to our combined Annual Review & Notice of Meeting. I am looking
forward to my first AGM and hope that you can join Ian Livingston and
me at the Barbican Centre on Wednesday 16 July.
I am pleased to report that
we are recommending a full year dividend of 15.8 pence, up 5% from last
year, reflecting the group’s strong performance and the Board’s
continued confidence in the future of the business.
Your vote is important to the
good governance of your Company. If you are not going to be at the Meeting,
and you want to vote on any of the resolutions, please complete and return
the enclosed proxy form to our Registrars, Equiniti. You will also find in
the envelope a copy of Forward, our shareholder magazine, in which
Ian and I talk about our priorities for the year ahead. You can find an
online audio version of this document and Forward at www.bt.com/annualreport
You will also find there an online version of our Annual Report &
Form 20-F, our full statutory accounts.
Thanks to Ben and
Before saying anything else,
I want to pay tribute to your Chief Executive of the past six and a half
years, Ben Verwaayen, who will be stepping down on 1 June 2008. Ben has been
a truly exceptional Chief Executive. His courage, determination, vision and
energy have transformed BT.
When he arrived in 2002, BT was
a deeply troubled organisation with huge debts and an uncertain future.
Since then, under his leadership, BT has delivered Broadband Britain, built
a successful and fast growing global operation and changed the regulatory
landscape in the UK through the creation of Openreach. This has enabled the
most competitive broadband market in the world to flourish. Ben has also –
and I’ll return to this – overseen the creation of a diverse and hugely
impressive talent pool in BT at executive team level and throughout our many
operations and specialist businesses around the world. He has restored pride
in BT and I know that he feels that in many ways this will prove to be his
most important legacy.
Great credit is also due to my
predecessor Sir Christopher Bland who stepped down in September. He was an
outstanding Chairman to whom I and the rest of BT owe a tremendous debt of
Number one for customer service
I’ve been at BT for eight
months and have enjoyed my time here enormously. Having had a chance to meet
BT people and get a first hand view of operations, I am convinced that we
have the right strategy and, just as importantly, the right team to take it
forward. That team consistently demonstrates that it has the imagination and
agility to deliver for our customers.
We need to drive standards
higher for the whole of the industry. Being number one for service in our
own sector is simply no longer good enough. We have to make outstanding
customer service a differentiator for BT. That will enable us to build on
our position as Britain’s favourite broadband provider, grow our wholesale
and global businesses, and drive down the costs we incur when things go
The transformation that Ben and
Christopher initiated continues.
Our wider responsibilities
It is vitally important for
companies to be responsible and contributing members of the communities in
which they operate. BT has an enviable track record when it comes to living
up to its social and environmental responsibilities and I am delighted that
we won Business in the Community’s prestigious Company of the Year award
for our positive impact on society. The award goes to the company judged to
be improving its business and its overall impact on society, in the
marketplace, the workplace, the environment and the community, through
leadership and integration of responsible business practices. We were also
the top telecommunications company in the Dow Jones Sustainability Index for
the seventh year in a row.
The importance of such awards is
that they highlight all the hard work, imagination and commitment throughout
our organisation that is focused on operating in an ethical, sustainable and
socially responsible way.
Around one third of BT people
are involved with corporate social responsibility related activities. We
provide the manpower and technology for major charity appeals including
Children in Need and Comic Relief, and we are working closely with
children's charity Childline on a campaign to ensure that no call for help
As we increasingly operate
globally, so the emphasis is on being good citizens of the world and making
a difference worldwide. For example, when your Board recently held a meeting
in India, we were able to see the marvellous work that the Katha IT and
E-commerce School (KITES) – which BT supports – is doing for kids in one
of Delhi's slums.
We recognise that we have a
responsibility to the environment and aim to be a leader in the new
low-carbon economy. Ben Verwaayen chaired a recent CBI task force which was
set up to make recommendations on combating climate change. And we are very
conscious of the importance of reducing our emissions and reducing waste
in-house. Our CO2 emissions in the UK are
58% lower than they were in 1996 and we aim to improve this to 80% by 2016.
Our contract to purchase green energy is one of the largest in the world and
we are developing wind powered projects which should meet up to 25% of our
UK electricity needs by 2016.
The creation of a genuinely
competitive environment, wherever we operate around the world, is
fundamental to our continued ability to meet our customers’ needs.
In the UK, it is vital that the
regulatory environment should enable us to make the necessary investments in
the next generation of the UK’s communications infrastructure with
In the European Union we are
also looking for a level playing field that allows BT access to other
I’m delighted that Ian
Livingston is taking over from Ben as your Chief Executive. He has delivered
brilliantly for BT, both as Group Finance Director and CEO of BT Retail. He
was the clear choice of the Board after a rigorous process. He leads a team
of executive directors of exceptional talent: Hanif Lalani, who was recently
named the 2008 Real FD/CBI finance director of the year (FTSE 100);
François Barrault, CEO of BT Global Services; and Gavin Patterson, who has
been CEO of BT Retail since 1 May 2008.
I’d like to thank Andy Green
and Paul Reynolds both of whom stepped down as executive directors during
the year. They provided first-class support for Ben over a number of years
and I wish them well in their new careers. My thanks also to Larry Stone who
provided excellent support to the Board as Company Secretary for the past
six years, and who moves on to become BT’s President of Group Public and
Government Affairs. He is replaced by Andrew Parker who was previously
General Counsel, BT Retail.
There have also been a number
of changes to your non-executive team during the year. Baroness Margaret Jay
and John Nelson both left after six years of invaluable service to BT. In
their place, I would like to welcome two new non-executive directors, both
of whom bring a wide range of skills and experience with them. In addition
to a distinguished political career, Patricia Hewitt has extensive business
and international experience. Eric Daniels is group CEO of Lloyds TSB. In
addition, his years as chairman and CEO of Zona Financiera, a leading Latin
American financial portal, will be of great value to us as we seek to build
further our presence in the region.
One of the directors proposed
for re-election this year is an independent non-executive director, Carl
Symon. I am pleased to confirm to shareholders that, following formal
performance evaluation, we continue to regard Carl as a very effective
non-executive director. He demonstrates the highest commitment to the role
and makes a valuable contribution in Board deliberations and as chairman of
the Equality of Access Board.
Directors appointed since the
last AGM have to retire at this meeting and Eric Daniels and the Rt Hon
Patricia Hewitt, who both joined the Board earlier this year, will
automatically retire at the AGM and be proposed for election, as I shall
have to myself. Gavin Patterson, Chief Executive of BT Retail, joins the
Board on 1 June and has to retire at the AGM, where he will be proposed for
election. Gavin was formerly Group Managing Director of BT Retail’s
Consumer Division. Directors’ biographies are set out on Board of Directors page.
A Games for the
I’m very proud to report
that in March 2008 we announced that BT had been selected as the official
communications services partner for the London 2012 Olympic Games and
As a company committed to the
proposition that better communications can mean better lives and a better
world, we will be providing the communications services infrastructure for
one of the world’s greatest sporting events and putting the BT brand at
the heart of ‘a Games for the Digital Age’. The partnership will be a
fantastic opportunity to showcase BT and our capabilities – who we are,
what we believe in and what we can do – in the context of a key event in
the life of the nation.
I’m also delighted that BT is
giving a boost to Team GB athletes by helping fund their journey to the
Beijing Olympic Games in August.
From our perspective, the
countdown to London 2012 has already started.
Looking to the future, BT
will continue to deliver on its strategy and to create new and exciting ways
for our customers to communicate and collaborate. That strategy is creating
value for our shareholders. In 2009, we expect to deliver continued growth
in revenue, EBITDA and earnings per share (both before specific items and
leaver costs) as we continue our transformation from a fixed-line business
into a software-driven global communications services company. We also
expect our free cash flow to be at a similar level to 2008 and to increase
dividends per share in 2009. I believe that we have the right team in place
and the right culture throughout the organisation – an absolute commitment
to the customer and a determination to get it right first time. There is
every reason for optimism.
Sir Michael Rake
14 May 2008
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