BT 2001 Annual Report Download - page 96

16. Acquisitions and disposals (continued)
(e) On 10 November 1999, BT acquired the 40% interest in Cellnet Group Limited, its mobile cellular phone operator, that it did
not already own for »3,150 million, excluding »23 million expenses. Goodwill arising on acquisition of Cellnet Group Limited is
being amortised over 20 years.
The consolidated results of Cellnet Group Limited for the years ended 31 March 1999 and 2000 are summarised as follows:
2000
£m
1999
£m
Group turnover 2,435 1,410
Total operating profit 97 165
Exceptional items included in total operating profit:
Impairment of analogue equipment and network closure costs (note 5) (47) –
Profit before taxation 49 117
Taxation (23) (39)
Minority interests (2) –
Profit for the financial year 24 78
(f) At the end of March 2000, BT acquired control of Esat Telecom Group plc (Esat), a leading telecommunications operator in
Ireland. An interest comprising 70% of the company was acquired under a public o¡er, the consideration for which passed
in April 2000. In January 2000, BT acquired 13% of the company from its then chairman and chief executive for US$287 million
(»174 million) and a further 12% interest from a major shareholder for US$271 million (»179 million). Of the total consideration,
»179 million was settled in cash in January 2000, »1,029 million in cash in April 2000 and »187 million was satis¢ed by loan
notes repayable at the option of the holder not later than 30 April 2005. The balance of the consideration covered the remaining
interest which was compulsorily acquired and compensation to employee share option holders. Goodwill arising on acquisition of
Esat is being amortised over 20 years.
Esat holds a 49.5% interest in Esat Digifone. In January 2000, BT acquired a further 1% interest in this company for
»15 million. At 31 March 2000 and 2001, Telenor owned the remaining 49.5% interest. In the table above, the assets acquired and
the liabilities assumed comprise those of both Esat and Esat Digifone. Since BT acquired control just before the 2000 ¢nancial
year end, only a preliminary assessment of the fair values of Esat’s assets and liabilities, which were based on 31 December 1999
balance sheets, had been undertaken. The fair value adjustment relates to an uplift of »69 million to the carrying value of Esat’s
debt to its market value on 30 March 2000. During the year ended 31 March 2001, in the ¢nal assessment of fair values, the fair
values of the net liabilities were increased by »75 million, the fair value of the consideration was increased by »38 million and
goodwill increased by »113 million to »1,878 million.
Esat incurred a loss after tax of IR»120 million (»95 million) for the year ended 31 December 1999.
Under an agreement with Telenor made in 2000, Telenor had the right to exchange its 49.5% interest in Esat Digifone for a
33% interest in Esat and a right to purchase from BT such additional shares as would result in Telenor having an almost 50%
interest in Esat at a total price of US$624 million plus interest. If Telenor did not exercise this right, Telenor agreed to sell its
interest in Esat Digifone to the group for US$1,238 million. In February 2001, Telenor decided to sell its interest in Esat Digifone
to the group and this transaction was completed in April 2001 for »856 million.
(g) On 31 August 1999, BT acquired Yellow Book USA, an independent classi¢ed directory publisher in the USA, for
»415 million. Yellow Book’s loss after tax for the year ended 31 October 1998 was »5 million.
(h) On 31 August 1999, BT acquired Syntegra (USA) (previously named Control Data Systems), an international systems
integration company based in the USA, for »213 million. Goodwill arising on acquisition of Syntegra (USA) is being amortised
over 20 years. Syntegra (USA)’s loss after tax for the year ended 31 December 1998 was »37 million.
Notes to the financial statements
96 BT Annual report and Form 20-F