BT Group Plc: Part 3

A comparison of financial reports of BT Group PLC with those of its financial performance and also those of its competitors indicates that the company is providing genuine and useful information. In particular, the company’s reports reflect its current performance and the enterprise’ business environment. The reports that I have analyzed to come up with this conclusion are BT Group Plc. strategic report, operating review, risk report, audit committee report, and remuneration report.
The company’s strategies reflect the current trend in the telecommunication industry. In this case, BT Group Plc. aims at delivering superior customer services, transforming its costs, and investing in growth. To achieve this goals, the company is investing in fibre, television and content, mobility and future voice, in the United Kingdom business markets, and also in leading global companies. Additionally, the company is providing its customers with high-quality customer services, which is essential for enabling customer satisfaction. BT Group Plc. Investment decisions on its fiver growth areas are driven by the company’s financial strength, competent personnel, access to network and physical assets, research and development, stakeholders and relationships, and natural resources.
Regarding financial strength, BT Group Plc. has ensured that it has enough capital to make appropriate strategic moves by focusing on its cash flows. With over 10,500 employees, BT Group Plc. has a wide pool of qualified personnel who can enable the company to achieve its strategies. The company has also invested heavily in network and physical assets, which allow it to improve the quality of its services. BT Group also invests heavily in research and development, and it is actually one of the largest investors in research in the United Kingdom. Additionally, BT Group has sound relationships with its key stakeholders, who include creditors, shareholders, suppliers, customers, government and regulators, and communities. Finally, the company has continued to protect its natural resources through waste management and control of emissions.
An operational review of the company’s actual performance indicates that the business is healthy and can achieve its short-term and long-term goals. As at the end of 2017, BT Group Plc. had the ability to invest over 3 billion pounds in fibre broadband to 95% of the United Kingdom. The business also aims at expanding its ultrafast broadband to 10m premises. As of 31 March 2016, the company had 102, 500 fulltime employees in 61 countries. Another 12,800 joined the group after the acquisition of EE. Additionally, there were another 11,400 fresh graduates who were recruited to bring fresh ideas and new approaches in the company. BT Group Plc network and physical assets are spread across 180 countries and are supported by in-country infrastructure. This infrastructure includes access to over 18,500 base stations through the MBL joint operation between EE and Hutchison 3G UK. The company also owns 7,000 properties in the UK and 1,730 in the rest of the world. Regarding research and development, BT Group Plc. had about 4,700 patents and applications as of 31 March 2016. Between 2015 and 2016, the company generated 3.6 billion pounds from products that contribute to carbon abatements, which was an increased from 3.4 billion generated between 2014 and 2015. This achievement shows the company’s efforts to protect the environment.
The main strategic risks the BT Group Plc faces are strategic and financial risks, operational risks, compliance risks, and EE acquisition risks. Financial and strategic risks are increased competition, which is due to the many players in the United Kingdom, and the increased use of cheaper communication systems due to technological developments. There has also been an increase in the communication industry, which requires the company to be more careful in its operations. Regarding the operation risks, the company is now expected to enhance the security of its systems to protect customers’ data. Additionally, it must ensure that its supply chain operates smoothly to avoid unnecessary interruptions in its provision of services. BT Company also ensures that all its officers comply with the current business regulations such as the UK Bribery Act and US Foreign Corrupt Practices Act (FCPA). Finally, the acquisition of EE introduced various risks to BT Group Plc., such as delays in deployment of new technologies and the failure of the joint venture.
The company’s report on remuneration shows that it pays its board members and employees’ competitive salaries. These type of salaries and incentives are appropriate for encouraging them to commit to performing their very best in their tasks. Additionally, they help the company to attract, retain and motivate competent employees. As a policy, the company reviews the salaries of its directors annually, and they may be adjusted if there are changes in their scope or competence. They also offer various incentives such as share plans and pensions to attract and retain competent directors
Finally, the BT Group Plc. audit report showed that that company’s strategic operating, reporting, and remuneration reports provide an honest view of the company. In the report, I was able to learn that the company’s financial statements give a true and fair view of the state of the group’s affairs as at the end of 31st March 2016. Additionally, I learned that these financial statements had been properly prepared according to the International Financial Reporting Standards and the Companies Act 2006 and also Article 4 of the IAS Regulation (BR Group plc., 2017). These report also acknowledged that the strategic report and report of the directors for the financial year for which the statements are prepared were consistent with the financial statements. From my observation of the strategic, operating, risk, audit committee, and remuneration reports, and their comparison with the company’s financial statements, I have concluded that they provide an honest and fair view of BT Group Plc. position, performance, and prospects.

References

BT Group plc. (2017). BT Group plc: Annual report and Form 20-F 2016. Retrieved from https://www.btplc.com/Sharesandperformance/Annualreportandreview/pdf/2016-Annual-Report.pdf.