BT 2003 Annual Report Download - page 122

35. Auditors
The auditors’ remuneration for the year ended 31 March 2003 for the group was £2,943,000 (2002 –
£2,702,000, 2001 – £3,639,000). The audit fees payable to the company’s auditors, PricewaterhouseCoopers
LLP (and formerly PricewaterhouseCoopers), for the company and UK subsidiary undertakings’ statutory accounts
were £1,910,000 (2002 – £1,656,000, 2001 – £2,100,000). The audit fee of the company was £31,000
(2002 – £44,000).
The following fees for non-audit services were paid or are payable to the company’s auditors,
PricewaterhouseCoopers LLP, in the UK for the years ended 31 March 2003, 31 March 2002 and 31 March 2001:
2003
£000
2002
£000
2001
£000
Rights issue, restructuring and demerger projects –14,161 9,756
Regulatory audit and associated services 1,690 1,142 1,130
Tax services 1,817 1,075 1,539
Concert global venture related work 505 591 1,196
Systems advice 3,765 2,565 1,360
Corporate Finance advice 265 982 730
Other 938 2,167 512
Total 8,980 22,683 16,223
In addition, fees of £1,586,000 were paid or are payable to PricewaterhouseCoopers LLP for the year ended
31 March 2003 (2002 – £2,540,000, 2001 – £3,025,000) in respect of audit and other services to the company’s
subsidiary undertakings outside the UK.
Total fees paid or payable to PricewaterhouseCoopers LLP for all services in the year ended 31 March 2003
were £12,476,000 (2002 – £26,879,000, 2001 – £21,348,000).
In order to maintain the independence of the external auditors, the Board has determined policies as to what
non audit services can be provided by the company’s external auditors and the approval processes related to
them. Under those policies work of a consultancy nature will not be offered to the external auditors unless there
are clear efficiencies and value added benefits to the company.
Under the terms of BT’s main licence the group is required to publish audited regulatory financial statements.
The fees for regulatory work principally reflect the audit fees associated with those regulatory financial
statements. The fees for tax services include tax compliance and tax advisory services. The fees for systems advice
in the year ended 31 March 2003 related to advisory services provided in connection with the implementation
of certain billing systems. These services, which were provided by PwC Consulting, the consulting business
of PricewaterhouseCoopers that was sold to IBM in October 2002, commenced in the prior year and are
now completed.
36. Financial instruments and risk management
The group holds or issues financial instruments mainly to finance 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 finance. In addition, various financial instruments – for example trade debtors and trade creditors –
arise directly from the group’s operations.
The group finances its operations primarily by a mixture of issued share capital, retained profits, 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. Typically, but not exclusively,
the bond markets provide the most cost-effective means of long-term borrowing. The group uses derivative
financial 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 financial 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 financial instruments is
undertaken on behalf of the group by substantial external fund managers who are limited to dealing in debt
instruments and certain defined derivative instruments and are given strict guidelines on credit, diversification
and maturity profiles.
During the year ended 31 March 2003, the group’s net debt reduced from £13.7 billion to £9.6 billion.
£2.6 billion was realised from the disposal of the group’s interest in Cegetel Groupe SA in the year, and the group
has closed out £2.6 billion of associated fixed interest rate swaps. The group’s fixed:floating interest rate profile
therefore remains at 88:12 at 31 March 2003.
Notes to the financial statements
BT Annual Report and Form 20-F 2003 121