BT Group plc Results for the Third Quarter and Nine Months to 31 December 2010

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Feb 03, 2011, 09:26 ET

LONDON, Feb. 3, 2011 /PRNewswire/ -- BT Group plc (BT.L) today announces its results for the third quarter and nine months to 31 December 2010.

Key points for the third quarter:

Revenue of 5,038m pounds Sterling, down 3%
EBITDA(1) of 1,484m pounds, up 7%
Profit before tax(1) of 531m pounds, up 30% (after specific items, up 111%)
Earnings per share(1) of 5.4p, up 32% (after specific items, up 96%)
Free cash flow(2) of 515m pounds, up 69%
Net debt of 8.7bn pounds, down 1.4bn pounds
DSL broadband net additions of 188,000, 53% market share
BT Global Services expected to generate operating cash flow of around 100m pounds in 2010/11 and around 200m pounds in 2011/12

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

"Profits and cash flow in the quarter were ahead of last year. BT Retail had a good quarter with growth in business revenues and our highest share of DSL broadband net additions for eight years. Openreach benefited from a stronger broadband market and growth in its copper line base. BT Global Services is now expected to be cash flow positive this year, a year earlier than targeted.

"These results show that we are making progress on a number of fronts. There is always more to do but our performance underpins our outlook for this year and the period to 2012/13."

(1) Before specific items

(2) Before pension deficit payment of 525m pounds (Q3 2009/10: 525m pounds)

Unless otherwise stated, the changes in results are year on year against the third quarter or nine months to 31 December 2009.


RESULTS FOR THE THIRD QUARTER AND NINE MONTHS TO 31 DECEMBER 2010

Group results

	Third quarter to 31 December			Nine months to 31 December
	2010	2009	Change	2010	2009	Change
	m pounds	m pounds	%	m pounds	m pounds	%
Revenue
- adjusted(1)	5,038	5,198	(3)	15,021	15,555	(3)
- reported	5,038	5,198	(3)	15,021	15,503	(3)
EBITDA
- adjusted(1)	1,484	1,386	7	4,335	4,127	5
- reported	1,418	1,227	16	4,147	3,821	9
Operating profit
- adjusted(1)	733	632	16	2,118	1,876	13
- reported	628	473	33	1,891	1,570	20
Profit before tax
- adjusted(1)	531	408	30	1,473	1,230	20
- reported	441	209	111	1,222	756	62
Earnings per share
- adjusted(1)	5.4p	4.1p	32	14.9p	12.2p	22
- reported	4.5p	2.3p	96	13.3p	10.6p	25
Capital expenditure	680	554	23	1,811	1,671	8
Free cash flow(2)
- before specific items	569	526	8	1,604	1,017	58
- after specific items	515	305	69	1,465	888	65
Net debt				8,674	10,112	(14)


Line of business results
	Adjusted revenue			Adjusted EBITDA(1)			Operating cash flow
Third quarter to	2010	2009(3)	Change	2010	2009(4)	Change	2010	2009	Change
31 December	m pounds	m pounds	%	m pounds	m pounds	%	m pounds	m pounds	%
BT Global Services	1,974	2,118	(7)	141	123	15	115	(27)	n/m
BT Retail	1,967	2,020	(3)	452	436	4	324	371	(13)
BT Wholesale	1,070	1,075	-	330	337	(2)	141	224	(37)
Openreach	1,240	1,241	-	550	488	13	316	321	(2)
Other and intra-group items	(1,213)	(1,256)	3	11	2	n/m	(381)	(584)	35
Total	5,038	5,198	(3)	1,484	1,386	7	515	305	69

(1) Before specific items. Specific items are defined below (2) Before pension deficit payment of 525m pounds (Q3 2009/10: 525m pounds) (3) Adjusted for the impact of customer account moves and 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 2010/11. 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 taking account of the 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
Notes: 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 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.

A conference call for analysts and investors will be held at 10:30am today and a simultaneous webcast will be available at www.bt.com/results.

The fourth quarter and full year results to 31 March 2011 are expected to be announced on 12 May 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: full year and future outlook; BT Global Services' full year and future cash flow and future revenue trends; the success of our broadband strategy; the improvement in line loss reductions; and our fibre roll out programme.

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 Group plc