BTPLC Annual Report 2005 - Financial review

In the 2005 financial year, the total net interest charge, including BT’s share of its ventures’ charges, at £801 million was £140 million lower than in the preceding year, which in turn was £498 million lower than in the 2003 financial year. Of the total net charge, £787 million arises in the group for the 2005 financial year, compared with £924 million and £1,420 million in the 2004 and 2003 financial years, respectively.
     The reduction in the net interest charge in the 2005 financial year reflects the continued reduction in the level of net debt. In addition, there were no exceptional interest charges or credits in the 2005 financial year compared to a net exceptional charge of £55 million in the 2004 financial year. The net exceptional charge in the 2004 financial year represents the premium on buying back €1.1 billion of 7.125% bonds due in 2011 and US$195 million of the group’s US dollar bonds, partially offset by a credit from the one off interest recognised on full repayment of loan notes received as part of the original consideration from the disposal of Yell.
     The reduction in the net interest charge in the 2004 financial year reflects the reduction in the level of net debt and lower net exceptional charges in the 2004 financial year.
     The net interest charge in the 2003 financial year includes the £293 million exceptional cost of terminating fixed interest rate swaps as a consequence of the receipt of the Cegetel sale proceeds.
     Interest cover in the 2005 financial year represented 3.6 times total operating profit before goodwill amortisation and exceptional items, and compares with interest cover of 3.3 in the 2004 financial year and 2.6 in the 2003 financial year. The improvement in cover is due to the reduction in the interest charge mainly arising from the reduction in net debt.

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