BT 2006 Annual Report Download - page 86

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10. NET DEBT continued
After allocating the element of the adjustments which impacts loans and other borrowings as defined above, gross debt at
31 March 2006 was £9,685 million (31 March 2005: £12,696 million).
2006 2005
£m £m
Reconciliation of net cash flow to movement in net debt
Net debt at 1 April 7,893 8,530
Decrease in net debt resulting from cash flows (199) (887)
Net debt assumed or issued on acquisitions –159
Currency movements (75) 2
Other non-cash movements (85) 89
Net debt at 31 March 7,534 7,893
Non-cash transactions
Other non-cash movements in 2006 includes £87 million relating to the early redemption of the group’s US dollar convertible bond
for shares in LG Telecom.
11. FREE CASH FLOW
Free cash flow is defined as the net increase in cash and cash equivalents less cash flows from financing activities (excluding
interest paid) and less the acquisition or disposal of group undertakings. It is a non-GAAP measure since it is not defined in IFRS
but it is a key indicator used by management in order to assess operational performance.
2006 2005
£m £m
Cash generated from operations before taxation 5,777 5,906
Income taxes paid (390) (332)
Net cash inflow from operating activities 5,387 5,574
Included in cash flows from investing activities
Net purchase of property, plant and equipment, computer software and licences (2,874) (2,945)
(Sale) purchase of non current financial assets (1) 537
Dividends received from associates 12
Interest received 185 374
Included in cash flows from financing activities
Interest paid (1,086) (1,260)
Free cash flow 1,612 2,282
12. ACQUISITIONS
Year ended 31 March 2006
Atlanet
a
£m
Radianz
b
£m
Other
c
£m
Total
£m
Fair value of consideration 65 143 69 277
Less: fair value of net assets acquired 35 104 17 156
Goodwill arising 30 39 52 121
Consideration:
Cash 58 120 52 230
Deferred consideration 7 – 17 24
Debt assumed – 23 – 23
Total 65 143 69 277
The outflow of cash and cash equivalents is as follows:
Cash consideration 58 115 52 225
Less: cash acquired 5441160
53 71 41 165
BT Group plc Annual Report and Form 20-F 2006 Notes to the consolidated financial statements84