Blueprint
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Date of
Announcement: 27
January 2017
BT
Group plc
(Translation of
registrant's name into English)
BT
Group plc
81 Newgate Street
London
EC1A
7AJ
England
(Address of
principal executive offices)
Indicate by check
mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F.
Form
20-F..X...
Form 40-F.....
Indicate by check
mark whether the registrant by furnishing the information contained
in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934.
Yes
......
No ..X..
If "Yes" is
marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
BT Group
plc
Results for the third quarter to 31 December 2016
27 January 2017
BT
Group plc (BT.L) today announced its results for the third quarter
and nine months to 31 December
2016.
Financial highlights for the quarter:
●
Reported revenue up 32%, and underlying
revenue1
excluding transit adjusted for the acquisition of EE down
1.5%
●
Reported earnings per share down 59% and
adjusted2
earnings per share down 24%
●
Adjusted2 EBITDA of
£1,870m up 18%, with underlying EBITDA1
adjusted for the acquisition of EE down 8%
●
Total adjustments relating to the
investigation of our Italian business amount to £268m for
prior year errors, for which we've revised prior periods, and a
specific item charge of £245m for changes in accounting
estimates (£145m in Q2 and £100m in Q3). See pages 5 and
20
●
Net cash inflow from operating activities
£1,515m, down £178m and normalised free cash
flow3
£606m, down £298m
●
Outlook: 2016/17 underlying
revenue1
broadly flat, EBITDA2 of c.£7.6bn,
normalised free cash flow3 of c.£2.5bn.
2017/18 underlying revenue1 broadly flat,
EBITDA2
broadly flat, normalised free cash flow3 of £3.0bn -
£3.2bn
Operational highlights for the quarter:
●
Mobile pay monthly net additions of 276,000,
with low churn of 1.1%
●
Retail broadband net additions at 83,000, with
retail fibre broadband net additions at 260,000
●
Record Openreach fibre broadband net
connections at 498,000, including 48% from external service
providers
●
Openreach has halved missed appointments year
on year
●
Mike McTighe appointed Chairman of the new
Openreach Board
● 100%
of EE calls now handled in UK and Ireland contact centres and
we’ve added around 500 UK and Ireland contact centre roles in
Consumer, with around 900 to be filled in the final quarter of the
year
|
Gavin Patterson, Chief Executive, commenting on the results,
said:
"The good progress we're making across most of the business has
unfortunately been overshadowed by the results of our investigation
into our Italian operations and our outlook. We've undertaken
extensive investigations into our Italian business, including an
independent review by KPMG, and I am deeply disappointed with the
unacceptable practices by some that we've found. This has no
place at BT, and it undermines the good work we're doing elsewhere
in the Group. We are committed to ensuring the highest
standards across the whole of BT.
"We face a more challenging outlook in the UK public sector and
international corporate markets but we've seen record growth at EE,
strong momentum in Consumer, and our highest ever fibre net
connections in Openreach. Customer experience remains a top
priority. EE is now answering 100 per cent of its customers' calls
in the UK and Ireland. In Openreach, missed appointments have
halved year on year. We'll continue to invest to ensure our service
levels improve and that our customers see the benefit.
"We are pushing ahead with reforms at Openreach, particularly on
governance and customer service and continue to believe an
agreement can be reached with Ofcom on its Digital Communications
Review. We think these changes address Ofcom's concerns and can
form the basis for a fair, proportionate and sustainable
settlement."
|
|
|
|
Third quarter to
31 December 2016
|
Nine months to
31 December 2016
|
|
|
|
£m
|
Change4,5
|
£m
|
Change4,5
|
|
Reported measures
|
|
|
|
|
|
|
Revenue
|
|
6,128
|
32%
|
17,940
|
33%
|
|
Profit
before tax
|
|
526
|
(37)%
|
1,914
|
(7)%
|
|
Basic
earnings per share
|
|
3.8p
|
(59)%
|
15.4p
|
(27)%
|
|
|
|
|
|
|
|
Adjusted measures
|
|
|
|
|
|
Change
in underlying revenue1 excluding
transit
adjusted for the acquisition of EE
|
|
(1.5)%
|
|
0.1%
|
|
Adjusted2
EBITDA
|
|
1,870
|
18%
|
5,576
|
26%
|
|
Change
in underlying EBITDA1
adjusted for the acquisition of EE
|
|
|
(8)%
|
|
(2)%
|
|
Adjusted2
profit before tax
|
|
826
|
(8)%
|
2,501
|
11%
|
|
Adjusted2
basic earnings per share
|
|
6.6p
|
(24)%
|
20.4p
|
(6)%
|
|
Normalised
free cash flow3
|
606
|
£(298)m
|
1,948
|
£369m
|
|
Net
debt
|
|
|
|
8,981
|
£3,966m
|
1 Excludes
specific items, foreign exchange movements and disposals and is
calculated as though EE had been part of the group from 1 April
2015. This differs from how we usually adjust for
acquisitions as explained on page 3
2 Before
specific items, which are defined on page 3
3 Before
specific items, pension deficit payments and the cash tax benefit
of pension deficit payments
4 The results for the
period include EE which we acquired on 29 January 2016.
Unless referred to as underlying adjusted for the acquisition of
EE,
comparatives do not include EE
5
Certain prior year results have been revised to reflect the outcome
of the investigation into our Italian business. See Note 1 to
the condensed consolidated financial statements
Group results for the third quarter and nine months to 31 December
2016
|
|
Third quarter
to 31 December
|
Nine months
to 31 December
|
|
|
2016
|
20151
|
Change2
|
2016
|
20151
|
Change2
|
|
|
£m
|
£m
|
%
|
£m
|
£m
|
%
|
|
Revenue
|
|
|
|
|
|
|
|
- reported
|
6,128
|
4,630
|
32
|
17,940
|
13,442
|
33
|
|
- adjusted3
|
6,126
|
4,587
|
34
|
17,954
|
13,239
|
36
|
|
- change in underlying revenue4
excluding
transit
adjusted for the acquisition of EE
|
|
|
(1.5)
|
|
|
0.1
|
|
EBITDA
|
|
|
|
|
|
|
|
- reported
|
1,624
|
1,574
|
3
|
5,148
|
4,408
|
17
|
|
- adjusted3
|
1,870
|
1,584
|
18
|
5,576
|
4,431
|
26
|
|
- change in underlying EBITDA4
adjusted for the acquisition of EE
|
|
|
(8)
|
|
|
(2)
|
|
Operating profit
|
|
|
|
|
|
|
|
- reported
|
729
|
981
|
(26)
|
2,529
|
2,564
|
(1)
|
|
- adjusted3
|
975
|
991
|
(2)
|
2,957
|
2,587
|
14
|
|
Profit before tax
|
|
|
|
|
|
|
|
- reported
|
526
|
832
|
(37)
|
1,914
|
2,062
|
(7)
|
|
- adjusted3
|
826
|
898
|
(8)
|
2,501
|
2,254
|
11
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
- reported
|
3.8p
|
9.2p
|
(59)
|
15.4p
|
21.0p
|
(27)
|
|
- adjusted3
|
6.6p
|
8.7p
|
(24)
|
20.4p
|
21.8p
|
(6)
|
|
Capital expenditure
|
852
|
580
|
47
|
2,432
|
1,862
|
31
|
|
Normalised free cash
flow5
|
606
|
904
|
(33)
|
1,948
|
1,579
|
23
|
|
Net debt
|
|
|
|
8,981
|
5,015
|
£3,966m
|
Line of business results3
|
|
Revenue
|
EBITDA
|
Free cash flow5
|
|
Third
quarter to
|
2016
|
20151
|
Change
|
2016
|
20151
|
Change
|
2016
|
2015
|
Change
|
|
31
December
|
£m
|
£m
|
%
|
£m
|
£m
|
%
|
£m
|
£m
|
%
|
|
Consumer
|
1,262
|
1,208
|
4
|
260
|
274
|
(5)
|
162
|
353
|
(54)
|
|
EE
|
1,311
|
-
|
n/m
|
277
|
-
|
n/m
|
141
|
-
|
n/m
|
|
Business and Public
Sector
|
1,190
|
1,035
|
15
|
393
|
341
|
15
|
302
|
289
|
4
|
|
Global
Services
|
1,398
|
1,299
|
8
|
40
|
131
|
(69)
|
(115)
|
23
|
n/m
|
|
Wholesale and
Ventures
|
528
|
578
|
(9)
|
211
|
182
|
16
|
151
|
166
|
(9)
|
|
Openreach
|
1,284
|
1,294
|
(1)
|
676
|
677
|
-
|
362
|
419
|
(14)
|
|
Other
|
2
|
4
|
n/m
|
13
|
(21)
|
n/m
|
(397)
|
(346)
|
15
|
|
Intra-group
items
|
(849)
|
(831)
|
2
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Total
|
6,126
|
4,587
|
34
|
1,870
|
1,584
|
18
|
606
|
904
|
(33)
|
1 Certain prior
year results have been revised to reflect the outcome of the
investigation into our Italian business. See Note 1 to the
condensed consolidated financial statements
2 The results
for the period include EE which we acquired on 29 January
2016. Unless referred to as underlying adjusted for the
acquisition of EE, comparatives do not include EE
3 Before
specific items, which are defined on page 3
4 Excludes
specific items, foreign exchange movements and disposals and is
calculated as though EE had been part of the group from 1 April
2015. This differs from how we usually adjust for
acquisitions as explained on page 3
5 Before
specific items, pension deficit payments and the cash tax benefit
of pension deficit payments
n/m =
not meaningful
Notes:
1.
Our commentary focuses on the trading results on an adjusted basis,
which is a non-GAAP measure, being before specific items.
Unless otherwise stated, revenue, operating costs, earnings before
interest, tax, depreciation and amortisation (EBITDA), operating
profit, profit before tax, net finance expense, earnings per share
(EPS) and normalised free cash flow are measured before specific
items. This is consistent with the way that financial
performance is measured by management and 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 with similarly titled measures used by other
companies. Reported revenue, reported operating costs,
reported operating profit, reported profit before tax, reported net
finance expense and reported EPS are the equivalent unadjusted or
statutory measures. Reconciliations of reported to adjusted
revenue, operating costs and operating profit are set out in the
Group income statement. Reconciliations of underlying revenue
excluding transit adjusted for the acquisition of EE, underlying
operating costs excluding transit adjusted for the acquisition of
EE, EBITDA, underlying EBITDA adjusted for the acquisition of EE,
net debt and free cash flow to the nearest measures prepared in
accordance with IFRS are provided in the notes to the condensed
consolidated financial statements and in the Additional
Information.
2.
Trends in underlying revenue excluding transit adjusted for the
acquisition of EE, underlying operating costs excluding transit
adjusted for the acquisition of EE, and underlying EBITDA adjusted
for the acquisition of EE are non-GAAP measures which seek to
reflect the underlying performance of the group that will
contribute to long-term sustainable growth and as such exclude the
impact of acquisitions and disposals, foreign exchange movements
and any specific items. We exclude transit from the trends as
transit traffic is low-margin and is affected by reductions in
mobile termination rates. Given the significance of the EE
acquisition to the group, in 2016/17 we are calculating underlying
revenue excluding transit adjusted for the acquisition of EE,
underlying operating costs excluding transit adjusted for the
acquisition of EE and underlying EBITDA adjusted for the
acquisition of EE (see note 3), as though EE had been part of the
group from 1 April 2015. This is different from how we
usually adjust for acquisitions, and is the basis for our 2016/17
outlook.
3.
We have prepared and published historical financial information
adjusted for the acquisition of EE (previously described as pro
forma historical financial information) for the eight quarters
ended 31 March 2016 for the group and by line of business under our
new organisational structure, to illustrate the results as though
EE had been part of the group from 1 April 2014. This historical
financial information adjusted for the acquisition of EE shows EE's
historical results adjusted to reflect BT's accounting policies. In
the consolidated group total, we've eliminated historical
transactions between BT and EE as though they had been intercompany
transactions. We've not made any adjustments to reflect the
allocation of the purchase price for EE. And all deal and
acquisition-related costs have been treated as specific items and
therefore don't impact the published information.
Enquiries
|
Press office:
|
|
|
Ross
Cook
|
Tel:
020 7356 5369
|
|
|
|
|
Investor relations:
|
|
|
Carl
Murdock-Smith
|
Tel:
020 7356 4909
|
We will hold a conference call for analysts and investors at 9.00am
today and a simultaneous webcast will be available at
www.bt.com/results
We are
scheduled to announce the fourth quarter results for 2016/17 on
Thursday 11 May 2017.
About BT
BT's
purpose is to use the power of communications to make a better
world. It is one of the world's leading providers of communications
services and solutions, serving customers in 180 countries. Its
principal activities include the provision of networked IT services
globally; local, national and international telecommunications
services to its customers for use at home, at work and on the move;
broadband, TV and internet products and services; and converged
fixed-mobile products and services. BT consists of six
customer-facing lines of business: Consumer, EE, Business and
Public Sector, Global Services, Wholesale and Ventures, and
Openreach.
For the
year ended 31 March 20161, BT Group's reported
revenue was £19,012m with reported profit before taxation of
£2,907m.
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
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/2906V_-2017-1-27.pdf
1 The comparative information of the current period
results have been revised to reflect the outcome of the
investigation into our Italian business
Signatures
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BT Group plc
(Registrant)
By:
/s/ Dan Fitz, Company Secretary
--------------------
Dan
Fitz, Company Secretary.
Date
27 January 2017