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| 18.
Intangible assets |
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| Cost |
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| At 1 April 2000 |
5,864 |
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3 |
|
5,867 |
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| Additions |
– |
|
4,315 |
|
4,315 |
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| Acquisitions of
subsidiary undertakings |
6,116 |
|
5,488 |
|
11,604 |
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| Adjustments |
99 |
|
3 |
|
102 |
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| Disposals and transfers |
(4 |
) |
– |
|
(4 |
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| Currency movements |
35 |
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(63 |
) |
(28 |
) |
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| Total cost at
31 March 2001 |
12,110 |
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9,746 |
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21,856 |
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| Amortisation |
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| At 1 April 2000 |
89 |
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1 |
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90 |
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| Charge for the year |
– amortisation |
37 |
|
313 |
|
386 |
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– impairment (c) |
3,000 |
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– |
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3,000 |
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| Total amortisation
at 31 March 2001 |
3,462 |
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14 |
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3,476 |
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| Net book value
at 31 March 2001 |
8,648 |
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9,732 |
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18,380 |
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| Net book value at
31 March 2000 |
5,775 |
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2 |
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5,777 |
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| (a) |
The goodwill arising
on acquisitions of subsidiary undertakings in the
year ended 31 March 2001 mainly arose from the acquisition
in June 2000 of the 50% interest in Telfort which
the group did not already own (£986 million) and
the acquisition in January and February 2001 of
the 55% interest in Viag Interkom which the group
did not already own (£4,992 million). The consideration
for the acquisition of the 55% interest in Viag
Interkom was negotiated in August 2000. (See note
16.) |
| |
| (b) |
The telecommunication
licences mainly comprise third generation mobile
licences in the UK and Germany. In April 2000, the
group won a third generation mobile licence in the
UK government’s auction. The licence, which
cost £4,030 million, will be amortised over its
remaining 20-year term from the date of launch of
services using the licensed radio spectrum. In August
2000, Viag Interkom won a third generation mobile
licence in the German government’s auction.
This licence, which cost £5,164 million, will be
similarly amortised over its remaining 20-year term
from the date of launch of service. |
| |
| (c) |
In accordance with
FRS 11 (Impairment of fixed assets and goodwill),
the carrying values of the group’s subsidiary
undertakings in Germany, Ireland, The Netherlands
and the UK at 31 March 2001 have been compared to
their recoverable amounts, represented by their
value in use to the group. |
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| |
The value in use has
been derived from discounted cash flow projections
which cover the ten years from 1 April 2001. The
projections cover a ten year period as the directors
consider that the growth in these businesses will
exceed the average growth rate of the countries
concerned over ten years. Also, the development
of the technology and assets required for such growth
means ten year projections would more fairly reflect
their long-term values. After the ten year period,
the projections use a long-term growth rate compatible
with projections for the countries concerned. The
discount rate used to arrive at this calculation
was 10% on a pre-tax basis. |
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The review has resulted
in an exceptional charge to operating costs of £3,000
million in respect of Viag Interkom. The charge
has been allocated to the goodwill arising on the
acquisition of the remaining 55% interest in the
company that was purchased during the year. The
remaining goodwill of £1,921 million will be amortised
over 20 years in accordance with the group’s
accounting policies. |
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