BT 2000 Annual Report Download - page 35

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Financial review
34 Annual report and Form 20-F
year. This was 10.0% higher than in the 1998 ¢nancial
year. The lower pro¢t in the 2000 ¢nancial year was due to
the lower group operating pro¢t and higher interest
charges, explained above.
The tax charge of »897 million for the 2000 ¢nancial
year as a percentage of pro¢t before taxation was 30.5%,
compared with an ordinary tax charge of 30.1% for the
1999 ¢nancial year and 30.4% for the 1998 ¢nancial year.
The 2000 e¡ective tax rate compares with the standard
30% corporation tax rate for the year. The group's tax
charge for the 1999 ¢nancial year was an e¡ective 31.0%
of pre-tax pro¢t, excluding the MCI share sale gain, which
was e¡ectively subject to a lower tax charge under UK
capital gains tax legislation. The group's ordinary tax
charge for the 1998 ¢nancial year was an e¡ective 31.5%
of pre-tax pro¢t, excluding the MCI merger break-up fee
which again was similarly subject to a lower tax charge.
These e¡ective tax charges re£ect the higher 31% rate of
corporation tax set for the 1999 and 1998 ¢nancial years.
The tax charge for the 1998 ¢nancial year included BT's
»510 million share of HM Government's windfall tax on
certain privatised companies, imposed in July 1997. The
tax was paid in two equal »255 million instalments in
December 1997 and December 1998.
Earnings and dividends
Basic earnings per share, based on the pro¢t for the 2000
¢nancial year of »2,055 million, were 31.7 pence. Earnings
per share for the 1999 and 1998 ¢nancial years were
46.3 pence and 26.6 pence, respectively. Earnings before
goodwill amortisation and exceptional items were 34.2 pence
per share for the 2000 ¢nancial year, in comparison with
35.0 pence for the 1999 ¢nancial year and 31.7 pence for the
1998 ¢nancial year. Diluted earnings per share are not
materially di¡erent.
2000
£m
1999
£m
1998
£m
Net cash in¯ow from operating activities 5,849 6,035 6,071
Dividends from ventures 52 5
Net cash out¯ow for returns on investments and servicing of ®nance (163) (328) (160)
Tax paid (1,311) (630) (1,886)
Net cash in¯ow (out¯ow) for capital expenditure and ®nancial investment (3,752) 1,046 (3,108)
Net cash out¯ow for acquisitions and disposals (6,405) (1,967) (1,501)
Equity dividends paid (1,364) (1,186) (3,473)
Cash in¯ow (out¯ow) before management of liquid resources and ®nancing (7,141) 2,972 (4,052)
Management of liquid resources 1,236 (2,447) 2,247
Net cash in¯ow (out¯ow) from ®nancing 5,959 (458) 1,794
Increase (decrease) in cash in the year 54 67 (11)
Decrease (increase) in net debt in the year (6,582) 3,146 (3,860)
Dividends paid and recommended for the 2000
¢nancial year of 21.9 pence per share represent a 7.4%
increase on the previous year and are covered 1.6 times by
earnings before goodwill amortisation and exceptional
items. These dividends comprise the interim dividend of
8.7 pence per share, paid in February 2000, and the
proposed ¢nal dividend of 13.2 pence per share which,
if approved at the annual general meeting, will be paid
on 18 September 2000 to shareholders on the register
on 18 August 2000. These dividends will absorb
»1,426 million.
BT paid or recommended dividends of 20.4 pence per
share for the 1999 ¢nancial year and dividends of 19.0
pence per share in respect of the 1998 ¢nancial year.
Financing
Net cash in£ow from operating activities of »5,849 million
in the 2000 ¢nancial year compared with »6,035 million
in the 1999 ¢nancial year and »6,071 million in the 1998
¢nancial year. Special contributions to the main pension
fund, described below, of »230 million in the 2000
¢nancial year and »200 million in the 1999 ¢nancial year
were paid, consequently reducing the cash in£ow in
those years.
Tax paid in the 2000 ¢nancial year totalled »1,311 million.
This included the ¢rst quarterly instalments under the new
corporation tax regime in the UK. Tax paid in the 1999
¢nancial year, which totalled »630 million, included the
second and ¢nal windfall tax instalment of »255 million.
Less UK corporation tax was paid in the 1999 ¢nancial
year than in either of the preceding or succeeding years
because of the advance corporation tax (ACT) on a special
dividend paid in September 1997. In contrast, the tax paid
in the 1998 ¢nancial year, which totalled »1,886 million,
was particularly high because of »561 million ACT paid in