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, BTs 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 year.
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
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 years 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
22 May 2001