Virgin Media 2008 Annual Report Download - page 38

• the ability to obtain additional financing in the future for working capital, capital expenditures,
product development, acquisitions or general corporate purposes may be impaired;
• our flexibility in reacting to competitive technological and other changes may be limited;
• the substantial degree of leverage could make us more vulnerable in the event of a downturn in
general economic conditions or adverse developments in our business; and
• we may be exposed to risks inherent in interest rate and foreign exchange rate fluctuations.
We continue to incur losses and may not be profitable in the future.
We had losses from continuing operations of £913.8 million in 2008, £463.5 million in 2007 and
£509.2 million in 2006. We cannot be certain that we will achieve or sustain operating profits. Failure to
achieve profitability could diminish our ability to sustain operations, meet financial covenants, obtain
additional required funds and make required payments on present or future indebtedness.
The covenants under our debt agreements place certain limitations on how we manage our business.
The agreements that govern our indebtedness contain financial maintenance tests and restrictive
covenants that limit the discretion of our management over various business matters. For example, the
financial maintenance tests include liquidity, coverage and leverage ratios, and the restrictive covenants
impact our ability to:
• incur or guarantee additional indebtedness;
• pay dividends or make other distributions, or redeem or repurchase equity interests or
subordinated obligations;
• make investments;
• sell assets, including the capital stock of subsidiaries;
• enter into sale and leaseback transactions and certain vendor financing arrangements;
• create liens;
• enter into agreements that restrict some of our subsidiaries’ ability to pay dividends, transfer
assets or make intercompany loans;
• merge or consolidate or transfer all or substantially all of our assets; and
• enter into transactions with affiliates.
These restrictions could materially adversely affect our ability to finance future operations or
capital needs or to engage in other business activities that may be in our best interests. We may also
incur other indebtedness in the future that may contain financial or other covenants more restrictive
than those applicable under our current indebtedness.
We are a holding company dependent upon cash flow from subsidiaries to meet our obligations.
Virgin Media Inc. and a number of its subsidiaries are holding companies with no independent
operations or significant assets other than investments in their subsidiaries. Each of these holding
companies depends upon the receipt of sufficient funds from its subsidiaries to meet its obligations.
The terms of our senior credit facility and other indebtedness limit the payment of dividends, loan
repayments and other distributions to or from these companies under many circumstances. Various
agreements governing our debt may restrict and, in some cases, may also prohibit the ability of these
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