BT 2009 Annual Report Download - page 39

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ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
BUSINESS AND FINANCIAL REVIEWS
37BT GROUP PLC ANNUAL REPORT & FORM 20-F
BUSINESS AND FINANCIAL REVIEWS FINANCIAL REVIEW
2009 2008 2007
£m £m £m
Other operating income
Net loss on sale of group
undertakings 13 10 5
Profit on sale of non current
asset investments – – (2)
13 10 3
Operating costs
BT Global Services
restructuring charges
– Networks and products
rationalisation 183 – –
– People and property 51 – –
– Intangible asset
impairments 46 – –
Group restructuring charges 65 402 –
21CN asset impairment
and related charges 50 – –
Property rationalisation costs – – 64
Creation of Openreach and
delivery of the
Undertakings – 53 30
Write off of circuit
inventory and other
working capital balances – 74 65
Costs associated with
settlement of
open tax years – – 10
395 529 169
Finance income
Interest on settlement of
open tax years – – (139)
Associates and joint
ventures
Reassessment of carrying
value of associate (36) – –
Profit on sale of associate – (9) (22)
Net specific items charge
before tax 372 530 11
Tax credit in respect of
settlement of
open tax years – (40) (938)
Tax credit on
re-measurement of
deferred taxes – (154) –
Tax credit on specific
items above (43) (149) (41)
Net specific items charge
(credit) after tax 329 187 (968)
The specific items recognised in 2009 are set out below.
A loss on disposal of £13m (2008: £10m, 2007: £5m) arose from
the disposal of a business. The £10m and £5m losses in 2008 and
2007, respectively, relate principally to the disposal of the
group’s satellite broadcast business.
As a result of the BT Global Services operational review,
(described on page 11) the group has recorded restructuring
charges of £280m, with further costs of around £420m expected
to be recorded over the next two years, the majority of which will
be in 2010. These charges are expected to result in a net cash
outflow of approximately £260m in 2010 and £50m in 2011.
The main components of the specific item are set out below.
– Networks and products rationalisation – as a result of the
rationalisation of the legacy networks, including the associated
systems and processes, a charge of £183m has been
recognised, representing the difference between the
recoverable amount and the carrying value of the assets
impacted by the rationalisation. In addition, further dual
running and transition costs of approximately £70m are
expected to be incurred over the next two financial years as
the rationalisation programme is completed.
– People and property – a charge of £51m has been recognised,
relating to the costs associated with the people and property
aspects of the restructuring and rationalisation. The main
components of the charge are leaver costs and property exit
costs. Further people leaver related costs of approximately
£350m are expected to be incurred over the next two financial
years.
– Intangible asset impairment – a charge of £46m has been
recognised, reflecting the costs associated with rationalising
the services that are offered to customers and the brands
under which customers are served. The charge includes the
write down of brands and other acquired intangible assets that
no longer have an economic value to the business.
A charge of £65m (2008: £402m, 2007: £nil) was recognised in
respect of restructuring costs relating to the group’s transformation
and reorganisation activities. The costs mainly comprise leaver
costs, property exit and transformation programme costs.
A charge of £50m was recognised, comprising £31m of asset
impairments and £19m of associated costs, following the group's
review of its 21CN programme and associated voice strategy in the
light of the move to a customer-led roll out strategy and focus on
next generation voice service developments of fibre based
products.
A credit of £36m was recognised in respect of a reassessment of
the value of our share of the net assets of an associated
undertaking.
A tax credit of £43m (2008: £149m, 2007: £41m) arose on
specific items.