BT 2006 Annual Report Download - page 120

35. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
Reclassifications
The following reclassifications would need to be made in addition to those disclosed elsewhere and in the above reconciliation of
shareholders’ equity in order to present amounts in accordance with US GAAP.
rA pensions intangible asset of £31 million (2005 – £55 million) would be recognised separately from retirement obligations.
rThe current portion of pension obligations of £630 million (2005 – £459 million) would be shown as a current liability.
rCash and cash equivalents and current liabilities would increase by £181 million (2005 – £2 million) in respect of bank
overdrafts.
rTrade and other receivables and trade and other payables would be £348 million higher (2005 – £239 million) – see note (h).
rA finance lease obligation of £2,325 million and property, plant and equipment of £780 million would be shown and trade and
other payables would be £478 million lower in respect of the property sale and finance leaseback transaction as described in
note (a).
rCurrent assets would be £11 million lower (2005 – £6 million lower), current liabilities would be £2 million lower (2005 –
£135 million higher) and long term borrowings would be £12 million lower (2005 – £230 million higher) in respect of financial
instruments.
(III) CONSOLIDATED STATEMENTS OF CASH FLOWS
The group cash flow statements are presented in accordance with IAS 7. The statements prepared under IAS 7 present
substantially the same information as that required under SFAS No. 95, ‘Statement of Cash Flows’.
If the cash flow statement had been prepared in accordance with SFAS No 95, the net increase in cash and cash equivalents
would have been higher by £179 million (2005: unchanged). This is because under IAS 7, bank overdrafts are classified as a
movement in cash and cash equivalents, while under US GAAP, the movements in bank overdrafts are classified as a financing
activity.
(IV) PENSION COSTS
The following position for the main pension scheme (BTPS) is computed in accordance with US GAAP pension accounting rules
under SFAS No. 87 and SFAS No. 88, the effect of which is shown in the above reconciliation statements. The liabilities of the
BTPS represent substantially all of the group’s pension obligations.
The pension cost determined under SFAS No. 87 was calculated by reference to an expected long-term rate of return on scheme
assets of 7.11% (2005 – 7.27%). The components of the net periodic pension cost for the main pension scheme comprised:
2006
£m
2005
£m
Service cost 538 507
Interest cost 1,784 1,745
Expected return on scheme assets (2,042) (1,897)
Amortisation of prior service costs 24 24
Amortisation of loss 215 263
Net periodic pension cost under US GAAP 519 642
The information required to be disclosed in accordance with SFAS No. 132(R), ‘Employers’ Disclosures about Pensions and Other
Post Retirement Benefits’ concerning the funded status of the main scheme at 31 March 2005 and 31 March 2006, based on the
valuations at 1 January 2005 and 1 January 2006, respectively, is given below.
2006
£m
2005
£m
Minimum liability, intangible asset and other comprehensive income
Plan assets at fair value 34,293 29,169
Accumulated benefit obligation 37,850 33,160
Minimum liability 3,557 3,991
Net amount recognised at end of year (2,604) (2,535)
Minimum additional liability 953 1,456
Intangible asset as at 31 March
Unrecognised prior service cost (31) (55)
Accumulated other comprehensive income 922 1,401
2006
£m
2005
£m
Changes in benefit obligation
Benefit obligation at the beginning of the year 34,336 32,448
Service cost 538 507
Interest cost 1,783 1,745
Employee contributions 21 50
Actuarial movement 3,438 943
Other changes –7
Benefits paid or payable (1,385) (1,364)
Translation (1) –
Benefit obligation at the end of the year 38,730 34,336
BT Group plc Annual Report and Form 20-F 2006 Notes to the consolidated financial statements118