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Annual report and Form 20-F

Table of contents

  • Page 1
    Annual report and Form 20-F

  • Page 2
    ...of parts of the business when this is judged to be in our shareholders' best long-term interests. â- â- â- â- â- British Telecommunications plc is a public limited company registered in England, which has listings on the London, New York and Tokyo stock exchanges. This is the annual report...

  • Page 3
    ... Financial highlights Chairman's message Chief Executive's statement Business review Our commitment to society Five-year ®nancial summary Financial review Board of directors Report of the directors Corporate governance Report on directors' remuneration Statement of directors' responsibility Report...

  • Page 4
    ... restructuring to position BT ahead of the new wave in communications ± announced in April 2000 20 per cent growth in total turnover BT Cellnet's customer connections up by 2.9 million to 7.4 million £3.1 billion invested in strategic alliances and joint ventures in Europe, North America and Asia...

  • Page 5

  • Page 6
    ... business units, and we were successful in our bid for a UMTS licence to operate the next generation of mobile services in the UK. Total turnover for 1999/2000 increased by 20 per cent to »21,903 million, including our proportionate share of our ventures' revenues. Our share of our ventures...

  • Page 7
    ... be listing this year. These new businesses will work alongside Concert, our global venture with AT&T, which will continue to serve the global communications needs of multinational customers. We also intend to separate the UK ¢xed business into a wholesale business, using our ¢xed-network assets...

  • Page 8
    ... creation of sustainable, long-term shareholder value. And it's about growth ^ in both our existing and new markets. Just consider, for a moment, what we've got going for us: & BT is an integrated group of international businesses, serving consumers and business customers. If any company can o¡er...

  • Page 9
    ... groups for about »1.2 billion (Yen 220 billion). Through a holding company structure, BT has an economic interest of 20%. The deal was ¢nalised in September 1999. Japan Telecom serves all types of residential and business customers and operates in the international, long-distance, data, internet...

  • Page 10
    ... Fixed-network calls Exchange lines Mobile communications Receipts from other operators Private services Customer premises equipment supply Yellow Pages and other directories Other sales and services Group turnover Share of associates' and joint ventures' ongoing turnover (b) Trading between group...

  • Page 11
    ... of the continuing rapid rise in the number of calls made to mobile phones and in the level of internet usage. Exchange line turnover comprises rental and connection charges and accounted for about 19% of group turnover in the 2000 ¢nancial year. Revenue from these activities continues to grow...

  • Page 12
    ... of new services and call stimulation, both internet and voice, and we have introduced a number of competitive pricing packages with calls costing from less than 1p per minute at the weekends and weekday evenings. Our website, www.bt.com, is increasingly being used for marketing and promotion and...

  • Page 13
    ...had turnover of »1.5 billion, including work done for other parts of BT, in the 2000 ¢nancial year. As a global consulting and information business, Syntegra is a market leader in creating new systems, which, through the use of the internet and associated technologies, are transforming business to...

  • Page 14
    ... providing internet access for the cost of a local phone call). The business will also manage BT's other internet ventures in the UK: & our 50/50 joint venture with LookSmart, a leading US-based on-line navigation company, which creates and distributes internet portal services throughout Europe and...

  • Page 15
    ...the use of the short messaging service. Generally post-pay phones deliver higher revenues per user than pre-paid. Directly controlled shops are playing an increasingly important part in BT Cellnet's marketing and sales activities. In April 2000, BT Cellnet purchased the 60% of The Mobile Phone Store...

  • Page 16
    ... at people on the move; and The Business Database, a major information On 5 January 2000, BT and AT&T, the US telecommunications operator, combined major parts of their international resources to form Concert, a major global communications joint venture owned equally by the parents. The new company...

  • Page 17
    ...leave the business by the end of September 2000. BT employs around 11,000 people outside the UK. Around 33,000 people are employed by our joint ventures and associates. BT is committed to investing in and supporting its people with innovative, leading-edge policies and programmes, creating a working...

  • Page 18
    ...Pay Task Force). BT sponsors the internet sites for the Employers' Forum on Disability, Employers for Worklife Balance and the National Work/Life Forum. BT encourages its employees to take up the opportunity to own part of their company and share in its success. There are two main ways for employees...

  • Page 19
    ...can trade. In particular, the company is required to publish and adhere to standard 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 Director...

  • Page 20
    ... 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 on certain private...

  • Page 21
    ... not subject to price controls. BT must publish a noti¢cation to the Director General and other licensed operators if it intends to amend existing charges or to o¡er new services. Review of the price controls United States In the United States, the Federal Communications Commission has extensive...

  • Page 22
    ... to ensure market access for its international services and for Concert. These are available in all key markets, such as Japan, Australia, China, Hong Kong and India, with more markets added each month. Rest of the world from 1 April 2000. Because software changes to BT's local exchanges cannot be...

  • Page 23
    ... submit an annual compliance certi¢cate to the Director General. Interconnection product On 14 April 2000, Oftel issued for public consultation a draft direction under Condition 45 of the Licence that BT should provide an interconnection product for £at rate internet access call origination. The...

  • Page 24
    ... UK by July 2001. These schools are also being helped to develop their own free website, while all schools nationally are encouraged to apply for BT awards for curriculum projects using information and communication technologies. Environment The Chief Executive, Sir Peter Bon¢eld, has Board-level...

  • Page 25
    ...to the use of mobile phones by children, and changes to planning rules on siting of masts. The health and safety of our customers, employees, and the general public is very important to us, and we are committed to working with HM Government and the rest of the industry to address these issues. Older...

  • Page 26
    ...operating income (a) Operating costs (b)(c)(d) Group operating pro®t Group's share of operating pro®t (loss) of associates and joint ventures Total operating pro®t: Ongoing activities Discontinued activities Pro®t on sale of ®xed asset investments and group undertakings (e) Net interest payable...

  • Page 27
    ...¯ow from operating activities Dividends from associates and joint ventures Returns on investments and servicing of ®nance Taxation Capital expenditure and ®nancial investment Acquisitions and disposals Equity dividends paid Cash in¯ow (out¯ow) before management of liquid resources and ®nancing...

  • Page 28
    ...£ect the costs of meeting increased customer demand, particularly for mobile communications, and of growing new areas of business. In both the 2000 and 1999 ¢nancial years, BT bene¢ted from the strong growth in demand for the group's products and services. Internet and mobile phone usage expanded...

  • Page 29
    ... (network) charges to other UK operators are based on long-run incremental costs. There are annual reductions in these charges based on a RPI minus 8 price cap. The Competition Commission (CC) required BT to reduce charges from a BT line to mobile phones by around 25% in the 2000 ¢nancial year and...

  • Page 30
    ...network calls Exchange lines Mobile communications Receipts from other operators Private services Customer premises equipment supply Yellow Pages and other directories Other sales and services Group turnover Share of ventures' turnover Trading between group and principal joint venture Total turnover...

  • Page 31
    ... terminating incoming calls into the UK and handling Concert's UK multinational customer domestic tra¤c. The increases in turnover, in the 2000 and 1999 ¢nancial years, primarily re£ect the growing market share of BT's UK competitors, particularly mobile phone operators, and the increasing level...

  • Page 32
    ... acquisition. The UK business has grown by about 9%, partly re£ecting the good growth in the economy. In the 1999 ¢nancial year, turnover grew by 5.4%, due mainly to an increased volume of advertising in the UK. Turnover from BT's other sales and services has grown by 11.3% in the 2000 ¢nancial...

  • Page 33
    ... 2000 and those made by BT to international operators for outgoing and transit calls prior to that time. Also included are payments made to mobile phone operators on behalf of BT Cellnet Lumina and DX Communications' customers. Other operating costs, which rose by 9.4% in the 2000 ¢nancial year...

  • Page 34
    ...group's products and services, particularly as a result of internet and mobile phone usage. Associates and joint ventures 1999 ¢nancial year were due to the factors explained above. After taking into account our share of Concert's operating pro¢t, total operating pro¢t in the 2000 ¢nancial year...

  • Page 35
    ...from ventures Net cash out¯ow for returns on investments and servicing of ®nance Tax paid Net cash in¯ow (out¯ow) for capital expenditure and ®nancial investment Net cash out¯ow for acquisitions and disposals Equity dividends paid Cash in¯ow (out¯ow) before management of liquid resources and...

  • Page 36
    ... as well as additional funding of the European ventures discussed below. The group's investment in Cegetel in September 1997 represented the main part of the net cash out£ow of »1,501 million in the 1998 ¢nancial year. Equity dividends paid in the 2000 ¢nancial year totalled »1,364 million...

  • Page 37
    .... As a result of these policies, the group's exposure to foreign currency arises mainly on the residual currency exposure on non-UK investments in its ventures and on any imbalances between the value of outgoing and incoming international calls with Concert. To date, these imbalances have not been...

  • Page 38
    ... year, BT completed a number of acquisitions of businesses or interests in ventures, located both within and outside the UK. The total amount invested, including deferred considerations and further funding of existing ventures, was »8,755 million. The investment in the new Concert global venture...

  • Page 39
    ... under the UK accounting policy in operation for that and preceding years. In March 2000, we announced that we would be taking an equity interest, jointly with Japan Telecom, in a number of regional Japanese mobile phone companies (J-Phone Communications). These companies are planning to build...

  • Page 40
    ... into the fund has been at 9.5% of employees' pensionable pay during each of the three ¢nancial years under review. In addition, the company paid special contributions into the fund of »230 million in March 2000 and »200 million in March 1999 in part because of redundancies. The number of retired...

  • Page 41
    ... continuing to take 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 ¢nancial years ended 31 March 2000 and 40 Annual report and Form 20-F

  • Page 42
    shareholders' equity at 31 March 2000 and 1999 under US Generally Accepted Accounting Principles (US GAAP) are shown on page 105. Di¡erences between UK GAAP and US GAAP include results of the di¡ering accounting treatment of pension costs, redundancy costs, intangible assets, goodwill, deferred ...

  • Page 43
    ... is chairman of British Airways, Inchcape and Invensys, and a non-executive director of HSBC Holdings and The New York Stock Exchange. Aged 66. Helen Alexander (b) (d) Sir Peter Bon¢eld was appointed to the Board on 1 January 1996 as Chief Executive. He chairs the Group Executive Committee. Sir...

  • Page 44
    ... Director and Secretary. Aged 51. 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 considered independent of the management of the company Annual report and Form...

  • Page 45
    ... 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. BT's payment terms are printed on the company's standard purchase order forms or, where...

  • Page 46
    ...the Group Managing Director BT UK, the President and Chief Executive BT Worldwide and BT Solutions, the Group Commercial Director and Secretary, the Group Personnel Director, the Group Director Strategy and Development, the Group Communications Director, the Group Engineering Annual report and Form...

  • Page 47
    ... next year's annual report. For the 2000 ¢nancial year, the Audit Committee has continued to review internal ¢nancial controls in accordance with the London Stock Exchange's transitional rules. Key elements of the group's systems of internal ¢nancial control are: & Formal policies and procedures...

  • Page 48
    ... Annual Report and Notice of AGM, given the large number of shareholders, in the most cost-e¡ective manner. We aim to give as much notice To reinforce our commitment to our policy to achieve best practice in our standards of business integrity around the world, BT has, over the year, communicated...

  • Page 49
    ... the Chairman, the executive directors and the members of the company's Group Executive Committee . Speci¢cally, it agrees the service contracts, salaries, other bene¢ts including bonuses and participation in the company's executive share plans, and other terms and conditions of employment. Lord...

  • Page 50
    ... so long as it operates. The Remuneration Committee reviewed this plan and will review any long-term plans to be established within the group, to ensure they are consistent with BT's overall remuneration policy for its senior executives. New long-term incentive plans The BT Share Option Scheme for...

  • Page 51
    ... be asked to approve a new equity incentive portfolio at the 2000 AGM. The new portfolio will comprise the following elements: & & & & & Incentive Shares which will be the main element will be granted annually to executive directors, senior executives and key employees. Awards will vest after...

  • Page 52
    ..., subject to a maximum of 75%. Annual bonus awards to executive directors for the year under review ranged from 41% to 69% of salary. In recognition of his contribution to the global venture with AT&T and its completion in January 2000, Sir Iain Vallance received a special bonus of »250,000. He...

  • Page 53
    ... when he retired from full-time employment with the company, has been entitled to receive an annual pension in accordance with his supplementary pension arrangements. This pension will be increased in line with future in£ation. The pension paid in the 2000 ¢nancial year amounted to »340,433 (1999...

  • Page 54
    ... interests The interests of directors and their families in the company's shares at 31 March 2000 and 1 April 1999, or date of appointment if later, are shown below: No. of shares Beneficial holdings Sir lain Vallance Sir Peter Bon®eld R P Brace B Cockburn Lord Marshall H Alexander J I W Anderson...

  • Page 55
    ...of year ®ve of the plan (2000 to 2004) 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 retirement. 54 Annual report and Form 20...

  • Page 56
    ...of a total of 7 shares under personal equity plans. There have been no other changes in the directors' interests in the share capital, including options to subscribe for shares, or in the debentures of the company and its subsidiaries between 31 March 2000 and 24 May 2000. Annual report and Form 20...

  • Page 57
    ...any other person pursuant to which any director or executive o¤cer was selected to serve. There are no family relationships between the directors. By order of the Board Lord Marshall of Knightsbridge Deputy Chairman and Chairman of Remuneration Committee 24 May 2000 56 Annual report and Form 20-F

  • Page 58
    ...nancial statements for the year ended 31 March 2000 on pages 59 to 110 the company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The directors also consider that all applicable accounting standards have been followed...

  • Page 59
    ... determination of net income, shareholders' equity and cash £ows is shown on pages 103 to 106. PricewaterhouseCoopers Chartered Accountants and Registered Auditors London 24 May 2000 We conducted our audit in accordance with Auditing Standards generally accepted in the United Kingdom and in the...

  • Page 60
    ... Group turnover, which excludes value added tax and other sales taxes, comprises 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...

  • Page 61
    ...Cost in the case of network services includes contractors' charges and payments on account, materials, direct labour and directly attributable overheads. (b) Depreciation Stocks mainly comprise items of equipment, held for sale or rental, consumable items and work in progress on longterm contracts...

  • Page 62
    ... recognised by adjustment of interest payable. The forward exchange contracts used to change the currency mix of net debt are revalued to balance sheet rates with net unrealised gains and losses being shown as part of debtors or creditors. The di¡erence between spot Annual report and Form 20-F 61

  • Page 63
    ... operating income (a) Operating costs (b)(c)(d) Group operating pro®t ± ongoing activities Group's share of operating loss of joint ventures Group's share of operating pro®t of associates Total operating pro®t: Ongoing activities Discontinued activities Pro®t on sale of ®xed asset investments...

  • Page 64
    ... the year ended 31 March 2000 2000 £m 1999 £m 1998 £m Pro®t (loss) for the ®nancial year: Group Joint ventures Associates Total pro®t for the ®nancial year Currency movements arising on consolidation of non-UK: Subsidiaries Joint ventures Associates Unrealised gain on transfer of assets...

  • Page 65
    ... Sale of investments in joint ventures and associates Net cash out¯ow for acquisitions and disposals Equity dividends paid Cash in¯ow (out¯ow) before management of liquid resources and ®nancing Management of liquid resources Financing Issue of ordinary share capital Minority shares issued New...

  • Page 66
    ... in joint ventures: Share of gross assets and goodwill Share of gross liabilities Investments in associates Other investments Total investments Total ®xed assets Current assets Stocks Debtors Investments Cash at bank and in hand Total current assets Creditors: amounts falling due within one year...

  • Page 67
    ...at total turnover, including the proportionate share of the group's associates and joint ventures. 2. Turnover 2000 £m 1999(a) £m 1998(a) £m Fixed network calls Exchange lines Mobile communications Receipts from other operators Private services Customer premises equipment supply Yellow Pages and...

  • Page 68
    ...in the year ended 31 March 1998. 4. Operating costs 2000 £m 1999 £m 1998 £m Staff costs: Wages and salaries Social security costs Pension costs (note 27) Employee share ownership scheme (a) Employee share option scheme compensation for special dividend (b) Total staff costs Own work capitalised...

  • Page 69
    ... to the group's ¢nancial position. 7. Interest receivable 2000 £m 1999 £m 1998 £m Income from listed investments Other interest receivable Group Joint ventures Associates Total interest receivable 13 169 182 4 7 193 9 150 159 2 4 165 11 149 160 ± 2 162 68 Annual report and Form 20-F

  • Page 70
    ... to reduction in corporation tax rate Prior year adjustments Total UK taxation, excluding windfall tax Non-UK 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...

  • Page 71
    ... year attributable to shareholders by the weighted average number of shares in issue after deducting the company's shares held by employee share ownership trusts. In calculating the diluted earnings per share, share options outstanding and other potential ordinary shares have been taken into account...

  • Page 72
    ... of the BT Cellnet analogue network Pro®t on sale of group undertakings Pro®t on sale of MCI shares Provision against another ®xed asset investment Costs relating to the disengagement from MCI MCI merger break up fee received less expenses Goodwill amortisation Total credit (charge) before tax...

  • Page 73
    ... At 1 April 1999 Additions Disposals and transfers Currency movements Charge for the year At 31 March 2000 Other intangibles ± acquisitions of subsidiary undertakings Total 742 5,699 (571) (6) ± 5,864 3 5,867 89) (89) (1) (90) 742 5,699 (571) (6) (89) 5,775 2 5,777 72 Annual report and Form 20-F

  • Page 74
    ... for liabilities and charges Group share of original book value of net assets (liabilities) Fair value adjustment to achieve consistency of accounting policies Other fair value adjustments Fair value to the group Goodwill Total cost Consideration: Cash Deferred Loan notes 2000/2009 Other loan...

  • Page 75
    ... group acquired MCI's 24.9% interest in Concert Communications Company (Concert Communications) for »607 million. Goodwill of »568 million arose on this transaction (note 18(c)). This goodwill was transferred into the Concert global venture with AT&T Corp on 5 January 2000. 74 Annual report and...

  • Page 76
    ...at 1 April 1999 Acquisitions of subsidiary undertakings Charge for the year (i) Disposal of subsidiary undertakings and transfers to joint ventures Other disposals and adjustments Total depreciation at 31 March 2000 Net book value at 31 March 2000 Engineering stores Total tangible ®xed assets at 31...

  • Page 77
    ... Balances at 1 April 1999 Charge for the year Transfers to subsidiary companies and joint ventures Disposals and adjustments Total depreciation at 31 March 2000 Net book value at 31 March 2000 Engineering stores Total tangible ®xed assets at 31 March 2000 Net book value at 31 March 1999 Engineering...

  • Page 78
    ...Shares £m Loans £m Other Associates Other and joint participating interests investments ventures £m £m £m Total £m Company Cost Balances at 1 April 1999 Additions Disposals Repayments and other transfers Currency movements Balances at 31 March 2000... (6) 20,527 Annual report and Form 20-F 77

  • Page 79
    ... 2000, the company and AT&T formed their global venture named Concert for the two companies' transborder communications activities. The venture is jointly owned and controlled. The group contributed the majority of its cross-border international networks, its international tra¤c, its business...

  • Page 80
    ... to achieve consistency of accounting policies Fair value to the group Goodwill Total cost 871 (49) 822 432 1,254 On 31 March 2000, the 30% interest in Japan Telecom had a market value equivalent to »3,398 million, compared with a carrying value of »1,345 million. Annual report and Form 20-F 79

  • Page 81
    ... and LG Telecom comprised: Maxis Communications LG Telecom £m £m Group shares of original book value of net assets Fair value adjustment to achieve consistency of accounting policies Fair value to the group Goodwill Total cost 60 (9) 51 228 279 98 (58) 40 194 234 80 Annual report and Form 20-F

  • Page 82
    ...of accounting policies Fair value to the group Goodwill Total cost 483 (316) 167 862 1,029 (i) MCI Communications 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...

  • Page 83
    ... asset investments Group 2000 £m 1999 £m 2000 £m Company 1999 £m Listed investments Other short-term deposits and investments Total current asset investments Market value of listed investments 419 1,632 2,051 420 359 2,919 3,278 361 5 1,743 1,748 5 5 1,892 1,897 5 82 Annual report and Form...

  • Page 84
    .... Lease ¢nance is repayable by instalments. Group 2000 £m 1999 £m 2000 £m Company 1999 £m Repayments fall due as follows: Within one year, or on demand Between one and two years Between two and three years Between three and four years Between four and ®ve years After ®ve years Total due...

  • Page 85
    ... group's interest payable for the year ended 31 March 2000. (c) Unused committed lines of credit for short-term ¢nancing available at 31 March 2000 totalled approximately »5,800 million (1999 --- »150 million), which was in support of a commercial paper programme or other borrowings. These lines...

  • Page 86
    ... granted under the employee share option schemes described in note 30. Ordinary shares allotted during the year were as follows: Number Nominal value £ Consideration(a) £ Savings related schemes Other share option schemes Stock purchase plan Totals for the year ended 31 March 2000 35,762,240...

  • Page 87
    ... to BT's employee share ownership trust (d) Currency movements (including £10 million net losses in respect of foreign currency borrowings) (c) Pro®t for the ®nancial year Dividends (21.9p per ordinary share) Unrealised gain on transfer of assets and group undertakings to a joint venture Balances...

  • Page 88
    ...the year ended 31 March 2000 the company issued shares at a market value of £375 million (1999 ± £311 million) in respect of the exercise of options awarded under its principal savings-relating share option scheme. Employees paid £118 million (1999 ± £146 million) to the group for the issue of...

  • Page 89
    ... the financial statements 26. Financial commitments, contingent liabilities and subsequent events Group 2000 £m 1999 £m 2000 £m Company 1999 £m Contracts placed for capital expenditure not provided in the accounts Operating lease payments payable within one year of the balance sheet date were...

  • Page 90
    ...projected unit method. The valuation was determined using the following long-term assumptions: Rates (per annum) % Return on existing assets, relative to market values Return on future investments Average increase in retail price index Average future increases in wages and salaries Average increase...

  • Page 91
    ..., share options and other long-term incentive plans is shown in the report on directors' remuneration on pages 48 to 56. 29. People employed 2000 Year end '000 Average '000 Year end '000 1999 Average '000 Year end '000 1998 Average '000 Number of employees in the group: UK Non-UK Total employees...

  • Page 92
    ... plan for executives. Share option schemes The major share option scheme, the BT Employee Sharesave Scheme, is savings related and the share options are normally exercisable on completion of a three or ¢ve-year Save As You Earn contract. A similar savings related scheme exists for group employees...

  • Page 93
    ... employees of the group in July 1998 and 1999. Under this plan, shares in the company are acquired by an employee share ownership trust and transferred to participants at the end of three years if he or she has continued to be employed by the group throughout that period. 92 Annual report and Form...

  • Page 94
    ...: ESP 2000 £m 1999 £m 2000 £m PSP 1999 £m 2000 £m DBP 1999 £m 2000 £m Total 1999 £m Value of range of possible future transfers: nil to Provision for the costs of the plans charged to the pro®t and loss account in year Nominal value of shares held in trust Market value of shares held in...

  • Page 95
    ... acquisitions of businesses and interests in joint ventures and associates. This increase in debt has been primarily funded under the group's commercial paper programmes. As a result, BT's borrowing pro¢le has changed during the year from one at ¢xed rates to one mainly at £oating rates. It is BT...

  • Page 96
    ...Financial instruments and risk management (continued) amount. Under gilt locks, forward sales of UK government long-dated treasury stock are entered into for periods of up to one year. This hedge e¡ectively ¢xes in the interest on part of the group's future borrowings. At 31 March 2000, the group...

  • Page 97
    ...32. Financial instruments and risk management (continued) Carrying amount 2000 £m 1999 £m 2000 £m Fair value 1999 £m Non-derivatives: Assets Cash at bank and in hand Short-term investments (a) Fixed asset investments ± loans to joint ventures (b) Liabilities Short-term borrowings (c) Long-term...

  • Page 98
    ... on which no interest is paid are due to mature within one year of the balance sheet date. The maturity pro¢le of ¢nancial liabilities is as given in note 21. Financial assets After taking into account the various interest rate swaps and forward foreign currency contracts entered into by the...

  • Page 99
    ... currency purchases and sales. Fair values of ®nancial assets held for trading 2000 £m 1999 £m Net gain included in pro®t and loss account Fair value of ®nancial assets held for trading at 31 March 51 980 104 1,944 The net gain was derived from government bonds, commercial paper and similar...

  • Page 100
    ... provision of exchange lines, private services and calls to and from the places of business and customer premises equipment. The Networks and Systems Division built, maintained and operated the company's ¢xed telecommunications network in the UK. Mobile Communications provided the group's UK mobile...

  • Page 101
    ... (loss) of associates and joint ventures £m Turnover Year ended 31 March 2000 External £m Internal £m Depreciation and amortisation £m Total operating profit (loss) £m Markets Enterprises Networks & Systems Mobility Products and Solutions Other Eliminations Total BT UK BT Worldwide Other...

  • Page 102
    ... 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. 2000 £m 1999 £m Group ®xed assets are located: UK Europe, excluding the UK Americas Asia and Paci®c Total 20,940...

  • Page 103
    ... (219) ± 3 (221) 25 (196) 2000 Net operating assets £m Associates and joint ventures £m Net operating assets (liabilities) £m Associates and joint ventures £m 1999 Year ended 31 March Total £m Total £m UK Europe, excluding the UK Americas Asia and Paci®c Total 16,428 2,232 653 156 19...

  • Page 104
    ...years. The value of goodwill is reviewed annually and the net asset value is written down if a permanent diminution in value has occurred. Under UK GAAP, goodwill arising on acquisitions completed on or after 1 April 1998 is generally accounted for in line with US GAAP. (e) Mobile cellular telephone...

  • Page 105
    ... increasing long-term liabilities by »1,500 million (1999 --- »1,544 million increase). (i) Dividends Under UK GAAP, dividends are recorded in the year in respect of which they are declared (in the case of interim or any special dividends) or proposed by the board of directors to the shareholders...

  • Page 106
    ... net income and shareholders' equity from that reported under UK GAAP to that which would have been reported had US GAAP been applied. Net income Years ended 31 March 2000 £m 1999 £m 1998 £m Net income applicable to shareholders under UK GAAP Adjustment for: Pension costs Redundancy charges...

  • Page 107
    ... of bank overdrafts. Under FRS 1, cash £ows are presented for operating activities; returns on investments and servicing of ¢nance; taxation; capital expenditure and ¢nancial investments; acquisitions and disposals; dividends paid to the company's shareholders; management of liquid resources and...

  • Page 108
    ...--- 7.7%, 1998 --- 8.2%). The components of the pension cost for the main pension scheme comprised: 2000 £m 1999 £m 1998 £m Service cost Interest cost Expected return on scheme assets Amortisation of prior service costs Amortisation of net obligation at date of limited application of SFAS No. 87...

  • Page 109
    ... the year Actual return on scheme assets Employers' contributions (b) Employees' contributions Other changes Bene®ts paid or payable Fair value of scheme assets at the end of the year 25,120 5,619 483 171 21 (1,538) 29,876 22,666 3,050 439 163 25 (1,223) 25,120 2000 £m 1999 £m Funded status...

  • Page 110
    ...Data Systems Inc. (f) BT acquired control of Esat in March 2000 following a public offer. The interests of dissident shareholders are in the process of being compulsorily acquired. Esat has a 31 December accounting reference date. (g) Held by Telecom Securicor Cellular Radio Limited. (h) In May 2000...

  • Page 111
    ...Share Capital b = billions m = millions Activity Percentage Issued(a) owned Country of operations(b) Associates AT&T BT Canada Holdings Limited Partnership (c) Maxis Communications Berhad (d)(e) Cegetel SA Cellular Operations Limited Japan Telecom Company Limited Rogers Cantel Mobile Communications...

  • Page 112
    ...' turnover Trading between group and principal joint venture Group turnover Other operating income Group operating pro®t Group's share of operating loss of associates and joint ventures Total operating pro®t Pro®t on sale of ®xed asset investments and group undertakings Net interest payable Pro...

  • Page 113
    ... Group's share of associates' and joint ventures' turnover Group turnover Other operating income Group operating pro®t Group's share of operating loss of associates and joint ventures Total operating pro®t Pro®t on sale of ®xed asset investments and group undertakings (a) Net interest payable...

  • Page 114
    ...Concert global venture, and, for the period from 5 January 2000, BT's proportionate interest in the global venture's results. (c) Elimination of turnover between businesses which is included in total turnover of the originating business. Other includes group redundancy costs. Annual report and Form...

  • Page 115
    ... employed is represented by total assets, excluding goodwill, less current liabilities, excluding corporate taxes and dividends payable, and provisions other than those for deferred taxation. Year-end ®gures are used in the computation of the average, except in the case of short-term investments...

  • Page 116
    ... reference to turnover growth attributable to calls, adjusted to eliminate the e¡ect of price changes. 1996 1997 1998 1999 2000 UK exchange line connections Business ('000) % growth over previous year Residential ('000) % reduction over previous year Total exchange line connections ('000) % growth...

  • Page 117
    ... developments in the convergence of technologies; prolonged adverse weather conditions resulting in a material increase in overtime, staff or other costs; the timing of entry and pro®tability of BT and its new businesses in certain communications markets; signi®cant changes in market shares for BT...

  • Page 118
    ...and lowest closing middle market prices for BT ordinary shares, as derived from the Daily O¤cial 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 119
    ... to do so. Individual savings accounts (ISAs) Information about investing in BT shares through an ISA may be obtained from Halifax Share Dealing Limited, Westbank, Water Lane, Leeds LS11 5TL (telephone 0870 600 9966). ISAs are also o¡ered by other organisations. 118 Annual report and Form 20-F

  • Page 120
    ...paid directly into a bank or building society account should contact the Registrar for a dividend mandate form. Dividends paid in this way will be paid through the Bankers Automated Clearing System (BACS). Alternatively, a form may be downloaded from the internet at www.bt.com/shares. Annual report...

  • Page 121
    ...plan replaced the share dividend plan for shareholders following the 1999 interim dividend. Under the dividend investment plan, cash from participants' dividends is used to buy further BT shares in the market. The 1999 interim dividend was paid on 15 February 1999 and shares were allotted at a price...

  • Page 122
    ... the United States or hold ordinary shares or ADSs as assets e¡ectively connected with a US trade or business (US Holders). It is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of ordinary shares or ADSs. Investors are advised to consult...

  • Page 123
    ... or any person treated as so resident or in respect of the governments of the Federal Republic of Yugoslavia, and of Serbia. There are no limitations under the laws of the United Kingdom restricting the right of non-residents to hold or to vote shares in the company. 122 Annual report and Form 20-F

  • Page 124
    ... the internet at www.bt.com/shares. For printed copies, contact the BT Shareholder Helpline on Freefone 0808 100 4141 or, alternatively, contact The Registrar in the UK, BT North America Inc. in the United States or The Toyo Trust & Banking Co. Limited in Japan at the addresses on page 124. Annual...

  • Page 125
    ...Ownership Scheme registers. 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 126
    ... charges Reserves Share premium account Shareholders' funds Stocks Tangible ¢xed assets Trade debtors Turnover US equivalent or de®nition Financial statements No direct US equivalent. Tax payable on cash dividends treated as advance payments on the company's UK income tax due Equity investees...

  • Page 127
    ... United States Generally Accepted Accounting Principles Subsidiary undertakings, joint ventures and associates 58 59-61 62 63 64 65 66-102 103-108 109-110 8 Selected ®nancial data Five year ¢nancial summary Additional information for shareholders ^ Dividends ^ Exchange rates 9 Management...

  • Page 128
    ..., 99, 113 Investments 3, 37, 60, 77-82 Joint ventures and associates 3, 5, 8, 9, 37, 38, 68, 77-82, 110 Legal proceedings 22, 88 Licence 10, 18-22, 28 Listings 116 Loans and other borrowings 83, 84 Management of liquid resources 71 Marketing and pricing 11 Minority interests 70 Mobile communications...

  • Page 129
    ... plc Registered office: 81 Newgate Street, London EC1A 7AJ Registered in England No. 1800000 Accredited with the Investor in People award Designed by Pauffley Printed in England by Pindar plc on paper awarded the Nordic White Swan label, an internationally recognised environmental standard.