TIDM72NS
RNS Number : 9370E
British Telecommunications PLC
06 November 2015
BRITISH TELECOMMUNICATIONS PLC
RESULTS FOR THE HALF YEAR TO 30 SEPTEMBER 2015
About BT
British Telecommunications plc (BT or group) is a wholly-owned
subsidiary of BT Group plc and encompasses virtually all businesses
and assets of the BT Group. BT Group plc is listed on stock
exchanges in London and New York.
BT's purpose is to use the power of communications to make a
better world. It is one of the world's leading providers of
communications services and solutions, serving customers in more
than 170 countries. Its principal activities include the provision
of networked IT services globally; local, national and
international telecommunications services to its customers for use
at home, at work and on the move; broadband, TV and internet
products and services and converged fixed/mobile products and
services. BT consists principally of five customer-facing lines of
business: BT Global Services, BT Business, BT Consumer, BT
Wholesale and Openreach.
In the year ended 31 March 2015, BT's reported revenue was
GBP17,979m with reported profit before taxation of GBP2,867m.
Group results
Half year to 30 September
----------------------------------- ---- ------------------------------
2015 2014 Change
GBPm GBPm %
----------------------------------- --------- -------- ---------
Revenue
- reported (see Note 1 below) 8,819 8,795 0
- adjusted(1) 8,659 8,737 (1)
- change in underlying revenue(2)
excluding transit 1.0
------------------------------------ --------- -------- ---------
Operating profit
- reported (see Note 1 below) 1,629 1,520 7
- adjusted(1) 1,642 1,618 1
----------------------------------------- --------- -------- ---------
Profit before tax
- reported (see Note 1 below) 1,453 1,213 20
- adjusted(1) 1,579 1,432 10
----------------------------------------- --------- -------- ---------
EBITDA
- reported (see Note 1 below) 2,880 2,790 3
- adjusted(1) 2,893 2,888 0
----------------------------------------- --------- -------- ---------
Capital expenditure 1,287 1,049 23
----------------------------------------- --------- -------- ---------
(1) Before specific items which are defined in Note 4
(2) Excludes specific items, foreign exchange movements and the
effect of acquisitions and disposals
Notes:
1. The commentary focuses on the trading results on an adjusted
basis, which is a non-GAAP measure, being before specific items.
Unless otherwise stated, revenue, operating costs, earnings before
interest, tax, depreciation and amortisation (EBITDA), operating
profit, profit before tax and net finance expense are measured
before specific items. This is consistent with the way that
financial performance is measured by management and reported to the
Board and the Operating Committee of BT Group plc and assists in
providing a meaningful analysis of the trading results of the
group. The directors believe that presentation of the group's
results in this way is relevant to the understanding of the group's
financial performance as specific items are those that in
management's judgement need to be disclosed by virtue of their
size, nature or incidence. In determining whether an event or
transaction is specific, management considers quantitative as well
as qualitative factors such as the frequency or predictability of
occurrence. Specific items may not be comparable to similarly
titled measures used by other companies. Reported revenue, reported
operating costs, reported EBITDA, reported operating profit,
reported profit before tax and reported net finance expense are the
equivalent unadjusted or statutory measures. Reconciliations of
revenue, operating costs and operating profit are set out in the
group income statement. Specific items are set out in Note 4.
Reconciliations of EBITDA and profit before tax to the nearest
measures prepared in accordance with IFRS are provided in Note 2
and in the Additional Information.
2. Trends in underlying revenue are non-GAAP measures which seek
to reflect the underlying performance of the group that will
contribute to long-term sustainable growth and as such exclude the
impact of acquisitions and disposals, foreign exchange movements
and any specific items. We focus on the trends in underlying
revenue excluding transit as transit traffic is low-margin and is
significantly affected by reductions in mobile termination rates. A
reconciliation of the trends in underlying revenue excluding
transit is set out in the Additional Information.
GROUP RESULTS FOR THE HALF YEAR TO 30 SEPTEMBER 2015
Line of business results
Revenue(1) EBITDA(1) Capital expenditure
-------------------------- ------------------------ -------------------- -----------------------------
Half year to 30 September 2015 2014 Change 2015 2014 Change 2015 2014 Change
GBPm GBPm % GBPm GBPm % GBPm GBPm %
-------------------------- ------- ------- ------ ----- ----- ------ -------- -------- ---------
BT Global Services 3,102 3,296 (6) 406 439 (8) 193 222 (13)
BT Business 1,530 1,551 (1) 501 498 1 72 56 29
BT Consumer 2,201 2,102 5 456 463 (2) 108 91 19
BT Wholesale 1,050 1,054 0 267 251 6 90 106 (15)
Openreach 2,516 2,490 1 1,287 1,251 3 750 504 49
Other and intra-group
items (1,740) (1,756) (1) (24) (14) 71 74 70 6
-------------------------- ------- ------- ------ ----- ----- ------ -------- -------- ---------
Total 8,659 8,737 (1) 2,893 2,888 0 1,287 1,049 23
-------------------------- ------- ------- ------ ----- ----- ------ -------- -------- ---------
Income statement
Reported revenue of GBP8,819m, which includes specific items,
was flat. This included GBP160m of ladder pricing transit revenue
relating to previous years which we have treated as a specific
item. Last year reported revenue included a specific item benefit
of GBP58m relating to ladder pricing agreements. Adjusted revenue,
which excludes specific items, was down 1% at GBP8,659m. We had a
GBP101m negative impact from foreign exchange movements, a GBP57m
reduction in transit revenue and a GBP6m impact from disposals.
Excluding these, underlying revenue excluding transit was up
1.0%.
Adjusted operating costs(1) were down 1%. Net labour costs
decreased 4%, or 3% excluding foreign exchange movements and the
effect of acquisitions and disposals. Excluding the impact of
higher leaver costs and higher pensions operating charges, net
labour costs were down 5% due to further efficiencies achieved by
our cost transformation programmes. Payments to telecommunications
operators were down 5%, largely benefiting from foreign exchange
movements. Network operating and IT costs were down 4%. These
reductions were offset by higher programme rights charges which
increased by GBP60m to GBP221m primarily reflecting the launch of
BT Sport Europe. Other costs were up 1% and property and energy
costs were flat.
Adjusted EBITDA of GBP2,893m was flat. Depreciation and
amortisation of GBP1,251m was down 1% and adjusted net finance
expense was GBP67m, down GBP120m primarily due to lower net debt.
As a result, adjusted profit before tax was GBP1,578m, up 10%.
Reported profit before tax (which includes specific items) was
GBP1,452m, up 20%. The effective tax rate on the profit before
specific items was 18.8% (HY 2014/15: 20.0%).
Specific items
Specific items resulted in a net charge after tax of GBP103m (HY
2014/15: GBP177m). This reflects net interest expense on pensions
of GBP111m (HY 2014/15: GBP146m) and GBP15m of costs relating to
the planned acquisition of EE. We recognised GBP160m of both
transit revenue and costs, being the impact of ladder pricing
agreements relating to prior years following a Supreme Court
judgment last year. The tax credit on specific items was GBP23m (HY
2014/15: GBP42m). Last year, specific items included restructuring
charges of GBP104m, a net EBITDA credit of GBP5m in relation to
ladder pricing and a profit of GBP25m on the disposal of our
interest in an associate.
Balance sheet
Total borrowings at 30 September 2015 were GBP9,404m (31 March
2015: GBP10,772m). Debt of GBP0.5bn and GBP0.8bn matured in June
and July, respectively. A further GBP0.4bn is repayable during the
remainder of 2015/16. At 30 September 2015 the group held cash and
current investment balances of GBP1.8bn. We also have a GBP1.5bn
committed facility, and a GBP3.6bn committed acquisition facility
to be used for the planned EE transaction by BT Group plc, both of
which are undrawn. We have extended our GBP1.5bn committed facility
by one year to September 2020.
Capital expenditure
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Capital expenditure was GBP1,287m (HY 2014/15: GBP1,049m) after
GBP65m (HY 2014/15: GBP173m) of net grant funding mainly relating
to the Broadband Delivery UK (BDUK) programme. This reflected
GBP193m of gross grant funding directly related to our fibre
broadband network build in the half year which was largely offset
by the deferral of GBP128m of the total grant funding we have
accrued to date. This is primarily because we have increased our
base-case assumption for take-up and under the terms of the BDUK
programme, we have a potential obligation to either re-invest or
repay grant funding depending on factors including the level of
customer take-up achieved.
(1) Before specific items
The deferral is a non-cash item in the half year that we expect
to be reflected in our free cash flow in future financial years.
Without the impact of the deferral, our capital expenditure would
have been GBP1,159m. The increase was mainly due to our fibre
rollout, connecting new homes and higher volumes of Ethernet
provision.
Pensions
The IAS 19 net pension position at 30 September 2015 was a
deficit of GBP5.6bn net of tax (HY 2014/15: GBP5.9bn) and GBP7.0bn
gross of tax (HY 2014/15: GBP7.3bn). The reduction primarily
reflects a decrease in the liabilities due to lower future
inflation expectations which more than offsets a decline in asset
values due to market conditions. The IAS 19 accounting position and
key assumptions are provided in Note 5.
Planned acquisition of EE
On 28 October the Competition and Markets Authority (CMA)
provisionally approved BT Group plc's GBP12.5bn acquisition of EE,
unconditionally without remedies. The CMA has provisionally decided
that the acquisition is not expected to result in a substantial
lessening of competition. The CMA has said that it will publish its
final decision by 18 January 2016. We welcome the provisional
approval; the combined BT Group and EE will be good for the UK,
providing investment and making sure consumers and businesses can
benefit from more innovation in a highly competitive market. It
also brings us a step closer to creating a true digital champion to
serve the UK. The planned acquisition will accelerate our existing
mobility strategy, where more than 200,000 consumer customers have
joined us to date.
Vision for the UK's digital future
In September we set out our vision for the UK's digital future
and the contribution BT can make, subject to regulatory support and
the right policy framework. We have four objectives:
1. To deliver minimum broadband speeds of between 5Mbps and
10Mbps, as needed for every home to enjoy the most popular internet
services, if Ofcom and the government take the action necessary to
make this commercially viable.
2. To expand the reach of fibre broadband in the UK beyond the
government's current target of 95%. Should the current public
funding model be continued, we are willing to support the
government to make sure homes and businesses in the most difficult
and commercially-inaccessible areas are connected.
3. To provide ultrafast broadband speeds of 300Mbps to 500Mbps
to 10m premises by the end of 2020, plus a service offering up to
1Gbps for those who want even faster speeds.
4. To deliver a higher service quality to our customers -
businesses, households and other Communications Providers (CPs) -
to match their growing expectations.
The Openreach Charter
Alongside these ambitions, Openreach announced the Openreach
Charter which sets out its specific commitments. As well as
investing in coverage and speed, Openreach will raise its service
standards, offering quicker installations and faster fixes. For
business customers, Openreach: will increase the number of new
Ethernet circuit connections by over 30% this year; will continue
to significantly increase speed of service delivery and improve the
number of on-time installations; and is committed to introducing
new Ethernet minimum service levels, working closely with industry
and Ofcom. Openreach has launched a new 'View my Engineer' service,
which provides text progress updates, as well as the engineer's
name and phone number ahead of an appointment. Openreach aims to
achieve 95% on-time installations by 2017, which is ahead of
Ofcom's minimum service level.
Fibre
We have passed 24m premises with our fibre broadband network,
over 80% of the UK. We achieved 415,000 fibre broadband net
connections, an increase of 21%. This brings the number of homes
and businesses connected to 5m, 21% of those passed. We have 3.4m
retail fibre broadband customers, having added 212,000 this
quarter. And the UK broadband market(1) grew by 160,000, of which
our share was 82,000 or 51%.
Regulation
In August, Ofcom issued supplementary guidance on how the
'minimum margin' test in respect of fibre broadband would be
impacted by a material change in circumstances (which would include
the launch of our UEFA Champions League and UEFA Europa League
content). Whilst we welcome this new guidance, it still does not
provide enough flexibility around how we recover our sport costs,
and we believe does not address the concerns raised by the European
Commission about the test.
(1) DSL and fibre
In August, the Court of Appeal granted us permission to appeal
the August 2014 decision of the Competition Appeal Tribunal
relating to a dispute on historical Ethernet pricing that was
originally determined by Ofcom in 2012. Our appeal was granted on
three legal grounds, including whether Ofcom had the power to
require us to make the payments it determined in the dispute and if
it has the power to award interest charges on these payments. Ofcom
has therefore deferred its final determination on the amount of
interest payable on claims under this dispute until the Court hears
the appeal, which we expect to take place during 2016/17.
In October, we and other parties responded to Ofcom's discussion
document in its Strategic Review of Digital Communications. We
believe regulation should make sure customers' needs are met by
ensuring efficient investment and delivering effective competition
across the whole of industry, including pay-TV as well as
communications. Ofcom has a key role to play by modernising the
regulatory framework in the following key areas:
-- Long-term commitment - Ofcom should make long-term
commitments in regulation to secure the long-term investments
necessary to meet future customers' needs;
-- Support for investment - Ofcom should not price regulate
services that depend on new investments before payback has been
achieved. Britain has gained, and will continue to gain, from
Openreach being part of BT - benefiting from more investment,
coverage and speed. We have called on Ofcom to reject at the
earliest opportunity the calls from some other CPs for structural
separation;
-- Consolidation - Ofcom should support consolidation that
promotes investment and competition;
-- Balance between service quality and price - Ofcom should take
customers' service needs into account when setting price
controls;
-- Level playing field - Ofcom needs to ensure a level playing
field of competition across the whole industry and should focus its
efforts on the competition problems in pay-TV; and
-- Regulate only where necessary - Ofcom should apply the
minimum regulation necessary to ensure markets work for customers
without distortion.
Related party transactions
Transactions with related parties during the half year to 30
September 2015 are disclosed in Note 8.
Principal risks and uncertainties
A summary of the group's principal risks and uncertainties is
provided in Note 9.
Post balance sheet events
Details of post balance sheet events are disclosed in Note
10.
OPERATING REVIEW
BT Global Services
Half year to 30 September
------------------------------------- ----- -------------------------------------
2015 2014 Change
GBPm GBPm GBPm %
------------------------------------- -------- -------- --------- ------
Revenue 3,102 3,296 (194) (6)
* underlying excluding transit (3)
Operating costs 2,696 2,857 (161) (6)
-------------------------------------------- -------- -------- --------- ------
EBITDA 406 439 (33) (8)
Depreciation & amortisation 257 264 (7) (3)
-------------------------------------------- -------- -------- --------- ------
Operating profit 149 175 (26) (15)
-------------------------------------------- -------- -------- --------- ------
Capital expenditure 193 222 (29) (13)
-------------------------------------------- -------- -------- --------- ------
Operating cash flow (179) (302) 123 41
-------------------------------------------- -------- -------- --------- ------
Revenue declined 6% including a GBP83m negative impact from
foreign exchange movements and a GBP15m decline in transit revenue.
Underlying revenue excluding transit decreased 3% primarily
reflecting lower revenue in the UK.
UK revenue was down 10%. In the US and Canada underlying revenue
excluding transit declined 6% as a major customer has started to
insource some services. In the high-growth regions(1) underlying
revenue excluding transit increased 4%. Underlying revenue
excluding transit grew 7% in Continental Europe.
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Operating costs declined 6% and EBITDA was 8% lower. The decline
in EBITDA mainly reflects the impact of our major health programmes
moving into their service and maintenance phase and the impact of
leaver costs, with these partially offset by the benefit of our
cost transformation programmes. Included in EBITDA were leaver
costs of GBP12m (HY 2014/15: GBPnil). While we expect to incur
further leaver costs during the remainder of the year, we expect
EBITDA in the second half to grow year on year. Depreciation and
amortisation was down 3%. Operating profit of GBP149m was down 15%
primarily due to the decline in EBITDA.
Capital expenditure was down 13% due to the timing of project
related expenditure. Operating cash outflow was GBP179m, an
improvement of GBP123m, reflecting improved collections, timing of
contract cash flows and lower capital expenditure.
(1) Asia Pacific, the Middle East and Africa (AMEA) and Latin
America
BT Business
Half year to 30 September
------------------------------------- ----- --------------------------------
2015 2014 Change
GBPm GBPm GBPm %
------------------------------------- ------ ------ ----- ---------
Revenue 1,530 1,551 (21) (1)
-
* underlying excluding transit
Operating costs 1,029 1,053 (24) (2)
-------------------------------------------- ------ ------ ----- ---------
EBITDA 501 498 3 1
Depreciation & amortisation 99 88 11 13
-------------------------------------------- ------ ------ ----- ---------
Operating profit 402 410 (8) (2)
-------------------------------------------- ------ ------ ----- ---------
Capital expenditure 72 56 16 29
-------------------------------------------- ------ ------ ----- ---------
Operating cash flow 331 421 (90) (21)
-------------------------------------------- ------ ------ ----- ---------
Revenue was down 1% with underlying revenue excluding transit
flat.
SME & Corporate voice revenue decreased 4% reflecting the
continued fall in business line volumes as customers move to data
and VoIP services. The number of traditional lines declined 7% but
this was partly offset by a 45% increase in the number of IP
lines.
SME & Corporate data and networking revenue increased 3%
with continued growth in our networking products and fibre
broadband. Business fibre broadband net additions were up 38%. IT
services revenue decreased 1% due to lower hardware sales as we
continue to focus our strategy towards providing higher margin
managed services. BT Ireland had a good six months, with its
underlying revenue excluding transit up 10%, helped by some ICT
equipment sales in the Republic of Ireland and fibre broadband
growth in Northern Ireland. Foreign exchange movements had an
GBP18m negative impact on BT Ireland revenue.
Operating costs were down 2% reflecting the benefit of our cost
transformation programmes, including a 4% reduction in total labour
costs and as a result, EBITDA grew 1%. Depreciation and
amortisation was up GBP11m and operating profit declined 2%.
Capital expenditure increased by GBP16m and operating cash
inflow was GBP90m lower mainly reflecting the timing of working
capital movements and the higher capital expenditure.
BT Consumer
Half year to 30 September
----------------------------- ----- -------------------------------------
2015 2014 Change
GBPm GBPm GBPm %
----------------------------- --------- -------- ------- -------
Revenue 2,201 2,102 99 5
Operating costs 1,745 1,639 106 6
------------------------------------ --------- -------- ------- -------
EBITDA 456 463 (7) (2)
Depreciation & amortisation 108 109 (1) (1)
------------------------------------ --------- -------- ------- -------
Operating profit 348 354 (6) (2)
------------------------------------ --------- -------- ------- -------
Capital expenditure 108 91 17 19
------------------------------------ --------- -------- ------- -------
Operating cash flow 264 332 (68) (20)
------------------------------------ --------- -------- ------- -------
Revenue was up 5% with a 12% increase in broadband and TV
revenue and a 1% increase in calls and lines.
We added 165,000 retail broadband customers. Fibre broadband
growth continued with 429,000 retail net additions, taking our
customer base to 3.4m. Of our broadband customers, 44% are now on
fibre.
Our consumer line losses of 111,000 were considerably lower than
last year. We grew our BT Mobile business, which launched in March,
with our customer base now over 200,000.
On 1 August, we launched our new BT Sport Pack, including the
new home of European football, BT Sport Europe. This pack is free
for customers taking BT TV, GBP5 a month for BT broadband customers
and is available via the satellite platform. Its contribution since
launch is ahead of our expectations and it has proved popular
amongst our sport customers with the majority now enjoying our
entire range of channels.
Operating costs increased 6% as a result of the launch of BT
Sport Europe in August and our new AMC TV channel, leading to a 2%
reduction in EBITDA. Depreciation and amortisation decreased 1% and
operating profit was down 2%.
Capital expenditure was up GBP17m. Operating cash flow decreased
GBP68m as a result of the lower EBITDA and the phasing of rights
payments for BT Sport Europe content, which were partially offset
by favourable other working capital movements.
BT Wholesale
Half year to 30 September
------------------------------------- ----- -------------------------------------
2015 2014 Change
GBPm GBPm GBPm %
------------------------------------- --------- -------- ------- -------
Revenue 1,050 1,054 (4) -
* underlying excluding transit 4
Operating costs 783 803 (20) (2)
-------------------------------------------- --------- -------- ------- -------
EBITDA 267 251 16 6
Depreciation & amortisation 113 114 (1) (1)
-------------------------------------------- --------- -------- ------- -------
Operating profit 154 137 17 12
-------------------------------------------- --------- -------- ------- -------
Capital expenditure 90 106 (16) (15)
-------------------------------------------- --------- -------- ------- -------
Operating cash flow 180 71 109 154
-------------------------------------------- --------- -------- ------- -------
Revenue was flat. Underlying revenue excluding a GBP44m decline
in transit was up 4%. This largely reflects the recognition of
around GBP15m of revenue related to ladder pricing in the six
months to 30 September 2015. Following the introduction of the new
non-geographic call services charging regime on 1 July, we do not
expect any further benefit from ladder pricing in our trading
revenue.
IP services revenue increased 27%. This partly reflects an
increase in IP Exchange voice minutes, a platform that now carries
over two billion minutes a month. Ethernet continues to grow
strongly with a 26% increase in the rental base, helped by network
deals we have won.
Managed solutions revenue was up 3%. Calls, lines and circuits
revenue was down 1%, with some specific work for some major
customers partly offsetting declining volumes.
Broadband revenue declined 16% as lines continue to migrate to
LLU. While migration to LLU continues to reduce the total size of
our wholesale broadband base, fibre broadband has seen a pick-up in
growth, reflecting demand across the market.
Operating costs decreased 2%. Selling and general administration
costs reduced 15% as we continue to focus on our cost
transformation activities.
EBITDA grew 6%. Depreciation and amortisation was down 1% and
operating profit was up 12%.
Capital expenditure decreased 15%. Operating cash flow grew
GBP109m as a result of higher EBITDA, lower capital expenditure,
and working capital movements.
(MORE TO FOLLOW) Dow Jones Newswires
November 06, 2015 13:21 ET (18:21 GMT)
Openreach
Half year to 30 September
----------------------------- ----- ------------------------------------
2015 2014 Change
GBPm GBPm GBPm %
----------------------------- --------- --------- ------- -----
Revenue 2,516 2,490 26 1
Operating costs 1,229 1,239 (10) (1)
------------------------------------ --------- --------- ------- -----
EBITDA 1,287 1,251 36 3
Depreciation & amortisation 665 684 (19) (3)
------------------------------------ --------- --------- ------- -----
Operating profit 622 567 55 10
------------------------------------ --------- --------- ------- -----
Capital expenditure 750 504 246 49
------------------------------------ --------- --------- ------- -----
Operating cash flow 599 637 (38) (6)
------------------------------------ --------- --------- ------- -----
Revenue increased 1% driven by continued strong growth in fibre
broadband revenue, which was up 40%. This growth was partly offset
by regulatory price changes which had a negative impact of around
GBP70m, the equivalent of around 3% of our revenue.
Operating costs were down 1% year on year with our cost
transformation activities offset by the additional costs to deliver
revenue growth and by the investments we are making to improve
customer service. There was no benefit from the sale of redundant
copper. EBITDA grew 3% and depreciation and amortisation was 3%
lower with operating profit up 10%.
Capital expenditure was GBP750m, up GBP246m or 49%, after
GBP186m (HY 2014/15: GBP167m) of gross grant funding directly
related to our fibre broadband network build, partly offset by the
deferral of GBP126m of the total grant funding we have accrued to
date. This is primarily because we have increased our base-case
assumption for take-up and under the terms of the BDUK programme,
we have a potential obligation to either re-invest or repay grant
funding depending on factors including the level of customer
take-up achieved. The remaining increase in capital expenditure was
mainly due to our fibre broadband rollout, connecting new homes and
higher volumes of Ethernet provision.
Operating cash flow decreased 6% with the growth in EBITDA and
favourable working capital movements more than offset by higher
capital expenditure.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Group income statement
For the six months to 30 September 2015 - unaudited
Specific
Before items
specific
items (Note 4) Total
Notes GBPm GBPm GBPm
----------------------------------- ------ --------- --------- --------
Revenue 2 8,659 160 8,819
Operating costs 3 (7,017) (173) (7,190)
----------------------------------- ------ --------- --------- --------
Operating profit 1,642 (13) 1,629
Finance expense (263) (113) (376)
Finance income 196 - 196
----------------------------------- ------ --------- --------- --------
Net finance expense (67) (113) (180)
Share of post-tax profits
of associates and joint ventures 4 - 4
Profit before tax 1,579 (126) 1,453
Tax (297) 23 (274)
----------------------------------- ------ --------- --------- --------
Profit for the period 1,282 (103) 1,179
----------------------------------- ------ --------- --------- --------
Group income statement
For the six months to 30 September 2014 - unaudited
Specific
Before items
specific (Note 4) Total
items
Notes GBPm GBPm GBPm
----------------------------------- ------ --------- --------- --------
Revenue 2 8,737 58 8,795
Operating costs 3 (7,119) (156) (7,275)
----------------------------------- ------ --------- --------- --------
Operating profit 1,618 (98) 1,520
Finance expense (295) (146) (441)
Finance income 108 - 108
----------------------------------- ------ --------- --------- --------
Net finance expense (187) (146) (333)
Share of post-tax profits
of associates and joint ventures 1 - 1
Profit on disposal of interest
in associate - 25 25
Profit before tax 1,432 (219) 1,213
Tax (286) 42 (244)
----------------------------------- ------ --------- --------- --------
Profit for the period 1,146 (177) 969
----------------------------------- ------ --------- --------- --------
Group statement of comprehensive income
For the six months to 30 September 2015 - unaudited
Six months
to 30 September
2015 2014
GBPm GBPm
---------------------------------------------------- ------------- -------------
Profit for the period 1,179 969
---------------------------------------------------- ------------- -------------
Items that will not be reclassified to the income
statement
Actuarial gains (losses) relating to retirement
benefit movements on defined benefit pension
schemes 157 (41)
Tax on actuarial gains and losses (32) 8
Items that may be subsequently reclassified to
the income statement
Exchange loss on translation of foreign operations (60) (27)
Fair value movements on available-for-sale assets 6 2
Fair value movements on cash flow hedges
* net fair value losses (76) (50)
* recognised in income and expense 121 26
Tax on components of other comprehensive income (8) -
that may be reclassified
---------------------------------------------------- ------------- -------------
Other comprehensive income (loss) for the period,
net of tax 108 (82)
---------------------------------------------------- ------------- -------------
Total comprehensive income for the period 1,287 887
---------------------------------------------------- ------------- -------------
Group statement of changes in equity
For the six months to 30 September 2015 - unaudited
Share Total
capital Reserves Equity
GBPm GBPm GBPm
------------------------------------------- --------- --------- --------
At 1 April 2015 2,172 17,232 19,404
Total comprehensive income for the period - 1,287 1,287
Share-based payments - 32 32
Dividends to parent company - (1,450) (1,450)
------------------------------------------- --------- --------- --------
At 30 September 2015 2,172 17,101 19,273
------------------------------------------- --------- --------- --------
For the six months to 30 September 2014 - unaudited
GBPm GBPm GBPm
------------------------------------------- ------ -------- --------
At 1 April 2014 2,172 16,811 18,983
Total comprehensive income for the period - 887 887
Share-based payments - 36 36
Dividends to parent company - (1,200) (1,200)
At 30 September 2014 2,172 16,534 18,706
------------------------------------------- ------ -------- --------
Group cash flow statement
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For the six months to 30 September 2015 - unaudited
Six months to 30 September
-----------------------------------------------
2015 2014
GBPm GBPm
Profit before tax 1,453 1,213
Share-based payments 32 36
Profit on disposal of subsidiaries and interest
in associates - (25)
Share of post-tax profits of associates
and joint ventures (4) (1)
Net finance expense 180 333
Depreciation and amortisation 1,251 1,270
Increase in working capital (687) (807)
Provisions, pensions and other non-cash
movements(1) (627) 97
------------------------------------------------- ----------------------- ----------------------
Cash generated from operating activities(2) 1,598 2,116
Tax paid (64) (231)
------------------------------------------------- ----------------------- ----------------------
Net cash inflow from operating activities 1,534 1,885
------------------------------------------------- ----------------------- ----------------------
Cash flow from investing activities
Interest received 5 4
Dividends received from associates and joint 17 -
ventures
Acquisition of subsidiaries(3) and joint
ventures (2) (6)
Proceeds on disposal of subsidiaries(3)
, associates and joint ventures - 28
Purchases of property, plant and equipment
and computer software (1,225) (1,054)
Proceeds on disposal of property, plant
and equipment 4 3
Outflow on non-current amounts owed by ultimate
parent company(4) (877) (615)
Net purchase of non-current asset investments - (2)
Purchases of current asset investments (3,625) (4,112)
Sale of current asset investments 5,819 4,734
------------------------------------------------- ----------------------- ----------------------
Net cash generated from (used in) investing
activities 116 (1,020)
------------------------------------------------- ----------------------- ----------------------
Cash flow from financing activities
Interest paid (253) (296)
New borrowings 1 812
Repayment of borrowings(4,5) (1,271) (1,151)
Cash flows from derivatives related to net
debt (66) 50
Net repayment of commercial paper - (338)
Net cash used in financing activities (1,589) (923)
------------------------------------------------- ----------------------- ----------------------
Net increase (decrease) in cash and cash
equivalents 61 (58)
------------------------------------------------- ----------------------- ----------------------
Opening cash and cash equivalents 402 679
Net increase (decrease) in cash and cash
equivalents 61 (58)
Effect of exchange rate movements (5) 1
------------------------------------------------- ----------------------- ----------------------
Closing cash and cash equivalents(6) 458 622
------------------------------------------------- ----------------------- ----------------------
(1) Includes pension deficit payments of GBP625m for the half
year to 30 September 2015 (HY 2014/15: GBPnil)
(2) Includes cash flows relating to programme rights
(3) Acquisitions and disposals of subsidiaries are shown net of
cash acquired or disposed of
(4) In addition, there are non-cash movements in this
intra-group loan arrangement which principally relate to settlement
of dividends with the parent company and amounts the ultimate
parent company was owed by the parent company which were settled
through their loan accounts with British Telecommunications plc.
For further details see Note 8
(5) Repayment of borrowings includes the impact of hedging and
repayment of lease liabilities
(6) Net of bank overdrafts of GBP16m (30 September 2014:
GBP17m)
Group balance sheet
30 September 31 March
2015 - 2015 -
unaudited audited
GBPm GBPm
--------------------------------------- --------------- -----------
Non-current assets
Intangible assets 3,084 3,178
Property, plant and equipment 13,607 13,505
Derivative financial instruments 1,124 1,232
Investments 19,093 19,614
Associates and joint venture 15 26
Trade and other receivables 179 184
Deferred tax assets 1,420 1,559
38,522 39,298
--------------------------------------- --------------- -----------
Current assets
Programme rights 541 118
Inventories 112 94
Trade and other receivables 3,331 3,141
Current tax receivable 65 65
Derivative financial instruments 77 97
Investments 1,523 3,571
Cash and cash equivalents 474 429
6,123 7,515
--------------------------------------- --------------- -----------
Current liabilities
Loans and other borrowings 993 1,902
Derivative financial instruments 62 168
Trade and other payables 5,305 5,297
Current tax liabilities 289 222
Provisions 137 142
6,786 7,731
--------------------------------------- --------------- -----------
Total assets less current liabilities 37,859 39,082
--------------------------------------- --------------- -----------
Non-current liabilities
Loans and other borrowings 8,411 8,870
Derivative financial instruments 851 927
Retirement benefit obligations 6,958 7,583
Other payables 1,032 928
Deferred tax liabilities 955 948
Provisions 379 422
18,586 19,678
--------------------------------------- --------------- -----------
Equity
Ordinary shares 2,172 2,172
Reserves 17,101 17,232
Total equity 19,273 19,404
--------------------------------------- --------------- -----------
37,859 39,082
--------------------------------------- --------------- -----------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 Basis of preparation and accounting policies
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These condensed consolidated financial statements ('the
financial statements') comprise the financial results of British
Telecommunications plc for the half years to 30 September 2015 and
2014 together with the audited balance sheet at 31 March 2015. The
financial statements for the half year to 30 September 2015 have
been reviewed by the auditors and their review opinion is on page
21. The financial statements have been prepared in accordance with
the Disclosure and Transparency Rules (DTR) of the Financial
Conduct Authority and with IAS 34 Interim Financial Reporting as
adopted by the European Union and as issued by the International
Accounting Standards Board. The financial statements should be read
in conjunction with the annual financial statements for the year to
31 March 2015.
Having reassessed the principal risks, the directors considered
it appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
Except as described below, and other than income taxes which are
accrued using the tax rate that is expected to be applicable for
the full financial year, the financial statements have been
prepared in accordance with the accounting policies as set out in
the financial statements for the year to 31 March 2015 and have
been prepared under the historical cost convention as modified by
the revaluation of financial assets and liabilities (including
derivative financial instruments) at fair value. These financial
statements do not constitute statutory accounts within the meaning
of Section 434 of the Companies Act 2006. Statutory accounts for
the year to 31 March 2015 were approved by the Board of Directors
on 13 May 2015, published on 21 May 2015, and delivered to the
Registrar of Companies. The report of the auditors on those
accounts was unqualified and did not contain any statement under
Section 498 of the Companies Act 2006.
2 Operating results - by line of business(1)
External Internal Group revenue EBITDA Operating
revenue revenue profit
(loss)
GBPm GBPm GBPm GBPm GBPm
--------------------------- --------- --------- -------------- ------- ----------
Half year to 30 September
2015
BT Global Services 3,087 15 3,102 406 149
BT Business 1,349 181 1,530 501 402
BT Consumer 2,170 31 2,201 456 348
BT Wholesale 1,050 - 1,050 267 154
Openreach 995 1,521 2,516 1,287 622
Other and intra-group
items(2) 8 (1,748) (1,740) (24) (33)
--------------------------- --------- --------- -------------- ------- ----------
Total 8,659 - 8,659 2,893 1,642
--------------------------- --------- --------- -------------- ------- ----------
Half year to 30 September
2014
BT Global Services 3,282 14 3,296 439 175
BT Business 1,360 191 1,551 498 410
BT Consumer 2,073 29 2,102 463 354
BT Wholesale 1,054 - 1,054 251 137
Openreach 957 1,533 2,490 1,251 567
Other and intra-group
items(2) 11 (1,767) (1,756) (14) (25)
Total 8,737 - 8,737 2,888 1,618
--------------------------- --------- --------- -------------- ------- ----------
Reconciliation of earnings before interest, taxation,
depreciation and amortisation
Earnings before interest, taxation, depreciation and
amortisation (EBITDA) is not a measure defined under IFRS, but is a
key indicator used by management to assess operational performance.
A reconciliation of reported profit before tax to adjusted EBITDA
is provided below.
Half year
to 30 September
-------------------
2015 2014
GBPm GBPm
----------------------------------- ----------- -------- --------- --------
Reported profit before tax 1,453 1,213
Share of post tax profits of associates
& joint ventures (4) (1)
Profit on disposal of interest in
associate - (25)
Net finance expense 180 333
---------------------------------------------------------- --------- --------
Operating profit 1,629 1,520
Depreciation and amortisation 1,251 1,270
---------------------------------------------------------- --------- --------
Reported EBITDA 2,880 2,790
Specific items (Note 4) 13 98
---------------------------------------------------------- --------- --------
Adjusted EBITDA 2,893 2,888
---------------------------------------------------------- --------- --------
(1) Before specific items
(2) Elimination of intra-group revenue, which is included in the
total revenue of the originating business.
3 Operating costs
Half year
to 30 September
---------------------------------
2015 2014
GBPm GBPm
------------------------------------------- ------------------ ----------------- ----------------
Direct labour costs 2,280 2,328
Indirect labour costs 370 390
Leaver costs 36 3
------------------------------------------------------------------- ----------------- ----------------
Total labour costs 2,686 2,721
Capitalised labour (581) (521)
------------------------------------------------------------------- ----------------- ----------------
Net labour costs 2,105 2,200
Payments to telecommunications
operators 1,029 1,082
Property and energy costs 486 485
Network operating and IT costs 299 312
Programme rights 221 161
Other costs 1,626 1,609
------------------------------------------------------------------- ----------------- ----------------
Operating costs before depreciation, amortisation
and specific items 5,766 5,849
Depreciation and amortisation 1,251 1,270
------------------------------------------------------------------- ----------------- ----------------
Total operating costs before specific
items 7,017 7,119
Specific items (Note 4) 173 156
------------------------------------------------------------------- ----------------- ----------------
Total operating costs 7,190 7,275
------------------------------------------------------------------- ----------------- ----------------
4 Specific items
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The group separately identifies and discloses those items that
in management's judgement need to be disclosed by virtue of their
size, nature or incidence (termed 'specific items'). This is
consistent with the way that financial performance is measured by
management and 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.
Half year
to 30 September
----------------------
2015 2014
GBPm GBPm
----------------------------------- ----------- ------------ -------- --------
Specific revenue
Retrospective regulatory matters (160) (58)
-------------------------------------------------------------- -------- --------
Specific operating costs
Retrospective regulatory matters 160 -
EE acquisition-related costs 13 -
Profit on disposal of subsidiary - (1)
Restructuring charges - 104
Provision for regulatory risks - 53
Specific operating costs 173 156
-------------------------------------------------------------- -------- --------
Net interest expense on pensions 111 146
Profit on disposal of interest
in associate - (25)
EE acquisition-related finance
costs 2 -
----------------------------------- ----------- ------------ -------- --------
Net specific items charge before
tax 126 219
Tax credit on specific items before
tax (23) (42)
Net specific items charge after
tax 103 177
---------------------------------------- ---------- -------- -------- --------
5 Pensions
30 September 2015 31 March 2015
---------------------- ----------------------
GBPbn GBPbn
------------------------- ---------------------- ----------------------
IAS 19 liabilities
- BTPS (48.2) (50.7)
Assets - BTPS 41.5 43.4
Other schemes (0.3) (0.3)
-------------------------- ---------------------- ----------------------
Total IAS 19 deficit,
gross of tax (7.0) (7.6)
-------------------------- ---------------------- ----------------------
Total IAS 19 deficit,
net of tax (5.6) (6.1)
-------------------------- ---------------------- ----------------------
Discount rate (nominal) 3.60% 3.25%
Discount rate (real) 0.68% 0.39%
RPI inflation 2.90% 2.85%
CPI inflation 1.0% below RPI 1.0% below RPI
until 31 March until 31 March
2017 and 1.2% 2017 and 1.2%
below RPI thereafter below RPI thereafter
-------------------------- ---------------------- ----------------------
The group made a deficit payment of GBP625m in April 2015 and
expects to make additional contributions of around GBP510m to the
BT Pension Scheme (BTPS) in 2015/16, comprising ordinary
contributions of around GBP260m and deficit contributions of
GBP250m.
6 Financial instruments and risk management
Fair value of financial assets and liabilities measured at
amortised cost
At 30 September 2015, the fair value of loans and borrowings was
GBP10,838m (31 March 2015: GBP12,662m) and the carrying value was
GBP9,404m (31 March 2015: GBP10,772m).
The fair value of the following financial assets and liabilities
approximate their carrying amount:
-- Cash and cash equivalents
-- Trade and other receivables
-- Trade and other payables
-- Provisions
-- Investments classified as loans and receivables
The group's activities expose it to a variety of financial
risks: market risk (including interest rate risk and foreign
exchange risk); credit risk; and liquidity risk. There have been no
changes in our risk management policy since 31 March 2015.
Fair value estimation
Financial instruments measured at fair value consist of
derivative financial instruments and investments classified as
available-for-sale or designated at fair value through profit and
loss. These instruments are further analysed by three levels of
valuation methodology which are:
-- Level 1 - uses quoted prices in active markets for identical assets or liabilities
-- Level 2 - uses inputs for the asset or liability other than
quoted prices, that are observable either directly or
indirectly
-- Level 3 - uses inputs for the asset or liability that are not
based on observable market data, such as internal models or other
valuation methods.
The fair value of the group's outstanding derivative financial
assets and liabilities were estimated using discounted cash flow
models and market rates of interest and foreign exchange at the
balance sheet date.
6 Financial instruments and risk management (continued)
Total held
Level Level Level Total held at amortised
30 September 2015 1 2 3 at fair value cost Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- -------- -------- ---------------- --------------- --------
Investments
Available-for-sale 31 1,308 10 1,349 - 1,349
Fair value through
profit and loss 7 - - 7 - 7
Loans and receivables(1) - - - - 19,260 19,260
Derivative assets
Designated in
a hedge - 900 - 900 - 900
Fair value through
profit and loss - 301 - 301 - 301
-------------------------- -------- -------- -------- ---------------- --------------- --------
Total assets 38 2,509 10 2,557 19,260 21,817
-------------------------- -------- -------- -------- ---------------- --------------- --------
Derivative liabilities
Designated in
a hedge - 687 - 687 - 687
Fair value through
profit and loss - 226 - 226 - 226
-------------------------- -------- -------- -------- ---------------- --------------- --------
Total liabilities - 913 - 913 - 913
-------------------------- -------- -------- -------- ---------------- --------------- --------
Total held
Level Level Level Total held at amortised
1 2 3 at fair value cost Total
31 March 2015 GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- -------- -------- ---------------- --------------- --------
Investments
Available-for-sale 26 3,133 10 3,169 - 3,169
Fair value through
profit and loss 8 - - 8 - 8
Loans and receivables(1) - - - - 20,008 20,008
Derivative assets
Designated in
a hedge - 1,176 - 1,176 - 1,176
Fair value through
profit and loss - 153 - 153 - 153
-------------------------- -------- -------- -------- ---------------- --------------- --------
Total assets 34 4,462 10 4,506 20,008 24,514
-------------------------- -------- -------- -------- ---------------- --------------- --------
Derivative liabilities
Designated in
a hedge - 859 - 859 - 859
Fair value through
profit and loss - 236 - 236 - 236
-------------------------- -------- -------- -------- ---------------- --------------- --------
Total liabilities - 1,095 - 1,095 - 1,095
(MORE TO FOLLOW) Dow Jones Newswires
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-------------------------- -------- -------- -------- ---------------- --------------- --------
(1) Loans and receivables include investments in term deposits
of GBP28m (HY 2014/15: GBP390m)
No gains or losses have been recognised in the income statement
in respect of Level 3 assets held at 30 September 2015. There were
no changes to the valuation methods or transfers between levels 1,
2 and 3 during the half year.
7 Financial commitments
Capital expenditure for property, plant and equipment and
software contracted for at the balance sheet date but not yet
incurred was GBP498m (30 September 2014: GBP469m; 31 March 2015:
GBP507m). Programme rights commitments, mainly relating to football
broadcast rights for which the licence period has not yet started,
were GBP1,989m (30 September 2014: GBP1,400m; 31 March 2015:
GBP2,512m).
8 Related party transactions
British Telecommunications plc and certain of its subsidiaries
act as a funder and deposit taker for cash related transactions for
both its parent (BT Group Investments Limited) and ultimate parent
company (BT Group plc). The loan arrangements described below with
these companies reflect this. Cash transactions normally arise
where the parent and ultimate parent company are required to meet
their external payment obligations or receive amounts from third
parties. These principally relate to the payment of dividends, the
buyback of shares and the exercise of share options. Transactions
between the ultimate parent company, the parent company and the
group are settled on both a cash and non-cash basis through these
loan accounts depending on the nature of the transaction.
In 2001/02 the group demerged its former mobile phone business
and as a result BT Group plc became the listed ultimate parent
company of the group. The demerger steps resulted in the formation
of an intermediary holding company, BT Group Investments Limited,
between BT Group plc and British Telecommunications plc. This
intermediary company held an investment of GBP18.5bn in British
Telecommunications plc which was funded by an intercompany loan
facility with British Telecommunications plc.
A dividend of GBP1,450m (HY 2014/15: GBP1,200m) was settled on
13 May 2015 with the parent company in relation to the year ended
31 March 2015. See the group statement of changes in equity. A
dividend from the parent company to the ultimate parent company of
GBP1,200m (HY 2014/15 GBP1,000m) was settled through BT plc.
Amounts paid to the group's retirement benefit plans for the six
months to 30 September 2015 are similar in nature to those
disclosed in Note 27 of the Annual Report & Form 20-F 2015 for
the year ended 31 March 2015. A deficit payment of GBP625m was made
in April 2015.
On 12 February 2015 the ultimate parent company raised GBP1.0bn
from an equity placing and entered into an additional intercompany
loan agreement with British Telecommunications plc for this amount.
This amount was raised to support BT Group's planned acquisition of
EE. Transaction costs of GBP15m (HY 2014/15: GBPnil) relating to
the planned acquisition were incurred by British Telecommunications
plc in the six months to 30 September 2015.
A summary of the balances with the parent and ultimate parent
companies and the finance income or expense arising in respect of
these balances is shown below:
Asset (liability) Finance income (expense)
------------------------ -----------------------------
30 September 31 March 30 September 30 September
2015 2015 2015 2014
GBPm GBPm GBPm GBPm
------------------------------- ------------- --------- -------------- -------------
Amounts owed by (to) parent
company
Loan facility - non-current
asset investments 18,058 18,263 172 88
Loan facility - current asset
investments 172 45 n/a n/a
Trade and other payables (76) (41) n/a n/a
------------------------------- ------------- --------- -------------- -------------
Amounts owed by (to) ultimate
parent company
Non-current asset investments 987 1,307 15 13
Non-current liabilities (1,004) (1,002) (10) -
Trade and other receivables 3 1 n/a n/a
Current asset investments 15 3 n/a n/a
Current liabilities (10) (2) n/a n/a
Trade and other payables (7) (5) n/a n/a
------------------------------- ------------- --------- -------------- -------------
For the six month period to 30 September 2015 the loan facility
with both the ultimate parent company and the parent company
accrued interest at a rate of 12 month LIBOR plus 102.5 basis
points (HY 2014/15: 2 month LIBOR plus 50 basis points) and was
subject to an overall maximum of GBP10bn and GBP25bn respectively.
In the six months to 30 September 2015 the overall loan investment
balances were maintained at a similar level as the equivalent
period in the prior year with the mix increasing the level of
short-term loans. The parent company currently finances its
obligations on the loan as they fall due through dividends from the
company.
9 Principal risks and uncertainties
We have processes for identifying, evaluating and managing our
risks. Details of our principal risks and uncertainties can be
found on pages 17 to 25 of the Annual Report & Form 20-F 2015
and are summarised below. All of them have the potential to have an
adverse impact on our business, revenue, profits, assets, liquidity
and capital resources.
-- The risks that could impact the security of our data or the
resilience of our operations and services
-- The risks associated with complex and high value national and
multinational customer contracts
-- The risks associated with a significant funding obligation in
relation to our defined benefit pension scheme
-- The risks arising from operating in markets which are
characterised by: high levels of change; strong and new
competition; declining prices and in some markets declining
revenues; technology substitution; market and product convergence;
customer churn; and regulatory intervention to promote competition
and reduce wholesale prices
-- The risks associated with some of our activities being
subject to significant price and other regulatory controls
-- The risks associated with operating under a wide range of
local and international anti-corruption and bribery laws, trade
sanctions and import and export controls
-- The risk there could be a failure of any of our critical
third-party suppliers to meet their obligations
-- The risks arising from operating as a major data controller
and processor of customer information around the world
There have been no significant changes to the principal risks
and uncertainties in the half year to 30 September 2015, some or
all of which have the potential to impact our results or financial
position during the remaining six months of the financial year. The
proposed acquisition of EE by BT Group plc creates additional risks
for BT beyond those captured in our principal risks and
uncertainties. These are described on pages 26 to 28 of the Annual
Report & Form 20-F 2015.
10 Post balance sheet event
Changes to the UK corporation tax rates were announced in the
Chancellor's Budget on 8 July 2015 and substantively enacted on 26
October 2015. These include reductions in the rate to 19% from 1
April 2017 and to 18% from 1 April 2020. As the changes had not
been substantively enacted at the balance sheet date their effects
are not included in these financial statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm, to the best of their knowledge, that this
condensed set of financial statements has been prepared in
accordance with IAS 34 as adopted by the European Union and that
the Interim Management Report includes a fair review of the
information required by Rules 4.2.7 and 4.2.8 of the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
By order of the Board
Glyn Parry
Director
6 November 2015
Enquiries
Investor relations:
Damien Maltarp Tel: 020 7356 4909
INDEPENDENT REVIEW REPORT TO BRITISH TELECOMMUNICATIONS PLC
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed the condensed consolidated financial
statements, defined below, in the half year financial report of
British Telecommunications plc (the "Group") for the six months
ended 30 September 2015. Based on our review, nothing has come to
our attention that causes us to believe that the condensed
consolidated financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated financial statements, which are
prepared by British Telecommunications plc, comprise:
-- the Group balance sheet as at 30 September 2015;
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