BT 2002 Annual Report Download - page 102

18. Acquisitions and disposals continued
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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 offer, 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 was being amortised over 20 years until it was partially demerged
with mmO2 and the remaining balance was written off in the 2002 ®nancial year.
Esat held 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. 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 Digifone was demerged with mmO2 in November
2001.
Esat incurred a loss after tax of IR£120 million (£95 million) for the year ended 31 December 1999.
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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. This was sold with Yell in
June 2001.
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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.
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On 5 January 2000, the company and AT&T formed their global venture named Concert for the two companies'
trans-border communications activities. The venture is jointly owned and controlled. The group contributed the majority of
its cross-border international networks, its international traf®c, its business with selected multinational customers and its
international products for business customers, as well as Concert Communications. AT&T contributed a similar set of
assets and businesses.
The book value of the assets contributed by the group to the joint venture comprised:
£m
Intangible assets 568
Tangible ®xed assets 870
Total ®xed assets 1,438
Current assets 123
Current liabilities (183)
Net current liabilities (60)
Provisions for liabilities and charges (13)
Long-term debt owed to the BT group (1,169)
Net assets contributed 196
The acquisition of the group's 50% interest in Concert comprised:
£m
Group's share of Concert's opening net assets (US GAAP) 631
Group's share of US to UK GAAP adjustments (180)
Group's share of Concert's opening net assets (UK GAAP) 451
Net assets contributed by the group to the joint venture (196)
Transition costs (96)
Unrealised gain on the contribution 159
Notes to the financial statements
BT Group Annual Report and Form 20-F 2002 101