BT 2010 Annual Report Download - page 113

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FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
111BT GROUP PLC ANNUAL REPORT & FORM 20-F
FINANCIAL STATEMENTSADDITIONAL INFORMATION REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
10. Cash and cash equivalents continued
The credit rating of counterparties with which cash equivalents were held is detailed in the table below.
2010 2009
At 31 March £m £m
Moody’s/S&P credit ratinga
Aaa/AAA 100 90
Aa2/AA 609 124
Aa3/AA– 202 271
A1/A+ 341 251
A2/A 32
Total cash equivalents 1,255 738
aCash equivalent balances with counterparties have been classified at the lower of their Moody’s and S&P rating.
Cash and cash equivalents are primarily fixed rate financial assets held for periods ranging from one day to three months.
11. 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 adjustments made for the re-measurement of hedged risks under fair value hedges and accrued
interest applied to reflect the effective interest method as required by IAS 39. In addition, the gross balances are adjusted to take account
of netting arrangements amounting to £nil (2009: £160m). 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.
2010 2009
Analysis of net debt £m £m
Loans and other borrowings (current and non current) 12,791 13,907
Less:
Cash and cash equivalents (1,452) (1,300)
Current asset investments (406) (163)
10,933 12,444
Adjustments:
To retranslate currency denominated balances at swapped rates where hedged (1,326) (1,766)
To remove fair value adjustments and accrued interest applied to reflect the
effective interest method (324) (317)
Net debt at 31 March 9,283 10,361
After allocating the element of the adjustments which impacts loans and other borrowings, as defined above, gross debt at 31 March 2010
was £11,139m (2009: £11,663m).
2010 2009
Reconciliation of movement in net debt £m £m
At 1 April 10,361 9,460
(Decrease) increase in net debt resulting from cash flows (1,079) 921
Net debt assumed or issued on acquisitions – (2)
Currency movements – (36)
Other non cash movements 118
At 31 March 9,283 10,361