Introduction to the Financial review

In the Financial review we discuss the results of the group and the customer-facing lines of business for 2008, 2007 and 2006. We explain the performance of the business using a variety of measures, some of which are not explicitly defined under IFRS, and are therefore termed ‘non-GAAP measures’. These measures are in addition to, and supplement, those prepared in accordance with IFRS. In particular, in this Financial review, we principally focus on our trading results before specific items, a non-GAAP measure. This is consistent with the way that financial performance is measured by management and assists in providing a meaningful analysis of our results. The directors believe that presentation of the group’s trading results in this way is relevant to an understanding of the group’s performance as specific items are significant one-off or unusual in nature and have little predictive value. Specific items are therefore analysed and discussed separately in this Financial review. The other non-GAAP measures we use in this Financial review are EBITDA before specific items, BT Global Services EBITDA before specific items and leaver costs, together with the associated margin, earnings per share before specific items, free cash flow and net debt.
     Each of these measures is discussed in more detail at the end of this section.
     In the Financial review, references we make to ‘2008’, ‘2007’, ‘2006’ and ’2009’ are to the financial years ended 31 March 2008, 2007, 2006 and 2009, respectively. References to ‘the year’ and ‘the current year’ are to the year ended 31 March 2008.

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