BOC Report and accounts 2005 - Alle jaarverslagen

Notes to the financial statements 133
30. US accounting information continued
There is a significant difference in the treatment of actuarial gains and losses arising during the accounting period. UK GAAP recognises the actuarial gains
and losses in full in the year in which they arise in the statement of total recognised gains and losses. Under US GAAP, the actuarial gains and losses which
exceed ten per cent of the value of the assets or liabilities at the start of the accounting period are amortised over the remaining service lives of
scheme members.
Where an additional minimum liability exists under US GAAP, (ie where the amount provided for any scheme does not cover the unfunded
accumulated benefit obligation for that scheme), this must be recognised in the balance sheet under SFAS87.The adjustment resulting from the recognition
of an additional minimum liability is reported as an intangible asset to the extent of the unrecognised prior service cost, after eliminating amounts
previously shown as a prepaid benefit cost.Any excess above these amounts is reported in comprehensive income.
Where surpluses exist in pension schemes under UK GAAP, a company should recognise the associated asset only to the extent that it is able to
recover that surplus either through reduced contributions or through refunds from the scheme. Regulations in South Africa concerning surpluses (as set out
in the Pension Funds Second Amendment Act 2001) specify that recognition of any surpluses in a retirement fund cannot be made by a company unless it is
either as a result of a surplus apportionment exercise, or if a fund‘s rules allow it.As a result, any surpluses in South Africa are not recognised under UK
GAAP and are written off in the statement of total recognised gains and losses.
There is no specific requirement under US GAAP relating to the treatment of irrecoverable surpluses.As a result, the associated surplus is retained
under US GAAP in line with SFAS 87.
Post retirement medical costs
For UK GAAP reporting (FRS17 – Retirement benefits), the post retirement medical liability is discounted using the bond yield on suitable high quality
corporate bonds, and disclosed net of related deferred tax.
For US GAAP (SFAS106), the liabilities are assessed and discounted using the rates of return obtainable on high quality fixed income investments.
Differences between the UK and US GAAP figures arise largely from the treatment of actuarial gains and losses.
Securities investments
Under UK GAAP, current asset investments (of all types) are stated at the lower of cost and net realisable value. Fixed asset investments are stated at cost,
or alternatively, at market value or at directors’ valuation.
Under US GAAP, securities which are determined to be ‘available-for-sale’ are stated at fair value and any unrealised gains or losses included as a
separate component of shareholders’ funds.The deferred tax consequences of unrealised gains or losses are also charged or credited to shareholders’ funds.
Contingent consideration
Under UK GAAP, contingent consideration is provided for as a liability when the likelihood of payment is considered to be probable.
Under US GAAP, contingent consideration is not recognised until the liability is determined beyond reasonable doubt.The elimination of
contingent consideration for US GAAP purposes also impacts on the value of goodwill arising on acquisitions, therefore there is no net impact on
shareholders’ funds.
Financial instruments
The Group enters into a number of currency swaps, interest rate swaps and forward foreign exchange contracts to hedge its exposure to currency and
interest rate risks. Under UK GAAP, such instruments are shown at their carrying value.
Under US GAAP, these instruments are marked to market and any change in value is recognised in either the income statement or through
comprehensive income in accordance with SFAS133 depending on whether a derivative is designated as part of a hedge transaction, and if it is, the
type of hedge transaction.
Accounting for swaps
Under UK GAAP, gains or losses on closing out interest rate swap contracts taken to hedge the Group’s fixed/floating interest rate position can be taken
to profit immediately.
US GAAP requires any gain or loss to be deferred over the remaining hedge period.
Share of results and net assets of joint ventures and associates
The Group’s share of the results and net assets of its joint ventures and associates (as calculated under UK GAAP) is shown within fixed asset investments.
For the purposes of the reconciliations set out below, the Group’s share of the results and net assets of its joint ventures and associates has been adjusted
to recognise a difference in the method of reporting profits under US GAAP.
Leasing
Under US GAAP (EITF 01–8) certain arrangements with customers (modified or entered into since 1 October 2003) concerning the use of some items
of the Group’s plant and machinery are deemed to contain leases.Where such arrangements qualify as finance leases under SFAS13, an appropriate
adjustment is made to net income and shareholders’ funds under US GAAP. UK GAAP does not contain this same requirement.
Sale and leaseback transactions
Under UK GAAP, any profit or loss on the sale and operating leaseback of fixed assets can generally be taken to profit immediately.
US GAAP requires any gain or loss to be deferred over the contract lease period.
Comprehensive income
Under US GAAP, SFAS130 establishes requirements for the reporting of comprehensive income and its components (revenue, expenses, gains and losses)
in a full set of general purpose financial statements. Components of comprehensive income for the Group determined on a UK GAAP basis include profit
for the financial year, pension actuarial gains and losses, and foreign currency translation gains and losses. Information regarding the Group’s foreign currency
translation gains and losses is included in the statement of total recognised gains and losses under UK GAAP on page 89.
b) Selected financial information under US GAAP
In addition to the Group five year record on page 12, for SEC reporting the Group is required to disclose, on a US GAAP basis, certain key selected financial
information under item 3.A.2. of form 20–F.
2005 2004 2003 2002 2001
£ million £ million £ million £ million £ million
Revenue 3,916.9 3,885.4 3,718.3 3,657.7 3,772.9
Net operating income 652.9 547.4 512.3 515.1 497.4
Net income 326.7 297.7 264.3 255.4 234.2
Total assets 5,241.7 5,333.2 5,046.2 5,126.9 5,118.5
Net assets 2,122.2 1,920.1 1,872.5 2,061.0 2,138.9