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Pro
forma financial information
British Telecommunications plc and subsidiaries
Introduction
The following unaudited pro forma condensed combined
statements of operations for the years ended 31
March 2001, 2000 and 1999 give pro forma effect
to (a) the acquisition of Viag Interkom GmbH &
Co. (“Viag Interkom”) and (b) the related
financings, as if each of these transactions had
occurred on 1 April 2000, and (c) the probable demerger
of BT Wireless, and (d) the probable demerger or
sale of Yell, as if each of these transactions had
occurred on 1 April 1998. The unaudited pro forma
condensed combined balance sheet as of 31 March
2001 gives effect to (a) the probable demerger of
BT Wireless and (b) the probable demerger or sale
of Yell as if each such transaction had occurred
on that date.
The unaudited pro forma condensed combined statements
of operations and balance sheet have been prepared
based upon BT’s audited annual consolidated
financial statements for the years ended 31 March
2000 and 31 March 1999, BT’s audited annual
consolidated financial statements as of and for
the year ended 31 March 2001, and the audited consolidated
financial statements of Viag Interkom for the year
ended 31 December 2000, each included elsewhere
or incorporated by reference in this Annual Report
on Form 20-F, and based upon other available information
and assumptions which management believes are reasonable.
BT has a year-end of 31 March, Viag Interkom had
a year end 31 December. As a result, the period
for which a consolidated result of operations of
Viag Interkom has been obtained and reflected in
the unaudited pro forma condensed consolidated statement
of operations does not exactly conform to the reporting
period presented therein.
The acquisition of Viag Interkom has been accounted
for using the purchase method of accounting under
UK and US GAAP. Assets and liabilities have been
recorded at their estimated fair values at the date
of purchase. The fair value adjustments included
in the unaudited condensed statement of operations
for the year ended 31 March 2001 represent BT’s
preliminary determination of these adjustments based
upon available information and assumptions which
management believes are reasonable.
Upon receipt of the necessary approvals required
to effect the probable sale or demergers, BT will
report BT Wireless and Yell as discontinued operations
under US GAAP, in accordance with APB Opinion No.
30 “Reporting the Results of Operations –
Reporting the Effects of Disposal of a Segment of
a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions”.
No account has been taken within the unaudited pro
forma condensed combined statements of operations
of any costs associated with the demerger or any
future changes in administrative costs incurred
or charged from BT which may or are expected to
occur as a result of the demerger of BT Wireless
or the demerger or sale of Yell.
There can be no assurance that the actual results
of Future BT, BT Wireless or Yell will not differ
significantly from the pro forma figures reflected
in the unaudited financial information presented
herein.
The pro forma condensed combined statements of operations
and balance sheet are for information only. The
pro forma condensed combined statements of operations
do not purport to represent our consolidated results
of operations had the demerger of BT Wireless and
the demerger or sale of Yell actually occurred on
1 April 1998, and had the acquisition of Viag Interkom
actually occurred on 1 April 2000, nor are they
intended to represent results which may occur in
the future.
The pro forma financial information has been prepared
in accordance with UK GAAP, which differs in certain
significant respects from US GAAP as described in
note 9 of the unaudited pro
forma condensed combined financial statements.
In preparing the unaudited pro forma condensed combined
financial statements, certain adjustments were identified
and made to reflect the differences between UK GAAP,
as applied by BT and German GAAP, as applied by
Viag Interkom. For the purpose of presenting the
unaudited pro forma condensed consolidated financial
information, the Viag Interkom statement of operations
has been conformed to UK GAAP.
These unaudited pro forma condensed combined financial
statements should be read in conjunction with the
financial review, BT’s audited consolidated
financial statements, including the notes to those
statements appearing elsewhere in this Annual Report
on Form 20-F for the financial year ended 31 March
2001 and the audited consolidated financial statements
of Viag Interkom and the related notes thereto,
furnished to the US Securities and Exchange Commission
on Form 6-K dated 10 May 2001. |
|
| |
 |
Unaudited
pro forma condensed combined balance sheet as at
31 March 2001
|
| Fixed assets |
|
|
|
|
|
|
|
|
|
| Intangible assets |
|
18,380 |
|
15,601 |
|
429 |
|
2,350 |
|
| Tangible assets |
|
21,625 |
|
3,734 |
|
43 |
|
17,848 |
|
| Investments |
|
5,204 |
|
68 |
|
2 |
|
5,134 |
|
|
| Total fixed assets |
|
45,209 |
|
19,403 |
|
474 |
|
25,332 |
|
| |
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
| Stocks |
|
361 |
|
149 |
|
88 |
|
124 |
|
| Debtors |
|
6,260 |
|
946 |
|
304 |
|
5,010 |
|
| Investments |
|
2,557 |
|
– |
|
– |
|
2,557 |
|
| Cash at bank and in hand |
|
412 |
|
– |
|
– |
|
412 |
|
|
| Total current assets |
|
9,590 |
|
1,095 |
|
392 |
|
8,103 |
|
|
| Creditors: amounts falling
due within one year |
|
|
|
|
|
|
|
|
|
| Loans |
|
(12,136 |
) |
– |
|
– |
|
(12,136 |
) |
| Other creditors |
|
(8,597 |
) |
(1,436 |
) |
(154 |
) |
(7,007 |
) |
|
Total creditors: amounts
falling
due within one year |
|
(20,733 |
) |
(1,436 |
) |
(154 |
) |
(19,143 |
) |
|
| Net current assets
(liabilities) |
|
(11,143 |
) |
(341 |
) |
238 |
|
(11,040 |
) |
|
| Total assets less
current liabilities |
|
34,066 |
|
19,062 |
|
712 |
|
14,292 |
|
|
Creditors: amounts
falling due
after more than one year |
|
|
|
|
|
|
|
|
|
| Loans and other borrowings |
|
(18,775 |
) |
– |
|
– |
|
(18,775 |
) |
| Provisions for liabilities
and charges |
|
(723 |
) |
(226 |
) |
– |
|
(497 |
) |
|
| Total net assets (liabilities) |
|
14,568 |
|
18,836 |
|
712 |
|
(4,980 |
) |
|
| Minority interests |
|
499 |
|
– |
|
– |
|
499 |
|
| Capital and reserves (deficit) |
|
14,069 |
|
18,836 |
|
712 |
|
(5,479 |
) |
|
| |
|
14,568 |
|
18,836 |
|
712 |
|
(4,980 |
) |
|
| US GAAP information |
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
|
33,435 |
|
| Total shareholders’
equity (deficit) |
|
|
|
|
|
|
|
(9,579 |
) |
|
See notes to unaudited pro forma
condensed combined financial statements.
|
|
|
Unaudited
pro forma statement of income for the year ended
31 March 2001
|
| Group turnover |
|
20,427 |
|
870 |
|
(100 |
) |
21,197 |
|
3,935 |
|
775 |
|
(831 |
) |
17,318 |
|
| Other operating income |
|
393 |
|
– |
|
– |
|
393 |
|
– |
|
– |
|
|
|
393 |
|
| Operating costs |
|
(20,759 |
) |
(1,508 |
) |
(36 |
) |
(22,303 |
) |
(7,663 |
) |
(589 |
) |
831 |
|
(14,882 |
) |
|
| Group operating profit
(loss) |
|
61 |
|
(638 |
) |
(136 |
) |
(713 |
) |
(3,728 |
) |
186 |
|
– |
|
2,829 |
|
| Group’s share of
operating loss of associates and joint ventures |
|
(397 |
) |
– |
|
277 |
|
(120 |
) |
7 |
|
2 |
|
|
|
(129 |
) |
|
| Total operating profit
(loss) |
|
(336 |
) |
(638 |
) |
141 |
|
(833 |
) |
(3,721 |
) |
188 |
|
– |
|
2,700 |
|
| Profit on sale of group
undertakings and fixed asset investments |
|
619 |
|
– |
|
(12 |
) |
607 |
|
1 |
|
– |
|
|
|
606 |
|
| Net interest payable |
|
(1,314 |
) |
(99 |
) |
(498 |
) |
(1,911 |
) |
(170 |
) |
(25 |
) |
|
|
(1,716 |
) |
|
| Profit (loss) on ordinary
activities before taxation |
|
(1,031 |
) |
(737 |
) |
(369 |
) |
(2,137 |
) |
(3,890 |
) |
163 |
|
– |
|
1,590 |
|
| Tax on profit (loss) on
ordinary activities |
|
(652 |
) |
– |
|
263 |
|
(389 |
) |
189 |
|
(58 |
) |
|
|
(520 |
) |
|
| Profit (loss) on ordinary
activities after taxation |
|
(1,683 |
) |
(737 |
) |
(106 |
) |
(2,526 |
) |
(3,701 |
) |
105 |
|
– |
|
1,070 |
|
| Minority interest |
|
(127 |
) |
– |
|
– |
|
(127 |
) |
– |
|
– |
|
|
|
(127 |
) |
|
| Profit (loss) for
the financial year |
|
(1,810 |
) |
(737 |
) |
(106 |
) |
(2,653 |
) |
(3,701 |
) |
105 |
|
– |
|
943 |
|
|
| Other financial information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pro forma basic earnings
per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.5 |
p |
| Pro forma diluted earnings
per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.2 |
p |
| Shares used in computing
basic earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,525 |
m |
| Shares used in computing
diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,621 |
m |
| US GAAP information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£242 |
m |
| Pro forma basic earnings
per ADS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£0.37 |
|
| Pro forma diluted
earnings per ADS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£0.37 |
|
|
See notes to unaudited
pro forma condensed combined financial statements.
|
|
| |
|
Unaudited
pro forma statements of income
|
| Group turnover |
|
18,715 |
|
2,636 |
|
622 |
|
(764 |
) |
16,221 |
|
| Other operating income |
|
242 |
|
– |
|
– |
|
|
|
242 |
|
| Operating costs |
|
(15,359 |
) |
(2,563 |
) |
(432 |
) |
764 |
|
(13,128 |
) |
|
| Group operating profit |
|
3,598 |
|
73 |
|
190 |
|
– |
|
3,335 |
|
| Group’s share of
operating profit (loss) of associates and
joint ventures |
|
(400 |
) |
(243 |
) |
1 |
|
– |
|
(158 |
) |
|
| Total operating profit
(loss) |
|
3,198 |
|
(170 |
) |
191 |
|
– |
|
3,177 |
|
| Profit on sale of group
undertakings |
|
126 |
|
– |
|
– |
|
– |
|
126 |
|
| Net interest payable |
|
(382 |
) |
(48 |
) |
(11 |
) |
– |
|
(323 |
) |
|
| Profit (loss) on ordinary
activities before taxation |
|
2,942 |
|
(218 |
) |
180 |
|
– |
|
2,980 |
|
| Tax on profit (loss) on
ordinary activities |
|
(897 |
) |
(2 |
) |
(58 |
) |
– |
|
(837 |
) |
|
| Profit (loss) on ordinary
activities after taxation |
|
2,045 |
|
(220 |
) |
122 |
|
– |
|
2,143 |
|
| Minority interest |
|
10 |
|
(2 |
) |
– |
|
– |
|
12 |
|
|
| Profit (loss) for
the financial year |
|
2,055 |
|
(222 |
) |
122 |
|
– |
|
2,155 |
|
|
| Other financial information |
|
|
|
|
|
|
|
|
|
|
|
| Pro forma basic earnings
per share |
|
|
|
|
|
|
|
|
|
33.2 |
p |
| Pro forma diluted earnings
per share |
|
|
|
|
|
|
|
|
|
32.4 |
p |
| Shares used in computing
basic earnings per share |
|
|
|
|
|
|
|
|
|
6,488 |
m |
| Shares used in computing
diluted earnings per share |
|
|
|
|
|
|
|
|
|
6,642 |
m |
| US GAAP information |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
|
|
|
|
|
|
|
£1,512 |
m |
| Pro forma basic earnings
per ADS |
|
|
|
|
|
|
|
|
|
£2.33 |
|
| Pro forma diluted earnings
per ADS |
|
|
|
|
|
|
|
|
|
£2.28 |
|
|
|
| Group turnover |
|
16,953 |
|
1,822 |
|
469 |
|
(537 |
) |
15,199 |
|
| Other operating income |
|
168 |
|
– |
|
– |
|
– |
|
168 |
|
| Operating costs |
|
(13,305 |
) |
(1,625 |
) |
(292 |
) |
537 |
|
(11,925 |
) |
|
| Group operating profit |
|
3,816 |
|
197 |
|
177 |
|
– |
|
3,442 |
|
| Group’s share of
operating loss of associates and joint ventures |
|
(342 |
) |
(152 |
) |
– |
|
– |
|
(190 |
) |
|
| Total operating profit |
|
3,474 |
|
45 |
|
177 |
|
– |
|
3,252 |
|
| Profit on sale of fixed
asset investments |
|
1,107 |
|
– |
|
– |
|
– |
|
1,107 |
|
| Net interest payable |
|
(286 |
) |
(40 |
) |
– |
|
– |
|
(246 |
) |
|
| Profit on ordinary
activities before taxation |
|
4,295 |
|
5 |
|
177 |
|
– |
|
4,113 |
|
| Tax on profit on ordinary
activities |
|
(1,293 |
) |
(15 |
) |
(60 |
) |
– |
|
(1,218 |
) |
|
| Profit (loss) on ordinary
activities after taxation |
|
3,002 |
|
(10 |
) |
117 |
|
– |
|
2,895 |
|
| Minority interests |
|
(19 |
) |
(34 |
) |
– |
|
– |
|
15 |
|
|
| Profit (loss) for
the financial year |
|
2,983 |
|
(44 |
) |
117 |
|
– |
|
2,910 |
|
|
| Other financial information |
|
|
|
|
|
|
|
|
|
|
|
| Pro forma basic earnings
per share |
|
|
|
|
|
|
|
|
|
45.2 |
p |
| Pro forma diluted earnings
per share |
|
|
|
|
|
|
|
|
|
44.1 |
p |
| Shares used in computing
basic earnings per share |
|
|
|
|
|
|
|
|
|
6,442 |
m |
| Shares used in computing
diluted earnings per share |
|
|
|
|
|
|
|
|
|
6,592 |
m |
| US GAAP information |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
|
|
|
|
|
|
|
£2,532 |
m |
| Pro forma basic earnings
per ADS |
|
|
|
|
|
|
|
|
|
£3.93 |
|
| Pro forma diluted earnings
per ADS |
|
|
|
|
|
|
|
|
|
£3,84 |
|
|
See notes to unaudited
pro forma condensed combined financial statements.
|
|
Notes to the pro forma
consolidated financial information
The unaudited pro forma condensed combined statements
of operations for the years ended 31 March 2001,
2000 and 1999 give pro forma effect to (a) the acquisition
of Viag Interkom and (b) the related financings,
as if each of these transactions had occurred on
1 April 2000, and (c) the probable demerger of BT
Wireless, and (d) the probable demerger or sale
of Yell, as if each of these transactions had occurred
on 1 April 1998. The unaudited pro forma condensed
combined balance sheet as of 31 March 2001 gives
effect to (a) the probable demerger of BT Wireless
and (b) the probable demerger or sale of Yell as
if each transaction had occurred on that date.
1. BT historical information
The historical information included in the unaudited
pro forma condensed combined balance sheet and statement
of operations as of and for the years ended 31 March
2001 and for the years ended 31 March 2000 and 1999
has been extracted from our audited consolidated
financial statements as of 31 March 2001 and for
the three years then ended, included in this Annual
Report on Form 20-F.
2. Historical Viag Interkom
The historical Viag Interkom financial information
incorporated by reference in the unaudited pro forma
condensed combined statement of operations for the
year ended 31 March 2001 has been derived from the
profit and loss account included in the audited
consolidated financial statements of Viag Interkom
as of and for the year ended 31 December 2000 incorporated
by reference in this document.
The historical consolidated financial statements
of Viag Interkom are presented in Deutsche Marks.
The historical profit and loss account of Viag Interkom
for the year ended 31 December 2000 has been translated
into Sterling at the average exchange rate for the
year of 3.2108 Deutsche Marks to one pound Sterling.
It should be noted that such translation should
not be construed as representations that the Deutsche
Mark amounts actually represent such Sterling amounts,
or could have been or will be converted at the rate
indicated or at all.
Historical Viag Interkom financial information has
been included in the pro forma financial statements
on a UK GAAP basis. The historical consolidated
financial statements of Viag Interkom were prepared
in accordance with accounting principles generally
accepted in Germany (“German GAAP”),
which differs in certain material respects from
UK GAAP.
For the purposes of preparing the unaudited pro
forma condensed combined financial information,
the translated historical profit and loss account
of Viag Interkom for the year ended 31 December
2000 has been restated as if UK GAAP had applied
by giving effect to the following adjustment:
Depreciation
Under German GAAP, the depreciable life of fixed
assets is determined in accordance with lives specified
by German tax regulations. Under UK GAAP, the depreciable
life of fixed assets is based on the estimated useful
life of the underlying asset regardless of the tax
regulations. The historical depreciation expense
reported by Viag Interkom for the year ended 31
December 2000 has been decreased by £46 million
to be restated in accordance with UK GAAP.
3. Viag Interkom purchase
accounting, financing and elimination adjustments
The Group’s interest in Viag Interkom was
accounted for as a joint venture investment under
the equity method of accounting in the period 1
April 2000 to 19 February 2001 and as a subsidiary
in the period 20 February 2001 to 31 March, 2001.
For the purposes of the pro forma statement of operations
for the year ended 31 March 2001, adjustments have
been made to account for Viag Interkom as though
it had been acquired on 1 April 2000. |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Group turnover |
|
(100 |
) |
– |
|
– |
|
– |
|
– |
|
(100 |
) |
| Operating costs |
|
193 |
|
– |
|
– |
|
(229 |
) |
– |
|
(36 |
) |
|
| Group operating profit
(loss) |
|
93 |
|
– |
|
– |
|
(229 |
) |
– |
|
(136 |
) |
| Group’s share of
operating loss of associates and joint ventures |
|
– |
|
277 |
|
– |
|
– |
|
– |
|
277 |
|
|
| Total operating profit |
|
93 |
|
277 |
|
– |
|
(229 |
) |
– |
|
141 |
|
|
| Profit on sale of group
undertakings and fixed asset investments |
|
(12 |
) |
– |
|
– |
|
– |
|
– |
|
(12 |
) |
| Net interest payable |
|
28 |
|
70 |
|
(596 |
) |
– |
|
– |
|
(498 |
) |
| Tax on profit (loss) on
ordinary activities |
|
(33 |
) |
(104 |
) |
179 |
|
– |
|
221 |
|
263 |
|
|
|
|
| |
|
|
|
| (a) |
|
This adjustment eliminates the
profit and loss items included in the post acquisition
consolidated results of BT in the period from 20
February 2001 to 31 March 2001. |
| (b) |
|
This adjustment eliminates BT’s
historical equity share of the losses of Viag Interkom
included within group’s share of operating
loss of associates and joint ventures relating to
the period from 1 April 2000 to 19 February 2001. |
| (c) |
|
This adjustment records the additional
interest expense arising from the financing arrangements
incurred to effect the acquisition of Viag Interkom.
BT primarily financed the acquisition of Viag Interkom,
and associated investments, of £10.8 billion by
the issuance of long-term fixed-rate debt. BT estimates
that the debt used to finance the acquisition of
Viag Interkom and its 3G mobile licence carries
a weighted average interest rate of 7.1% after taking
into account interest rate swaps and forward foreign
currency contracts. |
| |
|
Accordingly, the adjustment comprises
the estimated full year interest expense of £767
million, less £171 million already included in the
consolidated results of BT for the year ended 31
March 2001 in respect of interest already expensed
relating to this debt. |
| |
|
BT has estimated that the effect
on the pro forma net income of a 0.125% change in
the interest rates, assuming the interest on £11.3
billion of debt is based on variable rates, would
be approximately £14 million in the year ended 31
March 2001. |
| |
|
The tax effect on the pro forma
interest adjustments of £179 million has been calculated
at an assumed rate of 30%. |
| (d) |
|
This adjustment records the additional
amortisation of goodwill as a result of the preliminary
fair value adjustments made upon acquisition. Provisional
goodwill arising on acquisition has been estimated
at £4,992 million. This amount was being amortised
on a straight-line basis over 20 years. Accordingly,
the adjustment comprises the full year amortisation
charge of £250 million, less an amount of £21 million
already included in the consolidated results of
BT for the year ended 31 March 2001 in respect of
amortisation expenses in the period from 20 February
2001 to 31 March 2001. There is presumed to be no
tax effect in respect of the goodwill adjustment
on the basis that goodwill is not tax deductible.
As discussed in the Financial Review, a goodwill
impairment charge of £3,000 million has been made
at 31 March 2001 and thus the full year amortisation
charge is expected to the £100 million from 1 April
2001, based on the revised book value of goodwill.
|
| (e) |
|
Adjustment to the group tax charge
to reflect group relief for Viag Interkom’s
losses at 30%.
|
|
|
| |
4.
Combined group
This gives pro forma effect to acquisition of Viag
Interkom by combining the historic results of operations
of BT for the year ended 31 March 2001 with the
historic results of Viag Interkom for the year ended
31 December 2000, after taking into account financing
adjustments, preliminary purchase accounting adjustments
and the elimination of intercompany transactions.
5. BT Wireless discontinued
operations
As described in the Business Review, the group has
announced that it plans to seek a demerger and listing
of BT Wireless. These adjustments present management’s
best assessment of the historical results of operations
and the historical financial position of BT Wireless
to reflect the demerger of BT Wireless from BT as
though that transaction had occurred on (i) 1 April
1998 in respect of the unaudited pro forma condensed
statements of operations; and (ii) 31 March 2001
in respect of the unaudited pro forma condensed
combined balance sheet. These historical results
are not necessarily indicative of the stand-alone
results of BT Wireless had the group operated as
a stand-alone entity during that period. BT Wireless
is assumed to have been demerged free of all cash
and outstanding intercompany balances. Accordingly,
the historical balance sheet of BT Wireless as of
31 March 2001 excludes all such balances, which
have been reclassified as invested equity on the
BT Wireless balance sheet. An assumption has been
made that BT Wireless will not assume any third
party debt from BT, nor retain any third party debt
that exists on its own balance sheet. The historical
results of operations of BT Wireless for the year
ended 31 March 2001 have been further adjusted to
give pro forma effect to the acquisition of the
wireless business of Viag Interkom as though that
acquisition had occurred on 1 April 2000.
6. Yell discontinued operations
As described in the Business Review, the group has
announced that it plans to seek a demerger and listing
or sale of Yell. These adjustments present management’s
best assessment of the historical results of operations
and the historical financial position of Yell to
reflect the demerger or sale of Yell as though that
demerger or sale had occurred on (i) 1 April 1998
in respect of the unaudited pro forma condensed
statements of operations; and (ii) 31 March 2001
in respect of the unaudited pro forma condensed
combined balance sheet. These historical results
are not necessarily indicative of the stand-alone
results of Yell had that group operated as a stand-alone
entity. Yell is assumed to have been demerged or
sold free of all cash and outstanding intercompany
balances. Accordingly, the historical balance sheet
of Yell as of 31 March 2001 excludes all such balances,
which have been reclassified as invested equity
on the Yell balance sheet. An assumption has been
made that Yell will not assume any third-party debt
from BT, nor retain any third-party debt that exists
on its own balance sheet.
7. Other adjustments
To record the historical amount of intercompany
revenue and expense transactions between (i) pro
forma BT and (ii) BT Wireless and Yell. These amounts
were eliminated in the BT consolidated financial
statements and are not therefore reflected in BT’s
historical consolidated results of operations.
8. Pro forma basic and
diluted earnings per share
The calculations of pro forma basic earnings per
share are based on the net profit attributable to
shareholders divided by the average number of shares
in issue during the period, after deducting the
shares held by employee share ownership trusts.
In calculating pro forma diluted earnings per share,
the average number of shares in issue during the
period presented have been adjusted for share options
outstanding and other potential ordinary shares.
Details of the basic and total diluted weighted
average number of shares in each year are set out
in note
13 of this Annual Report on Form 20-F.
9. Reconciliation to US
GAAP
BT prepares its consolidated financial statements
in accordance with accounting principles that conform
in all material respect with UK GAAP, which differs
in certain material respects from US GAAP.
A summary of the significant differences between
UK and US GAAP that are relevant to the BT pro forma
financial information is set out in the United
States generally accepted accounting policies
section of this Annual Report on Form 20-F.
The calculation of pro forma combined net income
under US GAAP for each of the three years ended
31 March 2001 is as follows: |
|
| |
|
|
|
|
|
|
|
|
|
| Pro forma profit on ordinary
activities after taxation and minority interests
under UK GAAP |
|
943 |
|
2,155 |
|
2,910 |
|
| Adjustment for: |
|
|
|
|
|
|
|
| Pension costs |
|
(42 |
) |
(209 |
) |
(104 |
) |
| Redundancy charges |
|
(453 |
) |
(300 |
) |
(284 |
) |
| Capitalisation of
interest, net of related depreciation |
|
(13 |
) |
(14 |
) |
(19 |
) |
| Goodwill amortisation |
|
(27 |
) |
(45 |
) |
101 |
|
| Mobile licences,
software and other intangible asset capitalisation
and amortisation, net |
|
(32 |
) |
(33 |
) |
(226 |
) |
| Financial instruments |
|
(133 |
) |
(129 |
) |
(6 |
) |
| Deferred gain |
|
(71 |
) |
(19 |
) |
– |
|
| Deferred taxation |
|
108 |
|
106 |
|
220 |
|
| Other |
|
(38 |
) |
– |
|
(60 |
) |
|
| Pro forma net income as adjusted
for US GAAP |
|
242 |
|
1,512 |
|
2,532 |
|
|
|
| |
| The
calculation of pro forma BT shareholders’
equity (deficit) under US GAAP as of 31 March 2001
is as follows: |
|
| |
|
| Pro forma capital and reserves
(deficit) under UK GAAP |
|
(5,479 |
) |
| Adjustment for: |
|
|
|
| Pension costs |
|
(2,755 |
) |
| Redundancy costs |
|
(25 |
) |
| Capitalisation of interest,
net of related depreciation |
|
259 |
|
| Goodwill, net of accumulated
amortisation |
|
139 |
|
| Mobile licences, software and
other intangible asset capitalisation and amortisation,
net |
|
521 |
|
| Financial instruments |
|
(620 |
) |
| Deferred gain |
|
(323 |
) |
| Deferred taxation |
|
(1,296 |
) |
|
| Shareholders’ equity (deficit)
as adjusted for US GAAP |
|
(9,579 |
) |
|
|
| |
10.
Pro forma basic and diluted earnings per ADS
Each
ADS is equal to 10 ordinary shares of 25p each. |
| |
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