|
The 2004 financial year was marked by
the continuing transformation of our business operations and markets, where the
pace of change is accelerating. We are driving the change by providing our
customers with new technology and services with greater capabilities and lower
cost. The focus on delivering the strategy continued and the group’s
performance benefited from the growth in new wave activities such as
Information and Communications Technology (ICT) solutions, broadband, mobility
and managed services and continued cost efficiency programmes.
The 2003 financial year was characterised
by a focus on implementing and delivering the strategy announced in April 2002
and further corporate transactions in the continued restructuring of the group
and reduction of net debt. The corporate transactions included the unwind of
the Concert joint venture on 1 April 2002 and the disposal of our interest in
Cegetel for £2.6 billion.
The 2002 financial year was dominated by a series of corporate transactions
designed to focus and transform the group and reduce its net debt position.
Those corporate transactions included raising £5.9 billion through the rights
issue in June 2001, selling our Japanese telecom and Spanish mobile investments
for £4.8 billion, selling the Yell directories business for approximately £2
billion, the demerger of mmO2and the sale and leaseback of
properties for £2.4 billion.
As a result of the major
restructuring of the group and the significant level of corporate transactions
completed during the period under review, we believe it is difficult for
investors to meaningfully compare the financial performance of the group
between the financial years under review. In this Financial review the
commentary is therefore focused principally on the trading results of the
continuing activities of BT Group before goodwill amortisation and exceptional
items. In comparing the continuing activities of the group, the results of our
discontinued activities, namely our Japanese telecom and Spanish mobile
investments, Yell and mmO2 are excluded. Goodwill amortisation is
excluded because the annual charge has varied significantly during the period
under review as a result of the corporate transactions noted above and the
exceptional impairment charges. The exceptional items, by virtue of their size
or nature, are excluded because they predominantly relate to corporate
transactions rather than the trading activities of the group. This is also
consistent with the way that financial performance is measured by management
and we believe allows a meaningful comparison to be made of the trading results
of the group during the period under review.
The goodwill amortisation and exceptional
items are therefore analysed and discussed separately from the line of business
results in this Financial review because they are considered to be a reflection
of the corporate activity rather than the trading activity of the lines of
business.
The following table shows the
summarised profit and loss account which includes a reconciliation of the key
performance measures before and after goodwill amortisation and exceptional
items and is discussed further in this Financial review. The operating results
by line of business are discussed in addition to the overall group results as
we believe the activities and markets they serve are distinct and this analysis
provides a greater degree of insight to investors.
Summarised profit and loss
account
| |
2004 |
|
2003 |
|
2002 |
|
|
|
|
| Continuing |
Continuing |
|
|
|
| activities |
activities |
Continuing |
|
| and total |
and total |
activities |
Total |
* |
| £m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
| Total turnover |
18,914 |
|
20,182 |
|
21,815 |
|
24,642 |
|
| Group’s share of associates’ and joint
ventures’ turnover |
(395 |
) |
(1,455 |
) |
(4,049 |
) |
(4,764 |
) |
| Trading between group and principal joint
venture |
– |
|
– |
|
681 |
|
681 |
|
|
|
|
|
|
|
|
|
|
| Group turnover |
18,519 |
|
18,727 |
|
18,447 |
|
20,559 |
|
| Other operating income |
177 |
|
215 |
|
361 |
|
362 |
|
| Operating costs |
(15,823 |
) |
(16,370 |
) |
(18,854 |
) |
(21,400 |
) |
|
|
|
|
|
|
|
|
|
| Group operating profit (loss): |
|
|
|
|
|
|
|
|
Before
goodwill amortisation and
exceptional items |
2,892 |
|
2,790 |
|
2,771 |
|
2,580 |
|
| Goodwill
amortisation |
(12 |
) |
(20 |
) |
(121 |
) |
(352 |
) |
| Exceptional
items |
(7 |
) |
(198 |
) |
(2,696 |
) |
(2,707 |
) |
| |
2,873 |
|
2,572 |
|
(46 |
) |
(479 |
) |
| Group’s share of operating profit (loss)
of associates and joint ventures |
(34 |
) |
329 |
|
(1,443 |
) |
(1,381 |
) |
|
|
|
|
|
|
|
|
|
| Total operating profit (loss): |
|
|
|
|
|
|
|
|
Before
goodwill amortisation and
exceptional items |
2,884 |
|
2,971 |
|
2,663 |
|
2,546 |
|
| Goodwill
amortisation |
(12 |
) |
(22 |
) |
(162 |
) |
(405 |
) |
| Exceptional
items |
(33 |
) |
(48 |
) |
(3,990 |
) |
(4,001 |
) |
| |
2,839 |
|
2,901 |
|
(1,489 |
) |
(1,860 |
) |
| Profit on sale of group undertakings and
fixed asset investments |
36 |
|
1,691 |
|
21 |
|
4,389 |
|
| Profit on sale of property fixed assets |
14 |
|
11 |
|
1,089 |
|
1,089 |
|
| Amounts written off investments |
– |
|
(7 |
) |
(535 |
) |
(535 |
) |
| Net interest payable |
(941 |
) |
(1,439 |
) |
(1,579 |
) |
(1,622 |
) |
|
|
|
|
|
|
|
|
|
| Profit (loss) on ordinary activities
before taxation: |
|
|
|
|
|
|
|
|
Before
goodwill amortisation and
exceptional items |
2,016 |
|
1,829 |
|
1,273 |
|
1,113 |
|
| Goodwill
amortisation |
(12 |
) |
(22 |
) |
(162 |
) |
(405 |
) |
| Exceptional
items |
(56 |
) |
1,350 |
|
(3,604 |
) |
753 |
|
| |
1,948 |
|
3,157 |
|
(2,493 |
) |
1,461 |
|
| |
|
|
|
|
|
|
|
|
| Tax |
(539 |
) |
(459 |
) |
(385 |
) |
(443 |
) |
|
|
|
|
|
|
|
|
|
| Profit (loss) after taxation |
1,409 |
|
2,698 |
|
(2,878 |
) |
1,018 |
|
| Minority interests |
8 |
|
(12 |
) |
(10 |
) |
(23 |
) |
|
|
|
|
|
|
|
|
|
| Profit (loss) for the financial year |
1,417 |
|
2,686 |
|
(2,888 |
) |
995 |
|
|
|
|
|
|
|
|
|
|
| Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
Before
goodwill amortisation and
exceptional items |
16.9 |
p |
14.2 |
p |
8.8 |
p |
6.1 |
p |
| Goodwill
amortisation |
(0.1 |
)p |
(0.3 |
)p |
(2.0 |
)p |
(5.0 |
)p |
| Exceptional
items |
(0.4 |
)p |
17.3 |
p |
(41.6 |
)p |
10.9 |
p |
| |
16.4 |
p |
31.2 |
p |
(34.8 |
)p |
12.0 |
p |
|
|
|
|
|
|
|
|
|
| * Including discontinued activities |
|
|
|
|
|
|
|
|
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