BT 2015 Annual Report Download - page 151

149
Overview
The Strategic Report
Purpose and strategy Delivering our strategy Group performance Governance Financial statements
Additional information
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reparation of the financial stateents
hese consolidated financial stateents have been prepared in
accordance with the Companies Act 2006, Article 4 of the IAS
eulation and nternational ccountin tandards  and
nternational inancial eportin tandards  and related
interpretations, as adopted by the European Union. The consolidated
financial stateents are also in copliance with  as issued b the
nternational ccountin tandards oard the . he consolidated
financial stateents are prepared on a oin concern basis.
he consolidated financial stateents are prepared on the historical
cost basis ecept for certain financial and euit instruents that
have been easured at fair value. he consolidated financial stateents
are presented in Sterling, the functional currency of BT Group plc,
the parent company.
Reorganisation
From 1 April 2014 BT Conferencing has moved from BT Business
into BT Global Services. This siplifies the way we provide integrated
collaboration solutions to our global customers. BT Security has moved
from our central group functions within Other into BT Global Services.
Security is of increasing importance to our customers, and we believe
that this move helps us better compete in the market and take full
advantage of global opportunities.
In order to present historical information on a consistent basis, we have
revised comparatives for the years ended 31 March 2014 and 31 March
2013 in BT Global Services, BT Business and Other. There is no impact
on the total roup results. he net assets includin oodwill have
been reallocated to the appropriate cash eneratin units to reect this
reoranisation see note 1. he overall ipact on the lines of business
is disclosed in note 4.
New and amended accounting standards adopted with no
sinificant ipact on the roup
The following new and amended accounting standards adopted during
the ear did not have an sinificant ipact on the roup.
–   inancial nstruents resentation settin inancial
Assets and Financial Liabilities – Amendments to IAS 32’
– IAS 39 ‘Novation of Derivatives and Continuation of Hedge
Accounting’
–   ecoverable ount isclosures for on-financial ssets 
Amendments to IAS 36’.
New and amended accounting standards that have been
issued but are not et eective
he followin standards have been issued and are eective for
accounting periods ending on or after 1 January 2015 and are expected
to have an ipact on the roup financial stateents.
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In May 2014, IFRS 15 ‘Revenue from Contracts with Customers’ was
issued and is epected to be eective for periods beinnin on or after
1anuar 01 subect to consultation on potential deferral b one
year and endorsement by the EU.
IFRS 15 sets out the requirements for recognising revenue from contracts
with customers. The standard requires entities to apportion revenue
earned from contracts to individual promises, or performance obligations,
on a relative standalone sellin basis based on a five-step odel.
The group is in the process of quantifying the impact of this standard.
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 9 was published in ul 01 and will be eective for periods
beginning on or after 1 January 2018 subject to endorsement by the
U. t is applicable to financial assets and financial liabilities and covers
the classification easureent ipairent and de-reconition of
financial assets and financial liabilities toether with a new hede
accounting model.
The group is in the process of quantifying the impact of the
new standard.
There are no other standards or interpretations issued but not yet
eective we epect to have a aterial ipact on the roup.
resentation of specific ites
The group’s income statement and segmental analysis separately
identif tradin results before specific ites. he directors believe
that presentation of the group’s results in this way is relevant to an
understandin of the roups financial perforance as specific ites are
identified b virtue of their sie nature or incidence. his presentation
is consistent with the wa that financial perforance is easured b
management and reported to the Board and the
Operating Committee
and assists in providing a meaningful analysis of the trading results of
the roup. n deterinin whether an event or transaction is specific
management considers quantitative as well as qualitative factors such
as the frequency or predictability of occurrence.
Furthermore, the group considers a columnar presentation to be
appropriate, as it improves the clarity of the presentation and is
consistent with the wa that financial perforance is easured b
management and reported to the Board and the
Operating Committee .
pecific ites a not be coparable to siilarl titled easures used
by other companies. Examples of charges or credits meeting the above
definition and which have been presented as specific ites in the current
andor prior ears include disposals of businesses and investents
regulatory settlements, historic insurance or litigation claims, business
restructuring programmes, asset impairment charges, property
rationalisation programmes, net interest on pensions and the settlement
of multiple tax years. In the event that other items meet the criteria,
which are applied consistently from year to year, they are also treated
as specific ites.
pecific ites for the current and prior ears are disclosed in note.
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he preparation of financial stateents in conforit with  reuires
the use of accounting estimates and assumptions. It also requires
management to exercise its judgement in the process of applying the
group’s accounting policies. We continually evaluate our estimates,
assumptions and judgements based on available information and
eperience. s the use of estiates is inherent in financial reportin
actual results could dier fro these estiates. anaeent has
discussed its critical accounting estimates and associated disclosures
with the
Audit & Risk Committee . The areas involving a higher degree
ofudeent or copleit are described below.
Long-term customer contracts
on-ter custoer contracts can etend over a nuber of financial
ears. urin the contractual period reconition of costs and profits
a be ipacted b estiates of the ultiate profitabilit of each
contract. If, at any time, these estimates indicate that any contract will
be unprofitable the entire estiated loss for the contract is reconised
immediately. If these estimates indicate that any contract will be less
profitable than previousl forecast contract assets a have to be
written down to the extent they are no longer considered to be fully
recoverable. he roup perfors onoin profitabilit reviews of its
contracts in order to determine whether the latest estimates
are appropriate.
Key factors reviewed include:
– ransaction volues or other inputs aectin future revenues which
can vary depending on customer requirements, plans, market position
and other factors such as general economic conditions.
– Our ability to achieve key contract milestones connected with the
transition, development, transformation and deployment phases for
customer contracts.
– The status of commercial relations with customers and the implication
for future revenue and cost projections.
– ur estiates of future sta and third-part costs and the deree to
which cost savins and eciencies are deliverable.
The carrying value of assets comprising the costs of the initial set up,
transition or transformation phase of long-term networked IT services
contracts is disclosed in note 16.