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Background
Telephone services in almost all of the UK were, until
1981, provided by the Post Office, which was a government
department until 1969 when it was established as a state
public corporation. In 1981, the postal and telecommunications
services of the Post Office became the responsibility
of two separate corporations, with British Telecommunications
– under the trading name of British Telecom –
taking over the telecommunications business.
As a result of the Telecommunications Act, which received
Royal Assent in 1984, the company was incorporated in
the United Kingdom under the Companies Acts 1948 to 1981
on 1 April 1984 as a public limited company wholly owned
by HM Government of the United Kingdom. The transfer of
property, rights and liabilities of the corporation to
British Telecommunications plc was made on 6 August 1984.
In November 1984, HM Government offered 3,012 million
ordinary shares (50.2% of the total issued ordinary shares)
to the public. The share sale was fully subscribed. British
Telecom shares made their debut on the London Stock Exchange
on 3 December 1984.
British Telecommunications plc has been trading as BT
since April 1991.
In December 1991, HM Government sold over half its remaining
shares in BT, retaining a holding of about 22%. It sold
this residual holding in July 1993. Subsequently, in September
1997, HM Government redeemed at par a special rights redeemable
preference share to which certain special rights attached.
In 1985, Cellnet was launched as a joint venture between
British Telecom and Securicor which held 40% of the company.
BT acquired full control of Cellnet (now BT Cellnet) by
acquiring Securicor’s minority holding in July 1999.
In July 1998, BT and AT&T launched Concert, a 50/50
joint venture serving customers around the world. BT and
AT&T transferred their trans-border assets and operations
to Concert in January 2000.
BT’s registered number is 1800000 and its registered
office address is 81 Newgate Street, London EC1A 7AJ.
The company’s agent in the USA is Jan Vinokour,
350 Madison Avenue, New York, NY 10017.
Listings
The principal listing of BT’s ordinary shares is
on the London Stock Exchange. The shares are also listed
on the Tokyo Stock Exchange. American Depositary Shares
(ADSs), each representing 10 ordinary shares, have been
issued by Morgan Guaranty Trust Company of New York, as
Depositary for the American Depositary Receipts (ADRs)
evidencing the ADSs, and are listed on the New York Stock
Exchange. ADSs also trade, but are not listed, on the
London Stock Exchange. Trading on the New York Stock Exchange
is under the symbol “BTY”. BT shares are traded
on the Tokyo Stock Exchange under the Code “9484”. |
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Share
and ADS prices
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| Year
ended 31 March |
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| 1997 |
461 |
1/2 |
326 |
1/2 |
|
73 |
1/2 |
50 |
1/4 |
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| 1998 |
685 |
|
379 |
1/2 |
|
113 |
7/8 |
60 |
7/8 |
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| 1999 |
1,118 |
1/2 |
630 |
|
|
179 |
15/16 |
102 |
1/4 |
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| 2000 |
1,513 |
|
889 |
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|
244 |
1/2 |
147 |
5/8 |
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| 2001 |
1,172 |
|
469 |
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|
186 |
|
68 |
3/4 |
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| Year
ended 31 March 2000 |
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| 1
April – 30 June 1999 |
1,137 |
|
970 |
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|
181 |
15/16 |
159 |
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| 1
July – 30 September 1999 |
1,151 |
|
889 |
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|
184 |
5/8 |
147 |
5/8 |
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| 1
October – 31 December 1999 |
1,513 |
|
906 |
1/2 |
|
244 |
1/2 |
153 |
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| 1
January – 31 March 2000 |
1,423 |
|
964 |
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|
241 |
1/16 |
152 |
1/2 |
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| Year
ended 31 March 2001 |
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| 1
April – 30 June 2000 |
1,172 |
|
854 |
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|
186 |
|
127 |
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| 1
July – 30 September 2000 |
932 |
|
711 |
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|
141 |
|
107 |
1/16 |
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| 1
October – 31 December 2000 |
808 |
|
570 |
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|
119 |
|
84 |
7/8 |
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| 1
January – 31 March 2001 |
729 |
|
469 |
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109 |
1/2 |
68 |
3/4 |
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| Month |
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| November
2000 |
790 |
|
609 |
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114 |
3/4 |
86 |
1/8 |
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| December
2000 |
688 |
1/2 |
570 |
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|
101 |
11/16 |
84 |
7/8 |
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| January
2001 |
726 |
|
560 |
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|
109 |
1/2 |
87 |
1/16 |
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| February
2001 |
729 |
|
567 |
1/2 |
|
109 |
1/4 |
84 |
3/4 |
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| March
2001 |
588 |
|
469 |
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|
86 |
1/20 |
68 |
3/4 |
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| April
2001 |
595 |
|
479 |
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89 |
3/4 |
68 |
9/16 |
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The
prices are the highest and lowest closing middle market
prices for BT ordinary shares, as derived from the Daily
Official List of the London Stock Exchange and the highest
and lowest sales prices of ADSs, as reported on the New
York Stock Exchange composite tape.
Fluctuations in the exchange rate between the pound sterling
and the US dollar affect the dollar equivalent of the
pound sterling price of the company’s ordinary shares
on the London Stock Exchange and, as a result, are likely
to affect the market price of the ADSs on the New York
Stock Exchange. |
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Total
shareholder return
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| Total
Shareholder Return (TSR) is the measure of the returns
that a company has provided for its shareholders and is,
therefore, a good indicator of a company’s overall
performance. The TSR indices on the above graph are the
product of share price movement, plus gross dividends
reinvested in the shares to July 1997 and net dividends
after that date. |
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| Analysis
of shareholdings |
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| 1
– 399 |
800,412 |
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44.7 |
|
167 |
|
2.6 |
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| 400
– 799 |
518,649 |
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29.0 |
|
280 |
|
4.3 |
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| 800
– 1,599 |
315,693 |
|
17.6 |
|
344 |
|
5.2 |
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| 1,600
– 9,999 |
150,005 |
|
8.4 |
|
404 |
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6.2 |
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| 10,000
– 99,999 |
4,022 |
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0.2 |
|
97 |
|
1.5 |
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| 100,000
– 999,999 |
1,296 |
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0.1 |
|
459 |
|
6.9 |
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| 1,000,000
– 4,999,999 |
380 |
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– |
|
837 |
|
12.7 |
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| 5,000,000
and above (a),(b),(c) |
187 |
|
– |
|
3,991 |
|
60.6 |
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| Total |
1,790,644 |
|
100.0 |
|
6,579 |
|
100.0 |
(d) |
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| (a) |
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19 million shares were held
in trust by Ilford Trustees (Jersey) Limited for
allocation to employees under the employee share
schemes. |
| (b) |
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Under the BT Employee Share Ownership
Scheme, 21 million shares were held in trust on
behalf of 121,210 participants who were beneficially
entitled to the shares. 60 million shares were held
in the BT EasyShare corporate nominee service on
behalf of 106,049 beneficial owners. |
| (c) |
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Approximately 109 million shares
were represented by ADSs and a further 9 million
shares were held by a nominee of the Tokyo Stock
Exchange on behalf of investors. Analysis by size
of holding is not available for these holdings.
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| (d) |
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17.5% of the shares were in 1,730,672
individual holdings, of which 153,056 were joint
holdings, and 82.5% of the shares were in 59,972
institutional holdings. |
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So
far as the company is aware, no person is the beneficial
owner of more than 5% of the company’s ordinary
shares, nor is the company directly or indirectly owned
or controlled by another corporation or by HM Government
or any other foreign government or by any other natural
or legal person severally or jointly. There are no arrangements
known to the company the operation of which may at a subsequent
date result in a change in control of the company.
At 17 May 2001, there were 6,585,266,841 ordinary shares
outstanding. At the same date, approximately 11 million
ADSs (equivalent to 110 million ordinary shares, or approximately
1.7% of the total number of ordinary shares outstanding
on that date) were outstanding and were held by 3,012
record holders of ADRs.
CREST: London Stock Exchange
settlement system
The company’s ordinary shares are settled in CREST,
the computerised system for settling sales and purchases
of shares. CREST is a voluntary system which enables shareholders,
if they wish, to hold and transfer their shareholdings
electronically rather than by paper. Shareholders who
wish to retain their certificates are able to do so.
Individual savings accounts
(ISAs)
Information about investing in BT shares through an ISA
may be obtained from Halifax Share Dealing Limited, Westbank,
Water Lane, Leeds LS11 5TL (telephone 0870 242 5588).
ISAs are also offered by other organisations.
Dividends
The company has, since shortly after its incorporation
in 1984, paid interim dividends annually in February and
final dividends in September. The interim dividend we
paid in February 2001 was at the same rate as in the previous
year. However, as part of BT’s debt reduction and
restructuring plans, the Board is not recommending the
payment of a final dividend to shareholders for the year
ended 31 March 2001. In addition, the company has announced
that there will be no interim dividend for the year ending
31 March 2002.
Future dividends, if any, will depend on the progress
of the new companies created by our restructuring programme.
These companies will determine their own dividend policies
in accordance with their respective capital structures,
cash requirements and the markets in which they operate.
The dividends paid or payable on BT shares and ADSs for
the last five years are shown in the following table.
The dividends on the ordinary shares exclude the associated
tax credit. The dividends on the ADSs paid before 5 April
1999 include the associated UK tax credit available to
certain beneficial owners who are resident in the United
States or Canada for tax purposes, but before deduction
of UK withholding taxes. The amounts shown are not those
that were actually paid to holders of ADSs. For the tax
treatment of dividends, which changed for dividends paid
on or after 6 April 1999, see Taxation of dividends below.
Dividends have been translated from pounds sterling into
US dollars using exchange rates prevailing on the date
the ordinary dividends were paid. |
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| 1997(a) |
7.90 |
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11.95 |
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19.85 |
|
0.987 |
|
1.494 |
|
2.481 |
|
1.582 |
|
2.391 |
|
3.973 |
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| 1998(b) |
7.55 |
|
11.45 |
|
19.00 |
|
0.944 |
|
1.431 |
|
2.375 |
|
1.540 |
|
2.400 |
|
3.940 |
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| 1999(b) |
8.10 |
|
12.30 |
|
20.40 |
|
1.012 |
|
1.366 |
|
2.378 |
|
1.644 |
|
2.202 |
|
3.846 |
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| 2000(b) |
8.70 |
|
13.20 |
|
21.90 |
|
0.870 |
|
1.320 |
|
2.190 |
|
1.529 |
|
2.039 |
|
3.568 |
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| 2001(b) |
8.70 |
|
– |
|
8.70 |
|
0.870 |
|
– |
|
0.870 |
|
1.397 |
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– |
|
1.397 |
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| (a) |
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In addition, a special dividend
of 35p per share, excluding the associated tax credit,
or £4.375 (US$7.002) per ADS, including the UK associated
tax credit, was paid at the same time as the final
dividend for the 1997 financial year. |
| (b) |
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The dividends for the 1998, 1999,
2000 and 2001 financial years include an adjustment
to take account of the effect of the 1997 special
dividend. |
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As
dividends paid by the company are in pounds sterling,
exchange rate fluctuations will affect the US dollar amounts
received by holders of ADSs on conversion by the Depositary
of such cash dividends.
Dividend mandate
Any shareholder wishing dividends to be paid directly
into a bank or building society account should contact
the Registrar for a dividend mandate form. Dividends paid
in this way will be paid through the Bankers Automated
Clearing System (BACS). Alternatively, a form may be downloaded
from the internet at www.groupbt.com/investorcentre
Dividend investment plan
The dividend investment plan replaced the share dividend
plan for shareholders following the 1999 interim dividend.
Under the dividend investment plan, cash from participants’
dividends is used to buy further BT shares in the market.
Shareholders could elect to receive additional shares
in lieu of a cash dividend for the following dividends:
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| 1999
final |
20
September 1999 |
|
970.1 |
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| 2000
interim |
14
February 2000 |
|
991.5 |
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| 2000
final |
18
September 2000 |
|
809.6 |
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| 2001
interim |
12
February 2001 |
|
621.8 |
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Global
Invest Direct
Details of the Morgan Guaranty Trust Company’s direct
purchase plan, Global Invest Direct, including reinvestment
of dividends, are available from Morgan Guaranty Trust
Company of New York on 1 800 749 1687 (toll free in the
United States) or +1 781 575 4328 (from outside the United
States), or on written request to the Depositary.
Results announcements
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| Expected announcements
of results: |
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| 1st quarter |
26
July 2001 |
| 2nd quarter and half
year |
8
November 2001 |
| 3rd quarter and nine
months |
February
2002 |
| 4th quarter and full
year |
May
2002 |
| 2002 annual report
and accounts published |
June
2002 |
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ShareGift
The Orr Mackintosh Foundation operates a charity share
donation scheme for shareholders with small parcels of
shares whose value makes it uneconomic to sell them. Details
of the scheme are available on the ShareGift internet
site www.sharegift.org,
or can be obtained from the BT Shareholder Helpline.
Exchange rates
BT publishes its consolidated financial statements expressed
in pounds sterling. The following tables detail certain
information concerning the exchange rates between pounds
sterling and US dollars based on the noon buying rate
in New York City for cable transfers in pounds sterling
as certified for customs purposes by the Federal Reserve
Bank of New York (the Noon Buying Rate). |
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| Period
end |
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1.64 |
|
1.68 |
|
1.61 |
|
1.59 |
|
1.42 |
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| Average
(a) |
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|
1.60 |
|
1.65 |
|
1.65 |
|
1.61 |
|
1.47 |
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| High |
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|
1.71 |
|
1.70 |
|
1.72 |
|
1.68 |
|
1.60 |
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| Low |
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1.49 |
|
1.58 |
|
1.60 |
|
1.55 |
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1.40 |
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| High |
|
1.45 |
|
1.50 |
|
1.50 |
|
1.48 |
|
1.47 |
|
1.45 |
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| Low |
|
1.40 |
|
1.44 |
|
1.46 |
|
1.44 |
|
1.42 |
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1.42 |
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| (a) |
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The average of the Noon Buying
Rates in effect on the last day of each month during
the relevant period. |
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On
17 May 2001, the most recent practicable date for this
annual report, the Noon Buying Rate was US$1.43 to £1.00.
Memorandum and Articles of Association
The following is a summary of the
principal provisions of BT’s memorandum and articles
of association (“Memorandum” and “Articles”),
a copy of which has been filed with the Registrar of Companies.
Memorandum
The Memorandum states that its
principal objects are, among other things, to carry on
any business of running, operating, managing and supplying
telecommunication systems and systems of any kind for
conveying, receiving, storing, processing or transmitting
sounds, visual images, signals, messages and communications
of any kind.
Articles
(a)
Voting rights
In the following description of
the rights attaching to the shares in the company, a “holder
of shares” and a “shareholder” is, in
either case, the person registered in the company’s
register of members as the holder of the relevant shares.
Shareholders can choose whether their shares are to be
evidenced by share certificates (i.e. in certificated
form) or held in electronic (i.e. uncertificated) form
in CREST (the electronic settlement system in the UK).
Subject to the restrictions described
below, on a show of hands, every shareholder present at
any general meeting has one vote and, on a poll, every
shareholder present in person or by proxy has one vote
for each share which they hold or represent.
Voting at any meeting of shareholders
is by a show of hands unless a poll is demanded by the
chairman of the meeting or by at least five shareholders
at the meeting who are entitled to vote (or their proxies),
or by one or more shareholders at the meeting entitled
to vote (or their proxies) and who have, between them,
at least 10% of the total votes of all shareholders who
have the right to vote at the meeting.
No person is, unless the Board decides otherwise, entitled
to attend or vote at any general meeting or to exercise
any other right conferred by being a shareholder at or
in relation to meetings of the company in respect of any
shares held by them if they or any person appearing to
be interested in those shares have been sent a notice
under section 212 of the Companies Act 1985 (which confers
upon public companies the power to require information
with respect to interests in their voting shares) and
they or any interested person has failed to supply to
the company the information requested within 14 days after
delivery of that notice. These restrictions end (unless
the Board decides otherwise):
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(i)
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seven days
after the earlier of the date the shareholder complies
with the request satisfactorily or the company receives
notice that there has been an approved transfer
of the shares; or |
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(ii) |
|
when circumstances
described under “Limitation on size of shareholdings”
below apply. |
(b)
Limitation on size of shareholdings
For the purpose of these provisions,
the expression “interest” is widely defined.
It generally follows but is more extensive than the definition
used in deciding whether a notification to the company
would be required under Part VI of the Companies Act,
1985 (which contains requirements for the notification
of interests in shares in public limited companies). Any
person who has an interest in voting shares in the company
of 3% or more is required to notify the company of that
interest and is otherwise required to give notices in
relation to interests in voting shares as currently provided
in Part VI of the Companies Act.
If the Board knows that a person
has an interest in the company’s shares which carry
15% or more of the total votes attaching to relevant share
capital (as that expression is defined in the Act), the
Board must send a written notice to all persons (other
than certain persons referred to below) who appear to
it to have such interests and, if different, to the registered
holder(s) of the shares concerned. That notice will set
out the restrictions referred to below and will call for
the interest concerned to be reduced to less than 15%
by sale or other disposal of shares within 21 days of
the giving of the notice to the registered holder(s) (or
such longer period as the Board considers reasonable).
No transfer of the shares comprised in the interest may
be made except for the purpose of reducing the interest
to less than 15% or if the notice sent by the Board is
withdrawn.
If that notice is not complied with to the satisfaction
of the Board and has not been withdrawn, the Board must
effect the disposal on the terms as it decides, based
upon advice obtained by it for the purpose.
A registered holder on whom a notice
referred to above has been served is not entitled in respect
of the share or shares comprised in the interest, until
that notice has been withdrawn or complied with to the
satisfaction of the Board, to attend or vote at any general
meeting of the company or meeting of the holders of a
class of shares and those rights will vest in the chairman
of the meeting who may act entirely at his discretion.
The Board is not required to send a notice to any person
if it does not know that person’s identity or address.
Not delivering a notice in such case and any accidental
error in or failure to give notice to a person to whom
notice is required to be sent will not prevent the implementation
of or invalidate any procedure under the relevant Article.
Any resolution or determination of, or decision or exercise
of any discretion or power by, the Board is conclusive.
Certain specified shareholders, including the ADS Depositary
and The Depositary Trust Company, are not subject to these
restrictions.
(c)
Variation of rights
Whenever the share capital of the
company is split into different classes of shares, the
special rights attached to any of those classes can be
varied or withdrawn either:
|
(i) |
|
with the sanction of any
extraordinary resolution passed at a separate meeting
of the holders of the shares of that class; or |
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(ii) |
|
with the consent in writing
of the holders of at least 75% in nominal value
of the issued shares of that class. |
At any separate meeting, the necessary quorum is two persons
holding or representing by proxy not less than one-third
in nominal amount of the issued shares of the class in
question (but at any adjourned meeting, any person holding
shares of the class or his proxy is a quorum).
The company can issue new shares and attach any rights
and restrictions to them, as long as this is not restricted
by special rights previously given to holders of any existing
shares. Subject to this, the rights of new shares can
take priority over the rights of existing shares, or existing
shares can take priority over them, or the new shares
and the existing shares can rank equally.
(d)
Changes in capital
The company may by ordinary resolution:
|
(i) |
|
consolidate and divide
all or any of its share capital into shares of a
larger amount; |
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(ii) |
|
divide all or part of its
share capital into shares of a smaller amount; |
| |
(iii) |
|
cancel any shares which
have not, at the date of the ordinary resolution,
been taken or agreed to be taken by any person and
reduce the amount of its share capital by the amount
of the shares cancelled; and |
| |
(iv) |
|
increase its share capital. |
| The company
may also: |
| |
(i) |
|
buy back its own shares;
and |
| |
(ii) |
|
by special resolution reduce
its share capital, any capital redemption reserve
and any share premium account.
|
(e)
Dividends
The company’s shareholders
can declare dividends by passing an ordinary resolution.
No dividend can exceed the amount recommended by the directors.
Dividends must be paid out of profits available for distribution.
If the directors consider that the profits of the company
justify such payments, they can pay interim dividends
on any class of shares of the amounts and on the dates
and for the periods they decide. Fixed dividends will
be paid on any class of share on the dates stated for
the payments of those dividends.
The directors can offer ordinary shareholders the right
to choose to receive new ordinary shares, which are credited
as fully paid, instead of some or all of their cash dividend.
Before they can do this, the company’s shareholders
must have passed an ordinary resolution authorising the
directors to make this offer.
Any dividend which has not been claimed for 12 years after
it was declared or became due for payment may be forfeited
and will belong to the Company unless the Directors decide
otherwise.
BT can stop paying dividends if payments for two dividends
in a row are sent back or not cashed or have not been
able to be made. BT must start paying dividends again
if the shareholder or a person entitled to the shares
by transmission claims them.
(f) Distribution
of assets on winding up
If the company is wound up (whether
the liquidation is voluntary, under supervision of a court
or by a court) the liquidator can, with the authority
of an extraordinary resolution passed by the shareholders,
divide among the shareholders all or any part of the assets
of the company. This applies whether the assets consist
of property of one kind or different kinds. For this purpose,
the liquidator can place whatever value the liquidator
considers fair on any property and decide how the division
is carried out between shareholders or different group
of shareholders. Under general law the holders of BT shares
will be entitled to participate in any surplus assets
in a winding up in proportion to their shareholdings,
as BT has only one class of shares.
(g)
Transfer of shares
Certificated shares of the company
may be transferred in writing either by an instrument
of transfer in the usual standard form or another form
approved by the Board. The transfer form must be signed
or made effective by or on behalf of the person making
the transfer. The person making the transfer will be treated
as continuing to be the holder of the shares transferred
until the name of the person to whom the shares are being
transferred is entered in the register of members of the
company.
The Board may refuse to register any transfer of any share
held in certificated form:
 |
|
which is in favour of more than
four joint holders; or |
|
|
unless the transfer form to
be registered is properly stamped to show payment
of any applicable stamp duty and delivered to the
company’s registered office or any other place
the Board decides. The transfer must have with it
the share certificate for the shares to be transferred;
any other evidence which the Board asks for to prove
that the person wanting to make the transfer is
entitled to do this; and if the transfer form is
executed by another person on behalf of the person
making the transfer, evidence of the authority of
that person to do so. |
Transfers of uncertificated shares
must be carried out using a relevant system (as defined
in the Uncertificated Securities Regulations 1995 (the
Regulations)). The Board can refuse to register a transfer
of an uncertificated share in the circumstances stated
in the Regulations.
If the Board decides not to register a transfer of a share,
they must notify the person to whom that share was to
be transferred no later than two months after the company
receives the transfer form or instruction from the operator
of the relevant system.
The Board can decide to suspend the registration of transfers,
for up to 30 days a year, by closing the register of shareholders.
This register must not be closed without the consent of
the operator of a relevant system (as defined in the Regulations),
in the case of uncertificated shares.
(h)
Untraced shareholders
BT may sell any shares after advertising
its intention and waiting for three months if the shares
have been in issue for at least 12 years, during that
period at least three dividends have become payable on
them and have not been claimed and BT has not heard from
the shareholder or any person entitled to the dividends
by transmission. The net sale proceeds belong to BT, but
it must pay those proceeds to the former shareholder or
the person entitled to them by transmission if that shareholder,
or that other person, asks for them.
(i) General
meetings of shareholders
Every year BT must hold an annual
general meeting. The Board can call an extraordinary general
meeting at any time and, under general law, it must call
one on a shareholders’ requisition.
(j) Limitations
on rights of non-resident or foreign shareholders
The only limitation imposed by
the Articles on the rights of non-resident or foreign
shareholders is that a shareholder whose registered address
is outside the UK and who wishes to receive notices of
meetings of shareholders must give the company an address
within the UK to which they may be sent.
(k) Directors
Directors’ remuneration
Excluding remuneration referred to below, each director
will be paid such fees for his services as the Board decides,
not exceeding £50,000 a year and increasing by the percentage
increase of the retail prices index (as defined by Section
833(2) Income and Corporation Taxes Act 1988) for any
12 month period beginning 1 April 1999 or an anniversary
of that date. The company may by ordinary resolution decide
on a higher sum. This resolution can increase the fee
paid to all or any directors either permanently or for
a particular period. The directors may be paid their expenses
properly incurred in connection with the business of the
company.
The Board can award extra fees
to a director who holds an executive position; acts as
chairman or deputy chairman; serves on a Board committee
or board at the request of the Board; or performs any
other services which the Board considers extends beyond
the ordinary duties of a director.
The Board may grant pensions or other benefits to, among
others, any director or former director or persons connected
with them. However, BT can only provide these benefits
to any director or former director who has not been an
employee or held any other office or executive position
in the company or any of its subsidiary undertakings or
to relations or dependants of, or people connected to,
those directors or former directors, if the shareholders
approve this by passing an ordinary resolution.
Directors’ votes
A director need not be a shareholder, but a director who
is not a shareholder can still attend and speak at shareholders’
meetings.
Unless the Articles say otherwise, a director cannot vote
on a resolution about a contract in which the director
has a material interest (this will also apply to interests
of a person connected with the director). The director
can vote if the interest is only an interest in BT shares,
debentures or other securities. A director can, however,
vote and be counted in a quorum in respect of certain
matters in which he is interested as set out in the Articles.
Subject to the legislation, the shareholders can by passing
an ordinary resolution suspend or relax, among other things,
the provisions relating to the declaration of the interest
of a director in any contract or arrangement or relating
to a director’s right to vote and be counted in
a quorum on resolutions in which he is interested to any
extent or ratify any particular contract or arrangement
carried out in breach of those provisions.
Directors’ interests
If the legislation allows and the director has disclosed
the nature and extent of the interest to the Board, the
director can:
|
(i) |
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have any kind of interest
in a contract with or involving BT (or in which
BT has an interest or with or involving another
company in which BT has an interest); |
| |
(ii) |
|
have any kind of interest
in a company in which BT has an interest (including
holding a position in that company or being a shareholder
of that company); |
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(iii) |
|
hold a position (other
than auditor) in BT or another company in which
BT has an interest on terms and conditions decided
by the Board; and |
| |
(iv) |
|
alone (or through some
firm with which the director is associated) do paid
professional work (other than as auditor) for BT
or another company in which BT has an interest on
terms and conditions decided by the Board. |
A director does not have to hand over to BT any benefit
received or profit made as a result of anything permitted
to be done under the Articles.
When a director knows that they are interested in a contract
with BT they must tell the other directors.
Retirement of directors
Provisions of the legislation which, read with the Articles,
would restrict the appointment of a director or require
him to stop being a director because he has reached a
particular age do not apply to the company.
At every annual general meeting one third of the directors
(or if their number is not a multiple of three, the number
nearest to but greater than one third) must retire by
rotation as directors. The directors to retire are selected
on the basis of time in office since their last election.
Any director appointed by the directors automatically
retires at the next following annual general meeting,
and is then eligible for election, but is not taken into
account in determining which and how many directors are
to retire by rotation at such meeting. A retiring director
is eligible for re-election.
Directors’ borrowing powers
To the extent that the legislation and the Articles allow,
the Board may exercise all the powers of the company to
borrow money, to mortgage or charge its business, property
and assets (present and future) and to issue debentures
and other securities, and give security either outright
or as collateral security for any debt, liability or obligation
of the company or another person. The Board must limit
the borrowings of the company and exercise all voting
and other rights or powers of control exercisable by the
company in relation to its subsidiary undertakings so
as to ensure that the aggregate amount of all borrowings
by the group outstanding at any time is not more than
three times the adjusted capital and reserves (as defined
in the Articles). This affects subsidiary undertakings
only to the extent that the Board can do this by exercising
these rights or powers of control. This limit can be exceeded
if the consent of the shareholders has been given in advance
by passing an ordinary resolution.
Material contracts
The following contracts (not being
contracts entered into in the ordinary course of business)
have been entered into in the two years preceding the
date of this document by BT or another member of the group
and are, or may be, material to the group or have been
entered into by BT or another member of the group and
contain a provision under which a member of the group
has an obligation or entitlement which is, or may be,
material to BT or such other member of the group.
(i) Viag
Interkom
On 16 August 2000, the company, through its wholly-owned
subsidiary BT Interkom Verwaltungs GmbH, entered into
option agreements with each of its partners in the Viag
Interkom joint venture, E.ON AG and Telenor A.S., giving
BT the option to purchase, and the other partners the
right to sell, their interests in Viag Interkom which
holds a third-generation mobile telecommunications licence
in Germany.
On 19 February 2001, BT and BT Interkom Verwaltungs GmbH
exercised their options and entered into share transfer
agreements with each of the joint venture partners for
the transfer of their interest to BT.
The purchase prices for E.ON’s 45% share and Telenor’s
10% share of the venture were Euro 7.25 billion and Euro
1.61 billion, respectively.
The agreement with E.ON includes the right for BT to continue
to use the name “VIAG” or “Viag Interkom”
for three years, following which they may enter into good
faith negotiations for its continued use. It also contains
covenants restricting E.ON’s rights to compete with
Viag Interkom for 12 months.
The agreement with Telenor contains certain indemnities
granted by BT to Telenor.
(ii) Japan
Telecom
A sale and purchase agreement dated 2 May 2001 among BT,
a subsidiary of BT, Vodafone Group plc (“Vodafone”)
and a subsidiary of Vodafone, under which the subsidiary
of BT agreed to sell three subsidiaries which hold BT’s
interests in Japan Telecom Co., Ltd. (“JT”),
J-Phone Communications Co., Ltd. (“JPC”),
J-Phone Central Co., Ltd (“JC”), J-Phone East
Co., Ltd. (“JEC”) and J-Phone West Co., Ltd.
(“JWC”). JT is one of Japan’s leading
telecommunications companies and parent of JPC, which
in turn has controlling interests in the three regional
J-Phone wireless operating companies, JC, JEC and JWC.
The consideration for the transaction comprises a cash
payment of £3.7 billion, and the assumption by Vodafone
of £782 million of BT debt guarantees in favour of JT.
The closing of the transaction remains conditional upon
relevant procedural approvals in Japan. Closing of the
transfer of the subsidiaries holding BT’s interests
in JT and JPC (for £3.05 billion) may occur prior to (and
is not conditional upon) closing of the transfer of its
interests in JEC and JWC for the Euro equivalent of £650
million (which will follow upon completion of the exercise
of certain options over shares in JC, JEC and JWC, with
the option price of some £380 million to be paid by BT).
The agreement contains certain warranties and indemnities
in favour of Vodafone. These largely expire on 30 June
2002, however certain limited tax and title warranties
survive indefinitely. The agreement is conditional on
certain matters, including the need for consent from the
Bank of Japan, and the parties have certain termination
rights.
(iii) Airtel
A sale and purchase agreement dated 2 May 2001 between
BT, a subsidiary of BT and Vodafone, under which the BT
subsidiary has agreed to sell its entire interest in Airtel
Mo´bil, S.A. (“Airtel”) to Vodafone. The consideration
for the transaction is £1.1 billion (payable in cash in
euros). The closing of the transaction is conditional
on EC Merger Regulation approval.
Taxation (US Holders)
This is a summary only of the principal
US federal income tax and UK tax consequences to beneficial
owners of ADSs who either are resident in the United States
or hold ordinary shares or ADSs as assets effectively
connected with a US trade or business (US Holders). It
is not a complete analysis or listing of all potential
tax consequences of the purchase, ownership and disposal
of ordinary shares or ADSs.
Investors are advised to consult their tax advisers with
respect to the tax consequences of their holdings, including
the consequences under applicable state and local laws.
The statements of UK and US tax laws and practices set
out below are based on the laws in force and as interpreted
by the relevant taxation authorities as of the date of
this annual report. The statements are subject to changes
occurring after that date in UK or US law or practice,
in the interpretation thereof by the relevant taxation
authorities, or in any double taxation convention between
the United States and the UK.
In particular, this summary is based on the current convention
between the United States and the UK for the avoidance
of double taxation with respect to taxes on income and
capital gains (the Treaty) and the US Internal Revenue
Code of 1986, as amended. The US and the UK have entered
into negotiations with respect to a new US-UK tax treaty,
the provisions of which ultimately may modify certain
aspects of the following discussion.
Taxation of dividends
For dividends paid on or before
5 April 1999, US Holders were generally entitled to receive
the cash dividend plus a Treaty payment from the Inland
Revenue of one quarter of the dividend, subject to a UK
withholding tax of 15% of the aggregate amount paid. As
an example for illustration purposes only, a US Holder
who was entitled to a dividend of £80 was also entitled
to a Treaty payment of £20, reduced by the withholding
tax of 15% on the gross amount of £100, i.e. £15, leaving
a net cash payment of £85. The full dividend plus the
full Treaty payment including the UK tax withheld was
taxable income for US purposes, and the US tax withheld
generally was available as a US credit or deduction.
For dividends paid on or after 6 April 1999, the Treaty
payment reduces to one ninth of the dividend (i.e. one
tenth of the gross payment). As a result of the UK withholding
tax (which cannot exceed the amount of the hypothetical
Treaty payment), US Holders will no longer receive any
Treaty payment. In the above example, the cash dividend
would be £80, and the hypothetical Treaty payment would
be £8.89 (one ninth of £80). However, since the UK withholding
tax (15% of £88.89), would exceed the amount of the hypothetical
Treaty payment, no Treaty payment will be made and the
US Holder will receive only the cash dividend (here, £80).
A US holder will be taxable in the US on the full dividend
and full hypothetical Treaty payment (£88.89), and will
be treated as having paid a foreign tax equal to the hypothetical
Treaty payment (here, £8.89). The foreign tax deemed paid
generally will be available as a US credit or deduction.
For US federal income tax purposes, a distribution will
be treated as ordinary dividend income to the extent paid
out of our current or accumulated earnings and profits,
as determined for US tax purposes, based on the US dollar
value of the distribution on the date it is actually or
constructively received (calculated by reference to the
spot rate on the relevant date). Distributions by us in
excess of our current and accumulated earnings and profits
will be treated first as a return of capital to the extent
of the US Holder’s basis in the ordinary shares
and thereafter as capital gain. For foreign tax credit
limitation purposes, dividends paid by us will be income
from sources outside the United States. Dividends paid
by us will not be eligible for the US dividends received
deduction.
US Holders are urged to consult their own tax advisers
concerning whether they are eligible for benefits under
the Treaty, whether, and to what extent, a foreign tax
credit will be available with respect to dividends received
from us and the treatment of any foreign currency gain
or loss on any pounds sterling received with respect to
ordinary shares that are not converted into US dollars
on the date the pounds sterling are actually or constructively
received.
Taxation of capital gains
Unless a US resident carries on
a trade through a branch or agency in the UK, and the
disposal of ordinary shares and/or ADSs is related to
the activities of that trade, UK capital gains tax is
not charged on US residents who dispose of ordinary shares
and/or ADSs.
For US federal income tax purposes, a US Holder will recognise
a capital gain or loss on the sale or other disposition
of ordinary shares or ADSs (if the ordinary shares or
ADSs disposed of are held as capital assets) in an amount
equal to the difference between the US Holder’s
adjusted tax basis in the ordinary shares and the amount
realised on the disposition. Such gain or loss will be
US source gain or loss, and will be treated as long-term
capital gain or loss if the ordinary shares have been
held for more than one year. The deductibility of capital
losses is subject to significant limitations. Capital
gains of an individual US Holder are subject to US federal
income tax at preferential rates if specified holdings
periods are met.
US information reporting and back
up withholding
Dividends paid on and proceeds
received from the sale or disposition of ordinary shares
or ADSs may be subject to information reporting to the
IRS and back up withholding at a 31% rate. Certain exempt
recipients (such as corporations) are not subject to these
information reporting requirements. Back up withholding
will not apply, however, to a holder who provides a correct
taxpayer identification number or certificate of foreign
status and makes any other required certification or who
is otherwise exempt. US persons who are required to establish
their exempt status generally must file IRS Form W-9 (Request
for Taxpayer Identification Number and Certification).
Non-US holders generally will not be subject to US information
reporting or back up withholding. However, such holders
may be required to provide certification of non-US status
in connection with payments received in the United States
or through certain US-related financial intermediaries.
Finalised Treasury regulations have generally expanded
the circumstances under which US information reporting
and back up withholding may apply.
Amounts withheld as back up withholding may be credited
against a holder’s US federal income tax liability.
A holder may obtain a refund of any excess amounts withheld
under the back up withholding rules by filing the appropriate
claim for refund with the IRS and furnishing any required
information.
UK stamp duty
A transfer for value of an ordinary
share will generally be subject to UK stamp duty or to
UK stamp duty reserve tax. No UK stamp duty will be payable
on the transfer of an ADS, provided that the separate
instrument of transfer is not executed in, and always
remains outside, the UK.
Inheritance and gift taxes
US-domiciled holders of ordinary
shares and ADSs generally will not be subject to UK inheritance
tax on a gift of ordinary shares and/or ADSs if the gift
would be subject to US federal gift tax. Similarly, ordinary
shares and/or ADSs passing on the death of a US-domiciled
shareholder generally will not be subject to UK inheritance
tax if the estate would be subject to US estate tax.
Exchange controls and other
limitations
affecting security holders
There are currently no government
laws, decrees or regulations in the United Kingdom that
restrict the export or import of capital, including, but
not limited to, UK foreign exchange control restrictions,
or that affect the remittances of dividends or other payments
to non-resident holders of the company’s ordinary
shares, except as otherwise described in Taxation (US
Holders) above and except in respect of the government
of, or any resident of, Iraq or any person treated as
so resident. There are no limitations under the laws of
the United Kingdom restricting the right of non-residents
to hold or to vote shares in the company.
Publications
BT produces a series of reports
on the company’s financial, economic, social and
environmental performance. Most of these reports, which
are available to shareholders on request, can be accessed
on the internet at www.groupbt.com/investorcentre |
| |
|
|
| Document |
Publication
date |
|
| Annual
Review including summary financial statement |
June |
| Annual
Report and Form 20-F |
June |
| Report
for Shareholders |
February
and September |
| Quarterly
results releases |
February,
May, July and
November |
Current
Cost Financial Statements for the Businesses
and Activities and Statement of Standard Services
(as required by Oftel) |
September |
| Social
and Environment Report |
June |
| Statement
of Business Practice |
(a) |
| Quality
of Service Report |
May
and November |
|
| (a)
First issued in June 1999. |
|
|
|
| |
For
printed copies, when available, contact the BT Shareholder
Helpline on Freefone 0808
100 4141 or, alternatively,
contact
The Registrar in the UK, BT
North America Inc. in the USA or The
Toyo Trust Banking Co. Limited in Japan at the
addresses below. |
| |
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|
The
Registrar
Lloyds TSB Registrars (450)
The Causeway
Worthing, West Sussex
BN99 6DA
United Kingdom |
BT
Shareholder Helpline
Tel Freefone 0808 100 4141
Fax 01903 833 371
Textphone Freefone
0800 169 6907 |
|
|
| |
From
outside the UK:
Tel +44 121 433 4404
Fax +44 1903 833 371
Textphone +44 121 433 8013
e-mail bt@lloydstsb-registrars.co.uk
|
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|
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BT
North America Inc.
Investor Relations
350 Madison Avenue
New York, NY10017,
United States
Tel 1 800 331 4568
(toll free within the United States and Canada)
or +1 646 487 3844
(from outside the United States
and Canada)
Fax +1 646 487 3984 |
ADR
Depositary
Morgan Guaranty Trust
Company of New York
JP Morgan Service Centre
P.O. Box 842006
Boston, MA 02284-2006
United States
Tel 1 800 634 8366 (toll free)
or (781) 575 4328
e-mail adr@jpmorgan.com
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BT
(Japan) KK
ARK Mori Building
|
Share
Handling Agent in Japan
The Toyo Trust & Banking Co. Limited |
12-32 Akasaka 1-Chome
Minato-Ku, Tokyo 107-6024
Tel (03) 5562 6000 |
Tokyo
Office
10-11 Higashisuna 7-Chome
Koto-Ku, Tokyo 137-8081
(Corporate Agency Department)
Tel (03) 5683 5111
|
|
Osaka
Office
6-3 Fushimi-machi 3-Chome
Chuo-Ku, Osaka 541-8502
(Corporate Agency Department)
Tel (06) 6222 3111 |
| |
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Shareholder
enquiries
Lloyds TSB Registrars maintain BT’s share
register and the separate BT EasyShare Service and
BT Employee Share Ownership Scheme registers.
They also provide a BT
Shareholder Helpline service.
Shareholders should contact the Registrar (details
above) if they have any enquiries about their shareholding. |
General
enquiries
British Telecommunications plc
BT Centre
81 Newgate Street
London EC1A 7AJ
United Kingdom
Tel (020) 7356 5000
Fax (020) 7356 5520
From overseas:
Tel +44 20 7356 5000
Fax +44 20 7356 5520 |
|
A full list of BT
contacts, and an electronic feedback facility, is
available at www.bt.com/talk
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