BT 2001 Annual Report Download - page 139

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Notes to the pro forma consolidated financial information
6. Yell discontinued operations
As described in the Business Review, the group has announced that it plans to seek a demerger and listing or sale of Yell. These
adjustments present management’s best assessment of the historical results of operations and the historical ¢nancial position of
Yell to re£ect the demerger or sale of Yell as though that demerger or sale had occurred on (i) 1 April 1998 in respect of the
unaudited pro forma condensed statements of operations; and (ii) 31 March 2001 in respect of the unaudited pro forma condensed
combined balance sheet. These historical results are not necessarily indicative of the stand-alone results of Yell had that group
operated as a stand-alone entity. Yell is assumed to have been demerged or sold free of all cash and outstanding intercompany
balances. Accordingly, the historical balance sheet of Yell as of 31 March 2001 excludes all such balances, which have been
reclassi¢ed as invested equity on the Yell balance sheet. An assumption has been made that Yell will not assume any third-party
debt from BT, nor retain any third-party debt that exists on its own balance sheet.
7. Other adjustments
To record the historical amount of intercompany revenue and expense transactions between (i) pro forma BT and (ii) BT Wireless
and Yell. These amounts were eliminated in the BT consolidated ¢nancial statements and are not therefore re£ected in BT’s
historical consolidated results of operations.
8. Pro forma basic and diluted earnings per share
The calculations of pro forma basic earnings per share are based on the net pro¢t attributable to shareholders divided by the
average number of shares in issue during the period, after deducting the shares held by employee share ownership trusts.
In calculating pro forma diluted earnings per share, the average number of shares in issue during the period presented have
been adjusted for share options outstanding and other potential ordinary shares.
Details of the basic and total diluted weighted average number of shares in each year are set out in note 13 on page 92 of
this Annual Report on Form 20-F.
9. Reconciliation to US GAAP
BT prepares its consolidated ¢nancial statements in accordance with accounting principles that conform in all material respect
with UK GAAP, which di¡ers in certain material respects from US GAAP.
A summary of the signi¢cant di¡erences between UK and US GAAP that are relevant to the BT pro forma ¢nancial
information is set out on pages 124 to 126 of this Annual Report on Form 20-F.
The calculation of pro forma combined net income under US GAAP for each of the three years ended 31 March 2001 is as follows:
Years ended 31 March,
2001
£m
2000
£m
1999
£m
Pro forma profit on ordinary activities after taxation and minority interests under UK GAAP 943 2,155 2,910
Adjustment for:
Pension costs (42) (209) (104)
Redundancy charges (453) (300) (284)
Capitalisation of interest, net of related depreciation (13) (14) (19)
Goodwill amortisation (27) (45) 101
Mobile licences, software and other intangible asset capitalisation and amortisation, net (32) (33) (226)
Financial instruments (133) (129) (6)
Deferred gain (71) (19) –
Deferred taxation 108 106 220
Other (38) – (60)
Pro forma net income as adjusted for US GAAP 242 1,512 2,532
BT Annual report and Form 20-F 139