BT 2012 Annual Report Download - page 56

53
Performance
Earnings per share
Improved profitability and lower net finance expense have contributed
to a 13% increase in adjusted earnings per share from 21.0p to 23.7p.
Adjusted earnings per share is one of our key performance indicators, as
detailed in Key performance indicators on page 4 as it is an important
measure of the overall profitability of our business.
In 2012 adjusted earnings per share increased by 13% (2011: 21%).
The graph below shows the drivers of adjusted earnings per share
growth over the last two years.
25.0
21.0
23.0
17.0
19.0
13.0
15.0
Depreciation &
amortisation
EBITDA
2011 2012
Associates
Interest
Tax
Depreciation &
amortisation
EBITDA
Associates
Interest
Tax
2010
Earnings per share
pence
17.3
0.1
1.7
2.1
23.7
3.1
0.6
2.3
21.0
0.7
0.1
0.1
0.8
Impact of future share option exercises
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. This will lead to an increase in the number of shares used to
calculate basic earnings per share. To counteract the dilutive effect of
the all-employee share option plans maturing in 2013 we intend to
spend around £300m on a share buyback programme in 2013.
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 in the
full year dividend of 7% in 2011.
This will be paid, subject to shareholder approval, on 3 September 2012
to shareholders on the register on 10 August 2012.
0.0
6.0
5.0
4.0
3.0
2.0
1.0
7.0
9.0
8.0
2012
20112010
Final
Interim
Dividends per share
2.3 4.6 6.9
2.4 5.0 7.4
2.6 5.7 8.3
pence
As described in our Outlook on page 40, 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.
Cash flow and net debt
Adjusted free cash flow was £2.5bn in 2012, well above our target
of £2.2bn. This reflects our improved profitability and is also after
investing £2.6bn in capital expenditure. Our strong financial
performance allowed us to make a £2.0bn lump sum deficit payment
into the pension scheme, with net debt only increasing by £0.3bn
to£9.1bn.
Free cash flow
We monitor performance using adjusted free cash flow which is one of
our three key performance indicators as detailed in Key performance
indicators on page 4. Adjusted free cash flow is an important measure
by which our financial performance is measured as it represents the cash
we generate from operations after capital expenditure and financing
costs. It also excludes the cash impact of specific items and pension
deficit payments. This is consistent with the way financial performance
is measured by management and assists in providing a meaningful
analysis of the free cash flow generated by the group.
We are now providing our financial outlook on a normalised basis which
removes the impact of the cash tax benefit relating to pension deficit
payments and therefore gives a better view of the underlying cash
generation and trends within the business.
A reconciliation from net cash inflow from operating activities, the
most directly comparable IFRS measure, to adjusted free cash flow and
normalised free cash flow is provided on page 169.
The major sources of our cash inflow for 2012, 2011 and 2010 were the
cash generated from our operations and borrowings through short-term
commercial paper issuance and long-term debt raised in the capital
markets. These, as well as committed bank facilities of £1.5bn, are
expected to remain the key sources of liquidity for the foreseeable future.
Group financial performance
Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information