NOTES TO THE FINANCIAL STATEMENTS

11. Analysis of net debt 1996
£m
1995
£m

Long-term loans and other borrowings falling due after more than one year3,322 3,361
Short-term borrowings and long-term loans and other borrowings falling due within one year315 190


Total debt 3,637 3,551
Short-term investments (2,568) (1,260)
Cash at bank and in hand (121) (138)


Net debt at 31 March 948 2,153



Movement in net debt:

At 1 April 2,153 1,226
Increase (decrease) in net debt through cash flow (1,319) 2,146
Proceeds from sale of AT&T shares (a) - (1,141)
Currency and other movements 114 (78)


At 31 March 948 2,153



(a) The sale of short-term investments in the year ended 31 March 1995 of £4,364m included £1,141m gross proceeds from the sale of AT&T Corporation shares which had been exchanged for shares in McCaw Cellular Communications Corporation, Inc., previously an associated undertaking, in September 1994.

12. Tangible fixed assets Land and
buildings (a)
£m
Plant and
equipment
£m
Assets in
course of
construction
£m
Total
£m




Group
Cost
Balances at 1 April 1995 2,734 26,381 778 29,893
Additions 8 702 2,076 2,786
Transfers 76 1,752 (1,828) -
Disposals and adjustments (55) (1,249) (25) (1,329)





Total cost at 31 March 1996 2,763 27,586 1,001 31,350





Depreciation
Balances at 1 April 1995 1,151 12,857 - 14,008
Charge for the year 151 2,038 - 2,189
Disposals and adjustments (44) (1,187) - (1,231)





Total depreciation at 31 March 1996 1,258 13,708 - 14,966





Net book value at 31 March 1996 1,505 13,878 1,001 16,384
Engineering stores - - 112 112





Total tangible fixed assets at 31 March 1996 1,505 13,878 1,113 16,496





Net book value at 31 March 1995 1,583 13,524 778 15,885
Engineering stores - - 127 127





Total tangible fixed assets at 31 March 1995 1,583 13,524 905 16,012






Company
Cost
Balances at 1 April 1995 775 25,081 651 26,507
Additions - 509 1,941 2,450
Transfers 30 1,694 (1,724) -
Transfers to subsidiary undertakings (3) - (44) (47)
Other disposals and adjustments (26) (1,238) (18) (1,282)





Total cost at 31 March 1996 776 26,046 806 27,628





Depreciation
Balances at 1 April 1995 333 12,377 - 12,710
Charge for the year 60 1,858 - 1,918
Other disposals and adjustments (24) (1,179) - (1,203)





Total depreciation at 31 March 1996 369 13,056 - 13,425





Net book value at 31 March 1996 407 12,990 806 14,203
Engineering stores - - 110 110





Total tangible fixed assets at 31 March 1996 407 12,990 916 14,313





Net book value at 31 March 1995 442 12,704 651 13,797
Engineering stores - - 121 121





Total tangible fixed assets at 31 March 1995 442 12,704 772 13,918






Group Company


1996
£m
1995
£m
1996
£m
1995
£m




(a) The net book value of land and buildings comprised:
Freehold 1,255 1,313 218 225
Long leases (over 50 years unexpired) 101 80 60 46
Short leases 149 190 129 171





Total net book value of land and buildings 1,505 1,583 407 442






Interests in associated
undertakings(a) (b)

13. Fixed asset investments Shares
£m
Loans
£m
Share
of post
acquisition
profits
£m
Other
participating
interests
£m
Other
investments
(c)
£m
Total
£m






Group
Cost
Balances at 1 April 1995 2,844 9 73 104 39 3,069
Additions 113 9 - 57 28 207
Share of retained profits for the year - - 37 - - 37
Repayments, disposals and other transfers (3) - - (44) - (47)
Currency movements 57 - 4 - - 61







Balances at 31 March 1996 3,011 18 114 117 67 3,327







Provisions and amounts written off
Balances at 1 April 1995 (1,984) - - - (3) (1,987)
Goodwill (276) - - - - (276)
Increase in the year (3) - - - (4) (7)







Balances at 31 March 1996 (2,263) - - - (7) (2,270)







Net book value at 31 March 1996 748 18 114 117 60 1,057







Net book value at 31 March 1995 860 9 73 104 36 1,082








Subsidiary
undertakings(a)

Shares
£m
Loans
£m
Associated
undertakings
(a)(b)
£m
Other
participating
interests
£m
Other
investments
(c)
£m
Total
£m






Company
Cost
Balances at 1 April 1995 2,701 19 2,711 104 156 5,691
Additions 329 - 12 57 10 408
Repayments, disposals and other transfers 7 (7) - (44) (3) (47)
Currency movements - - 178 - - 178







Balances at 31 March 1996 3,037 12 2,901 117 163 6,230







Provisions and amounts written off
Balances at 1 April 1995 (10) (7) (27) - (152) (196)
Increase in the year (209) - - - (2) (211)
Disposals and transfers (7) 7 - - 2 2







Balances at 31 March 1996 (226) - (27) - (152) (405)







Net book value at 31 March 1996 2,811 12 2,874 117 11 5,825







Net book value at 31 March 1995 2,69112 2,684 104 4 5,495







(a) Subsidiary and associated undertakings
Details of the principal operating subsidiary and associated undertakings are set out elsewhere.

(b) MCI Communications Corporation
The groupís most significant associated undertaking is MCI Communications Corporation (MCI), the second largest carrier of long-distance telecommunication services in the USA. The groupís acquisition of a 20% interest in MCI was completed on 30 September 1994.

During the year ended 31 March 1996, MCI made certain acquisitions of subsidiary and associated undertakings and the groupís share of goodwill arising from these, amounting to £232m, has been written off to reserves under the groupís accounting policies.

At 31 March 1996, the groupís 20% share of the net assets of MCI, calculated in accordance with group accounting policies, amounted to £804m (1995 - £907m). This value comprised tangible fixed assets of £1,179m (1995 - £994m), short-term investments of £82m (1995 - £346m) and other assets of £741m (1995 - £394m), from which are deducted borrowings of £524m (1995 - £377m) and other liabilities of £674m (1995 - £450m).

In the year ended 31 March 1996, the groupís turnover with MCI amounted to £92m and the group purchased £77m in services and products from MCI. In the prior year, in the period from the acquisition of the interest, 30 September 1994, to 31 March 1995, the groupís turnover with MCI amounted to £48m and the group purchased £38m in services and products from MCI. The group sold a 24.9% interest in Concert Communications Company, a previously wholly-owned subsidiary undertaking, to MCI for £54m on 30 September 1994.

The companyís holding in MCI at 31 March 1996 comprised 136 million (1995 - 136 million) unlisted common shares and 0.7 million (1995 - nil) listed common shares. The listed common shares were purchased in the market in November 1995 at a cost of £12m.

(c) Other investments
Includes ordinary shares of the company, with a net book value of £9m (1995 - £2m), held in trust for the Long Term Remuneration Plan and the Performance Share Plan (note 27). Following the introduction of UITF Abstract 13 there has been a reclassification of this investment from current assets to fixed asset investments and the comparative figures have been restated.

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