BT 2012 Annual Report Download - page 55

52 Performance
Payments to telecommunications operators (POLOs) were down 16%
(2011: 8%), reflecting lower mobile termination rates and reduced
transit and wholesale call volumes. Property and energy costs were
down 7% (2011: 11%). Network operating and IT costs were down
11% (2011: 10%) as we rationalise our networks and systems. Other
operating costs decreased by 3% (2011:4%).
Net labour costs
POLOs
Property & energy
Network operating & IT
Other
5%
29%
8%
35%
23%
2012 Cost basea
a Excluding depreciation, amortisation and specific items.
A detailed breakdown of our operating costs is provided in note 6 to the
consolidated financial statements.
EBITDA
Adjusted EBITDA increased by 3% to £6.1bn in 2012 which means we
have achieved our 2013 target of above £6.0bn a year early.
The 3% and 4% increase in 2012 and 2011, respectively, reflect
the benefits from our cost transformation activities. An analysis of
EBITDA by line of business is provided in note 4 to the consolidated
financialstatements.
Depreciation and amortisation
Depreciation and amortisation was flat at £2,972m (2011: 2%
decrease) reflecting the lower levels of capital expenditure over the last
three years offset by higher depreciation and amortisation on shorter
lived assets.
Net finance expense
Net finance expense reduced by £164m in 2012 as we repaid higher
coupon debt in the second half of 2011.
Year ended 31 March
2012
£m
2011
£m
2010
£m
Interest on borrowings 672 852 886
Capitalised interest (9) (6) (3)
Fair value movements on
derivatives 29 34 19
Total finance expense 692 880 902
Total finance income (11) (35) (12)
Net finance expense 681 845 890
In 2012 interest on borrowings decreased by 21% (2011: 4%) reflecting
the reduction in the average net debt balance and the repayment of
higher coupon debt in the second half of 2011. Fair value movements
on derivatives included £16m (2011: £28m, 2010: £9m) of swap
restructuring costs on certain derivatives and £13m (2011: £6m, 2010:
£10m) of fair value movements on derivatives not in a designated
hedge relationship. In 2012 finance income decreased by £24m (2011:
£23m increase) mainly due to lower average cash and investment
balances. In 2011 finance income included £19m of interest in respect
of a tax refund.
Net pension interest is classified as a specific item and discussed in note
20 to the consolidated financialstatements.
Weighted average interest rates
The table below provides an overview of average gross debt, average
cash and investment balances, average net debt and related interest
rates over the three-year period.
Year ended 31 March
2012
£m
2011
£m
2010
£m
Average gross debt 9,295 10,808 11,382
Weighted average interest
rate on gross debt 7.3% 7.8% 7.7%
Average investments and
cash balances 1,148 2,192 1,293
Weighted average interest
rate on investments 0.6% 0.6% 0.6%
Average net debt 8,147 8,615 10,090
Weighted average interest
rate on net debt 8.3% 9.8% 8.8%
As detailed on page 55, the £1.7bn of term debt maturing in January
2013 has an interest rate below our weighted average and therefore our
weighted average rate will increase in the following years.
Group financial performance
Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information