Virgin Media 2011 Annual Report Download - page 60

Depreciation Expense
For the year ended December 31, 2010, depreciation expense increased to £987.7 million from
£928.7 million for the same period in 2009. This increase was primarily as a result of increases in depreciation in
respect of new fixed assets with relatively shorter lives, such as customer premises equipment, partially offset by
assets becoming fully depreciated.
Amortization Expense
For the year ended December 31, 2010, amortization expense decreased to £147.6 million from
£243.1 million for the same period in 2009. The decrease in amortization expense was primarily attributable to
the cessation of amortization of certain intangible assets that became fully amortized in 2009.
Goodwill and Intangible Asset Impairments
In the first quarter of 2010, we rebranded our Business reporting unit with the Virgin trademarks. As a
result, we recorded an impairment expense of £4.7 million for the year ended December 31, 2009 for the
Telewest trademark. We performed our annual impairment reviews for our Business and Consumer reporting
units as at October 1, 2010 and 2009. As a result of these reviews we concluded that the fair values of the
reporting units exceeded their carrying values.
Interest Expense
For the year ended December 31, 2010, interest expense increased to £477.8 million from £455.1 million for
the same period in 2009, mainly as a result of a larger proportion of higher cost bond debt, partially offset by
lower debt balances under the senior credit facility following the prepayments made during the year.
We paid cash interest of £438.8 million for the year ended December 31, 2010 and £404.2 million for the
year ended December 31, 2009. The increase in cash interest payments was primarily due to differences in the
timing of interest payments on our senior credit facility and senior notes.
Loss on Extinguishment of Debt
For the year ended December 31, 2010, loss on extinguishment of debt was £70.0 million, which related to
the write off of deferred financing costs as a result of the partial repayments of our senior credit facility in 2010
and the call premium totaling £5.5 million on the repayment of a portion of the senior notes due 2014. For the
year ended December 31, 2009, loss on extinguishment of debt was £54.5 million which related to the write off
of deferred financing costs as a result of the partial prepayment of our senior credit facility in 2009 and the call
premium totaling £30.3 million on the repayment of a portion of the senior notes due 2014.
Share of Income from Equity Investments
For the year ended December 31, 2010, share of income from equity investments was £24.0 million as
compared with income of £14.1 million for the same period in 2009. The share of income from equity
investments in the year ended December 31, 2010 was primarily comprised of our proportionate share of the
income earned by UKTV. Setanta Sports News ceased broadcasting on June 23, 2009 when Setanta Sports
Limited entered administration. See Segmental Results of Operations for the Years Ended December 31, 2009
and 2008—Television Channel Joint Ventures.
(Losses) Gains on Derivative Instruments
The losses on derivative instruments of £65.6 million in the year ended December 31, 2010 were mainly
driven by the termination of swaps relating to the previous senior credit facility refinanced in March 2010.
Additionally, the loss on derivative instruments includes a loss of £13.5 million related to our conversion hedges,
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