**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

**FORM 10-Q**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Forthe quarterly period ended June 30, 2007**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**CommissionFile No. 000-50886**

**VIRGIN MEDIA INC.**

(Exact name of registrantas specified in its charter)

**VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED**

(Additional Registrant)

| **Delaware**                                                     |   | **59-3778247**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation  or organization) |   | (I.R.S. Employer  Identification No.) |
| **909 Third Avenue, Suite 2863  New York, New York**        |   | **10022**                             |
| (Address of  principal executive offices)                        |   | (Zip Code)                            |

 

**(212) 906-8440**

(Registrant’s telephonenumber, including area code)

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes x  No o

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the ExchangeAct. (Check one):

| Large accelerated  filer x | Accelerated  filer o | Non-accelerated  filer o |
|---------------------------------|---------------------------|-------------------------------|

 

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

APPLICABLE ONLY TO ISSUERSINVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check markwhether the registrant has filed all documents and reports required to be filedby Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934subsequent to the distribution of securities under a plan confirmed by acourt. Yes x  No o

As of August 6, 2007,there were 326,716,877shares of the registrant’scommon stock, par value $0.01 per share, issued and outstanding, excludingshares of the registrant’s common stock issuable upon the exercise of the Series AWarrants and options and shares of restricted stock in escrow.

TheAdditional Registrant meets the conditions set forth in General InformationH(1)(a) and (b) of Form 10-Q and is filing this reportwith the reduced disclosure format. See “Note Concerning VMIH” in this Form 10-Q.

 

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**VIRGIN MEDIA INC.FORM 10-QQUARTER ENDED JUNE 30, 2007INDEX**
|                                                                                                                                                | ** ** | **Page** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| PART I.  FINANCIAL INFORMATION                                                                                                            |       | 5        |       |   |
| Item  1. Financial Statements                                                                                                                  |       | 5        |       |   |
| **Virgin Media Inc.**                                                                                                                          |       |     |       |   |
| Condensed Consolidated Balance Sheets—June 30,  2007 and December 31, 2006                                                      |       | 5        |       |   |
| Condensed Consolidated Statements of Operations—Three  and Six Months ended June 30, 2007 and 2006     |       | 6        |       |   |
| Condensed Consolidated Statements of Cash Flows—Six Months  ended June 30, 2007 and 2006                                        |       | 7        |       |   |
| Notes  to Condensed Consolidated Financial Statements                                                                                          |       | 8        |       |   |
| **Virgin Media Investment Holdings Limited**                                                                                                   |       |     |       |   |
| Condensed  Consolidated Balance Sheets—June 30, 2007 and December 31, 2006                                                      |       | 24       |       |   |
| Condensed Consolidated Statements of Operations—Three  and Six Months ended June 30, 2007 and 2006     |       | 25       |       |   |
| Condensed Consolidated  Statements of Cash Flows—Six Months ended June 30, 2007 and 2006                                             |       | 26       |       |   |
| Notes  to Condensed Consolidated Financial Statements                                                                                          |       | 27       |       |   |
| Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations                                            |       | 35       |       |   |
| Item 3. Quantitative and Qualitative Disclosures about  Market Risk                                                                            |       | 52       |       |   |
| Item 4. Controls and Procedures                                                                                                                |       | 52       |       |   |
| PART II.  OTHER INFORMATION                                                                                                               |       | 53       |       |   |
| Item  1. Legal Proceedings                                                                                                                     |       | 53       |       |   |
| Item  1A. Risk Factors                                                                                                                         |       | 53       |       |   |
| Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds                                                                           |       | 53       |       |   |
| Item 3. Defaults Upon Senior Securities                                                                                                        |       | 53       |       |   |
| Item 4. Submission of Matters to a Vote of Security  Holders                                                                                   |       | 53       |       |   |
| Item  5. Other Information                                                                                                                     |       | 54       |       |   |
| Item 6. Exhibits                                                                                                                               |       | 54       |       |   |
| SIGNATURES                                                                                                                                     |       | 55       |       |   |

 

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**“Safe Harbor”Statement under the Private Securities Litigation Reform Act of 1995:**

Various statementscontained in this document constitute “forward-looking statements” asthat term is defined under the Private Securities Litigation Reform Act of1995. Words like “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,”“estimates,” “projects,” “positioned,” “strategy,” and similar expressionsidentify these forward-looking statements, which involve known andunknown risks, uncertainties and other factors that may cause our actualresults, performance or achievements or industry results to be materiallydifferent from those contemplated, projected, forecasted, estimated orbudgeted, whether expressed or implied, by these forward-looking statements.These factors, among others, include:

·       theability to compete with a range of other communications and content providers;

·       theability to manage customer churn;

·       theeffect of technological changes on our businesses;

·       thecontinued right to use the Virgin name and logo;

·       theability to maintain and upgrade our networks in a cost-effective and timelymanner;

·       possiblelosses in revenues due to systems failures;

·       theability to provide attractive programming at a reasonable cost;

·       thereliance on single-source suppliers for some equipment, software andservices and third party distributors of our mobile services;

·       thefunctionality or market acceptance of new products that we may introduce;

·       theability to obtain and retain expected synergies from the merger of our legacyNTL and Telewest businesses and the acquisition of Virgin Mobile;

·       ratesof success in executing, managing and integrating key acquisitions, includingthe merger with Telewest and the acquisition of Virgin Mobile;

·       theability to achieve business plans for the combined company;

·       theability to fund debt service obligations through operating cash flow;

·       theability to obtain additional financing in the future and react to competitiveand technological changes;

·       theability to comply with restrictive covenants in our indebtedness agreements;and

·       theextent to which our future earnings will be sufficient to cover our fixedcharges.

These and other factorsare discussed in more detail under Item 1A. “Risk Factors” and elsewhere in ourForm 10-K filed with the SEC on March 1, 2007. We assume noobligation to update our forward-looking statements to reflect actualresults, changes in assumptions or changes in factors affecting thesestatements.

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**Note Concerning Corporate Name Changes**

Weentered into a license agreement with Virgin Enterprises Limited under which weare licensed to use certain Virgin trademarks within the United Kingdom and theRepublic of Ireland. As a result, in February 2007, we rebranded ourconsumer business and a large part of our content business to “Virgin Media”.We also changed the name of our corporate parent from NTL Incorporated toVirgin Media Inc. and the corporate names of certain of our subsidiaries,including:

·       NTLInvestment Holdings Limited, the principal borrower under our senior creditfacility, to Virgin Media Investment Holdings Limited;

·       NTLCable PLC, the issuer of our public bonds, to Virgin Media Finance PLC;

·       NTLGroup Limited, a principal operating subsidiary, to Virgin Media Limited;

·       FlextechTelevision Limited, our content subsidiary, to Virgin Media Television Limited;

·       NTLCommunications Limited to Virgin Media Communications Limited; and

·       NTLHoldings Inc. to Virgin Media Holdings Inc.

Forthe purposes of this quarterly report on Form 10-Q, the new nameswill be used where applicable. In this quarterly report, unless we haveindicated otherwise, or the context otherwise requires, references to:

·       “VirginMedia,” “the Company,” “we,” “us,” “our” and similar terms refer to Virgin MediaInc. and its subsidiaries (which include Telewest Global, Inc., orTelewest, and its subsidiaries and Virgin Mobile and its subsidiaries);

·       “NTL”refers to NTL Incorporated and its subsidiaries as they existed prior to thename change to Virgin Media Inc., and prior to the merger with Telewest, refersto the company now known as Virgin Media Holdings Inc. (which was formerlyknown as NTL Incorporated before the merger); and

·       “Telewest” refers toTelewest Global, Inc. and its subsidiaries as they existed prior to themerger with NTL in March 2006.

**Note Concerning VMIH**

Thisquarterly report on Form 10-Q (excepting financial statementsresponsive to Part I, Item 1) covers both Virgin Media Inc. and VirginMedia Investment Holdings Limited (“VMIH’’), an English company with an addressat 160 Great Portland Street, London, W1W 5QA, United Kingdom, that is awholly-owned subsidiary of Virgin Media Finance PLC and a wholly-owned indirectsubsidiary of Virgin Media Inc. VMIH is not an accelerated filer. VMIH is oneof 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 due2016 (U.S. dollar denominated). VMIH’s guarantee of these notes is not deemedto be unconditional.

VMIHcarries on the same business as Virgin Media Inc., and is the principalborrower under Virgin Media Inc.’s senior credit facility. In this quarterlyreport, unless the context otherwise requires, the terms “Virgin Media,” “the “Company,”“we,” “us,” “our” and similar terms refer to the consolidated business ofVirgin Media Inc., including VMIH and its subsidiaries. Unless otherwiseindicated, the discussion contained in this report applies to VMIH as well asVirgin Media Inc.

**Note ConcerningFinancial Information and Currency of Financial Statements**

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

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**PART I—FINANCIALINFORMATION**

**ITEM1.**                FINANCIALSTATEMENTS

**VIRGIN MEDIA INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(in millions)**

| ** **                                                                                                                                                                                          | ** ** | **June 30,  2007** | ** ** | **December 31,   2006** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------------|------------|
| ** **                                                                                                                                                                                          | ** ** | **(Unaudited)**         | ** ** | **(See Note)**               | ** ** |
| **Assets**                                                                                                                                                                                          | ** ** |                    | ** ** | ** **                        |       |   | ** ** | ** ** |   |
| Current assets                                                                                                                                                                                      |       |                    |       |                              |       |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                                           |       |                    | £     | 277.1                             |       |   |   | £ | 418.5 |   |   |
| Restricted cash                                                                                                                                                                                     |       |                    | 5.9        |                              |       |   | 6.0 |   |   |
| Accounts receivable—trade, less allowances for  doubtful accounts of £32.4 (2007) and £51.8 (2006)                                                                                   |       |                    | 447.6      |                              |       |   | 461.2 |   |   |
| Inventory                                                                                                                                                                                           |       |                    | 80.5       |                              |       |   | 65.3 |   |   |
| Prepaid expenses and other current assets                                                                                                                                                           |       |                    | 125.2      |                              |       |   | 87.4 |   |   |
| Total current assets                                                                                                                                                                                |       |                    | 936.3      |                              |       |   | 1,038.4 |   |   |
| Fixed assets, net                                                                                                                                                                                   |       |                    | 5,878.2    |                              |       |   | 6,026.3 |   |   |
| Goodwill and other indefinite-lived intangible assets                                                                                                                                               |       |                    | 2,509.1    |                              |       |   | 2,516.5 |   |   |
| Intangible assets, net                                                                                                                                                                              |       |                    | 968.5      |                              |       |   | 1,120.5 |   |   |
| Equity investments                                                                                                                                                                                  |       |                    | 377.3      |                              |       |   | 371.5 |   |   |
| Other assets, net of accumulated amortization of  £33.5 (2007) and £21.8 (2006)                                                                                                      |       |                    | 211.4      |                              |       |   | 170.3 |   |   |
| **Total assets**                                                                                                                                                                                    |       |                    | £     | 10,880.8                          |       |   |   | £ | 11,243.5 |   |   |
| **Liabilities  and shareholders’ equity**                                                                                                                                                      | ** ** |                    | ** ** | ** **                        |       |   | ** ** | ** ** |   |
| Current liabilities                                                                                                                                                                                 |       |                    |       |                              |       |   |   |   |   |
| Accounts payable                                                                                                                                                                                    |       |                    | £     | 385.3                             |       |   |   | £ | 379.6 |   |   |
| Accrued expenses and other current liabilities                                                                                                                                                      |       |                    | 420.3      |                              |       |   | 485.5 |   |   |
| VAT and employee taxes payable                                                                                                                                                                      |       |                    | 72.9       |                              |       |   | 82.8 |   |   |
| Restructuring liabilities                                                                                                                                                                           |       |                    | 114.4      |                              |       |   | 126.8 |   |   |
| Interest payable                                                                                                                                                                                    |       |                    | 109.1      |                              |       |   | 158.2 |   |   |
| Deferred revenue                                                                                                                                                                                    |       |                    | 267.9      |                              |       |   | 268.0 |   |   |
| Current portion of long term debt                                                                                                                                                                   |       |                    | 30.4       |                              |       |   | 141.9 |   |   |
| Total current liabilities                                                                                                                                                                           |       |                    | 1,400.3    |                              |       |   | 1,642.8 |   |   |
| Long term debt, net of current portion                                                                                                                                                              |       |                    | 6,062.8    |                              |       |   | 6,017.2 |   |   |
| Deferred revenue and other long term liabilities                                                                                                                                                    |       |                    | 287.1      |                              |       |   | 276.2 |   |   |
| Deferred income taxes                                                                                                                                                                               |       |                    | 81.7       |                              |       |   | 77.2 |   |   |
| Total liabilities                                                                                                                                                                                   |       |                    | 7,831.9    |                              |       |   | 8,013.4 |   |   |
| Commitments and  contingent liabilities                                                                                                                                                             |       |                    |       |                              |       |   |   |   |   |
| Shareholders’  equity                                                                                                                                                                          |       |                    |       |                              |       |   |   |   |   |
| Common stock—$.01 par value; authorized 1,000.0 and  1,000.0 (2007 and 2006) shares; issued 327.7 (2007) and 326.4  (2006) and outstanding 325.7 (2007) and 323.9 (2006) shares |       |                    | 1.8        |                              |       |   | 1.8 |   |   |
| Additional paid-in capital                                                                                                                                                                          |       |                    | 4,321.7    |                              |       |   | 4,303.4 |   |   |
| Accumulated other comprehensive income                                                                                                                                                              |       |                    | 164.1      |                              |       |   | 116.0 |   |   |
| Accumulated deficit                                                                                                                                                                                 |       |                    | (1,438.7   | )                                 |       |   | (1,191.1 | ) |   |
| Total shareholders’ equity                                                                                                                                                                     |       |                    | 3,048.9    |                              |       |   | 3,230.1 |   |   |
| **Total  liabilities and shareholders’ equity**                                                                                                                                                |       |                    | £     | 10,880.8                          |       |   |   | £ | 11,243.5 |   |   |

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Note: The balance sheet at December 31, 2006 hasbeen derived from the audited financial statements at that date.

See accompanying notes.

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**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,** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Revenue**                                                                                               |       | £                                          | 995.0      |                                          | £     | 884.3 |   | £ | 2,016.9 |   | £ | 1,495.7 |   |
| **Costs and expenses**                                                                                    | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Operating costs (exclusive of depreciation shown  separately below)                                       |       | 435.1                                           |       | 367.5                                         |       | 884.4 |   | 622.4 |   |
| Selling, general and administrative expenses                                                              |       | 244.6                                           |       | 223.5                                         |       | 511.5 |   | 381.6 |   |
| Other charges                                                                                             |       | 3.1                                             |       | 12.1                                          |       | 14.7 |   | 20.5 |   |
| Depreciation                                                                                              |       | 231.6                                           |       | 219.3                                         |       | 463.7 |   | 368.6 |   |
| Amortization                                                                                              |       | 77.6                                            |       | 55.6                                          |       | 154.9 |   | 92.4 |   |
|                                                                                                      |       | 992.0                                           |       | 878.0                                         |       | 2,029.2 |   | 1,485.5 |   |
| **Operating  income (loss)**                                                                              |       | 3.0                                             |       | 6.3                                           |       | (12.3 | ) | 10.2 |   |
| **Other income (expense)**                                                                                | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest income and other, net                                                                            |       | 7.8                                             |       | 8.6                                           |       | 14.8 |   | 17.2 |   |
| Interest expense                                                                                          |       | (128.1                                          | )          | (135.6                                        | )          | (246.6 | ) | (219.4 | ) |
| Share of income from equity investments                                                                   |       | 5.3                                             |       | 3.1                                           |       | 12.5 |   | 4.5 |   |
| Foreign currency transaction gains (losses)                                                               |       | 2.3                                             |       | (94.1                                         | )          | 5.6 |   | (104.1 | ) |
| Loss on extinguishment of debt                                                                            |       | (1.1                                            | )          | —                                        |       | (1.1 | ) | (32.4 | ) |
| (Losses) gains on derivative instruments                                                                  |       | (1.0                                            | )          | 5.7                                           |       | (1.5 | ) | (3.5 | ) |
| **Loss  before income taxes, minority interest and cumulative effect of change in  accounting principle** |       | (111.8                                          | )          | (206.0                                        | )          | (228.6 | ) | (327.5 | ) |
| Income tax  (expense) benefit                                                                             |       | (7.2                                            | )          | 9.9                                           |       | (10.7 | ) | 9.9 |   |
| Minority interest                                                                                         |       | —                                          |       | 0.3                                           |       | — |   | 0.7 |   |
| Cumulative effect  of change in accounting principle                                                      |       | —                                          |       | —                                        |       | — |   | 1.2 |   |
| **Net  loss**                                                                                             |       | £                                          | (119.0     | )                                             | £     | (195.8 | ) | £ | (239.3 | ) | £ | (315.7 | ) |
| **Basic  and diluted net loss per share**                                                                 |       | £                                          | (0.37      | )                                             | £     | (0.68 | ) | £ | (0.74 | ) | £ | (1.20 | ) |
| **Dividends  per share**(in U.S. dollars)                                                                 |       | $                                               | 0.03       |                                          | $          | 0.01 |   | $ | 0.05 |   | $ | 0.01 |   |
| **Average number of shares  outstanding**                                                                 |       | 325.5                                           |       | 287.9                                         |       | 324.8 |   | 262.4 |   |

 

See accompanying notes.

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

| ** **                                                                 | ** ** | **Six months ended  June 30,** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                 | ** ** | **2007**                                      | ** ** | **2006** | ** ** |
| **Net  cash provided by operating activities**                             |       | £                                        | 224.4      |   | £ | 243.8 |   |
| **Investing activities**                                                   | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Purchase of fixed and intangible assets                                    |       | (286.2                                        | )          | (263.4 | ) |
| Income from equity investments                                             |       | 6.2                                           |       | 13.6 |   |
| Acquisitions, net of cash acquired                                         |       | (1.0                                          | )          | (2,013.7 | ) |
| Other                                                                      |       | 2.1                                           |       | 5.1 |   |
| Net cash used in investing activities                                      |       | (278.9                                        | )          | (2,258.4 | ) |
| **Financing activities**                                                   | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| New borrowings, net of financing fees                                      |       | 874.5                                         |       | 6,665.8 |   |
| Principal payments on long term debt and capital  leases                   |       | (954.7                                        | )          | (4,963.5 | ) |
| Proceeds from employee stock option exercises                              |       | 4.0                                           |       | 30.3 |   |
| Dividends paid                                                             |       | (8.3                                          | )          | (1.6 | ) |
| Net cash (used in) provided by financing activities                        |       | (84.5                                         | )          | 1,731.0 |   |
| Effect of  exchange rate changes on cash and cash equivalents              |       | (2.4                                          | )          | (9.9 | ) |
| Decrease in cash  and cash equivalents                                     |       | (141.4                                        | )          | (293.5 | ) |
| Cash and cash  equivalents, beginning of period                            |       | 418.5                                         |       | 735.2 |   |
| Cash and cash  equivalents, end of period                                  |       | £                                        | 277.1      |   | £ | 441.7 |   |
| **Supplemental  disclosure of cash flow information**                      | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Cash paid during the  period for interest exclusive of amounts capitalized |       | £                                        | 295.0      |   | £ | 219.5 |   |

 

See accompanying notes.

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

**Note 1—Basisof Presentation**

The accompanying unaudited condensed consolidatedfinancial statements have been prepared in accordance with U.S. generallyaccepted accounting principles for interim financial information and with the rules andregulations of the Securities and Exchange Commission. Accordingly, they do notinclude all of the information and notes required by U.S. generally acceptedaccounting principles for complete financial statements. In the opinion ofmanagement, all adjustments (consisting of normal recurring accruals)considered necessary for a fair presentation have been included. Operatingresults for the six months ended June 30, 2007 are not necessarilyindicative of the results that may be expected for the year ending December 31,2007. For further information, refer to the consolidated financial statementsand notes thereto included in the Annual Report on Form 10-K forVirgin Media Inc. for the year ended December 31, 2006.

On March 3, 2006, Virgin Media Holdings Inc., orVirgin Media Holdings (then known as NTL Incorporated), merged with asubsidiary of Virgin Media Inc., or Virgin Media (then known as Telewest Global, Inc.,or Telewest). The merger has been accounted for as a reverse acquisition inwhich Virgin Media Holdings is treated as the accounting acquirer, primarilybecause Virgin Media Holdings’ shareholders owned 75% of the common stock uponcompletion of the merger. Following the merger, Telewest changed its name toNTL Incorporated, and subsequently to Virgin Media Inc. As a result, thehistorical financial statements of Virgin Media Holdings became the historicalfinancial statements of Virgin Media Inc. as of the completion of the merger.Therefore, the results of operations and cash flows for Telewest, the acquiredcompany for accounting purposes, are included in the consolidated financialstatements from March 3, 2006, the date on which the merger was completed.The results of operations and cashflows for Virgin Mobile (as defined below)are included in the consolidated financial statements from July 4, 2006,the date of its acquisition.

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

**Note 2—Acquisitions**

*Acquisition ofVirgin Mobile*

On July 4, 2006, we acquired 100% of theoutstanding shares and options of Virgin Mobile Holdings (UK) plc, or VirginMobile, through a U.K. Scheme of Arrangement. Virgin Mobile is the largestmobile virtual network operator in the United Kingdom, with approximately 4.4million customers.

The total purchase priceof £953.2 million included cash of £419.2 million, common stockvalued at £518.8 million and estimated direct transaction costs of£15.2 million. We financed the cash portion of the offer and transactionalexpenses through £475 million of additional borrowings under our senior creditfacility and cash on hand.

*Reverse Acquisitionof Telewest*

On March 3, 2006, Virgin Media Holdings Inc.(then known as NTL Incorporated) merged with a subsidiary of Virgin Media Inc.(then known as Telewest Global, Inc.) and the merger has been accountedfor as a reverse acquisition of Telewest using the purchase method. This mergercreated the U.K.’s largest provider of residential broadband and the U.K.’sleading provider of “triple-play” services. In connection 

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

with this transaction,Telewest changed its name to NTL Incorporated, and has since changed its nameto Virgin Media Inc.

The total purchase priceof £3.5 billion included cash of £2.3 billion, common stock valued at£1.1 billion, stock options with a fair value of £29.8 million andestimated direct transaction costs of £25.1 million. During the six monthsended June 30, 2007, we reduced goodwill by £1.5 million for amendments todeferred tax liabilities that were recognized at the acquisition date.

*Pro Forma Results*

Thefollowing pro forma financial information for the three and six months ended June 30,2006 presents the combined results of operations of Virgin Media Holdings, theformer Telewest and Virgin Mobile businesses as if the acquisitions hadoccurred as of the beginning of the periods presented (in millions, except pershare data). The unaudited pro forma financial information is not intended torepresent or be indicative of the consolidated results of operations orfinancial condition of Virgin Media that would have been reported had theacquisitions been completed as of the date presented, and should not be takenas representative of the future consolidated results of operations or financialcondition of Virgin Media.

|                                                                                                            | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                 | ** ** | **2007  Actual**                                | ** ** | **2006  Pro forma**                      | ** ** | **2007  Actual** | ** ** | **2006  Pro forma** | ** ** |
| Revenue                                                                                                    |       | £                                          | 995.0      |                                          |       | £ | 1,026.6 |   |   | £ | 2,016.9 |   |   | £ | 2,049.2 |   |   |
| Operating income (loss)                                                                                    |       | 3.0                                             |       |                                          | (8.2       | ) |   | (12.3 | ) |   | 3.5 |   |   |
| Loss before  income taxes, minority interest and cumulative effect of change in  accounting principle |       | (111.8                                          | )          |                                          | (234.4     | ) |   | (228.6 | ) |   | (379.7 | ) |   |
| Net loss                                                                                                   |       | (119.0                                          | )          |                                          | (224.1     | ) |   | (239.3 | ) |   | (378.1 | ) |   |
| Net loss per share                                                                                         |       | £                                          | (0.37      | )                                             |       | £ | (0.62 | ) |   | £ | (0.74 | ) |   | £ | (1.14 | ) |   |

 

The pro forma financialinformation above includes the following material, non-recurring charges in thesix months ended June 30, 2006: write-offs of historical deferred financecharges of £32.4 million; acquisition-related charges of £16.3 million; andother charges including restructuring charges of £21.0 million.

9

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

**Note 3—LongTerm Debt**

Longterm debt consists of (in millions):

| ** **                                | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| 8.75% U.S. Dollar  senior notes due 2014  |       | £            | 211.8      |                  |       | £ | 217.0 |   |   |
| 9.75% Sterling  senior notes due 2014     |       | 375.0             |       |                  | 375.0      |   |   |
| 8.75% Euro senior  notes due 2014         |       | 151.6             |       |                  | 151.6      |   |   |
| 9.125% U.S.  Dollar senior notes due 2016 |       | 274.1             |       |                  | 280.8      |   |   |
| Senior credit  facility                   |       | 4,970.2           |       |                  | 5,024.6    |   |   |
| Capital leases                            |       | 105.3             |       |                  | 104.4      |   |   |
| Other                                     |       | 5.2               |       |                  | 5.7        |   |   |
|                                      |       | 6,093.2           |       |                  | 6,159.1    |   |   |
| Less: current  portion                    |       | (30.4             | )          |                  | (141.9     | ) |   |
|                                      |       | £            | 6,062.8    |                  |       | £ | 6,017.2 |   |   |

 

The effective interest rate on the senior creditfacility was 7.8%and 7.1% as at June 30, 2007 and December 31, 2006, respectively.

In April 2007, we borrowed £890 million under oursenior credit facility which is repayable in 2012, and used £863 million of thenet proceeds to repay some of our obligations under our senior credit facilitythat were originally scheduled to be paid from 2007 to 2011. In April 2007,we also amended our senior credit facility agreement to allow for this £890million of additional indebtedness, the relaxation of certain financialcovenants and additional flexibility to pay increased levels of dividends on ourcommon stock.

In May 2007, we madea mandatory prepayment of £73.6 million under our senior credit facility as aresult of excess cash flow generated in 2006.

**Note 4—EmployeeBenefit Plans**

Thecomponents of net periodic pension cost in the three and six months ended June 30,2007 and 2006 were as follows (in millions):

| ** **                      | ** ** | **Three months ended** | ** ** | **Six months ended** | ** ** |
|---------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                      | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                      | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service costs                   |       | £                           | 0.6        |                           | £     | 0.7 |   | £ | 1.2 |   | £ | 1.4 |   |
| Interest costs                  |       | 4.2                              |       | 3.9                            |       | 8.4 |   | 7.8 |   |
| Expected return  on plan assets |       | (4.8                             | )          | (4.2                           | )          | (9.6 | ) | (8.4 | ) |
| Settlements and  curtailments   |       | —                           |       | 0.3                            |       | — |   | 0.6 |   |
| Net periodic benefit  costs     |       | £                           | —     |                           | £     | 0.7 |   | £ | — |   | £ | 1.4 |   |

 

*EmployerContributions*

In April 2007, weagreed with the trustees of one of our pension plans to a new fundingarrangement whereby we will be paying an additional £3.3 million per annum forthe next three years. Additionally, in June 2007, we effected a merger ofour three other defined benefit plans. The merger of these plans was 

10

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

subjectto the approval of the trustees and, as a condition of trustee approval, weagreed to make a specific one-time contribution of £4.5 million. For the threeand six months ended June 30, 2007, we contributed £6.5 million and £7.3million, respectively, to our pension plans. Reflecting the changes referencedabove, we anticipate contributing a total of £17.1 million to fund our pensionplans in 2007.

**Note 5—OtherCharges Including Restructuring Charges**

Other charges of £3.1 million and £12.1 million forthe three months ended June 30, 2007 and 2006, respectively, and £14.7 millionand £20.5 million for the six months ended June 30, 2007 and 2006,respectively, relate mainly to lease exit and employee termination costs as aresult of our acquisition-related restructuring programs.

Thefollowing tables summarize our historical restructuring provisions and therestructuring provisions resulting from the acquisitions during 2006 (inmillions):

| **Historical Restructuring Provisions** | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|---------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  December 31, 2006                  |       |       | £     | —                                                          |       |                   | £     | 43.4      |       | £ | 43.4 |   |
| Charged to  expense                               |       |       | —     |                                                            |       | 3.4                    |       | 3.4       |       |
| Utilized                                          |       |       | —     |                                                            |       | (6.5                   | )          | (6.5      | )          |
| Balance  June 30, 2007                       |       |       | £     | —                                                          |       |                   | £     | 40.3      |       | £ | 40.3 |   |

 

| **Acquisition Restructuring Provisions** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| Balance, December 31,  2006                   |       |       | £     | 18.7       |       |       | £     | 64.7       |       | £ | 83.4 |   |
| Charged to  expense                                |       |       | 7.6        |       |       | 3.7        |       | 11.3       |       |
| Utilized                                           |       |       | (15.8      | )          |       | (4.8       | )          | (20.6      | )          |
| Balance, June 30,  2007                       |       |       | £     | 10.5       |       |       | £     | 63.6       |       | £ | 74.1 |   |

 

**Note 6—Stockholders’Equity and Share Based Compensation**

On February 27, 2007 and May 16, 2007, ourBoard of Directors approved and declared the payment of a regular quarterlycash dividend of $0.02 and $0.03 per share on March 20, 2007 and June 20,2007, respectively, to stockholders of record as of March 12, 2007and June 12, 2007, totaling £3.3 million and £5.0 million, respectively.Future payments of regular quarterly dividends by us are at the discretion ofour Board of Directors and will be subject to our future needs and uses ofcash, which could include investments in operations, the repayment of debt, andshare repurchase programs.

Basic and diluted net loss per share is computed bydividing the net loss for the three and six months ended June 30, 2007 and2006 by the weighted average number of shares outstanding during the respectiveperiods. Outstanding warrants, options to purchase shares and restricted stocktotaling 40.9 million and 38.5 million shares at June 30, 2007 and2006, respectively, are excluded from the calculation of diluted loss pershare, since the inclusion of such warrants, options and shares of restrictedstock is anti-dilutive. The impact of the cumulative effect of change inaccounting principle did not change the earnings per share for all periodspresented.

11

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

The average number ofshares outstanding for the three and six months ended June 30, 2007 and2006 is computed as follows (in millions):

| ** **                                       | ** ** | **Three months ended** | ** ** | **Six months ended** | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                       | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                       | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
| Number of shares  outstanding at start of period |       | 324.6                            |       | 287.3                          |       | 323.9 |   | 212.9 |   |
| Issues of common  stock                          |       | 0.9                              |       | 0.6                            |       | 0.9 |   | 49.5 |   |
| Average shares  outstanding                      |       | 325.5                            |       | 287.9                          |       | 324.8 |   | 262.4 |   |

 

The following table summarizes the activity of ouroption plans for the six months ended June 30, 2007.

| ** **                                  | ** ** | **Options to  purchase  common stock** | ** ** | **Weighted  average  exercise price** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------|------------|
| Outstanding at  the beginning of the period |       |                                             | 13,055,630 |                                       |       |   | $ | 19.31 |   |   |
| Granted                                     |       |                                             | 2,459,027  |                                       |       |   | $ | 24.65 |   |   |
| Exercised                                   |       |                                             | (1,433,164 | )                                          |       |   | $ | 7.96 |   |   |
| Forfeited,  expired or cancelled            |       |                                             | (994,311   | )                                          |       |   | $ | 26.91 |   |   |
| Outstanding at  the end of the period       |       |                                             | 13,087,182 |                                       |       |   | $ | 20.99 |   |   |
| Exercisable at  the end of the period       |       |                                             | 4,712,049  |                                       |       |   | $ | 16.34 |   |   |

 

Total share based compensation expense included inselling, general and administrative expenses in the statement of operations was£7.1 million and £13.7 million for the three months ended June 30, 2007and 2006, respectively, and £14.2 million and £20.0 million for the sixmonths ended June 30, 2007 and 2006, respectively.

Thefollowing table summarizes the activity of our restricted stock plans for thesix months ended June 30, 2007.

| ** **                                  | ** ** | **Shares of  Common stock** | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|
| Outstanding at  the beginning of the period |       |                             | 2,435,396  |   |   |
| Granted                                     |       |                             | 128,150    |   |   |
| Awards vested and  shares issued            |       |                             | (514,804   | ) |   |
| Forfeited,  expired or cancelled            |       |                             | (20,833    | ) |   |
| Outstanding at the end  of the period       |       |                             | 2,027,909  |   |   |

 

12

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**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

**Note 7—ComprehensiveLoss**

Comprehensiveloss comprises (in millions):

| ** **                                    | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net loss for  period                          |       | £                                          | (119.0     | )                                             | £     | (195.8 | ) | £ | (239.3 | ) | £ | (315.7 | ) |
| Currency  translation adjustments             |       | 0.2                                             |       | 99.4                                          |       | (0.4 | ) | 82.4 |   |
| Net unrealized  gains (losses) on derivatives |       | 24.9                                            |       | (6.0                                          | )          | 48.5 |   | (7.2 | ) |
| Comprehensive loss                            |       | £                                          | (93.9      | )                                             | £     | (102.4 | ) | £ | (191.2 | ) | £ | (240.5 | ) |

 

Thecomponents of accumulated other comprehensive income, net of taxes, were asfollows (in millions):

| ** **                           | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Foreign currency  translation        |       |                    | £     | 131.2                       |       |   |   | £ | 131.6 |   |   |
| Pension liability  adjustments       |       |                    | (20.0      | )                           |       |   | (20.0 | ) |   |
| Net unrealized  gains on derivatives |       |                    | 52.9       |                        |       |   | 4.4 |   |   |
|                                 |       |                    | £     | 164.1                       |       |   |   | £ | 116.0 |   |   |

 

**Note 8—Incometaxes**

At each period end, it is necessary for us to makecertain estimates and assumptions to compute the provision for income taxesincluding, but not limited to, the expected operating income (or loss) for theyear, projections of the proportion of income (or loss) earned and taxed in theUnited Kingdom and the extent to which this income (or loss) may also be taxedin the United States, permanent and temporary differences, the likelihood ofdeferred tax assets being recovered and the outcome of contingent tax risks. Ateach interim period, management uses the best information available to developthese estimates and assumptions, which are used to compute the forecasteffective tax rate for the full year which is applied in computing the incometax expense or benefit for the interim period. In accordance with U.S.generally accepted accounting principles, the impact of revisions to theseestimates are recorded as income tax expense or benefit in the period in whichthey become known. Accordingly, the accounting estimates used to compute theprovision for income taxes have changed and will change as new events occur, asmore experience is acquired, as additional information is obtained and our taxenvironment changes. To the extent that the estimate changes during asubsequent quarter, the effect of the change on prior quarters as well as onthe current quarter is included in income tax expense for the current quarter.

For the three and six months ended June 30, 2007,income tax expense was £7.2 million and £10.7 million, respectively, ascompared with income tax benefits of £9.9 million and £9.9 million,respectively, for the same periods in 2006. The income tax expense for thethree 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 taxexpense of £8.6 million and a U.K. tax benefit of £1.8 million. The income taxexpense for the six months ended June 30, 2007 was comprised of currentfederal taxes of £0.7 million, a U.S. state and local tax benefit of £0.6million, deferred federal tax expense of £13.7 million and a U.K. tax benefitof £3.1 million. In the three and six months ended June 30, 2007, werecognized income tax benefits of £4.4 million 

13

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**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

and £7.4 million,respectively, that resulted in deferred tax expense with an offsettingreduction in our reorganization value. TheU.K. tax benefit relates to amounts receivable in respect of the sale of U.K.tax losses to an equity-method investee.

In June 2006, the FASB issued FASB Interpretation(“FIN”) No. 48, *Accounting for Uncertaintyin Income Taxes—an interpretation of FASB Statement 109*. FIN 48prescribes a comprehensive model for recognizing, measuring, presenting anddisclosing in the financial statements tax positions taken or expected to betaken on a tax return, including a decision whether to file or not to file in aparticular jurisdiction. We adopted FIN 48 on January 1, 2007. Theadoption did not have a material effect on our consolidated financialstatements. Upon the adoption of FIN 48, we had £70.9 million of unrecognizedtax benefits. If subsequently recognized, £66.5 million would not impactthe effective tax rate due to an offsetting valuation allowance, of theremainder £1.1 million would decrease income tax expense and £3.3 millionwould reduce goodwill. In addition, we had accrued £0.6 million for interest.We recognize interest and penalties related to unrecognized tax benefits inincome tax expense.

During the six months ended June 30, 2007, werecognized £53.9 million of previously unrecognized tax benefits due to achange in facts and circumstances. This had no impact on the effective tax ratedue to an offsetting valuation allowance. We also recognized £0.2 millionof previously unrecognized tax benefits as a result of the expiry of theapplicable statute of limitations, together with £0.3 million of accruedinterest thereon. We do not expect that the amount of unrecognized tax benefitswill significantly increase or decrease in the next twelve months.

The statute of limitations is open for the years 2003to 2006 in the U.S. and the U.K., our major tax jurisdictions.

The U.K. enacted changesin tax legislation in July 2007 that will impact our future U.K. taxposition. These changes include a reduction in the rate of taxation from 30% to28%, and a reduction in the rate at which capital allowances can be claimed ina year from 25% to 20%, with both changes coming into effect on April 1,2008. Under SFAS 109, *Accounting for IncomeTaxes,* the effect of such changes on deferred tax balances arerequired to be recognized in the period in which the new legislation isenacted. Our deferred tax assets are fully covered by a valuation allowance,such that no impact is expected to be recorded in the period in which it isenacted. There may be an impact in a future period, to the extent a deferredtax benefit is recognized.

**Note 9—RecentAccounting Pronouncements**

In September 2006,the FASB issued SFAS No. 157, *Fair Value Measurements.*SFAS 157 provides guidance for using fair value to measure assets andliabilities. It also responds to investors’ requests for expanded informationabout the extent to which companies measure assets and liabilities at fairvalue, the information used to measure fair value, and the effect of fair valuemeasurements on earnings. SFAS 157 applies whenever other standardsrequire (or permit) assets or liabilities to be measured at fair value, anddoes not expand the use of fair value in any new circumstances. SFAS 157is effective for financial statements issued for fiscal years beginning after November 15,2007 and is required to be adopted by us in the first quarter of 2008. We arecurrently evaluating the effect that the adoption of SFAS 157 will have onour consolidated results of operations and financial condition and are not yetin a position to determine such effects.

14

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**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

**Note 10—IndustrySegments**

Our reportable segmentsCable, Content and Mobile are based on our method of internal reporting. Ourprimary business segment is our Cable segment, which consists of ourtelevision, broadband and fixed line telephone services sold on our cablenetwork and, to a lesser extent, off our cable network. We operate a Contentsegment through our wholly-owned subsidiaries Virgin Media Television Limited (“VirginMedia TV’’, formerly known as Flextech Limited) and sit-up Limited (“sit-up”),which supply television programming to the U.K. pay-television broadcastingmarket including our televised shopping unit sit-up tv, which markets andretails a wide variety of consumer products using an auction-based format. Weoperate a Mobile segment through our wholly-owned subsidiary Virgin MobileLimited, which consists of our mobile telephony business. Our segments operateentirely in the U.K. and no one customer represents more than 5% of our overallrevenue.

Segment operating income before depreciation,amortization and other charges, which we refer to as Segment OCF, is management’smeasure of segment profit as permitted under SFAS 131, *Disclosuresabout Segments of an Enterprise and Related Information.* Ourmanagement, including our chief executive officer who is our chief operatingdecision maker, considers Segment OCF as an important indicator of theoperational strength and performance of our segments. Segment OCF excludes theimpact of costs and expenses that do not directly affect our cash flows. Othercharges, including restructuring charges, are also excluded from Segment OCF asmanagement believes they are not characteristic of our underlying businessoperations. The business segments disclosed in the consolidated financialstatements are based on this organizational structure and information reviewedby our management to evaluate the business segment results.

Segmentinformation for the three and six month periods ended June 30, 2007 and2006 is as follows (in millions):

| ** **                                     | ** ** | **Three months ended June 30, 2007** | ** ** |
|------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                     | ** ** | **Cable**                                                     | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                        |       | £                                                        | 775.1      |   |   | £ | 73.6 |   |   | £ | 146.3 |   |   | £ | — |   |   | £ | 995.0 |   |
| Inter 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 |   |   | — |   |   | 315.3 |   |
| Depreciation,  amortization and other charges  |       | (286.0                                                        | )          |   | (4.3 | ) |   | (22.0 | ) |   | — |   |   | (312.3 | ) |
| Operating (loss) income                        |       | £                                                        | (3.5       | ) |   | £ | (4.2 | ) |   | £ | 10.7 |   |   | £ | — |   |   | £ | 3.0 |   |

 

15

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**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

 

| ** **                                     | ** ** | **Three months ended June 30, 2006** | ** ** |
|------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                     | ** ** | **Cable**                                                     | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                        |       | £                                                        | 804.8      |   |   | £ | 79.5 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | 884.3 |   |
| Inter segment  revenue                         |       | 0.4                                                           |       |   | 5.7 |   |   |   | — |   |   |   | (6.1 | ) |   | — |   |
| Operating costs                                |       | (319.0                                                        | )          |   | (54.2 | ) |   |   | — |   |   |   | 5.7 |   |   | (367.5 | ) |
| Selling, general  and administrative  expenses |       | (201.7                                                        | )          |   | (22.2 | ) |   |   | — |   |   |   | 0.4 |   |   | (223.5 | ) |
| Segment OCF                                    |       | 284.5                                                         |       |   | 8.8 |   |   |   | — |   |   |   | — |   |   | 293.3 |   |
| Depreciation,  amortization and other charges  |       | (280.2                                                        | )          |   | (6.8 | ) |   |   | — |   |   |   | — |   |   | (287.0 | ) |
| Operating income                               |       | £                                                        | 4.3        |   |   | £ | 2.0 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | 6.3 |   |

 

| ** **                                    | ** ** | **Six months ended June 30, 2007** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                   | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                      | 1,575.4    |   | £ | 154.2 |   | £ | 287.3 |   | £ | — |   | £ | 2,016.9 |   |
| Inter 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 |   | — |   | 621.0 |   |
| Depreciation,  amortization and other charges |       | (581.5                                                      | )          | (8.4 | ) | (43.4 | ) | — |   | (633.3 | ) |
| Operating (loss) income                       |       | £                                                      | (32.2      | ) | £ | 3.9 |   | £ | 16.0 |   | £ | — |   | £ | (12.3 | ) |

 

| ** **                                    | ** ** | **Six months ended June 30, 2006** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                   | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                      | 1,389.0    |   |   | £ | 106.7 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | 1,495.7 |   |
| Inter segment  revenue                        |       | 0.7                                                         |       |   | 7.5 |   |   |   | — |   |   |   | (8.2 | ) |   | — |   |
| Operating costs                               |       | (556.6                                                      | )          |   | (73.3 | ) |   |   | — |   |   |   | 7.5 |   |   | (622.4 | ) |
| Selling, general  and administrative expenses |       | (353.2                                                      | )          |   | (29.1 | ) |   |   | — |   |   |   | 0.7 |   |   | (381.6 | ) |
| Segment OCF                                   |       | 479.9                                                       |       |   | 11.8 |   |   |   | — |   |   |   | — |   |   | 491.7 |   |
| Depreciation,  amortization and other charges |       | (473.3                                                      | )          |   | (8.2 | ) |   |   | — |   |   |   | — |   |   | (481.5 | ) |
| Operating income                              |       | £                                                      | 6.6        |   |   | £ | 3.6 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | 10.2 |   |

 

As at June 30, 2007, we performed our annualimpairment review of the goodwill recognized in the Virgin Media TV and sit-upreporting units included in our Content segment and the Virgin Mobile reportingunit and concluded that no impairment charges were necessary.

16

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**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

**Note 11—CondensedConsolidated Financial Information**

On April 13, 2004, our wholly-owned subsidiary,Virgin Media Finance PLC (formerly NTL Cable PLC), or Virgin MediaFinance, issued £375 million aggregate principal amount of 9.75% seniornotes due 2014, $425 million aggregate principal amount of 8.75% seniornotes due 2014, €225 million aggregateprincipal amount of 8.75% senior notes due 2014 and $100 million aggregateprincipal amount of floating rate notes due 2012, together referred to as theSenior Notes due 2014. On July 15, 2005, the $100 million aggregateprincipal 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 arereferred to as the Senior Notes. We and certain of our subsidiaries, namelyVirgin Media Group LLC (formerly NTL:Telewest LLC), Virgin Media Holdings Inc.(formerly NTL Holdings Inc.), Virgin Media (UK) Group, Inc. (formerly NTL(UK) Group, Inc.) and Virgin Media Communications Limited (formerly NTLCommunications Limited), have guaranteed the Senior Notes on a senior basis.Virgin Media Investment Holdings Limited, or VMIH, has guaranteed the SeniorNotes on a senior subordinated basis.

Wepresent the following condensed consolidated financial information as of June 30,2007 and December 31, 2006 and for the three and six months ended June 30,2007 and 2006 as required by Article 3-10(d) ofRegulation S-X.

| ** **                                                     | ** ** | **June 30, 2007** | ** ** |
|----------------------------------------------------------------|------------|-----------------------------|------------|
| **Balance sheets**                                        | ** ** | ** **                  | ** ** | **Company** | ** ** | **Virgin  Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                     | ** ** | **(in millions)**      | ** ** |
| Cash and cash  equivalents                                     |       |                        | £     | 2.2 |   |   | £ | — |   |   | £ | 21.3 |   |   | £ | 10.1 |   |   | £ | 243.5 |   |   |   | £ | — |   |   | £ | 277.1 |   |
| Restricted cash                                                |       |                        | —     |   |   | — |   |   | — |   |   | — |   |   | 5.9 |   |   |   | — |   |   | 5.9 |   |
| Other current  assets                                          |       |                        | —     |   |   | — |   |   | 0.5 |   |   | 3.1 |   |   | 649.7 |   |   |   | — |   |   | 653.3 |   |
| Total current assets                                           |       |                        | 2.2        |   |   | — |   |   | 21.8 |   |   | 13.2 |   |   | 899.1 |   |   |   | — |   |   | 936.3 |   |
| Fixed assets, net                                              |       |                        | —     |   |   | — |   |   | — |   |   | — |   |   | 5,878.2 |   |   |   | — |   |   | 5,878.2 |   |
| Intangible assets,  net                                        |       |                        | —     |   |   | — |   |   | (18.3 | ) |   | — |   |   | 3,495.9 |   |   |   | — |   |   | 3,477.6 |   |
| Investments in,  and loans to, parent and subsidiary companies |       |                        | 3,051.5    |   |   | 1,210.2 |   |   | 595.1 |   |   | 5,525.1 |   |   | (6,674.2 | ) |   |   | (3,330.4 | ) |   | 377.3 |   |
| Other assets, net                                              |       |                        | —     |   |   | — |   |   | — |   |   | 151.1 |   |   | 60.3 |   |   |   | — |   |   | 211.4 |   |
| Total assets                                                   |       |                        | £     | 3,053.7 |   |   | £ | 1,210.2 |   |   | £ | 598.6 |   |   | £ | 5,689.4 |   |   | £ | 3,659.3 |   |   |   | £ | (3,330.4 | ) |   | £ | 10,880.8 |   |
| Current  liabilities                                           |       |                        | £     | 4.8 |   |   | £ | 29.0 |   |   | £ | 16.2 |   |   | £ | 103.6 |   |   | £ | 1,358.9 |   |   |   | £ | (112.2 | ) |   | £ | 1,400.3 |   |
| Long term debt                                                 |       |                        | —     |   |   | 1,012.6 |   |   | — |   |   | 2,300.6 |   |   | 2,749.6 |   |   |   | — |   |   | 6,062.8 |   |
| Other long term  liabilities                                   |       |                        | —     |   |   | — |   |   | 0.4 |   |   | 138.5 |   |   | 229.9 |   |   |   | — |   |   | 368.8 |   |
| Shareholders’  equity                                     |       |                        | 3,048.9    |   |   | 168.6 |   |   | 582.0 |   |   | 3,146.7 |   |   | (679.1 | ) |   |   | (3,218.2 | ) |   | 3,048.9 |   |
| Total liabilities  and shareholders’ equity               |       |                        | £     | 3,053.7 |   |   | £ | 1,210.2 |   |   | £ | 598.6 |   |   | £ | 5,689.4 |   |   | £ | 3,659.3 |   |   |   | £ | (3,330.4 | ) |   | £ | 10,880.8 |   |
|                                                                |            |                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

17

----

**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

 

| ** **                                                     | ** ** | **December 31, 2006** | ** ** |
|----------------------------------------------------------------|------------|---------------------------------|------------|
| **Balance sheets**                                        | ** ** | ** **                      | ** ** | **Company** | ** ** | **Virgin  Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                     | ** ** | **(in millions)**          | ** ** |
| Cash and cash equivalents                                      |       |                            | £     | 2.4 |   |   | £ | — |   |   | £ | 31.5 |   |   | £ | 0.2 |   |   | £ | 384.4 |   |   |   | £ | — |   |   | £ | 418.5 |   |
| Restricted cash                                                |       |                            | —     |   |   | — |   |   | — |   |   | — |   |   | 6.0 |   |   |   | — |   |   | 6.0 |   |
| Other current assets                                           |       |                            | (1.7       | ) |   | — |   |   | 0.3 |   |   | 0.1 |   |   | 615.2 |   |   |   | — |   |   | 613.9 |   |
| Total current assets                                           |       |                            | 0.7        |   |   | — |   |   | 31.8 |   |   | 0.3 |   |   | 1,005.6 |   |   |   | — |   |   | 1,038.4 |   |
| Fixed assets, net                                              |       |                            | 0.7        |   |   | — |   |   | — |   |   | — |   |   | 6,025.6 |   |   |   | — |   |   | 6,026.3 |   |
| Intangible assets, net                                         |       |                            | —     |   |   | — |   |   | (11.0 | ) |   | — |   |   | 3,648.0 |   |   |   | — |   |   | 3,637.0 |   |
| Investments in, and loans to, parent and subsidiary  companies |       |                            | 3,242.3    |   |   | 1,411.7 |   |   | 774.4 |   |   | 5,327.2 |   |   | (6,407.5 | ) |   |   | (3,976.6 | ) |   | 371.5 |   |
| Other assets, net                                              |       |                            | —     |   |   | — |   |   | — |   |   | 103.2 |   |   | 67.1 |   |   |   | — |   |   | 170.3 |   |
| Total assets                                                   |       |                            | £     | 3,243.7 |   |   | £ | 1,411.7 |   |   | £ | 795.2 |   |   | £ | 5,430.7 |   |   | £ | 4,338.8 |   |   |   | £ | (3,976.6 | ) |   | £ | 11,243.5 |   |
| Current liabilities                                            |       |                            | £     | 11.8 |   |   | £ | 30.1 |   |   | £ | 9.4 |   |   | £ | 97.6 |   |   | £ | 1,593.9 |   |   |   | £ | (100.0 | ) |   | £ | 1,642.8 |   |
| Long term debt                                                 |       |                            | —     |   |   | 1,024.4 |   |   | — |   |   | 1,872.4 |   |   | 3,120.4 |   |   |   | — |   |   | 6,017.2 |   |
| Other long term liabilities                                    |       |                            | 1.8        |   |   | — |   |   | 8.5 |   |   | 124.9 |   |   | 218.2 |   |   |   | — |   |   | 353.4 |   |
| Shareholders’ equity                                      |       |                            | 3,230.1    |   |   | 357.2 |   |   | 777.3 |   |   | 3,335.8 |   |   | (593.7 | ) |   |   | (3,876.6 | ) |   | 3,230.1 |   |
| Total liabilities  and shareholders’ equity               |       |                            | £     | 3,243.7 |   |   | £ | 1,411.7 |   |   | £ | 795.2 |   |   | £ | 5,430.7 |   |   | £ | 4,338.8 |   |   |   | £ | (3,976.6 | ) |   | £ | 11,243.5 |   |
|                                                                |            |                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

| ** **                                                               | ** ** | **Three months ended June 30, 2007** | ** ** |
|--------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| **Statements of operations**                                   | ** ** | ** **                                                    | ** ** | **Company** | ** ** | **Virgin  Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                               | ** ** | **(in millions)**                                        | ** ** |
| Revenue                                                                  |       |                                                          | £     | — |   |   | £ | — |   |   | £ | — |   |   | £ | — |   |   | £ | 995.0 |   |   |   | £ | — |   |   | £ | 995.0 |   |
| Operating 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 loss                                                           |       |                                                          | —     |   |   | — |   |   | (2.9 | ) |   | — |   |   | 5.9 |   |   |   | — |   |   | 3.0 |   |
| Interest income and other, net                                           |       |                                                          | 0.1        |   |   | 25.1 |   |   | 12.5 |   |   | 24.3 |   |   | (17.8 | ) |   |   | (36.4 | ) |   | 7.8 |   |
| Interest expense                                                         |       |                                                          | —     |   |   | (24.8 | ) |   | (6.5 | ) |   | (97.5 | ) |   | (35.7 | ) |   |   | 36.4 |   |   | (128.1 | ) |
| Loss on extinguishment of debt                                           |       |                                                          | —     |   |   | — |   |   | — |   |   | (0.5 | ) |   | (0.6 | ) |   |   | — |   |   | (1.1 | ) |
| Share of income from equity investments                                  |       |                                                          | —     |   |   | — |   |   | — |   |   | — |   |   | 5.3 |   |   |   | — |   |   | 5.3 |   |
| (Losses) gains on derivative instruments                                 |       |                                                          | —     |   |   | — |   |   | — |   |   | — |   |   | (1.0 | ) |   |   | — |   |   | (1.0 | ) |
| Foreign currency gains                                                   |       |                                                          | —     |   |   | 0.1 |   |   | 0.3 |   |   | (4.4 | ) |   | 6.3 |   |   |   | — |   |   | 2.3 |   |
| Income tax (expense) benefit                                             |       |                                                          | (0.1       | ) |   | 0.1 |   |   | (4.7 | ) |   | — |   |   | (2.5 | ) |   |   | — |   |   | (7.2 | ) |
| Income (loss) before equity in net (loss) income  from subsidiaries |       |                                                          | —     |   |   | 0.5 |   |   | (1.3 | ) |   | (78.1 | ) |   | (40.1 | ) |   |   | — |   |   | (119.0 | ) |
| Equity in net (loss) income 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 | ) |
|                                                                          |            |                                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

18

----

**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

| ** **                                                          | ** ** | **Six months ended June 30, 2007** | ** ** |
|---------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| **Statements of operations**                              | ** ** | ** **                                                  | ** ** | **Company** | ** ** | **Virgin  Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                          | ** ** | **(in millions)**                                      | ** ** |
| Revenue                                                             |       |                                                        | £     | — |   |   | £ | — |   |   | £ | — |   |   | £ | — |   |   | £ | 2,016.9 |   |   |   | £ | — |   |   | £ | 2,016.9 |   |
| Operating 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)  income                                            |       |                                                        | (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 | ) |   | 14.8 |   |
| Interest expense                                                    |       |                                                        | —     |   |   | (49.9 | ) |   | (12.9 | ) |   | (184.5 | ) |   | (72.4 | ) |   |   | 73.1 |   |   | (246.6 | ) |
| Loss on  extinguishment of debt                                     |       |                                                        | —     |   |   | — |   |   | — |   |   | (0.5 | ) |   | (0.6 | ) |   |   | — |   |   | (1.1 | ) |
| Share of income  from equity investments                            |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | 12.5 |   |   |   | — |   |   | 12.5 |   |
| Losses on  derivative instruments                                   |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | (1.5 | ) |   |   | — |   |   | (1.5 | ) |
| Foreign currency  (losses) gains                                    |       |                                                        | —     |   |   | 0.1 |   |   | 0.4 |   |   | (4.5 | ) |   | 9.6 |   |   |   | — |   |   | 5.6 |   |
| Minority interest  income                                           |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   | — |   |
| Income tax expense                                                  |       |                                                        | (0.2       | ) |   | — |   |   | (7.3 | ) |   | — |   |   | (3.2 | ) |   |   | — |   |   | (10.7 | ) |
| (Loss) income  before equity in net (loss) income from subsidiaries |       |                                                        | (2.2       | ) |   | 0.6 |   |   | (4.0 | ) |   | (148.3 | ) |   | (85.4 | ) |   |   | — |   |   | (239.3 | ) |
| Equity in net  (loss) income 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 | ) |
|                                                                     |            |                                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

19

----

**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

 

| ** **                                                               | ** ** | **Three months ended June 30, 2006** | ** ** |
|--------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| **Statements of operations**                                   | ** ** | ** **                                                    | ** ** | **Company** | ** ** | **Virgin  Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                               | ** ** | **(in millions)**                                        | ** ** |
| Revenue                                                                  |       |                                                          | £     | — |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | — |   |   | £ | 884.3 |   |   |   | £ | — |   |   | £ | 884.3 |   |
| Operating costs                                                          |       |                                                          | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | (367.5 | ) |   |   | — |   |   | (367.5 | ) |
| Selling, general and administrative expenses                             |       |                                                          | (9.5       | ) |   |   | — |   |   |   | (4.0 | ) |   | — |   |   | (210.0 | ) |   |   | — |   |   | (223.5 | ) |
| Other charges                                                            |       |                                                          | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | (12.1 | ) |   |   | — |   |   | (12.1 | ) |
| Depreciation and amortization                                            |       |                                                          | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | (274.9 | ) |   |   | — |   |   | (274.9 | ) |
| Operating loss                                                           |       |                                                          | (9.5       | ) |   |   | — |   |   |   | (4.0 | ) |   | — |   |   | 19.8 |   |   |   | — |   |   | 6.3 |   |
| Interest income and other, net                                           |       |                                                          | 0.1        |   |   |   | 21.4 |   |   |   | 5.3 |   |   | 48.2 |   |   | (8.1 | ) |   |   | (58.3 | ) |   | 8.6 |   |
| Interest expense                                                         |       |                                                          | —     |   |   |   | (21.0 | ) |   |   | (56.6 | ) |   | (55.0 | ) |   | (61.3 | ) |   |   | 58.3 |   |   | (135.6 | ) |
| Share of income from equity investments                                  |       |                                                          | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | 3.1 |   |   |   | — |   |   | 3.1 |   |
| Gains on derivative instruments                                          |       |                                                          | —     |   |   |   | — |   |   |   | — |   |   | 5.7 |   |   | — |   |   |   | — |   |   | 5.7 |   |
| Foreign currency gains (losses)                                          |       |                                                          | —     |   |   |   | 2.4 |   |   |   | (86.9 | ) |   | (40.1 | ) |   | 30.5 |   |   |   | — |   |   | (94.1 | ) |
| Minority interest                                                        |       |                                                          | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | 0.3 |   |   |   | — |   |   | 0.3 |   |
| Income tax benefit                                                       |       |                                                          | —     |   |   |   | — |   |   |   | 8.9 |   |   | — |   |   | 1.0 |   |   |   | — |   |   | 9.9 |   |
| (Loss) income before equity in net (loss) income  from subsidiaries |       |                                                          | (9.4       | ) |   |   | 2.8 |   |   |   | (133.3 | ) |   | (41.2 | ) |   | (14.7 | ) |   |   | — |   |   | (195.8 | ) |
| Equity in net (loss) income of subsidiaries                              |       |                                                          | (187.2     | ) |   |   | (71.6 | ) |   |   | 21.9 |   |   | (30.4 | ) |   | — |   |   |   | 267.3 |   |   | — |   |
| Net loss                                                                 |       |                                                          | £     | (196.6 | ) |   |   | £ | (68.8 | ) |   |   | £ | (111.4 | ) |   | £ | (71.6 | ) |   | £ | (14.7 | ) |   |   | £ | 267.3 |   |   | £ | (195.8 | ) |
|                                                                          |            |                                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

20

----

**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

| ** **                                                               | ** ** | **Six months ended June 30, 2006** | ** ** |
|--------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| **Statements of operations**                                   | ** ** | ** **                                                  | ** ** | **Company** | ** ** | **Virgin  Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                               | ** ** | **(in millions)**                                      | ** ** |
| Revenue                                                                  |       |                                                        | £     | — |   |   | £ | — |   |   | £ | — |   |   | £ | — |   |   | £ | 1,495.7 |   |   |   | £ | — |   |   | £ | 1,495.7 |   |
| Operating costs                                                          |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | (622.4 | ) |   |   | — |   |   | (622.4 | ) |
| Selling, general and administrative expenses                        |       |                                                        | (12.6      | ) |   | — |   |   | (6.5 | ) |   | — |   |   | (362.5 | ) |   |   | — |   |   | (381.6 | ) |
| Other charges                                                            |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | (20.5 | ) |   |   | — |   |   | (20.5 | ) |
| Depreciation and amortization                                            |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | (461.0 | ) |   |   | — |   |   | (461.0 | ) |
| Operating (loss) income                                                  |       |                                                        | (12.6      | ) |   | — |   |   | (6.5 | ) |   | — |   |   | 29.3 |   |   |   | — |   |   | 10.2 |   |
| Interest income and other, net                                           |       |                                                        | 0.1        |   |   | 40.9 |   |   | 13.3 |   |   | 112.9 |   |   | — |   |   |   | (150.0 | ) |   | 17.2 |   |
| Interest expense                                                         |       |                                                        | —     |   |   | (40.2 | ) |   | (78.7 | ) |   | (108.2 | ) |   | (142.3 | ) |   |   | 150.0 |   |   | (219.4 | ) |
| Loss on extinguishment of debt                                           |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | (32.4 | ) |   |   | — |   |   | (32.4 | ) |
| Share of income from equity investments                                  |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | 4.5 |   |   |   | — |   |   | 4.5 |   |
| Losses on derivative instruments                                         |       |                                                        | —     |   |   | — |   |   | — |   |   | (3.5 | ) |   | — |   |   |   | — |   |   | (3.5 | ) |
| Foreign currency (losses) gains                                          |       |                                                        | —     |   |   | 2.4 |   |   | (103.7 | ) |   | (35.5 | ) |   | 32.7 |   |   |   | — |   |   | (104.1 | ) |
| Minority interest income                                                 |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | 0.7 |   |   |   | — |   |   | 0.7 |   |
| Income tax benefit                                                       |       |                                                        | —     |   |   | — |   |   | 8.9 |   |   | — |   |   | 1.0 |   |   |   | — |   |   | 9.9 |   |
| (Loss) income before equity in net (loss) income  from subsidiaries |       |                                                        | (12.5      | ) |   | 3.1 |   |   | (166.7 | ) |   | (34.3 | ) |   | (106.5 | ) |   |   | — |   |   | (316.9 | ) |
| Cumulative effect of change in  accounting principle                |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | 1.2 |   |   |   | — |   |   | 1.2 |   |
| Equity in net (loss) income of subsidiaries                              |       |                                                        | (304.0     | ) |   | (153.1 | ) |   | (138.4 | ) |   | (118.8 | ) |   | — |   |   |   | 714.3 |   |   | — |   |
| Net loss                                                                 |       |                                                        | £     | (316.5 | ) |   | £ | (150.0 | ) |   | £ | (305.1 | ) |   | £ | (153.1 | ) |   | £ | (105.3 | ) |   |   | £ | 714.3 |   |   | £ | (315.7 | ) |
|                                                                          |            |                                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

21

----

**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

 

| ** **                                                                             | ** ** | **Six months ended June 30, 2007** | ** ** |
|----------------------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| **Statements of cash flows**                                            | ** ** | ** **                                                  | ** ** | **Company** | ** ** | **Virgin   Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                                             | ** ** | **(in millions)**                                      | ** ** |
| Net cash (used in) provided by operating activities                                    |       |                                                        | £     | (0.5 | ) |   |   | £ | — |   |   |   | £ | (3.2 | ) |   | £ | (28.9 | ) |   | £ | 257.0 |   |   |   | £ | — |   |   | £ | 224.4 |   |
| Investing activities:                                                                  |       |                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase of fixed and intangible assets                                                |       |                                                        | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | (286.2 | ) |   |   | — |   |   | (286.2 | ) |
| Acquisitions, net of cash acquired                                                     |       |                                                        | —     |   |   |   | — |   |   |   | — |   |   | (1.0 | ) |   | — |   |   |   | — |   |   | (1.0 | ) |
| Investments in, and loans to equity investments,  parent and subsidiary companies |       |                                                        | 4.6        |   |   |   | — |   |   |   | (4.6 | ) |   | (375.1 | ) |   | 381.3 |   |   |   | — |   |   | 6.2 |   |
| Other                                                                                  |       |                                                        | —     |   |   |   | — |   |   |   | — |   |   | — |   |   | 2.1 |   |   |   | — |   |   | 2.1 |   |
| Net cash used in investing activities                                                  |       |                                                        | 4.6        |   |   |   | — |   |   |   | (4.6 | ) |   | (376.1 | ) |   | 97.2 |   |   |   | — |   |   | (278.9 | ) |
| Financing activities:                                                                  |       |                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New borrowings, net of financing fees                                                  |       |                                                        | —     |   |   |   | — |   |   |   | — |   |   | 576.8 |   |   | 297.7 |   |   |   | — |   |   | 874.5 |   |
| Principal payments on long term debt and capital  leases                          |       |                                                        | —     |   |   |   | — |   |   |   | — |   |   | (161.9 | ) |   | (792.8 | ) |   |   | — |   |   | (954.7 | ) |
| Proceeds from employee stock options                                                   |       |                                                        | 4.0        |   |   |   | — |   |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   | 4.0 |   |
| Dividends paid                                                                         |       |                                                        | (8.3       | ) |   |   | — |   |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   | (8.3 | ) |
| Net cash used in financing activities                                                  |       |                                                        | (4.3       | ) |   |   | — |   |   |   | — |   |   | 414.9 |   |   | (495.1 | ) |   |   | — |   |   | (84.5 | ) |
| Effect of exchange rate changes                                                        |       |                                                        | —     |   |   |   | — |   |   |   | (2.4 | ) |   | — |   |   | — |   |   |   | — |   |   | (2.4 | ) |
| Increase (decrease) 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 |   |   |   | — |   |   | 418.5 |   |
| Cash and cash  equivalents at end of period                                            |       |                                                        | £     | 2.2 |   |   |   | £ | — |   |   |   | £ | 21.3 |   |   | £ | 10.1 |   |   | £ | 243.5 |   |   |   | £ | — |   |   | £ | 277.1 |   |
|                                                                                        |            |                                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

22

----

**VIRGIN MEDIA INC.**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(unaudited)**

 

| ** **                                                                        | ** ** | **Six months ended June 30, 2006** | ** ** |
|-----------------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| **Statements of cash flows**                                       | ** ** | ** **                                                  | ** ** | **Company** | ** ** | **Virgin   Media  Finance** | ** ** | **Other  guarantors** | ** ** | **VMIH** | ** ** | **All other  subsidiaries** | ** ** | **Adjustments** | ** ** | **Total** | ** ** |
| ** **                                                                        | ** ** | **(in millions)**                                      | ** ** |
| Net cash (used in) provided by operating activities                               |       |                                                        | £     | 8.6 |   |   | £ | (2.4 | ) |   | £ | (10.3 | ) |   | £ | (49.7 | ) |   | £ | 297.6 |   |   |   | £ | — |   |   | £ | 243.8 |   |
| Investing activities:                                                             |       |                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase of fixed assets                                                          |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | (263.4 | ) |   |   | — |   |   | (263.4 | ) |
| Acquisitions, net of cash acquired                                                |       |                                                        | —     |   |   | — |   |   | (2,289.0 | ) |   | 1,735.9 |   |   | (1,460.6 | ) |   |   | — |   |   | (2,013.7 | ) |
| Telewest reorganization                                                           |       |                                                        | —     |   |   | — |   |   | (4,220.6 | ) |   | (5,956.5 | ) |   | 3,535.9 |   |   |   | 6,641.2 |   |   | — |   |
| Investments in, and loans to equity investments,  parent and subsidiary companies |       |                                                        | (35.3      | ) |   | (567.6 | ) |   | 42.7 |   |   | 2,457.8 |   |   | (1,884.0 | ) |   |   | — |   |   | 13.6 |   |
| Other                                                                             |       |                                                        | —     |   |   | — |   |   | — |   |   | — |   |   | 5.1 |   |   |   | — |   |   | 5.1 |   |
| Net cash provided by (used in)  investing activities                         |       |                                                        | (35.3      | ) |   | (567.6 | ) |   | (6,466.9 | ) |   | (1,762.8 | ) |   | (67.0 | ) |   |   | 6,641.2 |   |   | (2,258.4 | ) |
| Financing activities:                                                             |       |                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from exercise of stock options                                      |       |                                                        | 30.3       |   |   | — |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   | 30.3 |   |
| Proceeds from new borrowings, net of financing fees                               |       |                                                        | —     |   |   | 570.0 |   |   | 1,775.1 |   |   | 2,633.9 |   |   | 1,686.8 |   |   |   | — |   |   | 6,665.8 |   |
| Principal payments on long term debt and capital  leases                     |       |                                                        | —     |   |   | — |   |   | (1,709.9 | ) |   | (1,445.1 | ) |   | (1,808.5 | ) |   |   | — |   |   | (4,963.5 | ) |
| Issuance of stock                                                                 |       |                                                        | —     |   |   | — |   |   | 4,220.6 |   |   | 2,420.6 |   |   | — |   |   |   | (6,641.2 | ) |   | — |   |
| Share redemption                                                                  |       |                                                        | —     |   |   | — |   |   | 1,800.0 |   |   | (1,800.0 | ) |   | — |   |   |   | — |   |   | — |   |
| Dividends                                                                         |       |                                                        | (1.6       | ) |   | — |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   | (1.6 | ) |
| Net cash provided by (used in)  financing activities                         |       |                                                        | 28.7       |   |   | 570.0 |   |   | 6,085.8 |   |   | 1,809.4 |   |   | (121.7 | ) |   |   | (6,641.2 | ) |   | 1,731.0 |   |
| Effect of exchange rate  changes                                                  |       |                                                        | —     |   |   | — |   |   | (13.0 | ) |   | — |   |   | 3.1 |   |   |   | — |   |   | (9.9 | ) |
| Increase (decrease) in cash and cash equivalents                             |       |                                                        | 2.0        |   |   | — |   |   | (404.4 | ) |   | (3.1 | ) |   | 112.0 |   |   |   | — |   |   | (293.5 | ) |
| Cash and cash equivalents at beginning of period                                  |       |                                                        | —     |   |   | — |   |   | 446.6 |   |   | 5.4 |   |   | 283.2 |   |   |   | — |   |   | 735.2 |   |
| Cash and cash  equivalents at end of period                                       |       |                                                        | £     | 2.0 |   |   | £ | — |   |   | £ | 42.2 |   |   | £ | 2.3 |   |   | £ | 395.2 |   |   |   | £ | — |   |   | £ | 441.7 |   |
|                                                                                   |            |                                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

23

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**VIRGIN MEDIA INVESTMENT HOLDINGS LIMITEDCONDENSED CONSOLIDATED BALANCE SHEETS(in millions)**

| ** **                                                                                                              | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                                                                              | ** ** | **(Unaudited)**         | ** ** | **(See Note)**         | ** ** |
| **Assets**                                                                                                              | ** ** |                    | ** ** | ** **                  |       |   | ** ** | ** ** |   |
| Current assets                                                                                                          |       |                    |       |                        |       |   |   |   |   |
| Cash and cash equivalents                                                                                               |       |                    | £     | 253.3                       |       |   |   | £ | 384.0 |   |   |
| Restricted cash                                                                                                         |       |                    | 5.1        |                        |       |   | 5.2 |   |   |
| Accounts  receivable—trade, less allowances for doubtful accounts of £30.9 (2007)  and £49.4 (2006) |       |                    | 440.7      |                        |       |   | 454.9 |   |   |
| Inventory                                                                                                               |       |                    | 80.4       |                        |       |   | 65.3 |   |   |
| Prepaid expenses and  other current assets                                                                              |       |                    | 124.9      |                        |       |   | 89.2 |   |   |
| Total current assets                                                                                                    |       |                    | 904.4      |                        |       |   | 998.6 |   |   |
| Fixed assets, net                                                                                                       |       |                    | 5,725.0    |                        |       |   | 5,863.9 |   |   |
| Goodwill and other  indefinite-lived intangible assets                                                                  |       |                    | 2,521.4    |                        |       |   | 2,521.4 |   |   |
| Intangible assets, net                                                                                                  |       |                    | 962.3      |                        |       |   | 1,110.3 |   |   |
| Equity investments                                                                                                      |       |                    | 377.3      |                        |       |   | 371.5 |   |   |
| Other assets, net of accumulated  amortization of £33.5 (2007) and  £21.8 (2006)                         |       |                    | 211.4      |                        |       |   | 170.3 |   |   |
| Due from parent and  subsidiary companies                                                                               |       |                    | 633.6      |                        |       |   | 650.3 |   |   |
| **Total assets**                                                                                                        |       |                    | £     | 11,335.4                    |       |   |   | £ | 11,686.3 |   |   |
| **Liabilities and shareholders’ equity**                                                                           | ** ** |                    | ** ** | ** **                  |       |   | ** ** | ** ** |   |
| Current liabilities                                                                                                     |       |                    |       |                        |       |   |   |   |   |
| Accounts payable                                                                                                        |       |                    | £     | 385.0                       |       |   |   | £ | 379.5 |   |   |
| Accrued expenses and  other current liabilities                                                                         |       |                    | 417.3      |                        |       |   | 474.8 |   |   |
| VAT and employee taxes  payable                                                                                         |       |                    | 71.1       |                        |       |   | 86.2 |   |   |
| Restructuring liabilities                                                                                               |       |                    | 113.3      |                        |       |   | 124.5 |   |   |
| Interest payable                                                                                                        |       |                    | 156.3      |                        |       |   | 196.5 |   |   |
| Deferred revenue                                                                                                        |       |                    | 258.3      |                        |       |   | 258.0 |   |   |
| Current portion of long  term debt                                                                                      |       |                    | 30.4       |                        |       |   | 141.9 |   |   |
| Total current liabilities                                                                                               |       |                    | 1,431.7    |                        |       |   | 1,661.4 |   |   |
| Long term debt, net of  current portion                                                                                 |       |                    | 6,390.1    |                        |       |   | 6,345.9 |   |   |
| Deferred revenue and  other long term liabilities                                                                       |       |                    | 285.0      |                        |       |   | 266.2 |   |   |
| Deferred income taxes                                                                                                   |       |                    | 81.9       |                        |       |   | 77.0 |   |   |
| Total liabilities                                                                                                       |       |                    | 8,188.7    |                        |       |   | 8,350.5 |   |   |
| Commitments and contingent liabilities                                                                                  |       |                    |       |                        |       |   |   |   |   |
| Shareholders’ equity                                                                                               |       |                    |       |                        |       |   |   |   |   |
| Common stock                                                                                                            |       |                    | —     |                        |       |   | — |   |   |
| Additional paid-in  capital                                                                                             |       |                    | 4,371.3    |                        |       |   | 4,371.3 |   |   |
| Accumulated other  comprehensive income                                                                                 |       |                    | 5.8        |                        |       |   | (36.0 | ) |   |
| Accumulated deficit                                                                                                     |       |                    | (1,230.4   | )                           |       |   | (999.5 | ) |   |
| Total shareholders’  equity                                                                                        |       |                    | 3,146.7    |                        |       |   | 3,335.8 |   |   |
| **Total liabilities and shareholders’ equity**                                                                     |       |                    | £     | 11,335.4                    |       |   |   | £ | 11,686.3 |   |   |

----

Note: The balancesheet at December 31, 2006 has been derived from the audited financialstatements at that date.

See accompanying notes.

24

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**VIRGIN MEDIA INVESTMENT HOLDINGS LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited) (in millions, except per share data)**

| ** **                                                                                                     | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                     | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Revenue**                                                                                                    |       | £                                          | 965.1      |                                          | £     | 495.8 |   | £ | 1,956.5 |   | £ | 953.1 |   |
| **Costs and expenses**                                                                                         |       |                                            |       |                                          |       |   |   |   |   |
| Operating costs (exclusive of depreciation shown  separately below)                                            |       | 421.6                                           |       | 206.5                                         |       | 860.0 |   | 400.5 |   |
| Selling, general and administrative expenses                                                                   |       | 232.1                                           |       | 124.3                                         |       | 482.3 |   | 238.4 |   |
| Other charges                                                                                                  |       | 2.7                                             |       | 11.7                                          |       | 13.3 |   | 19.5 |   |
| Depreciation                                                                                                   |       | 226.1                                           |       | 129.8                                         |       | 452.8 |   | 245.8 |   |
| Amortization                                                                                                   |       | 75.7                                            |       | 28.9                                          |       | 151.1 |   | 53.7 |   |
|                                                                                                           |       | 958.2                                           |       | 501.2                                         |       | 1,959.5 |   | 957.9 |   |
| **Operating  income (loss)**                                                                                   |       | 6.9                                             |       | (5.4                                          | )          | (3.0 | ) | (4.8 | ) |
| **Other income (expense)**                                                                                     |       |                                            |       |                                          |       |   |   |   |   |
| Interest income and other, net                                                                                 |       | 6.8                                             |       | 7.4                                           |       | 13.4 |   | 10.6 |   |
| Interest expense                                                                                               |       | (131.4                                          | )          | (65.1                                         | )          | (253.2 | ) | (117.7 | ) |
| Share of income from equity investments                                                                        |       | 5.3                                             |       | —                                        |       | 12.5 |   | — |   |
| Foreign currency transaction gains (losses)                                                                    |       | 1.9                                             |       | (14.3                                         | )          | 5.1 |   | (7.0 | ) |
| Loss on extinguishment of debt                                                                                 |       | (1.1                                            | )          | —                                        |       | (1.1 | ) | (32.4 | ) |
| (Losses) gains on derivative instruments                                                                       |       | (1.0                                            | )          | 5.7                                           |       | (1.5 | ) | (3.5 | ) |
| **Loss  before income taxes, minority interest and cumulative effect of change  in accounting principle** |       | (112.6                                          | )          | (71.7                                         | )          | (227.8 | ) | (154.8 | ) |
| Income tax  expense                                                                                            |       | (2.5                                            | )          | —                                        |       | (3.2 | ) | — |   |
| Minority interest                                                                                              |       | —                                          |       | 0.1                                           |       | — |   | 0.5 |   |
| Cumulative effect  of change in accounting principle                                                           |       | —                                          |       | —                                        |       | — |   | 1.2 |   |
| **Net loss**                                                                                                   |       | £                                          | (115.1     | )                                             | £     | (71.6 | ) | £ | (231.0 | ) | £ | (153.1 | ) |

 

See accompanying notes.

25

----

**VIRGIN MEDIA INVESTMENT HOLDINGS LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited) (in millions)**

| ** **                                                     | ** ** | **Six months ended  June 30,** | ** ** |
|----------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                     | ** ** | **2007**                                      | ** ** | **2006** | ** ** |
| **Net  cash provided by operating activities**                 |       | £                                        | 216.8      |   | £ | 220.5 |   |
| **Investing activities**                                       |       |                                          |       |   |   |
| Purchase of fixed and intangible assets                        |       | (284.5                                        | )          | (207.5 | ) |
| Purchase of Telewest UK Limited from parent                    |       | —                                        |       | (3,966.6 | ) |
| Investments in, and loans to, parent and subsidiary  companies |       | 16.7                                          |       | 1,558.6 |   |
| Other                                                          |       | 0.5                                           |       | 2.2 |   |
| Net cash (used in) provided by investing activities            |       | (267.3                                        | )          | (2,613.3 | ) |
| **Financing activities**                                       |       |                                          |       |   |   |
| New borrowings, net of financing fees                          |       | 874.5                                         |       | 1,543.8 |   |
| Principal payments on long-term debt and  capital leases       |       | (954.7                                        | )          | (1,462.5 | ) |
| Issuance of shares                                             |       | —                                        |       | 2,420.6 |   |
| Net cash used in financing activities                          |       | (80.2                                         | )          | 2,501.9 |   |
| (Decrease) increase  in cash and cash equivalents              |       | (130.7                                        | )          | 109.1 |   |
| Cash and cash  equivalents, beginning of period                |       | 384.0                                         |       | 288.1 |   |
| Cash and cash  equivalents, end of period                      |       | £                                        | 253.3      |   | £ | 397.2 |   |

 

See accompanying notes.

26

----

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

**Note 1—Basisof Presentation**

We are an indirect, wholly-owned subsidiary of VirginMedia Inc. (“Virgin Media”).

The accompanying unaudited condensed consolidatedfinancial statements have been prepared in accordance with U.S. generallyaccepted accounting principles for interim financial information and with the rules andregulations of the Securities and Exchange Commission. Accordingly, they do notinclude all of the information and notes required by U.S. generally acceptedaccounting principles for complete financial statements. In the opinion ofmanagement, all adjustments (consisting of normal recurring accruals)considered necessary for a fair presentation have been included. Operatingresults for the six months ended June 30, 2007 are not necessarily indicativeof the results that may be expected for the year ending December 31, 2007.For further information, refer to the consolidated financial statements andnotes thereto included in the Annual Report on Form 10-K for VirginMedia Inc. for the year ended December 31, 2006.

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

**Note 2—Acquisitions**

*Acquisition ofVirgin Mobile*

On July 4, 2006, we acquired 100% of theoutstanding shares and options of Virgin Mobile Holdings (UK) plc, or VirginMobile, through a U.K. Scheme of Arrangement. Virgin Mobile is the largestmobile virtual network operator in the United Kingdom, with approximately 4.4million customers.

The total purchase priceof £953.2 million included cash of £419.2 million, common stockvalued at £518.8 million and estimated direct transaction costs of£15.2 million. Virgin Media financed the cash portion of the offer andtransactional expenses through £475 million of additional borrowings under itssenior credit facility and cash on hand.

*Reverse Acquisitionof Telewest*

On March 3, 2006, Virgin Media Holdings Inc.(then known as NTL Incorporated) merged with a subsidiary of Virgin Media Inc.(then known as Telewest Global, Inc.) and the merger has been accountedfor as a reverse acquisition of Telewest using the purchase method. This mergercreated the U.K.’s largest provider of residential broadband and the U.K.’sleading provider of “triple-play” services. In connection with thistransaction, Telewest changed its name to NTL Incorporated, and has sincechanged its name to Virgin Media Inc.

On June 19, 2006, inconnection with our integration with Telewest UK Limited, we engaged in a postacquisition restructuring of Telewest UK Limited and its subsidiaries in orderto integrate their operations with our existing U.K. operations and toimplement permanent financing. This restructuring involved a series of stepsthat included internal contributions, distributions, mergers and acquisitionsas well as borrowings from external sources and contributions of the proceedsof the same to us, to effect our acquisition of the shares of Telewest UKLimited and its subsidiaries. The completion of this restructuring resulted inTelewest UK Limited and its subsidiaries becoming our wholly-owned subsidiary.We have accounted for the acquisition of Telewest UK Limited and itssubsidiaries by applying the principles of APB 16, *BusinessCombinations*, in respect to transactions between entities undercommon control. As a 

27

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

result,the assets acquired and liabilities assumed have been recognized at theirhistorical cost and the results of operations and cashflows for Telewest UKLimited are included in our consolidated financial statements from June 19,2006, the date the restructuring was completed.

**Note 3—LongTerm Debt**

Longterm debt consists of (in millions):

| ** **                                                                         | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| 8.75% U.S. Dollar  senior loan notes due 2014 due to Virgin Media Finance PLC |       | £                  | 211.8      |                        |       | £ | 217.0 |   |   |
| 9.75% Sterling  senior loan notes due 2014 due to Virgin Media Finance PLC    |       | 375.0                   |       |                        | 375.0      |   |   |
| 8.75% Euro senior  loan notes due 2014 due to Virgin Media  Finance PLC       |       | 151.6                   |       |                        | 151.6      |   |   |
| 9.125% U.S.  Dollar senior notes due 2016 due to Virgin Media Finance PLC     |       | 274.1                   |       |                        | 280.8      |   |   |
| Floating rate  senior loan notes due 2012 due to Virgin Media  Finance PLC    |       | 49.8                    |       |                        | 51.1       |   |   |
| Senior credit  facility                                                            |       | 4,970.2                 |       |                        | 5,024.6    |   |   |
| Other loan notes  due to affiliates                                                |       | 277.5                   |       |                        | 277.6      |   |   |
| Capital leases                                                                     |       | 105.3                   |       |                        | 104.4      |   |   |
| Other                                                                              |       | 5.2                     |       |                        | 5.7        |   |   |
|                                                                               |       | 6,420.5                 |       |                        | 6,487.8    |   |   |
| Less: current  portion                                                             |       | (30.4                   | )          |                        | (141.9     | ) |   |
|                                                                               |       | £                  | 6,390.1    |                        |       | £ | 6,345.9 |   |   |

 

The effective interest rate on the senior creditfacility was 7.8% and 7.1% as at June 30, 2007 and December 31, 2006,respectively.

In April 2007, we borrowed £890 million under oursenior credit facility which is repayable in 2012, and used £863 million of thenet proceeds to repay some of our obligations under our senior credit facilitythat were originally scheduled to be paid from 2007 to 2011. In April 2007,we also amended our senior credit facility agreement to allow for this £890million of additional indebtedness, the relaxation of certain financial covenantsand additional flexibility to pay increased levels of dividends on our commonstock.

In May 2007, we madea mandatory prepayment of £73.6 million under our senior credit facility as aresult of excess cash flow generated in 2006.

28

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

**Note 4—EmployeeBenefit Plans**

Thecomponents of net periodic pension cost in the three and six months ended June 30,2007 and 2006 were as follows (in millions):

| ** **                      | ** ** | **Three months ended** | ** ** | **Six months ended** | ** ** |
|---------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                      | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                      | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service costs                   |       | £                           | 0.6        |                           | £     | 0.7 |   | £ | 1.2 |   | £ | 1.4 |   |
| Interest costs                  |       | 4.1                              |       | 3.9                            |       | 8.3 |   | 7.8 |   |
| Expected return  on plan assets |       | (4.7                             | )          | (4.2                           | )          | (9.5 | ) | (8.3 | ) |
| Settlements and  curtailments   |       | —                           |       | 0.3                            |       | — |   | 0.6 |   |
| Net periodic benefit  costs     |       | £                           | —     |                           | £     | 0.7 |   | £ | — |   | £ | 1.5 |   |

 

*EmployerContributions*

In April 2007, weagreed with the trustees of one of our pension plans to a new fundingarrangement whereby we will be paying an additional £3.3 million per annum forthe next three years. Additionally, in June 2007, Virgin Media effected amerger of three other defined benefit plans including two of our plans. Themerger of these plans was subject to the approval of the trustees and, as acondition of trustee approval, Virgin Media agreed to make a specific one-timecontribution of £4.5 million. For the three and six months ended June 30,2007, Virgin Media contributed £6.5 million and £7.3 million, respectively, tothese pension plans. Reflecting the changes referenced above, Virgin Mediaanticipates contributing a total of £17.1 million to fund its pension plans in2007.

**Note 5—OtherCharges Including Restructuring Charges**

Other charges of £2.7 million and £11.7 million forthe three months ended June 30, 2007 and 2006, respectively, and £13.3 million and £19.5 million for thesix months ended June 30, 2007 and 2006, respectively, relate mainly tolease exit and employee termination costs as a result of ouracquisition-related restructuring programs.

Thefollowing tables summarize our historical restructuring provisions and therestructuring provisions resulting from the acquisitions during 2006 (inmillions):

| **Historical Restructuring Provisions** | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|---------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  December 31, 2006                  |       |       | £     | —                                                          |       |                   | £     | 40.7      |       | £ | 40.7 |   |
| Charged to  expense                               |       |       | —     |                                                            |       | 3.1                    |       | 3.1       |       |
| Utilized                                          |       |       | —     |                                                            |       | (5.9                   | )          | (5.9      | )          |
| Balance,  June 30, 2007                      |       |       | £     | —                                                          |       |                   | £     | 37.9      |       | £ | 37.9 |   |

 

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

 

| **Acquisition Restructuring Provisions** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| Balance,  December 31, 2006                   |       |       | £     | 20.4       |       |       | £     | 63.4       |       | £ | 83.8 |   |
| Charged to  expense                                |       |       | 6.9        |       |       | 3.3        |       | 10.2       |       |
| Utilized                                           |       |       | (14.3      | )          |       | (4.3       | )          | (18.6      | )          |
| Balance, June 30,  2007                       |       |       | £     | 13.0       |       |       | £     | 62.4       |       | £ | 75.4 |   |

 

**Note 6—Stockholders’Equity**

On June 19, 2006, weissued shares to Virgin Media Finance PLC for cash consideration of£2.42 billion which was utilized to effect our acquisition of Telewest UKLimited and its subsidiaries.

*Stock Option Plans*

We are an indirect,wholly-owned subsidiary of Virgin Media. Accordingly, we have no stock-basedcompensation plans. As at June 30, 2007, certain of our employeesparticipated in the stock-based compensation plans of Virgin Media, asdescribed in Virgin Media’s 2006 Annual Report on Form 10-K.

**Note 7—ComprehensiveLoss**

Comprehensiveloss comprises (in millions):

| ** **                                    | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net loss for period                           |       | £                                          | (115.1     | )                                             | £     | (71.6 | ) | £ | (231.0 | ) | £ | (153.1 | ) |
| Net unrealized  gains (losses) on derivatives |       | 19.7                                            |       | (6.4                                          | )          | 41.8 |   | (7.2 | ) |
| Comprehensive loss                            |       | £                                          | (95.4      | )                                             | £     | (78.0 | ) | £ | (189.2 | ) | £ | (160.3 | ) |

 

Thecomponents of accumulated other comprehensive income, net of taxes, were asfollows (in millions):

| ** **                                    | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Pension liability  adjustments                |       |                    | £     | (20.0                       | )          |   |   | £ | (20.0 | ) |   |
| Net unrealized  gains (losses) on derivatives |       |                    | 25.8       |                        |       |   | (16.0 | ) |   |
|                                          |       |                    | £     | 5.8                         |       |   |   | £ | (36.0 | ) |   |

 

**Note 8—Incometaxes**

At each period end, it is necessary for us to makecertain estimates and assumptions to compute the provision for income taxesincluding, but not limited to, the expected operating income (or loss) for theyear, projections of the proportion of income (or loss) earned and taxed in theUnited Kingdom and the extent to which this income (or loss) may also be taxedin the United States, permanent and temporary differences, the likelihood ofdeferred tax assets being recovered and the outcome of contingent tax risks. Ateach interim period, management uses the best information available to developthese estimates and assumptions, which are used to compute the forecasteffective tax rate for the full year which is applied in computing the incometax expense or benefit for the interim period. In accordance with U.S.generally 

30

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

accepted accountingprinciples, the impact of revisions to these estimates are recorded as incometax expense or benefit in the period in which they become known. Accordingly,the accounting estimates used to compute the provision for income taxes haveand will change as new events occur, as more experience is acquired, asadditional information is obtained and our tax environment changes. To theextent that the estimate changes during a subsequent quarter, the effect of thechange on prior quarters as well as on the current quarter is included inincome tax expense for the current quarter.

For the three and six months ended June 30, 2007,income tax expense was £2.5 and £3.2 million, respectively, as compared with£nil for the same periods in 2006. The income tax expense for the three monthsended June 30, 2007 was comprised of deferred federal tax expense of £4.3million and a U.K. tax benefit of £1.8 million. The income tax expense for thesix months ended June 30, 2007 was comprised of deferred federal taxexpense of £6.3 million, and a U.K. tax benefit of £3.1 million. The U.K. tax benefit relates to amounts receivablein respect of the sale of U.K. tax losses to an equity method investee.

In June 2006, the FASB issued FASB Interpretation(“FIN”) No. 48, *Accounting for Uncertaintyin Income Taxes—an interpretation of FASB Statement 109*. FIN 48prescribes a comprehensive model for recognizing, measuring, presenting anddisclosing in the financial statements tax positions taken or expected to betaken on a tax return, including a decision whether to file or not to file in aparticular jurisdiction. We adopted FIN 48 on January 1, 2007 and theadoption did not have a material effect on our consolidated financialstatements. Upon the adoption of FIN 48, we had £3.3 million ofunrecognized tax benefits. If subsequently recognized, the £3.3 millionwould reduce goodwill. We recognize interest and penalties related tounrecognized tax benefits in income tax expense on the statement of operations.

The statute of limitations is open for the years 2003to 2006 in the U.S. and the U.K., our major tax jurisdictions. We do not expectthat the amount of unrecognized tax benefits will significantly increase ordecrease in the next twelve months.

The U.K. enacted changesin tax legislation in July 2007 that will impact our future U.K. taxposition. These changes include a reduction in the rate of taxation from 30% to28%, and a reduction in the rate at which capital allowances can beclaimed in a year from 25% to 20%, with both changes coming into effect on April 1,2008. Under SFAS 109, *Accountingfor Income Taxes*, the effect of such changes on deferred tax balances arerequired to be recognized in the period in which the new legislation isenacted. Our deferred tax assets are fully covered by a valuation allowance,such that no impact is expected to be recorded in the period in which it isenacted. There may be an impact in a future period, to the extent a deferredtax benefit is recognized.

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

**Note 9—Transactionswith Virgin Media Companies**

We area wholly-owned subsidiary of Virgin Media. We charge Virgin Media and ourother affiliates for operating costs and selling, general and administrativeexpenses incurred by us on their behalf. The following information summarizesour significant related party transactions with Virgin Media and its affiliates(in millions):

| ** **                                    | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| Revenue                                       |       | £                                          | —     |                                          | £     | — |   | £ | — |   | £ | — |   |
| Operating costs                               |       | 13.5                                            |       | 13.1                                          |       | 24.4 |   | 25.7 |   |
| Selling, general and  administrative expenses |       | 9.5                                             |       | 10.0                                          |       | 19.1 |   | 19.0 |   |
|                                               |            |                                                 |            |                                               |            |  |  |  |  |  |  |  |  |

 

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

Intercompanyinterest is charged from/to us by Virgin Media and its affiliates based onintercompany debt balances. Intercompany interest income and expense iscalculated using a weighted average interest rate of external borrowings byVirgin Media and its affiliates. The following information summarizes theamounts of intercompany interest charged from and to us by Virgin Media and itsaffiliates, which is included within interest income and expense in ourstatements of operations (in millions):

| ** **       | ** ** | **Three months ended  June 30,**          | ** ** | **Six months ended  June 30,**            | ** ** |
|------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **       | ** ** | **    2007    ** | ** ** | **    2006    ** | ** ** | **    2007    ** | ** ** | **    2006    ** | ** ** |
| Interest income  |       |                                                     | £     | —                                                   |       |   |   | £ | 1.1 |   |   |   | £ | — |   |   |   | £ | 4.3 |   |   |
| Interest expense |       |                                                     | 26.7       |                                                     |       |   | 23.3 |   |   |   | 53.7 |   |   |   | 47.4 |   |   |

 

Theamounts due to Virgin Media and its affiliates included in our consolidatedbalance sheets as of June 30, 2007 and December 31, 2006 were asfollows (in millions):

| ** **           | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|----------------------|------------|-------------------|------------|-----------------------|------------|
| ** **           | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| Due from  affiliates |       | £            | 633.7      |                  |       | £ | 650.3 |   |   |
| Interest payable     |       | 71.0              |       |                  | 63.9       |   |   |
| Long term debt       |       | 1,339.9           |       |                  | 1,353.1    |   |   |
|                      |            |                   |            |                       |            |  |  |  |  |

 

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

 

**Note 10—RecentAccounting Pronouncements**

In September 2006,the FASB issued SFAS No. 157, *Fair Value Measurements*.SFAS 157 provides guidance for using fair value to measure assets andliabilities. It also responds to investors’ requests for expanded informationabout the extent to which companies measure assets and liabilities at fairvalue, the information used to measure fair value, and the effect of fair valuemeasurements on earnings. SFAS 157 applies whenever other standardsrequire (or permit) assets or liabilities to be measured at fair value, anddoes not expand the use of fair value in any new circumstances. SFAS 157is effective for financial statements issued for fiscal years beginning after November 15,2007 and is required to be adopted by us in the first quarter of 2008. We arecurrently evaluating the effect that the adoption of SFAS 157 will have onour consolidated results of operations and financial condition and are not yetin a position to determine such effects.

**Note 11—IndustrySegments**

Our reportable segments Cable, Content and Mobile arebased on our method of internal reporting. Our primary business segment is ourCable segment, which consists of our television, broadband and fixed linetelephone services sold on our cable network and, to a lesser extent, off ourcable network. We operate a Content segment through our wholly-ownedsubsidiaries Virgin Media Television Limited (“Virgin Media TV’’, formerlyknown as Flextech Limited) and sit-up Limited (“sit-up”), which supplytelevision programming to the U.K. pay-television broadcasting market includingour televised shopping unit sit-up tv, which markets and retails a wide varietyof consumer products using an auction-based format. We operate a Mobile segmentthrough our wholly-owned subsidiary Virgin Mobile Limited, which consists ofour mobile telephony business. Our segments operate entirely in the U.K. and noone 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’smeasure of segment profit as permitted under SFAS 131, *Disclosuresabout Segments of an Enterprise and Related Information.* Ourmanagement, including our chief executive officer who is our chief operatingdecision maker, considers Segment OCF as an important indicator of theoperational strength and performance of our segments. Segment OCF excludes theimpact of costs and expenses that do not directly affect our cash flows. Othercharges, including restructuring charges, are also excluded from Segment OCF asmanagement believes they are not characteristic of our underlying businessoperations. The business segments disclosed in the consolidated financialstatements are based on this organizational structure and information reviewedby our management to evaluate the business segment results.

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

Segmentinformation for the three and six month periods ended June 30, 2007 and2006 is as follows (in millions):

| ** **                                    | ** ** | **Three months ended June 30, 2007** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                     | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                        | 745.2      |   |   | £ | 73.6 |   |   | £ | 146.3 |   |   | £ | — |   |   | £ | 965.1 |   |
| Inter 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 |   |   | — |   |   | 311.4 |   |
| Depreciation,  amortization and other charges |       | (278.2                                                        | )          |   | (4.3 | ) |   | (22.0 | ) |   | — |   |   | (304.5 | ) |
| Operating income (loss)                       |       | £                                                        | 0.4        |   |   | £ | (4.2 | ) |   | £ | 10.7 |   |   | £ | — |   |   | £ | 6.9 |   |

 

| ** **                                    | ** ** | **Three months ended June 30, 2006** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                     | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                        | 485.3      |   |   | £ | 10.5 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | 495.8 |   |
| Inter segment  revenue                        |       | —                                                        |       |   | 0.8 |   |   |   | — |   |   |   | (0.8 | ) |   | — |   |
| Operating costs                               |       | (200.2                                                        | )          |   | (7.1 | ) |   |   | — |   |   |   | 0.8 |   |   | (206.5 | ) |
| Selling, general  and administrative expenses |       | (121.4                                                        | )          |   | (2.9 | ) |   |   | — |   |   |   | — |   |   | (124.3 | ) |
| Segment OCF                                   |       | 163.7                                                         |       |   | 1.3 |   |   |   | — |   |   |   | — |   |   | 165.0 |   |
| Depreciation,  amortization and other charges |       | (169.5                                                        | )          |   | (0.9 | ) |   |   | — |   |   |   | — |   |   | (170.4 | ) |
| Operating (loss) income                       |       | £                                                        | (5.8       | ) |   | £ | 0.4 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | (5.4 | ) |

 

| ** **                                    | ** ** | **Six months ended June 30, 2007** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                   | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                      | 1,515.0    |   | £ | 154.2 |   | £ | 287.3 |   | £ | — |   | £ | 1,956.5 |   |
| Inter 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 |   | — |   | 614.2 |   |
| Depreciation,  amortization and other charges |       | (565.4                                                      | )          | (8.4 | ) | (43.4 | ) | — |   | (617.2 | ) |
| Operating (loss)  income                      |       | £                                                      | (22.9      | ) | £ | 3.9 |   | £ | 16.0 |   | £ | — |   | £ | (3.0 | ) |

 

| ** **                                    | ** ** | **Six months ended June 30, 2006** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                   | ** ** | **Content** | ** ** | **Mobile** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                      | 942.6      |   |   | £ | 10.5 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | 953.1 |   |
| Inter segment  revenue                        |       | —                                                      |       |   | 0.8 |   |   |   | — |   |   |   | (0.8 | ) |   | — |   |
| Operating costs                               |       | (394.2                                                      | )          |   | (7.1 | ) |   |   | — |   |   |   | 0.8 |   |   | (400.5 | ) |
| Selling, general  and administrative expenses |       | (235.5                                                      | )          |   | (2.9 | ) |   |   | — |   |   |   | — |   |   | (238.4 | ) |
| Segment OCF                                   |       | 312.9                                                       |       |   | 1.3 |   |   |   | — |   |   |   | — |   |   | 314.2 |   |
| Depreciation,  amortization and other charges |       | (318.1                                                      | )          |   | (0.9 | ) |   |   | — |   |   |   | — |   |   | (319.0 | ) |
| Operating (loss)  income                      |       | £                                                      | (5.2       | ) |   | £ | 0.4 |   |   |   | £ | — |   |   |   | £ | — |   |   | £ | (4.8 | ) |

 

As at June 30, 2007, we performed our annualimpairment review of the goodwill recognized in the Virgin Media TV and sit-upreporting units included in our Content segment and the Virgin Mobile reportingunit and concluded that no impairment charges were necessary.

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**ITEM2.**                MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

*The following discussion should be read in conjunctionwith the Condensed Consolidated Financial Statements and related notes thatappear elsewhere in this document.*

**OVERVIEW**

We are a leading U.K. entertainment and communicationsbusiness providing the first “quad-play” offering of television, broadband,fixed line telephone and mobile telephone services in the United Kingdom. Weare the U.K.’s most popular residential broadband and pay-as-you-go mobileprovider and the second largest provider in the U.K. of pay television andfixed line telephone services.

Virgin Media Television, or Virgin Media TV, and ntl:Telewest Business also operate under theVirgin Media umbrella. We provide abroad range of programming through our eleven wholly-owned channels; throughUKTV, our joint ventures with BBC Worldwide; and through the portfolio ofretail television channels operated by sit-up tv. ntl:Telewest Businessprovides a complete portfolio of voice, data and internet solutions to leadingbusinesses, public sector organizations and service providers in the U.K.

We presently manageour business through three reportable segments:

·       **Cable**: our cable segment includes the distribution oftelevision programming over our cable network and the provision of broadbandand fixed line telephone services to consumers, businesses and public sectororganizations, both on our cable network and, to a lesser extent, off ournetwork;

·       **Mobile**: our mobile segment includes the provision of mobiletelephone services under the brand name Virgin Mobile to consumers overcellular networks owned by T-Mobile; and

·       **Content**: our content segment includes the operations of ourU.K. television channels, such as LivingTV and Bravo and sit-up’s portfolio ofretail television channels. Although not included in our content segmentrevenue, our content team also oversees our interest in the UKTV televisionchannels, through our joint ventures with BBC Worldwide.

Ourrevenue by segment for the six months ended June 30, 2007 and 2006 was asfollows (in millions):

| ** **         | ** ** | **Six months ended June 30,** | ** ** |
|--------------------|------------|---------------------------------------------------|------------|
| ** **         | ** ** | **2007**                                          | ** ** | **2006** | ** ** |
| *Cable Segment*    |       |                                              |       |   |   |   |   |   |   |
| Consumer           |       | £                                            | 1,256.6    |   | 62.3 | % | £ | 1,106.1 |   | 74.0 | % |
| Business           |       | 318.8                                             |       | 15.8 |   | 282.9 |   | 18.9 |   |
|               |       | 1,575.4                                           |       | 78.1 |   | 1,389.0 |   | 92.9 |   |
| *Mobile  Segment*  |       | 287.3                                             |       | 14.3 |   | — |   | — |   |
| *Content  Segment* |       | 154.2                                             |       | 7.6 |   | 106.7 |   | 7.1 |   |
|               |       | £                                            | 2,016.9    |   | 100.0 | % | £ | 1,495.7 |   | 100.0 | % |

 

For further discussion ofour business please refer to our Annual Report on Form 10-K for theyear ended December 31, 2006 as filed with the SEC on March 1, 2007.

**Acquisitions**

***Acquisition of Virgin Mobile***

On July 4, 2006, we acquired 100% of theoutstanding shares and options of Virgin Mobile Holdings (UK) plc, or VirginMobile, through a U.K. Scheme of Arrangement. Virgin Mobile is the largestmobile virtual network operator in the United Kingdom, with approximately 4.4million customers.

35

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The total purchase priceof £953.2 million included cash of £419.2 million, common stockvalued at £518.8 million and estimated direct transaction costs of£15.2 million. We financed the cash portion of the offer and transactionalexpenses through £475 million of additional borrowings under our senior creditfacility and cash on hand.

***Reverse Acquisition of Telewest***

On March 3, 2006, NTL merged with a subsidiary ofTelewest and the merger has been accounted for as a reverse acquisition ofTelewest using the purchase method. This merger created the U.K.’s largestprovider of residential broadband and the U.K.’s leading provider of “triple-play”services. In connection with this transaction, Telewest changed its name to NTLIncorporated, and has since changed its name to Virgin Media Inc.

The total purchase priceof £3.5 billion included cash of £2.3 billion, common stock valued at£1.1 billion, stock options with a fair value of £29.8 million andestimated direct transaction costs of £25.1 million.

**Factors AffectingOur Business**

***Cable Segment***

Our Cable segment residential customers account forthe majority of our total revenue. The number of residential customers, thenumber and types of services that each customer uses and the prices we chargefor these services drive our revenue. Our profit is driven by the relativemargins on the types of services we provide to these customers and by thenumber of services that we provide to them. For example, broadband internet ismore profitable than our television services and, on average, our “quad-play”and “triple-play” customers are more profitable than “double-play” or “single-play”customers. Our packaging of services and our pricing are designed to encourageour customers to use multiple services such as television, telephone andbroadband 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 (ARPU), competition, the success of our integrationefforts, capital expenditures, currency movements and seasonality.

***Customer Churn.******  ***Customer churnis a measure of the number of customers who stop using our services. Anincrease in our customer churn can lead to increased costs and reduced revenue.We continue to focus on improving our customer service and enhancing andexpanding our service offerings to existing customers in an effort to manageour customer churn rate. Our ability to reduce our customer churn rate beyond abase level is limited by factors like customers moving outside our networkservice area, in particular during the summer season. Managing our customerchurn rate is a significant component of our business plan. Our customer churnrate may increase if our customer service is seen as unsatisfactory, if we areunable to deliver our services over our network without interruption, or if wefail to match offerings by our competitors.

***Cable ARPU.******  ***AverageRevenue Per User, or ARPU, is a measure we use to evaluate how effectively weare realizing potential revenue from our residential on-net cable customers. Webelieve that our “triple-play” cable offering of television, broadband andfixed line telephone services is attractive to our existing customer base andallows us to increase our Cable ARPU by facilitating the sale of multipleservices to each customer. Cable ARPU excludes any recognition of revenue fromour Mobile segment. With the acquisition of Virgin Mobile we are now able tooffer “quad-play” of television, broadband, mobile and fixed line telephoneservices, which we believe will enhance our competitiveness and growthopportunities.

***Competition.******  ***Our ability toacquire and retain customers and increase revenue depends on our competitivestrength. There is significant and increasing competition in the market for ourconsumer 

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services, includingbroadband and telephone services offered by British Telecom (“BT”) andresellers or local loop unbundlers such as British Sky Broadcasting Group plc (“BSkyB”)and Carphone Warehouse (Talk Talk), alternative internet access services likeDSL, satellite television services offered by BSkyB, digital terrestrialtelevision offered through Freeview, internet protocol television offered byTiscali S.p.A. (“Tiscali”) and BT, and mobile telephone services offered byother mobile telephone operators. Our business services also face a range ofcompetitors, including BT and Cable & Wireless. Certain competitors,such as BT and BSkyB, are dominant in markets in which we compete and may usetheir dominance in those markets to offer bundled services that include two ormore of our product offerings. If competitive forces prevent us from chargingthe prices for these services that we plan to charge, or if our competition isable to attract our customers or potential customers we are targeting, ourresults of operations will be adversely affected.

***Integration.******  ***Weare presently integrating our legacy NTL and Telewest cable businesses. Thisinvolves the incurrence of substantial operating and capital expenditures and,in some cases, involves the outsourcing of key functions in an effort toachieve synergies through the integration of the two businesses. For example,we will be continuing with the integration of our billing platforms over thenext twelve months. Any issues that may arise in connection with ourintegration could have a material negative effect on our financial performance.

***CapitalExpenditures.******  ***Our business requires substantialcapital expenditures on a continuing basis for various purposes, includingexpanding, maintaining and upgrading our network, investing in new customeracquisitions, and offering new services. If we do not continue to invest in ournetwork and in new technologies, our ability to retain and acquire customersmay be hindered. Therefore, our liquidity and the availability of cash to fundcapital projects are important drivers of our revenue. When our liquidity isrestricted, so is our ability to meet our capital expenditure requirements.

***Seasonality.****  *Some revenue streams are subject toseasonal factors. For example, telephone usage revenue by customers andbusinesses tends to be slightly lower during summer holiday months. Ourcustomer churn rates include persons who disconnect their service because ofmoves, resulting in a seasonal increase in our churn rates during the summermonths when higher levels of U.K. house moves occur and students leave theiraccommodation between academic years.

***Mobile Segment***

***Competition.******  ***Our ability toacquire and retain customers and increase revenue depends on our competitivestrength. There is significant competition in our markets from mobileoperators, including O2, Vodafone, Orange, T-Mobile and 3, and from othermobile virtual network operators, including Tesco Mobile, BT Mobile andCarphone Warehouse. Many of our competitors are part of large multinationalgroups, have substantial advertising and marketing budgets, and have asignificant retail presence. If competitive forces prevent us from charging theprices for these services that we plan to charge, or if our competition is ableto attract our customers or potential customers we are targeting, our resultsof operations will be adversely affected.

***Seasonality.******  ***Some revenuestreams and cost drivers are subject to seasonal factors. For example, in thefourth quarter of each year our customer acquisition and retention coststypically increase due to the Christmas period. Our ARPU generally decreases inthe first quarter of each year due to the fewer number of days in February andlower usage after the Christmas period.

***Distribution.***   Werely upon third parties to distribute our mobile products and services. If anyof these distribution partners were to cease to act as distributors for ourproducts and services, or the commissions or other costs charged by the thirdparties were to increase, our ability to gain new customers or retain existingcustomers may be adversely affected.

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***Content Segment***

***Competition.******  ***Our televisionprogramming competes with other broadcasters for advertising revenues,subscription revenues, and programming rights. sit-up competes with a largevariety of retailers in the U.K. market and with other television channels foraudiences.

***Access to Content.******  ***Most of the televisioncontent on the Virgin Media TV channels is purchased from the U.S. and becausethere is a limited supply of content available and an increasing number ofdigital channels in the U.K., Virgin Media TV may experience an increase in thecost of programming.

***Seasonality.******  ***Our Contentsegment incurs increased costs in the fourth quarter of each year due to theneed to provide enhanced programming over the important Christmas holidayperiod. Also, sit-up generally records increased revenues and costs in thefourth quarter due to generally higher retail sales in the lead up to theChristmas holiday.

***Limited Number ofBuyers.******  ***The principal third party buyer of ourtelevision channels is BSkyB. Other than BSkyB, there are no significant buyersof our television channels.

***Advertising Revenue.******  ***The majority of revenue forVirgin Media TV is from advertisers. Consequently, Virgin Media TV’s revenue isdirectly affected by changes in the total spend on television advertisingin the U.K. and the viewing levels for its channels.

***General***

***Currency Movements.******  ***We encountercurrency exchange rate risks because substantially all of our revenue andoperating costs are earned and paid primarily in U.K. pounds sterling, but wepay interest and principal obligations with respect to a portion of ourexisting indebtedness in U.S. dollars and euros. We have implemented ahedging program to seek to mitigate the risk from these exposures. Theobjective of this program is to reduce the volatility of our cash flows andearnings caused by changes in underlying rates.

**Critical AccountingPolicies**

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

For a discussion of theaccounting judgments and estimates that we have identified as critical in thepreparation of our consolidated financial statements, please refer to ourAnnual Report on Form 10-K for the year ended December 31, 2006as filed with the SEC on March 1, 2007.

**CONSOLIDATEDRESULTS OF OPERATIONS**

***Revenue***

For the three months ended June 30, 2007, revenueincreased by 12.5% to £995.0million from £884.3 million for the three months ended June 30, 2006.This increase is due to the acquisition of Virgin Mobile and the inclusion ofits revenues from July 4, 2006, offset by declines in revenue in our Cableand Content segments. See further discussion of our Cable and Content segmentsbelow.

For the six months ended June30, 2007, revenue increased by 34.8% to £2,016.9 million from £1,495.7 millionfor the six months ended June 30, 2006. This increase is primarily due to thereverse 

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acquisitionof Telewest and the inclusion of its revenues from March 3, 2006 and tothe acquisition of Virgin Mobile and the inclusion of its revenues fromJuly 4, 2006.

***Operatingcosts***

For the three months ended June 30, 2007, operatingcosts increased by 18.4%to £435.1 million from£367.5 million during the same period in 2006. This increase is primarily attributableto the acquisition of Virgin Mobile offset by reductions in our Cable segmentoperating expenses as a result of lower revenues.  Operating costs as a percentage of revenueincreased to 43.7% forthe three months ended June 30, 2007, from 41.6% for the same period in 2006,due to the inclusion of the new Mobile segment subsequent to the acquisition ofVirgin Mobile, since this segment has lower margins than our Cable segment.

For the six months ended June30, 2007, operating costs increased by 42.1% to £884.4 million from £622.4 millionduring the same period in 2006. This increase is primarily attributable to thereverse acquisition of Telewest and to the acquisition of Virgin Mobile.Operating costs as a percentage of revenue increased to 43.8% for the six months ended June 30,2007, from 41.6% for the same period in 2006, due to the inclusion of theTelewest Content segment subsequent to the reverse acquisition of Telewest andthe new Mobile segment subsequent to the acquisition of Virgin Mobile, sincethese segments have lower margins than our Cable segment.

***Selling,general and administrative expenses***

For the three months ended June 30, 2007, selling,general and administrative expenses increased by 9.4% to £244.6 million from £223.5 millionfor the three months ended June 30, 2006. This increase is primarilyattributable to the acquisition of Virgin Mobile. 

For the six months endedJune 30, 2007, selling, general and administrative expenses increased by 34.0% to £511.5 million from £381.6 million for the six months endedJune 30, 2006. This increase is primarily attributable to the reverseacquisition of Telewest and to the acquisition of Virgin Mobile.

***Other charges***

Other charges of £3.1 million for the three months endedJune 30, 2007 and £14.7 million for the six months ended June 30,2007 relate primarily to lease exit costs and employee termination costs inconnection with our restructuring programs initiated in respect of the reverseacquisition of Telewest. In the three months ended June 30, 2007, employeetermination costs of £ 4.3 million were offset by the release of provisions forlease exit costs of £1.2 million resulting primarily from the sublease of oneour vacant properties.

***Depreciation expense***

For the three months ended June 30, 2007,depreciation expense increased to £231.6 million from £219.3 million forthe three months ended June 30, 2006. This increase is attributable to theacquisition of Virgin Mobile together with the impact of additional purchasesof fixed assets.

For the six months endedJune 30, 2007, depreciation expense increased to £463.7 million from £368.6 millionfor the six months ended June 30, 2006. This increase is primarilyattributable to the reverse acquisition of Telewest and related fair valueadjustment to the property and equipment acquired, and to the acquisition ofVirgin Mobile.

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***Amortization expense***

For the three months ended June 30, 2007,amortization expense increased to £77.6 million from £55.6 million for the three months ended June 30,2006. The increase in amortization expense relates to additional intangibleassets arising from the acquisition of Virgin Mobile.

For the six months ended June 30,2007, amortization expense increased to £154.9 million from £92.4 million for the six months ended June 30,2006. The increase in amortization expense relates to additional intangibleassets arising from the reverse acquisition of Telewest and from theacquisition of Virgin Mobile.

***Interest income and other***

For the three and sixmonths ended June 30, 2007, interest income and other decreased to £7.8 million and £14.8 million from £8.6million and £17.2 million for the three and six months ended June 30,2006, respectively, primarily as a result of lower cash and cash equivalentsthroughout the periods as compared to the same periods in 2006.

***Interest expense***

For the three months ended June 30, 2007,interest expense decreased to £128.1 million from £135.6 million for the three months endedJune 30, 2006, primarily as a result of the non-recurrence in 2007 of thewrite-off of deferred finance costs in relation to the repayment of our previoussenior credit facility in connection with the reverse acquisition of Telewestin the three months ended June 30, 2006, partially offset by increasedinterest as a result of the additional borrowing for the acquisition of VirginMobile.

We paid cash interest of £140.0 million for the threemonths ended June 30, 2007, and £154.0 million for the three monthsended June 30, 2006. The decrease in cash interest payments is due tochanges in the timing of interest payments under our current debt arrangementsas compared with our debt arrangements in 2006.

For the six months ended June 30, 2007, interestexpense increased to £246.6million from £219.4 million for the six months ended June 30, 2006,primarily as a result of the additional borrowing from the reverse acquisitionof Telewest and the acquisition of Virgin Mobile.

We paid cash interest of £295.0 million for the six months ended June 30,2007, and £219.5 million for the six months ended June 30, 2006. Theincrease in cash interest payments resulted from the additional borrowings as aresult of the reverse acquisition of Telewest and the acquisition of VirginMobile, and changes in timing of interest payments.

***Foreign currency gains ( losses)***

The foreign currency gains of £2.3 million in thethree months ended June 30, 2007 were largely comprised of gains resultingfrom favorable exchange rate movements, principally on dollar settlements. Theforeign currency losses of £94.1 million in the three months ended June 30,2006 were largely comprised of foreign exchange losses of £75.4 million on U.S.dollar forward purchase contracts that were entered into to hedge the repaymentamount of the U.S. dollar denominated bridge facility. The repayment ofapproximately $3.1 billion of this facility on June 19, 2006 resulted inan offsetting gain of £99.1 million that was recorded as a component of equityduring the three months ended June 30, 2006.

The foreign currency gainsof £5.6 million in the six months ended June 30, 2007 were largelycomprised of gains resulting from favorable exchange rate movements,principally on dollar settlements. The foreign currency losses of £104.1million in the six months ended June 30, 2006 were largely comprised offoreign exchange losses of £75.4 million on U.S. dollar forward purchasecontracts that were entered 

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into tohedge the repayment amount of the U.S. dollar denominated bridge facility. Therepayment of approximately $3.1 billion of this facility on June 19, 2006resulted in an offsetting gain of £120.7 million that was recorded as acomponent of equity during the six months ended June 30, 2006.

***Income tax expense***

For the three months ended June 30, 2007, incometax expense was £7.2 million as compared with income tax benefit of £9.9million for the same period in 2006. The income tax expense for the threemonths ended June 30, 2007 was comprised of current federal taxes of £0.4million, a U.S. state and local tax benefit of £nil, deferred federal taxexpense of £8.6 million and a U.K. tax benefit of £1.8 million. The U.K. tax benefit relates to amounts receivablein respect of the sale of U.K. tax losses to an equity-method investee.

For the six months ended June 30,2007, income tax expense was £10.7 million as compared with income tax benefitof £9.9 million for the same period in 2006. The income tax expense for the sixmonths ended June 30, 2007 was comprised of current federal taxes of £0.7million, a U.S. state and local tax benefit of £0.6 million, deferred federaltax expense of £13.7 millionand a U.K. tax benefit of £3.1 million. TheU.K. tax benefit relates to amounts receivable in respect of the sale of U.K.tax losses to an equity-method investee.

***Net loss***

For the three months ended June 30, 2007, netloss decreased to £119.0 millioncompared with a loss of £195.8 million for the same period in 2006 due tothe factors discussed above.

For the six months ended June 30,2007, net loss decreased to £239.3 million compared with a loss of £315.7 million for thesame period in 2006 due to the factors discussed above.

***Net loss per share***

Basic and diluted net loss per common share for thethree months ended June 30, 2007 was £0.37 compared to £0.68 for the threemonths ended June 30, 2006. Basic and diluted net loss per share iscomputed using a weighted average of 325.5 million shares issued in thethree months ended June 30, 2007 and a weighted average of 287.9 millionshares issued for the same period in 2006. Options and warrants to purchaseshares along with shares of restricted stock held in escrow outstanding at June 30,2007 are excluded from the calculation of diluted net loss per share, since theinclusion of such options, warrants and restricted stock are anti-dilutive.

Basic and diluted net lossper common share for the six months ended June 30, 2007 was £0.74 comparedto £1.20 for the six months ended June 30, 2006. Basic and diluted netloss per share is computed using a weighted average of 324.8 millionshares issued in the six months ended June 30, 2007 and a weighted averageof 262.4 million shares issued for the same period in 2006. Options andwarrants to purchase shares along with shares of restricted stock held inescrow outstanding at June 30, 2007 are excluded from the calculation ofdiluted net loss per share, since the inclusion of such options, warrants andrestricted stock are anti-dilutive.

**Segment Information**

A description of the products and services, as well asyear-to-date financial data, for each segment can be found in note 10 to VirginMedia’s condensed consolidated financial statements. The segment results forthe three and six months ended June 30, 2007 included in our condensedconsolidated financial statements are reported on an actual basis and includethe results of Telewest and Virgin Mobile. The segment results for the threeand six months ended June 30, 2006 included in our condensed consolidated 

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financial statements arealso reported on an actual basis and include the results of Telewest from March 3, 2006.

The results of operations of each of our Cable andContent segments for the six months ended June 30, 2006 are reported inthis section on a pro forma combined basis as if the reverse acquisition ofTelewest had occurred at January 1, 2006 and combine Telewest’s historicalContent and sit-up segments into the combined company’s Content segment.The pro forma data has been calculated on a basis consistent with the pro formafinancial information filed with the Securities and Exchange Commission underour Form 8-K/A on May 10, 2006. We believe that a pro formacomparison of these segments is more relevant than a historic comparison as: (a) inrespect of our Cable segment, the size of the acquired legacy Telewest cablebusiness would obscure any meaningful discussion of changes in our Cablesegment if viewed on a historical basis; and (b) we did not have a Contentsegment prior to March 3, 2006. Comparative pro forma results of ourMobile segment have not been presented.

The reportable segments disclosed in this Form 10-Qare based on our management organizational structure as of June 30, 2007.Future changes to this organizational structure may result in changes to thereportable segments disclosed.

Segment operating incomebefore depreciation, amortization and other charges, which we refer to asSegment OCF, is management’s measure of segment profit as permitted under SFAS131, *Disclosures about Segments of an Enterprise andRelated Information.* Our management, including our chief executiveofficer who is our chief operating decision maker, considers Segment OCF as animportant indicator of the operational strength and performance of oursegments. Segment OCF excludes the impact of costs and expenses that do notdirectly affect our cash flows. Other charges, including restructuring charges,are also excluded from Segment OCF as management believes they are notcharacteristic of our underlying business operations.

***Cable Segment***

Thesummary combined results of operations of our Cable segment for the three andsix months ended June 30, 2007 and 2006 were as follows (in millions):

| ** **                                    | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                    | ** ** | **(Actual)**                                    | ** ** | **(Actual)**                                  | ** ** | **(Actual)** | ** ** | **(Pro forma)** | ** ** |
| Revenue                                       |       | £                                          | 775.1      |                                          | £     | 804.8 |   | £ | 1,575.4 |   |   | £ | 1,607.1 |   |   |
| Inter segment  revenue                        |       | 1.0                                             |       | 0.4                                           |       | 1.9 |   |   | 0.9 |   |   |
| Segment OCF                                   |       | 282.5                                           |       | 284.5                                         |       | 549.3 |   |   | 552.1 |   |   |
| Depreciation,  amortization and other charges |       | (286.0                                          | )          | (280.2                                        | )          | (581.5 | ) |   | (551.4 | ) |   |
| Operating (loss) income                       |       | £                                          | (3.5       | )                                             | £     | 4.3 |   | £ | (32.2 | ) |   | £ | 0.7 |   |   |

 

*Revenue*

OurCable segment revenue by customer type for the three and six months ended June 30,2007 and 2006 was as follows (in millions):

| ** **    | ** ** | **Three months ended  June 30,** | ** ** | ** **   | ** ** | **Six months ended  June 30,** | ** ** | ** **   | ** ** |
|---------------|------------|-------------------------------------------------|------------|--------------|------------|-----------------------------------------------|------------|--------------|------------|
| ** **    | ** ** | **2007**                                        | ** ** | **2006**     | ** ** | **Increase/**                                 | ** ** | **2007**     | ** ** | **2006** | ** ** | **Increase/** | ** ** |
| ** **    | ** ** | **(Actual)**                                    | ** ** | **(Actual)** | ** ** | **(Decrease)**                                | ** ** | **(Actual)** | ** ** | **(Pro forma)** | ** ** | **(Decrease)** | ** ** |
| Revenue:      |       |                                            |       |         |       |                                          |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer      |       |                                            | £     | 619.3        |       |                                          |       | £       | 644.7      |   |   |   | (3.9 | )% |   | 1,256.6 |   |   | £ | 1,281.4 |   |   |   | (1.9 | )% |   |
| Business      |       |                                            | 155.8      |         |       |                                          | 160.1      |         |       |   | (2.7 | )% |   | 318.8 |   |   | 325.7 |   |   |   | (2.1 | )% |   |
| Total revenue |       |                                            | £     | 775.1        |       |                                          |       | £       | 804.8      |   |   |   | (3.7 | )% |   | 1,575.4 |   |   | £ | 1,607.1 |   |   |   | (2.0 | )% |   |

* *

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*Consumer:*   Forthe three months ended June 30, 2007, revenue from residential customersdecreased by 3.9% to £619.3 million from revenue of £644.7 million for thethree months ended June 30, 2006. For the six months ended June 30,2007, revenue from residential customers decreased by 1.9% to £1,256.6 millionfrom pro forma revenue of £1,281.4 million for the six months ended June 30,2006. These decreases are primarily due to declines in fixed line telephonecustomer numbers, reductions in telephony prices and usage along with higherprice discounting to stimulate customer activity and retention. Partiallyoffsetting these decreases have been increases in revenues from additionalcustomers subscribing to our broadband services and selective television priceincreases.

Cable ARPU has decreased from £42.21 for the three months ended June 30,2006 to £42.16 for the three months ended June 30, 2007. The decrease inCable ARPU is due to the fall in revenue as described above. The decline hasbeen mitigated by our focus on acquiring new bundled customers and oncross-selling to existing customers which is shown by Revenue Generating Units(RGUs) per customer increasing from 2.12at June 30, 2006 to 2.23 at June 30, 2007 and by the percentage ofour customers with “triple-play” services growing from 37.1% at June 30, 2006 to 45.2% at June 30, 2007.

*Business:*   Forthe three months ended June 30, 2007, revenue from business customersdecreased by 2.7% to £155.8 million from £160.1 million for the three monthsended June 30, 2006. For the six months ended June 30, 2007, revenuefrom business customers decreased by 2.1% to £318.8 million from pro forma revenue of £325.7 million for thesix months ended June 30, 2006. These decreases are attributable todeclines in voice and wholesale revenues, partially offset by greater datarevenues.

*Cable segment OCF*

For the three months ended June 30, 2007, Cablesegment OCF decreased to £282.5million from £284.5 million for the three months ended June 30,2006. Lower consumer and business revenues have been partially offset bysavings in operating costs and selling, general and administrative costs.

For the six months ended June 30, 2007, Cablesegment OCF decreased to £549.3million from pro forma Cable segment OCF of £552.1 million for the six monthsended June 30, 2006. Lower consumer and business revenues have beenpartially offset by lower operating costs and selling, general andadministrative costs. Cost savings resulting from the integration activitiessince the reverse acquisition of Telewest, have in turn been offset by highermarketing and advertising costs incurred in connection with the rebrand toVirgin Media in the first quarter of 2007.

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*Summary CableStatistics*

Selectedstatistics for our residential cable customers, excluding customers off ourcable network and Virgin Mobile customers, for the three months ended June 30,2007 as well as the four prior quarters, are set forth in the table below.

| ** **                         | ** ** | **For the three months ended** | ** ** |
|------------------------------------|------------|----------------------------------------------------|------------|
| ** **                         | ** ** | **June 30,  2007**                            | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** | **September 30,  2006** | ** ** | **June 30,  2006** | ** ** |
| Opening customers                  |       | 4,807,600                                          |       | 4,854,500 |   | 4,891,500 |   | 4,928,700 |   | 4,983,800 |   |
| Data cleanse(1)                    |       | —                                             |       | — |   | — |   | — |   | (36,200 | ) |
| Adjusted opening  customers        |       | 4,807,600                                          |       | 4,854,500 |   | 4,891,500 |   | 4,928,700 |   | 4,947,600 |   |
| Customer  additions                |       | 191,900                                            |       | 184,300 |   | 213,500 |   | 229,200 |   | 192,300 |   |
| Customer  disconnects              |       | (262,200                                           | )          | (231,200 | ) | (250,500 | ) | (266,500 | ) | (211,200 | ) |
| Net customer movement              |       | (70,300                                            | )          | (46,900 | ) | (37,000 | ) | (37,300 | ) | (18,900 | ) |
| Closing customers                  |       | 4,737,300                                          |       | 4,807,600 |   | 4,854,500 |   | 4,891,500 |   | 4,928,700 |   |
| Churn(2)                           |       | 1.8                                                | %          | 1.6 | % | 1.7 | % | 1.8 | % | 1.5 | % |
| Revenue generating  units(1)(3):   |       |                                               |       |   |   |   |   |   |   |   |   |
| Television                         |       | 3,396,600                                          |       | 3,390,000 |   | 3,353,900 |   | 3,315,400 |   | 3,293,100 |   |
| DTV (included in Television)       |       | 3,125,300                                          |       | 3,081,100 |   | 3,005,900 |   | 2,922,000 |   | 2,836,200 |   |
| Telephone                          |       | 3,993,800                                          |       | 4,050,600 |   | 4,114,000 |   | 4,178,300 |   | 4,233,000 |   |
| Broadband                          |       | 3,191,900                                          |       | 3,146,400 |   | 3,058,500 |   | 2,980,400 |   | 2,902,300 |   |
| Total Revenue  Generating Units    |       | 10,582,300                                         |       | 10,587,000 |   | 10,526,400 |   | 10,474,100 |   | 10,428,400 |   |
| RGU/Customers                      |       | 2.23x                                              |       | 2.20x |   | 2.17x |   | 2.14x |   | 2.12x |   |
| Triple-play  penetration           |       | 45.2                                               | %          | 42.9 | % | 40.6 | % | 38.7 | % | 37.1 | % |
| Cable average  revenue per user(4) |       | £                                             | 42.16      |   | £ | 42.75 |   | £ | 42.82 |   | £ | 42.48 |   | £ | 42.21 |   |
| ARPU calculation:                  |       |                                               |       |   |   |   |   |   |   |   |   |
| On-net revenues  (millions)        |       | £                                             | 603.1      |   | £ | 620.0 |   | £ | 626.7 |   | £ | 625.4 |   | £ | 628.4 |   |
| Average customers                  |       | 4,768,000                                          |       | 4,834,900 |   | 4,878,800 |   | 4,907,400 |   | 4,962,300 |   |

 

Selectedstatistics for our residential customers that are not connected directlythrough our cable network are set forth in the table below.

| ** **     | ** ** | **For the three months ended** | ** ** |
|----------------|------------|----------------------------------------------------|------------|
| ** **     | ** ** | **June 30,  2007**                            | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** | **September 30,  2006** | ** ** | **June 30,  2006** | ** ** |
| Broadband RGUs |       | 275,200                                            |       | 270,500 |   | 260,800 |   | 242,800 |   | 235,000 |   |
| Telephone RGUs |       | 75,500                                             |       | 65,100 |   | 44,500 |   | 43,400 |   | 47,700 |   |

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(1)          Data cleanse activity inQ2-07 did not result in a change in customer numbers but did result in anincrease of 4,200 RGUs comprising of an increase of approximately 4,400 Televisionand 100 Telephone RGUs and a decrease of approximately 300 Broadband RGUs.Data cleanse activity in Q2-06 resulted in a decrease of 36,200 customersand 69,000 RGUs, a decrease of approximately 13,500 Telephone, 24,400 Broadbandand 31,100 TV RGUs. Data cleanse activity in Q2-06 is a result of moreclosely aligning customer definitions between NTL and Telewest together withthe removal of approximately 20,000 inactive backlog customers in NTL.

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(2)          Customer churn iscalculated by taking the total disconnects during the month and dividing themby the average number of customers during the month. Average monthly churnduring a quarter is the average of the three monthly churn calculations withinthe quarter.

(3)          Each telephone,television and broadband internet subscriber directly connected to our networkcounts as one RGU. Accordingly, a subscriber who receives both telephone andtelevision service counts as two RGUs. RGUs may include subscribers receivingsome services for free or at a reduced rate in connection with incentiveoffers.

(4)          Themonthly cable average revenue per user, or cable ARPU, is calculated on aquarterly basis by dividing total revenue generated from the provision oftelephone, television and internet services to customers who are directly connectedto our network in that period, exclusive of VAT, by the average number ofcustomers directly connected to our network in that period divided by three.

***Mobile Segment***

Virgin Mobile was acquired on July 4, 2006, andits results of operations have been consolidated from that date. Total Mobilesegment revenue for the three and six months ended June 30, 2007 was £146.3 million and £287.3 million, respectively, of which£142.3 million and £278.3 million was service revenue and £4.0 million and £9.0 million was equipment revenue,respectively.

Mobile segment OCF for the three months and six monthsended June 30, 2007 was £32.7 million and £59.4million, respectively.

In the three months ended June 30,2007, the number of mobile customers fell by 46,500 compared to a net decreaseof 61,300 in the three months ended March 31, 2007. Prepay customer lossesof 99,300 were partially offset by net additions of 52,800 contract customersin the three months ended June 30, 2007. The growth in contract customersreflects the drive for “quad-play” packages through cross-selling with ourCable segment products. The decline in prepay customers reflects increasedcompetition in the market.

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*Summary Mobile Statistics*

Selectedstatistics for Virgin Mobile since acquisition are set forth in the tablebelow:

| ** **                                                   | ** ** | **For the three months ended** | ** ** |
|--------------------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                                                   | ** ** | **June 30,  2007**                            | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** | **September 30,  2006** | ** ** |
| Opening  customers(1):                                       |       |                                               |       |   |   |   |   |   |   |   |   | ** ** |   |
| Prepay                                                       |       | 4,215,200                                          |       | 4,330,700 |   |   | 4,390,900 |   |   |   | — | ** ** |   |
| Contract                                                     |       | 246,300                                            |       | 192,100 |   |   | 120,800 |   |   |   | — | ** ** |   |
|                                                         |       | 4,461,500                                          |       | 4,522,800 |   |   | 4,511,700 |   |   |   | — | ** ** |   |
| Increase in customers on  acquisition of Virgin Mobile: |       |                                               |       |   |   |   |   |   |   |   |   | ** ** |   |
| Prepay                                                       |       |                                               |       |   |   |   |   |   |   |   | 4,292,800 | ** ** |   |
| Contract                                                     |       |                                               |       |   |   |   |   |   |   |   | 96,200 | ** ** |   |
|                                                         |       |                                               |       |   |   |   |   |   |   |   | 4,389,000 | ** ** |   |
| Net customer additions:                                      |       |                                               |       |   |   |   |   |   |   |   |   | ** ** |   |
| Prepay                                                       |       | (99,300                                            | )          | (115,500 | ) |   | (60,200 | ) |   |   | 98,100 | ** ** |   |
| Contract                                                     |       | 52,800                                             |       | 54,200 |   |   | 71,300 |   |   |   | 24,600 | ** ** |   |
|                                                         |       | (46,500                                            | )          | (61,300 | ) |   | 11,100 |   |   |   | 122,700 | ** ** |   |
| Closing customers:                                           |       |                                               |       |   |   |   |   |   |   |   |   | ** ** |   |
| Prepay                                                       |       | 4,115,900                                          |       | 4,215,200 |   |   | 4,330,700 |   |   |   | 4,390,900 | ** ** |   |
| Contract                                                     |       | 299,100                                            |       | 246,300 |   |   | 192,100 |   |   |   | 120,800 | ** ** |   |
|                                                         |       | 4,415,000                                          |       | 4,461,500 |   |   | 4,522,800 |   |   |   | 4,511,700 | ** ** |   |
| Mobile average revenue per user(2)                           |       | £                                             | 10.70      |   | £ | 10.07 |   |   | £ | 10.59 |   |   |   | £ | 10.28 | ** ** |   |
| ARPU calculation:                                            |       |                                               |       |   |   |   |   |   |   |   |   | ** ** |   |
| Mobile service  revenue (millions)                           |       | £                                             | 142.3      |   | £ | 136.0 |   |   | £ | 141.8 |   |   |   | £ | 132.5 | ** ** |   |
| Average customers                                            |       | 4,434,700                                          |       | 4,499,300 |   |   | 4,465,400 |   |   |   | 4,294,800 | ** ** |   |

----

(1)          Mobile customerinformation is for active customers. Prepay customers are defined as activecustomers if they have made an outbound event in the preceding 90 days.Contract customers are defined as active customers if they have beenprovisioned and have not been disconnected.

(2)          Mobilemonthly average revenue per user, or Mobile ARPU, is calculated on servicerevenue for the period, divided by the average number of active customers forthe period, divided by three.

***Content Segment***

Thesummary combined results of operations of our Content segment for the three andsix months ended June 30, 2007 and 2006 were as follows (in millions):

| ** **                                    | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                    | ** ** | **(Actual)**                                    | ** ** | **(Actual)**                                  | ** ** | **(Actual)** | ** ** | **(Pro forma)** | ** ** |
| Revenue                                       |       |                                            | £     | 73.6                                          |       |   |   | £ | 79.5 |   |   |   | £ | 154.2 |   |   |   | £ | 166.0 |   |   |
| Inter segment  revenue                        |       |                                            | 6.1        |                                          |       |   | 5.7 |   |   |   | 12.0 |   |   |   | 11.0 |   |   |
| Segment OCF                                   |       |                                            | 0.1        |                                          |       |   | 8.8 |   |   |   | 12.3 |   |   |   | 18.2 |   |   |
| Depreciation, amortization  and other charges |       |                                            | (4.3       | )                                             |       |   | (6.8 | ) |   |   | (8.4 | ) |   |   | (13.5 | ) |   |
| Operating (loss) income                       |       |                                            | £     | (4.2                                          | )          |   |   | £ | 2.0 |   |   |   | £ | 3.9 |   |   |   | £ | 4.7 |   |   |

 

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*Revenue*

For the three months endedJune 30, 2007, revenue in the Content segment decreased by 7.4% to £73.6million from £79.5 million for the three months ended June 30, 2006. Forthe six months ended June 30, 2007, revenue decreased by 7.1% to £154.2million from pro forma revenue of £166.0 million for the six months ended June 30,2006. These decreases are driven by reduced subscription revenue in Virgin MediaTV mainly as a result of a new carriage contract with BSkyB entered into at theend of 2006, partially offset by increased revenue from sit-up.

*Content segment OCF*

For the three months ended June 30, 2007, Contentsegment OCF decreased to £0.1 million from £8.8 million for the threemonths ended June 30, 2006. This decrease is mainly due to the reductionin subscription revenue referred to above and increased programming costs.

For the six months ended June 30,2007, Content segment OCF decreased by 32.4% to £12.3 million from pro formaContent segment OCF of £18.2 million for the six months ended June 30,2006. This decrease is mainly due to the reduction in subscription revenuereferred to above and increased programming costs, partially offset by thesettlement of a long running legal claim which resulted in the reversal of ahistoric accrual. The reversal generated a non-recurring increase in Contentsegment OCF.

**LIQUIDITY ANDCAPITAL RESOURCES**

As of June 30, 2007, we had £6,093.2 million ofdebt outstanding, compared to £6,159.1 million as of December 31, 2006,and £5,837.9 million as of June 30, 2006, and £277.1 million of cash andcash equivalents, compared to £418.5 million as of December 31, 2006 and£441.7 million as of June 30, 2006. The increase in debt since June 30,2006 is primarily attributable to the acquisition of Virgin Mobile in July 2006.Our business is capital intensive, we are highly leveraged, and we havehistorically incurred operating losses and negative cash flow, partly as aresult of our construction costs, operating expenditures and interest costs.

We require significant amounts of capital to connectcustomers to our network, expand and upgrade our network, offer new servicesand integrate our billing systems and customer databases.

We must also regularly service interest payments withcash flows from operations. Our ability to sustain operations, meet financialcovenants under our indebtedness, and make required payments on our indebtednesscould be impaired if we are unable to maintain or achieve various financialperformance measures. Our ability to service our capital needs, to service ourobligations under our indebtedness and to fund our ongoing operations willdepend upon our ability to generate cash.

Although we expect to generate positive cash flow inthe future, we cannot be certain that this will be the case. We believe thatour cash on hand, together with cash from operations and undrawn creditfacility, will be sufficient for our cash requirements through to at least June 30,2008. However, our cash requirements after June 30, 2008 may exceed thesesources of cash. This may require that we obtain additional financing in excessof the financing incurred in the recent refinancing transaction. We may not beable to obtain financing at all, or on favorable terms, or we may becontractually prevented by the terms of our senior notes or our senior creditfacility from incurring additional indebtedness.

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We are a holding company with no independentoperations or significant assets other than our investments in oursubsidiaries. As a result, we will depend upon the receipt of sufficient fundsfrom our subsidiaries to meet our obligations. In addition, the terms of ourand our subsidiaries’ existing and future indebtedness and the laws of thejurisdictions under which those subsidiaries are organized limit the payment ofdividends, loan repayments and other distributions to us under manycircumstances.

Our debt agreements andthe debt agreements of some of our subsidiaries contain restrictions on ourability to transfer cash between groups of our subsidiaries. As a result ofthese restrictions, although our overall liquidity may be sufficient to satisfyour obligations, we may be limited by covenants in some of our debt agreementsfrom transferring cash to other subsidiaries that might require funds. Inaddition, cross default provisions in our other indebtedness may be triggeredif we default on any of these debt agreements.

**ConsolidatedStatement of Cash Flows**

***Six Months Ended June 30, 2007 and 2006***

For the six months ended June 30, 2007, cashprovided by operating activities decreased to £224.4 million from£243.8 million for the six months ended June 30, 2006. This decreaseis primarily attributable to an increase in cash paid for interest. For the sixmonths ended June 30, 2007, cash paid for interest, exclusive of amountscapitalized, increased to £295.0 million from £219.5 million during thesame period in 2006. This increase resulted from the higher levels ofborrowings and repayment of existing facilities following the reverseacquisition of Telewest and the acquisition of Virgin Mobile.

For the six months ended June 30, 2007, cash usedin investing activities was £278.9 million compared with cash used in investing activities of£2,258.4 million for the six months ended June 30, 2006. The cashused in investing activities in the six months ended June 30, 2007 mainlyrepresents purchases of fixed assets. The cash used in investing activities inthe six months ended June 30, 2006 includes £2,013.7 million for thereverse acquisition of Telewest, net of cash acquired of £294.9 million.Purchases of fixed and intangible assets increased to £286.2 million for thesix months ended June 30, 2007 from £263.4 million for the sameperiod in 2006 primarily because of the reverse acquisition of Telewest and theacquisition of Virgin Mobile.

Cash used in financingactivities for the six months ended June 30, 2007 was £84.5 million compared to cash provided byfinancing activities of £1,731.0 million for the six months ended June 30,2006. The principal sources of cash provided by financing activities for thesix months ended June 30, 2006 were the new £3.2 billion senior creditfacilities and the £1.8 billion bridge loan offset by the repayment of ourprevious senior credit facilities. Cash used in financing activites for the sixmonths ended June 30, 2007 was primarily principal payments on long-termdebt and capital leases of £954.7 million, partially offset by new borrowings,net of financing fees, of £874.5 million.

**Long-Term Debt**

*Senior CreditFacility*

During 2006, we entered into a new senior creditfacility in an aggregate principal sterling equivalent amount of £5,275million, comprising a £3,350 million 5 year amortizing Tranche A term loanfacility, 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 61⁄2year bullet Tranche B2 term loan facility, a €500million 61⁄2 year bullet Tranche B3 term loan facility, a $650 million 61⁄2 yearbullet Tranche B4 term loan facility, a £300 million 7 year bullet TrancheC term loan facility and a £100 million 5 year multi-currency revolving loan facility.The principal under Tranches A and A1 is subject to scheduled repayment everysix months.

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In April 2007, we amended the senior creditfacility and borrowed an additional £890 million under a 51⁄2 year bullet TrancheB5 term loan facility and a 51⁄2 year Tranche B6 term loan facility. We used thenet proceeds to repay some of our obligations under the Tranche A and TrancheA1 term loan facilities. In April 2007, we also amended our senior creditfacility to among other things, (i) enable us to issue this £890 millionof additional indebtedness, (ii) relax certain of our financialconvenants, and (iii) provide us with additional flexibility, includingpermitting our Board of Directors, if they so determine, to pay increasedlevels of dividends on our common stock.

In May 2007, we made a mandatory prepayment of£73.6 million under our senior credit facility as a result of excess cash flowgenerated in 2006.

Aftergiving effect to the refinancing in April 2007 and the mandatoryprepayment of £73.6 million in May 2007 referred to above, the principalpayments are scheduled as follows (in millions):

| **Date**                 | ** ** | ** ** | ** ** | **Amount** | ** ** |
|--------------------------|------------|------------|------------|------------|------------|
| September 30,  2009 |       | £     | 403.5      |       |
| March 31,  2010     |       | £     | 526.5      |       |
| September 30,  2010 |       | £     | 579.4      |       |
| March 3,  2011      |       | £     | 966.0      |       |
| September 3,  2012  |       | £     | 2,194.8    |       |
| March 3, 2013       |       | £     | 300.0      |       |

 

The senior credit facility (other than for Tranche C)has the benefit of a full and unconditional senior secured guarantee fromVirgin Media Finance PLC as well as first priority pledges of the shares andassets of substantially all of the operating subsidiaries of Virgin MediaInvestment Holdings Limited (“VMIH”) and of receivables arising under anyintercompany loans to those subsidiaries. The senior secured guarantee ofVirgin Media Finance PLC is secured by a first priority pledge of the entirecapital stock of VMIH and the receivables under any intercompany loans fromVirgin Media Finance PLC to VMIH. The guarantee of the Tranche C of the seniorcredit facility will share in the security of Virgin Media Finance PLC granted tothe senior credit facility, but will receive proceeds only after the othertranches and will not benefit from guarantees or security granted by othermembers of the group.

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

Theapplicable interest margin for Tranche A, A1 and the revolving facility dependsupon the net leverage ratio then in effect as set forth below:

| **Leverage Ratio**                               | ** ** | ** ** | ** ** | **Margin** | ** ** |
|-------------------------------------------------------|------------|------------|------------|------------|------------|
| Less 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      | %          |       |

 

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Theapplicable interest margins for Tranche B and Tranche C are as follows(including the Tranche B5 and B6 term loan facilities):

| **Facility** | ** ** | ** ** | ** ** | **Margin** | ** ** |
|--------------|------------|------------|------------|------------|------------|
| B1           |       |       | 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 issuedU.S. dollar denominated 9.125% senior notes due 2016 with principal amountoutstanding of $550 million. The senior notes due 2016 are unsecured seniorobligations of Virgin Media Finance PLC and rank pari passu with Virgin MediaFinance’s outstanding senior notes due 2014. The senior notes due 2016 bearinterest at an annual rate of 9.125% payable on February 15 and August 15of each year, which began February 15, 2007. The senior notes due 2016mature on August 15, 2016 and are guaranteed by Virgin Media, Virgin MediaGroup LLC, VMIH and certain other intermediate holding companies in the group.

The U.S. dollardenominated 8.75% senior notes due 2014 were issued by Virgin Media Finance PLCon April 13, 2004 and have a principal amount outstanding of $425 million.The sterling denominated 9.75% senior notes due 2014 were issued by Virgin MediaFinance PLC on April 13, 2004 and have a principal amount outstanding of£375 million. The euro denominated 8.75% senior notes due 2014 were issued byVirgin Media Finance PLC on April 13, 2004 and have a principal amountoutstanding of €225 million. 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 companiesin the group.

*Restrictions underour Existing Debt Agreements*

The agreementsgoverning the senior notes and the senior credit facility significantly and, insome cases absolutely, restrict our ability and the ability of most of oursubsidiaries to:

·       incuror guarantee additional indebtedness;

·       paydividends or make other distributions, or redeem or repurchase equity interestsor subordinated obligations;

·       makeinvestments;

·       sellassets, including the capital stock of subsidiaries;

·       enterinto sale and leaseback transactions or certain vendor financing arrangements;

·       createliens;

·       enterinto agreements that restrict the restricted subsidiaries’ ability to paydividends, transfer assets or make intercompany loans;

·       mergeor consolidate or transfer all or substantially all of their assets; and

·       enter into transactionswith affiliates.

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*Debt Ratings*

Toaccess public debt capital markets, we rely on credit rating agencies to assigncorporate credit ratings. A rating is not a recommendation by the rating agencyto buy, sell or hold our securities. A credit rating agency may change orwithdraw our ratings based on its assessment of our current and future abilityto meet interest and principal repayment obligations. Lower credit ratingsgenerally result in higher borrowing costs and reduced access to debt capitalmarkets. As at June 30, 2007, the corporate debt ratings and outlookassigned by the rating agencies engaged by us are as follows:

| ** **                           | ** ** | **Corporate  Rating** | ** ** | **Outlook** | ** ** |
|--------------------------------------|------------|-----------------------|------------|-------------|------------|
| Moody’s Investors  Service Inc. |       |                  | Ba3        |        |       |   | Stable |   |   |
| Standard &  Poor’s     |       |                  | B+         |        |       |   | Stable |   |   |

 

**Cash Dividends**

On February 27, 2007and May 16, 2007, our Board of Directors approved and declared the paymentof a regular quarterly cash dividend of $0.02 and $0.03 per share on March 20,2007 and June 20, 2007, to stockholders of record as of March 12,2007 and June 12, 2007, totaling £3.3 million and £5.0 million,respectively. Future payments of regular quarterly dividends by us are at thediscretion of our Board of Directors and will be subject to our future needsand uses of cash which could include investments in operations, the repaymentof debt, and share repurchase programs.

**Off-Balance SheetArrangements**

As of June 30, 2007,we had no off-balance sheet arrangements.

**CONTRACTUALOBLIGATIONS AND COMMERCIAL COMMITMENTS**

Thefollowing table includes aggregate information about our contractualobligations as of June 30, 2007, and the periods in which payments are due(in millions).

| ** **                       | ** ** | ** ** | ** ** | **Payments Due by Period** | ** ** |
|----------------------------------|------------|------------|------------|-------------------------------------------|------------|
| **Contractual Obligations** | ** ** | ** ** | ** ** | **Total**                                 | ** ** | **Less than  1 year** | ** ** | **1-3  years** | ** ** | **3-5  years** | ** ** | **More than  5 years** | ** ** |
| Long-Term Debt  Obligations      |       | £     | 5,987.9    |                                      |       | £ | 3.1 |   |   | £ | 931.1 |   | £ | 1,545.9 |   |   | £ | 3,507.8 |   |   |
| Capital Lease  Obligations       |       | 190.6      |       |                                      | 34.6       |   |   | 32.4 |   | 33.2 |   |   | 90.4 |   |   |
| Operating Lease  Obligations     |       | 377.1      |       |                                      | 52.1       |   |   | 81.9 |   | 73.0 |   |   | 170.1 |   |   |
| Purchase  Obligations            |       | 664.9      |       |                                      | 357.1      |   |   | 162.5 |   | 82.2 |   |   | 63.1 |   |   |
| Interest  Obligations            |       | 2,551.0    |       |                                      | 477.5      |   |   | 936.4 |   | 709.6 |   |   | 427.5 |   |   |
| Total                            |       | £     | 9,771.5    |                                      |       | £ | 924.4 |   |   | £ | 2,144.3 |   | £ | 2,443.9 |   |   | £ | 4,258.9 |   |   |
| Early termination  charges       |       |       |       |                                      | £     | 39.2 |   |   | £ | 59.3 |   | £ | 26.4 |   |   | £ | — |   |   |
|                                  |            |            |            |                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Early termination charges are amounts that would bepayable in the above periods in the event of early termination during thatperiod of certain of the contracts underlying the purchase obligations listedabove.

There have been nomaterial changes in the six months ending June 30, 2007 to our commercialcommitments from what was disclosed in our Annual Report on Form 10-Kfor the year ended December 31, 2006 as filed with the SEC on March 1,2007.

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**ITEM 3.**                QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been nomaterial changes in the six months ending June 30, 2007 to the informationrequired under this Item from what was disclosed in our Annual Report on Form 10-Kfor the year ended December 31, 2006 as filed with the SEC on March 1,2007.

**ITEM 4.**                CONTROLS ANDPROCEDURES

*(a)   DisclosureControls and Procedures.*

Our management, with theparticipation of our chief executive officer and chief financial officer, hasevaluated the effectiveness of our disclosure controls and procedures (as suchterm is defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934, as amended, which we refer to as theExchange Act) as of the end of the period covered by this report. Based on suchevaluation, our chief executive officer and chief financial officer haveconcluded that, as of the end of such period, these controls and procedures areeffective to ensure that information required to be disclosed by the registrantin the reports the registrant files or submits under the Exchange Act isrecorded, processed, summarized, and reported within the time periods specifiedin the Securities and Exchange Commission’s rules and forms. Thesedisclosure controls and procedures include, without limitation, controls andprocedures designed to ensure that information required to be disclosed by theregistrant in the reports that it files or submits is accumulated andcommunicated to the registrant’s management, including our chief executiveofficer and chief financial officer, as appropriate to allow timely decisionsregarding required disclosure.

*(b)   Changesin Internal Control Over Financial Reporting*

On March 3, 2006, we completed the reverse acquisitionof Telewest and on July 4, 2006, we completed the acquisition of VirginMobile. As a consequence of our continued integration of these acquisitions, wehave made and expect to make further material changes to our internal controlover financial reporting. Other than as stated above, there were no changes inour internal control over financial reporting (as such term is defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act) during the second fiscal quarterthat have materially affected, or are reasonably likely to materially affect,our internal control over financial reporting.

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**PART II—OTHERINFORMATION**

**ITEM 1.**                    LEGALPROCEEDINGS

We are involved in disputes and litigation arising inthe ordinary course of our business. We are also involved in various disputesand legal proceedings, none of which is a material pending legal proceedingthat exclusive of interest and costs, is anticipated to exceed 10% of our andour subsidiaries’ current assets on a consolidated basis, or is otherwisereportable in response to this item.

**ITEM 1A:**           RISKFACTORS 

There have been nomaterial changes in the six months ended June 30, 2007 in the risk factorsdiscussed under “Risk Factors” and elsewhere in our Form 10-K for the yearended December 31, 2006 as filed with the SEC on March 1, 2007.

**ITEM 2.**                    UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

**ITEM 3.**                    DEFAULTSUPON SENIOR SECURITIES

None.

**ITEM 4.**                    SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

*Election ofDirectors*

Ourannual meeting of stockholders was held on May 16, 2007. The followingnominees were elected as directors, each to hold office for a period of threeyears, by the votes set forth below:

| **Nominee**          | ** ** | ** **  | ** ** | **For**    | ** ** | **Withheld** | ** ** |
|----------------------|------------|-------------|------------|------------|------------|--------------|------------|
| Jeffrey D.  Benjamin |       | 293,761,677 |       | 16,100,551 |       |
| David Elstein        |       | 282,201,554 |       | 27,660,674 |       |
| Gordon D. McCallum   |       | 283,063,617 |       | 26,798,611 |       |

 

The following directorshave terms continuing after the annual meeting of stockholders: Edwin M. Banks,Stephen A. Burch, Charles K. Gallagher, William R. Huff, James F. Mooney, andGeorge R. Zoffinger.

*Appointment ofErnst & Young LLP*

Theappointment of Ernst & Young LLP as our independent auditor for theyear ended December 31, 2007 was ratified by the votes set forth below:

| For       |   | 308,338,479 |   |
|-----------|--------|-------------|--------|
| Against   |   | 1,517,793   |   |
| Abstained |   | 5,956       |   |

 

*Approval of VirginMedia 2007 Sharesave Plan*

Theadoption of the Virgin Media 2007 Sharesave Plan was approved by the votes setforth below:

| For              |   | 226,158,367 |   |
|------------------|--------|-------------|--------|
| Against          |   | 46,480,107  |   |
| Abstained        |   | 55,937      |   |
| Broker Non-Votes |   | 37,167,817  |   |

** **

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**ITEM 5.**                    OTHERINFORMATION

As reported in our proxystatement filed with the SEC on April 13, 2007, our Compensation Committeeapproved the Virgin Media Inc. 2007 Bonus Scheme. The terms of the Scheme aredescribed in our proxy statement. No individual awards have been made orcommunicated under the Scheme.

**ITEM 6.**                    EXHIBITS
| 3.1  | Second restated certificate of incorporation of  Virgin Media Inc. (Incorporated by reference to Virgin Media Inc.’s Annual  Report on Form 10-K filed with the Securities and Exchange Commission on  March 1, 2007).                                                                                                                                                                                                                                                                                                                                                                                   |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2  | Restated by-laws of Virgin  Media Inc. (Incorporated by reference to Virgin Media Inc.’s Annual Report on  Form 10-K filed with the Securities and Exchange Commission on  March 1, 2007).                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.1 | Senior Facilities  Agreement dated March 3, 2006 as amended and restated on May 22,  2006, July 10, 2006, August 10, 2006 and April 4, 2007,  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) (Incorporated by reference to Virgin  Media Inc.’s Quarterly Report on Form 10-Q filed with the Securities and  Exchange Commission on May 10, 2007). |
| 10.2 | Form of Incentive  Stock Option Notice (Incorporated by reference to Virgin Media Inc.’s Current  Report on Form 8-K filed with the Securities and Exchange Commission on  June 1, 2007).                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.3 | Form of  Non-qualified Stock Option Notice (Incorporated by reference to Virgin Media  Inc.’s Current Report on Form 8-K filed with the Securities and Exchange  Commission on June 1, 2007).                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.4 | Form of Restricted  Stock Unit Agreement (Incorporated by reference to Virgin Media Inc.’s  Current Report on Form 8-K filed with the Securities and Exchange  Commission on June 1, 2007).                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.5 | Amendment Letter  No. 1, effective February 8, 2007, to the Trade Mark Licence  between Virgin Enterprises Limited and Virgin Media Limited dated  April 3, 2006 (previously filed).*                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 31.1 | Certification of Chief  Executive Officer, pursuant to Rule 13(a)-14(a) and  Rule 15d-14(a) of the Exchange Act.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 31.2 | Certification of Chief  Financial Officer, pursuant to Rule 13(a)-14(a) and  Rule 15d-14(a) of the Exchange Act.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 32.1 | Certifications of Chief  Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C  Section 1350, as adopted pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                            |

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*                    Filed herewith

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15 (d) of the SecuritiesExchange Act of 1934, the registrants have duly caused this report to be signedon their behalf by the undersigned thereunto duly authorized.
|                            | VIRGIN MEDIA INC.                         |
|----------------------------|-------------------------------------------|
| Date: August 8,  2007 | By:                                       | /s/ STEPHEN A. BURCH |
|                       | * *                                  | Stephen A. Burch |
|                       | * *                                  | *Chief Executive Officer* |
| Date: August 8,  2007 | By:                                       | /s/ JACQUES KERREST |
|                       | * *                                  | Jacques Kerrest |
|                       | * *                                  | *Chief Financial Officer* |
|                       | VIRGIN  MEDIA INVESTMENT HOLDINGS LIMITED |
| Date: August 8,  2007 | By:                                       | /s/ STEPHEN A. BURCH |
|                       | * *                                  | Stephen A. Burch |
|                       | * *                                  | *Chief Executive Officer* |
| Date: August 8,  2007 | By:                                       | /s/ JACQUES KERREST |
|                       | * *                                  | Jacques Kerrest |
|                       | * *                                  | *Chief Financial Officer* |

 

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