BT 2004 Annual Report Download - page 29

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Group results
All references in this section to the 2002 financial year
results or performance against the 2002 financial year
are in relation to the results from continuing activities.
Whilst driving a significant transformation in the
business, the group continued to make further
progress with earnings per share before goodwill
amortisation and exceptional items at 16.9 pence
which were 19% ahead of the 2003 financial year and
92% ahead of the 2002 financial year.
The acceleration of our transformation is
demonstrated by the 30% growth of new wave
turnover to £3,387 million compared to an increase of
20% in the 2003 financial year. New wave turnover
represented 18% of group turnover in the 2004
financial year compared to 14% and 12% in the 2003
and 2002 financial years, respectively. New wave
turnover is mainly generated from ICT solutions,
broadband, mobility and managed services.
Group turnover (£ million)
years ended 31 March
2002 2003 2004
New Wave
Traditional
18,447
18,727
18,519
12% 14% 18%
88% 86% 82%
In the 2004 financial year, performance was driven by
particularly strong growth in the ICT solutions business
and broadband. However, this growth was more than
offset by a 6% decline in turnover from the group’s
traditional businesses. The decline reflects regulatory
intervention, price reductions and competitive and
technological changes that are being used to drive
customers from traditional services to better value and
more flexible new wave services, such as broadband
and IPVPN’s. Mobile operators were required to reduce
their fees for terminating calls and these regulatory
reductions were passed on to BT customers resulting in
lower revenues but are profit neutral as payments to
mobile operators were reduced by the same amount.
Group turnover was maintained after excluding the
£219 million impact of these regulatory reductions to
mobile termination rates.
In the 2003 financial year performance in new
wave services was also driven by strong growth in ICT
solutions and broadband. This growth was partly offset
by the 1% decline in traditional revenues.
The table below analyses the group turnover by
customer segment. Consumer includes the external
turnover of BT Retail from consumer customers.
Business includes the external turnover of BT Retail
from smaller and medium sized enterprise (SME)
customers. Major Corporate includes the external
turnover of BT Retail Major Corporate customers, and
the external turnover of BT Global Services, excluding
global carrier. Wholesale includes the external turnover
of BT Wholesale and BT Global Services’ global carrier
business.
Group turnover by customer segment
2004
£m
2003
£m
2002
£m
Consumer 5,974 6,067 5,916
Business 2,600 2,716 2,748
Major Corporate 5,909 5,794 4,962
Wholesale 4,002 4,110 4,433
Other 34 40 388
18,519 18,727 18,447
Consumer turnover in 2004 was 2% lower (1%
excluding the impact of regulatory reductions in mobile
termination rates) at £5,974 million when compared to
the 2003 financial year. In the consumer fixed voice
market, Carrier Pre Selection (CPS) had some impact
with BT’s estimated residential market share, as
measured by the volume of fixed to fixed voice
minutes, declining by 3 percentage points to 70%
compared to the 2003 financial year. The estimated
market share, as measured by the volume of fixed to
fixed voice minutes, is based on our actual minutes,
market data provided by Ofcom and an extrapolation
of the historical market trends.
The proportion of contracted revenues has been
increasing, now approaching 60% of total revenues,
with the success of the BT Together packages and
broadband. The underlying 12 months rolling average
revenue per customer household (net of mobile
termination charges) of £268 in the 2004 financial year
was 1% lower than the 2003 financial year. Consumer
turnover in the 2003 financial year was 3% higher at
£6,067 million when compared to the 2002 financial
year. The number of BT Together packages increased by
304,000 packages during the 2003 financial year.
The aggregate Business and Major Corporate
turnover in the 2004 financial year was maintained
when compared to the 2003 financial year after an
increase of 10% from the 2002 financial year. BT’s
estimated business market share of fixed to fixed voice
minutes declined to an estimated 42% in the 2004
financial year compared to an estimated 45% and 49%
in the 2003 and 2002 financial years, respectively.
Turnover from smaller and medium sized enterprise
customers in the 2004 financial year reduced by 4% to
£2,600 million compared to the 2003 financial year,
reflecting the continued penetration of CPS and the
impact of customers switching from traditional
telephony services to new wave services such as
broadband. However, BT Business Plan, launched in
January 2003, had successfully attracted more than
267,000 business locations (175,000 customers) by
31 March 2004, helping to mitigate the rate of market
share decline. Revenues from smaller and medium sized
businesses in the 2003 financial year decreased by 1%
compared to the 2002 financial year.
BT Annual Report and Form 20-F 200428 Operating and financial review