BT Group plc Results for the Fourth Quarter and Year to 31 March 2011

LONDON, May 12, 2011 /PRNewswire/ -- BT Group plc (BT.L) today announces its results for the fourth quarter and year to 31 March 2011.

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

"We have delivered profits and free cash flow ahead of expectations for the year, while making significant investment in the business for the future. Free cash flow has nearly trebled compared with two years ago.

"We have consolidated our position as the leading provider of broadband in the UK with our highest quarterly share of DSL broadband net additions for eight years. BT Global Services order intake was up 10% at 7.3bn pounds Sterling and it has turned cash flow positive a year ahead of plan. Openreach saw growth in its copper line base in the year, reversing historic trends. Our roll out of super-fast broadband is one of the most rapid in the world, passing an average of 80,000 additional premises each week and we have plans to roughly double the speed of our fibre-to-the-cabinet based service in 2012.

"We expect to continue to grow our profits and free cash flow whilst investing to return BT to growth. These results show we are making progress, but we are well aware there remains a lot more to do."

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Key points:

• Full year results in line with or ahead of our outlook for the year
• Revenue of 20bn pounds in line with our outlook, underlying revenue excluding transit down 3% in the year
• Operating cost savings of 1.1bn pounds in the year, ahead of our outlook of around 900m pounds
• Net debt reduced to 8.8bn pounds, in line with our outlook, after pension deficit payments of 1.0bn pounds in the year
• Free cash flow(1,2) of 2.2bn pounds, ahead of our outlook and nearly trebled from two years ago
• Proposed final dividend of 5.0p, up 9%, giving a full year dividend of 7.4p, up 7%
• BT Global Services operating cash flow positive a year ahead of plan at 119m pounds
• IAS 19 pension deficit of 1.4bn pounds (net of tax), down 4.3bn pounds in the year
• DSL broadband net additions of 252,000 in the quarter, of which BT's retail market share was 64%

Outlook:

We expect

• Underlying revenue excluding transit to be in the range of down 2% to flat in 2012 and to grow by up to 2% in 2013
• Adjusted EBITDA to grow in 2012 and to be above 6.0bn pounds in 2013
• Adjusted free cash flow to be above 2011 level in both 2012 and 2013

(1) Before specific items

(2) Before pension deficit payments

Unless otherwise stated, the changes in results are year on year against the fourth quarter or year to 31 March 2010. The references 2010, 2011, 2012 and 2013 are the financial years to 31 March 2010, 2011, 2012 and 2013, respectively, except in relation to our fibre roll out plans which are based on calendar years.

Notes:

(1) Before specific items. Specific items are defined below and analysed in note 4. In 2011, net interest on pensions has been included within specific items because of its volatile nature. Accordingly specific items for comparative periods have been re-presented.

(2) Before pension deficit payments of 505m pounds in Q4 2011 and 1,030m pounds in FY 2011 (Q4 2010: nil pounds, FY 2010: 525m pounds).  

(3) Adjusted for the impact of customer account moves and after reflecting the impact of changes in the internal trading model.  The effect of the changes is primarily to reduce internal revenue in both BT Wholesale and Openreach by around 62m pounds per quarter in 2011. There is no impact from these changes on total group revenue. In the line of business commentaries for BT Wholesale and Openreach, revenue has been measured against an adjusted basis reflecting the impact of changes in the internal trading model to enable a like for like comparison.

(4) Restated for the impact of customer account moves.

n/m = not meaningful

Specific items - unless otherwise stated, any reference to earnings before interest, tax, depreciation and amortisation (EBITDA), operating profit, operating costs, profit before tax and earnings per share (EPS) are measured before specific items. The commentary focuses on the trading results on an adjusted basis being before specific items. This is consistent with the way that financial performance is measured by management and is 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 EBITDA, reported operating profit, reported profit before tax and reported EPS are the equivalent unadjusted or statutory measures.

Underlying revenue is a measure which seeks to reflect the underlying revenue performance of the group that will contribute to long term profitable growth.  As such it excludes any increases or decreases in revenue as a result of acquisitions or disposals, any foreign exchange movements affecting revenue and any specific items. We are focusing on the trends in underlying revenue excluding transit as transit traffic is low-margin and is significantly affected by reductions in mobile termination rates which have no impact on the group's profitability.

The fourth quarter and full year 2011 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 is expected to be published on 27 May 2011. The Annual General Meeting of BT Group plc will be held at Old Billingsgate, London on 13 July 2011. Results for the first quarter to 30 June 2011 are expected to be announced on 28 July 2011.

About BT

BT is one of the world's leading providers of communications solutions and services operating in over 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.

Forward-looking statements – caution advised

Certain statements in this results release are forward-looking and are made in reliance on the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. These statements include, without limitation, those concerning: outlook including underlying revenue trends, and profits, free cash flow, revenue and EBITDA growth; our fibre roll out programme and increased fibre-to-the-cabinet speed; BT Global Services' rationalisation programme and cash flow; the operating charge, net interest and cash contributions in relation to the BT Pension Scheme; progressive dividends; the success of our broadband strategy; the lower level of line losses; and increase in the copper line base.

Although BT believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

Factors that could cause differences between actual results and those implied by the forward-looking statements include, but are not limited to: material adverse changes in economic conditions in the markets served by BT; future regulatory actions and conditions in BT's operating areas, including competition from others; selection by BT and its lines of business of the appropriate trading and marketing models for its products and services; fluctuations in foreign currency exchange rates and interest rates; technological innovations, including the cost of developing new products, networks and solutions and the need to increase expenditures for improving the quality of service; prolonged adverse weather conditions resulting in a material increase in overtime, staff or other costs; developments in the convergence of technologies; the anticipated benefits and advantages of new technologies, products and services not being realised; the underlying assumptions and estimates made in respect of major customer contracts proving unreliable; the aims of the BT Global Services restructuring programme not being achieved; the outcome of the Pensions Regulator's review; and general financial market conditions affecting BT's performance and ability to raise finance. BT undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

SOURCE BT