Basis of Presentation

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation [Line Items]

Merger with Liberty Global, Inc.

On February 5, 2013, Liberty Global, Inc. and Virgin Media Inc. entered into a merger agreement (the “Merger Agreement”). Pursuant to the Merger Agreement, Liberty Global, Inc. and Virgin Media Inc. completed a series of mergers on June 7, 2013 that resulted in the surviving corporations in the mergers (renamed Liberty Global, Inc. and Virgin Media Inc.) becoming wholly-owned subsidiaries of Liberty Global plc (collectively, the “Mergers”). For further information, see note 2.

In connection with the execution of the Merger Agreement, we entered into various debt financing arrangements. For further information, see note 6.

Presentation of Predecessor and Successor financial information

The consolidated business of Virgin Media Inc. as existed as a Delaware Corporation prior to the Mergers, or the "Predecessor", is considered to be a Predecessor company to the consolidated business of the surviving corporation in the Merger, which was renamed Virgin Media Inc., or the "Successor".

As a result of Liberty Global's push-down of its investment basis in Virgin Media arising from the Mergers, a new basis of accounting was created on June 7, 2013.

In this quarterly report on Form 10-Q, amounts as of December 31, 2012, and for the periods ended June 7, 2013 and earlier, reflect the activity, financial position, results of operations, and changes in financial position of the Predecessor, and the period from June 8, 2013 reflects the activity, financial position, results of operations, and changes in financial position of the Successor.

Successor periods are not comparable to Predecessor periods primarily due to:

(i) The application of the acquisition method of accounting (see note 2), of which the most significant implications are (a) increased depreciation expense, (b) increased amortization expense and (c) increased share-based compensation expense;

(ii) conforming accounting policy changes, primarily to align to Liberty Global's accounting policy for the recognition of installation fees associated with customers in the Business segment as discussed later in this note; and

(iii) additional interest expense associated with debt financing arrangements entered into in connection with the Mergers and subsequently pushed down to the Successor's balance sheet (see note 6).

Operating results for the Successor period from June 8 to June 30, 2013 and the Predecessor period from January 1 to June 7, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. These unaudited condensed consolidated financial statements should be read in conjunction with the Predecessor's 2012 consolidated financial statements and notes thereto included in the Predecessor's 2012 Annual Report on Form 10-K/A.

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and with the instructions to Securities Exchange Commission, or "SEC", Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or SEC rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The reporting currency of our consolidated financial statements is pounds sterling.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, the valuation of acquisition-related assets and liabilities, allowances for uncollectible accounts, deferred income taxes and related valuation allowances, loss contingencies, fair value measurements, impairment assessments, capitalization of internal costs associated with construction and installation activities, useful lives of long-lived assets, share-based compensation and actuarial liabilities associated with our defined benefit plans. Actual results could differ from those estimates.

Unless otherwise indicated, convenience translations into pounds sterling are calculated as of June 30, 2013.

Alignment of accounting policies

The Predecessor and Successor consolidated financial statements have been prepared in accordance with GAAP, although certain differences exist when comparing the Predecessor's and Successor's application of GAAP, with the primary difference relating to installation fees from customers in the Business segment as set out in the following paragraphs.

On June 8, 2013, the Successor adopted Liberty Global's accounting policy for installation fees relating to revenue arrangements with customers in the Business segment involving both installation services and an ongoing service provision. The Predecessor generally treated installation fees received from customers in the Business segment as a separate deliverable and recognized revenue upon completion of the installation activity in an amount that was based on the relative standalone selling price methodology. The Successor's accounting policy is to generally defer upfront installation fees received from customers in the Business segment and recognize the associated revenue over the contractual term of the arrangement. The following table presents the amount of installation revenue recognized by the Predecessor that would have been deferred under Liberty Global's accounting policy in the indicated periods (in millions):



Predecessor period
Three months ended March 31, 2012	£	12.0
Three months ended June 30, 2012	£	12.1
Three months ended March 31, 2013	£	16.2
April 1, 2013 - June 7, 2013	£	9.3

The following table provides a rollforward of the Successor's deferred revenue for installation services provided to customers in the Business segment in the period from June 8, 2013 through June 30, 2013. The balance as of June 8, 2013 excludes any amounts that were included in the condensed consolidated balance sheet as of June 7, 2013 (in millions):



Balance at June 8, 2013	£	—
Amounts deferred for completed installation services^(a)	5.4
Amortization of deferred revenue over contract life	(0.2		)
Balance at June 30, 2013	£	5.2

(a)Represents amounts that would have been recognized as installation revenue under the Predecessor's accounting policy but were deferred under the Successor's accounting policy.

Presentational reclassifications

Certain amounts and captions included in the Predecessor's consolidated financial statements have been reclassified to conform to the presentation of Liberty Global.

Significant reclassifications include reclassifications between operating costs and selling, general and administrative expenses on the statement of operations for the three and six months ended June 30, 2012, and the reclassification of premiums paid on debt redemptions from net cash provided by operating activities to net cash used in financing activities in the statement of cash flows for the six months ended June 30, 2012.

Adjustment of December 31, 2012 Balance Sheet

In the three months ended March 31, 2013, and subsequent to the filing of the Predecessor's Annual Report on Form 10-K/A for the year ended December 31, 2012, the Predecessor discovered that the reported amount of its deferred income tax assets as of December 31, 2012 and the reported income tax benefit for the year ended December 31, 2012 were understated by £60.8 million. This understatement was principally caused by an error in the calculation of the Predecessor's deferred tax assets relating to arrangements that we account for as capital leases.

Following the provisions of SEC Staff Accounting Bulletin, or "SAB", No. 99, including an analysis of quantitative and qualitative factors, the Predecessor determined that the understatement was not material to the consolidated financial statements as of and for the year ended December 31, 2012. However, if the adjustments to correct the understatement of its deferred income tax assets had been recorded in the three months ended March 31, 2013, the Predecessor believed the impact would have been significant to that period. Therefore, following the provisions of SEC SAB No. 108, the Predecessor determined that it was appropriate to correct the error to the consolidated financial statements as of and for the year ended December 31, 2012 by correcting the previously issued financial statements in the financial statements as of and for the year ending December 31, 2013, beginning with the condensed consolidated financial statements for the three months ended March 31, 2013.

The December 31, 2012 condensed consolidated balance sheets included in this quarterly report on Form 10-Q reflect the correction of this understatement by increasing the previously reported amounts of the Predecessor's total deferred tax assets, total assets and total shareholders' equity by £60.8 million and by decreasing the previously reported amount of accumulated deficit by £60.8 million. Prior to the fourth quarter of 2012, the Predecessor maintained a full valuation allowance on its deferred income tax assets. If we had not understated our deferred income tax assets in periods prior to the fourth quarter of 2012, we would have increased the valuation allowance on those deferred income tax assets by a corresponding amount, resulting in no net impact on the consolidated balance sheets or statements of comprehensive income. Therefore, there will be no changes to the 2012 statements of operations for periods prior to the fourth quarter of 2012 until the financial statements for the year ending December 31, 2013 are issued, at which time the income tax benefit, income from continuing operations, net income and comprehensive income for the year ended December 31, 2012 will increase by £60.8 million. The correction will have no impact on the total cash flows from operating, investing or financing activities previously reported in the Predecessor's consolidated statement of cash flows for the year ended December 31, 2012.

VMIH

Organization, Consolidation and Presentation [Line Items]

Basis of Presentation

These combined notes accompany and form an integral part of the separate condensed consolidated financial statements of Virgin Media Investment Holdings Limited and its subsidiaries, or VMIH, and Virgin Media Investments Limited and its subsidiaries, or VMIL. VMIH and VMIL are indirect, wholly-owned subsidiaries of Virgin Media Inc. VMIL is a direct, wholly-owned subsidiary of VMIH.

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 condensed 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.

Merger between Virgin Media Inc. and Liberty Global, Inc.

On February 5, 2013, Liberty Global, Inc. and Virgin Media Inc., the group's parent, entered into a merger agreement (as amended, the “Merger Agreement”). Pursuant to the Merger Agreement, Liberty Global, Inc. and Virgin Media Inc. completed a series of mergers on June 7, 2013 that resulted in the surviving corporations in the mergers (renamed Liberty Global, Inc. and Virgin Media Inc.) becoming wholly-owned subsidiaries of Liberty Global plc (collectively, the “Mergers”). For further information, see note 2.

In connection with the execution of the Merger Agreement, we entered into various debt financing arrangements. For further information, see note 6.

Presentation of Predecessor and Successor financial information

The consolidated business of each of VMIH and VMIL as existed prior to the Mergers are considered to be Predecessor companies, and we refer to each individually as the "Predecessor", with the consolidated business of each of VMIH and VMIL post-merger referred to as the "Successor".

As a result of Liberty Global's push down of its investment basis arising from the Mergers to VMIH and VMIL, a new basis of accounting was created on June 7, 2013.

In this quarterly report on Form 10-Q, amounts as of December 31, 2012, and for the periods ended June 7, 2013 and earlier, reflect the activity, financial position, results of operations, and changes in financial position of the Predecessor, and periods from June 8, 2013, reflect the activity, financial position, results of operations, and changes in financial position of the Successor.

Successor periods are not comparable to Predecessor periods primarily due to:

(iii) additional interest expense associated with debt financing arrangements entered into in connection with the Mergers and subsequently pushed down to the Successor's balance sheet (see note 6).

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with the Securities Exchange Commission, or "SEC", instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or SEC rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The reporting currency of our consolidated financial statements is pounds sterling.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, the valuation of acquisition-related assets and liabilities, allowances for uncollectible accounts, deferred income taxes and related valuation allowances, loss contingencies, fair value measurements, impairment assessments, capitalization of internal costs associated with construction and installation activities, useful lives of long-lived assets, share based compensation and actuarial liabilities associated with our defined benefit plans. Actual results could differ from those estimates.

Unless otherwise indicated, convenience translations into pounds sterling are calculated as of June 30, 2013.

Alignment of accounting policies



Predecessor period
Three months ended March 31, 2012	£	12.0
Three months ended June 30, 2012	£	12.1
Three months ended March 31, 2013	£	16.2
April 1, 2013 - June 7, 2013	£	9.3

The following table provides a rollforward of the Successor's deferred revenue for installation services provided to customers in the Business segment in the period from June 8, 2013 through June 30, 2013. The balance at June 8, 2013 excludes any amounts that were included in the condensed consolidated balance sheet as of June 7, 2013 (in millions):



Balance at June 8, 2013	£	—
Amounts deferred for completed installation services^(a)	5.4
Amortization of deferred revenue over contract life	(0.2		)
Balance at June 30, 2013	£	5.2

(a)Represents amounts that would have been recognized as installation revenue under the Predecessor's accounting policy but were deferred under the Successor's accounting policy.

Presentational reclassifications

Certain amounts and captions included in the Predecessor's consolidated financial statements have been reclassified to conform to the presentation of Liberty Global.

Adjustment of December 31, 2012 Balance Sheet

In the three months ended March 31, 2013 and subsequent to the filing of the Predecessor's Annual Report on Form 10-K/A for the year ended December 31, 2012, the Predecessor discovered that the reported amount of its deferred income tax assets as of December 31, 2012 and the reported income tax benefit for the year ended December 31, 2012 were understated by £59.4 million. This understatement was principally caused by an error in the calculation of our deferred tax assets relating to arrangements that were accounted for as capital leases.

Following the provisions of SEC Staff Accounting Bulletin, or "SAB",No. 99, including an analysis of quantitative and qualitative factors, we determined that the understatement was not material to the consolidated financial statements as of and for the year ended December 31, 2012. However, if the adjustments to correct the understatement of our deferred income tax assets had been recorded in the three months ended March 31, 2013, the Predecessor believed the impact would have been significant to that period. Therefore, following the provisions of SAB No. 108, the Predecessor determined that it was appropriate to correct the error to the consolidated financial statements as of and for the year ended December 31, 2012 by correcting the previously issued financial statements in the financial statements as of and for the year ending December 31, 2013, beginning with the condensed consolidated financial statements for the three months ended March 31, 2013.

The December 31, 2012 condensed consolidated balance sheets included in this quarterly report on Form 10-Q reflect the correction of this understatement by increasing the previously reported amounts of the Predecessor's total deferred tax assets, total assets and total shareholder's equity by £59.4 million and by increasing the previously reported amount of retained earnings as of December 31, 2012 by £59.4 million. Prior to the fourth quarter of 2012, the Predecessor maintained a full valuation allowance on our deferred income tax assets. If the Predecessor had not understated its deferred income tax assets in periods prior to the fourth quarter of 2012, the Predecessor would have increased the valuation allowance on those deferred income tax assets by a corresponding amount, resulting in no net impact on the consolidated balance sheet or statement of comprehensive income. Therefore, there will be no changes to the 2012 statements of comprehensive income for periods prior to the fourth quarter of 2012 until our financial statements for the year ending December 31, 2013 are issued, at which time we will increase the income tax benefit, income from continuing operations, net income and comprehensive income for the year ended December 31, 2012 by £59.4 million in the statement of comprehensive income. The correction will have no impact on the total cash flows from operating, investing or financing activities previously reported in the consolidated statement of cash flows for the year ended December 31, 2012.

VMIL

VIRGIN MEDIA INC. 10-Q