1st Quarter Results
British Telecommunications PLC
27 July 2000
FIRST QUARTER RESULTS TO JUNE 30, 2000
BT's results for the first quarter to June 30, 2000
are summarised in the table below.
Sir Iain Vallance, Chairman of BT, said:
'Total turnover moved ahead strongly in the quarter
reflecting significant growth in our non-UK investments,
particularly in fixed and wireless businesses in Japan.
In this period, we won a third generation mobile licence
in the UK, gained full control of Telfort in Holland and
finalised the purchase of Esat in Ireland as part of our
strategy for investing in growth businesses.
Earnings have been affected by the interest and
goodwill costs of our investments for the future, as well
as continuing competition in our traditional UK market.
The restructuring of the group, announced in the quarter,
aims to manage and develop these investments effectively
and create value for shareholders.'
=========================================================
RESULTS FOR FIRST QUARTER TO JUNE 30, 2000
2000 1999
£m £m
Total turnover 6,791 4,987
EBITDA 1,518 1,590
Total operating profit 759 835
Profit before goodwill amortisation,
exceptional items and taxation 637 804
Profit before taxation 561 772
Profit after taxation 368 537
Earnings per share 4.9p 8.3p
Earnings per share before exceptional
items and goodwill amortisation 6.6p 8.7p
=========================================================
Results
-------
Total turnover, including BT's proportionate share
of its ventures' turnover, grew by 36 per cent to
£6,791 million for the quarter ended June 30, 2000. This
growth was primarily driven by BT's non-UK investments
including our interests in Japan and the launch of the
Concert global venture with AT&T in January 2000.
Earnings per share for the quarter were 4.9 pence
compared with 8.3 pence in the corresponding period of
the prior year. Before exceptional items and goodwill
amortisation, earnings were 6.6 pence per share, a
reduction of 24 per cent. Earnings before interest, tax,
depreciation and amortisation (EBITDA) declined by
4.5 per cent to £1,518 million in the quarter.
The reduction in earnings in the quarter was partly
caused by the rise in interest expenditure as a result of
the BT Cellnet minority acquisition in November 1999,
significant investments in Japan and Ireland and the
payment for the third generation mobile licence for the
UK in May 2000.
Goodwill amortisation has increased due to these
acquisitions and other investments in the last twelve
months. Additional pressure on profitability in the
quarter has arisen from reduced UK call prices, an
increased proportion of lower margin wholesale business
with other operators and the cost of developing new
products.
Restructuring
-------------
In April 2000, we announced a restructuring whereby
the group and its ventures would be managed in four
global businesses together with the UK operations and the
Concert global venture. The four global businesses, BT
Wireless, Ignite, BTopenworld and Yell began operations
on July 1, 2000, as planned.
It is intended that financial information on the
four global businesses will be published, beginning with
the second quarter ending September 30, 2000.
Illustrative financial information for the quarter ended
June 30, 2000 is provided in note 19 below. The
following discussion of our results centres around the
consideration of BT's turnover and costs as a whole.
Concert
-------
In January 2000, Concert, the global communications
joint venture between BT and AT&T, began operations and
BT transferred its international traffic, its business
with selected multinational customers and its
international products for business customers, together
with BT's existing Concert Communications business, into
the global venture. As a consequence group turnover has
been reduced overall by approximately £220 million in the
quarter. Total turnover, including BT's proportionate
share of its ventures, has however, increased by around
£210 million in the quarter from the establishment of
Concert, reflecting the greater level of AT&T's business
introduced into the global venture. After taking into
account our share of Concert's operating profit, total
operating profit has not been significantly affected by
the establishment of Concert.
Turnover
--------
Total turnover, including BT's proportionate share
of its ventures' turnover, grew by 36 per cent to
£6,791 million for the three months ended June 30, 2000.
This growth was predominantly due to the group's new
investments in Japan acquired since August 1999 and the
launch of Concert, BT's global venture with AT&T, in
January 2000. BT group turnover grew by 4.5 per cent in
the June 2000 quarter.
BT's share of its joint ventures and associates
turnover, before eliminating trading between BT and its
principal venture, Concert, rose by £1,765 million to
£2,222 million. BT's interests in Concert and Japan
Telecom (together with the newly acquired interests in
the J-Phone companies), represented more than half of the
total share of turnover from ventures in the quarter.
BT's share of Cegetel's turnover grew by 12 per cent to
£192 million and that of Viag Interkom's turnover was up
by over 175 per cent to £119 million as its mobile
customer base approaches 2 million.
Continuing price reductions in the UK adversely
affected turnover from fixed network calls which declined
by 5.4 per cent in the quarter. Call volume growth at 6
per cent on a 12-month moving average basis was driven by
fixed to mobile calls and internet traffic, which are
both growing strongly, offset by declining volumes of
traditional local and national calls due to mobile call
substitution and increased competition.
Turnover from exchange lines grew by 3.3 per cent in
the quarter, mainly from increased business line
connections. The number of business lines grew by
5.7 per cent to 8.6 million over the twelve months to
June 30, 2000. Residential lines were held at
20.0 million.
Turnover from mobile communications, principally BT
Cellnet and Esat Digifone, increased by 22 per cent. BT
Cellnet's customer base grew to 8.1 million at
June 30, 2000 an increase of 61 per cent over the twelve
months. Pre-paid customers now represent 55 per cent of
its base. Esat Digifone, in which BT acquired a
51 per cent interest in March 2000, had 0.7 million in
its customer base at June 30, 2000.
Receipts from other operators rose by 31 per cent
reflecting the services provided in the UK to the Concert
global venture and the increased use made by other
operators of BT's networks for transiting and terminating
traffic.
Other operating income
----------------------
BT provides administrative and other services to
Concert. The income from this totalled £59 million in
the quarter to June 30, 2000.
Operating costs
---------------
Group operating costs before goodwill amortisation
increased by 9.9 per cent to £3,989 million in the
quarter to June 30, 2000. These higher costs reflect the
greater level of interconnect with other operators, and
the cost of developing BT's networks for broadband
capabilities.
Payments to other operators increased by over
21 per cent. The increase was principally due to the
growth in internet traffic and in mobile calls.
Staff costs, net of own work capitalised, increased
by 6.4 per cent. The increase is partly due to acquired
businesses in the last 12 months and additional pension
costs following the December 1999 actuarial valuation of
the BT Pension Scheme.
Other operating costs grew by 8.9 per cent mainly as
a result of increased redundancy costs and the costs of
acquired businesses in the last twelve months.
Additionally, goodwill amortisation has risen by
£72 million.
Associates and joint ventures
-----------------------------
The group's proportionate share of its ventures' net
operating profits totalled £45 million in the quarter,
prior to goodwill amortisation of £41 million. The
Japanese ventures, the Concert global venture and Airtel
are the principal contributors to these profits which are
partially offset by continuing losses incurred by
Viag Interkom, British Interactive Broadcasting's Open
digital TV service, and Telfort. On July 17, 2000, it
was announced that, subject to regulatory clearance,
BSkyB would gain control of BiB and BT's interest would
be diluted to 19.9 per cent. Telfort became wholly owned
by BT at the end of June 2000.
Interest and taxation
---------------------
The net interest charge for the quarter increased by
£176 million to £239 million as a consequence of
increased debt to fund the BT Cellnet minority
acquisition in November 1999, the group's investments in
Japan, Canada and the USA in August 1999, its investment
in Ireland in April 2000 and the acquisition of the new
UK mobile licence in May 2000, as well as an increase in
BT's share of its ventures' interest costs.
BT's effective tax rate for the quarter is
28.5 per cent of profit before goodwill amortisation.
Acquisitions
------------
During the quarter ended June 30, 2000, BT completed
the acquisition of a significant indirect interest in
regional Japanese wireless companies (the J-Phone
companies), acquired the 50 per cent interest in Telfort
owned by its venture partner and acquired one of five UK
third generation mobile licences.
BT's indirect interests in the nine J-Phone cellular
companies are mainly through J-Phone Communications Co
Limited which holds more than 50 per cent of the equity
in these companies following a share issue in early
May 2000. BT and Japan Telecom together own 74 per cent
of the J-Phone Communications Co Limited. BT's interest
was acquired for £869 million. The J-Phone companies have
more than 8 million customers and have been granted
licences for third generation multimedia mobile phone
services.
BT acquired the 50 per cent of Telfort it did not
already own for £1.2 billion from the Dutch railways.
Telfort, which runs fixed and mobile services in the
Netherlands, has over 630,000 mobile customers and has
recently launched Genie, BT's mobile internet portal.
The completion of the transaction occurred on
June 22, 2000 with the consideration passing on
July 5, 2000.
On April 27, 2000, BT won a third generation licence
in the UK auction. This licence, coupled with BT's
existing GSM spectrum, will enable the company to deliver
mobile multimedia services to its customers. The payment
of £4.03 billion for the licence was made on
May 16, 2000.
During the quarter, BT has continued to share in
funding the development of its ventures, principally Viag
Interkom, to a total of over £230 million.
Capital expenditure
-------------------
Capital expenditure on plant, equipment and property
totalled £950 million in the quarter. Work continues on
enhancing the fixed network to enable customers to
benefit from new wave communications technologies,
including ADSL. We have invested significantly in
internet protocol and multi-media equipment, reflecting
both the current demand for internet based services and
anticipated future demand.
Cash flow and net debt
----------------------
Cash flow from operating activities amounted to
£1,427 million in the quarter, an increase of 10.5% on
the corresponding quarter of the previous year. The net
cash outflow on acquisitions of £2,235 million consisted
mainly of the Esat acquisition and the investment in the
J-Phone companies, as well as further funding of Viag
Interkom.
In April 2000, BT issued a £250 million index-linked
Eurobond repayable in 2025. We have financed the
majority of our requirements during the quarter by
drawing on commercial paper and medium-term note
programmes under which approximately £11.8 billion was
outstanding at June 30, 2000, an increase of £6.9 billion
in the quarter.
Gearing at June 30, 2000 stood at 89 per cent with
net debt of £15,354 million compared with £8,700 million
at March 31, 2000.
Airtel
------
Under an agreement announced in June 2000, BT has
agreed to support Vodafone in acquiring further shares in
Airtel and, should Vodafone's holding exceed 55 per cent,
then BT has the option to acquire the excess. In the
event that Vodafone holds in excess of 55 per cent,
Airtel's board will be restructured to give BT and
Vodafone equal representation. Through this agreement,
BT aims to increase its presence in the Spanish market
and jointly with Vodafone take a greater role in the long-
term development of Airtel. Vodafone announced on July
17, 2000 that, subject to regulatory approval, it had
agreed to acquire further shares in Airtel which would
increase its holding to 65.2 per cent.
_________________________________________________________
The company's final dividend for the year ended
March 31, 2000 of 13.2 pence per ordinary share, is
payable on September 18, 2000 to those shareholders on
the register on August 18, 2000. The last date for
lodging mandates for the BT dividend investment plan is
also August 18, 2000.
The second quarter and half year's results are
expected to be announced on November 9, 2000.
------------------------------------------------------------
GROUP PROFIT AND LOSS ACCOUNT
for the three months ended June 30, 2000
------------------------------------------------------------
First Quarter Year ended
ended June 30 March 31
2000 1999 2000
(unaudited) (note 1)
Notes £m £m £m
----------------------------------------------------------
TOTAL TURNOVER 2 6,791 4,987 21,903
Group's share of
associates and
joint ventures
turnover 2 (2,222) (457) (3,364)
Trading between
group and principal
joint venture 163 - 176
------ ------ ------
GROUP TURNOVER 4,732 4,530 18,715
Other operating
income 3 88 33 242
Operating costs (a) 4 (4,065) (3,633) (15,359)
------ ------ ------
Group operating
profit 755 930 3,598
Group's share of
operating profits
(losses) of
associates and
joint ventures 5 4 (95) (400)
------ ------ ------
Total operating profit 759 835 3,198
Profit on sale of
fixed asset invest-
ments and group
investments(b) 6 41 - 126
Interest receivable 63 46 193
Interest payable 7 (302) (109) (575)
------ ------ ------
PROFIT BEFORE
TAXATION 561 772 2,942
-------- -------- --------
PROFIT BEFORE GOODWILL
AMORTISATION,
EXCEPTIONAL ITEMS AND
TAXATION 8 637 804 3,100
-------- -------- --------
TAXATION (193) (235) (897)
-------- -------- --------
PROFIT AFTER TAXATION 368 537 2,045
Minority interests (47) (3) 10
------ ------ ------
PROFIT ATTRIBUTABLE TO
SHAREHOLDERS 321 534 2,055
====== ====== ======
EARNINGS PER SHARE 8
- BASIC 4.9p 8.3p 31.7p
====== ====== ======
- DILUTED 4.8p 8.1p 30.9p
====== ====== ======
EARNINGS PER SHARE
BEFORE GOODWILL
AMORTISATION AND
EXCEPTIONAL ITEMS 8
- BASIC 6.6p 8.7p 34.2p
====== ====== ======
- DILULTED 6.5p 8.5p 33.4p
====== ====== ======
------------------------------------------------------------
(a) Including exceptional
costs - (17) (111)
(b) Exceptional gain
41 - 126
GROUP CASH FLOW STATEMENT
for the three months ended June 30, 2000
------------------------------------------------------------
First Quarter Year ended
ended June 30 March 31
2000 1999 2000
(unaudited) (note 1)
£m £m £m
----------------------------------------------------------
NET CASH INFLOW FROM
OPERATING ACTIVITIES
(note 9) 1,427 1,291 5,849
DIVIDENDS FROM ASSOCIATES
AND JOINT VENTURES 5 - 5
NET CASH OUTFLOW FROM
RETURNS ON INVESTMENTS
AND SERVICING OF
FINANCE (219) (110) (163)
TAXATION PAID (119) (249) (1,311)
-------- -------- --------
Purchase of intangible
fixed assets (3,929) - -
Purchase of tangible
fixed assets (1,038) (766) (3,568)
Net sale (purchase) of
fixed asset investments 2 (11) (327)
Sale of tangible fixed
assets 23 24 143
-------- -------- --------
NET CASH OUTFLOW FOR
CAPITAL EXPENDITURE
AND FINANCIAL INVESTMENT (4,942) (753) (3,752)
NET CASH OUTFLOW FOR
ACQUISITIONS AND
DISPOSALS (2,235) (623) (6,405)
EQUITY DIVIDENDS PAID - - (1,364)
------ ------ ------
CASH OUTFLOW BEOFORE USE
OF LIQUID RESOURCES AND
FINANCING (6,083) (444) (7,141)
MANAGEMENT OF LIQUID
RESOURCES (521) (3) 1,236
Issue of ordinary share -------- -------- --------
capital 109 88 127
Issue of shares to
minorities - 15 432
New loans 1,396 635 1,473
Repayment of loans (211) (174) (587)
Net movement on short-
term borrowings 5,340 66 4,514
-------- -------- --------
NET CASH INFLOW
FROM FINANCING 6,634 630 5,959
------ ------ ------
INCREASE IN CASH 30 183 54
====== ====== ======
INCREASE IN
NET DEBT (note 12) (5,974) (341) (6,582)
====== ====== ======
GROUP BALANCE SHEET at June 30, 2000
------------------------------------------------------------
June 30 March 31
2000 1999 2000
(unaudited) (note 1)
£m £m £m
----------------------------------------------------------
FIXED ASSETS
Intangible assets
(note 11) 11,147 795 5,777
Tangible assets 18,787 17,971 18,163
Investments 6,910 2,277 5,878
------ ------ ------
36,844 21,043 29,818
CURRENT ASSETS -------- -------- --------
Stocks 233 218 225
Debtors 5,734 4,024 5,241
Investments 2,575 3,375 2,051
Cash at bank and in hand 345 226 253
------ ------ ------
8,887 7,843 7,770
------ ------ ------
CREDITORS: AMOUNTS
FALLING DUE WITHIN ONE
YEAR
Loans and other
borrowings 11,538 912 5,650
Other creditors 9,094 6,594 9,235
------ ------ ------
20,632 7,506 14,885
------ ------ ------
-------- -------- --------
NET CURRENT ASSETS
(LIABILITIES) (11,745) 337 (7,115)
------ ------ ------
TOTAL ASSETS LESS
CURRENT LIABILITIES 25,099 21,380 22,703
====== ====== ======
CREDITORS: AMOUNTS
FALLING DUE AFTER MORE
THAN ONE YEAR
Loans and other
borrowings 6,736 4,080 5,354
PROVISIONS FOR LIABILITIES
AND CHARGES (note 13) 1,138 1,479 1,056
MINORITY INTERESTS 579 232 498
CAPITAL AND RESERVES -------- -------- --------
Called up share capital 1,636 1,624 1,627
Reserves (note 14) 15,010 13,965 14,168
-------- -------- --------
TOTAL EQUITY
SHAREHOLDERS' FUNDS 16,646 15,589 15,795
------ ------ ------
25,099 21,380 22,703
====== ====== ======
-----------------------------------------------------------
NOTES
-----------------------------------------------------------
1 Basis of preparation
--------------------
The unaudited interim results of the group, which are
not statutory accounts, have been prepared on the basis of
the accounting policies as set out in the report and
accounts for the year ended March 31, 2000. Figures for
the year ended March 31, 2000 are extracts from the group
accounts for that year.
The group accounts for the year ended March 31, 2000,
on which the auditors made an unqualified report which did
not contain a statement under Section 237(2) or (3) of the
Companies Act 1985, have been delivered to the Registrar
of Companies.
2 Turnover
--------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Fixed network calls 1,411 1,491 5,908
Exchange lines 886 858 3,526
Mobile communications 620 508 2,170
Receipts from other
operators 591 451 1,974
Private circuits 263 287 1,135
Customer premises
equipment supply 179 209 847
Yellow Pages and other
directories 166 121 642
Other sales and
services 616 605 2,513
------ ------ ------
Group turnover 4,732 4,530 18,715
Share of associates and
joint ventures turnover 2,222 457 3,364
Group trading with
principal joint venture (163) - (176)
------ ------ ------
Total turnover 6,791 4,987 21,903
====== ====== ======
3 Other Operating income
----------------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Provision of administration
services to the Concert
global venture 59 - 79
Other 29 33 163
------ ------ ------
Total 88 33 242
====== ====== ======
4 Operating costs
---------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Staff costs 1,133 1,009 4,296
Own work capitalised (168) (102) (498)
Depreciation 687 656 2,752
Amortisation of goodwill 76 4 89
Payments to tele-
communication operators 846 697 3,086
Other operating
costs (a) 1,491 1,369 5,634
------ ------ ------
Total operating costs (b) 4,065 3,633 15,359
====== ====== ======
(a) Includes redundancy costs of £28m (1999 - £8m) for
the three months ended June 30, 2000 and £59m for the
year ended March 31, 2000.
(b) Includes exceptional costs of £17m in the three
months ended June 30, 1999 and 64m in the year ended
March 31, 2000 relating to the group's disengagement from
MCI and £47m relating to the closure of BT Cellnet's
analogue cellular system in the year ended March
31, 2000.
5 Group's share of operating profits (losses) of
----------------------------------------------
associates and joint ventures
-----------------------------
The results include goodwill amortisation of £41m
for the three months ended June 30, 2000 (1999 - £11m)
and £84m for the year ended March 31, 2000.
6 Profit on sale of fixed asset investments
-----------------------------------------
The profit on sale in the three months ended
June 30, 2000 is mainly attributable to the initial
public offering of I Net SpA in April 2000. The profit
on sale in the year ended March 31, 2000 is mainly
attributable to the sale of BT Communications Services KK
to Japan Telecom in August 1999.
7 Interest payable
----------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Group 246 94 488
Joint ventures and
associates 56 15 87
------ ------ ------
Total interest payable 302 109 575
====== ====== ======
8 Earnings per share
------------------
The basic earnings per share are calculated by
dividing the profit attributable to shareholders by the
average number of shares in issue after deducting the
company's shares held by employee share ownership trusts.
In calculating the diluted earnings per share, share
options outstanding and other potential ordinary shares
have been taken into account.
The average number of shares in the periods were:
First quarter Year ended
ended June 30 March 31
2000 1999 2000
millions of shares millions of shares
Basic 6,494 6,467 6,488
Diluted 6,632 6,632 6,642
The items taken into account in the calculation of
the earnings per share before goodwill amortisation and
exceptional items in the three months to June 30, 2000
are:
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Profit on sale of group
undertakings 41 - 126
Costs relating to the
closure of the analogue
cellular system - - (47)
Costs relating to the
disengagement from MCI - (17) (64)
Goodwill amortisation (117) (15) (173)
------ ------ ------
(76) (32) (158)
Tax credit (charge)
attributable (12) 5 (5)
------ ------ ------
Net credit (88) (27) (163)
====== ====== ======
9 Reconciliation of operating profit to operating cash flow
---------------------------------------------------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Group operating profit 755 930 3,598
Depreciation and
amortisation 763 660 2,841
Changes in working capital (75) (284) (241)
Provision movements and
other (16) (15) (349)
------ ------ ------
Net cash flow from
operating activities 1,427 1,291 5,849
====== ====== ======
10 Expenditure on tangible fixed assets
------------------------------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Plant and equipment:
Transmission equipment 470 292 1,563
Exchange equipment 80 86 413
Other network
equipment 187 108 703
Computers and office
equipment 99 80 502
Motor vehicles and
other 71 64 270
Land and buildings 43 64 229
------ ------ ------
Total expenditure 950 694 3,680
====== ====== ======
11 Intangible assets
-----------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Goodwill 6,987 795 5,775
Mobile licences 4,160 - 2
------ ------ ------
11,147 795 5,777
====== ====== ======
In June 2000, the group completed the acquisition of
the Dutch railways' 50% interest in Telfort for £1,207m,
including expenses. Goodwill of £1,050m arose on this
transaction which is being amortised over a period of 20
years.
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.
12 Net debt
--------
(a) Analysis
At June 30 At March 31
2000 1999 2000
£m £m £m
Long-term loans and other
borrowings falling due
after more than one year 6,736 4,080 5,354
Short-term borrowings and
long-term loans and other
borrowings falling due
within one year 11,538 912 5,650
------ ------ ------
Total debt 18,274 4,992 11,004
Short-term investments (2,575) (3,375) (2,051)
Cash at bank (345) (226) (253)
------ ------ ------
Net debt at end of period 15,354 1,391 8,700
====== ====== ======
(b) Reconciliation of net cash flow to movement in net debt
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Net debt at beginning
of period 8,700 953 953
Increase in net debt
resulting from cash
flows 5,974 341 6,582
Net debt assumed or
issued on acquisitions 35 48 971
Currency and other
movements 645 49 194
------ ------ ------
Net debt at end of
period 15,354 1,391 8,700
====== ====== ======
13 Provisions for liabilities and charges
--------------------------------------
At June 30 At March 31
2000 1999 2000
£m £m £m
Pension provisions 664 948 629
Deferred taxation 408 439 354
Other provisions 66 92 73
----- ----- -----
1,138 1,479 1,056
===== ===== =====
14 Reserves
--------
£m
Balance at April 1, 2000 14,168
Profit for the first quarter to June 30, 2000 321
Currency movements(a) 429
Premium on allotment of ordinary shares 330
Movement relating to BT's employee share
ownership trust (230)
Other movements (8)
------
Balance at June 30, 2000 15,010
======
(a) Net of £61m movement on the retranslation of foreign
borrowings and other hedging instruments.
15 Esat Telecom Group
------------------
On March 30, 2000, BT obtained control of the Esat
Telecom Group for approximately £1.5 billion. Esat
operates a fixed line telecommunications network in
Ireland. BT also gained control over Esat Digifone,
Ireland's second mobile operator, through Esat's
49.5 per cent interest in the company and an additional
1.0 per cent interest acquired by the BT group in January
2000. The majority of the consideration for the Esat
Telecom Group was paid in April 2000.
In January 2000, BT agreed to grant Telenor, the
owner of the remaining 49.5 per cent interest in Esat
Digifone, the right to exchange its interest in Esat
Digifone, subject to certain conditions, for a
33 per cent interest in Esat. If this right is
exercised, Telenor would have the additional right to
purchase, from BT, shares in Esat to give Telenor a 49.99
per cent interest in Esat for US$624 million plus
interest. In the event Telenor does not exercise its
right to exchange its interest in Esat Digifone, Telenor
has agreed to sell this interest to Esat for
approximately US$1,238 million.
16 Selected group activities
-------------------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
TURNOVER (a)
BT Cellnet 673 521 2,435
Yell 166 120 642
Syntegra 117 97 500
OPERATING PROFIT BEFORE
GOODWILL AMORTISATION
AND EXCEPTIONAL ITEMS
BT Cellnet 70 26 154
Yell 46 36 198
Syntegra 4 3 31
(a) Turnover includes sales to other group companies or units.
17 Selected group ventures
-----------------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
TOTAL RESULTS (a):
Turnover
Concert 1,187 n/a n/a
Cegetel 740 662 2,796
Airtel Movil 391 299 1,405
LG Telecom 365 155 834
Viag Interkom 265 96 657
Operating profit (loss)
before goodwill amortisation
Concert 119 n/a n/a
Cegetel 14 41 114
Airtel Movil 75 44 175
LG Telecom (76) 9 (59)
Viag Interkom (135) (150) (533)
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
GROUP'S SHARE OF RESULTS
(a):
Turnover
Concert (50%) 594 n/a n/a
Cegetel (26%) 192 172 727
Airtel Movil (18%) 70 53 250
LG Telecom (24%) 88 36 200
Viag Interkom (45%) 119 43 296
Operating profit (loss)
before goodwill amortisation
Concert (50%) 60 n/a n/a
Cegetel (26%) 4 11 30
Airtel Movil (18%) 13 8 31
LG Telecom (24%) (18) 2 (14)
Viag Interkom (45%) (61) (68) (240)
(a) Results are stated on BT's accounting policies.
n/a = not a BT investment throughout the reporting period.
18 Earnings before interest, taxation, depreciation and
----------------------------------------------------
amortisation (EBITDA)
---------------------
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Group operating profit 755 930 3,598
Depreciation 687 656 2,752
Amortisation 76 4 89
----- ----- -----
EBITDA 1,518 1,590 6,439
===== ===== =====
19 New divisional structure to be implemented in the year
------------------------------------------------------
ending March 31, 2001 - financial information
---------------------------------------------
The table below shows for illustrative purposes a
proforma of the results of BT's new business
organisation, to be implemented during the year ending
March 31, 2001, for the quarter ended June 30, 2000. It
is a restatement of the actual results for that period
showing the businesses had they traded throughout that
period. The information includes allocations and
apportionments of turnover and costs. These allocations
and apportionments will be reviewed on the implementation
of the new business organisation and may change.
Total operating
profit (loss)
First quarter Total before goodwill
ended June 30,2000 turnover EBITDA (b) amortisation
£bn £bn £bn
UK Wholesale and Retail 3.42 1.35 0.81
Ignite 1.02 (0.03) (0.11)
BTopenworld 0.05 (0.08) (0.08)
BT Wireless 2.01 0.27 0.13
Yell 0.17 0.05 0.05
Concert 0.59 0.11 0.06
Eliminations and other (a) (0.46) 0.05 0.02
----- ----- -----
Total 6.80 1.72 0.88
===== ===== =====
(a) Elimination of turnover between businesses which is
included in total turnover of the originating business.
Other includes group redundancy costs.
(b) Includes proportionate EBITDA of associates and
joint ventures.
20 United States Generally Accepted Accounting Principles
------------------------------------------------------
The results set out above have been prepared in
accordance with accounting principles generally accepted
in the United Kingdom. The table below sets out the
results calculated in accordance with United States
Generally Accepted Accounting Principles.
First quarter Year ended
ended June 30 March 31
2000 1999 2000
£m £m £m
Net income attributable
to shareholders 240 448 1,393
Earnings per ADS (£) 0.37 0.69 2.15
Each American Depositary Share (ADS) represents 10
ordinary shares of 25p each.
Shareholders' equity, calculated in accordance with
United States Generally Accepted Accounting Principles,
is £13,553m at June 30, 2000 (June 30, 1999 - £13,421m,
March 31, 2000 - £13,634m).
---------------------------------------------------------
Forward-looking statements - caution advised
--------------------------------------------
Certain statements in this results release are
forward-looking and are made in reliance on the safe
harbour provisions of the US Private Securities
Litigation Reform Act of 1995. These statements include,
without limitation, those concerning: expectations
regarding turnover, costs, growth and the communications
industry; the possible or assumed future results of
operations of BT and/or its associates and joint
ventures; the impact on BT of Concert, the global venture
with AT&T, and Concert's turnover and capital expenditure
requirements; expectations regarding the listing of some
of BT's businesses; expectations regarding the delivery
of new services and anticipated future demand for those
services; and investment plans.
Although BT believes that the expectations reflected
in these forward-looking statements are reasonable, it
can give no assurance that these expectations will prove
to have been correct. Because these statements involve
risks and uncertainties, actual results may differ
materially from those expressed or implied by these
forward-looking statements.
Factors that could cause differences between actual
results and those implied by the forward-looking
statements include, but are not limited to: material
adverse changes in economic conditions in the markets
served by BT and its new businesses; future regulatory
actions and conditions in BT's operating areas,
including competition from others in the UK and other
international communications markets; technological
innovations, including the cost of developing new
products and the need to increase expenditure improving
the quality of service; prolonged adverse weather
conditions resulting in a material increase in overtime,
staff or other costs; developments in the convergence of
technologies; the timing of entry and profitability of BT
and its new businesses in certain national and
international markets and fluctuations in foreign
currency exchange rates and interest rates.
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