Virgin Media 2010 Annual Report Download - page 187

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Organization and Business
Virgin Media Investment Holdings Limited and its subsidiaries, or VMIH, and Virgin Media Investments
Limited and its subsidiaries, or VMIL are indirect, wholly owned subsidiaries of Virgin Media Inc. incorporated
in the United Kingdom. VMIL is a direct, wholly owned subsidiary of VMIH.
On January 1, 2010, VMIL acquired VMIH’s shareholdings in its wholly owned subsidiaries other than
Virgin Media Secured Finance PLC, which remains a subsidiary of VMIH. VMIL issued an initial 1,000,141
shares to VMIH on January 1, 2010 and an additional 1,489,994 shares on December 13, 2010 following the
filing of the 2009 audited financial statements of VMIH with the appropriate authorities in England and Wales as
part of this internal reorganization. As a result of the reorganization, it was determined that a change in reporting
entity had occurred for VMIL and accordingly the comparative separate financial statements for VMIL have been
adjusted to consist of the combined historical balance sheet, results of operations, and cash flows of the wholly
owned subsidiaries of VMIH that were contributed to VMIL as part of the group reorganization. These
comparative financial statements have been prepared in accordance with the guidance permissible for
reorganizations between wholly owned subsidiaries such that the historic values of all assets and liabilities
acquired in the reorganization have been carried over with no new purchase accounting considered. The effect of
the issuances of common stock to VMIH has been retrospectively applied to the shareholder’s equity amounts in
the consolidated balance sheet as at December 31, 2009 to reflect these amounts as if the transaction had
occurred at the beginning of the periods presented. The retrospective application had no material effect on other
amounts. Intercompany accounts and transactions have been eliminated on consolidation.
Under the terms of the indentures governing the senior notes issued by Virgin Media Finance PLC and the
indentures governing the senior secured notes issued by Virgin Media Secured Finance PLC, VMIL was required
to grant guarantees that are identical to the guarantees granted by VMIH under the same indentures. Under the
terms of the intercreditor deed governing the senior credit facility, VMIL was required to grant a guarantee
identical to the guarantee granted by VMIH under the same deed. VMIH is fully dependent on the cash flows of
the operating subsidiaries of VMIL to service these debt obligations. As a result, debt obligations, cash required
to service debt obligations, derivative financial instruments, and any effects on the consolidated results of
operations and cash flows related to the senior notes, senior secured notes and senior credit facility have been
reflected in the separate consolidated financial statements of VMIL. As such, the amounts included in the
financial statements of VMIL do not necessarily represent items to which VMIL has legal title.
As used in these notes, the terms “we”, “our”, or “companies” refer to VMIH and VMIL and, except as
otherwise noted, the information in these combined notes relates to both of the companies.
We are a leading provider of entertainment and communications services in the U.K., offering “quad-play”
broadband internet, television, mobile telephony and fixed line telephony services. We are one of the U.K.’s
largest providers of residential broadband internet, pay television and fixed line telephony services by number of
customers. We believe our advanced, deep fiber access network enables us to offer faster and higher quality
broadband services than our digital subscriber line, or DSL, competitors. As a result, we provide our customers
with a leading next generation broadband service and one of the most advanced TV on-demand services available
in the U.K. market. As of December 31, 2010, we provided service to approximately 4.8 million residential cable
customers on our network. We are also one of the U.K.’s largest mobile virtual network operators by number of
customers, providing mobile telephony service to approximately 1.9 million prepay mobile customers and
approximately 1.2 million contract mobile customers over third party networks.
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