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 Home >> Consolidated financial statements>> Notes to the financial statements

2. Segmental analysis

The group provides telecommunication services, principally in the UK and essentially operates as a unitary business. Its main services and products are fixed voice and data calls, the provision of fixed exchange lines to homes and businesses, the provision of communication services to other operators, the provision of private services to businesses and the supply of telecommunication equipment for customers’ premises.

The turnover of each line of business is derived as follows:

  • BT Retail derives its turnover from the supply of exchange lines and from the calls made over these lines, the leasing of private circuits and other private services, the sale and rental of customer premises equipment to the group’s UK customers and other lines of business and from its narrowband and broadband internet access products.
  • BT Wholesale derives its turnover from providing network services to BT Retail and other BT lines of business, and from interconnecting the group’s UK network to other operators.
  • BT Global Services (formerly BT Ignite) mainly generates its turnover from outsourcing and systems integration work and from the fixed network operations of the group’s European subsidiaries. The business also derives revenues from providing web hosting facilities to end customers and through BT lines of business.

Segmented information on the lines of business is given below for the years ended 31 March 2003, 31 March 2002 and 31 March 2001 as required by the UK accounting standard SSAP 25 and the US accounting standard SFAS No. 131 (SFAS 131).

There is extensive trading between the lines of business and profitability is dependent on the transfer price levels. These intra-group trading arrangements and operating assets have been subject to review and have changed in certain instances. In addition, the group moved management responsibility of BT Openworld to BT Retail. Comparative figures have been restated for these and other changes and in certain instances have been determined using apportionments and allocations.

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Operating
profit (loss) of
associates
and joint
ventures
Turnover

Depreciation
and
amortisation

Total
operating
profit (loss)
External Internal Group
total
Year ended 31 March 2003 £m £m £m £m £m £m












BT Retail 11,333 1,968 13,301 210 (3 ) 1,421
BT Wholesale 3,472 7,788 11,260 1,923 (1 ) 1,923
BT Global Services 3,882 1,369 5,251 624 180 (266 )
Other 40 1 41 278 153 (177 )
Intra-group (11,126 ) (11,126 )












Group totals 18,727 18,727 3,035 329 2,901












Operating
profit (loss) of
associates
and joint

ventures
Turnover

Depreciation
and

amortisation
Total
operating

profit (loss)
Group
total
External Internal
Year ended 31 March 2002 £m £m £m £m £m £m












BT Retail 10,724 2,087 12,811 255 (6 ) 866
BT Wholesale 3,700 8,556 12,256 1,914 2,163
BT Global Services 3,635 837 4,472 2,828 144 (2,540 )
Concert (1,123 ) (1,123 )
Other 58 12 70 348 (458 ) (855 )
Intra-group (11,162 ) (11,162 )












Total continuing activities 18,117 330 18,447 5,345 (1,443 ) (1,489 )












mmO2 2,273 392 2,665 648 5 (461 )
Other 169 2 171 8 57 90
Intra-group (724 ) (724 )












Total discontinued activities 2,442 (330 ) 2,112 656 62 (371 )












Group totals 20,559 20,559 6,001 (1,381 ) (1,860 )












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                  Operating
profit (loss) of
associates
and joint
ventures
     
Turnover

Depreciation
and
amortisation
Total
operating
profit (loss)
Group
total
External Internal
Year ended 31 March 2001 £m £m £m £m £m £m












BT Retail 10,721 1,820 12,541 220 (59 ) 595
BT Wholesale 3,005 8,723 11,728 1,738 2,538
BT Global Services 2,966 502 3,468 646 (72 ) (668 )
Concert (1 ) (1 )
Other 127 11 138 376 (399 ) (8 )
Intra-group (10,734 ) (10,734 )












Total continuing activities 16,819 322 17,141 2,980 (531 ) 2,456












mmO2 2,865 523 3,388 3,416 (290 ) (3,416 )
Other 743 6 749 35 424 590
Intra-group (851 ) (851 )












Total discontinued activities 3,608 (322 ) 3,286 3,451 134 (2,826 )












Group totals 20,427 20,427 6,431 (397 ) (370 )












Transactions between divisions are at prices set in accordance with those agreed with Oftel where the services provided are subject to regulation. Other transactions are at arm’s length.

The following tables show the capital expenditure on plant, equipment and property, the net operating assets or liabilities and the net book value of associates and joint ventures by line of business for the years ended 31 March 2003 and 2002. Net operating assets comprise tangible and intangible fixed assets, stocks, debtors, less creditors (excluding loans and other borrowings) and provisions for liabilities and charges (excluding deferred tax).

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Net operating Associates
Capital assets and joint
expenditure (liabilities) ventures
Year ended 31 March 2003 £m £m £m






BT Retail 115 (430 ) (8 )
BT Wholesale 1,652 12,041
BT Global Services 439 1,912 141
Other 239 217 25






Total 2,445 13,740 158






Net operating Associates
Capital assets and joint
expenditure (liabilities) ventures
Year ended 31 March 2002 £m £m £m






BT Retail 153 (215 ) (3 )
BT Wholesale 1,974 12,163 1
BT Global Services 609 1,907 320
Concert 338
Other 364 479 22






Total continuing activities 3,100 14,334 678






mmO2 807
Other 1






Total discontinued activities 808






Total 3,908 14,334 678






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Information about geographic areas:
2003 2002 2001
£m £m £m






Turnover with external customers
Attributable to UK 17,536 16,703 15,924
Attributable to non-UK countriesa 1,191 1,414 895






Total continuing activitiesb 18,727 18,117 16,819






Attributable to UK 1,555 2,718
Attributable to non-UK countriesa 887 890






Total discontinued activities 2,442 3,608






Group turnover 18,727 20,559 20,427






a Turnover attributable to non-UK countries comprises the external turnover of group companies and branches operating outside the UK, income from non-UK operators for calls terminating in or in transit through the UK and turnover with non-UK joint ventures and associates.
   
b The group turnover from continuing activities as disclosed in the group profit and loss account includes intra-group trading with discontinued activities.
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2003 2002
£m £m






Group fixed assets are located
UK 14,785 15,384
Europe, excluding the UK 1,227 1,275
Americas 510 683
Asia and Pacific 139 209






Total 16,661 17,551






Geographical segment analysis in accordance with the requirements of SSAP 25 is as follows:
2003 2002 2001
£m £m £m






Total turnover on basis of origin
UK 17,544 16,428 15,580
Europe, excluding the UK 2,151 2,449 1,840
Americas 155 2,000 2,557
Asia and Pacific 332 608 769






Total continuing activitiesa 20,182 21,485 20,746






UK 1,635 2,920
Europe, excluding the UK 927 1,244
Americas 36 214
Asia and Pacific 559 4,542






Total discontinued activities 3,157 8,920






Total 20,182 24,642 29,666






a The total turnover from continuing activities as disclosed in the group profit and loss account includes intra-group trading with discontinued activities.
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2003 2002 2001
£m £m £m






Group turnover on basis of origin
UK 17,536 16,703 15,924
Europe, excluding the UK 978 1,113 507
Americas 153 147 154
Asia and Pacific 60 154 234






Total continuing activitiesa 18,727 18,117 16,819






UK 1,555 2,718
Europe, excluding the UK 851 676
Americas 36 214






Total discontinued activities 2,442 3,608






Total 18,727 20,559 20,427






a The group turnover from continuing activities as disclosed in the group profit and loss account includes intra-group trading with discontinued activities.

The analysis of turnover by geographical area is stated on the basis of origin. In an analysis of turnover by destination, incoming and transit international calls by country of origin and turnover with non-UK joint ventures and associates would be treated differently but would not lead to a materially different geographical analysis. See the ‘‘information about geographic areas’’ above.

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2003 2002 2001
£m £m £m






Group operating profit (loss)
UK 3,220 2,628 3,330
Europe, excluding the UK (627 ) (2,829 ) (252 )
Americas (28 ) 153 15
Asia and Pacific 7 2 (106 )






Total continuing activities 2,572 (46 ) 2,987






UK 4 156
Europe, excluding the UK (429 ) (3,094 )
Americas (6 ) (22 )
Asia and Pacific (2 )






Total discontinued activities (433 ) (2,960 )






Total 2,572 (479 ) 27






2003 2002 2001
£m £m £m






Share of operating results of associates and
 joint ventures,
including goodwill
 amortisation – profits (losses)
UK (2 ) (17 ) (51 )
Europe, excluding the UK 305 (240 ) (212 )
Americas (1 ) (1,135 ) (66 )
Asia and Pacific 27 (51 ) (202 )






Total continuing activities 329 (1,443 ) (531 )






UK 5 19
Europe, excluding the UK 20 (259 )
Asia and Pacific 37 374






Total discontinued activities 62 134






Total 329 (1,381 ) (397 )







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2003 2002


Net
operating Associates Net Associates
assets and joint operating and joint
(liabilities) ventures Total assets ventures Total
£m £m £m £m £m £m












Net operating
 assets
 (liabilities)
UK 12,196 (8 ) 12,188 13,186 (2 ) 13,184
Europe, excluding
 the UK
1,652 76 1,728 925 178 1,103
Americas (85 ) (85 ) 222 337 559
Asia and Pacific (23 ) 90 67 1 165 166












Total 13,740 158 13,898 14,334 678 15,012












Net operating assets comprise tangible and intangible fixed assets, stocks, debtors less creditors (excluding loans and other borrowings), and provisions for liabilities and charges (excluding deferred tax).

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