BT 2006 Annual Report Download - page 46

key senior executives. Each year, Directors participate in BT’s
‘Back to the floor’ programme, an activity that demonstrates
commitment to our customers and the people who serve them.
Throughout their period in office the directors are continually
updated on BT’s business, the competitive and regulatory
environments in which it operates, technology and corporate
social responsibility matters and other changes affecting BT and
the communications industry as a whole, by written briefings
and meetings with senior BT executives. Directors are also
advised on appointment of their legal and other duties and
obligations as a director of a listed company, both in writing
and in face-to-face meetings with the Secretary. They are
reminded of these duties each year and they are also updated
on changes to the legal, accounting and governance
requirements on the company and themselves as directors.
During the 2006 financial year, for example, they have
attended presentations on BT’s 21CN Investment Programme,
on the effects of the introduction of International Financial
Reporting Standards on the group’s results and on the US
Sarbanes-Oxley Act of 2002, which affects BT because its
securities are registered with the US Securities and Exchange
Commission (SEC); and received briefings on changes to UK
company law and various corporate governance proposals from
the European Commission. The Chairman also sends a weekly
e-mail to non-executive directors with topical sector highlights.
Guidelines are in place concerning the content, presentation
and delivery of papers for each Board meeting, so that the
directors have enough information to be properly briefed
sufficiently far ahead of each Board meeting and at other
appropriate times.
Directors’ and officers’ liability insurance and indemnity
For some years the company has purchased insurance to cover
its directors and officers against their costs in defending
themselves in civil legal proceedings taken against them in that
capacity and in respect of damages resulting from the
unsuccessful defence of any proceedings. At the date upon
which this report was approved, and throughout the 2006
financial year, the company’s wholly-owned subsidiary, British
Telecommunications plc, has provided an indemnity in respect
of all the company’s directors. Neither the insurance nor the
indemnity provides cover where the director has acted
fraudulently or dishonestly.
Interest of management in certain transactions
During and at the end of the 2006 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.
SUBSTANTIAL SHAREHOLDINGS
At 17 May 2006, the company had received notifications from
Legal & General Investment Management Limited, Barclays
PLC and Brandes Investment Partners LLC, under Part VI of the
Companies Act 1985, in respect of holdings of 318,525,417
shares, 369,832,178 shares and 413,832,977 shares
respectively, representing holdings of 3.8%, 4.3% and 4.9% of
the company’s issued ordinary share capital.
POLICY ON THE PAYMENT OF SUPPLIERS
BT subscribes to the Better Payment Practice Code for all
suppliers, the four principles of which are: to agree payment
terms at the outset and stick to them; to explain payment
procedures to suppliers; to pay bills in accordance with any
contract agreed with the supplier or as required by law; and to
tell suppliers without delay when an invoice is contested and
settle disputes quickly. The normal payment terms are 42
calendar days from date of receipt of a due and valid invoice.
BT will make payment to the supplier on the next payment run
following expiry of this term.The ratio, expressed in days,
between the amounts invoiced to the company by its suppliers
in the 2006 financial year and the amounts owed to its trade
creditors at the end of the year was 39 calendar days.
CHARITABLE DONATIONS
Details of charitable donations made by the group can be found
in Business review – Community investment.
POLITICAL DONATIONS
The company’s continuing policy is that no company in the
group shall make contributions in cash or kind to any political
party, whether by gift or loan. Arrangements are in place to
implement this policy. However, the definition of political
donations used in the Companies Act 1985 is very much
broader than the sense in which these words are ordinarily
used. It covers activities such as making MPs and others in the
political world aware of key industry issues and matters
affecting the company, which make an important contribution
to their understanding of BT. These activities are carried out on
an even-handed basis related broadly to the major UK political
parties’ electoral strength. The authority we are requesting at
the AGM is not designed to change the above policy. It will,
however, ensure that BT acts within the provisions of the
Companies Act 1985 requiring companies to obtain shareholder
authority before they can make donations to EU political
organisations (which includes UK political parties) as defined in
the Act. During the 2006 financial year the company’s wholly-
owned subsidiary, British Telecommunications plc, made the
following payments to cover the cost of hosting briefing
meetings about the company’s activities with MPs and MEPs:
Labour Party £9,956; Conservative Party £10,867; Liberal
Democrats Party £1,747; Scottish National Party £1,200; Plaid
Cymru £88. No loans were made to any political party by any
company in the BT group.
FINANCIAL INSTRUMENTS
Details of the financial risk management objectives and policies
of the group and exposure of the group to interest risk, foreign
exchange risk, credit risk, liquidity risk and price risk is given on
page 37 and note 33 on pages 105 to 110.
AUDITORS
Resolutions to reappoint PricewaterhouseCoopers LLP as
auditors of the company and to 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
13 July 2005 for the company to purchase in the market
850 million of its shares, representing 10% of the issued share
capital, expires on 12 October 2006. Shareholders will be asked
to give a similar authority at the AGM.
During the 2006 financial year, 166 million shares of 5
pence each were purchased under this authority (1.9% of the
share capital) for a total consideration of £360 million, at an
average price of £2.17 per share. The shares were purchased in
an on-market programme of buying back the company’s shares,
initiated in November 2003, as part of the company’s
shareholder distribution strategy. 290 million shares have been
BT Group plc Annual Report and Form 20-F 2006 Report of the directors44