plc is one of the worlds leading providers of communications
solutions and services, operating in 170 countries. In the 2006
financial year approximately 87% of revenues were derived from
operations in the UK. Details of our businesses and performance
are given in the Review of the year.
An interim dividend of 4.3 pence per share (2005: 3.9 pence) was paid on 13 February 2006. The directors recommend a final dividend of 7.6 pence per share (2005: 6.5 pence) to be paid on
11 September 2006 to shareholders on the register at the close of business on 18 August 2006. This makes a total dividend for the year of 11.9 pence per share (2005: 10.4 pence), an increase of 14%.
total shareholder return (TSR) performance over the five financial years to 31 March 2006
1 April 2001 = 100
The graph shows
the relative TSR performance (adjusted for the rights issue and demerger
our mobile business in the 2002 financial year) of BT and the FTSE 100.
Details of the current members of the Board are shown on the following page. All served throughout the financial year, with the exception of Matti Alahuhta and Phil Hodkinson, who were appointed on 1 February 2006. Lou Hughes served as a director until 31 March 2006.
Sir Anthony Greener, Maarten van den Bergh and Clayton Brendish retire from the Board by rotation at the Annual General Meeting and being eligible, offer themselves for re-election. Matti Alahuhta and Phil Hodkinson, having been appointed by the Board, will retire and will be proposed for election.
letters of appointment of Sir Anthony Greener, Maarten van den Bergh and Clay
Brendish were extended for a second term of three years and are terminable by
either party on three months notice.
contracts of Matti Alahuhta and Phil Hodkinson are for an initial period of three
years from 1 February 2006 and are terminable by either party on three months notice.
ANNUAL GENERAL MEETING
Notice of the Annual General Meeting to be held at 10.30 am at
the Barbican Centre, London on 12 July 2006 is contained in the
AGM information section.
It is BTs
policy to achieve for all our operations best practice in our standards of business
integrity. The directors consider that BT has, throughout the year, complied
with the provisions set out in section 1 of the 2003 Combined Code on Corporate
BOARD, DIRECTORS AND BOARD COMMITTEES
The Board is currently
made up of the part-time Chairman, the Chief Executive, four other executive
directors and eight independent non-executive directors. It is BTs policy
that the Board will comprise a majority of independent non-executive directors.
The roles of the Chairman and the Chief Executive are separate. The non-executive
directors provide a strong, independent element on the Board. Sir Anthony Greener,
the Deputy Chairman, is the senior independent director. Non-executive directors
are appointed initially for three years at the end of which the appointment may
be continued by mutual agreement. The Chairman and the non-executive directors
meet regularly without the executive directors. The Chairman ensures the views
of shareholders are known to and appropriately considered by the Board.
Boards principal focus is the overall strategic direction, development and control of the group. A formal statement of its role is available on the companys
website. The Board meets at least nine times each year.
summer 2005 the Board carried out a further evaluation of Board
and Board Committee performance and effectiveness. As part of
this process, the Chairman has one-to-one sessions with the directors
and the Deputy Chairman, Sir Anthony Greener, met all directors
individually to review the Chairmans performance.
meet best corporate governance practice, Audit, Remuneration and Nominating Committees
have long been an established part of BTs system of governance. Each committee has written terms of reference, which are available on the companys website. The Audit and Remuneration Committees are made up entirely of independent non-executive directors. The Board considers that several of the Audit Committees members have recent and relevant financial experience. The Audit Committee reviews the companys published financial results, the Annual Report and Form 20-F and other published information for statutory and regulatory compliance and reports its views to the Board. It recommends the appointment, reappointment and remuneration of the companys external auditors. The Board has policies determining what non-audit services the companys
external auditors can provide, in order to safeguard their independence and objectivity.
The Nominating Committee ensures an appropriate balance of experience and abilities on the Board, using this evaluation to review the size and composition of the Board and to recommend any proposed changes to the Board.
The Equality of
Access Board became operational on 1
November 2005 to monitor the companys compliance with the Undertakings
made to Ofcom following Ofcoms Strategic Review of Telecommunications.
Its terms of reference are also available on the companys
The Chief Executive, Ben Verwaayen, chairs the Operating Committee, which meets weekly. The Board also has a Community Support Committee and a Pension Scheme Performance Review Group.
INTERNAL CONTROL AND RISK MANAGEMENT
The Board is responsible
for the groups systems of internal control and risk management and for
reviewing the effectiveness of those systems. Such systems are designed to manage,
rather than eliminate, the risk of failure to achieve business objectives; any
system can provide only reasonable and not absolute assurance against material
misstatement or loss.
BT has processes for identifying, evaluating and managing the significant risks faced by the group. These processes have been in place for the whole of the 2006 financial year and have continued up to the date on which this document was approved.