields such as the telecommunication

industry, finance, regulatory and public affairs. The particulars

of the members of the Supervisory Board can be found on

page 39 and 40.

MeetingsThe Supervisory Board of Ziggo N.V. met 10 times in 2013.

One member was unable to attend three meetings, one

member was unable to attend two meetings, and two

members were unable to attend one meeting. All meetings

were held in the presence of the members of the Board of

Management and the corporate secretary. The principal

matters discussed during the regular meetings were:

■ Strategy;

■ Financing;

■ Internal control and risk management;

■ Monthly, quarterly, semi-annual and annual results;

■ Remuneration and targets of the Board of Management;

■ Budget;

■ Potential acquisitions;

■ Regulatory and public affairs;

■ Self-assessment;

■ The appointment of René Obermann as a member of the

Board of Management and CEO of Ziggo;

■ The preliminary proposal regarding a potential bid by

Liberty Global Plc. and subsequent discussions.

The Supervisory Board is in the process of finalizing a

self-assessment initiated in 2013.

The Selection, Appointment and Remuneration Committee

consists of four Supervisory Board Members: Andrew Sukawaty

(until April 18, 2013), Pamela Boumeester (as of April 18, 2013 and

Chair), Joseph Schull, David Barker and Dirk Jan van den Berg.

The committee convened once and discussed the long-term

remuneration of the Board of Management based on the

long-term incentive plan. We refer to the Remuneration Report

on page 56 for more information on this subject.

The Audit Committee consists of two Supervisory Board

members: Rob Ruijter (Chairman) and Anne Willem Kist.

The Audit Committee convened four times in 2013 to discuss

the Q4 results and full-year results for 2012 and the Q1,

half-year and Q3 results of 2013. The attendance rate at the

Audit Committee meetings was 100%. All meetings were

attended by the Company’s CFO and external auditors EY.

The Audit Committee also met separately with the external

auditors. Recurring items on the agenda were:



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■ The quarterly results and the financial statements;

■ The annual accounts;

■ Most important findings of the auditors based on the review

of the quarterly results and the financial statements;

■ Management letter and Auditor’s report;

■ Press releases;

■ Key findings of internal audit and the internal audit

programme;

■ Key findings of Internal Control & Risk Management (IC&RM);

■ Compliance and Fraud management;

■ Management of interest rate risks and hedges;

■ Capital expenditure;

■ Preparation by the Company for the corporate governance

and In Control statement;

■ Tax position of the Company and tax-related items;

■ Legal proceedings and provisions.

The Audit Committee also closely monitored EY’s

independence for performing non audit-related services

(e.g. when approving the related engagement). A proposal

to reappoint EY as external auditor for the year 2014 will

be submitted to the General Meeting of shareholders.

In addition to the regular topics, special attention was paid

to the following items:

■ Impairment test on assets with an indefinite life and finite

life, and the pre-tax WACC, including the components of

the WACC;

■ The acquisition of Esprit Telecom and the determination

of the opening balance, the valuation of the customer list

and goodwill;

■ IT security and Data Privacy;

■ The correspondence with the AFM as a result of questions

raised by the AFM concerning how the Company came

to the conclusion that the useful life of the customer

relationships is indefinite;

■ The issuance of the In Control statement by the Board of

Management and the inclusion of this statement in the

annual report.

In the answer by the Board of Management with respect to

the question raised by the AFM of how the Company came to

the conclusion in the first quarter of 2011 that the useful life of

the customer contracts and related customer relationships is

indefinite, management informed the AFM of its considerations,

in particular those with regard to IAS 38.88, IAS 38.90,

IAS 38.91, IAS 38.93, IAS 38.94 and IAS 38.123. Furthermore,

management provided the AFM with their analysis of public

information on the useful life of customer relationships of

peers, the attrition rates of Ziggo observed by management,

and the expected actions by competitors.

Management is of the opinion that the Company is facing a

high level of uncertainty in estimating the useful life.

Historic rates vary significantly, which would lead to useful

lives between 25 and over 50 years. Initially management

was inclined to set the useful life at 20 years – equal to their

general view on foreseeable limit – but IAS 38.93 states that

prudence does not do justice when estimating the asset’s

useful life. Management is aware that IAS 38 BC65 b) mentions

that difficulties in accurately determining useful life does not

provide a basis as such for regarding the useful life as indefinite

but also that following IAS 38.BC74, any arbitrarily determined

period would not be representationally faithful.

After ample consideration, management concluded that

considering the customer contracts and related customer

relationships to have an indefinite useful life would at this

moment do most justice to the asset identified upon

acquisition in a business combination. In line with IFRS the

asset is annually tested, hereby it is ensured that the carrying

amount will never exceed the asset’s recoverable amount.

Furthermore, management periodically evaluates if there are

any changes in the assessment of the customer contracts and

related customer relationships having an indefinite useful life.

If changes occur, management may reconsider their

assessment and account for this change in accordance with

IAS 8 as a change in an accounting estimate (IAS 38.104 /

IAS 38.109) and change the useful life from indefinite to finite

on a prospective basis going forward. The Company and the

AFM are still in the process of exchanging information

regarding this subject and further discussion is ongoing.



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Remuneration ReportThe objective of Ziggo’s remuneration policy is to provide

a remuneration structure that: (a) Creates a remuneration

structure that will allow Ziggo to attract, reward and retain

highly qualified executives; and (b) Provides and motivates

members of the Board of Management with a balanced and

competitive remuneration focused on sustainable results and

aligned with the long-term strategy of Ziggo. The General

Meeting of Shareholders of Ziggo held on February 21, 2012

adopted the remuneration policy and the remuneration of the

members of the Supervisory Board and has approved the long-

term incentive plan. The individual remuneration of the

members of the Board of Management has been determined in

accordance with this policy, as described below, and any

deviations thereof are indicated.

Remuneration policy Board of ManagementIn determining the level and the structure of the remuneration

of the members of the Board of Management, the Supervisory

Board took into account, among other things, the financial and

operational results as well as non-financial indicators relevant to

Ziggo’s long-term objectives. The Supervisory Board performed

and will continue to perform scenario analyses to assess that

the outcomes of variable remuneration components

appropriately reflect performance. This is done with due regard

to the risks to which the variable remuneration may expose

Ziggo. The Supervisory Board engaged an independent

consultant who rendered advice regarding remuneration.

He based this on scenario analyses regarding the possible

outcome of the variable components of the remuneration

of the Board of Management and the consequences for the

remuneration of the Board of Management. In determining

the remuneration of the Board of Management members,

the Supervisory Board also takes into account the impact of

the overall remuneration of the Board of Management on

the pay differential within Ziggo. The remuneration of the

Board of Management is determined at a range between

the median and a 75th percentile of remuneration levels

payable within a peer group of comparable national and

international companies relevant to the Company from

a labour market perspective.

The remuneration structure of the members of the Board of

Management consists of the following components:

■ A fixed, base salary, in addition to which, the members

of the Board of Management have pension and fringe

benefits including a company car, customary insurance

and holiday allowance;

■ A variable, annual cash bonus, related to performance in

the previous year to ensure that the Board of Management

has a healthy incentive to achieve performance targets in

the shorter term;

■ A long-term variable incentive, in the form of conditional

performance shares;

■ Severance arrangements.

■ Members of the Board of Management are eligible for long-

term incentive awards. This helps to align the interests of the

Board of Management members with those of its long-term

(or prospective) shareholders and provides an incentive for

the longer-term commitment and retention of the Board of

Management members.

The Ziggo LTI Plan is administered and executed by (and at

the discretion of) the Supervisory Board. Its main features

are as follows:

■ Annual grants of conditional performance shares in Ziggo;

■ The conditional performance shares vest and are delivered

to the Board of Management members three years after

the grant date, subject to continued employment and to

achievement of annual targets for the three-year Company

plan (as determined by the Supervisory Board), which may

include targets such as customer satisfaction, turnover,

EBITDA and cash flow;

■ The number of conditional performance shares granted shall

be based on percentages of base salary payable within a

relevant peer group of comparable national and international

companies at a range between the median and the 75th

percentile level, which can be extended to 120% of this level;

The number of performance shares vesting after 3 years may

vary between 0% and 150% of the shares granted, depending

on the extent to which performance targets have been met.

■ A lock-up applies for one year after vesting.

The Company does not disclose specific details on these

performance targets, as this is considered commercially

sensitive information.

The Supervisory Board has the authority to deviate from the

policies set out here, if it considers it necessary or desirable to

do so in specific individual cases in order to attract and reward

the most qualified members of the Board of Management.



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If any variable remuneration component conditionally awarded

to a member of the Board of Management in a previous

financial year would, in the opinion of the Supervisory Board,

produce an unfair result, the Supervisory Board has the power

to adjust the value downwards or upwards. This may occur due

to extraordinary circumstances during the period in which the

predetermined performance criteria have been or should have

been achieved.

Furthermore, the Supervisory Board may recover from

a member of the Board of Management any variable

remuneration awarded on the basis of incorrect financial or

other data (claw back clause), which are materially incorrect,

if such incorrectness is mainly attributable to acts or

omissions of the Board of Management member (e.g.

resulting from fraud or gross negligence).

The Supervisory Board expects to continue the Remuneration

Policy described above in 2014 and in subsequent years.

Board of Management Members Further information and a specification of the remuneration for

the individual members of the Board of Management can be

found below and is included in the notes to the consolidated

financial statements, Note 7 on page 79.

Bernard Dijkhuizen, Chief Executive Officer, retired from the

Company as of January 1, 2014. Provided the intended public

bid on the shares of Ziggo N.V. by Liberty Global is fulfilled,

the conditional performance shares awarded to Bernard

Dijkhuizen as part of the long-term incentive awards 2012 and

2013 will vest for 50%. If the public bid is not fulfilled the

conditional shares awarded in 2012 and 2013 will vest partially

in accordance with the targets achieved in 2012 and 2013.

Marcel Nijhoff, Chief Commercial Officer, has stepped down as

of March 1, 2014. Marcel Nijhoff will receive a termination fee

equal to one year base salary. Furthermore, he will receive his

short-term bonus over 2013. Additionally, provided the public

bid on the shares of Ziggo N.V. by Liberty Global is fulfilled, the

conditional performance shares awarded to Marcel Nijhoff as

part of the long-term incentive awards 2012 and 2013 will vest

for 50%. If the public bid is not fulfilled, the conditional shares

awarded in 2012 and 2013 will vest partially in accordance with

the targets achieved in 2012 and 2013.

In connection with the appointment of René Obermann as

member of the Board of Management and CEO per

January 1, 2014 the Supervisory Board has used the authority

to deviate from the policies set out. He receives a fixed base

salary of €750,000 gross per annum (fixed). He will be entitled

to an annual short-term incentive (cash bonus) of 100% of the

base salary in the case of on-target performance, which may

be increased up to a maximum of 150% in the case of

outperformance. René Obermann will be eligible to participate

in the Ziggo Long-Term Incentive Plan dated 20 March 2012

and to receive an annual LTIP Award equal to 230% of the base

salary, subject to the conditions of the LTIP Plan. He receives

annually a payment equal to 17.8% of the base salary, instead of

participating in the ABP pension scheme applied within Ziggo.

In order to compensate René Obermann for the expected

(partial) loss relating to rights under his existing contract with

his previous employer, he shall, to the extent that such loss

occurs, receive a one-time signing bonus of €2.45 million

gross. This signing bonus is in principle conditional upon

continued work by René Obermann for Ziggo for three years

after the Appointment Date and shall not be payable until then.

In the case of termination of the contract by Ziggo during the

agreed three year period other than for cause, René Obermann

will be entitled to a gross termination fee equal to the base

salary (the Termination Fee) and to payment of the signing

bonus at once. René Obermann will also be entitled to the

Termination Fee in the case of non-extension of the contract

after three years.

In case of a termination of the contract in connection with

a change of control for any reason (except for cause),

René Obermann will be entitled to the Termination Fee,

the signing bonus, the cash bonus at 100% target level and any

unvested LTIP Award granted before the date of a change of

control pursuant to the Long-Term Incentive Plan at 100%

target level.

It is intended to appoint Hendrik de Groot, currently Managing

Director of Business-to-Business at Ziggo, as new Chief

Commercial Officer and member of the Board of Management

of Ziggo with an effective date of April 18, 2014. He will receive

a fixed base salary of €300,000 gross per annum (fixed). He will

be entitled to an annual short term incentive (cash bonus) of

60% of the base salary in the case of on-target performance.

Hendrik de Groot will be eligible to participate in the Ziggo

Long-Term Incentive Plan dated March 20, 2012, and to

receive an annual LTIP Award equal to 140% of the base salary,

subject to the conditions of the LTIP Plan. He receives annually

a payment equal to the percentage of the employers

contribution to the ABP pension fund (in 2014 18,51% of the

base salary), instead of participating in the ABP pension

scheme applied within Ziggo.



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Board of Management variable cash bonus and long-term incentive awards 2013 The variable annual cash bonus for 2013 depended on a

weighted score based on the following criteria: Net Promoter

Score, Turnover, Cash flow (EBITDA minus Capex) and

elements of our innovation roadmap. The maximum

percentage for the variable annual cash bonus was set at 70%

of base salary for the CEO and 60% of base salary for the other

members of the Board of Management. The Company does

not disclose specific details on these performance targets,

as this is considered commercially sensitive information.

The criteria for 2012 were the same, with the exception of

Net Promoter Score (2012: Customer Satisfaction) and

Innovation Targets (2012: EBITDA). It is expected that based

on the performance for 2013, the variable annual cash bonus

will be settled at 18% of the base salary for the CEO and 15%

for the other members of the Board of Management, or 25%

of on target preformance (2012: 66% for the CEO and 56%

for the other members of the Board of Management, or 94%

of on target performance).

The long-term incentive awards are presented in the Notes

to the consolidated financial statements.

Supervisory BoardSupervisory Board members receive an annual fee of

€50,000 and a fee of €7,500 for membership of a committee,

with the following exceptions: Rob Ruijter receives a fee of

€25,000 for chairing the Audit Committee. Pamela Boumeester

receives a fee of €25,000 annualy (€19,000 in 2013) for

chairing the Selection, Appointment and Remuneration

Committee. Andy Sukawaty received a remuneration of

€190,000 in 2013 as chairman of the Supervisory Board.

He did not receive a separate remuneration for his membership

and chairmanship of the Selection, Appointment and

Remuneration Committee, which was taken over by Pamela

Boumeester in April 2013 .

Further information and a specification of the remuneration for

the individual members of the Supervisory Board is included in

the notes to the consolidated financial statements, Note 7 on

page 79. Andy Sukawaty agreed prior to the IPO in 2012 to

waive his entitlement to part of his annual cash remuneration

and to all of his annual equity remuneration. Andy Sukawaty’s

remuneration for his engagement as chairman of the

Supervisory Board will be €90,000 in 2014. As a compensation

for this waiver, Andy Sukawaty received €300,000 from Ziggo

prior to the closing of the IPO. As compensation for waiving

his annual equity remuneration after the IPO, Andy Sukawaty

received €1,100,000, which he has invested on an after-tax

basis in shares for which a lock-up period of two years applies.

The aforementioned compensation amounts are subject to a

pro rata claw back if Andy Sukawaty ceases to be the chairman

of the Supervisory Board before the end of his current term

in 2016.



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Connecting peopleZiggo & SocietyZiggo believes that the quality, availability and accessibility of information, as well as the digitisation required to facilitate all of this, can play a large role in maintaining and advancing an open society. Ziggo has instigated the Ziggo Open Society Award for organizations or individuals that have clearly contributed to a society in which everyone is included and in which everyone has the opportunity to act, think and imagine; thereby increasing pluriformity and the quality of life.



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Consolidated financial statements 62Statement of income 62Statement of comprehensive income 63Statement of financial position 64Statement of changes in equity 65Statement of cash flows 66

Notes to the consolidated financial statements 671. The Company and its operations 67

2. Basis of preparation 67

3. Significant accounting policies 69

4. Business combinations 76

5. Revenues 78

6. Personnel expenses 78

7. Remuneration and share-based

payment plans 79

8. Net financial income and expense 83

9. Income taxes 83

10. Intangible assets 86

11. Property and equipment 88

12. Other non-current financial assets 88

13. Investments in joint ventures 89

14. Inventories 89

15. Trade accounts receivable 89

16. Other current assets 90

17. Cash and cash equivalents 90

18. Equity attributable to equity holders 90

19. Interest-bearing loans 91

20. Provisions 93

21. Other non-current liabilities 94

22. Other current liabilities 95

23. Commitments and contingencies 95

24. Related party disclosures 95

25. Financial risks 96

26. Financial instruments 98

27. Subsidiaries 100

28. Subsequent events 100

Corporate financial statements 102Statement of income /

Statement of comprehensive income 102Statement of financial position 103Statement of changes in equity 104Statement of cash flows 105

Notes to the corporate financial statements 1061. Corporate information 106

2. Basis of preparation 106

3. Other income 108

4. Personnel expenses 108

5. Costs related to the IPO 109

6. Dividend income 109

7. Income taxes 109

8. Investment in subsidiaries 110

9. Shareholders’ equity 110

10. Other current liabilities 111

11. Commitments and contingencies 111

12. Related party disclosures 111

13. Subsequent events 111

14. Auditor’s fees 112

Appropriation of result 114Independent auditor’s report 115Contact details and address 116

Contents Financial Statements



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Consolidated statement of income

For the years ended December 31

Amounts in thousands of € (except ‘per share’ data) Note 2013 2012

Revenues 5 1,564,843 1,536,865

Cost of goods sold 289,114 294,407

Personnel expenses 6, 7 193,002 225,525

Contracted work 57,461 51,526

Materials & logistics 3,033 3,750

Marketing & sales 76,885 61,507

Office expenses 53,450 55,363

Other operating expenses 5,097 4,034

Amortisation and impairments 10 24,121 28,407

Depreciation and impairments 11 253,068 250,707

Total operating expenses 955,231 975,226

Operating income 609,612 561,639

Net financial income (expense) 8 (223,664) (284,803)

Result before income taxes 385,948 276,836

Net result of joint ventures and associates (after tax) 13 (9,111) (9,389)

Income tax benefit (expense) 9 (29,494) (74,677)

Net result for the year 347,343 192,770

Net result attributable to equity holders 347,343 192,770

Number of shares outstanding (in thousands) 200,000 200,000

Earnings per share - basic (in €) 1.74 0.96

Earnings per share - dilutive (in €) 1.74 0.96

The accompanying notes to this statement of income form an integral part of these consolidated financial statements.



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Consolidated statement of comprehensive income


Amounts in thousands of € 2013 2012

Net result for the year 347,343 192,770

Net other comprehensive income to be reclassified to profit or loss in subsequent periods - -

Items not to be reclassified to profit or loss in subsequent periods:

Cash flow hedges, net of tax 3,462 3,462

Net other comprehensive income not being reclassified to profit or loss in subsequent periods 3,462 3,462

Total comprehensive income for the period 350,805 196,232

Total comprehensive income attributable to equity holders 350,805 196,232



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Consolidated statement of financial position

Amounts in thousands of € Note December 31, 2013 December 31, 2012

Assets

Intangible assets 10 3,416,418 3,358,387

Property and equipment 11 1,473,278 1,434,080

Other non-current financial assets 12 1,125 719

Investments in joint ventures 13 3,437 3,556

Deferred tax assets 9 202,129 223,733

Total non-current assets 5,096,387 5,020,475

Inventories 14 40,004 27,889

Trade accounts receivable 15 37,887 18,240

Other current assets 16 34,541 24,914

Cash and cash equivalents 17 77,397 92,428

Total current assets 189,830 163,471

Total assets 5,286,217 5,183,946

Equity and liabilities

Issued share capital 200,000 200,000

Share premium 3,204,472 3,500,000

Other reserves (865) (4,327)

Treasury stock (33) (36)

Retained earnings (2,043,366) (2,316,733)

Equity attributable to equity holders 18 1,360,208 1,378,904

Interest-bearing loans 19 3,073,489 2,943,816

Derivative financial instruments 26 21,194 63,236

Provisions 20 19,830 23,059

Deferred tax liabilities 9 414,765 407,824

Other non-current liabilities 21 1,986 204

Total non-current liabilities 3,531,264 3,438,139

Deferred revenues 120,187 109,692

Derivative financial instruments 26 8,343 -

Provisions 20 7,072 7,480

Trade accounts payable 88,199 85,563

Corporate income tax 9 4,673 2,323

Other current liabilities 22 166,271 161,845

Total current liabilities 394,745 366,903

Total equity and liabilities 5,286,217 5,183,946

The accompanying notes to this statement of financial position form an integral part of these consolidated financial statements.



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Consolidated statement of changes in equity

Amounts in thousands of € Issued capital

Share premium

Cash flow hedge

reserveTreasury

sharesRetained earnings

Total equity

Balance at December 31, 2011 65 36,647 (7,789) - (1,090,562) (1,061,639)

Comprehensive income

Net result for the year 2012 - - - - 192,770 192,770

Other comprehensive income:

Cash flow hedges, net of tax - - 3,462 - - 3,462

Total comprehensive income - - 3,462 - 192,770 196,232

Transactions with shareholders

Share issuance 199,955 3,500,000 - - - 3,699,955

Effect of pooling of interest accounting (20) (36,647) - - (1,329,141) (1,365,808)

Conversion of shareholders loans into equity 199,935 3,463,353 - - (1,329,141) 2,334,147

Dividend payment - - - - (110,000) (110,000)

Purchase of treasury stock - - - (36) - (36)

Share-based payment - - - - 20,200 20,200

Total transactions with shareholders 199,935 3,463,353 - (36) (1,418,941) 2,244,311

Balance at December 31, 2012 200,000 3,500,000 (4,327) (36) (2,316,733) 1,378,904


Net profit for the year 2013 - - - - 347,343 347,343

Other comprehensive income:

Cash flow hedges, net of tax - - 3,462 - - 3,462

Total comprehensive income - - 3,462 - 347,343 350,805


Dividend payment - (295,528) - - (74,472) (370,000)

Purchase of treasury stock - - - 3 - 3

Share-based payment - - - - 496 496

Total transaction with shareholders - (295,528) - 3 (73,976) (369,501)

Balance at December 31, 2013 200,000 3,204,472 (865) (33) (2,043,366) 1,360,208



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Consolidated statement of cash flows


Amounts in thousands of € Note 2013 2012

Operating activities


Adjustments for:

Amortisation and impairments 10 24,121 28,407

Depreciation and impairments 11 253,068 250,707

Share-based payment 496 20,200

Movement in provisions 20 (4,137) (1,020)

Net financial expense 8 223,664 284,803

Operating cash flow before changes in working capital 883,160 859,933

Changes in working capital relating to:

Inventories 14 (12,022) 4,291

Trade accounts receivable 15 (17,906) 7,513

Other current assets 16 (6,005) 1,903

Trade accounts payable (385) 10,908

Deferred revenues 9,232 (6,184)

Other current liabilities 22 (18,999) 42,685

Change in working capital (46,085) 61,116

Net cash flow from operating activities 837,075 921,049

Investing activities

Purchase of intangible and tagible assets 10, 11 (342,649) (279,650)

Acquisition of business, net of cash acquired 4 (15,186) -

Additional contribution to joint ventures 13 (7,948) (12,954)

Treasury stock 3 (36)

Interest received 44 426

Change in financial assets (406) (155)

Net cash flow from investing activities (366,142) (292,369)

Financing activities

Proceeds from loans 19 1,378,500 -

Repayments of loans 19 (1,288,348) (320,000)

Interest paid (190,762) (217,906)

Dividend paid (370,000) (110,000)

Financing and commitment fees (13,445) (1,025)

Other financing activities (1,909) -

Net cash flow from financing activities (485,964) (648,931)

Net (decrease) / increase in cash and cash equivalents (15,031) (20,251)

Net cash and cash equivalents at January 1 92,428 112,679

Net cash flow from operating, investing and financing activities (15,031) (20,251)

Net cash and cash equivalents at December 31 77,397 92,428

The accompanying notes to this statement of cash flows form an integral part of these consolidated financial statements.



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Notes to the consolidated financial statements

1. The Company and its operations

The Company is the owner and operator of a broadband cable network in the Netherlands and provides analogue and digital radio

and television, broadband internet and telephony services in the Netherlands to 2.9 million households and businesses under the

brand name Ziggo. The principal activity of the Company is the exploitation of its broadband cable network.

2. Basis of preparation

Date of authorisation of issue

The consolidated financial statements of Ziggo N.V. for the year ended December 31, 2013 were prepared by the Board of

Management and adopted on March 5, 2014. The Company is a public limited company incorporated in Utrecht (registered office:

Atoomweg 100, 3542 AB Utrecht) in the Netherlands.

Statement of compliance

The consolidated financial statements of the Company and all its subsidiaries have been prepared in accordance with International

Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with part 9 of Book 2 of the Dutch Civil Code.

Measurement basis

The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that

have been measured at fair value. The consolidated financial statements are presented in thousands of euros (€) except when

otherwise indicated.

Foreign currency translation

The consolidated financial statements are presented in euros (€), which is the Company’s functional and presentation currency.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the transaction

dates. Monetary items denominated in foreign currencies are translated into the Company’s functional currency at the spot rate

of exchange ruling at the reporting date. Exchange differences arising on the settlement of monetary items and the translation of

monetary items are included in net income for the period. Non-monetary items that are measured on a historical cost basis in a

foreign currency are translated using the exchange rates ruling at the dates of the initial transactions.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at December 31, 2013.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue

to be consolidated until the date that such control ceases.

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has

the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the

Group has:

■ Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

■ Exposure, or rights, to variable returns from its involvement with the investee;

■ The ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or

more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and

ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of

during the year are included in the statement of comprehensive income from the date the Group gains control until the date the

Group ceases to control the subsidiary.



Contents

The financial statements of the subsidiaries are prepared for the same financial year as those of the parent company, using consistent

accounting policies. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of

the parent company. All intra-group balances, transactions, income and expenses and unrealised gains and losses resulting from

intra-group transactions are eliminated in full on consolidation.

The consolidated financial statements of the Company include the subsidiaries mentioned in Note 27.

Use of estimates and assumptions

The preparation of financial statements requires management to make a number of estimates and assumptions. These estimates

and assumptions affect the reported amounts of assets and liabilities, of revenues and expenses and the disclosure of contingent

assets and liabilities. All assumptions, expectations and forecasts used as a basis for certain estimates within these consolidated

financial statements represent good-faith assessments of the Company’s future performance for which management believes

there is a reasonable basis. These estimates and assumptions represent the Company’s view at the times they are made, and only

then. They involve risks, uncertainties and other factors that could cause the Company’s actual future results, performance and

achievements to differ materially from those forecasted. The estimates and assumptions that management considers most critical

relate to:

■ Impairment of goodwill and intangible assets with indefinite lives (Note 3 and Note 10)

■ Deferred tax assets (Note 3 and Note 9)

■ Fair value of financial instruments (Note 3, Note 25 and Note 26)

■ Other long-term employee benefits (Note 3 and Note 20)

■ Provisions and contingencies (Note 3 and Note 20)

Change in presentation

In 2013 the Company changed presentation of some items previously included in cost of goods of sold to office expenses.

Comparative information 2012 has been adjusted as follows:

December 31, 2012

Amounts in thousands of €Previously

reportedChange in

presentation Adjusted

Item Income Statement

Cost of goods sold 295,013 (606) 294,407

Office Expenses 54,757 606 55,363

Change in accounting policies

IAS 19, “Employee Benefits,” (as revised June 2011) became effective for the Company as of January 1, 2013. The amendments

require, amongst other things, the recognition of changes in defined benefit obligations and in fair value of plan assets as they

occur, hence eliminating the ”corridor approach” permitted under the previous version of IAS 19, and accelerate the recognition of

past service costs. All actuarial gains and losses are recognized immediately through other comprehensive income in order for the

net pension asset or liability recognized in the consolidated balance sheet to reflect the full value of the plan deficit or surplus.

Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 have been replaced with

a ”net-interest” amount, which is calculated by applying the discount rate to the net defined liability or asset. IAS 19 (as revised)

introduces certain changes in the presentation of the defined benefit cost including more extensive disclosures. As the Company

is not able to recognize its multi-employer defined benefit plans as defined benefit plans, the amendment does not have an impact

accounting for these plans.

IFRS 13, “Fair value measurement,” became effective for the Company as of January 1, 2013. It is applied prospectively. IFRS 13 aims

to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value

measurement and disclosure requirements for use across all IFRSs. The requirements do not extend the use of fair value

accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards

within the IFRSs. The adoption of IFRS 13 does not have a significant effect on the Company’s financial position or performance.

For more information about financial instruments and fair value measurements, see Note 25.



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In addition, the following new and amended IASB pronouncements have been early adopted. The initial application of

these pronouncements has been assessed and they do not have any significant effect on the Company’s financial position

or performance.

■ IFRS 10, “Consolidated financial statements” and amendments to IAS 27, “Separate financial statements”;

■ IFRS 11, “Joint arrangements” and amendments to IAS 28, “Investments in associates and joint ventures”;

■ IFRS 12, “Disclosures of interests in other entities”.

3. Significant accounting policies

Significant accounting policies applied in the preparation of the consolidated financial statements are presented below.

These policies have been consistently applied through all years presented, unless otherwise stated.

Segment reporting

IFRS 8 “Operating Segments” defines an operating segment as a component of the Company that engages in business activities

from which it may earn revenues and incur expenses. The operating segment’s operating result is reviewed regularly by the Board

of Management (Chief Operating Decision Maker), which makes decisions as to the resources to be allocated to the segment and

assesses its performance, based on discrete financial information available.

Segment results are reported to the Board of Management include items directly attributable to a segment as well as those that

can be allocated on a reasonable basis. Performance of the segments is evaluated on the basis of several measures, of which

operating income excluding depreciation and amortisation (EBITDA) is the most important. Segment assets and liabilities do not

include corporate assets and liabilities and income tax assets and liabilities. Segment capital expenditure is the total cost incurred

during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

In the assessment of operating segments, the Company concluded there is only one operating segment, based on the

following assumptions:

■ Chief Operating Decision Maker (Board of Management of the Company) makes decisions on the basis of financial results

for the Company as one company;

■ The Company has only one geographic area in which it operates;

■ The Company has an integrated network for all activities;

■ The Company’s investments and related costs are not allocated to its specific business lines or products.

Business combinations

Business combinations are accounted for using the acquisition accounting method. The cost of an acquisition is measured as the

aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest

in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair

value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in

other operating expenses.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent

changes to the fair value of the contingent consideration that is classified as an asset or liability are remeasured at subsequent reporting

dates in accordance with IAS 39 “Financial Instruments: Recognition and Measurement” or IAS 37 “Provisions, Contingent Liabilities and

Contingent Assets” as appropriate, with the corresponding gain or loss being recognised in the statement of income. Contingent

consideration that is classified as equity is not re-measured at subsequent reporting dates until it is finally settled within equity.

Share-based payments

Members of the Board of Management of the Company are eligible for share-based payment arrangements in return for services

delivered and will be granted shares based on the performance of the Company. The share-based payment transactions are

accounted for by the Company as equity-settled share-based payment transactions, in which the entity receives goods or services as

consideration for equity instruments of the entity. The employees have the option to settle income tax by selling part of the shares.



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The services received by the Company in a share based payment transaction are recognised when the services are rendered.

The Company recognises a corresponding increase in equity, and as the services are consumed over a three year period an

expense is recognised accordingly, with an estimate of the total costs being made and spread over the applicable period of

the arrangement. Services received and the corresponding increase in equity are measured at fair value at the grant date.

The performance shares granted each year will vest in three years; one-third is to be decided upon every year, depending on the

defined vesting conditions.

Intangible assets

Goodwill

Goodwill represents the excess of costs of an acquisition over the Company’s interest in the net fair value of the identifiable assets,

liabilities, and contingent liabilities at the date of acquisition, and is carried at cost less accumulated impairment losses. Goodwill

paid on the acquisition of joint ventures and associates is included in the carrying amount of the investment.

For the purposes of impairment testing, goodwill is allocated to each of the Company’s cash-generating units (or groups of

cash-generating units) that is expected to benefit from the synergies of the combination. The Company identifies one main

cash-generating unit, as the network of the Company services all business operations and cannot be allocated to specific segments.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit

or loss on disposal.

Other intangible assets

Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a

business combination is the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried

at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets,

excluding capitalised development costs, are not capitalised. Expenditures are reflected in the statement of income in the year

in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is

an indication that the economic benefits related to the intangible asset decreased. The amortisation period and the amortisation

method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected

useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by

changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. Such a change in

the useful life assessment is made on a prospective basis.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually. The assessment of indefinite

life is reviewed annually to determine whether the indefinite life of the asset remains indefinite. If not, the change in useful life from

indefinite to finite is made on a prospective basis.

Customer lists acquired upon the merger into Ziggo in 2008 represent the customer relationships of Multikabel, Casema and @Home.

Those customer lists, which are initially measured at fair value, are recognised as an asset with an indefinite life due to a high level of

uncertainty in estimating the useful life as historic attrition rates vary significantly. The asset is tested for impairment at least annually.

The customer list recorded upon the acquisition of Esprit Telecom will be amortised on a straight-line basis over 4.5 years, since

the customers acquired are not dependent on the infrastructure (network) of the Company the life of the asset isn’t evaluated

as indefinite.

Software is amortised in 3-5 years using the straight-line method over its economically useful life.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal

proceeds and the carrying amount of the assets and are recognised in the statement of income when the asset is derecognised.



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Property and equipment

Property and equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any. The cost

includes direct costs (materials, replacement parts, direct labour and contracted work) and directly attributable office expenses.

The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective

asset if the recognition criteria for a provision are met.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial

period of time to get ready for its intended use are capitalised as part of the costs of the respective assets. Borrowing costs consist

of interest and other costs that an entity incurs in connection with the borrowing of funds. The interest percentage used reflects

the weighted average interest expense of the Company.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, taking into account residual value.

Borrowing costs are depreciated over the estimated useful life of the corresponding asset. Land is not depreciated. The useful lives

of the assets are as follows:

Useful lives

Network active (head-end, local network) 10-12 years

Network passive (fibre) 12-20 years

Network equipment (IP and datacom equipment) 5 years

Other 3-20 years

The assets’ residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate at each financial

year-end. Any change in accounting caused by this review is applied prospectively.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is

probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be

measured reliably. The carrying amount of the replaced part is derecognised.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use

or disposal. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal

proceeds and the carrying amount of the asset) is included in the statement of income in the year the asset is derecognised.

Repairs and maintenance are charged to expense during the financial period in which they incur.

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an

assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement

conveys a right to use the asset.

Finance leases, which transfer substantially all the risks and benefits incidental to ownership of the leased item to the Company,

are capitalised at the inception of the lease at the fair value of the leased item or, if lower, at the present value of the minimum

lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve

a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense once they occur.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no

reasonable certainty that the Company will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in the statement of income on a straight-line basis over the lease term.

Impairment of non-financial assets

The Company assesses at each financial year-end whether there is an indication that an asset may be impaired. If any such

indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s

recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of



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disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are

largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable

amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated

future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of

the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, an appropriate valuation

model is used. These calculations are substantiated by valuation multiples, quoted share prices for publicly traded subsidiaries or

other available fair value indicators.

Impairment losses of continuing operations recognised in the statement of income will be recorded in a separate line item in those

expense categories consistent with the classification of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously

recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the Company makes an

estimate of the recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the

estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the

carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount

that would have been determined, net of depreciation, if no impairment loss had been recognised for the asset in prior years.

Such a reversal is recognised in the statement of income. Impairment losses recognised in relation to goodwill are not reversed for

subsequent increases in its recoverable amount.

Goodwill and other assets with indefinite lives are reviewed for impairment, annually or more frequently if events or changes in

circumstances indicate that their carrying amounts may be impaired. An indicator for impairment may be a drop in the share price

of Ziggo N.V. below the issue price of €18.50. Impairment is determined for goodwill by assessing the recoverable amount of the

cash-generating unit (or group of cash-generating units) to which the goodwill relates. The recoverable amount is the higher of

the cash-generating unit’s fair value less cost to sell and its value in use. The value in use of the cash-generating unit is determined

using the discounted cash flow method. Where the recoverable amount of the cash-generating unit is less than the carrying

amount of the cash-generating unit to which goodwill has been allocated, an impairment loss is recognised. Impairment losses

relating to goodwill cannot be reversed in future periods.

Investments in joint ventures and associates

A joint venture is a joint arrangement whereby the Company and one or more other parties have joint control and rights to he net

assets of the arrangement. Associates are entities over which the Company has significant influence but not control, generally

accompanying a shareholding of between 20% and 50% of the voting rights.

Joint ventures and associates are accounted for using the equity method. Under the equity method, investments in joint ventures

and associates are measured at cost and adjusted for post-acquisition changes in the Company’s share of the net assets of the

investment (net of any accumulated impairment in the value of individual investments).

Inventories

Inventories are measured at cost or net realisable value, whichever is the lower. Cost consists of all costs of purchase, costs of

conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the

estimated selling price in the ordinary course of business, less the estimated marketing, distribution and selling expenses.

Most of the inventory is not sold to customers but used in the Company’s network and capitalised once used. Sold inventory is

included in the cost of goods sold.

Provisions

Provisions are recognised when a legal or constructive obligation, which can be reliably estimated, exists as a result of a past event

and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the Company expects some

or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is

virtually certain. The expense relating to any provision is presented in the statement of income net of any reimbursement.

A provision for restructuring is recognised when management has approved a detailed and formal restructuring plan and the

restructuring has either commenced or has been announced to the parties concerned.



Contents

The Company recognises a provision for asset retirement obligations related to dismantling and removing items at leased property

and restoring the site on which these items are located after termination of the lease agreement. In addition, the Company is

exposed to costs of returning customer premises equipment upon termination of the subscription or renewals.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where

appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is

recognised as finance cost.

The net assets and net liabilities recognised in the consolidated statement of financial position for defined benefit plans and other

long-term employee benefits represent the net amount of the defined benefit obligations and unrecognised past-service costs less

plan assets. Actuarial gains and losses are recognised in other comprehensive income. Any net asset resulting from the calculation

is limited to unrecognised past-service cost, plus the present value of available refunds and reductions in future contributions to

the plan. No adjustment for the time value of money is made in case that the Company has an unconditional right to a refund of

the full amount of the surplus, even if such a refund is realisable only at a future date.

Defined benefit obligations are actuarially calculated at least annually on the reporting date using the projected unit credit method.

The present value of the defined benefit obligations is determined by discounting the estimated future cash outflows using interest

rates of high-quality corporate bonds denominated in the currency in which the benefits will be paid, and that have an average

duration similar to the expected duration of the related pension liabilities.

The Company provides pension plans for qualifying employees. The plans are multi-employer defined benefit plans with publicly

or privately administered pension insurance organisations (known as ”bedrijfstak-pensioenfonds”). These pension insurance

organisations are not able to provide the Company with sufficient information in order to account for the plans as defined benefit

plans. As a result, the defined benefit pension plans are treated as defined contribution plans.

Contributions to defined contribution plans are recognised as an expense when they are due. Post-employment benefits provided

through industry multi-employer plans, managed by third parties, are generally accounted for using defined contribution criteria.

Provisions are recognised for other long-term employee benefits on the basis of discount rates and other estimates that are

consistent with the estimates used for the defined benefit obligations. For these provisions the corridor approach is not applied

and all actuarial gains and losses are recognised in the consolidated statement of income immediately.

Financial instruments

Financial assets

The Company initially recognises loans and receivables and deposits on the date they originated. All other financial assets

(including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that

the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers

the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and

rewards of ownership of the financial asset are transferred.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets

are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and

receivables are measured at amortised cost using the effective interest method, less any impairment losses.

An impairment is recorded in operating expenses when it is probable (based on objective evidence) that the Company will not be

able to collect all amounts due under the original terms. Impairments are calculated on an individual basis and on a portfolio basis

for groups of receivables that are not individually identified as impaired. Impaired loans and receivables are derecognised when

they are assessed as uncollectible.

Loans and receivables comprise cash and cash equivalents, and trade and other receivables. Cash and cash equivalents comprise

cash balances and call deposits with original maturities of three months or less.



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Financial liabilities

The Company initially recognises debt securities issued and subordinated liabilities on the date they originated. All other financial

liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the

date that the Company becomes a party to the contractual provisions of the instrument.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and

the recognition of a new liability, with the difference in the respective carrying amounts being recognised in the statement of income.

The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are

recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial

liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade accounts and other payables.

Derivative financial instruments and hedging

The Company entered into several interest rate swaps in order to mitigate its risks associated with interest rate fluctuations. These

derivatives are recognised at fair value. The fair value of interest rate swaps is the estimated amount that would be received or paid

to terminate the swap at the reporting date, taking into account the current interest rates and creditworthiness of the swap counter

parties. As a result of the refinancing of the Company in October 2010, hedge accounting is no longer applied. Since October 2010

changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of income.

Until October 2010 changes in the fair value were recorded as hedge reserve in shareholders’ equity. This hedge reserve is charged

linear to the income statement since October 2010 based on the term of the underlying hedge instrument.

The fair values of various derivative instruments used for hedging purposes are disclosed in Note 26. The full fair value of a

hedging derivative is classified as a non-current asset or liability when the remaining term to maturity of the hedged item is more

than 12 months, and as a current asset or liability when the remaining term to maturity of the hedged item is less than 12 months.

Trading derivatives are classified as a current asset or liability.

When a hedging instrument expires or is sold, any cumulative gain or loss recorded in equity at that time is immediately transferred

to the statement of income under ‘Other net financial income and expense’.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can

be reliably measured. Revenue from the services provided in the ordinary course of business is measured at the fair value of the

consideration received or receivable, net of sales tax, customer discounts and other sales-related discounts.

Revenue primarily comprises revenues earned from subscription and usage fees on the delivery of standard cable (analogue and

digital signal) and digital pay television, broadband internet and telephony and subscriptions and services provided to the business

market. Revenue from other sources primarily comprises revenue from the sale of set top boxes and other goods, revenues

customer care service numbers, revenues from connection- and installation fees and various other items. Subscription and usage

revenues are recognised at the time services are provided to customers. Pre-invoiced revenues are deferred and allocated to the

respective period they relate to. Any unearned revenue is recognised as deferred revenue within current liabilities. Revenue from

the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually

on delivery of the goods.

The Company may provide the subscriber with an installation to establish the connection to its network and offers connection-

related services. Revenue from installations is recognised immediately when the installation and services have been rendered for

contracts with undefined contractual terms and is allocated to the concerning periods of a contract with a defined terms.



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Cost of goods sold

Cost of goods sold includes the costs for purchases of materials and services directly related to revenue, such as copyright,

interconnection costs, signal delivery costs, royalties, internet service provider fees and materials and logistics cost directly related

to the sale of set top boxes.

Income tax

Current income tax is recognised in the consolidated statement of income except to the extent that it relates to items recognised

in other comprehensive income. The current income tax is based on the best estimate of taxable income for the year, using tax

rates that have been enacted or substantively enacted at the reporting date, and adjustments for current taxes payable (receivable)

for prior years.

Deferred income tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and

liabilities and the corresponding tax basis used in the computation of taxable income. Deferred income tax assets are generally

recognised for all temporary differences, carry forwards of unused tax credits and unused tax losses, to the extent that it is

probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused

tax credits and unused tax losses can be utilised except to the extent that a deferred income tax asset arises from the initial

recognition of goodwill. Deferred income tax liabilities are generally recognised for all temporary differences.

Deferred income tax assets and liabilities are based on differences between financial reporting and tax bases of assets and

liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to

reverse or are substantively enacted at the reporting date. The effect of a change in tax rates on deferred income tax assets

and liabilities is recognised in the period that includes the enactment date. Deferred income tax assets are reduced by a valuation

allowance when the Company cannot make the determination that it is more likely than not that some portion or all of the

related tax assets will be realised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no

longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has

become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax

liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Statement of cash flows

The statement of cash flows is prepared using the indirect method with a breakdown into cash flows from operating, investing

and financing activities. The purchase of the business combination in investing activities is presented net of cash acquired.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as

a component of cash and cash equivalents for the purpose of the statement of cash flows.

Standards issued but not yet effective

The following new standards, amendments to standards and interpretations are not yet effective for the year ended

December 31, 2013 and have not been applied in preparing these consolidated financial statements:

Issued and effective as from the 2014 financial year:

■ Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) (issued June 2013)

■ Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (issued May 2013)

■ IFRIC 21 Levies (issued May 2013)

■ Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (issued October 2012)

■ Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (issued December 2011)



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Issued in previous financial years and not yet effective as from 2014:

■ IFRS 9 Financial Instruments (issued in November 2009) and subsequent amendments (amendments to IFRS 9 and IFRS 7 issued

in December 2011)

Issued by the IASB in this financial year but not yet effective as from 2014:

■ Annual Improvements to IFRSs 2010–2012 Cycle (issued December 2013)


■ Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) (issued November 2013)

The Company will introduce the new standards, amendments to standards and interpretations as of their effective date unless

otherwise indicated. Adoption of the standards and interpretations for the next financial year are not expected to have an impact

on the Consolidated statement of income, the Consolidated statement of comprehensive income and on the disclosure notes to

the financial statements of the Company.

4. Business combinations

On May 1, 2013 Ziggo acquired 100% of the shares of Esprit Telecom B.V. (“Esprit Telecom”). The acquisition enables the Company

to further expand its services for the business market. Esprit Telecom is a leading provider of voice and data services for the SME

(Small and Medium Enterprises) market in the Netherlands, and has an active sales channel of dealers across the country.

Esprit Telecom is the 100% parent company of Zoranet Connectivity Services B.V. (an ICT service provider that focuses on the retail

sector) and XB Facilities B.V.

Assets acquired and liabilities assumed

The fair value of the identifiable assets and liabilities of Esprit Telecom as at the date of acquisition were:

Amounts in thousands of €

Fair value recognised on

acquisition

Assets

Intangible assets 5,402

Property and equipment 2,467

Deferred tax asset 1,041

Inventories 93

Trade receivables 1,741

Other current assets 2,655

Cash and cash equivalents 2,630

Total assets 16,030

Liabilities

Loans from financial institutions 914

Deferred tax liability 1,274

Trade payables 2,971

Other current liabilities 3,862

Total liabilities 9,021

Net asset value acquired 7,008

Goodwill arising on acquisition 11,308

Total purchase consideration 18,316



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The purchase consideration comprises:


Purchase consideration

Cash consideration 17,816

Contingent consideration 500

Total purchase consideration 18,316

Contingent consideration

As part of the purchase agreement with the previous owner of Esprit Telecom, a contingent consideration has been agreed.

Payment is conditional upon the renewal of an Internet & Data agreement with a primary customer prior to July 1, 2014 against

market practice prices for a period of at least 12 months. As at the acquisition date, the fair value of the contingent consideration

was €0.5 million, as it is expected that this Internet & Data agreement with this customer will be extended prior to July 1, 2014.

If the contractual criteria are met, the maximum cash payable will not materially differ from the liability recorded. In the remainder

of the half year there were no changes in the underlying assumptions of the contingent consideration that required a change in

the fair value of the cash payment.

Cash flow on acquisition


Cash flow on acquisition

Net cash acquired with the subsidiary 2,630

Cash consideration (17,816)

Net cash flow on acquisition (15,186)

Of the total purchase consideration of €18.3 million, an amount of €11.3 million is allocated to the goodwill for the acquisition

of the sales channel and product portfolio of Esprit Telecom. Additionally, the Company expects to realize synergy advantages

mainly within interconnection costs from the acquisition in the future.

From the date of acquisition, Esprit Telecom contributed €25.2 million in revenues and €3.5 million to the operating income of the

Company. If the combination had taken place per January 1, 2013, revenue from continuing operations would have been

€37.8 million and the operating income from continuing operations would have been €4.5 million for the Company.



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5. Revenues

The Company’s revenues comprise the following:

For the years ended

Amounts in thousands of € December 31, 2013 December 31, 2012

Standard cable subscription 447,363 464,533

Digital pay television services 167,497 168,139

Total Video revenues 614,860 632,672

Broadband Internet subscription 464,354 442,419

Telephony subscription 137,357 129,048

Telephony usage 174,768 179,701

Total Telephony revenues 312,125 308,749

Revenues from other sources 31,805 47,461

Total Consumer Market 1,423,144 1,431,301

Business Services 141,699 105,564

Total revenues 1,564,843 1,536,865

Revenues generated from bundle subscriptions amounted to €727.5 million (2012: €672.0 million) and have been allocated to

the individual products Video-, Broadband internet- and Telephony subscriptions based on the individual product prices for

each product as a percentage of the sum of the individual product price.

The Company’s revenues are generated through a large customer base and no customer generates more than 10% of total

revenues. Revenues from other sources primarily comprise revenue from the sale of goods. Revenues from the sale of goods

as at December 31, 2013 amounted to €19.1 million (2012: €27.8 million).

6. Personnel expenses

The Company’s personnel expenses comprise the following:

For the years ended


Wages and salaries 145,862 174,893

Social security costs 17,368 19,135

Pensions and other long-term employee benefits 20,737 18,087

External personnel 78,307 53,093

Lease- & mileage costs 11,030 10,556

Other 6,555 7,090

Work Capitalized (86,857) (57,329)

Total personnel expenses 193,002 225,525

The number of employees of the Company in full time equivalents (FTEs) as at December 31, 2013 was 2,606 (2012: 2,502).

The average number of employees in 2013 was 2,571 FTEs (2012: 2,448).



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Employee bonuses

In 2012, employees of the Company received a bonus in relation to the IPO depending on the number of years of their

employment for the Company. Employees of the Company were free to choose between receiving a bonus in cash or in shares.

To encourage employees to choose a bonus in shares, the gross amount of an employee’s bonus was multiplied by 1.2 if the

employee had chosen to use the bonus to subscribe for shares. Per December 31, 2012 the total employee bonus amounted

to €14.2 million.

7. Remuneration and share-based payment plans

Remuneration

The remuneration of the members of the Board of Management is determined by the Supervisory Board. The total remuneration

in 2013 consisted of basic salaries, short-term performance incentives (in cash), long-term performance incentives (in shares)

and other benefits. As at December 31, 2013, the members of the Board of Management of the Company were:

■ Bernard Dijkhuizen (Chief Executive Officer)

■ Bert Groenewegen (Chief Financial Officer)

■ Paul Hendriks (Chief Technology Officer)

■ Marcel Nijhoff (Chief Commercial Officer)

Remuneration of the members of the Board of Management in 2013 and 2012 was as follows:


Financial Year

Base salary

Short-Term

Incentive (Cash)

Share-based

payment upon IPO

Long-term Incentive

(share awards) Pension

Other benefits and

expense reim burse-

ment

Total Remu-

neration

Bernard Dijkhuizen 2013 561 93 - 89 106 15 864

2012 561 371 3,756 76 88 6 4,858

Bert Groenewegen 2013 382 54 - 94 71 8 609

2012 382 216 2,441 47 66 0 3,152

Paul Hendriks 2013 382 54 - 89 71 10 606

2012 361 204 2,441 42 58 3 3,109

Marcel Nijhoff 2013 382 54 - 94 71 9 610

2012 382 216 2,441 47 61 2 3,149

Total 2013 1,707 255 - 366 319 42 2,690

Total 2012 1,686 1,007 11,079 212 273 11 14,268

Remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders.

At December 31, 2013, the members of the Supervisory Board of the Company were:

■ Andrew Sukawaty (Chairman)

■ David Barker

■ Dirk Jan van den Berg

■ Anne-Willem Kist

■ Joseph Schull

■ Rob Ruijter (appointed as from March 20, 2012)

■ Pamela Boumeester (appointed as from April 28, 2013)

■ Caspar Berendsen (retired as from December 31, 2012)

■ Paul Best (retired as from December 31, 2012)



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Supervisory Board members receive an annual fee of €50 and a fee of €7.5 for membership of a committee, with the following

exceptions: The chairman of the Supervisory Board receives an annual fee of €190. The chairman of the Audit Committee receives

an additional fee of €25 for chairing the committee. The chairman of the Selection, Appointment and Remuneration Committee

receives an additional fee of €25 for chairing the committee. Remuneration of the members of the Supervisory Board in 2013 and

2012 was as follows:

For the years ended


David Barker 58 43

Caspar Berendsen - 43

Dirk Jan van den Berg 50 58

Paul Best - 43

Pamela Boumeester 69 -

Anne-Willem Kist 58 58

Rob Ruijter 75 75

Joseph Schull 58 43

Andrew Sukawaty 190 4,590

Total 558 4,953

In 2012 the Chairman of the Supervisory Board received a remuneration of €290. He did not receive a separate remuneration for

his membership and chairmanship of the selection, appointment and remuneration committee. In 2012 the Chairman of the

Supervisory Board received €1.4 million compensation for waiving his entitlement to part of his annual cash remuneration

(€0.3 million) and to all of his annual equity remuneration (€1.1 million) post-offering. If the Chairman of the Supervisory Board

leaves the Company within the lock-up period of two years, the compensation of €1.4 million needs to be repaid in cash.

In addition, the Chairman received a share-based payment upon the IPO of the Company of €2.8 million, representing 152,265 shares

valued at the price of €18.50 against which the Company was listed in March 2012.

Short-term incentive plan (STIP)

The members of the Board of Management of the Company are eligible to receive a short-term incentive in cash based on

financial and non-financial target ranges which are set at the beginning of each year by the Supervisory Board. Target ranges are

set for Net Promoter Score, Revenue, Cash flow and Innovation roadmap (2012: Customer Satisfaction, Revenue, EBITDA and

Cash flow). For “on target” achievement, the STI will be 70% of basic salary for the CEO and 60% for the other members of the

Board of Management. Cost recognised related to the STI amounted to €0.3 million (realizing 25% of the targets) (2012:

€1.0 million realizing 94% of the target).

Share-based payment upon IPO

In March 2012, shares in the Company were granted by Cinven Cable Investments S.à r.l. and WP Holdings IV B.V. to members

of the Board of Management, the chairman of the Supervisory Board and certain employees of the Company. The fair value of

the share-based payments on the grant date amounted to €20.0 million, consisting of ordinary shares with a nominal value of

€18.50 per share. There are no additional vesting conditions and shares are granted immediately. The share-based payment is

accounted for as an equity-settled share-based payment transaction. Therefore, this transaction is recognised under personnel

costs and equity; the transaction did not affect the Company’s cash flow and did not dilute shareholders’ equity.

Long-term incentive plan (LTIP)

The Supervisory Board of the Company introduced a Long-Term Incentive Plan as part of the remuneration policy, under which the

members of the Board of Management of the Company are eligible to receive conditional performance shares in the Company.

Allocation of the conditional performance shares is based on the performance of the Company versus its three-year plan.



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At the start of each calendar year shares will be granted to the CEO equal to 155% of base salary for the CEO, and, to the other

members of the Board of Management equal to 140% of their base salaries. For 2013, the grant date was February 15, 2013 (for

2012: March 21, 2012 in relation to the IPO). The allocation of shares based on the actual performance versus the targets can vary

between 0% and 150%. The maximum number of performance shares conditionally awarded lies between 210%-232.5% of base

salary divided by the value of one performance share (i.e. reflecting maximum achievement). The Company defines stretching

targets, whereas for “on target” achievement, the value of performance shares will be 100% of 155% of base salary for the CEO

and 100% of 140% of base salary for the other members of the Board of Management.

Performance will be measured on an annual basis based on the achievement of Revenues, Net Promoter Score (NPS) (for 2012:

customer satisfaction), EBITDA and Cash flow targets, as defined in the three-year plan.

At the end of each Performance Period, 50% of one-third of the Conditional Performance Shares granted will be determined on

the performance on the above-mentioned criteria for each year. At the end of each year of the performance period, the Total

Shareholder Return (TSR) of the Company is compared with the Peer Group. For this purpose TSR is defined as the change in price

of the shares of the Company plus the dividend paid in a year. The Peer Group consists of the following companies: Telenet Group

Holding N.V., Kabel Deutschland Holding A.G., Liberty Global Inc., Virgin Media Inc., Zon Multimedia SGPS S.A., KPN N.V., Belgacom

N.V., BT Group P.L.C., Deutsche Telekom A.G. and Ziggo N.V. If the TSR in a year is in the lowest quartile compared to the Peer

Group, the number of shares determined on the basis of the criteria test for that year will not vest at the end of the performance

period. The vesting of the other 50% of one-third of the Conditional Performance Shares granted at the end of each performance

period is determined on the basis of a targeted cash flow per share. Scenario analyses are used to estimate the possible outcomes

of the value of the shares vesting in the coming years.

The performance shares will vest and be delivered to a member of the Board of Management after the end of the performance

period (three years), provided that the member of the Board of Management is still employed by the Company. After vesting, the

performance shares still need to be retained for another year as a result of a lock-up, except to the extent necessary to settle any

tax obligation resulting from the LTIP. During the lock-up the shares may not be transferred, assigned to any third party,

encumbered or otherwise disposed of.

Details of performance shares granted to the Board of Management are as follows:

Part A Part B

Board of management

Max

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m

per

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ance

sh

are

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nt

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dat

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ized

Fair

val

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at

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dat

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Fair

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at

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ares

ves

ted

Bernard Dijkhuizen 44,405

March 21, 2012 2012 Conditional No 10,423 €11.37 7,771 €14.15

January 1, 2015 -

2013* Conditional No 9,806 €10.71 7,771 €13.48January 1,

2015 -

Bert Groenewegen 27,243

March 21, 2012 2012 Conditional No 6,395 €11.37 4,768 €14.15

January 1, 2015 -


2015 -

Paul Hendriks 24,216 March 21,

2012 2012 Conditional No 5,684 €11.37 4,238 €14.15January 1,

2015 -


2015 -

Marcel Nijhoff 27,243 March 21,

2012 2012 Conditional No 6,395 €11.37 4,768 €14.15January 1,

2015 -


2015 -

Total 123,107 2012 28,897 €11.37 21,545 €14.15

2013* 32,105 €10.71 21,544 €13.48

* 2013 number of shares recognized is accumulated 2012 and 2013.



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Part A Part B

Board of management

Max

i mu

m

per

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ance

sh

are

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nt

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dat

e

Per

form

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ye

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Full

Co

ntr

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Nu

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of

shar

es

reco

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ized

Fair

val

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at

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nt

dat

e

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of

shar

es

reco

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ized

Fair

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at

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dat

e

Ves

tin

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ate

Nu

mb

er o

f sh

ares

ves

ted


February 15, 2013 2013 Conditional No 5,320 €14.33 - €18.20

January 1, 2016 -


February 15, 2013 2013 Conditional No 4,896 €14.33 3,264 €18.20

January 1, 2016 -

Paul Hendriks 19,584 February 15, 2013 2013 Conditional No 4,896 €14.33 3,264 €18.20

January 1, 2016 -

Marcel Nijhoff 19,584 February 15, 2013 2013 Conditional No 4,896 €14.33 3,264 €18.20

January 1, 2016 -

Total 90,674 20,008 €14.33 9,792 €18.20 -

The fair value per share of the 2013 grant Part A was €14.33 per share, the fair value per share of the 2013 grant Part B was

€18.20 (share price on the grant date €25.64). The fair value per share of the 2012 grant in 2013 of Part A is €10.71 (2012: €11.37),

the fair value per share in 2013 of Part B is €13.48 (2012: €14.15). The fair value per share is based on the share price at the grant

date adjusted for the effects of the right to receive dividend after vesting, the lock-up period after vesting and the chance Total

Shareholder Return is not in the lowest quartile compared to the Peer Group. Under IFRS 2 the fair value of the LTIP is charged to

the statement of income over the vesting period. In 2013, costs recognised for the LTIP amounted to €0.5 million

(2012: €0.2 million).

Number of Shares held by management

The number of shares held by the members of the Board of Management and Supervisory Board are presented below:

Board of management Number of shares



Paul Hendriks 376,579

Marcel Nijhoff 116,205

Total shares 1,087,497

Supervisory Board Number of shares

Andy Sukawaty 513,208

Total shares 513,208

In 2013, the Supervisory Board of the Company introduced a Long-Term Incentive Plan as part of the remuneration policy for

higher management. At the start of each calendar year shares will be granted to higher management equal to 100% of base salary.

All other conditions defined in the LTIP for higher management equal those defined in the LTIP for the Board of Management of

the Company. Total shares granted to higher management amount to 25,474 shares. In 2013, costs recognised for the LTIP for

higher management amounted to €0.1 million (2012: nil).



Contents

8. Net financial income and expense

For the years ended


Interest on loans from financial institutions (114,004) (119,834)

Interest on shareholder loans - (52,182)

Interest on 8.0% senior notes (96,708) (96,708)

Interest on 3.625% senior notes - -

Other interest expense (2,019) (1,672)

Capitalisation of borrowing cost 12,591 10,447

Interest expense (200,140) (259,949)

Interest income 1,025 426

Amortisation of financing fees, including write-offs of terminated facilities (51,799) (13,228)

Fair value gains (losses) on derivative financial instruments 29,083 (10,789)

Commitment fees (2,041) (1,047)

Foreign exchange results 208 (216)

Other net financial income and expense (24,549) (25,280)

Net financial income (expense) (223,664) (284,803)

The Company’s financing has changed in 2012 and in 2013, which is discussed in Note 19. As a consequence of this change, the

Company’s financial expense decreased in 2013 compared to 2012 by €61.1 million as the Company no longer incurs interest on

the terminated shareholder loans and a gain was realised on the derivative financial instruments, offset by a write-off of capitalized

financing fees for terminated credit facilities in 2013.

IAS 23 ‘Borrowing Costs’ requires the Company to capitalise borrowing costs that are directly attributable to the construction

of a qualifying asset, hence the Company’s assets under construction. Other interest expense relates mainly to the interest

added to provisions and long-term employee benefits.

9. Income taxes

The subsidiaries of the Company are incorporated into the fiscal unity of Ziggo N.V. for corporate income tax purposes.

For financial reporting purposes, its consolidated subsidiaries calculate their respective tax assets, tax liabilities and tax benefits

on a consolidated tax return basis. The Company’s income tax comprises:

For the years ended


Deferred tax assets (21,491) (68,271)

Deferred tax liabilities (5,786) (4,110)

Current tax liabilities (2,217) (2,296)

Income tax benefit (expense) (29,494) (74,677)



Contents

A reconciliation between the statutory tax rates of 25.0% and the Company’s effective tax rate is as follows:

For the years ended

Amounts in thousands of € Tax rate 2013 Tax rate 2012

Profit for the period 385,948 276,836

Notional tax income at statutory rates 25.00% 96,487 25.00% 69,209

Adjustments:

Non-deductable items 0.04% 141 1.98% 5,468

Innovation tax facilities (17.36%) (67,010) - -

Research and development deduction (0.03%) (124) - -

Effective tax rate / Income tax benefit 7.64% 29,494 26.98% 74,677

The Company reached an agreement with the Dutch tax authorities regarding the innovation box. The innovation box is a tax

facility under Dutch corporate income tax law which taxes profits attributable to innovation at an effective tax rate of 5% instead

of the statutory rate of 25%. The innovation box reduces the effective tax rate going forward but also reduces it retrospectively

for the period 2010 to 2012.

The Company and the Dutch tax authorities have reached agreement on all income tax filings up to and until 2009. In 2013

no taxes were paid in cash (2012: nil). A current tax liability is included for corporate income tax due per December 31, 2013 of

€4.7 million (2012: €2.3 million). This is the result of an intragroup transaction in which the Company transferred part of its

assets in order to renew part of the tax loss carry-forward position to avoid expiration of these losses. In one of the subsidiaries

the Company will report a profit for tax purposes based on a percentage of the value of the transferred assets, which cannot be

offset against the remaining losses of the fiscal unity according to Dutch carry-over rules.

Income tax recognised under other comprehensive income comprises:

For the years ended


Before tax Tax benefit Net of tax Before tax Tax benefit Net of tax

Cash flow hedges 4,616 (1,154) 3,462 4,615 (1,154) 3,462

4,616 (1,154) 3,462 4,615 (1,154) 3,462



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The tax effects of temporary differences influencing significant portions of the deferred tax assets and deferred tax liabilities as of

December 31, 2013 and 2012 are presented below:


December 31, 2011

Recog-nised in

profit or loss

Recog-nised

in other com pre-hen sive income

Re-classifi-

cation over-draft

December 31, 2012

Recog-nised

in profit or loss

Recog-nised

in other com pre-hen sive income

Acquired in a

business combi-nation

December 31, 2013

Tax loss carry-forwards 257,961 (125,882) - - 132,079 (7,903) - 1,041 125,217

Property and equipment - 54,914 - 20,934 75,848 (6,321) - - 69,527

Derivative financial instruments 14,264 2,696 (1,154) - 15,806 (7,267) (1,154) - 7,385

Deferred tax assets 272,225 (68,272) (1,154) 20,934 223,733 (21,491) (1,154) 1,041 202,129

Intangible assets (382,865) (2,493) - - (385,358) (3,241) - (1,156) (389,755)

Property and equipment 85 (1,617) - (20,934) (22,466) (2,545) - (25,011)

Deferred tax liabilities (382,780) (4,110) - (20,934) (407,824) (5,786) - (1,156) (414,765)

Deferred tax assets and liabilities (110,555) (72,382) (1,154) - (184,091) (27,277) (1,154) (115) (212,636)

The deferred tax asset and tax liability are calculated at a tax rate of 25.0%.

Recognised deferred tax assets relating to fiscal losses reflect management’s estimate of realisable amounts based on historic

growth numbers and expected future net results. The amounts of tax loss carry-forwards are subject to assessment by local tax

authorities.

The deferred tax asset furthermore relates to derivative financial instruments and a balance as a result of the loss renewal. The loss

renewal transaction resulted in a temporary difference on the fiscal value of transferred assets and thus a higher fiscal depreciation

base. This balance will decrease in time due to the higher fiscal depreciation.

The expiration of the available tax loss carry-forwards and recognised tax assets is as follows:

Amounts in thousands of € 2013

December 31, 2015 1,062

December 31, 2016 97,722

December 31, 2017 153,700

December 31, 2018 145,444

December 31, 2019 102,940

Total net operating loss 500,868



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10. Intangible assets

The Company’s intangible assets comprise:

Amounts in thousands of € Goodwill Customer lists Software Total

Balance as of January 1, 2012 1,782,449 1,538,755 38,532 3,359,736

Additions - - 27,058 27,058

Amortisation and impairment - - (28,407) (28,407)

Total changes in net book value 2012 - - (1,349) (1,349)

Cost 1,782,449 2,401,568 288,898 4,472,915

Accumulated amortisation - (862,813) (251,715) (1,114,528)

Balance as of December 31, 2012 1,782,449 1,538,755 37,183 3,358,387

Additions - - 65,442 65,442

Acquired through business combinations 11,308 5,093 309 16,710

Amortisation and impairment - (755) (23,366) (24,121)

Total changes in net book value 2013 11,308 4,338 42,385 58,030

Cost 1,793,757 2,406,661 354,649 4,555,067

Accumulated amortisation - (863,568) (275,081) (1,138,649)

Balance as of December 31, 2013 1,793,757 1,543,093 79,568 3,416,418

Value in use calculations for goodwill and customer lists are based on cash flow projections covering a maximum period of

five years and a terminal value; the four-year financial plan approved by the Company’s management and the years beyond

the four-year financial plan are based on models for this projection period using growth rates that do not exceed the long-term

average growth rate and are consistent with forecasts included in industry reports. The terminal value is calculated based on

a growth rate that does not exceed the long-term average growth rate and discounted at the weighted average cost of capital.

The key assumptions used in the goodwill impairment test and the customer list impairment test are set out below.

The main parameters used for impairment testing are as follows:

Parameters 2013 2012

WACC 8.78% 8.78%

Growth rate (after 2018) 2.00% 2.00%

Goodwill

All goodwill acquired through business combinations has been allocated for impairment testing purposes to the one cash-

generating unit at which management monitors the operating results. Impairment testing is based on the current group of

customers of the Company.

■ Growth rate – The growth rates in the four-year financial plan reflect historic growth numbers and current market

developments. The years beyond the four-year financial plan are extrapolated using estimated growth rates that do not exceed

the long-term average growth rate and are consistent with forecasts included in industry reports.

■ Cash flow– Free cash flow consists of operating cash flow before changes in working capital, changes in net working capital

and capital expenditures. Revenues are estimated based on historic growth numbers and expected future market penetration

levels, resulting in related costs and capital expenditures. Cash flow projections beyond the five-year period are captured in

a terminal value and are extrapolated from the final year cash flows, discounted by the appropriate discount rate.

■ Discount rate – The pre-tax discount rate is calculated taking into account the relative weights of each component of the

capital structure and is used by management as a benchmark to assess operating performance and future investments.

The pre-tax discount rate used for the 2013 goodwill impairment test is 8.78% (2012: 8.78%).



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Customer lists

Customer lists acquired upon the merger of Multikabel, Casema and @Home into Ziggo in 2008 were initially amortised on

a straight-line basis in 12-14 years. As from April 2011, the Company ceased amortising its customer lists as it was concluded

that the useful life of its underlying customer relationships connected to the Company’s network is indefinite (See Note 2).

Consequently the asset is subject to impairment testing for assets with indefinite lives as discussed in Note 3. The impairment

test for the customer lists is based on the historic number of active connections at the time the customer list was acquired.

■ Customer Relationship – The Company defines a customer relationship as an active connection to the Company’s network

multiplied by the number of residential products sold to this connection, also referred to as Revenue Generating Units (RGUs)

for the consumer market. The maximum number of RGUs per active connection is 4 RGUs.

■ Attrition – Attrition represents the expected decline of the customer relationships and is based on both historical information

as well as management expectations and market developments.

■ Growth rate – The growth rates in the four-year financial plan reflect historic growth numbers and current market

developments. The years beyond the four-year financial plan are extrapolated using estimated growth rates that do not exceed

the long-term average growth rate and are consistent with forecasts included in industry reports.

■ Cash flow – Free cash flow consists of operating cash flow before changes in working capital, changes in net working capital

and capital expenditures. Revenues comprise all revenues related to existing customer relationships at the time of the merger

and exclude revenues resulting from new customer relationships. Revenues are estimated based on historic growth numbers

and expected future market penetration levels, resulting in related costs and capital expenditures. Cash flow projections beyond

the five-year period are captured in a terminal value and are extrapolated from the final year cash flows, discounted by the

appropriate discount rate.

■ Discount rate – The pre-tax discount rate is calculated taking into account the relative weights of each component of

the capital structure and is used by management as a benchmark to assess operating performance and future investments.

The pre-tax discount rate used for the 2013 customer lists impairment test is 8.78% (2012: 8.78%).

Sensitivity to changes in assumptions

With regard to the sensitivity analyses, no reasonably possible change in any of the above key assumptions would cause the

carrying amount of the unit to materially exceed its recoverable amount.

Software

During 2013 the Company did not impair capitalised development of software (2012: nil).



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11. Property and equipment

The Company’s property and equipment comprises:

Amounts in thousands of € Network Land Other Assets under construction Total

Balance as of January 1, 2012 1,212,575 3,023 68,502 137,286 1,421,386

Additions 241,164 465 19,483 2,289 263,401

Reclassification - cost (253) - 253 - -

Reclassification - accumulated depreciation 21 - (21) - -

Depreciation and impairment (227,118) - (23,589) - (250,707)

Total change in net book value 2012 13,814 465 (3,874) 2,289 12,694

Cost 4,788,111 3,488 215,793 139,575 5,146,967

Accumulated depreciation (3,561,722) - (151,165) - (3,712,887)

Balance as of December 31, 2012 1,226,389 3,488 64,628 139,575 1,434,080

Additions 251,064 779 25,687 12,278 289,808

Acquired through business combinations 1,197 - 1,270 - 2,467

Disposals - - (9) - (9)

Depreciation and impairment (233,288) - (19,780) - (253,068)

Total change in net book value 2013 18,973 779 7,168 12,278 39,198

Cost 5,040,372 4,267 242,106 151,853 5,438,598

Accumulated depreciation (3,795,010) - (170,310) - (3,965,320)

Balance as of December 31, 2013 1,245,362 4,267 71,796 151,853 1,473,278

Network

The additions to the network include capitalised borrowing costs of €12.6 million (2012: €10.4 million). Generally, the capitalisation

rate used to determine the amount of capitalised borrowing costs is a weighted average of the interest rate applicable. For 2013,

an average interest rate of 6.91% (2012: 6.76%) was applied.

During 2013 the Company did not recognise any impairments for property and equipment (2012: nil).

Mortgages on all registered properties, related movable assets and network-related elements established under the Senior Credit

Facilities as explained in Note 19.

Assets under construction

Assets under construction relates to projects for the expansion and improvement of the Company’s network and IT infrastructure.

Included in assets under construction is software, which is recognised as an intangible asset once in use.

12. Other non-current financial assets

Financial assets consist of long-term prepaid expenses (related to information technology contracts) of €1.021 (2012: €578),

participation in the association COIN €99, and other financial assets €5 (2012: €42).



Contents

13. Investments in joint ventures

2013 2012


HBO Nederland

Cooperatief U.A.

ZUM B.V.

ZUM B B.V.

Other non-

current liabili-

ties

HBO Nederland

Cooperatief U.A.

ZUM B.V.

ZUM B B.V.

Other non-

current liabili-

ties

Balance as of January 1

Investments in joint ventures 3,556 (110)

Joint ventures with a negative equity value presented within other non-current liabilities (190) (14) (204) (104) - (104)

Adjustment starting balance 170 - - - (42) - - -

Expected profit / (loss) for the year (8,237) (96) (922) (1,018) (9,237) (86) (23) (109)

Funding 7,948 - - - 12,945 - 9 9

Balance as of December 31 3,437 (286) (936) (1,222) 3,556 (190) (14) (204)

The Company has a 50% interest in ZUM B.V. and ZUMB B.V. ZUM B.V. and ZUMB B.V. were established to participate in, finance

or have any other interest in, or conduct the management of frequency licences for mobile telecommunication.

The Company has a 50% interest in HBO Nederland Coöperatief U.A., which holds all the shares in HBO Netherland Distribution B.V.,

which is responsible for the marketing and distribution of premium HBO content in the Netherlands through television operators.

Net equity value of ZUM B.V. and ZUMB B.V. is negative. Subsequently, the net equity value is presented within other

non-current liabilities.

14. Inventories


Equipment and cables 17,712 12,951

Set top boxes 17,201 11,416

Customer premises equipment 5,659 4,386

Allowance for obsolete stock (568) (864)

Total Inventories 40,004 27,889

Movements in the provision for obsolete stock were as follows:


Balance as of January 1 864 1,718

Additions 218 -

Used (514) (854)

Balance as of December 31 568 864

15. Trade accounts receivable

Trade accounts receivable as at December 31, 2013 amounted to €37.9 million (2012: €18.2 million). The provision for doubtful

debts is calculated on an individual basis and on a portfolio basis for groups of receivables that are not individually identified.

The doubtful debts provision reflects probable losses in the accounts receivable balance based on historical experience by type

of trade debtor and other currently available evidence.



Contents

Movements in the provision for doubtful debts were as follows:


Balance as at January 1 3,783 5,103

Additions 3,104 2,080

Acquired in a business combination 839 -

Used (2,866) (1,836)

Released - (1,565)

Balance as of December 31 4,860 3,783

A pledge has been given on all receivables as mentioned in Note 19.

Trade accounts receivable are non-interest-bearing and are generally due on 30 days’ terms. Note 25 discloses the Company’s

credit risk related to the trade accounts receivable.

16. Other current assets


Prepaid expenses 14,171 11,820

Revenues to be invoiced 11,185 10,649

Related parties 1,756 688

Other current assets 7,429 1,757

Total current assets 34,541 24,914

Revenues for December, to be invoiced with the bill run of January 2014, comprise Telephony usage revenues and Video on

Demand revenues.

17. Cash and cash equivalents

All cash and cash equivalents within the Company are held within bank accounts and earn interest at floating rates based on

bank deposit rates.

A pledge has been given on the accounts of the Company as mentioned in Note 19.

18. Equity attributable to equity holders

The Company is incorporated as a public limited liability company under Dutch law. Its registered capital consists entirely of

ordinary shares. The authorised capital is divided into 200 million shares of €1 nominal value each. With the contribution of

Zesko B.V. at fair value a share premium resulted of €3,500 million (see Note 2 Accounting principles for more details on the IPO).

With the application of the pooling of interest method for the contribution of Zesko B.V. an adjustment in retained earnings is

recognised for the difference between the fair value and the net asset value of Zesko B.V. at contribution.

Share-based payments recognised in equity in 2013 amount to €0.5 million (2012: €20.2 million and relate to the IPO of the

Company and the long-term incentive plan for members of the Board of Management. Reference is made to Note 7

Remunerations and share-based payment plans).

Treasury stock recognised in equity amounts to €33 (1,806 shares at €18.50 per share).



Contents

Other reserves represents the cash flow hedge reserve. Prior to the Company’s refinancing in October 2010, hedge accounting was

applied resulting in a cash flow hedge reserve. After the refinancing, the Company no longer applied hedge accounting, with the

hedge reserve released to statement of income during the remainder of the contractual period of the underlying hedge contracts.

19. Interest-bearing loans


Loans from financial institutions 1,143,218 1,760,439

8.0 % Unsecured Notes, due 2018 1,187,357 1,183,377

3.625% Senior Secured Notes, due 2020 742,914 -

Interest bearing loans 3,073,489 2,943,816

Movements in total interest-bearing loans were as follows:


Balance at January 1 2,943,816 3,257,243

Repayments on loans (1,063,348) (320,000)

New facility A financial institutions 150,000

Issuance of 3.625% Senior Secured Notes 750,000 -

Disagio on 3.625% Senior Secured Notes (1,500) -

Drawings revolving facility 480,000 -

Repayments revolving facility (225,000) -

Incretion due to disagio 1,167 -

Financing fees new facilities and senior notes (13,445) (7,587)

Amortisation and impairment of financing fees 51,799 14,160

Balance at December 31 3,073,489 2,943,816

In 2013 the Company refinanced part of its loans from financial institutions to reduce financing costs, extend the debt maturity and

increase flexibility. The existing Facility B loan and the revolving facility were replaced by a 3.625% Senior Secured Notes with a due

date of March 2020, a new term loan A under a new credit facility of €150.0 million and a revolving credit facility of €400.0 million.

The remaining balance of capitalized financing fees of the terminated facilities in the amount of €42.7 million were impaired and

charged to the income instatement. Financing fees in 2013 relate to the refinancing of the Senior Credit Facility and the 3.625%

Senior Secured Notes. Capitalized financing fees in 2012 relate to the IPO consent fee of €7.6 million payable to the lenders of the

senior credit facilities upon completion of the IPO.

Loans from financial institutions

Loans from financial institutions can be broken down as follows:

Amounts in thousands of € Interest rate Maturity December 31, 2013 December 31, 2012

Senior Credit Facilities

Facility A loan - new EURIBOR +1.75% March 2018 150,000 -

Facility B loan EURIBOR +3.00% - - 922,906

Facility E loan (Sr. Secured Notes) 6.125% March 2018 750,000 750,000

Facility F loan EURIBOR +3.625% - - 140,431

Revolving Credit Facility EURIBOR +1.75% March 2018 255,000 -

Total 1,155,000 1,813,337

Financing fees (11,782) (52,898)

Total 1,143,218 1,760,439



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Facility A loan - new

In March 2013, Ziggo agreed on a new Facility A loan under a new credit facility of €150.0 million. Interest on the Facility A loan is

Euribor+1.75% and is paid monthly. Financing fees for this new facility have been capitalized for an amount of €6.4 million.

Facility B loan

In 2013 the Facility B loan of €922.9 million was fully repaid. In 2012 no repayments were made on the Facility B loan.

Facility E loan

In October 2010, Ziggo Finance B.V., a company managed by Deutsche Bank International Trust Company N.V., issued Senior

Secured Notes of €750.0 million with a nominal interest rate of 6.125%, due in 2017. Interest on the Notes is payable semi-annually

on May 15 and November 15 of each year. Ziggo Finance B.V. granted the proceeds of the Senior Secured Notes to the Company.

The Facility E loan is stated at amortised cost. Financing fees have been charged for an amount of €10.6 million, which are

presented as a deduction from the loan. The subsequent effective interest rate is 6.37%, which is recognised as financial expense.

Revolving and capital expenditure restructuring facility

As per December 31, 2013, an amount of €255.0 million is drawn under the new revolving facility.

Prepayment

On certain occasions prepayment of part or all of the drawn facilities is mandatory. If such events materialise, all outstanding

utilisations and ancillary outstandings, together with accrued interest, become immediately due and payable.

Securitisation

The total Senior Credit Facility is secured over the Company’s assets as follows:

■ Mortgage on all registered properties, related movable assets, the network-related elements and the claims

■ Pledges on all bank accounts, intellectual property rights, receivables and movable assets

The Company needs to comply on a quarterly basis with covenants set by the lenders of the senior credit facility. These covenants

are the interest coverage ratio and net leverage ratio. These financial covenants were all met during the years 2013 and 2012.

Financing fees

Financing fees associated with the issuance of the facilities are subtracted from the loans from financial institutions and amortised

over the period of the related loan. Amortisation costs on financing fees are recognised as other net financial income and expense

in financial income and expense.

8.0% Senior Notes

On April 27, 2010, Ziggo Bond Company B.V., an indirect, wholly-owned subsidiary of the Company, issued unsecured Senior

Notes for an amount of €1,208.9 million at a price of 99.271% with a nominal interest rate of 8.0% due in 2018. Interest on the

notes is payable semi-annually on May 15 and November 15.

The notes are senior obligations of the Company and are guaranteed on a senior subordinated basis by all of the subsidiaries of

Ziggo Bond Company B.V. Financing fees have been charged in the amount of €25.9 million, which are presented as a deduction

from the loan. The subsequent effective interest rate is 8.36%, which is recognised as financial expense.


In March 2013 Ziggo refinanced part of its capital by issuing a Senior Secured Note for the amount of €750.0 million at a price

of 99.8% with a nominal interest rate of 3.625% due in 2020 (disagio amounts to €1.5 million). Interest on the notes is payable

annually on March 27. The notes are Senior Secured Obligations of Ziggo B.V. and are guaranteed on a senior secured basis by

ABC B.V., Torenspits II B.V. and by the issuer’s subsidiaries Ziggo Netwerk B.V. and Ziggo Netwerk II B.V. Financing fees have been

capitalized for an amount of €6.3 million, which is presented as a deduction on the value of the Senior Secured Note.



Contents

20. Provisions


Other long-term employee

benefits Restructuring Legal claims Other Total

Balance as of December 31, 2011 13,144 2,025 4,791 11,818 31,778

Additions (including interest cost) 1,051 1,025 - 4,662 6,738

Usage (1,665) (1,216) - (2,446) (5,327)

Released (276) (262) (1,599) (514) (2,651)


Current 1,719 1,095 - 4,666 7,480

Non-current 10,535 477 3,192 8,855 23,059


Additions (including interest cost) 914 1,473 - 5,314 7,701

Acquired in business combination - - - 500 500

Usage (1,768) (1,384) - (8,263) (11,415)

Released (423) - - - (423)


Current 1,767 1,299 - 4,006 7,072

Non-current 9,210 362 3,192 7,066 19,830


Defined benefit plans

The Company has no obligations for deficits other than higher future pension-insurance payments. The Company pays

contributions on a contractual basis. The Company has no further payment obligations once the contributions have been paid.

The contributions are recognised as employee benefit expenses in the statement of income when they are due. The defined

benefit plans for which contributions are paid are multi-employer plans.

At December 31, 2013 the main administered pension insurance organisation had a coverage ratio of 106% (2012: 96%).

Other long-term employee benefits provision

In addition to the pension plan, the Company offers eligible participants a reduction of their working time with partial continuation

of income. The plan offers eligible employees born before January 1, 1957 or employees born before January 1, 1959 and in

service for at least 25 years as at December 31, 2008:

■ a working time reduction of 20% between the ages of 55 and 59; and

■ a working time reduction of up to 40% between the ages of 59 and 65.

According to the plan rules, 75% of the working time reduction is compensated by the Company. The employee benefit plan is

wholly unfunded and consequently the Company funds the plan as claims are incurred. The present value of the defined benefit

obligation and service cost were measured using the Projected Unit Credit Method.

Net periodic benefit expense, which is presented in the consolidated statement of income as a component of personnel expenses,

was as follows:

For the years ended


Service cost 603 691

Interest cost 311 360

Actuarial (gains) / losses (423) (276)

Net periodic benefit cost 491 775



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Changes in the present value of the defined benefit obligation were as follows:


Defined benefit obligation at January 1 12,254 13,144

Service cost 603 691

Interest cost 311 360

Actuarial (gains) / losses (423) (276)

Benefits paid (1,768) (1,665)

Defined benefit obligation at December 31 10,977 12,254

Since the Company recognises all actuarial results related to other long-term employee benefits immediately as an expense,

the defined benefit obligation equals the liability recognised in the statement of financial position.

The assumptions used in the actuarial calculations of the defined benefit obligation and net periodic benefit expense require

a degree of judgement. The key assumptions required to calculate the actuarial present value of benefit obligations and net

periodic benefit expense are as follows:

2013 2012

Discount rate 2.60% 2.60%

Price inflation 1.00% 1.00%

Future salary increase 1.00% 1.00%

Turnover rates 0.50% - 1.00% 0.50% - 1.00%

Additional turnover rate early retirement at 62 10.00% 10.00%

Mortality table AG Table AG Table

2012 - 2062 2012 - 2062

The Company has applied defined benefit accounting for the other long-term employee benefit plan since January 1, 2009.

The experience table is as follows:

Amounts in thousands of € 2013 2012 2011 2010 2009

Effect of change(s) in assumptions - (7) 159 244 549

Experience adjustments (423) (269) (531) (1,285) (294)

Actuarial (gains) losses (423) (276) (372) (1,041) 255

Restructuring provision

The Company recognised a provision for restructuring for a number of employees.

Legal claims provision

The Company recognised a provision for a limited number of disputes.

Other provisions

Other provisions include asset retirement obligations, the guarantee provision and onerous contracts.

21. Other non-current liabilities

Other non-current liabilities consisted of the negative investments in ZUM B.V. and ZUMB B.V.in the amount of €1,222 (2012: €204)

and financial lease obligations of €765 (2012: nil). Reference is made to note 13 Investments in joint ventures.



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22. Other current liabilities

The Company’s other current liabilities comprise the following:


Accrued interest 38,768 17,976

Accrued expenses 65,597 73,555

Taxes and social securities 49,463 52,819

Accrued employee benefits 12,443 17,495

Total other current liabilities 166,271 161,845

23. Commitments and contingencies

Lease commitments

The Company leases buildings, certain office equipment and vehicles and has entered into various maintenance and support

contracts for the support for network equipment. Lease terms generally range from three to five years with the option of renewal

for varying terms. Lease commitments for the coming periods are shown in the following schedule:


BuildingsOther

contracts Total Total

Within 1 year 10,127 5,893 16,020 16,279

Between 1 and 5 years 32,058 6,760 38,818 38,375

After 5 years 10,313 72 10,385 15,754

Total Lease commitments 52,498 12,725 65,223 70,408

Purchase commitments

The Company enters into purchase commitments in the ordinary course of business. As at December 31, 2013 it had purchase

commitments for an amount of €77 million (2012: €62 million).

Legal proceedings

The Company is involved in a number of legal proceedings. The legal proceedings may result in a liability that is material to the

Company’s financial condition, results of operations, or cash flows. The Company may enter into discussions regarding settlement

of these proceedings, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company.

In accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, the Company has recognised provisions with

respect to these proceedings, where appropriate, which are reflected in the consolidated statement of financial position and Note 20.

Guarantees

The company has provided guarantees to unrelated parties for an amount of €3.9 million (2012: €3.9 million).

24. Related party disclosures

Identification of related parties

Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party’s

financial or operational decisions. The related parties comprise associated companies, key management personnel and close

family members of related parties.



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Transactions and positions

The following significant related party transactions occurred during the year ended December 31, 2013:

■ In 2013, no management fees were charged to the Company (2012: €0.4 million);

■ As at year-end 2013 the Company had a current account receivable with ZUM B.V. of €1,621 (2012: €688), a trade receivable

with HBO Nederland Coöperatief U.A. of €347 (2012: nil) and a trade account payable with HBO Nederland Coöperatief U.A.

of nil (2012: €818) for premium content;

■ Remuneration of the Board of management and the Supervisory Board for which reference is made to Note 6 and Note 7.

In the normal course of business, the Company and its subsidiaries conduct various types of ordinary business with related parties

(mainly as a provider of internet, television and telephony services). These transactions are not considered material to the

Company, either individually or in the aggregate.

25. Financial risks

The Company’s financial risk management focuses on the unpredictability of financial markets and seeks to minimise potential

adverse effects on the Company’s financial position and performance. The Company is exposed to the following financial risks:

■ Credit risk;

■ Liquidity risk; and

■ Market risk.

For each of these financial risks, which are included in the Company’s risk management programme, the Company’s exposure,

objectives, policies and processes for measuring and managing risk are presented below.

Credit risk

The credit risk on consumer trade accounts receivable is considered to be low as a result of the large consumer customer base,

the relatively small amount of receivables per customer and the high percentage of customers who pay by direct debit. The risk

on trade accounts receivable from the Company’s business customers is also considered low, but this concerns a smaller

customer base with on average larger receivables per customer than for the Company’s consumer customers.

The analysis of the ageing of the trade accounts receivables is as follows:

Amounts in thousands of € Total Not due Past due, but not impaired

<30 days 30-60 days 60-90 days 90-180 days 180-365 days >365 days

2013 37,887 23,687 8,984 1,843 2,665 707 -

2012 18,240 10,368 2,001 1,216 2,326 2,329 -

The Company’s maximum exposure to credit risk in the event that a counterparty fails to fulfil its obligations in relation to each

class of recognised financial asset, including derivatives, is the carrying amount of those assets in the consolidated statement of

financial position.

Liquidity risk

The Company manages its liquidity risk on a consolidated basis with cash provided from operating activities being a primary source

of liquidity. The Company manages short-term liquidity based on a rolling forecast for projected cash flows for a six-month period.

Based on the current operating performance and liquidity position, the Company believes that cash generated by operating

activities and available cash balances will be sufficient for working capital, capital expenditures, interest payments, dividends and

scheduled debt repayment requirements for the next twelve months and the foreseeable future.



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The following table summarises the maturity profile of the Company’s financial liabilities:

December 31, 2013 Amounts in thousands of €

Carrying amount

Contractual cash flows

January - March 2014

April - December

2014 2015 2016 - 2018 After 2018

Non - derivative financial liabilities

Loans from financial institutions (1,143,218) (1,379,285) (2,009) (51,964) (53,973) (1,271,339) -

8.0% Unsecured Notes (1,187,357) (1,692,691) - (96,708) (96,708) (1,499,275) -

3.625% Senior Secured Notes 742,914 (994,852) (27,188) - (27,188) (81,564) (858,912)

Finance lease (765) (845) (72) (217) (289) (267) -

Trade accounts payable (88,199) (88,199) (88,199) - - - -

Derivative financial liabilitiesInterest rate swaps used for hedging (29,537) (42,941) (8,322) (6,424) (8,685) (19,510) -

Total (3,191,990) (4,198,813) (125,790) (155,313) (186,843) (2,871,955) (858,912)

December 31, 2012 Amounts in thousands of €

Carrying amount

Contractual cash flows

January - March 2013

April - December

2013 2014 2015 - 2017 After 2017

Non - derivative financial liabilities

Loans from financial institutions (1,760,439) (2,245,737) (22,216) (67,881) (90,097) (2,065,544) -

8.0 % Unsecured Notes (1,183,377) (1,727,894) (23,846) (72,862) (96,708) (290,124) (1,244,354)

Trade accounts payable (85,563) (85,563) (85,563) - - - -

Derivative financial liabilitiesInterest rate swaps used for hedging (63,236) (69,119) (8,475) (25,425) (15,161) (20,058) -

Total (3,092,615) (4,128,313) (140,100) (166,168) (201,966) (2,375,726) (1,244,354)

Market risk

The Company is exposed to market risks, including interest rate and foreign currency exchange rate risks, associated with

underlying assets, liabilities and anticipated transactions. Based on the analysis of these exposures, the Company selectively enters

into derivatives to manage the related risk exposures.

Interest rate risk

Exposure to the risk of changes in the market interest rates relates primarily to the Company’s long-term debt obligations with

a (partly) floating interest rate. The Company manages its exposure to changes in interest rates and its overall cost of financing

by using interest rate swap (IRS) agreements. These IRS agreements are used to transform the interest rate exposure on the

underlying liability from a floating interest rate into a fixed interest rate. It is the Company’s policy to keep at least 70% of its

borrowings at fixed rates of interest. The net interest rate risk can be analysed as follows:


Notional amount borrowing (floating) (405,000) (1,063,337)

Cash (floating) & deposits (floating and / or fixed) 77,397 92,428

Notional amount IRS (fixed) 250,000 1,000,000

Net interest rate risk - including offset IRS (77,604) 29,091

At December 31, 2013, after taking into account the effect of interest rate swaps, approximately 97% of the Company’s borrowings

were at a fixed interest rate (2012: 101%).



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Sensitivity analysis for interest rate risk

The following table demonstrates the sensitivity to a possible change in interest rates, with all other variables held constant, of

the Company’s result before tax (through the impact on floating rate borrowings). There is no impact on the Company’s equity.


Increase / decrease in basis points

+ 20bp (155) 58

+ 10bp (78) 29

- 10bp 78 (29)

- 20bp 155 (58)

Foreign currency risk

The Company has transactional currency exposures arising from purchases in USD. The Company enters into foreign exchange

swaps to partially mitigate this risk. As at December 31, 2013 the net foreign currency exposure of the USD amounted to

USD 5.0 million (2012: USD 0.6 million), relating to the net amount of cash and cash equivalents, foreign exchange swaps and

trade accounts payable. At year-end 2013 the Company entered into 2 foreign exchange swaps with a nominal value of

€9.0 million (2012: nil). The fair value of the swaps is close to zero.

26. Financial instruments

Fair values

The following table presents the fair values of financial instruments, based on the Company’s categories of financial instruments,

including current portions, compared to the carrying amounts at which these instruments are recognised in the consolidated

statement of financial position:


Carrying amount Fair value

Carrying amount Fair value

Financial assets

Loans 104 104 141 141

Trade accounts receivable 37,887 37,887 18,240 18,240

Cash and cash equivalents 77,397 77,397 92,428 92,428

Total financial assets 115,388 115,388 110,809 110,809

Financial liabilities

Loans from financial institutions (1,143,218) (1,175,510) (1,760,439) (1,867,029)

8% Unsecured Notes (1,187,357) (1,285,310) (1,183,377) (1,334,570)

3.625% Senior Secured Notes (742,914) (752,340) - -

Finance lease (765) (765) - -

Trade accounts payable (88,199) (88,199) (85,563) (85,563)

Total financial liabilities at amortised cost (3,162,453) (3,302,122) (3,029,379) (3,287,162)

Derivative financial instruments (29,537) (29,537) (63,236) (63,236)

Total financial liabilities (3,191,990) (3,331,660) (3,092,615) (3,350,398)

The carrying amounts of receivables, other current assets, cash and cash equivalents and accounts payable approximate their fair

values because of the short-term nature of these instruments and, for receivables, because of the fact that any recoverability loss

is reflected in an impairment loss. The fair values of quoted borrowings are based on year-end ask-market quoted prices. The fair

values of other non-derivative financial assets and liabilities that are not traded in an active market are estimated using discounted

cash flow analyses based on market rates prevailing at year-end.



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Hedging activities

At December 31, 2013, the Company had concluded interest rate swap (IRS) agreements with a total notional amount

of €250.0 million (2012: €1,000.0 million) under which it pays a fixed rate of interest (between 3.55% and 3.59%) and receives

a variable rate equal to EURIBOR on the notional amount. These IRS agreements are used to reduce the exposure to changes

in the variable EURIBOR rates on the outstanding loan portfolio of €405.0 million (2012: €1,063.3 million).

As at December 31, 2013 the Company did not have any swap agreements to reduce its exposure to fluctuations in its purchase

obligations denominated in US dollars (2012: nil).

Hedge accounting

As a consequence of the refinancing of the Company in October 2010, the Company no longer applies hedge accounting

for IRS, as the underlying hedges became ineffective. As of October 2010 any change in fair value of IRS is reported in financial

income and expense. The cash flow hedge reserve recognised under other comprehensive income is released to financial

income and expense over the remaining contractual period of the hedges concerned.

Fair value hierarchy

Of the Company’s financial instruments, only derivatives are measured at fair value using the Level 2 inputs as defined in IFRS 7

“Financial Instruments: Disclosures”. These inputs are inputs other than quoted prices that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of derivative instruments is estimated by

discounting future cash flows at prevailing market rates or based on the rates and quotations obtained from third parties.

The Company enters into derivative financial instruments with various counterparties, principally financial institutions with

investment grade ratings. There were no changes in the valuation method of the financial instruments of the Company in

2013 and 2012.

Derivatives

The numbers and the maturities of derivative contracts, the fair values and the qualification of the instruments for accounting

purposes are presented in the table below:


Number of contracts Fair value

Number of contracts Fair value

Interest rate swaps

Within one year 6 (8,343) - -

Within two - five years 5 (21,194) 6 (63,236)

Total derivative financial instruments 11 (29,537) 6 (63,236)

As per December 31, 2013 the Company hedged 62% of the outstanding balance with a floating interest rate under the Senior

Credit Facility. A hedge contract of €1 billion and an offset hedge contract of €750 million expire on March 31, 2014. As of this date,

an interest rate hedge of €500 million becomes effective with an expiration date of March 31, 2017. Besides the above mentioned

hedges the Company entered into forward starting swaps of €900 million, starting on May 15, 2014 and expiring on March 31, 2024

in order to hedge the current forward EURIBOR rate, assuming the Company will refinance the €750 million Senior Secured

Notes and the €1.2 billion Unsecured Senior Notes early 2014, latest at the call date for the Unsecured Senior Notes in May 2014.

For more information on the refinancing reference is made to Note 28. Subsequent events.



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27. Subsidiaries

The following companies were Ziggo N.V.’s significant subsidiaries as at December 31, 2013. Unless otherwise indicated,

these are wholly owned subsidiaries. Subsidiaries that are not material to providing an insight into the group as required

under Dutch law are omitted from this list.

With respect to the separate financial statements of a number of legal entities included in the consolidation, the Company used

the exemption laid down in section 403, subsection 1 of Book 2 of the Dutch Civil Code. Pursuant to this section, the Company

has issued liability statements for its subsidiaries. These companies are marked with an * in the following table.

Zesko B.V., Amsterdam, the Netherlands

Ziggo Bond Company Holding B.V., Amsterdam, the Netherlands

Ziggo Bond Company B.V., Amsterdam, the Netherlands

Amsterdamse Beheer- en Consultingmaatschappij B.V., Amsterdam, the Netherlands

Torenspits II B.V., Amsterdam, the Netherlands*

Ziggo B.V., Groningen, the Netherlands*

Ziggo Netwerk B.V., Groningen, the Netherlands*

Esprit Telecom B.V., Almere, the Netherlands

Breezz Nederland B.V., Den Dolder, the Netherlands

Ziggo Netwerk II B.V., Utrecht, the Netherlands

ZUM B.V., Amsterdam, the Netherlands (50.0%)

ZUMB B.V., Amsterdam, the Netherlands (50.0%)

HBO Nederland Coöperatief U.A, Amsterdam, the Netherlands (50.0%)

28. Subsequent events

On January 27, 2014 the Company announced together with Liberty Global Plc. that they have reached a conditional agreement

(the “Merger Protocol”) on a recommended offer (the “Offer”) pursuant to which Liberty Global will acquire Ziggo in a stock and

cash transaction valuing Ziggo at approximately €10.0 billion. After careful consideration, the Board of Management and the

Supervisory Board of Ziggo (the “Boards”) believe the Offer to be in the best interests of Ziggo and its stakeholders, including its

shareholders, and have agreed to fully and unanimously support and recommend the Offer for acceptance to Ziggo’s

shareholders. This potential change in ownership is still awaiting the acceptance of shareholders and approval by the requisite

authorities. Based on the required steps and subject to the necessary approvals, Liberty Global and Ziggo anticipate that the Offer

will close in the second half of 2014.

In relation to the Offer the Company has refinanced its outstanding debt. The following steps have been taken since the

announced offer on January 27, 2014:

■ The €225 million Revolving Credit Facility and the €150 million Facility A Loan have been refinanced through senior debt Facility

B1 Loan on February 26, 2014. The Facility B1 Loan has an interest rate of Euribor +275 bps;

■ The 2020 3.625% €750 million Senior Secured Notes have been tendered for €678 million and the tendered notes have

been redeemed through a new senior debt Facility B2 Loan (Euribor +275 bps) on February 27, 2014. The remainder is still

outstanding;

■ The 2017 6.125% €750 million Senior Notes have been refinanced through senior debt Facility B1 Loan on March 4, 2014;

■ Regarding the 2018 8.000% €1,208.9 million Senior Unsecured Notes, the Company has commenced an offer to exchange up to

€934 million aggregate principal amount. As per February 24, 2014 €743 million has been validly tendered and accepted in the

Exchange Offer. The exchanged principal amount and the outstanding principal amount post exchange have been deposited in

an escrow account until successful completion of the Offer. Upon closing new 2024 Notes will be issued by Liberty Global and

the remainder of the current outstanding amount for the Senior Unsecured Notes will be called and refinanced through Facility

B3 Loan;



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■ The Facility B1, B2 and B3 Loan have a duration of 8 years and are composed of a Euro and US Dollar component. The Euro

component has – as defined under the Senior Facility Agreement - an interest rate of Euribor +275 bps/300 bps (margin

depending on leverage). The US Dollar component has – as defined under the Senior Facility Agreement - an interest rate of is

Libor +250bps/275 bps (margin depending on leverage). Both Euribor and Libor have a floor of 75bp;

■ The US Dollar exposure and variable interest rate exposure on the new Facility Loans have been hedged as per March 6, 2014.

The Market-to-Market positions for all interest rate hedges, including the forward rate hedges, which were outstanding as per

December 31, 2013, have been settled for cash.

Also in relation to the Offer, the Company and Liberty Global have agreed that the 2012 and 2013 Awards as well as the 2014 and

2015 Awards (if any) will be cancelled per the Settlement Date without any compensation being due to the relevant person,

provided that:

(a) 50% of the originally granted conditional shares under the 2012 and 2013 Awards will be treated as if they had vested on

the Settlement Date in respect of which the members of the Board of Management, and former members of the Board of

Management and the other participants will be entitled to the Offer Price as if those persons had tendered those vested shares

under the offer;

(b) Liberty Global shall or shall ensure that the relevant company within the Liberty Global Group, shall, subject to the Liberty

Global 2014 Incentive Plan (effective on or around 1 March 2014) replace 100% of the originally granted conditional shares

under the 2014 Awards.

Ziggo announced on February 19, 2014 that Marcel Nijhoff, Chief Commercial Officer, will step down as of March 1, 2014.

The Supervisory Board intends to appoint Hendrik de Groot as Chief Commercial Officer and member of Board of Management of

Ziggo as of April 18, 2014. The intended appointment will be put on the agenda of the Annual General Meeting of shareholders of

Ziggo on April 17, 2014 for information purposes. Hendrik de Groot is currently Managing Director of Business-to-Business at Ziggo.



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Statement of income / Statement of comprehensive income


Amounts in thousands of € (except per share data) Note 2013 2012

Other income 3 3,156 2,042

Personnel expenses 4 4,002 38,091

Contracted work - 650

Marketing & sales - 976

Office expenses 35 1,455

Other operating expenses - 985

Total operating expenses 5 4,037 42,157

Operating income (expense) (881) (40,115)

Net financial income (expense) (1,373) 3

Dividend income 6 370,000 110,000


Income tax benefit (expense) 7 563 4,584

Net result for the year / Total comprehensive income 368,310 74,472

Net result attributable to equity holders 368,310 74,472

Number of shares outstanding (in thousands) 200,000 200,000

Earnings per share - basic (in €) 1.84 0.37

Earnings per share - dilutive (in €) 1.84 0.37

The accompanying notes to this statement of income / statement of comprehensive income form an integral part

of these financial statements.



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Statement of financial positionAmounts in thousands of € Note December 31, 2013 December 31, 2012

Assets

Investments in subsidiaries 8 3,700,000 3,700,000

Deferred tax asset 7 5,147 4,584

Total non-current assets 3,705,147 3,704,584

Cash and cash equivalents 179 5

Total current assets 179 5

Total assets 3,705,326 3,704,589

Equity and liabilities

Issued share capital 200,000 200,000

Share premium 3,204,472 3,500,000


Retained earnings 279,006 (15,328)

Equity attributable to equity holders 9 3,683,445 3,684,636

Deferred income tax liability 1 1

Total non-current liabilities 1 1

Other current liabilities 10 21,879 19,952

Total current liabilities 21,879 19,952

Total equity and liabilities 3,705,326 3,704,589

The accompanying notes to this statement of financial position form an integral part of these financial statements.



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Statement of changes in equity

Amounts in thousands of € Issued capital

Share premium

Treasury shares

Retained earnings

Total equity

Balance at January 1, 2012 45 - - - 45


Net profit for the year 2012 - - - 74,472 74,472


Share issuance 199,955 3,500,000 - - 3,699,955

Dividend payment - - - (110,000) (110,000)

Purchase of Treasury stock - - (36) - (36)

Share-based payment - - - 20,200 20,200

Total transaction with shareholders 199,955 3,500,000 (36) (89,800) 3,610,119

Balance at December 31, 2012 200,000 3,500,000 (36) (15,328) 3,684,636


Net profit for the year 2013 - - - 368,310 368,310


Dividend payment - (295,528) - (74,472) (370,000)

Purchase of Treasury stock - - 3 - 3

Share-based payment - - - 496 496

Total transaction with shareholders - (295,528) 3 (73,976) (369,501)

Balance at December 31, 2013 200,000 3,204,472 (33) 279,006 3,683,445



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Statement of cash flowsFor the years ended December 31

Amounts in thousands of € Note 2013 2012

Operating activities

Income (loss) before income taxes 367,746 69,888

Adjustments for:

Share-based payment 496 20,200

Net financial income and expense 1,373 (3)

Operating cash flow before changes in working capital 369,615 90,085

Changes in working capital relating to:

Other current liabilities 10 567 19,952

567 19,952

Net cash flow from operating activities 370,183 110,037

Investing activities

Treasury stock 9 3 (36)

Interest received / (paid) (12) 2

Net cash flow used in investing activities (9) (34)

Financing activities

Dividend payment (370,000) (110,000)

Net cash flow from financing activities (370,000) (110,000)

Net (decrease) / increase in cash and cash equivalents 174 3

Net cash and cash equivalents at January 1 5 2

Net cash flow from operating, investing and financing activities 174 3

Net cash and cash equivalents at December 31 179 5



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Notes to the corporate financial statements

1. Corporate information

Ziggo N.V. is a public limited company having its corporate seat in Utrecht (registered office: Atoomweg 100, 3542 AB Utrecht)

the Netherlands.

Ziggo N.V.’s principal activities are to act as a holding company for the group companies of the Ziggo group, the owner and

operator of a broadband cable network in the Netherlands, and providing analogue and digital radio and television, broadband

internet and telephony services in the Netherlands to 2.9 million households and businesses under the brand name Ziggo.

2. Basis of preparation

Date of authorisation of issue

The corporate financial statements of Ziggo N.V. for the year ended December 31, 2013 were prepared by the Board of

Management and adopted on March 5, 2014.

Statement of compliance

The corporate financial statements of Ziggo N.V. have been prepared in accordance with International Financial Reporting

Standards (IFRS) as adopted by the European Union.

Measurement basis

In the corporate financial statements of Ziggo N.V., the same accounting principles were applied as set out in the notes to the

consolidated financial statements, except for the valuation of the investments as presented under financial fixed assets in the

corporate financial statements. These policies were consistently applied to all years presented. The amounts in the corporate

financial statements are presented in thousands of euros (€) except when otherwise indicated.

Foreign currency translation

The corporate financial statements have been drawn up in euros (€), which is Ziggo N.V’s functional and presentation currency.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the transaction

dates. Monetary items denominated in foreign currencies are translated into Ziggo N.V.’s functional currency at the spot rate of

exchange ruling at the reporting date. Exchange differences arising on the settlement of monetary items and the translation of

monetary items are included in net income for the period. Non-monetary items that are measured on a historical cost basis in a

foreign currency are translated using the exchange rates ruling at the dates of the initial transactions.

Use of estimates and assumptions

The preparation of financial statements requires management to make a number of estimates and assumptions. All assumptions,

expectations and forecasts used as a basis for certain estimates within these corporate financial statements represent good-faith

assessments of Ziggo N.V.’s future performance for which management believes there is a reasonable basis. These estimates and

assumptions represent Ziggo N.V.’s view at the times they are made, and only then. They involve risks, uncertainties and other

factors that could cause Ziggo N.V.’s actual future results, performance and achievements to differ materially from those forecasted.

The estimates and assumptions that management considers most critical for the corporate financial statements relate to:

■ Investments in associates (Note 2 and Note 8)

■ Deferred tax assets (Note 2 and Note 7)

Investments in subsidiaries

Investments in subsidiaries and associated companies are stated at cost, less impairment. Dividend income from Ziggo N.V.’s

subsidiaries and associated companies is recognised in the statement of income when the right to receive payment is established.



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Impairment of investments in subsidiaries and associated companies

Ziggo N.V. assesses at each reporting date whether there is an indication that the investment in subsidiaries and associated

companies may be impaired. An indicator for impairment may be a drop in the share price of Ziggo N.V. below the issue price of

€18.50. If any such indication exists, Ziggo N.V. makes an estimate of the asset’s recoverable amount. The recoverable amount is

defined as the higher of an investment’s fair value less costs of disposal and its value in use. Where the carrying amount of an asset

exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment

losses of continuing operations are recognised in the statement of income.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses

may no longer exist or may have decreased. If such an indication exists, Ziggo N.V. makes an estimate of the recoverable amount.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s

recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased

to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of

depreciation, if no impairment loss had been recognised for the asset in prior years. Such a reversal is recognised in the statement

of income.

Income tax

Current income tax is recognised in the statement of income except to the extent that it relates to items recognised directly in

equity. The current income tax benefit is based on the best estimate of taxable income for the year, using tax rates that have been

enacted or substantively enacted at the reporting date, and adjustments for current taxes payable (receivable) for prior years.

Deferred income tax assets and liabilities are based on differences between financial reporting and tax bases of assets and liabilities

and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or are

substantively enacted at the reporting date. The effect of a change in tax rates on deferred income tax assets and liabilities is

recognised in the period that includes the enactment date. Deferred income tax assets are reduced by a valuation allowance when

Ziggo N.V. cannot make the determination that it is more likely than not that some portion or all of the related tax assets will be

realised. Deferred income tax assets are generally recognised for all temporary differences, carry-forwards of unused tax credits

and unused tax losses, to the extent that it is probable that taxable profit will be available. Deferred income tax liabilities are

generally recognised for all temporary differences.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer

probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has

become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax

liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Statement of cash flows

The statement of cash flows is prepared using the indirect method with a breakdown into cash flows from operating, investing

and financing activities.

Bank overdrafts that are repayable on demand and form an integral part of Ziggo N.V.’s cash management are included as a

component of cash and cash equivalents for the purpose of the statement of cash flows.

Standards issued but not yet effective

The following new standards, amendments to standards and interpretations are not yet effective for the year ended

December 31, 2013 and have not been applied in preparing these corporate financial statements:



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Issued and effective as from the 2014 financial year:

■ Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) (issued June 2013)

■ Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (issued May 2013)

■ IFRIC 21 Levies (issued May 2013)

■ Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (issued October 2012)

■ Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (issued December 2011)

Issued in previous financial years and not yet effective as from 2014:

■ IFRS 9 Financial Instruments (issued in November 2009) and subsequent amendments (amendments to IFRS 9 and IFRS 7 issued

in December 2011)

Issued by the IASB in this financial year but not yet effective as from 2014:



■ Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) (issued November 2013)

The Company will introduce the new standards, amendments to standards and interpretations as of their effective date unless

otherwise indicated. Adoption of the standards and interpretations for the next financial year are not expected to have an impact

on the Consolidated statement of income, the Consolidated statement of comprehensive income and on the disclosure notes to

the financial statements of the Company.

3. Other income

Other income recognised in 2013 comprises a management fee charged to the Ziggo N.V.’s subsidiary Zesko B.V. for services

provided by the Board of Management for an amount of €3.2 million (2012: €2.0 million).

4. Personnel expenses

Ziggo N.V.’s personnel expenses comprise the following:

For the years ended


Wages and salaries 3,086 17,584

Social security costs 45 34

Pensions and other long-term employee benefits 319 273

Share-based payments 496 20,200

Lease- & mileage costs 41 -

Other 15 -

Total personnel expenses 4,002 38,091

The number of employees of Ziggo N.V. in full time equivalents (FTE’s) as at December 31, 2013 was 4 (2012: 4).

Wages and salaries comprise the remuneration of the members of the Board of Management (including Short-Term Incentive

plan and Long-Term Incentive Plan) and the Supervisory Board. In 2012 the wages and salaries also include the IPO bonus for the

Board of Management, the bonus to the chairman of the Supervisory Board related to the IPO and the Employee bonus related

to the IPO (Reference is made to Note 6 and Note 7 of the Consolidated Financial Statements).



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5. Costs related to the IPO

The costs presented under the categories Contracted work, Marketing & Sales, Office expenses and Other operating expenses

relate to costs incurred for the IPO in March 2012.

6. Dividend income

Dividend income from Ziggo N.V.’s subsidiaries is recognised when the right to receive payment is established. Dividend income

recognised for 2013 amounted to €370.0 million (2012: €110.0 million).

7. Income taxes

The Company’s Dutch subsidiaries are part of a Dutch fiscal unit headed by Ziggo N.V. The standard conditions for a Dutch fiscal

unit stipulate that all companies included in the fiscal unity are jointly and severally liable for all tax liabilities borne by the parent

company until the tax unit ceases to exist. The Company’s corporate income tax is calculated as if separately liable for tax,

however, taking into account benefits from the Dutch fiscal unit Ziggo N.V.

A reconciliation between the statutory tax rates of 25.0% and Ziggo N.V.’s effective tax rate is as follows:

For the years ended

Amounts in thousands of € Tax rate 2013 Tax rate 2012

Profit (Loss) for the period 367,746 69,888

Notional tax income at statutory rates 25.00% 91,937 25.00% 17,472

Adjustments:

Non-deductable items 0.00% - 7.79% 5,444

Dividend income (25.15%) (92,500) (39.35%) (27,500)

Effective tax rate / Income tax benefit (0.15%) (563) (6.56%) (4,584)

The income tax benefit for the year is recognised on the corporate statement of financial position as deferred tax assets.

As the company is head of the fiscal unity, the income tax benefit for the year is utilized on a fiscal unity level given the total

income tax expense. The corporate position is as follows:

Amounts in thousands of €Recognised in

profit or lossDecember 31,

2013Recognised in

profit or lossDecember 31,

2012December 31,

2011

Tax loss carry-forwards 563 5,147 4,584 4,584 -

Deferred tax assets 563 5,147 4,584 4,584 -

The deferred tax asset is calculated at a tax rate of 25.0%.

Recognised deferred tax assets reflect management’s estimate of realisable amounts based on historic growth numbers

and expected net result. The amounts of tax loss carry-forwards are subject to assessment by local tax authorities.



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8. Investment in subsidiaries

Movements of Ziggo N.V.’s investment in subsidiaries were as follows:


Balance at January 1 3,700,000 43

Establishment new investment - -

Acquisition of Zesko B.V. - 3,699,957

Balance at December 31 3,700,000 3,700,000

On March 20, 2012, Ziggo N.V acquired a 100% interest in Zesko B.V., which is head of the Ziggo Group and owner and operator

of a broadband cable network in the Netherlands. It provides analogue and digital radio and television, broadband internet and

telephony services in the Netherlands to 2.9 million households and businesses under the brand name Ziggo (see also Note 2).

9. Shareholders’ equity

Ziggo N.V. is incorporated as a public limited company under Dutch law. Its authorised capital consists entirely of ordinary shares.


Authorised capital

Ordinary shares 200 million of €1 each 200,000 200,000

Issued and fully paid (200 million shares) 200,000 200,000

Share premium 3,204,472 3,500,000


Retained earnings 279,006 (15,328)

Equity attributable to equity holders 3,683,445 3,684,636

The difference between equity in the consolidated statement of financial position and the corporate statement of financial position

is presented below.


Equity in the consolidated financial statement of Ziggo N.V. 1,360,208 1,378,904

Acquisition of Zesko B.V. at fair value in corporate financial statements 2,427,492 2,427,492

Cumulative dividend received from subsidiaries 480,000 110,000

Cumulative result of subsidiaries (577,331) (228,298)

Cumulative cash flow hedge reserve (6,924) (3,462)

Equity in the corporate financial statement of Ziggo N.V. 3,683,445 3,684,636

The effect of the acquisition of Zesko B.V. at fair value in the corporate financial statements equals the difference between the fair

value of Zesko B.V. (€3.7 billion) and its net asset value (€1.3 billion) on March 20, 2012.



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The difference between the net result in the consolidated statement of income and the corporate statement of income is

presented below:


Net result in the consolidated financial statement of Ziggo N.V. 347,343 192,770

Dividend received from subsidiaries 370,000 110,000

Result of subsidiaries in consolidated financial statements (349,033) (228,298)

Net result in the corporate financial statement of Ziggo N.V. 368,310 74,472

10. Other current liabilities

Ziggo N.V. has the following intercompany balances with group companies, included under other current liabilities:


Ziggo B.V. 20,668 19,952

Personnel-related liabilities 1,211 -

Total other current liabilities 21,879 19,952

11. Commitments and contingencies

Ziggo N.V. has no outstanding commitments or contingencies.

12. Related party disclosures

Identification of related parties

Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party’s

financial or operational decisions. Related parties include associated companies, key management personnel and close family

members of related parties.

Transactions and positions

In the normal course of business, Ziggo N.V. conducts various types of ordinary business with related parties (mainly as a provider

of internet, television and telephony services). These transactions are not considered material to Ziggo N.V., either individually or in

the aggregate.

Remuneration

For the remuneration of the members of the Board of Management, reference is made to Note 7 in the consolidated financial

statements.

13. Subsequent events

On January 27, 2014 the Company announced together with Liberty Global Plc. that they have reached a conditional agreement

(the “Merger Protocol”) on a recommended offer (the “Offer”) pursuant to which Liberty Global will acquire Ziggo in a stock and

cash transaction valuing Ziggo at approximately €10.0 billion. After careful consideration, the Board of Management and the

Supervisory Board of Ziggo (the “Boards”) believe the Offer to be in the best interests of Ziggo and its stakeholders, including its

shareholders, and have agreed to fully and unanimously support and recommend the Offer for acceptance to Ziggo’s

shareholders. This potential change in ownership is still awaiting the acceptance of shareholders and approval by the requisite

authorities. Based on the required steps and subject to the necessary approvals, Liberty Global and Ziggo anticipate that the Offer

will close in the second half of 2014.



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In relation to the Offer the Company has refinanced its outstanding debt. The following steps have been taken since the

announced offer on January 27, 2014:

■ The €225 million Revolving Credit Facility and the €150 million Facility A Loan have been refinanced through senior debt Facility

B1 Loan on February 26, 2014. The Facility B1 Loan has an interest rate of Euribor +275 bps;

■ The 2020 3.625% €750 million Senior Secured Notes have been tendered for €678 million and the tendered notes have been

redeemed through a new senior debt Facility B2 Loan (Euribor +275 bps) on February 27, 2014. The remainder is still outstanding;

■ The 2017 6.125% €750 million Senior Notes have been refinanced through senior debt Facility B1 Loan on March 4, 2014;

■ Regarding the 2018 8.000% €1,208.9 million Senior Unsecured Notes, the Company has commenced an offer to exchange up to

€934 million aggregate principal amount. As per February 24, 2014 €743 million has been validly tendered and accepted in the

Exchange Offer. The exchanged principal amount and the outstanding principal amount post exchange have been deposited in

an escrow account until successful completion of the Offer. Upon closing new 2024 Notes will be issued by Liberty Global and

the remainder of the current outstanding amount for the Senior Unsecured Notes will be called and refinanced through Facility

B3 Loan;

■ The Facility B1, B2 and B3 Loan have a duration of 8 years and are composed of a Euro and US Dollar component.

The Euro component has – as defined under the Senior Facility Agreement - an interest rate of Euribor +275 bps/300 bps

(margin depending on leverage). The US Dollar component has – as defined under the Senior Facility Agreement - an interest

rate of is Libor +250bps/275 bps (margin depending on leverage). Both Euribor and Libor have a floor of 75bp;

■ The US Dollar exposure and variable interest rate exposure on the new Facility Loans have been hedged as per March 6, 2014.

The Market-to-Market positions for all interest rate hedges, including the forward rate hedges, which were outstanding as per

December 31, 2013, have been settled for cash.

Also in relation to the Offer, the Company and Liberty Global have agreed that the 2012 and 2013 Awards as well as the 2014 and

2015 Awards (if any) will be cancelled per the Settlement Date without any compensation being due to the relevant person,

provided that:

(a) 50% of the originally granted conditional shares under the 2012 and 2013 Awards will be treated as if they had vested on

the Settlement Date in respect of which the members of the Board of Management, and former members of the Board of

Management and the other participants will be entitled to the Offer Price as if those persons had tendered those vested shares

under the offer;

(b) Liberty Global shall or shall ensure that the relevant company within the Liberty Global Group, shall, subject to the Liberty

Global 2014 Incentive Plan (effective on or around 1 March 2014) replace 100% of the originally granted conditional shares

under the 2014 Awards.

Ziggo announced on February 19, 2014 that Marcel Nijhoff, Chief Commercial Officer, will step down as of March 1, 2014. The

Supervisory Board intends to appoint Hendrik de Groot as Chief Commercial Officer and member of Board of Management of

Ziggo as of April 18, 2014. The intended appointment will be put on the agenda of the Annual General Meeting of shareholders of

Ziggo on April 17, 2014 for information purposes. Hendrik de Groot is currently Managing Director of Business-to-Business at Ziggo.

14. Auditor’s fees

The fees for services provided by the Company’s independent auditor, EY, and its member firms and/or affiliates to the Company

and its subsidiaries can be broken down as follows:


Audit and audit-related fees 715 750

Tax-related fees 245 -

Transactional related (compliance) fees - 950

Other non-audit fees 155 356

Total 1,115 2,056

In 2013, Ziggo N.V. paid Auditor’s fees of €1.1 million of which €0.2 million tax-related fees and €0.2 million other non-audit fees.

Ziggo N.V. paid auditor’s fees for 2012 for a total amount of €2.1 million of which €1.0 million transactional (compliance) fees

related to the IPO and €0.4 million other non-audit fees.



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The financial statements are signed by Board of Management:

Rene Obermann

Bert Groenewegen

Paul Hendriks


March 5, 2013



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Appropriation of result

As a result of the conditional agreement (the “Merger Protocol”)

which has been agreed on January 27, 2014 between the

Company and Liberty Global Plc. on a recommended offer

pursuant to which Liberty Global will acquire Ziggo, it is

proposed to declare a dividend of €0.95 per ordinary share.

In 2013, an interim dividend of €0.95 per ordinary share was

paid in cash. Accordingly it is proposed that no final dividend

will be paid. Net income not paid in the form of dividends will

be added to the retained earnings.



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Independent auditor’s report

To: the Shareholders of Ziggo N.V.

Report on the financial statements

We have audited the accompanying financial statements 2013

of Ziggo N.V., Amsterdam. The financial statements include the

consolidated financial statements and the corporate financial

statements. The consolidated financial statements comprise

the consolidated statement of income for the year ended

December 31, 2013, the consolidated statement of

comprehensive income for the year ended December 31, 2013,

the consolidated statement of financial position as at

December 31, 2013, the consolidated statement of changes in

equity and the consolidated statement of cash flows for the

year then ended, and the notes, comprising a summary of the

accounting policies and other explanatory information. The

corporate financial statements comprise the corporate

statement of income / statement of comprehensive income for

the year ended December 31, 2013, the corporate statement of

financial position as at December 31, 2013 and the notes,

comprising a summary of the accounting policies and other

explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair

presentation of these financial statements in accordance with

International Financial Reporting Standards as adopted by the

European Union and with Part 9 of Book 2 of the Dutch Civil

Code, and for the preparation of the board report in accordance

with Part 9 of Book 2 of the Dutch Civil Code. Furthermore,

management is responsible for such internal control as it

determines is necessary to enable the preparation of the

financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in

accordance with Dutch law, including the Dutch Standards on

Auditing. This requires that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s

judgement, including the assessment of the risks of material

misstatement of the financial statements, whether due to

fraud or error.

In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair

presentation of the financial statements in order to design

audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates

made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion with respect to the financial statements

In our opinion, the financial statements give a true and fair view

of the financial position of Ziggo N.V. as at December 31, 2013,

its result and its cash flows for the year then ended in

accordance with International Financial Reporting Standards as

adopted by the European Union and with Part 9 of Book 2 of

the Dutch Civil Code.

Report on other legal and regulatory requirements

Pursuant to the legal requirement under Section 2:393 sub 5

at e and f of the Dutch Civil Code, we have no deficiencies to

report as a result of our examination whether the board report,

to the extent we can assess, has been prepared in accordance

with Part 9 of Book 2 of this Code, and whether the

information as required under Section 2:392 sub 1 at b-h

has been annexed. Further we report that the board report,

to the extent we can assess, is consistent with the financial

statements as required by Section 2:391 sub 4 of the Dutch

Civil Code.

Amsterdam, March 5, 2014

Ernst & Young Accountants LLP

signed by F.J. Blenderman



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Ziggo N.V.Postal address:

P.O. Box 43048

3540 AA Utrecht

The Netherlands

Visiting address:

Atoomweg 100

3542 AB Utrecht

The Netherlands

Telephone: +31 (0) 88 717 0000

Corporate Communications

P.O. Box 43048

3540 AA Utrecht

The Netherlands

[email protected]

www.ziggo.com

Contact details and address

Disclaimer

The annual report and accounts contain certain forward-looking statements with respect to the financial condition, results,

operations and businesses of Ziggo N.V. These statements and forecasts involve risk and uncertainty because they relate to

events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual

results or developments to differ materially from those expressed or implied by these forward-looking statements and

forecasts. Nothing in this annual report and accounts should be construed as a profit forecast. The financial statements

were audited by Ernst & Young Accountants LLP.



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