Virgin Media 2008 Annual Report Download - page 58

Share of income from equity investments
For the year ended December 31, 2008, share of income from equity investments was £14.4 million
as compared with income of £17.7 million for the same period in 2007. The share of income from
equity investments in the years ended December 31, 2008 and 2007 was largely comprised of our
proportionate share of the income earned by UKTV, which was partially offset by the losses incurred by
Setanta Sports News. See Segmental Results of Operations for the Years ended December 31, 2008 and
2007—Television Channel Joint Ventures.
Gain (loss) from derivative instruments
The gain from derivative instruments of £283.7 million in the year ended December 31, 2008,
mainly related to unrealized gains from the recognition of favorable mark to market changes in U.S.
dollar and euro denominated cross-currency interest rate swaps which are not designated as accounting
hedges but do economically mitigate the risk of certain exposures denominated in U.S. dollars and
euros. The loss from derivative instruments of £2.5 million in the year ended December 31, 2007,
primarily related to unrealized losses on cross-currency interest rate swaps not designated as hedges
offset by hedge ineffectiveness on certain interest rate swaps. See Derivative Instruments and Hedging
Activities.
Foreign currency (losses) gains
For the year ended December 31, 2008, foreign currency losses were £403.6 million as compared
with gains of £5.1 million for the same period in 2007. The foreign currency losses in the year ended
December 31, 2008 were largely comprised of net unrealized losses resulting from unfavorable
exchange movements totaling £364.0 million on our U.S dollar and euro denominated debt, including a
£171.1 million unfavorable exchange rate movement on the principal portion of our U.S. dollar
denominated convertible senior notes which is unhedged. The foreign currency transaction gains in the
year ended December 31, 2007 were largely comprised of favorable exchange rate movements on our
U.S. dollar denominated debt and payables. Our results of operations will continue to be affected by
foreign exchange rate fluctuations since £1,714.8 million of our indebtedness is denominated in U.S.
dollars and £617.8 million of our indebtedness is denominated in euros.
Income tax benefit (expense)
For the year ended December 31, 2008, income tax benefit was £6.8 million as compared with an
expense of £2.5 million for the same period in 2007. The 2008 tax benefit and 2007 tax expense was
comprised of (in millions):
2008 2007
U.S. state and local income tax .......................................... £ — £0.6
Foreign tax ........................................................ 4.7 4.9
Deferred U.S. income tax .............................................. (1.1) (7.6)
Deferred foreign tax .................................................. 3.4 —
Alternative minimum tax ............................................... (0.2) (0.4)
Total ............................................................. £6.8 £(2.5)
In 2008, we received refunds of £1.3 million in respect of pre-acquisition periods of Virgin Mobile.
We paid £0.1 million in respect of U.S. state and local taxes. In 2007, we received refunds of
£7.9 million in respect of pre-acquisition periods of Virgin Mobile and £0.4 million of U.S. federal
income tax relating to pre-acquisition periods of Telewest. We paid £0.6 million of U.S alternative
minimum tax in 2007.
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