BT Regulatory News (BT.A)

Philip Jansen, Chief Executive, commenting on the results, said

"BT delivered financial results in-line with expectations for the first half of the year, thanks to strong operational performance during exceptional circumstances. Customer demand during the pandemic has shown how critical our networks have become, and our significant network investments have helped us double the number of Openreach's FTTP orders compared to this time last year and have seen our leading 5G network expand to 112 towns and cities across the UK.

"We continue to invest to make BT more competitive and I'm pleased to see the quality of our products and services improving. At the same time we are firmly on track with the delivery of our modernisation programme and have delivered £352m in cost savings in the first half of the year.

"This performance has given us confidence to raise the lower end of our EBITDA outlook range for this year and publish an EBITDA expectation of at least £7.9bn for 2022/23, with sustainable growth from this level forward. This growth will be driven by the continued recovery from Covid-19, enhanced by sales of our converged and growth products, and by significant savings from our modernisation and cost saving programme. In combination these factors will more than offset legacy product declines.

"The growth in EBITDA underpins the planned reinstatement of our dividend next year whilst ensuring that we can continue to drive value-creating investments in our networks and products."

Half year to 30 September

2020

2019

Change

£m

£m

%

Reported measures

Revenue

10,590 

11,467 

(8)

Profit before tax

1,062 

1,333 

(20)

Profit after tax

856 

1,068 

(20)

Basic earnings per share

8.6p

10.8p

(20)

Net cash inflow from operating activities

2,713 

2,243 

21 

Interim dividend

0p

4.62p

Capital expenditure

1,969 

1,882 

5 

Adjusted measures

Adjusted2 Revenue

10,607 

11,413 

(7)

Adjusted2 EBITDA

3,721 

3,923 

(5)

Normalised free cash flow2

422 

604 

(30)

Net debt2

17,627 

18,347 

(£720m)

Adjusted1 revenue

Adjusted1 EBITDA

Normalised free cash flow1

Half year to

2020

20192

Change

2020

20192

Change

2020

20192

Change

30 September

£m

£m

%

£m

£m

%

£m

£m

%

Consumer

4,873 

5,194 

(6)

1,075 

1,180 

(9)

315 

534 

(41)

Enterprise

2,710 

2,987 

(9)

833 

955 

(13)

474 

622 

(24)

Global

1,916 

2,196 

(13)

289 

304 

(5)

57 

40 

43 

Openreach

2,585 

2,536 

2 

1,453 

1,417 

3 

20 

197 

(90)

Other

12 

14 

(14)

71 

67 

6 

(444)

(789)

44 

Intra-group items

(1,489)

(1,514)

2 

- 

- 

- 

- 

- 

- 

Total

10,607 

11,413 

(7)

3,721 

3,923 

(5)

422 

604 

(30)

Second quarter to 30 September

Consumer

2,511 

2,644 

(5)

574 

592 

(3)

Enterprise

1,358 

1,504 

(10)

427 

490 

(13)

Global

926 

1,111 

(17)

148 

164 

(10)

Openreach

1,299 

1,268 

2 

724 

700 

3 

Other

8 

6 

33 

35 

19 

84 

Intra-group items

(745)

(753)

1 

- 

- 

- 

Total

5,357 

5,780 

(7)

1,908 

1,965 

(3)

471 

281 

68 

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 reporting 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.

Normalised free cash flow

Free cash flow after net interest paid and payment of lease liabilities, before pension deficit payments (including the cash tax benefit of pension deficit payments) and specific items.

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 predominantly to retrospective regulatory charges, restructuring charges linked with our modernisation programme and other cost initiatives, and divestment related items. Further information is provided in note 6 on page 22.

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Tom Engel

Tel: 020 7356 5369

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