Annual Report

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Zesko Holding BV, Amsterdam, Annual Report 2007 1

Annual Report

2007

Zesko Holding bv

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Zesko Holding BV, Amsterdam, Annual Report 20072Zesko Holding BV, Amsterdam, Annual Report 20073

Contents Company proﬁle

4

Highlights

5

Chairman’ s statement

6

Chief Executive Ofﬁcer ’s review

8

1 Board of Directors report

10 Strategy and formation of Zesko 11 Operating review 13 Financial review 16 Risks and uncertainties 19 Corporate responsibility and Zesko people 21 Corporate governance 22

2 Board proﬁles

23 Supervisory Board members 24 Board of Directors 26

3 Consolidated ﬁnancial statements 2007

28 3.1 Consolidated income statement 29 3.2 Consolidated balance sheet 30 3.3 Consolidated statement of changes in company equity 31 3.4 Consolidated cash ﬂow statement 32

4 Notes to the consolidated ﬁnancial statements

33 4.1 General 34 4.2 Significant accounting judgements and estimates 36 4.3 Summary of significant accounting policies 37 4.4 Business combination 43 4.5 Changes in estimations 46 4.6 Other revenues and expenses 47 4.7 Employee benefits expenses 48 4.8 Income taxes 49 4.9 Property and equipment 51 4.10 Intangible assets 53 4.11 Other financial assets 54 4.12 Investments 55 4.13 Impairment testing of goodwill 56 4.14 Inventories 57 4.15 Trade accounts receivable 58 4.16 Other current assets 59 4.17 Cash and cash equivalents 60 4.18 Shareholders’ equity 61 4.19 Interest bearing loans and borrowings 62 4.20 Loan payable to related parties 64 4.21 Provisions 65 4.22 Other current liabilities 66 4.23 Commitments and contingencies 67 4.24 Related party disclosures 68 4.25 Financial risks 69 4.26 Financial instruments 71 4.27 Events after balance sheet date 72

5 Group companies

73 5.1 Group companies of zesko holding bv 74

6 Company ﬁnancial statements 2007

76 6.1 Company income statement 77 6.2 Company balance sheet 78

7 Notes to the company ﬁnancial statements

79 7.1 Accounting policies 80 7.2 Change in presentation 81 7.3 Investments 82 7.4 Cash and cash equivalents 83 7.5 Shareholder’s equity 84 7.6 Related party disclosures 85 7.7 Events after balance sheet date 86

8 Supplementar y information

87 8.1 Appropriation of result 88 8.2 Auditor’s report 89

9 Contact details and addresses

90 This annual report and account contains certain forward-looking statements with respect to the ﬁnancial condition, results, operations and businesses of Zesko. 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. Financial statements have been audited by Ernst & Young Accountants (see page 89 for full report).

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Company proﬁle

Zesko is a leading provider of cable television, broadband internet, and telephony services to 3.3 million households – approximately half of all households in The Netherlands – and businesses. Our services extend over much of the North, South, West and some Eastern parts of the country. Headquartered in Groningen, the company has a strong local presence in the regions in which it operates. In 2007 Zesko generated turnover of more than %1 billion and at year-end employed 2,121 people. Zesko was formed through the combination of three regional Dutch cable operators – Essent Kabelcom (@Home), Casema and Multikabel – that were acquired by the private equity investment groups Warburg Pincus and Cinven. Formed in 2006, Zesko created opportunity for improved market position for all three operators. As a major provider of communications and entertainment services, the company has become a new market leader in The Netherlands. Zesko is committed to develop and maintain long-term relationships with its customers through focussing on customer satisfaction. Zesko management sees the purchase of services as the beginning of a relationship with a customer, not its culmination. Zesko offers an assortment of products and acts as adviser to its customers, managing the logistics of delivery and payment. Zesko’s hybrid network – a combination of optic ﬁber and coaxial cable into customers’ homes – is fully upgraded to ensure it can offer customers the transmission levels needed for the next generation of services, particularly interactive services.

Pre-consolidation Post-consolidation

Highlights

Key Financial figures ( million) 2007 2006 Revenues 1,093.9 156.0 EBITDA 1) 579.0 91.9 Operating profit 70.5 (1.3) Net loss (264.8) (31.8) Capital expenditures 220.4 37.8 Cash flow before financing activities and acquisition of subsidiaries 73.2 26.1 Personnel 2007 2006 Personnel (FTE’s) end of year 2,121 1,105 1) EBITDA: Operating profit plus depreciation, amortisation and impairments The accounting period under review is 1 January 2007 until 31 December 2007. The company acquired @Home on 1 February 2007 and consolidated the results from this date. In the 2006 figures the results of Casema, acquired on 13 September 2006, were consolidated from this date. Subscribers (x 1,000) 2007 2006 Homes Passed 3,960 1,889 Analogue Television 3,277 1,630 Digital Television 834 189 Internet 1,347 610 Telephony 703 287 Total Revenue Generating Units 6,161 2,716

Revenues 2007 Market share in Zesko’ s ser vice area

Analogue Television 43% Digital Television 4% Internet 29% Telephony 13% Business market 7% Other Revenues 4%

Digital TelevisionBroadband Internet 60%40%20%

2006 2007

42% 51%

60%40%20%60%40%20%

44% 45%

51% 53%

VoIP Telephony

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Chairman’ s statement

I am pleased to present the first annual report of Zesko Holding BV. Although the publication of an annual report is not mandatory, we believe that transparency benefits the quality of the organisation. During 2007 our goal was to continue our day-to-day operations while building the new integrated Zesko organisation. In a remarkable performance, management and staff achieved revenues that exceeded our ambitious plans, while also devoting substantial time to the design and implementation of the new organisation. The year 2007 was a year of growth for Zesko, with the total number of subscription services supplied increasing by 12%. Key areas of success included the growing demand for digital television and telephony services and customers’ significant interest in service bundling. The improved cash flow and EBITDA growth are further indicators of good company health, as is the growth in average revenue per user. The Supervisory Board believes the financial statements contained in this report constitute a sound basis for the account that the Board of Directors must give of its management of the company and the Supervisory Board must give of its supervision of the management. The Board of Directors and Supervisory Board have worked well together. In 2007 the Supervisory Board held 10 meetings, in which the company’s strategy was reviewed in detail. A number of vital strategic decisions that had to be taken in view of the rapidly evolving and highly competitive market, particularly in regards to investment (where the long term commitment of the Board was clearly shown), integration matters and operations. The Supervisory Board is comprised of two representatives from each of the two private equity companies that hold Zesko shares – Cinven and Warburg

Pincus - and myself. As of 15 January 2008 Andy Sukawaty is also a member of the board. I can say that our Supervisory Board’s expertise is not limited to financial matters. My five colleagues have a plethora of expertise in telecoms, cable and media. Their know-how, insights and understanding of industry opportunities and restrictions, including the regulatory issues we face in the Dutch market, have been vital to Zesko’s development. The three-person Board of Directors, comprised of the Chief Executive Officer, Chief Financial Officer and Chief Commercial Officer, allowed for speedy decision-making and continuous flexibility. Our CEO Bernard Dijkhuizen, supported by the broader senior management team, deserves credit for managing both the integration process and the on-going operations. Furthermore, the dedication shown by the directors, and their willingness to put in extra time and effort to reach the right result, permeated the organization, reaching management and staff at all levels. I would also like to emphasize the role played by Zesko Works Councils during the integration process. Always constructive, they pressed hard in the interests of employees, whilst understanding our final goal of an effective and efficient company. The new organisation will be a leaner company and placing the right people in key roles was a priority during 2007. Zesko turned to outside advisers to assess its top 100 managers and match them, wherever possible, to roles required for the efficient operation of the new organisation. We are not yet at the end of integration. Substantial actions still need to be taken during 2008, but the performance so far has been absolutely remarkable.

The creation of one single, integrated and successful company will work because the organisation and people behind it works. Subsequent to the year-end, Zesko launched a new brand name “Ziggo” which will be used across all the company’s operations from 2008 onwards. We want the company to be best in class in the delivery of innovative and high-quality consumer services. That means customer focus must run through all veins of the organisation and cannot be limited to those with face-to-face customer relations. The year ahead contains both opportunities and challenges. I believe that the company, under its new brand name Ziggo has the potential to succeed just as well in 2008 as Zesko did in 2007. In the past year Zesko has demonstrated a continued ability to grow solidly in the midst of a complex integration process. More importantly, during this period we have continued to innovate and offer customers the new services expected from a modern information, communications and entertainment company. I strongly believe that if you do well, you should tell people about it. Zesko has done well, and on behalf of the Supervisory Board I would like to express our gratitude to the management and employees for their efforts over the past year.

W im Dik Chairman 27 March 2008

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In a year of major transformation, Zesko achieved strong growth. Total revenues in 2007 reached % 1,141 billion, an increase of 15% when compared to 2006.1) Our EBITDA (operational result) grew by 19%. And Zesko subscribers continued to buy more services; the total number of subscribed services purchased by our customers (RGUs, Revenue Generating Units) increased to 6.2 million. Our EBITDA (operational result), operational cash flow and our net debt position developed more positively than projected. Also the total leverage and capital expenditure were well within the limits set by financial covenants in the credit facilities. As expected, Zesko reports a net loss for 2007, mainly as a result of the acquisition of @Home and related amortization and interest costs. Zesko’s growth rates represented an expansion of market share and market leadership in our three key product areas: digital television, broadband internet and digital telephony. This growth was achieved while many of our customers were experiencing changes in their relationship with Zesko, as we sought to harmonise product offerings across our network under the different brands. Part of our excellent performance was due to synergies and cost savings achieved via the new streamlined structure. Even against an ambitious plan and with a % 220 million investment in the company, our EBITDA and earnings were better than forecasted and our Cost of Goods Sold was lower. In all, % 38 million in cost savings were realised in 2007 and we expect an even greater rate of savings during 2008. We were particularly pleased with customer reception of bundled services: 40% of our analogue television subscribers now also receive combinations of broadband internet, telephony and digital television services from us. These bundled offerings reduce the cost of sales while increasing consumer brand loyalty. While our sales and marketing teams continued to function under our regional brands, they also laid the groundwork for a single national brand, Ziggo, which was officially launched during the second quarter of 2008. Offering all our consumer services under one brand will strengthen our position in a highly competitive market. Moreover, our commercial teams can now, for the first time, present a single view of our services, while consumers nationwide can communicate with Ziggo through one point of contact. The foundation laid in 2007 is extremely important in continuing to improve our competitiveness. Due to the parallel development of infrastructures, Dutch customers enjoy a wider choice of television, broadband internet and telephony services than virtually any other group of consumers in Europe. Hybrid fiber-coax, PSTN (Public Switch Telephony Network), satellite and fiber optic networks are all delivery options in The Netherlands. This facilities based competition provides world-leading consumer choice at attractive prices. We urge the government, EU commission and the regulators to be cautious not to intervene in the succesful formula we have in the Netherlands. Apart from the great variety of choice in the Netherlands, prices are relatively low for high quality services and broadband penetration is one of the highest on a global scale (over 75% of households). During 2007, planning was completed and the first integration phase was initiated and will be completed by the beginning of 2009. In a rapidly changing environment, our people worked very hard to deliver the vision of a new unified organisation. They initiated the transformation of our organisation without losing sight of our main focus – high quality customer service. Maintaining this quality of service was challenging, particularly when demand for certain services, such as digital telephony, exceeded expectations. We had some major challenges, particularly in Customer Services. Recognising service as central to future success, in 2007 we recruited, trained and deployed large numbers

CEO’ s review

of customer service personnel to help drive better performance. There was a delay in the integration of the three companies in mid 2007 while a Social Plan was agreed upon with our employees. Getting those negotiations right was extremely important for all stakeholders. We needed to deliver the right result for our employees, for those who left the company and for the future of the company. I believe, through the good will of all parties, we achieved an agreement that delivers best practice and respects the interests of all stakeholders. The management structure of Zesko is now in place and the majority of the posts within that structure are filled. A single network for all customers is being created and major investments are being made to increase the capacity of the network where needed. The business and operating support systems that will enable our teams to deliver unified services across our entire network will be phased in during mid- and late-2008. 2007 was a year of beginnings. The brand values that will take Ziggo forward were defined – building on trust and ease of use, and leading up to inspiration. We made a commitment to include corporate and social responsibility principles within our company culture; this Annual Report is one of our first steps in fulfilling that commitment. While we are excited about our future, we are also conscious of the ongoing challenges to our vision for Zesko. Delays or set-backs in our integration plans might have a substantial impact on our costs and the fierce competition for subscribers could result in price-cutting or service offers that would affect our projected revenues and profits.

But the excellent performance of our company, reflected by a growing demand for our products and continued service improvement, during such a difficult time of transformation, make us confident that our top-line revenues and operating profits will continue to grow during 2008. The fact that 60% of our subscribers currently purchase only analogue television services means we have a large base of potential customers to introduce to our new digital services, such as video on demand. The restructuring that started in 2007 will peak in the first half of 2008 and be nearly complete by the end of the year. 2008 marks the birth of the Ziggo brand. The long term strategy is to create a strong brand and unified service platform, that our customers identify with excellent service and good value. We would like to thank our employees for the firm commitment they have demonstrated, despite the turbulence in the past year. As we reshape our business, I am confident that we will be well placed to deliver further growth in the years ahead.

Bernard Dijkhuizen Chief Executive Ofﬁcer 27 March 2008

1) Based on the pro forma full year recurring results see page 16

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1. Board of Directors report

1.1 Strategy and formation of the company

Zesko’s strategy is to create long-term value and to grow our business by adding new customers and delivering more to existing customers. The actions taken in 2007 have improved our competitiveness and prepared the ground for 2008 initiatives, including continued network development and a unified brand launch. To further our strategy during 2007 we focused specifically on two areas: Developing services attractive to both consumers and business customers - Bundling digital television, telephony and broadband internet services to offer more convenience to customers - Increasing value-added offerings like Video on Demand (VoD), high definition (HD) content, personal video recording (PVR) options - Creating a single contact point for the consumer market, capable of handling queries about all services including self-care - Developing City Access, a high-quality fiber optic service focused exclusively on the needs of business customers. Improving customer satisfaction - Building greater awareness of our commitment to customer satisfaction among Customer Service and Technical Service staff through internal programs - Initiating independent external monitoring of customer satisfaction scores to supplement the work of internal monitoring processes and employee panels - Upgrading the efficiency of our internal processes - Improving consumer’s ability to access telephone and online services - Increasing the performance, cohesion and availability of our network - Making our bundles and pricing systems as transparent and easily understood as possible. Formation of Zesko AnnouncementIntergrationAdvice request Internal launch mergerkick-offand Social Plannew brand

Q3 ‘06Q4 ‘06Q1 ‘07Q1 ‘08 Start implementation

Q3 ‘07

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The share capital of the company is held by two private equity ﬁrms, Warburg Pincus and Cinven.

About W arburg Pincus

Warburg Pincus has been a leading private equity investor since 1971. The firm currently has more than $35 billion of assets under management. Warburg Pincus’ investments are focused on a range of sectors in North America, Europe and Asia, including financial services, healthcare, industrial, technology, media and telecommunications, energy, consumer and retail and real estate. Since inception, the firm has raised 12 private equity funds that have invested more than $29 billion in approximately 600 companies in more than 30 countries. Warburg Pincus currently has an active portfolio of more than 100 companies. The firm has 59 managing directors and more than 160 professionals in Beijing, Frankfurt, Hong Kong, London, Mumbai, New York, San Francisco, Shanghai and Tokyo.

About Cinven

Cinven is a leading international buyout firm. The firm acquires European-based companies valued at %500 million and above that require an equity investment by funds of %100 million or more. Cinven was founded in 1977 and has been responsible for many buyout industry ‘firsts’, including the first %1 billion-plus buyouts in France, The Netherlands, Spain and the UK. The firm is focused on five sectors: business and financial services; healthcare; industrials; retail, leisure and consumer; and technology, media and telecommunications (TMT). Cinven has offices in London, Paris, Frankfurt and Milan.

1.2 Operating review 2007

Services such as television, video recording, broadband internet and telephony are converging in the digital age. This trend is fundamental to Zesko’s strategy, as we create a company that offers a full range of communications and entertainment services from a single point of consumer contact, backed by a single source of customer relation management. The combination of the three regional networks provided Zesko with an opportunity to improve its competitiveness by reducing costs, simplifying infrastructure and augmenting customer offers. Integration planning at Zesko began in February 2007 and implementation commenced in September 2007. Over % 220 million was invested in Zesko during 2007. Centralisation of network management, back office, administrative and commercial operations is eliminating double and triple effort throughout the organisation. During this year of transformation, Zesko increased revenue and [market]share of key digital markets. While the financial results also show the impact of the acquisition, restructuring activities and interest swaps undertaken, the underlying performance of the company is outstanding. Cash flow before financing activities and acquisition of subsidiaries was very strong. The various ratio’s were all well within the financial covenants of the credit facilities. One network In 2007 work began on the creation of a single Zesko digital backbone with two digital headends – each acting as back-up to the other – linking the three former networks. A Network Operational Centre was also created, capable of monitoring and managing performance across the entire network. Around 40,000 end-amplifiers, particularly in the South of The Netherlands, are being upgraded. This is just one of the investments being made to ensure availability, service quality and capacity across the hybrid fiber-coax cable network is sufficiently high to handle next-generation digital services. While a single product offering and unified network were being prepared, new unified Business Support and Operational Support Systems (BSS and OSS) were also developed to replace the three systems inherited in 2006. The new BSS-OSS will ‘go live’ in phases between March and August 2008, providing Zesko management with a unified view of company operations. Creation of the new BSS-OSS requires a fundamental rebuild of the IT systems and application tools that support commercial and operational planning. Zesko customer and technical service staff will be able to assist customers for all services, in any part of the Zesko network, via a single point of contact.

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One brand The planned launch of the Ziggo brand – a single name and brand across Zesko’s combined regions – is a major step forward for the organisation. The launch, in the second quarter of 2008, signaled the end of the first phase of the integration. During 2007, the new company continued using its familiar regional brands: @Home and @Work, Casema and Multikabel. The Ziggo brand launch will follow the completion of the first stage of the OSS-BSS implementation, providing a single company and network view, and a newly launched Ziggo portal. The national Ziggo brand will symbolise the unity Zesko has achieved between the three organisations, offering greater clarity to the consumer while being more cost effective for the company and more powerful. One organisation The new Zesko organisation has five functionally organised divisions, each reporting to the Chief Executive Officer (CEO): Commercial (CCO), Financial (CFO), Technical (CTO), Services (CSO) and Information (CIO). The CEO is also supported by centralised Strategy Legal & Regulatory, Human Resources and Corporate Communications’ teams. The CCO initiates all communications with consumer and business customers, including marketing, brand and communications, channel and portal management. The CIO maintains and develops the operational and business support systems that underpin Zesko’s services. Planning and control, procurement, internal controls and risk management, as well as operational administration are the province of the CFO. The network is managed by the CTO, while the CSO manages customer support and technical services. Zesko has also developed a Corporate Development, Legal, Regulatory and Public Affairs Group that combines strategic planning, M&A, new business development, internal consulting and management, with legal and compliance issues, regulatory affairs and public affairs. Staff from the Corporate Development, Legal, Regulatory and Public Affairs Group collaborate with operational managers to ensure strategic priorities are included in daily decision making. They coordinate activities to ensure cohesion during periods of rapid change; this group was essential in the implementation of the first phase of the integration. Market shares During 2007, Zesko gained market share in three key services: the digital television market grew from 42% in 2006 to 51%; the broadband internet market also grew year-on-year from 44% to 45%; and digital telephony, Zesko grew most aggressively increasing share from 51% to 53%.

Synergies Product harmonisation offered top line revenue improvements as well as cost savings and synergies from the elimination of duplication and complexity. Already, considerable savings have been made in the purchase of both network equipment and television content. Major international suppliers see Zesko as an attractive business partner. Other synergies include culling best practices from across the new organisation and easier product innovation and service delivery due to the increased business size.

Trends and developments

In The Netherlands, the major companies that supply information, communication and entertainment services compete on more than price and content. Services are delivered over very different infrastructures – ranging from the hybrid fiber-coax networks operated by Zesko and other cable companies, to satellite broadcasting, ADSL and terrestrial digital broadcasting service. Effective competition has developed rapidly, creating a marketplace that is highly sensitive to changes in consumer demand. Competition between infrastructures has been to the benefit of consumers and to innovative companies, such as Zesko, that are constantly seeking new ways to deliver more value to consumers. It has encouraged service providers to invest in infrastructures in order to strengthen their market position. To offer ideal services to our customers we continuously have to invest in our network and systems. In a market of 16.4 million people and 7.2 million households, 98% of homes receive television services. Broadband internet is present in 75% of homes and 79% have either fixed line or digital telephone services (mobile telephony subscriptions per head of population reached 112% during 2007). Local presence Consumers’ identification with their locality or region in The Netherlands is strong. This sense of regional identity was an important strength of the three regional companies that came together to form Zesko. In a market where customer satisfaction is a key driver for sustainable growth, the Customer and Technical Services of the new Zesko organisation will continue to be located within the communities they serve. From a technical services point of view, this approach also offers speed and efficiency advantages when dealing with service failures or improvements. Television going digital Zesko is the leading provider of digital television services in its service areas; the migration to digital accelerated during 2007 and is expected to continue. Sales of flat screen and larger sized televisions are stimulating demand for services such as high definition television (available from Zesko during 2007). Customers also show an interest in on-demand television; downloading programmes that were broadcast via Delay TV (“uitzending gemist”) was very popular in 2007. Zesko does not seek to prevent content providers from selling programs to other service providers. In other markets, such as the UK, the switch to digital television was driven by consumers’ desire to access content that was broadcast exclusively on the new digital networks. Dutch consumers have reacted unfavourably to the idea of exclusive broadcast deals that limit the public’s access. Zesko also tries to ensure that no other company establishes exclusive broadcast deals to the detriment of the Dutch public and Zesko. Bundling An important development in consumer markets is an increased preference for purchasing television, broadband and telephony services in bundled packages. The convenience of buying all services from one provider and the perceived price advantage from bundles is expected to attract large numbers of consumers across the whole network during 2008. Bundling services also increases customer loyalty to the company, reducing the rate of ‘churn’.

- Total subscriptions: 6.2 million at the end of 2007, a 14% growth compared to the total of the three former companies at the end of 2006. - Standard television: With 3,277,000 subscribers, the standard television package performed significantly better than forecast, irrespective of the aggressive step-up in competition. - Digital television: 2007 activities in digital television were focused on benefiting from the fast-growing market. The subscriber base of 834,000 at year-end is a significant market share increase of 9%. The average revenue per subscriber increased as a result of a rise in the number of channel-packages per customer. - Broadband internet: With 1,347,000 broadband internet subscribers the company sustained its share of a highly competitive market, where saturation is almost complete. New subscribers will need to come from remaining dial-up subscribers moving to broadband and from ADSL competitors. Offering competitive bundles will lead to further internet growth and increase in overall sales. - Telephony: Telephony subscriptions reached 703,000. Although the overall market showed lower than anticipated growth, Zesko continued to gain market share.

RGUs Zesko 5.5M 6.2M

642

2006 2007 8

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1.3 Financial review

The 2007 results are impacted by the acquisition and restructuring activities and interest swap results. In order to provide an understanding of the underlying performance of Zesko during the year 2007, the table set out below shows the impact of excluding the acquisition and restructuring costs from the statutory results and adding the results of the acquired subsidiary in order to come to full year results. This adjusted information is referred to in this review and elsewhere in this annual report. It is also used by management internally for analysing the performance of the business. Consolidated Income statement 2007 2006 Statutory information - Financial statements million million Revenues 1,093.9 156.0 Cost of Goods Sold 161.6 27.9 Operating costs and expenses 861.7 129.4 - of which Depreciation and Amortisation 508.5 93.2 Operating profit/ (loss) 70.6 (1.3) Net Finance costs (444.6) (75.3) Results on investments 0.0 0.1 Loss before tax (374.0) (76.5) Tax benefit (expense) 109.2 44.7 Net loss (264.8) (31.8) EBITDA Financial Statements 579.1 91.9 EBITDA margin 52.9% 58.9% Adjustments to Full Year 2007 2006 million million Add Results from acquisitions (1) Revenues 47.0 840.2 Cost of Goods Sold 5.9 110.3 Operating costs and expenses (2) 18.9 321.4 EBITDA 22.2 408.5 Minus Non recurring costs (3) Restructuring and acquisition costs 27.5 - Financing income (swap result) (34.4) - Adjusted Full Year Recurring EBITDA 594.4 500.4 EBITDA margin (4) 52.1% 50.2% Notes: 1) adding results of acquired company before acquisition date 2) excluding depreciation and amortisation 3) part of operating costs and expenses in financial statements 4) EBITDA as % of adjusted full year revenue

Note: The unaudited pro-forma financial full-year information for 2007 and former years used in this report has been prepared using the financial reports of the former companies, adjusted for harmonisation to the Zesko accounting principles. Although we believe that pro-forma financial information has been based on reasonable assumptions, it is provided for illustrative purposes only. We provide no assurance that the pro-forma financial information for the former companies would be identical to the actual results that might have been reported had the companies been integrated. Consolidated Income statement 2007 2006 Pro-forma Full-year recurring million million Total revenues 1,140.9 996.2 Residential Market 1,014.8 897.5 Business Market 85.0 78.6 Other Revenues 41.1 20.0 Cost of Goods Sold 167.5 138.2 Gross Margin 973.4 858.0 Operating costs and expenses 379.0 357.6 Adjusted Full Year Recurring EBITDA 594.4 500.4 EBITDA margin (4) 52.1% 50.2%

Revenues and Gross Margin

Total revenues amount to % 1,140.8 million, a growth rate of 15%. 89% of the total revenues come from the residential market, 7% from the business market, and other revenues consist of non-customer related income. The 12% growth in subscriptions results in 13% revenue growth for the residential market. The main Costs of Goods Sold are the cost for royalty and author rights and interconnection costs. These costs are lower than anticipated as a result of higher synergies realised in new contracts. Gross Margin 2007 (85%) is slightly lower compared with 2006 (86%) mainly driven by the growth of the telephony base, with a lower gross margin.

Operating costs and expenses

Operating costs and expenses amount to % 379 million. In the full year comparison the operational expenses increased 6%. This increase mainly comes from materials & logistics due to a high number of subsidised set-top boxes. A total of % 38 million in net cost savings were achieved in 2007. Actual net cost savings are based on the comparison of actual performance with pre-merger stand-alone plans. Trends in 2007 included: cautious investment of the Marketing & Sales budget in existing company brands in the ﬁrst half year; and higher than anticipated personnel reduction, driving higher external staff costs.

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EBITDA

Full Year Recurring EBITDA 2007 increased by 19% compared to full year 2006 (from % 500.3 million to % 594.4 million) as a result of improved revenues and realised synergies.

1.4 Risks and uncertainties

Zesko may be affected by a number of risks, not all of which are within our control. Zesko has processes in place for managing these risks across a number of our divisions. These processes are coordinated by our Corporate Development, Legal, Regulatory and Public Affairs Group, reporting directly to the Chief Executive Officer; and our Risk Manager, who is within the department of Internal Control & Risk Management, reporting to the Chief Financial Officer. In addition to inherent risks and uncertainties behind all the forward-looking statements and those discussed in the operating and financial review, the following section contains our perception of important risks and uncertainties facing the company.

Integration planning or controls and cost escalations or ser vice disruption

The company recognises that our business integration carries risks, such as: - Potential loss of service quality and reductions in our ability to manage data during the migration from three enterprise resource planning and business and operational support systems to one single system; - Potential loss of productivity during the creation of new staff roles and the migration of staff to new locations; and - Potential loss of base business during the move to a single Ziggo brand.

Recruitment and retention of key people

In a business experiencing dynamic growth, high levels of competition and rapid technological change, our growth strategy is dependent on the performance, knowledge and skills of our employees. We recognise the need to attract, integrate and retain people with the talents to fulﬁll our ambitions. We understand the negative impact on results that could arise from an inability to retain key knowledge during the integration period and adequately plan succession.

Compliance with regulation

The company is aware of the importance of complying with all applicable regulation affecting its business activities and of the potential damage to reputation and the ﬁnancial impact that could affect Zesko’s competitiveness following non-compliance.

Undisrupted and safe network operation

The company’s revenues are dependent on the continued operation of our various network facilities and the consistent delivery of high-quality information, communications and entertainment services that meet customer expectations. The operation of our network involves many risks, including the failure or sub-standard performance of equipment, the improper installation or operation of equipment, and natural disasters. Any signiﬁcant signal disruptions or problems in delivering content may cause sales and operating proﬁts to decline.

Information security

Failure to keep secure the personal and ﬁnancial data we hold that concerns our customers and our company may have detrimental reputational and ﬁnancial consequences.

CAPEX

Total capital expenditures amount to % 220.4 million, of which % 34.9 million is related to integration projects. Half of the network expenditures relate to the upgrade, new build and expansion of the network, the other half relates to maintenance (replacement).

Capital management

The primary object of the company’s capital management is to ensure that the covenants agreed upon with the lenders of the credit agreement (senior loan & mezzanine) will be met and an optimal debt to equity ratio is reached taking into account the company’s liabilities. No changes were made in the objectives, policies or processes during the years ending 31 December 2007 and 31 December 2006. The company needs to comply on a quarterly basis with certain covenants set by the lenders. These ﬁnancial covenants (test levels) which were all met during the year 2007, can be found in the ﬁnancial statements on page 70.

EBITDA Zesko 500M 594M

1.000500

2006 2007 750