We have made good progress on delivering our strategy, focused around differentiated customer experience, our best converged network, and creating a simple, lean and agile business.
Jan du Plessis Chairman
a Underlying revenue excludes specific items, foreign exchange movements and disposals.
b Items presented as adjusted are stated before specific items. See page 185 of the Annual Report for more information.
c After net interest paid, before pension deficit payments (including the cash tax benefit of pension deficit payments) and specific items.
d Additions to property, plant and equipment and software in the period less proceeds from disposals.
Our business model is centred around providing customers with communications and connectivity services, while delivering great experiences and maintaining long-term relationships.
We have a unique combination of people, technology, content, networks and other physical assets that sets us apart and supports us in adding value.
Our cash flows provide us with the funding to make long-term investments.
The commitment, expertise and diversity of our people are key to our success.
The size, scope and breadth of our customer base gives us an advantage over our competitors.
We maintain a substantial core network with key fixed and mobile assets.
We own three retail brands: BT, EE and Plusnet. We also own the Openreach brand which serves communications providers.
In the UK we have more than 600 retail stores, giving us the largest retail footprint of any mobile network operator.
This year we spent £643m on research and development enabling us to stay at the forefront of a rapidly changing world.
Our business model relies on partners and suppliers.
We build fixed and mobile connectivity across the UK, creating the UK's leading network.
We use our customer insight and technical skills to create new connectivity-based products and solutions.
Through our brands, we sell products and services to build trust, create value and generate loyalty.
We operate fast, secure and reliable fixed and mobile networks that deliver what our customers need.
We rely on our stakeholders for success as we build the UK's national digital infrastructure.
Our strategy is to lead in converged connectivity and services, capitalising on new business opportunities and delivering industry-leading operational efficiency. This is to support our goal of delivering sustainable growth in value.
The converged network we are creating is a long-term, sustainable asset. The investments we make today are the foundation of tomorrow's digital services and our future revenue.
Creating an outstanding customer experience for all our customers, backed by the best network, is central to our long-term growth and future success. We are making progress but we want to go further.
This year we have continued to focus on modernising our organisation, to put customers at the heart of what we do.
We help build better digital lives and businesses, and support the UK as a worldclass digital economy.
We have achieved our customer experience target for the year, but want to go further. Our results were in line with the financial guidance we set in May 2018 for adjusted EBITDA and normalised free cash flow. We exceeded our target for change in underlying revenue. Our capital expenditure (excluding BDUK clawback) was slightly ahead of our guidance as we accelerate our network investment.
Right First Time was up 5.4% (2017/18: up 4.3%).
Right First Time is our main measure of customer service. It tracks how often we keep our promises to customers. This could be keeping to appointment times, completing orders in the defined timeframe or fixing faults within an agreed period. As well as improving service and the customer experience, keeping our promises should reduce the work required to fix mistakes, and so reduce our costs.a Cumulative improvement from 1 April 2009.
Right First Time improvementa
At 31 March
Change in underlying revenue was down 0.9% (2017/18: down 1.0%) which exceeds our outlook of down c2%.
Underlying revenue reflects the underlying performance of the group that will contribute to long-term sustainable growth. We exclude the impact of specific items, foreign exchange movements, acquisitions and disposals.a Calculated as though EE was not part of the group until 1 April 2016. b Calculated as though EE had been part of the group from 1 April 2015. c Calculated including the impact of transit, which is no longer material.
Change in underlying revenue
Year ended 31 March
Adjusted earnings per share decreased 6% to 26.3p (2017/18: down 3% to 27.9p).
Adjusted earnings per share is the adjusted profit after tax attributable to shareholders excluding the impact of specific items, divided by the weighted average number of issued shares. This makes it a comparable and consistent way of measuring our business performance over time.
Adjusted earnings per share
Year ended 31 March
We generated normalised free cash flow of £2,440m. This was down £533m from last year and is in line with our outlook of £2.3bn to £2.5bn.
Normalised free cash flow is free cash flow (net cash inflow from operating activities after capital expenditure) after net interest paid, before pension deficit payments (including the cash tax benefit of pension deficit payments) and specific items.
Normalised free cash flow
Year ended 31 March