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BT Group plc
Annual Report & Form 20-F
2010

Table of contents

  • Page 1
    BT Group plc Annual Report & Form 20-F 2010

  • Page 2
    ...A44

  • Page 3
    ... Directors' information Business policies Shareholders and annual general meeting REVIEW OF THE YEAR 11 15 18 22 34 36 38 41 Our business and strategy Our markets and customers Our resources Our lines of business Our corporate responsibility Our risks Other information Financial review OVERVIEW

  • Page 4
    ... BT Global Services contract and financial review charges in 2009 and net interest on pensions. See page 55 for further details. In our quarterly results announcements we also report adjusted measures before leaver costs, consistent with the basis of our outlook for the year (see page 3). From 2011...

  • Page 5
    ...fic items of around £150m, with capital expenditure at around £2.6bn. BT GROUP PLC ANNUAL REPORT & FORM 20-F ADDITIONAL INFORMATION

  • Page 6
    ... Global Services and formerly Group Finance Director between 2005 and 2008, stepped down from the Board in January 2010 and left the company in March 2010. Jeff Kelly was appointed as Chief Executive of BT Global Services and as a member of the Operating Committee in January 2010. Jeff had 25 years...

  • Page 7
    ... new markets, winning deals with organisations like mobile operators, who are choosing BT to run a large part of their infrastructure. IAN LIVINGSTON CHIEF EXECUTIVE 12 MAY 2010 FINANCIAL STATEMENTS BT GROUP PLC ANNUAL REPORT & FORM 20-F REPORT OF THE DIRECTORS OVERVIEW OVERVIEW CHIEF EXECUTIVE...

  • Page 8
    ... equipment in BT exchanges, and use these lines to connect to end users White label managed services for customers who want to enter the communications market without the need to invest Managed network solutions for communications providers > More on page 11 6 BT GROUP PLC ANNUAL REPORT & FORM...

  • Page 9
    ...and free cash ï¬,ow, to the most directly comparable IFRS measure, is provided on pages 42 and 51, respectively. c Cumulative improvement from 1 April 2007. BT GROUP PLC ANNUAL REPORT & FORM 20-F 7 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 10
    ... We meet the needs of our different customer groups in more than 170 countries around the world through four customer-facing lines of business - BT Global Services, BT Retail, BT Wholesale and Openreach. These are supported by two internal service units - BT Innovate & Design and BT Operate. 2010...

  • Page 11
    ... government departments and other communications providers. Some of our customers are shown below. > More on page 16 FINANCIAL STATEMENTS 9 Transport MEDIA-SATURN BT GROUP PLC ANNUAL REPORT & FORM 20-F ADDITIONAL INFORMATION D epartment for REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 12
    ... Principal accounting policies, critical accounting estimates and key judgements 42 Summarised group income statement 43 Financial results 48 Financial position and resources 51 Liquidity 52 Funding and capital management 54 Alternative performance measures 10 BT GROUP PLC ANNUAL REPORT & FORM 20...

  • Page 13
    ... & FORM 20-F 11 BT is one of the world's leading communications services companies, serving the needs of customers in the UK and in more than 170 countries. ADDITIONAL INFORMATION Who we are FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW OUR BUSINESS AND STRATEGY

  • Page 14
    ... products such as BT Business One Plan Plus, the first unlimited calls, lines, broadband and mobile option available to small businesses in the UK. BT Global Services - a global leader BT Global Services is a global leader in the provision of networked IT services. However, during 2009 the level...

  • Page 15
    ... 1,000 CP customers and we are the established leader for carriers, and to extend and develop our international wholesale business. Over the next year, we also aim to consolidate further our position as a leading provider of managed network services (MNS) in the UK's fixed and mobile markets. Our...

  • Page 16
    ... priorities: driving broadband-based consumer services; being the 'Brand for Business' for UK SMEs; developing BT Global Services' position as a global leader in networked IT services; being the wholesaler of choice; and being the best network provider. As part of our plans for the future, we are...

  • Page 17
    ...). As the market responds to economic conditions, we see continued interest in network operational efficiency, workforce management, security, unified communications (where an organisation's infrastructure, mobility, desktop and applications work together), global hosted contact centre solutions...

  • Page 18
    ... investment in communications. Our broadband, e-mail, VoIP and online applications help SMEs keep in touch and communicate online with their customers, employees and suppliers, while our domain and web-hosting services make it easy for them to get online, develop 16 BT GROUP PLC ANNUAL REPORT & FORM...

  • Page 19
    REVIEW OF THE YEAR OUR MARKETS AND CUSTOMERS BT GROUP PLC ANNUAL REPORT & FORM 20-F 17 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS UK consumers can contact us online, through our call centres, or in 'stores without walls' which are situated in prime locations in major ...

  • Page 20
    ... which means that working together with our fellow London 2012 technology partners we will carry every image, sports 18 BT GROUP PLC ANNUAL REPORT & FORM 20-F Target 2011 BT will maintain a top 10 position in four of five major diversity benchmarks; four UK based, and one global 2010 2009 2008

  • Page 21
    ... BT Pension Scheme (BTPS), a defined benefit scheme, or BT sick pay costs 2010 £95.4m 2009 £85.2m 2008 £89.8m BT GROUP PLC ANNUAL REPORT & FORM 20-F 19 ADDITIONAL INFORMATION Non financial performance Target 2011 FINANCIAL STATEMENTS 0.188 REPORT OF THE DIRECTORS REVIEW OF THE YEAR...

  • Page 22
    REVIEW OF THE YEAR OUR RESOURCES People engagement and communication Keeping our people informed about what is happening in BT is an important part of how we manage our business. We use a range of communications channels, including online news services, quarterly employee magazine and two-way ...

  • Page 23
    ...fill from 2007 Financial performance UK only 2010 Net benefit to the business of the waste programme £1.61m 2009 £0.67m 2008 £0.32m BT GROUP PLC ANNUAL REPORT & FORM 20-F 21 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS 2010 2009 2008 REVIEW OF THE YEAR OVERVIEW

  • Page 24
    ... are BT Global Services, BT Retail, BT Wholesale and Openreach. They meet the needs of our different customer groups, supported by two internal service units, BT Innovate & Design and BT Operate. The financial performance of each of our customer-facing lines of business for 2010, 2009 and 2008 is...

  • Page 25
    ... OF THE YEAR OUR LINES OF BUSINESS BT GROUP PLC ANNUAL REPORT & FORM 20-F 23 ADDITIONAL INFORMATION sector organisations in the UK, and a leading player in other countries key to our customers. Our professional services consultants use in-depth knowledge of networked IT services, combined with...

  • Page 26
    ... customers in our target markets outside the UK have signed a number of significant deals during the year, including contracts to provide global hosted contact centre services, network connectivity and voice services in Spain and Portugal for the security company Prosegur Activa, fixed mobile...

  • Page 27
    ... BT GROUP PLC ANNUAL REPORT & FORM 20-F 25 ADDITIONAL INFORMATION Our BT Openzone business provides wi-fi hotspots to offer broadband on the move, both to retail customers and to wholesale customers such as mobile network operators. BT Openzone has now become part of BT Enterprises. We design...

  • Page 28
    ... second largest provider of IT services focusing mainly on government and major corporate customers. BT's retail broadband market share year end (million lines) 16 14 12 65% 10 8 6 4 35% 2 0 2008 Other ISPs' market share BT's market share a Operating review In a challenging market, BT Retail has...

  • Page 29
    .... We are working to maximise revenue with our existing accounts by finding new applications and new users, and by working with other parts of BT to acquire new customers who are either existing or first time Customer service delivery We have a range of programmes in progress which are designed to...

  • Page 30
    ... technology, making BT's investments and economies of scale work for their benefit, both in the UK and across the globe. We provide communications services and partially or fully managed solutions for customers ranging from mobile and fixed line operators to internet services providers, broadcast...

  • Page 31
    ... new opportunities for growth. Managed services revenue is growing, and accounted for 22% of BT Wholesale's external revenue in 2010, up from 15% the previous year. BT GROUP PLC ANNUAL REPORT & FORM 20-F 29 ADDITIONAL INFORMATION FINANCIAL STATEMENTS 2008 2009 2010 REPORT OF THE DIRECTORS...

  • Page 32
    ... MNS contracts with a total order value of £1.8bn (2009: £1.3bn), including: A 10-year network outsourcing agreement with KCOM Group to provide the operator with a fully-managed, national operational capability and a new streamlined portfolio of next generation products and services A long-term...

  • Page 33
    ...designed to provide our customers with the tools they need to meet the increasing demands of their customers today, while helping them to plan their services of the future. REVIEW OF THE YEAR ADDITIONAL INFORMATION FINANCIAL STATEMENTS BT GROUP PLC ANNUAL REPORT & FORM 20-F 31 Wholesale line rental...

  • Page 34
    ... customers had been restored and most broadband lines were working again within 36 hours. Operating review In 2010 Openreach made significant improvements in the quality of service delivery of its products. Faults due to the access network reduced by 11% compared with the previous year as a result...

  • Page 35
    ... wind farms. BT GROUP PLC ANNUAL REPORT & FORM 20-F 33 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR software assets being brought into use in 2010 and also our ongoing investment in systems to support new products and services. Adjusted operating pro...

  • Page 36
    ... customer solutions; and enabling skills for an inclusive society. This year we invested money, time and in-kind contributions worth £26.4m supporting responsible and sustainable business activities, meeting our commitment to invest at least 1% of group pre-tax profits. Our target for 2011...

  • Page 37
    ...and customer service Unacceptable supply chain working conditions. We manage the following three CR risks at group level: Health and safety risks to employees and the public exposed to BT operations Breach of integrity leading to a loss of trust in BT FINANCIAL STATEMENTS ADDITIONAL INFORMATION Loss...

  • Page 38
    ...competitive positions in attractive product and service markets. As well as looking beyond the UK and voice and connectivity market we also need to deliver major new investments (e.g. super-fast broadband) which will not only help us defend existing revenues but also open up new adjacent markets for...

  • Page 39
    ... longer life expectancy, as well as regulatory changes, all of which are outside our control. BT GROUP PLC ANNUAL REPORT & FORM 20-F 37 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR have to provide services to other CPs. In recent years the effect of...

  • Page 40
    ... exchange lines, although Ofcom is currently consulting on a market review/charge control for ISDN30 lines), which resulted in BT having greater freedom to package and price those services as we choose. Ofcom also completed its review of wholesale narrowband services markets and concluded that BT...

  • Page 41
    ... YEAR OTHER INFORMATION SMP charge controls As a result of SMP designations, the charges we can make for a number of wholesale services are subject to regulatory controls which are designed to ensure that our charges are reasonably derived from costs, plus an appropriate return on capital employed...

  • Page 42
    ... its consumer and SME broadband and voice customer base in the Republic of Ireland to Vodafone, and agreed to provide wholesale network services to underpin Vodafone's business over a seven-year period. We also completed a number of other minor disposals in 2010. Prior to 2010 The BT of today was...

  • Page 43
    ...of completion BT GROUP PLC ANNUAL REPORT & FORM 20-F 41 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR and likely outcome under long-term contracts; assessing the level of interconnect income with and payments to other telecommunications operators; making...

  • Page 44
    ... YEAR FINANCIAL REVIEW Summarised group income statement Year ended 31 March Revenue Adjusteda Specific items Contract and financial review charges Reported Other operating income Adjusteda Specific items Reported Operating costs Adjusteda Specific items Contract and financial review charges...

  • Page 45
    ...678m in 2010 due to growth in broadband revenue in BT Retail and BT Global Services and an BT GROUP PLC ANNUAL REPORT & FORM 20-F 43 ADDITIONAL INFORMATION Managed solutions Managed solutions revenue, which comprises networked IT services, MPLS and managed network services (MNS) increased by 3% to...

  • Page 46
    ... by an increase in social security costs as BTPS ceased to contract out of the Second State Pension. We expect the BTPS operating charge for the BTPS in 2011 to increase by about £100m as a result of the lower discount rate and higher inï¬,ation assumptions. Share-based payment costs decreased by...

  • Page 47
    ...impairment and related charges Creation of Openreach and delivery of the Undertakings Write off of circuit inventory and other working capital balances Finance income Interest on settlement of open tax years Share of results of associates and joint ventures Impact of renegotiated supply contracts on...

  • Page 48
    ...In 2008 a charge of £74m was recognised as a result of the completion of a review of circuit inventory and other working capital balances. In 2009 a credit of £36m was recognised in respect of a reassessment of the value of the group's share of the net assets of an associate. In 2008 a tax credit...

  • Page 49
    ... in BT Global Services, partially offset by good performance in the other lines of business. Reported profit before taxation was £1,007m in 2010, compared with a loss before taxation of £244m in 2009 and a profit before taxation of £1,976m in 2008. REVIEW OF THE YEAR ADDITIONAL INFORMATION...

  • Page 50
    ... due to the impact of foreign exchange movements. There were no acquisitions during 2010. An analysis of goodwill by cash generating units for the purposes of the impairment assessment is provided in note 12 to the consolidated financial statements. 48 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 51
    ... rate 3.24% 2.28% Non current trade and other receivables Non current trade and other receivables principally comprises costs relating to the initial set up, transition or transformation phase of long-term networked IT services contracts. There was a net increase of £14m during 2010. 2007 2008...

  • Page 52
    ...210m in 2010 primarily arising on the impact of the BT Global Services contract and financial review charges. In 2008 the cash tax paid was lower than the income statement charge. This was partly due to the phasing of UK corporation tax instalment payments, the level of provisioning for risks, the...

  • Page 53
    ... better efficiency and management of capital expenditure. It also reï¬,ects lower levels of investment in legacy network assets and reductions in customer BT GROUP PLC ANNUAL REPORT & FORM 20-F 51 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 54
    ...2009: £125m, 2008: £85m). Funding and capital management The objective of the group's capital management policy is to reduce net debt over time whilst investing in the business, supporting the pension scheme and delivering progressive dividends. In order to meet this objective the group may issue...

  • Page 55
    ... 2038 Financial year a Balances reported at swapped rates where hedged. BT GROUP PLC ANNUAL REPORT & FORM 20-F 53 ADDITIONAL INFORMATION 2,000 FINANCIAL STATEMENTS The group has two significant term debt maturities during the 2011 financial year. In December 2010 the group's US Dollar 8.625...

  • Page 56
    ...operational existence for the foreseeable future and continue to adopt a going concern basis (in accordance with the guidance 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' issued by the Financial Reporting Council) in preparing the consolidated financial statements...

  • Page 57
    ... paid) and less the acquisition or disposal of group undertakings and less the net sale of short-term investments and excluding pension deficit payments. Free cash ï¬,ow is primarily a liquidity measure, however we also FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 58
    ... level independently of ongoing trading operations such as dividends, share buy backs, acquisitions and disposals and repayment of debt. Our use of the term free cash ï¬,ow does not mean that this is a measure of the funds that are available for distribution to shareholders. A reconciliation...

  • Page 59
    ...the year, complied with the provisions set out in Section 1 of the 2008 Combined Code on Corporate Governance (the Code) and has applied the main principles of the Code as described in this report. 58 BOARD OF DIRECTORS AND OPERATING COMMITTEE 58 Chairman 58 Executive directors 58 Company Secretary...

  • Page 60
    ..., BT Retail Clive Selley, Chief Executive, BT Innovate & Design Key to membership of Board committees: a Operating b Audit c Remuneration d Nominating e Responsible and Sustainable Business f Pension Scheme Performance Review Group g Equality of Access Board 58 BT GROUP PLC ANNUAL REPORT & FORM 20...

  • Page 61
    ... director of BAE Systems and Rexam. He was formerly chairman of the HMV Group and a non-executive director of Rolls-Royce. A US national, he is aged 64. BT GROUP PLC ANNUAL REPORT & FORM 20-F 59 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 62
    ...THE BOARD Introduction BT Group plc is the listed holding company for the BT group of companies: its shares are listed on the London Stock Exchange and on the New York Stock Exchange in the form of American Depositary Shares. The directors submit their report and the audited financial statements of...

  • Page 63
    ... the Board capital expenditure and investments budgets, monitors financial, operational and customer quality of service performance, reviews the risk register and individual risks BT GROUP PLC ANNUAL REPORT & FORM 20-F 61 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS on...

  • Page 64
    ... BT GROUP PLC ANNUAL REPORT & FORM 20-F Committee activities At each of its meetings, the Committee reviews with the Director Internal Audit and appropriate executives the implementation and effectiveness of key operational and functional change and remedial programmes. The Committee also sets time...

  • Page 65
    ...-audit services review of the line of business Audit Committees enterprise risk management review half year results, announcement and related formal statements external audit plan BT Global Services major contracts review review of internal control requirements under the Combined Code and Sarbanes...

  • Page 66
    ... businesses in the US and Europe, including the UK. It also reviewed the position of the Chairman. The minutes of Nominating Committee meetings are sent, at their request, to directors who are not members of the Committee, where appropriate to do so. 64 BT GROUP PLC ANNUAL REPORT & FORM...

  • Page 67
    ... and stakeholder accountability and distributes, within the approved budget, funding to support the strategy. BT GROUP PLC ANNUAL REPORT & FORM 20-F 65 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW REPORT OF THE COMMITTEE FOR RESPONSIBLE...

  • Page 68
    ... top tax rate. Hanif Lalani, Chief Executive of BT Global Services and formerly Group Finance Director, resigned as a director on 7 January 2010. Details of his leaving arrangements are disclosed in this report. Non-executive directors' remuneration Directors' service agreements and contracts of...

  • Page 69
    ... this to 2.5x salary for the Chief Executive (2x salary for executive directors), in view of the wider economic conditions and the base salary increases. BT GROUP PLC ANNUAL REPORT & FORM 20-F 67 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 70
    ... to the executive after three years if they remain employed by the company. There are currently no additional performance measures for the vesting of DBP awards. The Committee considers that awarding shares on a deferred basis acts as 68 BT GROUP PLC ANNUAL REPORT & FORM 20-F a Target remuneration...

  • Page 71
    ... the same terms as other BT employees. None of the executive directors participates in the Openreach incentive plans. FINANCIAL STATEMENTS ADDITIONAL INFORMATION The remaining 50% of the ISP awards are based on a three-year cumulative free cash ï¬,ow, set at a level considered by the Committee, and...

  • Page 72
    ...towards meeting these targets has been made in 2009/10. Current shareholdings are set out on page 72. Pensions The BT Pension Scheme (BTPS) closed to new entrants on 31 March 2001. None of the executive directors participates in future service accrual in the BTPS. Executive directors who are members...

  • Page 73
    ... BT GROUP PLC ANNUAL REPORT & FORM 20-F 71 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR Patricia Hewitt, as Senior Independent Director, chairman of the Remuneration Committee and chairman of the Pension Scheme Performance Review Group, receives total...

  • Page 74
    ... price movements and assuming reinvestment of dividends. BT's total shareholder return (TSR) performance over the five financial years to 31 March 2010 200 BT FTSE 100 150 100 50 0 2005 2006 31 March 2005 = 100 2007 2008 2009 2010 Source: Datastream 72 BT GROUP PLC ANNUAL REPORT & FORM...

  • Page 75
    ...917 541 BT GROUP PLC ANNUAL REPORT & FORM 20-F 73 ADDITIONAL INFORMATION FINANCIAL STATEMENTS a Pension allowance paid in cash for the 2009/10 financial year - see 'Pensions' below. b Deferred annual bonuses payable in shares in three years' time, subject to continued employment. c Other bene...

  • Page 76
    ... pension schemes, but the company has agreed to pay an annual amount equal to 30% of his salary towards pension provision. The company paid £245,000 into his personal pension plan, plus a cash payment of £10,000 representing the balance of the pension allowance for the 2009/10 financial year. BT...

  • Page 77
    ... on share options as at 31 March 2010. Hanif Lalani had no unrealised gains on share options as at 31 March 2010. He left the company on 31 March 2010. BT GROUP PLC ANNUAL REPORT & FORM 20-F 75 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS All of the above options were...

  • Page 78
    ... March 2010. BT's TSR position was at 14th position against the European Telecom Sector of 15 companies. As a result all the shares lapsed on that date. c The performance period for the ISP 2008 ends on 31 March 2011. d The performance period for the ISP 2009 ends on 31 March 2012. 50% of each award...

  • Page 79
    ...During the year no awards of shares were granted under the ESIP. By order of the Board Rt Hon Patricia Hewitt Chair of Remuneration Committee 12 May 2010 BT GROUP PLC ANNUAL REPORT & FORM 20-F 77 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 80
    ... it operates, technology and corporate responsibility matters and other changes affecting BT and the communications industry as a whole, by written briefings and meetings with senior BT executives. The Board has an annual strategy meeting, with regular reviews during the year. Directors are also...

  • Page 81
    ...political party by any company in the BT group. OVERVIEW ADDITIONAL INFORMATION FINANCIAL STATEMENTS CORPORATE GOVERNANCE REVIEW OF THE YEAR Pension funds BT's two main UK pension arrangements - the BTPS and the BT Retirement Saving Scheme (BTRSS) - are not controlled by the Board but by a separate...

  • Page 82
    ... part of BT's annual strategic planning cycle. We have a detailed risk management process, culminating in a Board review, which identifies the key risks facing the group and each business unit. This information is reviewed by senior management as part of the strategic review. Our current key risks...

  • Page 83
    ...by others within the group. The Chief Executive and Group Finance Director have also provided the certifications required by the Sarbanes-Oxley Act. BT GROUP PLC ANNUAL REPORT & FORM 20-F 81 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR We comply with...

  • Page 84
    ...AGM. Shareholders will also again be asked to vote separately on the Report on directors' remuneration. It is part of our policy to involve shareholders fully in the affairs of the company and to give them the opportunity at the AGM to SECRETARY 12 May 2010 82 BT GROUP PLC ANNUAL REPORT & FORM 20...

  • Page 85
    ...-audit services 137 Financial instruments and risk management 145 REPORT OF THE INDEPENDENT AUDITORS - PARENT COMPANY FINANCIAL STATEMENTS 146 FINANCIAL STATEMENTS OF BT GROUP PLC 149 SUBSIDIARY UNDERTAKINGS AND ASSOCIATE 150 QUARTERLY ANALYSIS OF REVENUE AND PROFIT 151 SELECTED FINANCIAL DATA 153...

  • Page 86
    ... of the group; and the Report of the directors on pages 57 to 82 includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties that it faces. 84 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 87
    ...the parent company financial statements of BT Group plc for the year ended 31 March 2010 and on the information in the Report on directors' remuneration that is described as having been audited. BT GROUP PLC ANNUAL REPORT & FORM 20-F 85 ADDITIONAL INFORMATION FINANCIAL STATEMENTS Philip Rivett...

  • Page 88
    ... - CONSOLIDATED FINANCIAL STATEMENTS United States opinion Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of BT Group plc (the 'company') In our opinion, the accompanying Group income statements, Group statements of comprehensive income, Group...

  • Page 89
    ... the group's share of the results of operations after tax of the associate or joint venture. REPORT OF THE DIRECTORS ADDITIONAL INFORMATION FINANCIAL STATEMENTS (iii) Revenue Revenue represents the fair value of the consideration received or receivable for communication services and equipment sales...

  • Page 90
    ... cable recovery, income generated by our ï¬,eet operations, income from government grants, profits and losses on the disposal of business operations and property, plant and equipment and income generated from the exploitation of our intellectual property. 88 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 91
    ... for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period. BT GROUP PLC ANNUAL REPORT & FORM 20-F 89 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 92
    ... to the results of these Trustee valuations. In any intervening years, the actuaries review the continuing appropriateness of the contribution rates. The group also operates defined contribution pension schemes and the income statement is charged with the contributions payable. Assets held under...

  • Page 93
    ... or less. BT GROUP PLC ANNUAL REPORT & FORM 20-F 91 (xviii) Taxation Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company's subsidiaries, associates and joint ventures operate and generate taxable...

  • Page 94
    ..., cumulative amortisation. 92 BT GROUP PLC ANNUAL REPORT & FORM 20-F Derivative financial instruments The group uses derivative financial instruments mainly to reduce exposure to foreign exchange risks and interest rate movements. The group does not hold or issue derivative financial instruments...

  • Page 95
    ... forecast, contract assets may have to be written down to the extent they are no longer considered ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR The status of commercial relations with customers and the implication for future revenue and cost projections...

  • Page 96
    ... all remaining future charges are immediately recognised in the income statement with the credit recognised directly in equity. Prior to the adoption of the amendment to IFRS 2, the monthly savings requirement under the group's all employee sharesave plans was classified as a vesting condition and...

  • Page 97
    ... payments to acquire a business to be recorded at fair value at the acquisition date, with future contingent consideration subsequently re-measured at fair value through the income statement. IFRS 3 (Revised) is applied BT GROUP PLC ANNUAL REPORT & FORM 20-F 95 ADDITIONAL INFORMATION FINANCIAL...

  • Page 98
    ... 12.9p Year ended 31 March 2009 Revenue Other operating income Operating costs Operating profit Finance expense Finance income Net finance expense Share of post tax profit of associates and joint ventures Profit (loss) before taxation Taxation Profit (loss) for the year Attributable to: Equity...

  • Page 99
    ... (3,911) (4,102) 2008a £m 1,738 2,621 213 - 446 (294) 11 (832) 2,165 3,903 (2,633) 1 (2,632) (4,113) 11 (4,102) 3,899 4 3,903 a Restated. See page 94. BT GROUP PLC ANNUAL REPORT & FORM 20-F 97 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 100
    ... CONSOLIDATED FINANCIAL STATEMENTS GROUP STATEMENT OF CHANGES IN EQUITY Shareholders' equity (deficit) Share capitala £m At 1 April 2007 Change in accounting policy for adoption of the amendment to IFRS 2 (see page 94) Total comprehensive incomed Dividends to shareholders Share-based payments Tax...

  • Page 101
    ...cash charges. c Primarily consists of investment in and redemption of amounts held in liquidity funds. d Includes pension deficit payment of £525m (2009: £nil, 2008: £320m). BT GROUP PLC ANNUAL REPORT & FORM 20-F 99 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW...

  • Page 102
    ... 98. The consolidated financial statements on pages 87 to 144 and 149 were approved by the Board of Directors on 12 May 2010 and were signed on its behalf by Sir Michael Rake Chairman Ian Livingston Chief Executive Tony Chanmugam Group Finance Director 100 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 103
    ... for the impact of customer account moves between BT Global Services and BT Retail and other internal trading model changes effective from 1 April 2009 and has had no impact on the total results of the group. ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR

  • Page 104
    ... of associates and joint ventures Loss on disposal of associate Net finance expense Profit before tax Year ended 31 March 2009a Total segment revenue Internal revenue Adjusted revenue from external customersb Contract and financial review charges Revenue from external customers Adjusted EBITDAb...

  • Page 105
    ... Year ended 31 March Managed solutions Broadband and convergence Calls and lines Transit, conveyance, interconnect services, WLR, global carrier and other wholesale products Other products and services Total adjusted revenue Specific items Contract and financial review charges Total revenue 2010...

  • Page 106
    ... 5) Other operating income 2010 £m 75 74 229 378 2 380 2009 £m 52 72 228 352 (13) 339 2008 £m 50 74 235 359 (10) 349 3. Operating costs Year ended 31 March Costs by nature Staff costs: Wages and salaries Social security costs Pension costs Share-based payment expense Total staff costs Own work...

  • Page 107
    ... include both full and part-time employees. b Restated for the impact of customer account moves and other internal trading model changes. See page 101. BT GROUP PLC ANNUAL REPORT & FORM 20-F 105 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 108
    ...a £9m profit on the sale of an associate was recognised. m In 2008 a tax credit of £154m was recognised for the re-measurement of deferred tax balances as a result of the change in the UK statutory corporation tax rate from 30% to 28% effective in 2009. 106 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 109
    ...BT GROUP PLC ANNUAL REPORT & FORM 20-F 107 ADDITIONAL INFORMATION The Board recommends that a final dividend in respect of the year ended 31 March 2010 of 4.6p per share will be paid to shareholders on 6 September 2010, taking the full year proposed dividend in respect of the 2010 financial year...

  • Page 110
    ... non UK profits Higher (lower) taxes on gain on disposal of non current investments and group undertakings Other deferred tax assets not recognised Associates and joint ventures Adjustments in respect of prior periods Tax credit settlement of open tax years Re-measurements of deferred tax balances...

  • Page 111
    ... 74 7,988 1,028 13.3p 12.9p 2009a millions of shares 7,724 5 42 7,771 (193) (2.5)p (2.5)p 2008a millions of shares 8,066 106 51 8,223 1,737 21.5p 21.1p BT GROUP PLC ANNUAL REPORT & FORM 20-F 109 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 112
    ... of the adjustments, is as follows: 2010 Year ended 31 March Basic earnings (loss) per share/profit (loss)b Net specific items charge after tax Net pension interest expense (income) after tax BT Global Services contract and financial review charges after tax Adjusted basic earnings (loss)per...

  • Page 113
    ... or issued on acquisitions Currency movements Other non cash movements At 31 March 2010 £m 10,361 (1,079) - - 1 9,283 2009 £m 9,460 921 (2) (36) 18 10,361 BT GROUP PLC ANNUAL REPORT & FORM 20-F 111 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR 100...

  • Page 114
    ... 2009, comprising BT Global Services restructuring charges of £81m, BT Global Services contract and financial review charges of £241m (see note 3) and £13m in relation to the review of the 21CN programme and associated voice strategy. All impairment losses were recognised in the income statement...

  • Page 115
    ...the 10.8% assumption applied to a revised assumption of 12.2% or more a reduction in the projected operating cash ï¬,ows across five years by 15% or more. BT GROUP PLC ANNUAL REPORT & FORM 20-F 113 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 116
    ... were recognised in 2009, comprising BT Global Services restructuring charges of £129m and £18m in relation to the review of the 21CN programme and associated voice strategy. All impairment losses were recognised in the income statement. The recoverable amount of the impaired assets was equal to...

  • Page 117
    ...group to manage liquidity. Loans and receivables Loans and receivables mainly consist of term deposits denominated in Sterling with a fixed interest rate. BT GROUP PLC ANNUAL REPORT & FORM 20-F 115 ADDITIONAL INFORMATION FINANCIAL STATEMENTS 163 REPORT OF THE DIRECTORS 55 REVIEW OF THE YEAR...

  • Page 118
    FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. Associates and joint ventures Associates £m Non current assets Current assets Current liabilities Non current liabilities Share of net assets at 31 March Revenue Expenses Taxation Share of post tax results before specific ...

  • Page 119
    ...£230m (2009: £30m). BT GROUP PLC ANNUAL REPORT & FORM 20-F 117 ADDITIONAL INFORMATION FINANCIAL STATEMENTS Not past due £m Between 0 and 3 months £m Between 3 and 6 months £m Between 6 and 12 months £m Over 12 months £m Total £m REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 120
    ... At 31 March BT Global Services BT Retail BT Wholesale Openreach Other Total accrued income Given the broad and varied nature of the group's customer base, the analysis of trade receivables not past due and accrued income by line of business is considered the most appropriate disclosure of credit...

  • Page 121
    ... to exclude interest recognised in the carrying amount. BT GROUP PLC ANNUAL REPORT & FORM 20-F 119 ADDITIONAL INFORMATION FINANCIAL STATEMENTS The interest rates payable on loans and borrowings disclosed above reï¬,ect the coupons on underlying issued loans and borrowings and not the interest...

  • Page 122
    ... - fair value hedge Other cross currency swaps Forward foreign exchange contracts - cash ï¬,ow hedge Other forward foreign exchange contracts Credit default swaps Analysed as: Current Non current Assets £m - - 106 1,571 - - 23 - - 1,700 624 1,076 1,700 a Restated. See page 94. 2010 Liabilities...

  • Page 123
    ... 7,215 2009 £m At 31 March Non current Other payables Deferred income 734 70 804 718 76 794 BT GROUP PLC ANNUAL REPORT & FORM 20-F 121 ADDITIONAL INFORMATION FINANCIAL STATEMENTS Non current payables mainly relate to operating lease liabilities and deferred gains on a prior period sale and...

  • Page 124
    ... and £10m relating to the BT Global Services restructuring programme. 22. Deferred taxation Excess capital allowances £m At 1 April 2008 (Credit) expense recognised in the income statement (Credit) expense recognised in equity At 31 March 2009 Deferred tax asset Deferred tax liability At 1 April...

  • Page 125
    ... (2009: 250,000,000) with a nominal value of £nil (2009: £12m). BT GROUP PLC ANNUAL REPORT & FORM 20-F 123 ADDITIONAL INFORMATION FINANCIAL STATEMENTS Number of shares Share capitala Share premiumb £m £m REPORT OF THE DIRECTORS REVIEW OF THE YEAR 284 1,719 2010-2029 2010-2025 OVERVIEW

  • Page 126
    ... personnel comprise executive and non-executive directors and members of the Operating Committee. Key management personnel compensation is shown in the table below: Year ended 31 March Salaries and short-term benefits Termination benefits Post employment benefits Share-based payments 2010 £m 10...

  • Page 127
    ... in the year ending 31 March: 2010 2011 2012 2013 2014 2015 Thereafter Total future minimum operating lease payments - 494 460 431 400 375 5,527 7,687 484 455 430 403 377 356 5,499 8,004 BT GROUP PLC ANNUAL REPORT & FORM 20-F 125 ADDITIONAL INFORMATION FINANCIAL STATEMENTS Operating lease...

  • Page 128
    .... No adjustments have been made to the balances previously reported. BT Retail During 2009 the group acquired 100% of the issued share capital of Wire One Holdings Inc and Ufindus Ltd for a total consideration of £98m. The combined net assets acquired in these transactions and the goodwill arising...

  • Page 129
    ... has been assessed by reference to yields on longterm fixed and index-linked Government bonds and has regard to Bank of England published inï¬,ationary expectations. Salary increases are assumed to be in line with inï¬,ation. BT GROUP PLC ANNUAL REPORT & FORM 20-F 127 REVIEW OF THE YEAR OVERVIEW

  • Page 130
    ... £54m (2009: £52m) related to unfunded schemes. Amounts recognised in the income statement in respect of the group's pension schemes were as follows: Year ended 31 March Current service cost (including defined contribution schemes) Total operating charge Expected return on pension scheme assets...

  • Page 131
    ... Closing fair value of plan assets 2010 £m 29,353 1,932 5,157 391 525 15 (1,948) 4 35,429 2009 £m 37,448 2,621 (9,451) 441 - 18 (1,741) 17 29,353 BT GROUP PLC ANNUAL REPORT & FORM 20-F 129 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR 2,000 OVERVIEW

  • Page 132
    ... of the risk premium above yields on government bonds, consensus economic forecasts of future returns and historical returns. Alternative asset classes include commodities, hedge funds, private equity, infrastructure and credit opportunities. The long-term expected rate of return on investments does...

  • Page 133
    ...increase in pensions Nominal rates (per annum) 2008 2005 valuation valuation % % 3.65 2.15 - - - 3.06 1.79 - 0.75 - 6.76 5.21 3.00 3.00 3.00 5.84 4.54 2.70 3.47 2.70 BT GROUP PLC ANNUAL REPORT & FORM 20-F 131 ADDITIONAL INFORMATION At 31 December 2008 the assets of the BTPS had a market value...

  • Page 134
    ... in the United States. It also has several share plans for executives. All share-based payment plans are equity settled and details of these plans and an analysis of the total charge by type of award is set out below. Year ended 31 March Employee Sharesave Plan Allshare International Employee Stock...

  • Page 135
    ... or dividend equivalents earned on shares during the conditional periods are reinvested in company shares for the potential benefit of the participants. BT GROUP PLC ANNUAL REPORT & FORM 20-F 133 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 136
    ...price per share Number of outstanding options millions Number of exercisable options millions Normal dates of vesting and exercise (based on calendar years) BT Group Employee Sharesave Plans 2010 2011 2012 2013 2014 Total BT Group Legacy Option Plan 2001-2011 Total BT Group Global Share Option Plan...

  • Page 137
    ... UK gilt curve in effect at the time of the grant, for the expected life of the option or award. The fair values for the RSP and DBP were determined using the market price of the shares at the date of grant. The weighted average share price for RSP awards granted in 2010 was 104p (2009: 151p, 2008...

  • Page 138
    ... by the company's external auditors and the approval processes related to them. Under those policies, work of a consultancy nature will not be offered to the external auditors unless there are clear efficiencies and value-added benefits to the company. 136 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 139
    ...FINANCIAL STATEMENTS ADDITIONAL INFORMATION The objective of the group's capital management policy is to reduce net debt whilst investing in the business, supporting the pension scheme and delivering progressive dividends. In order to meet this objective, the group may issue or repay debt, issue new...

  • Page 140
    ... or the Treasurer who have been delegated such authority by the Board. The policy delegates authority to the Director Treasury, Tax and Risk Management to take positions of up to £100m and for the Group Finance Director to take positions of up to £1bn. 138 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 141
    ...AA- A1/A+ A2/A (3) (26) (89) (102) (220) 4 30 104 122 260 The credit quality of other treasury related financial assets is disclosed in notes 10 and 14. BT GROUP PLC ANNUAL REPORT & FORM 20-F 139 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 142
    ... of customers in each line of business. Liquidity risk management Management policy The group ensures its liquidity is maintained by entering into short, medium and long-term financial instruments to support operational and other funding requirements. On at least an annual basis the Board reviews...

  • Page 143
    ...(113) 60 - - 60 - - 60 - - 634 - - BT GROUP PLC ANNUAL REPORT & FORM 20-F 141 ADDITIONAL INFORMATION a The carrying amount excludes £1,859m (2009: £1,861m) of current and £804m (2009: £794m) of non current trade and other payables which relate to non financial liabilities. b The carrying...

  • Page 144
    ... in their fair value movements. In 2009 the group entered into credit default swap contracts to economically hedge part of its US Dollar denominated derivative financial assets, which had a notional principal of $90m. These derivatives matured in 2010. 142 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 145
    ... 401 298 699 699 BT GROUP PLC ANNUAL REPORT & FORM 20-F 143 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS The table below shows certain financial assets and financial liabilities that have been measured at fair value, analysed by the level of valuation method. The three...

  • Page 146
    ... using Level 3 valuation methods are presented below: Other investments £m At 1 April 2009 Additions Disposals At 31 March 2010 11 3 (2) 12 There were no losses recognised in the income statement in respect of Level 3 assets held at 31 March 2010. 144 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 147
    ... May 2010 BT GROUP PLC ANNUAL REPORT & FORM 20-F 145 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR certain disclosures of directors' remuneration specified by law are not made; or OVERVIEW REPORT OF THE INDEPENDENT AUDITORS - PARENT COMPANY FINANCIAL...

  • Page 148
    ... carrying value of investments in subsidiary undertakings in the year ended 31 March 2009. A corresponding increase to equity shareholders' funds representing the additional capital contribution has also been recognised. Other information (i) Dividends The Board recommends that a final dividend in...

  • Page 149
    ... Ian Livingston Chief Executive Tony Chanmugam Group Finance Director BT GROUP PLC ANNUAL REPORT & FORM 20-F 147 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS a Throughout 2010, the company held a 100% investment in BT Group Investments Limited, a company registered in...

  • Page 150
    FINANCIAL STATEMENTS FINANCIAL STATEMENTS OF BT GROUP PLC BT Group plc company reconciliation of movement in equity shareholders' funds Share Share premium capitala account £m £m At 1 April 2008 Profit for the financial year Dividends paid Change in accounting policy for adoption of the ...

  • Page 151
    ...and products provider Investment holding company Communications related services and products provider Communications related services and products provider Technology equipment retailer Global managed network service provider Global managed network service provider Broadband service provider Global...

  • Page 152
    ... (19,116) 2,123 (1,158) 54 (12) 1,007 22 1,029 13.3p 12.9p 1,456 17.3p a Adjusted results refer to the amounts before BT Global Services contract and financial review charges in 2009, specific items and net interest on pensions. b Restated. See page 94. 150 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 153
    ... provided in addition to the disclosure requirements defined under IFRS. The rationale for using non-GAAP measures is explained on pages 54 to 56. BT GROUP PLC ANNUAL REPORT & FORM 20-F 151 ADDITIONAL INFORMATION FINANCIAL STATEMENTS 2,040 REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 154
    ... dividends. Summary group cash ï¬,ow statement Year ended 31 March Net cash inï¬,ow from operating activities Net cash (outï¬,ow) inï¬,ow from investing activities Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash...

  • Page 155
    ... BT Global Services contract and financial review charges in 2009, and net interest on pensions. c The ratio is based on profit before taxation and net finance expense to average capital employed. Capital employed is represented by total assets less current liabilities (excluding corporation tax...

  • Page 156
    ... which BT is the call provider (excluding Northern Ireland but including Plusnet in 2010). Rolling 12 month consumer revenue, less mobile POLOs, divided by average number of primary lines. The numbers disclosed include both full-time and part-time employees. 154 BT GROUP PLC ANNUAL REPORT & FORM 20...

  • Page 157
    ADDITIONAL INFORMATION 156 INFORMATION FOR SHAREHOLDERS 168 CROSS REFERENCE TO FORM 20-F 171 GLOSSARY OF TERMS 174 INDEX BT GROUP PLC ANNUAL REPORT & FORM 20-F 155

  • Page 158
    ...discussed in more detail elsewhere in this annual report including, without limitation, in Our risks on pages 36 to 37. BT undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. 156 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 159
    ...shares. BT GROUP PLC ANNUAL REPORT & FORM 20-F 157 ADDITIONAL INFORMATION FINANCIAL STATEMENTS The prices are the highest and lowest closing middle market prices for BT ordinary shares, as derived from the Daily Official List of the London Stock Exchange and the highest and lowest closing sales...

  • Page 160
    ... September 2010, subject to approval at the AGM. The US Dollar amount of the final dividend of 46.0 pence per ADS to be paid to holders of ADSs will be based on the exchange rate in effect on 6 September 2010, the date of payment to holders of ordinary shares. 158 BT GROUP PLC ANNUAL REPORT & FORM...

  • Page 161
    ...Dividend investment plan REVIEW OF THE YEAR ADDITIONAL INFORMATION FINANCIAL STATEMENTS BT FTSE 100 2006 2007 FTSEurofirst 300 Telco 2008 2009 2010 2002 2003 2004 2005 Under the Dividend investment plan, cash from participants' dividends is used to buy further BT shares in the market. Shareholders...

  • Page 162
    ... and full year 2011 Annual Report published a Dates may be subject to change. Datea 29 July 2010 11 November 2010 February 2011 May 2011 May 2011 Individual savings accounts (ISAs) Information about investing in BT shares through an ISA may be obtained from Halifax Share Dealing Limited, 1 Lovell...

  • Page 163
    .... Any dividend which has not been claimed for ten years after it was declared or became due for payment will be forfeited and will belong to the company. BT GROUP PLC ANNUAL REPORT & FORM 20-F 161 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 164
    ...any other office or executive position in the company or any of its subsidiary undertakings, or to relations or dependants of, or people connected to, those directors or former directors, if the shareholders approve this by passing an ordinary resolution. 162 BT GROUP PLC ANNUAL REPORT & FORM 20-F

  • Page 165
    ... of BT's ordinary shares in the future. There are no provisions in the Articles or of corporate legislation in England and Wales that would delay, defer or prevent a change of control. BT GROUP PLC ANNUAL REPORT & FORM 20-F 163 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS...

  • Page 166
    ... dollar basis like a tax credit. The deduction, however, is not subject to the limitations applicable to foreign credits. There will be no right to any UK tax credit or to any payment from HMRC in respect of any tax credit on dividends paid on ordinary shares or ADSs. 164 BT GROUP PLC ANNUAL REPORT...

  • Page 167
    ... timely filing the appropriate claim for refund with the IRS and furnishing any required information. BT GROUP PLC ANNUAL REPORT & FORM 20-F 165 ADDITIONAL INFORMATION FINANCIAL STATEMENTS Passive foreign investment company status REPORT OF THE DIRECTORS REVIEW OF THE YEAR Taxation of capital...

  • Page 168
    ... of Meeting Annual Report & Form 20-F Changing World: Sustained Values EAB Annual Report Quarterly results releases Current Cost Financial Statements Statement of Business Practice (The Way We Work) Publication date May May May May July, November, February and May September January 2009 For printed...

  • Page 169
    ...+1 800 428 4237 (Global Invest Direct) e-mail: [email protected] Website: www.adr.com REVIEW OF THE YEAR BT GROUP PLC ANNUAL REPORT & FORM 20-F 167 Institutional investors and analysts Institutional investors and equity research analysts may contact BT Investor Relations on: Tel: 020 7356...

  • Page 170
    ... for shareholders Background Other information Acquisitions and disposals Financial review Liquidity Capital expenditure Acquisitions and disposals Our business and strategy Our markets and customers Our resources Our lines of business Our corporate responsibility Consolidated financial statements...

  • Page 171
    ...of experts and counsel Financial information Consolidated statements and other financial information 39 47 158 161 52 54 8B Significant changes BT GROUP PLC ANNUAL REPORT & FORM 20-F 169 ADDITIONAL INFORMATION 125 FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 172
    ... accountants' fees and services 136 62 16E 16F 16G 17 18 Purchases of equity securities by the issuer and affiliated purchasers Change in registrant's reporting accountant Corporate Governance Financial statements Financial statements 61 85 86 87 150 170 BT GROUP PLC ANNUAL REPORT & FORM...

  • Page 173
    ... on society OVERVIEW ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR A ADS: American Depositary Share ADSL: Asynchronous Digital Subscriber Line technology converts a standard copper line into a high-speed internet connection, which allows customers to talk...

  • Page 174
    ...Accounting Standards Board - the board which sets International Financial Reporting Standards ICT: information and communication technology IFRS: International Financial Reporting Standards IP Exchange: BT Wholesale's global IP interoperability platform that allows communications providers to manage...

  • Page 175
    ... (cabling) connection WLR: wholesale line rental - enables communications providers to offer their own-branded telephony services over the BT network BT GROUP PLC ANNUAL REPORT & FORM 20-F 173 ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 176
    ...Employee plans 132-135 Employees 105 Equity, Group statement of changes in 98 Exchange rates 88, 160 B Background 57 Balance sheet 48-50, 100, 147, 152 Board, the 58-60 Board of Directors and Operating Committee 58 BT Global Services 12, 22-25, 101 BT Innovate & Design 33, 101 BT Operate 33, 101 BT...

  • Page 177
    ..., 121 Trade and other receivables 49, 91, 117-118 U ADDITIONAL INFORMATION Unclaimed Assets Register 160 US Sarbanes-Oxley Act of 2002 80 BT GROUP PLC ANNUAL REPORT & FORM 20-F BT GROUP PLC ANNUAL REPORT & FORM 20-F 175 FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW

  • Page 178

  • Page 179
    ...44÷L>7FF7>33

  • Page 180
    ... Registered office: 81 Newgate Street, London EC1A 7AJ Registered in England and Wales No. 4190816 Produced by BT Group Printed in England by Pindar Plc Printed on Revive 50:50 Silk, which is produced using 50% recovered waste fibre and 50% virgin wood fibre. All pulps used are elemental chlorine...