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BT Group plc Annual Report & Form 20-F 101
9. CASH AND CASH EQUIVALENTS
2007 2006
£m £m
Cash at bank and in hand 568 511
Cash equivalents
Listed cash equivalents
Euro treasury bills 10 8
Unlisted cash equivalents
US corporate debt securities –422
UK deposits 417 914
European deposits 57 70
US deposits 23 40
Total cash equivalents 507 1,454
Total cash and cash equivalents 1,075 1,965
Bank overdrafts (51) (181)
Cash and cash equivalents per the cash flow statement 1,024 1,784
The group has cross undertaking guarantee facilities across certain bank accounts which allow a legally enforceable right of set off of
the relevant cash and overdraft balances on bank accounts included within each scheme. Included within overdrafts at 31 March
2007 were balances of £49 million (2006: £171 million) which had a legally enforceable right of set off against cash balances of
£117 million (2006: £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 expected value of 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 £49 million (2006: £171 million). Net debt is a non GAAP measure since it is not defined in
IFRSs but it is a key indicator used by management in order to assess operational performance and balance sheet strength.
2007 2006
£m £m
Analysis of net debt
Loans and other borrowings (current and non current) 8,590 9,935
Less:
Cash and cash equivalents 1,075 1,965
Current asset investments 3365
7,512 7,605
Adjustments:
To retranslate currency denominated balances at swapped rates where hedged 577 121
To recognise borrowings and investments at net proceeds and unamortised discount (175) (192)
Net debt 7,914 7,534
After allocating the element of the adjustments which impacts loans and other borrowings as defined above, gross debt at
31 March 2007 was £8,943 million (2006: £9,685 million). 2007 2006
£m £m
Reconciliation of movement in net debt
Net debt at 1 April 7,534 7,893
Increase (decrease) in net debt resulting from cash flows 219 (199)
Net debt assumed or issued on acquisitions 11 –
Currency movements 124 (75)
Other non-cash movements 26 (85)
Net debt at 31 March 7,914 7,534
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.
Financial statements