Virgin Media 2007 Annual Report Download - page 71

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was primarily due to increased selling, general and administrative expenses, which included
pre-acquisition charges of £20.9 million relating to the reverse acquisition of Telewest, consisting of
legal and professional charges of £11.7 million and executive compensation costs and insurance
expenses of £9.2 million, together with integration costs incurred since the acquisition.
Mobile Segment
Virgin Mobile was acquired on July 4, 2006, and its results of operations have been consolidated
from that date. Total Mobile segment revenue for the period since acquisition to December 31, 2006
was £292.1 million, of which £274.3 million was service revenue and £17.8 million was equipment
revenue. Equipment revenue is stated net of discounts earned through service usage. Mobile segment
OCF was £30.2 million for the period since acquisition.
Net customer additions in the three months ended December 31, 2006 were 11,100 compared to
122,700 in the three months ended September 30, 2006. Customer growth was lower due to increased
price competition, and higher advertising spend from our mobile competitors. We continued to grow
the number of higher mobile ARPU contract customers.
Content Segment
The summary pro forma combined results of operations of our Content segment were as follows
(in millions):
Year ended
December 31,
2006 2005
Revenue ........................................................ £362.1 £287.2
Inter segment revenue .............................................. 22.7 20.6
Segment OCF .................................................... 25.7 26.7
Depreciation, amortization and other charges .............................. 18.5 25.6
Operating income .................................................. £ 7.2 £ 1.1
Revenue
For the year ended December 31, 2006, pro forma Content segment revenue increased by 26.1%
to £362.1 million from £287.2 million for the year ended December 31, 2005. This increase was driven
largely by the inclusion in the year ended December 31, 2006 of sit-up. sit-up was acquired by Telewest
in May 2005 and contributed revenue of £226.4 million in 2006. Increased revenue from Virgin
Media TV of £14.0 million was principally due to an increased share of the TV advertising revenue
market as a result of the cumulative effect of the relative strength of the viewing performance of the
Virgin Media TV channels, and increased subscription revenue arising from contractual price increases.
Content segment OCF
For the year ended December 31, 2006, pro forma Content segment OCF decreased by 3.7% to
£25.7 million from £26.7 million for the year ended December 31, 2005. The decrease in pro forma
Content segment OCF was primarily due to lower gross margins being achieved in 2006 compared with
2005, particularly in sit-up trading.
Consolidated Statement of Cash Flows
Years Ended December 31, 2007 and 2006
For the year ended December 31, 2007, cash provided by operating activities decreased to
£716.0 million from £786.1 million for the year ended December 31, 2006. This decrease is primarily
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