Transcript Investor Meeting Packs (Q4 03/04)

Sir Christopher Bland
Chairman • BT Group plc
Delivering today
Investing for tomorrow
2003/04 - another year of good progress
Group turnover
£18.5bn, maintained*
Earnings per share
16.9p, up 19%**
Free cash flow
£2.1bn, up 21%
Dividend
8.5p, up 31%
Net debt
£8.4bn, down 12%
*Adjusted for the impact of mobile termination cut
**Before exceptional items and goodwill
Delivering today
2003/04 - key financial indicators
Earnings per share* (pence)
18p
15p
12p
9p
6p
3p
0p
Dividend per share* (pence)
9p
14.2
16.9
8.8
3p
2.0
FY 01/02
FY 02/03
FY 03/04
Free cash flow**(£m)
2,250
1,750
1,250
750
250
(250)
(750)
6.5
6p
8.5
0p
FY 01/02
FY 02/03
FY 03/04
Net debt (£bn)
0
1,708
2,071
(7)
-13.7
-9.6
-8.4
Mar 03
Mar 04
(14)
(21)
-732
FY 01/02
FY 02/03
FY 03/04
(28)
-27.9
Mar 01
Mar 02
*Before exceptional items, goodwill amortisation
**Free cash flow for 2001/02 excludes the property transaction and includes
pension payments, emerged and discontinued activities
2003/04 - dividends and buy backs
10p
+31%
8p
8.5p
Rolling share buy back
programme commenced
To date:
6.5p
6p
Purchased 1.1% of share
capital (97m shares)
4p
Total cost of purchase
£174m
2p
Authorisation for 10%
of share capital
2.0p
0p
FY 01/02
FY 02/03
FY 03/04
Dividend pay-out 50% of earnings
Targeting a 60% pay-out ratio in
2005/06
Continuing the transformation
Over the last three years and going forward:
delivering on a clear strategy
rigorous financial discipline
− strong free cash flow
− debt reduced by £20bn since March 2001
sustained reductions in customer dissatisfaction
accelerating new wave innovations
cultural change: BT’s people and brand values
deepening our community engagement
Delivering today
Investing for tomorrow
Our contribution to the community
Supporting good causes
£18 million
Education support
2 million children, 10,000 schools
4,000 BT Volunteers
Free teaching resources
ChildLine
£1.5 million cash, £2 million in kind,
19% more children helped
communities first
cymunedau yn gyntaf
Everybodyonline
Helped 8 communities - digital inclusion - 3 in Wales
Helping everyone benefit
from improved communication
Delivering today
Investing for tomorrow
Ben Verwaayen
Chief Executive • BT Group plc
Our strategy
Defend traditional
Improved service
Aggressive & creative
marketing
Price innovation
Reduce costs /
improve margin
Transformation
21st Century Network
Long term
partnership
with our customers
Grow new wave
Broadband
Mobility
ICT
Global Solutions
Transformation is underway
Total revenue £bn
19
17
15
2.6
New wave
15.9*
Traditional
13
3.4
New wave
15.1*
Traditional
+30%
-5%*
11
FY 02/03
FY 03/04
New wave now represents 18% of Group turnover
*Excluding the impact of the mobile termination rate reduction
Investing for tomorrow
Building for the future
Lead on network centric ICT capability
Deliver on broadband
Create convergent mobility solutions
Defend traditional business rigorously
Drive for cost leadership
Investing for tomorrow
Embracing technology - enabling change
ICT - combines telecoms experience
and IT innovation
Major wins across UK, Europe and US
− Unilever
− NHS
− Honeywell
Leading the world in
network-centric ICT solutions
Broadband - making Britain click
2.5m
BT’s UK-wide broadband
End user connections now
coverage more than
over 2.5m
2.0m
90%, and
BT Wholesale Broadband
to rise to 99.6% by
summer ’05
1.5m
Cardiff: now 100%
broadband enabled
Pan-Wales coverage:
96% by summer '05
1m
0.5m
0.0m
Mar Jun Sep Dec Mar Jun Sep Dec Mar
2002
2003
2004
Broadband at the heart of BT
Building a seamless converged service
BT re-enters mobility by:
Partnering with industry leaders
Re-building the brand in the high street
Acting as a virtual network operator
Innovating through Wi-Fi – BT Openzone
Launching converged services –
e.g. Project Bluephone
− enabling the mobile phone to “roam”
onto the fixed network
Create mobility services and solutions
Good value for money
Consumer
Business
BT Together Option 1
customers on Standard
migrated to Option 1 on 1st July
Option 1 price reduced £1 to
£10.50 per month
BT Business Plan
no UK or US call costs more
than 10p for an hour
calls to key European countries
cost no more than 20p
BT Together Option 2
price reduced from 1st April by
£1 to £6 per month (+ line rental)
BT Local Business
active in 73 locations
billing over £1bn of revenue
BT Together Option 3
price reduced from 1st April by £3
to £15 per month (+ line rental)
Reinvent our traditional business
Financial discipline with cost leadership
Savings to date
across the business
£1.7bn
£1bn
Future savings
programmes
across the business
21st Century Network savings
01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09
Good progress
to date
much more to come...
Competitive advantage
through cost leadership
21st Century Network
What?
A single intelligent network to
replace many legacy platforms
Why?
Driving efficiency
Better range and quality of services for customers
Speed to market
When?
Trials in 2004
Starting mass migration to new IP network - 2006
Broadband available as “dialtone” to most
customers - 2009
BT’s values
Trustworthy
Helpful
Inspiring
Straightforward
Heart
On 4 May 2004 over
1,300 senior managers
went back to the floor
‘my customer’
challenge cup
Hundreds of teams
across BT competing to
help improve customer
satisfaction
BT people
providing a customer-centric organisation
Our customer promises
When you make an appointment with us
our engineers will do whatever they can to keep it
When you call BT
you can choose to opt out of the machine and
talk to a real person
If the first person you call at BT can’t help
they’ll make it their top priority to find the
person who can
Improving customer satisfaction