TIDMBT.A
RNS Number : 5689N
BT Group PLC
27 October 2016
27 October 2016
BT GROUP PLC
RESULTS FOR THE SECOND QUARTER TO 30 SEPTEMBER 2016
BT Group plc (BT.L) today announced its results for the second
quarter and half year to 30 September 2016.
Financial highlights for the quarter:
-- Reported revenue up 35%, and growth in underlying revenue(1)
excluding transit adjusted for the acquisition of EE up 1.1%
-- Reported earnings per share down 10%, adjusted(2) earnings per share up 4%
-- Underlying EBITDA(1) adjusted for the acquisition of EE up 0.9%
-- Non-cash specific item charge of GBP145m following initial
investigation into inappropriate management behaviour in BT
Italia
-- Net cash inflow from operating activities of GBP1,734m, up
GBP489m and normalised free cash flow(3) of GBP894m, up GBP325m
reflects timing of receipts and payments within the year; net debt
GBP9,573m
-- Interim dividend 4.85p, up 10%
-- Outlook unchanged
Operational highlights for the quarter:
-- Mobile pay monthly net additions of 280,000, with sustained low churn
-- 65% retail share of total broadband net additions at 76,000,
with retail fibre broadband net additions at 216,000
-- Openreach achieved 440,000 fibre broadband net additions,
including >50% from external service providers for first
time
-- Over 1,000 new UK-based customer service roles in Consumer in
the second half to answer 90% of calls in the UK
-- Good progress clearing long tail of outstanding Ethernet orders in Openreach
-- Openreach ahead on all 60 minimum service levels and on track
to halve missed appointments this year
Gavin Patterson, Chief Executive, commenting on the results,
said:
"This is a positive set of results, both operationally and
financially, and we remain on track to achieve our full year
outlook. We've made good progress on the integration of EE and the
delivery of our synergy targets. Our consumer facing lines of
business have performed well, but in the enterprise space, UK
public sector continues to be a challenging market. Across the
group, we continue to drive cost reduction and productivity
improvements. Customer experience remains a key priority, and we're
stepping up our investments in the second half of the year. And
we'll continue to invest in our ultrafast and 4G plans in 2017 and
beyond. Ofcom's consultation on the Digital Communications Review
closed earlier this month; we've submitted our response and will
continue to engage with Ofcom to reach the best outcome for the
UK."
Second quarter to Half year to
30 September 2016 30 September 2016
GBPm Change(4) GBPm Change(4)
--------------------------------- ------------ ------------------ ------------- -----------------
Reported measures
Revenue 6,007 35% 11,782 34%
Profit before tax 671 5% 1,388 9%
Basic earnings per
share 5.7p (10)% 11.6p (6)%
Interim dividend 4.85p 10%
---------------------------------- ------------ ------------------ ------------- -----------------
Adjusted measures
Change in underlying revenue(1)
excluding transit
adjusted for the acquisition
of EE 1.1% 0.8%
Adjusted(2) EBITDA 1,888 31% 3,706 28%
Change in underlying
EBITDA(1)
adjusted for the
acquisition of EE 0.9% (0.4)%
Adjusted(2) profit
before tax 873 24% 1,675 20%
Adjusted(2) basic
earnings per share 7.2p 4% 13.8p 1%
Normalised free cash flow(3) 894 GBP325m 1,342 GBP667m
Net debt 9,573 GBP3,654m
---------------------------------- ------------ ------------------ ------------- -----------------
(1) Excludes specific items, foreign exchange movements and
disposals and is calculated as though EE had been part of the group
from 1 April 2015. This differs from
how we usually adjust for acquisitions as explained on page
3
(2) Before specific items, which are defined on page 3
(3) Before specific items, pension deficit payments and the cash
tax benefit of pension deficit payments
(4) The results for the period include EE which we acquired on
29 January 2016. Unless referred to as underlying adjusted for the
acquisition of EE, comparatives do not
include EE
GROUP RESULTS FOR THE SECOND QUARTER AND HALF YEAR TO 30
SEPTEMBER 2016
Second quarter Half year
to 30 September to 30 September
----------------------------------- --------------------------- ---------------------------
2016 2015 Change(1) 2016 2015 Change(1)
GBPm GBPm % GBPm GBPm %
----------------------------------- ------- ------ ---------- ------- ------ ----------
Revenue
- reported 6,007 4,459 35 11,782 8,819 34
- adjusted(2) 6,053 4,381 38 11,828 8,659 37
- change in underlying revenue(3)
excluding transit
adjusted for the acquisition
of EE 1.1 0.8
----------------------------------- ------- ------ ---------- ------- ------ ----------
EBITDA
- reported 1,739 1,436 21 3,524 2,878 22
- adjusted(2) 1,888 1,442 31 3,706 2,891 28
- change in underlying EBITDA(3)
adjusted for the acquisition
of EE 0.9 (0.4)
----------------------------------- ---------- ------- ------ ----------
Operating profit
- reported 870 813 7 1,800 1,627 11
- adjusted(2) 1,019 819 24 1,982 1,640 21
----------------------------------- ------- ------ ---------- ------- ------ ----------
Profit before tax
- reported 671 642 5 1,388 1,274 9
- adjusted(2) 873 706 24 1,675 1,400 20
----------------------------------- ------- ------ ---------- ------- ------ ----------
Basic earnings per share
- reported 5.7p 6.3p (10) 11.6p 12.4p (6)
- adjusted(2) 7.2p 6.9p 4 13.8p 13.6p 1
----------------------------------- ------- ------ ---------- ------- ------ ----------
Interim dividend 4.85p 4.40p 10
----------------------------------- ------- ------ ---------- ------- ------ ----------
Capital expenditure 802 629 28 1,579 1,287 23
----------------------------------- ------- ------ ---------- ------- ------ ----------
Normalised free cash flow(4) 894 569 57 1,342 675 99
Net debt 9,573 5,919 GBP3,654m
----------------------------------- ------- ------ ---------- ------- ------ ----------
Line of business results(2)
Revenue EBITDA Free cash flow(4)
----------------------- ---------------------- ---------------------- ------------------------------
Second quarter to 2016 2015(5) Change 2016 2015(5) Change 2016 2015(5) Change
30 September GBPm GBPm % GBPm GBPm % GBPm GBPm %
----------------------- ----- ------- ------ ----- ------- ------ -------- ---------- --------
Consumer 1,251 1,129 11 252 205 23 90 56 61
EE 1,277 - n/m 282 - n/m 135 - n/m
Business and Public
Sector 1,177 1,026 15 387 321 21 306 254 20
Global Services 1,409 1,212 16 132 113 17 58 35 66
Wholesale and Ventures 522 575 (9) 204 175 17 155 108 44
Openreach 1,273 1,267 0 630 646 (2) 456 327 39
Other 1 0 100 1 (18) (106) (306) (211) 45
Intra-group items (857) (828) 3 0 0 n/m 0 0 n/m
----------------------- ----- ------- ------ ----- ------- ------ -------- ---------- --------
Total 6,053 4,381 38 1,888 1,442 31 894 569 57
----------------------- ----- ------- ------ ----- ------- ------ -------- ---------- --------
(1) The results for the period include EE which we acquired on
29 January 2016. Unless referred to as underlying adjusted for the
acquisition of EE, comparatives do not
include EE
(2) Before specific items, which are defined on page 3
(3) Excludes specific items, foreign exchange movements and
disposals and is calculated as though EE had been part of the group
from 1 April 2015. This differs from
how we usually adjust for acquisitions as explained on page
3
(4) Before specific items, pension deficit payments and the cash
tax benefit of pension deficit payments
(5) Certain line of business results have been restated. See
Note 1 to the condensed consolidated financial statements
n/m = not meaningful
Notes:
1. Our commentary focuses on the trading results on an adjusted
basis, which is a non-GAAP measure, being before specific items.
Unless otherwise stated, revenue, operating costs, earnings before
interest, tax, depreciation and amortisation (EBITDA), operating
profit, profit before tax, net finance expense, earnings per share
(EPS) and normalised free cash flow are measured before specific
items. This is consistent with the way that financial performance
is measured by management and reported to the Board and the
Operating Committee and assists in providing a meaningful analysis
of the trading results of the group. The directors believe that
presentation of the group's results in this way is relevant to the
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. In determining
whether an event or transaction is specific, management considers
quantitative as well as qualitative factors such as the frequency
or predictability of occurrence. Specific items may not be
comparable with similarly titled measures used by other companies.
Reported revenue, reported operating costs, reported operating
profit, reported profit before tax, reported net finance expense
and reported EPS are the equivalent unadjusted or statutory
measures. Reconciliations of reported to adjusted revenue,
operating costs and operating profit are set out in the Group
income statement. Reconciliations of underlying revenue excluding
transit adjusted for the acquisition of EE, underlying operating
costs excluding transit adjusted for the acquisition of EE, EBITDA,
underlying EBITDA adjusted for the acquisition of EE, net debt and
free cash flow to the nearest measures prepared in accordance with
IFRS are provided in the notes to the condensed consolidated
financial statements and in the Additional information.
2. Trends in underlying revenue excluding transit adjusted for
the acquisition of EE, underlying operating costs excluding transit
adjusted for the acquisition of EE, and underlying EBITDA adjusted
for the acquisition of EE are non-GAAP measures which seek to
reflect the underlying performance of the group that will
contribute to long-term sustainable growth and as such exclude the
impact of acquisitions and disposals, foreign exchange movements
and any specific items. We exclude transit from the trends as
transit traffic is low-margin and is affected by reductions in
mobile termination rates. Given the significance of the EE
acquisition to the group, in 2016/17 we are calculating underlying
revenue excluding transit adjusted for the acquisition of EE,
underlying operating costs excluding transit adjusted for the
acquisition of EE and underlying EBITDA adjusted for the
acquisition of EE (see note 3), as though EE had been part of the
group from 1 April 2015. This is different from how we usually
adjust for acquisitions, and is the basis for our 2016/17
outlook.
3. We have prepared and published historical financial
information adjusted for the acquisition of EE (previously
described as pro forma historical financial information) for the
eight quarters ended 31 March 2016 for the group and by line of
business under our new organisational structure, to illustrate the
results as though EE had been part of the group from 1 April 2014.
This historical financial information adjusted for the acquisition
of EE shows EE's historical results adjusted to reflect BT's
accounting policies. In the consolidated group total, we've
eliminated historical transactions between BT and EE as though they
had been intercompany transactions. We've not made any adjustments
to reflect the allocation of the purchase price for EE. And all
deal and acquisition-related costs have been treated as specific
items and therefore don't impact the published information.
Enquiries
Press office:
Ross Cook Tel: 020 7356 5369
Investor relations:
Carl Murdock-Smith Tel: 020 7356 4909
We will hold the second quarter and half year 2016/17 results
presentation for analysts and investors in London at 9.00am today
and a simultaneous webcast will be available at
www.bt.com/results
We are scheduled to announce the third quarter results for
2016/17 on Friday 27 January 2017.
About BT
BT's purpose is to use the power of communications to make a
better world. It is one of the world's leading providers of
communications services and solutions, serving customers in 180
countries. Its principal activities include the provision of
networked IT services globally; local, national and international
telecommunications services to its customers for use at home, at
work and on the move; broadband, TV and internet products and
services; and converged fixed-mobile products and services. BT
consists of six customer-facing lines of business: Consumer, EE,
Business and Public Sector, Global Services, Wholesale and
Ventures, and Openreach.
For the year ended 31 March 2016, BT Group's reported revenue
was GBP19,042m with reported profit before taxation of
GBP3,029m.
British Telecommunications plc (BT) is a wholly-owned subsidiary
of BT Group plc and encompasses virtually all businesses and assets
of the BT Group. BT Group plc is listed on stock exchanges in
London and New York.
For more information, visit www.btplc.com
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END
IR PGGMAUUPQPGQ
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