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."
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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) |
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| Adjusted measures |
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| 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
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| 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) | - | - | - | - | - |
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| 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
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| 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
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