BT 2009 Annual Report Download - page 42

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
40 BT GROUP PLC ANNUAL REPORT & FORM 20-F
BUSINESS AND FINANCIAL REVIEWS FINANCIAL REVIEW
Cash flow
Summarised cash flow statement
2009 2008 2007
£m £m £m
Cash generated from
operations 4,934 5,187 5,245
Net income taxes
(paid) repaid (228) 299 (35)
Net cash inflow from
operating activities 4,706 5,486 5,210
Net purchase of property,
plant, equipment and
software (3,038) (3,253) (3,209)
Net acquisition of
subsidiaries, associates,
joint ventures and
group undertakings (227) (364) (237)
Net sale (purchase) of
current and non current
financial assets 286 (160) 515
Dividends received from
associates and joint
ventures 6 2 6
Interest received 19 111 147
Net cash used in
investing activities (2,954) (3,664) (2,778)
Net drawdown (repayment)
of borrowings 522 2,061 (765)
Equity dividends paid (1,222) (1,236) (1,057)
Net repurchase of shares (209) (1,413) (279)
Interest paid (956) (842) (797)
Net cash used in financing
activities (1,865) (1,430) (2,898)
Effect of exchange rates on
cash and cash equivalents 54 25 (35)
Net (decrease) increase
in cash and cash
equivalents (59) 417 (501)
Increase in net debt
resulting from cash flows (921) (1,510) (219)
Net cash outflow from investing activities was £2,954m in 2009
(2008: £3,664m, 2007: £2,778m). In 2009, net cash outflow for
the purchase of property, plant and equipment was £3,038m
(2008: £3,253m, 2007: £3,209m). The decrease in 2009 reflects
the lower capital expenditure across the group. The increase in
2008 reflects preparations for 21CN and the systems developments
required by the Undertakings agreed with Ofcom. Net cash
expenditure on acquiring new businesses was £227m in 2009
(2008: £364m, 2007: £237m). Significant acquisitions made in the
current year include Wire One Holdings Inc (£74m), Ribbit
Corporation (£46m) and Ufindus Ltd (£21m). In 2008, significant
acquisitions included Comsat International, Frontline Technologies
Corporation Limited and i2i Enterprise Private Limited. In 2007,
significant acquisitions included INS Inc and PlusNet.
In 2009, the net cash inflow from the net sale of investments was
£286m, compared with an outflow of £160m in 2008, and an
inflow of £515m in 2007. The cash flows in all financial years
mainly related to changes in amounts held in liquidity funds.
Interest received was £19m in 2009, compared with £111m in
2008 and £147m in 2007. The interest receipts in 2008 and 2007
include £65m and £74m, respectively, from HMRC on the
settlement discussed in the specific items section of this Financial
review. Excluding these receipts, interest received was £27m lower
in 2009 reflecting lower levels of investments held by the group
and lower average interest rates on deposits. In 2008, interest
received was £27m lower reflecting the lower level of investment
holdings following their utilisation to fund bond maturities, the
share buy back programme and liquidity management.
Net cash outflow from financing activities of £1,865m in 2009
compares with £1,430m in 2008 and £2,898m in 2007. In 2009,
the group raised debt of £795m mainly through our European
Medium Term Note programme and received £606m from the net
issue of commercial paper. This was partially offset by cash outflows
on the repayment of maturing borrowings and lease liabilities
amounting to £879m. In 2008, the group raised debt of £3,939m
mainly through its European Medium Term Note and US Shelf
programmes which was partially offset by cash outflows on the
repayment of maturing borrowings, lease liabilities and the net
repayment of commercial paper amounting to £1,878m. In 2007,
the full and part maturity of notes and leases resulted in a cash
outflow of £1,085m mainly offset by the net issue of commercial
paper of £309m.
At 31 March 2009, net debt was £10,361m, compared with
£9,460m at 31 March 2008 and £7,914m at 31 March 2007. The
components of net debt, which is a non-GAAP measure, together
with a reconciliation to the most directly comparable IFRS measure,
are detailed on page 103. The share buy back programme has
resulted in a cash outflow of £334m compared with £1,498m in
2008 and £400m in 2007.
Equity dividends paid in 2009 were £1,222m, compared with
£1,236m and £1,057m in 2008 and 2007, respectively. Interest
paid in 2009 was £956m, compared with £842m and £797m in
2008 and 2007, respectively. Interest payments in 2008 included
a one-off payment of £26m on the close out of derivatives
associated with a low cost borrowing transaction. Excluding this
payment, interest paid was £140m higher in 2009, which in turn
was £19m higher in 2008, reflecting the impact of increased
average net debt.
During 2009, the share buy back programme continued until July
2008 and we repurchased 143m shares for cash consideration of
£334m. During 2008 and 2007 we repurchased 540m and 148m
shares for cash consideration of £1,498m and £400m, respectively.
We also issued 83m shares out of treasury to satisfy obligations
under employee share scheme exercises receiving consideration of
£125m (2008: £85m, 2007: £123m).
BUSINESS AND FINANCIAL REVIEWS