Financial statements of BT Group plc

BT Group plc accounting policies
(i) Accounting basis
The financial statements are prepared on a going concern basis and under the historical cost convention as modified by the revaluation of certain financial assets and liabilities at fair value in accordance with the Companies Act 1985 and applicable United Kingdom accounting standards (UK GAAP).
     As permitted by Section 230(3) of the Companies Act 1985, the company’s profit and loss account has not been presented.
     The BT Group plc consolidated financial statements for the year ended 31 March 2008 contain a consolidated statement of cash flows. Consequently, the company has taken advantage of the exemption in FRS 1, ‘Cash Flow Statements’ not to present its own cash flow statement.
     The BT Group plc consolidated financial statements for the year ended 31 March 2008 contain related party disclosures. Consequently, the company has taken advantage of the exemption in FRS 8, ‘Related Party Disclosures’ not to disclose transactions with other members of the BT Group.
     The BT Group plc consolidated financial statements for the year ended 31 March 2008 contain financial instrument disclosures which comply with FRS 29, ‘Financial Instruments: Disclosures’. Consequently, the company is exempted by FRS 29 from providing its disclosure requirements in respect of its financial instruments.

(ii) Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost and reviewed for impairment if there are indicators that the carrying value may not be recoverable.

(iii) Taxation
Full provision is made for deferred taxation on all timing differences which have arisen but not reversed at the balance sheet date. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that there will be sufficient taxable profits from which the underlying timing differences can be deducted. The deferred tax balances are not discounted.

(iv) Dividends
Dividend distributions are recognised as a liability in the year in which the dividends are approved by the company’s shareholders. Interim dividends are recognised when they are paid; final dividends when authorised in general meetings by shareholders.

(v) Share capital
Ordinary shares are classified as equity. Repurchased shares of the company are recorded in the balance sheet as treasury shares and presented as a deduction from shareholders’ equity at cost.

(vi) Cash
Cash includes cash in hand, bank deposits repayable on demand and bank overdrafts.

(vii) Share based payments
The company does not incur a charge for share based payments. However the issuance by the company of share options and awards to employees of its subsidiaries represents additional capital contributions to its subsidiaries. An addition to the company’s investment in subsidiaries is recorded with a corresponding increase in equity shareholders’ funds. The additional capital contribution is determined based on the fair value of options and awards at the date of grant and is recognised over the vesting period.

Other information
(i) Dividends
The directors are proposing that a final dividend in respect of the year ended 31 March 2008 of 10.4 pence will be paid to shareholders on 15 September 2008, taking the full year proposed dividend in respect of the 2008 financial year to 15.8 pence (2007: 15.1 pence). This dividend is subject to shareholder approval at the Annual General Meeting and therefore the liability of approximately £805 million (2007: £825 million) has not been included in these financial statements.

(ii) Employees
The four (2007: five) executive directors and the Chairman of BT Group plc were the only employees of the company during the 2008 financial year. The costs relating to qualifying services provided to the company’s principal subsidiary, British Telecommunications plc, are recharged to that company.

 

BT Group plc company balance sheet

  2008   2007  
  £m   £m  
Fixed assets        
Investments in subsidiary undertakingsa 10,182   10,064  
 
Total fixed assets 10,182   10,064  
Current assets      
Debtorsb 996   137  
Cash at bank and in hand 16   17  
 
Total current assets 1,012   154  
Creditors: amounts falling due within one yearc 184   40  
 
Net current assets 828   114  
 
Total assets less current liabilities 11,010   10,178  
 
Capital and reservesd        
Called up share capital  420   432  
Share premium account  62   31  
Capital redemption reserve   15   2  
Treasury shares reserve  (1,843 ) (884 )
Profit and loss account  12,356   10,597  
 
Total equity shareholders’ funds 11,010   10,178  
 
a

 During 2008 the company acquired 91% of Net 2S S.A. for a consideration of £45 million. The remaining increase in investments in subsidiary undertakings relates to additional capital contributions in respect of share based payments (2008: £73 million, 2007: £93 million).
b Debtors consists of amounts owed by subsidiary undertakings of £996 million (2007: £137 million).
c
 Creditors consists of amounts owed to subsidiary undertakings of £8 million (2007: £8 million) and other creditors of £176 million (2007: £32 million).
d Capital and reserves are available on the subsidiary undertakings and associate page.

The financial statements of the company on this page and the subidiary undertakings and associate page were approved by the board of the directors on 14 May 2008 and were signed on its behalf by

 

Sir Michael Rake
Chairman

Ben Verwaayen
Chief Executive

Hanif Lalani
Group Finance Director

 

BT Group plc company balance sheet continued

                   
          Capital redemption reserve £m       Profit and loss account £m a,c,d     
  Share capital £m   a Share premium account £m   b   Treasury reserve £m      
          Total £m  
             
                         
At 1 April 2006 432   7   2   (600 ) 10,099   9,940  
Profit for the financial year –   –   –   –   1,458   1,458  
Dividends paid –   –   –   –   (1,053 ) (1,053 )
Capital contribution in respect of share based payments –   –   –   –   93   93  
Net purchase of treasury shares –   –   –   (284 ) –   (284 )
Arising on share issues –   24   –   –   –   24  
 
At 1 April 2007 432   31   2   (884 ) 10,597   10,178  
Profit for the financial year –   –   –   –   3,497   3,497  
Dividends paid –   –   –   –   (1,241 ) (1,241 )
Capital contribution in respect of share based payments –   –   –   –   73   73  
Net purchase of treasury shares –   –   –   (1,529 ) –   (1,529 )
Cancellation of shares (13 ) –   13   570   (570 ) –  
Arising on share issues 1   31   –   –   –   32  
 
At 31 March 2008 420   62   15   (1,843 ) 12,356   11,010  
 
a

The authorised share capital of the company throughout 2008 and 2007 was £13,463 million representing 269,260,253,468 ordinary shares of 5p each.
The allotted, called up and fully paid ordinary share capital of the company at 31 March 2008 was £420 million (2007: £432 million), representing 8,401,227,029 ordinary shares of 5p each (2007: 8,640,654,852). Of the authorised but unissued share capital at 31 March 2008, 21 million ordinary shares (2007: 21 million) were reserved to meet options granted under employee share option schemes.
b

 The share premium account, representing the premium on allotment of shares is not available for distribution. The movement in share premium in 2008 arises on shares issued in consideration for the acquisition of Net 2S S.A. and in 2008 and 2007, the excess of proceeds recieved on the exercise of share options versus the cost of treasury shares issued to satisfy the options.
c

 The profit for the financial year, dealt with in the profit and loss account of the company and after taking into account dividends from subsidiary undertakings, was £3,497 million (2007: £1,458 million). As permitted by Section 230 of the Companies Act 1985, no profit and loss account of the company is presented.
d




 During 2008 the company repurchased 539,657,691 (2007: 147,550,000) of its own shares of 5p each, representing 6% (2007: 2%) of the called-up share capital, for consideration (including transaction costs) of £1,626 million (2007: £404 million). This includes an accrual of £120 million (2007: £nil) for the purchase of treasury shares during the close period ending on 15 May 2008. In addition, 53,250,144 shares (2007: 66,719,600) were issued from treasury to satisfy obligations under employee share schemes and executive share awards at a cost of £97 million (2007: £120 million) and 250,000,000 treasury shares were cancelled at a cost of £570 million. At 31 March 2008 607,285,178 shares (2007: 370,877,631) with an aggregate nominal value of £30 million (2007: £19 million) are held as treasury shares at cost.