Preliminary Results
BT Group PLC
19 May 2005
May 19, 2005
PRELIMINARY RESULTS - YEAR TO MARCH 31, 2005
FOURTH QUARTER HIGHLIGHTS
•Group turnover up 2 per cent at £4,870 million
•New wave turnover of £1,367 million up 27 per cent
•Profit before taxation, goodwill amortisation and exceptional items of
£557 million, up 21 per cent
•Earnings per share before goodwill amortisation and exceptional items up 26
per cent at 4.9 pence
•Net debt of £7,786 million, £639 million lower than previous year
•Acquisitions of Infonet and Albacom successfully completed
•Broadband end users now more than 5 million with a record 825,000 DSL
connections in the quarter
FULL YEAR HIGHLIGHTS
•Group turnover up 1 per cent (up 2 per cent excluding the impact of acquisitions
and mobile termination rate reductions) at £18,623 million
•New wave turnover of £4,471 million up 32 per cent
•Global Services generated its first full year operating profit, at £7 million,
an improvement of £112 million
•Profit before taxation, goodwill amortisation and exceptional items of
£2,085million, up 4percent
•Earnings per share before goodwill amortisation and exceptional items of 18.1
pence, up 7 per cent
•Full year dividend of 10.4 pence per share, up 22 per cent
•Free cash flow before acquisitions, disposals and dividends of £2,282 million,
up 10 per cent
The full profit and loss account, cash flow statement and balance sheet, drawn
up in accordance with UK generally accepted accounting principles, from which
this information is extracted are set out on pages 16 to 21.
Chairman's statement
Sir Christopher Bland, Chairman, commenting on the full year results, said:
"The financial results for the full year reflect the continuing strong trends
that we have seen during the year. New wave revenues have grown by 32 per cent
to £4.5 billion and now represent nearly a quarter of our business. Earnings per
share before goodwill amortisation and exceptional items of 18.1 pence have more
than doubled over the past three years. We have again generated free cash flow
of more than £2 billion and reduced net debt to below £8 billion, a level with
which we are comfortable. Net debt is now more than £20 billion lower than in
2001. The transformation of our business is reflected in our financial results.
"I am particularly pleased to announce a full year dividend of 10.4 pence per
share, which is 22 per cent higher than last year. This shows our continued
commitment to improving shareholder returns whilst building for the future."
Chief Executive's statement
Ben Verwaayen, Chief Executive, commenting on the fourth quarter results, said:
"This has been an excellent quarter to end an exciting year.
"We have now delivered five consecutive quarters of underlying revenue growth
and twelve consecutive quarters of growth in underlying earnings per share*.
These are great results and we expect to see the overall revenue trends
continuing.
"We have more than doubled the number of broadband DSL connections in the year,
hit the 5 million target a year early and are increasing broadband speeds by up
to four times.
"Our global networked IT services business is building strongly and with
purpose. We have successfully completed the acquisitions of Albacom, Infonet and
Radianz, extending our global reach still further. Even after excluding the
effect of acquisitions, our Global Services' revenues grew by 10 per cent in the
quarter. Our ICT order intake was a record £3.8 billion in the quarter and takes
orders for the year to more than £7 billion. This is a profitable business today
and we expect it to continue to grow.
"We are delivering value through transforming the business and are confident
that our strategy will continue to deliver value in the future."
*before goodwill amortisation, exceptional items and leaver costs
RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED MARCH 31, 2005
Fourth quarter Year
2005 2004 Better 2005 2004 Better
(worse) (worse)
£m £m % £m £m %
Group turnover 4,870 4,787 2 18,623 18,519 1
EBITDA
- before
exceptional
items and
leaver costs 1,527 1,561 (2) 5,870 6,015 (2)
- before
exceptional
items 1,483 1,412 5 5,704 5,813 (2)
Profit before
taxation
- before
goodwill,
exceptional
items and
leaver costs 601 608 (1) 2,251 2,215 2
- before
goodwill and
exceptional
items 557 459 21 2,085 2,013 4
- after
goodwill and
exceptional
items 570 423 35 2,343 1,945 20
Earnings per
share
- before
goodwill,
exceptional
items and
leaver costs 5.2p 5.1p 2 19.5p 18.5p 5
- before
goodwill and
exceptional
items 4.9p 3.9p 26 18.1p 16.9p 7
- after
goodwill and
exceptional
items 5.1p 3.5p 46 21.4p 16.4p 30
Capital
expenditure 744 844 12 3,011 2,673 (13)
Free cash flow 1,144 819 40 2,282 2,071 10
Net debt 7,786 8,425 8
The commentary focuses on the results before goodwill amortisation and
exceptional items. This is consistent with the way that financial performance is
measured by management and we believe allows a meaningful comparison to be made
of the trading results of the group.
As noted in the first quarter, the results have been restated to reflect the
requirements of UITF Abstract 38 'Accounting for ESOP trusts' and the related
amendments to UITF Abstract 17 (revised 2003) 'Employee Share Schemes' which the
group has adopted (see note 1). This restatement results in an additional
operating profit charge of £3 million for the year and £nil for the quarter
ended March 31, 2004.
The full profit and loss account, cash flow statement and balance sheet are
provided on pages 16 to 21. A reconciliation of EBITDA to group operating profit
is provided on page 29.
GROUP RESULTS
Fourth quarter ended March 31, 2005
Turnover was 2 per cent higher at £4,870 million with strong growth of new wave
turnover and the impact of acquisitions more than offsetting the decline in
traditional turnover. The revenue of £111 million generated from the
acquisitions of Albacom and Infonet in the fourth quarter substantially offset
the impact of regulatory reductions to mobile termination rates, which have no
impact on profitability. Earnings per share before goodwill amortisation and
exceptional items increased by 26 per cent to 4.9 pence, helped by lower leaver
costs in the quarter.
The strong growth in new wave turnover continued and at £1,367 million was
27 per cent higher than last year. New wave turnover accounted for 28 per cent
of the group's turnover compared to 23 per cent in the fourth quarter of last
year. New wave turnover is mainly generated from Information and Communications
Technology (ICT), broadband and mobility. ICT turnover grew by 15 per cent to
£916 million. Broadband turnover increased by 77 per cent to £292 million.
Mobility turnover at £58 million achieved growth of 45 per cent.
Turnover from the group's traditional businesses declined by 9 per cent
(5 per cent excluding the impact of reductions to mobile termination rates).
This continued decline reflects regulatory intervention, competition, price
reductions and also technological changes that we are using to drive customers
from traditional services to new wave services, such as broadband and Internet
Protocol Virtual Private Networks (IPVPN).
Total consumer turnover in the fourth quarter was 6 per cent lower (5 per cent
lower excluding the impact of reductions to mobile termination rates). New wave
consumer turnover increased by 81 per cent, driven by the continuing growth of
broadband and mobility. Residential broadband connections almost doubled to
1,330,000 at March 31, 2005 and mobility connections increased by more than four
fold to 187,000 at March 31, 2005 from 41,000 last year. In February 2005 we
announced that our broadband customers would be able to receive broadband at
speeds of up to 2Mbit/s (up to four times faster) at no extra cost.
Traditional consumer turnover declined 11 per cent year on year reflecting the
continued impact of Carrier Pre-Selection (CPS) and broadband substitution.
There are now 17.6 million BT Together customers and the number of customers on
the frequent user packages continues to grow. BT Together Option 2 increased by
8 per cent to 1.3 million and Option 3, which offers unlimited UK fixed line
calls, increased by 80 per cent against last year to 582,000 by March 31, 2005,
an increase of 5 per cent in the quarter.
The underlying 12 month rolling average revenue per consumer household (net of
mobile termination charges) of £256 declined by £3 compared to last quarter,
with increased broadband volumes more than offset by lower call revenues.
Contracted revenues increased by 2 percentage points to 63 per cent compared to
last quarter, 5 percentage points higher than last year.
Turnover from smaller and medium sized businesses declined by 8 per cent
(6 per cent excluding the impact of reductions to mobile termination rates). New
wave turnover grew by 13 per cent supported by the 40 per cent growth in
Business Broadband customers to 347,000 and the continued growth in mobility.
The number of BT Business Plan locations increased by 67 per cent against last
year to 445,000 by March 31, 2005, an increase of 6 per cent in the quarter.
Major corporate (UK and international) turnover excluding the impact of
acquisitions was steady with strong growth in new wave turnover (16 per cent)
more than offsetting the decline in traditional services. There is a continued
migration from traditional voice only services to managed ICT solutions
contracts and an increase in mobility and broadband turnover. The year on year
growth in new wave turnover was lower than previous quarters in the year but was
measured against a very strong fourth quarter last year which included £77
million of turnover from the NHS contracts. New wave turnover now represents 54
per cent of all major corporate turnover. In addition, Albacom and Infonet
generated revenues of £111 million from their acquisition dates in February
2005.
ICT contract wins were a record £3.8 billion in the fourth quarter, including a
contract with Reuters expected to be worth up to £1.5 billion over eight and a
half years. Total orders of £7.2 billion were achieved over the last twelve
months. In addition, long term outsourcing contracts with the former joint
venture partners in Albacom were signed in the quarter.
Wholesale (UK and Global Carrier) turnover increased by 12 per cent (22 per cent
excluding the impact of reductions to mobile termination rates). UK Wholesale
new wave turnover increased by 80 per cent to £207 million, mainly driven by
broadband. We reached 5 million broadband DSL lines in early April 2005, a year
ahead of our target representing an increase of 126 per cent from March 31,
2004. A new broadband DSL connection was made every 10 seconds of every day in
the quarter.
Our estimate of market share by volume of fixed to fixed voice minutes is based
on our actual minutes, market data provided by Ofcom and an extrapolation of the
historical trends. BT's estimated consumer market share declined by 1.1
percentage points compared to last quarter to around 62 per cent whilst the
estimated business market share declined by 0.4 percentage points to around 41
per cent.
The group has an extensive market research programme conducted by external
agencies which focuses on the level and causes of customer dissatisfaction. BT
has achieved a 23 per cent reduction in the level of customer dissatisfaction on
a compound annual basis over the past three years.
Group operating costs before goodwill amortisation and exceptional items were
flat year on year at £4,170 million, although the costs from the acquisitions of
Albacom and Infonet were £123 million. Net staff costs before leaver costs
increased by £80 million to £955 million due mainly to the additional staff
required to service ICT contracts. Leaver costs were £44 million in the quarter
(£149 million last year). Payments to other telecommunication operators were
£82 million (8 per cent) lower than last year mainly reflecting the impact of
the mobile termination rate reductions offset by higher volumes. Other operating
costs (excluding goodwill amortisation and exceptional items) increased by
£118 million, in line with our expectations. This reflects not only the costs of
supporting new ICT contracts, but also investment in new wave activities,
including strengthening our networked IT services delivery capabilities outside
the UK, higher marketing costs and higher subscriber acquisition costs. These
were partly offset by cost savings from our efficiency programmes. Depreciation
was flat year on year at £739 million.
Group operating profit before goodwill amortisation and exceptional items
increased by 10 per cent to £739 million. Operating profit margins increased by
1.2 percentage points to 15.2 per cent due to the reduction in leaver costs year
on year.
Net interest payable before exceptional items was £190 million, an improvement
of £32 million against last year reflecting the reduction in the level of net
debt.
Profit before taxation, goodwill amortisation and exceptional items of
£557 million increased by 21 per cent compared to last year.
The effective tax rate on the profit before goodwill amortisation and
exceptional items was 25.7 per cent (26.8 per cent last year). The effective tax
rate reflects tax efficient investment of surplus cash and continued
improvements in the tax efficiency within the group.
Earnings per share before goodwill amortisation and exceptional items increased
by 26 per cent to 4.9 pence.
Full year results ended March 31, 2005
Group turnover increased by 1 per cent to £18,623 million in the year (up 2 per
cent excluding the impact of the acquisitions of Albacom and Infonet and
reductions to mobile termination rates). New wave turnover grew by 32 per cent
to £4,471 million in the year driven by strong growth in ICT solutions and
broadband. This strong growth more than offset the decline in traditional
turnover of 7 per cent (5 per cent excluding the impact of reductions to mobile
termination rates). New wave turnover represents 24 per cent of the group's
turnover for the year compared to 18 per cent last year.
We remain focused on financial discipline and our cost efficiency programmes
achieved savings of approximately £400 million in the full year. This has
enabled us to invest in growing our new wave activities. We aim to deliver at
least £300 million to £400 million of savings in each of the next three years.
Group operating profit before goodwill amortisation and exceptional items at
£2,864 million for the year was 1 per cent lower than the prior year. This
reflects the costs of supporting new networked IT services contracts, investment
in new wave activities and higher marketing and subscriber acquisition costs.
BT's share of associates and joint ventures operating profits before goodwill
amortisation and exceptional items was £nil (£8 million losses last year).
Net interest payable before exceptional items was £801 million for the year, an
improvement of £85 million against last year as a result of the reduction in net
debt.
The group achieved a profit before taxation, goodwill amortisation and
exceptional items of £2,085 million, a 4 per cent increase, reflecting the lower
net interest payable.
The taxation charge for the year was £539 million on the profit before
exceptional items and goodwill amortisation, an effective rate of 25.9 per cent
(28.2 per cent last year).
Earnings per share before goodwill amortisation and exceptional items were 7 per
cent higher at 18.1 pence for the year.
Exceptional items and goodwill
There was a net exceptional profit before taxation of £17 million in the
quarter. This includes the £46 million profit on disposal of our interest in
Intelsat partially offset by an exceptional property rationalisation charge of
£29 million (£59 million for the full year) in relation to the group's
provincial office portfolio. This rationalisation programme is expected to
continue through next year giving rise to additional rationalisation costs.
Other exceptional items in the full year include the profit on disposal of group
investments of £312 million, including Eutelsat and StarHub. This was partly
offset by BT's share of an exceptional write down of Albacom's fixed assets (£25
million) in the third quarter.
Goodwill amortisation was £4 million in the quarter (£3 million last year) and
£16 million for the full year (£12 million last year).
Earnings per share after goodwill amortisation and exceptional items were 5.1
pence in the quarter (3.5 pence last year) and 21.4 pence for the full year
(16.4 pence last year).
Dividends
The Board recommends a final dividend of 6.5 pence per share to shareholders,
amounting to £551 million. This will be paid, subject to shareholder approval,
on September 5, 2005 to shareholders on the register on August 5, 2005. The
ex-dividend date is August 3, 2005.
The full year dividend has increased by 22 per cent to 10.4 pence per share,
compared to 8.5 pence last year. This year's dividend pay out ratio is 57 per
cent of earnings before goodwill amortisation and exceptional items compared to
50 per cent last year.
We continue with our progressive dividend policy. The dividend for 2005/06 will
be at least 60 per cent of underlying earnings: subject to the group's overall
financial position, we expect our payout ratio to rise to around two-thirds of
underlying earnings by 2007/08.
Cash flow and net debt
Cash inflow from operating activities in the fourth quarter amounted to
£2,074 million compared to £1,568 million last year, benefiting from a reduction
in working capital. Last year's cash inflow was net of deficiency contributions
to the BT Pension Scheme of £380 million. The full year cash inflow from
operating activities was £5,898 million compared to £5,389 million last year.
Returns on investments and servicing of finance is a net cash outflow of
£101 million in the fourth quarter compared to a net inflow of £148 million last
year. This reflects the receipt of funds in the fourth quarter of last year on
restructuring part of the group's hedging swap portfolio partly offset by the
lower net debt this year.
The net cash outflow on fixed asset purchases and sales was £673 million in the
fourth quarter which compares to £765 million last year due mainly to the
consideration from the disposal of fixed asset investments and lower capital
expenditure in the fourth quarter this year.
BT's plans for its 21st century network (21CN) remain on track. Having consulted
widely with leading vendors, operators and customers, the detailed planning and
design work is well advanced to support 21CN implementation. Technical trials
are progressing well.
Through Consult21, we are giving wholesale customers an opportunity to input and
influence 21CN development. In April 2005 we announced a final list of eight
preferred suppliers after two years of discussions and negotiations. This has
been an extremely competitive process in what is one of the largest single
procurement programmes ever undertaken in the communications industry. We expect
to conclude the commercial agreements over the summer, which will include open
standards and a focus on whole life costs.
Free cash flow was a net inflow of £1,144 million in the fourth quarter compared
to £819 million last year mainly reflecting a strong working capital reduction.
Free cash flow for the full year was a net inflow of £2,282 million compared to
£2,071 million last year. The inflow includes the proceeds from the sale of
fixed asset investments of £537 million.
The net cash outflow from acquisitions was £418 million in the quarter and
relates mainly to Infonet and Albacom.
The share buyback programme continued with the repurchase of 29 million shares
for £60 million, with a cash outflow of £63 million in the quarter, taking the
full year share repurchase to 101 million shares for £195 million.
Net debt continued to improve and was £7,786 million at March 31, 2005, £639
million below the level at March 31, 2004. This is a level with which we are
comfortable and we are no longer targeting net debt of around £7 billion in
2006/07.
Pensions
The FRS17 position at March 31, 2005 showed a deficit of £3.3 billion, net of
tax, being a reduction of £0.3 billion since March 31, 2004.
Post balance sheet events
In March 2005 BT agreed to acquire Radianz, the leading financial services
extranet provider, from Reuters for consideration of £107 million for the
business including the cash on the balance sheet, subject to working capital
adjustments, at completion date. Regulatory clearance was received in April and
the transaction completed on April 29, 2005.
International Financial Reporting Standards
We estimate the pro forma impact of adopting IFRS on the 2004/05 reported UK
GAAP results would have been negligible on the underlying profit before tax, and
underlying earnings per share. However, due to the inherent volatilities
introduced by IFRS, no such statement can be made in respect of future years.
These estimates exclude the mark-to-market effects of IAS 39 on financial
instruments which we are not required to apply until April 1, 2005.
_____________________________________________________________________________
The Annual Report and Form 20-F is expected to be published on June 1, 2005. The
Annual General Meeting of BT Group plc will be held at the Harrogate
International Centre, Harrogate on July 13, 2005.
BT Retail
Fourth quarter ended March 31 Year ended
March 31
--------------------------- -------------
2005 2004* Better(worse) 2005 2004*
£m £m £m % £m £m
Group turnover 3,221 3,376 (155) (5) 12,562 12,940
----- ------ ------ ------
Gross margin 838 876 (38) (4) 3,300 3,517
Sales, general and
administration costs 505 571 66 12 2,051 2,123
--- --- ----- -----
EBITDA 333 305 28 9 1,249 1,394
Depreciation 33 36 3 8 129 162
-- -- --- ---
Operating profit 300 269 31 12 1,120 1,232
=== === ===== =====
Operating profit
before leaver costs 315 351 (36) (10) 1,187 1,344
--- --- ----- ----
Capital
expenditure 50 46 (4) (9) 154 118
== === === ===
*Restated to reflect changes in intra-group trading arrangements.
New wave turnover grew by 17 per cent but was more than offset by the
traditional turnover decline of 11 per cent. Overall turnover declined by 5 per
cent (3 per cent excluding the impact of reductions to mobile termination
rates).
BT Retail Fourth quarter ended March 31 Year ended
March 31
--------------------------- -------------
2005 2004* Better (worse) 2005 2004*
£m £m £m % £m £m
Voice Services 1,925 2,165 (240) (11) 8,054 8,906
Intermediate
Products 425 465 (40) (9) 1,728 1,868
--- --- ----- -----
Traditional 2,350 2,630 (280) (11) 9,782 10,774
----- ----- ----- ------
ICT 631 594 37 6 1,978 1,734
Broadband 163 101 62 61 541 307
Mobility 51 34 17 50 184 84
Other 26 17 9 53 77 41
-- -- -- --
New Wave 871 746 125 17 2,780 2,166
--- --- ----- -----
Total 3,221 3,376 (155) (5) 12,562 12,940
===== ===== ====== ======
Sales to other 137 140 (3) (2) 447 338
BT businesses
incl.above
*Restated to reflect changes in intra-group trading arrangements.
Turnover from voice services was 11 per cent lower than last year (9 per cent
excluding the impact of reductions to mobile termination rates). The reduction
includes the effects of the highest migration to broadband in a quarter with a
35 per cent fall in dial up internet minutes, a 5 per cent decline in the
overall fixed to fixed calls market and a reduction in market share reflecting
regulatory and competitive pressure.
Turnover from intermediate products decreased by 9 per cent compared to last
year mainly driven by the continued decline in private circuits and ISDN as
customers migrate to new wave products including broadband and IPVPN.
BT Retail's new wave turnover increased by 17 per cent compared to the strong
quarter of last year and accounted for 27 per cent of BT Retail's total turnover
in the quarter, up from 22 per cent last year.
ICT turnover increased by 6 per cent compared to the fourth quarter of last
year, which had benefited from high initial revenues from the NHS contracts,
reflecting strong growth compared to the overall market.
Broadband turnover grew by 61 per cent to £163 million. The growth of broadband
has accelerated with 1,752,000 BT Retail connections at March 31, 2005, an
increase of 18 per cent in the quarter. Net additions of 261,000 in the quarter
included the impact of BT Yahoo!'s successful narrowband upgrade programme and
results in a 29 per cent share of the broadband DSL market additions in the full
year and 32 per cent in the quarter.
Turnover from mobility services increased by 50 per cent to £51 million. BT
Mobile had over 372,000 contract mobile connections at March 31, 2005,
increasing the customer base in the quarter by 9 per cent. We plan to launch
Project Bluephone shortly, a converged mobile service, enabling customers to use
a single device that can switch seamlessly between fixed and mobile networks.
BT Openzone has grown significantly this year with paid minutes across the
network almost four times higher and the number of access sites is now over
20,000 worldwide.
Other new wave turnover has grown by 53 per cent, primarily driven by revenues
from BT Phone Books (now covering 171 different regions) increasing to £22
million.
Gross margin remained flat at 26 per cent compared to last year with improved
broadband margins offset by the changing mix between traditional business and
new wave services.
Cost transformation programmes contributed to SG&A savings of £21 million in the
traditional business. However, against this £23 million more was invested in new
wave activities (including new entertainment products and mobility convergence
products). Leaver costs of £15 million were incurred in the quarter,
significantly below the £82 million incurred in the fourth quarter last year.
Overall these results led to an operating profit in the quarter of £300 million
which is 12 per cent higher than last year.
BT Wholesale
Fourth quarter ended March 31 Year ended March 31
--------------------------- -------------
2005 2004* Better (worse) 2005 2004*
£m £m £m % £m £m
External turnover 965 871 94 11 3,812 3,473
Internal turnover 1,273 1,348 (75) (6) 5,167 5,410
----- ----- ----- -----
Group turnover 2,238 2,219 19 1 8,979 8,883
Variable cost
of sales 509 521 12 2 2,162 2,092
--- --- ----- -----
Gross variable
profit 1,729 1,698 31 2 6,817 6,791
Network and
SG&A costs 756 769 13 2 2,968 2,989
--- --- ----- -----
EBITDA 973 929 44 5 3,849 3,802
Depreciation 484 491 7 1 1,909 1,919
--- --- ----- -----
Operating profit 489 438 51 12 1,940 1,883
Operating profit
before leaver
costs 492 480 12 3 1,985 1,929
--- --- ----- -----
Capital 440 544 104 19 1,973 1,809
expenditure ======= ======= === ======= ========= === ======= ========
*Restated to reflect changes in intra-group trading arrangements.
Wholesale turnover for the quarter of £2,238 million was 1 per cent higher.
External turnover of £965 million increased by 11 per cent (underlying growth
being 21 per cent excluding the impact of regulatory reductions to mobile
termination rates). The growth continues to be driven by new wave services,
mainly broadband and managed services, up 80 per cent to £207 million.
The impact of regulatory reductions on November 30, 2004, to interconnect prices
and private circuits for mobile operators has continued this quarter reducing
external turnover by £27 million.
Internal turnover declined by 6 per cent to £1,273 million reflecting the impact
of lower volumes of calls, lines and private circuits, and lower regulatory
prices being reflected in internal charges.
Gross variable profit of £1,729 million is 2 per cent higher than the fourth
quarter last year reflecting volume increases and a favourable change in sales
mix.
A combination of cost reductions, higher turnover and the phasing of leaver
costs has resulted in the EBITDA increase of 5 per cent and operating profit
increase of 12 per cent in the quarter. Cost savings for the full year have more
than offset higher activity levels in the network, driven by broadband.
Capital expenditure in the quarter is 19 per cent lower but for the full year is
9 per cent higher than last year as a result of expenditure to support the rapid
growth in broadband and the transformation of the group's network.
BT Global Services
Fourth quarter ended March 31 Year ended March 31
-------------------------- -------------
2005 2004* Better(worse) 2005 2004*
£m £m £m % £m £m
Group turnover 1,928 1,649 279 17 6,381 5,782
EBITDA 201 163 38 23 580 508
Operating profit
(loss) 47 7 40 n/m 7 (105)
Operating profit
(loss) before
leaver costs 62 21 41 195 40 (72)
Capital 164 160 (4) (3) 628 479
expenditure ======= ======= === ======= ========= === ======= ========
*Restated to reflect changes in intra-group trading arrangements.
See note 2 for additional detail.
Turnover for the quarter rose by 17 per cent to £1,928 million, including £111
million of turnover from the acquired businesses, Albacom and Infonet. Excluding
acquisitions, turnover grew strongly by 10 per cent. Solutions turnover grew by
20 per cent reflecting the conversion of the continued strong order book.
Consulting and Systems Integration (C&SI) revenues showed a decrease of 8 per
cent due to very high initial NHS contract turnover in the fourth quarter of
last year. C&SI growth excluding the NHS contracts was 12 per cent. Solutions
and C&SI achieved record orders of £3.8 billion in the quarter which results in
orders of £7.2 billion over the last twelve months. Global Products turnover
grew by 4 per cent having benefited from continuing growth in Multi Protocol
Label Switching (MPLS) products. Global Carrier turnover increased by 1 per cent
reflecting the increases in termination revenues in Europe partly offset by the
anticipated decline in AT&T revenues.
The increase in turnover, together with lower network and SG&A costs and lower
depreciation, generated an operating profit of £47 million in the quarter,
representing a £40 million improvement over last year. The acquisitions
contributed an operating loss of £10 million in the period. BT Global Services
has generated its first ever full year operating profit before goodwill
amortisation and exceptional items, at £7 million, which is an improvement of
£112 million over last year. Operating costs include the expected increase in
resources associated with strengthening the overseas network centric solutions
delivery capabilities. We expect the underlying cost efficiency in Global
Services to continue to improve.
Capital expenditure in the quarter at £164 million increased by £4 million with
underlying reductions offset by expenditure on the NHS contracts. Excluding
acquisitions, capital expenditure in the quarter was £8 million lower than last
year. Operating free cash flow (EBITDA less capital expenditure) was positive at
£37 million, reducing the full year outflow to £48 million.
GROUP PROFIT AND LOSS ACCOUNT
for the three months ended March 31, 2005
-------------------- ------ ---------- ----------- ---------
Before goodwill Goodwill Total
amortisation and amortisation and
exceptional items exceptional items
(note 4)
(unaudited) Notes £m £m £m
-------------------- ------ ---------- ----------- ---------
Group turnover 2 4,870 - 4,870
Other
operating
income 39 - 39
Operating
costs 3 (4,170) (33) (4,203)
------- ---- ------
Group
operating
profit (loss) 2 739 (33) 706
Group's share
of operating
profits of
associates and
joint ventures 8 - 8
-- - -
Total
operating
profit (loss) 747 (33) 714
Profit on sale
of fixed asset
investments
and group
undertakings - 46 46
Net interest
payable 5 (190) - (190)
----- -- -----
Profit before
taxation 557 13 570
Taxation (143) 8 (135)
----- - ----
Profit after
taxation and
attributable
to shareholders 414 21 435
=== == ===
Earnings per
share 7
- basic 4.9p 5.1p
==== ===
- diluted 4.8p 5.1p
==== ====
GROUP PROFIT AND LOSS ACCOUNT
for the three months ended March 31, 2004
-------------------- ------ ---------- ----------- ---------
Before goodwill Goodwill Total
amortisation and amortisation and
exceptional items exceptional items
(note 4)
(unaudited, restated Notes £m £m £m
- see note 1)
-------------------- ------ ---------- ----------- ---------
Group turnover 2 4,787 - 4,787
Other operating
income 44 - 44
Operating
costs 3 (4,160) (10) (4,170)
------- ---- -------
Group
operating
profit (loss) 2 671 (10) 661
Group's share
of operating
losses of
associates and
joint ventures (6) (26) (32)
--- ---- ----
Total
operating
profit (loss) 665 (36) 629
Profit on sale
of fixed asset
investments
and group
undertakings 4 - 4
Profit on sale
of property
fixed assets 12 - 12
Net interest
payable 5 (222) - (222)
----- -- -----
Profit (loss)
before taxation 459 (36) 423
Taxation (123) 2 (121)
----- -- -----
Profit (loss)
after taxation 336 (34) 302
Minority
interests 1 - 1
-- -- --
Profit (loss)
attributable
to shareholders 337 (34) 303
=== ==== ====
Earnings per
share 7
- basic 3.9p 3.5p
==== ====
- diluted 3.9p 3.5p
==== ====
GROUP PROFIT AND LOSS ACCOUNT
for the year ended March 31, 2005
-------------------- ------ ---------- ----------- ---------
Before goodwill Goodwill Total
amortisation and amortisation and
exceptional items exceptional items
(note 4)
Notes £m £m £m
-------------------- ------ ---------- ----------- ---------
Group turnover 2 18,623 - 18,623
Other operating
income 171 - 171
Operating
costs 3 (15,930) (75) (16,005)
-------- ---- --------
Group operating
profit (loss) 2 2,864 (75) 2,789
Group's share
of operating
losses of
associates and
joint ventures - (25) (25)
- ---- ----
Total operating
profit (loss) 2,864 (100) 2,764
Profit on sale
of fixed asset
investments
and group
undertakings - 358 358
Profit on sale
of property
fixed assets 22 - 22
Net interest
payable 5 (801) - (801)
----- -- -----
Profit before
taxation 2,085 258 2,343
Taxation (539) 16 (523)
----- -- -----
Profit after
taxation 1,546 274 1,820
Minority
interests 1 - 1
-- -- --
Profit
attributable
to shareholders 1,547 274 1,821
===== === =====
Dividends 6 (883)
-----
Retained profit for
the period 938
Earnings per share 7
- basic 18.1p 21.4p
===== =====
- diluted 18.0p 21.2p
===== =====
GROUP PROFIT AND LOSS ACCOUNT
for the year ended March 31, 2004
-------------------- ------ ---------- ----------- ---------
Before goodwill Goodwill Total
amortisation and amortisation and
exceptional items exceptional items
(note 4)
(restated - see note Notes £m £m £m
1)
-------------------- ------ ---------- ----------- ---------
Group turnover 2 18,519 - 18,519
Other operating
income 177 - 177
Operating costs 3 (15,807) (19) (15,826)
-------- ---- --------
Group operating
profit (loss) 2 2,889 (19) 2,870
Group's share
of operating
losses of
associates and
joint ventures (8) (26) (34)
--- ---- ----
Total operating
profit (loss) 2,881 (45) 2,836
Profit on sale
of fixed asset
investments
and group
undertakings 4 32 36
Profit on sale
of property
fixed assets 14 - 14
Net interest
payable 5 (886) (55) (941)
----- ---- -----
Profit (loss)
before taxation 2,013 (68) 1,945
Taxation (568) 29 (539)
----- -- -----
Profit (loss)
after taxation 1,445 (39) 1,406
Minority
interests 8 - 8
- -- --
Profit (loss)
attributable
to shareholders 1,453 (39) 1,414
===== ==== =====
Dividends 6 (732)
Retained profit for
the period 682
Earnings per
share 7
- basic 16.9p 16.4p
===== =====
- diluted 16.8p 16.3p
===== =====
GROUP CASH FLOW STATEMENT
for the three months and year ended March 31, 2005
----------------------- ---------------- --- ----------------
Fourth quarter Year
ended March 31 ended March 31
2005 2004 2005 2004
(unaudited)
£m £m £m £m
Net cash inflow from
operating activities* 2,074 1,568 5,898 5,389
(note 8)
Dividends from associates
and joint ventures 1 - 2 3
Net cash (outflow) inflow
for returns on
investments and servicing of
finance** (101) 148 (878) (527)
Taxation paid (157) (132) (332) (317)
-------- -------- --------- ---------
Purchase of tangible fixed
assets (744) (802) (3,056) (2,684)
Net sale of fixed asset
investments 62 4 537 131
Sale of tangible fixed
assets 9 33 111 76
-------- -------- --------- ---------
Net cash outflow for capital
expenditure and financial
investments (673) (765) (2,408) (2,477)
----------------------- -------- --- -------- --------- --- ---------
Free cash inflow before
acquisitions,
disposals and dividends 1,144 819 2,282 2,071
----------------------- -------- --- -------- --- --------- --- ---------
-------- -------- --------- ---------
Acquisitions (418) (33) (453) (61)
Disposals - - 35 1
-------- -------- --------- ---------
Net cash outflow for
acquisitions and disposals (418) (33) (418) (60)
Equity dividends paid (330) (277) (784) (645)
Cash inflow before use of
liquid resources
and financing 396 509 1,080 1,366
Management of liquid
resources 33 857 587 1,123
-------- -------- -------- ---------
Repurchase of ordinary share
capital (63) (86) (193) (144)
New loans 5 6 5 1,326
Repayment of loans (126) (1,475) (1,297) (3,627)
-------- -------- -------- ---------
Net cash outflow from
financing (184) (1,555) (1,485) (2,445)
Increase (decrease) in cash 245 (189) 182 44
Decrease in net debt from
cash flows 333 423 887 1,222
(note 9)
----------------------- -------- --- -------- --- --------- --- ---------
* Net of deficiency and
special pension
contributions - (380) (6) (742)
** Including additonal
interest (payments) receipts
on restructuring currency
swap portfolio 2 303 (65) 420
GROUP BALANCE SHEET
at March 31, 2005
------------------------- --------- ---------
March 31 March 31
2005 2004
(restated*)
£m £m
------------------------- --------- ---------
Fixed assets
Intangible assets 623 204
Tangible assets 15,916 15,487
Investments 115 324
--- ---
16,654 16,015
Current assets
--------- ---------
Stocks 106 89
Debtors 5,387 5,189
Investments 4,597 5,163
Cash at bank and in hand 206 109
10,296 10,550
Creditors: amounts falling due within one year
Loans and other borrowings 4,498 1,271
Other creditors 7,963 7,252
12,461 8,523
--------- ---------
Net current (liabilities) assets (2,165) 2,027
------- -----
Total assets less current liabilities 14,489 18,042
====== =====
Creditors: amounts falling due after more than
one year
Loans and other borrowings 8,091 12,426
Provisions for liabilities and charges 2,497 2,504
Minority interests 50 46
Capital and reserves (note 10)
--------- ---------
Called up share capital 432 432
Reserves 3,419 2,634
--------- ---------
Total equity shareholders' funds 3,851 3,066
----- ------
14,489 18,042
====== ======
*See note 1 for details of restatement.
NOTES
1 Basis of preparation
The preliminary results of BT Group, which are not statutory accounts, have been
prepared on the basis of the accounting policies as set out in the Report and
Accounts of BT Group plc for the year ended March 31, 2004, except that during
the year ended March 31, 2005, the group has adopted UITF Abstract 38
'Accounting for ESOP trusts' and the related amendments to UITF Abstract 17
(revised 2003) 'Employee Share Schemes'. UITF 38 changes the presentation of an
entity's own shares held in an ESOP trust from previously being held as assets
to being deducted in arriving at shareholders' funds. UITF 17 (revised 2003)
requires the amounts recognised in the profit and loss account in respect of
share awards to be based on the fair value of shares at the date the award is
made, rather than the previous treatment of being based on the book value of
shares held in the ESOP trusts.
An additional charge of £3 million for the year ended March 31, 2004 has been
made to the group profit and loss account. The effect on the group's balance
sheet at March 31, 2004 has been to reduce fixed assets by £53 million, to
reduce other creditors by £25 million and to reduce shareholders' funds by
£28 million. There was no effect in the quarter to March 31, 2004.
Financial information for the years ended 31 March 2005 and 2004 is derived from
the group accounts for those years. The group accounts for the year ended
March 31, 2005, on which the auditors issued an unqualified report which did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985, were
approved by the Board of Directors on May 18, 2005, and have not yet been
delivered to the Registrar of Companies but are expected to be published on June
1, 2005.
2 Results of businesses
(a) Operating results
External Internal Group Group operating EBITDA
Turnover turnover Turnover profit (loss) (ii)
(ii)
£m £m £m £m £m
Fourth quarter
ended March 31, 2005
BT Retail 3,084 137 3,221 300 333
BT Wholesale 965 1,273 2,238 489 973
BT Global
Services 815 1,113 1,928 47 201
Other 6 - 6 (97) (24)
Intra-group items (i) - (2,523) (2,523) - -
--- ------- ------- -- --
Total 4,870 - 4,870 739 1,483
===== ===== ===== ==== =====
Fourth quarter
ended March 31, 2004
(restated - see note 1)
BT Retail 3,236 140 3,376 269 305
BT Wholesale 871 1,348 2,219 438 929
BT Global
Services 665 984 1,649 7 163
Other 15 - 15 (43) 15
Intra-group items (i) - (2,472) (2,472) - -
---- ------- ------- -- --
Total 4,787 - 4,787 671 1,412
===== === ===== === =====
Year ended
March 31, 2005
BT Retail 12,115 447 12,562 1,120 1,249
BT Wholesale 3,812 5,167 8,979 1,940 3,849
BT Global
Services 2,671 3,710 6,381 7 580
Other 25 - 25 (203) 26
Intra-group items (i) - (9,324) (9,324) - -
-- ------- ------- -- --
Total 18,623 - 18,623 2,864 5,704
====== == ====== ===== =====
Year ended
March 31, 2004
(restated - see note (1)
BT Retail 12,602 338 12,940 1,232 1,394
BT Wholesale 3,473 5,410 8,883 1,883 3,802
BT Global
Services 2,410 3,372 5,782 (105) 508
Other 34 1 35 (121) 109
Intra-group items (i) - (9,121) (9,121) - -
-- ------ ------- -- --
Total 18,519 - 18,519 2,889 5,813
====== ==== ====== ===== =====
(i) Elimination of intra-group turnover between businesses,
which is included in the total turnover of the originating business.
(ii) Before goodwill amortisation and exceptional items.
There is extensive trading between BT's lines of business and the line of
business profitability is dependent on the transfer price levels. The
intra-group trading arrangements are subject to review and were changed with
effect from April 1, 2004 in certain circumstances to reflect simplification of
internal trading flows and reorganisations within the group. The comparative
figures for the lines of business have been restated to reflect these changes
but there is no impact at a group level. In addition, the group adopted UITF 38
and UITF 17 (revised 2003) which impacted the comparative figures and is
discussed further in note 1.
(b) BT Global Services analysis
------------------------ -------------
Fourth quarter Year
ended March 31 ended March 31
------------------------ -------------
2005 2004 Better (worse) 2005 2004
£m £m £m % £m £m
Group turnover
Solutions 967 804 163 20 3,202 2,736
C&SI 234 253 (19) (8) 824 721
Global Products 506 487 19 4 1,897 1,831
Global Carrier 254 252 2 1 981 962
Other and eliminations (33) (147) 114 78 (523) (468)
---- ----- --- --- ---- ----
1,928 1,649 279 17 6,381 5,782
===== ===== === === ===== =====
EBITDA
Solutions 134 119 15 13 363 337
C&SI 16 17 (1) (6) 40 37
Global Products 52 36 16 44 159 113
Global Carrier 53 51 2 4 178 163
Other (i) (54) (60) 6 10 (160) (142)
---- ---- -- -- ---- -----
201 163 38 23 580 508
=== === === == ==== ===
Operating profit (loss) (ii)
Solutions 114 100 14 14 284 261
C&SI 14 14 - - 32 28
Global Products (36) (61) 25 41 (202) (273)
Global Carrier 33 29 4 14 94 74
Other (i) (78) (75) (3) (4) (201) (195)
---- ---- --- --- ----- -----
47 7 40 n/m 7 (105)
=== == === =====
(i) Other is after charging leaver costs of £15m in the fourth
quarter (£14m last year) and £33m in the year ended March 31, 2005 (£33m last
year). Also included are turnover, EBITDA and operating losses from acquisitions
in 2005 of £111m, £8m and £10m, respectively.
(ii) Before goodwill amortisation.
(c) Group turnover analysis
------------------------ -------------
Fourth quarter Year
ended March 31 ended March 31
------------------------ -------------
2005 2004 Better (worse) 2005 2004
£m £m £m % £m £m
Traditional 3,392 3,709 (317) (9) 14,041 15,132
New wave 1,367 1,078 289 27 4,471 3,387
Albacom and Infonet 111 - 111 n/m 111 -
--- -- --- ---
4,870 4,787 83 2 18,623 18,519
====== ===== ====== ======
Consumer 1,382 1,474 (92) (6) 5,637 5,974
Business 606 660 (54) (8) 2,464 2,600
Major Corporate 1,760 1,645 115 7 6,101 5,881
Wholesale/Carrier 1,116 993 123 12 4,396 4,030
Other 6 15 (9) (60) 25 34
-- -- -- ---
4,870 4,787 83 2 18,623 18,519
===== ===== ====== ======
Note: New wave includes the external new wave turnover of BT Retail (ICT,
broadband, mobility and classified directories), BT Wholesale (broadband and
managed services), the external turnover of Global Solutions and C&SI.
Consumer includes the external turnover of BT Retail from consumer customers.
Business includes the external turnover of BT Retail from SME customers.
Major Corporate includes the external turnover of BT Retail from major corporate
customers and the externalturnover of BT Global Services, with the exception of
Global Carrier. Includes £111m turnover from the acquisitions of Albacom and
Infonet.
Wholesale/Carrier includes the external turnover of BT Wholesale and Global
Carrier.
(d) New wave turnover analysis
------------------------ -------------
Fourth quarter Year
ended March 31 ended March 31
------------------------ -------------
2005 2004 Better (worse) 2005 2004
£m £m £m % £m £m
ICT 916 799 117 15 2,987 2,546
Broadband 292 165 127 77 930 491
Mobility 58 40 18 45 205 99
Other 101 74 27 36 349 251
---- -- --- ----
1,367 1,078 289 27 4,471 3,387
===== ===== ===== =====
(e) Capital expenditure on plant, equipment and motor vehicle additions
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
£m £m £m £m
BT Retail 50 46 154 118
BT Wholesale
Access 225 249 1,037 966
Switch 14 17 100 87
Transmission 62 64 230 213
Products/systems support 139 214 606 543
--- --- --- ---
440 544 1,973 1,809
BT Global Services
C&SI and Solutions 87 41 261 121
UK Networks 25 39 121 131
Other 52 80 246 227
-- -- --- ---
164 160 628 479
Other (including fleet vehicles and
property) 90 94 256 267
-- -- --- ---
Total 744 844 3,011 2,673
=== === ===== =====
3 Operating costs
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
(restated) (restated)
£m £m £m £m
Net staff costs before leaver costs 955 875 3,563 3,536
Leaver costs 44 149 166 202
--- --- --- ---
Net staff costs 999 1,024 3,729 3,738
Depreciation 739 740 2,834 2,921
Payments to telecommunication 891 973 3,725 3,963
operators
Other operating costs 1,541 1,423 5,642 5,185
----- ----- ----- -----
Total before goodwill amortisation 4,170 4,160 15,930 15,807
and exceptional items
Goodwill amortisation 4 3 16 12
Exceptional items 29 7 59 7
-- - --- --
Total 4,203 4,170 16,005 15,826
===== ===== ====== ======
The fourth quarter ended March 31, 2005 included costs of £123m associated with
the acquired businesses, Albacom and Infonet. Excluding these, operating costs
before goodwill amortisation and exceptional items were £4,047m (2004 -
£4,160m).
4 Exceptional items and goodwill amortisation
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
£m £m £m £m
Exceptional operating costs (29) (7) (59) (7)
Impairment of fixed assets of joint
ventures - (26) (25) (26)
Profit on sale of fixed asset investments
and group undertakings 46 - 358 32
Net interest payable - - - (55)
Goodwill amortisation (4) (3) (16) (12)
--- --- ---- ----
Net credit (charge) before tax and
minority interests 13 (36) 258 (68)
=== ==== === ====
5 Net interest payable
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
£m £m £m £m
Group 257 265 1,043 1,220
Joint ventures and associates 9 5 23 19
- -- --- ---
Total interest payable 266 270 1,066 1,239
Interest receivable (76) (48) (265) (298)
---- ---- ----- -----
Net interest payable 190 222 801 941
==== ===== === ===
Analysed:
Before exceptional items 190 222 801 886
Exceptional items - - - 55
---- -- ---- ---
Total 190 222 801 941
==== ==== === ===
6 Dividends
Year ended Year ended
March 31 March 31
2005 2004 2005 2004
pence per share £m £m
Interim dividend 3.90 3.20 332 278
Proposed final dividend 6.50 5.30 551 454
----- ---- ---- ---
10.40 8.50 883 732
====== ==== === ===
7 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 and treasury shares. 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:
Fourth quarter Year ended
ended March 31 ended March 31
2005 2004 2005 2004
millions of shares millions of shares
Basic 8,493 8,597 8,524 8,621
Diluted 8,576 8,645 8,581 8,676
8 Reconciliation of operating profit to operating cash flow
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
(restated) (restated)
£m £m £m £m
Group operating profit 706 661 2,789 2,870
Depreciation and amortisation 748 744 2,856 2,936
Changes in working capital 596 528 155 249
Provision movements, pensions
and other 24 (365) 98 (666)
---- ----- --- -----
Net cash inflow from operating
activities 2,074 1,568 5,898 5,389
======= ===== ===== =====
9 Net debt
(a) Analysis
At March 31
2005 2004
£m £m
Long-term loans and other borrowings falling due after
more than one year 8,091 12,426
Short-term borrowings and long-term loans and other
borrowings falling due within one year 4,498 1,271
----- ------
Total debt 12,589 13,697
Short-term investments (4,597) (5,163)
Cash at bank (206) (109)
----- -----
Net debt at end of period 7,786 8,425
===== =====
(b) Reconciliation of net cash flow to movement in net debt
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
£m £m £m £m
Net debt at beginning of period 7,940 8,795 8,425 9,573
Decrease in net debt resulting from cash
flows (333) (423) (887) (1,222)
Net debt assumed on acquisitions 159 1 159 1
Currency and other movements 2 15 2 4
Other non-cash movements 18 37 87 69
-- --- -- ---
Net debt at end of period 7,786 8,425 7,786 8,425
====== ====== ===== =====
10 Share capital and reserves
Reserves Total
Share capital (restated) (restated)
£m £m £m
Balances at April 1, 2004 432 2,634 3,066
Profit for the financial year - 1,821 1,821
Dividends - (883) (883)
Currency movements - 19 19
Purchase of own shares - (195) (195)
Other - 23 23
-- --- ---
Balances at March 31, 2005 432 3,419 3,851
===== ===== =====
11 Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
(restated) (restated)
£m £m £m £m
Group operating profit 706 661 2,789 2,870
Exceptional items 29 7 59 7
Depreciation and intangible 744 741 2,840 2,924
amortisation
Goodwill amortisation 4 3 16 12
-- -- -- ---
EBITDA before exceptional items 1,483 1,412 5,704 5,813
====== ====== ===== ====
12 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.
Fourth quarter Year ended
ended March 31 March 31
2005 2004 2005 2004
Net income attributable to 314 373 1,297 883
shareholders including
exceptional items (£m)
Earnings per ADS (£)
- basic 0.37 0.43 1.52 1.02
- diluted 0.37 0.43 1.51 1.02
Each American Depositary Share (ADS) represents 10 ordinary shares of
BT Group plc.
Shareholders' equity, calculated in accordance with United States Generally
Accepted Accounting Principles, is a £584m deficit at March 31, 2005 (March 31,
2004 - £1,455m).
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: continued growth in new wave turnover from broadband, ICT solutions,
mobility and managed services growth; implementation and development of BT's
21st century network; expectations regarding revenue growth, dividend payout
ratio, and cost efficiency and savings; and commitment to improving shareholder
returns.
Due to a number of new and revised Standards included within the body of
Standards that comprise IFRS, there is not yet a significant body of established
practice on which to draw in forming opinions regarding interpretation and
application. Accordingly, practice is continuing to evolve. At this preliminary
stage, therefore, the full financial effect of reporting under IFRS as it will
be applied and reported on in the group's first IFRS financial statements cannot
be determined with certainty and may be subject to change.
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; future regulatory
actions and conditions in BT's operating areas, including competition from
others; selection by BT and its lines of business of the appropriate trading and
marketing models for its products and services; fluctuations in foreign currency
exchange rates and interest rates; technological innovations, including the cost
of developing new products, networks and solutions and the need to increase
expenditures for 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 anticipated benefits and
advantages of new technologies, products and services, including broadband and
other new wave initiatives, not being realised; and general financial market
conditions affecting BT's performance.
BT undertakes no obligation to update any forward-looking statements whether as
a result of new information, future events or otherwise.
This information is provided by RNS
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