BT 2015 Annual Report Download - page 205

203
Overview
The Strategic Report
Purpose and strategy Delivering our strategy Group performance Governance Financial statements Additional information
(%,7'$
n addition to easurin financial perforance of the roup and lines of business based on operatin profit we also easure perforance based on
 and adusted .  is defined as the roup profit before depreciation aortisation net finance epense and taation. dusted
 is defined as  before specific ites.  is a coon easure used b investors and analsts to evaluate the operatin financial
performance of companies, particularly in the telecommunications sector.
We consider EBITDA and adjusted EBITDA to be useful measures of our operating performance because they approximate the underlying operating
cash ow b eliinatin depreciation and aortisation.  and adusted  are not direct easures of our liuidit which is shown b our
cash ow stateent and need to be considered in the contet of our financial coitents.
Within the lines of business we may also consider our performance using an underlying EBITDA measure, which additionally excludes the impact of
acquisitions and disposals and foreign exchange.
 reconciliation fro roup operatin profit the ost directl coparable  easure to reported and adusted roup  is set out below.
reconciliation between operatin profit and adusted  for our lines of business is set out in note  to the consolidated financial stateents.
Year ended 31 March
2015
£m
2014
£m
2013
£m
2SHUDWLQJSURƬW   
Depreciation and amortisation 2,538 2,695 2,843
5HSRUWHG(%,7'$   
pecific ites 253 276 352
$GMXVWHG(%,7'$   
(DUQLQJVSHUVKDUH
e also easure financial perforance based on adusted earnins per share which ecludes specific ites. asic and adusted earnins per share
and the per share ipact of specific ites are as follows
2015 2014 2013
Year ended 31 March
Pence
per share £m
Pence
per share £m
Pence
per share £m
%DVLFHDUQLQJVSHUVKDUHSURƬWa26.5  25.7  24.8 
pecific itesb5.0 406 2.5 196 1.5 111
$GMXVWHGEDVLFHDUQLQJVSHUVKDUHSURƬW 31.5  28.2  26.3 
a7KHVWDWHGSURƬWDPRXQWVDUHWKHFRPSRQHQWVRIWKHWRWDOSURƬWZKLFKDUHDWWULEXWDEOHWRHTXLW\VKDUHKROGHUVH[FOXGLQJQRQFRQWUROOLQJLQWHUHVWV
b6SHFLƬFLWHPVDUHVHWRXWLQQRWHWRWKHFRQVROLGDWHGƬQDQFLDOVWDWHPHQWV
e disclose reported earnins per share both basic and diluted in note 10 to the consolidated financial stateents.
)UHHFDVKƮRZ
oralised free cash ow is one of the roups e perforance indicators b which our financial perforance is easured. oralised free
cash ow is defined as the net increase in cash and cash euivalents less cash ows fro financin activities ecept net interest paid the
acuisition or disposal of roup undertains the net sale of short-ter investents and ecludin the cash ipact of specific ites purchases
oftelecounications licences and the cash ta benefit of pension deficit paents. or non-ta related ites the adustents are ade on a
pre-tax basis.
oralised free cash ow is priaril a liuidit easure. owever we also believe it is an iportant indicator of our overall operational perforance
as it reects the cash we enerate fro operations after capital ependiture and financin costs both of which are sinificant onoin cash outows
associated with investin in our infrastructure and financin our operations. n addition noralised free cash ow ecludes cash ows that are
determined at a corporate level independently of ongoing trading operations such as dividends, share buybacks, acquisitions and disposals and
repaent and raisin of debt. oralised free cash ow is not a easure of the funds that are available for distribution to shareholders.
ur e free cash ow easure chaned fro adusted free cash ow to noralised free cash ow in 011 followin the .0bn lup su
pension deficit paent ade in arch 01. he 0 ta credit relatin to this deficit paent would have distorted our free cash ow easure
in 011 as would the 0 paent for the  spectru licence. ertain historical incentive share awards still use adusted free
cash ow as one of the perforance criteria for vestin. dusted free cash ow does not eclude purchases of telecounications licences and
the cash ta benefit of pension deficit paents.