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| More than £6bn wiped off BT's market value after the company slashed forecasts on 'inappropriate behaviour' | |
| (35 minutes later) | |
| More than £6bn was wiped off the market value of BT on Tuesday after the company slashed its earnings forecast for this year and next, citing accounting errors in its Italian business that the company said are “far greater” than previously expected. | More than £6bn was wiped off the market value of BT on Tuesday after the company slashed its earnings forecast for this year and next, citing accounting errors in its Italian business that the company said are “far greater” than previously expected. |
| The network provider in October last year already said that an initial internal investigation of accounting practises in the Italian business had brought to light “historical accounting errors and areas of management judgement requiring reassessment.” | The network provider in October last year already said that an initial internal investigation of accounting practises in the Italian business had brought to light “historical accounting errors and areas of management judgement requiring reassessment.” |
| On Tuesday, however, it said that further investigation, which included an independent review by professional services firm KPMG, “revealed that the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified.” Shares tumbled more than 17 per cent in London sending it to the bottom of the FTSE 100 blue chip index and wiping around £6.6bn off the company's market value, according to Thomson Reuters data. | On Tuesday, however, it said that further investigation, which included an independent review by professional services firm KPMG, “revealed that the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified.” Shares tumbled more than 17 per cent in London sending it to the bottom of the FTSE 100 blue chip index and wiping around £6.6bn off the company's market value, according to Thomson Reuters data. |
| This is "a dark day for BT shares," said Neil Wilson, a market analyst at ETX Capital. "The problem is that investors will fear that this is not the end – what else will be uncovered? The costs could yet rise and that fear is driving the selling this morning," he added. | This is "a dark day for BT shares," said Neil Wilson, a market analyst at ETX Capital. "The problem is that investors will fear that this is not the end – what else will be uncovered? The costs could yet rise and that fear is driving the selling this morning," he added. |
| BT said that the investigation had “revealed improper accounting practises and a complex set of improper sales, purchase, factoring and leasing transactions.” | BT said that the investigation had “revealed improper accounting practises and a complex set of improper sales, purchase, factoring and leasing transactions.” |
| As a result of this, the group said that the write-down for the business had risen from a previously expected £145m to around £530m. | As a result of this, the group said that the write-down for the business had risen from a previously expected £145m to around £530m. |
| For the financial year ending in 2017, they now expect a decrease in adjusted revenue of around £200m, a decrease in adjusted core earnings of around £175m, and a decrease of up to £500m of normalised free cash flow. | For the financial year ending in 2017, they now expect a decrease in adjusted revenue of around £200m, a decrease in adjusted core earnings of around £175m, and a decrease of up to £500m of normalised free cash flow. |
| BT said that it had already suspended a number of BT Italy's senior management team and appointed a new Chief Executive of the business in the country, who will take charge on 1 February. | BT said that it had already suspended a number of BT Italy's senior management team and appointed a new Chief Executive of the business in the country, who will take charge on 1 February. |