BT 2010 Annual Report Download - page 35

REVIEW OF THE YEAR OUR LINES OF BUSINESS
33BT GROUP PLC ANNUAL REPORT & FORM 20-F
ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
software assets being brought into use in 2010 and also our
ongoing investment in systems to support new products and
services.
Adjusted operating profit decreased by 9% to £1,104m in 2010
(2009: broadly flat) due principally to the higher depreciation and
amortisation.
Capital expenditure decreased by 5% in 2010 to £907m (2009:
11% decrease), with the investment in our super-fast fibre access
network being more than offset by lower own work capitalised
following the delivery of significant efficiency savings.
Operating cash flow increased by 8% in 2010 to £1,167m (2009:
28% increase) due to the lower capital expenditure and the
beneficial impact of intra-group VAT settlements with BT Wholesale.
BT Innovate & Design
BT Innovate & Design is responsible for the innovation, design,
development and delivery of the processes, networks and platforms
on behalf of the customer-facing lines of business and which run
BT's business. These are operated and run by BT Operate.
BT Innovate & Design has an operating model focused on
delivery, with strong cost and quality management, which includes
the whole lifecycle of both the network and associated software. In
addition, by having the innovation, design and development skills
within one team we are able to bring innovation closer to the
customer, bringing new ideas, products and services to market
faster, cheaper and more effectively for our customers. This is
supported through the use of global development centres (in the
UK, US, Europe, India and China) which improve collaboration,
agility and efficiency in network and software development by
bringing together the development teams and customers.
We continue to reduce our cost base through a combination of
cost controls and efficiency measures, whilst improving quality and
meeting demand. In 2010 we reduced our unit costs by 31%
through a quality delivery process, which focuses on re-use,
consolidation and standardisation, the metrication of software
which can be used to guide decisions about development, and
supplier management.
BT Operate
BT Operate manages BT’s IT and network infrastructure platforms as
a single converged operation, providing a seamless IT infrastructure.
BT Operate also runs parts of other CPs’ networks on behalf of the
customer-facing lines of business, and is responsible for delivery of
the products and services BT sells to its customers.
We set and manage security policy and processes throughout BT,
enabling us to meet the requirements of our customers, both in the
UK and globally.
BT Operate also manages the group’s energy policy which aims to
reduce consumption, establish security of supply, and reduce
carbon emissions. The renewal of our green energy contract until
2014 means we continue to meet approximately 40% of our
electricity needs in the UK from renewable sources, and almost
60% from combined heat and power generation. We are
investigating how to use more renewable electricity or new
technologies, such as developing our own wind farms.
The chart below shows BT’s worldwide CO2equivalent (CO2e)
emissions and progress towards reducing our CO2e emissions
intensity by 80% from 1997 levels by 2020. We have reduced our
absolute CO2e emissions by 51% and our carbon intensity by 54%
(from 1997 levels) taking into account the purchase of zero and low
carbon electricity. Our full carbon accounts are available in our
2010 Sustainability Report, available at www.bt.com/betterworld
In 2010 we achieved a significant reduction in our total labour
resource, more efficient business operations and improved supply
chain management. We also continued to reduce the number of IT
incidents across the network as well as improving its reliability.
We have reduced the number of IT incidents across the network
by 33% over the last two years.
BT’s worldwide CO2 equivalent emissions
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1997 (Base) 2008 2009 2010
Net emissions
Net emissions – tonnes (thousands)
Carbon intensity – kgs per £ value add
Carbon intensity = CO2e/Value add (EBITDA + employee costs)
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
0.20
1,627 888 860 801
0.17
0.08 0.08
0.09