BT 2007 Annual Report Download - page 139

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.
rTrade and other receivables and trade and other payables would be £562 million higher (2006: £348 million higher) – see note
(h).
rA finance lease obligation of £2,316 million higher (2006: £2,325 million higher) and property, plant and equipment of £669
million higher (2006: £780 million higher) would be shown and trade and other payables would be £552 million lower (2006:
£478 million lower) in respect of the property sale and finance leaseback transaction as described in note (a).
rGoodwill would be £7 million lower (2006: £10 million lower), other debtors would be £1 million lower (2006: £1 million lower),
current liabilities would be the same (2006: £2 million lower) and long term borrowings would be £1 million lower (2006: £12
million lower) in respect of financial instruments.
rPrior to the adoption of FAS 158 a pension intangible asset was recognised separately from retirement benefit obligations. Due to
the adoption of FAS 158 on 31 March 2007 there is no reclassification required in the current year (2006: £31 million).
rAs outlined in note (1), contingent consideration on acquisitions of £15 million (2006: £7 million) was not recognised for
US GAAP. This results in goodwill and other payables being lower by £15 million (2006: £7 million).
rThe cumulative impact of the above adjustments is:
rCurrent assets – £649 million higher (2006: £337 million higher)
rNon current assets – £943 million higher (2006: £1,490 million higher)
rCurrent liabilities – £164 million higher (2006: £137 million lower)
rNon current liabilities – £2,080 million higher (2006: £3,356 million higher).
(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 movement in cash and cash equivalents
would have been higher by £130 million (2006: £179 million higher, 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 net liabilities of the BTPS represent substantially all of the group’s pensions obligations.
The pension cost determined under FAS 87 was calculated by reference to an expected long-term rate of return on scheme assets
of 6.5% (2006: 7.1%, 2005: 7.3%).
The components of the net periodic pension cost for the BTPS comprised:
2007
£m
2006
£m
2005
£m
Service cost 612 538 507
Interest cost 1,787 1,784 1,745
Expected return on scheme assets (2,206) (2,042) (1,897)
Amortisation of prior service costs 24 24 24
Amortisation of loss 150 215 263
Net periodic pension cost under US GAAP 367 519 642
The incremental effects of adopting the provisions of FAS 158 on the group’s balance sheet at 31 March 2007, as adjusted to
accord with US GAAP, are presented in the following table. The adoption of FAS 158 had no effect on the group’s consolidated
income statement, as adjusted to accord with US GAAP, and will not affect the group’s US GAAP net income in future periods.
Prior to
adoption
£m
Effect of
Adoption
£m
As reported
£m
Intangible assets 1 (1) –
Defined benefit pension plan deficit (2,145) 1,852 (293)
Deferred taxes 644 (556) 88
Shareholders’ equity (1,500) 1,295 (205)
Accumulated other comprehensive income – (1,851) (1,851)
Deferred taxes – 556 556
Accumulated other comprehensive income (net of deferred tax) – (1,295) (1,295)
Consolidated financial statements Notes to the consolidated financial statements
138 BT Group plc Annual Report & Form 20-F