TIDMBT.A

RNS Number : 2835R

BT Group PLC

04 November 2021

 
Financial results 
 Results for the half year to 30 September 2021 
 BT Group plc 
 4 November 2021 
Philip Jansen, Chief Executive, commenting on the results, said 
 "These results demonstrate an acceleration of pace in the transformation 
 of BT. We are creating a better BT for our customers, the country 
 and our shareholders. We're going further and faster on the UK's 
 next generation connectivity; we're modernising BT and bringing 
 down costs; and we're reinstating the dividend today, as planned. 
 "After a record six months, Openreach has now rolled out full fibre 
 broadband to almost 6m premises and continues to lower its build 
 cost. Its three largest customers are signed up to the new pricing 
 offer as we see rapid adoption of what will be the UK's first nationwide 
 full fibre network spanning 25m premises by 2026. Meanwhile, our 
 5G network now covers over 40% of the UK's population and we have 
 over 5.2m 5G ready customers. Together, our networks provide our 
 customers with an unrivalled level of connectivity. 
 "While we are serving our customers better than ever, BT is also 
 changing rapidly internally. We have hit our GBP1bn cost savings 
 target 18 months early, which allows us to bring forward our FY25 
 target for GBP2bn of savings to FY24. This is all part of creating 
 a leaner BT with simplified processes and improved customer experiences. 
 "BT is on track and with results in-line with our expectations, 
 we are today confirming our financial outlook for FY22 and FY23. 
 Looking further out, as we pass the peak of our fibre build and 
 move towards an all-fibre, all-IP network, we expect a reduction 
 in capex of at least GBP1bn and lower operating costs of GBP500m. 
 From these two factors alone, by the end of the decade we expect 
 an expansion of at least GBP1.5bn in normalised free cash flow compared 
 to FY22, and that's before any benefits from increased revenue and 
 further transformation efficiencies. Our progressive dividend policy 
 will be underpinned by these increased cash flows as we move to 
 sustainable growth going forward." 
 
 

BT Group plc (BT.L) today announced its results for the half year to 30 September 2021.

Key strategic developments - accelerating the pace of transformation:

-- Adam Crozier joined the Board on 1 November, and will become Chairman with effect from 1 December

-- Ten communication providers including Sky and TalkTalk signed up to Equinox, Openreach's national long-term FTTP pricing offer

-- Launched Eagle-i, our flagship security platform that will predict and prevent cyber-attacks for enterprises

   --   Delivered GBP1bn of gross annualised savings 18 months early at a cost of GBP571m 

-- Brought forward FY25 target of GBP2bn gross annualised savings to FY24 with further savings in FY25, within the expected cost of GBP1.3bn; Group peak capex from FY23 now expected to be GBP4.8bn, down from GBP5bn previously

-- FTTP joint venture: with FTTP build costs coming down and take-up ahead of expectations, decided to retain 100% of the project for shareholders and to remain fully focused on driving build and take-up

-- Brought forward net zero targets to 2030 for operational emissions and 2040 for supply chain and customer emissions

Strong operational performance:

-- Record Openreach FTTP build in Q2 and footprint now at almost 6m; expected average build costs lowered to GBP250-GBP350 per premises passed(1)

-- Openreach delivered strongest ever H1 for repairs on time at 87.1%, with highest proportion of customers back in service within SLA

   --   Consumer and Enterprise have now connected over 1m homes and businesses to FTTP 

-- Growth in fixed and broadband ARPC from Q1 into Q2 due to our convergence strategy and CPI+ price rise

   --   5G ready customer base over 5.2m 
   --   Consumer churn remaining near record lows resulting from strong customer focus 

Interim dividend of 2.31p per share declared; FY22 and FY23 financial outlook confirmed:

-- Revenue GBP10,305m, down 3%; driven by revenue decline in Enterprise and Global, flat in Consumer, partially offset by growth in Openreach; adjusted(2) revenue down 3%

-- Adjusted(2) EBITDA GBP3,748m, up 1%, with revenue decline more than offset by lower costs from our transformation programmes and tight cost management, and lower indirect commissions

-- Reported profit before tax GBP1,009m, down 5%, primarily due to higher finance expenses partly offset by increased EBITDA

-- Net cash inflow from operating activities GBP2,394m; normalised free cash flow(2) GBP360m, down 15%, primarily due to higher cash capital expenditure and adverse working capital movements, offset by lower tax payments

(1) Excludes new builds and net of subsidies.

(2) See Glossary on page 3.

   --   Capital expenditure GBP2,563m, up 30%, primarily due to investment in spectrum 

-- Expect by the end of the decade at least GBP1.5bn expansion in normalised free cash flow compared to FY22, solely from lower capex and operating costs as we move towards an all-fibre, all-IP network, before any benefits of increased revenue and further transformation efficiencies, net of tax

-- Now expect around GBP5bn of carried forward tax losses from FY23 as a greater proportion of capex qualify for Government's cash tax super-deduction

   --   Interim dividend of 2.31p per share declared 
 
Half year to 30 September          2021    2020     Change 
                                 ======  ====== 
                                   GBPm    GBPm          % 
===============================  ======  ======  ========= 
Reported measures 
Revenue                          10,305  10,590      (3) 
Profit before tax                 1,009   1,062      (5) 
Profit after tax                    431     856     (50) 
Basic earnings per share           4.4p    8.6p     (49) 
Net cash inflow from operating 
 activities                       2,394   2,713     (12) 
Half year dividend                2.31p      0p        N/A 
Capital expenditure(1)            2,563   1,969       30 
===============================  ======  ======  ======= 
 
Adjusted measures 
Adjusted(2) Revenue              10,308  10,607      (3) 
Adjusted(2) EBITDA                3,748   3,721        1 
Adjusted(2) basic earnings 
 per share                        10.2p    9.6p        6 
Normalised free cash flow(2)        360     422     (15) 
Capital expenditure excluding 
 spectrum                         2,067   1,969          5 
Net debt(2)                      18,241  17,627    GBP614m 
===============================  ======  ======  ========= 
 

Customer-facing unit results for the half year to 30 September 2021

 
                    Adjusted(2) revenue           Adjusted(2) EBITDA           Normalised free cash 
                                                                                      flow(2) 
              ============================  ========================== 
Half year          2021       2020  Change      2021      2020  Change      2021      2020      Change 
to 30 
September 
                   GBPm       GBPm       %      GBPm      GBPm       %      GBPm      GBPm           % 
              =========  =========  ======  ========  ========  ======  ========  ========  ========== 
Consumer          4,857      4,873       -     1,077     1,075       -       525       315        67 
Enterprise        2,572      2,710     (5)       852       833       2       327       474      (31) 
Global            1,654      1,916    (14)       207       289    (28)      (63)        57     (211) 
Openreach         2,707      2,585       5     1,561     1,453       7         8        20      (60) 
Other                14         12      17        51        71    (28)     (437)     (444)         2 
Intra-group 
 items          (1,496)    (1,489)       -         -         -       -         -         -         - 
============  =========  =========  ======  ========  ========  ======  ========  ========  ======== 
Total            10,308     10,607     (3)     3,748     3,721       1       360       422      (15) 
============  =========  =========  ======  ========  ========  ======  ========  ========  ======== 
 
 
Second quarter 
 to 30 September 
=================  ======  ======  ======  ======  ======  =====  =====  =====  ======= 
Consumer           2,475   2,511     (1)     554     574    (3) 
Enterprise         1,285   1,358     (5)     423     427    (1) 
Global               869     926     (6)     105     148   (29) 
Openreach          1,360   1,299       5     788     724      9 
Other                  6       8    (25)      12      35   (66) 
Intra-group 
 items             (757)   (745)     (2)       -       -      - 
=================  =====   =====   =====   =====   =====   ====   =====  =====  ======= 
Total              5,238   5,357     (2)   1,882   1,908    (1)    403    471   (14) 
=================  =====   =====   =====   =====   =====   ====   ====   ====   ==== 
 
 

(1) Includes investment in spectrum of GBP496m.

(2) See Glossary on page 3.

Glossary of alternative performance measure

 
Adjusted             Before specific items. Adjusted results are consistent 
                      with the way that financial performance is measured 
                      by management and assist in providing an additional 
                      analysis of the reported trading results of the Group. 
EBITDA               Earnings before interest, tax, depreciation and amortisation. 
Adjusted EBITDA      EBITDA before specific items, share of post tax profits/losses 
                      of associates and joint ventures and net non-interest 
                      related finance expense. 
Free cash flow       Net cash inflow from operating activities after net 
                      capital expenditure. 
Capital expenditure  Additions to property, plant and equipment and intangible 
                      assets in the period. 
Group NPS            Group NPS tracks changes in our customers' perceptions 
                      of BT. This is a combined measure of 'promoters' minus 
                      'detractors' across our business units. Group NPS measures 
                      Net Promoter Score in our retail business and Net Satisfaction 
                      in our wholesale business. 
Normalised           Free cash flow (net cash inflow from operating activities 
 free cash flow       after net capital expenditure) after net interest paid 
                      and payment of lease liabilities, before pension deficit 
                      payments (including cash tax benefit), payments relating 
                      to spectrum, and specific items. For non-tax related 
                      items the adjustments are made on a pre-tax basis. 
                      It excludes cash flows that are determined at a corporate 
                      level independently of ongoing trading operations such 
                      as dividends, share buybacks, acquisitions and disposals, 
                      and repayment and raising of debt. 
Net debt             Loans and other borrowings and lease liabilities (both 
                      current and non-current), less current asset investments 
                      and cash and cash equivalents, including items which 
                      have been classified as held for sale on the balance 
                      sheet. Currency denominated balances within net debt 
                      are translated into sterling at swapped rates where 
                      hedged. Fair value adjustments and accrued interest 
                      applied to reflect the effective interest method are 
                      removed. 
Specific items       Items that in management's judgement need to be disclosed 
                      separately by virtue of their size, nature or incidence. 
                      In the current period these relate to retrospective 
                      regulatory matters, restructuring charges, divestment-related 
                      items, Covid-19 related items, net interest expense 
                      on pensions and tax charge on specific items. 
===================  =============================================================== 
 

We assess the performance of the Group using a variety of alternative performance measures. Reconciliations from the most directly comparable IFRS measures are in Additional Information on pages 27 to 28.

Enquiries

 
Press office: 
Tom Engel            Tel: 07947 711 959 
Richard Farnsworth   Tel: 07734 776 317 
 
Investor relations: 
Mark Lidiard         Tel: 020 7356 4909 
 

We will hold a conference call for analysts and investors in London at 10am today and a simultaneous webcast will be available at www.bt.com/results .

We are scheduled to announce the third quarter results for FY22 on 3 February 2022.

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/2835R_1-2021-11-3.pdf

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