BT 2004 Annual Report Download - page 85

1. Changes in accounting policy and presentation and discontinued activities
(a) Changes in accounting policy and presentation
There have been no changes to accounting policies in the 2004 financial year. A small number of changes in the
presentation of the notes to the financial statements have been made and comparative figures have been
restated accordingly as explained in the notes where material.
(b) Discontinued activities
On 1 June 2001, BT disposed of its interests in Japan Telecom and J-Phone Communications and, on 29 June
2001, its interest in Airtel. On 22 June 2001, BT sold Yell, its classified advertising directory businesses in the
UK and the USA. These activities, together with mmO
2
which was demerged on 19 November 2001, are shown
as discontinued operations in the profit and loss accounts. The eliminations are intra-group eliminations. The
interest charge allocated to mmO
2
up to the date of the demerger has been calculated assuming that mmO
2
’s
net debt at the date of the demerger of £500 million, had been in existence for the whole of the period, and had
been bearing an interest charge of 8% per annum.
The interest charge allocated to Yell up to the date of disposal represents amounts payable on intercompany
loans charged at an arm’s length rate of interest. The taxation charge allocated to discontinued activities, up to
the date of demerger or disposal, represents amounts charged to these entities before recognising credit for
group relief surrendered to entities within continuing activities.
2. Segmental analysis
The group provides telecommunication services, principally in the UK, and essentially operates as a unitary
business. Its main services and products are fixed voice and data calls, the provision of fixed exchange lines
to homes and businesses, the provision of communication services to other operators, the provision of private
services to businesses and the supply of telecommunication equipment for customers’ premises.
The turnover of each line of business is derived as follows:
&BT Retail derives its turnover from the supply of exchange lines and from the calls made over these lines, the
provision of ICT products and services, the leasing of private circuits and other private services, the sale and
rental of customer premises equipment to the group’s UK customers and other lines of business and from its
narrowband and broadband internet access products.
&BT Wholesale derives its turnover from providing network services to other BT lines of business, and from
interconnecting the group’s UK network to other operators.
&BT Global Services mainly generates its turnover from the provision of ICT products and services,
outsourcing and systems integration work and from the fixed network operations of the group’s European
subsidiaries. The business also derives revenues from providing web hosting facilities to end customers and
through BT lines of business.
Segmented information on the lines of business is given below for the years ended 31 March 2004, 31 March
2003 and 31 March 2002 as required by the UK accounting standard SSAP 25 and the US accounting standard
SFAS No. 131 (SFAS 131).
There is extensive trading between the lines of business and profitability is dependent on the transfer price
levels. These intra-group trading arrangements and operating assets are subject to periodic review and have
changed in some instances. In addition, the group moved management responsibility of BT Openworld to
BT Retail. Comparative figures have been restated for these and other changes and in certain instances have
been determined using apportionments and allocations.
Turnover Depreciation
and
amortisation
Operating
profit (loss) of
associates
and joint
ventures
Total
operating
profit (loss)External Internal
Group
total
Year ended 31 March 2004 £m £m £m £m £m £m
BT Retail 12,630 904 13,534 163 1 1,434
BT Wholesale 3,445 7,414 10,859 1,919 – 1,682
BT Global Services 2,410 3,372 5,782 624 (37) (153)
Other 34 1 35 230 2 (124)
Intra-group – (11,691) (11,691) – – –
Group totals 18,519 – 18,519 2,936 (34) 2,839
BT Annual Report and Form 20-F 200484
Notes to the financial statements