Virgin Media 2009 Annual Report Download - page 59

Contingent Losses
Our revenue generating activities are subject to VAT. The U.K. tax authorities are seeking to
challenge our VAT treatment of certain of these activities. As a result, we have estimated a loss
contingency totaling £27.9 million as of December 31, 2009 that we have not accrued for since we do
not deem it to be probable. The Company does not believe the tax authorities’ position has merit and
will contest the issue vigorously.
Segmental Results of Operations for the Years Ended December 31, 2009 and 2008
A description of the products and services, as well as financial data, for each segment can be
found in note 18 to the consolidated financial statements of Virgin Media Inc. The reportable segments
disclosed in this document are based on our management organizational structure as of December 31,
2009.
Segment contribution, which is operating income (loss) before network operating costs, corporate
costs, depreciation, amortization, goodwill and intangible asset impairments and restructuring and other
charges, is management’s measure of segment profit. Segment contribution excludes the impact of
certain costs and expenses that are not directly attributable to the reporting segments, such as the costs
of operating the network, corporate costs, depreciation and amortization. Restructuring and other
charges, and goodwill and intangible asset impairments, are excluded from segment contribution as
management believes they are not characteristic of our underlying business operations. Assets are
reviewed on a consolidated basis and are not allocated to segments for management reporting since the
primary asset of the business is the cable network infrastructure which is shared by our Consumer and
Business segments.
We have changed the description that we previously used for ‘‘Revenue Generating Units’’ (RGUs)
to ‘‘Products’’. There is no change to the definition or calculation. We have changed the description
that we previously used for ‘‘on-net’’ and ‘‘off-net’’ to ‘‘cable’’ and ‘‘non-cable’’ respectively. There is no
change to the definition.
Consumer Segment
The summary combined results of operations of our Consumer segment for the years ended
December 31, 2009 and 2008 were as follows (in millions):
Year ended
December 31,
2009 2008
Revenue ............................................ £3,083.1 £3,029.0
Segment contribution ................................... 1,841.9 1,803.6
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