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

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

PR Newswire

IRVING, Texas, 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 2014     31 March 2014
                                         £m      Change^1  £m     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 flow^4              1,346   £45m      2,450  £150m
Net debt                                                   7,028  £(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:

  oUnderlying revenue excluding transit up 1.2%
  oEBITDA^1 up 2% and earnings per share^1 up 10%
  oUnderlying 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
  o347,000 net fibre connections, up 28%, of which 249,000 are BT retail
    customers
  oBT Global Services order intake of £2.2bn, up 13%

Key points for the year:

  oUnderlying revenue excluding transit up 0.5%, reversing decline of 3.1% in
    prior year and achieving our outlook of an improved trend
  oEBITDA^1 flat at £6,116m compared with our outlook of £6.0bn-£6.1bn
  oNormalised free cash flow^3 of £2,450m, up £150m, ahead of our outlook of
    around £2.3bn
  oUnderlying operating costs^2 down 3% excluding transit, our investments in
    BT Sport and the non-cash increase in the pensions operating charge
  oEarnings per share^1 up 7%
  oNet debt at £7,028m, down £769m
  oProposed 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                             £6,116m £6.2bn-£6.3bn Growth
Normalised free cash flow^3          £2,450m Above £2.6bn  Growth
Dividend per share                   Up 15%  Up 10%-15%    Up 10%-15%
Share buyback programme              £302m   c.£300m       c.£300m

  o2014/15 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
  o2014/15 normalised free cash flow^3 outlook above our previous
    expectations reflecting capital expenditure efficiencies. Cash flow
    growth to continue in 2015/16
  oDividend 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
                            £m          £m      %       £m     £m     %
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 flow^4      1,346  1,301   3       2,450  2,300  7
Net debt                                                7,028  7,797  £(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 flow^4
Fourth
quarter to   2014    2013^1  Change 2014  2013^1 Change 2014    2013^1  Change
31 March
             £m      £m      %      £m    £m     %      £m      £m      %
BT Global    1,857   1,934   (4)    286   264    8      517     454     14
Services
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  (914)   (968)   (6)    17    16     6      (346)   (263)   32
items
Total        4,748   4,815   (1)    1,705 1,664  2      1,346   1,301   3
Year to 31
March
BT Global    7,041   7,170   (2)    932   832    12     389     212     83
Services
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  (3,765) (3,916) (4)    38    34     12     (1,167) (1,297) (10)
items
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

Website: http://www.btplc.com
Contact: Press office: Ross Cook Tel: 020 7356 5369; or Investor relations:
Damien Maltarp Tel: 020 7356 4909
 
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