SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
09 February 2006
BT Group plc
(Translation of registrant's name into English)
BT Centre
81 Newgate Street
London
EC1A 7AJ
England
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F..X... Form 40-F.....
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes ..... No ..X..
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- ________
Enclosures: 1. 3rd Quarter Results announcement made on 09 February 2006
February 9, 2006
THIRD QUARTER AND NINE MONTHS RESULTS TO DECEMBER 31, 2005
THIRD QUARTER HIGHLIGHTS
- Revenue of GBP4,946 million, up 8 per cent (3 per cent excluding acquisitions)
- New wave revenue of GBP1,607 million, up 42 per cent, represents one third of
total
- EBITDA before specific items(1) and leaver costs of GBP1,404 million, down
GBP8 million
- Profit before taxation, specific items(1) and leaver costs of GBP568 million,
up 2 per cent
- Earnings per share before specific items (1) and leaver costs of 5.1 pence, up
4 per cent
- Broadband net additions of 0.7 million, BT Retail's share was 31 per cent
The income statement, cash flow statement and balance sheet, drawn up in
accordance with IFRS, from which this information is extracted are set out on
pages 12 to 18.
(1) Specific items are material one off or unusual items as defined in note 4 on
page 22.
Chief Executive's statement
Ben Verwaayen, Chief Executive, commenting on the third quarter results, said:
"We have delivered yet another good set of results in a dynamic business
environment.
"Revenue has grown by 8 per cent and new wave turnover - which now represents
one third of our business - is up 42 per cent. Earnings per share* have grown
for the fifteenth quarter in a row and the improving trend in underlying EBITDA
continues. BT Retail's profitability has grown strongly driven by innovative
products and services aligned with continued focus on cost management. Our
international business continues to grow rapidly and now delivers services in
more than 160 countries around the world. We are fast establishing ourselves as
a global leader.
"Broadband growth continues to be very strong with the number of BT Wholesale
connections now standing at more than seven million. This is pushing the UK to
the front of Europe in broadband take up.
"The transformation of the business continues to deliver value to our customers
and shareholders."
* Before leaver costs and specific items which are material one off or unusual
items as defined in note 4 on page 22.
RESULTS FOR THE THIRD QUARTER AND NINE MONTHS
TO DECEMBER 31, 2005
Third quarter Nine months
2005 2004 Better 2005 2004 Better
(worse) (worse)
GBPm GBPm % GBPm GBPm %
Revenue 4,946 4,584 8 14,551 13,753 6
EBITDA
- before specific
items and leaver
costs 1,404 1,412 (1) 4,152 4,219 (2)
- before specific
items 1,381 1,400 (1) 4,086 4,097 -
Profit before
taxation
- before specific
items and leaver
costs 568 558 2 1,681 1,642 2
- before specific
items 545 546 - 1,615 1,520 6
- after specific
items 545 795 (31) 1,533 1,777 (14)
Earnings per share
- before specific
items and leaver
costs 5.1p 4.9p 4 14.9p 14.2p 5
- before specific
items 4.9p 4.8p 2 14.4p 13.2p 9
- after specific
items 4.9p 7.7p (36) 13.7p 16.3p (16)
Capital expenditure 759 770 1 2,169 2,267 4
Free cash flow 138 387* (64) 515 1,138* (55)
Net debt 8,113 8,046 (1)
* Includes disposal proceeds of GBP450 million (nine months - GBP475 million)
mainly from the sale of the Eutelsat and Starhub investments.
The commentary focuses on the results before specific items and leaver costs.
This is consistent with the way that financial performance is measured by
management and we believe allows a meaningful analysis to be made of the trading
results of the group. Specific items are defined in note 4 on page 22.
The comparative results have been restated to reflect the requirements of IFRS
which the group has adopted (see note 1).
The income statement, cash flow statement and balance sheet are provided on
pages 12 to 18. A reconciliation of EBITDA to group operating profit is provided
on page 26. A definition and reconciliation of net debt is provided on page 25.
GROUP RESULTS
Revenue was 8 per cent higher at GBP4,946 million in the quarter with the
continued strong growth of new wave revenue more than offsetting the decline in
traditional revenue. Underlying revenue, adjusted for the acquisitions of
Albacom and Infonet, was 3 per cent higher than last year. Earnings per share
before specific items and leaver costs increased by 4 per cent to 5.1 pence, the
fifteenth consecutive quarter of year on year growth. EBITDA before specific
items and leaver costs was down 0.6 per cent compared to 2.3 per cent last
quarter, continuing the improving trend of recent quarters.
The strong growth in new wave business has continued and at GBP1,607 million new
wave revenue was 42 per cent higher than last year and now represents one third
of the group's total revenue. New wave revenue is mainly generated from
networked IT services, broadband and mobility. Networked IT services revenue
grew by 42 per cent to GBP1,046 million, broadband revenue increased by 48 per
cent to GBP374 million and mobility revenue increased by 22 per cent to GBP67
million. Excluding Albacom and Infonet, the organic growth in new wave revenue
was 27 per cent.
Networked IT services contract wins were GBP1.2 billion in the third quarter and
the value of total orders achieved over the last twelve months was GBP8.1
billion. BT had 6.9 million wholesale broadband connections at December 31,
2005, an increase of 2.8 million connections compared to last year. As a
demonstration of BT's commitment to delivering higher speed broadband to UK
consumers, technical trials are underway to deliver broadband speeds of up to
8Mbps near nationally. The service will be launched in Spring 2006. During the
third quarter, we commenced sales of BT Fusion, the world's first seamless
combined fixed and mobile communications service on a single handset.
Revenue from the group's traditional businesses declined by 3 per cent
(5 per cent excluding the impact of Albacom) continuing recent trends. This
reflects regulatory intervention, competition, price reductions and also
technological changes that we are using to drive customers from traditional
services to new wave services.
Consumer revenue in the third quarter was 5 per cent lower. New wave consumer
revenue increased by 43 per cent, driven by the continuing growth of broadband.
Traditional consumer revenue declined by 10 per cent year on year reflecting the
continued impact of Carrier Pre-Selection (CPS), Wholesale Line Rental (WLR) and
broadband substitution.
The underlying 12 month rolling average revenue per consumer household (net of
mobile termination charges) of GBP252 declined by GBP1 compared to last quarter,
with increased broadband volumes almost offsetting lower call revenues.
Contracted revenues were 66 per cent of the total, which is 5 percentage points
higher than last year.
Revenue from smaller and medium sized (SME) UK businesses declined by
5 per cent. New wave revenue grew by 14 per cent driven by continued growth in
broadband and networked IT services. The number of BT Business Plan locations
increased by 24 per cent against last year to 520,000 by December 31, 2005, an
increase of 3 per cent in the quarter. BT Business Plan now covers over 50 per
cent of SME call revenues.
Major corporate (UK and international) revenue showed continued strong growth of
20 per cent compared to the third quarter of last year, with growth in new wave
revenue (44 per cent) more than offsetting the decline in traditional services.
Excluding the impact of Albacom and Infonet, revenue grew by 9 per cent. There
is a continued migration from traditional voice only services to networked IT
services and an increase in mobility and broadband revenue. New wave revenue now
represents 59 per cent of major corporate revenues.
Wholesale (UK and Global Carrier) revenue increased by 16 per cent (12 per cent
excluding the impact of Albacom). UK Wholesale new wave revenue increased by 47
per cent to GBP265 million, mainly driven by broadband and managed services.
Our estimate of market share by volume of fixed to fixed voice minutes is based
on our actual minutes, market data provided by Ofcom and an extrapolation of the
historical trends. BT's estimated UK consumer market share declined by 1.2
percentage points compared to last quarter to around 58 per cent whilst the
estimated business market share remained at around 41 per cent.
Group operating costs before specific items increased by 10 per cent year on
year to GBP4,329 million, including the costs from Albacom and Infonet. Net
staff costs before leaver costs increased by GBP51 million to GBP980 million due
mainly to the acquisitions of Albacom and Infonet, the additional staff to grow
networked IT services and increased levels of activity in the network. Leaver
costs were GBP23 million in the quarter (GBP12 million last year). Payments to
other telecommunication operators increased by 11 per cent year on year at
GBP981 million mainly due to the impact of Albacom and Infonet. Other operating
costs before specific items increased by GBP217 million mainly due to increased
costs of sales from both organic and inorganic growth in networked IT services,
partly offset by cost savings from our efficiency programmes. Depreciation and
amortisation increased by 2 per cent year on year to GBP710 million.
EBITDA before specific items and leaver costs decreased by 0.6 per cent compared
to the 2.3 per cent decline last quarter, continuing the improvement in the
underlying trend seen during the year. Group operating profit before specific
items and leaver costs decreased by 3 per cent to GBP694 million.
Net finance costs were GBP129 million, an improvement of GBP20 million against
last year with the net finance income associated with the group's defined
benefit pension obligation of GBP64 million being GBP14 million higher than last
year.
Profit before taxation, specific items and leaver costs increased by 2 per cent
to GBP568 million with the reduction in net finance costs and share of profits
of associates and joint ventures offsetting the reduction in group operating
profit.
The effective tax rate on the profit before specific items was 24.6 per cent
(25.6 per cent last year). The effective tax rate reflects tax efficient
investment of surplus cash and the continued focus on tax efficiency within the
group.
Earnings per share before specific items increased by 2 per cent to 4.9 pence,
and increased by 4 per cent before specific items and leaver costs.
Cash flow and net debt
Net cash from operating activities in the third quarter amounted to
GBP1,218 million, an increase of GBP144 million primarily as a result of lower
working capital outflows and tax payments in the quarter.
Cash flows from investing activities were a net cash inflow of GBP1,027 million
in the third quarter compared to an outflow of GBP290 million last year. This
includes the cash inflow of GBP1,706 million upon the maturity of investments,
which were used to fund partly the repayment of maturing debt. The net cash
outflow from capital expenditure, net of disposal proceeds, amounted to GBP725
million in the quarter compared to GBP755 million last year.
Cash flows from financing activities were a net outflow of GBP2,741 million in
the third quarter compared to GBP1,340 million last year due to the repayment
of maturing debt of GBP1,862 million.
Free cash flow was a net inflow of GBP138 million in the third quarter (GBP387
million last year). Last year included disposal proceeds of GBP450 million
mainly relating to the sale of the non current asset investments in Eutelsat
and Starhub. The share buyback programme continued with the repurchase of
58 million shares for GBP125 million in the quarter. Net debt was
GBP8,113 million at December 31, 2005, a reduction of GBP20 million in the
quarter. Free cash flow and net debt are defined in notes 7 and 8 on pages
23 to 25.
Pensions
The IAS 19 net pension obligation at December 31, 2005 was a deficit of GBP2.9
billion, net of tax, being a reduction of GBP0.4 billion since March 31, 2005.
The BT Pension Scheme had assets of GBP34 billion at December 31, 2005.
21st Century Network
BT continued to make good progress on its 21CN programme during the quarter.
Following the successful conclusion to the second phase of 21CN voice
transformation trials on strategic equipment in December 2005, the next phase,
the trial of telephone services over the IP network, will begin in the spring.
Operational planning to migrate customers to the 21CN in Cardiff, which will see
the first live operation of 21CN, is well advanced. Following successful
implementation in Cardiff, BT will proceed to a planned national migration
programme. Through the communication forum, Consult 21, BT, in close
consultation with industry and Ofcom, has made good progress in agreeing the
detailed voice migration plans for the entirety of the migration period.
Line of business results
We reviewed our internal trading arrangements and with effect from April 1, 2005
have made changes to simplify our internal trading and drive synergies. We have
restated the comparative line of business results to assist readers in
understanding the year on year performance. There is no change to the overall
group reported results.
The main changes are firstly, the transfer of BT's UK Major Business operations
into BT Global Services from BT Retail. Secondly, Field Services moved from BT
Retail to BT Wholesale, in anticipation of the creation of Openreach.
Openreach was launched on January 21, 2006 and will be reported as a separate
line of business from the first quarter of next year.
____________________________________________________________________________
The fourth quarter and full year results are expected to be announced on May
18, 2006.
BT Retail
====================================== ============
Third quarter ended December 31 Nine months
ended
December 31
--------------------------------------- ------------
2005 2004* Better (worse) 2005 2004*
GBPm GBPm GBPm % GBPm GBPm
Revenue 2,117 2,175 (58) (3) 6,372 6,595
Gross margin 592 596 (4) (1) 1,741 1,757
SG&A before
leaver costs 385 412 27 7 1,150 1,191
EBITDA before
leaver costs 207 184 23 13 591 566
Leaver costs 8 1 (7) n/m 13 9
EBITDA 199 183 16 9 578 557
Depreciation
and
amortisation 36 33 (3) (9) 109 109
Operating
profit 163 150 13 9 469 448
Capital
expenditure 32 44 12 27 100 116
============= ======= ======= ======= ========= ======= =======
*Restated to reflect changes in intra-group trading arrangements.
BT Retail's EBITDA was 9 per cent higher than last year, building on the growth
reported last quarter. This is a significant turnaround over the previous year's
trends. Gross margins increased by 0.6 percentage points due to improved margin
management and greater network efficiency, coupled with cost transformation
programmes which helped contribute to SG&A savings of GBP27 million. These
factors more than compensated for the 3 per cent decline in revenues. Overall
these results led to an improvement in operating profit in the quarter to
GBP163 million which is 9 per cent higher than last year.
New wave revenue grew by 34 per cent but was more than offset by the traditional
revenue decline of 8 per cent. New wave revenue was 16 per cent of total revenue
in the quarter, up from 12 per cent last year.
The reduction in revenue from traditional services was driven by the continued
high levels of migration to new wave services such as broadband, which is
reflected in a fall of over 45 per cent in dial up internet minutes and a
reduction of 8 per cent in ISDN lines.
We have had success with new initiatives to add value to customer propositions,
such as BT Privacy. More than 2.9 million customers have registered for the
service, an increase of 61 per cent from last quarter.
Broadband revenue grew by 40 per cent to GBP188 million. The growth of broadband
continues with 2,328,000 BT Retail connections at December 31, 2005, an increase
of 10 per cent in the quarter. Net additions of 217,000 were a 31 per cent share
of the BT Wholesale broadband DSL additions in the quarter, an increase of 4
percentage points compared to previous quarter. Market share additions of DSL
plus LLU, were 28 per cent in the quarter, an increase of 3 percentage points
compared to the previous quarter.
In October, we re-launched our simplified consumer broadband tariffs, offering
new and existing customers wireless routers as standard in the higher tier
products, enhanced security features and the option of price competitive Voice
over IP (VoIP) services. Overall consumer broadband net additions were 176,000
for the quarter, an increase in net additions of 11 per cent compared with the
previous quarter.
Business broadband sales orders increased over 30 per cent in the quarter. The
number of customers also taking additional value add services increased over one
hundred percent in the quarter with each broadband order including an average of
1.1 value add services.
Revenue from mobility services increased by 37 per cent year on year to GBP41
million. BT Fusion, the world's first seamless combined fixed and mobile
service, has generated significant customer interest. Following launch of the
market leading V3B ( Motorola RAZR) phone, weekly customer connections have
continued to rise, and reached over 2,000 for the week ending February 3, 2006,
bringing the total number of Fusion customers to over 13,000. The launch of a BT
Fusion proposition for the business market is expected to accelerate further
connections over the next quarter.
Our plan is to introduce a range of converged next generation services to help
make life simpler and better for our customers. At the heart of this will be the
BT Hub, which will enable wireless networking for all the family's PCs and
laptops, next generation TV, voice calls over broadband, video telephony, high
definition voice, monitoring services and remote diagnostics. Our next
generation TV service offering, to be launched later this year, will include
content from Warner Music, Paramount Pictures, BBC Worldwide, National
Geographic Channel, Hit Entertainment and Nelvana.
BT Wholesale
====================================== =============
Third quarter ended December 31 Nine months
ended December 31
-------------------------------------- -------------
2005 2004* Better (worse) 2005 2004*
GBPm GBPm GBPm % GBPm GBPm
External
revenue 1,070 954 116 12 3,115 2,847
Internal
revenue 1,236 1,318 (82) (6) 3,773 3,961
Revenue 2,306 2,272 34 1 6,888 6,808
Variable cost
of sales 551 544 (7) (1) 1,634 1,653
Gross
variable
profit 1,755 1,728 27 2 5,254 5,155
Network and
SG&A before
leaver costs 777 743 (34) (5) 2,315 2,216
EBITDA before
leaver costs 978 985 (7) (1) 2,939 2,939
Leaver costs 2 1 (1) n/m 8 59
EBITDA 976 984 (8) (1) 2,931 2,880
Depreciation
and
amortisation 467 473 6 1 1,386 1,429
Operating
profit 509 511 (2) - 1,545 1,451
Capital
expenditure 491 514 23 4 1,422 1,539
============= ======= ======= ======= ========= ======= ========
*Restated to reflect changes in intra-group trading arrangements.
BT Wholesale revenue of GBP2,306 million increased by 1 per cent driven by
external revenue growth of 12 per cent. Increases in external revenue were
attributable to strong revenue growth in WLR and new wave services. External
revenue from new wave services increased by 47 per cent to GBP265 million and
now accounts for 25 per cent of external revenue compared to 19 per cent last
year.
Internal revenue declined by 6 per cent to GBP1,236 million due to the impact of
lower volumes of calls and lines and lower regulatory prices being reflected in
internal charges. This was partially offset by strong growth from internal
broadband revenue.
Gross variable profit of GBP1,755 million is 2 per cent higher than last year
as a result of overall volume increases and a favourable change in sales mix,
with broadband growth more than offsetting the decline in traditional products.
Higher network and SG&A costs reflect benefits from improved working capital
management last year, and higher broadband activity levels this year combined
with investment to improve customer service. Overall, this has resulted in a
slight decline in EBITDA. Lower depreciation has resulted in operating profit
remaining flat.
Capital expenditure in the quarter was 4 per cent lower than last year.
Investment in legacy network technologies is lower than last year, whilst
capital expenditure continues to be focused on the 21st Century Network and
supporting the growth in broadband.
BT Movio, a wholesale service providing mobile operators with TV and radio
channels to mobile handsets is set for commercial launch later this year. BT
Movio intends to be the first wholesale mobile broadcast entertainment service
to launch in the UK and will provide consumers with a simple to use and reliable
digital TV and radio service.
BT Global Services
======================================= =============
Third quarter ended December 31 Nine months
ended December 31
--------------------------------------- -------------
2005 2004* Better (worse) 2005 2004*
GBPm GBPm GBPm % GBPm GBPm
Revenue 2,211 1,843 368 20 6,391 5,426
EBITDA before
leaver costs 246 245 1 - 718 704
Leaver costs 4 6 2 33 28 44
EBITDA 242 239 3 1 690 660
Depreciation
and
amortisation 160 133 (27) (20) 470 402
Operating
profit 82 106 (24) (23) 220 258
Capital
expenditure 169 141 (28) (20) 482 446
============= ======= ======= ======= ========= ======= =======
*Restated to reflect changes in intra-group trading arrangements.
BT Global Services revenue for the quarter rose by 20 per cent to
GBP2,211 million. Underlying growth, excluding acquisitions, was 8 per cent.
Revenue growth was driven by networked IT services. In addition Multi Protocol
Label Switching (MPLS) grew 35 per cent year on year. Carrier revenue in
underlying terms was up 2 per cent in addition to being boosted by additional
revenues from Albacom. Order intake remained very strong with networked IT
services contract orders of GBP1.2 billion taken in the quarter resulting in
orders of GBP8.1 billion over the last twelve months. A EUR450 million five year
contract with Fiat was secured during the quarter as well as a realigned and
extended contract with the Department for Work and Pensions.
EBITDA before leaver costs increased year on year by GBP1 million. Growth in new
wave and MPLS profitability, including the effect of acquisitions, of GBP26
million was largely offset by the ongoing decline in UK traditional products,
including migration to IPVPNs sold to UK corporates and further reductions in
dial IP due to broadband substitution. Higher depreciation costs in the
acquisitions led to a fall in operating profit of GBP24 million.
Capital expenditure in the quarter at GBP169 million rose by GBP28 million due
mostly to the impact of expenditure in Albacom and Infonet.
BT is playing a prominent role in the NHS National Programme for IT delivering
the national broadband network (N3), the Spine transactional and messaging
database and the London local service provider IT systems. BT successfully
installed 12,000 connections on the N3 network five months ahead of schedule.
Spine now has more then 180,000 registered users. In London, BT delivered on
schedule the first patient administration system specifically designed for the
National Programme, to Queen Mary's Sidcup. BT continues the roll out of
additional deployments across London, including Picture Archiving and
Communications Systems.
GROUP INCOME STATEMENT
for the three months ended December 31, 2005
------------------------- ------ --------------- ----------- ---------
Before specific Specific Total
items items
(note 4)
(unaudited) Notes GBPm GBPm GBPm
------------------------- ------ ---------- ----------- ---------
Revenue 2 4,946 - 4,946
Other operating income 54 - 54
Operating costs 3 (4,329) - (4,329)
Operating profit 2 671 - 671
Finance costs (693) - (693)
Finance income 564 - 564
Net finance costs 5 (129) - (129)
Share of post tax profits
of associates and joint
ventures 3 - 3
Profit before taxation 545 - 545
Taxation (134) - (134)
Profit for the period
attributable to equity
shareholders 411 - 411
Earnings per share 6
- basic 4.9p 4.9p
- diluted 4.8p 4.8p
------------------------- ------ ---------- ----------- ---------
GROUP INCOME STATEMENT
for the three months ended December 31, 2004
------------------------- ------ --------------- ----------- ---------
Before specific Specific Total
items items
(note 4)
(unaudited) Notes GBPm GBPm GBPm
------------------------- ------ ---------- ----------- ---------
Revenue 2 4,584 - 4,584
Other operating income 55 - 55
Operating costs 3 (3,934) (10) (3,944)
Profit on sale of non
current asset investments - 284 284
Operating profit 2 705 274 979
Finance costs (692) - (692)
Finance income 543 - 543
Net finance costs 5 (149) - (149)
Share of post tax losses
of associates and joint
ventures (10) (25) (35)
Profit before taxation 546 249 795
Taxation (140) 3 (137)
Profit for the period
attributable to equity
shareholders 406 252 658
Earnings per share 6
- basic 4.8p 7.7p
- diluted 4.7p 7.7p
------------------------- ------ ---------- ----------- ---------
GROUP INCOME STATEMENT
for the nine months ended December 31, 2005
------------------------ ------ --------------- ----------- ---------
Before specific Specific Total
items items
(note 4)
(unaudited) Notes GBPm GBPm GBPm
------------------------ ------ ----------- ----------- ---------
Revenue 2 14,551 - 14,551
Other operating income 149 - 149
Operating costs 3 (12,725) (82) (12,807)
Operating profit (loss) 2 1,975 (82) 1,893
Finance costs (2,085) - (2,085)
Finance income 1,714 - 1,714
Net finance costs 5 (371) - (371)
Share of post tax profits
of associates and joint
ventures 11 - 11
Profit (loss) before
taxation 1,615 (82) 1,533
Taxation (402) 25 (377)
Profit (loss) for the
period attributable to
equity shareholders 1,213 (57) 1,156
Earnings per share 6
- basic 14.4p 13.7p
- diluted 14.2p 13.5p
------------------------ ------ ----------- ----------- ---------
GROUP INCOME STATEMENT
for the nine months ended December 31, 2004
------------------------ ------ --------------- ----------- ---------
Before specific Specific items Total
items (note 4)
(unaudited) Notes GBPm GBPm GBPm
------------------------ ------ ---------- ----------- ---------
Revenue 2 13,753 - 13,753
Other operating income 154 - 154
Operating costs 3 (11,909) (30) (11,939)
Profit on sale of non
current asset investments - 312 312
Operating profit 2 1,998 282 2,280
Finance costs (2,084) - (2,084)
Finance income 1,626 - 1,626
Net finance costs 5 (458) - (458)
Share of post tax losses
of associates and joint
ventures (20) (25) (45)
Profit before taxation 1,520 257 1,777
Taxation (396) 8 (388)
Profit for the period 1,124 265 1,389
Attributable to:
Equity shareholders 1,125 265 1,390
Minority interests (1) - (1)
Earnings per share 6
- basic 13.2p 16.3p
- diluted 13.1p 16.2p
------------------------ ------ ---------- ----------- ---------
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the nine months ended December 31, 2005
------------------------------------ --------------------------------
Nine months
ended December 31
2005 2004
(unaudited) GBPm GBPm
------------------------------------ -------- ---------
Profit for the period 1,156 1,389
Actuarial gains on defined benefit pension
obligation 625 800
Net losses on cash flow hedges (117) -
Exchange differences on translation of foreign
operations 23 47
Tax on items taken directly to equity (153) (240)
Net gains recognised directly in equity 378 607
Total recognised income for the period 1,534 1,996
Effect of adoption of IAS 32 and IAS 39 (337) -
Total recognised income attributable to equity
shareholders 1,197 1,996
GROUP CASH FLOW STATEMENT
for the three months and nine months ended December 31, 2005
------------------------- ----------------------- -----------------------
Third quarter Nine months
ended December 31 ended December 31
2005 2004 2005 2004
(unaudited) GBPm GBPm GBPm GBPm
------------------------- -------- -------- --------- -------
Cash flow from operating
activities
Cash generated from
operations (note 7 (a)) 1,293 1,207 3,639 3,830
Income taxes paid (75) (133) (317) (175)
Net cash inflow from
operating activities 1,218 1,074 3,322 3,655
Cash flow from investing
activities
Net sale (acquisition) of
subsidiaries, associates
and joint ventures (24) (11) (112) -
Net purchase of property,
plant, equipment
and software (725) (755) (2,082) (2,210)
Interest received 70 32 166 135
Net sale of short term
investments and non
current asset investments 1,706 444 2,288 722
Net cash received (used)
in investing activities 1,027 (290) 260 (1,353)
Cash flows from financing
activities
Repurchase of ordinary
share capital (124) (31) (233) (130)
Net repayments of
borrowings (2,182) (895) (2,206) (1,171)
Interest paid (426) (414) (891) (918)
Equity dividends paid (9) - (549) (454)
Net cash used in financing
activities (2,741) (1,340) (3,879) (2,673)
Effects of exchange rate
changes (23) (22) - (20)
Net decrease in cash and
cash equivalents (519) (578) (297) (391)
Cash and cash equivalents
at beginning of period 1,532 1,192 1,310 1,005
Cash and cash equivalents,
net of bank overdrafts, at
end of period (note 7 (c)) 1,013 614 1,013 614
Free cash flow (note 7 (b)) 138 387 515 1,138
Increase (decrease) in net
debt from cash flows
(note 8 (b)) 19 (345) 379 (554)
GROUP BALANCE SHEET
at December 31, 2005
------------------------- ----------- ----------- ---------
December 31 December 31 March 31
2005 2004 2005
(unaudited) GBPm GBPm GBPm
------------------------- ----------- ----------- ---------
Non current assets
Goodwill and other intangible
assets 1,518 759 1,259
Property, plant and equipment 15,347 15,179 15,386
Other non current assets 116 438 133
Deferred tax assets 1,222 1,301 1,434
18,203 17,677 18,212
Current assets
Inventories 125 119 106
Trade and other receivables 4,640 4,100 4,269
Other financial assets 1,548 3,983 3,634
Cash and cash equivalents 1,247 615 1,312
7,560 8,817 9,321
Total assets 25,763 26,494 27,533
Current liabilities
Loans and other borrowings 3,471 1,883 4,261
Trade and other payables 6,102 5,776 6,772
Other current liabilities 1,137 1,146 1,080
10,710 8,805 12,113
Total assets less current
liabilities 15,053 17,689 15,420
Non current liabilities
Loans and other borrowings 7,493 9,965 7,744
Deferred tax liabilities 1,520 1,737 1,715
Retirement benefit obligations 4,074 4,336 4,781
Other non current liabilities 1,404 1,230 1,085
14,491 17,268 15,325
Capital and reserves
Called up share capital 432 432 432
Reserves 80 (60) (387)
Total equity shareholders' funds 512 372 45
Minority interests 50 49 50
Total equity 562 421 95
15,053 17,689 15,420
------------------------- ----------- ----------- ---------
NOTES (unaudited)
1 Accounting policies and basis of preparation
These primary statements and selected notes comprise the unaudited interim
consolidated financial results of BT Group plc ("the group") for the quarter and
nine months ended December 31, 2005 and 2004, respectively. These interim
financial results do not comprise statutory accounts within the meaning of
Section 240 of the Companies Act 1985. Statutory accounts for the year ended
March 31, 2005 were approved by the Board of Directors on May 18, 2005 and
published on June 1, 2005. The auditor's report on those accounts was
unqualified and did not contain any statement under Section 237 of the Companies
Act 1985.
Previously the group prepared its audited annual financial statements and
unaudited quarterly results under UK Generally Accepted Accounting Principles
(UK GAAP). From April 1, 2005 the group is required to present its annual
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted for use in the European Union (EU). On
July 28, 2005, the group issued its first quarter results which also contained
information on the impact of IFRS on comparative periods in advance of the
publication of the group's annual results under IFRS. Details of the group's
principal accounting policies under IFRS were also included. The financial
information set out in this interim statement has been prepared in accordance
with those accounting policies and the directors intend to apply those policies
in the preparation of the consolidated financial statements for the year ended
March 31, 2006.
Standards currently in issue and adopted by the EU are subject to interpretation
issued from time to time, by the International Financial Reporting
Interpretations Committee (IFRIC). Further standards may be issued by the
International Accounting Standards Board that will be adopted for financial
years beginning on April 1, 2005. Furthermore, due to a number of new and
revised Standards included within the body of the Standards that comprise IFRS,
there is not yet a significant body of established practice on which to draw in
forming opinions regarding interpretation and application. Accordingly, practice
is continuing to evolve. At this preliminary stage, therefore, the full
financial effect of reporting under IFRS as it will be applied and reported on
in the group's first IFRS financial statements for the year ended March 31, 2006
may be subject to change.
These interim financial results have been prepared under the historical cost
convention, except in respect of certain financial assets and liabilities. As
permitted, the group has chosen not to adopt IAS 34 "Interim Financial
Statements", and therefore these interim financial results are not in full
compliance with IFRS.
2 Results of businesses
(a) Operating results
External Internal Group Group operating EBITDA
revenue revenue revenue profit (loss) (ii) (ii)
GBPm GBPm GBPm GBPm GBPm
Third quarter ended
December 31, 2005
BT Retail 2,036 81 2,117 163 199
BT Wholesale 1,070 1,236 2,306 509 976
BT Global Services 1,837 374 2,211 82 242
Other 3 - 3 (83) (36)
Intra-group items(i) - (1,691) (1,691) - -
Total 4,946 - 4,946 671 1,381
Third quarter ended
December 31, 2004
(restated - see below)
BT Retail 2,111 64 2,175 150 183
BT Wholesale 954 1,318 2,272 511 984
BT Global Services 1,513 330 1,843 106 239
Other 6 - 6 (62) (6)
Intra-group items(i) - (1,712) (1,712) - -
Total 4,584 - 4,584 705 1,400
Nine months ended
December 31, 2005
BT Retail 6,130 242 6,372 469 578
BT Wholesale 3,115 3,773 6,888 1,545 2,931
BT Global Services 5,293 1,098 6,391 220 690
Other 13 - 13 (259) (113)
Intra-group items(i) - (5,113) (5,113) - -
Total 14,551 - 14,551 1,975 4,086
Nine months ended
December 31, 2004
(restated - see below)
BT Retail 6,410 185 6,595 448 557
BT Wholesale 2,847 3,961 6,808 1,451 2,880
BT Global Services 4,477 949 5,426 258 660
Other 19 - 19 (159) -
Intra-group items(i) - (5,095) (5,095) - -
Total 13,753 - 13,753 1,998 4,097
(i) Elimination of intra-group revenue between businesses,
which is included in the total revenue of the originating business.
(ii) Before specific items.
We have reviewed our internal trading arrangements and with effect from April 1,
2005 have made changes to simplify our internal trading and drive synergies. We
have restated the comparative line of business results to assist readers in
understanding the year on year performance. There is no change to the overall
group reported results.
2 Results of businesses continued
(b) Revenue analysis
-------------------------------- ---------------------
Third quarter ended Nine months ended
December 31 December 31
-------------------------------- ---------------------
2005 2004 Better (worse) 2005 2004
GBPm GBPm GBPm % GBPm GBPm
Traditional 3,339 3,449 (110) (3) 10,120 10,649
New wave 1,607 1,135 472 42 4,431 3,104
4,946 4,584 362 8 14,551 13,753
Consumer 1,333 1,409 (76) (5) 4,012 4,255
Business 573 606 (33) (5) 1,752 1,858
Major Corporate 1,769 1,473 296 20 5,065 4,341
Wholesale/
Carrier 1,268 1,090 178 16 3,709 3,280
Other 3 6 (3) (50) 13 19
4,946 4,584 362 8 14,551 13,753
(c) New wave revenue analysis
-------------------------------- ---------------------
Third quarter ended Nine months ended
December 31 December 31
-------------------------------- ---------------------
2005 2004 Better (worse) 2005 2004
GBPm GBPm GBPm % GBPm GBPm
Networked IT
services 1,046 738 308 42 2,868 2,071
Broadband 374 253 121 48 1,038 638
Mobility 67 55 12 22 193 147
Other 120 89 31 35 332 248
1,607 1,135 472 42 4,431 3,104
(d) Capital expenditure(1) on property, plant, equipment, software
and motor vehicles:
-------------------------------- ---------------------
Third quarter ended Nine months ended
December 31 December 31
-------------------------------- ---------------------
2005 2004 Better (worse) 2005 2004
GBPm GBPm GBPm % GBPm GBPm
BT Retail 32 44 12 27 100 116
BT Wholesale
Access 238 268 30 11 723 811
Switch 9 31 22 71 27 86
Transmission 45 73 28 38 143 168
Products/systems
support 199 142 (57) (40) 529 474
491 514 23 4 1,422 1,539
BT Global
Services 169 141 (28) (20) 482 446
Other (including
fleet vehicles
and property) 67 71 4 6 165 166
Total 759 770 11 1 2,169 2,267
(1)Capital expenditure, which is recognised on an accruals basis, includes
computer software which is classified within intangible assets.
3 Operating costs
Third quarter ended Nine months ended
December 31 December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Net staff costs(1) before leaver
costs 980 929 2,947 2,686
Leaver costs 23 12 66 122
Net staff costs 1,003 941 3,013 2,808
Depreciation and amortisation 710 695 2,111 2,099
Payments to telecommunication
operators 981 880 2,891 2,832
Other operating costs 1,635 1,418 4,710 4,170
Total before specific items 4,329 3,934 12,725 11,909
Specific items (note 4) - 10 82 30
Total 4,329 3,944 12,807 11,939
(1) Net staff costs comprise gross staff costs less own work capitalised.
4 Specific items
BT will continue to separately identify and disclose any material one off or
unusual items (termed "specific items"). This is consistent with the way that
financial performance is measured by management and we believe assists in
providing a meaningful analysis of the trading results of the group. "Specific
items" may not be comparable to similarly titled measures used by other
companies. In the comparative period the specific items were previously referred
to as exceptional items under UK GAAP.
Third quarter ended Nine months ended
December 31 December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Operating costs (income)
Creation of Openreach - - 70 -
Property rationalisation costs - 10 12 30
Profit on sale of non current
asset investments - (284) - (312)
Total specific items - (274) 82 (282)
5 Net finance costs
Third quarter ended Nine months ended
December 31 December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Finance costs (1) before pension
interest 239 262 723 794
Interest on pension scheme
liabilities 454 430 1,362 1,290
Finance costs 693 692 2,085 2,084
Finance income before pension
income (46) (63) (161) (187)
Expected return on pension scheme
assets (518) (480) (1,553) (1,439)
Finance income (564) (543) (1,714) (1,626)
Net finance costs 129 149 371 458
(1) Finance costs in the third quarter and nine months ended December 31, 2005
include a GBP1 million charge and GBP6 million net credit, respectively, arising
from the re-measurement of financial instruments which are not in hedging
relationships on a fair value basis. A component of these net credits in the
nine months ended December 31, 2005 is the fair value movement in, and realised
gain arising from, the early redemption of the US dollar 2008 LG Telecom
convertible bond amounting to GBP27 million.
6 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
shareholders by the average number of shares in issue after deducting the
company's shares held by employee share ownership trusts and treasury shares. In
calculating the diluted earnings per share, share options outstanding and other
potential ordinary shares have been taken into account. The average number of
shares in the periods were:
Third quarter Nine months
ended December 31 ended December 31
2005 2004 2005 2004
Millions of shares Millions of shares
Basic 8,407 8,512 8,444 8,535
Diluted 8,523 8,579 8,560 8,591
7 (a) Reconciliation of profit to cash generated from operations
Third quarter Nine months
ended December 31 ended December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Profit before tax 545 795 1,533 1,777
Depreciation and amortisation 710 695 2,111 2,099
Associates and joint ventures (3) 35 (11) 45
Employee share scheme costs 22 8 59 20
Net finance costs 129 149 371 458
Profit on disposal of
property assets and non
current asset investments - (291) - (334)
Changes in working capital (124) (216) (585) (367)
Provisions movements,
pensions and other 14 32 161 132
Cash generated from
operations 1,293 1,207 3,639 3,830
7 (b) Free cash flow
Third quarter Nine months
ended December 31 ended December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Cash generated from operations 1,293 1,207 3,639 3,830
Income taxes paid (75) (133) (317) (175)
Net cash inflow from operating
activities 1,218 1,074 3,322 3,655
Included in cash flows from investing
activities
Net purchase of property, plant,
equipment and software (725) (755) (2,082) (2,210)
Net (purchase) sale of non current
asset investments - 450 (1) 475
Dividends received from associates 1 - 1 1
Interest received 70 32 166 135
Included in cash flows from financing
activities
Interest paid (426) (414) (891) (918)
Free cash flow 138 387 515 1,138
Free cash flow is defined as the net increase in cash and cash equivalents less
cash flows from financing activities (except interest paid) and less the
acquisition or disposal of group undertakings. It is not a measure recognised
under IFRS but is a key indicator used by management in order to assess
operational performance.
(c) Cash and cash equivalents
At December 31 At March 31
2005 2004 2005
GBPm GBPm GBPm
Cash at bank and in hand 502 132 206
Short term deposits 745 483 1,106
Cash and cash equivalents 1,247 615 1,312
Bank overdrafts (234) (1) (2)
1,013 614 1,310
8 Net debt
Net debt at December 31, 2005 was GBP8,113 million (December 31, 2004 - GBP8,046
million, March 31, 2005 - GBP7,893 million).
Net debt consists of borrowings less financial assets and cash and cash
equivalents. Borrowings are measured as the net proceeds raised, adjusted to
amortise any discount over the term of the debt. Financial assets and cash and
cash equivalents are measured at the lower of cost and net realisable value.
Currency denominated balances within net debt are translated to sterling at
swapped rates where hedged.
This definition of net debt reflects the future cash flows due to arise on
maturity of financial instruments and removes the balance sheet volatility
arising from the re-measurement of hedged risks under fair value hedges and the
use of the amortised cost method that is required by IAS 39. It is not a measure
recognised under IFRS but is used by management to measure and monitor
performance.
(a) Analysis
At December 31 At March 31
2005 2004 2005
GBPm GBPm GBPm
Loans and other borrowings 10,964 11,848 12,005
Cash and cash equivalents (1,247) (615) (1,312)
Other current financial assets (1) (1,289) (3,964) (3,491)
8,428 7,269 7,202
Adjustments:
To retranslate currency denominated balances at
swapped rates where hedged (40) 777 691
To recognise investments and borrowings at net
proceeds and unamortised discount (287) - -
Other 12 - -
Net debt 8,113 8,046 7,893
After allocating the element of the adjustments which impact loans and other
borrowings, gross debt at December 31, 2005 was GBP10,420 million (December 31,
2004 - GBP12,644 million, March 31, 2005 - GBP12,696 million).
(1) Excluding derivative financial instruments of GBP259 million, GBP19 million
and GBP143 million at December 31, 2005 and 2004 and March 31, 2005,
respectively.
(b) Reconciliation of net cash flow to movement in net debt
Third quarter ended Nine months
December 31 ended December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Net debt at beginning of period 8,133 8,373 7,893 8,530
Increase (decrease) in net debt
resulting from cash flows 19 (345) 379 (554)
Net debt assumed or issued on
acquisitions - - 1 -
Currency movements (41) (21) (65) 20
Other non-cash movements 2 39 (95) 50
Net debt at end of period 8,113 8,046 8,113 8,046
9 Changes in equity
Nine months ended
December 31
2005 2004
GBPm GBPm
Shareholders' funds (deficit) 45 (1,085)
Minority interests 50 46
95 (1,039)
Effect of adoption of IAS 32 and IAS 39 (337) -
Deficit at beginning of period (242) (1,039)
Total recognised income for the period 1,534 1,996
Employee share schemes 48 43
Issues of shares 4 -
Net movement in treasury shares (231) (135)
Dividends on ordinary shares (551) (454)
Other - 10
Net changes in equity for the financial period 804 1,460
Equity at end of period
Shareholders' funds 512 372
Minority interests 50 49
562 421
10 Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Third quarter ended Nine months
December 31 ended December 31
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Operating profit 671 979 1,893 2,280
Specific items (note 4) - (274) 82 (282)
Depreciation and amortisation (note 710 695 2,111 2,099
3)
EBITDA before specific items 1,381 1,400 4,086 4,097
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
before specific items is not a measure recognised under IFRS, but it is a key
indicator used by management in order to assess operational performance.
11 Dividends
The directors declared an interim dividend of 4.3 pence per share (3.9 pence
last year) on November 10, 2005. This will be paid on February 13, 2006 to
shareholders who were on the register at December 30, 2005. This interim
dividend, amounting to GBP362 million (GBP332 million last year) has not been
included as a liability as at December 31, 2005. It will be recognised as an
appropriation of retained earnings within shareholders' equity in the quarter
ended March 31, 2006.
12 United States Generally Accepted Accounting Principles (US GAAP)
The results set out above have been prepared in accordance with the basis of
preparation as set out in note 1. The table below sets out the results
calculated in accordance with US GAAP.
Third quarter ended Nine months
December 31 ended December 31
2005 2004 2005 2004
Net income attributable to 253 503 836 983
shareholders (GBPm)
Earnings per ADS (GBP)
- basic 0.30 0.59 0.99 1.15
- diluted 0.29 0.58 0.97 1.14
Each American Depositary Share (ADS) represents 10 ordinary shares of BT Group
plc.
Shareholders' equity, calculated in accordance with US GAAP, is a GBP780
million deficit at December 31, 2005 (December 31, 2004 - GBP1,304 million
deficit, March 31, 2005 - GBP584 million deficit).
13 Reconciliation of UK GAAP to IFRS for comparative periods
On July 28, 2005 the group issued its first quarter results which also included
appendices presenting and explaining the consolidated results of the group
restated from UK GAAP onto an IFRS basis for the year ended March 31, 2005, the
three months ended June 30, 2004 and the balance sheet as at April 1, 2004 and
June 30, 2004. The group has adopted IAS 39 and IAS 32 prospectively from April
1, 2005 and a reconciliation of the group's IFRS balance sheet from March 31,
2005 to April 1, 2005 was also included in the IFRS information presented with
the first quarter results. The first quarter results are available on the
group's website at www.btplc.com/Sharesandperformance
In this interim statement the group is also presenting a reconciliation from UK
GAAP to IFRS of the profit for the comparable financial period (the quarter and
nine months ended December 31, 2004), together with the equity at the end of the
comparable period (December 31, 2004).
13 Reconciliation of UK GAAP to IFRS for comparative periods continued
(a) Reconciliation of profit between UK GAAP and IFRS
Notes Third quarter Nine months
ended December 31 ended December 31
2004 2004
GBPm GBPm
Profit attributable to
shareholders under UK GAAP 653 1,385
Effect of transition to IFRS
(net of tax)
Pensions i 22 64
Goodwill ii 4 12
Share based payments iii (6) (15)
Leases iv (18) (55)
Other 3 (2)
Profit attributable to
shareholders under IFRS 658 1,389
(b) Reconciliation of equity between UK GAAP and IFRS
Notes At December 31
2004
GBPm
Total equity under UK GAAP 4,104
Effect of transition to IFRS
(net of tax)
Pensions i (3,762)
Goodwill ii 12
Share based payments iii 4
Leases iv (269)
Dividends v 332
Total equity under IFRS 421
Notes
i Pensions
Cumulative actuarial gains and losses in respect of the group's defined benefit
pension schemes have been recognised in full on transition to IFRS (April 1,
2004). Actuarial gains and losses arising from the transition date are being
recognised immediately in reserves, in accordance with the amended version of
IAS 19 "Employee benefits". An actuarial gain of GBP560 million (net of tax)
arose in the nine months ended December 31, 2004. The income statement charge is
split between an operating charge and a net finance charge. The charge to
operating costs in respect of pensions has increased by GBP19 million for the
third quarter ended December 31, 2004 (GBP58 million for the nine months ended
December 31, 2004) and net finance income has increased by GBP50 million for
the third quarter ended December 31, 2004 (GBP149 million for the nine months
ended December 31, 2004), giving rise to an overall increase in earnings of
GBP31 million for the quarter ended December 31, 2004 (GBP91 million for the
nine months ended December 31, 2004). The associated deferred tax benefit
recognised in the income statement for the quarter ended December 31, 2004 was
GBP9 million (GBP27 million for the nine months ended December 31, 2004).
A pension liability was recognised at December 31, 2004 of GBP4,336 million and
associated deferred tax asset of GBP1,301 million. This was offset by the
reversal of provisions and other creditors of GBP37 million. The pension
prepayment of GBP1,099 million on the UK GAAP balance sheet has also been
reversed including the associated deferred tax liability of GBP335 million. The
net effect has been a reduction in shareholders' funds of GBP3,762 million.
ii Goodwill
The group has used the exemption available under IFRS 1 for not restating
business combinations. IFRS 3 "Business Combinations" requires that goodwill
arising from business combinations should not be amortised. Accordingly, the UK
GAAP goodwill amortisation charge of GBP4 million for the quarter ended December
31, 2004 (GBP12 million for the nine months ended 31 December 2004) has been
reversed. There is no tax impact.
iii Share based payments
Under IFRS 2 "Share based payment", an expense must be recognised in the income
statement for all share based payments. This expense is based on the fair value
at the date of the award, using an option pricing model, and is charged to the
income statement over the related performance period. This has resulted in an
increased operating charge for the quarter ended December 31, 2004 of
GBP8 million (GBP20 million for the nine months ended December 31, 2004). The
credit entry for the share based payments is recognised directly in reserves as
the awards are equity settled, therefore there is no overall impact on
shareholders' equity.
iv Leases
Under IAS 17 "Leases" the buildings element of a small number of properties
have been reclassified from operating leases under UK GAAP to finance leases
under IFRS, and lease rentals under BT's sale and leaseback transactions are
recognised on a straight line basis. For those properties reclassified as
finance leases, profit before tax for the quarter ended December 31, 2004 has
been reduced by GBP1 million (GBP3 million for the nine months ended December
31, 2004) as a result of the recognition of depreciation and finance lease
interest charges and the removal of the UK GAAP operating lease charges.
Recognising the operating lease charges on a straight line basis has further
reduced profit before tax for the quarter ended December 31, 2004 by
GBP25 million (GBP76 million for the nine months ended December 31, 2004). The
associated deferred tax benefit recognised in the income statement for the
quarter ended December 31, 2004 was GBP8 million (GBP24 million for the nine
months ended December 31, 2004).
v Dividends
Under UK GAAP the dividend charge was recognised in the profit and loss account
in the period to which it related. Under IFRS, dividends are not recognised in
the income statement but directly within reserves. The final dividend is
recognised only when it has been declared and approved by the company in general
meeting. Interim dividends are recognised when they are paid. Therefore the
interim dividend liability of GBP332 million has been reversed because it was
paid after December 31, 2004.
Forward-looking statements - caution advised
Certain statements in this results release are forward-looking and are made in
reliance on the safe harbour provisions of the US Private Securities Litigation
Reform Act of 1995. These statements include, without limitation, those
concerning: continued growth in new wave revenue, mainly from networked IT
services, broadband and mobility growth; implementation of BT's 21st Century
Network programme; cost transformation and savings; introduction of next
generation services; and delivering value through transformation of the
business.
Although BT believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations will
prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
Factors that could cause differences between actual results and those implied by
the forward-looking statements include, but are not limited to: material adverse
changes in economic conditions in the markets served by BT; future regulatory
actions and conditions in BT's operating areas, including competition from
others; selection by BT and its lines of business of the appropriate trading and
marketing models for its products and services; fluctuations in foreign currency
exchange rates and interest rates; technological innovations, including the cost
of developing new products, networks and solutions and the need to increase
expenditures for improving the quality of service; prolonged adverse weather
conditions resulting in a material increase in overtime, staff or other costs;
developments in the convergence of technologies; the anticipated benefits and
advantages of new technologies, products and services, including broadband and
other new wave initiatives, not being realised; and general financial market
conditions affecting BT's performance. BT undertakes no obligation to update any
forward-looking statements whether as a result of new information, future events
or otherwise.
The IFRS position as stated is BT's current view, based on the Standards
currently in issue, and changes may arise as new accounting pronouncements are
developed and issued. Due to a number of new and revised Standards, included
within the body of Standards that comprise IFRS, there is not yet a significant
body of established best practice on which to draw in forming opinions regarding
interpretation and application. Accordingly, practice is continuing to evolve.
At this stage, therefore, the full financial effect of reporting under IFRS, as
it will be applied and reported in the group's first full IFRS financial
statements, cannot be determined with certainty and may be subject to change.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
BT Group PLC
(Registrant)
By: /s/ Patricia Day
--------------------
Patricia Day, Assistant Secretary.
Date 09 February, 2006