BT 2001 Annual Report Download - page 82

1. Changes in accounting policies and presentation
With e¡ect from 1 April 2000, the group changed its method of accounting for loans and other borrowings. Loans and other
borrowings are now adjusted for the e¡ect of currency swaps acting as hedges. There is no impact on the pro¢t of the group as a
result of this change; the adjustment is re£ected in debtors or creditors. By adjusting for the e¡ects of currency swaps acting as
hedges the balances stated re£ect the full economic exposure of the company arising from loans and other borrowings. The
comparative ¢gures have not been restated as the impact is not material.
During the year ended 31 March 2001, the group has made a number of changes in the presentation of its ¢nancial
statements. Comparative ¢gures have been restated accordingly. These are explained in the notes where material.
2. Segmental analysis
The group provides telecommunication services, principally in the UK and essentially operated as a unitary business prior to
1 July 2000. Its main services and products are ¢xed voice and data calls in the UK, the provision of ¢xed exchange lines to
homes and businesses, the supply of mobile communication services and equipment to businesses and individuals, the provision
of communication services in the UK to other operators, the provision of private services to businesses and the supply of
telecommunication equipment for customers’ premises.
In April 2000, the group announced a restructuring whereby the group and its associates and joint ventures would be
managed in several separate lines of business comprising four international businesses and two UK operating businesses, together
with the group’s Concert global venture. The four international businesses, which were formed in July 2000, are: BT Wireless
covering the group’s interests in mobile communications; BT Ignite responsible for broadband and internet networks;
BTopenworld covering the consumer market for internet products around the world; and Yell, responsible for the classi¢ed
directories and associated e-commerce businesses. The two UK operating lines of business, which were formed in autumn 2000,
are a wholesale line of business covering the UK ¢xed network and a retail line of business responsible for marketing UK ¢xed-
network products. In November 2000, the group announced that it intended to set up a new company, provisionally named NetCo,
to operate the group’s UK ¢xed network. NetCo, which will be formed principally from the UK wholesale business and part of the
UK retail business, is planned to be set up during the course of the year ending 31 March 2002.
The turnover of each line of business is derived as follows:
&BT Retail derives its turnover from the supply of exchange lines to the group’s UK customers and from the calls they
make over these lines, the leasing of private circuits and other private services, and the sale and rental of customer
premises equipment.
&BT Wholesale derives its turnover from providing network services to BT Retail and other BT lines of business, and from
interconnecting the group’s UK network to other operators.
&BT Wireless mainly derives its turnover from the calls made and received by its customers using its mobile phones, from
subscription fees charged to its contract customers and from handset equipment sales.
&BT Ignite mainly generates its turnover from outsourcing and systems integration work and from the ¢xed network
operations of the group’s European subsidiaries. The business also derives revenues from providing web hosting facilities.
&BTopenworld mainly derives its turnover from its narrowband internet access products, mainly by selling advertising.
&Yell derives its turnover from selling advertising in its classi¢ed directories in the UK and in the US.
Prior to the restructuring implemented during the year ended 31 March 2001, the group was managed as a unitary business
providing an integrated range of services. For the purposes of exercising day-to-day managerial and budgetary control, however,
the business was divided internally into divisions but these divisions were not self-standing businesses. Control was exercised by
comparing performance against budgets agreed in advance. The group’s chief operating decision maker (the CEO) reviewed the
turnover and operating results for each main division. The group’s capital expenditure programmes were largely centrally driven
and were not necessarily linked to individual divisions. For this reason it had been group policy not to allocate certain assets to
individual divisions, although depreciation charges were allocated.
Notes to the financial statements
82 BT Annual report and Form 20-F