________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

Form 10-Q

________________________



S	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2013



£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 000-50886

________________________

VIRGIN MEDIA INC.

(Exact name of registrant as specified in its charter)

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

(Additional Registrant)

VIRGIN MEDIA INVESTMENTS LIMITED

(Additional Registrant)

________________________

Delaware		5946-~~3778247~~1961563
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)
65 Bleecker Street, 6th Floor, New York, NY		10012
12300 Liberty Boulevard, Englewood, Colorado		80112
(Address of principal executive offices)		(Zip Code)

(~~212~~303) ~~906~~220-~~8440~~6600

(Registrant’s telephone number, including area code)

________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes S No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	S	Accelerated filer	£	Non-accelerated filer	£	Smaller reporting company	£
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No S

AsEffective ofJune ~~May 1~~7, 2013, ~~there~~the ~~were~~registrant ~~270,797,562~~was ~~shares~~acquired by Liberty Global plc. Following completion of the acquisition, there is no public trading in the registrant’'s common stock, ~~par~~and the aggregate market value ~~$0.01~~of ~~per~~voting ~~share,~~common ~~issued~~stock ~~and~~is ~~outstanding~~zero.

The Additional Registrants meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this report with the reduced disclosure format. See “Note Concerning Virgin Media Investment Holdings Limited and Virgin Media Investments Limited” in this Form 10-Q.

Table of Contents

VIRGIN MEDIA INC. - FORM 10-Q - QUARTER ENDED June 30, 2013

FORM 10-Q

QUARTER ENDED March 31, 2013

INDEX

		Page
PART I	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Virgin Media Inc.
	Condensed Consolidated Balance Sheets—March 31, 2013 and December 31, 2012	5
	Condensed Consolidated Balance Sheets—June 30, 2013 and December 31, 2012	5
	Condensed Consolidated Statements of Comprehensive Income —Three Months ended March 31, 2013 and 2012	6
	Condensed Consolidated Statements of Operations—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013, the Three Months Ended June 30, 2012, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	6
	Condensed Consolidated Statements of Cash Flows—Three Months ended March 31, 2013 and 2012	7
	Condensed Consolidated Statements of Comprehensive Earnings—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013, the Three Months Ended June 30, 2012, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	6
	Notes to Condensed Consolidated Financial Statements	8
	Condensed Consolidated Statements of Equity—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013 and the Three Months Ended March 31, 2013	8
	Condensed Consolidated Statements of Cash Flows—For the Period from June 8 to June 30, 2013, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	9
	Notes to Condensed Consolidated Financial Statements	10
	Virgin Media Investment Holdings Limited
	Condensed Consolidated Balance Sheets—March 31, 2013 and December 31, 2012	36
	Condensed Consolidated Balance Sheets—June 30, 2013 and December 31, 2012	63
	Condensed Consolidated Statements of Comprehensive Income — Three Months ended March 31, 2013 and 2012	37
	Condensed Consolidated Statements of Operations—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013, the Three Months Ended June 30, 2012, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	64
	Condensed Consolidated Statements of Cash Flows— Three Months ended March 31, 2013 and 2012	38
	Condensed Consolidated Statements of Comprehensive Earnings—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013, the Three Months Ended June 30, 2012, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	64
	Condensed Consolidated Statements of Equity—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013 and the Three Months Ended March 31, 2013	66
	Condensed Consolidated Statements of Cash Flows—For the Period from June 8 to June 30, 2013, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	67
	Virgin Media Investments Limited
	Condensed Consolidated Balance Sheets— March 31, 2013 and December 31, 2012	39
	Condensed Consolidated Balance Sheets—June 30, 2013 and December 31, 2012	68
	Condensed Consolidated Statements of Comprehensive Income — Three Months ended March 31, 2013 and 2012	40
	Condensed Consolidated Statements of Operations—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013, the Three Months Ended June 30, 2012, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	69
	Condensed Consolidated Statements of Cash Flows— Three Months ended March 31, 2013 and 2012	41
	Condensed Consolidated Statements of Comprehensive Earnings—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013, the Three Months Ended June 30, 2012, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	69
	Condensed Consolidated Statements of Equity—For the Period from June 8 to June 30, 2013, the Period from April 1 to June 7, 2013 and the Three Months Ended March 31, 2013	71
	Condensed Consolidated Statements of Cash Flows—For the Period from June 8 to June 30, 2013, the Period from January 1 to June 7, 2013 and the Six Months Ended June 30, 2012	72
	Virgin Media Investment Holdings Limited and Virgin Media Investments Limited
	Combined Notes to Condensed Consolidated Financial Statements	4273
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	56103
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	73125
Item 4.	Controls and Procedures	76129
PART II	OTHER INFORMATION	76129
Item 1.	Legal Proceedings	76129
Item 1A.	Risk Factors	77130
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78130
Item 3.	Defaults Upon Senior Securities	78130
Item 4.	Mine Safety Disclosures	78130
Item 5.	Other Information	78130
Item 6.	Exhibits	79131
SIGNATURES		81134

In this quarterly report on Form 10-Q, unless we have indicated otherwise, or the context otherwise requires, references to “Virgin Media,” “the Company,” “we,” “us,” “our” and similar terms refer to the consolidated business of Virgin Media Inc. and its subsidiaries (including Virgin Media Investment Holdings Limited, or VMIH, Virgin Media Investments Limited, or VMIL, and their respective subsidiaries).

Table of Contents

~~“Safe~~Merger ~~Harbor”~~with ~~Statement~~Liberty ~~under~~Global, ~~the Private Securities Litigation Reform Act of 1995~~Inc.

~~Various~~On ~~Statements~~February ~~contained~~5, in2013, ~~this~~Liberty ~~document~~Global, ~~constitute~~Inc. ~~“forward-looking~~and ~~statements”~~Virgin asMedia ~~that~~Inc. ~~term~~entered isinto ~~defined~~a ~~under~~merger agreement (the ~~Private Securities Litigation Reform Act of 1995. Words like~~ “~~believe,”~~Merger ~~“anticipate,~~Agreement”). ~~“should,”~~Pursuant ~~“intend,”~~to ~~“plan,”~~the ~~“will,”~~Merger ~~“expects~~Agreement,” ~~“estimates,”~~Liberty ~~“projects~~Global,” ~~“positioned,”~~Inc. ~~“think,” “strategy,”~~ and ~~similar~~Virgin ~~expressions~~Media ~~identify~~Inc. ~~these~~completed ~~forward-looking~~a ~~statements,~~series ~~which~~of ~~involve~~mergers ~~known~~on ~~and~~June ~~unknown risks~~7, ~~uncertainties~~2013 ~~and other factors~~ that ~~may~~resulted ~~cause~~in ~~our~~the ~~actual~~surviving ~~results,~~corporations ~~performance~~in orthe ~~achievements~~mergers or(renamed ~~industry~~Liberty ~~results~~Global, toInc. beand ~~materially~~Virgin ~~different~~Media ~~from~~Inc.) ~~those~~becoming ~~contemplated,~~wholly-owned ~~projected,~~subsidiaries ~~forecasted,~~of ~~estimated~~Liberty orGlobal ~~budgeted,~~plc ~~whether expressed or implied~~(collectively, bythe ~~these~~“Mergers”). ~~forward-looking~~Pursuant ~~statements.~~to ~~These~~the ~~factors,~~terms ~~among~~and ~~others,~~conditions ~~include~~of the ~~following~~Merger Agreement:

• Weeach ~~have~~share ~~entered~~of incommon stock, par value $0.01 per share, of Virgin Media Inc. was converted into the right to receive the following (collectively, the “VMI merger consideration”): (i) 0.2582 of a ~~Merger~~class ~~Agreement~~A ~~with~~ordinary ~~Liberty~~share, ~~Global~~nominal amount (i.e., ~~Inc~~par value) $0.01 per share, orof Liberty Global, ~~which~~plc is(a ~~subject~~“class toA ~~certain~~Liberty ~~conditions~~Global plc share”), ~~and~~(ii) as0.1928 of a ~~result~~class ~~the~~C ~~merger~~ordinary ~~may~~share, ~~not~~nominal beamount ~~consummated;~~(i.e., ~~our~~par ~~operations~~value) $0.01 per share, ~~both~~of ~~before~~Liberty ~~and~~Global ~~after~~plc ~~consummation~~(a of“class ~~the~~C ~~merger,~~Liberty ~~will~~Global beplc ~~impacted~~share”) and (iii) $17.50 in cash, without interest; and

• Weeach ~~operate~~share inof ~~highly~~series ~~competitive~~A ~~markets~~common ~~which~~stock ~~may~~of ~~lead~~Liberty Global, Inc. was converted into the right to areceive ~~decrease~~one inclass ~~our~~A ~~revenue,~~Liberty ~~increased~~Global ~~costs~~plc share, ~~increased~~each ~~customer~~share ~~churn~~of orseries aB ~~reduction~~common instock of Liberty Global, Inc. was converted into the ~~rate~~right to receive one class B ordinary share, nominal amount (i.e., par value) $0.01 per share, of ~~customer~~Liberty ~~acquisition;~~Global plc and each share of series C common stock of Liberty Global, Inc. was converted into the right to receive one class C Liberty Global plc share.

•Liberty ~~The~~Global ~~sectors~~plc inis ~~which~~a wepublic ~~compete~~limited ~~are~~company ~~subject~~organized tounder ~~rapid~~the laws of England and ~~significant~~Wales ~~changes~~and inits ~~technology~~class A, class B and ~~the~~class ~~effect~~C ofordinary ~~technological~~shares ~~changes~~are quoted on ~~our~~the ~~businesses~~NASDAQ ~~cannot~~Global beSelect ~~predicted;~~market under the LBTYA, LBTYB and LBTYK symbols, respectively.

•Basis ~~Adverse economic developments could reduce customer spending for our TV, broadband, and telephony services and increase churn, either~~ of ~~which~~this ~~could~~Quarterly ~~therefore~~Report ~~have a material adverse effect~~ on ~~our~~Form ~~revenue;~~10-Q

•This ~~Our~~quarterly ~~fixed~~report ~~line~~on ~~telephony~~Form ~~revenue~~10-Q includes the consolidated information for Virgin Media Inc. and the surviving corporation in the Mergers, which was renamed Virgin Media Inc. and is ~~declining~~a wholly owned subsidiary of Liberty Global plc. Amounts as of December 31, 2012, and ~~unlikely~~for tothe ~~improve;~~periods ended June 7, 2013 and earlier, reflect the activity, financial position, results of operations, and changes in financial position of the Predecessor (defined and described below), and periods from June 8, 2013, reflect the activity, financial position, results of operations, and changes in financial position of the Successor (defined and described below).

•In Athis ~~failure~~quarterly inreport ~~our~~on ~~network~~Form ~~and~~10-Q ~~information~~unless ~~systems,~~we ~~whether~~have ~~caused~~indicated byotherwise, ~~a natural failure~~ or athe ~~security~~context ~~breach,~~otherwise ~~could significantly disturb our operations~~requires, ~~which~~references ~~could have a material adverse effect on those operations, our business, our results of operations and financial condition;~~to:

• ~~Unauthorized~~The ~~access~~"Successor", toor ~~our~~"Successor ~~network~~financial ~~resulting~~information" inand ~~piracy~~similar ~~could~~terms, ~~result~~represents inthe aconsolidated ~~loss~~business from June 8, 2013 of ~~revenue~~the surviving corporation in the Mergers, which was renamed Virgin Media Inc., a Delaware corporation;

• WeThe ~~rely~~"Predecessor", onor ~~third-party~~"Predecessor ~~suppliers~~financial information" and ~~contractors~~similar toterms, ~~provide~~represents ~~necessary~~the ~~hardware~~consolidated business through June 7, ~~software~~2013 orof ~~operational~~Virgin ~~support~~Media Inc. as existed as a Delaware corporation prior to the Mergers, and ~~are~~until ~~reliant~~June 7, 2013, had its common stock publicly traded in the United States on ~~them~~the NASDAQ Global Select Market and in athe ~~way~~United ~~that~~Kingdom ~~could~~on ~~economically~~the ~~disadvantage~~London usStock Exchange;

• ~~The~~ “Virgin Media”, ~~brand~~the is"Company,” ~~not~~"our ~~under~~company," ~~our~~and ~~control~~similar terms refer to both the pre-merger consolidated business of Virgin Media Inc. and the ~~activities~~post-merger consolidated business of the surviving corporation in the Mergers, which was renamed Virgin ~~Group~~Media Inc., and ~~other~~its ~~licensees~~subsidiaries ~~could~~(including ~~have~~Virgin aMedia ~~material~~Investment ~~adverse~~Holdings ~~effect~~Limited, onor ~~the~~VMIH, ~~goodwill~~Virgin ofMedia ~~customers~~Investments ~~towards~~Limited, usor asVMIL, aand ~~licensee~~their respective subsidiaries);

• ~~Our~~"Liberty ~~inability~~Global", tothe ~~obtain~~"Group", ~~popular~~"our ~~programming~~Parent" orand tosimilar ~~obtain~~terms itrefer atto athe ~~reasonable~~post-merger ~~cost~~consolidated ~~could~~business ~~potentially~~of ~~have~~Liberty aGlobal ~~material~~plc ~~adverse~~and ~~effect~~its ~~on the number of customers or reduce margins~~subsidiaries;

• ~~Our~~"Liberty ~~consumer~~Global, ~~mobile~~Inc.", ~~service~~"LGI", ~~relies~~the on"pre-merger ~~EE's~~Group", ~~network~~and similar terms refer to ~~carry~~the pre-merger consolidated business of Liberty Global, Inc. as existed as a Delaware corporation prior to the Mergers, and until June 7, 2013, had its ~~communications~~common ~~traffic~~stock publicly traded in the United States on the NASDAQ Global Select Market; and

• WeThe doterms ~~not~~“we”, ~~insure the underground portion of~~ “our” ~~cable network~~ and ~~various~~“us” ~~pavement-based~~refers ~~electronics~~to ~~associated~~Virgin ~~with~~Media ~~our~~as ~~cable~~defined ~~network;~~above.

• We are subject to currency and interest rate risks;

• We are subject to tax in more than one tax jurisdiction and our structure poses various tax risks;

• Acquisitions and other strategic transactions present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction;

• Adverse changes in our financial outlook may result in negative or unexpected tax consequences which could adversely affect our net income;

• We are subject to significant regulation, and changes in U.K. and EU laws, regulations or governmental policy affecting the conduct of our business, which may have a material adverse effect on our ability to set prices, enter new markets or control our costs;

• We have substantial indebtedness that may have a material adverse effect on our available cash flow, our ability to obtain additional financing if necessary in the future, our flexibility in reacting to competitive and technological change and our operations;

• We may not be able to fund our debt service obligations in the future;

• The covenants under our debt agreements place certain limitations on our ability to finance future operations and how we manage our business; and

• We are a holding company dependent upon cash flow from subsidiaries to meet our obligations.

These and other factors are discussed in more detail under “Risk Factors” in our annual report filed with the SEC on Form 10-K on February 7, 2013. We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements.

Table of Contents

~~Corporate~~Post-merger ~~Structure~~organizational ~~and~~structure ~~Governance~~relevant to this Form 10-Q

~~Virgin~~The ~~Media~~following ~~Inc.~~chart isshows athe ~~Delaware~~corporate ~~corporation~~structure ~~and~~of ~~its~~Liberty ~~common~~Global ~~stock~~and isthose ~~publicly~~Virgin ~~traded~~Media inentities ~~the~~through ~~United~~which ~~States~~our onprimary ~~the~~operations ~~NASDAQ~~are ~~Global~~conducted. ~~Select~~This ~~Market~~is ~~and~~a incondensed ~~the~~chart ~~United~~and ~~Kingdom~~it ondoes ~~the~~not ~~London~~show ~~Stock~~all ~~Exchange. The primary listing for the shares~~ of our, ~~common~~or ~~stock~~Liberty isGlobal's, ~~the~~operating ~~NASDAQ~~and ~~Global~~other ~~Select~~intermediate ~~Market~~companies.

The following chart shows the corporate structure of Virgin Media through which our primary operations are conducted. This is a condensed chart and it does not show all of our operating and other intermediate companies.



	Liberty Global plc and Intermediate Holding Companies


	Virgin Media Inc. ⁽¹⁾⁽²⁾		Other Liberty Global subsidiaries

	Intermediate Holding Companies ⁽³⁾

	Virgin Media Finance PLC ⁽⁴⁾

	Virgin Media Investment Holdings Limited ⁽⁵⁾

Virgin Media Investments Limited		Virgin Media Secured Finance PLC ⁽⁶⁾

Virgin Media Limited and other Operating Subsidiaries ⁽⁷⁾

	Virgin Media Inc. (1)
	Intermediate Holding Companies (2)
	Virgin Media Finance PLC (3)
	Virgin Media Investment Holdings Limited (4)
Virgin Media Investments Limited		Virgin Media Secured Finance PLC (5)
Virgin Media Limited and other Operating Subsidiaries (6)


(1)	Virgin Media Inc. completed a series of mergers on June 7, 2013 that resulted in the surviving corporation in the mergers (renamed Virgin Media Inc.) becoming a wholly-owned subsidiary of Liberty Global plc.

(12) Issuer of our convertible senior notes.

(23) The entities which we refer to as the intermediate holding companies are Virgin Media Group LLC, Virgin Media Holdings Inc., Virgin Media (UK) Group, Inc. and Virgin Media Communications Limited.

(34) Issuer of our ~~unsecured~~ senior unsecured notes.

(45) Virgin Media Investment Holdings Limited is the principal borrower under our senior credit facility. Substantially all of the assets of Virgin Media Investment Holdings Limited and its subsidiaries secure our senior credit facility and senior secured notes.

(56) Issuer of our senior secured notes.

(67) Virgin Media Limited is one of our principal operating companies, although significant portions of our operations are conducted through other operating subsidiaries.

Note Concerning Virgin Media Investment Holdings Limited and Virgin Media Investments Limited

VMIH is a wholly owned subsidiary of Virgin Media Finance PLC, or VMF, and a wholly owned indirect subsidiary of Virgin Media. VMIL is a wholly owned subsidiary of VMIH. VMIH and VMIL are senior subordinated guarantors of the unsecured senior notes issued by VMF. As the VMIH and VMIL's guarantees are not deemed to be unconditional, separate financial statements for each of VMIH and VMIL have been included in this Form 10-Q pursuant to the rules and regulations of the ~~SEC~~United States Securities and Exchange Commission. VMIH and VMIL are also guarantors of the senior secured notes issued by Virgin Media Secured Finance PLC, or VMSF. VMIH is the principal borrower under Virgin Media's senior credit facility.

VMIH and VMIL carry on the same business as Virgin Media, are not accelerated filers, and are companies incorporated in England and Wales, with their registered office at Media House, Bartley Wood Business Park, Bartley Way, Hook, Hampshire, RG27 9UP, England. Unless otherwise indicated, the discussion contained in this report applies to VMIH and VMIL as well as Virgin Media.

Financial Information and Currency of Financial Statements

All of the financial statements included in this ~~annual~~quarterly report have been prepared in accordance with accounting principles generally accepted in the United States~~, or U~~.~~S. GAAP.~~ The reporting currency of our consolidated financial statements is pounds sterling.

Table of Contents

PART I—FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

VIRGIN MEDIA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited) (in millions, except par value)

	March 31, 2013			December 31, 2012
	Successor				Predecessor (1)
	(unaudited)
	June 30, 2013				December 31, 2012
Assets
Current assets
Cash and cash equivalents	£	~~318~~273.68		£	~~206.3~~£	206.3
Restricted cash	1.95			~~1.9~~	1.9
Accounts receivable - trade, less allowances for doubtful accounts of £10.5 (2013) and £9.0 (2012)	428.0			443.8
Trade receivables, net	416.6				442.7
Derivative financial instruments	7.3			6.1
Deferred income taxes (note 7)	65.5				58.1
Prepaid expenses and other current assets	101.5			103.2
Derivative instruments (note 3)	322.0				36.2
Deferred income taxes	57.8			58.1
Intercompany notes receivable (note 11)	2,357.6				—
Total current assets	915.1			819.4
Intercompany interest receivable and other assets (note 11)	17.7				—
Fixed assets, net	4,485.3			4,512.2
Other current assets	86.0				92.6
Goodwill and other indefinite-lived assets	2,017.5			2,017.5
Total current assets	3,540.7				837.8
Derivative financial instruments	655.9			461.6
Property and equipment, net (note 5)	6,342.4				4,512.2
Deferred financing costs, net of accumulated amortization of £54.3 (2013) and £50.6 (2012)	58.7			61.5
Goodwill (note 2)	5,781.6				2,017.5
Deferred income taxes	2,622.9			2,641.7
Intangible assets subject to amortization, net (note 5)	2,504.0				—
Other assets	51.0			51.2
Derivative instruments (note 3)	289.6				443.0
Total assets	10,806.4			10,565.1
Deferred financing costs, net of accumulated amortization of £2.5 (2013) and £50.6 (2012)	115.3				61.5
Liabilities and shareholders’ equity
Deferred income taxes (note 7)	1,533.2				2,641.7
Current liabilities
Intercompany long term notes receivable	12.3				—
Accounts payable	292.9			349.3
Other assets, net	50.7				51.2
Accrued expenses and other current liabilities	338.4			319.6
Total assets	£	20,169.8			£	10,564.9
Derivative financial instruments	7.1			8.1
Liabilities and equity
VAT and employee taxes payable	98.4			85.5
Current liabilities
Interest payable	94.7			67.7
Accounts payable	£	295.2			£	296.4
Deferred revenue	294.0			316.7
Deferred revenue and advanced payments from subscribers and others	303.9				317.7
Current portion of long term debt	81.6			77.1
Current portion of debt and capital lease obligations (note 6)	192.7				77.1
Total current liabilities	1,207.1			1,224.0
Derivative instruments (note 3)	199.0				29.3
Long term debt, net of current portion	6,029.3			5,852.0
Accrued interest	107.5				60.3
Derivative financial instruments	44.2			101.9
Accrued programming	57.1				53.8
Deferred revenue and other long term liabilities	174.1			168.8
Intercompany notes payable (note 11)	366.0				—
Total liabilities	7,454.7			7,346.7
Intercompany interest and other payables (note 11)	965.4				—
Commitments and contingent liabilities
Other accrued and current liabilities	407.3				402.8
Shareholders’ equity
Total current liabilities	2,894.1				1,237.4
Common stock - $0.01 par value; authorized 1,000.0 (2013 and 2012) shares; issued and outstanding 270.5 (2013) and 269.3 (2012) shares	1.5			1.4
Long-term debt and capital lease obligations (note 6)	8,677.5				5,852.0
Additional paid-in capital	3,677.2			3,658.9
Derivative instruments (note 3)	36.5				88.1
Accumulated other comprehensive loss	(20.9		)	(5.8		)
Deferred income tax liabilities (note 7)	47.9				—
Accumulated deficit	(306.1		)	(436.1		)
Deferred revenue and other long-term liabilities	119.8				169.0
Total shareholders’ equity	3,351.7			3,218.4
Total liabilities	11,775.8				7,346.5
Total liabilities and shareholders’ equity	£	10,806.4		£	10,565.1
Commitments and contingent liabilities (note 12)
Equity
Successor ordinary shares - $0.01 par value; authorized 1,000 shares; issued and outstanding 100 shares	—				—
Predecessor common stock - $0.01 par value; authorized 1,000 (2013 and 2012) shares; issued and outstanding 0 and 269.3, respectively	—				1.4
Additional paid-in capital	8,511.3				3,658.9
Accumulated deficit	(48.9		)		(436.1		)
Accumulated other comprehensive loss	(68.4		)		(5.8		)
Total equity	8,394.0				3,218.4
Total liabilities and equity	£	20,169.8			£	10,564.9

~~See~~ (1) ~~accompanying~~As ~~notes~~retrospectively revised - see note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

VIRGIN MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~OPERATIONS

(3 months ended June 30) (unaudited) (in millions~~, except per share data~~)

	Three months ended March 31,
	Successor				Predecessor
	2013			2012
	Period from June 8 to June 30, 2013				Period from April 1 to June 7, 2013			Three months ended June 30, 2012(1)
Revenue	£	~~1,042~~259.50		£	~~1,006.2~~£	767.7		£	1,026.9
Costs and expenses
Operating costs and expenses:
Operating costs (exclusive of depreciation shown separately below)	427.4			416.9
Operating (other than depreciation and amortization)	112.6				355.6			468.2
Selling, general and administrative expenses	216.6			212.8
Selling, general and administrative (including share-based compensation) (note 9)	56.4				109.8			146.6
Restructuring and other charges	0.4			5.4
Depreciation and amortization	92.7				183.5			246.3
Depreciation	248.3			240.2
Restructuring and other operating items, net	5.4				44.0			(13.8		)
	892.7			875.3
	267.1				692.9			847.3
Operating income	149.8			130.9
Operating income (loss)	(8.1		)		74.8			179.6
Other income (expense)
Non operating income (expense)
Interest expense	(8932.71		)	~~(105.6~~	(67.1	)	)	(98.6		)
Loss on extinguishment of debt	—			(58.6		)
Interest expense to group companies	(3.6		)		—			—
Gain on derivative instruments	103.6			44.5
Interest income and other, net	0.4				0.2			6.0
Foreign currency losses	(2.2		)	(4.4		)
Interest income from group companies	10.7				—			—
Interest income and other, net	0.1			0.3
Gain on debt modification and extinguishment, net	0.6				—			—
Income before income taxes	161.6			7.1
Realized and unrealized gains (losses) on derivative instruments, net (note 3)	120.2				(51.8		)	(20.6		)
Income tax expense	(22.7		)	(0.1		)
Foreign currency transaction gains (losses) net	(23.2		)		0.2			(1.4		)
Net income	138.9			7.0
Earnings (loss) before income taxes	64.9				(43.7		)	65.0
Net income per share amounts
Income tax benefit (expense) (note 7)	(6.5		)		4.6			(0.3		)
Basic earnings per share	£	0.51		£	0.02
Net earnings (loss)	£	58.4			£	(39.1	)	£	64.7
Diluted earnings per share	£	0.46		£	0.02
Dividends per share (in U.S. dollars)	$	0.04		$	0.04
Total comprehensive income	£	123.8		£	11.9

~~See~~ (1) ~~accompanying~~As ~~notes~~retrospectively revised - see note 1.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(3 months ended June 30) (unaudited) (in millions)



	Successor			Predecessor
	Period from June 8 to June 30, 2013			Period from April 1 to June 7, 2013			Three months ended June 30, 2012

Net earnings (loss)	£	58.4		£	(39.1	)	£	64.7
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments	(68.4		)	3.2			(6.6)
Net unrealized gains (losses) on derivatives, net of tax	—			(45.0		)	31.5
Reclassification of derivative losses (gains) to net income, net of tax	—			39.9			(29.3		)
Pension liability adjustment, net of tax	—			0.2			1.2
Other comprehensive loss	(68.4		)	(1.7		)	(3.2		)
Total comprehensive earnings (loss)	£	(10.0	)	£	(40.8	)	£	61.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VIRGIN MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~OPERATIONS

(6 months ended June 30) (unaudited) (in millions)

	Three months ended March 31,
	Successor				Predecessor(1)
	2013			2012
	Period from June 8 to June 30, 2013				Period from January 1 to June 7, 2013			Six months ended June 30, 2012
Operating activities:
Revenue	£	259.0			£	1,810.2		£	2,033.1
Net income	£	138.9		£	7.0
Operating costs and expenses
Adjustments to reconcile net income to net cash provided by operating activities:
Operating (other than depreciation and amortization)	112.6				845.4			949.8
Depreciation	248.3			240.2
Selling, general and administrative (including share-based compensation) (note 9)	56.4				256.1			294.7
Non-cash interest	38.1			17.9
Depreciation and amortization	92.7				432.8			487.3
Share-based compensation	7.5			7.6
Restructuring and other operating items, net	5.4				51.2			(9.2		)
Loss on extinguishment of debt, net of prepayment premiums	—			10.5
	267.1				1,585.5			1,722.6
Unrealized gains on derivative instruments	(104.9		)	(46.5		)
Operating income (loss)	(8.1		)		224.7			310.5
Foreign currency losses (gains)	0.5			(0.7		)
Non operating income (expense)
Income taxes	22.7			1.4
Interest expense	(32.1		)		(156.7		)	(204.2		)
Changes in operating assets and liabilities	(45.1		)	(25.3		)
Interest expense to group companies	(3.6		)		—			—
Net cash provided by operating activities	306.0			212.1
Interest income and other, net	0.4				0.4			6.3
Investing activities:
Interest income from group companies	10.7				—			—
Purchase of fixed and intangible assets	(174.4		)	(184.1		)
Gain (loss) on debt modification and extinguishment, net	0.6				(0.1		)	(58.6		)
Proceeds from sale of fixed assets	1.5			0.9
Realized and unrealized gains on derivative instruments, net (note 3)	120.2				51.8			23.9
Acquisitions, net of cash acquired	—			(0.6		)
Foreign currency transaction losses, net	(23.2		)		(2.1		)	(5.8		)
Disposal of equity investments, net	—			(2.5		)
Earnings before income taxes	64.9				118.0			72.1
Net cash used in investing activities	(172.9		)	(186.3		)
Income tax expense (note 7)	(6.5		)		(18.1		)	(0.4		)
Financing activities:
Net earnings	£	58.4			£	99.9		£	71.7
New borrowings, net of financing fees	—			315.9
Repurchase of common stock	—			(157.3		)
Proceeds from employee stock option exercises, net of taxes reimbursed	9.6			(2.1		)
Principal payments on long term debt	(1.5		)	(314.1		)
Principal payments on capital leases	(22.6		)	(21.3		)
Proceeds from settlement of cross-currency interest rate swaps	—			2.3
Dividends paid	(7.1		)	(7.0		)
Net cash used in financing activities	(21.6		)	(183.6		)
Effect of exchange rate changes on cash and cash equivalents	0.8			(1.5		)
Increase (decrease) in cash and cash equivalents	112.3			(159.3		)
Cash and cash equivalents, beginning of period	206.3			300.4
Cash and cash equivalents, end of period	£	318.6		£	141.1
Supplemental disclosure of cash flow information
Cash paid during the period for interest, exclusive of amounts capitalized	£	53.2		£	90.9
Income taxes paid	£	—		£	—

~~See~~ (1) ~~accompanying~~As ~~notes~~retrospectively revised - see note 1.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(6 months ended June 30) (unaudited) (in millions)



	Successor			Predecessor
	Period from June 8 to June 30, 2013			Period from January 1 to June 7, 2013			Six months ended June 30, 2012

Net earnings	£	58.4		£	99.9		£	71.7
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments	(68.4		)	(9.8		)	2.9
Net unrealized gains (losses) on derivatives, net of tax	—			66.8			(34.9)
Reclassification of derivative losses (gains) to net income, net of tax	—			(74.4		)	32.5
Pension liability adjustment, net of tax	—			0.6			1.2
Other comprehensive earnings (loss)	(68.4		)	(16.8		)	1.7
Total comprehensive earnings (loss)	£	(10.0	)	£	83.1		£	73.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VIRGIN MEDIA INC.

~~NOTES TO THE~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS OF EQUITY

(unaudited) (in millions)

Note 1—Basis of Presentation



						Accumulated Other Comprehensive Earnings (Loss)
	Common Stock $0.01 Par Value		Additional Paid-In Capital			Foreign Currency Translation			Pension Liability Adjustments			Net (Losses) Gains on Derivatives			Accumulated Deficit			Total equity
Predecessor
Balance, January 1, 2013	£	1.4	£	3,658.9		£	161.2		£	(98.5	)	£	(68.5	)	£	(436.1	)	£	3,218.4
Net earnings	—		—			—			—			—			138.9			138.9
Other comprehensive earnings, net of taxes:
Foreign currency translation adjustments	—		—			(13.0		)	—			—			—			(13.0		)
Net gains on derivatives, net of tax	—		—			—			—			111.8			—			111.8
Reclassification of derivative gains to net earnings, net of tax	—		—			—			—			(114.3		)	—			(114.3		)
Pension liability adjustment, net of tax	—		—			—			0.4			—			—			0.4
Exercise of stock options and tax effect	0.1		9.6			—			—			—			—			9.7
Conversion of debt into equity	—		(0.7		)	—			—			—			—			(0.7		)
Repurchase of common stock	—		1.8			—			—			—			(1.8		)	—
Share-based compensation	—		7.6			—			—			—			—			7.6
Dividends paid	—		—			—			—			—			(7.1		)	(7.1		)
Balance, March 31, 2013	£	1.5	£	3,677.2		£	148.2		£	(98.1	)	£	(71.0	)	£	(306.1	)	£	3,351.7
Net loss	—		—			—			—			—			(39.1		)	(39.1		)
Other comprehensive earnings, net of taxes:
Foreign currency translation adjustments	—		—			3.2			—			—			—			3.2
Net losses on derivatives, net of tax	—		—			—			—			(45.0		)	—			(45.0		)
Reclassification of derivative losses to net loss, net of tax	—		—			—			—			39.9			—			39.9
Pension liability adjustment, net of tax	—		—			—			0.2			—			—			0.2
Exercise of stock options and tax effect	—		12.0			—			—			—			—			12.0
Share-based compensation	—		4.3			—			—			—			—			4.3
Dividends paid	—		—			—			—			—			(7.1		)	(7.1		)
Balance, June 7, 2013	£	1.5	£	3,693.5		£	151.4		£	(97.9	)	£	(76.1	)	£	(352.3	)	£	3,320.1


Successor
Balance, June 8, 2013	£	—	£	6,147.3		£	—		£	—		£	—		£	(107.3	)	£	6,040.0
Net earnings	—		—			—			—			—			58.4			58.4
Foreign currency translation adjustments	—		—			(68.4		)	—			—			—			(68.4		)
Capital contribution from parent	—		2,343.2			—			—			—			—			2,343.2
Share-based compensation	—		20.8			—			—			—			—			20.8
Balance, June 30, 2013	£	—	£	8,511.3		£	(68.4	)	£	—		£	—		£	(48.9	)	£	8,394.0

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information and the rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2013 are ~~not~~an ~~necessarily~~integral ~~indicative~~part of ~~the~~these ~~results~~condensed ~~that may be expected for the year ending December 31, 2013. For further information, refer to the~~ consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2012, which we filed with the SEC on February 7, 2013, and which we refer to herein as the 2012 Annual Report.

Proposed merger with Liberty Global, Inc.

On February 5, 2013, we entered in to an Agreement and Plan of Merger, or Merger Agreement, with Liberty Global, Inc., or Liberty Global, and certain of its direct or indirect wholly owned subsidiaries, or the Merger Subsidiaries. As the merger has not yet been consummated, we have not modified our accounting to consider the potential effects on certain arrangements that may arise upon consummation, including those relating to long term debt, derivative financial instruments and stock based compensation plans.

For more information on the proposed merger, see Note 3 - Proposed Merger with Liberty Global, Inc.

Adjustment of December 31, 2012 Balance Sheet

Subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2012, we discovered that the reported amount of our deferred income tax assets as of December 31, 2012 and the reported income tax benefit for the year ended December 31, 2012 were understated by £60.8 million. This understatement was principally caused by an error in the calculation of our deferred tax assets relating to arrangements that we account for as capital leases.

Following the provisions of Staff Accounting Bulletin No. 99, including an analysis of quantitative and qualitative factors, we determined that the understatement was not material to the consolidated financial statements as of and for the year ended December 31, 2012. However, if the adjustments to correct the understatement of our deferred income tax assets had been recorded in the three months ended March 31, 2013, we believe the impact would have been significant to that period. Therefore, following the provisions of Staff Accounting Bulletin No. 108, we have determined that it is appropriate to correct the error to the consolidated financial statements as of and for the year ended December 31, 2012 by correcting the previously issued financial statements in the financial statements as of and for the year ending December 31, 2013, beginning with the condensed consolidated financial statements for the three months ended March 31, 2013.

The December 31, 2012 condensed consolidated balance sheets included in this Quarterly Report on Form 10-Q reflect the correction of this understatement by increasing the previously reported amounts of our total deferred tax assets, total assets and total shareholders' equity by £60.8 million and by decreasing the previously reported amount of accumulated deficit by £60.8 million. Prior to the fourth quarter of 2012, we maintained a full valuation allowance on our deferred income tax assets. If we had not understated our deferred income tax assets in periods prior to the fourth quarter of 2012, we would have increased the valuation allowance on those deferred income tax assets by a corresponding amount, resulting in no net impact on the consolidated balance sheets or statements of comprehensive income. Therefore, there will be no changes to the 2012 statements of comprehensive income for periods prior to the fourth quarter of 2012 until we produce our financial statements for the year ending December 31, 2013, at which time we will increase the income tax benefit, income from continuing operations, net income and comprehensive income for the year ended December 31, 2012 by £60.8 million. In addition, basic and diluted earnings per share for the year ended December 31, 2012 will be increased by £0.22 per share and £0.18 per share, respectively. The correction will have no impact on the total cash flows from operating, investing or financing activities previously reported in Virgin Media's consolidated statement of cash flows for the year ended December 31, 2012.

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VIRGIN MEDIA INC.

~~NOTES TO THE~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS ~~(continued)~~OF CASH FLOWS

(unaudited) (in millions)

Note 2—Recent Accounting Guidance



	Successor			Predecessor ⁽¹⁾
	Period from June 8 to June 30, 2013			Period from January 1 to June 7, 2013				Six months ended June 30, 2012
Cash flows from operating activities:
Net earnings	£	58.4		£	99.9			£	71.7
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Share-based compensation expense	23.2			22.1				17.0
Depreciation and amortization	92.7			432.8				487.3
Restructuring and other operating items, net	5.4			51.2			—	(9.2		)
Amortization of deferred financing costs and non-cash interest accretion	1.8			14.7				18.1
Losses (gains) on debt modification and extinguishment, net	(0.6		)	0.1				58.6
Realized and unrealized gains on derivative instruments, net	(120.2		)	(51.8		)		(23.9		)
Foreign currency transaction losses, net	23.2			2.1				5.8
Deferred income tax expense	6.4			17.2				—
Changes in operating assets and liabilities	(140.3		)	(0.2		)		(129.7		)
Net cash provided (used) by operating activities	(50.0		)	588.1				495.7
Cash flows from investing activities:
Purchase of fixed and intangible assets	(38.3		)	(313.4		)		(368.6		)
Loan to related party	(2,290.6		)	—				—
Other	—			4.1				(1.4		)
Net cash used by investing activities	(2,328.9		)	(309.3		)		(370.0		)
Cash flows from financing activities:
Borrowings of debt	1,983.4			—				419.1
Repayments and repurchases of debt and capital lease obligations	(3,945.2		)	(46.5		)		(364.3		)
Repayments of related party notes	(467.5		)	—				—
Release of restricted cash from escrow	2,313.6			—				—
Cash held by subsidiaries contributed to or merged into Virgin Media after acquisition	107.7			—				—
Capital contribution from parent undertaking	2,290.6			—				—
Payment of financing costs and debt premiums	(63.8		)	(1.1		)		(51.6		)
Other financing activities	(10.2		)	8.7				(231.5		)
Net cash provided (used) by financing activities	2,208.6			(38.9		)		(228.3		)
Effect of exchange rate changes on cash and cash equivalents	(3.0		)	0.9				(6.9		)
Net increase (decrease) in cash and cash equivalents	(173.3		)	240.8				(109.5		)
Cash and cash equivalents:
Beginning of period	447.1			206.3				300.4
End of period	£	273.8		£	447.1			£	190.9
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	£	72.4		£	102.9			£	207.2
Income taxes paid	£	—		£	0.1			£	—

~~On January~~ (1,) ~~2013,~~As weretrospectively ~~adopted~~revised ~~the~~- ~~FASB's~~see ~~new~~note ~~guidance regarding the presentation of amounts reclassified from other comprehensive income to net income in the notes to the financial statements~~1. ~~This guidance did not have a material impact on our financial statements.~~

OnThe ~~January~~accompanying 1,notes ~~2013, we adopted the FASB's new guidance regarding the presentation of certain derivatives that~~ are ~~either offset or subject to~~ an ~~enforceable~~integral ~~master~~part ~~netting~~of ~~arrangement.~~these ~~This~~condensed ~~guidance~~consolidated ~~did not have a material impact on our~~ financial statements.

Note 3—Proposed Merger with Liberty Global, Inc.

Merger agreement with Liberty Global, Inc.

On February 5, 2013, we entered into the Merger Agreement with Liberty Global and the Merger Subsidiaries. Under the terms of the Merger Agreement, we have agreed, through a series of intermediate steps and transactions, to be acquired by Liberty Global and merge into one of the Merger Subsidiaries. If consummated, the merger will result in both Liberty Global and Virgin Media becoming directly owned by a new U.K. public limited company, or the Ultimate Parent, listed on NASDAQ, the common stock of which will in turn be held by Liberty Global and Virgin Media Shareholders. We will continue to operate under the Virgin Media brand in the U.K.

Under the Merger Agreement, we have agreed to use our reasonable best efforts to carry on our business consistent with past practice and preserve intact our business organization and commercial goodwill from the date of the Merger Agreement until either the merger is consummated or the Merger Agreement is terminated. In addition, during this period we have undertaken covenants that place certain restrictions on us, and our subsidiaries', ability to, among other things, dispose of material properties or assets, make unbudgeted capital expenditures, acquire substantial assets, make substantial investments, increase the salary of certain of our employees or directors, pay certain bonuses or incentive compensation, grant new equity or non-equity based compensation awards, hire new employees, redeem common stock or other equity interests, declare or pay dividends or make other distributions in respect of our capital stock, other than a quarterly dividend of up to $0.04 per share, incur or otherwise become liable for material indebtedness, enter into certain transactions with related parties or enter into new material contracts, in each case, other than in the ordinary course of business, pursuant to certain exceptions and baskets set forth in the Merger Agreement or unless Liberty Global consents in writing to the taking of any such action. If we fail to comply with these restrictions in all material respects, unless waived by Liberty Global, the Merger Agreement could be terminated or the merger not consummated.

On April 15, 2013, the merger was granted unconditional European Union, or EU, regulatory approval to proceed. The consummation of the merger is still subject to the affirmative approval of our shareholders and those of Liberty Global, and other customary closing conditions. The shareholder meetings for Virgin Media and Liberty Global to consider and vote to approve the Merger Agreement and related transactions are currently scheduled to occur on June 4, 2013 and June 3, 2013, respectively. In addition, the Merger Agreement will terminate if, prior to the consummation of the merger, we enter into an acquisition agreement with respect to a superior proposal and pay an applicable termination fee of up to $470 million, or if the merger is not consummated on or prior to October 5, 2013, which is the eight month anniversary of the date of signature of the Merger Agreement, or January 5, 2014 if extended for certain reasons to the eleven month anniversary. The Merger Agreement also includes certain other events of termination and certain other termination fee and expense provisions.

At the effective time of the merger, pursuant to the Merger Agreement, each share of our common stock issued and outstanding immediately prior to the effective time (excluding shares held by ourselves or our subsidiaries in treasury and dissenting shares in accordance with Delaware law) will be converted into the right to receive (i) 0.2582 Series A shares of the Ultimate Parent, (ii) 0.1928 Series C shares of the Ultimate Parent and (iii) $17.50 per share in cash. Based on our fully-diluted shares outstanding of 335 million as of December 31, 2012, we expect that our shareholders will own approximately 36% of the shares outstanding of the Ultimate Parent and have approximately 26% of the voting rights.

We expect that Liberty Global will finance a portion of the merger consideration from its own cash reserves and by raising bank debt and accessing the capital markets, which, if the merger is consummated, will, together with debt

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(continued)~~

(unaudited)

Note 31—~~Proposed~~Basis ~~Merger~~of ~~with Liberty Global, Inc. (continued)~~Presentation

~~raised~~Merger towith ~~replace~~Liberty ~~certain of our existing facilities~~Global, ~~be assumed by us and result in an increase to our overall level of debt~~Inc.

~~Financing~~On ~~implications~~February of5, ~~the~~2013, Liberty Global, Inc. and Virgin Media Inc. entered into a merger agreement (the “Merger Agreement”). Pursuant to the Merger Agreement, Liberty Global, Inc. and Virgin Media Inc. completed a series of mergers on ~~our~~June ~~existing~~7, ~~debt~~2013 that resulted in the surviving corporations in the mergers (renamed Liberty Global, Inc. and Virgin Media Inc.) becoming wholly-owned subsidiaries of Liberty Global plc (collectively, the “Mergers”). For further information, see note 2.

~~Consummation~~In ofconnection ~~the~~with ~~merger would represent a change of control event under~~ the ~~terms~~execution of the ~~relevant~~Merger ~~indentures of all of the senior secured notes and senior notes issued by our wholly owned subsidiaries Virgin Media Secured Finance PLC~~Agreement, orwe ~~VMSF,~~entered ~~and~~into ~~Virgin~~various ~~Media~~debt ~~Finance~~financing ~~PLC, or VMF, and obligate us to offer the noteholders the right to put their notes back to us at 101% of the principal amount plus accrued interest~~arrangements. AtFor ~~the~~further ~~request of Liberty Global~~information, onsee ~~February~~note 6, 2013, VMSF and VMF commenced consent solicitations in respect of some of these notes for the noteholders to preemptively waive this obligation and to seek consents to effect certain other proposed amendments in relation to the merger. Holders of our dollar-denominated 6.50% senior secured notes due 2018, sterling-denominated 7.00% senior secured notes due 2018, dollar-denominated 8.375% senior notes due 2019 and sterling-denominated 8.875% senior notes due 2019 granted consent to preemptively waive this obligation. Holders of our dollar-denominated 5.25% senior secured notes due 2021 and sterling-denominated 5.50% senior secured notes due 2021, collectively the 2021 Notes, did not grant consent to preemptively waive this obligation and therefore we will be required to make an offer to repurchase these notes within 30 days of the consummation of the merger.

WePresentation ~~have~~of ~~not~~Predecessor ~~solicited consents in relation to our dollar-denominated 5.25% senior notes due 2022, our dollar-denominated 4.875% senior notes due 2022~~ and ~~our~~Successor ~~sterling-denominated~~financial ~~5.125% senior notes due 2022, collectively the 2022 Notes, and will be required to make an offer to repurchase these notes within 30 days of the consummation of the merger.~~information

OnThe ~~May~~consolidated 3business of Virgin Media Inc. as existed as a Delaware Corporation prior to the Mergers, ~~2013~~or the "Predecessor", weis ~~launched~~considered to ~~holders~~be a ~~notice~~Predecessor ofcompany ~~change~~to the consolidated business of ~~control~~the ~~and~~surviving ~~offer~~corporation toin ~~purchase~~the ~~our~~Merger, ~~2021~~which ~~and~~was ~~2022~~renamed Virgin Media Inc., or the "Successor".

~~Notes,~~As ~~which~~a ~~will~~result ~~remain~~of ~~open~~Liberty ~~until~~Global's ~~11:59~~push-down ~~p.m.~~of ~~New~~its ~~York~~investment ~~City~~basis ~~time~~in onVirgin ~~June~~Media 7,arising ~~2013~~from the Mergers, ~~unless~~a ~~the~~new ~~offer~~basis isof ~~extended~~accounting orwas ~~terminated~~created on June 7, 2013.

~~Upon~~In ~~consummation~~this ofquarterly ~~the~~report ~~merger~~on ~~our~~Form ~~convertible~~10-Q, ~~notes~~amounts ~~will~~as ~~have~~of ~~the~~December ~~right~~31, to2012, ~~convert~~ and ~~receive~~for the ~~same~~periods ~~consideration~~ended ~~that~~June is7, ~~received~~2013 inand earlier, reflect the ~~merger~~activity, asfinancial ~~the~~position, ~~holders~~results of ~~our~~operations, ~~Common~~and ~~Stock. We~~changes ~~will~~in ~~also~~financial beposition ~~required~~of tothe ~~offer~~Predecessor, and the ~~convertible~~period ~~note~~from ~~holders~~June ~~the~~8, ~~right~~2013 toreflects ~~put~~the ~~their~~activity, ~~notes~~financial atposition, ~~100%~~results of ~~the~~operations, ~~principal~~and ~~amount~~changes ~~plus~~in ~~accrued~~financial ~~interest~~position of the Successor.

~~Note 4—Long~~Successor ~~Term~~periods ~~Debt~~are not comparable to Predecessor periods primarily due to:

If(i) ~~the~~The ~~trading~~application ~~price~~ of ~~our common stock exceeds 120% of~~ the ~~conversion~~acquisition ~~price~~method of ~~our~~accounting ~~6.50%~~(see ~~convertible~~note ~~senior notes due 2016~~2), ~~or the Convertible Notes, for 20 out~~ of ~~the~~which ~~last 30 trading days of a calendar quarter, holders of~~ the ~~convertible~~most ~~notes~~significant ~~may~~implications ~~elect~~are to convert their convertible notes during the following quarter. This condition was achieved in the three months ended March 31, 2013. If conversions of this nature occur, we may deliver cash, common stock, or (a) ~~combination~~increased ofdepreciation ~~both~~expense, at(b) ~~our~~increased ~~election,~~amortization toexpense ~~settle our obligations. We have classified this debt as long-term debt in the condensed consolidated balance sheet as of March 31, 2013 because we determined, in accordance with the Derivatives~~ and ~~Hedging Topic of the FASB ASC, that we have the ability to settle the obligations in equity in all circumstances, except in the case of a fundamental change~~ (asc) ~~defined~~increased inshare-based ~~the~~compensation ~~indenture governing the convertible notes).~~expense;

~~Long~~(ii) ~~term~~conforming ~~debt~~accounting ~~repayments~~policy changes, ~~excluding~~primarily ~~capital~~to ~~leases,~~align asto Liberty Global's accounting policy for the recognition of ~~March 31,~~installation ~~2013,~~fees ~~were~~associated ~~due~~with customers in the Business segment as ~~follows~~discussed (later in ~~millions):~~ this note; and

Year ending March 31:
2014	£	—
2015	—
2016	750.0
2017	656.8
2018	1,532.5
Thereafter	2,886.2
Total debt payments	£	5,825.5

(iii) additional interest expense associated with debt financing arrangements entered into in connection with the Mergers and subsequently pushed down to the Successor's balance sheet (see note 6).

Operating results for the Successor period from June 8 to June 30, 2013 and the Predecessor period from January 1 to June 7, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. These unaudited condensed consolidated financial statements should be read in conjunction with the Predecessor's 2012 consolidated financial statements and notes thereto included in the Predecessor's 2012 Annual Report on Form 10-K/A.

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and with the instructions to Securities Exchange Commission, or "SEC", Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or SEC rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The reporting currency of our consolidated financial statements is pounds sterling.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 51—~~Fair~~Basis ~~Value~~of ~~Measurements~~Presentation (continued)

~~Fair~~The ~~value~~preparation isof ~~defined~~financial asstatements ~~the~~in ~~price~~conformity ~~that~~with ~~would~~GAAP berequires ~~received~~management to ~~sell~~make anestimates ~~asset~~and orassumptions ~~paid~~that toaffect ~~transfer~~the areported ~~liability~~amounts inof anassets ~~orderly~~and ~~transaction~~liabilities ~~between~~at ~~market~~the ~~participants~~date atof the ~~measurement~~financial ~~date.~~statements ~~The~~and ~~types~~the reported amounts of ~~inputs~~revenue and expenses during the reporting period. Estimates and assumptions are used toin ~~measure~~accounting for, among other things, the valuation of acquisition-related assets and liabilities, allowances for uncollectible accounts, deferred income taxes and related valuation allowances, loss contingencies, fair value ~~are~~measurements, ~~classified~~impairment ~~into~~assessments, ~~the~~capitalization ~~following~~of ~~hierarchy:~~internal costs associated with construction and installation activities, useful lives of long-lived assets, share-based compensation and actuarial liabilities associated with our defined benefit plans. Actual results could differ from those estimates.

Level 1		Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2		Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3		Unobservable inputs for the asset or liability

Unless otherwise indicated, convenience translations into pounds sterling are calculated as of June 30, 2013.

WeAlignment ~~endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level~~ of ~~input~~accounting ~~that is significant to the fair value measurement.~~policies

The ~~tables~~Predecessor ~~below~~and ~~present~~Successor ~~our~~consolidated ~~assets~~financial ~~and~~statements ~~liabilities~~have ~~measured~~been atprepared ~~fair~~in ~~value~~accordance aswith ~~of March 31~~GAAP, ~~2013~~although ~~and~~certain ~~December 31,~~differences ~~2012,~~exist ~~aggregated~~when bycomparing the ~~level~~Predecessor's inand Successor's application of GAAP, with the ~~fair~~primary ~~value~~difference ~~hierarchy~~relating ~~into~~to ~~which~~installation ~~those~~fees ~~measurements~~from ~~fall~~customers (in ~~millions):~~the Business segment as set out in the following paragraphs.

	March 31, 2013
	Level 1		Level 2		Level 3		Total
Assets
Derivative financial instruments, excluding conversion hedges	£	—	£	241.9	£	—	£	241.9
Conversion hedges	—		—		421.3		421.3
Total	£	—	£	241.9	£	421.3	£	663.2
Liabilities
Derivative financial instruments	£	—	£	51.3	£	—	£	51.3
Total	£	—	£	51.3	£	—	£	51.3

On June 8, 2013, the Successor adopted Liberty Global's accounting policy for installation fees relating to revenue arrangements with customers in the Business segment involving both installation services and an ongoing service provision. The Predecessor generally treated installation fees received from customers in the Business segment as a separate deliverable and recognized revenue upon completion of the installation activity in an amount that was based on the relative standalone selling price methodology. The Successor's accounting policy is to generally defer upfront installation fees received from customers in the Business segment and recognize the associated revenue over the contractual term of the arrangement. The following table presents the amount of installation revenue recognized by the Predecessor that would have been deferred under Liberty Global's accounting policy in the indicated periods (in millions):

	December 31, 2012
Predecessor period
	Level 1		Level 2		Level 3		Total
Three months ended March 31, 2012	£	12.0
Assets
Three months ended June 30, 2012	£	12.1
Derivative financial instruments, excluding conversion hedges	£	—	£	165.3	£	—	£	165.3
Three months ended March 31, 2013	£	16.2
Conversion hedges	—		—		302.4		302.4
April 1, 2013 - June 7, 2013	£	9.3
Total	£	—	£	165.3	£	302.4	£	467.7
Liabilities
Derivative financial instruments	£	—	£	110.0	£	—	£	110.0
Total	£	—	£	110.0	£	—	£	110.0

~~Derivative~~The ~~financial~~following ~~instruments~~table provides a rollforward of the Successor's deferred revenue for installation services provided to customers in the Business segment in the period from June 8, ~~excluding~~2013 ~~conversion~~through ~~hedges~~June 30, 2013. The balance as of June 8, 2013 excludes any amounts that were included in the condensed consolidated balance sheet as of June 7, 2013 (in millions):

As a result of our financing activities, we are exposed to market risks from changes in interest and foreign currency exchange rates, which may adversely affect our operating results and financial position. When deemed appropriate, we minimize our risks from interest and foreign currency exchange rate fluctuations through the use of derivative financial instruments such as foreign currency forward rate contracts, interest rate swaps and cross-currency interest rate swaps. These contracts are valued using internal models based on observable inputs, counterparty valuations, or market transactions in either the listed or over-the-counter markets and are adjusted for non-performance risk. As such, these derivative instruments are classified within level 2 of the fair value hierarchy.



Balance at June 8, 2013	£	—
Amounts deferred for completed installation services^(a)	5.4
Amortization of deferred revenue over contract life	(0.2		)
Balance at June 30, 2013	£	5.2

~~The~~(a) ~~fair~~Represents ~~values~~amounts ofthat ~~our~~would ~~derivative~~have ~~financial~~been ~~instruments~~recognized ~~are~~as ~~disclosed~~installation inrevenue ~~Note 6~~under -the ~~Derivative~~Predecessor's ~~Financial~~accounting ~~Instruments~~policy ~~and~~but ~~Hedging~~were ~~Activities~~deferred under the Successor's accounting policy.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 51—~~Fair~~Basis ~~Value~~of ~~Measurements~~Presentation (continued)

~~Conversion~~Presentational ~~hedges~~ reclassifications

~~During~~Certain ~~2010,~~amounts we entered into capped call option transactions, or conversion hedges, relating to our convertible notes, with certain counterparties. The conversion hedges are intended to offset a portion of the dilutive effects that could potentially be associated with conversion of the convertible notes at maturity and ~~provide~~captions usincluded ~~with the option to receive the number of shares of our common stock (or~~ in ~~certain circumstances cash) with a value equal to~~ the ~~excess~~Predecessor's ofconsolidated ~~(a) the~~financial ~~value~~statements ~~owed~~have bybeen usreclassified ~~(up~~ to ~~the~~conform ~~cap price of $35.00 per share)~~ to ~~convertible notes investors pursuant to~~ the ~~terms~~presentation of ~~the~~Liberty ~~notes on conversion of up to 90% of the notes over (b) the aggregate face amount of such converted notes upon maturity of the convertible notes~~Global. The conversion hedges also provide various mechanisms for settlement in our common stock and/or cash in certain circumstances, based primarily on the settlement method elected for the notes. These conversion hedges have an initial strike price of $19.22 per share of our stock, which is the conversion price provided under the terms of our convertible notes, and a cap price of $35.00 per share of our stock. We paid £205.4 million in respect of the conversion hedges during 2010. The cost of these transactions was not deductible for U.S. federal income tax purposes, and the proceeds, if any, received upon exercise of the options will not be taxable for U.S. federal income tax purposes.

~~The~~Significant ~~conversion~~reclassifications ~~hedges~~include ~~may~~reclassifications ~~only~~between beoperating ~~exercised~~costs byand ~~us upon maturity of the convertible notes~~selling, ~~except~~general ~~under~~and aadministrative ~~limited~~expenses ~~number~~on ofthe ~~circumstances.~~statement As of ~~March 31,~~operations ~~2013,~~for the ~~fair~~three ~~value~~and ofsix ~~these~~months ~~instruments~~ended ~~was~~June ~~estimated~~30, ~~to be £421.3 million~~2012, ~~using~~and the ~~Black-Scholes~~reclassification ~~Merton valuation technique. The fair values~~ of ~~the~~premiums ~~conversion~~paid ~~hedges are impacted by the price of our stock~~ on ~~the~~debt ~~measurement~~redemptions ~~date,~~from ~~the~~net ~~remaining~~cash ~~duration~~provided ofby ~~the~~operating ~~options,~~activities ~~the~~to ~~strike~~net ~~price~~cash ~~($19.22~~used ~~per~~in ~~share)~~financing ofactivities ~~the~~in ~~instrument,~~ the ~~expected~~statement ~~volatility~~ of ~~our~~cash ~~stock,~~flows ~~the~~for ~~cap price ($35.00 per share) of~~ the ~~instrument,~~six ~~the~~months ~~dividend~~ended ~~yield~~June ~~on our stock~~30, ~~exchange rates, and counterparty non-performance risk~~2012. ~~The table below presents the estimated impact on the March 31, 2013 fair value of a hypothetical 20% increase and decrease in our stock price, holding all other inputs constant (in millions):~~

	March 31, 2013
Estimated fair value of conversion hedges as reported	£	421.3
Estimated fair value of conversion hedges assuming a 20% increase in our stock price	£	433.1
Estimated fair value of conversion hedges assuming a 20% decrease in our stock price	£	385.5

Adjustment of December 31, 2012 Balance Sheet

WeIn ~~have determined that~~ the ~~overall~~three ~~valuation~~months ofended ~~the~~March ~~conversion~~31, ~~hedges~~2013, ~~falls~~and ~~within~~subsequent ~~level~~to 3the filing of the ~~fair~~Predecessor's ~~value~~Annual ~~hierarchy~~Report ason ~~the~~Form ~~assumption~~10-K/A for the ~~expected~~year ~~volatility~~ended ofDecember ~~our~~31, ~~stock~~2012, ~~price over~~ the ~~term~~Predecessor ofdiscovered that the ~~options~~reported isamount ~~based~~of onits andeferred ~~unobservable~~income ~~input~~tax ~~and~~assets isas ~~deemed to be significant to the determination~~ of ~~fair~~December ~~value.~~31, ~~Other~~2012 ~~impacts are not significant or are observable. We utilized expected volatility assumptions of 21%~~ and ~~33% in~~ the ~~valuation~~reported ofincome ~~each~~tax ~~component~~benefit offor the ~~conversion~~year ~~hedges~~ended asDecember ~~of March~~ 31, ~~2013.~~2012 Anwere ~~increase~~understated inby ~~this~~£60.8 ~~input~~million. inThis ~~isolation~~understatement ~~would~~was ~~generally~~principally ~~result~~caused inby aan ~~lower~~error ~~value~~in of the ~~conversion~~calculation ~~hedges whilst a decrease in this input would result in a higher value~~ of the ~~conversion~~Predecessor's ~~hedges.~~deferred ~~Non-performance~~tax ~~risk~~assets isrelating ~~based~~to onarrangements ~~quoted~~that ~~credit~~we ~~default~~account ~~swaps~~ for ~~counterparties to the contracts. The inclusion of counterparty non-performance risk resulted in a decrease to the fair values of the conversion hedges of £18.1 million and £13.7 million~~ as ofcapital ~~March 31, 2013 and December 31, 2012, respectively~~leases.

~~The~~Following ~~following~~the ~~table~~provisions ~~presents~~of aSEC ~~reconciliation~~Staff Accounting Bulletin, or "SAB", No. 99, including an analysis of quantitative and qualitative factors, the ~~beginning~~Predecessor determined that the understatement was not material to the consolidated financial statements as of and ~~ending~~for ~~balances~~the year ended December 31, 2012. However, if the adjustments to correct the understatement of its deferred income tax assets had been recorded in the ~~conversion~~three ~~hedges~~months (ended March 31, 2013, the Predecessor believed the impact would have been significant to that period. Therefore, following the provisions of SEC SAB No. 108, the Predecessor determined that it was appropriate to correct the error to the consolidated financial statements as of and for the year ended December 31, 2012 by correcting the previously issued financial statements in ~~millions):~~the financial statements as of and for the year ending December 31, 2013, beginning with the condensed consolidated financial statements for the three months ended March 31, 2013.

Balance at December 31, 2012	£	302.4
Unrealized gain included in gain on derivative instruments	97.3
Unrealized currency translation adjustment included in other comprehensive income	21.6
Balance at March 31, 2013	£	421.3

The December 31, 2012 condensed consolidated balance sheets included in this quarterly report on Form 10-Q reflect the correction of this understatement by increasing the previously reported amounts of the Predecessor's total deferred tax assets, total assets and total shareholders' equity by £60.8 million and by decreasing the previously reported amount of accumulated deficit by £60.8 million. Prior to the fourth quarter of 2012, the Predecessor maintained a full valuation allowance on its deferred income tax assets. If we had not understated our deferred income tax assets in periods prior to the fourth quarter of 2012, we would have increased the valuation allowance on those deferred income tax assets by a corresponding amount, resulting in no net impact on the consolidated balance sheets or statements of comprehensive income. Therefore, there will be no changes to the 2012 statements of operations for periods prior to the fourth quarter of 2012 until the financial statements for the year ending December 31, 2013 are issued, at which time the income tax benefit, income from continuing operations, net income and comprehensive income for the year ended December 31, 2012 will increase by £60.8 million. The correction will have no impact on the total cash flows from operating, investing or financing activities previously reported in the Predecessor's consolidated statement of cash flows for the year ended December 31, 2012.

~~Future~~Note ~~changes~~2—Merger inwith ~~fair~~Liberty ~~values of the conversion hedges will be reported as gains (losses) on derivative instruments in the condensed consolidated statements of comprehensive income.~~ Global

In connection with the Mergers, Liberty Global and Virgin Media completed a merger that resulted in the surviving corporations in the Mergers (renamed Liberty Global, Inc. and Virgin Media Inc.) becoming wholly-owned subsidiaries of Liberty Global plc. Pursuant to the terms and conditions of the Merger Agreement:

•

each share of common stock, par value $0.01 per share, of Virgin Media Inc. was converted into the right to receive the following (collectively, the “VMI merger consideration”): (i) 0.2582 of a class A ordinary share, nominal amount (i.e., par value) $0.01 per share, of Liberty Global plc (a “class A Liberty Global plc share”), (ii) 0.1928 of a class C ordinary share, nominal amount (i.e., par value) $0.01 per share, of Liberty Global plc (a “class C Liberty Global plc share”) and (iii) $17.50 in cash, without interest; and

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 5 2—~~Fair~~Merger ~~Value~~with ~~Measurements~~Liberty Global (continued)

~~Long~~• ~~term~~each ~~debt~~share of series A common stock of Liberty Global, Inc. was converted into the right to receive one class A Liberty Global plc share, each share of series B common stock of Liberty Global, Inc. was converted into the right to receive one class B ordinary share, nominal amount (i.e., par value) $0.01 per share, of Liberty Global plc and each share of series C common stock of Liberty Global, Inc. was converted into the right to receive one class C Liberty Global plc share.

~~The~~Liberty ~~carrying~~Global ~~value~~plc ofis ~~our~~a ~~senior~~public ~~credit~~limited ~~facility~~company ~~approximates~~organized ~~its~~under ~~fair value and is excluded from~~ the ~~table~~laws ~~below.~~of ~~The~~England ~~fair~~and ~~values~~Wales ofand ~~our~~its ~~senior~~class ~~notes~~A, ~~convertible~~class ~~notes~~B, and ~~senior~~class ~~secured~~C ~~notes~~ordinary inshares ~~the table below~~ are ~~based~~quoted on the ~~market~~NASDAQ ~~prices~~Global inSelect ~~active~~market ~~markets~~under ~~which~~the ~~incorporate~~LBTYA, ~~non-performance~~LBTYB ~~risk.~~and AsLBTYK ~~such~~symbols, ~~these measurements are classified within level 1 of the fair value hierarchy~~respectively.

~~The~~On ~~carrying~~June ~~values~~7, of2013, ~~the~~Liberty ~~$500~~Global ~~million~~plc ~~5.25%~~issued ~~and~~70,233,842 ~~£650~~class ~~million~~A ~~5.50%~~and ~~senior~~52,444,170 ~~secured~~class ~~notes~~C ~~due~~ordinary ~~2021~~shares ~~include~~to ~~increases~~holders of ~~£61.6~~Virgin ~~million~~Media common stock and ~~£110.4~~141,234,331 ~~million~~class A, ~~respectively~~10,176,295 atclass ~~March 31~~B and 105,572,797 ~~2013~~class ~~and~~C ~~increases~~ordinary shares to holders of ~~£42~~LGI common stock.9 Each ~~million~~class ~~and~~A ~~£109.1~~ordinary ~~million,~~share ~~respectively,~~of atLiberty ~~December 31,~~Global ~~2012~~is entitled to one vote per share, aseach aclass ~~result~~B ordinary share of ~~our~~Liberty ~~application~~Global is entitled to ten votes per share and each class C ordinary share of ~~fair~~Liberty ~~value~~Global ~~hedge~~was ~~accounting~~issued towithout ~~these~~voting ~~instruments~~rights.

The ~~carrying~~Mergers ~~amounts~~ and ~~fair~~related ~~values~~financing transactions were funded with a combination of ~~our~~(i) ~~long~~the ~~term~~net ~~debt,~~proceeds ~~excluding~~from ~~capital~~the ~~leases,~~April ~~were~~2021 Senior Secured Notes and 2023 Senior Notes assumed by the Successor (each as ~~follows~~defined and described in note 6), (ii) borrowings under the Senior Credit Facility (as defined and described in ~~millions~~note 6): and (iii) Liberty Global's and Virgin Media’s existing liquidity.

	March 31, 2013				December 31, 2012
	CarryingAmount		FairValue		CarryingAmount		FairValue
6.50% U.S. dollar convertible senior notes due 2016	£	582.6	£	1,716.2	£	544.0	£	1,276.3
8.375% U.S. dollar senior notes due 2019	329.3		369.6		309.3		357.6
8.875% sterling senior notes due 2019	250.4		282.6		250.3		287.7
5.25% U.S. dollar senior notes due 2022	328.8		330.7		308.9		321.9
4.875% U.S. dollar senior notes due 2022	591.8		585.3		555.9		571.5
5.125% sterling senior notes due 2022	400.0		403.0		400.0		409.0
6.50% U.S. dollar senior secured notes due 2018	650.9		706.6		611.2		681.6
7.00% sterling senior secured notes due 2018	866.3		934.1		865.9		945.8
5.25% U.S. dollar senior secured notes due 2021	369.3		332.9		350.5		360.5
5.50% sterling senior secured notes due 2021	755.6		664.6		754.1		724.9

For accounting purposes, the Mergers were treated as the acquisition of Virgin Media (the Predecessor) by Liberty Global. In this regard, the equity and cash consideration paid to acquire the Predecessor, and pushed down to and reported by the Successor, is set out below (in millions):

Note 6—Derivative Financial Instruments and Hedging Activities



Liberty Global class A ordinary shares^(a)	£	3,446.7
Liberty Global class C ordinary shares^(a)	2,414.0
Cash^(b)	3,064.1
Estimated fair value of the vested portion of Virgin Media stock incentive awards^(c)	174.1
Total equity and cash consideration	£	9,098.9

_______________

~~Strategies~~(a) Represents the value assigned to the 70,233,842 class A and ~~Objectives~~52,444,170 class ~~for~~C ~~Holding~~ordinary ~~Derivative~~shares ~~Instruments~~of Liberty Global issued to the Predecessor's shareholders in connection with the Mergers. These amounts are based on (i) the exchange ratios specified by the Merger Agreement, (ii) the closing per share price on June 7, 2013 of Series A and Series C LGI common stock of $76.24 and $71.51, respectively, and (iii) the 272,013,333 outstanding shares of the Predecessor's common stock at June 7, 2013.

~~Our~~(b) ~~operations~~Represents ~~are~~the ~~materially~~cash ~~impacted~~consideration bypaid ~~changes~~ in ~~interest~~connection ~~rates~~with ~~and~~the ~~foreign currency exchange rates~~Mergers. InThis anamount ~~effort~~is tobased ~~manage~~on ~~these~~(i) ~~risks,~~the we$17.50 ~~periodically~~per ~~enter~~share ~~into~~cash ~~various~~consideration ~~derivative~~specified ~~instruments~~by ~~including~~the ~~interest~~Merger ~~rate~~Agreement ~~swaps, cross-currency interest rate swaps~~ and ~~foreign~~(ii) ~~exchange~~the ~~forward~~272,013,333 ~~rate~~outstanding ~~contracts.~~shares Weof ~~recognize~~the ~~all~~Predecessor's ~~derivative~~common ~~instruments~~stock ~~as either assets or liabilities~~ at ~~fair~~June ~~value~~7, ~~on our consolidated balance sheets~~2013.

We(c) ~~have~~Represents ~~entered~~the ~~into~~portion ~~cross-currency~~of ~~interest~~the ~~rate~~estimated ~~swaps~~fair ~~and~~value ~~foreign~~of ~~currency~~the ~~forward~~Predecessor's ~~rate~~stock ~~contracts~~incentive toawards ~~manage~~that ~~interest~~are ~~rate~~attributable ~~and~~to ~~foreign~~services ~~exchange~~provided ~~rate~~prior ~~currency~~to ~~exposures~~the ~~with~~June ~~respect~~7, to2013 ~~our~~acquisition Udate.S. ~~dollar~~The ~~denominated~~estimated ~~debt~~fair ~~obligations.~~value ~~Additionally,~~is webased ~~have~~on ~~entered~~the ~~into~~attributes ~~interest~~of ~~rate~~the ~~swaps~~13.0 tomillion ~~manage~~outstanding ~~interest~~Predecessor's ~~rate~~stock ~~exposures~~incentive ~~resulting~~awards ~~from~~at ~~variable~~June ~~and~~7, ~~fixed~~2013, ~~rates~~including ofthe ~~interest~~market weprice ~~pay~~of onthe ~~our~~Predecessor's Uunderlying common stock.K. ~~pounds~~The ~~sterling~~outstanding ~~denominated~~Predecessor's ~~debt~~stock ~~obligations~~incentive awards at June 7, 2013 included 9.9 Wemillion stock options that have ~~also~~been ~~entered~~valued ~~into~~using UBlack Scholes option valuations.S. ~~dollar~~In ~~forward~~addition, ~~rate~~the ~~contracts~~Predecessor’s tostock ~~manage~~incentive ~~our~~awards ~~foreign~~at ~~exchange~~June ~~rate~~7, ~~currency~~2013 ~~exposures~~included ~~related~~3.17 tomillion ~~certain~~restricted ~~committed~~stock units that include performance conditions and, ~~forecasted~~in ~~purchases~~certain cases, market conditions. Those restricted stock units with market conditions have been valued using Monte Carlo simulation models. For further information, see note 9.

Whenever it is practical to do so, we designate a derivative contract as either a cash flow or fair value hedge for accounting purposes. These relationships are referred to as “Accounting Hedges” below. When a derivative contract is not designated as an Accounting Hedge, it is treated as an economic hedge with mark-to-market movements and realized gains or losses recognized through gains (losses) on derivative instruments in net income in the condensed consolidated statements of comprehensive income. These derivatives are referred to as “Economic Hedges” below. We do not enter into derivatives for speculative or trading purposes.

During the three months ended March 31, 2013 and 2012, we recognized gains of £107.7 million and £42.8 million on derivative instruments, respectively, relating to derivative instruments that were not designated or qualifying as a hedging instrument.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 62—~~Derivative~~Merger ~~Financial~~with ~~Instruments~~Liberty ~~and~~Global ~~Hedging Activities~~(continued)

The ~~conversion~~table ~~hedges~~below ~~are~~represents ~~intended to offset~~ a ~~portion~~reconciliation of the ~~dilutive~~purchase ~~effects~~consideration ~~that~~pushed ~~could~~down ~~potentially be caused by the conversion of the convertible notes at maturity and provide us with the option~~ to ~~receive~~amounts ~~the~~recorded ~~number~~in ofopening ~~shares~~additional ~~of our common stock (or~~ paid-in ~~certain~~capital ~~circumstances cash) with a value equal to the excess of (a) the value owed~~ by ~~us (up to~~ the ~~cap~~Successor ~~price of $35.00 per share) to convertible senior note investors pursuant to the terms of the notes on conversion of up to 90% of the notes over~~ (~~b) the~~in ~~aggregate face amount of such converted notes upon maturity of the convertible senior notes.~~ millions):

We believe that those relationships designated as Accounting Hedges will be highly effective throughout their term in offsetting changes in cash flow or fair value attributable to the hedged risk. If we determine it is probable that forecasted transactions to which a hedge contract relates will not occur, we discontinue hedge accounting prospectively and immediately reclassify any amounts accumulated in other comprehensive income to net income. We perform, at least quarterly, both a prospective and retrospective assessment of the effectiveness of our hedge contracts, including assessing the possibility of counterparty default. If we determine that a hedging relationship is no longer expected to be highly effective, we discontinue hedge accounting prospectively and recognize subsequent changes in the fair value of the derivative in gains (losses) on derivative instruments in net income in the condensed consolidated statements of comprehensive income. As a result of our effectiveness assessment at March 31, 2013, we believe our derivative contracts that are designated and qualify for hedge accounting will continue to be highly effective in offsetting changes in cash flow or fair value attributable to the hedged risk.



Purchase consideration	£	9,098.9
Contributed debt^(a)	(3,096.5		)
Other net assets^(b)	144.9
Opening Successor push-down equity	£	6,147.3

~~The~~(a) ~~foreign~~Consists ~~currency~~of ~~forward~~obligations ~~rate~~pursuant ~~contracts,~~to ~~interest~~(i) ~~rate~~a ~~swaps and cross~~third-~~currency~~party ~~interest~~bridge ~~rate~~loan ~~swaps~~of ~~are valued using internal models based on observable inputs~~£2,281.9 ~~counterparty~~million ~~valuations,~~that orwas ~~market~~subsequently ~~transactions~~repaid induring ~~either~~ the ~~listed~~period orfrom ~~over-the-counter~~June ~~markets,~~8 ~~adjusted~~to ~~for~~June ~~non-performance~~30, ~~risk.~~2013, ~~Non-performance~~and is(ii) ~~based~~an onintercompany ~~quoted~~loan ~~credit~~payable ~~default~~to ~~swaps~~a ~~for~~subsidiary ~~counterparties~~of toLiberty ~~the~~Global ~~contracts~~of ~~and swaps~~£814.6 ~~These derivative instruments are classified within level 2 in the fair value hierarchy~~million, ~~because~~both ~~we consider all~~ of ~~the~~which ~~significant~~were ~~inputs~~pushed ~~are~~down ~~observable.~~to OnVirgin ~~January~~Media 1,through ~~2013~~a wenon-cash ~~adopted~~common ~~the~~control ~~FASB's~~merger ~~new~~with ~~guidance~~an ~~regarding~~indirect ~~the~~subsidiary ~~presentation~~ of ~~certain~~Liberty ~~derivatives~~Global ~~that~~as ~~are~~a ~~either~~part ~~offset~~of orthe ~~subject~~Mergers. The toproceeds anfrom ~~enforceable~~these ~~master~~loans ~~netting~~were ~~arrangement.~~used Weby doLiberty ~~not~~Global ~~have~~prior ~~material~~to ~~arrangements~~the ~~that~~common ~~are~~control ~~subject~~merger to ~~master~~fund ~~netting~~the ~~agreements~~cash ~~and~~portion ~~therefore~~of ~~this~~the ~~guidance~~purchase ~~did~~consideration ~~not~~and ~~have~~other arelated ~~material impact on our financial statements~~costs. ~~We have not provided, nor do we require, cash collateral with any counterparty.~~

~~See~~(b) ~~Note~~In 5connection -with ~~Fair~~the ~~Value Measurements~~Mergers, ~~for~~certain asubsidiaries ~~discussion~~of Liberty Global were contributed to or merged into Virgin Media and its consolidated subsidiaries immediately after the acquisition of Virgin Media (Predecessor) by Liberty Global. The opening equity of the ~~conversion~~Successor ~~hedges~~includes the equity of these entities.

Direct transaction costs associated with the Mergers have been expensed as incurred. Transaction costs incurred in the Successor period from June 8 to June 30, 2013 and the Predecessor period from April 1 to June 7, 2013 are £0.2 million and £45.8 million, respectively, including professional fees and other related costs.

The Mergers have been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations, whereby the total purchase price was allocated to the acquired identifiable net assets based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. This allocation is preliminary and subject to adjustment based on final assessment of the fair values of the acquired identifiable assets and liabilities.

The preliminary fair value of assets and liabilities was determined by management with the assistance of outside valuation experts in the second quarter of 2013. Outside experts primarily assisted management in determining the fair value of its property, plant and equipment and intangible assets. Although most items in the valuation process remain open, the items with the highest likelihood of changing upon finalization of the valuation process include property, equipment, goodwill, customer relationships and income taxes. We expect to complete the purchase price allocation as soon as practicable. The adjustments, if any, arising out of the completion of the purchase price allocation will not impact cash flows.

Following the provisions of SEC SAB Topic 5J, “New Basis of Accounting Required in Certain Circumstances,” the fair values of the assets acquired and liabilities assumed by Liberty Global have been pushed down to the Successor’s financial statements to form a new basis of accounting.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 6 2—~~Derivative~~Merger ~~Financial~~with ~~Instruments~~Liberty ~~and~~Global ~~Hedging Activities~~ (continued)

~~The~~A ~~fair~~summary ~~values~~ of ~~our~~the ~~derivative~~purchase ~~instruments~~price ~~recorded~~allocation onand ~~our~~opening ~~condensed~~balance ~~consolidated~~sheet ~~balance~~pushed ~~sheets~~down ~~were~~to asthe ~~follows~~Successor at the June 7, 2013 acquisition date is presented in the following table (in millions):

	March 31, 2013			December 31, 2012
Cash and cash equivalents	£	447.1
Included within current assets:
Other current assets	600.7
Economic Hedges
Property and equipment, net	6,353.1
Foreign currency forward rate contracts	£	1.4		£	—
Goodwill(a)	5,781.6
Interest rate swaps	—			1.4
Intangible assets subject to amortization(b)	2,527.0
Cross-currency interest rate swaps	5.9			4.7
Other assets, net	2,103.6
	£	7.3		£	6.1
Current portion of debt and capital lease obligations	(762.4		)
Included within non-current assets:
Other current liabilities(c)(d)	(2,285.0		)
Accounting Hedges
Long-term portion of debt and capital lease obligations	(5,456.8		)
Interest rate swaps	£	104.1		£	105.9
Other long-term liabilities	(210.0		)
Cross-currency interest rate swaps	106.0			36.3
Total purchase price	£	9,098.9
Economic Hedges
Cross-currency interest rate swaps	24.5			17.0
Conversion hedges	421.3			302.4
	£	655.9		£	461.6
Included within current liabilities:
Economic Hedges
Interest rate swaps	£	—		£	2.1
Cross-currency interest rate swaps	7.1			6.0
	£	7.1		£	8.1
Included within non-current liabilities:
Accounting Hedges
Cross-currency interest rate swaps	£	6.4		£	62.0
Economic Hedges
Interest rate swaps	37.8			39.6
Cross-currency interest rate swaps	—			0.3
	£	44.2		£	101.9

~~Cross-Currency~~(a) ~~Interest~~The ~~Rate~~goodwill ~~Swaps~~recognized is primarily attributable to (i) the ability to take advantage of Virgin Media’s existing advanced broadband communications network to gain immediate access to potential customers and (ii) substantial synergies that are expected to be achieved through the integration of Virgin Media with Liberty Global's other broadband communications operations in Europe.

As(b) ofAmount ~~March 31,~~consists ~~2013,~~of weintangible ~~had~~assets ~~outstanding~~related ~~cross-currency interest rate swaps~~ to ~~mitigate~~customer ~~the~~relationships. ~~interest~~As ~~and~~of ~~foreign~~June ~~exchange~~7, ~~rate~~2013, ~~risks relating to~~ the ~~pound~~weighted ~~sterling~~average ~~value~~useful life of ~~interest~~our ~~and~~intangible ~~principal~~assets ~~payments~~was onapproximately ~~the~~seven Uyears.S. ~~dollar denominated senior notes and senior secured notes.~~

(c) Amount includes a £23.0 million liability that was recorded to adjust an unfavorable capacity supply arrangement to its estimated fair value. This amount, which is subject to adjustment upon the finalization of our acquisition accounting, will be amortized through the March 31, 2014 expiration date of the contract as a reduction of Virgin Media's operating expenses so that the net effect of this amortization and the payments required under the contract approximate market rates. During the period from June 8, 2013 through June 30, 2013, £4.3 million of this liability was amortized.

(d) Includes the equity component of the Convertible Notes (as defined in Note 6) of £1,068.5 million that is reflected as a derivative liability in the Successor period. For additional information, see note 6.

Goodwill

The goodwill was allocated to our reportable segments as set forth below (in millions):



Reportable Segment
Consumer	£	4,862.3
Business	919.3
Total	£	5,781.6

Note 3 - Derivative Instruments

Strategies and Objectives for Holding Derivative Instruments

During both the Successor and Predecessor periods, the Company's operations have been materially impacted by changes in interest rates and foreign currency exchange rates.

Cross-currency interest rate swaps and foreign currency forward rate contracts have been entered into to manage interest rate and foreign exchange rate currency exposures with respect to U.S. dollar denominated debt obligations. Additionally, interest rate swaps have been entered into to manage interest rate exposures resulting from variable and fixed rates of interest due on pounds sterling denominated debt obligations.

During both the Successor and Predecessor periods, the Company did not enter into derivatives for speculative or trading purposes.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 6 3—Derivative ~~Financial~~ Instruments ~~and Hedging Activities (continued)~~

~~The~~Accounting ~~terms~~for ofDerivative ~~our outstanding cross-currency interest rate swaps at March 31, 2013, were as follows:~~Instruments

Hedged item/Maturity date	Hedge type	Notional amount due from counterparty		Notional amount due to counterparty		Weighted averageinterest rate duefrom counterparty	Weighted averageinterest rate due tocounterparty
		(in millions)		(in millions)
$1bn convertible senior notes due 2016
November 2016	Economic	$	1,000.0	£	516.9	6.50%	6.91%
$507.1m senior notes due 2019
October 2019	Accounting	$	264.3	£	159.8	8.375%	9.03%
October 2011 to October 2019	Accounting	$	235.7	£	142.5	8.375%	9.03%
$1bn senior secured notes due 2018
January 2018	Accounting	$	1,000.0	£	615.7	6.50%	7.02%
$500m senior secured notes due 2021
January 2021	Accounting	$	500.0	£	308.9	5.25%	6 month LIBOR + 1.94%
$500m senior notes due 2022
February 2022	Accounting	$	500.0	£	313.6	5.25%	5.80%
$900m senior notes due 2022
February 2022	Accounting	$	900.0	£	560.0	4.875%	5.11%
		$	4,400.0	£	2,617.4
Other
December 2013	Economic	€	43.3	£	30.8	3 month EURIBOR + 2.88%	3 month LIBOR + 3.26%
		€	43.3	£	30.8
December 2013	Economic	£	29.7	€	43.3	3 month LIBOR + 2.90%	3 month EURIBOR + 2.88%
		£	29.7	€	43.3

Successor accounting

~~All~~The ofSuccessor ~~our~~does ~~cross-currency~~not ~~interest~~apply ~~rate~~hedge ~~swaps~~accounting ~~include~~to ~~exchanges~~derivative ofinstruments. ~~the~~Accordingly, ~~notional~~changes ~~amounts~~in at the ~~start~~fair ~~and~~values ~~end~~ of ~~the~~derivative ~~contract~~instruments ~~except~~are ~~for~~recorded ~~the~~in ~~contract~~realized ~~maturing~~and inunrealized ~~November~~gains ~~2016~~or ~~hedging~~losses ~~the~~on $1derivative ~~billion~~instruments, ~~convertible~~net, ~~senior~~in ~~notes~~the ~~due~~condensed ~~2016~~consolidated statements of operations.

~~Interest~~Predecessor ~~Rate Swaps~~accounting

AsWhenever ~~of March 31~~practical, ~~2013,~~the wePredecessor ~~had~~designated ~~outstanding~~a ~~interest~~derivative ~~rate~~contract ~~swap~~as ~~agreements~~either toa ~~manage the exposure to variability in future~~ cash ~~flows~~flow onor ~~the~~fair ~~interest~~value ~~payments~~hedge ~~associated~~for ~~with~~accounting ~~our~~purposes. ~~senior~~These ~~credit~~relationships ~~facility,~~were ~~which~~referred ~~accrue~~to atas ~~variable~~“Accounting ~~rates based on LIBOR~~Hedges”. WeWhen ~~have~~a ~~also~~derivative ~~entered~~contract ~~into~~was ~~interest~~not ~~rate~~designated ~~swap~~as ~~agreements~~an toAccounting ~~manage~~Hedge, ~~our~~it ~~exposure~~was totreated ~~changes~~as inan ~~the~~economic ~~fair~~hedge ~~value~~with ofmark-to-market ~~the~~movements ~~£650~~and ~~million~~realized ~~senior~~gains ~~secured~~or ~~notes~~losses ~~due~~recognized ~~2021.~~through ~~The~~gains ~~interest~~or ~~rate~~losses ~~swaps~~on ~~allow~~derivative usinstruments toin ~~receive~~net orincome ~~pay~~in ~~interest~~the ~~based~~condensed onconsolidated ~~six~~statements ~~month~~of ~~LIBOR~~comprehensive inincome. ~~exchange~~These ~~for~~derivatives ~~payments~~were orreferred ~~receipts~~to ofas ~~interest~~“Economic ~~at fixed rates~~Hedges”.

~~The~~During ~~terms~~the Predecessor period from April 1 to June 7, 2013 and the Predecessor period for the three months ended June 30, 2012, losses of ~~our~~£47.4 ~~outstanding~~million ~~interest~~and ~~rate~~£14.4 ~~swap~~million ~~contracts~~were atrecognized ~~March 31~~on derivative instruments, respectively, that were not designated or qualifying as a hedging instrument, and during the Predecessor period from January 1 to June 7, 2013 and the Predecessor period for the six months ended June 30, 2012 gains of £60.3 million and £28.4 million were recognized on derivative instruments, respectively, that were not designated or qualifying as ~~follows:~~a hedging instrument.

Hedged item/Maturity date	Hedge type	Notionalamount		Weighted averageinterest rate due fromcounterparty	Weighted averageinterest rate due tocounterparty
		(in millions)
Senior credit facility
July 2012 to December 2015	Economic	£	600.0	6 month LIBOR	2.86%
£650m senior secured notes due 2021
January 2021	Accounting	£	650.0	5.50%	6 month LIBOR + 1.84%

Cash Flow Hedging

For derivative instruments that were designated and qualified as cash flow Accounting Hedges, the effective portion of the gain or loss on the derivative was reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transactions affected earnings. In the Predecessor condensed consolidated statements of cash flows, the cash flows resulting from derivative contracts that were treated as Accounting Hedges were recognized in the same category where the cash flows from the underlying exposure were recognized. Cash flows from derivative contracts that were not designated as Accounting Hedges were recognized as operating activities in the condensed consolidated statement of cash flows. If hedge accounting was discontinued for an instrument, subsequent cash flows were classified based on the nature of the instrument.

Gains or losses in the Predecessor periods representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness were recognized as gains or losses on derivative instruments in net income in the period in which they occurred. During the Predecessor period from April 1 to June 7, 2013, the Predecessor period for the three months ended June 30, 2012, the Predecessor period from January 1 to June 7, 2013 and the Predecessor period for the six months ended June 30, 2012, no gain or loss relating to ineffectiveness on cash flow hedges was recognized.

See note 10 for details of the effective amount of gain or loss recognized in other comprehensive earnings and amounts reclassified to earnings during the Predecessor period from January 1 to June 7, 2013.

Fair Value Hedging

For derivative instruments that were designated in qualifying fair value Accounting Hedge relationships in the Predecessor periods, the gain or loss on the derivative, inclusive of counterparty non-performance risk, was reported in earnings. The difference between these movements and changes in the fair value of the hedged debt obligations due to changes in the hedged risks is referred to as hedge ineffectiveness. In the Predecessor condensed consolidated balance sheets, changes in the value of the hedged debt obligations due to changes in the hedged risks were included as adjustments to the carrying value of the debt.

In the Predecessor condensed consolidated statements of cash flows, the cash flows resulting from derivative contracts that were treated as Accounting Hedges were recognized in the same category where the cash flows from the underlying exposure were recognized. All other cash flows from derivative contracts were recognized as operating activities in the Predecessor condensed consolidated statement of cash flows.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 63—Derivative ~~Financial~~ Instruments ~~and Hedging Activities~~ (continued)

~~Foreign~~Gains ~~Currency~~or ~~Forward~~losses ~~Rate~~representing ~~Contracts~~either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness were recognized as gains or losses on derivative instruments in net income in the Predecessor condensed consolidated statements of operations in the periods in which they occurred. During the Predecessor period from April 1 to June 7, 2013 and the Predecessor period for the three months ended June 30, 2012, hedge ineffectiveness losses of £4.4 million and £6.2 million, respectively, were recognized. During the Predecessor period from January 1 to June 7, 2013 and the Predecessor period for the six months ended June 30, 2012, hedge ineffectiveness losses of £8.5 million and £4.5 million, respectively, were recognized.

AsConversion ofHedges March 31, 2013, we had outstanding foreign currency forward rate contracts to purchase U.S. dollars to hedge committed and forecasted purchases. The terms of our outstanding foreign currency forward rate contracts at March 31, 2013 were as follows:

Hedged item/Maturity date

Hedge type

Notionalamount duefromcounterparty

Notionalamount due tocounterparty

Weightedaverageexchange rate

(in millions)

Committed and forecasted purchases

April 2013 to June 2013

Economic

36.0

22.3

1.6174

During 2010, the Predecessor entered into capped call option transactions, or conversion hedges, relating to its Convertible Notes (as defined in note 6), in order to offset a portion of the dilutive effects associated with the conversion of the Convertible Notes. On consummation of the Mergers, these instruments were transferred to the Successor. As further described in note 6, most of the Convertible Notes were exchanged for class A and class C ordinary shares of Liberty Global and cash following the Mergers. Accordingly, subsequent to June 30, 2013, we settled 93.8% of the notional amount of the conversion hedges for cash proceeds of $543.8 million (£352.2 million).

Cash Flow Hedging

For derivative instruments that are designated and qualify as cash flow Accounting Hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. In our condensed consolidated statement of cash flows, we recognize the cash flows resulting from derivative contracts that are treated as Accounting Hedges in the same category where the cash flows from the underlying exposure are recognized. Cash flows from derivative contracts that are not designated as Accounting Hedges are recognized as operating activities in the condensed consolidated statement of cash flows. If we discontinue hedge accounting for an instrument, subsequent cash flows are classified based on the nature of the instrument.

Gains or losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized as gains or losses on derivative instruments in net income in the period in which they occur. During the three months ended March 31, 2013 and 2012, we recognized no gain or loss relating to ineffectiveness on our cash flow hedges.

See Note 10 - Comprehensive Income for details of the effective amount of gain or (loss) recognized in other comprehensive income and amounts reclassified to earnings during the three months ended March 31, 2013.

Fair Value Hedging

For derivative instruments that are designated in qualifying fair value Accounting Hedge relationships, the gain or loss on the derivative, inclusive of counterparty non-performance risk, is reported in earnings. The difference between these movements and changes in the fair value of the hedged debt obligations due to changes in the hedged risks is referred to as hedge ineffectiveness. In our condensed consolidated balance sheet, changes in the value of the hedged debt obligations due to changes in the hedged risks are included as adjustments to the carrying value of the debt.

In our condensed consolidated statement of cash flows, we recognize the cash flows resulting from derivative contracts that are treated as Accounting Hedges in the same category where the cash flows from the underlying exposure are recognized. All other cash flows from derivative contracts are recognized as operating activities in the condensed consolidated statement of cash flows.

Gains or losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized as gains or losses on derivative instruments in net income in the condensed consolidated statements of comprehensive income in the period in which they occur. We recognized hedge ineffectiveness losses of £4.1 million for the three months ended March 31, 2013, and gains of £1.7 million for the three months ended March 31, 2012.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 73—~~Income~~Derivative ~~Taxes~~Instruments (continued)

~~For~~Summary ~~the three months ended March 31, 2013, we recognized a net income tax expense~~ of ~~£22.7~~Derivative million compared to an expense of £0.1 million for the three months ended March 31, 2012. The net income tax expense of £22.7 million represents the net reduction in our deferred tax assets where these have been used to fully offset our taxable profits for the three months ended March 31, 2013. Instruments

~~Our~~The ~~net~~following ~~income~~table ~~tax~~provides ~~expense~~details ~~for~~of the ~~three~~fair ~~months~~values ~~ended~~of ~~March 31, 2013 at~~ the ~~U.S.~~derivative ~~federal~~instrument ~~statutory~~assets ~~tax~~and ~~rate~~liabilities ofrecognized ~~35%~~in ~~would have been £56.6 million, being £33.9 million higher than our actual net income tax expense. Our lower actual net income tax expense arises principally from~~ the ~~applicable~~Successor UKand ~~statutory~~Predecessor ~~corporation~~condensed ~~tax~~consolidated ~~rate~~balance ofsheets ~~23.25%~~(in reducing income tax expense by £11.9 million, permanent differences reducing net income tax expense by £28.4 million, offset by other timing differences increasing net income tax expense by £6.4 million. millions):

For the three months ended March 31, 2012, our income tax expense was £0.1 million.



	Successor		Predecessor⁽¹⁾
	June 30, 2013		December 31, 2012
Included within current assets:
Accounting Hedges
Interest rate swaps	£	—	£	7.5
Cross-currency interest rate swaps	—		18.1
Economic Hedges
Interest rate swaps	19.6		1.4
Cross-currency interest rate swaps	17.1		9.2
Conversion hedges	285.3		—
	£	322.0	£	36.2
Included within non-current assets:
Accounting Hedges
Interest rate swaps	£	—	£	95.6
Cross-currency interest rate swaps	—		32.0
Economic Hedges
Interest rate swaps	87.6		—
Cross-currency interest rate swaps	117.1		13.0
Conversion hedges	84.9		302.4
	£	289.6	£	443.0
Included within current liabilities:
Accounting Hedges
Cross-currency interest rate swaps	£	—	£	9.3
Economic Hedges
Interest rate swaps	35.5		14.0
Cross-currency interest rate swaps	9.3		6.0
Derivative embedded in convertible debt	154.2		—
	£	199.0	£	29.3
Included within non-current liabilities:
Accounting Hedges
Cross-currency interest rate swaps	£	—	£	54.5
Economic Hedges
Interest rate swaps	20.8		33.4
Cross-currency interest rate swaps	15.7		0.2
	£	36.5	£	88.1

~~During the fourth quarter of 2012, we reversed £2.5 billion of valuation allowances on certain of our U.K. deferred tax assets and £0.~~ (1) ~~billion~~As ofretrospectively ~~valuation~~revised ~~allowances on the U.S. deferred tax assets in our dual resident companies. The basis of these reversals is explained in Note 11~~ - ~~Income~~see ~~Taxes,~~note ~~to our audited consolidated financial statements included in our 2012 Annual Report~~1.

~~The~~Successor deferred tax assets and liabilities presented at March 31, 2013, reflect the current U.K. corporate income tax rate of 23%. During the three months ended March 31, 2013, it was announced that the U.K. corporate income tax rate will fall to 21% from April 2014 and 20% from April 2015. It is expected that this change will be enacted during the third quarter of 2013.Period

~~Note~~Cross-Currency ~~8—Shareholders'~~Interest ~~Equity~~Rate Swaps

~~Details~~As of ~~our Capital Structure Optimization programs~~June 30, ~~which include repurchases of our shares of common stock~~2013, ~~are~~the ~~set~~Successor ~~out~~held inoutstanding ~~our~~cross-currency ~~2012~~interest ~~Annual~~rate ~~Report.~~swaps ~~Under~~to ~~the~~mitigate ~~terms of~~ the ~~Merger~~interest ~~Agreement~~and weforeign ~~signed~~exchange ~~with~~rate ~~Liberty~~risks ~~Global~~relating onto ~~February~~the 5,pound ~~2013,~~sterling wevalue ~~have~~of ~~suspended~~interest ~~our~~and ~~capital~~principal ~~returns~~payments ~~program~~on ~~pending consummation of~~ the ~~merger~~U.S. Ifdollar ~~the~~denominated ~~merger~~senior isnotes ~~not~~and ~~consummated,~~senior wesecured ~~currently~~notes, ~~plan~~and tothe ~~resume~~U.S. ~~our~~dollar ~~capital~~denominated ~~returns~~senior ~~program~~credit facility.

We made no repurchases of common stock during the three months ended March 31, 2013.

Total share based compensation expense included within selling, general and administrative expenses in the condensed consolidated statements of comprehensive income was £7.5 million and £7.6 million for the three months ended March 31, 2013, and March 31, 2012 respectively.

Note 9—Income Per Common Share

Basic net income per common share is computed by dividing the net income for the three months ended March 31, 2013 and 2012 by the weighted average number of shares outstanding during the respective periods. Diluted net income per common share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method for options, sharesave options, shares of restricted stock held in escrow and restricted stock units, and the if-converted method for shares potentially issuable under our convertible notes.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 9 3—~~Income~~Derivative ~~Per~~Instruments ~~Common Share~~(continued)

The ~~weighted~~terms ~~average~~of ~~number~~outstanding ofcross-currency ~~shares~~interest ~~outstanding~~rate swaps for the ~~three~~Successor ~~months~~at ~~ended March~~June 3130, 2013, ~~and~~are ~~2012 is computed~~ as follows ~~(in millions)~~:

	Three months ended March 31,
Maturity date		Notional amount due from counterparty			Notional amount due to counterparty		Weighted averageinterest rate duefrom counterparty	Weighted averageinterest rate due tocounterparty
	2013			2012
		in millions
Number of shares outstanding at start of period	£	269.3		£	286.4
November 2016		$	1,000.0		£	516.9	6.50%	6.91%
Issue of common stock (average number outstanding during the period)	0.5			0.5
January 2018		1,000.0			615.7		6.50%	7.02%
Purchase of treasury shares (weighted average)	—			(4.6		)
April 2019		291.5			186.2		5.38%	5.49%
Weighted average number of shares outstanding	£	269.8		£	282.3
October 2019		500.0			302.3		8.38%	9.02%
June 2020		1,384.6			901.4		6 month US LIBOR + 2.75%	6 month LIBOR + 3.18%
October 2020		1,370.4			881.6		6 month US LIBOR + 2.75%	6 month LIBOR + 3.10%
January 2021		500.0			308.9		5.25%	6 month LIBOR + 1.94%
February 2022		500.0			313.6		5.25%	5.80%
February 2022		900.0			560.0		4.88%	5.11%
		$	7,446.5		£	4,586.6

~~The~~All ~~following~~cross-currency ~~table~~interest ~~sets~~rate ~~forth~~swaps ~~the~~include ~~components~~exchanges of ~~basic~~the notional amounts at the start and ~~diluted~~end ~~income~~of ~~per~~the ~~common~~contract ~~share~~except (for the contract maturing in ~~millions):~~November 2016 hedging the Convertible Notes. Accordingly, the only cash flows associated with this instrument are interest payments and receipts.

	Three months ended March 31,
	2013		2012
Numerator for basic net income per common share	£	138.9	£	7.0
Interest on convertible notes, net of tax	12.9		—
Numerator for diluted net income per common share	£	151.8	£	7.0
Weighted average number of shares:
Denominator for basic net income per common share	269.8		282.3
Effect of dilutive securities:
Share based awards to employees	5.5		4.5
Shares issuable under convertible notes	52.0		—
Denominator for diluted net income per common share	327.3		286.8

Interest Rate Swaps

As of June 30, 2013, the Successor had outstanding interest rate swap agreements to manage the exposure to variability in future cash flows on the interest payments associated with its senior credit facility, which accrue at variable rates based on LIBOR. The ~~following~~Successor ~~table~~also ~~sets~~had ~~forth~~outstanding interest rate swap agreements to manage its exposure to changes in the ~~number~~fair value of ~~potential~~the ~~common~~January ~~shares~~2021 ~~excluded~~sterling ~~from~~senior secured notes. The interest rate swaps allow the ~~calculation~~receipt or payment of ~~the~~interest ~~denominator~~based on six month LIBOR in exchange for ~~diluted~~payments ~~income~~or ~~per~~receipts ~~common~~of ~~share~~interest ~~(in~~at ~~millions):~~fixed rates.

	Three months ended March 31,
	2013	2012
Stock options	0.4	4.1
Sharesave options	—	—
Restricted stock held in escrow	—	0.6
Restricted stock units	2.0	3.2
Shares issuable under convertible notes	—	52.0

The terms of the outstanding interest rate swap contracts of the Successor at June 30, 2013 are as follows:

In the three months ended March 31, 2013, certain share based awards to employees have been excluded from the calculation of the diluted weighted average number of shares.



Maturity date	Notional amount		Weighted average interest rate due from counterparty	Weighted average interest rate due to counterparty
	in millions

December 2015	£	600.0	6 month LIBOR	2.86%
April 2018	300.0		6 month LIBOR	1.37%
October 2018	2,155.0		6 month LIBOR	1.52%
January 2021	650.0		5.50%	6 month LIBOR + 1.84%
January 2021	300.0		6 month LIBOR + 1.83%	3.89%
	£	4,005.0

In the three months ended March 31, 2013, certain restricted stock units have been excluded from the calculation of the diluted weighted average number of shares because these shares are contingently issuable based on the achievement of performance and/or market conditions that have not been achieved as of March 31, 2013.

Stock Option Grants

All options outstanding under our stock incentive plans have a ten year term and become fully exercisable within five years of continued employment. We have historically issued new shares upon exercise of the options and expect to continue to do so. For performance-based option grants, the performance objectives are based upon both quantitative and qualitative objectives, including earnings and stock price performance, amongst others. These objectives may be absolute or relative to prior performance or to the performance of other entities, indices or benchmarks and may be expressed in terms of progression within a specific range.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 9 4—~~Income~~Fair ~~Per~~Value ~~Common Share (continued)~~Measurements

~~Sharesave~~We ~~Option~~use ~~Grants~~the fair value method to account for our derivative instruments. The reported fair values of these derivative instruments as of June 30, 2013 likely will not represent the value that will be realized upon the ultimate settlement or disposition of these assets and liabilities. We expect that the values realized generally will be based on market conditions at the time of settlement, which may occur at the maturity of the derivative instrument or at the time of the repayment or refinancing of the underlying debt instrument.

~~All~~GAAP ~~options~~provides ~~granted~~for ~~under~~a fair value hierarchy that prioritizes the ~~Virgin~~inputs ~~Media Inc~~to valuation techniques used to measure fair value into three broad levels. ~~Sharesave~~Level ~~Plan~~1 ~~enable~~inputs ~~eligible~~are ~~employees~~quoted tomarket ~~purchase~~prices ~~shares~~in ofactive ~~our~~markets ~~common~~for ~~stock~~identical assets or liabilities that the reporting entity has the ability to access at athe ~~discount~~measurement date. ~~Employees~~Level 2 inputs are ~~invited~~inputs toother ~~take~~than ~~out~~quoted ~~savings~~market ~~contracts~~prices included within Level 1 that ~~last~~are observable for ~~three~~the ~~years~~asset or liability, either directly or indirectly. AtLevel 3 inputs are unobservable inputs for the ~~end~~asset or liability. We record transfers of ~~the~~assets ~~contract,~~or ~~employees~~liabilities ~~use~~in ~~the~~or ~~proceeds~~out of ~~these~~Levels ~~savings~~1, to2 ~~exercise~~or 3 at the ~~options~~beginning ~~granted~~of ~~under~~the quarter during which the ~~plan~~transfer occurred. WeDuring ~~intend~~the tosix ~~issue~~months ~~new~~ended ~~shares~~June ~~upon~~30, ~~exercise~~2013, ofno ~~the~~such ~~options~~transfers were made.

~~Restricted~~All ~~Stock~~of ~~Grants~~our Level 1 inputs (quoted market prices of Liberty Global's class A and C ordinary shares), Level 2 inputs (interest rate futures, swap rates and certain of the inputs for our weighted average cost of capital calculations) and certain of our Level 3 inputs (forecasted volatilities and credit spreads) are obtained from pricing services. These inputs, or interpolations or extrapolations thereof, are used in our internal models to calculate, among other items, yield curves, forward interest and currency rates and weighted average cost of capital rates. In the normal course of business, we receive market value assessments from the counterparties to our derivative contracts. Although we compare these assessments to our internal valuations and investigate unexpected differences, we do not otherwise rely on counterparty quotes to determine the fair values of our derivative instruments. The midpoints of applicable bid and ask ranges generally are used as inputs for our internal valuations.

~~The~~As ~~shares~~further ofdescribed ~~restricted~~in ~~stock~~note ~~granted~~3, ~~under~~we ~~our~~have ~~stock~~entered ~~incentive~~into ~~plans~~various ~~have~~derivative ainstruments ~~term~~to ofmanage upour tointerest ~~three~~rate ~~years,~~and ~~six~~foreign ~~months~~currency ~~and~~exchange ~~vest~~risk. ~~based~~The onrecurring ~~time~~fair orvalue ~~performance,~~measurements ~~subject~~of tothese ~~continued~~derivative ~~employment.~~instruments ~~For~~are ~~performance-based~~determined ~~restricted~~using ~~stock~~discounted ~~grants,~~cash flow models. Most of the ~~performance~~inputs ~~objectives~~to ~~are~~these ~~based~~discounted ~~upon~~cash ~~quantitative~~flow ~~and~~models ~~qualitative~~consist ~~objectives~~of, ~~including~~or ~~earnings~~are derived from, ~~operational~~observable ~~performance~~Level ~~and~~2 ~~achievement~~data for substantially the full term of ~~strategic~~these ~~goals,~~derivative ~~amongst~~instruments. ~~others,~~This observable data includes applicable interest rate futures and ~~vest~~swap ~~after~~rates, awhich ~~one~~are toretrieved ~~three~~or ~~year~~derived ~~period~~from available market data. ~~These~~Although ~~objectives~~we may beextrapolate ~~absolute~~ or ~~relative~~interpolate tothis ~~prior~~data, ~~performance~~we ordo tonot ~~the~~otherwise ~~performance~~alter ofthis ~~other~~data ~~entities,~~in ~~indices~~performing orour ~~benchmarks~~valuations. ~~and~~We ~~may~~incorporate bea ~~expressed~~credit risk valuation adjustment in ~~terms~~our fair value measurements to estimate the impact of ~~progression~~both ~~within~~our aown ~~specific~~nonperformance ~~range~~risk and the nonperformance risk of our counterparties.

~~Restricted~~Our ~~Stock~~and ~~Unit~~our counterparties’ credit spreads are Level 3 inputs that are used to derive the credit risk valuation adjustments with respect to our various interest rate and ~~Performance~~foreign ~~Share~~currency ~~Grants~~derivative valuations. As we would not expect changes in our or our counterparties’ credit spreads to have a significant impact on the valuations of these derivative instruments, we have determined that these valuations fall under Level 2 of the fair value hierarchy.

~~The~~Fair ~~restricted~~value ~~stock~~measurements ~~units~~are ~~and~~also ~~performance~~used ~~shares~~in ~~granted~~connection ~~under~~with ~~our~~nonrecurring ~~stock~~valuations ~~incentive~~performed ~~plans~~in ~~have~~connection awith ~~term~~impairment assessments and acquisition accounting. These nonrecurring valuations include the valuation of upcustomer torelationship ~~three~~intangible ~~years~~assets, ~~six~~property ~~months~~and equipment and ~~vest~~the implied value of goodwill. The valuation of customer relationships is primarily based on ~~time~~an orexcess ~~performance~~earnings methodology, ~~subject~~which tois ~~continued~~a ~~employment.~~form ~~These~~of ~~targets~~a ~~may~~discounted becash ~~absolute~~flow oranalysis. ~~relative~~The excess earnings methodology requires us to ~~prior~~estimate ~~performance~~the orspecific cash flows expected from the customer relationship, considering such factors as estimated customer life, the revenue expected to be generated over the ~~performance~~life of the customer, contributory asset charges, and other ~~entities~~factors. Tangible assets are typically valued using a replacement or reproduction cost approach, ~~indices~~considering factors such as current prices of the same or ~~benchmarks~~similar equipment, the age of the equipment and ~~may~~economic beobsolescence. ~~expressed~~The implied value of goodwill is determined by allocating the fair value of a reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in ~~terms~~a business combination, with the residual amount allocated to goodwill. All of ~~progression~~our ~~within~~nonrecurring valuations use significant unobservable inputs and therefore fall under Level 3 of the fair value hierarchy. During the six months ended June 30, 2013, we performed nonrecurring valuations for the purpose of determining the fair value of the assets and liabilities pushed down pursuant to the Mergers. We used a ~~specific~~discount ~~range~~rate of 9.0% for our preliminary valuation of the customer

Convertible Notes

Holders of our U.S. dollar denominated 6.50% convertible senior notes due 2016 may tender their notes for conversion at any time on or after August 15, 2016 through to the second scheduled trading date preceding the maturity date. Prior to August 15, 2016, holders may convert their notes, at their option, only under the following circumstances: (i) in any quarter, if the closing sale price of Virgin Media Inc.'s common stock during at least 20 of the last 30 trading days of the prior quarter was more than 120% of the applicable conversion price per share of common stock on the last day of such prior quarter; (ii) if, for five consecutive trading days, the trading price per $1,000 principal amount of notes was less than 98% of the product of the closing price of our common stock and the then applicable conversion rate; (iii) if a specified corporate event occurs, such as a merger, recapitalization, reclassification, binding share exchange or conveyance of all, or substantially all, of Virgin Media Inc.'s assets; (iv) the declaration by Virgin Media Inc. of the distribution of certain rights, warrants, assets or debt securities to all, or substantially all, holders of Virgin Media Inc.'s common stock; or (v) if Virgin Media Inc. undergoes a fundamental change (as defined in the indenture governing the convertible senior notes), such as a change in control, merger, consolidation, dissolution or delisting.

The initial conversion rate is equal to 52.0291 shares of Virgin Media Inc.'s common stock per $1,000 of convertible notes, which represents an initial conversion price of approximately $19.22 per share of common stock. The conversion rate of the convertible notes is adjusted only upon the occurrence of certain events. Specifically, the conversion rate is subject to adjustment for stock splits, stock dividends or distributions, the issuance of certain rights or warrants, certain cash dividends or distributions, or stock repurchases where the price exceeds market values. In the event of specified fundamental changes relating to Virgin Media Inc., referred to as make-whole fundamental changes, the conversion price will be increased as provided by a formula set forth in the indenture governing the convertible senior notes.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 104—~~Comprehensive~~Fair ~~Income~~Value Measurements (continued)

~~Comprehensive~~relationships ~~income~~acquired ~~comprises~~as ~~(in~~a ~~millions):~~result of this acquisition. We did not perform any significant nonrecurring fair value measurements during the six months ended June 30, 2012.

	Three months ended March 31,
	2013			2012
Net income	£	138.9		£	7.0
Currency translation adjustment	(13.0		)	9.5
Net unrealized gains (losses) on derivatives, net of tax	111.8			(66.4		)
Reclassification of derivative (gains) losses to net income, net of tax	(114.3		)	61.8
Pension liability adjustment, net of tax	0.4			—
Total comprehensive income	£	123.8		£	11.9

The following tables present the Predecessor and Successor assets and liabilities measured at fair value, aggregated by the level in the fair value hierarchy into which those measurements fall (in millions):

The following table presents the effective amount of gain or loss recognized in other comprehensive income and amounts reclassified to earnings during the three months ended March 31, 2013 (in millions):



	Successor
	June 30, 2013
	Level 1		Level 2		Level 3		Total
Assets
Derivative financial instruments, excluding conversion hedges	£	—	£	241.4	£	—	£	241.4
Conversion hedges	—		—		370.2		370.2
Total	£	—	£	241.4	£	370.2	£	611.6
Liabilities
Derivative financial instruments	£	—	£	235.5	£	—	£	235.5
Total	£	—	£	235.5	£	—	£	235.5

	Derivatives							Pension						Foreign currency translation			Total
	Predecessor
	Interest rateswaps		Cross-currencyinterest rateswaps			Tax effect of derivative transactions		Pension liability adjustment			Tax effect of pension transactions
	December 31, 2012
Balance at December 31, 2012	£	3.3	£	(72.8	)	£	1.0	£	(108.4	)	£	9.9		£	161.2		£	(5.8	)
	Level 1		Level 2			Level 3		Total
Amounts recognized in other comprehensive income	—		108.3			—		—			—			(13.0		)	95.3
Assets
Amounts reclassified to earnings impacting:
Derivative financial instruments, excluding conversion hedges	£	—	£	176.8		£	—	£	176.8
Foreign exchange gain	—		(114.8		)	—		—			—			—			(114.8		)
Conversion hedges	—		—			302.4		302.4
Interest expense	—		0.5			—		—			—			—			0.5
Total	£	—	£	176.8		£	302.4	£	479.2
Selling, general and administrative expenses	—		—			—		0.5			—			—			0.5
Liabilities
Tax effect recognized	—		—			3.5		—			(0.1		)	—			3.4
Derivative financial instruments	£	—	£	117.4		£	—	£	117.4
Balance at March 31, 2013	£	3.3	£	(78.8	)	£	4.5	£	(107.9	)	£	9.8		£	148.2		£	(20.9	)
Total	£	—	£	117.4		£	—	£	117.4

~~Assuming~~Conversion nohedges change in interest rates or foreign exchange rates for the next twelve months, the amount of pre-tax income or losses that would be reclassified from other comprehensive income to earnings would be losses of £0.0 million relating to interest rate swaps and foreign exchange contracts, and £7.0 million relating to cross-currency interest rate swaps.

The following table presents a reconciliation of the beginning and ending balances of the conversion hedges (in millions):



Predecessor
Balance at December 31, 2012	£	302.4
Unrealized gain included in gain on derivative instruments	97.3
Unrealized currency translation adjustment included in other comprehensive loss	21.6
Balance at March 31, 2013	£	421.3
Unrealized loss included in loss on derivative instruments	(47.3		)
Unrealized currency translation adjustment included in other comprehensive loss	(9.1		)
Balance at June 7, 2013	£	364.9


Successor
Balance at June 8, 2013	£	364.9
Unrealized loss included in gain on derivative instruments	(3.1		)
Unrealized currency translation adjustment included in other comprehensive loss	8.4
Balance at June 30, 2013	£	370.2

Changes in fair values of the conversion hedges in both the Predecessor and the Successor periods are reported as realized and unrealized gains (losses) on derivative instruments in the condensed consolidated statements of operations.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 115—~~Contingent~~Long ~~Liabilities~~Lived Assets

WeProperty ~~are involved in lawsuits, claims, investigations~~ and ~~proceedings~~Equipment, consisting of intellectual property, commercial, employee and employee benefits which arise in the ordinary course of our business. In accordance with the Contingencies Topic of the FASB ASC, we recognize a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We believe we have adequate provisions for any such matters. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Additionally, when we believe it is at least reasonably possible that a liability has been incurred in excess of any recorded liabilities we provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. While litigation is inherently unpredictable, we believe that we have valid defenses with respect to legal matters pending against us. net

~~Our~~As ~~revenue~~part ~~generating~~of ~~activities~~the ~~are~~push-down ~~subject~~accounting todiscussed ~~Value~~in ~~Added~~note ~~Tax~~2, orproperty ~~VAT.~~and ~~The~~equipment ~~U.K.~~has ~~tax~~been ~~authorities~~recorded ~~have~~at ~~challenged~~fair ~~our~~value ~~VAT~~at ~~treatment~~June ~~of certain of these activities. As a result~~7, ~~we have estimated contingent losses totaling £33.0 million as of March 31,~~ 2013 ~~that are not accrued for, as we deem them to be reasonably possible, but not probable, of resulting~~ in ~~a liability. We currently expect an initial hearing on these matters to take place during~~ the ~~second~~Successor's ~~half~~financial ~~of 2013 or early 2014~~statements.

~~Note 12—Industry~~The ~~Segments~~details of our property and equipment and the related accumulated depreciation are set forth below (in millions):

Our reporting segments are based on our method of internal reporting and the information used by our chief executive officer, who is our chief operating decision maker, or CODM, to evaluate segment performance and make capital allocation decisions. We have two reporting segments, Consumer and Business, as described below.



	Successor			Predecessor
	June 30, 2013			December 31, 2012
Distribution Systems	£	4,992.4		£	7,947.4
Customer premises equipment	771.8			1,355.1
Support equipment, buildings and land	647.9			690.7
	6,412.1			9,993.2
Accumulated depreciation	(69.7		)	(5,481.0		)
Total property and equipment, net	£	6,342.4		£	4,512.2

Our Consumer segment is our largest segment, consisting of the distribution of television programming, broadband and fixed line telephony services to residential customers on our cable network, the provision of broadband and fixed line telephony services to residential customers outside of our cable network, and the provision of mobile telephony and mobile broadband to residential customers.Goodwill

~~Our~~At ~~Business~~December ~~segment~~31, ~~comprises~~2012 ~~our~~and ~~operations~~as ~~carried~~at ~~out~~the ~~through~~date ~~Virgin~~of ~~Media~~the ~~Business~~Mergers ~~which~~on ~~provides~~June ~~voice~~7, ~~data~~2013, ~~and~~goodwill ~~internet~~attributable ~~solutions~~ to ~~businesses~~the Predecessor was £2,017.5 ~~public~~million. ~~sector~~As ~~organizations~~part of the push-down accounting discussed in note 2, the Predecessor goodwill was eliminated and ~~service~~£5,781.6 ~~providers~~million was recognized as goodwill in the U Successor's financial statements.K.

~~Segment~~Intangible ~~contribution,~~assets ~~which~~subject is operating income before network operating costs, corporate costs, depreciation, amortization, goodwill and intangible asset impairments and restructuring and other charges, is management’s measure of segment profit. Segment contribution excludes the impact of certain costs and expenses that are not directly attributable to ~~the reporting segments, such as the costs of operating the network, corporate costs and depreciation and~~ amortization~~. Restructuring and other charges~~, and goodwill and intangible asset impairments are excluded from segment contribution as management believes they are not characteristic of our underlying business operations. Assets are reviewed on a consolidated basis and cannot be allocated to segments for management reporting since the primary asset of the business is the cable network infrastructure, which is shared by our Consumer and Business segments.net

~~Segment~~The ~~information~~details ~~for~~of ~~the~~our ~~three~~intangible ~~months~~assets ~~ended~~subject ~~March 31,~~to ~~2013~~amortization ~~and~~are ~~2012~~set ~~was~~forth asbelow ~~follows~~ (in millions):

	Three months ended March 31, 2013							Three months ended March 31, 2012
	Successor								Predecessor
	Consumer		Business			Total		Consumer			Business				Total
	June 30, 2013								December 31, 2012
Revenue	£	879.1	£	163.4		£	1,042.5	£	835.8		£	170.4			£	1,006.2
	Gross carrying amount		Accumulated amortization			Net carrying amount			Gross carrying amount			Accumulated amortization				Net carrying amount
Segment contribution	£	521.9	£	85.5		£	607.4	£	486.7		£	91.2			£	577.9
Customer relationships	£	2,527.0	£	(23.0	)	£	2,504.0		£	754.6		£	(754.6	)		£	—

See note 2 for further details of the Successor's intangible assets.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 12 6—~~Industry~~Debt ~~Segments~~and Capital Lease Obligations

~~The reconciliation of total segment contribution to consolidated operating income and net income is as follows (in millions):~~Overview

	Three months ended March 31,
	2013			2012
Total segment contribution	£	607.4		£	577.9
Other operating and corporate costs	208.9			201.4
Restructuring and other charges	0.4			5.4
Depreciation	248.3			240.2
Consolidated operating income	149.8			130.9
Other income (expense)
Interest expense	(89.7		)	(105.6		)
Loss on extinguishment of debt	—			(58.6		)
Gain on derivative instruments	103.6			44.5
Foreign currency losses	(2.2		)	(4.4		)
Interest income and other, net	0.1			0.3
Income tax expense	(22.7		)	(0.1		)
Net income	£	138.9		£	7.0

The pound sterling equivalents of the components of our consolidated debt and capital lease obligations are as follows:



	June 30, 2013
	Weighted average interest rate^(a)		Unused borrowing capacity^(b)				Estimated fair value^(c)				Carrying value^(d)
	Weighted average interest rate^(a)		Borrowing Currency		Sterling equivalent		June 30, 2013		December 31, 2012		June 30, 2013			December 31, 2012
							in millions
Debt:
Senior Credit Facility	3.77	%	£	660.0	£	660.0	£	2,777.3	£	750.0	£	2,777.3		£	750.0
Notes	6.36	%	—		—		5,676.7		4,660.5		5,748.0			4,406.1
Convertible Notes^(e)	6.50	%	—		—		253.6		1,276.3		101.1			544.0
Total Debt	5.51	%	£	660.0	£	660.0	£	8,707.6	£	6,686.8	8,626.4			5,700.1

Capital lease obligations											243.8			229.0
Total debt and capital lease obligations											8,870.2			5,929.1
Current maturities											(192.7		)	(77.1		)
Long-term debt and capital lease obligations											£	8,677.5		£	5,852.0

^(a) Represents the weighted average interest rate in effect at June 30, 2013 for all borrowings outstanding pursuant to each debt instrument including any applicable margin. The interest rates presented represent stated rates and do not include the impact of our interest rate derivative contracts, deferred financing costs, original issue premiums or discounts or commitment fees, all of which affect our overall cost of borrowing. Including the effects of derivative instruments, original issue premiums and discounts and commitment fees, but excluding the impact of financing costs, our weighted average interest rate on our aggregate variable and fixed-rate indebtedness was approximately 6.1% at June 30, 2013. For information concerning our derivative instruments, see note 3.

^(b) Unused borrowing capacity represents the maximum availability under the Senior Credit Facility at June 30, 2013 without regard to covenant compliance calculations or other conditions precedent to borrowing. As adjusted for the completion of the applicable June 30, 2013 compliance reporting requirements, our availability at June 30, 2013 under the Senior Credit Facility would have been limited to £501.4 million.

^(c) The estimated fair values of our debt instruments were determined using the average of applicable bid and ask prices (mostly Level 1 of the fair value hierarchy) or, when quoted market prices are unavailable or not considered indicative of fair value, discounted cash flow models (mostly Level 2 of the fair value hierarchy). The discount rates used in the cash flow models are based on the market interest rates and estimated credit spreads of the applicable entity, to the extent available, and other relevant factors. For additional information concerning fair value hierarchies, see note 4.

^(d)Amounts include the impact of premiums and discounts, where applicable.

^(e)The $2,716.8 million (£1,748.7 million) fair value of the Convertible Notes (as defined and described below) on the date of the merger includes $1,056.8 million (£680.2 million) that we allocated to a debt component and $1,660.0 million (£1,068.5 million) that we allocated to an equity component. In the Successor period, the equity component is reflected as a derivative instrument included within current liabilities. See the related discussion below for additional information. The amount reported in the estimated fair value column for the Convertible Notes represents the estimated fair value of the remaining Convertible Notes outstanding as of June 30, 2013, including both the debt and equity components.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 136—~~Condensed~~Debt ~~Consolidating~~and ~~Financial~~Capital ~~Information—Senior~~Lease ~~Notes~~Obligations (continued)

WeFinancing ~~present the following condensed consolidating financial information as~~ of ~~March 31, 2013 and December 31, 2012 and for~~ the ~~three months ended March 31, 2013 and 2012 as required by Rule 3-10(d) of Regulation S-X.~~Mergers

AsThe Mergers and related refinancing transactions were funded with a combination of ~~March 31,~~(i) ~~2013,~~the ~~VMF~~proceeds isfrom the ~~issuer~~April of2021 Senior Secured Notes and 2023 Senior Notes (each as defined and described below), (ii) borrowings under the ~~following~~Senior ~~senior~~Credit ~~notes:~~Facility (as defined and described below) and (iii) Liberty Global's and our existing liquidity.

•Prior to consummation of the Mergers, the net proceeds (after deducting certain transaction expenses) from the April 2021 Senior Secured Notes and 2023 Senior Notes (each as defined and described below) of $~~507~~3,557.15 million ~~aggregate~~(£2,289.8 ~~principal~~million) ~~amount~~were ofplaced 8into segregated escrow accounts with a trustee.~~375%~~ ~~senior~~Such ~~notes~~net ~~due~~proceeds ~~2019~~were released upon closing of the Mergers.

•On ~~£253.5~~June ~~million~~11, ~~aggregate~~2013, ~~principal~~a ~~amount~~series of ~~8.875%~~transactions, or the "Debt Push-down", was completed pursuant to which the April 2021 Senior Secured Notes and the 2023 Senior Notes became senior ~~notes~~secured ~~due~~and ~~2019~~senior obligations of Virgin Media Secured Finance PLC and Virgin Media Finance PLC, respectively, both of which are U.K. subsidiaries of the Company.

•As ~~$500~~part ~~million~~of ~~aggregate~~the purchase price allocation discussed in note 2, the Predecessor long-term debt instruments were revalued to fair value on June 7, 2013. The excess of fair value over principal amount of ~~5.25%~~each ~~senior~~instrument ~~notes~~will ~~due~~be ~~2022~~amortized as a reduction of interest expense over the contractual life of the associated debt instrument.

•Repayment ~~$900 million aggregate principal amount~~ of ~~4.875%~~Predecessor ~~senior notes due 2022~~indebtedness

•In connection with the Mergers, the Successor repaid the Predecessor's existing senior credit facility in the amount of £~~400~~750.0 million, ~~aggregate~~the ~~principal~~6.50% U.S. dollar Convertible Notes (as defined and described below) in the amount of £515.9 million, 5.25% U.S. dollar denominated senior secured notes due 2021 in the amount of £33.4 million, 5.50% sterling denominated senior secured notes due 2021 in the amount of £21.6 million, 4.875% U.S. dollar denominated senior notes due 2022 in the amount of £501.1 million, 5.125% sterling denominated senior notes due 2022 in the amount of £355.9 million and the 5.25% U.S. dollar denominated senior notes due 2022 in the amount of £259.8 million.

~~Virgin~~Senior ~~Media Inc.~~Credit and certain of its subsidiaries, namely Virgin Media Group LLC, Virgin Media Holdings Inc., Virgin Media (UK) Group, Inc. and Virgin Media Communications Limited, have guaranteed the senior notes on a senior basis. Each of VMIH, and VMIL are conditional guarantors and have guaranteed the senior notes on a senior subordinated basis.Facility

	March 31, 2013
Balance sheets	Company		VirginMediaFinance		Otherguarantors			VMIH		VMIL		All othersubsidiaries			Adjustments			Total
	(in millions)
Cash and cash equivalents	£	20.4	£	1.0	£	0.2		£	—	£	—	£	297.0		£	—		£	318.6
Restricted cash	—		—		—			—		—		1.9			—			1.9
Deferred income taxes	—		—		—			—		—		57.8			—			57.8
Other current assets	0.2		—		—			10.7		—		525.9			—			536.8
Total current assets	20.6		1.0		0.2			10.7		—		882.6			—			915.1
Fixed assets, net	—		—		—			—		—		4,485.3			—			4,485.3
Goodwill and intangible assets, net	—		—		(15.0		)	—		—		2,032.5			—			2,017.5
Investments in, and loans to, parent and subsidiary companies	3,520.5		3,293.1		2,044.8			4,429.6		5,419.7		(2,184.4		)	(16,523.3		)	—
Deferred income taxes	—		—		—			—		—		2,622.9			—			2,622.9
Other assets, net	427.1		19.2		—			237.9		—		81.4			—			765.6
Total assets	£	3,968.2	£	3,313.3	£	2,030.0		£	4,678.2	£	5,419.7	£	7,920.3		£	(16,523.3	)	£	10,806.4
Current liabilities	£	33.7	£	32.9	£	2.7		£	78.4	£	—	£	1,829.3		£	(769.9	)	£	1,207.1
Long term debt, net of current portion	582.6		1,900.3		—			—		—		3,546.4			—			6,029.3
Other long term liabilities	0.2		—		—			44.2		—		173.9			—			218.3
Total liabilities	616.5		1,933.2		2.7			122.6		—		5,549.6			(769.9		)	7,454.7
Shareholders’ equity	3,351.7		1,380.1		2,027.3			4,555.6		5,419.7		2,370.7			(15,753.4		)	3,351.7
Total liabilities and shareholders’ equity	£	3,968.2	£	3,313.3	£	2,030.0		£	4,678.2	£	5,419.7	£	7,920.3		£	(16,523.3	)	£	10,806.4

The details of our borrowings under the Senior Credit Facility (as defined and described below) are summarized in the following table:



		As of June 30, 2013
Facility	Final maturity date	Interest rate	Facility amount (in borrowing capacity)		Unused borrowing capacity^(a)		Carrying value^(b)
			(in millions)
A	June 7, 2019	LIBOR +3.25%	£	375.0	£	—	£	375.0
B	June 7, 2020	LIBOR +2.75%(c)	$	2,755.0	—		1,805.3
C	June 7, 2020	LIBOR +3.75%(c)	£	600.0	—		597.0
Revolving Facility	June 7, 2019	LIBOR +3.25%	£	660.0	660.0		—
Total					£	660.0	£	2,777.3

^(a) Unused borrowing capacity represents the maximum availability under the Senior Credit Facility at June 30, 2013 without regard to covenant compliance calculations or other conditions precedent to borrowing. As adjusted for the completion of the applicable June 30, 2013 compliance reporting requirements, our availability at June 30, 2013 under the Senior Credit Facility would have been limited to £501.4 million. The Revolving Facility (as defined and described below) has a commitment fee on unused and uncancelled balances of 1.3% per year.

^(b) The carrying values of Facilities B and C include the impact of discounts.

^(c) Facilities B and C have a LIBOR floor of 0.75%.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 136—~~Condensed~~Debt ~~Consolidating~~and ~~Financial~~Capital ~~Information—Senior~~Lease ~~Notes~~Obligations (continued)

	December 31, 2012
Balance sheets	Company		VirginMediaFinance		Otherguarantors			VMIH		VMIL		All othersubsidiaries			Adjustments			Total
	(in millions)
Cash and cash equivalents	£	10.3	£	1.0	£	0.1		£	0.1	£	—	£	194.8		£	—		£	206.3
Restricted cash	—		—		—			—		—		1.9			—			1.9
Deferred income taxes	—		—		—			—		—		58.1			—			58.1
Other current assets	0.2		—		—			12.7		—		540.2			—			553.1
Total current assets	10.5		1.0		0.1			12.8		—		795.0			—			819.4
Fixed assets, net	—		—		—			—		—		4,512.2			—			4,512.2
Goodwill and intangible assets, net	—		—		(15.0		)	—		—		2,032.5			—			2,017.5
Investments in, and loans to, parent and subsidiary companies	3,474.9		3,144.9		1,973.7			4,424.4		5,306.3		(2,417.5		)	(15,906.7		)	—
Deferred income taxes	—		—		—			—		—		2,641.7			—			2,641.7
Other assets, net	308.3		19.8		—			162.8		—		83.4			—			574.3
Total assets	£	3,793.7	£	3,165.7	£	1,958.8		£	4,600.0	£	5,306.3	£	7,647.3		£	(15,906.7	)	£	10,565.1
Current liabilities	£	31.1	£	27.0	£	5.3		£	64.4	£	—	£	1,746.8		£	(650.6	)	£	1,224.0
Long term debt, net of current portion	544.0		1,824.4		—			—		—		3,483.6			—			5,852.0
Other long term liabilities	0.2		—		—			101.9		—		168.6			—			270.7
Total liabilities	575.3		1,851.4		5.3			166.3		—		5,399.0			(650.6		)	7,346.7
Shareholders’ equity	3,218.4		1,314.3		1,953.5			4,433.7		5,306.3		2,248.3			(15,256.1		)	3,218.4
Total liabilities and shareholders’ equity	£	3,793.7	£	3,165.7	£	1,958.8		£	4,600.0	£	5,306.3	£	7,647.3		£	(15,906.7	)	£	10,565.1

On June 7, 2013, Virgin Media Investment Holdings Limited (VMIH), together with certain other subsidiaries of Virgin Media as borrowers and guarantors (the Virgin Media Borrower Group) entered into a new senior secured credit facility agreement (the Senior Credit Facility), pursuant to which the lenders thereunder agreed to provide the borrowers with (i) a £375.0 million term loan (Facility A), (ii) a $2,755.0 million term loan (Facility B), (iii) a £600.0 million term loan (Facility C) and (iv) a £660.0 million revolving credit facility (the Revolving Facility). With the exception of the Revolving Facility, all available amounts were borrowed under the Senior Credit Facility in June 2013.

The Senior Credit Facility requires that members of the Virgin Media Borrower Group that generate not less than 80% of such group's EBITDA (as defined in the Senior Credit Facility) in any financial year, guarantee the payment of all sums payable under the Senior Credit Facility and such group members are required to grant first-ranking security over all or substantially all of their assets to secure the payment of all sums payable. In addition, the holding company of each borrower must give a share pledge over its shares in such borrower.

In addition to mandatory prepayments which must be made for certain disposal proceeds (subject to certain de minimis thresholds), the lenders may cancel their commitments and declare the loans due and payable after 30 business days following the occurrence of a change of control in respect of the Virgin Media Borrower Group, subject to certain exceptions.

The Senior Credit Facility contains certain customary events of default, the occurrence of which, subject to certain exceptions and materiality qualifications, would allow the lenders to (i) cancel the total commitments, (ii) accelerate all outstanding loans and terminate their commitments thereunder and/or (iii) declare that all or part of the loans be payable on demand. The Senior Credit Facility contains certain representations and warranties customary for facilities of this type, which are subject to exceptions, baskets and materiality qualifications.

The Senior Credit Facility restricts the ability of the members of the Virgin Media Borrower Group to, among other things, (i) incur or guarantee certain financial indebtedness, (ii) make certain disposals and acquisitions and (iii) create certain security interests over their assets, in each case, subject to carve-outs from such limitations.

The Senior Credit Facility also requires the borrowers to observe certain affirmative undertakings or covenants, which are subject to materiality and other customary and agreed exceptions.

In addition to customary default provisions, including defaults on other indebtedness of Virgin Media Finance, and its subsidiaries, the Senior Credit Facility provides that any event of default with respect to indebtedness of £50.0 million or more in the aggregate of Virgin Media Finance and its subsidiaries is an event of default under the Senior Credit Facility.

The Senior Credit Facility permits members of the Virgin Media Borrower Group to make certain distributions and restricted payments to its parent company through loans, advances or dividends subject to compliance with applicable covenants.

During July 2013, we borrowed £149.0 million under the Revolving Facility.

Notes

Under the terms of the applicable indentures, the completion of the Mergers represented a “Change of Control” event that required Virgin Media Secured Finance and Virgin Media Finance, as applicable, to offer to repurchase the January 2021 Senior Secured Notes and the 2022 Senior Notes. In this regard, on June 11, 2013, Virgin Media Secured Finance and Virgin Media Finance, as applicable, redeemed (i) $52.1 million of the January 2021 Dollar Senior Secured Notes, (ii) £21.6 million of the January 2021 Sterling Senior Secured Notes, (iii) $405.0 million of the 2022 5.25% Dollar Senior Notes, (iv) $781.3 million of the 2022 4.875% Dollar Senior Notes and (v) £355.9 million of the 2022 Sterling Senior Notes. With respect to the 2019 Senior Notes and the 2018 Senior Secured Notes, Virgin Media previously had obtained consent from holders of such notes to waive its repurchase obligations under the respective indentures related to the “Change of Control” provisions.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 136—~~Condensed~~Debt ~~Consolidating~~and ~~Financial~~Capital ~~Information—Senior~~Lease ~~Notes~~Obligations (continued)

	Three months ended March 31, 2013
Statements of comprehensive income	Company			VirginMediaFinance			Otherguarantors			VMIH			VMIL		All othersubsidiaries			Adjustments			Total
	(in millions)
Revenue	£	—		£	—		£	—		£	—		£	—	£	1,042.5		£	—		£	1,042.5
Operating costs	—			—			—			—			—		(427.4		)	—			(427.4		)
Selling, general and administrative expenses	(5.3		)	—			—			—			—		(211.3		)	—			(216.6		)
Restructuring and other charges	—			—			—			—			—		(0.4		)	—			(0.4		)
Depreciation and amortization	—			—			—			—			—		(248.3		)	—			(248.3		)
Operating income (loss)	(5.3		)	—			—			—			—		155.1			—			149.8
Interest expense	(31.7		)	(31.0		)	(2.7		)	(72.8		)	—		(212.5		)	261.0			(89.7		)
Gain on derivative instruments	97.3			—			—			6.3			—		—			—			103.6
Foreign currency (losses) gains	(0.2		)	4.0			4.3			37.9			—		11.7			(59.9		)	(2.2		)
Interest income and other, net	—			30.7			3.4			37.0			—		190.0			(261.0		)	0.1
Income tax expense	—			—			—			(0.4		)	—		(22.3		)	—			(22.7		)
Income from continuing operations	60.1			3.7			5.0			8.0			—		122.0			(59.9		)	138.9
Equity in net income of subsidiaries	78.8			64.1			73.7			116.1			115.6		—			(448.3		)	—
Net income	£	138.9		£	67.8		£	78.7		£	124.1		£	115.6	£	122.0		£	(508.2	)	£	138.9
Total comprehensive income	£	123.8		£	65.8		£	73.8		£	122.0		£	113.5	£	122.4		£	(497.5	)	£	123.8

On February 22, 2013, in connection with the execution of the Merger Agreement, two subsidiaries of Liberty Global issued:


(i)	$1.0 billion principal amount of 5.375% senior secured notes (the April 2021 Dollar Senior Secured Notes) and £1.1 billion principal amount of 6.00% senior secured notes (the April 2021 Sterling Senior Secured Notes and, together with the April 2021 Dollar Senior Secured Notes, the April 2021 Senior Secured Notes); and


(ii)	$530.0 million principal amount of 6.375% senior notes (the 2023 Dollar Senior Notes) and £250.0 million principal amount of 7.00% senior notes (the 2023 Sterling Senior Notes and, together with the 2023 Dollar Senior Notes, the 2023 Senior Notes).

Upon completion of the Mergers, the April 2021 Senior Secured Notes and the 2023 Senior Notes were pushed down to Virgin Media Secured Finance and Virgin Media Finance, respectively.

The 2018 Senior Secured Notes, the January 2021 Senior Secured Notes and the April 2021 Senior Secured Notes are collectively referred to as the "Senior Secured Notes". The 2019 Senior Notes, the 2022 Senior Notes and the April 2023 Senior Notes are collectively referred to as the "Senior Notes". The Senior Secured Notes and the Senior Notes are collectively referred to as the "Notes".

The details of the Notes are summarized in the following table:



			As of June 30, 2013
			Outstanding principal amount
Notes	Maturity	Interest rate	Borrowing currency		Sterling equivalent		Estimated fair value		Carrying value (a)
			(in millions)
2018 Dollar senior secured notes	January 15, 2018	6.50%	$	1,000.0	£	658.6	£	678.7	£	690.2
2018 Sterling senior secured notes	January 15, 2018	7.00%	£	875.0	875.0		907.9		919.9
2019 Dollar Senior Notes	October 15, 2019	8.38%	$	507.1	334.0		363.0		369.9
2019 Sterling Senior Notes	October 15, 2019	8.88%	£	253.5	253.5		275.7		279.7
January 2021 Dollar senior secured notes	January 15, 2021	5.25%	$	447.9	295.0		295.1		305.1
January 2021 Sterling senior secured notes	January 15, 2021	5.50%	£	628.4	628.4		616.6		638.9
April 2021 Dollar senior secured notes	April 15, 2021	5.38%	$	1,000.0	658.6		664.8		658.6
April 2021 Sterling senior secured notes	April 15, 2021	6.00%	£	1,100.0	1,100.0		1,097.3		1,100.0
2022 5.25% Dollar Senior Notes	February 15, 2022	5.25%	$	95.0	62.5		57.7		63.2
2022 4.875% Dollar Senior Notes	February 15, 2022	4.88%	$	118.7	78.2		75.7		78.9
2022 Sterling Senior Notes	February 15, 2022	5.13%	£	44.1	44.1		41.8		44.6
April 2023 Dollar Senior Notes	April 15, 2023	6.38%	$	530.0	349.1		353.0		349.0
April 2023 Sterling Senior Notes	April 15, 2023	7.00%	£	250.0	250.0		249.4		250.0
					£	5,587.0	£	5,676.7	£	5,748.0

^(a)Amounts include the impact of premiums and discounts, where applicable.

The Senior Notes are unsecured senior obligations of Virgin Media Finance that rank equally with all of the existing and future senior debt of Virgin Media Finance and are senior to all existing and future subordinated debt of Virgin Media Finance. The 2019 Senior Notes and the 2022 Senior Notes are guaranteed on a senior basis by Virgin Media, Virgin Media Group LLC, Virgin Media Holdings Inc., Virgin Media (UK) Group, Inc. and Virgin Media Communications Limited and on a senior subordinated basis by VMIH and Virgin Media Investments Limited (VMIL) (collectively, the Senior Notes Guarantors).

The Senior Secured Notes are senior obligations of Virgin Media Secured Finance that rank equally with all of the existing and future senior debt of Virgin Media Secured Finance and are senior to all existing and future subordinated

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 136—~~Condensed~~Debt ~~Consolidating~~and ~~Financial~~Capital ~~Information—Senior~~Lease ~~Notes~~Obligations (continued)

	Three months ended March 31, 2012
Statements of comprehensive income	Company			VirginMediaFinance			Otherguarantors			VMIH			VMIL		All othersubsidiaries			Adjustments			Total
	(in millions)
Revenue	£	—		£	—		£	—		£	—		£	—	£	1,006.2		£	—		£	1,006.2
Operating costs	—			—			—			—			—		(416.9		)	—			(416.9		)
Selling, general and administrative expenses	(3.8		)	—			—			—			—		(209.0		)	—			(212.8		)
Restructuring and other charges	—			—			—			—			—		(5.4		)	—			(5.4		)
Depreciation and amortization	—			—			—			—			—		(240.2		)	—			(240.2		)
Operating income (loss)	(3.8		)	—			—			—			—		134.7			—			130.9
Interest expense	(25.5		)	(43.7		)	(2.7		)	(91.6		)	—		(249.9		)	307.8			(105.6		)
Loss on extinguishment of debt	—			(58.6		)	—			—			—		—			—			(58.6		)
Gain (loss) on derivative instruments	50.6			—			—			(6.1		)	—		—			—			44.5
Foreign currency (losses) gains	(0.3		)	(7.3		)	(0.1		)	(19.4		)	—		4.4			18.3			(4.4		)
Interest income and other, net	—			47.2			3.9			50.1			—		206.9			(307.8		)	0.3
Income tax expense	—			—			—			—			—		(0.1		)	—			(0.1		)
Income (loss) from continuing operations	21.0			(62.4		)	1.1			(67.0		)	—		96.0			18.3			7.0
Equity in net (loss) income of subsidiaries	(14.0		)	42.5			(15.1		)	91.1			90.6		—			(195.1		)	—
Net income (loss)	£	7.0		£	(19.9	)	£	(14.0	)	£	24.1		£	90.6	£	96.0		£	(176.8	)	£	7.0
Total comprehensive income (loss)	£	33.3		£	(19.9	)	£	(12.5	)	£	19.5		£	90.6	£	96.0		£	(195.1	)	£	11.9

debt of Virgin Media Secured Finance. The Senior Secured Notes are guaranteed on a senior basis by Virgin Media Secured Finance, Virgin Media, VMIH, and certain subsidiaries of Virgin Media (the Senior Secured Guarantors) and are secured by liens on substantially all of the assets of Virgin Media Secured Finance and the Senior Secured Guarantors.

Subject to the circumstances described below, the January 2021 Senior Secured Notes and the 2022 Senior Notes are non-callable. At any time prior to maturity, Virgin Media Secured Finance or Virgin Media Finance (as applicable) may redeem some or all of the January 2021 Senior Secured Notes or the 2022 Senior Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to (i) January 15, 2021 using the discount rate (as specified in the indenture) as of the applicable redemption date plus 25 basis points in the case of the January 2021 Senior Secured Notes or (ii) February 15, 2022 using the discount rate (as specified in the applicable indenture) as of the applicable redemption date plus 50 basis points in the case of the 2022 Senior Notes.

Subject to the circumstances described below, the 2018 Senior Secured Notes are non-callable until January 15, 2014 , the 2019 Senior Notes are non-callable until October 15, 2014, the April 2021 Senior Secured Notes are non-callable until April 15, 2017 and the 2023 Senior Notes are non-callable until April 15, 2018. At any time prior to January 15, 2014 in the case of the 2018 Senior Secured Notes, October 15, 2014 in the case of the 2019 Senior Notes, April 15, 2017 in the case of the April 2021 Senior Secured Notes or April 15, 2018 in the case of the 2023 Senior Notes, Virgin Media Secured Finance and Virgin Media Finance (as applicable) may redeem some or all of the 2018 Senior Secured Notes, the 2019 Senior Notes, the April 2021 Senior Secured Notes or the 2023 Senior Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to January 15, 2014, October 15, 2014, April 15, 2017 or April 15, 2018 (as applicable) using the discount rate (as specified in the applicable indenture) as of the redemption date plus 50 basis points.

Virgin Media Finance and Virgin Media Secured Finance (as applicable) may redeem some or all of the 2018 Senior Secured Notes, the 2019 Senior Notes, the April 2021 Senior Secured Notes or the 2023 Senior Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and Additional Amounts (as defined in the applicable indenture), if any, to the applicable redemption date, if redeemed during the twelve-month period commencing on January 15 in the case of the 2018 Senior Secured Notes, October 15 in the case of the 2019 Senior Notes or April 15 in the case of the April 2021 Senior Secured Notes and the 2023 Senior Notes of the years set forth below:



	Redemption price
Year	2018 Dollar Senior Secured Notes	2018 Sterling Senior Secured Notes	2019 Dollar Senior Notes	2019 Sterling Senior Notes	April 2021 Dollar Senior Secured Notes	April 2021 Sterling Senior Secured Notes	2023 Dollar Senior Notes	2023 Sterling Senior Notes
2014	103.250%	103.500%	104.188%	104.538%	N.A.	N.A.	N.A.	N.A.
2015	101.625%	101.750%	102.792%	102.958%	N.A.	N.A.	N.A.	N.A.
2016	100.000%	100.000%	101.396%	101.479%	N.A.	N.A.	N.A.	N.A.
2017	100.000%	100.000%	100.000%	100.000%	102.688%	103.000%	N.A.	N.A.
2018	N.A.	N.A.	100.000%	100.000%	101.344%	101.500%	103.188%	103.500%
2019	N.A.	N.A.	N.A.	N.A.	100.000%	100.000%	102.125%	102.333%
2020	N.A.	N.A.	N.A.	N.A.	100.000%	100.000%	101.063%	101.667%
2021 and thereafter	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	100.000%	100.000%

In addition, at any time prior to April 15, 2016, Virgin Media Secured Finance and Virgin Media Finance (as applicable) may redeem up to 40% of the April 2021 Senior Secured Notes and the 2023 Senior Notes, respectively, at redemption prices of 105.375% in the case of the April 2021 Dollar Senior Secured Notes, 106.000% in the case of the April 2021 Sterling Senior Secured Notes, 106.375% in the case of the 2023 Dollar Senior Notes and 107.000% in the case of the 2023 Sterling Senior Notes, with the net proceeds from one or more specified equity offerings. Further, Virgin Media Finance and Virgin Media Secured Finance (as applicable) may redeem all, but not less than all, of the Senior Notes and Senior Secured Notes at a price equal to their respective principal amount plus accrued and unpaid interest upon the occurrence of certain changes in tax law.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 136—~~Condensed~~Debt ~~Consolidating~~and ~~Financial~~Capital ~~Information—Senior~~Lease ~~Notes~~Obligations (continued)

	Three months ended March 31, 2013
Statements of cash flows	Company			VirginMediaFinance			Otherguarantors			VMIH			VMIL		Allothersubsidiaries			Adjustments		Total
	(in millions)
Net cash provided by (used in) operating activities	£	(29.7	)	£	(1.0	)	£	(1.5	)	£	(31.3	)	£	—	£	369.5		£	—	£	306.0
Investing activities:
Purchase of fixed and intangible assets	—			—			—			—			—		(174.4		)	—		(174.4		)
Proceeds from sale of fixed assets	—			—			—			—			—		1.5			—		1.5
Principal drawdowns (repayments) on loans to group companies	38.0			1.0			1.6			31.2			—		(71.8		)	—		—
Net cash (used in) provided by investing activities	38.0			1.0			1.6			31.2			—		(244.7		)	—		(172.9		)
Financing activities:
Proceeds from employee stock option exercises, net of taxes reimbursed	9.6			—			—			—			—		—			—		9.6
Principal payments on long term debt and capital leases	(1.5		)	—			—			—			—		(22.6		)	—		(24.1		)
Dividends paid	(7.1		)	—			—			—			—		—			—		(7.1		)
Net cash (used in) provided by financing activities	1.0			—			—			—			—		(22.6		)	—		(21.6		)
Effect of exchange rates on cash and cash equivalents	0.8			—			—			—			—		—			—		0.8
Increase (decrease) in cash and cash equivalents	10.1			—			0.1			(0.1		)	—		102.2			—		112.3
Cash and cash equivalents at beginning of period	10.3			1.0			0.1			0.1			—		194.8			—		206.3
Cash and cash equivalents at end of period	£	20.4		£	1.0		£	0.2		£	—		£	—	£	297.0		£	—	£	318.6

Convertible Notes

In April 2008, the Predecessor issued $1.0 billion principal amount of 6.50% convertible senior notes (the Convertible Notes), pursuant to an indenture (the Convertible Notes Indenture). The Convertible Notes mature on November 15, 2016 unless the Convertible Notes are exchanged or repurchased prior thereto pursuant to the terms of the Convertible Notes Indenture.

As a result of the application of acquisition accounting in connection with the Mergers, the $2,716.8 million (£1,748.7 million) estimated fair value of the Convertible Notes at June 7, 2013 was allocated between the respective debt and equity components. The portion allocated to the debt component of $1,056.8 million (£680.2 million) was measured based on the estimated fair value of a debt instrument that has the same terms as the Convertible Notes without the conversion feature. The amount allocated to the debt component resulted in a premium to the principal amount of the Convertible Notes. The $1,660.0 million (£1,068.5 million) portion allocated to the equity component at June 7, 2013 was recorded as a derivative instrument included within current liabilities. The equity component is accounted for as an embedded derivative that requires bifurcation from the debt instrument due to the fact that the conversion option is indexed to Liberty Global shares. The fair value of the derivative liability at June 30, 2013 is £154.2 million.

The Convertible Notes are exchangeable under certain conditions for (subject to further adjustment as provided in the Convertible Notes Indenture and subject to our right to settle in cash or a combination of Liberty Global ordinary shares and cash) 13.4339 class A ordinary shares of Liberty Global, 10.0312 class C ordinary shares of Liberty Global and $910.51 in cash (without interest) for each $1,000 in principal amount of Convertible Notes exchanged. The circumstances under which the Convertible Notes are exchangeable are more fully described in the Convertible Notes Indenture, including, for example, based on the relationship of the value of the Merger Consideration to the conversion price of the Convertible Notes. Based on the trading prices of Liberty Global's class A and class C ordinary shares during a specified period, as provided for in the Convertible Notes Indenture, the Convertible Notes are currently exchangeable. Because the Mergers constituted a “Fundamental Change” and a “Make-Whole Fundamental Change” under the Convertible Notes Indenture, a holder of the Convertible Notes who exchanged such notes at any time from June 7, 2013 to, and including, July 9, 2013 (the Make-Whole Exchange Period), received 13.8302 class A ordinary shares of Liberty Global, 10.3271 class C ordinary shares of Liberty Global and $937.37 in cash (without interest) for each $1,000 in principal amount of Convertible Notes exchanged.

As of June 30, 2013, an aggregate of $853.9 million principal amount of the Convertible Notes had been exchanged following the Mergers for 11.8 million class A ordinary shares of Liberty Global and 8.8 million class C ordinary shares of Liberty Global and $800.4 million (£515.9 million) of cash. No gain or loss on extinguishment was recorded for these exchanges as the debt component of the Convertible Notes was measured at fair value shortly before the exchanges pursuant to the application of acquisition accounting in connection with the Mergers.

Subsequent to June 30, 2013, an additional $90.3 million principal amount of Convertible Notes was exchanged for 1.2 million class A ordinary shares of Liberty Global and 0.9 million class C ordinary shares of Liberty Global and $84.6 million (£56.8 million) of cash during the remainder of the Make-Whole Exchange Period. After giving effect to all exchanges completed during the Make-Whole Exchange Period, the remaining principal amount outstanding under the Convertible Notes was $54.8 million.

The Convertible Notes are senior unsecured obligations of Virgin Media that rank equally in right of payment with all of Virgin Media’s existing and future senior and unsecured indebtedness and ranks senior in right to all of Virgin Media’s existing and future subordinated indebtedness. The Convertible Notes are effectively subordinated to all existing and future indebtedness and other obligations of Virgin Media’s subsidiaries. The Convertible Notes Indenture does not contain any financial or restrictive covenants. The Convertible Notes are non-callable.

MergerCo Bridge Facility Agreement

On June 5, 2013, Liberty Global entered into a short-term unsecured bridge credit facility agreement as borrower with its wholly-owned subsidiary, UnitedGlobalCom, Inc. (“UGC”), as guarantor and The Royal Bank of Scotland as lender in an aggregate principal amount of approximately $3,545 million (the “MergerCo Bridge Facility Agreement”), with amounts borrowed to be applied towards paying the consideration for the Mergers together with any related fees, costs and expenses. This facility was pushed down to the Successor on June 7, 2013.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 136—~~Condensed~~Debt ~~Consolidating~~and ~~Financial~~Capital ~~Information—Senior~~Lease ~~Notes~~Obligations (continued)

	Three months ended March 31, 2012
Statements of cash flows	Company			VirginMediaFinance			Otherguarantors			VMIH			VMIL		Allothersubsidiaries			Adjustments		Total
	(in millions)
Net cash provided by (used in) operating activities	£	(10.9	)	£	(51.0	)	£	(1.2	)	£	(67.9	)	£	—	£	343.1		£	—	£	212.1
Investing activities:
Purchase of fixed and intangible assets	—			—			—			—			—		(184.1		)	—		(184.1		)
Proceeds from sale of fixed assets	—			—			—			—			—		0.9			—		0.9
Principal drawdowns (repayments) on loans to group companies	182.9			49.0			1.4			65.5			—		(298.8		)	—		—
Acquisitions, net of cash	—			—			—			—			—		(0.6		)	—		(0.6		)
Disposal of equity investments, net	—			—			—			—			—		(2.5		)	—		(2.5		)
Net cash (used in) provided by investing activities	182.9			49.0			1.4			65.5			—		(485.1		)	—		(186.3		)
Financing activities:
New borrowings, net of financing fees	—			316.0			—			—			—		(0.1		)	—		315.9
Repurchase of common stock	(157.3		)	—			—			—			—		—			—		(157.3		)
Proceeds from employee stock option exercises, net of taxes reimbursed	(2.1		)	—			—			—			—		—			—		(2.1		)
Principal payments on long term debt and capital leases	—			(314.0		)	—			—			—		(21.4		)	—		(335.4		)
Proceeds from settlement of cross currency swaps	—			—			—			2.3			—		—			—		2.3
Dividends paid	(7.0		)	—			—			—			—		—			—		(7.0		)
Net cash (used in) provided by financing activities	(166.4		)	2.0			—			2.3			—		(21.5		)	—		(183.6		)
Effect of exchange rates on cash and cash equivalents	(1.5		)	—			—			—			—		—			—		(1.5		)
(Decrease) increase in cash and cash equivalents	4.1			—			0.2			(0.1		)	—		(163.5		)	—		(159.3		)
Cash and cash equivalents at beginning of period	£	16.2		£	1.9		£	0.3		£	0.1		£	—	£	281.9		£	—	£	300.4
Cash and cash equivalents at end of period	£	20.3		£	1.9		£	0.5		£	—		£	—	£	118.4		£	—	£	141.1

Amounts borrowed under the MergerCo Bridge Facility Agreement were repaid on June 12, 2013 using proceeds from issuance of the April 2021 Senior Secured Notes and the 2023 Senior Notes. There was no margin or interest payable under the MergerCo Bridge Facility Agreement. However, the lender was paid a commitment fee. The MergerCo Bridge Facility Agreement was an unsecured credit facility. However, the lender benefited from a guarantee and indemnity issued by UGC.

The Successor made certain representations and warranties in favor of the lender, including with respect to its corporate status (i) capacity and authority to enter into the finance documents, (ii) its solvency, (iii) the binding nature of its obligations and (iv) the non-conflict of such obligations with its other obligations, as to the activities that it carries out and the accuracy of the information provided. It also gave certain customary undertakings, including (a) the maintenance of necessary authorizations, (b) compliance with laws and (c) the pari passu ranking of the loan.

Maturities of Debt and Capital Lease Obligations

The maturities of our debt and capital lease obligations as of June 30, 2013 are presented below (in millions):



Year ending December 31:	Debt			Capital lease obligations			Total
2013 (remainder of year)	£	95.5		£	51.1		£	146.6
2014	—			77.0			77.0
2015	—			53.8			53.8
2016	—			25.1			25.1
2017	—			2.0			2.0
2018	1,533.6			0.1			1,533.7
Thereafter	6,842.6			34.7			6,877.3
Total debt maturities	8,471.7			243.8			8,715.5
Unamortized premium	154.7			—			154.7
Total debt	£	8,626.4		£	243.8		£	8,870.2
Current portion	(101.2		)	(91.5		)	(192.7		)
Non-current portion	£	8,525.2		£	152.3		£	8,677.5

Non-cash Refinancing Transactions

During the Successor Period, certain of our refinancing transactions included non-cash borrowings and repayments of debt aggregating £750.0 million.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 7—Income ~~14 - Condensed Consolidating Financial Information - Senior Secured Notes~~Taxes

WeIncome ~~present~~tax expense attributable to our earnings before income taxes during the ~~following~~Successor ~~condensed~~period ~~consolidating~~from ~~financial~~June ~~information~~8 asto ofJune ~~March 31~~30, 2013, ~~and~~the ~~December 31~~Predecessor period from April 1 to June 7, ~~2012~~2013 and the Predecessor period for the three months ended ~~March 31~~June 30, ~~2013~~2012 ~~and~~differs ~~2012~~from asthe ~~required~~amounts computed by ~~Rule 3-10(d)~~applying ~~of Regulation~~the U.S-X. federal income tax rate of 35%, as a result of the following (in millions):

As of March 31, 2013, VMSF is the issuer of the following senior secured notes:



	Successor			Predecessor
	Period from June 8 to June 30, 2013			Period from April 1 to June 7, 2013			Three months ended June 30, 2012
Computed expected tax benefit (expense)	£	(22.7	)	£	15.3		£	(22.8	)
Change in valuation allowances	(3.4		)	(7.8		)	22.5
Non-deductible or non-taxable interest and other expenses	12.0			(12.6		)	—
International rate differences^(a)	7.8			10.1			—
Other, net	(0.2		)	(0.4		)	—
Total	£	(6.5	)	£	4.6		£	(0.3	)

•(a) ~~£875~~Amounts ~~million~~reflect ~~aggregate~~statutory ~~principal~~rates ~~amount~~in ofthe 7U.~~00%~~K. ~~senior~~which ~~notes~~are ~~due~~lower ~~2018~~than the U.S. federal income tax rate.

•At $1June 30,~~000~~ ~~million~~2013, ~~aggregate~~we ~~principal~~had ~~amount~~no ofsignificant ~~6.50%~~changes ~~senior~~to ~~notes~~the ~~due~~unrecognized ~~2018~~tax benefits disclosed in the Predecessor 's 2012 Annual Report.

•During the fourth quarter of the Predecessor's year ended December 31, 2012, £~~650~~2.5 ~~million~~billion ~~aggregate~~of ~~principal~~the ~~amount~~valuation allowance on certain of 5the U.~~50%~~K. ~~senior~~deferred ~~notes~~tax ~~due~~assets ~~2021~~and £0.1 billion of the valuation allowance on the U.S. deferred tax assets in dual resident companies were reversed. The basis of these reversals is explained in note 11 to the audited consolidated financial statements included in the Predecessor's 2012 Annual Report.

•The ~~$500~~deferred ~~million~~tax ~~aggregate~~assets ~~principal~~and ~~amount~~liabilities presented as of 5June 30, 2013 reflect the current U.25K. corporate income tax rate of 23%. ~~senior~~During ~~notes~~the ~~due~~three ~~2021~~months ended March 31, 2013, it was announced that the U.K. corporate income tax rate will fall to 21% from April 2014 and 20% from April 2015. This change was enacted in July 2013; therefore, the impact will be reflected in the financial statements for the three months ended September 30, 2013.

~~Our~~Note senior secured notes are issued by VMSF and are guaranteed on a senior basis by Virgin Media Inc., Virgin Media Group LLC, Virgin Media Holdings Inc., Virgin Media (UK) Group, Inc. and Virgin Media Communications Limited and on a senior subordinated basis by VMIH and VMIL. They also rank pari passu with and, subject to certain exceptions, share in the same guarantees and security which has been granted in favor of our senior credit facility.8—Equity

	March 31, 2013
Balance sheets	Company		Virgin MediaSecuredFinance		Guarantors			Non-Guarantors		Adjustments			Total
	(in millions)
Cash and cash equivalents	£	20.4	£	—	£	292.6		£	5.6	£	—		£	318.6
Restricted cash	—		—		1.0			0.9		—			1.9
Deferred income taxes	—		—		57.8			—		—			57.8
Other current assets	0.2		—		536.6			—		—			536.8
Total current assets	20.6		—		888.0			6.5		—			915.1
Fixed assets, net	—		—		3,907.6			577.7		—			4,485.3
Goodwill and intangible assets, net	—		—		1,869.2			148.3		—			2,017.5
Investments in, and loans to, parent and subsidiary companies	3,520.5		2,664.8		(1,164.9		)	4,209.1		(9,229.5		)	—
Deferred income taxes	—		—		2,622.9			—		—			2,622.9
Other assets, net	427.1		23.6		314.9			—		—			765.6
Total assets	£	3,968.2	£	2,688.4	£	8,437.7		£	4,941.6	£	(9,229.5	)	£	10,806.4
Current liabilities	£	33.7	£	41.8	£	1,341.4		£	560.1	£	(769.9	)	£	1,207.1
Long term debt, net of current portion	582.6		2,642.1		2,804.6			—		—			6,029.3
Other long term liabilities	0.2		—		204.5			13.6		—			218.3
Total liabilities	616.5		2,683.9		4,350.5			573.7		(769.9		)	7,454.7
Shareholders’ equity	3,351.7		4.5		4,087.2			4,367.9		(8,459.6		)	3,351.7
Total liabilities and shareholders’ equity	£	3,968.2	£	2,688.4	£	8,437.7		£	4,941.6	£	(9,229.5	)	£	10,806.4

On consummation of the Merger with Liberty Global on June 7, 2013, all Predecessor issued share capital was cancelled with the holders becoming entitled to receive the Merger consideration of $17.50 and 0.2582 class A ordinary shares in Liberty Global and 0.1928 class C ordinary shares in Liberty Global.

Details of the Predecessor Capital Structure Optimization programs, which include repurchases of common stock, are set out in the Predecessor's 2012 Annual Report. No repurchases of common stock were made during the Predecessor period from January 1 to June 7, 2013. Upon consummation of the Mergers, the Predecessor Capital Structure Optimization programs were cancelled.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 14 9—Share-Based ~~Condensed~~Incentive ~~Consolidating Financial Information - Senior Secured Notes (continued)~~Awards

	December 31, 2012
Balance sheets	Company		Virgin MediaSecuredFinance		Guarantors			Non-Guarantors		Adjustments			Total
	(in millions)
Cash and cash equivalents	£	10.3	£	—	£	191.9		£	4.1	£	—		£	206.3
Restricted cash	—		—		1.0			0.9		—			1.9
Deferred income taxes	—		—		58.1			—		—			58.1
Other current assets	0.2		—		552.9			—		—			553.1
Total current assets	10.5		—		803.9			5.0		—			819.4
Fixed assets, net	—		—		3,917.9			594.3		—			4,512.2
Goodwill and intangible assets, net	—		—		1,869.2			148.3		—			2,017.5
Investments in, and loans to, parent and subsidiary companies	3,474.9		2,589.8		(1,203.9		)	4,053.8		(8,914.6		)	—
Deferred income taxes	—		—		2,641.7			—		—			2,641.7
Other assets, net	308.3		24.6		241.4			—		—			574.3
Total assets	£	3,793.7	£	2,614.4	£	8,270.2		£	4,801.4	£	(8,914.6	)	£	10,565.1
Current liabilities	£	31.1	£	28.5	£	1,329.4		£	485.6	£	(650.6	)	£	1,224.0
Long term debt, net of current portion	544.0		2,581.8		2,726.2			—		—			5,852.0
Other long term liabilities	0.2		—		255.8			14.7		—			270.7
Total liabilities	575.3		2,610.3		4,311.4			500.3		(650.6		)	7,346.7
Shareholders’ equity	3,218.4		4.1		3,958.8			4,301.1		(8,264.0		)	3,218.4
Total liabilities and shareholders’ equity	£	3,793.7	£	2,614.4	£	8,270.2		£	4,801.4	£	(8,914.6	)	£	10,565.1

Share-based incentive expense and assumptions

In the Predecessor periods, share-based compensation plans represent options and performance shares issued over the Predecessor Virgin Media stock. On closing of the Mergers, Predecessor Virgin Media awards with respect to 12,814,176 shares were replaced with Liberty Global awards (Virgin Media Replacement Awards).

The following tables summarize our share-based compensation expense for the Successor period from June 8 to June 30, 2013, the Predecessor period from April 1 to June 7, 2013, the Predecessor period from January 1 to June 7, 2013, the Predecessor period for the three months ended June 30, 2012 and the Predecessor period for the six months ended June 30, 2012 (in millions):



	Successor		Predecessor
	Period from June 8 to June 30, 2013		Period from April 1 to June 7, 2013		Three months ended June 30, 2012
Ordinary shares:
Performance-based incentive awards	£	0.2	£	4.9	£	2.3
Other share-based incentive awards	23.0		6.7		4.4
Total	£	23.2	£	11.6	£	6.7
Included in:
Selling, general and administrative	£	23.2	£	11.6	£	6.7
Total	£	23.2	£	11.6	£	6.7



	Successor		Predecessor
	Period from June 8 to June 30, 2013		Period from January 1 to June 7, 2013		Six months ended June 30, 2012
Ordinary shares:
Performance-based incentive awards	£	0.2	£	10.0	£	6.4
Other share-based incentive awards	23.0		12.1		10.6
Total	£	23.2	£	22.1	£	17.0
Included in:
Selling, general and administrative	£	23.2	£	22.1	£	17.0
Total	£	23.2	£	22.1	£	17.0

In accordance with the terms of the Merger Agreement, Liberty Global share-based incentive awards (Virgin Media Replacement Awards) were issued to Virgin Media employees in exchange for corresponding Virgin Media awards. In connection with the Mergers, the Virgin Media Replacement Awards were measured as of June 7, 2013, resulting in an aggregate estimated fair value attributable to the Successor period of £123.8 million. During the Successor period from June 8 to June 30, 2013, £16.7 million of the June 7, 2013 estimated fair value of the Virgin Media Replacement Awards was charged to expense in recognition of the Virgin Media Replacement Awards that were fully vested on June 7, 2013 or for which vesting was accelerated pursuant to the terms of the Merger Agreement on or prior to June 30, 2013. The remaining June 7, 2013 estimated fair value will be amortized over the remaining service periods of the unvested Virgin Media Replacement Awards, subject to forfeitures and the satisfaction of performance conditions, including £4.1 million that was amortized during the Successor period from June 8 to June 30, 2013. Including this amortization, the aforementioned amount charged to expense and £2.4 million of national insurance taxes, the Virgin Media Replacement Awards accounted for all of our share-based compensation expense related to the Successor period from June 8 to June 30, 2013.

The following table provides certain information related to share-based compensation not yet recognized for share-based incentive awards related to Liberty Global ordinary shares as of June 30, 2013:



	Performance Awards		Other awards
Total compensation expense not yet recognized (in millions)	£	15.8	£	96.5
Weighted average period remaining for expense recognition (in years)	2.5		2.0

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 14 9—Share-Based ~~Condensed~~Incentive ~~Consolidating~~Awards ~~Financial Information - Senior Secured Notes~~ (continued)

	Three months ended March 31, 2013
Statements of comprehensive income	Company			Virgin MediaSecuredFinance			Guarantors			Non-Guarantors			Adjustments			Total
	(in millions)
Revenue	£	—		£	—		£	980.3		£	62.2		£	—		£	1,042.5
Operating costs	—			—			(408.3		)	(19.1		)	—			(427.4		)
Selling, general and administrative expenses	(5.3		)	—			(198.4		)	(12.9		)	—			(216.6		)
Restructuring and other charges	—			—			(0.4		)	—			—			(0.4		)
Depreciation and amortization	—			—			(225.6		)	(22.7		)	—			(248.3		)
Operating income (loss)	(5.3		)	—			147.6			7.5			—			149.8
Interest expense	(31.7		)	(40.9		)	(192.6		)	(92.9		)	268.4			(89.7		)
Gain on derivative instruments	97.3			—			6.3			—			—			103.6
Foreign currency (losses) gains	(0.2		)	—			68.7			(10.8		)	(59.9		)	(2.2		)
Interest and other income, net	—			41.2			131.9			95.4			(268.4		)	0.1
Income tax expense	—			—			(22.7		)	—			—			(22.7		)
Income (loss) from continuing operations	60.1			0.3			139.2			(0.8		)	(59.9		)	138.9
Equity in net income (loss) of subsidiaries	78.8			—			(8.8		)	79.7			(149.7		)	—
Net income	£	138.9		£	0.3		£	130.4		£	78.9		£	(209.6	)	£	138.9
Total comprehensive income	£	123.8		£	0.3		£	128.3		£	73.8		£	(202.4	)	£	123.8

The following table summarizes certain information related to the incentive awards granted and exercised with respect to Liberty Global shares, including the Virgin Media replacement awards. The equivalent information for the Predecessor's share-based incentive awards is contained in the Predecessor's 2012 Annual Report.



	Successor
	Period from June 8 to June 30, 2013
Assumptions used to estimate fair value of options, performance based share appreciation rights (PSARs), restricted shares and restricted share units (RSUs) and performance based share units (PSUs) granted:
Risk-free interest rate	1.0		%
Expected life	0.01 - 4.57yrs
Expected volatility	0.0 - 32.6%
Expected dividend yield	none

Weighted average grant-date fair value per share awards granted:
Options	£	29.41
PSARs	£	10.73
RSUs	£	47.79
PSUs	£	43.68

Total intrinsic value of awards exercised (in millions):
Options	£	13.0

Cash received from exercise of options (in millions)	£	6.9
Income tax benefit related to share-based compensation (in millions)	£	4.8

The fair values of the Virgin Media Replacement Awards issued on consummation of the Mergers were estimated at the date of grant (June 7, 2013) using a Black-Scholes option pricing model using the assumptions detailed above.

Challenge performance awards

Effective June 24, 2013, Liberty Global's compensation committee approved a grant of challenge performance awards to certain executive officers and key employees (the “Challenge Performance Awards”). The Challenge Performance Awards for Liberty Global's executive officers and other key employees consist of a combination of PSARs and PSUs, in each case divided equally between Challenge Performance Awards based on class A ordinary shares and Challenge Performance Awards based on class C ordinary shares, for an aggregate of 5,897,500 PSARs and 269,450 PSUs (including 610,000 PSARs and 68,050 PSUs granted to executive officers and key employees of Virgin Media). Each PSU represents the right to receive one class A ordinary share or one class C ordinary share of Liberty Global, as applicable, subject to performance and vesting. The performance period for the Challenge Performance Awards will be based on the compensation committee's assessment of the executive officer's performance and achievement of individual goals in each of the years 2013, 2014 and 2015.

As the performance measure, the compensation committee selected high levels of individual performance that must be maintained throughout the performance period based on our company's internal annual performance rating guidelines. In the event such performance levels are not maintained by a participant, the compensation committee has the discretion to reduce by up to 100% the amount of such participant's Challenge Performance Awards that will vest on June 24, 2016.

The PSARs have a term of seven years and base prices equal to the respective market closing prices of the applicable class on the grant date, which was $69.70 for the class A PSARs and $65.56 for the class C PSARs.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 14 9—Share-Based ~~Condensed~~Incentive ~~Consolidating~~Awards ~~Financial Information - Senior Secured Notes~~ (continued)

	Three months ended March 31, 2012
Statements of comprehensive income	Company			Virgin MediaSecuredFinance			Guarantors			Non-Guarantors			Adjustments			Total
	(in millions)
Revenue	£	—		£	—		£	947.2		£	59.0		£	—		£	1,006.2
Operating costs	—			—			(398.6		)	(18.3		)	—			(416.9		)
Selling, general and administrative expenses	(3.8		)	—			(195.8		)	(13.2		)	—			(212.8		)
Restructuring and other charges	—			—			(3.0		)	(2.4		)	—			(5.4		)
Depreciation and amortization	—			—			(218.8		)	(21.4		)	—			(240.2		)
Operating income (loss)	(3.8		)	—			131.0			3.7			—			130.9
Interest expense	(25.5		)	(40.8		)	(254.1		)	(100.6		)	315.4			(105.6		)
Loss on extinguishment of debt	—			—			(58.6		)	—			—			(58.6		)
Gain (loss) on derivative instruments	50.6			—			(6.1		)	—			—			44.5
Foreign currency (losses) gains	(0.3		)	—			(33.0		)	10.6			18.3			(4.4		)
Interest and other income, net	—			41.1			166.7			107.9			(315.4		)	0.3
Income tax expense	—			—			(0.1		)	—			—			(0.1		)
Income (loss) from continuing operations	21.0			0.3			(54.2		)	21.6			18.3			7.0
Equity in net (loss) income of subsidiaries	(14.0		)	—			17.0			(35.6		)	32.6			—
Net income (loss)	£	7.0		£	0.3		£	(37.2	)	£	(14.0	)	£	50.9		£	7.0
Total comprehensive income (loss)	£	33.3		£	0.3		£	(37.2	)	£	(17.1	)	£	32.6		£	11.9

The Challenge Performance Awards are subject to forfeiture or acceleration in connection with certain terminations of employment or change-in-control events.

Performance share awards

On June 24, 2013, Liberty Global's compensation committee granted to Virgin Media's executive officers and certain key employees a total of 123,801 Liberty Global class A PSUs and 92,389 Liberty Global class C PSUs, pursuant to the Virgin Media 2010 Stock Incentive Plan. Each PSU represents the right to receive one share of class A ordinary share or class C ordinary share, as applicable, subject to performance and vesting. The performance period for these PSUs (the 2013 PSUs) is January 1, 2013 to December 31, 2014. As the performance measure, the compensation committee selected the compound annual growth rate in consolidated operating cash flow (OCF CAGR) from 2012 to 2014, as adjusted for events such as acquisitions, dispositions and changes in foreign currency exchange rates and accounting principles or policies that effect comparability. The target OCF CAGR selected by the committee was based upon a comparison of our 2012 actual results to those reflected in our then existing long-range plan for 2014. The target OCF CAGR is subject to upward or downward adjustment for certain events in accordance with the terms of the grant agreement. A performance range of 75% to 125% of the target OCF CAGR would generally result in award recipients earning 50% to 150% of their 2013 PSUs, subject to reduction or forfeiture based on individual performance. One-half of the earned 2013 PSUs will vest on March 31, 2015 and the balance will vest on September 30, 2015. Liberty Global's compensation committee also established a minimum OCF CAGR base performance objective, subject to certain limited adjustments, which must be satisfied in order for our named executive officers to be eligible to earn any of their 2013 PSUs.

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 14 9—Share-Based ~~Condensed~~Incentive ~~Consolidating~~Awards ~~Financial Information - Senior Secured Notes~~ (continued)

	Three months ended March 31, 2013
Statements of cash flows	Company			Virgin MediaSecuredFinance			Guarantors			Non-Guarantors			Adjustments		Total
	(in millions)
Net cash provided by (used in) operating activities	£	(29.7	)	£	(0.1	)	£	255.3		£	80.5		£	—	£	306.0
Investing activities:
Purchase of fixed and intangible assets	—			—			(157.2		)	(17.2		)	—		(174.4		)
Proceeds from sale of fixed assets	—			—			1.5			—			—		1.5
Principal drawdowns (repayments) on loans to group companies	38.0			0.1			23.7			(61.8		)	—		—
Net cash (used in) provided by investing activities	38.0			0.1			(132.0		)	(79.0		)	—		(172.9		)
Financing activities:
Proceeds from employee stock option exercises, net of taxes reimbursed	9.6			—			—			—			—		9.6
Principal payments on long term debt and capital leases	(1.5		)	—			(22.6		)	—			—		(24.1		)
Dividends paid	(7.1		)	—			—			—			—		(7.1		)
Net cash (used in) provided by financing activities	1.0			—			(22.6		)	—			—		(21.6		)
Effect of exchange rates on cash and cash equivalents	0.8			—			—			—			—		0.8
Increase in cash and cash equivalents	10.1			—			100.7			1.5			—		112.3
Cash and cash equivalents at beginning of period	10.3			—			191.9			4.1			—		206.3
Cash and cash equivalents at end of period	£	20.4		£	—		£	292.6		£	5.6		£	—	£	318.6

The following tables summarize the share-based award activity for the Predecessor period January 1, 2013 to June 7, 2013 and the Successor period June 8, 2013 to June 30, 2013 and contemplates the change-in-control on June 7, 2013:



Options	Number of shares		Weighted average exercise price		Weighted average remaining contractual term (years)	Aggregate intrinsic value ($ million)
Outstanding Predecessor options at January 1, 2013	11,842,974		$	18.75	6.8	$	213.2
Granted	1,070,934		37.87		9.7	14.1
Expired or cancelled	(318,263	)	21.93		7.9	9.3
Exercised	(2,732,654	)	16.43		6.0	88.1
Outstanding Predecessor options exchanged for Liberty Global class A and C ordinary shares at June 7, 2013	9,862,991		$	21.36	6.8	$	292.3


Liberty Global class A ordinary share awards at June 8, 2013 granted in exchange for Predecessor options	3,934,574		$	31.16	6.7	$	166.5
Expired or cancelled	(25,541	)	56.42		9.6	0.4
Exercised	(264,111	)	26.05		5.9	12.3
Outstanding Liberty Global class A ordinary share options at June 30, 2013	3,644,922		$	31.36	6.7	$	153.6

Liberty Global class C ordinary share awards at June 8, 2013 granted in exchange for Predecessor options	2,935,250		$	27.16	6.7	$	119.6
Expired or cancelled	(19,061	)	52.42		9.6	0.3
Exercised	(173,106	)	22.49		6.0	7.9
Outstanding Liberty Global class C ordinary share options at June 30, 2013	2,743,083		$	27.29	6.7	$	111.4



RSUs	Number of shares		Weighted average grant date fair value per share		Weighted average remaining contractual term (years)
Outstanding Predecessor RSUs at January 1, 2013	1,781,742		$	15.64	6.8
Granted	50,101		39.39		9.6
Expired or cancelled	(578,801	)	15.34		6.7
Exercised	(858,701	)	14.10		6.6
Outstanding Predecessor RSUs at June 7, 2013	394,341		$	22.43	7.8


Liberty Global class A RSUs at June 8, 2013 granted in exchange for Predecessor RSUs and PSUs	900,408		$	76.24	8.3
Granted	8,334		69.72		10.0
Expired or cancelled	(746	)	76.24		9.6
Exercised	(60,509	)	76.24		8.6
Outstanding Liberty Global class A RSUs at June 30, 2013	847,487		$	76.18	8.3

Liberty Global class C RSUs at June 8, 2013 granted in exchange for Predecessor RSUs and PSUs	671,923		$	71.51	8.3
Granted	8,334		65.32		10.0
Expired or cancelled	(557	)	71.51		9.6
Exercised	(45,157	)	71.51		8.6
Outstanding Liberty Global class C RSUs at June 30, 2013	634,543		$	71.43	8.3

Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Note 14 9—Share-Based ~~Condensed~~Incentive ~~Consolidating~~Awards ~~Financial Information - Senior Secured Notes~~ (continued)

	Three months ended March 31, 2012
PSUs	Number of shares			Weighted average grant date fair value per share			Weighted average remaining contractual term (years)
Statements of cash flows	Company				Virgin MediaSecuredFinance			Guarantors		Non-Guarantors		Adjustments		Total
Outstanding Predecessor PSUs at January 1, 2013	2,408,426			$	22.40		8.2
	(in millions)
Granted	632,762			39.66			9.6
Net cash provided by (used in) operating activities	£	(10.9	)		£	0.3		£	214.2	£	8.5	£	—	£	212.1
Expired or cancelled	(251,936	)		22.59			8.2

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