1 How does the summary statement of financial position (balance sheet) reflect the accounting equation? Presenting the accounting equation Shareholders’ funds as at 21 March 2009 were £4,376 million (2008: £4,935 million), a reduction of £559 million, primarily as a result of the deterioration of the pension surplus into a deficit, which reduces net assets by £588 million. Gearing, which measures net debt as a percentage of total equity, increased to 38 per cent

(2008: 30 per cent) as a result of the pension surplus moving into deficit