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RNS
BT Group PLC  -  BT.A   

Final Results

Released 07:00 10-May-2018

RNS Number : 5902N
BT Group PLC
10 May 2018
 

BT Group plc

Results for the fourth quarter to 31 March 2018

10 May 2018

BT Group plc (BT.L) today announced its results for the fourth quarter and year to 31 March 2018.

 

Gavin Patterson, Chief Executive, commenting on the results, said

"BT delivered a solid set of financial results in the fourth quarter, with growth in our consumer divisions offset by declines in our enterprise businesses, due to both challenging market conditions and our decision to exit lower margin business.

"We continue to invest for growth, having now passed 1.5m premises with our ultrafast network and securing 40MHz of 3.4GHz spectrum suitable for 5G mobile services.  We are improving our customer experience across the Group, with our key metrics of Group NPS1 and Right First Time2 both strongly up.

"Our integration and restructuring activities remain on track. The integration of EE into BT is delivering run rate cost synergies of £290m. Our restructuring programme has removed over 2,800 roles and delivered savings of £180m during the year.  

 "I am pleased that we have reached agreement with the Trustee on the pension valuation and recovery plan, which is affordable within our capital allocation framework, and draws a line under a key source of uncertainty for our stakeholders.

"We have announced today an update to our strategy to accelerate leadership in converged connectivity and services.  Our strategy will drive sustainable growth in value by focusing on delivering differentiated customer experiences, investing in integrated network leadership, and transforming our operating model."

Key developments for the quarter:

·     Strategy announced today to drive sustainable long term growth in value by leading in converged connectivity, including removal of 13,000 roles at a total cost of £800m - see separate press release

·     Continued improvement in customer experience metrics; Group NPS1 up 8.3 points and Right First Time2 up 4.3%

·     Clarity on the pricing of key products provided in Ofcom's final statement on Wholesale Local Access regulation

·     40MHz of 3.4GHz spectrum secured; positions us well for launch of 5G and strengthens network leadership

·     Consumer businesses brought together from 1 April 2018 and Enterprise businesses from 1 October 2018

·     Triennial pension deficit agreed at £11.3bn, 13 year recovery plan including payments of £2.1bn over the three years to 31 March 2020 in line with prior recovery plan and a further £2.0bn contribution, due to be funded by the issuance of bonds which will be held by the BTPS; BTPS closed to future defined benefit accruals from 30 June 2018 reducing future exposure to pensions risk - see separate press release

·     Outlook for 2018/19: underlying3 revenue down c.2%, adjusted4 EBITDA £7.3bn - £7.4bn, capital expenditure5 c.£3.7bn and normalised free cash flow4 of £2.3bn - £2.5bn

·     Proposed final dividend of 10.55p, giving a full year dividend of 15.4p, unchanged from 2016/17

Financial:              

·     Reported revenue down 1% for the year and 3% for the quarter. Underlying4 revenue down 1% for the year and 1.4% for the quarter

·     Adjusted4 EBITDA of £7,505m for the year, down 2%, and £2,083m for the quarter up 1%

·     Reported profit before tax up 11% for the year and up 98% for the quarter mainly due to specific items in the prior year. Adjusted4 profit before tax down 2% for the year but up 1% for the quarter

·     Reported basic earnings per share 20.5p for the year. Adjusted4 earnings per share 27.9p for the year

·     Net cash inflow from operating activities £4,927m for the year, and £746m for the quarter and normalised free cash flow4 £2,973m for the year, and £1,026m for the quarter

·     2017/18 underlying4 revenue down 1.0% and lower than our outlook for the full year. Adjusted4 EBITDA within our outlook range, normalised free cash flow4 exceeded our outlook

 

 

Fourth quarter to

31 March 2018

 

Year to

31 March 2018

 

 

 

 

£m

 

 

Change6

 

£m

 

 

Change6

 

 

Reported measures

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

5,967

 

 

(3)%

 

23,723

 

 

(1)%

 

 

Profit before tax

 

872

 

 

98%

 

2,616

 

 

11%

 

 

Basic earnings per share

 

7.3

p

 

92%

 

20.5

p

 

7%

 

 

Net cash inflow from operating activities

 

746

 

 

£(845)m

 

4,927

 

 

£(1,247)m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted measures

 

 

 

 

 

 

 

 

 

 

 

 

Change in underlying4 revenue excluding transit

 

 

 

 

(1.4)%

 

 

 

 

(1.0)%

 

 

Adjusted4 EBITDA

 

2,083

 

 

1%

 

7,505

 

 

(2)%

 

 

Adjusted4 profit before tax

 

1,046

 

 

1%

 

3,444

 

 

(2)%

 

 

Adjusted4 basic earnings per share

 

8.8

p

 

5%

 

27.9

p

 

(3)%

 

 

Normalised free cash flow4

 

1,026

 

 

£192m

 

2,973

 

 

£191m

 

 

Net debt4

 

 

 

 

 

 

9,627

 

 

£695m

 

 

                                      Operational:

·     Gfast premises of 1m and FTTP premises of 560,000 passed in Q4; over 1.5m premises able to connect to ultrafast service

·     Openreach fibre connections at 555,000 in Q4 with superfast fibre broadband passing nearly 27.6m UK premises

·     4G coverage reaches 90% of the country as we deploy in hard to reach areas

·     Mobile postpaid net additions of 95,000, with low churn of 1.2%; monthly mobile postpaid ARPU down 1% to £26.0

·     BT Sport rights packages secured; includes Premier League matches for a further three years from 2019/20

·     Average BT Sport viewing increased 19% year on year; second best quarterly performance since launch

·     BT Consumer revenue generating units per customer increased 3% to 2.03, with ARPU up 5% to £41.7

·     Order intake, on a rolling 12-month basis, up 1% to £3,391m for Business and Public Sector, down 28% to £1,419m for Wholesale and Ventures and down 17% to £3,845m for Global Services, reflecting market conditions and our strategy to exit lower margin business

·     Integration run rate cost synergies now at £290m; restructuring initiatives delivered in year savings of £180m

 

Performance against 2017/18 outlook:

 

2017/18

outlook  

2017/18

performance

Change in underlying4 revenue excluding transit

Broadly flat  

(1.0%)

Adjusted4 EBITDA

£7.5bn - £7.6bn  

£7.5bn

Normalised free cash flow4

£2.7bn - £2.9bn  

£3.0bn

 

Our outlook for 2018/19 is as follows:

                    

2018/19

outlook  

Change in underlying3 revenue  (IAS18 basis)

Down c.2%  

Adjusted4 EBITDA (IAS18 basis)

£7.3bn - £7.4bn  

Capital expenditure5

c.£3.7bn  

Normalised free cash flow4

£2.3bn - £2.5bn  

 

 

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 1 on page 45

 

 

Underlying

Excludes specific items, foreign exchange movements and the effect of acquisitions and disposals. Further information is provided in note 2 on page 45

 

Reconciliations to the most directly comparable IFRS measures are in Additional Information on pages 45 to 48.  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 45.

 

 

 

  

 

1 Group NPS measures Net Promoter Score in our retail businesses and Net Satisfaction in our wholesale businesses

2 Measured against Group-wide 'Right First Time' (RFT) index

3 Including transit, but excluding specific items, foreign exchange movements and the effect of acquisitions and disposals

4 See Glossary above

5 Excluding BDUK clawback

6 Measured against the comparative period in the prior year

 

Group results for the fourth quarter and year to 31 March 2018

 

 

Fourth quarter to

31 March

 

Year to

31 March

 

 

 

2018

 

 

2017

 

 

Change

 

2018

 

 

2017

 

Change

 

 

 

 

£m

 

 

£m

 

 

%

 

£m

 

 

£m

 

%

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- reported

 

5,967

 

 

6,122

 

 

(3)

 

23,723

 

 

24,062

 

(1)

 

 

- adjusted1

 

5,967

 

 

6,128

 

 

(3)

 

23,746

 

 

24,082

 

(1)

 

 

- change in underlying1 revenue excluding transit

 

 

 

 

 

 

 

(1.4)

 

 

 

 

 

 

(1.0)

 

 

EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- reported

 

1,964

 

 

1,591

 

 

23

 

6,895

 

 

6,739

 

2

 

 

- adjusted1

 

2,083

 

 

2,069

 

 

1

 

7,505

 

 

7,645

 

(2)

 

 

Operating profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- reported

 

1,075

 

 

638

 

 

68

 

3,381

 

 

3,167

 

7

 

 

- adjusted1

 

1,194

 

 

1,178

 

 

1

 

3,991

 

 

4,135

 

(3)

 

 

Profit before tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- reported

 

872

 

 

440

 

 

98

 

2,616

 

 

2,354

 

11

 

 

- adjusted1

 

1,046

 

 

1,031

 

 

1

 

3,444

 

 

3,532

 

(2)

 

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- reported

 

7.3

p

 

3.8

p

 

92

 

20.5

p

 

19.2

p

7

 

 

- adjusted1

 

8.8

p

 

8.4

p

 

5

 

27.9

p

 

28.9

p

(3)

 

 

Capital expenditure

 

951

 

 

1,022

 

 

(7)

 

3,522

 

 

3,454

 

2

 

 

Normalised free cash flow1

 

1,026

 

 

834

 

 

23

 

2,973

 

 

2,782

 

7

 

 

Net debt1

 

 

 

 

 

 

 

 

 

9,627

 

 

8,932

 

£695m

 

 

 

Customer-facing unit results

 

 

Adjusted1 revenue

Adjusted1 EBITDA

Normalised free cash flow1

Fourth quarter to

2018

2017

Change

2018

2017

Change

2018

2017

Change

31 March

£m

£m

%

£m

£m

%

£m

£m

%

BT Consumer

1,289

1,246

3

295

261

13

243

159

53

EE

1,320

1,259

5

433

316

37

236

107

121

Business and Public Sector

1,157

1,222

(5)

362

391

(7)

340

433

(21)

Global Services

1,241

1,422

(13)

137

204

(33)

220

95

132

Wholesale and Ventures

506

541

(6)

204

220

(7)

151

147

3

Openreach

1,289

1,289

-

641

695

(8)

229

296

(23)

Other

-

4

n/m

11

(18)

n/m

(393)

(403)

2

Intra-group items

(835)

(855)

2

-

-

-

-

-

-

Total

5,967

6,128

(3)

2,083

2,069

1

1,026

834

23

 

Year to

2018

2017

Change

2018

2017

Change

2018

2017

Change

31 March

£m

£m

%

£m

£m

%

£m

£m

%

BT Consumer

5,066

4,934

3

1,023

1,012

1

635

709

(10)

EE

5,294

5,090

4

1,353

1,156

17

754

570

32

Business and Public Sector

4,563

4,758

(4)

1,418

1,528

(7)

1,136

1,293

(12)

Global Services

5,013

5,479

(9)

434

495

(12)

118

(245)

n/m

Wholesale and Ventures

2,009

2,109

(5)

754

834

(10)

509

587

(13)

Openreach

5,123

5,098

-

2,520

2,633

(4)

1,048

1,349

(22)

Other

8

10

n/m

3

(13)

n/m

(1,227)

(1,481)

(17)

Intra-group items

(3,330)

(3,396)

(2)

-

-

-

-

-

-

Total

23,746

24,082

(1)

7,505

7,645

(2)

2,973

2,782

7

n/m = not meaningful

1 See Glossary on page 2

 

 

 

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

http://www.rns-pdf.londonstockexchange.com/rns/5902N_-2018-5-10.pdf

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Final Results - RNS