BT Group Newsroom

Results for the half year to 30 September 2023

Thu, 02 Nov 2023 07:00:00 +0000

Philip Jansen, Chief Executive, commenting on the results, said

“These results show that BT Group is delivering and on target: we’re rapidly building and connecting customers to our next generation networks, we’re simplifying our products and services, and we’re now seeing predictable and consistent revenue and EBITDA growth.

“We’ve strengthened our competitive position with the launch of both New EE and our renewed strategy in Business, and Openreach has now built full fibre broadband to more than a third of the UK's homes and businesses with a growing connection rate. Our transformation programme has now delivered £2.5bn in annualised savings, well on track to meet our £3bn savings target by FY25.

“Our delivery in the first half means we are confirming our financial outlook for FY24 with normalised free cash flow now expected towards the top end of the guidance range, and we are declaring an interim dividend of 2.31 pence per share. BT Group has a bright future and I’m pleased to be handing the baton to Allison Kirkby early in the new year. She knows the sector, she knows the company and she’s the right person to lead BT Group from this position of operational strength.”

Continued strong execution of our strategy

FTTP build rate accelerated to 66k per week delivering a record of 860k premises passed in the quarter, FTTP footprint is now expanded to 12m premises with a further 6m where initial build is underway
Strong customer demand in Openreach for FTTP with net adds of 364k in Q2, bringing take-up rate to 33%
Openreach broadband ARPU grew by 10% year-on-year due to price rises and increased volumes of FTTP; Openreach broadband line losses of 255k in H1, a 1% decline in the broadband base; whilst we continue to target a decline of around 400k in FY24, softer market conditions increase the risk that losses will be above this level
Consumer broadband ARPU for the year to date increased 4% year-on-year and Consumer postpaid mobile ARPU for the year to date increased 9% year-on-year; churn for the year to date remains stable for both broadband and postpaid mobile at 1.1% and 1.0% respectively
In October 'New EE' was launched with a modern digital platform and a set of converged products and services
Retail FTTP base grew year-on-year by 48% to 2.2m of which Consumer 2.1m and Business 0.1m; 5G base 9.9m, up 42% year-on-year
Cost transformation on track with gross annualised cost savings of £2.5bn since April 2020 against our £3bn target, with a cost to achieve of £1.3bn against a target of £1.6bn
Continued focus on creating standout customer experiences with BT Group NPS of 22.7, up 1.8pts year-on-year

Adjusted¹ Revenue and EBITDA growth:

Reported revenue £10.4bn, in line with the prior year; adjusted¹ revenue £10.4bn, up 3% on a pro forma² basis due to increased fibre-enabled product sales, inflation-linked pricing and improved lower margin trading in Business partially offset by legacy product declines
Adjusted¹ EBITDA £4.1bn, up 6%; and up 4% on a pro forma² basis with revenue flow through and strong cost control more than offsetting cost inflation and one-off items in the prior year; Business EBITDA decline due to increased input costs and legacy high-margin managed contract declines
Reported profit before tax £1.1bn, up 29% largely due to factors driving adjusted¹ EBITDA growth
Reported capital expenditure ('capex') £2.3bn, down 11% with lower fixed network spend driven by lower FTTP build unit costs; cash capex of £2.5bn also down 11%
Net cash inflow from operating activities £2.3bn; normalised free cash flow¹ £0.5bn, up £0.4bn primarily due to £0.2bn increase in adjusted EBITDA¹ and £0.3bn decrease in cash capital expenditure partly offset by £(0.1)bn net working capital outflow; net working capital movements includes £359m from the sale of cash flows of contract assets relating to mobile handsets as well as £(220)m from lower utilisation of a supply chain financing programme
Net debt £19.7bn, (31 March 2023: £18.9bn), increasing mainly due to pension scheme contributions with net free cash flow for the first half of FY24 substantially offsetting the payment for the final dividend of FY23
Gross IAS 19 deficit of £3.9bn, up from £3.1bn at 31 March 2023 mainly due to the increase in real interest rates and narrowing of credit spreads over H1, partly offset by deficit contributions
Interim dividend for FY24 of 2.31 pence per share (pps) in line with our policy of paying 30% of prior year's full year dividend
FY24 Outlook: Adjusted¹ revenue and EBITDA growth on a pro forma basis; capital expenditure excluding spectrum of around £5.0bn; normalised free cash flow towards the top end of £1.0bn-£1.2bn range.

Customer-facing unit updates

_{¹ See Glossary}
_²_{See 'Prior period comparatives' section below for more information on pro forma and re-presented measures}_.
_{³ Net debt was £18,859m at 31 March 2023}

Prior period comparatives

Throughout this release, comparative financial information for the half year to 30 September 2022 ('FY23') has been re-presented to reflect the merger of our Global and Enterprise business units to form Business; and the change in the methodology used to allocate shared Network, Digital and support function costs across our units, which improves the relevance of our financial reporting by better allocating internal costs to the drivers behind those costs. These adjustments are made pursuant to IFRS accounting requirements, for more information see note 1 to the condensed consolidated financial statements on page 15 .

In addition, the group and operating review sections of this release present comparative financial information for the Consumer customer-facing unit and BT Group overall on an unaudited 'pro forma' basis. This reflects adjustments that estimate the impact as if trading in relation to BT Sport has been equity accounted in FY23, akin to the Sports JV being in place historically. Analysis on a pro forma basis enables comparison of results on a like-for-like basis.

The Additional Information on page 29 presents a bridge between financial information for the half year to 30 September 2022 as published on 3 November 2022, and the comparatives presented in this release. For further information see bt.com/about for separate publications covering the formation of Business and cost allocation changes, (published 27 June 2023), and the pro forma adjustments (published 18 October 2022).

Glossary


Adjusted	Adjusted measures (including adjusted revenue, adjusted operating costs, adjusted operating profit, and adjusted basic earnings per share) are 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.
Adjusted EBITDA	Earnings before interest, tax, depreciation and amortisation, before specific items, share of post tax profits/losses of associates and joint ventures and net 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	Free cash flow (net cash inflow from operating activities after net capital expenditure) after net interest paid, payment of lease liabilities, net cash flows from the sale of cash flows related to contract assets, monies received as prepayment for the sale of redundant copper, dividends received from non-current assets investments, associates and joint ventures, and net purchase or disposal of non-current asset investments, 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 paid, share buybacks, acquisitions and disposals, repayment and raising of debt, cash flows relating to loans with joint ventures, 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. Amounts due to joint ventures, loans and borrowings recognised in relation to monies received from the sale of cash flows of contract assets and as prepayment for the forward sale of redundant copper are excluded. 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.
Service revenue	Earned from services delivered using our fixed and mobile network connectivity, including but not limited to, broadband, calls, line rental, TV, residential sport subscriptions, mobile data connectivity, incoming & outgoing mobile calls and roaming by customers of overseas networks.
Re-presented	FY23 comparatives throughout this release have been re-presented to reflect: (i) the merger of our Global and Enterprise business units to form Business; and (ii) the change in our methodology used to allocate shared Network, Digital and support function costs across our units. Refer to the 'Prior period comparatives' section on page 2 and note 1 to the condensed consolidated financial statements on page 15 for more details, and to Additional Information on page 29 for a bridge between previously published FY23 financial information and re-presented numbers.
Pro forma	Unaudited pro forma results estimate the impact on the group as if trading in relation to BT Sport has been equity accounted in FY23, akin to the Sports JV being in place historically. Refer to the 'Prior period comparatives' section on page 2 for more information and to Additional Information on page 29 for a bridge between previously published financial information (re-presented as noted above) and pro forma numbers.
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 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 29 to 31.

Forward-looking statements – caution advised

Certain information included in this announcement is forward looking and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward looking statements. Forward looking statements cover all matters which are not historical facts and include, without limitation, projections relating to results of operations and financial conditions and the Company’s plans and objectives for future operations. Forward looking statements can be identified by the use of forward looking terminology, including terms such as ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’, ‘forecasts’, ‘intends’, ‘plans’, ‘projects’, ‘goal’, ‘target’, ‘aim’, ‘may’, ‘will’, ‘would’, ‘could’ or ‘should’ or, in each case, their negative or other variations or comparable terminology. Forward looking statements in this announcement are not guarantees of future performance. All forward looking statements in this announcement are based upon information known to the Company on the date of this announcement. Accordingly, no assurance can be given that any particular expectation will be met and readers are cautioned not to place undue reliance on forward looking statements, which speak only at their respective dates. Additionally, forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

Download PDF - Results for the half year to 30 September 2023

Trading update for the three months to 30 June 2023

Thu, 27 Jul 2023 07:00:00 +0100

Philip Jansen, Chief Executive, commenting on the results, said

“We’ve made a strong start to the year, in what remains a very competitive market, with improved customer satisfaction, pro forma revenue growth in all of our business units and pro forma group EBITDA up by 5%. Openreach is now 44% of the way through its full fibre build, and customer demand has continued to grow with a total network take-up rate of 32%. Consumer is seeing solid pro forma growth driven by pricing and mix, as customers choose higher performance connections; and Business grew its order book, driving revenue growth for the combined unit. We continue to drive transformation across the group, and while there remains much to do it’s clear that our strategy is working and BT Group is set up for success.”

Strong start to the year:

FTTP footprint expanded to 11m premises, 44% completion of 25m target, with a further c.6.2m where initial build is underway; 718k premises passed in the quarter at an average build rate of 55k per week
Customer demand in Openreach for FTTP increased with Q1 orders up 34% year-on-year and net adds of 383k, bringing network take-up rate to 32%; total FTTP connections grew to 3.5m
Openreach broadband ARPU grew by 10.2% year-on-year due to price rises and increased volumes of FTTP; Openreach broadband base down 126k in Q1 due to competitor losses combined with a weak broadband market and communications providers ceasing copper lines; we continue to expect the Openreach broadband base to decline by around 400k in FY24
Consumer broadband ARPU increased 5% year-on-year to £42.0 and Consumer postpaid mobile ARPU increased 9% year-on-year to £19.7, both driven by CPI-linked pricing; churn remains stable for broadband and postpaid mobile at 1.1% and 1.0% respectively
Retail FTTP base grew year-on-year by 50% to 2.0m of which Consumer 1.9m and Business 0.1m; 5G base 9.2m, up 53% year-on-year
Business performance reflects positive momentum in SMB but declines in CPS, Global and Wholesale due to higher input costs and legacy high-margin managed contract declines
Continued focus on customer satisfaction and delivery of excellent value for money with BT Group NPS of 23.7 up 1.8pts year-on-year

Continued pro forma revenue and EBITDA growth:

Pro forma adjusted¹ revenue £5.2bn, up 4% on Q1 FY23 due to increased fibre-enabled product sales and price increases in Openreach, increased service revenue in Consumer with 2023 annual contractual price rises being aided by higher FTTP base and higher roaming, and improved equipment trading in Business, offset partially by legacy product declines; reported revenue was up 1%
Pro forma adjusted¹ EBITDA £2.0bn, up 5% with revenue flow through and cost control more than offsetting cost inflation; Business EBITDA decline due to increased input costs and legacy high-margin managed contract declines
Reported profit before tax of £536m, up 11% primarily due to EBITDA growth partially offset by specific items
Reconfirming all FY24 outlook metrics

_{¹ See Glossary}

Glossary

Our commentary focuses on the trading results on an adjusted pro forma basis. Reported revenue and reported profit before tax are the equivalent unadjusted or statutory measures and are reconciled in pages 233 to 235 of the Annual Report 2023.


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.
Adjusted EBITDA	Earnings before interest, tax, depreciation and amortisation, before specific items, share of post tax profits/losses of associates and joint ventures and net finance expense.
Pro forma	Pro forma results estimate the impact on the group as if trading in relation to BT Sport had been equity accounted for in Q1 FY23, akin to the BT Sport joint venture being in place historically. Please refer to the press release of 3 November 2022 for a bridge between financial information on a reported basis and a Sports JV pro forma basis at the half year to 30 September 2022.
Restated	Results were restated in June 2023 to reflect: i) the merger of our Global and Enterprise units to form Business; and ii) the change in our methodology used to allocate shared Network, Digital and support function costs across our units, reported within operating costs and capex (to more closely align the recharges received by each unit to their actual consumption). Please refer to disclosures published for the formation of Business and adjustments to central cost allocations on 27 June 2023.
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 changes to our assessment of our provision for historical regulatory matters, restructuring charges, divestment-related items and net interest expense on pensions.

We are scheduled to announce the second quarter and half year results for FY24 on 2 November 2023.

Forward-looking statements – caution advised

Download PDF - Trading update for the three months to 30 June 2023

Trading update for the nine months to 31 December 2022

Thu, 02 Feb 2023 07:01:00 +0000

Philip Jansen, Chief Executive, commenting on the results, said

“We’ve grown revenue and EBITDA on a pro forma, like-for-like basis, despite a challenging economic backdrop, and we’re transforming BT Group for the benefit of our customers. We continue to accelerate our investments in the UK’s leading next generation networks; we're combining our Enterprise and Global operations to create BT Business, a single, strengthened B2B unit; and we’re going further on cutting costs to deliver £3 billion in annualised savings by the end of FY25.

“On full fibre, we’re building - and now connecting - like fury: 9.6 million premises reached to date, with 29% already connected, and our 5G mobile network now reaches 60% of the UK population.

“In December we awarded a cost-of-living pay rise to 85% of our UK colleagues, reaching an agreement with our union partners that we will all lean into our ongoing transformation plans. Despite extraordinary energy costs and other inflationary headwinds, we are reaffirming our outlook for the year.”

Key strategic developments:

Announced the merger of Enterprise and Global to create BT Business, to enhance value for all B2B customers, strengthen our competitive position and deliver material synergies as part of our £3bn cost-saving target
Announced CPI-linked price increases to offset cost inflation and pay for increased data usage and investment in our next generation networks
Additional action taken on operating costs to mitigate unforeseen energy, pay and equipment costs
Record FTTP build of 810k premises passed in the quarter at an average build rate of 62k per week; 38% of our 25m FTTP build completed
Customer demand for FTTP extremely strong with orders up 51% year on year; take up³ rate grew to 29% with net adds of 324k in the quarter; broadband rental ARPU up 7.6% year on year
Openreach announced improved discounts for FTTP connection and rental charges, from April 2023, to support accelerated take up³ of FTTP; announced the launch of 1.2Gbps and 1.8Gbps products
Record quarterly growth in FTTP base in Consumer, up 155k to 1.6m; 5G ready base now 8.5m; churn remains stable in a competitive market; RootMetrics named EE the UK's best mobile network for a 19th time running
Operational metrics recovering as industrial action ended with cost of living pay rise

Reaffirmed all outlook metrics despite inflationary headwinds:

Revenue £15.6bn, down 1% as price increases and improved trading in Openreach and Consumer were offset by lower strategic equipment sales in Global, migration of a MVNO customer, removal of BT Sport revenue, and legacy product declines; on a Sports Joint Venture ('JV') pro forma¹ basis adjusted revenue was up £65m
Adjusted¹ EBITDA £5.9bn, up 3% due to tight cost control and the removal of BT Sport costs, offset by revenue declines and inflationary cost pressures; on a Sports JV pro forma¹ basis adjusted EBITDA was up 2%
Reported profit before tax £1.3bn, down 15% due to increased depreciation offsetting EBITDA growth
Reported capital expenditure (capex) £3.9bn, up 3% due to increased Openreach investment in fixed network infrastructure offsetting prior-year investment in spectrum; capex excluding spectrum payments up 19%; cash capex was £4.1bn, up 19%; significantly lower capex in Q4 given unwind of Openreach work in progress
Normalised free cash flow¹ £0.1bn, down £0.8bn due to increased cash capex and adverse working capital phasing primarily driven by collections timings, partially offset by a tax refund and EBITDA growth
Net debt was £19.2bn, £1.2bn higher than at 31 March 2022 with normalised free cash flow more than offset by pension scheme contributions and payment of the final dividend
Financial outlook reaffirmed; normalised free cash flow heavily weighted to Q4, reflecting more front-ended capex and back-ended EBITDA and receivable collections than usual

_{¹ See Glossary}
_{² Net debt was £18,009m at 31 March 2022}
_{³ FTTP take up defined as customers that have been provisioned on the FTTP network}

Overview of the nine months to 31 December 2022

Customer-facing unit updates

Consumer: Strong performance in tough market conditions, first full quarter after completion of BT Sport JV

Revenue was flat due to the BT Sport disposal offsetting service revenue¹ growth; on a Sports JV pro forma¹ basis revenue was up 2%, with a 4% growth in service revenue¹ driven by the 2022 annual contractual price rise which was aided by a higher FTTP base, along with higher roaming, offset by lower mobile equipment sales due to reduced market activity
EBITDA was up 15% due to the BT Sport disposal and increased mobile and fixed service revenue¹ and tight cost management including lower indirect mobile commissions; on a Sports JV pro forma¹ basis EBITDA was up 9%
Strong demand for next generation products with highest ever quarterly growth in FTTP base, with an increase of 155k; FTTP base now 1.6m, 5G ready base now 8.5m
Churn continues to remain stable in a competitive market
Strong support for vulnerable customers with EE launching its first mobile social tariff in November alongside BT Home Essentials; 3m customers including customers on social and discounted tariffs excluded from April 2023 price increases

Enterprise: Revenue and EBITDA quarterly progression in FY23 continues

Revenue decline due to the migration of a MVNO customer and legacy product declines, partially offset by growth in SME and SoHo
EBITDA decline due to lower revenue and revenue mix, partially offset by tight cost control and our cost transformation programmes
The overall revenue and EBITDA trend continued to improve into Q3, reflecting continued growth in both the SME and SoHo segments and the timing of contract revenue recognition in Wholesale and ESN
Continued growth in both mobile and VoIP in the year to date, adding 65k connections to our mobile base and 93k connections to our VoIP base
Retail order intake was £2.8bn on a 12-month rolling basis, up 4% reflecting growth in new business partially offset by contract re-signs; Wholesale order intake was £0.7bn, down 28%
Official opening of new cyber Security Operations Centre in Belfast following contract win with the Department of Finance, Northern Ireland
Contract wins with HMRC to replace its existing in house IT services provider with a managed networks solution and the Ministry of Defence to upgrade its legacy Broadband and ADSL estate

Global: Financial performance continues to stabilise as improved growth portfolio and strong cost transformation offset lower equipment sales and inflationary pressures

Revenue decline mainly due to lower strategic equipment sales and the impact of prior year divestments, partly offset by a £95m positive foreign exchange movement; revenue excluding divestments, one-offs and foreign exchange was down 5%
EBITDA decline reflected lower revenue and inflationary pressures, partly offset by lower operating costs from ongoing modernisation, cost control and one-offs; EBITDA excluding divestments, one-offs and foreign exchange was down 5%
On a rolling 12-month basis order intake was £2.9bn, down 10%; the proportion of our growth product portfolio represents 53% of total orders won in the year
During the quarter we launched new digital tools to help customers monitor and optimise energy and carbon use across multi-cloud networks

Openreach: Revenue and EBITDA growth; FTTP connections continue to grow

Revenue growth due to price increases and increased sales of fibre-enabled products and Ethernet, partially offset by decline in physical lines and decrease in chargeable repairs due to lower repair volumes
EBITDA growth from revenue flow through and lower operating costs driven by improved repair and efficiency programmes partially offset by higher FTTP provisioning activity, and pay inflation
Broadband base down 10k in Q3 (Q3 FY22: 45k growth) with YoY position impacted by reduced broadband market growth; competitor churn continues to be in line with our expectations and average monthly rental ARPU grew by c.£1 YoY (7.6%) due to increased volumes of FTTP
Record FTTP build of 810k premises passed in the quarter at an average build rate of 62k per week; we have completed 38% of our 25m build
Customer demand for FTTP extremely strong with orders up 51% year on year; take up rate grew to 29% with net adds of 324k in the quarter; base now c.2.7m (29% of premises passed)
Almost 50% of the Openreach broadband base where we built network 24 months ago are now on FTTP
Announced improved discounts for FTTP connection and rental charges, from April 2023, to support accelerated take up² of FTTP; announced the launch of 1.2Gbps and 1.8Gbps products
FTTP footprint of 9.6m with a further 6m where initial build is underway; now passed 3m premises in rural locations

_{¹See Glossary. Commentary on revenue and EBITDA is based on adjusted measures.}
_{² FTTP take up defined as customers that have been provisioned on the FTTP network.}

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	Free cash flow (net cash inflow from operating activities 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 paid, share buybacks, acquisitions and disposals, repayment and raising of debt, cash flows relating to loans with joint ventures, 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.
Service revenue	Earned from services delivered using our fixed and mobile network connectivity, including but not limited to, broadband, calls, line rental, TV, residential BT Sport subscriptions, mobile data connectivity, incoming & outgoing mobile calls and roaming by customers of overseas networks.
Sports JV pro forma	On 1 September 2022 BT Group and Warner Bros. Discovery 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 the press release on 3 November 2022 for a bridge between financial information on a reported basis and a Sports JV pro forma basis at the half year to 30 September 2022.
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 changes to our assessment of our provision for historic regulatory matters, restructuring charges, divestment-related items and net interest expense on pensions.

Our commentary focuses on the trading results on an adjusted basis, which is a non-GAAP measure, being before specific items. The directors believe that presentation of the group’s results in this way is relevant to an 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. This is consistent with the way that financial performance is measured by management and reported to the Board and the Executive Committee and assists in providing a meaningful analysis of the trading results of the group. 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. Reported revenue, reported operating costs, reported operating profit and reported profit before tax are the equivalent unadjusted or statutory measures.

BT Group makes Cost of Living Pay Rise as union recommends end to strikes

Mon, 28 Nov 2022 14:30:00 +0000

BT Group has today announced plans for a UK Cost of Living Pay Rise to all but the highest paid staff. Chief Executive, Philip Jansen, presenting the company’s half year results this month, had made clear his determination to make such an award. Subsequent discussions with the Communication Workers Union (CWU) and Prospect have led to both unions recommending agreement.

Details of the Cost of Living Pay Rise are:

£1,500 pay rise for all UK colleagues who currently earn £50,000 or less from 1 Jan 2023
Consolidated salary increase, not one-off payment
Covers 100% of frontline staff (and others at ‘Team Member’ grade), and 51% of managers in the UK. In total, 85% of UK-based BT Group colleagues
Highly competitive pay award when combined with the increase made in April, bringing the total percentage pay rise for the lowest paid to over 15% since this time last year
Includes Openreach

The Cost of Living Pay Rise is being communicated to all UK BT Group staff today. At the same time, CWU and Prospect will communicate to their members, and will run consultative ballots recommending people vote in favour. The outcome of those ballots will be announced in mid-December, and in the case of the CWU would end industrial action if members are supportive.

BT Group has committed to still run a 2023 pay review for UK colleagues but this will now move to September 2023 and take into account the January Cost of Living Pay Rise.

Announcing the new Cost of Living Pay Rise, BT Group Chief Executive, Philip Jansen said:

“This award is based on the principles we have followed throughout this difficult period. It gets help to as many of our colleagues as possible; favours our lower paid colleagues; and gives people the security of a built-in, pensionable increase to their pay.

“Crucially, it has been worked on in conjunction with the CWU. As I’ve said throughout, whatever our differences, our unions are vital partners. We will now build on this collaboration: We have agreed with both our union partners that we will all lean into the opportunities and challenges the future will bring, specifically our transformation plans and the delivery of the £3bn cost savings by the end of FY25. Ultimately, we all want BT Group to be successful so that we can do the best by our people and customers for years to come.”

Results for the half year to 30 September 2022

Thu, 03 Nov 2022 07:00:00 +0000

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 £2.5bn to £3.0bn 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.£1 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 £1.7bn since April 2020 with total cost to achieve of £0.9bn; FY25 target increased from £2.5bn to £3.0bn in response to cost inflation, with total cost to achieve of £1.6bn

Revenue and EBITDA growth and interim dividend at 2.31pps confirmed

Revenue £10.4bn, 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
Adjusted¹ EBITDA £3.9bn, 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 £0.8bn, down 18% due to increased depreciation from network build and higher specific costs offsetting adjusted¹ EBITDA growth
Reported capital expenditure £2.6bn, 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 £2.9bn; normalised free cash flow¹ £0.1bn, down £0.3bn 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 £1.7bn, up from £1.1bn 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 £4.4bn at end of June 2022, and not adversely impacted by gilt market volatility in late September
FY23 capex outlook revised from c.£4.8bn to c.£5.0bn due to higher fibre connections and inflation, enabled by a £0.2bn tax refund in October; capex in subsequent years will be c.£4.8bn over remainder of the peak fibre build
Normalised free cash flow¹ expected to outturn towards the lower end of the £1.3bn-£1.5bn range
Interim dividend of 2.31 pence per share in line with our policy

Customer-facing unit updates

_{¹See Glossary}
_{²Net debt was £18,009m 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	Free cash flow (net cash inflow from operating activities 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 forma	On 1 September 2022 BT Group and Warner Bros. Discovery 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 changes to our assessment of our provision for historic regulatory matters, restructuring charges, divestment-related items and net interest expense on pensions.

Download - Results for the half year to 30 September 2022

BT Group provides historical pro forma to reflect formation of Sports Joint Venture between BT Sport and Eurosport UK

Tue, 18 Oct 2022 09:39:00 +0100

Historical unaudited pro forma financial and operational key performance indicators (KPIs) provided for FY21, FY22 and Q1 FY23
Pro forma information estimates the effect of the reorganisation of BT Sport following the formation of the Sports Joint Venture between BT Sport and Eurosport UK
Forming the JV reduces reported BT Group revenue for FY23 by c.£300m-350m. On a pro forma basis, we continue to expect sustainable revenue growth for FY23 and beyond. All other outlook items unchanged
BT’s historical reported Group financials are unchanged

18 October 2022

On 1 September 2022 BT Group and Warner Bros. Discovery announced completion of their transaction to form a 50:50 joint venture (JV) that combines the assets of BT Sport and Eurosport UK.

By bringing together the sports content offering of both BT Sport and Eurosport UK, the JV will have one of the most extensive portfolios of premium sports. This is an attractive agreement for BT, realising cost efficiencies between BT Sport and Warner Bros. Discovery, and introducing further broadcast rights and expertise from Warner Bros. Discovery, while creating more choice and an even stronger sport and entertainment proposition for our customers. Through the transaction, and with the support and strong partnership of Warner Bros. Discovery, BT Group’s risk exposure to sport has also been significantly reduced while ensuring that BT Group will benefit from the synergies created by the JV. BT plc will receive £93m from Warner Bros. Discovery and up to approximately £540m by way of an earn-out from the JV, subject to certain conditions being met.

BT plc’s interest in the JV will be classified as a JV under IFRS 11, and equity accounted for under IAS 28.

BT Group has today published unaudited historical pro forma financial and operational KPIs to estimate the impact on the group had the JV been in place historically.

Overview of key changes

From 1 September 2022:

Revenue from wholesale contracts, advertising and commercial premises, previously reported in ‘Other’ Consumer revenue, has been transferred to the JV. In addition, BT now acts as an agent of the JV for non-bundled Sport products, for example monthly pass, BT’s app only proposition, and will only recognise its net margin as revenue within Consumer fixed revenue. FY21 and FY22 Group revenue reduced by £0.4bn and £0.5bn respectively on a pro forma basis to reflect both of these revenue allocation changes. Similarly, we continue to expect revenue from this point on to be £0.5bn - £0.6bn per annum lower on a pro forma basis.
Bundled revenue from customers who access BT Sport through BT directly, for example purchased as part of package with broadband or BT TV, will continue to be reported gross within BT Group consolidated financials, with no pro forma adjustments needed.
Production and operational assets of BT Sport have been transferred to Warner Bros. Discovery. As a consequence of the operational assets moving to Warner Bros. Discovery there is a master service agreement whereby the JV is buying all production services from Warner Bros. Discovery. Separately, BT Sport’s sports rights transferred to the JV. As a result, costs associated with sports rights, production and SG&A are no longer reported within BT consolidated financials.
BT Group (through its wholly owned subsidiary British Telecommunications plc (“BT plc”)) and Warner Bros. Discovery have entered into distribution agreements with the JV under which they now distribute the combined sports content to new and existing customers on their respective platforms and apps. BT plc’s distribution agreement with the JV extends beyond 2030, and for the first four years, includes a minimum revenue guarantee of c. £500m per annum, after which payments to the JV will vary depending on customer base. BT plc will receive £93m from Warner Bros. Discovery and up to approximately £540m by way of an earn-out from the JV, subject to certain conditions being met.

BT’s obligation under the minimum revenue guarantee of £2bn over the next four years is higher than the fair value of the related revenue streams, and therefore the delta between our committed expenditure and the value that we currently expect to generate represents a financial liability that will be recorded as a provision on the balance sheet. This liability will unwind over the next 4 years as the £2bn minimum revenue guarantee reduces. The liability will be remeasured at each reporting period in accordance with IFRS 9, with any changes in estimates accounted for prospectively. The liability is included within the profit and loss on disposal calculation which will be booked as a specific item in the Q2 FY23 results.

In constructing the unaudited historical pro forma information, to present this information on a like-for-like basis with the future contractual arrangements under the JV, we have estimated a historical distribution agreement and minimum revenue guarantee as though our arrangements with the JV have always been in place. This charge from the JV is included within ‘TV programme rights charges’ in our costs breakdown. This is an estimate only and may have materially differed from actual contractual arrangements had they been negotiated at that time.

These outlined changes to revenue and cost would have translated to an estimated uplift to BT Group adjusted EBITDA of c.£200m in each of FY21 and FY22 on a pro forma basis. For FY23, BT Sport on a standalone basis was expected to benefit from increased revenue from commercial premises and lower sports rights costs. As a result, although creation of the JV would have increased BT Group EBITDA by £42m in Q1 FY23, this benefit reduces materially after Q1 FY23. Our share of post-tax earnings from associates and JVs is recognised below net finance expense in the group income statement and will increase commensurate with the 50:50 JV structure. We have not been able to meaningfully estimate our share of post-tax earnings from associates and JVs over the pro forma period and therefore this is not included in the pro forma information.

On a Group basis, pro forma normalised free cash flow is estimated as being unchanged from reported normalised free cash flow in FY21 and FY22.

Outlook

The completion of the Sports JV with Warner Bros. Discovery on 1 September 2022 will reduce reported BT Group revenue for FY23 by £300m to £350m as a result of the seven months of FY23 revenue transferring to the JV. However, we continue to expect underlying year on year Group revenue growth in FY23 on a pro forma basis.

We do not expect a material impact on our adjusted EBITDA² outlook in FY23 of at least £7.9bn. On a pro forma basis, we continue to expect sustainable revenue and EBITDA growth beyond FY23.

We continue to expect group normalised free cash flow to be in the range of £1.3bn - £1.5bn.

The table below outlines the outlook items most impacted by the JV.

	FY 23 outlook post JV on a reported basis	FY23 outlook pre JV on a reported basis
Change in adjusted¹ revenue	JV reduces reported revenue by c.£300-350m; revenue growth on a pro forma basis	Growth
Adjusted EBITDA²	At least £7.9bn	At least £7.9bn
Normalised free cash flow³	£1.3bn-£1.5bn	£1.3bn-£1.5bn

_{¹Before specific items.}
_{²EBITDA before specific items, share of post tax profits/losses of associates and joint ventures and net non-interest related finance expense.}
_{³Free cash flow (net cash inflow from operating activities after net capital expenditure) after net interest paid and payment of lease liabilities, before pension deficit payments (including cash tax benefit), payments relating to spectrum, and specific items. For non-tax related items the adjustments are made on a pre-tax basis. 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.}

Accompanying documents

To make it easier to understand these changes, BT has also published two additional documents:

Document A: Pro forma KPIs for BT Group reflecting the impact of the changes made from the formation of the JV
- Changes from the previously reported KPIs which are explained in the accompanying 'Document B: Pro forma KPIs supporting information' have been highlighted in purple.
- Changes from the previously reported KPIs which are not explained in the accompanying 'Document B: Pro forma KPIs supporting information' have been highlighted in pink.

Document B: Pro forma KPIs supporting information - a document that provides a bridge for the financial KPIs from BT’s previously reported KPIs to Document A

Pro forma KPIs are unaudited and provide an estimated indicative history of the company’s performance. As noted above in constructing the historical proforma information, to present this information on a like-for-like basis with the future contractual arrangements under the JV, we have estimated a historical distribution agreement and minimum revenue guarantee as though our arrangements with the JV had always been in place. This is an estimate only and may have materially differed from actual contractual arrangements had they been negotiated at that time.

The information is presented as an indication of trend only. The financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been audited by BT’s independent auditors. BT does not warrant the accuracy, completeness or validity of the information, figures or calculations in this document and shall not be liable in any way for any loss or damage arising out of the use of this information, or any errors or omissions in its content.

The full disclosures are provided on BT’s website.

Trading update results for the nine months to 31 December 2021

Thu, 03 Feb 2022 07:00:00 +0000

BT Group plc (BT.L) today announced its trading update for the nine months to 31 December 2021.

Philip Jansen, Chief Executive, commenting on the results, said

“BT has had a good quarter with encouraging market share performance, and we continued to make significant improvements in customer service, although revenue from our enterprise divisions was softer than we expected.

We had another record-breaking quarter on our full fibre build and a pleasing 37% increase in FTTP connections following the launch of Openreach’s wholesale pricing offer. Our 5G build is also on track and now covers over 40% of the UK population with independently verified network leadership.

Today sees two important strategic partnership announcements on how BT moves forward in the fast-evolving content and TV business. The agreement in principle with Sky will provide our customers more choice and more flexibility for the next decade. Separately, we are excited at the prospect of a new joint venture between BT Sport and Eurosport UK as we enter into exclusive discussions with Discovery.”

Strong operating momentum delivered by record customer experience and FTTP build:

Reached agreement in principle with Sky for a new longer-term reciprocal channel supply deal to beyond 2030
Separately, entered exclusive discussions with Discovery to create a joint venture with BT Sport and Eurosport UK
Delivered record FTTP build of 662k at an average rate of over 50k per week in the quarter with footprint now at 6.5m, including 2m rural premises
FTTP take up accelerated to 1.5m premises driven by Openreach's Equinox offer
5G ready customer base over 6.4m; 5G now covers more than 40% of the UK population
According to RootMetrics, EE again has the UK's best 4G and 5G networks
Highest ever NPS result for BT Group

Continued EBITDA growth with revenue challenges due to delayed Covid-19 recovery and supply chain issues¹:

Revenue £15,676m, down 2%; declines primarily in Global and Enterprise partly offset by growth in Openreach; adjusted² revenue down 3%
Adjusted² EBITDA £5,708m, up 2%; driven by tight cost management, lower indirect commissions and higher revenue from Ethernet and fibre-enabled products, partly offset by declining revenue in Global and Enterprise
Reported profit before tax £1,537m, down 3%, primarily due to higher finance expenses and depreciation and amortisation, partly offset by increased EBITDA
Normalised free cash flow² £878m, up 6%, primarily due to increased EBITDA, lower cash tax payments and improved working capital, offset by higher cash capital expenditure and one-off items in the prior year
Capital expenditure up 24% to £3,752m, primarily due to investment in spectrum, FTTP and mobile network
Group adjusted² revenue now expected to be down around 2% for FY22 as a result of Covid-19 and supply chain issues; all other outlook metrics unchanged

Download - Trading update results for the nine months to 31 December 2021

_{¹ All commentary relates to the nine months to 31 December 2021 unless otherwise stated.}
_{²See Glossary on page 4.}
_{³Net debt was £17,802m at 31 March 2021.}

Trading update results for the three months to 30 June 2021

Thu, 29 Jul 2021 07:02:10 +0100

BT Group plc (BT.L) today announced its trading update for the three months to 30 June 2021.

Key strategic developments:

Openreach announced an offer for communications providers giving long-term price certainty on FTTP to drive widespread adoption of ultrafast, ultra-reliable full fibre broadband

Announced long-term mobile network plans including: a 5G network that covers over 90% of the UK’s landmass by 2028; 4,500 square miles of new rural 4G coverage by 2025; and retiring legacy 3G services by 2023

Announced a strengthened strategic partnership with Microsoft to accelerate innovation across enterprise voice, cyber security and industry-focussed services

Reached agreement with the CWU¹ that recognises the need for change, ensures our colleagues continue to be treated fairly and with respect as we remain on track to modernise BT

Announced the launch of our new SoHo (Single/Small office, Home office) unit in Enterprise

Completed the sale of business units in Italy serving customers in the public administration and SME sectors

Invested in Safe Security, a leader in cyber risk quantification, reflecting our increased focus on security

Launched our Hope United campaign using the power of football to tackle online hate, as we continue to lead on the responsible use of technology

Strong operational performance with continued focus on our network growth:

Openreach FTTP network now covers 5m premises; increased our rural FTTP target to 6.2m premises as part of our programme to reach 25m premises by the end of 2026

Openreach announced it will stop selling legacy products to a total of 3m premises across 297 exchanges from April 2022

Launched Home Essentials, an industry-leading social tariff available to 4.6m low income households

Strong growth in FTTP connections and 5G-ready customer base in Consumer

Revamped our converged Halo for business broadband bundles to provide 900Mbps full fibre and Unbreakable Wi-Fi

Half of total Global orders won in the quarter were for products in our growth portfolio

Financials on track to deliver outlook and a path to growth:

Revenue £5,071m, down 3%; revenue has grown in Consumer and Openreach, and remained flat in the SME sector, more than offset by declines in the Corporate and Public Sector segment in Enterprise and in Global

Adjusted² EBITDA £1,866m, up 3%; all units have delivered EBITDA growth, with the exception of Global

Reported profit before tax £536m, down 4% despite higher adjusted² EBITDA, primarily due to the prior year gain on disposal of our domestic Spanish operations

Reported profit after tax £2m, down £446m, due to a one-off tax charge in the quarter to reflect the remeasurement of deferred tax balances following the enactment of the new UK corporation tax rate of 25% from April 2023

Normalised free cash flow² £(43)m, up 12%, due to improved EBITDA and lower cash tax payments, offset by higher cash capital expenditure

Capital expenditure up 63% to £1,507m, primarily due to investment in spectrum; capital expenditure excluding spectrum payments up 9% to £1,011m, primarily due to FTTP provisioning activities, mobile network spend and non-network infrastructure due to the Better Workplace programme

No change to FY22 or FY23 outlook

Philip Jansen, Chief Executive, commenting on the results, said

Our operational performance remained strong and our EBITDA grew during the first three months of the year, reflecting improved trading across most of our business and the positive benefits of our plans to modernise BT. Our results were overall in line with our expectations during the quarter, with good performance in the UK offsetting challenging conditions in Global's markets.

We’re powering ahead with our network build programmes: Openreach has now built full fibre broadband to more than 5m premises with growing customer demand; EE has set out plans for 5G on demand anywhere in the UK by 2028. We’ve also reached a partnership agreement with our largest trade union, the CWU¹ , allowing us to keep our modernisation plans on track.

We continue to invest in new strategic growth areas and have also today announced a strengthened strategic partnership with Microsoft that will see us accelerate co-innovation across all areas of our business, including enterprise voice and cyber security, supporting our growth strategy.

With trading conditions expected to see some improvement through the year, we have confirmed our outlook and remain confident that BT is on a path to growth.

Download - Trading update for the three months to 30 June 2021

_{¹ Communications Workers Union.
² See Glossary on page 3.
³ Net debt was £17,802m at 31 March 2021.}

BT proposes special bonus to reward frontline and key workers

Wed, 24 Mar 2021 07:00:19 +0000

Proposed £1,500 special bonus for frontline colleagues and key workers
Plan to pay £1,000 immediately in cash and £500 in shares after 3-years*
Equates to a bonus of 5% of average front line salary in the UK

BT proposes to offer frontline workers a special bonus of £1,500 to recognise their efforts to keep its customers and the country connected during the pandemic. This generous offer is equivalent to about 5% of the average salary. It is being made despite BT freezing pay across the company and ongoing, unresolved discussions with the trade unions over its transformation and modernisation plans.

Setting out the proposal for BT frontline staff, Chief Executive, Philip Jansen, said:

“BT has made a massive contribution to the national cause over the past year: we’ve supported the NHS, families and businesses, and avoided the use of redundancy or furlough in our response to the pandemic. Our frontline colleagues and key workers have been true heroes, keeping everyone connected in this most difficult time.

“BT has delivered for our customers through the dedication of all our people, but inevitably the pandemic hit our financial performance, like that of most companies. In this context, we have to prioritise and I am determined that we will do everything in our power to reward our frontline colleagues.”

No change to BT’s full year financial outlook is expected as a result of this team member bonus payment.

ends

*The £500 share payment is a discretionary award made under our previously announced yourshare scheme.

Trading update results for the nine months to 31 December 2020

Thu, 04 Feb 2021 07:00:26 +0000

BT Group plc (BT.L) today announced its trading update for the nine months to 31 December 2020.

Key strategic developments:

Creation of a new technology unit - Digital - to lead our digital innovation agenda from 1 April 2021; Digital will lead the IT, process and business transformation of BT and develop and deliver new growth products, platforms and services

Sale agreed of selected business units in Italy
Continued progress on our wider modernisation programme including the creation of a standalone procurement company

Operational:

Openreach’s FTTP network now reaches 4.1m premises, built at an average run rate of 42k premises passed per week in the quarter; remains on track to achieve 4.5m by March 2021
Openreach's first copper stop-sell now live in Salisbury, extending to 2.2m premises by January 2022

FTTP commercial offers extended; all of Openreach's major communications provider customers now selling FTTP with strong increase in sales in Q3; Openreach achieved record 17k FTTP orders per week

5G in 125 locations and 5G ready customer base now over 2.1m; EE has taken top spot in Rootmetrics' latest national results for the 15th consecutive time with 5G in more places than any other network according to Rootmetrics

Consumer fixed ARPC down 5.8% year on year due to commitments to meet our fairness agenda, investment in our long term strategic base and declining voice usage; postpaid mobile ARPC down 6.9% year on year due to increased SIM-only mix, decline in roaming and out of bundle revenue

In Consumer, BT brand at its highest NPS¹ ever, as evidenced by strong BT sales and churn performance

Enterprise retail and wholesale order intakes up 8% to £3.2bn and 5% to £1.2bn respectively on a 12-month rolling basis

Global order intake up 1% to £4.1bn on a 12-month rolling basis

Financial:

Revenue £16,058m, down 7% due primarily to the impact of Covid-19 on Consumer and our enterprise units, ongoing legacy product declines and divestments of domestic businesses in Spain, Latin America and France
Adjusted¹ EBITDA £5,603m, down 5%, driven by the fall in revenue, partially offset by H1 sports rights rebates, savings from our modernisation programme and other cost initiatives including Covid-19 mitigating actions
Reported profit before tax £1,591m, down 17%, due to reduced EBITDA
Normalised free cash flow¹ £830m, down 17%, due to reduced EBITDA and higher cash capital expenditure, offset by a cash receipt from the monetisation of a non-strategic revenue stream generated from our building infrastructure and timing of tax payments
Capital expenditure up 5% to £3,030m, primarily driven by increased fixed and mobile network investment
Outlook for 2020/21: Unchanged except for lower end of normalised free cash flow¹ outlook range raised to £1.3bn; revised range £1.3bn-£1.5bn; the EBITDA outlook range remains at £7.3bn-£7.5bn

Philip Jansen, Chief Executive, commenting on the results, said

During the current Covid-19 pandemic, BT has continued to deliver for our customers and invest in our networks, our modernisation programme, and our products and services in recognition of the ever increasing need for improved and faster connectivity. We delivered results in line with our expectations for the third quarter and remain on track to deliver our 2020/21 outlook despite even greater Covid-19 restrictions than previously forecast. BT has shown again that it has the spirit and determination to step up and deliver for our customers, keeping them connected with a range of initiatives. I am particularly proud of the ongoing work and investments we are making to support school children, SMEs and the NHS during the pandemic.

We continue to make significant investments in our industry leading networks; with FTTP having now passed over 4m premises and 5G available in 125 towns and cities, we're firmly on track to deliver our March 2021 targets. Openreach FTTP orders accelerated even further to reach another record level of 17k per week. We have demonstrated continued improvement in our operational performance, including acceleration of FTTP and 5G take-up, and customer satisfaction metrics. This reflects our progress in creating valued, reliable, stand out customer experiences and propositions; the next evolution of our flagship convergence proposition, Halo 3+, will drive even further progress.

As the WFTMR² consultation process draws to a close we're focused on ensuring the new regulation will create an environment to allow for fair returns across our industry including the additional significant network investment we are poised to undertake. The latest proposals from Ofcom are positive for investment in many areas, but there are key points of clarity still needed to unlock the fibre investment the country needs; and we still need to see concrete progress from Government on the things they can do to support the fibre roll out.

With no material impact expected from the Brexit deal and our resilient results so far this year I remain confident in our EBITDA expectation of at least £7.9bn for 2022/23. Looking further ahead our new Digital unit will enable us to accelerate our digital and business transformation programmes and to deliver digital platforms that bring together best-in-class services for our customers, further securing a brighter and more sustainable future for the group.

Download - Trading update for the nine months to 31 December 2020

_{¹ See Glossary on page 5
² Wholesale Fixed Telecoms Market Review}

Results for the half year to 30 September 2020

Thu, 29 Oct 2020 07:00:41 +0000

BT Group plc (BT.L) today announced its results for the half year to 30 September 2020.

Key strategic developments:

All of Openreach's major CP¹ customers now selling FTTP with strong increase in sales in Q2
Consumer aligns pricing policies across all products and services to CPI plus 3.9% per annum to provide consistent, predictable pricing for new and regrading customers and to support network investment

Operational:

Strong operating performance despite the ongoing impact of Covid-19
FTTP rollout reached record levels in Q2 with run-rate of 40k premises per week; 3.5m premises passed to date
Openreach to stop selling copper products to c.1.8m FTTP-enabled premises by September 2021 latest
5G-ready customer base now over 1m and 5G now live in 112 towns and cities
Strong increase in Consumer FTTP customer base up 60% year on year; fixed and mobile convergence at 21.4%
Enterprise agrees landmark partnership with Belfast Harbour to deploy 5G Private Network
Modernisation programme delivers £352m gross annualised savings at a cost of £163m

Financial:

Revenue relatively resilient at £10,590m, down 8%, primarily due to the impact of Covid-19 including reduced BT Sport revenue and a reduction in business activity in our enterprise units, and declines in legacy products
Adjusted² EBITDA £3,721m, down 5%, driven by the fall in revenue, partly offset by sports rights rebates, savings from our modernisation programme and other cost initiatives including Covid-19 mitigating actions
Reported profit before tax £1,062m, down 20%, driven primarily by reduced EBITDA
Net cash inflow from operating activities £2,713m; normalised free cash flow² £422m, down 30%, primarily due to reduced EBITDA and offsetting movements in working capital and timing of tax payments
Capital expenditure £1,969m, up 5%, primarily driven by fixed and mobile network investment
Lower end of the adjusted² EBITDA outlook range for 2020/21 raised to £7.3bn; revised range £7.3bn - £7.5bn
Adjusted² EBITDA outlook of at least £7.9bn in 2022/23, underpins planned reinstated dividend from 2021/22 and value-creating investment plans

Philip Jansen, Chief Executive, commenting on the results, said

"BT delivered financial results in-line with expectations for the first half of the year, thanks to strong operational performance during exceptional circumstances. Customer demand during the pandemic has shown how critical our networks have become, and our significant network investments have helped us double the number of Openreach’s FTTP orders compared to this time last year and have seen our leading 5G network expand to 112 towns and cities across the UK.

"We continue to invest to make BT more competitive and I’m pleased to see the quality of our products and services improving. At the same time we are firmly on track with the delivery of our modernisation programme and have delivered £352m in cost savings in the first half of the year.

"This performance has given us confidence to raise the lower end of our EBITDA outlook range for this year and publish an EBITDA expectation of at least £7.9bn for 2022/23, with sustainable growth from this level forward. This growth will be driven by the continued recovery from Covid-19, enhanced by sales of our converged and growth products, and by significant savings from our modernisation and cost saving programme. In combination these factors will more than offset legacy product declines.

"The growth in EBITDA underpins the planned reinstatement of our dividend next year whilst ensuring that we can continue to drive value-creating investments in our networks and products."

_{¹ Communications provider
² See Glossary on page 2}

Customer-facing unit results for the half year to 30 September 2020

_{¹ See Glossary below
² On 1 April 2020, Supply Chain and Pelipod, which serve several parts of BT, were transferred from Enterprise to the central procurement team and as a result are now reported in Group ‘Other’ financial results. The prior year comparative for the Enterprise and Other CFU results has been restated to reflect this. Refer to the announcement on 29 June 2020 for further information}

Glossary of alternative performance measure

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	Free cash flow after net interest paid and payment of lease liabilities, before pension deficit payments (including the cash tax benefit of pension deficit payments) and specific items.
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.
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 predominantly to retrospective regulatory charges, restructuring charges linked with our modernisation programme and other cost initiatives, and divestment related items. Further information is provided in note 6 on page 22.

Download - Results for the half year to 30 September 2020