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1999
Annual report and Form 20-F

Table of contents

  • Page 1
    1999 Annual report and Form 20-F

  • Page 2
    ... limited company which has listings on the London, New York and Tokyo stock exchanges and is registered in England. This is the annual report for the year ended 31 March 1999. It complies with UK regulations and is the annual report on Form 20-F for the Securities and Exchange Commission to meet...

  • Page 3
    ... Accounting policies Consolidated financial statements United States generally accepted accounting principles 102 Subsidiary undertakings, joint ventures and associates 104 Quarterly analysis of turnover and profit 106 Financial statistics 107 Operational statistics and regulatory information...

  • Page 4
    ... traffic and mobile usage • BT Cellnet's customer connections up by 1.4 million to 4.5 million • 7.4 per cent increase in dividends per share • Net gain of £1,133 million on sale of MCI shares Profit before tax Profit after tax Capital expenditure (£m) YEARS ENDED 31 MARCH 2,771 95...

  • Page 5
    4

  • Page 6
    ...cent to £18.2 billion. Our new ventures in Europe and Asia Pacific accounted for over £800 million of this increase in turnover, and both mobile and fixed network calls in the UK made strong contributions. BT's share price grew by 55 per cent in the financial year, compared with only five per cent...

  • Page 7
    ... telecommunications operator, dealing mainly in fixed-voice telephone calls, to a global communications company with operations that span the world, and services that, in addition to fixed-voice telephony, include the Internet, mobile and data communications, and business systems and solutions. Our...

  • Page 8
    ..., with a £90 million investment in ImpSat, which provides major corporate customers with an advanced range of voice, data, Internet and e-commerce services in key cities. Mobility The market for mobile communications is growing at 20 per cent per year and our mobile operations now have more than 14...

  • Page 9
    ... the 1999 financial year. The review is divided into the following sections: Introduction Global venture with AT&T Concert Communications Services Europe Asia Pacific Latin America Syntegra The UK UK fixed network Exchange lines International calls Mobile services in the UK Private circuits Customer...

  • Page 10
    ... Exchange lines International calls Mobile communications Private circuits Customer premises equipment supply Receipts from UK operators Yellow Pages and other directories Other UK sales and services Non-UK operations Group turnover Share of associates' and joint ventures' ongoing turnover (a) Total...

  • Page 11
    ... by June 1999. In February 1999, we acquired Arrakis, a leading Internet service provider in Spain, with a 15% market share. BT's other joint ventures in Europe include Ocean in the Republic of Ireland, which offers a wide range of services to business and commercial customers, Telenordia in Sweden...

  • Page 12
    ... major Malaysian telecommunications group operating a mobile communications business and providing fixed and international gateway services in Malaysia. Binariang's mobile company, Maxis, has a 22% market share and Binariang's broadband network can be accessed by 70% of Malaysian corporate customers...

  • Page 13
    ...in calls to mobile phones. The price structure for call charges varies with distance, duration, time of day, usage and the applicability of discount schemes. BT charges for the exact duration of the call, subject to a minimum charge. Exchange lines In the 1999 financial year, UK exchange line rental...

  • Page 14
    ...of our international call business will be transferred to our proposed global venture with AT&T later in 1999 once regulatory approvals are obtained. popular and have been a major contributor to the large increase in BT's mobile communications customer base (up 47% over the 1999 financial year) and...

  • Page 15
    ... use our network to help deliver their customers' calls. The emergence of many new operators in both the fixed and mobile markets led to a 30% increase in this turnover in the 1999 financial year, which accounted for approximately 4% of the group's turnover. Yellow Pages and other directories Yellow...

  • Page 16
    ... to develop a new range of Internet, intranet and corporate data services for mobile customers around the world. Services are expected to be available in several countries by early 2000. In January 1999, BT acquired a 50% share in Excite UK, a subsidiary of the US-based global Internet media company...

  • Page 17
    ...on Key Numbers, Key Cities, Key Regions and Key Countries. Another new plan is BT Dual Discount, which is designed to give extra savings to business customers based on their combined call spend for outgoing telephone and incoming Lo-call and Freefone calls. BT Call & Save, introduced in January 1999...

  • Page 18
    ... customer groups. There will also be a separate unit to develop established product lines and new IP services, and a Network and Systems organisation to build and operate the global network. Employees At 31 March 1999, BT employed around 125,000 people throughout the world with 119,000 in the UK...

  • Page 19
    ...and the maintenance of positive industrial relations. BT has extended its global operations in the year through its increasing network of joint ventures and alliances. This has meant significant growth in people terms. At the beginning of the 1999 financial year, the BT Worldwide family of alliances...

  • Page 20
    ..., will be published shortly. Education BT is developing Internet-based services to support online training and education in workplaces and homes. Solstra, jointly developed by BT and Futuremedia, provides companies with an enterprise-wide solution to on-line delivered and managed knowledge, training...

  • Page 21
    ... prices and other terms for providing certain services and, in general, to apply uniformly a published scale of charges for installing residential exchange lines on premises to be served by a single line. The Licence also contains provisions enabling the Director General to monitor the company...

  • Page 22
    ... on its fixed network services in the UK at two levels: retail and network. Competitors are generally not subject to price controls. Retail price controls BT is subject to two sets of UK retail price controls, one on certain public switched telephony call charges and exchange line rentals, and one...

  • Page 23
    ... for price control, and the issue was referred to the CC. Non-UK regulation In developing its business internationally, BT must take account of the regulatory regimes in the countries in which it operates or wishes to operate. United States In the United States, the Federal Communications Commission...

  • Page 24
    ... service fund. Mobile services BT has a majority share in BT Cellnet and resells cellular services through its mobile communications business. In March 1998, the Director General referred BT, BT Cellnet and Vodafone to the MMC for investigation into BT's retail charges for calls made from BT's fixed...

  • Page 25
    ... (a) Operating costs (b)(c) Group operating profit Group's share of operating profit (loss) of associates and joint ventures Total operating profit: Ongoing activities Discontinued activities 2,676 94 2,770 Profit on sale of fixed asset investments and group undertakings (d) Net interest payable...

  • Page 26
    ... YEARS ENDED 31 MARCH Cash flow from operating activities Dividends from associates and joint ventures Returns on investments and servicing of finance Taxation Capital expenditure and financial investment Acquisitions and disposals Equity dividends paid Cash inflow (outflow) before management...

  • Page 27
    ... Group turnover - ongoing Other operating income Operating costs Group operating profit Group's share of ventures' profits (losses) Total operating profit Profit on sale of fixed asset investments and group undertakings Net interest and premium payable Profit before taxation Taxation - ordinary...

  • Page 28
    ... outgoing international calls from the UK. The growth in cable operators' networks in the UK is having an adverse effect on BT's share of the residential market. In each of the last four financial years, BT has experienced a small net reduction in residential exchange line connections as a result of...

  • Page 29
    ... UK sales and services Non-UK operations Group turnover Share of ventures' turnover Total turnover 13,900 14,470 15,021 16,039 00011!!!00511111110111 00011!!!00511111110111 00011!!!00511111110111 In the 1999 financial year, a significant increase in calls to mobile phones and the increased...

  • Page 30
    ... from cable operators offset in part by the large number of BT customers installing second lines. Overall, BT's total fixed-network lines grew by 1.4% in the 1999 financial year to 28.1 million and were maintained at 27.6 million in the 1998 financial year. International call turnover declined by...

  • Page 31
    ...financial year, the pay awards impact was substantially offset by reduced pension costs, as explained in more detail below. The allocation for the employee share ownership scheme, included within staff costs, was £64 million in the 1999 financial year, representing 2% of pre-tax profit for the year...

  • Page 32
    ... BT's share of MCI's results up to that date, which included a special charge of £63 million. BT's share of MCI's pre-tax profit for the 1997 financial year amounted to £175 million, under BT's accounting policies. Total operating profit Total operating profit for the 1999 financial year...

  • Page 33
    ... the 2000 to 2002 financial years, and replace the former main single corporation tax payment made nine months after the financial year end and ACT payments associated with dividends. The effect Profit and taxation The group's profit before taxation for the 1999 financial year was £4,295 million...

  • Page 34
    ... for the 1999 financial year, generated mainly by the MCI share sale proceeds, resulted in net debt falling Net cash inflow (outflow) for capital expenditure and financial investment Net cash outflow for acquisitions and disposals Equity dividends paid Cash inflow (outflow) before management of...

  • Page 35
    ... and incoming international calls with non-UK telecommunication operators. To date, these imbalances have not been material. As a result, the group's profit has not been materially affected by movements in exchange rates, with the exception of the second half of the 1999 financial year when we...

  • Page 36
    ...global venture with AT&T once we obtain regulatory clearances. In March 1999, the group, through its 60%-owned subsidiary BT Cellnet, completed the acquisition of Martin Dawes Telecommunications Holdings Limited (MDT), then the largest independent mobile telecommunication services provider in the UK...

  • Page 37
    ... 1993. The actuarial valuation took into account the effect of HM Government's measures in July 1997 to end pension funds' ability to reclaim the tax credit associated with UK companies' dividends. The group's annual pension charges for the 1999 and 1998 financial years of £176 million and £177...

  • Page 38
    ...about 650 corporate systems and about 97% were declared conformant by our target date of 31 December 1998. Our Year 2000 work incorporates supporting the conformance programmes of our joint ventures. However, progress on global services is complicated by the group's dependency on non-UK operators at...

  • Page 39
    ... member states and is taking appropriate steps to adapt its operations to use the euro. BT is considering the impact of EMU on the UK business and the associated costs. US GAAP The group's net income and earnings per share for the three financial years ended 31 March 1999 and shareholders' equity at...

  • Page 40
    FINANCIAL REVIEW US Generally Accepted Accounting Principles (US GAAP) are shown on page 98. Differences between UK GAAP and US GAAP include results of the differing accounting treatment of pension costs, redundancy costs, intangible assets, goodwill, deferred taxation, capitalisation of interest ...

  • Page 41
    ...a non-executive director of HSBC Holdings, RAC Holdings and The New York Stock Exchange, and deputy president of the Confederation of British Industry. Aged 65. Helen Alexander (b) (d) Helen Alexander joined the Board on 1 June 1998. She has been chief executive of The Economist Group since January...

  • Page 42
    ... and Chief Legal Adviser in 1994. On 1 April 1999, he became Group Commercial Director and Secretary. Aged 50. Key to membership of principal Board committees: (a) Group Executive (b) Audit (c) Remuneration (d) Nominating (e) Pensions (f) Community Support All of the non-executive directors are...

  • Page 43
    ... major contracts are settled when agreeing the other terms negotiated with the individual suppliers. It is BT's policy to make payments for other purchases within 30 working days of the invoice date, provided that the relevant invoice is presented to the company in a timely fashion and is complete...

  • Page 44
    ... at the annual general meeting to be held on 14 July 1999, together with explanatory notes, appear in the separate Notice of Annual General Meeting sent to all shareholders. By order of the Board C R Green Secretary 25 MAY 1999 Registered office: 81 Newgate Street, London EC1A 7AJ Registered...

  • Page 45
    ...Chairman and executive directors have service The Board The Board continues to meet every month, except in August. Its principal focus is the overall strategic direction, development and control of the group. Key matters, such as approval of the group's strategic plans and annual operating plan and...

  • Page 46
    ...from the above reports. The Audit Committee has conducted its annual review of the effectiveness of the systems of internal financial control in existence in the group for the year ended 31 March 1999 and for the period up to the date of approval of the financial statements. The Board recognises the...

  • Page 47
    ...working days before the AGM. Established procedures ensure the timely release of share price sensitive information and the publication of financial results and regulatory financial statements. Relations with shareholders Senior executives, led by the Chief Executive and Group Finance Director, hold...

  • Page 48
    ... annual objectives and is designed to reward appropriately the achievement of results against these objectives. Targets are set at the start of the financial year based on key corporate objectives, such as revenue growth, profitability, quality of service, customer satisfaction and people management...

  • Page 49
    ...to provide cover for full-time executive directors and members of the Group Executive Committee. BT Deferred Bonus Plan The BT Deferred Bonus Plan (DBP) was introduced in 1998. The first awards, in the form of BT shares, were granted to around 200 senior executives during the 1999 financial year in...

  • Page 50
    ... the Board. All the non-executive directors have confirmed that they support this policy and will buy shares. Remuneration review Directors' remuneration As reported elsewhere in the annual report, Sir Iain Vallance became part-time Chairman from 1 August 1998. From that date, his annual salary has...

  • Page 51
    ... use of a car in Scotland. (b) Payments to non-executive directors include fees paid to their principal employer of £9,500 (1998 - £38,000). (c) In addition, deferred bonuses payable in shares in three years time, provided they are still employed by the company, were awarded to Sir Peter Bonfield...

  • Page 52
    ... in accrued pension during the year excludes any increase for inflation. (b) The pension entitlement is that which would be paid annually on retirement at normal retirement age based on service to the end of the year or date of retirement if earlier. (c) The transfer value has been calculated on the...

  • Page 53
    ...' interests The interests of directors and their families in the company's shares at 31 March 1999 and 1 April 1998, or date of appointment if later, are shown below: Beneficial holdings Sir Iain Vallance Sir Peter Bonfield R P Brace B Cockburn Lord Marshall H Alexander J I W Anderson Sir Ewen...

  • Page 54
    ... and exercised under the share option schemes during the year, and the balance held at 31 March 1999 are as follows: Number of shares under option 1 April 1998 Granted Exercised 31 March 1999 Option exercise price per share Market price at date of exercise Usual date from which exercisable Usual...

  • Page 55
    ...will transfer to each director at the end of year five of the plan (1999 to 2003) provided the corporate performance measure has been fully met. Normally, shares will transfer only if the individual is still employed by the group. However, the plan gives discretion to preserve awards of shares after...

  • Page 56
    ... to BT for a reasonable period after he took up his part-time role, this agreement is for an initial fixed two-year term. (b) The initial term of Sir Peter Bonfield's agreement was extended in the year ended 31 March 1998. After 31 December 1999 the agreement can be terminated by either the company...

  • Page 57
    56

  • Page 58
    ... the financial year and of the profit or loss and cash flows of the group for that period. The directors consider that, in preparing the financial statements for the year ended 31 March 1999 on pages 59 to 103, the company has used appropriate accounting policies, consistently applied and supported...

  • Page 59
    ... our review by the London Stock Exchange, and we report if it does not. We are not required to form an opinion on the effectiveness of the group's corporate governance procedures or its internal controls. Opinion In our opinion the financial statements: • give a true and fair view of the state of...

  • Page 60
    ... the value of services provided and equipment sales by group undertakings, excluding those between them. Total turnover is group turnover together with the group's share of its associates' and joint ventures' turnover. VII Tangible fixed assets Tangible fixed assets are stated at historical cost...

  • Page 61
    ... at year-end exchange rates. Investments in associates and joint ventures are stated in the group balance sheet at the group's share of their net assets, together with any attributable unamortised goodwill on acquisitions arising on or after 1 April 1998. The group's share of profits less losses of...

  • Page 62
    ... change the nature of the interest rate by converting a fixed rate to a variable rate or vice versa. Accounting for derivative financial instruments Principal amounts underlying currency swaps are revalued at exchange rates ruling at the date of the group balance sheet and are included in debtors...

  • Page 63
    ... share of joint ventures' turnover Group's share of associates' turnover Group turnover - ongoing activities Other operating income (a) Operating costs Group operating profit - ongoing activities Group's share of operating loss of joint ventures Group's share of operating profit (loss) of associates...

  • Page 64
    ... THE YEAR ENDED 31 MARCH 1999 1999 £m 1998 £m 1997 £m ))))))))))))01111110051111 Profit (loss) for the financial year: Group Joint ventures Associates Total profit for the financial year Currency movements arising on consolidation of foreign subsidiaries, joint ventures and associates Total...

  • Page 65
    Group cash flow statement FOR THE YEAR ENDED 31 MARCH 1999 Notes 1999 £m 1998 £m 1997 £m 0111!!!01111110051111 Net cash inflow from operating activities Dividends from joint ventures and associates Returns on investments and servicing of finance Interest received Interest paid, including ...

  • Page 66
    ... year: group £nil (1998 - £97m) and company £nil (1998 - £213m). The financial statements on pages 59 to 103 were approved by the board of directors on 25 May 1999 and were signed on its behalf by Sir Iain Vallance Chairman Sir Peter Bonfield CBE Chief Executive R P Brace Group Finance Director...

  • Page 67
    ... joint ventures The group's share of its associates' and joint ventures' turnover is included in the profit and loss account in memorandum form. The group's share of their operating results is shown separately in the profit and loss account and the group's share of their interest charges and income...

  • Page 68
    ... calls Mobile communications Private circuits Customer premises equipment supply Receipts from UK operators Yellow Pages and other directories Other UK sales and services Non-UK operations Group turnover - ongoing activities Group's share of associates' and joint ventures' turnover Total turnover...

  • Page 69
    ... security costs Pension costs (note 28) Employee share ownership scheme (a) Employee share option scheme compensation for special dividend (b) Total staff costs Own work capitalised Depreciation (note 18) Payments to telecommunication operators Other operating costs (c) Total operating costs 1999...

  • Page 70
    ... of results of associates from discontinued activities for the year ended 31 March 1998 included the group's share of a charge, made by MCI Communications Corporation, amounting to £63m mainly for the exiting from and restructuring of customer contracts. 6. Profit on sale of fixed asset investments...

  • Page 71
    ... UK taxation, excluding windfall tax Overseas taxation: Current Taxation charge on the group's share of results of joint ventures Taxation charge (credit) on the group's share of results of associates Total corporation and similar taxes Windfall tax Total tax on profit on ordinary activities 1999...

  • Page 72
    ...items in the years were: 1999 pence per share 1998 pence per share 1997 pence per share 1999 £m 1998 £m 1997 £m 01111110051111!!!01111110051111 MCI merger break up fee received less expenses Profit on sale of MCI shares Provision against another fixed asset investment Costs relating to the...

  • Page 73
    ... 1999 £m 1998 £m 1997 £m 15. Management of liquid resources Purchase of short-term investments and payments into short-term deposits over 3 months Sale of short-term investments and withdrawals from short-term deposits over 3 months Net movement of short-term investments and short-term...

  • Page 74
    ...!!!0111 MDT's profit after tax for the year to 31 December 1998 was £2m. Land and buildings (a) £m Assets in Plant and course of equipment construction £m £m 18. Tangible fixed assets Group Cost Balances at 1 April 1998 Acquisitions of subsidiary undertakings Additions Transfers Disposals and...

  • Page 75
    ... Transfers Disposals and adjustments Total cost at 31 March 1999 Depreciation Balances at 1 April 1998 Charge for the year Disposals and adjustments Total depreciation at 31 March 1999 Net book value at 31 March 1999 Engineering stores Total tangible fixed assets at 31 March 1999 Net book value...

  • Page 76
    ...S Interests in associates and joint ventures (a) ))))))%%!!00005 19. Fixed asset investments Group Cost Balances at 1 April 1998 Additions Disposals Share of losses less retained profits for the year Repayments and other transfers Currency movements Balances at 31 March 1999 Provisions and amounts...

  • Page 77
    ... Corporation In September 1994, the company completed the acquisition of a 20% equity interest in MCI (a major carrier of long-distance telecommunications services in the United States) represented by a holding of 136 million unlisted Class A common shares, whereupon MCI became the group...

  • Page 78
    ... ordinary shares of the company, with a net book value of £18m (1998 - £29m) and a market value of £70m (1998 - £68m), held in trust for the BT Executive Share Plan, the BT Performance Share Plan and the BT Deferred Bonus Plan (note 31). Also, in the group balance sheet at 31 March 1999, listed...

  • Page 79
    ... (a) Advance corporation tax is not paid on dividends that are paid after 5 April 1999. Group 1999 £m 1998 £m 1999 £m Company 1998 £m 0051111!!!0051111 21. Current asset investments Listed investments Other short-term deposits and investments Total current asset investments 0051111...

  • Page 80
    ... 93⁄8% guaranteed notes 1999 Average effective interest rates (a) % Group Company 1999 £m 1998 £m 1999 £m 1998 £m ))))))))%!!!...discount £4m (1998 - £5m)) Total listed bonds, debentures and notes Lease finance Bank loans due 1999-2009 Other loans Bank overdrafts and other short-term...

  • Page 81
    ...committed lines of credit for short-term financing available at 31 March 1999 totalled approximately £150m (1998 - £786m), which was in support of a commercial paper programme or other borrowings. These lines of credit are available for up to one year. Group 1999 £m 1998 £m 1999 £m Company 1998...

  • Page 82
    ... provided in the accounts at 31 March were as follows: Tax effect of timing differences due to: Excess capital allowances Pension provisions Other Total deferred taxation provided Advance corporation tax recoverable Total provision for deferred taxation 1999 £m Group 1998 £m 1999 £m Company...

  • Page 83
    ... in note 31. Ordinary shares allotted during the year were as follows: Nominal value £ Consideration(a) £ Number )))))))))!!!0011!!!0011!!!0011 Savings related schemes Other share option schemes Stock purchase plan Scrip dividend Totals for the year ended 31 March 1999 45,740,934 3,698...

  • Page 84
    ...financial year Dividends (54.85p net per ordinary share) Other movements Balances at 31 March 1997 Goodwill, arising on acquisition of subsidiaries, associates and joint ventures (b) Goodwill, previously written off to reserves, taken back to the profit and loss account Employee share option schemes...

  • Page 85
    ...Share premium account (a) £m Capital redemption reserve £m Profit and loss account £m Total £m 111005111111101111110051111 Company Balances at 31 March 1996 Employee share option schemes - 64 million shares issued (note 31) Profit for the financial year (e) Dividends (54.85p net per ordinary...

  • Page 86
    ... on the financial position or results of operations of the group. During the year ended 31 March 1999, all material outstanding US class actions brought by MCI shareholders arising out of the then-proposed merger of the company with MCI and involving claims made against the company and directors of...

  • Page 87
    ...payable. The BTPS assets are invested in UK and overseas equities, UK and overseas properties, fixed interest and index linked securities, deposits and short-term investments. At 31 March 1999, the UK equities included 46 million (1998 - 42 million) ordinary shares of the company with a market value...

  • Page 88
    ... share options and other long-term incentive plans is shown in the report on directors' remuneration on pages 47 to 55. 1999 1998 Year end '000 Average '000 Year end '000 1997 Average '000 0051111!!!0051111!!!0051111 30. People employed Number of employees in the group: UK Non-UK Total employees...

  • Page 89
    ... years after the date of grant. The total value of share options granted by BT in the year ended 31 March 1999 was £139m (1998 - £70m, 1997 - £83m). In accordance with UK accounting practices, no compensation expense is recognised for the fair value of options granted. See United States Generally...

  • Page 90
    ... Plan (PSP) were introduced for employees of the group in 1994 and 1995, respectively. Under the plans, company shares are acquired by an employee share ownership trust and are conditionally awarded to participants. Participants will only be entitled to these shares in full at the end of a five-year...

  • Page 91
    ... paid for work carried out by Price Waterhouse inside and outside the UK, respectively, before 1 July 1998. 33. Financial instruments and risk management The group holds or issues financial instruments mainly to finance its operations; for the temporary investment of short-term funds; and to manage...

  • Page 92
    ... sales of currency. These fair values have been estimated by calculating their present values using the market discount rates, appropriate to the terms of the contracts, in effect at the balance sheet dates. At 31 March 1999, the group had deferred unrealised gains of £24m (1998 - £nil) and losses...

  • Page 93
    ... account the various interest rate swaps and forward foreign currency contracts entered into by the group, the interest rate profile of the group's financial assets at 31 March 1999 was: Fixed rate financial assets £m Floating rate financial assets £m Currency: Sterling US dollar Euro Other Total...

  • Page 94
    ...of a fixed asset. 34. Effect of accounting policy changes In accordance with the Companies Act, the following disclosure is given on the effect of the changes in accounting policy on the group's profit for the year ended 31 March 1999. £m 01111 Profit for the financial year, as reported Effect of...

  • Page 95
    ... operating division; and a number of other support units. These divisions broadly equated to the BT Global Division, Business Division, Consumer Division and Networks and Systems Division described above. Mobile Communications were reported separately. The following information for the years ended...

  • Page 96
    ...and joint ventures £m Turnover External £m 1111500 YEAR ENDED 31 MARCH 1999 Depreciation and Internal amortisation £m £m Total operating profit (loss) £m 111111000000151011!!!0111!!!0111!!!0111!!!0111!!!0111 Business Division Consumer Division Networks & Systems Other, including Mobile...

  • Page 97
    ... turnover of group companies and branches operating outside the UK, income from non-UK operators for calls terminating in or in transit through the UK and turnover with non-UK joint ventures and associates. 1999 £m 1998 £m 0051111 Group fixed assets are located: In the UK Outside the UK Total...

  • Page 98
    ...are relevant to the group's financial statements. (a) Pension costs Under UK GAAP, pension costs are accounted for in accordance with UK Statement of Standard Accounting Practice No. 24, costs being charged against profits over employees' working lives. Under US GAAP, pension costs are determined in...

  • Page 99
    ...reported had US GAAP been applied. Net income YEAR ENDED 31 MARCH 1999 £m 1998 £m 1997 £m 00005 Net income applicable to shareholders under UK GAAP Adjustments for: Pension costs Redundancy charges Capitalisation of interest, net of related depreciation (a) Goodwill amortisation (a) Mobile...

  • Page 100
    ... and servicing of finance; taxation; capital expenditure and financial investments; acquisitions and disposals; dividends paid to the company's shareholders; management of liquid resources and financing. SFAS No. 95 requires a classification of cash flows as resulting from operating, investing and...

  • Page 101
    ...losses, net of deferred taxes, reported in shareholders' equity. Debt securities classified as held-to-maturity would be stated at amortised cost. The following analyses do not include securities with original maturities of less than three months. At 31 March 1999, the group held trading investments...

  • Page 102
    ... Employees' contributions Other changes Benefits paid Fair value of scheme assets at the end of the year Funded status under US GAAP Projected benefit obligation in excess of scheme assets Unrecognised net obligation at date of initial application of SFAS No. 87 (c) Unrecognised prior service costs...

  • Page 103
    ... ventures and associates at 31 March 1999, all of which were unlisted unless otherwise stated, were as follows: Group interest in allotted capital (b) Subsidiary undertakings BT Australasia Pty Limited (a) BT Cableships Limited (a) BT Communications Management Limited (a) BT Communications Services...

  • Page 104
    ... ordinary or common shares, unless otherwise stated. All investments, except Sunrise Communications AG, are held through intermediate holding companies. (b) All overseas undertakings are incorporated in their country of operations. (c) Airtel Movil SA is being accounted for as a joint venture...

  • Page 105
    ... Group's share of operating loss of associates and joint ventures Total operating profit - ongoing activities Profit on sale of fixed asset investments and group undertakings (a) Net interest payable Profit on ordinary activities before taxation Tax on profit on ordinary activities: Corporation...

  • Page 106
    ... 3,436 25 3,461 Profit (loss) on sale of fixed asset investments and group undertakings Net interest payable Profit on ordinary activities before taxation Tax on profit on ordinary activities: Corporation and similar taxes Windfall tax Profit (loss) on ordinary activities after taxation Minority...

  • Page 107
    ... the premium paid on the repurchase of bonds. (e) The number of times dividends are covered by earnings. The figure for 1998 excludes the effect of the windfall tax charge and the figure for 1999 excludes the gain on sale of the MCI shares. Expenditure on research and development YEARS ENDED 31...

  • Page 108
    ... BT is required to submit annual audited accounts in respect of the classified directory business to the Director of the Office of Fair Trading within nine months of the company's financial year end. Copies of these accounts, when available, may be obtained free of charge from the Financial Director...

  • Page 109
    108

  • Page 110
    ... lowest closing middle market prices for BT ordinary shares, as derived from the Daily Official List of the London Stock Exchange and the highest and lowest sales prices of ADSs, as reported on the New York Stock Exchange composite tape. Fluctuations in the exchange rate between the pound sterling...

  • Page 111
    ...the operation of which may at a subsequent date result in a change in control of the company. At 18 May 1999, there were 6,470,161,894 ordinary shares outstanding. At the same date, approximately 9.2 million ADSs (equivalent to 92 million ordinary shares, or approximately 1.4% of the total number of...

  • Page 112
    ... exchange rate in effect on 20 September 1999, the date of payment to holders of ordinary shares. This dividend will be the first to be paid under the new arrangements described in Taxation of dividends below. The dividends for the 1998 and 1999 financial years include an adjustment to take account...

  • Page 113
    ... date for this annual report, the Noon Buying Rate was US$1.62 to £1.00. Taxation (US Holders) This is a summary only of the principal US federal income tax and UK tax consequences to beneficial owners of ADSs who either are resident in the United States or hold ordinary shares or ADSs as assets...

  • Page 114
    ... who is otherwise exempt. UK stamp duty A transfer for value of an ordinary share will generally be subject to UK stamp duty or to UK stamp duty reserve tax. No UK stamp duty will be payable on the transfer of an ADS, provided that the separate instrument of transfer is not executed in, and always...

  • Page 115
    ... statement Annual Report and Form 20-F Report for Shareholders Quarterly results releases Historical Cost Financial Statements for the Businesses and Activities (as required by Oftel) Current Cost Financial Statements for the Businesses and Activities, including long-run incremental cost information...

  • Page 116
    ... Ownership Scheme register. They also provide a BT Shareholder Helpline service. Shareholders should contact the Registrar (details above) if they have any enquiries about their shareholding. General enquiries British Telecommunications plc BT Centre 81 Newgate Street London EC1A 7AJ United Kingdom...

  • Page 117
    116

  • Page 118
    ... than one year Employee share schemes Employment costs Finance lease Financial year Fixed asset investments Freehold Inland calls Interests in associates and joint ventures Loans to associates and joint ventures Net asset value Operating profit Other debtors Own work capitalised Equity investees Tax...

  • Page 119
    ... profit and loss account 62 Group statement of total recognised gains and losses 63 Group cash flow statement 64 Balance sheets 65 Notes to the financial statements 66-96 United States Generally Accepted Accounting Principles 97-101 Subsidiary undertakings, joint ventures and associates 102-103 Page...

  • Page 120
    ... and ADS prices 109 Share capital 82 Share dividend plan 111 Share option schemes 87-89 Staff costs 30, 68 Statement of total recognised gains and losses 63 Stocks 60 Subsidiary undertakings 35, 59, 60, 69, 75-77, 102 Substantial shareholdings 42 Suppliers payment policy 42 Tangible fixed assets 37...

  • Page 121
    ... office: 81 Newgate Street, London EC1A 7AJ Registered in England: No. 1800000 Accredited with the Investors in People award, 1998 European Quality Awards prize winner, 1996 and 1997 Printed in England by Pindar plc on paper awarded the Nordic White Swan label, an internationally recognised...

  • Page 122
    ...plc Registered office: 81 Newgate Street, London EC1A 7AJ Registered in England: No. 1800000 Accredited with the Investors in People award, 1998 European Quality Award prize winner, 1996 and 1997 Printed in England by the Howitt Group, Nottingham, on paper selected using BT's environmental standards...