BT 2003 Annual Report Download - page 53

Report of the directors
The directors submit their report and the audited
financial statements of the company, BT Group plc,
and the group, which includes its subsidiary
undertakings, for the 2003 financial year.
Introduction
BT Group plc is the listed holding company for
the BT group of companies and was formed when
the mmO
2
business (comprising what had been British
Telecommunications plc’s mobile activities in the UK,
the Netherlands, Germany and the Republic of Ireland)
was demerged on 19 November 2001.
The Business review on pages 8 to 23, Our
commitment to society on pages 24 and 25,
the Financial review on pages 28 to 49, the discussion
on Corporate governance on pages 53 to 57, the
Report on directors’ remuneration on pages 58 to 72
and Risk Factors on page 140 form part of this report.
The audited financial statements are presented on
pages 75 to 135.
Principal activity
The group’s principal activity is the supply
of communications services and equipment. In the 2003
financial year, approximately 94% of group turnover
arose from operations in the UK.
Directors
The names and biographical details of the directors
of the company are given on pages 50 and 51. All
served throughout the financial year, with the exception
of Ian Livingston and Clayton Brendish who joined
the Board on 8 April and 1 September 2002,
respectively. In addition, Philip Hampton served as
a director until his retirement on 30 April 2002.
Following his retirement from the Board on 1 May
2001, the former Chairman, Sir Iain Vallance, remained
with BT as President Emeritus until 31 July 2002.
In accordance with the articles of association,
Clayton Brendish, having been appointed as a director
by the Board, retires at the forthcoming annual general
meeting (AGM) and will be proposed for election.
Sir Anthony Greener, Louis Hughes and Maarten van
den Bergh retire by rotation and will be proposed
for re-election. Details of these directors’ contracts
of appointment are included in the Report on
directors’ remuneration on pages 62 and 63 and
the discussion on Corporate governance on page 53.
Substantial shareholdings
At 21 May 2003, the company had received
notifications from Legal & General Investment
Management Limited and Barclays PLC under Part VI
of the Companies Act 1985 in respect of holdings
of 261,519,674 shares and 261,518,424 shares
respectively each representing holdings of 3.02%
of the company’s issued ordinary share capital.
Interest of management in certain transactions
During and at the end of the 2003 financial year, none
of the company’s directors was materially interested in
any material transaction in relation to the group’s
business and none is materially interested in any
presently proposed material transactions.
Policy on the payment of suppliers
BT’s policy is to use its purchasing power fairly and
to pay promptly and as agreed.
BT has a variety of payment terms with its
suppliers. The terms for payments for purchases under
major contracts are settled when agreeing the other
terms negotiated with the individual suppliers. It is
BT’s policy to make payments for other purchases
within 30 working days of the invoice date, provided
that the relevant invoice is presented to the company
in a timely fashion and is complete. BT’s payment
terms are printed on the company’s standard purchase
order forms or, where appropriate, specified in
individual contracts agreed with the supplier. The ratio,
expressed in days, between the amounts invoiced to
the company by its suppliers in the 2003 financial year
and the amounts owed to its trade creditors at the end
of the year was 23 days.
Auditors
Following the conversion of PricewaterhouseCoopers,
the company’s auditors, to a limited liability
partnership from 1 January 2003,
PricewaterhouseCoopers resigned and the directors
appointed the new firm, PricewaterhouseCoopers LLP,
as auditors.
A resolution to reappoint PricewaterhouseCoopers
LLP as auditors of the company and authorise
the directors to settle their remuneration will be
proposed at the AGM.
Authority to purchase shares
The authority given at last year’s AGM of the company
held on 17 July 2002 for the company to purchase in
the market 867 million of its shares, representing 10%
of the issued share capital, expires on 16 October
2003. This authority was not used during the year and
shareholders will be asked to give a similar authority
at the AGM.
AGM resolutions
The resolutions to be proposed at the AGM to be held
on 16 July 2003, together with explanatory notes,
appear in the separate Notice of Annual General Meeting
sent to all shareholders.
By order of the Board
Larry Stone
Secretary
21 May 2003
Registered office: 81 Newgate Street, London EC1A 7AJ
Registered in England and Wales No. 4190816
52 BT Annual Report and Form 20-F 2003