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British Telecommunications plc
Annual Report and Financial Statements
Year ended 31 March 2025
Company number 1800000
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Contents

| Page
Corporate information | 2
Strategic report | 3
Report of the Directors | 23
Statement of directors’ responsibilities | 27
Independent auditor's report to the members of British Telecommunications plc | 28
Group income statement | 35
Group statement of comprehensive income | 36
Group balance sheet | 37
Group statement of changes in equity | 38
Group cash flow statement | 39
Notes to the consolidated financial statements | 40
Financial Statements of parent company | 106
Additional Information | 137

2
Corporate Information
Directors
Neil Harris
Edward Heaton
Simon Lowth
Daniel Rider
Roger Eyre (resigned 14 April 2025)
Helen Charnley (appointed 14 April 2025)
Secretary
Antony Gara
Independent Auditor
KPMG LLP
15 Canada Square
London
E14 5GL
Registered office
1 Braham Street
London
E1 8EE
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Strategic report
Non-financial information statement
Our integrated approach to reporting means that we address the requirements of the Non-Financial Reporting Directive through the
Strategic report.
The overall strategy of British Telecommunications plc (“BT plc” or the “Company”) is part of that of BT Group plc which is outlined in BT
Group plc’s Annual Report 2025, which does not form part of this report.
How we're organised
BT plc is the principal trading subsidiary of BT Group plc ("BT Group"), which is the ultimate parent company.
BT Group consists of customer-facing (CFUs), technology (TUs), and corporate (CUs) units. We share resources across our networks,
technologies, colleagues and brands to deliver the best results for customers, stakeholders and shareholders. To stay in line with UK
regulations a nd our commitments, Openreach operates independently.
Customer-facing units
Our three customer-facing units (CFUs) focus on different segments – each with unique needs. They aim to provide outstanding customer
experiences through tailored solutions which generate revenue and build long-term trust.
Consumer serves individuals and households across the entire UK market with connectivity products and other targeted services. We
provide 8.2 million broadband and 15.6 million mobile connections to customers. We reach 13.4 million UK households, that is nearly half
of all UK households.
Business serves businesses of all sizes, other communications providers (CPs) and public sector organisations with connectivity and other
solutions like security. We also support more than 1 million private and public sector organisations and over 1,400 wholesale customers in
the UK.
Openreach independently manages BT Group’s fixed access network, connecting millions of UK homes, businesses, public sites and
mobile towers. We lead in building the UK’s next-generation full fibre network, with more than 18 million homes and businesses passed by
the end of March 2025.
Technology units
Our technology units (TUs) build, maintain, and run our networks, platforms and digital assets, except fixed infrastructure assets which
Openreach operates and commercialises. They're also modernising our business through continuous innovation, research and
development (R&D), keeping us secure and at the cutting edge of the right technologies. They help us to be more agile and efficient and
deliver better outcomes for customers. Our two TUs are:
Digital delivers our IT and digital platforms making sure our products and services are running on efficient, future-proof technology.
Networks designs, builds, runs and secures the mobile, core and global networks, so we can become the UK’s most trusted connector of
people, business and society.
Corporate units
Our corporate units (CUs) operate at Group level, setting direction and governance frameworks and aligning our activities. They make us
more efficient through c entralised platforms, capabilities and shared services.
Our five CUs are:
– Finance and Business Services.
– Strategy and Change.
– Human Resources.
– Legal, Regulatory Affairs, Compliance and Company Secretarial.
– Corporate Affairs and Brand.
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Strategic report continued
Key performance indicators
We use nine KPIs – five operational and four financia l. We continue to monitor and evolve our KPIs to ensure those reported are the best
measures against our strategy. During FY25 we've worked on refreshing our strategy; as part of this we have updated our KPIs from FY26
onwards to more accurately reflect our strategic priorities. As part of the strategy refresh we have included adjusted UK Service Revenue
as a new KPI from FY25. Adjusted a EBITDA margin has been discontinued as a KPI, although revenue and adjusted a EBITDA remain KPIs.
We reconcile adjusted financial measures to the closest IFRS measure on page 137. Items presented as adjusted are stated before specific
items. See page 137 for more information.
Operational
BT Group Net Promoter Score (NPS)
This tracks changes in our customers’ perceptions of BT Group since we launched the measure in April 2016. It’s a combined measure of
‘promoters’ minus ‘detractors’ across our business units. BT Group NPS measures the net promoter score in our retail business b and net
satisfaction in our wholesale business. We continue to focus on creating standout customer experiences with performance up 4.7 points in
FY25 (FY24: up 1.0 poin t).
Total Openreach FTTP connections
This tracks how many premises are connected to Openreach’s full fibre (FTTP) network. 6.5m premises were connected to Openreach’s
FTTP network at 31 March 2025 (FY24: 4.7m). Openreach’s full fibre footprint reaches more than 18m homes and businesses and we’re
heading towards 25m premises by the end of 2026.
Total 5G connections
This measures the number of BT retail connections to the 5G network. There were 13.2m connections to our 5G network at 31 March
2025 (FY24: 11.1m). We continue to expand our 5G network which now covers 85% of the UK population.
Percentage reduction in operational carbon emissions
This measures performance against our ambition to cut carbon emissions by 90% by the end of March 2031 compared to FY17 levels c. It’s
based on an absolute reduction in tonnes of CO 2 e (carbon dioxide equivalent) in operational emissions (Scopes 1 and 2 greenhouse gas
emissions). This replaces our previous carbon intensity goal, reflecting stronger ambition and alignment to a 1.5 o c pathway. This year, we
achieved a 52% reduction from our baseline year (FY17) (FY24: 50%c).
Units on legacy
This tracks customer migrations from legacy to strategic network platforms, which enables our legacy platforms to be decommissioned. A
‘unit’ is a circuit within, or a connection to our network. We have reduced the number of legacy connections by 35%, to 4.2 units (FY24:
6.5), by migrating customers to Digital Voice, 4/5G and Fibre broadband.
Financial
Repo rted revenue
This is our revenue as reported in our income statement. Reported revenue was £20,358m (FY24: £20,797m). The decrease was driven by
continued challenging non-UK trading conditions in our Global and portfolio channels and weaker handset trading in Consumer, offset by
the impact of FTTP growth in Openreach and price increases.
Adjusted a UK Service Revenue
Adjusted UK Service revenue comprises all UK revenue less UK equipment revenue. Some revenue from equipment is included within
adjusted UK service revenue where this is sold as part of a managed services contract or where that equipment cannot be practicably
separated from the underlying service. Adjusted UK service revenue excludes revenues from our Global channel and international
elements of our Portfolio channel within our Business segment, as they are international in nature. Adjusted a UK Service Revenue for the
year was £15,582m (FY24: £15,727m). This is down 1% as growth in Openreach was more than offset by a decline in Business, as a result
of lower legacy revenues.
Adjusted a EBITDA
This measures our earnings before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax
profits or losses of associates and joint ventures. Adjusted a EBITD A was £8,203m (FY24: £8,102m), driven by strong cost transformation,
which more than offset lower revenue.
Reported capital expenditure
This measures additions to property, plant and equipment and intangible assets during the year. Reported capital expenditure was
£4,857m (FY24: £4,880m). This was broadly in line with prior year, with higher FTTP build and provision volumes in Openreach, some
preparation for an acceleration in our build, and higher customer premises equipment in Consumer, being offset by lower build and
provision unit cost s.
a Items presented as adjusted are stated before specific items. See page 137 for more information.
b Includes our Consumer brands as well as Business unit excluding Wholesale.
c Restated from percentages presented in the FY24 Annual Report due to a change in the KPI definition. Our previous KPI, an 87% reduction in carbon emissions intensity by FY31, has
been replaced with this operational carbon emissions reduction KPI.
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Strategic report continued
Group performance
Summarised income statement (reported measures)

| 2025 | 2024
Year ended 31 March | £m | £m
Revenue | 20,358 | 20,797
Operating costs | (12,894) | (13,183)
Depreciation and amortisation | (4,978) | (5,398)
Operating profit | 2,486 | 2,216
Net finance expense | (417) | (298)
Share of post tax profit (loss) of associates and joint ventures | (8) | (21)
Profit before tax | 2,061 | 1,897
Tax | (280) | (331)
Profit for the year | 1,781 | 1,566

Alternative performance measures
We assess the performance of the group using various alternative performance measures. As these are not defined under IFRS they are
termed ‘non-GAAP’ or ‘alternative performance’ measures. We reconcile these to the most directly comparable financial measure or
measures calculated and presented under IFRS on page 137. T he alternative performance measures we use may not be directly
comparable with similarly titled measures used by other companies.
Revenue
Reported revenue was £20,358m, down 2% mainly due to continued challenging trading conditions in our Global and non-UK Portfolio
channels and weaker handset trading in Consumer. These factors offset the impact of FTTP growth in Openreach and price i ncreases in
each CFU. You can find details of revenue by CFU in Note 4 of the consolidated financial statements. Note 5 to the consolidated financial
statements shows a full breakdown of reported revenue by all our major product and service categories.
Operating costs
Reported operating costs (including depreciation and amortisation) were £17,872m, down 4%year on year due to cost transformation
and the prior year goodwill impairment, which were partly offset by cost inflation and specific costs including impairment of disposal
groups, restructuring charges and adjustments to balances related to our Sports JV. Note 6 to the consolidated financial statements
shows a detailed breakdown of our operating costs.
Adjusted a EBITDA
Adjusted a EBITDA of £8,203m w as up 1%, driven by strong cost transformation, which more than offset lower revenue.
Profit before tax
Reported profit before tax of £2,061m was up 9%, primarily due to goodwill impairment in the prior year, offset by higher restructuring
charges, adjustments to balances related to our Sports JV and net finance expense in FY25.
Specific items
As we explain on page 137, we separately identify and disclose those items that in management’s judgement need to be disclosed by
virtue of their size, nature or incidence. We call these specific items. Specific items are used to derive the adjusted a results as presented in
the consolidated income statement. Adjusted a results are consistent with the way that financial performance is measured by management
and assists in providing an additional analysis of the reported trading results of the group.
Specific items resulted in a net charge after tax of £781m (FY24: £963 m). The main components were restructuring charges of £448m
(FY24: £388m), and interest expense on retirement benefit obligation of £197m (FY24: £121m); Sports JV-related items £119m and
impairment loss on remeasurement of the disposal groups of £116m; partly offset by a tax credit on specific items of £200m (FY24:
£145m). Specific operating costs were £772m (FY24: £949m).
Note 9 to the consolidated financial statements shows the full details of all revenues and costs that we have treated as specific items.
Taxation
The effective tax rate on reported profit was 13.6% (FY24: 17.4%) which is lower than the UK corporation tax rate of 25% primarily due to
the UK patent box regime and group relief received for nil payment. The rate was higher in the prior period due to a non-deductible
goodwill impairment. The effective tax rate on adjusted a profit was 15.8% (FY24: 20.7%) for the same reasons. A net corporation tax
refund of £35m (FY24: £59m payment) comprised overseas tax payments of £60m offset by a UK tax refund of £95m following the
closure of prior period tax returns.
Our tax expense recognised in the income statement before specific items was £480m (FY24: £476m). The charge for the period
comprises deferred tax in the UK and current and deferred tax overseas. Note 10 to the consolidated financial statements shows further
details of our tax expense, along with our key tax risks.
Dividends
In FY25 dividend of £780m was paid to the parent company, BT Group Investments Limited (FY24: £850m).
a Items presented as adjusted are stated bef ore specific items. See page 137 for more information.
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Strategic report continued
Capital expenditure
Capital expenditure was £4,857m (FY24: £4,880m), this was broadly in line with prior year, with higher FTTP build and provision volumes
in Openreach, some preparation for an acceleration in our build, and higher customer premises equipment in Consumer, being offset by
lower build and provision unit costs. Capital expenditure contracted but not yet spent was £985m at 31 March 2025 (FY24: £1,049m).
Cash flow
Net cash inflow from operating activities was £6,989m, up 17% (FY24: £5,953m).
Summarised balance sheet

| 2025 | 2024
At 31 March | £m | £m
Intangible assets | 12,433 | 12,928
Property, plant & equipment | 23,380 | 22,562
Right-of-use assets | 3,328 | 3,642
Derivative financial instruments | 1,034 | 1,070
Cash and cash equivalents | 209 | 409
Investments | 15,086 | 14,028
Trade and other receivables | 3,774 | 4,230
Preference shares in joint ventures | 395 | 533
Contract assets | 1,500 | 1,740
Deferred tax assets | 959 | 1,048
Assets classified as held for sale | 245 | —
Other current and non-current assets | 1,080 | 1,209
Total assets | 63,423 | 63,399
Loans and other borrowings | 18,762 | 18,526
Derivative financial instruments | 497 | 539
Trade and other payables | 6,149 | 6,960
Contract liabilities | 1,156 | 1,081
Lease liabilities | 4,571 | 4,955
Provisions | 640 | 649
Retirement benefit obligations | 4,230 | 4,882
Deferred tax liabilities | 1,717 | 1,533
Liabilities classified as held for sale | 188 | —
Other current and non-current liabilities | 82 | 92
Total liabilities | 37,992 | 39,217
Total equity | 25,431 | 24,182

Pensions
The IAS 19 gross deficit has decreased to £4.1bn at 31 March 2025, net of tax £3.2bn, primarily due to scheduled contributions over the
period. The 2023 BT Pension Scheme (BTPS) funding valuation incl uded a futu re funding commitment for BT to provide additional deficit
contributions should the funding deficit be more than £1bn behind plan at two consecutive semi-annual assessment dates. At the 31
December 2024 assessment date, the position was within this limit.
Assets and liabilities classified as held for sale
During the year we announced our intention to explore options to optimise our global business. At 31 March 2025 we have five disposal
groups held for sale. These include our datacentre business in Ireland, our Irish wholesale and enterprise business, and our domestic
operations in Italy. The disposals are all expected to be completed in FY26 subject to competition and regulatory approvals.
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Strategic report continued
Our stakeholders
Customers, colleagues, the country we do business in (including its communities, government and regulators), our owners, suppliers and
partners are all key stakeholders. We engage with them at every level of our business, from our frontline teams to senior leadership, the BT
Group Executive Committee and the BT Group plc Board. We do it with them in lots of different ways – from meetings and conferences to
reviews, forums and webcasts.
To keep track of how well we’re connecting with different groups, the BT Group plc Board and its Committees get regular updates from
various parts of the business and directly from the stakeholders themselves. These insights help them make better decisions, provide
valuable feedback and challenge activities, programmes, initiatives to make sure we’re on the right track.
Customers
Our large, broad customer base spans individuals, households, multinational corporations and government entities. We want to help
customers live and work better. That starts with them having outstanding experiences with us. To do that we must understand their unique
needs. Personally engaging with customers is essential to understanding what they need today and tomorrow. By transforming and
creating outstanding customer experiences, we aim to build trust and loyalty.
How we engage with customers
Colleagues in service, sales and contact centres talk to customers regularly to keep up to date with what they need and help them stay
connected.
Using research techniques and internal and external data, our insights team aims to get a deep understanding of customers’ needs.
Our CFUs, the BT Group plc Executive Committee and the BT Group plc Board regularly review metrics like NPS to monitor customers’
experiences and loyalty to our brands.
The Chief Executive, The BT Group plc Executive Committee and senior leaders also regularly review and discuss customer complaints.
Our Customer Fairness Panel, Customer Inclusion Panel, Security Advisory Board and Customer Advisory Board have direct conversations
with customers to help us better understand their experiences.
Openreach makes sure every communications provider gets equal access to our fixed network by engaging them through a transparent
and compliant consultation process.
Highlights this year
We’ve simplified our contract communication and charges by expressing changes in pounds and pence instead of percentages, making it
clearer for customers.
We visited every UK region to raise awareness and to make sure all customers understand the simple steps needed to switch to Digital
Voice.
In Consumer we’ve continued to use EE to offer converged propositions to support customers at home, at work and on the go. We gave
guidance on children’s digital wellbeing, discouraging parents from giving primary school-aged children their own smartphones.
For our business customers we ran market leading security events. One event – ‘Secure Tomorrow’ – hosted more than 800 business
customers and partners, discussing topics like emerging tech, workforce, regulation, and transformation.
Colleagues
To build a culture where colleagues can thrive and contribute to our purpose, ambition and success, they need to be engaged. That means
providing supportive work environments, flexible and agile working options and top-quality training and career development. And it
means rewarding performance with fair, competitive pay and benefits.
How we engage with colleagues
The BT Group plc Board gets regular updates from the Chief Executive and Chief People & Culture Officer. Topics range from people
strategy initiatives to culture and overall sentiment in the organisation. We’ve run four quarterly ‘Your Say’ employee engagement surveys
this year. They give around 10,000 people managers actionable insights on what their teams are experiencing, thinking and feeling over
time. Survey participation has stayed high at 76% (March 2025).
Highlights this year
Despite the big levels of change and transformation, colleague engagement has stayed strong at 76% – above the 70% UK benchmark.
Our commitment to customer satisfaction remains strong as our ‘Delivering for the Customer’ metric kept its strong score of 82% (over
the year). Colleagues feel equally positive about being “encouraged to develop new ways to serve customers” and “empowered to make
decisions to best serve customers” at 82%. This sentiment matches the global high-performing benchmark – and 8% above the 74% UK
benchmark.
I nclusion and wellbeing
Our Manifesto laid out our aspirations for our workforce to better reflect the customers and communities we serve. We list our 2025
manifesto goals for gender, ethnic minority and disability balance at various levels of the organisation in the BT Group plc Annual Report.
O ur overall UK declaration rates are up from 81% to 82%. More colleagues now feel comfortable declaring their personal information,
giving us better demographic data to tackle areas of opportunity.
While we’ve made progress on some goals notably on all colleagues ethnicity, and disability representation among senior leaders, we need
to work harder to make BT Group inclusive for everyone. To achieve this we are focusing on key areas that matter most:
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Strategic report continued
– We’re encouraging more inclusive workplaces through understanding barriers and acting to make sure all our people feel included and
can fulfil their potential.
– We’re making the way we design jobs and run our workplace more inclusive.
– We’re underpinning that with an unwavering focus on inclusive leadership.
– We’re committed to having a wider range of digital skills to make us more productive and innovative. Which will will help us and the
whole UK grow.
– And we’re still making sure our early careers talent represents the communities we serve – through partnerships with organisations such
as the Black Apprentice Network.
Our Chief Executiv e Allison Kirkby opened the Black Apprentice event in December 2024. Our apprentice representation figures keep
improving. They’re higher than BT Group and 2025 ambition figures in all demographics.
We work with our active and award-winning People Networks. These colleague-led groups inform our priorities and raise awareness and
advocate for change inside and outside BT Group.
Occupational health and wellbeing
This year we launched a new 24/7 global wellbeing portal for colleagues. It provides validated content on health, relationships, money and
work. It also gives access to services like online GP, menopause support, cancer checks, mental health, physiotherapy and wellbeing
programmes.
Occupational health and wellbeing absences (for UK colleagues) from sickness have dropped to an average of 3.52% calendar days lost
per colleague – down from 3.66% last year. When colleagues need extra help getting back to work, our fully funded rehabilitation
programme for musculoskeletal and mental health services returns 97% of them to full duties.
Country
We make a big economic contribution to UK society by connecting it. Trust is essential. Without it, we wouldn’t be able to grow and fulfil
our purpose of connecting for good. Different groups have different expectations but we all share the same goal – to make a positive
impact on society.
Communitie s
The communities we serve want us to:
– keep them protected through reliable and secure connections
– help them to understand and navigate the increasingly digital world
– keep providing direct and indirect employment
– do business ethically, responsibly and sustainably.
How we engage with communities
We support them through our stores, contact centres, digital channels and home visits for installation and maintenance. We offer digital
skills training to millions of UK people, to help everyone – whatever age or background – build the skills they need for a more connected
world. We run roadshows across the UK to help customers understand the switch from legacy copper-based services to Digital Voice.
We use customer surveys and reputation tracking to understand how we’re doing and inform future focus areas and goals.
The BT Group plc Responsible Business Committee oversees our societal programme – tracking feedback and performance through a
dashboard discussed at each meeting.
Highlights this year
Our full fibre network now reaches 4.9 million homes and businesses in harder-to-reach areas, against our aim to reach 6.2 million by
December 2026. Over 18 million homes and businesses have been passed with full-fibre so far.
We’re expanding 4G coverage in rural areas through the Shared Rural Network initiative, while also growing our 5G network to 90% of the
UK by 2027.
We support over 900,000 low income and vulnerable customers with social tariffs and discounted products.
We spend £9.6bn each year with UK suppliers. Our combined activities support 212,000 jobs directly or indirectly. We contribute £1 in
every £100 of UK Gross Value-Added and support 1 in every 100 workers in the UK 1.
We’re one of the UK’s biggest private sector apprenticeship employers – we’ve hired more than 3,000 apprentices and graduates over the
past five years.
We support communities to develop digital skills to help them thrive in a digital world. This year, we helped 280,000 more people, bringing
the total to 23.3 million since FY15.
Our people volunteered nearly 150,000 hours of their time to help our charity partners and communities – sharing skills and expertise
through mentoring and digital skills training programmes.
Colleagues donated over £1.2 million to more than 1,000 charities through payroll giving. We received the Payroll Giving Platinum Award
quality mark from the Government. Our people’s fundraising and donations raised over £173,000 for our charity partner HomeStart UK,
helping families facing social exclusion.
We fund UNICEF’s ‘Digital Learning Passport’ tech platform, which enables access to quality educational resources for young p eople.
1 The Economic Impact of BT Group plc in the UK – 2025 edition (bt.com/economic-impact)
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Strategic report continued
Government
Our relationship with government bodies underpins our three strategic pillars and helps us contribute to policies and initiatives that
promote the best results for stakeholders.
Based on a report commissioned last year, we added more than £22.8bn to the UK economy, supporting critical services and working with
more than 1,400 public sector customers.
Our public policy work with Government covers everything from infrastructure investment to national security, from promoting digital
skills and inclusion to wider economic and industrial policy.
Our networks support vital public services like welfare, tax, health, social care, police and defence – while protecting citizens’ personal
data.
The Government wants us to:
– keep investing in our network infrastructure – provide the fastest, most reliable and secure connection possible, to the widest possible
range of communities
– invest in the best products and services, at fair prices, with high levels of customer service
– support vulnerable customers through tough economic times.
How we engage with the Government – and highlights this year
Our policy and public affairs team manages our relationships with Government and other politicians.
Under the Communications Act 2003, the Government can ask us (and others) to run or restore services during disasters. The
Civil Contingencies Act 2004 also says that they can impose obligations on us (and others) in emergencies, or in connection with civil
contingency planning.
We keep an open dialogue with Government through BT Group plc's Chairman, Chief Executive and senior leaders – as well as through
consultation responses and cross-industry initiatives. Through those conversations we build support for policies that will deliver good
results for the UK and our shareholders.
The BT Group plc Board receives updates on discussions with Government through updates from the BT Group plc Chairman, Chief
Executive and the BT Group plc Executive Committee members.
In 2024 we engaged with senior representatives and politicians from all major political parties in the run up to the General Election. And
since the election we’ve sought to build a constructive partnership with the new Government.
This year, we contributed to Government initiatives on industrial strategy, technology development and adoption, mobile markets,
planning, business rates, smart data, AI opportunities, cybersecurity, international trade, economic security, fraud and copyright.
We also worked with officials and regulators to agree new protocols for moving customers off our old networks.
We gave insights to Government to help it formulate its Statement of Strategic Priorities for Ofcom. We also gave input and evidence to
parliamentarians on legislation like the Data (Use and Access) Bill and the Employment Rights Bill.
Regulators
Regulation is essential for protecting consumers and promoting fair competition. Our main relationship is with Ofcom, the regulator of UK
communications and TV services. We also work with other bodies like the Financial Conduct Authority, Competition and Markets
Authority, and the Information Commissioner’s Office.
Our regulators want us to:
– invest and innovate in UK digital infrastructure
– keep the UK’s digital infrastructure and critical services secure and reliable – be fair and transparent with customers – compete fairly in
our markets.
How we engage with regulators
We have open and constructive dialogue via the BT Group plc Board, BT Group plc Chief Executive, BT Group plc Executive Committee
and senior leaders. These discussions focus on how regulation can support investment in top-notch digital infrastructure while making
sure the market works for consumers. As part of our day-to-day operations, we regularly interact with Ofcom and other regulators
through industry consultations and information requests to make sure they understand the impact of proposed changes.
Suppliers and Partners
Strong relationships with suppliers and partners are crucial to our success. They enable us to provide solutions and offers to deliver
exceptional customer experiences.
Our suppliers and partners want us to:
– pay them according to our agreed terms
– work with them to optimise their supply chains and support cash flow management
– operate ethically and transparently.
How we engage with suppliers and partners
We need to know who we’re doing business with and who’s acting on our behalf.
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Strategic report continued
We pick suppliers who agree to endorse our policies and standards – making sure we collectively act ethically and responsibly.
We do due diligence before signing contracts on risks like financial health, anti-bribery and corruption, business continuity, human rights,
environmental impacts, cyber security, data privacy and health and safety.
We make sure we have strong contracts with suppliers to keep standards high, deliver on time to our customers, and follow our
responsible and ethical supply chain standards.
We regularly audit our high-risk suppliers – focusing on governance, human rights and environmental impacts – and work with them to
address findings.
Based in Dublin and established in early 2021, BT Sourced is our procurement arm. It focuses on creating more digital and sustainable
procurement through cutting-edge technologies like AI and robotics.
BT Sourced boosts our efficiency and productivity. It also fosters better collaboration with suppliers and partners – which delivers better
value for us, our customers and the wider community.
BT Sourced highlights this year
We grew our partnership with start-up Nnamu – using its game theory AI-based agent to recommend negotiation strategies and
negotiate autonomously. This is saving us time and money.
Our in-house negotiation analytics team explored AI techniques and added new tools. Our Supplier 360 dashboard now uses machine
learning and AI to analyse data and model our supply base, providing insights into supplier relationships, saving money and identifying
potential supply chain risks.
We improved support for small and micro-sized suppliers by launching a tailored Collaborative Cash Flow Optimisation (C2FO) solution,
with competitive funding rates. To make it more accessible for international suppliers, we’ve begun offering payments in US$. More than
1,300 suppliers have signed up. And in 2024 we facilitated more than £1.2bn early payments.
BT Group won awards for Best Use of Technology for a working capital project in the Working Capital Forum and Best Working Capital
Programme from the Supply Chain Finance Community.
We supported Scope 3 and circular economy targets through sourcing strategies for things like network kit, property, consumer devices
and fleet. Our new Supplier Environmental Standard sets clear expectations for suppliers on waste and chemicals, climate change, circular
economy, energy consumption and mineral sourcing.
We launched the Procurement Academy to improve our people’s supply chain optimisation and procurement skills – driving innovation
and improving supplier relationships and decision making.
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The BT Group Manifesto
Launched in 2021, our BT Group Manifesto has supported growth through responsible, inclusive and sustainable technology. We report
here on the progress made on our Manifesto ambitions over the last 12 months.
Moving forward, we’ll be stepping up our focus on digital inclusion and sustainability, replacing the Manifesto and fully integrating these
priorities into the refreshed Group strategy – helping us to achieve our ambition: to become the UK’s most trusted connector of people,
business and society.
Responsible: new tech must earn people’s trust and transform lives for the better
We apply our responsible tech principles across our value chain. They help us consider how to minimise harm and benefit people every
time we develop, buy, use or sell tech. They’re grounded in the UN Guiding Principles on Business and Human Rights, and form part of our
approach to risk management.
Our responsible tech principles are:
For Good: We design and deliver tech to empower people and improve their lives.
Accountable: We’re accountable for our actions and take care to avoid, and protect against, tech misuse.
Fair: We work hard to make sure everyone is treated fairly and with respect.
Open: We listen, collaborate and are transparent about our actions.
Developing new tech
We apply the principles right from the start when we design and develop new tech. This year we:
– completed a human rights impact assessment of drone technology to help us identify, understand and assess its risks.
– developed a playbook for our people to embed responsible tech principles into their designs – to build trust, drive growth and enable
responsible innovation.
Buying tech
Our procurement company, BT Sourced, has responsibility and sustainability criteria set into its processes. This gives our buyers clarity on
supplier risks and opportunities. This year we:
– continued due diligence on our direct Tier 1 manufacturing supply chain. Find out more at bt.com/modernslavery
– expanded our ‘worker’s voice’ survey to four new supplier factories to better understand the experience of those working in our supply
chain. We’ll use the feedback to fix problems and make improvements.
Using tech
We want to make sure our products and services are used for good. So we focus on protecting privacy and free expression and preventing
online harms. This year we:
– developed AI guidance for our people to help them manage AI risks and stay in line with regulation.
– refreshed our Consumer Data Principles to make sure we manage consumer data in line with our responsible tech principles.
– ran a workshop on content controls to find potential risks and impacts to users, creating guidance for our people to adopt when
designing products.
Selling tech
We sell to customers around the world. This year we continued sales due diligence in Business. This helps us assess any potential human
rights risks through the life of a customer’s contract. The 2024 Global Child Forum Benchmark Report looked at our policies, approach
and commitment to children’s rights. It rated us as a top-performing company in Europe, and in the global telecoms sector.
Partnerships
Collaboration was key to this year’s progress – creating a responsible tech ecosystem to drive trust and growth. This year we:
– joined the UN B-Tech project and continued our role in the BSR Human Rights Working Group – to help us implement the UN Guiding
Principles on Business and Human Rights.
– participated in the UN Global Compact Climate and Human Rights Working Group – to help us tackle climate change effects on human
rights and promote due diligence for a low carbon transition – attended the BSR Tech Against Trafficking Summit to understand how to
use tech to fight human trafficking – focusing on supply chain data, using AI and stopping tech-facilitated trafficking.
Inclusive: The future of tech must be diverse and inclusive for everyone to benefit
Embracing inclusion and wellbeing is core to our people strategy and our growth. We want to champion digital inclusion too. We’re
connecting the UK through our digital infrastructure, maximising everyone’s chances to be online and benefit from the digital world.
We continue to support low-income families and vulnerable groups who face ongoing cost of living challenges. We’re still market leader
for low-cost social tariffs – giving over 900,000 customers affordable fibre broadband and calls.
Our digital skills training helps more people benefit from being online – particularly more vulnerable groups like children and the over 65s.
Help with digital skills
This year we helped a further 280,000 UK people and businesses improve their digital skills. Since FY15, we’ve helped a total of 23.3
million people, as part of our ambition to reach 25m by the end of FY26.
Employability and digital skills for young people
We want to help young people prepare for their future and inspire them to work in tech, digital and data.
This year, more than 1,000 young people have benefited from our Work Ready days at our UK workplaces, or schools. These days improve
their understanding, self-confidence and digital skills. 92 of our colleagues gave over 800 volunteering hours to help deliver these events.
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We’re developing Work Ready content for teachers, including free, curriculum linked lesson plans. This will help students improve their
work-ready digital skills through practical, project-based modules, and boost teachers’ industry knowledge when giving careers advice.
We continue to support the National Cyber Security Centre’s CyberFirst programme. It aims to inspire more young people (especially
girls) to have a career in cyber and tech.
We give support through sponsorship, summer placement bursary funding, through around 150 volunteers who were available to help
with events and activities.
Online safety for children and families
We’re helping to promote safe and responsible tech use among young people and protect them online. This year we:
– launched age-appropriate guidance on smartphone use for kids and teens, to protect children and help families navigate online risks and
harms
– became the first UK telco to recommend that under 11s use limited capability devices
– made it simpler to set parental controls on the MyEE app by combining broadband and mobile account controls
– enhanced PhoneSmart, our online learning platform – adding safety guidelines for parents on issues, like AI and recognising deepfakes.
PhoneSmart has now reached over 10,400 learners, with around 3,800 licences issued to those who’ve completed all modules
– delivered more than 3,300 training hours in schools on online safety through ‘We Are Futures’ and the National Schools Partnership
– launched child-friendly devices – the IMO Dash+ phone and Xplora X6 Play smartwatch.
Senior skills
Around 4.7m people aged 65+ don’t have the basic skills needed to use the internet successfully 1. Last year, with partner AbilityNet, we
supported over 3,000 older people to develop their digital skills, improve their confidence and help them to stay safe online.
We’re now building on that success, by expanding our programme and reach to a further 7,000 people – increasing our scope to also
include adults with disabilities. This year, we’ve supported over 5,000 learners through one-to-one learning, repeated small group
sessions and webinars.
We’ve also recruited some celebrity help to shine a light on the issue of online safety:
– Sir Geoff Hurst joined a walking football group at Bristol City FC for an online safety session we held with AbilityNet.
– broadcaster Moira Stuart joined senior learners on a coach trip to Blenheim Palace, where they had bitesize digital skills sessions on scam
awareness and how to use wi-fi and QR codes (run by AbilityNet and supported by BT Group volunteers).
– and actress Linda Robson attended a small group training session and AbilityNet webinar to encourage others to get involved.
Sustainable: tech must accelerate our journey to net zero emissions and to a circular economy
We’ve led on climate action for more than three decades. We’ve been ‘A’ rated on climate by CDP for the past nine years. But as the
climate crisis worsens, we all need to speed up the switch to a low carbon economy.
This year we published our first Climate Transition Plan (bt.com/climatetransitionplan). It sets out in detail the objectives, strategy and
governance needed to help us decarbonise our business, manage climate-related risks and support economy-wide transformation to net
zero. We also continue to publish our Carbon Reduction Plan each year.
We’re aiming to be net zero in our operations by the end of March 2031 – and for our full value chain by the end of March 2041. This year
our Scope 1 and 2 target was updated from intensity based to absolute in line with the Science Based Target initiative (SBTi)’s net zero
standard. All our near term and net zero goals were approved by SBTi this year.
Research and development (R&D) and innovation
We’re still investing in future areas that play to our strengths. We’ve worked to bring new technologies to market first, giving customers
smarter and better outcomes:
– We were first to deploy 5G Standalone network slicing for business use, helping them avoid network congestion and boost connectivity
speeds in their busiest periods when they need it most.
– We were awarded the contract to support the CoSTAR national lab with our Private 5G, which supports virtual production R&D
technologies in film, TV and live events.
– Our Narrowband IoT network covers 97% of the UK population. It connects low-data assets like streetlights and water sensors, paving
the way for sustainable smart city development.
– We evolved our world-first Quantum Key Distribution (QKD) metro network in London.
– We won a bid for Innovate UK funding to lead a quantum assurance programme. It will build concrete assurance processes for QKD
solutions – with the aim of ultimate use in the network.
– This year we incurred £790m on R&D. We also filed 81 patent applications – bringing our portfolio to 5,519.
1 Offline and Overlooked: Digital exclusion and its impact on older people (ageuk.org.uk).
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Reducing carbon emissions in our operations
We’ve cut our operational carbon emissions by 52% since FY17. This is against our updated aim, to deliver a 90% cut by the end of March
2031 (compared to FY17 levels) – reflecting stronger ambition and aligning to a 1.5°C pathway.
We’ve cut our global energy consumption by around 100 GWh this year – a 4% drop on FY24. This was mainly due to continuing to
rationalise and modernise our buildings and networks, and lower fuel use in our fleet.
Buying renewable energy
This year we changed our approach to renewable energy procurement and reporting. This was because of concerns on transparency, lack
of environmental benefits and pricing volatility around Renewable Energy Certificates (RECs). We highlight these in a report we
commissioned with Cornwall Insight 1.
We support renewable power supply through our energy procurement. That includes long-term power purchase agreements (PPAs),
which met 31% of our UK electricity demand this year. But due to the evidence highlighted in our report, we’re scaling back on buying
RECs to those only sourced directly from our PPAs or renewable supply contracts.
And to more accurately reflect the real-world emissions from our electricity consumption, we’re using the location-based methodology 2
as the basis for our updated operational carbon reduction target. This reflects the average emissions intensity of grids from where energy
is consumed and doesn’t account for RECs.
This means we’re moving away from our previous approach of reporting the percentage of electricity that came from renewable sources.
It’ll help us be more transparent and focus on the activities that most effectively support our own decarbonisation. That’s things like
electrifying our vehicle fleet, decarbonising our estate and building more energy-efficient networks.
Switching our fleet to electric
We have over 30,000 vehicles operating across our business. After emissions from consumed electricity, our fleet is our second biggest
source of operational emissions (Scopes 1 and 2).
We’re working hard and investing to convert the majority of this fleet to electric or zero-emission vehicles by the end of FY31 – where
that’s the best technical or economic solution. And where zero-emission vehicles aren’t viable, we’re pursuing other ultra-low emission
options.
This year, we continued to roll out electric vehicles (EVs), increasing the total to over 5,500, which now represents 18% of our total fleet.
We also ordered 3,500 new EVs, the largest ever UK commercial EV fleet order. By 2026, when they’re all delivered, we’ll have nearly
8,000 – one of the UK’s largest EV fleets.
Decarbonising our buildings
Our Better Workplace Programme is consolidating hundreds of BT Group buildings to around 30. Our new-build central office hubs are
being constructed with the aim of meeting the BREEAM-Excellent rating, which requires strong environmental credentials. This year, we
opened Sheffield Endeavour, Dundee Greenmarket and Manchester New Bailey offices, which are all gas-free.
Across our wider UK buildings estate, we’re closing some sites, and we’re also replacing gas-fuelled heating systems with electric heating,
and exploring the use of solar and air-source heat pumps.
The combination of all these actions has helped cut our gas consumption by 13 GWh, equal to over 2,400 tonnes of CO 2 e.
Building energy-efficient networks
Improving our networks’ energy efficiency – which account for over 85% of our total energy consumption – is one of our biggest priorities.
We’re building more energy-efficient fixed and mobile networks, while switching off our old ones. As well as saving energy, full fibre
networks can better absorb the effects of physical climate change risks, like flooding and higher temperatures. That means fewer faults
and engineering visits.
In rural Shropshire we’ve switched on our first self-powered mobile site, driven by solar and wind. All its power comes from renewable
energy sources, giving reliable and sustainable 4G and 5G to EE customers living and working in the area.
We also rolled out energy-saving cell-sleep technology across EE mobile sites nationally. This should save up to 4.5 GWh per year –
alongside us switching off our old energy-intensive 3G network, which saved over 60 GWh last year.
Cutting carbon emissions across our value chain
Our Scope 3 carbon emissions account for 81% of our total emissions. They come mainly from purchased goods in our supply chain and
from customers using our products and services.
Since FY17, we’ve cut our Scope 3 net emissions by 30%, to 2.9 ktonnes of CO2e this year, a drop of around 9% on FY24.
1. Reviewing the future of REGOs for Corporates’ Insight report, based on independent research carried out by Cornwall Insight, commissioned by BT Group
2. As defined by the GHG Protocol Scope 2 Guidance and Corporate Standard – see Our Methodology at bt.com/esgaddendum
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Helping suppliers cut carbon
We’ve cut supply chain emissions by 25% since FY17. We’re aiming for a 42% cut by the end of March 2031.
We’ll keep working with suppliers on cutting carbon, including encouraging more of them to report to CDP to improve emissions visibility
and action. Today, suppliers representing more than 65% of our supply chain emissions are reporting to CDP.
We continue to collaborate with major Openreach partners through a supplier engagement programme, supporting them via workshops
and webinars to promote carbon emissions reporting and ways to reduce their own emissions.
Cutting customers’ carbon
There’s huge potential for the use of our networks, products and services to enable customers to cut their emissions – for example,
through improving our products’ energy efficiency and through customers’ use of technologies, like full fibre broadband, mobile solutions
and cloud computing.
We’ve switched from our previous time-bound target. Instead we’ll now report on our products’ cumulative enablement impact, as we
continue to help customers and society reach net zero. Overall we’ve helped customers avoid more than 5.5m tonnes of carbon since
FY22.
This year, we’ve expanded our Carbon Network Dashboard to give business customers a better view of electricity consumption and carbon
emissions. We’ve also added extra business-to-business solutions to our carbon enablement methodology.
Circularity
Developing a circular economy is vital for achieving a net zero world. Around 70% of global greenhouse gas emissions come from material
use and handling 1. We want to be a circular business by 2030 and build toward a circular tech ecosystem by 2040.
Operational waste – our networks and estate
We want to put zero waste into landfill by 2030. That means increasing the number of things we reuse and recycle, while minimising waste
where possible.
We generated over 164 ktonnes of operational waste globally this year – significantly more than last year, due to more site clearances and
civil spoils from our fibre build programme. Our UK and global recycling, reuse and recovery rates are at 97%.
We continued recovering old or end-of-life network kit to reuse or recycle. This year, we recovered 1,750 tonnes and reused 1,548 items
back into our network.
As more customers switch to full fibre, we’re extracting more old copper cable. This year we recycled over 5,600 tonnes of the metal –vital
for the green transition – back into the global supply chain.
Our products and services
This year, we collected over 3.1 million devices from consumers and businesses through our returns and take back processes.
Mobile devices: Through our consumer and business trade-in services, we collected nearly 140,000 mobile devices. 95% of them went for
reuse and a second life. The rest we recycled responsibly. Our mobile devices take-back rate is 4.8%. We want to increase this to at least
20% by 2030.
We’ve launched the sale of refurbished Apple and Samsung smartphones. And to extend the lives of our customers’ devices, our EE repair
service (approved by Apple, Samsung and Google) fixed 57,000 devices this year.
Customer Premises Equipment (CPE):
Our 2024 return rate was 66%, with over 2.9m hubs and set-top boxes returned. We refurbished and reused 50% of them and recycled
the rest. We’ve also redesigned our Smart Hub 2 and Wi-Fi disc packaging, cutting total material usage by 43% and saving 117 tonnes of
CO2e.
BT Business launched Device Lifecycle Management. The fully managed mobile solution monitors each stage of a device’s lifecycle –
which helps extend their lifespan through repair and reuse and encourages trading-in and recycling.
Climate action advocacy
We believe every business should commit to science-based climate policies that aim to limit global warming to 1.5°C, in line with the Paris
Agreement. We play our part, through direct engagement on key policies, and through third party association memberships.
This year, we’ve worked with Climate Group on pressing for renewable energy reforms and Government support on the EV transition. We
supported a public letter, urging the UK Government to reassert its climate leadership. They subsequently announced a new UK climate
target to cut emissions by 81% by 2035.
We’ve also worked with industry peers through the Joint Alliance for CSR, and we were made chair of the International Chamber of
Commerce UK sustainability committee.
1 Taken from the Circle Economy – The Circularity Gap Report 2022 https://www.circularity-gap.world/2022.
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Risk Management
We want to be smart with risk, making informed decisions to stay resilient, progressive and trusted. Our risk management framework helps
us do that.
An ever-changing risk landscape
We face a lot of external risks. They include competition, changing market dynamics, political and economic uncertainty, geopolitical
escalations and increasing cyber security threats.
We also need to positively engage with the UK Government and Ofcom to make sure regulations allow investors a healthy and fair return
on their investments.
Navigating these uncertainties – while simultaneously undergoing a major modernisation programme – is fundamental if we want to
achieve our strategic priorities.
That’s where our risk management framework comes in.
Supporting quality decision - making
Our risk management framework gives us the processes and structure we need to manage and oversee risk consistently and effectively.
The output supports quality decision-making against our expressed risk appetite. It monitors our exposures and gives vital early warning
signs if something’s about to go wrong.
How we manage risks
We divide our risk landscape into Group Risk Categories (GRCs). Each one has an Executive Committee sponsor accountable for applying
the framework to that category.
Within each GRC we distinguish between enduring and dynamic risks. Enduring risks need consistent, long-term structures to manage
them – a clear risk appetite position, controls and assurance.
These structures then free us up to think about dynamic risks that need focused and timely responses: How big are they? Who do they
impact? What do we need to do about them?
Dynamic risks are either:
1. Point: Risks potentially materially significant to us at a particular point in time that we can’t manage within our existing control
framework and which need focused attention.
2. Emerging: New and/or often longer-term risks with the potential to be materially significant that we can’t fully define today.
Our risk mindset
A risk management framework is only as good as how people embody it.
We expect our leaders to have good risk mindset characteristics – curiosity, accountability – to provide psychological safety, and to use our
risk management framework when they make decisions. We underpin this with regular risk discussions in leadership teams and at key
decision points.
We also train everyone involved in making our framework a success, so they have a deep understanding of the expectations and benefits
risk management brings.
Our risk governance
The BT Group plc Board is responsible for risk management. The BT Group plc Audit and Risk Committee oversees and monitors our risk
management and internal control system effectiveness on the BT Group plc Board’s behalf.
Twice a year, the BT Group plc Board gets a summary of how we’re managing key risks across all GRCs and units. The BT Group plc Audit
and Risk Committee also holds discussions with BT Group Executive Committee members to dive deeper into specific GRCs through the
year. There are oversight bodies at unit and group level – where key risk information is reported regularly.
Enhancing our risk management framework
As our business evolves and the risk landscape changes, we keep adapting and strengthening our risk management approach.
This year we focused on ‘being smart with risk’ – making it an integral part of strategic considerations, decision making, managing change
and day-to-day operational activities. That included embedding a consistent approach to thinking about risk in investment decisions and
business performance reviews.
We also continued enhancing our key control framework. That includes establishing ‘Material Key Controls’ aligned to the forthcoming UK
Corporate Governance Code changes – to help leaders and oversight bodies focus on the controls that underpin the biggest risks.
These Material Key Controls will be the main focus of an integrated assurance plan. This will involve second line assurance teams and
Internal Audit assessing the design and operational effectiveness of our defined control activities – underpinned with self assessment.
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Our Principal risks and uncertainties
The risks set out in the following pages align with our enduring Group Risk Categories (GRCs). Each GRC contains enduring risks, as well as
examples of current point and emerging risks.
Strategic
Strategy, technology and competition
Sponsor: Chief Strategy and Change Officer
Enduring risks this category covers
T o deliver value to our stakeholders and achieve our strategy , we
must carefully manage risks around economic uncertainty,
intensifying competition and rapidly changing customer and
technology trends. Equally, to stay competitive and create long-
term sustainable value, we must manage risks around designing
and effectively implementing the right strategy – and
incorporating it into our business plans.
Our risk appetite
Our risk appetite sets our tolerance for managing the internal risks
associated with this category. We measure and track it through
metrics on strategy execution. We also qualitatively assess
whether our strategy is clear, whether our analysis is robust and
whether our business and financial plans align with our strategy.
Doing this helps us make strong strategic choices and implement
them well.
Examples of dynamic risks
Point risks:
– Slower-than-planned progress on delivering top priorities could
limit our ability to cut costs, offer value to customers and
compete effectively.
– Macroeconomic environmental factors like high inflation,
progressively higher business taxes, high interest rates and lower
customer confidence might lower demand for premium
connectivity, increase customers’ price sensitivity and drive up
costs.
– Continued pricing pressure, and failing to find growth
opportunities with innovative, customer centric new products
and services might affect our market share.
– Increasing competitive intensity in our core markets may reduce
our market share.
Emerging risk:
– Failure to harness potential from artificial intelligence and
quantum technologies to generate greater commercial
opportunities and efficiencies.
Examples of what we do to manage these risks
– W e research, analyse and monitor economic, customer,
competitor and technology trends to inform our strategy.
– The BT Group plc Executive Committee and the BT Group plc
Board regularly review performance against our strategic
priorities and goals – and discuss key strategic topics through the
year.
– The BT Group plc Executive Committee and the BT Group plc
review and approve our budgets to make sure they’re in line with
strategic priorities.
– BT Investment Sub-Committee considers our investments to
make sure they are aligned to our strategy.
Transformation delivery
Sponsor: Chief Strategy and Change Officer
Enduring risks this category covers
We’re speeding up our transformation to make us simpler, more
efficient and dynamic. This includes building brilliant sales and
service journeys to connect customers to future products on
modern IT and then retiring old infrastructure. This will improve
customer and colleague experience and save money. To succeed,
we have to manage risks around transformation delivery and
whether we’ll realise the associated benefits. Not managing these
risks could make us less efficient, damaging our financial
performance, and customer experience.
Our risk appetite
We’ve defined the risk level we’ll tolerate for transforming our
products, customer journeys and technology. We track specific
metrics to check we’re achieving genuine, sustainable
transformation outcomes and not just cutting costs.
Delivering within our risk appetite will give us competitive
advantage, enable faster delivery, improve customer experience
a nd make sure our costs benchmark well with peers.
Examples of dynamic risks
Point risks:
– Moving customers off old networks too slowly could impact
infrastructure closure timelines and increase cost.
– The scale and complexity of our transformational activities
across different parts of the group could dilute our efforts and
limit efficiency gains.
– Day-to-day operations and business pressures might hinder our
ability to deliver sustainable transformation.
Emerging risks:
– F ailing to hire and keep the talent we need to drive
transformation might affect our ability to execute our strategy.
Examples of what we do to manage these risks
– We regularly review transformation performance at BT Group
plc Executive Committee meetings – managing dependencies,
making informed decisions and removing blocks.
– We have strong governance, with senior leaders owning specific
operational and financial outcomes.
– Through programme assurance, we continually improve
processes to make sure we plan and execute our transformation
properly, in line with our wider strategy and financial planning.
– We invest in our people so we have the right skills and culture
needed to deliver transformation.
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Financial
Financing
Sponsor: Chief Financial Officer, BT Group
Enduring risks this category covers
We carefully manage risks which might result in us not being able
to meet our payment commitments. They could come from not
generating enough cash, being unable to refinance existing debt or
paying increased pension scheme contributions.
We also manage risks around defining and executing the right
insurance strategy.
Our risk appetite
We fund our business based the performance forecasts in our
medium-term plans.
We rely on debt capital markets being open to investment grade
borrowers. We set our minimum credit rating at BBB. We invest
cash resources to preserve capital, not generate returns.
We have an agreed plan to reduce investment risk in the BT
Pension Scheme by 2034, and also plan to reduce longevity risk.
Examples of dynamic risks
Point risk:
– An uncertain macroeconomic or geopolitical environment could
raise the cost (or lower the availability) of new long-term debt –
or trigger extra deficit contributions to the BT Pension Scheme
before the 2026 valuation.
Examples of what we do to manage these risks
– We review our forecasted and actual business performance
regularly.
– We have formal treasury risk management processes, BT Group
plc Board oversight, delegated approvals and lender
relationship management.
– We review our pension schemes’ funding positions and
investment performance and agree funding valuations.
– We have insurance cover to mitigate exposure to potential risks.
Financial control
Sponsor: Chief Financial Officer, BT Group
Enduring risks this category covers
This category covers financial controls, fraud and Environmental,
Social, and Governance (ESG) reporting. Our financial controls
help us prevent fraud and report accurately. If these failed we
could lose money or materially misrepresent our financial position.
We might fail to apply the correct accounting principles and
treatment, or pay our taxes. That could lead to financial
misstatement, fines, legal disputes and reputational damage.
Our risk appetite
We want our overall financial control framework to be effective so
that there’s less-than-remote chance of material financial
misstatement in our reported numbers.
We’ve defined the proportion of our financial controls that we aim
to be preventative rather than detective, and automated rather
than manual.
We take a risk-based approach to compliance monitoring -
combining sample testing and financial data analytics.
Examples of dynamic risks
Point risks:
– N ot delivering our transformation programmes could affect our
control performance, efficiency and effectiveness.
– Complex, old sales systems might consistently fail to deliver the
outcomes we expect.
Emerging risks:
– ESG reporting requirements are growing fast. If we dont adapt
quickly, we might fail to deliver our reporting obligations.
– Malicious actors might exploit AI and machine learning
technologies to commit fraud.
Examples of what we do to manage these risks
– We have financial and operational controls for planning and
b udgetary discipline, efficient and accurate reporting and to
prevent fraud.
– We continually enhance processes, systems and our operating
model to improve and automate accounting, financial reporting
and fraud controls.
– We proactively identify, manage, investigate and report on
potentially fraudulent activities.
– We periodically provide fraud training to colleagues that need it.
– Our tax risk management framework helps us manage tax-
related risks.
– Independent professional services organisations review and test
our preparedness for new and changing legislation.
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Compliance
Communications regulation
Sponsor: General Counsel, Company Secretary & Director
Regulatory Affairs
Sponsor: CEO, Consumer (Financial Services only)
Enduring risks this category covers
We focus on communications regulation, competition law, anti-
bribery and corruption measures, international trade controls,
financial services compliance and corporate governance
responsibilities. Other relevant laws and regulations are covered in
other GRCs.
Our risk appetite
We’re committed to a strong compliance culture. We also want to
take advantage of commercial opportunities while making
informed, evidence-based, justifiable decisions on complying with
applicable laws and regulations. Regulatory obligations guide our
decisions. They include protecting our customers and network,
while taking into account the needs of our business and key
stakeholders. We prioritise sustaining long-term predictable and
stable regulation that supports investment and returns.
Examples of dynamic risks
Point risks:
– We might fail to deliver the switch to digital voice in line with
regulatory obligations or expectations.
– We could face complexities following regulations on customer
communications and One Touch Switching.
Emerging risk:
– Outcomes from Ofcom’s next Telecoms Access Review may
cause uncertainty on fibre regulation.
– There could be new laws and regulations, changes to existing
ones, or trade sanctions responding to geopolitical dynamics or
concerns in a particular area of law.
Examples of what we do to manage these risks
– We understand customers’ experiences – like when they’re
vulnerable or when we’re switching their network.
– We have processes in place to make sure customers get the
right outcomes.
– We proactively engage with regulators and give them accurate
information on time.
– Our policies and processes help colleagues comply with our
obligations under the UK Listing Rules and other corporate
governance and reporting requirements.
– Our code fosters a culture of high standards and encourages
everyone to speak up about issues.
– We assess risks and provide legal and compliance advice for
strategic projects, new business, or operations.
– We check our financial services products and promotions are
compliant before we launch them, and every year afterwards.
– We continue to invest in and improve organisational maturity to
meet the Financial Conduct Authority’s (FCA) Consumer Duty
regulation.
– Our compliance programme offers guidance and training, and
tests our regulatory controls.
Data and AI
Sponsor: Chief Security and Networks Officer
Enduring risks this category covers
We must follow today’s global data and AI regulations while
anticipating and preparing for tomorrow’s. That means actively
managing risks like privacy, data architecture, processing and
retention.
Our data and AI strategy aims to deliver value and efficiency –
while giving us a framework to manage risks on complying with
data and AI governance and regulation.
Not following data protection laws or regulations – or approaching
AI irresponsibly – could damage our reputation and stakeholder
trust, harm colleagues, customers or suppliers and/or lead to
litigation, fines and penalties.
Our risk appetite
We want to use data and AI ethically to grow our business, while
following global regulations and contractual clauses.
We aim to protect BT Group, colleagues, customers, partners and
suppliers from breaches of data protection laws and regulations.
We also want to harness our data to support and drive our
objectives and realise opportunities.
We can only achieve these aims with the right data ethics,
governance, security, protection, responsible technology and
compliance systems, and processes. To achieve our data goals we
must interpret global data protection laws, regulations and
standards correctly.
Examples of dynamic risks
Point risks:
– Using AI inappropriately could mean we breach AI and data
regulations, potentially compromise sensitive information or
violate banned uses.
– New EU cyber security legislation for the telecommunications
industry may be hard to implement.
Emerging risks:
– The UK’s new data use and access regulations may affect our
o perations but also offer opportunities.
Examples of what we do to manage these risks
– We continuously run and improve our data governance
programme to tackle existing and future regulatory risks.
– We review how we use personal data across the business to
make sure we follow our own data protection standards.
– We run data and AI impact assessments on all relevant changes.
– We horizon-scan for evolving regulations, sector developments
and new technologies that could affect our data risks, controls
and processes.
– We provide data protection and handling training and tools to
help colleagues make more risk aware day-to-day decisions.
– We have a defined, responsible approach when buying, selling
and developing AI.
19
Strategic report continued
Operational
Operational resilience
Sponsor: Chief Security and Networks Officer
Enduring risks this category covers
We want to deliver best-in-class performance for our customers,
across our fixed and mobile networks and IT. That means being
operationally resilient and managing any risk that could disrupt our
services.
Service disruptions could be caused by external events, like bad
weather, as well as poorly maintained assets.
Some might depend on suppliers’ and partners’ reliability – making
it important to carefully manage the risks.
Our risk appetite
We aim to deliver market-leading services to our customers,
underpinned by best-in-class network performance across fixed,
mobile and IT.
We make decisions on deploying resources based on maximising
service and customer experience, while aligning with our strategy.
Examples of dynamic risks
Point risks:
– Increasingly severe and frequent bad weather could damage our
infrastructure.
– If we don’t protect our buildings intruders might break in,
interrupting our services.
– Damage to our subsea cables could disrupt our services.
– A third-party service failing might cause incidents – and frustrate
customers.
Emerging risk:
– Continued geopolitical tensions could disrupt our services.
Examples of what we do to manage these risks
– We construct our infrastructure with built-in resilience.
– Our standardised processes keep our assets resilient across their
lifecycle.
– We respond quickly to incidents. We lessen their impact through
geographically dispersed response teams and by giving
customers regular updates.
– We complete regular business impact assessments that feed
into tested, up-to-date business continuity and restoration
plans.
– We make sure our operational estate has enough physical
security to keep services running.
– We proactively monitor and track external events that could
affect service or performance – so we can respond effectively.
Cyber security
Sponsor: Chief Security and Networks Officer
Enduring risks this category covers
A cyber-attack (external or internal) could disrupt customers and
the country – and compromise data. We manage security risks that
might lead to our assets or services losing their confidentiality,
integrity or availability. These include applicable regulatory or
contractual obligations.
A poorly-managed cyber security event might cost us money,
damage our reputation and affect our market share. The regulator
might also impose fines or penalties.
Our risk appetite
We want to protect BT Group, colleagues and customers from
harm and financial loss around our technical infrastructure or how
we use technology.
Cyber risk is inherent to our business. We could suffer significant
reputational damage from a major cyber security event. But we
know we can’t eradicate all cyber risks.
Cyber security events could be deliberate or accidental and come
from inside or out. So we adapt our security position and controls
accordingly to detect and respond to evolving threats.
We prioritise protecting our critical systems and network and the
data and information in them.
Examples of dynamic risks
Point risks:
– S tate-sponsored cyber-attacks could target critical national
infrastructure and lead to service disruption, data loss,
regulatory action and reputational damage.
– Being exposed to suppliers with security vulnerabilities might
lead to data loss, interrupted services or reputational damage.
– Malicious actors could use malware to penetrate our existing
security controls, including legacy assets, – disrupting
customers’ services.
Emerging risks:
– AI and machine learning advances might create opportunities to
harm us and our customers.
Examples of what we do to manage these risks
– Our security standards, tools and processes to protect our
applications, systems and networks.
– We monitor external threats and gather intelligence on evolving
cyber techniques, tactics and capabilities.
– We engage with the National Cyber Security Centre and industry
partners to better understand our threat landscape.
– We run communications, engagement and training for our
colleagues.
– We keep investing in cyber defences and security tools, shifting
to automation where appropriate.
20
Strategic report continued
People
Sponsor: Chief People & Culture Officer
Enduring risks this category covers
Our colleagues are key to delivering our ambition. Our people
strategy is to create a culture where everyone can perform and be
their best.
That means us managing risks around our talent management
lifecycle, skills and capabilities, engagement, culture, wellbeing
and inclusion.
Our risk appetite
Our highest priority is making sure colleagues can work and
perform at their best and we’re open to taking risks to do the right
thing culturally and commercially.
We’ll actively avoid risks that compromise our people’s health,
safety and wellbeing.
We’re also committed to taking risks that drive innovation and
growth – while following employment legislation and maintaining
our reputation as a leading employer.
Examples of dynamic risks
Point risks:
– A resource gap caused by big supply-and-demand shifts in
strategic skills might affect business results.
– Failing to drive an inclusive culture could stop us achieving our
business performance objectives.
– Inconsistent behaviours could limit high-performance culture or
slow the pace of change, affecting business results and
productivity.
Emerging risk:
– Changes in working patterns, or extra financial uncertainty,
could negatively affect colleagues’ mental health and
performance.
Examples of what we do to manage these risks
– Our consistent performance management and talent review
processes include goals shared through clear organisational
structures, roles and job descriptions.
– We continually assess skills and capabilities and invest in group-
wide workforce and succession planning.
– We provide training and development for specific roles, as well
as for the future skills we need.
– Our inclusion strategy involves family and carer’s leave, flexible
working, improving inclusive leadership and providing accessible
workplaces and systems for our people (more on page 7).
– We monitor and try to improve employee engagement and
maintain close relationships with formal representative groups
and unions.
– We clearly document and communicate the behaviours we
expect from our people through our code, values and leadership
expectations.
Health, safety and environment
Sponsor: Chief Security and Networks Officer
Enduring risks this category covers
We have diverse operations and working environments in various
locations. Some of them pose risks to health, safety and the
environment (HSE).
We must make sure colleagues and partners are safe and healthy
and can perform at their best while managing risk effectively.
We’re committed to maintaining and continually improving the
right HSE management systems. They make sure our business is
safe and compliant, while protecting the environment and those
who we might affect.
Our risk appetite
We want to keep colleagues, contractors, suppliers, customers,
visitors and members of the public healthy, safe and well.
We’re also committed to environment and energy management –
especially cutting pollution and carbon emissions.
We apply proactive risk management to identify and control big
HSE risks across the business and mitigate them to the lowest
possible level.
Our legal, regulatory and other requirements are our minimum
obligations. But we want to go beyond that – aiming for zero
avoidable harm, optimum physical and mental health and zero
pollution.
Examples of dynamic risks
Point risks:
– Failing to effectively manage and control asbestos could lead to
serious harm to health, legal non-compliance and reputational
damage.
– Heightened risks from the extra civil and construction work
supporting the full fibre rollout may lead to harm to colleagues,
increased regulatory scrutiny, legal claims and reputational
damage.
– Maintaining an ageing buildings estate – especially during our
fibre and digital upgrade – could pose increased health and
safety risks.
Examples of what we do to manage these risks
– Our group policy is underpinned by our standards and key
controls and the HSE framework is reflected in our code.
– We train colleagues to make sure they’re clear on their
responsibilities and are competent to do their jobs.
– We make sure colleagues and their representatives participate
in (and are consulted on) HSE matters.
– We act as a leader with our contractors, helping them improve
their own HSE performance.
– We allocate resources to develop, maintain and continually
improve our HSE management system.
21
Strategic report continued
Major customer contracts
Sponsor: Chief Executive, BT Group*
Enduring risks this category covers
In a dynamic, highly competitive environment, we want to win and
keep major private and public sector contracts.
We do that while navigating customer relationships and risk in
complex agreements – delivering highly sensitive, critical or
essential services globally.
Customer contractual terms can be onerous and challenging to
meet, leading to delays, penalties and disputes. Delivery or service
failures against obligations and commitments could damage our
brand and reputation, particularly for critical infrastructure
contracts or security and data protection services.
Not managing contract exits, migrations, renewals, exits or
disputes could erode profit margins and affect future customer
relationships.
Our risk appetite
We want a diverse mix of major contracts to help our business
grow. To do that, we must build market share, target the right
customers, sign good commercial and legal agreements and
deliver services successfully.
As markets change, we need to proactively adjust our portfolio of
services, countries and customers. This helps us avoid
concentration risk, unattractive or uncompetitive products and
services, stagnation and legacy dependency.
We know that involves taking on higher risk in some areas – for
example, complex customer agreements with obligations not fully
covered by our standard portfolio, customised terms and
conditions and/or delivery processes. We must manage this in bids
and contract lifecycles to minimise the overall impact.
Examples of dynamic risks
Point risks:
– Failing to deliver on bespoke customer data requirements could
lead to potential breaches, fines and reputational harm.
– Delays deploying key products might create risks around
fulfilling existing contractual commitments – and might hamper
our ability to deliver our business strategy.
Emerging risks:
– AI’s increasing prominence may affect our ability to deliver on
our customer promises.
Examples of what we do to manage these risks
– O ur clear governance framework helps us assess new business
opportunities, manage bids and monitor in-life contract risks.
– We make sure we manage external partners properly when they
deliver services to our customers.
– We regularly monitor the performance of customer contracts.
– We support frontline contract managers with contract and
obligation management tools.
*Excluding Openreach, which has separate GRC sponsorship and management.
Supply management
Sponsor: Chief Financial Officer, BT Group
Enduring risks this category covers
We have a lot of suppliers. Successfully selecting, bringing on
board and managing them is essential for us to deliver quality
products and services.
We must make decisions about suppliers on concentration,
capability, resilience, security, sustainability, costs and broader
issues that could impact our business and reputation.
Our risk appetite
Our appetite guides buying decisions. We recognise the inherent
risks of sole or dual sourcing. But we often need to do it for
products or services which we depend on to meet our business
goals (and where alternatives aren’t economically viable).
To get the best commercial rates and operational resilience we
continuously engage with and challenge suppliers on price, without
introducing service and/or delivery risk.
Governance is a prerequisite for effective supplier management.
So, we have a low appetite for dealing with suppliers outside of our
defined policy or processes.
We have to make sure third parties don’t expose our brands to
damage. That means avoiding – or stopping working with – any
that don’t meet our standards on key areas like human rights.
Examples of dynamic risks
Point risks:
– Geopolitical instability and conflicts pose various risks to our
supply chain – including the potential for increased tariff and
trade restrictions that could raise prices and reduce availability.
Emerging risks:
– A more demanding regulatory landscape on things like ESG
reporting, supplier use of AI and payment terms could create
compliance challenges.
Examples of what we do to manage these risks
– Our sourcing strategy uses different approaches to managing
risk by category. That includes standard terms and conditions
and controls so we can make good buying decisions.
– We have comprehensive supplier due diligence, contract
management and on-boarding processes and we’re reviewing
and improving our in-life assessment process.
– We have strong supplier risk management, performance,
renewal and termination processes.
– We do demand planning and forecasting, stock counts and
inventory management so supplies are always available.
– We get assurance that the goods and services we buy are made,
delivered and disposed of responsibly. That includes monitoring
energy use, labour standards and environmental, social and
governance i mpacts.
The strategic report was approved by the Board of Directors on 16 June 2025 and signed on its behalf by:
Simon Lowth
Director
22
Section 172 statement
In accordance with section 172 of the Companies Act 2006, each of our directors acts in the way he or she considers, in good faith, would
most likely promote the success of the comp any for the benefit of its members as a whole. Our directors have regard, amongst other
matte rs, to the:
– likely consequences of any decisions in the long-term;
– interests of the company’s employees;
– need to foster the company’s business relationships with suppliers, customers and others;
– impact of the company’s operations on the community and environment;
– desirability of the company maintaining a reputation for high standards of business conduct; and
– need to act fairly as between members of the company.
In discharging its section 172 duties the Company has regard to the factors set out above. The Company also has regard to other factors
which consider relevant to the decision being made. Those factors, for example, include the interests and views of its pensioners,
Bondholders and its relationship with Ofcom. The Company acknowledges that every decision it makes will not necessarily result in a
positive outcome for all of its stakeholders. By considering the Company’s purpose, vision and values together with its strategic priorities
and having a process in place for decision-making, the Company does, however, aim to make sure that its decisions are consistent and
predictable.
As is normal for large companies, the Company delegates authority for day-to-day management of the Company to executives and then
engage management in setting, approving and overseeing the execution of the business strategy and related policies. The Company also
reviews other areas over the course of the financial year including the Company’s financial and operational performance; stakeholder-
related matters; diversity and inclusivity; and corporate responsibility matters. This is done through the consideration and discussion of
reports which are sent in advance of each Board meeting and through presentations to the Board.
The views and the impact of the Company’s activities on the Company’s stakeholders (including its workforce, customers and suppliers)
are an important consideration for it when making relevant decisions. While there are cases where the Board itself judges that it should
engage directly with certain stakeholder groups or on certain issues, the size and spread of both the stakeholders and the BT Group means
that generally stakeholder engagement best takes place at an operational or group level. The Company finds that as well as being a more
efficient and effective approach, this also helps it achieve a greater positive impact on environmental, social and other issues than by
working alone as an individual company. For details on the some of the engagement that has taken place with the Company’s
stakeholders so as to help the directors to understand the issues to which they must have regard, and the impact of that feedback on
decisions, please see the stakeholders section in the strategic report of BT Group plc’s 2025 Annual Report.
During the period the Company received information to help it understand the interests and views of the Company’s key stakeholders and
other relevant factors when making decisions. This information was distributed in a range of different formats including in reports and
presentations on the Company’s financial and operational performance, non-financial KPIs, risk, environmental, social and corporate
governance matters and the outcomes of specific pieces of engagement. As a result of this the Company has had an overview of
engagement with stakeholders and other relevant factors which allows it to understand the nature of the stakeholders’ concerns and to
comply with its section 172 duty to promote success of the company.
One example of how the Company has had regard to the matters set out in section 172(1)(a)-(f) when discharging its section 172 duties
and the effect of that on decisions taken by it, is the payment of an interim dividend of £780m.
In making this decision the Board considered a range of factors. These included the long-term viability of the Company; its expected cash
flow and financing requirements; the ongoing need for strategic investment in our business and workforce, and the pricing expectations of
our customers and suppliers, as well as the expectations of our members and pensioners.
23
Report of the Directors
The directors present their report and the audited financial statements of the Company, British Telecommunications plc, and the group,
which includes its subsidiary undertakings, for the year ended 31 March 2025. The audited consolidated financial statements are
presented on pages 35 to 105 and the audited entity only financial statements are presented on pages 106 to 136.
A statement by the directors of their responsibilities for preparing the financial statements is included in the Statement of directors’
responsibilities on page 27.
Principal activity
The Company is the principal trading subsidiary of BT Group plc ("BT Group"), which is the ultimate parent company.
BT Group is the UK’s leading provider of fixed and mobile telecommunications and related secure digital products, solutions and services.
We also provide managed telecommunications, security and network and IT infrastructure services to customers across 180 countries.
We’re responsible for building and operating networks and delivering the connectivity-based solutions that are essential to modern lives,
businesses and communities. We’re the UK’s largest provider of consumer mobile, fixed and converged communications solutions. We
also keep UK and Republic of Ireland businesses and public sector organisations connected and provide network solutions to UK
communications providers. Globally we integrate, secure and manage network and cloud infrastructure and services for multinational
corporations. Openreach runs the UK’s main fixed connectivity access network, connecting homes, mobile phone masts, schools, shops,
banks, hospitals, libraries, broadcasters, governments and big and small businesses to the world.
As well as being the principal trading subsidiary of BT Group plc, British Telecommunications plc directly or indirectly controls all other
trading subsidiaries of the BT Group.
Directors
Neil Harris, Edward Heaton, Roger Eyre, Simon Lowth and Daniel Rider served as directors throughout the year. Roger Eyre resigned on 14
April 2025, when Helen Charnley was appointed.
Material accounting estimates, key judgements and significant accounting policies
Our critical accounting estimates and key judgements, and significant accounting policies conform with UK-adopted international
accounting standards, IFRSs issued by the International Accounting Standards Board (IASB) and the requirements of the Companies Act
2006, and are set out on page 41 of the consolidated financial statements and page 108 of the entity only financial statements. The
directors have reviewed these policies and applicable estimation techniques, and have confirmed they are appropriate for the preparation
of the FY25 consolidated financial statements.
Disclosure of information to the auditor
As far as each of the directors is aware, there is no relevant audit information (as defined by section 418(3) of the Companies Act 2006)
that has not be e n disclosed to the auditor. Each of the directors confirms that all steps have been taken that ought to have been taken to
make them aware of any relevant audit information and to establish that the auditor has been made aware of that information.
Dividend
A dividend of £780m was paid to the parent company, BT Group Investments Ltd (FY24: £850m). The directors recommend payment of a
final dividend in respect of FY25 of £1,500m (FY24: £780m).
Going concern
In line with IAS 1 ‘Presentation of financial statements’, and FRC guidance on ‘risk management, internal control and related financial and
business reporting’, management has taken into account all available information about the future for a period of at least, but not limited
to, 12 months from the date of approval of the financial statements when assessing the group’s ability to continue as a going concern.
The Strategic report on pages 3 to 21 i ncludes information on the group structure, strategy and business model, the performance of each
customer-facing unit and the impact of regulation and competition. The Group performance section on pages 5 to 6 includes information
on our group financial results and balance sheet position. Notes 21, 23, 24 and 26 of the consolidated financial statements include
information on the group’s investments, cash and cash equivalents, borrowings, derivatives, financial risk management objectives,
hedging policies and exposure to interest, foreign exchange, credit, liquidity and market risks.
Our principal risks and uncertainties are set out on pages 16 to 21 i ncluding details of each risk and how we manage and mitigate them.
The directors carried out a robust assessment of the emerging and principal risks affecting the group, including any that could threaten
our business model, future performance, insolvency or liquidity.
Having assessed the principal and emerging risks, the directors considered it appropriate to adopt the going concern basis of accounting
when preparing the financial statements. This assessment covers the period to June 2026, which is consistent with the FRC guidance.
When reaching this conclusion, the directors took into account the group’s overall financial position (including trading results and ability
to repay term debt as it matures without recourse to refinancing) and the exposure to emerging and principal risks.
At 31 March 2025, the group had cash and cash equivalents o f £0.2bn and current asset investments of £2.6bn. The group also had access
to committed borrowing facility of £2.1bn. These facilities were undrawn at the period-end and are not subject to renewal until no earlier
than January 2030 with the option to extend for two further years.
Directors’ and officers’ liability insurance and indemnity
BT Group plc routinely buys insurance cover for directors, officers and employees in positions of managerial supervision of BT Group plc
and its subsidiaries (including the Company). This is intended to protect against defence costs, civil damages and, in some circumstances,
civil fines and penalties following an action brought against them in their personal capacity. The policy also covers individuals serving as
directors of other companies or of joint ventures or on boards of trade associations or charitable organisations at BT Group plc’s request.
The insurance protects the directors and officers directly in circumstances where, by law, BT Group plc cannot provide an indemnity. It
also provides BT Group plc, subject to a retention, with cover against the cost of indemnifying a director or officer.
As at 16 June 2025, and throughout FY25, British Telecommunications plc has provided an indemnity for a group of people similar to the
group covered by the above insurance. Neither the insurance nor the indemnity provides cover where the individual is proven to have
acted fraudulently or dishonestly.
24
Report of the Directors continued
As permitted by the company’s Articles of Association, and to the extent permitted by law, BT Group indemnifies each of its directors and
other officers of the group against certain liabilities that may be incurred as a result of their positions within the group. The indemnity was
in force throughout the tenure of each director during the last financial year, and remains in force.
Systems of risk management and internal control
The Board of BT Group plc is responsible for reviewing the group’s systems of risk management and internal control each year, and
ensuring their effectiveness including in respect of relevant assurance activities. These systems are designed to manage, rather than
eliminate, risks we face that may prevent us achieving our business objectives and delivering our strategy. Any system can provide only
reasonable, and not absolute, assurance against material misstatement or loss.
The BT Group risk management framework is simple and consistent, and defines our (1) risk mindset and culture, (2) risk process and
activities; and finally (3) governance. The framework:
– provides the business with the tools to take on the right risks and make smart risk decisions
– supports the identification, assessment and management of the principal risks and uncertainties faced by the group
– is an integral part of BT Group’s annual strategic review cycle.
The framework was designed in accordance with the FRC guidance on risk management, internal control and related financial and
business reporting and has been in operation throughout the year and up to the date on which this document was approved. The
framework was reviewed in FY25 and was deemed effective. Continuous improvements were made in FY25 including enhancing our key
control framework. That included establishing ‘Material Key Controls’ aligned to the forthcoming Corporate Governance Code changes –
to help leaders and oversight bodies focus on the controls that underpin the biggest risks. These material key controls will be the main
focus of an integrated assurance plan which will involve second line assurance teams and Internal Audit assessing the design and
operational effectiveness of our defined control activities. More information on our group risk management framework can be found on
pages 16 to 21.
Internal audit carry out periodic assessments of the quality of risk management and control, promote effective risk management across all
our units and report to management and the BT Group plc Audit & Risk Committee on the status of specific areas identified for
improvement. We do not cover joint ventures and associates not controlled by the group in the scope of our group risk management
framework. Such third parties are responsible for their own internal control assessment.
Furthermore, the BT Group plc Audit & Risk Committee, on behalf of the Board, reviews the effectiveness of the systems of risk
management and internal control across the group.
Capital management and funding
The capital structure of the Company is managed by BT Group plc. The policies described here apply equally to both BT Group plc and
group companies. The objective of our Capital Management Policy is to target an overall level of debt consistent with our credit rating
objectives, while investing in the business, supporting our pension schemes and meeting our Distribution Policy.
The BT Group plc Board regularly reviews the group’s capital structure. Management proposes actions and produces analyses which
reflect the group’s investment plans and risk characteristics, as well as the macroeconomic conditions in which we operate.
Our Funding Policy is to raise and invest funds centrally to meet the group’s anticipated requirements. We use a combination of capital
market bond issuance and committed borrowing facilities to fund the group. When issuing debt, in order to avoid refinancing risk, group
treasury will take into consideration the maturity profile of the group’s debt portfolio, financial market conditions as well as forecast cash
flows.
Financial instruments
Details of the group’s financial risk management objectives and policies of the group and exposure to interest risk, credit risk, liquidity risk
and foreign exchange are given in note 26 to the consolidated financial statements.
Credit risk management policy
We take proactive steps to minimise the impact of adverse market conditions on our financial instruments. In managing investments and
derivative financial instruments, BT Group plc’s group treasury monitors the credit quality across treasury counterparties and actively
manages any exposures that arise. Management within the business units also actively monitors any exposures arising from trading
balances.
Off-balance sheet arrangements
Other than the financial commitments and contingent liabilities disclosed in note 30 to the consolidated financial statements, there are no
off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on: our financial condition;
changes in financial condition; revenues or expenses; results of operations; liquidity; capital expenditure; or capital resources.
Post balance sheet events
Any material post balance sheet events have been disclosed in note 31 of the consolidated financial statements and note 23 of the entity
only financial statements.
Legal proceedings
The group is involved in various legal proceedings, including actual or threatened litigation and, government or regulatory investigations.
For further details of legal and regulatory proceedings to which the group is party please see note 17 to the consolidated financial
statements.
Apart from the information disclosed in note 17 to the consolidated financial statements, the group does not currently believe that there
are any legal proceedings, government or regulatory investigations that may have a material adverse impact on the operations or financial
condition of the group. In respect of each of the claims described in note 17, the nature and progression of such proceedings and
investigations can make it difficult to predict the impact they will have on the group. Many factors prevent us from making these
assessments with certainty, including, that the proceedings of investigations are in early stages, no damages or remedies have been
specified, and/or the frequently slow pace of litigation.
25
Report of the Directors continued
Colleague engagement
Engaging with our colleagues is critical to creating a culture where they can be their best and contribute to our purpose, ambition, strategy
and long-term success.
Engaging with our colleagues takes many forms, including through:
– the Board receiving updates from the Chief Executive and Chief People & Culture Officer on colleagues, key people strategy initiatives,
culture and overall sentiment in the organisation
– visits by a number of Non-Executive Directors to locations throughout the year, including Adastral Park, our Tyneside contact centre,
Openreach field visits and EE stores
– our Designated Non-Executive Director for Workforce Engagement, Maggie Chan Jones, engaging with colleagues through a series of
in-person and virtual meetings, during which colleagues were encouraged to share personal views and experiences, which provided
Maggie with a varied range of opinions and insights from across the group
– informal breakfast sessions with certain members of the Board and groups of colleagues held before some Board meetings
– our quarterly Your Say colleague engagement surveys
– regular colleague communications.
Colleagues are kept well informed on matters such as the strategy and performance of the group, including after certain key events such as results
and trading updates. We work with our highly active, engaged and award-winning People Networks. These colleague-driven groups raise
awareness and advocate for change both inside and outside BT Group. Maggie Chan Jones met with representatives of the People Networks. W e
also maintain close relationships with formal representative groups and unions.
Despite the big levels of change and transformation, colleague engagement has stayed strong at 76%, +6% vs UK external benchmarks
maintaining September 2024 levels.
We encourage all our colleagues to become shareholders in the business through the operation of all-employee share plans. We annually
consider which all-employee plans to offer, both in the UK and globally.
Employees with disabilities
We’re an inclusive employer and actively encourage the recruitment, development, promotion and retention of disabled people. We know
that workplace adjustments are crucial to allow disabled and neurodiverse colleagues to perform to their best and we are committed to
making workplace adjustments for colleagues who need them. In 2023 we launched our new workplace adjustments process and our
disability and neurodiversity hub to make it simple for our colleagues and people managers to understand adjustments and implement
them quickly. In FY25, 1,559 colleagues engaged with the workplace adjustment process to ensure they had the necessary adjustments to
enable them to succeed at BT Group. In FY25 we continued our partnership with the Business Disability Forum, and we will be working to
make sure that we are able to meet and exceed the commitments we made to obtain our Disability Confident leader status and our
membership of Valuable 500.
Political donations
Our policy is that no company in the group will make contributions in cash or in kind to any political party, whether by gift or loan. However,
the definition of political donations used in the 2006 Act is significantly broader than the sense in which these words are ordinarily used.
The 2006 Act’s remit could cover making members of Parliament and others in the political world aware of key industry issues and matters
affecting the company, and enhancing their understanding of BT.
During FY25, British Telecommunications plc, paid the costs of attending events at (i) the Labour Party Conference and (ii) the Liberal
Democrats Party Conference and Business Day. These costs totalled £8,674 (FY24: £9,343). No company in the BT Group made any loans
to any political party.
Branches
Details of our branches outside the UK are set out on pages 131 to 135.
Governance Statemen t
The Board aspires to have and maintain good standards of corporate governance and has adopted a corporate governance code
appropriate for the company.
The Board has chosen not to adopt and report against the 2018 UK Corporate Governance Code, which in its view is designed, and is
therefore more appropriate, for premium listed companies. Whilst we support the introduction of the Wates Corporate Governance
Principles for Large Private Companies, we consider that they are less suitable for a wholly-owned subsidiary of a premium listed
Company. We have therefore adopted our own corporate governance code in the form of four overarching principles as set out below,
which we believe are appropriate for the company and are designed to ensure effective decision-making to promote the company’s long-
term success.
The principles which underpin our corporate governance code and how these principles have been applied during the financial year ended
31 March 2025 are shown below:
Principle One: Leadership
“The Company is led by a Board of directors who promote the success of the Company for the benefit of its members, ensuring that it
operates with a clear sense of purpose that aligns with its values, strategy and culture.”
The strategy and culture of the Company is underpinned by a clear vision of the company’s purpose and overall values which are
articulated through the leadership of the Board (having reference to the BT Group’s strategy, culture and values). Given the importance
of this, the Board seeks to promote the values, strategy and culture at different levels within the business. Culture remains an area of focus,
with the Board promoting ethical leadership and accountability to achieve a dynamic and positive culture.
26
Report of the Directors continued
Principle Two: Board composition
“The Board has an appropriate composition and size to enable it to effectively lead the Company.”
The size and composition of the Board is appropriate and proportionate for the business of the Company. The directors have an
appropriate combination of technical, financial and commercial skills, collectively demonstrating a high-level understanding of the
Company’s business model and its impact on key stakeholders.
All appointments to the Board are based on merit and objective criteria. Diversity remains an area of focus as we continue to build a
workforce that reflects the diversity of our customers and the communities we serve.
Principle Three: Directors’ responsibilities
“Directors have a clear understanding of their accountability and responsibilities. The Board’s policies and practices should support
effective decision making and independent challenge.”
– On joining the Board, new directors receive information on the company, are offered advice from the company secretary, and can
request training tailored to their specific experience and knowledge, covering both their legal duties and the business of the company.
– On an ongoing basis, directors update their skills, knowledge and familiarity with the company in a range of different ways by meeting
with senior management, visiting operations and by attending appropriate external and internal seminars and training sessions. This
helps by continuing to contribute to their informed and sound decision-making.
– Directors have a responsibility to declare any conflict of interest at the beginning of each Board meeting. Should a conflict arise, it would
be the responsibility of the chair in conjunction with the non-conflicted directors to agree whether the director may participate and/or
vote on the specific item.
The directors have equal voting rights when making decisions, except the chair, who has a casting vote. All directors have access to the
advice and services of the company secretary and may, if they wish, take professional advice at the company’s expense.
Principle Four: Stakeholder relationship and engagement
“The Board should build and maintain effective relationships with stakeholders.”
The Board seeks to understand the views of its key stakeholders, and the impact of its behaviour and business on employees, customers,
suppliers and society more broadly. Whilst for reasons of efficiency and effectiveness, much of this engagement takes place at a BT Group
level, the Board receives updates on its key stakeholders and the mechanisms and initiatives for engagement. For more information on
group level engagement with key stakeholders, see the BT Group plc 2025 Annual Report and the Section 172 statement.
When making decisions, the Board considers the potential impact on its key stakeholders, including the BT Pension Scheme and its
members.
Cross reference to the Strategic report
We have chosen to include the following information in the Strategic report in line with the Companies Act 2006 (otherwise required by
law to be included in the Report of the Directors):
– An indication of likely future developments in the business of the Company and its group (pages 3 to 21)
– An indication of our research and development activities (page 12)
– Information on how the group (and BT Group plc) engages with colleagues, and how regard has been had to the interests of colleagues
and the need to foster business relationships with suppliers, customers and others, and the effect of that regard during the year (pages
7 to 10)
– Anti-bribery and corruption (page 10)
– Social and community (page 8)
– Human rights (page 10 to 11)
By order of the Board
Simon Lowth
Director
16 June 2025
27
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the group and parent company
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that law
they are required to prepare the group financial statements in accordance with UK-adopted international accounting standards and with
the requirements of the Companies Act 2006. The parent company meets the definition of a qualifying entity under FRS 100 and the
company financial statements are prepared in accordance with United Kingdom Generally Accepted Accounting Practice (FRS 101
"Reduced disclosure framework”, and applicable law).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and parent company, and of the group’s profit or loss for that period. In preparing each of the group and
parent company financial statements, the directors are required to:
– select suitable accounting policies and apply them consistently
– make judgements and estimates that are reasonable, relevant, reliable and, in respect of the parent Company financial statements only,
prudent
– state whether the group financial statements have been prepared in accordance with the UK-adopted international accounting
standards
– state whether applicable UK accounting standards have been followed with regards to the parent company financial statements,
subject to any material departures disclosed and explained in the parent company financial statements
– assess the group and parent company’s ability to continue as a going concern and disclose, as applicable, matters related to going
concern
– use the going concern basis of accounting unless they either intend to liquidate the group or the parent company or to cease operations
or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy, at any time, the financial position of the parent company, and enable them to ensure
that its financial statements comply with the 2006 Act. They are responsible for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. They have general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud
and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing an annual strategic report and a directors’ report
that comply with such law and regulation.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule (“DTR”) 4.1.16R, the financial statements will form part of the annual
financial report prepared under DTR 4.1.17R and 4.1.18R. The auditor’s report on these financial statements provides no assurance over
whether the annual financial report has been prepared in accordance with those requirements.
Responsibility statement of the Board in respect of the annual financial report
We confirm that, to the best of our knowledge:
– the financial statements , prepared in accordance with the applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the group and the undertakings included in the consolidation taken as
a whole
– the Strategic report and the Report of the directors include a fair review of the development and performance of the business
and the position of the group and the undertakings included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
We consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the group’s position, performance, business model and strategy.
This responsibility statement was approved by the Board on 16 June 2025 and was signed on its behalf by
Simon Lowth
Director
1 Braham Street, London, United Kingdom E1 8EE
16 June 2025
28

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc

1. Our opinion is unmodified
We have audited the financial statements of British
Telecommunications plc (“the Company”) for the year ended 31
March 2025 which comprise the Group income statement, Group
statement of comprehensive income, Group balance sheet, Group
statement of changes in equity, Group cash flow statement,
Company balance sheet, Company statement of changes in equity,
and the related notes, including the accounting policies in note 3.
In our opinion:
– the financial statements give a true and fair view of the state of
the Group’s and of the parent Company’s affairs as at 31 March
2025 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting
standards;
– the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the
Board.
We were first appointed as auditor by the Directors for the year
ended 31 March 2019. The period of total uninterrupted
engagement is for the 7 financial years ended 31 March 2025. We
have fulfilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to
listed public interest entities. No non-audit services prohibited by
that standard were provided.
2. Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise
below the key audit matters, in decreasing order of audit
significance, in arriving at our audit opinion above, together with
our key audit procedures to address those matters and, as required
for public interest entities, our results from those procedures.
These matters were addressed, and our results are based on
procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole, and in
forming our opinion thereon, and consequently are incidental to
that opinion, and we do not provide a separate opinion on these
matters
2.1 Accuracy of Revenue due to complex billing
systems in BT Business
Financial Statement Elements

| FY25 | FY24
Business Revenue | £7.7bn | £8.0bn
Refund liability | £51m | £51m

Our assessment of risk vs FY24

çè | Our assessment of the risk is similar to FY24.

Our results

FY25: Acceptable | FY24: Acceptable

Description of the Key Audit Matter
Processing error
The Group’s non-long-term contract revenue consists of a large
number of low value transactions. The Group operates a number of
distinct billing and order-entry systems and the IT landscape
underpinning the end-to-end revenue process is complex.
There are multiple products sold at differing rates with varying
price structures in place. Products represent a combination of
service-based products, such as fixed line telephony, as well as
goods, such as the provision of mobile handsets.
The revenue recognition of non-long-term contract revenue is not
subject to significant judgement. However, due to the large
number of transactions, manual nature of order entry and
complexity of the billing systems, this is considered to be an area of
most significance in our audit. Within Business, we have identified a
significant risk of processing error in relation to some billing
systems. In addition, the bespoke nature of the pricing structure
within some of Business’ contracts means that there is a higher risk
of processing error in relation to a proportion of Business’ revenue
derived from certain billing systems.
Subjective estimate of refund liabilities in Business
The bespoke pricing structure results in a risk of billing inaccuracies
within a proportion of Business’ revenue and so over the
identification of financial liabilities for associated customer
refunds. The Group has estimated refund liabilities based on the
results of a sample of billing items leading to estimation
uncertainty over the refund liabilities.
The effect of these matters is that, as part of our risk assessment,
we determined the estimation of refund liabilities had a high
degree of estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality for the financial
statements as a whole and could be subject to manipulation, which
is the reason why we have considered it as a key matter of our audit
In conducting our final audit work, we reassessed the degree of
estimation uncertainty to be less than materiality. The financial
statements (note 5) disclose the key sensitivities of the refund
liabilities to changes in key assumptions.
Our response to the risk
Our procedures to address the risk included:
Process understanding: Obtaining an understanding of the
revenue processes by observing transactions from customer
initiation to cash received for material revenue streams.
Tests of detail: Comparing a sample of revenue transactions,
including credit adjustments, to supporting evidence e.g.,
customer bills, contracts, price lists and cash received (all where
applicable). We performed an assessment of whether the
overstatements of revenue identified through these procedures
were material, taking into account findings from other areas of the
audit and qualitative aspects of the financial statements as a
whole.
Tests of detail: Agreeing year end trade receivables to cash
received after year end.
Tests of detail: Within Business, we compared the results of our
test of detail over revenue, including error rates by product, in the
current and previous years’ audits, to the liabilities held for
customer refunds.
Tests of detail: We challenged the Group’s assessment of refund
liabilities, based on billing errors identified through our samples
testing and using our Revenue Data Analytics routine to test the
key assumptions of contract tenure and product type. The key
29

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc continued

assumptions used within their independent calculation. We also
challenged the Group on the legal and regulatory risks in relation
to billing errors for the products impacted.
Assessing transparency: Considering the adequacy of the Group’s
disclosures in respect of the sensitivity of the refund liability to
error rates and legal risks.
We performed the detailed tests above rather than seeking to rely
on the Group’s controls because our knowledge of the design of
these controls, indicated that we would be unlikely to obtain the
required evidence to support reliance on controls.

Areas of particular auditor judgement We exercised judgement over the adequacy of liabilities for customer refunds in light of overstatements of revenue identified through our testing over pricing within Business. Particular judgement was needed over the applicable error rate and periods impacted and comparing it to the liabilities held for customer refunds. Our results The results of our testing were satisfactory (FY24: satisfactory) and we considered the revenue relating to non-long-term contract revenue and the estimate of refund liabilities and related disclosures to be acceptable (FY24: acceptable).

2.2 Carrying amount of goodwill attributable to
UK Business cash generating unit (Group)
Financial Statement Elements

| FY25 | FY24
Carrying amount of goodwill in the UK Business CGU | £2.97bn | £3.56bn
Impairment charge in Business CGU | £nil | £0.49bn

Our assessment of risk vs FY24

çè | Our assessment of the risk is similar to FY24. In FY25 the risk has been focussed on the judgements taken in respect to forecast revenue growth and cost savings.

Our results

FY25: Acceptable | FY24: Acceptable

Description of the Key Audit Matter
Forecast-based impairment assessment
We consider the carrying value of goodwill allocated to the UK
Business cash generating unit (“CGU”) to be a significant audit risk.
This reflects the inherent uncertainty involved in forecasting cash
flows, which are the basis of the assessment of recoverability.
In the current period the estimated recoverable amount was
measured using a fair value less costs of disposal (FVLCD)
methodology, which represented a change from the Value in Use
methodology applied previously. For the UK Business CGU, there is
uncertainty in relation to the CGU’s ability to achieve revenue
targets, given its recent performance and the execution risk
associated with the transition from legacy to next generation
telecommunication products and services. In conjunction with
ongoing cost reductions and uncertainty in relation to the
economic outlook, thus renders precise forecasting of the
underlying cash flows challenging.
In addition, the impairment charge recognised in the prior period
and carryi ng value of assets results in limited headroom for this
CGU.The effect of these matters is that, as part of our risk
assessment for audit planning purposes, we determined that the
forecast cashflows used to support the recoverable amount of the
goodwill allocated to the Business CGU has a high degree of
estimation uncertainty, with a potential range of reasonable
impairment outcomes greater than our materiality for the financial
statements as a whole, and possibly many times that amount.
The financial statements (note 12) disclose the key assumptions
underlying the recoverable amount and the sensitivity of the
calculation to changes in these assumptions. There is a risk that the
disclosures presented are not sufficient to explain the key
assumptions that drive the valuations, and the key sensitivities that
the Board has considered.
Our response to the risk
Our procedures to address the risk included:
Tests of detail: We tested the principles and integrity of the
discounted cash flow model utilised to determine FVLCD. We
compared the cash flows used in the impairment model to the
output of the Group’s budgeting process.
Our entity experience: We critically assessed the Group’s
assumptions of forecast revenue and forecast cost savings from
the ongoing cost saving programme, taking account of strategic
plans approved by the Board. We assessed if these forecast cash
flows were reasonable from the perspective of a market
participant.This included benchmarking of revenue and EBITDA
CAGR assumptions against externally derived data and analyst
reports.
Historical comparison: We assessed the historical accuracy of the
forecasts used in the impairment model by considering actual
performance against prior year budgets. We assessed the forecast
revenue and EBITDA growth with reference to the most recent
results for FY24 and FY25, challenging if the forecast cashflows
have been appropriately risk adjusted to reflect the downside risk
and opportunities identified by the Group.
Sensitivity analysis: W e performed sensitivity and break-even
analyses for revenue and EBITDA growth rate individually and in
combination with the discount rate and the long-term growth rate
assumptions.
Comparing valuations: As an overall stand-back test we
compared the combined value of the recoverable amount of all of
the CGUs to the Group’s market capitalisation to assess the
reasonableness of the underlying cashflows, assessing and
challenging the difference to understand whether the assumptions
applied in the impairment test were acceptable. We also
compared the implied EBITDA multiple for the UK Business CGU
against those of comparable companies.
Assessing consistency: We assessed the consistency of the
forecasts used by the Group across different areas such as goodwill
impairment testing and the viability assessment.
Assessing transparency: We evaluated the adequacy of
disclosures related to the estimation uncertainty, and those related
to key assumptions in determining the recoverable amount of the
Business CGU.
We performed the detailed tests above rather than seeking to rely
on any of the Group’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily
through the detailed procedures described.

Areas of particular auditor judgement We identified the following as the areas of particular auditor judgement: – Whether the Group’s cashflow forecasts for the UK Business CGU, in particular those in respect of revenue growth and the timing and quantum of cost savings expected from delivery of the cost saving programme, fell within an acceptable range. – Adequacy of sensitivity disclosures and assessment as to what would constitute a reasonably possible downside scenario for the CGU. Our results We found the Group’s conclusion that there is no impairment of the carrying amount of UK Business CGU to be acceptable (FY24: carrying amount and related impairment charge to be acceptable) We found the Group’s disclosures of the related sensitivities to be acceptable (FY24: acceptable).

30

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc continued

2.3 Valuation of defined benefit obligation of
the BT Pension Scheme (BTPS)
Financial Statement Elements

| FY25 | FY24
BTPS Obligation | £35.69bn | £40.0bn

Our assessment of risk vs FY24

çè | Our assessment of the risk is similar to FY24.

Our results

FY25: Acceptable | FY24: Acceptable

Description of the Key Audit Matter
Subjective valuation
The valuation of the BT pension scheme (“BTPS”) defined
obligation is complex and requires a significant degree of
estimation in determining the assumptions. It is dependent on key
actuarial assumptions, including the discount rate, retail price
index (“RPI”) and mortality assumptions. A change in the
methodology applied or small changes in the key actuarial
assumptions may have a significant impact on the measurement of
the defined benefit pension obligation.
The effect of these matters is that, as part of our risk assessment,
we determined the valuation of the BTPS defined benefit
obligation had a high degree of estimation uncertainty, with a
potential range of reasonable outcomes greater than our
materiality for the financial statements as a whole, and possibly
many times that amount. The financial statements (note 18)
disclose the key sensitivities of the defined benefit pension
obligation to changes in key assumptions.
Our response to the risk
Our procedures to address the risk included:
Evaluation of the Group’s experts: Evaluating the scope,
competency and objectivity of the Group’s external experts who
assisted in determining the actuarial assumptions used to
determine the defined benefit obligation.
Our actuarial expertise: With the support of our own actuarial
specialists, we performed the following:
– Evaluating the judgements made and the appropriateness of
methodologies used by the Group and the Group’s expert in
determining the key actuarial assumptions;
– Comparing the assumptions used by the Group to our
independently compiled expected ranges based on market
observable data points and our market experience.
Assessing transparency: Considering the adequacy of the Group’s
disclosures in respect of the sensitivity of the obligation to these
assumptions.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that
we would expect to obtain audit evidence primarily through the
detailed procedures described.

Areas of particular auditor judgement We identified the following as the areas of particular auditor judgement: – Subjective and complex auditor judgement was required in evaluating the key actuarial assumptions used by the Group (including the discount rate, retail price index and mortality assumptions). Our results We found the valuation of the defined benefit obligation of the BT Pension Scheme and related disclosures to be acceptable (FY24: acceptable).

2.4 Valuation of unquoted assets in the BT
Pension Scheme (BTPS)
Financial Statement Elements

| FY25 | FY24
Longevity Insurance Contracts for the BTPS: included within the unquoted BTPS plan assets | £0.9bn | £0.9bn

Our assessment of risk vs FY24

çè | Our assessment of the risk is similar to FY24.

Our results

FY25: Acceptable | FY24: Acceptable

Description of the Key Audit Matter
Subjective valuation
The BTPS have unquoted plan assets in private equity, UK and
overseas property, mature infrastructure, longevity insurance
contracts, secure income and non-core credit assets which are
classified as fair value level three assets.
Significant judgement is required to determine the value of a
portion of these unquoted investments, which are valued based on
inputs that are not directly observable. The Group engages
valuation experts to value these assets.
In FY25, a key valuation judgement is in respect of the longevity
insurance contracts. The key unobservable inputs used to
determine the fair value of the longevity insurance contracts
include the discount rate and projected future mortality.
The effect of these matters is that, as part of our risk assessment,
we determined that the valuation of longevity insurance contract
assets held by the BTPS has a high degree of estimation
uncertainty, with a potential range of reasonable outcomes greater
than our materiality for the financial statements as a whole, and
possibly many times that amount.
The financial statements (note 18) disclose the key sensitivities of
the valuation of plan assets to changes in key assumptions.
Our response to the risk
Our procedures to address the risk included:
Assessing valuers’ credentials: Evaluating the scope,
competencies and objectivity of the Group’s external experts who
assisted in determining the key unobservable inputs and the
valuation of a longevity insurance contract.
Comparing valuations: Challenging, with the support of our own
actuarial specialists, the fair value of the longevity insurance
contracts by comparing with an independently developed range of
fair values using assumptions, such as the discount rate and
projected future mortality, based on external data. External data
included market views of the impact from COVID and post
pandemic mortality experience on future mortality, BT’s own
scheme mortality experience during the COVID-19 years, market
discount rates and the demographic analysis available from the 30
June 2023 triennial funding valuation.
Assessing transparency: Considering the adequacy of the Group’s
disclosures in respect of the sensitivity of the longevity insurance
contract asset valuations to these assumptions.
We performed the detailed tests above rather than seeking to rely
on any of the Group’s controls because our knowledge of the
design of these controls indicated that we would not be able to
obtain the required evidence to support reliance on controls.
31

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc continued

Areas of particular auditor judgement We identified the following as the areas of particular auditor judgement: – Subjective and complex auditor judgement was required in evaluating the key assumptions used by the Group (including the discount rate and projected mortality). Our results We found the valuation of the longevity insurance contracts and related disclosures to be acceptable (FY24: acceptable).

In FY25, "Impairment of Goodwill Attributable to the Business CGU
(Parent company)" is not identified as a Key Audit Matter as
Goodwill was fully impaired in FY24 and, therefore, it is not
separately identified in our report this year.
3. Our application of materiality and an overview
of the scope of our audit
Our application of materiality
Materiality for the Group financial statements as a whole was set at
£135m (FY24: £135m). This was determined with reference to a
benchmark of Total Revenue (of which it represents 0.66% (FY24:
0.65%)).
Consistent with FY24, we determined that Group Total revenue
remains the relevant benchmark for the Group. In the context of
the high levels of capital investment for future growth, Revenue is
considered a more representative and stable measure of
performance. As such, we based our Group materiality on Group
Total revenue of £20.3 billion (£20.7 billion).
Materiality for the Parent Company financial statements as a whole
was set at £105m (FY24: £110m), determined with reference to a
benchmark of Parent Company net assets, of which it represents
0.58% (FY24: 0.83%), and chosen to be lower than materiality for
the Group financial statements as a whole.
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 50% (FY24: 65%) of materiality
for the financial statements as a whole, which equates to £67.5m
(FY24: £88m) for the Group and £52.5m (FY24: £72m) for the
Parent Company. We applied this percentage in our determination
of performance materiality based on the level of identified
misstatements and control deficiencies during the prior period.
We agreed to report to the Board any corrected or uncorrected
identified misstatements exceeding 3% (FY24: 4%) of our
materiality, which equates to £4m (FY24: £5m) for Group and £3m
(FY24: £4m) for the Parent Company, in addition to other
identified misstatements that warranted reporting on qualitative
grounds.
Overview of the scope of our audit
This year, we applied the revised group auditing standard in our
audit of the consolidated financial statements. The revised
standard changes how an auditor approaches the identification of
components, and how the audit procedures are planned and
executed across components.
In particular, the definition of a component has changed, shifting
the focus from how the entity prepares financial information to
how we, as the group auditor, plan to perform audit procedures to
address group risks of material misstatement (“RMMs”). Similarly,
the group auditor has an increased role in designing the audit
procedures as well as making decisions on where these procedures
are performed (centrally and/or at component level) and how
these procedures are executed and supervised. As a result, we
assess scoping and coverage in a different way and comparisons to
prior period coverage figures are not meaningful. In this report we
provide an indication of scope coverage on the new basis.
We performed risk assessment procedures to determine which of
the Group’s components are likely to include risks of material
misstatement to the Group financial statements and which
procedures to perform at these components to address those risks.
In total, we identified 215 components, having considered our
evaluation of the Group’s operational structure, the Group’s legal
structure, the existence of common information systems, the
existence of common risk profile across entities, business units,
geographical locations, and our ability to perform audit procedures
centrally.
Of those, we identified 2 quantitatively significant components
which contained the largest percentages of either total revenue or
total assets of the Group, for which we performed audit
procedures.
Additionally, having considered qualitative and quantitative
factors, we selected 4 additional components with accounts and
disclosures contributing to the specific RMMs of the Group
financial statements.
Accordingly, we performed audit procedures on 6 components, of
which we involved component auditors in performing the audit
work on 2 components. This includes the audit of the parent
Company.
We set the component materialities, ranging from £9m to £105m,
having regard to the mix of size and risk profile of the Group across
the components.
Our audit procedures covered 83% of Group revenue.
We performed audit procedures in relation to components that
accounted for 87% of the total profits and losses that made up
group profit before tax and 98% of Group total assets.
For the remaining components for which we performed no audit
procedures, no component represented more than 10% of Group
total revenue, Group profit before tax or Group total assets. We
performed analysis at an aggregated Group level to re-examine
our assessment that there is not a reasonable possibility of a
material misstatement in these components.
We have also performed risk assessment and/or audit procedures
centrally across the Group, in the following areas:
– Testing of IT Systems
– Litigation and claims
These items were audited by the Group team for efficiency
purposes, where the Group team has direct access to the
underlying information. The Group team communicated the
results of these procedures to the component teams.
The scope of the audit work performed was predominately
substantive as we did not place any reliance upon the Group's
internal control over financial reporting.
Group auditor oversight
As part of establishing the overall Group audit strategy and plan,
we:
– included the component auditors' engagement partners and
managers in the Group planning discussions to facilitate inputs
from component auditors in the identification of matters
relevant to the Group audit;
– issued Group audit instructions to component auditors on the
scope of their work; and
– held risk assessment update discussions with component audit
teams before the commencement of the final phases of the
audit led by the Group engagement partner and engagement
quality control partner.
– inspected the work performed by the component auditors for
the purpose of the Group audit and evaluated the
appropriateness of conclusions drawn from the audit evidence
obtained and consistencies between communicated findings
and work performed.
32

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc continued

4 Going concern
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Parent Company’s financial resources or ability to continue
operations over the going concern period. The risks that we
considered most likely to adversely affect the Group’s and Parent
Company’s available financial resources over this period were:
– The impact of rising energy prices, supply shortages, and
inflationary pressures;
– The impact of significant supply chain disruptions driven by geo-
political factors;
– The impact of plans to deliver new initiatives required to meet
savings commitments not being realised;
– The likelihood of existing legal matters/claims crystallising
within the going concern period.
We also considered less predictable but realistic second order
impacts, such as a large-scale cyber breach, the UK experiences a
significant recession adverse changes to telecoms regulation,
which could result in a rapid reduction of available financial
resources.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available financial
resources indicated by the Group’s financial forecasts.
Our procedures also included an assessment of whether the going
concern disclosure in note 1 to the financial statements gives a full
and accurate description of the directors’ assessment of going
concern.
Our conclusions based on this work:
– we consider that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate;
– we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period; and
– we found the going concern disclosure in note 1 to be
acceptable.
However, as we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
5 Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
– enquiring of directors, the Board, internal audit and inspection of
policy documentation as to the Group’s high-level policies and
procedures to prevent and detect fraud, including the internal
audit function, and the Group’s channel for “whistleblowing”, as
well as whether they have knowledge of any actual, suspected or
alleged fraud;
– reading Board, Remuneration Committee and other Executive
Committee minutes;
– considering remuneration incentive schemes and performance
targets for management and directors including the EPS target
for management remuneration;
– using analytical procedures to identify any unusual or
unexpected relationships;
– Our forensic professionals assisted us in identifying key fraud
risks. This included attending the Risk Assessment and Planning
Discussion, holding a discussion with the engagement partner,
engagement manager and engagement quality control
reviewer, and assisting with designing relevant audit procedures
to respond to the identified fraud risks. They also attended
meetings with management to discuss key fraud risk areas.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout the
audit. This included communication from the Group audit team to
all component engagement teams of relevant fraud risks identified
at the Group level and request to component engagement teams
to report to the Group audit team any instances of fraud that could
give rise to a material misstatement at the Group level.
As required by auditing standards, and taking into account possible
pressures to meet profit targets, recent revisions to guidance and
our overall knowledge of the control environment, we perform
procedures to address the risk of management override of
controls, and the risk of fraudulent revenue recognition in relation
to the revenue streams in BT Business, in particular:
– the risk that Group and component management may be in a
position to make inappropriate accounting entries; and
– the risk that the refund liability position in BT Business is not
complete, given the high degree of estimation uncertainty in the
calculation and the sensitivity of the liability position.
We did not identify any additional fraud risks.
Further details in respect of risk over the identification of refund
liabilities for associated customers is contained within the Key
Audit Matter disclosures in item 2.1 of this report.
We also performed procedures including:
– Identifying journal entries to test at the Group level and for all
components in scope based on risk criteria and comparing the
identified entries to supporting documentation. These included
those posted by senior finance management, those posted and
approved by the same user and those posted to unusual or
seldom used accounts;
– Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias;
– Evaluating the business purpose for significant unusual
transactions.
Identifying and responding to risks of material
misstatement related to compliance with laws
and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, through
discussion with the directors and other management (as required
by auditing standards), and from inspection of the Group’s
regulatory and legal correspondence and discussed with the
directors and other management the policies and procedures
regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the Group’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the
33

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc continued

Group to component auditors of relevant laws and regulations
identified at the Group level, and a request for component auditors
to report to the Group audit team any instances of non-
compliance with laws and regulations that could give rise to a
material misstatement at the Group level.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation, taxation legislation, and pension legislation and
we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation or the loss of
the Group’s license to operate. We identified the following areas as
those most likely to have such an effect: anti-bribery, regulations
affecting telecommunication providers, and certain aspects of
company legislation recognising the financial and regulated nature
of the Group’s activities (including compliance with Ofcom
regulation) and its legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
For the legal matters discussed in note 17 we assessed disclosures
against our understanding from legal correspondence.
Context of the ability of the audit to detect
fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
6 We have nothing to report on the other
information in the Annual Report
The directors are responsible for the other information presented
in the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Strategic report and directors’ report
Based solely on our work on the other information:
– we have not identified material misstatements in the strategic
report and the directors’ report;
– in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
– in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
7 We have nothing to report on the other matters
on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
– adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
– the parent Company financial statements are not in agreement
with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law
are not made; or
– we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 27, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
and Parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in
an annual financial report prepared under Disclosure Guidance and
Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report
provides no assurance over whether the annual financial report has
been prepared in accordance with those requirements.
34

KPMG LLP’s Independent Auditor’s Report to the members of British Telecommunications plc continued

9. The purpose of our audit work and to whom we
owe our responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions we
have formed.
Jonathan Mills (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E145GL
16 June 2025
35

Group income statement Year ended 31 March 2025

|  | Before specific items (‘Adjusted’) | Specific items a | Total (Reported)
| Notes | £m | £m | £m
Revenue | 4, 5 | 20,370 | (12) | 20,358
Operating costs | 6 | (17,100) | (772) | (17,872)
Of which net impairment losses on trade receivables and contract assets |  | (171) | — | (171)
Operating profit (loss) | 4 | 3,270 | (784) | 2,486
Finance expense | 25 | (1,118) | (197) | (1,315)
Finance income | 25 | 898 | — | 898
Net finance expense |  | (220) | (197) | (417)
Share of post tax profit (loss) of associates and joint ventures | 22 | (8) | — | (8)
Profit (loss) before taxation |  | 3,042 | (981) | 2,061
Taxation | 10 | (480) | 200 | (280)
Profit (loss) for the year |  | 2,562 | (781) | 1,781

Group income statement
Y ear ended 31 March 2024

|  | Before specific items (‘Adjusted’) | Specific items a | Total (Reported)
| Notes | £m | £m | £m
Revenue | 4, 5 | 20,835 | (38) | 20,797
Operating costs | 6 | (17,632) | (949) | (18,581)
Of which net impairment losses on trade receivables and contract assets |  | (165) | — | (165)
Of which goodwill impairment | 12 | — | (488) | (488)
Operating profit (loss) | 4 | 3,203 | (987) | 2,216
Finance expense | 25 | (1,067) | (121) | (1,188)
Finance income |  | 890 | — | 890
Net finance expense |  | (177) | (121) | (298)
Share of post tax profit (loss) of associates and joint ventures | 22 | (21) | — | (21)
Profit (loss) before taxation |  | 3,005 | (1,108) | 1,897
Taxation | 10 | (476) | 145 | (331)
Profit (loss) for the year |  | 2,529 | (963) | 1,566

a Specific items are defined and analysed in note 9.
36

Group statement of comprehensive income Year ended 31 March 2025

|  | 2025 | 2024
| Notes | £m | £m
Profit for the year |  | 1,781 | 1,566
Other comprehensive income (loss) |  |  |
Items that will not be reclassified to the income statement |  |
Remeasurements of the net pension obligation | 18 | 88 | (2,444)
Tax on pension remeasurements | 10 | (22) | 600
Items that have been or may be reclassified to the income statement |  |
Exchange differences on translation of foreign operations | 27 | (50) | (66)
Fair value movements on assets at fair value through other comprehensive income | 27 | (6) | —
Movements in relation to cash flow hedges: |  |  |
– net fair value losses | 27 | (105) | (642)
– recognised in income and expense | 27 | 329 | 356
Tax on components of other comprehensive income that have been or may be reclassified | 10, 27 | (56) | 78
Share of post tax other comprehensive loss in associates and joint ventures | 22 | (5) | (11)
Other comprehensive income (loss) for the year, net of tax |  | 173 | (2,129)
Total comprehensive income (loss) for the year |  | 1,954 | (563)

37

Group balance sheet At 31 March 2025

|  | 2025 | 2024
| Notes | £m | £m
Non-current assets |  |  |
Intangible assets | 12 | 12,433 | 12,928
Property, plant and equipment | 13 | 23,380 | 22,562
Right-of-use assets | 14 | 3,328 | 3,642
Derivative financial instruments | 26 | 904 | 1,020
Investments | 21 | 12,455 | 11,662
Joint ventures and associates | 22 | 252 | 307
Trade and other receivables | 15 | 655 | 641
Preference shares in joint ventures | 22 | 234 | 451
Contract assets | 5 | 306 | 330
Retirement benefit surplus | 18 | 142 | 70
Deferred tax assets | 10 | 959 | 1,048
|  | 55,048 | 54,661
Current assets |  |  |
Inventories |  | 331 | 409
Trade and other receivables | 15 | 3,119 | 3,589
Preference shares in joint ventures | 22 | 161 | 82
Contract assets | 5 | 1,194 | 1,410
Assets classified as held for sale | 20 | 245 | —
Current tax receivable |  | 355 | 423
Derivative financial instruments | 26 | 130 | 50
Investments | 21 | 2,631 | 2,366
Cash and cash equivalents | 23 | 209 | 409
|  | 8,375 | 8,738
Current liabilities |  |  |
Loans and other borrowings | 24 | 2,092 | 1,395
Derivative financial instruments | 26 | 106 | 94
Trade and other payables | 16 | 5,873 | 6,323
Contract liabilities | 5 | 899 | 906
Lease liabilities | 14 | 705 | 766
Liabilities classified as held for sale | 20 | 188 | —
Current tax liabilities |  | 82 | 92
Provisions | 17 | 258 | 238
|  | 10,203 | 9,814
Total assets less current liabilities |  | 53,220 | 53,585
Non-current liabilities |  |  |
Loans and other borrowings | 24 | 16,670 | 17,131
Derivative financial instruments | 26 | 391 | 445
Contract liabilities | 5 | 257 | 175
Lease liabilities | 14 | 3,866 | 4,189
Retirement benefit obligations | 18 | 4,230 | 4,882
Other payables | 16 | 276 | 637
Deferred tax liabilities | 10 | 1,717 | 1,533
Provisions | 17 | 382 | 411
|  | 27,789 | 29,403
Equity |  |  |
Share capital |  | 2,172 | 2,172
Share premium |  | 8,000 | 8,000
Other reserves | 27 | 1,535 | 1,423
Retained earnings |  | 13,724 | 12,587
Total equity |  | 25,431 | 24,182
|  | 53,220 | 53,585

The consolidated financial statements on pages 35 to 105 were approved by the Board of Directors on 16 June 2025 and were signed on
its behalf by:
Simon Lowth
Director
38

Group statement of changes in equity Year ended 31 March 2025

|  | Share capital a | Share premium b | Other reserves c | Retained earnings (loss) | Total equity (deficit)
| Notes | £m | £m | £m | £m | £m
At 1 April 2023 |  | 2,172 | 8,000 | 1,664 | 13,703 | 25,539
Profit for the year |  | — | — | — | 1,566 | 1,566
Other comprehensive income (loss) – before tax |  | — | — | (708) | (2,455) | (3,163)
Tax on other comprehensive income (loss) | 10 | — | — | 78 | 600 | 678
Transferred to the income statement |  | — | — | 356 | — | 356
Total comprehensive income (loss) for the year |  | — | — | (274) | (289) | (563)
Dividends to shareholders | 11 | — | — | — | (850) | (850)
Share-based payments | 19 | — | — | — | 68 | 68
Tax on share-based payments | 10 | — | — | — | (12) | (12)
Transfer to realised profit d |  | — | — | 33 | (33) | —
At 1 April 2024 |  | 2,172 | 8,000 | 1,423 | 12,587 | 24,182
Profit for the year |  | — | — | — | 1,781 | 1,781
Other comprehensive income (loss) – before tax |  | — | — | (161) | 83 | (78)
Tax on other comprehensive income (loss) | 10 | — | — | (56) | (22) | (78)
Transferred to the income statement |  | — | — | 329 | — | 329
Total comprehensive income (loss) for the year |  | — | — | 112 | 1,842 | 1,954
Dividends to shareholders | 11 | — | — | — | (780) | (780)
Share-based payments | 19 | — | — | — | 59 | 59
Tax on share-based payments | 10 | — | — | — | 18 | 18
Other movements |  | — | — | — | (2) | (2)
At 31 March 2025 |  | 2,172 | 8,000 | 1,535 | 13,724 | 25,431

a The allotted, called up, and fully paid ordinary share capital of the company at 31 March 2025 was £2,172m comprising 8,689,755,905 ordinary shares of 25 p each (31 March 2024:
£2,172m comprising 8,689,755,905 ordinary shares of 25 p each). The holders of ordinary shares are entitled to receive dividends as declared and entitled to one vote for each share
which they hold at meetings.
b The share premium account, comprising the premium on allotment of shares, is not available for distribution.
c For further analysis of other reserves, see note 27.
d Includes amounts relating to disposal of investments, for further analys is see note 27.
39

Group cash flow statement Year ended 31 March 2025

|  | 2025 | 2024
| Notes | £m | £m
Cash flow from operating activities |  |  |
Profit before taxation |  | 2,061 | 1,897
Share of post tax loss (profit) of associates and joint ventures |  | 8 | 21
Net finance expense |  | 417 | 298
Operating profit |  | 2,486 | 2,216
Other non-cash charges a |  | 135 | 73
Impairment loss on remeasurement of disposal groups |  | 116 | —
Loss (profit) on disposal of businesses b |  | — | (15)
(Profit) loss on disposal of property, plant and equipment and intangible assets |  | (32) | 3
Depreciation and amortisation, including impairment charges c | 6 | 4,978 | 5,398
Decrease (increase) in inventories |  | 78 | (60)
Decrease (increase) in trade and other receivables |  | 237 | (843)
Decrease (increase) in contract assets |  | 219 | 157
(Decrease) increase in trade and other payables |  | (387) | (88)
Increase (decrease) in contract liabilities |  | 99 | 39
(Decrease) increase in other liabilities d |  | (924) | (850)
(Decrease) increase in provisions |  | (51) | (18)
Cash generated from operations |  | 6,954 | 6,012
Income taxes refunded (paid) |  | 35 | (59)
Net cash inflow from operating activities |  | 6,989 | 5,953
Cash flow from investing activities |  |  |
Interest received |  | 132 | 140
Dividends received from joint ventures, associates and investments |  | 4 | 20
Proceeds on disposal of businesses |  | 25 | 81
Outflow on non-current amounts owed by ultimate parent company |  | (863) | (833)
Proceeds on disposal of current financial assets e |  | 13,891 | 12,389
Purchases of current financial assets e |  | (14,158) | (11,216)
Proceeds from investment in preference shares in joint venture | 22 | 63 | —
Proceeds on disposal of property, plant and equipment and intangible assets |  | 36 | 2
Purchases of property, plant and equipment and intangible assets f |  | (4,937) | (4,969)
Prepayment for forward sale of copper g |  | — | 105
Decrease (increase) in amounts owed by joint ventures |  | 120 | 117
Settlement of minimum guarantee liability with sports joint venture | 16 | (187) | (211)
Net cash outflow from investing activities |  | (5,874) | (4,375)
Cash flow from financing activities |  |  |
Interest paid |  | (956) | (865)
Repayment of borrowings h |  | (2,095) | (1,676)
Proceeds from bank loans and bonds |  | 2,552 | 2,242
Payment of lease liabilities |  | (739) | (748)
Cash flows from collateral received (paid)i |  | (11) | (532)
Changes in ownership interests in subsidiaries |  | — | (13)
(Decrease) increase in amounts owed to joint ventures | 24 | (1) | (1)
Net cash outflow from financing activities |  | (1,250) | (1,593)
Net decrease in cash and cash equivalents |  | (135) | (15)
Opening cash and cash equivalents |  | 351 | 373
Net decrease in cash and cash equivalents |  | (135) | (15)
Effect of exchange rate changes |  | (9) | (7)
Closing cash and cash equivalents j | 23 | 207 | 351

a FY25 non cash items include £75m of fair value loss (FY24: £22m) on A and C preference shares held in the sports JV and an impairment loss of £44m in respect of Group's equity
interest in the sports JV.
b FY24 net profit comprises £25m profit on divestments completing in the year less £10m net transaction costs in relation to BT Sport disposal.
c FY24 depreciation and amortisation includes goodwill impairment charges of £488m.
d Includes pension deficit payments of £803m (FY24: £823m) see note 18 for further details.
e Primarily consists of investment in and redemption of amounts held in liquidity funds.
f Property, plant and equipment, engineering stores and software additions of £4,857m (FY24: £4,880m) (see note 4) and capital accruals movements of £80m (FY24: £89m).
Purchases of property, plant and equipment is presented net of cash inflows from government grants of £98 m (FY24: £159m).
g During FY25 we received an upfront prepayment of £nil (FY24: £105 m) from entering into a forward agreement to sell copper granules created from surplus copper cables which are
currently recognised within property, plant and equipment (note 13). 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. See note 26 for further details.
h Repayment of borrowings includes the impact of hedging.
i Cash flows relating to cash collateral held in respect of derivative financial assets with certain counterparties, see note 26 for further details.
j Net of b ank overdrafts o f £2m (FY24: £58m ).
40
Notes to the consolidated financial statements continued
1. Basis of preparation
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.
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 June
2026 , which is consistent with the FRC guidance. When reaching
this conclusion, the directors took into account the group’s and
parent company’s 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.
These financial statements consolidate B ritish
Telecommunications plc, the parent company, and its subsidiaries
(together the ‘group’, ‘us’, ‘we’ or ‘our’).
The consolidated financial statements are prepared on the
historical cost basis, except for certain financial instruments that
have been measured at fair value. The consolidated financial
statements are presented in sterling, the functional currency of
British Telecommunications plc.
These financial statements cover the financial year from 1 April
2024 to 31 March 2025 (‘FY25’), with comparative figures for the
financial year from 1 April 2023 to 31 March 2024 (‘FY24’).
New and amended accounting standards effective during
the year
The following amended standards were effective and adopted by
us during the year.
Supplier Finance Arrangements (Amendments to IAS 7 and
IFRS 7)
These amendments clarify the characteristics of supplier finance
arrangements and require additional disclosures of such
arrangements. The disclosure requirements in the amendments
are intended to assist in assessing their effects on liabilities, cash
flows and exposure to liquidity risk.
As a result of implementing the amendments, we have provided
additional disclosures about our supplier finance arrangements,
see note 16.
Other
The following amendments have not had a significant impact on
our consolidated financial statements:
– Classification of Liabilities as Current or Non-current and Non-
current Liabilities with Covenants (Amendments to IAS 1)
– Lease Liability in a Sale and Leaseback (Amendments to IFRS
16)
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 FY25 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 accounting standards and amendments to
existing standards have been issued but are not yet effective or
have not yet been endorsed by the U K Endorsement Board:
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, which replaces IAS 1
Presentation of Financial Statements. IFRS 18 introduces new
requirements for presentation within the income statement,
including specified totals and subtotals. Furthermore, entities are
required to classify all income and expenses within the income
statement into one of five categories: operating, investing,
financing, income taxes and discontinued operations, whereof the
first three are new.
It also requires disclosure of newly defined management-defined
performance measures, subtotals of income and expenses, and
includes new requirements for aggregation and disaggregation of
financial information based on the identified roles of the primary
financial statements and the notes.
In addition, narrow-scope amendments have been made to IAS 7
‘Statement of Cash Flows’, which include changing the starting
point for determining cash flows from operations under the
indirect method, from ‘profit or loss’ to ‘operating profit or loss’
and removing the optionality around classification of cash flows
from dividends and interest. There are also consequential
amendments to several other standards.
IFRS 18, and the amendments to the other standards, are effective
for reporting periods beginning on or after 1 January 2027 (i.e.,
FY28 for BT). Earlier application is permitted. IFRS 18 will apply
retrospectively.
We are currently assessing the impacts the amendments will have
on the primary financial statements and notes to the financial
statements.
Other
We are currently assessing the impact of the standards below, but
they are not expected to have a material impact on the
consolidated financial statements:
– Lack of Exchangeability (Amendments to IAS 21)
– Classification and Measurement of Financial Instruments
(Amendments to IFRS 9 and IFRS 7)
– Contracts referencing Nature-dependent Electricity
(Amendments to IFRS 9 and IFRS 7)
– Annual Improvements to IFRS Accounting Standards - Volume
11
– Subsidiaries without Public Accountability: Disclosures (IFRS 19)
Effective dates will be subject to the UK endorsement process. We
have not adopted any other standard, amendment or
interpretation that has been issued but is not yet effective.
Restatement of operating costs
During FY25, following the roll-out of a new payroll system, we
have identified employee pension contributions were incorrectly
included in employer pension costs and should have been
recorded as gross wages and salaries. Additionally, sales
commissions were omitted from wages and salaries, being
recognised in 'sales commissions'.
In FY24, following completion of a finance system transformation,
we have more granular information with which to better align cost
allocations with our accounting policies. As a result, we have
identified certain reclassifications across our operating cost
categories to the costs reported in FY24. Comparatives have been
restated. See note 6 for details.
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’s results in this
way is relevant to an understanding of the group’s financial
performance as specific items are those that in management’s
judgement need to be disclosed by virtue of their size, nature or
incidence.
41
Notes to the consolidated financial statements continued
1. Basis of preparation continued
This presentation is consistent with the way that financial
performance is measured by management and reported to the BT
Group plc Board and the BT Group plc 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 on remeasurement of the
disposal groups to held for sale, impairment of goodwill,
impairment charges in our portfolio businesses, charges or credits
relating to retrospective regulatory matters, property
rationalisation programmes, out-of-period balance sheet
adjustments, 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 22 for further detail.
Specific items for the current and prior year are disclosed in note 9.
2. Critical and 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 BT
Group plc 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 in the notes by the following
symbol .

Note | Critical estimate | Key estimate | Significant judgement
5. Estimate of customer refund liability |  | ü |
10. Current and deferred income tax |  | ü |
12. CGU identification for goodwill impairment |  |  | ü
12. Valuation of recoverable amount for goodwill impairment | ü |  |
14. Reasonable certainty and determination of lease terms |  |  | ü
17. Identifying contingent liabilities |  |  | ü
17. Provisions |  | ü | ü
18. Valuation of pension assets and liabilities | ü |  | ü
18. Control assessment over co-investment vehicles |  |  | ü
20. Held for sale classification |  |  | ü
22. Valuation of BT’s equity interest in the Sports joint venture |  | ü |
22. Valuation of investment in A preference shares in Sports joint venture |  | ü |

3. Material accounting policies that apply to the
overall financial statements
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 in the
notes 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 British Telecommunications 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’s 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
42
Notes to the consolidated financial statements continued
3. Material accounting policies that apply to the overall financial statements continued
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 arra ngement, 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’s 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 including Reaching 100% (R100), are
described in note 13.
Once a government grant is recognised, any related deferred
income is treated in accordance with IAS 20 ‘Accounting for
Government Grants and Disclosure of Government Assistance’.
Foreign currencies
The consolidated financial statements are presented in sterling,
which is also the company’s 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’s 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.
43
Notes to the consolidated financial statements continued
4. Segment information

| Material accounting policies that apply to segment information Operating and reportable segments Our operating segments are reported based on financial information provided to the BT Group plc Executive Committee, which is the key management committee and represents the ‘chief operating decision maker’. 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 2025 the group had three CFUs: Consumer, Business and Openreach. 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 ‘Operating Segments’ for any of the years presented. We aggregate the remaining operations and include them in the ‘Other’ category to reconcile to the consolidated results of the group. The ‘Other’ 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 ‘Other’ 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 ‘Other’ 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 reflected in the results of the reportable segment in line with how they are reported to the BT Group plc 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. Depreciation and amortisation incurred by CUs in relation to leased property managed 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 BT Group plc 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 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’s network, and is based on regulated prices. This occurs both directly, and also indirectly, through TUs which are included within the ‘Other’ 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 and 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, goodwill is allocated based on our goodwill model CGUs as detailed in note 12. |

44
Notes to the consolidated financial statements continued
4. Segment information continued
Segment revenue and profit

| Consumer | Business | Openreach | Other | Total
Year ended 31 March 2025 | £m | £m | £m | £m | £m
Segment revenue | 9,695 | 7,842 | 6,156 | 12 | 23,705
Internal revenue | (42) | (106) | (3,187) | — | (3,335)
Adjusted a revenue from external customers | 9,653 | 7,736 | 2,969 | 12 | 20,370
Adjusted EBITDA b | 2,644 | 1,536 | 4,029 | (6) | 8,203
Depreciation and amortisation a | (1,832) | (961) | (2,032) | (108) | (4,933)
Adjusted a operating profit (loss) | 812 | 575 | 1,997 | (114) | 3,270
Specific items (note 9) |  |  |  |  | (784)
Operating profit |  |  |  |  | 2,486
Net finance expense c |  |  |  |  | (417)
Share of post tax (loss) profit of associates and joint ventures |  |  |  |  | (8)
Profit before tax |  |  |  |  | 2,061
| Consumer | Business | Openreach | Other | Total
Year ended 31 March 2024 | £m | £m | £m | £m | £m
Segment revenue | 9,833 | 8,128 | 6,077 | 16 | 24,054
Internal revenue | (47) | (71) | (3,101) | — | (3,219)
Adjusted a revenue from external customers | 9,786 | 8,057 | 2,976 | 16 | 20,835
Adjusted EBITDA b | 2,672 | 1,630 | 3,827 | (27) | 8,102
Depreciation and amortisation a | (1,738) | (984) | (2,052) | (125) | (4,899)
Adjusted a operating profit (loss) | 934 | 646 | 1,775 | (152) | 3,203
Specific items (note 9) |  |  |  |  | (987)
Operating profit |  |  |  |  | 2,216
Net finance expense c |  |  |  |  | (298)
Share of post tax (loss) profit of associates and joint ventures |  |  |  |  | (21)
Profit before tax |  |  |  |  | 1,897

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 Interest expense on retirement benefit obligation of £197m (FY24: £121m). See note 9.
Internal revenue and costs

| Internal cost recorded by
| Consumer | Business | Openreach | Other | Total
Year ended 31 March 2025 | £m | £m | £m | £m | £m
Internal revenue recorded by |  |  |  |  |
Consumer | — | 41 | 1 | — | 42
Business | 26 | — | 39 | 41 | 106
Openreach | 2,089 | 1,098 | — | — | 3,187
Total | 2,115 | 1,139 | 40 | 41 | 3,335
| Internal cost recorded by
| Consumer | Business | Openreach | Other | Total
Year ended 31 March 2024 | £m | £m | £m | £m | £m
Internal revenue recorded by |  |  |  |  |
Consumer | — | 46 | — | 1 | 47
Business | 23 | — | — | 48 | 71
Openreach | 2,044 | 1,043 | — | 14 | 3,101
Total | 2,067 | 1,089 | — | 63 | 3,219

45
Notes to the consolidated financial statements continued
4. Segment information continued

Capital expenditure

| Consumer | Business | Openreach | Other | Total
Year ended 31 March 2025 | £m | £m | £m | £m | £m
Intangible assets a | 462 | 390 | 146 | — | 998
Property, plant and equipment b | 745 | 332 | 2,692 | 90 | 3,859
Capital expenditure | 1,207 | 722 | 2,838 | 90 | 4,857
| Consumer | Business | Openreach | Other | Total
Year ended 31 March 2024 | £m | £m | £m | £m | £m
Intangible assets a | 439 | 361 | 135 | 3 | 938
Property, plant and equipment b | 736 | 414 | 2,710 | 82 | 3,942
Capital expenditure | 1,175 | 775 | 2,845 | 85 | 4,880

a Additions to intangible assets as presented in note 12.
b Additions to property, plant and equipment as presented in note 13, inclusive of movement on engineering store s.
Geographic segmentation
Revenue from external customers

Year ended 31 March | 2025 | 2024
£m | £m
UK | 18,171 | 18,450
Europe, Middle East and Africa, excluding the UK | 1,194 | 1,303
Americas | 562 | 617
Asia Pacific | 443 | 465
Adjusted a revenue b | 20,370 | 20,835

a Before specific items.
b We present a reconciliation of our adjusted UK service revenue Alternative Performance Measure, of £15,582m (FY24: £15,727m), to revenue in the Additional Information section
to this report.
Non-current assets

At 31 March | 2025 | 2024
£m | £m
UK | 39,369 | 39,378
Europe, Middle East and Africa, excluding the UK | 557 | 634
Americas | 260 | 251
Asia Pacific | 168 | 147
Non-current assets ab | 40,354 | 40,410

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.
b Goodwill relating to the international CGU as detailed in n ote 12 is reported across the: Europe, Middle East and Africa, excluding the UK, Americas and Asia Pacific geographies.
46
Notes to the consolidated financial statements continued
5. Revenue

| 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 “performance obligation” 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 2025 that contain unsatisfied performance obligations. |
| Service line | Performance obligations | Revenue recognition policy |
| Information and communications technology (ICT) and managed networks | Provision of networked IT services, managed network services, and arrangements to design and build software solutions. Performance obligations are identified for each distinct service or deliverable for which the customer has contracted, and are considered to be satisfied over the time period that we deliver these services or deliverables. Commitments to provide hardware to customers that are distinct from the other promises are considered to be satisfied at the point in time that control passes to the customer. | Revenue for services is recognised over time using a measure of progress that appropriately reflects the pattern by which the performance obligation is satisfied. For time and materials contracts, revenue is recognised as the service is received by the customer. Where performance obligations exist for the provision of hardware, revenue is recognised at the point in time that the customer obtains control of the promised asset. For long-term fixed price contracts revenue 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 subscriptions | Provision of broadband, TV and fixed telephony services including national and international calls, connections, line rental and calling features. Performance obligations exist for each ongoing service provided to the customer and are satisfied over the period that the services are provided. Installation services are recognised as separate performance obligations if they are distinct from other services in the contract. These are satisfied when the customer benefits from the service. Connection services are not distinct performance obligations and are therefore combined with the associated service performance obligation. | Fixed subscription charges are recognised as revenue on a straight-line basis over the period that the services are provided. Upfront charges for non-distinct connection and installation services are deferred as contract liabilities and are recognised as revenue over the same period. Variable charges such as call charges are recognised when the related services are delivered. Where installation activities are distinct performance obligations, revenue is recognised at the point in time that the installation is completed. |
| Mobile subscriptions | Provision of mobile postpaid and prepaid services, including voice minutes, SMS and data services. Performance obligations exist for each ongoing service provided to the customer and are satisfied over the period that the services are provided. | Subscription fees, consisting primarily of monthly charges for access to internet or voice and data services, are recognised as the service is provided. One-off services such as calls outside of plan and excess data usage are recognised when the service is used. |
| Equipment and other services | Provision of equipment and other services, including mobile phone handsets and hardware such as set-top boxes and broadband routers provided as part of customer contracts. Performance obligations are satisfied at the point in time that control passes to the customer. For other services, performance obligations are identified based on the distinct goods and services we have committed to provide. | Revenue from equipment sales is recognised at the point in time that control passes to the customer. Where payment is not received in full at the time of the sale, such as with equipment provided as part of mobile and fixed access subscriptions, contract assets are recognised for the amount due from the customer that will be recovered over the contract period. 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. |

47
Notes to the consolidated financial statements continued
5. Revenue continued

| 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. 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 “as-invoiced” 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 certain 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 separate 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 a 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: – Transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market conditions and other factors such as general economic conditions. – Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment phases for customer contracts. – The status of commercial relations with customers and the implications for future revenue and cost projections. – 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’s 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 14. 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 14. 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). |

48
Notes to the consolidated financial statements continued
5. Revenue continued
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 2025 | £m | £m | £m | £m | £m
ICT and managed networks | — | 3,078 | — | — | 3,078
Fixed access subscriptions | 4,338 | 2,130 | 2,897 | — | 9,365
Mobile subscriptions | 3,509 | 1,202 | — | — | 4,711
Equipment a and other services | 1,806 | 1,326 | 72 | 12 | 3,216
Revenue before specific items | 9,653 | 7,736 | 2,969 | 12 | 20,370
Specific items b (note 9) |  |  |  |  | (12)
Revenue cd |  |  |  |  | 20,358
Year ended 31 March 2024 | Consumer | Business | Openreach | Other | Total
£m | £m | £m | £m | £m
ICT and managed networks | — | 3,592 | — | — | 3,592
Fixed access subscriptions | 4,333 | 2,149 | 2,900 | — | 9,382
Mobile subscriptions | 3,557 | 1,187 | — | — | 4,744
Equipment a 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 b (note 9) |  |  |  |  | (38)
Revenue cd |  |  |  |  | 20,797

a Includes UK equipment revenue of £2,310m (FY24: £2,391m).
b Relates to regulatory matters classified as specific. See note 9.
c The Group’s revenue at 31 March 2025 relating to contracts with customers, as defined by IFRS 15, amounts to £17,358m (FY24: £17,766m).
d We have further disaggregated the revenue presented here to derive the UK adjusted service revenue of £15,582m (FY24: £15,727m). Please refer to our adjusted UK service
revenue reconciliation in the Additional Information section of this report for details. Adjusted UK service revenue includes some portion of equipment revenue where that equipment
is sold as part of a managed services contract, or where that equipment cannot be practicably separated from the underlying service.
Revenue expected to be recognised in future periods for performance obligations that are not complete (or are partially complete) as at
31 March 2025 is £13,249m (FY24 : £12,133m). Of this, £6,477m (FY24: £6,052m ) 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 £6,772m (FY24: £6,081m) will substantially be recognised as revenue within two
years.

| Key accounting estimates made in accounting for revenue Estimate of customer refunds There remains an accounting estimate in place to reflect a risk of billing inaccuracy where there is the presence of bespoke pricing. This is associated with a small number of products across a limited number of billing systems. We have previously recognised a combined £51m and based on the results of testing there has been no change to the expected value of the liability. As a result, there is no additional recognition or revenue deduction made in the current financial year. The value of this estimate is based on a range of potential adjustments, none of which materially deviate from the amount currently recorded. This is presented within note 16 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 £3,000m (FY24: £3,031m) income from arrangements classified as operating leases under IFRS 16 and which
represent core business activities for the group. Income relates predominantly to Openreach’s 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:
– £19m (FY24: £26m) operating lease income from non-core business activities which is presented in other operating income (note 6).
Note 14 presents an analysis of payments to be received across the remaining term of operating lease arrangements.
– £12m ( FY24: £40m) 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.
£33m (FY24: £38m) 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.
49
Notes to the consolidated financial statements continued
5. Revenue continued
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 15. We provide for expected lifetime losses on contract assets following the policy set out in note 15. |

Contract assets and liabilities are as follows:

At 31 March | 2025 | 2024
£m | £m
Contract assets |  |
Current | 1,194 | 1,410
Non-current | 306 | 330
| 1,500 | 1,740
Contract liabilities |  |
Current | 899 | 906
Non-current | 257 | 175
| 1,156 | 1,081

£704m (FY24: £876m) of the contract liability at 31 March 2024 was recognised as revenue during the year. Impairment losses of £47m
(FY24: £35m) were recognised on contract assets during the year.
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 2025 was 3% (FY24: 3%).
50
Notes to the consolidated financial statements continued
6. Operating costs

Year ended 31 March | Notes | 2025 | 2024 (Restated)a
£m | £m
Operating costs by nature |  |  |
Staff costs: |  |  |
Wages and salaries b |  | 3,963 | 4,192
Social security costs |  | 431 | 425
Other pension costs | 18 | 333 | 358
Share-based payment expense | 19 | 59 | 68
Total staff costs |  | 4,786 | 5,043
Capitalised direct labour |  | (1,412) | (1,432)
Net staff costs |  | 3,374 | 3,611
Indirect labour costs c |  | 1,271 | 1,228
Capitalised indirect labour |  | (806) | (772)
Net indirect labour costs |  | 465 | 456
Net labour costs |  | 3,839 | 4,067
Product costs |  | 3,330 | 3,449
External sales commissions |  | 440 | 506
Payments to telecommunications operators |  | 1,074 | 1,227
Property and energy costs |  | 1,296 | 1,338
Network operating and IT costs |  | 1,077 | 1,145
Provision and installation |  | 379 | 378
Marketing and sales |  | 330 | 367
Net impairment losses on trade receivables and contract assets d |  | 171 | 165
Other operating costs |  | 508 | 329
Other operating income |  | (277) | (238)
Depreciation and amortisation, including impairment charges |  | 4,933 | 4,899
Total operating costs before specific items |  | 17,100 | 17,632
Specific items | 9 | 772 | 949
Of which goodwill impairment |  | — | 488
Total operating costs |  | 17,872 | 18,581
Operating costs before specific items include the following: |  |  |
Leaver costs b |  | 9 | 9
Research and development expenditure e |  | 790 | 726
Foreign currency (gains)/losses |  | (3) | (2)
Inventories recognised as an expense |  | 2,180 | 2,170

a Comparatives for the year to 31 March 2024 have been restated for employee pension costs, reclassification of sales commissions to wages and salaries, and other reclassifications
between cost categories.
b Leaver costs are included within wages and salaries, except for leaver costs of £278m (FY24: £242m) associated with restructuring costs, which have been recorded as specific items.
c Indirect labour costs related to subcontracted labour costs.
d Consists of net impairment losses on trade receivables and contract assets in Consumer of £117m (FY24: £98m), in Business of £46m (FY24 : £45m ), in Openreach of £7m (FY24:
£20m) and in Other of £2m ( FY24: £2m).
e R esearch and development expenditure includes amortisation of £752m (FY24: £679m) in respect of capitalised development costs and operating expenses of £38m (FY24: £47m).
In addition, the group capitalised software development costs of £438m (FY24: £429m ).
51
Notes to the consolidated financial statements continued
6. Operating costs continued
Depreciation and amortisation, which includes impairment charges, is analysed as follows:

Year ended 31 March | Notes | 2025 | 2024
£m | £m
Depreciation and amortisation before impairment charges |  |  |
Intangible assets | 12 | 1,300 | 1,248
Property, plant and equipment | 13 | 2,939 | 2,892
Right-of-use assets | 14 | 644 | 652
Impairment charges |  |  |
Intangible assets | 12 | 5 | —
Property, plant and equipment a | 13 | 43 | 108
Right-of-use assets b | 14 | 2 | (1)
Total depreciation and amortisation before specific items |  | 4,933 | 4,899
Impairment charges classified as specific items | 9 |  |
Intangible assets c |  | 2 | 488
Property, plant and equipment a |  | 29 | —
Right-of-use assets |  | 14 | 11
Total depreciation and amortisation |  | 4,978 | 5,398

a Impairment of network infrastructure, other asset s and AUC in FY25, and network infrastructure and engineering stores in FY24, see note 13. Impairment classified as a specific item
relates to our Portfolio Businesses, details in note 9 .
b FY24 impairment charge reflects a n et reversal of im pairment on properties reoccupied subsequent to initial impairment.
c FY24 impairment c harge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 12.
Who are our key management personnel and how are they compensated?
Key management personnel comprise Executive and Non-Executive Directors and members of the BT Group plc Executive Committee as
well as the directors of the Company. It is the BT Group plc Executive Committee which has responsibility for planning, directing and
controlling the activities of the group. .
Compensation of key management personnel is shown in the table below:

Year ended 31 March | 2025 | 2024
£m | £m
Short-term employee benefits | 17.9 | 18.0
Post employment benefits a | 0.7 | 0.8
Share-based payments | 8.7 | 8.7
Termination benefits | 0.2 | —
| 27.5 | 27.5

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.
K ey management personnel are compensated solely in the form of cash and share-based payments. During FY25, no key management
personnel (FY24: 2) exercised saveshare options, see note 19 .
Restatement of operating costs
Employee pension contributions
During the year to 31 March 2025, we have rolled out a new payroll system. As part of the implementation of the new system, we identified
that employee pension contributions that should have been included as part of gross wages and salaries were deducted from that
category and mapped to employer pension costs.
In the year to 31 March 2024 an amount of £224m representing employee pension contributions for the period, which are not a cost of the
Group, was incorrectly deducted from wages and salaries in the income statement and added to the amount disclosed as the Group’s
other pension cost. There was no effect on total staff costs. Comparatives have been restated.
Reclassification of sales commissions to wages and salaries
As part of an exercise to review cost categories for internal and external reporting we have revisited our classifications for sales
commissions. Commissions paid to employees are now included within wages and salaries. Sales commissions paid to employees were
previously mapped to the 'sales commissions’ category but should have been included within staff costs. We have renamed the ‘sales
commissions’ category in the operating cost note to ‘external sales commissions’ to clarify the content of this line.
Wages and salaries of £130m for the year to 31 March 2024 were included in ‘sales commissions’. We have adjusted the comparative
amounts for the year ended 31 March 2024 to show this amount in wages and salaries.
Other reclassifications between cost categories
During the year to 31 March 2025, following completion of finance system transformation, we have more granular information with which
to better align cost allocations with our accounting policies. As a result of this, we have identified certain reclassifications across our
operating cost categories to the costs reported in the year to 31 March 2024.
In particular:
– Equipment costs of £137m have been reclassified from provision and installation costs to product costs to reflect our policy of reporting
customer equipment costs within product costs.
– Network solution costs of £215m to support our products have been reclassified from product costs to network operating costs to
reflect the nature of the costs being incurred, being costs to develop network solutions to support our products.
52
Notes to the consolidated financial statements continued
6. Operating costs continued
The impact of the above restatement on the prior year operating costs not e is p resented in the table below:

| Year ended 31 March
| 2024 (Reported) | Restatement | 2024 (Restated)
| £m | £m
Operating costs by nature |  |  |
Staff costs: |  |  |
Wages and salaries | 3,838 | 354 | 4,192
Social security costs | 425 | — | 425
Other pension costs | 582 | (224) | 358
Share-based payment expense | 68 | — | 68
Total staff costs | 4,913 | 130 | 5,043
Capitalised direct labour | (1,432) | — | (1,432)
Net staff costs | 3,481 | 130 | 3,611
Indirect labour costs | 1,228 | — | 1,228
Capitalised indirect labour | (772) | — | (772)
Net indirect labour costs | 456 | — | 456
Net labour costs | 3,937 | 130 | 4,067
Product costs | 3,527 | (78) | 3,449
External sales commissions | 636 | (130) | 506
Payments to telecommunications operators | 1,227 | — | 1,227
Property and energy costs | 1,338 | — | 1,338
Network operating and IT costs | 930 | 215 | 1,145
Provision and installation | 515 | (137) | 378
Marketing and sales | 367 | — | 367
Net impairment losses on trade receivables and contract assets | 165 | — | 165
Other operating costs | 329 | — | 329
Other operating income | (238) | — | (238)
Depreciation and amortisation, including impairment charges | 4,899 | — | 4,899
Total operating costs before specific items | 17,632 | — | 17,632
Specific items (note 9) | 949 | — | 949
Total operating costs | 18,581 | — | 18,581

7. Employees

| 2025 | 2024
Number of employees in the group | Average a ’000 | Average b FTE ’000 | Year end b FTE ’000 | Average a ’000 | Average b FTE ’000 | Year end b FTE ’000
UK | 70.8 | 68.3 | 64.5 | 77.3 | 74.9 | 71.4
Non-UK | 20.7 | 20.7 | 20.8 | 20.1 | 20.0 | 20.3
Total employees | 91.5 | 89.0 | 85.3 | 97.4 | 94.9 | 91.7
Consumer | 17.8 | 15.7 | 16.2 | 18.1 | 16.3 | 15.8
Business | 22.2 | 22.0 | 21.0 | 23.6 | 23.3 | 22.6
Openreach | 30.6 | 30.5 | 27.8 | 35.1 | 34.9 | 32.8
Other | 20.9 | 20.8 | 20.3 | 20.6 | 20.4 | 20.5
Total employees | 91.5 | 89.0 | 85.3 | 97.4 | 94.9 | 91.7

a Average reflecting monthly average headcount.
b Average reflecting the full-time equivalent of full- and part-time employees, excluding subcontract labour. There were 31.0k FTE agency and subcontract labour at the FY25 year-
end (FY24: 28.4k).
53
Notes to the consolidated financial statements continued
8. Audit, audit related and other non-audit services
The following fees were paid or are payable to the company’s auditors, KPMG LLP and other firms in the KPMG n etwork.

| 2025 | 2024
Year ended 31 March | £000 | £000
Fees payable to the company’s auditors and its associates for: |  |
Audit services a |  |
The audit of the parent company and the consolidated financial statements | 16,332 | 14,409
The audit of the company’s subsidiaries | 5,962 | 6,276
| 22,294 | 20,685
Audit related assurance services b | 2,185 | 2,487
Other non-audit services | 3 | 33
Total services | 24,482 | 23,205

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. These fees are exclusive of the audit fees relating to the ultimate parent and immediate parent.
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’s regulatory financial statements and providing comfort letters for bond issuances.
Fees payable to auditors other than KPMG for audits of certain overseas subsidiaries were £174,000 (FY24 : £164,000).
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 FY25 KPMG LLP received total fees from the BT Pension Scheme of £2.3 m
(FY24: £1.9m) in respect of the following services:

| 2025 | 2024
Year ended 31 March | £000 | £000
Audit of financial statements of associates | 2,093 | 1,767
Audit-related assurance services | 128 | 26
Other non-audit services | 32 | 74
Total services | 2,253 | 1,867

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’s results in this way is relevant to an understanding of the group’s financial performance as specific items are those that in management’s judgement need to be disclosed by virtue of their size, nature or incidence. This presentation is consistent with the way that financial performance is measured by management and reported to the BT Group plc Board and the BT Group plc 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, disposals of businesses and investments, impairment on remeasurement of the disposal groups to held for sale, impairment of goodwill, impairment charges in our portfolio businesses, charges or credits relating to retrospective regulatory matters, property rationalisation programmes, out of period balance sheet adjustments, 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 22 for further detail. |

54
Notes to the consolidated financial statements continued
9. Specific items continued

| 2025 | 2024
Year ended 31 March | £m | £m
Revenue |  |
Retrospective regulatory matters | 12 | 38
Specific revenue | 12 | 38
Operating costs |  |
Restructuring charges | 448 | 388
Sports JV – related items | 119 | 32
Other divestment-related items | 19 | (22)
Retrospective regulatory matters | (7) | 18
Historical property-related provisions | — | 34
Out of period adjustments | 32 | —
Impairment loss on remeasurement of disposal groups | 116 | —
Specific operating costs before depreciation and amortisation | 727 | 450
Impairment charges in our Portfolio Businesses | 45 | —
Impairment charges due to property rationalisation | — | 11
Impairment of goodwill | — | 488
Specific operating costs | 772 | 949
Specific operating loss | 784 | 987
Net finance expense |  |
Interest expense on retirement benefit obligation | 197 | 121
Specific net finance expense | 197 | 121
Net specific items charge before tax | 981 | 1,108
Taxation |  |
Tax credit on specific items above | (200) | (145)
| (200) | (145)
Net specific items charge after tax | 781 | 963

Retrospective regulatory matters
We recognised net £5m impact in relation to historical regulatory
matters, with £12m charges recognised in revenue offset by credits
of £7m within operating costs ( FY24: net charge of £56m). These
items represent movements in provisions relating to various
matters.
Restructuring charges
We have incurred charges of £448m ( FY24: £388m) 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 £423m (FY24: £348m).
FY25 was the final year of the five-year transformation programme
which was announced in May 2020 and ran until the end of March
2025. A new programme of a further targeted £3bn gross
annualised c ost savings, with a total cost to achieve of £1bn, was
announced in May 2024 which will run until the end of FY29. The
benefits and costs of the final FY25 year of the previous May 2020
programme have been absorbed into the new programme. In FY25
we achieved an estimated £0.9bn of gross annualised cost savings
at a cost to achieve of £0.4bn. The total expected cash costs to
achieve is £1bn, of this we have incurred £0.4bn to date.
We do not consider the estimated restructuring costs to achieve of
£1bn referenced here to constitute a sufficiently-detailed formal
announcement of a restructuring programme such that would
trigger a provision under IAS 37. Costs are provided for when the
IAS 37 recognition criteria are met.
Sport JV-related items
We have recorded a net fair value loss of £75m (FY24:22m) on the
A and C preference shares held in the Sports JV (see note 22) and
an impairment loss of £44m in respect of Group’s equity interest in
the Sports JV. In FY24 £10m of additional net costs relating to the
transaction.
Other divestment-related items
We recognised a £19m charge (FY24: £22m credit) relating to
costs associated with ongoing divestment activities as we progress
towards becoming fully UK focused.
Historical property-related provisions
In FY24 we rec ognised a provision of £34m as a specific item in
relation to the cost of re mediating and rectifying asbestos related
p roperty issues where we have a present obligation to do this.
Out of period adjustments
We have recognised £32m related to under accrual of historical
costs, which came to light following a commercial settlement of
certain aged balances within a sub-unit of our Business CFU. This
has been recognised as specific due to the nature and incidence of
this adjustment. The correction of aged balances, which do not
relate to the current or prior year, would skew the results of the
Business CFU.
I mpairment loss on remeasurement of disposal groups
In our Business CFU, during FY25, we recognised an impairment
charge of £116m for the remeasurement of the disposal groups.
Assets classified as held for sale under IFRS 5 are measured at the
lower of their carrying amount and fair value less costs to sell,
resulting in an impairment loss (see note 20).
Impairment charges in our Portfolio Businesses
We have recognised an impairment of £45m of non-current assets
following a review of businesses within our Portfolio channel which
sits within the Business CFU.
Impairment charges due to property rationalisation
During FY24, we recognised an impairment charge as specific of
£11m, in relation to property rationalisation programmes. No
impairment was recognised in FY25.
55
Notes to the consolidated financial statements continued
9. Specific items continued
Impairment of goodwill
During FY24, we recognised an impairment charge of £488m in
respect of goodwill allocated to our Business cash generating unit.
See note 12 for more details.
Interest expense on retirement benefit obligation
During the year we incurred £197m (FY24: £121m) of interest costs
in relation to our defined benefit pension obligations.
Tax on specific items
A tax credit of £200m was recognised in relation to specific items
(FY24: £145m).
10.Taxation

| 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’s 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. 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. 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 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 68% by value of the provisions is under active tax authority examination and are therefore likely to be re-estimated or resolved in the coming 12 months. £96m (FY24: £112m) is included in current tax liabilities or offset against current tax assets where netting is appropriate. We are subject to regular tax authority review, and, under a downside case an additional amount of £135m could be required to be paid. This amount is not provided as we don’t 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 assessment 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’s income tax assets and liabilities is disclosed on the group balance sheet. The value of the group’s deferred tax assets and liabilities is disclosed below. |

Analysis of our taxation expense for the year

| 2025 | 2024
Year ended 31 March | £m | £m
United Kingdom |  |
Corporation tax at 25% (FY24: 25%) | (17) | (10)
Adjustments in respect of earlier years | 10 | —
Non-UK taxation |  |
Current tax a | (71) | (77)
Adjustments in respect of earlier years | (6) | (10)
Total current taxation (expense) | (84) | (97)
Deferred taxation |  |
Origination and reversal of temporary differences | (238) | (280)
Adjustments in respect of earlier years | 42 | 46
Total deferred taxation credit (expense) | (196) | (234)
Total taxation (expense) | (280) | (331)

a Includes a current tax expense related to Pillar Two top-up tax of £3m (FY24: N/A).
56
Notes to the consolidated financial statements continued
10. Taxation continued
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:

| 2025 | 2024
Year ended 31 March | £m | £m
Profit before taxation | 2,061 | 1,897
Expected taxation expense at UK rate of 25% (FY24: 25%) | (515) | (474)
Effects of: |  |
(Higher)/lower taxes on non-UK profits | 18 | 25
Net permanent differences between tax and accounting a | 155 | 63
Adjustments in respect of earlier years b | 46 | 40
Prior year non-UK losses used against current year profits | 9 | 10
Non-UK losses not recognised c | 7 | 5
Total taxation credit (expense) | (280) | (331)
Exclude specific items (note 9) | (200) | (145)
Total taxation expense before specific items | (480) | (476)

a Includes income that is not taxable or UK income taxable at a different rate including the UK patent box incentive of £55m (FY24: £60m) and group relief received for nil payment of
£183m (FY24: £177m), and expenses for which no tax relief is received including a loss on goodwill impairment of £nil (FY24: £122m).
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

| 2025 | 2024
Year ended 31 March | Tax credit (expense) £m | Tax credit (expense) £m
Taxation on items that will not be reclassified to the income statement |  |
Pension remeasurements | (22) | 600
Tax on items that have been or may be reclassified subsequently to the income statement |  |
Exchange differences on translation of foreign operations | 3 | 9
Fair value movements on cash flow hedges |  |
– net fair value gains or (losses) | (59) | 69
– recognised in income and expense | — | —
Total tax recognised in other comprehensive income | (78) | 678
Current tax credit a | 10 | —
Deferred tax (expense) credit | (88) | 678
Total tax recognised in other comprehensive income | (78) | 678

a Includes £6m (FY24: nil) relating to cash contributions made to reduce retirement benefit obligations.
Tax credit (expense) recognised directly in equity

| 2025 | 2024
Year ended 31 March | £m | £m
Tax credit (expense) relating to share-based payments | 18 | (12)

57
Notes to the consolidated financial statements continued
10. Taxation continued
Deferred taxation

| Fixed asset temporary differences | Retirement benefit obligations a | Share- based payments | Tax losses | Other | Jurisdictional offset | Total
| £m | £m | £m | £m | £m | £m | £m
At 1 April 2023 | 3,799 | (626) | (40) | (2,194) | (28) | — | 911
Expense (credit) recognised in the income statement | 782 | (17) | 2 | (454) | (79) | — | 234
Expense (credit) recognised in other comprehensive income | — | (325) | — | (266) | (87) | — | (678)
Expense (credit) recognised in equity | — | — | 12 | — | — | — | 12
Exchange differences | — | — | — | 3 | 3 | — | 6
At 31 March 2024 | 4,581 | (968) | (26) | (2,911) | (191) | — | 485
Non-current |  |  |  |  |  |  |
Deferred tax asset | — | (968) | (26) | (2,911) | (191) | 3,048 | (1,048)
Deferred tax liability | 4,581 | — | — | — | — | (3,048) | 1,533
At 31 March 2024 | 4,581 | (968) | (26) | (2,911) | (191) | — | 485
Expense (credit) recognised in the income statement | 194 | (42) | (6) | 118 | (68) | — | 196
Expense (credit) recognised in other comprehensive income | — | 128 | — | (98) | 58 | — | 88
Expense (credit) recognised in equity | — | — | (18) | — | — | — | (18)
Exchange differences | 3 | — | — | 3 | 1 | — | 7
At 31 March 2025 | 4,778 | (882) | (50) | (2,888) | (200) | — | 758
Non-current |  |  |  |  |  |  |
Deferred tax asset | — | (882) | (50) | (2,888) | (200) | 3,061 | (959)
Deferred tax liability | 4,778 | — | — | — | — | (3,061) | 1,717
At 31 March 2025 | 4,778 | (882) | (50) | (2,888) | (200) | — | 758

a Includes a deferred tax asset of £nil (FY24: £nil) 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 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 FY25.
The enhanced and accelerated tax deductions arising under the Government’s super-deduction regime for qualifying capital spend
during FY22 and FY23, together with full expensing for F Y24 and FY25, a nd pension deficit contribution deductions, result in c. £11.3bn of
tax losses expected to be carried forward from FY25, to be utilised against future UK taxable profits. These are represented by a net
c.£2.8b n deferred tax asset which is disclosed within the £2,888 m 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 is applicable from
1 April 2024. 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 is 25%, and the group’s 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 2025 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets
were recognised amounting to £3.5bn (FY24: £3.7bn). 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 2025 | £m | Expiry
Restricted losses |  |
Europe | 1 | 2026 - 2039
Americas | 325 | 2026 - 2039
Other | 2 | 2026 - 2034
Total restricted losses | 328 |
Unrestricted operating losses | 3,007 | No expiry
Other temporary differences | 201 | No expiry
Total | 3,536 |

At 31 March 2025 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to
£16.8bn (FY24: £16.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to
be remote.
At 31 March 2025 the undistributed earnings of non-UK subsidiaries were £2.5bn (FY24: £2.6bn). 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 £44m (FY24: £44m) would arise if these
earnings were to be repatriated to the UK.
58
Notes to the consolidated financial statements continued
11. Dividends
What dividends have been paid?
A dividend of £780 m was paid to the parent company, BT Group Investments Ltd (FY24: £850m). The directors recommend payment of a
final dividend in respect of FY25 of £1,500 m (FY24: £780 m).
12. Intangible 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’s 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 – 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’s 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’s 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: |
| – Computer software | 2 to 10 years |
| – Telecommunications licences | 2 to 20 years |
| – 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. |

59
Notes to the consolidated financial statements continued
12. Intangible assets continued

| Goodwill | Customer relationships and brands a | Telecoms licences and other b | Internally developed software c | Purchased software c | Total
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
At 1 April 2023 | 7,963 | 3,383 | 3,491 | 5,727 | 1,294 | 21,858
Additions | — | — | — | 732 | 206 | 938
Disposals and adjustments d | (4) | (1) | (12) | (671) | 298 | (390)
Transfers | — | — | — | 217 | (95) | 122
Exchange differences | (29) | — | (1) | (1) | (5) | (36)
At 31 March 2024 | 7,930 | 3,382 | 3,478 | 6,004 | 1,698 | 22,492
Additions | — | — | — | 775 | 223 | 998
Disposals and adjustments d | — | — | 6 | (753) | (121) | (868)
Transfers f | — | — | — | 124 | (197) | (73)
Transfer to assets held for sale e | (99) | — | (43) | — | (83) | (225)
Exchange differences | (33) | — | (1) | — | (4) | (38)
At 31 March 2025 | 7,798 | 3,382 | 3,440 | 6,150 | 1,516 | 22,286
Accumulated amortisation |  |  |  |  |  |
At 1 April 2023 | — | 2,700 | 1,095 | 3,747 | 621 | 8,163
Amortisation charge for the year | — | 231 | 185 | 762 | 70 | 1,248
Impairment | 488 | — | — | — | — | 488
Disposals and adjustments d | — | — | (13) | (462) | 96 | (379)
Transfers | — | — | — | (41) | 90 | 49
Exchange differences | — | — | (1) | — | (4) | (5)
At 31 March 2024 | 488 | 2,931 | 1,266 | 4,006 | 873 | 9,564
Amortisation charge for the year | — | 227 | 186 | 790 | 97 | 1,300
Impairment | — | — | — | 6 | 1 | 7
Disposals and adjustments d | — | — | 8 | (749) | (125) | (866)
Transfers f | — | — | — | 3 | (32) | (29)
Transfer to assets held for sale e | — | — | (42) | — | (77) | (119)
Exchange differences | — | — | (1) | — | (3) | (4)
At 31 March 2025 | 488 | 3,158 | 1,417 | 4,056 | 734 | 9,853
Carrying amount |  |  |  |  |  |
At 31 March 2024 | 7,442 | 451 | 2,212 | 1,998 | 825 | 12,928
At 31 March 2025 | 7,310 | 224 | 2,023 | 2,094 | 782 | 12,433

a Customer relationships and brands relate to separately identifiable intangible assets recognised on acquisition of EE.
b Telecoms licences and other primarily represents spectrum licences. These include 2100 MHz licence with book value of £543m (FY24: £593m), 1800 MHz with book value of
£498m (FY24: £544m), 700Mhz with book value of £251m (FY24: £266m), 3400 MHz with book value of £210m ( FY24 : £226m) and 2600 MHz with book value of £164m (FY24:
£185m). Spectrum licences are being amortised over a period between 14 and 20 years.
c Includes a carrying amount of £506m (FY24: £623m) in respect of assets under construction, which are not yet amortised.
d Disposals and adjustments include the removal of assets fro m the group’s fixed asset registers following disposals and the identification of fully amortised assets (including £0.7bn in
FY25 (FY24: £0.3bn) through operation of the group’s annual asset verification exercise).
e For a breakdown of assets held for sale see note 20.
f During FY25, assets with cost of £73m and accumulated depreciation of £29m were transferred from intangible assets to property, plant and equipment following review of asset
registers. During FY24, assets with a cost of £122m and accumulated depreciation of £49m were transferred from property, plant and equipment to intangible assets.
60
Notes to the consolidated financial statements continued
12. Intangible assets continued
Impairment of goodwill

| Material accounting policies that apply to impairment of goodwill Goodwill arising on the acquisition of a business is measured at cost less accumulated impairment losses. Goodwill is tested annually for impairment. For impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows that are largely independent of the cash inflows of other assets or cash-generating units (CGUs). Goodwill is allocated to CGUs that are expected to benefit from the synergies of the 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 recoverable amounts of the CGUs to which goodwill is allocated is determined based on fair value less costs of disposal (FVLCD), which is higher than its value in use (VIU). An impairment loss is recognised in profit or loss and presented as a specific item (note 9) if the carrying amount of CGU exceeds its recoverable amount. |

| 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. The outcome of this assessment affects the allocation of goodwill and impairment test for the CGU to which goodwill is allocated. This involves consideration of how our core assets are operated and whether these generate independent cash inflows. There were two CGUs to which goodwill was allocated during the prior year - Consumer and Business CGUs, aligning with the corresponding CFUs and reportable segments. Focusing our strategy on the UK market, we are exploring options to optimise our international operations, resulting in the identification of two CGUs within the Business segment. They consist of the UK-focused operation (“UK Business CGU”) and certain international operations (collectively “International Business CGU”) which individually represent the smallest group of assets that generate cash inflows that are largely independent of the cash inflows of other assets or CGUs. |
| Estimating recoverable amount The outcome of the impairment test of goodwill of UK Business CGU is subject to significant estimation uncertainty, as the calculation of the recoverable amount and resultant headroom is sensitive to the underlying assumptions used in the discounted cash flow (DCF) model, which include future projections of operating cash flows and selections of discount rate and terminal growth rate, in combination. Operating cash flow The financial plan on which the DCF is based on is underpinned by various granular assumptions on operating cash flows, which collectively roll up to the projected Adjusted EBITDA over the forecast period. We consider that each of these granular assumptions do not give rise to significant estimation uncertainty that would result in a material change to the outcome of the impairment test of UK Business CGU. Projected Adjusted EBITDA CAGR, which is expressed as compound annual growth rate of projected Adjusted EBITDA within the 5-year forecast period, is considered as the most representative metric for the underlying assumptions on an aggregated level that gives the most meaningful sensitivity information. Costs of disposal is not a key assumption that is sensitive to the recoverable amount. Terminal growth rate Long-term compound annual growth rates may be higher or lower than management’s estimate due to market-specific factors including inflation expectations, the regulatory environment and competition intensity. Discount rate The discount rate used is adjusted for the risk specific to the asset for which the future cash flow estimates have not been adjusted. The discount rate could vary from management's estimate due to fluctuations in market conditions, which impact underlying assumptions such as the risk-free rate, equity market risk premium, asset beta, and leverage ratios. |

61
Notes to the consolidated financial statements continued
12. Intangible assets continued
Cash-generating units
The carrying amount of goodwill allocated to CGUs is shown below:

|  |  | Business |  |
| Consumer | Legacy Business | UK Business | International Business | Total
| £m | £m | £m | £m | £m
1 April 2023 | 3,874 | 4,089 | — | — | 7,963
Acquisitions and disposals | — | (4) | — | — | (4)
Exchange differences | — | (29) | — | — | (29)
Impairment | — | (488) | — | — | (488)
31 March 2024 | 3,874 | 3,568 | — | — | 7,442
Transfer to assets held for sale | — | (99) | — | — | (99)
Exchange differences | — | (33) | — | — | (33)
Reallocation of goodwill | — | (3,436) | 2,966 | 470 | —
31 March 2025 | 3,874 | — | 2,966 | 470 | 7,310

As noted, in addition to Consumer CGU, we have identified two CGUs to which goodwill is allocated within the Business segment at the
end of the year. They consist of the UK-focused operation (“UK Business CGU”) and certain international operations (collectively
“International Business CGU”) which individually represent the smallest group of assets that generate cash inflows that are largely
independent of the cash inflows of other assets or CGUs. Goodwill has been allocated between the UK Business and International Business
CGUs on a relative fair value basis, as this was deemed to best reflect the goodwill associated to the reorganised units.
The impairment test
The Group’s impairment test compares the carrying value of each CGU with its recoverable amount. For FY25, this has been deemed
equal to FVLCD.
The fair value is determined using nominal cash flow projections derived from financial plans approved by the BT Group plc Board
covering a five-year period. They reflect management’s expectations of revenue, EBITDA growth, capital expenditure, working capital,
net savings from uncommitted restructuring (i.e., the group wide transformation programme announced in May 2024) and other
operating cash flows, based on past experience and future expectations of business performance, further adjusted for market participant’s
view. Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates. Forecasting risks are reflected in the cash
flows. These cash flows are discounted to their present value using a pre-tax nominal discount rate. Costs of disposals are based on
management's estimate.
The FVLCD is categorised as level 3 in its entirety under the fair value hierarchy.
In FY24, our recoverable amounts of Consumer CGU and Business CGU were based on VIU, which exclude the net savings from
uncommitted restructuring.
As at 31 March 2025, the estimated recoverable amount of each CGU exceeded its respective carrying value (FY24: £488m impairment
recognised).
Key assumptions
Key assumptions used in determining the discounted cash flow forecasts for Consumer, UK Business and International Business CGUs are
summarised as follows:

Key assumptions | Approach to determine
Projected Adjusted EBITDA | Adjusted EBITDA is defined as the profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post-tax profits or losses of associates and BT Group plc Board. The forecasts reflect past experience, and the trends and maturity of the industry that we operate in. Net savings from uncommitted restructuring are included in the projected Adjusted EBITDA in FY25; however were excluded in calculating the VIU in FY24 in line with IAS 36 requirements.
Discount rate | 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’s weighted average cost of capital are primarily benchmarked to externally available data and reflect the impact of those risks not already considered within cash flows, such as the risk-free rate, equity market risk premium, asset beta, and leverage ratios.
Long-term growth rate | 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 business and market. The growth rates have been benchmarked against external data for the relevant markets and analysts’ expectations. None of the growth rates applied exceed the expected average long-term growth rates for those markets or sectors.

62
Notes to the consolidated financial statements continued
12. Intangible assets continued
The discount rates and long-term growth rates used in the impairment test for Consumer, UK Business and International Business CGUs
are disclosed in accordance with IAS 36 as follows.

| 2025 | 2024
| Consumer | UK Business | International Business | Consumer | Legacy Business
Pre-tax discount rate | 9.35% | 9.35% | 10.98% | 9.25% | 9.27%
Long-term growth rate | 1.0% | 1.0% | 0.0% | 1.0% | 0.7%

Sensitivity analysis
The impairment testing as described is reliant on the accuracy of management’s forecasts and the assumptions that underlie them, and on
the selection of the discount and growth rates to be applied.
For the Consumer and International Business CGUs, no reasonably possible change in key assumptions indicated an impairment would
arise.
In light of the level of headroom (c.£0.9bn) and significance of estimation uncertainty for the UK Business CGU, we considered the
following reasonably possible scenarios. For changes in key assumptions in isolation, the impact on headroom is shown below. No
impairment arises from these sensitivities:

| Impact on headroom on UK Business
In £m | Low scenario | High scenario
Projected Adjusted EBITDA CAGR a -/+1.0% | (727) | 754
Pre-tax discount rate +/-0.5% | (419) | 473
Long-term growth rate -/+1.0% | (604) | 769

a Pr ojected Adjusted EBITDA CAGR is expressed as the compound annual growth rates of projected Adjusted EBITDA within the 5-year forecast period of the cash flow forecasts
which are used to determine the recoverable amounts of the CGUs.
We set out below the changes to key assumptions, in isolation, that would be required to to trigger an impairment loss being recognised:

Increase/(decrease) by | Change required for carrying value to equal recoverable amount
UK Business
Projected adjusted EBITDA CAGR | (1.2)%
Pre-tax discount rate | 1.1%
Long-term growth rate | (1.5)%

We also considered a reasonably possible combined sensitivity, reducing the projected adjusted EBITDA CAGR by 1.0% and long-term
growth rate by 1.0%. This would result in a material impairment of £405m.
63
Notes to the consolidated financial statements continued
13. Property, plant and equipment continued

| 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’s 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 |  |
| – Freehold buildings | 14 to 50 years |
| – Short-term leasehold improvements | Shorter of 10 years or lease term |
| – Leasehold land and buildings | Shorter of unexpired portion of lease or 40 years |
| Network infrastructure |  |
| Transmission equipment |  |
| – Duct | 40 years |
| – Cable | 3 to 25 years |
| – Fibre | 5 to 20 years |
| Exchange equipment | 2 to 13 years |
| Other network equipment | 2 to 40 years |
| Other assets |  |
| – Motor vehicles | 2 to 10 years |
| – 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 12. Building Digital UK (BDUK) government grants We receive government grants in relation to BDUK and other rural superfast broadband contracts including Reaching 100% (R100). 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 16. |

64
Notes to the consolidated financial statements continued
13. Property, plant and equipment continued

| Land and buildings | Network infrastructure | Other a | Assets under construction f | Total
Held by Openreach | Held by other units
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
At 1 April 2023 | 1,165 | 33,775 | 25,289 | 1,622 | 1,594 | 63,445
Additions b | 6 | 1 | 73 | 12 | 3,850 | 3,942
Transfers | 85 | 2,562 | 906 | 279 | (3,954) | (122)
Disposals and adjustments c | (95) | (208) | (2,198) | (162) | 137 | (2,526)
Transfer to assets held for sale d | — | — | — | — | — | —
Exchange differences | (11) | — | (66) | (5) | (1) | (83)
At 31 March 2024 | 1,150 | 36,130 | 24,004 | 1,746 | 1,626 | 64,656
Additions b | 2 | 1 | 43 | 10 | 3,803 | 3,859
Transfers e | 123 | 3,021 | 990 | 318 | (4,379) | 73
Disposals and adjustments c | (70) | (191) | (1,725) | (40) | (37) | (2,063)
Transfer to assets held for sale d | (151) | — | (610) | (81) | (2) | (844)
Exchange differences | (8) | — | (45) | (4) | (1) | (58)
At 31 March 2025 | 1,046 | 38,961 | 22,657 | 1,949 | 1,010 | 65,623
Accumulated depreciation |  |  |  |  |  |
At 1 April 2023 | 716 | 18,998 | 20,854 | 1,210 | — | 41,778
Depreciation charge for the year | 55 | 1,489 | 1,085 | 263 | — | 2,892
Impairment | — | 78 | — | — | 30 | 108
Transfers | — | — | (49) | — | — | (49)
Disposals and adjustments c | (30) | (134) | (2,222) | (174) | — | (2,560)
Transfer to assets held for sale d | — | — | — | — | — | —
Exchange differences | (9) | — | (61) | (5) | — | (75)
At 31 March 2024 | 732 | 20,431 | 19,607 | 1,294 | 30 | 42,094
Depreciation charge for the year | 68 | 1,554 | 1,050 | 267 | — | 2,939
Impairment | 1 | — | 44 | 10 | 17 | 72
Transfers e | — | — | 29 | — | — | 29
Disposals and adjustments c | (42) | (182) | (1,836) | (32) | (4) | (2,096)
Transfer to assets held for sale d | (118) | — | (563) | (63) | — | (744)
Exchange differences | (6) | — | (41) | (4) | — | (51)
At 31 March 2025 | 635 | 21,803 | 18,290 | 1,472 | 43 | 42,243
Carrying amount |  |  |  |  |  |
At 31 March 2024 | 418 | 15,699 | 4,397 | 452 | 1,596 | 22,562
At 31 March 2025 | 411 | 17,158 | 4,367 | 477 | 967 | 23,380

a'Other' comprises plant and equipment, motor vehicles, computers, and fixtures and fitting s.
b Net of government grants of £103m (FY24: £91m).
c Disposals and adjustments include the removal of assets from the group’s fixed asset registers following disposals and the identification of fully depreciated assets (inclu ding £1.5b n
in FY25 (FY24: £2.2bn) through operation of the group’s 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
capitalise d.
d Transfers to assets held for sale are detailed in note 20.
e During FY25, assets with cost of £73m and accumulated depreciation of £29m were transferred from intangible assets to property, plant and equipment following review of asset
registers. During FY24, assets with a cost of £122m and accumulated depreciation of £49m were transferred from property, plant and equipment to intangible assets.
f Assets under construction (AUC) cost includes a carrying amount of £73m (Gross cost of £108m and accumulated depreciation of £35 m) at 31 March 2025 and £91m (Gross costs
£121m and accumulated depreciation of £30m) at 31 March 2024 which relates to engineering stores. In the FY24 Annual R eport, part of the cost was previously presented
separately from the cost of AUC in the above table. During the year, this has been included in the cost of Assets under construction by including the Gross cost of £92m as at 1 April
2023.
65
Notes to the consolidated financial statements continued
13. Property, plant and equipment continued
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:
– £17,158m (FY24: £15,699m) of the carrying amount of the network infrastructure asset class represents Openreach’s 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.
– Plant and equipment, within o ther assets, includes devices with a carrying amount of £238m (FY24: £160m) 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’s overall asset base.
The carrying amount of land and buildings, including leasehold improvements, comprised:

| 2025 | 2024
At 31 March | £m | £m
Freehold | 67 | 71
Leasehold | 344 | 347
Total land and buildings | 411 | 418

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’s share of assets controlled by its joint operation MBNL is
£791m (FY24: £759m) and is recorded within network infrastructure.
BT Tower
In FY24 we agreed to the sale of the BT Tower for headline consideration of £275m, as part of the simplification of the group’s property
portfolio. The carrying amount of the BT Tower ass et is £2.9m as at 31 March 2025 (FY24: £4m). The asset continues not 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 transfer of legal title is anticipated to take place in a three year window between 2028 and 2031 subject to achieving vacant
possession of the site. BT continues to enjoy exclusive rights to occupy and access the site prior to completion.The useful economic lives of
assets associated with the BT Tower have been reassessed in light of the anticipated disposal in FY30.
14 Leases

| 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: – Th e 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. – The lessee (either the group, or the group’s customers) has the right to obtain substantially all the economic benefits from the use of the asset throughout the period of use; and – 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 th e 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. |

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Notes to the consolidated financial statements continued
14. Leases continued

| 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’s 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: – fixed pa yments – variable lease payments that depend on an index or rate – amounts expected to be paid under residual value guarantees – the exercise price of any purchase options that we are reasonably certain to exercise – payments due over optional renewal periods where we are reasonably certain to renew – penal ties 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’s 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 13 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 £5,000. 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 ‘other revenue’. |

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Notes to the consolidated financial statements continued
14. Leases continued

| 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: – Our anticipated operational, retail and office property requirements in the mid and long term. – The availability of suitable alternative sites. – 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. – Significant investments in leased sites, in particular those with useful lives beyond the lease term. – Costs associated with extending lease arrangements including rent increases during secondary lease periods. Our definition of ‘reasonable certainty’, 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 ‘evergreen’) 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. |
| Significant 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. |

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Notes to the consolidated financial statements continued
14. Leases continued

| 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’t be reasonably certain that we wouldn’t 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 2025: – Exercising the purchase option would lead to an estimated increase in the lease liability and right-of-use asset of between £3bn and £5bn. – 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 £1bn and £2bn. 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’s long-term network requirements, and the relatively high threshold that ‘reasonably 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: – Long-term economic incentives to remain on sites including existing capital improvements; – 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 – 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. |

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Notes to the consolidated financial statements continued
14. Leases continued
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.

| Land and buildings | Network infrastructure | Motor vehicles | Other | Total
| £m | £m | £m | £m | £m
At 1 April 2023 | 3,496 | 95 | 385 | 5 | 3,981
Additions a | 271 | 40 | 179 | 1 | 491
Depreciation charge for the year | (493) | (33) | (121) | (5) | (652)
Impairment b | (10) | — | — | — | (10)
Other movements c | (108) | (4) | (56) | — | (168)
At 31 March 2024 | 3,156 | 98 | 387 | 1 | 3,642
Additions a | 362 | 25 | 121 | 2 | 510
Depreciation charge for the year | (490) | (30) | (122) | (2) | (644)
Impairment b | (2) | (14) | — | — | (16)
Transfer to assets held for sale | (32) | (44) | (1) | — | (77)
Other movements c | (78) | (2) | (6) | (1) | (87)
At 31 March 2025 | 2,916 | 33 | 379 | — | 3,328

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 relate primarily to a review of businesses within our Portfolio channel, see note 9.
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:

| 2025 | 2024
Year ended 31 March | £m | £m
Current | 705 | 766
Non-current | 3,866 | 4,189
| 4,571 | 4,955

The following amounts relating to the group’s obligations under lease arrangements were recognised in the income statement in the year:
– Interest expense of £135m (FY24: £134m) on lease liabilities.
– Variable lease payments of £38m (FY24: £39m) 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 £874m (FY24: £882m). Our cash flow statement and normalised free cash flow
reconciliation present £739m (FY24: £748m) of the cash outflow as relating to the principal element of lease liability payments, with the
remaining balance of £135m (FY24: £134m) presented within interest paid.
Note 26 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.
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Notes to the consolidated financial statements continued
14. Leases continued
Other information relating to leases
At 31 March 2025 the group was committed to future minimum lease payments o f £229m (FY24: £55 m) 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 revenue (note 5)a | To be recognised as other operating income (note 6) | Total
At 31 March 2025 | £m | £m | £m
Less than one year | 435 | 19 | 454
One to two years | 100 | 12 | 112
Two to three years | 30 | 10 | 40
Three to four years | 2 | 3 | 5
Four to five years | 2 | 2 | 4
More than five years | — | 5 | 5
Total undiscounted lease payments | 569 | 51 | 620
At 31 March 2024 |  |  |
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 | — | 5 | 5
Total undiscounted lease payments | 608 | 56 | 664

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 term of one year or less.
15. 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 ‘Financial instruments’ and the related cash flows received are presented as cash flows from operating activities. Where a portfolio of trade receivables are either sold or held to collect the contractual cash flows, they are recorded at fair value through other comprehensive income. 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. |

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Notes to the consolidated financial statements continued
15. Trade and other receivables continued

| 2025 | 2024
At 31 March | £m | £m
Current |  |
Trade receivables | 1,490 | 1,899
Amounts owed by ultimate parent company | 10 | 25
Prepayments | 613 | 586
Accrued income | 173 | 162
Deferred contract costs | 415 | 383
Finance lease receivables | 29 | 31
Amounts due from joint ventures | 46 | 163
Other assets a | 343 | 340
| 3,119 | 3,589
Non-current |  |
Deferred contract costs | 291 | 229
Prepayments | 120 | 106
Finance lease receivables | 91 | 107
Other assets a | 153 | 199
| 655 | 641

a Other assets comprise Flex Pay receivables and £35 m (FY24: £57 m) of deferred cash consideration mainly relating to the disposal of BT Sport.
Amounts due from joint ventures relates to a sterling Revolving Credit Facility (RCF) provided to the Sports JV, see note 29. The expected
loss provision is immaterial.
T he company has a facility with a third party for the sale of mobile handset receivables. Under this facility, the Group transfers substantially
all of the risks and rewards to the third party, and therefore has derecognised the transferred receivables. During FY25, we received net
cash flows of £420m (FY24 : £76m) through this facility. The cashflows are included within the 'Decrease (increase) in trade and other
receivables' line in the Statement of Cash Flows. The net impact of working capital programmes on normalised free cash flow is set out in
the Groups Alternative Performance Measures.
Trade receivables are stated after deducting allowances for doubtful debts, as follows:

| 2025 | 2024
| £m | £m
At 1 April | 169 | 168
Expense | 124 | 129
Utilised | (122) | (127)
Exchange differences | — | (1)
At 31 March | 171 | 169

The expected credit loss allowance for trade receivables was determined as follows:

|  | Trade receivables specifically impaired net of provision | Past due and not specifically impaired |
| Not past due | Between 0 and 3 months | Between 3 and 6 months | Between 6 and 12 months | Over 12 months | Total
At 31 March | £m | £m | £m | £m | £m | £m | £m
2025 |  |  |  |  |  |  |
Expected loss rate % | 1% | 22% | 7% | 38% | 53% | 85% | 10%
Gross carrying amount | 919 | 94 | 467 | 61 | 53 | 67 | 1,661
Loss allowance | (7) | (21) | (35) | (23) | (28) | (57) | (171)
Net carrying amount | 912 | 73 | 432 | 38 | 25 | 10 | 1,490
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

Trade receivables not past due and accrued income are analysed below by CFU.

| Trade receivables not past due |  | Accrued income
| 2025 | 2024 |  | 2025 | 2024
At 31 March | £m | £m |  | £m | £m
Consumer | 276 | 375 |  | 76 | 81
Business | 629 | 900 |  | 2 | 4
Openreach | 5 | 161 |  | 89 | 75
Other | 2 | 1 |  | 6 | 2
Total | 912 | 1,437 |  | 173 | 162

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.
72
Notes to the consolidated financial statements continued
15. Trade and other receivables continued
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 connection costs | Deferred contract acquisition costs – commissions | Deferred contract acquisition costs – dealer incentives | Transition and transformation | Total
| £m | £m | £m | £m | £m
At 1 April 2023 | 22 | 131 | 330 | 97 | 580
Additions | 10 | 134 | 315 | 57 | 516
Amortisation | (11) | (118) | (292) | (56) | (477)
Impairment | — | (2) | (7) | — | (9)
Other | (8) | 2 | 3 | 5 | 2
At 31 March 2024 | 13 | 147 | 349 | 103 | 612
Additions | 41 | 128 | 365 | 55 | 589
Amortisation | (15) | (121) | (303) | (49) | (488)
Impairment | (1) | (4) | (3) | — | (8)
Other | 21 | (2) | — | (18) | 1
At 31 March 2025 | 59 | 148 | 408 | 91 | 706

73
Notes to the consolidated financial statements continued
16. Trade and other payables

| 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 programmes as described below. 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 2025 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. |

| 2025 | 2024
At 31 March | £m | £m
Current |  |
Trade payables | 3,727 | 4,119
Amounts owed to ultimate parent company | 12 | 36
Other taxation and social security | 484 | 544
Minimum guarantee with sports joint venture a | 201 | 194
Accrued expenses | 519 | 543
Deferred income b | 418 | 355
Other payables c | 512 | 532
| 5,873 | 6,323
Non-current |  |
Minimum guarantee with sports joint venture a | 87 | 271
Deferred income b | 164 | 342
Other payables | 25 | 24
| 276 | 637

a Liability recognised on the minimum revenue guarantee in BT’s distribution agreement with the sports joint venture (see note 22). Movement in the liability driven by £187m
payments made during the year less £10m finance cost recorded from unwinding the impact of discounting.
b Deferred income includes £98m (FY24: £106m) current and £44m (FY24: £122m) no n-current liabilities re lating 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 £5 1m (FY24 : £41m) relating to an estimate of customer refunds, refer to note 5.
Supplier Financing Arrangements
BT Group entered into arrangements with the following terms and conditions:
1. The group participates in a supply chain financing programme using bills of exchange, where the trade payables have been factored.
Under the arrangement, a finance institution agrees to pay amounts to a participating supplier in respect of invoices owed by the group
and receives settlement from the group at a later date. The facility size of £350m remains consistent with prior periods. This
programme is used with a limited number of suppliers with short payment terms. The principal purpose of this programme is to extend
their payment terms to BT standard payment terms.
2. In a separate supply chain financing programme , the group allows suppliers the opportunity to receive funding earlier than the invoice
due date to assist the supplier with their cash flows. The principal purpose of this programme is to allow suppliers to receive payment
earlier than BTs standard payment terms.

| Bills of Exchange | Other programme
| 31 March 2025 | 1 April 2024 | 31 March 2025 | 1 April 2024
| £m | £m | £m | £m
Carrying amount of liabilities that are part of supplier financing arrangements
Presented within trade and other payables d | — | 101 | 990 | 785
– Of which suppliers have received payment from finance providers | — | 101 | 223 | 224
Range of payment due dates
Liabilities which have received payment from finance providers | up to 121 days after invoice date | up to 114 days after invoice date | up to 135 days after invoice date | up to 135 days after invoice date
Comparable trade payables | up to 120 days after invoice date | up to 120 days after invoice date | up to 135 days after invoice date | up to 135 days after invoice date
Non-cash changes
There were no material business combinations or foreign exchange differences in either period or foreign exchange differences or other non- cash transfers relating to the carrying amount of liabilities subject to supplier finance arrangements.

d Other programme balances disclosed relate to invoices that are eligible for the supplier financing arrangement.
74
Notes to the consolidated financial statements continued
17. Provisions & contingent liabilities
Our provisions principally relate to obligations arising from property rationalisation 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 ‘contingent 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’s 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’s 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’s 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.The range of estimation uncertainty for each class of provision is not material. |

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Notes to the consolidated financial statements continued
17. Provisions & contingent liabilities continued

| Property | Network ARO | Regulatory | Litigation | Third party claims | Other | Total
| £m | £m | £m | £m | £m | £m | £m
At 1 April 2023 | 142 | 93 | 68 | 44 | 187 | 64 | 598
Additions | 42 | 42 | 72 | — | 73 | 9 | 238
Unwind of discount | 1 | 4 | — | — | 1 | — | 6
Utilised | (15) | (6) | (37) | (1) | (75) | (3) | (137)
Released | (17) | — | (17) | — | (32) | (3) | (69)
Transfers a | 4 | — | — | — | — | 10 | 14
Exchange differences | (1) | — | — | — | — | — | (1)
At 31 March 2024 | 156 | 133 | 86 | 43 | 154 | 77 | 649
Additions | 10 | 37 | 37 | 11 | 65 | 39 | 199
Unwind of discount | 1 | 8 | — | — | 1 | — | 10
Utilised | (38) | (2) | (45) | (8) | (43) | (2) | (138)
Released | (7) | — | (34) | (3) | (31) | (4) | (79)
Transfers | — | — | — | — | — | — | —
Exchange differences | (1) | — | — | — | — | — | (1)
At 31 March 2025 | 121 | 176 | 44 | 43 | 146 | 110 | 640

a Transfers in FY24 relate to the reclassification of balances previously presented in other payables (note 16) following reassessment of the level of certainty over the timing and
amount of any outflow of resources.

| 2025 | 2024
At 31 March | £m | £m
Analysed as: |  |
Current | 258 | 238
Non-current | 382 | 411
| 640 | 649

Contingent liabilities and legal proceedings
In the ordinary course of business, we are periodically n otified 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 – 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 £608m (inclusive of compound interest) or £589m (inclusive of simple
interest) alleging anti-competitive behaviour through excessive pricing by BT to customers with certain residential landline services, so-
called “stand-alone fixed voice servic es". Following certification of the claim to proceed to trial as an opt-out claim, Justin Le Patourel
amended his claim seeking £1,307m (inclusive of compound interest) or £1,278m (inclusive of simple interest). A hearing took place
between January and March 2024. In December 2024, the Competition Appeal Tribunal dismissed the claim, finding that there was no
abuse of a dominance position because BT’s prices were not unfair. In January 2025, Justin Le Patourel applied to the Competition Appeal
Tribunal for permission to appeal the judgment. In February 2025 the Competition Appeal Tribunal refused permission to appeal. In
March 2025 Justin Le Patourel applied to the Court of Appeal for permission to appeal the judgment. We await the decision of the Court
of Appeal as to whether to grant permission to appeal. 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 – 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 £1.1bn (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 £3.285bn (inclusive of simple interest). Class actions
must be certified by the Competition Appeal Tribunal at a Collective Proceedings Order (CPO) hearing before proceeding to a
substantive trial. A certification hearing took place in early April 2025 at which BT and the other proposed defendants contested
certifications and applied to limit the time period of the claim. If the class action is certified the substantive trial will not conclude during
FY26. BT intends to defend itself vigorously. 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.
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 (‘parte civile’) – a procedural
feature of the Italian criminal law system. These claims were directed at certain individual defendants (which include former BT/ BT Italia
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Notes to the consolidated financial statements continued
17. Provisions & contingent liabilities continued
employees). Those parties successfully joined BT Italia as a respondent to their civil claims (‘responsabile civile’) on the basis that it is
vicariously responsible for the individuals’ 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’s 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’s 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’s 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’s claim in its
entirety. Phones 4U has subsequently appealed that judgment to the Court of Appeal and a hearing is scheduled for late May 2025 with a
judgment expected some months later. 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 March 2025, the
CMA issued its final decision finding that BT and other sports broadcasters broke competition law through exchange of competitive
sensitive information. It imposed a fine on BT of £1,738,453. BT agreed to settle the investigation with the CMA and accept liability for the
infringement.
18. Retirement benefit plans
18.1 Background to BT Group’s pension plans
The group has both Defined Benefit and Defined Contribution retirement benefit plans. The group’s main plans are in the UK:
– The BT Pension Scheme (BTPS) is the largest UK Defined Benefit plan sponsored by BT Group, constituting 97% of BT Group’s IAS 19
liability. It was closed to future benefit accrual in 2018 for the majority of members.
– 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’s IAS 19
liability.
– 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 61,000 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’s fund, which is based on contributions paid and the performance of each individual’s chosen investments. The group has no exposure to investment and other experience risks (including longevity). |

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Notes to the consolidated financial statements continued
18. Retirement benefit plans continued
18.2 Background to BTPS
BTPS has 48,000 deferred members and 212,000 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).
Members currently receiving pension benefits make up 77% of the liabilities and 82% of the membe rship by num ber. The charts below
illustrate forecast benefits (projected using the IAS 19 assumptions) payable from the BTPS and the IAS 19 liabilities.
The estimated duration of the BTPS liabilities, which is an indicator of the weighted average term of the discounted future payments, is 10
years (FY24: 11 years) using the IAS 19 assumptions. The duration is sensitive to the assumptions and has reduced mainly due to the
increase in discount rate over the year.
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’s key powers include setting the investment strategy of the 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.

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’s views on a range of areas, including:
I. the balance between returns and 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. The Trustee adopts a defensive approach to investing growth assets, using hedges
where appropriate. Defensive approaches are designed to result in assets outperforming benchmarks in bear markets and
78
Notes to the consolidated financial statements continued
18. Retirement benefit plans continued
underperforming benchmarks in bull markets. This improves the stability of the funding position, and therefore the deficit contributions
that may be required from BT Group. The sensitivity chart on page 86 simplistically illustrates how the use of some of these derivatives
adjusts outcomes for the BTPS.
While the use of derivatives reduces funding risk it also increases the BTPS’s liquidity requirements which is then factored into the overall
investment strategy. The BTPS manages its liquidity risk by monitoring potential and actual liquidity requirements on an ongoing basis,
ensuring that sufficient cash resources can be made available for its projected cash requirements. At 31 March 2025 (and 31 March
2024), the BTPS held more liquidity than the minimum levels required by the Bank of England and the Pensions Regulator.
18.3 Overview of the Group’s financial statements under IAS 19
Group income statement
The expense arising from the group’s retirement benefit arrangements as recognised in the group income statement is shown below.

| 2025 | 2024
|  | (Restated)b
Year ended 31 March | £m | £m
Recognised in the income statement before specific items (note 6) |  |
Current service cost: |  |
– DB plans a | 12 | 12
– DC plans | 305 | 317
DB administration expenses and PPF levy | 16 | 29
Subtotal | 333 | 358
Recognised in the income statement as specific items (note 9) |  |
Interest on pensions deficit | 197 | 121
Subtotal | 197 | 121
Total recognised in the income statement | 530 | 479

a FY25 allows for an estimated £3m impact of the NTL Pension Scheme vs Virgin Media Ltd court ruling on pensions in 2024. We have identified that the trustees of our UK DB plans
have available the relevant certification for historic scheme amendments in respect of 99.99% of our IAS 19 liability. Investigation in respect of the remaining liabilities is expected to
conclude in FY26 H1.
b Comparatives for the year to 31 March 2024 have been restated for employee pensions costs reclassification to wages and salaries (see Note 6 for further details).
Group balance sheet
The net defined benefit liability in respect of DB 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.

| 2025 |  | 2024
At 31 March | Assets £m | Liabilities £m | Surplus/ (Deficit)a £m |  | Assets £m | Liabilities £m | Surplus/ (Deficit)a £m
Recognised in non-current liabilities |  |  |  |  |  |  |
BTPS | 31,683 | (35,690) | (4,007) |  | 35,391 | (40,038) | (4,647)
Unfunded plans | — | (82) | (82) |  | — | (88) | (88)
Other funded plans | 18 | (159) | (141) |  | 33 | (180) | (147)
Sub-total | 31,701 | (35,931) | (4,230) |  | 35,424 | (40,306) | (4,882)
Recognised in non-current assets |  |  |  |  |  |  |
EEPS | 732 | (601) | 131 |  | 769 | (710) | 59
Other funded plans a | 400 | (389) | 11 |  | 361 | (350) | 11
Sub-total | 1,132 | (990) | 142 |  | 1,130 | (1,060) | 70
Total | 32,833 | (36,921) | (4,088) |  | 36,554 | (41,366) | (4,812)

a Figures shown net of a £3m (FY24: £4m) adjustment in relation to IFRIC 14 (i.e. an adjustment made to reflect surplus that cannot be recovered). 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’s defined benefit plan balance sheet position net of tax.

| 2025 | 2024
At 31 March | £m | £m
Balance sheet position (net of tax) |  |
Surplus/(deficit) | (4,088) | (4,812)
Deferred tax asset (note 10) | 882 | 968
Total (net of tax) | (3,206) | (3,844)

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Notes to the consolidated financial statements continued
18. Retirement benefit plans continued
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
| £m | £m | £m
At 31 March 2023 | 39,808 | (42,895) | (3,087)
Service cost (including administration expenses and PPF levy) | (29) | (12) | (41)
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) | — | (3,140)
Actuarial gain arising from changes in financial assumptions | — | 563 | 563
Actuarial gain arising from changes in demographic assumptions | — | 652 | 652
Actuarial (loss) arising from experience adjustments a | — | (519) | (519)
Included in the group statement of comprehensive income |  |  | (2,444)
Regular contributions by employer | 55 | — | 55
Deficit contributions by employer | 823 | — | 823
Included in the group cash flow statement |  |  | 878
Contributions by employees | — | — | —
Benefits paid | (2,840) | 2,840 | —
Other (e.g. foreign exchange) | (9) | 12 | 3
Other movements |  |  | 3
At 31 March 2024 | 36,554 | (41,366) | (4,812)
Service cost (including administration expenses and PPF levy) | (16) | (12) | (28)
Interest on net pension deficit | 1,752 | (1,949) | (197)
Included in the group income statement |  |  | (225)
Return on plan assets below the amount included in the group income statement | (3,423) | — | (3,423)
Actuarial gain arising from changes in financial assumptions | — | 3,734 | 3,734
Actuarial (loss) arising from changes in demographic assumptions | — | (88) | (88)
Actuarial (loss) arising from experience adjustments | — | (135) | (135)
Included in the group statement of comprehensive income |  |  | 88
Regular contributions by employer | 53 | — | 53
Deficit contributions by employer | 803 | — | 803
Included in the group cash flow statement |  |  | 856
Contributions by employees | — | — | —
Benefits paid | (2,883) | 2,883 | —
Other (e.g. foreign exchange) | (7) | 12 | 5
Other movements |  |  | 5
At 31 March 2025 | 32,833 | (36,921) | (4,088)

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.
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Notes to the consolidated financial statements continued
18. Retirement benefit plans continued
18.4 Asset valuations for IAS 19
B TPS 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 approach for main quoted investments – Equities listed on recognised stock exchanges are valued at closing bid prices. – Bonds that are regularly traded are valued using broker quotes, based on sale/bid prices. – Exchange traded derivative contracts are valued based on closing bid prices. Valuation approach for 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. – 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. – Property investments are valued on the basis of open market value by an independent valuer using Royal Institution of Chartered Surveyors (RICS) guidelines. The significant assumptions used in the valuation are rental yields and occupancy rates. – 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. – 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. – 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. – 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. – The BTPS increased its longevity hedging through two transactions entered into over the financial year. Through the four longevity swaps held, 54% of the scheme’s liabilities are hedged against longevity risk. The longevity swaps are valued by discounting the fixed cash flows payable by the BTPS, and the floating cash flows payable by the insurers (consistent with the approach used to value the collateral, which vary by contract). 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 mortality assumptions. £6.3bn 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: £0.6bn investment grade credit and bond-like assets; £0.9bn mature infrastructure; £2.6bn private equity and credit; £2.0bn secure income assets; and £0.2bn property. These valuations have been adjusted for cash movements between the previous valuation date and 31 March 2025. The valuation approach and inputs for these investments would only be updated where there were indications of significant movements, for example implied by public market indicators. No such adjustment was required at 31 March 2025. Asset-Backed Funding (ABF) arrangement The ABF arrangement, issued to the BTPS in May 2021, has a fair value of £1.1bn at 31 March 2025 (FY24: £1.2bn) 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’s IAS 19 net defined benefit liability as it is a non-transferable financial instrument issued by the group. |
| 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’s 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 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. Our accounting assessment concluded that the co-investment vehicle is not controlled by BT Group (as defined by IFRS 10), and therefore should not be consolidated. The main factors that support this judgement are: – Payments made by BT Group into the co-investment vehicle are invested as if part of the overall BTPS investment strategy (as set by the BTPS Trustee after consultation with BT Group), with BTPS contractually able to impose onerous penalties on BT Group if they are not, including losing the ability to benefit from the co-investment vehicle; – Future returns of surplus to BT Group from the co-investment vehicle are dependent on the overall returns of the BTPS determined by the investment strategy set by the BTPS Trustee with the majority of assets sat outside the co-investment vehicle; and – The Trustee can, acting prudently but reasonably, decide to defer or reduce payments to BT Group from the co-investment vehicle. There is significant judgement involved in the assessment of determining the relevant activities that significantly affect BT Group’s returns, and whether BT Group has power over these activities. The interest in the co-investment vehicle held by the BTPS can only be used to fund employee benefits, and the assets in the vehicle are protected from BT Group’s other creditors in the event of insolvency. We therefore conclude that the BTPS’s interest in the co-investment vehicle meets the definition of a plan asset. |

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Notes to the consolidated financial statements continued
18. Retirement benefit plans continued
BTPS IAS 19 assets
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).

|  | 2025 |  | 2024 (re-presented)
|  | Total assets a | of which quoted |  | Total assets a | of which quoted
At 31 March |  | £bn | £bn |  | £bn | £bn
Growth |  |  |  |  |  |
Equities | Global Developed | 2.5 | 1.1 |  | 2.4 | 1.1
Private equity and credit |  | 3.0 | — |  | 3.1 | —
Property | UK | 2.1 | — |  | 2.3 | —
| Overseas | 0.4 | — |  | 0.6 | —
Other growth assets | Absolute Return b | 0.6 | — |  | 1.2 | —
| Mature Infrastructure | 0.9 | — |  | 1.0 | —
Liability matching |  |  |  |  |  |
Government bonds c | UK | 13.0 | 13.0 |  | 14.6 | 14.5
Investment grade credit | Global | 10.1 | 8.3 |  | 10.3 | 7.7
Secure income assets d |  | 5.2 | 0.6 |  | 5.1 | 0.4
Bond like e |  | 1.6 | — |  | 1.3 | —
Cash, derivatives and other |  |  |  |  |  |
Cash balances |  | 0.7 |  |  | 0.8 |
Financial derivative contracts f |  | (5.3) |  |  | (4.9) |
Longevity insurance contract g |  | (0.9) |  |  | (0.9) |
Other h |  | (2.2) |  |  | (1.5) |
Total i |  | 31.7 | 23.0 |  | 35.4 | 23.7

a At 31 March 2025, the BTPS held nil (FY24: nil) equity issued by the group and £1.5bn (FY24: £1.7bn) of bonds issued by the group. The FY25 asset categories have been updated to
better reflect underlying portfolio characteristics as the BTPS matures. FY24 assets have been re-presented to be consistent with the current presentation. £4.2bn of 'Non-Core
Credit' assets disclosed in FY24 are now split across 'Private equity and credit' (£1.8bn), 'Secure income assets' (£1.1bn) and 'Bond-like' (£1.3bn). Equities have been combined into
'Global Developed' for FY25.
b This allocation seeks to generate a positive return in all market conditions.
c Around 85% (FY24: 77%) of these are index-linked gilts with the remainder in conventional gilts.
d 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.
e 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.
f Predominantly relate to interest rate and inflation swaps and further information on the economic exposure of these derivatives is provided in the sensitivities chart below.
g The value reflects experience to date on the contracts from higher than expected deaths; this has partly offset a corresponding reduction in BTPS’s liabilities over the same period.
h Other balances comprise net amounts receivable/(payable) by the BTPS, including balances due to investment counterparties relating to repurchase agreements.
i Of which held in the co-investment vehicle: £0.7bn (FY24: £0.1bn).
Further information on the BTPS assets is available in the BTPS annual report.
18.5 Liability valuations for IAS 19

| Critical accounting estimates and significant judgements made when valuing our pension liabilities The measurement of 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 inflation is higher or lower than expected. The liabilities are the present value of the future expected benefit payments. |

BTPS IAS 19 Liabilities
What are the most significant assumptions, and how have they been set?
The most significant assumptions used to calculate the IAS 19 liabilities for the BTPS are summarised in the table below.

At 31 March | 2025 | 2024
Discount rate | 5.75% | 4.90%
Inflation – RPI | 3.10% | 3.25%
Inflation – CPI | 2.60% | 2.80%
Life expectancy – male aged 60 in lower pension bracket | 25.0 years | 24.9 years
Life expectancy – male aged 60 in higher pension bracket | 26.7 years | 26.7 years
Life expectancy – female aged 60 | 27.6 years | 27.4 years
Average additional life expectancy for a male member retiring at age 60 in 10 years’ time | 0.5 years | 0.4 years

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18. Retirement benefit plans continued
While the financial assumptions used for other schemes are 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 £-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 inflation | RPI inflation expectations are calculated by applying the projected BTPS benefit cash flows to an inflation curve derived 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 0.4% p.a. thereafter (FY24: 0.2% and 0.3% respectively). 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 1.1% lower than RPI inflation (FY24: 1.0%). RPI will be aligned with CPIH from 2030, and we assume a 0.1% (FY24: nil) gap between CPI and CPIH inflation. The change in inflation risk premium and expected difference between RPI and CPI for FY25 has reduced the BTPS liabilities by £0.3bn.
Pension increases | Under the BTPS rules, benefits increase prior to retirement primarily with reference to CPI capped at 5%, and the majority of 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: – the actual mortality experience of the BTPS pensioners, based on a formal review carried out for the 2023 triennial funding valuation; and – future improvements in longevity based on the CMI’s 2023 Mortality Projections model published by the UK actuarial profession. There continues to be significant uncertainty for future life expectancy assumptions following the Covid-19 pandemic. In setting our assumptions for future life expectancy, we have fully allowed for population mortality data from 2022 and 2023, but not data from 2020 and 2021 to exclude the impact of the pandemic. Allowing for the published 2023 CMI model has increased the BTPS liabilities by £0.1bn. We continue to assume mortality will improve in the long term by 1.0% per year.

18.6 Funding and Financial Support arrangements for the BTPS
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.
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18. Retirement benefit plans continued

| 30 June 2023 | 30 June 2020
| £bn | £bn
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 – RPI | 3.6% | 3.2%
Inflation – CPI | 3.2% | 2.4%
Life expectancy – male aged 60 in lower pension bracket | 25.5 years | 25.8 years
Life expectancy – male aged 60 in higher pension bracket | 27.2 years | 28.0 years
Life expectancy – female aged 60 | 28.0 years | 28.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years’ 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.
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 £3.7bn, down from £8.0bn at the 2020 funding valuation following £4.4bn of deficit contributions.
BT will pay £600m in each financial year until 31 March 2030, a final payment of £490m before 30 April 2030, and the £180m p.a.
payments due under the ABF arrangement agreed at the 2020 valuation.
No payments are currently payable under the future funding commitment (see page 84).
These payments are summarised in the table below.

Year to 31 March (£m) | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034
Payments from BT plc a | 600 b | 600 b | 600 b | 600 b | 600 b | 490 | — | — | —
Future funding commitment payments | — | — | — | — | — | — | — | — | —
Payments from ABF | 180 | 180 | 180 | 180 | 180 | 180 | 180 | 180 | 180
Total | 780 | 780 | 780 | 780 | 780 | 670 | 180 | 180 | 180

a Payments are due by 30 April each year.
b£10m is directly payable to the BTPS, and BT Group currently intends to pay the balance into the co-investment vehicle.
ABF
Under the ABF, £180m 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 £1.7bn, 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 £1.2bn at 31 March 2025 (FY24: £1.3bn). The fair value
of the ABF is £1.1bn at 31 March 2025 (FY24: £1.2bn). This value 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 and redemption income received on bonds held by the BTPS, 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’s 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 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.
Over the period, £0.6bn of contributions were paid into the co-investment vehicle, increasing its value to £0.7bn at 31 March 2025
(£0.1bn at 31 March 2024).
Our accounting assessment concluded that the co-investment vehicle is not controlled by BT Group (as defined by IFRS 10), and
therefore should not be consolidated. The main factors that support this judgement are:
– Payments made by BT Group into the co-investment vehicle are invested as if part of the overall BTPS investment strategy (as set by
the BTPS Trustee after consultation with BT Group), with BTPS contractually able to impose onerous penalties on BT Group if they are
not, including losing the ability to benefit from the co-investment vehicle;
– Future returns of surplus to BT Group from the co-investment vehicle are dependent on the overall returns of the BTPS determined by
the investment strategy set by the BTPS Trustee with the majority of assets sat outside the co-investment vehicle; and
– The Trustee can, acting prudently but reasonably, decide to defer or reduce payments to BT Group from the co-investment vehicle.
There is significant judgement involved in the assessment of determining the relevant activities that significantly affect BT Group’s
returns, and whether BT Group has power over these activities.
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18. Retirement benefit plans continued
The interest in the co-investment vehicle held by the BTPS can only be used to fund employee benefits, and the assets in the vehicle are
protected from BT Group’s other creditors in the event of insolvency. We therefore conclude that the BTPS’s interest in the co-
investment vehicle meets the definition of a plan asset.
If we had concluded that BT Group did control the co-investment vehicle, then instead of being included as a plan asset with movements
through other comprehensive income, the assets of the vehicle would be consolidated on BT Group’s balance sheet with movements
through the income statement.
Protections for BTPS (going concern)
BT Group has agreed to provide the Trustee with certain protections to 2035.

Feature | Detail
Future funding commitment | BT Group will provide additional contributions, of between £150m p.a. and £300m p.a., should the funding deficit fall 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 £1bn. 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 2024 assessment date, additional contributions were not triggered. The next test will be carried out as at 30 June 2025.
Shareholder distributions | BT Group will provide additional payments to the BTPS by the amount that shareholder distributions exceed a 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 30 September 2023 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: – it considers share buybacks for any purpose other than relating to employee share awards; – it considers making any shareholder distributions in any of the next three years if annual normalised free cash flow of the group is below £1bn in the year and distributions within the year would be in excess of 120% of the above threshold; or – it considers making a special dividend.
Material corporate events | In the event that BT Group generates net cash proceeds greater than a threshold from disposals (net of acquisitions) in any financial year, BT Group will make additional contributions to the BTPS. The threshold is £750m p.a. to 30 June 2026. The amount payable is one third of the total net cash proceeds.
BT Group will consult with the Trustee if: – it considers making acquisitions with a total cost of more than £1.0bn in any 12-month period; – it considers making any disposal of more than £1.0bn; – it considers making a Class 1 transaction which will have a material impact on the BTPS (acquisition or disposal); – it is likely to be subject to a takeover offer; or – there are any other corporate or third-party events which may have a materially detrimental impact on BT Group’s covenant t o the BTPS (in which case BT Group will use its best endeavours to agree appropriate mitigation). This obligation is ongoing until otherwise terminated.
Negative pledge | A negative pledge that future creditors will not be granted superior security to the BTPS in excess of £0.5bn, to cover any member of the BT Group. Business as usual financing arrangements are not included within the £0.5bn.

No additional contributions were triggered during FY25.
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 BTPS 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: – the Crown Guarantee covers BT plc’s 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 – the funding obligation to which the Crown Guarantee relates is measured with reference to BT plc’s 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 Fund (PPF) | Further protection is also provided by the PPF which is the fund responsible for paying compensation in respect of schemes where the employer becomes insolvent.

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18. Retirement benefit plans continued
18.7 Key risks to BT Group arising from the BTPS
Background
The BTPS Trustee has a detailed framework to manage the risks of running a large DB pension scheme. The key risks the group is exposed
to as a result of sponsoring the BTPS include:
– Funding and balance sheet risk – a large increase in our pension scheme obligations or under-performance of assets could lead to an
increased balance sheet and / or funding liability / deficit, resulting in additional contributions and/or potentially impacting our business
plans.
– Liquidity risk – where our schemes request us to provide funding earlier than planned to avoid being a forced seller of scheme assets at
depressed prices to fund member benefits. For example, 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.
– Legislative risk – changes in legislation or regulation could impact the value of the liabilities or assets.
Quantifying funding and balance sheet risk
The key drivers which could worsen the balance sheet position or increase contributions to our pension schemes are:
– Bond yields – a decrease in government bond yields (and therefore future expected interest rates) will increase BTPS liabilities,
although this will be predominantly offset by an increase in the value of bond-like assets and interest rate derivatives held by the BTPS
– Credit spreads – a fall in credit spreads will increase the IAS 19 liabilities (as the discount rate is linked to the yield on corporate bonds)
and a corresponding but smaller increase in both asset values and funding liabilities
– Inflation expectations – an increase in average inflation expectations over the lifetime of the plan will increase BTPS liabilities (as a
significant proportion of the benefits paid to members are linked to inflation). This will typically be offset by an increase in the value of
inflation-linked bond-like assets (e.g. index-linked gilts) and inflation derivatives held by the BTPS, except where inflation is above the
cap that applies to benefit increases or in deflationary environments
– Growth assets – a significant proportion of the BTPS assets are invested in growth assets, such as equities and property (30% as at 31
March 2025). The deficit could increase if these assets underperform the discount rate used to calculate the liabilities. The BTPS has
temporary hedges in place to partly offset the impact of a fall in equity markets, and adopts a diverse portfolio. A significant proportion
of the BTPS assets are invested in illiquid assets, such as property and infrastructure. Insufficient liquidity could result in the forced
selling of assets (at potentially depressed values) to meet benefit payments and/or collateral requirements
– Life expectancy – an increase in the life expectancy of members will result in benefits being paid out for longer, leading to an increase in
the IAS 19 and funding liabilities, although this will be partially offset by longevity insurance contracts the BTPS has in place
– Hedging mismatches – the BTPS uses highly correlated assets to hedge certain risks which cannot be hedged directly, for example:
hedging CPI-linked benefit increases using RPI-linked assets, as there is no deep market for CPI-linked assets. Mismatches between the
movement in the assets and the risks they are intended to hedge could increase the deficit. A 0.25% p.a. increase in CPI inflation
expectations before 2030 (with no corresponding change in RPI inflation expectations) would increase the IAS 19 deficit by c. £0.2bn as
at 31 March 2025.
– Member options – members have certain options before and at retirement to reshape their benefits. We make assumptions on the
take-up of these options based on historic scheme experience. Future experience differing from historic experience could lead to an
increase or decrease in the IAS 19 and funding liabilities.
The potential negative impact of these drivers is illustrated by the following scenarios. These have been assessed by BT Group’s
independent actuary as scenarios that might occur over the next year with a probability of 5%. The scenarios have been updated to reflect
market experience over the last year.

Scenario | 5% probability scenario
2025 | 2024
1. Fall in bond yields a | 1.2% | 1.2%
2. Increase in credit spreads b | 0.7% | 0.9%
3. Increase to average inflation expectations over the lifetime of the plan c | 1.1% | 1.1%
4. Fall in growth assets d | 20.0% | 15.0%
5. Increase to life expectancy | 1.1 years | 1.2 years

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 20% (FY24: 15%) fall in the aggregate value of the growth assets prior to temporary hedges held by the BTPS.
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18. Retirement benefit plans continued
Impact of illustrative scenarios which might occur over the next year with a probability of 5%
The sensitivities have been prepared using the same approach as FY24 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 FY24 is
due to a combination of: changes in the scenarios, changes in asset and liability values over the year, and changes in the BTPS’s
investment strategy in line with the agreed de-risking plan.
Considerations when using sensitivities
The impact shown under each scenario looks at each simplistic event in isolation and reflects the liabilities, assets and investment strategy
at 31 March 2025. In practice more complex events could arise throughout the year and further consideration should be given when using
the sensitivities for areas such as:
– Changes in the asset portfolio or hedges: the BTPS typically aims to hedge 90%-100% of interest rate and inflation risk (on a funding
measure) and the actual hedge ratio could vary over the year within this range.
– Credit mismatch: the IAS 19 liabilities are calculated using a discount rate set with reference to the yield on AA rated corporate bonds.
The corporate bonds held by the BTPS may have a different credit rating or duration to that of the discount rate.
– Use of market indices: movements in market indices may not provide an accurate representation of the performance of the BTPS assets
(given their bespoke nature) or changes in the liabilities (as these are calculated using scheme specific assumptions).
– Long term expectations moving differently to short term expectations: although the sensitivities illustrate a uniform change for both
short and long term expectations, in practice the change may not be uniform.
– Combination of different events: the effects are neither additive nor linear (e.g. doubling the change in bond yields assumed will not
double the impact).
We note that these limitations are also applicable to the funding position scenario analysis below.
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’s 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 out above on the 30 June 2024 funding position. Note that the funding sensitivities exclude the impact of
the two longevity hedges put in place after 30 June 2024, and the same limitations as outlined above apply to these sensitivities.
The figures shown in the graph apply to the BTPS assets and funding liabilities as at 30 June 2024; an increase in the assets or funding
liabilities will increase the impact of the scenarios shown.
18.8 Funding and Financial Support arrangements for the EEPS
A triennial valuation of the defined benefit section as at 31 December 2024 is currently underway. The previous triennial valuation was
performed as at 31 December 2021 and agreed in March 2023. This showed a funding deficit of £218m. The group is scheduled to
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Notes to the consolidated financial statements continued
18. Retirement benefit plans continued
contribute £1.7m each month until 31 July 2025 and a final payment of up to £80m by 31 March 2026. £20.0m (FY24: £31.7m) 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
and illiquid alternatives (20%), an absolute return portfolio (24%), and a liability-driven investment portfolio (31%).
19. Share-based payments

| Material accounting policies that apply to share-based payments BT Group plc operates 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)in BT Group plc. 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’s 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. |

| 2025 | 2024
Year ended 31 March | £m | £m
Employee saveshare plans | 7 | 13
Yourshare | 2 | 13
Executive share plans: |  |
Deferred Bonus Plan (DBP) | 8 | 8
Restricted Share Plan (RSP) | 42 | 34
| 59 | 68

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 has not operated since 2020.
Yourshare
In FY21 and FY22, all eligible employees of the group were awarded £500 of BT shares. The shares are held in trust for a minimum period
of three years, after which they are available to employees.
Deferred Bonus Plan (DBP)
Awards are granted annually to selected senior employees where a percentage of their bonus is deferred and awarded in shares in the
group. The shares are transferred to participants at the end of a specified period provided they continue to be employed by the group.
Dividends are reinvested in shares that are added to the relevant share awards.
Restricted Share Plan (RSP)
Awards are granted to selected employees. Shares in the group are transferred to participants at the end of a specified period provided
they continue to be employed by the group. Dividends are reinvested in shares that are added to the relevant share awards.
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Notes to the consolidated financial statements continued
19. Share-based payments continued
Employee Saveshare Plans
Movements in Employee Saveshare options are shown below.

| Number of share options |  | Weighted average exercise price
| 2025 | 2024 |  | 2025 | 2024
Year ended 31 March | millions | millions |  | pence | pence
Outstanding at 1 April | 156 | 269 |  | 96 | 102
Granted | — | — |  | — | —
Forfeited | (5) | (23) |  | 107 | 118
Exercised | (7) | (64) |  | 82 | 89
Expired | (26) | (26) |  | 161 | 151
Outstanding at 31 March | 118 | 156 |  | 82 | 96
Exercisable at 31 March | — | — |  | — | —

The weighted average share price for all options exercised during FY25 was 141 p (FY24: 118 p).
The following table summarises information relating to options outstanding and exercisable under Employee Saveshare plans at 31 March
2025.

Normal dates of vesting and exercise (based on calendar years) | Exercise price per share | Weighted average exercise price | Number of outstanding options millions | Weighted average remaining contractual life (months)
2025 | 82p | 82p | 118 | 10
Total |  | 82p | 118 | 10

Executive share plans
Movements in executive share plan awards are shown below:

| Number of shares (millions)
| DBP | RSP | Total
At 1 April 2023 | 20 | 73 | 93
Awards granted | 5 | 41 | 46
Awards vested | (8) | (26) | (34)
Awards lapsed | (1) | (8) | (9)
Dividend shares reinvested | 1 | 6 | 7
At 31 March 2024 | 17 | 86 | 103
Awards granted | 4 | 39 | 43
Awards vested | (5) | (18) | (23)
Awards lapsed | — | (10) | (10)
Dividend shares reinvested | 1 | 6 | 7
At 31 March 2025 | 17 | 103 | 120

Fair values
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 FY25 was 140 p (FY24: 135 p) and for RSP awards granted in FY25 was 140 p (FY24: 112 p).
20. A ssets & liabilities classified as held for sale

| Material accounting policies that apply to 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 ‘held for sale’ 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 or 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 ‘discontinued operations’. |

89
Notes to the consolidated financial statements continued
20. Assets & liabilities classified as held for sale continued

| Significant judgements in assessment of assets held for sale During FY25, the BT Group plc announced its intention to fully focus on UK connectivity and has initiated an active programme to explore options to optimise its non-core or global business. At 31 March 2025, management is committed to a plan to sell five separate businesses within our non-core or global business. The sale of these businesses is considered to be highly probable and they are expected to complete within a year. Accordingly, the associated assets and liabilities have been presented as held for sale at 31 March 2025. A description of these businesses is as follows: – We entered into agreement with Equinix to sell our datacentre business in Ireland for consideration of €59m (£49m). This disposal is expected to complete in FY26, subject to competition and regulatory clearance. – We entered into an agreement with Speed Fibre Group for the sale of BT Communications Ireland Ltd, our Irish wholesale and enterprise business, for consideration of €22m (£18m). The disposal is expected to be completed in FY26, subject to certain completion conditions including competition and regulatory approvals. – The proposed sale of our domestic operations in Italy, which includes fibre networks and datacentres, have commenced during FY25 and we considered the sale to be highly probable and expected to complete within a year at 31 March 2025 and as a result have presented the associated assets and liabilities as held for sale at 31 March 2025. Post year end, on 18 April 2025, BT have reached an agreement to sell this business to Retelit S.p.A. and the disposal is expected to complete in the second half of FY26, subject to competition and regulatory approvals, see note 31. – For the remaining two businesses, the sales are considered to be highly probable and expected to complete within a year. Accordingly, the assets and liabilities associated to these businesses have been presented as held for sale at 31 March 2025. |
| Impairment on remeasurement of disposal groups held for sale On classification of the disposal groups as held for sale, we remeasured the disposal groups to the lower of their carrying amount or fair value less costs of disposal. An impairment loss of £116m associated with the remeasurement of these disposal groups has been recognised, this is presented as a specific item, see note 9. The impairment loss has been applied to reduce the carrying amount of intangible assets, property, plant and equipment and right-of-use assets within the impacted disposal groups. |

The disposal groups held for sale comprised the following assets and liabilities:

| 2025
At 31 March | £m
Assets |
Intangible assets a | 94
Property, plant and equipment b | 40
Right-of-use assets b | 33
Trade and other receivables | 78
Assets held for sale | 245
Liabilities |
Trade and other payables | 100
Lease Liabilities <1yr | 81
Current tax liability | 4
Provisions | 3
Liabilities held for sale | 188

a Intangible assets of the disposal groups of £106m are presented as assets held for sale of which £12m has been impaired.
b Property, plant and equipment of £100m and right-of-use assets of £77m of the disposal groups are presented as assets held for sale above of which £60m and £44m, respectively,
have been impaired.
There were no assets or liabilities held for sale in FY24.
21. 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. They are remeasured 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. |

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Notes to the consolidated financial statements continued
21. Investments continued

| 2025 | 2024
At 31 March | £m | £m
Non-current assets |  |
Fair value through other comprehensive income | 17 | 23
Amounts owed by ultimate parent and parent company | 12,438 | 11,633
Fair value through profit or loss | — | 6
Total non-current asset investments | 12,455 | 11,662
Current assets |  |
Investments held at amortised cost | 2,631 | 2,366
Current asset investments | 2,631 | 2,366

Investments held at amortised cost relate to money market investments denominated in sterling of £2,615m (FY24: £2,355m), in euros of
£3m (FY24: £5m ) and US dollars of £13m (FY24: £6m). Within these amounts are investments in liquidity funds of £2,600m (FY24:
£1,815m), collateral paid on swaps of £20m (FY24: £40m), accrued interest on investments o f £11m (FY24: £11m) an d gilt repurchase
agreements £nil (FY24: £500m).
Fair value estimation

Fair value hierarchy | Level 1 | Level 2 | Level 3 | Total held at fair value
At 31 March 2025 | £m | £m | £m | £m
Non-current and current investments |  |  |  |
Fair value through other comprehensive income | — | — | 17 | 17
Fair value through profit or loss | — | — | — | —
Total | — | — | 17 | 17
At 31 March 2024 |  |  |  |
Non-current and current investments |  |  |  |
Fair value through other comprehensive income | — | — | 23 | 23
Fair value through profit or loss | 6 | — | — | 6
Total | 6 | — | 23 | 29

The three levels of valuation methodology used are:
Level 1 – uses quoted prices in active markets for identical assets or liabilities.
Level 2 – uses inputs for the asset or liability other than quoted prices that are observable either directly or indirectly.
Level 3 – uses inputs for the asset or liability that are not based on observable market data, such as internal models or other valuation
methods.
Level 3 balances consist of investments classified as fair value through other comprehensive income of £17m (FY24: £23m) 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. Additionally, this category also includes investments in
preference shares in Sport JV and power purchase agreements (PPAs and vPPAs), for further details see notes 22 and 26.
During the year there were no significant changes in the measurement and valuation techniques, or transfers between the levels of fair
value hierarchy.
22. Joint ventures and associates

| 2025 | 2024
At 31 March | £m | £m
Interest in joint ventures | 240 | 302
Interest in associates | 12 | 5
Total | 252 | 307

Share of post tax loss of associates and joint ventures included in the income statement of £8 m (FY24: £ 21 m loss) includes £11m loss
(FY24: £41m loss) relating to our sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) and £3m profit (FY24: £20m profit)
relating to our other joint ventures and associates. The Sports JV is the only material equity-accounted investment held by the group, see
below for further details.
Sports JV
I n FY23, the group formed a sports joint venture with WBD , known externally as TNT Sports, which combined BT Sport and WBD’s
Eurosport UK business. As part of the transaction, the group’s 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.
WBD have the option to acquire BT plc’s 50% interest in the Sports JV at specified points during the first four years of the Sports JV (Call
Option) from FY23. 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.
Key developments in the Sports JV during the year:
– Closure of the Eurosport brand, channels and streaming tier on discovery+ in the UK and Republic of Ireland i n February 2025, with
content being rationalised into TNT Sports service, which serves as a single premium sports proposition.
– A material customer contract was renewed, providing further revenue certainty in the medium term.
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Notes to the consolidated financial statements continued
22. Joint ventures and associates continued
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. Key factors relevant to our assessment: – 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. – Unequal cash distribution during the first four years of the JV due to the earn-out mechanism. – WBD’s call option to acquire BT’s 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. A key factor in our assessment of control during the year was WBD’s call option to acquire BT’s 50% interest in the Sports JV, which was active at a point during the year, but not at the period end. Determining whether the call option provided WBD a substantive right to unilaterally control the key decisions required judgement and consideration of a variety of factors, including whether there were any barriers to exercise. On balance of all factors considered, we assessed that BT’s joint control over the Sports JV still applied throughout the year. The alternative treatment of discontinuing equity accounting on the basis that joint control had been lost would not have had a material impact. |
| Measurement of BT’s equity interest in the Sports JV On initial recognition, the group valued its interest in the Sports JV based on the estimated fair value at exit. The investment is subsequently accounted for using the equity method, where the consolidated financial statements include the group’s share of the profit or loss and other comprehensive income of the Sports JV. It will be subject to impairment testing at each reporting period, with any impairment losses recognised through specific items. See below for assumptions made in estimating the fair value used in our impairment test. |
| Measurement of investment in A preference shares BT will receive an earn-out from the Sports JV (subject to liquidity and usual UK company law requirements). 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 fair value reflecting the present value of expected cash flows. Subsequent to the initial recognition, the group’s carried forward investment in A preference shares are remeasured to fair value at each reporting date. |
| Measurement of the minimum revenue guarantee in BT’s distribution agreement with the Sports JV BT plc entered into a distribution agreement with the Sports JV at formation to procure the sport content that is supplied to our broadband, TV and mobile customers. The agreement extends beyond 2030 and the first four years includes a minimum revenue guarantee of approximately £500m per annum, which runs to the end of July 2026. After this point it will change to a fully variable arrangement. BT’s obligation under the minimum revenue guarantee represents both a trading arrangement on market terms, and a financing arrangement for the off-market element of the revenue guarantee, which has been recognised as a financial liability initially recorded at fair value. The liability is subsequently measured at amortised cost and held within trade and other payables on the balance sheet (see note 16). T he carrying amount at 31 March 2025 was £288 m (FY24: £465m) after payments made to the Sports JV. |
| Accounting policies adopted by the Sports JV In order to recognise our share of the Sports JV’s results for our equity-accounted investment, we have prepared the Sports JV’s financial information for the year ended 31 March 2025 after making certain adjustments to comply with IFRS and align with accounting policy choices made by BT. The following were judgements made in the preparation of the Sports JV’s financial information: – 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. – Revenues from the minimum guarantee in the Sports JV’s 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 – this mirrors the accounting treatment applied by BT. – 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. – Hedge accounting should be applied on the Sports JV’s forward contracts with BT (see note 29) 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. – 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. |

92
Notes to the consolidated financial statements continued
22. Joint ventures and associates continued

| Key accounting estimates made in accounting for the Sports JV Valuation of investment in A preference shares The fair value recorded is supported by forecasted cash flows of the Sports JV and an internal valuation model with the following key assumptions: – Approximately 60% of revenues and 95% of costs during the remaining earn out period are contractually committed. – Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period. 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 – see note 21 for further details on the fair value hierarchy. Changes in key assumptions and inputs could result in changes in fair value. |
| Valuation of BT’s equity interest in the Sports JV For impairment test purposes, the group has estimated the fair value of equity interest in the Sports JV using the following key assumptions: – BT expect to realise its equity interest in the Sports JV through sale rather than ongoing value in use. – An earnings multiple has been applied to the expected EBITDA at exit which is identified from comparable peers and transactions in the premium sports subscription and broadcasting market. Changes in key assumptions could result in impairment losses. |

Ordinary equity shares
The following summarises the balances and movements of the ordinary equity interests in the Sports JV.

| 2025 | 2024
| £m | £m
Carrying amount at 1 April | 300 | 352
Share of total comprehensive loss for the year | (16) | (52)
Dividends during the year | (2) | —
Impairment loss for the year | (44) | —
Carrying amount at 31 March | 238 | 300

An impairment loss was recognised as at 31 March 2025 in respect of the Group’s equity interest in the Sports JV. The impairment arose
following a fair value assessment which indicated that the recoverable amount of the investment was lower than its carrying amount. The
impairment reflects revised expectations of the joint venture’s future performance and market conditions. Changes in key assumptions,
including EBITDA forecasts and market multiples, could result in further impairment losses or reversals in future periods.
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’s accounting policies and fair value adjustments.

| 2025 | 2024
Summarised statement of total comprehensive income for year ended 31 March | £m | £m
Revenue | 958 | 918
Loss for the year a | (22) | (82)
Other comprehensive loss | (11) | (22)
Total comprehensive loss b | (33) | (104)
| 2025 | 2024
Summarised balance sheet at 31 March | £m | £m
Current assets c | 800 | 863
Non-current assets d | 858 | 1,085
Current liabilities e | (435) | (413)
Non-current liabilities f | (308) | (575)
Net assets | 915 | 960
Attributable to fair value of BT’s A preference shares | (242) | (387)
BT’s share of residual net assets (50%) | 337 | 287
Proceeds from investment in preference shares in joint venture | (63) | —
Other fair value adjustments | 8 | 13
Impairment loss for the year | (44) | —
Carrying amount of interest in Sports JV | 238 | 300

a Includes amortisation of £52m (FY24: £27m) on acquired intangibles; net finance income of £7m (FY24: £5m); and tax income of £25m (FY24: £57m) driven by current tax charge of
£37m (FY24: £10m) offset by deferred tax credit of £62m (FY24: £67m).
b FY24 total comprehensive loss for the year includes a £25m credit as a result of finalising fair value adjustments that were provisional at the time of the formation of the JV.
c Includes cash and cash and cash equivalents of £10m (FY24: £11m).
d Includes goodwill and acquired intangibles of £616m (FY24: £668m).
e Includes current financial liabilities (excluding trade and other payables and provisions) of £(222)m (FY24: £(244)m) of which £(46)m (FY24: £(163)m) relates to the outstanding
liability on the RCF provided by BT (see note 29).
f Includes non-current financial liabilities (excluding trade and other payables and provisions) of £(92)m (FY24: £(305)m).
The Sports JV had a loss after tax for the year of £22m, after adjustments made to align with the group’s 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. Underlying trading before these adjustments was profitable. In addition, the Sports JV had other comprehensive
93
Notes to the consolidated financial statements continued
22. Joint ventures and associates continued
losses of £ 11 m relating to fair value movements on its foreign exchange hedging arrangement with the group (see note 26) that have
been designated as cash flow hedges.
Preference shares
In addition to BT’s 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.

| 2025 | 2024
At 31 March | £m | £m
Investment in A preference shares | 242 | 387
Investment in C preference shares | 153 | 146
Total | 395 | 533

A £ 138 m movement has been recorded in the group’s preference share investments driven by: (1) £63 m earn-out payment received
from the Sports JV and recorded as a repayment of our investment in A preference shares; and (2) net £75 m fair value loss, see below for
further details.
– A preference sh ares – a £82 m fair value loss has been recognised through specific items (see note 9), largely driven by a reduction in
revenue after a material customer contract was renewed at a lower than expected value, leading to lower cash available for distribution
under BT’s earn-out entitlement.
– C preference shares – BT’s return on the shares is driven by changes in the Sports JV’s sports rights portfolio which in turn is dependent
on changes in the wider sports rights market and the Sports JV’s financial performance and are therefore held as a financial asset at
FVTPL under IFRS 9. A £7 m fair value gain has been recognised through specific items (see note 9) largely driven by the effect of
discounting.
23. 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 24). |

| 2025 | 2024
At 31 March | £m | £m
Cash at bank and in hand | 134 | 327
Cash equivalents |  |
Bank deposits | 75 | 82
Total cash equivalents | 75 | 82
Total cash and cash equivalents | 209 | 409
Bank overdrafts (note 24) | (2) | (58)
Cash and cash equivalents per the cash flow statement | 207 | 351

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 £33m (FY24: £71m), of which £17m ( FY24: £14m ) was held in countries where local capital or exchange controls
currently prevent us from accessing cash balances. The remaining balance of £16m (FY24: £57m ) was held in escrow accounts, or in
commercial arrangements akin to escrow.
24. Loans and other borrowings

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.

Capital management policy
The capital structure is managed by BT Group plc, the ultimate parent of the group. Its capital management policy is set out in the Report
of the Directors on page 24.
94
Notes to the consolidated financial statements continued
24. Loans and other borrowings continued
The table below shows the key components of gross debt and of the increase of £67m this year.

| At 31 March 2024 | Cash flows | Net lease additions a | Foreign exchange | Transfer to within one year | Other movements b | At 31 March 2025
| £m | £m | £m | £m | £m | £m | £m
Loans and other borrowings due within one year c,d | 1,395 | (2,190) | — | 15 | 2,744 | 128 | 2,092
Loans and other borrowings due after one year d | 17,131 | 1,758 | — | (234) | (2,744) | 759 | 16,670
Total loans and other borrowings | 18,526 | (432) | — | (219) | — | 887 | 18,762
Lease liabilities due within one year | 766 | (874) | — | — | 813 | — | 705
Lease liabilities due after one year | 4,189 | — | 496 | (6) | (813) | — | 3,866
Lease liabilities classified as held for sale | — | — | — | — | — | 81 | 81
Total lease liabilities | 4,955 | (874) | 496 | (6) | — | 81 | 4,652
Gross debt | 23,481 | (1,306) | 496 | (225) | — | 968 | 23,414
| At 31 March 2023 | Cash flows (re-presented)d | Net lease additions a | Foreign exchange | Transfer to within one year | Other movements (re-presented)b,d | At 31 March 2024
| £m | £m | £m | £m | £m | £m | £m
Loans and other borrowings due within one year c,d | 1,772 | (1,685) | — | (12) | 1,227 | 93 | 1,395
Loans and other borrowings due after one year d | 16,749 | 1,139 | — | (287) | (1,227) | 757 | 17,131
Total loans and other borrowings | 18,521 | (546) | — | (299) | — | 850 | 18,526
Lease liabilities due within one year | 800 | (882) | — | (1) | 849 | — | 766
Lease liabilities due after one year | 4,559 | — | 487 | (8) | (849) | — | 4,189
Lease liabilities classified as held for sale | 3 | — | — | — | — | (3) | —
Total lease liabilities | 5,362 | (882) | 487 | (9) | — | (3) | 4,955
Gross debt | 23,883 | (1,428) | 487 | (308) | — | 847 | 23,481

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 Other movements include movements relating to accrued interest, amortisation of transaction costs, fair value adjustments and held for sale assets and liabilities (see note 20).
c Includes accrued interest and bank overdrafts.
d FY24 comparatives have been re-presented to include the cash flows of £(731)m interest paid and corresponding movements in accrued interest relating to loans and other
borrowings to agree with the group cash flow statement.
95
Notes to the consolidated financial statements continued
24. Loans and other borrowings continued
The table below gives details of the listed bonds and other debt.

| 2025 | 2024
At 31 March | £m | £m
1% €825m bond due November 2024 a | — | 708
3.50% £250m index linked bond due April 2025 b | — | 575
0.5% €419m bond due September 2025 a,c | 351 | 557
1.75% €1,076m bond due March 2026 a,c | 901 | 1,112
1.5% €1,150m bond due June 2027 a | 971 | 991
2.75% €700m bond due August 2027 a | 590 | 601
2.125% €500m bond due September 2028 a | 422 | 431
5.125% $700m bond due December 2028 a | 550 | 561
5.75% £600m bond due December 2028 | 649 | 658
1.125% €750m bond due September 2029 a | 627 | 640
3.25% $1,000m bond due November 2029 a | 780 | 796
9.625% $2,670m bond due December 2030 a (minimum 8.625%d) | 2,122 | 2,166
3.75% €800m bond due May 2031 a | 690 | 704
3.125% £500m bond due November 2031 | 504 | 503
3.125% €850m bond due February 2032 a | 708 | —
3.375% €500m bond due August 2032 a | 424 | 433
4.25% €850m bond due January 2033 a | 710 | 725
3.64% £330m bond due June 2033 | 339 | 339
1.613% £330m index linked bond due June 2033 | 403 | 394
3.875% €895m bond due January 2034 a | 750 | —
6.375% £500m bond due June 2037 | 523 | 523
3.883% £330m bond due June 2039 | 340 | 340
1.739% £330m index linked bond due June 2039 | 404 | 394
5.75% £450m bond due February 2041 a,e | 446 | 445
5.625% £350m bond due December 2041 a,e | 351 | —
3.924% £340m bond due June 2042 | 350 | 350
1.774% £340m index linked bond due June 2042 | 416 | 406
2.08% JPY10,000m bond due February 2043 a | 52 | 52
3.625% £250m bond due November 2047 | 251 | 251
4.25% $500m bond due November 2049 a | 388 | 400
5.125% €750m hybrid bond due October 2054 a,f | 638 | —
1.874% €500m hybrid bond due August 2080 a,f | 423 | 432
4.250% $500m hybrid bond due November 2081 a,f | 391 | 396
4.875% $500m hybrid bond due November 2081 a,f | 393 | 401
8.375% £700m hybrid bond due December 2083 f | 711 | 710
Total listed bonds | 18,568 | 17,994
Loans related to cash flows related to the sale of contract assets g | 87 | 341
Loans related to the forward sale of redundant copper | 93 | 106
Other loans | 12 | 27
Bank overdrafts (note 23) | 2 | 58
Total other loans and borrowings | 194 | 532
Total loans and other borrowings | 18,762 | 18,526

a Designated in a cash flow hedge relationship.
b Redeemed early in March 2025.
c Bond partially redeemed in June 2024.
d The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody’s or Standard & Poor’s to the group’s senior unsecured debt below
A3/A– respectively. In addition, if Moody’s or Standard & Poor’s 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.
e Designated in a fair value hedge relationship.
f Includes call options between 0.5 years and 6.5 years.
g 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’s 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 and the related cash flows from the customers remain classified as operating cash flows. £87m (FY24: £318m) of the liability relates to sales of
cash flows related to contract assets and so is removed from our net debt measure, the remaining £nil (FY24: £23m) relates to sales in prior year.
Unless previously or currently 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 £18,132m (FY24: £17,820m).
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.
96
Notes to the consolidated financial statements continued
24. Loans and other borrowings continued
Loans and other borrowings are analysed as follows:

| 2025 | 2024
At 31 March | £m | £m
Current liabilities |  |
Listed bonds | 1,975 | 996
Amounts owed to joint ventures | 10 | 11
Other loans and bank overdrafts a | 107 | 388
Total current liabilities | 2,092 | 1,395
Non-current liabilities |  |
Listed bonds | 16,593 | 16,998
Other loans | 77 | 133
Total non-current liabilities | 16,670 | 17,131
Total loans and other borrowings | 18,762 | 18,526

a Includes collateral received on swaps of £2m (FY24: £15m).
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 2025 were
unsecured.
The principal repayments of loans and borrowings at hedged rates amounted to £18,189m (FY24: £17,728m) and repayments fall due as
follows:

| 2025 |  | 2024
Carrying amount | Effect of hedging and interest | Principal repayments at hedged rates |  | Carrying amount | Effect of hedging and interest | Principal repayments at hedged rates
At 31 March | £m | £m | £m |  | £m | £m | £m
Within one year, or on demand | 2,092 | (345) | 1,747 |  | 1,395 | (258) | 1,137
Between one and two years | 430 | (17) | 413 |  | 2,727 | (85) | 2,642
Between two and three years | 1,583 | 63 | 1,646 |  | 431 | (24) | 407
Between three and four years | 2,261 | 28 | 2,289 |  | 1,614 | 29 | 1,643
Between four and five years | 2,030 | 63 | 2,093 |  | 2,282 | 6 | 2,288
After five years | 10,412 | (411) | 10,001 |  | 10,107 | (496) | 9,611
Total due for repayment after more than one year | 16,716 | (274) | 16,442 |  | 17,161 | (570) | 16,591
Total repayments | 18,808 | (619) | 18,189 |  | 18,556 | (828) | 17,728
Non cash adjustments a | (46) |  |  |  | (30) |  |
Total loans and other borrowings | 18,762 |  |  |  | 18,526 |  |

a Fair value adjustments of £39m (FY24: £49m) and unamortised bond fees.
25. Finance expense and income

| 2025 | 2024
Year ended 31 March | £m | £m
Finance expense |  |
Interest on: |  |
Financial liabilities at amortised cost and associated derivatives | 916 | 872
Lease liabilities | 135 | 134
Derivatives | (2) | 4
Fair value movements: |  |
Bonds designated as hedged items in fair value hedges | 1 | —
Derivatives designated as hedging instruments in fair value hedges | (1) | —
Derivatives not in a designated hedge relationship | (1) | (1)
Reclassification of cash flow hedge from other comprehensive income | 51 | 38
Unwinding of discount on provisions and other payables | 19 | 20
Total finance expense before specific items | 1,118 | 1,067
Specific items (note 9) | 197 | 121
Total finance expense | 1,315 | 1,188

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Notes to the consolidated financial statements continued
25. Finance expense and income continued

| 2025 | 2024
Year ended 31 March | £m | £m
Finance income |  |
Interest on financial assets at amortised cost | 134 | 168
Other finance income | 17 | 13
Interest income on loans to immediate and ultimate parent company | 747 | 709
Total finance income | 898 | 890

| 2025 | 2024
Year ended 31 March | £m | £m
Net finance expense before specific items | 220 | 177
Specific items (note 9) | 197 | 121
Net finance expense | 417 | 298

26. Financial instruments and risk management
Risk management is performed by BT Group plc, the ultimate parent company of the group.
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), liquidity risk and
credit 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 BT Group plc Board. Group treasury activities are subject to a set of controls appropriate for the magnitude of
borrowing, investments and group-wide exposures. The BT Group plc 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 of BT Group plc.
There has been no change in the nature of our risk profile between 31 March 2025 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 BT Group plc Board, is to ensure that at least 70% of ongoing net debt (as defined in Additional Information
section in BT Group plc's Annual Report) 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 of BT Group plc who each have been delegated such authority from the BT Group plc 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’s 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 BT Group plc Board’s 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 BT Group plc 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
of BT Group plc.
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,
labour cost 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.
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Notes to the consolidated financial statements continued
26. Financial instruments and risk management continued
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.

| 2025 |  | 2024
Fixed rate interest | Floating rate interest | Total |  | Fixed rate interest | Floating rate interest | Total
At 31 March | £m | £m | £m |  | £m | £m | £m
Sterling | 16,967 | 1,220 | 18,187 |  | 15,899 | 1,780 | 17,679
Other | — | 2 | 2 |  | — | 49 | 49
Total | 16,967 | 1,222 | 18,189 |  | 15,899 | 1,829 | 17,728
Ratio of fixed to floating | 93% | 7% | 100% |  | 90% | 10% | 100%
Weighted average effective fixed interest rate – sterling | 5.1% |  |  |  | 4.6% |  |

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’ 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:
– For interest, a 1% increase in interest rates and parallel shift in yield curves across sterling, US dollar and euro currencies.
– For foreign exchange, a 10% strengthening of sterling against other currencies.
– 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:

| 2025 | 2024
At 31 March | £m Increase (reduce) | £m Increase (reduce)
Sterling interest rates | 509 | 602
US dollar interest rates | (258) | (300)
Euro interest rates | (350) | (316)
Sterling strengthening | (137) | (142)
Energy prices | 26 | 27

A 1% decrease in interest rates, 10% weakening of sterling against other currencies and 10% decrease in energy prices would have
broadly the same impact in the opposite direction.
The impact of a 1% change in interest rates on the group’s annual net finance expense would have been a decrease of £127m (FY24:
£103m). The impact of 10% change in energy prices on group’s income statement and our exposure to foreign exchange volatility in the
income statement, after hedging (excluding translation exposures), would not have been material in FY25 and FY24.
Credit ratings
BT Group plc continues to target a BBB+/Baa1 credit rating over the cycle, with a BBB/Baa2 floor. We regularly review the liquidity of the
group and BT Group's 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 BT Group plc's credit ratings are below A3 in
the case of Moody’s or A– in the case of Standard & Poor’s (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 £2.1bn at 31 March 2025, our finance expense would increase/decrease by approximately £10m a year if the
group’s credit rating were to be downgraded/upgraded, respectively, by one credit rating category by both agencies.
BT Group plc's credit ratings were as detailed below:

At 31 March | 2025 |  | 2024 |
Rating | Outlook |  | Rating | Outlook |
Rating agency |  |  |  |  |  |
Fitch | BBB | Stable |  | BBB | Stable |
Moody’s | Baa2 | Stable |  | Baa2 | Stable |
Standard & Poor’s | 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 shor t- 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 BT Group plc 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 2025 is disclosed in note 24. We have term
debt maturities of £1.7bn in FY26.
Our treasury operation reviews and manages our short-term requirements within the parameters of the policies set by the BT Group plc
Board. We hold cash, cash equivalents and current investments in order to manage short-term liquidity requirements. During the year we
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Notes to the consolidated financial statements continued
26. Financial instruments and risk management continued
extended the maturity of our £2.1bn (FY24: £2.1bn) undrawn committed borrowing facilities by three years to mature no earlier than
January 2030 with the option to extend for two further years.
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.

Non-derivative financial liabilities | Loans and other borrowings | Interest on loans and other borrowings | Trade and other payables | Lease liabilities | Total
At 31 March 2025 | £m | £m | £m | £m | £m
Due within one year | 1,786 | 784 | 4,925 | 705 | 8,200
Between one and two years | 430 | 759 | 88 | 772 | 2,049
Between two and three years | 1,583 | 742 | — | 729 | 3,054
Between three and four years | 2,261 | 712 | — | 691 | 3,664
Between four and five years | 2,030 | 582 | — | 669 | 3,281
After five years | 10,412 | 2,436 | — | 1,613 | 14,461
| 18,502 | 6,015 | 5,013 | 5,179 | 34,709
Interest payments not yet accrued | — | (5,709) | — | — | (5,709)
Fair value adjustments, unamortised bond fees | (46) | — | — | — | (46)
Impact of discounting | — | — | (6) | (608) | (614)
Carrying value on the balance sheet a,b | 18,456 | 306 | 5,007 | 4,571 | 28,340
At 31 March 2024 |  |  |  |  |
Due within one year | 1,103 | 738 | 5,434 | 765 | 8,040
Between one and two years | 2,727 | 737 | 189 | 730 | 4,383
Between two and three years | 431 | 697 | 88 | 696 | 1,912
Between three and four years | 1,614 | 680 | — | 663 | 2,957
Between four and five years | 2,282 | 649 | — | 634 | 3,565
After five years | 10,107 | 2,569 | — | 2,103 | 14,779
| 18,264 | 6,070 | 5,711 | 5,591 | 35,636
Interest payments not yet accrued | — | (5,778) | — | — | (5,778)
Fair value adjustments, unamortised bond fees | (30) | — | — | — | (30)
Impact of discounting | — | — | (16) | (636) | (652)
Carrying value on the balance sheet a,b | 18,234 | 292 | 5,695 | 4,955 | 29,176

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 £189m (FY24: £366m) of non-current trade and other payables which relates to non-financial liabilities, and £953m
(FY24: £899m) of other taxation, social security, deferred income and other payables.
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’s derivative financial instruments.
Cash flows are presented on a net or gross basis in accordance with settlement arrangements of the instruments.

Derivative financial liabilities | Net settled | Gross settled outflows | Gross settled inflows | Total
At 31 March 2025 | £m | £m | £m | £m
Due within one year | 14 | 1,994 | (1,829) | 179
Between one and two years | 14 | 578 | (463) | 129
Between two and three years | 14 | 1,996 | (1,860) | 150
Between three and four years | 15 | 718 | (626) | 107
Between four and five years | 4 | 1,487 | (1,373) | 118
After five years | 16 | 2,537 | (2,343) | 210
Total a,b | 77 | 9,310 | (8,494) | 893
At 31 March 2024 |  |  |  |
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
Total a,b | 95 | 9,548 | (8,844) | 799

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.
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Notes to the consolidated financial statements continued
26. Financial instruments and risk management continued
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 BT Group's 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 BT Group plc Board’s defined policy restricts exposure to any one counterparty by setting credit limits
based on the credit quality as defined by Moody’s and Standard & Poor’s. The minimum credit ratings permitted with counterparties in
respect of new transactions are A3/A– 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 BT Group plc Board.
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Notes to the consolidated financial statements continued
26. Financial instruments and risk management continued
Operational management policy
BT Group's 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’s financial assets at the balance sheet date is as follows:

|  | 2025 | 2024
At 31 March | Notes | £m | £m
Derivative financial assets |  | 1,034 | 1,070
Investments | 21 | 15,086 | 14,028
Trade and other receivables a | 15 | 1,719 | 2,249
Contract assets | 5 | 1,500 | 1,740
Cash and cash equivalents | 23 | 209 | 409
Total |  | 19,548 | 19,496

a The carrying amount excludes £655m (FY24: £641m) of non-current trade and other receivables which relate to non-financial assets, and £1,400m (FY24: £1,340m) 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’s and Standard & Poor’s (S&P) differ, the lower rating is used.

Moody’s/S&P credit rating of counterparty | 2025 | 2024
At 31 March | £m | £m
Aa2/AA and above | 2,610 | 1,823
Aa3/AA– | 95 | 585
A1/A+ | 750 | 819
A2/A | 245 | 261
A3/A– | — | —
Baa1/BBB+ | — | —
Baa2/BBB and below a | 40 | 30
Total b | 3,740 | 3,518

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 £2m (FY24: £15m) 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 15, 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 £1,047m (FY24: £1,047m) 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’s balance sheet and the impact of
enforceable master netting or similar agreements.

Financial assets and liabilities |  | Related amounts not set off in the balance sheet
Amounts presented in the balance sheet | Right of set off with derivative counterparties | Cash collateral | Net amount
At 31 March 2025 | £m | £m | £m | £m
Derivative financial assets | 1,034 | (346) | (2) | 686
Derivative financial liabilities | (497) | 346 | 20 | (131)
Total | 537 | — | 18 | 555
At 31 March 2024 |  |  |  |
Derivative financial assets | 1,070 | (356) | (15) | 699
Derivative financial liabilities | (539) | 356 | 40 | (143)
Total | 531 | — | 25 | 556

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.
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Notes to the consolidated financial statements continued
26. Financial instruments and risk management continued

| 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 or fair value hedge The group designates certain derivatives in a cash flow or fair value 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 Group plc’s 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 Group plc’s risk management strategy or if it no longer qualifies for hedge accounting. BT Group plc 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. Cash flow hedge 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. Fair value hedge When a derivative financial instrument is designated as a hedge of the exposure in fair value of a recognised asset or liability, or an unrecognised firm commitment, the hedging instrument is measured at fair value with changes in fair value recognised in the income statement. The changes in fair value of the hedging instruments are recorded in the same line in the income statement, together with any changes in fair value of the hedged asset or liability that is attributable to the hedged risk which are remeasured to fair value. In a fair value hedge, an ineffectiveness is automatically recognised in the income statement because changes in the measurement of both the hedging instrument and the hedged item are reported through that. Other derivatives BT Group's 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 asset | Non-current asset | Current liability | Non-current liability
At 31 March 2025 | £m | £m | £m | £m
Designated in a cash flow hedge | 104 | 843 | 82 | 338
Designated in a fair value hedge | — | 1 | — | —
Other | 26 | 60 | 24 | 53
Total derivatives | 130 | 904 | 106 | 391
At 31 March 2024 |  |  |  |
Designated in a cash flow hedge | 34 | 947 | 80 | 383
Designated in a fair value hedge | — | — | — | —
Other | 16 | 73 | 14 | 62
Total derivatives | 50 | 1,020 | 94 | 445

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 21. These contracts are fair valued based on a discounted cash flow method using a mix of
assumptions some of which are not observable in the market. The key inputs used in the internal valuation model are the developers P90
generation volume forecast (where the output is forecasted to be exceeded 90% of the time over the contract’s lifetime), publicly
available electricity price data, inflation rates, and the g roup’s weighted average cost of capita l. During the year no new energy contracts
were signed or terminated, fair value movement was driven by monthly settlements and market fluctuation.
Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging sterling, 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’s 2030 US dollar bond. The hedged cash flows will affect the group’s income statement as interest and
principal amounts are repaid over the remaining term of the borrowings (see note 24).
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.
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Notes to the consolidated financial statements continued
26. Financial instruments and risk management continued
PPAs and vPPAs are taken out to hedge our exposure to energy prices and provide long-term cost certainty. The hedged cash flows affect
the income statement over the hedged period.
Fair value hedges consist of interest rate swaps that are used to protect against changes in the fair value of certain fixed rate bonds due to
movements in market interest rates. Gains and losses arising on fair value hedges are disclosed in note 25.
All hedge relationships were fully effective in the period.
The amounts related to items designated as hedging instruments were as follows:

Hedged items | Notional principal | Asset | Liability | Balance in cash flow hedge related reserves (gain)/loss | Fair value (gain)/loss recognised in OCI | Amount recycled from cash flow hedge related reserves to P&L
At 31 March 2025 | £m | £m | £m | £m | £m | £m
Sterling, euro, US dollar and Japanese yen denominated borrowings a | 14,278 | 933 | (329) | (449) | 86 | (322)
Step up interest on the 2030 US dollar bond b | 99 | — | (1) | (19) | 2 | 4
Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints c | 1,274 | 10 | (15) | 10 | 22 | —
Other, including energy contracts d |  | 4 | (75) | 74 | (5) | (11)
Total cash flow hedges | 15,651 | 947 | (420) | (384) | 105 | (329)
Fixed rate borrowings e | 800 | 1 | — |  |  |
Total fair value hedges | 800 | 1 | — |  |  |
Deferred tax |  | — | — | 86 |  |
Derivatives not in a designated hedge relationship |  | 86 | (77) | — |  |
Carrying value on the balance sheet |  | 1,034 | (497) | (298) |  |
At 31 March 2024 |  |  |  |  |  |
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 b | 112 | — | (2) | (25) | 2 | 4
Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints c | 1,308 | 18 | (11) | (12) | 15 | 8
Other, including energy contracts d |  | 3 | (95) | 90 | 161 | (7)
Total cash flow hedges | 15,003 | 981 | (463) | (160) | 642 | (356)
Fixed rate borrowings e | — | — | — |  |  |
Total fair value hedges | — | — | — |  |  |
Deferred tax |  | — | — | 27 |  |
Derivatives not in a designated hedge relationship |  | 89 | (76) | — |  |
Carrying value on the balance sheet |  | 1,070 | (539) | (133) |  |

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
prese nted within finance expense. Range of hedged rates: sterling interest: 5.9% - 6.0% (FY24: 5.9% - 6.0%), euro FX: 1.12 - 1.29 (FY24: 1.12 - 1.29), US dollar FX: 1.28 - 1.80
(FY24: 1.28 - 1.80), Japanese yen FX: 156.92 (FY24: 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: 1.27 - 1.30 (FY24:1.21 - 1.28).
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: 1.23 - 1.34 (FY24: 1.21 - 1.30), euro:
1.15 - 1.19 (FY24:1.12 - 1.17), Indian rupees: 107.88 - 121.60(FY24: 106.05 - 120.97), Hungarian forint: 472.12 - 492.24(FY24: 458.35 - 467.81).
d Includes £(57)m liability (FY24: £(87)m liability) relating to energy contracts, these are hedged using contracts for difference including 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 - 119 £/MWh (FY24: 60-122 £/MWh).
e Fixed rate borrowings are hedged using fixed to floating in terest rate swaps. Fair value movements on bonds and swaps in fair value hedges in profit and loss are presented within
finance expense. Range of hedged rates:SONIA+123.5 bps - SONIA+136.7 bps.
104
Notes to the consolidated financial statements continued
27. Other reserves

| Other comprehensive income |
| Cash flow reserve a | Fair value b reserve | Cost of hedging reserve c | Translation reserve d | Merger and other reserves | Total
| £m | £m | £m | £m | £m | £m
At 1 April 2023 | 377 | (4) | (37) | 470 | 858 | 1,664
Exchange differences e | — | — | — | (66) | — | (66)
Net fair value gain (loss) on cash flow hedges | (661) | — | 19 | — | — | (642)
Movements in relation to cash flow hedges recognised in income and expense f | 349 | — | 7 | — | — | 356
Tax recognised in other comprehensive income | 69 | — | — | 9 | — | 78
Transfer to realised profit | 10 | 12 | — | 11 | — | 33
At 31 March 2024 | 144 | 8 | (11) | 424 | 858 | 1,423
Exchange differences e | — | — | — | (50) | — | (50)
Net fair value gain (loss) on cash flow hedges | (105) | — | — | — | — | (105)
Movements in relation to cash flow hedges recognised in income and expense f | 324 | — | 5 | — | — | 329
Fair value movement on assets at fair value through other comprehensive income | — | (6) | — | — | — | (6)
Tax recognised in other comprehensive income | (59) | — | — | 3 | — | (56)
At 31 March 2025 | 304 | 2 | (6) | 377 | 858 | 1,535

a The cash flow reserve is us ed 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 Excludes an insignificant amount of exchange differences in relation to retained earnings attributed to non-controlling interests.
f Movements in cash flow hedge-related reserves recognised in income and expense of £ 329m (FY24 : £356m) include a net credit to other comprehensive income of £278 m (FY24:
credit of £318m) which have been reclassified to operating costs, and a net credit of £51m (FY24: net credit of £38m) which have been reclassified to finance expen se (see note 25).
28. Directors’ emoluments and pensions
Neil Harris, Edward Heaton, Daniel Rider, Roger Eyre and Simon Lowth served as directors throughout the year. Roger Eyre resigned on 14
April 2025, when Helen Charnley was appointed. The Directors’ services were incidental to their service to the group as a whole and any
allocation to the company would be de minimis.
For th e year ended 31 March 2025 the aggregate emoluments of the directors excluding deferred bonuses of £625,000 (FY24: £652,000)
was £2,811,000 (FY24: £2,648,000). Deferred bonuses are payable in 5p ordinary shares of BT Group plc in three years’ time subject to
continuous employment.
No retirement benefits were accruing to directors (FY24: none) under a money purchase scheme.
During the year no directors exercised options (FY24: two) under BT Group share option plans. Five directors who held office for the whole
or part of the year (FY24: six) received or are entitled to receive 5p ordinary shares of BT Group plc under BT long-term incentive plans.
The aggregate value of BT Group plc shares which vested to directors during the year under BT long-term incentive plans was £2,161,000
(FY24: £1,988,000).
The emoluments of the highest paid directo r in cluding his defe rred bonus of £443,000 (FY24: £522,000) were £1,796,000 (FY24:
£1,920,000). He is entitled to receive 5,840,162 BT Group plc 5p ordinary shares under BT long-term incentive plans subject to
continuous employment and in some cases to certain performance conditions being met.
Included in the above aggregate emoluments are those of Simon Lowth who is also a director of the ultimate holding company, BT Group
plc.
The emoluments of the directors are calculated in accordance with the statutory provisions applicable to the company.
29. Related party transactions
British Telecommunications plc related parties include joint ventures, associates, investments and key management personnel.
Key management personnel comprise Executive and Non-Executive Directors and members of the BT Group plc Executive Committee.
Compensation of key management personnel is disclosed in note 6.
Amounts paid to the group’s retirement benefit plans are set out in note 18.
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 FY25 were £9 m (FY24: £33 m) and purchases from the Sports JV were £305 m (FY24: £299 m) excluding £187m
(FY24: £211m) additional payments made to settle the minimum guarantee liability. The amount receivable from the Sports JV as at 31
March 2025 was £nil (FY24: £3m) and the amount payable to the Sports JV was £ 97 m (FY24: £94m).
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 of £200 m, (FY24: £300m) 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's external short-term borrowings. The outstanding balance under the RCF of £ 46 m (FY24: £163m) is treated as a loan receivable
and held at amortised cost, see note 15. T here is also a loan payable to the Sports JV of £ 10 m (FY24: £11m), see note 24.
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
105
Notes to the consolidated financial statements continued
29. Related party transactions
mitigate its exposure to exchange risk. The group holds a £36 m (FY24: £29m) 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:

| 2025 | 2024
At 31 March | £m | £m
Sales of services to associates and joint ventures | 12 | 37
Purchases from associates and joint ventures | 348 | 338
Amounts receivable from associates and joint ventures | 2 | 5
Amounts payable to associates and joint ventures | 99 | 95

Other related party transactions include a dividend received from a joint venture of £nil (FY24: £12m).
British Telecommunications plc and certain of its subsidiaries act as a funder and deposit taker for cash related transactions for both its
parent and ultimate parent company. The loan arrangements described below with these companies reflect this. Cash transactions usually
arise where the parent and ultimate parent company are required to meet their external payment obligations or receive amounts from
third parties. These principally relate to the payment of dividends, the buyback of shares, the exercise of share options and the issuance of
ordinary shares. Transactions between the ultimate parent company, parent company and the group are settled on both a cash and non-
cash basis through these loan accounts depending on the nature of the transaction.
During FY25, a dividend of £780m (FY24: £850m) was settled with the parent company in respect of the year ended 31 March 2024. The
directors recommend payment of a final dividend in respect of FY25 of £1,500m. See note 11 and the group statement of changes in
equity.
As of 31 March 2025 there was only one balance between BT plc and the ultimate parent, which accrued interest at SONIA plus a margin
of 95bps, plus baseline credit adjustment spread (CAS) 45.4bps.
The loan facility between the parent company and British Telecommunications plc accrues interest at a rate of SONIA plus 140.4 bps with
an overall limit of £35bn. The parent company currently finances its obligations on this loan as they fall due through dividends paid by the
company.
A summary of the balances with the parent and ultimate parent companies and the finance income or expense arising in respect of these
balances is set out below:

|  | 2025 | 2024
|  | Asset (liability) at 31 March | Finance income (expense) | Asset (liability) at 31 March | Finance income (expense)
| Notes | £m | £m | £m | £m
Amounts owed by (to) parent company |  |  |  |  |
Non-current assets investments | 21, 25 | 11,917 | 724 | 11,208 | 692
Amounts owed by (to) ultimate parent company |  |  |  |  |
Non-current assets investments | 21, 25 | 521 | 23 | 425 | 17
Non-current liabilities loans | 24, 25 | — | — | — | —
Trade and other receivables | 15 | 10 | n/a | 25 | n/a
Trade and other payables | 16 | (12) | n/a | (36) | n/a

30. Financial commitments
Financial commitments as at 31 March 2025 include capital commitments of £985m (FY24: £1,049m ) and device purchase commitments
of £198m (FY24: £171m).
The group’s programme rights commitments for our BT Sport operations were t ransferred to the Sports JV formed with Warner Bros.
Discovery (WBD) during FY23 (see note 22). Both the group and WBD have provided p arent company guarantees for the Sports JV’s
obligations under certain programme rights commitments; the fair value of these guarantees is not material.
Other than as disclosed in note 17, there were no contingent liabilities or guarantees at 31 March 2025 other than those arising in the
ordinary course of the group’s business and on these no material losses are anticipate d. 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 17 for contingent liabilities associated with legal and regulatory proceedings.
31. Post balance sheet events
As disclosed in note 20, o n 18 April 2025, BT reached an agreement to sell its domestic operations in Italy to Retelit S.p.A. BT’s domestic
operation in Italy includes fibre networks and datacentres in Italy. The transaction is expected to be completed in the second half of FY26,
subject to competition and regulatory approvals. Under the terms of the agreement, Retelit S.p.A. will acquire BT Italia’s domestic
operations in exchange for a contribution from BT based on an enterprise value range of €163m (£136m) to €188m (£157m), subject to
the pace of completion. This contribution does not affect the amounts recognised in the financial statements for the year ended 31 March
2025.
On 3 June 2025, BT issued a EUR 700m senior bond due on 3 January 2035 with a coupon of 3.75% and a GBP 400m hybrid bond due on
3 December 2055 with a coupon of 6.375% until the first reset date of 30 December 2030 under our European Medium Term Note
programme.
106
British Telecommunications plc company balance sheet
Registered number 01800000

|  | 2025 | 2024
At 31 March | Notes | £m | £m
Non-current assets |  |  |
Intangible assets | 4 | 2,018 | 1,962
Property, plant and equipment | 5 | 21,347 | 20,247
Right-of-use assets | 6 | 2,383 | 2,628
Derivative financial instruments | 21 | 1,026 | 1,141
Investments in subsidiary undertakings, associates and joint ventures | 7 | 14,819 | 16,132
Other investments | 8 | 12,973 | 12,152
Trade and other receivables | 9 | 335 | 302
Preference shares in joint venture | 7 | 234 | 451
Contract assets |  | 7 | 27
Retirement benefit surplus | 18 | 11 | 11
Deferred tax assets |  | 907 | 969
|  | 56,060 | 56,022
Current assets |  |  |
Inventories |  | 144 | 212
Trade and other receivables | 9 | 2,235 | 2,185
Preference shares in joint venture | 7 | 161 | 82
Contract assets |  | 194 | 161
Assets classified as held for sale | 22 | 13 | —
Current tax receivables |  | 756 | 839
Derivative financial instruments | 21 | 130 | 51
Other investments | 8 | 3,402 | 3,682
Cash and cash equivalents a |  | 33 | 190
|  | 7,068 | 7,402
Current liabilities |  |  |
Loans and other borrowings | 10 | 13,588 | 17,457
Derivative financial instruments | 21 | 106 | 94
Trade and other payables | 11 | 4,561 | 4,517
Contract liabilities |  | 493 | 535
Liabilities classified as held for sale | 22 | 6 | —
Lease liabilities | 6 | 484 | 506
Current tax liabilities |  | — | —
Provisions | 13 | 187 | 167
|  | 19,425 | 23,276
Total assets less current liabilities |  | 43,703 | 40,148
Non-current liabilities |  |  |
Loans and other borrowings | 10 | 16,665 | 17,085
Derivative financial instruments | 21 | 391 | 445
Contract liabilities |  | 171 | 100
Lease liabilities | 6 | 3,078 | 3,366
Retirement benefit obligations | 18 | 2,940 | 3,479
Other payables | 12 | 1,124 | 1,418
Deferred taxation | 14 | 994 | 705
Provisions | 13 | 182 | 226
|  | 25,545 | 26,824
Equity |  |  |
Ordinary shares |  | 2,172 | 2,172
Share premium |  | 8,000 | 8,000
Other reserves | 15 | 1,055 | 891
Retained earnings b |  | 6,931 | 2,261
Equity shareholder’s funds |  | 18,158 | 13,324
|  | 43,703 | 40,148

a Includes cash of £33 m (FY24 : £190 m) and cash equivalents of £nil ( FY24: £nil).
b As permitted by Section 408(3) of the Companies Act 2006, no income statement of the company is presented. The company’s profit for the financial year including dividends
received from subsidiary undertakings was £5,008 m ( FY24: £761 m) before dividends paid of £780 m (FY24 : £850 m).
The accompanying notes form an integral part of these financial statements.
The financial statements of the company on pages 106 to 130 were approved by the Board of Directors on 16 June 2025 and were signed
on its behalf by:

Simon Lowth Director

107
British Telecommunications plc company statement of
changes in equity

|  | Share capital a | Share premium account b | Other reserves c | Retained earnings (loss) | Total equity
| Notes | £m | £m | £m | £m | £m
At 1 April 2023 |  | 2,172 | 8,000 | 1,099 | 4,114 | 15,385
Profit for the year d |  | — | — | — | 761 | 761
Actuarial loss | 18 | — | — | — | (2,401) | (2,401)
Tax on actuarial loss |  | — | — | — | 599 | 599
Share-based payments |  | — | — | — | 51 | 51
Tax on share-based payments |  | — | — | — | (12) | (12)
Tax on items taken directly to equity | 15 | — | — | 69 | — | 69
Net fair value loss on cash flow hedges | 15 | — | — | (641) | — | (641)
Dividends e |  | — | — | — | (850) | (850)
Transferred to the income statement | 15 | — | — | 358 | — | 358
Transfer to realised profit |  | — | — | 6 | (6) | —
Other movements |  | — | — | — | 5 | 5
At 31 March 2024 |  | 2,172 | 8,000 | 891 | 2,261 | 13,324
Profit for the year d |  | — | — | — | 5,008 | 5,008
Actuarial gain | 18 | — | — | — | 59 | 59
Tax on actuarial gain |  | — | — | — | (10) | (10)
Share-based payments |  | — | — | — | 40 | 40
Tax on share-based payments |  | — | — | — | 18 | 18
Tax on items taken directly to equity | 15 | — | — | (59) | — | (59)
Net fair value loss on cash flow hedges | 15 | — | — | (101) | — | (101)
Dividends d |  | — | — | — | (780) | (780)
Transferred to the income statement | 15 | — | — | 330 | — | 330
Fair value movement on assets at fair value through other comprehensive income | 15 | — | — | (6) | — | (6)
Transfer to realised profit |  | — | — | — | — | —
Other movements e |  | — | — | — | 335 | 335
At 31 March 2025 |  | 2,172 | 8,000 | 1,055 | 6,931 | 18,158

a The allotted, called up and fully paid ordinary share capital of the company at 31 March 2025 and 31 March 2024 was £2,172m representing 8,689,755,905 ordinary shares of 25p
ea ch. The holders of ordinary shares are entitled to receive dividends as declared and entitled to one vote for each share which they hold at meetings.
b The share premium account, representing the premium on allotment of shares, is not available for distribution.
c A breakdown of other reserves is provided in note 15.
d As permitted by Section 408(3) of the Companies Act 2006, no income statement of the company is presented. The company’s profit for the financial year including dividends
received from subsidiary undertakings was £5,008 m (FY24: £761 m) before dividends paid of £780 m (FY24: £850 m ).
e Other movements primarily includes a £335 m dividend in specie for subsidiary shareholding transfers.
The accompanying notes form an integral part of these financial statements.
108
Notes to the company financial statements
British Telecommunications plc company accounting policies
1. Basis of preparation
Preparation of the financial statements
The term ‘company’ refers to British Telecommunications plc (BT
plc). The consolidated group financial statements of BT plc have
been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies
Act 2006. The company meets the definition of a qualifying entity
under FRS 101. Accordingly, these company financial statements
have been prepared in accordance with FRS 101 “Reduced
disclosure framework”. FRS 101 involves the application of
International Financial Reporting Standards (IFRS) with a reduced
level of disclosure.
The financial statements are prepared on a going concern basis
and on the historical cost basis, except for certain financial and
equity instruments that have been measured at fair value. Refer to
note 1 of the notes to the consolidated accounts for further
information. The financial statements are presented in sterling, the
functional currency of the company .
New and amended accounting standards effective during
the year
The following amended standards were effective and adopted by
us during the year.
Supplier Finance Arrangements (Amendments to IAS 7 and
IFRS 7)
These amendments clarify the characteristics of supplier finance
arrangements and require additional disclosures of such
arrangements. The disclosure requirements in the amendments
are intended to assist in assessing their effects on liabilities, cash
flows and exposure to liquidity risk.
As a result of implementing the amendments, we have provided
additional disclosures about our supplier finance arrangements in
the published consolidated financial statements of BT Plc.
Other
The following amendments have not had a significant impact on
our financial statements:
– Classification of Liabilities as Current or Non-current and Non-
current Liabilities with Covenants (Amendments to IAS 1)
– Lease Liability in a Sale and Leaseback (Amendments to IFRS
16)
IFRS Interpretations Committee agenda decisio ns
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 FY25 have
been assessed as having a significant impact on the company.
Exemptions
As permitted by Section 408(3) of the Companies Act 2006, the
company's income statement has not been presented.
The company has applied the exemptions available under FRS 101
in respect of the following disclosures:
– The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2
‘Share-based Payments’ in relation to group-settled share-
based payments.
– The requirements of IFRS 7 ‘Financial Instruments: Disclosures’.
– The requirements of paragraphs 91 to 99 of IFRS 13 ‘Fair Value
Measurement’.
– The requirements of the second sentence of paragraph 110 and
from paragraphs 113a,114,115,118,119(a) to (c),120 to 127
and 129 of IFRS 15 ‘Revenue from Contracts with Customers’.
– The second sentence of paragraph 89, and paragraphs 90, 91
and 93 of IFRS 16 'Leas es'.
– The requirement in paragraph 38 of IAS 1 ‘Presentation of
Financial Statements’ to present comparative information in
respect of: (i) paragraph 79(a)(iv) of IAS 1 ‘Presentation of
Financial Statements’; (ii) paragraph 73(e) of IAS 16 ‘Property,
Plant and Equipment’; and (iii) paragraph 118(e) of IAS 38
‘Intangible Assets’.
– The following paragraphs of IAS 1 ‘Presentation of Financial
Statements’:
– 10(d) (statement of cash flows);
– 16 (statement of compliance with all IFRS);
– 38A (requirement for minimum of two primary statements
including cash flow statements);
– 38B-D (additional comparative information);
– 111 (cash flow statement information); and
– 134 to 136 (capital management disclosures).
– The requirements of IAS 7 ‘Statement of Cash Flows’.
– The requirements of paragraph 17 of IAS 24 ‘Related Party
Disclosures’.
– The requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and errors.
– The requirements in IAS 24 ‘Related Party Disclosures’ to
disclose related party transactions entered into between two
or more members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned by such a
member.
– The requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d)
to 134(f) and 135(c) to 135(e) of IAS 36 Impairment of
Assets’.
The company intends to continue to take advantage of these
exemptions in future years.
Where required, equivalent disclosures have been given in the
consolidated group financial statements of BT plc.
The financial statements have been prepared on a consistent basis
with the prior year.
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 of BT Group plc.
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.
109
Notes to the parent company financial statements continued
2. Critical & key accounting estimates and significant judgements continued

Note | Critical estimate | Key estimate | Significant judgement
6. Reasonable certainty and determination of lease terms |  |  | ü
7. Valuation of investment in A preference shares in Sports joint venture |  | ü |
7. Valuation of BT's equity interest in Sports joint venture |  | ü |
8. Other investments |  |  | ü
11. Estimate of customer refund liability |  | ü |
13. Identifying contingent liabilities |  |  | ü
13. Provisions |  | ü | ü
14. Current and deferred income tax |  | ü |
18. Valuation of pension assets and liabilities | ü |  | ü
22. Held for sale classification |  |  | ü

3. Material accounting policies that apply to the
overall financial statements
The material accounting policies applied in preparation of our
financial statements are set out below. Other material accounting
policies applicable to a particular area are disclosed in the relevant
note. We have applied all policies consistently to all the years
presented, unless otherwise stated.
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 recognised as deferred income and amortised over
the life of the related asset. 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 BDUK
and other rural superfast broadband contracts, including Reaching
100% (R100) are described in note 5. Once a government grant is
recognised, any related deferred income is treated in accordance
with IAS 20 ‘Accounting for Government Grants and Disclosure of
Government Assistance’.
Foreign currencies
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.
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 company 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.
Share-based payments
The ultimate parent of BT plc, BT Group plc, operates a number of
equity settled share-based arrangements, as detailed in note 19 to
the BT plc consolidated financial statements, under which the
company receives services from employees as consideration for
equity instruments (share options and shares) of BT Group plc. In
the company’s separate financial statements these are also
accounted for as equity settled.
Equity settled share-based payments are measured at fair value at
the date of grant. Market-based performance criteria and non-
vesting conditions (for example, the requirement for employees to
make contributions to the share purchase programme) are
reflected in this measurement of fair value. The fair value
determined at the grant date is recognised as an expense on a
straight line basis over the vesting period, based on the company’s
estimate of the options or shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
Fair value is measured using the Binomial options pricing model.
Service and performance 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.
In the case that 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, this 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.
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 and are subject to insignificant risk of changes
in value and have an original maturity of three months or less. Bank
overdrafts are included within loans and other borrowings, in
current liabilities on the balance sheet.
Dividends
Dividend distributions are recognised as a liability in the year in
which the dividends are approved by the Board. Interim dividends
are therefore recognised when they are paid; final dividends when
authorised by the Board.
110
Notes to the parent company financial statements continued
4. Intangible 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 company, 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 in the company's separate financial statements relates to the excess of cost over the value of the company's share of the identifiable net assets acquired where the company has purchased a business. The full cost balance of goodwill recognised at 31 March 2025, £624m, is attributable to the Business CGU. This balance was fully impaired in FY24 and is held at £nil in the company's separate financial statements. 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 only capitalise costs directly associated with the production of internally developed software, including direct and indirect labour costs of development, 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 which 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:
– Computer software | 2 to 10 years
– 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.

| Software a | Goodwill | Other | Total
| £m | £m | £m | £m
Cost |  |  |  |
At 1 April 2024 | 6,046 | 624 | 15 | 6,685
Additions | 798 | — | — | 798
Disposals and adjustments b | (804) | — | 8 | (796)
Transfers c | (75) | — | — | (75)
Transfer to assets held for sale d | (15) | — | — | (15)
At 31 March 2025 | 5,950 | 624 | 23 | 6,597
Accumulated amortisation |  |  |  |
At 1 April 2024 | 4,094 | 624 | 5 | 4,723
Charge for the year | 676 | — | — | 676
Impairment | 7 | — | — | 7
Disposals and adjustments b | (794) | — | 8 | (786)
Transfers c | (29) | — | — | (29)
Transfer to assets held for sale d | (12) | — | — | (12)
At 31 March 2025 | 3,942 | 624 | 13 | 4,579
Carrying amount |  |  |  |
At 31 March 2024 | 1,952 | — | 10 | 1,962
At 31 March 2025 | 2,008 | — | 10 | 2,018

a Includes a carrying amount of £278m (FY24 : £283m) in respect of assets in the course of construction, which are not yet amortised.
b Disposals and adjustments include the removal of assets from the company's fixed asset registers following disposals and the identification of fully depreciated assets (including
£0.7bn in FY25 through operation of the group’s annual asset verification exerc ise).
c During FY25, assets with c ost of £75m and accumulated depreciation of £29m were reclassified from intangible assets to property, plant and equipment following review of asset
registers.
d For a breakdown of assets held for sale, see n ote 22.
111
Notes to the parent company financial statements continued
5. 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 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’s 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
– Freehold buildings | 14 to 50 years
– Short-term leasehold improvements | Shorter of 10 years or lease term
– Leasehold land and buildings | Shorter of unexpired portion of lease or 40 years
Network infrastructure |
Transmission equipment |
– Duct | 40 years
– Cable | 3 to 25 years
– Fibre | 5 to 20 years
Exchange equipment | 2 to 13 years
Other network equipment | 2 to 40 years
Other assets |
– Motor vehicles | 2 to 10 years
– Computers and office equipment | 3 to 7 years
Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively. 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.

112
Notes to the parent company financial statements continued
5. Property, plant and equipment

| Land and buildings | Network infrastructure | Other a | Assets under construction d | Total
Held by Openreach | Held by other units
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
At 1 April 2024 | 717 | 36,130 | 16,285 | 1,459 | 1,248 | 55,839
Additions | (1) | 1 | 90 | — | 3,326 | 3,416
Transfers b | 121 | 3,021 | 401 | 291 | (3,759) | 75
Disposals and adjustments c | (51) | (191) | (601) | (17) | (35) | (895)
Transfer to assets held for sale e | — | — | (8) | — | (2) | (10)
At 31 March 2025 | 786 | 38,961 | 16,167 | 1,733 | 778 | 58,425
Depreciation |  |  |  |  |  |
At 1 April 2024 | 402 | 20,431 | 13,673 | 1,056 | 30 | 35,592
Charge for the year | 55 | 1,554 | 458 | 241 | — | 2,308
Impairments | — | — | 27 | 11 | 12 | 50
Transfers b | — | — | 29 | — | — | 29
Disposals and adjustments c | (22) | (182) | (673) | (15) | (4) | (896)
Transfer to assets held for sale e | — | — | (5) | — | — | (5)
At 31 March 2025 | 435 | 21,803 | 13,509 | 1,293 | 38 | 37,078
Carrying amount |  |  |  |  |  |
At 31 March 2024 | 315 | 15,699 | 2,612 | 403 | 1,218 | 20,247
At 31 March 2025 | 351 | 17,158 | 2,658 | 440 | 740 | 21,347

a Other comprises plant and equipment, motor vehicles, computers, and fixtures and fittings.
b During FY25, assets with cost of £75m and accumulated depreciation of £29m were reclassified from intangible assets to property, plant and equipment following review of asset
registers.
c Disposals and adjustments include the removal of assets from the company's fixed asset registers following disposals and the identification of fully depreciated assets (including
£0.6bn in FY25 through operation of the group’s annual asset verification exercise).
d Assets under construction ('AUC') cost includes a carrying amount of £73m (gross cost of £108m and accumulated depreciation of £35m) at 31 March 2025 and £89m (Gross costs
£119m and accumulated depreciation of £30m) at 31 March 2024 which relates to engineering stores. In the FY24, this was previously presented separately from AUC in the above
table.
e Transfers to assets held for sale are detailed in note 22.
Included within the above disclosure are assets which are used in arrangements which meet the definition of operating leases under IFRS
16:
– £17,158m (FY24: £15,699m) of the carrying amount of the network infrastructure asset class represents Openreach's 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.
– Plant and equipment, within other assets, include devices with a carrying amount of £238m (FY24: £160m) 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's overall asset base.
The net book value of land and buildings comprised:

| 2025 | 2024
At 31 March | £m | £m
Freehold | 37 | 38
Leasehold | 314 | 277
Total net book value of land and buildings | 351 | 315

BT Tower
In FY24 we agreed to the sale of the BT Tower for headline consideration of £275m, as part of the simplification of the group’s property
portfolio. The carrying amount of the BT Tower asset is £2.9m at 31 March 2025 (FY24: £4m). The asset continues not 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 transfer of legal title is anticipated to take place in a three year window between 2028 and 2031 subject to achieving vacant
possession of the site. BT continues to enjoy exclusive rights to occupy and access the site prior to completion.The useful economic lives of
assets associated with the BT Tower have been reassessed in light of the anticipated disposal in FY30.
113
Notes to the parent company financial statements continued
6. Leases

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: – 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; – The lessee (either the company, or the company’s customers) has the right to obtain substantially all the economic benefits from the use of the asset throughout the period of use; and – 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’s 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: – fixed payments – variable lease payments that depend on an index or rate – amounts expected to be paid under residual value guarantees – the exercise price of any purchase options that we are reasonably certain to exercise – payments due over optional renewal periods where we are reasonably certain to renew – 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’s 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 5 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 £5,000. 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 of a contract, we determine whether the contract is, or contains, a lease. 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 of 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. We recognise operating lease payments as income on a straight-line basis over the lease term. Any up front payments received, such as connection fees, are deferred over the lease term. 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. The receivable is measured based on future payments to be received discounted using the interest rate implicit in the lease, adjustment for any direct costs.

114
Notes to the parent company financial statements continued
6. Leases

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 company acts as lessee; and the deferral period for any upfront connection charges where the company 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: – Our anticipated operational, retail and office property requirements in the mid and long term; – The availability of suitable alternative sites; – 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; – Significant investments in leased sites, in particular those with useful lives beyond the lease term; – Costs associated with extending lease arrangements including rent increases during secondary lease periods. Our definition of ‘reasonable certainty’, 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 ‘evergreen’) 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. 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’t be reasonably certain that we wouldn’t 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 2025: – Exercising the purchase option would lead to an estimated increase in the lease liability and right-of-use asset of between £3bn and £5bn. – 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 £1bn and £2bn. 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 company 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.

115
Notes to the parent company financial statements continued
6. Leases
Company as lessee
Right-of-use assets
Most of our right-of-use assets are associated with our leased property portfolio, specifically our office and exchange estate.

| Land and buildings | Network infrastructure | Motor vehicles | Other | Total
| £m | £m | £m | £m | £m
At 1 April 2023 | 2,398 | 23 | 372 | 1 | 2,794
Additions a | 135 | 29 | 169 | — | 333
Depreciation charge for the year | (279) | (19) | (113) | (1) | (412)
Impairment b | (10) | — | — | — | (10)
Other movements c | (23) | 1 | (55) | — | (77)
At 1 April 2024 | 2,221 | 34 | 373 | — | 2,628
Additions a | 80 | 17 | 105 | — | 202
Depreciation charge for the year | (275) | (17) | (113) | — | (405)
Impairment b | — | (14) | — | — | (14)
Transfer to assets held for sale | (2) | — | — | — | (2)
Other movements c | (23) | 1 | (4) | — | (26)
At 31 March 2025 | 2,001 | 21 | 361 | — | 2,383

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 I mpairment charge relate primarily to the early exit of leases as a result of ongoing property rationalisation activity.
c Other movements primarily relate to terminated leases a nd 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:

| 2025 | 2024
Year ended 31 March | £m | £m
Current | 484 | 506
Non-current | 3,078 | 3,366
| 3,562 | 3,872

The following amounts relating to the company’s obligations under lease arrangements were recognised in the income statement in the
year:
– Interest expense of £103 m (FY24: £102 m) on lease liabilities.
– Variable lease payments of £38 m (FY24: £39 m) which are not dependent on an index or rate and which have not been included
in the measurement of lease liabilities.
The total cash outflow for leases in the year was £487 m (FY24: £400 m).
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.
At 31 March 2025 the company was committed to future minimum lease payment s of £218 m in resp ect of leases which have not yet
commenced and for which no lease liability has been recognised (31 March 2024: £47m).
Note 10 presents a maturity analysis of the payments due over the remaining lease term for these liabilities.
Company as lessor
The company acts as lessor in a number of arrangements which have been classified as operating leases. These relate primarily to
Openreach's leases of fixed-line telecommunications infrastructure to external communications providers and leases of devices to
Consumer customers as part of fixed access subscription offerings. The following table analyses payments to be received across the
remaining term of operating lease arrangements where the company is lessor:

| 2025 | 2024
At 31 March | £m | £m
Less than one year | 426 | 419
One to two years | 99 | 115
Two to three years | 31 | 39
Three to four years | 4 | 11
Four to five years | 4 | 11
More than five years | 5 | 5
Total undiscounted lease payments | 569 | 600

Lessor arrangements classified as finance leases are not material to the company.
116
Notes to the parent company financial statements continued
7. Investments in subsidiary undertakings, associates and joint ventures

Material accounting policies that apply to investments in subsidiary undertakings, associates and joint ventures Investments in subsidiary undertakings, associates and joint ventures are stated at cost and reviewed for impairment if there are indicators that the carrying value may not be recoverable. Investments in subsidiary undertakings, associates and joint ventures are derecognised when the company no longer owns the shares of the subsidiary, associate or joint venture or such is dissolved. The company applies predecessor value method of accounting when it enters into a business transfer agreement with its subsidiary. This is considered as business combinations under common control which is outside the scope of IFRS 3 Business Combinations. The predecessor value method involves accounting for assets and liabilities of the acquired business at its carrying values. The carrying values of the assets and liabilities of the acquired business is based on those reported in the BT plc consolidated financial statements.

| Subsidiary undertakings | Joint ventures | Associates | Total |
| £m | £m | £m | £m |
Cost |  |  |  |  |
At 31 March 2024 | 33,529 | 454 | — | 33,983 |
Additions a | 336 | — | 6 | 342 |
At 31 March 2025 | 33,865 | 454 | 6 | 34,325 |
Provisions and amounts written off |  |  |  |  |
At 31 March 2024 | 17,812 | 39 | — | 17,851 |
Provided in the year | 1,479 | 176 | — | 1,655 |
At 31 March 2025 | 19,291 | 215 | — | 19,506 |
Net book value at 31 March 2024 | 15,717 | 415 | — | 16,132 |
Net book value at 31 March 2025 | 14,574 | 239 | 6 | 14,819 |

a Additions in subsidiary undertakings principally arise due to transactions undertaken to simplify our legal entity hierarchy.
Subsidiary undertakings
Details of the company’s subsidiary undertakings are set out on pages 131 to 145.
During the year, the Company received dividend payments from its subsidiaries, where four of the dividend receipts resulted in an
impairment indicator, as the carrying amount of the related investments in the Company’s financial statements exceeded the net asset
value (NAV) of the respective subsidiary and its subgroup subsidiaries financial statements. In response, the Company conducted a
detailed impairment assessment. This review determined that the carrying amounts of the investments were higher than their recoverable
amounts. As a result, an impairment loss of £1,479 m was recognised.
Apart from the circumstances described above, the carrying amounts of the remaining investment in subsidiaries were deemed to be
recoverable.
J oint ventures - Sports JV
In FY23 we formed a sports joint venture with Warner Bros. Discovery (WBD), known externally as TNT Sports, which combined BT Sport
and WBD’s Eurosport UK business.
Further details on the transaction are provided in note 22 to the consolidated financial statement.
For key developments in the Sports JV during the year see note 22 to the consolidated financial statement.
The company holds both ordinary equity shares and preference shares in the Sports JV entity.
117
Notes to the parent company financial statements continued
7. Investments in subsidiary undertakings, associates and joint ventures

| Key accounting estimates made in accounting for the Sports JV Valuation of investment in A preference shares We expect the company’s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out entitlement. BT’s 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 forecasted cash flows of the Sports JV and an internal valuation model with the following key assumptions: – Approximately 60% of revenues and 95% of costs during the remaining earn out period are contractually committed. – Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period. Changes in key assumptions could result in changes in fair value gains or losses. Valuation of BT’s equity interest in the Sports JV For impairment test purpose, the group valued its equity interest in the Sports JV based on the estimated fair value at exit using the following key assumptions: – BT expect to realise its interest in the Sports JV through exit rather than ongoing value in use. – An earnings multiple has been applied to the expected EBITDA at exit - 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. Changes in key assumptions could result in impairment losses. |

Ordinary equity shares
The company records an investment on its ordinary equity interest held in the Sports JV at a deemed cost being the initial fair value of
£414m.
This investment is subsequently held at this deemed cost and reviewed for impairment. Our analysis at 31 March 2025 indicates the fair
value less costs to sell is lower than the carrying amount of the investment, and therefore we have impaired the investment by £176 m
(FY24: no impairment). The company now records an investment on its ordinary equity interest in the Sports JV at £238m.
Preference shares
In addition to the company's ordinary equity shareholding, the company holds the following investments in preference shares in the Sports
JV.

| 2025 | 2024
At 31 March | £m | £m
Investment in A preference shares | 242 | 387
Investment in C preference shares | 153 | 146
Total | 395 | 533

– A preference shares – W e expect these shares to be redeemed by the Sports JV for the distribution of cash to the company under our
earn-out entitlement. The company’s 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.
– C preference shares – The company's return on the shares is driven by changes in the Sports JV’s sports rights portfolio which in turn is
dependent on changes in the wider sports rights market and the Sports JV’s financial performance and are therefore held as a financial
asset at FVTPL under IFRS 9.
A £138 m movement has been recorded across the preference share driven by: (1) £63 m earn-out payment received from the Sports JV
and recorded as a repayment of our investment in A preference shares; and (2) net £75 m fair value loss.
8. Other investm ent s

Material accounting policies that apply to other investments Equity instruments Equity investments are recorded in non-current assets unless they are expected to be sold within one year. 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.

118
Notes to the parent company financial statements continued
8. Other investments

Significant accounting judgements made in accounting for other investments We extend loans to our subsidiaries in order to fund their activities. We regularly consider whether there is an indication of impairment. This involves judgement in reviewing year-end financial position, current year performance, known indicators of future performance and cash- flows, one-off events and contingent liabilities and assets. Based on this if there is an indication that the loan receivable may be impaired we perform an assessment of the recoverable amount and make a provision for the portion that we consider irrecoverable. We exercise judgement in determining whether the loan is fully or partially recoverable, which includes making assumptions regarding the future performance of the subsidiary. These assumptions are normally based on financial plans or through extrapolating current performance taking into account past experience and known future events. A provision of £138m is held against these loans.

| 2025 | 2024
At 31 March | £m | £m
Non-current assets |  |
Fair value through other comprehensive income | 17 | 22
Fair value through profit or loss | — | 5
Loans to group undertakings | 518 | 510
Loans to parent undertakings | 12,438 | 11,615
Total non-current asset investments | 12,973 | 12,152
Current assets |  |
Investments held at amortised cost | 2,631 | 2,366
Loans to group undertakings | 771 | 1,316
Total current asset investments | 3,402 | 3,682

Investments held at amortised cost relate to money market investments denominated in sterling of £2,615m (FY24: £2,355m), in euros of
£3m (FY24: £5m) and in US dollars of £13m (FY24: £6m). Within these amounts are investments in liquidity funds of £2,600m (FY24:
£1,815m), £20m collateral paid on swaps (FY24: £40m), accrued interest on investments of £11m (FY24: £11m) and gilt repurchase
agreements £nil (FY24: £500m).
Loans to group and parent undertakings total £13,727m (FY24: £13,441m). These consist of amounts denominated in sterling of
£12,545m (FY24: £12,258m), euros of £788m ( FY24: £781m), US dollars of £7m (FY24: £8m) and other currencies of £387m (FY24:
£394m).
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Notes to the parent company financial statements continued
9. Trade an d other receivables

Material accounting policies that apply to trade and other receivables Recognition of 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. Contingent assets such as any insurance recoveries, or prepaid programme rights 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. 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 ‘Financial instruments’ and the related cash flows received are presented as cash flows from operating activities. Where a portfolio of trade receivables are either sold or held to collect the contractual cashflows, they are recorded at fair value through other comprehensive income. Allowance for doubtful debts 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 customer-facing units in order to reflect the specific nature of the customers relevant to that customer-facing unit. Contract losses 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 forecasted, 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: - 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; - Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment phases for customer contracts; - The status of commercial relations with customers and the implications for future revenue and cost projections; - Our estimates of future staff and third-party costs and the degree to which cost savings and efficiencies are deliverable.
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.

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Notes to the parent company financial statements continued
9. Trade an d other receivables

| 2025 | 2024
At 31 March | £m | £m
Current receivables |  |
Trade receivables | 859 | 1,166
Amount owed by group undertakings | 593 | 181
Amount owed by ultimate parent company | 10 | 25
Prepayments | 287 | 309
Accrued income | 96 | 72
Deferred contract costs | 179 | 146
Finance lease receivables | 12 | 10
Amounts due from joint ventures | 46 | 163
Other assets a | 153 | 113
Total current receivables | 2,235 | 2,185
Non-current receivables |  |
Deferred contract costs | 212 | 157
Finance lease receivables | 55 | 60
Other assets a | 68 | 85
Total non current receivables | 335 | 302

a Other assets include £35 m (FY24: £57m) of deferred cash consideration mainly relating to the disposal of BT Sport.
Amounts due from joint ventures relates to a sterling Revolving Credit Facility (RCF) provided to the Sports JV formed. The expected loss
provision is immaterial.
10. Loans and other borrowings

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.

121
Notes to the parent company financial statements continued
10. Loans and other borrowings
The table below gives details of the listed bonds and other debt.

| 2025 | 2024
At 31 March | £m | £m
1% €825m bond due November 2024 a | — | 708
3.50% £250m index linked bond due April 2025 b | — | 575
0.5% €419m bond due September 2025 a,c | 351 | 557
1.75% €1,076m bond due March 2026 a,c | 901 | 1,112
1.5% €1,150m bond due June 2027 a | 971 | 991
2.75% €700m bond due August 2027 a | 590 | 601
2.125% €500m bond due September 2028 a | 422 | 431
5.125% $700m bond due December 2028 a | 550 | 561
5.75% £600m bond due December 2028 | 649 | 658
1.125% €750m bond due September 2029 a | 627 | 640
3.25% $1,000m bond due November 2029 a | 780 | 796
9.625% $2,670m bond due December 2030 a (minimum 8.625%d) | 2,122 | 2,166
3.75% €800m bond due May 2031 a | 690 | 704
3.125% £500m bond due November 2031 | 504 | 503
3.125% €850m bond due February 2032 a | 708 | —
3.375% €500m bond due August 2032 a | 424 | 433
4.25% €850m bond due January 2033 a | 710 | 725
3.64% £330m bond due June 2033 | 339 | 339
1.613% £330m index linked bond due June 2033 | 403 | 394
3.875% €895m bond due January 2034 a | 750 | —
6.375% £500m bond due June 2037 | 523 | 523
3.883% £330m bond due June 2039 | 340 | 340
1.739% £330m index linked bond due June 2039 | 404 | 394
5.75% £450m bond due February 2041 a,e | 446 | 445
5.625% £350m bond due December 2041 a,e | 351 | —
3.924% £340m bond due June 2042 | 350 | 350
1.774% £340m index linked bond due June 2042 | 416 | 406
2.08% JPY10,000m bond due February 2043 a | 52 | 52
3.625% £250m bond due November 2047 | 251 | 251
4.25% $500m bond due November 2049 a | 388 | 400
5.125% €750m hybrid bond due October 2054 a,f | 638 | —
1.874% €500m hybrid bond due August 2080 a,f | 423 | 432
4.250% $500m hybrid bond due November 2081 a,f | 391 | 396
4.875% $500m hybrid bond due November 2081 a,f | 393 | 401
8.375% £700m hybrid bond due December 2083 f | 711 | 710
Total listed bonds | 18,568 | 17,994
Loans from group undertakings g | 11,578 | 16,357
Loans related to the forward sale of redundant copper | 93 | 106
Other loans | 12 | 27
Bank overdrafts | 2 | 58
Total other loans and borrowings | 11,685 | 16,548
Total loans and borrowings | 30,253 | 34,542

a Designated in a cash flow hedge relationship.
b Redeemed early in March 2025.
c Bond partially redeemed in June 2024.
d The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody’s or Standard & Poor’s to the group’s senior unsecured debt below
A3/A– respectively. In addition, if Moody’s or Standard & Poor’s 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.
e Designated in a fair value hedge relationship.
f Includes call options between 0.5 years and 6.5 years.
g Loans from group undertakings are £11,578m (FY24 : £16,357m). These consist of £7,329m (FY24: £12,080m) denominated in sterling, £1,544m (FY24: £1,449m) denominated in
euros, £1,952m (FY24: £2,045m) denominated in US dollars, and £753m (FY24 : £783m) denominated in other currencies.
Unless previously or currently 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 £18,132m (FY24: £17,820m).
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.
122
Notes to the parent company financial statements continued
10. Loans and other borrowings
Loans and other borrowings are analysed as follows:

| 2025 | 2024
At 31 March | £m | £m
Current liabilities |  |
Listed bonds | 1,975 | 996
Amount owed to joint ventures | 10 | 11
Loans from group undertakings | 11,578 | 16,357
Other loans and bank overdrafts | 25 | 93
Total current liabilities | 13,588 | 17,457
Non-current liabilities |  |
Listed bonds | 16,593 | 16,998
Other loans | 72 | 87
Total non-current liabilities | 16,665 | 17,085
Total | 30,253 | 34,542

| 2025 |  | 2024
Lease liabilities | Loans and other borrowings | Total |  | Lease liabilities | Loans and other borrowings | Total
At 31 March | £m | £m | £m |  | £m | £m | £m
Repayments falling due as follows: |  |  |  |  |  |  |
Within one year, or on demand | 484 | 13,588 | 14,072 |  | 506 | 17,457 | 17,963
Between one and two years | 558 | 425 | 983 |  | 536 | 2,681 | 3,217
Between two and three years | 543 | 1,583 | 2,126 |  | 530 | 431 | 961
Between three and four years | 530 | 2,261 | 2,791 |  | 518 | 1,614 | 2,132
Between four and five years | 519 | 2,030 | 2,549 |  | 511 | 2,282 | 2,793
After five years | 1,417 | 10,412 | 11,829 |  | 1,792 | 10,107 | 11,899
Total due for repayment after more than one year | 3,567 | 16,711 | 20,278 |  | 3,887 | 17,115 | 21,002
Total repayments | 4,051 | 30,299 | 34,350 |  | 4,393 | 34,572 | 38,965
Non cash adjustments a | — | (46) | (46) |  | — | (30) | (30)
Impact of discounting | (489) | — | (489) |  | (521) | — | (521)
Total loans and other borrowings | 3,562 | 30,253 | 33,815 |  | 3,872 | 34,542 | 38,414

a Fair value adjustments of £39m (FY24: £49m) and unamortised bond fees.
11. Current trade and other payables

Material accounting policies relating 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 programmes as described below. 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 2025 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.

Key accounting estimates made in accounting for other payables Estimate of customer refunds There remains an accounting estimate in place to reflect a risk of revenue billing inaccuracy where there is the presence of bespoke pricing. This is associated with a small number of products across a limited number of billing systems. We have previously recognised a combined £51m and based on the results of testing there has been no change to the expected value of the liability. This is presented within current other payables and represents out 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 adjustments will be released.

| 2025 | 2024
At 31 March | £m | £m
Trade payables | 2,475 | 2,534
Amounts owed to group undertakings | 621 | 414
Amounts owed to ultimate parent company | 12 | 36
Other taxation and social security | 115 | 189
Minimum guarantee with sports joint venture a | 201 | 194
Accrued expenses | 251 | 287
Deferred income b | 423 | 402
Other payables c | 463 | 461
Total | 4,561 | 4,517

a Liability recognised on the minimum revenue guarantee in BT’s distribution agreement with the sports joint venture, see note 22 of the consolidated financial statements.
123
Notes to the parent company financial statements continued
11. Current trade and other payables
b Deferred income includes £98 m (FY24: £106 m) relating to the Building Digital UK programme, for which grants received by the company may be subject to re-investment or
repayment depending on the level of take-up.
c Inclu des £5 1m (FY24: £41m) r elating to an estimate of customer refunds, see key accounting estimate disclosure above.
Current trade and other payables at 31 March 2025 include £ 212 m (31 March 2024: £209 m) of trade payables in a supply chain financing
programme that allows suppliers the opportunity to r eceive 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.
12. Other non-current payables

| 2025 | 2024
At 31 March | £m | £m
Minimum guarantee with sports joint venture a | 87 | 271
Deferred income b | 1,032 | 1,143
Other payables | 5 | 4
Total | 1,124 | 1,418

a Liability recognised on the minimum revenue guarantee in BT’s distribution agreement with the sports joint venture, see note 22 of the consolidated financial statements.
b D eferred income includes £44 m (FY24: £ 122 m) relating to the Building Digital UK programme, for which grants received by the company may be subject to re-investment or
repayment depending on the level of take-up.
13. Provisions & contingent liabilities
Our provisions principally relate to obligations arising from property rationalisation programmes, 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 company 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 company 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 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 'contingent liabilities' section below.

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Notes to the parent company financial statements continued
13. Provisions & contingent liabilities

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 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. 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’s 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 company. 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.

| Property | Regulatory | Litigation | Third party claims | Other | Total
| £m | £m | £m | £m | £m | £m
At 1 April 2023 | 82 | 68 | 28 | 144 | 34 | 356
Additions | 39 | 72 | — | 42 | 2 | 155
Unwind of discount | — | — | — | — | — | —
Utilised | (9) | (37) | — | (52) |  | (98)
Released | (8) | (17) | — | (8) | (1) | (34)
Transfers a | — | — | (3) | — | 17 | 14
At 31 March 2024 | 104 | 86 | 25 | 126 | 52 | 393
Additions | 4 | 37 | 9 | 29 | 38 | 117
Unwind of discount | — | — | — | 1 | — | 1
Utilised | (28) | (45) | — | (32) | — | (105)
Released | (2) | (34) | — | (1) | — | (37)
Transfers | — | — | — | — | — | —
At 31 March 2025 | 78 | 44 | 34 | 123 | 90 | 369

a Transfers relate to the reclassification of balances previously presented in other payables (note 12) following reassessment of the level of certainty over the timing and amount of any
outflow of resources.

| 2025 | 2024
At 31 March | £m | £m
Analysed as: |  |
Current | 187 | 167
Non-current | 182 | 226
| 369 | 393

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. There are no matters brought against the company where we believe a material adverse impact on the operations or
financial condition of the company 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.
Further details on the contingent liabilities are provided in note 17 to the consolidated financial statements.
125
Notes to the parent company financial statements continued
14. Taxation

The value of the company’s income tax asset is disclosed on the company balance sheet on page 106. The values of the company’s
deferred tax assets and liabilities are disclosed in note 18 and below. Deferred tax liabilities are provided for in full on certain temporary
differences.

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. The company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and the company establishes provisions where appropriate on the basis of the amounts expected to be paid to tax authorities. Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of the company’s 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. 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. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and 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 can be regarded as probable that there will be suitable taxable profits, in the foreseeable future against which the deductible temporary difference can be utilised.

Key accounting estimates 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 80% by value of the provisions is under active tax authority examination and are therefore likely to be re-estimated or resolved in the coming 12 months. £75m (FY24: £86m) is included in current tax liabilities or offset against current tax assets where netting is appropriate. We are subject to regular tax authority review, and, under a downside case an additional amount of £135m could be required to be paid. This amount is not provided as we don’t consider this outcome to be probable.

| £m
At 1 April 2023 | 810
Credit recognised in the income statement | 194
Transfer to deferred tax asset | —
Transfer to current tax | —
Credit recognised in reserves | (299)
At 1 April 2024 | 705
Charge recognised in the income statement | 302
Transfer to deferred tax asset | —
Transfer to current tax | —
Credit recognised in reserves | (13)
At 31 March 2025 | 994

| 2025 | 2024
At 31 March | £m | £m
Tax effect of temporary differences due to: |  |
Excess capital allowances | 3,952 | 3,686
Losses | (2,824) | (2,842)
Share-based payments | (51) | (26)
Other | (83) | (113)
Total provision for deferred taxation | 994 | 705

The deferred taxation asset relating to the retirement benefit position is disclosed in note 18.
What factors affect our future tax charges?
We expect a large proportion of our capital spend 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 FY25.
The enhanced and accelerated tax deductions arising under the Government’s super-deduction regime for qualifying capital spend
during FY22 and FY23, together with full expensing for FY24 and FY25, and pension deficit contribution deductions, result in c. £11.3bn of
tax losses expected to be carried forward from FY25, to be utilised against future UK taxable profits.
The UK has enacted Pillar Two legislation which is applicable from 1 April 2024. 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 is 25%, and the group’s business is primarily in the UK, the impact of these rules on the group is not expected to
be material
126
Notes to the parent company financial statements continued
15. Reconciliation of movement in other reserves

| Cash flow reserve a | Fair value reserve | Cost of hedging reserve b | Capital redemption reserve c | Total other reserves
| £m | £m | £m | £m | £m
At 1 April 2023 | 378 | 6 | (37) | 752 | 1,099
Transferred to the income statement | 351 | — | 7 | — | 358
Tax on items taken directly to equity | 69 | — | — | — | 69
Net fair value gain on cash flow hedges | (660) | — | 19 | — | (641)
Transfer to realised profit | 6 | — | — | — | 6
Fair value movements on assets at fair value through other comprehensive income | — | — | — | — | —
At 31 March 2024 | 144 | 6 | (11) | 752 | 891
Transferred to the income statement | 324 | — | 6 | — | 330
Tax on items taken directly to equity | (59) | — | — | — | (59)
Net fair value loss on cash flow hedges | (101) | — | — | — | (101)
Transfer to realised profit | — | — | — | — | —
Fair value movements on assets at fair value through other comprehensive income | — | (6) | — | — | (6)
At 31 March 2025 | 308 | — | (5) | 752 | 1,055

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.
b 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.
c The capital redemption reserve is not available for distribution.
16. Related party transactions
The company is a wholly-owned subsidiary of BT Gro up Investments Limited, which is the immediate parent company. BT Group
Investments Limited is a wholly-owned subsidiary of the ultimate holding company and controlling entity, BT Group plc.
Amounts paid to the the company’s retirement benefit plans are set out in note 18.
Copies of the ultimate holding company's financial statements may be obtained from The Secretary, BT Group plc, 1 Braham Street,
London E1 8EE.
The results of the company are included in the consolidated financial statements of BT Group plc. As permitted by FRS 101, paragraph
8(k) and the Companies Act 2006, the company is exempt from the requirements of IAS 24 Related Party Disclosures to disclose related
party transactions entered into between two or more members of the group, provided that any subsidiary which is a party to the
transaction is wholly-owned by such a member.
The company's related parties include joint ventures, associates, investments and key management personnel.
Associates and joint ventures related parties include the Sports JV with Warner Bros formed during FY23. The amount receivable from the
Sports JV as at 31 March 2025 was £nil (FY24: £3 m) and the amount payable to the Sports JV was £97 m (FY24: £94 m).
As part of the BT Sport transaction, the company has committed to providing the Sports JV with a sterling Revolving Credit Facility (RCF),
up to a maximum for £ 200 m, 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
company’s external short-term borrowings. The outstanding balance under the RCF of £46 m (FY24: £163 m) is treated as a loan
receivable and held at amortised cost. There is also a loan payable to the Sports JV of £10 m (FY24: £ 11 m).
The Sports JV has a foreign exchange hedging arrangement with the company to secure Euros required to meet its commitments to
certain sports rights holders; the company 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 company holds a £36 m (FY24: £29 m) 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:

| 2025 | 2024
At 31 March | £m | £m
Amounts receivable from associates and joint ventures | 2 | 5
Amounts payable to associates and joint ventures | 99 | 95

Other related party transactions include a dividend received from a joint venture of £2m (FY24: £nil).
17. Financial commitments
Financial commitments as at 31 March 2025 include capital commitments of £767 m (FY24: £ 794m ) and other commitments of £2 m
(FY24: £1 m).
TV programme rights commitments were transferred to the Sports JV formed with Warner Bros. Discovery (WBD) during FY23 (see note
7); the company has guaranteed the Sports JV's obligations under certain programme rights commitments; the fair value of these parent
company guarantees is not material.
Other than as disclosed in note 13 in respect of legal and regulatory proceedings, there were no contingent liabilities or guarantees at 31
March 2025 other than those arising in the ordinary course of the company’s business and on these no material losses are anticipated. We
127
Notes to the parent company financial statements continued
17. Financial commitments continued
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 company generally carries its own risks.
18. Retirement benefit plans
Background to BT’s pension plans
The company has both Defined Benefit (DB) and Defined Contribution (DC) retirement benefit plans. The company’s plans are in the UK
and the largest by membership is the BT Pension Scheme (BTPS). The BTPS is a DB plan that was closed to future benefit accrual in 2018
for over 99% of the active membership at the time. The BT H ybrid S cheme (BTHS), which combines elements of both DB and DC plans,
was set up for non-management employees impacted by the closure of the BTPS, and was closed to new entrants in 2019.
New entrants to BT in the UK are eligible to join a DC plan, currently the BT Retirement Saving Scheme (BTRSS), a contract-based
arrangement operated by Standard Life.

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 company or members. The company 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's fund, which is based on contributions paid and the performance of each individual’s chosen investments. The company has no exposure to investment and other experience risks (including longevity).

Critical accounting estimates and significant judgements made when valuing our pension liabilities The measurement of 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.

Critical accounting estimates and significant judgements made when valuing the BTPS assets
Asset-Backed Funding (ABF) arrangement The ABF arrangement, issued to the BTPS in May 2021, has a fair value of £1.1bn at 31 March 2025 (FY24: £1.2bn) 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. Under IFRS, the ABF is recognised as a plan asset in the company's balance sheet, but not recognised at group level.
Refer to note 18 of the BT plc consolidated financial statements for further details on all other critical accounting estimates and significant judgements.

The net defined benefit liability in respect of defined benefit plans reported in the balance sheet is set out below.

| 2025 |  | 2024
| Assets | Liabilities | Surplus / (Deficit) |  | Assets | Liabilities | Surplus / (Deficit)
At 31 March | £m | £m | £m |  | £m | £m | £m
BTPS a | 32,793 | (35,690) | (2,897) |  | 36,601 | (40,038) | (3,437)
Other plans b | 125 | (157) | (32) |  | 104 | (135) | (31)
Total (gross of tax) | 32,918 | (35,847) | (2,929) |  | 36,705 | (40,173) | (3,468)
Deferred tax asset |  |  | 907 |  |  |  | 969
Total (net of tax) |  |  | (2,022) |  |  |  | (2,499)

a Included in the plan assets is £1.1bn (FY24: £1.2bn) related to the asset-backed funding arrangement.
b The balance sheet position comprises plans in surplus of £11m (FY24 : £11m) and plans in deficit of £43m (FY24:£42m). Included in the liabilities is £40m (FY24: £39m) related to
unfunded plans.
128
Notes to the parent company financial statements continued
18. Retirement benefit plans continued
Movements in defined benefit plan assets and liabilities are shown below.

| Assets | Liabilities | Surplus / (Deficit)
£m | £m | £m
At 31 March 2023 | 40,075 | (41,699) | (1,624)
Service cost (including administration expenses and PPF levy) | (30) | (8) | (38)
Interest on pension deficit | 1,898 | (1,959) | (61)
Return on plan assets below pensions interest on assets | (3,083) | — | (3,083)
Actuarial gain arising from changes in financial assumptions | — | 539 | 539
Actuarial gain arising from changes in demographic assumptions | — | 643 | 643
Actuarial (loss) arising from experience adjustments | — | (500) | (500)
Regular contributions by employer | 44 | — | 44
Deficit contributions by employer | 612 | — | 612
Benefits paid | (2,811) | 2,811 | —
At 31 March 2024 | 36,705 | (40,173) | (3,468)
Service cost (including administration expenses and PPF levy) | (15) | (10) | (25)
Interest on pension deficit | 1,757 | (1,899) | (142)
Return on plan assets below pensions interest on assets | (3,321) | — | (3,321)
Actuarial gain arising from changes in financial assumptions | — | 3,606 | 3,606
Actuarial (loss) arising from changes in demographic assumptions | — | (87) | (87)
Actuarial (loss) arising from experience adjustments | — | (139) | (139)
Regular contributions by employer | 44 | — | 44
Deficit contributions by employer | 603 | — | 603
Benefits paid | (2,855) | 2,855 | —
At 31 March 2025 | 32,918 | (35,847) | (2,929)

Asset-Backed Funding arrangement (ABF)
Under the ABF, £180m pa is paid into the BTPS until June 2033, with the payments 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.
Assuming they are all paid, the future payments from the ABF have a present value of £1.2bn as at 31 March 2025 (FY24: £1.3bn). The fair
value of the ABF is £1.1bn at 31 March 2025 (FY24: £1.2bn). This value 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 and the IAS 19 deficit in the company
accounts. Payments from the ABF to BTPS are treated in the same way as coupon payments from bonds, and do not affect the deficit
when they are paid. The ABF would be categorised as an unquoted secure income asset within the asset allocation table in note 18 of the
BT plc consolidated financial statements.
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 BTPS are treated as deficit contributions by the group, and
reduce the IAS 19 deficit, when they are paid.
Further information covering details of the BTPS, including the valuation methodology of plan assets and liabilities, funding valuation and
future funding obligations is disclosed in note 18 of the BT plc consolidated financial statements.
19. Employees and directors
The average number of persons employed by the company (including directors) during the year was:

| 2025 | 2024
Year ended 31 March | 000 | 000
Average monthly number of employees a | 23.1 | 24.7

| 2025 | 2024 (restated)
Year ended 31 March | £m | £m
Wages and salaries | 1,428 | 1,523
Share-based payments | 35 | 55
Social security | 188 | 187
Other pension costs | 148 | 160
| 1,799 | 1,925

a Includes an average of 6 non-UK employees (FY24: 10 non-UK employees).
Restatement of employee costs
During the year ending 31 March 2025, a new payroll system was implemented. This identified that employee pension contributions,
which should have been included in gross wages and salaries, were incorrectly deducted from that category and mapped to employer
pension costs. For the year ending 31 March 2024, £113 million of employee pension contributions were wrongly deducted from wages
and salaries and added to the Group’s other pension costs. This misclassification did not affect total staff costs, and the comparative
figures have been restated.
Additionally, sales commissions paid to employees have been reclassified to be included within wages and salaries. Previously, these
commissions were categorised under 'sales commissions'. For the year ending 31 March 2024, £74 million was reclassified from 'sales
129
Notes to the parent company financial statements continued
19. Employees and directors continued
commissions' to wages and salaries. The 'sales commissions' category has been renamed to 'external sales commissions' to clarify its
content.
20. Directors’ remuneration
Information covering directors’ remuneration, interests in shares and share options of BT Group plc (the ultimate parent), and pension
benefits is included in note 28 to the consolidated financial statements of BT plc.
21. Derivatives
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 All of the company’s derivative financial instruments are held at fair value on the company’s balance sheet. Derivatives designated in a cash flow or fair value hedge The company designates certain derivatives in a cash flow or fair value 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 Group plc’s 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 Group plc’s risk management strategy or if it no longer qualifies for hedge accounting. In line with BT Group plc's policy the company 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. Cash flow hedge 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. Fair value hedge When a derivative financial instrument is designated as a hedge of the exposure in fair value of a recognised asset or liability, or an unrecognised firm commitment, the hedging instrument is measured at fair value with changes in fair value recognised in the income statement. The changes in fair value of the hedging instruments are recorded in the same line in the income statement, together with any changes in fair value of the hedged asset or liability that is attributable to the hedged risk which are remeasured to fair value. In a fair value hedge, an ineffectiveness is automatically recognised in the income statement because changes in the measurement of both the hedging instrument and the hedged item are reported through that. Other derivatives In line with BT Group, company's 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.

At 31 March 2025 | Current asset £m | Non current asset £m | Current liability £m | Non current liability £m
Designated in a cash flow hedge | 104 | 843 | 82 | 338
Designated in a fair value hedge | — | 1 | — | —
Other | 26 | 182 | 24 | 53
Total derivatives | 130 | 1,026 | 106 | 391
At 31 March 2024 |  |  |  |
Designated in a cash flow hedge | 34 | 947 | 80 | 383
Designated in a fair value hedge | — | — | — | —
Other | 17 | 194 | 14 | 62
Total derivatives | 51 | 1,141 | 94 | 445

130
Notes to the parent company financial statements continued
21. Derivatives continued
Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging sterling, 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 company’s 2030 US dollar bond. The hedged cash flows will affect the company’s income statement as interest
and principal amounts are repaid over the remaining term of the borrowings (see note 10).
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.
PPAs and vPPAs are taken out to hedge our exposure to energy prices and provide long-term cost certainty. The hedged cash flows affect
the income statement over the hedged period .
Fair value hedges consist of interest rate swaps that are used to protect against changes in the fair value of certain fixed rate bonds due to
movements in market interest rates. Gains and losses arising on fair value hedges are recognised in the income statement.
All hedge relationships were fully effective in the period. See note 15 for details of the movements in the cash flow hedge reserve.
Other derivatives include £122m (FY24: £121m) in relation to BT plc's interest in the ABF funding arrangement for the BTPS. Further
information is disclosed in note 18 of the BT plc consolidated financial statements.
22. A ssets & liabilities classified as held for sale

Material accounting policies that apply to 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 ‘held for sale’ 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. 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 ‘discontinued operations’.

Significant judgements in assessment of assets held for sale During FY25, BT Group Plc announced its intention to fully focus on UK connectivity and has initiated an active program to explore options to optimise its non-core or global business. At 31 March 2025, management is committed to a plan to sell a separate business within our non-core business providing connectivity solutions to multiple customers in the UK. The sale of this business is considered to be highly probable and is expected to complete within a year. Accordingly, the associated assets and liabilities have been presented as held for sale at 31 March 2025.

Assets and liabilities held for sale
The disposal group held for sale comprised the following assets and liabilities.

| 2025
At 31 March | £m
Assets |
Intangible assets a | 3
Property, plant and equipment b | 5
Right-of-use assets b | 2
Trade and other receivables | 3
Assets held for sale | 13
Liabilities |
Trade and other payables | 3
Lease Liabilities <1yr | 2
Current tax liability | 1
Liabilities held for sale | 6

a Intangible assets of the disposal groups are presented as assets held for sale. See Note 4.
b Property, plant and equipment and right-of-use assets of the disposal groups are presented as assets held for sale. See Note 5 and Note 6 respectively.
There were no assets and liabilities classified as held for sale in FY24.
23. Post balance sheet events
On 3 June 2025, the company issued a EUR 700m senior bond due on 3 January 2035 with a coupon of 3.75% and a GBP 400m hybrid
bond due on 3 December 2055 with a coupon of 6.375% until the first reset date of 30 December 2030 under our European Medium Term
Note programme.
131
Related undertakings

Company name | Group interest in allotted capital a | Share class |  |
Held directly |  |
Bermuda |  |
Century House, 16 Par-la-Ville Road, Hamilton, HM08, Bermuda |  |
Communications Global Network Services Limited | 100% | ordinary |  |
China |  |
Building 16, 6th Floor, Room 602-B, No. 269 Wuyi Road, Hi-tech Park, Dalian, 116023, China |  |
BT Technology (Dalian) Company Limited | 100% | registered |  |
Italy |  |
Via Tucidide 14, 20134, Milano, Italy |  |
BT Italia S.p.A. | 99% | ordinary |  |
Isle of Man |  |
Third Floor, St Georges Court, Upper Church Street, Douglas, IM1 1EE, Isle of Man |  |
Communicator Insurance Company Limited | 100% | ordinary |  |
Jersey |  |
26 New Street, St Helier, JE2 3RA, Jersey |  |
Ilford Trustees (Jersey) Limited | 100% | ordinary |  |
Luxembourg |  |
12 rue Eugene Ruppert, L 2453, Luxembourg |  |
BT Global Services Luxembourg SARL | 100% | ordinary |  |
Netherlands |  |
Herikerbergweg 2, 1101 CM, Amsterdam, Netherlands |  |
BT Nederland N.V. | 100% | ordinary |  |
Republic of Ireland |  |
5th Floor, 2 Grand Canal Plaza, Upper Grand Canal Street, Dublin 4, Ireland |  |
The Faraday Procurement Company Limited | 100% | ordinary |  |
United Kingdom |  |
1 Braham Street, London, E1 8EE, United Kingdom |  |
Autumnwindow Limited | 100% | ordinary |  |
Autumnwindow No.2 Limited | 100% | ordinary |  |
Autumnwindow No.3 Limited | 100% | ordinary |  |
BPSLP Limited | 100% | ordinary |  |
Bruning Limited | 100% | ordinary |  |
BT (RRS LP) Limited | 100% | ordinary |  |
BT Corporate Trustee Limited | 100% | limited by guarantee |  |
BT European Investments Limited | 100% | ordinary |  |
BT Euston Holdings UK Limited | 100% | ordinary |  |
BT Holdings Limited | 100% | ordinary |  |
BT IoT Networks Limited | 100% | ordinary |  |
BT Ninety-Seven Limited | 100% | ordinary |  |
BT Nominees Limited | 100% | ordinary |  |

BT Paddington Holdings UK Limited | 100% | ordinary |  |
BT Property Holdings (Aberdeen) Limited | 100% | ordinary |  |
BT Property Limited | 100% | ordinary |  |
BT Quartz Euston Limited | 100% | ordinary |  |
BT Quartz Holdings UK Limited | 100% | ordinary |  |
BT Quartz Paddington Limited | 100% | ordinary |  |
BT SLE Euro Limited | 100% | ordinary |  |
BT SLE USD Limited | 100% | ordinary |  |
BT Solutions Limited | 100% | ordinary |  |
EE Group Investments Limited | 100% | ordinary |  |
Newgate Street Secretaries Limited | 100% | ordinary |  |
Radianz Limited | 100% | ordinary |  |
Redcare Limited | 100% | ordinary |  |
Southgate Developments Limited | 100% | ordinary |  |
Alexander Bain House, 15 York Street, Glasgow, Lanarkshire, G2 8LA, Scotland |  |
BT Corporate Limited | 99% | ordinary |  |
BT Falcon 1 LP | 50% | – |  |
Holland House (Northern) Limited | 100% | ordinary |  |
6 Gracechurch Street, London, EC3V 0AT, United Kingdom |  |
Openreach Limited | 100% | ordinary |  |
BDO LLP, 55 Baker Street, London, W1U 7EU, United Kingdom |  |
BT OnePhone Limited | 100% | ordinary |  |
Endeavour, Sheffield Digital Campus,1a Concourse Way, Sheffield, S1 2BJ, United Kingdom |  |
Plusnet plc | 100% | ordinary |  |
Held via other group companies |  |
Algeria |  |
20 Micro zone d’Activités Dar El Madina, Bloc B, Loc N01 Hydra, Alger, 16000, Algeria |  |
BT Algeria Communications SARL | 100% | ordinary |  |
Argentina |  |
Maipu No 1210, piso 8 (C1006), Buenos Aires, Argentina |  |
BT Argentina S.R.L. | 100% | ordinary |  |
Australia |  |
Level 20, 420 George Street, Sydney, NSW 2000, Australia |  |
BT Australasia Pty Limited | 100% | ordinary |  |
Austria |  |
Louis-Häfliger-Gasse 10, 1210, Wien, Austria |  |
BT Austria GmbH | 100% | ordinary |  |
Azerbaijan |  |
AZ 1025 The Azure Business Center, 20th Floor, c/o BDO Azerbaijan LLC, Z1025, Khatai district, Afiyaddin Jalilov 26, apt.177, Azerbaijan |  |
BT Azerbaijan Limited, Limited Liability Company | 100% | ordinary |  |
Bahrain |  |
Suite #2216, Building No. 2504, Road 2832, Al Seef, P.O. BOX 18259, Bahrain |  |

BT Solutions Limited (Bahrain Branch)b | 100% | – |  |
Bangladesh |  |
UTC Building, 19th Floor, Kawran Bazar, Dhaka, 1215, Bangladesh |  |
BT Communications Bangladesh Limited | 100% | ordinary |  |
Barbados |  |
3rd Floor, The Goddard Building, Haggatt Hall, St. Michael, BB11059, Barbados |  |
BT (Barbados) Limited | 100% | ordinary |  |
Belarus |  |
58 Voronyanskogo St, Office 89, Minsk 220007, Belarus |  |
BT BELRUS Foreign Limited Liability Company | 100% | ordinary |  |
Belgium |  |
Telecomlaan 9, 1831 Diegem, Belgium |  |
BT Global Services Belgium BV | 100% | ordinary |  |
Global Security Europe Limited – Belgian Branch b | 100% | – |  |
Rue des Guillemins 129, 4000 Liege, Belgium |  |
IP Trade SA | 100% | ordinary |  |
Bolivia |  |
Avda. 6 de Agosto N° 2700, Torre Empresarial CADECO, Piso 4, La Paz, Bolivia |  |
BT Solutions Limited Sucursal Bolivia b | 100% | – |  |
Bosnia and Herzegovina |  |
Trg Heroja 10/1, Sarajevo, 71000, Bosnia and Herzegovina |  |
BTIH Teleconsult Drustvo sa organicenom odgovornoscu za posredovanje i zastupanje d.o.o. Sarajevo | 100% | – |  |
Botswana |  |
Plot 2482b, Tshekedi Crescent, Extension 9, Gaborone, 211008, Bontleng, Botswana |  |
BT Global Services Botswana (Proprietary) Limited | 100% | ordinary |  |
Brazil |  |
Avenida Dr. Ruth Cardoso, 4777 – 14 andar, A parte, Pinheiros, São Paulo, SP, 05477-000, Brazil |  |
BT Communications do Brasil Limitada | 100% | quotas |  |
BT Global Communications do Brasil Limitada | 100% | quotas |  |
Bulgaria |  |
51B Bulgaria Blvd., fl. 4, Sofia, 1404, Bulgaria |  |
BT Bulgaria EOOD | 100% | ordinary |  |
BT Global Europe B.V. – Bulgaria branch b | 100% | – |  |
Canada |  |
100 King Steet West, Suite 6200, 1 Canadian Place, Toronto ON M5X 1B8, Canada |  |
BT Canada Inc. | 100% | common |  |
Chile |  |
Rosario Norte 407, Piso 6, Las Condes, Santiago, Chile |  |
Servicios de Telecomunicaciones BT Global Networks Chile Limitada | 100% | ordinary |  |

132
Related undertakings continued

China |  |
No. 3 Dong San Huan Bei Lu, Chao Yang District, Beijing, 100027, China |  |
BT Limited, Beijing Office b | 100% | – |  |
Room 2101-2103, 21/F, International Capital Plaza, No. 1318 North Sichuan Road, Hong Kou District, Shanghai, 200080, China |  |
BT China Limited- Shanghai Branch Office b | 100% | – |  |
1502-1503, AVIC Center, No. 1008, Huafu Road, Futian District, Shenzhen, 518000, China |  |
BT China Limited – Shenzhen Branch b | 100% | – |  |
Room 3, 4, F7, Tower W3, Oriental Plaza, 1 East Chang An Avenue, Dongcheng District, Beijing, 100738, China |  |
BT China Limited | 100% | registered |  |
Unit 1537B, Floor 15th, No. 55, Xili Road, Shanghai Free Trade Zone, Shanghai, China |  |
BT China Communications Limited | 50% | ordinary |  |
Colombia |  |
Calle 113, 7-21,Torre A Oficina 1015 Teleport Business, Bogota, Colombia |  |
BT Colombia Limitada | 100% | quotas |  |
Costa Rica |  |
Provincia 01 San Jose, Canton 02 Escazu, San Rafael, Centro, Edificio A, Cuarto Piso, Oficinas Deloitte. Costa Rica |  |
BT Global Costa Rica SRL | 100% | ordinary |  |
Côte d’Ivoire |  |
Abidjan Plateau, Rue du commerce, Immeuble Nabil 1er étage, 01 BP 12721 Abidjan 01, Côte d’Ivoire |  |
BT Cote D’Ivoire | 100% | ordinary |  |
Cyprus |  |
Arch. Makarios III, 213, Maximos Plaza, Tower 3, Floor 2, Limassol, 3030, Cyprus |  |
BT Global Europe B.V.b | 100% | – |  |
Czech Republic |  |
Pujmanové 1753 / 10a, Nusle, 140 00, Prague 4, Czech Republic |  |
BT Global Europe B.V., odštěpný závod b | 100% | – |  |
Denmark |  |
Norre Farimagsgade 13, 4. th, 1364 Kobenhavn K, Denmark |  |
BT Denmark ApS | 100% | ordinary |  |
Dominican Republic |  |
Rafael Augusto Sanchez No. 86, Torre Roble Corporate Center Piso 7, Sector Piantini, Santo Domingo, Dominican Republic |  |
BT Dominican Republic, S. A. | 100% | ordinary |  |
Ecuador |  |
Av. Amazonas N21-252 y Carrión, Edificio Londres, 4° Piso, Quito, Ecuador |  |
BT Solutions Limited (Sucursal Ecuador)b | 100% | – |  |
Egypt |  |
Unit no. 306 Administrative Second Floor, Al Saraya Mall, Al Mehwar Al- Markazy, Giza, Egypt |  |
BT Telecom Egypt LLC | 100% | stakes |  |
El Salvador |  |
Edificio Avante Penthouse Oficina, 10-01 Y 10-03 Urbanizacion, Madre Selva, Antiguo Cuscatlan, La Libertad, El Salvador |  |

BT El Salvador, Limitada de Capital Variable | 100% | ordinary |  |
Finland |  |
Mannerheimvägen 12 B 6, 00100 Helsinki, Finland |  |
BT Nordics Finland Oy | 100% | ordinary |  |
France |  |
Tour Ariane, 5 place de la Pyramide, La Defense Cedex, 92088, Paris, France |  |
BT France S.A.S. | 100% | ordinary |  |
Germany |  |
Marcel-Breuer-Straße 6, 80807 Munich, Germany |  |
BT (Germany) GmbH & Co. oHG | 100% | ordinary |  |
BT Deutschland GmbH | 100% | ordinary |  |
BT Garrick GmbH | 100% | ordinary |  |
Hansepark, Hansestraße 61, 51149, Köln, Germany |  |
Global Security Europe Limited – Germany Branch b | 100% | – |  |
Ghana |  |
5th Floor, Vivo Place, Cantonments City, Rangoon Lane, P.O. Box MB 595, Accra, Ghana |  |
BT Ghana Ltd | 100% | ordinary |  |
Guatemala |  |
5ta avenida 5-55 zona 14, Edificio Europlaza World Business Center, Torre IV, nivel 7, oficina 702, Guatemala City, Guatemala |  |
BT Guatemala S.A. | 100% | unique |  |
Honduras |  |
Colonia Florencia Norte, Edificio Plaza America, 5to Piso, Tegucigalpa, Honduras |  |
BT Sociedad De Responsabilidad Limitada | 100% | – |  |
Hong Kong |  |
Unit 31-105, 31/F, Hysan Place, 500 Hennessy Road, Causeway Bay, Hong Kong |  |
BT Hong Kong Limited | 100% | ordinary |  |
Infonet China Limited | 100% | ordinary |  |
Hungary |  |
1112 Budapest, Boldizsár utca 4., Hungary |  |
BT Global Europe B.V. Magyarorszagi Fioktelepe b | 100% | – |  |
BT Limited Magyarorszagi Fioktelepe b | 100% | – |  |
BT ROC Kft | 100% | business |  |
India |  |
11th Floor, Eros Corporate Tower, Opp. International Trade Tower, Nehru Place, New Delhi, 110019, India |  |
BT (India) Private Limited | 100% | ordinary |  |
BT e-Serv (India) Private Limited | 100% | equity |  |
BT Global Communications India Private Limited | 100% | ordinary |  |
BT Telecom India Private Limited | 100% | ordinary |  |
A-47, Hauz Khas, New Delhi, Delhi-DL, 110016, India |  |
Orange Services India Private Limited | 100% | ordinary |  |
Indonesia |  |
Menara Astra, 37F. JI. Jendral Sudirman Kav 5-6, Jakarta Pusat, Jakarta, 10220, Indonesia |  |
PT BT Indonesia | 100% | ordinary |  |

PT BT Communications Indonesia | 95% | ordinary |  |
Isle of Man |  |
Third Floor, St Georges Court, Upper Church Street, Douglas, IM1 1EE, Isle of Man |  |
Belmullet Limited | 100% | ordinary |  |
Priestgate Limited | 100% | ordinary |  |
Israel |  |
Beit Oz, 14 Abba Hillel Silver Rd, Ramat Gan, 52506, Israel |  |
B.T. Communication Israel Ltd | 100% | ordinary |  |
Italy |  |
Viale Abruzzi n. 94 , 20131 Milan, Italy |  |
Global Security Europe Limited b | 100% | – |  |
Via Tucidide 14, 20134, Milano, Italy |  |
Atlanet SpA | 99% | ordinary |  |
Basictel SpA | 99% | ordinary |  |
Jamaica |  |
Suite #6, 9A Garelli Avenue, Half way tree, St. Andrew, Kingston 10, Jamaica |  |
BT Jamaica Limited | 100% | ordinary |  |
Japan |  |
ARK Mori Building, 12-32 Akasaka, 1-Chome, Minato-Ku, Tokyo, 107 – 6018, Japan |  |
BT Japan Corporation | 100% | ordinary |  |
Jersey |  |
PO Box 264, Forum 4, Grenville Street, St Helier, JE4 8TQ, Jersey |  |
BT Jersey Limited | 100% | ordinary |  |
Jordan |  |
Wadi AlSer – Dahiet Prince Rashid – King Abdullah Street, Building No. 391 – 3rd Floor, Jordan |  |
BT (International) Holdings Limited (Jordan) | 100% | ordinary |  |
Kazakhstan |  |
n.p.38b, Building 5, Kaiym Mukhamedkhanov Street, Nura District, Astana, Index 010000, Kazakhstan |  |
BT Kazakhstan LLP | 100% | – |  |
Kenya |  |
L R No, 1870/ 1/176, Aln House, Eldama Ravine close, off Eldama Ravine Road, Westlands, P O Box 764, Sarit Centre, Nairobi, 00606, Kenya |  |
BT Communications Kenya Limited | 70% | ordinary |  |
Korea |  |
Level 19, Hana Securities Building, 81, Uisadang- daero, Yeongdeungpogu, Seoul, 07321, Republic of Korea |  |
BT Global Services Korea Limited | 100% | common |  |
Latvia |  |
Muitas iela 1A, Riga, LV-1010, Latvia |  |
BT Latvia Limited, Sabiedriba ar ierobezotu atbildibu | 100% | ordinary |  |
Lebanon |  |
Abou Hamad, Merheb, Nohra & Chedid Law Firm, Chbaro Street, 22nd Achrafieh Warde Building, 1st Floor, Beirut, P.O.BOX 165126, Lebanon |  |
BT Lebanon S.A.L. | 100% | ordinary |  |
Lithuania |  |

133
Related undertakings continued

Aludariu str 2-33, LT-01113 Vilnius, Lithuania |  |
UAB BTH Vilnius | 100% | ordinary |  |
Luxembourg |  |
12 rue Eugene Ruppert, L 2453, Luxembourg |  |
BT Broadband Luxembourg Sàrl | 100% | ordinary |  |
Malawi |  |
KEZA Office Park Blocks 3, First Floor, Near Chichiri, Shopping Mall, Blantyre, Malawi |  |
BT Malawi Limited | 100% | ordinary |  |
Malaysia |  |
Level 5, Tower 3, Avenue 7, Bangsar South, No.8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia |  |
BT Global Technology (M) Sdn. Bhd. | 100% | ordinary |  |
BT Systems (Malaysia) Sdn Bhd | 100% | ordinary |  |
Malta |  |
Level 1, LM Complex, Brewery Street, Zone 3, Central Business District, Birkirkara CBD, 3040, Malta |  |
BT Solutions Limited b | 100% | – |  |
Mauritius |  |
c/o Deloitte, 7th Floor Standard Chartered Tower, 19-21 Bank Street, Cybercity, Ebène, 72201, Mauritius |  |
BT Global Communications (Mauritius) Limited | 100% | ordinary |  |
Mexico |  |
Boulevard Manuel Avila Camacho No. 32, 6th Floor, Lomas de Chapultepec III Section, Miguel Hidalgo, Mexico City CP11000 |  |
BT LatAm México, S.A. de C.V. | 100% | common |  |
Montenegro |  |
Vasa Raickovica 4b, Podgorica, Podgorica, Montenegro |  |
BT Montenegro DOO | 100% | – |  |
Morocco |  |
Bd. Abdelmoumen, Immeuble Atrium, n 374, Lot. Manazyl Al Maymoune, 5eme etage, Casablanca, 20390, Morocco |  |
BT Solutions Limited – Morocco Branch b | 100% | – |  |
Mozambique |  |
Avenida Kenneth Kaunda, number 660, Sommershield, Maputo City, Mozambique |  |
BT Mozambique, Limitada | 100% | quotas |  |
Namibia |  |
Unit 3, 2nd floor, Ausspann Plaza, Dr Agostinho Neto Road, Ausspannplatz, Private Bag, Windhoek, 12012, Namibia |  |
BT Solutions Limited b | 100% | – |  |
Netherlands |  |
Herikerbergweg 2, 1101 CM, Amsterdam, Netherlands |  |
BT Global Europe B.V. | 100% | ordinary |  |
BT (Netherlands) Holdings B.V. | 100% | ordinary |  |
BT Professional Services Nederland B.V. | 100% | ordinary |  |
Global Security Europe Limited b | 100% | – |  |
New Zealand |  |
c/o Deloitte, Level 20, 1 Queen Street, Auckland Central, Auckland, 1010, New Zealand |  |

BT Australasia Pty Limited – New Zealand Branch b | 100% | – |  |
Nicaragua |  |
De donde fué el Restaurante Marea Alta Ahora quesillos, El Pipe, 2 cuadras al este, 10 Metros al norte, frente al, Hotel El Gran Marquez, Casa #351, Nicaragua, 2815, Nicaragua |  |
BT Nicaragua S.A. | 100% | capital |  |
Nigeria |  |
Civic Towers, Plot GA1, Ozumba Mbadiwe Avenue, Victoria Island, Lagos, Nigeria |  |
BT (Nigeria) Limited | 100% | ordinary |  |
North Macedonia |  |
Str. Dame Gruev no.8, 5th floor, Building “Dom na voenite invalidi”, Skopje 1000, North Macedonia |  |
BT Solutions Limited Branch Office in Skopje b | 100% | – |  |
Norway |  |
Munkedamsveien 45, Oslo, 0121, Norway |  |
BT Solutions Norway AS | 100% | ordinary |  |
Oman |  |
Maktabi Building, Building No. 458, Unit No. 413 4th Floor, Road No – R41, Block No. 203, Plot No. 107, Zone No. SW41, Complex No. 271, Al Watiyah, Bausher, Muscat, Sultanate of Oman, Oman |  |
BT International Holdings Limited & Co. LLC | 100% | ordinary |  |
Pakistan |  |
Cavish Court, A-35, Block 7&8, KCHSU, Shahrah- e-Faisal, Karachi, 75350, Pakistan |  |
BT Pakistan (Private) Limited | 100% | ordinary |  |
Panama |  |
50th and 74th Street, San Francisco, PH 909, 15th and 16th Floor, Panama City, Panama |  |
BT de Panama, S.R.L. | 100% | ordinary |  |
Paraguay |  |
Av. Brasilia N° 767 casi Siria, Asunción, Paraguay |  |
BT Paraguay S.R.L. | 100% | quotas |  |
Peru |  |
AV. Santa Cruz 830, Oficina 301, Miraflores, Lima, Peru |  |
BT Peru S.R.L. | 100% | ordinary |  |
Philippines |  |
11th Floor, Page One Building, 1215 Acacia Ave Madrigal Business Park, Ayala Alabang, Muntinlupa, Metro Manila, 1780, Philippines |  |
IT Holdings, Inc | 100% | ordinary |  |
40th Floor, PBCom Tower 6795, Ayala Avenue cor. Rufino St, Makati City, 1226, Philippines |  |
BT Communications Philippines Incorporated | 100% | ordinary |  |
c/o Sun Microsystems Phil Inc., 8767 Paseo de Roxas, Makati City, Philippines |  |
PSPI-Subic, Inc | 51% | ordinary |  |
Poland |  |
126/134 Marszalkowska St., Room 209, 00-008, Warsaw, Poland |  |
BT Poland Spółka Z Ograniczoną Odpowiedzialnością | 100% | ordinary |  |
Portugal |  |
Rua D. Francisco Manuel de Melo 21-1, 1070-085 Lisboa, Portugal |  |
BT Portugal – Telecomunicaçöes, Unipessoal Lda | 100% | ordinary |  |

Puerto Rico |  |
Corporation Service Company Puerto Rico Inc., c/o RVM Professional Services LLC, A4 Reparto Mendoza, Humacao, 00791, Puerto Rico |  |
BT Communications Sales, LLC Puerto Rico branch b | 100% | – |  |
Qatar |  |
1413, 14th Floor, Al Fardan Office Tower, Doha, 31316, Qatar |  |
BT Global Services (North Gulf) LLC | 49% | ordinary |  |
Republic of Ireland |  |
2 Grand Canal Plaza, Upper Grand Canal Street, Dublin 4, Republic of Ireland |  |
BT Business Telecoms Ireland Limited | 100% | redeemable |  |
BT Communications Ireland Limited | 100% | ordinary |  |
BT Communications Ireland Group Limited | 100% | ordinary |  |
BT Communications Ireland Holdings Limited | 100% | ordinary |  |
BT Datacentres Ireland Limited | 100% | ordinary |  |
Whitestream Industries Limited | 100% | ordinary |  |
Romania |  |
Cladirea A1, Biroul Nr. 52, Nr 35-37, Str. Oltenitei, Sector 4, Bucharest, Romania |  |
BT Global Services Limited Londra Sucursala Bucuresti b | 100% | – |  |
Russia |  |
Room 62, prem xx, Floor 2, Pravdy, 26, 127137, Moscow, Russian Federation |  |
BT Solutions Limited Liability Company | 100% | – |  |
Serbia |  |
Dimitrija Georgijevica Starike 20, Belgrade, 11070, Serbia |  |
BT Belgrade d.o.o | 100% | ordinary |  |
Sierra Leone |  |
84 Dundas Street, Freetown, Sierra Leone |  |
BT (SL) Limited | 100% | ordinary |  |
Singapore |  |
Level 3, #03-01/02 & #03-04, Block B, Alexandra Technopark, 438B Alexandra Road, Singapore, 119968 |  |
BT (India) Private Limited Singapore Branch b | 100% | – |  |
BT Global Solutions Pte. Ltd. | 100% | ordinary |  |
BT Singapore Pte. Ltd. | 100% | ordinary |  |
Slovakia |  |
Pribinova 10, 811 09, Bratislava , mestskó èast’ Staré Mesto, Slovakia |  |
BT Global Europe B.V., o.z.b | 100% | – |  |
BT Slovakia s.r.o. | 100% | ordinary |  |
Slovenia |  |
Cesta v Mestni Log 1, Ljubljana, 1000, Slovenia |  |
BT GLOBALNE STORITVE, telekomunikacijske storitve, obdelava podatkov, podatkovnih baz; d.o.o. | 100% | ordinary |  |
South Africa |  |
74 Waterfall Drive, Buidling 5, Waterfall Corporate Campus, Midrand 2066, South Africa |  |

134
Related undertakings continued

BT Communications Services South Africa (Pty) Limited | 70% | ordinary |  |
BT Building, Woodmead North Office Park, 54 Maxwell Drive, Woodmead, Johannesburg, 2191, South Africa |  |
BT Limited b | 100% | – |  |
Spain |  |
C/ María Tubau, 3, 28050 de Madrid, Spain |  |
BT Global ICT Business Spain SLU | 100% | ordinary |  |
Sri Lanka |  |
100, Braybrooke Place, Colombo 02, Sri Lanka |  |
BT Communications Lanka (Private) Limited | 100% | ordinary |  |
Sudan |  |
Alskheikh Mustafa Building, Parlman Street, Khartoum, Sudan |  |
Newgate Communication (Sudan) Co. Ltd | 100% | ordinary |  |
Sweden |  |
c/o 7A, Vasagatan 28, 111 20, Stockholm, Sweden |  |
BT Nordics Sweden AB | 100% | ordinary |  |
Switzerland |  |
Richtistrasse 5, 8304 Wallisellen, Switzerland |  |
BT Switzerland AG | 100% | ordinary |  |
Taiwan |  |
11F, No. 1 Songzhi Rd, Xinyi Dist., Taipei City, 110411, Taiwan (Province of China) |  |
BT Limited Taiwan Branch b | 100% | – |  |
Tanzania |  |
Region Dar Es Salaam, District Kinondoni, Ward Msasani, Street Msasani Peninsula, Road 1 Bains Singh Avenue, Plot number 1403/1, Ground Floor, 14111, United Republic of Tanzania |  |
BT Solutions Limited – Tanzania Branch b | 100% | – |  |
Thailand |  |
No.63 Athenee Tower, 23rd Floor (CEO Suite, Room No.38), Wireless Road, Kwaeng Lumpini, Khet Pathumwan, Bangkok, 10330, Thailand |  |
BT Siam Communications Co., Ltd | 49% | class B |  |
BT Siam Limited | 69% | ordinary |  |
| 69% | preference |  |
Trinidad and Tobago |  |
2nd Floor CIC Building, 122-124 Frederick Street, Port of Spain, Trinidad and Tobago |  |
BT Solutions Limited b | 100% | – |  |
Tunisia |  |
Rue de I’, Euro Immeuble Slim, Block A-2nd floor- Les berges du Lac, Tunis, 1053, Tunisia |  |
BT Tunisia S.A.R.L | 100% | ordinary |  |
Turkey |  |
Acıbadem Mahallesi Çeçen Sk. Akasya A , Kule Kent Etabı Apt. No: 25 A/28- , Üsküdar, Istanbul, Turkey |  |
BT Bilisim Hizmetleri Anonim Şirketi | 100% | ordinary |  |
BT Telekom Hizmetleri Anonim Şirketi | 100% | common |  |
Uganda |  |

Engoru, Mutebi Advocates, Ground Floor, Rwenzori House, 1 Lumumba Avenue, Kampala, 22510, Uganda |  |
BT Solutions Limited b | 100% | – |  |
Ukraine |  |
Office 702, 34 Lesi Ukrainky Boulevard, Kyiv 01042, Ukraine |  |
BT Ukraine Limited Liability Company | 100% | stakes |  |
United Arab Emirates |  |
Office no 315-318, DIC Building No. 10, Dubai Internet City, PO Box 25205, Dubai , United Arab Emirates |  |
BT MEA FZ-LLC | 100% | ordinary |  |
Office no.206 BLOCK B, Diamond Business Center 1, Al Barsha South Third, Dubai, P.O. BOX 25205, United Arab Emirates |  |
BT UAE Limited – Dubai Branch (1)b | 100% | – |  |
BT UAE Limited – Dubai Branch (2)b | 100% | – |  |
United Kingdom |  |
1 Braham Street, London, E1 8EE, United Kingdom |  |
Belmullet (IoM) Limited b | 100% | – |  |
BT (International) Holdings Limited | 100% | ordinary |  |
BT Communications Ireland Group Limited – UK Branch b | 100% | – |  |
BT Fifty-One | 100% | ordinary |  |
BT Fifty-Three Limited | 100% | ordinary |  |
BT Global Security Services Limited | 100% | ordinary |  |
BT Global Services Limited | 100% | ordinary |  |
BT Limited | 100% | ordinary |  |
BT Sixty-Four Limited | 100% | ordinary |  |
BT UAE Limited | 100% | ordinary |  |
Communications Global Network Services Limited – UK Branch b | 100% | – |  |
Communications Networking Services (UK) | 100% | ordinary |  |
EE (Group) Limited | 100% | ordinary |  |
EE Limited | 100% | ordinary |  |
EE Pension Trustee Limited | 100% | ordinary |  |
ESAT Telecommunications (UK) Limited | 100% | ordinary |  |
Extraclick Limited | 100% | ordinary |  |
Global Security Europe Limited | 100% | ordinary |  |
Mainline Communications Group Limited | 100% | ordinary |  |
Mainline Digital Communications Limited | 100% | ordinary |  |
Numberrapid Limited | 100% | ordinary |  |
Orange Furbs Trustees Limited | 100% | ordinary |  |
Orange Home UK Limited | 100% | ordinary |  |
Orange Personal Communications Services Limited | 100% | ordinary |  |
Tudor Minstrel | 100% | ordinary |  |
United States |  |

c/o Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808, United States |  |
BT Americas Holdings Inc. | 100% | common |  |
BT Americas Inc. | 100% | common |  |
BT Communications Sales LLC | 100% | units |  |
BT Federal Inc. | 100% | common |  |
BT Procure L.L.C. | 100% | units |  |
BT United States L.L.C. | 100% | units |  |
BT Quartz Euston LLC | 100% | units |  |
BT Quartz Paddington LLC | 100% | units |  |
Infonet Services Corporation | 100% | common |  |
Uruguay |  |
Rincón 487 Piso 11, Montevideo, Zip Code 11.000, Uruguay |  |
BT Solutions Limited Sucursal Uruguay b | 100% | – |  |
Venezuela |  |
Calle Guaicaipuro, Urbanizacion El Rosal, Municipio Chacao, Oficina 11B, Piso 11, Torre Forum, Caracas, Venezuela |  |
BT LatAm Venezuela, S.A. | 100% | ordinary |  |
Vietnam |  |
16th Floor Saigon Tower, 29 Le Duan Road, District 1, Ho Chi Minh City, 710000, Socialist Republic of Vietnam |  |
BT (Vietnam) Co. Ltd. | 100% | ordinary |  |
Zambia |  |
Plot No. 11058, Haile Selassie Avenue, Zimbabwe, Lusaka, Lusaka Province, 34972, Zambia |  |
BT Solutions Limited b | 100% | – |  |
Zimbabwe |  |
6th Floor, Goldbridge Eastgate, Sam Nujoma Street Harare, Post Box 10400, Zimbabwe |  |
Numberrapid Limited b | 100% | – |  |
Associates |  |
Company name | Group interest in allotted capital a | Share class |  |
Held directly |  |
United Kingdom |  |
The Blade, Abbey Square, Reading, RG1 3BE, United Kingdom |  |
Altitude Angel Ltd | 23% | preference |  |
2nd Floor, Aldgate Tower, 2 Leman Street, London, E1 8FA, United Kingdom |  |
Youview TV Limited | 14% | voting |  |
Held via other group companies |  |
Mauritius |  |
IFS Court, Bank Street, TwentyEight Cybercity, Ebene, 72201, Mauritius |  |
Mahindra – BT Investment Company (Mauritius) Limited | 43% | ordinary |  |
Philippines |  |
32F Philam Life Tower, 8767 Paseo de Roxas, Makati City, Philippines |  |
ePLDTSunphilcox JV, Inc | 20% | ordinary |  |
SunPhilcox JV, Inc | 20% | ordinary |  |

135
Related undertakings continued

United Kingdom |  |
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG, United Kingdom |  |
Digital Mobile Spectrum Limited | 25% | ordinary |  |
10 Stadium Business Court , Millennium Way, Pride Park , Derby, DE24 8HP, United Kingdom |  |
Midland Communications Distribution Limited | 35% | ordinary |  |
Phoneline (M.C.D) Limited | 35% | ordinary |  |
Joint ventures |  |
Company name | Group interest in allotted capital a | Share class |  |
Held directly |  |
United Kingdom |  |
Chiswick Park Building 2, 566 Chiswick High Road, London, W4 5YB, United Kingdom |  |
TNT Sports Broadcasting Limited c | 50% | ordinary |  |
6th Floor, One London Wall, London, EC2Y 5EB, United Kingdom |  |
Internet Matters Limited | 25% | - |  |
Held via other group companies |  |
United Kingdom |  |
80 Fenchurch Street , London, EC3M 4AE, United Kingdom |  |
Rugby Radio Station (General Partner) Limited | 50% | ordinary |  |
Rugby Radio Station (Nominee) Limited | 50% | ordinary |  |
Rugby Radio Station LP | 50% | – |  |

Joint operations |  |
Company name | Group interest in allotted capital a | Share class |  |
Held via other group companies |  |
United Kingdom |  |
450 Longwater Avenue, Green Park, Reading, Berkshire, RG2 6GF, United Kingdom |  |
Mobile Broadband Network Limited | 50% | ordinary |  |

EE Limited and Hutchison 3G UK Limited
(together ‘the Companies’) each have a 50%
share in the joint operation Mobile Broadband
Network Limited (‘MBNL’). MBNL’s ongoing
purpose is the operation and maintenance of
radio access sites for mobile networks through
a sharing arrangement. This includes: (i) the
efficient management of shared infrastructure
for both shareholders and a 3G network on
behalf of Hutchison 3G UK Ltd, (ii) acquiring
certain network elements for shared use, and
(iii) coordinating the deployment of new sites,
infrastructure and networks on either a shared
or a unilateral basis (unilateral elements being
network assets or services specific to one
company only). The group is committed to
incurring 50% of costs in respect of
restructuring the shared MBNL network, a
broadly similar proportion of the operating
costs (which varies in line with usage), and
100% of any unilateral elements.
MBNL is accounted for as a joint operation.
Guarantees for the joint operation are given by
British Telecommunications plc and CK
Hutchison Holdings Limited.
The principal place of business of the joint
Operation is in the UK.
a The proportion of voting rights held corresponds to the
aggregate interest in percentage held by the holding
company and subsidiaries undertaking.
b No shares issued for a branch.
c In addition to the 50% ordinary A shares we also hold A
preference shares and C preference shares, see note 24 for
more details.
136
Subsidiaries exempt from audit
The following subsidiary undertakings have taken the exemption from the requirements of audit of individual accounts
by parent guarantee under section 479A-479C of the Companies Act 2006:

Subsidiary | Registered number |  | Subsidiary | Registered number |  | Subsidiary | Registered number
Autumnwindow Limited | 4109614 |  | BT Holdings Limited | 2216773 |  | ExtraClick Limited a | 4552808
Autumnwindow No.2 Ltd | 4312827 |  | BT IoT Networks Limited | 2329342 |  | Global Security Europe Limited | 12290726
BPSLP Limited | 11251566 |  | BT Limited | 2216369 |  | Holland House (Northern) Limited | SC390251
Bruning Limited | 4958289 |  | BT Ninety-Seven Limited | 14017603 |  | Mainline Communications Group Limited | 2862068
BT (International) Holdings Limited | 2216586 |  | BT Property Holdings (Aberdeen) | 10255933 |  | Mainline Digital Communications Limited | 2973418
BT (RRS LP) Limited | 4109640 |  | BT Sixty-Four Limited | 4007415 |  | Numberrapid Limited | 4825279
BT European Investments Limited | 4276882 |  | BT Sle Euro Limited | 7573610 |  | Openreach Limited | 10690039
BT Fifty-One | 3621755 |  | BT Sle USD Limited | 7573644 |  | Radianz Limited | 3918478
BT Fifty-Three Limited | 3621745 |  | BT Solutions Limited | 4573373 |  | Tudor Minstrel | 3747023
BT Global Security Services Limited | 11786115 |  | BT UAE Limited | 4726666 |  |  |
BT Global Services Limited | 2410810 |  | Communications Networking Services (UK) | 2840475 |  |  |

a ExtraClick Limited has a 30 September 2024 year-end
137
Additional Information
Alternative performance measures
Introduction
We assess the performance of the group using a variety of
alternative performance measures that are not defined under IFRS
and are therefore termed non-GAAP measures. The non-GAAP
measures we use are: adjusted revenue, adjusted UK service
revenue, adjusted operating costs, adjusted finance expense,
adjusted EBITDA, adjusted operating profit and adjusted profit
before tax. The rationale for using these measures, along with a
reconciliation from the nearest measures prepared in accordance
with IFRS, is presented below.
The alternative performance measures we use may not be directly
comparable with similarly titled measures used by other
companies.
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’s results in this
way is relevant to an understanding of the group’s financial
performance as specific items are those that in management’s
judgement need to be disclosed by virtue of their size, nature or
incidence.
This presentation is consistent with the way that financial
performance is measured by management and reported to the
Board and the BT Group plc Executive Committee and assists in
providing an additional analysis of our reporting trading results.
In determining whether an event or transaction is specific,
management considers quantitative as well as qualitative factors.
E xamples 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, impairment
on remeasurement of the disposal groups to be held for sale,
impairment charges in our portfolio businesses, charges or credits
relating to retrospective regulatory matters, property
rationalisation programmes, out of period balance sheet
adjustments, 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 as specific. Refer to note 22 for
further detail.
Details of items meeting the definition of specific items in the
current and prior year are set out in note 9.
Reported revenue, reported operating costs, reported operating
profit, reported net finance expense, reported profit before tax
and reported earnings per share are the equivalent IFRS measures.
A reconciliation from these can be seen in the group income
statement on page 35.
Adjusted EBITDA
In addition to measuring financial performance of the group and
customer-facing units based on adjusted operating profit, we also
measure performance 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.
We consider adjusted EBITDA to be a useful measure of our
operating performance because it approximates the underlying
operating cash flow by eliminating depreciation and amortisation.
Adjusted EBITDA is not a direct measure of our liquidity, which is
shown by our cash flow statement, and needs to be considered in
the context of our financial commitments.
A reconciliation of reported profit for the period, the most directly
comparable IFRS measure, to adjusted EBITDA, is set out below.

| 2025 | 2024
Year ended 31 March | £m | £m
Reported profit for the period | 1,781 | 1,566
Tax | 280 | 331
Reported profit before tax | 2,061 | 1,897
Net finance expense | 417 | 298
Depreciation and amortisation, including impairment charges | 4,978 | 5,398
Specific revenue | 12 | 38
Specific operating costs before depreciation and amortisation | 727 | 450
Share of post tax losses (profits) of associates and joint ventures | 8 | 21
Adjusted EBITDA | 8,203 | 8,102

Adjusted UK service revenue
Adjusted UK service revenue is one of the group’s key performance
indicators by which our financial performance is measured.
Adjusted UK service revenue excludes revenues from our Global
channel and international elements of our Portfolio channel within
our Business segment, as they are international in nature.
Adjusted UK service revenue comprises all UK revenue less UK
equipment revenue. Some revenue from equipment is included
within adjusted UK service revenue where that equipment is sold as
part of a managed services contract, or where that equipment
cannot be practicably separated from the underlying service.
We consider adjusted UK service revenue to be an important
indicator of the successful delivery of our refreshed corporate
strategy because it measures the predictable and recurring
revenue from our core UK business.
A reconciliation of reported revenue, the most directly comparable
IFRS measure, to adjusted UK service revenue, is set out below.

| 2025 | 2024
Year ended 31 March | £m | £m
Reported revenue | 20,358 | 20,797
Specific revenue | 12 | 38
Adjusted revenue | 20,370 | 20,835
Of which non-UK a revenue | (2,478) | (2,717)
Adjusted UK revenue | 17,892 | 18,118
UK equipment b revenue | (2,310) | (2,391)
Adjusted UK service revenue | 15,582 | 15,727

a UK revenue excludes revenue generated from international channels within our
Business segment. This is different to the non-UK revenue in Note 4 as it is
disaggregated based on revenue from external customers on the basis of customer
location.
b This includes Consumer equipment of £1,806m (FY24: £1,918m) and Business
equipment of £504m (FY24: £473m), which is different to Note 5 where it is
disaggregated based on product and segment.
Below we reconcile Adjusted UK service revenue by unit:

| 2025 | 2024
Year ended 31 March | £m | £m
Consumer | 7,888 | 7,916
Business | 4,861 | 4,937
Openreach | 6,156 | 6,077
Other | 12 | 11
Intra-group items | (3,335) | (3,214)
Total | 15,582 | 15,727

138

Cautionary statement regarding forward-looking statements

Certain information included in this Annual Report and Accounts is
forward looking and involves risks, assumptions and uncertainties
that could cause actual result s to differ materially from those
expressed or implied by forward looking statements. Forward
looking statements cover all matters which are not historical facts
and include, without limitation, projections relating to results of
operations and financial conditions and the Company’s plans and
objectives for future operations. Forward looking statements can
be identified by the use of forward looking terminology, including
terms such as ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’,
‘forecasts’, ‘intends’, ‘plans’, ‘projects’, ‘goal’, ‘target’, ‘aim’, ‘may’,
‘will’, ‘would’, ‘could’ or ‘should’ or, in each case, their negative or
other variations or comparable terminology. Forward looking
statements in this Annual Report and Accounts are not guarantees
of future performance. All forward looking statements in this
Annual Report and Accounts are based upon information known to
the Company on the date of this Annual Report and Accounts.
Accordingly, no assurance can be given that any particular
expectation will be met and readers are cautioned not to place
undue reliance on forward looking statements, which speak only at
their respective dates. Additionally, forward looking statements
regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the
future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority), the Company undertakes no obligation to
publicly update or revise any forward looking statement, whether
as a result of new information, future events or otherwise. Nothing
in this Annual Report and Accounts shall exclude any liability under
applicable laws that cannot be excluded in accordance with
such laws.