TIDMBT.A
RNS Number : 1435F
BT Group PLC
03 November 2022
Results for the half year to 30 September 2022
BT Group plc
03 November 2022
Philip Jansen, Chief Executive, commenting on the results, said
"BT Group remains on the front foot in these turbulent times. Our
strategy is working, we're executing against our plan and we're
confident that we'll deliver our long-term ambition while underpinning
economic growth in the UK.
"Our financial performance is on track; we grew revenue and EBITDA
in the first six months of the year and we remain laser focused
on modernising and simplifying BT Group. Given the current high
inflationary environment, including significantly increased energy
prices, we need to take additional action on our costs to maintain
the cash flow needed to support our network investments. As a result,
we are increasing our cost savings target from GBP2.5bn to GBP3.0bn
by the end of FY25.
"High-quality connectivity has never been more important for our
customers and our products provide great value for money.
"We continue to drive ahead with our strategy designed to deliver
consistent and predictable revenue and EBITDA growth, expand cash
flow and underpin our progressive dividend policy over the longer-term."
Key strategic developments:
-- We are firmly on track in delivering our strategy despite
short-term macroeconomic pressures; we are investing to sustain
network leadership, improving customer experience and reducing our
costs to strengthen our competitive position
-- FTTP build passed 8.8m premises, including 2.8m in rural
areas, with initial build underway on a further 6m premises; weekly
build rate averaging 62k premises in Q2
-- FTTP connections ahead of plan; Q2 net adds of 331k with total take up of 27%
-- Openreach broadband base down 89k in Q2 (Q2 FY22: net adds of
29k) due to reduced broadband market growth and c.40k impact from
industrial action, with competitor churn in line with our
expectations; average monthly rental ARPU grew by c.GBP1 year on
year due to continued increase in fibre-enabled broadband
-- Openreach reviewing wholesale pricing to accelerate migration to FTTP
-- EE's 5G network continues to grow with 5G deployed in nearly all UK major towns and cities
-- Completed Sports JV to create one of the most extensive
portfolios of premium sports in the UK
-- Delivered gross annualised cost savings of GBP1.7bn since
April 2020 with total cost to achieve of GBP0.9bn; FY25 target
increased from GBP2.5bn to GBP3.0bn in response to cost inflation,
with total cost to achieve of GBP1.6bn
Revenue and EBITDA growth and interim dividend at 2.31pps
confirmed
-- Revenue GBP10.4bn, up 1% due to growth in Consumer and
Openreach partially offset by legacy declines in large corporate
customers in Enterprise, lower equipment sales in Global and the
impact of the BT Sport disposal
-- Adjusted(1) EBITDA GBP3.9bn, up 3% due to revenue growth,
continued strong cost control and some one-off items, partially
offset by increased energy costs and cost inflation
-- Reported profit before tax GBP0.8bn, down 18% due to
increased depreciation from network build and higher specific costs
offsetting adjusted(1) EBITDA growth
-- Reported capital expenditure GBP2.6bn, up 2% due to increased
Openreach investments in fixed network infrastructure offsetting a
decline in spectrum; capital expenditure excluding spectrum
payments up 26%
-- Net cash inflow from operating activities GBP2.9bn;
normalised free cash flow(1) GBP0.1bn, down GBP0.3bn primarily
reflecting higher cash capex partially offset by increased EBITDA
and working capital movements including stronger collections and
movement in sports rights
-- Gross IAS 19 deficit of GBP1.7bn, up from GBP1.1bn at 31
March 2022 mainly due to the impact of higher real gilt yields
partly offset by deficit contributions; BT Pension Scheme
roll-forward funding deficit was GBP4.4bn at end of June 2022, and
not adversely impacted by gilt market volatility in late
September
-- FY23 capex outlook revised from c.GBP4.8bn to c.GBP5.0bn due
to higher fibre connections and inflation, enabled by a GBP0.2bn
tax refund in October; capex in subsequent years will be c.GBP4.8bn
over remainder of the peak fibre build
-- Normalised free cash flow(1) expected to outturn towards the
lower end of the GBP1.3bn-GBP1.5bn range
-- Interim dividend of 2.31 pence per share in line with our policy
(1) See Glossary on page 3
Half year to 30 September 2022 2021 Change
----------------------- ----------------------
Reported measures GBPm GBPm %
Revenue 10,366 10,305 1
Profit before tax 831 1,009 (18)
Profit after tax 893 431 107
Basic earnings per share 9.1p 4.4p 107
Net cash inflow from operating
activities 2,911 2,394 22
Half year dividend 2.31p 2.31p -
Capital expenditure 2,613 2,563 2
------------------------------- ----------------------- ---------------------- -------------------------
Adjusted measures
Adjusted(1) Revenue 10,368 10,308 1
Adjusted(1) EBITDA 3,873 3,748 3
Adjusted(1) basic earnings per
share 10.0p 10.2p (2)
Normalised free cash flow(1) 64 360 (82)
Capital expenditure excluding
spectrum 2,613 2,067 26
Net debt(1,2) 19,042 18,241 GBP801m
------------------------------- ----------------------- ---------------------- -------------------------
Customer-facing unit updates
Adjusted(1) revenue Adjusted(1) EBITDA Normalised free
cash flow(1)
----------------------------------- -----------------------------------
Half year
to 30
September 2022 2021 Change 2022 2021 Change 2022 2021 Change
------------
GBPm GBPm % GBPm GBPm% GBPm GBPm %
------------ ---------- ---------- ----------- ---------- ---------- ---------- ---------- ----------- -----------
Consumer 4,992 4,857 3 1,295 1,077 20 460 525 (12)
Enterprise 2,439 2,572 (5) 660 852 (23) 112 327 (66)
Global 1,617 1,654 (2) 197 207 (5) (128) (63) (103)
Openreach 2,836 2,707 5 1,711 1,561 10 53 8 n/m
Other 14 14 - 10 51 (80) (433) (437) 1
Intra-group
items (1,530) (1,496) (2) - - - - -
------------ ---------- ---------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
Total 10,368 10,308 1 3,873 3,748 3 64 360 (82)
------------ ---------- ---------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
Second
quarter
to 30
September 2022 2021 Change 2022 2021 Change 2022 2021 Change
------------
GBPm GBPm % GBPm GBPm% GBPm GBPm %
------------ ----------- ----------- ----------- ----------- ---------- ---------- --------- --------- ----------
Consumer 2,490 2,475 1 670 554 21
Enterprise 1,239 1,285 (4) 345 423 (18)
Global 843 869 (3) 101 105 (4)
Openreach 1,419 1,360 4 860 788 9
Other 7 6 17 (6) 12 (150)
Intra-group
items (763) (757) (1) - - -
------------ ----------- ----------- ----------- ----------- ---------- ----------- --------- --------- ----------
Total 5,235 5,238 - 1,970 1,882 5 269 403 (33)
------------ ----------- ----------- ----------- ----------- ---------- ----------- --------- --------- ----------
(1) See Glossary on page 3
(2) Net debt was GBP18,009m at 31 March 2022
n/m = not meaningful
Glossary
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 (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 their cash tax benefit),
payments relating to spectrum, and specific items.
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, and
cash flows relating to the Building Digital UK demand
deposit account which have already been accounted
for within normalised free cash flow. For non-tax
related items the adjustments are made on a pre-tax
basis.
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. Amounts due to or from joint ventures held
within current asset investments or loans and borrowings
are also excluded.
Sports JV pro On 1 September 2022 BT Group and Warner Bros. Discovery
forma announced completion of their transaction to form
a 50:50 joint venture (JV) combining the assets of
BT Sport and Eurosport UK. Financial information stated
as pro forma is unaudited and is presented to estimate
the impact on the group as if trading in relation
to BT Sport had been equity accounted for in previous
periods, akin to the JV being in place historically.
Please refer to Additional Information on page 32
for a bridge between financial information on a reported
basis and a Sports JV pro forma basis.
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 the BT Sport
disposal, changes to our assessment of our provision
for historic regulatory matters, restructuring charges,
divestment-related items and net interest expense
on pensions.
------------------- --------------------------------------------------------------
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 30 to 32.
Enquiries
Press office: Tom Engel Tel: 07947 711 959
Richard Farnsworth Tel: 07734 776 317
Investor relations: Mark Lidiard Tel: 0800 389 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 FY23
on 2 February 2023 .
Click on, or paste the following link into your web browser, to
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