BT 2013 Annual Report Download - page 57

Performance 55
Performance
BT Retail
Despite the challenge of highly competitive markets,
we have increased our profits for the eighth
year running. By simplifying, standardising and
automating our processes, we have cut costs. We
have grown our broadband market share and our
fibre customer base. We have made good progress
on TV, launching YouView from BT and securing
great content for BT Sport. BT Business improved
itsrevenue trend with good growth in IT services.
Operating performance
BT Consumer
Consumers want to buy bundles of services. So to attract new customers
and keep hold of existing ones, we have continued to focus on selling
dual play (calls and broadband) and triple play (calls, broadband and TV)
bundles.
Around 99% of our new broadband sales are now bundles and 82% of
our retail broadband customers take a bundle of services.
The market is tough with some of our competitors offering big incentives
to customers to switch to their products or services. We have therefore
continued to lose consumer lines. Net active line losses have risen 4%
but net total line losses have declined by 19%.
Our targeted promotions, seasonal deals and the improvement in our
bundled propositions are helping us fight back. We have also launched
new features like BT SmartTalk, BT Cloud and our new home phone
withcall blocking.
Plusnet performed well with good broadband and voice customer
additions.
Key facts
51% share of broadbanda
net additions
Now around 1.3m retail
fibre customers
Consumer ARPU up
to£365
TV base of 810,000
a DSL and fibre, excluding cable.
Financial performance
Year ended 31 March
2013
£m
2012
£m
2011
£m
Revenue 7,166 7,809 8,059
Underlying revenue excluding
transit (6%) (1%) (4%)
Net operating costsa6,540 7,182 7,466
EBITDA 626 627 593
Depreciation and amortisation 623 712 734
Operating profit (loss) 3 (85) (141)
Capital expenditure 525 560 498
Operating cash flow 6 183 119
a Net of other operating income.
Underlying revenue excluding transit decreased by 6% (2011/12: 1%)
reflecting the tough conditions in Europe and the financial services
sector. Revenue decreased by 8% (2011/12: 3%) including a £151m
negative impact from foreign exchange movements, a £43m impact
from disposals and a £16m decline in transit revenue.
Revenue from managed networked IT services decreased by 10%
(2011/12: 1%). Whilst we increased our market share in Asia Pacific,
Latin America, Turkey, the Middle East and Africa, this was more than
offset by the impact of the tough European economic conditions,
foreign exchange movements and disposals. Calls and lines revenue
decreased by 10% (2011/12: 9%) reflecting the continued trend of
customers migrating to alternative IP-based services. Transit revenue
decreased by 7% (2011/12: 27%) largely due to the impact of mobile
termination rate reductions in Europe.
Underlying net operating costs excluding transit costs decreased by
7% (2011/12: 1%) reflecting the impact of lower revenue and our cost
transformation programmes. Net operating costs decreased by 9%
(2011/12: 4%).
EBITDA was flat (2011/12: 6% increase) and increased by 4% (2011/12:
7%) excluding foreign exchange movements and disposals. Depreciation
and amortisation decreased by 13% (2011/12: 3%) as a result of lower
capital expenditure in recent years. Operating profit increased by £88m
(2011/12: £56m) resulting in a positive operating profit for the first
time in five years.
Capital expenditure decreased by 6% (2011/12: 12% increase). EBITDA
less capital expenditure increased by £34m to £101m compared with a
£28m decrease to £67m in 2011/12.
Operating cashflow was an inflow of £6m (2011/12: £183m, 2010/11:
£119m). As expected this was lower than the prior year reflecting the
phasing of working capital.