BT Group PLC Final Results 2021

Key strategic developments:

• Ofcom's WFTMR¹, outcome of recent spectrum auction and Government's tax super-deduction allows us to increase and accelerate our FTTP build from 20m to 25m premises by December 2026; BT to explore potential joint venture for additional 5m build – see separate press release

• Agreed triennial pension deficit of £7.98bn and deficit recovery plan comprising: asset-backed funding over 13 years (£180m p.a.) secured against the EE business; and further payments over 10 years (£900m p.a. reducing to £600m p.a. from 1 July 2024) – see separate press release

• Secured 80MHz of 5G spectrum for a total of £475m in Ofcom's auction allowing us to build on our position as the UK's number one 5G network

• Significant UK cash tax benefit in 2021/22 and 2022/23, as a large proportion of our capital expenditure is expected to qualify for the proposed 130% tax super-deduction

Strong operational performance during the Covid-19 pandemic:

• Strong network performance; BT's broadband networks seamlessly managed a doubling of daytime traffic due to more people being at home during the day; 42% increase in EE mobile data usage over the last 12 months

• Group NPS² increased by 7.8 points compared to the prior year baseline, a 19th successive quarter of growth

• Openreach achieved 2.0m in year FTTP build with record build levels in Q4; increased FTTP connections by 73% to 905k over the last 12 months

• 5G footprint doubled to 160 locations and 5G ready customer base now over 3.2m; EE named the Fastest Mobile Network by Uswitch in February 2021

• Tracking ahead on our modernisation plans; delivered gross annualised savings of £764m within the first year of our three-year modernisation programme with an associated cost of £438m

Financials delivered in line with guidance primarily impacted by Covid-19:

• Revenue £21,331m, down 7%, primarily due to the impact of Covid-19 on Consumer and our enterprise units, ongoing legacy product declines and divestments, partly offset by higher equipment revenue and Openreach bases in fibre and Ethernet; adjusted² revenue down 6% in line with expectation

• Adjusted² EBITDA £7,415m, down 6% as expected, primarily due to the fall in revenue, special frontline bonus, increased service costs and continued investment in copper-to-fibre migrations and our FTTP base, partly offset by sports rights rebates and cost savings including our modernisation programme, tight cost control, and Covid-19 mitigation actions

• Reported profit before tax £1,804m, down 23%, primarily due to reduced EBITDA

• Net cash inflow from operating activities £5,963m; normalised free cash flow² £1,459m, down 27%, primarily due to reduced EBITDA, higher cash capital expenditure and adverse working capital, offset by a cash receipt from the monetisation of a non-strategic revenue stream generated from our building infrastructure and timing of tax payments

• Capital expenditure £4,216m, up 6%, primarily due to increased network and equipment investment

• As previously disclosed, no final dividend for 2020/21, but payments expected to resume at an annual rate of 7.7p per share in 2021/22

• Outlook for 2021/22: adjusted² revenue to be broadly flat year on year; adjusted² EBITDA between £7.5bn-£7.7bn; capital expenditure c.£4.9bn; normalised free cash flow between £1.1bn-£1.3bn.

Customer-facing unit results for the full year to 31 March 2021

Performance against 2020/21 outlook

¹ See Glossary on page 3.

² On 1 April 2020, Supply Chain and Pelipod, which serve several parts of BT, were transferred from Enterprise to the central procurement team and as a result are now reported in Group 'Other' financial results. The prior year comparative for the Enterprise and Other CFU results has been restated to reflect this. Refer to the announcement on 29 June 2020 for further information.