Virgin Media 2010 Annual Report Download - page 203

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 6—Goodwill and Intangible Assets (continued)
During the fourth quarter of 2009, we entered into a license agreement with Virgin Enterprises Limited for
use of the “Virgin” name for our Business reporting unit. As a result of the decision to rebrand this reporting unit,
we recognized an impairment charge of £4.7 million in respect to the Telewest trademark which we discontinued
using from February 10, 2010.
As at June 30, 2008, we performed our annual impairment review of the goodwill recognized in the former
Mobile reporting units. The fair value of this reporting unit was determined through the use of a combination of
both the market and income valuation approaches to calculate fair value. We concluded that the Mobile reporting
unit fair value was less than its carrying value.
The market approach valuations in respect of the Mobile reporting unit had 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 extended our review to
include the valuation of the Mobile reporting unit’s individual assets and liabilities and recognized a goodwill
impairment charge of £362.2 million 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 reporting unit and concluded that no impairment charge was necessary. Subsequent to the year end,
management performed an exercise to reallocate goodwill and reorganization value intangible assets that had
been previously recognized in the former Cable and Mobile reporting units to our Consumer and Business
reporting units. As a result of this review, goodwill and reorganization value intangible assets totaling
£1,825.2 million and £207.3 million were allocated to the Consumer and Business reporting units, respectively.
We also performed an interim impairment review of the goodwill related to the former Mobile reporting unit as
at January 1, 2009 and concluded that the goodwill was not impaired. The revised amounts are tested for
impairment on an annual basis on October 1 of each year.
Note 7—Investments
Through our wholly owned subsidiary, Flextech Broadband Limited, we own a 50% equity investment in
the UKTV joint venture companies. This investment is accounted for under the equity method at December 31,
2010. The UKTV joint venture companies operate a portfolio of channels under the UKTV brand. This equity
investment was acquired as part of the acquisition of Telewest on March 3, 2006. In accordance with the joint
venture agreements between Flextech Broadband Limited and BBC Worldwide, we are required to recognize
100% of any losses for those companies which represent UKTV.
Investments consist of (in millions):
December 31,
2010 2009
Loans and redeemable preference shares ......................... £120.4 £129.3
Share of net assets ........................................... 238.8 230.6
£359.2 £359.9
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