BT 2014 Annual Report Download - page 130

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Financial statements
Financial statements
Notes to the consolidated Ƭnancial statements
1. Basis of preparation
Preparation of the nancial statements
These consolidated nancial statements have been prepared in
accordance with the Companies Act 2006, Article 4 of the IAS
Regulation and International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS) and related
interpretations, as adopted by the European Union. The consolidated
nancial statements are also in compliance with IFRS as issued by the
International Accounting Standards Board (the IASB). The consolidated
nancial statements are prepared on a going concern basis.
The consolidated nancial statements are prepared on the historical
cost basis, except for certain nancial and equity instruments that
have been measured at fair value. The consolidated nancial statements
are presented in Sterling, the functional currency of BT Group plc,
the parent company.
New and amended standards adopted with an
impact to the group
IAS 19 Employee Benets’ (Revised 2011) was eective for the group
from 1 April 2013. We have restated the comparative gures for the
year ended 31 March 2013 and 31March 2012 to reect the position
had it applied in those years. Implementation had the following impact
– plan administration costs are recognised in the group’s income
statement, while previously these were recognised within other
comprehensive income. For the year ended 31 March 2013,
this increased operating costs by £18m (2011/12 £20m)
– the Pension Protection Fund levy is recognised as an operating cost,
while previously this was recognised as a nance expense. For the year
ended 31 March 2013, this has increased operating costs and reduced
net nance expense by £20m (2011/12 £10m) and
– the expected return on pension plan assets and interest expense
on pension plan liabilities were replaced by a single net interest
component calculated on the net pension obligation using the
discount rate. Net nance income on pensions (treated as a specic
item) has reduced by £168m for the year ended 31 March 2013
(2011/12 £305m) and as such is an expense.
Overall, reported prot before tax and reported prot after tax, which
are after the impact of specic items, were reduced by £186m for the
year ended 31 March 2013 (2011/12 £325m) and £143m for the
year ended 31 March 2013 (2011/12 £247m), respectively. Reported
basic and diluted earnings per share were reduced by 1.9p and 1.8p for
the year ended 31 March 2013 respectively (2011/12 3.2p and 3.0p).
EBITDA and adjusted prot before tax reduced by £38m for the year
ended 31 March 2013 (2011/12 £30m). There is no impact on the
group’s free cash ow.
Changes in presentation of the nancial statements
Presentation of other operating income
To simplify our reporting, from 1 April 2013 we no longer separately
report other operating income. We have re-presented items previously
reported as other 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 prot
before tax or earnings per share.
SimpliƬcation of internal trading
Eective from 1 April 2013, we also made a number of changes to
simplify our internal trading and more closely align our line of business
nancial results with our regulatory accounts. We also adjusted the
disclosure of our lines of business to reect customer account moves
and to better reect their commercial activity. In order to present
historical information on a consistent basis, we have revised comparative
information for the years ended 31 March 2013 and 31 March 2012
for a number of items that impact the nancial results of individual lines
of business, but have no impact on the total group results.
Split of BT Retail
During the year, BT Retail was divided into two separate lines of
business, BT Business and BT Consumer. Segmental reporting for the
current and previous years has been revised to reect the new structure.
Cash generating units have also been revised to reect the new structure
(see note 12). We have revised balance sheet comparatives to present
them on a consistent basis. Accrued income at 31 March 2013 increased
by £53m, with a corresponding increase of £53m in deferred income.
The overall impact on the lines of business of the simplication of
internal trading and the split of BT Retail is disclosed in note 4.
New and amended standards adopted with no signicant
impact to the group
The following new and amended standards adopted during the year
did not have any signicant impact on the group.
Amendments to IFRS 7 ‘Disclosures – Oƪsetting Financial Assets
and Financial Liabilities’
These amendments require entities to disclose information about
rights of oset and related arrangements for nancial instruments
under an enforceable master netting agreement or similar arrangement.
The amendments also require disclosures to be provided for
comparative periods.
IFRS 10 ‘Consolidated Ƭnancial statements’ (IFRS 10), IFRS 11 ‘Joint
arrangements’ (IFRS 11), IFRS 12 ‘Disclosures of interests in other
entities’ (IFRS 12), IAS 27 (as revised in 2011) ‘Separate Financial
Statements’ (IAS 27 revised), IAS 28 (as revised in 2011) ‘Investments
in Associates and Joint Ventures’ (IAS 28 revised)
In accordance with IFRS as issued by the IASB, IFRS 10, IFRS 11,
IFRS 12, IAS 27 revised and IAS 28 revised are eective for the group
from 1 April 2013. However for IFRS as adopted by the European
Union, the mandatory application of these standards is only required
for the group’s accounting period beginning on 1 April 2014.
These accounting standards were therefore adopted early by the
group for the accounting period commencing on 1 April 2013 in order
to avoid dierences between IFRS as issued by the IASB and IFRS as
adopted by the European Union.
IFRS 13 ‘Fair value measurement’ (IFRS 13)
The standard provides a single source of guidance for fair value
measurements and disclosures. It also provides a new denition of
fair value and it does not change the requirements regarding which
items should be measured or disclosed at fair value. IFRS 13 is applied
prospectively eective from 1 April 2013.