Directors Report 3
Directors' report for the year ended 31 March 2016
The directors submit their report and the audited financial statements of BT Sle Euro Limited (the "Company") for the year ended 31 March 2016. The registered number of the Company is 7573610.
The directors' report has been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006.
Principal activities and future developments
The Company's principal activity is to act as an investment holding company within the British Telecommunications plc group of companies. The directors do not anticipate any change in the Company's principal activity in the foreseeable future.
First-time adoption of FRS 101
For all periods up to and including the year ended 31 March 2015, the Company prepared its separate financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP). The Company's annual financial statements for the year ended 31 March 2016 are the first that the Company has prepared in accordance with FRS 101 "Reduced Disclosure Framework" which involves the application of International Financial Reporting Standards (IFRS) with a reduced level of disclosure. The standard is effective for periods beginning on or after 1 January 2015.
The Company meets the definition of a qualifying subsidiary under FRS 100. Accordingly, in the year ended 31 March 2016 the Company has undergone transition from reporting under previous UK GAAP to FRS 101 'Reduced Disclosure Framework'. As required by FRS 101, these financial statements include comparative FRS101 financial information for the year ended 31 March 2015. FRS 101 incorporates, with limited amendments, International Financial Reporting Standards (MRS).
Principal risks and uncertainties
The principal risks to which BT Group plc (the ultimate controlling entity of the Company) is exposed are also the principal matters which would create risk and uncertainty for the Company. These are managed by the directors of BT Group plc at the group level rather than at an individual business unit level. They are discussed on pages 46-56 of the group's 2016 annual report which does not form part of this report.
BT Sle Euro Limited 2 Directors' report for the year ended 31 March 2016 (Continued) Financial risk management Credit risk
Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. If wholesale customers are independently rated, these ratings are used. If there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. The amount of exposure to any individual counterparty is subject to a limit, which is reassessed annually by the board.
Liquidity risk
The company actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the company has sufficient available funds for operations and planned expansions.
Interest rate cash flow risk
The company has both interest-bearing assets and interest-bearing liabilities. Interest-bearing assets include only government securities and cash balances, all of which earn interest at fixed rate. The company has a policy of maintaining debt at fixed rate to ensure certainty of future interest cash flows. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature.
Results
The loss on ordinary activities before taxation was ?39,566,120 (2015: profit of ?44,593,547). The tax credit on profit on ordinary activities was ?944,827 (2015: ?1,385,602) which left a loss after taxation for the financial year of ?38,621,293 (2015: profit of ?45,979,149).
Dividends
The directors do not recommend the payment of a dividend in respect of the year ended 31 March 2016 (2015: ?ni1).
Going Concern
The directors believe that preparing the financial statements on the going concern basis is appropriate due to the continued financial support provided by British Telecommunications plc. Please refer to the accounting policies (page 13) for further details.
BT Sle Euro Limited 3 Directors' report for the year ended 31 March 2016 (Continued)
Directors
The directors of the company who were in office during the year and up to the date of signing the financial statements were:
M P Genikis P N Allenby (resigned on 18 May 2015) Alberto Buffa (appointed on 18 May 2015)
Directors' indemnities
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year and is currently in force. Also, BT Group plc purchased and maintained throughout the financial year Directors' and Officers' liability insurance in respect of BT Sle Euro Limited and its Directors.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to: ?select suitable accounting policies and then apply them consistently; ?make judgements and accounting estimates that are reasonable and prudent; ?state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; ?notify the company's shareholders in writing about the use of disclosure exemptions, if any, of FRS 101 used in the preparation of the financial statements; and ?prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
BT Sle Euro Limited 4 Directors' report for the year ended 31 March 2016 (Continued)
Disclosure of information to the auditors
So far as each of the directors is aware, there is no relevant information that has not been disclosed to the Company's 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 Company's auditors have been made aware of that information.
Independent auditors
PricewaterhouseCoopers LLP have indicated their willingness to be reappointed for another term and appropriate arrangements are being made for them to be deemed reappointed as auditors in the absence of an Annual General Meeting.
The directors' report on pages 1 to 4 was approved by the Board of directors on 13 September 2016 and was signed by order of the board by Christina Ryan.
Authorised Signato for and on behalf of Newgate Street Secretaries Limited Company Secretary 2016-09-14 00:00:00
BT Ste Euro Limited
Independent auditors' report to the member of BT Ste Euro Limited Report on the financial statements Our opinion
In our opinion, BT Sle Euro Limited's financial statements (the "financial statements"): ?give a true and fair view of the state of the company's affairs as at 31 March 2016
?have been properly prepared in accordance with United Kingdom Generally
?have been prepared in accordance with the requirements of the Companies Act
What we have audited
The financial statements, included within the Directors' Report and Financial Statements (the "Annual Report"), comprise: ?the Balance Sheet as at 31 March 2016; ?the Profit and loss account for the year then ended; ?the Statement of changes in equity for the year then ended; and ?the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information. The financial reporting framework that has been applied in the preparation of the financial statements is United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law (United Kingdom Generally Accepted Accounting Practice).
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.
Opinion on other matter prescribed by the Companies Act 2006 In our opinion, the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Other matters on which we are required to report by exception Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion: ?we have not received all the information and explanations we require for our
?adequate accounting records have not been kept, or returns adequate for our audit
?the financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. BT Ste Euro Limited 6
Independent auditors' report to the members of BT Ste Euro Limited (continued)
Directors' remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.
Entitlement to exemptions
Under the Companies Act 2006 we are required to report to you if, in our opinion, the directors were not entitled to: prepare financial statements in accordance with the small companies regime; and take advantage of the small companies exemption from preparing a strategic report. We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the directors
As explained more fully in the Statement of directors' responsibilities set out on pages 3-4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland) ("ISAs (UK & Ireland)"). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the parent company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: ?whether the accounting policies are appropriate to the company's circumstances
?the reasonableness of significant accounting estimates made by the directors; and ?the overall presentation of the financial statements.
BT Sle Euro Limited 7
Independent auditors' report to the members of BT Ste Euro Limited (continued)
We primarily focus our work in these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. u16- 11) at Gvt.
Julie Watson (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Aberdeen 2016-09-14 00:00:00 Sheet1 All results derive from continuing operations.
There have been no recognised gains or losses during either 2016 or 2015 other than as disclosed in the profit and loss account and therefore no separate statement of total comprehensive income has been presented.
There were no material differences between the results as disclosed above and the results on an unmodified historical cost basis.
'These figures have been restated to reclassify the amount of forex (loss)/ gain from administrative expense/ (income) to finance (expense)/ income. Sheet2
The financial statements on pages 8 to 18 were approved and authorised for issue by the Board of directors on 13 September 2016 and were signed on its behalf by Alberto Buffa.
0,11)ca-o 13-00? Alberto Buffa Director
BT Ste Euro Limited 10 Statement of changes in equity for the year ended 31 March 2016
Sheet3 BT Sle Euro Limited 11
1.General Information
BT Ste Euro Limited acts as a finance company within the British Telecommunications plc ("BT") group of companies.
The company is a private company and is incorporated and domiciled in the UK. The address of its registered office is 81 Newgate Street, London EC1A 7AJ. 2.Basis of accounting and accounting policies Preparation of the financial statements
The financial statements have been prepared in accordance with Financial Reporting Standard 101, "Reduced Disclosure Framework" (FRS 101), which involves the application of International Financial Reporting Standards (IFRS) with a reduced level of disclosure. For all periods up to and including the year ended 31 March 2015, the Company prepared its separate financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP).
The financial statements have been prepared under the historic cost convention and in accordance with the Companies Act 2006 as applicable to companies using FRS 101.The preparation of financial statements in accordance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the company's accounting policies. There are no areas involving a higher degree of complexity, or areas where assumption and estimates are significant to the financial statements.
The company meets the definition of a qualifying subsidiary under FRS 100. Accordingly, in the year ended 31 March 2016 the company has undergone transition from reporting under previous UK GAAP to FRS 101 'Reduced Disclosure Framework'. As required by FRS 101, these financial statements include comparative FRS101 financial information for the year ended 31 March 2015. FRS 101 incorporates, with limited amendments, International Financial Reporting Standards (IFRS).
Exemptions
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard. The following exemptions have been taken: ?The requirements of IAS 7 Statement of Cash Flows. ?The requirements of paragraphs 17 and 18A of IAS 24 Related Party Disclosures. ?The requirements of paragraphs 6 and 21 of IFRS 1 'First-time Adoption of International Financial Reporting Standards' to present an opening statement of financial position at the date of transition. ?The following paragraphs of IAS 1 'Presentation of Financial Statements': ?10(d) (statement of cash flows); ?10(f) (third statement of financial position); BT Sic Euro Limited 12 ?16 (statement of compliance with all 'FRS);
Basis of accounting and accounting policies (Continued)
?38A (requirement for minimum of two primary statements including cash flow statements); ?38B-D (additional comparative information); ?40A-D (third statement of financial position); and ?111 (cash flow statement information);- and ?134 to 136 (capital management disclosures).
The company intends to continue to take advantage of these exemptions in future years.
Where required, equivalent disclosures have been given in the consolidated financial statements of BT Group plc. Previous UK GAAP differs in certain respects from FRS 101 and comparative information has been re-presented as necessary in accordance with FRS 101. There were no measurement differences on transition from UK GAAP to FRS 101 and therefore no opening reconciliation of Equity is presented.
The accounting policies set out on pages 12 to 14 have been applied in preparing the financial statements for the year ended 31 March 2016, the comparative information for the year ended 31 March 2015 and the preparation of an opening balance sheet at 1 April 2014, the company's date of transition.
The Company's annual financial statements for the year ended 31 March 2016 are the first that the Company has prepared in accordance with the FRS 101 as issued by the Financial Reporting Council. The transition from UK GAAP to FRS did not have any reconciling items in the financial statements.
Transition to FRS 101
The accounting policies set out on pages 12 to 14 have been applied in preparing the financial statements for the year ended 31 March 2016, the comparative information for the year ended 31 March 2015.
The transition from UK GAAP to FRS 101 required no adjustments to amounts previously reported in the financial statements.
Accounting policies
Investments
Investments are carried at cost less provision for impairment. Investments are tested for impairment by the directors when an event that might affect asset values has occurred. An impairment loss is recognised to the extent that the carrying amount cannot be recovered either by selling the asset or by the discounted future cash flows from the investment.
BT Sle Euro Limited 13
Basis of accounting and accounting policies (Continued)
Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.
Going Concern
The directors have satisfied themselves that the Company will continue to have financial support provided by British Telecommunications plc in order to meet its requirements for at least the next year, and therefore believe that preparing the accounts on the going concern basis is appropriate.
Foreign currencies
The financial statements are presented in pounds sterling, which is the currency of the primary economic environment in which the Company operates (its functional currency).
Foreign currency transactions are translated into the reporting currency using the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of transactions and the translation of monetary assets and liabilities denominated in foreign currencies at period end exchange rates are recognised in the profit and loss account in the line that most appropriately reflects the nature of the item or transaction.
Current and deferred income tax
Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. The company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and the company establishes provisions where appropriate on the basis of the amounts expected to be paid to the tax authorities.
Deferred tax is recognised using the liability method, in respect of temporary differences between the carrying amount of the company's assets and liabilities and their tax base. A deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to apply in periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax balances are not discounted.
BT Ste Euro Limited 14 Basis of accounting and accounting policies (Continued)
Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those for which the company may not recover substantially all of its initial investment, other than because of credit deterioration, which are classified as available-for-sale. Loans and receivables are initially recognised at fair value plus transaction costs and subsequently carried at amortised cost using the effective interest method, with changes in carrying value recognised in the profit and loss account.
Debtors
Financial assets within debtors are initially recognised at fair value, which is usually the original invoiced amount, and are subsequently carried at amortised cost using the effective interest method less provisions made for doubtful debts. Provisions are made specifically where there is evidence of a risk of non payment, taking into account ageing, previous losses experienced and general economic conditions. Financial liabilities Creditors
Financial liabilities within creditors are initially recognised at fair value, which is usually the original invoiced amount, and subsequently carried at amortised cost using the effective interest method.
Loans and other borrowings
Loans and other borrowings are initially recognised at fair value plus directly attributable transaction costs. Loans and other borrowings are subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are re-valued to reflect the fair value movements on the hedged risk associated with the loans and other borrowings. The resulting amortisation of fair value movements, on dedesignation of the hedge, are recognised in the profit and loss account.
New and amended accounting standards that have been issued but are not yet effective
The following standards have been issued but are not yet effective. The impact of these on the financial statements are being considered by the Company.
[FRS 15 'Revenue from Contracts with Customers' IFRS 9 'Financial instruments' IFRS 16 'Leases' Presentation of specific items
BT Ste Euro Limited 15 Notes to the financial statements
3 Operating (loss)/profit
Operating profit stated after charging: 2016.0
2015.0
Restated
4245.0
Auditors' remuneration for statutory audit
7100.0 4 Finance (expense)/income
Foreign exchange (loss)/gain
5 Directors' emoluments
2016 2015
Restated
(35,083,601) 51,090,195
The directors are employed and remunerated by British Telecommunications plc or other group companies in respect of their services to the BT group as a whole. No emoluments were paid tb the directors in respect of their services to the Company in the year ended 31 March 2016 (2015: fnil).
6 Employee information
The average monthly number of persons employed by the Company during the year was nil (2015: nil).
7 Interest receivable and similar income 2016 2015
Interest receivable from group undertaking 44,418 16,573
8 Interest payable and similar charges
2016 2015 Interest payable to group undertaking (4,519,042) (6,512,168)
BT Sic Euro Limited 16 Notes to the financial statements (continued)
9 Tax on (loss)/profit on ordinary activities Sheet4 The tax assessed for the year is lower (2015: lower) than the standard rate of corporation tax in the UK of 20% (2015: 21%) as explained below:
Sheet5
The rate of UK corporation tax will change from 20% to 19% on 1 April 2017 and to 18% on 1 April 2020. The UK Finance Bill 2016 also includes a reduction of the UK corporation tax rate to 17% on 1 April 2020. This will replace the 18% UK corporation tax rate that is currently legislated to take effect. These rate changes will be applied to the future results of the Company but will have no effect on the current year as the Company has no deferred tax timing differences.
10 Investments
Cost and net book value at 1 April 2015 and 31 March 2016
Associated Undertaking Shares
1334069361.0
Brief details of the associated undertakings were as follows: Company Company Activity Percentage of allocated Number of Shares Country name ordinary share capital owned Tudor United Minstrel Finance Company 23.684% 675,000,000 C Ordinary Shares Kingdom
In the opinion of the directors, the carrying value of the investment is supported by its underlying net assets.
BT Sle Euro Limited 17
Notes to the financial statements (continued)
11 Debtors Sheet6 Amounts owed from group undertakings include an interest bearing (12 month GBP LIBOR plus 42.5 basis points) loan facility of frill (2015: ?2,959,219) to British Telecommunications plc and is receivable on demand. Amounts owed from group undertakings include an interest bearing (EURO 12 month EURTBOR plus 42.5 basis points) loan facility of ?4,555,378 (2015: ?67,730) to British Telecommunications plc and is receivable on demand.
12 Creditors: amounts falling due within one year
Sheet7 Amounts owed to group undertakings include an interest bearing (EURO 12 month EUREBOR plus 102.5 basis points) loan facility of ?399,953,161 (2015: ?360,139,481) from British Telecommunications plc and is repayable on demand.
13 Called up share capital
2016 2015
198,264,929 198,264,929
Allotted, called up and fully paid: 225,110,000 (2015: 225,110,000) ordinary shares of El each BT Sle Euro Limited 18 Notes to the financial statements
14 Contingent liabilities
At 31 March 2016, there are no contingent liabilities or guarantees other than those arising in the ordinary course of the Company's business and on these no material losses are anticipated.
15 Controlling entities
The Company is a wholly owned subsidiary of British Telecommunications plc, which is the immediate controlling entity. The ultimate controlling entity is BT Group plc.
The parent undertaking of the largest group of companies into which the results of the Company are consolidated is BT Group plc, a Company incorporated in England & Wales. Consequently the Company is exempt under the terms of IAS 24 "Related Party Disclosures" from disclosing details of transactions and balances with BT Group plc, fellow group subsidiaries and associated undertakings, and those deemed under BT Group control during the year ended 31 March 2016. Copies of the financial statements of BT Group plc may be obtained from The Secretary, BT Group plc, 81 Newgate Street, London EC 1A 7AJ.
The parent undertaking of the smallest group of companies into which the results of the Company are consolidated is British Telecommunications plc, a Company incorporated in England & Wales. Copies of the financial statements of British Telecommunications plc are available from The