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Pages:
11 pages/≈3025 words
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10 Sources
Style:
Harvard
Subject:
Mathematics & Economics
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Essay
Language:
English (U.K.)
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MS Word
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Financial analysis of BT Group Plc Company

Essay Instructions:
PLEASE INCLUDE ALL SOURCES, and calculations. See Brief uploaded. SECTION ONE Carry out an analysis of the Report and Financial Statements 2010 of BT Group plc, a UK-based telecoms business http://www(dot)btplc(dot)com/Sharesandperformance/Annualreportandreview/pdf/BTGroupAnnualReport2010.pdf The analysis in this order should include 1. A comparison of 2010 results with 2009 results 2. A ratio analysis of both years 2010 and 2009 3. A comparison with industry average figures as available 4. A discussion and explanation of your results PLEASE SHOW ALL WORKINGS The chosen techniques of analysis identify and apply reliable and valid performance measurement tools and techniques based on data taken from the case study and from outside sources Prepare a detailed and structured report/essay (pretending) it's addressed to the directors of BT Group plc. Please include evidence of all research materials including full workings of financial analysis at the end of the essay. The report must include the following headings: 1. Liquidity 2. Solvency, 3. Working capital management 4. Profitability 5. Asset efficiency Each heading must incliude a minimum of three (3) ratio analysis under each of the above headings for each of the two years covered. The choice of analysis techniques highlights the interdependencies of ratios ********** SECTION TWO Following on from the research above, on financial analysis of the performance of BT Group plc to include financial and non-financial performance indicators. Carry out a performance audit of an organization including reference to internal and external factors a) Using information published information and materials from above (Section ONE), prepare a balanced scorecard for the directors of BT Group plc. b) Describe and explain how each aspect of the scorecard can assist BT Group plc in achieving its goals and targets. The outcome of this task is an extension from Section One. All assumptions, systems and procedures must be suitably referenced in research. ******* SECTION THREE Commonly-used investment project appraisal methods include Net present value of the project, Payback period and Internal rate of return. Make recommendations based on a post-audit appraisal on the appropriateness of selected investment project decisions (a) Explain clearly, using an example from published information concerning BT Group plc, the decision rule underlying each of the appraisal methods used above and how BT Group plc might apply each of these rules in making a long-term financial and strategic investment, such as introducing fiber-optic cabled broadband. BT Group plc as a public limited company is accountable to its shareholders in law. In addition to this accountability that it shares with all public limited companies, historical events around its formation have left it with a Universal Service Obligation (USO) to provide certain services to all sectors of the population regardless of ability to pay. (b) Identify, describe and explain investment appraisal methods that would be appropriate to include in BT's decision-making process when seeking to comply with the USO. Use the balanced scorecard developed in SECTION Two to suggest how the directors of BT could conduct an appraisal of the success of a project they have initiated some time (say 5 years) after the project was implemented. THE FINAL WORK SHOULD HAVE: SUITABLE CONCLUSIONS, BACKED WITH RELEVANT CITATIONS AND RESEARCH. RECOMMENDATIONS MUST BE SUITABLE, TO THE POINT, AND REALISTIC IN THE CONTEXT. THE FINAL WORK SHOULD BE logical and complete steps followed in analyzing, explaining and integrating results. MUST HAVE substantial investigation into the assignment subject has been carried out
Essay Sample Content Preview:

Running head: Financial analysis of BT Group Plc Company
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FINANCIAL ANALYSIS OF BT GROUP PLC.BUSINESSES
INTRODUCTION
BT Group plc (BT) is an integrated group of businesses that provides voice and data services. It is involved in providing communications solutions and services around the world and these include networked IT services, local, national and international telecommunications services, higher value broadband and internet products and services. The company serves a wide customer base including major corporate, business, wholesale and consumer. It also operates its business across four divisions namely, BT Global services, BT Retail and BT wholesale and open reach (BT Group,2010).
FINANCIAL ANALYSIS
1 A COMPARISON OF 2010 RESULTS WITH 2009 RESULTS
Group results

2010 £m

2009 £m

change

Revenue




-adjusted

£20,911

£21,431

2%

-reported

£20,859

£21,390

2%

EBITDA




-adjusted

£ 5,639

£ 5,238

8%

-reported

£ 5,162

£ 3,191

62%

Profit(loss) before taxation




-adjusted

£ 1,735

£ 1,454

19%

-reported

£ 1,007

£ 244

£ 1,251 m

Earnings(loss) per share




-adjusted

17.3p

14.1p

23%

-reported

13.3p

2.5p

15.8p

Proposed full year dividend

6.9p

6.5p

6%

Fresh cash flow

£ 1,933

£ 737

£ 1,196m

Net debt

£ 9,283

£ 10,361

£ 1,078m

PERFORMANCE AGAINST THE OUTLOOK FOR 2010

Outlook may 2009

Outlook updated

outcome

Outlook achieved

Adjusted revenue decline

4%-5%

3%-4%

2%

yes

Total underlying cost reductions

>£1 bn

>£1.5bn

£ 1.75 bn

yes

Adjusted EBITDA before leaver costs

_

c.£ 5.7 bn

£ 5.8 bn

yes

Capital expenditure

c.£ 2.7 bn

c.£ 2.5 bn

£ 2.5 bn

yes

Free cash flow

>£ 1 bn

c.£ 1.7 bn

£ 1.9 bn

yes

Full year dividend

_

c.5% up

6% up

yes

Net debt

_

<£ 10.0 bn

£ 9.3 bn

yes

2 A RATIO ANALYSIS OF BOTH YEARS 2010 AND 2009

2010 £m

2009 £m

Ratio

Revenue

8,297

8,663

0.95:1

Net operating costs

6,447

6,999

0.92:1

Adjusted EBITDA Depreciation and amortization

1,850
459

1,664
426

1.1:...
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