BT "overshadowed" by Italy accounting scandal as it takes profit hit

 
Rebecca Smith
Chief exec Gavin Patteson said he was
Chief exec Gavin Patteson said he was "deeply disappointed" with the unacceptable practices found (Source: BT)

BT has announced a profit slump in the third quarter to the 31 December, after revealing earlier this week that it was forced to write down the value of its Italian unit by £530m after years of "inappropriate behaviour".

Read more: BT Europe boss Corrado Sciolla leaves after accounting scandal

The figures

Pre-tax profits fell 37 per cent to £526m, while revenue rose 32 per cent to £6.12bn, though it was down 1.5 per cent when adjusted for the acquisition of EE.

Total adjustments relating to the investigation of its Italian business amounted to £268m for prior year errors and a specific item charge of £245m for changes in accounting estimates (£145m for the second quarter and £100m for the third).

Reported earnings per share were down 59 per cent, while adjusted earnings per share were down 24 per cent.

Why it's interesting

On the bright side, the UK broadband market grew by 189,000 customers and BT's retail share was 83,000 - or 44 per cent. Openreach has halved missed appointments year-on-year. And, well, there's record growth in the telecoms' giant's EE mobile unit.

But as chief executive Gavin Patterson said: "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."

Quite. Shares have fallen 20 per cent over the past few days, since the company announced revenues would be hit hard by financial impropriety in the Italian business. European chief Corrado Sciolla has left the company, following the discovery of the accounting irregularities too.

Read more: BT faces US lawsuits as Italian prosecutors begin probe

What the company said

Gavin Patterson, chief executive, said: "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."

Looking forward, Patterson added the firm faces "a more challenging outlook" in the UK public sector and international corporate markets.

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