BT 2004 Annual Report Download - page 57

group operations with their opinion on the
effectiveness of the operation of internal controls
during the financial year.
&the group’s internal auditors carry out continuing
assessments of the quality of risk management
and control. Internal Audit reports to the
management and the Audit Committee on the
status of specific areas identified for improvement.
They also promote effective risk management in
the lines of business operations.
&the Audit Committee,onbehalf of the Board,
considers the effectiveness of the operation of
internal control procedures in the group during the
financial year. This follows consideration of the
matter by the Management Council. The Audit
Committee reviews reports from the internal
auditors and from the external auditors and
reports its conclusions to the Board. The Audit
Committee has carried out these actions for the
2004 financial year.
Material joint ventures and associates, which BT
does not control, outside the UK have not been dealt
with as part of the group for the purposes of this
internal control assessment.
The Board has approved the formal statement of
matters which are reserved to it for consideration,
approval or oversight. It has also approved the group’s
corporate governance framework, which sets out the
high level principles by which the group is managed
and the responsibilities and powers of the Operating
Committee,Management Council and the group’s senior
executives. As part of this framework the development
and implementation of certain powers relating to
group-wide policies and practices are reserved to
identified senior executives.
Relations with shareholders
Senior executives, led by the Chief Executive and the
Group Finance Director and including, as appropriate,
the other executive directors, hold meetings with the
company’s principal institutional shareholders to
discuss the company’s strategy, financial performance
and specific major investment activities. The Deputy
Chairman also attends, at his discretion and in
consultation with the Chairman and the Chief
Executive, meetings with shareholders during the year.
As explained in the Report on directors’
remuneration,wealso maintain contact, when
appropriate, through the chairman of the Remuneration
Committee and other senior executives to discuss
overall remuneration policies and plans. Contact with
institutional shareholders (and with financial analysts,
brokers and the media) is controlled by written
guidelines to ensure the protection of share price
sensitive information that has not already been made
generally available to the company’s shareholders. The
directors are provided with reports and other written
briefings from the company’s major shareholders and
analysts, either in full or through summaries from the
company’s brokers and are regularly informed by the
Secretary about the holdings of its principal
shareholders. The Secretary also surveys the
company’s retail shareholders about the quality of the
company’s shareholder communications and share
registration services.
We are continuing our policy that shareholders
vote on the annual report at the AGM. Shareholders
will also again be asked to vote on the Report on
directors’ remuneration.
It is part of our policy to involve shareholders fully
in the affairs of the company and to give them the
opportunity at the AGM to ask questions about the
company’s activities and prospects. We also give the
shareholders the opportunity to vote on every
substantially different issue by proposing a separate
resolution for each issue. The Board’s opinion is that
the re-election and the fees of the auditors are inter-
related matters and should therefore be dealt with in
one resolution.
The proxy votes for and against each resolution, as
well as abstentions, will be counted before the AGM
and the results will be made available at the meeting
after the shareholders have voted on each resolution
on a show of hands and at the end of the meeting.
It is our policy for all directors to attend the AGM if at
all possible. Whilst, because of ill health or other
pressing reasons, this may not always be possible, in
normal circumstances this means that the chairman of
the Audit, Nominating and Remuneration committees is
at the AGM and is available to answer relevant
questions.
The Annual Review and, if requested, the Annual
Report and Form 20-F, together with the Notice of the
AGM, are sent to shareholders in the most cost-
effective fashion, given the large number of
shareholders. We aim to give as much notice as
possible and at least 21 clear days, as required by the
company’s articles of association. In practice, these
documents are being sent to shareholders more than
20 working days before the AGM.
Established procedures ensure the timely release of
share price sensitive information and the publication of
the company’s financial results and regulatory financial
statements.
Statement of business practice
To reinforce our commitment to achieve best practice
in our standards of business integrity and ethics, BT
has a written statement of business practice (The Way
We Work). The statement covers all our operations and
reflects the expectations in the area of corporate
governance and business practice standards. A copy of
the statement has been sent to every employee and is
also available on the company’s intranet site.
These high-level principles are supported by a
continuing and comprehensive communications
programme and online training. A confidential helpline
and e-mail facility are also available to employees who
have questions about the application of these
principles. We also continue to require our agents and
contractors to apply these principles when representing
BT.
Political donations
It has always been BT’s policy that no company in the
group shall make cash contributions to any political
BT Annual Report and Form 20-F 200456 Corporate governance