Virgin Media 2009 Annual Report Download - page 148

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 17—Commitments and Contingent Liabilities (Continued)
Our revenue generating activities are subject to Value Added Tax, or VAT. The U.K. tax authorities
are seeking to challenge our VAT treatment of certain of these activities. As a result, we have
estimated contingent losses totaling £27.9 million as of December 31, 2009 that are not accrued for, as
we do not deem them to be probable of resulting in a liability. We continue to evaluate the likelihood
of the contingent losses as additional information becomes available and, to the extent an accrual
becomes necessary, it will be recognized in earnings in the period when such amount becomes
probable. Any challenge made could be subject to court proceedings before any settlement would be
required and therefore the timescale for resolution is not expected to occur within the next financial
year.
Our banks have provided guarantees in the form of performance bonds and stand by letters of
credit on our behalf as part of our contractual obligations. The fair value of the guarantees has been
calculated by reference to the monetary value for each performance bond. The amount of commitment
expires over the following periods (in millions):
Year ending December 31:
2010 ..................................................... £12.1
2011 ..................................................... 0.9
2012 ..................................................... —
2013 ..................................................... —
2014 ..................................................... —
Thereafter ................................................. 9.0
£22.0
Note 18—Industry Segments
Our reporting segments are based on our method of internal reporting along with the criteria used
by our chief executive officer, who is our chief operating decision maker (CODM), to evaluate segment
performance, the availability of separate financial information and overall materiality considerations.
Our previously reported operating segments were based on how we distributed our services.
Distribution through cable systems, delivery of television content, and provision of mobile phone
services made up the core of our business and were the focus of how the business was managed
internally through our former Cable, Content and Mobile segments.
As a result of the business reorganization initiated in the last quarter of 2008, we have realigned
our internal reporting structure and the related financial information used by management and the
CODM. Our operating structures have been revised to build a customer-focused organization able to
respond effectively to rapid changes in the market, technology and customer demands through our
three new customer-based segments: Consumer, Business and Content.
Our Consumer segment, part of which was previously included within our Cable segment, is our
primary segment, consisting of the distribution of television programming, broadband and fixed line
telephone services to consumers on our cable network and, to a lesser extent, off our cable network.
The Consumer segment also includes our former Mobile segment consisting of our mobile telephony
and broadband business.
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