|United States Generally Accepted Accounting Principles reconciliations
The group’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the UK (UK GAAP), which differ in certain significant respects from those applicable in the US (US GAAP).
Differences between United Kingdom and United States generally accepted accounting principles
(a) Pension costs
(b) Early release schemes
Under US GAAP, if employees are encouraged to leave voluntarily by the use of special termination benefits, then the termination benefits, primarily severance payments, payments in lieu of notice and the associated cost of providing incremental pension benefits, are charged against profits in the period in which the termination terms are agreed with the employees. If staff terminations are likely to be enforced, then the termination benefits are charged against profits at the time when the group is committed to the staff terminations and the associated costs can be reasonably estimated.
(c) Capitalisation of interest
(e) Mobile cellular telephone and broadcasting licences
(f) Software capitalisation
(g) Acquisition provisions
(h) Deferred taxation
Net income and shareholders’ equity reconciliation statements|
The following statements summarise the material estimated adjustments, gross of their tax effect, which reconcile net income and shareholders’ equity from that reported under UK GAAP to that which would have been reported had US GAAP been applied.
Net income YEAR ENDED 31 MARCH
|Net income applicable to shareholders under UK GAAP||1,767||1,731||1,986||3,039|
|Early release schemes||(119)||125||(152)||(233)|
|Capitalisation of interest, net of related depreciation||(16)||(18)||(22)||(34)|
|Mobile cellular telephone and broadcasting licences amortisation||(28)||130||(b)||-||-|
|Software and other intangible asset capitalisation and amortisation, net||(1)||21||38||58|
|Net income as adjusted for US GAAP||1,476||1,744||1,806||2,763|
|Earnings per American Depositary Share as adjusted for US GAAP (c)||£2.38||£2.80||£2.87||$4.40|
|Shareholders’ equity AT 31 MARCH|
|Shareholders’ equity under UK GAAP||11,997||12,678||19,397|
|Early release schemes||(16)||(168)||(257)|
|Capitalisation of interest, net of related depreciation||387||366||560|
|Goodwill, net of accumulated amortisation||1,992||2,174||3,326|
|Software and other intangible asset capitalisation and amortisation||144||196||300|
|Dividend declared after the financial year end||669||715||1,094|
|Shareholders’ equity as adjusted for US GAAP||12,185||13,010||19,905|
|(a) Translated at US$1.53 to £1.00, the rate ruling on 31 March 1996.
(b) The disposal of the group’s interest in AT&T Corporation shares which had been exchanged for shares in McCaw Cellular Communications, Inc, during the year ended 31 March 1995 gave rise to adjustments, increasing net income, of £125m to goodwill and £137m to mobile cellular telephone and broadcasting licence amortisation.
(c) Each American Depositary Share is equivalent to 10 ordinary shares of 25p each.