BT 2010 Annual Report Download - page 6

OVERVIEW
4BT GROUP PLC ANNUAL REPORT & FORM 20-F
CHAIRMAN’S MESSAGE
As we promised, 2010 has been a year for delivery. After the
challenges of the last financial year, we focused our efforts on
starting to improve BT Global Services’ performance and reducing
our cost base so that we could emerge stronger from recession.
While the economy is still challenging, I am delighted to say our
determination has paid off and we have delivered results ahead
of our original expectations for the year.
Dividends
Last year we said we wanted to rebase the dividend to a level which
we were confident was sustainable and from which it could grow.
The Board is committed to delivering progressive dividends, while
balancing the need to invest in the business, support the pension
fund and reduce our net debt. Given our good performance in
terms of free cash flow generation this year, the Board is proposing
a final dividend of 4.6p, making a total of 6.9p for the full year. This
represents 6% growth over last year, in line with our indication
of around a 5% increase.
Pension fund
In February we announced that BT had reached agreement with
the Trustee of the BT Pension Scheme on the triennial funding
valuation of the pension scheme and a recovery plan for the £9bn
deficit. I was disappointed, given the significant amount of work
done by the Trustee and the prudent assumptions we had agreed,
that the Pensions Regulator had substantial concerns with certain
features of the agreement. We and the Trustee continue to work
with the Pensions Regulator to progress this matter. Since the
valuation date the scheme’s investments have increased in value
by £4bn.
Regulation
In the current economic environment it is imperative that we avoid
protectionism and establish a truly level playing field for businesses.
We continue to work with governments and regulators in the UK,
the EU and around the world for open and fair wholesale access to
telecoms networks, whether fixed or mobile, and to premium pay
TV content to drive competition and avoid inequalities and
excessive pricing in the broadband market. Our own access network
is open to all-comers on an equivalent basis and it is because of this
that the UK has one of the most competitive and vibrant telecoms
markets. This benefits everyone, be they our competitors or our
customers. We seek consistency and ask only in other markets what
we offer in the UK market.
Environment and the community
We are proud to be involved with the London 2012 Olympic and
Paralympic Games and see this as an opportunity to contribute to a
great event not just for London but for the whole of the UK and the
rest of the world. In keeping with our tradition of helping others,
BT people will be volunteering and contributing to the Games and
our network will provide a lasting legacy beyond.
We firmly believe in investing in young people and I am delighted
that BT is stepping up its commitment to the Modern
Apprenticeship scheme.
BT is committed to a sustainable environment and has set one
of the most aggressive corporate carbon reduction targets in the
world. We have made considerable progress, reducing the carbon
intensity of our global business by 54% compared with our 1997
baseline. By 2020 we aim to have reduced our emissions by 80%.
The Board
I was delighted that Tony Ball, chief executive of BSkyB from 1999
to 2003, joined the Board in July 2009. He brings great experience
of international telecoms and broadcasting.
Patricia Hewitt, who joined the Board in March 2008, has taken
on the role of Senior Independent Director, which had been
previously held by Maarten van den Bergh, who stepped down
from the Board in July 2009.
I would like to thank Deborah Lathen, who stepped down from
the Board in January 2010 at the end of her three year term. She
brought helpful insights into the international telecoms market and
regulatory matters, for which I have been very grateful.
I continue to work with the Nominating Committee to ensure we
have the appropriate skills and experience at Board level to guide
the business through its next stages of development.
Hanif Lalani, Chief Executive of BT Global Services and formerly
Group Finance Director between 2005 and 2008, stepped down
from the Board in January 2010 and left the company in March
2010. Jeff Kelly was appointed as Chief Executive of BT Global
Services and as a member of the Operating Committee in January
2010. Jeff had 25 years’ experience at EDS, the global IT services
firm, where he most recently ran their US$10bn business in the
Americas. Jeff’s task will be to improve the performance of BT
Global Services and build on its position as a global leader in
networked IT services.
My thanks go to the rest of the Board who have continued
to support me and the executive management through these
challenging times.
The future
The year ahead will have its challenges as the world economy
struggles to recover from the long recession. No one knows when,
or by how much, conditions will improve. However, we believe we
can drive efficiency, provide even better customer service and
deliver a better future for all our stakeholders.
SIR MICHAEL RAKE
CHAIRMAN
12 MAY 2010
SIR MICHAEL RAKE
CHAIRMAN