Virgin Media 2008 Annual Report Download - page 69

disposal of investments totaling £8.1 million, offset by losses on disposal of fixed assets totaling
£18.8 million.
Interest expense
For the year ended December 31, 2007, interest expense increased to £514.2 million from
£457.4 million for the year ended December 31, 2006, primarily due to the additional borrowings
resulting from the reverse acquisition of Telewest and the acquisition of Virgin Mobile.
We paid cash interest of £486.9 million for the year ended December 31, 2007 and £327.1 million
for the year ended December 31, 2006. The increase in cash interest payments resulted from the
additional borrowings following the reverse acquisition of Telewest and the acquisition of Virgin
Mobile, and changes in the timing of interest payments.
Loss on extinguishment of debt
For the year ended December 31, 2007, loss on extinguishment of debt was £3.2 million which
related to the write off of deferred financing costs as a result of our partial repayments under our
senior credit facility. For the year ended December 31, 2006, loss on extinguishment of debt was
£32.8 million which related primarily to the write off of deferred financing costs on our previous senior
credit facility that was repaid upon completion of the refinancing of the reverse acquisition of Telewest.
Share of income from equity investments
For the year ended December 31, 2007, share of income from equity investments was £17.7 million
as compared with income of £12.5 million for the same period in 2006. The income from equity
investments in the year ended December 31, 2007 was largely comprised of our proportionate share of
the income earned by UKTV. The increase in our proportionate share of the income earned by UKTV
was primarily due to the inclusion of UKTV within our Content segment only from March 3, 2006
following the reverse acquisition of Telewest as compared with its inclusion for a full year in 2007,
together with an increase in UKTV’s net income in 2007 resulting primarily from additional advertising
revenue.
(Loss) gain from derivative instruments
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
partially offset by hedge ineffectiveness on certain interest rate swaps. The gain from derivative
instruments of £1.3 million in the year ended December 31, 2006 related primarily to favorable mark to
market movements in the fair value of derivative instruments not designated as hedges.
Foreign currency gains (losses)
For the year ended December 31, 2007, foreign currency gains were £5.1 million as compared with
losses of £90.1 million for the same period in 2006. The foreign currency gains in the year ended
December 31, 2007 were largely comprised of favorable exchange rate movements in our U.S. dollar
denominated debt and payables. The foreign currency losses in the year ended December 31, 2006 were
largely comprised of foreign exchange losses of £70.8 million on U.S. dollar forward purchase contracts
that were entered into to economically mitigate the foreign currency risk relating to the repayment of
our U.S. dollar denominated bridge facility. The repayment of $3.1 billion of this facility on June 19,
2006 resulted in an offsetting gain during the period of £120.7 million that was recorded as a
component of equity.
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