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Introduction
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The financial results
for the 2005 and 2004 financial years reflect the continuing strong
growth in new wave services as we derive value from transforming
the business. Our results reflect the continuing transformation
of our business operations and markets in an environment 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 networked IT services, broadband, mobility and
managed services and continued cost efficiency programmes. Our global
networked IT services business is growing strongly and our global
capabilities have been strengthened by the successful completion
of the acquisitions of Albacom and Infonet in the 2005 financial
year. Subsequent to the year end we also completed the acquisition
of Radianz.
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.
In this Financial review
the commentary is focused principally on the trading results of
BT Group before goodwill amortisation and exceptional items. Goodwill
amortisation and 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.
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