Virgin Media 2007 Annual Report Download - page 30

environmental sustainability. We believe that our brand, people and products present a clear
opportunity for using CR as a point of differentiation both in our sector and beyond.
The need to engage our people, which is a key priority for senior management, has been
augmented by the strengthening of policies on issues such as employee well-being and learning and
development. Similarly, we have worked alongside the Virgin Group’s charitable arm, Virgin Unite, in
developing a series of partnerships with charities such as Foyer and Lucca Leadership that enable us to
use our people, products and expertise to generate social benefit. We have focused on generating an
internal structure, consisting of regional and local charity champions, through which we can significantly
accelerate our investment in charities and communities.
We have sought to gain an accurate understanding of our environmental impact by establishing
baseline data in a number of key areas such as energy, transport and waste. We are also committed to
the principle of sustainable procurement, details of which have been articulated in a new code of
conduct that has formed the basis of a constructive dialogue with suppliers around issues such as labor
standards and environmental sustainability.
Seasonality
Some revenue streams are subject to seasonal factors. For example, fixed line telephone usage
revenue by customers and businesses tends to be slightly lower during summer holiday months. Our
customer churn rates include persons who disconnect their service because of moves, resulting in a
seasonal increase in our churn rates during the summer months when higher levels of U.K. house
moves occur and students leave their accommodation between school years. In addition, our Content
segment includes Virgin Media TV, which has a seasonally higher programming spend in the fourth
quarter, and sit-up’s home shopping channels, which earn potentially higher revenues in the fourth
quarter, reflecting the Christmas holiday period, which is common in the retail industry. In our Mobile
segment, fourth quarter customer acquisition and retention costs generally increase due to the
important Christmas period and Mobile ARPU generally decreases in the first quarter of each year due
to the lower number of days in February and lower usage after the Christmas period.
Research and Development
Our research and development activities involve the analysis of technological developments
affecting our cable television, telephone and telecommunications business, the evaluation of existing
services and sales and marketing techniques and the development of new services and techniques.
Patents, Trademarks, Copyrights and Licenses
We do not have any material patents or copyrights nor do we believe that patents play a material
role in our business. We own and have the right to use registered trademarks, which in some cases are,
and in others may be, of material importance to our business, including the exclusive right to use the
‘‘Virgin’’ name and logo in connection with our corporate activities and in connection with the activities
of our consumer and a large part of our content businesses under license from Virgin Enterprises
Limited. This license with Virgin Enterprises Limited is for a 30-year term and exclusive to us within
the U.K. and Ireland. The license entitles us to use the ‘‘Virgin’’ name for the TV, broadband internet,
telephone and mobile phone services we provide to our residential customers, as well as the acquisition
and branding of sports, movies and other premium television content and the sale of certain
communications equipment, such as set top boxes and cable modems. For our content operations, we
are entitled to use the ‘‘Virgin Media Television’’ name for the creation, distribution and management
of our wholly-owned television channels, and to use the ‘‘Virgin’’ name for our recently launched
television channel, Virgin 1. Our license agreement provides for an annual royalty of 0.25% of certain
consumer and content revenues, subject to a minimum annual royalty of £8.7 million, except for
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