|
Interests
in associates and joint ventures (a)
|
||||||
| ---------------------------------------------------- | ||||||
|
Share
|
||||||
| 19. Fixed asset investments |
of
post
|
|||||
|
acquisition
|
Other
|
|||||
|
profits
|
participating
|
Other
|
||||
|
Shares
|
Loans
|
(losses)
|
interests
|
investments(g)
|
Total
|
|
| Group |
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
| Cost | ||||||
| -------------------------------------------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------ |
| Balances at 1 April 1998 |
1,533
|
151
|
(286)
|
164
|
3,381
|
4,943
|
| Additions |
1,209
|
112
|
-
|
65
|
38
|
1,424
|
| Disposals |
-
|
-
|
-
|
-
|
(3,059)
|
(3,059)
|
| Share of losses less retained profits for the year |
-
|
-
|
(364)
|
-
|
-
|
(364)
|
| Repayments and other transfers |
146
|
(17)
|
(16)
|
(66)
|
(147)
|
(100)
|
| Currency movements |
50
|
1
|
4
|
-
|
2
|
57
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Balances at 31 March 1999 |
2,938
|
247
|
(662)
|
163
|
215
|
2,901
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Provisions and amounts written off | ||||||
| Balances at 1 April 1998 |
(1,005)
|
-
|
-
|
-
|
(2,230)
|
(3,235)
|
| Goodwill amortisation for the year |
(17)
|
-
|
-
|
-
|
-
|
(17)
|
| Disposals |
-
|
-
|
-
|
-
|
2,242
|
2,242
|
| Increase in the year |
(1)
|
-
|
-
|
-
|
(58)
|
(59)
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Balances at 31 March 1999 |
(1,023)
|
-
|
-
|
-
|
(46)
|
(1,069)
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Net book value at 31 March 1999 |
1,915
|
247
|
(662)
|
163
|
169
|
1,832
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Net book value at 31 March 1998 |
528
|
151
|
(286)
|
164
|
1,151
|
1,708
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
|
Associates |
Other
participating interests |
Other
investments(g) |
Total
|
|||
| Subsidiary undertakings (a) | ||||||
| ---------------------------------- | ||||||
|
Shares
|
Loans
|
|||||
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------ | |
| Company | ||||||
| Cost | ||||||
| Balances at 1 April 1998 |
6,658
|
10
|
32
|
164
|
1,608
|
8,472
|
| Additions |
8,612
|
-
|
35
|
65
|
26
|
8,738
|
| Disposals |
(2,009)
|
-
|
-
|
-
|
(32)
|
(2,041)
|
| Repayments and other transfers |
(875)
|
-
|
(10)
|
(66)
|
(1,391)
|
(2,342)
|
| Currency movements |
-
|
-
|
1
|
-
|
-
|
1
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Balances at 31 March 1999 |
12,386
|
10
|
58
|
163
|
211
|
12,828
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Provisions and amounts written off | ||||||
| Balances at 1 April 1998 |
(475)
|
-
|
(15)
|
-
|
(174)
|
(664)
|
| Decrease (increase) in the year |
212
|
-
|
-
|
-
|
(33)
|
179
|
| Disposals and transfers |
-
|
-
|
-
|
-
|
28
|
28
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Balances at 31 March 1999 |
(263)
|
-
|
(15)
|
-
|
(179)
|
(457)
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Net book value at 31 March 1999 |
12,123
|
10
|
43
|
163
|
32
|
12,371
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| Net book value at 31 March 1998 |
6,183
|
10
|
17
|
164
|
1,434
|
7,808
|
| -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | |||||
| (a) Subsidiary undertakings, associates and joint ventures |
| Details of the principal operating subsidiary undertakings, joint ventures and associates are set out on pages 102 and 103. |
|
1999
|
1998
|
|
| (b) Associates and joint ventures |
£m
|
£m
|
| -------------------------------------------------- | -------------------------------------------------- | |
| Associates: | ||
| Goodwill |
227
|
-
|
| Share of other net assets |
191
|
143
|
| Total - associates |
418
|
143
|
| Joint ventures: | ||
| Goodwill |
409
|
-
|
| Loans |
247
|
151
|
| Share of other net assets |
426
|
99
|
| Total - joint ventures |
1,082
|
250
|
|
-----------------------------------------------------
|
||
| Net book value at 31 March |
1,500
|
393
|
| -------------------------------------------------- |
-----------------------------------------------------
|
|
| (c) MCI Communications Corporation |
| In September 1994, the company completed the acquisition of a 20% equity interest in MCI (a major carrier of long-distance telecommunications services in the United States) represented by a holding of 136 million unlisted Class A common shares, whereupon MCI became the group's most significant associate. On 3 November 1996, the company entered into a merger agreement with MCI whereby the group would acquire the entire share capital of MCI, not already owned. On 21 August 1997, the terms of the merger agreement were modified. On 1 October 1997, WorldCom announced its intention to offer shares in its company to MCI shareholders as an alternative to the proposed merger and, following an improved offer from WorldCom on 9 November 1997, the company agreed with WorldCom and MCI that it would support the proposed merger of MCI with WorldCom. On 15 September 1998, MCI and WorldCom merged to form MCI WorldCom. |
| On completion of the merger, the company sold the group's holding of 136 million unlisted Class A common shares in MCI to WorldCom for US$51 per share in cash. The consideration of US$6,936m was equivalent to £4,133m at the exchange rate ruling on 15 September 1998. The group also held 0.7 million listed common shares in MCI, most of which were purchased in November 1995. These shares were exchanged for MCI WorldCom common shares on completion of the merger and subsequently sold in the market for £26m. |
| As a consequence of the termination of the company's merger agreement with MCI and the company's agreement with WorldCom and MCI, the group ceased treating MCI as an associate on 31 October 1997. The group's share of its associates' results for the year ended 31 March 1998 included a loss before tax of £27m for its share of MCI's results up to that date (1997 - £175m profit). |
| At 31 March 1998, the group's investment in MCI was stated at £813m. Goodwill, amounting to £2,214m written off to group reserves in prior years in respect of this investment, was accounted for at the completion of the MCI/WorldCom merger in determining the profit on the sale of the shares which the group recognised (note 6). |
| In the period 1 April 1997 to 31 October 1997, the group's turnover with MCI amounted to £108m (1997 - £134m) and in the same period the group purchased £56m (1997 - £87m) in services and products from MCI. |
| (d) Binariang and LG Telecom |
| On 9 October 1998, the group completed its acquisition of a 33.3% interest in Binariang, a leading Malaysian telecommunications company. And on 14 October 1998, the group completed its acquisition of a 23.5% interest in LG Telecom, a major Korean mobile telecommunications company. |
| The acquisition of the interests in Binariang and LG Telecom comprised: |
|
Binariang
|
LG
Telecom
|
|
|
£m
|
£m
|
|
| ------------------ | ------------------ | |
| Group share of original book value of net assets |
60
|
98
|
| Fair value adjustment to achieve consistency of accounting policies |
(9)
|
(58)
|
| --------------------------------------------------------------------------------------------------- | ------------------ | ------------------ |
| Fair value to the group |
51
|
40
|
| Goodwill |
228
|
194
|
| --------------------------------------------------------------------------------------------------- | ------------------ | ------------------ |
| Total cost |
279
|
234
|
| --------------------------------------------------------------------------------------------------- | ------------------ | ------------------ |
| (e) Airtel Movil SA |
| Following the clearance in 1998 by the European Commission of the alliance between the company, AirTouch and other investors in Airtel Movil SA, a leading Spanish mobile telecommunications company, the group's 15.8% investment in Airtel was reclassified as a joint venture on 1 April 1998. Airtel is jointly controlled by the company as a consequence of the alliance agreement. During the year ended 31 March 1999, the group acquired an additional 2% interest in Airtel for £55m. |
| In summary, the acquisition of the cumulative 17.8% interest in Airtel comprised: |
|
£m
|
|
| ------------------ | |
| Group share of original book value of net assets |
62
|
| Fair value adjustment to achieve consistency of accounting policies |
(19)
|
| --------------------------------------------------------------------------------------------------- | ------------------ |
| Fair value to the group |
43
|
| Goodwill |
158
|
| --------------------------------------------------------------------------------------------------- | ------------------ |
| Total cost |
201
|
| --------------------------------------------------------------------------------------------------- | ------------------ |
| (f) Cegetel | |
| On 24 September 1997, the group completed its acquisition of a 26% interest in Cegetel, a leading French telecommunications company. Of the cost of the investment in the associated undertaking of £1,029m, goodwill arising of £862m has been written off against reserves. | |
| The acquisition of the interest in Cegetel comprised: | |
|
£m
|
|
| --------------------------------------------------------------------------------------------------- | ------------------ |
| Group share of original book value of net assets |
483
|
| Fair value adjustment to achieve consistency of accounting policies |
(316)
|
| --------------------------------------------------------------------------------------------------- | ------------------ |
| Fair value to the group |
167
|
| Goodwill |
862
|
| --------------------------------------------------------------------------------------------------- | ------------------ |
| Total cost | 1,029 |
| --------------------------------------------------------------------------------------------------- | ------------------ |
| (g) Other investments |
| Other investments include ordinary shares of the company, with a net book value of £18m (1998 - £29m) and a market value of £70m (1998 - £68m), held in trust for the BTExecutive Share Plan, the BTPerformance Share Plan and the BTDeferred Bonus Plan (note 31). Also, in the group balance sheet at 31 March 1999, listed investments were held with a book value of £132m (1998 - £117m) and a market value of £206m (1998 - £154m). |
| (h) Subsidiary company acquisition |
| In February 1997, the group entered into an agreement to purchase from Banco Santander SA its 50% holding in the share capital of BT Telecomunicaciones SA, a joint venture between a wholly-owned subsidiary of the company and Banco Santander SA, for the equivalent of £76m. The transaction was completed in July 1997. |
| (i) Other related party transactions with associates and joint ventures |
| In the year ended 31 March 1999, the group's turnover with its other associates and joint ventures amounted to |
| £129m
(1998 - £74m, 1997 - £23m) and the group purchased £1m (1998 - £9m,
1997 - £30m) in services and products from these undertakings. Back to financial statements |