BT 2002 Annual Report Download - page 122

34. Employee share schemes continued
The values of possible future transfers of shares under the plans were based on the BT Group plc's share price at 31 March
2002 of 280p (2001 ± BT plc share price of 510p). The provisions for the costs of the ISP, RSP, ESP and PSP were based
on best estimates of the company's performance over the plans' conditional periods, relating to those portions of the plan
conditional periods from commencement up to the ®nancial year end.
Employee Stock Purchase Plan
The BT Employee Stock Purchase Plan (ESPP) operated from December 2000 to 30 June 2001 for employees in the US.
Under this plan employees could purchase American Depositary Shares (ADSs) on a monthly basis at a price equal to the
lower of (i) 85% of the average trading price of the ADSs on the New York Stock Exchange on the date of which the
purchase rights are granted and, (ii) 85% of the average trading price of the ADSs on the date of purchase. During the
period from 31 March 2001 to 5 July 2001, the discounted price ranged between US$49.02 and US$72.89 (2001 ±
US$65.98 and US$154.88) per ADS and 0.7 million shares (2001 ± 0.1 million) were issued under the plan.
The BT ESPP ceased to operate in June 2001 prior to the demerger of mmO2. The ®rst offer under the BT Group
Employee Stock Purchase Plan was made in December 2001. The BT Group ESPP enables participants to purchase ADSs
quarterly at a price which is 85% of the market price of an ADS at the start of the offer (and in the case of employees who
have joined after the start of the offer, 85% of the market price on that date, whichever is higher). 29,000 shares have been
issued under the BT Group ESPP.
35. Auditors
The auditors' remuneration for the year ended 31 March 2002 for the group was £2,702,000 (2001 ± £3,639,000, 2000 ±
£2,650,000). The audit fees payable to the company's auditors, PricewaterhouseCoopers, for the company and UK
subsidiary undertakings' statutory accounts were £1,656,000 (2001 ± £2,100,000, 2000 ± £2,063,000). The audit fee of the
company was £44,000 for the year ended 31 March 2002.
The following fees for non-audit services were paid or are payable to the company's auditors,
PricewaterhouseCoopers, in the UK for the years ended 31 March 2002, 31 March 2001 and 31 March 2000:
2002
£000
2001
£000
2000
£000
Rights issue, restructuring and demerger projects 14,161 9,756 ±
Regulatory work 1,142 1,130 1,252
Tax work 1,075 1,539 1,155
Concert global venture related work 591 1,196 5,117
Systems advice 2,565 1,360 1,461
Corporate Finance advice 982 730 1,810
Other 2,167 512 1,950
Total 22,683 16,223 12,745
In addition, fees of £2,540,000 were paid or are payable to PricewaterhouseCoopers for the year ended 31 March 2002
(2001 ± £3,025,000, 2000 ± £6,382,000) in respect of audit and other services to the company's subsidiary undertakings
outside the UK.
36. Financial instruments and risk management
The group holds or issues ®nancial instruments mainly to ®nance its operations; for the temporary investment of short-term
funds; and to manage the currency and interest rate risks arising from its operations and from its sources of ®nance. In
addition, various ®nancial instruments ± for example trade debtors and trade creditors ± arise directly from the group's
operations.
The group ®nances its operations primarily by a mixture of issued share capital, retained pro®ts, deferred taxation,
long-term loans and, short-term loans, principally by issuing commercial paper and medium-term notes. The group
borrows in the major long-term debt markets in major currencies and signi®cant new long-term debt was taken on in the
year ended 31 March 2001. Typically, but not exclusively, the bond markets provide the most cost-effective means of
long-term borrowing. The group uses derivative ®nancial instruments primarily to manage its exposure to market risks from
changes in interest and foreign exchange rates. The derivatives used for this purpose are principally interest rate swaps, gilt
locks, currency swaps and forward currency contracts.
The types of ®nancial instrument used for investment of short-term funds are prescribed in group treasury policies with
limits on the exposure to any one organisation. Short-term investing in ®nancial instruments is undertaken on behalf of the
group by external substantial fund managers who are limited to dealing in debt instruments and certain de®ned derivative
instruments and are given strict guidelines on credit, diversi®cation and maturity pro®les.
Notes to the financial statements
BT Group Annual Report and Form 20-F 2002 121