Shareholder votes – statement for the IA’s Public Register
Investment Association’s Public Register of listed companies who receive shareholder opposition of more than 20% on any resolution (the ‘Public Register’)
This statement represents, for the purposes of the Public Register, BT’s response in respect of the shareholder vote against Resolution 17 on Auditor’s appointment as set out in the BT Group plc Notice of meeting 2017. Resolution 17 proposed that PricewaterhouseCoopers LLP (PwC) be re-appointed auditors of the Company, to hold office until the end of the next general meeting at which the accounts are laid before the Company.
We had explained in our Annual Report & Form 20-F 2016 that we expected the audit tender to be no later than 2019, with the Audit & Risk Committee keeping external audit arrangements under annual review. We then reported in this year’s Annual Report that, following the Audit & Risk Committee’s review of the external auditors in 2016/17, the Committee recommended to the Board that the audit tender process be accelerated.
Consulting with the FRC
In March 2017 we consulted with the Financial Reporting Council (FRC) to ask if we could accelerate a change in auditors to 2017/18 but the FRC confirmed this was not possible under the audit independence and tender rules. Independence had to be established under the FRC Revised Ethical Standard 2016 which requires independence not only from the beginning of the relevant financial year but also in respect of certain services from the beginning of the immediately preceding financial year. The earliest we could replace PwC as our auditors is for 2018/19, leaving them in post for 2017/18.
After a rigorous and comprehensive tender process led by the Audit & Risk Committee, KPMG were selected as the new auditors and their appointment was announced in June 2017. Subject to shareholder approval, KPMG will become our new auditors from the 2018/19 financial year. This enables an effective transition from PwC to KPMG during the 2017/18 audit process.
Ahead of our AGM on 12 July 2017, we also engaged with our top 20 shareholders and offered them a meeting with a member of the Board to discuss any aspects of BT’s business. The reappointment of PwC was difficult for some of our shareholders to support, in light of their voting policies, and their voting reflected that although they acknowledged that the earliest we could replace PwC is for 2018/19.