SECURITIES AND EXCHANGE COMMISSION
 

Washington, D.C. 20549
 

FORM 6-K
 

Report of Foreign Private Issuer
 

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
 

Date of Announcement: 30 July 2009
 
 

BT Group plc
 

(Translation of registrant's name into English)
 
 

BT Centre
81 Newgate Street
London
EC1A 7AJ
England
 

(Address of principal executive offices)
 
 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
 

Form 20-F..X...       Form 40-F.....
 
 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
 

Yes .....      No ..X..
 
 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
 
 
 
Enclosure: 1. 1st Quarter Results announcement made on 30 July 2009
 

30 July 2009

BT GROUP PLC

RESULTS FOR THE FIRST QUARTER TO 30 JUNE 2009 

 

  First quarter to 30 June

 

2009 

 

2008 1

 

Change

 

£m 

 

£m 

 

Revenue

5,235 

 

5,177 

 

1

EBITDA 

- adjusted2

1,371 

 

1,417 

 

(3) 

- reported

1,285 

 

1,317 

 

(2)

Profit  before tax 

- adjusted2

427 

 

519 

 

(18)

- reported 

272 

 

497 

 

(45)

Earnings per share 

- adjusted2

4.2p  

 

5.1p

 

(18)

- reported

2.8p  

 

4.9p

 

(43)

Free cash flow

(122)

 

(734)

 

n/m  



Key points:

·     

Revenue up 1%, down 3% excluding foreign exchange movements and acquisitions


·     

EBITDA 2 decline of 3% due to BT Global Services


·     

Rest of the group continues to perform well with EBITDA2  growth of 6%


·     

Sequential improvement in BT Global Services with EBITDA 2  almost double the previous quarter


·     

Reduction of £357m in underlying operating costs and capital expenditure


·     

Free cash flow improvement of £612m compared with the prior year, including a tax repayment of £210m 


·     

BT's retail share of DSL and LLU net additions was 46% in the quarter




Ian Livingston, Chief Executive, commenting on the first quarter results, said:

"We have made a solid start to the year against a background of challenging trading conditions. BT Global Services is making progress although there is still much to do. The rest of the group continues to perform well generating EBITDA 2 growth of 6%. 
 

"We are on track to deliver reductions in operating costs and capital expenditure of well over £1bn and to generate group free cash flow3  of over £1bn this year."
 
 

1   Restated for the adoption of IFRS 2  'Share-based Payment - vesting conditions and cancellations'. See Note 1 on page 14 for details.

Before specific items, leaver costs and net interest on pensions.      

3  Before any pension deficit payments, but after the cash costs of the BT Global Services restructuring.  

 

BT Group plc

RESULTS FOR THE FIRST QUARTER TO 30 JUNE 2009

Group results

 

First quarter to 30 June       

 

2009

 

2008 1  

 

Change

 

£m

 

£m

 

Revenue

5,235  

 

5,177 

 

1

EBITDA

         

- adjusted 2

1,371  

 

1,417 

 

(3)

- reported

1,285  

 

1,317 

 

(2)

Operating profit

         

- adjusted 2

633  

 

726 

 

(13)

- reported

547  

 

626 

 

(13)

Profit before tax

         

- adjusted 2

427  

 

519 

 

(18)

- reported

272  

 

497 

 

(45)

Earnings per share

         

- adjusted 2

4.2p

 

5.1p

 

(18)

- reported

2.8p

 

4.9p

 

(43)

Capital expenditure

559  

 

802 

 

 (30)

Free cash flow

(122) 

 

(734)

 

n/m

Net debt

10,517 

 

10,581

 

  (1)



Line of business results 

 

 

 

 

 

Operating  

 

 

Revenue 

Change

EBITDA 2

Change 

profit (loss) 2

Change 

First quarter to 30 June

£m 

%

£m 

£m  

BT Global Services

2,079 

62 

(66)

(124)

n/m 

BT Retail

2,110 

(2)

476 

26 

359 

30 

BT Wholesale

1,142 

(1)

320 

(1)

149 

(3)

Openreach

1,306 

-

503 

302 

(2)

Other

13 

n/m

10 

(77)

(53)

n/m 

Intra-group items

(1,415)

(2)

Total

5,235 

1,371 

(3)

633 

(13)



1   Restated for the adoption of IFRS 2 'Share-based Payment - vesting conditions and cancellations'. See Note 1 on page 14 for details.
2   Before specific items, leaver costs and net interest on pensions.

Notes:

Unless otherwise stated, any reference to earnings before interest, tax, depreciation and amortisation (EBITDA), operating profit, and operating costs is measured before specific items and leaver costs. In addition, adjusted profit before tax and adjusted earnings per share (EPS) is also shown before net interest on pensions (see Note 7). Unless otherwise stated, the change in results is year on year. Reported EBITDA, reported operating profit, reported profit before tax and reported EPS are the equivalent statutory measures. 

Underlying revenue, underlying operating costs, underlying EBITDA and underlying capital expenditure refer to the measure excluding foreign exchange rate movements and acquisitions. Underlying operating costs are also stated before specific items, leaver costs and depreciation and amortisation. 

The commentary focuses on the trading results before specific items and leaver costs. This is consistent with the way that financial performance is measured by management and we believe allows a meaningful analysis to be made of the trading results of the group. Specific items are defined in Note 5. Leaver costs are shown in Note 4(b). In addition, adjusted profit before tax and adjusted EPS is also shown before the net interest on pensions, due to the volatile nature of this item. 

The income statement, cash flow statement and balance sheet are provided on pages 10 to 13. A reconciliation of EBITDA (as defined above) to group operating profit is provided on page 20. A reconciliation of adjusted profit before tax (as defined above) to reported profit before tax is provided on page 20. A reconciliation of reported EPS to adjusted EPS is provided on page 17. A definition and reconciliation of free cash flow and net debt are provided on pages 18 to 19. 

The line of business commentaries also discuss operating cash flow before specific items and leaver costs. Operating cash flow is defined as EBITDA less direct and allocated capital expenditure (net of capital accrual movements), working capital movements and movements in provisions and other non-cash items. 
 

Enquiries:

Press office:

 

Peter Morgan/Ross Cook

Tel: 020 7356 5369

   

Investor relations:

 

Catherine Nash

Tel: 020 7356 4909



A conference call for analysts and investors will be held at 9.00am today and a simultaneous webcast will be available at  www.bt.com/results .

The second quarter and half year results for 2009/10 are expected to be announced on 12 November 2009.

About BT

BT is one of the world's leading providers of communications solutions and services operating in 170 countries. Its principal activities include the provision of networked IT services globally; local, national and international telecommunications services to our customers for use at home, at work and on the move; broadband and internet products and services and converged fixed/mobile products and services. BT consists principally of four lines of business: BT Global Services, BT Retail, BT Wholesale and Openreach.

British Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group plc and encompasses virtually all businesses and assets of the BT Group. BT Group plc is listed on stock exchanges in London and New York.

For more information, visit  www.btplc.com

 

 

 

BT Group plc

RESULTS FOR THE FIRST QUARTER TO 30 JUNE 2009

GROUP RESULTS

Operating results overview

Revenue was up 1% to £5,235m including favourable foreign exchange movements of £169m and the impact of acquisitions of £27m. Excluding the impact of these, underlying revenue decreased by 3%. Adjusted EBITDA decreased by 3% to £1,371m, held back by BT Global Services. The rest of the group has performed well with adjusted EBITDA increasing by 6% driven by growth in both BT Retail and Openreach and an improved performance in BT Wholesale. This continued good performance in three out of four of our lines of business is primarily due to the effective delivery of cost savings and the effect of a one-off revenue and EBITDA benefit in BT Retail. Foreign exchange movements and the impact of acquisitions had no overall effect on EBITDA. 

With effect from this quarter, the group has adopted a new measure of adjusted profit before tax and adjusted EPS, which is before specific items, leaver costs and also net interest on pensions. This is due to the volatile nature of the non-cash pensions accounting under IAS 19. The notional net interest on our defined benefit pension scheme in the quarter was an expense of £69m compared with income of £78m last year, an adverse movement of £147m. Adjusted EPS decreased by 18% to 4.2p as a result of the year on year decline in BT Global Services results. A reconciliation of reported EPS to adjusted EPS is provided in Note 7(b) on page 17. 

Other operating income decreased by £11m to £79m, largely due to some one-off items in the prior year. Group operating costs increased by 2% to £4,726m, due to the impact of foreign exchange movements of £169m and acquisitions of £27m. Underlying group operating costs reduced by 3% to £3,747m. Excluding BT Global Services, underlying group operating costs reduced by 6%. Leaver costs were £45m (Q1 2008/09: £73m). 

Our direct staff costs, on an underlying basis, decreased by 12% to £1,216m largely due to the impact of staff reductions and lower pension charges. The reduction in pension charges is a result of the implementation of the pensions review changes from 1 April 2009.  The direct staff cost reductions were offset by an increase in other operating costs which increased by 7% to £1,703m, on an underlying basis, mainly due to lower contract costs being capitalised in BT Global Services.

In total, underlying operating costs and underlying capital expenditure reduced by £357m to £4,295m, a reduction of 8% compared with the prior year.

Depreciation and amortisation increased by 7% to £738m reflecting the impact of Ethernet and ADSL2+ assets being brought into use.

Free cash flow was an outflow of £122m in the quarter, an improvement of £612m year on year largely due to improved working capital performance, lower capital expenditure and a tax repayment of £210m.  

Outlook

Our outlook as stated in our full year 2008/09 results announcement remains unchanged. We continue to expect a decline in revenue of 4% to 5%, a reduction in capital expenditure and operating costs of well over £1bn and to generate group free cash flow (before pension deficit payments and after the cash costs of BT Global Services restructuring) of over £1bn in 2009/10. 

Restatements

As described in Note 1, we have adopted the amendment to IFRS 2  'Share-based Payment - vesting conditions and cancellations'  resulting in a change in the group's accounting policy for share-based payments. Our prior period comparatives have been restated resulting in a reduction of £16m in EBITDA for Q1 2008/09 and £110m for FY 2008/09, which is reflected in the 'Other' segment. 

We have also restated our 2008/09 line of business comparatives as a result of customer account moves and internal trading model changes effective from 1 April 2009 which have no impact on the total group results. The impact of these restatements on prior period line of business results are provided in Note 14. 

 

 

Line of business results

With effect from this quarter we have included operating cashflow and capital expenditure measures in our line of business commentaries. Operating cash flow is defined as EBITDA less direct and allocated capital expenditure (net of capital accruals), working capital movements and movements in provisions and other non-cash items. Capital expenditure includes both direct expenditure and allocated shared infrastructure expenditure.

OPERATING REVIEW 

BT Global Services 

 

   First quarter to 30 June

 

2009 

 

2008 1  

 

      Change

 

£m 

 

£m  

 

£m 

Revenue

2,079 

 

1,994  

 

85 

4  

Net operating costs  2

   2,017

 

1,812  

 

205 

11  

EBITDA

62 

 

182  

 

(120)

(66) 

Depreciation & amortisation

186 

 

181  

 

3  

Operating (loss) profit

(124)

 

1  

 

(125)

n/m  

             

Capital expenditure

131 

 

245  

 

(114)

(47) 

             

Operating cash flow

(459)

 

(637) 

 

178 

28 



1  Restated for the impact of customer account moves and internal trading model changes - See Note 1 for details.  

2  Net of other operating income.

Before contract and financial review charges, and restated for the customer account moves and internal trading model changes 

Revenue

BT Global Services revenue increased by 4% to £2,079m with foreign exchange movements contributing £154m and acquisitions £8m. Excluding the impact of these, underlying revenue decreased by 4%. The underlying decline is largely due to the impact of mobile termination rate reductions and lower call volumes in continental Europe and the continued decline in our UK calls and lines business. 

Total order intake in the quarter was £1.4bn leading to a rolling 12 month order intake of £7.5bn. As previously stated, the market trend towards lower value and shorter contracts and longer sales lead times as customers delay decisions in the current economic climate are expected to result in a lower order intake for this financial year.

In the quarter we were awarded a  five year contract by the UK Ministry of Defence worth more than £99m to support communications across 197 military bases, and the  Fiat Group renewed its global outsourcing contract, worth €325m over the next five years. We were also awarded a new two year inbound services contract by Lloyds Banking Group.

Operating results

We have made progress with our cost saving initiatives. Excluding foreign exchange movements of £166m and acquisitions of £8m, underlying operating costs of £1,853m for the quarter increased by only 1% representing continued improvement in the sequential trend from the previous two quarters. Total labour resource was reduced by around 2,300 in the quarter.  Operating costs were adversely impacted year on year by lower contract costs being capitalised in the quarter. Net operating costs increased by 11% to £2,017m.

As a result of our progress in addressing the cost base, EBITDA increased to £62m compared with £32m3  in the fourth quarter and £7m3  in the third quarter of last year. Depreciation and amortisation increased by 3% to £186m due mainly to the adverse impact of foreign exchange movements. 

Capital expenditure was reduced by 47% as a result of improved procurement efficiencies and more stringent investment return criteria. Operating cash outflow was £178m better due to improved working capital performance and reduced capital expenditure more than offsetting the lower EBITDA. 

 

 

 

BT Retail

 

      First quarter to 30 June

 

2009 

 

2008 1

 

   Change

 

£m 

 

£m 

 

£m 

Revenue

2,110 

 

2,158 

 

(48)

(2)

Net operating costs2

1,634 

 

1,781 

 

(147)

(8)

EBITDA

476 

 

377 

 

 99 

26 

Depreciation & amortisation

117 

 

100 

 

  17 

  17 

Operating profit

359 

 

277 

 

82 

30 

             

Capital expenditure 

81 

 

127 

 

(46)

(36)

             

Operating cash flow

363 

 

169 

 

194 

n/m 



1  Restated for the impact of customer account moves and internal trading model changes - see Note 1 for details.  

2  Net of other operating income.

Revenue

BT Retail revenue declined by 2% to £2,110m due largely to a reduction in calls and lines revenue. Revenue for the quarter includes a one-off benefit of £38m relating to prior periods, which also flowed through to benefit EBITDA. Underlying revenue, excluding the one-off benefit, declined by 6%. Consumer revenue declined by 1% and BT Business revenue declined by 8% as small businesses are impacted by the economic downturn.

In the maturing broadband market, BT remains the largest provider with a retail market share of the DSL and LLU installed base of 35% at 30 June 2009. Net additions were 78,000 in the quarter and total customers remained at 4.8m. BT's retail share of net additions was 46%. During the quarter we announced the launch of ADSL2+ to consumer and business markets, more than doubling the broadband speed at no extra cost. 

BT Vision net additions were 38,000 in the quarter before adjusting for inactive customers. After these adjustments, the customer base was 433,000 at 30 June 2009.

Operating results

The decline in revenue and focus on cost control has driven an 8% reduction in net operating costs to £1,634m, delivered through cost transformation programmes focused on labour productivity, systems rationalisation and supplier management. Underlying operating costs decreased by 10% to £1,620m.

EBITDA increased 26% to £476m, although on an underlying basis (excluding the one-off benefit) the increase was 15%. This reflects the timing of price initiatives which will not continue to flow through at a similar level in this financial year. As a result, we expect the increase in the EBITDA growth rate to return to mid single digits for the rest of the financial year.

Depreciation and amortisation increased by 17% to £117m. Overall this resulted in an operating profit of £359m, an increase of 30%. 

Capital expenditure was £46m lower largely due to lower central infrastructure expenditure. Operating cash flow was £194m higher due to the EBITDA growth, improved cash collections from customers and lower capital expenditure.

 

 

BT Wholesale

 

  First quarter to 30 June

 

2009

 

2008 1

 

   Change

 

£m

 

£m 

 

£m 

Revenue

1,142

 

1,156 

 

(14)

(1)

Net operating costs2

822

 

832 

 

(10)

(1)

EBITDA

320

 

324 

 

(4)

(1)

Depreciation & amortisation

171

 

170 

 

Operating profit

149

 

154 

 

(5)

(3)

             

Capital expenditure

71

 

120 

 

(49)

(41)

             

Operating cashflow

108

 

45 

 

63 

n/m



1  Restated for the impact of customer account moves and internal trading model changes - see Note 1 for details.  

2  Net of other operating income.

Revenue

BT Wholesale revenue declined by 1% to £1,142m, which was better than anticipated as the decline in transit did not materialise as expected. The revenue movement reflects reductions in low margin transit of £27m, conveyance of £21m, circuits of £18m and broadband of £12m as a result of continued migrations to LLU. These declines were largely offset by continued strong growth in managed network solutions which more than doubled to £167m. We still expect a decline in transit revenue during this financial year, primarily from the price impact of mobile termination rate reductions and also as operators continue to interconnect directly.

We continue to win major new contracts, including a 10 year managed network solutions agreement with KCOM Group to outsource the management of KCOM's UK network operations. We will manage, maintain and enhance network operations, network management and vendor management on KCOM's behalf.  

Operating results

The decline in revenue and continued focus on cost control including initiatives to reduce total labour resource has reduced net operating costs by 1% to £822m. EBITDA decreased by 1% to £320m, continuing the improvement in the rate of decline over recent quarters. Depreciation and amortisation increased by 1% to £171m and as a result operating profit declined by 3% to £149m.

Capital expenditure was £49m lower due to improved procurement, process efficiencies and more stringent investment return criteria. Operating cash flow was £63m higher primarily due to lower capital expenditure and improved working capital performance as a result of the timing of receipts from customers.

Openreach

 

  First quarter to 30 June

 

2009

 

2008

 

  Change

 

 

£m

 

£m

 

£m 

  % 

External revenue

280

 

237

 

43 

18 

Revenue from other BT lines of business

1,026

 

1,069

 

(43)

(4)

Revenue

1,306

 

1,306

 

-

Net operating costs1

803

 

815

 

(12)

(1)

EBITDA

503

 

491

 

12 

  2 

Depreciation & amortisation

201

 

184

 

17 

  9 

Operating profit

302

 

307

 

(5)

(2)

             

Capital expenditure 

203

 

227

 

(24)

(11)

             

Operating cashflow

237

 

256

 

(19)

(7)



1  Net of other operating income.

Revenue

Total revenue remained flat at £1,306m. Revenue from other BT lines of business decreased by 4% primarily due to Ethernet price reductions, the impact of the continued migration to external communication providers (CPs) and lower connections, as a result of external factors such as lower activity in the housing market. This was partially offset by a one-off internal billing to ensure compliance with the Undertakings. External revenue increased by 18% due to continued growth in the WLR and LLU rental base with external CPs. 

Operating results

Net operating costs reduced by 1% to £803m, helped by our continued investment in the quality of our network, driving the number of customer reported faults down by 30%. Continued process improvements and efficiencies, together with the lower levels of connection and migration activity, have contributed to a reduction in total labour costs. This has been achieved through reducing overtime, minimising the use of third party resource, natural attrition and leavers. 

Despite flat revenues, cost reduction activities have delivered a 2% increase in EBITDA. Depreciation and amortisation increased by 9% due to the significant investment in prior periods on high value software assets, provisioning activity and improving the health of the network. As a result, operating profit decreased by 2% to £302m.

    

Capital expenditure reduced by 11% to £203m due to lower connection activity in the housing market and our efficiency initiatives. This has been partially offset by increased investment in our fibre network programme to provide super-fast broadband services to at least 40% of UK households by 2012. We plan to accelerate the rollout of these services and aim to provide speeds of up to 40Mbps to 1.5m homes and businesses by summer 2010. 1m of these homes and businesses will have access by March 2010 which represents a doubling of our original plans. 

Operating cash flow reduced by 7% to £237m. Increases in EBITDA and a reduction in capital expenditure were more than offset by lower cash receipts from customers primarily due to higher one-off collections in the prior year.

  

 

OTHER GROUP ITEMS

Net finance expense

Net finance expense before specific items was £283m, an increase of £153m, principally due to the notional non-cash pension interest expense under IAS 19. The increase in the notional pension net interest of £147m is largely due to the reduction in asset values during the 2008/09 financial year.

Tax

The effective tax rate on the profit before specific items was 22.2% (23.5% last year) compared with the UK statutory rate of 28%, reflecting the continued focus on tax efficiency within the group. 

Specific items

Specific items are defined in Note 5. Specific items in the quarter were a charge before tax of £41m (Q1 2008/09: £27m) and a net charge after tax of £30m (Q1 2008/09: £19m). Specific items before tax comprise BT Global Services restructuring charges which relate to people and transformation costs. Specific items recognised in the prior year comprised costs of £27m relating to the group's transformation and reorganisation activities. 

Earnings per share

Adjusted EPS (before specific items, leaver costs and net interest on pensions) was 4.2p (Q1 2008/09: 5.1p). This is based on average shares in issue of 7,735m (Q1 2008/09: 7,731m). EPS before specific items and leaver costs was 3.6p (Q1 2008/09: 5.9p). Reported EPS was 2.8p (Q1 2008/09: 4.9p). A reconciliation from reported EPS to adjusted EPS is provided in Note 7(b) on page 17.

Cash flow and liquidity

Net cash inflow from our operating activities in the first quarter was £839m (Q1 2008/09: £387m) largely due to improved working capital and a tax repayment of £210m relating to the prior year. Free cash flow was an outflow of £122m, being an improvement of £612m. The significant improvement in free cash flow reflects the impact of lower working capital outflows, lower capital expenditure and the tax repayment. Free cash flow is defined and reconciled in Note 8(b).

Net cash outflow for the purchase of property, plant and equipment and software was £678m (Q1 2008/09: £836m). The net cash outflow on acquisition of subsidiaries in the quarter was £12m (Q1 2008/09: £94m) principally comprising deferred consideration relating to a previous acquisition .

During the quarter we raised new long term borrowings of £520m at an average annualised interest rate of 6.8% for which there was a strong demand and the issue was oversubscribed. Our undrawn committed facilities of £2.4bn provide us with a strong liquidity and funding position and the group has no significant debt maturities until December 2010. Cash collections from our customers remain strong, in spite of the difficult economic conditions. 

Net debt

Net debt was £10,517m at 30 June 2009 (31 March 2009: £10,361m, 30 June 2008: £10,581m). Net debt is defined and reconciled in Note 9.

Capital expenditure    

Capital expenditure reduced by 30% to £559m and we remain on track for our full year capital expenditure target of around £2.7bn. The reduction in the quarter reflects improved procurement, better process efficiency within our engineering workforce and more stringent investment return criteria.

Pensions

The IAS 19 net pension position at 30 June 2009 was a deficit of £5.8bn net of tax (£8.0bn gross of tax), compared with a deficit of £2.9bn at 31 March 2009 (£4.0bn gross of tax). The market value of the BT Pension Scheme assets was £30.4bn at 30 June 2009 (31 March 2009: £29.3bn). The value of the BT Pension Scheme liabilities was £38.3bn (31 March 2009: £33.1bn). The IAS19 liability valuation position is based on an AA bond rate of 6.2% (31 March 2009: 6.85%) and an inflation rate of 3.25% (31 March 2009: 2.90%). The deterioration in the position since 31 March 2009 is due to the reducing discount rate and increasing inflation rate, more than offsetting the asset value increase of £1.1bn. 

The IAS 19 deficit pension position at 30 June 2009 has resulted in an overall net balance sheet liability position of £3.2bn. This does not affect the distributable reserves and dividend paying capacity of BT Group plc, the parent company.

 

 

FINANCIAL STATEMENTS

Group income statement

for the first quarter to 30 June 2009

 

 

Before   

 

Specific items

 

 

   

specific items  

 

(Note 5)

 

Total 

 

Notes

£m   

 

£m   

 

£m 

Revenue

2

5,235 

 

 

5,235 

Other operating income

 

79 

 

 

79 

Operating costs

4

(4,726)

 

(41)

 

(4,767)

Operating profit

 

588 

 

(41)

 

547 

             

Finance expense

 

(767)

 

-

 

(767)

Finance income

 

484 

 

-

 

484 

Net finance expense

6

(283)

 

-

 

(283)

             

Share of post tax profits of associates and joint ventures

 

 

-

 

Profit before tax

 

313 

 

(41)

 

272 

             

Tax

 

(69)

 

11 

 

(58)

Profit for the period
 

244 

 

(30)

 

214 

             

Attributable to:

           

Equity shareholders

 

244 

 

(30)

 

214 

Minority interests

 

-  

 

 

 

 

         

Earnings per share

7

         

- basic

 

3.2p

   

2.8p

- diluted

 

3.1p

   

2.7p



 

Group income statement

for the first quarter to 30 June 2008

 

 

Before  

 

Specific items 

 

 

   

specific items 

 

(Note 5) 

 

Total 1  

 

Notes

£m 

 

£m 

 

£m 

Revenue

2

5,177 

 

 

5,177 

Other operating income

 

90 

 

 

90 

Operating costs

4

(4,614)

 

(27)

 

(4,641)

Operating profit

 

653 

 

(27)

 

626 

             

Finance expense

 

(796)

 

 

(796)

Finance income

 

666 

 

 

666 

Net finance expense

6

(130)

 

 

(130)

             

Share of post tax profits of associates and joint ventures

 

 

 

Profit before tax

 

524 

 

(27)

 

497 

             

Tax

 

(123)

 

 

(115)

Profit for the period

401 

 

(19)

 

382 

             

Attributable to:

           

Equity shareholders

 

400 

 

(19)

 

381

Minority interests

 

 

 

1

 

 

         

Earnings per share

7

         

- basic

 

5.2p

   

4.9p

- diluted

 

5.1p

   

4.8p



1 Restated, see Note 1.

  

 

Group statement of comprehensive income 

for the first quarter to 30 June 2009

 

 

 First quarter to 30 June

   

2009 

2008 1

 

 

£m 

£m 

Profit for the period

 

214

382 

       

Other comprehensive (loss) income

     

Actuarial losses on defined benefit pension schemes

 

(4,017)

(3,803)

Exchange losses on translation of foreign operations

 

(365)

(29)

Fair value losses on cash flow hedges

 

(457)

(13)

Movement in assets available for sale reserve

 

2

Tax on items taken directly to equity

 

1,266

1,034 

       

Other comprehensive loss for the period, net of tax

 

(3,571)

(2,802)

Total comprehensive loss for the period

 

(3,357)

(2,420)

Attributable to:

     

Equity shareholders

 

(3,357)

(2,421)

Minority interests

 

-

   

(3,357)

(2,420)



1 Restated, see Note 1.

    

Group cash flow statement 

for the first quarter to 30 June 2009

 

First quarter to 30 June 

 

2009 

 

2008 

 

£m 

 

£m 

Cash flow from operating activities

     

Cash generated from operations (Note 8(a))

629 

 

387 

Income taxes received

210 

 

Net cash inflow from operating activities

839 

 

387 

       

Cash flow from investing activities

     

Interest received

 

Dividends received from associates and joint ventures

 

Proceeds on disposal of property, plant and equipment

 

Acquisition of subsidiaries, net of cash acquired

(12)

 

(94)

Purchases of property, plant and equipment and computer software

(685)

 

(844)

Purchases of current financial assets

(2,644)

 

(1,032)

Sale of current financial assets

1,800 

 

1,167 

Net cash used in investing activities

(1,532)

 

(788)

       

Cash flow from financing activities

     

Equity dividends paid

(2)

 

(2)

Dividends paid to minority interests

 

(1)

Interest paid

(285)

 

(292)

Repayments of borrowings

(11)

 

(89)

New bank loans and bonds

522 

 

794 

Net repayment of commercial paper

(170)

 

(71)

Net proceeds on issue (repurchase) of ordinary shares

 

(268)

Net cash received from financing activities

55 

 

71 

       

Effects of exchange rate changes

(30)

 

(2)

Net decrease in cash and cash equivalents

(668)

 

(332)

       

Cash and cash equivalents at beginning of period

1,115 

 

1,174 

       

Cash and cash equivalents, net of bank overdrafts, at end of period 

(Note 8(c))

447 

 

842 

       

Free cash flow (Note 8(b))

(122)

 

(734)

       

Increase in net debt from cash flows

135 

 

1,099  



 

 

 

 

Group balance sheet

at 30 June 2009

 

30 June

 

30 June1

 

31 March1

 

2009

 

2008 

 

2009 

 

£m

 

£m 

 

£m 

Non current assets

         

Intangible assets

3,602

 

3,545 

 

3,788 

Property, plant and equipment

15,098

 

15,291 

 

15,405 

Derivative financial instruments

1,100

 

281 

 

2,542 

Investments

55

 

41 

 

55 

Associates and joint ventures

130

 

84 

 

132 

Trade and other receivables

349

 

890 

 

322 

Deferred tax assets

2,245

 

268 

 

1,103 

 

22,579

 

20,400 

 

23,347 

           

Current assets

         

Inventories

128

 

153 

 

121 

Trade and other receivables

4,270

 

4,959 

 

4,185 

Derivative financial instruments

54

 

16 

 

158 

Investments

996

 

302 

 

163 

Cash and cash equivalents

457

 

1,036 

 

1,300 

 

5,905

 

6,466 

 

5,927 

           

Total assets

28,484

 

26,866 

 

29,274 

           

Current liabilities

         

Loans and other borrowings

1,062

 

1,250 

 

1,542 

Derivative financial instruments

68

 

22 

 

56 

Trade and other payables

6,631

 

7,060 

 

7,215 

Current tax liabilities

271

 

348 

 

Provisions

219

 

61 

 

254 

 

8,251

 

8,741 

 

9,068 

           

Total assets less current liabilities

20,233

 

18,125 

 

20,206 

           

Non current liabilities

         

Loans and other borrowings

11,878

 

10,584 

 

12,365 

Derivative financial instruments

649

 

992 

 

711 

Other payables

800

 

728 

 

794 

Deferred tax liabilities

1,599

 

1,736 

 

1,728 

Retirement benefit obligations

8,053

 

958 

 

3,973 

Provisions

427

 

267 

 

466 

 

23,406

 

15,265 

 

20,037 

           

Capital and reserves

         

Called up share capital

408

 

408 

 

408 

Reserves

(3,600)

 

2,429 

 

(266) 

Total equity shareholders' (deficit) funds

(3,192)

 

2,837 

 

142 

Minority interests

19

 

23 

 

27 

Total (deficit) equity

(3,173)

 

2,860 

 

169 

           

 

20,233

 

18,125 

 

20,206 



1 Restated, see Note 1.

 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1

Basis of preparation and accounting policies

   


These condensed consolidated financial statements ("the financial statements") comprise the financial results of BT Group plc for the quarter to 30 June 2009 and 2008.

Except as described below, the financial statements have been prepared in accordance with the accounting policies as set out in the financial statements for the year to 31 March 2009 and have been prepared under the historical cost convention as modified by the revaluation of financial assets and liabilities (including derivative financial instruments) at fair value.

The financial statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year to 31 March 2009 were approved by the Board of Directors on 13 May 2009, published on 27 May 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985. The financial statements for the quarter to 30 June 2009 have been reviewed by the auditors and their review opinion is on page 24. The financial statements should be read in conjunction with the annual financial statements for the year to 31 March 2009.

The following new standards, amendments to new standards and interpretations which are relevant for the group have been adopted with effect from 1 April 2009:

·     

IAS 1 (revised), 'Presentation of financial statements';


·     

IAS 23 (amended),  'Borrowing costs';


·     

IFRS 2,  'Share-based Payment - vesting conditions and cancellations';  


·     

IFRS 8,  'Operating segments';


·     

IFRIC 12,  'Service concession arrangements';


·     

IFRIC 13,  'Customer loyalty programmes'; and


·     

IFRIC 16,  'Hedges of a net investment in a foreign operation'.




The adoption of the amendment to IFRS 2 'Share-based Payment - vesting conditions and cancellations' has resulted in a change in the group's accounting policy for share based payments. The amendment clarifies that only service and performance conditions are vesting conditions. Any other conditions are non-vesting conditions which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as a result of a failure to meet a non-vesting condition that is within the control of either the group or the counterparty, this must be treated as a cancellation. Cancellations are treated as accelerated vestings and all remaining future charges are immediately recognised in the income statement with the credit recognised directly in equity. Hence the overall impact on net assets and cash flow is nil. 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 any cancellations made by employees prior to the normal vesting date resulted in the reversal of all charges recognised to date. 

None of the other new standards, amendments or interpretations referred to above has a significant impact on the group's results.

Restatements - impact of new accounting standards

The amendment to IFRS 2 requires retrospective adoption and hence the quarterly and annual comparative periods for FY 2008/09 have been restated. Due to the change in accounting policy as explained above, this has resulted in a reduction in EBITDA of £16m for Q1 2008/09, £22m for Q2 2008/09, £35m for Q3 2008/09, £37m for Q4 2008/09 and £110m for FY 2008/09. The impact of these changes on all relevant income statement line items is shown in Note 14. The restatements have been included in the 'Other' segment. 

The adoption of IAS 1 (revised), 'Presentation of financial statements' has resulted in a change in accounting policy applied to the classification of derivatives which have not been allocated to a specific hedge relationship. Where such derivatives have a maturity of and are expected to be held for more than twelve months after the reporting period, they will now be presented as non current assets or liabilities. Prior period balance sheets have been reclassified to be on a consistent basis.  The impact of these changes on all relevant balance sheet line items is shown in Note 14.

 

Restatements - internal changes

We have also restated the line of business 2008/09 income statement comparatives 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. The impact of these changes on the line of business results is shown in Note 14. These restatements have no impact on total group results. 

2

Operating results - by line of business



 

 

 

 

 

 

 

 

 

Group  

 

External

 

Internal 

 

Group 

 

EBITDA 1  

 

operating 

 

revenue

 

revenue 

 

revenue 

     

profit  (loss)  1

 

£m

 

£m 

 

£m 

 

£m 

 

£m 

First quarter to 30 June 2009

                 

BT Global Services

2,079

 

-  

 

2,079 

 

62 

 

(124)

BT Retail

2,027

 

83 

 

2,110 

 

476 

 

359 

BT Wholesale

836

 

306 

 

1,142 

 

320 

 

149 

Openreach

280

 

1,026 

 

1,306 

 

503 

 

302 

Other

13

 

 

13 

 

10 

 

(53)

Intra-group items2

 

(1,415)

 

(1,415)

 

 

Total

5,235

 

 

5,235 

 

1,371 

 

633 

                   

First quarter to 30 June 2008 3

                 

BT Global Services

1,994

 

 

1,994 

 

182

 

BT Retail

2,090

 

68 

 

2,158 

 

377

 

277 

BT Wholesale

849

 

307 

 

1,156 

 

324

 

154 

Openreach

237

 

1,069 

 

1,306 

 

491

 

307 

Other

7

 

 

 

43

 

(13)

Intra-group items2

-

 

(1,444)

 

(1,444)

 

-

 

Total

5,177

 

 

5,177 

 

1,417

 

726 

                   
1  Before specific items and leaver costs.
2  Elimination of intra-group revenue between businesses, which is included in the total revenue of the originating business.
3  Restated - see Note 1 for details.

3 Capital expenditure - by line of business

 

 

First quarter to 30 June

 

2009

 

2008

 

   Change

 

£m

 

£m

 

£m 

 

BT Global Services

131

 

245

 

(114)

 

(47)

BT Retail

81

 

127

 

(46)

 

(36)

BT Wholesale

71

 

120

 

(49)

 

(41)

Openreach

203

 

227

 

(24)

 

(11)

Other

73

 

83

 

(10)

 

(12)

 

559

 

802

 

(243)

 

(30)



The above table reflects a revised methodology for allocating shared infrastructure capital expenditure to the market facing lines of business. This methodology will be used on a consistent basis going forward. 'Other' comprises capital expenditure relating to the group's regulatory, property, fleet and corporate operations. 
 

4

(a)

Operating costs



 

First quarter to 30 June 

 

2009 

 

2008 1

 

£m 

 

£m 

Staff costs before leaver costs

1,266 

 

1,386 

Leaver costs

45 

 

73 

Staff costs 

1,311 

 

1,459 

Own work capitalised

(144)

 

(158)

Net staff costs

1,167 

 

1,301

Depreciation and amortisation

738 

 

691

Payments to telecommunication operators

1,048 

 

1,037

Other operating costs

1,773 

 

1,585

Total before specific items

4,726 

 

4,614

Specific items (Note 5)

41 

 

27

Total

4,767 

 

4,641



1   Restated - see Note 1 for details

    

    (b) Leaver costs

 

First quarter to 30 June

 

2009

 

2008

 

£m

 

£m

BT Global Services

 

6

BT Retail

6

 

3

BT Wholesale

 

-

Openreach

28

 

4

Other

11

 

60

Total

45

 

73



5

Specific items

   


BT separately identifies and discloses any significant one-off or unusual items (termed "specific items"). This is consistent with the way that financial performance is measured by management and we believe assists in providing a meaningful analysis of the trading results of the group. Specific items may not be comparable to similarly titled measures used by other companies.  

 

  First quarter to 30 June

 

2009 

 

2008 

 

£m 

 

£m 

BT Global Services restructuring charges

41 

 

-

Group transformation and reorganisation costs

 

27 

Net specific items charge before tax

41 

 

27 

Tax credit on specific items

(11)

 

(8)

Net specific items charge after tax

30 

 

19 



 

6     Net finance expense

   

 

First quarter to 30 June  

 

2009 

 

2008 

 

£m 

 

£m 

Finance expense¹ before pension interest

215 

 

219 

Interest on pension scheme liabilities

552 

 

577 

Finance expense

767 

 

796 

       

Finance income before pension income

(1)

 

(11)

Expected return on pension scheme assets

(483)

 

(655)

Finance income

(484)

 

(666)

 

     

Net finance expense

283 

 

130 

       

Net finance expense before pensions

214 

 

208 

Net interest expense (income) on pensions

69 

 

(78)

Net finance expense

283 

 

130 



 

1   Finance expense in the first quarter to 30 June 2009 includes a £1m net credit (30 June 2008: £3m), respectively, arising from the re-measurement of financial instruments on a fair value basis which under IAS 39, are not in hedging relationships. 

7 (a)

Earnings per share

   


The basic earnings per share is calculated by dividing the profit attributable to shareholders by the average number of shares in issue after deducting the company's shares held by employee share ownership trusts and treasury shares. In calculating the diluted earnings per share, share options outstanding and other potential ordinary shares have been taken into account. The average number of shares in the periods were:

 

First quarter to 30 June

 

2009

 

2008

 

   millions of shares 

Basic

7,735

 

7,731

Diluted

7,814

 

7,856



7 (b)

Reconciliation of adjusted earnings per share



 

First quarter to 30 June

 

2009

2008 1

 

 

pence per share 

Reported earnings per share

2.8

4.9 

Per share impact of: 

   

- Leaver costs 

0.4

0.7 

- Specific items

0.4

0.2 

- Net interest expense (income) on pensions

  0.6

(0.7) 

Adjusted earnings per share

4.2

5.1 



1   Restated - see Note 1 for details


 

8

(a)

Reconciliation of profit before tax to cash generated from operations



 

First quarter to 30 June

 

2009 

 

2008 1

 

£m 

 

£m 

Profit before tax

272 

 

497 

Depreciation and amortisation

738 

 

691 

Net finance expense

283 

 

130 

Decrease in net working capital

(599)

 

(962)

Associates and joint ventures

(8)

 

(1) 

Provisions movements, pensions and other non-cash movements

(57)

 

32 

Cash generated from operations

629 

 

387 



1   Restated - see Note 1 for details

   
 

(b)

Free cash flow



 

First quarter to 30 June 

 

2009 

 

2008 

 

£m 

 

£m 

Cash generated from operations

629 

 

387 

Income taxes received

210 

 

Net cash inflow from operating activities

839 

 

387 

Included in cash flows from investing activities

     

Net purchase of property, plant, equipment and software

(678)

 

(836)

Dividends received from associates

 

Interest received

 

7  

Included in cash flows from financing activities

     

Interest paid

(285)

 

(292)

Free cash flow

(122)

 

(734)



Free cash flow is defined as the net increase in cash and cash equivalents less cash flows from financing activities (except interest paid), less the acquisition or disposal of group undertakings and less the net sale of short term investments. It is not a measure recognised under IFRS but is a key indicator used by management in order to assess operational performance.

   
   
 

(c)

Cash and cash equivalents



 

First quarter to 30 June

 

2009 

 

2008 

 

£m 

 

£m 

Cash at bank and in hand

381 

 

577 

Short term deposits

76 

 

459 

Cash and cash equivalents

457 

 

1,036 

Bank overdrafts

(10)

 

(194)

Total

447 

 

842 



  

9

Net debt

   


Net debt at 30 June 2009 was £10,517m (31 March 2009: £10,361m, 30 June 2008: £10,581m). Net debt consists of loans and other borrowings less current asset investments and cash and cash equivalents. Loans and other borrowings are measured at the net proceeds raised, adjusted to amortise any discount over the term of the debt. For the purpose of this analysis, current asset investments and cash and cash equivalents are measured at the lower of cost and net realisable value. Currency denominated balances within net debt are translated to Sterling at swapped rates where hedged.

This definition of net debt measures balances at the expected value of future undiscounted cash flows due to arise on maturity of financial instruments and removes the balance sheet adjustments made from the re-measurement of hedged risks under fair value hedges and the use of the effective interest method as required by IAS 39. Net debt is a non GAAP measure since it is not defined in IFRS but it is a key indicator used by management in order to assess operational performance.

   
 

(a)

Analysis of net debt



 

First quarter to 30 June

 

2009 

 

2008 

 

£m 

 

£m 

Loans and other borrowings

12,940 

 

11,834 

Cash and cash equivalents

(457)

 

(1,036)

Investments

(996)

 

(302)

 

11,487 

 

10,496 

Adjustments:

     

To re-translate currency denominated balances at

     

swapped rates where hedged

(728)

 

277 

To recognise borrowings at net proceeds adjusted to amortise discount and investments at the lower of cost and net realisable value

(242)

 

(192)

Net debt

10,517

 

10,581



After allocating the element of the adjustments which impacts loans and other borrowings, gross debt at 30 June 2009 was £11,970m (30 June 2008: £11,738m, 31 March 2009: £11,663m). The adjustment to re-translate currency denominated balances at swapped rates where hedged reflects the foreign exchange impact of currency swaps which offset the foreign exchange movement on revaluing currency loans and borrowings.

   
 

(b)

Reconciliation of movement in net debt 



 

First quarter to 30 June 

 

2009 

 

2008 

 

£m 

 

£m 

Net debt at beginning of period

10,361 

 

9,460 

Increase in net debt resulting from cash flows

135 

 

1,099 

Net debt assumed or issued on acquisitions

 

18 

Currency movements

25 

 

Other non-cash movements

(4)

 

Net debt at end of period

10,517 

 

10,581



  

10

Statement of changes in equity



 

First quarter to 30 June 

 

2009 

 

2008 

 

£m 

 

£m 

Shareholders' funds

142 

 

5,409 

Minority interest

27 

 

23 

Equity at beginning of period

169 

 

5,432 

       

Total comprehensive loss for the period

(3,357)

 

(2,420)

Share-based payment

19 

 

35 

Net sale (purchase) of treasury shares

 

(186)

Minority interest

(5)

 

(1)

Net changes in equity for the period

(3,342)

 

(2,572)

       

Equity at end of period

     

Shareholders' (deficit) funds

(3,192)

 

2,837 

Minority interest

  19 

 

23 

Total (deficit) equity

(3,173)

 

2,860 



11         Earnings before interest, taxation, depreciation and amortisation (EBITDA)

 

 

First quarter to 30 June

 

2009 

 

2008

 

£m 

 

£m

Operating profit

547 

 

626

Depreciation and amortisation (Note 4(a))

738 

 

691

Leaver costs (Note 4(b))

45 

 

73

Specific items (Note 5)

41 

 

27

EBITDA before specific items and leaver costs

1,371 

 

1,417




Earnings before interest, taxation, depreciation and amortisation (EBITDA) before specific items and leaver costs is not a measure recognised under IFRS, but it is a key indicator used by management in order to assess operational performance. 

12

Reconciliation of adjusted profit before tax

   


 

First quarter to 30 June

 

2009 

 

2008

 

£m 

 

£m

Reported profit before tax

272 

 

497

Leaver costs (Note 4(b))

45 

 

73

Specific items (Note 5)

41 

 

27

Net interest on pensions (Note 6)

69  

 

(78)

Adjusted profit before tax

427 

 

519



13

Dividends

   


BT's final dividend of 1.1 pence per share for the 2008/09 financial year will be paid on 7 September 2009 to shareholders on the register on 14 August 2009. The ex-dividend date is 12 August 2009. 

14    Prior period restatements

   
 

(a)

Customer account moves and trading model changes (before leaver costs, specific items and contract and financial review charges) 



 

As reported - 2008/09

 

Adjustments

 

Restated - 2008/09

 

Q1

Q2

Q3

Q4

FY

 

Q1

Q2

Q3

Q4 

FY

 

Q1

Q2

Q3

Q4

FY

 

£m

£m

£m

£m

£m

 

£m

£m

£m

£m

£m

 

£m

£m

£m

£m

£m

Global Services

                                 

Revenue

2,052

2,157

2,253

2,366

8,828

 

(58)

(62)

(59)

(62)

(241)

 

1,994

2,095

2,194

2,304

8,587

EBITDA

195

119

17

43

374

 

(13)

(14)

(10)

(11)

(48)

 

182

105

7

32

326

                                   

Retail 

                                 

Revenue

2,109

2,127

2,134

2,101

8,471

 

49

49

46

48

192

 

2,158

2,176

2,180

2,149

8,663

EBITDA

368

421

428

435

1,652

 

9

8

6

7

30

 

377

429

434

442

1,682

                                   

Wholesale

                                 

Revenue

1,156

1,168

1,183

1,151

4,658

 

-

-

-

-

-

 

1,156

1,168

1,183

1,151

4,658

EBITDA

322

320

319

311

1,272

 

2

4

2

3

11

 

324

324

321

314

1,283

                                   

Openreach

                                 

Revenue

1,306

1,303

1,329

1,293

5,231

 

-

-

-

-

-

 

1,306

1,303

1,329

1,293

5,231

EBITDA

491

489

533

512

2,025

 

-

-

-

-

-

 

491

489

533

512

2,025

                                   

Other

                                 

Revenue

7

11

11

13

42

 

-

1

(1)

(2)

(2)

 

7

12

10

11

40

EBITDA

57

80

39

53

229

 

2

2

1

7

 

59

82

41

54

236

                                   

Intra-group items

                                 

Revenue

(1,453)

(1,463)

(1,473)

(1,451)

(5,840)

 

9

12

14 

16

51

 

(1,444)

(1,451)

(1,459)

(1,435)

(5,789)

EBITDA

-

-

-

-

-

 

-

-

-

-

 

-

-

-

-

-

                                   

TOTAL

                                 

Revenue

5,177

5,303

5,437

5,473

21,390

 

-

-

-

-

 

5,177

5,303

5,437

5,473

21,390

EBITDA 

1,433

1,429

1,336

1,354

5,552

 

-

-

-

-

 

1,433

1,429

1,336

1,354

5,552



   14  (b)  Accounting standards

IFRS 2 (amended) 1

As reported - 2008/09

 

IFRS 2 (amended) adjustment

 

Restated - 2008/09

 

Q1

Q2

Q3

Q4

FY 

 

Q1

Q2

Q3

Q4

FY 

 

Q1

Q2

Q3

Q4

FY 

Share-based payment

£m

£m

£m

£m

£m

 

£m

£m

£m

£m

   

£m

£m

£m

£m

£m

                                   

Adjusted EBITDA  2

1,433

1,429

1,336

1,354

5,552

 

(16)

(22)

(35)

(37)

(110)

 

1,417

1,407

1,301

1,317

5,442

EBITDA

1,333

1,355

967

(354)

3,301

 

(16)

(22)

(35)

(37)

(110)

 

1,317

1,333

932

(391)

3,191

Profit after tax

398

400

97

(976)

(81)

 

(16)

(22)

(35)

(37)

(110)

 

382

378

62

(1,013)

(191)

                                   

Basic earnings per share (p)

5.1

5.2

1.3

(12.6)

(1.1)

 

(0.2)

(0.3)

(0.5)

(0.5)

(1.4)

 

4.9

4.9

0.8

(13.1)

(2.5)

Diluted earnings per share (p)

5.1

5.2

1.3

(12.6)

(1.1)

 

(0.3)

(0.3)

(0.5)

(0.4)

(1.4)

 

4.8

4.9

0.8

(13.0)

(2.5)

 
                                   

IAS 1 (revised)  1

As reported - 2008/09

   

IAS 1 (revised) adjustment

   

Restated - 2008/09

 
 

Q1

Q2

Q3

Q4

   

Q1

Q2

Q3

Q4

   

Q1

Q2

Q3

Q4

 

Derivatives classification

£m

£m

£m

£m

   

£m

£m

£m

£m

   

£m

£m

£m

£m

 
                                   

Non Current Assets

281

345

2,730

2,456

   

-

5

104

86

   

281

350

2,834

2,542

 

Current Assets

16 

86

470

244

   

-

(5)

(104)

(86)

   

16

81

366

158

 

Current Liabilities

(213)

(267)

(373)

(340)

   

191

198

309

284

   

(22)

(69)

(64)

(56)

 

Non Current liabilities

(801)

(464)

(491)

(427)

   

(191)

(198)

(309)

(284)

   

(992)

(662)

(800)

(711)

 
                                   

Total

(717)

(300)

2,336

1,933

   

-

-

-

-

   

(717)

(300)

2,336

1,933

 


See Note 1 for further explanation.
2  Before leaver costs, specific items and contract and financial review charges.

Forward-looking statements - caution advised

Certain statements in this results release are forward-looking and are made in reliance on the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. These statements include, without limitation, those concerning: revenue, operating cost and capital expenditure reduction, and free cash flow and EBITDA; progress in Global Services; plans for future networks and roll out of super fast broadband; and the liquidity and funding position. 

Although BT believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

Factors that could cause differences between actual results and those implied by the forward-looking statements include, but are not limited to: material adverse changes in economic conditions in the markets served by BT; future regulatory actions and conditions in BT's operating areas, including competition from others; selection by BT and its lines of business of the appropriate trading and marketing models for its products and services; fluctuations in foreign currency exchange rates and interest rates; technological innovations, including the cost of developing new products, networks and solutions and the need to increase expenditures for improving the quality of service; prolonged adverse weather conditions resulting in a material increase in overtime, staff or other costs; developments in the convergence of technologies; the anticipated benefits and advantages of new technologies, products and services not being realised; the underlying assumptions and estimates made in respect of major customer contracts proving unreliable; the aims of the Global Services' revised operating model and restructuring plan not being achieved; completion of the pension fund actuarial valuation; and general financial market conditions affecting BT's performance and ability to raise finance. BT undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

                                                          Independent review report to BT Group plc on the interim financial information

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim financial report for the three months ended 30 June 2009, which comprises the group income statement, group statement of comprehensive income, group cash flow statement, group balance sheet and related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with note 1 of the interim financial report, "Basis of preparation and accounting policies".

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The accounting policies which have been applied to prepare the condensed set of financial statements, included in this interim financial report, are the same as those used for the preparation of the consolidated financial statements for the year ended 31 March, 2009.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the company and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the three months ended 30 June 2009 is not prepared, in all material respects, in accordance with note 1 of the interim financial report, "Basis of preparation and accounting policies".

PricewaterhouseCoopers LLP, Chartered Accountants

London 
29 July 2009

Note:

The maintenance and integrity of the group's website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial information since it was initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


 
 

Signatures
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 

BT Group PLC
(Registrant)
 
By: /s/ Patricia Day
--------------------
 

Patricia Day, Assistant Secretary.
 
Date 30 July 2009