Virgin Media 2011 Annual Report Download - page 201
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VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 8—Derivative Financial Instruments and Hedging Activities (continued)
Foreign Currency Forward Rate Contracts—Hedging Committed and Forecasted Transactions
As of December 31, 2011, we had outstanding foreign currency forward rate contracts to purchase U.S.
dollars and South African rand to hedge committed and forecasted purchases. The terms of our outstanding
foreign currency forward rate contracts at December 31, 2011 were as follows:
Hedged item/Maturity date Hedge type
Notional
amount due
from
counterparty
Notional
amount due to
counterparty
Weighted
average
exchange rate
(in millions) (in millions)
Committed and forecasted purchases
January 2012 to June 2012 .................... Accounting ZAR 39.0 £ 3.0 12.8588
January 2012 to June 2012 .................... Economic $ 72.0 £44.7 1.6099
Cash Flow Hedges
For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the
gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into
earnings in the same period or periods during which the hedged transactions affect earnings. In our consolidated
statement of cash flows, we recognize the cash flows resulting from derivative contracts that are treated as
Accounting Hedges in the same category where the cash flows from the underlying exposure are recognized.
Cash flows from derivative contracts that are not designated as Accounting Hedges are recognized as operating
activities in the consolidated statements of cash flows. If we discontinue hedge accounting for an instrument,
subsequent cashflows are classified based on the nature of the instrument.
Gains or losses representing either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized as gains or losses on derivative instruments in the consolidated
statement of operations in the period in which they occur. During the years ended December 31, 2011, 2010 and
2009, we recognized £0.0 million, a gain of £0.5 million, and a loss of £0.6 million respectively, relating to
ineffectiveness on our cash flow hedges.
F-112