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 groupís 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 companyís 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.
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
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
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 yearís 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 BTís
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
Key events and achievements
Launch of Openzone, BTís public wireless LAN hotspot
The UKís most intensive TV campaign stimulates demand for
BT wins Ä1 billion contract to manage and develop Unileverís
global communications infrastructure
Sale of stake in Cegetel for £2.6 billion
BT announces that it has connected more than 800,000