Interim Results

RNS Number : 3830C

BT Group PLC

12 November 2009

 



    12 November 2009

BT GROUP PLC

RESULTS FOR THE SECOND QUARTER AND HALF YEAR TO 30 SEPTEMBER 2009 

Key points for the second quarter:

• Revenue1 of £5,122m, down 3%, or 6% excluding foreign exchange movements and acquisitions

• Adjusted EBITDA1 of £1,436m, up 2% reflecting progress in all lines of business

• Continued improvement in BT Global Services with adjusted EBITDA1 of £95m, up 53% on the first quarter

• Adjusted earnings per share1 of 4.5p, down 8%, reported earnings per share of 5.5p, up 12%

• Free cash flow of £705m, up £336m including a tax repayment and associated interest of £226m 

• Net debt4 reduced to £9.9bn

• Total underlying costs2 down £932m in the half year

• Interim dividend of 2.3p per share  
  

2009/10 Outlook:
	Previous	New
· Revenue1 decline	4%-5%	3%-4%
· Capital expenditure	c.£2.7bn	c.£2.6bn
· Total underlying cost2 reductions	well over £1bn	at least £1.5bn
· Free cash flow3	over £1bn	at least £1.6bn
· Net debt4	-	below £10bn
· Full year dividend	-	up c.5%

Ian Livingston, Chief Executive, commenting on the results, said:

“We have had another quarter of progress but there remains a lot more to do. With total cost² reductions of over £900m in the first half, we have made significant headway towards our previous target of well over £1bn for the full year. We now expect to generate at least £1.6bn of free cash flow³ this year, compared with our previous target of over £1bn. 

"We are investing in the future of the business with an enhanced and accelerated programme of fibre deployment and wider roll out of faster broadband speeds, all within our capital expenditure plans.

"Given our operational performance, we expect to increase dividends by around 5% for the full year.  The Board is declaring an interim dividend of 2.3p per share."

1 Before specific items, leaver costs and net interest on pensions.  

2 Underlying operating costs and capital expenditure.

3 Before gross pension deficit payments of £525m, but after cash costs of BT Global Services restructuring.

4Net debt is defined in Note 12.

RESULTS FOR THE SECOND QUARTER AND HALF YEAR TO 30 SEPTEMBER 2009

Group results

	Second quarter to 30 September						Half year to 30 September
	2009		20081		Change		2009		20081		Change
	£m		£m		%		£m		£m		%
Revenue2	5,122		5,303		(3)		10,357		10,480		(1)
EBITDA
- adjusted2	1,436		1,407		2		2,807		2,824		(1)
- reported	1,309		1,333		(2)		2,594		2,650		(2)
Operating profit
- adjusted2	677		722		(6)		1,310		1,448		(10)
- reported	550		648		(15)		1,097		1,274		(14)
Profit before tax
- adjusted2	461		490		(6)		888		1,009		(12)
- reported	275		494		(44)		547		991		(45)
Earnings per share
- adjusted2	4.5p		4.9p		(8)		8.8p		10.0p		(12)
- reported	5.5p		4.9p		12		8.3p		9.8p		(15)
Interim dividend	-		-		-		2.3p		5.4p		(57)
Capital expenditure	558		766		(27)		1,117		1,568		(29)
Free cash flow	705		369		91		583		(365)		n/m
Net debt	-		-		-		9,878		11,028		(10)

Line of business results 

	Revenue2	Change1	EBITDA2	Change1
Second quarter to 30 September 2009	£m	%	£m	%
BT Global Services	2,024	(3)	95	(10)
BT Retail	2,062	(5)	475	11
BT Wholesale	1,125	(4)	328	1
Openreach	1,285	(1)	507	4
Other	10	n/m	31	(48)
Intra-group items	(1,384)	5	-	-
Total	5,122	(3)	1,436	2

¹   Restated - see Note 1 for details.

  ²  Before specific items, leaver costs and net interest on pensions.

Notes:

Unless otherwise stated, any reference to earnings before interest, tax, depreciation and amortisation (EBITDA), operating profit, and operating costs is measured before specific items and leaver costs. In addition, adjusted profit before tax and adjusted earnings per share (EPS) are also shown before net interest on pensions due to the volatile nature of this item (see Notes 9 and 10). Unless otherwise stated, the change in results is year on year. Reported EBITDA, reported operating profit, reported profit before tax and reported EPS are the equivalent unadjusted or statutory measures. 

Underlying revenue, underlying operating costs, underlying EBITDA and underlying capital expenditure refer to the measure excluding foreign exchange rate movements and acquisitions. Underlying revenue and operating costs are also stated before specific items, leaver costs and depreciation and amortisation.

The commentary focuses on the trading results before specific items and leaver costs. This is consistent with the way that financial performance is measured by management and we believe allows a meaningful analysis to be made of the trading results of the group. Specific items are defined in Note 5. 

The income statement, cash flow statement and balance sheet are provided on pages 12 to 16. A reconciliation of group operating profit to EBITDA (as defined above) is provided in Note 8. A reconciliation of reported profit before tax (as defined above) to adjusted profit before tax is provided in Note 9. A reconciliation of reported EPS to adjusted EPS is provided in Note 10. A definition and reconciliation of free cash flow and net debt are provided In Notes 11 and 12. 

The line of business commentaries also discuss operating cash flow before specific items and leaver costs. Operating cash flow is defined as EBITDA less direct and allocated capital expenditure (net of capital accrual movements), working capital movements and movements in provisions and other non-cash items.

For the avoidance of doubt all page and note references refer to the full results release for the second quarter and half year to 30 September 2009.

  Enquiries

Press office:
Peter Morgan/Ross Cook	Tel: [phone]
Investor relations:
Catherine Nash	Tel: [phone]

A 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. 

Results for the third quarter to 31 December 2009 are expected to be announced on 11 February 2010.

About BT

BT is one of the world's leading providers of communications solutions and services operating in 170 countries. Its principal activities include the provision of networked IT services globally; local, national and international telecommunications services to our 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 four lines of business: BT Global Services, BT Retail, 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

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