commitment
our commitment
At TELUS, we recognize that leading the way in corporate social responsibility is as important as our financial performance. We have made a commitment to our customers, shareholders and all stakeholders to stay ahead of our competitors in all aspects of our business – economically, environmentally and socially.
Darren Entwistle
Member of the TELUS Team
Corporate social responsibility remains an integral part of what we do – it defines our business practices and culture as we strive to achieve long-term sustainable growth.
TELUS remains committed to a triple bottom line approach to business, balancing economic growth with an unwavering devotion to our environmental and social goals. This is a promise TELUS and our team members make to our stakeholders, and it is ingrained in the leadership throughout our organization.
TELUS, our team members and our retirees are committed to our goal of being Canada’s premier corporate citizen and to making a positive difference in the communities we serve across Canada. The establishment in 2005 of TELUS Community Boards in seven Canadian cities to better assist us in making meaningful investments in social welfare is a prime example.
As we strive to stay ahead and to advance our leadership position in the global telecommunications industry, we vow to continue managing our business responsibly and with integrity while focusing on sustainable development.
A look at our progress
For TELUS, 2005 was an extraordinary year of challenges and triumphs, and ultimately a year when everything came together. Following a four-month labour disruption, we reached a key milestone with the ratification of a new five-year collective agreement by our bargaining unit team members.
Another significant milestone was the merging of our wireline and wireless organizations – TELUS Communications and TELUS Mobility – into a single operating structure. This development promises tremendous rewards for our company, team members and shareholders as we move forward as one team, under one brand, defined by a common strategy.
In last year’s corporate social responsibility report, we set sustainability targets in five areas: economic growth, environmental conservation, community welfare, workplace well-being and governance, integrity and transparency. Notwithstanding the challenges experienced in the year, we made significant progress as outlined below.
Economic growth
Target: Realize TELUS’ 2005 consolidated financial targets
as detailed in the 2004 annual report.
TELUS achieved and mostly exceeded its 2005 financial targets
despite the impact of the labour disruption. We generated
$8.1 billion in revenue and $700 million of net income. TELUS
was a top-quartile global leader among major telecom
companies in growth of revenue, operating earnings (EBITDA:
earnings before interest, taxes, depreciation and amortization),
earnings per share and cash flow (measured as EBITDA
less capital expenditures). Specifically, we generated growth of
seven per cent in revenue and operating earnings, 24 per cent
in earnings per share and 12 per cent for cash flow.
Maintaining a balance between shareholder and debt holder interests remained a priority for TELUS in 2005. In this regard, we continued to fulfill our commitment toward debt reduction, including retiring $1.6 billion in debt in December 2005, six months ahead of the maturation schedule. This resulted in a net debt to EBITDA ratio of 1.7 times and served to strengthen our balance sheet and credit position. Notably, TELUS received upgrades from all four major credit rating agencies during 2005.
TELUS continued its program of returning capital to shareholders, firstly through two share repurchase programs. We repurchased 20.8 million shares for $892 million in 2005, and announced a second repurchase program for up to 24 million shares, or seven per cent of outstanding shares, by December 2006. Secondly, TELUS announced a substantial 37.5 per cent increase to the quarterly dividend, effective January 1, 2006, making the total quarterly dividend 27.5 cents per share. It should be noted that TELUS shareholders benefited from a second year of impressive share price appreciation; the common shares appreciated 32 per cent in 2005 (40 per cent in 2004).
Environmental conservation
Target: Complete an external audit of TELUS’ environmental
management system (EMS), demonstrating a high degree of
conformance with the ISO 14000 EMS standard.
TELUS engaged PricewaterhouseCoopers, a leading international
auditing firm, to complete this audit in the fall of 2005. Unfortunately
the labour disruption interrupted plans for the audit as most
environmental staff members were redeployed to other areas of
the business to maintain customer service levels. The need for
an EMS review remains a priority; the last audit was completed in
1998 and our corporate goal is to complete an EMS audit every
five years. As such, the audit has been rescheduled for 2006.
For three consecutive years, Corporate Knights, an organization specializing in corporate social responsibility, has recognized TELUS as an environmental leader. Specifically, in 2005 we ranked seventh in the top 50 of Canada’s Best Corporate Citizens. In 2003 and 2004 we were named Canada’s Best Environmental Corporate Citizen.
Community welfare
Target: Increase both the funds raised and participation rate
of team members by 10 per cent in the 2005 Employee
Charitable Giving Campaign.
TELUS encourages a corporate culture of giving through the
annual Employee Charitable Giving Campaign, where we
match team member pledges to charitable organizations dollar
for dollar. The 2005 campaign was not implemented due to
the extended labour disruption. Recognizing the importance of
the campaign to both team members and Canadian charitable
organizations, TELUS donated 100 per cent of the funding –
$2 million – in lieu of the 2005 campaign.
Since 1995, we have remained committed to being an Imagine Caring Company, annually donating more than one per cent of our pre-tax profits to charitable organizations.
Workplace well-being
Target: Resolve outstanding collective bargaining.
TELUS is particularly pleased to have realized this target in
November 2005. The ratification of a negotiated and progressive
agreement between TELUS and the Telecommunications
Workers Union marked the beginning of a new constructive
era for TELUS and all team members.
The agreement provides 14,000 unionized team members with best-in-class compensation, growth opportunities and employment protection, whilst allowing TELUS the productivity and flexibility needed in today’s competitive telecommunications industry.
Governance, integrity and transparency
Target: Enhance TELUS’ corporate governance leadership
by being substantially ready in 2005 for the next level
of U.S. Sarbanes-Oxley Act certification required in 2006.
I am pleased to report that we also met this target.
Seventy-five per cent of key controls were tested in 2005
as a dry run in preparation for full certification. We will
test 100 per cent of key controls in 2006 and be prepared
to certify under the rigorous U.S. Sarbanes-Oxley Act
certification (section 404) required in 2006 on financial
reporting internal controls.
In addition, we received external recognition for various aspects of our corporate governance practices from the Canadian Institute of Chartered Accountants, IR Magazine and Canadian Business magazine. These complemented our 2005 ranking from Corporate Knights, which also acknowledged our corporate governance leadership.
| 2006 sustainability targets | |
|---|---|
Economic growth |
Realize TELUS’ 2006 consolidated financial targets (revenue, operating earnings, earnings per share, capital expenditures and free cash flow) as detailed on page 8 of the 2005 annual report – business review. |
Environmental conservation |
Complete an external audit of TELUS’ environmental management system (EMS), demonstrating a high degree of conformance with the ISO 14000 EMS standard. |
Community welfare |
Through the TELUS Community Boards, donate $3.5 million to community initiatives in line with
our pillars of health and wellness, sport and education, and arts and culture.
Launch Governance Essentials, a program for not-for-profit directors in Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal, as a critical component of our leadership strategy in corporate philanthropy. |
Workplace well-being |
Through targeted initiatives such as spirited teamwork – stronger together, increase the engagement of the TELUS team as measured by the Pulsecheck survey. |
Governance, integrity and transparency |
Test 100 per cent of key controls in 2006 and be prepared to certify under the rigorous U.S. Sarbanes-Oxley Act certification (section 404) required in 2006. |
Meeting the challenges – 2006 targets
As we embark upon the exciting path ahead as a successful company focused on staying ahead of our competitors, there are challenges that require our unrelenting attention.
1 The entrance of non-traditional competitors such as cable-television companies into the telecom arena through voice over Internet protocol (VoIP) is an excellent example of the increasingly competitive and changing telecommunications industry. Whilst it is a significant challenge, it is also a tremendous opportunity. We have begun a team member trial of our own innovative VoIP service. In addition, we are gearing up for the expansion of our digital television service, TELUS TV, in Alberta and into the B.C. market later this year. In preparation, we are building a $15 million satellite centre in B.C. to transmit television signals.
2 Responding to appeals for financial support in our communities continues to be a priority. Our focus is clear – funding from TELUS needs to benefit the community in the most effective manner possible. In 2005, TELUS made significant progress with the establishment of the TELUS Community Boards, which directly involve key community stakeholders in the decision-making process in allocating $3.5 million annually of TELUS funds to the charitable sector. In 2006, we intend to expand the national network to include a number of smaller communities in British Columbia and Alberta.
3 Conserving the environment in relation to the implementation of TELUS’ business initiatives is another ongoing challenge and responsibility. Our commitment to environmental stewardship leads us to strive for continuous improvement in the way we manage environmental impacts. In 2006, we will improve our reporting of energy consumption and use this as a means to identify new conservation initiatives. We will continue to seek feedback on our environmental performance from all stakeholders, and engage team members in ongoing and new environmental programs.
Staying ahead
The future is very promising for TELUS and its stakeholders. We have an excellent financial foundation, a talented and united team and a growing portfolio of innovative wireline and wireless solutions. This positive outlook brings renewed strength to our commitment to corporate social responsibility.
Recognizing that our success is measured by our accomplishments, we have set six corporate social responsibility targets for 2006. You have the commitment of the entire TELUS team to meet these objectives in a financially, socially and environmentally responsible manner as we strive to stay ahead of the competition for the benefit of all our stakeholders.
Sincerely,
Darren Entwistle
President and Chief Executive Officer
March 15, 2006