BT 2008 Annual Report Download - page 124

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BT Group plc Annual Report & Form 20-F 123
28. Acquisitions continued
Year ended 31 March 2008
BT Global Services
Comsat International
On 14 June 2007, the group acquired Comsat International Inc (Comsat International) through the purchase of 100% of the issued
share capital of its parent company, CI Holding Corporation. The total purchase consideration was £130 million, including £5 million
deferred, contingent consideration. The net assets acquired in the transaction and the goodwill arising are as follows:
Book
value
Fair value
adjustments Fair value
£m £m £m
.....................................................................................................................................................................................................................................
Intangible assets –1111
Property, plant and equipment 70 1 71
Other non current assets 4–4
Receivables 31 – 31
Cash and cash equivalents 3–3
Payables (58) (5) (63)
Net assets acquired 50 7 57
Goodwill 73
Total consideration 130
Intangible assets recognised in respect of Comsat International comprise customer relationships and a brand. Goodwill represents
Comsat’s geographic presence and capabilities, as well as the assembled workforce. The fair value adjustments relating to Comsat
International were provisional at 31 March 2008 and will be finalised in 2009.
From the date of acquisition, Comsat International has contributed revenue of £82 million and a net profit of £2 million to the
group’s results. If the acquisition had occurred on 1 April 2007, the group’s revenue would have been higher by £20 million and
profit for the year would have been higher by £1 million.
Other
During the year, the group has acquired a number of smaller subsidiary undertakings that now form part of BT Global Services.
These acquisitions include principally, Frontline Technologies Corporation Limited, i2i Enterprise Private Limited, Net 2S SA (Net 2S)
and I.NET SpA (I.NET). The total purchase consideration paid for these subsidiaries was £279 million, including £53 million deferred,
contingent consideration. The group acquired 100% of each company, with the exception of Net 2S, where the group had acquired
91% of the issued share capital at 31 March 2008, and I.NET where the group increased its holding by 25% to 90% of the issued
share capital in the year. An element of the purchase consideration for Net 2S was satisfied through the issue of shares in BT Group
plc. A total of 10,572,177 shares were issued, with a fair value of £22 million. The fair value of the shares issued was determined by
reference to the BT Group plc share price on the date the shares were issued. The combined net assets acquired in these
transactions and the goodwill arising is as follows:
Book
value
Fair value
adjustments Fair value
£m £m £m
.....................................................................................................................................................................................................................................
Intangible assets 53540
Property, plant and equipment 13 (2) 11
Associates and joint ventures 12 – 12
Receivables 111 – 111
Cash and cash equivalents 13 – 13
Payables (123) – (123)
Minority interest 15 – 15
Net assets acquired 46 33 79
Goodwill 200
Total consideration 279
Intangible assets recognised in respect of these acquisitions comprise customer relationships, brands and proprietary technology.
Goodwill principally represents the geographical presence and capabilities of the acquired companies, as well as the assembled
workforce and anticipated synergies. The fair value adjustments in respect of these acquisitions were provisional at 31 March 2008
and will be finalised in 2009.
From the date of acquisition, these acquisitions have contributed revenue of £74 million and a net profit of £2 million to the
group’s results. If the acquisitions had occurred on 1 April 2007, the group’s revenue would have been higher by £209 million and
profit for the year would have been higher by £4 million.
Financial statements