BT 2005 Annual Report Download - page 82

1. Changes in accounting policy and presentation
During the 2005 financial year the group adopted UITF Abstract 38 ‘Accounting for ESOP trusts’ and the related
amendments to UITF Abstract 17 (revised 2003) ‘Employee Share Schemes’. UITF 38 changes the presentation of an
entity’s own shares held in an ESOP trust from previously being held as assets to being deducted in arriving at
shareholders’ funds. UITF 17 (revised 2003) requires the amounts recognised in the profit and loss account in respect
of share awards previously based on the book value of shares held in the ESOP trusts to being based on the fair value of
shares at the date the award is made.
An additional charge of £3 million and a credit of £16 million for the 2004 and 2003 financial years, respectively has
been made to the group profit and loss account. The effect on the group’s balance sheet at 1 April 2002 has been to
reduce fixed assets by £177 million, to reduce other creditors by £25 million and to reduce shareholders’ funds by
£152 million. The prior year adjustment in the statement of total recognised gains and losses is £21 million. Had we
not adopted this change the charge to the profit and loss account would have been £18 million higher in the 2005
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.
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 and solutions to communications companies,
including fixed and mobile network operators, ISPs (internet service providers) and other service providers, including
other BT lines of business, and from carrying transit traffic between telecommunications 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 2005, 31 March 2004
and 31 March 2003 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. Comparative figures have been restated for these and other changes and in certain instances have
been determined using apportionments and allocations.
Turnover Depreciation
Operating
profit (loss) of
associates Total
External Internal
Group
total
and
amortisation
and joint
ventures
operating
profit (loss)
Year ended 31 March 2005 £m £m £m £m £m £m
BT Retail 12,115 447 12,562 134 1 1,116
BT Wholesale 3,812 5,167 8,979 1,909 – 1,940
BT Global Services 2,671 3,710 6,381 584 (31) (35)
Other 25 – 25 229 5 (257)
Intra-group – (9,324) (9,324) – – –
Group totals 18,623 – 18,623 2,856 (25) 2,764
Turnover Depreciation
Operating
profit (loss) of
associates Total
External Internal
Group
total
and
amortisation
and joint
ventures
operating
profit (loss)
Year ended 31 March 2004 £m £m £m £m £m £m
a
BT Retail 12,602 338 12,940 163 1 1,232
BT Wholesale 3,473 5,410 8,883 1,919 – 1,884
BT Global Services 2,410 3,372 5,782 624 (37) (153)
Other 34 1 35 230 2 (127)
Intra-group – (9,121) (9,121) – – –
Group totals 18,519 – 18,519 2,936 (34) 2,836
a
Restated – see note 1
Notes to the financial statements
BT Group plc Annual Report and Form 20-F 2005 81