Sir Michael Rake BT Group plc Chairman
2011 summary of the year � Progress towards making BT a better business � Improving profitability and free cash flow � A responsible and sustainable business leader � Investing in the business for a better future
In line with or 2011 group results ahead of 2011 R 2011 Results lt Ch Change outlook tl k Revenue 1 £20,076m 4% Cost savings 1 £1,087m Profit before tax 1 1 £2,083m 20% Free cash flow 2 Free cash flow £2 223m £2,223m 6% 6% Net debt £8,816m £467m 1 before specific items 2 before specific items and pension deficit payments
Dividends � Proposed final dividend 5.0p 9% � Full year dividend 7.4p 7% � Committed to progressive dividends at same time as: – investing for the future – reducing net debt – supporting pension scheme
Pensions � BT’s pension scheme is one of the largest private schemes in the UK schemes in the UK � Accounting deficit has reduced from £5.7bn to £1.4bn, due to: due to: – recovery in asset prices – BT has paid more than £2bn into the scheme over two years � The Pensions Regulator’s review of December 2008 funding valuation now on hold
2011 and beyond � Incentivising management � Board and senior management changes � Regulatory environment
2011 and beyond � Corporate responsibility
2011 and beyond � London 2012 Olympic and Paralympic Games Paralympic Games
Total Shareholder Return* 57% 60% 50% 40% 30% 16% 20% 7% 10% 0% BT FTSE100 European Telco S Sector t * TSR = Total Shareholder Return is the measure of the returns that a company has generated for its shareholders, reflecting share price movement and dividends. Measured from 1 April 2010 to 31 March 2011
Financial strategy to 2013 2011 2011 2013 2013 Invest in the business Reduce net debt S Support the pension fund t th i f d Pay progressive dividends Pay progressive dividends
Chief Executive Ian Livingston BT Group plc
The UK market The UK market
UK has lowest landline prices amongst major countries t i 30 28.86 28.06 26 51 26.51 25 25 P nth, PPP 26 17 26.17 25.85 22.08 20 £ per mo 15 10 £ 5 0 UK UK USA USA S Spain i G Germany Italy It l F France International Communications Market, December 2010 Ofcom; weighted average of best-value tariff from each of the three largest operators by market share in each country, for 600 outbound minutes; July 2010 PPP adjusted. Based on a family of two parents and two children, who are cost conscious and favour using the fixed-line phone whenever possible, which gets fairly heavy use. Includes line rental and cost of purchasing enhanced tariffs that offer reduced prices.
UK also has highest broadband availability bscribe 100 99.7 56k) 98.5 98 5 could sub verage (25 95 96.1 96.0 95.7 95.0 holds that dband cov 90 85 % househ Broad 80 G Germany It l Italy USA USA Spain S i F France UK UK Source: OECD Broadband Portal August 2010
How is BT doing? How is BT doing?
Focusing on our strategic priorities to build a better future b tt f t � Driving broadband-based consumer services � Being the ‘Brand for Business’ for UK SMEs A better � BT Global Services – a global leader future future � The wholesaler of choice � The best network provider � A responsible and sustainable business leader A better Investing for Customer service Cost the future delivery transformation business
Customer service delivery � Challenges in the year � Q4 service improvements – Global Services customer faults c.10% – Wholesale broadband faults c.15% – Consumer complaints c.20% – Business complaints c.60% � More to do � More to do
Cost transformation � c. £2.8bn reduction in costs over 2 years, driven by – improved service and processes – procurement savings – a more agile organisation – substantial investment
Driving broadband-based consumer services � Super-fast fibre based broadband B Broadband db d New services Over 50% share of DSL net additions 5.7m customers � Award winning broadband for cost conscious consumers Differentiated WiFi service service � Home Hub 3 � Home Hub 3 with Smart Wireless
Being the ‘Brand for Business’ for UK small and medium sized enterprises (SME) di i d t i (SME) � SME line loss at lowest IT services and mobility revenue trend level for more than 3 years level for more than 3 years 20% � New business broadband 15% propositions launched 10% – Business broadband net adds up 5% c.30% 0% � Opportunity to increase market O t it t i k t -5% share in IT services and mobility 2010 2011 – IT services revenue up 17% p IT services Mobility – Mobility revenue up 14%
BT Global Services – a global leader � Order intake of £7.3bn, up 10% p � Contract wins with major Banking international companies and Consumer & Gov’t & government departments government departments Commerce Commerce Packaged Packaged Financial Health Goods Markets � Investment in Asia Pacific region UK – growing pipeline of orders growing pipeline of orders EMEA & Latin America � Strong growth in Latin America United States & Canada � New structure to focus on key � New structure to focus on key global sectors Asia Pacific
The wholesaler of choice � Europe’s largest telecoms wholesaler � Provides infrastructure for the UK telecoms industry – Managed Network Services now 24% of revenue* – More than 700 communications providers – Supplies / supports all major mobile network operators � Increasing revenue from new technology – IP based services / Ethernet – IP based services / Ethernet * external revenue
The best network provider 50 0 nes -50 50 ‘000s lin -100 -150 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Copper line base grew for first time since 2006
The best network provider - fibre � Fibre roll out progressing at pace – now over 5m premises passed – passing c.80,000 new premises per week – Cornwall and Northern Ireland public/private partnerships progressing well � Future – pass two thirds of premises by end of 2015 – potential to pass 90% of premises with government support – expect to roughly double our fibre to the cabinet (FTTC) speeds to up to 80Mbps in 2012 – Fibre to the premises (FTTP) trialling at 100Mbps and 1Gbps
Free cash flow * 2,500 £2,223m £2,106m 2,000 ,000 Tax benefit Tax benefit & one-offs £m 1,500 1,000 £772m 500 0 2009 2010 2011 Free cash flow * nearly trebled over 2 years * before cash specific items and pension deficit payments
Outlook - 2012 & 2013 Revenue 1 � Growth in 2012/13 Profit 2 � Growth to above £6bn in 2012/13 Free cash flow 3 � Above 2010/11 level in 2011/12 and 2012/13 � Progressive dividend Dividends 1 underlying revenue excluding transit underlying revenue excluding transit 2 earnings before interest, tax, depreciation and amortisation, before specific items 3 before specific items and pension deficit payments
Progress made More to do
BT Group plc Annual General Meeting 13 July 2011
Resolution 1 Reports and accounts Reports and accounts Resolution 3 Final Dividend Final Dividend
www bt com/annualreport www.bt.com/annualreport
Resolution 1 Reports and accounts Reports and accounts Resolution 3 Final Dividend Final Dividend
Resolution 2 Directors’ remuneration report Directors remuneration report Resolutions 22-26 Employee share plans and executive portfolio Employee share plans and executive portfolio
www bt com/annualreport www.bt.com/annualreport
Resolution 2 Directors’ remuneration report Directors remuneration report Resolutions 22-26 Employee share plans and executive portfolio Employee share plans and executive portfolio
Resolutions 4 – 12 Re election of directors Re-election of directors Resolutions 13-14 El Election of directors ti f di t
Resolution 17 Resolution 17 Authority to allot shares Resolution 18 Authority to allot shares for cash* Authority to allot shares for cash *Special resolution Resolution 19 Authority to purchase own shares* y p *Special resolution
Resolution 15 Reappointment of auditors Reappointment of auditors Resolution 16 Resolution 16 Remuneration of auditors Resolution 20 Notice of general meetings* *S *Special resolution i l l i Resolution 21 Resolution 21 Authority for political donations
Poll on all Resolutions Using your Admission Card/Proxy Card: • If voting all shares “for”, place a cross (X) in “For” box • If voting all shares “against”, place a cross (X) in “Against” box • If withholding vote, place (X) in “Vote withheld” box • If splitting vote, indicate the number of shares voting “for” “against” and “Vote withheld” • Please sign the card g • Place completed card in ballot box as you leave • Please ask a marshal if you have any questions
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