Proposed Shareholder Action Against BT Group plc

Bentham Ventures B.V. (Bentham) is contemplating funding proceedings against BT Group plc (BT) on behalf of shareholders who have acquired shares in the indicative period 1 February 2013 to 24 January 2017. 

BT is a multinational telecommunications services company that is traded on the London Stock Exchange under ticker BT.A.

The grounds of the proposed litigation are expected to be that BT allegedly issued false and misleading statements and/or failed to disclose material information regarding BT’s business performance and prospects, including that: (a) BT’s Italian business, which is a part of BT’s Global Services division, was overstating earnings over a significant number of years; (b) BT, through its subsidiary BT Italia, was engaging in unsuitable accounting practices, which included a complex set of improper sales, purchase, factoring and leasing transactions; (c) BT’s internal controls were materially deficient such that its reported results were not reliable.

On 27 October 2016, on its Earnings Call, Gavin Patterson, Chief Executive of BT, updated the market about the performance of BT Italia. Mr Patterson announced that following allegations of inappropriate behaviour within BT Italia, BT had conducted an initial internal investigation. As a result, BT made a £145 million write-down in its results for the second quarter.

On 24 January 2017, BT issued a market report entitled “Update on investigation into BT's Italian business and on BT Group outlook”. The report updated the market in relation to the investigation within BT Italia. The report stated that the investigation revealed that the extent and complexity of inappropriate behaviour was far greater than previously identified.

BT reported that the behaviour led to an overstatement of earnings in BT’s Italian operations over several years and the adjustments previously identified had increased from £145 million to a total of around £530 million (adjusted 2 days later to £515 million).

As a result of the overstatements, BT’s share price fell 20.79% from 382.55p to 303.00p on 218.65 million trades, with prior average daily trading volume of about 19.47 million shares.

Shareholders who have held shares between 1 February 2013 and 24 January 2017 should contact Bentham Europe at bt@benthameurope.com. BT’s ISIN is GB0030913577.

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