U.K. Companies Act Annual Report December 31, 2017 ...

1 Companies Act Annual Report December 31, 2017. Registered Number 8379990. Registered Office Liberty Global plc Griffin House, 161 Hammersmith Rd, London W6 8BS. United Kingdom LIBERTY GLOBAL PLC. 2017 Companies ACT Annual Report . TABLE OF CONTENTS. Page Number Strategic 1. Directors' 52. Statement of Directors' Responsibilities in Respect of the 2017 Companies Act Annual Report .. 59. Financial Statements and Supplementary 65. Parent Company Only Financial Statements and Footnotes .. 192. Appendix A-1 - Proxy Statement for the 2018 Annual General Meeting of Shareholders of Liberty Global plc, including the Liberty Global plc Statutory Directors' Remuneration Report as Appendix A thereto * .. A-1. _____. * The appendix included in the version of this Companies Act Annual Report that was filed with Companies House. Liberty Global plc's Proxy Statement for the 2018 Annual General Meeting of Shareholders has also been filed with the Securities and Exchange Commission and a copy can be obtained, without charge, from the Securities and Exchange Commission's website at or from our website at [THIS PAGE INTENTIONALLY LEFT BLANK].

2 STRATEGIC Report . The following discussion and analysis, which should be read in conjunction with our consolidated financial statements, is intended to assist in providing an understanding of our results of operations and financial condition and is organized as follows: Overview. This section provides a general description of our business and recent events. Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2017 and 2016. Liquidity and Capital Resources. This section provides an analysis of our corporate and subsidiary liquidity, consolidated statements of cash flows and contractual commitments. Critical Accounting Policies, Judgments and Estimates. This section discusses those material accounting policies that involve uncertainties and require significant judgment in their application. Quantitative and Qualitative Disclosures about Market Risk. This section provides discussion and analysis of the foreign currency, interest rate and other market risk that our company faces.

3 Risk Factors. This section provides discussion and analysis of risks the company faces, including competition, technology, operating in overseas markets, financial and other risks. The capitalized terms used throughout the Annual Report are defined in the notes to our consolidated financial statements for year ended December 31, 2017 included herein (the Consolidated Financial Statements). In the following text, the terms we, . our, our company and us may refer, as the context requires, to Liberty Global (or its predecessor) or collectively to Liberty Global (or its predecessor) and its subsidiaries. Unless otherwise indicated, convenience translations into dollars are calculated, and operational data (including subscriber statistics) is presented, as of December 31, 2017, and the amounts presented relate only to our continuing operations. Overview General Liberty Global is a public limited company organized under the laws of England and Wales.

4 We are an international provider of video, broadband internet, fixed-line telephony, mobile and other communications services to residential customers and businesses, with consolidated operations at December 31, 2017 in 12 European countries. We provide residential and B2B communication services in (i) the and Ireland through virgin Media, (ii) Germany through Unitymedia, (iii) Belgium and Luxembourg through Telenet and (iv) seven other European countries through UPC Holding. In addition, through the December 31, 2016 completion of the VodafoneZiggo JV Transaction, we provided residential and B2B communications services in the Netherlands through VodafoneZiggo Holding. Following the completion of the VodafoneZiggo JV Transaction, we own a 50% noncontrolling interest in the VodafoneZiggo JV, which provides video, broadband internet, fixed-line telephony, mobile and B2B communications services in the Netherlands. As further described in note 6 to the Consolidated Financial Statements, we completed the Split-off Transaction on December 29, 2017.

5 Accordingly, the entities comprising the LiLAC Group are reflected as discontinued operations in our consolidated financial statements for all applicable periods presented. In the following discussion and analysis, the operating statistics, results of operations, cash flows and financial condition that we present and discuss are those of our continuing operations unless otherwise indicated. Operations At December 31, 2017, we owned and operated networks that passed 45,222,300 homes and served 45,793,700 revenue generating units (RGUs), consisting of 18,485,200 video subscribers, 14,917,400 broadband internet subscribers and 12,391,100. fixed-line telephony subscribers. In addition, at December 31, 2017, we served 6,448,200 mobile subscribers. Video Services Our video service is, and continues to be, one of the key foundations of our product offerings in our markets. Our cable operations offer multiple tiers of digital video programming and audio services starting with a basic video service.

6 Subscribers to 1. our basic video service pay a fixed monthly fee and receive digital or analog video channels (including a limited number of high definition (HD) channels) and several digital and analog radio channels and an electronic programming guide. In our markets where our basic digital service is unencrypted (Germany, Austria, Poland, Hungary, the Czech Republic and Romania), the cost of our digital service is the same cost as the monthly fee of our analog service. In the markets where we encrypt our basic digital service, our digital service is generally offered at an incremental cost equal to or slightly higher than the monthly fee for our basic analog service. We tailor our video services in each country of operation based on programming preferences, culture, demographics and local regulatory requirements. We also offer a variety of premium channel packages to meet the special interests of our subscribers. For an additional monthly charge, a subscriber may upgrade to one of our extended digital tier services and receive an increased number of video and radio channels, including the channels in the basic tier service and additional HD channels.

7 Digital subscribers may also subscribe to one or more packages of premium channels for an additional monthly charge. Our channel offerings include general entertainment, sports, movies, documentaries, lifestyles, news, adult, children and ethnic and foreign channels. Subscribers to our digital services also receive the channels available through our analog service. We offer limited analog video services in all of our broadband markets, except in the , Germany, Switzerland and Austria. In all of our broadband operations, we continue to upgrade our systems to expand our digital services and encourage our analog subscribers to convert to a digital or premium digital service. Discounts to our monthly service fees are available to any subscriber who selects a bundle of two or more of our services (Bundled services): video, internet, fixed-line telephony and, in certain markets, mobile services. Bundled services consist of double-play for two services, triple-play for three services and, where available, quad-play for four services.

8 To meet customer demands, we have enhanced our video services with various products that enable our customers to control when, where and how they watch their programming. These products range from digital video recorders (DVRs) to multimedia home gateway systems such as "Horizon TV", as well as various mobile applications (apps). Horizon TV is a next generation multimedia home gateway (decoder box) based on a digital television platform that is capable of distributing video, voice and data content throughout the home and to multiple devices. It has a sophisticated user interface that enables customers to view and share, across multiple devices, linear channels, video-on-demand (VoD) programming and personal media content and to pause, replay and record programming. The Horizon TV gateway can act as an internet router that allows access to digital video content available on the television via other devices, such as laptops, smart phones and tablets.

9 For our Horizon TV subscribers, we offer various features and functionalities, including television apps for various online services (such as YouTube, Netflix, social platforms, sports experience, music, news and games). In almost all of our operations, we also offer an online mobile app for viewing on a second screen called Horizon Go . Horizon Go is available on mobile devices (iOS, Android and Windows) and via an internet portal and allows video customers to view linear channels and VoD, with a substantial part of this content available outside of the home. For Horizon TV customers, when in the home the second screen device can act as a remote control. Through Horizon Go, customers have the ability to remotely schedule the recording of a television program on their Horizon TV box at home. We offer Horizon TV in Germany, Switzerland, Austria, Ireland, Poland and the Czech Republic. In several of our other European operations, we provide a Horizon TV-like experience through a remote upgrade of the software on the customer's set- top box.

10 After the upgrade, these boxes offer several features of the Horizon TV product. We refer to this upgrade as Horizon Lite , although it is locally marketed as Horizon TV, except in Belgium where it is marketed as Digital TV . Some of the Horizon TV features are not available on our Horizon Lite systems, such as recommendation-based content and the ability to access video content on other devices in the home. We intend to continue to improve the Horizon TV user experience with new functionality and software updates. In the , we offer a multimedia home gateway based on the TiVo platform under a strategic partnership agreement with TiVo Inc. The TiVo set-top boxes provide television and broadband internet capabilities. In late 2016, we launched a new set-top box in the called the virgin Media v6 box . This device combines ultra high-definition 4K video, including high dynamic range, with improved streaming functionalities and more processing power.