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Report of the directors
The directors submit their report and the audited financial statements of the company, BT Group plc, and the group, which includes its subsidiary undertakings, for the 2005 financial year.
BT Group plc is the listed holding company for the BT group of companies.
The
Operating and
financial review, the discussion on Corporate
governance, the Report
on directors’ remuneration and Risk
Factors form part of this report. The audited
financial statements are also presented.
The group’s principal activity is the supply of communications services and equipment. In the 2005 financial year, approximately 91% of group turnover arose from operations in the UK.
The names and biographical details of the directors of the company are available from the Board of directors and Operating Committee section. All served throughout the financial year, with the exception of Hanif Lalani, who was appointed on 7 February 2005. Pierre Danon served as a director until 28 February 2005.
In accordance with the articles of association, Hanif Lalani, having been appointed as a director by the Board, retires at the forthcoming annual general meeting (AGM) and will be proposed for election. Ben Verwaayen, Paul Reynolds, Carl Symon and Baroness Jay retire by rotation and will be proposed
for re-election. Details of these directors’ contracts of appointment are included in the Report on directors’ remuneration and the discussion on Corporate governance.
At 18 May 2005, the company had received notifications from Legal & General Investment Management Limited, Barclays PLC and Brandes Investment Partners LLC, under Part VI of the Companies Act 1985, in respect of holdings of 289,727,496 shares, 341,139,080 shares and 347,201,310 shares
respectively, representing holdings of 3.4%, 4.01% and 4.08% of the company’s issued ordinary share capital.
During and at the end of the 2005 financial year, none of the company’s directors was materially interested in any material transaction in relation to the group’s business and none is materially interested in any presently proposed material transactions.
Policy on the payment of suppliers |
BT’s policy is to use its purchasing power fairly and to pay promptly and as agreed.
BT has a variety of payment terms with its suppliers. The terms for payments for purchases under major contracts are settled when agreeing the other terms negotiated with the individual suppliers. It is BT’s current policy to make payments for other purchases within 30 working days of the invoice date,
provided that the relevant invoice is presented to the company in a timely fashion and is complete. BT’s payment terms are printed on the company’s standard purchase order forms or, where appropriate, specified in individual contracts agreed with the supplier. The ratio, expressed in days, between the
amounts invoiced to the company by its suppliers in the 2005 financial year and the amounts owed to its trade creditors at the end of the year was 36 calendar days.
The company’s continuing policy is that no company in the group shall make contributions in cash or kind 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 UK political parties’ electoral strength. The authority we are requesting at the AGM is not designed to change the above policy. It will, however, ensure that BT 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 Act. During the 2005 financial year the company’s wholly-owned subsidiary, British Telecommunications plc, made the following payments to cover the cost of hosting briefing meetings about the company’s
activities with MPs and MEPs: Labour Party £10,972; Conservative Party £5,930; Liberal Democrats Party £2,907; Scottish National Party £2,000; Plaid Cymru £500.
Resolutions to reappoint PricewaterhouseCoopers LLP as auditors of the company and to authorise the directors to settle their remuneration will be proposed at the AGM.
Authority to purchase shares |
The authority given at last year’s AGM of the company held on 14 July 2004 for the company to purchase in the market 859 million of its shares, representing 10% of the issued share capital, expires on 13 October 2005. Shareholders will be asked to give a similar authority at the AGM.
During the 2005 financial year, 101 million shares of 5 pence each were purchased under this authority (1.2% of the share capital) for a total consideration of £195 million, at an average price of £1.92 per share. The shares were purchased in an on-market programme of buying back the company’s shares,
initiated in November 2003, as part of the company’s shareholder distribution strategy. 36 million shares were cancelled and 134 million shares have been retained as treasury shares. At 18 May 2005, 11 million treasury shares had been transferred to meet the company’s obligations under its employee share
plans.
The resolutions to be proposed at the AGM to be held on 13 July 2005, together with explanatory notes, appear in the separate Notice of Annual General Meeting sent to all shareholders.
By order of the Board
Larry Stone
Secretary
18 May 2005
Registered office: 81 Newgate Street, London EC1A 7AJ
Registered in England and Wales No. 4190816
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