Interim Results - Part 3
British Telecommunications PLC
8 November 2001
PART 3
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, 2001, with the
exception that deferred taxation is now stated on a full liability basis in
accordance with FRS 19 'Deferred tax' in place of the partial provisioning
basis formerly adopted. The deferred tax liabilities are not being discounted.
The comparative figures in the profit and loss account and balance sheet have
been restated. Figures for the quarter and six months ended September 30, 2000
and the year ended March 31, 2001 have been restated for the effects of FRS 19
and the earnings per share have been restated for the dilutionary effect of
the company's rights issue which closed on June 15, 2001. Additional
information in the profit and loss account statements has been presented for
the BT Group and mmO2, the subject of the demerger which is expected to take
effect on November 19, 2001.
The basis of preparation of the comparative financial information on mmO2 in
the profit and loss accounts on pages 28 to 31 and in the analysis by line of
business in the first part of note 2 is inconsistent in certain respects from
that disclosed for mmO2 in the mmO2 listing particulars. The trading
information in this BT financial results release is extracted from the group
returns used to prepare the consolidated accounts of BT, whereas the financial
information in the mmO2 Listing Particulars and that included in the Annex to
this release has been prepared from underlying records as if mmO2 had been a
discrete operation through the periods presented.
The interest charge allocated to mmO2 for all periods presented has been
calculated assuming that mmO2's net debt at September 30, 2001 of £500m, has
been in existence for the whole of the period, and has been bearing an
interest charge of 8 per cent per annum.
The allocation to mmO2 of goodwill and the related amortisation charge
for the six months ended September 30, 2001 is based on the carrying value of
the goodwill as recorded in the accounting records of BT, whereas the
financial information in the Annex to this release has been prepared from the
underlying records as if mmO2 had been a discrete operation throughout the
period presented.
On June 1, 2001, the group disposed of its interests in Japan Telecom and
J-Phone Communications and on June 29, 2001, its interest in Airtel. On June
25, 2001, the group sold Yell, its classified advertising directory businesses
in the UK and the USA. These activities are shown as discontinued operations
in the profit and loss accounts. The eliminations are inter-company
eliminations.
The group accounts for the year ended March 31, 2001, 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 Results of businesses
The tables below show the results of BT's current business organisation, which
was put in place during the year ended March 31, 2001. Elements of the
information are a restatement of the actual results of the group to show the
businesses as if they had traded as separate units throughout the relevant
comparative period. There is extensive trading between many of the business
units and profitability is dependent on the transfer price levels. These
intra-group trading arrangements have been subject to review and have changed
in certain instances. Comparative figures have been restated for these and
other changes and in certain instances have been determined using
apportionments and allocations. Further changes to the intra-group trading
arrangements may be made during the current financial year.
(a) Operating results
Group EBITDA Group operating Share of associates and
turnover before profit (loss) joint ventures total
exceptional before goodwill operating profit (loss)
items (i) amortisation and before goodwill
exceptional items amortisation and
(i) exceptional items
£m £m £m £m
Second
quarter
ended
September
30, 2001
BT Retail 3,038 315 269 -
BT Wholesale 3,027 991 523 -
BT Ignite 1,131 34 (87) (12)
BTopenworld 57 (25) (36) (2)
Other 83 77 (5) 63
Concert - - - (40)
Eliminations (2,779) - - -
(iii)
Total BT 4,557 1,392 664 9
Group before
exceptional
items
mmO2 1,062 71 (94) 2
Discontinued - - - -
activities
Eliminations (315) - - -
(iii)
Total before 5,304 1,463 570 11
exceptional
items
Exceptional - (81) (219) (825)
items and
goodwill
amortisation
Total after 5,304 1,382 351 (814)
exceptional
items
and goodwill
amortisation
2 Results of businesses continued
(a) Operating results
Group EBITDA Group operating Share of associates and
turnover before profit (loss) joint ventures total
exceptional before goodwill operating profit (loss)
items (i) amortisation and before goodwill
exceptional items amortisation and
(i) exceptional items
£m £m £m £m
Second
quarter
ended
September
30, 2000
(ii)
BT Retail 3,007 284 238 -
BT Wholesale 2,842 1,027 595 -
BT Ignite 820 22 (50) (29)
BTopenworld 33 (45) (48) (9)
Other 101 117 23 (3)
Concert - - - 46
Eliminations (2,544) - - -
(iii)
Total BT 4,259 1,405 758 5
Group before
exceptional
items
mmO2 804 117 39 (80)
Discontinued 167 51 47 134
activities
Eliminations (210) - - -
and other
(iii)
Total before 5,020 1,573 844 59
exceptional
items
Exceptional - - (91) (51)
items and
goodwill
amortisation
Total after 5,020 1,573 753 8
exceptional
items and
goodwill
amortisation
2 Results of businesses continued
(a) Operating results
Group EBITDA Group operating Share of associates and
turnover before profit (loss) joint ventures total
exceptional before goodwill operating profit (loss)
items (i) amortisation and before goodwill
exceptional items amortisation and
(i) exceptional items
£m £m £m £m
Half year
ended
September
30, 2001
BT Retail 6,032 676 585 -
BT Wholesale 6,016 1,951 1,010 -
BT Ignite 2,147 70 (165) (27)
BTopenworld 103 (63) (77) (6)
Other 187 186 9 112
Concert - - - (121)
Eliminations (5,430) - - -
(iii)
Total BT 9,055 2,820 1,362 (42)
Group before
exceptional
items
mmO2 2,099 135 (189) 5
Discontinued 171 41 37 68
activities
Eliminations (567) - - -
(iii)
Total before 10,758 2,996 1,210 31
exceptional
items
Exceptional - (95) (354) (855)
items and
goodwill
amortisation
Total after 10,758 2,901 856 (824)
exceptional
items and
goodwill
amortisation
2 Results of businesses continued
(a) Operating results
Group EBITDA Group operating Share of associates and
turnover before profit (loss) joint ventures total
exceptional before goodwill operating profit (loss)
£m items (i) amortisation and before goodwill
exceptional items amortisation and
£m (i) exceptional items
£m £m
Half year
ended
September
30, 2000
(ii)
BT Retail 5,968 553 463 -
BT Wholesale 5,640 2,042 1,190 -
BT Ignite 1,572 (17) (151) (69)
BTopenworld 59 (79) (85) (45)
Other 157 255 76 (41)
Concert - - - 106
Eliminations (5,138) - - -
(iii)
Total BT 8,258 2,754 1,493 (49)
Group before
exceptional
items
mmO2 1,568 233 84 (135)
Discontinued 332 104 98 288
activities
Eliminations (406) - - -
(iii)
Total before 9,752 3,091 1,675 104
exceptional
items
Exceptional - - (167) (92)
items and
goodwill
amortisation
Total after 9,752 3,091 1,508 12
exceptional
items
and goodwill
amortisation
(i) Excludes associates and joint ventures.
(ii) The results of the lines of business for the quarter and half year
ended September 30, 2000 have been restated.
(iii) Includes elimination of turnover between businesses which is
included in total turnover of the originating business.
2 Results of businesses continued
BT Retail analysis
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Group turnover
Fixed network calls 1,185 1,255 2,340 2,493
Exchange lines 900 826 1,787 1,649
Private services 131 160 284 319
Customer premises equipment 154 156 298 308
supply
Other sales and services 279 254 532 519
Sales to other BT 389 356 791 680
businesses
Total group turnover 3,038 3,007 6,032 5,968
Payments to network 2,197 2,064 4,319 4,173
operators and other cost of
sales
Gross margin 841 943 1,713 1,795
Selling, general and 526 659 1,037 1,242
administration costs
EBITDA 315 284 676 553
Depreciation 46 46 91 90
Group operating profit 269 238 585 463
before exceptional items
2 Results of businesses continued
BT Wholesale analysis
Second quarter ended Half year ended September
September 30 30
2001 2000 2001 2000
£m £m £m £m
Group turnover
BT Retail 1,985 1,982 3,915 3,933
mmO2 87 53 171 135
Other BT lines of 112 113 220 218
business
Concert global venture 148 119 286 285
UK fixed operators 480 406 976 755
UK mobile operators 215 169 448 314
Total group turnover 3,027 2,842 6,016 5,640
Operating costs
Net staff costs 154 137 308 276
Payments to network 850 754 1,693 1,445
operators
Payments to other BT 994 895 1,983 1,861
businesses (a)
Other operating costs 92 77 201 152
Other operating income (54) (48) (120) (136)
Total operating costs 2,036 1,815 4,065 3,598
before depreciation
EBITDA 991 1,027 1,951 2,042
Depreciation 468 432 941 852
Group operating profit 523 595 1,010 1,190
before exceptional
items
(a) Includes 121 104 239 200
payments to mmO2
for interconnect
2 Results of businesses continued
BT Ignite analysis
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Group turnover
Syntegra 145 132 288 249
Ignite solutions 424 369 831 712
Application service provision 15 11 33 24
Content hosting 21 13 41 23
Media distribution 70 64 138 127
European connectivity 248 108 473 174
UK IP and other 267 183 508 366
Eliminations (59) (60) (165) (103)
Total group turnover 1,131 820 2,147 1,572
EBITDA
Syntegra 3 11 5 18
Ignite solutions 35 31 71 54
Application service provision (5) (15) (10) (28)
Content hosting (14) (11) (27) (23)
Media distribution 17 26 34 47
European connectivity (29) (22) (53) (29)
UK IP and other 27 2 50 (56)
Total EBITDA 34 22 70 (17)
Operating loss before goodwill
amortisation and exceptional items
Syntegra 1 8 - 12
Ignite solutions 15 14 32 25
Application service provision (7) (19) (14) (33)
Content hosting (16) (12) (34) (26)
Media distribution 10 22 22 37
European connectivity (68) (50) (131) (82)
UK IP and other (22) (13) (40) (84)
Total operating loss before (87) (50) (165) (151)
goodwill amortisation and
exceptional items
2 Results of businesses continued
mmO2 analysis
Second quarter ended Half year ended
September 30 September 30
2001 2000(i) 2001 2000(i)
pro forma pro forma
£m £m £m £m
Group turnover
UK - BT Cellnet 675 663 1,368 1,334
Germany - Viag Interkom 221 167 420 293
Ireland - Esat Digifone 98 77 193 144
The Netherlands - Telfort Mobiel 49 28 89 52
Genie 28 1 39 1
Other and eliminations (9) 1 (10) 13
Total group turnover 1,062 937 2,099 1,837
EBITDA before exceptional items
UK - BT Cellnet 161 161 327 293
Germany - Viag Interkom (48) (108) (114) (215)
Ireland - Esat Digifone 31 15 59 32
The Netherlands - Telfort Mobiel (37) (20) (54) (48)
Genie (22) (31) (55) (49)
Other (14) (30) (28) (40)
Total EBITDA before exceptional 71 (13) 135 (27)
items
Operating (loss) before goodwill
amortisation and exceptional items
UK - BT Cellnet 86 105 183 179
Germany - Viag Interkom (98) (150) (221) (295)
Ireland - Esat Digifone 14 3 29 10
The Netherlands - Telfort Mobiel (56) (31) (87) (65)
Genie (27) (31) (65) (49)
Other (13) (23) (28) (35)
Total operating loss before goodwill (94) (127) (189) (255)
amortisation and exceptional items
Capital expenditure
UK - BT Cellnet 135 113 257 225
Germany - Viag Interkom 82 97 161 184
Ireland - Esat Digifone 25 31 44 67
The Netherlands - Telfort Mobiel 31 58 68 73
Genie 30 7 41 19
Other 36 7 52 20
Total capital expenditure 339 313 623 588
(i) The results of the second quarter and half year ended September 30,
2000 have been shown on a pro forma basis to include three months and six
months respectively of all the operating entities of mmO2 as though they
were subsidiaries for the whole of those periods.
2 Results of businesses continued
(b) Capital expenditure on plant, equipment and property
Second quarter ended September 30 Half year ended September
30
2001 2000 2001 2000
£m £m £m £m
BT Retail 18 51 48 104
BT Wholesale 439 533 884 1,013
BT Ignite 104 181 246 314
BTopenworld 3 8 5 30
Other 96 111 182 198
Total BT Group 660 884 1,365 1,659
mmO2 339 204 623 377
Discontinued - 7 1 9
activities
Total 999 1,095 1,989 2,045
(c) Net assets
Net operating assets Associates and joint
(liabilities) (i) ventures
£m £m
At September 30,
2001
BT Retail 1,077 -
BT Wholesale 11,958 -
BT Ignite 3,817 122
BTopenworld (30) -
Concert - 430
Other 1,272 729
Total BT Group 18,094 1,281
mmO2 19,923 27
Total 38,017 1,308
At March 31, 2001
BT Retail 1,114 -
BT Wholesale 12,511 -
BT Ignite 3,584 178
BTopenworld (42) 10
Concert - 1,430
Other 1,775 2,511
Total BT Group 18,942 4,129
mmO2 18,634 27
Total 37,576 4,156
(i) Net operating assets comprise tangible and intangible fixed assets,
stocks, debtors less creditors, excluding loans and other borrowings, and
provisions for liabilities and charges, excluding deferred tax.
3 Other operating income
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Provision of administration 28 30 70 89
services to the Concert
global venture
Other 51 35 110 64
Total 79 65 180 153
4 Group's share of profit (losses) of associates and joint
ventures
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Share of operating profits before 11 59 31 104
goodwill amortisation and
exceptional items
Amortisation of goodwill (9) (51) (39) (92)
Goodwill impairment (265) - (265) -
Provision for impairment of (551) - (551) -
Concert joint venture tangible
fixed assets on unwind
Group's share of operating (814) 8 (824) 12
profits (losses) of associates
and joint ventures
5 Profit on sale of fixed asset investments and group undertakings
The profit in the six months ended September 30, 2001 of £4,495m is
mainly attributable to the profit of £2,361m on the sale of BT's interests in
Japan Telecom and J-Phones Communications, the profit of £844m on the sale of
BT's interest in Airtel, the profit of £1,137m on the sale of Yell, the
group's classified advertising directory business, and £120m profit recognised
on BSkyB shares that were able to be sold on receipt, obtained in exchange for
the residual interest in British Interactive Broadcasting in May 2001.
6 Amounts written off investments
The amounts written off investments in the three and six months ended
September 30, 2001 of £535m are mainly attributable to AT&T Canada, £347m and
Impsat, £157m.
7 Net interest payable
Second quarter ended September Half year ended September
30 30
2001 2000 2001 2000
£m £m £m £m
Group 460 312 975 558
Joint 35 66 77 122
ventures
and
associates
Total 495 378 1,052 680
interest
payable
Interest (133) (64) (216) (127)
receivable
Net 362 314 836 553
interest
payable
8 Earnings (loss) per share
The basic earnings (loss) per share are calculated by dividing the profit
(loss) 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 diluted loss
per share is shown as the same as the basic loss per share. Comparative
figures have been restated for the rights issue which closed on June 15, 2001.
The average number of shares and attributable earnings (loss) in the
periods were:
Second quarter ended September 30 Half year ended September 30
2001 2000 2001 2000
(restated) (restated)
millions of shares millions of shares
Basic 8,530 7,282 8,021 7,262
Diluted 8,578 7,390 8,086 7,391
8 Earnings (loss) per share continued
A reconciliation of attributable earnings (loss) to attributable earnings
before goodwill amortisation and exceptional items is as follows:
Second quarter Half year ended
ended September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Profit (loss) attributable to (1,477) 256 2,870 562
shareholders
Exceptional items:
Profit on sale of group 11 24 4,495 65
undertakings and fixed asset
investments
Goodwill impairment in subsidiary (16) - (16) -
undertakings
Goodwill impairment in associates (265) - (265) -
and joint ventures
Provision for impairment of Concert (551) - (551) -
joint venture tangible fixed assets
on unwind
Other asset impairment (7) - (7) -
Amounts written off investments (535) - (535) -
mmO2 demerger costs (74) - (88) -
Goodwill amortisation (131) (142) (282) (259)
Net credit (charge) before tax and (1,568) (118) 2,751 (194)
minority interests
Tax credit (charge) attributable (2) - 2 (12)
Minority interests - 1 - (21)
Net credit (charge) (1,570) (117) 2,753 (227)
Profit attributable to shareholders 93 373 117 789
before goodwill amortisation and
exceptional items
Earnings (loss) per share
- basic (17.3)p 3.5p 35.8p 7.7p
- diluted (17.3)p 3.5p 35.5p 7.6p
Earnings per share before goodwill
amortisation and exceptional items
- basic 1.1p 5.1p 1.5p 10.9p
- diluted 1.1p 5.0p 1.4p 10.7p
9 Reconciliation of operating profit to operating cash flow
Second quarter ended Half year ended September
September 30 30
2001 2000 2001 2000
£m £m £m £m
Group operating 351 753 856 1,508
profit
Depreciation and 1,031 820 2,045 1,583
amortisation
Changes in working 96 (277) (212) (352)
capital
Provision movements (45) 40 (2) 24
and other
Net cash flow from 1,433 1,336 2,687 2,763
operating
activities
10 Intangible assets
At September 30 At March 31
2001 2000 2001
£m £m £m
Mobile licences 9,707 4,456 9,732
Goodwill 8,850 6,650 8,648
18,557 11,106 18,380
11 Net debt
(a) Analysis
At September 30 At
March
31
2001 2000 2001
£m £m £m
Long-term loans and other borrowings falling due 17,704 6,399 18,775
after more than one year
Short-term borrowings and long-term loans and 6,202 14,800 12,136
other borrowings falling due within one year
Total debt 23,906 21,199 30,911
Short-term investments (6,973) (2,091) (2,557)
Cash at bank (404) (369) (412)
Net debt at end of period 16,529 18,739 27,942
11 Net debt continued
(b) Reconciliation of net cash flow to movement in net debt
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Net debt at beginning of 17,481 15,354 27,942 8,700
period
Increase (decrease) in net (482) 3,966 (11,141) 9,940
debt resulting from cash
flows
Net debt assumed or issued - 11 (15) 46
on acquisitions
Currency and other 174 (591) 27 (30)
movements
Other non-cash movements (644) (1) (284) 83
Net debt at end of period 16,529 18,739 16,529 18,739
12 Provisions for liabilities and charges
At September 30 At March 31
2001 2000 2001
(restated) (restated)
£m £m £m
Deferred taxation 2,276 2,409 2,285
Pension provisions 372 679 335
Other provisions 115 73 118
2,763 3,161 2,738
Following the adoption of FRS 19 on April 1, 2001, the deferred tax provision
has been restated to a full liability provision method and has increased on
restatement by £2,015m at March 31, 2001 and by £1,985m at September 30, 2000.
13 Share capital and reserves
£m
Share capital
Balance at April 1, 2001 1,646
Rights issue (a) 494
Issued during period 10
Balance at September 30, 2001 2,150
Reserves
Balance at April 1, 2001, as reported 12,423
Less: adjustment for restatement of deferred tax provision (2,015)
Balance at April 1, 2001, as restated 10,408
Share premium on rights issue, less £52m expenses (a) 5,382
Premium on other allotments of ordinary shares 165
Profit for the six months to September 30, 2001 2,870
Currency movements (b) 10
Movement relating to BT's employee share ownership trust (67)
Other movements 14
Balance at September 30, 2001 18,782
Total share capital and reserves at September 30, 2001 20,932
(a) The group's rights issue closed on June 15, 2001. A total of 1,976
million ordinary shares of 25 pence were issued at 300 pence per share in
a 3 for 10 rights issue. Of the total of £5,876m raised, net of £52m
expenses, £494m has been credited to share capital and the balance to
share premium account. The total number of issued ordinary shares was
8,601 million at September 30, 2001.
(b) Net of £69m movement on the retranslation of foreign borrowings and
other hedging instruments.
14 Digifone
Under an agreement made in January 2000, on April 18, 2001 BT completed
the acquisition of the 49.5 per cent minority interest in Digifone, Ireland's
second mobile operator, for approximately £869m including acquisition
expenses.
15 Earnings before interest, taxation, depreciation and amortisation
(EBITDA)
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Group operating profit 351 753 856 1,508
Depreciation 892 725 1,779 1,412
Amortisation 139 95 266 171
EBITDA 1,382 1,573 2,901 3,091
Exceptional items 81 - 95 -
excluding depreciation
and amortisation
EBITDA before 1,463 1,573 2,996 3,091
exceptional items
16 Results of associates and joint ventures
Group's share Turnover EBITDA Total operating
£m before profit (loss) before
exceptional items goodwill amortisation
£m and exceptional items
£m
Second quarter ended
September 30, 2001
Concert global venture 579 9 (40)
Cegetel 267 83 51
Other continuing 268 35 -
Discontinued investments - - -
Total 1,114 127 11
Second quarter ended
September 30, 2000
Concert global venture 836 58 46
Cegetel 213 44 20
Other continuing 358 (50) (141)
Discontinued investments 1,354 383 134
Total 2,761 435 59
Half year ended
September 30, 2001
Concert global venture 1,179 (24) (121)
Cegetel 519 155 95
Other continuing 547 57 (11)
Discontinued investments 634 148 68
Total 2,879 336 31
16 Results of associates and joint ventures continued
Group's share Turnover EBITDA Total operating
£m before profit (loss) before
exceptional items goodwill amortisation
£m and exceptional items
£m
Half year ended
September 30, 2000
Concert global venture 1,430 168 106
Cegetel 405 73 24
Other continuing 826 (146) (314)
Discontinued investments 2,322 545 288
Total 4,983 640 104
17 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.
Second quarter ended Half year ended
September 30 September 30
2001 2000 2001 2000
£m £m £m £m
Net income (loss) (1,046) (70) 2,705 170
attributable to
shareholders
Earnings (loss) per ADS (1.23) (0.10) 3.37 0.23
(£)
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 £18,538m at September 30, 2001 (September
30, 2000 - £13,170m, March 31, 2001 - £10,231m).
____________________________________________________________
Non-financial statistics
As at September 30, 2001, unless otherwise stated
mmO2 - selected operations
BT Cellnet:
Pre-pay customer base (000s) 7,550
Post-pay customer base (000s) 3,418
Total customer base (000s) 10,968
WAP unique visitors (000s) 820
Pre-pay ARPU (£ per year) 108
Post-pay ARPU (£ per year) 489
Blended ARPU (£ per year) 238
Viag Interkom:
Pre-pay customer base (000s) 1,643
Post-pay customer base (000s) 1,751
Total customer base (000s) 3,394
WAP unique visitors (000s) 272
Pre-pay ARPU (£ per year) 58
Post-pay ARPU (£ per year) 304
Blended ARPU (£ per year) 184
Esat Digifone:
Pre-pay customer base (000s) 755
Post-pay customer base (000s) 350
Total customer base (000s) 1,105
WAP unique visitors (000s) 83
Pre-pay ARPU (£ per year) 190
Post-pay ARPU (£ per year) 623
Blended ARPU (£ per year) 330
Telfort:
Pre-pay customer base (000s) 1,061
Post-pay customer base (000s) 217
Total customer base (000s) 1,278
WAP unique visitors (000s) 376
Pre-pay ARPU (£ per year) 83
Post-pay ARPU (£ per year) 487
Blended ARPU (£ per year) 165
Notes:
(i) Customer bases are active customers. Pre-pay customers are defined as
active if they have used the network within the last three months.
(ii) ARPU is the Annual Average Revenue per user.
(iii) The basis on which customer numbers, ARPU and WAP unique visitors
figures are calculated is set out in Notes 1, 2 and 7 on Page 20 of the
mmO2 Listing Particulars.
(iv) Viag ARPU per year is calculated by annualising Viag's ARPU for the
six months to September 30, 2001.
Non-financial statistics continued
As at September 30, 2001, unless otherwise stated
BT Group
UK exchange lines:
Business, including wholesale (000s) 9,019
Residential, including service providers (000s) 20,010
BT Wholesale
Optical fibre in network (km millions) 5.5
SDH nodes 2,123
Next generation trunk switches 66
BT Dial IP ports connected to groomed local exchanges (000s) (a) 372
ADSL enabled exchanges 1,000
ADSL lines provided (000s) 89
(a) Grooming applies to internet type calls originating from BT customers.
These calls are grouped together and then routed directly to BT's Dial IP
platform or other operators' networks. Grooming occurs at all BT's digital
local exchanges.
BT Ignite
Inter-city fibre network (kms) (a) 52,000
Web hosting centres 20
Dial access ports 600,000
(a) Of which over 40,000 route kilometres are through our wholly owned
businesses in Europe.
BTopenworld
Fixed ISP UK customers:
Pay As You Go (000s) 565
ISP Customers (unmetered) (000s) 868
ADSL customers (000s) 52
Total customer base (000s) 1,485
______________________________________________________________________
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 lines of business, associates and joint ventures; the impact
on BT of the unwind of Concert, the global venture with AT&T; expectations
regarding capital expenditure, investment plans and cost reductions;
expectations regarding the disposal of non-core businesses and group property,
intentions regarding the demerger of mmO2, the level of BT's borrowings, the
unwind of Concert and the exit from AT&T Canada.
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
lines of business; 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 businesses in certain national and international markets; fluctuations in
foreign currency exchange rates and interest rates; general financial market
conditions affecting BT's ability to fulfil its intentions regarding the
demerger of mmO2, its debt reduction, the unwind of Concert and the exit from
AT&T Canada.
A-1
ANNEX
Supplementary mmO2 group financial information
Set out below is the interim profit and loss account, balance sheet and cash
flow statement of the mmO2 group as at and for the six months ended September
30, 2001, together with comparative information. The information in this Annex
is supplementary to and should be read in conjunction with the summary
financial information relating to mmO2 group set out in this BT financial
results release.
A-2
mmO2 group interim financial information for the six months ended September
30, 2001
COMBINED PROFIT AND LOSS ACCOUNT
6 months to 6 months to
September September
(unaudited) 30, 2001 30, 2000
£ million £ million
Group turnover 2,099 1,520
Group operating loss (373) (65)
Share of associates and joint ventures operating 6 (144)
profits/(losses)
Net interest (payable)/receivable (1) 5
Loss on ordinary activities before taxation (368) (204)
Tax on loss on ordinary activities (19) (43)
Loss on ordinary activities after taxation (387) (247)
Minority interests - (2)
Loss for the financial period (387) (249)
Basic and diluted loss per share (pence) (4.5)p (2.9)p
Basic and diluted earnings per share before
depreciation, amortisation, exceptional items,
minority interests, interest and taxation (pence) 1.9p 0.8p
A-3
COMBINED BALANCE SHEET
(unaudited) September 30, March 31,
2001 2001
£ million £ million
Fixed assets 20,375 19,384
Current assets 1,967 1,784
Creditors: amounts falling due within one year (1,354) (1,504)
Net current assets 613 280
Total assets less current liabilities 20,988 19,664
Creditors: amounts falling due after more than (1,273) (399)
one year
Provisions for liabilities and charges (224) (205)
Equity minority interests - 8
Net assets 19,491 19,068
Owners' net investment 19,491 19,068
A-4
COMBINED CASH FLOW STATEMENT
6 months ended 6 months ended
September 30, 2001 September 30, 2000
(unaudited)
£ million £ million
Net cash inflow from operating 422 818
activities
Net cash inflow from returns on 5 5
investments and servicing of finance
Taxation - (6)
Net cash outflow from capital (687) (4,664)
expenditure and financial investment
Net cash outflow from acquisitions and (873) (6,664)
disposals
Cash outflow before financing (1,133) (10,511)
Net cash inflow from financing 1,155 10,581
Increase in cash in the period 22 70
A-5
NOTE TO THE mmO2 GROUP INTERIM FINANCIAL INFORMATION
Basis of preparation
The mmO2 group ('mmO2') unaudited interim financial information has been
prepared using the accounting principles and policies set out on pages 119 to
124 (inclusive) of the Listing Particulars of mmO2 plc published on September
18, 2001 (the 'Listing Particulars'), with the exception of the accounting for
certain allocated loans and borrowings from BT referred to below. As explained
on page 34 of the BT financial results release, the basis of preparation of
the comparative information for mmO2 included earlier in this results release
is inconsistent in certain respects with that disclosed in the Listing
Particulars.
During the period covered by these interim results, the mmO2 group was not
constituted as a discrete legal group of companies under a single holding
company. All equity funding of mmO2's businesses during the period was
provided via BT's net investment (the 'Owners' net investment').
On 16 November, 2001 mmO2 will be transferred to the new mmO2 group holding
company, mmO2 plc, via a scheme of arrangement under section 425 of the
Companies Act 1985. Following this, on November 19, 2001, holders of existing
BT shares will receive one share in mmO2 plc and one share in BT Group plc for
each share held.
For the purpose of the preparation of the financial information contained in
the Listing Particulars, a portion of BT's short- and long-term loans and
other borrowings were allocated to mmO2. The basis of presentation adopted for
the purposes of the mmO2 interim financial information in this Annex shows the
results and financial position of mmO2 with no allocations of loans and other
borrowings from BT, except as referred to below. This is consistent with the
present debt structure of mmO2 and that which will exist on demerger. The
impact of this difference in presentation on the balance sheet at March 31,
2001 is to increase Owners' net investment from £2,452 million to £19,068
million. Loans and other borrowings previously allocated to mmO2 for the
purpose of the Listing Particulars of £16,140 million and the related interest
payable, net of taxation, of £476 million, have not been allocated to mmO2 for
the purpose of this mmO2 interim financial information. The actual interest
charge for mmO2 included in the interim financial information on page A-2
reflects the interest on mmO2's actual borrowings in the periods shown, by
contrast with the mmO2 information included earlier in the BT financial
results release, which, as explained on page 34, has been calculated assuming
that mmO2's net debt (excluding the QTE lease liability) was £500m throughout
the whole period.
A-6
In accordance with the Separation Agreement dated September 18, 2001 as
amended and restated by an Amending Agreement dated October 31, 2001 between,
among others, mmO2 and BT, BT has converted to equity part of the intercompany
debt owed to BT, by mmO2, such that the net indebtedness (excluding the QTE
lease liability) owed by mmO2 as at September 30, 2001 is approximately £500
million. This amount has been included in the interim financial information as
the net debt owed by mmO2 (including to BT) at September 30, 2001.
The financial information presented may not necessarily reflect the financial
position, operating results, borrowings, BT's net investment and cash flows of
mmO2 as they would have been had mmO2 been a separate, stand alone entity
during the periods presented. In particular, on demerger BT's net investment
in mmO2 and loans due to BT will be replaced by share capital and reserves and
by external borrowings, respectively. These results are unaudited and do not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985.
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