Virgin Media 2009 Annual Report Download - page 207

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15—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 ................................................. 8.3
£21.3
Note 16—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. In
the first quarter of 2009, we changed our operating segments. While VMIH has operating segments,
consisting of Consumer, Business and Content, which are consistent with Virgin Media’s operating
segments, financial information is only prepared and reviewed by the CODM at the consolidated level.
As such, there are no separable reportable segments for VMIH.
As a result of the business reorganization initiated in the last quarter of 2008, Virgin Media
realigned its internal reporting structure and the related financial information used by management and
the CODM. These have been revised to build a customer-focused organization able to respond
effectively to rapid changes in the market, technology and consumer demands through three new
customer-based segments: Consumer, Business and Content.
Virgin Media’s Consumer segment, part of which was previously included within its Cable segment,
is its primary segment, consisting of the distribution of television programming, broadband and fixed
line telephone services to consumers on the cable network and, to a lesser extent, off the cable
network. The Consumer segment also includes Virgin Media’s former Mobile segment consisting of its
mobile telephony and broadband business.
F-111