Shareholder Exclusive September 2013 The spirit of London 2012 lives on at BT BT is partnering with Join In, the London 2012 volunteering legacy charity, to encourage people across the country to give their time and make a difference in their local communities. Read more on page 6. 2 Chairman s message 4 Become an e-shareholder 6 Making a difference in local communities 8 Great offers and prize draws 10 The year so far and looking to the future Fantastic offers and prize draws inside Sporting celebrities and athletes support Join In, clockwise from top left: John Inverdale, Lee McConnell, Sharron Davies and Dave Moorcroft
A message from your Chairman The strategy that we have in place remains the right one. We held our AGM in Edinburgh this year and you can find full details of the meeting, including the voting results, online at www.bt.com/btagm2013 At the meeting, I reported another year of delivery for all our stakeholders, with financial results either meeting or exceeding expectations. We continue to invest in the future of our business, including outside the UK where we are driving investment in the high-growth regions of the world. Across the UK, our rollout of fibre optic cable to provide faster broadband continued at a worldbeating pace. Fibre broadband is now available to more than 16 million premises. That number is growing every week, and more than 1.7 million homes and businesses have chosen to take up the service. We are also working to help people develop the skills and confidence they need to make the most of broadband and all the advantages it can bring. We launched BT Sport, which is free to all BT Broadband customers, on 1 August. After just three months, more than a million households were ready to enjoy the start of the Barclays Premier League. This is a positive start and clearly demonstrates BT s commitment to helping deliver an Olympic legacy. The strategy that we have in place remains the right one. Our aim is to drive profitable revenue growth and increase profits and cash so that we can continue to invest in the business, reduce net debt, support our pension fund and pay you progressive dividends. I am pleased to report that at the AGM our shareholders approved a final dividend of 6.5 pence (up 14%), meaning a 14% increase in the full year dividend to 9.5 pence. We expect dividends to grow by 10-15% a year for the next two years. At the AGM, I also mentioned how seriously we take our obligations to society, the environment and the communities in which we operate. The things we do in these areas are integral to our business strategy. We have tangible goals in place for abating carbon emissions for customers and delivering a measurable social impact. You can see the progress we are making at bt.com/betterfuture The foundations are in place for an exciting future. Our vision continues to be one of creating a better business one that helps to create a better future for our investors and all of the many other people who have a stake in the ongoing success of BT. Sir Michael Rake Chairman September 2013 2
BT Sport studio on launch day, 1 August 3
Become an e-shareholder and you could win one of our great prizes You ll receive shareholder communications electronically and have dividends paid direct to your bank or building society account. Become an e-shareholder in two easy steps Sign up and you could win a VIP trip up the BT Tower* 1. Register your e-shareholder account Go to: www.btplc.com/signup All you need is your Shareholder reference number (from your dividend voucher) and your email address. 2. Choose direct dividend payment When you receive your activation code in the post, just add your bank or building society account details online, or fill in the form attached to your dividend cheque. Simple! Become an e-shareholder and be automatically entered into a free prize draw to win one of 250 VIP trips for two people to the top of the BT Tower. To be an e-shareholder you must have your dividend paid directly to your bank or building society account and have signed up for e-communication. Sign up at www.btplc.com/signup 4
Sign up by 31 October for the chance to win these great prizes: Win tickets to the Clare Balding show * Become an e-shareholder and you could win a pair of tickets to the Clare Balding Show at the new BT Sport studio where you will be part of the live studio audience and watch Clare interview three stars from the sporting world. Free 30 voucher for Naked Wines* A three night weekend break with Warner Leisure* Get your hands on the new ipad mini* Register as an e-shareholder and receive a 30 credit to spend against an order of a 6 or 12 bottle case of wine. Plus, win a case of champagne!* All new e-shareholders will also be entered into a free prize draw to win a 6 bottle case of Moutard Champagne. Sign up as an e-shareholder and be entered into our free prize draw to win a three-night break to Holme Lacy House in Herefordshire a fabulous Georgian manor surrounded by 20 acres of restored formal gardens and landscaped parkland. Stylish Signature room Delicious breakfasts and 3-course evening meals Live entertainment every night Range of daytime activities Use of sports and leisure facilities All new e-shareholders will be entered into our free prize draw to win a new ipad mini. There s a lot to like about the new ipad mini. Thin,light and full of features, it can do just about anything. Enter the draw by signing up as an e-shareholder. * To enter and for terms and conditions of all e-shareholder prize draws go to www.btplc.com/signup All prize draws close on 31 October 2013. 5
Making a difference in local communities BT has always believed in the powerful impact of volunteering. We actively encourage our employees and other stakeholders to give their time and expertise to make a real difference to local communities. Join in Together with the London 2012 volunteering legacy charity Join In, BT aims to build a new social movement around volunteering. In July, BT was the Presenting Partner of the UK s biggest volunteering event. Hundreds of BT people were part of the 30,000-strong crowd at the Queen Elizabeth Olympic Park at the Join In Go Local event, which inspired a new army of volunteers to help at grassroots sports clubs across the UK. This summer, there have been over 10,000 Join In events across the UK for people to volunteer at their local sports clubs and community groups. You can be the first to hear about Join In and future volunteering opportunities in your area. Sign up at www.joininuk.org/signup The crew of BT s Hot Air Balloon Join In Go Local volunteering event Join In Go Local volunteering event 6
43,600 work days spent volunteering by BT people 13million in-kind support and assistance by BT people Better Future programme BT has taken the lead in promoting charitable doing. We were one of the first companies to start measuring volunteering days. Last year, BT people spent 43,600 work days volunteering in the community, providing over 13 million of in-kind support and assistance to the organisations they helped. Skills-based giving is part of our Better Future programme. Find out more at www.btplc.com/betterfuture The Supporters Club The Supporters Club is an exciting initiative which brings together BT, our BT Sport partners and Comic Relief, using the power of sport to help disadvantaged young people, both here in the UK and around the world. BT Sport customers are invited to make a recurring monthly donation of 1, 3 or 5 via their BT bill. The money raised is being used to fund the coaches, mentors and teachers that these young people need to help them fulfil their potential. BT will match pound for pound the amount donated by its customers, up to 1 million, as well as donating another 500,000 through various initiatives and covering the running costs of the fund so that 100% of donations go straight to The Supporters Club. Find out more at www.thesupportersclub.org Sported Sported is the other London 2012 legacy charity. It focuses on sport with purpose providing young people with opportunities to develop the skills they ll need for the workplace. BT is providing volunteer mentors to Sported, helping the charity to expand its work across the UK and help young people reach their true potential. Find out more at www.sported.org.uk Clare Balding at the Riding for the Disabled Association, the first charity supported by The Supporters Club. You can watch the TV documentary on BT Sport (www.btsport.com) The Supporters Club fund is managed by Comic Relief which is a registered charity, No. 326568 (England/Wales); SC039730 (Scotland) 7
Great offers and prize draws for BT shareholders Enter our prize draw to win the Fujitsu AH512 Intel Pentium B960 Notebook* * All prize draws close on 31 October 2013. To enter and for terms and conditions go to www.btplc.com/signup 8
Win a pair of tickets to the BT Carol Concert* This year we are pulling out all the stops to celebrate 25 years of the BT Carol Concert it really will be a night to remember and tickets are expected to fly out of the box office even faster than they did last year. We re offering two lucky shareholders the chance to win a pair of tickets. To enter go to www.btplc.com/signup Exclusive offers on the latest technology Warner Leisure Hotels, just for grown-ups Available for BT shareholders at the BT Shop. Hurry, they re only available for a limited time! Visit www.bt.com/shop/shareholder or call 0800 917 0514 Take advantage of our BT Shareholder Offer and save up to 50% on selected 3 and 4 night breaks. PLUS save an EXTRA 10 off per person! To book call 0800 1 388 399 quoting code 87PHC, or visit www.warnerhotels.co.uk/phc For more of our great offers go to www.bt.com/shareholderoffers 9
The year so far Although it s early days, we are very pleased with the strong start in BT Sport. As many of you will have read in our latest quarterly financial results (published on 25 July 2013), we continue to make good progress, having delivered another quarter of solid growth in underlying profit before tax. This is despite the impact of regulation and the significant investments we are making for the future. Delivering faster broadband over fibre optic cable remains at the heart of our plans. Take-up is strong, with 265,000 users added in the quarter. This continued investment and focus on deploying fibre into regional areas of the UK is helping the Government to achieve its goal of more than 90% fibre availability in the next few years. Although it s early days, we are very pleased with the strong start in BT Sport. This promises to be a great product showing many of the best matches and events, presented by some of the leading talent in the UK. The number of fixed lines in the UK grew by 12,000 compared with a 44,000 decline in the first quarter last year. Our SME business delivered its best revenue performance in more than four years. BT Wholesale made a strong start to the year with a total order intake of 509m. BT Global Services also delivered a strong order intake, up almost 50%, and we saw a doubledigit increase in revenue in the high-growth regions of the world. I am immensely proud to have led BT over the last five years. The foundations are in place for an exciting future and I m confident that BT will make even more progress under the leadership of Gavin Patterson and our talented team. Ian Livingston Chief Executive 1m Over 1 million households with BT Sport 10
Looking to the future We are making a number of investments in the group: in our networks, for example fibre and mobile. This is a very exciting time for BT and I m looking forward to the challenges ahead. We are making a number of investments in the group: in our networks, for example fibre broadband and mobile; in our products, such as TV; and in the quality of service we provide to our customers. My first priority is to make sure that we execute well on these investments. Secondly, we need to keep investing in the long-term future of our business while delivering on our financial promises in the short-term. If we achieve these goals, then we will grow cash flow sustainably, which is another important priority. All of this will be achieved through delivering on the strategy that we set a few years ago. It is a strategy which I played a fundamental part in creating. It focuses on improving our customer service, transforming our cost base and investing in our future. This will make BT a better business with a better future. Gavin Patterson CEO, BT Retail, Group Chief Executive designate 16m Fibre broadband now available to over 16 million premises 11
Contact information Shareholder helpline For general enquiries call: Freefone: 0808 100 4141 (+44 121 415 7178*) Textphone: 0800 169 6907 (+44 121 415 7028*) BT Shop: 0800 917 0514 * calls from outside the UK Online You can find information on how to manage your shareholdings at https://help.shareview.co.uk If your question is not answered by the information provided, you can send your enquiry via secure email from these pages. Post Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom (Please include a daytime telephone number.) Managing your shares 24/7 View current market information and share prices, update your address and bank details and contact us through secure email by logging on and registering at www.shareview.co.uk Beware of fraudsters We would like to remind shareholders to be very mindful of unsolicited phone calls or correspondence concerning your shareholding or investment matters. If you receive any unsolicited investment advice make sure you record the name of the person, organisation, telephone number, address etc and check they are properly authorised before you get involved. If it sounds too good to be true it probably is. You can check on the Financial Conduct Authority s (FCA) website at www.fca.org.uk or call their consumer helpline on 0800 111 6768. If you also tell Equiniti they will liaise with the FCA and keep BT informed. BT Group plc www.bt.com Registered office: 81 Newgate Street, London, EC1A 7AJ Registered in England and Wales No. 4190816. PHME: 68412 Design by saslondon.com Printed in England by DST (Output) Ltd Printed on FSC 130gsm Pavarotti Silk.