BT 2014 Annual Report Download - page 40

37
The Strategic Report
Delivering our strategy
Delivering our strategy
We have made it easier for our customers to contact us by improving
ouronline chat capability (and extending its opening hours), opening
a new Twitter channel and launching online customer self-service on
mobile devices.
We have increased the percentage of our customer accounts on
paper-free billing to 15%. This reduces our costs and carbon emissions.
Cost transformation
Operating costs reduced 2%, reecting the benet of our cost
transformation initiatives.
We have renegotiated contracts with suppliers which has delivered
signicant savings.
We have realised cost synergies by combining BT Enterprises, the non-
consumer parts of BT Ireland and the previous Business unit together
into one organisation. This has enabled us to reduce overall BT Business
total labour resource by 7%, becoming more ecient in areas such as
sales, product delivery and customer service.
Investing for the future
We have continued to invest in our next generation of oIP services,
mobile services and IT systems to improve customer service.
In May we launched new broadband and telephony packages and a
76Mbps bre product under the Plusnet Business brand.
We launched a 330Mbps FTTP service in June and a new managed Wide
Area Network (WAN) service in August tailored specically to the needs
of SMEs.
In the Republic of Ireland we expanded our portfolio of access options
for Ethernet services with the launch of our Ethernet First Mile and
10GB Etherway products. We have upgraded our core network to deliver
speeds of 100Gbps to cost eectively support customers growing
demand for bandwidth. We have deployed a new performance-reporting
and control platform for BT Connect services. We have invested in data
centre and telehousing capabilities in Belfast and Dublin to increase
capacity and support BT Managed Compute services.
In BT Engage IT we have invested to expand the BT Managed Compute
platform. This is a managed Infrastructure as a Service (IaaS) solution
for core IT infrastructure, helping businesses migrate their data centre
services to the cloud.
BT Tikit has invested in the next generation of Carpe Diem, a desktop
time-keeping application for the legal profession.
In BT Conferencing we have invested in the launch of BT MeetMe with
Dolby oice. We have expanded our conferencing services into atin
America, with investment in local product modications, sales and
operations teams and a new customer service centre in Peru.
Financial performance
Year ended 31 March
2014
£m
2013a
£m
2012a
£m
Revenue 3,509 3,516 3,594
 Underlying revenue excluding transit (1)% (2) % (2)%
Operating costs 2,411 2,469 2,557
EBITDA 1,098 1,047 1,037
Depreciation and amortisation 206 245 248
Operating prot892 802 789
Capital expenditure 133 147 196
Operating cash ow 892 907 856
a 5estated, see note 1 to the consolidated Ƭnancial statements.
Reported revenue was at (201213 2% decline) including a £9m
positive impact from foreign exchange movements, a £12m decline
in transit revenue and a £20m impact from acquisitions. Underlying
revenue excluding transit decreased 1% (201213 2%).
UK SME  Corporate voice revenue declined 2% (201213 6%)
withcontinuing volume reductions partly oset by an increase in
average spend per customer. The volume decline partly reects
migration of customers to oIP services where revenue increased
25%(201213 5%).
UK SME  Corporate data and networking revenue increased 1%
(201213 1%) with growth in managed network services and in
broadband revenue with more customers choosing to take bre services.
BT Conferencing revenue declined 2% (201213 1% increase) due to
continued lower hardware sales and lower audio prices, partly oset by
growth in the volume of conferencing minutes.
BT Ireland underlying revenue excluding transit increased 4%
(201213at) driven by contract wins. Transit revenue declined 24%
(20121311% increase).
Excluding the benet of the acquisition of Tikit, IT services underlying
revenue grew 1% (201213 3%).
Revenue declines were seen in BT Directories, BT Redcare and BT
Payphones, with these partially oset by growth in BT Fleet.
Operating costs decreased 2% (201213 3%). Underlying operating
costs excluding transit decreased 3% (201213 3%) reecting the
impact of our cost transformation programmes.
EBITDA increased 5% (201213 1%) and underlying EBITDA increased
4% (201213 1%). Depreciation and amortisation decreased 16% as
a result of lower capital expenditure in recent years. Operating prot
increased 11% (201213 2%).
Capital expenditure decreased 10% (201213 25%). EBITDA less
capital expenditure increased by £65m compared with a £59m increase
last year.
Operating cash ow was an inow of £892m (201213 £907m).
Thiswas lower than the prior year driven by the timing of working
capitalmovements.