BT 2016 Annual Report Download - page 95

100 BT Group plc
Annual Report 2016
We recognised a £29m charge relating to the rationalisation of the
group’s property portfolio.
In addition to the above, we also treated a number of other items
as specific, such as the net interest expense on pensions of £221m
(2014/15: £292m). The decrease from 2014/15 mainly reects
a fall in the IAS 19 discount rate between 31 March 2014 and
31 March 2015.
We also recognised a tax credit of £96m for the re‑measurement
of deferred tax balances due to the upcoming changes in the UK
corporation tax rate from 20% to 19% from 1 April 2017 and to
18% from 1 April 2020 (the UK Finance Bill, not yet enacted, is
expected to reduce this to 17%). There was no credit last year as
all deferred tax balances had already been remeasured at 20%.
The tax credit on specific items (excluding the re‑measurement
of deferred tax) was £70m (2014/15: £121m).
You can see details of all revenue and costs that we have treated
as specific items in the income statement in the last three years
in note 8 to the consolidated financial statements.
Prot before tax
Adjusted profit before tax was up 9% at £3,473m.
The increase in adjusted profit before tax reects our EBITDA
performance, and in particular the contribution from EE.
Reported profit before tax (which includes specific items) was up
15% to £3,029m.
We discuss depreciation, net finance expense and tax in later
sections of this performance review.
Earnings per share
Adjusted earnings per share increased 5% to 33.2p.
Adjusted earnings per share is one of our key performance
indicators (see pages 96 and 97) and has increased 18% over
the last two years. The graph below shows the key drivers of this
increase.
Reported earnings per share, which includes specific items, was
29.9p, up 13%.
2014
EBITDA
Depreciation &
amortisation
Other
Interest
2015
EBITDA
Interest
Depreciation &
amortisation
Othera
2016
A
djusted earnings per share
Ye
ar ended 31 March
23
25
27
29
31
33
35
37
0.4
28.2
2.0
2.0
31.5
33.2
1.1
3.7
1.1 0.9
1.8
a Other primarily reects the impact of the change in the weighted average number of shares.
Dividends
The Board is proposing a final dividend to shareholders
of 9.6p, up 13%. This brings the full year dividend to
14.0p, also up 13%, and compares with an increase in the
2014/15 full year dividend of 14%.
This year’s dividend is in the middle of our outlook range. It will be
paid, subject to shareholder approval, on 5 September 2016 to
shareholders on the register on 12 August 2016.
2014 2015 2016
pence
D
ividends per share
Y
ear ended 31 March
Final
Interim
0.0
2.0
4.0
6.0
8.0
10.0
14.0
16.0
12.0
3.4
3.9 8.5
10.9
12.4
7.5
14%
0
4.4 9.6 14.0
13%
The Board has reviewed the group’s dividend policy and continues
to believe that a policy of paying progressive dividends is the most
appropriate. The Board believes this best aligns with the group’s
financial objectives of growing sustainable profitable revenue
growth and transforming the cost base in order to drive long‑term
growth in cash ows. In reaching this decision, the Board took into
account forecasts for future debt reduction as well as the level of
dividend cover expected over the medium‑term.
We’ve set out our dividend expectations for 2016/17 and
2017/18 in our Outlook on page 96.
Cash ow
We generated normalised free cash ow of £3,098m,
up £268m or 9%. Excluding EE, this was £2,837m, in line
with our outlook of c£2.8bn for the year.
Free cash ow
The increase in normalised free cash ow is mainly due to the
addition of EE which contributed £261m.
This year we paid £482m for our existing FA Premier League,
UEFA Champions League and UEFA Europa League broadcast
rights.
The net cash cost of specific items was £232m (2014/15:
£154m). This included: EE acquisition‑related costs of £114m
(2014/15: £nil); restructuring costs of £85m (2014/15:
£267m); and ladder pricing receipts of £41m (2014/15: £88m).