BT pension scheme deficit doubles to £9.3bn

Thursday 12th November 2009

BT has today said the deficit of its final salary pension scheme has reached a huge £9.3 billion, more than doubling in six months.

The firm also announced it made a pre-tax profit of £547 million in the six months to September 30th, a 45 per cent decline on what BT reported for the same period last year.

BT said the deficit has increased sharply due to its assumed cost of providing pensions in the future has risen dramatically under UK accounting rules.

Profits were left depressed by redundancy costs and the pension deficit, but BT's pre-tax, post-exceptional items profit for the half-year rose 12 per cent to £888m.

Ian Livingston, chief executive, said: "We have had another quarter of progress but there remains a lot more to do. With total cost reductions of over £900m in the first half, we have made significant headway towards our previous target of well over £1bn for the full year. We now expect to generate at least £1.6bn of free cash flow this year, compared with our previous target of over £1bn.

"We are investing in the future of the business with an enhanced and accelerated programme of fibre deployment and wider roll out of faster broadband speeds, all within our capital expenditure plans.

"Given our operational performance, we expect to increase dividends by around five per cent for the full year. The board is declaring an interim dividend of 2.3p per share."

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