CONSIDERACIONES RELATIVAS A LAS CLÁUSULAS NO AUTOEJECUTABLES DEL CONVENIO

As a group, we do business responsibly and sustainably. Our Better Future programme underpins this, by making sure our people, networks and technology work together to deliver the best outcomes for our business, society and the environment.

We have invested £27m directly in society, made up of a mixture of cash, time volunteered and in-kind contributions; equating to 1% of our 2012/13 adjusted profit before tax. This brings our total investment to over £165m over the past six years (an average of 1.3% of profit before tax each year).

BT Group plc has set a Better Future vision and goal for 2020 in each of the following three priority areas: Connected Society, Net Good and Improving Lives. Achieving these will help BT and our customers to grow sustainably in the years to come.

Connected Society

In the UK 6.6 out of ten people can now access fibre-based products and services (this is equivalent to two thirds of premises passed). We are well on our way to achieving our 2020 goal of nine out of ten. Through our regional Get IT Together projects, in 2013/14 we helped over 10,800 people to participate in courses that have helped them to gain confidence and competence in using the internet.

We also announced a three-year partnership, The Right Click: Internet Safety Matters, with UNICEF, to provide practical advice about online child safety to up to 35,000 teachers, parents and children in the UK, supported by BT volunteers. Outside the UK, our Connecting Africa project provided satellite connectivity to 19 villages across the continent. This has provided access to information and critical services such as healthcare for around 95,000 people and we expect that up to 570,000 people living in the villages and surrounding areas could indirectly benefit. In September we published the findings of our research partnership with Scope in the ‘Enabling Technology’ report which highlighted how technology can work better for the UK’s 11m people with disabilities. We are implementing its findings.

Net Good

This year we helped our customers reduce their carbon emissions by 1.3:1 the end-to-end carbon impact of our business (as measured in MtCO2e). This was an improvement on last year, but we still have some way to go to achieve our 2020 goal of a 3:1 ratio.

We can achieve this goal at the same time as benefiting our own business. Reducing the end-to-end carbon impact of our business can also reduce our operating costs. This year we achieved a 3% reduction in our global energy consumption, saving the business over £25m.

Reporting the revenue associated with the Net Good portfolio highlights the connection between our business and our positive impact on society and the environment. This year the products and servcies for which we have calculated a carbon abatement benefit for our customers generated revenues of £3.1bn globally. Our product inclusion criteria and methodology is endorsed by the Carbon Trust and further details are available on our Better Future website and in our Better Future report.

Our product innovations also drove a decrease in emissions from the equipment we sell our customers. For example, our latest BT Home Hub is more energy efficient than the equipment it replaces.

We are also developing additional products and solutions that help corporate customers reduce their energy consumption, such as BT Inbound Calling.

We are constantly trying to reduce our environmental impacts through better product stewardship. In partnership with the University of Cambridge Engineering Design Centre, we have developed a Designing Our Tomorrow (DOT) checklist. This is now being rolled out across our own product development teams and to suppliers through the Better Future Supplier Forum to influence the manufacture, use and disposal of our products.

Improving Lives

This year we helped generate over £85m towards good causes meaning, since 2012/13, we have achieved £146m cumulatively towards our target of £1bn by 2020. Our operational support of major telethons and appeals was the biggest contributor to this. Over £41m was raised over BT platforms in support of the Children in Need and Disasters Emergency Committee’s Philippines appeal following typhoon Haiyan.

Thousands of people and organisations use our portfolio of services for charities, with over 5,800 charities and individuals using the MyDonate for Fundraising service to raise a further £16.4m for good causes.

We supported Comic Relief by providing the communication infrastructure for its appeals, as well as through employee

volunteering and our inspiring celebrity challenges. This year during Sport Relief, a major sport initiative from Comic Relief, we

galvanised our people to get active, raise money and change lives. BT volunteers powered Sport Relief’s fundraising efforts by coordinating 87 call centres and handling 234,000 calls. Through in-kind support and donations from BT and our employees, our Sport Relief activities contributed £9m with our MyDonate platform processing online donations for the first time.

Jointly with Comic Relief, we also created a brand new charitable initiative, The Supporters Club. So far we have raised more than £2m to help improve young people’s lives in the UK and worldwide using the unique power of sport.

Volunteering is central to what it means to work at BT – our people have been giving up their time and applying their expertise in support of communities for decades and they continue to do so today with great enthusiasm and dedication. Our commitment to volunteering makes our people proud to work for BT and is an important part of being a responsible and sustainable business leader. As a result, over 46,000 days of volunteering were recorded by over 13,600 BT people, representing an in-kind contribution of over £14m, and supporting over 1,300 charities worldwide.

37 The Strategic Report – Performance

Our 2020 Goals 2013/14 target 2013/14 result 2014/15 target

Better Future Connected Society 5.8/10 people can 6.6/10 people can Continue to deliver Programme More than 9/10 people in the UK will access fibre-based access fibre-based against 9/10 target 2020 goals have access to fibre-based products products and services products and services

and services

Net Good 1.1:1 achieved against 1.3:1 achieved against Continue to deliver Helping our customers reduce carbon our goal of 3:1 our goal of 3:1 against 3:1 target emissions by at least 3 times the end-

to-end carbon impact of our business

Improving Lives Over £63m raised for Over £85m raised for Continue to deliver Using our skills and technology to good causes good causes against £1bn target help generate more than £1bn for

good causes

Our foundations for being a responsible and sustainable business

Our foundations 2013/14 target 2013/14 result 2014/15 target

Our Investment in responsible and 1% of PBT invested 1% of PBT invested Maintain 1% of PBT investment sustainable business activities in responsible and invested in responsible

sustainable business and sustainable business

activities activities

Our customers Customer service: Improve RFT to more 1.5% improvement Improve RFT a measure across our entire than recover the decline from 2013/14

customer base in performance level

seen in 2012/13

Our employees Employee engagement index: Maintain or improve 3.82/5 achieved Maintain or improve a measure of our relationship from 2012/13 from 2013/14 with our employees performance, outcome performance

was 3.69/5

Sickness absence rate: Reduce or maintain 2.10% calendar days Maintain or improve % of calendar days lost to 2.13% calendar days lost in sickness from 2013/14

sickness absence lost in sickness performance

Ethical performance: Maintain or improve 4.29/5 achieved Maintain or improve a measure of our employees’ from 2012/13 from 2013/14 awareness and training performance, outcome performance

was 4.19/5

Our suppliers Ethical trading: 100% follow-up 97% follow-up within 100% follow-up a measure of our supply chain review; within three months, three months within three months, with specific focus on Human Rights for all those suppliers for all those suppliers

identified as high/ identified as high/

medium risk medium risk

Our CO2emissions: By December 2020 reduce 79% net reduction in net Continue to

environmental a measure of our climate our net CO2e emission intensity CO2e emission intensity deliver against

impact change impact by 80% against 1996/97 levels against 1996/97 levels 80% target

Evolving measurement of our progress

At BT we are keen to move beyond volume-based metrics to understand and track the impact and value of our business. This year we have assessed a number of social impact methodologies to understand how we can best measure the significance of what being online brings to the individuals, businesses and governments that we serve. Moving forward this will enable us, for the first time, to start measuring the social impact of our digital skills programmes and our wider investment in broadband.

The _{Strategic Report was approved by the Board of Directors on} 15 May 2014.

By order of the Board

Tony Chanmugam

Director

Our Better Future goals are based on a long-term commitment until the year 2020

The results below demonstrate that we are focused on our delivery to achieve our Better Future goals – but there is still a long way to

go. Out of our seven foundation performance indicators below, we have made progress against five of the seven, but we have failed to meet two, specifically relating to customer service and ethical trading supply chain review.

38 Report of the directors – Statutory information

Introduction

The directors submit their report and the audited financial

statements of the company, British Telecommunications plc, and the group, which includes its subsidiary undertakings, for the 2013/14 financial year.

The audited consolidated financial statements are presented on pages 44 to 93 and 111.

Dividend

During the year a final dividend of £1,300m (2012/13: £1,400) has been paid to the parent company, BT Group Investments Limited. The directors have declared a final dividend of £1,200m for 2013/14.

Principal activity

The company is the principal trading subsidiary of BT Group plc, which is its ultimate parent company.

BT Group plc is one of the world’s leading communications services companies. In the UK, we sell products and services to consumers and small and medium-sized enterprises (SMEs). Around the world, as well as in the UK, we provide managed networked IT services to large multinational corporations, domestic businesses and the public sector. We also sell wholesale telecoms services to communications providers in the UK and internationally.

Directors

The directors, who served throughout 2013/14 and continued to be directors as at the date of this report, were Tony Chanmugam, Glyn Parry and Sean Williams.

Financial statements

A statement by the directors of their responsibilities for preparing the financial statements is included in the Statement of directors’

responsibilities on page 41.

Our significant accounting policies are set out on pages 51 to 55 of the consolidated financial statements and conform with IFRS. These policies, and applicable estimation techniques, have been reviewed by the directors who have confirmed them to be appropriate for the preparation of the 2013/14 consolidated financial statements. So far as each of the directors is aware, there is no relevant information that has not been disclosed to the auditors and each of the directors believes that all steps have been taken that ought to have been taken to make them aware of any relevant audit information and to establish that the auditors have been made aware of that information.

Capital management and funding policy

The capital structure is managed by BT Group plc, the ultimate parent company of the group.

The objective of BT Group plc’s capital management and funding policy is to reduce net debt while investing in the business, supporting the pension fund and paying progressive dividends. The BT Group plc Board reviews the group’s capital structure regularly. Management proposes actions which reflect the

group’s investment plans and risk characteristics as well as the macro- economic conditions in which we operate.

Our funding policy is to raise and invest funds centrally to meet the group’s anticipated requirements. We use a combination of capital market bond issuance, commercial paper borrowing, committed borrowing facilities and investments. These are planned so as to mature at different stages in order to meet short, medium and long- term requirements.

Details of our treasury management policies are included in note 24 to the consolidated financial statements.

Financial instruments

Details of the financial risk management objectives and policies of the group and exposure to interest risk, credit risk, liquidity risk and foreign exchange are given in note 24 to the consolidated financial statements.

Credit risk management policy

We take proactive steps to minimise the impact of adverse market conditions on our financial instruments. In managing investments and derivative financial instruments, the group’s central treasury function monitors the credit quality across treasury counterparties and actively manages any exposures which arise. This central team continually reviews any credit exposures, whether arising from centrally-managed financial instruments or from the group’s trade- related receivables. Management within the lines of business also actively monitors any exposures arising from trading balances.

Off-balance sheet arrangements

Other than the financial commitments and contingent liabilities disclosed in note 28 to the consolidated financial statements, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on: our financial condition; changes in financial condition; revenues or expenses; results of operations; liquidity; capital expenditure; or capital resources.

Legal proceedings

We do not believe that there is any single current court action that would have a material adverse effect on our financial position or operations. During 2013/14, the aggregate volume and value of legal actions to which we are party reduced.

Going concern

TheStrategic Report on pages 2 to 37 includes information on the group structure, the performance of each of the lines of business, the impact of regulation and competition and principal risks and uncertainties. The Performance section on pages 31 to 37 includes information on our group financial results, financial outlook, cash flow, loans and borrowings and balance sheet position. Notes 20, 21, 22 and 24 of the consolidated financial statements include information on the group’s investments, cash and cash equivalents, loans and borrowings, and derivatives, financial risk management objectives, hedging policies and exposures to interest, foreign exchange, credit, liquidity and market risks.

Alongside the factors noted above, the directors have considered BT Group plc’s cash flow forecasts, as they relate to the group, in particular with reference to the period to the end of May 2015. The directors are satisfied that these cash flow forecasts, taking into account reasonably possible risk sensitivities associated with this forecast and BT Group plc’s current funding and facilities, alongside BT Group plc’s funding strategy, shows that the group will continue to operate for the foreseeable future. The directors therefore continue to have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and continue to adopt a going concern basis (in accordance with the guidance ‘Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009’ issued by the Financial Reporting Council) in preparing the consolidated financial statements.

There has been no significant change in the financial or trading position of the group since 31 March 2014.