Virgin Media 2008 Annual Report Download - page 55

interests’’) to be clearly identified, presented, and disclosed in the consolidated statement of financial
position within equity, but separate from the parent’s equity. All changes in the parent’s ownership
interests are required to be accounted for consistently as equity transactions and any non-controlling
equity investments in unconsolidated subsidiaries must be measured initially at fair value. FAS 160 is
effective, on a prospective basis, for fiscal years beginning after December 15, 2008; however,
presentation and disclosure requirements must be retrospectively applied to comparative financial
statements. While we are still addressing the impact of the adoption of FAS 160, it is not expected to
have a material impact on our consolidated financial statements.
In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and
Hedging Activities—an Amendment of FASB Statement No. 133, or FAS 161, which amends and expands
the disclosure requirements of FASB Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities, or FAS 133, with the intent to provide users of financial statements with an enhanced
understanding of: (1) how and why an entity uses derivative instruments; (2) how derivative instruments
and related hedged items are accounted for under FAS 133 and its related interpretations; and (3) how
derivative instruments and related hedged items affect an entity’s financial position, financial
performance and cash flows. FAS 161 requires qualitative disclosures about objectives and strategies for
using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative
instruments and disclosures about credit-risk-related contingent features in derivative instruments.
FAS 161 applies to all entities and all derivative instruments and is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008. We have not yet adopted
the provisions of FAS 161, but we do not expect it to have a material impact on our consolidated
financial statements.
In May 2008, the FASB issued Statement No. 162, The Hierarchy of Generally Accepted Accounting
Principles, or FAS 162. FAS 162 sets forth the level of authority to a given accounting pronouncement
or document by category. Where there might be conflicting guidance between two categories, the more
authoritative category will prevail. FAS 162 will become effective 60 days after the SEC approves the
PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. We do not expect
FAS 162 to have an effect on our consolidated financial statements at this time.
Consolidated Results of Operations
Consolidated Results of Operations for the Years Ended December 31, 2008 and 2007
Revenue
For the year ended December 31, 2008, revenue decreased by 1.4% to £4,015.9 million from
£4,073.7 million for the same period in 2007. This decrease was primarily due to lower revenue in our
Cable segment, driven by declining telephony usage and increased discounting due to increased
competition, and lower Mobile segment revenue, mainly due to lower prepay revenue as a result of
fewer customers. This reduction was partially offset by an increase in revenue in our Content segment.
See further discussion of our Cable, Mobile and Content segments below.
Expenses
Operating costs. For the year ended December 31, 2008, operating costs, including network
expenses, decreased slightly to £1,829.2 million from £1,830.0 million during the same period in 2007.
This decrease was primarily attributable to decreased operating costs in our Cable and Mobile
segments partially offset by increased operating costs in our Content segment. Lower employee,
facilities and other network costs in our Cable segment and reduced commissions and equipment costs
in our Mobile segment were partially offset by increased interconnect costs in our Mobile segment and
increased programming costs in our Content segment following the launch of our Virgin1 channel in
the fourth quarter of 2007.
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