Virgin Media 2009 Annual Report Download - page 67

Consolidated Results of Operations for the Years Ended December 31, 2008 and 2007
Revenue
For the year ended December 31, 2008, revenue decreased by 1.6% to £3,776.8 million from
£3,838.6 million for the same period in 2007. This decrease was primarily due to lower revenue in our
Consumer segment, driven by declining cable telephony usage, increased price discounting due to
increased competition, and lower mobile revenue mainly due to lower prepay revenue as a result of
fewer customers, and lower Business segment revenue. This reduction was partially offset by an
increase in revenue in our Content segment. See further discussion of our Consumer, Business and
Content segments below.
Operating Costs
For the year ended December 31, 2008, operating costs, including network expenses, decreased
slightly to £1,647.1 million from £1,652.2 million during the same period in 2007. This decrease was
primarily attributable to decreased cost of sales in our Consumer and Business segments partially offset
by increased cost of sales in our Content segment. Lower employee, facilities and other network costs
and reduced commissions and equipment costs related to mobile equipment sales were partially offset
by increased interconnect costs related to our mobile services and increased programming costs in our
Content segment following the launch of our Virgin1 channel in the fourth quarter of 2007.
Selling, General and Administrative Expenses
For the year ended December 31, 2008, selling, general and administrative expenses decreased to
£828.0 million from £906.0 million for the same period in 2007. This decrease was primarily attributable
to lower employee costs mainly as a result of fewer employees, lower bad debt expense and a reduction
in costs in relation to marketing and our rebrand to Virgin Media in 2007. The decrease was partially
offset by increased professional charges.
Restructuring and Other Charges
For the year ended December 31, 2008, restructuring and other charges decreased to £22.7 million
from £28.7 million for the same period in 2007. Restructuring and other charges in the year ended
December 31, 2008 related primarily to contract and lease exit costs in connection with the
restructuring program initiated in the last quarter of 2008 as discussed below. Restructuring and other
charges in the year ended December 31, 2007 related primarily to employee termination costs and lease
exit costs in connection with our restructuring programs initiated in respect of the reverse acquisition of
Telewest.
During the fourth quarter of 2008, we commenced the implementation of a restructuring plan
aimed at driving further improvements in our operational performance and eliminating inefficiencies in
order to create a fully-integrated, customer-focused organization. This plan will involve the incurrence
of substantial operating and capital expenditures, including certain costs which we expect to treat as
restructuring costs under the Exit or Disposal Cost Obligations of the FASB ASC.
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