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BT Group is the UK\u2019s leading fixed and mobile
communications provider. We build and run
the biggest fixed and mobile networks in
the country.
We operate in both wholesale and retail markets. Our customers
include consumers, small, medium and large businesses, public
sector organisations and other communications providers.
We create value by designing, building, marketing, selling and
supporting network access, connectivity and related products to
customers. We provide many of the fixed, mobile and converged
connectivity solutions integral to modern life. They include
broadband, mobile, TV, networking and IT services. We also
sell other things \u2013 like handsets, gaming and insurance \u2013 to help
our customers connect, communicate, share, be entertained
and do business.
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"iso4217:GBP" } }, "fact-478": { "value": "692000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsIfDifferentFromStatementOfFinancialPosition", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2022-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-479": { "value": "-17000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalentsBeforeEffectOfExchangeRateChanges", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-480": { "value": "-308000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalentsBeforeEffectOfExchangeRateChanges", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2022-04-01T00:00:00/2023-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-481": { "value": "-8000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:EffectOfExchangeRateChangesOnCashAndCashEquivalents", 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"language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-15": { "value": "10", "dimensions": { "concept": "btgroupplc:NetTransactionCosts", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-13": { "value": "488", "dimensions": { "concept": "btgroupplc:DepreciationAndAmortisationIncludingGoodwillImpairmentCharges", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-9": { "value": "823000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:PensionDeficitPaymentIncludedInAdjustmentsForOtherLiabilities", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-5": { "value": "994000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:PensionDeficitPaymentIncludedInAdjustmentsForOtherLiabilities", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2022-04-01T00:00:00/2023-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-10": { "value": "4880000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:AdditionToPropertyPlantAndEquipmentAndSoftware", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-6": { "value": "5056000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:AdditionToPropertyPlantAndEquipmentAndSoftware", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2022-04-01T00:00:00/2023-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-11": { "value": "89000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:MovementInCapitalAccruals", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-7": { "value": "251000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:MovementInCapitalAccruals", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2022-04-01T00:00:00/2023-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-16": { "value": "105", "dimensions": { "concept": "btgroupplc:UpfrontAgreementOnPrepaymentForCopper", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-12": { "value": "58000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:BankOverdraftsExcludedFromCashAndCashEquivalents", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2024-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-8": { "value": "11000000", "decimals": -6, "dimensions": { "concept": "btgroupplc:BankOverdraftsExcludedFromCashAndCashEquivalents", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-490": { "value": "Preparation of the financial statements The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006. The consolidated financial statements are prepared on a going concern basis. This assessment is consistent with the assessment of our viability, as set out on pages 81 to 82, which has been based on the Company\u2019s strategy, balance sheet and financing position, including our \u00a32.1bn undrawn committed borrowing facility which matures in March 2027, and the potential impact of \u2018Our principal risks and uncertainties\u2019 (pages 63 to 70); and which estimates the financial impact of a severe but plausible outcome for each risk, both individually, in combination and through stochastic risk modelling. This stress testing confirmed that existing projected cash flows and cash management activities provide us with adequate headroom over the going concern assessment period. Having assessed the principal and emerging risks, the directors considered it appropriate to adopt the going concern basis of accounting when preparing the group and parent company financial statements. This assessment covers the period to May 2025, which is consistent with the FRC guidance. When reaching this conclusion, the directors took into account the group\u2019s and parent company\u2019s overall financial position (including trading results and ability to repay term debt as it matures without recourse to refinancing) and the exposure to principal risks. In preparing the financial statements, the directors have considered the impact of climate change, particularly in the context of the risks identified in the TCFD disclosure on pages 71 to 80 this year. There has been no material impact identified in respect of the judgements and estimates reported in these financial statements. The following impacts were considered: \u2013 Low carbon fleet \u2013 see note 14 These financial statements consolidate BT Group plc, the parent company, and its subsidiaries (together the \u2018group\u2019, \u2018us\u2019, \u2018we\u2019 or \u2018our\u2019). The consolidated financial statements are prepared on the historical cost basis, except for certain financial and equity instruments that have been measured at fair value. The consolidated financial statements are presented in sterling, the functional currency of BT Group plc. These financial statements cover the financial year from 1 April 2023 to 31 March 2024 (\u2018FY24\u2019), with comparative figures for the financial year from 1 April 2022 to 31 March 2023 (\u2018FY23\u2019). New and amended accounting standards effective during the year The following amended standards were effective during the year, none of which had a material impact on the financial statements of the group: IFRS 17 Insurance Contracts BT adopted IFRS 17 with retrospective application on 1 April 2023. The standard establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement method for insurance contracts required by IFRS 17 is a probability weighted discounted cash flow model, including a best estimate and an adjustment for non-financial risk calculated for groups of similar contracts. IFRS 17 primarily impacts insurance entities, however, as it applies to individual contracts it is possible that non-insurers could issue contracts that are in scope of the standard such as product breakdown contracts or warranties. We have assessed the impact of the standard on the group, and concluded that its impact is not material. Contracts in scope of the standard entered into by the group are restricted to intragroup insurance arrangements; the group does not issue external insurance contracts. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) These amendments require the disclosure of \u2018material\u2019 rather than \u2018significant\u2019 accounting policies. The amendments have not resulted in any changes to accounting policies disclosures made in these financial statements. International Tax Reform \u2013 Pillar Two Model Rules (Amendments to IAS 12 Income Taxes) The IASB amended the scope of IAS 12 to introduce a temporary mandatory exception from deferred tax accounting for top-up tax arising from the implementation of the OECD Pillar Two model rules. This was endorsed in the UK in July 2023 and applies to accounting periods beginning on or after 1 January 2023. The group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Other The following changes have not had a significant impact on our consolidated financial statements: \u2013 Definition of Accounting Estimate (Amendments to IAS 8) \u2013 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) IFRS Interpretations Committee agenda decisions The IFRS Interpretations Committee (IFRIC) periodically issues agenda decisions which explain and clarify how to apply the principles and requirements of IFRS. Agenda decisions are authoritative and may require the group to revise accounting policies or practice to align with the interpretations set out in the decision. We regularly review IFRIC updates and assess the impact of agenda decisions. No agenda decisions finalised during FY24 have been assessed as having a significant impact on the group. New and amended accounting standards that have been issued but are not yet effective The following new or amended standards and interpretations are applicable in future periods and are not expected to have a material impact on the consolidated financial statements: Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) The amendments will apply to the group from FY25 onwards and require new disclosures relating to supplier finance arrangements that assist in assessing their effects on liabilities, cash flows and exposure to liquidity risk. We participate in supply chain financing arrangements which the amendments will apply to, see note 17. We will include the required disclosures in the FY25 financial statements. Other The following are not expected to have a significant impact on the consolidated financial statements: \u2013 Classification of Liabilities as Current or Non-current (Amendments to IAS 1) \u2013 Non-current Liabilities with Covenants (Amendments to IAS 1) \u2013 Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) \u2013 Lack of Exchangeability (Amendments to IAS 21) Accounting policy and operating segment changes During FY24 we changed the methodology used to allocate certain internal costs and our Business CFU began reporting as a single unit. Allocation of central costs From 1 April 2023 we have revised the methodology used to allocate shared Network, Digital and support function costs across our units to more closely align the recharges received by each unit to their actual consumption and establish clearer driver-focused allocation of cost, harmonise principles for pricing and profitability, and support greater unit cost ownership and management and decision making. This represents an accounting policy change and in line with the requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors we have re-presented FY23 comparatives to enable comparability across periods. Creation of the Business unit As disclosed in the FY23 financial statements, the Enterprise and Global CFUs have been combined into a single CFU, Business, which began reporting as a single unit from 1 April 2023. In line with the requirements of IFRS 8 Operating Segments, we have re-presented FY23 comparatives to reflect the combined unit. Re-presentation of prior year comparatives These changes have resulted in re-presentation of prior year comparatives. Changes affect segmental disclosures only and have no impact on the overall reported group financial results. The following disclosures are impacted by the creation of the Business unit only. Re-presentation of prior year comparatives is limited to the combination of the balances previously reported in respect of the Enterprise and Global units, with no further adjustments: \u2013 Note 5 Revenue: disaggregation of external revenue \u2013 Note 7 Employees: number of employees \u2013 Note 16 Trade and other receivables: trade receivables not past due and accrued income by CFU Note 4 Segment information is also impacted by changes to the allocation of shared costs. Re-presentation of comparatives has involved adjustments to reallocate internal costs to report on a like-for-like basis with FY24 and to remove internal trading between the Enterprise and Global units. Note 32 presents a bridge between previously published FY23 financial information and comparatives presented in these disclosures: Also presented is a bridge in respect of the CFU normalised free cash flow comparatives which are re-presented in the Additional information on page 231 . Presentation of specific items Our income statement and segmental analysis separately identify trading results on an adjusted basis, being before specific items. The directors believe that presentation of the group\u2019s results in this way is relevant to an understanding of the group\u2019s financial performance as specific items are those that in management\u2019s judgement need to be disclosed by virtue of their size, nature or incidence. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and the Executive Committee and assists in providing an additional analysis of our reporting of trading results. Specific items may not be comparable to similarly titled measures used by other companies. In determining whether an event or transaction is specific, management considers quantitative as well as qualitative factors. Examples of charges or credits meeting the above definition and which have been presented as specific items in the current and/or prior years include significant business restructuring programmes such as the current group-wide cost transformation and modernisation programme, acquisitions and disposals of businesses and investments, impairment of goodwill, charges or credits relating to retrospective regulatory matters, property rationalisation programmes, historical property-related provisions, significant out-of-period contract settlements, net interest on our
pension obligation, and the impact of remeasuring deferred tax
balances. In the event that items meet the criteria, which are
applied consistently from year to year, they are treated as specific
items. Any releases to provisions originally booked as a specific
item are also classified as specific. Conversely, when a reversal
occurs in relation to a prior year item not classified as specific, the
reversal is not classified as specific in the current year.
Movements relating to the sports joint venture (Sports JV) with
Warner Bros. Discovery (WBD), such as fair value gains or losses on
the A and C preference shares or impairment charges on the
equity-accounted investment are classified as specific. Refer to
note 24 for further detail.
Specific items for the current and prior year are disclosed in note 9.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-487": { "value": "Preparation of the financial statements The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006. The consolidated financial statements are prepared on a going concern basis. This assessment is consistent with the assessment of our viability, as set out on pages 81 to 82, which has been based on the Company\u2019s strategy, balance sheet and financing position, including our \u00a32.1bn undrawn committed borrowing facility which matures in March 2027, and the potential impact of \u2018Our principal risks and uncertainties\u2019 (pages 63 to 70); and which estimates the financial impact of a severe but plausible outcome for each risk, both individually, in combination and through stochastic risk modelling. This stress testing confirmed that existing projected cash flows and cash management activities provide us with adequate headroom over the going concern assessment period. Having assessed the principal and emerging risks, the directors considered it appropriate to adopt the going concern basis of accounting when preparing the group and parent company financial statements. This assessment covers the period to May 2025, which is consistent with the FRC guidance. When reaching this conclusion, the directors took into account the group\u2019s and parent company\u2019s overall financial position (including trading results and ability to repay term debt as it matures without recourse to refinancing) and the exposure to principal risks. In preparing the financial statements, the directors have considered the impact of climate change, particularly in the context of the risks identified in the TCFD disclosure on pages 71 to 80 this year. There has been no material impact identified in respect of the judgements and estimates reported in these financial statements. The following impacts were considered: \u2013 Low carbon fleet \u2013 see note 14 These financial statements consolidate BT Group plc, the parent company, and its subsidiaries (together the \u2018group\u2019, \u2018us\u2019, \u2018we\u2019 or \u2018our\u2019). The consolidated financial statements are prepared on the historical cost basis, except for certain financial and equity instruments that have been measured at fair value. The consolidated financial statements are presented in sterling, the functional currency of BT Group plc. These financial statements cover the financial year from 1 April 2023 to 31 March 2024 (\u2018FY24\u2019), with comparative figures for the financial year from 1 April 2022 to 31 March 2023 (\u2018FY23\u2019). New and amended accounting standards effective during the year The following amended standards were effective during the year, none of which had a material impact on the financial statements of the group: IFRS 17 Insurance Contracts BT adopted IFRS 17 with retrospective application on 1 April 2023. The standard establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement method for insurance contracts required by IFRS 17 is a probability weighted discounted cash flow model, including a best estimate and an adjustment for non-financial risk calculated for groups of similar contracts. IFRS 17 primarily impacts insurance entities, however, as it applies to individual contracts it is possible that non-insurers could issue contracts that are in scope of the standard such as product breakdown contracts or warranties. We have assessed the impact of the standard on the group, and concluded that its impact is not material. Contracts in scope of the standard entered into by the group are restricted to intragroup insurance arrangements; the group does not issue external insurance contracts. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) These amendments require the disclosure of \u2018material\u2019 rather than \u2018significant\u2019 accounting policies. The amendments have not resulted in any changes to accounting policies disclosures made in these financial statements. International Tax Reform \u2013 Pillar Two Model Rules (Amendments to IAS 12 Income Taxes) The IASB amended the scope of IAS 12 to introduce a temporary mandatory exception from deferred tax accounting for top-up tax arising from the implementation of the OECD Pillar Two model rules. This was endorsed in the UK in July 2023 and applies to accounting periods beginning on or after 1 January 2023. The group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Other The following changes have not had a significant impact on our consolidated financial statements: \u2013 Definition of Accounting Estimate (Amendments to IAS 8) \u2013 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) IFRS Interpretations Committee agenda decisions The IFRS Interpretations Committee (IFRIC) periodically issues agenda decisions which explain and clarify how to apply the principles and requirements of IFRS. Agenda decisions are authoritative and may require the group to revise accounting policies or practice to align with the interpretations set out in the decision. We regularly review IFRIC updates and assess the impact of agenda decisions. No agenda decisions finalised during FY24 have been assessed as having a significant impact on the group. New and amended accounting standards that have been issued but are not yet effective The following new or amended standards and interpretations are applicable in future periods and are not expected to have a material impact on the consolidated financial statements: Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) The amendments will apply to the group from FY25 onwards and require new disclosures relating to supplier finance arrangements that assist in assessing their effects on liabilities, cash flows and exposure to liquidity risk. We participate in supply chain financing arrangements which the amendments will apply to, see note 17. We will include the required disclosures in the FY25 financial statements. Other The following are not expected to have a significant impact on the consolidated financial statements: \u2013 Classification of Liabilities as Current or Non-current (Amendments to IAS 1) \u2013 Non-current Liabilities with Covenants (Amendments to IAS 1) \u2013 Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) \u2013 Lack of Exchangeability (Amendments to IAS 21) Accounting policy and operating segment changes During FY24 we changed the methodology used to allocate certain internal costs and our Business CFU began reporting as a single unit.
Allocation of central costs
From 1 April 2023 we have revised the methodology used to
allocate shared Network, Digital and support function costs across
our units to more closely align the recharges received by each unit
to their actual consumption and establish clearer driver-focused
allocation of cost, harmonise principles for pricing and profitability,
and support greater unit cost ownership and management and
decision making.
This represents an accounting policy change and in line with the
requirements of IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors we have re-presented FY23 comparatives to
enable comparability across periods.
Creation of the Business unit
As disclosed in the FY23 financial statements, the Enterprise and
Global CFUs have been combined into a single CFU, Business,
which began reporting as a single unit from 1 April 2023.
In line with the requirements of IFRS 8 Operating Segments, we
have re-presented FY23 comparatives to reflect the combined
unit.
Re-presentation of prior year comparatives
These changes have resulted in re-presentation of prior year
comparatives. Changes affect segmental disclosures only and have
no impact on the overall reported group financial results.
The following disclosures are impacted by the creation of the
Business unit only. Re-presentation of prior year comparatives is
limited to the combination of the balances previously reported in
respect of the Enterprise and Global units, with no further
adjustments:
\u2013 Note 5 Revenue: disaggregation of external revenue
\u2013 Note 7 Employees: number of employees
\u2013 Note 16 Trade and other receivables: trade receivables not past
due and accrued income by CFU
Note 4 Segment information is also impacted by changes to the
allocation of shared costs. Re-presentation of comparatives has
involved adjustments to reallocate internal costs to report on a
like-for-like basis with FY24 and to remove internal trading
between the Enterprise and Global units. Note 32 presents a
bridge between previously published FY23 financial information
and comparatives presented in these disclosures: Also presented is
a bridge in respect of the CFU normalised free cash flow
comparatives which are re-presented in the Additional information
on page 231 .
Presentation of specific items
Our income statement and segmental analysis separately identify
trading results on an adjusted basis, being before specific items.
The directors believe that presentation of the group\u2019s results in this
way is relevant to an understanding of the group\u2019s financial
performance as specific items are those that in management\u2019s
judgement need to be disclosed by virtue of their size, nature or
incidence.
This presentation is consistent with the way that financial
performance is measured by management and reported to the
Board and the Executive Committee and assists in providing an
additional analysis of our reporting of trading results. Specific
items may not be comparable to similarly titled measures used by
other companies.
In determining whether an event or transaction is specific,
management considers quantitative as well as qualitative factors.
Examples of charges or credits meeting the above definition and
which have been presented as specific items in the current and/or
prior years include significant business restructuring programmes
such as the current group-wide cost transformation and
modernisation programme, acquisitions and disposals of
businesses and investments, impairment of goodwill, charges or
credits relating to retrospective regulatory matters, property
rationalisation programmes, historical property-related provisions,
significant out-of-period contract settlements, net interest on our
pension obligation, and the impact of remeasuring deferred tax balances. In the event that items meet the criteria, which are applied consistently from year to year, they are treated as specific items. Any releases to provisions originally booked as a specific item are also classified as specific. Conversely, when a reversal occurs in relation to a prior year item not classified as specific, the reversal is not classified as specific in the current year. Movements relating to the sports joint venture (Sports JV) with Warner Bros. Discovery (WBD), such as fair value gains or losses on the A and C preference shares or impairment charges on the equity-accounted investment are classified as specific. Refer to note 24 for further detail. Specific items for the current and prior year are disclosed in note 9. 2. Critical & key accounting estimates and significant judgements The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and assumptions. It also requires management to exercise its judgement in the process of applying our accounting policies. We continually evaluate our estimates, assumptions and judgements based on available information and experience. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates. Our critical accounting estimates are those estimates that carry a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year. We also make other key estimates when preparing the financial statements, which, while not meeting the definition of a critical estimate, involve a higher degree of complexity and can reasonably be expected to be of relevance to a user of the financial statements. Management has discussed its critical and other key accounting estimates and associated disclosures with the Audit and Risk Committee. Significant judgements are those made by management in applying our material accounting policies that have a material impact on the amounts presented in the financial statements. We may exercise significant judgement in our critical and key accounting estimates. Our critical and key accounting estimates and significant judgements are described in the following notes to the financial statements. They can be identified by the following symbol .
Note Critical Key estimate Significant
estimate judgement
5. Estimate of customer refund \u00fc
liability
10. Current and deferred
\u00fc
\u00fc
income tax
13. Goodwill impairment
\u00fc
\u00fc
14. Determining the point of
sale of BT Tower
\u00fc
15. Reasonable certainty and
determination of lease terms
\u00fc
18. Identifying contingent \u00fc
liabilities
18. Provisions
\u00fc
\u00fc
19. Valuation of pension assets
\u00fc
\u00fc
and liabilities
24. Valuation of investment in
A preference shares in Sports
\u00fc
joint venture
The material accounting policies applied in the preparation of our consolidated financial statements are set out below. Other material accounting policies applicable to a particular area are disclosed in the most relevant note. They can be identified by the following symbol . We have applied all policies consistently to all the years presented, unless otherwise stated. Basis of consolidation The group financial statements consolidate the financial statements of BT Group plc and its subsidiaries, and include its share of the results of associates and joint ventures using the equity method of accounting. The group recognises its direct rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint operations under the appropriate headings in the consolidated financial statements. All business combinations are accounted for using the acquisition method regardless of whether equity instruments or other assets are acquired. A subsidiary is an entity that is controlled by another entity, known as the parent or investor. An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Non-controlling interests in the net assets of consolidated subsidiaries, which consist of the amounts of those interests at the date of the original business combination and non-controlling share of changes in equity since the date of the combination, are not material to the group\u2019s financial statements. The results of subsidiaries acquired or disposed of during the year are consolidated from and up to the date of change of control. Where necessary, accounting policies of subsidiaries have been aligned with the policies adopted by the group. All intra-group transactions including any gains or losses, balances, income or expenses are eliminated on consolidation. When the group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. The profit or loss on disposal is recognised as a specific item. Associates are those entities in which the group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the group has joint control, whereby the group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. Interests in associates and joint ventures are initially recognised at cost (including transaction costs) except where they relate to a retained non-controlling interest in a former subsidiary, which is initially recognised at a deemed cost being the fair value of the retained interest. Subsequent to initial recognition, the consolidated financial statements include the group\u2019s share of the profit or loss and other comprehensive income of equity- accounted investees, until the date on which significant influence or joint control ceases. Inventories Network maintenance equipment and equipment to be sold to customers are stated at the lower of cost or net realisable value, taking into account expected revenue from the sale of packages comprising a mobile handset and a subscription. Cost corresponds to purchase or production cost determined by either the first in first out (FIFO) or average cost method. Government grants Government grants are recognised when there is reasonable assurance that the conditions associated with the grants have been complied with and the grants will be received. Grants for the purchase or production of property, plant and equipment are deducted from the cost of the related assets and reduce future depreciation expense accordingly. Grants for the reimbursement of operating expenditure are deducted from the related category of costs in the income statement. Estimates and judgements applied in accounting for government grants received in respect of Building Digital UK (BDUK) and other rural superfast broadband contracts are described in note 14. Once a government grant is recognised, any related deferred income is treated in accordance with IAS 20 \u2018Accounting for Government Grants and Disclosure of Government Assistance\u2019. Foreign currencies The consolidated financial statements are presented in sterling, which is also the company\u2019s functional currency. Each group entity determines its own functional currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of transactions and the translation of monetary assets and liabilities denominated in foreign currencies at period end exchange rates are recognised in the income statement line which most appropriately reflects the nature of the item or transaction. On consolidation, assets and liabilities of foreign undertakings are translated into the group\u2019s presentation currency at year end exchange rates. The results of foreign undertakings are translated into sterling at the rates prevailing on the transaction dates. Foreign exchange differences arising on the retranslation of foreign undertakings are recognised directly in a separate component of equity, the translation reserve. There is no material exposure to companies operating in hyperinflationary economies. In the event of the disposal of an undertaking with assets and liabilities denominated in a foreign currency, the cumulative translation difference associated with the undertaking in the translation reserve is charged or credited to the gain or loss on disposal recognised in the income statement. Research and development Research expenditure is recognised in the income statement in the period in which it is incurred. Development expenditure, including the cost of internally developed software, is recognised in the income statement in the period in which it is incurred unless it is probable that economic benefits will flow to the group from the asset being developed, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Capitalisation ceases when the asset being developed is ready for use. Research and development costs include direct and indirect labour, materials and directly attributable overheads. Termination benefits Termination benefits (leaver costs) are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. We recognise termination benefits when they are demonstrably committed to the affected employees leaving the group.
Material accounting policies that apply to segment information
Operating and reportable segments
Our operating segments are reported based on financial information provided to the Executive Committee, which is the key
management committee and represents the \u2018chief operating decision maker\u2019.
Our organisational structure reflects the different customer groups to which we provide communications products and services via
our customer-facing units (CFUs). The CFUs are our reportable segments and generate substantially all of our revenue.
During the year to 31 March 2024 the group had three CFUs: Consumer, Business and Openreach. Business was formed from the
merger of the Global and Enterprise units during FY23 and has been monitored by the Executive Committee on a consolidated basis
since 1 April 2023.
The CFUs are supported by technology units (TUs) comprising Digital and Networks; and corporate units (CUs) including
procurement and property management. TUs and CUs are not reportable segments as they did not meet the quantitative thresholds
as set out in IFRS 8 \u2018Operating Segments\u2019 for any of the years presented.
We aggregate the remaining operations and include them in the \u2018Other\u2019 category to reconcile to the consolidated results of the
group. The \u2018Other\u2019 category includes unallocated TU costs and our CUs.
Allocation of certain items to segments
Provisions for the settlement of significant legal, commercial and regulatory disputes, which are negotiated at a group level, are
initially recorded in the \u2018Other\u2019 segment. On resolution of the dispute, the full impact is recognised in the results of the relevant CFU
and offset in the group results through the utilisation of the provision previously charged to the \u2018Other\u2019 segment. Settlements which
are particularly significant or cover more than one financial year may fall within the definition of specific items as detailed in note 9, in
which case they are not reflecting in the results of the reportable segment in line with how they are reported to the Executive
Committee.
The costs incurred by TUs and CUs are recharged to the CFUs to reflect the services provided to them. Depreciation and
amortisation incurred by TUs in relation to the networks and systems they manage and operate on behalf of the CFUs is allocated to
the CFUs based on their respective utilisation. Capital expenditure incurred by TUs for specific projects undertaken on behalf of the
CFUs is allocated based on the value of the directly attributable expenditure incurred. Where projects are not directly attributable to
a particular CFU, capital expenditure is allocated among them based on the proportion of estimated future economic benefits.
Specific items are detailed in note 9 and are not allocated to the reportable segments as this reflects how they are reported to the
Executive Committee. Finance expense and income are not allocated to the reportable segments, as the central treasury function
manages this activity, together with the overall net debt position of the group.
Measuring segment performance
Performance of each reportable segment is measured based on adjusted EBITDA. Adjusted EBITDA is defined as the group profit or
loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of
associates and joint ventures. Adjusted EBITDA is considered to be a useful measure of the operating performance of the CFUs
because it approximates the underlying operating cash flow by eliminating depreciation and amortisation and also provides a
meaningful analysis of trading performance by excluding specific items, which are disclosed separately by virtue of their size, nature
or incidence. We also increasingly track adjusted operating profit which reflects the growing depreciation expense arising from our
elevated network investment.
Revenue recognition
Our revenue recognition policy is set out in note 5.
Internal revenue and costs
Most of our internal trading relates to Openreach and arises on rentals, and any associated connection or migration charges, of the
UK access lines and other network products to the other CFUs, including the use of BT Ireland\u2019s network. This occurs both directly,
and also indirectly, through TUs which are included within the \u2018Other\u2019 segment. Business internal revenue arises from Consumer for
mobile Ethernet access and TUs for transmission planning services. Intra-group revenue generated from the sale of regulated
products and services is based on market price. Intra-group revenue from the sale of other products and services is agreed between
the relevant CFUs and therefore the profitability of CFUs may be impacted by transfer pricing levels.
Geographic segmentation
The UK is our country of domicile and is where we generate the majority of our revenue from external UK customers. The geographic
analysis of revenue is based on the country in which the customer is invoiced. The geographic analysis of non-current assets, which
excludes derivative financial instruments, investments, preference shares in joint ventures, retirement benefit schemes in surplus and
deferred tax assets, is based on the location of the assets.
Material accounting policies that apply to revenue
Revenue from contracts with customers in scope of IFRS 15
Most revenue recognised by the group is in scope of IFRS 15, excluding Openreach where most revenue is in scope of IFRS 16. The
revenue recognition policy for both is set out below.
On inception of the contract we identify a \u201cperformance obligation\u201d for each of the distinct goods or services we have promised to
provide to the customer. The consideration specified in the contract with the customer is allocated to each performance obligation
identified based on their relative standalone selling prices, and is recognised as revenue as they are satisfied.
The table below summarises the performance obligations we have identified for our major service lines and provides information on
the timing of when they are satisfied and the related revenue recognition policy. Also detailed in this note is revenue expected to be
recognised in future periods for contracts in place at 31 March 2024 that contain unsatisfied performance obligations.
Service line
Performance obligations
Revenue recognition policy
Information and Provision of networked IT services, managed network Revenue for services is recognised over time using a
communications services, and arrangements to design and build measure of progress that appropriately reflects the
technology (ICT) software solutions. Performance obligations are pattern by which the performance obligation is
and managed identified for each distinct service or deliverable for satisfied. For time and materials contracts, revenue is
networks which the customer has contracted, and are recognised as the service is received by the customer.
considered to be satisfied over the time period that we Where performance obligations exist for the provision
deliver these services or deliverables. Commitments to of hardware, revenue is recognised at the point in time
provide hardware to customers that are distinct from that the customer obtains control of the promised
the other promises are considered to be satisfied at the asset. For long-term fixed price contracts revenue
point in time that control passes to the customer. recognition will typically be based on the satisfaction
of performance obligations in respect of the
achievement of contract milestones and customer
acceptance, which is the best measure of progress
towards the completion of the performance obligation.
Fixed access Provision of broadband, TV and fixed telephony Fixed subscription charges are recognised as revenue
subscriptions services including national and international calls, on a straight-line basis over the period that the
connections, line rental and calling features. services are provided. Upfront charges for non-distinct
Performance obligations exist for each ongoing service connection and installation services are deferred as
provided to the customer and are satisfied over the contract liabilities and are recognised as revenue over
period that the services are provided. Installation the same period. Variable charges such as call charges
services are recognised as distinct performance are recognised when the related services are delivered.
obligations if their relationship with the other services Where installation activities are distinct performance
in the contract is purely functional. These are satisfied obligations, revenue is recognised at the point in time
when the customer benefits from the service. that the installation is completed.
Connection services are not distinct performance
obligations and are therefore combined with the
associated service performance obligation.
Mobile Provision of mobile postpaid and prepaid services, Subscription fees, consisting primarily of monthly
subscriptions including voice minutes, SMS and data services. charges for access to internet or voice and data
Performance obligations exist for each ongoing service services, are recognised as the service is provided.
provided to the customer and are satisfied over the One-off services such as calls outside of plan and
period that the services are provided. excess data usage are recognised when the service is
used.
Equipment and Provision of equipment and other services, including Revenue from equipment sales is recognised at the
other services mobile phone handsets and hardware such as set-top point in time that control passes to the customer.
boxes and broadband routers provided as part of Where payment is not received in full at the time of the
customer contracts. Performance obligations are sale, such as with equipment provided as part of
satisfied at the point in time that control passes to the mobile and fixed access subscriptions, contract assets
customer. For other services, performance obligations are recognised for the amount due from the customer
are identified based on the distinct goods and services that will be recovered over the contract period.
we have committed to provide. Revenue to be recognised is calculated by reference to
the relative standalone selling price of the equipment.
For other services, revenue is recognised when the
related performance obligations are satisfied, which
could be over time, in line with contract milestones, or
at a point in time depending on the nature of the
service.
We recognise revenue based on the relative standalone selling price of each performance obligation. Determining the standalone
selling price often requires judgement and may be derived from regulated prices, list prices, a cost-plus derived price or the price of
similar products when sold on a standalone basis by BT or a competitor. In some cases it may be appropriate to use the contract price
when this represents a bespoke price that would be the same for a similar customer in a similar circumstance.
The fixed access and mobile subscription arrangements sold by our Consumer business are typically payable in advance, with any
variable or one-off charges billed in arrears. Contracts are largely inflation-linked with price increases recognised when effective.
Payment is received immediately for direct sales of equipment to customers. Where equipment is provided to customers under
mobile and fixed access subscription arrangements, payment for the equipment is received over the course of the contract term. For
sales by our enterprise businesses, invoices are issued in line with contractual terms. Payments received in advance are recognised as
contract liabilities; amounts billed in arrears are recognised as contract assets.
We adopt variable consideration to allocate the transaction price to take account of the likelihood of the customer upgrading to a
new handset during the contract term. Consideration is constrained to a period shorter than the contract term and is allocated to the
handset and airtime based on relative standalone selling price. Certain Business long term contracts offer rebates to our customers.
Where this is the case we make an estimate of variable consideration at the outset of the contract based on assumed volumes. These
rebates are normally settled monthly against service revenues.
We are applying the practical expedient to recognise revenue \u201cas-invoiced\u201d for certain fixed access and mobile subscription services
revenues. Where we have a right to invoice at an amount that directly corresponds with performance to date, we recognise revenue
at that amount. We have also adopted the practical expedient not to calculate the aggregate amount of the transaction price
allocated to the performance obligations that are unsatisfied for these contracts.
We do not have any material obligations in respect of returns, refunds or warranties.
Where we act as an agent in a transaction, such as insurance services offered, we recognise commission net of directly attributable
costs.
We exercise judgement in assessing whether the initial set-up, transition and transformation phases of long-term contracts are
distinct from the other services to be delivered under the contract and therefore represent distinct performance obligations. This
determines whether revenue is recognised in the early stages of the contract, or deferred until delivery of the other services
promised in the contract begins.
We recognise immediately the entire estimated loss for a contract when we have evidence that the contract is unprofitable. If these
estimates indicate that any contract will be less profitable than previously forecast, contract assets may have to be written down to
the extent they are no longer considered to be fully recoverable. We perform ongoing profitability reviews of our contracts in order
to determine whether the latest estimates are appropriate. Key factors reviewed include:
\u2013 Transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market
position and other factors such as general economic conditions.
\u2013 Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment
phases for customer contracts.
\u2013 The status of commercial relations with customers and the implications for future revenue and cost projections.
\u2013 Our estimates of future staff and third party costs and the degree to which cost savings and efficiencies are deliverable.
Revenue from lease arrangements in scope of IFRS 16
Some consumer broadband and TV products and arrangements to provide external communications providers with exclusive use of
Openreach\u2019s fixed-network telecommunications infrastructure meet the definition of operating leases under IFRS 16.
At inception of a contract, we determine whether the contract is, or contains, a lease following the accounting policy set out in note
15. Arrangements meeting the definition of a lease in which we act as lessor are classified as operating or finance leases at lease
inception based on an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to
ownership of the underlying asset. If this is the case then the lease is a finance lease; if not, it is an operating lease. For sub-leases, we
make this assessment by reference to the characteristics of the right-of-use asset associated with the head lease rather than the
underlying leased asset.
Income from arrangements classified as operating leases is presented as revenue where it relates to our core operating activities, for
example leases of fixed-line telecommunications infrastructure to external communications providers and leases of devices to
consumer customers as part of fixed access subscription products. Operating lease income from other arrangements is presented
within other operating income (note 6).
We recognise operating lease payments as income on a straight-line basis over the lease term. Any upfront payments received, such
as connection fees, are deferred over the lease term. Determining the lease term is subject to the significant judgements set out in
note 15.
Where the contract contains both lease and non-lease components, the transaction price is allocated between the components on
the basis of relative standalone selling price.
Where an arrangement is assessed as a finance lease we derecognise the underlying asset and recognise a receivable equivalent to
the net investment in the lease. Finance lease receivables are presented in note 16. The receivable is measured based on future
payments to be received discounted using the interest rate implicit in the lease, adjusted for any direct costs. Any difference between
the derecognised asset and the finance lease receivable is recognised in the income statement. Where the nature of services
delivered relates to our core operating activities it is presented as revenue. Where it relates to non-core activities it is presented
within other operating income (note 6).
Material accounting policies that apply to contract assets and liabilities We recognise contract assets for goods and services for which control has transferred to the customer before we have the right to bill. These assets mainly relate to mobile handsets provided upfront but paid for over the course of a contract. Contract assets are reclassified as receivables when the right to payment becomes unconditional and we have billed the customer. Contract liabilities are recognised when we have received advance payment for goods and services that we have not transferred to the customer. These primarily relate to fees received for connection and installation services that are not distinct performance obligations. Where the initial set-up, transition or transformation phase of a long-term contract is considered to be a distinct performance obligation we recognise a contract asset for any work performed but not billed. Conversely a contract liability is recognised where these activities are not distinct performance obligations and we receive upfront consideration. In this case eligible costs associated with delivering these services are capitalised as fulfilment costs, see note 16. We provide for expected lifetime losses on contract assets following the policy set out in note 16.
Material accounting policies that apply to specific items
Our income statement and segmental analysis separately identify trading results on an adjusted basis, being before specific items. The
directors believe that presentation of the group\u2019s results in this way is relevant to an understanding of the group\u2019s financial performance as
specific items are those that in management\u2019s judgement need to be disclosed by virtue of their size, nature or incidence.
This presentation is consistent with the way that financial performance is measured by management and reported to the Board and
the Executive Committee and assists in providing an additional analysis of our reporting trading results. Specific items may not be
comparable to similarly titled measures used by other companies.
In determining whether an event or transaction is specific, management considers quantitative as well as qualitative factors.
Examples of charges or credits meeting the above definition and which have been presented as specific items in the current and/or
prior years include significant business restructuring programmes such as the current group-wide cost transformation and
modernisation programme, acquisitions and disposals of businesses and investments, impairment of goodwill, charges or credits
relating to retrospective regulatory matters, property rationalisation programmes, historical property-related provisions, significant
out of period contract settlements, net interest on our pension obligation, and the impact of remeasuring deferred tax balances. In
the event that items meet the criteria, which are applied consistently from year to year, they are treated as specific items. Any
releases to provisions originally booked as a specific item are also classified as specific. Conversely, when a reversal occurs in relation
to a prior year item not classified as specific, the reversal is not classified as specific in the current year.
Movements relating to the sports joint venture (Sports JV) with Warner Bros. Discovery (WBD), such as fair value gains or losses on
the A and C preference shares or impairment charges on the equity-accounted investment are classified as specific. Refer to note 24
for further detail.
Material accounting policies that apply to taxation Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the group\u2019s subsidiaries, associates and joint ventures operate and generate taxable income. We evaluate positions taken in tax returns where tax regulation is subject to interpretation, and establish provisions if appropriate based on the amounts likely to be paid to tax authorities. Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of our assets and liabilities and their tax base. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred and current income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it is probable that there will be suitable taxable profits against which the deductible temporary difference can be utilised. Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on the face of the group balance sheet as permitted by IAS 12, with the exception of deferred tax related to our pension schemes which is disclosed within deferred tax assets.
Material accounting policies that apply to intangible assets
We recognise identifiable intangible assets where we control the asset, it is probable that future economic benefits attributable to
the asset will flow to the group, and we can reliably measure the cost of the asset. We amortise all intangible assets, other than
goodwill, over their useful economic life. The method of amortisation reflects the pattern in which the assets are expected to be
consumed. If the pattern cannot be determined reliably, the straight-line method is used.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets
(including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note.
Acquired intangible assets \u2013 customer relationships and brands
Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the
date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these
relationships or brands and include management\u2019s estimates of revenue and profits to be generated by them.
Telecommunications licences
Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially
recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can
extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years.
Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at
amortised cost. The fair value is based on management\u2019s assumption of future cash flows using market expectations at acquisition
date.
Computer software
Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed
software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly
associated with the production of internally developed software, including direct and indirect labour costs of development, only
where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and
technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do
not meet these criteria and research costs are expensed as incurred.
Our development costs which give rise to internally developed software include upgrading the network architecture or functionality
and developing service platforms aimed at offering new services to our customers.
Other
Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a
straight-line basis over their useful economic life or the term of the contract.
Estimated useful economic lives
The estimated useful economic lives assigned to the principal categories of intangible assets are as follows:
\u2013 Computer software 2 to 10 years
\u2013 Telecommunications licences 2 to 20 years
\u2013 Customer relationships and brands 1 to 15 years
Impairment of intangible assets
Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting
date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is
assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash
generating unit and the fair value less costs to dispose.
Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement,
as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a
pro-rata basis against intangible and other assets.
Material accounting policies that apply to impairment of goodwill
We perform an annual goodwill impairment review.
Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a
result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent
the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other
groups of assets. Our CGUs are deemed to be Consumer and Business.
We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is
allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes.
The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the
Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital
expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance.
Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates.
Material accounting policies that apply to property, plant and equipment
Our property, plant and equipment is included at historical cost, net of accumulated depreciation, government grants and any
impairment charges. Property, plant and equipment acquired through business combinations is initially recorded at fair value and
subsequently accounted for on the same basis as our existing assets. We derecognise items of property, plant and equipment on
disposal or when no future economic benefits are expected to arise from the continued use of the asset. The difference between the
sale proceeds and the net book value at the date of disposal is recognised in operating costs in the income statement.
Included within the cost of network infrastructure and equipment are direct and indirect labour costs, materials and directly
attributable overheads.
We depreciate property, plant and equipment on a straight-line basis from the time the asset is available for use, to write off the
asset\u2019s cost over the estimated useful life taking into account any expected residual value. Freehold land is not depreciated.
Estimated useful economic lives
The estimated useful lives assigned to principal categories of assets are as follows:
Land and buildings
\u2013 Freehold buildings 14 to 50 years
\u2013 Short-term leasehold improvements Shorter of 10 years or lease term
\u2013 Leasehold land and buildings Shorter of unexpired portion of lease or 40 years
Network infrastructure
Transmission equipment
\u2013 Duct 40 years
\u2013 Cable 3 to 25 years
\u2013 Fibre 5 to 20 years
Exchange equipment 2 to 13 years
Other network equipment 2 to 20 years
Other assets
\u2013 Motor vehicles 2 to 10 years
\u2013 Computers and office equipment 3 to 7 years
Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively.
Network share assets
Certain assets have been contributed to a network share arrangement by both EE and Hutchison 3G UK Limited, with legal title
remaining with the contributor. This is considered to be a reciprocal arrangement. Our share of the assets on acquisition of EE was
recognised at fair value within tangible assets, and depreciated in line with policy. Subsequent additions are recorded at cost.
Impairment of property, plant and equipment
We test property, plant and equipment for impairment if events or changes in circumstances (assessed at each reporting date)
indicate that the carrying amount may not be recoverable. When an impairment test is performed, we assess the recoverable
amount by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant asset and
the fair value less costs to dispose. If it is not possible to determine the recoverable amount for the individual asset then we assess
impairment by reference to the relevant cash generating unit as described in note 13 .
Building Digital UK (BDUK) government grants We receive government grants in relation to BDUK and other rural superfast broadband contracts. Where we have achieved certain service levels, or delivered the network more efficiently than anticipated, we have an obligation to either re-invest or repay grant funding. Where this is the case, we recognise deferred income in respect of the funding that will be re-invested or repaid, and make a corresponding adjustment to the carrying amount of the related property, plant and equipment. Assessing the timing of whether and when we change the estimated take-up assumption is judgemental as it involves considering information which is not always observable. Our consideration on whether and when to change the base case assumption is dependent on our expectation of the long-term take-up trend. Our assessment of how much grant income to defer includes consideration of the difference between the take-up percentage agreed with the local authority and the likelihood of actual take-up. The value of the government grants deferred is disclosed in note 17.
Material accounting policies that apply to leases
Identifying whether a lease exists
At inception of a contract, we determine whether the contract is, or contains, a lease. A lease exists if the contract conveys the right
to control the use of an identified asset, for a period of time, in exchange for consideration. In making this assessment, we consider
whether:
\u2013 The contract involves the use of an identified asset, either explicitly or implicitly. The asset must be physically distinct or represent
substantially all the capacity of a physically distinct asset. Assets that a supplier has a substantive right to substitute are not
considered distinct.
\u2013 The lessee (either the group, or the group\u2019s customers) has the right to obtain substantially all the economic benefits from the use
of the asset throughout the period of use; and
\u2013 The lessee has the right to direct the use of the asset, in other words, has the decision-making rights that are most relevant to
changing how and for what purpose the asset is used.
Where practicable, and by class of underlying asset, we have elected to account for leases containing a lease component and one or
more non-lease components as a single lease component. Where this election has been taken, it has been applied to the entire asset.
Lessee accounting
We recognise a lease liability and right-of-use asset at the commencement of the lease.
Lease liabilities are initially measured at the present value of lease payments that are due over the lease term, discounted using the
group\u2019s incremental borrowing rate.
The lease term is the non-cancellable period of the lease adjusted for the impact of any extension options that we are reasonably
certain that the lessee will exercise, or termination options that we are reasonably certain that the lessee will not exercise.
The incremental borrowing rate is the rate that we would have to pay for a loan of a similar term, and with similar security, to obtain
an asset of similar value.
Lease payments include:
\u2013 fixed payments
\u2013 variable lease payments that depend on an index or rate
\u2013 amounts expected to be paid under residual value guarantees
\u2013 the exercise price of any purchase options that we are reasonably certain to exercise
\u2013 payments due over optional renewal periods where we are reasonably certain to renew
\u2013 penalties for early termination of the lease where we are reasonably certain to terminate early
Lease liabilities are subsequently measured at amortised cost using the effective interest method. They are remeasured if there is a
change in future lease payments, including changes in the index or rate used to determine those payments, or the amount we expect
to be payable under a residual value guarantee.
We also remeasure lease liabilities where the lease term changes. This occurs when the non-cancellable period of the lease changes,
or on occurrence of a significant event or change in circumstances within the control of the lessee and which changes our initial
assessment in regard to whether the lessee is reasonably certain to exercise extension options or not to exercise termination options.
Where the lease term changes we remeasure the lease liability using the group\u2019s incremental borrowing rate at the date of
reassessment. Where a significant event or change in circumstances does not occur, the lease term remains unchanged and the
carrying amounts of the lease liability and associated right-of-use asset will decline over time.
Right-of-use assets are initially measured at the initial amount of the corresponding lease liabilities, adjusted for any prepaid lease
payments, plus any initial direct costs incurred and an estimate of any decommissioning costs that have been recognised as
provisions, less any lease incentives received. They are subsequently depreciated using the straight-line method to the earlier of the
end of the useful life of the asset or the end of the lease term. Right-of-use assets are tested for impairment following the policy set
out in note 14 and are adjusted for any remeasurement of lease liabilities.
We have elected not to recognise lease liabilities and right-of-use assets for short-term leases that have a lease term of 12 months
or less, and leases of low-value assets with a purchase price under \u00a35,000. We recognise payments for these items as an expense on
a straight-line basis over the lease term.
Any variable lease payments that do not depend on an index or rate, such as usage-based payments, are recognised as an expense in
the period to which the variability relates.
Lessor accounting
At inception or on modification of a contract that contains a lease component, we allocate the consideration in the contract to each
lease component on the basis of their relative stand-alone prices.
When we act as a lessor, we determine at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, we make an overall assessment of whether the lease transfers substantially all the risks and rewards incidental
to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of
this assessment, we consider certain indicators such as whether the lease is for the major part of the economic life of the asset.
When we are an intermediate lessor, we account for our interests in the headlease and the sublease separately. We assess the lease
classification of a sublease with reference to the right-of-use asset arising from the headlease, not with reference to the underlying
asset. If a headlease is a short-term lease to which we apply the exemption described above, then we classify the sublease as an
operating lease.
If an arrangement contains lease and non-lease components, then we apply IFRS 15 to allocate the consideration in the contract.
We apply the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. We further regularly review
estimated unguaranteed residual values used in calculating the gross investment in the lease.
We recognise lease payments received under operating leases as income on a straight-line basis over the lease term as part of \u2018other
revenue\u2019.
Material accounting policies that apply to trade and other receivables
Trade receivables are recognised where the right to receive payment from customers is conditional only on the passage of time. We
initially recognise trade and other receivables at fair value, which is usually the original invoiced amount. They are subsequently
carried at amortised cost using the effective interest method. The carrying amount of these balances approximates to fair value due
to the short maturity of amounts receivable.
We provide services to consumer and business customers, mainly on credit terms. We know that certain debts due to us will not be
paid through the default of a small number of our customers. Because of this, we recognise an allowance for doubtful debts on initial
recognition of receivables, which is deducted from the gross carrying amount of the receivable. The allowance is calculated by
reference to credit losses expected to be incurred over the lifetime of the receivable. In estimating a loss allowance we consider
historical experience and informed credit assessment alongside other factors such as the current state of the economy and particular
industry issues. We consider reasonable and supportable information that is relevant and available without undue cost or effort.
Once recognised, trade receivables are continuously monitored and updated. Allowances are based on our historical loss
experiences for the relevant aged category as well as forward-looking information and general economic conditions. Allowances are
calculated by individual CFUs in order to reflect the specific nature of the customers relevant to that CFU.
The group utilises factoring arrangements for selected trade receivables. Trade receivables that are subject to debt factoring
arrangements are derecognised if they meet the conditions for derecognition detailed in IFRS 9 \u2018Financial instruments\u2019 and the
related cash flows received are presented as cash flows from operating activities.
Contingent assets such as any insurance recoveries which we expect to recoup, have not been recognised in the financial statements
as these are only recognised within trade and other receivables when their receipt is virtually certain.
Material accounting policies that apply to deferred contract costs We capitalise certain costs associated with the acquisition and fulfilment of contracts with customers and amortise them over the period that we transfer the associated services. Connection costs are deferred as contract fulfilment costs because they allow satisfaction of the associated connection performance obligation and are considered recoverable. Sales commissions and other third party contract acquisition costs are capitalised as costs to acquire a contract unless the associated contract term is less than 12 months, in which case they are expensed as incurred. Capitalised costs are amortised over the minimum contract term. A portfolio approach is used to determine contract term. Where the initial set-up, transition and transformation phases of long-term contractual arrangements represent distinct performance obligations, costs in delivering these services are expensed as incurred. Where these services are not distinct performance obligations, we capitalise eligible costs as a cost of fulfilling the related service. Capitalised costs are amortised on a straight-line basis over the remaining contract term, unless the pattern of service delivery indicates a more appropriate profile. To be eligible for capitalisation, costs must be directly attributable to specific contracts, relate to future activity, and generate future economic benefits. Capitalised costs are regularly assessed for recoverability.
Material accounting policies that apply to trade and other payables
We initially recognise trade and other payables at fair value, which is usually the original invoiced amount. We subsequently carry
them at amortised cost using the effective interest method.
We use a supply chain financing programme to extend payment terms with a limited number of suppliers to a more typical payment
term. We also use a separate supply chain financing programme to allow suppliers to receive funding earlier than the invoice due
date. We assess these arrangements against indicators to assess if debts which vendors have sold to the funder under the supplier
financing schemes continue to meet the definition of trade payables or should be classified as borrowings. At 31 March 2024 under
the terms of the arrangement the funder's payment to the supplier does not legally extinguish our obligation to the supplier so it
remains within trade and other payables. Cash flows only occur when the trade payable is extinguished and are therefore presented
in cash flows from operating activities.
Material accounting policies that apply to provisions & contingent liabilities
We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation
with an outflow that is not probable or which cannot be reliably estimated.
Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where
appropriate.
Types of retirement benefit plans
Defined Benefit (DB) plans
DB plan benefits are determined by the plan rules, typically dependent on factors such as years of service and pensionable pay, but
not on the value of actual contributions made by the group or members. The group is exposed to investment and other experience
risks and may need to make additional contributions where it is estimated that the benefits will not be met from assets held, regular
contributions and expected investment income.
The net defined benefit liability, or deficit, is the present value of all expected future benefit cash flows to be paid by each plan,
calculated using the projected unit credit method by professionally qualified actuaries (also known as the Defined Benefit
Obligation, DBO or liabilities) less the fair value of the plan assets. A net defined benefit asset, or surplus, occurs when the fair value
of assets exceeds the liabilities.
Defined Contribution (DC) plans
DC plan benefits are linked to the value of each member\u2019s fund, which is based on contributions paid and the performance of each
individual\u2019s chosen investments. The group has no exposure to investment and other experience risks (including longevity).
Material accounting policies that apply to own shares
Own shares are recorded at cost and deducted from equity. When shares held for the beneficial ownership of employees vest
unconditionally or are cancelled they are transferred from the own shares reserve to retained earnings at their weighted average
cost.
Material accounting policies that apply to share-based payments
We operate a number of equity-settled share-based payment arrangements, under which the group receives services from
employees in consideration for equity instruments (share options and shares) of the group. Equity-settled share-based payments
are measured at fair value at the date of grant. The fair value is recognised as an expense on a straight-line basis over the vesting
period, based on the group\u2019s estimate of the options or shares that will eventually vest. Fair value of share option schemes is
measured using a Binomial options pricing model.
Service conditions are vesting conditions. Any other conditions are non-vesting conditions which are taken into account to
determine the fair value of equity instruments granted. When an award or option does not vest as a result of a failure to meet a non-
vesting condition that is within the control of either counterparty, it is accounted for as a cancellation. Cancellations are treated as
accelerated vesting and all remaining future charges are immediately recognised in the income statement. As the requirement to
save under an employee saveshare arrangement is a non-vesting condition, employee cancellations, other than through a
termination of service, are treated as an accelerated vesting.
No adjustment is made to total equity for awards that lapse or are forfeited after the vesting date.
Material accounting policies that apply to divestments and assets & liabilities classified
as held for sale
We classify non-current assets or a group of assets and associated liabilities, together forming a disposal group, as \u2018held for sale\u2019
when their carrying amount will be recovered principally through disposal rather than continuing use and the sale is highly probable.
Sale is considered to be highly probable when management are committed to a plan to sell the asset or disposal group and the sale
should be expected to qualify for recognition as a completed divestment within one year from the date of classification. We measure
non-current assets or disposal groups classified as held for sale at the lower of their carrying amount and fair value less costs of
disposal. Intangible assets, property, plant and equipment and right-of-use assets classified as held for sale are not depreciated or
amortised.
Upon completion of a divestment, we recognise a profit or loss on disposal calculated as the difference between (i) the aggregate of
the fair value of the consideration received and the fair value of any retained interest less costs incurred in disposing of the asset or
disposal group and (ii) the carrying amount of the asset or disposal group (including goodwill). The profit or loss on disposal is
recognised as a specific item, see note 9.
In the event that non-current assets or disposal groups held for sale form a separate and identifiable major line of business, the
results for both the current and comparative periods are reclassified as \u2018discontinued operations\u2019.
Material accounting policies that apply to investments
Investments classified as amortised cost
These investments are measured at amortised cost. The carrying amount of these balances approximates to fair value. Any gain or
loss on derecognition is recognised in the income statement.
Investments classified as fair value through profit and loss
These investments are initially recognised at fair value plus direct transaction costs. They are re-measured at subsequent reporting
dates to fair value and changes are recognised directly in the income statement.
Equity instruments classified as fair value through other comprehensive income
We have made an irrevocable election to present changes in the fair value of equity investments that are not held for trading in other
comprehensive income. All gains or losses, aside from dividends, are recognised in other comprehensive income and are not
reclassified to the income statement when the investments are disposed of, instead any balance remaining in other comprehensive
income is transferred to retained earnings. Dividends are recognised in the income statement when our right to receive payment
is established. Equity investments are recorded in non-current assets unless they are expected to be sold within one year.
Material accounting policies that apply to the Sports JV Assessment of whether BT has joint control over the Sports JV The Sports JV is classified as a joint venture based on an assessment under IFRS 10 and 11 of the ownership, voting power and joint control established through the joint venture agreement between BT and WBD. Factors relevant to our assessment: \u2013 Equal voting rights over the activities that most significantly impact the returns of the Sports JV, namely decisions around new or existing sports rights and distribution arrangements. \u2013 Unequal cash distribution during the first four years of the JV due to the earn-out mechanism and larger business contributed into the JV by BT. \u2013 Revolving credit facility (RCF) provided by BT to fund short-term liquidity required by the Sports JV for working capital and commitments to sports rights holders. \u2013 WBD\u2019s call option to acquire BT\u2019s 50% interest in the Sports JV is not exercisable before key decisions over material activities of the Sports JV are made such that joint control still applies. The assessment whether joint control remains in place is reviewed at each reporting period. Accounting policies adopted by the Sports JV The Sports JV has a financial year-end of 31 July and has not yet prepared its first set of audited financial statements. In order to recognise our share of the Sports JV\u2019s results for our equity-accounted investment, we have prepared the Sports JV\u2019s financial information disclosed below based on management accounts for the period ending 31 March 2024 after making certain adjustments to comply with IFRS. Significant judgements made in preparing the Sports JV\u2019s financial information: \u2013 IFRS 3 acquisition accounting should be applied by the Sports JV over the business combination achieved through the transfer of the BT Sport and Eurosport UK businesses from BT and WBD respectively, recognising acquired intangibles on the current and future value of programme rights, and goodwill. \u2013 Revenues from the minimum guarantee in the Sports JV\u2019s distribution agreement with BT should be adjusted to reflect a trading agreement on market terms with a separate financing arrangement for the off-market portion accounted for under IFRS 9 \u2013 this mirrors the accounting treatment applied by BT (see note 22). \u2013 A and C preference shares issued by the Sports JV to BT should be classified as a financial liability at fair value through profit or loss under IFRS 9, as cash flows of the liability can be modified by both financial and non-financial factors that are not closely related to the instrument itself. \u2013 Hedge accounting should be applied on the Sports JV\u2019s forward contracts with BT (see note 30) with fair value movements on the derivatives recognised in other comprehensive income and held in the cash flow hedge reserve until recycle on settlement of the forward contracts. \u2013 Programme rights should be recognised on the balance sheet from the point at which the licence period begins and are consumed by the Sports JV on a straight-line basis over the programming period which is generally 12 months. This is consistent with accounting policy applied in our previous BT Sport operations that have been transferred to the Sports JV. Accounting policies in other areas are consistent with those applied by the group.
Material accounting policies that apply to cash and cash equivalents
Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily
convertible to cash, are subject to insignificant risk of changes in value and have an original maturity of three months or less. All are
held at amortised cost on the balance sheet, equating to fair value.
For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined above net of outstanding bank
overdrafts. Bank overdrafts are included within the current element of loans and other borrowings (note 26).
Material accounting policies that apply to loans and other borrowings
We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are
re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on
de-designation of the hedge, is recognised in the income statement.
Material accounting policies that apply to derivatives and hedge accounting
All of our derivative financial instruments are held at fair value on the balance sheet.
Derivatives designated in a cash flow hedge
The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting,
recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation
must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic
relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This
is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when
it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting.
The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is
assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered
timing, cash flows or value.
When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a
highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in
equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and
recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the
income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement.
Other derivatives
Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives
may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate.
We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts,
including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are
recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re-
measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or
transaction to which they relate.
Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the
transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred
and amortised to the income statement based on the remaining contractual term and as observable market data becomes available.
The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market
rates of interest and foreign exchange at the balance sheet date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-523": { "value": "
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards
and with the requirements of the Companies Act 2006.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-524": { "value": "
The consolidated financial statements are prepared on a going
concern basis.
This assessment is consistent with the assessment of our viability,
as set out on pages 81 to 82, which has been based on the
Company\u2019s strategy, balance sheet and financing position,
including our \u00a32.1bn undrawn committed borrowing facility which
matures in March 2027, and the potential impact of \u2018Our principal
risks and uncertainties\u2019 (pages 63 to 70); and which estimates the
financial impact of a severe but plausible outcome for each risk,
both individually, in combination and through stochastic risk
modelling. This stress testing confirmed that existing projected
cash flows and cash management activities provide us with
adequate headroom over the going concern assessment period.
Having assessed the principal and emerging risks, the directors
considered it appropriate to adopt the going concern basis of
accounting when preparing the group and parent company
financial statements. This assessment covers the period to May
2025, which is consistent with the FRC guidance. When reaching
this conclusion, the directors took into account the group\u2019s and
parent company\u2019s overall financial position (including trading
results and ability to repay term debt as it matures without
recourse to refinancing) and the exposure to principal risks.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-525": { "value": "The consolidated financial statements are presented in sterling, the functional currency of BT Group plc. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-526": { "value": "
New and amended accounting standards effective during
the year
The following amended standards were effective during the year,
none of which had a material impact on the financial statements of
the group:
IFRS 17 Insurance Contracts
BT adopted IFRS 17 with retrospective application on 1 April 2023.
The standard establishes principles for the recognition,
measurement, presentation and disclosure of insurance contracts.
The measurement method for insurance contracts required by
IFRS 17 is a probability weighted discounted cash flow model,
including a best estimate and an adjustment for non-financial risk
calculated for groups of similar contracts.
IFRS 17 primarily impacts insurance entities, however, as it applies
to individual contracts it is possible that non-insurers could issue
contracts that are in scope of the standard such as product
breakdown contracts or warranties.
We have assessed the impact of the standard on the group, and
concluded that its impact is not material. Contracts in scope of the
standard entered into by the group are restricted to intragroup
insurance arrangements; the group does not issue external
insurance contracts.
Disclosure of Accounting Policies (Amendments to IAS 1
and IFRS Practice Statement 2)
These amendments require the disclosure of \u2018material\u2019 rather than
\u2018significant\u2019 accounting policies. The amendments have not
resulted in any changes to accounting policies disclosures made in
these financial statements.
International Tax Reform \u2013 Pillar Two Model Rules
(Amendments to IAS 12 Income Taxes)
The IASB amended the scope of IAS 12 to introduce a temporary
mandatory exception from deferred tax accounting for top-up tax
arising from the implementation of the OECD Pillar Two model
rules. This was endorsed in the UK in July 2023 and applies to
accounting periods beginning on or after 1 January 2023.
The group applies the exception to recognising and disclosing
information about deferred tax assets and liabilities related to
Pillar Two income taxes, as provided in the amendments to IAS 12
issued in May 2023.
Other
The following changes have not had a significant impact on our
consolidated financial statements:
\u2013 Definition of Accounting Estimate (Amendments to IAS 8)
\u2013 Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
IFRS Interpretations Committee agenda decisions
The IFRS Interpretations Committee (IFRIC) periodically issues
agenda decisions which explain and clarify how to apply the
principles and requirements of IFRS. Agenda decisions are
authoritative and may require the group to revise accounting
policies or practice to align with the interpretations set out in the
decision.
We regularly review IFRIC updates and assess the impact of
agenda decisions. No agenda decisions finalised during FY24 have
been assessed as having a significant impact on the group.
New and amended accounting standards that have been
issued but are not yet effective
The following new or amended standards and interpretations are
applicable in future periods and are not expected to have a
material impact on the consolidated financial statements:
Supplier Finance Arrangements (Amendments to IAS 7 and
IFRS 7)
The amendments will apply to the group from FY25 onwards and
require new disclosures relating to supplier finance arrangements
that assist in assessing their effects on liabilities, cash flows and
exposure to liquidity risk.
We participate in supply chain financing arrangements which the
amendments will apply to, see note 17. We will include the
required disclosures in the FY25 financial statements.
Other
The following are not expected to have a significant impact on the
consolidated financial statements:
\u2013 Classification of Liabilities as Current or Non-current
(Amendments to IAS 1)
\u2013 Non-current Liabilities with Covenants (Amendments to IAS 1)
\u2013 Lease Liability in a Sale and Leaseback (Amendments to IFRS
16)
\u2013 Lack of Exchangeability (Amendments to IAS 21)
Accounting policy and operating segment changes
During FY24 we changed the methodology used to allocate
certain internal costs and our Business CFU began reporting as
a single unit.
Allocation of central costs From 1 April 2023 we have revised the methodology used to allocate shared Network, Digital and support function costs across our units to more closely align the recharges received by each unit to their actual consumption and establish clearer driver-focused allocation of cost, harmonise principles for pricing and profitability, and support greater unit cost ownership and management and decision making. This represents an accounting policy change and in line with the requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors we have re-presented FY23 comparatives to enable comparability across periods. Creation of the Business unit As disclosed in the FY23 financial statements, the Enterprise and Global CFUs have been combined into a single CFU, Business, which began reporting as a single unit from 1 April 2023. In line with the requirements of IFRS 8 Operating Segments, we have re-presented FY23 comparatives to reflect the combined unit. Re-presentation of prior year comparatives These changes have resulted in re-presentation of prior year comparatives. Changes affect segmental disclosures only and have no impact on the overall reported group financial results. The following disclosures are impacted by the creation of the Business unit only. Re-presentation of prior year comparatives is limited to the combination of the balances previously reported in respect of the Enterprise and Global units, with no further adjustments: \u2013 Note 5 Revenue: disaggregation of external revenue \u2013 Note 7 Employees: number of employees \u2013 Note 16 Trade and other receivables: trade receivables not past due and accrued income by CFU Note 4 Segment information is also impacted by changes to the allocation of shared costs. Re-presentation of comparatives has involved adjustments to reallocate internal costs to report on a like-for-like basis with FY24 and to remove internal trading between the Enterprise and Global units. Note 32 presents a bridge between previously published FY23 financial information and comparatives presented in these disclosures: Also presented is a bridge in respect of the CFU normalised free cash flow comparatives which are re-presented in the Additional information on page 231 . ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-553": { "value": "New and amended accounting standards effective during the year The following amended standards were effective during the year, none of which had a material impact on the financial statements of the group: IFRS 17 Insurance Contracts BT adopted IFRS 17 with retrospective application on 1 April 2023. The standard establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement method for insurance contracts required by IFRS 17 is a probability weighted discounted cash flow model, including a best estimate and an adjustment for non-financial risk calculated for groups of similar contracts. IFRS 17 primarily impacts insurance entities, however, as it applies to individual contracts it is possible that non-insurers could issue contracts that are in scope of the standard such as product breakdown contracts or warranties. We have assessed the impact of the standard on the group, and concluded that its impact is not material. Contracts in scope of the standard entered into by the group are restricted to intragroup insurance arrangements; the group does not issue external insurance contracts. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) These amendments require the disclosure of \u2018material\u2019 rather than \u2018significant\u2019 accounting policies. The amendments have not resulted in any changes to accounting policies disclosures made in these financial statements. International Tax Reform \u2013 Pillar Two Model Rules (Amendments to IAS 12 Income Taxes) The IASB amended the scope of IAS 12 to introduce a temporary mandatory exception from deferred tax accounting for top-up tax arising from the implementation of the OECD Pillar Two model rules. This was endorsed in the UK in July 2023 and applies to accounting periods beginning on or after 1 January 2023. The group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Other The following changes have not had a significant impact on our consolidated financial statements: \u2013 Definition of Accounting Estimate (Amendments to IAS 8) \u2013 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) IFRS Interpretations Committee agenda decisions The IFRS Interpretations Committee (IFRIC) periodically issues agenda decisions which explain and clarify how to apply the principles and requirements of IFRS. Agenda decisions are authoritative and may require the group to revise accounting policies or practice to align with the interpretations set out in the decision. We regularly review IFRIC updates and assess the impact of agenda decisions. No agenda decisions finalised during FY24 have been assessed as having a significant impact on the group. ", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-554": { "value": "New and amended accounting standards that have been issued but are not yet effective The following new or amended standards and interpretations are applicable in future periods and are not expected to have a material impact on the consolidated financial statements: Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) The amendments will apply to the group from FY25 onwards and require new disclosures relating to supplier finance arrangements that assist in assessing their effects on liabilities, cash flows and exposure to liquidity risk. We participate in supply chain financing arrangements which the amendments will apply to, see note 17. We will include the required disclosures in the FY25 financial statements. Other The following are not expected to have a significant impact on the consolidated financial statements: \u2013 Classification of Liabilities as Current or Non-current (Amendments to IAS 1) \u2013 Non-current Liabilities with Covenants (Amendments to IAS 1) \u2013 Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) \u2013 Lack of Exchangeability (Amendments to IAS 21) Accounting policy and operating segment changes During FY24 we changed the methodology used to allocate certain internal costs and our Business CFU began reporting as a single unit. Allocation of central costs From 1 April 2023 we have revised the methodology used to allocate shared Network, Digital and support function costs across our units to more closely align the recharges received by each unit to their actual consumption and establish clearer driver-focused allocation of cost, harmonise principles for pricing and profitability, and support greater unit cost ownership and management and decision making. This represents an accounting policy change and in line with the requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors we have re-presented FY23 comparatives to enable comparability across periods. Creation of the Business unit As disclosed in the FY23 financial statements, the Enterprise and Global CFUs have been combined into a single CFU, Business, which began reporting as a single unit from 1 April 2023. In line with the requirements of IFRS 8 Operating Segments, we have re-presented FY23 comparatives to reflect the combined unit. Re-presentation of prior year comparatives These changes have resulted in re-presentation of prior year comparatives. Changes affect segmental disclosures only and have no impact on the overall reported group financial results. The following disclosures are impacted by the creation of the Business unit only. Re-presentation of prior year comparatives is limited to the combination of the balances previously reported in respect of the Enterprise and Global units, with no further adjustments: \u2013 Note 5 Revenue: disaggregation of external revenue \u2013 Note 7 Employees: number of employees \u2013 Note 16 Trade and other receivables: trade receivables not past due and accrued income by CFU Note 4 Segment information is also impacted by changes to the allocation of shared costs. Re-presentation of comparatives has involved adjustments to reallocate internal costs to report on a like-for-like basis with FY24 and to remove internal trading between the Enterprise and Global units. Note 32 presents a bridge between previously published FY23 financial information and comparatives presented in these disclosures: Also presented is a bridge in respect of the CFU normalised free cash flow comparatives which are re-presented in the Additional information on page 231 . ", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-486": { "value": "BT Group plc ", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-485": { "value": "BT Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-17": { "value": "BT Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-489": { "value": " plc", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-632": { "value": "
2. Critical & key accounting estimates and
significant judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and assumptions. It also
requires management to exercise its judgement in the process of
applying our accounting policies. We continually evaluate our
estimates, assumptions and judgements based on available
information and experience. As the use of estimates is inherent in
financial reporting, actual results could differ from these estimates.
Our critical accounting estimates are those estimates that carry a
significant risk of resulting in a material adjustment to the carrying
amount of assets and liabilities within the next financial year. We
also make other key estimates when preparing the financial
statements, which, while not meeting the definition of a critical
estimate, involve a higher degree of complexity and can
reasonably be expected to be of relevance to a user of the financial
statements. Management has discussed its critical and other key
accounting estimates and associated disclosures with the Audit
and Risk Committee.
Significant judgements are those made by management in
applying our material accounting policies that have a material
impact on the amounts presented in the financial statements. We
may exercise significant judgement in our critical and key
accounting estimates.
Our critical and key accounting estimates and significant
judgements are described in the following notes to the financial
statements. They can be identified by the following symbol .
Note Critical Key estimate Significant
estimate judgement
5. Estimate of customer refund \u00fc
liability
10. Current and deferred
\u00fc
\u00fc
income tax
13. Goodwill impairment
\u00fc
\u00fc
14. Determining the point of
sale of BT Tower
\u00fc
15. Reasonable certainty and
determination of lease terms
\u00fc
18. Identifying contingent \u00fc
liabilities
18. Provisions
\u00fc
\u00fc
19. Valuation of pension assets
\u00fc
\u00fc
and liabilities
24. Valuation of investment in
A preference shares in Sports
\u00fc
joint venture
Key accounting estimates made in accounting for revenue Estimate of customer refunds Revenue has been adjusted to reflect a risk of billing inaccuracy where there is a high level of manual processing through certain billing systems. This is associated with a small number of products within our Business unit which contain bespoke pricing. \u00a341m has been recognised as an IFRS 9 financial liability and deducted from revenue, and has been derived from an estimate of the possible range of the adjustment from \u00a324m to \u00a364m based on the results of a sample of billing items. This is presented within Note 17 and represents our best estimate required to cover ongoing billing adjustments to products relating to both current and prior periods. If the final quantum of adjustments is less than expected, the adjustment will be released back to the income statement. Key accounting estimates and significant judgements made in accounting for taxation We seek to pay tax in accordance with the laws of the countries where we do business. However, in some areas these laws are unclear, and it can take many years to agree an outcome with a tax authority or through litigation. We estimate our tax on country- by-country and issue-by-issue bases. Our key uncertainties are whether our intra-group trading model will be accepted by a particular tax authority and whether intra-group payments are subject to withholding taxes. We provide for the predicted outcome where an outflow is probable, but the agreed amount can differ materially from our estimates. Approximately 65% by value of the provisions are under active tax authority examination and are therefore likely to be re-estimated or resolved in the coming 12 months. \u00a3112m (FY23: \u00a3104m) is included in current tax liabilities or offset against current tax assets where netting is appropriate. We are subject to regular tax authority review, under a downside case an additional amount of \u00a3123m could be required to be paid. This amount is not provided as we don\u2019t consider this outcome to be probable. Deciding whether to recognise deferred tax assets is judgemental. We only recognise them when we consider it is probable that they can be recovered. In making this judgement we consider evidence such as historical financial performance, future financial plans and trends and whether our intra-group pricing model has been agreed by the relevant tax authority. The value of the group\u2019s income tax assets and liabilities is disclosed on the group balance sheet. The value of the group\u2019s deferred tax assets and liabilities is disclosed below.
Significant judgements and critical accounting estimates made in reviewing goodwill for
impairment
Determining our CGUs
The determination of our CGUs is judgemental. The identification of CGUs involves an assessment of whether the asset or group of
assets generate largely independent cash inflows. This involves consideration of how our core assets are operated and whether these
generate independent revenue streams.
In FY23 our CGUs were aligned with the Consumer, Enterprise and Global customer-facing units in existence at the time. From
1 April 2023 the Enterprise and Global units are managed and reported as a single combined unit, Business. Financial information
is provided to the Executive Committee on a consolidated basis only, and there have been material changes to the structure and
organisation of the combined Business unit following the merger.
During FY24 we have reviewed the identification of our CGUs in light of the creation of Business. We concluded that the Enterprise
and Global CGUs have been replaced with a single Business CGU. In reaching this conclusion we considered the way in which the
combined unit is monitored and the degree of integration within the combined unit, specifically in relation to revenue streams and its
asset base. This conclusion also reflects the fact that the cash flows of the legacy Enterprise and Global units are no longer
independent and it is no longer possible to report the performance of these units on an individual basis.
Accordingly, our CGUs are Consumer and Business from 1 April 2023, aligned with the corresponding CFUs and operating segments
(note 4).
Estimating value in use
Our value in use calculations require estimates in relation to uncertain items, including management\u2019s expectations of future revenue
growth, operating costs, profit margins, operating cash flows and the discount rate for each CGU. Future cash flows used in the value
in use calculations are on a nominal basis and based on risk-adjusted projections derived from the latest Board-approved five-year
financial plans, representing management's best risk-adjusted estimate of future growth. This includes the direct and indirect
impacts of inflation and associated mitigations. Expectations about future growth reflect the expectations of growth in the markets
to which the CGU relates and consideration of the overall variability relating to individual assumptions at the unit level. The future
cash flows are discounted using a pre-tax nominal discount rate that reflects current market assessments of the time value of money.
The discount rate used in each CGU is adjusted for the risk specific to the asset, including the countries in which cash flow will be
generated, for which the future cash flow estimates have not been adjusted.
Estimating terminal growth
A long term growth rate into perpetuity is applied immediately at the end of the five year forecast period. We calculate this for each
CGU as the lower of the nominal GDP growth rate forecasts and the long-term compound annual growth rate as estimated by
management. Long-term compound annual growth rates may be lower than forecast nominal GDP growth rates due to market-
specific factors including inflation expectations, the regulatory environment and competition intensity.
Significant judgements made in accounting for the BT Tower sale Exchange of contracts in respect of the BT Tower sale with MCR Hotels occurred during FY24, with transfer of legal title anticipated to take place in a three year window between 2028 and 2031 subject to achieving vacant possession of the site. We will continue to enjoy exclusive rights to occupy and access the site prior to completion. The delay between exchange and completion reflects the extensive work required to decommission the site. We have exercised significant judgement in concluding that control over BT Tower passes to the buyer at the point of completion rather than exchange. In doing so we performed a detailed assessment of the restrictions placed on BT\u2019s use of the asset in the period following exchange, as well as the transaction pricing structure, and concluded that they were insufficient to represent a transfer to the buyer of sufficiently all the risks and rewards associated with ownership. We placed particular weight on the fact that legal title to the site does not transfer to the buyer until the point of completion. Had we concluded that control had passed on exchange of contracts in FY24, the transaction would have been treated as a sale and leaseback with profit on disposal recognised in the period and associated derecognition of the BT Tower asset and accounting for the leaseback. Significant judgements made in accounting for leases The lease term is a key determinant of the size of the lease liability and right-of-use asset recognised where the group acts as lessee; and the deferral period for any upfront connection charges where the group acts as lessor. Determining the lease term requires judgement to evaluate whether we are reasonably certain the lessee will exercise extension options or will not exercise termination options. Key facts and circumstances that create an incentive to exercise those options are considered; these include: \u2013 Our anticipated operational, retail and office property requirements in the mid and long term. \u2013 The availability of suitable alternative sites. \u2013 Costs or penalties associated with exiting lease arrangements relative to the benefits to be gained, including costs of removing leasehold improvements or relocating, and indirect costs such as disruption to business. \u2013 Significant investments in leased sites, in particular those with useful lives beyond the lease term. \u2013 Costs associated with extending lease arrangements including rent increases during secondary lease periods. Our definition of \u2018reasonable certainty\u2019, and therefore the lease term, will often align with the judgements made in our medium-term plan, in particular for leases of non-specialised property and equipment on rolling (or \u2018evergreen\u2019) arrangements that continue until terminated and which can be exited without significant penalty. Following initial determination of the lease term, we exercise judgement in evaluating whether events or changes in circumstances are sufficiently significant to change the initial assessment of whether we are reasonably certain the lessee will exercise extension options or will not exercise termination options; and in the subsequent reassessment of the lease term. Key judgements exercised in setting the lease term The quantum of the lease liability and right-of-use asset currently recognised on our balance sheet is most significantly affected by the judgement exercised in setting the lease term for the arrangement under which the bulk of our operational UK property estate is held. Setting the lease term for our leased cell sites has also involved the use of judgement, albeit to a lesser degree.
UK operational property portfolio
Substantially all of our leased property estate is held under an arrangement which can be terminated in 2031, at which point we may
either vacate some or all properties or purchase the entire estate. If neither option is taken the lease continues to the next unilaterally
available break point in 2041. The lease liability recognised for the arrangement reflects a lease end date of 2031.
On initial recognition we concluded that, although the majority of these properties are expected to be needed on a long-term basis,
we couldn\u2019t be reasonably certain that we wouldn\u2019t exercise the termination option or that we would exercise the purchase option. In
coming to this conclusion, we had due regard to material sub-lease arrangements relating to the estate.
As time progresses our assessment may change; if this happens, we will remeasure the lease liability and right-of-use asset to reflect
either the rentals due for any properties we will continue to occupy, or the cost of purchasing the estate, using an updated discount
rate. There would be no overall impact on net assets.
If the assessment were to change at the balance sheet date of 31 March 2024:
\u2013 Exercising the purchase option would lead to an estimated increase in the lease liability and right-of-use asset of between \u00a33bn
and \u00a35bn.
\u2013 Continuing to lease the estate beyond 2031 until the next available break in 2041 would lead to an estimated increase in the lease
liability and right-of-use asset of between \u00a31bn and \u00a32bn.
Our assessment will be directly linked to future strategic decisions, which will be resolved at some time prior to 2031, around the
development of the fixed network and the associated rationalisation of our exchange estate. The breadth of the ranges reflects the
significant uncertainty around key variables used to determine cash outflows, especially future inflation and which properties the
group will be able to exit prior to or in 2031.
Estimates are based on discounted cash outflows and do not reflect the likely and significant impact of cash inflows generated from
the disposal, repurposing or subleasing of properties retained post-2031.
We are permitted to hand a limited number of properties back to the lessor prior to 2031. On initial adoption of IFRS 16 we were not
reasonably certain which properties would be handed back and as such the lease term did not reflect the exercise of these options.
Subsequently we exercise judgement in identifying significant events that trigger reassessment of our initial conclusion. We exercise
similar judgement in identifying events triggering reassessment of whether we are reasonably certain we will not exercise termination
options associated with other leased properties.
In doing so we consider decisions associated with our ongoing workplace rationalisation programme, in particular decisions to exit a
particular location or lease an alternative property. Generally we remain reasonably certain that we will not exercise a termination
option until implementation of the associated business plan has progressed to a stage that we are committed to exiting the property.
At that point we reassess the lease term by reference to the time we expect to remain in occupation of the property and any notice
period associated with exercise of the option.
Cell sites
Most of the liability recognised in respect of leased cell sites relates to multi-site arrangements with commercial providers. The
fixed-term nature of these arrangements means it has not been necessary to exercise significant judgement when determining the
lease term. Where the arrangements offer extension options we have been required to conclude whether the options are reasonably
certain to be exercised. Although the balance sheet could be materially affected by the conclusion reached in regard to these
options, we have not been required to exercise a significant degree of judgement in arriving at the lease term having regard to the
period of time covered by the options, the difficulty in predicting the group\u2019s long-term network requirements, and the relatively
high threshold that \u2018reasonably certain' represents.
A smaller proportion of the cell site liability relates to arrangements with individual landlords which are either rolling or can be exited
with notice. When setting the initial lease term for these arrangements we exercised significant judgement in establishing the period
that we are reasonably certain to require use of the site. We broadly aligned lease terms with our medium-term planning horizon
after assessing the relative strengths of the following factors:
\u2013 Long-term economic incentives to remain on sites including existing capital improvements;
\u2013 A need to maintain flexibility in our ability to develop and manage our network infrastructure to react quickly to technological
developments and evolving capacity requirements; and
\u2013 Incentives to renegotiate arrangements in the medium term to gain more security over sites to support future capital investment.
Although significant judgement has been exercised in determining the lease term, reaching an alternative conclusion would not have
a material impact on the balance sheet having regard to the most feasible alternative lease terms.
Subsequently, we consider key events that trigger reassessment of lease terms to be developments which resolve uncertainty
around our economic incentive to remain on individual sites in the long term. These are primarily lease renegotiations and significant
capital investments, for example that associated with our 5G rollout and other capital refresh programmes.
Significant judgements made in identifying contingent liabilities
Contingent liabilities are not recognised as liabilities on our balance sheet. By their nature, contingencies will be resolved only when
one or more uncertain future events occur or fail to occur. We assess the likelihood that a potential claim or liability will arise and also
quantify the possible range of financial outcomes where this can be reasonably determined.
In identifying contingent liabilities we make key judgements in relation to applicable law and any historical and pending court rulings,
and the likelihood, timing and cost of resolution.
Establishing contingent liabilities associated with litigation brought against the group may involve the use of significant judgements
and assumptions, in particular around the ability to form a reliable estimate of any probable outflow. We provide further information
in relation to specific matters in the \u2018contingent liabilities' section below.
Key accounting estimates and significant judgements made in accounting for provisions
We exercise judgement in determining the quantum of all provisions to be recognised. Our assessment includes consideration of
whether we have a present obligation, whether payment is probable and if so whether the amount can be estimated reliably.
When measuring provisions we reflect the impact of inflation as appropriate, particularly in relation to our property, asset retirement
obligation and third party claims provisions. Although this involves a degree of estimation, it does not represent a significant source
of estimation uncertainty having regard to the quantum of the balances in question and the anticipated timing of outflows.
Property provisions relate to obligations arising in relation to our property portfolio, in particular costs to restore leased properties on
vacation where this is required under the lease agreement. In measuring property provisions, we have made estimates of the costs
associated with the restoration of properties by reference to any relevant guidance such as rate cards. Cash outflows occur as and
when properties are vacated and the obligations are settled.
Asset retirement obligations (AROs) relate to obligations to dismantle equipment and restore network sites on vacation of the site.
The provision represents the group\u2019s best estimate of the costs to dismantle equipment and restore the sites. Obligations are settled
as and when sites are vacated and the timing is largely influenced by the group\u2019s network strategy.
Our regulatory provision represents our best estimate of the cost to settle our present obligation in relation to historical regulatory
matters. The charge/credit for the year represents the outcome of management\u2019s re-assessment of the estimates and regulatory
risks across a range of issues, including price and service issues. The prices at which certain services are charged are regulated and
may be subject to retrospective adjustment by regulators. When estimating the likely value of regulatory risk we make key
judgements, including in regard to interpreting Ofcom regulations and past and current claims. The precise outcome of each matter
depends on whether it becomes an active issue, and the extent to which negotiation or regulatory and compliance decisions will
result in financial settlement. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual
outcome of any settlement.
Litigation provisions represent the best estimate to settle present obligations recognised in respect of claims brought against the
group. The estimate reflects the specific facts and circumstances of each individual matter and any relevant external advice
received. Provisions recognised are inherently judgemental and could change over time as matters progress.
Third party claims provisions (previously described as insurance provisions) represent our exposure to claims from third parties, with
latent disease claims from former colleagues and motor vehicle claims making up the majority of the balance. We engage an
independent actuary to provide an estimate of the most likely outcomes in respect of latent disease and third party motor vehicle
accident claims, and our in-house insurance teams review our exposure to other risks.
Other provisions do not include any individually material provisions.
For all risks, the ultimate liability may vary materially from the amounts provided and will be dependent upon the eventual outcome
of any settlement.
Critical accounting estimates and significant judgements made when valuing the BTPS assets Under IAS 19, plan assets are measured at fair value at the balance sheet date and include quoted and unquoted investments. Valuation of main quoted investments \u2013 Equities listed on recognised stock exchanges are valued at closing bid prices. \u2013 Bonds that are regularly traded are valued using broker quotes, based on sale/bid prices. \u2013 Exchange traded derivative contracts are valued based on closing bid prices. Valuation of main unquoted investments A portion of unquoted investments are valued based on inputs that are not directly observable, which require more judgement. The assumptions used in valuing unquoted investments are affected by market conditions. \u2013 Equities are valued using the International Private Equity and Venture Capital (IPEVC) guidelines where the most significant assumptions are the discount rate and earnings assumptions. \u2013 Property investments are valued on the basis of open market value by an independent valuer using RICS guidelines. The significant assumptions used in the valuation are rental yields and occupancy rates. \u2013 Bonds, including those issued by BT Group, that are not regularly traded are valued by an independent valuer using pricing models making assumptions for credit risk, market risk and market yield curves. \u2013 Holdings in investment funds are typically valued at the Net Asset Value provided by the fund administrator or investment manager. The significant assumption used in the valuation is the Net Asset Value. \u2013 Infrastructure investments are valued by an independent valuer using a model-based valuation such as a discounted cash flow approach, or at the price of recent market transactions if they represent fair value. Where a discounted cash flow model is used, the significant assumptions used in the valuation are the discount rate and the expected cash flows. \u2013 Over the counter derivatives are valued by an independent valuer using cash flows discounted at market rates. The significant assumptions used in the valuation are the yield curves and cost of carry. \u2013 The BTPS entered into a longevity insurance contract in 2014, and a second in August 2023. The two longevity insurance contracts are valued by discounting the fixed cash flows payable by the BTPS and the floating cash flows payable by the insurers under the contracts (projected by an actuary, consistent with the terms of the contracts). The significant assumptions used to value the assets are the discount rate (set as a margin above a risk-free rate to reflect credit and liquidity risk) and the mortality assumptions. \u00a35.7bn of unquoted investments that are formally valued periodically by the investment manager have a latest valuation that precedes the balance sheet date. These assets consist of: \u00a32.4bn non-core credit; \u00a31.0bn mature infrastructure; \u00a31.2bn private equity; \u00a30.9bn secure income assets; and \u00a30.2bn property. These valuations have been adjusted for cash movements between the previous valuation date and 31 March 2024. The valuation approach and inputs for these investments would only be approximately updated where there were indications of significant movements, for example implied by public market indicators. No such adjustment was required at 31 March 2024. Asset-Backed Funding (ABF) arrangement The ABF arrangement, issued to the BTPS in May 2021, has a fair value of \u00a31.2bn at 31 March 2024 (FY23: \u00a31.3bn) calculated as the present value of the future stream of payments, allowing for the probability of the BTPS becoming fully funded and therefore the payments to the BTPS ending early. It is not recognised as a pension asset when measuring the group\u2019s IAS 19 net defined benefit liability as it is a non-transferable financial instrument issued by the group. Critical accounting estimates and significant judgements made when valuing our pension liabilities The measurement of the service cost and the liabilities involves judgement about uncertain events including the life expectancy of members, price inflation and the discount rate used to calculate the net present value of the future pension payments. We use estimates for all of these uncertain events. Our assumptions reflect historical experience, market expectations (where relevant), actuarial advice and our judgement regarding future expectations at the balance sheet date. While assumptions are made for these events, actual benefit payments in a given year may be higher or lower than the assumption, for example if members retire sooner or later than assumed. The liabilities are the present value of the future expected benefit payments.
Critical & key accounting estimates and significant judgements made in accounting for the
BT Sport disposal in FY23
The following critical and key accounting estimates and significant judgements were made in accounting for the BT Sport disposal in
FY23 only and are not considered to be ongoing significant judgements.
Assessment of whether BT has joint control over the Sports JV
See note 24 for assessment of control.
Valuation of investment in A preference shares (akin to contingent consideration)
BT will receive an earn-out from the Sports JV (subject to liquidity and usual UK company law requirements), which will end at the
earliest of:
\u2013 four years post completion of the transaction;
\u2013 the exercise by WBD of the Call Option; and
\u2013 if the earn-out reaches an agreed cap.
The earn-out cash flows to BT are dependent on the cash profit generation of the Sports JV over the earn-out period and is therefore
akin to contingent consideration, initially recorded at a fair value of \u00a3428m reflecting the present value of expected cash flows.
Subsequent to the initial recognition, the group\u2019s carried forward investment in A preference shares are remeasured to fair value at
each reporting date in accordance with IFRS 9, see note 24.
Valuation of the minimum revenue guarantee in BT\u2019s distribution agreement with the Sports JV
BT plc\u2019s obligation under the minimum revenue guarantee of c. \u00a32bn over the first four years of the Sports JV represents both a
trading arrangement on market terms and a financing arrangement for the off-market element of the revenue guarantee, which has
been recorded as a financial liability at an initial fair value of \u00a3712m.
The valuation of this financial liability, and what a fair cost-per-subscriber would be, is sensitive to a number of assumptions on
volumes and price, and there is a range of outcomes which we could have arrived at. Alternative scenarios considered, based on the
different prices and terms used with other market participants, could have resulted in a liability ranging from \u00a3543m to \u00a3837m.
The key assumptions in calculating the financial liability are in estimating what is a market wholesale price at market volume
commitment that is supported by the forecast volumes for the related revenue streams. The volumes used are consistent with those
included in the jointly-agreed business plan for the Sports JV. We note that the bottom of the range disclosed above is based on the
price that we will pay when the minimum revenue guarantee has ended, however we do not believe that is an appropriate rate from
the outset due to existing volume commitments.
The liability is held at amortised cost within trade and other payables on the balance sheet (see note 17) \u2013 the carrying amount at
31 March 2024 has reduced to \u00a3465m (FY23: \u00a3660m) after payments made to the Sports JV on the minimum revenue guarantee.
Valuation of BT\u2019s equity interest in the Sports JV
WBD has the option to acquire BT plc\u2019s 50% interest in the Sports JV at specified points during the first four years of the Sports JV.
If the Call Option is not exercised, BT plc will have the ability to exit its shareholding in the JV either through a sale or IPO.
The group valued its interest in the Sports JV based on the estimated fair value at exit and using the following key assumptions:
\u2013 BT expect to realise its interest in the Sports JV through exit rather than ongoing value in use.
\u2013 BT expect WBD to exercise its option to acquire BT\u2019s 50% interest in the Sports JV at the end of the first four years of the Sports
JV.
\u2013 An earnings multiple has been applied to the expected year 5 EBITDA per the jointly-agreed business plan - the multiple is at the
lower end of a possible range identified from comparable peers and transactions in the premium sports subscription and
broadcasting market.
The investment is subsequently accounted for using the equity method and will be subject to impairment testing at each reporting
period, with any impairment losses recognised through specific items, see note 24.
Discounting of cash flows
All cash flows expected to be received or paid over time were discounted at a rate applicable to the risks associated with the cash flows:
\u2013 Deferred payments due to BT from WBD have been discounted at an appropriate post-tax cost of debt;
\u2013 BT\u2019s earn-out from the Sports JV has been discounted at the weighted average cost of capital for the Sports JV at completion
date; and
\u2013 BT\u2019s commitments under the minimum guarantee have been discounted at the group\u2019s post-tax cost of debt.
We do not consider the net present value of the transaction would be materially affected by a reasonable change in the discount rate.
Key accounting estimates made in accounting for the Sports JV Valuation of investment in A preference shares We expect the group\u2019s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out entitlement. BT\u2019s return on the shares is driven by the underlying cash profit generation of the Sports JV and therefore have been classified as a fair value through profit or loss (FVTPL) financial asset under IFRS 9 and is remeasured to fair value at each reporting date. The fair value recorded is supported by a jointly-agreed business plan and internal valuation model with the following key assumptions: \u2013 Approximately 45% of revenues and 90% of costs during the remaining earn out period are contractually committed. \u2013 Material contracts are renewed at an economic value no less than current terms. \u2013 Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-491": { "value": "
Basis of consolidation
The group financial statements consolidate the financial
statements of BT Group plc and its subsidiaries, and include its
share of the results of associates and joint ventures using the
equity method of accounting. The group recognises its direct rights
to (and its share of) jointly held assets, liabilities, revenues and
expenses of joint operations under the appropriate headings in the
consolidated financial statements.
All business combinations are accounted for using the acquisition
method regardless of whether equity instruments or other assets
are acquired.
A subsidiary is an entity that is controlled by another entity, known
as the parent or investor. An investor controls an investee when the
investor is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those
returns through its power over the investee.
Non-controlling interests in the net assets of consolidated
subsidiaries, which consist of the amounts of those interests at the
date of the original business combination and non-controlling
share of changes in equity since the date of the combination, are
not material to the group\u2019s financial statements.
The results of subsidiaries acquired or disposed of during the year
are consolidated from and up to the date of change of control.
Where necessary, accounting policies of subsidiaries have been
aligned with the policies adopted by the group. All intra-group
transactions including any gains or losses, balances, income or
expenses are eliminated on consolidation.
When the group loses control of a subsidiary, the profit or loss on
disposal is calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of
any retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and any
non-controlling interests. The profit or loss on disposal is
recognised as a specific item.
Associates are those entities in which the group has significant
influence, but not control or joint control, over the financial and
operating policies.
A joint venture is an arrangement in which the group has joint
control, whereby the group has rights to the net assets of the
arrangement, rather than rights to its assets and obligations for its
liabilities. Joint control is the contractually agreed sharing of
control of an arrangement, which exists only when decisions about
the activities that significantly affect the returns of the
arrangement require the unanimous consent of the parties sharing
control.
Interests in associates and joint ventures are initially recognised at
cost (including transaction costs) except where they relate to a
retained non-controlling interest in a former subsidiary, which is
initially recognised at a deemed cost being the fair value of the
retained interest. Subsequent to initial recognition, the
consolidated financial statements include the group\u2019s share of the
profit or loss and other comprehensive income of equity-
accounted investees, until the date on which significant influence
or joint control ceases.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-584": { "value": "The group financial statements consolidate the financial statements of BT Group plc and its subsidiaries, and include its share of the results of associates and joint ventures using the equity method of accounting. The group recognises its direct rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint operations under the appropriate headings in the consolidated financial statements. Associates are those entities in which the group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the group has joint control, whereby the group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. Interests in associates and joint ventures are initially recognised at cost (including transaction costs) except where they relate to a retained non-controlling interest in a former subsidiary, which is initially recognised at a deemed cost being the fair value of the retained interest. Subsequent to initial recognition, the consolidated financial statements include the group\u2019s share of the profit or loss and other comprehensive income of equity- accounted investees, until the date on which significant influence or joint control ceases. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-573": { "value": "The group financial statements consolidate the financial statements of BT Group plc and its subsidiaries, and include its share of the results of associates and joint ventures using the equity method of accounting. The group recognises its direct rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint operations under the appropriate headings in the consolidated financial statements. Associates are those entities in which the group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the group has joint control, whereby the group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. Interests in associates and joint ventures are initially recognised at cost (including transaction costs) except where they relate to a retained non-controlling interest in a former subsidiary, which is initially recognised at a deemed cost being the fair value of the retained interest. Subsequent to initial recognition, the consolidated financial statements include the group\u2019s share of the profit or loss and other comprehensive income of equity- accounted investees, until the date on which significant influence or joint control ceases. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-555": { "value": "The group financial statements consolidate the financial statements of BT Group plc and its subsidiaries, and include its share of the results of associates and joint ventures using the equity method of accounting. The group recognises its direct rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint operations under the appropriate headings in the consolidated financial statements. Associates are those entities in which the group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the group has joint control, whereby the group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. Interests in associates and joint ventures are initially recognised at cost (including transaction costs) except where they relate to a retained non-controlling interest in a former subsidiary, which is initially recognised at a deemed cost being the fair value of the retained interest. Subsequent to initial recognition, the consolidated financial statements include the group\u2019s share of the profit or loss and other comprehensive income of equity- accounted investees, until the date on which significant influence or joint control ceases. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-527": { "value": "The group financial statements consolidate the financial statements of BT Group plc and its subsidiaries, and include its share of the results of associates and joint ventures using the equity method of accounting. The group recognises its direct rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint operations under the appropriate headings in the consolidated financial statements. All business combinations are accounted for using the acquisition method regardless of whether equity instruments or other assets are acquired. A subsidiary is an entity that is controlled by another entity, known as the parent or investor. An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Non-controlling interests in the net assets of consolidated subsidiaries, which consist of the amounts of those interests at the date of the original business combination and non-controlling share of changes in equity since the date of the combination, are not material to the group\u2019s financial statements. The results of subsidiaries acquired or disposed of during the year are consolidated from and up to the date of change of control. Where necessary, accounting policies of subsidiaries have been aligned with the policies adopted by the group. All intra-group transactions including any gains or losses, balances, income or expenses are eliminated on consolidation. When the group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. The profit or loss on disposal is recognised as a specific item. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-626": { "value": "All business combinations are accounted for using the acquisition method regardless of whether equity instruments or other assets are acquired. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-623": { "value": "All business combinations are accounted for using the acquisition method regardless of whether equity instruments or other assets are acquired. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets (including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note. Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-492": { "value": "
Inventories
Network maintenance equipment and equipment to be sold to
customers are stated at the lower of cost or net realisable value,
taking into account expected revenue from the sale of packages
comprising a mobile handset and a subscription. Cost corresponds
to purchase or production cost determined by either the first in
first out (FIFO) or average cost method.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-615": { "value": "
Government grants
Government grants are recognised when there is reasonable
assurance that the conditions associated with the grants have been
complied with and the grants will be received.
Grants for the purchase or production of property, plant and
equipment are deducted from the cost of the related assets and
reduce future depreciation expense accordingly. Grants for the
reimbursement of operating expenditure are deducted from the
related category of costs in the income statement. Estimates and
judgements applied in accounting for government grants received
in respect of Building Digital UK (BDUK) and other rural superfast
broadband contracts are described in note 14.
Once a government grant is recognised, any related deferred
income is treated in accordance with IAS 20 \u2018Accounting for
Government Grants and Disclosure of Government Assistance\u2019.
Building Digital UK (BDUK) government grants
We receive government grants in relation to BDUK and other rural superfast broadband contracts. Where we have achieved certain
service levels, or delivered the network more efficiently than anticipated, we have an obligation to either re-invest or repay grant
funding. Where this is the case, we recognise deferred income in respect of the funding that will be re-invested or repaid, and make a
corresponding adjustment to the carrying amount of the related property, plant and equipment.
Assessing the timing of whether and when we change the estimated take-up assumption is judgemental as it involves considering
information which is not always observable. Our consideration on whether and when to change the base case assumption is
dependent on our expectation of the long-term take-up trend.
Our assessment of how much grant income to defer includes consideration of the difference between the take-up percentage
agreed with the local authority and the likelihood of actual take-up. The value of the government grants deferred is disclosed in
note 17.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-493": { "value": "
Foreign currencies
The consolidated financial statements are presented in sterling,
which is also the company\u2019s functional currency. Each group entity
determines its own functional currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign exchange gains and losses resulting from the
settlement of transactions and the translation of monetary assets
and liabilities denominated in foreign currencies at period end
exchange rates are recognised in the income statement line which
most appropriately reflects the nature of the item or transaction.
On consolidation, assets and liabilities of foreign undertakings are
translated into the group\u2019s presentation currency at year end
exchange rates. The results of foreign undertakings are translated
into sterling at the rates prevailing on the transaction dates.
Foreign exchange differences arising on the retranslation of
foreign undertakings are recognised directly in a separate
component of equity, the translation reserve. There is no material
exposure to companies operating in hyperinflationary economies.
In the event of the disposal of an undertaking with assets and
liabilities denominated in a foreign currency, the cumulative
translation difference associated with the undertaking in the
translation reserve is charged or credited to the gain or loss on
disposal recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-494": { "value": "
Research and development
Research expenditure is recognised in the income statement in the
period in which it is incurred. Development expenditure, including
the cost of internally developed software, is recognised in the
income statement in the period in which it is incurred unless it is
probable that economic benefits will flow to the group from the
asset being developed, the cost of the asset can be reliably
measured and technical feasibility can be demonstrated, in which
case it is capitalised as an intangible asset on the balance sheet.
Capitalisation ceases when the asset being developed is ready for
use. Research and development costs include direct and indirect
labour, materials and directly attributable overheads.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-624": { "value": "Research and development Research expenditure is recognised in the income statement in the period in which it is incurred. Development expenditure, including the cost of internally developed software, is recognised in the income statement in the period in which it is incurred unless it is probable that economic benefits will flow to the group from the asset being developed, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Capitalisation ceases when the asset being developed is ready for use. Research and development costs include direct and indirect labour, materials and directly attributable overheads. We depreciate property, plant and equipment on a straight-line basis from the time the asset is available for use, to write off the asset\u2019s cost over the estimated useful life taking into account any expected residual value. Freehold land is not depreciated. Estimated useful economic lives The estimated useful lives assigned to principal categories of assets are as follows: Land and buildings \u2013 Freehold buildings 14 to 50 years \u2013 Short-term leasehold improvements Shorter of 10 years or lease term \u2013 Leasehold land and buildings Shorter of unexpired portion of lease or 40 years Network infrastructure Transmission equipment \u2013 Duct 40 years \u2013 Cable 3 to 25 years \u2013 Fibre 5 to 20 years Exchange equipment 2 to 13 years Other network equipment 2 to 20 years Other assets \u2013 Motor vehicles 2 to 10 years \u2013 Computers and office equipment 3 to 7 years Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-495": { "value": "
Termination benefits
Termination benefits (leaver costs) are payable when employment
is terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these
benefits. We recognise termination benefits when they are
demonstrably committed to the affected employees leaving
the group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-595": { "value": " Material accounting policies that apply to segment information Operating and reportable segments Our operating segments are reported based on financial information provided to the Executive Committee, which is the key management committee and represents the \u2018chief operating decision maker\u2019. Our organisational structure reflects the different customer groups to which we provide communications products and services via our customer-facing units (CFUs). The CFUs are our reportable segments and generate substantially all of our revenue. During the year to 31 March 2024 the group had three CFUs: Consumer, Business and Openreach. Business was formed from the merger of the Global and Enterprise units during FY23 and has been monitored by the Executive Committee on a consolidated basis since 1 April 2023. The CFUs are supported by technology units (TUs) comprising Digital and Networks; and corporate units (CUs) including procurement and property management. TUs and CUs are not reportable segments as they did not meet the quantitative thresholds as set out in IFRS 8 \u2018Operating Segments\u2019 for any of the years presented. We aggregate the remaining operations and include them in the \u2018Other\u2019 category to reconcile to the consolidated results of the group. The \u2018Other\u2019 category includes unallocated TU costs and our CUs. Allocation of certain items to segments Provisions for the settlement of significant legal, commercial and regulatory disputes, which are negotiated at a group level, are initially recorded in the \u2018Other\u2019 segment. On resolution of the dispute, the full impact is recognised in the results of the relevant CFU and offset in the group results through the utilisation of the provision previously charged to the \u2018Other\u2019 segment. Settlements which are particularly significant or cover more than one financial year may fall within the definition of specific items as detailed in note 9, in which case they are not reflecting in the results of the reportable segment in line with how they are reported to the Executive Committee. The costs incurred by TUs and CUs are recharged to the CFUs to reflect the services provided to them. Depreciation and amortisation incurred by TUs in relation to the networks and systems they manage and operate on behalf of the CFUs is allocated to the CFUs based on their respective utilisation. Capital expenditure incurred by TUs for specific projects undertaken on behalf of the CFUs is allocated based on the value of the directly attributable expenditure incurred. Where projects are not directly attributable to a particular CFU, capital expenditure is allocated among them based on the proportion of estimated future economic benefits. Specific items are detailed in note 9 and are not allocated to the reportable segments as this reflects how they are reported to the Executive Committee. Finance expense and income are not allocated to the reportable segments, as the central treasury function manages this activity, together with the overall net debt position of the group. Measuring segment performance Performance of each reportable segment is measured based on adjusted EBITDA. Adjusted EBITDA is defined as the group profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of associates and joint ventures. Adjusted EBITDA is considered to be a useful measure of the operating performance of the CFUs because it approximates the underlying operating cash flow by eliminating depreciation and amortisation and also provides a meaningful analysis of trading performance by excluding specific items, which are disclosed separately by virtue of their size, nature or incidence. We also increasingly track adjusted operating profit which reflects the growing depreciation expense arising from our elevated network investment. Revenue recognition Our revenue recognition policy is set out in note 5. Internal revenue and costs Most of our internal trading relates to Openreach and arises on rentals, and any associated connection or migration charges, of the UK access lines and other network products to the other CFUs, including the use of BT Ireland\u2019s network. This occurs both directly, and also indirectly, through TUs which are included within the \u2018Other\u2019 segment. Business internal revenue arises from Consumer for mobile Ethernet access and TUs for transmission planning services. Intra-group revenue generated from the sale of regulated products and services is based on market price. Intra-group revenue from the sale of other products and services is agreed between the relevant CFUs and therefore the profitability of CFUs may be impacted by transfer pricing levels. Geographic segmentation The UK is our country of domicile and is where we generate the majority of our revenue from external UK customers. The geographic analysis of revenue is based on the country in which the customer is invoiced. The geographic analysis of non-current assets, which excludes derivative financial instruments, investments, preference shares in joint ventures, retirement benefit schemes in surplus and deferred tax assets, is based on the location of the assets. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-496": { "value": " Material accounting policies that apply to segment information Operating and reportable segments Our operating segments are reported based on financial information provided to the Executive Committee, which is the key management committee and represents the \u2018chief operating decision maker\u2019. Our organisational structure reflects the different customer groups to which we provide communications products and services via our customer-facing units (CFUs). The CFUs are our reportable segments and generate substantially all of our revenue. During the year to 31 March 2024 the group had three CFUs: Consumer, Business and Openreach. Business was formed from the merger of the Global and Enterprise units during FY23 and has been monitored by the Executive Committee on a consolidated basis since 1 April 2023. The CFUs are supported by technology units (TUs) comprising Digital and Networks; and corporate units (CUs) including procurement and property management. TUs and CUs are not reportable segments as they did not meet the quantitative thresholds as set out in IFRS 8 \u2018Operating Segments\u2019 for any of the years presented. We aggregate the remaining operations and include them in the \u2018Other\u2019 category to reconcile to the consolidated results of the group. The \u2018Other\u2019 category includes unallocated TU costs and our CUs. Allocation of certain items to segments Provisions for the settlement of significant legal, commercial and regulatory disputes, which are negotiated at a group level, are initially recorded in the \u2018Other\u2019 segment. On resolution of the dispute, the full impact is recognised in the results of the relevant CFU and offset in the group results through the utilisation of the provision previously charged to the \u2018Other\u2019 segment. Settlements which are particularly significant or cover more than one financial year may fall within the definition of specific items as detailed in note 9, in which case they are not reflecting in the results of the reportable segment in line with how they are reported to the Executive Committee. The costs incurred by TUs and CUs are recharged to the CFUs to reflect the services provided to them. Depreciation and amortisation incurred by TUs in relation to the networks and systems they manage and operate on behalf of the CFUs is allocated to the CFUs based on their respective utilisation. Capital expenditure incurred by TUs for specific projects undertaken on behalf of the CFUs is allocated based on the value of the directly attributable expenditure incurred. Where projects are not directly attributable to a particular CFU, capital expenditure is allocated among them based on the proportion of estimated future economic benefits. Specific items are detailed in note 9 and are not allocated to the reportable segments as this reflects how they are reported to the Executive Committee. Finance expense and income are not allocated to the reportable segments, as the central treasury function manages this activity, together with the overall net debt position of the group. Measuring segment performance Performance of each reportable segment is measured based on adjusted EBITDA. Adjusted EBITDA is defined as the group profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of associates and joint ventures. Adjusted EBITDA is considered to be a useful measure of the operating performance of the CFUs because it approximates the underlying operating cash flow by eliminating depreciation and amortisation and also provides a meaningful analysis of trading performance by excluding specific items, which are disclosed separately by virtue of their size, nature or incidence. We also increasingly track adjusted operating profit which reflects the growing depreciation expense arising from our elevated network investment. Revenue recognition Our revenue recognition policy is set out in note 5. Internal revenue and costs Most of our internal trading relates to Openreach and arises on rentals, and any associated connection or migration charges, of the UK access lines and other network products to the other CFUs, including the use of BT Ireland\u2019s network. This occurs both directly, and also indirectly, through TUs which are included within the \u2018Other\u2019 segment. Business internal revenue arises from Consumer for mobile Ethernet access and TUs for transmission planning services. Intra-group revenue generated from the sale of regulated products and services is based on market price. Intra-group revenue from the sale of other products and services is agreed between the relevant CFUs and therefore the profitability of CFUs may be impacted by transfer pricing levels. Geographic segmentation The UK is our country of domicile and is where we generate the majority of our revenue from external UK customers. The geographic analysis of revenue is based on the country in which the customer is invoiced. The geographic analysis of non-current assets, which excludes derivative financial instruments, investments, preference shares in joint ventures, retirement benefit schemes in surplus and deferred tax assets, is based on the location of the assets. 4. Segment information
Segment revenue and profit
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Segment revenue
9,833
8,128
6,077
16
24,054
Internal revenue
(47)
(71)
(3,101)
\u2014
(3,219)
Adjusted
a
revenue from external customers
9,786
8,057
2,976
16
20,835
Adjusted EBITDA
2,672
1,630
3,827
(29)
8,100
Depreciation and amortisation
(1,738)
(984)
(2,052)
(125)
(4,899)
Adjusted
a
operating profit (loss)
934
646
1,775
(154)
3,201
Specific operating profit (loss) \u2013 see note 9
(987)
Operating profit
2,214
Net finance expense (1,007)
Share of post tax (loss) profit of associates and joint ventures
(21)
Profit before tax
1,186
b
a
c
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2023 (re-presented
d
)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Segment revenue
9,737
8,258
5,675
27
23,697
Internal revenue
(57)
(81)
(2,890)
\u2014
(3,028)
Adjusted
a
revenue from external customers
9,680
8,177
2,785
27
20,669
Adjusted EBITDA
2,469
1,945
3,510
4
7,928
Depreciation and amortisation
(1,603)
(1,047)
(1,965)
(138)
(4,753)
Adjusted
a
operating profit (loss)
866
898
1,545
(134)
3,175
Specific operating profit (loss) \u2013 see note 9
(556)
Operating profit
2,619
Net finance expense (831)
Share of post tax (loss) profit of associates and joint ventures
(59)
Profit before tax
1,729
b
a
c
a Before specific items.
b Adjusted EBITDA is defined as profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of associates and
joint ventures.
c Net finance expense includes specific item expense of \u00a3121m (FY23: \u00a35m). See note 9.
d Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit and a change in the methodology used
to allocate shared central costs. For more information see note 1, and for a bridge to prior period published financial information see note 32.
Internal revenue and costs
Internal cost recorded by
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue recorded by
Consumer
\u2014
46
\u2014
1
47
Business
23
\u2014
\u2014
48
71
Openreach
2,044
1,043
\u2014
14
3,101
Total
2,067
1,089
\u2014
63
3,219
Internal cost recorded by
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2023 (re-presented
a
)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue recorded by
Consumer
\u2014
56
\u2014
1
57
Business
26
\u2014
\u2014
55
81
Openreach
1,805
1,072
\u2014
13
2,890
Total
1,831
1,128
\u2014
69
3,028
a Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit. For more information see note 1, and
for a bridge to prior period published financial information see note 32.
Capital expenditure
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Intangible assets
a
439
361
135
3
938
Property, plant and equipment
736
414
2,710
82
3,942
Capital expenditure
1,175
775
2,845
85
4,880
b
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2023 (re-presented
c
)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Intangible assets
a
552
361
101
4
1,018
Property, plant and equipment
669
525
2,746
98
4,038
Capital expenditure
1,221
886
2,847
102
5,056
b
a Additions to intangible assets as presented in note 13.
b Additions to property, plant and equipment as presented in note 14, inclusive of movement on engineering stores.
c Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing units. For more information see note 1, and
for a bridge to prior period published financial information see note 32.
Geographic segmentation
Revenue from external customers
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
UK
18,450
18,154
Europe, Middle East and Africa, excluding the UK
1,303
1,372
Americas
617
684
Asia Pacific
465
459
Adjusted
a
revenue
20,835
20,669
a Before specific items.
Non-current assets
2024
2023
At 31 March
\u00a3m
\u00a3m
UK
39,370
39,387
Europe, Middle East and Africa, excluding the UK
634
740
Americas
251
283
Asia Pacific
147
156
Non-current assets
a
40,402
40,566
a Comprising the following balances presented in the group balance sheet: intangible assets, property, plant and equipment, right-of-use assets, joint ventures and associates, trade
and other receivables and contract assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-591": { "value": "UK", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-528": { "value": "Geographic segmentation Revenue from external customers
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
UK
18,450
18,154
Europe, Middle East and Africa, excluding the UK
1,303
1,372
Americas
617
684
Asia Pacific
465
459
Adjusted
a
revenue
20,835
20,669
a Before specific items. Non-current assets
2024
2023
At 31 March
\u00a3m
\u00a3m
UK
39,370
39,387
Europe, Middle East and Africa, excluding the UK
634
740
Americas
251
283
Asia Pacific
147
156
Non-current assets
a
40,402
40,566
a Comprising the following balances presented in the group balance sheet: intangible assets, property, plant and equipment, right-of-use assets, joint ventures and associates, trade and other receivables and contract assets.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeographicalAreasExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-497": { "value": " Material accounting policies that apply to revenue Revenue from contracts with customers in scope of IFRS 15 Most revenue recognised by the group is in scope of IFRS 15, excluding Openreach where most revenue is in scope of IFRS 16. The revenue recognition policy for both is set out below. On inception of the contract we identify a \u201cperformance obligation\u201d for each of the distinct goods or services we have promised to provide to the customer. The consideration specified in the contract with the customer is allocated to each performance obligation identified based on their relative standalone selling prices, and is recognised as revenue as they are satisfied. The table below summarises the performance obligations we have identified for our major service lines and provides information on the timing of when they are satisfied and the related revenue recognition policy. Also detailed in this note is revenue expected to be recognised in future periods for contracts in place at 31 March 2024 that contain unsatisfied performance obligations.
Service line
Performance obligations
Revenue recognition policy
Information and Provision of networked IT services, managed network Revenue for services is recognised over time using a
communications services, and arrangements to design and build measure of progress that appropriately reflects the
technology (ICT) software solutions. Performance obligations are pattern by which the performance obligation is
and managed identified for each distinct service or deliverable for satisfied. For time and materials contracts, revenue is
networks which the customer has contracted, and are recognised as the service is received by the customer.
considered to be satisfied over the time period that we Where performance obligations exist for the provision
deliver these services or deliverables. Commitments to of hardware, revenue is recognised at the point in time
provide hardware to customers that are distinct from that the customer obtains control of the promised
the other promises are considered to be satisfied at the asset. For long-term fixed price contracts revenue
point in time that control passes to the customer. recognition will typically be based on the satisfaction
of performance obligations in respect of the
achievement of contract milestones and customer
acceptance, which is the best measure of progress
towards the completion of the performance obligation.
Fixed access Provision of broadband, TV and fixed telephony Fixed subscription charges are recognised as revenue
subscriptions services including national and international calls, on a straight-line basis over the period that the
connections, line rental and calling features. services are provided. Upfront charges for non-distinct
Performance obligations exist for each ongoing service connection and installation services are deferred as
provided to the customer and are satisfied over the contract liabilities and are recognised as revenue over
period that the services are provided. Installation the same period. Variable charges such as call charges
services are recognised as distinct performance are recognised when the related services are delivered.
obligations if their relationship with the other services Where installation activities are distinct performance
in the contract is purely functional. These are satisfied obligations, revenue is recognised at the point in time
when the customer benefits from the service. that the installation is completed.
Connection services are not distinct performance
obligations and are therefore combined with the
associated service performance obligation.
Mobile Provision of mobile postpaid and prepaid services, Subscription fees, consisting primarily of monthly
subscriptions including voice minutes, SMS and data services. charges for access to internet or voice and data
Performance obligations exist for each ongoing service services, are recognised as the service is provided.
provided to the customer and are satisfied over the One-off services such as calls outside of plan and
period that the services are provided. excess data usage are recognised when the service is
used.
Equipment and Provision of equipment and other services, including Revenue from equipment sales is recognised at the
other services mobile phone handsets and hardware such as set-top point in time that control passes to the customer.
boxes and broadband routers provided as part of Where payment is not received in full at the time of the
customer contracts. Performance obligations are sale, such as with equipment provided as part of
satisfied at the point in time that control passes to the mobile and fixed access subscriptions, contract assets
customer. For other services, performance obligations are recognised for the amount due from the customer
are identified based on the distinct goods and services that will be recovered over the contract period.
we have committed to provide. Revenue to be recognised is calculated by reference to
the relative standalone selling price of the equipment.
For other services, revenue is recognised when the
related performance obligations are satisfied, which
could be over time, in line with contract milestones, or
at a point in time depending on the nature of the
service.
5. Revenue We recognise revenue based on the relative standalone selling price of each performance obligation. Determining the standalone selling price often requires judgement and may be derived from regulated prices, list prices, a cost-plus derived price or the price of similar products when sold on a standalone basis by BT or a competitor. In some cases it may be appropriate to use the contract price when this represents a bespoke price that would be the same for a similar customer in a similar circumstance. The fixed access and mobile subscription arrangements sold by our Consumer business are typically payable in advance, with any variable or one-off charges billed in arrears. Contracts are largely inflation-linked with price increases recognised when effective. Payment is received immediately for direct sales of equipment to customers. Where equipment is provided to customers under mobile and fixed access subscription arrangements, payment for the equipment is received over the course of the contract term. For sales by our enterprise businesses, invoices are issued in line with contractual terms. Payments received in advance are recognised as contract liabilities; amounts billed in arrears are recognised as contract assets. We adopt variable consideration to allocate the transaction price to take account of the likelihood of the customer upgrading to a new handset during the contract term. Consideration is constrained to a period shorter than the contract term and is allocated to the handset and airtime based on relative standalone selling price. Certain Business long term contracts offer rebates to our customers. Where this is the case we make an estimate of variable consideration at the outset of the contract based on assumed volumes. These rebates are normally settled monthly against service revenues. We are applying the practical expedient to recognise revenue \u201cas-invoiced\u201d for certain fixed access and mobile subscription services revenues. Where we have a right to invoice at an amount that directly corresponds with performance to date, we recognise revenue at that amount. We have also adopted the practical expedient not to calculate the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied for these contracts. We do not have any material obligations in respect of returns, refunds or warranties. Where we act as an agent in a transaction, such as insurance services offered, we recognise commission net of directly attributable costs. We exercise judgement in assessing whether the initial set-up, transition and transformation phases of long-term contracts are distinct from the other services to be delivered under the contract and therefore represent distinct performance obligations. This determines whether revenue is recognised in the early stages of the contract, or deferred until delivery of the other services promised in the contract begins. We recognise immediately the entire estimated loss for a contract when we have evidence that the contract is unprofitable. If these estimates indicate that any contract will be less profitable than previously forecast, contract assets may have to be written down to the extent they are no longer considered to be fully recoverable. We perform ongoing profitability reviews of our contracts in order to determine whether the latest estimates are appropriate. Key factors reviewed include: \u2013 Transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market position and other factors such as general economic conditions. \u2013 Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment phases for customer contracts. \u2013 The status of commercial relations with customers and the implications for future revenue and cost projections. \u2013 Our estimates of future staff and third party costs and the degree to which cost savings and efficiencies are deliverable. Revenue from lease arrangements in scope of IFRS 16 Some consumer broadband and TV products and arrangements to provide external communications providers with exclusive use of Openreach\u2019s fixed-network telecommunications infrastructure meet the definition of operating leases under IFRS 16. At inception of a contract, we determine whether the contract is, or contains, a lease following the accounting policy set out in note 15. Arrangements meeting the definition of a lease in which we act as lessor are classified as operating or finance leases at lease inception based on an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case then the lease is a finance lease; if not, it is an operating lease. For sub-leases, we make this assessment by reference to the characteristics of the right-of-use asset associated with the head lease rather than the underlying leased asset. Income from arrangements classified as operating leases is presented as revenue where it relates to our core operating activities, for example leases of fixed-line telecommunications infrastructure to external communications providers and leases of devices to consumer customers as part of fixed access subscription products. Operating lease income from other arrangements is presented within other operating income (note 6). We recognise operating lease payments as income on a straight-line basis over the lease term. Any upfront payments received, such as connection fees, are deferred over the lease term. Determining the lease term is subject to the significant judgements set out in note 15. Where the contract contains both lease and non-lease components, the transaction price is allocated between the components on the basis of relative standalone selling price. Where an arrangement is assessed as a finance lease we derecognise the underlying asset and recognise a receivable equivalent to the net investment in the lease. Finance lease receivables are presented in note 16. The receivable is measured based on future payments to be received discounted using the interest rate implicit in the lease, adjusted for any direct costs. Any difference between the derecognised asset and the finance lease receivable is recognised in the income statement. Where the nature of services delivered relates to our core operating activities it is presented as revenue. Where it relates to non-core activities it is presented within other operating income (note 6).
Disaggregation of external revenue
The following table disaggregates external revenue by our major service lines and by reportable segment.
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ICT and managed networks
\u2014
3,592
\u2014
\u2014
3,592
Fixed access subscriptions
4,333
2,149
2,900
\u2014
9,382
Mobile subscriptions
3,557
1,187
\u2014
\u2014
4,744
Equipment and other services
1,896
1,129
76
16
3,117
Revenue before specific items
9,786
8,057
2,976
16
20,835
Specific items
a
(note 9)
(38)
Revenue
20,797
Year ended 31 March 2023
Consumer
Business
Openreach
Other
Total
(re-presented
b
)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ICT and managed networks
\u2014
3,352
\u2014
\u2014
3,352
Fixed access subscriptions
4,059
1,893
2,716
\u2014
8,668
Mobile subscriptions
3,351
1,160
\u2014
\u2014
4,511
Equipment and other services
2,270
1,772
69
27
4,138
Revenue before specific items
9,680
8,177
2,785
27
20,669
Specific items
a
(note 9)
12
Revenue
20,681
a Relates to regulatory matters classified as specific. See note 9.
b Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our
Enterprise and Global units, see note 1.
Revenue expected to be recognised in future periods for performance obligations that are not complete (or are partially complete) as at
31 March 2024 is \u00a312,133m (FY23: \u00a312,792m). Of this, \u00a36,052m (FY23: \u00a36,592m) relates to ICT and managed services contracts and
equipment and other services which will substantially be recognised as revenue within three years. Fixed access and mobile subscription
services typically have shorter contract periods and so \u00a36,081m (FY23: \u00a36,200m) will substantially be recognised as revenue within two
years.
Revenue recognised this year relating to performance obligations that were satisfied, or partially satisfied, in previous years was not
material. Revenue related to customers\u2019 unexercised rights (for example, unused amounts on prepaid SIM cards) was not material.
Key accounting estimates made in accounting for revenue
Estimate of customer refunds
Revenue has been adjusted to reflect a risk of billing inaccuracy where there is a high level of manual processing through certain
billing systems. This is associated with a small number of products within our Business unit which contain bespoke pricing. \u00a341m has
been recognised as an IFRS 9 financial liability and deducted from revenue, and has been derived from an estimate of the possible
range of the adjustment from \u00a324m to \u00a364m based on the results of a sample of billing items. This is presented within Note 17 and
represents our best estimate required to cover ongoing billing adjustments to products relating to both current and prior periods. If
the final quantum of adjustments is less than expected, the adjustment will be released back to the income statement.
Lease income
Presented within revenue is \u00a33,031m (FY23: \u00a32,909m) income from arrangements classified as operating leases under IFRS 16 and which
represent core business activities for the group. Income relates predominantly to Openreach\u2019s leases of fixed-line telecommunications
infrastructure to external communications providers, classified as fixed access subscription revenue in the table above, and leases of
devices to Consumer customers as part of fixed access subscription offerings, classified as equipment and other services.
During the year we also recognised:
\u2013 \u00a326m (FY23: \u00a329m) operating lease income from non-core business activities which is presented in other operating income (note 6).
Note 15 presents an analysis of payments to be received across the remaining term of operating lease arrangements.
\u2013 \u00a340m (FY23: \u00a358m) revenue in relation to upfront gains from arrangements meeting the definition of a finance lease. These
arrangements meet the criteria for revenue recognition as they concern leases and sub-leases of telecommunications infrastructure
that represent core business activities of the group.
\u00a338m (FY23: \u00a369m) of this income relates to the sub-leasing of right-of-use assets. These are primarily operating sub-leases of unutilised
properties, and finance sub-leases of telecommunications infrastructure.
Contract assets and liabilities
Material accounting policies that apply to contract assets and liabilities
We recognise contract assets for goods and services for which control has transferred to the customer before we have the right to
bill. These assets mainly relate to mobile handsets provided upfront but paid for over the course of a contract. Contract assets are
reclassified as receivables when the right to payment becomes unconditional and we have billed the customer.
Contract liabilities are recognised when we have received advance payment for goods and services that we have not transferred to
the customer. These primarily relate to fees received for connection and installation services that are not distinct performance
obligations.
Where the initial set-up, transition or transformation phase of a long-term contract is considered to be a distinct performance
obligation we recognise a contract asset for any work performed but not billed. Conversely a contract liability is recognised where
these activities are not distinct performance obligations and we receive upfront consideration. In this case eligible costs associated
with delivering these services are capitalised as fulfilment costs, see note 16.
We provide for expected lifetime losses on contract assets following the policy set out in note 16.
Contract assets and liabilities are as follows:
2024
2023
At 31 March
\u00a3m
\u00a3m
Contract assets
Current
1,410
1,565
Non-current
330
369
1,740
1,934
Contract liabilities
Current
906
859
Non-current
175
193
1,081
1,052
\u00a3876m of the contract liability at 31 March 2023 was recognised as revenue during the year (FY23: \u00a3903m). Impairment losses of \u00a335m
were recognised on contract assets during the year (FY23: \u00a346m).
The expected credit loss provisions recognised against contract assets vary across the group due to the nature of our customers; the
expected loss rate at 31 March 2024 was 3% (FY23: 3%).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-529": { "value": " Material accounting policies that apply to revenue Revenue from contracts with customers in scope of IFRS 15 Most revenue recognised by the group is in scope of IFRS 15, excluding Openreach where most revenue is in scope of IFRS 16. The revenue recognition policy for both is set out below. On inception of the contract we identify a \u201cperformance obligation\u201d for each of the distinct goods or services we have promised to provide to the customer. The consideration specified in the contract with the customer is allocated to each performance obligation identified based on their relative standalone selling prices, and is recognised as revenue as they are satisfied. The table below summarises the performance obligations we have identified for our major service lines and provides information on the timing of when they are satisfied and the related revenue recognition policy. Also detailed in this note is revenue expected to be recognised in future periods for contracts in place at 31 March 2024 that contain unsatisfied performance obligations.
Service line
Performance obligations
Revenue recognition policy
Information and Provision of networked IT services, managed network Revenue for services is recognised over time using a
communications services, and arrangements to design and build measure of progress that appropriately reflects the
technology (ICT) software solutions. Performance obligations are pattern by which the performance obligation is
and managed identified for each distinct service or deliverable for satisfied. For time and materials contracts, revenue is
networks which the customer has contracted, and are recognised as the service is received by the customer.
considered to be satisfied over the time period that we Where performance obligations exist for the provision
deliver these services or deliverables. Commitments to of hardware, revenue is recognised at the point in time
provide hardware to customers that are distinct from that the customer obtains control of the promised
the other promises are considered to be satisfied at the asset. For long-term fixed price contracts revenue
point in time that control passes to the customer. recognition will typically be based on the satisfaction
of performance obligations in respect of the
achievement of contract milestones and customer
acceptance, which is the best measure of progress
towards the completion of the performance obligation.
Fixed access Provision of broadband, TV and fixed telephony Fixed subscription charges are recognised as revenue
subscriptions services including national and international calls, on a straight-line basis over the period that the
connections, line rental and calling features. services are provided. Upfront charges for non-distinct
Performance obligations exist for each ongoing service connection and installation services are deferred as
provided to the customer and are satisfied over the contract liabilities and are recognised as revenue over
period that the services are provided. Installation the same period. Variable charges such as call charges
services are recognised as distinct performance are recognised when the related services are delivered.
obligations if their relationship with the other services Where installation activities are distinct performance
in the contract is purely functional. These are satisfied obligations, revenue is recognised at the point in time
when the customer benefits from the service. that the installation is completed.
Connection services are not distinct performance
obligations and are therefore combined with the
associated service performance obligation.
Mobile Provision of mobile postpaid and prepaid services, Subscription fees, consisting primarily of monthly
subscriptions including voice minutes, SMS and data services. charges for access to internet or voice and data
Performance obligations exist for each ongoing service services, are recognised as the service is provided.
provided to the customer and are satisfied over the One-off services such as calls outside of plan and
period that the services are provided. excess data usage are recognised when the service is
used.
Equipment and Provision of equipment and other services, including Revenue from equipment sales is recognised at the
other services mobile phone handsets and hardware such as set-top point in time that control passes to the customer.
boxes and broadband routers provided as part of Where payment is not received in full at the time of the
customer contracts. Performance obligations are sale, such as with equipment provided as part of
satisfied at the point in time that control passes to the mobile and fixed access subscriptions, contract assets
customer. For other services, performance obligations are recognised for the amount due from the customer
are identified based on the distinct goods and services that will be recovered over the contract period.
we have committed to provide. Revenue to be recognised is calculated by reference to
the relative standalone selling price of the equipment.
For other services, revenue is recognised when the
related performance obligations are satisfied, which
could be over time, in line with contract milestones, or
at a point in time depending on the nature of the
service.
5. Revenue We recognise revenue based on the relative standalone selling price of each performance obligation. Determining the standalone selling price often requires judgement and may be derived from regulated prices, list prices, a cost-plus derived price or the price of similar products when sold on a standalone basis by BT or a competitor. In some cases it may be appropriate to use the contract price when this represents a bespoke price that would be the same for a similar customer in a similar circumstance. The fixed access and mobile subscription arrangements sold by our Consumer business are typically payable in advance, with any variable or one-off charges billed in arrears. Contracts are largely inflation-linked with price increases recognised when effective. Payment is received immediately for direct sales of equipment to customers. Where equipment is provided to customers under mobile and fixed access subscription arrangements, payment for the equipment is received over the course of the contract term. For sales by our enterprise businesses, invoices are issued in line with contractual terms. Payments received in advance are recognised as contract liabilities; amounts billed in arrears are recognised as contract assets. We adopt variable consideration to allocate the transaction price to take account of the likelihood of the customer upgrading to a new handset during the contract term. Consideration is constrained to a period shorter than the contract term and is allocated to the handset and airtime based on relative standalone selling price. Certain Business long term contracts offer rebates to our customers. Where this is the case we make an estimate of variable consideration at the outset of the contract based on assumed volumes. These rebates are normally settled monthly against service revenues. We are applying the practical expedient to recognise revenue \u201cas-invoiced\u201d for certain fixed access and mobile subscription services revenues. Where we have a right to invoice at an amount that directly corresponds with performance to date, we recognise revenue at that amount. We have also adopted the practical expedient not to calculate the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied for these contracts. We do not have any material obligations in respect of returns, refunds or warranties. Where we act as an agent in a transaction, such as insurance services offered, we recognise commission net of directly attributable costs. We exercise judgement in assessing whether the initial set-up, transition and transformation phases of long-term contracts are distinct from the other services to be delivered under the contract and therefore represent distinct performance obligations. This determines whether revenue is recognised in the early stages of the contract, or deferred until delivery of the other services promised in the contract begins. We recognise immediately the entire estimated loss for a contract when we have evidence that the contract is unprofitable. If these estimates indicate that any contract will be less profitable than previously forecast, contract assets may have to be written down to the extent they are no longer considered to be fully recoverable. We perform ongoing profitability reviews of our contracts in order to determine whether the latest estimates are appropriate. Key factors reviewed include: \u2013 Transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market position and other factors such as general economic conditions. \u2013 Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment phases for customer contracts. \u2013 The status of commercial relations with customers and the implications for future revenue and cost projections. \u2013 Our estimates of future staff and third party costs and the degree to which cost savings and efficiencies are deliverable. Revenue from lease arrangements in scope of IFRS 16 Some consumer broadband and TV products and arrangements to provide external communications providers with exclusive use of Openreach\u2019s fixed-network telecommunications infrastructure meet the definition of operating leases under IFRS 16. At inception of a contract, we determine whether the contract is, or contains, a lease following the accounting policy set out in note 15. Arrangements meeting the definition of a lease in which we act as lessor are classified as operating or finance leases at lease inception based on an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case then the lease is a finance lease; if not, it is an operating lease. For sub-leases, we make this assessment by reference to the characteristics of the right-of-use asset associated with the head lease rather than the underlying leased asset. Income from arrangements classified as operating leases is presented as revenue where it relates to our core operating activities, for example leases of fixed-line telecommunications infrastructure to external communications providers and leases of devices to consumer customers as part of fixed access subscription products. Operating lease income from other arrangements is presented within other operating income (note 6). We recognise operating lease payments as income on a straight-line basis over the lease term. Any upfront payments received, such as connection fees, are deferred over the lease term. Determining the lease term is subject to the significant judgements set out in note 15. Where the contract contains both lease and non-lease components, the transaction price is allocated between the components on the basis of relative standalone selling price. Where an arrangement is assessed as a finance lease we derecognise the underlying asset and recognise a receivable equivalent to the net investment in the lease. Finance lease receivables are presented in note 16. The receivable is measured based on future payments to be received discounted using the interest rate implicit in the lease, adjusted for any direct costs. Any difference between the derecognised asset and the finance lease receivable is recognised in the income statement. Where the nature of services delivered relates to our core operating activities it is presented as revenue. Where it relates to non-core activities it is presented within other operating income (note 6). Disaggregation of external revenue The following table disaggregates external revenue by our major service lines and by reportable segment.
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ICT and managed networks
\u2014
3,592
\u2014
\u2014
3,592
Fixed access subscriptions
4,333
2,149
2,900
\u2014
9,382
Mobile subscriptions
3,557
1,187
\u2014
\u2014
4,744
Equipment and other services
1,896
1,129
76
16
3,117
Revenue before specific items
9,786
8,057
2,976
16
20,835
Specific items
a
(note 9)
(38)
Revenue
20,797
Year ended 31 March 2023
Consumer
Business
Openreach
Other
Total
(re-presented
b
)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ICT and managed networks
\u2014
3,352
\u2014
\u2014
3,352
Fixed access subscriptions
4,059
1,893
2,716
\u2014
8,668
Mobile subscriptions
3,351
1,160
\u2014
\u2014
4,511
Equipment and other services
2,270
1,772
69
27
4,138
Revenue before specific items
9,680
8,177
2,785
27
20,669
Specific items
a
(note 9)
12
Revenue
20,681
a Relates to regulatory matters classified as specific. See note 9. b Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our Enterprise and Global units, see note 1. Revenue expected to be recognised in future periods for performance obligations that are not complete (or are partially complete) as at 31 March 2024 is \u00a312,133m (FY23: \u00a312,792m). Of this, \u00a36,052m (FY23: \u00a36,592m) relates to ICT and managed services contracts and equipment and other services which will substantially be recognised as revenue within three years. Fixed access and mobile subscription services typically have shorter contract periods and so \u00a36,081m (FY23: \u00a36,200m) will substantially be recognised as revenue within two years. Revenue recognised this year relating to performance obligations that were satisfied, or partially satisfied, in previous years was not material. Revenue related to customers\u2019 unexercised rights (for example, unused amounts on prepaid SIM cards) was not material. Key accounting estimates made in accounting for revenue Estimate of customer refunds Revenue has been adjusted to reflect a risk of billing inaccuracy where there is a high level of manual processing through certain billing systems. This is associated with a small number of products within our Business unit which contain bespoke pricing. \u00a341m has been recognised as an IFRS 9 financial liability and deducted from revenue, and has been derived from an estimate of the possible range of the adjustment from \u00a324m to \u00a364m based on the results of a sample of billing items. This is presented within Note 17 and represents our best estimate required to cover ongoing billing adjustments to products relating to both current and prior periods. If the final quantum of adjustments is less than expected, the adjustment will be released back to the income statement. Lease income Presented within revenue is \u00a33,031m (FY23: \u00a32,909m) income from arrangements classified as operating leases under IFRS 16 and which represent core business activities for the group. Income relates predominantly to Openreach\u2019s leases of fixed-line telecommunications infrastructure to external communications providers, classified as fixed access subscription revenue in the table above, and leases of devices to Consumer customers as part of fixed access subscription offerings, classified as equipment and other services. During the year we also recognised: \u2013 \u00a326m (FY23: \u00a329m) operating lease income from non-core business activities which is presented in other operating income (note 6). Note 15 presents an analysis of payments to be received across the remaining term of operating lease arrangements. \u2013 \u00a340m (FY23: \u00a358m) revenue in relation to upfront gains from arrangements meeting the definition of a finance lease. These arrangements meet the criteria for revenue recognition as they concern leases and sub-leases of telecommunications infrastructure that represent core business activities of the group. \u00a338m (FY23: \u00a369m) of this income relates to the sub-leasing of right-of-use assets. These are primarily operating sub-leases of unutilised properties, and finance sub-leases of telecommunications infrastructure. Contract assets and liabilities Material accounting policies that apply to contract assets and liabilities We recognise contract assets for goods and services for which control has transferred to the customer before we have the right to bill. These assets mainly relate to mobile handsets provided upfront but paid for over the course of a contract. Contract assets are reclassified as receivables when the right to payment becomes unconditional and we have billed the customer. Contract liabilities are recognised when we have received advance payment for goods and services that we have not transferred to the customer. These primarily relate to fees received for connection and installation services that are not distinct performance obligations. Where the initial set-up, transition or transformation phase of a long-term contract is considered to be a distinct performance obligation we recognise a contract asset for any work performed but not billed. Conversely a contract liability is recognised where these activities are not distinct performance obligations and we receive upfront consideration. In this case eligible costs associated with delivering these services are capitalised as fulfilment costs, see note 16. We provide for expected lifetime losses on contract assets following the policy set out in note 16. Contract assets and liabilities are as follows:
2024
2023
At 31 March
\u00a3m
\u00a3m
Contract assets
Current
1,410
1,565
Non-current
330
369
1,740
1,934
Contract liabilities
Current
906
859
Non-current
175
193
1,081
1,052
\u00a3876m of the contract liability at 31 March 2023 was recognised as revenue during the year (FY23: \u00a3903m). Impairment losses of \u00a335m were recognised on contract assets during the year (FY23: \u00a346m). The expected credit loss provisions recognised against contract assets vary across the group due to the nature of our customers; the expected loss rate at 31 March 2024 was 3% (FY23: 3%).", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-596": { "value": "Material accounting policies that apply to revenue Revenue from contracts with customers in scope of IFRS 15 Most revenue recognised by the group is in scope of IFRS 15, excluding Openreach where most revenue is in scope of IFRS 16. The revenue recognition policy for both is set out below. On inception of the contract we identify a \u201cperformance obligation\u201d for each of the distinct goods or services we have promised to provide to the customer. The consideration specified in the contract with the customer is allocated to each performance obligation identified based on their relative standalone selling prices, and is recognised as revenue as they are satisfied. The table below summarises the performance obligations we have identified for our major service lines and provides information on the timing of when they are satisfied and the related revenue recognition policy. Also detailed in this note is revenue expected to be recognised in future periods for contracts in place at 31 March 2024 that contain unsatisfied performance obligations.
Service line
Performance obligations
Revenue recognition policy
Information and Provision of networked IT services, managed network Revenue for services is recognised over time using a
communications services, and arrangements to design and build measure of progress that appropriately reflects the
technology (ICT) software solutions. Performance obligations are pattern by which the performance obligation is
and managed identified for each distinct service or deliverable for satisfied. For time and materials contracts, revenue is
networks which the customer has contracted, and are recognised as the service is received by the customer.
considered to be satisfied over the time period that we Where performance obligations exist for the provision
deliver these services or deliverables. Commitments to of hardware, revenue is recognised at the point in time
provide hardware to customers that are distinct from that the customer obtains control of the promised
the other promises are considered to be satisfied at the asset. For long-term fixed price contracts revenue
point in time that control passes to the customer. recognition will typically be based on the satisfaction
of performance obligations in respect of the
achievement of contract milestones and customer
acceptance, which is the best measure of progress
towards the completion of the performance obligation.
Fixed access Provision of broadband, TV and fixed telephony Fixed subscription charges are recognised as revenue
subscriptions services including national and international calls, on a straight-line basis over the period that the
connections, line rental and calling features. services are provided. Upfront charges for non-distinct
Performance obligations exist for each ongoing service connection and installation services are deferred as
provided to the customer and are satisfied over the contract liabilities and are recognised as revenue over
period that the services are provided. Installation the same period. Variable charges such as call charges
services are recognised as distinct performance are recognised when the related services are delivered.
obligations if their relationship with the other services Where installation activities are distinct performance
in the contract is purely functional. These are satisfied obligations, revenue is recognised at the point in time
when the customer benefits from the service. that the installation is completed.
Connection services are not distinct performance
obligations and are therefore combined with the
associated service performance obligation.
Mobile Provision of mobile postpaid and prepaid services, Subscription fees, consisting primarily of monthly
subscriptions including voice minutes, SMS and data services. charges for access to internet or voice and data
Performance obligations exist for each ongoing service services, are recognised as the service is provided.
provided to the customer and are satisfied over the One-off services such as calls outside of plan and
period that the services are provided. excess data usage are recognised when the service is
used.
Equipment and Provision of equipment and other services, including Revenue from equipment sales is recognised at the
other services mobile phone handsets and hardware such as set-top point in time that control passes to the customer.
boxes and broadband routers provided as part of Where payment is not received in full at the time of the
customer contracts. Performance obligations are sale, such as with equipment provided as part of
satisfied at the point in time that control passes to the mobile and fixed access subscriptions, contract assets
customer. For other services, performance obligations are recognised for the amount due from the customer
are identified based on the distinct goods and services that will be recovered over the contract period.
we have committed to provide. Revenue to be recognised is calculated by reference to
the relative standalone selling price of the equipment.
For other services, revenue is recognised when the
related performance obligations are satisfied, which
could be over time, in line with contract milestones, or
at a point in time depending on the nature of the
service.
We recognise revenue based on the relative standalone selling price of each performance obligation. Determining the standalone selling price often requires judgement and may be derived from regulated prices, list prices, a cost-plus derived price or the price of similar products when sold on a standalone basis by BT or a competitor. In some cases it may be appropriate to use the contract price when this represents a bespoke price that would be the same for a similar customer in a similar circumstance. The fixed access and mobile subscription arrangements sold by our Consumer business are typically payable in advance, with any variable or one-off charges billed in arrears. Contracts are largely inflation-linked with price increases recognised when effective. Payment is received immediately for direct sales of equipment to customers. Where equipment is provided to customers under mobile and fixed access subscription arrangements, payment for the equipment is received over the course of the contract term. For sales by our enterprise businesses, invoices are issued in line with contractual terms. Payments received in advance are recognised as contract liabilities; amounts billed in arrears are recognised as contract assets. We adopt variable consideration to allocate the transaction price to take account of the likelihood of the customer upgrading to a new handset during the contract term. Consideration is constrained to a period shorter than the contract term and is allocated to the handset and airtime based on relative standalone selling price. Certain Business long term contracts offer rebates to our customers. Where this is the case we make an estimate of variable consideration at the outset of the contract based on assumed volumes. These rebates are normally settled monthly against service revenues. We are applying the practical expedient to recognise revenue \u201cas-invoiced\u201d for certain fixed access and mobile subscription services revenues. Where we have a right to invoice at an amount that directly corresponds with performance to date, we recognise revenue at that amount. We have also adopted the practical expedient not to calculate the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied for these contracts. We do not have any material obligations in respect of returns, refunds or warranties. Where we act as an agent in a transaction, such as insurance services offered, we recognise commission net of directly attributable costs. We exercise judgement in assessing whether the initial set-up, transition and transformation phases of long-term contracts are distinct from the other services to be delivered under the contract and therefore represent distinct performance obligations. This determines whether revenue is recognised in the early stages of the contract, or deferred until delivery of the other services promised in the contract begins. We recognise immediately the entire estimated loss for a contract when we have evidence that the contract is unprofitable. If these estimates indicate that any contract will be less profitable than previously forecast, contract assets may have to be written down to the extent they are no longer considered to be fully recoverable. We perform ongoing profitability reviews of our contracts in order to determine whether the latest estimates are appropriate. Key factors reviewed include: \u2013 Transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market position and other factors such as general economic conditions. \u2013 Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment phases for customer contracts. \u2013 The status of commercial relations with customers and the implications for future revenue and cost projections. \u2013 Our estimates of future staff and third party costs and the degree to which cost savings and efficiencies are deliverable. Revenue from lease arrangements in scope of IFRS 16 Some consumer broadband and TV products and arrangements to provide external communications providers with exclusive use of Openreach\u2019s fixed-network telecommunications infrastructure meet the definition of operating leases under IFRS 16. At inception of a contract, we determine whether the contract is, or contains, a lease following the accounting policy set out in note 15. Arrangements meeting the definition of a lease in which we act as lessor are classified as operating or finance leases at lease inception based on an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case then the lease is a finance lease; if not, it is an operating lease. For sub-leases, we make this assessment by reference to the characteristics of the right-of-use asset associated with the head lease rather than the underlying leased asset. Income from arrangements classified as operating leases is presented as revenue where it relates to our core operating activities, for example leases of fixed-line telecommunications infrastructure to external communications providers and leases of devices to consumer customers as part of fixed access subscription products. Operating lease income from other arrangements is presented within other operating income (note 6). We recognise operating lease payments as income on a straight-line basis over the lease term. Any upfront payments received, such as connection fees, are deferred over the lease term. Determining the lease term is subject to the significant judgements set out in note 15. Where the contract contains both lease and non-lease components, the transaction price is allocated between the components on the basis of relative standalone selling price. Where an arrangement is assessed as a finance lease we derecognise the underlying asset and recognise a receivable equivalent to the net investment in the lease. Finance lease receivables are presented in note 16. The receivable is measured based on future payments to be received discounted using the interest rate implicit in the lease, adjusted for any direct costs. Any difference between the derecognised asset and the finance lease receivable is recognised in the income statement. Where the nature of services delivered relates to our core operating activities it is presented as revenue. Where it relates to non-core activities it is presented within other operating income (note 6). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-556": { "value": "Disaggregation of external revenue The following table disaggregates external revenue by our major service lines and by reportable segment.
Consumer
Business
Openreach
Other
Total
Year ended 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ICT and managed networks
\u2014
3,592
\u2014
\u2014
3,592
Fixed access subscriptions
4,333
2,149
2,900
\u2014
9,382
Mobile subscriptions
3,557
1,187
\u2014
\u2014
4,744
Equipment and other services
1,896
1,129
76
16
3,117
Revenue before specific items
9,786
8,057
2,976
16
20,835
Specific items
a
(note 9)
(38)
Revenue
20,797
Year ended 31 March 2023
Consumer
Business
Openreach
Other
Total
(re-presented
b
)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
ICT and managed networks
\u2014
3,352
\u2014
\u2014
3,352
Fixed access subscriptions
4,059
1,893
2,716
\u2014
8,668
Mobile subscriptions
3,351
1,160
\u2014
\u2014
4,511
Equipment and other services
2,270
1,772
69
27
4,138
Revenue before specific items
9,680
8,177
2,785
27
20,669
Specific items
a
(note 9)
12
Revenue
20,681
a Relates to regulatory matters classified as specific. See note 9. b Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our Enterprise and Global units, see note 1. Revenue expected to be recognised in future periods for performance obligations that are not complete (or are partially complete) as at 31 March 2024 is \u00a312,133m (FY23: \u00a312,792m). Of this, \u00a36,052m (FY23: \u00a36,592m) relates to ICT and managed services contracts and equipment and other services which will substantially be recognised as revenue within three years. Fixed access and mobile subscription services typically have shorter contract periods and so \u00a36,081m (FY23: \u00a36,200m) will substantially be recognised as revenue within two years. Revenue recognised this year relating to performance obligations that were satisfied, or partially satisfied, in previous years was not material. Revenue related to customers\u2019 unexercised rights (for example, unused amounts on prepaid SIM cards) was not material. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDisaggregationOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-498": { "value": "
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Operating costs by nature
Staff costs:
Wages and salaries
3,843
3,858
Social security costs
425
424
Other pension costs
19
582
590
Share-based payment expense
21
71
80
Total staff costs
4,921
4,952
Own work capitalised
(1,432)
(1,364)
Net staff costs
3,489
3,588
Net indirect labour costs
b
456
381
Net labour costs
3,945
3,969
Product costs
3,527
3,368
Sales commissions
636
589
Payments to telecommunications operators
1,227
1,354
Property and energy costs
1,338
1,242
Network operating and IT costs
930
913
TV programme rights charges
\u2014
354
Provision and installation
515
591
Marketing and sales
367
363
Net impairment losses on trade receivables and contract assets
165
138
Other operating costs
323
103
Other operating income
(238)
(243)
Depreciation and amortisation, including impairment charges
4,899
4,753
Total operating costs before specific items
17,634
17,494
Specific items
9
949
568
Of which goodwill impairment
488
\u2014
Total operating costs
18,583
18,062
Operating costs before specific items include the following:
Leaver costs
9
11
Research and development expenditure
726
683
Foreign currency (gains)/losses
(2)
(9)
Inventories recognised as an expense
2,170
2,311
a c d c e a Leaver costs are included within wages and salaries, except for leaver costs of \u00a3242m (FY23: \u00a3129m) associated with restructuring costs, which have been recorded as specific items. b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of \u00a3772m (FY23: \u00a3824m). c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22. d Consists of net impairment losses on trade receivables and contract assets in Consumer of \u00a398m (FY23: \u00a394m), in Business of \u00a345m (FY23: \u00a332m), in Openreach of \u00a320m (FY23: \u00a35m) and in Other of \u00a32m (FY23: \u00a31m). e Research and development expenditure includes amortisation of \u00a3679m (FY23: \u00a3632m) in respect of capitalised development costs and operating expenses of \u00a347m (FY23: \u00a351m). In addition, the group capitalised software development costs of \u00a3429m (FY23: \u00a3503m) . 6. Operating costs Depreciation and amortisation, which includes impairment charges, is analysed as follows:
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Depreciation and amortisation before impairment charges
Intangible assets
13
1,248
1,165
Property, plant and equipment
14
2,892
2,878
Right-of-use assets
15
652
689
Impairment charges
Intangible assets
13
\u2014
\u2014
Property, plant and equipment
14
108
11
Right-of-use assets
15
(1)
10
Total depreciation and amortisation before specific items
4,899
4,753
Impairment charges classified as specific items
9
Intangible assets
488
\u2014
Property, plant and equipment
\u2014
\u2014
Right-of-use assets
11
65
Total depreciation and amortisation
5,398
4,818
a b c a Impairments of network infrastructure and engineering stores in FY24 and other assets in FY23, see note 14. b FY24 impairment charge reflects a net reversal of impairment on properties reoccupied subsequent to initial impairment. c FY24 impairment charge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 13. Who are our key management personnel and how are they compensated? Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee. Compensation of key management personnel is shown in the table below:
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Short-term employee benefits
16.6
23.0
Post employment benefits
0.7
0.7
Share-based payments
8.1
6.7
25.4
30.4
a a Post employment benefits include cash pension allowances paid to the Chief Executive and Chief Financial Officer. The group does not contribute to defined contribution or defined benefit pension schemes on behalf of key management personnel. Key management personnel are compensated solely in the form of cash and share-based payments. During FY24, one member of key management personnel (FY23: none) exercised saveshare options, see note 21. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-530": { "value": "
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Operating costs by nature
Staff costs:
Wages and salaries
3,843
3,858
Social security costs
425
424
Other pension costs
19
582
590
Share-based payment expense
21
71
80
Total staff costs
4,921
4,952
Own work capitalised
(1,432)
(1,364)
Net staff costs
3,489
3,588
Net indirect labour costs
b
456
381
Net labour costs
3,945
3,969
Product costs
3,527
3,368
Sales commissions
636
589
Payments to telecommunications operators
1,227
1,354
Property and energy costs
1,338
1,242
Network operating and IT costs
930
913
TV programme rights charges
\u2014
354
Provision and installation
515
591
Marketing and sales
367
363
Net impairment losses on trade receivables and contract assets
165
138
Other operating costs
323
103
Other operating income
(238)
(243)
Depreciation and amortisation, including impairment charges
4,899
4,753
Total operating costs before specific items
17,634
17,494
Specific items
9
949
568
Of which goodwill impairment
488
\u2014
Total operating costs
18,583
18,062
Operating costs before specific items include the following:
Leaver costs
9
11
Research and development expenditure
726
683
Foreign currency (gains)/losses
(2)
(9)
Inventories recognised as an expense
2,170
2,311
a c d c e a Leaver costs are included within wages and salaries, except for leaver costs of \u00a3242m (FY23: \u00a3129m) associated with restructuring costs, which have been recorded as specific items. b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of \u00a3772m (FY23: \u00a3824m). c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22. d Consists of net impairment losses on trade receivables and contract assets in Consumer of \u00a398m (FY23: \u00a394m), in Business of \u00a345m (FY23: \u00a332m), in Openreach of \u00a320m (FY23: \u00a35m) and in Other of \u00a32m (FY23: \u00a31m). e Research and development expenditure includes amortisation of \u00a3679m (FY23: \u00a3632m) in respect of capitalised development costs and operating expenses of \u00a347m (FY23: \u00a351m). In addition, the group capitalised software development costs of \u00a3429m (FY23: \u00a3503m) ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-557": { "value": "
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Operating costs by nature
Staff costs:
Wages and salaries
3,843
3,858
Social security costs
425
424
Other pension costs
19
582
590
Share-based payment expense
21
71
80
Total staff costs
4,921
4,952
Own work capitalised
(1,432)
(1,364)
Net staff costs
3,489
3,588
Net indirect labour costs
b
456
381
Net labour costs
3,945
3,969
Product costs
3,527
3,368
Sales commissions
636
589
Payments to telecommunications operators
1,227
1,354
Property and energy costs
1,338
1,242
Network operating and IT costs
930
913
TV programme rights charges
\u2014
354
Provision and installation
515
591
Marketing and sales
367
363
Net impairment losses on trade receivables and contract assets
165
138
Other operating costs
323
103
Other operating income
(238)
(243)
Depreciation and amortisation, including impairment charges
4,899
4,753
Total operating costs before specific items
17,634
17,494
Specific items
9
949
568
Of which goodwill impairment
488
\u2014
Total operating costs
18,583
18,062
Operating costs before specific items include the following:
Leaver costs
9
11
Research and development expenditure
726
683
Foreign currency (gains)/losses
(2)
(9)
Inventories recognised as an expense
2,170
2,311
a c d c e a Leaver costs are included within wages and salaries, except for leaver costs of \u00a3242m (FY23: \u00a3129m) associated with restructuring costs, which have been recorded as specific items. b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of \u00a3772m (FY23: \u00a3824m). c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22. d Consists of net impairment losses on trade receivables and contract assets in Consumer of \u00a398m (FY23: \u00a394m), in Business of \u00a345m (FY23: \u00a332m), in Openreach of \u00a320m (FY23: \u00a35m) and in Other of \u00a32m (FY23: \u00a31m). e Research and development expenditure includes amortisation of \u00a3679m (FY23: \u00a3632m) in respect of capitalised development costs and operating expenses of \u00a347m (FY23: \u00a351m). In addition, the group capitalised software development costs of \u00a3429m (FY23: \u00a3503m) ", "dimensions": { "concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-574": { "value": "
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Operating costs by nature
Staff costs:
Wages and salaries
3,843
3,858
Social security costs
425
424
Other pension costs
19
582
590
Share-based payment expense
21
71
80
Total staff costs
4,921
4,952
Own work capitalised
(1,432)
(1,364)
Net staff costs
3,489
3,588
Net indirect labour costs
b
456
381
Net labour costs
3,945
3,969
Product costs
3,527
3,368
Sales commissions
636
589
Payments to telecommunications operators
1,227
1,354
Property and energy costs
1,338
1,242
Network operating and IT costs
930
913
TV programme rights charges
\u2014
354
Provision and installation
515
591
Marketing and sales
367
363
Net impairment losses on trade receivables and contract assets
165
138
Other operating costs
323
103
Other operating income
(238)
(243)
Depreciation and amortisation, including impairment charges
4,899
4,753
Total operating costs before specific items
17,634
17,494
Specific items
9
949
568
Of which goodwill impairment
488
\u2014
Total operating costs
18,583
18,062
Operating costs before specific items include the following:
Leaver costs
9
11
Research and development expenditure
726
683
Foreign currency (gains)/losses
(2)
(9)
Inventories recognised as an expense
2,170
2,311
a c d c e a Leaver costs are included within wages and salaries, except for leaver costs of \u00a3242m (FY23: \u00a3129m) associated with restructuring costs, which have been recorded as specific items. b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of \u00a3772m (FY23: \u00a3824m). c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22. d Consists of net impairment losses on trade receivables and contract assets in Consumer of \u00a398m (FY23: \u00a394m), in Business of \u00a345m (FY23: \u00a332m), in Openreach of \u00a320m (FY23: \u00a35m) and in Other of \u00a32m (FY23: \u00a31m). e Research and development expenditure includes amortisation of \u00a3679m (FY23: \u00a3632m) in respect of capitalised development costs and operating expenses of \u00a347m (FY23: \u00a351m). In addition, the group capitalised software development costs of \u00a3429m (FY23: \u00a3503m) ", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-585": { "value": "
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Operating costs by nature
Staff costs:
Wages and salaries
3,843
3,858
Social security costs
425
424
Other pension costs
19
582
590
Share-based payment expense
21
71
80
Total staff costs
4,921
4,952
Own work capitalised
(1,432)
(1,364)
Net staff costs
3,489
3,588
Net indirect labour costs
b
456
381
Net labour costs
3,945
3,969
Product costs
3,527
3,368
Sales commissions
636
589
Payments to telecommunications operators
1,227
1,354
Property and energy costs
1,338
1,242
Network operating and IT costs
930
913
TV programme rights charges
\u2014
354
Provision and installation
515
591
Marketing and sales
367
363
Net impairment losses on trade receivables and contract assets
165
138
Other operating costs
323
103
Other operating income
(238)
(243)
Depreciation and amortisation, including impairment charges
4,899
4,753
Total operating costs before specific items
17,634
17,494
Specific items
9
949
568
Of which goodwill impairment
488
\u2014
Total operating costs
18,583
18,062
Operating costs before specific items include the following:
Leaver costs
9
11
Research and development expenditure
726
683
Foreign currency (gains)/losses
(2)
(9)
Inventories recognised as an expense
2,170
2,311
a c d c e a Leaver costs are included within wages and salaries, except for leaver costs of \u00a3242m (FY23: \u00a3129m) associated with restructuring costs, which have been recorded as specific items. b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of \u00a3772m (FY23: \u00a3824m). c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22. d Consists of net impairment losses on trade receivables and contract assets in Consumer of \u00a398m (FY23: \u00a394m), in Business of \u00a345m (FY23: \u00a332m), in Openreach of \u00a320m (FY23: \u00a35m) and in Other of \u00a32m (FY23: \u00a31m). e Research and development expenditure includes amortisation of \u00a3679m (FY23: \u00a3632m) in respect of capitalised development costs and operating expenses of \u00a347m (FY23: \u00a351m). In addition, the group capitalised software development costs of \u00a3429m (FY23: \u00a3503m) . 6. Operating costs Depreciation and amortisation, which includes impairment charges, is analysed as follows:
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Depreciation and amortisation before impairment charges
Intangible assets
13
1,248
1,165
Property, plant and equipment
14
2,892
2,878
Right-of-use assets
15
652
689
Impairment charges
Intangible assets
13
\u2014
\u2014
Property, plant and equipment
14
108
11
Right-of-use assets
15
(1)
10
Total depreciation and amortisation before specific items
4,899
4,753
Impairment charges classified as specific items
9
Intangible assets
488
\u2014
Property, plant and equipment
\u2014
\u2014
Right-of-use assets
11
65
Total depreciation and amortisation
5,398
4,818
a b c a Impairments of network infrastructure and engineering stores in FY24 and other assets in FY23, see note 14. b FY24 impairment charge reflects a net reversal of impairment on properties reoccupied subsequent to initial impairment. c FY24 impairment charge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 13. Who are our key management personnel and how are they compensated? Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee. Compensation of key management personnel is shown in the table below:
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Short-term employee benefits
16.6
23.0
Post employment benefits
0.7
0.7
Share-based payments
8.1
6.7
25.4
30.4
a a Post employment benefits include cash pension allowances paid to the Chief Executive and Chief Financial Officer. The group does not contribute to defined contribution or defined benefit pension schemes on behalf of key management personnel. Key management personnel are compensated solely in the form of cash and share-based payments. During FY24, one member of key management personnel (FY23: none) exercised saveshare options, see note 21. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-592": { "value": "
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Operating costs by nature
Staff costs:
Wages and salaries
3,843
3,858
Social security costs
425
424
Other pension costs
19
582
590
Share-based payment expense
21
71
80
Total staff costs
4,921
4,952
Own work capitalised
(1,432)
(1,364)
Net staff costs
3,489
3,588
Net indirect labour costs
b
456
381
Net labour costs
3,945
3,969
Product costs
3,527
3,368
Sales commissions
636
589
Payments to telecommunications operators
1,227
1,354
Property and energy costs
1,338
1,242
Network operating and IT costs
930
913
TV programme rights charges
\u2014
354
Provision and installation
515
591
Marketing and sales
367
363
Net impairment losses on trade receivables and contract assets
165
138
Other operating costs
323
103
Other operating income
(238)
(243)
Depreciation and amortisation, including impairment charges
4,899
4,753
Total operating costs before specific items
17,634
17,494
Specific items
9
949
568
Of which goodwill impairment
488
\u2014
Total operating costs
18,583
18,062
Operating costs before specific items include the following:
Leaver costs
9
11
Research and development expenditure
726
683
Foreign currency (gains)/losses
(2)
(9)
Inventories recognised as an expense
2,170
2,311
a c d c e a Leaver costs are included within wages and salaries, except for leaver costs of \u00a3242m (FY23: \u00a3129m) associated with restructuring costs, which have been recorded as specific items. b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of \u00a3772m (FY23: \u00a3824m). c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22. d Consists of net impairment losses on trade receivables and contract assets in Consumer of \u00a398m (FY23: \u00a394m), in Business of \u00a345m (FY23: \u00a332m), in Openreach of \u00a320m (FY23: \u00a35m) and in Other of \u00a32m (FY23: \u00a31m). e Research and development expenditure includes amortisation of \u00a3679m (FY23: \u00a3632m) in respect of capitalised development costs and operating expenses of \u00a347m (FY23: \u00a351m). In addition, the group capitalised software development costs of \u00a3429m (FY23: \u00a3503m) . 6. Operating costs Depreciation and amortisation, which includes impairment charges, is analysed as follows:
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Depreciation and amortisation before impairment charges
Intangible assets
13
1,248
1,165
Property, plant and equipment
14
2,892
2,878
Right-of-use assets
15
652
689
Impairment charges
Intangible assets
13
\u2014
\u2014
Property, plant and equipment
14
108
11
Right-of-use assets
15
(1)
10
Total depreciation and amortisation before specific items
4,899
4,753
Impairment charges classified as specific items
9
Intangible assets
488
\u2014
Property, plant and equipment
\u2014
\u2014
Right-of-use assets
11
65
Total depreciation and amortisation
5,398
4,818
a b c a Impairments of network infrastructure and engineering stores in FY24 and other assets in FY23, see note 14. b FY24 impairment charge reflects a net reversal of impairment on properties reoccupied subsequent to initial impairment. c FY24 impairment charge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 13. Who are our key management personnel and how are they compensated? Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee. Compensation of key management personnel is shown in the table below:
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Short-term employee benefits
16.6
23.0
Post employment benefits
0.7
0.7
Share-based payments
8.1
6.7
25.4
30.4
a a Post employment benefits include cash pension allowances paid to the Chief Executive and Chief Financial Officer. The group does not contribute to defined contribution or defined benefit pension schemes on behalf of key management personnel. Key management personnel are compensated solely in the form of cash and share-based payments. During FY24, one member of key management personnel (FY23: none) exercised saveshare options, see note 21. The following fees were paid or are payable to the company\u2019s auditors, KPMG LLP and other firms in the KPMG network.
2024
2023
Year ended 31 March
\u00a3000
\u00a3000
Fees payable to the company\u2019s auditors and its associates for:
Audit services
a
The audit of the parent company and the consolidated financial statements
14,473
13,558
The audit of the company\u2019s subsidiaries
6,294
6,274
b
20,767
19,832
Audit related assurance services
2,487
2,553
Other non-audit services
33
55
Total services
23,287
22,440
a Services in relation to the audit of the parent company and the consolidated financial statements. This also includes fees payable for the statutory audits of the financial statements of subsidiary companies. b Includes services that are required by law or regulation to be carried out by an appointed auditor and services that support us to fulfil obligations required by law or regulation. This includes fees for the review of interim results, the accrued fee for the audit of the group\u2019s regulatory financial statements and providing comfort letters for bond issuances. Fees payable to auditors other than KPMG for audits of certain overseas subsidiaries were \u00a3164,000 (FY23: \u00a3171,000). The BT Pension Scheme is an associated pension fund as defined in the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011. In FY24 KPMG LLP received total fees from the BT Pension Scheme of \u00a31.9m (FY23: \u00a31.6m) in respect of the following services:
2024
2023
Year ended 31 March
\u00a3000
\u00a3000
Audit of financial statements of associates
1,767
1,622
Audit-related assurance services
26
14
Other non-audit services
74
\u2014
Total services
1,867
1,636
8. Audit, audit related and other non-audit services", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-532": { "value": "
Depreciation and amortisation, which includes impairment charges, is analysed as follows:
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Depreciation and amortisation before impairment charges
Intangible assets
13
1,248
1,165
Property, plant and equipment
14
2,892
2,878
Right-of-use assets
15
652
689
Impairment charges
Intangible assets
13
\u2014
\u2014
Property, plant and equipment
14
108
11
Right-of-use assets
15
(1)
10
Total depreciation and amortisation before specific items
4,899
4,753
Impairment charges classified as specific items
9
Intangible assets
488
\u2014
Property, plant and equipment
\u2014
\u2014
Right-of-use assets
11
65
Total depreciation and amortisation
5,398
4,818
a
b
c
a Impairments of network infrastructure and engineering stores in FY24 and other assets in FY23, see note 14.
b FY24 impairment charge reflects a net reversal of impairment on properties reoccupied subsequent to initial impairment.
c FY24 impairment charge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 13.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-558": { "value": "Depreciation and amortisation, which includes impairment charges, is analysed as follows:
2024
2023
Year ended 31 March
Notes
\u00a3m
\u00a3m
Depreciation and amortisation before impairment charges
Intangible assets
13
1,248
1,165
Property, plant and equipment
14
2,892
2,878
Right-of-use assets
15
652
689
Impairment charges
Intangible assets
13
\u2014
\u2014
Property, plant and equipment
14
108
11
Right-of-use assets
15
(1)
10
Total depreciation and amortisation before specific items
4,899
4,753
Impairment charges classified as specific items
9
Intangible assets
488
\u2014
Property, plant and equipment
\u2014
\u2014
Right-of-use assets
11
65
Total depreciation and amortisation
5,398
4,818
a b c a Impairments of network infrastructure and engineering stores in FY24 and other assets in FY23, see note 14. b FY24 impairment charge reflects a net reversal of impairment on properties reoccupied subsequent to initial impairment. c FY24 impairment charge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 13. ", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-531": { "value": "
Who are our key management personnel and how are they compensated?
Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee.
Compensation of key management personnel is shown in the table below:
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Short-term employee benefits
16.6
23.0
Post employment benefits
0.7
0.7
Share-based payments
8.1
6.7
25.4
30.4
a
a Post employment benefits include cash pension allowances paid to the Chief Executive and Chief Financial Officer. The group does not contribute to defined contribution or defined
benefit pension schemes on behalf of key management personnel.
Key management personnel are compensated solely in the form of cash and share-based payments. During FY24, one member of key
management personnel (FY23: none) exercised saveshare options, see note 21.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-499": { "value": "
7. Employees
2024
2023
a b b
Average
a
Average
b
FTE
Year end
b
FTE
Average Average FTE Year end FTE
Number of employees in the group \u2019000 \u2019000 \u2019000 \u2019000 \u2019000 \u2019000
UK
77.3
74.9
71.4
82.2
79.7
77.6
Non-UK
20.1
20.0
20.3
19.1
19.1
19.5
Total employees
97.4
94.9
91.7
101.3
98.8
97.1
Consumer
18.1
16.3
15.8
18.3
16.5
16.4
Business
23.6
23.3
22.6
25.0
24.6
24.0
Openreach
35.1
34.9
32.8
37.9
37.6
36.6
Other
20.6
20.4
20.5
20.1
20.1
20.1
Total employees
97.4
94.9
91.7
101.3
98.8
97.1
c
a Average reflecting monthly average headcount.
b Average reflecting the full-time equivalent of full- and part-time employees, excluding subcontract labour. There were 28.4k FTE agency & subcontract labour at the FY24 year-end
(FY23: 33.0k).
c Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our
Enterprise and Global units, see note 1.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-500": { "value": "The following fees were paid or are payable to the company\u2019s auditors, KPMG LLP and other firms in the KPMG network.
2024
2023
Year ended 31 March
\u00a3000
\u00a3000
Fees payable to the company\u2019s auditors and its associates for:
Audit services
a
The audit of the parent company and the consolidated financial statements
14,473
13,558
The audit of the company\u2019s subsidiaries
6,294
6,274
b
20,767
19,832
Audit related assurance services
2,487
2,553
Other non-audit services
33
55
Total services
23,287
22,440
a Services in relation to the audit of the parent company and the consolidated financial statements. This also includes fees payable for the statutory audits of the financial statements of subsidiary companies. b Includes services that are required by law or regulation to be carried out by an appointed auditor and services that support us to fulfil obligations required by law or regulation. This includes fees for the review of interim results, the accrued fee for the audit of the group\u2019s regulatory financial statements and providing comfort letters for bond issuances. Fees payable to auditors other than KPMG for audits of certain overseas subsidiaries were \u00a3164,000 (FY23: \u00a3171,000). The BT Pension Scheme is an associated pension fund as defined in the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011. In FY24 KPMG LLP received total fees from the BT Pension Scheme of \u00a31.9m (FY23: \u00a31.6m) in respect of the following services:
2024
2023
Year ended 31 March
\u00a3000
\u00a3000
Audit of financial statements of associates
1,767
1,622
Audit-related assurance services
26
14
Other non-audit services
74
\u2014
Total services
1,867
1,636
8. Audit, audit related and other non-audit services", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-501": { "value": "9. Specific items Material accounting policies that apply to specific items Our income statement and segmental analysis separately identify trading results on an adjusted basis, being before specific items. The directors believe that presentation of the group\u2019s results in this way is relevant to an understanding of the group\u2019s financial performance as specific items are those that in management\u2019s judgement need to be disclosed by virtue of their size, nature or incidence. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and the Executive Committee and assists in providing an additional analysis of our reporting trading results. Specific items may not be comparable to similarly titled measures used by other companies. In determining whether an event or transaction is specific, management considers quantitative as well as qualitative factors. Examples of charges or credits meeting the above definition and which have been presented as specific items in the current and/or prior years include significant business restructuring programmes such as the current group-wide cost transformation and modernisation programme, acquisitions and disposals of businesses and investments, impairment of goodwill, charges or credits relating to retrospective regulatory matters, property rationalisation programmes, historical property-related provisions, significant out of period contract settlements, net interest on our pension obligation, and the impact of remeasuring deferred tax balances. In the event that items meet the criteria, which are applied consistently from year to year, they are treated as specific items. Any releases to provisions originally booked as a specific item are also classified as specific. Conversely, when a reversal occurs in relation to a prior year item not classified as specific, the reversal is not classified as specific in the current year. Movements relating to the sports joint venture (Sports JV) with Warner Bros. Discovery (WBD), such as fair value gains or losses on the A and C preference shares or impairment charges on the equity-accounted investment are classified as specific. Refer to note 24 for further detail.
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Revenue
Retrospective regulatory matters
38
(12)
Specific revenue
38
(12)
Operating costs
Restructuring charges
388
300
BT Sport disposal
\u2014
155
Sports JV \u2013 subsequent movements
32
34
Other divestment-related items
(22)
2
Retrospective regulatory matters
18
12
Historical property-related provisions
34
\u2014
Specific operating costs before depreciation and amortisation
450
503
Impairment charges due to property rationalisation
11
65
Impairment of goodwill
488
\u2014
Specific operating costs
949
568
Specific operating loss
987
556
Net finance expense
Finance expense relating to the BT Sport disposal
\u2014
(13)
Interest expense on retirement benefit obligation
121
18
Specific net finance expense
121
5
Net specific items charge before tax
1,108
561
Taxation
Tax credit on specific items above
(145)
(308)
(145)
(308)
Net specific items charge after tax
963
253
Retrospective regulatory matters
We recognised net \u00a356m impact in relation to historical regulatory
matters, with \u00a338m charges recognised in revenue and \u00a318m
within operating costs (FY23: net impact of \u00a3nil). These items
represent movements in provisions relating to various matters.
Restructuring charges
We have incurred charges of \u00a3388m (FY23: \u00a3300m) relating to
projects associated with our group-wide cost transformation and
modernisation programme. Costs primarily relate to leaver costs,
consultancy costs, and staff costs associated with colleagues
working exclusively on programme activity. The net cash cost of
restructuring activity during the year was \u00a3348m (FY23: \u00a3326m).
The programme was first announced in May 2020 and runs until
the end of FY25. In response to cost inflation, during FY23 we
revised the gross annualised savings target to \u00a33.0bn (previously
\u00a32.5bn), with a cost to achieve of \u00a31.6bn (previously \u00a31.3bn). We
have now achieved our \u00a33bn target 12 months early at a cost to
achieve of \u00a31.5bn, \u00a30.1bn lower than target (FY23: achieved gross
annualised savings of \u00a32.1bn and costs of \u00a31.1bn).The cumulative
cash costs incurred amount to \u00a31.5bn (FY23: \u00a31.1bn).
BT Sport disposal
In the prior year, we completed the disposal of BT Sport operations
through forming the Sports JV with WBD. We recognised a profit
on disposal of \u00a328m in specific items, made up of \u00a3155m charges
recognised within operating costs net of \u00a3183m tax credits. We
also recognised a \u00a313m credit within finance costs as specific,
relating to a foreign exchange hedging arrangement with the
Sports JV.
Sports JV subsequent movements
Subsequent to the BT Sport disposal, we have recorded a net fair
value loss of \u00a322m (FY23: \u00a334m) on the A and C preference shares
held in the Sports JV (see note 24), and \u00a310m additional net costs
relating to the transaction.
Other divestment-related items
We recognised a \u00a322m credit (FY23: \u00a32m charge) comprising a
net \u00a325m gain on disposal from the completed divestments of
Pelipod Limited, BT Enia S.p.A and certain city fibre networks and
associated infrastructure assets in Germany; offset by \u00a33m charges
relating to ongoing divestment activity.
Historical property-related provisions
During FY24 we recognised a provision of \u00a334m as a specific item
(FY23: nil) in relation to the cost of remediating and rectifying
asbestos related property issues where we have a present
obligation to do this.
Impairment charges due to property rationalisation
During FY24, we recognised a \u00a311m impairment charge as specific
(FY23: \u00a365m), in relation to an ongoing property rationalisation
programme.
Impairment of goodwill
We have recognised an impairment charge of \u00a3488m (FY23: nil) in
respect of goodwill allocated to our Business cash generating unit.
See note 13 for more details.
Interest expense on retirement benefit obligation
During the year we incurred \u00a3121m (FY23: \u00a318m) of interest costs
in relation to our defined benefit pension obligations.
Tax on specific items
A tax credit of \u00a3145m was recognised in relation to specific items
(FY23: \u00a3308m, of which \u00a3183m relates to the BT Sport disposal).
", "dimensions": { "concept": "btgroupplc:DisclosureOfSpecificItems", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-597": { "value": "Material accounting policies that apply to specific items Our income statement and segmental analysis separately identify trading results on an adjusted basis, being before specific items. The directors believe that presentation of the group\u2019s results in this way is relevant to an understanding of the group\u2019s financial performance as specific items are those that in management\u2019s judgement need to be disclosed by virtue of their size, nature or incidence. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and the Executive Committee and assists in providing an additional analysis of our reporting trading results. Specific items may not be comparable to similarly titled measures used by other companies. In determining whether an event or transaction is specific, management considers quantitative as well as qualitative factors. Examples of charges or credits meeting the above definition and which have been presented as specific items in the current and/or prior years include significant business restructuring programmes such as the current group-wide cost transformation and modernisation programme, acquisitions and disposals of businesses and investments, impairment of goodwill, charges or credits relating to retrospective regulatory matters, property rationalisation programmes, historical property-related provisions, significant out of period contract settlements, net interest on our pension obligation, and the impact of remeasuring deferred tax balances. In the event that items meet the criteria, which are applied consistently from year to year, they are treated as specific items. Any releases to provisions originally booked as a specific item are also classified as specific. Conversely, when a reversal occurs in relation to a prior year item not classified as specific, the reversal is not classified as specific in the current year. Movements relating to the sports joint venture (Sports JV) with Warner Bros. Discovery (WBD), such as fair value gains or losses on the A and C preference shares or impairment charges on the equity-accounted investment are classified as specific. Refer to note 24 for further detail. ", "dimensions": { "concept": "btgroupplc:DescriptionOfAccountingPolicyForSpecificItems", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-598": { "value": "
Material accounting policies that apply to taxation
Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the
countries where the group\u2019s subsidiaries, associates and joint ventures operate and generate taxable income. We evaluate positions
taken in tax returns where tax regulation is subject to interpretation, and establish provisions if appropriate based on the amounts
likely to be paid to tax authorities.
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of our assets
and liabilities and their tax base. Deferred tax is determined using tax rates that are expected to apply in the periods in which the
asset is realised or liability settled, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet
date.
Deferred and current income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority
where there is an intention to settle the balances on a net basis. Any remaining deferred tax asset is recognised only when, on the
basis of all available evidence, it is probable that there will be suitable taxable profits against which the deductible temporary
difference can be utilised. Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on
the face of the group balance sheet as permitted by IAS 12, with the exception of deferred tax related to our pension schemes which
is disclosed within deferred tax assets.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-502": { "value": " Material accounting policies that apply to taxation Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the group\u2019s subsidiaries, associates and joint ventures operate and generate taxable income. We evaluate positions taken in tax returns where tax regulation is subject to interpretation, and establish provisions if appropriate based on the amounts likely to be paid to tax authorities. Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of our assets and liabilities and their tax base. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred and current income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it is probable that there will be suitable taxable profits against which the deductible temporary difference can be utilised. Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on the face of the group balance sheet as permitted by IAS 12, with the exception of deferred tax related to our pension schemes which is disclosed within deferred tax assets. Key accounting estimates and significant judgements made in accounting for taxation We seek to pay tax in accordance with the laws of the countries where we do business. However, in some areas these laws are unclear, and it can take many years to agree an outcome with a tax authority or through litigation. We estimate our tax on country- by-country and issue-by-issue bases. Our key uncertainties are whether our intra-group trading model will be accepted by a particular tax authority and whether intra-group payments are subject to withholding taxes. We provide for the predicted outcome where an outflow is probable, but the agreed amount can differ materially from our estimates. Approximately 65% by value of the provisions are under active tax authority examination and are therefore likely to be re-estimated or resolved in the coming 12 months. \u00a3112m (FY23: \u00a3104m) is included in current tax liabilities or offset against current tax assets where netting is appropriate. We are subject to regular tax authority review, under a downside case an additional amount of \u00a3123m could be required to be paid. This amount is not provided as we don\u2019t consider this outcome to be probable. Deciding whether to recognise deferred tax assets is judgemental. We only recognise them when we consider it is probable that they can be recovered. In making this judgement we consider evidence such as historical financial performance, future financial plans and trends and whether our intra-group pricing model has been agreed by the relevant tax authority. The value of the group\u2019s income tax assets and liabilities is disclosed on the group balance sheet. The value of the group\u2019s deferred tax assets and liabilities is disclosed below. Analysis of our taxation expense for the year
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
United Kingdom
Corporation tax at 25% (FY23: 19%)
(10)
\u2014
Adjustments in respect of earlier years
\u2014
63
Non-UK taxation
Current
(77)
(67)
Adjustments in respect of earlier years
(10)
9
Total current taxation (expense)
(97)
5
Deferred taxation
Origination and reversal of temporary differences
(280)
102
Adjustments in respect of earlier years
46
56
Remeasurement of temporary differences
\u2014
13
Total deferred taxation credit (expense)
(234)
171
Total taxation (expense)
(331)
176
10. Taxation
Factors affecting our taxation expense for the year
The taxation expense on the profit for the year differs from the amount computed by applying the UK corporation tax rate to the profit
before taxation as a result of the following factors:
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Profit before taxation
1,186
1,729
Expected taxation expense at UK rate of 25% (FY23: 19%)
(297)
(328)
Effects of:
(Higher)/lower taxes on non-UK profits
25
\u2014
Net permanent differences between tax and accounting
(114)
352
Adjustments in respect of earlier years
b
40
126
Prior year non-UK losses used against current year profits
10
5
Non-UK losses not recognised
5
9
Re-measurement of deferred tax balances
\u2014
12
Total taxation credit (expense)
(331)
176
Exclude specific items (note 9)
(145)
(308)
Total taxation expense before specific items
(476)
(132)
a
c
a Includes income that is not taxable or UK income taxable at a different rate including the UK patent box incentive of \u00a360m (FY23: \u00a335m), and expenses for which no tax relief is
received including a loss on goodwill impairment of \u00a3122m. In FY23 this included the benefit of the UK super-deduction of \u00a3250m and the non-taxable profit on the disposal and
revaluation of BT Sport of \u00a3104m.
b Reflects the differences between initial accounting estimates and tax returns submitted to tax authorities, including the release and establishment of provisions for uncertain tax
positions.
c Reflects losses made in countries where it has not been considered appropriate to recognise a deferred tax asset, as future taxable profits are not probable.
Tax components of other comprehensive income
2024
2023
Tax credit Tax credit
(expense) (expense)
Year ended 31 March \u00a3m \u00a3m
Taxation on items that will not be reclassified to the income statement
Pension remeasurements
600
732
Tax on items that have been or may be reclassified subsequently to the income statement
Exchange differences on translation of foreign operations
9
\u2014
Fair value movements on cash flow hedges
\u2013 net fair value gains or (losses)
69
(90)
\u2013 recognised in income and expense
\u2014
\u2014
Total tax recognised in other comprehensive income
678
642
Current tax credit
\u2014
8
Deferred tax credit (expense)
678
634
Total tax recognised in other comprehensive income
678
642
a
a Includes \u00a3nil (FY23: \u00a3nil) relating to cash contributions made to reduce retirement benefit obligations.
Tax (expense) credit recognised directly in equity
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Tax (expense) credit relating to share-based payments
(12)
(9)
Deferred taxation
Fixed asset Retirement Share-
temporary benefit based Tax Jurisdictional
a
differences obligations payments
losses
Other
offset
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
2,913
(195)
(36)
(857)
(154)
\u2014
1,671
Expense (credit) recognised in the
income statement
886
(18)
(13)
(1,022)
(4)
\u2014
(171)
Expense (credit) recognised in other
comprehensive income
\u2014
(413)
\u2014
(311)
90
\u2014
(634)
Expense (credit) recognised in equity
\u2014
\u2014
9
\u2014
\u2014
\u2014
9
Exchange differences
\u2014
\u2014
\u2014
(4)
(3)
\u2014
(7)
Acquisition of subsidiary
\u2014
\u2014
\u2014
\u2014
2
\u2014
2
Transfer from current tax
\u2014
\u2014
\u2014
\u2014
41
\u2014
41
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Non-current
Deferred tax asset
\u2014
(626)
(40)
(2,194)
(28)
2,179
(709)
Deferred tax liability
3,799
\u2014
\u2014
\u2014
\u2014
(2,179)
1,620
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Expense (credit) recognised in the
income statement
782
(17)
2
(454)
(79)
\u2014
234
Expense (credit) recognised in other
comprehensive income
\u2014
(325)
\u2014
(266)
(87)
\u2014
(678)
Expense (credit) recognised in equity
\u2014
\u2014
12
\u2014
\u2014
\u2014
12
Exchange differences
\u2014
\u2014
\u2014
3
3
\u2014
6
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
Non-current
Deferred tax asset
\u2014
(968)
(26)
(2,911)
(191)
3,048
(1,048)
Deferred tax liability
4,581
\u2014
\u2014
\u2014
\u2014
(3,048)
1,533
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
a Includes a deferred tax asset of \u00a3nil (FY23: \u00a38m) arising on contributions payable to defined contribution pension plans. The majority of the deferred tax assets and liabilities noted above are anticipated to be realised after more than 12 months. What factors affect our future tax charges? We expect a large proportion of our capital spend on fibre rollout to be eligible for full expensing under the UK capital allowances regime, which provides 100% tax relief in the year of spend on qualifying assets. These deductions drive a projected UK tax loss and no UK tax payments for FY24. The enhanced and accelerated tax deductions arising under the Government\u2019s super-deduction regime for qualifying capital spend during FY22 and FY23, together with full expensing in FY24 and pension deficit contribution deductions, result in c. \u00a311.3bn of tax losses expected to be carried forward from FY24, to be utilised against future UK taxable profits. These are represented by a net c. \u00a32.8bn deferred tax asset which is disclosed within the \u00a32,911m deferred tax asset relating to tax losses in the table above. The group is within the scope of the OECD Pillar Two model rules. The UK has enacted Pillar Two legislation which applies for accounting periods beginning on or after 1 January 2024. Since the Pillar Two legislation was not effective for the current period, the group has no related current tax exposure. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. As the UK rate of corporation tax from FY24 will be 25%, and the group\u2019s business is primarily in the UK, the impact of these rules on the group is not expected to be material. What are our unrecognised tax losses and other temporary differences? At 31 March 2024 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets were recognised amounting to \u00a33.7bn (FY23: \u00a33.7bn). Our other temporary differences have no expiry date restrictions. The expiry date of operating losses carried forward is dependent upon the tax law of the various territories in which the losses arose. A summary of expiry dates for losses in respect of which restrictions apply is set out below:
At 31 March 2024
\u00a3m
Expiry
Restricted losses
Europe
\u2014
2025 - 2043
Americas
372
2025 - 2033
Other
2
2025 - 2033
Total restricted losses
374
Unrestricted operating losses
3,080
No expiry
Other temporary differences
209
No expiry
Total
3,663
At 31 March 2024 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to \u00a316.8bn (FY23: \u00a316.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to be remote.
At 31 March 2024 the undistributed earnings of non-UK subsidiaries were \u00a32.6bn (FY23: \u00a32.5bn). No deferred tax liabilities have been
recognised in respect of these unremitted earnings because the group is in a position to control the timing of any dividends from
subsidiaries and hence any tax consequences that may arise. Under current tax rules, tax of \u00a344m (FY23: \u00a341m) would arise if these
earnings were to be repatriated to the UK.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-616": { "value": "Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of our assets and liabilities and their tax base. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred and current income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it is probable that there will be suitable taxable profits against which the deductible temporary difference can be utilised. Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on the face of the group balance sheet as permitted by IAS 12, with the exception of deferred tax related to our pension schemes which is disclosed within deferred tax assets.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-533": { "value": "
Deferred taxation
Fixed asset Retirement Share-
temporary benefit based Tax Jurisdictional
a
differences obligations payments
losses
Other
offset
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
2,913
(195)
(36)
(857)
(154)
\u2014
1,671
Expense (credit) recognised in the
income statement
886
(18)
(13)
(1,022)
(4)
\u2014
(171)
Expense (credit) recognised in other
comprehensive income
\u2014
(413)
\u2014
(311)
90
\u2014
(634)
Expense (credit) recognised in equity
\u2014
\u2014
9
\u2014
\u2014
\u2014
9
Exchange differences
\u2014
\u2014
\u2014
(4)
(3)
\u2014
(7)
Acquisition of subsidiary
\u2014
\u2014
\u2014
\u2014
2
\u2014
2
Transfer from current tax
\u2014
\u2014
\u2014
\u2014
41
\u2014
41
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Non-current
Deferred tax asset
\u2014
(626)
(40)
(2,194)
(28)
2,179
(709)
Deferred tax liability
3,799
\u2014
\u2014
\u2014
\u2014
(2,179)
1,620
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Expense (credit) recognised in the
income statement
782
(17)
2
(454)
(79)
\u2014
234
Expense (credit) recognised in other
comprehensive income
\u2014
(325)
\u2014
(266)
(87)
\u2014
(678)
Expense (credit) recognised in equity
\u2014
\u2014
12
\u2014
\u2014
\u2014
12
Exchange differences
\u2014
\u2014
\u2014
3
3
\u2014
6
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
Non-current
Deferred tax asset
\u2014
(968)
(26)
(2,911)
(191)
3,048
(1,048)
Deferred tax liability
4,581
\u2014
\u2014
\u2014
\u2014
(3,048)
1,533
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
a Includes a deferred tax asset of \u00a3nil (FY23: \u00a38m) arising on contributions payable to defined contribution pension plans.
The majority of the deferred tax assets and liabilities noted above are anticipated to be realised after more than 12 months.
What factors affect our future tax charges?
We expect a large proportion of our capital spend on fibre rollout to be eligible for full expensing under the UK capital allowances regime,
which provides 100% tax relief in the year of spend on qualifying assets. These deductions drive a projected UK tax loss and no UK tax
payments for FY24. The enhanced and accelerated tax deductions arising under the Government\u2019s super-deduction regime for qualifying
capital spend during FY22 and FY23, together with full expensing in FY24 and pension deficit contribution deductions, result in c. \u00a311.3bn
of tax losses expected to be carried forward from FY24, to be utilised against future UK taxable profits. These are represented by a net c.
\u00a32.8bn deferred tax asset which is disclosed within the \u00a32,911m deferred tax asset relating to tax losses in the table above.
The group is within the scope of the OECD Pillar Two model rules. The UK has enacted Pillar Two legislation which applies for accounting
periods beginning on or after 1 January 2024. Since the Pillar Two legislation was not effective for the current period, the group has no
related current tax exposure. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base
Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. As the UK rate of corporation tax from FY24 will be 25%,
and the group\u2019s business is primarily in the UK, the impact of these rules on the group is not expected to be material.
What are our unrecognised tax losses and other temporary differences?
At 31 March 2024 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets
were recognised amounting to \u00a33.7bn (FY23: \u00a33.7bn). Our other temporary differences have no expiry date restrictions. The expiry date
of operating losses carried forward is dependent upon the tax law of the various territories in which the losses arose. A summary of expiry
dates for losses in respect of which restrictions apply is set out below:
At 31 March 2024
\u00a3m
Expiry
Restricted losses
Europe
\u2014
2025 - 2043
Americas
372
2025 - 2033
Other
2
2025 - 2033
Total restricted losses
374
Unrestricted operating losses
3,080
No expiry
Other temporary differences
209
No expiry
Total
3,663
At 31 March 2024 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to
\u00a316.8bn (FY23: \u00a316.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to
be remote.
At 31 March 2024 the undistributed earnings of non-UK subsidiaries were \u00a32.6bn (FY23: \u00a32.5bn). No deferred tax liabilities have been recognised in respect of these unremitted earnings because the group is in a position to control the timing of any dividends from subsidiaries and hence any tax consequences that may arise. Under current tax rules, tax of \u00a344m (FY23: \u00a341m) would arise if these earnings were to be repatriated to the UK. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-593": { "value": "Deferred taxation
Fixed asset Retirement Share-
temporary benefit based Tax Jurisdictional
a
differences obligations payments
losses
Other
offset
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
2,913
(195)
(36)
(857)
(154)
\u2014
1,671
Expense (credit) recognised in the
income statement
886
(18)
(13)
(1,022)
(4)
\u2014
(171)
Expense (credit) recognised in other
comprehensive income
\u2014
(413)
\u2014
(311)
90
\u2014
(634)
Expense (credit) recognised in equity
\u2014
\u2014
9
\u2014
\u2014
\u2014
9
Exchange differences
\u2014
\u2014
\u2014
(4)
(3)
\u2014
(7)
Acquisition of subsidiary
\u2014
\u2014
\u2014
\u2014
2
\u2014
2
Transfer from current tax
\u2014
\u2014
\u2014
\u2014
41
\u2014
41
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Non-current
Deferred tax asset
\u2014
(626)
(40)
(2,194)
(28)
2,179
(709)
Deferred tax liability
3,799
\u2014
\u2014
\u2014
\u2014
(2,179)
1,620
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Expense (credit) recognised in the
income statement
782
(17)
2
(454)
(79)
\u2014
234
Expense (credit) recognised in other
comprehensive income
\u2014
(325)
\u2014
(266)
(87)
\u2014
(678)
Expense (credit) recognised in equity
\u2014
\u2014
12
\u2014
\u2014
\u2014
12
Exchange differences
\u2014
\u2014
\u2014
3
3
\u2014
6
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
Non-current
Deferred tax asset
\u2014
(968)
(26)
(2,911)
(191)
3,048
(1,048)
Deferred tax liability
4,581
\u2014
\u2014
\u2014
\u2014
(3,048)
1,533
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
a Includes a deferred tax asset of \u00a3nil (FY23: \u00a38m) arising on contributions payable to defined contribution pension plans. The majority of the deferred tax assets and liabilities noted above are anticipated to be realised after more than 12 months. What factors affect our future tax charges? We expect a large proportion of our capital spend on fibre rollout to be eligible for full expensing under the UK capital allowances regime, which provides 100% tax relief in the year of spend on qualifying assets. These deductions drive a projected UK tax loss and no UK tax payments for FY24. The enhanced and accelerated tax deductions arising under the Government\u2019s super-deduction regime for qualifying capital spend during FY22 and FY23, together with full expensing in FY24 and pension deficit contribution deductions, result in c. \u00a311.3bn of tax losses expected to be carried forward from FY24, to be utilised against future UK taxable profits. These are represented by a net c. \u00a32.8bn deferred tax asset which is disclosed within the \u00a32,911m deferred tax asset relating to tax losses in the table above. The group is within the scope of the OECD Pillar Two model rules. The UK has enacted Pillar Two legislation which applies for accounting periods beginning on or after 1 January 2024. Since the Pillar Two legislation was not effective for the current period, the group has no related current tax exposure. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. As the UK rate of corporation tax from FY24 will be 25%, and the group\u2019s business is primarily in the UK, the impact of these rules on the group is not expected to be material. What are our unrecognised tax losses and other temporary differences? At 31 March 2024 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets were recognised amounting to \u00a33.7bn (FY23: \u00a33.7bn). Our other temporary differences have no expiry date restrictions. The expiry date of operating losses carried forward is dependent upon the tax law of the various territories in which the losses arose. A summary of expiry dates for losses in respect of which restrictions apply is set out below:
At 31 March 2024
\u00a3m
Expiry
Restricted losses
Europe
\u2014
2025 - 2043
Americas
372
2025 - 2033
Other
2
2025 - 2033
Total restricted losses
374
Unrestricted operating losses
3,080
No expiry
Other temporary differences
209
No expiry
Total
3,663
At 31 March 2024 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to \u00a316.8bn (FY23: \u00a316.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to be remote. At 31 March 2024 the undistributed earnings of non-UK subsidiaries were \u00a32.6bn (FY23: \u00a32.5bn). No deferred tax liabilities have been recognised in respect of these unremitted earnings because the group is in a position to control the timing of any dividends from subsidiaries and hence any tax consequences that may arise. Under current tax rules, tax of \u00a344m (FY23: \u00a341m) would arise if these earnings were to be repatriated to the UK. Material accounting policies that apply to trade and other payables We initially recognise trade and other payables at fair value, which is usually the original invoiced amount. We subsequently carry them at amortised cost using the effective interest method. We use a supply chain financing programme to extend payment terms with a limited number of suppliers to a more typical payment term. We also use a separate supply chain financing programme to allow suppliers to receive funding earlier than the invoice due date. We assess these arrangements against indicators to assess if debts which vendors have sold to the funder under the supplier financing schemes continue to meet the definition of trade payables or should be classified as borrowings. At 31 March 2024 under the terms of the arrangement the funder's payment to the supplier does not legally extinguish our obligation to the supplier so it remains within trade and other payables. Cash flows only occur when the trade payable is extinguished and are therefore presented in cash flows from operating activities.
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade payables
4,119
4,196
Other taxation and social security
544
581
Minimum guarantee with sports joint venture
a
194
195
Accrued expenses
543
458
Deferred income
355
532
Other payables
572
602
6,327
6,564
Non-current
Minimum guarantee with sports joint venture
a
271
465
Deferred income
342
403
Other payables
24
52
637
920
b c b a Liability recognised on the minimum revenue guarantee in BT\u2019s distribution agreement with the sports joint venture (see note 22). Movement in the liability driven by \u00a3211m payments made during the year less \u00a316m finance cost recorded from unwinding the impact of discounting. b Deferred income includes \u00a3106m (FY23: \u00a3258m) current and \u00a3122m (FY23: \u00a3169m) non-current liabilities relating to Building Digital UK, for which grants received by the group may be subject to re-investment or repayment depending on the level of take-up. c Includes \u00a341m relating to an estimate of customer refunds, refer to note 5. Current trade and other payables at 31 March 2024 include: \u2013 \u00a3101m (31 March 2023: \u00a3348m) of trade payables that have been factored in a supply chain financing programme. The facility size of \u00a3350m remains consistent with prior periods. These programmes are used with a limited number of suppliers with short payment terms to extend them to a more typical payment term. \u2013 \u00a3224m (31 March 2023: \u00a3169m) of trade payables in a separate supply chain financing programme that allows suppliers the opportunity to receive funding earlier than the invoice due date. Financial institutions are used to support this programme but we continue to recognise the underlying payables as we continue to cash settle the supplier invoices in accordance with their terms. 17. Trade and other payables", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-586": { "value": "Deferred taxation
Fixed asset Retirement Share-
temporary benefit based Tax Jurisdictional
a
differences obligations payments
losses
Other
offset
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
2,913
(195)
(36)
(857)
(154)
\u2014
1,671
Expense (credit) recognised in the
income statement
886
(18)
(13)
(1,022)
(4)
\u2014
(171)
Expense (credit) recognised in other
comprehensive income
\u2014
(413)
\u2014
(311)
90
\u2014
(634)
Expense (credit) recognised in equity
\u2014
\u2014
9
\u2014
\u2014
\u2014
9
Exchange differences
\u2014
\u2014
\u2014
(4)
(3)
\u2014
(7)
Acquisition of subsidiary
\u2014
\u2014
\u2014
\u2014
2
\u2014
2
Transfer from current tax
\u2014
\u2014
\u2014
\u2014
41
\u2014
41
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Non-current
Deferred tax asset
\u2014
(626)
(40)
(2,194)
(28)
2,179
(709)
Deferred tax liability
3,799
\u2014
\u2014
\u2014
\u2014
(2,179)
1,620
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Expense (credit) recognised in the
income statement
782
(17)
2
(454)
(79)
\u2014
234
Expense (credit) recognised in other
comprehensive income
\u2014
(325)
\u2014
(266)
(87)
\u2014
(678)
Expense (credit) recognised in equity
\u2014
\u2014
12
\u2014
\u2014
\u2014
12
Exchange differences
\u2014
\u2014
\u2014
3
3
\u2014
6
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
Non-current
Deferred tax asset
\u2014
(968)
(26)
(2,911)
(191)
3,048
(1,048)
Deferred tax liability
4,581
\u2014
\u2014
\u2014
\u2014
(3,048)
1,533
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
a Includes a deferred tax asset of \u00a3nil (FY23: \u00a38m) arising on contributions payable to defined contribution pension plans. The majority of the deferred tax assets and liabilities noted above are anticipated to be realised after more than 12 months. What factors affect our future tax charges? We expect a large proportion of our capital spend on fibre rollout to be eligible for full expensing under the UK capital allowances regime, which provides 100% tax relief in the year of spend on qualifying assets. These deductions drive a projected UK tax loss and no UK tax payments for FY24. The enhanced and accelerated tax deductions arising under the Government\u2019s super-deduction regime for qualifying capital spend during FY22 and FY23, together with full expensing in FY24 and pension deficit contribution deductions, result in c. \u00a311.3bn of tax losses expected to be carried forward from FY24, to be utilised against future UK taxable profits. These are represented by a net c. \u00a32.8bn deferred tax asset which is disclosed within the \u00a32,911m deferred tax asset relating to tax losses in the table above. The group is within the scope of the OECD Pillar Two model rules. The UK has enacted Pillar Two legislation which applies for accounting periods beginning on or after 1 January 2024. Since the Pillar Two legislation was not effective for the current period, the group has no related current tax exposure. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. As the UK rate of corporation tax from FY24 will be 25%, and the group\u2019s business is primarily in the UK, the impact of these rules on the group is not expected to be material. What are our unrecognised tax losses and other temporary differences? At 31 March 2024 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets were recognised amounting to \u00a33.7bn (FY23: \u00a33.7bn). Our other temporary differences have no expiry date restrictions. The expiry date of operating losses carried forward is dependent upon the tax law of the various territories in which the losses arose. A summary of expiry dates for losses in respect of which restrictions apply is set out below:
At 31 March 2024
\u00a3m
Expiry
Restricted losses
Europe
\u2014
2025 - 2043
Americas
372
2025 - 2033
Other
2
2025 - 2033
Total restricted losses
374
Unrestricted operating losses
3,080
No expiry
Other temporary differences
209
No expiry
Total
3,663
At 31 March 2024 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to \u00a316.8bn (FY23: \u00a316.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to be remote. At 31 March 2024 the undistributed earnings of non-UK subsidiaries were \u00a32.6bn (FY23: \u00a32.5bn). No deferred tax liabilities have been recognised in respect of these unremitted earnings because the group is in a position to control the timing of any dividends from subsidiaries and hence any tax consequences that may arise. Under current tax rules, tax of \u00a344m (FY23: \u00a341m) would arise if these earnings were to be repatriated to the UK. 16. Trade and other receivables Material accounting policies that apply to trade and other receivables Trade receivables are recognised where the right to receive payment from customers is conditional only on the passage of time. We initially recognise trade and other receivables at fair value, which is usually the original invoiced amount. They are subsequently carried at amortised cost using the effective interest method. The carrying amount of these balances approximates to fair value due to the short maturity of amounts receivable. We provide services to consumer and business customers, mainly on credit terms. We know that certain debts due to us will not be paid through the default of a small number of our customers. Because of this, we recognise an allowance for doubtful debts on initial recognition of receivables, which is deducted from the gross carrying amount of the receivable. The allowance is calculated by reference to credit losses expected to be incurred over the lifetime of the receivable. In estimating a loss allowance we consider historical experience and informed credit assessment alongside other factors such as the current state of the economy and particular industry issues. We consider reasonable and supportable information that is relevant and available without undue cost or effort. Once recognised, trade receivables are continuously monitored and updated. Allowances are based on our historical loss experiences for the relevant aged category as well as forward-looking information and general economic conditions. Allowances are calculated by individual CFUs in order to reflect the specific nature of the customers relevant to that CFU. The group utilises factoring arrangements for selected trade receivables. Trade receivables that are subject to debt factoring arrangements are derecognised if they meet the conditions for derecognition detailed in IFRS 9 \u2018Financial instruments\u2019 and the related cash flows received are presented as cash flows from operating activities. Contingent assets such as any insurance recoveries which we expect to recoup, have not been recognised in the financial statements as these are only recognised within trade and other receivables when their receipt is virtually certain.
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade receivables
1,899
1,395
Prepayments
586
545
Accrued income
162
158
Deferred contract costs
383
369
Finance lease receivables
31
29
Amounts due from joint ventures
163
268
Other assets
341
296
3,565
3,060
Non-current
Deferred contract costs
229
211
Finance lease receivables
107
98
Other assets
305
194
641
503
a a a Other assets comprise Flex Pay receivables, prepayments and \u00a357m (FY23: \u00a370m) of deferred cash consideration mainly relating to the disposal of BT Sport, see note 22 . Amounts due from joint ventures relates to a sterling Revolving Credit Facility (RCF) provided to the Sports JV, see note 30. The expected loss provision is immaterial. Trade receivables are stated after deducting allowances for doubtful debts, as follows:
2024
2023
\u00a3m
\u00a3m
At 1 April
168
223
Expense
129
84
Utilised
(127)
(142)
Exchange differences
(1)
3
At 31 March
169
168
The expected credit loss allowance for trade receivables was determined as follows:
Past due and not specifically impaired
Trade
receivables
specifically Between Between Between
impaired net 0 and 3 3 and 6 6 and 12 Over 12
Not past due of provision months months months
months
Total
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2024
Expected loss rate %
1%
50%
8%
28%
47%
65%
8%
Gross carrying amount
1,448
4
357
81
64
114
2,068
Loss allowance
(11)
(2)
(29)
(23)
(30)
(74)
(169)
Net carrying amount
1,437
2
328
58
34
40
1,899
2023
Expected loss rate %
1%
75%
10%
46%
41%
52%
11%
Gross carrying amount
1,030
20
265
48
59
141
1,563
Loss allowance
(8)
(15)
(26)
(22)
(24)
(73)
(168)
Net carrying amount
1,022
5
239
26
35
68
1,395
Trade receivables not past due and accrued income are analysed below by CFU.
Trade receivables not past due
Accrued income
2024
2023
2024
2023
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Consumer
375
309
81
82
Business
900
713
4
2
Openreach
161
\u2014
75
70
Other
1
\u2014
2
4
Total
1,437
1,022
162
158
a a Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our Enterprise and Global units, see note 1. Given the broad and varied nature of our customer base, the analysis of trade receivables not past due and accrued income by CFU is considered the most appropriate disclosure of credit concentrations. Deferred contract costs Material accounting policies that apply to deferred contract costs We capitalise certain costs associated with the acquisition and fulfilment of contracts with customers and amortise them over the period that we transfer the associated services. Connection costs are deferred as contract fulfilment costs because they allow satisfaction of the associated connection performance obligation and are considered recoverable. Sales commissions and other third party contract acquisition costs are capitalised as costs to acquire a contract unless the associated contract term is less than 12 months, in which case they are expensed as incurred. Capitalised costs are amortised over the minimum contract term. A portfolio approach is used to determine contract term. Where the initial set-up, transition and transformation phases of long-term contractual arrangements represent distinct performance obligations, costs in delivering these services are expensed as incurred. Where these services are not distinct performance obligations, we capitalise eligible costs as a cost of fulfilling the related service. Capitalised costs are amortised on a straight-line basis over the remaining contract term, unless the pattern of service delivery indicates a more appropriate profile. To be eligible for capitalisation, costs must be directly attributable to specific contracts, relate to future activity, and generate future economic benefits. Capitalised costs are regularly assessed for recoverability. The following table shows the movement on deferred costs:
Deferred contract Deferred contract
Deferred connection acquisition costs \u2013 acquisition costs \u2013 Transition and
costs commissions dealer incentives
transformation
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
24
124
324
90
562
Additions
15
100
285
70
470
Amortisation
(15)
(94)
(276)
(67)
(452)
Impairment
\u2014
(1)
(1)
\u2014
(2)
Other
(2)
2
(2)
4
2
At 31 March 2023
22
131
330
97
580
Additions
10
134
315
57
516
Amortisation
(11)
(118)
(292)
(56)
(477)
Impairment
\u2014
(2)
(7)
\u2014
(9)
Other
(8)
2
3
5
2
At 31 March 2024
13
147
349
103
612
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-559": { "value": "Deferred taxation
Fixed asset Retirement Share-
temporary benefit based Tax Jurisdictional
a
differences obligations payments
losses
Other
offset
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
2,913
(195)
(36)
(857)
(154)
\u2014
1,671
Expense (credit) recognised in the
income statement
886
(18)
(13)
(1,022)
(4)
\u2014
(171)
Expense (credit) recognised in other
comprehensive income
\u2014
(413)
\u2014
(311)
90
\u2014
(634)
Expense (credit) recognised in equity
\u2014
\u2014
9
\u2014
\u2014
\u2014
9
Exchange differences
\u2014
\u2014
\u2014
(4)
(3)
\u2014
(7)
Acquisition of subsidiary
\u2014
\u2014
\u2014
\u2014
2
\u2014
2
Transfer from current tax
\u2014
\u2014
\u2014
\u2014
41
\u2014
41
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Non-current
Deferred tax asset
\u2014
(626)
(40)
(2,194)
(28)
2,179
(709)
Deferred tax liability
3,799
\u2014
\u2014
\u2014
\u2014
(2,179)
1,620
At 31 March 2023
3,799
(626)
(40)
(2,194)
(28)
\u2014
911
Expense (credit) recognised in the
income statement
782
(17)
2
(454)
(79)
\u2014
234
Expense (credit) recognised in other
comprehensive income
\u2014
(325)
\u2014
(266)
(87)
\u2014
(678)
Expense (credit) recognised in equity
\u2014
\u2014
12
\u2014
\u2014
\u2014
12
Exchange differences
\u2014
\u2014
\u2014
3
3
\u2014
6
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
Non-current
Deferred tax asset
\u2014
(968)
(26)
(2,911)
(191)
3,048
(1,048)
Deferred tax liability
4,581
\u2014
\u2014
\u2014
\u2014
(3,048)
1,533
At 31 March 2024
4,581
(968)
(26)
(2,911)
(191)
\u2014
485
a Includes a deferred tax asset of \u00a3nil (FY23: \u00a38m) arising on contributions payable to defined contribution pension plans. The majority of the deferred tax assets and liabilities noted above are anticipated to be realised after more than 12 months. What factors affect our future tax charges? We expect a large proportion of our capital spend on fibre rollout to be eligible for full expensing under the UK capital allowances regime, which provides 100% tax relief in the year of spend on qualifying assets. These deductions drive a projected UK tax loss and no UK tax payments for FY24. The enhanced and accelerated tax deductions arising under the Government\u2019s super-deduction regime for qualifying capital spend during FY22 and FY23, together with full expensing in FY24 and pension deficit contribution deductions, result in c. \u00a311.3bn of tax losses expected to be carried forward from FY24, to be utilised against future UK taxable profits. These are represented by a net c. \u00a32.8bn deferred tax asset which is disclosed within the \u00a32,911m deferred tax asset relating to tax losses in the table above. The group is within the scope of the OECD Pillar Two model rules. The UK has enacted Pillar Two legislation which applies for accounting periods beginning on or after 1 January 2024. Since the Pillar Two legislation was not effective for the current period, the group has no related current tax exposure. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. As the UK rate of corporation tax from FY24 will be 25%, and the group\u2019s business is primarily in the UK, the impact of these rules on the group is not expected to be material. What are our unrecognised tax losses and other temporary differences? At 31 March 2024 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets were recognised amounting to \u00a33.7bn (FY23: \u00a33.7bn). Our other temporary differences have no expiry date restrictions. The expiry date of operating losses carried forward is dependent upon the tax law of the various territories in which the losses arose. A summary of expiry dates for losses in respect of which restrictions apply is set out below:
At 31 March 2024
\u00a3m
Expiry
Restricted losses
Europe
\u2014
2025 - 2043
Americas
372
2025 - 2033
Other
2
2025 - 2033
Total restricted losses
374
Unrestricted operating losses
3,080
No expiry
Other temporary differences
209
No expiry
Total
3,663
At 31 March 2024 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to \u00a316.8bn (FY23: \u00a316.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to be remote. At 31 March 2024 the undistributed earnings of non-UK subsidiaries were \u00a32.6bn (FY23: \u00a32.5bn). No deferred tax liabilities have been recognised in respect of these unremitted earnings because the group is in a position to control the timing of any dividends from subsidiaries and hence any tax consequences that may arise. Under current tax rules, tax of \u00a344m (FY23: \u00a341m) would arise if these earnings were to be repatriated to the UK. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-503": { "value": "
11. Earnings per share
How is earnings per share calculated?
Basic earnings per share is calculated by dividing the profit after tax attributable to equity shareholders by the weighted average number
of shares in issue after deducting the own shares held by employee share ownership trusts and treasury shares.
In calculating the diluted earnings per share, share options outstanding and other potential shares have been taken into account where
the impact of these is dilutive.
Year ended 31 March
2024
2023
Basic weighted average number of shares (millions)
9,823
9,803
Dilutive shares from share options (millions)
39
83
Dilutive shares from share awards (millions)
136
171
Diluted weighted average number of shares (millions)
9,998
10,057
Basic earnings per share
8.7 p
19.4 p
Diluted earnings per share
8.6 p
18.9 p
The earnings per share calculations are based on profit after tax attributable to equity shareholders of the parent company which excludes
non-controlling interests. Profit after tax was \u00a3855m (FY23: \u00a31,905m) and profit after tax attributable to non-controlling interests was
\u00a3nil (FY23: \u00a34m). Profit attributable to non-controlling interests is not presented separately in the financial statements as it is not
material.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-599": { "value": " How is earnings per share calculated? Basic earnings per share is calculated by dividing the profit after tax attributable to equity shareholders by the weighted average number of shares in issue after deducting the own shares held by employee share ownership trusts and treasury shares. In calculating the diluted earnings per share, share options outstanding and other potential shares have been taken into account where the impact of these is dilutive.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-504": { "value": "12. Dividends What is the group\u2019s dividend policy? We have a progressive dividend policy to maintain or grow the dividend each year whilst taking into consideration a number of factors including underlying medium-term earnings expectations and levels of business reinvestment. What dividends have been paid? A final dividend of 5.69p per share amounting to approximately \u00a3553m is proposed in respect of the year ended 31 March 2024 (FY23: final dividend of 5.39p per share amounting to \u00a3530m paid in respect of the year ended 31 March 2023). An interim dividend of 2.31p per share amounting to \u00a3227m was paid on 2 February 2024 (FY23: interim dividend of 2.31p per share amounting to \u00a3226m paid). This value may differ from the amount shown for equity dividends paid in the group cash flow statement, which represents the actual cash paid in relation to dividend cheques that have been presented over the course of the financial year.
2024
2023
Year ended 31 March
pence per share
\u00a3m
pence per share
\u00a3m
Final dividend in respect of the prior year
5.39
530
5.39
527
Interim dividend in respect of the current year
2.31
227
2.31
226
7.70
757
7.70
753
20. Own shares Material accounting policies that apply to own shares Own shares are recorded at cost and deducted from equity. When shares held for the beneficial ownership of employees vest unconditionally or are cancelled they are transferred from the own shares reserve to retained earnings at their weighted average cost.
a a
Treasury shares Employee share ownership trust Total
millions
\u00a3m
millions
\u00a3m
millions
\u00a3m
At 1 April 2022
41
(108)
94
(166)
135
(274)
Own shares purchased
\u2014
\u2014
114
(187)
114
(187)
Share options exercised
(5)
14
\u2014
\u2014
(5)
14
Share awards vested
\u2014
\u2014
(14)
25
(14)
25
At 31 March 2023
36
(94)
194
(328)
230
(422)
Own shares purchased
\u2014
\u2014
64
(83)
64
(83)
Share options exercised
(20)
52
(44)
72
(64)
124
Yourshare vestings
\u2014
\u2014
(5)
8
(5)
8
Share awards vested
\u2014
\u2014
(37)
62
(37)
62
At 31 March 2024
16
(42)
172
(269)
188
(311)
b b b b a At 31 March 2024, 16,299,007 shares (FY23: 36,190,551) with an aggregate nominal value of \u00a31m (FY23: \u00a32m) were held at cost as treasury shares and 172,157,686 shares (FY23: 193,798,578) with an aggregate nominal value of \u00a39m (FY23: \u00a310m) were held in the Trust. b See group cash flow statement. The cash paid for the repurchase of ordinary shares was \u00a3133m (FY23: \u00a3138m). 35m shares (FY23: 40m) were purchased via forward contracts. The cash received from proceeds on the issue of treasury shares was \u00a357m (FY23: \u00a35m). At 31 March 2024 the group had forward contracts to purchase 15m shares (FY23: 55m shares). The treasury shares reserve represents BT Group plc shares purchased directly by the group. The BT Group Employee Share Ownership Trust (the Trust) also purchases BT Group plc shares. The treasury shares and the shares in the Trust are being used to satisfy our obligations under employee share plans, further details of which are provided in note 21.
Other comprehensive income
Capital b Cost of
redemption Cash flow Fair value hedging Translation
a c d
reserve reserve reserve reserve reserve Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
27
(148)
(1)
236
505
619
Reclassification
e
\u2014
472
\u2014
(472)
\u2014
\u2014
Exchange differences
\u2014
\u2014
\u2014
\u2014
89
89
Net fair value gain (loss) on cash flow hedges
\u2014
864
\u2014
191
\u2014
1,055
Movements in relation to cash flow hedges
g
\u2014
(721)
\u2014
8
\u2014
(713)
recognised in income and expense
Fair value movement on assets at fair value
through other comprehensive income
\u2014
\u2014
(3)
\u2014
\u2014
(3)
Tax recognised in other comprehensive income
\u2014
(90)
\u2014
\u2014
\u2014
(90)
At 31 March 2023
27
377
(4)
(37)
594
957
Exchange differences
\u2014
\u2014
\u2014
\u2014
(66)
(66)
Net fair value gain (loss) on cash flow hedges
\u2014
(661)
\u2014
19
\u2014
(642)
Movements in relation to cash flow hedges
g
\u2014
349
\u2014
7
\u2014
356
recognised in income and expense
Tax recognised in other comprehensive income
\u2014
69
\u2014
\u2014
9
78
Transfer to realised profit
\u2014
10
12
\u2014
11
33
At 31 March 2024
27
144
8
(11)
548
716
f f a The cash flow reserve is used to record the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. The transfer to realised profit includes a deferred tax adjustment. b The fair value reserve is used to record gains or losses on equity investments held at fair value through other comprehensive income. When these investments are disposed of any remaining gains or losses in other comprehensive income are transferred to retained earnings. c The cost of hedging reserve reflects the gain or loss on the portion excluded from the designated hedging instrument that relates to the currency basis element of our cross-currency swaps and forward points on certain foreign exchange contracts. It is initially recognised in other comprehensive income and accounted for similarly to gains or losses in the cash flow reserve. d The translation reserve is used to record cumulative translation differences on the net assets of foreign operations. The cumulative translation differences are recycled to the income statement on disposal of the foreign operation. e Reclassification on cash flow hedges in FY23 includes \u00a3472m reclassification from cash flow hedge reserve to cost of hedging reserve. f Excludes \u00a3nil (FY23: \u00a32m) of exchange differences in relation to retained earnings attributed to non-controlling interests. g Movements in cash flow hedge-related reserves recognised in income and expense of \u00a3356m (FY23: \u00a3713m) include a net credit to other comprehensive income of \u00a3318m (FY23: charge of \u00a3679m) which have been reclassified to operating costs, and a net credit of \u00a338m (FY23: charge of \u00a334m) which have been reclassified to finance expense (see note 27). 29. Other reserves", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-560": { "value": "12. Dividends What is the group\u2019s dividend policy? We have a progressive dividend policy to maintain or grow the dividend each year whilst taking into consideration a number of factors including underlying medium-term earnings expectations and levels of business reinvestment. What dividends have been paid? A final dividend of 5.69p per share amounting to approximately \u00a3553m is proposed in respect of the year ended 31 March 2024 (FY23: final dividend of 5.39p per share amounting to \u00a3530m paid in respect of the year ended 31 March 2023). An interim dividend of 2.31p per share amounting to \u00a3227m was paid on 2 February 2024 (FY23: interim dividend of 2.31p per share amounting to \u00a3226m paid). This value may differ from the amount shown for equity dividends paid in the group cash flow statement, which represents the actual cash paid in relation to dividend cheques that have been presented over the course of the financial year.
2024
2023
Year ended 31 March
pence per share
\u00a3m
pence per share
\u00a3m
Final dividend in respect of the prior year
5.39
530
5.39
527
Interim dividend in respect of the current year
2.31
227
2.31
226
7.70
757
7.70
753
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-600": { "value": "
What is the group\u2019s dividend policy?
We have a progressive dividend policy to maintain or grow the dividend each year whilst taking into consideration a number of factors
including underlying medium-term earnings expectations and levels of business reinvestment.
What dividends have been paid?
A final dividend of 5.69p per share amounting to approximately \u00a3553m is proposed in respect of the year ended 31 March 2024 (FY23:
final dividend of 5.39p per share amounting to \u00a3530m paid in respect of the year ended 31 March 2023). An interim dividend of 2.31p per
share amounting to \u00a3227m was paid on 2 February 2024 (FY23: interim dividend of 2.31p per share amounting to \u00a3226m paid). This value
may differ from the amount shown for equity dividends paid in the group cash flow statement, which represents the actual cash paid in
relation to dividend cheques that have been presented over the course of the financial year.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-536": { "value": "0.0569", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-535": { "value": "553000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-534": { "value": "7.7", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-505": { "value": " Material accounting policies that apply to intangible assets We recognise identifiable intangible assets where we control the asset, it is probable that future economic benefits attributable to the asset will flow to the group, and we can reliably measure the cost of the asset. We amortise all intangible assets, other than goodwill, over their useful economic life. The method of amortisation reflects the pattern in which the assets are expected to be consumed. If the pattern cannot be determined reliably, the straight-line method is used. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets (including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note. Acquired intangible assets \u2013 customer relationships and brands Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these relationships or brands and include management\u2019s estimates of revenue and profits to be generated by them. Telecommunications licences Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years. Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. The fair value is based on management\u2019s assumption of future cash flows using market expectations at acquisition date. Computer software Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly associated with the production of internally developed software, including direct and indirect labour costs of development, only where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do not meet these criteria and research costs are expensed as incurred. Our development costs which give rise to internally developed software include upgrading the network architecture or functionality and developing service platforms aimed at offering new services to our customers. Other Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a straight-line basis over their useful economic life or the term of the contract. Estimated useful economic lives The estimated useful economic lives assigned to the principal categories of intangible assets are as follows: \u2013 Computer software 2 to 10 years \u2013 Telecommunications licences 2 to 20 years \u2013 Customer relationships and brands 1 to 15 years Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. 13. Intangible assets
Customer Internally
relationships Telecoms developed Purchased
a b c c
Goodwill and brands licences and other software software Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 April 2022
7,917
3,383
3,490
5,346
971
21,107
Additions
\u2014
\u2014
\u2014
815
203
1,018
Disposals and adjustments
(21)
\u2014
\u2014
(466)
151
(336)
Transfers
\u2014
\u2014
\u2014
30
(38)
(8)
Exchange differences
72
\u2014
1
2
7
82
Transfers to assets held for sale
(13)
\u2014
\u2014
\u2014
\u2014
(13)
At 31 March 2023
7,955
3,383
3,491
5,727
1,294
21,850
Additions
\u2014
\u2014
\u2014
732
206
938
Disposals and adjustments
(4)
(1)
(12)
(671)
298
(390)
Transfers
\u2014
\u2014
\u2014
217
(95)
122
Exchange differences
(29)
\u2014
(1)
(1)
(5)
(36)
At 31 March 2024
7,922
3,382
3,478
6,004
1,698
22,484
Accumulated amortisation
At 1 April 2022
\u2014
2,469
908
3,595
326
7,298
Amortisation charge for the year
\u2014
231
185
596
153
1,165
Impairment
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Disposals and adjustments
\u2014
\u2014
1
(389)
79
(309)
Transfers
\u2014
\u2014
\u2014
(56)
56
\u2014
Exchange differences
\u2014
\u2014
1
1
7
9
Transfers to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 March 2023
\u2014
2,700
1,095
3,747
621
8,163
Amortisation charge for the year
\u2014
231
185
762
70
1,248
Impairment
488
\u2014
\u2014
\u2014
\u2014
488
Disposals and adjustments
\u2014
\u2014
(13)
(462)
96
(379)
Transfers
\u2014
\u2014
\u2014
(41)
90
49
Exchange differences
\u2014
\u2014
(1)
\u2014
(4)
(5)
At 31 March 2024
488
2,931
1,266
4,006
873
9,564
Carrying amount
At 31 March 2023
7,955
683
2,396
1,980
673
13,687
At 31 March 2024
7,434
451
2,212
1,998
825
12,920
d e d f d d f a Customer relationships and brands relate to customer relationships recognised on acquisition of EE. b Telecoms licences and other primarily represents spectrum licences. These include 2100 MHz licence with book value of \u00a3593m (FY23: \u00a3643m), 1800 MHz with book value of \u00a3544m (FY23: \u00a3590m), 700Mhz with book value of \u00a3266m (FY23: \u00a3281m), 3400 MHz with book value of \u00a3226m (FY23: \u00a3242m) and 2600 MHz with book value of \u00a3185m (FY23: \u00a3206m). Spectrum licences are being amortised over a period between 14 and 20 years. c Includes a carrying amount of \u00a3623m (FY23: \u00a31,125m) in respect of assets under construction, which are not yet amortised. d Disposals and adjustments include the removal of assets from the group\u2019s fixed asset registers following disposals and the identification of fully amortised assets (including \u00a30.3bn in FY24 through operation of the group\u2019s annual asset verification exercise). e For a breakdown of assets held for sale see note 22. f During FY24, assets with cost of \u00a3122m and accumulated depreciation of \u00a349m were reclassified from property, plant and equipment to intangible assets following review of asset registers. Impairment of goodwill Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. Significant judgements and critical accounting estimates made in reviewing goodwill for impairment Determining our CGUs The determination of our CGUs is judgemental. The identification of CGUs involves an assessment of whether the asset or group of assets generate largely independent cash inflows. This involves consideration of how our core assets are operated and whether these generate independent revenue streams. In FY23 our CGUs were aligned with the Consumer, Enterprise and Global customer-facing units in existence at the time. From 1 April 2023 the Enterprise and Global units are managed and reported as a single combined unit, Business. Financial information is provided to the Executive Committee on a consolidated basis only, and there have been material changes to the structure and organisation of the combined Business unit following the merger. During FY24 we have reviewed the identification of our CGUs in light of the creation of Business. We concluded that the Enterprise and Global CGUs have been replaced with a single Business CGU. In reaching this conclusion we considered the way in which the combined unit is monitored and the degree of integration within the combined unit, specifically in relation to revenue streams and its asset base. This conclusion also reflects the fact that the cash flows of the legacy Enterprise and Global units are no longer independent and it is no longer possible to report the performance of these units on an individual basis. Accordingly, our CGUs are Consumer and Business from 1 April 2023, aligned with the corresponding CFUs and operating segments (note 4). Estimating value in use Our value in use calculations require estimates in relation to uncertain items, including management\u2019s expectations of future revenue growth, operating costs, profit margins, operating cash flows and the discount rate for each CGU. Future cash flows used in the value in use calculations are on a nominal basis and based on risk-adjusted projections derived from the latest Board-approved five-year financial plans, representing management's best risk-adjusted estimate of future growth. This includes the direct and indirect impacts of inflation and associated mitigations. Expectations about future growth reflect the expectations of growth in the markets to which the CGU relates and consideration of the overall variability relating to individual assumptions at the unit level. The future cash flows are discounted using a pre-tax nominal discount rate that reflects current market assessments of the time value of money. The discount rate used in each CGU is adjusted for the risk specific to the asset, including the countries in which cash flow will be generated, for which the future cash flow estimates have not been adjusted. Estimating terminal growth A long term growth rate into perpetuity is applied immediately at the end of the five year forecast period. We calculate this for each CGU as the lower of the nominal GDP growth rate forecasts and the long-term compound annual growth rate as estimated by management. Long-term compound annual growth rates may be lower than forecast nominal GDP growth rates due to market- specific factors including inflation expectations, the regulatory environment and competition intensity. We tested our goodwill for impairment as at 31 March 2024. The carrying value of goodwill and the key assumptions used in performing the annual impairment assessment and sensitivities are disclosed below.
Consumer
Legacy Enterprise
Legacy Global
Business
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
3,900
3,573
444
\u2014
7,917
Transfer
\u2014
\u2014
\u2014
\u2014
\u2014
Acquisitions and disposals
(26)
4
1
\u2014
(21)
Exchange differences
\u2014
4
68
\u2014
72
Transfer to assets held for sale
\u2014
(4)
(9)
\u2014
(13)
At 31 March 2023
3,874
3,577
504
\u2014
7,955
Transfer
\u2014
(3,577)
(504)
4,081
\u2014
Impairment
\u2014
\u2014
\u2014
(488)
(488)
Acquisitions and disposals
\u2014
\u2014
\u2014
(4)
(4)
Exchange differences
\u2014
\u2014
\u2014
(29)
(29)
Transfer to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 March 2024
3,874
\u2014
\u2014
3,560
7,434
Of the \u00a34.1bn attributable to the Business CGU at 31 March 2023, \u00a32.6bn relates to the acquisition of EE in 2016 with the rest relating to historical small acquisitions. Outcome of our annual impairment review Our FY24 impairment testing exercise concluded that there is significant headroom in our Consumer CGU, consistent with FY23. The carrying value of the Business CGU exceeded its value in use by \u00a3488m. We have therefore booked an impairment charge equivalent to this amount in the income statement, presented as a specific item (note 9). No impairment was recognised in FY23. Historical trends including the transition from legacy products indicate risk within forecasts which we have made appropriate adjustment for in line with IAS 36, so as to arrive at a risk adjusted estimate of future economic conditions which reflects long-term viability and trading risks inherent in delivering against the group\u2019s strategic pillars. At the same time, to acknowledge this risk we have reduced terminal growth rate applied to cash flows when calculating the terminal value. We have also excluded uncommitted restructuring costs and benefits including those that relate to the group-wide restructuring programmes. The combined impact of these adjustments has led to a value in use for IAS 36 impairment testing purposes that is indicative of an impairment. Calculating the value in use has involved the application of assumptions and estimates that have had a material impact on the impairment charge recognised. Management judge that the Board-approved forecasts used to calculate value in use support the carrying amount of the Business CGU as at 31 March 2024. We consider below the impact of reasonably possible alternatives in the next 12 months. What discount rate have we used? The pre-tax discount rates applied to the cash flow forecasts are derived from our post-tax weighted average cost of capital. The assumptions used in the calculation of the group\u2019s weighted average cost of capital are benchmarked to externally available data. The pre-tax discount rate used in performing the value in use calculation for Consumer was 9.25% in FY24 and 9.4% in FY23. We have used a slightly higher rate of 9.27% for Business. This reflects the higher risk countries in which it operates, which in FY23 were part of the Global CGU. In FY23 we used a discount rate of 9.4% for Enterprise and 9.7% for Global, again reflecting the higher risk from countries in which it operates. The reduction in discount rates in FY24 reflects that the cash flows, rather than the discount rate, have been risk adjusted. What growth rates have we used? The perpetuity growth rates are determined based on the forecast market growth rates of the regions in which the CGU operates, and reflect an assessment of the long-term growth prospects of that market. The growth rates have been benchmarked against external data for the relevant markets and analysts\u2019 expectations. None of the growth rates applied exceed the expected average long-term growth rates for those markets or sectors. In FY24 we have used a perpetuity growth rate of 1.0% for Consumer and 0.7% for the Business CGU. In FY23 the perpetuity growth rate was 2.0% for Enterprise and Consumer, and 2.4% for Global. Key assumptions applied to testing goodwill allocated to the Business CGU Key assumptions that value in use is most sensitive to are EBITDA growth over the 5-year forecast period; the long term growth rate for the terminal period; and the weighted average cost of capital used to discount cash flows. \u2013 Our value in use assumes risk-adjusted EBITDA compound annual growth of 0.7% over the 5-year forecast period. The growth rate is the projected adjusted EBITDA growth rate on the cash flow forecasts used in our goodwill impairment model and reflect the growth and maturity of the industry we operate in and historical trends. Compound annual growth rates are risk-adjusted to the compound annual growth rates used in our Board-approved forecasts. \u2013 Application of the terminal growth rate of 0.7%, equivalent to compound annual growth within the terminal period, is viewed as a key assumption with c.75% of the value in use derived from terminal cash flows. \u2013 Value in use is sensitive to the weighted average cost of capital used to discount future cash flows. The table below shows the sensitivity of the \u00a3488m impairment recognised to reasonably possible changes in key assumptions:
Low scenario
High scenario
EBITDA compound annual growth rate +/- 1%
(\u00a31,260m) more impairment
\u00a3374m less impairment
Long term growth rate +/- 0.7%
(\u00a3478m) more impairment
\u00a3488m less impairment
Weighted average cost of capital +/- 1%
(\u00a3865m) more impairment
\u00a3488m less impairment
Other sensitivities applicable to the Business CGU Applying a severe but plausible downside scenario, reflecting a plan that we are highly confident will be achieved or exceeded, based on the same risk population would result in a further impairment charge of \u00a32,430m in addition to the \u00a3488m recognised. Management consider that it is reasonably possible to expect that actual future cash flows will outperform the risk-adjusted cash flows modelled for the purpose of testing goodwill impairment. A less conservative view of risks and opportunities in the base case of our forecast would result in headroom of approximately \u00a32,083m rather than the impairment charge booked.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-537": { "value": " Material accounting policies that apply to intangible assets We recognise identifiable intangible assets where we control the asset, it is probable that future economic benefits attributable to the asset will flow to the group, and we can reliably measure the cost of the asset. We amortise all intangible assets, other than goodwill, over their useful economic life. The method of amortisation reflects the pattern in which the assets are expected to be consumed. If the pattern cannot be determined reliably, the straight-line method is used. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets (including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note. Acquired intangible assets \u2013 customer relationships and brands Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these relationships or brands and include management\u2019s estimates of revenue and profits to be generated by them. Telecommunications licences Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years. Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. The fair value is based on management\u2019s assumption of future cash flows using market expectations at acquisition date. Computer software Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly associated with the production of internally developed software, including direct and indirect labour costs of development, only where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do not meet these criteria and research costs are expensed as incurred. Our development costs which give rise to internally developed software include upgrading the network architecture or functionality and developing service platforms aimed at offering new services to our customers. Other Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a straight-line basis over their useful economic life or the term of the contract. Estimated useful economic lives The estimated useful economic lives assigned to the principal categories of intangible assets are as follows: \u2013 Computer software 2 to 10 years \u2013 Telecommunications licences 2 to 20 years \u2013 Customer relationships and brands 1 to 15 years Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. 13. Intangible assets
Customer Internally
relationships Telecoms developed Purchased
a b c c
Goodwill and brands licences and other software software Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 April 2022
7,917
3,383
3,490
5,346
971
21,107
Additions
\u2014
\u2014
\u2014
815
203
1,018
Disposals and adjustments
(21)
\u2014
\u2014
(466)
151
(336)
Transfers
\u2014
\u2014
\u2014
30
(38)
(8)
Exchange differences
72
\u2014
1
2
7
82
Transfers to assets held for sale
(13)
\u2014
\u2014
\u2014
\u2014
(13)
At 31 March 2023
7,955
3,383
3,491
5,727
1,294
21,850
Additions
\u2014
\u2014
\u2014
732
206
938
Disposals and adjustments
(4)
(1)
(12)
(671)
298
(390)
Transfers
\u2014
\u2014
\u2014
217
(95)
122
Exchange differences
(29)
\u2014
(1)
(1)
(5)
(36)
At 31 March 2024
7,922
3,382
3,478
6,004
1,698
22,484
Accumulated amortisation
At 1 April 2022
\u2014
2,469
908
3,595
326
7,298
Amortisation charge for the year
\u2014
231
185
596
153
1,165
Impairment
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Disposals and adjustments
\u2014
\u2014
1
(389)
79
(309)
Transfers
\u2014
\u2014
\u2014
(56)
56
\u2014
Exchange differences
\u2014
\u2014
1
1
7
9
Transfers to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 March 2023
\u2014
2,700
1,095
3,747
621
8,163
Amortisation charge for the year
\u2014
231
185
762
70
1,248
Impairment
488
\u2014
\u2014
\u2014
\u2014
488
Disposals and adjustments
\u2014
\u2014
(13)
(462)
96
(379)
Transfers
\u2014
\u2014
\u2014
(41)
90
49
Exchange differences
\u2014
\u2014
(1)
\u2014
(4)
(5)
At 31 March 2024
488
2,931
1,266
4,006
873
9,564
Carrying amount
At 31 March 2023
7,955
683
2,396
1,980
673
13,687
At 31 March 2024
7,434
451
2,212
1,998
825
12,920
d
e
d
f
d
d
f
a Customer relationships and brands relate to customer relationships recognised on acquisition of EE.
b Telecoms licences and other primarily represents spectrum licences. These include 2100 MHz licence with book value of \u00a3593m (FY23: \u00a3643m), 1800 MHz with book value of
\u00a3544m (FY23: \u00a3590m), 700Mhz with book value of \u00a3266m (FY23: \u00a3281m), 3400 MHz with book value of \u00a3226m (FY23: \u00a3242m) and 2600 MHz with book value of \u00a3185m (FY23:
\u00a3206m). Spectrum licences are being amortised over a period between 14 and 20 years.
c Includes a carrying amount of \u00a3623m (FY23: \u00a31,125m) in respect of assets under construction, which are not yet amortised.
d Disposals and adjustments include the removal of assets from the group\u2019s fixed asset registers following disposals and the identification of fully amortised assets (including \u00a30.3bn in
FY24 through operation of the group\u2019s annual asset verification exercise).
e For a breakdown of assets held for sale see note 22.
f During FY24, assets with cost of \u00a3122m and accumulated depreciation of \u00a349m were reclassified from property, plant and equipment to intangible assets following review of asset
registers.
Impairment of goodwill Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. Significant judgements and critical accounting estimates made in reviewing goodwill for impairment Determining our CGUs The determination of our CGUs is judgemental. The identification of CGUs involves an assessment of whether the asset or group of assets generate largely independent cash inflows. This involves consideration of how our core assets are operated and whether these generate independent revenue streams. In FY23 our CGUs were aligned with the Consumer, Enterprise and Global customer-facing units in existence at the time. From 1 April 2023 the Enterprise and Global units are managed and reported as a single combined unit, Business. Financial information is provided to the Executive Committee on a consolidated basis only, and there have been material changes to the structure and organisation of the combined Business unit following the merger. During FY24 we have reviewed the identification of our CGUs in light of the creation of Business. We concluded that the Enterprise and Global CGUs have been replaced with a single Business CGU. In reaching this conclusion we considered the way in which the combined unit is monitored and the degree of integration within the combined unit, specifically in relation to revenue streams and its asset base. This conclusion also reflects the fact that the cash flows of the legacy Enterprise and Global units are no longer independent and it is no longer possible to report the performance of these units on an individual basis. Accordingly, our CGUs are Consumer and Business from 1 April 2023, aligned with the corresponding CFUs and operating segments (note 4). Estimating value in use Our value in use calculations require estimates in relation to uncertain items, including management\u2019s expectations of future revenue growth, operating costs, profit margins, operating cash flows and the discount rate for each CGU. Future cash flows used in the value in use calculations are on a nominal basis and based on risk-adjusted projections derived from the latest Board-approved five-year financial plans, representing management's best risk-adjusted estimate of future growth. This includes the direct and indirect impacts of inflation and associated mitigations. Expectations about future growth reflect the expectations of growth in the markets to which the CGU relates and consideration of the overall variability relating to individual assumptions at the unit level. The future cash flows are discounted using a pre-tax nominal discount rate that reflects current market assessments of the time value of money. The discount rate used in each CGU is adjusted for the risk specific to the asset, including the countries in which cash flow will be generated, for which the future cash flow estimates have not been adjusted. Estimating terminal growth A long term growth rate into perpetuity is applied immediately at the end of the five year forecast period. We calculate this for each CGU as the lower of the nominal GDP growth rate forecasts and the long-term compound annual growth rate as estimated by management. Long-term compound annual growth rates may be lower than forecast nominal GDP growth rates due to market- specific factors including inflation expectations, the regulatory environment and competition intensity. We tested our goodwill for impairment as at 31 March 2024. The carrying value of goodwill and the key assumptions used in performing the annual impairment assessment and sensitivities are disclosed below.
Consumer
Legacy Enterprise
Legacy Global
Business
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
3,900
3,573
444
\u2014
7,917
Transfer
\u2014
\u2014
\u2014
\u2014
\u2014
Acquisitions and disposals
(26)
4
1
\u2014
(21)
Exchange differences
\u2014
4
68
\u2014
72
Transfer to assets held for sale
\u2014
(4)
(9)
\u2014
(13)
At 31 March 2023
3,874
3,577
504
\u2014
7,955
Transfer
\u2014
(3,577)
(504)
4,081
\u2014
Impairment
\u2014
\u2014
\u2014
(488)
(488)
Acquisitions and disposals
\u2014
\u2014
\u2014
(4)
(4)
Exchange differences
\u2014
\u2014
\u2014
(29)
(29)
Transfer to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 March 2024
3,874
\u2014
\u2014
3,560
7,434
Of the \u00a34.1bn attributable to the Business CGU at 31 March 2023, \u00a32.6bn relates to the acquisition of EE in 2016 with the rest relating to
historical small acquisitions.
Outcome of our annual impairment review
Our FY24 impairment testing exercise concluded that there is significant headroom in our Consumer CGU, consistent with FY23.
The carrying value of the Business CGU exceeded its value in use by \u00a3488m. We have therefore booked an impairment charge equivalent
to this amount in the income statement, presented as a specific item (note 9). No impairment was recognised in FY23.
Historical trends including the transition from legacy products indicate risk within forecasts which we have made appropriate adjustment
for in line with IAS 36, so as to arrive at a risk adjusted estimate of future economic conditions which reflects long-term viability and
trading risks inherent in delivering against the group\u2019s strategic pillars.
At the same time, to acknowledge this risk we have reduced terminal growth rate applied to cash flows when calculating the terminal
value. We have also excluded uncommitted restructuring costs and benefits including those that relate to the group-wide restructuring
programmes. The combined impact of these adjustments has led to a value in use for IAS 36 impairment testing purposes that is indicative
of an impairment. Calculating the value in use has involved the application of assumptions and estimates that have had a material impact
on the impairment charge recognised. Management judge that the Board-approved forecasts used to calculate value in use support the
carrying amount of the Business CGU as at 31 March 2024. We consider below the impact of reasonably possible alternatives in the next
12 months.
What discount rate have we used?
The pre-tax discount rates applied to the cash flow forecasts are derived from our post-tax weighted average cost of capital. The
assumptions used in the calculation of the group\u2019s weighted average cost of capital are benchmarked to externally available data. The
pre-tax discount rate used in performing the value in use calculation for Consumer was 9.25% in FY24 and 9.4% in FY23. We have used a
slightly higher rate of 9.27% for Business. This reflects the higher risk countries in which it operates, which in FY23 were part of the Global
CGU. In FY23 we used a discount rate of 9.4% for Enterprise and 9.7% for Global, again reflecting the higher risk from countries in which it
operates. The reduction in discount rates in FY24 reflects that the cash flows, rather than the discount rate, have been risk adjusted.
What growth rates have we used?
The perpetuity growth rates are determined based on the forecast market growth rates of the regions in which the CGU operates, and
reflect an assessment of the long-term growth prospects of that market. The growth rates have been benchmarked against external data
for the relevant markets and analysts\u2019 expectations. None of the growth rates applied exceed the expected average long-term growth
rates for those markets or sectors. In FY24 we have used a perpetuity growth rate of 1.0% for Consumer and 0.7% for the Business CGU. In
FY23 the perpetuity growth rate was 2.0% for Enterprise and Consumer, and 2.4% for Global.
Key assumptions applied to testing goodwill allocated to the Business CGU
Key assumptions that value in use is most sensitive to are EBITDA growth over the 5-year forecast period; the long term growth rate for
the terminal period; and the weighted average cost of capital used to discount cash flows.
\u2013 Our value in use assumes risk-adjusted EBITDA compound annual growth of 0.7% over the 5-year forecast period. The growth rate is
the projected adjusted EBITDA growth rate on the cash flow forecasts used in our goodwill impairment model and reflect the growth
and maturity of the industry we operate in and historical trends. Compound annual growth rates are risk-adjusted to the compound
annual growth rates used in our Board-approved forecasts.
\u2013 Application of the terminal growth rate of 0.7%, equivalent to compound annual growth within the terminal period, is viewed as a key
assumption with c.75% of the value in use derived from terminal cash flows.
\u2013 Value in use is sensitive to the weighted average cost of capital used to discount future cash flows.
The table below shows the sensitivity of the \u00a3488m impairment recognised to reasonably possible changes in key assumptions:
Low scenario
High scenario
EBITDA compound annual growth rate +/- 1%
(\u00a31,260m) more impairment
\u00a3374m less impairment
Long term growth rate +/- 0.7%
(\u00a3478m) more impairment
\u00a3488m less impairment
Weighted average cost of capital +/- 1%
(\u00a3865m) more impairment
\u00a3488m less impairment
Other sensitivities applicable to the Business CGU
Applying a severe but plausible downside scenario, reflecting a plan that we are highly confident will be achieved or exceeded, based on
the same risk population would result in a further impairment charge of \u00a32,430m in addition to the \u00a3488m recognised. Management
consider that it is reasonably possible to expect that actual future cash flows will outperform the risk-adjusted cash flows modelled for the
purpose of testing goodwill impairment. A less conservative view of risks and opportunities in the base case of our forecast would result in
headroom of approximately \u00a32,083m rather than the impairment charge booked.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-561": { "value": " Material accounting policies that apply to intangible assets We recognise identifiable intangible assets where we control the asset, it is probable that future economic benefits attributable to the asset will flow to the group, and we can reliably measure the cost of the asset. We amortise all intangible assets, other than goodwill, over their useful economic life. The method of amortisation reflects the pattern in which the assets are expected to be consumed. If the pattern cannot be determined reliably, the straight-line method is used. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets (including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note. Acquired intangible assets \u2013 customer relationships and brands Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these relationships or brands and include management\u2019s estimates of revenue and profits to be generated by them. Telecommunications licences Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years. Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. The fair value is based on management\u2019s assumption of future cash flows using market expectations at acquisition date. Computer software Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly associated with the production of internally developed software, including direct and indirect labour costs of development, only where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do not meet these criteria and research costs are expensed as incurred. Our development costs which give rise to internally developed software include upgrading the network architecture or functionality and developing service platforms aimed at offering new services to our customers. Other Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a straight-line basis over their useful economic life or the term of the contract. Estimated useful economic lives The estimated useful economic lives assigned to the principal categories of intangible assets are as follows: \u2013 Computer software 2 to 10 years \u2013 Telecommunications licences 2 to 20 years \u2013 Customer relationships and brands 1 to 15 years Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. 13. Intangible assets
Customer Internally
relationships Telecoms developed Purchased
a b c c
Goodwill and brands licences and other software software Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 April 2022
7,917
3,383
3,490
5,346
971
21,107
Additions
\u2014
\u2014
\u2014
815
203
1,018
Disposals and adjustments
(21)
\u2014
\u2014
(466)
151
(336)
Transfers
\u2014
\u2014
\u2014
30
(38)
(8)
Exchange differences
72
\u2014
1
2
7
82
Transfers to assets held for sale
(13)
\u2014
\u2014
\u2014
\u2014
(13)
At 31 March 2023
7,955
3,383
3,491
5,727
1,294
21,850
Additions
\u2014
\u2014
\u2014
732
206
938
Disposals and adjustments
(4)
(1)
(12)
(671)
298
(390)
Transfers
\u2014
\u2014
\u2014
217
(95)
122
Exchange differences
(29)
\u2014
(1)
(1)
(5)
(36)
At 31 March 2024
7,922
3,382
3,478
6,004
1,698
22,484
Accumulated amortisation
At 1 April 2022
\u2014
2,469
908
3,595
326
7,298
Amortisation charge for the year
\u2014
231
185
596
153
1,165
Impairment
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Disposals and adjustments
\u2014
\u2014
1
(389)
79
(309)
Transfers
\u2014
\u2014
\u2014
(56)
56
\u2014
Exchange differences
\u2014
\u2014
1
1
7
9
Transfers to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 March 2023
\u2014
2,700
1,095
3,747
621
8,163
Amortisation charge for the year
\u2014
231
185
762
70
1,248
Impairment
488
\u2014
\u2014
\u2014
\u2014
488
Disposals and adjustments
\u2014
\u2014
(13)
(462)
96
(379)
Transfers
\u2014
\u2014
\u2014
(41)
90
49
Exchange differences
\u2014
\u2014
(1)
\u2014
(4)
(5)
At 31 March 2024
488
2,931
1,266
4,006
873
9,564
Carrying amount
At 31 March 2023
7,955
683
2,396
1,980
673
13,687
At 31 March 2024
7,434
451
2,212
1,998
825
12,920
d e d f d d f a Customer relationships and brands relate to customer relationships recognised on acquisition of EE. b Telecoms licences and other primarily represents spectrum licences. These include 2100 MHz licence with book value of \u00a3593m (FY23: \u00a3643m), 1800 MHz with book value of \u00a3544m (FY23: \u00a3590m), 700Mhz with book value of \u00a3266m (FY23: \u00a3281m), 3400 MHz with book value of \u00a3226m (FY23: \u00a3242m) and 2600 MHz with book value of \u00a3185m (FY23: \u00a3206m). Spectrum licences are being amortised over a period between 14 and 20 years. c Includes a carrying amount of \u00a3623m (FY23: \u00a31,125m) in respect of assets under construction, which are not yet amortised. d Disposals and adjustments include the removal of assets from the group\u2019s fixed asset registers following disposals and the identification of fully amortised assets (including \u00a30.3bn in FY24 through operation of the group\u2019s annual asset verification exercise). e For a breakdown of assets held for sale see note 22. f During FY24, assets with cost of \u00a3122m and accumulated depreciation of \u00a349m were reclassified from property, plant and equipment to intangible assets following review of asset registers. Impairment of goodwill Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. Significant judgements and critical accounting estimates made in reviewing goodwill for impairment Determining our CGUs The determination of our CGUs is judgemental. The identification of CGUs involves an assessment of whether the asset or group of assets generate largely independent cash inflows. This involves consideration of how our core assets are operated and whether these generate independent revenue streams. In FY23 our CGUs were aligned with the Consumer, Enterprise and Global customer-facing units in existence at the time. From 1 April 2023 the Enterprise and Global units are managed and reported as a single combined unit, Business. Financial information is provided to the Executive Committee on a consolidated basis only, and there have been material changes to the structure and organisation of the combined Business unit following the merger. During FY24 we have reviewed the identification of our CGUs in light of the creation of Business. We concluded that the Enterprise and Global CGUs have been replaced with a single Business CGU. In reaching this conclusion we considered the way in which the combined unit is monitored and the degree of integration within the combined unit, specifically in relation to revenue streams and its asset base. This conclusion also reflects the fact that the cash flows of the legacy Enterprise and Global units are no longer independent and it is no longer possible to report the performance of these units on an individual basis. Accordingly, our CGUs are Consumer and Business from 1 April 2023, aligned with the corresponding CFUs and operating segments (note 4). Estimating value in use Our value in use calculations require estimates in relation to uncertain items, including management\u2019s expectations of future revenue growth, operating costs, profit margins, operating cash flows and the discount rate for each CGU. Future cash flows used in the value in use calculations are on a nominal basis and based on risk-adjusted projections derived from the latest Board-approved five-year financial plans, representing management's best risk-adjusted estimate of future growth. This includes the direct and indirect impacts of inflation and associated mitigations. Expectations about future growth reflect the expectations of growth in the markets to which the CGU relates and consideration of the overall variability relating to individual assumptions at the unit level. The future cash flows are discounted using a pre-tax nominal discount rate that reflects current market assessments of the time value of money. The discount rate used in each CGU is adjusted for the risk specific to the asset, including the countries in which cash flow will be generated, for which the future cash flow estimates have not been adjusted. Estimating terminal growth A long term growth rate into perpetuity is applied immediately at the end of the five year forecast period. We calculate this for each CGU as the lower of the nominal GDP growth rate forecasts and the long-term compound annual growth rate as estimated by management. Long-term compound annual growth rates may be lower than forecast nominal GDP growth rates due to market- specific factors including inflation expectations, the regulatory environment and competition intensity. We tested our goodwill for impairment as at 31 March 2024. The carrying value of goodwill and the key assumptions used in performing the annual impairment assessment and sensitivities are disclosed below.
Consumer
Legacy Enterprise
Legacy Global
Business
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
3,900
3,573
444
\u2014
7,917
Transfer
\u2014
\u2014
\u2014
\u2014
\u2014
Acquisitions and disposals
(26)
4
1
\u2014
(21)
Exchange differences
\u2014
4
68
\u2014
72
Transfer to assets held for sale
\u2014
(4)
(9)
\u2014
(13)
At 31 March 2023
3,874
3,577
504
\u2014
7,955
Transfer
\u2014
(3,577)
(504)
4,081
\u2014
Impairment
\u2014
\u2014
\u2014
(488)
(488)
Acquisitions and disposals
\u2014
\u2014
\u2014
(4)
(4)
Exchange differences
\u2014
\u2014
\u2014
(29)
(29)
Transfer to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 March 2024
3,874
\u2014
\u2014
3,560
7,434
Of the \u00a34.1bn attributable to the Business CGU at 31 March 2023, \u00a32.6bn relates to the acquisition of EE in 2016 with the rest relating to historical small acquisitions. Outcome of our annual impairment review Our FY24 impairment testing exercise concluded that there is significant headroom in our Consumer CGU, consistent with FY23. The carrying value of the Business CGU exceeded its value in use by \u00a3488m. We have therefore booked an impairment charge equivalent to this amount in the income statement, presented as a specific item (note 9). No impairment was recognised in FY23. Historical trends including the transition from legacy products indicate risk within forecasts which we have made appropriate adjustment for in line with IAS 36, so as to arrive at a risk adjusted estimate of future economic conditions which reflects long-term viability and trading risks inherent in delivering against the group\u2019s strategic pillars. At the same time, to acknowledge this risk we have reduced terminal growth rate applied to cash flows when calculating the terminal value. We have also excluded uncommitted restructuring costs and benefits including those that relate to the group-wide restructuring programmes. The combined impact of these adjustments has led to a value in use for IAS 36 impairment testing purposes that is indicative of an impairment. Calculating the value in use has involved the application of assumptions and estimates that have had a material impact on the impairment charge recognised. Management judge that the Board-approved forecasts used to calculate value in use support the carrying amount of the Business CGU as at 31 March 2024. We consider below the impact of reasonably possible alternatives in the next 12 months. What discount rate have we used? The pre-tax discount rates applied to the cash flow forecasts are derived from our post-tax weighted average cost of capital. The assumptions used in the calculation of the group\u2019s weighted average cost of capital are benchmarked to externally available data. The pre-tax discount rate used in performing the value in use calculation for Consumer was 9.25% in FY24 and 9.4% in FY23. We have used a slightly higher rate of 9.27% for Business. This reflects the higher risk countries in which it operates, which in FY23 were part of the Global CGU. In FY23 we used a discount rate of 9.4% for Enterprise and 9.7% for Global, again reflecting the higher risk from countries in which it operates. The reduction in discount rates in FY24 reflects that the cash flows, rather than the discount rate, have been risk adjusted. What growth rates have we used? The perpetuity growth rates are determined based on the forecast market growth rates of the regions in which the CGU operates, and reflect an assessment of the long-term growth prospects of that market. The growth rates have been benchmarked against external data for the relevant markets and analysts\u2019 expectations. None of the growth rates applied exceed the expected average long-term growth rates for those markets or sectors. In FY24 we have used a perpetuity growth rate of 1.0% for Consumer and 0.7% for the Business CGU. In FY23 the perpetuity growth rate was 2.0% for Enterprise and Consumer, and 2.4% for Global. Key assumptions applied to testing goodwill allocated to the Business CGU Key assumptions that value in use is most sensitive to are EBITDA growth over the 5-year forecast period; the long term growth rate for the terminal period; and the weighted average cost of capital used to discount cash flows. \u2013 Our value in use assumes risk-adjusted EBITDA compound annual growth of 0.7% over the 5-year forecast period. The growth rate is the projected adjusted EBITDA growth rate on the cash flow forecasts used in our goodwill impairment model and reflect the growth and maturity of the industry we operate in and historical trends. Compound annual growth rates are risk-adjusted to the compound annual growth rates used in our Board-approved forecasts. \u2013 Application of the terminal growth rate of 0.7%, equivalent to compound annual growth within the terminal period, is viewed as a key assumption with c.75% of the value in use derived from terminal cash flows. \u2013 Value in use is sensitive to the weighted average cost of capital used to discount future cash flows. The table below shows the sensitivity of the \u00a3488m impairment recognised to reasonably possible changes in key assumptions:
Low scenario
High scenario
EBITDA compound annual growth rate +/- 1%
(\u00a31,260m) more impairment
\u00a3374m less impairment
Long term growth rate +/- 0.7%
(\u00a3478m) more impairment
\u00a3488m less impairment
Weighted average cost of capital +/- 1%
(\u00a3865m) more impairment
\u00a3488m less impairment
Other sensitivities applicable to the Business CGU Applying a severe but plausible downside scenario, reflecting a plan that we are highly confident will be achieved or exceeded, based on the same risk population would result in a further impairment charge of \u00a32,430m in addition to the \u00a3488m recognised. Management consider that it is reasonably possible to expect that actual future cash flows will outperform the risk-adjusted cash flows modelled for the purpose of testing goodwill impairment. A less conservative view of risks and opportunities in the base case of our forecast would result in headroom of approximately \u00a32,083m rather than the impairment charge booked.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-601": { "value": "Material accounting policies that apply to intangible assets We recognise identifiable intangible assets where we control the asset, it is probable that future economic benefits attributable to the asset will flow to the group, and we can reliably measure the cost of the asset. We amortise all intangible assets, other than goodwill, over their useful economic life. The method of amortisation reflects the pattern in which the assets are expected to be consumed. If the pattern cannot be determined reliably, the straight-line method is used. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets (including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note. Acquired intangible assets \u2013 customer relationships and brands Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these relationships or brands and include management\u2019s estimates of revenue and profits to be generated by them. Telecommunications licences Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years. Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. The fair value is based on management\u2019s assumption of future cash flows using market expectations at acquisition date. Computer software Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly associated with the production of internally developed software, including direct and indirect labour costs of development, only where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do not meet these criteria and research costs are expensed as incurred. Our development costs which give rise to internally developed software include upgrading the network architecture or functionality and developing service platforms aimed at offering new services to our customers. Other Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a straight-line basis over their useful economic life or the term of the contract. Estimated useful economic lives The estimated useful economic lives assigned to the principal categories of intangible assets are as follows: \u2013 Computer software 2 to 10 years \u2013 Telecommunications licences 2 to 20 years \u2013 Customer relationships and brands 1 to 15 years Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-627": { "value": "Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the group\u2019s share of the identifiable net assets (including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note. Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-617": { "value": "Acquired intangible assets \u2013 customer relationships and brands Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these relationships or brands and include management\u2019s estimates of revenue and profits to be generated by them. Telecommunications licences Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years. Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at amortised cost. The fair value is based on management\u2019s assumption of future cash flows using market expectations at acquisition date. Computer software Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly associated with the production of internally developed software, including direct and indirect labour costs of development, only where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do not meet these criteria and research costs are expensed as incurred. Our development costs which give rise to internally developed software include upgrading the network architecture or functionality and developing service platforms aimed at offering new services to our customers. Other Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a straight-line basis over their useful economic life or the term of the contract. Estimated useful economic lives The estimated useful economic lives assigned to the principal categories of intangible assets are as follows: \u2013 Computer software 2 to 10 years \u2013 Telecommunications licences 2 to 20 years \u2013 Customer relationships and brands 1 to 15 years Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-630": { "value": "Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-629": { "value": "Impairment of intangible assets Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash generating unit and the fair value less costs to dispose. Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement, as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a pro-rata basis against intangible and other assets. Material accounting policies that apply to impairment of goodwill We perform an annual goodwill impairment review. Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Our CGUs are deemed to be Consumer and Business. We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes. The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the Board covering a five-year period. They reflect management\u2019s risk-adjusted expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. Impairment of property, plant and equipment We test property, plant and equipment for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, we assess the recoverable amount by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant asset and the fair value less costs to dispose. If it is not possible to determine the recoverable amount for the individual asset then we assess impairment by reference to the relevant cash generating unit as described in note 13 . ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-506": { "value": "14. Property, plant and equipment Material accounting policies that apply to property, plant and equipment Our property, plant and equipment is included at historical cost, net of accumulated depreciation, government grants and any impairment charges. Property, plant and equipment acquired through business combinations is initially recorded at fair value and subsequently accounted for on the same basis as our existing assets. We derecognise items of property, plant and equipment on disposal or when no future economic benefits are expected to arise from the continued use of the asset. The difference between the sale proceeds and the net book value at the date of disposal is recognised in operating costs in the income statement. Included within the cost of network infrastructure and equipment are direct and indirect labour costs, materials and directly attributable overheads. We depreciate property, plant and equipment on a straight-line basis from the time the asset is available for use, to write off the asset\u2019s cost over the estimated useful life taking into account any expected residual value. Freehold land is not depreciated. Estimated useful economic lives The estimated useful lives assigned to principal categories of assets are as follows: Land and buildings \u2013 Freehold buildings 14 to 50 years \u2013 Short-term leasehold improvements Shorter of 10 years or lease term \u2013 Leasehold land and buildings Shorter of unexpired portion of lease or 40 years Network infrastructure Transmission equipment \u2013 Duct 40 years \u2013 Cable 3 to 25 years \u2013 Fibre 5 to 20 years Exchange equipment 2 to 13 years Other network equipment 2 to 20 years Other assets \u2013 Motor vehicles 2 to 10 years \u2013 Computers and office equipment 3 to 7 years Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively. Network share assets Certain assets have been contributed to a network share arrangement by both EE and Hutchison 3G UK Limited, with legal title remaining with the contributor. This is considered to be a reciprocal arrangement. Our share of the assets on acquisition of EE was recognised at fair value within tangible assets, and depreciated in line with policy. Subsequent additions are recorded at cost. Impairment of property, plant and equipment We test property, plant and equipment for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, we assess the recoverable amount by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant asset and the fair value less costs to dispose. If it is not possible to determine the recoverable amount for the individual asset then we assess impairment by reference to the relevant cash generating unit as described in note 13 . Building Digital UK (BDUK) government grants We receive government grants in relation to BDUK and other rural superfast broadband contracts. Where we have achieved certain service levels, or delivered the network more efficiently than anticipated, we have an obligation to either re-invest or repay grant funding. Where this is the case, we recognise deferred income in respect of the funding that will be re-invested or repaid, and make a corresponding adjustment to the carrying amount of the related property, plant and equipment. Assessing the timing of whether and when we change the estimated take-up assumption is judgemental as it involves considering information which is not always observable. Our consideration on whether and when to change the base case assumption is dependent on our expectation of the long-term take-up trend. Our assessment of how much grant income to defer includes consideration of the difference between the take-up percentage agreed with the local authority and the likelihood of actual take-up. The value of the government grants deferred is disclosed in note 17.
Network infrastructure
Land and Held by Held by a Assets under
buildings Openreach other units Other
construction
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 April 2022
1,022
31,276
24,439
1,444
1,446
59,627
Additions
7
\u2014
129
7
3,947
4,090
Transfers
89
2,617
913
211
(3,822)
8
Disposals and adjustments
31
(118)
(183)
(33)
(70)
(373)
Transfer to assets held for sale
\u2014
\u2014
(108)
(13)
\u2014
(121)
Exchange differences
16
\u2014
99
6
1
122
At 31 March 2023
1,165
33,775
25,289
1,622
1,502
63,353
Additions
6
1
73
12
3,851
3,943
Transfers
85
2,562
906
279
(3,954)
(122)
Disposals and adjustments
(95)
(208)
(2,198)
(162)
137
(2,526)
Transfer to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Exchange differences
(11)
\u2014
(66)
(5)
(1)
(83)
At 31 March 2024
1,150
36,130
24,004
1,746
1,535
64,565
Accumulated depreciation
At 1 April 2022
621
17,476
20,050
1,025
\u2014
39,172
Depreciation charge for the year
50
1,466
1,144
218
\u2014
2,878
Impairment
\u2014
\u2014
\u2014
11
\u2014
11
Transfers
\u2014
195
(192)
(4)
\u2014
(1)
Disposals and adjustments
32
(139)
(133)
(36)
\u2014
(276)
Transfer to assets held for sale
\u2014
\u2014
(106)
(11)
\u2014
(117)
Exchange differences
13
\u2014
91
7
\u2014
111
At 31 March 2023
716
18,998
20,854
1,210
\u2014
41,778
Depreciation charge for the year
55
1,489
1,085
263
\u2014
2,892
Impairment
\u2014
78
\u2014
\u2014
30
108
Transfers
\u2014
\u2014
(49)
\u2014
\u2014
(49)
Disposals and adjustments
(30)
(134)
(2,222)
(174)
\u2014
(2,560)
Transfer to assets held for sale
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Exchange differences
(9)
\u2014
(61)
(5)
\u2014
(75)
At 31 March 2024
732
20,431
19,607
1,294
30
42,094
Carrying amount
At 31 March 2023
449
14,777
4,435
412
1,502
21,575
Engineering stores
\u2014
\u2014
\u2014
\u2014
92
92
Total at 31 March 2023
449
14,777
4,435
412
1,594
21,667
At 31 March 2024
418
15,699
4,397
452
1,505
22,471
Engineering stores
\u2014
\u2014
\u2014
\u2014
91
91
Total at 31 March 2024
418
15,699
4,397
452
1,596
22,562
b c d b e c d c d e c d a Other mainly comprises motor vehicles, computers and fixtures and fittings. b Net of government grants of \u00a391m (FY23: \u00a3150m). c Disposals and adjustments include the removal of assets from the group\u2019s fixed asset registers following disposals and the identification of fully depreciated assets (including \u00a32.2bn in FY24 through operation of the group\u2019s annual asset verification exercise). They also include adjustments between gross cost and accumulated depreciation following review of fixed asset registers, and adjustments resulting from changes in assumptions used in calculating lease-end obligations where the corresponding asset is capitalised. d Transfers to assets held for sale are detailed in note 22. e During FY24, assets with cost of \u00a3122m and accumulated depreciation of \u00a349m were reclassified from property, plant and equipment to intangible assets following review of asset registers. Included within the disclosure are assets used in arrangements which represent core business activities for the group and which meet the definition of operating leases: \u2013 \u00a315,699m (FY23: \u00a314,777m) of the carrying amount of the network infrastructure asset class represents Openreach\u2019s network infrastructure. The majority of the associated assets are used to deliver fixed-line telecommunications services that have been assessed as containing operating leases, to both internal and external communications providers. Network infrastructure held by Openreach is presented separately in the table above; however it is not practicable to separate out infrastructure not used in operating lease arrangements. \u2013 Other assets includes devices with a carrying amount of \u00a3160m (FY23: \u00a3163m) that are made available to retail customers under arrangements that contain operating leases. These are not presented separately in the table above as they are not material relative to the group\u2019s overall asset base. The carrying amount of land and buildings, including leasehold improvements, comprised:
2024
2023
At 31 March
\u00a3m
\u00a3m
Freehold
71
80
Leasehold
347
369
Total land and buildings
418
449
Network infrastructure Some of our network assets are jointly controlled by EE Limited with Hutchison 3G UK Limited. These relate to shared 3G network and certain elements of network for 4G rural sites. The net book value of the group\u2019s share of assets controlled by its joint operation MBNL is \u00a3759m (FY23: \u00a3721m) and is recorded within network infrastructure. Within network infrastructure are assets with a net book value of \u00a311.5bn (FY23: \u00a310.9bn) which have useful economic lives of more than 18 years. BT Tower In FY24 we agreed to the sale of the BT Tower for headline consideration of \u00a3275m, as part of the simplification of the group\u2019s property portfolio. The carrying amount of the BT Tower asset is \u00a34m at 31 March 2024. It is not considered to meet the IFRS 5 criteria for classification as held for sale at the reporting date, reflecting the extent of decommissioning work needed to provide vacant possession of the site. The useful economic lives of assets associated with the BT Tower have been reassessed in light of the anticipated disposal in FY30. Significant judgements made in accounting for the BT Tower sale Exchange of contracts in respect of the BT Tower sale with MCR Hotels occurred during FY24, with transfer of legal title anticipated to take place in a three year window between 2028 and 2031 subject to achieving vacant possession of the site. We will continue to enjoy exclusive rights to occupy and access the site prior to completion. The delay between exchange and completion reflects the extensive work required to decommission the site. We have exercised significant judgement in concluding that control over BT Tower passes to the buyer at the point of completion rather than exchange. In doing so we performed a detailed assessment of the restrictions placed on BT\u2019s use of the asset in the period following exchange, as well as the transaction pricing structure, and concluded that they were insufficient to represent a transfer to the buyer of sufficiently all the risks and rewards associated with ownership. We placed particular weight on the fact that legal title to the site does not transfer to the buyer until the point of completion. Had we concluded that control had passed on exchange of contracts in FY24, the transaction would have been treated as a sale and leaseback with profit on disposal recognised in the period and associated derecognition of the BT Tower asset and accounting for the leaseback. Low carbon fleet As reported in our TCFD statement on page 78, we\u2019re working hard and investing to convert the majority of our fleet to electric or zero emission vehicles by the end of FY31. This plan does not trigger a significant impairment of fleet assets as substantially all non-electric vehicles held by the group at 31 March 2024 will be fully depreciated ahead of FY31.", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-602": { "value": "Material accounting policies that apply to property, plant and equipment Our property, plant and equipment is included at historical cost, net of accumulated depreciation, government grants and any impairment charges. Property, plant and equipment acquired through business combinations is initially recorded at fair value and subsequently accounted for on the same basis as our existing assets. We derecognise items of property, plant and equipment on disposal or when no future economic benefits are expected to arise from the continued use of the asset. The difference between the sale proceeds and the net book value at the date of disposal is recognised in operating costs in the income statement. Included within the cost of network infrastructure and equipment are direct and indirect labour costs, materials and directly attributable overheads. We depreciate property, plant and equipment on a straight-line basis from the time the asset is available for use, to write off the asset\u2019s cost over the estimated useful life taking into account any expected residual value. Freehold land is not depreciated. Estimated useful economic lives The estimated useful lives assigned to principal categories of assets are as follows: Land and buildings \u2013 Freehold buildings 14 to 50 years \u2013 Short-term leasehold improvements Shorter of 10 years or lease term \u2013 Leasehold land and buildings Shorter of unexpired portion of lease or 40 years Network infrastructure Transmission equipment \u2013 Duct 40 years \u2013 Cable 3 to 25 years \u2013 Fibre 5 to 20 years Exchange equipment 2 to 13 years Other network equipment 2 to 20 years Other assets \u2013 Motor vehicles 2 to 10 years \u2013 Computers and office equipment 3 to 7 years Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively. Network share assets Certain assets have been contributed to a network share arrangement by both EE and Hutchison 3G UK Limited, with legal title remaining with the contributor. This is considered to be a reciprocal arrangement. Our share of the assets on acquisition of EE was recognised at fair value within tangible assets, and depreciated in line with policy. Subsequent additions are recorded at cost. Impairment of property, plant and equipment We test property, plant and equipment for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, we assess the recoverable amount by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant asset and the fair value less costs to dispose. If it is not possible to determine the recoverable amount for the individual asset then we assess impairment by reference to the relevant cash generating unit as described in note 13 Building Digital UK (BDUK) government grants We receive government grants in relation to BDUK and other rural superfast broadband contracts. Where we have achieved certain service levels, or delivered the network more efficiently than anticipated, we have an obligation to either re-invest or repay grant funding. Where this is the case, we recognise deferred income in respect of the funding that will be re-invested or repaid, and make a corresponding adjustment to the carrying amount of the related property, plant and equipment. Assessing the timing of whether and when we change the estimated take-up assumption is judgemental as it involves considering information which is not always observable. Our consideration on whether and when to change the base case assumption is dependent on our expectation of the long-term take-up trend. Our assessment of how much grant income to defer includes consideration of the difference between the take-up percentage agreed with the local authority and the likelihood of actual take-up. The value of the government grants deferred is disclosed in note 17. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-618": { "value": "We depreciate property, plant and equipment on a straight-line basis from the time the asset is available for use, to write off the asset\u2019s cost over the estimated useful life taking into account any expected residual value. Freehold land is not depreciated. Estimated useful economic lives The estimated useful lives assigned to principal categories of assets are as follows: Land and buildings \u2013 Freehold buildings 14 to 50 years \u2013 Short-term leasehold improvements Shorter of 10 years or lease term \u2013 Leasehold land and buildings Shorter of unexpired portion of lease or 40 years Network infrastructure Transmission equipment \u2013 Duct 40 years \u2013 Cable 3 to 25 years \u2013 Fibre 5 to 20 years Exchange equipment 2 to 13 years Other network equipment 2 to 20 years Other assets \u2013 Motor vehicles 2 to 10 years \u2013 Computers and office equipment 3 to 7 years Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-631": { "value": "Impairment of property, plant and equipment We test property, plant and equipment for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, we assess the recoverable amount by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant asset and the fair value less costs to dispose. If it is not possible to determine the recoverable amount for the individual asset then we assess impairment by reference to the relevant cash generating unit as described in note 13 . ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-507": { "value": " Material accounting policies that apply to leases Identifying whether a lease exists At inception of a contract, we determine whether the contract is, or contains, a lease. A lease exists if the contract conveys the right to control the use of an identified asset, for a period of time, in exchange for consideration. In making this assessment, we consider whether: \u2013 The contract involves the use of an identified asset, either explicitly or implicitly. The asset must be physically distinct or represent substantially all the capacity of a physically distinct asset. Assets that a supplier has a substantive right to substitute are not considered distinct. \u2013 The lessee (either the group, or the group\u2019s customers) has the right to obtain substantially all the economic benefits from the use of the asset throughout the period of use; and \u2013 The lessee has the right to direct the use of the asset, in other words, has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. Where practicable, and by class of underlying asset, we have elected to account for leases containing a lease component and one or more non-lease components as a single lease component. Where this election has been taken, it has been applied to the entire asset. Lessee accounting We recognise a lease liability and right-of-use asset at the commencement of the lease. Lease liabilities are initially measured at the present value of lease payments that are due over the lease term, discounted using the group\u2019s incremental borrowing rate. The lease term is the non-cancellable period of the lease adjusted for the impact of any extension options that we are reasonably certain that the lessee will exercise, or termination options that we are reasonably certain that the lessee will not exercise. The incremental borrowing rate is the rate that we would have to pay for a loan of a similar term, and with similar security, to obtain an asset of similar value. Lease payments include: \u2013 fixed payments \u2013 variable lease payments that depend on an index or rate \u2013 amounts expected to be paid under residual value guarantees \u2013 the exercise price of any purchase options that we are reasonably certain to exercise \u2013 payments due over optional renewal periods where we are reasonably certain to renew \u2013 penalties for early termination of the lease where we are reasonably certain to terminate early Lease liabilities are subsequently measured at amortised cost using the effective interest method. They are remeasured if there is a change in future lease payments, including changes in the index or rate used to determine those payments, or the amount we expect to be payable under a residual value guarantee. We also remeasure lease liabilities where the lease term changes. This occurs when the non-cancellable period of the lease changes, or on occurrence of a significant event or change in circumstances within the control of the lessee and which changes our initial assessment in regard to whether the lessee is reasonably certain to exercise extension options or not to exercise termination options. Where the lease term changes we remeasure the lease liability using the group\u2019s incremental borrowing rate at the date of reassessment. Where a significant event or change in circumstances does not occur, the lease term remains unchanged and the carrying amounts of the lease liability and associated right-of-use asset will decline over time. Right-of-use assets are initially measured at the initial amount of the corresponding lease liabilities, adjusted for any prepaid lease payments, plus any initial direct costs incurred and an estimate of any decommissioning costs that have been recognised as provisions, less any lease incentives received. They are subsequently depreciated using the straight-line method to the earlier of the end of the useful life of the asset or the end of the lease term. Right-of-use assets are tested for impairment following the policy set out in note 14 and are adjusted for any remeasurement of lease liabilities. We have elected not to recognise lease liabilities and right-of-use assets for short-term leases that have a lease term of 12 months or less, and leases of low-value assets with a purchase price under \u00a35,000. We recognise payments for these items as an expense on a straight-line basis over the lease term. Any variable lease payments that do not depend on an index or rate, such as usage-based payments, are recognised as an expense in the period to which the variability relates. 15. Leases Lessor accounting At inception or on modification of a contract that contains a lease component, we allocate the consideration in the contract to each lease component on the basis of their relative stand-alone prices. When we act as a lessor, we determine at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, we make an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, we consider certain indicators such as whether the lease is for the major part of the economic life of the asset. When we are an intermediate lessor, we account for our interests in the headlease and the sublease separately. We assess the lease classification of a sublease with reference to the right-of-use asset arising from the headlease, not with reference to the underlying asset. If a headlease is a short-term lease to which we apply the exemption described above, then we classify the sublease as an operating lease. If an arrangement contains lease and non-lease components, then we apply IFRS 15 to allocate the consideration in the contract. We apply the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. We further regularly review estimated unguaranteed residual values used in calculating the gross investment in the lease. We recognise lease payments received under operating leases as income on a straight-line basis over the lease term as part of \u2018other revenue\u2019. Significant judgements made in accounting for leases The lease term is a key determinant of the size of the lease liability and right-of-use asset recognised where the group acts as lessee; and the deferral period for any upfront connection charges where the group acts as lessor. Determining the lease term requires judgement to evaluate whether we are reasonably certain the lessee will exercise extension options or will not exercise termination options. Key facts and circumstances that create an incentive to exercise those options are considered; these include: \u2013 Our anticipated operational, retail and office property requirements in the mid and long term. \u2013 The availability of suitable alternative sites. \u2013 Costs or penalties associated with exiting lease arrangements relative to the benefits to be gained, including costs of removing leasehold improvements or relocating, and indirect costs such as disruption to business. \u2013 Significant investments in leased sites, in particular those with useful lives beyond the lease term. \u2013 Costs associated with extending lease arrangements including rent increases during secondary lease periods. Our definition of \u2018reasonable certainty\u2019, and therefore the lease term, will often align with the judgements made in our medium-term plan, in particular for leases of non-specialised property and equipment on rolling (or \u2018evergreen\u2019) arrangements that continue until terminated and which can be exited without significant penalty. Following initial determination of the lease term, we exercise judgement in evaluating whether events or changes in circumstances are sufficiently significant to change the initial assessment of whether we are reasonably certain the lessee will exercise extension options or will not exercise termination options; and in the subsequent reassessment of the lease term. Key judgements exercised in setting the lease term The quantum of the lease liability and right-of-use asset currently recognised on our balance sheet is most significantly affected by the judgement exercised in setting the lease term for the arrangement under which the bulk of our operational UK property estate is held. Setting the lease term for our leased cell sites has also involved the use of judgement, albeit to a lesser degree. UK operational property portfolio Substantially all of our leased property estate is held under an arrangement which can be terminated in 2031, at which point we may either vacate some or all properties or purchase the entire estate. If neither option is taken the lease continues to the next unilaterally available break point in 2041. The lease liability recognised for the arrangement reflects a lease end date of 2031. On initial recognition we concluded that, although the majority of these properties are expected to be needed on a long-term basis, we couldn\u2019t be reasonably certain that we wouldn\u2019t exercise the termination option or that we would exercise the purchase option. In coming to this conclusion, we had due regard to material sub-lease arrangements relating to the estate. As time progresses our assessment may change; if this happens, we will remeasure the lease liability and right-of-use asset to reflect either the rentals due for any properties we will continue to occupy, or the cost of purchasing the estate, using an updated discount rate. There would be no overall impact on net assets. If the assessment were to change at the balance sheet date of 31 March 2024: \u2013 Exercising the purchase option would lead to an estimated increase in the lease liability and right-of-use asset of between \u00a33bn and \u00a35bn. \u2013 Continuing to lease the estate beyond 2031 until the next available break in 2041 would lead to an estimated increase in the lease liability and right-of-use asset of between \u00a31bn and \u00a32bn. Our assessment will be directly linked to future strategic decisions, which will be resolved at some time prior to 2031, around the development of the fixed network and the associated rationalisation of our exchange estate. The breadth of the ranges reflects the significant uncertainty around key variables used to determine cash outflows, especially future inflation and which properties the group will be able to exit prior to or in 2031. Estimates are based on discounted cash outflows and do not reflect the likely and significant impact of cash inflows generated from the disposal, repurposing or subleasing of properties retained post-2031. We are permitted to hand a limited number of properties back to the lessor prior to 2031. On initial adoption of IFRS 16 we were not reasonably certain which properties would be handed back and as such the lease term did not reflect the exercise of these options. Subsequently we exercise judgement in identifying significant events that trigger reassessment of our initial conclusion. We exercise similar judgement in identifying events triggering reassessment of whether we are reasonably certain we will not exercise termination options associated with other leased properties. In doing so we consider decisions associated with our ongoing workplace rationalisation programme, in particular decisions to exit a particular location or lease an alternative property. Generally we remain reasonably certain that we will not exercise a termination option until implementation of the associated business plan has progressed to a stage that we are committed to exiting the property. At that point we reassess the lease term by reference to the time we expect to remain in occupation of the property and any notice period associated with exercise of the option. Cell sites Most of the liability recognised in respect of leased cell sites relates to multi-site arrangements with commercial providers. The fixed-term nature of these arrangements means it has not been necessary to exercise significant judgement when determining the lease term. Where the arrangements offer extension options we have been required to conclude whether the options are reasonably certain to be exercised. Although the balance sheet could be materially affected by the conclusion reached in regard to these options, we have not been required to exercise a significant degree of judgement in arriving at the lease term having regard to the period of time covered by the options, the difficulty in predicting the group\u2019s long-term network requirements, and the relatively high threshold that \u2018reasonably certain' represents. A smaller proportion of the cell site liability relates to arrangements with individual landlords which are either rolling or can be exited with notice. When setting the initial lease term for these arrangements we exercised significant judgement in establishing the period that we are reasonably certain to require use of the site. We broadly aligned lease terms with our medium-term planning horizon after assessing the relative strengths of the following factors: \u2013 Long-term economic incentives to remain on sites including existing capital improvements; \u2013 A need to maintain flexibility in our ability to develop and manage our network infrastructure to react quickly to technological developments and evolving capacity requirements; and \u2013 Incentives to renegotiate arrangements in the medium term to gain more security over sites to support future capital investment. Although significant judgement has been exercised in determining the lease term, reaching an alternative conclusion would not have a material impact on the balance sheet having regard to the most feasible alternative lease terms. Subsequently, we consider key events that trigger reassessment of lease terms to be developments which resolve uncertainty around our economic incentive to remain on individual sites in the long term. These are primarily lease renegotiations and significant capital investments, for example that associated with our 5G rollout and other capital refresh programmes.
Right-of-use assets
Most of our right-of-use assets are associated with our leased property portfolio, specifically our office, retail and exchange estate. We
also lease a significant proportion of our network infrastructure, including mobile cell and switch sites.
Network
Land and buildings
infrastructure
Motor vehicles
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
3,941
110
369
9
4,429
Additions
203
16
150
2
371
Depreciation charge for the year
(521)
(32)
(131)
(5)
(689)
Impairment
b
(75)
\u2014
\u2014
\u2014
(75)
Transfer to assets held for sale
(3)
\u2014
\u2014
\u2014
(3)
Other movements
(49)
1
(3)
(1)
(52)
At 31 March 2023
3,496
95
385
5
3,981
Additions
271
40
179
1
491
Depreciation charge for the year
(493)
(33)
(121)
(5)
(652)
Impairment
b
(10)
\u2014
\u2014
\u2014
(10)
Other movements
(108)
(4)
(56)
\u2014
(168)
At 31 March 2024
3,156
98
387
1
3,642
a
b
c
a
b
c
a Additions comprise increases to right-of-use assets as a result of entering into new leases, and upwards remeasurement of existing leases arising from lease extensions or
reassessments and increases to lease payments.
b Impairment charges relates primarily to the early exit of leases as a result of ongoing property rationalisation activity.
c Other movements primarily relate to terminated leases and downwards remeasurements of right-of-use assets arising from reductions or reassessments of lease terms and
decreases in lease payments.
Lease liabilities
Lease liabilities recognised are as follows:
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Current
766
800
Non-current
4,189
4,559
4,955
5,359
The following amounts relating to the group\u2019s obligations under lease arrangements were recognised in the income statement in the year:
\u2013 Interest expense of \u00a3134m (FY23: \u00a3133m) on lease liabilities.
\u2013 Variable lease payments of \u00a339m (FY23: \u00a338m) which are not dependent on an index or rate and which have not been included in the
measurement of lease liabilities.
Expenses relating to leases of low-value assets and short-term leases for which no right-of-use asset or lease liability has been recognised
were not material.
The total cash outflow for leases in the year was \u00a3882m (FY23: \u00a3860m). Our cash flow statement and normalised free cash flow
reconciliation present \u00a3748m (FY23: \u00a3727m) of the cash outflow as relating to the principal element of lease liability payments, with the
remaining balance of \u00a3134m (FY23: \u00a3133m) presented within interest paid.
Note 28 presents a maturity analysis of the payments due over the remaining lease term for lease liabilities currently recognised on the
balance sheet. This analysis only includes payments to be made over the reasonably certain lease term. Cash outflows are likely to exceed
these amounts as payments will be made on optional periods that we do not currently consider to be reasonably certain, and in respect of
leases entered into in future periods.
Other information relating to leases
At 31 March 2024 the group was committed to future minimum lease payments of \u00a355m (FY23: \u00a3145m) in respect of leases which have
not yet commenced and for which no lease liability has been recognised.
The following table analyses cash payments to be received across the remaining term of operating lease arrangements where BT is lessor:
To be recognised as To be recognised as other
revenue (note 5)
operating income (note 6)
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
Less than one year
431
17
448
One to two years
117
11
128
Two to three years
41
11
52
Three to four years
10
9
19
Four to five years
9
3
12
More than five years
\u2014
5
5
Total undiscounted lease payments
608
56
664
At 31 March 2023
Less than one year
416
19
435
One to two years
131
15
146
Two to three years
46
15
61
Three to four years
13
14
27
Four to five years
10
13
23
More than five years
\u2014
20
20
Total undiscounted lease payments
616
96
712
a
a Future operating lease income to be recognised as revenue primarily relates to income from Openreach's fixed access subscription services which meet the definition of leases under
IFRS 16 and which typically are expected to have a lease period terms of one year or less.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-603": { "value": "Material accounting policies that apply to leases Identifying whether a lease exists At inception of a contract, we determine whether the contract is, or contains, a lease. A lease exists if the contract conveys the right to control the use of an identified asset, for a period of time, in exchange for consideration. In making this assessment, we consider whether: \u2013 The contract involves the use of an identified asset, either explicitly or implicitly. The asset must be physically distinct or represent substantially all the capacity of a physically distinct asset. Assets that a supplier has a substantive right to substitute are not considered distinct. \u2013 The lessee (either the group, or the group\u2019s customers) has the right to obtain substantially all the economic benefits from the use of the asset throughout the period of use; and \u2013 The lessee has the right to direct the use of the asset, in other words, has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. Where practicable, and by class of underlying asset, we have elected to account for leases containing a lease component and one or more non-lease components as a single lease component. Where this election has been taken, it has been applied to the entire asset. Lessee accounting We recognise a lease liability and right-of-use asset at the commencement of the lease. Lease liabilities are initially measured at the present value of lease payments that are due over the lease term, discounted using the group\u2019s incremental borrowing rate. The lease term is the non-cancellable period of the lease adjusted for the impact of any extension options that we are reasonably certain that the lessee will exercise, or termination options that we are reasonably certain that the lessee will not exercise. The incremental borrowing rate is the rate that we would have to pay for a loan of a similar term, and with similar security, to obtain an asset of similar value. Lease payments include: \u2013 fixed payments \u2013 variable lease payments that depend on an index or rate \u2013 amounts expected to be paid under residual value guarantees \u2013 the exercise price of any purchase options that we are reasonably certain to exercise \u2013 payments due over optional renewal periods where we are reasonably certain to renew \u2013 penalties for early termination of the lease where we are reasonably certain to terminate early Lease liabilities are subsequently measured at amortised cost using the effective interest method. They are remeasured if there is a change in future lease payments, including changes in the index or rate used to determine those payments, or the amount we expect to be payable under a residual value guarantee. We also remeasure lease liabilities where the lease term changes. This occurs when the non-cancellable period of the lease changes, or on occurrence of a significant event or change in circumstances within the control of the lessee and which changes our initial assessment in regard to whether the lessee is reasonably certain to exercise extension options or not to exercise termination options. Where the lease term changes we remeasure the lease liability using the group\u2019s incremental borrowing rate at the date of reassessment. Where a significant event or change in circumstances does not occur, the lease term remains unchanged and the carrying amounts of the lease liability and associated right-of-use asset will decline over time. Right-of-use assets are initially measured at the initial amount of the corresponding lease liabilities, adjusted for any prepaid lease payments, plus any initial direct costs incurred and an estimate of any decommissioning costs that have been recognised as provisions, less any lease incentives received. They are subsequently depreciated using the straight-line method to the earlier of the end of the useful life of the asset or the end of the lease term. Right-of-use assets are tested for impairment following the policy set out in note 14 and are adjusted for any remeasurement of lease liabilities. We have elected not to recognise lease liabilities and right-of-use assets for short-term leases that have a lease term of 12 months or less, and leases of low-value assets with a purchase price under \u00a35,000. We recognise payments for these items as an expense on a straight-line basis over the lease term. Any variable lease payments that do not depend on an index or rate, such as usage-based payments, are recognised as an expense in the period to which the variability relates. Lessor accounting At inception or on modification of a contract that contains a lease component, we allocate the consideration in the contract to each lease component on the basis of their relative stand-alone prices. When we act as a lessor, we determine at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, we make an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, we consider certain indicators such as whether the lease is for the major part of the economic life of the asset. When we are an intermediate lessor, we account for our interests in the headlease and the sublease separately. We assess the lease classification of a sublease with reference to the right-of-use asset arising from the headlease, not with reference to the underlying asset. If a headlease is a short-term lease to which we apply the exemption described above, then we classify the sublease as an operating lease. If an arrangement contains lease and non-lease components, then we apply IFRS 15 to allocate the consideration in the contract. We apply the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. We further regularly review estimated unguaranteed residual values used in calculating the gross investment in the lease. We recognise lease payments received under operating leases as income on a straight-line basis over the lease term as part of \u2018other revenue\u2019.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-508": { "value": "16. Trade and other receivables Material accounting policies that apply to trade and other receivables Trade receivables are recognised where the right to receive payment from customers is conditional only on the passage of time. We initially recognise trade and other receivables at fair value, which is usually the original invoiced amount. They are subsequently carried at amortised cost using the effective interest method. The carrying amount of these balances approximates to fair value due to the short maturity of amounts receivable. We provide services to consumer and business customers, mainly on credit terms. We know that certain debts due to us will not be paid through the default of a small number of our customers. Because of this, we recognise an allowance for doubtful debts on initial recognition of receivables, which is deducted from the gross carrying amount of the receivable. The allowance is calculated by reference to credit losses expected to be incurred over the lifetime of the receivable. In estimating a loss allowance we consider historical experience and informed credit assessment alongside other factors such as the current state of the economy and particular industry issues. We consider reasonable and supportable information that is relevant and available without undue cost or effort. Once recognised, trade receivables are continuously monitored and updated. Allowances are based on our historical loss experiences for the relevant aged category as well as forward-looking information and general economic conditions. Allowances are calculated by individual CFUs in order to reflect the specific nature of the customers relevant to that CFU. The group utilises factoring arrangements for selected trade receivables. Trade receivables that are subject to debt factoring arrangements are derecognised if they meet the conditions for derecognition detailed in IFRS 9 \u2018Financial instruments\u2019 and the related cash flows received are presented as cash flows from operating activities. Contingent assets such as any insurance recoveries which we expect to recoup, have not been recognised in the financial statements as these are only recognised within trade and other receivables when their receipt is virtually certain.
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade receivables
1,899
1,395
Prepayments
586
545
Accrued income
162
158
Deferred contract costs
383
369
Finance lease receivables
31
29
Amounts due from joint ventures
163
268
Other assets
341
296
3,565
3,060
Non-current
Deferred contract costs
229
211
Finance lease receivables
107
98
Other assets
305
194
641
503
a a a Other assets comprise Flex Pay receivables, prepayments and \u00a357m (FY23: \u00a370m) of deferred cash consideration mainly relating to the disposal of BT Sport, see note 22 . Amounts due from joint ventures relates to a sterling Revolving Credit Facility (RCF) provided to the Sports JV, see note 30. The expected loss provision is immaterial. Trade receivables are stated after deducting allowances for doubtful debts, as follows:
2024
2023
\u00a3m
\u00a3m
At 1 April
168
223
Expense
129
84
Utilised
(127)
(142)
Exchange differences
(1)
3
At 31 March
169
168
The expected credit loss allowance for trade receivables was determined as follows:
Past due and not specifically impaired
Trade
receivables
specifically Between Between Between
impaired net 0 and 3 3 and 6 6 and 12 Over 12
Not past due of provision months months months
months
Total
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2024
Expected loss rate %
1%
50%
8%
28%
47%
65%
8%
Gross carrying amount
1,448
4
357
81
64
114
2,068
Loss allowance
(11)
(2)
(29)
(23)
(30)
(74)
(169)
Net carrying amount
1,437
2
328
58
34
40
1,899
2023
Expected loss rate %
1%
75%
10%
46%
41%
52%
11%
Gross carrying amount
1,030
20
265
48
59
141
1,563
Loss allowance
(8)
(15)
(26)
(22)
(24)
(73)
(168)
Net carrying amount
1,022
5
239
26
35
68
1,395
Trade receivables not past due and accrued income are analysed below by CFU.
Trade receivables not past due
Accrued income
2024
2023
2024
2023
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Consumer
375
309
81
82
Business
900
713
4
2
Openreach
161
\u2014
75
70
Other
1
\u2014
2
4
Total
1,437
1,022
162
158
a a Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our Enterprise and Global units, see note 1. Given the broad and varied nature of our customer base, the analysis of trade receivables not past due and accrued income by CFU is considered the most appropriate disclosure of credit concentrations. Deferred contract costs Material accounting policies that apply to deferred contract costs We capitalise certain costs associated with the acquisition and fulfilment of contracts with customers and amortise them over the period that we transfer the associated services. Connection costs are deferred as contract fulfilment costs because they allow satisfaction of the associated connection performance obligation and are considered recoverable. Sales commissions and other third party contract acquisition costs are capitalised as costs to acquire a contract unless the associated contract term is less than 12 months, in which case they are expensed as incurred. Capitalised costs are amortised over the minimum contract term. A portfolio approach is used to determine contract term. Where the initial set-up, transition and transformation phases of long-term contractual arrangements represent distinct performance obligations, costs in delivering these services are expensed as incurred. Where these services are not distinct performance obligations, we capitalise eligible costs as a cost of fulfilling the related service. Capitalised costs are amortised on a straight-line basis over the remaining contract term, unless the pattern of service delivery indicates a more appropriate profile. To be eligible for capitalisation, costs must be directly attributable to specific contracts, relate to future activity, and generate future economic benefits. Capitalised costs are regularly assessed for recoverability. The following table shows the movement on deferred costs:
Deferred contract Deferred contract
Deferred connection acquisition costs \u2013 acquisition costs \u2013 Transition and
costs commissions dealer incentives
transformation
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
24
124
324
90
562
Additions
15
100
285
70
470
Amortisation
(15)
(94)
(276)
(67)
(452)
Impairment
\u2014
(1)
(1)
\u2014
(2)
Other
(2)
2
(2)
4
2
At 31 March 2023
22
131
330
97
580
Additions
10
134
315
57
516
Amortisation
(11)
(118)
(292)
(56)
(477)
Impairment
\u2014
(2)
(7)
\u2014
(9)
Other
(8)
2
3
5
2
At 31 March 2024
13
147
349
103
612
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-604": { "value": "Material accounting policies that apply to trade and other receivables Trade receivables are recognised where the right to receive payment from customers is conditional only on the passage of time. We initially recognise trade and other receivables at fair value, which is usually the original invoiced amount. They are subsequently carried at amortised cost using the effective interest method. The carrying amount of these balances approximates to fair value due to the short maturity of amounts receivable. We provide services to consumer and business customers, mainly on credit terms. We know that certain debts due to us will not be paid through the default of a small number of our customers. Because of this, we recognise an allowance for doubtful debts on initial recognition of receivables, which is deducted from the gross carrying amount of the receivable. The allowance is calculated by reference to credit losses expected to be incurred over the lifetime of the receivable. In estimating a loss allowance we consider historical experience and informed credit assessment alongside other factors such as the current state of the economy and particular industry issues. We consider reasonable and supportable information that is relevant and available without undue cost or effort. Once recognised, trade receivables are continuously monitored and updated. Allowances are based on our historical loss experiences for the relevant aged category as well as forward-looking information and general economic conditions. Allowances are calculated by individual CFUs in order to reflect the specific nature of the customers relevant to that CFU. The group utilises factoring arrangements for selected trade receivables. Trade receivables that are subject to debt factoring arrangements are derecognised if they meet the conditions for derecognition detailed in IFRS 9 \u2018Financial instruments\u2019 and the related cash flows received are presented as cash flows from operating activities. Contingent assets such as any insurance recoveries which we expect to recoup, have not been recognised in the financial statements as these are only recognised within trade and other receivables when their receipt is virtually certain.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-562": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade receivables
1,899
1,395
Prepayments
586
545
Accrued income
162
158
Deferred contract costs
383
369
Finance lease receivables
31
29
Amounts due from joint ventures
163
268
Other assets
341
296
3,565
3,060
Non-current
Deferred contract costs
229
211
Finance lease receivables
107
98
Other assets
305
194
641
503
a
a
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-539": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade receivables
1,899
1,395
Prepayments
586
545
Accrued income
162
158
Deferred contract costs
383
369
Finance lease receivables
31
29
Amounts due from joint ventures
163
268
Other assets
341
296
3,565
3,060
Non-current
Deferred contract costs
229
211
Finance lease receivables
107
98
Other assets
305
194
641
503
a a a Other assets comprise Flex Pay receivables, prepayments and \u00a357m (FY23: \u00a370m) of deferred cash consideration mainly relating to the disposal of BT Sport, see note 22 ", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-575": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade receivables
1,899
1,395
Prepayments
586
545
Accrued income
162
158
Deferred contract costs
383
369
Finance lease receivables
31
29
Amounts due from joint ventures
163
268
Other assets
341
296
3,565
3,060
Non-current
Deferred contract costs
229
211
Finance lease receivables
107
98
Other assets
305
194
641
503
a a ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-538": { "value": "
The expected credit loss allowance for trade receivables was determined as follows:
Past due and not specifically impaired
Trade
receivables
specifically Between Between Between
impaired net 0 and 3 3 and 6 6 and 12 Over 12
Not past due of provision months months months
months
Total
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2024
Expected loss rate %
1%
50%
8%
28%
47%
65%
8%
Gross carrying amount
1,448
4
357
81
64
114
2,068
Loss allowance
(11)
(2)
(29)
(23)
(30)
(74)
(169)
Net carrying amount
1,437
2
328
58
34
40
1,899
2023
Expected loss rate %
1%
75%
10%
46%
41%
52%
11%
Gross carrying amount
1,030
20
265
48
59
141
1,563
Loss allowance
(8)
(15)
(26)
(22)
(24)
(73)
(168)
Net carrying amount
1,022
5
239
26
35
68
1,395
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-605": { "value": "
Material accounting policies that apply to deferred contract costs
We capitalise certain costs associated with the acquisition and fulfilment of contracts with customers and amortise them over the
period that we transfer the associated services.
Connection costs are deferred as contract fulfilment costs because they allow satisfaction of the associated connection performance
obligation and are considered recoverable. Sales commissions and other third party contract acquisition costs are capitalised as
costs to acquire a contract unless the associated contract term is less than 12 months, in which case they are expensed as incurred.
Capitalised costs are amortised over the minimum contract term. A portfolio approach is used to determine contract term.
Where the initial set-up, transition and transformation phases of long-term contractual arrangements represent distinct
performance obligations, costs in delivering these services are expensed as incurred. Where these services are not distinct
performance obligations, we capitalise eligible costs as a cost of fulfilling the related service. Capitalised costs are amortised on a
straight-line basis over the remaining contract term, unless the pattern of service delivery indicates a more appropriate profile. To be
eligible for capitalisation, costs must be directly attributable to specific contracts, relate to future activity, and generate future
economic benefits. Capitalised costs are regularly assessed for recoverability.
", "dimensions": { "concept": "btgroupplc:DescriptionOfAccountingPolicyForDeferredContractCosts", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-509": { "value": " Material accounting policies that apply to trade and other payables We initially recognise trade and other payables at fair value, which is usually the original invoiced amount. We subsequently carry them at amortised cost using the effective interest method. We use a supply chain financing programme to extend payment terms with a limited number of suppliers to a more typical payment term. We also use a separate supply chain financing programme to allow suppliers to receive funding earlier than the invoice due date. We assess these arrangements against indicators to assess if debts which vendors have sold to the funder under the supplier financing schemes continue to meet the definition of trade payables or should be classified as borrowings. At 31 March 2024 under the terms of the arrangement the funder's payment to the supplier does not legally extinguish our obligation to the supplier so it remains within trade and other payables. Cash flows only occur when the trade payable is extinguished and are therefore presented in cash flows from operating activities.
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade payables
4,119
4,196
Other taxation and social security
544
581
Minimum guarantee with sports joint venture
a
194
195
Accrued expenses
543
458
Deferred income
355
532
Other payables
572
602
6,327
6,564
Non-current
Minimum guarantee with sports joint venture
a
271
465
Deferred income
342
403
Other payables
24
52
637
920
b c b a Liability recognised on the minimum revenue guarantee in BT\u2019s distribution agreement with the sports joint venture (see note 22). Movement in the liability driven by \u00a3211m payments made during the year less \u00a316m finance cost recorded from unwinding the impact of discounting. b Deferred income includes \u00a3106m (FY23: \u00a3258m) current and \u00a3122m (FY23: \u00a3169m) non-current liabilities relating to Building Digital UK, for which grants received by the group may be subject to re-investment or repayment depending on the level of take-up. c Includes \u00a341m relating to an estimate of customer refunds, refer to note 5. Current trade and other payables at 31 March 2024 include: \u2013 \u00a3101m (31 March 2023: \u00a3348m) of trade payables that have been factored in a supply chain financing programme. The facility size of \u00a3350m remains consistent with prior periods. These programmes are used with a limited number of suppliers with short payment terms to extend them to a more typical payment term. \u2013 \u00a3224m (31 March 2023: \u00a3169m) of trade payables in a separate supply chain financing programme that allows suppliers the opportunity to receive funding earlier than the invoice due date. Financial institutions are used to support this programme but we continue to recognise the underlying payables as we continue to cash settle the supplier invoices in accordance with their terms. 17. Trade and other payables", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-606": { "value": "Material accounting policies that apply to trade and other payables We initially recognise trade and other payables at fair value, which is usually the original invoiced amount. We subsequently carry them at amortised cost using the effective interest method. We use a supply chain financing programme to extend payment terms with a limited number of suppliers to a more typical payment term. We also use a separate supply chain financing programme to allow suppliers to receive funding earlier than the invoice due date. We assess these arrangements against indicators to assess if debts which vendors have sold to the funder under the supplier financing schemes continue to meet the definition of trade payables or should be classified as borrowings. At 31 March 2024 under the terms of the arrangement the funder's payment to the supplier does not legally extinguish our obligation to the supplier so it remains within trade and other payables. Cash flows only occur when the trade payable is extinguished and are therefore presented in cash flows from operating activities. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-540": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade payables
4,119
4,196
Other taxation and social security
544
581
Minimum guarantee with sports joint venture
a
194
195
Accrued expenses
543
458
Deferred income
355
532
Other payables
572
602
6,327
6,564
Non-current
Minimum guarantee with sports joint venture
a
271
465
Deferred income
342
403
Other payables
24
52
637
920
b
c
b
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-563": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade payables
4,119
4,196
Other taxation and social security
544
581
Minimum guarantee with sports joint venture
a
194
195
Accrued expenses
543
458
Deferred income
355
532
Other payables
572
602
6,327
6,564
Non-current
Minimum guarantee with sports joint venture
a
271
465
Deferred income
342
403
Other payables
24
52
637
920
b c b ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-576": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade payables
4,119
4,196
Other taxation and social security
544
581
Minimum guarantee with sports joint venture
a
194
195
Accrued expenses
543
458
Deferred income
355
532
Other payables
572
602
6,327
6,564
Non-current
Minimum guarantee with sports joint venture
a
271
465
Deferred income
342
403
Other payables
24
52
637
920
b c b a Liability recognised on the minimum revenue guarantee in BT\u2019s distribution agreement with the sports joint venture (see note 22). Movement in the liability driven by \u00a3211m payments made during the year less \u00a316m finance cost recorded from unwinding the impact of discounting. b Deferred income includes \u00a3106m (FY23: \u00a3258m) current and \u00a3122m (FY23: \u00a3169m) non-current liabilities relating to Building Digital UK, for which grants received by the group may be subject to re-investment or repayment depending on the level of take-up. c Includes \u00a341m relating to an estimate of customer refunds, refer to note 5. Current trade and other payables at 31 March 2024 include: \u2013 \u00a3101m (31 March 2023: \u00a3348m) of trade payables that have been factored in a supply chain financing programme. The facility size of \u00a3350m remains consistent with prior periods. These programmes are used with a limited number of suppliers with short payment terms to extend them to a more typical payment term. \u2013 \u00a3224m (31 March 2023: \u00a3169m) of trade payables in a separate supply chain financing programme that allows suppliers the opportunity to receive funding earlier than the invoice due date. Financial institutions are used to support this programme but we continue to recognise the underlying payables as we continue to cash settle the supplier invoices in accordance with their terms. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-587": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Current
Trade payables
4,119
4,196
Other taxation and social security
544
581
Minimum guarantee with sports joint venture
a
194
195
Accrued expenses
543
458
Deferred income
355
532
Other payables
572
602
6,327
6,564
Non-current
Minimum guarantee with sports joint venture
a
271
465
Deferred income
342
403
Other payables
24
52
637
920
b c b ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-510": { "value": "Our provisions principally relate to obligations arising from property rationalisation programmes, restructuring programmes, asset retirement obligations, network assets, third party claims, litigation and regulatory risks. Contingent liabilities primarily arise from litigation and regulatory matters that are not sufficiently certain to meet the criteria for recognition as provisions. Material accounting policies that apply to provisions & contingent liabilities We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation with an outflow that is not probable or which cannot be reliably estimated. Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where appropriate. Significant judgements made in identifying contingent liabilities Contingent liabilities are not recognised as liabilities on our balance sheet. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. We assess the likelihood that a potential claim or liability will arise and also quantify the possible range of financial outcomes where this can be reasonably determined. In identifying contingent liabilities we make key judgements in relation to applicable law and any historical and pending court rulings, and the likelihood, timing and cost of resolution. Establishing contingent liabilities associated with litigation brought against the group may involve the use of significant judgements and assumptions, in particular around the ability to form a reliable estimate of any probable outflow. We provide further information in relation to specific matters in the \u2018contingent liabilities' section below. Key accounting estimates and significant judgements made in accounting for provisions We exercise judgement in determining the quantum of all provisions to be recognised. Our assessment includes consideration of whether we have a present obligation, whether payment is probable and if so whether the amount can be estimated reliably. When measuring provisions we reflect the impact of inflation as appropriate, particularly in relation to our property, asset retirement obligation and third party claims provisions. Although this involves a degree of estimation, it does not represent a significant source of estimation uncertainty having regard to the quantum of the balances in question and the anticipated timing of outflows. Property provisions relate to obligations arising in relation to our property portfolio, in particular costs to restore leased properties on vacation where this is required under the lease agreement. In measuring property provisions, we have made estimates of the costs associated with the restoration of properties by reference to any relevant guidance such as rate cards. Cash outflows occur as and when properties are vacated and the obligations are settled. Asset retirement obligations (AROs) relate to obligations to dismantle equipment and restore network sites on vacation of the site. The provision represents the group\u2019s best estimate of the costs to dismantle equipment and restore the sites. Obligations are settled as and when sites are vacated and the timing is largely influenced by the group\u2019s network strategy. Our regulatory provision represents our best estimate of the cost to settle our present obligation in relation to historical regulatory matters. The charge/credit for the year represents the outcome of management\u2019s re-assessment of the estimates and regulatory risks across a range of issues, including price and service issues. The prices at which certain services are charged are regulated and may be subject to retrospective adjustment by regulators. When estimating the likely value of regulatory risk we make key judgements, including in regard to interpreting Ofcom regulations and past and current claims. The precise outcome of each matter depends on whether it becomes an active issue, and the extent to which negotiation or regulatory and compliance decisions will result in financial settlement. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual outcome of any settlement. Litigation provisions represent the best estimate to settle present obligations recognised in respect of claims brought against the group. The estimate reflects the specific facts and circumstances of each individual matter and any relevant external advice received. Provisions recognised are inherently judgemental and could change over time as matters progress. Third party claims provisions (previously described as insurance provisions) represent our exposure to claims from third parties, with latent disease claims from former colleagues and motor vehicle claims making up the majority of the balance. We engage an independent actuary to provide an estimate of the most likely outcomes in respect of latent disease and third party motor vehicle accident claims, and our in-house insurance teams review our exposure to other risks. Other provisions do not include any individually material provisions. For all risks, the ultimate liability may vary materially from the amounts provided and will be dependent upon the eventual outcome of any settlement. 18. Provisions & contingent liabilities
Network Third party
Property
ARO
Regulatory
Litigation
claims
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
142
181
65
85
92
108
673
Additions
43
\u2014
16
6
35
15
115
Unwind of discount
1
3
\u2014
\u2014
\u2014
\u2014
4
Utilised
(8)
(4)
(1)
(41)
(30)
(7)
(91)
Released
(37)
(87)
(16)
(9)
(43)
(42)
(234)
Transfers
\u2014
\u2014
4
\u2014
132
(11)
125
Exchange differences
1
\u2014
\u2014
3
1
1
6
At 31 March 2023
142
93
68
44
187
64
598
Additions
42
42
72
\u2014
73
9
238
Unwind of discount
1
4
\u2014
\u2014
1
\u2014
6
Utilised
(15)
(6)
(37)
(1)
(75)
(3)
(137)
Released
(17)
\u2014
(17)
\u2014
(32)
(3)
(69)
Transfers
4
\u2014
\u2014
\u2014
\u2014
10
14
Exchange differences
(1)
\u2014
\u2014
\u2014
\u2014
\u2014
(1)
At 31 March 2024
156
133
86
43
154
77
649
a
a
a Transfers relate to the reclassification of balances previously presented in other payables (note 17) following reassessment of the level of certainty over the timing and amount of any
outflow of resources.
2024
2023
At 31 March
\u00a3m
\u00a3m
Analysed as:
Current
238
229
Non-current
411
369
649
598
Contingent liabilities and legal proceedings
In the ordinary course of business, we are periodically notified of actual or threatened litigation, and regulatory and compliance matters
and investigations. We have disclosed below a number of such matters including any matters where we believe a material adverse impact
on the operations or financial condition of the group is possible and the likelihood of a material outflow of resources is more than remote.
Where the outflow of resources is considered probable, and a reasonable estimate can be made of the amount of that obligation, a
provision is recognised for these amounts and reflected in the table above. Where an outflow is not probable but is possible, or a
reasonable estimate of the obligation cannot be made, a contingent liability exists.
In respect of each of the claims below, the nature and progression of such proceedings and investigations can make it difficult to predict
the impact they will have on the group. There are many reasons why we cannot make these assessments with certainty, including, among
others, that they are in early stages, no damages or remedies have been specified, and/or the often slow pace of litigation.
Class action claim \u2013 landline only services
In January 2021, Justin Le Patourel, represented by law firm Mishcon de Reya applied to the Competition Appeal Tribunal to bring a
proposed class action claim for damages they estimated at \u00a3608m (inclusive of compound interest) or \u00a3589m (inclusive of simple
interest) alleging anti-competitive behaviour through excessive pricing by BT to customers with certain residential landline services.
Ofcom considered this topic in 2017. At that time, Ofcom\u2019s final statement made no finding of excessive pricing or breach of competition
law more generally but we implemented a voluntary commitment to reduce prices for customers that have a BT landline only and not to
increase those prices beyond inflation (CPI). In September 2021 the Competition Appeal Tribunal certified the claim to proceed to a
substantive trial on an opt-out basis (class members are automatically included in the claim unless they choose to opt-out). In July 2023
Justin Le Patourel amended his claim seeking increased damages estimated at \u00a31,338m (inclusive of compound interest) or \u00a31,309m
(inclusive of simple interest), later revised to \u00a31,307m (inclusive of compound interest) or \u00a31,278m (inclusive of simple interest). A
hearing took place between January and March 2024 and we are awaiting judgment. At the reporting date we are not aware of any
evidence to indicate that a present obligation exists such that any amount should be provided for.
Class action claim \u2013 combined mobile and handset services
In November 2023, Justin Gutmann, represented by law firm Charles Lyndon applied to the Competition Appeal Tribunal to bring a
proposed class action claim for damages estimated at \u00a31.1bn (inclusive of simple interest) on behalf of customers who purchased
combined handset and airtime contracts who are outside their minimum contract terms but who continue to pay the same price as during
their minimum contract terms. The claim alleges this approach was an anti-competitive abuse of a dominant position. Similar claims have
also been brought against Vodafone, Three and O2 with the total damages claimed \u00a33.285bn (inclusive of simple interest). At the
reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for.
Class actions must be certified by the Competition Appeal Tribunal at a Collective Proceedings Order (CPO) hearing before proceeding to
a substantive trial. A first case management conference to determine next procedural steps is scheduled for 23 May 2024. If the class
action is certified the substantive trial will not conclude during FY25. BT intends to defend itself vigorously.
Italian business
Milan Public Prosecutor prosecutions: In FY20 proceedings were initiated against BT Italia for certain potential offences, namely the
charge of having adopted, from 2011 to 2016, an inadequate management and control organisation model for the purposes of Articles 5
and 25 of Legislative Decree 231/2001. BT Italia disputed this and maintained in a defence brief filed in April 2019 that: (a) BT Italia did
not gain any interest or benefit from the conduct in question; and (b) in any event, it had a sufficient organisational, management and
audit model that was circumvented/overridden by individuals acting in their own self-interest. The trial commenced on 26 January 2021.
On 23 April 2021, the Court allowed some parties to be joined to the criminal proceedings as civil parties (\u2018parte civile\u2019) \u2013 a procedural
feature of the Italian criminal law system. These claims were directed at certain individual defendants (which include former BT/ BT Italia
employees). Those parties successfully joined BT Italia as a respondent to their civil claims (\u2018responsabile civile\u2019) on the basis that it is
vicariously responsible for the individuals\u2019 wrongdoing.
The first instance phase of the trial has now concluded with the Court handing down its decision on 25 January 2024. The Court convicted
certain individuals (including certain former BT Italia employees) for manipulation of BT Italia\u2019s financial statements for the financial year
ending 31 March 2016 and for fraud against an Italian company, Sed Multitel S.r.l. The Court dismissed all charges that had been brought
against BT Italia but ordered that BT Italia indemnify certain individual minority shareholders in the company and Sed Multitel for their
losses. The Court has not quantified the indemnification amount, such that the indemnified parties must now seek to recover these
amounts from BT Italia by agreement or separate civil proceedings. The quantum of those claims, if they are pursued successfully, is not
anticipated to be material.
Accounting misstatement claims: a law firm acting on behalf of a group of investors has made claims under s.90A of the Financial Services
& Markets Act 2000, alleging that untrue or misleading statements were made in relation to the historical irregular accounting practices in
BT\u2019s Italian business (which have been the subject of previous disclosures). No value is stated and the matter is in the early stages. As
mentioned in our earlier reports, the accounting issues in Italy have previously been the subject of class actions in the US that were
dismissed by the US courts.
Phones 4U
Since 2015 the administrators of Phones 4U Limited have made allegations that EE and other mobile network operators colluded to
procure Phones 4U\u2019s insolvency. Legal proceedings for an unquantified amount were issued in December 2018 by the administrators. The
trial on the question of liability/breach ran from May to July 2022. In November 2023 the High Court dismissed Phones 4U\u2019s claim in its
entirety. Phones 4U has subsequently appealed that judgment to the Court of Appeal and a hearing is expected in May 2025. We continue
to dispute these allegations vigorously.
UK Competition and Markets Authority (CMA) investigation
On 12 July 2022 the CMA opened a competition law investigation into BT and other companies involved in the purchase of freelance
services for the production and broadcasting of sports content in the UK. The investigation is focused on BT Sport. In February 2023, the
CMA extended its investigation to include suspected breaches of competition law in relation to the employment of staff supporting the
production and broadcasting of sports content in the UK however in March 2024 the CMA confirmed this limb of its investigation would
not be progressed. The CMA has said no assumption should be made at this stage that competition law has been infringed. BT is
cooperating with the investigation.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-541": { "value": "Our provisions principally relate to obligations arising from property rationalisation programmes, restructuring programmes, asset retirement obligations, network assets, third party claims, litigation and regulatory risks. Contingent liabilities primarily arise from litigation and regulatory matters that are not sufficiently certain to meet the criteria for recognition as provisions. Material accounting policies that apply to provisions & contingent liabilities We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation with an outflow that is not probable or which cannot be reliably estimated. Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where appropriate. Significant judgements made in identifying contingent liabilities Contingent liabilities are not recognised as liabilities on our balance sheet. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. We assess the likelihood that a potential claim or liability will arise and also quantify the possible range of financial outcomes where this can be reasonably determined. In identifying contingent liabilities we make key judgements in relation to applicable law and any historical and pending court rulings, and the likelihood, timing and cost of resolution. Establishing contingent liabilities associated with litigation brought against the group may involve the use of significant judgements and assumptions, in particular around the ability to form a reliable estimate of any probable outflow. We provide further information in relation to specific matters in the \u2018contingent liabilities' section below. Key accounting estimates and significant judgements made in accounting for provisions We exercise judgement in determining the quantum of all provisions to be recognised. Our assessment includes consideration of whether we have a present obligation, whether payment is probable and if so whether the amount can be estimated reliably. When measuring provisions we reflect the impact of inflation as appropriate, particularly in relation to our property, asset retirement obligation and third party claims provisions. Although this involves a degree of estimation, it does not represent a significant source of estimation uncertainty having regard to the quantum of the balances in question and the anticipated timing of outflows. Property provisions relate to obligations arising in relation to our property portfolio, in particular costs to restore leased properties on vacation where this is required under the lease agreement. In measuring property provisions, we have made estimates of the costs associated with the restoration of properties by reference to any relevant guidance such as rate cards. Cash outflows occur as and when properties are vacated and the obligations are settled. Asset retirement obligations (AROs) relate to obligations to dismantle equipment and restore network sites on vacation of the site. The provision represents the group\u2019s best estimate of the costs to dismantle equipment and restore the sites. Obligations are settled as and when sites are vacated and the timing is largely influenced by the group\u2019s network strategy. Our regulatory provision represents our best estimate of the cost to settle our present obligation in relation to historical regulatory matters. The charge/credit for the year represents the outcome of management\u2019s re-assessment of the estimates and regulatory risks across a range of issues, including price and service issues. The prices at which certain services are charged are regulated and may be subject to retrospective adjustment by regulators. When estimating the likely value of regulatory risk we make key judgements, including in regard to interpreting Ofcom regulations and past and current claims. The precise outcome of each matter depends on whether it becomes an active issue, and the extent to which negotiation or regulatory and compliance decisions will result in financial settlement. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual outcome of any settlement. Litigation provisions represent the best estimate to settle present obligations recognised in respect of claims brought against the group. The estimate reflects the specific facts and circumstances of each individual matter and any relevant external advice received. Provisions recognised are inherently judgemental and could change over time as matters progress. Third party claims provisions (previously described as insurance provisions) represent our exposure to claims from third parties, with latent disease claims from former colleagues and motor vehicle claims making up the majority of the balance. We engage an independent actuary to provide an estimate of the most likely outcomes in respect of latent disease and third party motor vehicle accident claims, and our in-house insurance teams review our exposure to other risks. Other provisions do not include any individually material provisions. For all risks, the ultimate liability may vary materially from the amounts provided and will be dependent upon the eventual outcome of any settlement. 18. Provisions & contingent liabilities
Network Third party
Property
ARO
Regulatory
Litigation
claims
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
142
181
65
85
92
108
673
Additions
43
\u2014
16
6
35
15
115
Unwind of discount
1
3
\u2014
\u2014
\u2014
\u2014
4
Utilised
(8)
(4)
(1)
(41)
(30)
(7)
(91)
Released
(37)
(87)
(16)
(9)
(43)
(42)
(234)
Transfers
\u2014
\u2014
4
\u2014
132
(11)
125
Exchange differences
1
\u2014
\u2014
3
1
1
6
At 31 March 2023
142
93
68
44
187
64
598
Additions
42
42
72
\u2014
73
9
238
Unwind of discount
1
4
\u2014
\u2014
1
\u2014
6
Utilised
(15)
(6)
(37)
(1)
(75)
(3)
(137)
Released
(17)
\u2014
(17)
\u2014
(32)
(3)
(69)
Transfers
4
\u2014
\u2014
\u2014
\u2014
10
14
Exchange differences
(1)
\u2014
\u2014
\u2014
\u2014
\u2014
(1)
At 31 March 2024
156
133
86
43
154
77
649
a a a Transfers relate to the reclassification of balances previously presented in other payables (note 17) following reassessment of the level of certainty over the timing and amount of any outflow of resources.
2024
2023
At 31 March
\u00a3m
\u00a3m
Analysed as:
Current
238
229
Non-current
411
369
649
598
Contingent liabilities and legal proceedings In the ordinary course of business, we are periodically notified of actual or threatened litigation, and regulatory and compliance matters and investigations. We have disclosed below a number of such matters including any matters where we believe a material adverse impact on the operations or financial condition of the group is possible and the likelihood of a material outflow of resources is more than remote. Where the outflow of resources is considered probable, and a reasonable estimate can be made of the amount of that obligation, a provision is recognised for these amounts and reflected in the table above. Where an outflow is not probable but is possible, or a reasonable estimate of the obligation cannot be made, a contingent liability exists. In respect of each of the claims below, the nature and progression of such proceedings and investigations can make it difficult to predict the impact they will have on the group. There are many reasons why we cannot make these assessments with certainty, including, among others, that they are in early stages, no damages or remedies have been specified, and/or the often slow pace of litigation. Class action claim \u2013 landline only services In January 2021, Justin Le Patourel, represented by law firm Mishcon de Reya applied to the Competition Appeal Tribunal to bring a proposed class action claim for damages they estimated at \u00a3608m (inclusive of compound interest) or \u00a3589m (inclusive of simple interest) alleging anti-competitive behaviour through excessive pricing by BT to customers with certain residential landline services. Ofcom considered this topic in 2017. At that time, Ofcom\u2019s final statement made no finding of excessive pricing or breach of competition law more generally but we implemented a voluntary commitment to reduce prices for customers that have a BT landline only and not to increase those prices beyond inflation (CPI). In September 2021 the Competition Appeal Tribunal certified the claim to proceed to a substantive trial on an opt-out basis (class members are automatically included in the claim unless they choose to opt-out). In July 2023 Justin Le Patourel amended his claim seeking increased damages estimated at \u00a31,338m (inclusive of compound interest) or \u00a31,309m (inclusive of simple interest), later revised to \u00a31,307m (inclusive of compound interest) or \u00a31,278m (inclusive of simple interest). A hearing took place between January and March 2024 and we are awaiting judgment. At the reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for. Class action claim \u2013 combined mobile and handset services In November 2023, Justin Gutmann, represented by law firm Charles Lyndon applied to the Competition Appeal Tribunal to bring a proposed class action claim for damages estimated at \u00a31.1bn (inclusive of simple interest) on behalf of customers who purchased combined handset and airtime contracts who are outside their minimum contract terms but who continue to pay the same price as during their minimum contract terms. The claim alleges this approach was an anti-competitive abuse of a dominant position. Similar claims have also been brought against Vodafone, Three and O2 with the total damages claimed \u00a33.285bn (inclusive of simple interest). At the reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for. Class actions must be certified by the Competition Appeal Tribunal at a Collective Proceedings Order (CPO) hearing before proceeding to a substantive trial. A first case management conference to determine next procedural steps is scheduled for 23 May 2024. If the class action is certified the substantive trial will not conclude during FY25. BT intends to defend itself vigorously. Italian business Milan Public Prosecutor prosecutions: In FY20 proceedings were initiated against BT Italia for certain potential offences, namely the charge of having adopted, from 2011 to 2016, an inadequate management and control organisation model for the purposes of Articles 5 and 25 of Legislative Decree 231/2001. BT Italia disputed this and maintained in a defence brief filed in April 2019 that: (a) BT Italia did not gain any interest or benefit from the conduct in question; and (b) in any event, it had a sufficient organisational, management and audit model that was circumvented/overridden by individuals acting in their own self-interest. The trial commenced on 26 January 2021. On 23 April 2021, the Court allowed some parties to be joined to the criminal proceedings as civil parties (\u2018parte civile\u2019) \u2013 a procedural feature of the Italian criminal law system. These claims were directed at certain individual defendants (which include former BT/ BT Italia employees). Those parties successfully joined BT Italia as a respondent to their civil claims (\u2018responsabile civile\u2019) on the basis that it is vicariously responsible for the individuals\u2019 wrongdoing. The first instance phase of the trial has now concluded with the Court handing down its decision on 25 January 2024. The Court convicted certain individuals (including certain former BT Italia employees) for manipulation of BT Italia\u2019s financial statements for the financial year ending 31 March 2016 and for fraud against an Italian company, Sed Multitel S.r.l. The Court dismissed all charges that had been brought against BT Italia but ordered that BT Italia indemnify certain individual minority shareholders in the company and Sed Multitel for their losses. The Court has not quantified the indemnification amount, such that the indemnified parties must now seek to recover these amounts from BT Italia by agreement or separate civil proceedings. The quantum of those claims, if they are pursued successfully, is not anticipated to be material. Accounting misstatement claims: a law firm acting on behalf of a group of investors has made claims under s.90A of the Financial Services & Markets Act 2000, alleging that untrue or misleading statements were made in relation to the historical irregular accounting practices in BT\u2019s Italian business (which have been the subject of previous disclosures). No value is stated and the matter is in the early stages. As mentioned in our earlier reports, the accounting issues in Italy have previously been the subject of class actions in the US that were dismissed by the US courts. Phones 4U Since 2015 the administrators of Phones 4U Limited have made allegations that EE and other mobile network operators colluded to procure Phones 4U\u2019s insolvency. Legal proceedings for an unquantified amount were issued in December 2018 by the administrators. The trial on the question of liability/breach ran from May to July 2022. In November 2023 the High Court dismissed Phones 4U\u2019s claim in its entirety. Phones 4U has subsequently appealed that judgment to the Court of Appeal and a hearing is expected in May 2025. We continue to dispute these allegations vigorously. UK Competition and Markets Authority (CMA) investigation On 12 July 2022 the CMA opened a competition law investigation into BT and other companies involved in the purchase of freelance services for the production and broadcasting of sports content in the UK. The investigation is focused on BT Sport. In February 2023, the CMA extended its investigation to include suspected breaches of competition law in relation to the employment of staff supporting the production and broadcasting of sports content in the UK however in March 2024 the CMA confirmed this limb of its investigation would not be progressed. The CMA has said no assumption should be made at this stage that competition law has been infringed. BT is cooperating with the investigation. ", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-564": { "value": "Our provisions principally relate to obligations arising from property rationalisation programmes, restructuring programmes, asset retirement obligations, network assets, third party claims, litigation and regulatory risks. Contingent liabilities primarily arise from litigation and regulatory matters that are not sufficiently certain to meet the criteria for recognition as provisions. Material accounting policies that apply to provisions & contingent liabilities We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation with an outflow that is not probable or which cannot be reliably estimated. Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where appropriate. Significant judgements made in identifying contingent liabilities Contingent liabilities are not recognised as liabilities on our balance sheet. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. We assess the likelihood that a potential claim or liability will arise and also quantify the possible range of financial outcomes where this can be reasonably determined. In identifying contingent liabilities we make key judgements in relation to applicable law and any historical and pending court rulings, and the likelihood, timing and cost of resolution. Establishing contingent liabilities associated with litigation brought against the group may involve the use of significant judgements and assumptions, in particular around the ability to form a reliable estimate of any probable outflow. We provide further information in relation to specific matters in the \u2018contingent liabilities' section below. Key accounting estimates and significant judgements made in accounting for provisions We exercise judgement in determining the quantum of all provisions to be recognised. Our assessment includes consideration of whether we have a present obligation, whether payment is probable and if so whether the amount can be estimated reliably. When measuring provisions we reflect the impact of inflation as appropriate, particularly in relation to our property, asset retirement obligation and third party claims provisions. Although this involves a degree of estimation, it does not represent a significant source of estimation uncertainty having regard to the quantum of the balances in question and the anticipated timing of outflows. Property provisions relate to obligations arising in relation to our property portfolio, in particular costs to restore leased properties on vacation where this is required under the lease agreement. In measuring property provisions, we have made estimates of the costs associated with the restoration of properties by reference to any relevant guidance such as rate cards. Cash outflows occur as and when properties are vacated and the obligations are settled. Asset retirement obligations (AROs) relate to obligations to dismantle equipment and restore network sites on vacation of the site. The provision represents the group\u2019s best estimate of the costs to dismantle equipment and restore the sites. Obligations are settled as and when sites are vacated and the timing is largely influenced by the group\u2019s network strategy. Our regulatory provision represents our best estimate of the cost to settle our present obligation in relation to historical regulatory matters. The charge/credit for the year represents the outcome of management\u2019s re-assessment of the estimates and regulatory risks across a range of issues, including price and service issues. The prices at which certain services are charged are regulated and may be subject to retrospective adjustment by regulators. When estimating the likely value of regulatory risk we make key judgements, including in regard to interpreting Ofcom regulations and past and current claims. The precise outcome of each matter depends on whether it becomes an active issue, and the extent to which negotiation or regulatory and compliance decisions will result in financial settlement. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual outcome of any settlement. Litigation provisions represent the best estimate to settle present obligations recognised in respect of claims brought against the group. The estimate reflects the specific facts and circumstances of each individual matter and any relevant external advice received. Provisions recognised are inherently judgemental and could change over time as matters progress. Third party claims provisions (previously described as insurance provisions) represent our exposure to claims from third parties, with latent disease claims from former colleagues and motor vehicle claims making up the majority of the balance. We engage an independent actuary to provide an estimate of the most likely outcomes in respect of latent disease and third party motor vehicle accident claims, and our in-house insurance teams review our exposure to other risks. Other provisions do not include any individually material provisions. For all risks, the ultimate liability may vary materially from the amounts provided and will be dependent upon the eventual outcome of any settlement. 18. Provisions & contingent liabilities
Network Third party
Property
ARO
Regulatory
Litigation
claims
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
142
181
65
85
92
108
673
Additions
43
\u2014
16
6
35
15
115
Unwind of discount
1
3
\u2014
\u2014
\u2014
\u2014
4
Utilised
(8)
(4)
(1)
(41)
(30)
(7)
(91)
Released
(37)
(87)
(16)
(9)
(43)
(42)
(234)
Transfers
\u2014
\u2014
4
\u2014
132
(11)
125
Exchange differences
1
\u2014
\u2014
3
1
1
6
At 31 March 2023
142
93
68
44
187
64
598
Additions
42
42
72
\u2014
73
9
238
Unwind of discount
1
4
\u2014
\u2014
1
\u2014
6
Utilised
(15)
(6)
(37)
(1)
(75)
(3)
(137)
Released
(17)
\u2014
(17)
\u2014
(32)
(3)
(69)
Transfers
4
\u2014
\u2014
\u2014
\u2014
10
14
Exchange differences
(1)
\u2014
\u2014
\u2014
\u2014
\u2014
(1)
At 31 March 2024
156
133
86
43
154
77
649
a a a Transfers relate to the reclassification of balances previously presented in other payables (note 17) following reassessment of the level of certainty over the timing and amount of any outflow of resources.
2024
2023
At 31 March
\u00a3m
\u00a3m
Analysed as:
Current
238
229
Non-current
411
369
649
598
Contingent liabilities and legal proceedings In the ordinary course of business, we are periodically notified of actual or threatened litigation, and regulatory and compliance matters and investigations. We have disclosed below a number of such matters including any matters where we believe a material adverse impact on the operations or financial condition of the group is possible and the likelihood of a material outflow of resources is more than remote. Where the outflow of resources is considered probable, and a reasonable estimate can be made of the amount of that obligation, a provision is recognised for these amounts and reflected in the table above. Where an outflow is not probable but is possible, or a reasonable estimate of the obligation cannot be made, a contingent liability exists. In respect of each of the claims below, the nature and progression of such proceedings and investigations can make it difficult to predict the impact they will have on the group. There are many reasons why we cannot make these assessments with certainty, including, among others, that they are in early stages, no damages or remedies have been specified, and/or the often slow pace of litigation. Class action claim \u2013 landline only services In January 2021, Justin Le Patourel, represented by law firm Mishcon de Reya applied to the Competition Appeal Tribunal to bring a proposed class action claim for damages they estimated at \u00a3608m (inclusive of compound interest) or \u00a3589m (inclusive of simple interest) alleging anti-competitive behaviour through excessive pricing by BT to customers with certain residential landline services. Ofcom considered this topic in 2017. At that time, Ofcom\u2019s final statement made no finding of excessive pricing or breach of competition law more generally but we implemented a voluntary commitment to reduce prices for customers that have a BT landline only and not to increase those prices beyond inflation (CPI). In September 2021 the Competition Appeal Tribunal certified the claim to proceed to a substantive trial on an opt-out basis (class members are automatically included in the claim unless they choose to opt-out). In July 2023 Justin Le Patourel amended his claim seeking increased damages estimated at \u00a31,338m (inclusive of compound interest) or \u00a31,309m (inclusive of simple interest), later revised to \u00a31,307m (inclusive of compound interest) or \u00a31,278m (inclusive of simple interest). A hearing took place between January and March 2024 and we are awaiting judgment. At the reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for. Class action claim \u2013 combined mobile and handset services In November 2023, Justin Gutmann, represented by law firm Charles Lyndon applied to the Competition Appeal Tribunal to bring a proposed class action claim for damages estimated at \u00a31.1bn (inclusive of simple interest) on behalf of customers who purchased combined handset and airtime contracts who are outside their minimum contract terms but who continue to pay the same price as during their minimum contract terms. The claim alleges this approach was an anti-competitive abuse of a dominant position. Similar claims have also been brought against Vodafone, Three and O2 with the total damages claimed \u00a33.285bn (inclusive of simple interest). At the reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for. Class actions must be certified by the Competition Appeal Tribunal at a Collective Proceedings Order (CPO) hearing before proceeding to a substantive trial. A first case management conference to determine next procedural steps is scheduled for 23 May 2024. If the class action is certified the substantive trial will not conclude during FY25. BT intends to defend itself vigorously. Italian business Milan Public Prosecutor prosecutions: In FY20 proceedings were initiated against BT Italia for certain potential offences, namely the charge of having adopted, from 2011 to 2016, an inadequate management and control organisation model for the purposes of Articles 5 and 25 of Legislative Decree 231/2001. BT Italia disputed this and maintained in a defence brief filed in April 2019 that: (a) BT Italia did not gain any interest or benefit from the conduct in question; and (b) in any event, it had a sufficient organisational, management and audit model that was circumvented/overridden by individuals acting in their own self-interest. The trial commenced on 26 January 2021. On 23 April 2021, the Court allowed some parties to be joined to the criminal proceedings as civil parties (\u2018parte civile\u2019) \u2013 a procedural feature of the Italian criminal law system. These claims were directed at certain individual defendants (which include former BT/ BT Italia employees). Those parties successfully joined BT Italia as a respondent to their civil claims (\u2018responsabile civile\u2019) on the basis that it is vicariously responsible for the individuals\u2019 wrongdoing. The first instance phase of the trial has now concluded with the Court handing down its decision on 25 January 2024. The Court convicted certain individuals (including certain former BT Italia employees) for manipulation of BT Italia\u2019s financial statements for the financial year ending 31 March 2016 and for fraud against an Italian company, Sed Multitel S.r.l. The Court dismissed all charges that had been brought against BT Italia but ordered that BT Italia indemnify certain individual minority shareholders in the company and Sed Multitel for their losses. The Court has not quantified the indemnification amount, such that the indemnified parties must now seek to recover these amounts from BT Italia by agreement or separate civil proceedings. The quantum of those claims, if they are pursued successfully, is not anticipated to be material. Accounting misstatement claims: a law firm acting on behalf of a group of investors has made claims under s.90A of the Financial Services & Markets Act 2000, alleging that untrue or misleading statements were made in relation to the historical irregular accounting practices in BT\u2019s Italian business (which have been the subject of previous disclosures). No value is stated and the matter is in the early stages. As mentioned in our earlier reports, the accounting issues in Italy have previously been the subject of class actions in the US that were dismissed by the US courts. Phones 4U Since 2015 the administrators of Phones 4U Limited have made allegations that EE and other mobile network operators colluded to procure Phones 4U\u2019s insolvency. Legal proceedings for an unquantified amount were issued in December 2018 by the administrators. The trial on the question of liability/breach ran from May to July 2022. In November 2023 the High Court dismissed Phones 4U\u2019s claim in its entirety. Phones 4U has subsequently appealed that judgment to the Court of Appeal and a hearing is expected in May 2025. We continue to dispute these allegations vigorously. UK Competition and Markets Authority (CMA) investigation On 12 July 2022 the CMA opened a competition law investigation into BT and other companies involved in the purchase of freelance services for the production and broadcasting of sports content in the UK. The investigation is focused on BT Sport. In February 2023, the CMA extended its investigation to include suspected breaches of competition law in relation to the employment of staff supporting the production and broadcasting of sports content in the UK however in March 2024 the CMA confirmed this limb of its investigation would not be progressed. The CMA has said no assumption should be made at this stage that competition law has been infringed. BT is cooperating with the investigation. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-577": { "value": "Our provisions principally relate to obligations arising from property rationalisation programmes, restructuring programmes, asset retirement obligations, network assets, third party claims, litigation and regulatory risks. Contingent liabilities primarily arise from litigation and regulatory matters that are not sufficiently certain to meet the criteria for recognition as provisions. Material accounting policies that apply to provisions & contingent liabilities We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation with an outflow that is not probable or which cannot be reliably estimated. Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where appropriate. Significant judgements made in identifying contingent liabilities Contingent liabilities are not recognised as liabilities on our balance sheet. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. We assess the likelihood that a potential claim or liability will arise and also quantify the possible range of financial outcomes where this can be reasonably determined. In identifying contingent liabilities we make key judgements in relation to applicable law and any historical and pending court rulings, and the likelihood, timing and cost of resolution. Establishing contingent liabilities associated with litigation brought against the group may involve the use of significant judgements and assumptions, in particular around the ability to form a reliable estimate of any probable outflow. We provide further information in relation to specific matters in the \u2018contingent liabilities' section below. Key accounting estimates and significant judgements made in accounting for provisions We exercise judgement in determining the quantum of all provisions to be recognised. Our assessment includes consideration of whether we have a present obligation, whether payment is probable and if so whether the amount can be estimated reliably. When measuring provisions we reflect the impact of inflation as appropriate, particularly in relation to our property, asset retirement obligation and third party claims provisions. Although this involves a degree of estimation, it does not represent a significant source of estimation uncertainty having regard to the quantum of the balances in question and the anticipated timing of outflows. Property provisions relate to obligations arising in relation to our property portfolio, in particular costs to restore leased properties on vacation where this is required under the lease agreement. In measuring property provisions, we have made estimates of the costs associated with the restoration of properties by reference to any relevant guidance such as rate cards. Cash outflows occur as and when properties are vacated and the obligations are settled. Asset retirement obligations (AROs) relate to obligations to dismantle equipment and restore network sites on vacation of the site. The provision represents the group\u2019s best estimate of the costs to dismantle equipment and restore the sites. Obligations are settled as and when sites are vacated and the timing is largely influenced by the group\u2019s network strategy. Our regulatory provision represents our best estimate of the cost to settle our present obligation in relation to historical regulatory matters. The charge/credit for the year represents the outcome of management\u2019s re-assessment of the estimates and regulatory risks across a range of issues, including price and service issues. The prices at which certain services are charged are regulated and may be subject to retrospective adjustment by regulators. When estimating the likely value of regulatory risk we make key judgements, including in regard to interpreting Ofcom regulations and past and current claims. The precise outcome of each matter depends on whether it becomes an active issue, and the extent to which negotiation or regulatory and compliance decisions will result in financial settlement. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual outcome of any settlement. Litigation provisions represent the best estimate to settle present obligations recognised in respect of claims brought against the group. The estimate reflects the specific facts and circumstances of each individual matter and any relevant external advice received. Provisions recognised are inherently judgemental and could change over time as matters progress. Third party claims provisions (previously described as insurance provisions) represent our exposure to claims from third parties, with latent disease claims from former colleagues and motor vehicle claims making up the majority of the balance. We engage an independent actuary to provide an estimate of the most likely outcomes in respect of latent disease and third party motor vehicle accident claims, and our in-house insurance teams review our exposure to other risks. Other provisions do not include any individually material provisions. For all risks, the ultimate liability may vary materially from the amounts provided and will be dependent upon the eventual outcome of any settlement. 18. Provisions & contingent liabilities
Network Third party
Property
ARO
Regulatory
Litigation
claims
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
142
181
65
85
92
108
673
Additions
43
\u2014
16
6
35
15
115
Unwind of discount
1
3
\u2014
\u2014
\u2014
\u2014
4
Utilised
(8)
(4)
(1)
(41)
(30)
(7)
(91)
Released
(37)
(87)
(16)
(9)
(43)
(42)
(234)
Transfers
\u2014
\u2014
4
\u2014
132
(11)
125
Exchange differences
1
\u2014
\u2014
3
1
1
6
At 31 March 2023
142
93
68
44
187
64
598
Additions
42
42
72
\u2014
73
9
238
Unwind of discount
1
4
\u2014
\u2014
1
\u2014
6
Utilised
(15)
(6)
(37)
(1)
(75)
(3)
(137)
Released
(17)
\u2014
(17)
\u2014
(32)
(3)
(69)
Transfers
4
\u2014
\u2014
\u2014
\u2014
10
14
Exchange differences
(1)
\u2014
\u2014
\u2014
\u2014
\u2014
(1)
At 31 March 2024
156
133
86
43
154
77
649
a a a Transfers relate to the reclassification of balances previously presented in other payables (note 17) following reassessment of the level of certainty over the timing and amount of any outflow of resources.
2024
2023
At 31 March
\u00a3m
\u00a3m
Analysed as:
Current
238
229
Non-current
411
369
649
598
Contingent liabilities and legal proceedings In the ordinary course of business, we are periodically notified of actual or threatened litigation, and regulatory and compliance matters and investigations. We have disclosed below a number of such matters including any matters where we believe a material adverse impact on the operations or financial condition of the group is possible and the likelihood of a material outflow of resources is more than remote. Where the outflow of resources is considered probable, and a reasonable estimate can be made of the amount of that obligation, a provision is recognised for these amounts and reflected in the table above. Where an outflow is not probable but is possible, or a reasonable estimate of the obligation cannot be made, a contingent liability exists. In respect of each of the claims below, the nature and progression of such proceedings and investigations can make it difficult to predict the impact they will have on the group. There are many reasons why we cannot make these assessments with certainty, including, among others, that they are in early stages, no damages or remedies have been specified, and/or the often slow pace of litigation. Class action claim \u2013 landline only services In January 2021, Justin Le Patourel, represented by law firm Mishcon de Reya applied to the Competition Appeal Tribunal to bring a proposed class action claim for damages they estimated at \u00a3608m (inclusive of compound interest) or \u00a3589m (inclusive of simple interest) alleging anti-competitive behaviour through excessive pricing by BT to customers with certain residential landline services. Ofcom considered this topic in 2017. At that time, Ofcom\u2019s final statement made no finding of excessive pricing or breach of competition law more generally but we implemented a voluntary commitment to reduce prices for customers that have a BT landline only and not to increase those prices beyond inflation (CPI). In September 2021 the Competition Appeal Tribunal certified the claim to proceed to a substantive trial on an opt-out basis (class members are automatically included in the claim unless they choose to opt-out). In July 2023 Justin Le Patourel amended his claim seeking increased damages estimated at \u00a31,338m (inclusive of compound interest) or \u00a31,309m (inclusive of simple interest), later revised to \u00a31,307m (inclusive of compound interest) or \u00a31,278m (inclusive of simple interest). A hearing took place between January and March 2024 and we are awaiting judgment. At the reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for. Class action claim \u2013 combined mobile and handset services In November 2023, Justin Gutmann, represented by law firm Charles Lyndon applied to the Competition Appeal Tribunal to bring a proposed class action claim for damages estimated at \u00a31.1bn (inclusive of simple interest) on behalf of customers who purchased combined handset and airtime contracts who are outside their minimum contract terms but who continue to pay the same price as during their minimum contract terms. The claim alleges this approach was an anti-competitive abuse of a dominant position. Similar claims have also been brought against Vodafone, Three and O2 with the total damages claimed \u00a33.285bn (inclusive of simple interest). At the reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for. Class actions must be certified by the Competition Appeal Tribunal at a Collective Proceedings Order (CPO) hearing before proceeding to a substantive trial. A first case management conference to determine next procedural steps is scheduled for 23 May 2024. If the class action is certified the substantive trial will not conclude during FY25. BT intends to defend itself vigorously. Italian business Milan Public Prosecutor prosecutions: In FY20 proceedings were initiated against BT Italia for certain potential offences, namely the charge of having adopted, from 2011 to 2016, an inadequate management and control organisation model for the purposes of Articles 5 and 25 of Legislative Decree 231/2001. BT Italia disputed this and maintained in a defence brief filed in April 2019 that: (a) BT Italia did not gain any interest or benefit from the conduct in question; and (b) in any event, it had a sufficient organisational, management and audit model that was circumvented/overridden by individuals acting in their own self-interest. The trial commenced on 26 January 2021. On 23 April 2021, the Court allowed some parties to be joined to the criminal proceedings as civil parties (\u2018parte civile\u2019) \u2013 a procedural feature of the Italian criminal law system. These claims were directed at certain individual defendants (which include former BT/ BT Italia employees). Those parties successfully joined BT Italia as a respondent to their civil claims (\u2018responsabile civile\u2019) on the basis that it is vicariously responsible for the individuals\u2019 wrongdoing. The first instance phase of the trial has now concluded with the Court handing down its decision on 25 January 2024. The Court convicted certain individuals (including certain former BT Italia employees) for manipulation of BT Italia\u2019s financial statements for the financial year ending 31 March 2016 and for fraud against an Italian company, Sed Multitel S.r.l. The Court dismissed all charges that had been brought against BT Italia but ordered that BT Italia indemnify certain individual minority shareholders in the company and Sed Multitel for their losses. The Court has not quantified the indemnification amount, such that the indemnified parties must now seek to recover these amounts from BT Italia by agreement or separate civil proceedings. The quantum of those claims, if they are pursued successfully, is not anticipated to be material. Accounting misstatement claims: a law firm acting on behalf of a group of investors has made claims under s.90A of the Financial Services & Markets Act 2000, alleging that untrue or misleading statements were made in relation to the historical irregular accounting practices in BT\u2019s Italian business (which have been the subject of previous disclosures). No value is stated and the matter is in the early stages. As mentioned in our earlier reports, the accounting issues in Italy have previously been the subject of class actions in the US that were dismissed by the US courts. Phones 4U Since 2015 the administrators of Phones 4U Limited have made allegations that EE and other mobile network operators colluded to procure Phones 4U\u2019s insolvency. Legal proceedings for an unquantified amount were issued in December 2018 by the administrators. The trial on the question of liability/breach ran from May to July 2022. In November 2023 the High Court dismissed Phones 4U\u2019s claim in its entirety. Phones 4U has subsequently appealed that judgment to the Court of Appeal and a hearing is expected in May 2025. We continue to dispute these allegations vigorously. UK Competition and Markets Authority (CMA) investigation On 12 July 2022 the CMA opened a competition law investigation into BT and other companies involved in the purchase of freelance services for the production and broadcasting of sports content in the UK. The investigation is focused on BT Sport. In February 2023, the CMA extended its investigation to include suspected breaches of competition law in relation to the employment of staff supporting the production and broadcasting of sports content in the UK however in March 2024 the CMA confirmed this limb of its investigation would not be progressed. The CMA has said no assumption should be made at this stage that competition law has been infringed. BT is cooperating with the investigation. 31. Financial commitments Financial commitments as at 31 March 2024 include capital commitments of \u00a31,049m (FY23: \u00a31,480m) and device purchase commitments of \u00a3171m (FY23: \u00a3217m). TV programme rights commitments were transferred to the Sports JV formed with Warner Bros. Discovery (WBD) during FY23 (see note 22). Both the group and WBD have guaranteed the Sports JV\u2019s obligations under certain programme rights commitments; the fair value of these parent company guarantees is not material. Other than as disclosed below and in note 18, there were no contingent liabilities or guarantees at 31 March 2024 other than those arising in the ordinary course of the group\u2019s business and on these no material losses are anticipated. We have insurance cover to certain limits for major risks on property and major claims in connection with legal liabilities arising in the course of our operations. Otherwise, the group generally carries its own risks. Legal and regulatory proceedings See note 18 for contingent liabilities associated with legal and regulatory proceedings.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-607": { "value": "Material accounting policies that apply to provisions & contingent liabilities We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation with an outflow that is not probable or which cannot be reliably estimated. Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where appropriate.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-619": { "value": "Material accounting policies that apply to provisions & contingent liabilities We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation with an outflow that is not probable or which cannot be reliably estimated. Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where appropriate.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-542": { "value": "19. Retirement benefit plans Background to BT Group\u2019s pension plans The group has both Defined Benefit and Defined Contribution retirement benefit plans. The group\u2019s main plans are in the UK: \u2013 The BT Pension Scheme (BTPS) is the largest UK Defined Benefit plan sponsored by BT Group, constituting 97% of BT Group\u2019s IAS 19 liability. It was closed to future benefit accrual in 2018 for the majority of members, and has 55,000 deferred members and 210,000 pensioners. All BTPS members receive pension benefits at retirement based on salary and years of service; some members also receive a lump sum payment at retirement. Increases for the majority of benefits are linked to either the Retail Price Index (RPI) or the Consumer Price Index (CPI). \u2013 The EE Pension Scheme (EEPS) has a Defined Benefit section that was closed to future benefit accrual in 2014 and a Defined Contribution section which was closed to future accrual in July 2023. The Defined Benefit section constitutes 2% of BT Group\u2019s IAS 19 liability. \u2013 The BT Retirement Saving Scheme (BTRSS) is a Defined Contribution, contract-based, plan operated by Standard Life which new UK employees join. There are around 67,000 employees currently contributing to the BTRSS. The group also has retirement arrangements around the world in line with local markets and culture; the principal ones being in the Netherlands and Germany. Types of retirement benefit plans Defined Benefit (DB) plans DB plan benefits are determined by the plan rules, typically dependent on factors such as years of service and pensionable pay, but not on the value of actual contributions made by the group or members. The group is exposed to investment and other experience risks and may need to make additional contributions where it is estimated that the benefits will not be met from assets held, regular contributions and expected investment income. The net defined benefit liability, or deficit, is the present value of all expected future benefit cash flows to be paid by each plan, calculated using the projected unit credit method by professionally qualified actuaries (also known as the Defined Benefit Obligation, DBO or liabilities) less the fair value of the plan assets. A net defined benefit asset, or surplus, occurs when the fair value of assets exceeds the liabilities. Defined Contribution (DC) plans DC plan benefits are linked to the value of each member\u2019s fund, which is based on contributions paid and the performance of each individual\u2019s chosen investments. The group has no exposure to investment and other experience risks (including longevity).
Amounts in the financial statements
Group income statement
The expense arising from the group\u2019s retirement benefit arrangements as recognised in the group income statement is shown below.
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Recognised in the income statement before specific items (note 6)
\u2013 Service cost:
\u2013 DB plans
12
17
\u2013 DC plans
541
537
\u2013 Past service cost/(credit)
\u2014
(2)
\u2013 Administration expenses and PPF levy
29
38
Subtotal
582
590
Recognised in the income statement as specific items (note 9)
\u2013 Costs to close BTPS and provide transition payments
a
for affected employees
\u2014
13
\u2013 Interest on pensions deficit
121
18
Subtotal
121
31
Total recognised in the income statement
703
621
a All employees impacted by the closure of the BTPS were eligible for transition payments from the date of closure into their BTRSS pot for a period linked to the employee\u2019s age.
Group balance sheet
The net defined benefit liability in respect of defined benefit plans reported in the group balance sheet is set out below. Plans in surplus
are presented within non-current assets and plans in deficit within non-current liabilities.
2024
2023
Surplus/ Surplus/
a Assets Liabilities (Deficit)
Assets Liabilities (Deficit)
At 31 March \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Recognised in non-current liabilities
BTPS
35,391
(40,038)
(4,647)
38,673
(41,575)
(2,902)
Unfunded plans
\u2014
(88)
(88)
\u2014
(92)
(92)
Other funded plans
33
(180)
(147)
65
(210)
(145)
Sub-total
35,424
(40,306)
(4,882)
38,738
(41,877)
(3,139)
Recognised in non-current assets
EEPS
769
(710)
59
749
(713)
36
Funded plans
361
(350)
11
321
(305)
16
Sub-total
1,130
(1,060)
70
1,070
(1,018)
52
Total
36,554
(41,366)
(4,812)
39,808
(42,895)
(3,087)
a
a
a Figures shown net of a \u00a34m adjustment in relation to IFRIC 14. With the exception of some of the group's smaller plans, the group is not required to limit any pension surplus or
recognise additional pension liabilities in individual plans as economic benefits are available in the form of either future refunds or reductions to future contributions. For example, a
refund of surplus is available following the gradual settlement of the liabilities over time when there are no members remaining in the BTPS or EEPS.
The table below shows the group\u2019s defined benefit liability net of tax.
2024
2023
At 31 March
\u00a3m
\u00a3m
Balance sheet position (net of tax)
Surplus/(deficit)
(4,812)
(3,087)
Deferred tax asset (note 10)
968
618
Total (net of tax)
(3,844)
(2,469)
Movements in defined benefit plan assets and liabilities The table below shows the movements in the defined benefit plan assets and liabilities and shows where they are reflected in the financial statements.
Assets
Liabilities
Deficit
\u00a3m
\u00a3m
\u00a3m
At 31 March 2022
54,937
(56,080)
(1,143)
Service cost (including administration expenses and PPF levy)
(38)
(17)
(55)
Past service credit
\u2014
2
2
Interest on net pension deficit
1,480
(1,498)
(18)
Included in the group income statement
(71)
Return on plan assets below the amount included in the group income statement
(14,911)
\u2014
(14,911)
Actuarial gain arising from changes in financial assumptions
\u2014
12,279
12,279
Actuarial gain arising from changes in demographic assumptions
\u2014
891
891
Actuarial (loss) arising from experience adjustments
\u2014
(1,135)
(1,135)
Included in the group statement of comprehensive income
(2,876)
Regular contributions by employer
22
\u2014
22
Deficit contributions by employer
994
\u2014
994
Included in the group cash flow statement
1,016
Contributions by employees
1
(1)
\u2014
Benefits paid
(2,686)
2,686
\u2014
Other (e.g. foreign exchange)
9
(22)
(13)
Other movements
(13)
At 31 March 2023
39,808
(42,895)
(3,087)
Service cost (including administration expenses and PPF levy)
(29)
(12)
(41)
Past service credit
\u2014
\u2014
\u2014
Interest on net pension deficit
1,886
(2,007)
(121)
Included in the group income statement
(162)
Return on plan assets below the amount included in the group income statement
(3,140)
\u2014
(3,140)
Actuarial gain arising from changes in financial assumptions
\u2014
563
563
Actuarial gain arising from changes in demographic assumptions
\u2014
652
652
Actuarial (loss) arising from experience adjustments
\u2014
(519)
(519)
Included in the group statement of comprehensive income
(2,444)
Regular contributions by employer
55
\u2014
55
Deficit contributions by employer
823
\u2014
823
Included in the group cash flow statement
878
Contributions by employees
\u2014
\u2014
\u2014
Benefits paid
(2,840)
2,840
\u2014
Other (e.g. foreign exchange)
(9)
12
3
Other movements
3
At 31 March 2024
36,554
(41,366)
(4,812)
a a a Primarily reflects the impact on the liabilities of actual inflation being higher than assumed at the prior reporting date, which has been broadly offset by increases to inflation-linked assets from higher inflation. How is the BTPS governed and managed? BT Pension Scheme Trustees Limited (the Trustee) has been appointed by BT Group as an independent trustee to administer and manage the BTPS on behalf of the members in accordance with the terms of the BTPS Trust Deed and Rules and relevant legislation (principally the Pensions Acts of 1993, 1995, 2004 and 2021). The Trustee\u2019s key powers include setting the investment strategy of BTPS (after consultation with BT Group) and agreeing with BT Group the actuarial assumptions to be used when assessing the BTPS funding position and the resulting contributions that will be paid. There are nine Trustee directors, all of whom are appointed by BT Group, as illustrated below. Trustee directors are usually appointed for a three-year term but are then eligible for re-appointment. Chair of the Trustee directors Member nominated Trustee directors Employer nominated Trustee directors Appointed by BT after consultation with, and with the agreement of, the relevant trade unions. Appointed by BT based on nominations by trade unions. Appointed by BT. Two normally hold senior positions within the group and two normally hold (or have held) senior positions in commerce or industry BTPS IAS 19 assets Critical accounting estimates and significant judgements made when valuing the BTPS assets Under IAS 19, plan assets are measured at fair value at the balance sheet date and include quoted and unquoted investments. Valuation of main quoted investments \u2013 Equities listed on recognised stock exchanges are valued at closing bid prices. \u2013 Bonds that are regularly traded are valued using broker quotes, based on sale/bid prices. \u2013 Exchange traded derivative contracts are valued based on closing bid prices. Valuation of main unquoted investments A portion of unquoted investments are valued based on inputs that are not directly observable, which require more judgement. The assumptions used in valuing unquoted investments are affected by market conditions. \u2013 Equities are valued using the International Private Equity and Venture Capital (IPEVC) guidelines where the most significant assumptions are the discount rate and earnings assumptions. \u2013 Property investments are valued on the basis of open market value by an independent valuer using RICS guidelines. The significant assumptions used in the valuation are rental yields and occupancy rates. \u2013 Bonds, including those issued by BT Group, that are not regularly traded are valued by an independent valuer using pricing models making assumptions for credit risk, market risk and market yield curves. \u2013 Holdings in investment funds are typically valued at the Net Asset Value provided by the fund administrator or investment manager. The significant assumption used in the valuation is the Net Asset Value. \u2013 Infrastructure investments are valued by an independent valuer using a model-based valuation such as a discounted cash flow approach, or at the price of recent market transactions if they represent fair value. Where a discounted cash flow model is used, the significant assumptions used in the valuation are the discount rate and the expected cash flows. \u2013 Over the counter derivatives are valued by an independent valuer using cash flows discounted at market rates. The significant assumptions used in the valuation are the yield curves and cost of carry. \u2013 The BTPS entered into a longevity insurance contract in 2014, and a second in August 2023. The two longevity insurance contracts are valued by discounting the fixed cash flows payable by the BTPS and the floating cash flows payable by the insurers under the contracts (projected by an actuary, consistent with the terms of the contracts). The significant assumptions used to value the assets are the discount rate (set as a margin above a risk-free rate to reflect credit and liquidity risk) and the mortality assumptions. \u00a35.7bn of unquoted investments that are formally valued periodically by the investment manager have a latest valuation that precedes the balance sheet date. These assets consist of: \u00a32.4bn non-core credit; \u00a31.0bn mature infrastructure; \u00a31.2bn private equity; \u00a30.9bn secure income assets; and \u00a30.2bn property. These valuations have been adjusted for cash movements between the previous valuation date and 31 March 2024. The valuation approach and inputs for these investments would only be approximately updated where there were indications of significant movements, for example implied by public market indicators. No such adjustment was required at 31 March 2024. Asset-Backed Funding (ABF) arrangement The ABF arrangement, issued to the BTPS in May 2021, has a fair value of \u00a31.2bn at 31 March 2024 (FY23: \u00a31.3bn) calculated as the present value of the future stream of payments, allowing for the probability of the BTPS becoming fully funded and therefore the payments to the BTPS ending early. It is not recognised as a pension asset when measuring the group\u2019s IAS 19 net defined benefit liability as it is a non-transferable financial instrument issued by the group. How are the BTPS assets invested? The Trustee regularly reviews the allocation of assets between different investment classes, taking into account current market conditions and trends. The allocations reflect the Trustee\u2019s views on a range of areas, including: i) the balance between seeking returns and incurring risk; ii) the extent to which the assets should be allocated to match movements in the liabilities due to changes in interest rates, inflation and/or longevity (i.e. liability-driven investments, or LDI); iii) the extent to which the assets should provide cash flows to meet expected payments to beneficiaries; and iv) liquidity needed to meet benefit payments and collateral requirements for derivatives contracts. Financial derivatives (e.g. swaps) are used to reduce the mismatch between movements in the liabilities and the assets from changes in interest rates, inflation, longevity, and exchange rates. This provides greater stability in the funding position, and therefore the deficit contributions that may be required from BT Group. The sensitivity chart on page 194 shows how the use of some of these derivatives adjusts outcomes for the BTPS. While the use of derivatives reduces funding risk, it increases the BTPS\u2019s liquidity requirements which is factored into the overall investment strategy. Following the impact of the September 2022 mini-budget on derivatives, the Bank of England and the Pensions Regulator issued guidance on the minimum level of collateral pension schemes should hold. At 31 March 2024 (and 31 March 2023), the BTPS held more collateral than these minimum levels. The table below analyses the fair value of the BTPS assets by asset category, subdivided by valuations based on a quoted market price in an active market, and those that are not (such as investment funds).
2024
2023
Total of which Total of which
a assets quoted
assets quoted
At 31 March
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Growth
Equities
UK
0.1
\u2014
0.1
\u2014
Overseas Developed
2.3
1.1
1.7
0.6
Emerging Markets
\u2014
\u2014
\u2014
\u2014
Private Equity
1.3
\u2014
1.1
\u2014
Property
UK
2.3
\u2014
2.6
\u2014
Overseas
0.6
\u2014
0.8
\u2014
Other growth assets
Absolute Return
1.2
\u2014
0.9
\u2014
Non-Core Credit
4.2
0.4
4.2
0.4
Mature Infrastructure
1.0
\u2014
1.2
\u2014
Liability matching
Government bonds
UK
14.6
14.5
13.2
13.1
Investment grade credit
Global
10.3
7.7
10.4
8.2
Secure income assets
4.0
\u2014
3.7
\u2014
Cash, derivatives and other
Cash balances
0.8
\u2014
3.0
\u2014
Financial derivative contracts
(4.9)
\u2014
(4.2)
\u2014
Longevity insurance contract
f
(0.9)
\u2014
(0.8)
\u2014
Other
h
(1.5)
\u2014
0.8
\u2014
Total
35.4
23.7
38.7
22.3
a b c d e a At 31 March 2024, the BTPS held nil (FY23: nil) equity issued by the group and \u00a31.7bn (FY23: \u00a31.6bn) of bonds issued by the group. b This allocation seeks to generate a positive return in all market conditions. c This allocation includes a range of credit investments, including emerging market, sub-investment grade and unrated credit. The allocation seeks to exploit investment opportunities within credit markets using the expertise of a range of specialist investment managers. d Around 77% (FY23: 72%) of these are index-linked gilts with the remainder in conventional gilts. e This allocation consists of assets which aim to provide the BTPS with contractual bond-like income, often inflation-protected. The assets include property, infrastructure and investment-grade private credit. f The value reflects experience to date on the contract from higher than expected deaths; this has partly offset a corresponding reduction in BTPS\u2019s liabilities over the same period. g Other balances comprise net amounts receivable/(payable) by the BTPS, including balances due to investment counterparties relating to repurchase agreements. h Of which held in the co-investment vehicle: \u00a30.1bn (FY23: <\u00a31m). BTPS IAS 19 Liabilities Critical accounting estimates and significant judgements made when valuing our pension liabilities The measurement of the service cost and the liabilities involves judgement about uncertain events including the life expectancy of members, price inflation and the discount rate used to calculate the net present value of the future pension payments. We use estimates for all of these uncertain events. Our assumptions reflect historical experience, market expectations (where relevant), actuarial advice and our judgement regarding future expectations at the balance sheet date. While assumptions are made for these events, actual benefit payments in a given year may be higher or lower than the assumption, for example if members retire sooner or later than assumed. The liabilities are the present value of the future expected benefit payments. What are the forecast benefits payable from the BTPS? There are c.265,000 members, and their dependants, who will be receiving benefits from the BTPS for the remainder of their lives. Members currently receiving pension benefits make up around 73% of the liabilities and 79% of the membership by number.
The chart below illustrates how the forecast benefits payable from the BTPS, and IAS 19 liabilities, projected using the IAS 19 assumptions
evolve over time.
The estimated duration of the BTPS liabilities, which is an indicator of the weighted average term of the discounted future payments, is
11 years (FY23: 12 years) using the IAS 19 assumptions. The duration is sensitive to the assumptions and has reduced mainly due to the
increase in bond yields, and therefore discount rate, over the year.
What are the most significant assumptions, and how have they been set?
The most significant financial assumptions used to calculate the IAS 19 liabilities for the BTPS are the discount rate and inflation. The most
significant demographic assumption used is how life expectancy will evolve over time which is illustrated as forecast life expectancies in
the table below.
At 31 March
2024
2023
Discount rate
4.90%
4.85%
Inflation \u2013 RPI
3.25%
3.35%
Inflation \u2013 CPI
2.80%
2.85%
Life expectancy \u2013 male aged 60 in lower pension bracket
24.9 years
24.7 years
Life expectancy \u2013 male aged 60 in higher pension bracket
26.7 years
26.9 years
Life expectancy \u2013 female aged 60
27.4 years
27.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years\u2019 time
0.4 years
0.4 years
While the financial assumptions are typically scheme-specific, the average financial assumptions weighted by liabilities across all schemes
are within 0.05% of the figures shown in the table above.
The table below summarises how these assumptions have been set, including key changes over the year.
Detail
Discount rate
The discount rate assumption is calculated by applying the projected BTPS benefit cash flows to a corporate bond yield
curve constructed by our external actuary based on the yield on AA-rated \u00a3-denominated corporate bonds at the balance
sheet date. In setting the yield curve, judgement is required on the selection of appropriate bonds to be included in the
universe and the approach used to then derive the yield curve.
The increase in the discount rate over the year reflects changes in the market yield of corporate bonds.
RPI and CPI RPI inflation expectations are calculated by applying the projected BTPS benefit cash flows to an inflation curve derived
inflation from market yields on UK government bonds, and making a deduction for an inflation risk premium (to reflect the extra
premium paid by investors for inflation linked assets) of 0.2% p.a. before 2030 and 0.3% p.a. thereafter.
CPI inflation expectations are set with reference to the RPI inflation assumption taking into account market data and
independent estimates of the expected difference. Before 2030, CPI inflation is assumed to be 1.0% lower than RPI
inflation (FY23: 1.0%). RPI will be aligned with CPIH from 2030, and we assume a nil gap between CPI and CPIH inflation
as historically these measures have been broadly comparable.
Pension Under the BTPS rules, benefit increases prior to retirement are primarily linked to CPI capped at 5%, and the majority of
increases benefits increase after retirement linked to either CPI for Sections A and B or RPI with a 5% cap for Section C. Benefits are
assumed to increase in line with the RPI or CPI inflation assumptions.
Longevity
The longevity assumption takes into account:
\u2013
the actual mortality experience of the BTPS pensioners, based on a formal review carried out for the 2023 triennial
funding valuation; and
\u2013
future improvements in longevity based on the CMI\u2019s 2022 Mortality Projections model published by the UK actuarial
profession.
There is significant uncertainty for future life expectancy assumptions following the Covid-19 pandemic. We continue to
assume that following the pandemic there is a short-term increase in deaths compared to the assumptions adopted prior
to the pandemic and we have fully allowed for population mortality data from 2022, but not data from 2020 and 2021.
Allowing for the published 2022 CMI model has reduced the BTPS liabilities by \u00a30.4bn.
We continue to assume mortality will improve in the long-term by 1% per year.
Risks to BT Group arising from the BTPS Background A large increase in our pension scheme obligations could lead to an increased deficit, resulting in additional contributions being required, potentially impacting our business plans. Changes in factors, such as bond yields, life expectancy or inflation can have an impact on the IAS 19 and funding assumptions, impacting the measurement of BTPS liabilities. These factors can also impact the BTPS assets. A summary of changes and potential impacts is set out in the table below.
Change in
Impact
Government A fall in government bond yields will:
bond yields
\u2013
increase the IAS 19 liabilities, driven by the fall in the discount rate; and
\u2013
increase the assets, driven by an increase in the value of government bonds, corporate bonds and interest rate
derivatives held by the BTPS.
Credit spreads
A fall in credit spreads will lead to a fall in corporate bond yields, and therefore an increase in the IAS 19 liabilities and a
corresponding but smaller increase in both asset values and funding liabilities.
Inflation A significant proportion of the benefits paid to members are currently increased in line with RPI or CPI inflation. The risk
expectations of high inflation is limited by caps on some of the inflationary increases under the BTPS rules e.g. benefit increases prior
to retirement are primarily linked to CPI capped at 5%, and for Section C members benefits primarily increase after
retirement in line with RPI with a 5% cap.
Changes in average inflation expectations over the lifetime of the plan
An increase in average inflation expectations will:
\u2013
increase the IAS 19 liabilities; and
\u2013
increase the value of index-linked bonds, other inflation linked assets and inflation derivatives held by the BTPS.
Changes in inflation over the next year
If inflation over the next year is lower or higher than assumed, it would lead to a fall or increase in the IAS 19 liabilities. We
estimate the change in asset values will broadly offset the movement in both the IAS 19 liabilities and funding liabilities.
If inflation is higher than the caps that apply to benefits, the assets will increase by more than the liabilities. Similarly, in a
deflationary environment, the asset values are expected to fall by more than the IAS 19 liabilities and funding liabilities
since the payments on index-linked gilts would be reduced but pensions paid by the BTPS would not necessarily fall to
fully offset the fall in asset values.
Hedging CPI benefits
The BTPS primarily holds RPI inflation-linked assets and derivatives to hedge inflation-linked benefits. Around two-
thirds of the inflation-linked benefits increase with reference to CPI. A 0.25% a year increase in CPI inflation
expectations before 2030 (with no corresponding change in RPI inflation expectations) would increase the IAS 19 deficit
by around \u00a30.3bn as at 31 March 2024.
Growth assets
A significant proportion of the BTPS assets are invested in growth assets, such as equities and property. The BTPS has
temporary hedges in place to partly offset the impact of a fall in equity markets, and adopts a diverse portfolio. A fall in
these growth assets will increase the IAS 19 and funding deficit.
Life An increase in the life expectancy of members will result in benefits being paid out for longer, leading to an increase in
expectancy the IAS 19 liabilities and funding liabilities.
The BTPS holds two longevity insurance contracts which covers around 32% of the BTPS\u2019s total exposure to improvements in longevity, providing long-term protection and income to the BTPS in the event that members live
longer than currently expected.
Other risks include: changes in legislation or regulation which impact the value of the liabilities or assets; and member take-up of options
before and at retirement to reshape their benefits. The scale of the BTPS means that investment changes and any future de-risking
actions need to be planned and executed carefully, potentially over an extended timeframe or multiple transactions.
Scenario analysis
The potential negative impact of these risks is illustrated by the following five scenarios. These have been assessed by BT Group\u2019s
independent actuary as scenarios that might occur no more than once in every 20 years. The scenarios have been updated to reflect
market experience over the last year.
1-in-20 events
Scenario
2024
2023
1. Fall in bond yields
1.2%
1.2%
2. Increase in credit spreads
0.9%
0.9%
3. Increase to average inflation expectations over the lifetime of the plan
c
1.1%
1.1%
4. Fall in growth assets
15.0%
20.0%
5. Increase to life expectancy
1.2 years
1.3 years
a
b
d
a Scenario assumes a fall in the yields on both government and corporate bonds.
b Scenario assumes an increase in the yield on corporate bonds, with no change to yield on government bonds.
c Scenario assumes average RPI and CPI inflation expectations over the lifetime of the plan increase by the same amount.
d Impact includes the dampening effect of temporary equity hedges held by the BTPS. Scenario considers combinations of changes to the key inputs used to value the growth assets,
leading to a 15% (FY23: 20%) fall in the aggregate value of the growth assets prior to temporary hedges held by the BTPS.
The impact shown under each scenario looks at each event in isolation and reflects the liabilities, assets and investment strategy at
31 March 2024. In practice a combination of events could arise, and the effects are not additive nor are they linear (e.g. doubling the
change in bond yields assumed will not double the impact). The asset allocation is not fixed and changes over the year may impact the
sensitivities shown.
Impact of illustrative scenarios which might occur no more than once in every 20 years The sensitivities have been prepared using the same approach as FY23 which involves calculating the liabilities and assets allowing for the change in market conditions assumed under the scenario as if they had occurred at the reporting date. The change in impact from FY23 is due to a combination of: changes in the scenarios, changes in asset and liability values over the year, and changes in the scheme\u2019s investment strategy in line with the agreed de-risking plan. BTPS funding Triennial funding valuation A funding valuation is carried out for the Trustee by a professionally qualified independent actuary at least every three years. The funding valuation assesses the on-going financial health of the BTPS. If there are insufficient assets to meet the estimated future benefit payments to members (i.e. a funding deficit), BT Group and the Trustee agree the amount and timing of additional cash contributions. It is prepared using the principles set out in UK pension legislation, such as the 2004 and 2021 Pensions Acts, and uses a prudent approach overall when setting the actuarial assumptions. Some of the key differences compared to the IAS 19 deficit are set out in the table below.
IAS 19
Funding
Purpose
Balance sheet in BT Group accounts
Assessing the on-going financial health and setting cash payments
Regulation
IFRS
UK pensions legislation
Frequency
Semi-annually
At least every three years
Key assumptions
Determined by
BT Group
BT Group and BTPS agreement
Discount rate
Yield curve based on AA corporate bonds
Yield curve reflecting prudent return expected from BTPS assets
Other assumptions
Best estimate
Prudent overall approach
Assets
BT Group accounts excludes ABF value
Includes ABF value
The different purpose and principles lead to different assumptions being used, and therefore a different estimate for the liabilities and deficit. The latest funding valuation was performed as at 30 June 2023. The next funding valuation will have an effective date of no later than 30 June 2026. The results of the two most recent triennial valuations are shown below.
30 June 2023
30 June 2020
\u00a3bn
\u00a3bn
Funding liabilities
(40.9)
(65.3)
Assets
37.2
57.3
BTPS Funding deficit
(3.7)
(8.0)
Percentage of accrued benefits covered by the BTPS assets at valuation date
91 %
88 %
Key assumptions at valuation date:
Discount rate
a
5.3 %
1.4 %
Inflation \u2013 RPI
3.6 %
3.2 %
Inflation \u2013 CPI
3.2 %
2.4 %
Life expectancy \u2013 male aged 60 in lower pension bracket
25.5 years
25.8 years
Life expectancy \u2013 male aged 60 in higher pension bracket
27.2 years
28.0 years
Life expectancy \u2013 female aged 60
28.0 years
28.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years\u2019 time
0.8 years
0.9 years
a The discount rate has been derived from prudent return expectations that reflect the investment strategy over time, allowing for the BTPS to de-risk to a portfolio consisting predominantly of bond and bond-like investments by 2034.
Scenario analysis of the funding position (unaudited)
The impact of changes in market conditions on the funding liabilities differs to the impact on the IAS 19 liabilities due to the size of the
liabilities and how the assumptions are set. For example, the funding liabilities use a discount rate linked to a risk-free rate plus a margin
based on the BTPS\u2019s investment strategy, whereas the IAS 19 liabilities use a discount rate based on corporate bond yields. The chart
below illustrates the approximate impact of the scenarios set on page 192 on the 30 June 2023 funding position.
The figures shown in the table apply to the BTPS assets and funding liabilities as at 30 June 2023; an increase in the assets or funding
liabilities will increase the impact of the scenarios shown.
Deficit payments from the Group
In November 2023, the 2023 triennial funding valuation was finalised, agreed with the Trustee, and certified by the Scheme Actuary. The
funding deficit at 30 June 2023 was \u00a33.7bn, down from \u00a38.0bn at the 2020 funding valuation following \u00a34.4bn of deficit contributions.
Annual contribution amounts remain unchanged, at \u00a3600m in each financial year until 31 March 2030, a final payment of \u00a3490m before
30 April 2030, and the \u00a3180m pa payments due under the ABF arrangement agreed at the 2020 valuation.
No payments are currently payable under the future funding commitment (see page 195).
These payments are summarised in the table below.
Year to 31 March (\u00a3m)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Payments from BT plc 600 600 600 600
600
b
600
490
\u2014
\u2014
\u2014
Future funding commitment payments
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Payments from ABF
180
180
180
180
180
180
180
180
180
180
Total
780
780
780
780
780
780
670
180
180
180
a
b
b
b
b
b
a Payments are due by 30 April each year.
b \u00a310m is directly payable to the BTPS, and BT Group currently intends to pay the balance into the co-investment vehicle.
ABF
Under the ABF, \u00a3180m p.a. is paid into the BTPS until June 2033, secured on EE Limited. If the BTPS reaches full funding as calculated by
the Scheme Actuary at any 30 June, the ABF payments to the BTPS will cease. BT Group received tax relief at inception of the ABF based
on the original market value of \u00a31.7bn, and will receive further tax-relief if payments are made to the BTPS in excess of this amount.
Assuming they are all paid, future payments from the ABF have a present value of \u00a31.3bn at 31 March 2024 (FY23: \u00a31.4bn). The fair value
of the ABF is \u00a31.2bn at 31 March 2024 (FY23: \u00a31.3bn) which allows for the probability of the BTPS becoming fully funded, and the
payments to the BTPS ending early.
The fair value of the ABF is included in the assets of the BTPS when assessing the funding deficit. Payments from the ABF to the BTPS are
treated in the same way as coupon payments from bonds, and do not affect the funding deficit when they are paid.
The fair value of the ABF is not included in the assets of the BTPS when assessing the IAS 19 deficit in the group consolidated accounts, as
it is a non-transferable asset issued by the group. Payments from the ABF to the BTPS are treated as deficit contributions, and reduce the
IAS 19 deficit, when they are paid.
Co-investment vehicle
A co-investment vehicle was set up in 2021 which provides BT Group with some protection against the risk of overfunding and therefore
enables BT Group to provide upfront funding with greater confidence. BT Group is eligible for future refunds if some or all of the co-
investment vehicle funds are surplus to the BTPS\u2019s requirements, unless the BTPS, acting prudently but reasonably, decides to defer or
reduce these payments. Assessments will be carried out over a series of dates between June 2032 and June 2041.
Payments made by BT Group into the co-investment vehicle will be invested as if part of the overall BTPS investment strategy. BT Group
will receive tax relief in respect of any funds paid to the BTPS from the vehicle but does not receive tax relief when payments are made to
the co-investment vehicle.
The fair value of assets in the co-investment vehicle, \u00a30.1bn at 31 March 2024 (FY23: <\u00a31m), is included in the assets of the BTPS when assessing both the IAS 19 and funding deficits. Protections for BTPS (going concern) BT Group has agreed to provide the Trustee with certain protections to 2035.
Feature
Detail
Future funding BT Group will provide additional contributions, of between \u00a3150m p.a. and \u00a3300m p.a., should the funding deficit fall
commitment behind plan by more than an agreed threshold at any two consecutive reviews. The reviews will be carried out every
June and December and until the 2026 valuation the threshold is \u00a31bn.
Payments are due within 12 months of the payments being switched on. Payments will stop once the semi-annual
assessment shows the funding deficit is back on plan, i.e. outstanding deficit contributions are sufficient to address the
funding deficit.
At the 31 December 2023 assessment date, the funding position was within the above limit. The next test will be carried
out as at 30 June 2024.
Shareholder BT Group will provide additional payments to the BTPS by the amount that shareholder distributions exceed a
distributions threshold. For the three years following the 2023 valuation, the threshold allows for 10% per year dividend per share
growth based on dividends of 7.7p per share in FY23, adjusted to reflect the interim dividend declared at our half-year
results.
BT Group has agreed to implement a similar protection at each subsequent valuation, with the terms to be negotiated
at the time.
BT Group will consult with the Trustee if:
\u2013
it considers share buybacks for any purpose other than relating to employee share awards;
\u2013
it considers making any shareholder distributions in any of the next three years if annual normalised free cash flow of the
group is below \u00a31bn in the year and distributions within the year would be in excess of 120% of the above threshold; or
\u2013
it considers making a special dividend.
Material In the event that BT Group generates net cash proceeds greater than a threshold from disposals (net of acquisitions) in
corporate any financial year, BT Group will make additional contributions to the BTPS. The threshold is \u00a3750m p.a. to 30 June
events 2026.
The amount payable is one-third of the total net cash proceeds.
BT Group will consult with the Trustee if:
\u2013
it considers making acquisitions with a total cost of more than \u00a31.0bn in any 12-month period;
\u2013
it considers making any disposal of more than \u00a31.0bn;
\u2013
it considers making a Class 1 transaction which will have a material impact on the BTPS (acquisition or disposal);
\u2013
it is likely to be subject to a takeover offer; or
\u2013
there are any other corporate or third-party events which may have a materially detrimental impact on BT Group\u2019s
covenant to the BTPS (in which case BT Group will use its best endeavours to agree appropriate mitigation).
This obligation is ongoing until otherwise terminated.
Negative A negative pledge that future creditors will not be granted superior security to the BTPS in excess of \u00a30.5bn, to cover
pledge any member of the BT Group. Business as usual financing arrangements are not included within the \u00a30.5bn.
No additional contributions were triggered during FY24. Protections for BTPS (insolvency) The Scheme Actuary assumes that in the highly unlikely event that BT Group were to become insolvent, the Trustee would continue to run the Scheme with a low-risk, closely-matched investment strategy including additional margins for risk. On this basis and assuming no further contribution from BT Group, it was estimated that at 30 June 2023 the assets of the Scheme would have met around 80% of the liabilities. Were this to occur, BTPS members would benefit from the following additional protections.
Feature
Detail
Crown Guarantee
The Crown Guarantee was granted by the Government when BT was privatised in 1984; it would only come into
effect upon the insolvency of BT plc. In July 2014, the courts established that:
\u2013
the Crown Guarantee covers BT plc\u2019s funding obligation in relation to the benefits of members of the BTPS who
joined post-privatisation as well as those who joined pre-privatisation (subject to certain exceptions); and
\u2013
the funding obligation to which the Crown Guarantee relates is measured with reference to BT plc\u2019s obligation
to pay deficit contributions under the rules of the BTPS.
The Crown Guarantee is not taken into account for the purposes of the actuarial valuation of the BTPS and is an
entirely separate matter, only being relevant in the highly unlikely event that BT plc becomes insolvent.
Pension Protection Further protection is also provided by the PPF which is the fund responsible for paying compensation in respect of
Fund (PPF) schemes where the employer becomes insolvent.
EEPS funding valuation
The most recent triennial valuation of the defined benefit section was performed as at 31 December 2021 and agreed in March 2023. This
showed a funding deficit of \u00a3218m. The group is scheduled to contribute \u00a31.7m each month until 31 July 2025 and a final payment of up
to \u00a380m by 31 March 2026. \u00a331.7m (FY23: \u00a313.3m) of deficit contributions were paid by the group to the EEPS during the year.
At the triennial valuation date, the EEPS had a diversified investment strategy, investing scheme assets in: global equities (25%), property
& illiquid alternatives (20%), an absolute return portfolio (24%) and a liability-driven investment portfolio (31%).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-511": { "value": "19. Retirement benefit plans Background to BT Group\u2019s pension plans The group has both Defined Benefit and Defined Contribution retirement benefit plans. The group\u2019s main plans are in the UK: \u2013 The BT Pension Scheme (BTPS) is the largest UK Defined Benefit plan sponsored by BT Group, constituting 97% of BT Group\u2019s IAS 19 liability. It was closed to future benefit accrual in 2018 for the majority of members, and has 55,000 deferred members and 210,000 pensioners. All BTPS members receive pension benefits at retirement based on salary and years of service; some members also receive a lump sum payment at retirement. Increases for the majority of benefits are linked to either the Retail Price Index (RPI) or the Consumer Price Index (CPI). \u2013 The EE Pension Scheme (EEPS) has a Defined Benefit section that was closed to future benefit accrual in 2014 and a Defined Contribution section which was closed to future accrual in July 2023. The Defined Benefit section constitutes 2% of BT Group\u2019s IAS 19 liability. \u2013 The BT Retirement Saving Scheme (BTRSS) is a Defined Contribution, contract-based, plan operated by Standard Life which new UK employees join. There are around 67,000 employees currently contributing to the BTRSS. The group also has retirement arrangements around the world in line with local markets and culture; the principal ones being in the Netherlands and Germany. Types of retirement benefit plans Defined Benefit (DB) plans DB plan benefits are determined by the plan rules, typically dependent on factors such as years of service and pensionable pay, but not on the value of actual contributions made by the group or members. The group is exposed to investment and other experience risks and may need to make additional contributions where it is estimated that the benefits will not be met from assets held, regular contributions and expected investment income. The net defined benefit liability, or deficit, is the present value of all expected future benefit cash flows to be paid by each plan, calculated using the projected unit credit method by professionally qualified actuaries (also known as the Defined Benefit Obligation, DBO or liabilities) less the fair value of the plan assets. A net defined benefit asset, or surplus, occurs when the fair value of assets exceeds the liabilities. Defined Contribution (DC) plans DC plan benefits are linked to the value of each member\u2019s fund, which is based on contributions paid and the performance of each individual\u2019s chosen investments. The group has no exposure to investment and other experience risks (including longevity). Amounts in the financial statements Group income statement The expense arising from the group\u2019s retirement benefit arrangements as recognised in the group income statement is shown below.
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Recognised in the income statement before specific items (note 6)
\u2013 Service cost:
\u2013 DB plans
12
17
\u2013 DC plans
541
537
\u2013 Past service cost/(credit)
\u2014
(2)
\u2013 Administration expenses and PPF levy
29
38
Subtotal
582
590
Recognised in the income statement as specific items (note 9)
\u2013 Costs to close BTPS and provide transition payments
a
for affected employees
\u2014
13
\u2013 Interest on pensions deficit
121
18
Subtotal
121
31
Total recognised in the income statement
703
621
a All employees impacted by the closure of the BTPS were eligible for transition payments from the date of closure into their BTRSS pot for a period linked to the employee\u2019s age. Group balance sheet The net defined benefit liability in respect of defined benefit plans reported in the group balance sheet is set out below. Plans in surplus are presented within non-current assets and plans in deficit within non-current liabilities.
2024
2023
Surplus/ Surplus/
a Assets Liabilities (Deficit)
Assets Liabilities (Deficit)
At 31 March \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Recognised in non-current liabilities
BTPS
35,391
(40,038)
(4,647)
38,673
(41,575)
(2,902)
Unfunded plans
\u2014
(88)
(88)
\u2014
(92)
(92)
Other funded plans
33
(180)
(147)
65
(210)
(145)
Sub-total
35,424
(40,306)
(4,882)
38,738
(41,877)
(3,139)
Recognised in non-current assets
EEPS
769
(710)
59
749
(713)
36
Funded plans
361
(350)
11
321
(305)
16
Sub-total
1,130
(1,060)
70
1,070
(1,018)
52
Total
36,554
(41,366)
(4,812)
39,808
(42,895)
(3,087)
a a a Figures shown net of a \u00a34m adjustment in relation to IFRIC 14. With the exception of some of the group's smaller plans, the group is not required to limit any pension surplus or recognise additional pension liabilities in individual plans as economic benefits are available in the form of either future refunds or reductions to future contributions. For example, a refund of surplus is available following the gradual settlement of the liabilities over time when there are no members remaining in the BTPS or EEPS. The table below shows the group\u2019s defined benefit liability net of tax.
2024
2023
At 31 March
\u00a3m
\u00a3m
Balance sheet position (net of tax)
Surplus/(deficit)
(4,812)
(3,087)
Deferred tax asset (note 10)
968
618
Total (net of tax)
(3,844)
(2,469)
Movements in defined benefit plan assets and liabilities The table below shows the movements in the defined benefit plan assets and liabilities and shows where they are reflected in the financial statements.
Assets
Liabilities
Deficit
\u00a3m
\u00a3m
\u00a3m
At 31 March 2022
54,937
(56,080)
(1,143)
Service cost (including administration expenses and PPF levy)
(38)
(17)
(55)
Past service credit
\u2014
2
2
Interest on net pension deficit
1,480
(1,498)
(18)
Included in the group income statement
(71)
Return on plan assets below the amount included in the group income statement
(14,911)
\u2014
(14,911)
Actuarial gain arising from changes in financial assumptions
\u2014
12,279
12,279
Actuarial gain arising from changes in demographic assumptions
\u2014
891
891
Actuarial (loss) arising from experience adjustments
\u2014
(1,135)
(1,135)
Included in the group statement of comprehensive income
(2,876)
Regular contributions by employer
22
\u2014
22
Deficit contributions by employer
994
\u2014
994
Included in the group cash flow statement
1,016
Contributions by employees
1
(1)
\u2014
Benefits paid
(2,686)
2,686
\u2014
Other (e.g. foreign exchange)
9
(22)
(13)
Other movements
(13)
At 31 March 2023
39,808
(42,895)
(3,087)
Service cost (including administration expenses and PPF levy)
(29)
(12)
(41)
Past service credit
\u2014
\u2014
\u2014
Interest on net pension deficit
1,886
(2,007)
(121)
Included in the group income statement
(162)
Return on plan assets below the amount included in the group income statement
(3,140)
\u2014
(3,140)
Actuarial gain arising from changes in financial assumptions
\u2014
563
563
Actuarial gain arising from changes in demographic assumptions
\u2014
652
652
Actuarial (loss) arising from experience adjustments
\u2014
(519)
(519)
Included in the group statement of comprehensive income
(2,444)
Regular contributions by employer
55
\u2014
55
Deficit contributions by employer
823
\u2014
823
Included in the group cash flow statement
878
Contributions by employees
\u2014
\u2014
\u2014
Benefits paid
(2,840)
2,840
\u2014
Other (e.g. foreign exchange)
(9)
12
3
Other movements
3
At 31 March 2024
36,554
(41,366)
(4,812)
a a a Primarily reflects the impact on the liabilities of actual inflation being higher than assumed at the prior reporting date, which has been broadly offset by increases to inflation-linked assets from higher inflation. How is the BTPS governed and managed? BT Pension Scheme Trustees Limited (the Trustee) has been appointed by BT Group as an independent trustee to administer and manage the BTPS on behalf of the members in accordance with the terms of the BTPS Trust Deed and Rules and relevant legislation (principally the Pensions Acts of 1993, 1995, 2004 and 2021). The Trustee\u2019s key powers include setting the investment strategy of BTPS (after consultation with BT Group) and agreeing with BT Group the actuarial assumptions to be used when assessing the BTPS funding position and the resulting contributions that will be paid. There are nine Trustee directors, all of whom are appointed by BT Group, as illustrated below. Trustee directors are usually appointed for a three-year term but are then eligible for re-appointment. Chair of the Trustee directors Member nominated Trustee directors Employer nominated Trustee directors Appointed by BT after consultation with, and with the agreement of, the relevant trade unions. Appointed by BT based on nominations by trade unions. Appointed by BT. Two normally hold senior positions within the group and two normally hold (or have held) senior positions in commerce or industry . BTPS IAS 19 assets Critical accounting estimates and significant judgements made when valuing the BTPS assets Under IAS 19, plan assets are measured at fair value at the balance sheet date and include quoted and unquoted investments. Valuation of main quoted investments \u2013 Equities listed on recognised stock exchanges are valued at closing bid prices. \u2013 Bonds that are regularly traded are valued using broker quotes, based on sale/bid prices. \u2013 Exchange traded derivative contracts are valued based on closing bid prices. Valuation of main unquoted investments A portion of unquoted investments are valued based on inputs that are not directly observable, which require more judgement. The assumptions used in valuing unquoted investments are affected by market conditions. \u2013 Equities are valued using the International Private Equity and Venture Capital (IPEVC) guidelines where the most significant assumptions are the discount rate and earnings assumptions. \u2013 Property investments are valued on the basis of open market value by an independent valuer using RICS guidelines. The significant assumptions used in the valuation are rental yields and occupancy rates. \u2013 Bonds, including those issued by BT Group, that are not regularly traded are valued by an independent valuer using pricing models making assumptions for credit risk, market risk and market yield curves. \u2013 Holdings in investment funds are typically valued at the Net Asset Value provided by the fund administrator or investment manager. The significant assumption used in the valuation is the Net Asset Value. \u2013 Infrastructure investments are valued by an independent valuer using a model-based valuation such as a discounted cash flow approach, or at the price of recent market transactions if they represent fair value. Where a discounted cash flow model is used, the significant assumptions used in the valuation are the discount rate and the expected cash flows. \u2013 Over the counter derivatives are valued by an independent valuer using cash flows discounted at market rates. The significant assumptions used in the valuation are the yield curves and cost of carry. \u2013 The BTPS entered into a longevity insurance contract in 2014, and a second in August 2023. The two longevity insurance contracts are valued by discounting the fixed cash flows payable by the BTPS and the floating cash flows payable by the insurers under the contracts (projected by an actuary, consistent with the terms of the contracts). The significant assumptions used to value the assets are the discount rate (set as a margin above a risk-free rate to reflect credit and liquidity risk) and the mortality assumptions. \u00a35.7bn of unquoted investments that are formally valued periodically by the investment manager have a latest valuation that precedes the balance sheet date. These assets consist of: \u00a32.4bn non-core credit; \u00a31.0bn mature infrastructure; \u00a31.2bn private equity; \u00a30.9bn secure income assets; and \u00a30.2bn property. These valuations have been adjusted for cash movements between the previous valuation date and 31 March 2024. The valuation approach and inputs for these investments would only be approximately updated where there were indications of significant movements, for example implied by public market indicators. No such adjustment was required at 31 March 2024. Asset-Backed Funding (ABF) arrangement The ABF arrangement, issued to the BTPS in May 2021, has a fair value of \u00a31.2bn at 31 March 2024 (FY23: \u00a31.3bn) calculated as the present value of the future stream of payments, allowing for the probability of the BTPS becoming fully funded and therefore the payments to the BTPS ending early. It is not recognised as a pension asset when measuring the group\u2019s IAS 19 net defined benefit liability as it is a non-transferable financial instrument issued by the group. How are the BTPS assets invested? The Trustee regularly reviews the allocation of assets between different investment classes, taking into account current market conditions and trends. The allocations reflect the Trustee\u2019s views on a range of areas, including: i) the balance between seeking returns and incurring risk; ii) the extent to which the assets should be allocated to match movements in the liabilities due to changes in interest rates, inflation and/or longevity (i.e. liability-driven investments, or LDI); iii) the extent to which the assets should provide cash flows to meet expected payments to beneficiaries; and iv) liquidity needed to meet benefit payments and collateral requirements for derivatives contracts. Financial derivatives (e.g. swaps) are used to reduce the mismatch between movements in the liabilities and the assets from changes in interest rates, inflation, longevity, and exchange rates. This provides greater stability in the funding position, and therefore the deficit contributions that may be required from BT Group. The sensitivity chart on page 194 shows how the use of some of these derivatives adjusts outcomes for the BTPS. While the use of derivatives reduces funding risk, it increases the BTPS\u2019s liquidity requirements which is factored into the overall investment strategy. Following the impact of the September 2022 mini-budget on derivatives, the Bank of England and the Pensions Regulator issued guidance on the minimum level of collateral pension schemes should hold. At 31 March 2024 (and 31 March 2023), the BTPS held more collateral than these minimum levels. The table below analyses the fair value of the BTPS assets by asset category, subdivided by valuations based on a quoted market price in an active market, and those that are not (such as investment funds).
2024
2023
Total of which Total of which
a assets quoted
assets quoted
At 31 March
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Growth
Equities
UK
0.1
\u2014
0.1
\u2014
Overseas Developed
2.3
1.1
1.7
0.6
Emerging Markets
\u2014
\u2014
\u2014
\u2014
Private Equity
1.3
\u2014
1.1
\u2014
Property
UK
2.3
\u2014
2.6
\u2014
Overseas
0.6
\u2014
0.8
\u2014
Other growth assets
Absolute Return
1.2
\u2014
0.9
\u2014
Non-Core Credit
4.2
0.4
4.2
0.4
Mature Infrastructure
1.0
\u2014
1.2
\u2014
Liability matching
Government bonds
UK
14.6
14.5
13.2
13.1
Investment grade credit
Global
10.3
7.7
10.4
8.2
Secure income assets
4.0
\u2014
3.7
\u2014
Cash, derivatives and other
Cash balances
0.8
\u2014
3.0
\u2014
Financial derivative contracts
(4.9)
\u2014
(4.2)
\u2014
Longevity insurance contract
f
(0.9)
\u2014
(0.8)
\u2014
Other
h
(1.5)
\u2014
0.8
\u2014
Total
35.4
23.7
38.7
22.3
a b c d e a At 31 March 2024, the BTPS held nil (FY23: nil) equity issued by the group and \u00a31.7bn (FY23: \u00a31.6bn) of bonds issued by the group. b This allocation seeks to generate a positive return in all market conditions. c This allocation includes a range of credit investments, including emerging market, sub-investment grade and unrated credit. The allocation seeks to exploit investment opportunities within credit markets using the expertise of a range of specialist investment managers. d Around 77% (FY23: 72%) of these are index-linked gilts with the remainder in conventional gilts. e This allocation consists of assets which aim to provide the BTPS with contractual bond-like income, often inflation-protected. The assets include property, infrastructure and investment-grade private credit. f The value reflects experience to date on the contract from higher than expected deaths; this has partly offset a corresponding reduction in BTPS\u2019s liabilities over the same period. g Other balances comprise net amounts receivable/(payable) by the BTPS, including balances due to investment counterparties relating to repurchase agreements. h Of which held in the co-investment vehicle: \u00a30.1bn (FY23: <\u00a31m). BTPS IAS 19 Liabilities Critical accounting estimates and significant judgements made when valuing our pension liabilities The measurement of the service cost and the liabilities involves judgement about uncertain events including the life expectancy of members, price inflation and the discount rate used to calculate the net present value of the future pension payments. We use estimates for all of these uncertain events. Our assumptions reflect historical experience, market expectations (where relevant), actuarial advice and our judgement regarding future expectations at the balance sheet date. While assumptions are made for these events, actual benefit payments in a given year may be higher or lower than the assumption, for example if members retire sooner or later than assumed. The liabilities are the present value of the future expected benefit payments. What are the forecast benefits payable from the BTPS? There are c.265,000 members, and their dependants, who will be receiving benefits from the BTPS for the remainder of their lives. Members currently receiving pension benefits make up around 73% of the liabilities and 79% of the membership by number. The chart below illustrates how the forecast benefits payable from the BTPS, and IAS 19 liabilities, projected using the IAS 19 assumptions evolve over time. The estimated duration of the BTPS liabilities, which is an indicator of the weighted average term of the discounted future payments, is 11 years (FY23: 12 years) using the IAS 19 assumptions. The duration is sensitive to the assumptions and has reduced mainly due to the increase in bond yields, and therefore discount rate, over the year. What are the most significant assumptions, and how have they been set? The most significant financial assumptions used to calculate the IAS 19 liabilities for the BTPS are the discount rate and inflation. The most significant demographic assumption used is how life expectancy will evolve over time which is illustrated as forecast life expectancies in the table below.
At 31 March
2024
2023
Discount rate
4.90%
4.85%
Inflation \u2013 RPI
3.25%
3.35%
Inflation \u2013 CPI
2.80%
2.85%
Life expectancy \u2013 male aged 60 in lower pension bracket
24.9 years
24.7 years
Life expectancy \u2013 male aged 60 in higher pension bracket
26.7 years
26.9 years
Life expectancy \u2013 female aged 60
27.4 years
27.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years\u2019 time
0.4 years
0.4 years
While the financial assumptions are typically scheme-specific, the average financial assumptions weighted by liabilities across all schemes are within 0.05% of the figures shown in the table above.
The table below summarises how these assumptions have been set, including key changes over the year.
Detail
Discount rate
The discount rate assumption is calculated by applying the projected BTPS benefit cash flows to a corporate bond yield
curve constructed by our external actuary based on the yield on AA-rated \u00a3-denominated corporate bonds at the balance
sheet date. In setting the yield curve, judgement is required on the selection of appropriate bonds to be included in the
universe and the approach used to then derive the yield curve.
The increase in the discount rate over the year reflects changes in the market yield of corporate bonds.
RPI and CPI RPI inflation expectations are calculated by applying the projected BTPS benefit cash flows to an inflation curve derived
inflation from market yields on UK government bonds, and making a deduction for an inflation risk premium (to reflect the extra
premium paid by investors for inflation linked assets) of 0.2% p.a. before 2030 and 0.3% p.a. thereafter.
CPI inflation expectations are set with reference to the RPI inflation assumption taking into account market data and
independent estimates of the expected difference. Before 2030, CPI inflation is assumed to be 1.0% lower than RPI
inflation (FY23: 1.0%). RPI will be aligned with CPIH from 2030, and we assume a nil gap between CPI and CPIH inflation
as historically these measures have been broadly comparable.
Pension Under the BTPS rules, benefit increases prior to retirement are primarily linked to CPI capped at 5%, and the majority of
increases benefits increase after retirement linked to either CPI for Sections A and B or RPI with a 5% cap for Section C. Benefits are
assumed to increase in line with the RPI or CPI inflation assumptions.
Longevity
The longevity assumption takes into account:
\u2013
the actual mortality experience of the BTPS pensioners, based on a formal review carried out for the 2023 triennial
funding valuation; and
\u2013
future improvements in longevity based on the CMI\u2019s 2022 Mortality Projections model published by the UK actuarial
profession.
There is significant uncertainty for future life expectancy assumptions following the Covid-19 pandemic. We continue to
assume that following the pandemic there is a short-term increase in deaths compared to the assumptions adopted prior
to the pandemic and we have fully allowed for population mortality data from 2022, but not data from 2020 and 2021.
Allowing for the published 2022 CMI model has reduced the BTPS liabilities by \u00a30.4bn.
We continue to assume mortality will improve in the long-term by 1% per year.
Risks to BT Group arising from the BTPS
Background
A large increase in our pension scheme obligations could lead to an increased deficit, resulting in additional contributions being required,
potentially impacting our business plans. Changes in factors, such as bond yields, life expectancy or inflation can have an impact on the IAS
19 and funding assumptions, impacting the measurement of BTPS liabilities. These factors can also impact the BTPS assets. A summary of
changes and potential impacts is set out in the table below.
Change in
Impact
Government A fall in government bond yields will:
bond yields
\u2013
increase the IAS 19 liabilities, driven by the fall in the discount rate; and
\u2013
increase the assets, driven by an increase in the value of government bonds, corporate bonds and interest rate
derivatives held by the BTPS.
Credit spreads
A fall in credit spreads will lead to a fall in corporate bond yields, and therefore an increase in the IAS 19 liabilities and a
corresponding but smaller increase in both asset values and funding liabilities.
Inflation A significant proportion of the benefits paid to members are currently increased in line with RPI or CPI inflation. The risk
expectations of high inflation is limited by caps on some of the inflationary increases under the BTPS rules e.g. benefit increases prior
to retirement are primarily linked to CPI capped at 5%, and for Section C members benefits primarily increase after
retirement in line with RPI with a 5% cap.
Changes in average inflation expectations over the lifetime of the plan
An increase in average inflation expectations will:
\u2013
increase the IAS 19 liabilities; and
\u2013
increase the value of index-linked bonds, other inflation linked assets and inflation derivatives held by the BTPS.
Changes in inflation over the next year
If inflation over the next year is lower or higher than assumed, it would lead to a fall or increase in the IAS 19 liabilities. We
estimate the change in asset values will broadly offset the movement in both the IAS 19 liabilities and funding liabilities.
If inflation is higher than the caps that apply to benefits, the assets will increase by more than the liabilities. Similarly, in a
deflationary environment, the asset values are expected to fall by more than the IAS 19 liabilities and funding liabilities
since the payments on index-linked gilts would be reduced but pensions paid by the BTPS would not necessarily fall to
fully offset the fall in asset values.
Hedging CPI benefits
The BTPS primarily holds RPI inflation-linked assets and derivatives to hedge inflation-linked benefits. Around two-
thirds of the inflation-linked benefits increase with reference to CPI. A 0.25% a year increase in CPI inflation
expectations before 2030 (with no corresponding change in RPI inflation expectations) would increase the IAS 19 deficit
by around \u00a30.3bn as at 31 March 2024.
Growth assets
A significant proportion of the BTPS assets are invested in growth assets, such as equities and property. The BTPS has
temporary hedges in place to partly offset the impact of a fall in equity markets, and adopts a diverse portfolio. A fall in
these growth assets will increase the IAS 19 and funding deficit.
Life An increase in the life expectancy of members will result in benefits being paid out for longer, leading to an increase in
expectancy the IAS 19 liabilities and funding liabilities.
The BTPS holds two longevity insurance contracts which covers around 32% of the BTPS\u2019s total exposure to improvements in longevity, providing long-term protection and income to the BTPS in the event that members live
longer than currently expected.
Other risks include: changes in legislation or regulation which impact the value of the liabilities or assets; and member take-up of options before and at retirement to reshape their benefits. The scale of the BTPS means that investment changes and any future de-risking actions need to be planned and executed carefully, potentially over an extended timeframe or multiple transactions. Scenario analysis The potential negative impact of these risks is illustrated by the following five scenarios. These have been assessed by BT Group\u2019s independent actuary as scenarios that might occur no more than once in every 20 years. The scenarios have been updated to reflect market experience over the last year.
1-in-20 events
Scenario
2024
2023
1. Fall in bond yields
1.2%
1.2%
2. Increase in credit spreads
0.9%
0.9%
3. Increase to average inflation expectations over the lifetime of the plan
c
1.1%
1.1%
4. Fall in growth assets
15.0%
20.0%
5. Increase to life expectancy
1.2 years
1.3 years
a b d a Scenario assumes a fall in the yields on both government and corporate bonds. b Scenario assumes an increase in the yield on corporate bonds, with no change to yield on government bonds. c Scenario assumes average RPI and CPI inflation expectations over the lifetime of the plan increase by the same amount. d Impact includes the dampening effect of temporary equity hedges held by the BTPS. Scenario considers combinations of changes to the key inputs used to value the growth assets, leading to a 15% (FY23: 20%) fall in the aggregate value of the growth assets prior to temporary hedges held by the BTPS. The impact shown under each scenario looks at each event in isolation and reflects the liabilities, assets and investment strategy at 31 March 2024. In practice a combination of events could arise, and the effects are not additive nor are they linear (e.g. doubling the change in bond yields assumed will not double the impact). The asset allocation is not fixed and changes over the year may impact the sensitivities shown.
Impact of illustrative scenarios which might occur no more than once in every 20 years
The sensitivities have been prepared using the same approach as FY23 which involves calculating the liabilities and assets allowing for the
change in market conditions assumed under the scenario as if they had occurred at the reporting date. The change in impact from FY23 is
due to a combination of: changes in the scenarios, changes in asset and liability values over the year, and changes in the scheme\u2019s
investment strategy in line with the agreed de-risking plan.
BTPS funding
Triennial funding valuation
A funding valuation is carried out for the Trustee by a professionally qualified independent actuary at least every three years. The funding
valuation assesses the on-going financial health of the BTPS. If there are insufficient assets to meet the estimated future benefit payments
to members (i.e. a funding deficit), BT Group and the Trustee agree the amount and timing of additional cash contributions. It is prepared
using the principles set out in UK pension legislation, such as the 2004 and 2021 Pensions Acts, and uses a prudent approach overall when
setting the actuarial assumptions. Some of the key differences compared to the IAS 19 deficit are set out in the table below.
IAS 19
Funding
Purpose
Balance sheet in BT Group accounts
Assessing the on-going financial health and setting cash payments
Regulation
IFRS
UK pensions legislation
Frequency
Semi-annually
At least every three years
Key assumptions
Determined by
BT Group
BT Group and BTPS agreement
Discount rate
Yield curve based on AA corporate bonds
Yield curve reflecting prudent return expected from BTPS assets
Other assumptions
Best estimate
Prudent overall approach
Assets
BT Group accounts excludes ABF value
Includes ABF value
The different purpose and principles lead to different assumptions being used, and therefore a different estimate for the liabilities and deficit.
The latest funding valuation was performed as at 30 June 2023. The next funding valuation will have an effective date of no later than
30 June 2026.
The results of the two most recent triennial valuations are shown below.
30 June 2023
30 June 2020
\u00a3bn
\u00a3bn
Funding liabilities
(40.9)
(65.3)
Assets
37.2
57.3
BTPS Funding deficit
(3.7)
(8.0)
Percentage of accrued benefits covered by the BTPS assets at valuation date
91 %
88 %
Key assumptions at valuation date:
Discount rate
a
5.3 %
1.4 %
Inflation \u2013 RPI
3.6 %
3.2 %
Inflation \u2013 CPI
3.2 %
2.4 %
Life expectancy \u2013 male aged 60 in lower pension bracket
25.5 years
25.8 years
Life expectancy \u2013 male aged 60 in higher pension bracket
27.2 years
28.0 years
Life expectancy \u2013 female aged 60
28.0 years
28.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years\u2019 time
0.8 years
0.9 years
a The discount rate has been derived from prudent return expectations that reflect the investment strategy over time, allowing for the BTPS to de-risk to a portfolio consisting
predominantly of bond and bond-like investments by 2034.
Scenario analysis of the funding position (unaudited) The impact of changes in market conditions on the funding liabilities differs to the impact on the IAS 19 liabilities due to the size of the liabilities and how the assumptions are set. For example, the funding liabilities use a discount rate linked to a risk-free rate plus a margin based on the BTPS\u2019s investment strategy, whereas the IAS 19 liabilities use a discount rate based on corporate bond yields. The chart below illustrates the approximate impact of the scenarios set on page 192 on the 30 June 2023 funding position. The figures shown in the table apply to the BTPS assets and funding liabilities as at 30 June 2023; an increase in the assets or funding liabilities will increase the impact of the scenarios shown. Deficit payments from the Group In November 2023, the 2023 triennial funding valuation was finalised, agreed with the Trustee, and certified by the Scheme Actuary. The funding deficit at 30 June 2023 was \u00a33.7bn, down from \u00a38.0bn at the 2020 funding valuation following \u00a34.4bn of deficit contributions. Annual contribution amounts remain unchanged, at \u00a3600m in each financial year until 31 March 2030, a final payment of \u00a3490m before 30 April 2030, and the \u00a3180m pa payments due under the ABF arrangement agreed at the 2020 valuation. No payments are currently payable under the future funding commitment (see page 195). These payments are summarised in the table below.
Year to 31 March (\u00a3m)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Payments from BT plc 600 600 600 600
600
b
600
490
\u2014
\u2014
\u2014
Future funding commitment payments
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Payments from ABF
180
180
180
180
180
180
180
180
180
180
Total
780
780
780
780
780
780
670
180
180
180
a b b b b b a Payments are due by 30 April each year. b \u00a310m is directly payable to the BTPS, and BT Group currently intends to pay the balance into the co-investment vehicle. ABF Under the ABF, \u00a3180m p.a. is paid into the BTPS until June 2033, secured on EE Limited. If the BTPS reaches full funding as calculated by the Scheme Actuary at any 30 June, the ABF payments to the BTPS will cease. BT Group received tax relief at inception of the ABF based on the original market value of \u00a31.7bn, and will receive further tax-relief if payments are made to the BTPS in excess of this amount. Assuming they are all paid, future payments from the ABF have a present value of \u00a31.3bn at 31 March 2024 (FY23: \u00a31.4bn). The fair value of the ABF is \u00a31.2bn at 31 March 2024 (FY23: \u00a31.3bn) which allows for the probability of the BTPS becoming fully funded, and the payments to the BTPS ending early. The fair value of the ABF is included in the assets of the BTPS when assessing the funding deficit. Payments from the ABF to the BTPS are treated in the same way as coupon payments from bonds, and do not affect the funding deficit when they are paid. The fair value of the ABF is not included in the assets of the BTPS when assessing the IAS 19 deficit in the group consolidated accounts, as it is a non-transferable asset issued by the group. Payments from the ABF to the BTPS are treated as deficit contributions, and reduce the IAS 19 deficit, when they are paid. Co-investment vehicle A co-investment vehicle was set up in 2021 which provides BT Group with some protection against the risk of overfunding and therefore enables BT Group to provide upfront funding with greater confidence. BT Group is eligible for future refunds if some or all of the co- investment vehicle funds are surplus to the BTPS\u2019s requirements, unless the BTPS, acting prudently but reasonably, decides to defer or reduce these payments. Assessments will be carried out over a series of dates between June 2032 and June 2041. Payments made by BT Group into the co-investment vehicle will be invested as if part of the overall BTPS investment strategy. BT Group will receive tax relief in respect of any funds paid to the BTPS from the vehicle but does not receive tax relief when payments are made to the co-investment vehicle.
The fair value of assets in the co-investment vehicle, \u00a30.1bn at 31 March 2024 (FY23: <\u00a31m), is included in the assets of the BTPS when
assessing both the IAS 19 and funding deficits.
Protections for BTPS (going concern)
BT Group has agreed to provide the Trustee with certain protections to 2035.
Feature
Detail
Future funding BT Group will provide additional contributions, of between \u00a3150m p.a. and \u00a3300m p.a., should the funding deficit fall
commitment behind plan by more than an agreed threshold at any two consecutive reviews. The reviews will be carried out every
June and December and until the 2026 valuation the threshold is \u00a31bn.
Payments are due within 12 months of the payments being switched on. Payments will stop once the semi-annual
assessment shows the funding deficit is back on plan, i.e. outstanding deficit contributions are sufficient to address the
funding deficit.
At the 31 December 2023 assessment date, the funding position was within the above limit. The next test will be carried
out as at 30 June 2024.
Shareholder BT Group will provide additional payments to the BTPS by the amount that shareholder distributions exceed a
distributions threshold. For the three years following the 2023 valuation, the threshold allows for 10% per year dividend per share
growth based on dividends of 7.7p per share in FY23, adjusted to reflect the interim dividend declared at our half-year
results.
BT Group has agreed to implement a similar protection at each subsequent valuation, with the terms to be negotiated
at the time.
BT Group will consult with the Trustee if:
\u2013
it considers share buybacks for any purpose other than relating to employee share awards;
\u2013
it considers making any shareholder distributions in any of the next three years if annual normalised free cash flow of the
group is below \u00a31bn in the year and distributions within the year would be in excess of 120% of the above threshold; or
\u2013
it considers making a special dividend.
Material In the event that BT Group generates net cash proceeds greater than a threshold from disposals (net of acquisitions) in
corporate any financial year, BT Group will make additional contributions to the BTPS. The threshold is \u00a3750m p.a. to 30 June
events 2026.
The amount payable is one-third of the total net cash proceeds.
BT Group will consult with the Trustee if:
\u2013
it considers making acquisitions with a total cost of more than \u00a31.0bn in any 12-month period;
\u2013
it considers making any disposal of more than \u00a31.0bn;
\u2013
it considers making a Class 1 transaction which will have a material impact on the BTPS (acquisition or disposal);
\u2013
it is likely to be subject to a takeover offer; or
\u2013
there are any other corporate or third-party events which may have a materially detrimental impact on BT Group\u2019s
covenant to the BTPS (in which case BT Group will use its best endeavours to agree appropriate mitigation).
This obligation is ongoing until otherwise terminated.
Negative A negative pledge that future creditors will not be granted superior security to the BTPS in excess of \u00a30.5bn, to cover
pledge any member of the BT Group. Business as usual financing arrangements are not included within the \u00a30.5bn.
No additional contributions were triggered during FY24.
Protections for BTPS (insolvency)
The Scheme Actuary assumes that in the highly unlikely event that BT Group were to become insolvent, the Trustee would continue to run the
Scheme with a low-risk, closely-matched investment strategy including additional margins for risk. On this basis and assuming no further
contribution from BT Group, it was estimated that at 30 June 2023 the assets of the Scheme would have met around 80% of the liabilities.
Were this to occur, BTPS members would benefit from the following additional protections.
Feature
Detail
Crown Guarantee
The Crown Guarantee was granted by the Government when BT was privatised in 1984; it would only come into
effect upon the insolvency of BT plc. In July 2014, the courts established that:
\u2013
the Crown Guarantee covers BT plc\u2019s funding obligation in relation to the benefits of members of the BTPS who
joined post-privatisation as well as those who joined pre-privatisation (subject to certain exceptions); and
\u2013
the funding obligation to which the Crown Guarantee relates is measured with reference to BT plc\u2019s obligation
to pay deficit contributions under the rules of the BTPS.
The Crown Guarantee is not taken into account for the purposes of the actuarial valuation of the BTPS and is an
entirely separate matter, only being relevant in the highly unlikely event that BT plc becomes insolvent.
Pension Protection Further protection is also provided by the PPF which is the fund responsible for paying compensation in respect of
Fund (PPF) schemes where the employer becomes insolvent.
EEPS funding valuation The most recent triennial valuation of the defined benefit section was performed as at 31 December 2021 and agreed in March 2023. This showed a funding deficit of \u00a3218m. The group is scheduled to contribute \u00a31.7m each month until 31 July 2025 and a final payment of up to \u00a380m by 31 March 2026. \u00a331.7m (FY23: \u00a313.3m) of deficit contributions were paid by the group to the EEPS during the year. At the triennial valuation date, the EEPS had a diversified investment strategy, investing scheme assets in: global equities (25%), property & illiquid alternatives (20%), an absolute return portfolio (24%) and a liability-driven investment portfolio (31%).", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-608": { "value": "Types of retirement benefit plans Defined Benefit (DB) plans DB plan benefits are determined by the plan rules, typically dependent on factors such as years of service and pensionable pay, but not on the value of actual contributions made by the group or members. The group is exposed to investment and other experience risks and may need to make additional contributions where it is estimated that the benefits will not be met from assets held, regular contributions and expected investment income. The net defined benefit liability, or deficit, is the present value of all expected future benefit cash flows to be paid by each plan, calculated using the projected unit credit method by professionally qualified actuaries (also known as the Defined Benefit Obligation, DBO or liabilities) less the fair value of the plan assets. A net defined benefit asset, or surplus, occurs when the fair value of assets exceeds the liabilities. Defined Contribution (DC) plans DC plan benefits are linked to the value of each member\u2019s fund, which is based on contributions paid and the performance of each individual\u2019s chosen investments. The group has no exposure to investment and other experience risks (including longevity). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-565": { "value": "
Movements in defined benefit plan assets and liabilities
The table below shows the movements in the defined benefit plan assets and liabilities and shows where they are reflected in the financial
statements.
Assets
Liabilities
Deficit
\u00a3m
\u00a3m
\u00a3m
At 31 March 2022
54,937
(56,080)
(1,143)
Service cost (including administration expenses and PPF levy)
(38)
(17)
(55)
Past service credit
\u2014
2
2
Interest on net pension deficit
1,480
(1,498)
(18)
Included in the group income statement
(71)
Return on plan assets below the amount included in the group income statement
(14,911)
\u2014
(14,911)
Actuarial gain arising from changes in financial assumptions
\u2014
12,279
12,279
Actuarial gain arising from changes in demographic assumptions
\u2014
891
891
Actuarial (loss) arising from experience adjustments
\u2014
(1,135)
(1,135)
Included in the group statement of comprehensive income
(2,876)
Regular contributions by employer
22
\u2014
22
Deficit contributions by employer
994
\u2014
994
Included in the group cash flow statement
1,016
Contributions by employees
1
(1)
\u2014
Benefits paid
(2,686)
2,686
\u2014
Other (e.g. foreign exchange)
9
(22)
(13)
Other movements
(13)
At 31 March 2023
39,808
(42,895)
(3,087)
Service cost (including administration expenses and PPF levy)
(29)
(12)
(41)
Past service credit
\u2014
\u2014
\u2014
Interest on net pension deficit
1,886
(2,007)
(121)
Included in the group income statement
(162)
Return on plan assets below the amount included in the group income statement
(3,140)
\u2014
(3,140)
Actuarial gain arising from changes in financial assumptions
\u2014
563
563
Actuarial gain arising from changes in demographic assumptions
\u2014
652
652
Actuarial (loss) arising from experience adjustments
\u2014
(519)
(519)
Included in the group statement of comprehensive income
(2,444)
Regular contributions by employer
55
\u2014
55
Deficit contributions by employer
823
\u2014
823
Included in the group cash flow statement
878
Contributions by employees
\u2014
\u2014
\u2014
Benefits paid
(2,840)
2,840
\u2014
Other (e.g. foreign exchange)
(9)
12
3
Other movements
3
At 31 March 2024
36,554
(41,366)
(4,812)
a
a
a Primarily reflects the impact on the liabilities of actual inflation being higher than assumed at the prior reporting date, which has been broadly offset by increases to inflation-linked
assets from higher inflation.
How is the BTPS governed and managed?
BT Pension Scheme Trustees Limited (the Trustee) has been appointed by BT Group as an independent trustee to administer and manage
the BTPS on behalf of the members in accordance with the terms of the BTPS Trust Deed and Rules and relevant legislation (principally
the Pensions Acts of 1993, 1995, 2004 and 2021). The Trustee\u2019s key powers include setting the investment strategy of BTPS (after
consultation with BT Group) and agreeing with BT Group the actuarial assumptions to be used when assessing the BTPS funding position
and the resulting contributions that will be paid.
There are nine Trustee directors, all of whom are appointed by BT Group, as illustrated below. Trustee directors are usually appointed for a
three-year term but are then eligible for re-appointment.
Chair of the Trustee directors Member nominated Trustee directors Employer nominated Trustee directors
Appointed by BT after consultation
with, and with the agreement of,
the relevant trade unions.
Appointed by BT based on
nominations by trade unions.
Appointed by BT. Two normally hold senior
positions within the group and two normally
hold (or have held) senior positions in
commerce or industry .
BTPS IAS 19 assets Critical accounting estimates and significant judgements made when valuing the BTPS assets Under IAS 19, plan assets are measured at fair value at the balance sheet date and include quoted and unquoted investments. Valuation of main quoted investments \u2013 Equities listed on recognised stock exchanges are valued at closing bid prices. \u2013 Bonds that are regularly traded are valued using broker quotes, based on sale/bid prices. \u2013 Exchange traded derivative contracts are valued based on closing bid prices. Valuation of main unquoted investments A portion of unquoted investments are valued based on inputs that are not directly observable, which require more judgement. The assumptions used in valuing unquoted investments are affected by market conditions. \u2013 Equities are valued using the International Private Equity and Venture Capital (IPEVC) guidelines where the most significant assumptions are the discount rate and earnings assumptions. \u2013 Property investments are valued on the basis of open market value by an independent valuer using RICS guidelines. The significant assumptions used in the valuation are rental yields and occupancy rates. \u2013 Bonds, including those issued by BT Group, that are not regularly traded are valued by an independent valuer using pricing models making assumptions for credit risk, market risk and market yield curves. \u2013 Holdings in investment funds are typically valued at the Net Asset Value provided by the fund administrator or investment manager. The significant assumption used in the valuation is the Net Asset Value. \u2013 Infrastructure investments are valued by an independent valuer using a model-based valuation such as a discounted cash flow approach, or at the price of recent market transactions if they represent fair value. Where a discounted cash flow model is used, the significant assumptions used in the valuation are the discount rate and the expected cash flows. \u2013 Over the counter derivatives are valued by an independent valuer using cash flows discounted at market rates. The significant assumptions used in the valuation are the yield curves and cost of carry. \u2013 The BTPS entered into a longevity insurance contract in 2014, and a second in August 2023. The two longevity insurance contracts are valued by discounting the fixed cash flows payable by the BTPS and the floating cash flows payable by the insurers under the contracts (projected by an actuary, consistent with the terms of the contracts). The significant assumptions used to value the assets are the discount rate (set as a margin above a risk-free rate to reflect credit and liquidity risk) and the mortality assumptions. \u00a35.7bn of unquoted investments that are formally valued periodically by the investment manager have a latest valuation that precedes the balance sheet date. These assets consist of: \u00a32.4bn non-core credit; \u00a31.0bn mature infrastructure; \u00a31.2bn private equity; \u00a30.9bn secure income assets; and \u00a30.2bn property. These valuations have been adjusted for cash movements between the previous valuation date and 31 March 2024. The valuation approach and inputs for these investments would only be approximately updated where there were indications of significant movements, for example implied by public market indicators. No such adjustment was required at 31 March 2024. Asset-Backed Funding (ABF) arrangement The ABF arrangement, issued to the BTPS in May 2021, has a fair value of \u00a31.2bn at 31 March 2024 (FY23: \u00a31.3bn) calculated as the present value of the future stream of payments, allowing for the probability of the BTPS becoming fully funded and therefore the payments to the BTPS ending early. It is not recognised as a pension asset when measuring the group\u2019s IAS 19 net defined benefit liability as it is a non-transferable financial instrument issued by the group. How are the BTPS assets invested? The Trustee regularly reviews the allocation of assets between different investment classes, taking into account current market conditions and trends. The allocations reflect the Trustee\u2019s views on a range of areas, including: i) the balance between seeking returns and incurring risk; ii) the extent to which the assets should be allocated to match movements in the liabilities due to changes in interest rates, inflation and/or longevity (i.e. liability-driven investments, or LDI); iii) the extent to which the assets should provide cash flows to meet expected payments to beneficiaries; and iv) liquidity needed to meet benefit payments and collateral requirements for derivatives contracts. Financial derivatives (e.g. swaps) are used to reduce the mismatch between movements in the liabilities and the assets from changes in interest rates, inflation, longevity, and exchange rates. This provides greater stability in the funding position, and therefore the deficit contributions that may be required from BT Group. The sensitivity chart on page 194 shows how the use of some of these derivatives adjusts outcomes for the BTPS. While the use of derivatives reduces funding risk, it increases the BTPS\u2019s liquidity requirements which is factored into the overall investment strategy. Following the impact of the September 2022 mini-budget on derivatives, the Bank of England and the Pensions Regulator issued guidance on the minimum level of collateral pension schemes should hold. At 31 March 2024 (and 31 March 2023), the BTPS held more collateral than these minimum levels. The table below analyses the fair value of the BTPS assets by asset category, subdivided by valuations based on a quoted market price in an active market, and those that are not (such as investment funds).
2024
2023
Total of which Total of which
a assets quoted
assets quoted
At 31 March
\u00a3bn
\u00a3bn
\u00a3bn
\u00a3bn
Growth
Equities
UK
0.1
\u2014
0.1
\u2014
Overseas Developed
2.3
1.1
1.7
0.6
Emerging Markets
\u2014
\u2014
\u2014
\u2014
Private Equity
1.3
\u2014
1.1
\u2014
Property
UK
2.3
\u2014
2.6
\u2014
Overseas
0.6
\u2014
0.8
\u2014
Other growth assets
Absolute Return
1.2
\u2014
0.9
\u2014
Non-Core Credit
4.2
0.4
4.2
0.4
Mature Infrastructure
1.0
\u2014
1.2
\u2014
Liability matching
Government bonds
UK
14.6
14.5
13.2
13.1
Investment grade credit
Global
10.3
7.7
10.4
8.2
Secure income assets
4.0
\u2014
3.7
\u2014
Cash, derivatives and other
Cash balances
0.8
\u2014
3.0
\u2014
Financial derivative contracts
(4.9)
\u2014
(4.2)
\u2014
Longevity insurance contract
f
(0.9)
\u2014
(0.8)
\u2014
Other
h
(1.5)
\u2014
0.8
\u2014
Total
35.4
23.7
38.7
22.3
a b c d e a At 31 March 2024, the BTPS held nil (FY23: nil) equity issued by the group and \u00a31.7bn (FY23: \u00a31.6bn) of bonds issued by the group. b This allocation seeks to generate a positive return in all market conditions. c This allocation includes a range of credit investments, including emerging market, sub-investment grade and unrated credit. The allocation seeks to exploit investment opportunities within credit markets using the expertise of a range of specialist investment managers. d Around 77% (FY23: 72%) of these are index-linked gilts with the remainder in conventional gilts. e This allocation consists of assets which aim to provide the BTPS with contractual bond-like income, often inflation-protected. The assets include property, infrastructure and investment-grade private credit. f The value reflects experience to date on the contract from higher than expected deaths; this has partly offset a corresponding reduction in BTPS\u2019s liabilities over the same period. g Other balances comprise net amounts receivable/(payable) by the BTPS, including balances due to investment counterparties relating to repurchase agreements. h Of which held in the co-investment vehicle: \u00a30.1bn (FY23: <\u00a31m). BTPS IAS 19 Liabilities Critical accounting estimates and significant judgements made when valuing our pension liabilities The measurement of the service cost and the liabilities involves judgement about uncertain events including the life expectancy of members, price inflation and the discount rate used to calculate the net present value of the future pension payments. We use estimates for all of these uncertain events. Our assumptions reflect historical experience, market expectations (where relevant), actuarial advice and our judgement regarding future expectations at the balance sheet date. While assumptions are made for these events, actual benefit payments in a given year may be higher or lower than the assumption, for example if members retire sooner or later than assumed. The liabilities are the present value of the future expected benefit payments. What are the forecast benefits payable from the BTPS? There are c.265,000 members, and their dependants, who will be receiving benefits from the BTPS for the remainder of their lives. Members currently receiving pension benefits make up around 73% of the liabilities and 79% of the membership by number. The chart below illustrates how the forecast benefits payable from the BTPS, and IAS 19 liabilities, projected using the IAS 19 assumptions evolve over time. The estimated duration of the BTPS liabilities, which is an indicator of the weighted average term of the discounted future payments, is 11 years (FY23: 12 years) using the IAS 19 assumptions. The duration is sensitive to the assumptions and has reduced mainly due to the increase in bond yields, and therefore discount rate, over the year. What are the most significant assumptions, and how have they been set? The most significant financial assumptions used to calculate the IAS 19 liabilities for the BTPS are the discount rate and inflation. The most significant demographic assumption used is how life expectancy will evolve over time which is illustrated as forecast life expectancies in the table below.
At 31 March
2024
2023
Discount rate
4.90%
4.85%
Inflation \u2013 RPI
3.25%
3.35%
Inflation \u2013 CPI
2.80%
2.85%
Life expectancy \u2013 male aged 60 in lower pension bracket
24.9 years
24.7 years
Life expectancy \u2013 male aged 60 in higher pension bracket
26.7 years
26.9 years
Life expectancy \u2013 female aged 60
27.4 years
27.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years\u2019 time
0.4 years
0.4 years
While the financial assumptions are typically scheme-specific, the average financial assumptions weighted by liabilities across all schemes are within 0.05% of the figures shown in the table above. The table below summarises how these assumptions have been set, including key changes over the year.
Detail
Discount rate
The discount rate assumption is calculated by applying the projected BTPS benefit cash flows to a corporate bond yield
curve constructed by our external actuary based on the yield on AA-rated \u00a3-denominated corporate bonds at the balance
sheet date. In setting the yield curve, judgement is required on the selection of appropriate bonds to be included in the
universe and the approach used to then derive the yield curve.
The increase in the discount rate over the year reflects changes in the market yield of corporate bonds.
RPI and CPI RPI inflation expectations are calculated by applying the projected BTPS benefit cash flows to an inflation curve derived
inflation from market yields on UK government bonds, and making a deduction for an inflation risk premium (to reflect the extra
premium paid by investors for inflation linked assets) of 0.2% p.a. before 2030 and 0.3% p.a. thereafter.
CPI inflation expectations are set with reference to the RPI inflation assumption taking into account market data and
independent estimates of the expected difference. Before 2030, CPI inflation is assumed to be 1.0% lower than RPI
inflation (FY23: 1.0%). RPI will be aligned with CPIH from 2030, and we assume a nil gap between CPI and CPIH inflation
as historically these measures have been broadly comparable.
Pension Under the BTPS rules, benefit increases prior to retirement are primarily linked to CPI capped at 5%, and the majority of
increases benefits increase after retirement linked to either CPI for Sections A and B or RPI with a 5% cap for Section C. Benefits are
assumed to increase in line with the RPI or CPI inflation assumptions.
Longevity
The longevity assumption takes into account:
\u2013
the actual mortality experience of the BTPS pensioners, based on a formal review carried out for the 2023 triennial
funding valuation; and
\u2013
future improvements in longevity based on the CMI\u2019s 2022 Mortality Projections model published by the UK actuarial
profession.
There is significant uncertainty for future life expectancy assumptions following the Covid-19 pandemic. We continue to
assume that following the pandemic there is a short-term increase in deaths compared to the assumptions adopted prior
to the pandemic and we have fully allowed for population mortality data from 2022, but not data from 2020 and 2021.
Allowing for the published 2022 CMI model has reduced the BTPS liabilities by \u00a30.4bn.
We continue to assume mortality will improve in the long-term by 1% per year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNetDefinedBenefitLiabilityAssetExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-543": { "value": "20. Own shares Material accounting policies that apply to own shares Own shares are recorded at cost and deducted from equity. When shares held for the beneficial ownership of employees vest unconditionally or are cancelled they are transferred from the own shares reserve to retained earnings at their weighted average cost.
a a
Treasury shares Employee share ownership trust Total
millions
\u00a3m
millions
\u00a3m
millions
\u00a3m
At 1 April 2022
41
(108)
94
(166)
135
(274)
Own shares purchased
\u2014
\u2014
114
(187)
114
(187)
Share options exercised
(5)
14
\u2014
\u2014
(5)
14
Share awards vested
\u2014
\u2014
(14)
25
(14)
25
At 31 March 2023
36
(94)
194
(328)
230
(422)
Own shares purchased
\u2014
\u2014
64
(83)
64
(83)
Share options exercised
(20)
52
(44)
72
(64)
124
Yourshare vestings
\u2014
\u2014
(5)
8
(5)
8
Share awards vested
\u2014
\u2014
(37)
62
(37)
62
At 31 March 2024
16
(42)
172
(269)
188
(311)
b b b b a At 31 March 2024, 16,299,007 shares (FY23: 36,190,551) with an aggregate nominal value of \u00a31m (FY23: \u00a32m) were held at cost as treasury shares and 172,157,686 shares (FY23: 193,798,578) with an aggregate nominal value of \u00a39m (FY23: \u00a310m) were held in the Trust. b See group cash flow statement. The cash paid for the repurchase of ordinary shares was \u00a3133m (FY23: \u00a3138m). 35m shares (FY23: 40m) were purchased via forward contracts. The cash received from proceeds on the issue of treasury shares was \u00a357m (FY23: \u00a35m). At 31 March 2024 the group had forward contracts to purchase 15m shares (FY23: 55m shares). The treasury shares reserve represents BT Group plc shares purchased directly by the group. The BT Group Employee Share Ownership Trust (the Trust) also purchases BT Group plc shares. The treasury shares and the shares in the Trust are being used to satisfy our obligations under employee share plans, further details of which are provided in note 21. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-609": { "value": "Material accounting policies that apply to own shares Own shares are recorded at cost and deducted from equity. When shares held for the beneficial ownership of employees vest unconditionally or are cancelled they are transferred from the own shares reserve to retained earnings at their weighted average cost. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-512": { "value": "21. Share-based payments Material accounting policies that apply to share-based payments We operate a number of equity-settled share-based payment arrangements, under which the group receives services from employees in consideration for equity instruments (share options and shares) of the group. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value is recognised as an expense on a straight-line basis over the vesting period, based on the group\u2019s estimate of the options or shares that will eventually vest. Fair value of share option schemes is measured using a Binomial options pricing model. Service conditions are vesting conditions. Any other conditions are non-vesting conditions which are taken into account to determine the fair value of equity instruments granted. When an award or option does not vest as a result of a failure to meet a non- vesting condition that is within the control of either counterparty, it is accounted for as a cancellation. Cancellations are treated as accelerated vesting and all remaining future charges are immediately recognised in the income statement. As the requirement to save under an employee saveshare arrangement is a non-vesting condition, employee cancellations, other than through a termination of service, are treated as an accelerated vesting. No adjustment is made to total equity for awards that lapse or are forfeited after the vesting date.
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Employee saveshare plans
13
21
Yourshare
13
12
Executive share plans:
Deferred Bonus Plan (DBP)
9
12
Retention and Restricted Share Plans (RSP)
36
35
71
80
What share incentive arrangements do we have?
Our plans include savings-related share option plans for employees and those of participating subsidiaries and several share plans for
executives. All share-based payment plans are equity-settled. Details of these plans are set out below.
Employee Saveshare Plans
Under HMRC-approved savings-related share option plans, employees save on a monthly basis, over a three- or five-year period, towards
the purchase of shares at a fixed price determined when the option is granted. This price is set at a 20% discount to the market price for
five-year plans and 10% for three-year plans. The options must be exercised within six months of maturity of the savings contract,
otherwise they lapse. Similar plans operate for our overseas employees. The scheme did not operate in FY24 or FY23.
Yourshare
In FY21 and FY22, all eligible employees of the group were awarded \u00a3500 of BT shares. The shares are held in trust for a three-year
vesting period after which they will be transferred to employees, providing they have been continuously employed during that time. A
similar plan operated for overseas employees. Under the terms of Yourshare and the executive share plans, dividends are reinvested in
shares that are added to the relevant share awards, unless the employee has elected to receive dividends in cash.
Deferred Bonus Plan (DBP)
Awards are granted annually to selected senior employees where part of their bonus is awarded in shares in the group. These shares vest
after three years.
Retention and Restricted Share Plans (RSP)
Awards are granted to selected employees. Shares in the group are transferred to participants at the end of a specified retention or
restricted period if they continue to be employed by the group throughout that period.
Incentive Share Plan (ISP)
Under this scheme, certain employees were awarded shares if the group met performance measures linked to total shareholder return,
normalised free cash flow and revenue growth over a three year period. The last ISP was granted in 2019 and vested in 2022.
Employee Saveshare Plans
Movements in Employee Saveshare options are shown below.
Number of share options
Weighted average exercise price
2024
2023
2024
2023
Year ended 31 March
millions
millions
pence
pence
Outstanding at 1 April
269
342
102
102
Granted
\u2014
\u2014
\u2014
\u2014
Forfeited
(23)
(42)
118
130
Exercised
(64)
(5)
89
96
Expired
(26)
(26)
151
208
Outstanding at 31 March
156
269
103
102
Exercisable at 31 March
\u2014
\u2014
\u2014
\u2014
The weighted average share price for all options exercised during FY24 was 118p (FY23: 153p).
The following table summarises information relating to options outstanding and exercisable under Employee Saveshare plans at 31 March
2024.
Weighted Number of
average outstanding Weighted average
Exercise price exercise options remaining contractual
Normal dates of vesting and exercise (based on calendar years) per share price millions life (months)
2024
164p
164p
27
10
2025
82p
82p
129
22
Total
96p
156
20
Executive share plans
Movements in executive share plan awards are shown below:
Number of shares (millions)
ISP
DBP
RSP
Total
At 1 April 2022
31
22
58
111
Awards granted
\u2014
6
29
35
Awards vested
(5)
(5)
(4)
(14)
Awards lapsed
(26)
(1)
(7)
(34)
Dividend shares reinvested
\u2014
2
4
6
At 31 March 2023
\u2014
24
80
104
Awards granted
\u2014
6
42
48
Awards vested
\u2014
(10)
(27)
(37)
Awards lapsed
\u2014
(1)
(8)
(9)
Dividend shares reinvested
\u2014
1
6
7
At 31 March 2024
\u2014
20
93
113
Fair values
There were no grants under Employee Saveshare or the ISP in FY24 or FY23.
Volatility has been determined by reference to BT\u2019s historical volatility which is expected to reflect the BT share price in the future. An
expected life of six months after vesting date is assumed for Employee Saveshare options. The risk-free interest rate is based on the UK
gilt curve in effect at the time of the grant, for the expected life of the option.
The fair values for the DBP and RSP were determined using the market price of the shares at the grant date. The weighted average share
price for DBP awards granted in FY24 was 135p (FY23: 188p) and for RSP awards granted in FY24 was 112p (FY23: 183p).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-610": { "value": "Material accounting policies that apply to share-based payments We operate a number of equity-settled share-based payment arrangements, under which the group receives services from employees in consideration for equity instruments (share options and shares) of the group. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value is recognised as an expense on a straight-line basis over the vesting period, based on the group\u2019s estimate of the options or shares that will eventually vest. Fair value of share option schemes is measured using a Binomial options pricing model. Service conditions are vesting conditions. Any other conditions are non-vesting conditions which are taken into account to determine the fair value of equity instruments granted. When an award or option does not vest as a result of a failure to meet a non- vesting condition that is within the control of either counterparty, it is accounted for as a cancellation. Cancellations are treated as accelerated vesting and all remaining future charges are immediately recognised in the income statement. As the requirement to save under an employee saveshare arrangement is a non-vesting condition, employee cancellations, other than through a termination of service, are treated as an accelerated vesting. No adjustment is made to total equity for awards that lapse or are forfeited after the vesting date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-544": { "value": "Employee Saveshare Plans Movements in Employee Saveshare options are shown below.
Number of share options
Weighted average exercise price
2024
2023
2024
2023
Year ended 31 March
millions
millions
pence
pence
Outstanding at 1 April
269
342
102
102
Granted
\u2014
\u2014
\u2014
\u2014
Forfeited
(23)
(42)
118
130
Exercised
(64)
(5)
89
96
Expired
(26)
(26)
151
208
Outstanding at 31 March
156
269
103
102
Exercisable at 31 March
\u2014
\u2014
\u2014
\u2014
The weighted average share price for all options exercised during FY24 was 118p (FY23: 153p). The following table summarises information relating to options outstanding and exercisable under Employee Saveshare plans at 31 March 2024.
Weighted Number of
average outstanding Weighted average
Exercise price exercise options remaining contractual
Normal dates of vesting and exercise (based on calendar years) per share price millions life (months)
2024
164p
164p
27
10
2025
82p
82p
129
22
Total
96p
156
20
", "dimensions": { "concept": "ifrs-full:DisclosureOfNumberAndWeightedAverageExercisePricesOfShareOptionsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-545": { "value": "22. Divestments and assets & liabilities classified as held for sale Material accounting policies that apply to divestments and assets & liabilities classified as held for sale We classify non-current assets or a group of assets and associated liabilities, together forming a disposal group, as \u2018held for sale\u2019 when their carrying amount will be recovered principally through disposal rather than continuing use and the sale is highly probable. Sale is considered to be highly probable when management are committed to a plan to sell the asset or disposal group and the sale should be expected to qualify for recognition as a completed divestment within one year from the date of classification. We measure non-current assets or disposal groups classified as held for sale at the lower of their carrying amount and fair value less costs of disposal. Intangible assets, property, plant and equipment and right-of-use assets classified as held for sale are not depreciated or amortised. Upon completion of a divestment, we recognise a profit or loss on disposal calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest less costs incurred in disposing of the asset or disposal group and (ii) the carrying amount of the asset or disposal group (including goodwill). The profit or loss on disposal is recognised as a specific item, see note 9. In the event that non-current assets or disposal groups held for sale form a separate and identifiable major line of business, the results for both the current and comparative periods are reclassified as \u2018discontinued operations\u2019. Divestments During the year, we completed the disposals of certain city fibre networks and associated infrastructure assets in Germany and Pelipod Limited, both of which were classified as held for sale in FY23, and the disposal of BT Enia, a subsidiary of BT Italia. We recognised a net profit on disposal after tax of \u00a325m through specific items from these divestments, see below for further details. In FY23, we completed the disposal of BT Sport operations through forming a sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) recognising a profit on disposal after tax of \u00a328m through specific items. During the current year, we recorded \u00a310m additional net transaction costs through specific items and received \u00a324m from the deferred cash consideration recorded at completion of the transaction. The disposals in the current or prior year have not been reclassified as discontinued operations as they do not meet our definition of a separate major line of business. The net consideration recognised on completion of these divestments was as follows:
2024
2023
\u00a3m
\u00a3m
Intangible assets, including allocated goodwill of \u00a318m (FY23: \u00a383m)
19
88
Property, plant and equipment
13
13
Right-of-use assets
3
1
Other assets
8
760
Liabilities
b
(8)
(357)
Net assets of operations disposed
35
505
Net financial liabilities recognised
\u2014
534
Net impact on the consolidated balance sheet
35
1,039
Profit on disposal, after tax (note 9)
25
28
Net consideration from divestments completed in the year
60
1,067
Additional net transaction costs on the BT Sport disposal (note 9)
(10)
\u2014
Net consideration
50
1,067
Satisfied by
Proceeds received in the year per the cash flow statement
81
29
Deferred cash consideration on BT Sport disposal
(24)
70
Deferred cash consideration from other divestments
5
\u2014
Transaction costs
(2)
(35)
Investment in A preference shares in Sports JV (note 24)
\u2014
428
Investment in C preference shares in Sports JV
\u2014
161
Ordinary equity interest in Sports JV (note 24)
\u2014
414
Net consideration from divestments completed in the year
60
1,067
Additional net transaction costs on the BT Sport disposal (note 9)
(10)
\u2014
Net consideration
50
1,067
a b c d e a Balances in FY23 relate to the BT Sport disposal. b Other assets in FY23 included \u00a3632m of capitalised programme rights and \u00a3104m prepayments relating to programme rights payments made for licence periods that had not yet started. Liabilities included \u00a3351m relating to outstanding trade payables to broadcast rights holders for the current licence period. c Net financial liabilities in FY23 the fair value of BT\u2019s obligation under the minimum revenue commitment of \u00a3712m, less tax credit of \u00a3178m. d Deferred cash consideration on the BT Sport disposal relates to the discounted cash flows due to BT from the remaining fixed consideration payable by WBD, of which \u00a324m has been received in FY24. \u00a352m of deferred consideration is outstanding at 31 March 2024 and held in trade and other receivables, see note 16. e BT\u2019s C preference shares in the Sports JV are expected to be sold to WBD at the end of BT\u2019s earn-out entitlement in consideration for any programme rights funded by BT and is therefore akin to deferred consideration for pre-funded programme rights contributed by BT in to the Sports JV at formation. See note 24 for further details. BT Sport In August 2022 the group formed a sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) combining BT Sport and WBD\u2019s Eurosport UK business. As part of the transaction, the group\u2019s wholly owned subsidiary, British Telecommunications plc (BT plc or BT) and WBD each contributed, sub-licensed or delivered the benefit of their respective sports rights and distribution businesses for the UK & Ireland to the Sports JV. Both parties each hold a 50% interest and equal voting rights in the Sports JV. BT Sport\u2019s distribution agreement with Virgin Media transferred to the Sports JV, and the Sports JV also entered into an agreement with Sky extending beyond 2030 to provide for its distribution of the Sports JV\u2019s combined sports content. The production and operational assets of BT Sport transferred to WBD who manage and operate the production of the Sports JV\u2019s sport content. BT plc entered into a distribution agreement with the Sports JV to procure the sport content required to continue to supply our broadband, TV and mobile customers. BT plc\u2019s agreement with the Sports JV will extend beyond 2030 and the first four years includes a minimum revenue guarantee of approximately \u00a3500m per annum, after which the agreement will change to a fully variable arrangement. BT no longer has control of the BT Sport operations based on the assessment of ownership and joint control over the key decisions of the Sports JV (50/50 with WBD) established through the Sports JV agreement. The group\u2019s retained ordinary equity interest in the combined business has been classified as a joint venture under IFRS 11, see note 24. WBD have the option to acquire BT plc\u2019s 50% interest in the Sports JV at specified points during the first four years of the Sports JV (Call Option). The price payable under the Call Option will be 50% of the fair market value of the Sports JV to be determined at the time of the exercise, plus any unpaid fixed consideration and remaining earn-out as described below. If the Call Option is not exercised, BT plc will have the ability to exit its shareholding in the Sports JV either through a sale or IPO after the initial four-year period. Critical & key accounting estimates and significant judgements made in accounting for the BT Sport disposal in FY23 The following critical and key accounting estimates and significant judgements were made in accounting for the BT Sport disposal in FY23 only and are not considered to be ongoing significant judgements. Assessment of whether BT has joint control over the Sports JV See note 24 for assessment of control. Valuation of investment in A preference shares (akin to contingent consideration) BT will receive an earn-out from the Sports JV (subject to liquidity and usual UK company law requirements), which will end at the earliest of: \u2013 four years post completion of the transaction; \u2013 the exercise by WBD of the Call Option; and \u2013 if the earn-out reaches an agreed cap. The earn-out cash flows to BT are dependent on the cash profit generation of the Sports JV over the earn-out period and is therefore akin to contingent consideration, initially recorded at a fair value of \u00a3428m reflecting the present value of expected cash flows. Subsequent to the initial recognition, the group\u2019s carried forward investment in A preference shares are remeasured to fair value at each reporting date in accordance with IFRS 9, see note 24. Valuation of the minimum revenue guarantee in BT\u2019s distribution agreement with the Sports JV BT plc\u2019s obligation under the minimum revenue guarantee of c. \u00a32bn over the first four years of the Sports JV represents both a trading arrangement on market terms and a financing arrangement for the off-market element of the revenue guarantee, which has been recorded as a financial liability at an initial fair value of \u00a3712m. The valuation of this financial liability, and what a fair cost-per-subscriber would be, is sensitive to a number of assumptions on volumes and price, and there is a range of outcomes which we could have arrived at. Alternative scenarios considered, based on the different prices and terms used with other market participants, could have resulted in a liability ranging from \u00a3543m to \u00a3837m. The key assumptions in calculating the financial liability are in estimating what is a market wholesale price at market volume commitment that is supported by the forecast volumes for the related revenue streams. The volumes used are consistent with those included in the jointly-agreed business plan for the Sports JV. We note that the bottom of the range disclosed above is based on the price that we will pay when the minimum revenue guarantee has ended, however we do not believe that is an appropriate rate from the outset due to existing volume commitments. The liability is held at amortised cost within trade and other payables on the balance sheet (see note 17) \u2013 the carrying amount at 31 March 2024 has reduced to \u00a3465m (FY23: \u00a3660m) after payments made to the Sports JV on the minimum revenue guarantee. Valuation of BT\u2019s equity interest in the Sports JV WBD has the option to acquire BT plc\u2019s 50% interest in the Sports JV at specified points during the first four years of the Sports JV. If the Call Option is not exercised, BT plc will have the ability to exit its shareholding in the JV either through a sale or IPO. The group valued its interest in the Sports JV based on the estimated fair value at exit and using the following key assumptions: \u2013 BT expect to realise its interest in the Sports JV through exit rather than ongoing value in use. \u2013 BT expect WBD to exercise its option to acquire BT\u2019s 50% interest in the Sports JV at the end of the first four years of the Sports JV. \u2013 An earnings multiple has been applied to the expected year 5 EBITDA per the jointly-agreed business plan - the multiple is at the lower end of a possible range identified from comparable peers and transactions in the premium sports subscription and broadcasting market. The investment is subsequently accounted for using the equity method and will be subject to impairment testing at each reporting period, with any impairment losses recognised through specific items, see note 24. Discounting of cash flows All cash flows expected to be received or paid over time were discounted at a rate applicable to the risks associated with the cash flows: \u2013 Deferred payments due to BT from WBD have been discounted at an appropriate post-tax cost of debt; \u2013 BT\u2019s earn-out from the Sports JV has been discounted at the weighted average cost of capital for the Sports JV at completion date; and \u2013 BT\u2019s commitments under the minimum guarantee have been discounted at the group\u2019s post-tax cost of debt. We do not consider the net present value of the transaction would be materially affected by a reasonable change in the discount rate. Assets and liabilities held for sale At 31 March 2024 there are no assets and liabilities classified as held for sale. Assets and liabilities classified as held for sale at 31 March 2023 related to certain city fibre networks and associated infrastructure assets in Germany and Pelipod Limited. These divestments completed during FY24, and information on the gains and losses on disposal is disclosed above. The disposal groups held for sale comprised the following assets and liabilities:
2024
2023
At 31 March
\u00a3m
\u00a3m
Assets
Intangible assets
a
\u2014
13
Property, plant and equipment
\u2014
4
Right-of-use assets
\u2014
3
Inventories
\u2014
\u2014
Trade and other receivables
\u2014
1
Assets held for sale
\u2014
21
Liabilities
Trade and other payables
\u2014
1
Lease liabilities
\u2014
3
Liabilities held for sale
\u2014
4
a Intangible assets in FY23 include goodwill of \u00a313m that has been allocated to the disposal group.", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-513": { "value": "22. Divestments and assets & liabilities classified as held for sale Material accounting policies that apply to divestments and assets & liabilities classified as held for sale We classify non-current assets or a group of assets and associated liabilities, together forming a disposal group, as \u2018held for sale\u2019 when their carrying amount will be recovered principally through disposal rather than continuing use and the sale is highly probable. Sale is considered to be highly probable when management are committed to a plan to sell the asset or disposal group and the sale should be expected to qualify for recognition as a completed divestment within one year from the date of classification. We measure non-current assets or disposal groups classified as held for sale at the lower of their carrying amount and fair value less costs of disposal. Intangible assets, property, plant and equipment and right-of-use assets classified as held for sale are not depreciated or amortised. Upon completion of a divestment, we recognise a profit or loss on disposal calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest less costs incurred in disposing of the asset or disposal group and (ii) the carrying amount of the asset or disposal group (including goodwill). The profit or loss on disposal is recognised as a specific item, see note 9. In the event that non-current assets or disposal groups held for sale form a separate and identifiable major line of business, the results for both the current and comparative periods are reclassified as \u2018discontinued operations\u2019. Divestments During the year, we completed the disposals of certain city fibre networks and associated infrastructure assets in Germany and Pelipod Limited, both of which were classified as held for sale in FY23, and the disposal of BT Enia, a subsidiary of BT Italia. We recognised a net profit on disposal after tax of \u00a325m through specific items from these divestments, see below for further details. In FY23, we completed the disposal of BT Sport operations through forming a sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) recognising a profit on disposal after tax of \u00a328m through specific items. During the current year, we recorded \u00a310m additional net transaction costs through specific items and received \u00a324m from the deferred cash consideration recorded at completion of the transaction. The disposals in the current or prior year have not been reclassified as discontinued operations as they do not meet our definition of a separate major line of business.
The net consideration recognised on completion of these divestments was as follows:
2024
2023
\u00a3m
\u00a3m
Intangible assets, including allocated goodwill of \u00a318m (FY23: \u00a383m)
19
88
Property, plant and equipment
13
13
Right-of-use assets
3
1
Other assets
8
760
Liabilities
b
(8)
(357)
Net assets of operations disposed
35
505
Net financial liabilities recognised
\u2014
534
Net impact on the consolidated balance sheet
35
1,039
Profit on disposal, after tax (note 9)
25
28
Net consideration from divestments completed in the year
60
1,067
Additional net transaction costs on the BT Sport disposal (note 9)
(10)
\u2014
Net consideration
50
1,067
Satisfied by
Proceeds received in the year per the cash flow statement
81
29
Deferred cash consideration on BT Sport disposal
(24)
70
Deferred cash consideration from other divestments
5
\u2014
Transaction costs
(2)
(35)
Investment in A preference shares in Sports JV (note 24)
\u2014
428
Investment in C preference shares in Sports JV
\u2014
161
Ordinary equity interest in Sports JV (note 24)
\u2014
414
Net consideration from divestments completed in the year
60
1,067
Additional net transaction costs on the BT Sport disposal (note 9)
(10)
\u2014
Net consideration
50
1,067
a
b
c
d
e
a Balances in FY23 relate to the BT Sport disposal.
b Other assets in FY23 included \u00a3632m of capitalised programme rights and \u00a3104m prepayments relating to programme rights payments made for licence periods that had not yet
started. Liabilities included \u00a3351m relating to outstanding trade payables to broadcast rights holders for the current licence period.
c Net financial liabilities in FY23 the fair value of BT\u2019s obligation under the minimum revenue commitment of \u00a3712m, less tax credit of \u00a3178m.
d Deferred cash consideration on the BT Sport disposal relates to the discounted cash flows due to BT from the remaining fixed consideration payable by WBD, of which \u00a324m has
been received in FY24. \u00a352m of deferred consideration is outstanding at 31 March 2024 and held in trade and other receivables, see note 16.
e BT\u2019s C preference shares in the Sports JV are expected to be sold to WBD at the end of BT\u2019s earn-out entitlement in consideration for any programme rights funded by BT and is
therefore akin to deferred consideration for pre-funded programme rights contributed by BT in to the Sports JV at formation. See note 24 for further details.
BT Sport
In August 2022 the group formed a sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) combining BT Sport and WBD\u2019s
Eurosport UK business. As part of the transaction, the group\u2019s wholly owned subsidiary, British Telecommunications plc (BT plc or BT) and
WBD each contributed, sub-licensed or delivered the benefit of their respective sports rights and distribution businesses for the UK &
Ireland to the Sports JV. Both parties each hold a 50% interest and equal voting rights in the Sports JV.
BT Sport\u2019s distribution agreement with Virgin Media transferred to the Sports JV, and the Sports JV also entered into an agreement with
Sky extending beyond 2030 to provide for its distribution of the Sports JV\u2019s combined sports content.
The production and operational assets of BT Sport transferred to WBD who manage and operate the production of the Sports JV\u2019s sport
content.
BT plc entered into a distribution agreement with the Sports JV to procure the sport content required to continue to supply our
broadband, TV and mobile customers. BT plc\u2019s agreement with the Sports JV will extend beyond 2030 and the first four years includes a
minimum revenue guarantee of approximately \u00a3500m per annum, after which the agreement will change to a fully variable arrangement.
BT no longer has control of the BT Sport operations based on the assessment of ownership and joint control over the key decisions of the
Sports JV (50/50 with WBD) established through the Sports JV agreement. The group\u2019s retained ordinary equity interest in the combined
business has been classified as a joint venture under IFRS 11, see note 24.
WBD have the option to acquire BT plc\u2019s 50% interest in the Sports JV at specified points during the first four years of the Sports JV (Call
Option). The price payable under the Call Option will be 50% of the fair market value of the Sports JV to be determined at the time of the
exercise, plus any unpaid fixed consideration and remaining earn-out as described below. If the Call Option is not exercised, BT plc will
have the ability to exit its shareholding in the Sports JV either through a sale or IPO after the initial four-year period.
Critical & key accounting estimates and significant judgements made in accounting for the BT Sport disposal in FY23 The following critical and key accounting estimates and significant judgements were made in accounting for the BT Sport disposal in FY23 only and are not considered to be ongoing significant judgements. Assessment of whether BT has joint control over the Sports JV See note 24 for assessment of control. Valuation of investment in A preference shares (akin to contingent consideration) BT will receive an earn-out from the Sports JV (subject to liquidity and usual UK company law requirements), which will end at the earliest of: \u2013 four years post completion of the transaction; \u2013 the exercise by WBD of the Call Option; and \u2013 if the earn-out reaches an agreed cap. The earn-out cash flows to BT are dependent on the cash profit generation of the Sports JV over the earn-out period and is therefore akin to contingent consideration, initially recorded at a fair value of \u00a3428m reflecting the present value of expected cash flows. Subsequent to the initial recognition, the group\u2019s carried forward investment in A preference shares are remeasured to fair value at each reporting date in accordance with IFRS 9, see note 24. Valuation of the minimum revenue guarantee in BT\u2019s distribution agreement with the Sports JV BT plc\u2019s obligation under the minimum revenue guarantee of c. \u00a32bn over the first four years of the Sports JV represents both a trading arrangement on market terms and a financing arrangement for the off-market element of the revenue guarantee, which has been recorded as a financial liability at an initial fair value of \u00a3712m. The valuation of this financial liability, and what a fair cost-per-subscriber would be, is sensitive to a number of assumptions on volumes and price, and there is a range of outcomes which we could have arrived at. Alternative scenarios considered, based on the different prices and terms used with other market participants, could have resulted in a liability ranging from \u00a3543m to \u00a3837m. The key assumptions in calculating the financial liability are in estimating what is a market wholesale price at market volume commitment that is supported by the forecast volumes for the related revenue streams. The volumes used are consistent with those included in the jointly-agreed business plan for the Sports JV. We note that the bottom of the range disclosed above is based on the price that we will pay when the minimum revenue guarantee has ended, however we do not believe that is an appropriate rate from the outset due to existing volume commitments. The liability is held at amortised cost within trade and other payables on the balance sheet (see note 17) \u2013 the carrying amount at 31 March 2024 has reduced to \u00a3465m (FY23: \u00a3660m) after payments made to the Sports JV on the minimum revenue guarantee. Valuation of BT\u2019s equity interest in the Sports JV WBD has the option to acquire BT plc\u2019s 50% interest in the Sports JV at specified points during the first four years of the Sports JV. If the Call Option is not exercised, BT plc will have the ability to exit its shareholding in the JV either through a sale or IPO. The group valued its interest in the Sports JV based on the estimated fair value at exit and using the following key assumptions: \u2013 BT expect to realise its interest in the Sports JV through exit rather than ongoing value in use. \u2013 BT expect WBD to exercise its option to acquire BT\u2019s 50% interest in the Sports JV at the end of the first four years of the Sports JV. \u2013 An earnings multiple has been applied to the expected year 5 EBITDA per the jointly-agreed business plan - the multiple is at the lower end of a possible range identified from comparable peers and transactions in the premium sports subscription and broadcasting market. The investment is subsequently accounted for using the equity method and will be subject to impairment testing at each reporting period, with any impairment losses recognised through specific items, see note 24. Discounting of cash flows All cash flows expected to be received or paid over time were discounted at a rate applicable to the risks associated with the cash flows: \u2013 Deferred payments due to BT from WBD have been discounted at an appropriate post-tax cost of debt; \u2013 BT\u2019s earn-out from the Sports JV has been discounted at the weighted average cost of capital for the Sports JV at completion date; and \u2013 BT\u2019s commitments under the minimum guarantee have been discounted at the group\u2019s post-tax cost of debt. We do not consider the net present value of the transaction would be materially affected by a reasonable change in the discount rate. Assets and liabilities held for sale At 31 March 2024 there are no assets and liabilities classified as held for sale. Assets and liabilities classified as held for sale at 31 March 2023 related to certain city fibre networks and associated infrastructure assets in Germany and Pelipod Limited. These divestments completed during FY24, and information on the gains and losses on disposal is disclosed above.
The disposal groups held for sale comprised the following assets and liabilities:
2024
2023
At 31 March
\u00a3m
\u00a3m
Assets
Intangible assets
a
\u2014
13
Property, plant and equipment
\u2014
4
Right-of-use assets
\u2014
3
Inventories
\u2014
\u2014
Trade and other receivables
\u2014
1
Assets held for sale
\u2014
21
Liabilities
Trade and other payables
\u2014
1
Lease liabilities
\u2014
3
Liabilities held for sale
\u2014
4
a Intangible assets in FY23 include goodwill of \u00a313m that has been allocated to the disposal group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-620": { "value": "Material accounting policies that apply to divestments and assets & liabilities classified as held for sale We classify non-current assets or a group of assets and associated liabilities, together forming a disposal group, as \u2018held for sale\u2019 when their carrying amount will be recovered principally through disposal rather than continuing use and the sale is highly probable. Sale is considered to be highly probable when management are committed to a plan to sell the asset or disposal group and the sale should be expected to qualify for recognition as a completed divestment within one year from the date of classification. We measure non-current assets or disposal groups classified as held for sale at the lower of their carrying amount and fair value less costs of disposal. Intangible assets, property, plant and equipment and right-of-use assets classified as held for sale are not depreciated or amortised. Upon completion of a divestment, we recognise a profit or loss on disposal calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest less costs incurred in disposing of the asset or disposal group and (ii) the carrying amount of the asset or disposal group (including goodwill). The profit or loss on disposal is recognised as a specific item, see note 9. In the event that non-current assets or disposal groups held for sale form a separate and identifiable major line of business, the results for both the current and comparative periods are reclassified as \u2018discontinued operations\u2019. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-611": { "value": "Material accounting policies that apply to divestments and assets & liabilities classified as held for sale We classify non-current assets or a group of assets and associated liabilities, together forming a disposal group, as \u2018held for sale\u2019 when their carrying amount will be recovered principally through disposal rather than continuing use and the sale is highly probable. Sale is considered to be highly probable when management are committed to a plan to sell the asset or disposal group and the sale should be expected to qualify for recognition as a completed divestment within one year from the date of classification. We measure non-current assets or disposal groups classified as held for sale at the lower of their carrying amount and fair value less costs of disposal. Intangible assets, property, plant and equipment and right-of-use assets classified as held for sale are not depreciated or amortised. Upon completion of a divestment, we recognise a profit or loss on disposal calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest less costs incurred in disposing of the asset or disposal group and (ii) the carrying amount of the asset or disposal group (including goodwill). The profit or loss on disposal is recognised as a specific item, see note 9. In the event that non-current assets or disposal groups held for sale form a separate and identifiable major line of business, the results for both the current and comparative periods are reclassified as \u2018discontinued operations\u2019. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-566": { "value": "23. Investments Material accounting policies that apply to investments Investments classified as amortised cost These investments are measured at amortised cost. The carrying amount of these balances approximates to fair value. Any gain or loss on derecognition is recognised in the income statement. Investments classified as fair value through profit and loss These investments are initially recognised at fair value plus direct transaction costs. They are re-measured at subsequent reporting dates to fair value and changes are recognised directly in the income statement. Equity instruments classified as fair value through other comprehensive income We have made an irrevocable election to present changes in the fair value of equity investments that are not held for trading in other comprehensive income. All gains or losses, aside from dividends, are recognised in other comprehensive income and are not reclassified to the income statement when the investments are disposed of, instead any balance remaining in other comprehensive income is transferred to retained earnings. Dividends are recognised in the income statement when our right to receive payment is established. Equity investments are recorded in non-current assets unless they are expected to be sold within one year.
2024
2023
At 31 March
\u00a3m
\u00a3m
Non-current assets
Fair value through other comprehensive income
23
23
Fair value through profit or loss
6
6
Total non-current asset investments
29
29
Current assets
Investments held at amortised cost
2,366
3,548
Current asset investments
2,366
3,548
Investments held at amortised cost relate to money market investments denominated in sterling of \u00a32,355m (FY23: \u00a33,094m), in euros of \u00a35m (FY23: \u00a3446m) and US dollars of \u00a36m (FY23: \u00a38m). Within these amounts are investments in liquidity funds of \u00a31,815m (FY23: \u00a33,491m), collateral paid on swaps of \u00a340m (FY23: \u00a348m), interest on investments of \u00a311m (FY23: \u00a39m) and gilt repurchase agreements \u00a3500m (FY23: \u00a3nil)
Fair value estimation
Total held at
Fair value hierarchy
Level 1
Level 2
Level 3
fair value
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Non-current and current investments
Fair value through other comprehensive income
\u2014
\u2014
23
23
Fair value through profit or loss
6
\u2014
\u2014
6
Total
6
\u2014
23
29
At 31 March 2023
Non-current and current investments
Fair value through other comprehensive income
\u2014
\u2014
23
23
Fair value through profit or loss
6
\u2014
\u2014
6
Total
6
\u2014
23
29
The three levels of valuation methodology used are:
Level 1 \u2013 uses quoted prices in active markets for identical assets or liabilities.
Level 2 \u2013 uses inputs for the asset or liability other than quoted prices that are observable either directly or indirectly.
Level 3 \u2013 uses inputs for the asset or liability that are not based on observable market data, such as internal models or other valuation
methods.
Level 3 balances consist of investments classified as fair value through other comprehensive income of \u00a323m (FY23: \u00a323m) which
represent investments in a number of private companies. If specific market data is not available, these investments are held at cost,
adjusted as necessary for impairments, which approximates to fair value.
24. Joint ventures and associates
2024
2023
At 31 March
\u00a3m
\u00a3m
Interest in joint ventures
302
354
Interest in associates
5
5
Total
307
359
Share of post tax loss of associates and joint ventures included in the income statement of \u00a321m (FY23: \u00a359m loss) includes \u00a341m loss
(FY23: \u00a360m) relating to our sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) and \u00a320m profit (FY23: \u00a31m) relating to
our other joint ventures and associates including Rugby Radio Station. The Sports JV is the only material equity-accounted investment
held by the group, see below for further details.
Sports JV
In FY23 we formed the Sports JV (known externally as TNT Sports) with WBD, combining BT Sport and WBD\u2019s Eurosport UK business.
Further details on the transaction are provided in note 22.
Key developments in the Sports JV during the year:
\u2013 BT Sport\u2019s linear channels and live content were rebranded to TNT Sports prior to the start of the 2023/24 football season with
streaming customers migrated to WBD\u2019s discovery+ platform in October 2023. Eurosport UK rebranding will follow later in the year.
\u2013 Underlying trading, before adjustments made to align with the group\u2019s accounting policies (see below), was profitable with stable
subscriber volumes.
\u2013 Premier League rights were extended with a four-year deal to air 52 exclusively live matches per season until 2029, and a four-year deal
was agreed with the Football Association to show the FA Cup from 2025.
The group holds both ordinary equity shares and preference shares in the Sports JV entity.
Material accounting policies that apply to the Sports JV Assessment of whether BT has joint control over the Sports JV The Sports JV is classified as a joint venture based on an assessment under IFRS 10 and 11 of the ownership, voting power and joint control established through the joint venture agreement between BT and WBD. Factors relevant to our assessment: \u2013 Equal voting rights over the activities that most significantly impact the returns of the Sports JV, namely decisions around new or existing sports rights and distribution arrangements. \u2013 Unequal cash distribution during the first four years of the JV due to the earn-out mechanism and larger business contributed into the JV by BT. \u2013 Revolving credit facility (RCF) provided by BT to fund short-term liquidity required by the Sports JV for working capital and commitments to sports rights holders. \u2013 WBD\u2019s call option to acquire BT\u2019s 50% interest in the Sports JV is not exercisable before key decisions over material activities of the Sports JV are made such that joint control still applies. The assessment whether joint control remains in place is reviewed at each reporting period. Accounting policies adopted by the Sports JV The Sports JV has a financial year-end of 31 July and has not yet prepared its first set of audited financial statements. In order to recognise our share of the Sports JV\u2019s results for our equity-accounted investment, we have prepared the Sports JV\u2019s financial information disclosed below based on management accounts for the period ending 31 March 2024 after making certain adjustments to comply with IFRS. Significant judgements made in preparing the Sports JV\u2019s financial information: \u2013 IFRS 3 acquisition accounting should be applied by the Sports JV over the business combination achieved through the transfer of the BT Sport and Eurosport UK businesses from BT and WBD respectively, recognising acquired intangibles on the current and future value of programme rights, and goodwill. \u2013 Revenues from the minimum guarantee in the Sports JV\u2019s distribution agreement with BT should be adjusted to reflect a trading agreement on market terms with a separate financing arrangement for the off-market portion accounted for under IFRS 9 \u2013 this mirrors the accounting treatment applied by BT (see note 22). \u2013 A and C preference shares issued by the Sports JV to BT should be classified as a financial liability at fair value through profit or loss under IFRS 9, as cash flows of the liability can be modified by both financial and non-financial factors that are not closely related to the instrument itself. \u2013 Hedge accounting should be applied on the Sports JV\u2019s forward contracts with BT (see note 30) with fair value movements on the derivatives recognised in other comprehensive income and held in the cash flow hedge reserve until recycle on settlement of the forward contracts. \u2013 Programme rights should be recognised on the balance sheet from the point at which the licence period begins and are consumed by the Sports JV on a straight-line basis over the programming period which is generally 12 months. This is consistent with accounting policy applied in our previous BT Sport operations that have been transferred to the Sports JV. Accounting policies in other areas are consistent with those applied by the group. Key accounting estimates made in accounting for the Sports JV Valuation of investment in A preference shares We expect the group\u2019s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out entitlement. BT\u2019s return on the shares is driven by the underlying cash profit generation of the Sports JV and therefore have been classified as a fair value through profit or loss (FVTPL) financial asset under IFRS 9 and is remeasured to fair value at each reporting date. The fair value recorded is supported by a jointly-agreed business plan and internal valuation model with the following key assumptions: \u2013 Approximately 45% of revenues and 90% of costs during the remaining earn out period are contractually committed. \u2013 Material contracts are renewed at an economic value no less than current terms. \u2013 Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period. Ordinary equity shares Our retained ordinary equity interest in the Sports JV is held under the equity method of accounting, consistent with our accounting policy on associates and joint ventures.
2024
2023
\u00a3m
\u00a3m
Carrying amount at 1 April
352
414
Share of total comprehensive loss for the year
(52)
(62)
Dividends received during the year
\u2014
\u2014
Carrying amount at 31 March
300
352
As required by IAS 36, we have assessed the investment for impairment. There is no impairment at 31 March 2024 as the fair value less
costs to sell is higher than the carrying amount of the investment. See below for sensitivities we have applied in determining the fair value
less costs to sell.
The following is summarised and unaudited financial information for the Sports JV prepared in accordance with IFRS and including
adjustments required to align with the group\u2019s accounting policies and fair value adjustments.
2024
2023
Summarised statement of total comprehensive income for year ended 31 March
\u00a3m
\u00a3m
Revenue
918
557
Loss for the year
(82)
(121)
Other comprehensive loss
(22)
(2)
Total comprehensive loss
(104)
(123)
a
2024
2023
Summarised balance sheet at 31 March
\u00a3m
\u00a3m
Current assets
c
863
1,098
Non-current assets
d
1,085
1,286
Current liabilities
(413)
(702)
Non-current liabilities
(575)
(618)
Net assets
960
1,064
Attributable to fair value of BT\u2019s A preference shares (see below)
(387)
(429)
BT\u2019s share of residual net assets (50%)
287
318
Other fair value adjustments
13
34
Carrying amount of interest in Sports JV
300
352
b
e
f
a Includes amortisation of \u00a327m (FY23: \u00a356m) on acquired intangibles; net finance income of \u00a35m (FY23: \u00a36m); and tax income of \u00a357m (FY23: \u00a317m) driven by current tax charge of
\u00a310m (FY23: \u00a34m) offset by deferred tax credit of \u00a367m (FY23: \u00a321m).
b Restated to reflect true-up to opening balance sheet from finalising fair value adjustments.
c Includes cash and cash and cash equivalents of \u00a311m (FY23: \u00a311m).
d Includes goodwill and acquired intangibles of \u00a3668m (FY23: \u00a3695m restated).
e Includes current financial liabilities (excluding trade and other payables and provisions) of \u00a3(244)m (FY23: \u00a3(281)m) of which \u00a3(163)m (FY23: \u00a3(268)m) relates to the outstanding
liability on the RCF provided by BT (see note 30).
f Includes non-current financial liabilities (excluding trade and other payables and provisions) of \u00a3(305)m (FY23: \u00a3(416)m).
The Sports JV had a loss after tax for the year of \u00a382m, after adjustments made to align with the group\u2019s accounting policies, and reflects
amortisation of acquired intangibles from the BT Sport and Eurosport UK business transfers and adjustments for the off-market minimum
guarantee with BT (see note 22). Underlying trading before these adjustments was profitable. In addition, the Sports JV had other
comprehensive losses of \u00a322m relating to fair value movements on its foreign exchange hedging arrangement with the group (see note
30) that have been designated as cash flow hedges.
Our share of the Sports JV\u2019s results in FY23 included amortisation from provisional fair value adjustments, which were subject to true-up
within 12 months from the Sports JV formation. We have subsequently finalised these fair value adjustments and recorded a \u00a325m credit
in the current year as a true-up to the amount recorded in FY23, of which our 50% share is \u00a313m. The difference is not material and
therefore we have not retrospectively adjusted our share of total comprehensive loss in FY23.
Preference shares
In addition to BT\u2019s ordinary shareholding, BT held the following investments in preference shares in the Sports JV that have not been
included within the equity-accounted interest above.
2024
2023
At 31 March
\u00a3m
\u00a3m
Investment in A preference shares
387
429
Investment in C preference shares
146
126
Total
533
555
A net \u00a322m movement has been recorded on the group\u2019s preference share investments relating to fair value changes only, see below for
further details.
\u2013 A preference shares \u2013 a \u00a342m fair value loss has been recognised through specific items (see note 9), largely driven by a reduction in
forecast cash flows following the Sports JV\u2019s investment in new sports content, leading to lower cash available for distribution under
BT\u2019s earn-out entitlement.
\u2013 C preference shares \u2013 these shares are expected to be sold to WBD at the end of BT\u2019s earn-out entitlement in consideration for any
sports rights funded by BT at that point. BT\u2019s return on the shares is driven by changes in the Sports JV\u2019s sports rights portfolio which in
turn is dependent on changes in the wider sports rights market and the Sports JV\u2019s financial performance and are therefore held as a
financial asset at FVTPL under IFRS 9. A \u00a320m fair value gain has been recognised through specific items (see note 9) driven by an
expected growth in the Sports JV content portfolio, which will increase the payment to BT for pre-funded sports rights up to the end of
BT\u2019s earn-out entitlement.
The preference shares are held at Level 3 on the fair value hierarchy, reflecting a valuation methodology that does not use inputs based on
observable market data \u2013 see note 23 for further details on the fair value hierarchy. See below for sensitivities we have applied in
determining the fair value.
Sensitivities The group\u2019s ordinary equity and preference share investments in the Sports JV, carry both upside and downside risk from changes in micro and macroeconomic factors affecting the sports content subscription market and risk appetite of investors in that market. Further, a key decision point in the next 12 months, relating to the renewal of a material customer contract, could significantly impact the value of our investments. We have applied the following sensitivities to these risk factors: \u2013 EBITDA decline from loss of revenue or improvement from outperformance against revised forecasts. \u2013 Increase or decrease in the valuation multiple achieved. \u2013 Increase or decrease in the discount rate applied.
Headroom on impairment test
Fair value of A and C preference over equity-accounted
Sensitivity shares in Sports JV investment
20% increase or decrease in EBITDA
+/- \u00a3112m
+/- \u00a3117m
10% increase or decrease in discount rate
+/- \u00a34m
+/- \u00a314m
10% change in valuation multiple
\u2014
+/- \u00a357m
None of these sensitivities generated an impairment on the group\u2019s equity-accounted investment in the Sports JV. In valuing our investments, we have assumed an exit after the earn-out period ends on the fourth anniversary of forming the Sports JV. However, an earlier exit would not have a material impact on the amounts recorded.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-612": { "value": "Material accounting policies that apply to investments Investments classified as amortised cost These investments are measured at amortised cost. The carrying amount of these balances approximates to fair value. Any gain or loss on derecognition is recognised in the income statement. Investments classified as fair value through profit and loss These investments are initially recognised at fair value plus direct transaction costs. They are re-measured at subsequent reporting dates to fair value and changes are recognised directly in the income statement. Equity instruments classified as fair value through other comprehensive income We have made an irrevocable election to present changes in the fair value of equity investments that are not held for trading in other comprehensive income. All gains or losses, aside from dividends, are recognised in other comprehensive income and are not reclassified to the income statement when the investments are disposed of, instead any balance remaining in other comprehensive income is transferred to retained earnings. Dividends are recognised in the income statement when our right to receive payment is established. Equity investments are recorded in non-current assets unless they are expected to be sold within one year. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-546": { "value": "24. Joint ventures and associates
2024
2023
At 31 March
\u00a3m
\u00a3m
Interest in joint ventures
302
354
Interest in associates
5
5
Total
307
359
Share of post tax loss of associates and joint ventures included in the income statement of \u00a321m (FY23: \u00a359m loss) includes \u00a341m loss (FY23: \u00a360m) relating to our sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) and \u00a320m profit (FY23: \u00a31m) relating to our other joint ventures and associates including Rugby Radio Station. The Sports JV is the only material equity-accounted investment held by the group, see below for further details. Sports JV In FY23 we formed the Sports JV (known externally as TNT Sports) with WBD, combining BT Sport and WBD\u2019s Eurosport UK business. Further details on the transaction are provided in note 22. Key developments in the Sports JV during the year: \u2013 BT Sport\u2019s linear channels and live content were rebranded to TNT Sports prior to the start of the 2023/24 football season with streaming customers migrated to WBD\u2019s discovery+ platform in October 2023. Eurosport UK rebranding will follow later in the year. \u2013 Underlying trading, before adjustments made to align with the group\u2019s accounting policies (see below), was profitable with stable subscriber volumes. \u2013 Premier League rights were extended with a four-year deal to air 52 exclusively live matches per season until 2029, and a four-year deal was agreed with the Football Association to show the FA Cup from 2025. The group holds both ordinary equity shares and preference shares in the Sports JV entity.
Material accounting policies that apply to the Sports JV
Assessment of whether BT has joint control over the Sports JV
The Sports JV is classified as a joint venture based on an assessment under IFRS 10 and 11 of the ownership, voting power and joint
control established through the joint venture agreement between BT and WBD.
Factors relevant to our assessment:
\u2013 Equal voting rights over the activities that most significantly impact the returns of the Sports JV, namely decisions around new or
existing sports rights and distribution arrangements.
\u2013 Unequal cash distribution during the first four years of the JV due to the earn-out mechanism and larger business contributed into
the JV by BT.
\u2013 Revolving credit facility (RCF) provided by BT to fund short-term liquidity required by the Sports JV for working capital and
commitments to sports rights holders.
\u2013 WBD\u2019s call option to acquire BT\u2019s 50% interest in the Sports JV is not exercisable before key decisions over material activities of
the Sports JV are made such that joint control still applies.
The assessment whether joint control remains in place is reviewed at each reporting period.
Accounting policies adopted by the Sports JV
The Sports JV has a financial year-end of 31 July and has not yet prepared its first set of audited financial statements. In order to
recognise our share of the Sports JV\u2019s results for our equity-accounted investment, we have prepared the Sports JV\u2019s financial
information disclosed below based on management accounts for the period ending 31 March 2024 after making certain adjustments
to comply with IFRS.
Significant judgements made in preparing the Sports JV\u2019s financial information:
\u2013 IFRS 3 acquisition accounting should be applied by the Sports JV over the business combination achieved through the transfer of
the BT Sport and Eurosport UK businesses from BT and WBD respectively, recognising acquired intangibles on the current and
future value of programme rights, and goodwill.
\u2013 Revenues from the minimum guarantee in the Sports JV\u2019s distribution agreement with BT should be adjusted to reflect a trading
agreement on market terms with a separate financing arrangement for the off-market portion accounted for under IFRS 9 \u2013 this
mirrors the accounting treatment applied by BT (see note 22).
\u2013 A and C preference shares issued by the Sports JV to BT should be classified as a financial liability at fair value through profit or loss
under IFRS 9, as cash flows of the liability can be modified by both financial and non-financial factors that are not closely related to
the instrument itself.
\u2013 Hedge accounting should be applied on the Sports JV\u2019s forward contracts with BT (see note 30) with fair value movements on the
derivatives recognised in other comprehensive income and held in the cash flow hedge reserve until recycle on settlement of the
forward contracts.
\u2013 Programme rights should be recognised on the balance sheet from the point at which the licence period begins and are consumed
by the Sports JV on a straight-line basis over the programming period which is generally 12 months. This is consistent with
accounting policy applied in our previous BT Sport operations that have been transferred to the Sports JV.
Accounting policies in other areas are consistent with those applied by the group.
Key accounting estimates made in accounting for the Sports JV
Valuation of investment in A preference shares
We expect the group\u2019s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out
entitlement. BT\u2019s return on the shares is driven by the underlying cash profit generation of the Sports JV and therefore have been
classified as a fair value through profit or loss (FVTPL) financial asset under IFRS 9 and is remeasured to fair value at each reporting
date.
The fair value recorded is supported by a jointly-agreed business plan and internal valuation model with the following key
assumptions:
\u2013 Approximately 45% of revenues and 90% of costs during the remaining earn out period are contractually committed.
\u2013 Material contracts are renewed at an economic value no less than current terms.
\u2013 Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period.
Ordinary equity shares
Our retained ordinary equity interest in the Sports JV is held under the equity method of accounting, consistent with our accounting policy
on associates and joint ventures.
2024
2023
\u00a3m
\u00a3m
Carrying amount at 1 April
352
414
Share of total comprehensive loss for the year
(52)
(62)
Dividends received during the year
\u2014
\u2014
Carrying amount at 31 March
300
352
As required by IAS 36, we have assessed the investment for impairment. There is no impairment at 31 March 2024 as the fair value less costs to sell is higher than the carrying amount of the investment. See below for sensitivities we have applied in determining the fair value less costs to sell. The following is summarised and unaudited financial information for the Sports JV prepared in accordance with IFRS and including adjustments required to align with the group\u2019s accounting policies and fair value adjustments.
2024
2023
Summarised statement of total comprehensive income for year ended 31 March
\u00a3m
\u00a3m
Revenue
918
557
Loss for the year
(82)
(121)
Other comprehensive loss
(22)
(2)
Total comprehensive loss
(104)
(123)
a
2024
2023
Summarised balance sheet at 31 March
\u00a3m
\u00a3m
Current assets
c
863
1,098
Non-current assets
d
1,085
1,286
Current liabilities
(413)
(702)
Non-current liabilities
(575)
(618)
Net assets
960
1,064
Attributable to fair value of BT\u2019s A preference shares (see below)
(387)
(429)
BT\u2019s share of residual net assets (50%)
287
318
Other fair value adjustments
13
34
Carrying amount of interest in Sports JV
300
352
b e f a Includes amortisation of \u00a327m (FY23: \u00a356m) on acquired intangibles; net finance income of \u00a35m (FY23: \u00a36m); and tax income of \u00a357m (FY23: \u00a317m) driven by current tax charge of \u00a310m (FY23: \u00a34m) offset by deferred tax credit of \u00a367m (FY23: \u00a321m). b Restated to reflect true-up to opening balance sheet from finalising fair value adjustments. c Includes cash and cash and cash equivalents of \u00a311m (FY23: \u00a311m). d Includes goodwill and acquired intangibles of \u00a3668m (FY23: \u00a3695m restated). e Includes current financial liabilities (excluding trade and other payables and provisions) of \u00a3(244)m (FY23: \u00a3(281)m) of which \u00a3(163)m (FY23: \u00a3(268)m) relates to the outstanding liability on the RCF provided by BT (see note 30). f Includes non-current financial liabilities (excluding trade and other payables and provisions) of \u00a3(305)m (FY23: \u00a3(416)m). The Sports JV had a loss after tax for the year of \u00a382m, after adjustments made to align with the group\u2019s accounting policies, and reflects amortisation of acquired intangibles from the BT Sport and Eurosport UK business transfers and adjustments for the off-market minimum guarantee with BT (see note 22). Underlying trading before these adjustments was profitable. In addition, the Sports JV had other comprehensive losses of \u00a322m relating to fair value movements on its foreign exchange hedging arrangement with the group (see note 30) that have been designated as cash flow hedges. Our share of the Sports JV\u2019s results in FY23 included amortisation from provisional fair value adjustments, which were subject to true-up within 12 months from the Sports JV formation. We have subsequently finalised these fair value adjustments and recorded a \u00a325m credit in the current year as a true-up to the amount recorded in FY23, of which our 50% share is \u00a313m. The difference is not material and therefore we have not retrospectively adjusted our share of total comprehensive loss in FY23. Preference shares In addition to BT\u2019s ordinary shareholding, BT held the following investments in preference shares in the Sports JV that have not been included within the equity-accounted interest above.
2024
2023
At 31 March
\u00a3m
\u00a3m
Investment in A preference shares
387
429
Investment in C preference shares
146
126
Total
533
555
A net \u00a322m movement has been recorded on the group\u2019s preference share investments relating to fair value changes only, see below for further details. \u2013 A preference shares \u2013 a \u00a342m fair value loss has been recognised through specific items (see note 9), largely driven by a reduction in forecast cash flows following the Sports JV\u2019s investment in new sports content, leading to lower cash available for distribution under BT\u2019s earn-out entitlement. \u2013 C preference shares \u2013 these shares are expected to be sold to WBD at the end of BT\u2019s earn-out entitlement in consideration for any sports rights funded by BT at that point. BT\u2019s return on the shares is driven by changes in the Sports JV\u2019s sports rights portfolio which in turn is dependent on changes in the wider sports rights market and the Sports JV\u2019s financial performance and are therefore held as a financial asset at FVTPL under IFRS 9. A \u00a320m fair value gain has been recognised through specific items (see note 9) driven by an expected growth in the Sports JV content portfolio, which will increase the payment to BT for pre-funded sports rights up to the end of BT\u2019s earn-out entitlement. The preference shares are held at Level 3 on the fair value hierarchy, reflecting a valuation methodology that does not use inputs based on observable market data \u2013 see note 23 for further details on the fair value hierarchy. See below for sensitivities we have applied in determining the fair value.
Sensitivities
The group\u2019s ordinary equity and preference share investments in the Sports JV, carry both upside and downside risk from changes in micro
and macroeconomic factors affecting the sports content subscription market and risk appetite of investors in that market. Further, a key
decision point in the next 12 months, relating to the renewal of a material customer contract, could significantly impact the value of our
investments.
We have applied the following sensitivities to these risk factors:
\u2013 EBITDA decline from loss of revenue or improvement from outperformance against revised forecasts.
\u2013 Increase or decrease in the valuation multiple achieved.
\u2013 Increase or decrease in the discount rate applied.
Headroom on impairment test
Fair value of A and C preference over equity-accounted
Sensitivity shares in Sports JV investment
20% increase or decrease in EBITDA
+/- \u00a3112m
+/- \u00a3117m
10% increase or decrease in discount rate
+/- \u00a34m
+/- \u00a314m
10% change in valuation multiple
\u2014
+/- \u00a357m
None of these sensitivities generated an impairment on the group\u2019s equity-accounted investment in the Sports JV.
In valuing our investments, we have assumed an exit after the earn-out period ends on the fourth anniversary of forming the Sports JV.
However, an earlier exit would not have a material impact on the amounts recorded.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-578": { "value": "24. Joint ventures and associates
2024
2023
At 31 March
\u00a3m
\u00a3m
Interest in joint ventures
302
354
Interest in associates
5
5
Total
307
359
Share of post tax loss of associates and joint ventures included in the income statement of \u00a321m (FY23: \u00a359m loss) includes \u00a341m loss (FY23: \u00a360m) relating to our sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) and \u00a320m profit (FY23: \u00a31m) relating to our other joint ventures and associates including Rugby Radio Station. The Sports JV is the only material equity-accounted investment held by the group, see below for further details. Sports JV In FY23 we formed the Sports JV (known externally as TNT Sports) with WBD, combining BT Sport and WBD\u2019s Eurosport UK business. Further details on the transaction are provided in note 22. Key developments in the Sports JV during the year: \u2013 BT Sport\u2019s linear channels and live content were rebranded to TNT Sports prior to the start of the 2023/24 football season with streaming customers migrated to WBD\u2019s discovery+ platform in October 2023. Eurosport UK rebranding will follow later in the year. \u2013 Underlying trading, before adjustments made to align with the group\u2019s accounting policies (see below), was profitable with stable subscriber volumes. \u2013 Premier League rights were extended with a four-year deal to air 52 exclusively live matches per season until 2029, and a four-year deal was agreed with the Football Association to show the FA Cup from 2025. The group holds both ordinary equity shares and preference shares in the Sports JV entity. Material accounting policies that apply to the Sports JV Assessment of whether BT has joint control over the Sports JV The Sports JV is classified as a joint venture based on an assessment under IFRS 10 and 11 of the ownership, voting power and joint control established through the joint venture agreement between BT and WBD. Factors relevant to our assessment: \u2013 Equal voting rights over the activities that most significantly impact the returns of the Sports JV, namely decisions around new or existing sports rights and distribution arrangements. \u2013 Unequal cash distribution during the first four years of the JV due to the earn-out mechanism and larger business contributed into the JV by BT. \u2013 Revolving credit facility (RCF) provided by BT to fund short-term liquidity required by the Sports JV for working capital and commitments to sports rights holders. \u2013 WBD\u2019s call option to acquire BT\u2019s 50% interest in the Sports JV is not exercisable before key decisions over material activities of the Sports JV are made such that joint control still applies. The assessment whether joint control remains in place is reviewed at each reporting period. Accounting policies adopted by the Sports JV The Sports JV has a financial year-end of 31 July and has not yet prepared its first set of audited financial statements. In order to recognise our share of the Sports JV\u2019s results for our equity-accounted investment, we have prepared the Sports JV\u2019s financial information disclosed below based on management accounts for the period ending 31 March 2024 after making certain adjustments to comply with IFRS. Significant judgements made in preparing the Sports JV\u2019s financial information: \u2013 IFRS 3 acquisition accounting should be applied by the Sports JV over the business combination achieved through the transfer of the BT Sport and Eurosport UK businesses from BT and WBD respectively, recognising acquired intangibles on the current and future value of programme rights, and goodwill. \u2013 Revenues from the minimum guarantee in the Sports JV\u2019s distribution agreement with BT should be adjusted to reflect a trading agreement on market terms with a separate financing arrangement for the off-market portion accounted for under IFRS 9 \u2013 this mirrors the accounting treatment applied by BT (see note 22). \u2013 A and C preference shares issued by the Sports JV to BT should be classified as a financial liability at fair value through profit or loss under IFRS 9, as cash flows of the liability can be modified by both financial and non-financial factors that are not closely related to the instrument itself. \u2013 Hedge accounting should be applied on the Sports JV\u2019s forward contracts with BT (see note 30) with fair value movements on the derivatives recognised in other comprehensive income and held in the cash flow hedge reserve until recycle on settlement of the forward contracts. \u2013 Programme rights should be recognised on the balance sheet from the point at which the licence period begins and are consumed by the Sports JV on a straight-line basis over the programming period which is generally 12 months. This is consistent with accounting policy applied in our previous BT Sport operations that have been transferred to the Sports JV. Accounting policies in other areas are consistent with those applied by the group. Key accounting estimates made in accounting for the Sports JV Valuation of investment in A preference shares We expect the group\u2019s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out entitlement. BT\u2019s return on the shares is driven by the underlying cash profit generation of the Sports JV and therefore have been classified as a fair value through profit or loss (FVTPL) financial asset under IFRS 9 and is remeasured to fair value at each reporting date. The fair value recorded is supported by a jointly-agreed business plan and internal valuation model with the following key assumptions: \u2013 Approximately 45% of revenues and 90% of costs during the remaining earn out period are contractually committed. \u2013 Material contracts are renewed at an economic value no less than current terms. \u2013 Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period. Ordinary equity shares Our retained ordinary equity interest in the Sports JV is held under the equity method of accounting, consistent with our accounting policy on associates and joint ventures.
2024
2023
\u00a3m
\u00a3m
Carrying amount at 1 April
352
414
Share of total comprehensive loss for the year
(52)
(62)
Dividends received during the year
\u2014
\u2014
Carrying amount at 31 March
300
352
As required by IAS 36, we have assessed the investment for impairment. There is no impairment at 31 March 2024 as the fair value less costs to sell is higher than the carrying amount of the investment. See below for sensitivities we have applied in determining the fair value less costs to sell. The following is summarised and unaudited financial information for the Sports JV prepared in accordance with IFRS and including adjustments required to align with the group\u2019s accounting policies and fair value adjustments.
2024
2023
Summarised statement of total comprehensive income for year ended 31 March
\u00a3m
\u00a3m
Revenue
918
557
Loss for the year
(82)
(121)
Other comprehensive loss
(22)
(2)
Total comprehensive loss
(104)
(123)
a
2024
2023
Summarised balance sheet at 31 March
\u00a3m
\u00a3m
Current assets
c
863
1,098
Non-current assets
d
1,085
1,286
Current liabilities
(413)
(702)
Non-current liabilities
(575)
(618)
Net assets
960
1,064
Attributable to fair value of BT\u2019s A preference shares (see below)
(387)
(429)
BT\u2019s share of residual net assets (50%)
287
318
Other fair value adjustments
13
34
Carrying amount of interest in Sports JV
300
352
b e f a Includes amortisation of \u00a327m (FY23: \u00a356m) on acquired intangibles; net finance income of \u00a35m (FY23: \u00a36m); and tax income of \u00a357m (FY23: \u00a317m) driven by current tax charge of \u00a310m (FY23: \u00a34m) offset by deferred tax credit of \u00a367m (FY23: \u00a321m). b Restated to reflect true-up to opening balance sheet from finalising fair value adjustments. c Includes cash and cash and cash equivalents of \u00a311m (FY23: \u00a311m). d Includes goodwill and acquired intangibles of \u00a3668m (FY23: \u00a3695m restated). e Includes current financial liabilities (excluding trade and other payables and provisions) of \u00a3(244)m (FY23: \u00a3(281)m) of which \u00a3(163)m (FY23: \u00a3(268)m) relates to the outstanding liability on the RCF provided by BT (see note 30). f Includes non-current financial liabilities (excluding trade and other payables and provisions) of \u00a3(305)m (FY23: \u00a3(416)m). The Sports JV had a loss after tax for the year of \u00a382m, after adjustments made to align with the group\u2019s accounting policies, and reflects amortisation of acquired intangibles from the BT Sport and Eurosport UK business transfers and adjustments for the off-market minimum guarantee with BT (see note 22). Underlying trading before these adjustments was profitable. In addition, the Sports JV had other comprehensive losses of \u00a322m relating to fair value movements on its foreign exchange hedging arrangement with the group (see note 30) that have been designated as cash flow hedges. Our share of the Sports JV\u2019s results in FY23 included amortisation from provisional fair value adjustments, which were subject to true-up within 12 months from the Sports JV formation. We have subsequently finalised these fair value adjustments and recorded a \u00a325m credit in the current year as a true-up to the amount recorded in FY23, of which our 50% share is \u00a313m. The difference is not material and therefore we have not retrospectively adjusted our share of total comprehensive loss in FY23. Preference shares In addition to BT\u2019s ordinary shareholding, BT held the following investments in preference shares in the Sports JV that have not been included within the equity-accounted interest above.
2024
2023
At 31 March
\u00a3m
\u00a3m
Investment in A preference shares
387
429
Investment in C preference shares
146
126
Total
533
555
A net \u00a322m movement has been recorded on the group\u2019s preference share investments relating to fair value changes only, see below for further details. \u2013 A preference shares \u2013 a \u00a342m fair value loss has been recognised through specific items (see note 9), largely driven by a reduction in forecast cash flows following the Sports JV\u2019s investment in new sports content, leading to lower cash available for distribution under BT\u2019s earn-out entitlement. \u2013 C preference shares \u2013 these shares are expected to be sold to WBD at the end of BT\u2019s earn-out entitlement in consideration for any sports rights funded by BT at that point. BT\u2019s return on the shares is driven by changes in the Sports JV\u2019s sports rights portfolio which in turn is dependent on changes in the wider sports rights market and the Sports JV\u2019s financial performance and are therefore held as a financial asset at FVTPL under IFRS 9. A \u00a320m fair value gain has been recognised through specific items (see note 9) driven by an expected growth in the Sports JV content portfolio, which will increase the payment to BT for pre-funded sports rights up to the end of BT\u2019s earn-out entitlement. The preference shares are held at Level 3 on the fair value hierarchy, reflecting a valuation methodology that does not use inputs based on observable market data \u2013 see note 23 for further details on the fair value hierarchy. See below for sensitivities we have applied in determining the fair value. Sensitivities The group\u2019s ordinary equity and preference share investments in the Sports JV, carry both upside and downside risk from changes in micro and macroeconomic factors affecting the sports content subscription market and risk appetite of investors in that market. Further, a key decision point in the next 12 months, relating to the renewal of a material customer contract, could significantly impact the value of our investments. We have applied the following sensitivities to these risk factors: \u2013 EBITDA decline from loss of revenue or improvement from outperformance against revised forecasts. \u2013 Increase or decrease in the valuation multiple achieved. \u2013 Increase or decrease in the discount rate applied.
Headroom on impairment test
Fair value of A and C preference over equity-accounted
Sensitivity shares in Sports JV investment
20% increase or decrease in EBITDA
+/- \u00a3112m
+/- \u00a3117m
10% increase or decrease in discount rate
+/- \u00a34m
+/- \u00a314m
10% change in valuation multiple
\u2014
+/- \u00a357m
None of these sensitivities generated an impairment on the group\u2019s equity-accounted investment in the Sports JV. In valuing our investments, we have assumed an exit after the earn-out period ends on the fourth anniversary of forming the Sports JV. However, an earlier exit would not have a material impact on the amounts recorded.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-514": { "value": "24. Joint ventures and associates
2024
2023
At 31 March
\u00a3m
\u00a3m
Interest in joint ventures
302
354
Interest in associates
5
5
Total
307
359
Share of post tax loss of associates and joint ventures included in the income statement of \u00a321m (FY23: \u00a359m loss) includes \u00a341m loss (FY23: \u00a360m) relating to our sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) and \u00a320m profit (FY23: \u00a31m) relating to our other joint ventures and associates including Rugby Radio Station. The Sports JV is the only material equity-accounted investment held by the group, see below for further details. Sports JV In FY23 we formed the Sports JV (known externally as TNT Sports) with WBD, combining BT Sport and WBD\u2019s Eurosport UK business. Further details on the transaction are provided in note 22. Key developments in the Sports JV during the year: \u2013 BT Sport\u2019s linear channels and live content were rebranded to TNT Sports prior to the start of the 2023/24 football season with streaming customers migrated to WBD\u2019s discovery+ platform in October 2023. Eurosport UK rebranding will follow later in the year. \u2013 Underlying trading, before adjustments made to align with the group\u2019s accounting policies (see below), was profitable with stable subscriber volumes. \u2013 Premier League rights were extended with a four-year deal to air 52 exclusively live matches per season until 2029, and a four-year deal was agreed with the Football Association to show the FA Cup from 2025. The group holds both ordinary equity shares and preference shares in the Sports JV entity. Material accounting policies that apply to the Sports JV Assessment of whether BT has joint control over the Sports JV The Sports JV is classified as a joint venture based on an assessment under IFRS 10 and 11 of the ownership, voting power and joint control established through the joint venture agreement between BT and WBD. Factors relevant to our assessment: \u2013 Equal voting rights over the activities that most significantly impact the returns of the Sports JV, namely decisions around new or existing sports rights and distribution arrangements. \u2013 Unequal cash distribution during the first four years of the JV due to the earn-out mechanism and larger business contributed into the JV by BT. \u2013 Revolving credit facility (RCF) provided by BT to fund short-term liquidity required by the Sports JV for working capital and commitments to sports rights holders. \u2013 WBD\u2019s call option to acquire BT\u2019s 50% interest in the Sports JV is not exercisable before key decisions over material activities of the Sports JV are made such that joint control still applies. The assessment whether joint control remains in place is reviewed at each reporting period. Accounting policies adopted by the Sports JV The Sports JV has a financial year-end of 31 July and has not yet prepared its first set of audited financial statements. In order to recognise our share of the Sports JV\u2019s results for our equity-accounted investment, we have prepared the Sports JV\u2019s financial information disclosed below based on management accounts for the period ending 31 March 2024 after making certain adjustments to comply with IFRS. Significant judgements made in preparing the Sports JV\u2019s financial information: \u2013 IFRS 3 acquisition accounting should be applied by the Sports JV over the business combination achieved through the transfer of the BT Sport and Eurosport UK businesses from BT and WBD respectively, recognising acquired intangibles on the current and future value of programme rights, and goodwill. \u2013 Revenues from the minimum guarantee in the Sports JV\u2019s distribution agreement with BT should be adjusted to reflect a trading agreement on market terms with a separate financing arrangement for the off-market portion accounted for under IFRS 9 \u2013 this mirrors the accounting treatment applied by BT (see note 22). \u2013 A and C preference shares issued by the Sports JV to BT should be classified as a financial liability at fair value through profit or loss under IFRS 9, as cash flows of the liability can be modified by both financial and non-financial factors that are not closely related to the instrument itself. \u2013 Hedge accounting should be applied on the Sports JV\u2019s forward contracts with BT (see note 30) with fair value movements on the derivatives recognised in other comprehensive income and held in the cash flow hedge reserve until recycle on settlement of the forward contracts. \u2013 Programme rights should be recognised on the balance sheet from the point at which the licence period begins and are consumed by the Sports JV on a straight-line basis over the programming period which is generally 12 months. This is consistent with accounting policy applied in our previous BT Sport operations that have been transferred to the Sports JV. Accounting policies in other areas are consistent with those applied by the group. Key accounting estimates made in accounting for the Sports JV Valuation of investment in A preference shares We expect the group\u2019s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out entitlement. BT\u2019s return on the shares is driven by the underlying cash profit generation of the Sports JV and therefore have been classified as a fair value through profit or loss (FVTPL) financial asset under IFRS 9 and is remeasured to fair value at each reporting date. The fair value recorded is supported by a jointly-agreed business plan and internal valuation model with the following key assumptions: \u2013 Approximately 45% of revenues and 90% of costs during the remaining earn out period are contractually committed. \u2013 Material contracts are renewed at an economic value no less than current terms. \u2013 Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period. Ordinary equity shares Our retained ordinary equity interest in the Sports JV is held under the equity method of accounting, consistent with our accounting policy on associates and joint ventures.
2024
2023
\u00a3m
\u00a3m
Carrying amount at 1 April
352
414
Share of total comprehensive loss for the year
(52)
(62)
Dividends received during the year
\u2014
\u2014
Carrying amount at 31 March
300
352
As required by IAS 36, we have assessed the investment for impairment. There is no impairment at 31 March 2024 as the fair value less costs to sell is higher than the carrying amount of the investment. See below for sensitivities we have applied in determining the fair value less costs to sell. The following is summarised and unaudited financial information for the Sports JV prepared in accordance with IFRS and including adjustments required to align with the group\u2019s accounting policies and fair value adjustments.
2024
2023
Summarised statement of total comprehensive income for year ended 31 March
\u00a3m
\u00a3m
Revenue
918
557
Loss for the year
(82)
(121)
Other comprehensive loss
(22)
(2)
Total comprehensive loss
(104)
(123)
a
2024
2023
Summarised balance sheet at 31 March
\u00a3m
\u00a3m
Current assets
c
863
1,098
Non-current assets
d
1,085
1,286
Current liabilities
(413)
(702)
Non-current liabilities
(575)
(618)
Net assets
960
1,064
Attributable to fair value of BT\u2019s A preference shares (see below)
(387)
(429)
BT\u2019s share of residual net assets (50%)
287
318
Other fair value adjustments
13
34
Carrying amount of interest in Sports JV
300
352
b e f a Includes amortisation of \u00a327m (FY23: \u00a356m) on acquired intangibles; net finance income of \u00a35m (FY23: \u00a36m); and tax income of \u00a357m (FY23: \u00a317m) driven by current tax charge of \u00a310m (FY23: \u00a34m) offset by deferred tax credit of \u00a367m (FY23: \u00a321m). b Restated to reflect true-up to opening balance sheet from finalising fair value adjustments. c Includes cash and cash and cash equivalents of \u00a311m (FY23: \u00a311m). d Includes goodwill and acquired intangibles of \u00a3668m (FY23: \u00a3695m restated). e Includes current financial liabilities (excluding trade and other payables and provisions) of \u00a3(244)m (FY23: \u00a3(281)m) of which \u00a3(163)m (FY23: \u00a3(268)m) relates to the outstanding liability on the RCF provided by BT (see note 30). f Includes non-current financial liabilities (excluding trade and other payables and provisions) of \u00a3(305)m (FY23: \u00a3(416)m). The Sports JV had a loss after tax for the year of \u00a382m, after adjustments made to align with the group\u2019s accounting policies, and reflects amortisation of acquired intangibles from the BT Sport and Eurosport UK business transfers and adjustments for the off-market minimum guarantee with BT (see note 22). Underlying trading before these adjustments was profitable. In addition, the Sports JV had other comprehensive losses of \u00a322m relating to fair value movements on its foreign exchange hedging arrangement with the group (see note 30) that have been designated as cash flow hedges. Our share of the Sports JV\u2019s results in FY23 included amortisation from provisional fair value adjustments, which were subject to true-up within 12 months from the Sports JV formation. We have subsequently finalised these fair value adjustments and recorded a \u00a325m credit in the current year as a true-up to the amount recorded in FY23, of which our 50% share is \u00a313m. The difference is not material and therefore we have not retrospectively adjusted our share of total comprehensive loss in FY23. Preference shares In addition to BT\u2019s ordinary shareholding, BT held the following investments in preference shares in the Sports JV that have not been included within the equity-accounted interest above.
2024
2023
At 31 March
\u00a3m
\u00a3m
Investment in A preference shares
387
429
Investment in C preference shares
146
126
Total
533
555
A net \u00a322m movement has been recorded on the group\u2019s preference share investments relating to fair value changes only, see below for further details. \u2013 A preference shares \u2013 a \u00a342m fair value loss has been recognised through specific items (see note 9), largely driven by a reduction in forecast cash flows following the Sports JV\u2019s investment in new sports content, leading to lower cash available for distribution under BT\u2019s earn-out entitlement. \u2013 C preference shares \u2013 these shares are expected to be sold to WBD at the end of BT\u2019s earn-out entitlement in consideration for any sports rights funded by BT at that point. BT\u2019s return on the shares is driven by changes in the Sports JV\u2019s sports rights portfolio which in turn is dependent on changes in the wider sports rights market and the Sports JV\u2019s financial performance and are therefore held as a financial asset at FVTPL under IFRS 9. A \u00a320m fair value gain has been recognised through specific items (see note 9) driven by an expected growth in the Sports JV content portfolio, which will increase the payment to BT for pre-funded sports rights up to the end of BT\u2019s earn-out entitlement. The preference shares are held at Level 3 on the fair value hierarchy, reflecting a valuation methodology that does not use inputs based on observable market data \u2013 see note 23 for further details on the fair value hierarchy. See below for sensitivities we have applied in determining the fair value. Sensitivities The group\u2019s ordinary equity and preference share investments in the Sports JV, carry both upside and downside risk from changes in micro and macroeconomic factors affecting the sports content subscription market and risk appetite of investors in that market. Further, a key decision point in the next 12 months, relating to the renewal of a material customer contract, could significantly impact the value of our investments. We have applied the following sensitivities to these risk factors: \u2013 EBITDA decline from loss of revenue or improvement from outperformance against revised forecasts. \u2013 Increase or decrease in the valuation multiple achieved. \u2013 Increase or decrease in the discount rate applied.
Headroom on impairment test
Fair value of A and C preference over equity-accounted
Sensitivity shares in Sports JV investment
20% increase or decrease in EBITDA
+/- \u00a3112m
+/- \u00a3117m
10% increase or decrease in discount rate
+/- \u00a34m
+/- \u00a314m
10% change in valuation multiple
\u2014
+/- \u00a357m
None of these sensitivities generated an impairment on the group\u2019s equity-accounted investment in the Sports JV. In valuing our investments, we have assumed an exit after the earn-out period ends on the fourth anniversary of forming the Sports JV. However, an earlier exit would not have a material impact on the amounts recorded.", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-515": { "value": "25. Cash and cash equivalents Material accounting policies that apply to cash and cash equivalents Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily convertible to cash, are subject to insignificant risk of changes in value and have an original maturity of three months or less. All are held at amortised cost on the balance sheet, equating to fair value. For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined above net of outstanding bank overdrafts. Bank overdrafts are included within the current element of loans and other borrowings (note 26).
2024
2023
At 31 March
\u00a3m
\u00a3m
Cash at bank and in hand
332
336
Cash equivalents
Indian rupee deposits
74
55
Other deposits
8
1
Total cash equivalents
82
56
Total cash and cash equivalents
414
392
Bank overdrafts (note 26)
(58)
(11)
Cash and cash equivalents per the cash flow statement
356
381
The majority of cash at bank balance was held at counterparties with a credit rating of A2/A or above. Cash and cash equivalents include restricted cash of \u00a371m (FY23: \u00a3131m), of which \u00a314m (FY23: \u00a323m) was held in countries where local capital or exchange controls currently prevent us from accessing cash balances. The remaining balance of \u00a357m (FY23: \u00a3108m) was held in escrow accounts, or in commercial arrangements akin to escrow.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-613": { "value": "Material accounting policies that apply to cash and cash equivalents Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily convertible to cash, are subject to insignificant risk of changes in value and have an original maturity of three months or less. All are held at amortised cost on the balance sheet, equating to fair value. For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined above net of outstanding bank overdrafts. Bank overdrafts are included within the current element of loans and other borrowings (note 26). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-547": { "value": "
2024
2023
At 31 March
\u00a3m
\u00a3m
Cash at bank and in hand
332
336
Cash equivalents
Indian rupee deposits
74
55
Other deposits
8
1
Total cash equivalents
82
56
Total cash and cash equivalents
414
392
Bank overdrafts (note 26)
(58)
(11)
Cash and cash equivalents per the cash flow statement
356
381
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-548": { "value": "
The majority of cash at bank balance was held at counterparties with a credit rating of A2/A or above. Cash and cash equivalents include
restricted cash of \u00a371m (FY23: \u00a3131m), of which \u00a314m (FY23: \u00a323m) was held in countries where local capital or exchange controls
currently prevent us from accessing cash balances. The remaining balance of \u00a357m (FY23: \u00a3108m) was held in escrow accounts, or in
commercial arrangements akin to escrow.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-516": { "value": "Material accounting policies that apply to loans and other borrowings We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on de-designation of the hedge, is recognised in the income statement. What\u2019s our capital management policy? Our capital management policy targets an overall level of debt consistent with our credit rating target of BBB+/Baa1 and minimum rating of BBB/Baa2 while investing in the business, supporting the pension scheme and meeting our distribution policy. To meet this objective, we may issue or repay debt, issue or repurchase shares or adjust dividends paid to shareholders. We manage the capital structure and make adjustments to it accordingly to reflect changes in economic conditions and the risk characteristics of the group. The Board regularly reviews the capital structure and capital management policy and no changes were made in FY24. For details of share issues and repurchases in the year see note 20. Our capital structure consists of net debt and shareholders\u2019 equity. The analysis below summarises the components which we manage as capital.
2024
2023
At 31 March
\u00a3m
\u00a3m
Net debt
19,479
18,859
Total parent shareholders\u2019 equity
12,513
14,490
Capital structure
31,992
33,349
a a Excludes non-controlling interests of \u00a35m (FY23: \u00a324m). Net debt and net financial debt Net debt consists of loans and other borrowings, lease liabilities (both current and non-current) less current asset investments and cash and cash equivalents, including items which have been classified as held for sale on the balance sheet. Amounts due to joint ventures and loans and borrowings recognised in relation to monies received from the sale of cash flows of contract assets and as prepayment for the forward sale of redundant copper are excluded. Currency-denominated balances within net debt are translated to sterling at swap rates where hedged. Fair value adjustments and accrued interest applied to reflect the effective interest method are removed. We explain the rationale for using net debt as a key performance indicator, together with changes to the metric in FY24, in Additional Information on page 231. Net financial debt is defined as net debt excluding lease liabilities. Net debt and net financial debt are considered to be alternative performance measures as they are not defined in IFRS. The most directly comparable IFRS measure is the aggregate of loans and other borrowings and lease liabilities (current and non-current), current asset investments and cash and cash equivalents. A reconciliation from these IFRS measures to net debt and net financial debt is given below.
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Loans and other borrowings
18,526
18,521
Lease liabilities
15
4,955
5,359
Assets and liabilities classified as held for sale
22
\u2014
3
Less:
Cash and cash equivalents
25
(414)
(392)
Current asset investments
23
(2,366)
(3,548)
20,701
19,943
Adjustments:
To retranslate debt balances at swap rates where hedged by currency swaps
(512)
(819)
To remove accrued interest applied to reflect the effective interest method and fair value
adjustments
(275)
(254)
Loans with joint ventures
30
(11)
(11)
Loans related to the forward sale of redundant copper
(106)
\u2014
Loans related to sale of contract assets
(318)
\u2014
Net debt
19,479
18,859
Lease liabilities
15
(4,955)
(5,359)
Lease liabilities classified as held for sale
\u2014
(3)
Net financial debt
14,524
13,497
a b c b a Includes overdrafts of \u00a358m at 31 March 2024 (FY23: \u00a311m). b Refer to note 22. c The translation difference between spot rate and hedged rate of loans and borrowings denominated in foreign currency. 26. Loans and other borrowings
The table below shows the key components of net debt and the increase of \u00a3620m this year.
At 31 March Cash Net lease Foreign Transfer to Other At 31 March
a d
2023 flows additions exchange within one year movements 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
1,772
(1,615)
\u2014
(12)
1,227
23
1,395
Loans and other borrowings due after one year
16,749
1,800
\u2014
(287)
(1,227)
96
17,131
Total loans and other borrowings
18,521
185
\u2014
(299)
\u2014
119
18,526
Lease liabilities due within one year
800
(882)
\u2014
(1)
849
\u2014
766
Lease liabilities due after one year
4,559
\u2014
487
(8)
(849)
\u2014
4,189
Liabilities classified as held for sale
3
\u2014
\u2014
\u2014
\u2014
(3)
\u2014
Total lease liabilities
5,362
(882)
487
(9)
\u2014
(3)
4,955
Gross debt
23,883
(697)
487
(308)
\u2014
116
23,481
Less:
Impact of cross-currency swaps
(819)
\u2014
\u2014
307
\u2014
\u2014
(512)
Removal of the accrued interest and fair value
(264)
\u2014
\u2014
\u2014
\u2014
(22)
(286)
adjustments
Removal of loans with joint ventures
(11)
(1)
\u2014
\u2014
\u2014
1
(11)
Removal of loans related to the forward sale of
redundant copper
\u2014
(105)
\u2014
\u2014
\u2014
(1)
(106)
Removal of loans related to sale of cash flows
\u2014
(305)
\u2014
\u2014
\u2014
(13)
(318)
related to contract assets
Cash and cash equivalents
(392)
(30)
\u2014
8
\u2014
\u2014
(414)
Current asset investments
(3,548)
1,173
\u2014
10
\u2014
(1)
(2,366)
Removal of accrued interest
10
\u2014
\u2014
\u2014
\u2014
1
11
Net debt
18,859
35
487
17
\u2014
81
19,479
b
c
At 31 March Cash Net lease Foreign Transfer to Other At 31
2022 flows additions exchange within one year movements March 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
873
(136)
\u2014
65
943
27
1,772
Loans and other borrowings due after one year
15,312
1,746
\u2014
525
(943)
109
16,749
Total loans and other borrowings
16,185
1,610
\u2014
590
\u2014
136
18,521
Lease liabilities due within one year
795
(860)
\u2014
2
863
\u2014
800
Lease liabilities due after one year
4,965
\u2014
449
11
(863)
(3)
4,559
Liabilities classified as held for sale
2
\u2014
\u2014
\u2014
\u2014
1
3
Total lease liabilities
5,762
(860)
449
13
\u2014
(2)
5,362
Gross debt
21,947
750
449
603
\u2014
134
23,883
Less:
Impact of cross-currency swaps
(234)
\u2014
\u2014
(585)
\u2014
\u2014
(819)
Removal of the accrued interest and fair value
(251)
\u2014
\u2014
\u2014
\u2014
(13)
(264)
adjustments
Removal of loans with joint ventures
\u2014
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Cash and cash equivalents
(777)
379
\u2014
3
\u2014
3
(392)
Current asset investments
(2,679)
(885)
\u2014
(21)
\u2014
37
(3,548)
Removal of accrued interest
3
\u2014
\u2014
\u2014
\u2014
7
10
Net debt
18,009
233
449
\u2014
\u2014
168
18,859
a
d
b
c
a Net lease additions are net non-cash movements in lease liabilities during the period, and primarily comprise new and terminated leases, remeasurements of existing leases and lease
interest charges.
b Includes accrued interest and bank overdrafts.
c Translation of debt balances at swap rates where hedged by cross-currency swaps.
d Other movements include removal of accrued interest applied to reflect the effective interest rate method, removal of fair value adjustments and movements relating to held for sale
assets and liabilities (see note 22).
The table below shows how cash flows from gross debt of \u00a3(697)m (FY23: \u00a3750m) in the table above reconciles to the line items
presented in the group cash flow statement on page 149:
2024
2023
At 31 March
\u00a3m
\u00a3m
Repayment of borrowings
(1,676)
(513)
Proceeds from bank loans and bonds
2,242
2,203
Cash flows from collateral (paid) received
(532)
(17)
Increase (decrease) in amounts owned to joint ventures
(1)
11
Change in bank overdraft
47
(74)
Total loans and other borrowings cash flows - financing activities
80
1,610
Prepayment for the forward sale of copper
105
\u2014
Total loans and other borrowings cash flows - investing activities
105
\u2014
Total loans and other borrowings cash flows
185
1,610
Payment of lease liabilities
(748)
(727)
Interest on lease liabilities paid
(134)
(133)
Total lease liability cash flows - financing activities
(882)
(860)
Total gross debt cash flows
(697)
750
a
b
c
a Presented within cash and cash equivalents in the group cash flow statement.
b In FY24 we received an upfront prepayment of \u00a3105m from entering into a forward agreement to sell copper granules created from surplus copper cables. As this is expected to be
the only cash flow that occurs as part of this transaction the cash receipt has been included as a separate line within cash flows from investing activities in the group cash flow
statement. The related liability is recognised on balance sheet within loans and other borrowings, see page 149.
c Presented within interest paid in the group cash flow statement.
The table below gives details of the listed bonds and other debt.
2024
2023
At 31 March
\u00a3m
\u00a3m
0.875% \u20ac306m bond due September 2023
a
\u2014
270
4.5% $675m bond due December 2023
\u2014
554
1% \u20ac469m bond due June 2024
\u2014
415
1% \u20ac825m bond due November 2024
708
726
3.50% \u00a3250m index linked bond due April 2025
575
524
0.5% \u20ac650m bond due September 2025
557
571
1.75% \u20ac1,300m bond due March 2026
1,112
1,143
1.5% \u20ac1,150m bond due June 2027
991
1,017
2.75% \u20ac700m bond due August 2027
601
530
2.125% \u20ac500m bond due September 2028
a
431
442
5.125% $700m bond due December 2028
561
573
5.75% \u00a3600m bond due December 2028
658
669
1.125% \u20ac750m bond due September 2029
a
640
657
3.25% $1,000m bond due November 2029
796
812
9.625% $2,670m bond due December 2030
a
(minimum 8.625%
b
)
2,166
2,214
3.75% \u20ac800m bond due February 2031
704
704
3.125% \u00a3500m bond due November 2031
503
503
3.375% \u20ac500m bond due August 2032
433
445
4.25% \u20ac850m bond due January 2033
725
\u2014
3.64% \u00a3330m bond due June 2033
339
339
1.613% \u00a3330m index linked bond due June 2033
394
380
6.375% \u00a3500m bond due June 2037
523
523
3.883% \u00a3330m bond due June 2039
340
340
1.739% \u00a3330m index linked bond due June 2039
394
381
5.75% \u00a3450m bond due February 2041
445
347
3.924% \u00a3340m bond due June 2042
350
350
1.774% \u00a3340m index linked bond due June 2042
406
392
2.08% JPY10,000m bond due February 2043
52
61
3.625% \u00a3250m bond due November 2047
251
250
4.25% $500m bond due November 2049
400
408
1.874% \u20ac500m hybrid bond due August 2080
432
443
4.250% $500m hybrid bond due November 2081
396
404
4.875% $500m hybrid bond due November 2081
401
409
8.375% \u00a3700m hybrid bond due December 2083
710
\u2014
Total listed bonds
17,994
17,796
Loans related to the sale of cash flows related to contract assets
341
100
Loans related to the forward sale of redundant copper
106
\u2014
Other loans
27
614
Bank overdrafts (note 25)
58
11
Total other loans and borrowings
532
725
Total loans and other borrowings
18,526
18,521
a a,d a a a a a,f a a a a a f a a a,c a,c a,c c e a Designated in a cash flow hedge relationship. b The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody\u2019s or Standard & Poor\u2019s to the group\u2019s senior unsecured debt below A3/A\u2013 respectively. In addition, if Moody\u2019s or Standard & Poor\u2019s subsequently increase the ratings then the interest rate will be decreased by 0.25% for each rating category upgrade by either rating agency. In no event will the interest rate be reduced below the minimum rate reflected in the above table. c Includes call options between 1.5 years and 7.5 years. d Redeemed early in March 2024. e Performance obligations have been substantially delivered to the customer in relation to these cash flows related to contract assets that have been sold but the right to receive cash is dependent on the group\u2019s future performance in relation to airtime and so a financial liability has been recognised. The related cash flows have been included within financing activities in the cash flow statement. \u00a3318m of the liability relates to sales of cash flows related to contract assets in FY24 and so is removed from our net debt measure, the remaining \u00a323m relates to sales in FY23. f Increased the issue size on \u20ac700m bond due August 2027 by \u20ac100m in November 2023 and on \u00a3450m bond due February 2041 by \u00a3100m in December 2023 . Unless previously designated in a fair value hedge relationship, all loans and other borrowings are carried on our balance sheet and in the table above at amortised cost. The fair value of listed bonds is \u00a317,820m (FY23: \u00a316,979m). The fair value of our listed bonds is estimated on the basis of quoted market prices (Level 1). The carrying amount of other loans and bank overdrafts equates to fair value due to the short maturity of these items (Level 3). The interest rates payable on loans and borrowings disclosed above reflect the coupons on the underlying issued loans and borrowings and not the interest rates achieved through applying associated cross-currency and interest rate swaps in hedge arrangements. During the period the group entered into a forward agreement to sell copper granules created from BT\u2019s surplus copper cables. The right to receive cash is dependent on the initial buyer receiving payment from the end customer and so a financial liability of \u00a3106m including
accrued interest has been recognised. This should be the only cash flow that occurs as part of this transaction and so the cash receipt of
\u00a3105m has been included in a separate line within investing activities in the cash flow statement.
Loans and other borrowings are analysed as follows:
2024
2023
At 31 March
\u00a3m
\u00a3m
Current liabilities
Listed bonds
996
1,075
Amounts owed to joint ventures
11
11
Other loans and bank overdrafts
388
686
Total current liabilities
1,395
1,772
Non-current liabilities
Listed bonds
16,998
16,722
Other loans and bank overdrafts
133
27
Total non-current liabilities
17,131
16,749
Total loans and other borrowings
18,526
18,521
a
a
a Includes collateral received on swaps of \u00a315m (FY23: \u00a3557m).
The carrying values disclosed in the above table reflect balances at amortised cost adjusted for accrued interest and fair value
adjustments to the relevant loans or borrowings. These do not reflect the final principal repayments that will arise after taking account of
the relevant derivatives in hedging relationships which are reflected in the table below. All borrowings as at 31 March 2024 were
unsecured.
The principal repayments of loans and borrowings at hedged rates amounted to \u00a317,728m (FY23: \u00a317,442m) and repayments fall due as
follows:
2024
2023
Effect of Principal Effect of Principal
Carrying hedging and repayments at Carrying hedging and repayments at
amount interest hedged rates amount interest hedged rates
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within one year, or on demand
1,395
(258)
1,137
1,772
(271)
1,501
Between one and two years
2,727
(85)
2,642
1,165
15
1,180
Between two and three years
431
(24)
407
2,669
(141)
2,528
Between three and four years
1,614
29
1,643
404
(33)
371
Between four and five years
2,282
6
2,288
1,539
(14)
1,525
After five years
10,107
(496)
9,611
10,983
(646)
10,337
Total due for repayment after more than one year
17,161
(570)
16,591
16,760
(819)
15,941
Total repayments
18,556
(828)
17,728
18,532
(1,090)
17,442
Non cash adjustments
(30)
(11)
Total loans and other borrowings
18,526
18,521
a
a Fair value adjustments and unamortised bond fees.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-549": { "value": "Material accounting policies that apply to loans and other borrowings We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on de-designation of the hedge, is recognised in the income statement. What\u2019s our capital management policy? Our capital management policy targets an overall level of debt consistent with our credit rating target of BBB+/Baa1 and minimum rating of BBB/Baa2 while investing in the business, supporting the pension scheme and meeting our distribution policy. To meet this objective, we may issue or repay debt, issue or repurchase shares or adjust dividends paid to shareholders. We manage the capital structure and make adjustments to it accordingly to reflect changes in economic conditions and the risk characteristics of the group. The Board regularly reviews the capital structure and capital management policy and no changes were made in FY24. For details of share issues and repurchases in the year see note 20. Our capital structure consists of net debt and shareholders\u2019 equity. The analysis below summarises the components which we manage as capital.
2024
2023
At 31 March
\u00a3m
\u00a3m
Net debt
19,479
18,859
Total parent shareholders\u2019 equity
12,513
14,490
Capital structure
31,992
33,349
a a Excludes non-controlling interests of \u00a35m (FY23: \u00a324m). Net debt and net financial debt Net debt consists of loans and other borrowings, lease liabilities (both current and non-current) less current asset investments and cash and cash equivalents, including items which have been classified as held for sale on the balance sheet. Amounts due to joint ventures and loans and borrowings recognised in relation to monies received from the sale of cash flows of contract assets and as prepayment for the forward sale of redundant copper are excluded. Currency-denominated balances within net debt are translated to sterling at swap rates where hedged. Fair value adjustments and accrued interest applied to reflect the effective interest method are removed. We explain the rationale for using net debt as a key performance indicator, together with changes to the metric in FY24, in Additional Information on page 231. Net financial debt is defined as net debt excluding lease liabilities. Net debt and net financial debt are considered to be alternative performance measures as they are not defined in IFRS. The most directly comparable IFRS measure is the aggregate of loans and other borrowings and lease liabilities (current and non-current), current asset investments and cash and cash equivalents. A reconciliation from these IFRS measures to net debt and net financial debt is given below.
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Loans and other borrowings
18,526
18,521
Lease liabilities
15
4,955
5,359
Assets and liabilities classified as held for sale
22
\u2014
3
Less:
Cash and cash equivalents
25
(414)
(392)
Current asset investments
23
(2,366)
(3,548)
20,701
19,943
Adjustments:
To retranslate debt balances at swap rates where hedged by currency swaps
(512)
(819)
To remove accrued interest applied to reflect the effective interest method and fair value
adjustments
(275)
(254)
Loans with joint ventures
30
(11)
(11)
Loans related to the forward sale of redundant copper
(106)
\u2014
Loans related to sale of contract assets
(318)
\u2014
Net debt
19,479
18,859
Lease liabilities
15
(4,955)
(5,359)
Lease liabilities classified as held for sale
\u2014
(3)
Net financial debt
14,524
13,497
a b c b a Includes overdrafts of \u00a358m at 31 March 2024 (FY23: \u00a311m). b Refer to note 22. c The translation difference between spot rate and hedged rate of loans and borrowings denominated in foreign currency. 26. Loans and other borrowings The table below shows the key components of net debt and the increase of \u00a3620m this year.
At 31 March Cash Net lease Foreign Transfer to Other At 31 March
a d
2023 flows additions exchange within one year movements 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
1,772
(1,615)
\u2014
(12)
1,227
23
1,395
Loans and other borrowings due after one year
16,749
1,800
\u2014
(287)
(1,227)
96
17,131
Total loans and other borrowings
18,521
185
\u2014
(299)
\u2014
119
18,526
Lease liabilities due within one year
800
(882)
\u2014
(1)
849
\u2014
766
Lease liabilities due after one year
4,559
\u2014
487
(8)
(849)
\u2014
4,189
Liabilities classified as held for sale
3
\u2014
\u2014
\u2014
\u2014
(3)
\u2014
Total lease liabilities
5,362
(882)
487
(9)
\u2014
(3)
4,955
Gross debt
23,883
(697)
487
(308)
\u2014
116
23,481
Less:
Impact of cross-currency swaps
(819)
\u2014
\u2014
307
\u2014
\u2014
(512)
Removal of the accrued interest and fair value
(264)
\u2014
\u2014
\u2014
\u2014
(22)
(286)
adjustments
Removal of loans with joint ventures
(11)
(1)
\u2014
\u2014
\u2014
1
(11)
Removal of loans related to the forward sale of
redundant copper
\u2014
(105)
\u2014
\u2014
\u2014
(1)
(106)
Removal of loans related to sale of cash flows
\u2014
(305)
\u2014
\u2014
\u2014
(13)
(318)
related to contract assets
Cash and cash equivalents
(392)
(30)
\u2014
8
\u2014
\u2014
(414)
Current asset investments
(3,548)
1,173
\u2014
10
\u2014
(1)
(2,366)
Removal of accrued interest
10
\u2014
\u2014
\u2014
\u2014
1
11
Net debt
18,859
35
487
17
\u2014
81
19,479
b c
At 31 March Cash Net lease Foreign Transfer to Other At 31
2022 flows additions exchange within one year movements March 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
873
(136)
\u2014
65
943
27
1,772
Loans and other borrowings due after one year
15,312
1,746
\u2014
525
(943)
109
16,749
Total loans and other borrowings
16,185
1,610
\u2014
590
\u2014
136
18,521
Lease liabilities due within one year
795
(860)
\u2014
2
863
\u2014
800
Lease liabilities due after one year
4,965
\u2014
449
11
(863)
(3)
4,559
Liabilities classified as held for sale
2
\u2014
\u2014
\u2014
\u2014
1
3
Total lease liabilities
5,762
(860)
449
13
\u2014
(2)
5,362
Gross debt
21,947
750
449
603
\u2014
134
23,883
Less:
Impact of cross-currency swaps
(234)
\u2014
\u2014
(585)
\u2014
\u2014
(819)
Removal of the accrued interest and fair value
(251)
\u2014
\u2014
\u2014
\u2014
(13)
(264)
adjustments
Removal of loans with joint ventures
\u2014
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Cash and cash equivalents
(777)
379
\u2014
3
\u2014
3
(392)
Current asset investments
(2,679)
(885)
\u2014
(21)
\u2014
37
(3,548)
Removal of accrued interest
3
\u2014
\u2014
\u2014
\u2014
7
10
Net debt
18,009
233
449
\u2014
\u2014
168
18,859
a d b c a Net lease additions are net non-cash movements in lease liabilities during the period, and primarily comprise new and terminated leases, remeasurements of existing leases and lease interest charges. b Includes accrued interest and bank overdrafts. c Translation of debt balances at swap rates where hedged by cross-currency swaps. d Other movements include removal of accrued interest applied to reflect the effective interest rate method, removal of fair value adjustments and movements relating to held for sale assets and liabilities (see note 22). The table below shows how cash flows from gross debt of \u00a3(697)m (FY23: \u00a3750m) in the table above reconciles to the line items presented in the group cash flow statement on page 149:
2024
2023
At 31 March
\u00a3m
\u00a3m
Repayment of borrowings
(1,676)
(513)
Proceeds from bank loans and bonds
2,242
2,203
Cash flows from collateral (paid) received
(532)
(17)
Increase (decrease) in amounts owned to joint ventures
(1)
11
Change in bank overdraft
47
(74)
Total loans and other borrowings cash flows - financing activities
80
1,610
Prepayment for the forward sale of copper
105
\u2014
Total loans and other borrowings cash flows - investing activities
105
\u2014
Total loans and other borrowings cash flows
185
1,610
Payment of lease liabilities
(748)
(727)
Interest on lease liabilities paid
(134)
(133)
Total lease liability cash flows - financing activities
(882)
(860)
Total gross debt cash flows
(697)
750
a b c a Presented within cash and cash equivalents in the group cash flow statement. b In FY24 we received an upfront prepayment of \u00a3105m from entering into a forward agreement to sell copper granules created from surplus copper cables. As this is expected to be the only cash flow that occurs as part of this transaction the cash receipt has been included as a separate line within cash flows from investing activities in the group cash flow statement. The related liability is recognised on balance sheet within loans and other borrowings, see page 149. c Presented within interest paid in the group cash flow statement. The table below gives details of the listed bonds and other debt.
2024
2023
At 31 March
\u00a3m
\u00a3m
0.875% \u20ac306m bond due September 2023
a
\u2014
270
4.5% $675m bond due December 2023
\u2014
554
1% \u20ac469m bond due June 2024
\u2014
415
1% \u20ac825m bond due November 2024
708
726
3.50% \u00a3250m index linked bond due April 2025
575
524
0.5% \u20ac650m bond due September 2025
557
571
1.75% \u20ac1,300m bond due March 2026
1,112
1,143
1.5% \u20ac1,150m bond due June 2027
991
1,017
2.75% \u20ac700m bond due August 2027
601
530
2.125% \u20ac500m bond due September 2028
a
431
442
5.125% $700m bond due December 2028
561
573
5.75% \u00a3600m bond due December 2028
658
669
1.125% \u20ac750m bond due September 2029
a
640
657
3.25% $1,000m bond due November 2029
796
812
9.625% $2,670m bond due December 2030
a
(minimum 8.625%
b
)
2,166
2,214
3.75% \u20ac800m bond due February 2031
704
704
3.125% \u00a3500m bond due November 2031
503
503
3.375% \u20ac500m bond due August 2032
433
445
4.25% \u20ac850m bond due January 2033
725
\u2014
3.64% \u00a3330m bond due June 2033
339
339
1.613% \u00a3330m index linked bond due June 2033
394
380
6.375% \u00a3500m bond due June 2037
523
523
3.883% \u00a3330m bond due June 2039
340
340
1.739% \u00a3330m index linked bond due June 2039
394
381
5.75% \u00a3450m bond due February 2041
445
347
3.924% \u00a3340m bond due June 2042
350
350
1.774% \u00a3340m index linked bond due June 2042
406
392
2.08% JPY10,000m bond due February 2043
52
61
3.625% \u00a3250m bond due November 2047
251
250
4.25% $500m bond due November 2049
400
408
1.874% \u20ac500m hybrid bond due August 2080
432
443
4.250% $500m hybrid bond due November 2081
396
404
4.875% $500m hybrid bond due November 2081
401
409
8.375% \u00a3700m hybrid bond due December 2083
710
\u2014
Total listed bonds
17,994
17,796
Loans related to the sale of cash flows related to contract assets
341
100
Loans related to the forward sale of redundant copper
106
\u2014
Other loans
27
614
Bank overdrafts (note 25)
58
11
Total other loans and borrowings
532
725
Total loans and other borrowings
18,526
18,521
a a,d a a a a a,f a a a a a f a a a,c a,c a,c c e a Designated in a cash flow hedge relationship. b The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody\u2019s or Standard & Poor\u2019s to the group\u2019s senior unsecured debt below A3/A\u2013 respectively. In addition, if Moody\u2019s or Standard & Poor\u2019s subsequently increase the ratings then the interest rate will be decreased by 0.25% for each rating category upgrade by either rating agency. In no event will the interest rate be reduced below the minimum rate reflected in the above table. c Includes call options between 1.5 years and 7.5 years. d Redeemed early in March 2024. e Performance obligations have been substantially delivered to the customer in relation to these cash flows related to contract assets that have been sold but the right to receive cash is dependent on the group\u2019s future performance in relation to airtime and so a financial liability has been recognised. The related cash flows have been included within financing activities in the cash flow statement. \u00a3318m of the liability relates to sales of cash flows related to contract assets in FY24 and so is removed from our net debt measure, the remaining \u00a323m relates to sales in FY23. f Increased the issue size on \u20ac700m bond due August 2027 by \u20ac100m in November 2023 and on \u00a3450m bond due February 2041 by \u00a3100m in December 2023 . Unless previously designated in a fair value hedge relationship, all loans and other borrowings are carried on our balance sheet and in the table above at amortised cost. The fair value of listed bonds is \u00a317,820m (FY23: \u00a316,979m). The fair value of our listed bonds is estimated on the basis of quoted market prices (Level 1). The carrying amount of other loans and bank overdrafts equates to fair value due to the short maturity of these items (Level 3). The interest rates payable on loans and borrowings disclosed above reflect the coupons on the underlying issued loans and borrowings and not the interest rates achieved through applying associated cross-currency and interest rate swaps in hedge arrangements. During the period the group entered into a forward agreement to sell copper granules created from BT\u2019s surplus copper cables. The right to receive cash is dependent on the initial buyer receiving payment from the end customer and so a financial liability of \u00a3106m including accrued interest has been recognised. This should be the only cash flow that occurs as part of this transaction and so the cash receipt of \u00a3105m has been included in a separate line within investing activities in the cash flow statement. Loans and other borrowings are analysed as follows:
2024
2023
At 31 March
\u00a3m
\u00a3m
Current liabilities
Listed bonds
996
1,075
Amounts owed to joint ventures
11
11
Other loans and bank overdrafts
388
686
Total current liabilities
1,395
1,772
Non-current liabilities
Listed bonds
16,998
16,722
Other loans and bank overdrafts
133
27
Total non-current liabilities
17,131
16,749
Total loans and other borrowings
18,526
18,521
a a a Includes collateral received on swaps of \u00a315m (FY23: \u00a3557m). The carrying values disclosed in the above table reflect balances at amortised cost adjusted for accrued interest and fair value adjustments to the relevant loans or borrowings. These do not reflect the final principal repayments that will arise after taking account of the relevant derivatives in hedging relationships which are reflected in the table below. All borrowings as at 31 March 2024 were unsecured. The principal repayments of loans and borrowings at hedged rates amounted to \u00a317,728m (FY23: \u00a317,442m) and repayments fall due as follows:
2024
2023
Effect of Principal Effect of Principal
Carrying hedging and repayments at Carrying hedging and repayments at
amount interest hedged rates amount interest hedged rates
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within one year, or on demand
1,395
(258)
1,137
1,772
(271)
1,501
Between one and two years
2,727
(85)
2,642
1,165
15
1,180
Between two and three years
431
(24)
407
2,669
(141)
2,528
Between three and four years
1,614
29
1,643
404
(33)
371
Between four and five years
2,282
6
2,288
1,539
(14)
1,525
After five years
10,107
(496)
9,611
10,983
(646)
10,337
Total due for repayment after more than one year
17,161
(570)
16,591
16,760
(819)
15,941
Total repayments
18,556
(828)
17,728
18,532
(1,090)
17,442
Non cash adjustments
(30)
(11)
Total loans and other borrowings
18,526
18,521
a a Fair value adjustments and unamortised bond fees. 28. Financial instruments and risk management We issue or hold financial instruments mainly to finance our operations; to finance corporate transactions such as share buybacks and acquisitions; for the temporary investment of short-term funds; and to manage currency and interest rate risks. In addition, various financial instruments, for example trade receivables and payables arise directly from operations. How do we manage financial risk? Our activities expose us to a variety of financial risks: market risk (including interest rate risk and foreign exchange risk), credit risk and liquidity risk. Treasury operation We have a centralised treasury operation whose primary role is to manage liquidity and funding requirements as well as our exposure to associated market risks, and credit risk. Treasury policy Treasury policy is set by the Board. Group treasury activities are subject to a set of controls appropriate for the magnitude of borrowing, investments and group-wide exposures. The Board has delegated authority to operate these policies to a series of panels responsible for the management of key treasury risks and operations. Appointment to and removal from the key panels requires approval from two of the following: the Chairman, the Chief Executive or the Chief Financial Officer. There has been no change in the nature of our risk profile between 31 March 2024 and the date of approval of these financial statements. How do we manage interest rate risk? Management policy Interest rate risk arises primarily from our long-term borrowings. Interest cash flow risk arises from borrowings issued at variable rates, partially offset by cash held at variable rates. Fair value interest rate risk arises from borrowings issued at fixed rates. Our policy, as set by the Board, is to ensure that at least 70% of ongoing net debt is at fixed rates. Short-term interest rate management is delegated to the treasury operation while long-term interest rate management decisions require further approval by the Chief Financial Officer, the Corporate Finance Director or the Group Treasury Director who each have been delegated such authority from the Board. Hedging strategy In order to manage our interest rate profile, we enter into cross-currency and interest rate swap agreements to vary the amounts and periods for which interest rates on borrowings are fixed. The duration of the swap agreements matches the duration of the debt instruments. The majority of the group\u2019s long-term borrowings are subject to fixed sterling interest rates after applying the impact of these hedging instruments. How do we manage foreign exchange risk? Management policy Foreign currency hedging activities protect the group from the risk that changes in exchange rates will adversely affect future net cash flows. The Board\u2019s policy for foreign exchange risk management defines the types of transactions typically covered, including significant operational, funding and currency interest exposures, and the period over which cover should extend for each type of transaction. The Board has delegated short-term foreign exchange management to the treasury operation and long-term foreign exchange management decisions require further approval from the Chief Financial Officer, the Corporate Finance Director or the Group Treasury Director. Hedging strategy A significant proportion of our external revenue and costs arise within the UK and are denominated in sterling. Our non-UK operations generally trade and are funded in their functional currency which limits their exposure to foreign exchange volatility. We do not have a material exposure to hyperinflationary economies. We enter into forward currency contracts to hedge foreign currency capital purchases, purchase and sale commitments, interest expense and foreign currency investments. The commitments hedged are principally denominated in US dollars, euros, Indian rupees and Hungarian forints. As a result, our exposure to foreign currency arises mainly on non-UK subsidiary investments and on residual currency trading flows. We use cross-currency swaps to swap foreign currency borrowings into sterling. The table below reflects the currency and interest rate profile of our loans and borrowings after the impact of hedging.
2024
2023
Fixed rate Floating rate Fixed rate Floating rate
interest
interest
Total
 interest
interest
Total
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling
15,899
1,780
17,679
15,210
1,773
16,983
Euro
\u2014
\u2014
\u2014
\u2014
443
443
Other
\u2014
49
49
\u2014
16
16
Total
15,899
1,829
17,728
15,210
2,232
17,442
Ratio of fixed to floating
90%
10%
100%
87%
13%
100%
Weighted average effective fixed
interest rate \u2013 sterling
4.6%
4.0%
The floating rate loans and borrowings and committed facilities bear interest rates fixed in advance for periods up to one year, primarily by reference to RPI, CPI and ARRs where applicable. Sensitivity analysis The income statement and shareholders\u2019 equity are exposed to volatility arising from changes in interest rates, foreign exchange rates and energy prices. To demonstrate this volatility, management has concluded that the following are reasonable benchmarks for performing sensitivity analysis: \u2013 For interest, a 1% increase in interest rates and parallel shift in yield curves across sterling, US dollar and euro currencies. \u2013 For foreign exchange, a 10% strengthening of sterling against other currencies. \u2013 For energy, a 10% increase in energy prices. The impact on equity, before tax and excluding any impact related to retirement benefit plans, of a 1% increase in interest rates, a 10% strengthening of sterling against other currencies, and a 10% increase in energy prices is as detailed below:
2024
2023
\u00a3m \u00a3m
Increase Increase
At 31 March (reduce) (reduce)
Sterling interest rates
602
579
US dollar interest rates
(300)
(371)
Euro interest rates
(316)
(284)
Sterling strengthening
(142)
(169)
Energy prices
27
45
A 1% decrease in interest rates, 10% weakening of sterling against other currencies would have broadly the same impact in the opposite direction. The impact of a 1% change in interest rates on the group\u2019s annual net finance expense, 10% change in energy prices on group\u2019s income statement and our exposure to foreign exchange volatility in the income statement, after hedging (excluding translation exposures), would not have been material in FY24 and FY23. Credit ratings We continue to target a BBB+/Baa1 credit rating over the cycle, with a BBB/Baa2 floor. We regularly review the liquidity of the group and our funding strategy takes account of medium-term requirements. These include the pension deficit and shareholder distributions. Our December 2030 bond contains terms that require us to pay higher rates of interest when our credit ratings are below A3 in the case of Moody\u2019s or A\u2013 in the case of Standard & Poor\u2019s (S&P). Additional interest of 0.25% per year accrues for each ratings category downgrade by each agency below those levels effective from the next coupon date following a downgrade. Based on the total notional value of debt outstanding of \u00a32.1bn at 31 March 2024, our finance expense would increase/decrease by approximately \u00a311m a year if the group\u2019s credit rating were to be downgraded/upgraded, respectively, by one credit rating category by both agencies. Our credit ratings were as detailed below:
2024
2023
At 31 March
Rating
Outlook
Rating
Outlook
Rating agency
Fitch
BBB
Stable
BBB
Stable
Moody\u2019s
Baa2
Stable
Baa2
Stable
Standard & Poor\u2019s
BBB
Stable
BBB
Stable
How do we manage liquidity risk? Management policy We maintain liquidity by entering into short and long-term financial instruments to support operational and other funding requirements, determined by using short- and long-term cash forecasts. These forecasts are supplemented by a financial headroom analysis which is used to assess funding adequacy for at least a 12-month period. On at least an annual basis the Board reviews and approves the long- term funding requirements of the group and on an ongoing basis considers any related matters. We manage refinancing risk by limiting the amount of borrowing that matures within any specified period and having appropriate strategies in place to manage refinancing needs as they arise. The maturity profile of our loans and borrowings at 31 March 2024 is disclosed in note 26. We have term debt maturities of \u00a30.7bn in FY25. Our treasury operation reviews and manages our short-term requirements within the parameters of the policies set by the Board. We hold cash, cash equivalents and current investments in order to manage short-term liquidity requirements. At 31 March 2024 we had undrawn committed borrowing facilities of \u00a32.1bn (FY23: \u00a32.1bn) maturing in March 2027. The following table provides an analysis of the remaining cash flows including interest payable for our non-derivative financial liabilities on an undiscounted basis, which may therefore differ from both the carrying value and fair value.
Trade and
Loans and other Interest on loans other Lease
c d
Non-derivative financial liabilities borrowings and other borrowings payables
liabilities
Provisions
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Due within one year
1,103
738
5,438
765
\u2014
8,044
Between one and two years
2,727
737
189
730
\u2014
4,383
Between two and three years
431
697
88
696
\u2014
1,912
Between three and four years
1,614
680
\u2014
663
\u2014
2,957
Between four and five years
2,282
649
\u2014
634
\u2014
3,565
After five years
10,107
2,569
\u2014
2,103
\u2014
14,779
18,264
6,070
5,715
5,591
\u2014
35,640
Interest payments not yet accrued
\u2014
(5,778)
\u2014
\u2014
\u2014
(5,778)
Fair value adjustment
(30)
\u2014
\u2014
\u2014
\u2014
(30)
Impact of discounting
a,b
\u2014
\u2014
(16)
(636)
\u2014
(652)
Carrying value on the balance sheet
18,234
292
5,699
4,955
\u2014
29,180
At 31 March 2023 (restated)
Due within one year
1,512
643
5,467
800
3
8,425
Between one and two years
1,165
637
204
774
2
2,782
Between two and three years
2,669
616
189
676
2
4,152
Between three and four years
404
575
88
640
2
1,709
Between four and five years
1,539
558
\u2014
612
2
2,711
After five years
10,983
2,891
\u2014
2,529
\u2014
16,403
18,272
5,920
5,948
6,031
11
36,182
Interest payments not yet accrued
\u2014
(5,660)
\u2014
\u2014
\u2014
(5,660)
Fair value adjustment
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Impact of discounting
a,b,c
\u2014
\u2014
(32)
(672)
(1)
(705)
Carrying value on the balance sheet
18,261
260
5,916
5,359
10
29,806
c c c c a Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest cash flows were calculated using the most recent interest or indexation rates at the relevant balance sheet date. b The carrying amount of trade and other payables excludes \u00a3366m (FY23: \u00a3455m) of non-current trade and other payables which relates to non-financial liabilities, and \u00a3899m (FY23: \u00a31,113m) of other taxation, social security and deferred income. c FY23 comparatives have been restated to include the financial liability for the minimum guarantee provided to the Sports JV due in more than one year, totalling \u00a3465m.These amounts had been omitted from this table within the prior year accounts. d No provisions meeting the definition of a financial liability have been identified in FY24. Trade and other payables are held at amortised cost. The carrying amount of these balances approximates to fair value due to the short maturity of amounts payable. The following table provides an analysis of the contractually agreed cash flows in respect of the group\u2019s derivative financial instruments. Cash flows are presented on a net or gross basis in accordance with settlement arrangements of the instruments.
Gross settled Gross settled
Derivative financial liabilities
Net settled
outflows
inflows
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Due within one year
17
2,274
(2,135)
156
Between one and two years
16
1,152
(1,028)
140
Between two and three years
16
519
(430)
105
Between three and four years
17
1,935
(1,857)
95
Between four and five years
17
597
(528)
86
After five years
12
3,071
(2,866)
217
a,b
Total
95
9,548
(8,844)
799
At 31 March 2023
Due within one year
47
2,184
(2,088)
143
Between one and two years
47
1,125
(1,058)
114
Between two and three years
94
939
(882)
151
Between three and four years
111
381
(364)
128
Between four and five years
16
161
(135)
42
After five years
47
2,127
(2,011)
163
Total
a,b
362
6,917
(6,538)
741
a Analysed by earliest payment date, certain derivative financial instruments contain break clauses whereby either the group or bank counterparty have the right to terminate the swap on certain dates. If the break clause was exercised, the mark to market position would be settled in cash. b Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest rate cash flows were calculated using the most recent rate applied at the relevant balance sheet date. How do we manage energy price risk? Management policy UK (excluding Northern Ireland) and European energy prices continue to be exposed to volatility driven by fears of reduced gas supply as Europe continues the shift from Russian gas to LNG and renewables (which themselves are subject to short-term fluctuations given their intermittent nature). In order to manage our exposure to fluctuating energy prices, we have a target for UK (excluding Northern Ireland) energy demand to be at least 80% hedged one quarter before the start of the next financial year, and 50% hedged for the following financial year. We achieve this through forward over the counter hedges and a mixture of new and existing power purchase agreements (PPAs) and derivative virtual PPAs (vPPAs). Hedging strategy In each financial year our strategy is to build on our existing PPA and vPPA portfolio, exploring opportunities with 5-10 year contracts delivering favourable net present values. We complement this by monitoring the markets and forward purchasing electricity (power) when the market is favourable. In the forthcoming financial year the aim is to be 95% hedged, which allows for headroom for increased outputs from the renewable sources should weather conditions prevail. How do we manage credit risk? Management policy Our exposure to credit risk arises from financial assets transacted by the treasury operation (primarily derivatives, investments, cash and cash equivalents) and from trading-related receivables. For treasury-related balances, the Board\u2019s defined policy restricts exposure to any one counterparty by setting credit limits based on the credit quality as defined by Moody\u2019s and Standard & Poor\u2019s. The minimum credit ratings permitted with counterparties in respect of new transactions are A3/A\u2013 for long-term and P1/A1 for short-term investments. If counterparties in respect of existing transactions fall below the permitted criteria we will take action where appropriate. The treasury operation continuously reviews the limits applied to counterparties and will adjust the limit according to the nature and credit standing of the counterparty, and in response to market conditions, up to the maximum allowable limit set by the Board. Operational management policy Our credit policy for trading-related financial assets is applied and managed by each of the customer-facing units (CFUs) to ensure compliance. The policy requires that the creditworthiness and financial strength of customers are assessed at inception and on an ongoing basis. Payment terms are set in accordance with industry standards. Where appropriate, we may minimise risks by requesting securities such as deposits, guarantees and letters of credit. We take proactive steps including constantly reviewing credit ratings of counterparties to minimise the impact of adverse market conditions on trading-related financial assets. Exposures The maximum credit risk exposure of the group\u2019s financial assets at the balance sheet date is as follows:
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Derivative financial assets
1,070
1,479
Investments
23
2,395
3,577
Trade and other receivables
16
2,224
1,821
Contract assets
5
1,740
1,934
Cash and cash equivalents
25
414
392
Total
7,843
9,203
a a The carrying amount excludes \u00a3641m (FY23: \u00a3503m) of non-current trade and other receivables which relate to non-financial assets, and \u00a31,341m (FY23: \u00a31,239m) of prepayments, deferred contract costs, finance lease receivables and other assets. The credit quality and credit concentration of cash equivalents, current asset investments and derivative financial assets are detailed in the tables below. Where the opinion of Moody\u2019s and Standard & Poor\u2019s (S&P) differ, the lower rating is used.
2024
2023
Moody\u2019s/S&P credit rating of counterparty
\u00a3m
\u00a3m
Aa2/AA and above
1,823
3,498
Aa3/AA\u2013
585
115
A1/A+
819
957
A2/A
261
400
A3/A\u2013
\u2014
53
Baa1/BBB+
\u2014
\u2014
Baa2/BBB and below
a
30
60
Total
b
3,518
5,083
a Baa2/BBB rated exposure represents the energy derivatives and carrying value of forward currency contracts with Sports JV. b We hold cash collateral of \u00a315m (FY23: \u00a3557m) in respect of derivative financial assets with certain counterparties, this has reduced during the year as a result of derivative portfolio management. The concentration of credit risk for our trading balances is provided in note 16, which analyses outstanding balances by CFU. Where multiple transactions are undertaken with a single financial counterparty or group of related counterparties, we enter into netting arrangements to reduce our exposure to credit risk by making use of standard International Swaps and Derivatives Association (ISDA) documentation. We have also entered into credit support agreements with certain swap counterparties whereby, on a daily, weekly and monthly basis, the fair value position on notional \u00a31,047m (FY23: \u00a32,024m) of long-dated cross-currency swaps and interest rate swaps is collateralised . Offsetting of financial instruments The table below shows our financial assets and liabilities that are subject to offset in the group\u2019s balance sheet and the impact of enforceable master netting or similar agreements.
Related amounts not set off in the balance sheet
Amounts presented in the Right of set off with derivative Cash Net
Financial assets and liabilities balance sheet counterparties collateral amount
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative financial assets
1,070
(356)
(15)
699
Derivative financial liabilities
(539)
356
40
(143)
Total
531
\u2014
25
556
At 31 March 2023
Derivative financial assets
1,479
(323)
(557)
599
Derivative financial liabilities
(383)
323
48
(12)
Total
1,096
\u2014
(509)
587
Derivatives and hedging We use derivative financial instruments mainly to reduce exposure to foreign exchange and interest rate risks. Derivatives may qualify as hedges for accounting purposes if they meet the criteria for designation as cash flow hedges or fair value hedges in accordance with IFRS 9. Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date.
Current Non-current Current Non-current
asset asset liability liability
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Designated in a cash flow hedge
34
947
80
383
Other
16
73
14
62
Total derivatives
50
1,020
94
445
At 31 March 2023
Designated in a cash flow hedge
78
1,330
62
255
Other
4
67
24
42
Total derivatives
82
1,397
86
297
All derivative financial instruments are categorised at Level 2, with the exception of the energy contracts which are categorised at Level 3 of the fair value hierarchy as defined in note 23. Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging euro, US dollar and Japanese yen denominated borrowings. Forward currency contracts are taken out to hedge step up interest on currency denominated borrowings relating to the group\u2019s 2030 US dollar bond. The hedged cash flows will affect the group\u2019s income statement as interest and principal amounts are repaid over the remaining term of the borrowings (see note 26). We hedge forecast foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints 12 months forward with certain specific transactions hedged further forward. The related cash flows are recognised in the income statement over this period. All hedge relationships were fully effective in the period. The amounts related to items designated as hedging instruments were as follows:
Balance in cash Amount
flow hedge Fair value recycled from
related (gain)/loss cash flow
Notional reserves recognised in hedge related
Hedged items
principal
Asset
Liability
(gain)/loss OCI reserves to P&L
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
13,583
960
(355)
(213)
464
(361)
Step up interest on the 2030 US dollar bond
112
\u2014
(2)
(25)
2
4
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,308
18
(11)
(12)
15
8
and Hungarian forints
Other, including energy contracts
d
3
(95)
90
161
(7)
Total cash flow hedges
15,003
981
(463)
(160)
642
(356)
Deferred tax
\u2014
\u2014
27
Derivatives not in a designated hedge relationship
89
(76)
\u2014
Carrying value on the balance sheet
1,070
(539)
(133)
At 31 March 2023
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
12,888
1,316
(290)
(316)
(887)
597
Step up interest on the 2030 US dollar bond
115
\u2014
(2)
(31)
(8)
6
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,211
34
(24)
(35)
(75)
61
and Hungarian forints
Other, including energy contracts
d
58
(1)
(64)
(85)
49
Total cash flow hedges
14,214
1,408
(317)
(446)
(1,055)
713
Deferred tax
\u2014
\u2014
106
Derivatives not in a designated hedge relationship
71
(66)
\u2014
Carrying value on the balance sheet
1,479
(383)
(340)
b c b c a Sterling, euro, US dollar and Japanese yen denominated borrowings are hedged using cross-currency swaps and interest rate swaps. Amounts recycled to profit and loss are presented within finance expense. Range of hedged rates: sterling interest: 5.9%-6.0% (FY23: 5.9%-6.0%), euro FX: 1.12-1.29 (FY23: 1.11-1.29), US dollar FX: 1.28-1.80 (FY23: 1.28-1.80), Japanese yen FX: 156.92 (FY23: 156.92). b Step up interest on US dollar denominated borrowings are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within finance expense. Range of hedged FX rates: 1.21-1.28 (FY23: 1.17-1.24). c Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within cost of sales or operating costs, in line with the underlying hedged item. Range of hedged FX rates: US dollar: 1.21-1.30 (FY23: 1.10-1.31), euro: 1.12-1.17 (FY23: 1.11-1.18), Indian rupees: 106.05-120.97 (FY23: 106.05-120.97), Hungarian forint: 458.35-467.81 (FY23: 489.17-503.51). d Includes \u00a3(87)m liability (FY23: \u00a357m asset) relating to energy contracts, these are hedged using contracts for difference and virtual power purchase agreements in order to provide long-term power cost certainty. Amounts recycled to profit and loss are presented within operating costs. Range of strike price: 60-122 \u00a3/MWh (FY23: 60-125 \u00a3/MWh).", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-579": { "value": "Material accounting policies that apply to loans and other borrowings We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on de-designation of the hedge, is recognised in the income statement. What\u2019s our capital management policy? Our capital management policy targets an overall level of debt consistent with our credit rating target of BBB+/Baa1 and minimum rating of BBB/Baa2 while investing in the business, supporting the pension scheme and meeting our distribution policy. To meet this objective, we may issue or repay debt, issue or repurchase shares or adjust dividends paid to shareholders. We manage the capital structure and make adjustments to it accordingly to reflect changes in economic conditions and the risk characteristics of the group. The Board regularly reviews the capital structure and capital management policy and no changes were made in FY24. For details of share issues and repurchases in the year see note 20. Our capital structure consists of net debt and shareholders\u2019 equity. The analysis below summarises the components which we manage as capital.
2024
2023
At 31 March
\u00a3m
\u00a3m
Net debt
19,479
18,859
Total parent shareholders\u2019 equity
12,513
14,490
Capital structure
31,992
33,349
a a Excludes non-controlling interests of \u00a35m (FY23: \u00a324m). Net debt and net financial debt Net debt consists of loans and other borrowings, lease liabilities (both current and non-current) less current asset investments and cash and cash equivalents, including items which have been classified as held for sale on the balance sheet. Amounts due to joint ventures and loans and borrowings recognised in relation to monies received from the sale of cash flows of contract assets and as prepayment for the forward sale of redundant copper are excluded. Currency-denominated balances within net debt are translated to sterling at swap rates where hedged. Fair value adjustments and accrued interest applied to reflect the effective interest method are removed. We explain the rationale for using net debt as a key performance indicator, together with changes to the metric in FY24, in Additional Information on page 231. Net financial debt is defined as net debt excluding lease liabilities. Net debt and net financial debt are considered to be alternative performance measures as they are not defined in IFRS. The most directly comparable IFRS measure is the aggregate of loans and other borrowings and lease liabilities (current and non-current), current asset investments and cash and cash equivalents. A reconciliation from these IFRS measures to net debt and net financial debt is given below.
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Loans and other borrowings
18,526
18,521
Lease liabilities
15
4,955
5,359
Assets and liabilities classified as held for sale
22
\u2014
3
Less:
Cash and cash equivalents
25
(414)
(392)
Current asset investments
23
(2,366)
(3,548)
20,701
19,943
Adjustments:
To retranslate debt balances at swap rates where hedged by currency swaps
(512)
(819)
To remove accrued interest applied to reflect the effective interest method and fair value
adjustments
(275)
(254)
Loans with joint ventures
30
(11)
(11)
Loans related to the forward sale of redundant copper
(106)
\u2014
Loans related to sale of contract assets
(318)
\u2014
Net debt
19,479
18,859
Lease liabilities
15
(4,955)
(5,359)
Lease liabilities classified as held for sale
\u2014
(3)
Net financial debt
14,524
13,497
a b c b a Includes overdrafts of \u00a358m at 31 March 2024 (FY23: \u00a311m). b Refer to note 22. c The translation difference between spot rate and hedged rate of loans and borrowings denominated in foreign currency. 26. Loans and other borrowings The table below shows the key components of net debt and the increase of \u00a3620m this year.
At 31 March Cash Net lease Foreign Transfer to Other At 31 March
a d
2023 flows additions exchange within one year movements 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
1,772
(1,615)
\u2014
(12)
1,227
23
1,395
Loans and other borrowings due after one year
16,749
1,800
\u2014
(287)
(1,227)
96
17,131
Total loans and other borrowings
18,521
185
\u2014
(299)
\u2014
119
18,526
Lease liabilities due within one year
800
(882)
\u2014
(1)
849
\u2014
766
Lease liabilities due after one year
4,559
\u2014
487
(8)
(849)
\u2014
4,189
Liabilities classified as held for sale
3
\u2014
\u2014
\u2014
\u2014
(3)
\u2014
Total lease liabilities
5,362
(882)
487
(9)
\u2014
(3)
4,955
Gross debt
23,883
(697)
487
(308)
\u2014
116
23,481
Less:
Impact of cross-currency swaps
(819)
\u2014
\u2014
307
\u2014
\u2014
(512)
Removal of the accrued interest and fair value
(264)
\u2014
\u2014
\u2014
\u2014
(22)
(286)
adjustments
Removal of loans with joint ventures
(11)
(1)
\u2014
\u2014
\u2014
1
(11)
Removal of loans related to the forward sale of
redundant copper
\u2014
(105)
\u2014
\u2014
\u2014
(1)
(106)
Removal of loans related to sale of cash flows
\u2014
(305)
\u2014
\u2014
\u2014
(13)
(318)
related to contract assets
Cash and cash equivalents
(392)
(30)
\u2014
8
\u2014
\u2014
(414)
Current asset investments
(3,548)
1,173
\u2014
10
\u2014
(1)
(2,366)
Removal of accrued interest
10
\u2014
\u2014
\u2014
\u2014
1
11
Net debt
18,859
35
487
17
\u2014
81
19,479
b c
At 31 March Cash Net lease Foreign Transfer to Other At 31
2022 flows additions exchange within one year movements March 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
873
(136)
\u2014
65
943
27
1,772
Loans and other borrowings due after one year
15,312
1,746
\u2014
525
(943)
109
16,749
Total loans and other borrowings
16,185
1,610
\u2014
590
\u2014
136
18,521
Lease liabilities due within one year
795
(860)
\u2014
2
863
\u2014
800
Lease liabilities due after one year
4,965
\u2014
449
11
(863)
(3)
4,559
Liabilities classified as held for sale
2
\u2014
\u2014
\u2014
\u2014
1
3
Total lease liabilities
5,762
(860)
449
13
\u2014
(2)
5,362
Gross debt
21,947
750
449
603
\u2014
134
23,883
Less:
Impact of cross-currency swaps
(234)
\u2014
\u2014
(585)
\u2014
\u2014
(819)
Removal of the accrued interest and fair value
(251)
\u2014
\u2014
\u2014
\u2014
(13)
(264)
adjustments
Removal of loans with joint ventures
\u2014
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Cash and cash equivalents
(777)
379
\u2014
3
\u2014
3
(392)
Current asset investments
(2,679)
(885)
\u2014
(21)
\u2014
37
(3,548)
Removal of accrued interest
3
\u2014
\u2014
\u2014
\u2014
7
10
Net debt
18,009
233
449
\u2014
\u2014
168
18,859
a d b c a Net lease additions are net non-cash movements in lease liabilities during the period, and primarily comprise new and terminated leases, remeasurements of existing leases and lease interest charges. b Includes accrued interest and bank overdrafts. c Translation of debt balances at swap rates where hedged by cross-currency swaps. d Other movements include removal of accrued interest applied to reflect the effective interest rate method, removal of fair value adjustments and movements relating to held for sale assets and liabilities (see note 22). The table below shows how cash flows from gross debt of \u00a3(697)m (FY23: \u00a3750m) in the table above reconciles to the line items presented in the group cash flow statement on page 149:
2024
2023
At 31 March
\u00a3m
\u00a3m
Repayment of borrowings
(1,676)
(513)
Proceeds from bank loans and bonds
2,242
2,203
Cash flows from collateral (paid) received
(532)
(17)
Increase (decrease) in amounts owned to joint ventures
(1)
11
Change in bank overdraft
47
(74)
Total loans and other borrowings cash flows - financing activities
80
1,610
Prepayment for the forward sale of copper
105
\u2014
Total loans and other borrowings cash flows - investing activities
105
\u2014
Total loans and other borrowings cash flows
185
1,610
Payment of lease liabilities
(748)
(727)
Interest on lease liabilities paid
(134)
(133)
Total lease liability cash flows - financing activities
(882)
(860)
Total gross debt cash flows
(697)
750
a b c a Presented within cash and cash equivalents in the group cash flow statement. b In FY24 we received an upfront prepayment of \u00a3105m from entering into a forward agreement to sell copper granules created from surplus copper cables. As this is expected to be the only cash flow that occurs as part of this transaction the cash receipt has been included as a separate line within cash flows from investing activities in the group cash flow statement. The related liability is recognised on balance sheet within loans and other borrowings, see page 149. c Presented within interest paid in the group cash flow statement.
The table below gives details of the listed bonds and other debt.
2024
2023
At 31 March
\u00a3m
\u00a3m
0.875% \u20ac306m bond due September 2023
a
\u2014
270
4.5% $675m bond due December 2023
\u2014
554
1% \u20ac469m bond due June 2024
\u2014
415
1% \u20ac825m bond due November 2024
708
726
3.50% \u00a3250m index linked bond due April 2025
575
524
0.5% \u20ac650m bond due September 2025
557
571
1.75% \u20ac1,300m bond due March 2026
1,112
1,143
1.5% \u20ac1,150m bond due June 2027
991
1,017
2.75% \u20ac700m bond due August 2027
601
530
2.125% \u20ac500m bond due September 2028
a
431
442
5.125% $700m bond due December 2028
561
573
5.75% \u00a3600m bond due December 2028
658
669
1.125% \u20ac750m bond due September 2029
a
640
657
3.25% $1,000m bond due November 2029
796
812
9.625% $2,670m bond due December 2030
a
(minimum 8.625%
b
)
2,166
2,214
3.75% \u20ac800m bond due February 2031
704
704
3.125% \u00a3500m bond due November 2031
503
503
3.375% \u20ac500m bond due August 2032
433
445
4.25% \u20ac850m bond due January 2033
725
\u2014
3.64% \u00a3330m bond due June 2033
339
339
1.613% \u00a3330m index linked bond due June 2033
394
380
6.375% \u00a3500m bond due June 2037
523
523
3.883% \u00a3330m bond due June 2039
340
340
1.739% \u00a3330m index linked bond due June 2039
394
381
5.75% \u00a3450m bond due February 2041
445
347
3.924% \u00a3340m bond due June 2042
350
350
1.774% \u00a3340m index linked bond due June 2042
406
392
2.08% JPY10,000m bond due February 2043
52
61
3.625% \u00a3250m bond due November 2047
251
250
4.25% $500m bond due November 2049
400
408
1.874% \u20ac500m hybrid bond due August 2080
432
443
4.250% $500m hybrid bond due November 2081
396
404
4.875% $500m hybrid bond due November 2081
401
409
8.375% \u00a3700m hybrid bond due December 2083
710
\u2014
Total listed bonds
17,994
17,796
Loans related to the sale of cash flows related to contract assets
341
100
Loans related to the forward sale of redundant copper
106
\u2014
Other loans
27
614
Bank overdrafts (note 25)
58
11
Total other loans and borrowings
532
725
Total loans and other borrowings
18,526
18,521
a
a,d
a
a
a
a
a,f
a
a
a
a
a
f
a
a
a,c
a,c
a,c
c
e
a Designated in a cash flow hedge relationship.
b The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody\u2019s or Standard & Poor\u2019s to the group\u2019s senior unsecured debt below
A3/A\u2013 respectively. In addition, if Moody\u2019s or Standard & Poor\u2019s subsequently increase the ratings then the interest rate will be decreased by 0.25% for each rating category upgrade
by either rating agency. In no event will the interest rate be reduced below the minimum rate reflected in the above table.
c Includes call options between 1.5 years and 7.5 years.
d Redeemed early in March 2024.
e Performance obligations have been substantially delivered to the customer in relation to these cash flows related to contract assets that have been sold but the right to receive cash
is dependent on the group\u2019s future performance in relation to airtime and so a financial liability has been recognised. The related cash flows have been included within financing
activities in the cash flow statement. \u00a3318m of the liability relates to sales of cash flows related to contract assets in FY24 and so is removed from our net debt measure, the remaining
\u00a323m relates to sales in FY23.
f Increased the issue size on \u20ac700m bond due August 2027 by \u20ac100m in November 2023 and on \u00a3450m bond due February 2041 by \u00a3100m in December 2023 .
Unless previously designated in a fair value hedge relationship, all loans and other borrowings are carried on our balance sheet and in the
table above at amortised cost. The fair value of listed bonds is \u00a317,820m (FY23: \u00a316,979m).
The fair value of our listed bonds is estimated on the basis of quoted market prices (Level 1).
The carrying amount of other loans and bank overdrafts equates to fair value due to the short maturity of these items (Level 3).
The interest rates payable on loans and borrowings disclosed above reflect the coupons on the underlying issued loans and borrowings
and not the interest rates achieved through applying associated cross-currency and interest rate swaps in hedge arrangements.
During the period the group entered into a forward agreement to sell copper granules created from BT\u2019s surplus copper cables. The right
to receive cash is dependent on the initial buyer receiving payment from the end customer and so a financial liability of \u00a3106m including
accrued interest has been recognised. This should be the only cash flow that occurs as part of this transaction and so the cash receipt of \u00a3105m has been included in a separate line within investing activities in the cash flow statement. Loans and other borrowings are analysed as follows:
2024
2023
At 31 March
\u00a3m
\u00a3m
Current liabilities
Listed bonds
996
1,075
Amounts owed to joint ventures
11
11
Other loans and bank overdrafts
388
686
Total current liabilities
1,395
1,772
Non-current liabilities
Listed bonds
16,998
16,722
Other loans and bank overdrafts
133
27
Total non-current liabilities
17,131
16,749
Total loans and other borrowings
18,526
18,521
a a a Includes collateral received on swaps of \u00a315m (FY23: \u00a3557m). The carrying values disclosed in the above table reflect balances at amortised cost adjusted for accrued interest and fair value adjustments to the relevant loans or borrowings. These do not reflect the final principal repayments that will arise after taking account of the relevant derivatives in hedging relationships which are reflected in the table below. All borrowings as at 31 March 2024 were unsecured. The principal repayments of loans and borrowings at hedged rates amounted to \u00a317,728m (FY23: \u00a317,442m) and repayments fall due as follows:
2024
2023
Effect of Principal Effect of Principal
Carrying hedging and repayments at Carrying hedging and repayments at
amount interest hedged rates amount interest hedged rates
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within one year, or on demand
1,395
(258)
1,137
1,772
(271)
1,501
Between one and two years
2,727
(85)
2,642
1,165
15
1,180
Between two and three years
431
(24)
407
2,669
(141)
2,528
Between three and four years
1,614
29
1,643
404
(33)
371
Between four and five years
2,282
6
2,288
1,539
(14)
1,525
After five years
10,107
(496)
9,611
10,983
(646)
10,337
Total due for repayment after more than one year
17,161
(570)
16,591
16,760
(819)
15,941
Total repayments
18,556
(828)
17,728
18,532
(1,090)
17,442
Non cash adjustments
(30)
(11)
Total loans and other borrowings
18,526
18,521
a a Fair value adjustments and unamortised bond fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-614": { "value": "Material accounting policies that apply to loans and other borrowings We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on de-designation of the hedge, is recognised in the income statement. Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-621": { "value": "Material accounting policies that apply to loans and other borrowings We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on de-designation of the hedge, is recognised in the income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-567": { "value": "
Net debt and net financial debt
Net debt consists of loans and other borrowings, lease liabilities (both current and non-current) less current asset investments and cash
and cash equivalents, including items which have been classified as held for sale on the balance sheet. Amounts due to joint ventures and
loans and borrowings recognised in relation to monies received from the sale of cash flows of contract assets and as prepayment for the
forward sale of redundant copper are excluded. Currency-denominated balances within net debt are translated to sterling at swap rates
where hedged. Fair value adjustments and accrued interest applied to reflect the effective interest method are removed. We explain the
rationale for using net debt as a key performance indicator, together with changes to the metric in FY24, in Additional Information on
page 231.
Net financial debt is defined as net debt excluding lease liabilities.
Net debt and net financial debt are considered to be alternative performance measures as they are not defined in IFRS. The most directly
comparable IFRS measure is the aggregate of loans and other borrowings and lease liabilities (current and non-current), current asset
investments and cash and cash equivalents. A reconciliation from these IFRS measures to net debt and net financial debt is given below.
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Loans and other borrowings
18,526
18,521
Lease liabilities
15
4,955
5,359
Assets and liabilities classified as held for sale
22
\u2014
3
Less:
Cash and cash equivalents
25
(414)
(392)
Current asset investments
23
(2,366)
(3,548)
20,701
19,943
Adjustments:
To retranslate debt balances at swap rates where hedged by currency swaps
(512)
(819)
To remove accrued interest applied to reflect the effective interest method and fair value
adjustments
(275)
(254)
Loans with joint ventures
30
(11)
(11)
Loans related to the forward sale of redundant copper
(106)
\u2014
Loans related to sale of contract assets
(318)
\u2014
Net debt
19,479
18,859
Lease liabilities
15
(4,955)
(5,359)
Lease liabilities classified as held for sale
\u2014
(3)
Net financial debt
14,524
13,497
a
b
c
b
a Includes overdrafts of \u00a358m at 31 March 2024 (FY23: \u00a311m).
b Refer to note 22.
c The translation difference between spot rate and hedged rate of loans and borrowings denominated in foreign currency.
The table below shows the key components of net debt and the increase of \u00a3620m this year.
At 31 March Cash Net lease Foreign Transfer to Other At 31 March
a d
2023 flows additions exchange within one year movements 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
1,772
(1,615)
\u2014
(12)
1,227
23
1,395
Loans and other borrowings due after one year
16,749
1,800
\u2014
(287)
(1,227)
96
17,131
Total loans and other borrowings
18,521
185
\u2014
(299)
\u2014
119
18,526
Lease liabilities due within one year
800
(882)
\u2014
(1)
849
\u2014
766
Lease liabilities due after one year
4,559
\u2014
487
(8)
(849)
\u2014
4,189
Liabilities classified as held for sale
3
\u2014
\u2014
\u2014
\u2014
(3)
\u2014
Total lease liabilities
5,362
(882)
487
(9)
\u2014
(3)
4,955
Gross debt
23,883
(697)
487
(308)
\u2014
116
23,481
Less:
Impact of cross-currency swaps
(819)
\u2014
\u2014
307
\u2014
\u2014
(512)
Removal of the accrued interest and fair value
(264)
\u2014
\u2014
\u2014
\u2014
(22)
(286)
adjustments
Removal of loans with joint ventures
(11)
(1)
\u2014
\u2014
\u2014
1
(11)
Removal of loans related to the forward sale of
redundant copper
\u2014
(105)
\u2014
\u2014
\u2014
(1)
(106)
Removal of loans related to sale of cash flows
\u2014
(305)
\u2014
\u2014
\u2014
(13)
(318)
related to contract assets
Cash and cash equivalents
(392)
(30)
\u2014
8
\u2014
\u2014
(414)
Current asset investments
(3,548)
1,173
\u2014
10
\u2014
(1)
(2,366)
Removal of accrued interest
10
\u2014
\u2014
\u2014
\u2014
1
11
Net debt
18,859
35
487
17
\u2014
81
19,479
b c
At 31 March Cash Net lease Foreign Transfer to Other At 31
2022 flows additions exchange within one year movements March 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans and other borrowings due within one year
873
(136)
\u2014
65
943
27
1,772
Loans and other borrowings due after one year
15,312
1,746
\u2014
525
(943)
109
16,749
Total loans and other borrowings
16,185
1,610
\u2014
590
\u2014
136
18,521
Lease liabilities due within one year
795
(860)
\u2014
2
863
\u2014
800
Lease liabilities due after one year
4,965
\u2014
449
11
(863)
(3)
4,559
Liabilities classified as held for sale
2
\u2014
\u2014
\u2014
\u2014
1
3
Total lease liabilities
5,762
(860)
449
13
\u2014
(2)
5,362
Gross debt
21,947
750
449
603
\u2014
134
23,883
Less:
Impact of cross-currency swaps
(234)
\u2014
\u2014
(585)
\u2014
\u2014
(819)
Removal of the accrued interest and fair value
(251)
\u2014
\u2014
\u2014
\u2014
(13)
(264)
adjustments
Removal of loans with joint ventures
\u2014
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Cash and cash equivalents
(777)
379
\u2014
3
\u2014
3
(392)
Current asset investments
(2,679)
(885)
\u2014
(21)
\u2014
37
(3,548)
Removal of accrued interest
3
\u2014
\u2014
\u2014
\u2014
7
10
Net debt
18,009
233
449
\u2014
\u2014
168
18,859
a d b c a Net lease additions are net non-cash movements in lease liabilities during the period, and primarily comprise new and terminated leases, remeasurements of existing leases and lease interest charges. b Includes accrued interest and bank overdrafts. c Translation of debt balances at swap rates where hedged by cross-currency swaps. d Other movements include removal of accrued interest applied to reflect the effective interest rate method, removal of fair value adjustments and movements relating to held for sale assets and liabilities (see note 22). The table below shows how cash flows from gross debt of \u00a3(697)m (FY23: \u00a3750m) in the table above reconciles to the line items presented in the group cash flow statement on page 149:
2024
2023
At 31 March
\u00a3m
\u00a3m
Repayment of borrowings
(1,676)
(513)
Proceeds from bank loans and bonds
2,242
2,203
Cash flows from collateral (paid) received
(532)
(17)
Increase (decrease) in amounts owned to joint ventures
(1)
11
Change in bank overdraft
47
(74)
Total loans and other borrowings cash flows - financing activities
80
1,610
Prepayment for the forward sale of copper
105
\u2014
Total loans and other borrowings cash flows - investing activities
105
\u2014
Total loans and other borrowings cash flows
185
1,610
Payment of lease liabilities
(748)
(727)
Interest on lease liabilities paid
(134)
(133)
Total lease liability cash flows - financing activities
(882)
(860)
Total gross debt cash flows
(697)
750
a b c a Presented within cash and cash equivalents in the group cash flow statement. b In FY24 we received an upfront prepayment of \u00a3105m from entering into a forward agreement to sell copper granules created from surplus copper cables. As this is expected to be the only cash flow that occurs as part of this transaction the cash receipt has been included as a separate line within cash flows from investing activities in the group cash flow statement. The related liability is recognised on balance sheet within loans and other borrowings, see page 149. c Presented within interest paid in the group cash flow statement. The table below gives details of the listed bonds and other debt.
2024
2023
At 31 March
\u00a3m
\u00a3m
0.875% \u20ac306m bond due September 2023
a
\u2014
270
4.5% $675m bond due December 2023
\u2014
554
1% \u20ac469m bond due June 2024
\u2014
415
1% \u20ac825m bond due November 2024
708
726
3.50% \u00a3250m index linked bond due April 2025
575
524
0.5% \u20ac650m bond due September 2025
557
571
1.75% \u20ac1,300m bond due March 2026
1,112
1,143
1.5% \u20ac1,150m bond due June 2027
991
1,017
2.75% \u20ac700m bond due August 2027
601
530
2.125% \u20ac500m bond due September 2028
a
431
442
5.125% $700m bond due December 2028
561
573
5.75% \u00a3600m bond due December 2028
658
669
1.125% \u20ac750m bond due September 2029
a
640
657
3.25% $1,000m bond due November 2029
796
812
9.625% $2,670m bond due December 2030
a
(minimum 8.625%
b
)
2,166
2,214
3.75% \u20ac800m bond due February 2031
704
704
3.125% \u00a3500m bond due November 2031
503
503
3.375% \u20ac500m bond due August 2032
433
445
4.25% \u20ac850m bond due January 2033
725
\u2014
3.64% \u00a3330m bond due June 2033
339
339
1.613% \u00a3330m index linked bond due June 2033
394
380
6.375% \u00a3500m bond due June 2037
523
523
3.883% \u00a3330m bond due June 2039
340
340
1.739% \u00a3330m index linked bond due June 2039
394
381
5.75% \u00a3450m bond due February 2041
445
347
3.924% \u00a3340m bond due June 2042
350
350
1.774% \u00a3340m index linked bond due June 2042
406
392
2.08% JPY10,000m bond due February 2043
52
61
3.625% \u00a3250m bond due November 2047
251
250
4.25% $500m bond due November 2049
400
408
1.874% \u20ac500m hybrid bond due August 2080
432
443
4.250% $500m hybrid bond due November 2081
396
404
4.875% $500m hybrid bond due November 2081
401
409
8.375% \u00a3700m hybrid bond due December 2083
710
\u2014
Total listed bonds
17,994
17,796
Loans related to the sale of cash flows related to contract assets
341
100
Loans related to the forward sale of redundant copper
106
\u2014
Other loans
27
614
Bank overdrafts (note 25)
58
11
Total other loans and borrowings
532
725
Total loans and other borrowings
18,526
18,521
a a,d a a a a a,f a a a a a f a a a,c a,c a,c c e a Designated in a cash flow hedge relationship. b The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody\u2019s or Standard & Poor\u2019s to the group\u2019s senior unsecured debt below A3/A\u2013 respectively. In addition, if Moody\u2019s or Standard & Poor\u2019s subsequently increase the ratings then the interest rate will be decreased by 0.25% for each rating category upgrade by either rating agency. In no event will the interest rate be reduced below the minimum rate reflected in the above table. c Includes call options between 1.5 years and 7.5 years. d Redeemed early in March 2024. e Performance obligations have been substantially delivered to the customer in relation to these cash flows related to contract assets that have been sold but the right to receive cash is dependent on the group\u2019s future performance in relation to airtime and so a financial liability has been recognised. The related cash flows have been included within financing activities in the cash flow statement. \u00a3318m of the liability relates to sales of cash flows related to contract assets in FY24 and so is removed from our net debt measure, the remaining \u00a323m relates to sales in FY23. f Increased the issue size on \u20ac700m bond due August 2027 by \u20ac100m in November 2023 and on \u00a3450m bond due February 2041 by \u00a3100m in December 2023 . Unless previously designated in a fair value hedge relationship, all loans and other borrowings are carried on our balance sheet and in the table above at amortised cost. The fair value of listed bonds is \u00a317,820m (FY23: \u00a316,979m). The fair value of our listed bonds is estimated on the basis of quoted market prices (Level 1). The carrying amount of other loans and bank overdrafts equates to fair value due to the short maturity of these items (Level 3). The interest rates payable on loans and borrowings disclosed above reflect the coupons on the underlying issued loans and borrowings and not the interest rates achieved through applying associated cross-currency and interest rate swaps in hedge arrangements. During the period the group entered into a forward agreement to sell copper granules created from BT\u2019s surplus copper cables. The right to receive cash is dependent on the initial buyer receiving payment from the end customer and so a financial liability of \u00a3106m including accrued interest has been recognised. This should be the only cash flow that occurs as part of this transaction and so the cash receipt of \u00a3105m has been included in a separate line within investing activities in the cash flow statement. Loans and other borrowings are analysed as follows:
2024
2023
At 31 March
\u00a3m
\u00a3m
Current liabilities
Listed bonds
996
1,075
Amounts owed to joint ventures
11
11
Other loans and bank overdrafts
388
686
Total current liabilities
1,395
1,772
Non-current liabilities
Listed bonds
16,998
16,722
Other loans and bank overdrafts
133
27
Total non-current liabilities
17,131
16,749
Total loans and other borrowings
18,526
18,521
a a a Includes collateral received on swaps of \u00a315m (FY23: \u00a3557m). The carrying values disclosed in the above table reflect balances at amortised cost adjusted for accrued interest and fair value adjustments to the relevant loans or borrowings. These do not reflect the final principal repayments that will arise after taking account of the relevant derivatives in hedging relationships which are reflected in the table below. All borrowings as at 31 March 2024 were unsecured. The principal repayments of loans and borrowings at hedged rates amounted to \u00a317,728m (FY23: \u00a317,442m) and repayments fall due as follows:
2024
2023
Effect of Principal Effect of Principal
Carrying hedging and repayments at Carrying hedging and repayments at
amount interest hedged rates amount interest hedged rates
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within one year, or on demand
1,395
(258)
1,137
1,772
(271)
1,501
Between one and two years
2,727
(85)
2,642
1,165
15
1,180
Between two and three years
431
(24)
407
2,669
(141)
2,528
Between three and four years
1,614
29
1,643
404
(33)
371
Between four and five years
2,282
6
2,288
1,539
(14)
1,525
After five years
10,107
(496)
9,611
10,983
(646)
10,337
Total due for repayment after more than one year
17,161
(570)
16,591
16,760
(819)
15,941
Total repayments
18,556
(828)
17,728
18,532
(1,090)
17,442
Non cash adjustments
(30)
(11)
Total loans and other borrowings
18,526
18,521
a a Fair value adjustments and unamortised bond fees. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-568": { "value": "
27. Finance expense and income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives
872
753
Lease liabilities
134
133
Derivatives
4
9
Fair value movements on derivatives not in a designated hedge relationship
(1)
1
Reclassification of cash flow hedge from other comprehensive income
38
(21)
Unwinding of discount on provisions and other payables
20
14
Total finance expense before specific items
1,067
889
Specific items (note 9)
121
5
Total finance expense
1,188
894
a
a Includes \u00a3nil (FY23: \u00a313m credit) reclassification of cash flow hedge from other comprehensive income .
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance income
Interest on:
Bank deposits and cash equivalents
28
16
Investments held at amortised cost
140
40
Other finance income
13
7
Total finance income
181
63
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Net finance expense before specific items
886
826
Specific items (note 9)
121
5
Net finance expense
1,007
831
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-594": { "value": "27. Finance expense and income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives
872
753
Lease liabilities
134
133
Derivatives
4
9
Fair value movements on derivatives not in a designated hedge relationship
(1)
1
Reclassification of cash flow hedge from other comprehensive income
38
(21)
Unwinding of discount on provisions and other payables
20
14
Total finance expense before specific items
1,067
889
Specific items (note 9)
121
5
Total finance expense
1,188
894
a a Includes \u00a3nil (FY23: \u00a313m credit) reclassification of cash flow hedge from other comprehensive income .
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance income
Interest on:
Bank deposits and cash equivalents
28
16
Investments held at amortised cost
140
40
Other finance income
13
7
Total finance income
181
63
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Net finance expense before specific items
886
826
Specific items (note 9)
121
5
Net finance expense
1,007
831
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-588": { "value": "27. Finance expense and income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives
872
753
Lease liabilities
134
133
Derivatives
4
9
Fair value movements on derivatives not in a designated hedge relationship
(1)
1
Reclassification of cash flow hedge from other comprehensive income
38
(21)
Unwinding of discount on provisions and other payables
20
14
Total finance expense before specific items
1,067
889
Specific items (note 9)
121
5
Total finance expense
1,188
894
a a Includes \u00a3nil (FY23: \u00a313m credit) reclassification of cash flow hedge from other comprehensive income .
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance income
Interest on:
Bank deposits and cash equivalents
28
16
Investments held at amortised cost
140
40
Other finance income
13
7
Total finance income
181
63
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Net finance expense before specific items
886
826
Specific items (note 9)
121
5
Net finance expense
1,007
831
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-580": { "value": "27. Finance expense and income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives
872
753
Lease liabilities
134
133
Derivatives
4
9
Fair value movements on derivatives not in a designated hedge relationship
(1)
1
Reclassification of cash flow hedge from other comprehensive income
38
(21)
Unwinding of discount on provisions and other payables
20
14
Total finance expense before specific items
1,067
889
Specific items (note 9)
121
5
Total finance expense
1,188
894
a a Includes \u00a3nil (FY23: \u00a313m credit) reclassification of cash flow hedge from other comprehensive income .
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance income
Interest on:
Bank deposits and cash equivalents
28
16
Investments held at amortised cost
140
40
Other finance income
13
7
Total finance income
181
63
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Net finance expense before specific items
886
826
Specific items (note 9)
121
5
Net finance expense
1,007
831
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-550": { "value": "27. Finance expense and income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives
872
753
Lease liabilities
134
133
Derivatives
4
9
Fair value movements on derivatives not in a designated hedge relationship
(1)
1
Reclassification of cash flow hedge from other comprehensive income
38
(21)
Unwinding of discount on provisions and other payables
20
14
Total finance expense before specific items
1,067
889
Specific items (note 9)
121
5
Total finance expense
1,188
894
a a Includes \u00a3nil (FY23: \u00a313m credit) reclassification of cash flow hedge from other comprehensive income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance income
Interest on:
Bank deposits and cash equivalents
28
16
Investments held at amortised cost
140
40
Other finance income
13
7
Total finance income
181
63
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Net finance expense before specific items
886
826
Specific items (note 9)
121
5
Net finance expense
1,007
831
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-517": { "value": "27. Finance expense and income
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives
872
753
Lease liabilities
134
133
Derivatives
4
9
Fair value movements on derivatives not in a designated hedge relationship
(1)
1
Reclassification of cash flow hedge from other comprehensive income
38
(21)
Unwinding of discount on provisions and other payables
20
14
Total finance expense before specific items
1,067
889
Specific items (note 9)
121
5
Total finance expense
1,188
894
a a Includes \u00a3nil (FY23: \u00a313m credit) reclassification of cash flow hedge from other comprehensive income .
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Finance income
Interest on:
Bank deposits and cash equivalents
28
16
Investments held at amortised cost
140
40
Other finance income
13
7
Total finance income
181
63
2024
2023
Year ended 31 March
\u00a3m
\u00a3m
Net finance expense before specific items
886
826
Specific items (note 9)
121
5
Net finance expense
1,007
831
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-518": { "value": "
28. Financial instruments and risk management
We issue or hold financial instruments mainly to finance our operations; to finance corporate transactions such as share buybacks and
acquisitions; for the temporary investment of short-term funds; and to manage currency and interest rate risks. In addition, various
financial instruments, for example trade receivables and payables arise directly from operations.
How do we manage financial risk?
Our activities expose us to a variety of financial risks: market risk (including interest rate risk and foreign exchange risk), credit risk and
liquidity risk.
Treasury operation
We have a centralised treasury operation whose primary role is to manage liquidity and funding requirements as well as our exposure to
associated market risks, and credit risk.
Treasury policy
Treasury policy is set by the Board. Group treasury activities are subject to a set of controls appropriate for the magnitude of borrowing,
investments and group-wide exposures. The Board has delegated authority to operate these policies to a series of panels responsible for
the management of key treasury risks and operations. Appointment to and removal from the key panels requires approval from two of the
following: the Chairman, the Chief Executive or the Chief Financial Officer.
There has been no change in the nature of our risk profile between 31 March 2024 and the date of approval of these financial statements.
How do we manage interest rate risk?
Management policy
Interest rate risk arises primarily from our long-term borrowings. Interest cash flow risk arises from borrowings issued at variable rates,
partially offset by cash held at variable rates. Fair value interest rate risk arises from borrowings issued at fixed rates.
Our policy, as set by the Board, is to ensure that at least 70% of ongoing net debt is at fixed rates. Short-term interest rate management is
delegated to the treasury operation while long-term interest rate management decisions require further approval by the Chief Financial
Officer, the Corporate Finance Director or the Group Treasury Director who each have been delegated such authority from the Board.
Hedging strategy
In order to manage our interest rate profile, we enter into cross-currency and interest rate swap agreements to vary the amounts and
periods for which interest rates on borrowings are fixed. The duration of the swap agreements matches the duration of the debt
instruments. The majority of the group\u2019s long-term borrowings are subject to fixed sterling interest rates after applying the impact of
these hedging instruments.
How do we manage foreign exchange risk?
Management policy
Foreign currency hedging activities protect the group from the risk that changes in exchange rates will adversely affect future net cash flows.
The Board\u2019s policy for foreign exchange risk management defines the types of transactions typically covered, including significant
operational, funding and currency interest exposures, and the period over which cover should extend for each type of transaction.
The Board has delegated short-term foreign exchange management to the treasury operation and long-term foreign exchange management
decisions require further approval from the Chief Financial Officer, the Corporate Finance Director or the Group Treasury Director.
Hedging strategy
A significant proportion of our external revenue and costs arise within the UK and are denominated in sterling. Our non-UK operations
generally trade and are funded in their functional currency which limits their exposure to foreign exchange volatility. We do not have a
material exposure to hyperinflationary economies.
We enter into forward currency contracts to hedge foreign currency capital purchases, purchase and sale commitments, interest expense
and foreign currency investments. The commitments hedged are principally denominated in US dollars, euros, Indian rupees and
Hungarian forints. As a result, our exposure to foreign currency arises mainly on non-UK subsidiary investments and on residual currency trading flows. We use cross-currency swaps to swap foreign currency borrowings into sterling. The table below reflects the currency and interest rate profile of our loans and borrowings after the impact of hedging.
2024
2023
Fixed rate Floating rate Fixed rate Floating rate
interest
interest
Total
 interest
interest
Total
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling
15,899
1,780
17,679
15,210
1,773
16,983
Euro
\u2014
\u2014
\u2014
\u2014
443
443
Other
\u2014
49
49
\u2014
16
16
Total
15,899
1,829
17,728
15,210
2,232
17,442
Ratio of fixed to floating
90%
10%
100%
87%
13%
100%
Weighted average effective fixed
interest rate \u2013 sterling
4.6%
4.0%
The floating rate loans and borrowings and committed facilities bear interest rates fixed in advance for periods up to one year, primarily by reference to RPI, CPI and ARRs where applicable. Sensitivity analysis The income statement and shareholders\u2019 equity are exposed to volatility arising from changes in interest rates, foreign exchange rates and energy prices. To demonstrate this volatility, management has concluded that the following are reasonable benchmarks for performing sensitivity analysis: \u2013 For interest, a 1% increase in interest rates and parallel shift in yield curves across sterling, US dollar and euro currencies. \u2013 For foreign exchange, a 10% strengthening of sterling against other currencies. \u2013 For energy, a 10% increase in energy prices. The impact on equity, before tax and excluding any impact related to retirement benefit plans, of a 1% increase in interest rates, a 10% strengthening of sterling against other currencies, and a 10% increase in energy prices is as detailed below:
2024
2023
\u00a3m \u00a3m
Increase Increase
At 31 March (reduce) (reduce)
Sterling interest rates
602
579
US dollar interest rates
(300)
(371)
Euro interest rates
(316)
(284)
Sterling strengthening
(142)
(169)
Energy prices
27
45
A 1% decrease in interest rates, 10% weakening of sterling against other currencies would have broadly the same impact in the opposite direction. The impact of a 1% change in interest rates on the group\u2019s annual net finance expense, 10% change in energy prices on group\u2019s income statement and our exposure to foreign exchange volatility in the income statement, after hedging (excluding translation exposures), would not have been material in FY24 and FY23. Credit ratings We continue to target a BBB+/Baa1 credit rating over the cycle, with a BBB/Baa2 floor. We regularly review the liquidity of the group and our funding strategy takes account of medium-term requirements. These include the pension deficit and shareholder distributions. Our December 2030 bond contains terms that require us to pay higher rates of interest when our credit ratings are below A3 in the case of Moody\u2019s or A\u2013 in the case of Standard & Poor\u2019s (S&P). Additional interest of 0.25% per year accrues for each ratings category downgrade by each agency below those levels effective from the next coupon date following a downgrade. Based on the total notional value of debt outstanding of \u00a32.1bn at 31 March 2024, our finance expense would increase/decrease by approximately \u00a311m a year if the group\u2019s credit rating were to be downgraded/upgraded, respectively, by one credit rating category by both agencies. Our credit ratings were as detailed below:
2024
2023
At 31 March
Rating
Outlook
Rating
Outlook
Rating agency
Fitch
BBB
Stable
BBB
Stable
Moody\u2019s
Baa2
Stable
Baa2
Stable
Standard & Poor\u2019s
BBB
Stable
BBB
Stable
How do we manage liquidity risk?
Management policy
We maintain liquidity by entering into short and long-term financial instruments to support operational and other funding requirements,
determined by using short- and long-term cash forecasts. These forecasts are supplemented by a financial headroom analysis which is
used to assess funding adequacy for at least a 12-month period. On at least an annual basis the Board reviews and approves the long-
term funding requirements of the group and on an ongoing basis considers any related matters. We manage refinancing risk by limiting
the amount of borrowing that matures within any specified period and having appropriate strategies in place to manage refinancing needs
as they arise. The maturity profile of our loans and borrowings at 31 March 2024 is disclosed in note 26. We have term debt maturities of
\u00a30.7bn in FY25.
Our treasury operation reviews and manages our short-term requirements within the parameters of the policies set by the Board. We hold
cash, cash equivalents and current investments in order to manage short-term liquidity requirements. At 31 March 2024 we had undrawn
committed borrowing facilities of \u00a32.1bn (FY23: \u00a32.1bn) maturing in March 2027.
The following table provides an analysis of the remaining cash flows including interest payable for our non-derivative financial liabilities on
an undiscounted basis, which may therefore differ from both the carrying value and fair value.
Trade and
Loans and other Interest on loans other Lease
c d
Non-derivative financial liabilities borrowings and other borrowings payables
liabilities
Provisions
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Due within one year
1,103
738
5,438
765
\u2014
8,044
Between one and two years
2,727
737
189
730
\u2014
4,383
Between two and three years
431
697
88
696
\u2014
1,912
Between three and four years
1,614
680
\u2014
663
\u2014
2,957
Between four and five years
2,282
649
\u2014
634
\u2014
3,565
After five years
10,107
2,569
\u2014
2,103
\u2014
14,779
18,264
6,070
5,715
5,591
\u2014
35,640
Interest payments not yet accrued
\u2014
(5,778)
\u2014
\u2014
\u2014
(5,778)
Fair value adjustment
(30)
\u2014
\u2014
\u2014
\u2014
(30)
Impact of discounting
a,b
\u2014
\u2014
(16)
(636)
\u2014
(652)
Carrying value on the balance sheet
18,234
292
5,699
4,955
\u2014
29,180
At 31 March 2023 (restated)
Due within one year
1,512
643
5,467
800
3
8,425
Between one and two years
1,165
637
204
774
2
2,782
Between two and three years
2,669
616
189
676
2
4,152
Between three and four years
404
575
88
640
2
1,709
Between four and five years
1,539
558
\u2014
612
2
2,711
After five years
10,983
2,891
\u2014
2,529
\u2014
16,403
18,272
5,920
5,948
6,031
11
36,182
Interest payments not yet accrued
\u2014
(5,660)
\u2014
\u2014
\u2014
(5,660)
Fair value adjustment
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Impact of discounting
a,b,c
\u2014
\u2014
(32)
(672)
(1)
(705)
Carrying value on the balance sheet
18,261
260
5,916
5,359
10
29,806
c
c
c
c
a Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest cash flows were calculated using the
most recent interest or indexation rates at the relevant balance sheet date.
b The carrying amount of trade and other payables excludes \u00a3366m (FY23: \u00a3455m) of non-current trade and other payables which relates to non-financial liabilities, and \u00a3899m
(FY23: \u00a31,113m) of other taxation, social security and deferred income.
c FY23 comparatives have been restated to include the financial liability for the minimum guarantee provided to the Sports JV due in more than one year, totalling \u00a3465m.These
amounts had been omitted from this table within the prior year accounts.
d No provisions meeting the definition of a financial liability have been identified in FY24.
Trade and other payables are held at amortised cost. The carrying amount of these balances approximates to fair value due to the short
maturity of amounts payable.
The following table provides an analysis of the contractually agreed cash flows in respect of the group\u2019s derivative financial instruments.
Cash flows are presented on a net or gross basis in accordance with settlement arrangements of the instruments.
Gross settled Gross settled
Derivative financial liabilities
Net settled
outflows
inflows
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Due within one year
17
2,274
(2,135)
156
Between one and two years
16
1,152
(1,028)
140
Between two and three years
16
519
(430)
105
Between three and four years
17
1,935
(1,857)
95
Between four and five years
17
597
(528)
86
After five years
12
3,071
(2,866)
217
a,b
Total
95
9,548
(8,844)
799
At 31 March 2023
Due within one year
47
2,184
(2,088)
143
Between one and two years
47
1,125
(1,058)
114
Between two and three years
94
939
(882)
151
Between three and four years
111
381
(364)
128
Between four and five years
16
161
(135)
42
After five years
47
2,127
(2,011)
163
Total
a,b
362
6,917
(6,538)
741
a Analysed by earliest payment date, certain derivative financial instruments contain break clauses whereby either the group or bank counterparty have the right to terminate the swap
on certain dates. If the break clause was exercised, the mark to market position would be settled in cash.
b Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest rate cash flows were calculated using
the most recent rate applied at the relevant balance sheet date.
How do we manage energy price risk? Management policy UK (excluding Northern Ireland) and European energy prices continue to be exposed to volatility driven by fears of reduced gas supply as Europe continues the shift from Russian gas to LNG and renewables (which themselves are subject to short-term fluctuations given their intermittent nature). In order to manage our exposure to fluctuating energy prices, we have a target for UK (excluding Northern Ireland) energy demand to be at least 80% hedged one quarter before the start of the next financial year, and 50% hedged for the following financial year. We achieve this through forward over the counter hedges and a mixture of new and existing power purchase agreements (PPAs) and derivative virtual PPAs (vPPAs). Hedging strategy In each financial year our strategy is to build on our existing PPA and vPPA portfolio, exploring opportunities with 5-10 year contracts delivering favourable net present values. We complement this by monitoring the markets and forward purchasing electricity (power) when the market is favourable. In the forthcoming financial year the aim is to be 95% hedged, which allows for headroom for increased outputs from the renewable sources should weather conditions prevail. How do we manage credit risk? Management policy Our exposure to credit risk arises from financial assets transacted by the treasury operation (primarily derivatives, investments, cash and cash equivalents) and from trading-related receivables. For treasury-related balances, the Board\u2019s defined policy restricts exposure to any one counterparty by setting credit limits based on the credit quality as defined by Moody\u2019s and Standard & Poor\u2019s. The minimum credit ratings permitted with counterparties in respect of new transactions are A3/A\u2013 for long-term and P1/A1 for short-term investments. If counterparties in respect of existing transactions fall below the permitted criteria we will take action where appropriate. The treasury operation continuously reviews the limits applied to counterparties and will adjust the limit according to the nature and credit standing of the counterparty, and in response to market conditions, up to the maximum allowable limit set by the Board. Operational management policy Our credit policy for trading-related financial assets is applied and managed by each of the customer-facing units (CFUs) to ensure compliance. The policy requires that the creditworthiness and financial strength of customers are assessed at inception and on an ongoing basis. Payment terms are set in accordance with industry standards. Where appropriate, we may minimise risks by requesting securities such as deposits, guarantees and letters of credit. We take proactive steps including constantly reviewing credit ratings of counterparties to minimise the impact of adverse market conditions on trading-related financial assets. Exposures The maximum credit risk exposure of the group\u2019s financial assets at the balance sheet date is as follows:
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Derivative financial assets
1,070
1,479
Investments
23
2,395
3,577
Trade and other receivables
16
2,224
1,821
Contract assets
5
1,740
1,934
Cash and cash equivalents
25
414
392
Total
7,843
9,203
a a The carrying amount excludes \u00a3641m (FY23: \u00a3503m) of non-current trade and other receivables which relate to non-financial assets, and \u00a31,341m (FY23: \u00a31,239m) of prepayments, deferred contract costs, finance lease receivables and other assets. The credit quality and credit concentration of cash equivalents, current asset investments and derivative financial assets are detailed in the tables below. Where the opinion of Moody\u2019s and Standard & Poor\u2019s (S&P) differ, the lower rating is used.
2024
2023
Moody\u2019s/S&P credit rating of counterparty
\u00a3m
\u00a3m
Aa2/AA and above
1,823
3,498
Aa3/AA\u2013
585
115
A1/A+
819
957
A2/A
261
400
A3/A\u2013
\u2014
53
Baa1/BBB+
\u2014
\u2014
Baa2/BBB and below
a
30
60
Total
b
3,518
5,083
a Baa2/BBB rated exposure represents the energy derivatives and carrying value of forward currency contracts with Sports JV. b We hold cash collateral of \u00a315m (FY23: \u00a3557m) in respect of derivative financial assets with certain counterparties, this has reduced during the year as a result of derivative portfolio management. The concentration of credit risk for our trading balances is provided in note 16, which analyses outstanding balances by CFU. Where multiple transactions are undertaken with a single financial counterparty or group of related counterparties, we enter into netting arrangements to reduce our exposure to credit risk by making use of standard International Swaps and Derivatives Association (ISDA) documentation. We have also entered into credit support agreements with certain swap counterparties whereby, on a daily, weekly and monthly basis, the fair value position on notional \u00a31,047m (FY23: \u00a32,024m) of long-dated cross-currency swaps and interest rate swaps is collateralised . Offsetting of financial instruments The table below shows our financial assets and liabilities that are subject to offset in the group\u2019s balance sheet and the impact of enforceable master netting or similar agreements.
Related amounts not set off in the balance sheet
Amounts presented in the Right of set off with derivative Cash Net
Financial assets and liabilities balance sheet counterparties collateral amount
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative financial assets
1,070
(356)
(15)
699
Derivative financial liabilities
(539)
356
40
(143)
Total
531
\u2014
25
556
At 31 March 2023
Derivative financial assets
1,479
(323)
(557)
599
Derivative financial liabilities
(383)
323
48
(12)
Total
1,096
\u2014
(509)
587
Derivatives and hedging We use derivative financial instruments mainly to reduce exposure to foreign exchange and interest rate risks. Derivatives may qualify as hedges for accounting purposes if they meet the criteria for designation as cash flow hedges or fair value hedges in accordance with IFRS 9. Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date.
Current Non-current Current Non-current
asset asset liability liability
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Designated in a cash flow hedge
34
947
80
383
Other
16
73
14
62
Total derivatives
50
1,020
94
445
At 31 March 2023
Designated in a cash flow hedge
78
1,330
62
255
Other
4
67
24
42
Total derivatives
82
1,397
86
297
All derivative financial instruments are categorised at Level 2, with the exception of the energy contracts which are categorised at Level 3
of the fair value hierarchy as defined in note 23.
Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging euro, US dollar and Japanese
yen denominated borrowings. Forward currency contracts are taken out to hedge step up interest on currency denominated borrowings
relating to the group\u2019s 2030 US dollar bond. The hedged cash flows will affect the group\u2019s income statement as interest and principal
amounts are repaid over the remaining term of the borrowings (see note 26).
We hedge forecast foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints 12
months forward with certain specific transactions hedged further forward. The related cash flows are recognised in the income statement
over this period.
All hedge relationships were fully effective in the period.
The amounts related to items designated as hedging instruments were as follows:
Balance in cash Amount
flow hedge Fair value recycled from
related (gain)/loss cash flow
Notional reserves recognised in hedge related
Hedged items
principal
Asset
Liability
(gain)/loss OCI reserves to P&L
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
13,583
960
(355)
(213)
464
(361)
Step up interest on the 2030 US dollar bond
112
\u2014
(2)
(25)
2
4
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,308
18
(11)
(12)
15
8
and Hungarian forints
Other, including energy contracts
d
3
(95)
90
161
(7)
Total cash flow hedges
15,003
981
(463)
(160)
642
(356)
Deferred tax
\u2014
\u2014
27
Derivatives not in a designated hedge relationship
89
(76)
\u2014
Carrying value on the balance sheet
1,070
(539)
(133)
At 31 March 2023
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
12,888
1,316
(290)
(316)
(887)
597
Step up interest on the 2030 US dollar bond
115
\u2014
(2)
(31)
(8)
6
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,211
34
(24)
(35)
(75)
61
and Hungarian forints
Other, including energy contracts
d
58
(1)
(64)
(85)
49
Total cash flow hedges
14,214
1,408
(317)
(446)
(1,055)
713
Deferred tax
\u2014
\u2014
106
Derivatives not in a designated hedge relationship
71
(66)
\u2014
Carrying value on the balance sheet
1,479
(383)
(340)
b
c
b
c
a Sterling, euro, US dollar and Japanese yen denominated borrowings are hedged using cross-currency swaps and interest rate swaps. Amounts recycled to profit and loss are
presented within finance expense. Range of hedged rates: sterling interest: 5.9%-6.0% (FY23: 5.9%-6.0%), euro FX: 1.12-1.29 (FY23: 1.11-1.29), US dollar FX: 1.28-1.80
(FY23: 1.28-1.80), Japanese yen FX: 156.92 (FY23: 156.92).
b Step up interest on US dollar denominated borrowings are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within finance expense.
Range of hedged FX rates: 1.21-1.28 (FY23: 1.17-1.24).
c Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints are hedged using forward currency contracts. Amounts recycled to
profit and loss are presented within cost of sales or operating costs, in line with the underlying hedged item. Range of hedged FX rates: US dollar: 1.21-1.30 (FY23: 1.10-1.31),
euro: 1.12-1.17 (FY23: 1.11-1.18), Indian rupees: 106.05-120.97 (FY23: 106.05-120.97), Hungarian forint: 458.35-467.81 (FY23: 489.17-503.51).
d Includes \u00a3(87)m liability (FY23: \u00a357m asset) relating to energy contracts, these are hedged using contracts for difference and virtual power purchase agreements in order to provide
long-term power cost certainty. Amounts recycled to profit and loss are presented within operating costs. Range of strike price: 60-122 \u00a3/MWh (FY23: 60-125 \u00a3/MWh).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-569": { "value": "How do we manage interest rate risk? Management policy Interest rate risk arises primarily from our long-term borrowings. Interest cash flow risk arises from borrowings issued at variable rates, partially offset by cash held at variable rates. Fair value interest rate risk arises from borrowings issued at fixed rates. Our policy, as set by the Board, is to ensure that at least 70% of ongoing net debt is at fixed rates. Short-term interest rate management is delegated to the treasury operation while long-term interest rate management decisions require further approval by the Chief Financial Officer, the Corporate Finance Director or the Group Treasury Director who each have been delegated such authority from the Board. Hedging strategy In order to manage our interest rate profile, we enter into cross-currency and interest rate swap agreements to vary the amounts and periods for which interest rates on borrowings are fixed. The duration of the swap agreements matches the duration of the debt instruments. The majority of the group\u2019s long-term borrowings are subject to fixed sterling interest rates after applying the impact of these hedging instruments. How do we manage foreign exchange risk? Management policy Foreign currency hedging activities protect the group from the risk that changes in exchange rates will adversely affect future net cash flows. The Board\u2019s policy for foreign exchange risk management defines the types of transactions typically covered, including significant operational, funding and currency interest exposures, and the period over which cover should extend for each type of transaction. The Board has delegated short-term foreign exchange management to the treasury operation and long-term foreign exchange management decisions require further approval from the Chief Financial Officer, the Corporate Finance Director or the Group Treasury Director. Hedging strategy A significant proportion of our external revenue and costs arise within the UK and are denominated in sterling. Our non-UK operations generally trade and are funded in their functional currency which limits their exposure to foreign exchange volatility. We do not have a material exposure to hyperinflationary economies. We enter into forward currency contracts to hedge foreign currency capital purchases, purchase and sale commitments, interest expense and foreign currency investments. The commitments hedged are principally denominated in US dollars, euros, Indian rupees and Hungarian forints. As a result, our exposure to foreign currency arises mainly on non-UK subsidiary investments and on residual currency trading flows. We use cross-currency swaps to swap foreign currency borrowings into sterling. The table below reflects the currency and interest rate profile of our loans and borrowings after the impact of hedging.
2024
2023
Fixed rate Floating rate Fixed rate Floating rate
interest
interest
Total
 interest
interest
Total
At 31 March
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling
15,899
1,780
17,679
15,210
1,773
16,983
Euro
\u2014
\u2014
\u2014
\u2014
443
443
Other
\u2014
49
49
\u2014
16
16
Total
15,899
1,829
17,728
15,210
2,232
17,442
Ratio of fixed to floating
90%
10%
100%
87%
13%
100%
Weighted average effective fixed
interest rate \u2013 sterling
4.6%
4.0%
The floating rate loans and borrowings and committed facilities bear interest rates fixed in advance for periods up to one year, primarily by reference to RPI, CPI and ARRs where applicable. Sensitivity analysis The income statement and shareholders\u2019 equity are exposed to volatility arising from changes in interest rates, foreign exchange rates and energy prices. To demonstrate this volatility, management has concluded that the following are reasonable benchmarks for performing sensitivity analysis: \u2013 For interest, a 1% increase in interest rates and parallel shift in yield curves across sterling, US dollar and euro currencies. \u2013 For foreign exchange, a 10% strengthening of sterling against other currencies. \u2013 For energy, a 10% increase in energy prices. The impact on equity, before tax and excluding any impact related to retirement benefit plans, of a 1% increase in interest rates, a 10% strengthening of sterling against other currencies, and a 10% increase in energy prices is as detailed below:
2024
2023
\u00a3m \u00a3m
Increase Increase
At 31 March (reduce) (reduce)
Sterling interest rates
602
579
US dollar interest rates
(300)
(371)
Euro interest rates
(316)
(284)
Sterling strengthening
(142)
(169)
Energy prices
27
45
A 1% decrease in interest rates, 10% weakening of sterling against other currencies would have broadly the same impact in the opposite direction. The impact of a 1% change in interest rates on the group\u2019s annual net finance expense, 10% change in energy prices on group\u2019s income statement and our exposure to foreign exchange volatility in the income statement, after hedging (excluding translation exposures), would not have been material in FY24 and FY23.
How do we manage energy price risk?
Management policy
UK (excluding Northern Ireland) and European energy prices continue to be exposed to volatility driven by fears of reduced gas supply as
Europe continues the shift from Russian gas to LNG and renewables (which themselves are subject to short-term fluctuations given their
intermittent nature). In order to manage our exposure to fluctuating energy prices, we have a target for UK (excluding Northern Ireland)
energy demand to be at least 80% hedged one quarter before the start of the next financial year, and 50% hedged for the following
financial year. We achieve this through forward over the counter hedges and a mixture of new and existing power purchase agreements
(PPAs) and derivative virtual PPAs (vPPAs).
Hedging strategy
In each financial year our strategy is to build on our existing PPA and vPPA portfolio, exploring opportunities with 5-10 year contracts
delivering favourable net present values. We complement this by monitoring the markets and forward purchasing electricity (power)
when the market is favourable. In the forthcoming financial year the aim is to be 95% hedged, which allows for headroom for increased
outputs from the renewable sources should weather conditions prevail.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-581": { "value": "
Sensitivity analysis
The income statement and shareholders\u2019 equity are exposed to volatility arising from changes in interest rates, foreign exchange rates and
energy prices. To demonstrate this volatility, management has concluded that the following are reasonable benchmarks for performing
sensitivity analysis:
\u2013 For interest, a 1% increase in interest rates and parallel shift in yield curves across sterling, US dollar and euro currencies.
\u2013 For foreign exchange, a 10% strengthening of sterling against other currencies.
\u2013 For energy, a 10% increase in energy prices.
The impact on equity, before tax and excluding any impact related to retirement benefit plans, of a 1% increase in interest rates,
a 10% strengthening of sterling against other currencies, and a 10% increase in energy prices is as detailed below:
2024
2023
\u00a3m \u00a3m
Increase Increase
At 31 March (reduce) (reduce)
Sterling interest rates
602
579
US dollar interest rates
(300)
(371)
Euro interest rates
(316)
(284)
Sterling strengthening
(142)
(169)
Energy prices
27
45
A 1% decrease in interest rates, 10% weakening of sterling against other currencies would have broadly the same impact in the opposite
direction.
The impact of a 1% change in interest rates on the group\u2019s annual net finance expense, 10% change in energy prices on group\u2019s income
statement and our exposure to foreign exchange volatility in the income statement, after hedging (excluding translation exposures),
would not have been material in FY24 and FY23.
", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-570": { "value": "How do we manage liquidity risk? Management policy We maintain liquidity by entering into short and long-term financial instruments to support operational and other funding requirements, determined by using short- and long-term cash forecasts. These forecasts are supplemented by a financial headroom analysis which is used to assess funding adequacy for at least a 12-month period. On at least an annual basis the Board reviews and approves the long- term funding requirements of the group and on an ongoing basis considers any related matters. We manage refinancing risk by limiting the amount of borrowing that matures within any specified period and having appropriate strategies in place to manage refinancing needs as they arise. The maturity profile of our loans and borrowings at 31 March 2024 is disclosed in note 26. We have term debt maturities of \u00a30.7bn in FY25. Our treasury operation reviews and manages our short-term requirements within the parameters of the policies set by the Board. We hold cash, cash equivalents and current investments in order to manage short-term liquidity requirements. At 31 March 2024 we had undrawn committed borrowing facilities of \u00a32.1bn (FY23: \u00a32.1bn) maturing in March 2027. The following table provides an analysis of the remaining cash flows including interest payable for our non-derivative financial liabilities on an undiscounted basis, which may therefore differ from both the carrying value and fair value.
Trade and
Loans and other Interest on loans other Lease
c d
Non-derivative financial liabilities borrowings and other borrowings payables
liabilities
Provisions
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Due within one year
1,103
738
5,438
765
\u2014
8,044
Between one and two years
2,727
737
189
730
\u2014
4,383
Between two and three years
431
697
88
696
\u2014
1,912
Between three and four years
1,614
680
\u2014
663
\u2014
2,957
Between four and five years
2,282
649
\u2014
634
\u2014
3,565
After five years
10,107
2,569
\u2014
2,103
\u2014
14,779
18,264
6,070
5,715
5,591
\u2014
35,640
Interest payments not yet accrued
\u2014
(5,778)
\u2014
\u2014
\u2014
(5,778)
Fair value adjustment
(30)
\u2014
\u2014
\u2014
\u2014
(30)
Impact of discounting
a,b
\u2014
\u2014
(16)
(636)
\u2014
(652)
Carrying value on the balance sheet
18,234
292
5,699
4,955
\u2014
29,180
At 31 March 2023 (restated)
Due within one year
1,512
643
5,467
800
3
8,425
Between one and two years
1,165
637
204
774
2
2,782
Between two and three years
2,669
616
189
676
2
4,152
Between three and four years
404
575
88
640
2
1,709
Between four and five years
1,539
558
\u2014
612
2
2,711
After five years
10,983
2,891
\u2014
2,529
\u2014
16,403
18,272
5,920
5,948
6,031
11
36,182
Interest payments not yet accrued
\u2014
(5,660)
\u2014
\u2014
\u2014
(5,660)
Fair value adjustment
(11)
\u2014
\u2014
\u2014
\u2014
(11)
Impact of discounting
a,b,c
\u2014
\u2014
(32)
(672)
(1)
(705)
Carrying value on the balance sheet
18,261
260
5,916
5,359
10
29,806
c c c c a Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest cash flows were calculated using the most recent interest or indexation rates at the relevant balance sheet date. b The carrying amount of trade and other payables excludes \u00a3366m (FY23: \u00a3455m) of non-current trade and other payables which relates to non-financial liabilities, and \u00a3899m (FY23: \u00a31,113m) of other taxation, social security and deferred income. c FY23 comparatives have been restated to include the financial liability for the minimum guarantee provided to the Sports JV due in more than one year, totalling \u00a3465m.These amounts had been omitted from this table within the prior year accounts. d No provisions meeting the definition of a financial liability have been identified in FY24. Trade and other payables are held at amortised cost. The carrying amount of these balances approximates to fair value due to the short maturity of amounts payable. The following table provides an analysis of the contractually agreed cash flows in respect of the group\u2019s derivative financial instruments. Cash flows are presented on a net or gross basis in accordance with settlement arrangements of the instruments.
Gross settled Gross settled
Derivative financial liabilities
Net settled
outflows
inflows
Total
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Due within one year
17
2,274
(2,135)
156
Between one and two years
16
1,152
(1,028)
140
Between two and three years
16
519
(430)
105
Between three and four years
17
1,935
(1,857)
95
Between four and five years
17
597
(528)
86
After five years
12
3,071
(2,866)
217
a,b
Total
95
9,548
(8,844)
799
At 31 March 2023
Due within one year
47
2,184
(2,088)
143
Between one and two years
47
1,125
(1,058)
114
Between two and three years
94
939
(882)
151
Between three and four years
111
381
(364)
128
Between four and five years
16
161
(135)
42
After five years
47
2,127
(2,011)
163
Total
a,b
362
6,917
(6,538)
741
a Analysed by earliest payment date, certain derivative financial instruments contain break clauses whereby either the group or bank counterparty have the right to terminate the swap on certain dates. If the break clause was exercised, the mark to market position would be settled in cash. b Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest rate cash flows were calculated using the most recent rate applied at the relevant balance sheet date. ", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-571": { "value": "How do we manage credit risk? Management policy Our exposure to credit risk arises from financial assets transacted by the treasury operation (primarily derivatives, investments, cash and cash equivalents) and from trading-related receivables. For treasury-related balances, the Board\u2019s defined policy restricts exposure to any one counterparty by setting credit limits based on the credit quality as defined by Moody\u2019s and Standard & Poor\u2019s. The minimum credit ratings permitted with counterparties in respect of new transactions are A3/A\u2013 for long-term and P1/A1 for short-term investments. If counterparties in respect of existing transactions fall below the permitted criteria we will take action where appropriate. The treasury operation continuously reviews the limits applied to counterparties and will adjust the limit according to the nature and credit standing of the counterparty, and in response to market conditions, up to the maximum allowable limit set by the Board. Operational management policy Our credit policy for trading-related financial assets is applied and managed by each of the customer-facing units (CFUs) to ensure compliance. The policy requires that the creditworthiness and financial strength of customers are assessed at inception and on an ongoing basis. Payment terms are set in accordance with industry standards. Where appropriate, we may minimise risks by requesting securities such as deposits, guarantees and letters of credit. We take proactive steps including constantly reviewing credit ratings of counterparties to minimise the impact of adverse market conditions on trading-related financial assets. Exposures The maximum credit risk exposure of the group\u2019s financial assets at the balance sheet date is as follows:
2024
2023
At 31 March
Notes
\u00a3m
\u00a3m
Derivative financial assets
1,070
1,479
Investments
23
2,395
3,577
Trade and other receivables
16
2,224
1,821
Contract assets
5
1,740
1,934
Cash and cash equivalents
25
414
392
Total
7,843
9,203
a a The carrying amount excludes \u00a3641m (FY23: \u00a3503m) of non-current trade and other receivables which relate to non-financial assets, and \u00a31,341m (FY23: \u00a31,239m) of prepayments, deferred contract costs, finance lease receivables and other assets. The credit quality and credit concentration of cash equivalents, current asset investments and derivative financial assets are detailed in the tables below. Where the opinion of Moody\u2019s and Standard & Poor\u2019s (S&P) differ, the lower rating is used.
2024
2023
Moody\u2019s/S&P credit rating of counterparty
\u00a3m
\u00a3m
Aa2/AA and above
1,823
3,498
Aa3/AA\u2013
585
115
A1/A+
819
957
A2/A
261
400
A3/A\u2013
\u2014
53
Baa1/BBB+
\u2014
\u2014
Baa2/BBB and below
a
30
60
Total
b
3,518
5,083
a Baa2/BBB rated exposure represents the energy derivatives and carrying value of forward currency contracts with Sports JV. b We hold cash collateral of \u00a315m (FY23: \u00a3557m) in respect of derivative financial assets with certain counterparties, this has reduced during the year as a result of derivative portfolio management. The concentration of credit risk for our trading balances is provided in note 16, which analyses outstanding balances by CFU. Where multiple transactions are undertaken with a single financial counterparty or group of related counterparties, we enter into netting arrangements to reduce our exposure to credit risk by making use of standard International Swaps and Derivatives Association (ISDA) documentation. We have also entered into credit support agreements with certain swap counterparties whereby, on a daily, weekly and monthly basis, the fair value position on notional \u00a31,047m (FY23: \u00a32,024m) of long-dated cross-currency swaps and interest rate swaps is collateralised ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-572": { "value": "
Offsetting of financial instruments
The table below shows our financial assets and liabilities that are subject to offset in the group\u2019s balance sheet and the impact of
enforceable master netting or similar agreements.
Related amounts not set off in the balance sheet
Amounts presented in the Right of set off with derivative Cash Net
Financial assets and liabilities balance sheet counterparties collateral amount
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative financial assets
1,070
(356)
(15)
699
Derivative financial liabilities
(539)
356
40
(143)
Total
531
\u2014
25
556
At 31 March 2023
Derivative financial assets
1,479
(323)
(557)
599
Derivative financial liabilities
(383)
323
48
(12)
Total
1,096
\u2014
(509)
587
", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-589": { "value": "Offsetting of financial instruments The table below shows our financial assets and liabilities that are subject to offset in the group\u2019s balance sheet and the impact of enforceable master netting or similar agreements.
Related amounts not set off in the balance sheet
Amounts presented in the Right of set off with derivative Cash Net
Financial assets and liabilities balance sheet counterparties collateral amount
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative financial assets
1,070
(356)
(15)
699
Derivative financial liabilities
(539)
356
40
(143)
Total
531
\u2014
25
556
At 31 March 2023
Derivative financial assets
1,479
(323)
(557)
599
Derivative financial liabilities
(383)
323
48
(12)
Total
1,096
\u2014
(509)
587
", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-582": { "value": "Offsetting of financial instruments The table below shows our financial assets and liabilities that are subject to offset in the group\u2019s balance sheet and the impact of enforceable master netting or similar agreements.
Related amounts not set off in the balance sheet
Amounts presented in the Right of set off with derivative Cash Net
Financial assets and liabilities balance sheet counterparties collateral amount
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative financial assets
1,070
(356)
(15)
699
Derivative financial liabilities
(539)
356
40
(143)
Total
531
\u2014
25
556
At 31 March 2023
Derivative financial assets
1,479
(323)
(557)
599
Derivative financial liabilities
(383)
323
48
(12)
Total
1,096
\u2014
(509)
587
", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-590": { "value": "Derivatives and hedging We use derivative financial instruments mainly to reduce exposure to foreign exchange and interest rate risks. Derivatives may qualify as hedges for accounting purposes if they meet the criteria for designation as cash flow hedges or fair value hedges in accordance with IFRS 9. Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date.
Current Non-current Current Non-current
asset asset liability liability
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Designated in a cash flow hedge
34
947
80
383
Other
16
73
14
62
Total derivatives
50
1,020
94
445
At 31 March 2023
Designated in a cash flow hedge
78
1,330
62
255
Other
4
67
24
42
Total derivatives
82
1,397
86
297
All derivative financial instruments are categorised at Level 2, with the exception of the energy contracts which are categorised at Level 3 of the fair value hierarchy as defined in note 23. Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging euro, US dollar and Japanese yen denominated borrowings. Forward currency contracts are taken out to hedge step up interest on currency denominated borrowings relating to the group\u2019s 2030 US dollar bond. The hedged cash flows will affect the group\u2019s income statement as interest and principal amounts are repaid over the remaining term of the borrowings (see note 26). We hedge forecast foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints 12 months forward with certain specific transactions hedged further forward. The related cash flows are recognised in the income statement over this period. All hedge relationships were fully effective in the period. The amounts related to items designated as hedging instruments were as follows:
Balance in cash Amount
flow hedge Fair value recycled from
related (gain)/loss cash flow
Notional reserves recognised in hedge related
Hedged items
principal
Asset
Liability
(gain)/loss OCI reserves to P&L
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
13,583
960
(355)
(213)
464
(361)
Step up interest on the 2030 US dollar bond
112
\u2014
(2)
(25)
2
4
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,308
18
(11)
(12)
15
8
and Hungarian forints
Other, including energy contracts
d
3
(95)
90
161
(7)
Total cash flow hedges
15,003
981
(463)
(160)
642
(356)
Deferred tax
\u2014
\u2014
27
Derivatives not in a designated hedge relationship
89
(76)
\u2014
Carrying value on the balance sheet
1,070
(539)
(133)
At 31 March 2023
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
12,888
1,316
(290)
(316)
(887)
597
Step up interest on the 2030 US dollar bond
115
\u2014
(2)
(31)
(8)
6
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,211
34
(24)
(35)
(75)
61
and Hungarian forints
Other, including energy contracts
d
58
(1)
(64)
(85)
49
Total cash flow hedges
14,214
1,408
(317)
(446)
(1,055)
713
Deferred tax
\u2014
\u2014
106
Derivatives not in a designated hedge relationship
71
(66)
\u2014
Carrying value on the balance sheet
1,479
(383)
(340)
b c b c a Sterling, euro, US dollar and Japanese yen denominated borrowings are hedged using cross-currency swaps and interest rate swaps. Amounts recycled to profit and loss are presented within finance expense. Range of hedged rates: sterling interest: 5.9%-6.0% (FY23: 5.9%-6.0%), euro FX: 1.12-1.29 (FY23: 1.11-1.29), US dollar FX: 1.28-1.80 (FY23: 1.28-1.80), Japanese yen FX: 156.92 (FY23: 156.92). b Step up interest on US dollar denominated borrowings are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within finance expense. Range of hedged FX rates: 1.21-1.28 (FY23: 1.17-1.24). c Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within cost of sales or operating costs, in line with the underlying hedged item. Range of hedged FX rates: US dollar: 1.21-1.30 (FY23: 1.10-1.31), euro: 1.12-1.17 (FY23: 1.11-1.18), Indian rupees: 106.05-120.97 (FY23: 106.05-120.97), Hungarian forint: 458.35-467.81 (FY23: 489.17-503.51). d Includes \u00a3(87)m liability (FY23: \u00a357m asset) relating to energy contracts, these are hedged using contracts for difference and virtual power purchase agreements in order to provide long-term power cost certainty. Amounts recycled to profit and loss are presented within operating costs. Range of strike price: 60-122 \u00a3/MWh (FY23: 60-125 \u00a3/MWh).", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-583": { "value": "Derivatives and hedging We use derivative financial instruments mainly to reduce exposure to foreign exchange and interest rate risks. Derivatives may qualify as hedges for accounting purposes if they meet the criteria for designation as cash flow hedges or fair value hedges in accordance with IFRS 9. Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date.
Current Non-current Current Non-current
asset asset liability liability
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Designated in a cash flow hedge
34
947
80
383
Other
16
73
14
62
Total derivatives
50
1,020
94
445
At 31 March 2023
Designated in a cash flow hedge
78
1,330
62
255
Other
4
67
24
42
Total derivatives
82
1,397
86
297
All derivative financial instruments are categorised at Level 2, with the exception of the energy contracts which are categorised at Level 3 of the fair value hierarchy as defined in note 23. Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging euro, US dollar and Japanese yen denominated borrowings. Forward currency contracts are taken out to hedge step up interest on currency denominated borrowings relating to the group\u2019s 2030 US dollar bond. The hedged cash flows will affect the group\u2019s income statement as interest and principal amounts are repaid over the remaining term of the borrowings (see note 26). We hedge forecast foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints 12 months forward with certain specific transactions hedged further forward. The related cash flows are recognised in the income statement over this period. All hedge relationships were fully effective in the period. The amounts related to items designated as hedging instruments were as follows:
Balance in cash Amount
flow hedge Fair value recycled from
related (gain)/loss cash flow
Notional reserves recognised in hedge related
Hedged items
principal
Asset
Liability
(gain)/loss OCI reserves to P&L
At 31 March 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
13,583
960
(355)
(213)
464
(361)
Step up interest on the 2030 US dollar bond
112
\u2014
(2)
(25)
2
4
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,308
18
(11)
(12)
15
8
and Hungarian forints
Other, including energy contracts
d
3
(95)
90
161
(7)
Total cash flow hedges
15,003
981
(463)
(160)
642
(356)
Deferred tax
\u2014
\u2014
27
Derivatives not in a designated hedge relationship
89
(76)
\u2014
Carrying value on the balance sheet
1,070
(539)
(133)
At 31 March 2023
Sterling, euro, US dollar and Japanese yen
denominated borrowings
a
12,888
1,316
(290)
(316)
(887)
597
Step up interest on the 2030 US dollar bond
115
\u2014
(2)
(31)
(8)
6
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees
1,211
34
(24)
(35)
(75)
61
and Hungarian forints
Other, including energy contracts
d
58
(1)
(64)
(85)
49
Total cash flow hedges
14,214
1,408
(317)
(446)
(1,055)
713
Deferred tax
\u2014
\u2014
106
Derivatives not in a designated hedge relationship
71
(66)
\u2014
Carrying value on the balance sheet
1,479
(383)
(340)
b c b c a Sterling, euro, US dollar and Japanese yen denominated borrowings are hedged using cross-currency swaps and interest rate swaps. Amounts recycled to profit and loss are presented within finance expense. Range of hedged rates: sterling interest: 5.9%-6.0% (FY23: 5.9%-6.0%), euro FX: 1.12-1.29 (FY23: 1.11-1.29), US dollar FX: 1.28-1.80 (FY23: 1.28-1.80), Japanese yen FX: 156.92 (FY23: 156.92). b Step up interest on US dollar denominated borrowings are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within finance expense. Range of hedged FX rates: 1.21-1.28 (FY23: 1.17-1.24). c Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within cost of sales or operating costs, in line with the underlying hedged item. Range of hedged FX rates: US dollar: 1.21-1.30 (FY23: 1.10-1.31), euro: 1.12-1.17 (FY23: 1.11-1.18), Indian rupees: 106.05-120.97 (FY23: 106.05-120.97), Hungarian forint: 458.35-467.81 (FY23: 489.17-503.51). d Includes \u00a3(87)m liability (FY23: \u00a357m asset) relating to energy contracts, these are hedged using contracts for difference and virtual power purchase agreements in order to provide long-term power cost certainty. Amounts recycled to profit and loss are presented within operating costs. Range of strike price: 60-122 \u00a3/MWh (FY23: 60-125 \u00a3/MWh).", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-628": { "value": "Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-625": { "value": "Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-622": { "value": "Material accounting policies that apply to derivatives and hedge accounting All of our derivative financial instruments are held at fair value on the balance sheet. Derivatives designated in a cash flow hedge The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation must be prepared at inception, the hedge must be in line with BT\u2019s risk management strategy and there must be an economic relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when it is no longer in line with BT\u2019s risk management strategy or if it no longer qualifies for hedge accounting. The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered timing, cash flows or value. When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement. Other derivatives Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate. We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts, including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re- measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or transaction to which they relate. Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred and amortised to the income statement based on the remaining contractual term and as observable market data becomes available. The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-551": { "value": "
Other comprehensive income
Capital b Cost of
redemption Cash flow Fair value hedging Translation
a c d
reserve reserve reserve reserve reserve Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 April 2022
27
(148)
(1)
236
505
619
Reclassification
e
\u2014
472
\u2014
(472)
\u2014
\u2014
Exchange differences
\u2014
\u2014
\u2014
\u2014
89
89
Net fair value gain (loss) on cash flow hedges
\u2014
864
\u2014
191
\u2014
1,055
Movements in relation to cash flow hedges
g
\u2014
(721)
\u2014
8
\u2014
(713)
recognised in income and expense
Fair value movement on assets at fair value
through other comprehensive income
\u2014
\u2014
(3)
\u2014
\u2014
(3)
Tax recognised in other comprehensive income
\u2014
(90)
\u2014
\u2014
\u2014
(90)
At 31 March 2023
27
377
(4)
(37)
594
957
Exchange differences
\u2014
\u2014
\u2014
\u2014
(66)
(66)
Net fair value gain (loss) on cash flow hedges
\u2014
(661)
\u2014
19
\u2014
(642)
Movements in relation to cash flow hedges
g
\u2014
349
\u2014
7
\u2014
356
recognised in income and expense
Tax recognised in other comprehensive income
\u2014
69
\u2014
\u2014
9
78
Transfer to realised profit
\u2014
10
12
\u2014
11
33
At 31 March 2024
27
144
8
(11)
548
716
f f a The cash flow reserve is used to record the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. The transfer to realised profit includes a deferred tax adjustment. b The fair value reserve is used to record gains or losses on equity investments held at fair value through other comprehensive income. When these investments are disposed of any remaining gains or losses in other comprehensive income are transferred to retained earnings. c The cost of hedging reserve reflects the gain or loss on the portion excluded from the designated hedging instrument that relates to the currency basis element of our cross-currency swaps and forward points on certain foreign exchange contracts. It is initially recognised in other comprehensive income and accounted for similarly to gains or losses in the cash flow reserve. d The translation reserve is used to record cumulative translation differences on the net assets of foreign operations. The cumulative translation differences are recycled to the income statement on disposal of the foreign operation. e Reclassification on cash flow hedges in FY23 includes \u00a3472m reclassification from cash flow hedge reserve to cost of hedging reserve. f Excludes \u00a3nil (FY23: \u00a32m) of exchange differences in relation to retained earnings attributed to non-controlling interests. g Movements in cash flow hedge-related reserves recognised in income and expense of \u00a3356m (FY23: \u00a3713m) include a net credit to other comprehensive income of \u00a3318m (FY23: charge of \u00a3679m) which have been reclassified to operating costs, and a net credit of \u00a338m (FY23: charge of \u00a334m) which have been reclassified to finance expense (see note 27). 29. Other reserves", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-519": { "value": "
30. Related party transactions
Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee. Compensation
of key management personnel is disclosed in note 6.
Amounts paid to the group\u2019s retirement benefit plans are set out in note 19.
Associates and joint ventures related parties include the Sports JV with Warner Bros formed during FY23 (see note 22). Sales of services
to the Sports JV during FY24 were \u00a333m (FY23: \u00a323m), and purchases from the Sports JV were \u00a3299m (FY23: \u00a3176m) excluding \u00a3211m
(FY23: \u00a361m) additional payments made to settle the minimum guarantee liability (see note 17). The amount receivable from the Sports
JV as at 31 March 2024 was \u00a33m (FY23: 10m) and the amount payable to the Sports JV was \u00a394m (FY23: \u00a3123m).
As part of the BT Sport transaction, the group has committed to providing the Sports JV with a sterling Revolving Credit Facility (RCF), up
to a maximum for \u00a3300m, for short-term liquidity required by the Sports JV to fund its working capital and commitments to sports rights
holders. Amounts drawn down by the Sports JV under the RCF accrue interest at a market reference rate, consistent with the group\u2019s
external short-term borrowings. The outstanding balance under the RCF of \u00a3163m (FY23: \u00a3268m) is treated as a loan receivable and held
at amortised cost, see note 16. The capacity of the RCF is expected to reduce to \u00a3200m during FY25. There is also a loan payable to the
Sports JV of \u00a311m (FY23: \u00a311m), see note 26.
The Sports JV has a foreign exchange hedging arrangement with the group to secure euros required to meet its commitments to certain
sports rights holders; the group has external forward contracts in place to purchase the euros at an agreed sterling rate in order to mitigate
its exposure to exchange risk. The group holds a \u00a329m (FY23: \u00a314m) derivative liability in respect of forward contracts provided to the
Sports JV.
Transactions from commercial trading arrangements with associates and joint ventures, including the Sports JV, are shown below:
2024
2023
At 31 March
\u00a3m
\u00a3m
Sales of services to associates and joint ventures
37
29
Purchases from associates and joint ventures
338
216
Amounts receivable from associates and joint ventures
5
10
Amounts payable to associates and joint ventures
95
124
Other related party transactions include a dividend received from a joint venture of \u00a312m (FY23: \u00a3nil) and in the prior year the purchase of
energy from an entity controlled by the BT Pension Scheme until FY24. FY23 total purchases were \u00a313m and \u00a31m was due to the other
party as at 31 March 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-552": { "value": "30. Related party transactions Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee. Compensation of key management personnel is disclosed in note 6. Amounts paid to the group\u2019s retirement benefit plans are set out in note 19. Associates and joint ventures related parties include the Sports JV with Warner Bros formed during FY23 (see note 22). Sales of services to the Sports JV during FY24 were \u00a333m (FY23: \u00a323m), and purchases from the Sports JV were \u00a3299m (FY23: \u00a3176m) excluding \u00a3211m (FY23: \u00a361m) additional payments made to settle the minimum guarantee liability (see note 17). The amount receivable from the Sports JV as at 31 March 2024 was \u00a33m (FY23: 10m) and the amount payable to the Sports JV was \u00a394m (FY23: \u00a3123m). As part of the BT Sport transaction, the group has committed to providing the Sports JV with a sterling Revolving Credit Facility (RCF), up to a maximum for \u00a3300m, for short-term liquidity required by the Sports JV to fund its working capital and commitments to sports rights holders. Amounts drawn down by the Sports JV under the RCF accrue interest at a market reference rate, consistent with the group\u2019s external short-term borrowings. The outstanding balance under the RCF of \u00a3163m (FY23: \u00a3268m) is treated as a loan receivable and held at amortised cost, see note 16. The capacity of the RCF is expected to reduce to \u00a3200m during FY25. There is also a loan payable to the Sports JV of \u00a311m (FY23: \u00a311m), see note 26. The Sports JV has a foreign exchange hedging arrangement with the group to secure euros required to meet its commitments to certain sports rights holders; the group has external forward contracts in place to purchase the euros at an agreed sterling rate in order to mitigate its exposure to exchange risk. The group holds a \u00a329m (FY23: \u00a314m) derivative liability in respect of forward contracts provided to the Sports JV. Transactions from commercial trading arrangements with associates and joint ventures, including the Sports JV, are shown below:
2024
2023
At 31 March
\u00a3m
\u00a3m
Sales of services to associates and joint ventures
37
29
Purchases from associates and joint ventures
338
216
Amounts receivable from associates and joint ventures
5
10
Amounts payable to associates and joint ventures
95
124
Other related party transactions include a dividend received from a joint venture of \u00a312m (FY23: \u00a3nil) and in the prior year the purchase of energy from an entity controlled by the BT Pension Scheme until FY24. FY23 total purchases were \u00a313m and \u00a31m was due to the other party as at 31 March 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-520": { "value": "
31. Financial commitments
Financial commitments as at 31 March 2024 include capital commitments of \u00a31,049m (FY23: \u00a31,480m) and device purchase
commitments of \u00a3171m (FY23: \u00a3217m).
TV programme rights commitments were transferred to the Sports JV formed with Warner Bros. Discovery (WBD) during FY23 (see note
22). Both the group and WBD have guaranteed the Sports JV\u2019s obligations under certain programme rights commitments; the fair value
of these parent company guarantees is not material.
Other than as disclosed below and in note 18, there were no contingent liabilities or guarantees at 31 March 2024 other than those arising
in the ordinary course of the group\u2019s business and on these no material losses are anticipated. We have insurance cover to certain limits for
major risks on property and major claims in connection with legal liabilities arising in the course of our operations. Otherwise, the group
generally carries its own risks.
Legal and regulatory proceedings
See note 18 for contingent liabilities associated with legal and regulatory proceedings.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-521": { "value": "We have re-presented certain FY23 comparatives to reflect changes to the methodology used to allocate certain shared costs, and the creation of our Business CFU. See note 1 for more details. The following disclosures are impacted by the creation of the Business unit only. Re-presentation of prior year comparatives is limited to the combination of the balances previously reported in respect of the Enterprise and Global units, with no further adjustments: \u2013 Note 5 Revenue: disaggregation of external revenue \u2013 Note 7 Employees: number of employees \u2013 Note 16 Trade and other receivables: trade receivables not past due and accrued income by CFU Note 4 Segment information is also impacted by changes to the allocation of shared costs and therefore includes additional adjustments. The tables below present a bridge between previously published financial information and re-presented comparatives for the affected disclosures (segment revenue and profit; internal revenue and costs; and capital expenditure). Also presented is a bridge in respect of the CFU normalised free cash flow comparatives which are re-presented in the Additional information on page 231. Note 4 Segment information: Segment revenue and profit
Consumer
Enterprise
Global
Business
Openreach
Other
Total
Year ended 31 March 2023: published
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Segment revenue
9,737
4,962
3,328
\u2014
5,675
27
23,729
Internal revenue
(57)
(113)
\u2014
\u2014
(2,890)
\u2014
(3,060)
Adjusted
a
revenue from external customers
9,680
4,849
3,328
\u2014
2,785
27
20,669
Adjusted EBITDA
2,623
1,394
458
\u2014
3,449
4
7,928
Depreciation and amortisation
(1,397)
(842)
(317)
\u2014
(2,059)
(138)
(4,753)
Adjusted
a
operating profit (loss)
1,226
552
141
\u2014
1,390
(134)
3,175
b a
Year ended 31 March 2023: adjustments for creation of Business and change
in cost allocation methodology
Segment revenue
\u2014
(4,962)
(3,328)
8,258
\u2014
\u2014
(32)
Internal revenue
\u2014
113
\u2014
(81)
\u2014
\u2014
32
Adjusted
a
revenue from external customers
\u2014
(4,849)
(3,328)
8,177
\u2014
\u2014
\u2014
Adjusted EBITDA
(154)
(1,394)
(458)
1,945
61
\u2014
\u2014
Depreciation and amortisation
(206)
842
317
(1,047)
94
\u2014
\u2014
Adjusted
a
operating profit (loss)
(360)
(552)
(141)
898
155
\u2014
\u2014
b a
Year ended 31 March 2023: re-presented
Segment revenue
9,737
\u2014
\u2014
8,258
5,675
27
23,697
Internal revenue
(57)
\u2014
\u2014
(81)
(2,890)
\u2014
(3,028)
Adjusted
a
revenue from external customers
9,680
\u2014
\u2014
8,177
2,785
27
20,669
Adjusted EBITDA
2,469
\u2014
\u2014
1,945
3,510
4
7,928
Depreciation and amortisation
(1,603)
\u2014
\u2014
(1,047)
(1,965)
(138)
(4,753)
Adjusted
a
operating profit (loss)
866
\u2014
\u2014
898
1,545
(134)
3,175
b a 32. Re-presentation of prior year comparatives
Note 4 Segment information: Internal revenue and costs
Internal cost recorded by
Consumer
Enterprise
Global
Business
Openreach
Other
Total
Year ended 31 March 2023: published
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue recorded by
Consumer
\u2014
40
16
\u2014
\u2014
1
57
Enterprise
26
\u2014
32
\u2014
\u2014
55
113
Global
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Openreach
1,805
888
184
\u2014
\u2014
13
2,890
Total
1,831
928
232
\u2014
\u2014
69
3,060
Year ended 31 March 2023: adjustments for creation of Business and change
in cost allocation methodology
Consumer
\u2014
(40)
(16)
56
\u2014
\u2014
\u2014
Enterprise
(26)
\u2014
(32)
\u2014
\u2014
(55)
(113)
Global
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business
26
\u2014
\u2014
\u2014
\u2014
55
81
Openreach
\u2014
(888)
(184)
1,072
\u2014
\u2014
\u2014
Total
\u2014
(928)
(232)
1,128
\u2014
\u2014
(32)
Year ended 31 March 2023: re-presented
Consumer
\u2014
\u2014
\u2014
56
\u2014
1
57
Enterprise
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Global
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business
26
\u2014
\u2014
\u2014
\u2014
55
81
Openreach
1,805
\u2014
\u2014
1,072
\u2014
13
2,890
Total
1,831
\u2014
\u2014
1,128
\u2014
69
3,028
Note 4 Segment information: Capital expenditure
Consumer
Enterprise
Global
Business
Openreach
Other
Total
Year ended 31 March 2023: published
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Intangible assets
530
257
81
\u2014
87
63
1,018
Property, plant and equipment
663
351
171
\u2014
2,709
144
4,038
Capital expenditure
1,193
608
252
\u2014
2,796
207
5,056
Year ended 31 March 2023: adjustments for creation of Business and change
in cost allocation methodology
Intangible assets
22
(257)
(81)
361
14
(59)
\u2014
Property, plant and equipment
6
(351)
(171)
525
37
(46)
\u2014
Capital expenditure
28
(608)
(252)
886
51
(105)
\u2014
Year ended 31 March 2023: re-presented
Intangible assets
552
\u2014
\u2014
361
101
4
1,018
Property, plant and equipment
669
\u2014
\u2014
525
2,746
98
4,038
Capital expenditure
1,221
\u2014
\u2014
886
2,847
102
5,056
Additional information: Normalised free cash flow
Adjustments for creation of
Business and change in cost
Published
allocation methodology
Re-presented
Year ended March 2023
\u00a3m
\u00a3m
\u00a3m
Consumer
1,147
(184)
963
Enterprise
522
(522)
\u2014
Global
63
(63)
\u2014
Business
\u2014
648
648
Openreach
211
8
219
Other
(615)
113
(502)
Normalised free cash flow
1,328
\u2014
1,328
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-522": { "value": "
33. Post balance sheet events
On 3 April 2024, BT issued a EUR 750m hybrid bond due on 3 October 2054 under our European Medium Term Note programme with a
coupon of 5.125% until the first call date of 5.5 years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } }, "fact-18": { "value": "1 Braham Street, London E1 8EE", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800LRO7NS5CYQMN21", "period": "2023-04-01T00:00:00/2024-04-01T00:00:00" } } } }