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BT GROUP PLCResults for the fourth quarter and year to 31 March 2012
(ENP Newswire Via Acquire Media NewsEdge) ENP Newswire - 11 May 2012
Release date- 10052012 - BT Group plc (BT.L) today announces its results for the fourth quarter and year to 31 March 2012.
Key points:
Underlying revenue excluding transit down 1.9% for the year, within our target range
EBITDA1 target of above GBP6bn delivered a year early
Free cash flow2 of GBP2.5bn, up 13% and well above expectations
Net debt up GBP266m after GBP2.0bn pension deficit payment
Proposed final dividend of 5.7p, up 14%, giving a full year dividend of 8.3p, up 12%
10m homes and businesses passed with fibre, many months ahead of schedule
Outlook:
We expect
Underlying revenue excluding transit to show an improving trend in 2013 and 2014
Growth in EBITDA1 in 2013 and 2014
Normalised free cash flow (which excludes pension deficit payments and related tax credits) of GBP2,307m in 2012 to be broadly level in 2013 and above GBP2.4bn in 2014
BT Global Services to deliver solid EBITDA growth in 2013
BT Global Services operating cash flow to be lower in 2013 before returning to growth in 2014
Dividends to grow by 10%-15% per year for the next three years
Share buyback programme of around GBP300m in 2013
Ian Livingston, Chief Executive, commenting on the results, said:
'In what remains a challenging environment we have delivered another year of growth in profits and free cash flow. Our financial strength has allowed us to invest in the business, make a GBP2bn payment into the pension fund, reward employees and deliver double digit growth in shareholder returns.
'We have now passed 10m homes and businesses with our fibre roll-out. This is many months ahead of schedule and brings the benefits of super-fast broadband to families and businesses in cities, towns and rural areas across the UK. We remain the leading provider of broadband in the UK and over half a million customers are already taking our fibre-based BT Infinity product. At a time when many of our corporate customers are facing their own challenges, our investments internationally will help those seeking to expand in faster growing economies and this is reflected in GBP2bn of new orders won by BT Global Services this quarter.
'While we will be impacted by economic and regulatory headwinds, we expect to continue to grow profits over the next two years, with normalised free cash flow growing to above GBP2.4bn in 2014. We will continue to pursue our prudent financial strategy, investing in the long-term future of the business, supporting the pension scheme, paying down debt and enhancing shareholder returns.
'We have made progress again this year delivering for all our stakeholders, but we know there is more to do.'
1 Before specific items
2 Before specific items and pension deficit payments
RESULTS FOR THE FOURTH QUARTER AND YEAR TO 31 MARCH 2012
1Before specific items. Specific items are defined below and analysed in Note 4 to the condensed consolidated financial statements
2Underlying revenue excluding transit is defined below
3Before pension deficit payments of GBP2,000m in Q4 2012 and FY 2012 (Q4 2011: GBP505m; FY 2011: GBP1,030m)
4Before specific items, pension deficit payments and the cash tax benefit of pension deficit payments
5Restated for the impact of customer account moves. See Note 1 to the condensed consolidated financial statements
Notes:
1) Unless otherwise stated, any reference to revenue, earnings before interest, tax, depreciation and amortisation (EBITDA), operating profit, operating costs, profit before tax, earnings per share (EPS) and free cash flow are measured before specific items. The commentary focuses on the trading results on an adjusted basis being before specific items. This is consistent with the way that financial performance is measured by management and is 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 to similarly titled measures used by other companies. Reported revenue, reported EBITDA, reported operating profit, reported profit before tax, reported EPS and reported free cash flow are the equivalent unadjusted or statutory measures.
2) Underlying revenue is a measure which seeks to reflect the underlying revenue performance of the group that will contribute to long-term profitable growth. As such it excludes any increases or decreases in revenue as a result of acquisitions or disposals, any foreign exchange movements affecting revenue and any specific items. We are focusing on the trends in underlying revenue excluding transit revenue as transit traffic is low-margin and is significantly affected by reductions in mobile termination rates. Underlying costs is a measure which seeks to reflect the underlying costs of the group. As such it excludes any decreases or increases in costs as a result of acquisitions or disposals, any foreign exchange movements affecting costs and any specific items.
3) Unless otherwise stated, the references 2011, 2012, 2013 and 2014 are the financial years to 31 March 2011, 2012, 2013 and 2014, respectively, except in relation to our fibre roll-out plans which are based on calendar years.
BT Group plc
RESULTS FOR THE YEAR TO 31 MARCH 2012
GROUP RESULTS
Operating results overview for the year
Underlying revenue excluding transit decreased by 1.9%, within our target range, reflecting lower revenue from calls and lines and the challenging environment in certain markets. Adjusted revenue was 4% lower at GBP19,307m with transit revenue down by GBP392m (including mobile termination rate reductions of GBP286m), favourable foreign exchange movements of GBP22m and disposals of GBP55m. Reported revenue was down 6% reflecting the specific charge to revenue of GBP410m this year that had no impact on profits or cash (see Specific items below).
Total operating costs before depreciation and amortisation and specific items decreased by GBP933m, or 6%, to GBP13,630m. These costs have reduced by GBP2.9bn, and by GBP3.4bn including the reduction in capital expenditure, over the last three years. Underlying operating costs were down 6% for the year.
Net labour costs decreased by 1% to GBP4,812m after adjusting for certain labour related costs of GBP87m classified as other costs in the prior year. Leaver costs, which are included in net labour costs, increased by GBP40m to GBP97m. Payments to telecommunications operators were down 16%, reflecting lower mobile termination rates and reduced transit and wholesale call volumes. Property and energy costs were 7% lower and network operating and IT costs were 11% lower as we rationalise our networks and systems. Other operating costs decreased by 3%.
Adjusted EBITDA increased by 3% to GBP6,064m, which means we have delivered our original target of above GBP6.0bn for 2013 a year early. Foreign exchange movements had no significant impact on EBITDA in the year.
Depreciation and amortisation was flat at GBP2,972m reflecting the lower levels of capital expenditure over the last three years offset by higher depreciation and amortisation on shorter lived assets.
Capital expenditure was GBP2,594m, in line with our target for the year of around GBP2.6bn. We expect capital expenditure to remain at around GBP2.6bn in 2013.
Broadband
We added 589,000 retail broadband customers in the year, representing 54% of the broadband market net additions1 of 1,085,000 and taking our retail broadband customer base to around 6.3m, up 10%.
1 DSL, LLU and fibre, excluding cable
Net finance expense
Net finance expense was GBP681m, a decrease of GBP164m, primarily due to lower average net debt and the repayment of higher coupon debt in the second half of 2011.
Profit before tax
Adjusted profit before tax was GBP2,421m, up 16%, reflecting the higher EBITDA and lower finance expense. Reported profit before tax (which includes specific items) was GBP2,445m, up 42%.
Tax
The effective tax rate on the profit before specific items for the year was 24.1% (2011: 21.7%). This is lower than the UK statutory rate of 26% (2011: 28%) reflecting the utilisation of tax losses. For 2013 we expect the effective tax rate to be around 23% reflecting the lower UK statutory rate.
Specific items
Specific items in the year resulted in a net credit after tax of GBP166m (2011: GBP127m net charge), the principal components of which are described below.
Following a retrospective regulatory ruling in Germany a one-off charge of GBP410m was recognised against revenue with an equal reduction in operating costs in the second quarter of 2012. This had no impact on profits or cash.
Specific operating costs include property rationalisation charges of GBP90m (2011: GBP88m) and BT Global Services restructuring charges of GBP64m (2011: GBP192m) principally comprising network, people and property costs. Net pension interest income was GBP197m (2011: GBP79m expense).
The tax charge in respect of specific items was GBP22m (2011: GBP72m credit). A specific tax credit of GBP164m (2011: GBP172m) has been recognised for the re-measurement of deferred tax balances due to the change in the UK statutory tax rate to 24% from 1 April 2012.
In 2013 we expect to incur further BT Global Services restructuring costs of around GBP40m in relation to the rationalisation of the Infonet and Radianz networks. The property rationalisation programme has now been completed.
Earnings per share
Adjusted EPS was 23.7p, up 13%, principally reflecting the higher EBITDA and lower finance expense. Reported EPS was 25.8p, up 33%. These are based on a weighted average number of shares in issue of 7,763m (2011: 7,750m). A reconciliation of reported EPS to adjusted EPS is provided in Note 9.
At 31 March 2012 there were around 120m outstanding options over BT Group plc shares granted under all-employee share option plans which are expected to become exercisable in 2013. In addition around 48m shares will be allocated in 2013 under the 2009 executive share plans.
Free cash flow
Adjusted free cash flow of GBP2,522m (2011: GBP2,223m) was well above our target for the year. The growth in cash flow was principally driven by the increase in EBITDA, lower interest payments, lower capital expenditure and lower regular pension contributions which were partly offset by higher tax payments. Excluding the GBP215m cash tax benefit in relation to pension deficit payments, free cash flow on a normalised basis was GBP2,307m (2011: GBP2,076m). The cash tax benefit of pension deficit payments is expected to be around GBP560m in 2013.
The cash cost of specific items was GBP204m (2011: GBP212m) comprising BT Global Services restructuring costs of GBP120m (2011: GBP165m), property rationalisation costs of GBP68m (2011: GBP47m) and a payment of GBP16m relating to a regulatory decision in a prior year. Reported free cash flow was GBP2,318m (2011: GBP2,011m). We expect the cash cost of the BT Global Services restructuring and property rationalisation programmes to be around GBP100m in 2013. There are ongoing regulatory disputes and appeals in relation to prior periods. If any of these result in a significant cash payment or receipt, in accordance with our accounting policy, they would be treated as a specific item.
A reconciliation of cash generated from operations to free cash flow is provided in Note 5.
Net debt and liquidity
Net debt was GBP9,082m at 31 March 2012, an increase of GBP266m in the year, principally reflecting the GBP2.0bn pension deficit payment made in March 2012. Net debt is reconciled in Note 6. At 31 March 2012 the group had cash and current investment balances of GBP844m and available facilities of GBP1.5bn. Out of total gross debt of GBP9.9bn at 31 March 2012, GBP1.7bn of term debt is repayable during the 2013 financial year.
Pensions
The 2011 triennial funding valuation of the BT Pension Scheme (BTPS) has now been finalised, agreed with the Trustee and certified by the Scheme Actuary. The final funding deficit at 30 June 2011 was GBP3.9bn compared with the provisional value of GBP4.1bn announced in March. As a result, following the GBP2.0bn lump sum deficit payment made in March 2012, the remaining recovery plan payments are GBP325m in March 2013 and 2014 followed by seven annual deficit payments of GBP295m (compared with GBP325m under the provisional agreement) through to March 2021. To provide greater certainty we also agreed a schedule of future potential payments depending on the outcome of the 2014 and 2017 funding valuations. Under the final agreement the maximum future potential payments have been increased to offset the reduction in the annual deficit payments.
The valuation documentation will now be submitted to the Pensions Regulator. The final Court decision on the Crown Guarantee case, after any appeals, will give greater clarity on the extent to which the BTPS liabilities are covered by the Crown Guarantee. This will inform the Pensions Regulator's next steps with regards to the valuation of the Scheme.
The IAS 19 accounting position and key assumptions for the liability valuation are:
The IAS 19 net pension position at 31 March 2012 was a deficit of GBP1.9bn net of tax (GBP2.4bn gross of tax) compared with a deficit of GBP1.4bn at 31 March 2011 (GBP1.8bn gross of tax). The higher deficit reflects an increase in liabilities which have more than offset the higher assets. Liabilities have risen primarily as a result of a lower discount rate, driven by low real corporate bond yields partly reflecting the impact of quantitative easing, and actual inflation experience being higher than the long-term assumptions. In line with developing best practice and reflecting a more sophisticated methodology, the discount rate at 31 March 2012 is based on a market-based AA corporate bond yield curve that matches the duration of the BTPS liabilities. This improved approach will be adopted consistently going forward. At 31 March 2011 the discount rate was based on a published index yield for a basket of corporate bonds and had this approach continued to be applied at 31 March 2012 the discount rate would have been around 30 basis points lower and the net pension deficit around GBP1.4bn higher. However, partly offsetting this, we have amended longevity assumptions which have increased the net pension deficit by around GBP0.2bn compared with the 31 December 2011 assumptions. The increase in assets includes the GBP2.0bn lump sum deficit payment made in March 2012.
We expect the pension operating charge for the BTPS in the income statement to be around GBP225m in 2013, around GBP30m lower. We also expect regular cash contributions into the BTPS to be around GBP225m in 2013, around GBP55m higher than 2012. The net pension interest within specific items is expected to be a credit of around GBP30m, a decrease of around GBP165m mainly due to lower expected returns on assets more than offsetting the higher asset values.
Dividends
The Board is proposing a final dividend of 5.7p, up 14%, giving a full year dividend of 8.3p, up 12%. This compares with an increase of 7% in 2011. Subject to shareholder approval, this will be paid on 3 September 2012 to shareholders on the register at 10 August 2012. The ex-dividend date is 8 August 2012. The final dividend, amounting to approximately GBP453m (2011: GBP388m) will be recognised as an appropriation of retained earnings in the quarter to 30 September 2012.
Regulation
There were a number of regulatory rulings issued in 2012. The new charge controls recently set on WLR, LLU and ISDN30 products are expected to have a negative impact of around GBP100m-GBP200m on group revenue in 2013 and a similar year on year impact in 2014. The outcome of Ofcom's forthcoming Business Connectivity Market Review, relating to the markets for Ethernet and wholesale leased lines, may also further impact our future revenue.
Outlook
Our objective remains to drive profitable revenue growth. While economic and regulatory headwinds will make revenue growth in 2013 more challenging than originally envisaged, we expect underlying revenue excluding transit to show an improving trend in 2013 and 2014. We expect a decline of around GBP200m-GBP300m in transit revenue in 2013.
We expect to make further progress in transforming our cost base which will drive growth in adjusted EBITDA in 2013 and 2014.
As the tax credit in relation to the GBP2.0bn lump sum pension deficit payment will distort our cash flow in 2013, we are now giving our free cash flow outlook excluding the tax benefit of pension deficit payments. On this normalised basis, free cash flow amounted to GBP2,307m in 2012 and is expected to be broadly level in 2013 and above GBP2.4bn in 2014. We intend to continue our policy of reducing net debt and are targeting a BBB+ credit rating over the medium term.
We expect BT Global Services to deliver solid EBITDA growth in 2013 as we intensify our efforts to reduce its cost base. Its operating cash flow is expected to be lower in 2013 due to phasing of working capital before returning to growth in 2014.
As a result of our confidence in our ability to grow free cash flow, we intend to increase the dividend per share by 10%-15% per year for the next three years. We also intend to spend around GBP300m on a share buyback programme in the current financial year which will counteract the dilutive effect of all-employee share option plans maturing this year and add to shareholder returns.
Principal risks and uncertainties
The group's principal risks and uncertainties, which will be included in the BT Group plc Annual Report & Form 20-F 2012, expected to be published on 24 May 2012, are disclosed in Note 10.
RESULTS FOR THE FOURTH QUARTER TO 31 MARCH 2012
GROUP RESULTS
Operating results overview
Underlying revenue excluding transit decreased by 2.0%. Adjusted revenue was 4% lower at GBP4,875m with transit revenue down by GBP47m mainly due to mobile termination rate reductions, and disposals reducing revenue by GBP27m. Foreign exchange movements had no significant impact on group revenue or profits in the quarter.
Total operating costs before depreciation and amortisation and specific items decreased by 7% to GBP3,363m. Underlying operating costs were down 6%.
Net labour costs decreased by 1% to GBP1,179m after adjusting for certain labour related costs of GBP20m classified as other costs in the prior year. Payments to telecommunications operators were down 15%, reflecting lower mobile termination rates and reduced transit and wholesale call volumes. We saw further reductions across all our other cost categories due to further efficiency improvements.
Adjusted EBITDA increased by 4% to GBP1,609m reflecting the continued delivery of cost reductions.
Depreciation and amortisation decreased by 2% to GBP746m.
Capital expenditure was down 11% to GBP695m reflecting a more even phasing of capital expenditure this year.
Net finance expense
Net finance expense was GBP173m, a decrease of GBP13m, primarily due to lower average net debt and the repayment of higher coupon debt in the second half of 2011.
Profit before tax
Adjusted profit before tax was GBP690m, up 13%, reflecting the higher EBITDA and lower finance expense. Reported profit before tax (which includes specific items) was GBP724m, up 46%.
Tax
The effective tax rate on the profit before specific items for the quarter was 24.1% (Q4 2011: 21.6%).
Specific items
Specific items in the quarter resulted in a net credit after tax of GBP107m (Q4 2011: GBP5m net charge). Specific operating costs include BT Global Services restructuring charges of GBP14m (Q4 2011: GBP84m) principally comprising network, people and property costs. Net interest income on pensions was GBP48m (Q4 2011: GBP20m expense). The tax charge in respect of the above specific items was GBP9m (Q4 2011: GBP19m credit). A specific tax credit of GBP82m (Q4 2011: GBP96m) has been recognised for the re-measurement of deferred tax balances.
Earnings per share
Adjusted EPS was 6.8p, up 10%, principally reflecting the higher EBITDA and lower finance expense. Reported EPS was 8.1p, up 33%. These are based on a weighted average number of shares in issue of 7,771m (2011: 7,754m).
Free cash flow
Adjusted free cash flow increased by GBP290m to GBP909m principally reflecting the higher EBITDA, lower capital expenditure payments and improved working capital. Reported free cash flow was an inflow of GBP856m (Q4 2011: GBP546m). There was a net cash outflow of GBP53m relating to specific items (Q4 2011: GBP73m) comprising property rationalisation costs of GBP19m (Q4 2011: GBP16m), BT Global Services restructuring charges of GBP18m (Q4 2011: GBP57m) and a payment of GBP16m relating to a regulatory decision in a prior year.
OPERATING REVIEW
BT Global Services
1Restated for the impact of customer account moves, see Note 1 to the condensed consolidated financial statements
2Net of other operating income
n/m = not meaningful
Revenue
Underlying revenue excluding transit decreased by 2% in the quarter partly reflecting the challenging environment in certain markets. For the year, underlying revenue excluding transit decreased by 1%, compared with a 4% decline in 2011. Revenue was down 4% in the quarter, including broadly flat transit revenue of GBP121m, a GBP27m impact from disposals, and an GBP11m negative impact from foreign exchange movements. Revenue was down 3% for the year including a GBP168m decline in transit revenue, a GBP55m impact from disposals, and a GBP21m favourable impact from foreign exchange movements.
Total order intake was GBP2.0bn for the quarter, up 8%, and GBP6.7bn for the year, down 8%, with the reduction being more than accounted for by lower contract renewals. In the quarter we signed contracts with leading organisations around the world including: Anglo American, covering 15 countries across Africa, Latin America, and Asia; NATO, for services to more than 70 locations; and the Spanish steel company Celsa Group. In the UK we signed a contract with NATS (National Air Traffic Services) to support core air traffic control operations, and with the South Essex Partnership NHS Trust to provide a 500 site N3 Community of Interest network, making this the largest local health network in the UK.
In February we announced a series of initiatives aimed at doubling our business across Turkey, the Middle East and Africa. These initiatives build on similar programmes previously announced in Asia Pacific and Latin America. Across these three regions revenue increased by 16% and order intake increased by over 60% in the year. We expect to increase our revenue by around GBP500m in these regions over the medium term.
Operating results
Net operating costs reduced by 4% in the quarter and the year. Excluding transit costs, disposals and foreign exchange movements net operating costs declined by 3% in the quarter and 1% in the year. Included in net operating costs were leaver costs of GBP6m in the quarter and GBP19m in the year.
EBITDA was up 1% in the quarter and 6% in the year. Excluding disposals and foreign exchange movements EBITDA increased 4% in the quarter and 7% in the year reflecting the impact of cost saving initiatives and improved operational performance.
Depreciation and amortisation reduced by 9% in the quarter and 3% in the year as a result of lower capital expenditure over the prior two financial years. This contributed to an GBP8m operating profit in the quarter.
Capital expenditure was up 4% in the quarter. Capital expenditure for the year increased by 12% due to customer contract commitments, additional expenditure to support the delivery of new contracts in EMEA and Latin America, as well as continued network investment.
Operating cash flow was an inflow of GBP164m in the quarter and GBP183m for the year. This was slightly below our target of around GBP200m for the year.
BT Retail
1Restated for the impact of customer account moves, see Note 1 to the condensed consolidated financial statements
2Net of other operating income
Revenue
Revenue decreased by 3% in the quarter and 4% in the year.
Consumer revenue decreased by 2% in the quarter. This is the best quarterly revenue performance for two years driven by growth in our broadband base, particularly BT Infinity, and in BT Vision, which contributed to an increase in consumer ARPU from GBP337 to GBP343 in the quarter. Consumer revenue decreased by 5% in the year.
We added 136,000 retail broadband customers in the quarter, representing 44% of the DSL, LLU and fibre broadband market net additions, contributing to a full year share of net additions of 54%. Net additions for BT Infinity, our super-fast broadband service, were 131,000 in the quarter, and our customer base currently stands at over 550,000. BT Vision added 28,000 customers in the quarter, bringing the customer base to over 700,000, up 23% on last year. Additional content was added in the quarter as a result of deals with Miramax and UKTV.
Active consumer line losses were higher in the fourth quarter compared with the prior year but declined by 30% for the year as a whole.
Business revenue decreased by 6% in the quarter and 5% in the year. Revenue continued to be impacted by lower IT hardware sales reflecting market conditions and our decision in the second quarter to move away from low-margin IT hardware trade sales. Business line losses were at the lowest level for more than four years.
Enterprises revenue increased by 2% in the quarter and 1% in the year, excluding the impact of foreign exchange movements. The increase was largely due to the performance of BT Conferencing which saw an almost 20% rise in conferencing minutes in the quarter which offset lower revenue in BT Directories.
BT Ireland revenue increased by 4% in the quarter, excluding the impact of foreign exchange movements, reflecting large government and corporate contracts in both Northern Ireland and the Republic of Ireland and the impact of fibre take-up. A number of significant contracts were secured including Belfast Health and Social Care Trust and FBD Insurance. Revenue was broadly flat in the year, excluding the impact of foreign exchange movements. BT Ireland's fibre roll-out in Northern Ireland has now reached 89% coverage with over 750,000 premises passed, making it one of the most connected regions in Europe.
Operating results
In the quarter net operating costs decreased by 5% primarily as a result of our cost transformation initiatives. EBITDA increased by 2% and with depreciation and amortisation decreasing by 5%, operating profit was up by 4%.
Capital expenditure decreased by 9% principally as a result of the phasing of expenditure compared with the prior year. Operating cash flow increased by 2%.
BT Wholesale
1Restated for the impact of customer account moves, see Note 1 to the condensed consolidated financial statements
2Net of other operating income
Revenue
Underlying revenue excluding transit decreased by 2% in the quarter and the year. A retrospective charge of GBP13m was recognised in the fourth quarter reflecting a recent Ofcom determination. Excluding this charge, underlying revenue excluding transit declined by 1% both in the quarter and the year, primarily due to the ongoing migration of broadband lines to LLU. Revenue decreased by 6% in the quarter and 7% in the year mainly due to a decline in transit revenue of GBP49m in the quarter and GBP224m in the year, driven by mobile termination rate reductions of GBP35m and GBP213m, respectively. Managed network services represented 27% of external revenue in the year, up from 24% last year.
Total order intake in the quarter was around GBP220m giving a total of around GBP750m for the year.
We now have more than 60 communications providers (CPs) taking our WBC fibre broadband service. Our Mobile Ethernet Access Service is now available at more than 13,000 mobile base station sites, an increase of around 1,000 in the quarter, reinforcing our market-leading position. IP Exchange, which simplifies global VoIP interconnect, continues to grow rapidly with voice minutes increasing by around 80% in the quarter.
Operating results
In the quarter net operating costs decreased by 5%, but increased by 3% excluding transit costs. Reductions in total labour costs and discretionary expenditure were offset by the impact of changes in the product mix and network migration costs. EBITDA decreased by 9%, or 5% excluding the retrospective regulatory charge. Depreciation and amortisation reduced by 1% and operating profit declined by 16%, or 8% excluding the retrospective regulatory charge.
Capital expenditure decreased by 1%. Operating cash flow decreased by 5% as the decline in EBITDA was partly offset by an improvement in working capital.
Openreach
1Restated for the impact of customer account moves, see Note 1 to the condensed consolidated financial statements
2Net of other operating income
Revenue
Revenue increased by 4% in the quarter and the year, reflecting growth in Ethernet, LLU and fibre revenue.
In the quarter our overall copper line base increased by 74,000, our sixth consecutive quarter of growth. This gives an increase of 136,000 for the year, the largest annual increase since the formation of Openreach, compared with a flat position in the prior year and a significant decline in the year before that.
We have now passed 10m homes and businesses with our fibre broadband roll-out and in April we doubled the downstream speeds provided by fibre-to-the-cabinet broadband to up to 80Mbps. Following our success in Cornwall we have been appointed to deliver the roll-out of super-fast broadband for the Broadband Delivery UK project in Lancashire. We are in the early stages of deploying our fibre-to-the-premises service offering speeds of 110Mbps and are on track to launch our 330Mbps product shortly. This quarter we also completed the fibre infrastructure work underpinning the communications network at the Olympic Park in Stratford.
Operating results
In the quarter net operating costs reduced by 3% as a result of efficiencies and lower labour costs. EBITDA increased by 12% as a result of our increased revenue and reduced operating costs. Depreciation and amortisation increased by 5% reflecting the investment in fibre broadband and Ethernet. Operating profit increased by 17%.
The accelerated investment in our fibre roll-out programme was offset by lower spend on DSL, resulting in capital expenditure reducing by 5%. Operating cash flow was up 29% due to the higher EBITDA and lower capital expenditure.
The fourth quarter and full year 2012 results presentation for analysts and investors will be held in London at 9.00am today and a simultaneous webcast will be available at www.bt.com/results
The BT Group plc Annual Report & Form 20-F 2012 is expected to be published on 24 May 2012. The Annual General Meeting of BT Group plc will be held at Old Billingsgate, 1 Old Billingsgate Walk, London, EC3R 6DX on 11 July 2012 at 11.00am.
Results for the first quarter to 30 June 2012 are expected to be announced on Wednesday 25 July 2012.
[Editorial queries for this story should be sent to newswire@enpublishing.co.uk]
((Comments on this story may be sent to info@enpublishing.co.uk))
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