BT 2016 Annual Report Download - page 60

64 BT Group plc
Annual Report 2016
Our core products and services
We’ve made it easier for our customers to connect securely to
third-party providers including Microsoft’s cloud-based Office
365 suite, HP Enterprise Helion Managed Cloud Services and
Salesforce.com.
We’ve also made it simpler for customers to integrate
video, conferencing and messaging platforms offered
by different providers.
In the security area, we:
• introduced a cloud‑based DDoS mitigation service;
• launched BT Assure Cyber Defence, an advanced security
platform for monitoring, detecting and protecting against
cyber‑threats; and
• launched two further BT Assure services, Ethical Hacking for
Finance and Ethical Hacking for Vehicles (which assesses the
vulnerabilities of connected vehicles to cyber-attacks).
Industry-specific solutions
As a founding member of the Acuitas Digital Alliance, we’ve
launched our BT In-Store Visibility solution. It gives retailers real-
time digital insight from the shop and across the supply chain to
give customers in-store the same experience they enjoy online.
Operating costs decreased 4% (2014/15: 8%). Underlying
operating costs excluding transit decreased 1% (2014/15: 5%)
reflecting the impact of lower revenue and the benefit of our cost
transformation programmes. Operating costs included £25m of
leaver costs (2014/15: £nil).
EBITDA was flat (2014/15: up 1%) and was up 1% excluding
foreign exchange movements. Depreciation and amortisation
was flat (2014/15: down 16%), and operating profit was also
flat (2014/15: up 24%).
We reduced our capital expenditure by 11% (2014/15: 9%),
largely reflecting improved efficiencies. EBITDA less capital
expenditure was up £54m to £633m, a similar increase to
last year.
Our operating cash flow of £475m was £126m higher than last
year, benefiting from the timing of contract-specific cash flows
and the lower capital expenditure.
We’re focused on strengthening our position as a global leader. This
will be helped by the April 2016 reorganisation and the renewed
focus this provides for Global Services. Our future priorities include:
• strengthening the capabilities that underpin our ‘Cloud of Clouds’
strategy: our network performance, the systems delivering cloud
services to our customers, and vertically-integrated solutions for our
customers;
• continuing to build deeper relationships with our major customers as
their trusted partner;
• transforming our customer service through clearer insight into
customer experiences, including the introduction of a ‘Next Generation
Service Desk’;
• continuing to drive down costs to become a more ecient organisation;
• investing in the technologies which help our customers embrace the
digital age; and
• further strengthening our defences against attempted cyber-attacks
and fraud, and supporting customers in their security challenges.
We’ve also set ourselves some specific ambitions over the next
three years:
• to grow our share of spending with our Global Accounts by 10%;
• to achieve double-digit percentage annual growth rates in the revenue
we generate in security, cloud unified communications and Cloud
Compute; and
• to increase our net promoter score by at least ten points.
Key priorities
BT Global Services 12-month rolling operating cash ow
Year ended 31 March
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016
£m
0
100
200
300
400
500
600
Year ended 31 March
2016
£m
2015
£m
2014
£m
Revenue 6,530 6,779 7,269
Underlying revenue excluding
transit (2)% (4)% (1)%
Operating costs 5,4825,732 6,228
EBITDA 1,048 1,047 1,041
Depreciation and amortisation 518 519 616
Operating profit 530 528 425
Capital expenditure 415 468 516
Operating cash ow 475 349 499
Financial performance
Revenue decreased 4% (2014/15: 7%) including
a £105m negative impact from foreign exchange
movements and a £30m decline in transit revenue.
Our key revenue measure, underlying revenue excluding
transit, decreased 2%, which was an improvement on
the 4% decline the year before.
Underlying revenue excluding transit grew 4% in the high-growth
regions (2014/15: 9%) reflecting the signing of key deals and
the impact of newly-launched capabilities, products and services.
Continental Europe delivered 5% growth in underlying revenue
excluding transit (2014/15: 2%) reflecting higher IP Exchange
volumes and growth from corporate customers.
In the UK our revenue was down 5% (2014/15: 11%) reflecting
the decline in our public-sector income. In the US and Canada
we had a 9% decline in underlying revenue excluding transit
(2014/15: 3%) as a major customer started insourcing some
services.