Virgin Media 2009 Annual Report Download - page 145

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15—Related Party Transactions (Continued)
Under a related agreement, Virgin Enterprises Limited has the right to propose a candidate to fill a
seat on our Board of Directors. Pursuant to this right, Virgin Enterprises Limited proposed Gordon
McCallum who was appointed to our Board of Directors. During the years ended December 31, 2009,
2008 and 2007, respectively, we incurred expenses of £9.0 million, £8.9 million and £8.7 million for
charges in respect of brand licensing and promotion of which £2.3 million and £4.5 million was payable
at December 31, 2009 and 2008, respectively.
Subsequent to the year end, ntl:Telewest Business announced that it would rebrand using the
Virgin trade marks to ‘‘Virgin Media Business’’. Virgin Media has entered into a trade mark license
with Virgin Enterprises Ltd under which an annual royalty is payable of 0.25% of revenues from our
business division, subject to a minimum payment of £1.5 million.
Virgin Retail Limited
We had previously identified Virgin Retail Limited, an affiliate of Virgin Enterprises Limited, as a
related party to us. We had agreements with Virgin Retail 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. On September 17, 2007, the Virgin Group sold
its interest in Virgin Megastores and it therefore ceased to be a related party. As part of the
agreement, Virgin Retail Limited passed through proceeds on sales of mobile handsets, vouchers and
other stock items to us. We recognized revenues totaling £6.5 million and incurred expenses of
£2.3 million in connection with this agreement during the period from January 1, 2007 to
September 17, 2007.
Other Virgin Companies
As a licensee of the ‘‘Virgin’’ brand name, we participate in mutually beneficial activities with
other Virgin companies. These arrangements are in the ordinary course of business and believed to be
on arm’s length terms.
UKTV Joint Ventures
Through our wholly owned subsidiary, Flextech Broadband Limited, we own a 50% equity
investment in the UKTV joint venture companies. We have therefore identified the UKTV joint
venture companies as related parties to us. We also carry the UKTV channels in our pay television
packages available to our customers.
As at December 31, 2009 and 2008, included in the balance sheet were amounts related to our
share of net assets, loans receivable, redeemable preference shares, and other payables and receivables
in respect of the UKTV joint ventures totaling £359.9 million and £353.5 million, respectively.
We pay UKTV for purchases of television programming rights and receive payments in respect of
advertising and other business support services provided to UKTV. During the years ended
December 31, 2009, 2008 and 2007, the net expense recognized in respect to these transactions through
the consolidated statement of operations totaled £24.3 million, £22.1 million and £21.4 million,
respectively. These amounts are settled on a net basis at regular intervals.
During the years ended December 31, 2009, 2008 and 2007, we received cash payments from
UKTV for loan principal payments, interest, dividends and consortium tax relief totaling £21.1 million,
£46.7 million and £38.3 million, respectively.
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