BT 2012 Annual Report Download - page 49

46 Performance
Contracts
During 2012 we signed contracts with a total order value of around
£750m. This was lower than 2011 partly due to several significant wins
in that year and the lengthening of sales lead times for new contracts as
customers delay making long-term strategic decisions. Contracts won in
2012 included:
Customer Contract
Colt Group Framework agreement to resell our worldwide
media network capability
Virgin Media Extension of MNS voice contract for a further three
years
Sky Renewal of outside broadcasting contract for the
next six years
Customer service delivery
A variety of initiatives to improve reliability led to a 15% reduction
in faults being handled by us. During 2012 we increased our e-chat
service and we now handle 85% of customer enquiries on-line. This
reduces waiting time and improves handling times for our customers.
Financial performance
Year ended 31 March
2012
£m
2011a
£m
2010a
£m
Revenue 3,923 4,201 4,583
Underlying revenue excluding transit (2%) (3%) –
Net operating costs 2,715 2,885 3,230
EBITDA 1,208 1,316 1,353
Depreciation and amortisation 604 619 680
Operating profit 604 697 673
Capital expenditure 336 329 325
Operating cash flow 800 911 917
a Restated. See page 111.
In 2012 underlying revenue excluding transit declined by 2% (2011:
3% decline), primarily due to the ongoing migration of broadband lines
to LLU and the transition to IP-based services such as Ethernet and IP
Exchange. These new IP-based services grew significantly in 2012 but
not enough to offset the decline in our traditional services. Revenue
declined by 7% mainly due to a £224m (2011: £81m) reduction in
transit revenue driven by mobile termination rate reductions of £213m.
In 2011 revenue declined by 8%, or by 4% after reflecting changes
in the internal trading model in 2011. The majority of our largest
customers by revenue have signed long-term contracts. Revenue from
MNS contracts continued to grow and accounted for 27% of external
revenue in 2012, up from 24% in 2011.
Net operating costs reduced by 6% (2011: 5% decline) but increased by
3% (2011: 3%) excluding transit costs, as detailed above.
EBITDA decreased by 8% (2011: 3% decrease). Depreciation and
amortisation reduced by 2% (2011: 9% decrease) and operating profit
declined by 13% (2011: 4% increase).
Capital expenditure increased by 2% (2011: 1% increase) principally
due to better utilisation of our assets being offset by increased
investment in our WBC and Ethernet roll-out.
Operating cash flow decreased by 12% (2011: 1% decrease) largely due
to the decline in EBITDA.
Openreach
During 2012 we continued to roll out super-fast
broadband and we have now passed 10m premises,
many months ahead of schedule. We have seen further
growth in our copper line base, which has increased for
six consecutive quarters.
136,000 increase in our copper line base
10m premises now passed with our fibre roll-out
More than 60 providers trialling or offering fibre broadband
Ethernet circuits up 25%
Key facts
Operating performance
The continued growth in demand for bandwidth by consumers and
businesses led to higher sales volumes across our portfolio. This growth
helped us to deliver a good financial performance, but also led to higher
levels of faults in our copper network.
Investing for the future
We have achieved our target of passing 10m UK premises with our
fibre roll-out many months ahead of schedule and we are on track for
passing two-thirds of premises by the end of 2014. Adoption of fibre
broadband has been promising– at 31 March 2012 we had more than
60 different providers trialling or offering fibre broadband. Given our
early experience of customer adoption, we have hired a new mobile
workforce of over 800 engineers (including many former Armed Forces
personnel) to manage the spikes in demand that occur when fibre
broadband is first made available in an exchange area.
Line of business performance
Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information