BT 2009 Annual Report Download - page 105

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ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
103BT GROUP PLC ANNUAL REPORT & FORM 20-F
FINANCIAL STATEMENTS
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 undiscounted 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 effective interest method as required by IAS 39. In addition, the gross balances are adjusted to take account of netting
arrangements amounting to £160m (2008: £256m). Net debt is a non-GAAP measure since it is not defined in accordance with IFRS, but
it is a key indicator used by management in order to assess operational performance and balance sheet strength.
2009 2008
£m £m
Analysis of net debt
Loans and other borrowings (current and non current) 13,907 11,342
Less:
Cash and cash equivalents (1,300) (1,435)
Current asset investments (163) (440)
12,444 9,467
Adjustments:
To retranslate currency denominated balances at swapped rates where hedged (1,766) 241
To recognise borrowings at net proceeds adjusted to amortise discount and investments
at the lower of cost and net realisable value (317) (248)
Net debt at 31 March 10,361 9,460
After allocating the element of the adjustments which impacts loans and other borrowings, as defined above, gross debt at 31 March 2009
was £11,663m (2008: £11,076m).
2009 2008
£m £m
Reconciliation of movement in net debt
Net debt at 1 April 9,460 7,914
Increase in net debt resulting from cash flows 921 1,510
Net debt assumed or issued on acquisitions (2) 35
Currency movements (36) (4)
Other non-cash movements 18 5
Net debt at 31 March 10,361 9,460