BT 2011 Annual Report Download - page 32

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29BT GROUP PLC ANNUAL REPORT & FORM 20-F 2011
BUSINESS REVIEW OUR LINES OF BUSINESS
BT Consumer revenue decreased by 6% (2010: 3%) as the
reduction in calls and lines revenue more than offset growth in
broadband revenue.
BT Business revenue decreased by 1% (2010: 8% decrease), as
declines in calls and lines revenue were largely offset by growth in
IT services and mobility revenue.
BT Enterprises revenue decreased by 2% (2010: 2% increase)
principally due to lower revenue in BT Redcare & Payphones.
BT Ireland revenue decreased by 6% (2010: flat). Excluding the
negative impact of foreign exchange movements and the reduction
in low-margin transit revenue, revenue decreased by 3%, in a
difficult economic climate.
2011 2010a2009a
£m £m £m
Products and services
Calls and lines 4,491 4,953 5,346
Broadband and convergence 1,311 1,258 1,253
ICT and managed networks 551 578 591
Other products and services 949 962 958
External revenue 7,302 7,751 8,148
Internal revenue 446 373 343
Total 7,748 8,124 8,491
aRestated. See page 108.
Calls and lines revenue decreased by 9% in 2011 (2010: 7%
decrease) in what continues to be a competitive market
environment.
Broadband and convergence revenue increased by 4% (2010:
broadly flat) reflecting the success of our broadband strategy,
together with increased revenue from services such as mobility.
ICT and managed networks revenue decreased by 5% in 2011
(2010: 2% decrease).
Net operating costs decreased by 6% (2010: 8% decrease). The
prior year included a favourable one-off internal rebate of £15m
relating to prior periods. The decrease reflects the reduction in
revenue but also our cost efficiency initiatives. Labour productivity
efficiencies resulted in a 7% reduction in total labour costs. These
savings were offset by the planned investment in subscriber
acquisition costs, marketing and product development to drive
future revenue growth.
The above factors contributed to a small increase in EBITDA to
£1,784m in 2011 (2010: 12% increase). However, excluding the
one-off benefits of £55m in 2010, the increase in 2011 was 4%.
Depreciation and amortisation decreased by 3% (2010: 8%
increase) due to the lower level of capital expenditure in recent
years.
Operating profit increased by 2% in 2011 (2010: 14% increase).
Excluding the one-off benefits of £55m in 2010, the growth in
2011 was 6%.
Capital expenditure increased by 4% in 2011 (2010: 11% decrease)
as a result of the continued investment in higher speed broadband
services and the investment in the fibre-based broadband roll-out
in Northern Ireland.
Operating cash flow decreased by 12% in 2011 (2010: 59%
increase). This reflects the impact of some strong working capital
receipts in 2010.
BUSINESS REVIEW OVERVIEWBUSINESS REVIEWFINANCIAL REVIEWREPORT OF THE DIRECTORSFINANCIAL STATEMENTSADDITIONAL INFORMATION