BT 2010 Annual Report Download - page 108

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
106 BT GROUP PLC ANNUAL REPORT & FORM 20-F
5. 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 reported to the Board and the
Operating Committee and it assists in providing
a meaningful analysis of the trading results of the group. A definition of specific items is provided on page 87.
2010 2009 2008
Year ended 31 March £m £m £m
Revenue
Regulatory settlementa52––
Other operating income
(Profit) loss on disposal of a businessb(2) 13 10
Operating costs
BT Global Services restructuring charges:
– Networks, products and procurement channels rationalisationc142 183 –
– People and propertyc132 51 –
– Intangible asset impairments and other chargesc27 46 –
301 280 –
Property rationalisation costsd121––
Costs associated with settlement of open tax yearse5––
Restructuring costs – group transformation and reorganisation activitiesf– 65 402
21CN asset impairment and related chargesg–50 –
Creation of Openreach and delivery of the Undertakingsh––53
Write off of circuit inventory and other working capital balancesi––74
427 395 529
Finance income
Interest on settlement of open tax yearse(11) ––
Share of results of associates and joint ventures
Impact of renegotiated supply contracts on associatej(29) – –
Reassessment of carrying value of associatek– (36) –
Loss (profit) on disposal of associates and joint venturesl12 – (9)
(17) (36) (9)
Net specific items charge before tax 449 372 530
Tax credit in respect of settlement of open tax yearse(230) – (40)
Tax credit on re-measurement of deferred taxm– – (154)
Tax credit on specific items above (112) (43) (149)
Net specific items charge after tax 107 329 187
aIn 2010 a charge of £52m was recognised reflecting an Ofcom determination in relation to 2Mb/s partial private circuits.
bIn 2010 a profit of £2m arose on disposal of a business. In 2009 and 2008 respectively, a £13m and £10m loss on disposal arose from exiting businesses.
cIn 2010 and 2009 respectively, the group recognised BT Global Services restructuring charges of £301m and £280m. The main components of the charges are set out below:
–Networks, products and procurement channels rationalisation charges of £142m (2009: £183m and 2008: £nil). In 2010 this included a payment of £127m made to Tech
Mahindra for the renegotiation of certain supply contracts as part of the rationalisation of procurement channels.
– People and property charges of £132m (2009: £51m and 2008: £nil) principally comprising leaver costs and property exit costs.
– Intangible asset impairments and other charges of £27m (2009: £46m and 2008: £nil) reflecting the costs associated with rationalising the services that are offered to
customers and the brands under which customers are served.
dIn 2010 £121m (2009 and 2008: £nil) of property rationalisation charges were recognised in relation to the rationalisation of the group’s UK property portfolio. The charge
recognised relates to properties which have been vacated and as a result of which, the associated leases have become onerous. This programme is expected to continue over the
next two years. Including the charge recognised in 2010, the total cost of the rationalisation programme is expected to be around £300m.
eIn 2010 the group agreed substantially all outstanding tax matters with HMRC relating to the 2006, 2007 and 2008 tax years. Specific items include a tax credit of £230m,
associated interest of £11m and costs of £5m in connection with reaching the agreement. In 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.
fIn 2009 and 2008 respectively, the group incurred costs of £65m and £402m in respect of the group’s transformation and reorganisation activities. The costs mainly comprised
leaver costs, property exit and transformation programme costs.
gIn 2009 a £50m 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.
hIn 2008 a charge of £53m was recognised in relation to further estimated costs to create Openreach and deliver the Undertakings agreed with Ofcom.
iIn 2008 a charge of £74m was recognised as a result of the completion of a review of circuit inventory and other working capital balances.
jIn 2010 the group recognised a specific item credit of £29m in connection with the £127m payment to its associate Tech Mahindra, as described above.
kIn 2009 a credit of £36m was recognised in respect of a reassessment of the value of the group’s share of the net assets of an associate.
lIn 2010 a £12m loss on disposal of an indirect interest in Tech Mahindra was recognised. In 2008, a £9m profit on the sale of an associate was recognised.
mIn 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.