BT has said it has taken a £145m hit following the discovery of ‘historical accounting errors’ and ‘inappropriate management behaviour’ at its Italian division, according to the telecoms company’s second quarter results
The figures for the second quarter to 30 September 2016 include a non-cash specific item charge of £145m, which BT says it has recorded following an initial internal investigation at BT Italia.
This review included a review of accounting practices. As a result BT says ‘we have identified certain historical accounting errors and reassessed certain areas of management judgement.’
The balance sheet write-down of £145m is described as a ‘current best estimate’ of the financial impact based on the investigation. The write down relates to balances that have built up over a number of years.
However, BT states that in its view the errors have not materially impacted the group’s reported earnings over the previous two years. The amount has been charged as a specific item in the results for the quarter.
As a non-cash item in the period it does not impact normalised free cash flow.
In a statement, BT said: ‘A full investigation of these matters is ongoing and we have appointed external advisers to assist with this. Appropriate action will be taken as the investigation progresses.’
BT’s total revenues grew 35% year-on-year to £6bn in the three months to the end of September. Excluding the impact of the acquisition of EE in January, revenues were up 1.1%.
Pre-tax profits, also unadjusted, rose 5% year-on-year in the quarter to £671m. On an adjusted basis pre-tax profits rose 24% to £873m in the quarter.
