|
28. Reconciliation
of movement in shareholders funds
| |
Share
capital
£m
|
|
Share
premium
account
£m |
|
Capital
redemption
reserve
£m |
|
Other
reserves
£m
|
|
Profit
and
loss
account
£m |
|
Total
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at 1 April
2001 |
7,573 |
|
|
|
|
|
(2,848 |
) |
7,329 |
|
12,054 |
|
| Rights issuea |
2,272 |
|
|
|
|
|
3,604 |
|
|
|
5,876 |
|
| Shares issued to
special purpose trustb |
65 |
|
|
|
|
|
108 |
|
|
|
173 |
|
| Other allotments of
ordinary shares prior to demerger 52 million shares issued |
61 |
|
|
|
|
|
160 |
|
|
|
221 |
|
| Distribution relating
to demerger of mmO2c |
|
|
|
|
|
|
|
|
(19,490 |
) |
(19,490 |
) |
| Capital reduction on
21 November 2001d |
(9,537 |
) |
|
|
|
|
|
|
9,537 |
|
|
|
Goodwill,
previously written off to reserves, taken back
to the profit
and loss accounte (note
7) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
68 |
|
68 |
|
| Employee
share option schemes 1 million shares issued (note
34) |
|
|
2 |
|
|
|
|
|
|
|
2 |
|
| Movement relating to
BTs employee share ownership trustf |
|
|
|
|
|
|
|
|
(70 |
) |
(70 |
) |
| Unrealised gain on
start up of joint ventures |
|
|
|
|
|
|
5 |
|
|
|
5 |
|
| Realisation of gain
made on start up of joint ventures |
|
|
|
|
|
|
(2 |
) |
|
|
(2 |
) |
| Movement in other
reserves due to demerger |
|
|
|
|
|
|
(2 |
) |
|
|
(2 |
) |
| Currency movements
(including £36 million net movements in respect of foreign currency
borrowings)g |
|
|
|
|
|
|
|
|
(15 |
) |
(15 |
) |
| Profit for the
financial year |
|
|
|
|
|
|
|
|
995 |
|
995 |
|
| Dividends (2.0p per
ordinary share) |
|
|
|
|
|
|
|
|
(173 |
) |
(173 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at 1 April
2002 |
434 |
|
2 |
|
|
|
1,025 |
|
(1,819 |
) |
(358 |
) |
| Goodwill,
previously written off to reserves, taken back
to the profit and loss accounte (note
7) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
869 |
|
869 |
|
| Employee
share option schemes 0.2 million shares issued (note
34) |
|
|
|
|
|
|
|
|
|
|
|
|
| Transfer between
reservesi |
|
|
|
|
|
|
(27 |
) |
27 |
|
|
|
| Currency movements
(including £106 million net movements in respect of foreign currency
borrowings)g |
|
|
|
|
|
|
|
|
5 |
|
5 |
|
| Profit for the year |
|
|
|
|
|
|
|
|
2,686 |
|
2,686 |
|
| Dividends (6.5p per
ordinary share) |
|
|
|
|
|
|
|
|
(560 |
) |
(560 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at 1 April
2003 |
434 |
|
2 |
|
|
|
998 |
|
1,208 |
|
2,642 |
|
| Purchase of own
shares:h |
|
|
|
|
|
|
|
|
|
|
|
|
|
shares cancelled |
(2 |
) |
|
|
2 |
|
|
|
(64 |
) |
(64 |
) |
|
shares held as treasury shares |
|
|
|
|
|
|
|
|
(80 |
) |
(80 |
) |
| Currency movements
(including £133 million net movements in respect of foreign currency
borrowings)g |
|
|
|
|
|
|
|
|
(89 |
) |
(89 |
) |
| Profit for the year |
|
|
|
|
|
|
|
|
1,417 |
|
1,417 |
|
| Dividends (8.5p per
ordinary share) |
|
|
|
|
|
|
|
|
(732 |
) |
(732 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances
at 31 March 2004 |
432 |
|
2 |
|
2 |
|
998 |
|
1,660 |
|
3,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| a |
The groups
rights issue closed on 15 June 2001, when British Telecommunications plc
was the parent company of the group. A total of 1,976 million ordinary
shares of 25p each was issued at 300p per share in a 3 for 10 rights
issue. Of the total of £5,876 million raised, net of £52 million
expenses, £494 million was credited to share capital and £5,382 million
to the share premium account of British Telecommunications plc. Following
the introduction of BT Group plc as the parent company of the group, the
increase in consolidated share capital has been restated to reflect the
nominal value of BT Group plc shares and the balance has been credited to
other reserves. |
| b |
In connection with outstanding
share options at the date of demerger, 57 million British Telecommunications
plc ordinary shares were issued on 14 November 2001 to a special purpose
trust.
Of the consideration of £173 million, £159 million was credited to
the share premium account of British Telecommunications plc. Following the introduction
of BT Group plc as the parent company of the group, the increase in consolidated
share capital has been restated to reflect the nominal value of BT Group plc
shares and the balance has been credited to other reserves. |
| c |
The demerger distribution
of £19,490 million represents the net assets of mmO2, including
purchased goodwill, as at the date of the demerger. See also
the note
on the face of the group profit and loss account for the year
ended 31 March 2002. |
| d |
Following the approval of the
Court, the nominal value of BT Group shares was reduced from 115p each
to 5p each on 21 November 2001 by way of a reduction of capital under
section 135 of the Companies Act 1985. The surplus of £9,537 million
arising from this reduction has been credited to group profit and loss
reserve. |
| e |
Aggregate goodwill at 31 March
2004 in respect of acquisitions completed prior to 1 April 1998 of £385
million (2003 £385 million, 2002 £1,254 million) has been
written off against retained earnings in accordance with the groups
accounting policy. The goodwill written off against retained earnings will
be charged in the profit and loss account on the subsequent disposal of
the business to which it related. |
| f |
During the year ended 31 March
2002 the company
issued shares at a market value
of £154 million in respect of the exercise of options awarded under its
principal savings-related share option scheme. Employees paid £84 million
to the group for the issue of these shares and the balance of £70 million
comprised contributions to the qualifying employee share ownership trust from
group undertakings. |
| g |
The cumulative foreign
currency translation adjustment, which increased retained earnings at 31
March 2004, was £133 million (2003 £222 million, 2002 £217
million). |
| h |
During the year ended 31 March
2004 the company repurchased 80,571,000 of its own shares of 5p each,
representing 1% of the called-up share capital, for an aggregate consideration
of £144 million. Of the total shares repurchased 36,222,000 shares
with an aggregate nominal value
of £2 million were cancelled immediately and 44,349,000 shares with an
aggregate nominal value of £2
million are held as treasury shares. |
| i |
Release of statutory reserves
in subsidiary undertakings on cessation of associated activities. |
Reorganisation and demerger
On 19 November 2001,
the legal separation of the mmO2 business from the
rest of the former British Telecommunications
plc group was completed and BT Group plc (BT Group) became the
ultimate parent company of British Telecommunications plc (BT).
The legal structure of the transaction was such that BT transferred
the mmO2 business to mmO2 plc and BT Group
Investments Limited (BTGI) became the immediate parent company
of BT on 16 November 2001. On 19 November 2001, mmO2
plc transferred the shares in BTGI to BT Group, as consideration
for the issue to former BT shareholders of one ordinary share
of 115 pence in the company, credited as fully paid, for each
ordinary share in BT held on 16 November 2001.
On
21 November 2001, following the approval of the Court, the nominal
value of BT Group shares was reduced from 115 pence per ordinary
share to 5 pence per ordinary share by way of a reduction of capital
under section 135 of the Companies Act 1985. The surplus of £9,537
million arising from this capital reduction has been credited
to the group profit and loss reserve.
The
transfer of BTGI to the company has been accounted for as a group
reconstruction in accordance with the principles of merger accounting
set out in Financial Reporting Standard 6 (FRS 6) and Schedule
4A to the Companies Act 1985. The consolidated financial statements
are therefore presented as if the company had been the parent
company of the group throughout the year ended 31 March 2001 and
up to the date of the demerger. The results of mmO2
have been included in discontinued activities in all three years.
The
transfer of BT to BTGI on 16 November 2001 was a group reorganisation
effected for non-equity consideration. This transaction has been
accounted for in these financial statements using the principles
of merger accounting as if BT had been owned and controlled by
BTGI throughout the year ended 31 March 2001 and up to 16 November
2001. This is not in accordance with the Companies Act 1985 since
the group reorganisation does not meet all the conditions for
merger accounting. If acquisition accounting had been applied
to account for the reorganisation whereby BTGI became the parent
company of BT, this would have resulted in all the separable assets
and liabilities of the BT Group as at 16 November 2001 being recorded
at their fair values, substantial goodwill and goodwill amortisation
charges arising and only the post demerger results being reflected
within the BT Group consolidated financial statements. The directors
consider that to have applied acquisition accounting in preparing
these financial statements would have failed to give a true and
fair view of the groups state of affairs and results. This is
because, in substance, BT Group is the successor to BT and its
shareholders have had a continuing interest in the BT business
both before and after the demerger. The directors consider that
it is not practicable to quantify the effects of this departure
from the requirements of the Companies Act 1985.
In
the companys financial statements, its investment in BTGI is
stated at the nominal value of shares issued. In accordance with
sections 131 and 133 of the Companies Act 1985, no premium was
recorded on the ordinary shares issued (see note 37). On consolidation,
the difference between the nominal value of the shares issued
and the aggregate share capital, share premium and capital redemption
reserve of BT at the date of the demerger (the merger difference),
has been debited to the other reserves.
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