BT Group PLC 3rd Quarter Results (5549D)

TIDMBT.A

RNS Number : 5549D

BT Group PLC

30 January 2015

30 January 2015

BT GROUP PLC

RESULTS FOR THE THIRD QUARTER AND NINE MONTHS TO 31 DECEMBER 2014

BT Group plc (BT.L) today announced its results for the third quarter and nine months to 31 December 2014.

 
                                                   Third quarter to                  Nine months to 
                                                    31 December 2014                 31 December 2014 
                                               GBPm            Change         GBPm              Change 
                                      -------------  ----------------  -----------  ------------------ 
 Revenue(1)                                   4,475              (3)%       13,212                (2)% 
 Underlying revenue(2) excluding 
  transit                                                      (1.0)%                           (0.1)% 
 EBITDA(1)                                    1,567                2%        4,452                  1% 
 Profit before 
  tax               - adjusted(1)               814               13%        2,142                 11% 
  - reported                                    694               12%        1,803                 15% 
 Earnings per 
  share             - adjusted(1)              8.0p               10%        21.4p                 12% 
  - reported                                   6.9p               10%        18.1p                (2)% 
 Normalised free cash flow(3)                   908           GBP354m        1,563             GBP459m 
 Net debt                                                                    6,202         GBP(1,438)m 
 

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

"This quarter we have delivered good growth in profit before tax and strong free cash flow.

"Openreach achieved the highest growth in the number of landlines on record. It was also our best ever quarter for fibre broadband net additions. All the major communications providers are responding to the strong market demand for fibre broadband, helping to drive take-up in what is already a very competitive market.

"Our superfast fibre broadband network now covers around three-quarters of the UK. BT has been at the forefront of fibre innovation and investment, from which all communications providers benefit. We aim to keep it that way. So today we're announcing large-scale pilots this summer of ultrafast broadband with G.fast. We now think we can deploy this technology at scale which will enable us to deliver ultrafast speeds of up to 500Mbps to most of the UK within a decade.

"I am pleased that we have agreed the 2014 triennial funding valuation and recovery plan with the Trustee of the BT Pension Scheme. The funding deficit is GBP7.0bn at 30 June 2014, an increase from 2011 reflecting the low interest rate environment. Over the next three years we will pay GBP2.0bn into the scheme, which is less than we paid over the previous three years. We have agreed a 16 year recovery plan reflecting the strength and sustainability of our future cash flow generation.

"Mobility is a key growth area for us. We are making good progress on our due diligence in relation to a possible acquisition of EE and will make further announcements in due course. In the meantime, our Consumer mobile launch plans remain on track."

Financial highlights for the third quarter:

   --      Underlying revenue(2) excluding transit down 1% 
   --      Underlying operating costs(4) excluding transit down 3% reflecting the benefit of our cost transformation activities 
   --      EBITDA(1) up 2% and earnings per share(1) up 10% 
   --      Normalised free cash flow(3) of GBP908m, up 64% 
   --      Outlook reaffirmed 

(1) Before specific items. Specific items are defined on page 3

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

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

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

GROUP RESULTS FOR THE THIRD QUARTER AND NINE MONTHS TO 31 DECEMBER 2014

 
                                 Third quarter to 31 December            Nine months to 31 December 
----------------------  ---------------------------------------  ------------------------------------ 
                            2014     2013                Change       2014       2013          Change 
                            GBPm     GBPm                     %       GBPm       GBPm               % 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 Revenue 
 - adjusted(1)             4,475    4,599                 (3)       13,212     13,539             (2) 
 - reported                4,475    4,599                 (3)       13,270     13,539             (2) 
 - underlying revenue 
  excluding transit                                       (1.0)                                 (0.1) 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 EBITDA 
 - adjusted(1)             1,567    1,537                     2      4,452      4,411               1 
 - reported                1,519    1,491                     2      4,306      4,229               2 
----------------------                     --------------------  ---------  ---------  -------------- 
 Operating profit 
 - adjusted(1)               949      867                     9      2,564      2,367               8 
 - reported                  901      821                    10      2,418      2,185              11 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 Profit before tax 
 - adjusted(1)               814      722                    13      2,142      1,926              11 
 - reported                  694      617                    12      1,803      1,565              15 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 Earnings per share 
 - adjusted(1)              8.0p     7.3p                    10      21.4p      19.1p              12 
 - reported                 6.9p     6.3p                    10      18.1p      18.5p             (2) 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 Capital expenditure         599      581                     3      1,648      1,772             (7) 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 Normalised free cash 
  flow(2)                    908      554                    64      1,563      1,104              42 
 Net debt                                                            6,202      7,640     GBP(1,438)m 
----------------------  --------  -------  --------------------  ---------  ---------  -------------- 
 

Line of business results(1)

 
                                 Revenue                  EBITDA              Free cash flow(2) 
----------------------  ----------------------  ----------------------  ------------------------- 
Third quarter to         2014  2013(3)  Change   2014  2013(3)  Change    2014   2013(3)   Change 
31 December              GBPm     GBPm       %   GBPm     GBPm       %    GBPm      GBPm        % 
----------------------  -----  -------  ------  -----  -------  ------  ------  --------  ------- 
BT Global Services      1,694    1,847     (8)    261      290    (10)      52       111     (53) 
BT Business               789      808     (2)    266      257       4     224       218        3 
BT Consumer             1,083    1,014       7    251      175      43     274        99      177 
BT Wholesale              532      589    (10)    136      146     (7)     114        30      280 
Openreach               1,255    1,274     (1)    651      660     (1)     471       452        4 
Other and intra-group 
 items                  (878)    (933)       6      2        9    (78)   (227)     (356)       36 
----------------------  -----  -------  ------  -----  -------  ------  ------  --------  ------- 
Total                   4,475    4,599     (3)  1,567    1,537       2     908       554       64 
----------------------  -----  -------  ------  -----  -------  ------  ------  --------  ------- 
 
 

(1) Before specific items

(2) Before specific items, pension deficit payments and the cash tax benefit of pension deficit payments

(3) Certain results have been restated. See Note 1 to the condensed consolidated financial statements

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 with 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.

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.

Enquiries

Press office:

Ross Cook Tel: [phone]

Investor relations:

Damien Maltarp Tel: [phone]

A conference call for analysts and investors will be held at 9.00am today and a simultaneous webcast will be available at www.bt.com/results

We expect to announce the fourth quarter and full year results for 2014/15 on 7 May 2015.

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. BT consists principally of five customer-facing lines of business: BT Global Services, BT Business, BT Consumer, BT Wholesale and Openreach.

For the year ended 31 March 2014, BT Group's reported revenue was GBP18,287m with reported profit before taxation of GBP2,312m.

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

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