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BT Group plc Results For The Fourth Quarter And Year To 31 March 2014

May 8, 2014

IRVING, Texas, May 8, 2014 /PRNewswire/ — BT Group plc (BT.L) today announced its results for the fourth quarter and year to 31 March 2014.

Fourth quarter and full year results:


                                              Fourth
                                          quarter to          Year to

                                             31 March           31 March
                                               2014               2014

                           BPSm        Change(1)   BPSm   Change(1)
                           ----        --------    ----   --------

    Revenue(2)                               4,748     (1)%    18,287      0%

    Underlying
     revenue(3)
     excluding
     transit                                 1.2%               0.5%

    EBITDA(2)                              1,705       2%     6,116      0%

     Profit
     before
     tax            - adjusted(2)            901       9%     2,827      6%

                    - reported               747      17%     2,312      0%

     Earnings
     per
     share          - adjusted(2)           9.0p      10%     28.2p      7%

                    - reported              7.2p       1%     25.7p      4%

    Normalised free
     cash flow4                  1,346    BPS45m   2,450    BPS150m

    Net debt                                       7,028  BPS(769)m

    Full year
     proposed
     dividend                                      10.9p         15%

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

“We have made strong progress this year. Underlying revenue, adjusted profit before tax and normalised free cash flow have all grown and beaten market expectations.

“Our investment in fibre is delivering with 1.3 million more premises taking fibre this year, almost doubling the number of homes and businesses now connected. Our rollout is ahead of schedule with our fibre network passing more than 19 million premises, around two thirds of the UK. But we are not stopping there. All of our BDUK projects are underway and will help take the coverage of all fibre networks to at least 90% of the UK, bringing significant benefits to communities across the nation.

“BT Sport has proved very popular and we are delighted the service is now in around five million homes. For BT Consumer it underpinned a record 9% growth in revenue in the fourth quarter and the lowest line losses in over five years. We achieved an excellent 79% share of broadband(5) market net additions in the quarter.

“BT Global Services delivered a 9% increase in its order intake this year and continued to see double-digit revenue increases in the high-growth regions of the world. BT Business and BT Wholesale have also delivered decent order intakes. Our cost transformation programmes are helping to drive the strong cash flow of the group.

“These results provide a strong platform for growth and from which to achieve our outlook for the years ahead. Our performance in the year means that we are growing our full year dividend by 15% to 10.9p and we now expect to increase our dividend by 10%-15% for each of the next two years. We continue to focus on improving the service we provide to our customers and delivering on our investments.”

(1 )Certain results for the fourth quarter and year to 31 March 2013 have been restated. See Note 1 to the condensed consolidated financial statements

(2 )Before specific items

(3 )Excludes specific items, foreign exchange movements and the effect of acquisitions and disposals

(4 )Before specific items, purchases of telecommunications licences, pension deficit payments and the cash tax benefit of pension deficit payments

(5 )DSL and fibre

Key points for the fourth quarter:

    --  Underlying revenue excluding transit up 1.2%
    --  EBITDA(1) up 2% and earnings per share(1) up 10%
    --  Underlying operating costs(2) excluding transit up 0.5%; down 5%
        excluding our investments in BT Sport and the non-cash increase in the
        pensions operating charge
    --  347,000 net fibre connections, up 28%, of which 249,000 are BT retail
        customers
    --  BT Global Services order intake of £2.2bn, up 13%

Key points for the year:

    --  Underlying revenue excluding transit up 0.5%, reversing decline of 3.1%
        in prior year and achieving our outlook of an improved trend
    --  EBITDA(1) flat at £6,116m compared with our outlook of £6.0bn-£6.1bn
    --  Normalised free cash flow(3) of £2,450m, up £150m, ahead of our
        outlook of around £2.3bn
    --  Underlying operating costs(2) down 3% excluding transit, our investments
        in BT Sport and the non-cash increase in the pensions operating charge
    --  Earnings per share(1) up 7%
    --  Net debt at £7,028m, down £769m
    --  Proposed final dividend of 7.5p, up 15%, giving full year dividend of
        10.9p, also up 15%

Future outlook:

We are confident we will achieve our goal of sustainable, profitable revenue growth and we have updated our outlook as set out below:


                               2013/14           2014/15       2015/16

                          results
                          -------

    Underlying revenue
     excluding transit         Up 0.5%  Broadly level     Growth

    EBITDA(1)            BPS6,116m     BPS6.2bn-BPS6.3bn   Growth

    Normalised free cash
     flow(3)             BPS2,450m       Above BPS2.6bn    Growth

    Dividend per share          Up 15%       Up 10%-15%   Up 10%-15%

    Share buyback
     programme            BPS302m          c.BPS300m     c.BPS300m
    --  2014/15 underlying revenue excluding transit expected to be broadly
        level with 2013/14 despite an expected negative year on year impact of
        around £100m in UK local government revenues
    --  2014/15 normalised free cash flow(3) outlook above our previous
        expectations reflecting capital expenditure efficiencies.  Cash flow
        growth to continue in 2015/16
    --  Dividend and share buyback policy extended by one year to 2015/16

(1) Before specific items

(2) Excludes specific items, foreign exchange movements and the effect of acquisitions and disposals and is before depreciation and amortisation

(3) Before specific items, purchases of telecommunications licences, pension deficit payments and the cash tax benefit of pension deficit payments

GROUP RESULTS FOR THE FOURTH QUARTER AND YEAR TO 31 MARCH 2014


                                   Fourth quarter to 31
                                           March                 Year to 31 March
                                  ---------------------          ----------------

                                                    2014 2013(1)            Change          2014   2013(1) Change

                                                    BPSm    BPSm                 %          BPSm      BPSm      %
                                                    ----    ----               ---          ----      ----    ---

    Revenue

    -
     adjusted(2)                                   4,748   4,815                (1)       18,287    18,339      0

    -reported
     (see Note
     below)                                        4,748   4,815                (1)       18,287    18,103      1

    -underlying revenue excluding
     transit                                                 1.2                                       0.5
    -----------------------------                            ---                                       ---

    EBITDA

    -
     adjusted(2)                                   1,705   1,664                 2         6,116     6,143      0

    -reported
     (see Note
     below)                                        1,611   1,513                 6         5,840     5,791      1
    ----------                                     -----   -----               ---         -----     -----    ---

    Operating profit

    -
     adjusted(2)                                   1,054     972                 8         3,421     3,300      4

    - reported                                       960     821                17         3,145     2,948      7
    ----------                                       ---     ---               ---         -----     -----    ---

    Profit before tax

    -
     adjusted(2)                                     901     824                 9         2,827     2,656      6

    - reported                                       747     639                17         2,312     2,315      0
    ----------                                       ---     ---               ---         -----     -----    ---

    Earnings per share

    -
     adjusted(2)                                    9.0p    8.2p                10         28.2p     26.3p      7

    - reported                                      7.2p    7.1p                 1         25.7p     24.8p      4
    ----------                                      ----    ----               ---         -----     -----    ---

    Full year proposed dividend                                                     10.9p   9.5p        15
    ---------------------------                                                     -----   ----       ---

    Capital
     expenditure(3)                                  574     648               (11)        2,346     2,438     (4)
    ---------------                                  ---     ---               ---         -----     -----    ---

    Normalised
     free cash
     flow4                                         1,346   1,301                 3         2,450     2,300      7
    ----------                                     -----   -----               ---         -----     -----    ---

    Net debt                                                                        7,028  7,797 BPS(769)m
    --------                                                                        -----  ----- ---------

Note: Reported revenue and EBITDA in the year to 31 March 2013 included a specific item charge of £151m and £36m, respectively, relating to Ofcom’s determinations on historic Ethernet pricing as well as a specific item charge of £85m and £58m, respectively, relating to the retrospective regulatory impact of the Court of Appeal decision on ladder pricing.

Line of business results(2)


                                   Revenue        EBITDA      Free cash flow4
                                   -------        ------      ---------------

    Fourth quarter to 31 March    2014   2013(1)       Change   2014   2013(1) Change    2014  2013(1)  Change

                                  BPSm      BPSm            %   BPSm      BPSm      %    BPSm     BPSm       %
                                  ----      ----          ---   ----      ----    ---    ----     ----     ---

    BT Global Services           1,857     1,934           (4)   286       264      8     517      454      14

    BT Business                    895       922           (3)   287       284      1     280      304      (8)

    BT Consumer                  1,068       982            9    269       256      5     216      218      (1)

    BT Wholesale                   571       669          (15)   152       161     (6)    219      178      23

    Openreach                    1,271     1,276            0    694       683      2     460      410      12

    Other and intra-group items   (914)     (968)          (6)    17        16      6    (346)    (263)     32
    ---------------------------   ----      ----          ---    ---       ---    ---    ----     ----     ---

    Total                        4,748     4,815           (1) 1,705     1,664      2   1,346    1,301       3
    -----                        -----     -----          ---  -----     -----    ---   -----    -----     ---

    Year to 31 March

    BT Global Services           7,041     7,170           (2)   932       832     12     389      212      83

    BT Business                  3,509     3,516            0  1,098     1,047      5     892      907      (2)

    BT Consumer                  4,019     3,846            4    833       968    (14)    472      655     (28)

    BT Wholesale                 2,422     2,608           (7)   614       620     (1)    372      348       7

    Openreach                    5,061     5,115           (1) 2,601     2,642     (2)  1,492    1,475       1

    Other and intra-group items (3,765)   (3,916)          (4)    38        34     12  (1,167)  (1,297)    (10)
    --------------------------- ------     -----          ---    ---       ---    ---  ------    -----     ---

    Total                       18,287    18,339            0  6,116     6,143      0   2,450    2,300       7
    -----                       ------    ------          ---  -----     -----    ---   -----    -----     ---

(1) Certain results for the fourth quarter and year to 31 March 2013 have been restated. See Note 1 to the condensed consolidated financial statements

(2) Before specific items. Specific items are defined on page 4 and analysed in Note 4 to the condensed consolidated financial statements

(3) Before purchases of telecommunications licences

(4) Before specific items, purchases of telecommunications licences, pension deficit payments and the cash tax benefit of pension deficit payments

Notes:

    1. The commentary focuses on the trading results on an adjusted basis, which
       is a non-GAAP measure, being before specific items.  Unless otherwise
       stated, 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.  This is consistent with
       the way that financial performance is measured by management and reported
       to the Board and the Operating Committee and assists in providing a
       meaningful analysis of the trading results of the group.  The directors
       believe that presentation of the group's results in this way is relevant
       to the understanding of the group's financial performance as specific
       items are those that in management's judgement need to be disclosed by
       virtue of their size, nature or incidence.  In determining whether an
       event or transaction is specific, management considers quantitative as
       well as qualitative factors such as the frequency or predictability of
       occurrence.  Specific items may not be comparable to similarly titled
       measures used by other companies. Reported revenue, reported operating
       costs, reported EBITDA, reported operating profit, reported profit before
       tax, reported net finance expense, reported EPS and reported free cash
       flow are the equivalent unadjusted or statutory measures.
       Reconciliations of revenue, operating costs and operating profit are set
       out in the Group income statement.  Specific items are set out in Note 4.
       Reconciliations of EBITDA, adjusted profit before tax and adjusted EPS to
       the nearest measures prepared in accordance with IFRS are provided in
       Notes 7, 8 and 9 respectively.
    2. Trends in underlying revenue, trends in underlying operating costs, and
       underlying EBITDA are non-GAAP measures which seek to reflect the
       underlying performance of the group that will contribute to long-term
       profitable growth and as such exclude the impact of acquisitions and
       disposals, foreign exchange movements and any specific items.  We focus
       on the trends in underlying revenue and underlying operating costs
       excluding transit as transit traffic is low-margin and is significantly
       affected by reductions in mobile termination rates.

The fourth quarter and full year 2013/14 results presentation for analysts and investors will be held in London at 9.00am today and a simultaneous webcast will be available at www.bt.com/results

The BT Group plc Annual Report & Form 20-F 2014 is expected to be published on 22 May 2014. The Annual General Meeting of BT Group plc will be held at Old Billingsgate, 1 Old Billingsgate Walk, London, EC3R 6DX, on Wednesday 16 July 2014 at 11am.

Results for the first quarter to 30 June 2014 are expected to be announced on Thursday 31 July 2014.

About BT

BT is one of the world’s leading providers of communications services and solutions, serving customers in more than 170 countries. Its principal activities include the provision of networked IT services globally; local, national and international telecommunications services to its customers for use at home, at work and on the move; broadband and internet products and services and converged fixed/mobile products and services. During the year BT Retail divided into two separate divisions and so BT now consists principally of five customer-facing lines of business: BT Global Services, BT Business, BT Consumer, BT Wholesale and Openreach.

British Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group plc and encompasses virtually all businesses and assets of the BT Group. BT Group plc is listed on stock exchanges in London and New York.

For more information, visit www.btplc.com

SOURCE BT


Source: PR Newswire



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