BT 2007 Annual Report Download - page 146

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BT GROUP PLC ACCOUNTING POLICIES
(i) Accounting basis
The financial statements are prepared on a going concern basis and under the historical cost convention as modified by the
revaluation of certain financial assets and liabilities at fair value in accordance with the Companies Act 1985 and applicable United
Kingdom accounting standards (UK GAAP).
As permitted by Section 230(3) of the Companies Act 1985, the company’s profit and loss account has not been presented.
The BT Group plc consolidated financial statements for the year ended 31 March 2007 contain a consolidated statement of cash
flows. Consequently, the company has taken advantage of the exemption in FRS 1, (Revised 1996) ‘Cash Flow Statements’ not to
present its own cash flow statement.
The BT Group plc consolidated financial statements for the year ended 31 March 2007 contain related party disclosures.
Consequently, the company has taken advantage of the exemption in FRS 8, ‘Related Party Disclosures’ not to disclose transactions
with other members of the BT Group.
The BT Group plc consolidated financial statements for the year ended 31 March 2007 contain financial instrument disclosures
which comply with FRS 25, ‘Financial Instruments: Disclosure and Presentation’. Consequently, the company has taken advantage of
the exemption in FRS 25 not to present separate financial instrument disclosures for the company.
(ii) Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost and reviewed for impairment if there are indicators that the carrying value
may not be recoverable.
(iii) Investments
Investments comprise an available-for-sale asset. Available-for-sale financial assets are carried at fair value, with unrealised gains
and losses recognised in equity until the financial asset is de-recognised, at which time the cumulative gain or loss previously
recognised in equity is taken to the income statement, in the line item that most appropriately reflects the nature of the item or
transaction.
(iv) Taxation
Full provision is made for deferred taxation on all timing differences which have arisen but not reversed at the balance sheet date.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that there will be sufficient taxable
profits from which the underlying timing differences can be deducted. The deferred tax balances are not discounted.
(v) Dividends
Dividend distributions are recognised as a liability in the year in which the dividends are approved by the company’s shareholders.
Interim dividends are recognised when they are paid; final dividends when authorised in general meetings by shareholders.
(vi) Share capital
Ordinary shares are classified as equity. Repurchased shares of the company are recorded in the balance sheet as treasury shares and
presented as a deduction from shareholders’ equity at cost.
(vii) Cash
Cash includes cash in hand, bank deposits repayable on demand and bank overdrafts.
(viii) Share based payments
The company does not incur a charge for share based payments. However the issuance by the company of share options and awards
to employees of its subsidiaries represents additional capital contributions to its subsidiaries. An addition to the company’s
investment in subsidiaries is recorded with a corresponding increase in equity shareholders’ funds. The additional capital contribution
is determined based on the fair value of options and awards at the date of grant and is recognised over the vesting period.
OTHER INFORMATION
(i) Dividends
The directors are proposing that a final dividend in respect of the year ended 31 March 2007 of 10.0 pence will be paid to
shareholders on 17 September 2007, taking the full year proposed dividend in respect of the 2007 financial year to 15.1 pence
(2006: 11.9 pence). This dividend is subject to shareholder approval at the Annual General Meeting and therefore the liability of
£825 million (2006: £631 million) has not been included in these financial statements.
(ii) Employees
The five (2006: five) executive directors of BT Group plc were the only employees of the company during the 2007 financial year.
The costs relating to qualifying services provided to the company’s principal subsidiary, British Telecommunications plc, are recharged
to that company.
(iii) Available-for-sale
The movement in the available-for-sale reserve in the year was £nil (2006: £nil).
Financial statements
Financial Statements of BT Group plc
BT Group plc Annual Report & Form 20-F 145
Financial statements