Virgin Media 2006 Annual Report Download - page 177

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Related Party Transactions (Continued)
combined historical NTL and Telewest 2005 revenues including revenue from Virgin Mobile and our subsidiary Virgin.net). The
agreement replaces the existing license agreement under which our subsidiary Virgin.net was entitled to use the Virgin brand in
relation to its internet business. The agreement has a term of 30 years. It can be terminated after 10 years on one year’s notice, and it is
subject to earlier termination by us in certain other circumstances, including (subject to specified payments) upon a change of control.
The agreement also entitled Virgin Media and its subsidiaries to use a corporate name that includes the Virgin name. Under a related
agreement, Virgin Enterprises Limited has the right to propose a candidate to fill a seat on our board. Pursuant to this right, Virgin
Enterprises Limited proposed Gordon McCallum who was appointed to Virgin Media’s board. During the year ended December 31,
2006, we incurred expenses of £5.8 million for charges in respect of brand licensing and promotion of which £2.5 million was payable
at the year end.
With effect from February 8, 2007 we agreed in principle with Virgin Enterprises Limited to extend the trademark license
agreement to enable a portion of our content business, formerly known as Flextech Television Limited, to use the name Virgin Media
Television to create, manage and distribute our wholly−owned television program services, such as Living and Bravo. The proposed
agreement provides for a royalty of 0.25% per annum of our content revenue, subject to a minimum annual royalty of £200,000.
We also have agreements with Virgin Retail Limited, an affiliate of Virgin Enterprises Limited, in respect to sales of our
communications services (such as internet, television, fixed line telephone and mobile telephone services), through the various Virgin
Megastores outlets. We incurred expenses of £1.8 million for charges in respect to these stores of which £1.2 million was payable at
the year end. As part of the agreement, Virgin Retail Limited pass through proceeds on sales of handsets, vouchers and other stock
items to us. We recognized revenues totaling £5.7 million during the year of which £2.2 million was receivable at the end of the year.
As a licensee of the “Virgin’’ brand name, we participate in mutually beneficial activities with other “Virgin’’ branded
companies. These arrangements are in the ordinary course of business and on arm's length terms.
17. Commitments and Contingent Liabilities
At December 31, 2006, we were committed to pay £605.1 million for equipment and services. This amount includes
£320.2 million for operations and maintenance contracts and other commitments from January 1, 2008 to 2016. The aggregate amount
of the fixed and determinable portions of these obligations for the succeeding five fiscal years and thereafter is as follows (in
millions):
Year ended December 31:
2007 £ 284.9
2008 72.2
2009 97.0
2010 64.5
2011 37.2
Thereafter 49.3
£ 605.1
F−98
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007