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Sir
Christopher Bland, Chairman, reports on a year in which
BT further reduced debt, grew its dividend significantly
and continued to invest in the future.
The
year
This
has been a really good year for BT. We said 12 months
ago that, in a turbulent market, your company had taken
the hard decisions and necessary actions early. Events
have shown that we were right to do so and that we have
now established a strong base for sustainable growth.
Earnings per share in the year increased by 61% and
net debt reduced by over £4 billion. The group generated
free cash flow of £1.7 billion. The full year dividend
of 6.5 pence per share reflects the group’s financial
performance, operational strength and confidence in
the future.
In
the past two years, our net debt has been reduced from
£27.9 billion as at 31 March 2001 to £9.6 billion as
at 31 March 2003, a reduction of 66%. The foundations
of the progress in 2003 were the achievement of operating
efficiencies and the sale of non-core assets, such as
our stake in Cegetel, which we sold for £2.6 billion.
Progress was sustained by improving service in our traditional
markets, and our growing success in such new-wave markets
as broadband, mobility, information and communications
technology (ICT) and solutions. We continue to invest
in and to transform our network to help take our 20
million customers into a future shaped by new communications
possibilities.
Purpose
and responsibilities
As
a business, our purpose is to connect the worlds of
our customers. In achieving that purpose we will provide
the greatest customer satisfaction and enjoy commercial
success if we make every experience of our services
simple and complete.
Your
company’s broader responsibilities include the maintenance
of a good reputation, definitive standards of governance
and a coherent corporate social responsibility programme,
all vital to encouraging investors to put their trust
in us, customers to buy from us and the best people
to work for us. This sense of responsibility runs through
the whole of our organisation.
Pensions
BT
takes its responsibilities to its pensioners, existing
and prospective, very seriously. The result of a recent
valuation of the main BT pension scheme, carried out
by the independent actuary appointed by the Scheme trustees,
showed a funding deficit of £2.1 billion. This compares
to £1 billion at the last formal valuation in 1999.
BT has agreed it will make good this deficit with additional
annual payments of £232 million, compared to the £200
million additional annual payments that BT has been
making.
Strength
of the BT Pension Scheme
The
BT Pension Scheme, which has been closed to new members
since 31 March 2001, is backed by BT. The Scheme assets
are controlled by trustees who must act in the best
interests of its members. Any deficit has to be made
good by the company, and no changes can be made to the
rules and benefits that apply to Scheme members without
the agreement of the trustees.
Company
Board
I
am delighted to welcome Clay Brendish, former deputy
chairman of CMG plc, and founder and former executive
chairman of Admiral plc, to the Board. Clay brings with
him a wealth of experience in the information technology
industry. His appointment with effect from 1 September
2002, on which shareholders will have the opportunity
to vote at this year’s AGM, means that independent non-executive
directors constitute a majority on your Board.
People
and prospects
Finally,
we would like to thank our customers, our shareholders
and our people for their continued confidence in and
loyalty to the company. We are recognising the efforts
of our people in meeting BT’s performance targets through
awarding them 2% of the pre-tax profits, £36 million,
in the form of BT shares.
We
believe the company is well placed – financially, operationally
and managerially – to meet new challenges and to seize
new opportunities.
Sir
Christopher Bland
Chairman
21 May 2003
Key
events and achievements
June 2002
Launch of Openzone,
BT’s public wireless LAN hotspot service
September
2002
The UK’s most intensive TV campaign stimulates demand
for broadband
November
2002
BT wins €1 billion contract to manage and
develop Unilever’s global communications infrastructure
January
2003
Sale of stake in Cegetel for £2.6 billion
April
2003
BT announces that it has connected more than 800,000
broadband customers
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