COVENTRY UNIVERSTYFaculty of Business Environment and Society.docx

COVENTRY UNIVERSTY
Faculty of Business Environment and Society
289ACCAccounting for Business 1617SEPJAN
Coursework Title: Analysis and interpretation of company’s
financial statements [Contributes 40% to total module mark]
Issue Date: 10th October 2016
Due date: 18th November 2016
This assignment must be submitted via turn-it-in through the
module Moodle page by 23.55 on the hand in deadline date.
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Thisis a group assignment. Each group comprises of 4-5
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Marked Coursework
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of December 2016.
Faculty of Business and Law289ACC - ACCOUNTING FOR
BUSINESS
Coursework Title:Analysis and interpretation of company’s
Issue date: 10th October 2016 Due
date: 18th November 2016
STATEMENT OF CONTRIBUTION AND PARTICIPATION
We declare that each member of the group has made an equal

contribution to this coursework. The details of the contribution
of each member of the group are as follows:
Group MemberContribution to the preparation of the group
coursework and roles/tasks in the group courseworkSignature(1)
Student ID:
(2) Student ID:
(3) Student ID:
(4) Student ID:
(5) Student ID:

Faculty of Business and Law289ACC - ACCOUNTING FOR
BUSINESS
Coursework Title:Analysis and interpretation of company’s
Issue Date: 10th October 2016
Due date: 18th November 2016
Learning Outcomes Assessed
1) Make use of financial information to evaluate business
performance
Assessment Criteria
5%
Brief background/introduction of each company
40%
Clear written assessment/ analysis of both companies’ financial
performance & position based primarily on the financial
statements and the provided ratios calculated and any other non-
financial information at your disposal.
25%
An assessment of each company’s long-term strategic
development
10%
Clearly stated and reasonable recommendations and
conclusions.
10%
A discussion of the limitations of your analysis.
5%

Structure, layout and presentation
5%
Harvard referencing, spelling and language used
ASSIGNMENT BRIEF
Interpretation of companies’ financial statements
Assignment questions
Your team is a group of investment advisers and you have been
provided with the most recent published annual financial
statements for two different companies
Vodafone Group PLC
BT Group PLC
Copies of each company’s annual report can be found on the

module Moodle page, along with a spread sheet of computed
financial ratios for each company.
Your team has been tasked with the duty of creating a report to
the investors, advising them on which company would make a
more attractive investment option.
You are required to address each of the following tasks within
your report:
1. A brief background of each company, highlighting the main
markets and sources of revenue.
2. An interpretation and assessment of each group’s recent
financial performance and position based primarily on the
financial statements in the Annual reports and the calculated
ratios in the spread sheet (all provided via the module Moodle
page).
This assessment should cover the following five core areas: -
a) Profitability;
b) Liquidity position;
c) Efficiency;
d) Gearing;
e) Investment potential.
3. A critical evaluation the financial performance of each
company using all the information at your disposal.
4. After the recent UK EU referendum vote, some financial
analysts anticipate that the Brexit vote could cost London “tens
of thousands” of jobs and deal a substantial blow to the city’s
reputation as Europe’s financial capital. This is due to the fact
that certain firms such as HSBC and Vodafone are mulling over
potential relocation of their headquarters as they view London
as a less advantageous place to do business once the U.K. splits

from the EU.
In light of this current vote, provide an assessment of the long-
term strategic development of both companies. (Please make use
of any content in each company’s annual report and wider
academic journal literature, as well as the use of any suitable
business strategic model.)
5. Based on your analysis, recommend and explain which
company would make a more suitable investment option to the
investors.
6. An explanation of the limitations of your analysis, including
the ratio analysis technique.
PLAGIARISM WARNING! – Assignments should not be copied
in part or in whole from any other source, except for any
marked up quotations, that clearly distinguish what has been
quoted from your own work. All references used must be given,
and the specific page number used should also be given for any
direct quotations, which should be in inverted commas. Students
found copying from the internet or other sources will get zero
marks and may be excluded from the university.

289ACC Accounting for Business
Coursework Detailed Assessment Criteria
Mark
A brief background to the group and its main markets and
sources of revenue
A thorough background to the company explaining their main
markets and sources of revenue.
3-5
A partial background to the company highlighting some markets
and sources of revenue.
0-2
An assessment of the group’s recent financial performance and

position based purely on the financial statements and calculated
ratios in the spread sheet provided
Meanings of all significant financial ratios are correctly
explained.
All significant financial ratios are correctly interpreted to
explain financial performance of each company.
Changes in all significant ratios are identified.
Excellent linkage is made to other ratios in order to explain
changes in ratios.
Reappraisal identifies eight to ten key pieces of contextual
information that improve the interpretation of the ratios and the
changes in the ratios.
Reappraisal shows excellent understanding of the meaning of
the ratios in the context of the wider business environment.
35-40
Meanings of most significant financial ratios are correctly
explained.
Most significant financial ratios are correctly interpreted to
Changes in most significant ratios are identified.
Reasonable explanations are given for the significance of
changes.
Good linkage is made to other ratios in order to explain changes
in ratios.
Reappraisal identifies five to seven key pieces of contextual
Reappraisal shows good understanding of the meaning of the
ratios in the context of the wider business environment.
28-34
Meanings of some significant financial ratios are correctly
explained.

Some significant financial ratios are correctly interpreted to
Changes in some significant ratios are identified.
Explanations are given for the significance of changes.
Linkage is made to other ratios in order to explain changes in
ratios.
Reappraisal identifies three to four key pieces of contextual
Reappraisal shows some understanding of the meaning of the
20-27
Meanings of few significant financial ratios are correctly
explained.
Few significant financial ratios are correctly interpreted to
Changes in few significant ratios are identified.
Explanations are not given for the significance of changes.
No linkage is made to other ratios in order to explain changes in
ratios.
Reappraisal identifies a couple of key pieces of contextual
Reappraisal shows little understanding of the meaning of the
ratios in the context of the wider business environment
10-19
Meanings of significant financial ratios are not correctly
explained.
Significant financial ratios are not correctly interpreted to
Changes in ratios are not identified.
Explanations are not given for the significance of changes.

No linkage is made to other ratios in order to explain changes in
ratios.
Reappraisal fails to identify more than one key piece of
contextual information that improve the interpretation of the
ratios and the changes in the ratios.
Reappraisal shows no understanding of the meaning of the
0-9
An assessment of each company’s long-term strategic
development
Excellent assessment of each company’s long term strategic
development supported by the use of a relevant business
strategy model and previous analysis
21 -25
Good assessment which is supported by evidence from the
Annual Report.
16-20
Fair discussion but poor linkage/ use of previous analysis.
10-15
Poor analysis given, with on little or no evidence.
0-9
A review and recommendation for investors of the investment
potential of the group
Excellent advice given which has been logically derived from
previous analysis and supported by evidence from the Annual
Report.
8 -10

Good advice given which is linked to previous analysisand
supported by evidence from the Annual Report.
5-7
Advice is given but poor linkage/ use of previous analysis.
2-4
Advice given but based on little or no evidence.
0-1
An explanation of the limitations of your analysis including the
technique of ratio analysis
Excellent discussion of limitations related to the foregoing
analysis and ratio analysis in general.
8-10
Good discussion of limitations of ratio analysis in general but
not related to the foregoing analysis.
5-7
Fair discussion of limitations of ratio analysis in general but not
related to the foregoing analysis.
2-4
Poor discussion of limitations of ratio analysis.
0-1
Structure, layout & presentation
Report is well presented with effective use made of tables,
charts and appendices. Material is coherently structured.
3-5
Reports format is poor and presentation is weak. No real
coherence to the structure.

0-2
Referencing, spelling and language
Work is correctly referenced and contains few
spelling/grammatical errors. Language is appropriate and
accessible.
3-5
Weak referencing throughout. Language is inappropriately used
and there are spelling and grammatical errors.
0-2
1
Vodafone Group PLC
Vodafone is a worldwide international telecommunication
company that offers a various mobile services to its customers
from voice calling, texting and internet access. . The company
boasts a wide market across the globe with a significant
presence in Africa, Asia-Pacific, Europe, and the Middle East.
Vodafone has always committed to deliver useful innovations
where in 1991 “we enabled the world’s first international
mobile roaming.” (Vodafone, 2016). Vodafone is the largest
network company in the UK and its headquartered in Newbury,
England. The very first phone call was made after midnight on
the 1st of January in 1985. (essays, 2015). Vodafone has a
market value of about one hundred billion pound, which makes
it the top in the market share.
BT Group PLC
BT is one of the leading communication companies in the
world, serving around 180 countries. Its headquarters is in
London, England. Where the company provides a various range
of services such as, fixed-line services, broadband, mobile and

TV products. (BT, 2016)
BT also sell wholesale products and services to communication
providers in the UK and even around the world. BT has around
900,000 customers in the UK serving fixed voice, networking,
cloud services and broadband.
After analysing the various ratios and comparing the two
companies the interpretation reveals the proper financial
position of the two companies
Profitability Ratios:-
When looking at Return of Capital Employed of both the
companies BT group’s rate dropped by .40% to 17.90% in 2015.
Even after making a overall growth in the operating profit the
ROCE dropped for BT due to significant rise in non-current
liabilities like retirement benefit obligations etc. whereas the
equity also has risen but not as much as the liabilities.
While Vodafone Group’s -4% has risen up to 2.10% in 2015.
This is largely due to rise of operating profit for Vodafone
group from a loss of 3913M GBP to 1967M GBP profit in 2015.
Operating Profit Margin for BT increased by 2.20% to 19.40%
in 2015 whereas for Vodafone Group it rose from -10.20% to
4.66%.
This shows us that both the companies made more profit on the
revenue attained than last year and have managed to bring down
operating cost(in case of BT) or increase revenue( as in case of
Vodafone).
Net Profit Margin for Vodafone was down from 29% to 14% in
2015 while BT posted a growth of .9% to move to 11.9%.
Vodafone group overall had posted a Net Profit margin of 155%
but this was largely due to sale of some businesses like the
Verizon deal. But the drop was a result of drop in profits from
both continued as well as discontinued operations. BT showed
growth even after posting a lower revenue than last year, It was

largely due to increase in profits for the year.
Liquidity Ratios: -
The Current ratio for Vodafone group had a fall of .30 to 0.69 in
2015 while BT Group had a rise of 0.23 to 0.97. The current
assets for Vodafone group reduced during the year by 4875M
GBP while the liabilities rose. BT Group had a increase in
current assets while their liabilities did not rise by very much
The Quick ratio for Vodafone group also had a fall to 0.67 from
0.97 while BT group showed a rise to 0.96 from 0.73 in 2015.
Efficiency in use of assets
Asset Turnover for BT Group fell from 1.06 to 0.92 in 2015
while Vodafone group rose from 0.4 to 0.45. This implies that
both Vodafone and BT Group is now making more efficient use
of its net assets and create more revenues from it.
Inventory Turnover of Vodafone group reduced to 5.69 days
from 5.76 which is very miniscule while BT group decreased
from 2.4 days to 2 days. The reduce in Vodafone group’s
inventory turnover was due to increase in cost of sales of the
company being very high as compared to Inventory. BT group
on the other hand had a increase in inventory but a decrease in
cost of sales.
Receivable Days for Vodafone group reduced from 35 days to
34 days but BT Group increased from 27 days to 30 days in
2015.
Solvency/Gearing Ratios:-
Long term debt to Equity ratio for BT group fell by 7.40% to
96% while it showed a rise of 1.90% to 27.70 % for Vodafone
in 2015. This rise was due to the fact that the total Equity of the
company reduced by

4048M GBP and the non-current liabilities rose up by 923M
GBP. For BT Group the transition took place because of the rise
in non-current liabilities by 872M GBP while the total equity
rose from a deficit by 1400M GBP.
Interest cover for BT group saw a change of 0.22 to 3.97 times
while for Vodafone Group the Interest cover went up by 4 times
from -3 to 1.
Investor Ratios
Dividend per share Increased for BT Group to 12p from 9p but
for Vodafone group it remained constant at 11p in 2015. The
change in dividend per share for BT was due to increase in
dividend amount by 148M GBP and also the rise of weighted
number of shares outstanding.
Earnings Per Share for BT Group has increased by 0.8p but
Vodafone group saw a dive of 212.09p.
Q3) A critical evaluation the financial performance of each
company using all the information at your disposal
For the probability ratio Vodafone, has shown a rise in their
profit while on the other hand BT Groups profit has fallen in
2015. This is an indicator that proves that Vodafone was being
more successful than BT Groups.
While the operating profit maring for BT increased in 2015
more than Vodafone.
And at last for the net profit Margin, Vodafone was down for
abot 15% while but showed a growth of around 2%.
Overall, BT Groups performance on Profitability ratio was
better than Vodafone Group in 2015.
For liquidity ratios, BT Groups showed again a rise in their

current ratio while Vodafone Groups showed a fall in the
current ratio. On the other hand, for current assets, Vodafone
groups reduced them as their liabilities has rose, for BT Groups
the current assets has risen and their liabilities has risen as well
but not very much.
The quick ratio for Vodafone group has fallen for about 0.30
while BT groups ratio has risen about 0.13 in 2015.
For the asset turnover, BT shown fall of around 0.14, while for
Vodafone, it has shown a rise of around 0.41 in 2015.
While for the inventory turnover, Vodafone group reduced
while BT Groups has decreased as well.
At last, a Long-Term Equity ratio for BT has been fallen for
around 7.40% while on the other hand Vodafone has shown a
rise of 1.90% in 2015.
Overall BT Groups has shown us by numbers that they are
performing better than Vodafone Groups since they are doing
more profit, less liabilities and more fixed assets.
4.0. Effects of Brexit Decision on the Business Strategy and
Business Model of Vodafone and BT Group Plc
Pulling out of the European Union by the UK has so far left
most businesses in flux as many big and small companies are
revealing collapsed business deals, job cuts and plans to shift
their headquarters and therefore changing their base countries
away from the UK. Vodafone is one of the large enterprises that
have announced it is an intention to move it is Headquarters out
of the UK; this decision made in the best interest of the
customers, shareholders as well as the employees of the
company. The decision to move the base country from the UK
pegged on the outcome of the negotiations on the UK curbing
freedom of movement after exiting the European Union (Palmer,
2016). Traditionally, the unfettered flow of capital, people and
goods across European greatly benefited Vodafone Company
since it generated an average of 11 percent of the company's
profits from the UK operations. In the case of BT Group plc,
immediately after the referendum indicating that the UK

citizens had voted heavily for the exits of the UK from the
European Union, the stocks of BT Group plummeted massively
by 19.4 percent (Sparks, 2016).
The impact of the Brexit on BT Group and Vodafone Company
clearly show that the large British multinational companies that
operated in many different countries across Europe were
severely affected by the Brexit. The Brexit negatively impacted
the British-Based technology companies with multinational
operations. There is significant concern that information-
technology companies like the BT Group and Vodafone
company could quickly lose their unrestricted access to the
massive European market and thus make the competition ability
of these businesses in the UK tight. Evidence from the stock
prices of the two companies after the Brexit decision through
the referendum shows that the shares of the company have been
on a downward trend and thus suggesting a significant loss of
investor's wealth in the operations of the two companies. The
charts showing the trend of the historical stock prices of the two
companies after the Brexit are as below:
Figure 1: BT Group plc past six month’s stock prices
Source: Yahoo Finance (2016a)
Figure 2: Historical six months stock Prices for Vodafone plc
Source: Yahoo Finance (2016)
Evidence shows that concerns about the performance of BT
Group plc and Vodafone Company after the Brexit had a
significant impact on the stock prices of the company. This
trend could explain the market sentiments that made the share
prices of Vodafone company fail to increase in 2015 even after
the company had a strong performance as established from the
financial statements of the enterprise.
Traditionally, BT Group and Vodafone Company, two large
British technology companies, benefited greatly from the large

market that was available when the UK was in the European
Union. However, after the Brexit, the two companies will face
limited access to the whole European region as the UK will
close it is borders, and they are treated as a foreign company
operating in this market (Slobodchikoff, 2010). The
consequences are that the companies will face that problem of
limited market access, limited movement of capital, limited
movement of labor across the countries. Additionally, there will
be restrictions on the nature of operations by the companies in
the European market, and the two companies will also be
required to file their tax returns to the UK as well as to the
respective economies or the general European Union region
(Tavlas, 2004). These results, therefore, suggests that the Brexit
is technically detrimental to the business operations of both
Vodafone Company and BT Group plc.
References:
Palmer, K 2016, The Telegraph: How businesses have reacted to
Brexit. so far , < HYPERLINK
http://www.telegraph.co.uk/business/0/how-businesses-have-
reacted-to-brexit-so-far/ >. Accessed on 16th November 2016.
Slobodchikoff, M 2010, 'The New European Union: Integration
as a Means of Norm Diffusion,' Journal of Ethnopolitics and
Minority Issues in Europe, vol 9, no. 1, pp. 1-25.
Sparks, D 2016, fool.com: BT Group plc Plummets 19% in
Brexit Aftershock, < HYPERLINK
http://www.fool.com/investing/2016/06/24/bt-group-plc-
plummets-19-in-brexit-aftershock.aspx >. Accessed on 16th
November 2016.
Tavlas, GS 2004, 'Benefits and costs of entering the Eurozone',
Cato Journal, vol 24, no. 1/2, pp. 89-106.
Yahoo Finance 2016, BT Group Historical Stock Prices - 6
months, < HYPERLINK
https://uk.finance.yahoo.com/echarts?s=BT-A.L#symbol=BT-
A.L;range=1d >. Accessed on 16th November 2016.
Yahoo Finance 2016, Historical Stock Prices Vodafone plc, <

HYPERLINK
https://uk.finance.yahoo.com/echarts?s=VOD.L#symbol=VOD.L
;range=1d >. Accessed on 16th November 2016.
2015
BT Group plc
Annual Report & Form 20-F 2015
Investing for the future
building on a history of
1961 198419381915189218691846
PC_FRONT.indb 3 5/15/2015 1:46:39 AM
Our history of innovation
1984>2013 2014>15 2015>
Our current innovations
Inventing a smarter future
30 years since privatisation
Read more on page

12
Read more on page
14
Read more on page
18
PC_FRONT.indb 4 5/15/2015 1:46:42 AM
guiding principles and content elements
Welcome to BT Group plc’s
Annual Report & Form 20-F 2015
Contents
2
Overview
The Strategic Report
Purpose and strategy
21 Our purpose
21 Our goal
21 Our strategy
Delivering our strategy

51
Our lines of business
Group performance
Governance
Financial statements
Additional information
Reference to other pages
within the report
1
Reference to video Reference to further Our business model
Online Annual Report
Please see the cautionary statement regarding forward-looking
statements
on page 209.
The Purpose and strategy, Delivering our strategy, Our lines of
business and
Group performance sections on pages 19 to 92 form the
Strategic Report.
PC_FRONT.indb 1 5/15/2015 1:46:46 AM
BT Group plc

Annual Report 2015
2
Investing for growth
Building our global presence
Rewarding our people
Strengthening the Board
Generating value for shareholders
Sir Michael Rake
Chairman
Chairman’s introduction
both BT and the UK.”
PC_FRONT.indb 2 5/15/2015 1:46:47 AM
3
Overview

0ur lines of business
Group performance
Governance
Overview
5 Our goal and strategy
5 Our business model
Who we are
Our business model
outputs and outcomes is on page

3
Overview
Group performance
Governance
28
PC_FRONT.indb 3 5/15/2015 1:46:48 AM
BT Group plc
Annual Report 2015

4
Our purpose
We use the power of
communications to
make a better world
We are improving our business. We make a major contribution
to society, businesses to invest for the future while
Who we are and what we do
Every day we touch the lives of millions
In the UK we are delivering one
We are the leading provider of
voice and broadband services
We are one of the world’s
leading communications
We are Europe’s largest
telecoms services
We provide managed networked
IT services for many of the
largest global companies
PC_FRONT.indb 4 5/15/2015 1:46:54 AM
5
Overview

Group performance
Governance
Our goal and strategy Our business model
Find out more
Our business model inputs
on page
28
Our business model outputs
28

Our Governance
on page
93
Our Risks
on page
41
Governance
Risks
customer service
Broaden and deepen our customer relationships
To use the power of communications to make a better world
A healthy organisation
Fibre
Customer
customers
TV and
content

Team
UK business
markets
Change
Mobility
voice
Honesty
Leading
global
companies
Pride
Invest for
growth
Transform
our costs
Our strategy
Our culture
Our values
Our goal

Our purpose
External environment
Outputs &
OutcomesInputs
Value creation
PC_FRONT.indb 5 5/15/2015 1:46:55 AM
BT Group plc
Annual Report 2015
6
£m
2012 20132011 2014 2015
Year ended 31 March
1,900
2,100
2,300
2,500
2,700
2,900

2,
30
7
2,
07
6 2
,4
50
2,
83
0
2,
30
0
10
5
15
20
%
20112010 2012 2013 2014 20152015
Customer service improvement
At 31 March

0
3.
0
10
.5
3.
0
(4
.0
) 4
.7
18
.7
1.
5
b
Key performance indicators Our performance for the year
%
2012 20132011 2014 2015
Trend in underlying revenue excluding transit
Year ended 31 March
(3.5)

(3.0)
(2.5)
(2.0)
(1.5)
(1.0)
(0.5)
0.0
0.5
1.0
(1
.9
)
(3
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.5
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)
a Result
a Result
pence
2012 20132011 2014 2015
Adjusted earnings per share
Year ended 31 March
23
.4
20
.7
28
.2
26
.3
0
5
10
15
20
25

35
30
31
.5
Target Resultb Cumulative improvement in
RFT from 1 April 2009.
a Financial outlook which was
given at the start of the year.
a Financial outlook which was
given at the start of the year.
Find out more
Our KPIs
on page
80
from page
77
PC_FRONT.indb 6 5/15/2015 1:46:56 AM
7

Overview
Group performance
Governance
Financial highlights
a
b Before depreciation and amortisation.
c
d
p
10.9p
p

p
12 ^
^
Adjusted earnings per sharea
Proposed full year dividend
2015
2015
Revenue
Year ended 31 March
20142013 2015
17,000
17,500
18,000
18,500
£m
reported 1%
0%adjusted a
2%
2%
20152014

18
,1
03 1
8,
33
9
18
,2
87
18
,2
87
17
,9
79
17
,8
51
Operating costsb
Year ended 31 March
20142013 2015
11,000
11,500

12,000
12,500
£m
reported 1%
0%adjusteda
20152014
12
,3
12
12
,1
96 1
2,
44
7
12
,1
71
11
,9
61
11
,5

80
4%
5%
Free cash w
Year ended 31 March
20142013 2015
2,000
2,100
2,300
2,500
2,700
2,800
2,600
2,400
2,200
2,900
£m
reported 5% 28%
16%normalised 7%
20152014
2,
29

2
2,
30
0
2,
78
2
2,
83
0
2,
17
1
2,
45
0
c
revenue by line of business
38%
BT Global
Services

11%
Openreach
28%
Openreach
(including internal)
12%
BT
Wholesale
24%
BT Consumer
15%
BT Business
Year ended 31 March 2015
See page 54 for commentary on relative
contributions by each line of business
Adjusted EBITDA by line of business
17%
BT Global
Services
17%
BT
Business

16%
BT Consumer
41%
Openreach
9%
BT Wholesale
Adjusted a a
EBITDA
Year ended 31 March
20142013 2015
5,600
5,800
6,000
6,200
6,400
£m
reported 1% 3%
3%adjusteda 0%
20152014
5,
79
1

6,
14
3
5,
84
0
6,
11
6
6,
01
8
6,
27
1
Net debt
At 31 March
20142013 2015
0
2,000
4,000

6,000
8,000
£m
7,
79
7
7,
02
8
5,
11
9
d
PC_FRONT.indb 7 5/15/2015 1:46:56 AM
BT Group plc
Annual Report 2015
8
BT Business 12-month rolling order intake
Year ended 31 March
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015

£m
1,800
1,900
2,000
2,100
2,200
2,300
How our lines of business performed
BT Global Services BT Business
BT Global Services 12-month rolling EBITDA less capital
expenditure
0
100
200
300
400
500
600

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015
£m
Year ended 31 March
PC_FRONT.indb 8 5/15/2015 1:47:00 AM
9
Overview
Group performance
Governance
BT Wholesale 12-month rolling order intake
Year ended 31 March

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015
£m
0
500
1,000
1,500
2,000
2,500
BT’s retail broadband market share
At 31 March
20
25
30
35
40
%
37%
30%

36%
29%
39%38%
31% 32%
40%
32%
Source: BT and market data.
20132011 2012 2014 2015
BT Consumer BT Wholesale
PC_FRONT.indb 9 5/15/2015 1:47:03 AM
BT Group plc
Annual Report 2015
10
BT Technology, Service & Operations (BT TSO)
a
a
years following improvements to our data. Previous estimates of
energy usage have been

Openreach
Premises passed (LHS) Take-up (RHS)
0
5
10
15
20
25 20%
16%
12%
8%
4%
0%
m
Year ended 31 March
20132011 2012 2014 2015
Gwh
2012 20132011 2014 2015
BT’s worldwide energy usea

Year ended 31 March
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
2,
75
6
2,
67
5
2,
60
0
2,

51
5
2,
40
2
PC_FRONT.indb 10 5/15/2015 1:47:04 AM
11
Adastral Park
11
196119381915189218691846 1984
Developing and investing in new
technologies, attracting and keeping
the best people, leading markets
and competing freely: innovation
drives everything we do and has
pages highlight some of our more
recent achievements following
PC_FRONT.indb 11 5/15/2015 1:47:08 AM
12 BT Group plc
Annual Report 2015

%
of the UK population
had access to Cellnet
1st
BT international
170+
countries now part
network
Mbps
Revolutionary
Bringing nations closer.
Fibre cables are also easier to install
1984 19861985
Open for business.
Three billion British Telecom
shares went on sale 3 December
It’s good to talk –
and announced our proposed
PC_FRONT.indb 12 5/15/2015 1:47:12 AM
13

Switched on – as always
The biggest, best and most
connected yet. The London 2012
Olympic and Paralympic games.
1990 2002 2012
Find out more about BT’s history at
www.btplc.com/Thegroup/BTsHistory
PC_FRONT.indb 13 5/15/2015 1:47:16 AM
14 BT Group plc
Annual Report 2015
Today’s tools to improve productivity
Assignments received
on the go
Easy to contact the
customer in advance
of the visit
Engineers can quickly
report progress during
the working day
Customers can
provide feedback on
the engineer visit

All engineers can keep
connected with peers
and company news
2014>15
Connecting more of us to the customer journey
Delivering real customer satisfaction
Watch the video online at
www.bt.com/annualreport
14
Speeding up
BT Group plc
Annual Report 2015
Tbps
The real-world
super channel
speed achieved
Growth in higher
bandwidth demand
every year
%
Dr. Kevin Smith

PC_FRONT.indb 14 5/15/2015 1:47:20 AM
15
The Openreach
Tomasz Kulawinski
Field engineer
And my customers
Find out more about this story and
Openreach at www.openreach.co.uk
15
Q What’s changed most during your time at BT?
A
Q ou set the record for the fastest data
speed, what does this capability allow
people to do?
A
Q With increasing consumer and business demands, what’s next
in terms of
technological advances?
A
PC_FRONT.indb 15 5/15/2015 1:47:23 AM

16 BT Group plc
Annual Report 2015
16 BT Group plc
Annual Report 2015
Click on happiness
Find out more about this story and
BT Global Services at www.globalservices.bt.com
Jean-Marc Frangos
2014>15
PC_FRONT.indb 16 5/15/2015 1:47:25 AM
17
Find out more about this story and BT Consumer
at www.productsandservices.bt.com
What you want, Brilliant set-
top boxes
lets customers pause
Extraordinary TV
Delia Bushell
“ People are spending more

time online and less time
entertainment at great
PC_FRONT.indb 17 5/15/2015 1:47:27 AM
18 BT Group plc
Annual Report 2015
We never stand still
18
programme is pioneering a solution
BT Group plc
Annual Report 2015
2015>
Dr. Tim Whitley
Find out more about this at
www.btplc.com/Innovation
Watch the video online at

Find out more about BT Technology, Service
Ourcompany/Groupbusinesses/BTTSO
PC_FRONT.indb 18 5/15/2015 1:47:29 AM
19
Overview
Group performance
Governance
19

Our purpose
Our goal
Our culture
Overview
Group performance
Governance
20 Chief Executive’s introduction

21 Our purpose
21 Our goal
21 Our strategy
24 Our culture
Dan Fitz
Group General Counsel
PC_FRONT.indb 19 5/15/2015 1:47:29 AM
BT Group plc
Annual Report 2015
20
possible and
i
Gavin Patterson
Chief Executive
Chief Executive’s introduction
“ It’s been a ground-breaking year for BT.
We’ve announced some major investments
and launched a number of innovative
new services.”
Watch my video online at

Find out more
PC_FRONT.indb 20 5/15/2015 1:47:31 AM
21
Overview
Group performance
Governance
Our purpose
Our goal

enable us
Our strategy
Our strategy is founded on broadening and deepening
Our business
model on page
28
Find out more
customer service
Fibre TV and content
UK business
markets
Mobility
voice
Leading
global

companies
Invest for
growth
Transform
our costs
Our strategy
Our culture
Our goal
Our purpose
PC_FRONT.indb 21 5/15/2015 1:47:31 AM
BT Group plc
Annual Report 2015
22
Deliver superior customer service
RFT improvement
Year ended 31 March 2015 %
0
1

2
3
4
5
6
7
8
9
BT
Global
Services
BT
Business
BT
Consumer
BT
Wholesale
Openreach BT Group
Acting on
insight
Keeping our

customers
connected
Creating great
tools and
systems
Working better
across our
organisation
Supporting
our people
PC_FRONT.indb 22 5/15/2015 1:47:31 AM
23
Overview
Group performance
Governance

Transform our costs
e colleagues
and
Cost transformation within
our lines of business from page
53
Find out more
PC_FRONT.indb 23 5/15/2015 1:47:31 AM
BT Group plc
Annual Report 2015
24
Invest for growth
Fibre
TV and content
Mobility and

future voice
UK business
markets
Leading global
companies
Proposed acquisition of EE
a
Our culture
a For the assumptions underlying our synergies estimates, see
Additional Information on page 222.
PC_FRONT.indb 24 5/15/2015 1:47:32 AM
25
Overview
Group performance

Governance
26 Operating Committee
28 Our business model
30 Financial strength
30 Our people
33 Our networks and physical assets
34 Research and development
34 Brand and reputation
35 Stakeholders and relationships
41 Our risks
51 EE acquisition: risks
25
Our people

30
32
Our global reach
55
73
Our research activities
34
Overview
Group performance

Governance
PC_FRONT.indb 25 5/15/2015 1:47:32 AM
26 BT Group plc
Annual Report 2015
Operating Committee
Gavin Pattersona
Chief Executive
Tony Chanmugama
Group Finance Director
Luis Alvarez
CEO, BT Global Services
John Petter
CEO, BT Consumer
a
PC_FRONT.indb 26 5/15/2015 1:47:40 AM

27
Overview
Group performance
Governance
b
Clive Selley
CEO, BT Technology, Service & Operations and Group CIO
CEO, BT Wholesale
b

Joe Garner – Invitee
CEO, Openreach
Graham Sutherland
CEO, BT Business
Alison Wilcox
Group HR Director (from July 2015)
&
Dan Fitz
Company Secretary
PC_FRONT.indb 27 5/15/2015 1:47:50 AM
28 BT Group plc
Annual Report 2015
Our business model
Inputs
Outputs
Outcomes
Our strategy
Our culture
Our values

Our goal
Our purposeInputs
Financial
Our people
resources
Inputs
Read more
on page 30
Our people
Read more
on page 30
Read more
on page 33
Read more
on page 34
Read more
on page 35
Read more
on page 40
PC_FRONT.indb 28 5/15/2015 1:47:50 AM

29
Overview
Group performance
Governance
Governance
Risks
customer service

Fibre
Customer
TV and
content
Team
UK business
markets
Change
Mobility
voice
Honesty
Leading
global
companies
Pride
Invest for
growth

Transform
our costs
External environment
Outputs
Outcomes
Group performance
performance
Outcomes
Read more
from page 77
Read more
from page 53
Read more
on page 34
Read more
on page 90
Read more
on page 90
Outputs
Read more
from page 31

Read more
from page 53
Read more
on page 34
Read more
on page 40
PC_FRONT.indb 29 5/15/2015 1:47:50 AM
30 BT Group plc
Annual Report 2015
How we create value
see
Our sustainable business model
Financial strength
Grow EBITDA
Invest in
business
Reduce Support
pension fund
Pay
progressive

dividends
Our people
Believing in what we do
Team
more
Honesty
respectful
Customer
customers
Pride
Change
PC_FRONT.indb 30 5/15/2015 1:47:51 AM

31
Overview
Group performance
Governance
A global workforce
External hires (full-time equivalents)
Year ended 31 March
UK Non-UK
000
12
10

8
6
4
2
0
2013 2014 2015
A customer-facing workforce
Customer First Challenge Cup
Investing for growth
A healthy organisation – employee engagement and
involvement
Find out more
apprenticeship scheme visit
www.btplc.com/careercentre
PC_FRONT.indb 31 5/15/2015 1:47:52 AM
32 BT Group plc
Annual Report 2015

Volunteering
s
Sharing in success
Employee engagement index
As at 31 March
2011 20132012 2014 2015
3.5
3.6
3.7
3.8
3.9
Diversity at work
a
Staying safe and well
a The Two Ticks is an accreditation that is given to
organisations that are committed to employing
disabled people.

PC_FRONT.indb 32 5/15/2015 1:47:52 AM
33
Overview
Group performance
Governance
Our networks and physical assets
Our global reach
In-country networks
Developments this year

-
Service platforms
BT Conferencing
BT Cloud Contact
Our BT TV platform
IT systems
Properties
on page
73
Find out more
PC_FRONT.indb 33 5/15/2015 1:47:52 AM
34 BT Group plc
Annual Report 2015
Research and development
a

-
to-
Brand and reputation
bn
2/
a
R&D Investment Scoreboard,
http://iri.jrc.ec.europa.eu/scoreboard.html
PC_FRONT.indb 34 5/15/2015 1:47:52 AM
35
Overview
Group performance
Governance

9 out10 of
1bn
10m
0
Ingenious
Stakeholders and relationships
Our customers
businesses and public sector
Communities and society as a whole
on page
53
Our performance against
our 2020 ambitions
92
Find out more

5m
PC_FRONT.indb 35 5/15/2015 1:47:52 AM
9 out of 10 people in the UK will have access
fito bre-based products and services.
36 BT Group plc
Annual Report 2015
included as part of our
Our shareholders
Number of investor meetings and events
Year ended 31 March
0
100
200
300
400
500
20142013 2015

2
5
9
4
2
1
3
6
9
Our lenders
Our pension schemes
Our suppliers
PC_FRONT.indb 36 5/15/2015 1:47:53 AM
37
Overview

Group performance
Governance
2015
Paying our suppliers
Human rights
Our
The Academy
31
BT Supplier Policy
www.selling2bt.bt.com
BT Supplier Finance Scheme
www.selling2bt.bt.com/
Payment/SupplierFinance/
Better Payment Practice Code
www.payontime.co.uk

Find out more
PC_FRONT.indb 37 5/15/2015 1:47:53 AM
38 BT Group plc
Annual Report 2015
Our relationship with HM Government
Regulation
The Communications Act and Ofcom
BT’s Undertakings
PC_FRONT.indb 38 5/15/2015 1:47:53 AM
39
Overview
Group performance

Governance
Impact of regulation
Fixed Access
and Wholesale
Broadband
Access Market
Reviews
Fibre
broadband
margin
Ladder pricing
Pay-TV
igital
Ethernet
dispute appeal
Business
Connectivity
Market Review

Wholesale
Market Review
PC_FRONT.indb 39 5/15/2015 1:47:53 AM
40 BT Group plc
Annual Report 2015
Water usage
Energy use and carbon footprint
Gwh
2012 20132011 2014 2015
BT’s worldwide energy usea
Year ended 31 March
2,000
2,100
2,200
2,300
2,400
2,500
2,600

2,700
2,800
2,
75
6
2,
67
5
2,
60
0
2,
51
5
2,
40
2
2 2
2
2
1997

(Base)
CO2e Ktonnes
0
400
600
200
1,000
800
1,600
1,400
1,200
1,800
Global GHG emissions dataa
Year ended 31 March
Total gross emissions
Scope 2: electricity purchased for own use
Scope 1: combustion of fuel and operation of facilities
Scope 3: other indirect emissions
2015201420132012

1,
62
8
1,
52
8
1,
44
5
1,
38
7
1,
44
8414
1,097
117
191
516
157
194

190
151
182
62
147
178
65
142
Total net emissions
Figures exclude third-party consumption
a
years following improvements to our data. Previous estimates of
energy usage have been
PC_FRONT.indb 40 5/15/2015 1:47:53 AM
41
Overview

Group performance
Governance
Our risks
Principal risks and uncertainties
How we manage risk
Business activitiesMonitoring Evaluation
Response
Changes over the year
Enterprise Risk Management framework
Line of business and
BT TSO audit
& risk committees
Line of business and BT TSO
leadership teams

means identifying and responding to
Operating
Committee
Operating
assigns a management
Group Risk
Panel
Operating
Audit & Risk
Committee
Board
Audit
PC_FRONT.indb 41 5/15/2015 1:47:53 AM
42 BT Group plc
Annual Report 2015
Risk description Impact Link to strategy
Security and resilience
The resilience of our IT systems, networks and associated
infrastructure, including our core data centres and exchanges,
is essential to our short and long-term commercial success.

Major contracts
We have a number of complex and high-value national and
multinational customer contracts.
Transform our costs
Our principal risks
PC_FRONT.indb 42 5/15/2015 1:47:53 AM
43
Overview
Group performance
Governance

Changes over the last year Risk mitigation
PC_FRONT.indb 43 5/15/2015 1:47:53 AM
44 BT Group plc
Annual Report 2015
Pensions
Scheme (BTPS or Scheme).
Transform our costs
Growth in a competitive market
We operate in markets which are characterised by: high levels
of change; strong and new competition; declining prices and,
in some markets, declining revenues; technology substitution;
market and product convergence; customer churn; and
regulatory intervention to promote competition and reduce
wholesale prices.
PC_FRONT.indb 44 5/15/2015 1:47:53 AM
45
Overview

Group performance
Governance
economic uncertainty remains a factor causing corporate
customers to delay
PC_FRONT.indb 45 5/15/2015 1:47:53 AM
46 BT Group plc
Annual Report 2015

Communications industry regulation
Regulation impacts our activities across all jurisdictions.
Transform our costs
Business integrity and ethics
We are committed to maintaining high standards of ethical
behaviour, and have a zero tolerance approach to bribery
bribery and sanctions legislation could result in substantial
sanctions regulations could also lead to reputation and brand
Transform our costs
PC_FRONT.indb 46 5/15/2015 1:47:54 AM
47
Overview
Group performance

Governance
Regulation
PC_FRONT.indb 47 5/15/2015 1:47:54 AM
48 BT Group plc
Annual Report 2015
Supply chain
We operate in a global supply market. This enables us to
procure third-party products and services that help us deliver
to our customers wherever they are. There are often several
links in the ‘chain’ of supply of a product or service to us.
Suppliers
all supplier failures typically result in an increased cost to
Transform our costs
Customer data processing

As a major data controller and processor of customer
information around the world we recognise the importance
of adhering to data privacy laws. Every day we process the
personal data of millions of consumer and business customers
give their personal data to us they can trust us to do the right
as incurring costs resulting from termination of customer
PC_FRONT.indb 48 5/15/2015 1:47:54 AM
49
Overview
Group performance
Governance

Increased focus on in-life contract management of our critical
suppliers is
into
Information
PC_FRONT.indb 49 5/15/2015 1:47:54 AM
50 BT Group plc
Annual Report 2015
Risk case-studies
Raising standards in major contracts
How we managed the risk
Outcome and lessons learned
How we managed the risk
Outcome and lessons learned
PC_FRONT.indb 50 5/15/2015 1:47:55 AM
51
Overview

Group performance
Governance
EE acquisition: risks
older circular in relation to our proposed
Risks related to the acquisition
planned
Increased cost of debt
Risks to the enlarged business
PC_FRONT.indb 51 5/15/2015 1:47:55 AM

52 BT Group plc
Annual Report 2015
PC_FRONT.indb 52 5/15/2015 1:47:55 AM
53
Overview
Group performance
Governance
54 How we are organised

55 BT Global Services
59 BT Business
64 BT Consumer
68 BT Wholesale
71 Openreach
76 BT Technology, Service & Operations
Our customers
Our products and services
Line of business performance
53
Overview
Group performance

Governance
PC_FRONT.indb 53 5/15/2015 1:47:55 AM
54 BT Group plc
Annual Report 2015
How we are organised
BT
Business
BT Technology, Service & Operations
Customers
BT
Wholesale
OpenreachBT Global
Services
BT
Consumer

28%
Openreach
(including internal)
Adjusted revenuea by line of business
12%
BT Wholesale
24%
BT Consumer
15%
BT Business
38%
BT Global Services
Adjusted EBITDAa by line of business
17%
BT Global Services
17%
BT Business
16%
BT Consumer
41%
Openreach

9%
BT Wholesale
ª
11%
Openreach
22,000 or 25%
BT TSO and Other
(group functions)
Employeesb by line of business
32,700 or 37%
Openreach
6,200 or 7%
BT Consumer
1,500 or 2%
BT Wholesale
8,000 or 9%
BT Business
18,100 or 20%
BT Global Services
As at 31 March 2015
b Full-time equivalent of full and part-time employees.
Internal reorganisation

PC_FRONT.indb 54 5/15/2015 1:47:56 AM
55
Overview
Group performance
Governance
BT Global Services
Financial Services
Public Sector
Automotive

Energy and Resources
Healthcare and Life Sciences
Manufacturing
Media and Business Services
Retail and Consumer Goods
Technology and Telecoms
Travel, Transport and Logistics
UK Continental
Europe
US and Canada High-growth
regions
and Africa
Markets and customers
BT Global Services revenue by sector
18%
Financial institutions
20%
Public sector
5%
Transit

5%
Other global carriers
52%
Corporate customers
institutions)
generate
BT Global Services revenue by region
43%
UK
31%
Continental Europe
13%
US and Canada
13%
High-growth regions
proportion of multinational corporation
PC_FRONT.indb 55 5/15/2015 1:47:56 AM
56 BT Group plc
Annual Report 2015
a

yearsb
c
d
Products and services
Innovation from BT
Industry propositions
BT Advise
Service from BT
BT Assure
BT Compute
adapt
BT One
BT Contact
BT Connect
a Gartner, Magic Quadrant for Communications Outsourcing
and Professional Services, Christine
Gartner does not endorse any vendor, product or service
depicted in its research publications, and
does not advise technology users to select only those vendors
with the highest ratings or other
designation. Gartner research publications consist of the

opinions of Gartner’s research organisation
particular purpose.
b
c
d
research opinion or viewpoints published, as part of a
syndicated subscription service, by Gartner,
BT Assure
BT One
Industry propositions
PC_FRONT.indb 56 5/15/2015 1:47:56 AM
57
Overview
Group performance

Governance
a
Customer Contract
(BT Contact)
Genome Institute
of Singapore
(BT Compute)
Kimberly-Clark
(BT One)
To implement and manage cloud-
Procter and Gamble
(BT Connect)
Sasol
(BT Connect)
Smart DCC, subsidiary of
the Capita Group
(BT Assure)
Société Générale

(BT Connect)
Royal Mail
(mobility services)
Welsh Government
(BT Connect)
of carbon emissions
Performance in the year
a
b
Key facts:
Improved customer service –
increased speed of delivery by
25% and RFT up 8.6%
Operating costsa down 5%
Order intake of £6.5bn, down
last year
Revenuea up in the
high-growth regions
and Continental Europe
Operating performance
BT Global Services 12-month rolling order intake
Year ended 31 March

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015
£bn
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
PC_FRONT.indb 57 5/15/2015 1:47:56 AM
58 BT Group plc
Annual Report 2015
Transform our costs
optimise our operating model.
reduce failures in our processes.
transform and optimise our global network.

improve third-party supplier value for money by negotiating
better
global account management capabilities and made our products
and
the high-growth regions
our network
our core products and services
BT Advise
Financial performance
2015 a a
Depreciation and amortisation
a
some
assets becoming fully
PC_FRONT.indb 58 5/15/2015 1:47:56 AM
59
Overview

Group performance
Governance
BT Business
BT Business
Solution
s
some public
sector
organisations

and BT Global
customers
UK
Corporate
businesses
and corporate
BT
Ireland
corporates
in RoI
UK
SME
companies
target

specialist
UK SME
Business
BT Redcare
BT Directories
BT Payphones
UK Corporate
BT Ireland
0
100
200
300
400

500
600
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015
£m
Year ended 31 March
Key priorities
PC_FRONT.indb 59 5/15/2015 1:47:56 AM
60 BT Group plc
Annual Report 2015
BT Business

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