CEO's statement

2004/05 was a busy and successful year for O2. Yet I believe we grew stronger last year by holding on to a simple idea - that we should pace ourselves and concentrate on doing a few important things exceptionally well.

We were not, for example, among the first to launch 3G services, because we wanted to make sure important elements - network quality, functioning handsets, trained staff and compelling content - were in place first.

"Corporate responsibility sounds like a dry concept. But it describes a significant shift in business thinking, forcing us to ask important questions about the balance of how we do things."

Nonetheless, we were at the forefront in highlighting the potential hazards of mobile content to young people, providing parents with the necessary information to allow them to understand and manage their children's use of phones safely, protecting them from harmful content and contacts that can occur through mobile internet access. We aim to further improve our communications in this field over the coming year.

This is part of the increased focus we are giving to our customers.

Our customer centred strategy recognises that - in a fiercely competitive marketplace, where people are happy to shop around for the lowest prices and the latest devices and services - quality, value and innovation are what will really set O2 apart from the crowd and make our customers come back to us time after time.

Customers want excellent technology, compelling products and services, useful and entertaining content, simple and clear pricing. We want to be better than our competitors at providing these things. That's why we marked the end of our financial year by promising to switch more of our resources, including an extra 2,000 staff, to the front line of customer service. This means that now around three quarters of our employees will be directly customer facing.

Customers also want to be comfortable with us as a company. They want to be able to trust us. That's why we need to show that we behave responsibly and with due care. This influences people's choices, as consumers and as citizens. It makes absolute business sense to devote the time and effort we put into responding to the concerns of customers and other stakeholders. Only by increasing our dialogue with them can we really hope to understand and respond to their needs. We are committed to increasing that dialogue.

People in O2 understand that meeting the needs of our customers is critical. We made it a priority last year to stress its importance in presentations to employees. And we have given each of our operating businesses - in the UK, Germany, Ireland and the Isle of Man - the lead role in making sure responsible practices are being applied across our operations. Why? Because they are closest to our customers and best placed to respond to people's needs and concerns.

This report will give you many examples of how we have taken this work forward during the year. You will see it in our environmental performance, where we were the first mobile operator to achieve ISO 14001 accreditation for all our operating businesses. You'll see it in the work we are doing in all our markets to make mobile services safer for young people and the progress we are making in areas such as employee wellbeing programmes and in our 'Can Do in the Community' investment initiatives, which go from strength to strength. Corporate responsibility sounds like a dry concept. But it describes a significant shift in business thinking, forcing us to ask important questions about the balance of how we do things.

There is, for instance, a balance between what we want to offer our customers, people inside the Company and the communities we serve. If we want to provide real value for our customers it is essential we value the people who work for O2. We can only serve a wide range of customers with modern products and services if we provide an inclusive and modern workplace. We can only make a real difference in our communities when we give our employees the opportunity to bring their energy and ideas to our community programme. Being serious about the safety of our customers and the public goes hand-in-hand with safeguarding the wellbeing of our employees.

This report has been prepared in accordance with the 2002 GRI guidelines. It represents a balanced and reasonable presentation of our organisation's economic, environmental and social performance.

You may well want to know more or to share your views with us. If so, please contact us.

Peter Erskine, Chief Executive Officer, O2 plc
24 June 2005