We have seen the continuing rapid spread
of communications technologies into every part of everyday life.
But it has also been a year of great turbulence for the industry
itself. At a time of such profound change, many players, including
BT, have not found it easy to stay ahead of the game.
However, BT’s operating performance during the year has
been satisfactory, and in line with expectations. Group
turnover rose by 9%, and earnings before interest, taxation, depreciation
and amortisation have been maintained at similar levels to last
Net debt has risen to an unsustainable £27.9 billion at 31 March
following the acquisitions made during the year. Our first priority
is to repay a significant amount of this debt. We have made a
good start with the agreed sales of investments in Japan, Spain,
Switzerland and Malaysia, which should raise around £5.5 billion.
Further disposals are planned.
A major part of our plans for the future is our intention to demerge
BT Wireless. This will mean that, provided the necessary permissions
are received, shareholders will own shares in two strong and separately
quoted businesses, both in the FTSE 100 list: BT Wireless and
Future BT, which will be a focused European network and retail
group concentrating on voice and data services.
This amounts to nothing less than a structural and financial transformation
of BT. I joined BT as Chairman on the basis that I was totally
committed to this transformation and would be responsible for
leading the Board in overseeing its delivery.
"This amounts to nothing
less than a structural and financial transformation of BT."
To provide greater financial stability and to help finance this
restructuring, we have announced a £5.9 billion rights issue.
Clearly it would not be appropriate to raise this amount of money
from shareholders and then immediately recycle some of it back
through dividends. We are, therefore, taking the unwelcome but
necessary step of halting payments for the 2000/2001 final dividend
and also the current year’s interim dividend. Future dividend
policy will be decided by the individual listed companies, taking
into account their respective capital structures, their cash requirements
and the markets in which they operate.
I would like to pay tribute to Sir Iain Vallance, my predecessor.
As successively Director, Chief Executive and Chairman of BT,
he played a major role in the development of BT from a nationalised
utility into a leading player in the telecommunications industry.
In conclusion, I recognise that it will require determined and
rapid action by BT management to achieve the transformation of
the company. We have made a good start, the culture is changing,
and I am confident that we can complete the process in the best
interests of our shareholders, our customers and our employees.
Sir Christopher Bland Chairman
22 May 2001