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BT Group plc
Annual Report & Form 20-F 2014
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Table of contents

  • Page 1
    ... controls Use the document controls located in the top right corner to help you navigate through this report. Navigating with tabs Search Print Go to contents Back/forward one page Fast link to previous page viewed Group performance Additional information Financial statements Governance...

  • Page 2
    BT roup plc $nnuaO 5eport Form 20-F 2014 We use the power of communications to make a Eetter{worOG

  • Page 3
    ... 2014 In this report you will find information on our purpose our strategy and how we deliver it how we have performed and how we govern our business. www.bt.com annualreport nline Annual eport www.bt.com betterfuture nline Better Future eport This is the BT Annual eport for the year ended arch...

  • Page 4
    ... company financial statements Financial statements of BT roup plc ubsidiary undertakings Mobility and future voice - changing the way people communicate 56 Providing integrated services to help UK businesses grow 74 Additional information Alternative performance measures elected financial data...

  • Page 5
    ...market for managed networked IT services and grew its order book by . It has also reduced its cost base, contributing to its cash ow increasing by over in the year. To best serve our multinational customers it is critical that we have fair access to networks across the world. Other operators can use...

  • Page 6
    ... pages summarise our Annual Report. They outline our purpose as a company and the values which guide the way we work. ou will find a summary of our strategy and our business model, and how the two link together. ou can see how we have done in the year our key performance indicators the financial...

  • Page 7
    ... of fibre broadband in the world e provide managed networked IT services for many of the largest global companies e are the leading provider of voice and broadband services to U Es and consumers Every day we touch the lives of millions of people, helping them communicate, do business and be...

  • Page 8
    ...Our purpose Our purpose is to use the power of communications to make a better world. By bringing together the best networks and technology with the expertise of our people, we make connections and create new possibilities. Overview We use the power of communications to make{a Eetter worOG We are...

  • Page 9
    ... moGeO on paJe 23 People Financial strength Products and services Customer service delivery Cost transformation Investing for the future Delivering value Shareholders Technology Customers Networks Society ike all businesses, we are affected by, and must manage, risks and uncertainties that...

  • Page 10
    ... the benefit of BT port. BT holesale s revenue was impacted by regulation as was Openreach s where it offset strong growth in fibre take-up. All of our lines of business made good progress in transforming their costs. Across the group, we have focused on improving end-to-end processes which span our...

  • Page 11
    ...revenue by line of business Year ended 31 March 2014 10% Openreach 28% Openreach (including internal) 39% BT Global Services Adjusted EBITDA by line of businessb Year ended 31 March 2014 43% Openreach 2014 13% BT Wholesale 2013 hange 22% BT Consumer 16% BT Business 10% BT Wholesale See page...

  • Page 12
    ... services and grow our market share. This year BT Business improved its revenue trend, increased its EBITDA for the second year running and grew its order intake by 3%. BT's retail broadband market share At 31 March % 40 35 30 25 20 2010 2011 2012 2013 2014 35% 36% 37% 39% BT Business 12-month...

  • Page 13
    .... BT Global Services is driving to be a more predictable business in terms of its financial performance. We have made progress on this. Our order intake grew 9% in the year with contracts signed across all our key geographies. We achieved double-digit revenue increases in the high-growth regions...

  • Page 14
    ...communities, supported by public funding from the Broadband Delivery U (BDU ) programme. We hired around 2,000 people this year to deliver the new infrastructure, connect fibre customers and improve our service. But the extreme levels of rainfall led to higher than expected volumes of network faults...

  • Page 15
    ... technology thanks to BT, and around 14% of these are already connected to services via Openreach s open wholesale network. These figures will continue to grow as we complete our commercial rollout and deploy even more fibre with the help of Broadband Delivery U (BDU ) funding. Voice of the customer...

  • Page 16
    ...18 19 Our strategy Customer service delivery Cost transformation Investing for the future Our strategic priorities Driving broadband-based consumer services Being the Brand for Business for U SMEs BT Global Services a global leader The wholesaler of choice The best network provider A responsible and...

  • Page 17
    ... people. The world is being transformed by communications. They are changing how we work, how we bank, how we shop and how we think bringing new ways of delivering healthcare and education reshaping how governments operate helping to create new businesses and driving social mobility. BT is right...

  • Page 18
    ... of information and entertainment at their fingertips. We believe that people want to work with a company that supports their ability to grow and is a positive force in the communities where it operates. Whether it is by making connectivity accessible wherever it is needed, helping our customers to...

  • Page 19
    ...people and technology and in the resilience of our networks. We want to deliver a step-change to provide a superior service to all our customers. This year we have • recruited hundreds of extra people into our contact centres • invested in software to improve our performance in calling customers...

  • Page 20
    ... broadband-based consumer services TV and content Mobility and future voice UK business markets Leading global companies Being the 'Brand for Business' for UK SMEs Businesses want communications and IT services that help them to grow, manage their costs and operate exibly. Technology changes...

  • Page 21
    ... telecoms provider. European wholesaler market share by revenue (2012) 43% Other 18% BT There are few companies that can fulfil the needs of the world s multinationals for outsourced managed networked IT services. We are a leader in this growing market. Our customers look for a provider with global...

  • Page 22
    ... everyone to use our products and to work with others to drive digital inclusion. Our future plans include • increasing fibre-to-the-cabinet (FTTC) coverage to help take fibre broadband to at least 90% of UK premises (provided we have access to appropriate levels of public funding to support this...

  • Page 23
    ... The Strategic Report Delivering our strategy BT Sport is the 8.os newest sports T9 service And is free for BT broadband customers With three channels showing live top tier action from the Barclays remier eague and the Aviva remiership, as well as a host of other sports. From summer 2015 BT Sport...

  • Page 24
    ...accounts. Comparative financial results for each line of business for 2012 13 and 2011 12 have been restated to be on a consistent basis throughout this Annual Report. There was no impact on the group results from these changes. See page 127 for further details. We assess and e[plain the performance...

  • Page 25
    ... the group s key risks and considers the potential threats to and opportunities for the business. The Operating Committee develops BT s strategy and budgets for the Board s approval recommends to the Board capital expenditure and investment budgets allocates resources across BT within plans agreed...

  • Page 26
    ... our customer-facing lines of business. Our products range from telephony and broadband services for UK households through to managing the networks and communications needs of some of the world s largest multinational companies. We sell through a range of channels including online, contact centres...

  • Page 27
    ... networks, technology and products and services for our customers, we use the power of communications to make a better world. During the year we updated our corporate values to re ect what really matters to our people. Teams are increasingly using these values to guide the way they work, creating...

  • Page 28
    ...managers have learnt new ways to lead, coach and support their teams. A global programme is giving our frontline people the skills, tools and techniques to improve the way they serve customers. Employee engagement index As at 31 March 3.9 3.8 3.7 3.6 3.5 2011 2012 2013 2014 Delivering our strategy

  • Page 29
    .... We offer our widest range of network services, access technologies and coverage in the UK. Our fixed-line network is one of our most valuable assets and our fibre broadband investment is key to sustaining its value for the UK. We have over 5m BT Wi-fi hotspots to which our broadband customers have...

  • Page 30
    ...Strategic Report Delivering our strategy 27 This year we have • delivered the multicast capability to support the addition of BT Sport and our other channels to our T service • improved our UK broadband network optimising it to cater for increases in tra c and improving its tolerance to faults...

  • Page 31
    ... cost-effective technology and improving the way networks respond to customer needs or sudden peaks in demand. We have launched a new service to allow corporate customers to securely manage applications when employees bring their own device to work. BT Media and Broadcast helped deliver the world...

  • Page 32
    ... suppliers This year the average number of days between invoice date and supplier payment was 62 days (2012 13 60 days). In the UK, we have re-tendered the supplier financing scheme that offers contracted suppliers the chance to be paid early. This reduces financing costs to a new lower rate for all...

  • Page 33
    ... this Annual Report. There was no impact on the group results from these changes. See page 127 for further details. There have been some changes to our organisational structure since the year-end. BT Security moved from our central group functions into BT Global Services in April 2014. This business...

  • Page 34
    ...Strategic Report Delivering our strategy 31 BT Global Services We are a global leader in managed networked IT services. We serve the needs of more than 6,500 large corporate and public sector customers. We focus on serving the following key industries and regions. Around two thirds of our revenue...

  • Page 35
    ... service and investing in our global assets, people and technology. We have made progress towards our aim of being a more predictable business in terms of financial performance. Our continued focus on cost transformation has contributed to a £177m increase in operating cash ow. Key facts: Order...

  • Page 36
    ... scientific software applications from Schr dinger and more research solutions from Accelrys. We connected a new financial services customer in New ealand to the BT Radian community. • BT Advise we have improved the centralised knowledge management system which supports the BT Advise Academy...

  • Page 37
    ... our strategy Financial performance Year ended 31 March Revenue Underlying revenue excluding transit Operating costs EBITDA Depreciation and amortisation Operating profit Capital expenditure Operating cash ow a 5estated, see note 1 to the consolidated Ƭnancial statements. BT Business 2014...

  • Page 38
    ... products to managed services and complex customised solutions. 40% 0 Fixed-voice and data BT Business Rest of market Mobility 1% Addressable IT services market Source: BT Business revenue and IDC custom market-sizing model. Fixed-voice and data There are 8.3m business lines in the UK (2012...

  • Page 39
    ... sites using IP connections), SIP trunking (which transports voice calls over IP networks), leased lines, cabling infrastructure and local area networking solutions. BT iNet and BT Engage IT sell cloud and data centre services, unified communications, security solutions, end-user support services...

  • Page 40
    ...Corporate data and networking revenue increased 1% (2012 13 1%) with growth in managed network services and in broadband revenue with more customers choosing to take fibre services. BT Conferencing revenue declined 2% (2012 13 1% increase) due to continued lower hardware sales and lower audio prices...

  • Page 41
    ... data from Ofcom, UK fixed-call minutes fell 13% in the quarter to December 2013, compared with the same quarter a year earlier. Despite this trend, demand for fixed broadband connections is supporting the overall number of lines in the market. BT has a 38% share of the market for consumer fixed...

  • Page 42
    The Strategic Report Delivering our strategy 39 Our three key product segments are fixed-voice, broadband and TV. To win and keep customers we offer competitively priced and differentiated packages across these areas. We provide additional services that support our value-for-money positioning ...

  • Page 43
    ... (Q4 2012 13 33%, Q4 2011 12 31%). (196) (496) (314) (883) Cost transformation Operating costs increased 11% due to our investment in BT Sport and our improved revenue trend. Excluding BT Sport, operating costs declined 5% which is consistent with the prior year. 2013 Net total line losses 2014...

  • Page 44
    ... and Sky Movies. BT Wholesale BT is Europe s largestb wholesale telecoms provider. In Great Britain, BT Wholesale serves more than 1,400 CP customers. BT Wholesale sells voice, broadband and data communications products and services to fixed and mobile network operators and other service providers...

  • Page 45
    ...of designing, building, managing and transforming CPs networks for them. We enable CPs to offer complete voice, data and broadband products. We can extend this to include an end-to-end service wrap, from taking and processing new orders through to customer service and billing the end-user. This year...

  • Page 46
    ... Spitfire Technology Group. Other business won this year includes • contracts with two UK mobile operators to migrate their voice tra c to IP • managed data solutions (incorporating leased lines and Ethernet) for two major US telecoms providers • data centre services for a mobile operator and...

  • Page 47
    ...year. We are delivering the fibre broadband rollout on behalf of the group and are playing our part in building Britain s connected future, helping businesses to grow and communities to prosper. Openreach is responsible for providing services over the local loop (sometimes known as the local access...

  • Page 48
    ... 2011 2012 2013 2014 Wholesale ine Rental (W R) W R is a copper-based service which lets CPs offer own-branded phone services (with their own pricing and billing) using our equipment and network. They pay to use the copper lines between our exchanges and customer premises but can avoid investing...

  • Page 49
    ... more productive. Cost transformation BT Technology, Service & Operations (BT TSO) BT TSO is our internal service unit. It supports our customer-facing lines of business and has 13,500 people. BT TSO is responsible for the whole lifecycle of our global networks and systems from innovation, design...

  • Page 50
    ... total annualised savings, from programmes run over the last five years, to £131m. BT's worldwide energy use Year ended 31 March Gwh 2,900 2,850 • to help benchmark our performance against other organisations, we have also reported our intensity as net emissions (scopes 1 2) per unit of revenue...

  • Page 51
    ... level review of our overarching human rights policy. We will continue to work with our suppliers, customers and partners, along with industry, sector and government bodies to reinforce the message around respect of human rights. Our Better Future strategy and our involvement in local communities...

  • Page 52
    ...amount we can charge CPs whose customers make calls on our network (fixed call origination). • During the year Ofcom started a review of both the Fixed Access market (covering W R, U, GEA, ISDN 2 and ISDN 30 products) and the Wholesale Broadband Access market (covering IPstream, Datastream and WBC...

  • Page 53
    ... have the potential to impact our business, brand, assets, revenue, profits, liquidity or capital resources. The principal risks we described last year have evolved, and so has our response to them. Our Enterprise Risk Management framework provides reasonable (but cannot give absolute) assurance...

  • Page 54
    ... risk exists in these contracts. Impact Failure to manage or meet our commitments under these contracts, as well as changes in customers requirements, budgets, strategies or businesses, may lead to a reduction in our expected future revenue, profitability and cash generation. Unexpectedly high costs...

  • Page 55
    ... and profit is generated in the UK where the overall telecoms market has been in decline in real terms, despite strong volume growth in new services. Revenue from our calls and lines services to consumers and businesses has historically been in decline but new broadband and connectivity markets are...

  • Page 56
    ... repayments to CPs. We may from time-to-time be required to provide new services, or existing services on improved terms, to wholesale customers on a nondiscriminatory basis. This could increase our costs. Regulation outside the UK can impact our revenue by limiting our ability to compete through...

  • Page 57
    ...operate a comprehensive in-life risk management programme that recognises the supplier s criticality to BT and checks that the appropriate level of supplier governance is in place across the group. We regularly scan our suppliers for changes in commercial, financial, ethical, security or performance...

  • Page 58
    ... and designed measures into the technology and operational processes to mitigate those risks. We also need to be fully prepared to respond effectively in the event of a major outage. How we managed the risk A dedicated Business Continuity project was set up, reporting to the BT Sport Programme Board...

  • Page 59
    ...The Strategic Report Group performance Mobility and future voice - changing the way people communicate Conference calling is an established part of life for businesses and other organisations For all that, experiencing the improvement in audio quality made possible by a new collaboration between BT...

  • Page 60
    ... business. 58 Group Finance Director's introduction 59 Group financial results 60 60 60 62 62 64 65 66 67 68 68 69 70 Group performance Market context Our progress against our KPIs Outlook Income statement Cash ow Net debt Dividends Taxation Capital expenditure Balance sheet Pensions Contractual...

  • Page 61
    ... the group for further cost transformation. Together, these will drive long-term cash ow growth for the business. We will continue with our prudent financial policy of investing in our business, reducing net debt, supporting the pension fund and paying progressive dividends. Future outlook 2014/15...

  • Page 62
    The Strategic Report Group performance 59 Group financial results We have made good progress in a number of areas and delivered strong financial results for the year. The investments we are making will support our goal to deliver sustainable, profitable revenue growth. Revenue Year ended 31 March ...

  • Page 63
    ... improved performances from BT Global Services, BT Consumer and BT Business whilst regulatory price reductions impacted group revenue by £150m £200m. Underlying revenue is a measure that re ects the underlying performance of the group that will contribute to long-term profitable revenue growth...

  • Page 64
    ...generate from operations after capital expenditure and finance costs. It shows what cash is available to invest in the business, repay debt, support the pension scheme and pay dividends. Group performance Adjusted earnings per share is the adjusted profit after tax attributable to our shareholders...

  • Page 65
    ... in the prior year. This re ects improved performances from BT Global Services, BT Consumer and BT Business whilst regulatory price reductions impacted group revenue by £150m £200m. BT Global Services investments in the high-growth regions of the world are delivering positive results with double...

  • Page 66
    ...energy costs were 6% lower as a rate rebate and a 3% reduction in energy usage more than offset higher energy prices. BT Sport programme rights charges were £203m (2012 13 £nil). Other operating costs, net of other operating income, increased by 4%, principally re ecting our investment in BT Sport...

  • Page 67
    ...business, supporting our pension fund and our share buyback programme, and paying progressive dividends to our shareholders. The increase in normalised free cash ow in the year partly re ects a particularly strong cash ow performance within BT Global Services as well as lower tax, interest payments...

  • Page 68
    ... free cash ow At 1 April 2012 Disposal and acquisitions At 31 March 2013 Cash tax benefit of pension deficit Pension deficit payments Normalised free cash ow Pension deficit payments Share buyback programme Specific items Specific items 9,082 8,500 8,000 2,300 £m 9,000 Dividends...

  • Page 69
    ...%, and compares with an increase in the full year dividend of 14% in 2012 13. This year s dividend is at the upper end of our expected range, re ecting our strong financial performance this year. It will be paid, subject to shareholder approval, on 8 September 2014 to shareholders on the register on...

  • Page 70
    ...reallocation of overpayments made in prior years following the considerable tax deductible pension deficit payment made in March 2012 and the use of capital allowances that we had not previously claimed. We paid non-UK corporate income taxes of £48m (2012 13 £63m, 2011 12 £47m). 650 (13) (17) 16...

  • Page 71
    68 The Strategic Report Group performance Capital expenditure We continue to make significant investments to support our future growth strategy. Delivering e ciencies across our capital programmes has allowed us to invest for the future whilst continuing to reduce our overall capital expenditure....

  • Page 72
    ...current arrangement for UK employees who joined the group after 1 April 2001. It has around 26,000 active members. The BTPS and BTRSS are not controlled by the Board. The BTPS is managed by a separate and independent Trustee. Details of the governance of the BTPS, its financial position, performance...

  • Page 73
    ... Actuarial losses on assets and exchange rate movements Administration costs Service cost Deficit at 31 March 2014 400 Deficit at 1 April 2013 Programme rights commitments 1,657 Pension deficit obligations 2,065 Total 20,713 a Excludes fair value adjustments for hedged risks. b Includes...

  • Page 74
    ... 8 0 2010 2011 2012 2013 2014 Investment - time, cash and in-kind support valued in £m Percentage of previous year's adjusted profit before taxation We have set a Better Future vision and goal for 2020 in each of the following three priority areas Connected Society, Net Good and Improving Lives...

  • Page 75
    ...Strategic Report Group performance Net Good Improving Lives Over Reduction in our global energy consumption 3% £25m Over Savings to the business from energy reduction £85m 46,000 Over Generated towards good causes during 2013/14 Days volunteered by over 13,600 BT people This year we helped...

  • Page 76
    ...10 people in the UK will have access to fibre-based products and services Net Good Help our customers reduce carbon emissions by at least 3 times the end-to-end carbon impact of our business Improving Lives Use our skills and technology to help generate more than £1bn for good causes 2013/14 target...

  • Page 77
    ... IT team, while BT will provide people to run and manage the IT systems as well as to give help and guidance for the end-users in care homes. This includes staff working for Anchor who need access to applications such as SMART, which is used to maintain individual customer records and is therefore...

  • Page 78
    ...Pensions Committee Chairman's report Committee for Sustainable and Responsible Business Chairman's report 91 Report on Directors' Remuneration 111 Directors' information 112 General information 115 Shareholders and Annual General Meeting Corporate governance statement We are committed to operating...

  • Page 79
    ... in corporate reporting, including the changes in executive remuneration reporting and voting regimes and the introduction of the strategic report. We also responded to a number of consultations including the Financial Reporting Council's integrated guidance on risk management, internal control and...

  • Page 80
    ... and investment proposals and matters of major strategic importance. The Board also sets the direction for the group's values, ethics and business policies and practices. It also oversees operating and financial performance risk management and internal controls compliance and major public policy...

  • Page 81
    78 Governance Board of Directors Key to membership of Board committees Operating Audit & Risk Remuneration Nominating & Governance Sustainable and Responsible Business BT Pensions Equality of Access Board Sir Michael Rake Chairman Appointed to the Board as Chairman in September 2007. A British ...

  • Page 82
    ...Rose Non-executive director Appointed to the Board in January 2011. Nick became Senior Independent Director in March 2014. A British national, age 56. Skills and experience Nick brings experience in finance, risk, control, governance and international business expertise. He was chief financial o cer...

  • Page 83
    ... plans and policies to the Board implement Board decisions, policies and strategy develop and promote compliance with BT's policies on conducting business globally • maintain an effective framework of internal controls and risk management • lead the Operating Committee in the day-to-day running...

  • Page 84
    ... planning • Financial reports • Board evaluation • Strategy • Security updates • Line of business updates • Governance and compliance • Risk management • Approach to tax • Dividend policy • Annual Report & Form 20-F • Investor relations • Group communications overview...

  • Page 85
    ... business environment at the Board strategy day in March 2014. Board committees Remuneration Committee updates The committee chairman provides an update at the private sessions the Chairman has with the nonexecutive directors. Strategic oversight Undertake further deep-dives into the key strategic...

  • Page 86
    ... in Latin America and reports on major contracts in BT Global Services, customer data handling, data security and current trends on security risks facing BT. We also requested a briefing in relation to the regulatory financial statements, including areas of key judgement or estimate. Governance Some...

  • Page 87
    ... reporting changes following the simplification of internal trading and the split of BT Retail into BT Business and BT Consumer (see note 1 to the financial statements). We also considered the resulting revisions to cash generating units (CGUs) and cash ow forecasts for BT Global Services, BT...

  • Page 88
    ... programme at the joint meeting with the Nominating & Governance Committee. The Board is ultimately responsible for the group's systems of internal controls and risk management. You can find details of the Board's and our review of the group's systems of internal control and risk management on pages...

  • Page 89
    ... management of the careers of BT's high potential individuals. As a result of our succession discussions, we were able to move quickly when the need arose to appoint a new Chief Executive. Patricia Hewitt also met with non-executive directors to discuss succession plans for BT Group's chairmanship...

  • Page 90
    ... non-executive directors to discuss the succession planning for BT Group's chairmanship. We held a joint meeting of the Audit & Risk and the Nominating & Governance Committees in March 2014 and plan to hold this annually. We have noted a number of enhancements to the reporting information reviewed...

  • Page 91
    ...in BT Global Services and the review under way of sales pay plans across the group and • our UK telecommunications regulatory compliance programme and how BT manages and mitigates regulatory risk. We also received an update on BT's human rights compliance programme. Regional Governance Committees...

  • Page 92
    ... on 1 May 2014. Further information Further details about BT's Retirement benefit plans are included in note 19 to these accounts. In addition to the work of the BT Pensions Committee, BT provides regular updates on BT's performance and strategy at BT Pension Scheme (BTPS) Trustee meetings and holds...

  • Page 93
    ...profit before taxation, based on the 2012/13 group results. This investment is split between programmes we directly oversee and activities embedded in the lines of business. BT Group's direct investment in sustainable and responsible business in 2013/14 was £27.2m (in time, cash and in-kind support...

  • Page 94
    ...financial targets, although the customer service target was not met. As a result the annual bonus for the Chief Executive was 68% of maximum. In keeping with past practice, part of the annual bonus is deferred for three years and paid in shares. Further information on annual bonus is set out on page...

  • Page 95
    ... our shareholders and re-balanced our remuneration framework to drive long-term, sustainable profitable revenue growth, in line with our business strategy and shareholder interests, whilst being mindful not to encourage inappropriate risk-taking. For 2014/15, executive directors' pay arrangements...

  • Page 96
    ... in May 2013 at a share price of £3.055. e Pension allowance paid in cash for the Ƭnancial year s see Total pension entitlement on page{95. f Includes an additional fee for regular travel to Board and Board committee meetings. g Warren East was appointed as a director on 1 February 2014. h Ian...

  • Page 97
    ... revenue 4% in 2013/14, the most in over ten years. BT Global Ian Livingston received a pro-rated cash bonus re ecting his service during the year. Further details of payments to Ian are set out on page 96. Incentive share plan The ISP 2011 is due to vest in May 2014. The performance conditions...

  • Page 98
    ...,784 shares vested on 6 November 2013. Details of the committee s treatment of Ian Livingston s outstanding awards are set out on page 93. Total pension entitlements The BT Pension Scheme (BTPS) closed to new entrants on 31 March 2001. None of the executive directors participate in future service...

  • Page 99
    ... performance conditions are the same for each director. The target range for TSR the normalised free cash ow element for the three-year performance period 2013/14 - 2015/16 and underlying revenue growth excluding transit is set out in the table below. a Face value based on share price at the date...

  • Page 100
    ... to build up a shareholding in the company over time by retaining shares which they have received under an executive share plan (other than shares sold to meet a National Insurance contribution or income tax liability) or from purchases in the market. At 31 March 2014, both the executive directors...

  • Page 101
    ...2011 DBP 2012 DBP 2013 T Chanmugam DBP 2010 DBP 2011 DBP 2012 DBP 2013 Former director I Livingstonb DBP 2010 DBP 2011 DBP 2012 DBP 2013 01/04/2013 Awardeda Dividends re-invested Vested Lapsed Total number of award shares 31/03/2014 Vesting date Price at grant Monetary Market value of price...

  • Page 102
    ... to a threeyear adjusted cumulative free cash Ʈow measure and 20% to a measure of growth in underlying revenue excluding{transit) over three years. The market price at vesting is an estimate of the value using a three-month average share price from 1 February 2014 to 30{April 2014 of £3.8751. The...

  • Page 103
    ... Share Investment Plan (ESIP) at 31 March 2014 (audited) Total number of shares at 31 March 2014 Gavin Patterson Tony Chanmugam During the year, no awards were made under the ESIP. All UK employees may participate in the ESIP. The awards are not subject to any performance conditions...

  • Page 104
    ...used. TSR is the measure of the returns that a company has provided for its shareholders, re ecting share price movements and assuming reinvestment of dividends. BT's TSR performance vs the FTSE100 The table below illustrates the increase in salary, benefits and annual bonus for the Chief Executive...

  • Page 105
    ...against these targets at the same time as we disclose bonus payments in the Annual Report 2015 so that shareholders can evaluate performance against those targets. The purposeful company measure is aligned to our strategy and is assessed by the Chief Executive for the Group Finance Director and each...

  • Page 106
    ... not increase after this review and is £650,000 per year (2012/13 £650,000). Additional fees are paid for membership and chairing a Board committee, details of which are given in the table below Committee Audit & Risk Remuneration Nominating & Governance BT Pensions CSRBb Equality of Access Board...

  • Page 107
    ...or losses as all other shareholders. Targets for performance are established at above consensus market expectation at the time they are set. In setting directors' remuneration, the committee takes account of the remuneration of other companies of similar si e and complexity, using a comparator group...

  • Page 108
    ... performance measures - these re ect key company, strategic and individual goals. For example, such measures may include customer service, purposeful company and personal objectives. In terms of weighting, non-financial measures will typically account for no more than 50% of the total annual...

  • Page 109
    ... normal ISP award that business plan and consensus market expectations and may be awarded to an executive director in respect of any financial year of the company will be 400% of basic salary. • share price performance measures, to re ect the ultimate delivery of shareholder returns which may, In...

  • Page 110
    ... jobs across a number of countries • all employees, including directors, are paid by reference to the market rate • performance for managers is measured and rewarded through a number of performance-related bonus schemes across the group • business unit performance measures are cascaded down...

  • Page 111
    ... Board does receive feedback from employee surveys that takes into account remuneration in general. The committee also receives updates from the Group People Director. Executive director and Chairman service contracts The other key terms of the service contracts for the current executive directors...

  • Page 112
    ... from the Board. This policy is not mandatory. No element of non-executive director remuneration is performancerelated. Non-executive directors do not participate in BT's bonus or employee share plans and are not members of any of the company pension schemes. Dilution For a number of years we have...

  • Page 113
    ..., UK-listed companies, taking into account the si e, responsibility and time commitment required of the role. • The company's Articles of Association provide the maximum fee level is payable. The maximum is based on NED fees benchmarked as at 1 April 1999 with increases linked to the Retail Price...

  • Page 114
    ... page 83. The Board considers, on the advice of the Audit & Risk Committee that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy. SigniƬcant accounting...

  • Page 115
    ... board members, develops and recommends to the Board a set of corporate governance principles applicable to the company. We have a Nominating & Governance Committee whose terms of reference include governance and compliance issues (see Nominating & Governance Committee Chairman's report on page...

  • Page 116
    ... integral part of BT's annual strategic planning cycle. We have a detailed risk management process which identifies the key risks facing the group, each line of business and our internal service unit, BT TSO. Our current key risks are summarised in the Strategic Report s Our risks on pages 50 to 55...

  • Page 117
    ... business, supporting the pension fund and paying progressive dividends. The Board reviews the group's capital structure regularly. Management proposes actions which re ect the group's investment plans and risk characteristics as well as the macro-economic conditions in which we operate. Our funding...

  • Page 118
    ... year, we surveyed 10,000 private shareholders selected at random to help us improve our engagement with them. In response to the survey's findings, we have included more information on BT's financial performance, strategy and future plans in our shareholder communications. We provide the directors...

  • Page 119
    ... companies Unilever operates around the world. Its world-leading brands, including Wall's Ice Cream, Dove beauty products, Lipton and Knorr, are consumed by two billion people every day. BT has worked with Unilever for more than a decade, providing network services and solutions which are helping...

  • Page 120
    ... accounting policies 135 Segment information 139 Operating costs 140 Employees 140 Audit, audit related and other non-audit services 141 Specific items 142 Taxation 145 Earnings per share 145 Dividends 146 Intangible assets 148 Property, plant and equipment 149 Business combinations 149 Programme...

  • Page 121
    ... income for the year then ended • the group statement of changes in equity and cash ow statement for the year then ended and • the notes to the group financial statements, which include a summary of significant accounting policies and other explanatory information. The financial reporting...

  • Page 122
    ...that we consider the risk that management could override the system of internal controls within the business and intentionally misstate the financial results and position of the group. Valuation of the pension scheme obligations and unquoted investments We focused on this area because the valuation...

  • Page 123
    ... directors state that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the group's performance, business model and strategy. On page 84, as required by C.3.8 of the Code, the Audit & Risk Committee...

  • Page 124
    ... Report of independent registered public accounting firm to the Board of directors and shareholders of BT Group plc (the company') In our opinion, the accompanying group income statements, group statements of comprehensive income, group balance sheets, group statements of changes in equity and group...

  • Page 125
    ... (loss) for the year Earnings per share Basic Diluted 8 9 Year ended 31 March 2013 Revenue Operating costs Operating proƬt (loss) Finance expense Finance income Net Ƭnance expense Share of post tax profit of associates and joint ventures Profit on disposal of interest in associate ProƬt (loss...

  • Page 126
    ...) 212 (59) Year ended 31 March 2012 Revenue Operating costs Operating proƬt (loss) Finance expense Finance income Net Ƭnance expense Share of post tax profit of associates and joint ventures ProƬt (loss) before taxation Taxation ProƬt (loss) for the year Earnings per share Basic Diluted a For...

  • Page 127
    ... Associates and joint ventures Trade and other receivables Deferred tax assets Notes 12 13 26 22 16 9 2014 £m 3,087 13,840 539 34 18 214 1,460 19,192 Current assets Programme rights Inventories Trade and other receivables Current tax receivable Derivative financial instruments Investments Cash...

  • Page 128
    ... loss Transferred to the income statement Comprehensive (loss) income Dividends to shareholders Share-based payments Tax on share-based payments Net buyback of own shares At 31 March 2014 11 21 9 20 9 11 21 9 20 a The allotted, called up, and fully paid ordinary share capital of BT Group...

  • Page 129
    126 Financial statements Group cash Ʈow statement Year ended 31 March Cash Ʈow from operating activities Profit before taxationa Loss (profit) on disposal of interest in associates and joint ventures Share of post tax loss (profit) of associates and joint ventures Net finance expensea Operating ...

  • Page 130
    ... operating income as either revenue or a reduction in operating costs, as appropriate. For the year ended 31 March 2013 this change increased revenue by £86m (2011/12 £90m), and it reduced operating costs by £313m (2011/12 £278m). There is no impact on the group's EBITDA or profit before tax...

  • Page 131
    ... change, network investment plans (including the group's fibre rollout programme), prospective economic utilisation and physical condition of the assets concerned. Changes to the service lives of assets implemented from 1 April 2013 had no significant impact in aggregate on the results for the year...

  • Page 132
    ... of cash generating units (CGUs) has been determined based on value-in-use calculations. These calculations require the use of estimates, including management's expectations of future revenue growth, operating costs, profit margins and operating cash ows for each CGU. As a result of the split of BT...

  • Page 133
    ... of business BT Global Services, BT Business, BT Consumer, BT Wholesale and Openreach. The customer-facing lines of business are supported by an internal service unit BT Technology, Service & Operations (BT TSO). The customer-facing lines of business are the group's reportable segments and generate...

  • Page 134
    ... the group's policy for impairment of non-financial assets set out on page 132. Related cash out ows are classified as operating cash ows in the cash ow statement. Assets held under finance leases are depreciated over the shorter of the lease term or their useful economic life. Residual values and...

  • Page 135
    ... The group financial statements consolidate the financial statements of BT Group plc ( the company') and its subsidiaries, and they incorporate its share of the results of associates and joint ventures using the equity method of accounting. A subsidiary is an entity that is controlled by...

  • Page 136
    ... subsequent reporting dates to fair value, with unrealised gains and losses (except for changes in exchange rates for monetary items, interest, dividends and impairment losses, which are recognised in the income statement) recognised in equity until the financial asset is derecognised, at which time...

  • Page 137
    ...is designated as a fair value hedge is recorded in the income statement at each reporting date, together with any changes in fair value of the hedged asset or liability that is attributable to the hedged risk. Accounting standards, interpretations and amendments not yet effective IFRS 9 'Financial...

  • Page 138
    ... page 127, BT Retail was subsequently split into two reportable segments, BT Business and BT Consumer. Information regarding the results of each reportable segment is provided below. Segment revenue and profit Year ended 31 March 2014 Segment revenue Internal revenue Revenue from external customers...

  • Page 139
    ...by transfer pricing levels. BT Global Services and BT Wholesale do not generate internal revenue from the other lines of business. The majority of internal trading relates to Openreach and arises on rentals, and any associated connection or migration charges, of the UK access lines and other network...

  • Page 140
    ...4,130 Year ended 31 March 2012 (Restateda) Internal revenue recorded by BT Global Services BT Business BT Consumer BT Wholesale Openreach Other Total Revenue by products and services Year ended 31 March ICT and managed networks Broadband, TV and convergence Calls and lines and connectivity Transit...

  • Page 141
    138 Financial statements 4. Segment information continued Geographic information The UK is the group's country of domicile and the group generates the majority of its revenue from external customers in the UK. The geographic analysis of revenue is on the basis of the country of origin in which the...

  • Page 142
    ... of key management personnel 2014 £m 11.1 1.0 6.4 18.5 2013 £m 10.5 1.1 6.0 17.6 2012 £m 11.6 1.0 7.8 20.4 Year ended 31 March Short-term employee benefits Post employment benefits Share-based payments More detailed information concerning directors' remuneration, shareholdings, pension...

  • Page 143
    ... services provided. These represented 15% of the total fees in 2013/14 (2012/13 and 2011/12 17%). The BT Pension Scheme is an associated pension fund as defined in the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011. In the year ended...

  • Page 144
    ... revenue with an eTual reduction in operating costs. c The components of the restructuring charges recognised in 201314, 201213 and 201112 were: people and property charges of £217m (201213: £163m, 201112: £28m) principally comprising leaver costs, property exit costs and networks, products...

  • Page 145
    ... year differs from the amount computed by applying the UK corporation tax rate to the profit before taxation as a result of the following factors 2014 £m 2,312 (532) 13 (12) (40) (5) - 54 17 208 3 (294) (319) (613) 2013 Restateda £m 2,315 (555) 14 (14) (46) 10 28 36 57 103 - (367) (230) (597) 2012...

  • Page 146
    ... (201213: £128m, 201112: £565m) relating to actuarial losses arising from retirement beneƬt obligations. Tax credit recognised directly in equity Year ended 31 March Tax credit relating to share-based payments 2014 £m 106 2013 £m 68 2012 £m 17 Deferred taxation Excess Retirement capital...

  • Page 147
    144 Financial statements 9. Taxation continued Factors affecting future tax charges The rate of UK corporation tax changed from 23% to 21% on 1 April 2014 and will change to 20% on 1 April 2015. As deferred tax assets and liabilities are measured at the rates that are expected to apply in the ...

  • Page 148
    ...all shareholders on the Register of Members on 15 August 2014. The value of £781m (2012/13 £684m, 2011/12 £589m) for the final and interim dividends is disclosed in the group statement of changes in equity. This value may differ from the amount shown for equity dividends paid in the group cash ow...

  • Page 149
    146 Financial statements 12. Intangible assets Customer relationships and brands £m 325 - 28 - - 5 358 - 20 - 27 (11) 394 270 18 - 3 291 15 26 (9) 323 Telecoms licences and other £m 273 202 - - 2 4 481 1 - - (62) (5) 415 175 8 - 3 186 7 (89) (3) 101 Internally developed software £m 3,091 399 - ...

  • Page 150
    ...internal trading and more closely align our line of business financial results and our regulatory accounts. These changes impacted the cash ow projections for BT Global Services, BT Business and BT Consumer used in the annual goodwill impairment review. They resulted in an increase in operating cash...

  • Page 151
    ... on those assets in 201314 was £22m (201213: £19m), comprising land and buildings of £4m (201213: £3m) and network infrastructure of £18m (201213: £16m). Within network infrastructure are assets with net book value of £7.4bn which have useful economic lives of more than 18 years. b Other...

  • Page 152
    ...issued share capital of Tikit Group plc ( Tikit' or BT Tikit'). The purchase was made for cash consideration of £64m which was settled in the year and the cash acquired with the business was £10m. Intangible assets of £37m recognised in respect of this acquisition comprised customer relationships...

  • Page 153
    ... 564 197 119 64 21 2 967 Accrued income 2014 2013 £m £m 435 121 - 118 137 4 815 399 121 - 135 75 6 736 At 31 March BT Global Services BT Business BT Consumer BT Wholesale Openreach Other Total Given the broad and varied nature of the group's customer base, the analysis of trade receivables not...

  • Page 154
    Financial statements 151 18. Provisions Restructuringa £m At 1 April 2012 Income statement expense Unwind of discount Utilised or released Transfers At 1 April 2013 Income statement expense Unwind of discount Utilised or released Exchange differences At 31 March 2014 105 31 - (69) - 67 20 - (28) ...

  • Page 155
    ... below. 2014 £m 2013 Restateda £m 2012 Restateda £m Year ended 31 March Recognised in the income statement before speciƬc items Current service cost - defined benefit plans - defined contribution plans Administration expenses and Pension Protection Fund ( PPF') levy Total operating expense Net...

  • Page 156
    ... in the financial statements. Assets £m At 1 April 2012 Current service cost Interest on pension deficita Administration expenses and PPF levy Included in the group income statement Return on plan assets above the amount included in the group income statementb Actuarial loss arising from changes in...

  • Page 157
    ... and manage the scheme on behalf of the members in accordance with the terms of the Trust Deed of the scheme and relevant legislation. Under the terms of the Trust Deed there are nine Trustee directors all of whom are appointed by BT. The chairman of the Trustee is appointed after consultation with...

  • Page 158
    ... equities are valued in accordance with International Private Equity and Venture Capital (IPEVC) guidelines unlisted fixed interest and index-linked instruments are valued using the latest market price or using discounted cash ow models that consider credit risk. The fair value of the assets...

  • Page 159
    ... 2074 2094 Liabilities (Right axis) a Based on accrued bene ts to date. Key assumptions - IAS 19 (Revised 2011) The key financial assumptions used to measure the liabilities of the BTPS under IAS 19 (Revised 2011) are shown below. Nominal rates (per year) 2014 2013 2012 % % % 4.25 3.25 2.50b...

  • Page 160
    ... is to design a funding plan to ensure that the scheme has su cient funds available to meet future benefit payments. The latest funding valuation was performed as at 30 June 2011. The next funding valuation will have an effective date of no later than 30 June 2014. Financial statements The valuation...

  • Page 161
    ... of the funding deficit in the period from 31 December 2008 to 30 June 2011 re ects an increase in scheme assets due to deficit contribution payments totalling £1.6bn and strong investment performance of 10.1% per year. The liabilities increased due to a lower discount rate which was partly...

  • Page 162
    ... with the Trustee and certified by the Scheme Actuary. The funding deficit at 30 June 2011 was £3.9bn. Under the associated recovery plan BT made payments of £2.0bn in March 2012, £325m in March 2013 and £325m in March 2014. BT will make deficit payments of £295m in each year from 2015 to 2021...

  • Page 163
    ...954) with an aggregate nominal value of £12m (201213: £14m) were held at cost as treasury shares and 61,313,845 shares b See group cash Ʈow statement on page 126. In 201314 the cash paid for the repurchase of ordinary share capital was £302m (201213: £302m). The cash received for proceeds on...

  • Page 164
    ... granted in 2013/14, 2012/13 and 2011/12 40% of each award is linked to a total shareholder return (TSR) target for a comparator group of companies from the beginning of the relevant performance period 40% is linked to a three-year cumulative free cash ow measure, and 20% to growth in underlying...

  • Page 165
    ... fair values and key assumptions used for valuing grants made under the Employee Saveshare plans and ISP in 2013/14, 2012/13 and 2011/12. 2014 Year ended 31 March Weighted average fair value Weighted average share price Weighted average exercise price Expected dividend yield Risk free rates Expected...

  • Page 166
    ... in a number of private companies. In the absence of specific market data, these investments are held at cost, adjusted as necessary for impairments, which approximates to fair value. There were no losses recognised in the income statement in respect of Level 3 assets held at 31 March 2014 (2012/13...

  • Page 167
    ... over time whilst investing in the business, supporting the pension scheme and paying progressive dividends. In order to meet this objective, the group may issue or repay debt, issue new shares, repurchase shares, or adjust the amount of dividends paid to shareholders. The group manages the capital...

  • Page 168
    ... £286m (2012/13 £314m). The fair value of the group's bonds and other long-term borrowings are estimated on the basis of quoted market prices for the same or similar issues with same maturities, where they exist and on calculation of the value of future cash ows using approximate discount rates in...

  • Page 169
    ...arise after taking account of the relevant derivatives in hedging relationships which are re ected in the table below. Apart from finance leases, all borrowings as at 31 March 2014 and 2013 were unsecured. The principal repayments of loans and borrowings at hedged rates amounted to £9,496m (2012/13...

  • Page 170
    ... a number of years in the income statement. Year ended 31 March Net finance expense Timing differences Derivative restructuring costs Timing of coupon payments on bonds Deferred income Net interest cash outƮow 2014 £m 591 14 (5) 8 608 2013 £m 653 16 15 8 692 2012 £m 681 (4) - 8 685 Financial...

  • Page 171
    ...role is to manage liquidity and funding requirements and the group's exposure to associated financial and market risks, including credit risk, interest rate risk and foreign exchange risk. Treasury policy Treasury policy is set by the Board. Group treasury activities are subject to a set of controls...

  • Page 172
    Financial statements 169 26. Financial instruments and risk management continued Hedging strategy A significant proportion of the group's external revenue and costs arise within the UK and are denominated in Sterling. The group's non-UK operations generally trade and are funded in their functional...

  • Page 173
    ... 2013 Outlook Stable Positive The group is targeting a BBB /Baa1 credit rating over the medium term. Liquidity risk management Management policy The group ensures its liquidity is maintained by entering into short, medium and long-term financial instruments to support operational and other funding...

  • Page 174
    ... 1,739 1,856 1,133 1,615 7,487 19,904 (5,671) 108 (135) 14,206 a Foreign currency-related cash Ʈows were translated at closing rates as at the relevant reporting date. Future variable interest rate cash Ʈows were calculated using the most recent rate applied at the relevant Financial statements

  • Page 175
    ... relevant reporting date. Future variable interest rate cash Ʈows were calculated using the most recent rate applied at the relevant balance sheet date. Credit risk management Management policy The group's exposure to credit risk arises from financial assets transacted by the treasury operation...

  • Page 176
    ...statements 173 26. Financial instruments and risk management continued The credit quality and credit concentration of cash equivalents, current asset investments and derivative financial assets are detailed in the tables below. Where the opinion of Moody's and S&P differ, the lower rating is used...

  • Page 177
    ... foreign exchange contracts are estimated using discounted cash ow models and market rates of interest and foreign exchange at the balance sheet date. Derivatives At 31 March 2014 Designated in a cash ow hedge Designated in a fair value hedge Other Total derivatives Current Non current asset asset...

  • Page 178
    ... the diƪerence between the nominal value of shares in the new parent company, BT{Group{plc, and b The cash Ʈow reserve is used to record the eƪective portion of the cumulative net change in the fair value of cash Ʈow hedging instruments related to hedged transactions that have not yet occurred...

  • Page 179
    ...directors and members of the Operating Committee. Compensation of key management personnel is disclosed in note 5. Amounts paid to the group's retirement benefit plans are set out in note 19. In the comparative periods when Tech Mahindra was the group's principal associate, the net value of services...

  • Page 180
    ... 2014 • the parent company reconciliation of movement in equity shareholders' funds for the year then ended and • the notes to the parent company financial statements, which include a summary of significant accounting policies and other explanatory information. The financial reporting framework...

  • Page 181
    ... in these financial statements. Employees The Chairman, the executive directors and the Group General Counsel & Company Secretary of BT Group plc were the only employees of the company during 2013/14. The costs relating to qualifying services provided to the company's principal subsidiary, British...

  • Page 182
    ... Total assets less current liabilities Capital and reserves Called up share capital Share premium account Capital redemption reserve Own shares Profit and loss account Total equity shareholders' fundsc a Throughout 201314 and 201213, the company held a 100% investment in BT Group Investments...

  • Page 183
    180 Financial statements BT Group plc company reconciliation of movement in equity shareholders' funds Called up share capitala £m At 1 April 2012 Profit for the financial year Dividends paid Capital contribution in respect of share-based payments Net issuance of own shares At 1 April 2013 Profit...

  • Page 184
    ... England and Wales, except BT Americas Inc proƬt or assets of the group. A full list of subsidiaries, joint ventures and associates will be annexed to the companyos next annual return Ƭled with the Registrar of Companies. and Communications Global Network Services /imited which are incorporated...

  • Page 185
    ... out more, visit www.bt.combetterfuture BT's Emergency Response Team pictured after successfully installing a satellite communications unit in Roxas City, Capi , Philippines as part of our response to Typhoon Haiyan in 2013. A VSAT' unit was used to provide voice and data connections for NGOs and...

  • Page 186
    ... Financial and operational statistics 192 Information for shareholders 203 Cross reference to Form 20-F 207 Glossary of terms Effective from 1 April 2013 we made a number of changes that simplify our internal trading and more closely align our line of business results with our regulatory accounts...

  • Page 187
    ... with the way that financial performance is measured by management and reported to the Board and the Operating Committee and assists in providing a meaningful analysis of the trading results of the group. The directors believe that presentation of the group's results in this way is relevant...

  • Page 188
    ... our lines of business is set out in note 4 to the consolidated financial statements. 2014 £m 3,145 2,695 5,840 276 6,116 2013 Restateda £m 2,948 2,843 5,791 352 6,143 2012 Restateda £m 2,889 2,972 5,861 173 6,034 Year ended 31 March Operating proƬt Depreciation and amortisation Reported EBITDA...

  • Page 189
    ... current asset investments and cash and cash equivalents are measured at the lower of cost and net realisable value. Our net debt calculation starts from the expected future undiscounted cash ows that should arise when our financial instruments mature. We adjust these cash ows to re ect hedged risks...

  • Page 190
    ... information 187 Selected Ƭnancial data Summary group income statement Year ended 31 March Revenue Adjusted Specific items Operating costs Adjusted Specific items Operating proƬt Adjusted Specific items Net Ƭnance expense Adjusted Specific items Share of post tax (loss) proƬt of associates...

  • Page 191
    ... loans and other borrowings Retirement benefit obligations Other non-current liabilities Total assets less liabilities Ordinary shares Share premium account Own shares Other reserves Retained (loss) earnings Total (deƬcit) equity 2014 £m 3,087 13,840 2,265 19,192 (1,981) 17,211 (7,941) (7,022...

  • Page 192
    ... Year ended 31 March Increase (decrease) in underlying revenue excluding transita,c Adjusted EBITDAa,b,c Free cash Ʈowc Normalised Reported Net debt at 31 Marchc Operating costs excluding depreciation and amortisationa,b Expenditure on research and development Research and development operating...

  • Page 193
    190 Additional information Financial ratios Year ended 31 March Return on capital employedb Adjustedc - % Reported - % Interest coverd Adjustedc - times Reported - times Net debt to adjusted EBITDAc - times Capital expendituree as a percentage of revenuec - % 2014 22.9 21.1 5.8 3.8 1.1 12.8 2013 ...

  • Page 194
    ...Year ended 31 March BT Global Services Order intake (£m) BT Business Order intake (£m) BT Consumer Consumer average revenue per user (ARPU)b (£) Active consumer lines BT TV customers BT Wholesale Order intake (£m) Openreach Physical lines Internal External Fully unbundled Total physical lines BT...

  • Page 195
    ..., market shares, prices and growth expectations regarding the convergence of technologies plans for the launch of new products and services network performance and quality the impact of regulatory initiatives, decisions and outcomes on operations, including the regulation of the UK fixed wholesale...

  • Page 196
    ... and are listed on the New York Stock Exchange. Trading on the New York Stock Exchange is under the symbol BT'. Share and ADS prices Pence per ordinary share High Low pence pence Financial years ended 31 March 2010 2011 2012 2013 2014 Financial year ended 31 March 2013 1 April - 30 June 2012 1 July...

  • Page 197
    ... known to the company, the operation of which may at a subsequent date result in a change in control of the company. The company's major shareholders do not have different voting rights to those of other shareholders. At 2 May 2014, there were 8,151,227,029 ordinary shares outstanding, including 231...

  • Page 198
    ... on the date the ordinary dividends were paid. Per ordinary share Final Total pence pence 4.60 5.00 5.70 6.50 7.50 6.90 7.40 8.30 9.50 10.9 Per ADS Total £ 0.690 0.740 0.830 0.950 1.090 Per ADS Total US$ 1.023 1.143 1.275 1.445 -a Dividends Financial years ended 31 March 2010 2011 2012 2013 2014...

  • Page 199
    196 Additional information Dividend investment plan Under the Dividend investment plan, cash from participants' dividends is used to buy further BT shares in the market. Shareholders could elect to receive additional shares in lieu of a cash dividend for the following dividends Date paid 2009/10 ...

  • Page 200
    .... BT publishes its consolidated financial statements expressed in Sterling. The following tables provide certain information concerning the exchange rates between Sterling and US Dollars based on the noon buying rate in New York City for cable transfers in Sterling as certified for customs purposes...

  • Page 201
    .... Fixed dividends will be paid on any class of shares on the dates stated for the payments of those dividends. The directors can offer ordinary shareholders the right to choose to receive new ordinary shares, which are credited as fully paid, instead of some or all of their cash dividend. Before...

  • Page 202
    ... and future) and Taxation (US Holders) This is a summary only of the principal US federal income tax and UK tax consequences of the ownership and disposition of ordinary shares or ADSs by US Holders (as defined below) who hold their ordinary shares or ADSs as capital assets. It does not address all...

  • Page 203
    ... gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the US Dollar value of the Taxation of dividends Under current UK tax law, BT will not be required to withhold tax at source from dividend payments it makes. Unless a US Holder of ordinary shares or ADSs...

  • Page 204
    ... corporations and other customers that require global communications connectivity, are insignificant to the group's financial condition and results of operations. Under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13 (r) to the Securities Exchange...

  • Page 205
    ... Better Future our annual sustainability report EAB Annual Report Expected quarterly results releases Current Cost Financial Statements The Way We Work, a statement of business practice Publication date May May May May July, October, January and May July General enquiries BT Group plc BT Centre 81...

  • Page 206
    ... for the offer and use of proceeds Information on the company History and development of the company Financial highlights Group performance Group financial results Selected financial data Information for shareholders Exchange rates Not applicable Not applicable 8 59 187 197 4B Business overview...

  • Page 207
    ... plans Share-based payments Board of Directors The Board Reports of the Board Committees Report on Directors' Remuneration Our people Group performance Income statement Operating costs Consolidated financial statements Notes to the consolidated financial statements Employees Reports of the Board...

  • Page 208
    ...and other financial information Where information can be found in this Annual Report Section Page 8B Significant changes The oƪer and listing Offer and listing details See Item 18 below General information Legal proceedings Group performance Dividends Consolidated financial statements Notes to...

  • Page 209
    ... committee Ƭnancial expert 112 112 16B 16C Code of ethics Principal accountants' fees and services 140 83 195 16E 16F 16G Purchases of equity securities by the issuer and aƯliated purchasers Change in registrant's reporting accountant Corporate Governance 112 17 18 Financial statements...

  • Page 210
    ... which uses fibre to provide high connection speeds for the whole route from the exchange to the customer B BDUK: Broadband Delivery UK BTPS (BT Pension Scheme): the defined benefit pension scheme which was closed to new members on 31 March 2001 BTRSS (BT Retirement Saving Scheme): the scheme set...

  • Page 211
    ...communications services W WBC: wholesale broadband connect WLR: wholesale line rental - a product supplied by Openreach which is used by CPs to offer telephony services using their own brand, pricing structure and billing, but using BT's network P PIA: passive infrastructure access POLOs: payments...

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    ...plc Registered office 81 Newgate Street, London EC1A 7AJ Registered in England and Wales No. 4190816 Produced by BT Group PHME 70299 Printed in England by Pindar Scarborough Ltd Design by saslondon.com Typeset by RR Donnelley Printed on Amadeus 50 Silk which is made from 50% de-inked, post-consumer...