|
Net debt consists of loans and other borrowings less current asset investments and cash and cash equivalents. Loans and other borrowings are measured at the net proceeds raised, adjusted to amortise any discount over the term of the debt. For the purpose of this analysis current asset investments and cash
and cash equivalents are measured at the lower of cost and net realisable value. Currency denominated balances within net debt are translated to sterling at swapped rates where hedged.
This definition of net debt measures balances at the future cash flows due to arise on maturity of financial instruments and removes the balance sheet adjustments made from the re-measurement of hedged risks under fair value hedges and the use of the amortised cost method as required by IAS 39. In
addition, the gross balances are adjusted to take account of netting arrangements amounting to £171 million. Net debt is a non GAAP measure since it is not defined in IFRS but it is a key indicator used by management in order to assess operational performance.
| |
|
|
|
|
| |
2006 |
|
2005 |
|
| |
£m |
|
£m |
|
|
|
|
Analysis
of net debt
|
|
|
|
|
|
Loans
and other borrowings (current and non current)
|
9,935 |
|
12,005 |
|
|
Less:
|
|
|
|
|
|
Cash
and cash equivalents
|
1,965 |
|
1,312 |
|
|
Current
asset investments
|
365 |
|
3,491 |
|
|
|
| |
7,605 |
|
7,202 |
|
|
Adjustments:
|
|
|
|
|
|
To
retranslate currency denominated balances at swapped rates
where hedged
|
121 |
|
691 |
|
|
To
recognise borrowings and investments at net proceeds and
unamortised discount
|
(192 |
) |
– |
|
|
|
|
Net
debt
|
7,534 |
|
7,893 |
|
|
|
After allocating the element of the adjustments which impacts loans and other borrowings as defined above, gross debt at 31 March 2006 was £9,685 million (31 March 2005: £12,696 million).
| |
2006 |
|
2005 |
|
| |
£m |
|
£m |
|
|
|
|
Reconciliation
of net cash flow to movement in net debt
|
|
|
|
|
|
Net
debt at 1 April
|
7,893 |
|
8,530 |
|
|
Decrease
in net debt resulting from cash flows
|
(199 |
) |
(887 |
) |
|
Net
debt assumed or issued on acquisitions
|
– |
|
159 |
|
|
Currency
movements
|
(75 |
) |
2 |
|
|
Other
non-cash movements
|
(85 |
) |
89 |
|
|
|
|
Net
debt at 31 March
|
7,534 |
|
7,893 |
|
|
|
Non-cash transactions
Other non-cash movements in 2006 includes
£87 million relating to the early redemption of the group’s
US dollar convertible bond for shares in LG Telecom.
|
