These results show that BT Group is delivering and on target: we're rapidly building and connecting customers to our next generation networks, we're simplifying our products and services, and we're now seeing predictable and consistent revenue and EBITDA growth.
"We've strengthened our competitive position with the launch of both New EE and our renewed strategy in Business, and Openreach has now built full fibre broadband to more than a third of the UK's homes and businesses with a growing connection rate. Our transformation programme has now delivered £2.5bn in annualised savings, well on track to meet our £3bn savings target by FY25.
"Our delivery in the first half means we are confirming our financial outlook for FY24 with normalised free cash flow now expected towards the top end of the guidance range, and we are declaring an interim dividend of 2.31 pence per share. BT Group has a bright future and I'm pleased to be handing the baton to Allison Kirkby early in the new year. She knows the sector, she knows the company and she's the right person to lead BT Group from this position of operational strength."
Continued strong execution of our strategy
• FTTP build rate accelerated to 66k per week delivering a record of 860k premises passed in the quarter, FTTP footprint is now expanded to 12m premises with a further 6m where initial build is underway
• Strong customer demand in Openreach for FTTP with net adds of 364k in Q2, bringing take-up rate to 33%
• Openreach broadband ARPU grew by 10% year-on-year due to price rises and increased volumes of FTTP; Openreach broadband line losses of 255k in H1, a 1% decline in the broadband base; whilst we continue to target a decline of around 400k in FY24, softer market conditions increase the risk that losses will be above this level
• Consumer broadband ARPU for the year to date increased 4% year-on-year and Consumer postpaid mobile ARPU for the year to date increased 9% year-on-year; churn for the year to date remains stable for both broadband and postpaid mobile at 1.1% and 1.0% respectively
• In October 'New EE' was launched with a modern digital platform and a set of converged products and services
• Retail FTTP base grew year-on-year by 48% to 2.2m of which Consumer 2.1m and Business 0.1m; 5G base 9.9m, up 42% year-on-year
• Cost transformation on track with gross annualised cost savings of £2.5bn since April 2020 against our £3bn target, with a cost to achieve of £1.3bn against a target of £1.6bn
• Continued focus on creating standout customer experiences with BT Group NPS of 22.7, up 1.8pts year-on-year
Adjusted1 Revenue and EBITDA growth:
• Reported revenue £10.4bn, in line with the prior year; adjusted1 revenue £10.4bn, up 3% on a pro forma2 basis due to increased fibre-enabled product sales, inflation-linked pricing and improved lower margin trading in Business partially offset by legacy product declines
• Adjusted1 EBITDA £4.1bn, up 6%; and up 4% on a pro forma2 basis with revenue flow through and strong cost control more than offsetting cost inflation and one-off items in the prior year; Business EBITDA decline due to increased input costs and legacy high-margin managed contract declines
• Reported profit before tax £1.1bn, up 29% largely due to factors driving adjusted1 EBITDA growth
• Reported capital expenditure ('capex') £2.3bn, down 11% with lower fixed network spend driven by lower FTTP build unit costs; cash capex of £2.5bn also down 11%
• Net cash inflow from operating activities £2.3bn; normalised free cash flow1 £0.5bn, up £0.4bn primarily due to £0.2bn increase in adjusted EBITDA1 and £0.3bn decrease in cash capital expenditure partly offset by £(0.1)bn net working capital outflow; net working capital movements includes £359m from the sale of cash flows of contract assets relating to mobile handsets as well as £(220)m from lower utilisation of a supply chain financing programme
• Net debt £19.7bn, (31 March 2023: £18.9bn), increasing mainly due to pension scheme contributions with net free cash flow for the first half of FY24 substantially offsetting the payment for the final dividend of FY23
• Gross IAS 19 deficit of £3.9bn, up from £3.1bn at 31 March 2023 mainly due to the increase in real interest rates and narrowing of credit spreads over H1, partly offset by deficit contributions
• Interim dividend for FY24 of 2.31 pence per share (pps) in line with our policy of paying 30% of prior year's full year dividend
• FY24 Outlook: Adjusted1 revenue and EBITDA growth on a pro forma basis; capital expenditure excluding spectrum of around £5.0bn; normalised free cash flow towards the top end of £1.0bn-£1.2bn range.
Dividend 2.31p paid 2 feb ex 28dec record date 29 dec
More info here, the RNS is just a brief summary:
http://www.rns-pdf.londonstockexchange. ... 3-11-1.pdfI've not read them in detail yet, but the pension payments are definitely a drag on performance financially. I was hoping that the higher interest rates would reduce the pension deficit - I'll have to look at that when I have a more detailed read of the pdf.