BT Report 2001



	Home

	Headlines and five-year summary

	Chairman's message

	Chief Executive's statement

	Message from Sir Iain Vallance

	Business review

	Our commitment to society

	Financial review

	Directors, directors' report and corporate governance

	Risk factors

	Report on directors' remuneration

	Consolidated financial statements

	Additional information

	PDF download

back to Financial review >>

In the 2001 financial year, the total net interest charge, including BT's share of its ventures' charges, at £1,314 million was £932 million higher than in the preceding year, which in turn was £96 million higher than in the 1999 financial year. Of the total charge, £1,044 million arises in the BT group for the 2001 financial year, compared with £306 million and £261 million in the 2000 and 1999 financial years, respectively.

The substantially higher charge in the 2001 financial year is due to the cost of funding the third-generation mobile licences, principally in the UK and Germany, and the cost of acquisitions in the 2001 and 2000 financial years, including the BT Cellnet minority interests, the Esat group, Telfort and Viag Interkom. There has also been a £194 million increase in BT's share of its ventures' interest charges principally through the Japanese investments and Viag Interkom. The group's net interest charge has bene┤ed in the year by an exceptional interest receipt of £25 million relating to the rates refund from the UK Government, noted above.

The higher total interest charge in the 2000 financial year over the previous year was due to an increase in BT's share of its ventures interest costs and the cost of funding the acquisitions made by BT during the 2000 financial year, including the BT Cellnet minority acquisition.

Interest cover for the 2001 financial year represented 2.6 times total operating pro┤ before goodwill amortisation and impairment, and compares with interest cover of 8.8 in the 2000 financial year and 12.2 in the 1999 financial year. The decline in cover is due to the substantial increase in the interest charge compared with a relatively static operating pro┤ before goodwill amortisation and impairment. We expect the net interest charge to further increase and interest cover to decline in the 2002 financial year following the signi▂ant increase in net debt during the 2001 financial year to be o︿et in part by the expected proceeds of the rights issue and the sales of investments already announced.