BT 2014 Annual Report Download - page 187

184 Additional information
Introduction
We assess the performance of the group using a variety of alternative performance measures. We principally discuss the group’s results on an
adjusted’ basis. The rationale for using adjusted measures is explained below. Results on an adjusted basis are presented before specic items.
We also explain nancial performance using measures that are not dened under IFRS and are therefore termed non-GAAP’ measures.
Thenon-GAAP measures we use are the trend in underlying revenue excluding transit, and in underlying operating costs excluding transit,
as well as in underlying operating costs excluding transit, the investment in BT Sport and the non-cash increase in the pensions operating charge
reported and adjusted EBITDA reported and normalised free cash ow and net debt. A reconciliation from these non-GAAP measures to the
nearest measure prepared in accordance with IFRS is presented below. The alternative performance measures we use may not be directly
comparable with similarly titled measures used by other companies.
SpeciƬc items
The group’s income statement and segmental analysis separately identify trading results before specic items. Specic items are those that in
management’s judgement need to be separately disclosed by virtue of their sie, nature or incidence. In determining whether an event or transaction
is specic, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. This is consistent
with the way that nancial 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 to an understanding of the group’s underlying nancial
performance. Items which have been considered to be specic items by virtue of their sie, nature or incidence include disposals of businesses
andinvestments, regulatory settlements, historic insurance or litigation claims, business restructuring programmes, asset impairment charges,
property rationalisation programmes, net interest on pensions and the settlement of multiple tax years.
Specic items are disclosed in note 8 to the consolidated nancial statements.
Trends in underlying revenue and operating costs
Underlying revenue and underlying operating costs are measures which seek to reect the underlying performance of the group that will contribute
to long-term sustainable, protable growth. As such they exclude the impact of acquisitions or disposals, foreign exchange movements and
specic items. We focus on the trends in underlying revenue and underlying operating costs excluding transit, as transit trac is low-margin and
issignicantly aected by reductions in mobile termination rates.
A reconciliation from the increase in reported revenue and decrease in reported operating costs, the most directly comparable IFRS measures, to the
increase in underlying revenue and increase in underlying operating costs excluding transit, is set out below.
Year ended 31 March
2014
%
2013
Restateda
%
2012
Restateda
%
Increase (decrease) in reported revenue 1.0 (4.7) (5.9)
Specic items (1.3) (0.8) 2.0
Decrease in adjusted revenue (0.3) (5.5) (3.9)
Transit revenue 1.0 1.3 1.6
Acquisitions and disposals (0.1) 0.2 0.3
Foreign exchange movements and other (0.1) 0.9 0.1
Increase (decrease) in underlying revenue excluding transit 0.5 (3.1) (1.9)
Year ended 31 March
2014
%
2013
Restateda
%
2012
Restateda
%
Decrease in reported operating costs (0.1) (5.9) (8.7)
Depreciation and amortisation 1.2 (0.3) (1.7)
Increase (decrease) in reported operating costs before depreciation and amortisation 1.1 (6.2) (10.4)
Specic items (1.3) (2.5) 3.7
Decrease in adjusted operating costs before depreciation and amortisation (0.2) (8.7) (6.7)
Transit costs 1.4 1.7 1.8
Acquisitions and disposals (0.1) 0.2 0.3
Foreign exchange movements and other –1.0 0.3
Increase (decrease) in underlying operating costs before depreciation and amortisation excluding transit 1.1 (5.8) (4.3)
a Restated, see note 1 to the consolidated Ƭnancial statements.
Alternative performance measures