SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K/A
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
02 December 2002
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. Record date correction announcement made on 7 November 2002
November 7, 2002
Record date correction.
The interim dividend record date should have read 31 December 2002 and not as
stated. All other particulars in the announcement, an amended version of which
is set out below, remain unchanged.
SECOND QUARTER AND HALF YEAR RESULTS TO SEPTEMBER 30, 2002
SECOND QUARTER AND HALF YEAR HIGHLIGHTS
- Group turnover* of GBP4,661 million, up 2 per cent
- Profit before taxation* of GBP496 million, up 55 per cent
- Earnings per share* of 3.7 pence, up 54 per cent
- Free cash flow of GBP552 million generated
- Net debt reduced by GBP285 million in the quarter
- Interim dividend of 2.25 pence per share
- Broadband end users of 451,000 at November 1
- Customer satisfaction well ahead of the competition
*from continuing activities before goodwill amortisation and exceptional items
Chairman's statement
Sir Christopher Bland, Chairman, commenting on the second quarter results, said:
"This is an excellent set of results. The operating performance of the
business has been particularly strong in a difficult market. We
generated over half a billion pounds in free cash flow in the quarter.
I am pleased to report that we will be paying an interim dividend
of 2.25 pence per share.
The recently announced agreement to dispose of our stake in Cegetel
will see net debt reduce by a further GBP2.5 billion on completion.
These results demonstrate our ability to reduce debt, reward our
shareholders and invest for the future."
Chief Executive's statement
Ben Verwaayen, Chief Executive, commenting on the second quarter results said:
"We continue to make strong progress in achieving our key goals of
improving cash flow, earnings per share and customer satisfaction. Free
cash flow was GBP552 million and earnings per share* increased by 54 per
cent over last year to 3.7 pence, well ahead of our targets. Customer
satisfaction was also well ahead of the competition.
Our revenue growth in the quarter was 2 per cent. Although the
three year revenue target of 6 to 8 per cent compound annual growth is
unlikely to be achieved in the present market conditions, we expect
total revenue growth for the second half to be in line with current
market expectations. Future revenue growth will benefit from our focus
on developing new wave initiatives, particularly in broadband and ICT."
*from continuing activities before goodwill amortisation and exceptional
items
BT Group's results, excluding discontinued activities, exceptional items and
goodwill amortisation, are summarised in the following table:
RESULTS FOR THE SECOND QUARTER AND HALF YEAR
TO SEPTEMBER 30, 2002
BT Group's continuing activities before goodwill amortisation
and exceptional items
Second quarter Half year
2002 2001 Better (worse) 2002 2001 Better (worse)
GBPm GBPm % GBPm GBPm %
Group turnover 4,661 4,557 2 9,248 9,055 2
EBITDA before leaver 1,515 1,403 8 2,974 2,825 5
costs
EBITDA after leaver 1,478 1,385 7 2,781 2,808 (1)
costs
Group operating profit 729 657 11 1,299 1,350 (4)
Net interest charge 295 352 16 595 798 25
Profit before taxation 496 321 55 818 521 57
Profit after taxation 331 206 61 546 300 82
Earnings per share 3.7p 2.4p 54 6.2p 3.7p 68
Capital expenditure 559 660 15 1,108 1,365 19
Net debt 13,112 16,529 21
GROUP RESULTS
Group turnover increased year on year by 2 per cent to GBP4,661 million in the
second quarter. This was a good performance in a difficult market for telecoms
operators and solutions businesses. Although the three year revenue target of 6
to 8 per cent compound annual growth is unlikely to be achieved in the present
market conditions, we expect total revenue growth for the second half to be in
line with current market expectations. Future revenue growth will benefit from
our focus on developing new wave initiatives.
Group operating profit before goodwill amortisation and exceptional items at
GBP729 million for the quarter was GBP72 million higher than the second quarter
of last year, with improved gross margins in BT Retail, cost reductions across
the lines of business and reduced losses in the overseas activities of BT
Ignite. The strong operating performance is despite the negative operating
profit effect of unwinding the Concert global venture, the Telereal property
sale and leaseback and the impact of GBP37 million of leaver costs (GBP18
million last year). The operating improvement does however reflect the year on
year effect of one off charges of GBP52 million, relating to certain regulatory
decisions, made in the second quarter of last year.
BT's share of associates and joint ventures operating profits before goodwill
amortisation was GBP66 million (GBP9 million last year) in the quarter,
benefiting from the unwind of Concert and improved results from Cegetel.
Net interest payable was GBP295 million for the quarter, an improvement of GBP57
million against last year as a result of the significant reduction in the level
of net debt.
Profit before taxation of GBP496 million in the quarter increased by 55 per cent
reflecting the underlying operating performance of the group and lower net
interest costs.
The taxation charge for the quarter was GBP165 million; this represents an
effective rate of 33.3 per cent (35.8 per cent last year) on the profit before
exceptional items and goodwill amortisation.
Earnings per share before goodwill amortisation and exceptional items were 3.7
pence for the quarter (2.4 pence last year), an increase of 54 per cent.
Goodwill amortisation at GBP3 million for the quarter was GBP38 million lower
than last year. This reduction reflects the disposals and goodwill impairment
write downs made last year. Earnings per share after goodwill amortisation and
exceptional items were 3.7 pence compared to a loss of 15.0 pence last year.
An interim dividend of 2.25 pence per share will be paid on February 10, 2003 to
shareholders on the register on December 31, 2002. We expect this year's final
dividend to be slightly more than the historical level of one and a half times
the interim dividend. Our progressive dividend policy remains unchanged.
Underlying performance and intra-group trading
In the line of business commentaries that follow, references to "underlying
performance" are to trading performance after adjusting for the estimated impact
of the Concert unwind and business acquisitions and disposals on the line of
business results. Trends in the results of the lines of business are described
by reference to the underlying performance.
The group results have not been adjusted for the pro forma impact of the Concert
unwind.
There is extensive trading between the lines of business, the effect of which is
eliminated in arriving at the group results. The intra-group turnover and
intra-group costs of BT Retail for comparative periods and the first quarter
ended June 30, 2002 have been restated to reflect changes to the intra-group
trading arrangements.
OPERATING PERFORMANCE BY LINE OF BUSINESS
Second quarter ended Group EBITDA Group operating profit Capital expenditure on
September 30, 2002 (i) Turnover Before exceptional (loss) before goodwill plant, equipment and
Items amortisation and property additions
GBPm exceptional items
GBPm GBPm GBPm
BT Retail 3,288 439 388 26
BT Wholesale 2,833 990 512 385
BT Ignite 1,267 34 (115) 93
BT Openworld 67 (16) (22) 1
Other 85 31 (34) 54
Intra-group items (ii) (2,879) - - -
Total 4,661 1,478 729 559
Half year ended Group EBITDA Group operating profit Capital expenditure on
September 30, 2002 (i) turnover before exceptional (loss) before goodwill plant, equipment and
items amortisation and property additions
GBPm exceptional items
GBPm GBPm GBPm
BT Retail 6,463 858 758 46
BT Wholesale 5,583 1,835 885 744
BT Ignite 2,513 44 (245) 187
BT Openworld 132 (38) (46) 2
Other 168 82 (53) 129
Intra-group items (ii) (5,611) - - -
Total 9,248 2,781 1,299 1,108
i. See note 2 on pages 24 and 25 for prior year figures
ii. Includes elimination of turnover between businesses, which is included in
the turnover of the originating business
BT Retail
Second quarter ended September 30 Half year
ended September 30
Better (worse)
2002 2001 Actual Underlying 2002 2001
(b)
GBPm GBPm % % GBPm GBPm
Group turnover 3,288 3,184 (a) 3 1 6,463 6,315 (a)
Gross margin 948 846 12 8 1,906 1,723
Sales, general and 509 531 1,048 1,047
administration costs
EBITDA 439 315 39 39 858 676
Depreciation 51 46 100 91
Operating profit 388 269 44 44 758 585
Capital expenditure 26 18 (44) (44) 46 48
Operating free 413 297 39 39 812 628
cash flow
(a) Internal turnover restated to reflect changes in intra-group trading
arrangements
(b) Adjusting for the effect of the Concert unwind
Compared to the second quarter of last year, BT Retail increased turnover by
GBP46 million (1 per cent). Operating profits increased by GBP119 million (44
per cent) due to margin improvements and cost reductions.
The estimated impact on BT Retail of integrating the returning Concert
multinational customers and associated sales staff on the reported results for
the second quarter of last year would have been to increase turnover by GBP58
million (in the product areas of fixed network calls, exchange line connections
and private circuits) and increase gross margin by GBP34 million. There would
have been no impact on EBITDA and operating profit.
Turnover for the quarter is summarised as follows:
Second quarter ended September 30 Half year
ended September 30
Better (worse)
BT Retail turnover 2002 2001 Actual Underlying 2002 2001
(a) (b) (a)
GBPm GBPm % % GBPm GBPm
Voice Services
Fixed network calls 1,200 1,217 (1) (2) 2,361 2,392
Analogue lines 772 743 4 4 1,529 1,487
Other 454 433 5 (2) 893 867
2,426 2,393 1 - 4,783 4,746
Intermediate Products
Narrowband access (inc. 215 187 15 12 418 363
ISDN)
Digital private circuits 270 298 (9) (12) 560 606
Other 184 160 15 10 354 317
669 645 4 1 1,332 1,286
New Wave 193 146 32 32 348 283
Total 3,288 3,184 3 1 6,463 6,315
Sales to other BT 458 515 (11) (2) 884 1,038
businesses incl. above
(a) Internal turnover restated to reflect changes in intra-group trading
arrangements
(b) Adjusting for the effect of the Concert unwind
Turnover from voice services was unchanged from the second quarter of last year,
with growth in the consumer market being offset by a decline in the business
market. Within this, turnover from fixed network calls including outbound
international calls, calls to mobile phones and calls to the internet decreased
by 2 per cent to GBP1,200 million reflecting a reduction in call volumes. The
effect was partly offset by an increase in revenue from packages such as BT
Together and from analogue line rentals and connections.
The continued success of BT Together and BT Answer 1571 has held the rate
of decline in geographic call volumes in BT Retail to 4 per cent, consistent
with the last quarter. In the second quarter of last year the rate of decline
was 5 per cent. The growth in fixed to mobile call minutes of 7 per cent (5 per
cent in the last quarter), compares to 13 per cent in the second quarter of last
year. Internet related and other non-geographic call minutes declined by 8 per
cent compared to the second quarter of last year mainly due to customers
continuing to switch to either FRIACO (Flat Rate Internet Access Call
Origination) based internet products or, increasingly, broadband.
Within the residential voice market BT Retail has maintained market share
at around 73 per cent as it has done since June 2000. In the business voice
market, excluding the returned Concert businesses, estimates show BT Retail's
market share to be down around 0.5 percentage points since the first quarter to
45 per cent.
Turnover from analogue exchange lines of GBP772 million increased by 4 per
cent compared to the second quarter of last year as a result of rebalancing
tariff charges. The number of residential voice lines has remained stable.
Other voice services include operator services, directory enquiries,
payphones and chargecards. Turnover from these services decreased by 2 per cent
to GBP454 million compared to the second quarter of last year.
Turnover from intermediate products of GBP669 million increased by 1 per
cent compared to the second quarter of last year, despite the continued
migration of customers from retail private circuits to partial private circuits,
the effect of which is estimated at GBP41 million for the quarter. Narrowband
(ISDN) lines continue to grow and at 3.7 million are 11 per cent higher than
last year. Total business lines grew by 1 per cent reflecting the growth in ISDN
lines. Other services comprise hardware, conferencing and other data services.
New Wave revenue grew by 32 per cent in the quarter as a result of the
continued focus on the information, communications and technology ("ICT"),
broadband and mobility products. The benefit of product launches during the
quarter should contribute to further revenue growth in the second half of the
year.
During the quarter BT Retail announced the next strand of its ICT strategy,
namely the provision of applications management, hosting, mobility and web
services which together with the IP infrastructure portfolio products helped BT
achieve some notable wins: Unilever, Dixons Group and Leisure Link.
BT Retail fully launched its direct broadband product on September 22,
2002. Volumes are being stimulated by an extensive marketing campaign.
September also saw the launch of the BT click&buy micropayments service
which offers customers a secure means of buying digital content on the internet.
At launch, twenty content partners were on-line with a further twenty-five
signed up.
The increase in gross margin of GBP68 million (1.7 percentage points to
28.8 per cent) compared to the second quarter of last year continues to benefit
from a more favourable traffic mix, value added offers and lower wholesale
prices. The prior year effect of one-off charges relating to regulatory
decisions, totalling GBP30 million, in the second quarter of last year has also
improved the year on year gross margin.
Cost transformation programmes have generated a 10 per cent saving in
sales, general and administration costs of GBP56 million against the second
quarter of last year. These savings have been driven by the implementation of
the call centre rationalisation programme, the reduction in business expenses,
lower service payments resulting from improvements in service quality and other
similar cost transformation programmes. On a full year basis these programmes
are expected to deliver GBP200 million savings in the voice services and
intermediate products.
EBITDA in the second quarter was GBP124 million (39 per cent) higher than
the prior year which enabled BT Retail to contribute an operating free cash flow
(EBITDA less capital expenditure) of GBP413 million in the quarter; GBP116
million better than the second quarter of last year.
The second quarter saw continued success in achieving our objective of
establishing "clear blue water" against the competition for customer
satisfaction. Customer satisfaction was well ahead in all areas of the business
with Consumer achieving 80 per cent satisfaction (9 per cent ahead of the
competition), Business achieving 67 per cent (3 per cent ahead) and Major
Business achieving 66 per cent (10 per cent ahead).
BT Wholesale
Second quarter ended September 30 Half year
ended September 30
Better (worse)
2002 2001 Actual Underlying* 2002 2001
GBPm GBPm % % GBPm GBPm
Group turnover 2,833 3,027 (6) - 5,583 6,016
Total operating costs 1,872 2,090 3,808 4,185
before depreciation
Other operating income 29 54 60 120
EBITDA 990 991 - - 1,835 1,951
Depreciation 478 468 950 941
Operating profit 512 523 (2) (2) 885 1,010
Capital expenditure 385 439 12 12 744 884
Operating free 605 552 10 10 1,091 1,067
cash flow
*Adjusting for the effect of the Concert unwind and transfer of a major account
from BT Ignite
BT Wholesale's turnover for the quarter at GBP2,833 million was flat and
operating profit was 2 per cent lower than the second quarter of last year at
GBP512 million. Operating free cash flow has continued to improve, showing
growth of 10 per cent, mainly as a result of tight control of capital
expenditure.
Second quarter ended September 30 Half year
ended September 30
Better (worse)
BT Wholesale turnover 2002 2001 Actual Underlying* 2002 2001
GBPm GBPm % % GBPm GBPm
Internal turnover 1,968 2,097 (6) (3) 3,878 4,135
Concert - 148 n/m n/m - 286
UK fixed operators 515 480 7 4 1,020 976
UK mobile operators 350 302 16 16 685 619
Total 2,833 3,027 (6) - 5,583 6,016
*Adjusting for the effect of the Concert unwind and transfer of a major account
from BT Ignite
Turnover was flat due to the adverse market conditions in the
telecommunications sector and a reduction in prices.
External turnover in the quarter of GBP865 million showed an increase of
GBP66 million (8 per cent) over the second quarter of last year. This partly
reflects the year on year effect of regulatory provisions, made in the second
quarter of last year, for the retrospective effect of the Oftel Number
Translation Services (NTS) determination. This reduced prior year revenues by
GBP22 million.
New business external revenues, including broadband and solutions, at GBP45
million were 55 per cent higher than the second quarter of last year reflecting,
in part, the significant growth of wholesale ADSL lines of which there were
451,000 as at November 1, 2002.
Within traditional products, the impact of price reductions - due to flat rate
price packages, new Network Charge Control (NCC) pricing formulae and Oftel
determinations - coupled with unfavourable market conditions have continued to
slow turnover growth. Mobile operator originated transit continues to grow
although the effect is partly offset by the decline in fixed operator originated
transit. FRIACO revenues continue to grow but are partly offset by the slow down
in the conveyance revenues they substitute. Also, revenues from retail private
circuits are down, due to migration of customers to lower priced partial private
circuits.
Internal turnover in the quarter at GBP1,968 million showed a decrease of GBP65
million (3 per cent) due to a reduction in both volumes and prices charged to BT
Retail, partly offset by an increase in sales (including ADSL) to other BT lines
of business.
Despite network volume increases, BT Wholesale's operating costs, excluding
depreciation, of GBP1,872 million were broadly flat against the second quarter
of last year. Full time equivalent staff numbers have reduced by 8 per cent
since the second quarter of last year, the benefit of which is recognised in
lower capital investment and improved operating efficiencies. Leaver costs were
GBP6 million in the second quarter, GBP5 million higher than last year.
Depreciation at GBP478 million increased by GBP10 million (2 per cent)
reflecting the move towards shorter asset lives partly offset by reduced capital
expenditure.
Operating profit decreased by GBP11 million (2 per cent) whilst operating profit
margins remained stable at 18 per cent.
Capital expenditure at GBP385 million decreased by GBP54 million (12 per cent)
reflecting the continued tight control over capital investment.
BT Wholesale has maintained its focus on managed cash costs (operating costs
excluding payments to other network operators and depreciation, plus capital
expenditure). Managed cash costs at GBP1,436 million decreased by 3 per cent
despite an increase in network volumes. Managed cash cost savings are GBP133
million, year to date, and BT Wholesale remains on track to achieve the full
year target savings of GBP200 million after allowing for price and volume
effects.
BT Ignite
Second quarter ended September 30 Half year
ended September 30
Better (worse)
2002 2001 Actual Underlying* 2002 2001
GBPm GBPm % % GBPm GBPm
Group turnover 1,267 1,131 12 1 2,513 2,146
EBITDA 34 34 - n/m 44 70
Group operating loss (115) (87) (32) 25 (245) (165)
Capital expenditure 93 104 11 48 187 246
Operating free cash flow (59) (70) 16 70 (143) (176)
*Adjusting for the effect of the Concert unwind, acquisitions and disposals and
the transfer of a major account to BT Wholesale
BT Ignite made good progress in the quarter with a significant improvement
in underlying profitability and cash flow despite experiencing difficult trading
conditions in the corporate sector and reduced carrier revenues. Underlying
operating losses for the quarter were reduced by 25 per cent on last year.
Underlying turnover for the quarter grew at 1 per cent to GBP1,267 million. This
includes the impact of a 16 per cent fall in Global Carrier turnover primarily
due to the decline in trade with AT&T and Worldcom following the unwind of the
Concert global venture. Excluding Global Carrier, BT Ignite's turnover grew by 6
per cent. Global Products grew by 10 per cent and Solutions by 9 per cent.
Syntegra has outperformed the declining systems integration market, holding
turnover at around last year's level. European Connectivity turnover fell by 2
per cent to GBP243 million due mainly to the decline of non-core revenues as BT
Ignite has exited non profitable elements of the SME and consumer markets in
Europe. Growth in core European Connectivity revenues was 5 per cent compared to
the second quarter of last year.
Costs have been managed carefully to compensate for the lower revenue
growth with EBITDA improving by GBP49 million over the second quarter of last
year. As part of the cost reduction programme approximately 350 people left
under early leaver terms at a cost of GBP14 million (GBP5 million last year).
Excluding leaver costs EBITDA was GBP58 million ahead. All businesses generated
an improvement in EBITDA compared to the second quarter of last year.
European operations have made excellent progress towards their targeted
EBITDA break even run rate by March 31, 2003 with their combined EBITDA
improving by GBP25 million to a loss of GBP4 million. The results benefited from
one off credits in the quarter of GBP3 million. During the second quarter Spain
became the second operation to generate positive EBITDA, following Ireland in
the first quarter.
The operating loss was GBP101 million in the quarter before early leaver
costs, a GBP48 million improvement from the second quarter of last year.
Capital expenditure was GBP93 million in the quarter, GBP87 million lower
than the second quarter of last year. As a result, the operating free cash
outflow (EBITDA less capital expenditure) of GBP59 million was 70 per cent
better than the second quarter of last year.
BT Openworld
Second quarter ended September 30 Half year ended September 30
2002 2001 Better 2002 2001
GBPm GBPm % GBPm GBPm
Group turnover 67 56 20 132 102
EBITDA (16) (25) 36 (38) (63)
Group operating loss (22) (36) 39 (46) (77)
Capital expenditure 1 3 67 2 5
Operating free cash flow (17) (28) 39 (40) (68)
BT Openworld made further good improvements in turnover, profitability and
cash flow. Turnover for the second quarter was GBP67 million, an increase of
GBP11 million (20 per cent) on the second quarter of last year. The improvement
is mainly due to growth in new broadband products and continued growth in the
core narrowband product range.
EBITDA loss for the second quarter was GBP16 million, GBP9 million (36 per
cent) less than the second quarter of last year and GBP6 million less than the
previous quarter. Operating losses fell by 39 per cent to GBP22 million. The
reduced losses reflect economies of scale from increased volumes, in particular
in the narrowband business, which is now EBITDA positive. This is well ahead of
the target date of March 31, 2003.
As at September 30, 2002, BT Openworld had 213,000 broadband customers,
representing approximately 20 per cent of the total UK broadband market.
CASH FLOW AND NET DEBT
Cash inflow from operating activities amounted to GBP1,423 million in the
quarter. This represents a strong conversion of profits into cash with EBITDA of
GBP1,478 million in the quarter. The reported cash inflow last year of GBP1,433
million in the quarter was generated from both the continuing and discontinued
activities of the Group.
The cash outflow on fixed asset purchases was GBP602 million in the quarter
which compares to GBP804 million from the continuing activities last year. This
reflects the continued management focus and control over capital expenditure.
Full year capital expenditure is expected to be around GBP2.8 billion.
Free cash flow (before acquisitions and disposals, dividends and financing) was
GBP552 million in the quarter.
Net debt at September 30, 2002 was GBP13.1 billion, a reduction of GBP285
million in the quarter. BT repaid GBP381 million of gross borrowings during the
quarter, principally bonds held by Esat, the group's Irish subsidiary.
The group's gross borrowings at September 30, 2002 totalled GBP16,978 million,
compared with GBP18,440 million at March 31, 2002. After deducting short term
investments and cash of GBP3,866 million (GBP4,739 million at March 31, 2002),
net debt was GBP13,112 million at September 30, 2002 (GBP13,701 million at March
31, 2002).
In the third quarter the previously announced annual deficiency funding and
special contribution for early leavers' pension costs, totalling approximately
GBP340 million, will be paid to the BT Pension Scheme. In addition, bond
interest payments of approximately GBP370 million will be made.
POST BALANCE SHEET EVENTS
On October 16, 2002, BT agreed to sell its 26 per cent stake in Cegetel for
EUR4.0 billion (GBP2.5 billion) in cash representing a return of around two and
a half times on the total investment in Cegetel. BT will recognise a profit of
approximately GBP1.4 billion after taking account of goodwill of GBP0.9 billion
that had previously been written off directly to reserves. The transaction is
conditional upon relevant regulatory approvals and is expected to complete
during the second half of the year.
A review has been undertaken of the group's London office strategy with a view
to reducing the number of office based staff and the number of office locations
in the London and M25 area. It is anticipated this will require an exceptional
property rationalisation charge of between GBP150 and GBP200 million to be
recognised in the third quarter.
On October 8, 2002 the shareholders of Blu SpA agreed to the sale of their
shares to Telecom Italia Mobile. As a result BT expects to write back
approximately GBP150 million of exceptional charges when the transaction
completes.
_____________________________________________________________________
The half year report, which contains the independent review report of the
auditors, will be advertised in the Financial Times on November 8, 2002.
The third quarter results of BT Group are expected to be announced on February
13, 2003.
GROUP PROFIT AND LOSS ACCOUNT
for the three months ended September 30, 2002
Continuing activities
Before goodwill Goodwill Total
amortisation and amortisation and
exceptional items except-ional items
(note 7)
(unaudited) Notes GBPm GBPm GBPm
Total turnover 5,094 - 5,094
Group's share of associates and joint ventures (433) - (433)
turnover
Group turnover 2 4,661 - 4,661
Other operating income 44 - 44
Operating costs (3,976) (3) (3,979)
Group operating profit (loss) 2 729 (3) 726
Group's share of operating profits of associates 4 66 - 66
and joint ventures
Total operating profit (loss) 795 (3) 792
Loss on sale of fixed asset investments and - (4) (4)
group undertakings
Profit on sale of property fixed assets 3 - 3
Amounts written off investments (7) - (7)
Net interest payable 6 (295) - (295)
Profit (loss) before taxation 496 (7) 489
Taxation (165) - (165)
Profit (loss) after taxation 331 (7) 324
Minority interests (9) - (9)
Profit (loss) attributable to shareholders 322 (7) 315
Earnings per share
- basic 9 3.7p 3.7p
- diluted 3.7p 3.6p
GROUP PROFIT AND LOSS ACCOUNT
for the three months ended September 30, 2001
Continuing activities
Before goodwill Goodwill Discontinued Total
amortisation and amortisation and activities and
exceptional items except-ional eliminations
items
(note 1)
(note 7)
(unaudited) Notes GBPm GBPm GBPm GBPm
Total turnover 5,487 - 774 6,261
Group's share of associates and joint (1,087) - (27) (1,114)
ventures turnover
Trading between group and principal 157 - - 157
joint venture
Group turnover 2 4,557 - 747 5,304
Other operating income 3 74 - (2) 72
Operating costs (3,974) (123) (935) (5,032)
Group operating profit (loss) 2 657 (123) (190) 344
Group's share of operating profits 4 9 (825) 2 (814)
(losses) of associates and joint
ventures
Total operating profit (loss) 666 (948) (188) (470)
Profit on sale of fixed asset - 2 9 11
investments and group undertakings
Profit on sale of property fixed assets 7 - - 7
Amounts written off investments - (535) - (535)
Net interest payable 6 (352) - (10) (362)
Profit (loss) before taxation 321 (1,481) (189) (1,349)
Taxation (115) (2) (10) (127)
Profit (loss) after taxation 206 (1,483) (199) (1,476)
Minority interests (1) - - (1)
Profit (loss) attributable to 205 (1,483) (199) (1,477)
shareholders
Earnings (loss) per share 9
- basic 2.4p (17.3)p
- diluted 2.4p (17.3)p
GROUP PROFIT AND LOSS ACCOUNT
for the six months ended September 30, 2002
Continuing activities
Before goodwill Goodwill Total
amortisation and amortisation and
exceptional items except-ional items
(note 7)
(unaudited) Notes GBPm GBPm GBPm
Total turnover 10,092 - 10,092
Group's share of associates and joint ventures (844) - (844)
turnover
Group turnover 2 9,248 - 9,248
Other operating income 96 - 96
Operating costs (8,045) (11) (8,056)
Group operating profit (loss) 2 1,299 (11) 1,288
Group's share of operating profits of 4 115 - 115
associates and joint ventures
Total operating profit (loss) 1,414 (11) 1,403
Profit on sale of fixed asset investments and 5 - 66 66
group undertakings
Profit on sale of property fixed assets 6 - 6
Amounts written off investments (7) - (7)
Net interest payable 6 (595) - (595)
Profit before taxation 818 55 873
Taxation (272) - (272)
Profit after taxation 546 55 601
Minority interests (11) - (11)
Profit attributable to shareholders 535 55 590
Dividends 8 (194)
Retained profit for the period 396
Earnings per share 9
- basic 6.2p 6.9p
- diluted 6.2p 6.8p
GROUP PROFIT AND LOSS ACCOUNT
for the six months ended September 30, 2001
Continuing activities
Before goodwill Goodwill Discontinued Total
amortisation and amortisation and activities and
exceptional items except-ional eliminations
items
(note 7) (note 1)
(unaudited) Notes GBPm GBPm GBPm GBPm
Total turnover 10,921 - 2,394 13,315
Group's share of associates and joint (2,188) - (691) (2,879)
ventures turnover
Trading between group and principal 322 - - 322
joint venture
Group turnover 2 9,055 - 1,703 10,758
Other operating income 3 167 - 1 168
Operating costs (7,872) (166) (2,044) (10,082)
Group operating profit (loss) 2 1,350 (166) (340) 844
Group's share of operating profits 4 (43) (843) 62 (824)
(losses) of associates and joint
ventures
Total operating profit (loss) 1,307 (1,009) (278) 20
Profit on sale of fixed asset - 129 4,366 4,495
investments and group undertakings
Profit on sale of property fixed assets 12 - - 12
Amounts written off investments - (535) - (535)
Net interest payable 6 (798) - (38) (836)
Profit (loss) before taxation 521 (1,415) 4,050 3,156
Taxation (221) 2 (53) (272)
Profit (loss) after taxation 300 (1,413) 3,997 2,884
Minority interests (1) - (13) (14)
Profit (loss) attributable to 299 (1,413) 3,984 2,870
shareholders
Earnings per share 9
- basic 3.7p 35.8p
- diluted 3.7p 35.5p
GROUP CASH FLOW STATEMENT
for the three months and six months ended September 30, 2002
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
(unaudited) GBPm GBPm GBPm GBPm
Net cash inflow from operating 1,423 1,433 2,735 2,687
activities (note 10)
Dividends from associates and joint 1 1 1 1
ventures
Net cash outflow for returns on (235) (138) (606) (679)
investments and servicing of finance
Taxation paid (58) (144) (146) (238)
Purchase of tangible fixed assets (602) (1,204) (1,269) (2,240)
Net sale of fixed asset investments 1 55 1 70
Sale of tangible fixed assets 22 21 42 138
Net cash outflow for capital expenditure (579) (1,128) (1,226) (2,032)
and financial investments
Acquisitions (105) (32) (127) (974)
Disposals - 383 128 6,393
Net cash inflow (outflow) for (105) 351 1 5,419
acquisitions and disposals
Equity dividends paid (173) - (173) -
Cash inflow before use of liquid 274 375 586 5,158
resources and financing
Management of liquid resources 334 3,878 1,117 (3,959)
Issue of ordinary share capital - 107 42 5,983
New loans 17 1 20 2
Repayment of loans (381) (499) (1,467) (789)
Net movement on short-term borrowings - (4,365) (64) (6,297)
Net cash outflow from financing (364) (4,756) (1,469) (1,101)
Increase (decrease) in cash 244 (503) 234 98
Decrease in net debt from cash flows 274 482 628 11,141
(note 11)
GROUP BALANCE SHEET
at September 30, 2002
September 30 March 31
2002 2001 2002
(unaudited) (note 1)
GBPm GBPm GBPm
Fixed assets
Intangible assets 230 18,557 252
Tangible assets 15,995 21,748 16,078
Investments 946 1,797 1,221
17,171 42,102 17,551
Current assets
Stocks 104 253 111
Debtors 5,384 6,186 5,272
Investments 3,748 6,973 4,581
Cash at bank and in hand 118 404 158
9,354 13,816 10,122
Creditors: amounts falling due within one year
Loans and other borrowings 1,584 6,202 2,195
Other creditors 7,180 8,239 7,195
8,764 14,441 9,390
Net current assets (liabilities) 590 (625) 732
Total assets less current liabilities 17,761 41,477 18,283
Creditors: amounts falling due after more than one year
Loans and other borrowings 15,394 17,704 16,245
Provisions for liabilities and charges (note 12) 2,304 2,763 2,324
Minority interests 67 78 72
Capital and reserves (note 13)
Called up share capital 434 9,890 434
Reserves (438) 11,042 (792)
Total equity shareholders' funds (deficiency) (4) 20,932 (358)
17,761 41,477 18,283
NOTES
1 Basis of preparation
The unaudited interim results of BT Group, which are not statutory accounts,
have been prepared on the basis of the accounting policies as set out in the
report and accounts of BT Group plc for the year ended March 31, 2002. Figures
for the year ended March 31, 2002 are extracts from the group accounts for that
year.
The group accounts for the year ended March 31, 2002, on which the auditors
issued an unqualified report which did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985, have been delivered to the Registrar of
Companies.
The activities of mmO2, Japan Telecom, J-Phone Communications, Airtel and Yell
were disposed of in the year ended March 31, 2002, and are shown as discontinued
operations in the profit and loss account for the comparative periods. The
eliminations are intra-group eliminations.
2 Results of businesses
The tables below show the results of BT's lines of business. There is extensive
trading between many of the business units and profitability is dependent on the
transfer price levels. These intra-group trading arrangements are subject to
review and have changed in certain instances. Comparative figures were restated
for these changes during the first quarter.
During the second quarter, the intra-group turnover and intra-group costs of BT
Retail for comparative periods and the first quarter ended June 30, 2002 have
been further restated to reflect refinements to the intra-group trading
arrangements. This has no impact on the group results.
2 Results of businesses continued
(a) Operating results
Group turnover EBITDA before Group operating profit
exceptional items (loss) before goodwill
amortisation and
exceptional items
GBPm GBPm GBPm
Second quarter ended
September 30, 2002
BT Retail 3,288 439 388
BT Wholesale 2,833 990 512
BT Ignite 1,267 34 (115)
BT Openworld 67 (16) (22)
Other 85 31 (34)
Intra-group items (ii) (2,879) - -
Total before exceptional items 4,661 1,478 729
Second quarter ended
September 30, 2001 (i)
BT Retail 3,184 315 269
BT Wholesale 3,027 991 523
BT Ignite 1,131 34 (87)
BT Openworld 56 (25) (36)
Other 69 70 (12)
Intra-group items (ii) (2,910) - -
Total continuing activities before exceptional items 4,557 1,385 657
Discontinued activities 1,062 71 (94)
Intra-group items (ii) (315) - -
Total before exceptional items 5,304 1,456 563
2 Results of businesses continued
(a) Operating results continued
Group turnover EBITDA before Group operating profit
exceptional items (loss) before goodwill
amortisation and
exceptional items
GBPm GBPm GBPm
Half year ended
September 30, 2002
BT Retail 6,463 858 758
BT Wholesale 5,583 1,835 885
BT Ignite 2,513 44 (245)
BT Openworld 132 (38) (46)
Other 168 82 (53)
Intra-group items (ii) (5,611) - -
Total before exceptional items 9,248 2,781 1,299
Half year ended
September 30, 2001 (i)
BT Retail 6,315 676 585
BT Wholesale 6,016 1,951 1,010
BT Ignite 2,146 70 (165)
BT Openworld 102 (63) (77)
Other 173 174 (3)
Intra-group items (ii) (5,697) - -
Total continuing activities before exceptional items 9,055 2,808 1,350
Discontinued activities 2,270 176 (152)
Intra-group items (ii) (567) - -
Total before exceptional items 10,758 2,984 1,198
(i) The results of the lines of business for the quarter ended September 30,
2001 and the half year ended September 30, 2001 have been restated to reflect
changes to intra-group trading arrangements.
(ii) Includes elimination of intra-group turnover between businesses which
is included in the total turnover of the originating business.
2 Results of businesses continued
BT Ignite analysis
Second quarter ended Half year
September 30 ended September 30
Better (worse)
Before goodwill amortisation 2002 2001 Actual 2002 2001
and exceptional items GBPm GBPm % Underlying (i) GBPm GBPm
%
Group turnover
Solutions 475 434 9 9 919 844
Syntegra 143 145 (1) - 285 288
Global Products 459 379 21 10 899 737
Global Carrier 247 64 286 (16) 499 124
Other and eliminations (57) 109 (89) 153
1,267 1,131 12 1 2,513 2,146
European connectivity included 243 248 (2) (2) 490 473
above
EBITDA
Solutions 45 31 83 69
Syntegra 5 3 8 5
Global Products (27) 5 (64) (6)
Global Carrier 34 5 76 4
Other (ii) (23) (10) (59) (2)
34 34 - n/m 44 70
European connectivity included (4) (29) (19) (53)
above
Group operating
profit (loss)
Solutions 26 11 47 29
Syntegra 2 1 3 -
Global Products (123) (51) (253) (115)
Global Carrier 13 (11) 32 (29)
Other (ii) (33) (37) (74) (50)
(115) (87) (32) 25 (245) (165)
European connectivity included (43) (68) (101) (131)
above
Capital expenditure 93 104 11 48 187 246
Operating free cash flow (59) (70) 16 70 (143) (176)
(i) Adjusted for the effect of the Concert unwind, acquisitions and
disposals and the transfer of a major account to BT Wholesale.
(ii) Other is after charging leaver costs of GBP14 million in the second
quarter (GBP5 million last year) and GBP39 million (GBP5 million last year) in
the half year ended September 30, 2002.
BT Ignite's comparative figures for the segmental results have been reclassified
to reflect the new internal financial reporting lines that were introduced with
effect from March 31, 2002.
2 Results of businesses continued
(b) Capital expenditure on plant, equipment and motor vehicle additions
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
BT Retail 26 18 46 48
BT Wholesale 385 439 744 884
BT Ignite 93 104 187 246
BT Openworld 1 3 2 5
Other 54 96 129 182
Total continuing activities 559 660 1,108 1,365
Discontinued activities - 339 - 624
Total 559 999 1,108 1,989
(c) Net operating assets (liabilities)
September 30 March 31
2002 2002
GBPm GBPm
BT Retail (141) (187)
BT Wholesale 12,117 12,163
BT Ignite 1,510 1,486
BT Openworld (37) (28)
Other 926 900
Total 14,375 14,334
Note: Net operating assets (liabilities) comprise tangible and
intangible fixed assets, stocks, debtors less creditors (excluding loans
and other borrowings) and provisions for liabilities and charges
(excluding deferred tax). The March 31, 2002 comparatives have been
restated to reflect changes to the method of allocating central balances
to the lines of business.
3 Other operating income
In the quarter and half year ended September 30, 2001 other operating income
included income from the provision of administration services to the Concert
global venture of GBP28m and GBP70m, respectively.
4 Group's share of profits (losses) of associates and joint ventures
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
Share of operating profits (losses) before 66 9 115 (43)
goodwill amortisation and exceptional items
Provision for impairment of Concert - (806) - (806)
tangible fixed assets and goodwill, and
share of redundancy and unwind costs
Provision for impairment of other - (10) - (10)
associates and joint ventures assets and
goodwill
Amortisation of goodwill - (9) - (27)
Share of operating profits (losses) of 66 (816) 115 (886)
continuing associates and joint ventures
Discontinued activities - 2 - 62
Total share of operating profits (losses) 66 (814) 115 (824)
of associates and joint ventures
5 Profit on sale of fixed asset investments and group undertakings
The profit in the six months ended September 30, 2002 of GBP66m is mainly
attributable to the sale of BSkyB shares.
6 Net interest payable
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
Group 343 460 678 975
Joint ventures and associates 6 35 16 77
Total interest payable 349 495 694 1,052
Interest receivable (54) (133) (99) (216)
Net interest payable 295 362 595 836
Analysed:
Continuing activities 295 352 595 798
Discontinued activities - 10 - 38
295 362 595 836
7 Exceptional items and goodwill amortisation
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
Attributable to continuing activities:
Impairment of Concert and AT&T Canada - (1,153) - (1,153)
investments
Impairment of other investments and related - (221) - (221)
costs
Costs related to mmO2 demerger - (68) - (82)
Profit (loss) on sale of group undertakings (4) 2 66 129
and fixed asset investments
Goodwill amortisation (3) (41) (11) (88)
Net credit (charge) before tax and minority (7) (1,481) 55 (1,415)
interests
Attributable to discontinued activities:
Profit on sale of group undertakings and - 9 - 4,366
fixed asset investments
mmO2 demerger costs - (6) - (6)
Goodwill amortisation - (90) - (194)
Net credit (charge) before tax and minority - (87) - 4,166
interests
Total exceptional items and goodwill (7) (1,568) 55 2,751
amortisation
8 Dividends
Half year Half year
ended September 30 ended September 30
2002 2001 2002 2001
pence per share GBPm GBPm
Interim dividend 2.25 - 194 -
9 Earnings per share
The basic earnings per share are 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. 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:
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
million of shares million of shares
Basic 8,613 8,530 8,609 8,021
Diluted 8,649 8,578 8,659 8,086
10 Reconciliation of operating profit to operating cash flow
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
Group operating profit 726 344 1,288 844
Depreciation and amortisation 752 1,031 1,493 2,045
Changes in working capital (93) 96 (88) (212)
Provision movements and other 38 (38) 42 10
Net cash inflow from operating activities 1,423 1,433 2,735 2,687
11 Net debt
(a) Analysis
At September 30 At March 31
2002 2001 2002
GBPm GBPm GBPm
Long-term loans and other borrowings falling due 15,394 17,704 16,245
after more than one year
Short-term borrowings and long-term loans and other 1,584 6,202 2,195
borrowings falling due within one year
Total debt 16,978 23,906 18,440
Short-term investments (3,748) (6,973) (4,581)
Cash at bank (118) (404) (158)
Net debt at end of period 13,112 16,529 13,701
11 Net debt continued
(b) Reconciliation of net cash flow to movement in net debt
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
Net debt at beginning of period 13,397 17,481 13,701 27,942
Decrease in net debt resulting from (274) (482) (628) (11,141)
cash flows
Net debt assumed or issued on acquisitions - - (13) (15)
Currency and other movements (16) 174 17 27
Other non-cash movements 5 (644) 35 (284)
Net debt at end of period 13,112 16,529 13,112 16,529
12 Provisions for liabilities and charges
Second quarter Year ended
ended September 30 March 31
2002 2001 2002
GBPm GBPm GBPm
Deferred taxation 2,146 2,276 2,140
Pension provisions (a) 33 372 29
Other provisions 125 115 155
2,304 2,763 2,324
(a) The pension provision relating to the BT Pension Scheme of GBP351m at
September 30, 2001 has moved into a prepayment of GBP231m at September 30, 2002
and is included in debtors.
13 Share capital and reserves
Share capital Reserves Total
GBPm GBPm GBPm
Balances at April 1, 2002 434 (792) (358)
Profit for the six months ended September 30, 2002 - 590 590
Dividend - (194) (194)
Goodwill written back on disposals - 6 6
Currency movements (a) - (48) (48)
Balances at September 30, 2002 434 (438) (4)
(a) Net of GBP7m movement on the retranslation of foreign borrowings and
other hedging instruments in the six months ended September 30, 2002.
14 Earnings before interest, taxation, depreciation and amortisation
(EBITDA)
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
GBPm GBPm GBPm GBPm
Group operating profit before exceptional 726 441 1,288 955
items
Depreciation 749 893 1,482 1,786
Amortisation 3 122 11 243
EBITDA before exceptional items 1,478 1,456 2,781 2,984
Analysed:
Continuing activities 1,478 1,385 2,781 2,808
Discontinued activities - 71 - 176
Total before exceptional items 1,478 1,456 2,781 2,984
15 United States Generally Accepted Accounting Principles
The results set out above have been prepared in accordance with accounting
principles generally accepted in the United Kingdom. The table below sets out
the results calculated in accordance with United States Generally Accepted
Accounting Principles.
Second quarter Half year
ended September 30 ended September 30
2002 2001 2002 2001
Net income (loss) attributable to 514 (1,046) 725 2,705
shareholders (GBP million) including
discontinued activities and exceptional
items
Earnings (loss) per ADS (GBP)
- basic 0.60 (1.23) 0.84 3.37
- diluted 0.59 (1.23) 0.84 3.35
Each American Depositary Share (ADS) represents 10 ordinary shares of BT
Group plc.
Shareholders' equity, calculated in accordance with United States Generally
Accepted Accounting Principles, is GBP3,798m deficiency at September 30, 2002
(September 30, 2001 - GBP18,538m surplus, March 31, 2002 - GBP4,247m
deficiency).
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: expectations regarding broadband growth and the benefits of
other new wave initiatives; the possible or assumed future results of operations
of BT and/or its lines of business; dividend cover and the group's cash
position; expectations regarding revenue growth, capital expenditure, investment
plans, cost reductions, return on capital employed and pension funding; the sale
of Blu SpA; the disposal of Cegetel and net debt.
Although BT Group 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 and
its lines of business; future regulatory actions and conditions in BT's
operating areas, including competition from others in the UK and other
international communications markets; 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 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; the timing of
entry and profitability of BT and its lines of business in certain communication
markets; significant changes in market shares for BT and its principal products
and services; to the extent that BT chooses to sell assets or minority interests
in its subsidiaries, prevailing market levels for such sales; general financial
market conditions affecting BT's performance; the reintegration of Concert; and
the outcome of the actuarial funding valuation as at December 31, 2002. BT Group
undertakes no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
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. Head of Shareholder Services
Date 02 December, 2002