BT Group plc
Sir Michael Rake
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
2011 group results
2011 Results
R
lt
Revenue1
£20,076m
Ch
Change
4%
Cost savings1
£1,087m
Profit before tax1
£2,083m
20%
Free cash flow2
£2 223m
£2,223m
6%
Net debt
£8,816m
£467m
1
2
before specific items
before specific items and pension deficit payments
In line
with or
ahead of
outlook
tl k
Dividends
Proposed final dividend 5.0p
9%
Full year dividend
7%
7.4p
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
Accounting deficit has reduced from £5.7bn to £1.4bn,
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
Total Shareholder Return*
60%
57%
50%
40%
30%
16%
20%
7%
10%
0%
BT
*
FTSE100
European Telco
S t
Sector
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
2013
Invest in the business
Reduce net debt
S
Support
t the
th pension
i
fund
f d
Pay progressive dividends
BT Group plc
Ian Livingston
Chief Executive
The UK market
UK has lowest landline prices amongst major
countries
ti
£ per month, PPP
P
30
25
20
25.85
26 17
26.17
26 51
26.51
USA
S i
Spain
G
Germany
28.06
28.86
It l
Italy
F
France
22.08
15
10
5
0
UK
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.
Broad
dband covverage (25
56k)
% househ
holds that could sub
bscribe
UK also has highest broadband availability
100
98.5
98
5
95
95.0
95.7
96.0
96.1
G
Germany
It l
Italy
USA
S i
Spain
99.7
90
85
80
Source: OECD Broadband Portal August 2010
F
France
UK
How is BT doing?
Focusing on our strategic priorities to build a
b tt future
better
f t
Driving broadband-based consumer services
Being the ‘Brand for Business’ for UK SMEs
A better
future
BT Global Services – a global leader
The wholesaler of choice
The best network provider
A responsible and sustainable business leader
Customer service
delivery
Cost
transformation
Investing for
the future
A better
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
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 db d
Broadband
Over 50% share of DSL net additions
5.7m customers
Award winning broadband for
cost conscious consumers
Home Hub 3
with Smart
Wireless
Differentiated
service
WiFi
New services
Being the ‘Brand for Business’ for UK small and
medium
di
sized
i d enterprises
t
i
(SME)
SME line loss at lowest
level for more than 3 years
New business broadband
propositions launched
– Business broadband net adds up
c.30%
Opportunity
O
t it to
t increase
i
market
k t
share in IT services and mobility
IT services and mobility revenue trend
20%
15%
10%
5%
0%
-5%
2010
2011
– IT services revenue up
p 17%
IT services
– Mobility revenue up 14%
Mobility
BT Global Services – a global leader
Order intake of £7.3bn,
up
p 10%
Contract wins with major
international companies and
government departments
Investment in Asia Pacific region
– growing pipeline of orders
Banking
&
Financial
Markets
Commerce
Consumer
Packaged
Goods
UK
Strong growth in Latin America
EMEA & Latin America
New structure to focus on key
global sectors
United States & Canada
Asia Pacific
Gov’t &
Health
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
*
external revenue
The best network provider
50
‘000s lin
nes
0
-50
50
-100
-150
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Copper line base grew for first time since 2006
Q4
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
£2,106m
£m
2,000
,000
£2,223m
Tax benefit
& one-offs
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
Revenue1
Growth in 2012/13
Profit2
Growth to above £6bn in 2012/13
Free cash flow3
Above 2010/11 level in 2011/12 and 2012/13
Dividends
Progressive dividend
1
underlying revenue excluding transit
earnings before interest, tax, depreciation and amortisation, before specific items
3
before specific items and pension deficit payments
2
Progress made
More to do
BT Group plc
Annual General Meeting
13 July 2011
Resolution 1
Reports and accounts
Resolution 3
Final Dividend
www bt com/annualreport
www.bt.com/annualreport
Resolution 1
Reports and accounts
Resolution 3
Final Dividend
Resolution 2
Directors’ remuneration report
Directors
Resolutions 22-26
Employee share plans and executive portfolio
www bt com/annualreport
www.bt.com/annualreport
Resolution 2
Directors’ remuneration report
Directors
Resolutions 22-26
Employee share plans and executive portfolio
Resolutions 4 – 12
Re election of directors
Re-election
Resolutions 13-14
El ti off di
Election
directors
t
Resolution 17
Authority to allot shares
Resolution 18
Authority to allot shares for cash
cash*
*Special resolution
Resolution 19
Authorityy to p
purchase own shares*
*Special resolution
Resolution 15
Reappointment of auditors
Resolution 16
Remuneration of auditors
Resolution 20
Notice of general meetings*
*S i l resolution
*Special
l i
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”
g the card
• Please sign
• Place completed card in ballot box as you leave
• Please ask a marshal if you have any questions
For & Discretion
Res No. Description
Against
Total
%
Total
%
Overall
Total
For & Discretion
Res No. Description
Against
Total
%
Total
%
Overall
Total
0.27%
4,690,526,598
01
Reports and accounts
4,649,815,530
99.07%
43,718,567
0.93%
4,693,534,097
14
Elect Jasmine Whitbread
4,678,089,368
99.73%
12,437,230
02
Remuneration report
4,399,658,611
94.74%
244,422,176
5.26%
4,644,080,787
15
Reappointment of auditors
4,632,595,661
99.52%
22,119,840
0.48%
4,654,715,501
Remuneration of auditors
4,682,489,246
99.83%
8,019,548
0.17%
4,690,508,794
03
Final dividend
4,691,979,848
99.97%
1,256,668
0.03%
4,693,236,516
16
04
Re-elect Sir Michael Rake
4,613,566,569
99.14%
39,904,138
0.86%
4,653,470,707
17
Authority to allot shares
4,541,405,551
97.99%
92,929,159
2.01%
4,634,334,710
99.34%
31,086,673
0.66%
4,690,721,009
Re-elect Ian Livingston
g
4,684,154,290
99.84%
7,712,409
0.16%
4,691,866,699
18
Authority to allot shares for cash
4,659,634,336
06
Re-elect Tony Chanmugam
4,683,139,413
99.83%
8,171,524
0.17%
4,691,310,937
19
Authority to purchase own shares
4,664,833,724
99.43%
26,898,036
0.57%
4,691,731,760
07
Re-elect Gavin Patterson
4,683,867,357
99.84%
7,498,491
0.16%
4,691,365,848
08
Re-elect Tony Ball
365,392,215
7.79%
4,692,107,694
40,580,443
0.87%
4,691,072,041
14 days' notice of meetings
92.21%
99.13%
20
4,326,715,479
4,650,491,598
09
Re-elect J Eric Daniels
4,650,663,077
99.14%
40,252,367
0.86%
4,690,915,444
21
Authority for political donations
4,582,914,404
97.76%
104,970,415
2.24%
4,687,884,819
10
Re-elect
Re
elect Rt Hon Patricia Hewitt
4 638 102 917
4,638,102,917
98 86%
98.86%
53 395 337
53,395,337
1 14%
1.14%
4 691 498 254
4,691,498,254
22
Renewal of sharesave scheme
4,666,466,687
99.49%
23,795,307
0.51%
4,690,261,994
11
Re-elect Phil Hodkinson
4,678,229,059
99.73%
12,700,825
0.27%
4,690,929,884
23
Renewal of intl sharesave scheme
4,664,670,229
99.48%
24,449,047
0.52%
4,689,119,276
12
Re-elect Carl Symon
4,641,713,408
98.95%
49,050,572
1.05%
4,690,763,980
24
Renewal of share investment plan
4,669,025,930
99.55%
21,203,765
0.45%
4,690,229,695
13
Elect Nick Rose
4,678,816,547
99.75%
11,636,502
0.25%
4,690,453,049
25
Renewal of stock purchase plan
4,666,641,859
99.51%
23,067,218
0.49%
4,689,709,077
26
Renewal of executive p
portfolio
3,361,679,539
73.59%
1,206,149,801
26.41%
4,567,829,340
05
For & Discretion
Res No. Description
Res
No.
Description
01
Reports and accounts
Total
4,649,815,530
Against
For & Discretion
%
Total
Vote Withheld
Overall
Against
%
Total43,718,567 %0.93%
98.93%
Total
Total
6,714,224
%
Total
0.14%
Overall
%
Total
%4,700,248,321
100.00%
For & Discretion
Res No. Description
Total
Res No. Description
Against
For & Discretion
%
Reports and accounts
1.19%0.93%
4,700,221,228
100.00%
4,693,534,097
0214
Elect Jasmine
Remuneration
report Whitbread 4,399,658,611
4,649,815,530
7,073,746
0.15%5.26%
4,700,310,262
100.00%
244,422,176
4,644,080,787
98.93%
%
43,718,567
Overall
Against
%
Total
01
Vote Withheld
Total
0.93%
4,678,089,368
93.61%
244,422,17699.73%
5.20%
Total
%
Total
Total
6,714,224
%
0.14%
Overall
%
Total
4,700,248,321
100.00%
12,437,230 1.19%0.27%
4,690,526,598
56,140,441
4,700,221,228
100.00%
0201
Remuneration
Reports report
and accounts
4,399,658,611
93.61%
244,422,17699.07%
5.20%
4,649,815,530
0302
FinalRemuneration
dividend
report
4,691,979,848
99.82%
1,256,668 94.74%
0.03%
4,399,658,611
0315
FinalReappointment
dividend
0403
Re-elect
Michael Rake
FinalSirdividend
4,613,566,569
98.16%
39,904,13899.97%
0.85%
4,691,979,848
46,753,784
1,256,668
0.99%0.03%
4,700,224,491
100.00%
4,693,236,516
0416
Remuneration
of auditors4,613,566,569
Re-elect
Sir Michael Rake
4,682,489,246
98.16%
39,904,138 99.83%
0.85%
8,019,548
46,753,784
4,690,508,794
0.99%0.17%
4,700,224,491
100.00%
05
Re-elect Ian Livingston
4,684,154,290
99.66%
7,712,409
99.66%
7,712,409
4,541,405,551
8,428,363
92,929,159
0.18%2.01%
4,700,295,062
100.00%
4,634,334,710
06
Re-elect Tony Chanmugam
4,683,139,413
99.64%
8,171,524
07
Re-elect Gavin Patterson
4,683,867,357
99.65%
7,498,491
08
Re-elect Tony Ball
4,650,491,598
98.94%
40,580,443
09
Re-elect J Eric Daniels
Re-elect Tony Ball
4,650,663,077
98.95%
40,252,367
10
Re-elect Rt Hon Patricia Hewitt
4,638,102,917
98.68%
53,395,337
11
Re-elect Phil Hodkinson
4,678,229,059
99.53%
12,700,825
04
05
06
07
08
09
10
Re-elect Sir Michael Rake
Re-elect Ian Livingston
g
Re-elect Tony Chanmugam
Re-elect Gavin Patterson
Re-elect J Eric Daniels
Re-elect
Re
elect Rt Hon Patricia Hewitt
4,641,713,408
4,613,566,569
4,684,154,290
4,683,139,413
4,683,867,357
4,650,491,598
4,650,663,077
4 638 102 917
4,638,102,917
98.76%
39,904,138
100.00%
0517
Re-elect
Ian Livingston
Authority
to allot
0.17%
8,932,325
7,712,409
0.19%
4,700,243,262
100.00%
06
Re-elect Tony Chanmugam
0.16%
8,868,131
8,171,524
0.19%
4,700,233,979
100.00%
07
Re-elect Gavin Patterson
4,683,867,357
99.65%
0.86%
9,155,740
7,498,491
0.19%
4,700,227,781
100.00%
08
Re-elect Tony Ball
4,650,491,598
98.94%
0.86%
9,304,680
0.20%
4,700,220,124
100.00%
0920
14 days'
Re-elect
J Eric notice
Daniels of meetings
4,650,663,077
4,326,715,479
98.95%
40,252,367 92.21%
0.86%
365,392,215
4,692,107,694
9,304,680
0.20%7.79%
4,700,220,124
100.00%
8,768,917
0.19%
4,700,267,171
100.00%
1021
Re-elect
Rt Hon Patricia
Hewitt
Authority
for political
98.68%
53,395,337 97.76%
1.14%
4,582,914,404
8,768,917
0.19%2.24%
4,700,267,171
100.00%
104,970,415
4,687,884,819
9,283,152
0.20%
4,700,213,036
100.00%
11
Re-elect Phil Hodkinson
4,678,229,059
99.53%
12,700,825
12
Re-elect Carl Symon
4,641,713,408
98.76%
49,050,572
99.84%
99.83%
99.84%
99.13%
1.14%
99.14%
0.27%
98 86%
98.86%
1.04%
40,580,443
40,252,367
53 395 337
53,395,337
0.17%
0.16%
0.87%
0.86%
1 14%
1.14%
Re-elect Phil Hodkinson
Elect Nick Rose
4,678,816,547
99.54%
9,752,169
0.21%
1412
Re-elect
Carl Symon
Elect
Jasmine Whitbread
4,678,089,368
99.53%
4,641,713,408
98.95%
12,437,230
0.26%
49,050,572
9,668,696
0.21%
1513
Elect NickofRose
Reappointment
auditors
4,632,595,661
4,678,816,547
98.56%
22,119,84099.75%
0.47%
11,636,502
45,521,896
16
Remuneration of auditors
4,682,489,246
99.62%
9,723,912
99.73%
0.25%
0.17%
9,435,692
0.16%
11
13
8,019,548
22,119,840
4,654,715,501
7,073,746
0.15%0.48%
4,700,310,262
100.00%
4,700,295,062
Re-elect Carl Symon
11,636,502
99.52%
0.03%
0.18%
0.86%
12,700,825
0.20%
4,653,470,707
4,691,866,699
4,691,310,937
4,691,365,848
4,691,072,041
4,690,915,444
4 691 498 254
4,691,498,254
4,700,199,672
0.27%
100.00%
4,690,929,884
4,700,205,218
100.00%
18
19
22
23
shares
4,632,595,661
99.82%
1,256,668
8,428,363
12
4,678,229,059
of auditors
4,691,979,848
0.16%
99.14%
49,050,572
56,140,441
43,718,567
4,684,154,290
4,683,139,413
Authority to allot shares for
cash
Authority to purchase own shares
4,638,102,917
donations
Renewal of sharesave scheme
Renewal of intl sharesave scheme
99.64%
8,171,524
0.17%
4,659,634,336
99.34%
7,498,491
4,664,833,724
99.43%
40,580,443
4,666,466,687
4,664,670,229
0.27%
99.49%
1.04%
99.48%
9,155,740
0.19%
4,700,233,979
0.57%
0.19%
100.00%
4,691,731,760
4,700,227,781
100.00%
9,283,152
0.20%
4,700,213,036
100.00%
9,435,692
0.20%
4,700,199,672
100.00%
23,795,307
24,449,047
0.51%
0.52%
4,690,261,994
4,689,119,276
9,752,169
0.21%
Elect
Jasmine Whitbread
4,678,089,368
Renewal
of share investment
plan
4,669,025,930
99.53%
12,437,230 99.55%
0.26%
21,203,765
9,668,696
4,690,229,695
0.21%0.45%
4,700,195,294
100.00%
4,690,453,049
0.97%0.25%
4,700,237,397
100.00%
15
Reappointment of auditors
4,632,595,661
98.56%
22,119,840
0.47%
45,521,896
23,067,218
0.97%
4,700,237,397
100.00%
0.21%
16
Remuneration of auditors
4,682,489,246
99.62%
8,019,548
0.17%
9,723,912
0.21%
4,700,232,706
100.00%
25
26
Renewal of stock purchase plan
Renewal of executive p
portfolio
4,666,641,859
3,361,679,539
0.25%
8,868,131
26,898,036
Elect Nick Rose
100.00%
11,636,502
0.86%
8,932,325
0.19%
4,700,243,262
100.00%
31,086,673
0.66%
4,690,721,009
1424
4,700,232,706
99.54%
0.16%
13
1.05%
4,690,763,980
4,700,195,294
100.00%
4,678,816,547
0.16%
97.99%
99.51%
73.59%
1,206,149,801
4,700,205,218
0.49%
26.41%
100.00%
4,689,709,077
4,567,829,340
17
Authority to allot shares
4,541,405,551
96.62%
92,929,159
1.98%
65,895,756
1.40%
4,700,230,466
100.00%
17
Authority to allot shares
4,541,405,551
96.62%
92,929,159
1.98%
65,895,756
1.40%
4,700,230,466
18
Authority to allot shares for cash
4,659,634,336
99.14%
31,086,673
0.66%
9,519,074
0.20%
4,700,240,083
100.00%
18
Authority to allot shares for cash
4,659,634,336
99.14%
31,086,673
0.66%
9,519,074
0.20%
4,700,240,083
100.00%
100.00%
19
Authority to purchase own shares
4,664,833,724
99.25%
26,898,036
0.57%
8,495,555
0.18%
4,700,227,315
100.00%
19
Authority to purchase own shares
4,664,833,724
99.25%
26,898,036
0.57%
8,495,555
0.18%
4,700,227,315
100.00%
20
14 days' notice of meetings
4,326,715,479
92.05%
365,392,215
7.77%
8,112,956
0.17%
4,700,220,650
100.00%
20
14 days' notice of meetings
4,326,715,479
92.05%
365,392,215
7.77%
8,112,956
0.17%
4,700,220,650
100.00%
21
Authority for political donations
4,582,914,404
97.50%
104,970,415
2.23%
12,361,584
0.26%
4,700,246,403
100.00%
21
Authority for political donations
4,582,914,404
97.50%
104,970,415
2.23%
12,361,584
0.26%
4,700,246,403
100.00%
22
Renewal of sharesave scheme
4 666 466 687
99 28%
23 795 307
0 51%
10 049 961
0 21%
4 700 311 955
100 00%
22
Renewal of sharesave scheme
4 666 466 687
99 28%
23 795 307
0 51%
10 049 961
0 21%
4 700 311 955
100 00%
Poll on Amendment to Resolution X
Using your voting paper:
• If voting all shares “for” amendment, tick (9) “For” box in Column 2, alongside
appropriate resolution number
• If voting all shares “against” amendment, tick (9) “Against” box in Column 3
• If splitting vote,
vote enter the appropriate number of shares in Columns 2 and 3
• Write name, address and account number in Box 1
g the voting
g paper
p p in Box 2 and hand it to marshal at end of row
• Sign
• Please ask a marshal if you have any questions
Poll on Procedural Resolution
Using your voting paper:
• Delete Box A
• If voting “for” procedural resolution, place a tick (9) in Box 1 headed “For”
• If voting “against” procedural resolution, place a tick (9) in Box 2 headed
Against
“Against”
• If splitting vote, enter the appropriate number of shares in Boxes 1 and 2
• Write name,, address and account number in Box 3
• Sign the voting paper in Box 4 and hand it to marshal at end of row
• Please ask a marshal if you have any questions
Poll on an adjournment
Using your voting paper:
• Delete Box B
• If voting “for” an adjournment, place a tick (9) in Box 1 headed “For”
• If voting “against” an adjournment, place a tick (9) in Box 2 headed “Against”
• If splitting vote, enter the appropriate number of shares in Boxes 1 and 2
• Write name, address and account number in Box 3
• Sign the voting paper in Box 4 and hand it to marshal at end of row
• Please ask a marshal if you have any questions