What makes more sense than writing about a business under investigations after writing a post about management qualities? Maybe the market has overreacted here?
British Telco BT Group had a … lets say issue with accounting in Italy.
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.
The stock price have dropped from 380 GB pence to around 300 GB pence, destroying around GBP 7 bn in shareholder value.
“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. ” –Gavin Patterson
The IAS 19 net pension position at 31 December 2016 was a deficit of £9.2bn net of tax (£11.1bn gross of tax), compared with £9.5bn net of tax (£11.5bn gross of tax) at 30 September 2016. The 2017/18 pensions operating charge will be calculated at 31 March 2017, with changes in market conditions since 31 March 2016 expected to increase the operating charge by tens of millions of pounds year on year.
Net debt and liquidity
Net debt was £8,981m at 31 December 2016, a reduction of £586m since 30 September 2016 and £857m lower than at 31 March 2016. In the quarter, reported free cash flow was £585m
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
note to myself: I have to look at how they adjusted the EE numbers
Valuation BT Group:
Peer Group valuations (EV/EBITDA) from Yahoo
(no adjustments for pensions ect from me)
Peer Group last Dividends from Yahoo
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Today on Jan 24, 2017 07:00 GMT this news from british BT Group came out:
The investigation into the financial position of our Italian business is now substantially complete.
The EBITDA contribution of the Italian business included in the Group’s reported EBITDA for the financial year ended 31 March 2016 was around 1%.
For Q3, with the exception of the financial impact of the BT Italy investigation, we expect to report results broadly in line with market expectations. Our consumer-facing businesses are set to report good revenue growth, with Consumer delivering continued volume and ARPU1 growth and EE achieving revenue growth for the first time.
Normalised free cash flow is now expected to be around £2.5bn.
BT Italy case was mentioned in Okt 2016 http://www.btplc.com/News/#/pressreleases/results-for-the-second-quarter-to-30-september-2016-1624371
Annual report 2016 (March) http://www.btplc.com/Sharesandperformance/Annualreportandreview/pdf/2016-Annual-Report.pdf
Page 95 = numbers
Note: continental Europe is 32% of revenue, 42% is UK
BT Group (dividends)