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8. EARNINGS PER SHARE continued
Basic earnings per share before specific items, and the per share impact of individual specific items, is as follows:
2006
pence
per share
2006
£m
2005
pence
per share
2005
£m
Per share impact of specific items:
Profit on sale of non current asset investments ––4.2 358
Profit on sale of joint venture – 1 ––
Property rationalisation costs (0.8) (68) (0.7) (59)
Provision for the creation of Openreach (0.8) (70) ––
Impairment in associates and joint ventures ––(0.3) (25)
Tax credit on specific items 0.5 41 0.2 16
Basic (loss) earnings per share/(loss) profit for the year attributable to specific
items (1.1) (96) 3.4 290
Basic earnings per share/profit for the year 18.4 1,548 21.5 1,829
Adjustment: Basic loss (earnings) per share/loss (profit) for the financial year
attributable to specific items 1.1 96 (3.4) (290)
Basic earnings per share/profit for the year before specific items 19.5 1,644 18.1 1,539
9. CASH AND CASH EQUIVALENTS
2006 2005
£m £m
Cash at bank and in hand 511 206
Cash equivalents
Listed cash equivalents
Euro treasury bills 820
Unlisted cash equivalents
US corporate debt securities 422 223
UK deposits 914 818
European deposits 70 36
US deposits 40 9
Total cash equivalents 1,454 1,106
Total cash and cash equivalents 1,965 1,312
Bank overdrafts (181) (2)
Cash and cash equivalents per the cash flow statement 1,784 1,310
The group has a cross undertaking guarantee facility across certain bank accounts which allows a legally enforceable right of set off
of the relevant cash and overdraft balances on bank accounts included within the scheme. At 31 March 2006, overdraft balances of
£171 million had a legally enforceable right of set off against cash balances of £209 million. These balances have not been netted
above as settlement is not intended to take place simultaneously or on a net basis.
10. NET DEBT
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
Notes to the consolidated financial statements BT Group plc Annual Report and Form 20-F 2006 83