BT’s Global Services division has seen a significant reduction in its losses for the year to 31 March.
The division recorded a loss of £141 million, which was 61 percent less than the previous year (£358 million). The improvement was aided by an increase in BT Global Services’ order intake.
“BT Global Services order intake was up 10 percent at £7.3 billion and it has turned cash flow positive [at £119 million] a year ahead of plan,” said BT’s chief executive, Ian Livingston.
A total £1.9 billion of the orders took place in the fourth quarter to end of March 2011. These included a contract with construction and support services company Carillion to provide managed voice and data services to 800 sites in the UK, and chemical company BASF, for network services at 900 global sites and local network and IP telephony services to more than 300 sites in the US and Asia-Pacific.
BT Global Services also recorded a restructuring charge of £192 million last year, 36 percent less than 2010 (£301 million, which covers mainly people, network and property costs. It expects to incur another £50 million in 2012 thanks to the costs of the division’s network rationalisation programme.
Anthony Miller, managing partner at analyst TechMarketView said that despite the division still being loss-making, BT Global Services remains a strong player in the software and IT services market.
“BTGS derives two-thirds of its revenues from ‘ICT and Managed Services’, and revenues for these activities grew by 0.5 percent in the year to £5.3 billion. But, there’s a lot of unpicking yet to do to isolate out the ‘pure’ managed voice and data services activities. We are pretty sure the SITS (Software and IT Services) bit declined.
“Last year, we estimated that BTGS generated about £1.44 billion in the UK SITS market – including a good chunk from the erstwhile National Programme for IT – firmly positioning it within the UK SITS Top Ten. As we compile this year’s rankings, we don’t doubt BTGS will remain a ranking player.”
Overall, BT Group recorded a 20 percent increase in pre-tax profit to £2.08 billion last year, on total revenues of £20 billion.
“We expect to continue to grow our profits and free cash flow whilst investing to return BT to growth. These results show we are making progress, but we are well aware there remains a lot more to do,” Livingstone continued.
Meanwhile, the company said that its efficiency improvements had helped drive a 10 percent reduction in IT costs for the year, as well as an 11 percent decrease in its energy costs and network maintenance.
BT Group’s labour costs also fell by five percent to £5.8 billion, partly due to an ongoing programme to cut the number of agency and contract staff. These indirect labour costs fell by nearly a fifth (18 percent) over the year.