Welcome to our 2008 Annual Report.

We have divided the report into four sections:

Overview: this section contains a summary of the strategy, performance and activities of the group as well as messages from your Chairman and Chief Executive

Report of the Directors: this section provides detailed information about what the businesses within BT do and their financial performance in the year. The section also gives details of BT’s commitment to the wider community and how we govern ourselves

Financial statements: this section includes the consolidated financial statements, the notes to the financial statements and other useful summary financial information and operational statistics

Additional information: this section provides helpful information for shareholders and a glossary and index to make this report easier to navigate

BT Group plc is a public limited company registered in England and Wales and listed on the London and New York stock exchanges. It was incorporated in England and Wales on 30 March 2001 as Newgate Telecommunications Limited with the registered number 4190816. Its registered office address is 81 Newgate Street, London EC1A 7AJ. The company changed its name to BT Group plc on 11 September 2001. Following the demerger of O2 in November 2001, the continuing activities of BT were transferred to BT Group plc.
     British Telecommunications plc is a wholly owned subsidiary of BT Group plc and encompasses virtually all the businesses and assets of the BT group. The successor to the statutory corporation British Telecommunications, it was incorporated in England and Wales as a public limited company, wholly owned by the UK Government, as a result of the Telecommunications Act 1984. Between November 1984 and July 1993, the UK Government sold all of its shareholding in British Telecommunications plc in three public offerings.
     This is the Annual Report for the year ended 31 March 2008. It complies with UK regulations and is the Annual Report on Form 20-F for the US Securities and Exchange Commission to meet US regulations. This Annual Report has been sent to shareholders who have elected to receive a copy. A separate annual review and notice of meeting (including a summary financial statement) for the year ended 31 March 2008 has been issued to all shareholders.
     In this Annual Report, references to ‘BT Group’, ‘BT’, ‘the group’, ‘the company’, ‘we’ or ‘our’ are to BT Group plc (which includes the continuing activities of British Telecommunications plc) and its subsidiaries and lines of business, or any of them as the context may require.
     References to a year are to the financial year ended 31 March of that year, eg ‘2008’ refers to the year ended 31 March 2008. Unless otherwise stated, all non-financial statistics are at 31 March 2008. Please see cautionary statement regarding forward-looking statements.
     A number of measures quoted in this Annual Report are ‘non-GAAP’ measures. The Directors believe these measures provide a more meaningful analysis of the trading results of the group and are consistent with the way financial performance is measured by management. These include EBITDA and profit before taxation and specific items, earnings per share before specific items, earnings per share before specific items and leaver costs, net debt and free cash flow. The rationale for using non GAAP measures and reconciliations to the most directly comparable IFRS indicator are provided in Introduction to the financial review, Line of business results table (opens new window), Specific items, Earnings per share, Free cash flow, Accounting policies, and Net debt.