REG - BT Group PLC - Final Results
16/05/2024 07:00
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RNS Number : 6413O BT Group PLC 16 May 2024
Results for the full year to 31 March 2024
BT Group plc
16 May 2024
Allison Kirkby, Chief Executive, commenting on the results, said
"BT Group built and connected customers to our next generation networks at
record speed and efficiency over the past year, while continuing to grow
revenue and EBITDA. Having passed peak capex on our full fibre broadband
rollout and achieved our £3 billion cost and service transformation programme
a year ahead of schedule, we've now reached the inflection point on our
long-term strategy.
"This delivery and greater capex efficiency gives us the confidence to
provide new guidance for significantly increased short term cash flow and sets
out a path to more than double our normalised free cash flow over the next
five years. This enhanced cash flow allows us to increase our dividend for
FY24 by 3.9% to 8.0 pence per share. We're also setting a further £3bn of
gross annualised cost savings to be reached by the end of FY29.
"As we move into the next phase of BT Group's transformation, we are
sharpening our focus to be better for our customers and the country, by
accelerating the modernisation of our operations, and by exploring options to
optimise our global business. This will create a simpler BT Group, fully
focused on connecting the UK, and well positioned to generate significant
growth for all our stakeholders."
Continued strong delivery against our strategy
• FTTP build rate accelerated to 1.0m premises passed in the quarter, a
record 78k per week. FTTP footprint now over 14m premises with a further 6m
where initial build is underway; on track to reach 25m by December 2026.
Department for Science, Innovation and Technology has notified Openreach of
its preferred bidder status for Project Gigabit cross-regional supplier
contract (Type C)(1)
• Strong Openreach customer demand for FTTP with net adds of 397k in Q4;
total premises connected now over 4.8m with increased take-up rate of 34%
• Openreach broadband ARPU in FY24 grew year-on-year by 10% to £15.1
due to price rises and increased volumes and mix of FTTP; Openreach broadband
line losses of 491k, a 2% decline in the broadband base, as weaker than
expected growth in the broadband market in FY24 did not offset competitor
losses which were at comparable levels to FY23; we expect that the broadband
market will recover over the medium term but if it remains weak over the next
12 months then we can expect Openreach's broadband base to be impacted by
moderately higher competitor losses
• Consumer broadband ARPU in FY24 increased 5% year-on-year to £41.2;
Consumer postpaid mobile ARPU increased 9% year-on-year to £19.4; monthly
churn for the year remained stable in a competitive market with broadband and
postpaid mobile both at 1.1%
• Business financial performance continues to be impacted by higher
input costs, legacy declines, a one off revenue adjustment and prior year
one-offs, partly offset by cost transformation and growth in Small &
Medium Business (SMB) and Security
• Retail FTTP base grew year-on-year by 40% to 2.6m of which Consumer
2.4m and Business 0.2m; 5G base 11.1m, up 29% year-on-year
• Cost transformation target of £3bn gross annualised cost savings
since May 2020 achieved 12 months early, at a cost to achieve of £1.5bn,
£0.1bn lower than target. Announced further £3bn gross annualised cost
savings by end FY29 at a cost to achieve of £1.0bn
• BT Group NPS of 24.0, up 1.0pts year-on-year, further improving
customer experience
• Looking forward, BT Group will focus on the UK; we will explore all
options to optimise our global business
FY24 Normalised free cash flow(2) (NFCF) ahead of guidance; dividend raised;
growth in NFCF to £1.5bn in FY25, £2.0bn in FY27 and £3bn by the end of the
decade
• Reported revenue £20.8bn, up 1%; adjusted(2) revenue £20.8bn, up 2%
on a pro forma(3) basis due to price increases and fibre-enabled product sales
in Openreach, increased service revenue in Consumer with annual contractual
price rises being aided by higher roaming and increased FTTP connections,
partly offset by legacy product declines and a one-off revenue adjustment in
Business
• Adjusted(2) EBITDA £8.1bn, up 2%; and up 1% on a pro forma(3) basis
with revenue flow through and cost control more than offsetting cost inflation
and one-off items; Openreach and Consumer delivered strong EBITDA growth,
partially offset by EBITDA decline in Business due to increased input costs
and legacy high-margin managed contract declines
( )
(1) Subject to contract signing
(2) See Glossary on page 12.
(3) See 'Prior period comparatives' section on page 4 for background on pro
forma comparatives.
• We have recognised a non-cash impairment of goodwill allocated to
Business of £488m as a specific item, reflecting a decline in profitability
in recent years
• Reported profit before tax £1.2bn, down 31% primarily due to
impairment of goodwill, increased depreciation, amortisation and pension
interest expense, partially offset by adjusted(2) EBITDA growth
• Capital expenditure ('capex') £4.9bn, down 3% primarily driven by
lower networks spend despite higher FTTP build in the year due to reduced unit
costs and efficiencies; cash capex of £5.0bn also down 6%
• Net cash inflow from operating activities £6.0bn; normalised free
cash flow(1) £1.3bn, down 4% due to working capital timing and a prior year
tax refund, partly offset by EBITDA growth and lower capital expenditure
• Net debt £19.5bn (FY23: £18.9bn), increased mainly due to our
scheduled pension scheme contributions of £0.8bn
• Gross IAS 19 pension deficit of £4.8bn, up from £3.1bn at 31 March
2023 mainly due to the increase in real interest rates and narrowing of credit
spreads over the period, partly offset by our scheduled contributions
• Final dividend of 5.69 pence per share (pps), bringing the full year
dividend to 8.00pps, up 3.9%
• FY25 Outlook: Adjusted(1) revenue growth of 0-1% and EBITDA of around
£8.2bn; capital expenditure excluding spectrum less than £4.8bn; normalised
free cash flow of around £1.5bn
• Mid-term guidance: Consistent and predictable adjusted(1) revenue
growth and EBITDA growth ahead of revenue, enhanced by cost transformation
from FY26 to FY30; capital expenditure excluding spectrum less than £4.8bn
until FY26, reducing by c. £1bn post peak FTTP build; normalised free cash
flow of c. £2.0bn in FY27 and c. £3.0bn by the end of the decade
Full year to 31 March 2024 2023 Change
Reported measures £m £m %
Revenue 20,797 20,681 1
Profit before tax 1,186 1,729 (31)
Profit after tax 855 1,905 (55)
Basic earnings per share 8.7p 19.4p (55)
Net cash inflow from operating activities 5,953 6,724 (11)
Full year dividend 8.00p 7.70p 4
Capital expenditure 4,880 5,056 (3)
Adjusted measures
Adjusted(1) Revenue 20,835 20,669 1
Adjusted(1) EBITDA 8,100 7,928 2
Pro forma(2) Revenue 20,835 20,431 2
Pro forma(2) EBITDA 8,100 7,999 1
Adjusted(1) basic earnings per share 18.5p 22.0p (16)
Normalised free cash flow(1) 1,280 1,328 (4)
Net debt(1) 19,479 18,859 £620m
Customer-facing unit updates
Adjusted(1) revenue Adjusted(1) EBITDA Normalised free cash flow(1)
Full year to 31 March 2024 2023 Change 2024 2023 Change 2024 2023 Change
Pro forma(2) Pro forma(2) Pro forma(2) re-presented(2)
re-presented(2) re-presented(2)
£m £m % £m £m % £m £m %
Consumer 9,833 9,499 4 2,672 2,540 5 1,023 1,086 (6)
Business 8,128 8,258 (2) 1,630 1,945 (16) 431 648 (33)
Openreach 6,077 5,675 7 3,827 3,510 9 590 219 169
Other 16 27 (41) (29) 4 n/m (764) (625) (22)
Intra-group items (3,219) (3,028) (6) - - - - -
Total 20,835 20,431 2 8,100 7,999 1 1,280 1,328 (4)
Fourth quarter to 31 March 2024 2023 Change 2024 2023 Change
Pro forma(2) Pro forma(2)
re-presented(2) re-presented(2)
£m £m % £m £m %
Consumer 2,370 2,306 3 664 610 9
Business 2,001 2,115 (5) 421 555 (24)
Openreach 1,503 1,420 6 924 904 2
Other 4 3 33 (31) (21) (48)
Intra-group items (801) (755) (6) - - -
Total 5,077 5,089 - 1,978 2,048 (3)
(1 ) See Glossary on page 12.
(2) See 'Prior period comparatives' section below for more information on pro
forma and re-presented measures.
n/m: comparison not meaningful
Performance against FY24 outlook
FY24 outlook FY24 performance
Change in adjusted(1) revenue Growth on a Sports JV pro forma(1) basis Up 2%
Adjusted(1) EBITDA Growth on a Sports JV pro forma(1) basis Up 1%
Capital expenditure(1) c.£5.0bn £4.9bn
Normalised free cash flow(1) Toward the top end of £1.0bn-£1.2bn £1.3bn
Prior period comparatives
Throughout this release, comparative financial information for year to 31
March 2023 ('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 17 .
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 year to 31 March 2023 as published on 3 November 2022, and
the comparatives presented in this release. For further information see
bt.com/about
(file:///C%3A/Users/803076431/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/SKQQ3GQY/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).
(1 ) See Glossary on page 12
http://www.rns-pdf.londonstockexchange.com/rns/6413O_1-2024-5-15.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6413O_1-2024-5-15.pdf)
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