Virgin Media 2006 Annual Report Download - page 176

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Related Party Transactions
We are a wholly−owned subsidiary of Virgin Media. We charge Virgin Media and our other affiliates for operating costs and
selling, general and administrative expenses incurred by us on their behalf. The following information summarizes our significant
related party transactions with Virgin Media and its affiliates (in millions):
Year ended December 31,
2006 2005 2004
Operating costs £ 47.7 £ 47.3 £ 38.4
Selling, general and administrative expenses 41.9 35.4 29.8
£ 89.6 £ 82.7 £ 68.2
The above recharges are recorded in operating costs and selling, general and administrative expenses and offset the respective
costs incurred.
Intercompany interest is charged from/to us by Virgin Media and its affiliates based on intercompany debt balances.
Intercompany interest income and expense is calculated using a weighted average interest rate of external borrowings by Virgin Media
and its affiliates. The following information summarizes the amounts of intercompany interest charged from and to us by Virgin
Media and its affiliates, which is included within interest income and expense in our statements of operations (in millions):
Year ended December 31,
2006 2005 2004
Interest income £ 7.4 £ 2.1 £ —
Interest expense 106.8 94.1 132.0
The amounts due to Virgin Media and its affiliates included in our consolidated balance sheets as of December 31, 2006 and
2005 were as follows (in millions):
December 31,
2006 2005
Due from affiliates £ 650.3 £ 61.0
Interest payable 63.9 42.6
Amounts due to affiliates — 111.8
Long term debt 1,353.1 1,128.5
Virgin Enterprises Limited
On April 3, 2006, we entered into a trademark license agreement with Virgin Enterprises Limited under which we are entitled to
use certain Virgin trademarks within the United Kingdom and Ireland. The agreement is an exclusive license covering a number of
aspects of our consumer and a large part of our content businesses, including the provision of communications services (such as
internet, television, fixed line telephony, and upon the acquisition of Virgin Mobile, mobile telephony), the acquisition and branding
of sports, movie and other premium television content, and the branding and sale of certain communications equipment related to our
consumer businesses, such as set top boxes and cable modems. The agreement provides for a royalty of 0.25% per annum of our
revenue from the relevant businesses, subject to a minimum annual royalty of £8.5 million (the royalty would have been £9 million
based on our
F−97
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007