Virgin Media 2009 Annual Report Download - page 69

receivable on higher cash balances during the year, together with the non-recurrence in 2008 of losses
incurred in 2007 on disposal of fixed assets. In 2007, interest income and other included gains on
disposal of investments of £8.1 million, offset by losses on disposal of fixed assets of £18.8 million.
Interest Expense
For the year ended December 31, 2008, interest expense decreased to £499.4 million from
£514.1 million for the same period in 2007, mainly as a result of reductions in certain loan obligations
following voluntary repayments under our senior credit facility in December 2007 and April 2008,
partially offset by interest on the new convertible senior notes issued in April 2008 which funded the
repayment of higher cost bank debt.
We paid cash interest of £515.8 million for the year ended December 31, 2008 and £486.9 million
for the year ended December 31, 2007. The increase in cash interest payments resulted from changes in
the timing of interest payments.
Loss on Extinguishment of Debt
For the year ended December 31, 2008, loss on extinguishment of debt was £9.6 million which
related to the write off of deferred financing costs as a result of the prepayment of £804.0 million
under our senior credit facility during the year. For the year ended December 31, 2007, loss on
extinguishment of debt was £3.2 million which related to the write off of deferred financing costs as a
result of the prepayment of £273.6 million under our senior credit facility during the year.
Share of Income From Equity Investments
For the year ended December 31, 2008, share of income from equity investments was £14.4 million
as compared with income of £17.7 million for the same period in 2007. The share of income from
equity investments in the years ended December 31, 2008 and 2007 was largely comprised of our
proportionate share of the income earned by UKTV, which was partially offset by the losses incurred by
Setanta Sports News. See Segmental Results of Operations for the Years Ended December 31, 2008
and 2007—Television Channel Joint Ventures.
Gains (Losses) on Derivative Instruments
The gain on derivative instruments of £283.7 million in the year ended December 31, 2008, mainly
related to unrealized gains from the recognition of favorable mark to market changes in U.S. dollar
and euro denominated cross-currency interest rate swaps which are not designated as accounting
hedges but do economically mitigate the risk of certain exposures denominated in U.S. dollars and
euros. The loss on derivative instruments of £2.5 million in the year ended December 31, 2007,
primarily related to unrealized losses on cross-currency interest rate swaps not designated as hedges
offset by hedge ineffectiveness on certain interest rate swaps. See Derivative Instruments and Hedging
Activities.
Foreign Currency (Losses) Gains
For the year ended December 31, 2008, foreign currency losses were £403.6 million as compared
with gains of £5.1 million for the same period in 2007. The foreign currency losses in the year ended
December 31, 2008 were largely comprised of net unrealized losses resulting from unfavorable
exchange movements totaling £364.0 million on our U.S dollar and euro denominated debt, including a
£171.1 million unfavorable exchange rate movement on the principal portion of our U.S. dollar
denominated convertible senior notes which is unhedged. The foreign currency transaction gains in the
year ended December 31, 2007 were largely comprised of favorable exchange rate movements on our
U.S. dollar denominated debt and payables.
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