BT 2014 Annual Report Download - page 68

65
The Strategic Report
Group performance
Group performance
£m
At
1 April
2013
Term debt
issuance
(maturities)
Other
cash
ow
Fair value
move-
ments
Foreign
exchange
Transfer to
within one
year Other
At
31 March
2014
Debt due within one yeara 1,736 (318) (630)  (44) 1,129 1,873
Debt due after one year 8,277 1,181  (47) (355) (1,129) 14 7,941
Impact of cross-currency swapsb (417)   393  (24)
Removal of accrued interest and fair value adjustmentsc (345)  47   4 (294)
Gross debt 9,251 863 (630) – (6) – 18 9,496
Less
Cash equivalents (924) 191  38  (695)
Current assets investments (531) (1,243)    (1,774)
Removal of accrued interestc 1       1
Net debt 7,797 863 (1,682) – 32 – 18 7,028
a Including accrued interest and bank overdrafts.
b 5etranslation of debt balances at swap rates where hedged by cross-currency swaps.
c 5emoval of accrued interest applied to reƮect the eƪective interest rate method and removal of fair value adjustments.
The table below shows the key components of our net debt and of the reduction this year of £769m.
Movements in net debt
£m
At 1 April 2012 Normalised free cash ow
Cash tax benet of
pension decit
Purchase of telecommunications licences
Pension decit
payments Dividends Disposal and acquisitions Non-cash movement Share buyback programme Proceeds from issue of own shares
Proceeds from issue of own shares
Pension decit
payments Dividends Disposal and acquisitions Non-cash movement Share buyback programme At 31 March 2013 Normalised free cash ow
Cash tax benet of
pension decit Specic items
Specic items
At 31 March 2014
5,000
5,500
Total reduction of £2,054m
6,000
6,500
7,000
7,500
8,000
8,500
9,000
9,082
2,300
109
560
366
325
683
302
202
222
28
2,450
356
7,028
7,797
77
75
22
325
778
302
50
Over the last two years we have reduced net debt by more than £2bn, as shown in the graph below.
Net debt
Our cash generation has enabled us to reduce net debt to £7,028m,
down £769m.
We intend to continue our policy of reducing net debt and target a
BBBBaa1 credit rating over the medium term.
Gross debt, translated at swap rates, at 31 March 2014 was £9,496m.
This comprised term debt of £8,705m, nance leases of £264m,
commercial paper of £339m and other loans of £188m.
During 201314 we issued £1,181m of term debt in the capital markets
in order to renance maturing debt of £318m and to ensure we have
liquidity to renance term debt of £1,151m maturing in early 201415.
In June 2013 we issued a US600m three-year bond swapped to
£390m with an eective Sterling interest rate of 1.95%.
In February 2014 we issued a US500m three-year bond and a
US800m ve-year bond. The US1.3bn proceeds were swapped to
£791m which comprised £304m with an eective Sterling interest rate
of 1.78% a year for three years and £487m with an eective Sterling
interest rate of 2.66% a year for ve years.
In December 2013 the US500m oating rate note matured, resulting
in a cash outow of £318m.
Other cash ow movements included repayments of £630m of
commercial paper and other debt due within one year. We also increased
the level of our investments held in AAA rated liquidity funds by
£1,243m following the bond issues in the year and reecting our cash
generation.
The adjustment to translate our debt balances to Sterling at swap rates
to reect the impact of hedging decreased by £393m in 201314,
principally due to the weakening in the year of both the Euro and the
USDollar against Sterling.
The adjustment to net debt to remove the impact of fair value hedge
accounting decreased by £47m. The adjustment relating to the use of
the eective interest method decreased by £4m. These were principally
due to higher Sterling interest rates. Foreign exchange movements on
cash and cash equivalents were £38m, which was principally due to the
strengthening of Sterling against other currencies.