Virgin Media 2009 Annual Report Download - page 56

Depreciation Expense
For the year ended December 31, 2009, depreciation expense increased to £930.5 million from
£902.8 million for the same period in 2008. This increase was primarily as a result of increases in
depreciation in respect of new fixed assets partially offset by assets becoming fully depreciated.
Amortization Expense
For the year ended December 31, 2009, amortization expense decreased to £243.1 million from
£285.8 million for the same period in 2008. The decrease in amortization expense was primarily
attributable to the cessation of amortization of certain intangible assets that became fully amortized in
2008. Estimated aggregate amortization expense for succeeding fiscal years is £147.4 million in 2010,
£118.5 million in 2011 and nil thereafter.
Goodwill and Intangible Asset Impairments
In the first quarter of 2010, we rebranded our Business reporting unit utilizing the Virgin trade
marks. As a result, we recorded an impairment expense of £4.7 million as at December 31, 2009 for the
Telewest trademark.
We performed our annual impairment reviews for our Content reporting unit as at June 30, 2009
and our Business and Consumer reporting units as at October 1, 2009. As a result of these reviews we
concluded that the fair values of the reporting units exceeded their carrying values.
We performed our annual impairment review for our former Mobile, Virgin Media TV and sit-up
reporting units as at June 30, 2008. As a result of this review we concluded that the fair values of the
Virgin Media TV and sit-up reporting units exceeded their carrying value, while the Mobile reporting
unit’s fair value was less than its carrying value. The fair value of the Mobile reporting unit as at June
30, 2008 was determined through the use of a combination of both market and income valuation
approaches to calculate fair value. The market approach valuations in respect of the Mobile reporting
unit declined from the prior year primarily as a result of declining market multiples of comparable
companies. The income approach valuations in respect of the Mobile reporting unit declined as a result
of a combination of an increased discount rate, a reduced terminal value multiple and reduced long
term cash flow estimates. As a result, we recorded an impairment charge of £362.2 million in relation
to this reporting unit in the year ended December 31, 2008.
As at December 31, 2008, we performed our annual impairment review of the goodwill recognized
in our former Cable segment and concluded that its fair value exceeded its carrying value.
Interest Income and Other, Net
For the year ended December 31, 2009, interest income and other decreased to £6.2 million from
£26.1 million for the year ended December 31, 2008, primarily as a result of lower interest rates and
lower cash balances.
Interest Expense
For the year ended December 31, 2009, interest expense decreased to £455.1 million from
£499.4 million for the same period in 2008, mainly as a result of lower interest rates and lower debt
balances following the prepayments made in 2008.
We paid cash interest of £404.2 million for the year ended December 31, 2009 and £515.8 million
for the year ended December 31, 2008. The decrease in cash interest payments was primarily due to
differences in the timing of interest payments on our senior credit facility, together with lower interest
rates and debt balances as described above.
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