BT 2014 Annual Report Download - page 189

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186 Additional information
A reconciliation from net cash inow from operating activities, the most directly comparable IFRS measure, to reported, adjusted and normalised free
cash ow, is set out below.
Year ended 31 March
2014
£m
2013
£m
2012
£m
Net cash inƮow from operating activities 4,796 5,295 3,558
Add back pension decit payment 325 325 2,000
Included in cash Ʈows from investing activities
Net capital expenditure before purchases of telecommunications licences (2,346) (2,438) (2,560)
Purchases of telecommunications licences – (202) –
Interest received 698
Dividends received from associates and joint ventures 1 3 4
Sales of non-current nancial assets 311
Included in cash Ʈows from Ƭnancing activities
Interest paid (614) (701) (693)
Reported free cash Ʈow 2,171 2,292 2,318
Net cash outow from specic items 356 366 204
Adjusted free cash Ʈow 2,527 2,658 2,522
Add back (deduct)
Purchases of telecommunications licences – 202 –
Cash tax benet of pension decit payments (77) (560) (215)
Normalised free cash Ʈow 2,450 2,300 2,307
Net debt
Net debt consists of loans and other borrowings (both current and non-current), less current asset investments and cash and cash equivalents. Loans
and other borrowings are measured as the net proceeds raised, adjusted to amortise any discount over the term of the debt. For the purpose of this
measure, current asset investments and cash and cash equivalents are measured at the lower of cost and net realisable value. Our net debt calculation
starts from the expected future undiscounted cash ows that should arise when our nancial instruments mature. We adjust these cash ows to
reect hedged risks that are re-measured under fair value hedges, as well as for the impact of the eective interest method. Currency denominated
balances within net debt are translated to Sterling at swap rates where hedged.
Net debt is a measure of the group’s net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure that
can be used to assess both the group’s cash position and indebtedness. There are material limitations in the use of alternative performance measures
and the use of the term net debt does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities
included in this measure.
Net debt is considered to be an alternative performance measure as it is not dened in IFRS. The most directly comparable IFRS measure is the
aggregate of loans and other borrowings (current and non-current), current asset investments and cash and cash equivalents. A reconciliation from
these to net debt is given below.
At 31 March
2014
£m
2013
£m
Loans and other borrowings 9,814 10,013
Less
Cash and cash equivalents (695) (924)
Current asset investments (1,774) (531)
7,345 8,558
Adjustments
To retranslate debt balances at swap rates where hedged by currency swaps (24) (417)
To remove accrued interest applied to reect the eective interest method and fair value adjustments (293) (344)
Net debt 7,028 7,797