BT 2011 Annual Report Download - page 58

55BT GROUP PLC ANNUAL REPORT & FORM 20-F 2011
FINANCIAL REVIEW
FINANCIAL REVIEW FINANCIAL POSITION AND RESOURCES
Property, plant and equipment and software
Property, plant and equipment and internally developed and
purchased software decreased by £362m to £16,446m at 31 March
2011, principally due to capital expenditure of £2,590m, (further
details of which are given below) which was more than offset by
£2,979m of depreciation and amortisation.
Capital expenditure
Capital expenditure, on an accruals basis, totalled £2,590m in 2011
(2010: £2,533m; 2009: £3,088m), in line with our expectations of
around £2.6bn.
The capital expenditure by major area over the last three years is
shown below.
In 2011 platforms and networks expenditure was £1,145m (2010:
£1,135m). A significant element of the platform expenditure was
on our super-fast fibre-based broadband services network. To date,
we have spent £0.6bn of our £2.5bn potential investment in our
fibre roll-out programme. This expenditure is being managed
within our capital expenditure plans. Access expenditure was
£591m (2010: £566m) for connecting our customers to the
network. Customer related expenditure was £599m (2010:
£560m), principally relating to major customer contracts in BT
Wholesale and BT Global Services. This also included product
development, testing and fault reduction investments across the
group.
Of the capital expenditure, £227m (2010: £280m) arose outside of
the UK. Contracts placed for ongoing capital expenditure totalled
£467m at 31 March 2011 (2010: £383m).
Capital expenditure for the last five financial years is included in the
Financial statistics section on page 160.
Deferred tax
The deferred tax asset of £461m (2010: £2,196m) relates to the
group’s retirement benefit obligations, as detailed in note 23 to the
consolidated financial statements. The deferred tax liability decreased
by £244m to £1,212m at 31 March 2011, mainly reflecting the 2%
reduction in the rate of UK corporation tax, effective 1 April 2011.
Movements in deferred tax assets and liabilities are disclosed in
note 24 to the consolidated financial statements.
Cash and cash equivalents
For further details on cash and cash equivalents refer to Liquidity
and Funding and capital management on pages 50 and 52
respectively.
Trade and other receivables
Current trade and other receivables decreased by £364m to
£3,332m at 31 March 2011 principally reflecting improvements to
working capital in BT Global Services.
Capital expenditure
£m
2009 2010 2011
Regulatory & compliance
Support functions
Access
Customer related
Platforms & networks
0
1,000
500
2,000
1,500
3,000
2,500
3,500
Trade and other payables
Trade and other payables decreased by £417m to £6,114m at
31 March 2011 principally reflecting the impact of the reduction in
our cost base in 2011.
Loans and other borrowings
For further details of movements in our loans and other borrowings,
see Net debt on page 52.
Provisions
Current and non-current provisions increased by £115m to £956m
at 31 March 2011. The movements in provisions are disclosed in
note 25 to the consolidated financial statements.
Retirement benefit obligations
A summary of movements in the IAS 19 accounting deficit is set out
below:
2011 2010
Deficit £bn £bn
At 1 April (7.9) (4.0)
Current service cost (0.3) (0.2)
Interest (0.1) (0.3)
Actuarial gain (loss) 5.2 (4.3)
Contributions 1.3 0.9
At 31 March (1.8) (7.9)
Deferred tax asset 0.4 2.2
Net of deferred tax at 31 March (1.4) (5.7)
The market value of the BTPS assets have increased by £1.7bn since
31 March 2010 to £37.0bn at 31 March 2011 principally reflecting
the continuation of strong asset performance with a 7% return and
deficiency contributions of £1.0bn offsetting benefits paid of
£2.0bn. At 31 March 2011 the value of the BTPS liabilities have
decreased by £4.3bn to £38.7bn principally as a result of the
£3.5bn impact of the UK Government decision that the Consumer
Prices Index (CPI), rather than the Retail Prices Index (RPI), will be
used for revaluation and indexation of occupational pension rights.
The present value of the liabilities continues to reflect the low real
yield on bonds over the last two years. Further details and detailed
pensions accounting disclosures are provided in note 23 to the
consolidated financial statements.
Equity
A summary of the movements in equity is set out below:
2011 2010
£m £m
(Deficit) equity at 1 April (2,626) 169
Profit for the year 1,504 1,029
Other comprehensive income (loss) 3,449 (3,661)
Dividends to shareholders (543) (263)
Share-based payment 68 81
Tax on share-based payment 91 19
Net issue of treasury shares 8 4
Movements in non-controlling interests – (4)
Equity (deficit) at 31 March 1,951 (2,626)
The increase in equity in 2011 is principally due to the profit for the
year and the recognition of actuarial gains on retirement benefit
obligations.
BT Group plc, the parent company, had a profit and loss reserve, net of
the treasury reserve, of £9,198m at 31 March 2011. The financial
statements of BT Group plc are prepared in accordance with UK GAAP.
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