1st Quarter - Appendix A

BT Group PLC 28 July 2005 FIRST QUARTER RESULTS TO JUNE 30, 2005 July 28, 2005 Appendix A - Explanation of the transition to IFRS (a) Basis of preparation and accounting policies Previously the group prepared its audited annual financial statements and unaudited quarterly results under UK Generally Accepted Accounting Principles (UK GAAP). From April 1, 2005 the group is required to present its annual consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union (EU). The rules for the first time adoption of IFRS are set out in IFRS 1 "First Time Adoption of International Financial Reporting Standards". IFRS 1 allows exemptions from the application of certain IFRS to assist companies with the transition process and the group has elected to take the following exemptions: • Financial instruments: the group has chosen to utilise the exemption from the requirement to restate comparative information for IAS 32 "Financial Instruments: Disclosure and presentation" and IAS 39 "Financial Instruments: Recognition and Measurement", and hence these standards have been applied prospectively as of April 1, 2005. • Business combinations: the group has elected not to restate business combinations prior to the date of transition (April 1, 2004). • Employee benefits: all cumulative actuarial gains and losses have been recognised in reserves at the transition date. • Share based payments: the group has applied IFRS 2 "Share Based Payment" to all grants of equity instruments after November 7, 2002 which were unvested as at January 1, 2005. • Cumulative translation differences: the group has elected to reset the foreign currency translation reserve to zero at the transition date, April 1, 2004. Any gains and losses on subsequent disposals of foreign operations will exclude translation differences arising prior to that date. These unaudited group results for the three months to June 30, 2005 have been prepared on a basis consistent with the accounting policies set out in Appendix B ("BT's IFRS accounting policies"). IFRS are subject to ongoing review and possible amendment or interpretative guidance and therefore are still subject to change. These policies also assume that the amendments to IAS 19 "Employee Benefits" published by the International Accounting Standards Board, allowing actuarial gains and losses to be recognised in full through reserves, will be endorsed by the EU. In addition, the accounting policies applicable to IAS 39 "Financial Instruments: Recognition and Measurement" will not be impacted by the elements carved out of the EU endorsement, and hence the group will comply with the full version of IAS 39. These interim financial results have been prepared under the historical cost convention, except in respect of certain financial assets and liabilities. As permitted, the group has chosen not to adopt IAS 34 "Interim Financial Statements", and therefore the interim financial results are not in full compliance with IFRS. An explanation of how the transition from UK GAAP to IFRS has affected the group's financial position and reported performance is set out in the following notes and the tables at the end of this appendix. 2 (b) Explanation of adjustments between UK GAAP and IFRS 1. Pensions Under UK GAAP, the group previously measured pension commitments and other related post-retirement benefits in accordance with SSAP 24 "Accounting for Pension Costs" with additional disclosures provided in accordance with FRS 17 "Retirement Benefits". Under BT's IFRS accounting policies, the group measures pension commitments and other related post-retirement benefits in accordance with IAS 19 "Employee Benefits", which takes a similar approach to FRS 17. On adoption of IAS 19 the deficit in defined benefit pension schemes was recognised on the group's balance sheet. The amended version of IAS 19, which is subject to EU approval, allows companies to choose to recognise actuarial gains and losses immediately in reserves, or alternatively to be held on the balance sheet and released to the income statement over a period of time. The group has elected to early adopt the amended version of IAS 19 and reflect the impact of actuarial gains and losses immediately in reserves. The income statement charge is split between an operating charge and a net finance charge. The net finance charge relates to the unwinding of the discount applied to the liabilities of the scheme offset by the expected return on the assets of the scheme, based on conditions prevailing at the start of the year. Under SSAP 24, the asset on the balance sheet represented the timing differences between the pension charge recognised in the profit and loss account and the payments made to the pension scheme. Under IAS 19, the liability on the balance sheet represents the deficit in the pension scheme. The scheme assets are valued at market value and the liabilities are discounted using a high quality corporate bond rate in calculating the deficit. Under SSAP 24, pension charges for the year ended March 31, 2005 were £465 million and for the 3 month period to June 30, 2004 were £101 million, including a charge for the amortisation of the SSAP 24 deficit in the BT Pension Scheme, and an interest credit relating to the balance sheet prepayment. Under IAS 19 the total charges for the year ended March 31, 2005 were £342 million and for the 3 month period to June 30, 2004 were £70 million, split between an operating charge and net finance income. Accordingly, for the year ended March 31, 2005 and the 3 months ended June 30, 2004 there is an additional £75 million and £19 million charge to operating profit and £198 million and £50 million of net finance income has been recognised under IAS 19. A pension liability has been recognised at March 31, 2005 of £4,781 million (£3,347 million net of a deferred tax asset of £1,434 million) and at June 30, 2004 of £5,136 million (£3,595 million net of a deferred tax asset of £1,541 million), offset by the reversal of provisions and other creditors of £44 million for March 31, 2005 and £36 million at June 30, 2004. The pension prepayment on the UK GAAP balance sheet of £1,118 million and £1,126 million has also been reversed, including the associated deferred tax liability. The net effect has been a reduction in shareholders' funds at March 31, 2005 of £4,092 million and at June 30, 2004 of £4,368 million. 3 2. Share based payments Under UK GAAP an expense was recognised for the award of share options and shares based on their intrinsic value (the difference between the exercise price and the market value at the date of the award). The majority of BT's share based payments are made under all employee 'Save As You Earn' plans which were exempt under UK GAAP and the intrinsic value of many of the senior management schemes is nil. Under IFRS 2 "Share Based Payment", an expense is recognised in the income statement for all share based payments (both awards of options and awards of shares). This expense is based on the fair value at the date of grant of the award, using an option pricing model, and is charged to the income statement over the related performance period. The accounting rules of IFRS 2 have resulted in an increased operating charge for the year ended March 31, 2005 and the 3 months ended June 30, 2004 of £28 million and £4 million, respectively. A related tax benefit of £7 million and £1 million, respectively, has also been recognised. The credit entry for the share based payments is recognised directly in reserves as the awards are equity settled. 3. Goodwill and other intangible assets UK GAAP required goodwill to be amortised over its expected useful economic life. Under IFRS 3 "Business Combinations", goodwill is no longer amortised but held at its carrying value on the balance sheet and tested annually for impairment. In addition, IAS 38 "Intangible Assets" requires other intangible assets arising on acquisitions after the transition date to be separately identified and amortised over their useful economic life, often a shorter period than previously used for goodwill. As a result, intangible assets such as customer relationships and trademarks, need to be separately valued and recognised on business combinations, and then amortised over their useful economic lives. The UK GAAP goodwill amortisation charge in the year to March 31, 2005 and 3 months to June 30, 2004 of £16 million and £4 million, respectively, has been reversed. The other intangible assets arising from acquisitions since April 1, 2004 are being amortised over their estimated useful economic lives. Computer software that is not an integral part of the associated hardware is classified as an intangible asset under IAS 38. Under UK GAAP, the group's policy was to categorise all capitalised software as tangible fixed assets. This has resulted in a balance sheet reclassification of £620 million and £399 million as at March 31, 2005 and June 30, 2004 respectively. 4. Dividends Under UK GAAP, the dividend charge was recognised in the profit and loss account in the period to which it related. Under IAS 10 "Events After The Balance Sheet Date", dividends are not recognised in the income statement but directly in reserves. In addition, the final dividend is recognised only when it has been declared and approved by the company in general meeting. The final dividend liabilities for the 2005 and 2004 financial years of £551 million and £454 million, respectively have been reversed at March 31, 2005, June 30, 2004 and April 1, 2004 as the associated dividends had not been approved at those dates. 4 5. Leases Under IAS 17 "Leases" there is a requirement to view leases of land separately from leases of buildings. Furthermore, there is a requirement to recognise operating lease charges as an expense on a straight line basis. As a result, the building elements of a small number of properties have been reclassified from operating leases under UK GAAP to finance leases under IFRS, and lease rentals under BT's 2001 sale and leaseback transaction are recognised on a straight line basis under IFRS. For those properties reclassified as finance leases, profit before tax for the year ended March 31, 2005 and the 3 months to June 30, 2004, has been reduced by approximately £3 million and £1 million, respectively, as a result of the recognition of depreciation and finance lease interest charges, and the removal of the UK GAAP operating lease charges. Recognising the operating lease charges, on a straight line basis has further reduced the profit before tax for the year ended March 31, 2005 and the 3 months to June 30, 2004 by £101 million and £26 million, respectively. 6. Financial instruments Under UK GAAP, the group previously measured financial assets and liabilities in accordance with the principles of FRS 4 "Capital Instruments", FRS 5 "Reporting the Substance of Transactions" and SSAP 20 "Foreign Currency Translation". Current asset investments were recognised at the lower of cost and net realisable value. Debt instruments were stated at the amount of the net proceeds adjusted to amortise any discount over the term of the debt. Debt and current asset investments were further adjusted for the effect of the currency element of swaps and forward contracts used as a hedge against these instruments. The group also provided disclosures in accordance with FRS 13 "Derivatives and Other Financial Instruments: Disclosures" setting out the objectives, policies and strategies for holding or issuing financial instruments, and the fair value of financial instruments held at the balance sheet date. The group has taken the IFRS 1 exemption not to restate comparatives for the adoption of IAS 32 "Financial Instruments: Disclosure and Presentation" and IAS 39 "Financial Instruments: Recognition and Measurement". These standards set out the accounting rules surrounding the recognition, measurement, disclosure and presentation of financial instruments. IAS 39 requires all derivative financial instruments to be recorded at fair value on the balance sheet. The fair value of derivative financial instruments recognised on the balance sheet on transition at April 1, 2005 was a net liability of £1.5 billion. This fair value included a net liability of £0.7 billion which was previously recognised under UK GAAP, reflecting the currency element of financial instruments and accrued interest associated with derivatives. The additional net liability of £0.8 billion arising on transition resulted in a corresponding net decrease to equity. Future market interest rate and currency movements will give rise to adjustments to these fair values. Where hedge accounting cannot be applied under the prescriptive rules of IAS 39, changes in fair values of derivative financial instruments will impact the income statement. In addition, the majority of the gains and losses associated with terminated derivative financial instruments that were deferred under UK GAAP have been reclassified to reserves in accordance with the transitional rules of IFRS 1, resulting in an additional net increase to equity of £0.3 billion. Certain financial assets and financial liabilities are required to be recorded at amortised cost under IAS 39. Under UK GAAP, the majority of this amortised cost value was reflected on the balance 5 6. Financial Instruments continued sheet but elements were separately recorded in current assets and current liabilities. These amounts have been reclassified on transition to either financial assets or loans and borrowings to recognise the respective instruments at amortised cost. The adjustments described above, on adoption of IAS 32 and IAS 39, have resulted in an overall reduction in total equity as at April 1, 2005 of £481 million (£337 million net of deferred taxation), as shown in table (7) of this appendix. BT's revised IFRS accounting policies which have been adopted for financial instruments and derivative financial instruments are detailed in Appendix B. 7. Other adjustments There are a number of other minor adjustments and reclassifications under BT's IFRS accounting policies which include: - Presenting the results of associates and joint ventures net of tax and finance costs on the face of the income statement. Previously under UK GAAP interest and tax was included in the relevant interest and tax line of the income statement. - Liquid investments with maturities of less than three months at acquisition are classified within cash and cash equivalents under IAS 7 "Cash Flow Statements" rather than as current asset investments under UK GAAP. - Cash flow statements prepared in accordance with IAS 7 "Cash Flow Statements" have a different presentational format. Although the underlying cash flows remain the same as previously reported, the cash flow statement reflects movements in cash and cash equivalents. In addition, certain leases are now classified as finance leases which had previously been treated as operating leases. - Under UK GAAP, loans and borrowings and current asset investments were held at foreign currency rates prescribed in the hedging instrument where hedging had been applied in accordance with the group's accounting policies. Under IAS 21 "The Effects of Changes in Foreign Exchanges Rates", such forward rate adjustments are required to be disclosed separately and have therefore been reclassified. On adoption of IAS 39 from April 1, 2005, such forward rate adjustments form part of the overall fair value of derivative financial instruments. - Recognition of foreign exchange gains or losses on certain intercompany loans in the income statement, under IAS 21, whereas previously under UK GAAP these amounts had been recognised in reserves. - Profits on the sale of property fixed assets are classified within other operating income on the face of the income statement. Under UK GAAP, these amounts had previously been disclosed after operating profit. 6 (1) Summary income statement reconciliation (unaudited) 3 months 3 months Year ended ended ended 30 June 30 June 31 March 2005 2004 2005 £m £m £m Operating profit - UK GAAP* as reported 686 622 2,789 Reclassification of items previously reported below operating profit 2 3 380 --------- --------- ---------- Operating profit - UK GAAP* 688 625 3,169 Adjustments to operating profit Employee benefits (23) (19) (75) Share based payments (9) (4) (28) Amortisation of acquired intangible assets (3) - - Reversal of goodwill amortisation 8 4 16 Leases (21) (24) (94) Foreign exchange (4) (9) 4 --------- --------- ---------- Net impact of adjustments to operating profit (52) (52) (177) Operating profit - IFRS* 636 573 2,992 Specific items Property rationalisation costs 12 17 59 Profit on sale of non current asset investments - (3) (358) --------- --------- ---------- Operating profit before specific items - IFRS* 648 587 2,693 --------- --------- ---------- Profit before tax - UK GAAP* 496 416 2,343 Operating profit adjustments shown above (50) (49) 203 Reversal of operating profit reclassification above (2) (3) (380) Adjustments to net finance costs Employee benefits 63 50 198 Non cash re-measurement of financial instruments (4) - - Leases (3) (3) (10) Adjustments to joint ventures and associates Reclassification of tax charge (1) - - --------- --------- ---------- Profit before tax - IFRS* 499 411 2,354 Specific items Property rationalisation costs 12 17 59 Profit on sale of non current asset investments - (3) (358) Impairment of assets in joint ventures - - 25 --------- --------- ---------- Profit before tax and specific items - IFRS* 511 425 2,080 --------- --------- ---------- * In accordance with BT's accounting policies 7 (2) Reconciliation of profit for the year ended March 31, 2005 (unaudited) UK GAAP* Employee Share Goodwill Leases Other IFRS* benefits based payments £m £m £m £m £m £m £m Revenue 18,623 - - - - - 18,623 Other operating income 193 - - - - - 193 Operating costs (16,005) (75) (28) 16 (94) 4 (16,182) Profit on sale of non current asset investments 358 - - - - - 358 -------- -------- -------- -------- ------- ------- -------- Operating profit 3,169 (75) (28) 16 (94) 4 2,992 Net finance costs (801) 198 - - (10) 14 (599) Share of losses of associates and joint ventures (25) - - - - (14) (39) -------- -------- -------- -------- ------- ------- -------- Profit before tax 2,343 123 (28) 16 (104) 4 2,354 Income tax expense (523) (37) 7 - 31 (3) (525) -------- -------- -------- -------- ------- ------- -------- Profit for the period 1,820 86 (21) 16 (73) 1 1,829 ======== ======== ======== ======== ======= ======= ======== Attributable to: Equity shareholders 1,821 86 (21) 16 (73) 1 1,830 Minority interest (1) - - - - - (1) ======== ======== ======== ======== ======= ======= ======== Basic earnings per share 21.4p 21.5p Diluted earnings per share 21.2p 21.3p Adjusted earnings per share** 18.1p 18.1p * In accordance with BT's accounting policies ** Before specific items 8 (3) Reconciliation of profit for the three months ended June 30, 2004 (unaudited) UK GAAP* Employee Share Goodwill Leases Other IFRS* benefits based payments £m £m £m £m £m £m £m Revenue 4,567 - - - - - 4,567 Other operating income 41 - - - - - 41 Operating costs (3,986) (19) (4) 4 (24) (9) (4,038) Profit on sale of non current asset investments 3 - - - - - 3 -------- -------- -------- -------- ------- ------- -------- Operating profit 625 (19) (4) 4 (24) (9) 573 Net finance costs (204) 50 - - (3) 2 (155) Share of losses of associates and (5) - - - - (2) (7) joint ventures -------- -------- -------- -------- ------- ------- -------- Profit before tax 416 31 (4) 4 (27) (9) 411 Income tax expense (111) (9) 1 - 8 2 (109) -------- -------- -------- -------- ------- ------- -------- Profit for the period 305 22 (3) 4 (19) (7) 302 ======== ======== ======== ======== ======= ======= ======== Attributable to: Equity shareholders 305 22 (3) 4 (19) (7) 302 Minority - - - - - - - interest ======== ======== ======== ======== ======= ======= ======== Basic earnings per share 3.6p 3.5p Diluted earnings per share 3.5p 3.5p Adjusted earnings per share** 3.7p 3.6p -------- -------- -------- -------- ------- ------- -------- * In accordance with BT's accounting policies ** Before specific items 9 (4) Reconciliation of balance sheet and equity at April 1, 2004 (date of transition to IFRS - unaudited) UK* Employee Dividends Leases Re-class IFRS* GAAP benefits £m £m £m £m £m £m Assets Intangible assets 204 - - - 368 572 Property, plant and equipment 15,487 - - 93 (368) 15,212 Derivative financial instruments - - - - 156 156 Investments and other assets 324 - - - - 324 Deferred tax assets - 1,541 - - - 1,541 -------- -------- -------- -------- -------- -------- Total non-current assets 16,015 1,541 - 93 156 17,805 Inventories 89 - - - - 89 Trade and other receivables 5,189 (1,172) - - - 4,017 Derivative financial instruments - - - - 46 46 Other financial assets 5,163 - - - (944) 4,219 Cash and cash equivalents 109 - - - 898 1,007 -------- -------- -------- -------- -------- -------- Total current assets 10,550 (1,172) - - - 9,378 Liabilities Trade and other payables 6,848 (6) (454) - (1,365) 5,023 Derivative financial instruments - - - - 1,418 1,418 Loans and other borrowings 1,271 - - - (53) 1,218 Current tax payable 404 - - - - 404 -------- -------- -------- -------- -------- -------- Total current liabilities 8,523 (6) (454) - - 8,063 -------- -------- -------- -------- -------- -------- Total assets less current 18,042 375 454 93 156 19,120 liabilities ======== ======== ======== ======== ======== ======== Loans and other borrowings 12,426 - - 105 (740) 11,791 Deferred tax liabilities 2,191 (335) - (92) - 1,764 Derivative financial instruments - - - - 896 896 Other financial liabilities - - - 295 - 295 Retirement benefit obligations - 5,136 - - - 5,136 Provisions 313 (36) - - - 277 -------- -------- -------- -------- -------- -------- Total non-current liabilities 14,930 4,765 - 308 156 20,159 Equity Issued capital 432 - - - - 432 Reserves 2,634 (4,390) 454 (215) - (1,517) -------- -------- -------- -------- -------- -------- Total equity shareholders' funds (deficit) 3,066 (4,390) 454 (215) - (1,085) Minority interest 46 - - - - 46 -------- -------- -------- -------- -------- -------- Total equity 3,112 (4,390) 454 (215) - (1,039) -------- -------- -------- -------- -------- -------- 18,042 375 454 93 156 19,120 ======== ======== ======== ======== ======== ======== * In accordance with BT's accounting policies 10 (5) Reconciliation of balance sheet and equity at June 30, 2004 (unaudited) UK* Employee Dividends Leases Share Goodwill Re-class IFRS* GAAP benefits based payments £m £m £m £m £m £m £m £m Assets Intangible assets 204 - - - - 4 399 607 Property, plant and equipment 15,466 - - 92 - - (399) 15,159 Derivative financial instruments - - - - - - 165 165 Investments and other assets 297 - - - - - - 297 Deferred tax assets - 1,541 - - - - - 1,541 -------- -------- -------- -------- -------- -------- -------- ------- Total non-current assets 15,967 1,541 - 92 - 4 165 17,769 Inventories 111 - - - - - - 111 Trade and other receivables 5,261 (1,126) - - - - - 4,135 Derivative financial instruments - - - - - - 26 26 Other financial assets 5,071 - - - - - (781) 4,290 Cash and cash equivalents 144 - - - - - 755 899 -------- -------- -------- -------- -------- -------- -------- ------- Total current assets 10,587 (1,126) - - - - - 9,461 Liabilities Trade and other payables 6,636 18 (454) - - - - 6,200 Derivative financial instruments - - - - - - 46 46 Loans and other borrowings 1,112 - - - - - (46) 1,066 Current tax payable 506 - - - - - - 506 -------- -------- -------- -------- -------- -------- -------- ------- Total current liabilities 8,254 18 (454) - - - - 7,818 -------- -------- -------- -------- -------- -------- -------- ------- Total assets less current 18,300 397 454 92 - 4 165 19,412 liabilities ======== ======== ======== ======== ======== ======== ======== ======= Loans and other borrowings 12,420 - - 105 - - (657) 11,868 Deferred tax liabilities 2,191 (335) - (100) (1) - - 1,755 Derivative financial instruments - - - - - - 822 822 Other financial liabilities - - - 320 - - - 320 Retirement benefit obligations - 5,136 - - - - - 5,136 Provisions 300 (36) - - - - - 264 -------- -------- -------- -------- -------- -------- -------- ------- Total non-current liabilities 14,911 4,765 - 325 (1) - 165 20,165 Equity Issued capital 432 - - - - - - 432 Reserves 2,911 (4,368) 454 (233) 1 4 - (1,231) -------- -------- -------- -------- -------- -------- -------- ------- Total equity shareholders' 3,343 (4,368) 454 (233) 1 4 - (799) funds (deficit) Minority interest 46 - - - - - - 46 -------- -------- -------- -------- -------- -------- -------- ------- Total equity 3,389 (4,368) 454 (233) 1 4 - (753) -------- -------- -------- -------- -------- -------- -------- ------- 18,300 397 454 92 - 4 165 19,412 ======== ======== ======== ======== ======== ======== ======== ======= *In accordance with BT's accounting policies 11 (6) Reconciliation of balance sheet and equity at 31 March 2005 (unaudited) UK GAAP* Employee Dividends Leases Share based Goodwill Re-class IFRS* benefits payments £m £m £m £m £m £m £m £m Assets Intangible assets 623 - - - - 16 620 1,259 Property, plant and equipment 15,916 - - 90 - - (620) 15,386 Derivative financial instruments - - - - - - 18 18 Investments and other assets 115 - - - - - - 115 Deferred tax assets - 1,434 - - - - - 1,434 -------- -------- -------- -------- -------- -------- -------- ------- Total non-current assets 16,654 1,434 - 90 - 16 18 18,212 Inventories 106 - - - - - - 106 Trade and other receivables 5,387 (1,118) - - - - - 4,269 Derivative financial instruments - - - - - - 143 143 Other financial assets 4,597 - - - - - (1,106) 3,491 Cash and cash equivalents 206 - - - - - 1,106 1,312 -------- -------- -------- -------- -------- -------- -------- ------- Total current assets 10,296 (1,118) - - - - 143 9,321 Liabilities Trade and other payables 7,318 - (551) - - - 5 6,772 Derivative financial instruments - - - - - - 375 375 Loans and other borrowings 4,498 - - - - - (237) 4,261 Current tax payable 645 - - - - - - 645 -------- -------- -------- -------- -------- -------- -------- ------- Total current liabilities 12,461 - (551) - - - 143 12,053 -------- -------- -------- -------- -------- -------- -------- ------- Total assets less current 14,489 316 551 90 - 16 18 15,480 liabilities ======= ======== ======== ======== ======== ======== ======== ======= Loans and other borrowings 8,091 - - 107 - - (454) 7,744 Deferred tax liabilities 2,174 (329) - (123) (7) - - 1,715 Derivative financial instruments - - - - - - 472 472 Other financial liabilities - - - 394 - - - 394 Retirement benefit obligation - 4,781 - - - - 4,781 Provisions 323 (44) - - - - - 279 -------- -------- -------- -------- -------- -------- -------- ------- Total non-current liabilities 10,588 4,408 - 378 (7) - 18 15,385 Equity Issued capital 432 - - - - - - 432 Reserves 3,419 (4,092) 551 (288) 7 16 - (387) -------- -------- -------- -------- -------- -------- -------- ------- Total equity shareholders' funds (deficit) 3,851 (4,092) 551 (288) 7 16 - 45 Minority interest 50 - - - - - - 50 -------- -------- -------- -------- -------- -------- -------- ------- Total equity 3,901 (4,092) 551 (288) 7 16 - 95 -------- -------- -------- -------- -------- -------- -------- ------- 14,489 316 551 90 - 16 18 15,480 ======= ======== ======== ======== ======== ======== ======== ======= * In accordance with BT's accounting policies 12 (7) Financial instruments (IAS 32 and 39) Transition balance sheet at April 1, 2005 (unaudited) IFRS IAS 32 and IAS 39 Restated for IAS 32 and IAS At 31 March adjustments 39 at 2005* 1 April 2005* £m £m £m Assets Intangible assets 1,259 - 1,259 Property, plant and equipment 15,386 - 15,386 Derivative financial instruments 18 5 23 Investments and other assets 115 - 115 Deferred tax assets 1,434 - 1,434 ------ ----- ------ Total non-current assets 18,212 5 18,217 Inventories 106 - 106 Trade and other receivables 4,269 (275) 3,994 Derivative financial instruments 143 31 174 Other financial assets 3, 491 47 3,538 Cash and cash equivalents 1,312 - 1,312 ------ ----- ------ Total current assets 9,321 (197) 9,124 Liabilities Trade and other payables 6,772 (861) 5,911 Derivative financial instruments 375 321 696 Loans and other borrowings 4,261 111 4,372 Current tax payable 645 - 645 ------ ----- ------ Total current liabilities 12,053 (429) 11,624 ------ ----- ------ Total assets less current liabilities 15,480 237 15,717 ====== ===== ====== Loans and other borrowings 7,744 194 7,938 Deferred tax liabilities 1,715 (144) 1,571 Derivative financial instruments 472 524 996 Other financial liabilities 394 - 394 Retirement benefit obligation 4,781 - 4,781 Provisions 279 - 279 ------ ----- ------ Total non-current liabilities 15,385 574 15,959 Equity Issued 432 - 432 capital Reserves (387) (337) (724) ------ ----- ------ Total equity shareholders' funds (deficit) 45 (337) (292) Minority interest 50 - 50 ------ ----- ------ Total equity 95 (337) (242) ------ ----- ------ 15,480 237 15,717 ====== ===== ====== * In accordance with BT's accounting policies This information is provided by RNS The company news service from the London Stock Exchange MORE TO FOLLOW QRFDBGDRCBDGGUR

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