Exhibit 7
Unaudited computation of ratio of earnings to fixed charges | |||||||||||
Year ended 31 March | |||||||||||
Under UK GAAP (unaudited) | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||
£m | £m | £m | £m | £m | |||||||
Fixed charges | |||||||||||
Interest payable | 1,091 | 1,123 | 971 | 1,156 | 405 | ||||||
Add: One third of rental expense | 451 | 449 | 308 | 233 | 119 | ||||||
Add: Preference dividends | 77 | 85 | 94 | 91 | 62 | ||||||
1,619 | 1,657 | 1,373 | 1,480 | 586 | |||||||
Earnings | |||||||||||
(Loss)/profit on ordinary activities before taxation | (5,047 | ) | (6,208 | ) | (13,539 | ) | (8,086 | ) | 1,351 | ||
Less: Share of profit/(loss) in joint ventures and associated undertakings | 546 | (156 | ) | (1,457 | ) | (550 | ) | (185 | ) | ||
Less: Share of net interest payable of joint ventures and associated undertakings | (215 | ) | (295 | ) | (342 | ) | (327 | ) | (51 | ) | |
Less: Loss on ordinary activities before taxation – discontinued operations | (7 | ) | (272 | ) | (428 | ) | — | — | |||
(5,371 | ) | (5,485 | ) | (11,312 | ) | (7,209 | ) | 1,587 | |||
Add: Fixed charges | 1,619 | 1,657 | 1,373 | 1,480 | 586 | ||||||
Add: Cash received from associated undertakings and joint ventures | 1,801 | 742 | 139 | 353 | 236 | ||||||
Less: Preference dividends | (77 | ) | (85 | ) | (94 | ) | (91 | ) | (62 | ) | |
(2,028 | ) | (3,171 | ) | (9,894 | ) | (5,467 | ) | 2,347 | |||
Ratio of earnings to fixed charges | (1.3 | ) | (1.9 | ) | (7.2 | ) | (3.7 | ) | 4.0 | ||
Deficiency between fixed charges and earnings | (3,647 | ) | (4,828 | ) | (11,267 | ) | (6,947 | ) | — | ||
Year ended 31 March | |||||||||||
Under US GAAP (unaudited) | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||
£m | £m | £m | £m | £m | |||||||
Fixed charges | |||||||||||
Interest payable | 1,091 | 1,123 | 971 | 1,156 | 405 | ||||||
Add: One third of rental expense | 451 | 449 | 308 | 233 | 119 | ||||||
Add: Preference dividends | 77 | 85 | 94 | 91 | 62 | ||||||
1,619 | 1,657 | 1,373 | 1,480 | 586 | |||||||
Earnings | |||||||||||
(Loss)/profit on ordinary activities before taxation | (5,047 | ) | (6,208 | ) | (13,539 | ) | (8,086 | ) | 1,351 | ||
Adjusted for: | |||||||||||
Less: Share of profit/(loss) in joint ventures and associated undertakings | 546 | (156 | ) | (1,457 | ) | (550 | ) | (185 | ) | ||
Less: Share of net interest payable of joint ventures and associated undertakings | (215 | ) | (295 | ) | (342 | ) | (327 | ) | (51 | ) | |
Less: Loss on ordinary activities before taxation – discontinued operations | (7 | ) | (272 | ) | (428 | ) | — | — | |||
(5,371 | ) | (5,485 | ) | (11,312 | ) | (7,209 | ) | 1,587 | |||
UK/US GAAP Adjustments (a) | |||||||||||
Less: Goodwill amortisation charge of subsidiary companies | (6,520 | ) | (5,487 | ) | (5,120 | ) | (3,034 | ) | (113 | ) | |
Add: Exceptional items | (476 | ) | 405 | (85 | ) | — | — | ||||
Add: Connection income | 29 | 16 | (15 | ) | (54 | ) | — | ||||
Add: Reorganisation costs | — | — | — | 84 | 25 | ||||||
Less: Other | (213 | ) | (52 | ) | (53 | ) | (87 | ) | (9 | ) | |
(12,551 | ) | (10,603 | ) | (16,585 | ) | (10,300 | ) | 1,490 | |||
Add: Fixed charges | 1,619 | 1,657 | 1,373 | 1,480 | 586 | ||||||
Add: Cash received from associated undertakings and joint ventures | 1,801 | 742 | 139 | 353 | 236 | ||||||
Less: Preference dividends | (77 | ) | (85 | ) | (94 | ) | (91 | ) | (62 | ) | |
(9,208 | ) | (8,289 | ) | (15,167 | ) | (8,558 | ) | 2,250 | |||
Ratio of earnings to fixed charges | (5.7 | ) | (5.0 | ) | (11.0 | ) | (5.8 | ) | 3.8 | ||
Deficiency between fixed charges and earnings | (10,827 | ) | (9,946 | ) | (16,540 | ) | (10,038 | ) | — | ||
(a) | For discussion of significant differences between UK GAAP and US GAAP and a reconciliation of net income between amounts calculated under UK GAAP and under US GAAP, see Note 36 to the Consolidated Financial Statements. |
The fixed charges and earnings have been restated for the years ended 31 March 2000, 2001, 2002 and 2003 to treat Japan Telecom as discontinued operations; to exclude from US GAAP earnings adjustments the minority interest in such adjustments; and to include additional amounts within rental expense in both fixed charges and earnings.