Virgin Media 2008 Annual Report Download - page 170

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
and/or estimation methodologies may have a material effect on the estimated fair value amounts. We
have based these fair value estimates on pertinent information available to us as of December 31, 2008
and 2007.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation. The
consolidated statement of cash flows for the year ended December 31, 2006 include reclassifications of
cash flows from operating activities to provide greater detail on non-cash movements included within
this category.
Foreign Currency Translation
Our reporting currency is the pound sterling because substantially all of our revenues, operating
costs and selling general and administrative expenses are denominated in U.K. pounds sterling.
Exchange gains and losses on translation of our net equity investments in subsidiaries having functional
currencies other than the pound sterling are reported as a separate component of accumulated other
comprehensive income in shareholders’ equity. Foreign currency transactions involving amounts
denominated in currencies other than a subsidiary’s functional currency are recorded at the exchange
rate ruling at the date of the transaction and are remeasured each period with gains and losses
recorded in the consolidated statement of operations.
Cash Equivalents and Restricted Cash
Cash equivalents are short term highly liquid investments purchased with an original maturity of
three months or less. We had cash equivalents totaling £120.2 million and £218.7 million as at
December 31, 2008 and 2007, respectively.
Restricted cash balances of £5.3 million and £5.4 million as at December 31, 2008 and 2007
represent cash balances collateralized against performance bonds given on our behalf.
Trade Receivables
Our trade receivables are stated at outstanding principal balance, net of allowance for doubtful
accounts. Allowances for doubtful accounts are estimated based on the current aging of trade
receivables, prior collection experience and future expectations of conditions that might impact
recoverability. The movements in our allowance for doubtful accounts for the years ended
December 31, 2008, 2007 and 2006 are as follows (in millions):
Year ended December 31,
2008 2007 2006
Balance, January 1, ............................. £17.1 £ 49.4 £ 39.8
Acquisitions ................................. — — 15.5
Charged to costs and expenses ................... 30.1 30.3 47.0
Write offs, net of recoveries ..................... (30.7) (62.6) (52.9)
Balance, December 31, .......................... £16.5 £ 17.1 £ 49.4
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