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2 Nov 2017 07:00
BT Group plc
Results for the second quarter to 30 September 2017
2 November 2017
BT Group plc (BT.L) today announced its results for the second quarter and half year to 30 September 2017.
Key developments for the quarter
Strategic:
· Bringing together BT Consumer and EE is progressing well under new leadership team
· Openreach consultation identified broad industry support and key enablers for a large-scale FTTP broadband network
· Voluntary offer made to deliver the Government's goal for universal broadband access
· Continued improvement in customer experience metrics; Group NPS1 up 3.8 points and Right First Time up 2.3%
· Transformation programme and restructuring initiatives on track
· Review of future pension benefits continues and we expect to consult with affected employees on proposed changes shortly
Operational:
· BT Consumer revenue generating units per customer increased 3% to 2.01; monthly mobile ARPU up 9% to £20.9
· Mobile postpaid net subscriber additions of 279,000, with low churn of 1.2%
· Openreach fibre connections remain high at 505,000, with fibre broadband now passing 27.1m UK premises
· Order intake up 22% to £3.8bn for Business and Public Sector and up 32% to £1.8bn for Wholesale and Ventures,
on a 12-month rolling basis
· Taking robust actions to improve the performance of Global Services
Financial:
· Reported revenues down 1% to £5,949m and underlying2 revenue down 1.5%
· Adjusted2 EBITDA decreased 4% to £1,811m, reflecting investment in sports rights and customer experience, along with higher pension costs, business rates and decline in Global Services partly offset by cost savings
· Net cash inflow from operating activities of £1,270m down £464m, and normalised free cash flow2 of £689m down £205m due to working capital phasing and higher capital expenditure
· Interim dividend for future years set at 30% of prior year's full year dividend. Interim dividend for this year held flat at 4.85 pence per share. Progressive dividend policy unchanged
· Full year outlook maintained
Gavin Patterson, Chief Executive, commenting on the results, said "Our first half results are in line with our expectations as encouraging results in our consumer facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular Global Services. Given our underlying business performance, we are maintaining our outlook for the year.
"As the UK's leading converged telecommunications provider we continue to make positive progress on all our strategic priorities. Improving customer experience is critical to our success and we have seen continued positive progress underpinned by investments in operational improvements, increased network quality and customer-centric product development. Our integration and restructuring programmes are also on track to deliver run-rate savings of £250m and £150m respectively by the end of this year. We are working closely with the UK Government, Ofcom and our Communications Provider partners to find the right solutions to accelerate the deployment of fibre and our universal broadband commitment. We are committed to delivering ultrafast speeds to 12 million premises by the end of 2020.
"From next year the interim dividend per share will be fixed at 30% of the prior year's full year dividend. However, in this transitional year, we are proposing to hold our interim dividend at 4.85 pence per share. Our progressive dividend policy remains unchanged."
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Second quarter to 30 September 2017 | Half year to 30 September 2017 | |||||
£m | Change4 | £m | Change4 | |||
Reported measures | ||||||
Revenue | 5,949 | (1)% | 11,786 | - | ||
Profit before tax | 666 | (1)% | 1,084 | (22)% | ||
Basic earnings per share | 5.3p | (7)% | 8.2p | (29)% | ||
Net cash inflow from operating activities | 1,270 | £(464)m | 2,585 | £(483)m | ||
Interim dividend | 4.85p | - | ||||
Adjusted measures | ||||||
Change in underlying2 revenue excluding transit | (1.5)% | (0.7)% | ||||
Adjusted2 EBITDA | 1,811 | (4)% | 3,596 | (3)% | ||
Change in underlying2 EBITDA | (4.1)% | (3.3)% | ||||
Adjusted2 profit before tax | 789 | (10)% | 1,580 | (6)% | ||
Adjusted2 basic earnings per share | 6.4p | (11)% | 12.7p | (8)% | ||
Normalised free cash flow2 | 689 | £(205)m | 1,245 | £(97)m | ||
Net debt2 | 9,520 | £(47)m3 | ||||
1 Group NPS measures Net Promoter Score in our retail businesses and Net Satisfaction in our wholesale businesses2 See Glossary on page 23 Revised, see note 1 to the condensed consolidated financial statements4 Measured against the comparative period in the prior year
Group results for the second quarter to 30 September 2017
Second quarter to 30 September | Half year to 30 September | |||||
2017 | 2016 | Change | 2017 | 2016 | Change | |
£m | £m | % | £m | £m | % | |
Revenue | ||||||
- reported | 5,949 | 6,007 | (1) | 11,786 | 11,782 | - |
- adjusted1 | 5,951 | 6,053 | (2) | 11,800 | 11,828 | - |
- change in underlying1 revenue excluding transit | (1.5) | (0.7) | ||||
EBITDA | ||||||
- reported | 1,742 | 1,739 | - | 3,209 | 3,524 | (9) |
- adjusted1 | 1,811 | 1,888 | (4) | 3,596 | 3,706 | (3) |
- change in underlying1 EBITDA | (4.1) | (3.3) | ||||
Operating profit | ||||||
- reported | 850 | 870 | (2) | 1,452 | 1,800 | (19) |
- adjusted1 | 919 | 1,019 | (10) | 1,839 | 1,982 | (7) |
Profit before tax | ||||||
- reported | 666 | 671 | (1) | 1,084 | 1,388 | (22) |
- adjusted1 | 789 | 873 | (10) | 1,580 | 1,675 | (6) |
Basic earnings per share | ||||||
- reported | 5.3p | 5.7p | (7) | 8.2p | 11.6p | (29) |
- adjusted1 | 6.4p | 7.2p | (11) | 12.7p | 13.8p | (8) |
Interim dividend | 4.85p | 4.85p | - | |||
Capital expenditure | 858 | 803 | 7 | 1,693 | 1,580 | 7 |
Normalised free cash flow1 | 689 | 894 | (23) | 1,245 | 1,342 | (7) |
Net debt1 | 9,520 | 9,5672 | £(47)m | |||
Line of business results
Adjusted1 revenue | Adjusted1 EBITDA | Normalised free cash flow1 | |||||||
Second quarter to | 2017 | 2016 | Change | 2017 | 2016 | Change | 2017 | 2016 | Change |
30 September | £m | £m | % | £m | £m | % | £m | £m | % |
BT Consumer | 1,261 | 1,251 | 1 | 245 | 252 | (3) | 23 | 90 | (74) |
EE | 1,326 | 1,277 | 4 | 326 | 282 | 16 | 224 | 135 | 66 |
Business and Public Sector | 1,153 | 1,177 | (2) | 358 | 387 | (7) | 270 | 306 | (12) |
Global Services | 1,262 | 1,409 | (10) | 81 | 132 | (39) | 46 | 58 | (21) |
Wholesale and Ventures | 505 | 522 | (3) | 187 | 204 | (8) | 120 | 155 | (23) |
Openreach | 1,281 | 1,273 | 1 | 624 | 630 | (1) | 184 | 456 | (60) |
Other | 3 | 1 | n/m | (10) | 1 | n/m | (178) | (306) | (42) |
Intra-group items | (840) | (857) | (2) | - | - | - | - | - | - |
Total | 5,951 | 6,053 | (2) | 1,811 | 1,888 | (4) | 689 | 894 | (23) |
1 See Glossary
2 Revised, see note 1 to the condensed consolidated financial statements
n/m = not meaningful
Glossary of alternative performance measures
Adjusted | Before specific items |
Free cash flow | Cash generated from operations (after capital expenditure) excluding pension deficit payments and after interest, tax and non-current asset investments |
Net debt | Loans and other borrowings (both current and non-current), less current asset investments and cash and cash equivalents. Currency denominated balances within net debt are translated to Sterling at swapped rates where hedged |
Normalised free cash flow | Free cash flow before specific items and the cash tax benefit of pension deficit payments |
Specific items
| Items that in management's judgement need to be disclosed separately by virtue of their size, nature or incidence. Further information is provided in note 4 on page 28 |
Underlying | Excludes specific items, foreign exchange movements and the effect of acquisitions and disposals. Further information is provided in note 2 on page 35 |
Reconciliations to the most directly comparable IFRS measures are in Additional Information on pages 35 to 37. Our commentary focuses on the trading results on an adjusted basis. Unless otherwise stated in the commentary, 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. Further information is provided in note 1 on page 35.
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