Virgin Media 2012 Annual Report Download - page 153

F-82
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles, or GAAP.
On September 30, 2011, we completed the sale to Scripps Network Interactive, Inc. (“Scripps”), of our 50% equity
investment in the UKTV joint venture with BBC Worldwide Limited. After the inclusion of associated fees, this transaction
resulted in a loss on disposal of £7.2 million.
On July 12, 2010, we completed the sale of our television channel business known as Virgin Media TV to BSkyB. Virgin
Media TV’s operations comprised our former Content segment. These consolidated financial statements reflect Virgin
Media TV as discontinued operations.
Principles of Consolidation
The consolidated financial statements include the financial statements for us and our wholly owned subsidiaries.
Intercompany accounts and transactions have been eliminated on consolidation. The operating results of acquired
companies are included in our consolidated statements of comprehensive income from the date of acquisition.
For investments in which we own 20% to 50% of the voting shares and have significant influence over the operating
and financial policies, the equity method of accounting is used. Accordingly, our share of the earnings and losses of
these companies are included in the share of income (losses) in equity investments in the accompanying consolidated
statements of comprehensive income.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates
and assumptions impact, among others, the following: the amount of uncollectible accounts receivable, amounts
accrued for vacated properties, the amount to be paid for other liabilities, including contingent liabilities, our pension
expense and pension funding requirements, amounts to be paid under our employee incentive plans, costs for
interconnection, the amount of costs to be capitalized in connection with the construction and installation of our network
and facilities, goodwill and indefinite life assets, long-lived assets, certain other intangible assets and the computation
of our valuation allowance on deferred tax assets. Actual results could differ from those estimates.
Fair Values
We have determined the estimated fair value amounts presented in these consolidated financial statements using
available market information and appropriate methodologies including, where appropriate, the recording of adjustments
to fair values to reflect non-performance risk. However, considerable judgment is required in interpreting market data
to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may
have a material effect on the estimated fair value amounts. We have based these fair value estimates on information
available to us as of December 31, 2012, 2011 and 2010.
Foreign Currency Translation
Our reporting currency is the pound sterling because substantially all of our revenues, operating costs and selling,
general and administrative expenses are denominated in pounds sterling. Exchange gains and losses on translation
of our net equity investments in subsidiaries having functional currencies other than the pound sterling are reported
as a separate component of accumulated other comprehensive income in shareholder’s equity. Foreign currency
transactions involving amounts denominated in currencies other than a subsidiary’s functional currency are recorded
at the exchange rate ruling at the date of the transaction and are remeasured each period with gains and losses
recorded in the consolidated statement of comprehensive income.
Table of Contents
VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2—Significant Accounting Policies