BT 2010 Annual Report Download - page 126

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
124 BT GROUP PLC ANNUAL REPORT & FORM 20-F
25. Other reserves
Treasury Cash flow Available-for- Translation Merger Total other
sharesareservebsale reservecreservedreserveereserves
£m £m £m £m £m £m
At 1 April 2007 (884) 23 – (49) 998 88
Exchange differences – – – 210 – 210
Net fair value gain on cash flow hedges – 446–––446
Recognised in income and expense in the year – (294) – – – (294)
Reclassified and reported in non current assets – 11–––11
Tax recognised in other comprehensive income – (29) – – – (29)
Net purchase of treasury shares (1,529) ––––(1,529)
Cancellation of treasury shares 570 ––––570
At 1 April 2008 (1,843) 157 – 161 998 (527)
Exchange differences – – – 683 – 683
Net fair value gain on cash flow hedges – 2,719–––2,719
Recognised in income and expense in the year – (2,144) – – – (2,144)
Reclassified and reported in non current assets – (5) – – – (5)
Gains on available-for-sale investments – – 5 – – 5
Tax recognised in other comprehensive income – (164) – – – (164)
Net purchase of treasury shares (63) ––––(63)
Cancellation of treasury shares 797 ––––797
At 1 April 2009 (1,109) 563 5 844 998 1,301
Exchange differences – – – (119) – (119)
Net fair value loss on cash flow hedges – (1,067) – – – (1,067)
Recognised in income and expense in the year – 496–––496
Reclassified and reported in non current assets – (4) – – – (4)
Gains on available-for-sale investments – – 7 – – 7
Tax recognised in other comprehensive income – 159 – (20) – 139
Net issue of treasury shares 4 ––––4
At 31 March 2010 (1,105) 147 12 705 998 757
aThe treasury shares reserve is used to hold BT Group plc shares purchased by the group. During 2010 the company purchased nil (2009: 142,608,225, 2008: 539,657,691) of its own shares of 5p each,
representing nil% (2009: 2%, 2008: 6%) of the called-up share capital, for consideration (including transaction costs) of £nil (2009: £189m, 2008: £1,626m). In addition, 8,320,766 shares (2009:
90,626,518, 2008: 53,250,144) were issued from treasury to satisfy obligations under employee share schemes and executive share awards at a cost of £4m (2009: £126m, 2008: £97m), and nil treasury
shares (2009 and 2008: 250,000,000) were cancelled at a cost of £nil (2009: £797m, 2008: £570m). At 31 March 2010, 400,906,119 shares (2009: 409,226,885, 2008: 607,285,178) with an aggregate
nominal value of £20m (2009: £20m, 2008: £30m) were held as treasury shares at cost.
bThe cash flow reserve is used to record the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.
cThe available-for-sale reserve is used to record the cumulative fair value gains and losses on available-for-sale financial assets. The cumulative gains and losses are recycled to the income statement on
disposal of the assets. The gross gain in the year amounted to £7m (2009: £5m, 2008: £nil).
dThe translation reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations. The cumulative translation differences are recycled to the income statement on
disposal of the foreign operation.
eThe merger reserve arose on the group reorganisation that occurred in November 2001 and represented the difference between the nominal value of shares in the new parent company, BT Group plc, and
the aggregate of the share capital, share premium account and capital redemption reserve of the prior parent company, British Telecommunications plc.
26. Related party transactions
Key management personnel comprise executive and non-executive directors and members of the Operating Committee . Key management
personnel compensation is shown in the table below:
2010 2009a2008a
Year ended 31 March £m £m £m
Salaries and short-term benefits 10.3 8.4 8.3
Termination benefits 0.1 2.4 –
Post employment benefits 1.8 2.3 1.0
Share-based payments 2.6 3.6 5.0
14.8 16.7 14.3
a Restated to include the Chairman and non-executive directors.
More detailed information concerning directors’ remuneration, shareholdings, pension entitlements, share options and other long-term
incentive plans is shown in the audited part of the Report on Directors’ Remuneration (pages 73 to 77), which forms part of the
consolidated financial statements.
Amounts paid to the group’s retirement benefit plans are set out in note 29. There were a number of transactions during the year
between the company and its subsidiary undertakings, which are eliminated on consolidation and therefore not disclosed.
During 2010, the group purchased services in the normal course of business and on an arm’s length basis from its principal associate, Tech
Mahindra Limited. The net value of services purchased was £301m (2009: £296m, 2008: £305m) and the amount outstanding and payable for
services at 31 March 2010 was £65m (2009: £89m, 2008: £125m). In addition in 2010 a cash payment of £127m was made to Tech Mahindra
Limited for the renegotiation of certain supply contracts as part of the rationalisation of procurement channels within BT Global Services. In
2008, a cash payment of £55m was received from Tech Mahindra Limited, which was recognised as income in 2008 (£28m) and 2009 (£27m).