BTPLC Annual Report 2006 - Consolidated financial statements

	Atlanet	Radianz	Other	Total
Year ended 31 March 2006	£m	£m	£m	£m

Fair value of consideration	65	143	69	277
Less: fair value of net assets acquired	35	104	17	156

Goodwill arising	30	39	52	121

Consideration:
Cash	58	120	52	230
Deferred consideration	7	–	17	24
Debt assumed	–	23	–	23

Total	65	143	69	277

The outflow of cash and cash equivalents is as follows:
Cash consideration	58	115	52	225
Less: cash acquired	5	44	11	60

	53	71	41	165

	Infonet	Albacom	Other	Total
Year ended 31 March 2005	£m	£m	£m	£m

Fair value of consideration	520	131	19	670
Less: fair value of net assets acquired	334	122	9	465

Goodwill arising	186	9	10	205

Consideration:
Cash	520	93	23	636
Deferred consideration	–	38	1	39

Total	520	131	24	675

The outflow of cash and cash equivalents is as follows:
Cash consideration	520	93	23	636
Less: cash acquired	205	–	5	210

	315	93	18	426

Year ended 31 March 2006
^aAtlanet
On 28 February 2006 the group acquired 100% of the issued share capital of Atlanet SpA (Atlanet) for total consideration of £65 million, including deferred consideration of £7 million and acquisition costs of £1 million. The net assets acquired in the transaction and the goodwill arising were as follows:

	Book and
	fair value
	£m

Intangible assets	2
Property, plant and equipment	25
Receivables	46
Cash and cash equivalents	5
Payables	(43	)

Group’s share of original book value and fair value of net assets	35

Goodwill	30

Total consideration	65

The fair value adjustments relating to the acquisition of Atlanet are provisional due to the timing of the transaction and will be finalised during the 2007 financial year.
From the date of acquisition, Atlanet has contributed to the group’s results revenue of £7 million and a net loss of £1 million. If the acquisition had occurred on 1 April 2005, the group’s revenue would have been higher by £90 million, and profit for the year would have been lower by £1 million (year ended 31 March 2005, £112 million higher and £1 million lower, respectively). The residual excess over the net assets acquired is recognised as goodwill. Goodwill comprises principally the assembled workforce, expected cost savings and synergies.

^bRadianz
On 29 April 2005, the group acquired 100% of the issued share capital of Radianz Limited (Radianz) for total consideration of £143 million, including acquisition costs of £5 million. The net assets acquired in the transaction, and the goodwill arising, were as follows:

	Book value		Fair value adjustments		Fair value
	£m		£m		£m

Intangible assets	–		22		22
Property, plant and equipment	55		(4	)	51
Receivables	40		–		40
Cash and cash equivalents	44		–		44
Payables	(53	)	–		(53	)

Group’s share of original book value and fair value of net assets	86		18		104

Goodwill					39

Total consideration					143

From the date of acquisition Radianz has contributed to the group’s results £60 million of revenue and a net loss of £30 million. If the acquisition had occurred on 1 April 2005, the group’s revenue and profit after tax would have been higher by £4 million and £nil, respectively (year ended 31 March 2005, £38 million and £1 million, respectively).
Intangible assets, comprising a brand, customer lists and customer relationships, were recognised at their respective fair values. The residual excess over the net assets acquired is recognised as goodwill. Goodwill comprises principally the assembled work force, expected cost savings and synergies.

^cOther
During the year ended 31 March 2006 the group acquired a number of other smaller subsidiary undertakings and businesses including principally SkyNet Systems Limited, the CARA Group and Total Network Solutions Limited. The combined net assets and goodwill arising in respect of these acquisitions were as follows:

	fair value
	Book and
	£m

Property, plant and equipment	5
Inventories	4
Receivables	26
Cash and cash equivalents	11
Payables	(29	)

Group’s share of original book value and fair value of net assets	17

Goodwill	52

Total consideration	69

If these acquisitions had occurred on 1 April 2005, the group’s revenue and profit after tax would have been higher by £15 million and £nil, respectively.

Year ended 31 March 2005
^dInfonet
On 25 February 2005 the group acquired 100% of the issued share capital of Infonet Services Corporation (Infonet) for total consideration of £520 million including acquisition costs of £10 million (£315 million, net of cash in the business). At 31 March 2005, the fair value adjustments relating to the acquisition of Infonet were provisional, however no further changes to these adjustments were necessary when the fair values were finalised in the 2006 financial year. The net assets acquired in the transaction, and the goodwill arising, were as follows:

	Book value		Fair value adjustments		Fair value
	£m		£m		£m

Intangible assets	–		78		78
Property, plant and equipment	200		(100	)	100
Receivables	93		(19	)	74
Cash and cash equivalents	205		–		205
Payables	(94	)	4		(90	)
Provisions and non current liabilities	(14	)	(18	)	(32	)
Minority interest	(1	)	–		(1	)

Group’s share of original book value and fair value of net assets	389		(55	)	334

Goodwill					186

Total consideration					520

Intangible assets, comprising a brand and customer relationships, were recognised at their respective fair values. The residual excess over the net assets acquired is recognised as goodwill. Goodwill comprises principally the assembled work force, expected cost savings and synergies.

^eAlbacom

On 4 February 2005 the group acquired the 74% interest in Albacom SpA (Albacom) not already held for total consideration of £131 million, including deferred consideration of £38 million and acquisition costs of £5 million. The deferred consideration is dependent upon the financial performance of Albacom in the 2009 financial year and the minimum payable is £38 million. At 31 March 2005, the fair value adjustments relating to the acquisition of Albacom were provisional, however no further changes to these adjustments were necessary when the fair values were finalised in the 2006 financial year. The net assets acquired in the transaction, and the goodwill arising, were as follows:

	Book value		Fair value adjustments		Fair value
	£m		£m		£m

Intangible assets	190		–		190
Property, plant and equipment	188		(11	)	177
Inventories	5		–		5
Receivables	206		–		206
Payables	(301	)	(14	)	(315	)
Provisions and non current liabilities	(139	)	–		(139	)
Minority interest	(2	)	–		(2	)

Group’s share of original book value and fair value of net assets	147		(25	)	122

Goodwill					9

Total consideration					131

The residual excess over the net assets acquired was recognised as goodwill. Goodwill comprises principally the assembled work force, expected cost savings and synergies.

^fOther

During the year ended 31 March 2005 the group acquired a number of other smaller subsidiary undertakings and businesses, principally BIC Systems Group Limited. The combined net assets acquired in the transaction and goodwill arising in respect of these acquisitions were as follows:


	Book value		Fair value adjustments	Fair value
	£m		£m	£m

Intangible assets	–		6	6
Receivables	3		–	3
Cash and cash equivalents	5		–	5
Payables	(5	)	–	(5	)

Group’s share of original book value and fair value of net assets	3		6	9

Goodwill				10

Total consideration				19

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