BT 2014 Annual Report Download - page 117

114 Governance
Capital management and funding policy
The objective of our capital management and funding policy is to reduce
net debt while investing in the business, supporting the pension fund
and paying progressive dividends.
The Board reviews the group’s capital structure regularly.
Managementproposes actions which reect the group’s investment plans
and risk characteristics as well as the macro-economic conditions in
which we operate.
Our funding policy is to raise and invest funds centrally to meet the
group’s anticipated requirements. We use a combination of capital
market bond issuance, commercial paper borrowing, committed
borrowing facilities and investments. These are planned so as to mature
at dierent stages in order to meet short, medium and long-term
requirements.
Details of our treasury management policies are included in note 26
tothe consolidated nancial statements.
Financial instruments
Details of the group’s nancial risk management objectives and policies
of the group and exposure to interest risk, credit risk, liquidity risk and
foreign exchange are given in note 26 to the consolidated nancial
statements.
Credit risk management policy
We take proactive steps to minimise the impact of adverse market
conditions on our nancial instruments. In managing investments and
derivative nancial instruments, the group’s central treasury function
monitors the credit quality across treasury counterparties and actively
manages any exposures which arise. This central team continually
reviews any credit exposures, whether arising from centrally-managed
nancial instruments or from the group’s trade-related receivables.
Management within the lines of business also actively monitors any
exposures arising from trading balances.
Oƪ-balance sheet arrangements
Other than the nancial commitments and contingent liabilities
disclosed in note 29 to the consolidated nancial statements, there are
no o-balance sheet arrangements that have, or are reasonably likely
to have, a current or future material eect on our nancial condition
changes in nancial condition revenues or expenses results of
operations liquidity capital expenditure or capital resources.
Legal proceedings
We do not believe that there is any single current court action that would
have a material adverse eect on our nancial position or operations.
During 2013/14, the aggregate volume and value of legal actions to
which we are party reduced.
Other statutory information
Certain provisions of the 2006 Act require us to make additional
disclosures. A number of these disclosures can be found elsewhere in
thisReport as set out below
• structure of BT’s share capital (page 180) including the rights and
obligations attaching to the shares (pages 197 to 199)
• restrictions on the transfer of BT shares and voting rights
(pages 197 and 199)
• signicant direct or indirect shareholdings (page 115) and
• appointment and replacement of directors (pages 109, 110 and 199).
The disclosures which are not covered elsewhere in this Report are
• BT has two employee share ownership trusts which hold BT shares for
the purpose of satisfying awards made under the various employee
share plans. The trustee of the BT Group Employee Share Investment
Plan may invite participants, on whose behalf it holds shares, to direct
it how to vote in respect of those shares, and, if there is an oer for the
shares or other transaction which would lead to a change of control
ofBT, participants may direct it to accept the oer or agree to the
transaction. In respect of shares held in the BT Group Employee Share
Ownership Trust, the trustee abstains from voting those shares.
Ifthere is an oer for the shares, the trustee is not obliged to accept or
reject the oer but will have regard to the interests of the participants,
may consult them to obtain their views on the oer and may otherwise
take the action with respect to the oer it thinks fair.
• We are not aware of any agreements between shareholders that may
result in restrictions on the transfer of shares or on voting rights.
• No person holds securities carrying special rights with regard to control
of the company.
• Proxy appointment and voting instructions must be received by
theregistrars not less than 48 hours before a general meeting
(see also page 197).
• Any amendment of BT’s Articles of Association requires shareholder
approval in accordance with legislation in force from time to time.
• The powers of the directors are determined by UK legislation and the
Articles of Association. The directors are authorised to issue and allot
shares, and to undertake purchases of BT shares subject to shareholder
approval at the AGM.
• BT Group plc is not party to any signicant agreements that take eect,
alter or terminate upon a change of control following a takeover.
• We do not have any agreements with directors providing for
compensation for loss of oce or employment that occurs because
ofa takeover. There is similarly no such provision in standard contracts
for employees.
Political donations
Our policy is that no company in the group will make contributions in
cash or kind to any political party, whether by gift or loan. However,
the denition of political donations used in the 2006 Act is very much
broader than the sense in which these words are ordinarily used. It may
cover activities such as making Members of Parliament and others in
the political world aware of key industry issues and matters aecting
the company. These actions make an important contribution to their
understanding of BT.
The authority we are requesting at the AGM is not designed to change
the above policy. It will, however, ensure that the group continues
to act within the provisions of the 2006 Act requiring companies to
obtain shareholder authority before they can make donations to EU
political parties and/or political organisations as dened in the 2006
Act. During 2013/14, the company’s wholly-owned subsidiary, British
Telecommunications plc, made payments totalling £3,000 (2012/13
£739) to cover the cost of a brieng meeting with MPs, MSPs and
councillors of the Scottish National Party. No loans were made to any
political party by any company in the BT group.