BT 2009 Annual Report Download - page 99

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
97BT GROUP PLC ANNUAL REPORT & FORM 20-F
FINANCIAL STATEMENTS
4. Specific items
The group separately identifies and discloses significant one off or unusual items (termed ‘specific items’). This is consistent with the way
that financial performance is measured by management and we believe it assists in providing a meaningful analysis of the trading results of
the group. A definition of specific items is provided on page 79.
2009 2008 2007
£m £m £m
Other operating income
Net loss on sale of group undertakingsa13 10 5
Profit on sale of non current asset investmentsb– – (2)
13 10 3
Operating costs
BT Global Services restructuring charges:
– Networks and products rationalisationc183––
– People and propertyc51––
– Intangible asset impairmentsc46––
280––
Restructuring costs – group transformation and reorganisation activitiesd65 402 –
Property rationalisation costse––64
Creation of Openreach and delivery of the Undertakingsf–5330
Write off of circuit inventory and other working capital balancesg–7465
21CN asset impairment and related chargesh50––
Costs associated with settlement of open tax yearsi––10
395 529 169
Finance income
Interest on settlement of open tax yearsi– – (139)
Share of results of associates and joint ventures
Reassessment of carrying value of associatej(36) – –
Profit on disposal of associates and joint venturesk– (9) (22)
(36) (9) (22)
Net specific items charge before tax 372 530 11
Tax credit in respect of settlement of open tax yearsi– (40) (938)
Tax credit on re-measurement of deferred taxl– (154) –
Tax credit on specific items above (43) (149) (41)
Net specific items charge (credit) after tax 329 187 (968)
aIn 2009, a £13m (2008: £10m, 2007: £5m) loss on disposal arose from exiting a business. The £10m and £5m losses in 2008 and 2007, respectively, relate principally to the
disposal of the group’s satellite broadcast business.
bIn 2007, the group disposed of some non-core investments, resulting in a profit of £2m (2009 and 2008: £nil).
cIn 2009, as a result of the BT Global Services operational review, the group recorded restructuring charges of £280m (2008 and 2007: £nil). The main components of the
specific item are set out below.
– Networks and products rationalisation – as a result of the decision to rationalise the legacy networks, including the associated systems and processes, a charge of £183m
(2008 and 2007: £nil) has been recognised, representing the difference between the recoverable amount and the carrying value of the assets impacted by the rationalisation.
– People and property – a charge of £51m (2008 and 2007: £nil) has been recognised, relating to the costs associated with the restructuring and rationalisation of people and
property. The main components of the restructuring charge are leaver costs and property exit costs.
– Intangible asset impairments – a charge of £46m (2008 and 2007: £nil) has been recognised, reflecting the costs associated with rationalising the services that are offered to
customers and the brands under which customers are served. The charge includes the write down of brands and other acquired intangible assets that no longer have an
economic value to the business.
dIn 2009 and 2008, respectively, the group incurred costs of £65m and £402m (2007: £nil) in respect of the group’s transformation and reorganisation activities. The costs
mainly comprised leaver costs, property exit and transformation programme costs.
eIn 2007, the group incurred property rationalisation costs of £64m (2009 and 2008: £nil).
fIn 2008 and 2007, respectively, charges of £53m and £30m (2009: £nil) were recognised in relation to further estimated costs required to create Openreach and deliver the
Undertakings agreed with Ofcom, particularly with regard to the introduction of equivalence of input systems.
gIn 2008 and 2007, respectively, the group recorded charges of £74m and £65m (2009: £nil), recognised as a result of the completion of a review of circuit inventory and other
working capital balances.
hIn 2009, a £50m (2008 and 2007: £nil) charge was recognised, comprising £31m of asset impairments and £19m of associated costs, following the group’s review of its 21CN
programme and associated voice strategy in the light of the move to a customer-led roll out strategy and focus on next generation voice service developments of fibre based
products.
iIn 2008, the group agreed an outstanding tax matter relating to a business disposed of in 2001, the impact of which was a tax credit of £40m, and this closed all open items in
relation to the settlement reached in 2007. In 2007, the group agreed the settlement of substantially all open UK tax matters relating to ten tax years up to and including
2004/05 with HM Revenue and Customs (HMRC). In 2007, the total impact of the settlement was a net credit of £1,067m, comprising a tax credit of £938m representing those
elements of the tax charges previously recognised which were in excess of the final agreed liability, interest income of £139m and operating costs of £10m representing the
costs associated with reaching this agreement.
jIn 2009, a £36m credit (2008 and 2007: £nil) was recognised in respect of a reassessment of the value of the group’s share of the net assets of an associated undertaking.
kIn 2008 and 2007, respectively, profit on the sale of associates of £9m and £22m (2009: £nil) were recognised. In 2008, the £9m profit arose from the receipt of contingent
consideration from the disposal of the group’s interest in e-peopleserve. In 2007, the £22m profit arose from the disposal of 6% of the group’s equity interest in the associate
Tech Mahindra Limited.
lIn 2008, a tax credit of £154m was recognised for the re-measurement of deferred tax balances as a result of the change in the UK statutory corporation tax rate from 30% to
28%, effective in 2009.