BT 2007 Annual Report Download - page 116

28. ACQUISITIONS continued
The fair value adjustments relating to the acquisition of INS are provisional due to the timing of the transaction and will be finalised
during the 2008 financial year, which will include the identification and valuation of any intangible assets acquired through the
transaction. Accordingly, the value of any acquired intangible assets are aggregated within goodwill.
From the date of acquisition, INS has contributed to the group’s results revenue of £5 million and a net loss of £1 million. If the
acquisition had occurred on 1 April 2006, the group’s revenue would have been higher by £63 million, and profit for the year would
have been lower by £5 million (2006: £74 million higher and £5 million lower, respectively).
PlusNet
On 16 November 2006, the group announced an offer to acquire 100% of the share capital of PlusNet plc. The offer became
unconditional on 23 January 2007 once sufficient acceptances had been received from shareholders and all regulatory clearances
were obtained. 23 January 2007 is therefore considered to be the date of acquisition. The net assets acquired in the transaction and
the goodwill arising were as follows:
Book and
fair value
£m
Intangible assets 5
Property, plant and equipment 5
Receivables 1
Cash and cash equivalents 5
Payables (7)
Net assets acquired 9
Goodwill 57
Total consideration 66
The fair value adjustments relating to the acquisition of PlusNet are provisional due to the timing of the transaction and will be
finalised during the 2008 financial year, which will include the identification and valuation of any intangible assets acquired through
the transaction. Accordingly, the value of any acquired intangible assets are aggregated within goodwill.
From the date of acquisition, PlusNet has contributed to the group’s results revenue of £7 million and a net income of £nil. If the
acquisition had occurred on 1 April 2006, the group’s revenue would have been higher by £7 million, and profit for the year would
have been higher by £3 million (2006: £9 million higher and £1 million higher, respectively).
Other acquisitions
During the year ended 31 March 2007, the group acquired a number of other smaller subsidiary undertakings including principally
dabs.com plc, I3IT Limited and Counterpane LLC. The combined net assets and goodwill arising in respect of these acquisitions were
as follows:
Book value
Fair value
adjustments Fair value
£m £m £m
Intangible assets –1212
Property, plant and equipment 7 (1) 6
Inventory 4–4
Receivables 21 – 21
Cash and cash equivalents 14 – 14
Payables (29) – (29)
Minority interest 12 – 12
Net assets acquired 29 11 40
Goodwill 104
Total consideration 144
The fair value adjustments in respect of intangible assets are due to the recognition of £8 million and £4 million in respect of a
brand and customer relationships, respectively. The assessment of the fair value of the net assets of Counterpane LLC are provisional
at 31 March 2007 and will be finalised during the 2008 financial year. This will include the identification and valuation of any
intangible assets acquired through the transaction.
From the date of acquisition, the companies have contributed to the group’s results revenue of £180 million and a net profit of
£5 million. If the acquisitions had occurred on 1 April 2006, the group’s revenue would have been higher by £15 million, and profit
for the year would have been lower by £4 million (2006: £159 million higher and £3 million higher, respectively). Goodwill in
respect of these acquisitions comprises principally the fair value of the skills and expertise of the acquired companies’ workforce and
both anticipated revenue and cost synergies.
BT Group plc Annual Report & Form 20-F 115
Financial statements