Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File No. 000-50886

VIRGIN MEDIA INC.(Exact name of registrant as specified in its charter)

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED(Additional Registrant)

Delaware(State or other jurisdiction of incorporation
or organization)

59-3778247(I.R.S. Employer
Identification No.)909 Third Avenue, Suite 2863
New York, New York(Address of principal executive offices)

10022(Zip code)(212) 906-8440(Registrant's telephone number, including area code)


Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large
accelerated filers ý    Accelerated
filer o    Non-accelerated filer o    Smaller reporting
company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes o No ý

As of August 4, 2008, there were 328,107,207 shares of the registrant's common stock, par value $0.01 per share, issued and outstanding, excluding 855,834
unvested shares of restricted stock held in escrow.

The
Additional Registrant meets the conditions set forth in General Information H(1)(a) and (b) of Form 10-Q and is therefore filing this report with the
reduced disclosure format. See "Note Concerning Virgin Media Investment Holdings Limited" in this Form 10-Q.



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Table of Contents

VIRGIN MEDIA INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2008
INDEX



PagePART I. FINANCIAL INFORMATION

5Item 1. Financial Statements

5Virgin Media Inc.Condensed Consolidated Balance SheetsJune 30, 2008 and December 31, 2007

5Condensed Consolidated Statements of OperationsThree and Six Months ended June 30, 2008 and 2007

6Condensed Consolidated Statements of Cash FlowsSix Months ended June 30, 2008 and 2007

7Notes to Condensed Consolidated Financial Statements

8Virgin Media Investment Holdings LimitedCondensed Consolidated Balance SheetsJune 30, 2008 and December 31, 2007

24Condensed Consolidated Statements of OperationsThree and Six Months ended June 30, 2008 and 2007

25Condensed Consolidated Statements of Cash FlowsSix Months ended June 30, 2008 and 2007

26Notes to Condensed Consolidated Financial Statements

27Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations

36Item 3. Quantitative and Qualitative Disclosures about Market Risk

56Item 4. Controls and Procedures

58PART II. OTHER INFORMATION

59Item 1. Legal Proceedings

59Item 1A. Risk Factors

59Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

59Item 3. Defaults Upon Senior Securities

59Item 4. Submission of Matters to a Vote of Security Holders

59Item 5. Other Information

60Item 6. Exhibits

60SIGNATURES

62


2

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Table of Contents

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Various statements contained in this document constitute "forward-looking statements" as that term is defined under the Private
Securities Litigation Reform Act of 1995. Words like "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions
identify these forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to
be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. These factors, among others,
include:



These
and other factors are discussed in more detail under "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2007,
as filed with the Securities and Exchange Commission, or SEC, on February 29, 2008, as amended, and our Quarterly Report on Form 10-Q for the quarter ended March 31,
2008, as filed with the SEC on May 8, 2008. We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting
these statements.

In
this quarterly report, unless we have indicated otherwise, or the context otherwise requires, references to:



3

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Table of Contents



Note Concerning Virgin Media Investments Holdings Limited

This quarterly report on Form 10-Q (excepting separate financial statements responsive to Part I,
Item 1) covers both Virgin Media and Virgin Media Investment Holdings Limited, or VMIH, a company incorporated in England and Wales with its address at 160 Great Portland Street, London
W1W 5QA, United Kingdom, which is a wholly owned subsidiary of Virgin Media Finance PLC and a wholly owned indirect subsidiary of Virgin Media. VMIH is not an accelerated filer. VMIH is
one of the guarantors of Virgin Media Finance PLC's 9.75% senior notes due 2014 (sterling denominated), 8.75% senior notes due 2014 (euro denominated), 8.75% senior notes due 2014 (U.S. dollar
denominated), and 9.125% senior notes due 2016 (U.S. dollar denominated). VMIH's guarantee of those notes is not deemed to be unconditional.

VMIH
carries on the same business as Virgin Media, and is the principal borrower under Virgin Media's senior credit facility. In this quarterly report, unless the context otherwise
requires, the terms "Virgin Media," "the Company," "we," "us," "our" and similar terms refer to the consolidated business of Virgin Media Inc., including VMIH and its subsidiaries. Unless
otherwise indicated, the discussion contained in this report applies to VMIH as well as Virgin Media Inc.

Note Concerning Financial Information and Currency of Financial Statements

All of the financial statements included in this quarterly report have been prepared in accordance with U.S. generally accepted
accounting principles, or GAAP. The reporting currency of our consolidated financial statements is U.K. pounds sterling.

4

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Table of Contents

PART IFINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

VIRGIN MEDIA INC.    CONDENSED CONSOLIDATED BALANCE SHEETS    (in millions)(except par value)

June 30, 2008

December 31, 2007(Unaudited)

(See Note)AssetsCurrent assetsCash and cash equivalents

£
426.8

£
321.4Restricted cash


6.0


6.1Accounts receivabletrade, less allowances for doubtful accounts of £20.0 (2008) and £19.5 (2007)


437.1


455.6Inventory


94.8


75.4Prepaid expenses and other current assets


185.4


94.8Total current assets


1,150.1


953.3Fixed assets, net


5,491.6


5,655.6Goodwill and other indefinite-lived intangible assets


2,116.7


2,488.2Intangible assets, net


657.4


816.7Equity investments


373.0


368.7Other assets, net of accumulated amortization of £55.9 (2008) and £45.0 (2007)


176.9


183.6Total assets

£
9,965.7

£
10,466.1Liabilities and shareholders' equityCurrent liabilitiesAccounts payable

£
382.8

£
372.9Accrued expenses and other current liabilities


510.9


406.2VAT and employee taxes payable


71.6


86.1Restructuring liabilities


57.7


89.6Interest payable


137.3


172.5Deferred revenue


268.0


250.3Current portion of long term debt


33.3


29.1Total current liabilities


1,461.6


1,406.7Long term debt, net of current portion


5,990.2


5,929.4Deferred revenue and other long term liabilities


160.9


238.5Deferred income taxes


83.3


81.0Total liabilities


7,696.0


7,655.6Commitments and contingent liabilitiesMinority interest


0.2


Shareholders' equityCommon stock$.01 par value; authorized 1,000.0 (2008 and 2007) shares; issued 329.0 (2008) and 328.9 (2007) and outstanding 328.1 (2008) and 327.5 (2007)
shares


1.8


1.8Additional paid-in capital


4,343.7


4,335.9Accumulated other comprehensive income


164.7


148.6Accumulated deficit


(2,240.7
)

(1,675.8
)Total shareholders' equity


2,269.5


2,810.5Total liabilities and shareholders' equity

£
9,965.7

£
10,466.1


---

Note:    The
balance sheet at December 31, 2007 has been derived from the audited financial statements at that date.

See accompanying notes.

5

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Table of Contents

VIRGIN MEDIA INC.    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    (unaudited) (in millions, except per share data)

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Revenue

£
990.5

£
995.0

£
1,992.3

£
2,016.9Costs and expensesOperating costs (exclusive of depreciation shown separately below)


434.9


435.1


895.3


884.4Selling, general and administrative expenses


222.7


244.6


439.9


511.5Other (income) charges


(1.7
)

3.1


2.9


14.7Depreciation


230.2


231.6


461.7


463.7Amortization


71.3


77.6


164.0


154.9Goodwill impairment


366.2





366.2


1,323.6


992.0


2,330.0


2,029.2Operating (loss) income


(333.1
)

3.0


(337.7
)

(12.3
)Other income (expense)Interest income and other, net


7.6


7.8


13.9


14.8Interest expense


(121.6
)

(128.1
)

(245.0
)

(246.6
)Share of income from equity investments


3.9


5.3


9.0


12.5Foreign currency gains (losses)


3.4


2.3


(25.0
)

5.6Loss on extinguishment of debt


(5.6
)

(1.1
)

(5.6
)

(1.1
)(Losses) gains on derivative instruments


(2.3
)

(1.0
)

31.1


(1.5
)Loss before income taxes and minority interest


(447.7
)

(111.8
)

(559.3
)

(228.6
)Income tax benefit (expense)


0.6


(7.2
)

7.9


(10.7
)Minority interest


(0.1
)




(0.2
)

Net loss

£
(447.2
)
£
(119.0
)
£
(551.6
)
£
(239.3
)Basic and diluted net loss per share

£
(1.36
)
£
(0.37
)
£
(1.68
)
£
(0.74
)Dividends per share(in U.S. dollars)

$
0.04

$
0.03

$
0.08

$
0.05Average number of shares outstanding


328.1


325.5


328.0


324.8


See
accompanying notes.

6

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Table of Contents

VIRGIN MEDIA INC.    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    (unaudited) (in millions)

Six months ended
June 30,2008

2007Operating activitiesNet loss

£
(551.6
)
£
(239.3
)Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization


625.7


618.6Goodwill impairment


366.2


Non-cash interest


(29.8
)

(65.4
)Non-cash compensation


7.2


14.3Income from equity accounted investments, net of dividends received


(5.0
)

(9.2
)Income taxes


(6.1
)

12.7Amortization of original issue discount and deferred financing costs


10.9


11.6Unrealized foreign currency losses (gains)


21.7


(1.2
)Loss on extinguishment of debt


5.6


1.1(Gains) losses on derivative instruments


(24.1
)

1.5Other


(0.5
)

Changes in operating assets and liabilities


(41.4
)

(123.6
)Net cash provided by operating activities


378.8


221.1Investing activitiesPurchase of fixed and intangible assets


(233.3
)

(286.2
)Principal repayments on loans to equity investments


0.6


6.2Acquisitions, net of cash acquired





(1.0
)Other


1.6


2.1Net cash used in investing activities


(231.1
)

(278.9
)Financing activitiesNew borrowings, net of financing fees


494.0


874.5Proceeds from employee stock option exercises


0.6


4.0Principal payments on long term debt and capital leases


(523.7
)

(951.4
)Dividends paid


(13.3
)

(8.3
)Net cash used in financing activities


(42.4
)

(81.2
)Effect of exchange rate changes on cash and cash equivalents


0.1


(2.4
)Increase (decrease) in cash and cash equivalents


105.4


(141.4
)Cash and cash equivalents, beginning of period


321.4


418.5Cash and cash equivalents, end of period

£
426.8

£
277.1Supplemental disclosure of cash flow informationCash paid during the period for interest exclusive of amounts capitalized

£
263.5

£
295.0


See
accompanying notes.

7

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Table of Contents

VIRGIN MEDIA INC.        NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (unaudited)

Note 1Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes
required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2008. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for
the year ended December 31, 2007, as filed with the SEC on February 29, 2008, as amended.

Certain
prior year balances have been reclassified to conform to the current period presentation.

Note 2Goodwill and Intangible Assets

During the six months ended June 30, 2008, assets not subject to amortization were adjusted for the following (in millions):

Trade Names

Reorganization Value

GoodwillBalance, December 31, 2007

£
16.5

£
146.1

£
2,325.6Deferred tax balances





(5.3
)

Goodwill impairment








(366.2
)Balance, June 30, 2008

£
16.5

£
140.8

£
1,959.4


During
the six months ended June 30, 2008, reorganization value in excess of amounts allocable to identifiable assets was reduced by £5.3 million due to the use
of deferred tax assets that existed as at January 10, 2003 that were previously offset by a valuation allowance.

As
at June 30, 2008, we performed our annual impairment review of the goodwill recognized in the Virgin Media TV and sit-up reporting units, included in our Content
segment, and the Virgin Mobile reporting unit. The fair value of these reporting units were determined through the use of a combination of both the market and income valuation approaches to calculate
fair value. We concluded that the fair value of the Virgin Media TV and sit-up reporting units exceeded their carrying value, while the Virgin Mobile reporting unit fair value was less
than its carrying value.

The
market approach valuations in respect of the Mobile reporting unit have 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 Virgin Mobile reporting unit's individual assets and liabilities and have recognized a preliminary goodwill
impairment charge of £366.2 million. We intend to complete our impairment review during the third quarter and any further adjustments to the carrying value of goodwill, if required,
will be recognized in our third quarter results.

8

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Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 3Long Term Debt

Long term debt consists of (in millions):

June 30,
2008

December 31,
20078.75% U.S. Dollar senior notes due 2014

£
213.5

£
214.29.75% Sterling senior notes due 2014


375.0


375.08.75% Euro senior notes due 2014


178.0


165.69.125% U.S. Dollar senior notes due 2016


276.3


277.26.50% U.S. Dollar convertible senior notes due 2016


502.4


Senior credit facility


4,324.1


4,804.8Capital leases


149.8


116.9Other


4.4


4.86,023.5


5,958.5Less: current portion


(33.3
)

(29.1
)£
5,990.2

£
5,929.4


The
effective interest rate on the senior credit facility was 7.4% and 7.8% as at June 30, 2008 and December 31, 2007, respectively.

Convertible Senior Notes

On April 16, 2008, Virgin Media Inc. issued U.S. dollar denominated 6.5% convertible senior notes due 2016 with a
principal amount outstanding of $1.0 billion and used the proceeds and cash on hand to repay £504.0 million of our obligations under our senior credit facility that were
originally scheduled to be paid in 2009, 2010 and 2012. The convertible senior notes are unsecured senior obligations of Virgin Media Inc. and, consequently, are subordinated to our obligations
under the senior credit facility and rank equally with Virgin Media Inc.'s guarantees of our senior notes. The convertible senior notes bear interest at an annual rate of 6.5% payable
semi-annually on May 15 and November 15 of each year, beginning November 15, 2008. The convertible senior notes mature on November 15, 2016 and may not be
redeemed by us prior to their maturity date. Upon conversion, we may elect to settle in cash, shares of common stock or a combination of cash and shares of our common stock.

Holders
of convertible senior notes may tender their notes for conversion at any time on or after August 15, 2016 through to the second scheduled trading date preceding the
maturity date. Prior to August 15, 2016, holders may convert their notes, at their option, only under the following circumstances: (i) in any quarter, if the closing sale price of Virgin
Media Inc.'s common stock during at least 20 of the last 30 trading days of the prior quarter was more than 120% of the applicable conversion price per share of common stock on the last day of
such prior quarter; (ii) if, for five consecutive trading days, the trading price per $1,000 principal amount of notes was less than 98% of the product of the closing price of our common stock
and the then applicable conversion rate; (iii) if a specified corporate event occurs, such as a merger, recapitalization, reclassification, binding share exchange or conveyance of all, or
substantially all, of Virgin Media Inc.'s assets; (iv) the declaration by Virgin Media Inc. of the distribution of certain rights, warrants, assets or debt securities to all, or
substantially all, holders of Virgin Media Inc.'s common stock; or (v) if Virgin Media Inc. under goes a

9

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Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 3Long Term Debt (Continued)

fundamental
change (as defined in the indenture governing the convertible senior notes), such as a change in control, merger, consolidation, dissolution or delisting.

The
initial conversion rate is equal to 52.0291 shares of Virgin Media Inc.'s common stock per $1,000 of convertible senior notes, which represents an initial conversion price of
approximately $19.22 per share of common stock. The conversion rate is subject to adjustment for stock splits, stock dividends or distributions, the issuance of certain rights or warrants,
certain cash dividends or distributions or stock repurchases where the price exceeds market values. In the event of specified fundamental changes relating to Virgin Media Inc., referred to as
"make whole" fundamental changes, the conversion rate will be increased as provided by a formula set forth in the indenture governing the convertible senior notes.

Holders
may also require us to repurchase the convertible senior notes for cash in the event of a fundamental change for a purchase price equal to 100% of the principal amount, plus
accrued but unpaid interest to the purchase date.

In
May 2008, the FASB issued Staff Position No. APB 14-1,Accounting for Convertible Debt Instruments that may be Settled in Cash Upon
Conversion, or FSP APB 14-1. FSP APB 14-1 requires that the liability and equity components of convertible debt instruments that may be
settled in cash upon conversion (including partial cash settlement) be separately accounted for in a manner that reflects an issuer's nonconvertible debt borrowing rate. As a result, the liability
component would be recorded at a discount reflecting its below market coupon interest rate, and the liability component would subsequently be accreted to its par value over its expected life, with the
rate of interest that reflects the market rate at issuance being reflected in the results of operations. This change in methodology will affect the calculations of net income and earnings per share,
but will not increase the Company's cash interest payments. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Retrospective application to all periods presented is required and early adoption is prohibited. Our convertible senior notes are within the scope of FSP
APB 14-1. We are currently evaluating the impact of the adoption of FSP APB 14-1 on our consolidated financial statements.

Note 4Employee Benefit Plans

The components of net periodic pension cost in the three and six months ended June 30, 2008 and 2007 were as follows (in
millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Service costs

£
0.5

£
0.6

£
0.9

£
1.2Interest costs


4.5


4.2


9.1


8.4Expected return on plan assets


(5.3
)

(4.8
)

(10.7
)

(9.6
)Net periodic benefit costs

£
(0.3
)
£


£
(0.7
)
£



10

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Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 5Other (Income) Charges Including Restructuring Charges

The following tables summarize our historical restructuring accruals and the restructuring accruals resulting from the acquisitions made by us during 2006 (in millions):

Historical
Restructuring
Accruals

Acquisition Restructuring
Accruals

TotalThree months ended June 30, 2008

Lease
Exit Costs

Involuntary
Employee
Termination
and Related Costs

Lease
Exit CostsBalance, March 31, 2008

£
19.7

£
4.7

£
40.1

£
64.5Charged to expense


0.5





0.9


1.4Revisions


(1.6
)

(1.4
)

(0.1
)

(3.1
)Utilized


(1.8
)

(1.5
)

(1.8
)

(5.1
)Balance, June 30, 2008

£
16.8

£
1.8

£
39.1

£
57.7




Historical
Restructuring
Accruals

Acquisition Restructuring
Accruals

TotalSix months ended June 30, 2008

Lease
Exit Costs

Involuntary
Employee
Termination
and Related Costs

Lease
Exit CostsBalance, December 31, 2007

£
35.9

£
12.6

£
41.1

£
89.6Charged to expense


1.4





1.7


3.1Revisions


(2.0
)

(0.2
)

2.0


(0.2
)Utilized


(18.5
)

(10.6
)

(5.7
)

(34.8
)Balance, June 30, 2008

£
16.8

£
1.8

£
39.1

£
57.7


Other
income of £1.7 million and other charges of £3.1 million for the three months ended June 30, 2008 and 2007, respectively, and other
charges of £2.9 million and £14.7 million for the six months ended June 30, 2008 and 2007, respectively, relate mainly to lease exit and employee
termination costs as a result of our acquisition-related restructuring programs.

11

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Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 6Stockholders' Equity and Share Based Compensation

During the year ended December 31, 2007 and the six months ended June 30, 2008, we paid the following dividends:

Board Declaration Date

Per Share
Dividend

Record Date

Payment Date

Total
Amount(in millions)Year ended December 31, 2007:February 27, 2007

$
0.02


March 12, 2007


March 20, 2007

£
3.3May 16, 2007


0.03


June 12, 2007


June 20, 2007


5.0August 15, 2007


0.04


September 12, 2007


September 20, 2007


6.5November 27, 2007


0.04


December 12, 2007


December 20, 2007


6.4Six months ended June 30, 2008:February 6, 2008

$
0.04


March 12, 2008


March 20, 2008

£
6.6May 21, 2008


0.04


June 12, 2008


June 20, 2008


6.7


Future
payments of regular quarterly dividends by us are at the discretion of our Board of Directors and will be subject to our future needs and uses of cash, which could include
investments in operations, the repayment of debt, and share repurchase programs.

Basic
and diluted net loss per share is computed by dividing the net loss for the three and six months ended June 30, 2008 and 2007 by the weighted average number of shares
outstanding during the respective periods. Options, warrants, shares issuable under our convertible senior notes and shares of restricted stock held in escrow at June 30, 2008 and 2007,
respectively, are excluded from the calculation of diluted loss per share, since these securities are anti-dilutive.

The
average number of shares outstanding for the three and six months ended June 30, 2008 and 2007 is computed as follows (in millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Number of shares outstanding at start of period


328.0


324.6


327.5


323.9Issues of common stock (average number outstanding during the period)


0.1


0.9


0.5


0.9Average number of shares outstanding


328.1


325.5


328.0


324.8


Total
share based compensation expense included in selling, general and administrative expenses in the statement of operations was £5.1 million and
£7.1 million for the three months ended June 30, 2008 and 2007, respectively, and £7.2 million and £14.3 million for the six months
ended June 30, 2008 and 2007, respectively.

12

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Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 7Comprehensive Loss

Comprehensive loss comprises (in millions):

Three months ended June 30,

Six months ended June 30,2008

2007

2008

2007Net loss for period

£
(447.2
)
£
(119.0
)
£
(551.6
)
£
(239.3
)Currency translation adjustments


0.1





0.1


(0.4
)Net unrealized gains on derivatives, net of tax


11.7


9.5


27.6


34.0Reclassification of derivative (gains) losses to net income, net of tax


(2.0
)

15.6


(11.6
)

14.5Comprehensive loss

£
(437.4
)
£
(93.9
)
£
(535.5
)
£
(191.2
)


The
components of accumulated other comprehensive income, net of taxes, were as follows (in millions):

June 30,
2008

December 31,
2007Foreign currency translation


£131.5


£131.4Pension liability adjustments


(0.2
)

(0.2
)Net unrealized gains on derivatives


33.4


17.4£164.7


£148.6


Note 8Income Taxes

At each period end, it is necessary for us to make certain estimates and assumptions to compute the provision for income taxes including, but not limited to, the expected operating
income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in the United Kingdom and the extent to which this income (or loss) may also be taxed in the United
States, permanent and temporary differences, the likelihood of deferred tax assets being recovered and the outcome of contingent tax risks. At each interim period, management uses the best information
available to develop these estimates and assumptions, which are used to compute the forecast effective tax rate for the full year which is applied in computing the income tax expense or benefit for
the interim period. In accordance with U.S. generally accepted accounting principles, the impact of revisions to these estimates are recorded as income tax expense or benefit in the period in which
they become known. Accordingly, the accounting estimates used to compute the provision for income taxes have changed and will change as new events occur, as more experience is acquired, as additional
information is obtained and our tax environment changes. To the extent that the estimate changes during a
subsequent quarter, the effect of the change on prior quarters as well as on the current quarter is included in income tax expense for the current quarter.

For
the three and six months ended June 30, 2008, income tax benefit was £0.6 million and £7.9 million, respectively, as compared with income
tax expense of £7.2 million and £10.7 million, respectively, for the same periods in 2007. The income tax benefit for the three months ended June 30, 2008
was comprised of current federal tax expense of £0.2 million, deferred federal tax expense of £4.2 million, a U.K. current tax benefit of
£1.2 million and a U.K. deferred tax benefit of £3.8 million.

13

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 8Income Taxes (Continued)

The
income tax benefit for the six months ended June 30, 2008 was comprised of current federal tax expense of £0.4 million, deferred federal tax expense of
£7.5 million, a U.K. current tax benefit of £2.5 million and a U.K. deferred tax benefit of £13.3 million. The U.K. current tax benefit related
to amounts receivable in respect of the sale of U.K. tax losses to an equity-method investee. The U.K. deferred tax benefit related to the decrease in our deferred tax asset valuation allowance due to
changes in our assessment of the future realization of certain deferred tax assets. Such changes resulted from the recording of certain deferred tax liabilities related to amounts recognized in the
statement of other comprehensive income during the quarter that are expected to reverse in future periods and will allow us to offset such amounts against certain deferred tax assets. The income tax
expense for the three months ended June 30, 2007 was comprised of current federal taxes of £0.4 million, a U.S. state and local tax benefit of £nil, deferred
federal tax expense of £8.6 million and a U.K. tax benefit of £1.8 million. The income tax expense for the six months ended June 30, 2007 was comprised of
current federal taxes of £0.7 million, a U.S. state and local tax benefit of £0.6 million, deferred federal tax expense of £13.7 million and a
U.K. tax benefit of £3.1 million. The U.K. tax benefit related to amounts receivable in respect of the sale of U.K. tax losses to an equity-method investee.

We
recognize interest and penalties related to unrecognized tax benefits in income tax expense in the statement of operations.

Note 9Fair Value Measurements

In September 2006, the FASB issued Statement No. 157,Fair Value Measurements, or FAS 157. FAS 157 provides guidance
for using fair value to measure assets and liabilities. It also responds to investors' requests for expanded information about the extent to which companies measure assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair value measurements on earnings. FAS 157 applies whenever other standards require (or permit) assets or liabilities to
be measured at fair value, and does not expand the use of fair value in any new circumstances. FAS 157 is effective for certain financial instruments included in financial statements issued for
fiscal years beginning after November 15, 2007 and for all other non-financial instruments for fiscal years beginning after November 15, 2008. The provisions of
FAS 157 relating to certain financial instruments were required to be adopted by us in the first quarter of 2008 effective January 1, 2008. The adoption of this standard did not have a
material impact on our consolidated financial statements.

FAS 157,
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (exit price). FAS 157 classifies the inputs used to measure fair value into the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 2

Unadjusted quoted prices in active markets for similar assets or liabilities, orUnadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, orInputs other than quoted prices that are observable for the asset or liabilityLevel 3

Unobservable inputs for the asset or liability


14

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 9Fair Value Measurements (Continued)

We
endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that
is significant to the fair value measurement. We have determined that all of our financial assets and liabilities that are stated at fair value fall in level 2 in the fair value hierarchy
described above.

The
following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2008 and December 31, 2007 (in
millions):

June 30,
2008

December 31,
2007Included within other current assets:Foreign currency forward rate contracts

£
25.9

£
Interest rate swaps


25.1


4.1Cross-currency interest rate swaps


21.8


£
72.8

£
4.1Included within other assets:Foreign currency forward rate contracts

£


£
18.3Interest rate swaps





11.2Cross-currency interest rate swaps


57.8


30.6£
57.8

£
60.1Included within other current liabilities:Foreign currency forward rate contracts

£
76.1

£
Cross-currency interest rate swaps


7.5


£
83.6

£
Included within deferred revenue and other long term liabilities:Foreign currency forward rate contracts





67.9Cross-currency interest rate swaps


40.7


54.4£
40.7

£
122.3


As
a result of our financing activities, we are exposed to market risks from changes in interest and foreign currency exchange rates, which may adversely affect our operating results and
financial position. When deemed appropriate, we minimize our risks from interest and foreign currency exchange rate fluctuations through the use of derivative financial instruments. Derivative
financial instruments are used to manage risk and are not used for trading or other speculative purposes and we do not use leveraged derivative financial instruments. The foreign currency forward rate
contracts, interest rate swaps and cross-currency interest rate swaps are valued using broker quotations, or market transactions in either the listed or over-the counter markets. As such,
these derivative instruments are classified within level 2 in the fair value hierarchy.

15

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 10Recent Accounting Pronouncements

In February 2007, the FASB issued Statement No. 159,The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115, or FAS 159. FAS 159 allows
companies to elect to measure certain assets and liabilities at fair value and is effective
for fiscal years beginning after November 15, 2007. We did not elect to utilize the fair value option permitted by FAS 159 for any of our assets or liabilities as at December 31,
2007.

In
December 2007, the FASB issued FAS No. 160,Noncontrolling Interests in Consolidated Financial Statements, or FAS 160.
FAS 160 establishes requirements for ownership interests in subsidiaries held by parties other than ourselves (sometimes called "minority interests") to be clearly identified, presented, and
disclosed in the consolidated statement of financial position within equity, but separate from the parent's equity. All changes in the parent's ownership interests are required to be accounted for
consistently as equity transactions and any non-controlling equity investments in unconsolidated subsidiaries must be measured initially at fair value. FAS 160 is effective, on a
prospective basis, for fiscal years beginning after December 15, 2008; however, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. We
are currently assessing the impact of FAS 160 on our consolidated financial position and results of operations.

Note 11Industry Segments

Our reportable segments, Cable, Content and Mobile, are based on our method of internal reporting. Our primary segment is our Cable segment, which consists of the distribution of
television programming to consumers and the provision of broadband and fixed line telephone services to consumers, businesses and public sector organizations on our cable network and, to a lesser
extent, off our cable network. We operate our Content segment through our wholly owned subsidiaries Virgin Media Television Limited, or Virgin Media TV, and sit-up Limited, or
sit-up, which supply television programming to the U.K. pay-television broadcasting market including our televised shopping unit sit-up tv, which markets and
retails a wide variety of consumer products using an auction-based format. We operate our Mobile segment through our wholly owned subsidiary Virgin Mobile Holdings (UK) Ltd., which consists of
our mobile telephony business. Our segments operate entirely in the U.K. and no one customer represents more than 5% of our overall revenue.

Segment
operating income before depreciation, amortization and other charges, which we refer to as Segment OCF, is management's measure of segment profit as permitted under
FAS 131,Disclosures
about Segments of an Enterprise and Related Information. Our management, including our chief executive officer who is our chief operating decision maker, considers Segment OCF
as an important indicator of the operational strength and performance of our segments. Segment OCF excludes the impact of certain costs and expenses that do not directly affect our cash flows. Other
charges, including restructuring charges, are also excluded from Segment OCF as management believes they are not characteristic of our underlying business operations. The business segments disclosed
in the consolidated financial statements are based on this organizational structure and information reviewed by our management to evaluate the business segment results.

16

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 11Industry Segments (Continued)

Segment
information for the three and six month periods ended June 30, 2008 and 2007 was as follows (in millions):

Three months ended June 30, 2008Cable

Content

Mobile

Elims.

TotalRevenue

£
767.1

£
79.5

£
143.9

£


£
990.5Inter segment revenue


0.8


6.5





(7.3
)

Operating costs


(292.3
)

(66.1
)

(83.0
)

6.5


(434.9
)Selling, general and administrative expenses


(177.3
)

(20.8
)

(25.4
)

0.8


(222.7
)Segment OCF


298.3


(0.9
)

35.5





332.9Depreciation, amortization and other charges


(269.6
)

(4.6
)

(25.6
)




(299.8
)Goodwill impairment








(366.2
)




(366.2
)Operating income (loss)

£
28.7

£
(5.5
)
£
(356.3
)
£


£
(333.1
)




Three months ended June 30, 2007Cable

Content

Mobile

Elims.

TotalRevenue

£
775.1

£
73.6

£
146.3

£


£
995.0Inter segment revenue


1.0


6.1





(7.1
)

Operating costs


(297.0
)

(60.1
)

(84.2
)

6.2


(435.1
)Selling, general and administrative expenses


(196.6
)

(19.5
)

(29.4
)

0.9


(244.6
)Segment OCF


282.5


0.1


32.7





315.3Depreciation, amortization and other charges


(286.0
)

(4.3
)

(22.0
)




(312.3
)Operating (loss) income

£
(3.5
)
£
(4.2
)
£
10.7

£


£
3.0




17

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 11Industry Segments (Continued)

Six months ended June 30, 2008Cable

Content

Mobile

Elims.

TotalRevenue

£
1,546.0

£
162.9

£
283.4

£


£
1,992.3Inter segment revenue


1.5


12.8





(14.3
)

Operating costs


(601.3
)

(131.2
)

(175.6
)

12.8


(895.3
)Selling, general and administrative expenses


(346.0
)

(40.3
)

(55.1
)

1.5


(439.9
)Segment OCF


600.2


4.2


52.7





657.1Depreciation, amortization and other charges


(568.4
)

(9.1
)

(51.1
)




(628.6
)Goodwill impairment








(366.2
)




(366.2
)Operating income (loss)

£
31.8

£
(4.9
)
£
(364.6
)
£


£
(337.7
)




Six months ended June 30, 2007Cable

Content

Mobile

Elims.

TotalRevenue

£
1,575.4

£
154.2

£
287.3

£


£
2,016.9Inter segment revenue


1.9


12.0





(13.9
)

Operating costs


(608.7
)

(120.2
)

(167.6
)

12.1


(884.4
)Selling, general and administrative expenses


(419.3
)

(33.7
)

(60.3
)

1.8


(511.5
)Segment OCF


549.3


12.3


59.4





621.0Depreciation, amortization and other charges


(581.5
)

(8.4
)

(43.4
)




(633.3
)Operating (loss) income

£
(32.2
)
£
3.9

£
16.0

£


£
(12.3
)


Note 12Condensed Consolidated Financial Information

On April 13, 2004, our wholly owned subsidiary, Virgin Media Finance PLC, or Virgin Media Finance, issued £375 million aggregate principal amount of
9.75% senior notes due 2014, $425 million aggregate principal amount of 8.75% senior notes due 2014, €225 million aggregate principal amount of 8.75% senior notes due
2014 and $100 million aggregate principal amount of floating rate notes due 2012, together referred to as the Senior Notes due 2014. On July 15, 2005, the $100 million aggregate
principal amount of floating rate notes was redeemed. On July 25, 2006, Virgin Media Finance issued $550 million aggregate principal amount of 9.125% senior notes due 2016, and together
with the Senior Notes due 2014, these are referred to as the Senior Notes. Virgin Media Inc. and certain of its subsidiaries, namely Virgin Media Group LLC, Virgin Media
Holdings Inc., Virgin Media (UK) Group, Inc. and Virgin Media Communications Limited, have guaranteed the Senior
Notes on a senior basis. Virgin Media Investment Holdings Limited, or VMIH, has guaranteed the Senior Notes on a senior subordinated basis.

18

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Condensed Consolidated Financial Information (Continued)

We
present the following condensed consolidated financial information as of June 30, 2008 and December 31, 2007 and for the three and six months ended June 30, 2008
and 2007 as required by Article 3-10(d) of Regulation S-X.

June 30, 2008Balance sheets

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Cash and cash equivalents

£
0.9

£


£
4.2

£


£
421.7

£


£
426.8Restricted cash














6.0





6.0Other current assets


1.2








4.4


711.7





717.3Total current assets


2.1





4.2


4.4


1,139.4





1,150.1Fixed assets, net














5,491.6





5,491.6Intangible assets, net








(18.2
)




2,792.3





2,774.1Investments in, and loans to, parent and subsidiary companies


2,770.1


508.2


(110.6
)

4,444.3


(6,601.2
)

(637.8
)

373.0Other assets, net


9.7








180.7


(13.5
)




176.9Total assets

£
2,781.9

£
508.2

£
(124.6
)
£
4,629.4

£
2,808.6

£
(637.8
)
£
9,965.7Current liabilities

£
10.0

£
38.4

£
27.6

£
61.8

£
1,479.8

£
(156.0
)
£
1,461.6Long term debt


502.4


1,042.8





2,066.8


2,378.2





5,990.2Other long term liabilities








0.3


107.5


136.4





244.2Minority interest














0.2





0.2Shareholders' equity


2,269.5


(573.0
)

(152.5
)

2,393.3


(1,186.0
)

(481.8
)

2,269.5Total liabilities and shareholders' equity

£
2,781.9

£
508.2

£
(124.6
)
£
4,629.4

£
2,808.6

£
(637.8
)
£
9,965.7




December 31, 2007Balance sheets

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Cash and cash equivalents

£
1.3

£


£
10.0

£
0.7

£
309.4

£


£
321.4Restricted cash














6.1





6.1Other current assets








0.4


9.6


615.8





625.8Total current assets


1.3





10.4


10.3


931.3





953.3Fixed assets, net














5,655.6





5,655.6Intangible assets, net








(13.1
)




3,318.0





3,304.9Investments in, and loans to, parent and subsidiary companies


2,808.8


1,018.0


379.5


5,281.1


(6,526.6
)

(2,592.1
)

368.7Other assets, net











129.0


54.6





183.6Total assets

£
2,810.1

£
1,018.0

£
376.8

£
5,420.4

£
3,432.9

£
(2,592.1
)
£
10,466.1Current liabilities

£
(0.4
)
£
29.9

£
6.4

£
119.6

£
1,354.5

£
(103.3
)
£
1,406.7Long term debt





1,032.0





2,262.4


2,635.0





5,929.4Other long term liabilities








0.3


116.7


202.5





319.5Shareholders' equity


2,810.5


(43.9
)

370.1


2,921.7


(759.1
)

(2,488.8
)

2,810.5Total liabilities and shareholders' equity

£
2,810.1

£
1,018.0

£
376.8

£
5,420.4

£
3,432.9

£
(2,592.1
)
£
10,466.1


19

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Condensed Consolidated Financial Information (Continued)

Three months ended June 30, 2008Statements of operations

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Revenue

£


£


£


£


£
990.5

£


£
990.5Operating costs














(434.9
)




(434.9
)Selling, general and administrative expenses


(11.6
)




5.2





(216.3
)




(222.7
)Other income














1.7





1.7Depreciation and amortization














(301.5
)




(301.5
)Goodwill impairment














(366.2
)




(366.2
)Operating (loss) income


(11.6
)




5.2





(326.7
)




(333.1
)Interest income and other, net


6.9


30.7


26.8


17.3


(7.3
)

(66.8
)

7.6Interest expense


(7.5
)

(31.0
)

(20.4
)

(84.1
)

(45.4
)

66.8


(121.6
)Share of income from equity investments














3.9





3.9Foreign currency (losses) gains


(0.1
)




(0.1
)

6.1


(2.5
)




3.4Loss on extinguishment of debt











(4.4
)

(1.2
)




(5.6
)(Loss) gain on derivative instruments











28.1


(30.4
)




(2.3
)Income tax benefit (expense)


(0.1
)




(3.2
)

13.3


(9.4
)




0.6Minority interest














(0.1
)




(0.1
)(Loss) income before equity in net (loss) income from subsidiaries


(12.4
)

(0.3
)

8.3


(23.7
)

(419.1
)




(447.2
)Equity in net loss of subsidiaries


(434.8
)

(444.2
)

(443.3
)

(420.5
)




1,742.8


Net loss

£
(447.2
)
£
(444.5
)
£
(435.0
)
£
(444.2
)
£
(419.1
)
£
1,742.8

£
(447.2
)




Six months ended June 30, 2008Statements of operations

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Revenue

£


£


£


£


£
1,992.3

£


£
1,992.3Operating costs














(895.3
)




(895.3
)Selling, general and administrative expenses


(12.2
)










(427.7
)




(439.9
)Other charges














(2.9
)




(2.9
)Depreciation and amortization














(625.7
)




(625.7
)Goodwill impairment














(366.2
)




(366.2
)Operating (loss)


(12.2
)










(325.5
)




(337.7
)Interest income and other, net


6.9


56.2


39.9


34.2


(16.0
)

(107.3
)

13.9Interest expense


(7.9
)

(56.5
)

(27.0
)

(166.7
)

(94.2
)

107.3


(245.0
)Share of income from equity investments














9.0





9.0Foreign currency (losses) gains


(0.1
)

(0.4
)

(0.1
)

(22.4
)

(2.0
)




(25.0
)Loss on extinguishment of debt











(4.4
)

(1.2
)




(5.6
)Gain on derivative instruments











28.1


3.0





31.1Income tax benefit (expense)


(0.1
)




(5.5
)

13.3


0.2





7.9Minority interest














(0.2
)




(0.2
)(Loss) income before equity in net (loss) income from subsidiaries


(13.4
)

(0.7
)

7.3


(117.9
)

(426.9
)




(551.6
)Equity in net loss of subsidiaries


(538.2
)

(544.4
)

(545.8
)

(426.5
)




2,054.9


Net loss

£
(551.6
)
£
(545.1
)
£
(538.5
)
£
(544.4
)
£
(426.9
)
£
2,054.9

£
(551.6
)


20

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Condensed Consolidated Financial Information (Continued)

Three months ended June 30, 2007Statements of operations

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Revenue

£


£


£


£


£
995.0

£


£
995.0Operating costs














(435.1
)




(435.1
)Selling, general and administrative expenses


(0.1
)




(2.9
)




(241.6
)




(244.6
)Other charges














(3.1
)




(3.1
)Depreciation and amortization


0.1











(309.3
)




(309.2
)Operating income (loss)








(2.9
)




5.9





3.0Interest income and other, net


0.1


25.1


12.5


24.3


(17.8
)

(36.4
)

7.8Interest expense





(24.8
)

(6.5
)

(97.5
)

(35.7
)

36.4


(128.1
)Share of income from equity investments














5.3





5.3Loss on extinguishment of debt











(0.5
)

(0.6
)




(1.1
)Foreign currency gains (losses)





0.1


0.3


(4.4
)

6.3





2.3Losses on derivative instruments














(1.0
)




(1.0
)Income tax (expense) benefit


(0.1
)

0.1


(4.7
)




(2.5
)




(7.2
)(Loss) income before equity in net loss from subsidiaries





0.5


(1.3
)

(78.1
)

(40.1
)




(119.0
)Equity in net loss of subsidiaries


(119.0
)

(115.0
)

(117.7
)

(37.0
)




388.7


Net loss

£
(119.0
)
£
(114.5
)
£
(119.0
)
£
(115.1
)
£
(40.1
)
£
388.7

£
(119.0
)




Six months ended June 30, 2007Statements of operations

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Revenue

£


£


£


£


£
2,016.9

£


£
2,016.9Operating costs














(884.4
)




(884.4
)Selling, general and administrative expenses


(2.0
)




(8.1
)

(0.3
)

(501.1
)




(511.5
)Other charges


(0.3
)










(14.4
)




(14.7
)Depreciation and amortization














(618.6
)




(618.6
)Operating loss


(2.3
)




(8.1
)

(0.3
)

(1.6
)




(12.3
)Interest income and other, net


0.3


50.4


23.9


41.5


(28.2
)

(73.1
)

14.8Interest expense





(49.9
)

(12.9
)

(184.5
)

(72.4
)

73.1


(246.6
)Share of income from equity investments














12.5





12.5Loss on extinguishment of debt











(0.5
)

(0.6
)




(1.1
)Foreign currency gains (losses)





0.1


0.4


(4.5
)

9.6





5.6Losses on derivative instruments














(1.5
)




(1.5
)Minority interest income




















Income tax expense


(0.2
)




(7.3
)




(3.2
)




(10.7
)(Loss) income before equity in net loss from subsidiaries


(2.2
)

0.6


(4.0
)

(148.3
)

(85.4
)




(239.3
)Equity in net loss of subsidiaries


(237.1
)

(230.9
)

(233.1
)

(82.7
)




783.8


Net loss

£
(239.3
)
£
(230.3
)
£
(237.1
)
£
(231.0
)
£
(85.4
)
£
783.8

£
(239.3
)


21

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Condensed Consolidated Financial Information (Continued)

Six months ended June 30, 2008Statements of cash flows

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Net cash provided by (used in) operating activities

£
(2.3
)
£


£
(8.4
)
£
(30.8
)
£
420.3

£


£
378.8Investing activities:Purchase of fixed and intangible assets














(233.3
)




(233.3
)Principal repayments (drawdowns) on loans to equity investments


(492.8
)




0.9


262.2


230.3





0.6Other














1.6





1.6Net cash (used in) provided by investing activities


(492.8
)




0.9


262.2


(1.4
)




(231.1
)Financing activities:New borrowings, net of financing fees


494.0

















494.0Proceeds from employee stock options


0.6

















0.6Principal payments on long term debt and capital leases











(217.1
)

(306.6
)




(523.7
)Intercompany funding movements


13.3





1.7


(15.0
)







Dividends paid


(13.3
)
















(13.3
)Net cash (used in) provided by in financing activities


494.6





1.7


(232.1
)

(306.6
)




(42.4
)Effect of exchange rate changes


0.1

















0.1Increase (decrease) in cash and cash equivalents


(0.4
)




(5.8
)

(0.7
)

112.3





105.4Cash and cash equivalents at beginning of period


1.3





10.0


0.7


309.4





321.4Cash and cash equivalents at end of period

£
0.9

£


£
4.2

£


£
421.7

£


£
426.8


22

---



Table of Contents

VIRGIN MEDIA INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Condensed Consolidated Financial Information (Continued)

Six months ended June 30, 2007Statements of cash flows

Company

Virgin
Media
Finance

Other
guarantors

VMIH

All other
subsidiaries

Adjustments

Total(in millions)Net cash provided by (used in) operating activities

£
(0.5
)
£


£
(3.2
)
£
(28.9
)
£
253.7

£


£
221.1Investing activities:Purchase of fixed and intangible assets














(286.2
)




(286.2
)Acquisitions, net of cash acquired











(1.0
)







(1.0
)Principal repayments (drawdowns) on loans to equity investments


4.6





(4.6
)

(375.1
)

381.3





6.2Other














2.1





2.1Net cash (used in) provided by investing activities


4.6





(4.6
)

(376.1
)

97.2





(278.9
)Financing activities:New borrowings, net of financing fees











576.8


297.7





874.5Principal payments on long term debt and capital leases











(161.9
)

(789.5
)




(951.4
)Proceeds from employee stock options


4.0

















4.0Dividends paid


(8.3
)
















(8.3
)Net cash (used in) provided by financing activities


(4.3
)







414.9


(491.8
)




(81.2
)Effect of exchange rate changes








(2.4
)










(2.4
)(Decrease) increase in cash and cash equivalents


(0.2
)




(10.2
)

9.9


(140.9
)




(141.4
)Cash and cash equivalents at beginning of period


2.4





31.5


0.2


384.4





418.5Cash and cash equivalents at end of period

£
2.2

£


£
21.3

£
10.1

£
243.5

£


£
277.1


23

---





Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED    CONDENSED CONSOLIDATED BALANCE SHEETS    (in millions, except par value)

June 30,
2008

December 31,
2007(Unaudited)

(See Note)AssetsCurrent assetsCash and cash equivalents

£
421.7

£
310.0Restricted cash


5.2


5.4Accounts receivabletrade, less allowances for doubtful accounts of £17.6 (2008) and £17.1 (2007)


427.5


451.0Inventory


94.8


75.4Prepaid expenses and other current assets


184.1


94.4Total current assets


1,133.3


936.2Fixed assets, net


5,362.1


5,510.3Goodwill and other indefinite-lived intangible assets


2,129.1


2,495.3Intangible assets, net


657.3


814.3Equity investments


373.0


368.7Other assets, net of accumulated amortization of £55.7 (2008) and £45.0 (2007)


167.2


183.6Due from group companies


720.0


637.4Total assets

£
10,542.0

£
10,945.8Liabilities and shareholders' equityCurrent liabilitiesAccounts payable

£
382.7

£
372.9Accrued expenses and other current liabilities


498.9


407.4VAT and employee taxes payable


66.4


81.2Restructuring liabilities


57.3


84.8Interest payable


106.0


148.2Interest payable to group companies


93.5


77.6Deferred revenue


259.2


240.3Current portion of long term debt


33.3


29.1Total current liabilities


1,497.3


1,441.5Long term debt, net of current portion


4,445.0


4,897.4Long term debt, due to group companies


1,964.1


1,367.1Deferred revenue and other long term liabilities


158.6


237.1Deferred income taxes


83.5


81.0Total liabilities


8,148.5


8,024.1Commitments and contingent liabilitiesMinority interest


0.2


Shareholders' equityShare capital£0.001 par value; authorized 1,000,000 ordinary shares (2008 and 2007); issued and outstanding 224,552 ordinary shares (2008 and 2007)





Additional paid-in capital


4,371.3


4,371.3Accumulated other comprehensive income


33.2


17.2Accumulated deficit


(2,011.2
)

(1,466.8
)Total shareholders' equity


2,393.3


2,921.7Total liabilities and shareholders' equity

£
10,542.0

£
10,945.8


---

Note:    The
balance sheet at December 31, 2007 has been derived from the audited financial statements at that date.

See accompanying notes.

24

---



Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    (unaudited) (in millions)

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Revenue

£
963.0

£
965.1

£
1,937.4

£
1,956.5Costs and expensesOperating costs (exclusive of depreciation shown separately below)


421.7


421.6


869.3


860.0Selling, general and administrative expenses


210.0


232.1


414.8


482.3Other (income) charges


(1.7
)

2.7


2.8


13.3Depreciation


225.1


226.1


451.0


452.8Amortization


70.9


75.7


161.7


151.1Goodwill impairment


366.2





366.2


1,292.2


958.2


2,265.8


1,959.5Operating (loss) income


(329.2
)

6.9


(328.4
)

(3.0
)Other income (expense)Interest income and other, net


7.6


6.8


13.8


13.4Interest income from group companies


1.8


1.1


3.7


3.0Interest expense


(90.4
)

(102.8
)

(189.8
)

(199.5
)Interest expense to group companies


(37.4
)

(29.7
)

(67.1
)

(56.7
)Share of income from equity investments


3.9


5.3


9.0


12.5Foreign currency gains (losses)


3.6


1.9


(24.4
)

5.1Loss on extinguishment of debt


(5.6
)

(1.1
)

(5.6
)

(1.1
)(Losses) gains on derivative instruments


(2.3
)

(1.0
)

31.1


(1.5
)Loss before income taxes and minority interest


(448.0
)

(112.6
)

(557.7
)

(227.8
)Income tax benefit (expense)


3.9


(2.5
)

13.5


(3.2
)Minority interest


(0.1
)




(0.2
)

Net loss

£
(444.2
)
£
(115.1
)
£
(544.4
)
£
(231.0
)


See
accompanying notes.

25

---



Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    (unaudited) (in millions)

Six months ended
June 30,2008

2007Operating activitiesNet loss

£
(544.4
)
£
(231.0
)Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization


612.7


603.9Goodwill impairment


366.2


Non-cash interest


(36.7
)

(63.3
)Non-cash compensation


5.4


11.4Income from equity accounted investments, net of dividends received


(5.0
)

(9.2
)Income taxes


(11.5
)

5.5Amortization of original issue discount and deferred financing costs


10.7


11.6Unrealized foreign currency losses (gains)


23.9


0.6Loss on extinguishment of debt


5.6


1.1(Gains) losses on derivative instruments


(24.1
)

1.5Other


(0.5
)

0.1Changes in operating assets and liabilities


(44.0
)

(107.3
)Net cash provided by operating activities


358.3


224.9Investing activitiesPurchase of fixed and intangible assets


(231.0
)

(284.5
)Principal repayments on loans to equity investments


0.6


Investments in, and loans from, parent and subsidiary companies


505.9


5.3Acquisitions, net of cash acquired





(1.0
)Other


1.6


1.5Net cash provided by (used in) investing activities


277.1


(278.7
)Financing activitiesNew borrowings, net of financing fees





874.5Principal payments on long term debt and capital leases


(523.7
)

(951.4
)Net cash used in financing activities


(523.7
)

(76.9
)Increase (decrease) in cash and cash equivalents


111.7


(130.7
)Cash and cash equivalents, beginning of period


310.0


384.0Cash and cash equivalents, end of period

£
421.7

£
253.3


26

---





Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED        NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (unaudited)

Note 1Basis of Presentation

Virgin Media Investment Holdings Limited, or VMIH, is an indirect, wholly owned subsidiary of Virgin Media Inc., or Virgin
Media.

The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial
information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by U.S. generally accepted
accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. For
further information, refer to the consolidated financial statements and notes thereto included in Virgin Media's Annual Report on Form 10-K for the year ended December 31,
2007, as filed with the SEC on February 29, 2008, as amended.

Certain
prior year balances have been reclassified to conform to the current period presentation.

Note 2Goodwill and Intangible Assets

During the six months ended June 30, 2008, assets not subject to amortization were adjusted for the following (in millions):

Trade Names

Reorganization
Value

GoodwillBalance, December 31, 2007

£
16.5

£
153.2

£
2,325.6Goodwill impairment








(366.2
)Balance, June 30, 2008

£
16.5

£
153.2

£
1,959.4


As
at June 30, 2008, we performed our annual impairment review of the goodwill recognized in the Virgin Media TV and sit-up reporting units, included in our Content
segment, and the Virgin Mobile reporting unit. The fair value of these reporting units were determined through the use of a combination of both the market and income valuation approaches to calculate
fair value. We concluded that the fair value of the Virgin Media TV and sit-up reporting units exceeded their carrying value, while the Virgin Mobile reporting unit fair value was less
than its carrying value.

The
market approach valuations in respect of the Mobile reporting unit have 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 Virgin Mobile reporting unit's individual assets and liabilities and have recognized a preliminary goodwill
impairment charge of £366.2 million. We intend to complete our impairment review during the third quarter
and any further adjustments to the carrying value of goodwill, if required, will be recognized in our third quarter results.

27

---



Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 3Long Term Debt

Long term debt consists of (in millions):

June 30,
2008

December 31,
20078.75% U.S. Dollar senior loan notes due 2014 due to Virgin Media Finance PLC

£
213.5

£
214.29.75% Sterling senior loan notes due 2014 due to Virgin Media Finance PLC


375.0


375.08.75% Euro senior loan notes due 2014 due to Virgin Media Finance PLC


178.0


165.69.125% U.S. Dollar senior notes due 2016 due to Virgin Media Finance PLC


276.3


277.2Floating rate senior loan notes due 2012 due to Virgin Media Finance PLC


50.2


50.4Senior credit facility


4,324.1


4,804.8Other loan notes due to affiliates


871.1


284.7Capital leases


149.8


116.9Other


4.4


4.86,442.4


6,293.6Less: current portion


(33.3
)

(29.1
)£
6,409.1

£
6,264.5


The effective interest rate on the senior credit facility was 7.4% and 7.8% as at June 30, 2008 and December 31, 2007, respectively.

Note 4Employee Benefit Plans

The components of net periodic pension cost in the three and six months ended June 30, 2008 and 2007 were as follows (in
millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Service costs

£
0.5

£
0.6

£
0.9

£
1.2Interest costs


4.5


4.1


9.1


8.3Expected return on plan assets


(5.3
)

(4.7
)

(10.7
)

(9.5
)Net periodic benefit costs

£
(0.3
)
£


£
(0.7
)
£



28

---



Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 5Other (Income) Charges Including Restructuring Charges

The following tables summarize our historical restructuring accruals and the restructuring accruals resulting from the acquisitions
during 2006 made by Virgin Media (in millions):

Historical
Restructuring
Accruals

Acquisition Restructuring
Accruals

TotalThree months ended June 30, 2008

Lease
Exit Costs

Involuntary
Employee
Termination
and Related Costs

Lease
Exit CostsBalance, March 31, 2008

£
19.2

£
4.6

£
39.8

£
63.6Charged to expense


0.5





0.9


1.4Revisions


(1.6
)

(1.4
)

(0.1
)

(3.1
)Utilized


(1.5
)

(1.4
)

(1.7
)

(4.6
)Balance, June 30, 2008

£
16.6

£
1.8

£
38.9

£
57.3




Historical
Restructuring
Accruals

Acquisition Restructuring
Accruals

TotalSix months ended June 30, 2008

Lease
Exit Costs

Involuntary
Employee
Termination
and Related Costs

Lease
Exit CostsBalance, December 31, 2007

£
34.0

£
11.9

£
38.9

£
84.8Charged to expense


1.4





1.7


3.1Revisions


(2.0
)

(0.2
)

1.9


(0.3
)Utilized


(16.8
)

(9.9
)

(3.6
)

(30.3
)Balance, June 30, 2008

£
16.6

£
1.8

£
38.9

£
57.3


Other
income of £1.7 million and other charges of £2.7 million for the three months ended June 30, 2008 and 2007, respectively, and other
charges of £2.8 million and £13.3 million for the six months ended June 30, 2008 and 2007, respectively, relate mainly to lease exit and employee
termination costs as a result of our acquisition-related restructuring programs.

Note 6Share Based Compensation

Stock Option Plans

We are an indirect, wholly owned subsidiary of Virgin Media. Accordingly, we have no stock-based compensation plans. As at
June 30, 2008, certain of our employees participated in the stock-based compensation plans of Virgin Media, as described in Virgin Media's 2007 Annual Report on Form 10-K,
filed with the SEC on February 29, 2008, as amended.

29

---



Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 7Comprehensive Loss

Comprehensive loss comprises (in millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Net loss for period

£
(444.2
)
£
(115.1
)
£
(544.4
)
£
(231.0
)Net unrealized gains on derivatives, net of tax


11.7


9.5


27.6


34.0Reclassification of derivative losses (gains) to net income, net of tax


(2.0
)

10.2


(11.6
)

7.8Comprehensive loss

£
(434.5
)
£
(95.4
)
£
(528.4
)
£
(189.2
)


The
components of accumulated other comprehensive income, net of taxes, were as follows (in millions):

June 30,
2008

December 31,
2007Pension liability adjustments

£
(0.2
)
£
(0.2
)Net unrealized gains on derivatives


33.4


17.4£
33.2

£
17.2


Note 8Income Taxes

At each period end, it is necessary for us to make certain estimates and assumptions to compute the provision for income taxes including, but not limited to, the expected operating
income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in the United Kingdom and the extent to which this income (or loss) may also be taxed in the United
States, permanent and temporary differences, the likelihood of deferred tax assets being recovered and the outcome of contingent tax risks. At each interim period, management uses the best information
available to develop these estimates and assumptions, which are used to compute the forecast effective tax rate for the full year which is applied in computing the income tax expense or benefit for
the interim period. In accordance with U.S. generally accepted accounting principles, the impact of revisions to these estimates are recorded as income tax expense or benefit in the period in which
they become known. Accordingly, the accounting estimates used to compute the provision for income taxes have changed and will change as new events occur, as more experience is acquired, as additional
information is obtained and our tax environment changes. To the extent that the estimate changes during a subsequent quarter, the effect of the change on prior quarters as well as on the current
quarter is included in income tax expense for the current quarter.

For
the three and six months ended June 30, 2008, income tax benefit was £3.9 and £13.5 million, respectively, as compared with income tax expense
of £2.5 million and £3.2 million for the same periods in 2007. The income tax benefit for the three months ended June 30, 2008 was comprised of deferred
federal tax expense of £1.1 million, a U.K. current tax benefit of £1.2 million and a U.K. deferred tax benefit of £3.8 million. The income tax
benefit for the six months ended June 30, 2008 was comprised of deferred federal tax expense of £2.3 million, a U.K. current tax benefit of £2.5 million
and a U.K. deferred tax benefit of £13.3 million. The U.K. current tax benefit related to amounts receivable in

30

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Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 8Income Taxes (Continued)

respect
of the sale of tax losses to an equity-method investee. The U.K. deferred tax benefit related to the decrease in our deferred tax asset valuation allowance due to changes in our assessment of
the future realization of certain deferred tax assets. Such changes resulted from the recording of certain deferred tax liabilities related to amounts recognized in the statement of other
comprehensive income that are expected to reverse in future periods and will allow us to offset such amounts against certain deferred tax assets. The income tax expense for the three months ended
June 30, 2007 was comprised of deferred federal tax expense of £4.3 million and a U.K. tax benefit of £1.8 million. The income tax expense for the six
months ended June 30, 2007 was comprised of deferred federal tax expense of £6.3 million and a U.K. tax benefit of £3.1 million. The U.K. tax benefit
relates to amounts receivable in respect of the sale of U.K. tax losses to an equity-method investee.

We
recognize interest and penalties related to unrecognized tax benefits in income tax expense in the statement of operations.

Note 9Related Party Transactions

Virgin Media Inc. and its consolidated subsidiaries

We are a wholly owned subsidiary of Virgin Media Inc. We charge Virgin Media Inc. and certain of its group companies for
operating costs and selling, general and administrative expenses incurred by us on their behalf. The following information summarizes our significant related party transactions with Virgin
Media Inc. and its group companies (in millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Operating costs

£
13.2

£
13.5

£
26.0

£
24.4Selling, general and administrative expenses


12.7


9.5


25.1


19.1


The
above recharges are recorded in operating costs and selling, general and administrative expenses and offset the respective costs incurred.

Note 10Fair Value Measurements

In September 2006, the FASB issued Statement No. 157,Fair Value Measurements,
or FAS 157. FAS 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors' requests for expanded information about the extent to which
companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. FAS 157 applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. FAS 157 is effective for certain financial
instruments included in financial
statements issued for fiscal years beginning after November 15, 2007 and for all other non-financial instruments for fiscal years beginning after November 15, 2008. The
provisions of FAS 157 relating to certain financial instruments were required to be adopted by us in the first quarter of 2008 effective January 1, 2008. The adoption of this standard
did not have a material impact on our consolidated financial statements.

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VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 10Fair Value Measurements (Continued)

FAS 157
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (exit price). FAS 157 classifies the inputs used to measure fair value into the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 2

Unadjusted quoted prices in active markets for similar assets or liabilities, orUnadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, orInputs other than quoted prices that are observable for the asset or liabilityLevel 3

Unobservable inputs for the asset or liability


We
endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that
is significant to the fair value measurement. We have determined that all of our financial assets and liabilities that are stated at fair value fall in level 2 in the fair value hierarchy
described above.

The
following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2008 and December 31, 2007 (in
millions):

June 30,
2008

December 31,
2007Included within other current assets:Foreign currency forward rate contracts

£
25.9

£
Interest rate swaps


25.1


4.1Cross-currency interest rate swaps


21.8


£
72.8

£
4.1Included within other assets:Foreign currency forward rate contracts

£


£
18.3Interest rate swaps





11.2Cross-currency interest rate swaps


57.8


30.6£
57.8

£
60.1Included within other current liabilities:Foreign currency forward rate contracts

£
76.1

£
Cross-currency interest rate swaps


7.5


£
83.6

£
Included within deferred revenue and other long term liabilities:Foreign currency forward rate contracts

£


£
67.9Cross-currency interest rate swaps


40.7


54.4£
40.7

£
122.3


32

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Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 10Fair Value Measurements (Continued)

As
a result of our financing activities, we are exposed to market risks from changes in interest and foreign currency exchange rates, which may adversely affect our operating results and
financial position. When deemed appropriate, we minimize our risks from interest and foreign currency exchange rate fluctuations through the use of derivative financial instruments. Derivative
financial instruments are used to manage risk and are not used for trading or other speculative purposes and we do not use leveraged derivative financial instruments. The foreign currency forward rate
contracts, interest rate swaps and cross-currency interest rate swaps are valued using broker quotations, or market transactions in either the listed or over-the counter markets. As such,
these derivative instruments are classified within level 2 in the fair value hierarchy.

Note 11Recent Accounting Pronouncements

In February 2007, the FASB issued Statement No. 159,The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
amendment of FASB Statement No. 115, or FAS 159. FAS 159 allows companies to elect to measure certain assets and liabilities at fair value and is effective
for fiscal years beginning after November 15, 2007. We did not elect to utilize the fair value option as permitted by FAS 159 for any of our assets or liabilities as at
December 31, 2007.

In
December 2007, the FASB issued FAS No. 160,Noncontrolling Interests in Consolidated Financial Statements, or FAS 160.
FAS 160 establishes requirements for ownership interests in subsidiaries held by parties other than ourselves (sometimes called "minority interests") be clearly identified, presented, and
disclosed in the consolidated statement of financial position within equity, but separate from the parent's equity. All changes in the parent's ownership interests are required to be accounted for
consistently as equity transactions and any noncontrolling equity investments in unconsolidated subsidiaries must be measured initially at fair value. FAS 160 is effective, on a prospective
basis, for fiscal years beginning after December 15, 2008. However, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. We are
currently assessing the impact of FAS 160 on our consolidated financial position and results of operations.

Note 12Industry Segments

Our reportable segments Cable, Content and Mobile are based on our method of internal reporting. Our primary segment is our Cable segment, which consists of the distribution of
television programming to consumers and the provision of broadband and fixed line telephone services to consumers, businesses and public sector organizations on our cable network and, to a lesser
extent, off our cable network. We operate our Content segment through our wholly owned subsidiaries Virgin Media TV, and sit-up, which supply television programming to the U.K.
pay-television broadcasting market including our televised shopping unit sit-up tv, which markets and retails a wide variety of consumer products using an auction-based format.
We operate our Mobile segment through our wholly owned subsidiary Virgin Mobile Holdings (UK) Ltd., which consists of our mobile telephony business. Our segments operate entirely in the U.K.
and no one customer represents more than 5% of our overall revenue.

Segment
operating income before depreciation, amortization and other charges, which we refer to as Segment OCF, is management's measure of segment profit as permitted under
FAS 131,Disclosures about Segments of an Enterprise and Related Information.Our management, including our chief

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VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Industry Segments (Continued)

executive
officer who is our chief operating decision maker, considers Segment OCF as an important indicator of the operational strength and performance of our segments. Segment OCF excludes the
impact of certain costs and expenses that do not directly affect our cash flows. Other charges, including restructuring charges, are also excluded from Segment OCF as management believes they are not
characteristic of our underlying business operations. The business segments disclosed in the consolidated financial statements are based on this organizational structure and information reviewed by
our management to evaluate the business segment results.

Segment
information for the three and six month periods ended June 30, 2008 and 2007 was as follows (in millions):

Three months ended June 30, 2008Cable

Content

Mobile

Elims.

TotalRevenue

£
739.6

£
79.5

£
143.9

£


£
963.0Inter segment revenue


0.8


6.5





(7.3
)

Operating costs


(279.1
)

(66.1
)

(83.0
)

6.5


(421.7
)Selling, general and administrative expenses


(164.6
)

(20.8
)

(25.4
)

0.8


(210.0
)Segment OCF


296.7


(0.9
)

35.5





331.3Depreciation, amortization and other charges


(264.1
)

(4.6
)

(25.6
)




(294.3
)Goodwill impairment








(366.2
)




(366.2
)Operating income (loss)

£
32.6

£
(5.5
)
£
(356.3
)
£


£
(329.2
)




Three months ended June 30, 2007Cable

Content

Mobile

Elims.

TotalRevenue

£
745.2

£
73.6

£
146.3

£


£
965.1Inter segment revenue


1.0


6.1





(7.1
)

Operating costs


(283.5
)

(60.1
)

(84.2
)

6.2


(421.6
)Selling, general and administrative expenses


(184.1
)

(19.5
)

(29.4
)

0.9


(232.1
)Segment OCF


278.6


0.1


32.7





311.4Depreciation, amortization and other charges


(278.2
)

(4.3
)

(22.0
)




(304.5
)Operating income (loss)

£
0.4

£
(4.2
)
£
10.7

£


£
6.9




Six months ended June 30, 2008Cable

Content

Mobile

Elims.

TotalRevenue

£
1,491.1

£
162.9

£
283.4

£


£
1,937.4Inter segment revenue


1.5


12.8





(14.3
)

Operating costs


(575.3
)

(131.2
)

(175.6
)

12.8


(869.3
)Selling, general and administrative expenses


(320.9
)

(40.3
)

(55.1
)

1.5


(414.8
)Segment OCF


596.4


4.2


52.7





653.3Depreciation, amortization and other charges


(555.3
)

(9.1
)

(51.1
)




(615.5
)Goodwill impairment








(366.2
)




(366.2
)Operating income (loss)

£
41.1

£
(4.9
)
£
(364.6
)
£


£
(328.4
)


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Table of Contents

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 12Industry Segments (Continued)



Six months ended June 30, 2007Cable

Content

Mobile

Elims.

TotalRevenue

£
1,515.0

£
154.2

£
287.3

£


£
1,956.5Inter segment revenue


1.9


12.0





(13.9
)

Operating costs


(584.3
)

(120.2
)

(167.6
)

12.1


(860.0
)Selling, general and administrative expenses


(390.1
)

(33.7
)

(60.3
)

1.8


(482.3
)Segment OCF


542.5


12.3


59.4





614.2Depreciation, amortization and other charges


(565.4
)

(8.4
)

(43.4
)




(617.2
)Operating (loss) income

£
(22.9
)
£
3.9

£
16.0

£


£
(3.0
)


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Table of Contents

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and
related notes that appear elsewhere in this document.

Overview

Virgin Media is a leading U.K. entertainment and communications business providing the first "quad-play" offering of
television, broadband, fixed line telephone and mobile telephone services in the U.K. together with one of the most advanced TV on demand services available in the U.K. market. We are one of the
largest providers of residential broadband, pay television and fixed line telephone services and, by customers, the largest mobile virtual
network operator in the U.K. Through ntl:Telewest Business, which also operates as part of the Virgin Media group, we provide a complete portfolio of voice, data and internet solutions to leading
businesses, public sector organizations and service providers in the U.K.

Through
Virgin Media Television, or Virgin Media TV, we also provide a broad range of programming through our wholly owned channels, such as Virgin 1, Living and Bravo; through UKTV, our
joint ventures with BBC Worldwide; and through the portfolio of retail television channels operated by sit-up tv.

We
presently manage our business through three reportable segments:



Our
revenue by segment for the six months ended June 30, 2008 and 2007 was as follows (in millions):

Six months ended June 30,2008

2007Cable SegmentConsumer

£
1,228.5


61.7
%
£
1,256.6


62.3
%Business


317.5


15.9


318.8


15.81,546.0


77.6


1,575.4


78.1Mobile Segment


283.4


14.2


287.3


14.3Content Segment


162.9


8.2


154.2


7.6£
1,992.3


100.0
%
£
2,016.9


100.0
%


For
further discussion of our business, please refer to our Annual Report on Form 10-K for the year ended December 31, 2007 as filed with the SEC on
February 29, 2008, as amended.

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Table of Contents

Factors Affecting Our Business

Cable Segment

In our Cable segment, residential customers account for the majority of our total revenue. The number of residential customers, the
number and types of services that each customer uses and the prices we charge for these services drive our revenue. Our profit is driven by the relative margins on the types of services we provide to
these customers and by the number of services that we provide to them. For example, broadband internet is more profitable than our television services and, on average, our "triple-play"
customers are more profitable than "double-play" or "single-play" customers. Our packaging of services and our pricing are designed to encourage our customers to use multiple
services such as television, telephone and broadband at a lower price than each stand-alone product on a combined basis. Factors particularly affecting our profitability include customer churn,
average revenue per user, or ARPU, competition, capital expenditures and seasonality.

Customer Churn.Customer churn is a measure of the number of customers who stop subscribing to our services. An increase in our customer churn can lead to
increased costs and reduced revenue. We
continue to focus on improving our customer service and enhancing and expanding our service offerings to existing customers in order to manage our customer churn rate. Our ability to reduce our
customer churn rate beyond a base level is limited by factors like competition and customers moving outside our network service area, in particular during the summer season. Managing our customer
churn rate is a significant component of our business plan. Our customer churn rate may increase if our customer service is seen as unsatisfactory, if we are unable to deliver our services over our
network without interruption, or if we fail to match offerings by our competitors.

Cable ARPU.ARPU is a measure we use to evaluate how effectively we are realizing potential revenue from our residential cable customers on our network. We believe
that our "triple-play" cable offering of television, broadband and fixed line telephone services is attractive to our existing customer base and generally allows us to increase our Cable
ARPU by facilitating the sale of multiple services to each customer. Cable ARPU excludes any revenue from our Mobile segment.

Competition.Our ability to acquire and retain customers and increase revenue depends on our competitive strength. There is significant and increasing competition
in the market for our consumer services, including broadband and telephone services offered by British Telecom, or BT, and resellers or local loop unbundlers, such as British Sky Broadcasting
Group plc, or BSkyB, and Carphone Warehouse (Talk Talk), alternative internet access services like DSL, satellite television services offered by BSkyB and by BBC and ITV through Freesat,
digital terrestrial television offered through Freeview, internet protocol television offered by Tiscali S.p.A. and BT, and mobile telephone, television and data services offered by other
mobile telephone operators. Our business services also face a range of competitors, including BT and Cable & Wireless. Certain competitors, such as BT and BSkyB, are dominant in markets in
which we compete and may use their dominance in those markets to offer bundled services that compete with our product offerings. As a result of increased competition, we have had to, and may be
required to continue to, adjust our pricing and offer discounts to new and existing customers in order to attract and retain customers.

Capital Expenditures.Our business requires substantial capital expenditures on a continuing basis for various purposes, including expanding, maintaining and
upgrading our network, investing in new customer acquisitions, and offering new services. If we do not continue to invest in our network and in new technologies, our ability to retain and acquire
customers may be hindered. Therefore, our liquidity and the availability of cash to fund capital projects are important drivers of our revenue. When our liquidity is restricted, so is our ability to
meet our capital expenditure requirements.

Seasonality.Some revenue streams are subject to seasonal factors. For example, telephone usage revenue by residential customers and businesses tends to be
slightly lower during summer holiday

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Table of Contents

months.
Our customer churn rates include persons who disconnect their service because of moves, resulting in a seasonal increase in our churn rates during the summer months when higher levels of U.K.
house moves occur and students leave their accommodation between academic years.

Mobile Segment

Factors particularly affecting our Mobile segment include competition, seasonality and our third party distribution arrangements.

Competition.Our ability to acquire and retain customers and increase revenue depends on our competitive strength. There is significant competition in our markets
from mobile operators, including O2, Vodafone, Orange, T-Mobile and 3, and from other mobile virtual network operators, including Tesco Mobile, BT Mobile and Carphone Warehouse. Many of
our competitors are part of large multinational organizations, have substantial advertising and marketing budgets, and have a significant retail presence. If competitive forces prevent us from
charging the prices for these services that we plan to charge, or if our competition is able to attract our customers or potential customers we are targeting, our results of operations will be
adversely affected.

Seasonality.Some revenue streams and cost drivers are subject to seasonal factors. For example, in the fourth quarter of each year our customer acquisition and
retention costs typically increase due to the Christmas holiday period. Our ARPU generally decreases in the first quarter of each year due to the fewer number of days in February and lower usage after
the Christmas holiday period. During the summer holiday months, roaming revenue is generally higher as a result of increased international travel.

Distribution.We primarily rely upon third parties to distribute our mobile products and services. If any of these distribution partners were to cease to act as
distributors for our products and services, or the
commissions or other costs charged by the third parties were to increase, our ability to gain new customers or retain existing customers may be adversely affected. We also distribute our products
through our own retail outlets.

Content Segment

Factors particularly affecting our Content segment include competition, the number of buyers for our television channels, our access to
content, seasonality and advertising revenue.

Competition.Our television channels compete with other broadcasters for advertising revenues, subscription revenues, and programming rights. sit-up
competes with a large variety of retailers in the U.K. market and with other television channels for audiences. IDS, our advertising sales department, competes with advertising sales operations
representing other television broadcasters.

Limited Number of Buyers.The principal third party buyer of our television channels is BSkyB. Other than BSkyB, there are no significant buyers of our television
channels.

Access to Content.Most of the television content on the Virgin Media TV channels is purchased, mainly from the U.S., and because there is a limited supply of
content available and an increasing number of digital channels in the U.K., Virgin Media TV has experienced and may continue to experience an increase in the cost of its programming.

Seasonality.Our Content segment incurs increased costs in the fourth quarter of each year due to the need to provide enhanced programming over the important
Christmas holiday period. Also, sit-up records increased revenues and costs in the fourth quarter due to generally higher retail sales in the lead up to the Christmas holiday.

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Advertising Revenue.The majority of revenue for Virgin Media TV is from advertisers. Consequently, Virgin Media TV's revenue is directly affected by changes in
the total spend on television advertising in the U.K., the viewing levels for its channels and the proportion of the U.K. advertising market represented by IDS.

General

Other factors affecting our business include:

Currency Movements.We encounter currency exchange rate risks because substantially all of our revenue and operating costs are earned and paid primarily in U.K.
pounds sterling, but we pay interest and principal obligations with respect to a portion of our existing indebtedness in U.S. dollars and euros. We have implemented a hedging program to mitigate the
risk from these exposures. The objective of
this program is to reduce the volatility of our cash flows and earnings caused by changes in underlying currency exchange rates.

Integration.We continue to integrate our business with Virgin Mobile. We will be completing the final stages of the integration of our cable billing platforms
during 2008 and are continuing to integrate certain of the operations of Virgin Mobile. Any issues that may arise in connection with these integration activities could have a material negative effect
on our financial performance.

General Macroeconomic Factors.General macroeconomic factors in the U.K. may have an impact on our business. For example, in our Cable segment, as consumers
generally have less discretionary spending to purchase goods and services during an economic slowdown, consumers may be less willing to subscribe to additional products or upgrade their existing
services and our bad debt experience may worsen. In addition, as expenditures by advertisers are sensitive to economic conditions and tend to decline in recessionary periods and other periods of
uncertainty, a slowing economy may be accompanied by a decrease in advertising revenues generated through our television programming and broadband internet platforms. Finally, in our Mobile segment,
customers may reduce their expenditures on mobile phones and usage in a slowing economy.

Critical Accounting Policies

The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and contingent liabilities. We base our judgments on historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions.

For
a discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our consolidated financial statements, please refer to our Annual
Report on Form 10-K for the year ended December 31, 2007 as filed with the SEC on February 29, 2008, as amended.

Consolidated Results of Operations

Consolidated Results of Operations for the Three and Six Months Ended June 30, 2008 and 2007

Revenue

For the three months ended June 30, 2008, revenue decreased by 0.5% to £990.5 million from
£995.0 million for the three months ended June 30, 2007. This decrease was primarily due to lower revenue in our Cable and Mobile segments driven by declining prices due to
increased competition,

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Table of Contents

partially
offset by an increase in revenue in our Content segment. See further discussion of our Cable, Mobile and Content segments below.

For
the six months ended June 30, 2008, revenue decreased by 1.2% to £1,992.3 million from £2,016.9 million for the six months ended
June 30, 2007. This decrease was primarily due to a decline in revenue in our Cable and Mobile segments driven by declining prices due to increased competition, partially offset by an increase
in revenue in our Content segment. See further discussion of our Cable, Mobile and Content segments below.

Expenses

Operating costs:For the three months ended June 30, 2008, operating costs, including network expenses, were relatively unchanged at
£434.9 million compared to £435.1 million during the same period in 2007. This slight decrease was primarily attributable to decreased operating costs in our
Cable and Mobile segments partially offset by increased operating costs in our Content segment. Operating costs as a percentage of revenue increased to 43.9% for the three months ended June 30,
2008, from 43.7% for the same period in 2007. Lower network costs in our Cable segment and reduced equipment and interconnect costs in our Mobile segment were partially offset by increased programming
costs in our Content segment following the launch of our new Virgin 1 channel.

For
the six months ended June 30, 2008, operating costs increased by 1.2% to £895.3 million from £884.4 million during the same period in
2007. This increase was primarily attributable to increased operating costs in our Content and Mobile segments partially offset by decreased operating costs in our Cable segment. Operating costs as a
percentage of revenue increased to 44.9% for the six months ended June 30, 2008, from 43.8% for the same period in 2007 due to increased programming costs in our Content segment following the
launch of our new Virgin 1 channel, and increased costs relating to higher handset volumes along with increased interconnect costs in our Mobile segment, partially offset by lower employee, facilities
and network costs in our Cable segment.

Selling, general and administrative expenses:For the three months ended June 30, 2008, selling, general and administrative expenses decreased by 9.0% to
£222.7 million from £244.6 million for the three months ended June 30, 2007. This decrease is primarily due to lower employee related costs partially
offset by higher professional fees and regulatory costs.

For
the six months ended June 30, 2008, selling, general and administrative expenses decreased by 14.0% to £439.9 million from £511.5 million
for the six months ended June 30, 2007. This decrease was primarily attributable to a reduction in costs in relation to marketing and our rebrand to Virgin Media in 2007 along with lower
employee related costs, including reduced share based compensation expense, partially offset by higher professional fees and regulatory expenses.

Other (income) charges

Other income was £1.7 million for the three months ended June 30, 2008 and a charge of
£2.9 million for the six months ended June 30, 2008. The benefit recognized in the three months ended June 30, 2008 related principally to revisions in cashflow
estimates resulting from the sublease of a vacant property. Other charges for the six months ended June 30, 2008 related primarily to an increase in our accrual for lease exit costs in relation
to changes in
U.K. property tax rates which was partially offset by decreases as a result of the surrender or sublease of a number of properties.

Other
charges of £3.1 million for the three months ended June 30, 2007 and £14.7 million for the six months ended June 30, 2007
related primarily to lease exit costs and employee termination costs in connection with our restructuring programs initiated in respect of the reverse acquisition of Telewest. In the three months
ended June 30, 2007, employee termination costs of £4.3 million were partially offset by a revision in the cash flow estimates for lease exit costs of
£1.2 million resulting primarily from the sublease of one our vacant properties.

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Depreciation expense

For the three months ended June 30, 2008, depreciation expense was relatively unchanged at £230.2 million as
compared to £231.6 million for the three months ended June 30, 2007. For the six months ended June 30, 2008, depreciation expense was relatively unchanged at
£461.7 million as compared to £463.7 million for the six months ended June 30, 2007.

Amortization expense

For the three months ended June 30, 2008, amortization expense decreased to £71.3 million from
£77.6 million for the three months ended June 30, 2007. Amortization expense decreased as a result of the cessation of amortization of certain intangible assets that became
fully amortized during the period, partially offset by an increased expense related to the reduction in the remaining useful economic lives of certain intangible assets effective from
January 1, 2008.

For
the six months ended June 30, 2008, amortization expense increased to £164.0 million from £154.9 million for the six months ended
June 30, 2007. The increase in amortization expense related to the reduction in the remaining useful economic lives of certain intangible assets
effective from January 1, 2008, partially offset by a decreased expense as a result of the final amortization of certain intangible assets.

Goodwill impairment

During the quarter we performed our annual impairment review for our Mobile, Virgin Media TV and sit-up reporting units. As
a result of this review we concluded that the fair value of the Virgin Media TV and sit-up reporting units exceeded their carrying value, while the Mobile reporting unit's fair value was
less than its carrying value. The fair value of the Mobile reporting unit was determined through the use of a combination of both market and income valuation approaches to calculate fair value.

The
market approach valuations in respect of the Mobile reporting unit have 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. We have completed our preliminary valuation of the individual assets and liabilities within the Mobile reporting unit and recognized a preliminary goodwill impairment charge of
£366.2 million in the quarter. We intend to complete our impairment review during the third quarter and any further adjustments to the carrying value of goodwill, if required, will
be recognized in our third quarter results.

Interest income and other, net

For the three and six months ended June 30, 2008, interest income and other decreased to £7.6 million and
£13.9 million from £7.8 million and £14.8 million for the three and six months ended June 30, 2007, respectively, primarily as a result
of lower deposit rates in 2008 and a gain on disposal of investments that was recognized in the prior year.

Interest expense

For the three months ended June 30, 2008, interest expense decreased to £121.6 million from
£128.1 million for the three months ended June 30,
2007, primarily as a result of reductions in certain loan obligations following voluntary repayments in December 2007 and April 2008, partially offset by interest on the new convertible senior notes.

41

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We
paid cash interest of £121.4 million for the three months ended June 30, 2008, and £140.0 million for the three months ended
June 30, 2007. The decrease in cash interest payments was primarily due to differences in the timing of interest payments with respect to our senior credit facility.

For
the six months ended June 30, 2008, interest expense decreased to £245.0 million from £246.6 million for the six months ended
June 30, 2007, primarily as a result of reductions in certain loan obligations following the voluntary prepayments noted above, offset by the impact of higher interest rates on the unhedged
portion of our loan obligations and interest on the new convertible senior notes which funded the repayment of higher cost bank debt.

We
paid cash interest of £263.5 million for the six months ended June 30, 2008, and £295.0 million for the six months ended June 30,
2007. The decrease in cash interest payments was primarily as a result of changes in timing of interest payments.

Foreign currency gains (losses)

The foreign currency gains of £3.4 million in the three months ended June 30, 2008 were largely comprised of
unrealized gains resulting from favorable exchange movements on our euro denominated debt. The foreign currency gains of £2.3 million in the three months ended June 30, 2007
were largely comprised of gains resulting from favorable exchange rate movements, principally on dollar settlements.

The
foreign currency losses of £25.0 million in the six months ended June 30, 2008 were largely comprised of unrealized losses resulting from unfavorable
exchange movements on our euro denominated debt. The foreign currency gains of £5.6 million in the six months ended June 30, 2007 were largely comprised of gains resulting
from favorable exchange rate movements, principally on dollar settlements.

Loss on extinguishment of debt

The loss on extinguishment of debt of £5.6 million in the three and six months ended June 30, 2008 related to
the write-off of deferred financing costs resulting from the repayment of £504.0 million of our senior credit facility with the proceeds of the new convertible senior
notes and cash on hand.

(Losses) gains on derivative instruments

Losses on derivative instruments of £2.3 million in the three months ended June 30, 2008 mainly related to
unfavorable mark to market changes in the valuation of euro denominated derivative instruments that are not designated as accounting hedges. The losses on derivative instruments of
£1.0 million in the three months ended June 30, 2007 mainly related to unfavorable movements in the fair value of sterling interest rate swaps not designated as accounting
hedges.

Gains
on derivative instruments of £31.1 million in the six months ended June 30, 2008 mainly related to the recognition of favorable mark to market changes in
the valuation of euro denominated derivative instruments that are not designated as accounting hedges. The losses on derivative instruments of £1.5 million in the six months ended
June 30, 2007 mainly related to unfavorable movements in the fair value of sterling interest rate swaps not designated as accounting hedges.

Income tax benefit (expense)

For the three months ended June 30, 2008, there was an income tax benefit of £0.6 million as compared with an
income tax expense of £7.2 million for the same period in 2007. The income tax benefit for the three months ended June 30, 2008 was comprised of current federal tax expense
of £0.2 million, deferred federal tax expense of £4.2 million, a U.K. current tax benefit of £1.2 million and a U.K. deferred tax benefit of
£3.8 million. The income tax expense for the three months ended June 30, 2007 was comprised of current federal taxes of £0.4 million, deferred federal tax
expense of £

42

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8.6 million
and a U.K. tax benefit of £1.8 million. The U.K. tax benefit related to amounts receivable in respect of the sale of U.K. tax losses to an equity-method investee.
The U.K. deferred tax benefit related to the decrease in our deferred tax asset valuation allowance due to changes in our assessment of the future realization of certain deferred tax assets. Such
changes resulted from the recording of certain deferred tax liabilities related to amounts recognized in the statement of other comprehensive income during the quarter that are expected to reverse in
future periods and will allow us to offset such amounts against certain deferred tax assets.

For
the six months ended June 30, 2008, there was an income tax benefit of £7.9 million as compared with an income tax expense of
£10.7 million for the same period in 2007. The income tax benefit for the six months ended June 30, 2008 was comprised of current federal tax expense of
£0.4 million, deferred federal tax expense of £7.5 million, a U.K. current tax benefit of £2.5 million and a U.K. deferred tax benefit of
£13.3 million. The income tax expense for the six months ended June 30, 2007 was comprised of current federal taxes of £0.7 million, a U.S. state and local
tax benefit of £0.6 million, deferred federal tax expense of £13.7 million and a U.K. tax benefit of £3.1 million. The U.K. tax benefit related
to amounts receivable in respect of the sale of U.K. tax losses to an equity-method investee. The U.K. deferred tax benefit related to the decrease in our deferred tax asset valuation allowance due to
changes in our assessment of the future realization of certain deferred tax assets. Such changes resulted from the recording of certain deferred tax liabilities related to amounts recognized in the
statement of other comprehensive income during the six month period that are expected to reverse in future periods and will allow us to offset such amounts against certain deferred tax assets.

Net loss

For the three months ended June 30, 2008, net loss increased to £447.2 million compared with a net loss of
£119.0 million for the same period in 2007 due primarily to the goodwill impairment charge as discussed above.

For
the six months ended June 30, 2008, net loss increased to £551.6 million compared with a net loss of £239.3 million for the same period
in 2007 due primarily to the goodwill impairment charge as discussed above.

Net loss per share

Basic and diluted net loss per common share for the three months ended June 30, 2008 was £1.36 compared to
£0.37 for the three months ended June 30, 2007. Basic and diluted net loss per share is computed using a weighted average of 328.1 million shares outstanding in the three
months ended June 30, 2008 and a weighted average of 325.5 million shares outstanding for the same period in 2007. Options, warrants, shares issuable under the convertible senior notes
and shares of restricted stock held in escrow outstanding at June 30, 2008 and June 30, 2007 are excluded from the calculation of diluted net loss per share, since these securities are
anti-dilutive.

Basic
and diluted net loss per common share for the six months ended June 30, 2008 was £1.68 compared to £0.74 for the six months ended June 30,
2007. Basic and diluted net loss per share is computed using a weighted average of 328.0 million shares outstanding in the six months ended June 30, 2008 and a weighted average of
324.8 million shares outstanding for the same period in 2007. Options, warrants, shares issuable under the convertible senior notes and shares of restricted stock held in escrow outstanding at
June 30, 2008 and June 30, 2007 are excluded from the calculation of diluted net loss per share, since these securities are anti-dilutive.

Segment Results of Operations for the Three and Six Months Ended June 30, 2008 and 2007

A description of the products and services, as well as year-to-date financial data, for each segment can be
found in note 11 to Virgin Media's condensed consolidated financial statements.

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The reportable segments disclosed in this Form 10-Q are based on our management organizational structure as of June 30, 2008. Future
changes to this organizational structure may result in changes to the reportable segments disclosed.

Segment
operating income before depreciation, amortization and other charges, which we refer to as Segment OCF, is management's measure of segment profit as permitted under
FAS 131,Disclosures about Segments of an Enterprise and Related Information.Our management, including our chief executive officer who is our
chief operating decision maker, considers Segment OCF as an important indicator of the operational strength and performance of our segments. Segment OCF excludes the impact of costs and expenses that
do not directly affect our cash flows. Other charges, including restructuring charges, are also excluded from Segment OCF as management believes they are not characteristic of our underlying business
operations.

Cable Segment

The summary combined results of operations of our Cable segment for the three and six months ended June 30, 2008 and 2007 were
as follows (in millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Revenue

£
767.1

£
775.1

£
1,546.0

£
1,575.4Inter segment revenue


0.8


1.0


1.5


1.9Segment OCF


298.3


282.5


600.2


549.3Depreciation, amortization and other charges


(269.6
)

(286.0
)

(568.4
)

(581.5
)Operating income (loss)

£
28.7

£
(3.5
)
£
31.8

£
(32.2
)




Our Cable segment revenue by customer type for the three and six months ended June 30, 2008 and 2007 was as follows (in
millions):

Three months ended
June 30,



Six months ended
June 30,Increase/
(Decrease)

Increase/
(Decrease)2008

2007

2008

2007Revenue:Consumer

£
610.3

£
619.3


(1.5
)%
£
1,228.5

£
1,256.6


(2.2
)%Business


156.8


155.8


0.6
%

317.5


318.8


(0.4
)%Total revenue

£
767.1

£
775.1


(1.0
)%
£
1,546.0

£
1,575.4


(1.9
)%


Consumer:For the three months ended June 30, 2008, revenue from residential customers decreased by 1.5% to £610.3 million from revenue
of £619.3 million for the three months ended June 30, 2007. For the six months ended June 30, 2008, revenue from residential customers decreased by 2.2% to
£1,228.5 million from £1,256.6 million for the six months ended June 30, 2007. These decreases were primarily due to higher price discounting to stimulate
customer activity and retention in light of competitive factors in the marketplace, particularly relating to steps taken to increase the alignment of the prices paid by our existing customers with the
prices paid by new customers. Partially offsetting these decreases were increases in revenue from selective telephony price rises as well as from additional customers subscribing to our telephone,
broadband and television services.

Cable
ARPU decreased to £41.63 for the three months ended June 30, 2008 from £42.16 for the three months ended June 30, 2007. The decrease in Cable
ARPU was primarily due to lower telephony usage and higher price discounting as discussed above. The decline has been mitigated by our focus on acquiring new bundled customers and cross-selling and
up-selling to existing customers. Our focus on

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acquiring
new bundled customers and on cross-selling to existing customers is shown by Cable Revenue Generating Units, or Cable RGUs, per customer increasing to 2.36 at June 30, 2008 from 2.23
at June 30, 2007 and by triple-play penetration growing to 53.1% at June 30, 2008 from 45.2% at June 30, 2007. A triple-play customer is a customer who
subscribes to our television, broadband and fixed line telephone services.

Business:Revenue from our business customers for the three and six months ended June 30, 2008 and 2007 was comprised of (in millions):

Three months ended
June 30,



Six months ended June 30,Increase/
(Decrease)

Increase/
(Decrease)2008

2007

2008

2007Revenue:Retail:Voice

£
47.7

£
53.5


(10.8
)%
£
97.9

£
109.9


(10.9
)%Data


46.8


42.7


9.6
%

91.8


83.9


9.4
%Other


17.5


13.3


31.6
%

36.1


28.2


28.0
%112.0


109.5


2.3
%

225.8


222.0


1.7
%Wholesale:


44.8


46.3


(3.2
)%

91.7


96.8


(5.3
)%Total revenue

£
156.8

£
155.8


0.6
%
£
317.5

£
318.8


(0.4
)%


For the three months ended June 30, 2008, revenue from business customers increased slightly by 0.6% to £156.8 million
from £155.8 million for the three months ended June 30, 2007. For the six months ended June 30, 2008, revenue from business customers decreased slightly by 0.4% to
£317.5 million from £318.8 million for the six months ended June 30, 2007. The increase in the three months ended June 30, 2008 was attributable to
growth in retail data and other revenues, partially offset by declines in wholesale and retail telephony voice revenues. The decrease in the six months ended June 30, 2008 was attributable to
declines in wholesale and retail telephony voice revenues, partially offset by growth in retail data and other revenues. Retail data revenues represented 41.8% and 40.7% of the retail business
revenues for the three and six months
ended June 30, 2008 compared with 39.0% and 37.8% for the three and six months ended June 30, 2007, respectively.

Other
retail revenue in the three and six months ended June 30, 2008 was £17.5 million and £36.1 million compared to
£13.3 million and £28.2 million in the three and six months ended June 30, 2007, respectively. The majority of this revenue is from infrastructure projects
which are non-recurring in nature. Our largest infrastructure project is the provision of telecoms network equipment for Heathrow airport's new Terminal 5 which contributed
£6.4 million and £16.1 million of revenue in the three and six months ended June 30, 2008 compared to £6.0 million and
£10.7 million in the same periods last year, respectively.



For the three months ended June 30, 2008, Cable segment OCF increased to £298.3 million from
£282.5 million for the three months ended June 30, 2007. Lower consumer revenue and lower direct operating costs in respect of our television and telephone services were
partially offset by increased broadband revenues. Savings in the three months ended June 30, 2008 were made in selling, general and administrative expenses particularly in respect of lower
employee related costs, including share based compensation expense, due to reduced headcount, partially offset by higher professional and other regulatory costs.

For
the six months ended June 30, 2008, Cable segment OCF increased to £600.2 million from £549.3 million for the six months ended
June 30, 2007. This increase is partly due to lower selling, general and administrative expenses as a result of a reduction in costs in relation to marketing after our rebrand to Virgin Media
in 2007 along with lower employee related costs, including reduced share

45

---



Table of Contents

based
compensation expense, together with lower direct operating costs as a result of lower revenues. Partially offsetting these savings was lower consumer revenue, primarily as a result of higher
price discounting and lower telephony usage, together with the slight decline in revenue from business customers, as described above.



Selected statistics for our residential cable customers, excluding customers off our cable network and Virgin Mobile customers, for the
three months ended June 30, 2008 as well as the four prior quarters, are set forth in the table below. Our net customer movement for the three months ended June 30, 2008 was a reduction
of 19,500 customers being the net of gross additions and disconnections (net additions) together with a reduction of 18,900 customers with respect to data cleanse activity following the migration of
our final on-net residential billing system during the quarter. The reduction in net additions was primarily the result of fewer gross additions due in part to the softer macroeconomic
environment. Customer churn fell during recent periods, particularly in the three months ended December 31, 2007, March 31, 2008 and June 30, 2008 during which our average monthly
churn was 1.4%, 1.2% and 1.3%, respectively. The total number of Cable RGUs grew to 11,165,700 at June 30, 2008 from 10,582,300 at June 30, 2007, representing a net increase in RGUs of
583,400. Our net customer movement during the three months ended June 30, 2007 was a reduction of 70,300 customers, partly as a result of the increased competition in the marketplace together
with the removal of BSkyB's basic channels from our platform.

Three months endedJune 30,
2008

March 31,
2008

December 31,
2007

September 30,
2007

June 30,
2007Opening customers


4,779,600


4,774,700


4,750,300


4,737,300


4,807,600Customer additions


167,900


181,400


225,100


256,500


191,900Customer disconnects


(187,400
)

(176,500
)

(200,700
)

(243,500
)

(262,200
)Net customer movement


(19,500
)

4,900


24,400


13,000


(70,300
)Data cleanse(1)


(18,900
)










Closing customers


4,741,200


4,779,600


4,774,700


4,750,300


4,737,300Cable churn(2)


1.3
%

1.2
%

1.4
%

1.7
%

1.8
%Cable Revenue Generating Units(1)(3):Television


3,538,800


3,514,900


3,478,100


3,417,000


3,396,600DTV (included in Television)


3,353,500


3,311,400


3,253,500


3,167,000


3,125,300Telephone


4,063,500


4,060,400


4,031,400


3,992,500


3,993,800Broadband


3,563,400


3,502,300


3,413,900


3,307,700


3,191,900Total Cable Revenue Generating Units


11,165,700


11,077,600


10,923,400


10,717,200


10,582,300Cable RGU/Customers


2.36x


2.32x


2.29x


2.26x


2.23xTriple-play penetration


53.1
%

51.3
%

49.5
%

47.0
%

45.2
%Cable Average Revenue Per User(4)

£
41.63

£
41.91

£
42.24

£
41.55

£
42.16Cable ARPU calculation:On-net Cable revenues (millions)

£
594.8

£
601.0

£
604.7

£
590.5

£
603.1Average customers


4,762,900


4,780,200


4,771,700


4,737,100


4,768,000


---

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---



Table of Contents



Selected statistics for our residential customers that are not connected directly through our cable network are set forth in the table below.

Three months endedJune 30,
2008

March 31,
2008

December 31,
2007

September 30,
2007

June 30,
2007Broadband RGUs


272,700


279,500


287,300


282,300


275,200Telephone RGUs


107,300


102,400


103,900


90,500


75,500


Total
RGUs for our residential customers that are not connected directly through our cable network declined by 1,900 during the three months ended June 30, 2008 as compared to an
increase of 15,100 RGUs in the three months ended June 30, 2007. The decline in RGUs in the current quarter is partially due to the migration of the billing systems supporting these customers
which has delayed the introduction of new offerings in an increasingly competitive market.

Mobile Segment

The summary combined results of operations of our Mobile segment for the three and six months ended June 30, 2008 and 2007 were
as follows (in millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Revenue

£
143.9

£
146.3

£
283.4

£
287.3Segment OCF


35.5


32.7


52.7


59.4Depreciation, amortization and other charges


(25.6
)

(22.0
)

(51.1
)

(43.4
)Goodwill impairment


(366.2
)




(366.2
)

Operating (loss) income

£
(356.3
)
£
10.7

£
(364.6
)
£
16.0


47

---



Table of Contents



Our Mobile segment revenue for the three and six months ended June 30, 2008 and 2007 was comprised of (in millions):

Three months ended
June 30,



Six months ended
June 30,Increase/
(Decrease)

Increase/
(Decrease)2008

2007

2008

2007Revenue:Service

£
139.3

£
142.3


(2.1
)%
£
273.8

£
278.3


(1.6
)%Equipment(1)


4.6


4.0


15.0
%

9.6


9.0


6.7
%Total revenue

£
143.9

£
146.3


(1.6
)%
£
283.4

£
287.3


(1.4
)%


---

For the three months ended June 30, 2008, revenue decreased to £143.9 million from £146.3 million for
the three months ended June 30, 2007. The decrease was primarily attributable to lower prepay revenues as a result of lower volumes, and lower Mobile ARPU, partially offset by increased
contract revenues driven mainly by higher contract volumes.

For
the six months ended June 30, 2008, revenue decreased to £283.4 million from £287.3 million for the six months ended June 30,
2007. The decrease was primarily attributable to lower prepay revenues as a result of lower volumes, and lower Mobile ARPU, partially offset by increased contract revenues driven mainly by higher
contract volumes.

Mobile
ARPU decreased slightly to £10.65 for the three months ended June 30, 2008 from £10.70 for the three months ended June 30, 2007. The decrease
was primarily due to lower prepay usage and reduced prices on our contract offerings.



For the three months ended June 30, 2008, Mobile segment OCF was £35.5 million compared with
£32.7 million for the three months ended June 30, 2007. This increase was due primarily to a reduction in interconnect costs as a result of renegotiated terms with our mobile
network provider, T-Mobile. We have agreed new terms with our mobile network provider which reduce the wholesale rates we pay for voice and data traffic, retroactive to January 1,
2008 for voice and to April 1, 2008 for data. We have also agreed new data pricing rates that will allow us to launch a complementary mobile broadband proposition in the fourth quarter and to
price more competitively in the growing mobile data usage market which will be more attractive for higher value customers. We have also committed to purchasing our current core voice, text and handset
data and mobile broadband data card services exclusively from T-Mobile for a three year period commencing April 1, 2008.

For
the six months ended June 30, 2008, Mobile segment OCF was £52.7 million compared with £59.4 million for the six months ended
June 30, 2007. This decrease was due primarily to lower revenue from prepay customers together with increased equipment cost of sales, interconnect costs and costs of network usage, partially
offset by lower operating costs and employee expenses.



Selected statistics for Virgin Mobile are set forth in the table below. Between June 30, 2008 and June 30, 2007, the
number of mobile customers decreased by a net 126,000. Contract customer gains of 192,500 were offset by net losses of 318,500 prepay customers. The growth in contract customers

48

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Table of Contents

reflects
the drive for "quad-play" packages through cross-selling with our Cable segment products. The decline in prepay customers reflects increased competition in the prepay market.

Three months endedJune 30,
2008

March 31,
2008

December 31,
2007

September 30,
2007

June 30,
2007Opening mobile customers(1):Prepay


3,987,500


4,115,100


4,102,100


4,115,900


4,215,200Contract


435,700


376,300


328,800


299,100


246,3004,423,200


4,491,400


4,430,900


4,415,000


4,461,500Net mobile customer additions:Prepay


(190,100
)

(127,600
)

13,000


(13,800
)

(99,300
)Contract


55,900


59,400


47,500


29,700


52,800(134,200
)

(68,200
)

60,500


15,900


(46,500
)Closing mobile customers:Prepay


3,797,400


3,987,500


4,115,100


4,102,100


4,115,900Contract


491,600


435,700


376,300


328,800


299,1004,289,000


4,423,200


4,491,400


4,430,900


4,415,000Mobile average revenue per user(2)

£
10.65

£
10.04

£
10.69

£
11.11

£
10.70Mobile ARPU calculation:Mobile service revenue (millions)

£
139.3

£
134.5

£
142.0

£
147.3

£
142.3Average mobile customers


4,359,600


4,465,200


4,429,200


4,417,900


4,434,700


---

Content Segment

The summary combined results of operations of our Content segment for the three and six months ended June 30, 2008 and 2007 were
as follows (in millions):

Three months ended
June 30,

Six months ended
June 30,2008

2007

2008

2007Revenue

£
79.5

£
73.6

£
162.9

£
154.2Inter segment revenue


6.5


6.1


12.8


12.0Segment OCF


(0.9
)

0.1


4.2


12.3Depreciation, amortization and other charges


(4.6
)

(4.3
)

(9.1
)

(8.4
)Operating (loss) income

£
(5.5
)
£
(4.2
)
£
(4.9
)
£
3.9


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---



Table of Contents



Our Content segment revenue, excluding inter segment revenue, for the three and six months ended June 30, 2008 and 2007 was as
follows (in millions):

Three months ended
June 30,



Six months ended
June 30,Increase/
(Decrease)

Increase/
(Decrease)2008

2007

2008

2007Revenue:Virgin Media TV

£
28.3

£
25.9


9.3
%
£
56.7

£
55.2


2.7
%sit-up


51.2


47.7


7.3
%

106.2


99.0


7.3
%Total revenue

£
79.5

£
73.6


8.0
%
£
162.9

£
154.2


5.6
%


For the three months ended June 30, 2008, revenue in the Content segment increased by 8.0% to £79.5 million from
£73.6 million for the three months ended June 30, 2007. For the six months ended June 30, 2008, revenue increased by 5.6% to £162.9 million from
£154.2 million for the six months ended June 30, 2007. These increases were driven primarily by increased retail revenue from our sit-up television channels
together with increased advertising revenues from Virgin Media TV, partially offset by the loss of revenue in Virgin Media TV from our program rights licensing business which was disposed of in July
2007.



For the three months ended June 30, 2008, Content segment OCF decreased to a loss of £0.9 million from income
of £0.1 million for the three months ended June 30, 2007. This decrease is mainly due to higher programming and other direct costs and the timing of marketing campaigns,
partially offset by an increase in revenues.

For
the six months ended June 30, 2008, Content segment OCF decreased to £4.2 million from £12.3 million for the six months ended
June 30, 2007. This decrease is mainly due to an increase in Virgin Media TV programming and marketing costs together with the non recurrence in 2008 of an accrual reversal of
£7.9 million relating to the settlement of a long-running legal claim in 2007.



We own 50% of the companies that comprise UKTV, a group of joint ventures formed with BBC Worldwide. UKTV produces a portfolio of
television channels based on the BBC's program library and other acquired programming and which are carried on Virgin Media's cable platform and also satellite. Some channels are also available on
Freeview.

We
account for our interest in UKTV under the equity method and recognized a share of net income of £5.0 million and £11.2 million for the three and
six months ended June 30, 2008, and £5.4 million and £12.5 million for the three and six months ended June 30, 2007, respectively. At
June 30, 2008, our investment in UKTV was carried on the balance sheet at £374.3 million, which includes an outstanding loan totaling £144.9 million.

UKTV
receives financing through loans from Virgin Media, which totaled £144.9 million at June 30, 2008. These loans effectively act as a revolving facility for
UKTV. We received net cash payments from UKTV in the form of loan capital repayments of £5.4 million and £0.5 million for the three and six months ended
June 30, 2008. We received dividends, interest payments and payment for consortium tax relief from UKTV totaling £3.9 million and £9.8 million during the
three and six months ended June 30, 2008, respectively.

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Additionally,
we recorded a loss of £1.1 million and £2.2 million in the three months and six months ended June 30, 2008, respectively, from
our investment in our joint venture with Setanta Sports News.

Liquidity and Capital Resources

As of June 30, 2008, we had £6,023.5 million of debt outstanding, compared to
£5,958.5 million as of December 31, 2007, and £6,093.2 million as of June 30, 2007, and £426.8 million of cash and cash
equivalents, compared to £321.4 million as of December 31, 2007 and
£277.1 million as of June 30, 2007. The decrease in debt since June 30, 2007 was primarily attributable to a voluntary prepayment of £200 million in
December 2007 utilizing cash reserves, partially offset by exchange rate movements on our debt denominated in currencies other than the pound sterling together with a greater use of finance leases.
The increase in debt since the year end is primarily the result of changes in foreign exchange rates together with a greater use of finance leases.

As
discussed in greater detail below, on April 16, 2008 we issued $1.0 billion of 6.5% convertible senior notes due 2016 and used the net proceeds and cash on hand to repay
£504.0 million of our obligations under our senior credit facility that were originally scheduled to be paid in 2009, 2010 and 2012.

Our
business is capital intensive and we are highly leveraged. We have significant cash requirements for operating cost, capital expenditure, interest expense and debt amortization. The
level of our capital expenditures and operating expenditures are affected by the significant amounts of capital required to connect customers to our network, expand and upgrade our network, offer new
services and integrate our billing systems and customer databases. We expect that our cash on hand, together with cash from operations and our undrawn credit facility, will be sufficient for our cash
requirements through the next twelve months. However, our cash requirements after the next twelve months may exceed these sources of cash. For instance, debt amortization repayments under our senior
credit facility increase significantly in 2010. We believe that we will need to address these scheduled principal payments in part through means other than reliance on cash flow from operations, such
as raising additional debt or equity, refinancing our existing facility, possible asset sales, or other means. We may not be able to obtain financing, or sell assets, at all or on favorable terms, or
we may be contractually prevented by the terms of our senior notes or our senior credit facility from incurring additional indebtedness or selling assets.

Our
long term debt was issued by Virgin Media Inc. and certain of its subsidiaries that have no independent operations or significant assets other than investments in their
respective subsidiaries. As a result, they will depend upon the receipt of sufficient funds from their respective subsidiaries to meet their obligations. In addition, the terms of our existing and
future indebtedness and the laws of the jurisdictions under which our subsidiaries are organized limit the payment of dividends, loan repayments and other distributions to them under many
circumstances.

Our
debt agreements contain restrictions on our ability to transfer cash between groups of our subsidiaries. As a result of these restrictions, although our overall liquidity may be
sufficient to satisfy our obligations, we may be limited by covenants in some of our debt agreements from transferring cash to other subsidiaries that might require funds. In addition, cross default
provisions in our other indebtedness may be triggered if we default on any of these debt agreements.

Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2008 and 2007

For the six months ended June 30, 2008, cash provided by operating activities increased to £378.8 million
from £221.1 million for the six months ended June 30, 2007. This increase was primarily attributable to improved operating results and working capital movements together with
reduced cash interest payments. For the six months ended June 30, 2008, cash paid for interest, exclusive of amounts

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capitalized,
decreased to £263.5 million from £295.0 million during the same period in 2007. This decrease was primarily as a result of changes in timing of
interest payments.

For
the six months ended June 30, 2008, cash used in investing activities was £231.1 million compared with cash used in investing activities of
£278.9 million for the six months ended June 30, 2007. The cash used in investing activities in the six months ended June 30, 2008 mainly represented purchases of
fixed assets. Purchases of fixed and intangible assets decreased to £233.3 million for the six months ended June 30, 2008 from £286.2 million for the same
period in 2007 primarily because of the timing of fixed asset purchases along with a greater use of finance leases.

Cash
used in financing activities for the six months ended June 30, 2008 was £42.4 million compared to £81.2 million for the six months ended
June 30, 2007. Cash used in financing activities for the six months ended June 30, 2008 was primarily principal repayments on long-term debt and capital leases totaling
£523.7 million offset by new borrowings under the convertible senior notes, net of financing fees, of £494.0 million. Cash used in financing activities for the
six months ended June 30, 2007 was primarily principal payments on long-term debt and capital leases of £951.4 million, partially offset by new borrowings, net of
financing fees, of £874.5 million.

Long Term Debt

Senior Credit Facility

During 2006, we entered into a senior credit facility in an aggregate principal sterling equivalent amount of
£5,275 million, comprising a £3,350 million 5 year amortizing Tranche A term loan facility, a £175 million 5 year
amortizing Tranche A1 term loan facility, a £300 million 61/2 year bullet Tranche B1 term loan facility, a £351 million 61/2 year
bullet Tranche B2 term loan facility, a €500 million 61/2 year bullet Tranche B3 term loan facility, a $650 million 61/2 year bullet Tranche
B4 term loan facility, a £300 million 7 year bullet Tranche C term loan facility and a £100 million 5 year multi-currency revolving loan
facility.

In
April 2007, we amended the senior credit facility and borrowed an additional £890 million under a 51/2 year bullet Tranche B5 term loan facility and
a 51/2 year Tranche B6 term loan facility. We used the net proceeds to repay some of our obligations under the Tranche A and Tranche A1 term loan facilities. In April 2007, we
also amended our senior credit facility to among other things, (i) enable us to issue this £890 million of additional indebtedness, (ii) relax certain of our financial
covenants, and (iii) provide us with additional flexibility, including permitting our Board of Directors, if they so determine, to pay increased levels of dividends on our common stock.

At
June 30, 2008, the principal payments on our senior credit facility are scheduled as follows (in millions):

Date

AmountSeptember 30, 2009

£
4.1March 31, 2010


526.3September 30, 2010


579.4March 3, 2011


966.0September 3, 2012


1,948.3March 3, 2013


300.0


The senior credit facility (other than for Tranche C) has the benefit of a full and unconditional senior secured guarantee from Virgin
Media Finance PLC as well as first priority pledges of the shares and assets of substantially all of the operating subsidiaries of Virgin Media Investment Holdings Limited, or VMIH, and of
receivables arising under any intercompany loans to those subsidiaries. The senior secured guarantee of Virgin Media Finance PLC is secured by a first priority pledge of the

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entire
capital stock of VMIH and the receivables under any intercompany loans from Virgin Media Finance PLC to VMIH. The guarantee of Tranche C of the senior credit facility will share
in the security of Virgin Media Finance PLC granted to the senior credit facility, but will receive proceeds only after the other tranches and will not benefit from guarantees or security
granted by other members of the group.

The
annual rate of interest payable under our senior credit facility is the sum of (i) the London Intrabank Offer Rate (LIBOR), US LIBOR or European Intrabank Offer Rate
(EURIBOR), as applicable, plus (ii) the applicable interest margin and the applicable cost of complying with any reserve requirement.

The
applicable interest margin for Tranche A, Tranche A1 and the revolving facility depends upon the net leverage ratio then in effect as set forth below:

Leverage Ratio

MarginLess than 3.00:1


1.250
%Greater than or equal to 3.00:1 but less than 3.40:1


1.375
%Greater than or equal to 3.40:1 but less than 3.80:1


1.500
%Greater than or equal to 3.80:1 but less than 4.20:1


1.625
%Greater than or equal to 4.20:1 but less than 4.50:1


1.750
%Greater than or equal to 4.50:1 but less than 4.80:1


1.875
%Greater than or equal to 4.80:1 but less than 5.00:1


2.125
%Greater than or equal to 5.00:1


2.250
%


The applicable interest margins for Tranche B and Tranche C are as follows:

Facility

MarginB1


2.125
%B2


2.125
%B3


2.000
%B4


2.000
%B5


2.125
%B6


2.125
%C


2.750
%


Senior Notes

On July 25, 2006, Virgin Media Finance PLC issued U.S. dollar denominated 9.125% senior notes due 2016 with a principal
amount outstanding of $550 million. The senior notes due 2016 are unsecured senior obligations of Virgin Media Finance PLC and rank pari passu with Virgin Media Finance's outstanding
senior notes due 2014. The senior notes due 2016 bear interest at an annual rate of 9.125% payable on February 15 and August 15 of each year, beginning February 15, 2007. The
senior notes due 2016 mature on August 15, 2016 and are guaranteed by Virgin Media, Virgin Media Group LLC, VMIH and certain other intermediate holding companies of Virgin Media.

On
April 13, 2004, Virgin Media Finance PLC issued U.S. dollar denominated 8.75% senior notes due 2014 with a principal amount outstanding of $425 million, sterling
denominated 9.75% senior notes due 2014 with a principal amount outstanding of £375 million, and euro denominated 8.75% senior notes due with a principal amount outstanding of
€225 million. Interest is payable on April 15 and October 15 of each year. The senior notes due 2014 mature on April 15, 2014 and are guaranteed by Virgin
Media, Virgin Media Group LLC, VMIH and certain of the intermediate holding companies in the group.

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Convertible Senior Notes

On April 16, 2008, Virgin Media Inc. issued U.S. dollar denominated 6.5% convertible senior notes due 2016 with a
principal amount outstanding of $1.0 billion. The convertible senior notes are unsecured senior obligations of Virgin Media Inc. and, consequently, are subordinated to our obligations
under the senior credit facility and rank equally with Virgin Media Inc.'s guarantees of our senior notes. The convertible senior notes bear interest at an annual rate of 6.5% payable
semi-annually on May 15 and November 15 of each year, beginning November 15, 2008. The convertible senior notes mature on November 15, 2016 and may not be
redeemed by us prior to their maturity date. Upon conversion, we may elect to settle in cash, shares of common stock or a combination of cash and shares of our common stock.

Holders
of convertible senior notes may tender their notes for conversion at any time on or after August 15, 2016 through to the second scheduled trading date preceding the
maturity date. Prior to August 15, 2016, holders may convert their notes, at their option, only under the following circumstances: (i) in any quarter, if the closing sale price of Virgin
Media Inc.'s common stock during at least 20 of the last 30 trading days of the prior quarter was more than 120% of the applicable conversion price per share of common stock on the last day of
such prior quarter; (ii) if, for five consecutive trading days, the trading price per $1,000 principal amount of notes was less than 98% of the product of the closing price of our common stock
and the then applicable conversion rate; (iii) if a
specified corporate event occurs, such as a merger, recapitalization, reclassification, binding share exchange or conveyance of all, or substantially all, of Virgin Media Inc.'s assets;
(iv) the declaration by Virgin Media Inc. of the distribution of certain rights, warrants, assets or debt securities to all, or substantially all, holders of Virgin Media Inc.'s
common stock; or (v) if Virgin Media Inc. under goes a fundamental change (as defined in the indenture governing the convertible senior notes), such as a change in control, merger,
consolidation, dissolution or delisting.

The
initial conversion rate is equal to 52.0291 shares of Virgin Media Inc.'s common stock per $1,000 of convertible senior notes, which represents an initial conversion price of
approximately $19.22 per share of common stock. The conversion rate is subject to adjustment for stock splits, stock dividends or distributions, the issuance of certain rights or warrants, certain
cash dividends or distributions or stock repurchases where the price exceeds market values. In the event of specified fundamental changes relating to Virgin Media Inc., referred to as "make
whole" fundamental changes, the conversion rate will be increased as provided by a formula set forth in the indenture governing the convertible senior notes.

Holders
may also require us to repurchase the convertible senior notes for cash in the event of a fundamental change for a purchase price equal to 100% of the principal amount, plus
accrued but unpaid interest to the purchase date.

Restrictions Under Our Existing Debt Agreements

The agreements governing the senior notes and the senior credit facility significantly, and in some cases absolutely, restrict our
ability and the ability of most of our subsidiaries to:



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We
are also subject to financial maintenance covenants under our senior credit facility. These covenants require us to meet financial covenants on a quarterly basis and the required
levels increase over time. As a result, we will need to continue to improve our operating performance over the next several years to meet these levels. Failure to meet these covenant levels would
result in a default under our senior credit facility.

Debt Ratings

To access public debt capital markets, we rely on credit rating agencies to assign corporate credit ratings. A rating is not a
recommendation by the rating agency to buy, sell or hold our securities. A credit rating agency may change or withdraw our ratings based on its assessment of our current and future ability to meet
interest and principal repayment obligations. Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets. The corporate debt ratings and outlook
currently assigned by the rating agencies engaged by us are as follows:

Corporate
Rating

OutlookMoody's Investors Service Inc.

Ba3

NegativeStandard & Poor's

B+

Positive


Cash Dividends

During the year ended December 31, 2007 and the six months ended June 30, 2008, we paid the following dividends:

Board Declaration Date

Per Share
Dividend

Record Date

Payment Date

Total
Amount(in millions)Year ended December 31, 2007:February 27, 2007

$
0.02


March 12, 2007


March 20, 2007

£
3.3May 16, 2007


0.03


June 12, 2007


June 20, 2007


5.0August 15, 2007


0.04


September 12, 2007


September 20, 2007


6.5November 27, 2007


0.04


December 12, 2007


December 20, 2007


6.4Six months ended June 30, 2008:February 6, 2008

$
0.04


March 12, 2008


March 20, 2008

£
6.6May 21, 2008


0.04


June 12, 2008


June 20, 2008


6.7


Future
payments of regular quarterly dividends by us are at the discretion of our Board of Directors and will be subject to our future needs and uses of cash, which could include
investments in operations, the repayment of debt, and share repurchase programs. In addition, the terms of our and our subsidiaries' existing and future indebtedness and the laws of jurisdictions
under which those subsidiaries are organized limit the payment of dividends, loan repayments and other distributions to us under many circumstances.

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Off-Balance Sheet Arrangements

As part of our ongoing business we have not participated in transactions that generate relationships with unconsolidated entities or
financial partnerships, such as entities frequently referred to as special purpose entities, or SPEs, which would have been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. As of June 30, 2008 we are not involved with any material unconsolidated SPEs.

Contractual Obligations and Commercial Commitments

The following table includes aggregate information about our contractual obligations as of June 30, 2008, and the periods in
which payments are due (in millions).

Payments Due by PeriodContractual Obligations

Total

Less than
1 year

1-3 years

3-5 years

More than
5 yearsLong Term Debt Obligations

£
5,873.7

£
0.8

£
2,078.7

£
2,248.7

£
1,545.5Capital Lease Obligations


238.5


42.2


56.3


53.8


86.2Operating Lease Obligations


349.3


56.5


85.6


77.3


129.9Purchase Obligations


774.3


414.0


202.8


90.4


67.1Interest Obligations


2,013.8


450.7


832.7


487.3


243.1Total

£
9,249.6

£
964.2

£
3,256.1

£
2,957.5

£
2,071.8Early Termination Charges




£
44.8

£
64.0

£
24.0

£
4.9


On
April 16, 2008, we issued convertible senior notes, and used the net proceeds to make repayments, on our senior credit facility as discussed under Liquidity and Capital
ResourcesLong Term Debt above.

Early
termination charges are amounts that would be payable in the above periods in the event of early termination during that period of certain of the contracts underlying the purchase
obligations listed above.

There
have been no material changes in the six months ending June 30, 2008 to our commercial commitments from what was disclosed in our Annual Report on
Form 10-K for the year ended December 31, 2007 as filed with the SEC on February 29, 2008, as amended.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rates. Market risk is the
potential loss arising from adverse changes in market rates and prices, like foreign currency exchange and interest rates. As some of our indebtedness accrues interest at variable rates, we have
exposure to volatility in future cash flows and earnings associated with variable interest rate payments.

Also,
substantially all of our revenues and operating costs are earned and paid in pounds sterling but we pay interest and principal obligations on some of our indebtedness in U.S.
dollars and euros. As of June 30, 2008, £1,272.4 million, or 21.1% of our indebtedness, was denominated in U.S. dollars and £518.5 million, or 8.6%, of our
indebtedness was denominated in euros. As a result, we have exposure to volatility in future cash flows and earnings associated with changes in foreign exchange rates on payments of principal and
interest on a portion of our indebtedness.

To
mitigate the risk from these exposures, we have implemented a cash flow hedging program. The objective of this program is to reduce the volatility of our cash flows and earnings
caused by changes in underlying rates. To achieve this objective we have entered into a number of derivative instruments.

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Table of Contents

The
derivative instruments utilized comprise interest rate swaps, cross-currency interest rate swaps and foreign currency forward contracts. We do not enter into derivative instruments for trading or
speculative purposes. See note 9 to Virgin Media's condensed consolidated financial statements.

The
fair market value of long-term fixed interest rate debt and the amount of future interest payments on variable interest rate debt are subject to interest rate risk.

The
following table provides information as of June 30, 2008 about our long term fixed and variable interest rate debt that are sensitive to changes in interest rates and foreign
currency exchange rates (in millions).

Year ended December 31,





Fair
Value
June 30,
20082008

2009

2010

2011

2012

Thereafter

TotalLong term debt (including current portion)U.S. dollarsFixed rate
















$
425.0

$
425.0

$
423.4Average interest rate

















8.75%Average forward exchange rate

















0.53Pounds SterlingFixed rate
















£
375.0

£
375.0

£
358.6Average interest rate

















9.75%EurosFixed rate
















€
225.0

€
225.0

€
212.6Average interest rate

















8.75%Average forward exchange rate

















0.83U.S. DollarsFixed rate
















$
550.0

$
550.0

$
521.8Average interest rate

















9.125%Average forward exchange rate

















0.53U.S. DollarsFixed rate
















$
1,000.0

$
1,000.0

$
1,032.8Average interest rate

















6.5%Average forward exchange rate

















0.53Pounds SterlingVariable Rate

£


£
4.1

£
1,105.7

£
966.0

£
2,248.3

£


£
4,324.1

£
4,324.1Average interest rate


LIBOR
plus
1.25-2.25%


LIBOR
plus
1.25-2.25%


LIBOR
plus
1.25-2.25%


LIBOR
plus
1.25-2.25%


LIBOR
plus
2.00-2.13%


LIBOR
plus
2.75%Currency swap agreements related to long term debtReceipt of U.S. DollarsNotional amount




$
425.0







$
650.0

$
550.0

$
1,625.0

£
(65.1
)Average contract exchange rate





0.60








0.54


0.55Average sterling interest rate paid





9.42%








LIBOR
plus
2.11%


8.54%Receipt of EurosNotional amount




€
225.0







€
427.9




€
652.9

£
65.9Average contract exchange rate





0.69








0.69Average sterling interest rate paid





10.26%








LIBOR plus
2.16%Receipt of U.S. DollarsNotional amount
















$
700.0

$
700.0

£
(1.8
)Average contract exchange rate

















0.51Average sterling interest rate paid

















6.93%Interest rate derivative financial instruments related to long term debtSterling Interest Rate SwapsNotional amount




£
3,175.0













£
3,175.0

£
25.1Average sterling interest rate paid





5.25%Sterling interest rate received





LIBOR


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Table of Contents

ITEM 4.   CONTROLS AND PROCEDURES

(a)   Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, which we refer to as the
Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of such
period, these controls and procedures are effective to ensure that information required to be disclosed by us in the reports the registrant file or submits under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the SEC rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by us in the reports that it file or submit is accumulated and communicated to our management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)   Changes in Internal Control Over Financial Reporting

On March 3, 2006, we completed the reverse acquisition of Telewest and on July 4, 2006, we completed the acquisition of Virgin Mobile. As a
consequence of our integration of these acquisitions, we have made and expect to make further material changes to our internal control over financial reporting this year. Other than as stated above,
there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART IIOTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We are involved in disputes and litigation arising in the ordinary course of our business. We are also involved in various disputes and
legal proceedings, none of which is a material pending legal proceeding that, exclusive of interest and costs, is anticipated to exceed 10% of our and our subsidiaries' current assets on a
consolidated basis, or is otherwise reportable in response to this item.

ITEM 1A.    RISK FACTORS

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2007, as filed with the SEC on February 29, 2008, as amended, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, as
filed with the SEC on May 8, 2008.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of stockholders was held on May 21, 2008. The following actions by stockholders were taken at the meeting:

Election of Directors

The following nominees were elected as directors, each to hold office for a period of three years, by the votes set forth below:

Nominee

For

WithheldWilliam R. Huff


265,992,781


18,399,295James F. Mooney


266,156,206


18,235,870


The
following directors had terms continuing after the annual meeting of stockholders: Edwin M. Banks, Jeffrey D. Benjamin, Neil A. Berkett, Gordon D. McCallum and George R. Zoffinger.
Subsequently, on July 8, 2008, James A. Chiddix, Andrew Cole and Steven J. Simmons were appointed to our Board.

Appointment of Ernst & Young LLP

The appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending December 31, 2008 was
ratified by the votes set forth below:

For


282,468,549Against


1,869,094Abstained


54,433


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Table of Contents

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.    EXHIBITS

3.1

Second restated certificate of incorporation of Virgin Media Inc. (Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of Virgin Media Inc. as filed with the
Securities and Exchange Commission on March 1, 2007).3.2

Restated by-laws of Virgin Media Inc. (Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on March 1, 2007).4.1

Indenture for 6.50% Convertible Senior Notes due 2016, dated as of April 16, 2008, between Virgin Media Inc. and The Bank of New York, as trustee (including form of 6.50% Convertible Senior Notes due 2016) (Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on April 16, 2008).4.2

Registration Rights Agreement for 6.50% Convertible Senior Notes due 2016, dated as of April 16, 2008, between Virgin Media Inc. and Goldman, Sachs & Co., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.
(Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on April 16, 2008).10.1
*
Senior Facilities Agreement, dated March 3, 2006, as amended and restated on May 22, 2006, July 10, 2006, August 10, 2006, April 4, 2007 and May 15, 2008, between, among others, Virgin Media Inc., certain of its
subsidiaries (as Borrowers and/or Guarantors) and Deutsche Bank AG, London Branch, J.P. Morgan Plc, The Royal Bank of Scotland Plc and Goldman Sachs International (as Bookrunners and Mandated Lead Arrangers).10.2

Form of Restricted Stock Unit Agreement relating to the 2008-2010 Virgin Media Inc. Long Term Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and
Exchange Commission on April 17, 2008).10.3

Restricted Stock Agreement, dated as of April 30, 2008, between Virgin Media Inc. and James Mooney (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Virgin Media Inc. as filed with the
Securities and Exchange Commission on May 8, 2008).10.4

Description of the 2008-2010 Virgin Media Inc. Long Term Incentive Plan (Incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q of Virgin Media Inc. as filed with the Securities and Exchange Commission on
May 8, 2008).10.5

Service Agreement, dated as of May 7, 2008 between Virgin Media Limited and Neil Berkett (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange
Commission on May 9, 2008).10.6

Employment Agreement, dated as of December 18, 2007, between Virgin Media Inc. and Charles K. Gallagher (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the
Securities and Exchange Commission on June 4, 2008).


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Table of Contents

10.7

Extension Agreement, dated as of June 3, 2008, between Virgin Media Inc. and Charles K. Gallagher (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Virgin
Media Inc. as filed with the Securities and Exchange Commission on June 4, 2008).10.8

Second Amended and Restated Employment Agreement, dated as of August 4, 2008, between, Virgin Media Inc. and Bryan H. Hall (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Virgin Media Inc. as
filed with the Securities and Exchange Commission on August 6, 2008).10.9
*
Description of the Virgin Media Inc. 2008 Bonus Scheme.31.1
*
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.31.2
*
Certification of Senior Vice PresidentFinance, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.32.1
*
Certifications of Chief Executive Officer and Senior Vice PresidentFinance Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1

Description of the 6.50% Convertible Senior Notes due 2016 (Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on April 16,
2008).


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their
behalf by the undersigned thereunto duly authorized.

VIRGIN MEDIA INC.Date: August 7, 2008

By:

/s/NEIL BERKETTNeil Berkett Chief Executive OfficerDate: August 7, 2008

By:

/s/CHARLES K. GALLAGHERCharles K. Gallagher Senior Vice PresidentFinanceVIRGIN MEDIA INVESTMENT HOLDINGS LIMITEDDate: August 7, 2008

By:

/s/NEIL BERKETTNeil Berkett Chief Executive OfficerDate: August 7, 2008

By:

/s/CHARLES K. GALLAGHERCharles K. Gallagher Senior Vice PresidentFinance


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