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.
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