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Financial results Results for the half year to 30 September 2021 BT Group plc 4 November 2021 |
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Philip Jansen, Chief Executive, commenting on the results, said “These results demonstrate an acceleration of pace in the transformation of BT. We are creating a better BT for our customers, the country and our shareholders. We're going further and faster on the UK's next generation connectivity; we're modernising BT and bringing down costs; and we're reinstating the dividend today, as planned. “After a record six months, Openreach has now rolled out full fibre broadband to almost 6m premises and continues to lower its build cost. Its three largest customers are signed up to the new pricing offer as we see rapid adoption of what will be the UK's first nationwide full fibre network spanning 25m premises by 2026. Meanwhile, our 5G network now covers over 40% of the UK's population and we have over 5.2m 5G ready customers. Together, our networks provide our customers with an unrivalled level of connectivity. “While we are serving our customers better than ever, BT is also changing rapidly internally. We have hit our £1bn cost savings target 18 months early, which allows us to bring forward our FY25 target for £2bn of savings to FY24. This is all part of creating a leaner BT with simplified processes and improved customer experiences. “BT is on track and with results in-line with our expectations, we are today confirming our financial outlook for FY22 and FY23. Looking further out, as we pass the peak of our fibre build and move towards an all-fibre, all-IP network, we expect a reduction in capex of at least £1bn and lower operating costs of £500m. From these two factors alone, by the end of the decade we expect an expansion of at least £1.5bn in normalised free cash flow compared to FY22, and that's before any benefits from increased revenue and further transformation efficiencies. Our progressive dividend policy will be underpinned by these increased cash flows as we move to sustainable growth going forward.” |
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BT Group plc (BT.L) today announced its results for the half year to 30 September 2021.
Key strategic developments – accelerating the pace of transformation:
• Adam Crozier joined the Board on 1 November, and will become Chairman with effect from 1 December
• Ten communication providers including Sky and TalkTalk signed up to Equinox, Openreach's national long-term FTTP pricing offer
• Launched Eagle-i, our flagship security platform that will predict and prevent cyber-attacks for enterprises
• Delivered £1bn of gross annualised savings 18 months early at a cost of £571m
• Brought forward FY25 target of £2bn gross annualised savings to FY24 with further savings in FY25, within the expected cost of £1.3bn; Group peak capex from FY23 now expected to be £4.8bn, down from £5bn previously
• FTTP joint venture: with FTTP build costs coming down and take-up ahead of expectations, decided to retain 100% of the project for shareholders and to remain fully focused on driving build and take-up
• Brought forward net zero targets to 2030 for operational emissions and 2040 for supply chain and customer emissions
Strong operational performance:
• Record Openreach FTTP build in Q2 and footprint now at almost 6m; expected average build costs lowered to £250-£350 per premises passed1
• Openreach delivered strongest ever H1 for repairs on time at 87.1%, with highest proportion of customers back in service within SLA
• Consumer and Enterprise have now connected over 1m homes and businesses to FTTP
• Growth in fixed and broadband ARPC from Q1 into Q2 due to our convergence strategy and CPI+ price rise
• 5G ready customer base over 5.2m
• Consumer churn remaining near record lows resulting from strong customer focus
Interim dividend of 2.31p per share declared; FY22 and FY23 financial outlook confirmed:
• Revenue £10,305m, down 3%; driven by revenue decline in Enterprise and Global, flat in Consumer, partially offset by growth in Openreach; adjusted2 revenue down 3%
• Adjusted2 EBITDA £3,748m, up 1%, with revenue decline more than offset by lower costs from our transformation programmes and tight cost management, and lower indirect commissions
• Reported profit before tax £1,009m, down 5%, primarily due to higher finance expenses partly offset by increased EBITDA
• Net cash inflow from operating activities £2,394m; normalised free cash flow2 £360m, down 15%, primarily due to higher cash capital expenditure and adverse working capital movements, offset by lower tax payments
1 Excludes new builds and net of subsidies.
2 See Glossary on page 3.
• Capital expenditure £2,563m, up 30%, primarily due to investment in spectrum
• Expect by the end of the decade at least £1.5bn expansion in normalised free cash flow compared to FY22, solely from lower capex and operating costs as we move towards an all-fibre, all-IP network, before any benefits of increased revenue and further transformation efficiencies, net of tax
• Now expect around £5bn of carried forward tax losses from FY23 as a greater proportion of capex qualify for Government's cash tax super-deduction
• Interim dividend of 2.31p per share declared
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Half year to 30 September |
2021 |
2020 |
Change |
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£m |
£m |
% |
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Reported measures |
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Revenue |
10,305 |
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10,590 |
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(3) |
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Profit before tax |
1,009 |
|
1,062 |
|
(5) |
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Profit after tax |
431 |
|
856 |
|
(50) |
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Basic earnings per share |
4.4p |
8.6p |
(49) |
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Net cash inflow from operating activities |
2,394 |
|
2,713 |
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(12) |
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Half year dividend |
2.31p |
0p |
N/A |
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Capital expenditure1 |
2,563 |
|
1,969 |
|
30 |
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Adjusted measures |
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Adjusted2 Revenue |
10,308 |
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10,607 |
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(3) |
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Adjusted2 EBITDA |
3,748 |
|
3,721 |
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1 |
|
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Adjusted2 basic earnings per share |
10.2p |
9.6p |
6 |
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Normalised free cash flow2 |
360 |
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422 |
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(15) |
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Capital expenditure excluding spectrum |
2,067 |
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1,969 |
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5 |
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Net debt2 |
18,241 |
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17,627 |
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£614m |
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Customer-facing unit results for the half year to 30 September 2021
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Adjusted2 revenue |
Adjusted2 EBITDA |
Normalised free cash flow2 |
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Half year to 30 September |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
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£m |
£m |
% |
£m |
£m |
% |
£m |
£m |
% |
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Consumer |
4,857 |
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4,873 |
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– |
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1,077 |
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1,075 |
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– |
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525 |
|
315 |
|
67 |
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Enterprise |
2,572 |
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2,710 |
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(5) |
|
852 |
|
833 |
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2 |
|
327 |
|
474 |
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(31) |
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Global |
1,654 |
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1,916 |
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(14) |
|
207 |
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289 |
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(28) |
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(63) |
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57 |
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(211) |
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Openreach |
2,707 |
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2,585 |
|
5 |
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1,561 |
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1,453 |
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7 |
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8 |
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20 |
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(60) |
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Other |
14 |
|
12 |
|
17 |
|
51 |
|
71 |
|
(28) |
|
(437) |
|
(444) |
|
2 |
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Intra-group items |
(1,496) |
|
(1,489) |
|
– |
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– |
|
– |
|
– |
|
– |
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– |
|
– |
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Total |
10,308 |
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10,607 |
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(3) |
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3,748 |
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3,721 |
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1 |
|
360 |
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422 |
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(15) |
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Second quarter to 30 September |
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Consumer |
2,475 |
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2,511 |
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(1) |
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554 |
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574 |
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(3) |
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Enterprise |
1,285 |
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1,358 |
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(5) |
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423 |
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427 |
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(1) |
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Global |
869 |
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926 |
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(6) |
|
105 |
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148 |
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(29) |
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Openreach |
1,360 |
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1,299 |
|
5 |
|
788 |
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724 |
|
9 |
|
|
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Other |
6 |
|
8 |
|
(25) |
|
12 |
|
35 |
|
(66) |
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|
|
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Intra-group items |
(757) |
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(745) |
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(2) |
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– |
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– |
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– |
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Total |
5,238 |
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5,357 |
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(2) |
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1,882 |
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1,908 |
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(1) |
|
403 |
|
471 |
|
(14) |
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1 Includes investment in spectrum of £496m.
2 See Glossary on page 3.