Re Interim Results
British Telecommunications PLC
9 November 2001
The following interim report was published in the 'Financial Times' today, 9
November 2001.
BT Half Year Results and Interim Report
Chairman's Statement
The demerger of mmO2 is on schedule and received very strong support at our
October EGM. The other elements of our restructuring are also progressing
well: we have reduced debt in the quarter by a further £1 billion and have
announced an agreement with AT&T to unwind Concert.
Although the general economic outlook for the second half of the financial
year is uncertain following the events in the US on September 11, most of BT's
businesses have strong market positions and have so far proved to be
relatively resilient.
Sir Christopher Bland, 7 November 2001
________________________________________________________________________________
Review
The demerger of mmO2 , which is scheduled to become effective on 19
November, is the latest in a series of transactions undertaken since 1 April
2001 designed to transform the group and reduce its debt. During this period
we have successfully raised £5.9 billion through the rights issue, sold our
Japanese investments for £3.7 billion, sold the Yell directories business for
approximately £2 billion and completed the sale other investments for a total
of £1.5 billion. Consequently, our net debt at 30 September 2001 of £16.5
billion is £11.4 billion lower than at 31 March 2001. Total profit on these
and other disposals amounted to £4,495 million in the half year.
In October 2001, BT and AT&T announced the unwind of the Concert joint
venture. Its business, customer accounts and networks will be returning to the
two parent companies. BT will also cease to have any interest in AT&T Canada
and will be released from its future capital expenditure commitment associated
with AT&T Canada. As a result, BT has written down its carrying value of its
investments in these two companies by a total of £1,153 million. We have also
taken an exceptional impairment charge in the half year against certain other
investments totalling £221 million in view of the recent radical change in the
global marketplace of the telecoms and IT sector.
Group turnover increased by 10% in the half year mainly due to our taking
full control of Viag Interkom in Germany in February 2001 and growth in
activity with other UK operators. Total operating profit before exceptional
items declined by 37% to £959 million principally due to the impact of the
disposals, losses incurred in building mobile and data network operations in
Germany and Concert's trading losses.
Net interest rose by £283 million to £836 million following the
significant increase in debt in the last financial year.
Capital expenditure at £1,989 million for the half year was 3% lower
reflecting the tight control over spending in the UK fixed network offset by
the impact of the expenditure in developing mmO2's mobile networks acquired in
the last financial year.
____________________________________________________________________
Group profit and loss account
(unaudited)
6 months
ended
September 30
2001 2000
£m £m
Turnover, including share of ventures 13,315 14,394
Group turnover 10,758 9,752
Total operating profit (a) 32 1,520
Profit on sale of investments (b) 4,495 65
Amount written off investments (c) (535) -
Net interest payable (836) (553)
Profit before taxation (d) 3,156 1,032
Taxation (272) (399)
Profit after taxation 2,884 633
Minority interests (14) (71)
Profit attributable to shareholders 2,870 562
Interim dividend - 571
Earnings per share
- basic 35.8p 7.7p
- diluted 35.5p 7.6p
Earnings per share before goodwill amortisation and exceptional
items
- basic 1.5p 10.9p
- diluted 1.4p 10.7p
Interim dividend per share - 7.8p
(a) After charging £839 million for write-downs, mainly attributable to
the Concert unwind, and £88 million demerger costs.
(b) Principally on the sale of the group's Japanese investments, the Yell
directory business and the investment in Airtel in June 2001.
(c) Mainly attributable to AT&T Canada.
(d) Including net exceptional gains of £3,033 million (2000 - £65 million)
being the profit on the sale of investments in the period, offset by the
amounts written off investments and the assets and demerger costs.
________________________________________________________________________
Group cash flow statement
(unaudited)
6 months ended
September 30
2001 2000
£m £m
Inflow from operating activities, including ventures 2,688 2,768
Outflow for returns on investments (679) (410)
and servicing of finance
Taxation paid (238) (140)
Outflow for capital expenditure and financial investment (2,032) (6,245)
Inflow (outflow) for acquisitions and disposals 5,419 (5,207)
Equity dividends paid - (863)
Inflow (outflow) before financing 5,158 (10,097)
Management of liquid resources (3,959) (5)
Inflow (outflow) from financing (1,101) 10,276
Increase in cash 98 174
________________________________________________________________________
Group balance sheet
30 September 31 March
2001 2000 2001
(unaudited)
£m £m £m
Fixed assets 42,102 38,683 45,209
Current assets 13,816 8,415 9,590
Current liabilities (14,441) (22,868) (20,733)
Net current liabilities (625) (14,453) (11,143)
Total assets less current liabilities 41,477 24,230 34,066
Creditors: amounts falling due after one year 17,704 6,399 18,775
Provisions for liabilities and charges 2,763 3,161 2,738
Minority interests 78 590 499
Capital and reserves 20,932 14,080 12,054
41,477 24,230 34,066
________________________________________________________________________
Notes
1 This statement has been prepared in accordance with the accounting
policies in the statutory accounts for the year ended 31 March 2001, with the
exception that deferred taxation is now stated on a full liability basis in
accordance with FRS 19. The comparative figures have been restated. Earnings
and dividends per share figures have been restated for the dilutionary effect
of the company's rights issue which closed on 15 June 2001.
2 The figures for the year ended 31 March 2001 are extracts from the
accounts, with the exception of the restatements explained in note 1. A copy
of the statutory accounts for that year, on which the auditors have issued an
unqualified report, have been delivered to the Registrar of Companies.
If you have any queries as a shareholder please call Freefone 0808 100 4141.
Further information about BT and these financial results may be found on the
internet at
www.groupbt.com/investorcentre
British Telecommunications plc
81 Newgate Street, London EC1A 7AJ
________________________________________________________________________
Independent Review Report to
British Telecommunications plc
Introduction
We have been instructed by the company to review the financial information
which comprises the group profit and loss account, group cash flow statement,
group balance sheet and the related notes. We have read the other information
contained in the interim report and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2001.
PricewaterhouseCoopers, Chartered Accountants
London, 7 November 2001