BT 2016 Annual Report Download - page 71

Overview The Strategic Report Governance Financial statements Additional information
75
Financial performance
Year ended 31 March
2016
£m
2015
£m
2014
£m
Revenue 4,598 4,285 4,019
Operating costs 3,561 3,254 3,186
EBITDA 1,037 1,031 833
Depreciation and amortisation 206 218 219
Operating profit 831 813 614
Capital expenditure 206 207 211
Operating cash ow 762 813 472
Revenue increased 7% (2014/15: 7%) with a strong
performance across broadband and TV resulting from
the launch of our European football coverage.
Calls and lines revenue increased 2% (2014/15: 1%), reflecting
the lowest level of line losses for over eight years, new pricing and
the launch of BT Mobile.
Broadband and TV revenue was up 17% (2014/15: 16%)
including the impact of the launch of our European football
proposition, continued growth in broadband and our best‑ever
year for adding new TV customers.
Other revenue decreased 10% (2014/15: 6% increase) after
last year benefited from the successful launch of the BT8500
Advanced Call Blocker handset.
Operating costs were up 9% (2014/15: 2%). This reflected the
launch of our European football proposition including the sports
rights costs as well as the cost of launching the channels in August.
Excluding UEFA rights costs, operating costs increased 3%, mainly
reflecting the growth in our customer base.
EBITDA increased 1% (2014/15: 24%).
Depreciation and amortisation decreased 6% (2014/15: broadly
flat). Operating profit increased 2% (2014/15: 32%).
Capital expenditure was flat (2014/15: down 2%). Operating
cash flow decreased 6% (2014/15: 72% increase) reflecting
unfavourable working capital movements relating to the timing
of our sports rights and capital expenditure payments.
Our future plans include:
• continuing to transform our customer service with 90% of all calls
being answered within the UK by March 2017;
• launching our new FA Premier League rights and Australian cricket
rights on BT Sport;
• trialing and launching ultrafast broadband using Openreach G.fast
products;
• launching mobile handsets to unlock a new market opportunity while
creating synergies with EE;
• introducing a new YouView user interface to drive better engagement
with our content;
• launching our breakthrough new service to help home phone
customers avoid nuisance calls; and
• increasing the number of ‘revenue generating units’ by 2.5m over
the next three years.
Key priorities
Transform our costs
Operating costs increased 9% reecting the costs of the
UEFA Champions League and UEFA Europa League rights
and the growth in our customer base. The increase was
partly oset by our cost transformation activities.
We delivered savings this year by:
• extending our fibre self‑install programme across all fibre
products, including Plusnet’s, which further reduced the number
of engineer visits and the associated cost;
• reducing customer equipment costs by negotiating better
commercial terms with our suppliers; and
• improving our real‑time network diagnostics, helping us to
more quickly find the right solution for customer faults, avoiding
unnecessary engineer visits.
Invest for growth
In the summer we launched our new BT Sport Pack, the
home of European football, increasing the choice of
content for our customers and increasing engagement
with sports fans. We also launched an improved BT Sport
app and Europe’s first Ultra HD sports channel.
In August we exclusively launched AMC’s UK channel. AMC is a
leading US TV network with a track record of producing successful
premium dramas. We also extended our deal with UKTV to include
all ten of its channels as well as gaining access to the UKTV Play
service.
We’ve added the UK rights to show all Australian home cricket
internationals, including the 2017/18 Ashes. The five‑year rights
deal starts in 2016. In addition, we extended the rights for
the FA Cup until 2021.
We launched BT Mobile and our advertising is improving the
perception of the service and is attracting subscribers.