Catherine NashThank you, Bupendra, and welcome, everyone. It's Catherine Nash here from BT IR. On our call today, we have Ian Livingston, Chief Executive; and Tony Chanmugam, Group Finance Director. Ian's going to talk to you on the headline results and then go through the lines of business. Tony will then go through the financials in more detail, and then we'll hand over to you at the end of the session for questions. In the room with us today, we also have the COOs of all our lines of business. Before we start, I'd just like to draw your attention to the usual caution on forward-looking statements. Please see this slide that accompanies today's call and our latest annual report on Form 20-F for examples of the factors that could cause actual results to differ from any forward-looking statements we may make. Both the slide and the annual report can be found on our website. I'll now hand over to Ian. Ian Paul Livingston Thank you, Catherine, and good morning to everyone. Thank you very much for coming on the call. I'll go straight into our overall results, if you would like to turn to Slide 4. Overall group results, revenue was down 6%. However, on an underlying basis, and to be clear, underlying is excluding any M&A activity, exchange movements, specific items, excluding that and excluding transit, it was down 3.2%. This clearly reflects, on one side, more revenue from Global Services but actually, a good improvement in Retail, Wholesale and Openreach's trends. And actually, Global Services, down about 1.2% on underlying ex transit basis, which is progress. EBITDA continues to be solid, up 2% in the quarter and normalized free cash flow. As we've said quarter-after-quarter, it is volatile, but clearly, this number was a bit lower than you'd expect it. And there's really some unusual factors in that, and Tony will talk through what's happened and with the reversal, some of these items come in later.
So from that, let's go to the individual lines of business on Slide 5, Global Services. Global Services revenue was down 9% headline basis, was at down 6% excluding transit. If you look on the right-hand side, I think you see the key movements. And over half of the underlying ex transit revenue decline came from tough conditions in Continental Europe and financial services sector, and we do show that in the numbers. I don't think that's a huge surprise. Certainly, the market has not got better. It's got worse, I think, recently, and we saw, for instance, double-digit declines in Spain even in constant currency, and in addition to that, with the currency movements, it's significant declines.Underlying operating costs I think have started to go in the right direction. They're down 6%, and I would stress that's excluding foreign exchange, so it will be down more than that on a -- including foreign exchange. And that's meant that the underlying EBITDA is down 8%. However, actually, a big part of that was the fact we had more leavers cost charged to P&L this year than last year in this quarter, and leaver costs have been volatile. And as you know -- remember, those of you who have been around a while, that we used to show ex leavers as a key measure. And actually, ex leavers were down 3% in Global Services, and we're still committed to growth in EBITDA in Global Services for the year as a whole. So I think just to put it in context, it is a tough market. But with the right cost program, and I think there's a lot more to be done there, we still believe Global Services can grow its EBITDA. Cash flow. We said that cash flow would be lower this year, and it was down in the quarter. Some of the things that we thought would happen, and we can talk in more detail of it, and Tony will do, there's lower contract-related receipts, some delays in debt receipts and time and supply payments. We did see in Q4 that you would expect Q1 and Q2 to be lower due to working capital in Global Services, so that -- a lot of that we expected.
And in terms of order intake, order intake was GBP 1.1 billion. We had a good Q4. This was obviously a weaker Q1. Again, it's the same story we said in Q4, which is the absence of the very largest deals. We're doing lots of deals with lots of people. We had good deals, for instance, with Tesco, with Caixa Economica in Brazil, with Rolls-Royce, really good deals. But we didn't have -- for instance, this time last year, we had, last year, Camden Council, which is GBP 400 million. That being said, GBP 1.1 billion is lower and I think does reflect the fact that people are holding off and deals are more difficult, but that's very much something we raised at Q4.Now turning to Slide 6. I thought it's useful just to put in context, because Global Services was been tough conditions just now. It's come a long way over the last few years, and you see that in the chart to the left in terms of EBITDA and free cash flow growth. And just if I look at the key things that we are focusing on in Global Services, I think we've seen a huge improvement in the risk profile of the contracts we do. We, the management, is substantially better in them, and the profile is really much less. This is not the business of a number of years ago. We've also seen customer service improving in Global Services, and that's important. It's actually important for the overall contracts. We're providing customers want they want. It doesn't mean we never have any problems, but again, a huge improvement is recognized by external industry analysts as well. We've also spent time and effort and money in enhancing our product range, particularly globalizing it, making sure we have a consistent product range, well explained, and I think that's going to produce a good position going forward, as is our investment in faster-growing economies. We're still seeing a strong growth, for instance, in places like Asia, which we started in an investment this year, and it's going to be focused in Middle East and Africa. But we expect to grow -- to add about GBP 500 million of revenue in the medium term from these fast-growing economies, so that's good. Read the rest of this transcript for free on seekingalpha.com