Results for the full year to 31 March
2024
BT Group plc
16 May 2024
Allison Kirkby, Chief Executive,
commenting on the results, said
"BT Group built and connected
customers to our next generation networks at record speed and
efficiency over the past year, while continuing to grow revenue and
EBITDA. Having passed peak capex on our full fibre broadband
rollout and achieved our £3 billion cost and service transformation
programme a year ahead of schedule, we've now reached the
inflection point on our long-term strategy.
"This delivery and greater
capex efficiency gives us the confidence to provide new guidance
for significantly increased short term cash flow and sets out a
path to more than double our normalised free cash flow over the
next five years. This enhanced cash flow allows us to increase our
dividend for FY24 by 3.9% to 8.0 pence per share. We're also
setting a further £3bn of gross annualised cost savings to be
reached by the end of FY29.
"As we move into the next
phase of BT Group's transformation, we are sharpening our focus to
be better for our customers and the country, by accelerating the
modernisation of our operations, and by exploring options to
optimise our global business. This will create a simpler BT Group,
fully focused on connecting the UK, and well positioned to generate
significant growth for all our stakeholders."
|
Continued strong delivery against our
strategy
• FTTP build rate accelerated to 1.0m
premises passed in the quarter, a record
78k per week. FTTP
footprint now over
14m premises with a further 6m where initial build is underway; on
track to reach 25m by December 2026. Department for Science,
Innovation and Technology has notified Openreach of its preferred
bidder status for Project Gigabit cross-regional supplier contract
(Type C)1
• Strong Openreach customer demand for
FTTP with net adds of 397k in Q4; total premises connected
now over 4.8m with increased take-up rate
of 34%
• Openreach broadband ARPU in FY24 grew
year-on-year by 10% to £15.1 due to price
rises and increased volumes and mix of FTTP; Openreach broadband
line losses of 491k, a 2% decline in the broadband base, as weaker
than expected growth in the broadband market in FY24 did not offset
competitor losses which were at comparable levels
to FY23; we expect that the broadband
market will recover over the medium term but if it remains weak
over the next 12 months then we can expect Openreach's broadband
base to be impacted by moderately higher competitor
losses
• Consumer broadband ARPU in FY24
increased 5% year-on-year
to £41.2; Consumer postpaid mobile
ARPU increased 9% year-on-year to £19.4; monthly churn
for the year remained stable in a competitive
market with broadband and postpaid mobile both at 1.1%
• Business financial performance
continues to be impacted by higher input costs, legacy declines, a
one off revenue adjustment and prior year one-offs, partly offset
by cost transformation and growth in Small
& Medium Business (SMB) and
Security
• Retail FTTP base grew year-on-year by
40% to 2.6m of which Consumer 2.4m and Business 0.2m; 5G base 11.1m, up 29%
year-on-year
• Cost transformation target of £3bn
gross annualised cost savings since May 2020 achieved 12 months
early, at a cost to achieve of £1.5bn, £0.1bn lower than target.
Announced further £3bn gross annualised cost
savings by end FY29 at a cost to achieve of
£1.0bn
• BT Group NPS of 24.0, up 1.0pts
year-on-year, further improving customer experience
• Looking forward, BT Group will focus on the UK; we will
explore all options to optimise our global business
FY24 Normalised free cash flow2 (NFCF) ahead of
guidance; dividend raised; growth in NFCF to £1.5bn in FY25, £2.0bn
in FY27 and £3bn by the end of the decade
• Reported revenue £20.8bn, up 1%; adjusted2 revenue £20.8bn, up 2% on a pro forma3 basis due to price
increases and fibre-enabled product sales in Openreach, increased
service revenue in Consumer with annual
contractual price rises being aided by higher roaming and increased
FTTP connections, partly offset by legacy
product declines and a one-off revenue
adjustment in Business
• Adjusted2
EBITDA £8.1bn, up 2%; and
up 1% on a pro
forma3 basis with revenue flow through and cost control
more than offsetting cost inflation and one-off items; Openreach and Consumer delivered strong EBITDA
growth, partially offset by EBITDA decline in Business due to
increased input costs and legacy high-margin managed contract
declines
1 Subject to contract signing
2 See Glossary on page 12.
3 See 'Prior period comparatives' section on page
4 for background on pro
forma comparatives.
• We
have recognised a non-cash impairment of goodwill allocated to
Business of £488m as a specific item,
reflecting a decline in profitability in recent years
• Reported profit before tax £1.2bn, down 31% primarily due to impairment of goodwill, increased
depreciation, amortisation and pension interest expense, partially
offset by adjusted2 EBITDA growth
• Capital expenditure ('capex')
£4.9bn, down
3% primarily driven by lower networks spend
despite higher FTTP build in the year due to
reduced unit costs and efficiencies; cash capex of £5.0bn also down
6%
• Net cash inflow from operating
activities £6.0bn; normalised free cash flow1
£1.3bn, down 4% due to working capital timing and a prior year tax
refund, partly offset by EBITDA growth and lower capital
expenditure
• Net debt £19.5bn (FY23: £18.9bn),
increased mainly due to our scheduled
pension scheme contributions of £0.8bn
• Gross IAS 19 pension deficit
of £4.8bn, up from £3.1bn
at 31 March 2023 mainly due to the increase
in real interest rates and narrowing of credit spreads over the
period, partly offset by our scheduled
contributions
• Final dividend of 5.69 pence per share
(pps), bringing the full year dividend to 8.00pps, up
3.9%
• FY25
Outlook: Adjusted1
revenue growth of 0-1% and EBITDA of around £8.2bn; capital
expenditure excluding spectrum less than £4.8bn; normalised free
cash flow of around £1.5bn
• Mid-term guidance: Consistent and
predictable adjusted1
revenue growth and EBITDA growth ahead of revenue,
enhanced by cost transformation from FY26 to FY30; capital
expenditure excluding spectrum less than £4.8bn until FY26,
reducing by c. £1bn post peak FTTP build; normalised free cash flow
of c. £2.0bn in FY27 and c. £3.0bn by the end of the
decade
Full year to 31 March
|
2024
|
2023
|
Change
|
Reported
measures
|
£m
|
£m
|
%
|
Revenue
|
20,797
|
20,681
|
1
|
Profit before tax
|
1,186
|
1,729
|
(31)
|
Profit after tax
|
855
|
1,905
|
(55)
|
Basic earnings per share
|
8.7p
|
19.4p
|
(55)
|
Net cash inflow from operating
activities
|
5,953
|
6,724
|
(11)
|
Full year dividend
|
8.00p
|
7.70p
|
4
|
Capital expenditure
|
4,880
|
5,056
|
(3)
|
|
|
|
|
Adjusted
measures
|
|
|
|
Adjusted1
Revenue
|
20,835
|
20,669
|
1
|
Adjusted1
EBITDA
|
8,100
|
7,928
|
2
|
Pro forma2
Revenue
|
20,835
|
20,431
|
2
|
Pro forma2
EBITDA
|
8,100
|
7,999
|
1
|
Adjusted1 basic earnings
per share
|
18.5p
|
22.0p
|
(16)
|
Normalised free cash
flow1
|
1,280
|
1,328
|
(4)
|
Net debt1
|
19,479
|
18,859
|
£620m
|
Customer-facing unit
updates
|
Adjusted1
revenue
|
Adjusted1
EBITDA
|
Normalised free cash
flow1
|
Full year to 31 March
|
2024
|
2023
Pro
forma2
re-presented2
|
Change
|
2024
|
2023
Pro
forma2
re-presented2
|
Change
|
2024
|
2023
Pro
forma2 re-presented2
|
Change
|
£m
|
£m
|
%
|
£m
|
£m
|
%
|
£m
|
£m
|
%
|
Consumer
|
9,833
|
9,499
|
4
|
2,672
|
2,540
|
5
|
1,023
|
1,086
|
(6)
|
Business
|
8,128
|
8,258
|
(2)
|
1,630
|
1,945
|
(16)
|
431
|
648
|
(33)
|
Openreach
|
6,077
|
5,675
|
7
|
3,827
|
3,510
|
9
|
590
|
219
|
169
|
Other
|
16
|
27
|
(41)
|
(29)
|
4
|
n/m
|
(764)
|
(625)
|
(22)
|
Intra-group items
|
(3,219)
|
(3,028)
|
(6)
|
-
|
-
|
-
|
-
|
-
|
|
Total
|
20,835
|
20,431
|
2
|
8,100
|
7,999
|
1
|
1,280
|
1,328
|
(4)
|
Fourth quarter to 31 March
|
2024
|
2023
Pro
forma2
re-presented2
|
Change
|
2024
|
2023
Pro
forma2
re-presented2
|
Change
|
£m
|
£m
|
%
|
£m
|
£m
|
%
|
Consumer
|
2,370
|
2,306
|
3
|
664
|
610
|
9
|
Business
|
2,001
|
2,115
|
(5)
|
421
|
555
|
(24)
|
Openreach
|
1,503
|
1,420
|
6
|
924
|
904
|
2
|
Other
|
4
|
3
|
33
|
(31)
|
(21)
|
(48)
|
Intra-group items
|
(801)
|
(755)
|
(6)
|
-
|
-
|
-
|
Total
|
5,077
|
5,089
|
-
|
1,978
|
2,048
|
(3)
|
1
See Glossary on page 12.
2 See 'Prior period comparatives' section below for more
information on pro forma and re-presented measures.
n/m: comparison not meaningful
Performance against FY24 outlook
|
FY24
outlook
|
FY24
performance
|
Change in adjusted1
revenue
|
Growth on a Sports JV pro
forma1 basis
|
Up 2%
|
Adjusted1
EBITDA
|
Growth on a Sports JV pro
forma1 basis
|
Up 1%
|
Capital
expenditure1
|
c.£5.0bn
|
£4.9bn
|
Normalised free cash
flow1
|
Toward the top end of
£1.0bn-£1.2bn
|
£1.3bn
|
Prior period comparatives
Throughout this release, comparative
financial information for year to 31 March 2023 ('FY23') has been
re-presented to reflect the merger of our Global and Enterprise
business units to form Business; and the change in the methodology
used to allocate shared Network, Digital and support function costs
across our units, which improves the relevance of our financial
reporting by better allocating internal costs to the drivers behind
those costs. These adjustments are made pursuant to IFRS accounting
requirements, for more information see note 1 to the condensed
consolidated financial statements on page 17 .
In addition, the group and operating
review sections of this release present comparative financial
information for the Consumer customer-facing unit and BT Group
overall on an unaudited 'pro forma' basis. This reflects
adjustments that estimate the impact as if trading in relation to
BT Sport has been equity accounted in FY23, akin to the Sports JV
being in place historically. Analysis on a pro forma basis enables
comparison of results on a like-for-like basis.
The Additional Information on
page 29 presents a
bridge between financial information for the year to 31 March 2023
as published on 3 November 2022, and the comparatives presented in
this release. For further information see
bt.com/about for separate publications
covering the formation of Business and cost allocation changes,
(published 27 June 2023), and the pro forma adjustments (published
18 October 2022).
1
See Glossary on page 12
http://www.rns-pdf.londonstockexchange.com/rns/6413O_1-2024-5-15.pdf