BT Group plc

Good morning and welcome everyone to BT Group's results presentation for the full year ended 31st of March, 2026. Presenting today are Alison Kirkby, BT Group's Chief Executive, and Simon Louth, BT Group CFO. Following the presentation, there will be a question and answer session. I would like to make everyone aware that this event is being recorded for replay purposes. And before we start, I'd like to draw your attention to the forward-looking statements caution in the presentation and press release. For examples are the factors that could cause actual results to differ from any forward-looking statements we may make. Both the press release and the presentation can be found on our website. With that, I'll now hand over to Alison.

Thank you for that AI generation from Nick Delfus. Good morning, everyone, and welcome to our full year results presentation. Thank you to all of you who have managed to join us in the room and also to those of you online. I'm going to start with an update on our strategic progress over the past year. Then Simon will take you through our financials. And after that, we'll share our plans and our outlook for the year ahead. We'll, of course, take all of your many questions, no doubt, at the end. I'm also delighted that members of our executive committee are here with us today. They're over there and you might not recognise them, but Tom is actually wearing a suit today. But please do take the opportunity to say hello at the end of the meeting. But now let's start with the full year highlights on slide four. It has been another busy year of strong progress. Amidst all the noise in our sector and, yes, the turbulence of the world, we stayed very much focused on what matters most, and that's the delivery of our strategy, and there is a lot to be proud of. Openreach set two new records, achieving the accelerated full-fibre build that I set out last year, as well as delivering record connections. We strengthened our mobile leadership, with EE winning three major awards by a wide margin. And our brands all performed well, with customer satisfaction improving across BT, EE and Plusnet, setting a new group record and helping us grow our retail customer base. We continue to transform our operations at pace, more than offsetting headwinds, which included higher national insurance, cost inflation and voice declines. And building on this momentum, we're now extending our transformation programme, as Simon will explain to you in a bit. This will ultimately leave us with a simpler business in the future, with further upside to come from AI. At the same time, we also continue to sharpen our focus on the UK. We successfully exited five non-core businesses and are now driving a more radical transformation of our international division. Financially, we met our guidance and we grew our EBITDA. And reflecting that performance and our confidence in the future... we're increasing the total dividend to 8.32 pence per share, that's a 2% growth, and giving clarity on our dividend growth in the years ahead. Finally, we're again confirming our outlook, including reconfirming the £2 billion of normalised free cash flow for now this current fiscal year, and the £3 billion by fiscal year 30. So let me now take you through each of our customer-facing units. I think we can all agree that Openreach executed brilliantly this past year, building to a record 4.8 million homes and businesses, including 1.5 million in the final quarter alone. A huge credit to Clive, to Katie and the whole Openreach team for delivering at such scale, safely, on time and on budget. We have now passed 23 million premises, around two-thirds of the UK, and we remain on track to reach the 25 million target by the end of the calendar year. This is the fastest fibre build in Europe, with 9 million premises passed in the last two years alone. But building is only good if you also connect, and we did that too. We connected a record 2.2 million customers, driven by strong demand for next generation services. And today I can tell you we're now up at over 9 million customers with a 39% take-up rate. As I've said before, building and connecting is our best defence and we're starting to see that translate now into lower line losses. We beat the improved target we set in January with lower losses to retail competitors, partly offsetting higher losses to wholesale altnets during the course of the year in what has been a very relatively flat broadband market overall. Looking ahead, we expect line losses to reduce again this year to around 800,000, encouraged by both the last quarter's exceptionally strong build and our belief that retail altnet competition is reducing. We continue to grow our broadband ARPUs, which increase with CPI and also with our upsell to full fibre and to higher speeds. This has led to flat broadband revenue, but with a much higher full fibre mix. And in our billion pound Ethernet business, revenues grew a further 4%. The transition to full fibre is also driving material efficiency benefits. Faults across fibre and copper reduced by a record 18% and this helped us cut direct labour by more than 10% while also planning for the step down in build and also keeping service quality high. All of this drove a record year for Openreach with growth in EBITDA well ahead of revenue. Moving to consumer, this is the first year in eight, yes, eight years that we have grown our customers across all three core consumer products. That helped us return to service revenue growth in the second half of the year, in line with what we said in November, despite around a one percentage point drag from voice as we head towards the PSTN closure in January. Our performance reflects the strength of our three leading and loved brands, which together serve the full breadth of the connectivity market in a very complementary way. Our brands are driving continued strong upsell to fibre, which now accounts for over half of our consumer broadband base. And because fibre customers are happier customers, our broadband churn fell in the year, despite a continued competitive retail market. More homes are also taking at least two services from us, with our EE1 proposition driving convergence to 27%, which is up two percentage points over the year, which also helped keep mobile churn at record lows. And we keep winning mobile quality awards with top placings from Rootmetrics, Umlaut and OpenSignal. All of this drove increased customer satisfaction with improvements seen across all three of our brands. ARPUs were slightly down overall, but improved through the year, despite pricing competition, and underlying broadband ARPU, if you exclude the voice impact, actually increased. Finally, we achieved better customer outcomes whilst also transforming our operations, nearly offsetting additional costs, which included higher national insurance and higher national living wage, and the investment that we proactively put in service that allowed us to complete nearly 2 million migrations off of the PSTN in the year. Moving to business, service revenue grew 1%, excluding the impact of voice, and down 2% at total revenue. Customer satisfaction improved thanks to our investment in customer experience and our now accelerated move to modern digital and AI-supported platforms and to our streamlined product set. And we also stepped up our commitment to innovation with strategic launches in cyber, in sovereign and in AI capabilities. If you look into each segment within the SMB segment, the service revenue trajectory was pretty similar to consumer with a better second half and growth in both mobile and IP voice customers. In corporate and public sector, we won landmark connectivity and security deals, including BAE Systems, which we announced earlier this week, Northern Ireland Electricity Networks and EasyJet. And wholesale is a very well diversified across products and grew its EBITDA throughout the year. Overall, the business division's transformation is now accelerating, with momentum in customer wins, real progress in delivering simpler, better customer experiences, and in market-leading innovation, all powered by our relaunched and refreshed BT brand. Finally, moving on to international. As you know, we successfully carved it out as its own division back in July. And since then, we've divested five businesses that didn't fit with our focus on serving the connectivity needs of major multinational customers. Revenues, however, did remain under pressure on a pro forma basis from legacy and managed contract declines. But the team worked hard to offset this with £70 million of cost transformation initiatives in the year, driven by structural reductions that will benefit us going forward in footprint, in products, in overseas networks and in our IT estate. And now, under the leadership of the maestro, Clive Selly, we are continuing to simplify the division and to upgrade customers to Global Fabric, our network as a service platform, to drive pro-pharma EBITDA growth already in this coming financial year. Now, let me hand over to Simon to take you through our progress on transformation and the numbers that I know you all love in a bit more detail.

Thank you, Alison, and good morning to everybody. So, starting with our transformation on slide 10, we are delivering ahead of plan on the £3 billion transformation programme that we announced two years ago. Our transformation not only reduces cost, it also improves experience for our customers. By the end of the financial year, we achieved £580 million in annualised cost savings, bringing total savings to £1.5 billion over the first two years at a cost to achieve of £0.8 billion. Our overall workforce, including subcontractors, reduced by 7% despite the fast pace of our fibre build. Direct labor fell 10%, with reductions in all our units, with the highest in open reach and the corporate functions. We cut our energy use by 6% following the closure of 3G and the optimization of our 2G network ahead of its decommissioning later in the decade. While the conflict in the Gulf has pushed up energy prices, we entered FY27 well protected, around 90% hedged at pre-conflict prices and approximately half hedged into the medium term. As a reminder, total energy cost is around £500 million, of which about half is non-commodity levies. We continue to reduce units on legacy networks driven largely by the PSTN. We also reduced business IT applications in billing, security, and network management systems as we upgrade to strategic technology. Moving on to our financial results by division, and let me start with Openreach. Revenue grew 1% in the year, driven by CPI-linked price increases and an improved FTTP mix in broadband. This was partially offset by declines in the broadband and voice-only customer bases. Adjusted EBITDA grew by 5%, reflecting revenue flow through and continued cost transformation, including lower fault rates, lower labor and energy costs, all partly offset by pay inflation. In Q4, EBITDA grew by 9%, reflecting the impact of commercial and storm-related costs in the prior year. Moving to consumer, revenue declined 2% in the year, primarily driven by lower handset volumes. Adjusted service revenue was flat as higher average customer bases were offset by modestly lower ARPU, with a return to growth as previously guided in Q4 and H2. Consumer EBITDA declined by 2%, driven by the flow-through of service revenue and higher input costs, including higher taxes, partly offset by significant cost reduction. Excluding the effect of some prior year one-offs in the mid-tens of millions, EBITDA for this year would have been broadly flat. In the first half of FY27, we expect brand refresh costs and the voice transmission transition will be a headwind in the mid-tens of millions in H1, but sports content costs will be a tailwind in H2, also in the mid-tens of millions. Business revenue was down 2% due to softer equipment sales and UK service revenue was down 1%, driven entirely by voice declines. Business EBITDA declined by 5% for the year, reflecting the flow-through of revenue from high-margin legacy products, partly offset by tight cost management and ongoing modernization activity. And similar to consumer, there will be higher marketing spend in the first half of FY27, balanced by cost improvements in the second half. Finally, international was affected by legacy and managed contract declines, as well as divestments, which amounted to 7 percentage points off revenue and 11 percentage points off EBITDA. Moving to look now at our group results on slide 12. Adjusted revenue for the year was £19.6 billion, that's down 4%, principally due to lower equipment sales and lower revenues in international, including that impact of divestments. Adjusted UK service revenue was down 1%, with growth in open reach offset by slightly lower business revenues and higher group eliminations. In the fourth quarter, we returned to growth up 1%. Adjusted operating costs before depreciation were down 6%, reflecting the benefits of cost transformation and tight expenditure control. As a result, adjusted EBITDA for the year was £8.23 billion, and excluding the five divestments we made during the year, up just under a percent. CapEx was £5.1 billion for the year. It's about £100 million above our guidance for the year, reflecting strong connection activity. Normalised free cash flow hit our guidance of £1.5 billion. This was down from £1.6 billion in FY25. But as you know, we invested more in CapEx. And of course, last year's tax receipt of £95 million did not repeat. As planned, we successfully realised value from forward-selling redundant copper, locking in the price and covering part of our accelerated fibre build. We also continue to meet our customers' needs for longer, 36-month handset repayment contracts, and we sell receivables to neutralise the cash impact of these larger contracts. We normalised payment terms to handset vendors, also helping us to manage working capital between years, where FY25 had an unexpectedly strong receivables and inventory inflow late in the year. The S19 pension deficit increased by £100 million, reflecting updated views on mortality and inflation and lower asset returns than expected, partly offset by scheduled contributions. Although the geopolitical landscape has driven financial market volatility, the BTPS remains well hedged against movements in interest rates and inflation, and around 50% of longevity risk is hedged. Our funding plan remains on track and the next annual review will take place as at the 30th of June. And as Alison just announced, we're proposing a final dividend of 5.87 pence per share, making the full FY26 dividend 2% higher at 8.32 pence per share. With that, let me hand back to Alison to look at our strategic priorities.