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Annual Review & Notice of Meeting 2007

Notice of meeting

The 2007 Annual General Meeting of BT Group plc will be held at The Sage Gateshead, St Mary’s Square, Gateshead Quays, Gateshead NE8 2JR, at 10.30 am on Thursday 19 July 2007 to consider the following:

ORDINARY BUSINESS
Resolution 1

That the accounts and reports of the directors and the auditors for the year ended 31 March 2007 be received.
Legislation requires the directors to present to the meeting these accounts and reports contained in the Company’s Annual Report.

Resolution 2
That the directors’ remuneration report for the year ended 31 March 2007 be approved.
The directors have to ask shareholders to vote on this report on directors’ remuneration. It is summarised on the 'Summary report of directors' renumeration' section of this document. The full report, in the Annual Report, is on the Company’s website at www.bt.com/annualreport or is sent to shareholders if requested.

Resolution 3
That the final dividend of 10 pence per share recommended by the directors be declared payable on 17 September 2007 to holders of ordinary shares registered at the close of business on 24 August 2007.
The final dividend declared cannot exceed the amount recommended by the directors.

Resolutions 4-7: re-election of directors
Under the Company’s articles of association (‘articles’), in compliance with the Combined Code on Corporate Governance, all directors have to retire every three years at an Annual General Meeting. As a result, four directors must retire at this year’s Annual General Meeting and are proposed by the Board for re-election.

Resolution 4
That Sir Christopher Bland be re-elected as a director.
Sir Christopher Bland was appointed to the Board of British Telecommunications plc as Chairman on 1 May 2001. He became Chairman of the Company at the time of the demerger of O2 in November 2001. He chairs the Nominating and Community Support committees and is a member of the Pension Scheme Performance Review Group.
     He was chairman of the BBC Board of Governors from 1 April 1996 until 30 September 2001. From 1972 to 1979, Sir Christopher was deputy chairman of the Independent Broadcasting Authority and chairman of its Complaints Review Board. In 1982, he became a non-executive director of LWT Holdings and was chairman from 1983 to 1994, when LWT was acquired by Granada Group. From December 1994 to May 2000, he was chairman of NFC. From 1977 to 1985, he was chairman of Sir Joseph Causton & Sons.
     Sir Christopher, who was chairman of the Hammersmith and Queen Charlotte’s Hospitals Special Health Authority from 1982 to 1994 and of Hammersmith Hospital’s NHS Trust from 1994 to February 1997, was knighted for his work in the NHS in 1993. He was chairman of the Private Finance Panel from 1995 to 1996 and a member of the Prime Minister’s Advisory Panel on the Citizen’s Charter. He is senior advisor at Warburg Pincus and chairman of the Royal Shakespeare Company. Aged 68.

Resolution 5
That Andy Green be re-elected as a director.

Andy Green was appointed to the Board on 19 November 2001. He is a member of the Operating Committee. In October 2001 Andy was appointed as Chief Executive of BT Global Services, BT’s managed services and solutions provider, serving multi-site organisations worldwide. On 24 April 2007, he was appointed Chief Executive, Group Strategy and Operations. Since joining the Company in 1986, he has held a number of positions, including Chief Executive of BT Openworld and Group Director of Strategy and Development. Andy was a member of the former Executive Committee from February 1995. He is a board member of e-skills UK and ABESU, a charity with the objective of ‘making poverty history’, and a non-executive director of NAVTEQ Corporation (a US corporation). Aged 51.

Resolution 6
That Ian Livingston be re-elected as a director.
Ian Livingston was appointed Group Finance Director in April 2002 and became Chief Executive of BT Retail in February 2005. He is a member of the Operating Committee. Before joining the Company he was group finance director of Dixons Group, a position he held from 1997. He joined Dixons in 1991 after working for 3i Group and Bank of America International. His experience at Dixons spanned a number of operational and financial roles, both in the UK and overseas. He was also a non-executive director of Ladbrokes (formerly Hilton Group) and a director of Freeserve from its inception. Ian is a Chartered Accountant. Aged 42.

Resolution 7
That John Nelson be re-elected as a director.

John Nelson was appointed to the Board on 14 January 2002. He is a member of the Audit and Nominating committees and the Pension Scheme Performance Review Group. A Chartered Accountant, he retired as chairman of Credit Suisse First Boston Europe (CSFB) on 31 January 2002. He was a member of the executive board and chairman of the European executive committee of CSFB.
     Prior to joining CSFB in January 1999, John spent 13 years with Lazard Brothers. He was appointed vice chairman of Lazard Brothers in 1990. He was also chairman of Lazard S.p.A. in Italy and a managing director of Lazard Freres, New York. He is chairman of Hammerson, deputy chairman of Kingfisher, a member of the Board of English National Opera and a senior advisor to Charterhouse Capital Partners. Aged 59.

Resolutions 8-9: election of directors
The articles require any director appointed by the Board to retire at the Annual General Meeting following appointment.

Resolution 8
That Deborah Lathen be elected as a director.
Deborah Lathen was appointed to the Board on 1 February 2007. She is a member of the Remuneration Committee. She is a US attorney and is president of Lathen Consulting, which provides strategic, legal and management advice and counsel to senior executives of major US companies on policy and regulatory matters.
     Deborah was formerly chief of the Cable Services Bureau at the Federal Communications Commission from 1998 to 2001. She was responsible for policy and regulation covering the cable, satellite TV and broadcast industries.
     She was previously director of national consumer affairs and managing counsel at Nissan Motor Corporation USA, and prior to that, held legal positions at TRW Financial Systems and at the Quaker Oats Company.
     A US national, she is aged 54.

Resolution 9
That François Barrault be elected as a director.

François Barrault was appointed to the Board and became Chief Executive of BT Global Services on 24 April 2007. He is a member of the Operating Committee. He joined BT in April 2004 as President BT International, BT Global Services. François was formerly president, Lucent Technologies Inc and held other roles within Lucent including president and CEO Mobility International, and president and CEOEMEA (Europe, Middle East and Africa). Before this, François worked for Ascend Communications, where he held the position of senior vice president, EMEA and International until its acquisition by Lucent. He previously held executive positions with IBM, Computervision/ Prime and Stratus. He is a non-executive director of eServGlobal (an Australian corporation).
     A French national, he is aged 46.

Resolution 10
That PricewaterhouseCoopers LLP be reappointed auditors of the Company, to hold office until the conclusion of the next general meeting at which accounts are laid before the Company.
The resolution proposes the reappointment of PricewaterhouseCoopers LLP as the Company’s auditors.

Resolution 11
That the directors be authorised to decide the auditors’ remuneration.

This resolution follows standard practice. If passed, the directors will decide how much the auditors should be paid.

SPECIAL BUSINESS

The following resolution will be proposed as an ordinary resolution.

Resolution 12
That the authority and power conferred on the directors in relation to the Section 80 Amount by Article 74 of the Company’s articles of association be renewed until 18 October 2008 and for that period the Section 80 Amount shall be £136 million.
The articles give a general authority to the directors to allot unissued shares, which is subject to renewal by shareholders.
     The directors will be able to issue new shares up to a nominal value of £136 million (the Section 80 Amount), which is equal to approximately 33% of the issued share capital (excluding treasury shares) of the Company as at the date of this Notice.
     See the notes to Resolution 14 for more information on treasury shares.

The following three resolutions will be proposed as special resolutions.

Resolution 13
That the authority and power conferred on the directors by Article 74 of the Company’s articles of association be:

extended to any sale of shares which the Company may hold as treasury shares; and
renewed until 18 October 2008; and for that period the Section 89 Amount shall be £21 million.
This resolution renews the authority given to directors to allot equity securities without needing to offer these shares to existing shareholders first:
for cash, up to an amount representing approximately 5% of the issued share capital (including treasury shares) as at the date of this Notice, approximately 420 million shares; or
in connection with a rights issue – defined in summary as an offer of equity securities to shareholders which is open for a period decided by the Board – subject to any limits or restrictions that the Board thinks are necessary or appropriate.
 

    There are no current plans to allot shares except in connection with the Company’s employee share plans and over a three year rolling period this disapplication will not exceed 7.5% of issued share capital. References to ‘allot’ in this note include the sale of treasury shares. The authorities sought by Resolutions 12 and 13 will last for 15 months until 18 October 2008, although the directors intend to seek renewal of these powers at each Annual General Meeting.
     This will ensure that the directors continue to have the flexibility to act in the best interests of shareholders, when opportunities arise, by allotting shares.

Resolution 14
That the Company be generally and unconditionally authorised to make market purchases (within the meaning of Section 163(3) of the Companies Act 1985) of shares of 5p each in the Company, subject to the following conditions:

(a)
the maximum number of shares which may be purchased is 827 million shares;
(b)
the minimum price which may be paid for each share is 5p;
(c)
the maximum price which may be paid for each share is an amount equal to 105% of the average of the middle market quotations of a share in the Company as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the share is contracted to be purchased; and
(d) this authority will expire at the close of the Annual General Meeting of the Company held in 2008, or if earlier, 18 October 2008 (except in relation to the purchase of shares, the contract for which was concluded before the expiry of this authority and which might be executed wholly or partly after that expiry).

The directors would like the Company to continue to have the flexibility to buy its own shares. This resolution renews the Company’s authority to buy its own shares in similar terms to previous years’ authorities. It would be limited to 827 million ordinary shares, representing 10% of the issued share capital (excluding treasury shares) at the date of this Notice. The directors would exercise this authority only after considering the effects on earnings per share and the benefits for shareholders generally.
     Shares purchased by the Company out of distributable profits may be held as treasury shares, which may then be cancelled, sold for cash or used to meet the Company’s obligations under its employee share plans.
     During the 2007 financial year, 148 million shares were purchased (1.7% of the share capital) for a total consideration of £401 million, at an average price of £2.72 per share. As at 16 May 2007, 91 million treasury shares had been transferred to meet the Company’s obligations under its employee share plans and as at that date, the Company still held 368 million treasury shares which is equal to 4.4% of the issued share capital (excluding treasury shares) in issue as at that date.
     The Company’s current intention is to hold any shares purchased as treasury shares but it retains the flexibility to cancel them or sell them for cash if it considers this to be in the best interests of the Company.
     The authority sought by this resolution will end by 18 October 2008, although the directors intend to seek renewal of this power at each Annual General Meeting.
     As at 16 May 2007, there were options outstanding over 373 million shares (of which options over 271 million shares were in respect of options granted under the savings related share option plans), representing 4.5% of the Company’s issued share capital (excluding treasury shares). If the authority given by this resolution were to be fully used, these would represent 5.0% of the Company’s issued share capital (excluding treasury shares). There are no warrants outstanding.
 

Resolution 15
That the Company may use electronic communications and in particular may send or supply any document or information to members by making them available on a website to members who do not elect to receive them electronically or in hard copy, and this resolution will supersede any provision in the Company’s articles of association to the extent that it is inconsistent with this resolution.
This resolution will extend the powers BT currently has set out in its articles for communicating with shareholders electronically, by taking advantage (if it decides to do so) of provisions in the Companies Act 2006. It will allow BT to use website communication as the default position, without sending documents to the shareholder. BT will be able to ask shareholders for their consent to receive communications from the Company via its website, or to elect to receive communications either electronically or in hard copy, as is currently the case. If the shareholder has not responded within 28 days of a request by BT, the Company may take that as consent to receive communications via its website. Where a shareholder receives communications via BT’s website, in this way, he or she will be sent a letter notifying them of the documents on the website, and of the right to receive a hard copy of the documents free of charge.
     BT will continue to communicate with shareholders by e-mail, where they have agreed to this, notifying them of the documents on the website, and of the right to receive a hard copy of the documents free of charge.
     BT expects to save considerable printing and postage costs if it decides to use the powers granted by this resolution.

The following resolution will be proposed as an ordinary resolution.

Resolution 16
That British Telecommunications plc, a wholly-owned subsidiary of the Company, be authorised to make donations to EU (European Union) political organisations, not exceeding £100,000 in total, during the period beginning with the date of the 2007 Annual General Meeting and ending at the conclusion of the day on which the 2008 Annual General Meeting is held.
The Company’s continuing policy is that no company in the group shall make contributions in cash or kind (including loans) to any political party. Arrangements are in place to implement this policy. However, the definition of political donations used in the Companies Act 1985 is very much broader than the sense in which these words are ordinarily used. It covers activities such as making MPs and others in the political world aware of key industry issues and matters affecting the Company, which make an important contribution to their understanding of BT. These activities are carried out on an even-handed basis related broadly to the major political parties’ electoral strength. The authority we are requesting in this resolution is not designed to change the above policy. It will, however, ensure that the group acts within the provisions of the Companies Act 1985 requiring companies to obtain shareholder authority before they can make donations to EU political organisations (which includes UK political parties) as defined in the Companies Act 1985. During the 2007 financial year, the Company’s wholly-owned subsidiary, British Telecommunications plc, spent £18,392.

     Only shareholders on the Register of Members at 6.00 pm on 17 July 2007 are entitled to attend and vote. A shareholder entitled to attend and vote is entitled to appoint a proxy or proxies to vote on his or her behalf. A proxy need not be a shareholder of the Company. On a poll, the number of shares held by each shareholder at 6.00 pm on 17 July 2007 will decide the number of votes that the shareholder may cast.
     The total number of issued and fully paid ordinary shares of 5p each as at 16 May 2007 (the latest practicable date prior to the publication of this document) was 8,640,654,852. The total number of voting rights in the Company as at that date was 8,272,726,496 (excluding treasury shares).

Documents
Copies of all service contracts and contracts of appointment between the directors and the Company are available for inspection during business hours at the registered office of the Company on any weekday (public holidays excluded), and will also be available for inspection at the place of the Annual General Meeting from 9.30 am on the day of the meeting until the conclusion of the meeting.

Your directors believe that the proposals in Resolutions 1 to 16 are in the best interests of both the Company and its shareholders and unanimously recommend that you vote in favour of all these resolutions. The directors intend to do so in respect of their own beneficial holdings.

By order of the Board


Larry Stone
Secretary
81 Newgate Street
London
EC1A 7AJ
16 May 2007

If you are not coming to the meeting
Webcast
The speeches by the Chairman, Sir Christopher Bland, and the Chief Executive, Ben Verwaayen, will be broadcast live on the internet at www.bt.com/btagm2007 Questions and voting on the business of the meeting will not be broadcast. If you intend to view the webcast, you should visit this site before the meeting to check that you will be able to view it on your computer, and also whether you need any additional software.

 

 

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