BT 2000 Annual Report Download - page 28

Financial review
Annual report and Form 20-F 27
Introduction
BT's earnings of 31.7 pence per share for the year ended
31 March 2000 (the 2000 ¢nancial year) compare with
46.3 pence for the 1999 ¢nancial year and 26.6 pence for
the 1998 ¢nancial year. Exceptional items have a¡ected
earnings in each of these years and goodwill amortisation
in the last two years. Of the earnings in the 2000 ¢nancial
year, 0.1 pence per share represented net exceptional
income. In the 1999 ¢nancial year, net exceptional income
amounted to 11.6 pence per share mainly relating to the
sale of the group's investment in MCI Communications
Corporation in September 1998. Earnings for the 1998
¢nancial year were a¡ected by net exceptional charges of
5.1 pence per share, relating to the windfall tax, partially
o¡set by a fee received relating to the termination of the
then-planned BT/MCI merger. Goodwill amortisation, on
acquisitions completed after 1 April 1998 when BT adopted
the new UK ¢nancial reporting standard on goodwill
(FRS 10), adversely a¡ected earnings by 2.6 pence per
share in the 2000 ¢nancial year and by 0.3 pence per share
in the 1999 ¢nancial year. Before goodwill amortisation
and exceptional items, earnings of 34.2 pence per share for
the 2000 ¢nancial year compare with an equivalent
35.0 pence and 31.7 pence for the 1999 and 1998 ¢nancial
years, respectively.
The results for the 2000 ¢nancial year re£ect the
adverse e¡ect which competitive pressures have had on our
2000
£m
1999
£m
1998
£m
Total turnover ± ongoing 21,903 18,223 16,039
Group's share of ventures' turnover ± ongoing (3,364) (1,270) (399)
Trading between group and principal joint venture 176 ± ±
Group turnover ± ongoing 18,715 16,953 15,640
Other operating income 242 168 372
Operating costs (15,359) (13,305) (12,355)
Group operating pro®t 3,598 3,816 3,657
Group's share of ventures' losses (400) (342) (196)
Total operating pro®t 3,198 3,474 3,461
Pro®t on sale of ®xed asset investments and group undertakings 126 1,107 63
Net interest (382) (286) (310)
Pro®t before taxation 2,942 4,295 3,214
Taxation ± ordinary (897) (1,293) (977)
± windfall ±± (510)
Pro®t after taxation 2,045 3,002 1,727
Minority interests 10 (19) (25)
Pro®t for the ®nancial year 2,055 2,983 1,702
Basic earnings per share 31.7p 46.3p 26.6p
Pro®t before goodwill amortisation, exceptional items and taxation 3,100 3,274 2,976
Basic earnings per share before goodwill amortisation and exceptional items 34.2p 35.0p 31.7p
operating margins in the UK ¢xed-voice telephony and
mobile markets. The results also re£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 rapidly and this led to increased turnover
and, in the 1999 ¢nancial year, increased pro¢t. In the 2000
and 1998 ¢nancial years, the buoyant UK economy had a
bene¢cial e¡ect on the results. Our ventures in North
America, continental Europe and Asia Paci¢c which we
have established, or in which we have acquired interests, in
the past three years, are contributing signi¢cantly to our
turnover growth. However, the initial losses incurred by
many in their development stages are, as anticipated,
adversely a¡ecting the group's results. We continue to be
a¡ected by the tight regulatory regime in the UK. Price
reductions, including those imposed by the price control
formulae, totalled approximately »550 million in the 2000
¢nancial year, following reductions of approximately
»500 million in the 1999 ¢nancial year and over
»750 million in the 1998 ¢nancial year.
In early January 2000, Concert, our global venture
50/50 owned with AT&T, was established. Concert has
taken over a major part of our international
communications activities and is managing the
Please see cautionary statement regarding forward-looking statements on page 116.