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62 The Strategic Report
Group performance
Income statement
Summarised income statement
Year ended 31 March 2014 2013a2012a
Before specic items £m £m £m
Revenue 18,287 18,339 19,397
Operating costsb (12,171) (12,196) (13,363)
EBITDA
Depreciation and amortisation
6,116 6,143 6,034
(2,695) (2,843) (2,972)
Operating proƬt3,421 3,300 3,062
Net nance expense (591) (653) (681)
Associates and joint ventures (3) 9 10
ProƬt before taxation 2,827 2,656 2,391
Taxation (613) (597) (576)
ProƬt for the year 2,214 2,059 1,815
a 5estated. See note 1 to the consolidated Ƭnancial statements.
b Excluding depreciation and amortisation.
Revenue
Our key revenue measure, underlying revenue excluding transit, was
up 0.5% compared with a decline of 3.1% in the prior year. Our results
provide a strong platform from which to deliver our goal of sustainable,
protable revenue growth.
Reported revenue, which includes specic items, was up 1%.
Adjustedrevenue was at at £18,287m. We had a £176m reductionin
transit revenue, a £2m positive impact from foreign exchange movements
and a £26m positive net impact from acquisitions and disposals.
Our key measure of the groups revenue trend, underlying revenue
excluding transit, was up 0.5% compared with a 3.1% decline in the
prior year. This reects improved performances from BT Global Services,
BT Consumer and BT Business whilst regulatory price reductions
impacted group revenue by £150m£200m.
BT Global Services investments in the high-growth regions of the world
are delivering positive results with double-digit underlying revenue
growth. These continue to help oset revenue declines elsewhere,
including in the UK public sector. BT Business reported an improved
revenue trend, supported by IT services and growth in BT Ireland.
BT Consumer generated strong revenue growth driven primarily by
higher broadband and TV revenue reecting the benet of BT Sport.
BT Wholesales revenue was impacted by Ofcoms Narrowband Market
Review and the migration of services o a previously terminated
contract. The small decline in Openreach revenue reects the impact
ofregulation which oset strong growth in bre take-up.
A full breakdown of reported revenue by major product and service
category is provided in note 4 to the consolidated nancial statements.
Outlook
Our goal is to deliver sustainable, protable
revenue growth. This is supported by the
investments we are making and our cost
transformation activities.
Our nancial outlook is set out below.
201415 201516
Underlying revenue excluding
transitaBroadly level Growth
Adjusted EBITDAa£6.2bn£6.3bn Growth
Normalised free cash owaAbove £2.6bn Growth
Dividend per share Up 10%15% Up 10%15%
Share buyback programme c.£300m c.£300m
a DeƬned on pages 184 and 185.
Our investments are delivering for the business and we expect
themtosupport our goal of sustainable, protable revenue growth.
Weare also condent there are signicant opportunities for further
costtransformation across the group. Together, these will drive
long-term cash ow growth. We will continue with our prudent nancial
policy of investing in our business, reducing net debt (targeting a
BBBBaa1 credit rating over the medium-term), supporting the pension
fund and paying progressive dividends.
In 201415, lower levels of expenditure in the UK local government
sector, and our focus on only pursuing business in this sector that
generates economic value, are expected to impact revenue by around
£100m. We therefore expect underlying revenue excluding transit to
bebroadly level with 201314. We expect growth in 201516.
We continue to expect adjusted EBITDA of £6.2bn£6.3bn in 201415
with further growth in 201516. As a result of capital expenditure
eciencies, we now expect normalised free cash ow to be above
£2.6bn in 201415. We continue to expect normalised free cash ow to
grow in 201516.
We have extended our dividend policy by one year and now expect
to grow our dividend per share by 10%15% in both 201415 and
201516. We have also extended our annual share buyback of around
£300m to the 201516 nancial year. This will partly counteract
thedilutive eect of all-employee share option plans maturing over
thisperiod.