BT 2009 Annual Report Download - page 123

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ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
121BT GROUP PLC ANNUAL REPORT & FORM 20-F
FINANCIAL STATEMENTS
28. Acquisitions continued
BT Retail
During 2008, the group acquired a number of smaller subsidiary undertakings that now form part of BT Retail. These acquisitions include
principally, Lynx Technology Holdings Limited, Basilica Group Limited and Brightview plc. The total purchase consideration paid for these
subsidiaries was £71m, including £8m deferred, contingent consideration. The group acquired 100% of each company. The combined net
assets acquired in these transactions and the goodwill arising is as follows:
Book Fair value
value adjustments Fair value
£m £m £m
Intangible assets –2323
Property, plant and equipment 4–4
Receivables 22 (1) 21
Cash and cash equivalents 3–3
Payables (25) (2) (27)
Net assets acquired 42024
Goodwill 47
Total consideration 71
Intangible assets recognised in respect of these acquisitions comprise customer relationships and brand names. Goodwill arising on these
acquisitions principally relates to anticipated cost and revenue synergies and the assembled workforce. During 2009, the determination of
fair value in respect of these acquisitions has been finalised. No adjustments have been made to the balances previously reported.
29. Retirement benefit plans
Background
The group offers retirement benefit plans to its employees. The group’s main scheme, the BT Pension Scheme (BTPS), is a defined benefit
scheme. This scheme has been closed to new entrants since 31 March 2001 when it was replaced by a defined contribution scheme, the BT
Retirement Plan (BTRP). On 1 April 2009 BT set up the BT Retirement Saving Scheme, a contract based defined contribution arrangement
to which BTRP members are being invited to transfer their accumulated assets. The total pension cost of the group for the year, included
within staff costs, was £544m (2008: £626m, 2007: £643m). The total cost associated with the group’s defined benefit pension schemes
was £459m (2008: £576m, 2007: £600m).
Defined contribution schemes
The income statement charge in respect of defined contribution schemes represents the contribution payable by the group based upon a
fixed percentage of employees’ pay. The total pension cost for the year in respect of the group’s main defined contribution scheme was
£47m (2008: £37m, 2007: £28m) and £4m (2008: £3m, 2007: £3m) of contributions were outstanding at 31 March 2009.
Defined benefit schemes
BT Pension Scheme Trustees Limited administers and manages the scheme on behalf of the members in accordance with the terms of the
Trust Deed of the scheme and relevant legislation. Under the terms of the trust deed of the BTPS, there are nine trustee directors
appointed by the group, five of which appointments are made with the agreement of the relevant trade unions, including the Chairman of
the Trustees. Four trustee directors other than the Chairman are appointed by BT on the nomination of the relevant trade unions. Two of
the trustee directors will normally hold senior positions within the group, and two will normally hold (or have held) senior positions in
commerce or industry. Subject to there being an appropriately qualified candidate, there should be at least one current pensioner or
deferred pensioner of the BTPS as one of the trustee directors. Trustee directors are appointed for a three-year term, but are then eligible
for re-appointment.
Measurement of scheme assets and liabilities – IAS 19
Scheme assets are measured at the bid market value at the balance sheet date. The liabilities of the BTPS are measured by discounting the
best estimate of future cash flows to be paid out by the scheme using the projected unit method. Estimated future cash flows are
discounted at the current rate of return on high quality corporate bonds of an equivalent term to the liability. Actuarial gains and losses are
recognised in full in the year in which they occur in the statement of recognised income and expense.